Market Commentary February 2017Submitted by Mark Smith-Windsor Investment Advisor on February 24th, 2017
I haven’t provided a market commentary since mid-last year. Don’t worry, nothing big has happened in the world since then.
The big news is that my wife and I were blessed with the arrival of our first child, a girl, Madeline. This was followed by four months of sleep deprivation, during which time both my wife and I were somewhat irrational. Apparently the rest of the world is suffering from the same phenomenon.
Rising populism globally is challenging the established order as fringe political movements are becoming mainstream challengers. I believe the Brexit vote during the summer and the U.S. presidential election this past fall, are not the last of this sort of thing.
Four predictions for 2017
• Trade barriers = Inflation Whether we devolve into trade wars or simply have trade battles, it is likely to be inflationary. This is bad for bonds and favors tangible assets.
• Trump = Uncertainty. The current president of the United States has a communication method which unnerves many. He often uses extreme statements publicly as a starting point in order to shift the conversation closer to his agenda. My only prediction is that the media circus around President Trump will die down and a sense of normalcy will resume. Nobody remembers who was on the second season of The Apprentice. Still, I am holding on to my shares in gold companies just in case.
• Populism beats the pundits: The various populist movements around the world will continue to surprise pollsters and the media.
• The real estate markets in Toronto and Vancouver top out: House prices in Toronto and Vancouver will always be expensive but they have gotten to extremes over this past year. This sort of hyper activity is typical of tops in markets.
For your investment portfolios I feel Canada is a sensible place to invest. It has taken the TSX almost a decade to regain the ground lost in the financial crisis. Nothing goes straight up, but my thinking is resource shares should continue to recover, driving our market higher.
One investment worth considering is Canadian General Investments.
Canadian General Investments – CGI on the TSX
Canadian General Investment is one of Canada’s oldest closed end funds and currently trades at a discount to the underlying value of its holdings. The share price is at a 35% discount to its investment portfolio.