Happy New Year to all. I’d like to begin by weighing in with a few thoughts on the “year-that-was” and then take a look at the RBC Global 2022 Outlook Report.

I think everyone would agree that 2021 was another unprecedented year, not just because of the ongoing pandemic, but for the remarkable performance exhibited by the world markets (including Canada). This was in spite of the onslaught of ever-increasing inflammatory headlines.

In the first half of 2021, a number of clients shared with me that they were bracing for the worst and continued to climb that proverbial “wall of worry” throughout the year. In much of my correspondence and conversations last year, I reiterated there was a lot to be positive about in terms of economic news, portfolio performance and so on. I reminded clients that market-timing and old-adages about not investing in certain months (think October), were not to be trusted. The fact remained, we bought and held quality companies, not just for earnings on that given day, but for this year, next year, and so on. I also continued to impress upon all, the importance of sector allocation and re-balancing.

For those sitting on more cash than usual, I urged, especially in the last quarter, further investment in the solid businesses we already own, and this strategy paid off handsomely. For 2021, many of my clients experienced portfolio performance in the high-teens to well over 20%. That is certainly something to celebrate!

Now to look forward… The first paragraph of the attached report states in part, “… the initial “catch-up” phase of the global economic recovery after the shock of the pandemic is giving way to an expansion phase. In our view, the era of outsized, globally synchronized fiscal stimulus and unprecedented monetary stimulus is beginning to recede. From now until well into 2023, we see the trajectory of the world’s major economies being shaped by the normal progression of the business cycle.” I can only view this as good news.

The Global Advisory Committee goes on to say, “…a period of intense corporate competition and even greater corporate concentration will emerge, and that stock selection will be key to portfolio performance.” I wholeheartedly agree and will continue to embrace this behaviour throughout 2022. And, important to note, “The recession accompanying the COVID-19 pandemic was the shortest on record, lasting less than three months. By the end of Q3 2021, the U.S. economy had regained all of the ground lost in the spring 2020 plunge.”

Remaining topics in the report include:

• Equity investing for the next 10 years (pg 4)
• A different kind of debt mountain (pg 11)
• Green energy transformation (pg 16)
• China’s economic evolution (pg 21)
• The strong initial recovery phase that transpired following the depths of the pandemic has already given way to a more normal yet above-average growth phase. We think this will become more entrenched in 2022. (pg 28)

I, along with my Associate Amanda, feel very optimistic about the future and wish you a very happy and prosperous 2022.

Libby

 

 

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