MP Week In Review
Scott G. Marshall - Dec 07, 2018
Pivot and Stack
I started writing this update blog last week. World events and news pieces are coming at us fast and furious these days, so much so that I almost can’t get a blog written and out quick enough to include them all. I am up to the challenge, I am going to blitz at it a bit, hit a news piece, quick comment, move on. Here we go.
Last Friday the G20 meeting was just starting and the markets went into that weaker and unhappy about increasing US/China tension and trade tariffs. On Sunday it was noted that Trump and the Chinese leader Xi Jinping were talking about working out a solution to the Tariff spat, so Monday the markets were up. Monday after markets closed Trump tweeted that he would be “Mr. tariff man”, his way of letting the world know he would continue to be “tough”, and just like that on Tuesday the DOW was down over 3% or 800 points.
Going into the G20 meeting oil prices had been very weak, partly a combination of over supply and slowing consumption due to tariffs, essentially world trade slowing down. On the weekend Alberta’s Premier Notley announced she will be implementing a mandatory reduction in Alberta oil production, oil prices strengthened up slightly. At the G20 Russian leader Putin high fives the Saudi Prince in greeting, all is right in their worlds? Minor detail that Putin had just had his navy fire on and confiscate three Ukrainian navel ships and had imprisoned the crews, and the Prince had been outed by the CIA about his involvement in journalist Khashoggi’s death and disappearance. Putin talked about oil supply cuts with the Prince on the weekend, today as I write this, they both have not followed through, so oil prices weaken off further. Proactively, before serious deterioration we had moved out of our oil/gas holdings to avoid these over supply risks.
In 2017 our Tactical portfolios handily outperformed the markets/benchmarks.
We had been very early into the Medical marijuana sector, even before it showed up on anyone’s radar screens. As those share prices moved up aggressively, we sold partial positions all along the way up. We took original invested money to cash plus a healthy amount of profit on top of that. Remaining positions in our portfolios are bought and paid for and more. Now that the recreational market has become legal in Canada, we are being doubly selective in our holdings and choices, and positioning for a repeat of this expanding opportunity in the USA and globally. Volatility will ensue as everybody and their brother gets into this game late.
“Under pressure, you don’t rise to the occasion. You sink to the level of your training. That’s why we train so hard.” – Anonymous Navy Seal
We have been talking about increased volatility coming into the broader markets since early October. Our Pivot timing indicator triggered us to move out of the equity markets and to the sidelines. Some of that money has been moved into $US. Today as the markets are volatile and weak, our portfolios are trading up in value. Again, we are beating the markets/benchmarks. Pivot is our market strength/timing tool that we use to move up or down our equity exposure. History shows us that major downturns often start out un-noticed or quietly and ramp up into something much worse. This industry contends that asset diversification and patience is the answer to repair or survive these wealth destroying waterslide like rides of fear. We don’t agree. Pivot out of the way of a downturn, that’s what we prescribe. When Pivot signals us on the upside, we will increase our equity exposures then.
This repeatable process is solid, and consistently we will stack our realized gains to cash or shorter-term safety and work to avoid the major downturns. Stacking will help deliver powerful returns in the long run, and protect gains in the short term.
Scott G. Marshall, CIM®, FCSI®
Portfolio Manager | Independent Wealth Management
Canaccord Genuity Wealth Management