Ivy Quarterly Review | Mackenzie Investments

Ivy Quarterly Review

Highlights from the Third Quarter Edition


What's going on?

What's fair value for the market? How about a particular stock or asset? These are tough questions for anyone. After all, who would have thought this market cycle would surpass valuation and duration records?

Ivy Quarterly map

Generally speaking, global exchange indices have grown substantially since the 2008 recession. The Dow-Jones is over 14,000 points higher than its March 2009 low. The MSCI World is 250% higher. Throw in an average Canadian house price that has tripled and one could easily think that things are right in the world. Or are they?

What's really behind the impressive growth is debatable. Factor in a potential "Trump Bump" and possible stock price manipulation. (There's more on that in the full update.) Then factor in central bank policies – LIRP, ZIRP, TARP, and QE1, 2 and 3. Even when one tosses in irrational exuberance, the complete picture remains elusive. In our opinion, what's not up for debate is the inevitability of the bear market.

With this in mind, investors should recognize that it has become more difficult for us to find opportunities that meet our criteria. And we believe there is little value in moving from a high-priced equity in one market to a high-priced equity in another. On the other hand, holding cash isn't a lot of fun when the markets keep moving upward. We'd know.

What certainly should please investors is that Ivy remains focused on our objectives of outperformance via a better path. And we're proud to say our valuation discipline is working.

We are cautious with US equities, despite soaring values and a strong economy. That strength prompted reconsideration and some redeployment to Canadian equities due to a marked diversion of returns and more reasonable market multiples. Europe shares much with the US, meaning we are watching our current holdings along with the names on our watch list, too. If there's alignment with our benchmarks and the market cycle, decisions may follow. The good news is recent European additions have been strong. Moving east, Q3 was tough on Asia. The lingering US-China trade dispute has been pulling down valuations of stocks on our watch list. This "good news" has begun to impact less cyclical stocks, which we generally view as more attractive. Will new positions follow? We'll see.

Read the complete Q3 commentary for a deeper analysis, the numbers and the moves. Plus, watch this space in early 2019 for the Q4 and year-end review.

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This document includes forward-looking information that is based on forecasts of future events as of September 30, 2018. Mackenzie Financial Corporation will not necessarily update the information to reflect changes after that date. Forward-looking statements are not guarantees of future performance and risks and uncertainties often cause actual results to differ materially from forward-looking information or expectations. Some of these risks are changes to or volatility in the economy, politics, securities markets, interest rates, currency exchange rates, business competition, capital markets, technology, laws, or when catastrophic events occur. Do not place undue reliance on forward-looking information.  In addition, any statement about companies is not an endorsement or recommendation to buy or sell any security.