Private Investment Management update

Jul 21, 2020 | Paul Belous


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Good morning

The top five stocks in the Nasdaq and the S&P 500 continue to gather in all the money and distort markets especially on the performance side. Yesterday for instance the market was up for the day yet 8 of the 10 sectors on the S&P 500 were in negative territory. Tesla’s market capitalization yesterday moved the equivalent of all of Ford. Amazon’s move was the equivalent to the size of Boeing. In Canada we have Shopify that continues to dominate all the moves and it remains our largest market capitalization stock, larger than the Royal Bank , yet it makes no profits and not anticipated to for years down the road. We are now in the time of ridiculousness and it is frustrating as clients start to wonder why we are not participating in this but that is where we take our short term lumps and look down the road. Sure it would be nice to have been on this ride but where would we get off, no one knows until it is over and then hindsight kicks in to tell us where. This is not investing - this is pure and simple gambling and that is not what we have been hired to do. These companies will eventually have to deliver results to sustain their lofty levels and this is where the rubber will meet the road. I do not know where and when this will happen but I do not want to be there when it eventually does.

I have been looking at the good companies that are cheap on valuation and boring and have been thrown aside and we will continue to add to these areas. I am continuing to keep a good amount on the sidelines to protect our portfolios on both sides of the border and will look to add money when the time looks good to do so as we still have more uncertainty to come. We now have 5 year GIC rates at 1.5% and I do not see this rising any time soon so the only game in town remains the stock market and this will end badly in the over stretched areas. I am willing to look wrong in the short term to protect the portfolios and have them grow appropriately.

Have a great day.