Craig Millar, CFA
President, Chief Investment Officer & Lead Manager, Global Equities,
Cumberland Investment Counsel Inc., an affiliate of Cumberland Private Wealth Management Inc.
Cumberland Private Wealth is a strategic partner of CDSPI, providing discretionary wealth management services to dentists with household investable assets of over $1 million. In the fall of 2019, we asked Craig Millar to share his thoughts about the current Global outlook in the face of market uncertainty.
Market volatility, an uncertain economy, Brexit, trade wars, declining interest rates, a looming recession… There is a lot of news out there that’s worrying investors, but it’s best to try to ignore the noise and focus on the fundamentals which, in most cases, are quite healthy:
- The markets are not overpriced. Right now, the Price / Earnings multiple (a common valuation gauge used by investors) of the S&P 500 index is at about 17x, which is a reasonable level. Some international markets are even cheaper. We see opportunities in this environment, not a cause for alarm.
- Recent corporate earnings reports have shown good results, and a host of other factors are generally positive as well.
- Recessions are often caused by credit crunches, but every day we see strong demand for corporate bonds, which means companies are strong and investors are confident.
- The tech sector, which is a key driver of market buoyancy, remains very strong. Some consider tech companies to be expensive, but this premium is often well deserved. They operate at very high profit margins, they serve global markets, they continue to innovate, and their sales growth is much higher than that of the broader market.
- Most management teams of large corporations are not foreseeing a recession. In fact, many are investing for expansion.
- The investment industry’s highly respected Citi Research Bear Market Checklist indicates that economic conditions remain favourable. Only 3½ of the 18 factors on its checklist are flashing sell. This is way lower than the 17½ that preceded the prolonged decline in 2000, and 13 before the crash that started in 2007.*
At Cumberland, we invest mainly in high-quality, well-managed companies that provide needed products and services, operate in wide geographical areas, and focus on growth. These companies can withstand short-term market fluctuations, recover well when they do occur, and will compound your earnings over time.
All of this being said, market volatility is inevitable. The key to long-term success is to keep emotions out of your decisions and stay invested. In fact, market downturns often provide good buying opportunities.
It’s easier to stay the course if you have a full financial plan, which you can get from CDSPI Advisory Services Inc.~ We often work in tandem with CDSPI—they provide strategic financial planning, while we provide the tactical recommendations to meet the goals of your plan.
If you would like to learn about the advantages of Cumberland’s discretionary wealth management, please contact Steven Moscone, Vice-President, CDSPI Advisory Services Inc., who will arrange a meeting with an Investment Planning Advisor from CDSPI and a Cumberland Portfolio Manager.
Read our article, Are You Getting the Attention You Deserve? to learn how Cumberland and CDSPI work together on behalf of high net worth dentists.
* Source: BNN Bloomberg, August, 2019
~Financial planning services are provided by licensed advisors at CDSPI Advisory Services Inc. Restrictions to advisory services may apply in certain jurisdictions.
The information contained in this article is of a general nature only and should not be considered as personal investment or financial advice. All expressions of opinion are subject to change without notice in reaction to shifting market, economic or political conditions.