May was a relatively quiet month in the markets. Our Growth Portfolio earned a solid gain, benefiting from a number of consensus-beating earnings reports issued by our companies. The Income Portfolio earned a solid gain as well, with investors continuing to buy more high quality bonds. Small Cap Value also saw a sizeable increase in return. That contrasted with American Growth which saw a decline due to a couple companies not meeting earnings report expectations.
Our outlook continues to follow themes we established earlier in the year: we believe economic growth in North America will be lower than generally anticipated (but not negative) through 2017. We believe defensive value companies and bonds are the best places to realize a return and protect capital in such an environment. We believe that although the large cap market indices are fully valued, there are sizeable pockets of cheapness outside of the most popular stocks. Investors must be extra-choosy to avoid the over-valued companies. Thus, we believe the anticipated returns of index and passive investment strategies do not provide adequate compensation for risks assumed in a fully valued market.
Company-specific notes and target estimates are available for clients only.
In a field where most people look for corroborating evidence, it’s far more effective to disprove you’re thinking than prove it https://www.farnamstreetblog.com/2017/05/confirmation-bias/
Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth
55 Yonge Street, Suite 1100