Blog
Why we are buying an oil company
Why we are buying an oil company Not that long ago, I wrote a blog explaining why we don’t own oil companies. We recently purchased shares of Canadian Natural Resources, one of the largest Canadian oil sands producers, for many [...]
Shaken, but not Stirred – Presented by Barry Schwartz and Ernest Wong
Given the current environment, interest rate hikes, inflation, further disruption to supply chains and the Russian invasion which resulted in a very bumpy start to 2022, Barry & Ernest share their views on the market as well as specific examples of companies we are holding and how we analyze them.
Unprecedented events occur with some regularity
If there’s anything to be learned from the last few years, it’s that unprecedented events occur much more often than one would expect. This isn’t exactly a new concept – the idea is borrowed from famous investor Seth Klarman – but the events that have taken place recently have really driven this concept home.
An Ernest Opinion
Have growth stocks bottomed?
A notable feature of the current stock market decline is how disproportionately growth stocks have been impacted. The S&P 500 is down only about 12% year-to-date, while the technology-focused NASDAQ is down about 18%. Apart from Energy (+41%), the top performing sectors are low-growth, dividend-heavy Consumer Staples, and Utilities stocks. This result is not too surprising as high-growth stocks are more impacted by rising interest rates than low-growth stocks.
What to do about inflation
By now, there is unanimous consensus that inflation is happening and that it is not as transitory as once thought. I normally don't spend time thinking about macroeconomic issues such as future inflation since it is difficult to not only forecast such factors accurately, but even more importantly, have a correct non-consensus macro view that adds value. This is why our investment strategy focuses on company-specific factors such as business quality and capital allocation and why we often say, “We own individual companies, not the market”.
Why we don’t invest in oil stocks
Given the current oil price environment particularly with the geopolitical issues in Russia and Ukraine, it is natural to ask questions about whether an investor should buy energy producers.
Media Appearances
Barry Schwartz on BNN Bloomberg: If a recession happens, it’ll be the weirdest one
Barry joins BNN Bloomberg to discuss Walmart's second warning and for his thoughts on a possibility of a recession. Schwartz says if this is a recession, it is a weird one as we have seen strong employment, consumer spending, retail sales, durable good order, housing demand and truck tonnage to name a few strong data points.
Barry Schwartz on BNN Bloomberg: Reconsider selling your “riskiest” positions
Barry joins BNN Bloomberg to discuss how to prepare for the upcoming rebound. He recommends investors to think twice before selling a company that is profitable and has a strong outlook over a full business cycle.
Barry Schwartz on BNN – Top Picks & Past Picks
Barry discusses his top & past picks.
Outlook
Monthly Newsletter – July 2022
We wrote last month that much of the hoped-for recovery would depend on earnings reports for the 2nd quarter, and the forecasts that companies would make about the outlook for the second half of the year. We are happy to say: so far, so good. David analyzes the strong month of July in this quarter’s newsletter.
Monthly Newsletter – June 2022
From June 8th to June 16th, the S&P 500, the index of the most valuable traded companies in the United States, dropped 520 points, or 12.5%. About $4 trillion of market capitalization was vapourized in just over a week. That is, by any measure, a staggering amount of money. It is equal to about $12,000 for every person in the United States, or about $560 for every human on earth. The proximate cause was the increase in interest rates in all the developed countries. Central bankers around the world acted in concert to combat inflation by quickly raising rates. In the last six months, the yield on 2 year US government bonds has risen almost exactly 2.5%, from 0.65% to 3.13%. Rates to borrow money have risen equally quickly. The interest rate for a standard mortgage in the US has risen from 3.1% to 5.3% in the same period.
Monthly Newsletter – May 2022
During May, the outlook for interest rates and inflation continued to rise, consumer demand weakened, supply chain constraints appeared to be getting worse, and the Ukraine/Russia conflict showed no sign of ending. Despite headlines that are certainly not improving, the S&P 500 ended the month exactly flat, and the technology-heavy NASDAQ was down just 3%. This result was encouraging because it suggests that investors are no longer reacting as harshly to bad news. As Barry noted during our Shaken but not Stirred presentation in April (which can be viewed here), stocks start going up far in advance of any actual improvements in the situation.
Wealth Management
Getting Wealthy and Staying Wealthy
Everyone worries about money. Daniel Kahneman, a behavioural economist and winner of the Nobel in economic science once said “Money does not buy you happiness, but lack of money certainly buys you misery”. Money worries are the greatest source of stress, more than work, personal health and relationships.
Don’t Hesitate; Just Designate
Designating a beneficiary on your registered accounts is one of the most important decisions in estate planning. By designating a beneficiary, you inform the financial institution of your plans for your estate after your death. While it is a simple act requiring little in the way of paperwork, it can do a great deal of heavy lifting in establishing your wishes for your estate and ensuring your assets are distributed according to your wishes when you die.
Knowledge is power
As the great Francis Bacon proposed, “knowledge is power”. If so, then so too must be saving and sponsoring another person in their pursuit of that knowledge. The Registered Education Savings Plan is a highly effective vehicle for Canadians to save for the education of a loved one, chiefly children and grandchildren.