Equity markets continued their march northward this month with North American bourses leading the way.
While both Canada and the U.S. have risen about 6%, international markets are slightly higher and gold has been flat, the real story remains Canadian energy stocks. This month they’ve continued their rise from the ashes, trading almost 11% higher than their September month-end values!
Given their sterling performance, it’s worth a quick look back to see how far these stocks have come. Fifteen months ago, I wrote: “Canadian energy companies are almost 50% lower than where they were at the end of 2019. Having said that, recent activity indicates even a modest bump in oil prices could result in a surge in their values - meaning that, eventually, we might be looking back on these securities, which are trading at 20-plus year lows, as bargains.”

Since then, the Canadian energy index has risen more than 110%. And given current global dynamics, it seems poised to continue rising. Perhaps most surprising is that despite this phenomenal rally, Canadian energy stocks still trade 60% below their 2008 highs! While I’m not nearly as confident as I was last July considering all that’s going on right now (see articles below), it is possible that energy stocks could rise the 150% required to reach their previous highs again.

This has been a great reminder that trends that swing dramatically one way, often (though not always) can be expected to revert back to their mean. Sometimes this happens quickly and sometimes it takes 13+ years. As Warren Buffett is fond of saying, “In the short run, the market is a voting machine but in the long run it is a weighing machine.”

While I remain cautiously optimistic moving forward, there are factors to consider. A new strain of COVID-19 has been discovered that could be problematic, the global supply chain remains a mess, and it’s looking increasingly possible (see article below on yesterday’s news from the Bank of Canada) that the inflation we’re seeing may not be as transient as originally expected. But given the balanced approach we’ve taken, we should be able to weather most economic storms that come our way.

If you’re looking for more timely information on the markets, you can find them on the research section of my website, or on my Twitter, Facebook, and LinkedIn feeds.

What it means to be an Executor, Trustee or Power of Attorney - A Three Part Educational Series - presented by Raymond James: Ever wonder what’s involved in being an executor, trustee, or power of attorney (POA)? If so, this free three-part educational series will teach you everything you want to know. Just use this link to sign up for any or all of the following:
  • Settling an Estate: The Role of the Executor on Wednesday, November 10 at 1pm ET - presented by: Marissa Lydynia (Senior Trust Advisor, Raymond James Trust Ltd.) and John Israel Galambos (Partner, Miller Thomson)
  • Incapacity: The Role of the Power of Attorney on Wednesday, November 17 at 1pm ET - presented by: Paula Lester (Senior Trust Advisor, Raymond James Trust) and Nuwanthi Dias (Associate, Nelligan Law)
  • Trusts: Navigating your Trustee Duties and Responsibilities on Wednesday, November 24 at 1pm ET - presented by: Damian McGrath (Senior Trust Advisor, Raymond James Trust) and Joe Fingerote (Associate, Watson Goepel)
The Beautiful Mystery by Louise Penny: After reading The Hangman (see last newsletter), Tanya and I jumped back into the series and were instantly rewarded. Taking place in a secluded monastery, Louise Penny explores the everyday life of a monk, Gregorian chants, and what happens when foundations crack.

Why the World is Facing a Global Energy Crunch - the Associated Press: The world is facing an energy crunch and things could get rough this winter. Good article on why this is happening.

Behind the Energy Crisis: Fossil Fuel Investment Drops, and Renewables Aren’t Ready by Christopher M. Matthews, Collin Eaton and Benoit Faucon: Complementary to the article above, this piece looks into why renewable energy, despite production prices falling dramatically, hasn’t been able to supply enough energy to ease current global shortfalls.
Renewables vs. Nuclear: 256-0 by Emiliano Bellini: I continue to believe nuclear energy should be part of the fight against global warming. However, this article has forced me to dial back my degree of confidence. A good read regardless of which side of the debate you stand.

Year End Tax Planning: If you’re looking to do some year-end tax planning, you’ll find this guide created by Raymond James very helpful!

Bank of Canada Ends QE Bond Buying Program, a Sign That Higher Rates Are Coming by Pete Evans: In a surprise move, the Bank of Canada ends its quantitative buying program. This is the strongest indication we’ve had that inflation may be more pervasive than originally thought.
Haiti vs. the Dominican Republic by Noah Smith: The Dominican Republic and Haiti share the same island, however, their standards of living are worlds apart. In this essay, Noah Smith provides his thoughts on why that is the case. Aside from the topic itself, I enjoyed Smith’s humble approach to it. All too often authors state their “three reasons why…” something is the way it is. Smith, on the other hand, recognizes how thick the veil of history can be and remains open to the fact he may be wrong.
The Deployment Age by Jerry Neumann: A deep dive into Carlota Perez’s theory on how economic transitions occur, which may provide perspective on the current transition we’re experiencing. I like Perez’s holistic approach of incorporating social, economic, and institutional changes, as they’ve always played key roles throughout history.
People are Fleeing Ontario in Droves to buy Cheaper Houses in These Provinces by Lauren O’Neil: Though the title is a little hyperbolic, it’s a good article on how many are leaving Ontario for cheaper pastures.
History’s Seductive Beliefs by Morgan Housel: “The biggest takeaway from history is that the characters change but their behaviors don’t. The technologies, trends, tragedies and winners – the events that take place – are always in flux and can be nearly impossible to predict. But the behaviours that drive people into action, influence their thoughts and guide their beliefs, are stable. They’re the same today as they were 100 years ago and will be 100 years from now.” Another gem from Morgan Housel!
Infinity Revenue, Infinity Possibilities by Packy McCormick: Imagine you had the option to quit your job and earn up to double your salary, just by playing a video game. And no, you need not be exceptional at it. This is the reality for tens, possibly hundreds, of thousands of people in the developing world. At least for now. This article is as long as it is fascinating, taking a deep dive into the worlds of gaming and the cryptocurrency ethereum. I have no idea how successful ethereum, or any other cryptocurrency, will be, but it certainly provides a unique platform to enable a new world of possibilities.

Lastly, given the monthly exponential factors outlined in this July article, I have confirmed the trends discussed have continued. This unbelievable growth will taper off, or perhaps even crash, at some point. But it’s a story worth tracking, if for no other reason than to see if it becomes a game-changer for the developing world.

Global Tax Accord Could Earn Canada up to $4.5 billion per year, says Freeland by Chris Hall: Earlier this month, 136 countries signed a landmark deal requiring the world’s largest companies to pay more tax. Shortly after that, Canadian Minister of Finance Chrystia Freeland stated the agreement could lead to an additional $4.5 billion a year in tax collected by the federal government.

Ted Lasso (Season 2): Tanya and I watched Season 1 in a couple of nights. However, having caught up to the production schedule, we were forced to wait as each of the 12 episodes of Season 2 dropped on a weekly basis. After the initial annoyance, I actually preferred waiting a week. It gave me the opportunity to mull each episode over, as well as pester Tanya with my thoughts and predictions. Season 2 has a very different feel, but I found it equally enjoyable. Characters grew, relationships evolved, and the storyline took turns down alleys I didn’t know existed.
I also really enjoyed how instrumental (pun intended) the show’s soundtrack has become to the narrative. To the point that it almost - almost - made me like Rick Astley’s 1980’s song Never Gonna Give You Up”...and that’s saying something.

Amazon Fulfillment Center Video Tour: This is rather mind-boggling.
Rory Sutherland: Human Behavior, Innovation, and Alchemy (EP.16) & (EP.54) on Infinite Loops: Marketing is often a dirty word. Usually for good reason. But Rory Sutherland, Vice-Chairman of Ogilvy Group, has a wonderful way of showing that marketing is not only ubiquitous, but also often a force for good. I love listening to him because he’s wise, funny, and has a wonderful British accent, but perhaps mostly because he’s unexpectedly mischievous for a corporate executive.
Matthew McConaughey on WTF: Fun conversation between host Marc Maron and Matthew McConaughey, as McConaughey riffs on his incredible life and upbeat approach to life.

“I belong everywhere I go, no matter where it is, or who I am with, as long as I never betray myself. The minute I become who you want me to be, in order to fit in and make sure people like me, is the moment I no longer belong anywhere.”  
- Brené Brown
“A good teacher does not teach facts, he or she teaches enthusiasm, open-mindedness and values.”
- Gian-Carlo Rota, mathematician and philosopher, on teaching
“You have to learn all the big ideas in the key disciplines in a way that they’re in a mental latticework in your head and you automatically use them for the rest of your life.” 
- Charlie Munger

“It is not power that corrupts but fear. Fear of losing power corrupts those who wield it and fear of the scourge of power corrupts those who are subject to it.” 
- Aung San Suu Kyi
Matthew Lekushoff
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