Optimism #55 -September 23, 2022

Dear clients and friends, its ugly out there but fear not.

It’s a bit like owning a million-dollar home and seeing your neighbor across the street with a similar one, sell for half a million.  What do you do except scratch your head?  Another neighbor could sell for $400,000.  Brace for the irrational.  Prices rarely reflect true value. 

Should you sell as well?  Clearly no.  Is your home now worth half as much?  I think not.  Was it a buying opportunity for your new neighbor?  Time will tell but likely yes.  Will prices recover and go on to new highs? History has proven that the answer is yes, every time, so your patience will be rewarded. 

Maybe the market will bottom on October 19th as the averages predict.

Some of us got a pay raise.  Dividends were increased at Pembina Pipeline in August.

There is a longer and more broadly diversified than normal list of insiders that have been buying recently at Lion Electric, ECN Capital, Quarterhill Inc., Hut 8 Mining, Clairvest Group, Solaris Resources, Slate Office REIT, Descartes Systems Group, Guru Organic, Open Text, Canadian Western Bank, Dental Corp Holdings, Kits Eyecare, Total Energy, Suncor, Lundin Mining, Cascades Incl, Laurentian Bank, Summit Industrial Income REIT, First Majestic Silver, Killam Apartment REIT, Cargojet, CI Financial, MDA Ltd and National Bank.  And good old Jim Pattison, has been buying more Westshore Terminals. 

I have been speaking with Portfolio Managers and they are selectively buying as well.

(In the U.S.,) 2022 is off to the worst start since 1937 for portfolios that are 60% stocks, 40% bonds at –16.2%. 

The good news is that returns in 1938 were +19.3%

First Capital REIT temporarily lowered its payout during covid, to give tenants a break, but has fully restored it.

Seasoned professional Tom Bradley has some great reminders for tough times and some good humour:

Tom Bradley: Investors should read these 11 signs | Financial Post (word format

From John Heinzl, the author of the Yield Hog, and Stars and Dogs writes about three dividend growth stocks to hold forever:

Three dividend growth stocks to hold forever - The Globe and Mail (word format)

I’ll give you a hint:  Fortis, TD Bank and Brookfield.  😊)

If you read one of these articles, please choose this one.  Its about acting rationally and understanding our inherent biases.

Why value investors can still outperform the market: An excerpt from a new book by Dr. George Athanassakos - The Globe and Mail (word format)

Do not put travel or other plans on hold because of the market dipping.  You will regret it if you do.  (and I will lecture you)

Mark Twain said “The only thing you live to regret are the risks you didn’t take.”

Happy Friday.