Markets have become more turbulent again, not that we should be surprised. In fact, opportunities are now becoming more apparent and for that, we are excited as it will help us grow your portfolio. However, we also recognize that the larger ups and downs can be very emotionally difficult to endure. Trust can be tested. With that in mind, today we want to share some great ideas and some suggested reading, all in an effort to help you navigate the stormy waters with a little more ease.
Let It Grow
When you plant a tree, you give it time to grow while the sun and rain nourish it. You don’t keep digging up the sapling to check its roots, and you don’t panic in the winter when the leaves fall because it’s just part of the natural cycle.
From time to time we read absolutely excellent reports from some of the managers we outsource a piece of our portfolios to. Here are two outstanding pieces from our friends at EdgePoint and we encourage you to read them over the coming holidays.
“Patience in a World of Instant Gratification” What do Charlie Munger, Sir John Templeton and Warren Buffett have in common? They’re some of the greatest money managers ever – and they also underperformed the S&P 500 Index 35% of the time on a short-term basis. Doesn’t sound like a good track record, but over the long term, they significantly outperformed the index on an average annualized basis. You have to expect periods of relative underperformance from any money manager – even the legends. Since investing is a long-term commitment, it requires a long-term perspective. This will help bring peace of mind when encountering the occasional bout of short-term underperformance. Investors who stay focused on their long-term goals will avoid making rash decisions in reaction to the inevitable short-term noise.
“Things Are Always Bad…Or So You May Believe…” For many investors, the perception of bad things is often much higher than reality. Biases that may have been helpful to our ancestors when they were only dealing with dribbles of information can become a detriment in today’s world overloaded with information, data, videos and social media.
Happy reading…and happy holidays to you all.
Annual holiday poem from our friends at Mawer
‘Twas the Week Before Christmas
‘Twas the week before Christmas So let’s set the scene: Just what the heck happened In 2018?
The year started merrily With equities strong But by late January Things began to go wrong.
The VIX spiked in Feb And equities went down Volatility’s the theme “Good grief!” — Charlie Brown
With interest rates rising And inflation expectations World markets did tumble To investor frustrations.
Q2 seemed different, Corporate earnings did sing Could the decade-long bull Still be in the ring?
The bear could awaken— With tariffs, FAANGs, or oil price But is it signal or noise, Or a roll of the dice?
And NAFTA dragged on From Q1 to Q3 The TSX fluctuated With uncertainty.
Behold a new star Weed entered the fray The TSX lit up But on the sidelines, we’ll stay.
Speaking of investments Creating a craze Bitcoin’s down 80% From the height of its days.
And closer to home Oil prices rallied But then moved back down As pipeline work dallied.
Planes, trains, or automobiles It would be sublime: Dear Santa please bring us One approved pipeline.
Heading down to the south Where the Fed was a-raisin’ Unemployment was low And the greenback a-blazin’.
With debt service costs high From those strong U.S.—“D’s” Many abandoned ship On EM currencies.
Down peso! Down lira! Down rand and real! Can they pay back their debts? Investors can’t tell.
Facebook, Apple, and Amazon, Netflix plus Google make FAANG They drove the S&P A most notorious gang.
Tech stocks are enticing The unicorns shine bright But we avoid fanfare Keeping the long-term in sight.
When Trump said to the dragon: Trade tariffs are nigh China did suffer While U.S. markets flew high.
But now the U.S. and China The trade talks seemed strong Then Meng was arrested Can’t they just get along?
Now Brexit’s delayed They just can’t agree Soft, hard, or no deal We’ll just have to see.
Not all UK businesses Will be affected the same So whatever’s decided Mawer’s still in the game.
Yield curve, oh yield curve How flat will you go? Inverted or rising, No one can know.
But one thing is certain, We’ll keep playing our plan Bottom-up, fundamental Since ‘74 we began.
Be Boring, Make Money™ Is always our theme Happy holidays to all From the entire Mawer team!