PWLCapital

I have written numerous times about the benefits of 'staying the course' or keeping your money invested during uncertain times.

In this note, I’d like to tell you about some of the pay-offs that PWL clients' portfolios have experienced in the last year, resulting from PWL’s good management. Below are examples...

Asset Class Strategies

1)   Canadian equity - we felt it was over-valued for the last 18 months; have taken 2 rounds of profits, and placed the money in cheaper asset classes (e.g. trust units and US equity)

2)   Canadian REITS – we sold all holdings for profit a year ago – since then the asset class has corrected significantly and we are now reinvesting in Canada and globally

3)   US equity large cap – having been underweighted for 18 months, we added to our positions 3 months ago and are benefiting from recent market improvements

4)   US equity small cap – we maintained remained underweight for 3 years as the class slowly corrected – we are now investing to equal weight.

5)   International equity – a large part of your equity is outside North America, which did very well for the 4 years prior to 2007. We remain on target weight.

Currency Strategies

6)   US Dollar – our 50% hedge reduced the loss in previous years, from November to February 2008 we removed the hedge completely – our US holdings have gained 7% from the recent drop in the Loonie

7)   EAFE currencies – we moved to increase our hedge to 40% in May 2008, protecting a gain from a rapid increase in the EURO.

By managing currencies (which most managers do not) and by avoiding the temptation of investing high yield asset backed commercial paper (ABCP) in client portfolios, our June 30 performance compares very favorably to our competitors.

I believe we have built strong portfolios and look forward to the markets ahead. Please give me a call or contact me to discuss any of this.

Here are my thoughts on the Markets for July 2008.

• Inflation fears have now eased among central bankers as commodity prices
have dropped from their early July peaks. Accordingly, short term government
bond yields decreased (therefore increasing in price) in the U.S. and Canada.
• The S&P/TSX Composite declined 5.9% primarily due to commodity market
weakness. The U.S. S&P500 dropped 0.8%, but the strength of the U.S. dollar
reduced this loss to 0.4% for Canadian investors. The EAFE markets declined
2.0% during the month.
• The Canadian dollar was weaker, dropping below 0.97 USD by the beginning
of August. This is the lowest it has been since September 2007. It remained
stable against the Euro (0.6 EUR) and Yen (105 Yen).

Market Statistics (PDF)

Statistiques de marché (PDF)

The latest statistics are regularly available in the Broadcast Centre, Market Statistics and you'll find my comments archived in my Market Statistics & Commentary page.

Life is short so we need to make the most of it. As an advisor, my role is to be a good steward of capital. If I could help clients set aside some of the stress and minimize the emotional turmoil and the accompanying mistakes brought on by market timing, would you give that a try?

The numbers prove time and time again, while advisors and/or investors might enjoy the thrill and challenge of trying to beat the markets, fewer than 9% of active managers in Canada manage to rise above the market average, and doing so on a regular basis – year after year – is even less likely.

In my recent article for Advisor’s Edge, I look at passive investing and why it’s good for both advisors and investors. It’s the philosophy we use here at PWL Capital and we see that investors get better results without the angst and uncertainty characteristic of the active alternative.

If your advisor can build a long-term plan that would see returns regularly rank in the top 10 percentile, wouldn’t you think that was worth a closer look?

If you can’t beat ‘em, then joining sounds like the way to go. Have a look at my article where I’ve laid out my case for passive investing being good for both advisors and investors.

Of course you’re welcome to comment and let me know what you think.  Click here to read the article

Here are my thoughts on the Markets for June 2008.

• After aggressively cutting interest rates in the first half of the year, the U.S.
Federal Reserve and the Bank of Canada held key interest rates steady in June,
citing inflation control as their primary concern in the coming months.
Government bond prices dropped early in the month in reaction to this
development.
• Corporate bonds have also declined in price in response to further expected
writedowns by the major banks in Canada and the U.S.
• The Canadian stock market declined by 1.4% despite commodity prices
hitting all time highs, the S&P500 dropped by 6.0% and the MSCI EAFE
dropped by 5.7%.
• The Canadian dollar remained in the range in which it has been trading all
year, between $0.97 USD and $1.03 USD.

Market Statistics (PDF)

Statistiques de marché (PDF)

The latest statistics are regularly available in the Broadcast Centre, Market Statistics and you'll find my comments archived in my Market Statistics & Commentary page.

My thoughts on the Market Statistics for May 2008.

• Prices in the Canadian and US government bond markets continued to drop for all maturities (increasing yields) as funds moved back into equity markets.

• The TSX gained 5.8% due primarily to strong commodity prices, the S&P500 gained 1.3% and the MSCI EAFE gained 1.4%.

• The Canadian dollar remained in the range in which it has been trading all year, between $0.97 USD and $1.03 USD. The price of oil rose to a high of $135 USD per barrel, up 33% since the beginning of the year.

Market Statistics May 2008 (PDF)

Statistiques de marché Mai 2008 (PDF)

The latest statistics are regularly available in the Broadcast Centre, Market Statistics and you'll find my comments archived in my Market Statistics & Commentary page.