| Happy Summer! I am writing this from the slightly hazy view from my deck in Kelowna. I can barely make out the other side of Okanagan Lake through the smoke from all the forest fires that are burning through the Okanagan area. Not the best of omens for our holidays but even that is not enough to dampen the excitement from leaving the city for the first time in a year! July 1st hit and we packed up the truck and made great haste to take advantage of our newly re-opened province. Early days have been great as we have tried to cram in a year’s worth of pent-up frustration and ennui into the first week of holidays. Golf, pickle ball, kayaking, hiking, wakesurfing, swimming and pretty much all our meals out have resulted in a much needed “off day” from vacationing today! Have got a couple weeks with the whole family in Kelowna, then Kristy and I are off to Banff for a few days. Not quite the Europe trip we had planned for our 25th anniversary, but the Fairmont is as close as I could find to a castle in Canada and we are looking forward to the trip! First half of the year is in the books, and it has been a good one. Investors continue to ditch stocks like Peloton and Zoom and have been loading up on oil and gas companies, but all around markets have been positive. Oil up over 50% so far this year and gas up 45% as investors realize that an expanding economy is not yet ready to be serviced by clean energy companies! This is the main driver behind the Canadian markets rise to prominence as one of the top performing stock markets so far year to date. Tech and clean energy have flipped from top performing sectors in 2020 to lagging behind energy and financials. We’re doing a small renovation in our master bedroom right now which has forced us to clean out our closet. Going through my old clothes and pruning those which I don’t wear and deciding what is worth keeping reminds me of building a portfolio. I’m no fashionista, but quality, staple pieces I wear season over season. Solid colour shirts and pants, comfortable, quality sweaters etc… Surrounding those pieces are the more “trend of the day” type of garments that add some pop to the wardrobe and only last a season before they need to be discarded. You might be happy wearing them for a few months, but they aren’t going to last the test of time. I was quite happy that bucket hats have made a comeback this summer – comfortable and practical! Even though Maddie insists that just because they are popular again doesn’t mean I look good in it, I am pretty happy with my new hat! The challenge is trying to figure out which is quality and worth spending a bit more on because it will last and is worth keeping, and what needs to be culled. This requires reflection, guess work and some cognitive flexibility! I have a collection of nice suits that I have built up over the years, Armani, Boss, Zegna etc… that I am loathing getting rid of them as I have always thought of them as foundational wardrobe pieces, but business attire has dramatically changed and I have a hard time seeing suits becoming a staple again anytime soon. I haven’t worn a suit (aside from weddings) in years. And as much as I don’t like the idea of wasting money, I am very happy to not have to wear a suit ever again – they aren’t that comfortable! Markets are at record highs in a lot of sectors right now as, so far, bets on vaccine efficacy holding up appear to be correct. Central bankers have pledged to keep the easy money flowing, corporate earnings are blowing away expectations, and pent-up consumer and business spending is taking off as the economy opens up. Worries around COVID variants, inflation being more than just a transitory blip, and geopolitical concerns have been brushed aside this year. The question that is currently being asked is where do markets go next? One of the main tenets I try to impart to clients is that worrying about where markets go in the short term is both a waste of energy and irrelevant. Trying to stay on top of what is currently hot is even harder than trying to keep up with the latest fashion trends. Impossible to predict! A well-built portfolio is one which is balanced between multiple asset classes and diversified between various investment themes and ideas. Looking through short-term headlines might mean on missing out on “easy gains” but it enables long term success in that you avoid having to be right twice on an investment (when to buy and when to get out) as opposed to just once (picking a good business that you are comfortable being with for the long term). You don’t need to care where markets are going next, you need to care whether your portfolio is going to be able to meet your objectives and your timeline for what those investments represent in terms of lifestyle. It’s ok to add the odd “bucket hat” piece to your portfolio but the core needs to be built with duration and longevity in mind. Emotional intelligence, discipline, and reflective logic are the keys to success in a lot of things in life, including the competencies critical to building successful investment strategies. Hope you have a great summer, stay positive, safe, stay healthy, stay disciplined |
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