Thoughtful stories —
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Market Ethos
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
Jan 23 - 20237 min read