It’s been a while since I’ve been able to say this, but most international markets have moved meaningfully higher this month. The only exceptions are the marginal declines in the price of gold and emerging markets (EMs). The latter have been negatively affected by Chinese President Xi Jinping’s recent power grab.


But the real star, once again, are Canadian energy stocks. So far (two trading days remain in the month) they have soared over 20% in October. Their year to date return exceeds 57%, and they’ve risen more than 61% since the end of last October. And should North America or Europe have a cold winter, energy stocks could rally through to the spring. Though that would be bullish for our portfolios, it would most likely also put additional pressure on inflation.


This is not to say everything is wonderful on the economic or geopolitical fronts. Most of the problems I’ve discussed in past letters remain. However, market bottoms occur more frequently this time of year. While I’m not predicting history will repeat, given how bad markets have been this year, it wouldn’t be a shock if they rallied from here. We’ll have to see how things play out.


In terms of interesting and pertinent news, the U.K. has changed Prime Ministers, again, this year. Hopefully Rishi Sunak can create the stability they badly need. And on the home front, The Bank of Canada increased interest rates by 0.50%. This was a surprise. Most, including myself, were expecting a 0.75% hike. Although good news for those borrowing on a variable basis or taking out new loans, it may also be a sign The Bank of Canada is becoming increasingly concerned over a pending recession.


Looking forward, the overall trend of value over growth appears intact, which is why I remain optimistic our portfolios will continue outperforming for the time being. The question is, will our outperformance mean we lose less, or we make more? Time will tell.

As always, feel free to reach out if you have any questions, and 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.


Montaigne by Stefan Zweig: My second read of this short biography on one of history’s most influential non-fiction writers. Fun fact: Montaigne almost single-handedly popularized the essay format.


Trivia aside, my interest in Montaigne lies in his desire to know himself as completely as possible. At 38, following numerous failed attempts at public service, he stepped back from society for a decade to study the world and himself. Ironically, the fruits of being a recluse intellectual brought him so much notoriety, the social success he once sought was then thrust upon him by society and enforced by the regent of the day.


Rishi Sunak Chosen to be New UK Prime Minister by Mark Osborne: History has been made in the U.K. this week. In choosing Rishi Sunak as national leader of the Conservative party, he became the country's third Prime Minister of 2022, the youngest in 200 years, and, perhaps most notable, the first person of colour to lead the history.

Why Fundamentals Matter by Jamie Catherwood: “However, investors should remember that companies primarily generating returns from multiple expansion are susceptible to wild swings because this is the least tangible source of total return. A company’s earnings don’t change on a whim, but investors’ willingness to pay higher multiples for the same stock do.


This is a great irony of the speculative feedback loop described earlier. When asset prices are rising, investors typically require less conviction or belief in an asset to purchase it. When prices are falling, however, investors meticulously study the merits of an investment and make sure they have strong conviction in its prospects.


When that happens, it’s often too late to try and increase earnings or bolster other important fundamentals that were left ignored for far too long.”

Six Recent Discoveries That Have Changed How We Think About Human Origins by Penny Spikins: My big takeaways are: there appears to have been up to 21 different species of humans - we have interbred with at least several of them; and how much the environment shaped our evolution.


How Natural Gas Storage Works and Why Europe Faces a Tough Winter by Sal Gilbertie:

“What is predictable is that Europe will run out of stored gas this winter earlier than most authorities are publicly admitting. Most important of all, Europe will not be able to adequately refill its gas storage facilities next summer, meaning next winter has the potential to be a catastrophic economic and human tragedy.


Sadly, today’s harsh reality is that this winter will be tough, but one year from now Europe could be facing the equivalent of an unemployed consumer with barely enough savings to obtain basic necessities and nothing more.”


The World is Awful. The World is Much Better. The World Can Be Much Better by Our World in Data: Last month, I shared an article on how life has dramatically improved for the average human. This article builds on that point, but adds context.


“The world is awful, this is why we need to know about progress.


The news often focuses on how awful the world is. There is a large audience for bad news and it is easier to scare people than to encourage them to achieve positive change.


I agree that it is important that we know what is wrong with the world. But, given the scale of what we have achieved already and of what is possible in the future, I think it’s irresponsible to only report on how awful our situation is.


To see that the world has become a better place does not mean to deny that we are facing very serious problems.”


Focus to Win by Farnam Street: The title says it all.


Morgan Stanley Says Bottom Near for Emerging-Market Equities by Bloomberg: Morgan Stanley believes emerging-market (EM) equities have brighter days ahead. If they’re right, our portfolios will benefit as we are overweight EMs. They are currently cheaply valued and should grow faster than the developed world over the coming decades. 


All the Personal-Finance Books Are Wrong by Derek Thompson: Really interesting article on how economic theory, even when sound, often fails to take human emotions into account, which can lead to poorer results.

It reminded me of Naval Ravikant’s advice on building habits: “...choose consistency over content. The best book is the one you can’t put down. The best exercise is the one you enjoy doing every day. The best health food is the one you find tasty. The best work is the work you’d do for free."

Perhaps a Visit to Wisconsin is in Order…


Do the Right Thing by The Browser: You know an article has affected you when it sends you down multiple rabbit holes. This article on rationalism did that for me. I’ve not only expired a number of websites it cited, I’m also now reading Map and Territory, a book it mentioned. Odds are it won’t stop here.


Though I’ve always been drawn to rationalism, it seems even more important today, where the truth seems under assault from all sides. Clear, rational thinking may never have been more important than it is now.


Italy has 334 ‘Most Beautiful’ Villages. Can Their Beauty Survive?: Italy has a shocking number of “beautiful villages” with crumbling infrastructures that are fighting depopulation.

Stoicism for Modern Stresses: 5 Lessons from Cato by Ryan Holiday: Five lessons from one of the most famous and courageous of all stoics. 1) Master the power of gestures; 2) Don’t compromise—ever; 3) Fear nothing; 4) Use pain as a teacher; 5) Don’t expect to control your legacy.


John Denver: Death of the Sunshine Boy by Mobituaries: I don’t remember the first time I heard a John Denver song, but I know I’ve always liked his music and am increasingly drawn to it the closer I am to nature. This episode of Mo Rocca’s (from CBS’s Sunday Morning) Mobituaries highlights the highs and lows of Denver’s life and his tragic death, while weaving in many of his classic songs.

History’s Biggest Questions with Dan Carlin (Part 1 & Part 2) by The Rest is History: Question: Would you rather be under siege by A) The Mongols, B) The Romans, or C) The Assyrians. Yes, I’d also choose D) None of the above. But if you had to choose and had no idea where to start, this podcast is for you. Dan Carlin (Hardcore History) discusses this and nine other big questions like, “What would have happened if the south won the Civil War?” with the hosts of The Rest is History.


James Burrows on Bringing Sitcoms to TV, Will & Grace, Cheers, Friends by Smartless: I had no idea how prolific James Burrows has been.


In the history of physics, every time we've looked beyond the scales and energies we were familiar with, we've found things that we wouldn't have thought were there. You look inside the atom and eventually you discover quarks. Who would have thought that? It's hubris to think that the way we see things is everything there is.

- Theoretical physicist Lisa Randall, on looking beyond what we are familiar with


“The only man I know who behaves sensibly is my tailor; he takes my measurements anew each time he sees me. The rest go on with their old measurements and expect me to fit them.” 

​- George Bernard Shaw


“If you can’t tell what you desperately need, it’s probably sleep.”​ 

- Kevin Kelly


“A lot of smart people think they’re way smarter than they are, and therefore they do worse than dumb people. And it’s very common to be utterly brilliant and think you’re way the hell smarter than you are."

- Charlie Munger


There can be no happiness if the things we believe in are different from the things we do.

- Freya Stark

Matthew Lekushoff
Subscribe to My Newsletter
Twitter  Linkedin  Facebook  
This provides links to other Internet sites for the convenience of users. Raymond James Ltd. is not responsible for the availability or content of these external sites, nor does Raymond James Ltd endorse, warrant or guarantee the products, services or information described or offered at these other Internet sites. Users cannot assume that the external sites will abide by the same Privacy Policy which Raymond James Ltd adheres to. The views of the author do not necessarily reflect those of Raymond James. This article is for information only. Raymond James Ltd. Member-Canadian Investor Protection Fund. Unless otherwise mentioned, all market returns are sourced from Thompson One.