Optimism #43 - March 16, 2022

Dear clients and friends,

It’s been a challenging few weeks.  I am tempted to grab the generous gains of the past two years and put the money under the mattress for a rainy day.

They “buy and hold” mantra is easy to say, harder to do, especially when I stare at a screen much of the day.

Friday about ten days ago I was bracing, eyes closed, turning on my phone to see what was going on, convinced it would be a bloodbath for share prices.

Prices were up.  That tells you a lot about my prediction skills.

BMO chief strategist Brian Belski sees Canadian stocks as a safe haven for global investors,

“In fact, investors should look no further than their own backyard, as our work shows Canada offers many key points of stability within global equity markets. Indeed, the resource sectors have been the primary driver of recent outperformance and is likely to remain a core area of stability while the ongoing supply shocks persist. Additionally, the S&P/TSX has maintained a strong relative value play within global equities – even after its strong relative performance – thereby providing another layer of attractiveness within global equity markets. In fact, our work shows the valuation advantage remains broad-based, with strong relative value in almost all sectors, including key areas like Financials and even Technology. Furthermore, the strong income nature of Canadian equities and the upswing of dividend growth that is well ahead of the rate of inflation adds income protection in an increasingly volatile environment.”

BMO strategist urges global investors to look to Canada - The Globe and Mail

Its always good to see insiders buying shares of companies they are highly informed about.

Bill Holland, CEO of CI funds, and Director of Real Matters bought 100,000 share of the latter, for about half a million dollars.

Armado Pagliari, Executive VP, bought $11,000 shares for over $89,000 in Martinrea, (an Ontario company that supplies parts to the auto sector).

Chairman Rob Wildeboer and President & CEO Pat D’Ermao bought shares as well.

At Kinaxis, Chief commercial officer, Paul Carriero invsted $145,000.

Freehold Royalties Director Maureen Howe acquired 21,000 shares for about $313,000.

Zach Michaud invested over half a million in Colliers, the real estate company.

Dan Daviau, President and CEO of Cannaccord Genuity, a wealth manager, bought $100,000 shares.

Lots of buying at PrairieSky Royalty Ltd, Home Capital, Ritchie Brothers Auctioneers and North American Construction.

I’m happy to see lots of activity over broadly diverse sectors. 

Any of you who invested in either Ryan or Manchester MICs (pools of investment mortgages) received confirmation of their audited annual results today.  9.17% for Ryan and 6.29% for Manchester.  Excellent.

Other than living with three females and seeing a lot of delivery trucks show up, I admit to not know much about Amazon.

“While we all quite naturally think of Amazon as an e-commerce company -- an online merchant -- as time goes on, e-commerce is becoming less and less important to Amazon's profits. Fact is, according to the latest data from S&P Global Market Intelligence, Amazon now gets an astounding $18.5 billion of its operating profits not from e-commerce, but from Amazon Web Services cloud computing. That's 74% of Amazon's profits -- nearly three times as much profit as the company makes from e-commerce.”  I’m not sure I completely know what ‘cloud computing’ means, but its interesting and not what I expected.

Amazon.com Inc (AMZN-Q) Quote - Press Release - The Globe and Mail

Ships don’t sink because of the water around them, they sink because of the water that gets in them.

Don’t let what’s happening around you get inside you and weigh you down.  (With all of the bad news in the world today, thank you for the perspective Carl.)

Today I was just chuckling and crying at the same time.  Pretend laughing makes me feel less stupid.

Back when I started, 26 years ago, I worked at Investors Group, owned by Power Corp, which many of you are familiar with.

These nice people gave me free shares.

Me… not so smart.  I remember selling mine for about 12$ each.

Today… the closing price is $43.95, plus twenty some years of dividends. 

At five percent, that’s at least another $40 a share.  It gets worse. The shares have split, so had I held them, they would be worth double, or just under $88.  Time does amazing things for those who are patient.

It’s tax time. If you have any questions, I would be happy to try to help.

Deadline for US returns is April 16th this year (US Citizens and Visa holders only). For CRA personal ones it’s May 2nd.

You can find our other optimism blurbs here

Have a great week,