September 2017 Update

We continue to maintain a defensive position across our portfolios. We are holding a larger than usual amount of cash, government bonds, and commodities, with a reduced exposure to equities. At this time, we seek to protect our wealth rather than engage in excess risk taking.

Short term interest rates in Canada and the US have been moving higher over the past months, increasing interest costs and tightening the availability of credit. With leverage at an all time high in Canada, this poses a risk for many of our country’s borrowers. History tells us expanding credit is an important ingredient for economic growth, while contracting credit tends to be an important precursor to economic recession. Sometimes credit begins to contract a year before recession, while other times only months.

With that in mind, the latest Canadian GDP report showed an abrupt halt in economic growth in July, driven primarily by real estate, construction, and banking. We therefore maintain a sense of caution.

Portfolio construction and company-specific notes are available for clients only.

Interesting links:

The economics (and tax advantages) of owning a sports team https://www.bloomberg.com/view/articles/2017-09-08/buy-a-sports-team-get-a-tax-break

How our perspective influences our success https://www.farnamstreetblog.com/2017/09/open-closed-minded/

Dividends aren’t what you thought http://www.etf.com/sections/index-investor-corner/swedroe-vanguard-debunks-dividend-myth

Please let me know if you’d like to chat about financial planning, long term investing, or private investment opportunities.

Cordially,

Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
www.growthandincome.ca
www.altusinvest.ca
 

(416) 369-3024

55 Yonge Street, Suite 1100
Toronto, Ontario
M5E 1J4