MP Week In Review

Darren Pastro - Feb 01, 2019

What a difference 1 month makes. Markets were plunging in December with the TSX down more than 5%, finishing 2018 with a double-digit loss. While through the first month of 2019 the TSX has ripped higher. Needless to say, that is quite the roller-coaster ride! While we are not, and never will be perfect, it is interesting to look back at how we did during the recent volatility. We were fortunate to post small gains in December against the significant weakness while also managing to generate positive results in January as Pivot shifted to a constructive approach early in the new year.

 

As discussed in recent blog posts, we have dipped our toes into the equity waters - those dips are starting to pay off with positive portfolio results. How long this next up-leg will last (no matter what the talking media heads say), is impossible to know. What we do know is that our indicator is positive, and as a result of our investment process we are more constructive as it relates to equity exposures. We are actively working on a number of beaten down quality names in our endless search for above average future returns.

 

It is easy to get caught up in the political and financial noise out there. Apparently, the US is now pulling out of a nuclear agreement with Russia that has been in place since the 80’s, France has significant civil unrest, election results are being questioned in South America, etc, etc, etc. While the unending barrage of news typically seems like a negative for the globe, that negativity does not necessarily equate to down markets – that is why we spend so much time studying the forces of supply and demand, trading volumes and volatility. We have learned that a thorough understanding of the underlying health of a market is critical to investing success. As a child, early morning sunshine was a signal that it was safe to spend summer days outside with the neighborhood kids riding bikes and playing in the parks. Likewise, when the dark clouds started rolling in it was a clear indicator that rain was coming and that we should probably huddle inside with a board game. Pivot does the same thing – tells us whether it is safe to go outside or whether we should stay indoors.

 

Currently the sky is blue, the wind is low, and the temperature is comfortable. We will maintain equity and potentially increase exposure until the clouds roll in.

 

All my best,

Darren

 

Darren G. Pastro, CA, CIM®

Branch Manager, Portfolio Manager | Independent Wealth Management