SO FAR, QUITE GOOD

The first quarter of 2022, just finished, saw the markets post their worst performance since the pandemic began.

But not our clients’ portfolios. That is because our clients don’t own the market, but instead very carefully curated portfolios, customized to their unique goals as detailed in the financial plans we have created for them.

And so, our clients’ portfolios are significantly outperforming the market.  We have carefully positioned ourselves and are therefore able to make volatility our friend: we are able to find pockets of value in the market and put money to work in areas we think will deliver above average rates of return.  And above all, we focus on preserving your capital.

Our new Associate Wealth Advisor, Dan Dharmarajah, who we introduced in the February edition of Marche Monthly, has been working closely with me on the research required to find these opportunities.  As well, Joy and I have been communicating extensively with our clients’ accountants. And that’s when an interesting phenomenon occurs – something I have seen year after year.

IT HAPPENS EVERY YEAR

Every year, at tax time, many people reflect on whether they are happy with how their portfolios are doing and therefore, how their retirement plans are coming along.  They collect their various forms and statements (to send to their accountants), which gives them a natural prompt to wonder if they should be farther ahead.  A significant number of people answer their own question with a “yes.” 

At the same time, accountants are reviewing the portfolios we have been managing for their/our clients, and can see that for a number of years, we have been outperforming the market, while also reducing fees and improving tax efficiency.

The end result is that every year at this time, we get new referrals:  from our clients, because they realize they are doing well, and from their accountants, who can see that success over the years.

Is there someone you know who’s questioning their investments at this time of year, and wondering if they are on track?  We will be happy to look at their situation with absolutely no obligation.  We can usually help them do better.  If we think we can’t, we will direct them to where we think they can.

BUFFETT IS BACK

You will probably know that here at Marche Wealth Management, we are disciples of the “Oracle of Omaha,” Warren Buffett.  With a net worth of $127-billion, he is the world’s fifth-richest person. He is unusual among the world’s wealthiest, because he made his money not in founding and running a business, like Bill Gates did with Microsoft or Elon Musk did with Tesla, but by buying and holding investments in other companies.  He is, in other words, the world’s most famous value investor.  And he has been complaining for a while now that companies are overvalued, which is why he has not been making major investments.

But then, earlier this month, I saw a very promising headline:  Buffett Is Buying Big Again. Clearly he now sees long term value in the market, and that is good news for us, since I see in the article that a number of the approaches he is taking are similar to ours.

For example, we get exposure to energy stocks by owning companies like TC Energy and Enbridge, which provide the infrastructure required for the delivery of energy. Investing in companies that make their money from energy infrastructure – as opposed to the energy itself, the price of which is highly unpredictable – helps us avoid the risk inherent in commodity prices. I see that Buffett is taking essentially the same approach.

LONG-TERM PROMISE

Along with sharing Buffett’s optimism for long term portfolios, we are seeing the silver lining in the US bond market being down more than 6% this year on track for its worst performance in decades.

Silver lining?  Yes.  Even though bond investors have seen bond prices drop in the short term, this is better for them longer term – because now we are able to buy new bonds that will pay higher interest for many years to come. That’s why we are currently buyers of bonds.  

CANADA’S FUTURE

Buffett is looking ahead, and here in Canada, we are as well.  And it’s not all rosy. I am referring to our national debt.  To pay it down, higher taxes are all but inevitable.  We work with multiple generations of our client families, and I worry that leaving behind mountains of debt for our children and grandchildren to pay will significantly limit their opportunities.  We have covered this important issue before, including here in August 2021.

We might think of this as just a Canadian problem, but I recently returned from Florida, a Republican state we might think has its fiscal house in better order – and they are facing exactly the same issues.

The plain fact is that our governments have to cut spending, but I am not optimistic that will happen in the near term.  Here’s what we said in September of last year: 

“Translation:  taxes will go up.  We have been saying this for quite some time now, and it definitely bears repeating:  it is more important than ever to make sure you have the proper planning and strategies in place, to maximize your wealth after tax. 

“To do this, we look for ways to leverage the use of life insurance, prescribed rate loans, trusts, income splitting and other strategies; in fact, these are things we are continually doing.”

If you ever want to talk about any of these things, please never hesitate to be in touch.

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We don’t speak jargon.  We’re all about uncomplicating your life, so we speak plain English.  If there is someone you care about – someone who would appreciate this simple and straightforward approach – please feel free to share this message with them or put us in touch.

Want to discuss any aspect of this month’s blog, or any other issue on your mind?  Have a story idea?  I am always happy to receive your call or email.