December 2018 Update

To buy when others are despondently selling and to sell when others are avidly buying requires the greatest of fortitude and pays the greatest ultimate rewards. – John Templeton

The stock market is a device for transferring money from the impatient to the patient. – Warren Buffett

Across each portfolio we took advantage of November’s volatility to replace some positions and add others at low prices. When it comes to investing, volatility is synonymous with opportunity, and we take advantage of every opportunity we can to improve the long term growth and value characteristics of our portfolios.
The balance of evidence still suggests popular stock indices are overvalued relative to cashflow and asset value fundamentals. While this overvaluation can continue for some time, and perhaps the market may even go higher, it is unlikely that investing in popular indices or the most popular stocks will produce lasting gains from current prices. Instead of following the herd, we’ve invested in unpopular, under-estimated, and outright cheap stocks that are much more likely to earn long term positive returns. We remain patient through inevitable periods of volatility so that we can reap the long term rewards. Following a value strategy has proven the best method of generating long term performance.
I’m happy to announce that a months-long research project has yielded positive results that will improve performance going forward. Harnessing the power of machine learning, I created a program that identifies common characteristics of losing trades. The program studied reams of data on every single losing trade in the portfolios since inception, in an effort to discover unanticipated, even hidden, areas for improvement. The program was successful in identifying several “hidden patterns” of losing trades before they turn into losers. What surprised me was that some of these patterns essentially camouflage themselves into promising looking opportunities – the types of things even the most seasoned of investors salivate over. I’ve added this new protection feature to our investment analysis process, screened all current investments against this new criterion, and very much look forward to the long term benefits.

Interesting links:
A wonderful list of the world’s most powerful ideas

Ben W. Kizemchuk
Portfolio Manager & Investment Advisor
Wellington-Altus Private Wealth