October 2021 Portfolio Management Team Update

Elvis Picardo

October 14, 2021

Market & Economic Environment 

September lived up to its reputation of being one of the worst months for stock performance. Most major indices declined, and U.S. equities registered their biggest monthly drop since March 2020, as investors grappled with a growing number of risk factors.

The TSX Composite’s 2.5% decline last month was its biggest retreat in a year and broke a streak of seven straight monthly gains for the index. The Energy sector was the only group to gain in September, advancing 8% as crude oil prices surged 10% and natural gas soared 34%. Decliners were led by the health care, technology, and materials sectors.  Despite the TSX finishing the quarter down 0.5%, YTD gains for the index (as of September 30) were still at a healthy 15.1%.

U.S. indices fared worse than the TSX last month, as the big three benchmarks fell almost 5%. The S&P 500 declined 4.8% in September but managed to eke out a quarterly gain of 0.2% for its sixth straight quarter in the black. The Dow Jones Industrial Average and Nasdaq Composite tumbled 4.3% and 5.3% respectively to post their first quarterly losses since the pandemic erupted in Q1 of 2020. YTD gains for all three indices remain in double-digit territory, led by the S&P 500’s 14.7% advance, despite the September pullback

(Data Source: FactSet)

Our Strategy

 Investors had to contend with a laundry list of risks in September – a potential U.S. government shutdown, winding down of stimulus by central banks, inflation concerns amid supply-chain bottlenecks and spiking energy prices, and debt / regulatory risks from China.

However, markets continue to rally strongly on any hint of positive developments, such as the October 1 announcement of Merck’s experimental antiviral pill for Covid-19, and last week’s news that the U.S. Senate had voted to temporarily raise the nation’s debt ceiling. This tendency to “buy the dips” puts a floor to markets’ downside risk and could set the stage for a strong finish to the year, in our opinion.

The Portfolio Management Team (PMT) continued with its strategy of adding to long-term holdings by using proceeds from trimming profitable positions in client portfolios. The PMT is excited about the upcoming launch of its in-house Platinum Growth Fund, which will hold funds run by some of the best fund managers.

Please contact any member of the PMT if you have any questions or concerns regarding your accounts.