Category Archives: Uncategorized

OUR SEPTEMBER RESULTS

Our weighted average return in August was +4.74%. Since 2015, we have generated a net return of +46.16%.

In terms of investment strategy performance, our weighted average net returns for September were (a) +.03% for conservative strategies, (b) +1.70% for balanced strategies, and (c) +9.37% for aggressive strategies.

September marked the 10th anniversary of the collapse of Lehman Brothers. Despite considerable media mention of this painful theme, US equities continued to trade higher and gained 0.59% in September, posting an impressive gain of 7.7% for the third quarter of this year. In terms of economic data, US consumer confidence hit its highest level since 2000 (around the peak of the ‘dot.com’ bubble), while US small business confidence hit its highest level since the National Federation of Independent Businesses began its survey in 1974. Moreover, monthly average unemployment figures hit their lowest level since 1969 – the year the US Apollo Mission successfully landed on the Moon.

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OUR JULY RESULTS

Our weighted average return in July was +1.30%. Since 2015, we have generated a net return of +35.90%.

In terms of investment strategy performance, our weighted average net returns for July were (a) +1.07% for conservative strategies, (b) +1.77% for balanced strategies, and (c) +0.96% for aggressive strategies.

July was good month for most asset classes. Trade tensions remained heightened, but the outstanding strength of corporate earnings in the US and Europe pushed equity markets to new highs. S&P 500 earnings per share grew a phenomenal 25% year-over-year. While US corporate tax cuts certainly contributed to these gains, they were not the only differentiating factor. In their analysis of the Q2 earnings season, Goldman Sachs commented that: “the effective tax rate for the overall S&P 500 index equaled 25% in 2Q 2017, but fell to 20% in 2Q 2018. However, pre-tax earnings rose by an impressive 16%, ahead of the 13% expectation at the start of reporting season.” Truly, a superb result.

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OUR JUNE RESULTS

Our weighted average return in June was -0.32%. Since 2015, we have generated a net return of +34.16%.

In terms of investment strategy performance, our weighted average net returns for June were (a) -0.46% for conservative strategies, (b) +0.65% for balanced strategies, and (c) +0.16% for aggressive strategies.

Trump’s trade war antics took center stage in June, causing broad weakness in emerging market bonds (-1.49%) and equities (-4.54%), as well as base metals (copper -3.72%; nickel -2.18%; zinc -6.89%). The effect of trade wars is simple: tariffs increase costs to producers, which they then pass on to consumers. Higher prices for consumers lead to lower demand. Guess who wins? No one! Now carry this dynamic over to companies with multi-national supply chains and consider the disruptions tariffs might cause. Fun, right? And so, because markets dislike uncertainty, we saw considerable sell-offs in exporters and raw goods suppliers. No one can say for certain how long Trump’s trade war tactics will endure, but the longer they persist, the greater the chance they will damage economic sentiment.

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OUR MAY RESULTS

OUR MAY RESULTS

Our weighted average return in May was +0.66%. Since 2015, we have generated a net return of +34.59%.

In terms of investment strategy performance, our weighted average net returns for May were (a) -0.91% for conservative strategies, (b) +0.04% for balanced strategies, and (c) +2.39% for aggressive strategies.

The dominant theme in May was the continued resurgence of the US dollar, which gained 3.5% versus the euro. The media attributed this move to political strife in Italy and Spain, but the fact of the matter is that the US economy is doing extremely well. First quarter earnings for the S&P 500 rose by 24% versus the same period last year and the flash manufacturing purchasing managers index also rose in May.

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OUR APRIL RESULTS

OUR APRIL RESULTS

Our weighted average return in April was +0.50%. Since 2015, we have generated a net return of +33.71%.

In terms of investment strategy performance, our weighted average net returns for April were (a) -0.41% for conservative strategies, (b) +0.40% for balanced strategies, and (c) +1.31% for aggressive strategies.

April was yet another volatile month with corporate earnings and geopolitical drama sending markets back and forth. Corporate earnings came in stronger than expected and gave a strong indication that the US economy continues to perform well. In the commodity space, Trump’s decision to back out of the Iran nuclear deal helped push oil prices up 7%. As mentioned is last month’s commentary, there was also significant volatility in the metals sector as the US applied sanctions to a number of Russian industrial titans. By the end of the month, the S&P 500 was +0.4%, the US dollar gained +1.8% versus the Euro and the Barclays Global Aggregate Bond Index was -1.6%.

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How Most Investors Underperform The Market

In our January commentary we wrote:

Although we have been taking profits on some of our high-flying stocks, we do not intend to try to time the market by selling stocks that we like in the hope of buying them back more cheaply in the future. This is called being ‘cute’. ‘Cuteness’ is the domain of babies and puppies, not investment managers.

We continue to abide by what we wrote.

LINK: Our January Results

However, it seems as if cutting and running is a huge problem for retail investors. Panic induced selling leads to missing returns as markets recover and trade higher.

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The World’s Biggest Economies In 2050

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PWC Global has come out with a report that sets out its long-term growth projections for the world’s largest economies.

LINK: World in 2050 (PWC)

Here is a quick summary of their forecast:

“Key results of our analysis (as summarised also in the accompanying video) include:

The world economy could more than double in size by 2050, far outstripping population growth, due to continued technology-driven productivity improvements

Emerging markets (E7) could grow around twice as fast as advanced economies (G7) on average

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OUR JANUARY RESULTS – A GREAT START TO 2017

OUR JANUARY RESULTS – A GREAT START TO 2017

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Our weighted average return in January was +2.38% (net of fees).

Our core bond holdings continued to deliver stable returns and our equity performance was outstanding. Our decision to maximize our exposure to technology stocks in November and December of last year delivered immediate rewards. Here is how our top three individual equity holdings performed last month:

1) Amazon +11%
2) Facebook +15.80%
3) Shopify +19.41%

Our rotation into emerging markets and our investments in the biotechnology sector also contributed to our strong outperformance of the S&P 500 (SPY US), which had total return of 1.79%. We also outperformed emerging market bonds (EMB US: +1.73%) and investment grade bonds (BND US: +0.19%) by a considerable margin.

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Unexpected Consequences of Self-Driving Cars And The One Thing That Will Never Change

Full disclosure: I am not a ‘car guy’.

I can appreciate a fine automobile and enjoy watching “Top Gear”/”Grand Tour”, but I only got my driver’s license because I met a girl that I really liked who lived in the suburbs. Driving for me has always been a means to an end, not an end in itself. I have enjoyed open stretches of scenic highway, but driving in urban environments gives me no joy, and that is one of the main reasons that I cannot wait for self-driving cars.

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