Hymers Private Wealth - A week for the record books - Market Update from Hymers Wealth Management Group

As the author of the Global Insight Weekly noted, what difference a week makes. Fear of the coronavirus continued to grip the markets. Please click HERE for the Global Insight Weekly.

Although market corrections are unsettling and often feel scary, we are committed to our focus on quality businesses with attractive growth and income potential over the long term. Please find here a few thoughts on our portfolio positioning, investment philosophy, and how we will be approaching this market in the coming weeks and months.

1. We had already been actively moving towards defense in anticipation of an eventual market correction. Where we hold individual equities, we have made the following changes:

We added Fortis and Duke to the portfolios in November last year. These are electrical utility companies that have held up well and pay an attractive dividend of 3.5% and 4.1% respectively.
We switched out Brookfield Property Real Estate Investment Trust and added Granite Real Estate Investment Trust. Brookfield has a higher exposure to shopping centers, while Granite holds mostly industrial spaces. This switch has proven to be beneficial as Brookfield Property has sold off quite a bit more than Granite.
We removed CN Rail and added CP Rail, which again has held up much better than CN Rail.

2. We have a plan in place, and it is to stay disciplined to our process of rebalancing:

Although the equity markets have fallen, the fixed income markets have rallied. We are now in a position to take profits from our fixed income investments to add back into our high-quality businesses. We will be assessing these opportunities over the coming weeks to take advantage of lower prices where we feel it will add value over the long term.

3. We are in the business of owning quality businesses:

We are shareholders of every company in your portfolio. These companies generate vast profits, and we expect these companies to continue making profits for the next decade.
There will be temporary interruptions along the way, such as the corona virus outbreak, but these will eventually pass.
Despite the pessimism in the markets, consumers will continue paying for things like garbage pickup, electricity, and internet service.

4. Investing is a Marathon, Not a Sprint:

Our goal is to own quality companies that can generate growing profits over the long term.
Markets can move erratically based on fear and greed in the short term, but that does not change a company's long-term value.
There is no need to make a binary decision like "buy," "sell," or "go all-in" right away. We will lean into opportunities over time as they arise.

5. Stocks have been able to recover quite quickly from significant daily declines, and trying to time the exit and re-entry again has proven to be costly:

Trying to time the market by selling and re-buying at a later date often does not result in optimal returns. Some of the most substantial gains tend to occur right after a sell-off and missing out on these days can have detrimental effects on your long term returns. The chart below shows the returns on a portfolio by just missing out on 10 of the best trading days, 20 of the best trading days, and 50 of the best trading days over the past ten years compared to simply staying invested.
Additionally, by staying invested, we continue to collect an attractive level of dividend income.

I trust this provides a helpful summary. We will keep you updated as market updates are available. Please also feel free to contact myself, Darren, Kuan or Rossi should you have any questions.

Warm Regards,

Rhonda

"The stock market is a device for transferring money from the impatient to the patient."

~ Warren Buffett ~

A week for the record books - Market Update from Hymers Wealth Management Group

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