Detective Sherlock Holmes, brought to life by the Scottish author Sir Arthur Conan Doyle, is known for his proficiency with observation, deduction and logical reasoning that borders on the extraordinary. “The world is full of obvious things which nobody by any chance ever observes,” he once said. This brought to mind a question: Are Canadian investors who are enamoured with U.S. equities — and the alluring appeal of the Magnificent Seven — missing some attractive investment opportunities that are much closer to home?
By employing these characteristics, investors can build a resilient and prosperous portfolio that reaps many rewards and stands the test of time. The investment industry is rife with predictions on matters such as where the stock market is expected to finish at the end of the year, what securities might perform better than others and how many interest rate cuts we can expect to have. However, humans have proven time and again that their track record of prognosticating future events leaves something to be desired. Subsequently, we at Goodreid do not spend time trying to predict the future. Instead, we spend our energy preparing for specific outcomes.
Billionaire Charlie Munger passed away in November 2023 at the age of 99 after many decades alongside Warren Buffett at the helm of the massive holding corporation Berkshire Hathaway. Together, Buffett and Munger grew Berkshire from a small textiles firm into a massive and diversified conglomerate with a market capitalization of about $780 billion at the time of Munger’s passing. Over the years I was fortunate enough to attend the Berkshire Hathaway Annual General Meetings (AGMs) in Omaha, Nebraska on a number of occasions. Here are five of the many investing lessons we have taken from Munger over the years.
As we approach year-end, many investors are turning their attention to tax-loss selling, the strategy of selling investments that have experienced a loss in order to offset capital gains and potentially reduce an investor’s tax liability.
Canadian banks have long been considered a solid investment choice for a variety of reasons, but perhaps the best thing they have going for them is the oligopolistic nature of the industry. The Big Six — namely Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank — collectively control about 95 per cent of the sector’s market share. Their dominance gives them considerable influence over the economy, including the ability to set interest rates, lending practices and fees for various financial products and services. Their extensive branch networks, robust financial stability and diverse product offerings contribute to their strong market position, making it challenging for smaller banks and new entrants to effectively compete.
Major League Baseball playoffs have arrived, and the best teams will duel it out to be crowned world champions for another year. While history will undoubtedly be made, with exciting walk-offs and bitter disappointments on tap, one thing is and has always been true: hitting a baseball is one of the most difficult things to do in all of sports. But even though it might seem like an art form, hitting is actually more of a science. Take it from Ted Williams, the most proficient hitter in baseball’s history. In 1941, he achieved one of the best batting averages of all time, and one that has not been matched since. He hit 0.406 that year, which is more than four hits out of every 10 at-bats. He was and still is regarded as the best hitter of all time. So, how did he do it? And what can we learn from his approach and apply to investing?
When it comes to investing in a diversified portfolio of Canadian equities, there are usually two choices: a total return Canadian equity portfolio, or a Canadian equity dividend portfolio that generates considerably higher income.
While many investors look around the world for the best places to invest, money manager Robert Gill believes some of the best bets are at home in Canada, especially now. Mr. Gill, senior vice president and Canadian portfolio manager at Goodreid Investment Counsel Corp. in Toronto, says Canada is cheap with more room for growth. He notes the S&P/TSX Composite Index is trading at about 13.4 times earnings, while the S&P 500 is trading at about 18.6 times earnings, citing Bloomberg LP data as of May 9. Dividend yields are also 3.2 per cent for Canada and about 1.7 per cent for the S&P 500.
Years ago I was fortunate enough to be invited to Omaha, Neb., to have lunch with Warren Buffett. As Warren sat down beside me at Gorat’s, his favourite steakhouse, I was bursting with questions. After a brief introduction, I asked, “What advice would you offer a young person starting out in the investment business?” He replied by suggesting that the most educationally rewarding experience a new investor could have was to find their own pool of capital to manage, as soon as possible. Do not wait to be given a portfolio to manage; instead, ask your friends and family to invest with you. Consider starting an investment club.
Banks are only viable institutions with the trust of their customers. Banks rely on deposits to fund much of their business activity, such as commercial loans, mortgages and other debt offerings. Because they are vital to the economy, governments oversee and regulate banks rigorously. However, in this age of digital access, the concept of “a run on the bank” is quite different than it was 90 years ago at the start of the Great Depression, when as old photos illustrate, long lines of people formed to wait their turn to withdraw their money.
TC Energy Corp. (TRP-T) has recently fallen out of favour with investors, but we believe this would be the right time to add the energy infrastructure company to any investment portfolio. TC Energy transports oil and natural gas through 90,000 kilometres of pipeline across North America. It delivers energy to millions of people, connecting growing supply in the most prolific production regions of the continent to refineries and key end-markets. The company has a very stable business. So what happened, and why are we looking at it now?
There is a tremendous amount of commentary these days about the future of equity markets. Much of this talk is focused on what can be termed, “top down” issues, for example the geo-political tensions around the world or whether the economy will stall in the face of higher interest rates. But “bottom up”, company-specific analysis rules the day in the long term. Using a car road trip as a metaphor, focusing on the fortunes of individual companies to create a portfolio will determine your end destination, while those top down, macro issues will affect the route to your destination.
October baseball is here, where the best of the best teams in Major League Baseball duel it out to be crowned champion of the world for another year. And while there will be history made, exciting walkoffs, and bitter disappointment (sorry, Blue Jays fans), one thing is and has always been true – hitting a baseball is one of the most difficult things to do in all of sports. So what can we learn from it and how does it apply to investing?
Our new position, McKesson (MCK-NYSE), provides healthcare solutions in the United States, primarily through drug distribution. As such, it is relatively insulated from bouts of waning consumer confidence and has little exposure to the negative effects of an appreciating U.S. dollar.
Having managed professionally for over three decades, those of us at Goodreid have learned a few lessons. One of the most important teachings of the market is to live with, and respect, the process. Economies and their pricing tool, the equity market, naturally cycle, searching and adjusting to reach a perfect balance between supply and demand. Throughout this process the system spends almost all its time out of whack, with either a growth or contraction bias. Living with this imbalance means accepting with grace and having peace of mind during both upcycles and downcycles.
Robert is joining Goodreid from a prominent Investment Counsel firm, where he was Canadian Equity Portfolio Manager to institutional and high net worth clients. “We are excited to have someone of Rob’s calibre join the Goodreid investment team”, said Mr. Reid. “His approach and track record clearly illustrate his strong understanding of investment management, and in particular, the Canadian equity market”.
Who doesn’t like a gain? But the reality of many financial gains in this country is that you have a silent partner – otherwise known as Canada Revenue Agency (CRA). CRA’s piece are the taxes we pay. There are many exceptions to taxes on gains on capital (most notably in Canada on principal residences), but the purpose of this blog is to focus specifically on gains on the sale of publicly-traded shares.
After a screaming hot run for growth stocks off the pandemic-led economic and stock disruptions of March 2020, value investing made an impressive comeback in 2021. This has thrown equity managers for a loop, with only 40% of U.S. equity managers managing to outperform the S&P 500 Index this year.
For anyone wondering how likely it is that lumber prices will stay at current levels – roughly 4x the 35 year average price, and 197% above any prior cyclical peak, pre-2018, a recent announcement by Brookfield Asset Management tells us everything we need to know about that particular question.
CURA has rallied nicely over the past 3 months in lockstep with political developments in the U.S.. Shares picked up strong momentum when Joe Biden won the Presidency in November and gains continued as the U.S. Senate polls turned to favour the Democratic Party in Georgia.
We’ve likely all heard by now the breathless media accounts of how Shopify last week overtook Royal Bank as the largest company in Canada with a market capitalization of $127B.
Canadian banks are important…not just to Goodreid’s clients (although they are very important to us, comprising nearly 20% of our Canadian portfolio), but to the overall direction of the S&P TSX Composite Index...