Blog
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.
Chasing the Past
If your house is like my house, you have a box of ear swabs that you use regularly for their intended purpose, cleaning your ears. But if you read the fine print on the box, you will find a warning. You are told that you must not put this product in your ear, that it is dangerous to do so, and whatever made you think to call cotton swabs “ear swabs” anyway?
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
There will always be an unprecedented event
Barry Schwartz joins BNN Bloomberg to discuss rising home prices, and how to handle unprecedented times. According to Barry, the first thing is to accept that there will always be an unprecedented time and that it's not a new concept.
Buckets of companies to own during high inflationary periods
Inflation remains a worry for investors as they continue to navigate adjusting their portfolio's adequately. Barry Schwartz joins BNN Bloomberg to discuss which companies he's watching that may be worth holding during high inflation. One of them being Costco.
David Baskin on BNN – Stock Comments
David discusses a number of stocks.
Outlook
Monthly Newsletter – April 2022
Usually, when the stock market is having a bad period, as it certainly is now, investors can take some comfort in the fixed income part of their portfolio. They know that returns on fixed income are lower over time, but at least the capital is protected and yields are predictable. Usually. The last six months have seen the biggest drop in the bond market in history. In Europe, where government-issued debt has traded with yields at or below zero for the last three years, losses have been in the trillions of dollars (or Euros). In North America, losses have been on a smaller scale, but are still very substantial.
Monthly Newsletter – March 2022
LIONS AND TIGERS AND LOTS OF BEARS We all follow our own paths towards our financial goals. Sometimes we appear to be on the yellow brick road where the sun is shining, the sky is blue and there are no [...]
Monthly Newsletter – February 2022
What Matters There are lots of things we, as professional investors, cannot control. We cannot make Russia behave, although we wish we could. We cannot make the economy stronger, although it seems to be doing that by itself. We cannot [...]
Wealth Management
Knowledge is power
s 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.
TFSAs – The magic of tax free compounding
How large can a TFSA get? It depends, of course, on the rate of return and the number of years that compounding has to work its magic.
Donating Securities to Charity – The Angel is in the Details
This is a follow-up to my earlier post on donating securities to charities. In short, making a charitable donation using securities – such as shares of public companies – that have appreciated in value is a highly tax-efficient strategy. This article will go into greater detail about the tax implications of the strategy.