The market conditions that we have witnessed in the last month are unprecedented, simply because the current circumstances in the world are unprecedented in the modern era. Since the last global pandemic, over 100 years ago, we have added instantaneous world-wide communication, social media, electronic trading and much more. It is therefore even more risky than usual to try and forecast the future by looking at the past. None the less, we think there are things we can learn. (Please read the cautionary language at the end of this essay).

It is said that history does not repeat itself, but it does rhyme. I recently came across Baskin Wealth Management’s portfolio records showing the stocks it held for clients during the Great Financial Crisis from 2008 to 2009. Naturally, as is the case now, no one client held all the stocks, and the performance of individual clients was highly idiosyncratic, depending on the risk tolerance, goals and time horizons of each client. However, there are things we can learn by looking at how our portfolio had performed, and more importantly, how our firm has evolved over time. As a disclaimer, I started my first year at the University of Toronto in 2009 and had no knowledge whatsoever on the thought process during that time (please contact David or Barry for more information on that!)

These were our top 20 equity positions as of August 31, 2008, right before Lehman Brothers went bankrupt in September:

This part of our portfolio consisted of 18 blue-chip (at the time), dividend-paying Canadian stocks, with two international names, Syngenta & Fresenius. A $200,000 portfolio equally weighted in all positions provided a cash- on- cash yield of about 2% by way of annual dividend income.

How did this group of our most heavily-weighted stocks perform during the crisis? By March 2009, the $200,000 portfolio would have been worth just $124,000 which was nearly identical to the performance of the S&P/TSX Index.

By the end of 2009, the hypothetical portfolio had rebounded sharply, and would have been down just 10% from the portfolio’s all-time highest value in August of 2008. This bundle of stocks would have outperformed the S&P/TSX quite handily. In a period of 16 months, nine of these stocks had fully recovered all of their losses, one had been sold (Petro-Canada), and one had separated into two companies (Encana).


Importantly, of the nineteen dividend payers in the group, only one company (Manulife) cut its dividend, and 6 actually raised their dividends during this time (SNC-Lavalin, TransCanada, BCE, Saputo, Syngenta). Anyone who owned this group of 20 stocks actually had a higher cash income from dividends at the end of 2019 than they had at the start of the financial crisis.

We have often warned that it is impossible to time the market. Buying and selling on news reports and the “tone” of the market would have led an investor to sell when the situation looked the bleakest in March. The investor would not only have missed the subsequent rally, but also the dividends paid from the cash flows that the healthy companies continued to earn despite the financial crisis.

Another lesson is that it is important to focus on the long term prospects for high quality companies. Brookfield Asset Management was the 4th worst performer through Dec 2009, and simply looking at the performance would have led you to wonder if Brookfield’s stock was ever going to come back. Since then, Brookfield’s stock has more than tripled before dividends.

What does this mean for our current portfolio?

Clients who look at their portfolios today can clearly see that after the 2008-2009 financial crisis our equity selections at Baskin Wealth Management have changed quite significantly. Today, our clients own a much heavier weighting in US stocks while having virtually no weighting in commodities and energy names. In hindsight, this was a profitable shift for clients particularly given the poor performance of the Canadian energy sector (and correspondingly, the Canadian Dollar) over the last few years.

Most of the companies we own today like Apple, Microsoft, and Visa are defensive leaders with strong margins and stable cash flows, and thus, we believe client portfolios are even better positioned for an extended downturn than our portfolio was in 2008, with potentially better upside in the rebound. So far, none of the companies in our client portfolios has announced a dividend cut, and accordingly, amidst the incredible volatility and wildly bouncing stock prices we have experienced in the last month, cash income remains the same.



1. Just because something happened in the past, it does not imply it will happen in the future. Clearly market conditions in 2020 are not the same as they were in 2008/09 and the great financial crisis and the global pandemic are in many ways very dissimilar events.
2. As noted, results for each of our clients in 2008/09 depended on their goals, their risk tolerance and the time horizon. These factors determined which, if any, of the 20 stocks highlighted in this essay they owned over that period.
3. This essay is not intended to imply that any client or clients had performance exactly as shown in the numerical example above, and it is certainly not our intention to imply that the portfolios currently held by clients will perform in a way similar to the hypothetical portfolio of 2008/09.