MARKET WATCH
The strong market performance that began in January continued through February, with virtually every global market segment 3-6% higher on the year.
That is, of course, with the exception of commodities. After a breakout year in 2020, especially when markets plunged, gold is 6% lower this year. Canadian energy stocks, on the other hand, despite tremendous strength around the end of 2020, had a horrible rest of the year, falling about 35%.
Yet, 2021 has been a different story. Oil patch companies are already 27% higher on the year! This is the third time since November 2019 where gold and energy companies moved in opposite directions. Although they canceled each other out to some extent, given our religious rebalancing practice, they enhanced our returns while mitigating risk.
Looking forward, there are numerous reasons to be excited. Yes, U.S. equities are expensive and potentially vulnerable to correcting given their lofty valuations. And we’re definitely not out of the pandemic woods. However, with vaccinations rising, COVID-19 numbers falling, governments aggressively spending, money being aggressively printed, not to mention pent up consumer demand, global equities could very well continue rallying. I’m especially excited by energy and emerging market stocks, and expect gold to rebound at some point.
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TAX SEASON
Home Office Expenses: With tax return time around the corner, those of you who have worked from home may want to make note of some potential tax relief. The Government of Canada has established a temporary deduction for employees working from home, which amounts to $2 per day (up to a maximum of $400) that can be claimed on your 2020 income tax return. Under this new method, employees will not need a Form T2200 to claim a deduction. For more information, visit the government’s news release or access the CRA brochure.
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THINKING ABOUT IT
Aside from my usual perusals, I spent much of February working on two processes I believe are vastly under-appreciated: thinking and decision-making. Besides hard work and luck, I feel these are two of the biggest factors that contribute to a successful life.
Rhythm of War by Brandon Sanderson: The fourth book in what is becoming an epic fantasy series. But be warned, if you’re thinking about starting the series, each book is 1,200 pages and the series is expected to be 10 books long.
How To Decide by Annie Duke: Former poker pro Annie Duke walks through the nuances of good decision-making. Not only is the content fantastic, it’s written as a workbook to help you get the most out of it. By far the best book I’ve read on decision-making!
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ARTICLES
The Days Are Long But The Decades Are Short by Sam Altman: I’m a sucker for lists of what people have learned, especially when they are based on milestone birthdays. However, this one is not only good, it’s impressive because the author is only 30.
How to Think for Yourself by Paul Graham: Paul Graham argues that being an independent thinker relies on three factors: curiosity, resisting being told what to think, and being fastidious about truth.
The High Price of Mistrust by Farnam Street: I’ve long believed in the correlation between successful cultures and trust. In this blog post, Shane Parrish discusses the costs that can be incurred due to a lack of trust.
A Few Rules by Morgan Housel: There is a lot of wisdom here!
What I Think of Bitcoin by Ray Dalio: Bitcoin has been in the news quite a bit lately. Although Ray Dalio isn’t an expert in crypto currencies, as one of the great investors of our generation, I’m always interested in how he views any investment. As everything else he does, this article is thorough, well thought out and useful.
Asia's COVID Recovery: Vietnam's breakout moment by Nikkei Asia: I’m increasingly coming across articles on Vietnam. It not only has one of the fastest growing economies on the planet, but it’s also increasingly becoming a manufacturing alternative to China, while keeping COVID numbers low. As a result, its economy grew by 2.5% last year and is expected to grow by more than 6% in 2021. It’s also planning for the future by investing up to $8 billion in world-class ports. With almost 100 million people, Vietnam will be a country to watch in the coming years and decades.
Probabilistic thinking by Shane Parrish: Great Twitter thread on the importance of using probability to reason through problems and decisions.
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PODCASTS AND VIDEOS
The Hidden Half author Michael Blastland on Econ Talk: “[Michael] Blastland argues that the deeper you delve into science, medicine, astrophysics - pick a topic - the more you realize there is a lot we don't understand. Things we can't explain. Blastland believes we would all do well to admit that and stop pretending that everything is knowable and every problem solvable.”
Antarctica: A Year on Ice by Anthony Powell: Ever wonder what it’s like to live on the planet’s coldest continent for a year? This great documentary will answer all of your questions.
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SELECTED INSIGHTS
“The most powerful weapon on earth is the human soul on fire.”
- Ferdinand Foch
- Morgan Housel
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Matthew Lekushoff
416-777-6368
matthew.lekushoff@raymondjames.ca
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