Thoughtful stories —
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Market Ethos
Market Ethos
Jun 30 - 20255 min readHigh Valuations, High Stakes
It's been an odd year for markets. Indices are up, economic forecasts are down, and uncertainty remains. So what do high valuations mean for investors going forward?...
Market Ethos
Jun 23 - 20256 min readTo Hedge or Not to Hedge
Currency hedging is an evergreen topic in Canadian investing. But accurately forecasting where a currency is going next can be rather challenging. So which trends do Canadians need to examine when considering hedged investment opportunities?...
Market Ethos
Jun 16 - 20256 min readSmall, Medium, or Large?
Portfolio managers often wonder what to do with small- or mid-cap stocks. High valuations make them attractive, but is there more to consider?...
Market Ethos
Jun 09 - 20255 min readTrimming America
Higher-than-expected labour numbers lifted the S&P 500 over 6,000 last week. But amid this newfound optimism, are markets underreacting to slowing economic data and earnings revisions?...
Market Ethos
Jun 02 - 202515 min readEvolving Diversification
In an era of policy uncertainty, market corrections are becoming more and more unique. Now more than ever, a more tactical approach to diversifiers is crucial for portfolio management....
Market Ethos
May 26 - 20256 min readDebt Sustainability
Rising long yields are stoking fears of high deficits and high debt levels. So what are the risks, both short and long term?...
Market Ethos
May 20 - 20255 min readWill the Consumer Wobble?
Based on daily credit and debit card transactions, U.S. consumer spending appears to be holding up nicely. But do underlying indicators tell a different story?...
Market Ethos
May 12 - 20256 min readInternational Exceptionalism?
With EAFE up about 13% so far in 2025, folks are talking international equities once again. Will this be yet another false signal, or is this cyclical dance finally changing tunes? ...
Market Ethos
May 05 - 202514 min readApril’s Wild Ride
The market is often driven by confidence, but policy uncertainty has induced a unique degree of market sensitivity. And while the S&P gets most of the headlines, there were a lot of moving parts during the recent bout of volatility....
Market Ethos
Apr 28 - 20255 min readThe Anatomy of a Correction
Periods of market weakness experience similar paths from correction to trough to recovery. But every correction is somewhat different, and the last few have been especially unique....
Market Ethos
Apr 21 - 20256 min readJekyll & Hyde
Policy uncertainty has led to some very large daily market swings. The good news is that there's always an option to pivot policy, to reverse or mitigate market damage....
Market Ethos
Apr 14 - 20256 min readNonsense and Sensibility
It's hard to find any sense over the past week and a half. There is, however, plenty of emotion. We’re seeing sentiment extremes and massive market swings....
Market Ethos
Apr 04 - 20258 min readPush It to the Limit
In financial markets, knowing when to hold steady amid chaos often separates success from failure. This past week has been the largest test of investors’ resolve since the depths of the pandemic....
Market Ethos
Mar 31 - 202511 min readHard or Soft Data?
The tariff situation continues to provoke uncertainty for markets. But will the soft data translate into hard impacts on the economy and earnings reports?...
Market Ethos
Mar 24 - 20256 min readWhat Are Advisors Asking?
Since 2010, the U.S. equity market has really dominated most others thanks to significantly higher earnings growth. So, is the strong start for internationally developed equity market performance a new trend or another head fake?...
Market Ethos
Mar 17 - 20257 min readThe Correction Is Here… Now What?
The S&P 500 closed in correction territory last Thursday, down 10% from its previous high. Policy uncertainty and flip-floppery have worn down market patience....
Market Ethos
Mar 10 - 20255 min readAnother Week, Another Tariff Update
So far, tariffs have been on, delayed, on again, softened for autos and agriculture, then all delayed again. It appears the market is becoming exhausted as well, or at least fed up....
Market Ethos
Mar 03 - 202512 min readThe “Trump Put”
Markets rejoiced following Trump's election win. But like many sugar highs, it just didn't last. So what's the best approach to what could be a volatile year?...
Market Ethos
Feb 24 - 20258 min readThe Prompt Paradox
Artificial intelligence (AI) has clearly been a dominant market, economic and workflow theme over the past few years. This ethos is not about how much compute we need and how we will power those data centres. It is about using AI....
Market Ethos
Feb 18 - 20257 min readOpportunistic Thinking
The art of investing is dealing with uncertainty. Successfully identifying when the odds are sufficiently tilted in your favour is what makes a successful investor....
Market Ethos
Feb 10 - 20256 min readDo Commodities Really Hedge Inflation?
With inflationary pressures back on the rise, inflation ‘proofing’ portfolios remains popular. It is an age-old market truism that real assets are a standout asset class for inflation protection. The only issue with old market sayings is that they are not always entirely true....
Market Ethos
Feb 03 - 202513 min readTariff Time
We know President Trump is rather fond of using tariffs. Perhaps of great importance is the impact on portfolios. Listen to what is being said or proposed and look for a potential market overreaction. This is our playbook....
Market Ethos
Jan 27 - 20255 min readHas Spring Sprung for M&A?
M&A activity has been rather low over the past few years given a number of factors from higher yields and confidence. However, there are signs of improvement as a number of factors are switching over from being headwinds to tailwinds. ...
Market Ethos
Jan 20 - 20255 min readNo More Trailers, It's Show Time
Trump 2.0 starts next week, and everyone is sure it will be an attention grabber if the trailers have been any indication. In this Ethos, we talk a bit about the likelihood of politically-driven volatility and dive into bond yields...
Market Ethos
Jan 13 - 20256 min readYield-to-Risk Ratio
Given most yield-providing allocations are also expected to provide some portfolio defence, we have shared a risk-adjusted yield framework to help consider different yield strategies for a portfolio....
Market Ethos
Jan 06 - 202510 min readReflecting on 2024 – Awesome Returns, Surprising Resilience
In this month’s strategy edition, we provide a year-in-review to help put last year into perspective. ...
Market Ethos
Dec 23 - 20244 min readTop 10 Ethos of 2024
As with tradition, this is the last Ethos of the year and we are going to run down the most popular editions based on clicks/eyeballs. We would like to thank our readers for your continued attention and will continue to endeavor to provide context and insight for the ever-changing markets....
Market Ethos
Dec 16 - 20246 min readThematics in Flux
hematic investing is a different beast. It’s not about earnings, dividends, debt or cash flow. At its core, it’s about identifying structural trends and innovations that are expected to drive future growth....
Market Ethos
Dec 09 - 20245 min readA Bizarro Tax-Loss-Selling Year
Tax-loss selling this time of year can often lead to weakness in beaten-down names that rebound in January as investors repurchase after waiting the required time. However, this year may be the opposite, given how few tax-loss candidates are available....
Market Ethos
Macro Commentary
Dec 02 - 202426 min readThree-Peat? A Market Recap and Analysis
Before we jump into our thoughts and analysis for 2025, let’s give a big round of applause for 2024! It was a great year for markets – just about all markets, in fact. ...
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. ...
Portfolios With a Purpose
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 - 20236 min readTightrope
Sometimes good economic news is bad (when inflation is the most significant risk), and sometimes bad is bad (when a recession is the risk). Today, this market appears to be walking on a tightrope where either good or bad economic news could elicit a bad market reaction....
Market Ethos
Feb 13 - 20237 min readThematic ETFs Are Missing Something
Thematic ETFs have exploded in popularity as imaging future long-term secular trends is very exciting. But there appears to be a problem....
Market Ethos
Feb 06 - 202316 min readRent This Rally, Don't Buy It
2023 has started off with a bang – a good bang, that is. After a tough 2022, which saw most asset classes, including stocks and bonds, moving lower, 2023 has started off on the right foot, with stocks jumping higher and bonds moving up too....
Market Ethos
Jan 30 - 20237 min readRisk – It Depends on You
Investing is all about balancing risk and return to achieve your long-term goals. I think everyone understands returns (especially when they're negative), but what about risk?...
Market Ethos
Jan 23 - 20237 min readBeep Beep
Markets, like Wile E., can be so singularly focused on one thing (inflation) that they can for better or worse be oblivious to approaching danger (recession)....
Market Ethos
Jan 16 - 20236 min readHockey & Dividends
Another thing Canadians love is dividends or, more aptly, dividend-paying companies. So are we also really good at producing some of the greatest dividend-paying companies?...
Market Ethos
Jan 09 - 20236 min readA Job-Filled Recession?
Our team absorbs a lot of different economic/market views and opinions from a lot of different sources. We also do a ton of our own analysis. To put it bluntly, 2023 is lining up to be one confusing year....
Market Ethos
Op-Ed
Jan 04 - 202319 min readPurpose 2023 Outlook – Bear Market End Game
The current bear market began roughly the same time the ball in Time Square dropped to usher in 2022, which means with the more recent ball drop this bear celebrated its one-year anniversary. There is no blueprint for bear markets. Sometimes they are short (2020), sometimes long (2000-03)....
Market Ethos
Dec 19 - 20226 min readOur Top 10 Market Ethos of 2022
It's that time of year again when market activity subsides, and many investors enjoy their holidays. We have authored 39 Market Ethos publications this year, not including the Investor Strategy editions that come out at the start of every month....
Market Ethos
Dec 12 - 20226 min readData, Shmata
Big week next week, with the US inflation number released on Tuesday. Expectations are for YoY CPI to continue to drift lower, falling from 7.7% in October to 7.3% in November. ...
Market Ethos
Dec 05 - 202212 min readCanada Is Alright
There has certainly been more good news in the markets over the month or so. Inflation stopped going up, and even appears to have softened a smidge. As we discussed, this is a bear market caused by inflation, so when the root cause begins to improve, the market reacts very positively. ...
Market Ethos
Nov 28 - 20225 min readWill Santa Make It to Xmas?
The term Santa Claus rally has been coined over the years for a good reason. Data back over a century reveals that December has the highest probability of any month to be in the green for the TSX and S&P 500 – 77% and 76%, respectively. ...
Market Ethos
Nov 21 - 20226 min readRegression to Reflexive
Someday this bear market will end, and this does appear to be the end of the market cycle that began in 2009. We believe the next bull cycle will look very different than the last, and this will have significant portfolio construction implications. In fact, it already does....
Market Ethos
Nov 14 - 20225 min readKapow!
Well, that was a day! A better-than-expected U.S. CPI (inflation) print kicked off the largest one-day rally the market has seen since the 2020 pandemic bear....
Market Ethos
Nov 07 - 202215 min readTwo Different Roads
The bear market in global equities is now in its 11th month, not necessarily long for a bear market but indeed approaching the average duration. Then again, global bonds are in their 23rd month of a bear market....
Market Ethos
Oct 31 - 20226 min readDefanging
2022 is not a fun year to be an investor, an advisor, and – most definitively from personal experience – not a portfolio manager. Inflation remains the market’s biggest angst, there is a potential recession of sorts on the horizon, and it is already well into a bear market....
Market Ethos
Oct 24 - 20227 min readNo White Flag
After posting its third consecutive quarter of declines, the stock market has managed to stay slightly positive so far in October—despite bond yields continuing to climb. Both Canadian and U.S. 10-year bond yields posted new highs this past week with U.S. 10-years rising to 4.25%....
Market Ethos
Oct 17 - 20227 min readWhat the Dickens?
Last Wednesday, if you somehow had a premonition that U. S. Consumer Prices (CPI) were NOT going show signs of cooling but instead surprise to the upside to bring core CPI to its highest annual pace in four decades, you would have expected markets to tumble on Thursday....
Market Ethos
Oct 11 - 20225 min readIs Something Going to Break?
This bear market started off rather orderly. Due to inflation, central banks were hiking rates at speeds not seen in many decades and longer yields were also rising pretty fast from very low levels....
Market Ethos
Oct 03 - 202218 min readInvestor Strategy - When Does the Bear Market End?
For the first half of the quarter, it looked hopeful that the markets were through the worst of it. By the midpoint of the quarter in August, both the S&P/TSX & S&P 500 were both chugging along nicely, up +7.8% and +13.9% (USD), respectively....
Market Ethos
Sep 26 - 20226 min readSearching for a Floor
Ok, we are not fans of seasonal trends in the market for the simple reason it is never that simple. Nonetheless, September, which has a history of lower returns and higher volatility, is certainly giving the seasonal supporters strong evidence this year....
Market Ethos
Sep 19 - 20226 min readStock & Bond Correlation
The path to the greatest wealth creation is to load up a portfolio into one security – you just have to pick the right one. Ask Jeff Bezos or Bill Gates. Unfortunately, choosing the right one is either impossible or luck with incredibly impossible odds. ...
Market Ethos
Sep 12 - 20224 min readDominating Dollar
In normal times—if you can remember those—asset class volatility was a declining range from the most volatile equities to bonds to the least volatile currencies....
Market Ethos
Sep 06 - 202214 min readFall Is Coming
Yes, the summer rally really went from oversold levels in mid June to getting a tailwind from a number of contributors. Valuations in June had become much more appealing, and second quarter earnings did not erode as many had expected from rising costs. ...
Market Ethos
Aug 29 - 20227 min readRisk
In the past three years, investors in the TSX have experienced a 37% drop over a one-month span, a subsequent 109% gain over two years, then a 16% decline over three months, to then see a 10% gain in the past few weeks....
Market Ethos
Aug 22 - 20225 min readOn a Warm Summer’s Evening
On a train bound for nowhere . . . or so the song goes. Investing is NOT gambling; done right, it incorporates thoughtful portfolio construction incorporating objectives with capital market assumptions influenced by the current environment and expectations going forward. ...
Market Ethos
Aug 15 - 20226 min readForecasters’ Folly – Insight Versus Inanity
Investors often look for a playbook, a way to help guide them through times of uncertainty. History is often used to write that playbook. However, markets are just like any sport – rules change, equipment improves, athletes progress, and what worked best in the past may not always apply....
Market Ethos
Aug 08 - 20227 min readWhy?
The tech-tilted NASDAQ has risen +20% since mid-June. Still materially down on the year, but a 20% rise over seven weeks is both significant in the size of the advance and duration....
Market Ethos
Aug 02 - 202212 min readWhat Butterflies Have to Do With the Recent Market Rally
One would think that with CPI rising, the Fed hiking rates by 75bps, the Bank of Canada hiking even higher by 100bps, the U.S. GDP posting a second consecutive quarter of negative growth, and the recession chorus growing louder, things are looking dire....
Market Ethos
Jul 25 - 20225 min readStars Aligning for Japan
The often-cited investment adage that stocks go up in the long run seems to apply just about everywhere except Japan. The Nikkei index is still below its peak in 1989, over 30 years ago. ...
Market Ethos
Jul 18 - 20226 min readEmerging Markets – Not Now, Maybe Soon
Emerging markets (EM) have a very strong allure for inclusion into the international equity component of a portfolio. ...
Market Ethos
Jul 11 - 20226 min readTo Hedge or Not to Hedge?
Even during these troubled times for the markets with equities down, yields up, inflation in everyone’s face, lost luggage, and now recession grumblings, still the most recurring question during client events remains the Canadian dollar....
Market Ethos
Jul 04 - 202225 min read2nd Half Better Than the 1st
It is halftime for 2022, and if this were a football match, the markets are in dire need of a great inspiration speech before retaking the pitch....
Market Ethos
Jun 27 - 20225 min readThere’s Good News and Bad News
Would you like the good news first or the bad news? Sorry, it's a trick question as the news for both is the same: the economy is slowing down. It's good news as it will help the inflation pressures; however, the bad news is too much slowing, and we have a whole new set of problems....
Market Ethos
Jun 20 - 20228 min readWhat a Week
One thing is for certain, if you stopped paying attention to the market for a few days a lot has changed. ...
Market Ethos
Jun 13 - 20224 min readInflating
Well, if you thought peak inflation had been reached, the May U.S. Consumer Price Index certainly did not show that to be the case. And the markets are not a fan. U.S. CPI rose 1.0% in May, which brought the one-year tally to +8.6%....
Market Ethos
Jun 06 - 202211 min readThe Upside Down
Bad news can elicit a positive market response while good news brings weakness. This may very well be the situation today as a confluence of factors has created this kind of upside down market....
Market Ethos
May 30 - 20226 min readDon’t Fret QT, It Is the Announcement that Hurts
The U.S. Federal Reserve is about to commence quantitative tightening (QT). For those not all up to speed on quantitative maneuvers by central banks, QT and quantitative easing (QE) are two tools central banks have used extensively over the past decade or so....
Market Ethos
May 24 - 20226 min readFears Moving from Inflation to Recession
Listening to the news, a political debate, or overhearing a conversation on the bus (yes, I ride the bus), the one recurring topic appears to be inflation....
Market Ethos
May 16 - 20227 min readWhen Will It End?
When will this price correction be over, and are we headed towards a recession? After sharing our thoughts on those questions so many times over the past week, here are answers from those meetings, with some charts to help illuminate....
Market Ethos
May 09 - 20225 min readTime Slows During Corrections
We are deep in a correction that encapsulates multiple asset classes. And it is not just weakness, the daily gyrations are truly breathtaking. Over the past ten trading sessions, the U.S. S&P 500 has seen five sessions with daily returns +/- 2%....
Market Ethos
Macro Commentary
May 02 - 202210 min readTake a Breath
Following numerous conversations with both investors and advisors, a common theme has emerged, which we will paraphrase as follows: “We own bonds for some income but mainly to provide a stabilizer for the portfolio during periods of equity market weakness....
Market Ethos
Apr 27 - 20228 min readCorrection Goes Warp Speed
Markets have been absorbing a lot of bad news so far in 2022. The Fed went from the market’s bestie to that ex-friend who like to run away with your punch bowl....
Market Ethos
Apr 25 - 20226 min readThe Loonie: It’s Stronger Than You Think
The CAD has remained relatively rangebound from 78-81 cents over the past quarters. But what has really been happening is that both the US dollar (USD) and the Canadian loonie (CAD) have been appreciating together, materially....
Market Ethos
Apr 18 - 20226 min readEmerging Markets: How Much, If Any, for Portfolios
The long term or secular reasons to have an emerging market (EM, or developing market, if you prefer) allocation within a portfolio are pretty sound....
Market Ethos
Apr 11 - 20225 min readPeak Hawkishness
On January 1st, the market was pricing in a Fed Funds rate of 0.8% for the end of 2022 or about three rate hikes over the year of the 25bps tenor. Fast forward to today, the futures now price in 2.5% at year end or eight to nine hikes....
Market Ethos
Mar 28 - 20226 min readBuy the Dip (In Bonds?)
When investing, whether you’re a portfolio manager, advisor, or individual, nothing is as rewarding as making the right call and then being proven right by the market....
Market Ethos
Mar 21 - 20226 min readRates, We Have Lift Off
After months of jawboning and telegraphing the pending move, the world’s largest central bank finally raised rates. ...
Market Ethos
Mar 14 - 20226 min readThis Is Chess, Not Checkers
When big news happens, markets move. And this year there has been no shortage of big news from the pandemic loosening its hold, yields rising, inflation spiking, central banks pivoting and, the biggest news, Russian invading Ukraine....
Market Ethos
Mar 07 - 202213 min readPortfolio Construction Insights
How do you build and manage multi-asset portfolios? This may sound like an innocuous question but given this is literally what all of us do in the finance industry, to one extent or another, it is kind of an important question....
Market Ethos
Mar 01 - 20226 min readIt Is a Correction
The markets, which had been gently inching towards correction territory, got pushed over the threshold on the news of Russia invading Ukraine. The obvious reaction to this unfortunate news hit the markets overnight....
Market Ethos
Feb 22 - 20224 min readGreat Fundamentals, For Now
Over the past few years, a common chorus has been that fundamentals just don’t matter in this current market environment. It is all about the macro, the Fed’s balance sheet, liquidity, money flows, and performance chasing....
Market Ethos
Feb 15 - 20227 min read2%
The 2% is actually about the U.S. 10-year Treasury yield breaching this threshold for the first time since mid 2019....
Market Ethos
Feb 09 - 202216 min readThe Year Everything Changed
“The trend is your friend” is a popular adage and for good reason. Imagine you are driving on a straight highway and all of a sudden you’re surrounded by fog. Of course, you slow down but you also likely assume the road will continue in the same straight line you’ve been driving down....
Market Ethos
Jan 31 - 20226 min readBubbles, Biases, and Broken Dreams
So far, we’ve had quite the rollercoaster of emotions for investors this year, with many markets on the verge or even dipping their toe into correction territory....
Market Ethos
Jan 24 - 20225 min readIs Growth Over?
The rotation out of Growth and into Value as we started 2022 has been, well, violent. As of Thursday, January 20, the S&P 500 Growth Index was down 9.6% so far this year while the Value version of the index is off a mere 1.8%. ...
Market Ethos
Jan 17 - 20228 min readWhat Is Wrong With Gold?
If you hit the rewind button back to a year ago, gold was trading at $1,850/oz, and the iShares TSX Gold ETF was about $19.50....
Market Ethos
Jan 10 - 20225 min readHow Does a Bull Run End?
Okay, if we knew the answer our residence would likely be on a nice warm private island somewhere. The fact is market advances that roll into corrections or bear markets don’t follow a pre-determined pattern or playbook....
Market Ethos
Jan 04 - 20229 min readA 2021 Reminiscence: Not Your Typical Year, Not Your Typical Market
While 2021 certainly had a lot of twists and turns ranging from a pandemic that won’t go away, to inflation, to meme stocks, it ended up being a rather pleasant year for investors with many equity indices advancing over 20%. ...
Market Ethos
Macro Commentary
Dec 14 - 202125 min readPurpose 2022 Outlook: The Long Road Back to the New Normal
As the end of 2021 nears, it was clearly a win for investors. And while the pandemic retains it grip on humanity, overall, economies, companies, and behaviours have adapted relatively well. 2022 looks like it will be a more challenging and uncertain year, as some trends are poised to change....
Market Ethos
Dec 06 - 20214 min readBuy the Dip Is Alive and Well
Over the past year, equity investors would be hard pressed to find anything to complain about. Even without dividends, the S&P 500 is up 24%, the TSX has risen 19% and global equities are up 18%....
Market Ethos
Nov 29 - 20215 min readCapitalizing on Tax Loss Selling
‘Tis the season for tax-loss selling: an annual rite of passage for both seasoned investors as well as investing neophytes. When the days get darker and the mornings a little chillier, something curious begins to occur....
Market Ethos
Nov 22 - 20216 min readActive vs Passive - So, You’re Telling Me There’s a Chance
So far in 2021, the S&P 500 and the TSX are both up about 25%. A truly remarkable year for equity markets that were fuelled by everything from fiscal spending, MONEY PRINTING, economic recovery, the retreat of a pandemic, and a sprinkling of inflation....
Market Ethos
Nov 15 - 20215 min readNot All Dividends Are the Same
There is little doubt that at the core of most every Canadian’s portfolio is a healthy allocation to dividend-paying equities. And for many good reasons. Dividends enjoy preferential tax treatment, notably Canadian dividend-paying companies....
Market Ethos
Nov 09 - 20215 min readDraining the Punchbowl
For months now, the U.S. Federal Reserve has been hinting that the ‘taper’ of its quantitative easing (QE) program would begin, and last week the hints turned into an operation plan. Monthly bond-buying programs that are running at $120 billion per month will be reduced by $15 billion per month....
Market Ethos
Oct 22 - 20216 min readG N' R - Rocking Markets
No, this is not a homage to one of the great hard rock bands of all-time, but we will do our best to work ‘welcome to the jungle’ into this Ethos. Instead, we are talking about little ‘g’ and little ‘r’ – two of the most important inputs for market valuations....
Market Ethos
Oct 15 - 20215 min readLabour Intensity, Wage Pressure, and Why People Are Quitting Their Jobs in Droves
Inflation sucks. It is essentially a tax on those consuming goods or services, as things simply cost more. Even worse, it is a regressive tax given lower income/wealth consumers tend to spend a higher portion of their income. ...
Market Ethos
Oct 08 - 20216 min readRarefied Air
The market advance over the past year has truly turned a lot of heads, in a good way. After the initial bear and bounce triggered by the Covid-19 pandemic, markets went on a phenomenal run....
Market Ethos
Sep 27 - 20216 min readQ3 Earnings Season Is No Cake Walk
The life blood of the equity market is the earnings generated by the companies in the index. Sometimes the market pays more for these earnings, like these days, sometimes less....
Market Ethos
Sep 20 - 20216 min readWelcome to the Backside of the Inflation Spike
Okay, even an armchair economist knew that used car prices, airfares, and car rentals couldn’t continue to go up by double digits month after month for very long. These were some of the bigger contributing categories to the spike in the U.S....
Market Ethos
Sep 14 - 20214 min readModern Portfolio Theory, We Have a Problem
Modern Portfolio Theory (MPT) sits at the core of just about every portfolio construction process. While developed some 70 years ago, the core beliefs of MPT remain as applicable today as they did before....
Market Ethos
Jun 30 - 20255 min read