November has brought us tremendously encouraging news. Undoubtedly the news with greatest impact arises from both Pfizer and Moderna announcing vaccines proving better than 90% effectiveness against covid. This exceeds every hope, and other vaccine developments may also be successful. If over the next six months we can remain strictly careful about hand-washing, face masks, and avoiding unnecessary gatherings, we may succeed against overwhelming hospitals, losing loved ones, and by mid/late 2021 be able to enjoy restored social freedoms.
Biden’s successful election in the U.S. is also favourable – particularly the fact voting was so surprisingly close which will result in a dynamically divided U.S. government from January onwards. Had there been a massive Biden landslide, we expected higher debt, higher taxes, increased anti-trust legislation against companies we take for granted in our daily lives as offering global public service. An electoral majority (democrat or republican) was forecast to drag heavily on business and investment markets. From our vantage point we seem to have the best possible result: a divided US government offers rich ground for negotiation. Plus, they will have a recognized and encouraging leader at the helm, more friendly and favourable toward global relations and international trade.
Investment accounts have been recovering very well since the March meltdown. I’ve been reviewing year-to-date and results since April 1st. Conservative and income-oriented assets have mostly recovered, and meanwhile featured yields 6% and higher. Growth assets have paid returns above 20%, 30%, 40% since April 1st. People on monthly income in retirement have stayed safe with our strategic income planning. Younger generations investing more each month have seen astonishing growth. As each person’s profile is unique it’s best we get time to speak together as your time allows.
It’s intriguing what surprises appear in our portfolio teams’ reports. The golden arches company has just announced (featuring in our global dividend and strategic income positions) they are launching the McPlant. If you hadn’t heard you may well ask, what is a McPlant? It is McDonald’s answer to the beyond burger. McPlant is a plant-based burger (plant, lettuce, tomato – here’s a stand-in picture until they release the real thing) and was successfully tested this year in parts of Ontario. Beyond Meat sold off 17% on the day of McDonald’s announcement. Clearly the world remains enamoured with Golden Arches capacity to innovate for modern tastes and sensitivities.
Value and Growth.
There is great debate on relative strength of “value” versus “growth” in today’s investment markets. A paragraph explains too briefly but a few notes here add to earlier letters. For 10+ years “growth” has been the major winner, while “value” wears the crown of longest leadership over most decades. A value position could be Royal Bank paying 5% dividend, sustained strong earnings, safely unassailable and deeply entrenched business model, and limited yet distinctly positive range of forecast price over the next 3-12 months. A growth position could be Tesla, paying 0% dividend, next-to-zero earnings, new competitors emerging on every continent, and vast dispersion of possible stock price over the year ahead. (Only for simplicity I mention such companies as representing value vs growth.) What happens in fact is that most of our clients hold a careful blend of value and growth – with a very healthy logic in this approach. We cannot possibly guess when growth will give up in favour of value. We know the rich and enduring “substance” of our value positions, and we know the cautious analysis of our growth teams investing in financially responsible innovation across many sectors in Canada, US, and the world. It helps to realize our conservative stance toward income/value and also growth, so that both of these elements contribute to your longterm stability and financial rewards.
Healthcare and Gratitude.
I’ve had a ring-side seat to the excellence and dedication of our healthcare workers. This also explains why this letter is later than usual. Oct. 29th I had two kidney stones removed (one more remains on my right side), and with some complications and fainting at home on a ceramic floor I got six days in hospital followed by mandatory rest at home. We all have such seasons in our life, and if it hasn’t happened yet, the future will come. The point isn’t that we get sick or we get hurt … but rather the point is that we get care and we get healed. That journey isn’t what we wanted or expected, but the wonderful people in our health system make a tremendous and vital difference, along with family and friends who ease the way and help us through. I’ve been on the gift-planning committee of this hospital for years. I’ve raised money for this hospital. My wife Virginia was one of the first babies ever born in this hospital … but I had no idea 2020 would give me a week as resident in this hospital. Say thank you to a nurse, or a doctor, lab-techs, food-services, caretaking/cleaning … they are wonderful all of them. We have SO much to be grateful for in our modern health care.
Post-Covid in 2021.
Closing note for today: consider with amazement the unparalleled successes being achieved in vaccine development. What might have taken fifteen years (if ever) is a concerted race to prove more vaccines and delivery systems to battle covid. Keep our guard up against this disease – we must do in order to protect one another. But daily we are marching toward a safer 2021/ 2022. When new pathogens arise in future, this year’s global effort will be the measure and motivation to rally again to protect loved ones, life and community. Economic costs are far from settled, but the ultimate result is clear and safety in due course is certain.
Reach me with any questions, and connect us with a friend or family who needs help to ensure financial goals, lifelong comfort, and a rewarding retirement. Freely share this letter if you know someone who can benefit.
Yours in Financial Security for LIFE!
Brian Weatherdon, MA, CFP, CLU, CPCA. 905-637-3500
627 Guelph Line, Burlington, Ont. L7R 3M7. 1-877-937-3500
Certified Financial Planner, Certified Retirement Coach
Author: A Lifetime Of Wealth — And How Not To Lose It (2013). Protecting Life, Loved Ones, and Future Dreams (2013). Your Business, Your Retirement: Halton Retirement Study (2015).
** This monthly letter touches on key strategies in Canadian and global investing and financial planning. This letter is not an offer to sell any kind of security, insurance, or program. Historical returns and risk measures are not a valid guide to future performance. Returns are from publicly available sources and research from a variety of firms including but not limited to Canada Life, CIBC, Dynamic, Mackenzie Financial, RBC / PH&N… Opinions in this letter belong solely to the author and no other body is responsible for the content expressed here. We value opportunity to coordinate with your legal and accounting advisers to further your financial goals in home and business. We are grateful always to receive your comments and questions.