Outlook

In this month’s newsletter, David addresses a question many of you have asked: How might the upcoming U.S. elections impact financial markets? While the election season stirs plenty of headlines, historical data shows the stock market tends to be more stable than we might expect, even in election years. Interestingly, if an incumbent party loses, the market sees a positive boost in the short term. As long-term investors, we focus on company performance and remain confident that quality companies will thrive, no matter the political outcome.

We’ve seen it all in the finance world – from the 1987 Black Monday crash to Nvidia’s meteoric rise in 2024. Here’s a golden nugget: fear trumps reason and trying to time the market is a sure way to give your money to the taxman. Remember, envy and greed can lead you astray, and sometimes doing nothing is your best move. Diversify like your wealth depends on it – because it does!

Now that hockey and the Blue Jays are done for the year, Canadians can return to a discussion of their favourite topic - real estate. The cost of shelter, be it buying a house or a condo, or renting a property, is very high. For the younger generation, they are wondering whether they can afford to buy while for those in the later stage of life, the question is whether to stay in their family home, buy a smaller house or condo, or perhaps rent. In this months newsletter, David focuses on the latter scenario, outlining some of the pros and cons of the different options.

In this months newsletter, David discusses how the pandemic has reshaped the commercial real estate landscape. From abandoned office buildings to repurposed spaces, city cores have been transformed and how and when this will be resolved is unknown. This completely unexpected turn of events, along with a number of other pandemic related investment trends that came and went, reinforced how complex markets can be from which he concludes that investing is about looking for quality, not headlines.

"One Up on Wall Street" by Peter Lynch advocates for the investment strategy of buying what you know, emphasizing personal observations over traditional financial analysis. David’s newsletter discusses how Canadians tend to invest heavily in domestic companies due to familiarity, despite the risks of home market bias. He highlights the under-performance of the Canadian equity market compared to global markets, attributing it to factors like scale, sector concentration, and lack of international investor interest. Despite these challenges, there are reasons for Canadians to hold domestic stocks such as tax benefits and currency risk mitigation. At Baskin Wealth Management, we will always be investors in Canadian stocks but we have been increasing investments in non-Canadian stocks.

In this month's newsletter, David runs some experiments using Microsoft's AI tool - Copilot - to better understand what it is and isn't capable of. He starts with a basic question, to which it provides a pretty good answer. He then asks if Copilot is good at picking stocks. For David, the answer demonstrated that while Copilot has plenty of knowledge, it lacks wisdom, an essential ingredient in making decisions in the markets where there are large numbers of somewhat irrational humans involved.

Spring has arrived, ushering in the annual ritual of filing income tax returns. This is a process marked by the increasing complexity of the Canada Income Tax Act to which the Government has responded by hiring at a rate exceeding that of the general population by almost 4-fold over the past 10 years. Unfortunately, this is not isolated to CRA and is symptomatic of declining productivity across the country. In this month's newsletter, David discusses how this impacts growth prospects for Canada and how we are addressing it in client portfolios.

In this month’s newsletter David writes about how the Canadian government's got a reminder for us – hey, you're getting old! They let him know this by telling him to start taking money out of his RRSP, which is now a RRIF, and begin paying the taxes that go along with it. They say death and taxes are inevitable, which is at least half true, but good planning can sure take the edge off taxes. Just don't wait too long.

In our year-end newsletter, David reflects on the unpredictability of financial markets, highlighting the surprising success of the stock and bond markets in 2023 despite widespread predictions of a recession. He emphasizes the importance of acknowledging uncertainties and suggests that understanding what is known and unknown is crucial for successful long-term investing. David expresses confidence in active management over passive strategies and discusses the uncertainties surrounding stock market movements and interest rates. He underscores the focus on high-quality stocks, the recognition of value over time, and the significance of behavioral biases in investment decisions.

Alphabet Soup As 2023 draws to a close, we have added another new acronym to the ever-growing alphabet soup of government financial and tax planning programs. Here’s a quick update on what’s new (and old): FHSA.  The First Home [...]

Why We Hate The Stock Market, And Why It Is So Necessary Every now and then we encounter a potential client who wants to open an investment account but doesn’t want to put money into the stock market. “It’s just [...]

Ignore the Merchants of Fear, and Count Our Many Blessings Back in the days when everyone got their news from newspapers and television, the wisdom in the media industry was “if it bleeds, it leads”. In other words, bad news [...]