June 2018 Update

Our largest portfolio positions continue to benefit as expected. Our energy companies received good news in May with the Canadian government’s support of the Trans Mountain Pipeline, along with improving natural gas and crude prices. Our precious metals companies benefited from increasing government support in their mining jurisdictions, along with support from higher commodity prices. Our bonds saw significant appreciation as global economic conditions decelerate, as I’ve been expecting for some time. In all cases, a combination of low purchase prices and low consensus expectations setup a promising foundation for our investments. I anticipate more upside ahead for our holdings.

The consensus investor today holds the largest position in growth stocks, high yield bonds, credit, and real estate in history, while holding the relatively smallest position in government bonds, gold, energy, and cash in history. This reflects the tendency of the public to invest by looking in the rear view mirror, chasing short term performance and naïve trend following instead of judging a security based on it’s intrinsic value. Our positions stand to benefit as the tide shifts back towards reality. 

Interesting links

Stocks aren’t the only inefficient market: https://www.bloomberg.com/news/features/2018-05-03/the-gambler-who-cracked-the-horse-racing-code

There will be stories for decades: https://betterdwelling.com/boc-8-of-canadian-households-owe-more-than-20-of-the-2-1-trillion-in-debt/

Value stocks emerging as the new heroes: http://eastwestfunds.com/research/value-vs-growth-a-decade-long-pause-provides-great-entry/

What do google search trends tell us about the health of the economy?  https://twitter.com/jessefelder/status/999307524674392064/photo/1

The next big market mistake: https://latest.13d.com/liquidity-new-leverage-regulation-algorithmic-investing-qt-bond-equity-markets-7b7f97c57cc5


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

(416) 369-3024

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