January 2021 - Monthly Update
Ian Peebles - Jan 01, 2022
Trust this note finds you well as we launch into the year 2022. All the best for the new year to you and your family from all of us here!
Your investment portfolio posted gains in December. It continues with positive performance over the past 12 months.
It has been three years of above average of growth in the value of our investment portfolio.
Coming into 2021, we had all expected to be feeling better about our menu of choices in the pandemic world. On this front, there is still much progress to look forward to.
Looking back, it was a year where account statements (excellent) did not match how our hearts (unsettled) felt.
During all the intense headlines of 2021, the behavior of your investment portfolio was extremely stable, consistently grinding higher over the months.
The growth in the value of your portfolio aligned with the economic recovery that occurred in North America. Not one newspaper headline on the planet proclaimed what a great year it was to be an investor.
2021 was all about the shift from recovery to one of economic growth.
From here, the fuel of the economy transitions from stimulus to self-perpetuating.
This new trend is in its infancy – the reduction of historic economic stimulus.
Ending the economic stimulus (unparalleled in scope and size) has always been part of the plan. That we are now on that path is a good thing. It reflects the progress made by the economy and the strength of the foundation upon which we now build and grow.
As investors it will look more like old school investing = great businesses grow and are worth more in the future.
A growing economy leads to a strong job market and competition for talent / people to do the work.
In the United States (U.S.) where 70% of the economy is driven by the consumer, a strong job market reinforces the current cycle of growth. Rising household earnings and savings turn into domestic spending, which powers the U.S. economy.
The collection of ideas we own worked so well again in 2021 that there was very little rational to make major changes. Technology and health care continued to be areas of strength. They were joined by the banks (which lagged in 2020) and industrials this year.
You remain in a strong position financially.
The view from Brian Belski, BMO’s Chief Investment Strategist:
“S&P 500 Finishes 2021 Near a Record High… The resiliency of US stocks was on display in December as the S&P 500 posted its third best gain for the year amid a number of concerns arising among investors , including the rapid spread of omicron, CPI [Consumer Price Index] print near 40 -year highs, Fed’s taper acceleration, and expectations for three rate hikes in 2022. While we acknowledge that these concerns… will likely brings bouts of volatility and price choppiness during the year, we do not anticipate they will have the longer -term detrimental impact on equities that some investors are projecting. Overall, the solid fundamental backdrop for US stocks remains intact with earnings estimated to grow at a high single -digit clip (with consensus likely too conservative)… profitability metrics and margins at new highs, and shareholder distributions accelerating. Ultimately, we believe these positive fundamentals should lift the S&P 500 to another double -digit gain in 2022… 2021 exhibit the strongest annual S&P/TSX price return since 2009… In fact, December saw a rebound from the pull back in November even as renewed lock down risk s emerged… Despite posting the strongest annual returns since 2009 , much of the past 12 months can be defined by a market that lagged fundamentals, resulting in a massive game of “catch -up” to match much stronger -than -expected earnings recovery – results that blew away upwardly revised estimates by near double digits every quarter in 2021. Despite this strong fundamental underpinning, unlike US investors, Canadian equity market participants have remained skeptical and far too pessimistic, in our opinion – even as valuations compress to historical averages. Yes, not even two years into the recovery and many investors we talk with are already obsessed with diagnosing the end of the cycle, let alone suggesting we are in the late stages. In other words, “Canadian Eeyore” is on full display as we head into 2022. However, from our perspective this spells opportunity. Canadian equities remain a strong relative value play within global markets, with 2022 likely positioned to see expanded reopening of the economy that should result in another year of record earnings and one of the strongest dividend growth cycles in decades."
Stocks in your portfolio that made a new 52 week high this past month:
Accenture*, Fortis*, Home Depot, Qualcomm, Royal Bank*, S&P 500 Index, TD Bank*, Telus*, United Health*
Stocks in your portfolio that made a new 52 week low this past month:
Medtronic
The Loonie increased by one cent versus the U.S. dollar to:
$0.79
We wish you and the ones you love a healthy and happy new year.
Ian, Gab & Kaitlyn