Blog

I want to start by saying thank you for listening and having patience for my weekly diatribes as a I generally railed against our political leaders and their fly by the seat of their pants economic and social policies. Going into 2022 I don’t anticipate that changing any time soon given the most recent lockdown and the negative effect it is going to have on business owners in this province.

Next, I want to wish everyone a Happy, safe, and healthy New Year. We have endured a lot this year, and I hope once the latest version of the covid pandemic is put to bed sooner rather than later.

In terms of market activity, it’s been a bifurcated market where for the most part, value stocks underperformed while the mega caps and high-flying growth stocks soared to unbelievable levels. We note the 4^th quarter was rather unkind to many of them, so perhaps a more rational approach will succeed next year. Historically, in the latter parts of a bull market, value tends to outperform growth but with an avalanche of cash pushed into the system by central bankers around the world, the froth had to go somewhere and, in the end, crypto currencies, SPACs and real estate seemed to have received the lion’s share.

Turning to next year, I think Wall and Bay Street will be in a more of a “show me” mood rather than the manic party it turned into this year. It took a while, but it seems I have had some vindication in advising clients not too chase the many rainbows that made headlines this year. The poster child must be Peloton. It went from $35 to $171 and back down to $35.

Broadly speaking, I believe value and cyclical stocks will take the lead next year. I am speculating that the infrastructure spending bill will cause a general rise in those companies that will benefit from government contracts. Furthermore, I think we are on the cusp of a telecom boom from the roll out of 5G technology. I also believe Asia will continue to outperform North America as growth rates rebound from the covid shut down.

There are a couple of black swans out there whether it be a clamp down, regulation or taxation of crypto currencies by central banks or government organizations like the SEC, or geopolitical events that could create uncertainties like say Russia annexing more of the Ukraine or perhaps China making a move on Taiwan.

As for Canada, I think we have the great fortune of seeing Alberta rising again. I firmly believe OPEC + Russia will engineer generally rising oil prices and Canadian producers have the best environmental record for developing our natural resources. I also see continued strength in base metals like copper, aluminum, and zinc. If nothing else, the trend towards electric vehicle production will create rising demand for copper. I will leave my personal convictions on the industry to myself, but if I were to make one recommendation to people who truly want to improve the environment and need a new vehicle, buy a plug-in hybrid.

Happy New year, Stay safe and I look forward to talking with you in January.

Cheers Steve and Michele

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