Hello, it is approaching 12:00 here on Thursday March 13th has not actually been that long since we did our last video for you, but I thought it was sort of timely given what has been going on out there. It's been a little bit chaotic to say the least, so we thought it was obviously worth reaching out and and updating on where we're at what we're seeing is, yeah, a lot of, a lot of volatility as predicted and I think this is sort of consistent with the presidential election cycle theory that we've talked about in the past where you know the the year of an election presidential candidates are making all kinds of promises and everything sounds great and markets generally do well in that environment, right. All kinds of promises are made and then the reality hits when a new politician comes in for a four-year term they're going to make all the difficult decisions upfront so those are all going to occur in year one in this case the new US Administration got off to a real aggressive start and they've made a lot of changes in the first four months a lot of unpopular stuff.
I want to just preface anything I say here just by reminding you that this is not a political view that is being expressed. Everything we do is through the scope of investments and that is the way we look at things. We leave our political and social agendas aside and just come to this purely from an investment standpoint so when I'm considering this and we've said it before Trump is actually probably positive net for the investment landscape and some of the things that we've seen so far we actually still really like for some of the groundwork that's being laid. Those things are again you know a reduction of the size and scope of government of course it is excellent. It just greases the wheels of business the reduction of spending and debt at the government level is certainly positive. That should be reflected well in currency markets and in treasury and bond markets and we have seen that yields on bonds are coming down. Bonds are rallying and then lastly, I guess tax cuts are certainly very positive for companies that are reporting earnings it's just more cash on their on their earnings reports which effectively inflates the price of their share price.
Again, some positive things happening there and I want to reiterate that of course all of that is being overshadowed by what we are seeing on the tariff front. We had mentioned that it was a wait and see for us and that we thought a lot of the tariffs that were being talked about as applied to Canada did not make a lot of sense. That does not seem to matter. They have come after kind of everybody in this tariff war and now you are seeing sort of reciprocal action from everybody else, so you know I think it has been very hard to kind of manage portfolios around that. The example the other day, I was at home I get up, I get on my computer, I am sort of doing my sort of morning assessment and I see the news about Ontario levying tariffs on energy exports to the US. I get in my car; I am on my way to the office, and I stop at the coffee shop. As I am getting into the coffee shop, I look, and Trump has responded with his own doubling of tariffs on steel and aluminum so then I get to the office, and both have backed off and we are not going to proceed with any of that. So, it has just become this sort of ridiculous narrative, and it is paramount that we focus on what is being done and not what is being said so this is extremely challenging for most of us. Most of us are in front of the media in one form or another at all hours of the day and the Canadian media is having a field day with this. This is fanning patriotic emotions, and everybody is getting really upset about what is happening because of this perceived attack on Canada so you got to be very careful about following the Canadian media. From our perspective what we want to focus on is again just what's being done and we also want to focus on the fact that we are not the market we are not what's being reported in the media your portfolio is completely different from even what's happening in the various stock markets around the world and that's an important takeaway. We manage three different portfolios, a conservative, a balanced, and a growth. And they are all about flat on the year so let us take that in comparison to some of the major stock indexes out there this is as of of March 12th. The Dow was down 22% this is year to date. Since January 1st, the S&P was down about 5% year-to date. The NASDAQ which is very tech-heavy is down 9% on the year so even the MSCI which is the global index was down only about 1.5 so a little better. And the TSX was down a full percentage point since January 1st so again that's some sort of pretty big draw downs in the stock market. Again, your portfolios and our models are about flat on the year so there has not been a lot of ground lost and that is coming off the back of a double-digit returns for all of our models in 2024. That is the first thing I want to reiterate. The other thing is to say that stock market corrections like this are not uncommon so this S&P correction for example takes us back only to about the level of last September just before the election so that is not terrible. The other thing to consider is that on average a correction of at least 10% occurs once every 17 months. So historically speaking we see a 10% correction in markets every 17 months and it has been about 16 months since we saw our last correction. Again, that is right on time and me you know the recent example that we have been studying at our investment committee was the correction from last summer. Last July/August we saw a steep selloff in in Global stock markets and you know it was scary. At times it looks exactly like this one when you look at it, but it sorts of rebounded, and we just sort of regained strength the story changed the narrative in the market changed and we just sort of kept moving to the upside. Again this is not something that we haven't seen for and the other thing to mention is just that a lot of the selling in the market has really centered around tech stocks some of the names out there that were really quite ridiculously overvalued so whether you're talking about a Nvidia which makes all the chips for AI or even a Tesla is down like 50% from from its high. Those are stocks in which we are not even interested. The numbers on those stocks do not make sense for our portfolios so we do not go there. Again, to reiterate your portfolio is not the market and you know I can highlight a couple of things that we've that I think sort of set us apart. First of all, we are very conservatively positioned as we have talked about. The balance model as an example is only 50% invested in stocks. The bond market has started to behave normally again so bonds historically were not correlated to stocks and generally acted as ballast in the account. I.E stocks go down and the bonds rally up a little bit, so we have seen a return of that historical behavior which a welcome development is of course being invested in bonds, so they are positive on the year. Our fixed Income holdings are positive. Our alternative holdings again a big part of the portfolio we might have expected a little bit more out of them but again they are still positive on the year thus far which is a great development and even some of the stocks that we own. I mentioned that the MSCI which is the global index is only down about one and a half % versus some of the American indexes. Our international fund that we have in the portfolio is up about 3% on the year so again a little allocation there. It has been a great performing fund, but we have our international exposure to the upside. I also highlight a gold trade that we made just before the election process started in the US back early October. We had foreseen a lot of volatility of course around the event and put on a bit of a gold trade so we purchased the gold producers for your portfolio. Since then that position is up about 20% so there are things that are working really well in the current market and as we've always said to you in our portfolios there are no huge bats so these are all little bats but it just means that we're not overexposed in any one area and performance generally has been very good. I just really wanted to highlight a few of those things and wanted to make sure that you as clients are focused on your portfolios and and again to reiterate one more time your portfolio is not the market you're in relatively good shape and we don't know what's around the corner or what's going to come out of the woodwork next but for now that's just the message that we want to convey to you today. I have also included a couple charts in the email body that just sort of speaks a little bit about some of the themes that we are talking about here. This again is always intended just to be a timely way to convey information to you. We are trying to make the rounds and get out and get on the phone with everybody here but of course if you have any questions about anything at all always pick up the phone and give us a call. That is your best and most efficient way to get hold of us. Anyway, with that I will leave it, and we will pick up again soon. Thank you.
