Hi everyone, my name is Joseph Antoine Migdilani today I am with
Karim Zakher our portfolio manager. Welcome to our quarterly web
capsule, before we start I want to remind you that the reason why we
do these capsules is to inform, educate and keep you posted with the
world of finance so don't forget to subscribe if you like our videos
and to share with family and friends, we’re going to be very happy if
you do so and if you have any questions don't hesitate to reach us
after the video. So, because we are in the tax season I just want to
start by two little points, the first one is that the government of
Canada decided to remove his new rule with the tax inclusion for the
capital gain we're going back to the original where 50% will be
taxable on capital gain that's great news um of course it happens
during an election period but uh we'll take it it's candy and we'll
definitely take it and we’ll see what happens in the future if they
reverse that rule again after they get elected but anyway that's
that’s, that’s another story we'll see but we'll take it absolutely
and the second point is that I wanted to let you know that all the tax
slip or fiscal documents are now available online so for our clients
you could go on our website or national bank financial website to get
that and to send it to your accountant before the April 30th, for the
tax of 2024. So now let’s talk about the market right uh how do you
feel Karim about the market right now and uh let's talk about the
first quarter a little bit as well yeah so the first quarter uh Joseph
uh it's two words tariff trump that's all I got to say uh thing is
we've had a correction in the month of March these corrections
happen,10% corrections for the S&P 500 tend to happen every 18
months on average so we're pretty much at that point and um there is a
new index that's out it's called uh the macro research economic policy
index that exists since 1985 it measures the level of uncertainty
among investors in the US in particular might be pretty high right now
it's at a peak and whenever it's at a peak the S&P 500 after the
correction occurs the S&P 500 has a tendency to go up 80% of the
time really with an average return of 8.8% now nothing's guaranteed
nothing's set in stone sure but it's we'll take it we'll take it, I
think it's a positive.A positive index so when we reach peak
uncertainty honestly it's the time to be buying not selling and I'm
going to give you examples very recent examples uh that most people
already most likely forgot the corrections 2018 2020 and 2022, a lot
of people say some people are going to say we had a correction in 2018
we certainly did it was Trump 1.0 was his first mandate yeahthe fourth
quarter of 2018 particularlybetween Christmas and New Year's we hada
pretty big drop in the markets for theexact same reason trump tariffs
what happened afterwards is 2019 while the markets went up 2020 I
think everybody remembers that one it's the pandemic where we had a
V-shaped Yeah correction yeah uh we've had cases some clients who
couldn't take it they was the end of the world they wanted out i got
them out unfortunately at the wrong time, i suggested not to do that
they did it any some of them did it anyway the majority 99% listen but
1% do what they feel is best for them which is fine I I totally
respect that and they liquidated at the worst possible time and what
happened the central banks plowed a lot of liquidity into the world
markets and guess what happened market rebounded and it actually the
year 2020 was a positive year for the market believe it or was not
greatly positive but it was positive where we were down like 20 to 25%
at one point remember and then the most recent correction other than
this one is 2022 uh if you remember interest rates were virtually at
zero and the and the central banks raised rates all the way up to like
5% I shouldn't say all central banks the US Federal Reserve did and
Canada followed so rates went really went up really fast and we had a
market correction and a bond market correction because when rates go
up bonds go down simultaneously and we only saw that four times in the
last 100 years where the bond market and the stock market drops at the
same time joseph what happened in 2023 and 2024 amazing years
phenomenal years afterwards talk to people in 2024 remember that
correction uh what correction they completely forgot but when it was
in the middle of a correction it's like the end of the world we should
get out we should try and time it and get back in no no no it's a big
big mistake to time the markets okay I keep saying that so this is
another correction where uh discounts are almost everywhere uh the
main reason for this correction exactly is Trump and tariffs but uh
what sector really dropped it's the magnificent 7 which was the best
performing sectors over the last two years so the Max 7 which is
really implicated in the artificial intelligence is not to be avoided
you got to stay in it's the future artificial intelligence a lot of
companies are integrating this technology in their business network
it's happening more and more and so we're at the infancy stage and I
believe has a long way to go the other 493 of the S&P 500 stocks
held pretty well but it's really the MAX 7 that really took a dive so
um I do see coming back and what about Tesla Karim so for those who
hold the discretionary portfolios we sold Tesla we sold the entire
position for the simple reason that it's become unfortunately too
political and too toxic yeah uh it's too bad because we bought Tesla
in January 2023 at about $142 to $143 USD a share right we exited the
position entirely at 308 uh clients made over 100% and in addition to
that I had sold even prior to that in the 400 range for some clients
well most clients because I rebalance portfolios and so we took some
profits off but we sold the entire position at 308 okay this quarter.
So for those uh who want to know what we purchased instead of Tesla I
will refer you to our quarterly mandate, a quarterly brief letter that
we send out to all our discretionary clients only which discusses the
ins and the outs what we bought what we sold so we may revisit Tesla
because I think it's phenomenal company yeah I love the product
they're the most advanced in in EV technology of any another car
companies and so we will revisit if Trump gets if sorry if Elon gets
out of the government or out of Tesla one or the other we'll
reconsider it good to know so uh I just want to repeat it's an ideal
time to remain invested and if you're sitting on cash on the sidelines
it's a fantastic time to get in because in a year or two this
correction will be forgotten as well absolutely and I can assure you
that most likely your portfolios will be going up over the next 5
years maybe not up over the next 5 months but over the next 5 years
your portfolios will most likely go up just want to give a couple of
examples uh where to prove to you that we're not traders we're more of
a buy and hold type of investor uh we had bought Apple uh the stock
back in September 2013 we hold we hold for a long time i'll hold
forever if I could okay and we bought the stock at 17 USD per share
pre-split adjusted to all the splits today as of April uh the 1st the
stock is at $223 a share now when it was at 17 it did go to 50 it
dropped back down to 30 some clients are saying "Why didn't you
get out at 50?" It's because I'm a buy and hold I don't trade why
don't I Why don't we trade it's very taxable uh it's a lot of work for
your accountant and it just it's not the right approach to investing
that’s not how you generate wealth by trading in and out most traders
have a hard time making money because they don't know their direction
it's very especially with Trump there yeah we don't know what to own
yeah so the key is to be diver to own a little bit of everything in
the right sectors as best as we can and hang tight and uh that's a
performance of over uh over 10 fold that's amazing there's gold as
well I think gold is another one where we buy and hold we had bought
gold uh the Royal Canadian Mint which is kind of like a certificate
that trades it reflects gold bullion not gold mining companies but
gold bullion uh we bought that in January 2018 at $17.67 a share today
it's at $48 a share Canadian okay um and I could tell you gold is
under owned people don't like gold I don't know why gold is a refuge
when things go bad and gold is an excellent portfolio diversifier
everybody should hold gold and all our discretionary portfolios have
quite a significant holding in gold and uh it's under owned and I
believe gold's going to be going higher and I also think Kareem that a
good example you could give is 2022 when the market like bonds stocks
went down gold went up exactly and if actually I look at gold's
performance over the last three years versus the S&P 500 gold has
done a performance of 16.87% very good annually over the last 3 years
versus the S&P at 9% wow which goes to show diversification
creates great opportunity it lowers your volatility and it enhances
your return and that's what I call alpha you want to get those
performing uh pieces in your portfolio that create that alpha and I'll
just finish by saying the S&P in the first quarter uh lost 4% the
TSX was a little bit above being flat uh and the good news is all our
portfolios whether you have the most conservative of them all which is
the revenue portfolio all the way up to the max growth portfolio the
performance is at least 1% if not higher excellent for all our
discretionary portfolios in the first quarter so I'm very happy to see
that and I'm going to finish with if you're not comfortable with
volatility I'm going to repeat this and I tell this often to clients
if you're not comfortable with seeing your portfolio being volatile
dropping 5% even 10% in any one moment in order to make more money
down the road if you're not comfortable doing that put your money in a
GIC they'll give you 3% but know this inflation is 3% and then you get
taxed on the 3% so you lose one and a half% because most people are at
50% tax bracket you're guaranteed to have a loss of 1 and a.5% if you
buy these types of products yeah it won't go down the value of your
money will go down so this is where diversifying holding stocks
holding bonds holding gold holding euros holding US uh USD holding yen
holding Australian dollars make all the difference in your portfolio
over a longer period of time and when I say long term I'm always
focused on five years yeah well said thank you Karim um I want to
remind you like I said at the beginning of the video that if you have
any questions concern feel free to reach out we're here to help and to
assist and uh I want to say thank you for listening to the video and
we'll see you soon.