Skip Navigation

Contact Us

Catherine Laurin
Tim Anderson

Tel: 514-282-5807
Fax: 514-282-5837
Toll Free: 1-800-363-6732


1501 avenue McGill College
Bureau 3200
Montréal, QC
H3A 3M8


August 2019


Enclosed in this Portfolio Managers’ notes, we present BMO Nesbitt Burns’ latest portfolio strategy report to give you an update on equity markets and our strategist’s perspective. In addition, we have included an article discussing the recent volatility in equity markets.

We also attached, in pdf format, an article on Microsoft, one of our core holdings in the Technology sector which continues to perform very well.

In the Wealth Management section, we remind you of the amounts eligible for the various registered plans. We encourage you to make these contributions, if not already done. We have also included an article on the taxation of employee stock options.

Please take note that Joanne Shinder, of our administrative team, will be leaving at the end of August on maternity leave. We wish her another healthy little girl and to enjoy this time off with her new baby.

Yanne Nankoo, who returned from her maternity leave last April, will be assuming Joanne’s main responsibilities. Tracey Regan and Branden Hang are also there to support and to ensure a seamless transition while maintaining the quality of the service to our clients.

We hope that you have been enjoying your summer. We take this opportunity to remind you that we are here to help if you have any questions or would like to review your investment portfolio or your financial plan.

Stock Research of Interest
Portfolio Strategy
Analyst: Stéphane Rochon, CFA, Equity Strategist
Equity Strategy:
Dog Days of Summer – A Good Time To Reflect on Asset, Geographic and Sector Positioning

Low Inflation, Low Rates and Improving Economic Growth Are an Ideal Combination for Stocks

Our work has shown this statement to be true. Looking at the current economic environment, clearly, accelerating growth would be better (encouragingly, our recession Probability Model still shows a low probability) but two out of three ain’t bad. Last month, we increased our fair value estimates for the S&P 500 and TSX to 3,300 and 18,500 respectively -implying low double digit return potential in the U.S. and Canada- based on the impact of lower for longer interest rates. Recent events and data have done nothing to lower our confidence in that call.

Read more 

The Volatility Strikes Back

Market volatility has picked up significantly over the last week based on two related factors: (1) the continuing slowdown in global economic growth; and (2) relentlessly lower interest rates. In particular, the brief inversion of the U.S. 10-year / 2-year yield curve (when long-term rates are lower than short-term rates) was clearly the catalyst for the broad equity selloff experienced on Wednesday, August 14.
Still, to be fair, overall market returns are more than adequate year to date in North America, with the S&P 500 up 13%, and the consistently lagging S&P/TSX up a respectable 12%. However, the important point is not to look in the rear view mirror, but to try to determine where we go from here.

Read more 

BMO Capital Markets
Analyst: Keith Bachman, CFA
Microsoft: Remarkable Free Cash Flow (FCF)

Bottom line: As we had previewed, MSFT had upside across the board, including
revenues and margins. However, what may be overshadowed was very strong FCF performance. Normalizing for tax payments, MSFT grew FY19 FCF by 23% to ~$39.7 billion, and FCF margins were 31.5% vs. 29.2% in FY18. Given ongoing double-digit revenue growth, with the potential to grow margins y/y in FY20, we continue to like the stock. We are raising our target price to $160 from $153, and we retain our Outperform rating.
Key Catalysts: We believe double-digit operating income growth, in part due to balanced performance between Azure and server products, will drive MSFT shares higher. We think Azure will continue to deliver very strong growth rates with improving margins. 

Read more (please contact us)



Wealth Management

The RRSP contribution limit for 2019 is $26,500. You can find your eligible amount on your federal notice of assessment which you should have received by now.

TFSA contribution amount for 2019 is $6,000 or cumulative of $63,500 for 2019 if you have never contributed to a TFSA account.

The RESP offers an attractive opportunity to parents to save for their children’s education. If you contribute $2,500, you will be receiving a 30% combined governments’ grants.

Financial  & Estate Planning

Tax Planning Strategies-Tax Planning of Employee
Stock Options

A common incentive program provided by Canadian employers is a stock option plan. These programs grant employees (including directors) the right to acquire a set number of shares of the employer (or parent) company at a fixed price (“exercise price”) within a set timeframe.

The intention of these programs is to align employee/employer interests by providing a long-term incentive in which employees benefit from the success of their employer, and likewise, employers benefit from long-term, loyal employees. This publication provides an overview of the Canadian tax implications of stock options issued to employees who are residents of Canada for tax purposes.

Read more      

A Guide to the Principal Residence Exemption

One of the most important tax breaks offered to Canadians is the “Principal Residence Exemption” which can reduce or eliminate any capital gain otherwise occurring for income tax purposes, on the disposition (or deemed disposition – e.g., death) of your home.

In general, a resident of Canada who owns only one housing unit, which is situated on land of one-half hectare or less, and which has been used since its acquisition strictly as his or her residence, will qualify for the principal residence exemption.
Although simple in concept, in situations other than the one described above the tax rules governing the exemption can quickly become complicated, particularly when more than one residence is owned by a family unit.

This publication provides an overview of the exemption and outlines many of the common issues encountered in its application

Read more     

Tim, Catherine, and Edward