MP Week In Review
Craig I Adams - Jan 25, 2019
The 2018 calendar year delivered double digit negative returns for TSX investors, while our exclusive MP portfolios managed to keep the volatility to significantly reduced levels (MP Tactical Income -1.37% and MP Tactical Growth -2.31%, gross of fees). PIVOT works and in this particular circumstance it allowed us to set aside all of our Christmas money for Boxing Day sales…..
We are officially one-month past Christmas and well into 2019, leaving one of the worst fourth quarters of TSX performance on record behind us. We did not see a Santa Clause rally last year… as a matter of fact the lowest point of the year was December 24th, 2018. Thank you very much for the lump of coal dear Santa. What 2018 has done is hit a soft reset button if you will on a number of quality equities across North American markets. The market correction provided opportunity for us to buy good quality companies in both the Tactical Income and Tactical Growth portfolios, companies that were otherwise deemed to have been too expensive prior to October 2018.
PIVOT went negative on October the 11th, 2018 and then subsequently positive on January 10th, 2019. The TSX had significant volatility during that period and ultimately the re-entry signal was 700 points lower on the TSX, then when the exit signal was triggered. For those of you who like to look at charts, feel free to pull one up and compare the dates. PIVOT is not designed to identify market tops or bottoms, it is designed to identify actionable changes in market sentiment which signify a shift in the overall market direction. Should this last correction have developed into a more significant bear market, or worse yet a complete market meltdown, your capital would have been protected.
It is fascinating to note that the performance of our MP Tactical Income mandate has handedly exceed the overall returns of the TSX Total Return Index since the start of 2015. Likewise, our MP Tactical Growth mandate has matched the TSX over that same time period. Our portfolios were not designed to beat the TSX, nor will they ever be 100% equity weighted, they are designed to and have delivered consistent returns with significantly reduced volatility. Since January 10th we have been able to rebuild the portfolios by deploying our significant cash reserves into some very notable names in Tactical Income (CIBC, Enbridge, Power Financial) and in Tactical Growth (Apple, NVIDIA) at what we feel were Boxing Day like prices.
Despite the overall market correction, this market cycle remains long in the tooth and data has shown that global growth is slowing. Boxing Day sales aside, if a 2008 like correction is coming sometime in the not too distant future..... We will be ready to protect assets and be able to go shopping for the sales that occur only once or twice in an investor’s lifetime!
Until that time comes, we will happily take any further sales the market decides to provide us with and look forward to a solid 2019.
Have a great weekend,
Craig I Adams
Investment and Insurance Advisor | Independent Wealth Management