MacNicol’s Monthly Commentary – June 2022
With this commentary, we plan to communicate with you every month about our thoughts on the markets, some snapshots of metrics, a section on behavioural investing and finally an update on MacNicol & Associates Asset Management (MAAM). We hope you enjoy this information, and it allows you to better understand what we see going on in the marketplace.
“Good memories are our second chance at happiness.”
– Her Majesty Queen Elizabeth, II
Compendium of doom…
The chances of a reprieve for beleaguered equity markets were present during most of the second half of May. Russia’s war with Ukraine, was no longer news. The prospect for tighter central policy was more than just a prospect. Pandemic skittishness has cooled considerably. And even inflation had become so mainstream that comparing outrageous food, fuel and materials prices became something of a national past time. May therefore did not offer investors any new things to worry about and so equities staged what at the time looked like a rebound. With stocks appearing as though they had wanted to go higher in late May, our overall portfolio positioning was broadly the same. Why didn’t we add to stocks in May? We held off because most of the root causes for weakness in stocks remained the same across May and into June. Stubbornly high inflation, rising interest rates and fears of a sharp economic slowdown are still with us. Since we have alternatives to investing only in stocks and since the current backdrop for stocks was not unanimously bullish, we figured we would wait it out. It is worth pointing out that Canadian markets have held up much better thus far in 2022, and we expect this outperformance to continue given the Canadian market’s exposure to materials and energy which have functioned as inflation hedges during previous market cycles. Valuations in Canadian equity markets have also helped cushion the blow experienced by investors in other markets. More of the stocks we had been selectively buying recently have been from areas like the materials sector and then energy patch.
Click the link below to download the full commentary…
Click here: The Monthly June 2022