Tel: 905-727-5040


BMO Nesbitt Burns
16775 Yonge St
Suite 221
Newmarket, ON
L3Y 8J4

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March 2020

Posted on: March 9, 2020

  • Please see below for more detail on our strategy and your portfolio, as well as a market update and technical analysis.
Our Disciplined Strategy:
We have said many times that we have rules and a disciplined strategy. It is that discipline that has now protected the portfolios on the downside.
Our portfolios have held up very well relative to the markets and the majority of our peers. The equity component at Thursdays close was down only 5.04% year to date versus the Canadian market, which was down 28.12% and the U.S. market down 16.44% (in CAD).
We have always told you that the core principal of our strategy is to protect your portfolios against the downside, and we can now see that it is working. We strive to perform in line with or better than the market on the up side, but more importantly to protect your savings from major downturns. We hope you can take some comfort in seeing that this strategy working.
Your current portfolio and our strategy;
  • We are holding lots of cash, mostly USD, as it is still the reserve currency and stronger relative to CAD. We are watching this relationship between the currencies closely and expect to take some profits soon by converting back to CAD and avoiding any currency risk.
  • We want to draw your attention to the two ‘BMO SIA’ funds in your portfolios. Although they will be showing in the equity allocation of your statements, they use a similar strategy to us and have fully transitioned to cash (CAD).
  • The remainder of the assets include bonds, gold, and occasionally other defensive alternatives that can give us some upside or pay interest. We may reduce these positions, and limit further trading for the time being, as market volatility, trading volumes, and prices are less consistent. Bonds are a good example of this as investors are trying and failing to ascertain the net worth of assets. This is typical of a downward “bear” market, signaling that this state of volatility is far from over.
 We are constantly reassessing what you own and our primary concern is the protection of your assets. Our approach is Active; this is not a passive ‘Buy and Hold’ approach. Each morning, we utilize the rules of the strategy to assess the market and plan our next move. We don’t have to wait for some fund manager or institution to make a decision. It is our team and our disciplined strategy that evaluates the most likely probabilities and confidently positions your portfolio each day.
We are currently well positioned to take advantage of the market, no matter the direction it takes us.
Bottom Line:
Buy and hold portfolios ride the market up, but they also ride them all the way down. Unfortunately, this passive management strategy is used by the majority of investors, maybe because it is easier, but it has hurt them badly during this significant downturn.
In contrast, our active management and unique ability to go to cash has significantly insulated your portfolios from this drop.
We protected your portfolios on the downside versus the indices. We know the importance of this, as protecting these assets is also protecting your dreams, lifestyle and plans. We are proud of our strategy and how well it has performed, and we hope you are too.
We thank you for your trust and confidence in our team and strategy. We remain extremely diligent in all aspects of our practice, and are committed to keeping you informed along the way.
Please reach out to us if you have any questions. Below is a more detailed Market Update & Outlook for your reference.
Market Update & Outlook:
Equity, Commodity, Currency and Bond markets have all continued to be rocked by coronavirus related turmoil over the last week. Government and corporate efforts to contain the spread in North America and Europe ramped up dramatically including partial border closings, social distancing, travel reductions including flight cancellations, lockdowns and temporary store closings. Uncertainty over how long these restrictions may last continue to weigh on confidence and depress equities. Crude oil also remains depressed with a war among suppliers amid a plunge in demand dragging it down toward $20.00.
On March 18th, the Dow and S&P 500 returned to levels last seen before President Trump was inaugurated, wiping out all gains made on his watch. US jobless claims jumped versus the week before indicating that coronavirus-related layoffs have started to increase significantly.
On the other hand, efforts by governments to try and mitigate the economic damage have also ramped up with the Fed, ECB and Bank of Japan all announcing increased monetary stimulus while the governments of the US, Canada and other countries increase stimulus efforts on the fiscal side. 
Investor sentiment remains wary with capital apparently stampeding into US cash. Over the last week, the US Dollar has posted strong gains against other major currencies and gold, while US treasury bond prices have started to come back down, enabling the US 10-year Treasury yield to climb back up toward 1.2%.
The coming week may see markets continue to veer back and forth between dominance by liquidators (margin calls and fund redemptions), against bargain hunters and potentially some central banks. Friday is quadruple witching day (multiple expiries of index, commodity and equity futures and options) so we could see volatility through the week. (SIACharts)
Technical Analysis:
We provide the comments from our own BMO Nesbitt Burns Technical Analyst; Russ Visch (Thursday, March 19, 2020):
Daily Action Report - We like the fact that the S&P 500 and S&P/TSX Composite managed to hold above key support levels (2018/2016 lows respectively) on a closing basis yesterday, while NYSE breadth and volume was not nearly as bad as we have seen in recent days. Still, markets have not been able to generate any meaningful/lasting traction despite virtually all of the indicators in both our short and medium-term timing models being as oversold (or worse) than they were during the depths of the credit crisis. Given the state of these indicators it's reasonable to assume that a relief rally is likely to develop at some point soon. All we are watching for now is a sign that selling is exhausted and so far there is little evidence of that. We noted at the beginning of the week that Friday's quadruple expiry in futures and options markets will create additional volatility as large derivatives positions are managed/settled. We suspect markets will have to get past Friday's expiry before a tradable low develops.
We mentioned that the next ten years could look somewhat like the year 2000 – 2010 where markets in effect finished where they started. That does not mean there is not opportunity; especially for those that have the ability to move to cash and other assets as opposed to those still stuck in buy and hold.
Have a great weekend!
John, Kate, Michelle, Megan and Katerina
Video Meeting Option Available
Over the last year, we have been encouraged many times to offer the option of video meetings, allowing us to share our computer screen with you for reviews. In light of recent events and some people’s concerns, we have expedited this request and have registered with a program called “Go To Meeting”. We have found it to be a very helpful tool and many of our clients prefer this option for meetings.
We would like to extend this option to you and look forward to your feedback on the experience.
It is quick and simple to set up. All we do is send you a link to click on prior to the meeting.

2019 Tax Reminiders

Canadians will have until June 1 to submit their income tax return to CRA. The deadline to pay off any outstanding balances interest-free will also be extended, this time to July 31.
Businesses will also have more time to pay their taxes without paying any interest or penalties. The new deadline will be July 31 to pay any corporate taxes or make any scheduled instalment payments that would otherwise be due starting Wednesday.

We appreciate that tax season is an important time of year for investors. Depending on your investment holdings and account activity, you could receive a variety of tax slips that you’ll need to prepare your annual tax return. To help simplify your tax preparation efforts, we are providing a brief overview of the various tax slips and supporting documents you may receive from BMO, along with their expected availability dates.  Please make sure that you receive all required tax slips before filing your tax return with the Canada Revenue Agency (“CRA”), to prevent having to file an amended tax return.
Please note that depending on your delivery preference, your tax documents will be posted on BMO Nesbitt Burns Gateway® and/or placed in the mail as soon as they are available. If you would like to access your tax documents exclusively online, reducing paper and providing secure access, please speak to your BMO Nesbitt Burns Investment Advisor. If you are not able to access your tax documents online and would like an electronic copy emailed to you or your accountant, please let us know.
Registering for eDocuments
With tax season underway, we want to take this opportunity to remind to sign up for eDocuments on Gateway to access your tax documents and other account documents. Online access to tax documents provides you quicker access, secure storage, and easy access to any lost or misplaced tax slips. To sign up for eDocuments:
  • Sign into your Gateway account,
  • Go to Account Settings,
  • Select Electronic delivery as the preference for one or all of the available documents (account statements, trade confirmations and/or tax documents) through the eServices tab.
Once enrolled, Gateway will maintain a seven-year history of these documents for your future reference.

Tracking the Pandemic's Economic Footprint
Canadian Retail Sales (Jan. 2020) — All Autos & Gas
FOMC Policy Announcement — A Full Slate of Emergency Easing Measures
Home Sales Hot in February
BoC Announcement — Joining the QE Club
U.S. Retail Sales (Feb. 2020) — At Least Online Sales Rose
U.S. Industrial Production (Feb. 2020) — Nice While It Lasted
U.S. Housing Starts (Feb. 2020) — Housing's Last Hurrah
Goodbye 2% Inflation
Thou Shalt Be Called PEPP
BoE Cuts and Adds (-/+)
Better Late than Never
Ottawa’s COVID-19 Economic Response Plan
A Bridge Over Troubled Markets 
Introduce Someone You Value
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John Ridd, PFP® CIM® FMA® FCSI® Vice President, Wealth Advisor & Portfolio Manager
Kate Parker, CIM® CFP® BCOMM Investment Advisor & Financial Planner
Megan Lisowski PFP® Investment Representative
Michelle Silva Investment Representative

Phone: (905) 727-5040 | Fax: (905) 830-9538 | Toll free: 1(800) 651-5952 |

BMO Nesbitt Burns – Aurora – Yonge & Wellington
c/o BMO Bank of Montreal, 15252 Yonge Street, Aurora, ON, L4G1N4
BMO Nesbitt Burns – Aurora – Bayview & Wellington
c/o BMO Bank of Montreal, 668 Wellington Street East, Aurora, ON L4G 0K3
BMO Nesbitt Burns – Newmarket – Yonge & Mulock
16775 Yonge Street Suite 221, Newmarket, ON, L3Y 8J4

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