The first half of 2022 is in the books. It was a nasty six months for stocks as the S&P500 American Stock Index posted its worst half of the year since 1970. We had to navigate the Ukraine invasion, soaring inflation, and the removal of COVID relief stimulus to markets and the overall economy.

The halfway mark of the year is also a good time to assess our progress YTD and measure our results to our stated objectives. On January 3rd, I first introduced this weekly newsletter and the idea that there’s a better way to invest in markets (I can resend that letter to anyone wanting to see it). I wanted my clients to have a strategy based on risk management - meaning raising cash when it doesn’t make sense to be fully invested and only getting aggressive when the wind is in our sails. Ultimately, I wanted you to have a portfolio that you could rely on at all times and feel very satisfied knowing that you had a good manager at the helm. This would be something different from what just about everyone else in the province has become accustomed to.

Every week I update the performance chart (see below) to help you assess how the Tactical Growth mandate is performing against the most aggressive mandates of my largest competitors. After six months we are strongly outperforming our major competitors and the stock indexes. The 17.72% (TD) to 20.22% (RBC) margin of outperformance was a result of sticking to the process and executing many timely buys and sells. I came into this year with a narrative built on the unwinding of government stimulus and the thesis that it could be negative for stocks. I didn’t know how bad it would be and it didn’t matter. I just knew we didn’t want to fight that trend. All the competitors are forced by mandate to keep you fully, or near fully, invested, and tell you everything is going to be ok. On the contrary, we were able to step to the sidelines while the panic crept in, protecting your capital and keeping it ready to buy when the carnage ends. This strategy was one of the very few across the country that posted gains through the first 6 months of 2022. This is what Tactical Growth vs. Passive Investing is really all about.

Though the central banks around the world have all but come out and said it, we appear to be entering a recession. It’s likely we might already be in one. We don’t know how long or how deep it will be, but it is something that we’ll have to navigate into this coming autumn. I remain at the ready to change my mind, but I would expect to keep a defensive bias as we get into August, September, and October. Seasonally, markets are usually pretty good in July.

Lastly, the boat is in the water and ready for guests. We would enjoy a visit on a sunny evening. A very sincere thank you for your continued support and confidence! Happy Summer!