To my clients:
It was an up week for North American stock markets with the Canadian TSX finishing up 0.2%; the U.S. Dow Jones Index finishing up 0.2%; and the U.S. S&P 500 finishing up 0.4%.
From time to time, I get asked how I make my investment decisions in client portfolios. Obviously, as a Portfolio Manager with RBC Dominion Securities, I’m heavily influenced by the research and strategy guidance produced by my firm and our sister companies RBC Capital Markets and RBC Global Asset Management. In addition, we have contracted relationships with 3rd party research providers Veritas (an independent research firm) in Canada, and JP Morgan and FundStrat in the United States. Further still, I read all manner of widely available business news and analytics sites and publications on a daily basis. The point being that “Nick Scholte” is not an island unto himself making investment decisions divorced from meaningful input from his firm and the contracted research providers made available to him.
That said, in my weekly updates, I do like to inject my own voice into my commentary. I feel it is important that clients know they are fully supported by an attentive professional who understands the economic and investment conditions at hand, and is not merely cutting and pasting ghost-written commentary proffered by his firm. When I do quote and/or cite internal sources for my viewpoints, I am always sure to clearly identify these sources. Very rarely, I might offer extended verbatim passages if I believe the commentary precisely aligns with my own point of view and might also serve to offer additional comfort to clients. Today is such a day. In the most recent “Global Insight Monthly - July 2021” published by RBC Wealth Management, the Strategy Committee puts forth the following investment stance on equities (i.e. stocks):
“Absent a vigorous return of the pandemic, the momentum generated by a series of stimulus injections from governments, combined with unprecedented support from monetary policies, should keep the global economy powering ahead at an above-average rate through next year, at least. U.S. recession risks are nowhere in sight, according to our six leading indicators, and other major economies are in favorable positions as well. In the early stages of an expansion, with recession risks nearly nonexistent, equity markets have scope to push higher. Consolidation periods and corrections can arrive at any time as the economic and earnings growth trajectories transition from peak levels to something less spectacular, and as monetary policies become somewhat less accommodative. But any wobbles should be temporary and superseded by another leg up for the economy, corporate profits, and the equity market. We would maintain a moderately Overweight position in equities in balanced portfolios.”
For those who read my weekly updates on a regular basis, the above commentary should resonate. Last week I cited RBC’s proprietary Recession Scorecard consisting of the firm’s preferred six leading indicators of recession. In addition, during the first half of 2021 I’ve stated repeatedly that recession is nowhere in sight; periods of volatility (i.e. corrections) might arise but clients should do their best to look through these episodes; and that with recession nowhere in sight, equities should be given the benefit of the doubt.
Bottom line: I and RBC are aligned in our outlook and closely monitoring and positioning client portfolios as conditions warrant.
That’s it for this week. All the best,
Nick Scholte, CIM, FCSI
Vice-President & Portfolio Manager
Scholte Wealth Management
RBC Dominion Securities Inc. │ Tel: 604.257.7569 │ Fax: 604.235.9950
3200-1055 West Georgia │ Vancouver, BC │ V6E 3P3
Toll Free: 1.844.665.9900 │Email: firstname.lastname@example.org
Visit Our Website: www.nickscholte.ca
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Any recommendations herein are for the exclusive use of clients of RBC Dominion Securities and Investment Advisor Nick Scholte. Any other direct or indirect recipient of this email should consult with his/her own licensed investment advisor prior to implementing any investment action he/she may be contemplating.