April 2025 - Monthly Update
Kaitlyn Richardson - Apr 01, 2025
Hope this note finds you and your family well as the daylight grows longer and the nights warmer.
Your portfolio declined in March. As of today’s date, it has declined a few percent from its year-end value. For context, this is the equivalent of the dividends and interest we earn over a 12-month period. It remains with positive performance over the last 12 months, inclusive of April 2025.
Your wealth remains well insulated from the volatility of 2025 as well as the general selling pressure of April.
Let’s review three core elements of our portfolio construction to explain how this has been accomplished: Quality, diversification, intentionality.
Five highlights of our definition of quality all must be true to permit inclusion in our investment portfolio.
1) Established business (not a startup or emerging industry)
2) Profitable
3) Dividend payer (with a history of increasing payments over time)
4) Provides services/products that are central to the economy
5) World Class Leadership
These attributes represent businesses that endure during the challenging times of longer economic cycles and thrive to become bigger and more valuable over time.
Within investment markets, a diversified portfolio requires that all the individual components do not move in the same direction (up or down) on any given day. By being truly diversified, our portfolio experiences insulation from bigger daily adjustments by investment markets. It also provides access to liquidity. The value of liquidity is both the ability to sell an asset without disadvantage to transfer cash into a bank account as well as the ability to use those proceeds to opportunistically purchase a mispriced asset.
Intentionality is our decision to be specific around what we own and what we do not (rather the broad investment market). This includes our risk/reward assessment of any opportunity which is most valuable when uncertainty is high. An example would be the automotive sector. There is a growing possibility of great change between the businesses within this industry with heightened risk that some of the incumbents will go out of business. While there will be businesses that do not, the risk of a zero outcome drives our decision to avoid the sector entirely as part of our investment process.
One important data point of note: the price of gasoline and oil in North America. Both are 20%-30% below the level of three years ago. The price of energy is a cost that influences the price of everything within an economy. All things being equal, decreases in energy prices translate to lower prices throughout an economy and have a downward influence on inflationary readings in the future.
Our investment strategy remains steady and unchanged. You and your wealth are in a strong position.
The view from Brian Belski, BMO's Chief Investment Strategist:
“US stocks fell for the second consecutive month during March with the S&P 500 [posting] its largest monthly loss since December 2022. This weakness also pushed [first quarter (1Q)] performance into negative territory with the index… breaking a five-quarter winning streak and representing the worst 1Q since 2022. Tariff uncertainty continued to weigh on stock prices as investor and consumer sentiment levels deteriorated further throughout the month. For our part, we are remaining patient with our 2025 outlook because from our lens there has been no concrete evidence that any of the worries surrounding potential tariff impact have trickled into the hard data yet. In addition, despite some of the more ominous tariff prognostications, we still believe that the Trump administration is using their “implementation” as a negotiation starting point and that the “realized” impact will wind up being less severe compared to current worries. Nonetheless, market trends were changing even before the tariff flare up with leadership rotating out of select mega-cap stocks and into, well, pretty much everything else. As such, we continue to advise investors to stay the course but to also be highly selective in their decision-making process… While the S&P/TSX declined … in March, it still managed to outperform the S&P 500, which declined … and entered correction territory during the month. Indeed, despite extreme levels of pessimism, fear, and elevated rhetoric, the S&P/TSX has climbed the proverbial wall of worry and is still up … year to date, outperforming the S&P 500, which is down … as of the end of March. As we cue our broken record, we believe Canada’s strong relative value position, returning equity flows, and overall broadening of US equity performance are all helping Canada outperform its neighbour to the south – period. From our perspective, none of these core drivers have changed. Canada remains a strong relative value play that can and will continue to converge with the US. In fact, we believe the value proposition that Canadian stocks offer will continue to act as a strong buffer during down days, thereby limiting the downside of the TSX relative to the US. Furthermore, our models are depicting a sharp reversal in net foreign equity flows into Canada over the last six months, with 12-month trailing net equity flows turning positive for the first time since 2022. Overall, our view on Canada remains resolute. Canadian equities remain well positioned for normalization and will likely continue to outperform as North American equity performance broadens out, valuations normalize, and earnings growth trends stabilize.”
Stocks in your portfolio that made a new 52 week high this past month: Fortis*, Johnson & Johnson, MasterCard*,Thomson Reuters*, Waste Management*( Waste Connections*)
Stocks in your portfolio that made a new 52 week low this past month: CN Rail*, (Rogers Communications*, CPKC Rail*), Microsoft*
The Loonie gained half a cent versus the U.S. dollar to $0.695
Thank you,
Ian, Gab, Kaitlyn and Meeral