October 2021 - Monthly Update
Ian Peebles - Oct 01, 2021
Trust this note finds you well and set for a great weekend.
Your portfolio declined in September. It remains with positive performance in 2021 and over the last twelve months.
The long streak of seven straight months of gains ended in September. It was a turbulent month for stock markets. To put things in perspective, September unwound one month of our gains this year.
The latest data continues to confirm the trends of economic growth, advances in job markets and broad based increases in spending / demand in North America.
The conversation has shifted to “staying open” from “reopening”. This is real progress on our journey out of the pandemic.
The historic amount of stimulus to fuel the economy remains in place. This is by design. The plan is to err on the side of too much growth as opposed to too little.
Over time, stimulus will be very slowly withdrawn as the economy transitions to being fuelled by organic growth and spending.
Industries that thrived during the pandemic are reporting quarter after quarter of record profits, have historic levels of cash in the bank, and have restructured their debt to be less expensive / long term. Big business in North America has never been in a stronger positive financially than today. They provide for a strong foundation and safety net on which to build, innovate and solve the challenges ahead.
Our investment focus remains on domestic businesses in the United States (U.S.) and Canada. We are not invested in Chinese real estate developers or anti-inflation themes.
While growth is never linear, the positive trajectory of the North American economy is unchanged and has only solidified over the last month.
North America remains more local and domestic than it was in 2019. Industries such as technology, health care, transportation and the consumer sector continue to benefit from the tailwinds and positive trends already in place.
Our investment strategy is sound and unchanged: Own a properly diversified portfolio of high quality investments aligned with the positive trends.
You remain in a strong position financially.
The view from Brian Belski, BMO’s Chief Investment Strategist:
“September certainly lived up to its moniker as the worst month of the year with the S&P 500 stumbling 4.8%, its first monthly decline since January, and the biggest loss since March 2020. During the month, US stocks also exhibited the first 5% pullback since last October, an occurrence many investors have been prognosticating after each down day in the market this year. For the first time in a while, the path of least resistance was lower for equities as a host of worries related to rising yields, supply chain pressures, inflation, legislative uncertainty, Fed tapering, and China’s economy, seemed to dampen sentiment among investors. From our perspective, we do not view many of these concerns as long - term headwinds for stocks and expect them to fade in the coming months, especially given the positive earnings and economic backdrop in place. As we approach the Q3 reporting period, we believe better-than-consensus corporate earnings and renewed upward revisions will be the catalysts for a market rally into year-end… September marked the first monthly decline for the [Canadian Stock Market] since the beginning of the year. In fact, every sector except Energy declined on the month… [O]ur work continues to show improving fundamentals… Overall, we continue to believe price momentum will slow and remain choppy as the market transitions to more earnings driven market that will continue to see a normalization in valuations and ultimately a return to long -term trend earnings growth.“
Stocks in your portfolio that made a new 52 week high this past month:
Accenture*, Canadian National Rail*, Medtronic*, S&P 500 Index, Telus*, Waste Management*
Stocks in your portfolio that made a new 52 week low this past month:
Bristol-Meyers, Qualcomm
The Loonie was unchanged versus the U.S. dollar at:
$0.79
Thank you,
Ian, Gab & Kaitlyn