Goodreid Blog

Patience and Perspective

June 27, 2022

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. 

That said, investors would have to be robots not to experience some greed and fear emotional impulses during bull and bear markets. Professional management helps to curb that, by you being one iteration away from the management of your wealth. In addition, partnering with an investment firm that has experienced all this before…. many times, is comforting. 

It is said that there is a price for everything. In the investing world the price for an expanding economy and rising market is greater risk. Valuations become stretched, investors rely on stock momentum more than fundamental analysis, and debt levels increase. As the air comes out during tough economic times and a bear market, there are the necessary casualties, but most of us who respected the process will be the beneficiaries of a new economic cycle and with it a new bull market, full of opportunity. What is required is patience and perspective.

Bear markets, such as the one we are now in, last an average of 9 months, with those associated with recession lasting longer, at 19 months vs. those without an economic recession at 6 months. The key point is that they are not terminal events. They are a part of a cycle. By the time a recession is officially declared, bear markets are often over. This is because markets are forward indicators pricing future cashflows, not the past or present. 

While we at Goodreid do not claim to have a crystal ball and cannot predict the date or level of the bottom of this bear market, we are confident that we are well into it. Necessary market damage has been inflicted. The gambling cohort has largely capitulated. The selling feels overdone and is at historic levels. But markets have a way of humbling investors and “oversold” can become “more oversold.” 

Negative investment returns during bear markets must be expected and accepted. That said, we follow our strong disciplines of owning quality companies with above average earnings growth prospects and compelling valuations. This allows us to add relative value regardless of the environment. Certainly Goodreid’s performance for a balanced client during this bear market has relinquished a portion of last year’s gain, but it has outperformed our peer group benchmark index, and is just one step in the investment journey. To create a fair performance perspective multiple cycles must be considered. The result is decidedly favourable.

We are excited with the opportunity within our portfolios. As the economy recovers, we expect many of our companies to shine and for their share prices to reflect their promise. 

Gordon Reid

President & CEO

Gordon Reid, President and CEO of Goodreid Investment Counsel Corp., entered the financial services business in 1985 and co-founded Goodreid Investment Strategy, one of Canada's first fully discretionary "high net worth" wrap accounts.

See Biography

Other Posts

The Financial Post: These tax-loss selling targets are also table-pounding buys

23 November, 2023

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.

Read More

The Financial Post: Banks are taking it on the chin, but here’s why they deserve a second look

26 October, 2023

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…

Read More

The Financial Post: Just as in baseball, investors can do better by waiting for the perfect pitch

28 September, 2023

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…

Read More

The Globe and Mail: Dividend investing works wonders - and now’s a great time to start with these three stocks

29 August, 2023

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.

Read More

The Globe and Mail: Why this money manager thinks Canada is the best place to invest over the U.S. right now

12 May, 2023

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,…

Read More

The Globe and Mail: What is Topicus and why it’s a stock pick among our Investing Club members

03 May, 2023

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…

Read More