When the facts change, I change my mind – what do you do, sir?” Keynes
In this month’s reflection section, we deviated from our normal analysis of factors impacting the stock market. We looked at the condo and labour markets through the lens of TV news and newspapers. Some people own several condos and others put down deposits on prebuild condos. The condo boom was driven by speculators. One news story profiled an unfortunate man who put a deposit on a condo only to find out that $1500 per foot was more than the market price when he took delivery. He looked at the camera and said that was my retirement, he lost $300,000. There does not appear to be a shortage of condos as I see signs up showing units available but not the ones at the price real people, not speculators, will pay. The second section covered the issues related to immigration. One party wants to end the temporary worker program other businesses claim they need the workers, and the government is issuing more rights for this program than the target. What is the right answer, only time and the economy will give the answer. The key to the analysis is that 2 people with the same set of facts can come to different conclusions. That is one reason there is always someone willing to sell a stock and someone willing to buy it, just the price matters.
We have stressed in other commentaries how we believe in creating portfolios and not just a collection of stocks. Our portfolios primarily are concentrated on dividend paying stocks such as banks and pipelines. We like the history of dividend increases that help grow returns over time. We include stocks with other attributes. For instance, Gold stocks provide some diversification from the interest sensitive sectors. This month the gold stocks were out-performers. We understand the market will fluctuate and a diversified portfolio is the best defence to changing markets.
