Highlights from the Fourth Quarter Edition
Consequences and truth.
We can't escape the consequences of our actions—intended or unintended.
Looking at the actions of market players—the central bankers, political classes, and even companies themselves—one could take the position that there's nothing to worry about.
After all, December's losses started to come back in January. Like all of us, we take good news when it comes.
Yet, we believe there's an undercurrent beneath the good market results. There are debt levels that have skyrocketed since the Financial Crisis, unresolved trade tensions, and seemingly wonky market valuations to name a few.
For the intellectually honest, it comes down to watching for all consequences—unintended ones included—and reacting appropriately. Given a late-cycle market, we're watching for repercussions from 10 years of actions made by key market actors. A volatile Q4 in a volatile 2018 is exhibit 1.
In Canadian Equities, we managed to outperform the TSX, and some of our peers by a few percentage points. There were some exits and new positions initiated with some quality players.
Our US holdings withstood October's volatility only to get rattled in December. There may be a number of factors in play. Was the volatility due to the concern over fundamentals, late-cycle jitters, or something else? Even with the decline, US equities are an expensive proposition.
Moving across the Atlantic, the market news was much like the rest of the globe's. With Ivy's focus on more defensive sectors, we generated some substantial outperformance. Being careful on prices led us to reduce our positions in some holdings that benefitted us as we sold before the drop. It's also moved a number of opportunities into investable range.
Moving to the Far East, we've made some minor moves. Here, as in every market, we're looking to turn volatility into an opportunity by adding some quality companies from our Asia watch-list. But only if prices are right.
Q4 2018 is a useful reminder of what a market correction feels like. Unfortunately, only hindsight can reveal what actions precipitated the market volatility. For those who choose a skilled team that is true to its investment philosophy, we're striving to ensure that the best consequence for our investors is continued confidence.
Read the complete Q4 commentary for the deeper analysis, the numbers, and the moves.