November 2019 Portfolio Management Team Update
Market & Economic Environment: The TSX Composite fell 1% in October even as most major indexes globally gained in the month. Declines by the Canadian benchmark’s consumer, health care, energy and real estate sectors offset gains by the materials, industrials and financial groups. The S&P 500 advanced 2% in the month, posting a new record of 3,050 on October 30, the same day that the Federal Reserve cut its key interest rate by a quarter-percentage point for the third time this year. The Dow Jones advanced 0.5%, lagging the S&P 500, while resurgent appetite for mega-cap technology stocks led to a 3.7% increase in the Nasdaq Composite. (Data Source: FactSet)
Our Strategy: The continued narrowing of the performance gap between so-called growth stocks and value stocks was a notable development in equity markets last month. Growth stocks have outperformed value stocks for years, but the performance gap has been narrowing since September, picking up steam last month as investors lose patience with companies that trade at high valuations despite racking up huge losses. As a result, stocks that are trading at bargain valuations are attracting interest from investors. In the currency market, the Canadian dollar gained 0.7% against the US dollar in October for YTD gains of 4%, the best performance of major currencies. The currency may be finding support from higher interest rates, as Bank of Canada Governor Poloz kept the policy interest rate unchanged at 1.75%, the highest rate among advanced economies. The Portfolio Management Team (PMT) rebalanced the individual equities sleeve of client portfolios in October, taking profits from the best performers and deploying the proceeds in lagging stocks. The PMT intends to capitalize on buying opportunities that it expects will arise in Q4, while continuing to maintain a defensive tilt to portfolios going into year-end.
Please contact any member of the PMT if you have any questions or concerns regarding your accounts.
This information has been prepared by Luft Financial. Opinions expressed in this article are those of Luft Financial only and do not necessarily reflect those of IA Private Wealth. Furthermore, this does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors.
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