Tag Archives: Inflation


Our net weighted average return in 2020 was +18.23%. Since 2015, we have generated a net weighted average return of +54.39%.

2020 was a challenging year. We were forced to navigate an all-out panic in financial markets while weighing the staggering human costs of the Covid-19 pandemic. Shortly after what turned out to be the market lows of the year in March we wrote the following:

“The most significant reasons as to why markets have rebounded are 1) the massive rescue package passed by the US Congress, and 2) the massive balance sheet expansion by the Federal Reserve. The amount of money with which the richest country in the world is ready to attack this crisis is without comparison in the history of the world. And what you learn in capital markets is that you don’t fight against the guys that make the bullets.”

read more


Our weighted average return in November was -0.36%, bringing our year-to-date return to +15.26%.

Many of our favoured sectors performed poorly in November – emerging market bonds sold off, biotech was weak and base metals miners underperformed. Thankfully, our asset allocations and security selection allowed us to preserve capital in our portfolios.

Earlier in the month, I attended an investment conference in Berlin and was taken aback by the amount of construction going on in the city. My perceptions of the German economic zeitgeist were confirmed later on in the month when I heard of an actual case of a commercial lease in Berlin being renewed at a 40% increase from its previous level. Unsurprisingly, Germany reported impressive GDP growth of 2.8% versus an estimate of 2.3%. Clearly low rates in Europe are having the desired effect in its largest economy. Moreover, the Eurozone manufacturing Purchasing Managers’ Index (PMI) hit a new record high of 60.1, which is consistent with a growth rate of more than 3%. Not so long ago Europe was petrified of deflation and interest rates were below 0%. Now the stage has been set for what could be considerable inflation. It remains to be seen how the ECB will navigate this new environment, but we will be avoiding investment grade, long duration European bonds for the foreseeable future.

We were not particularly active in our portfolios last month but took advantage of weakness in European financials to buy back positions that we sold at higher levels. Unlike other asset managers that try to play around certain benchmarks, we only buy and hold what we like and what we believe will generate superior returns for our clients. This provides us with two major advantages over other asset managers: 1) we can take profits when we see fit and not be bothered if ‘underweight’ positions perform well; 2) it encourages us to seek out opportunities before they appear on other managers’ radars (this is where real alpha is generated).

Last month provided a very good example of us seeking out opportunities before they appear on other managers’ screens: we purchased Canadian medical marijuana stocks in our aggressive portfolios. Canada will be legalizing recreational marijuana on July 1st of next year, and the battle to meet consumer demand is raging. This sector has been on our radar for some time now, but we deemed a significant number of successful secondary financings in the space to be a tipping point for institutional investor acceptance. We made gains of over 40% in one month, took profits and continue to evaluate which companies will emerge as the true leaders in this space, as well as which of their competitors they might be buying up along the way.

Please feel free to contact us asset@blueorangebank.com if you would like to hear more about our investment strategies.

On the behalf our portfolio management team, I thank you for your continued trust and support!
FULL DISCLOSURE: Please note that the opinions expressed in this blog should in no way be considered as investment advice or a solicitation to buy or sell securities.
read more