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Monthly Update - January 2020

 

Trust our monthly update finds you well as we look towards an early spring.
 
Over the past twelve months, your investments have made money (Profit. After Fees). Your portfolio posted strong gains in January.
 
It was another typical month featuring the tug of war between greed and fear that is a hallmark of stock markets.
 
Through it all, markets operated normally. On days when the averages were down, a collection of your investments moved higher. On up days, some investments did not follow the pack.
 
From one day to the next, this behaviour reflects the diversity of businesses and investments you own.
 
When observed in the fullness of time, this is how we participate in growth; by owning a collection of productive assets and businesses.
 
As we turn the page on a new decade, the headlines shifted from concerns around trade between the United States (U.S.) and China to the corona virus.
 
Buried in the back of the newspaper is the same old story; that of resilient U.S. economic growth.
 
To navigate the present and future, we will continue to strike the right strategic balance using our objectivity and process.
 
As we look to the year ahead, economic leadership from American companies is set to continue. The current quarter of positive earnings surprises is one example of this positive and enduring trend.
 
Our investment strategy remains sound and unchanged: Own a diversified group of high-quality U.S. and Canadian investments that pay dividends or interest. These are companies that are innovating and applying technology to make their businesses better.
 
You and your portfolio are in a strong position.

The view from Brian Belski, BMO’s Chief Investment Strategist:
 
“Markets are rarely linear for long, regardless of the direction. After what has been essentially a straight shot up for US stocks since early October, the S&P 500 took a pause in January with volatility resurfacing amid heightened US/Iran tensions at the start of the month and more recently, the outbreak of the coronavirus. The latter sparked risk-off sentiment among investors during the back half of January and drove the index to its biggest weekly decline since August. However, US stocks proved resilient, ending the month down only [0.16%] in the face of falling yields and renewed global growth concerns, and have already reached a new all-time high in February. From our lens, we still believe stocks are likely due for a breather at some point in the coming months …. With that said, we do not envision any sort of prolonged market meltdown, although we do anticipate the path to our target will be quite bumpy…Therefore, we advocate an active approach with regard to US equity positioning and urge investors to use any potential periods of weakness as an opportunity to increase exposure within favored positions, as we continue to believe the secular bull remains intact… To be sure, fundamental concerns surrounding the Canadian consumer remain elevated. Such trepidation is especially evident considering the Bank of Canada’s messaging regarding headwinds facing the Canadian consumer as a key component to their near-term outlook. While we agree the domestic consumer has faced and will continue to face broad headwinds for years to come, most fundamental metrics for the Consumer sectors remain positive in our view – especially those areas that focus on the U.S… with a strong preference for companies with U.S. growth relative to domestic exposure.” Portfolio Strategy – February 2019. BMO Capital Markets.
 
 
  • Stocks in your portfolio that made a new 52 week high this past month: Fortis*, Johnson & Johnson*, JP Morgan*, MasterCard*, Microsoft*, S&P 500, Telus*, United Health*, Waste Management*
     
  • Stocks in your portfolio that made a new 52 week low this past month: None
     
  • The Loonie declined by one cent versus the US dollar to $0.76
 
Thank you.
 
We wish you all our best,
 
Ian, Gab & Kaitlyn


 

* This specific security is covered under the research of BMO Capital Markets. For a full list of company specific disclosures keys please visit https://research-ca.bmocapitalmarkets.com/Public/Company_Disclosure_Public.aspx or ask your BMO Nesbitt Burns Investment Advisor for a copy.