“I know nothing, I am not here – I did not even get up this morning!” Sargent Schultz from Hogan’s Heroes
In the reflection section we discussed how difficult it is to anticipate the impact of world events on equity markets. We are not at the “I know nothing” phase but we do admit when we do not know something. We study the markets to get a better handle on them, but I cannot tell you how fast the war in Iran will end, I cannot tell you if and when the Iranian people will support a new leader or if the leader will be another theocrat or a relative of the Shah. It is this uncertainty that will make the markets volatile over the next few weeks. At least tariffs are no longer the lead story. However, I do know the CUSMA trade deal is up for renewal later this year and the President feels that Canada has taken advantage of America. That may be the greater threat to the markets, but I do not know this for sure, but it is likely. Unlike the character in the sitcom, I did get up early this morning to get a better handle of the war on the markets and more importantly on our portfolios.
We continue to focus on purchasing companies with what we believe to be solid long-term prospects. We tend to prefer dividend paying stocks that continue to pay income despite the market fluctuations. One factor we like is not just the yield, but the potential for the company to increase its dividend over time. As you have seen throughout this commentary it is difficult, if not impossible to make a good decision on the markets regarding the tariffs or military actions. That said, we will hold on to companies with solid earnings and a history of increasing dividends.
