Thoughtful stories —
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Market Ethos
Market Ethos
Nov 25 - 20245 min readGold Shakes Off Election
Gold retreated following the election as money parked in the yellow metal in case of trouble or a contested election moved back out. But that sale didn’t last long as gold is steadily recovering. In this Ethos, we share our views on gold and miners as unique diversifiers for portfolios....
Market Ethos
Nov 18 - 20245 min readBonds? We Don’t Need No Stinking Bonds!
Investors have been piling into all-equity one-ticket solutions. Performance chasing, perhaps. These vehicles are more tilted to DIY investors as this trend is less evident across the broader market flows....
Market Ethos
Nov 11 - 20247 min readFour More Years
Okay, everyone is churning out content and thoughts on the market implications of four more years of Trump. And the Trump trades are bouncing all over, most modelled after the 2016 term. ...
Market Ethos
Nov 04 - 202413 min readHalloween Is Scary
October had been going rather well… until the last day of the month. Maybe earnings from a few key market leaders spooked the market....
Market Ethos
Oct 28 - 20245 min readTo Hedge or Not to Hedge
Summary: The USD has risen significantly lately against most currencies, including the CAD. There are many economic/yield reasons for this move, with the biggest being USD strength ahead of potential election uncertainties. Yet at 72 cents, the CAD may be getting too cheap....
Market Ethos
Oct 21 - 20245 min readNew President in Two Weeks, or Later On
Markets have moved higher over the past couple of months, with decent economic and inflation news as the tailwinds....
Market Ethos
Oct 15 - 20245 min readA Challenge: Markets Up and Earnings Revisions Down
Over time, equity markets go up because earnings go up, and earnings go up because the economy expands. Sure, the market moves up and down more than earnings as the market multiple (PE ratio or valuations) fluctuates given investor mindset, risk, outside factors, interest rates, etc. ...
Market Ethos
Oct 07 - 202415 min readFoggy
Anticipated volatility in September didn’t come as expected. Though markets wobbled at the beginning of the month, risk appetite and optimism came back in a hurry following the Fed jump-starting its easing cycle with a 50bp cut mid-month....
Market Ethos
Sep 30 - 20246 min readCrouching Economy, Not-So-Hidden Stimulus
Following a global market rally spurred by a recent Fed rate cut, China introduced a significant stimulus package to counter its economic slowdown. ...
Market Ethos
Sep 23 - 20245 min readReturn of the Dividends
As of June 30th of this year, the halfway point, the TSX was up about +6%. Meanwhile, dividend stocks, as measured by the DJ Canadian Dividend Select index, were marginally better than flat (+0.9%)....
Market Ethos
Sep 16 - 20246 min readMulti-Trillion-Dollar Question
Okay, we all watched this play out over the past few years. As cash yields rose, the money started flowing. And did it ever? Billions and trillions flowed into various cash vehicles from GICs, HISAs, and money market funds. ...
Market Ethos
Sep 09 - 20245 min readPortfolio Playbook
What will you do if the market tumbles 8% in October, a month known for having above-average volatility? You are probably thinking you will put some cash to work and buy that dip! ...
Market Ethos
Sep 03 - 202414 min readRocky
How can we characterize the market of late? The analogy that keeps popping into my mind is Rocky fighting Ivan Drago in the 12th round as his corner keeps yelling: “Don’t go down.” This market is listening....
Market Ethos
Aug 26 - 20246 min readEnergy's Shifting Sands
While Canadian energy companies have proven resilient, the recent divergence between commodity prices and energy stock performance warrants closer scrutiny. Despite a notable decline in commodity prices since the quarter's inception, energy stocks have exhibited unexpected relative strength. ...
Market Ethos
Aug 19 - 20246 min readElasticity of Yield Demand
Bond yields have certainly moved lower during the past month or two. Early May saw the 10-year U.S. Treasury yield around 4.75%, down to 3.9% as of mid-August....
Market Ethos
Aug 12 - 20245 min readRecession Flip-Flop Talk
Beneath the ‘carry trade’ talk, there has been an uptick in folks talking about recession once again. That will be our brief topic this week....
Market Ethos
Aug 06 - 20247 min readCarrymageddon
What just happened to markets on our holiday Monday? Most are still scratching their heads as to what happened as the market weakness from last week took an abrupt turn for the worse. ...
Market Ethos
Aug 06 - 202411 min readWhat Did We Just Hit?
Sometimes, you are driving along nicely, and suddenly, your car is jolted as you hit a pothole… well the market just did that… or maybe it’s a sinkhole. ...
Market Ethos
Jul 29 - 20245 min readOur Worst Tilt of the Year… So Far
Marketing in the investment management industry is often focused on pieces of a portfolio that have worked out really well. How a great idea got into a portfolio and produced the desired results....
Market Ethos
Jul 22 - 20246 min readCan't Get No... Diversification
Building on our July 8th Market Ethos – Efficient Frontier Shifts Right – this edition goes searching for diversification in a more correlated world. The stock-to-bond correlation is at the core of multi-asset portfolio construction, and from 2000 to 2020, it was negative....
Market Ethos
Jul 15 - 20246 min readOne-Legged Stool – Multiple Expansion
Everyone likes new market highs, as do we, even with our more defensive mindset of late. The S&P has been busy entering never-before-seen levels, so has the TSX, and so has Europe. Asia has been a little off of record highs, but not by much. ...
Market Ethos
Jul 08 - 20247 min readEfficient Frontier Shifts Right
Remember the days when stocks and bonds moved more independently or even in the opposite direction to one another? Ahhhh, the 2010s, with the benefit of hindsight, it really was a marvellous time....
Market Ethos
Jul 02 - 202414 min readHalftime
There isn’t too much for investors to complain about as we pass into the 2nd half of 2024. Equities are up rather nicely, and the Bloomberg World Equity Index is about +15%, which is darn good for the halfway point....
Market Ethos
Jun 24 - 20246 min read1997 or 2000?
We are clearly in some sort of "artificial intelligence bubble" with many of the common bubble characteristics present. It is a disruptive technology that is changing the way people do things......
Market Ethos
Jun 17 - 20246 min readIs It Over?
It seems like just yesterday that you could buy a pint of Stella for $7 or so. Now, more often than not, it is closer to $10. And with the benefit of hindsight, the current higher inflationary environment can be blamed on a few pretty big factors....
Market Ethos
Jun 10 - 20246 min readCrisis Alpha
If the wealth advice service were in the manufacturing industry, the portfolio would be akin to what we make. Sure, there are many value-added services in addition to the portfolio, but it’s the portfolio that has to succeed for the client to reach their long-term goals....
Market Ethos
Jun 03 - 202411 min readThis Ain’t That
The US market is up a little over 10% this year, Canada +6%, Europe +10%, and Japan +15%, while bonds are down about -1%. Huh, that sure does look like asset allocation is working well again after the car crash of 2022......
Market Ethos
May 27 - 20245 min readThe Calm Before the Calm
Should it be any surprise how calm markets have become? Global equities are up 9.2% year to date. Apart from a 2% decline in January and a 5% drop in April, the trend has been steadily up to the right on the chart....
Market Ethos
May 21 - 20246 min readMore Bad News, S’Il Vous Plaît
I think we might be in that very unique market mood when bad news is good news. The equity market weakness in April can probably be attributed to bond yields moving higher, so any economic data on the weaker growth side is welcome news at the moment....
Market Ethos
May 13 - 20247 min readIs It Time for Emerging Markets?
The normal narrative for encouraging investors to look at emerging markets typically goes like this: The valuations are cheap, the demographics/rising incomes are supportive of growth, and they offer diversification. ...
Market Ethos
May 06 - 202412 min readLots of Bulls and Bears
Take your pick. There is no shortage of both good and bad news floating about the financial markets. To be fair, this is always the case. ...
Market Ethos
Apr 29 - 20246 min readEarnings Optimism
There are three things you should rarely ever bet against: the Leaf’s opposing team in the playoffs, the American consumer’s ability to spend, and corporate profits. As we are now about halfway through U.S. earnings season, once again, positive surprises remain the norm; 81% have beaten....
Market Ethos
Apr 22 - 20246 min readEnergy Stars Align
The oil market has been interesting lately and, to the surprise of many, has been the biggest silent outperformer this year....
Market Ethos
Apr 15 - 20245 min readValue in the Canadian Dollar
The weakness in the Canadian dollar is pretty easy to explain. U.S. inflation has ticked higher, as has the American economic data. ...
Market Ethos
Apr 08 - 20245 min readDividend Depression
Dividend investing is supposed to be easy. Find quality companies with long track records of paying or even increasing their dividends, buy some shares, collect your regular tax-advantaged payments over time and watch the share price go higher....
Market Ethos
Apr 01 - 202414 min readWHY?
Financial literacy is predicated on asking the question, “Why?” Why does this market keep moving higher? Why is inflation fading so slowly? Why are home prices high given low affordability?...
Market Ethos
Mar 25 - 20246 min readIPOs – Where Art Thou?
There is no denying the equity markets are in the throws of a strong advance. The S&P is up 21% over the past six months, Europe is up 19%, and Japan is up 25%. ...
Market Ethos
Mar 18 - 20246 min readInflation - Not Going Quietly Into the Night
Now with 2024 well underway and the equity market up smartly, should we be concerned that inflation doesn’t seem to be going quietly into the night?...
Market Ethos
Mar 11 - 20246 min readWhat’s Up With Gold?
If you have ever held gold within your portfolio, it is a safe assumption that you found the experience frustrating. Sometimes, the stars align for gold, such as positive retail/bank flows, falling real yields, a weaker US dollar, and war breaking out somewhere. ...
Market Ethos
Mar 04 - 202413 min readA Bubbly World
The history of markets is filled with examples of bubbles, creating great wealth on the way up and subsequently destroying much wealth on the way back down. ...
Market Ethos
Feb 26 - 20247 min readCash vs GICs vs Bonds
So far this year, investors have piled into cash, added into bonds and sucked money out of equities....
Market Ethos
Feb 20 - 20246 min readNobody Controls Risk in an Index
The steady redemptions over the years from active managers and reallocation to passive have created more steady selling pressure in strategies that focus on value or fundamentals....
Market Ethos
Feb 12 - 20245 min readAmerican Exceptionalism
Over the past month or so, the economic data from America has certainly turned up somewhat. A strong Q4 GDP print of 3.1%, two back-to-back months of 300k+ job gains, and even manufacturing activity has ticked higher....
Market Ethos
Feb 05 - 202416 min readConflicting Forces
In the heart of every market lies a fierce clash between bulls and bears, where optimism battles pessimism and greed contends with fear. Buyers and sellers engage, and their sheer will is one of the most important factors driving the markets. ...
Market Ethos
Jan 29 - 20245 min readDo Valuations Matter?
One could certainly question the importance of valuations in this market. If you were bold enough to buy Nvidia a year ago, ignoring the 60x price-to-earnings (forward earnings), you made money....
Market Ethos
Jan 22 - 20248 min readMoody Market
Markets certainly move around a lot. Last summer, the stock market rallied over a number of months into the end of July before going on a three-month decline due to rising bond yields. ...
Market Ethos
Jan 15 - 20246 min readMaybe It Was Transitory After All
The illusion of causality is a behavioural bias in which we believe there is a cause-and-effect relationship at work which just isn’t there....
Market Ethos
Jan 08 - 20247 min read60/40: The Reports of My Death Are Greatly Exaggerated
It was not that long ago, perhaps about a year at its peak frequency, that you couldn’t go far without coming across another report extolling the death of the plain vanilla 60/40 portfolio allocation. ...
Market Ethos
Jan 02 - 202410 min read2023 Year in Review
Let’s just say it: despite all the headlines, twists and surprises along the way, 2023 was a great year for investors. The S&P 500 was the star at +23% (all returns are total returns in CAD). ...
Market Ethos
Dec 18 - 20233 min readTop 10 Ethos of 2023
In keeping with our annual tradition, below are our favourite Market Ethos publications of the past year. In chronological order....
Market Ethos
Dec 11 - 20236 min readIs the “Buy the Dip” Era Over?
2023 may not be over yet, but with only a few weeks left, it appears to have been a great year to be an investor. Global equities are up about 15%, led by the S&P and Europe at +20%, followed by Japan at +13% and the TSX at +7%....
Market Ethos
Dec 04 - 202331 min read2024 Outlook – The Great Reset Final Act
Over the past couple of years, we have been enduring a great reset following a decade-long period that was characterized by disinflation, lower economic growth, low yields and lots of monetary stimulus. ...
Market Ethos
Nov 27 - 20236 min readJapan Still Rising
Have you ever noticed when a manager or advisor or investor talks about their portfolio, they tend to focus much more on what has worked out well and often gloss over detractors?...
Market Ethos
Nov 20 - 20236 min readInflation Victory Lap
Grab that bottle of Veuve and give your sabrage skills a test; inflation is over, and it's time to party. Well, that is the way the equity markets have rejoiced on a handful of data points supporting the view that inflation risk is quickly fading. ...
Op-Ed
Market Ethos
Nov 10 - 20239 min readActive vs Passive
The debate between passive and active is not something new. There are strong arguments that can be made for both sides, but in our eyes, there does not necessarily have to be a clear winner of this battle....
Market Ethos
Nov 06 - 202312 min readYear-End Rally?
2022 was certainly a rather painful year for investing. There were more central bank rate hikes than any of us would care to count, yields moved from ultra lows to the highest in a few decades, and markets took it on the chin. ...
Market Ethos
Oct 30 - 20235 min readEarnings Hits and Misses
We are about halfway through the U.S. earnings season, with 245 of the S&P 500 having already reported. Earnings are rather backward-looking, kind of like GDP reports, since the quarter started in July and ended in September....
Market Ethos
Oct 23 - 20237 min readThe Thematic Riddle
Okay, we will start this week with full acknowledgement that this edition is a bit self-serving; it’s about thematic investing, and yes, we launched a thematic-focused strategy last week....
Market Ethos
Oct 16 - 20236 min readSometimes, Even a Free Lunch Can Taste Bad
Harry Markowitz, the father of modern portfolio construction, is often quoted as saying, “Diversification is the only free lunch” in investing....
Market Ethos
Oct 10 - 20235 min readCrowding Out Risk
Now, that was a blockbuster jobs report. The U.S. economy added 336k jobs in September, based on the nonfarm payroll report, which was much stronger than expected. ...
Market Ethos
Oct 02 - 202313 min readFrom Bayes to Bulls: A Probabilistic Look into Market Strategy
Here comes some good news: given the drop in August and September, markets are pretty oversold. Sentiment has turned more bearish, which is bullish....
Market Ethos
Sep 25 - 20236 min readMarkets Yield to Higher Yields
Not a very kind September so far, as equity markets are down: TSX -2%, S&P -4%, NASDAQ -6%, and international -2%....
Market Ethos
Sep 18 - 20235 min readDividends for Sale
Investing isn’t easy. The markets rarely behave the way most think they should and seem to often behave to make the most people wrong. The financial media is filled with tales of fat tails – either things that went exceptionally well or extremely poorly....
Market Ethos
Sep 11 - 20236 min readLittle Trouble in Big China
There’s no denying the Chinese stock market has had a tough go. Over the past 3-years, the Shanghai Shenzhen CSI 300 index is down about 15%. ...
Market Ethos
Sep 05 - 202312 min readAI to the Rescue (Again)
August was a difficult month for both stocks and bonds. Rising rates tightened financial conditions and sent both asset classes into the red. At one point, the S&P 500 was down nearly 6% from the July highs. ...
Market Ethos
Aug 28 - 20236 min readWhat Happens on the Other Side
Each year since 1978, the Federal Reserve Bank of Kansas City has sponsored a symposium on an important economic issue facing the U.S. and world economies....
Market Ethos
Aug 21 - 20235 min readIn Need of Some Bad News
Markets have enjoyed a great advance in June and July, thanks to a number of factors....
Market Ethos
Aug 14 - 20236 min readBulls, Bears, and Pumpkin Spice
Investor sentiment is a pendulum that swings back and forth between extreme optimism and extreme pessimism and never sits still. Every individual stock has its own little pendulum. At times investors rapaciously bid up shares, believing prices will continue driving prices to irrational levels....
Market Ethos
Aug 08 - 20235 min readEarnings: Economists vs Analysts
Here we are again, closing out the Q2 earnings season for the U.S. and Canadian equity markets. The S&P 500 is now over 84% complete and has seen positive surprise rates of about 80%, keeping with standard practice....
Market Ethos
Jul 31 - 20239 min readTime Flies
Time often seems to slow down during market sell-offs or corrections, as the volatility creates a more news-filled world. On the flip side, when markets keep going up, time flies. So if you are wondering why this summer seems to have flown by quickly, blame the stock market. ...
Market Ethos
Jul 24 - 20237 min readCurrency Matters
At the beginning of the year most strategists expected a few things: recession to soon materialize, the Fed to stop hiking, pivot mid-year, and then aggressively cut in the second half leading to U.S. dollar weakness....
Market Ethos
Jul 17 - 20237 min readStyle Postmortem
While we have kept up with our peer group thanks to some other contributors such as Japan, an overall overweight in international equity and manager selection within fixed income, our style tilt has been, well, wrong so far in 2023....
Market Ethos
Jul 10 - 20235 min readJobs
Well, it looks like AI (artificial intelligence) has not replaced everyone’s job just yet. Last week saw a surprisingly strong ADP employment report of 497k – double what economists were expecting....
Market Ethos
Jul 03 - 202311 min readEverything Has Gone K-Shaped
Economic parlance often tries to use a single letter to capture what is happening. For example, a V-shaped recovery in the economy or market represents a sudden drop followed by a sudden rise; L-shaped is a sudden drop followed by a muted recovery. ...
Market Ethos
Jun 26 - 20236 min readDoes the Market Need to Drink to Have a Good Time?
If the punch bowl is stimulus, it is safe to say over the past number of years, the market has become rather hooked on this sweat-intoxicating elixir. QE, rate changes, and twists all had pretty big impacts on stock prices, both up and down. ...
Market Ethos
Jun 19 - 20238 min readDividend Divergence
The headlines are currently dominated by stories or ‘financial explanations’ as to the jump in U.S. equities, enjoying one of the best weeks in months. AI, Fed pausing rate hikes, some decent economic data, and improving breadth are the most prevalent....
Market Ethos
Jun 12 - 20237 min readIt's Priced In
Have you ever heard the words “it's priced in,” referring to the market or an investment pricing in some sort of potential negative event? The TSX is trading at 13x earnings estimates, historically low for this index, clearly pricing in some uncertainty or potential recession ahead....
Market Ethos
Jun 05 - 202310 min readTwo Tales of the Same Market
Global equities, as measured by the Bloomberg World Equity Index, are up 9% so far in 2023. So, is it safe to give the all-clear with a soft landing and markets go higher? ...
Market Ethos
May 29 - 20235 min readIs the Third Time a Charm?
For the third time in as many years, gold is brushing up against the 2,000/oz zone, raising the question of whether this resistance level will hold once again or will the yellow metal finally break out. ...
Market Ethos
May 23 - 20235 min readBuy the Dip or Sell the Tip?
Looks like we have a deal. Markets are pleased that a debt ceiling appears to be within reach, avoiding all the potentially bad stuff that this politically motivated crisis could have unleashed....
Market Ethos
May 15 - 20236 min readGood News, Good News, and More Good News
Over the past few weeks, we would say the news has been tilted solidly towards the ‘good’ side. The world’s largest central bank (Fed) effectively announced the cessation of rate hikes, ending a fourteen-month journey that raised overnight rates from 0.25% to 5.25%. Yay!!!...
Market Ethos
May 08 - 20235 min readLeaning Back a Bit
Good news – the world’s largest central bank hit the pause button on rate hikes last week. After embarking on a rate hiking cycle in March of 2022, it would appear the Fed is done for now after hiking from 0.25 to 5.25%. Yay!! ...
Market Ethos
May 01 - 202311 min readHold the Line
The S&P 500 is up about +8% so far this year, the TSX +7%, Europe is up well over 10%, and Asia is doing pretty well, too. Even bonds are up. This bear market rally (assuming we are still in a bear market) is being fuelled by a healthy dose of good news....
Market Ethos
Apr 24 - 20237 min readBigger Is Not Always Better
For broad U.S. market exposure, bigger isn't always better. In a multi-asset portfolio, we've long argued the case that being active can provide long-term added value. But being active doesn't necessarily mean solely relying on active managers....
Market Ethos
Apr 17 - 20234 min readGlass Half Full
It’s been a good month with the S&P and TSX bumping up against the top of a range that has existed for half a year now....
Market Ethos
Apr 10 - 20235 min readBonds Being Bonds Again, Who Knew?
For years bonds had a single job in portfolios, providing a ballast during periods of equity market weakness. Ok, maybe spin off a little income along the way....
Market Ethos
Mar 31 - 202313 min readActive Defence
Investing is never easy, even at times like back in 2021 when it actually was easy. Just about everything went up in 2021, but this year isn’t the same. ...
Market Ethos
Mar 27 - 20236 min readStuck
If you take a step back from the day-to-day market gyrations, it appears we are stuck. How could the market become unstuck and, most importantly, in which direction?...
Market Ethos
Mar 16 - 20237 min readIt Is 2023, Not 2008
It’s fair to say that investors remember the last bear market the best; the one before that is a hazy memory, and if they have been investing long enough, the one before that is almost forgotten. ...
Market Ethos
Mar 13 - 20237 min readThinking Long-Term Returns
It is fair to say we spend a good portion of our time researching, thinking and talking about what will happen this week, next week, next month, and next quarter. Will inflation come back down? Is there a recession coming, and if so, how will it look? How could capital markets react? ...
Market Ethos
Mar 06 - 202315 min readWorth a Read or Two
Markets and the economy never travel in a straight line, and the last few months have had more than their normal share of zigs and zags....
Market Ethos
Feb 27 - 20236 min readKnow Thyself
The S&P 500 is roughly where it was two years ago, around 4,000. But during this short time frame, it has visited 4,800 (+20%) and 3,600 (-10%) – clearly not a flat journey. The TSX has fared better, starting at 18,500, rising up to 22,000, back down to 18,500 and then up to 20,000....
Market Ethos
Feb 20 - 2023