November 2021 Portfolio Management Team Update

Elvis Picardo

November 18, 2021

Market & Economic Environment

North American indices rebounded strongly in October, with the TSX posting a record streak of 14 consecutive up days as it rose to a new all-time high and the S&P notching its best October gain in six years.

Despite losing some ground in the last week of October, the TSX Composite rose 4.8% for the month as it bounced back from September’s 2.5% drop, its biggest decline in a year. Gains were led by the industrials sector (+8.8%), while the energy group also rose over 8% as crude oil surged at least 10% for the second straight month. Real estate, materials, financials and technology also posted gains of over 4%. Decliners were led by the health care and consumer staples sectors. As a result of October’s solid performance, the TSX was up 20.7% YTD (as of October 31).

U.S. indices also rebounded strongly from September’s decline of almost 5%, which also inflicted the first quarterly losses on the Dow Jones Industrial Average (DJIA) and Nasdaq Composite since the onset of the pandemic in Q1 of 2020. The S&P 500 advanced 6.9%, bringing its YTD gains to 22.6%. The DJIA and Nasdaq Composite gained 5.8% and 7.3% respectively, for YTD gains of 17.0% and 20.3%.

(Data Source: FactSet)

Our Strategy

Inflation and the prospect of higher interest rates topped the list of investors’ worries in October, but those concerns were brushed aside by a rapid return to the “risk on” mode that has characterized equity markets for the past 18 months.

The current market debate is centered around two issues –

1. Is inflation transitory or will it be longer-lasting? and
2. What will be the timing of interest rate hikes by central banks?

At the present time, investors do not appear to be unduly concerned about the risk of higher inflation, judging by the fact that longer-term bond yields remain stubbornly low. As for the timing of rate hikes, market opinion appears to have shifted to the view that the first rate hike could occur a little earlier than prior expectations, perhaps as early as April 2022 in Canada, and July 2022 in the U.S.

The Portfolio Management Team (PMT) continued with its strategy of adding to long-term holdings by using proceeds from trimming profitable positions in client portfolios. On November 8, the PMT successfully launched its in-house Platinum Growth Fund, which holds funds run by some of the best fund managers. Join us on our November 24 Webinar to learn more about the Platinum Growth Fund.

Please contact any member of the PMT if you have any questions or concerns regarding your