Cardinal Update – June 2020
REITS Beyond the Headlines – As investment managers, it is important to approach negative headlines with a healthy dose of respect, but to also not be afraid to look beyond the headlines.
What do we mean by this? Well, it is a two-fold process both to assess the arguments made through the negative headlines to gauge the risk, and then to evaluate whether there is an appropriate level of risk-reward available in any individual company within the sector that warrants investment consideration.
Click here to read more: Cardinal Update – June 2020
DM Monthly Report – May 2020
HAVE STOCKS FALLEN FAR ENOUGH? – By the end of April, the S&P 500 had reclaimed a significant portion of its initial COVID-crisis decline, leaving some to wonder how Wall Street’s seemingly sanguine mood could have become so disconnected from what we all see happening on Main Street. A good portion of the US bellwether’s recovery, though, can be explained by its composition, rather than its constituents. The S&P is a ‘cap-weighted’ index, meaning that larger companies have greater influence on its performance and, at the moment, Microsoft, Apple, Amazon, Alphabet, & Facebook account for a 20%+ benchmark weight. These companies also happen to be faring particularly well in the new economic environment and their stocks have reflected this, with each now in positive territory for 2020. Looking at the market in a different way, the chart above plots an equal weighted version of the S&P 500 against the standard non-US global index.
Click here to read more: DM-Monthly-Report-May-20
Cardinal Update – May 2020
Value Investing in a Covid-Driven Downturn – The S&P 500 and S&P TSX are now down just -11.6% and -14.5% respectively since the beginning of the year, an amazing recovery from March 23rd lows, down over -30%.
However, a big portion of the market’s gains have come from just a few companies, mostly technology. Consider that in the S&P 500, the median performance (meaning the point where half of stocks are below and half above) was -18.4%, almost 7% worse than the index performance. The median stock in Canada was similarly weak.
Click here to read more: Cardinal Update – May 2020
DM – Q1 Commentary 2020
It’s Different This Time – Sir John Templeton once called those the most dangerous words in investing. To be sure, we heard them when tech stocks seemed unstoppable in the late 1990’s, when house flipping was free money in the mid-2000s, and alongside virtually every other ill-fated bubble in investing history. They even applied in the opposite sense when fatigued investors convinced themselves that the financial system was irreparably broken in 2009 and fled stocks at the market’s nadir that spring.
As things presently stand, however, we’re fairly sure that even the late Mr. Templeton would have to admit that the otherwise treacherous phrase is for once wholly applicable. Try as we might, we can find no episode in modern times that compares to the scale and pervasiveness of the COVID-19 crisis has fallen upon all corners of the globe.
Click here to read more: DM-Portfolio-Commentary-Q1-20
