Good morning,
I often tell you about turbulence and we have had some for a week. Silicon Valley Bank and Signature Bank have fallen and been somewhat rescued between last Thursday and Sunday. This morning Credit Suisse is being clobbered by 20% on the Swiss stock market based on a difficult background specific to this bank.
In short, things are not going well and even our beloved Canadian banks are being shaken up. For your information, TD has fallen by more than 10% in one week.
Meanwhile, interest rates on fixed income are falling, which illustrates a flight to safety. Fear (and lots of it) is currently driving the markets.
I would also remark with amusement that the vast majority of people (investors and experts alike) did not see the banking system as a cause for concern in 2023 and that no one predicted interest rates dropping so sharply in March 2023.
This demonstrates (once again) some inescapable truths:
- Short-term predictions are worthless (besides the psychological aspect of discussion).
- It is ALWAYS important to be well diversified. Even when you love one or two particular companies that, of course, would never fail! Please see the Nifty Fifty and Nortel. So diversify by sector, asset class, maturity and issuer.
- Remember the old expression: When all the experts (and all their forecasts) agree, something else is going to happen.
- There is no substitute for quality and prudence. We do our own homework by taking the time to read and analyze our own investments. You'd be amazed at how many advisors foolishly rely on someone else's analysis or list.
For the moment it's a bit of a shake up, but we're still smiling. Our portfolios are made for this kind of market. In fact, we're more willing to buy than sell.
This is just a reminder that we're going through some financial turbulence right now. That's all there is to it. This week, you will go to the grocery store (Metro), you will not damage your car too much on our beautiful roads (Uniselect), you will pay your cell phone bill (Telus) from your bank account (TD Bank), you will call a friend (Apple), you will take your doctor's prescribed medication (Novo Nordisk) and on Saturday night you will celebrate an important birthday (LVMH) by inviting friends over to your home (Fortis). Unfortunately, your credit card will be out a lot (Visa)!
In other words, life goes on for you and the companies in your portfolio.
Best regards,
Charles F. Lasnier, MBA - CIM