DM Portfolio Commentary – Q3 2020
STOCK MARKET * ECONOMY – In what has already been one of the most jarring and upside-down years in modern investing history, it’s perhaps not surprising that both equity bulls and stock market bears have used variations of the same argument to justify their positions. Those who are positive on stocks, despite the recent plunge in economic activity, have regularly dismissed naysayers with the retort “the market and the economy are not the same thing”, while pessimists forecasting more trouble ahead warn that “stocks have become dangerously disconnected from the real economy”. Since both views are expressed frequently without much in the way of supporting evidence, we’ve devoted this commentary to examining their validity.
Click here to read more: DM-Portfolio-Commentary-Q3-20
Cardinal Update – August 2020
Strength That You Can Bank On – The current global crisis has created challenges for the broader economy, which in turn, has led to weakness in the share prices of Canadian banks. Coincidentally, Canadian bank shares recently traded down to lows last seen in the Global
Financial Crisis, which also represents the last period of great stress the Canadian banks have gone through. Despite reaching comparable valuation levels, we remain heartened by the position of strength the Canadian banks are in both on an absolute basis and in relative comparison to this period.
Click here to read more: Cardinal Update – August 2020
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
