As we close out the month, most global stock exchanges trade near their previous month-end values. As is usually the case, there are a few things to note.
Last year, emerging markets (EMs) performed well, rising more than 15%. That momentum continued into 2021 with an impressive 10% increase in January. Unfortunately, they weakened considerably during the February to April period and spent most of May (for the month and year) in negative territory. However, they have since rallied and have climbed back to parity for both periods.

The most meaningful factors behind EMs' post-January weakness have been the declines of the Chinese and Brazilian indexes. However, the dire COVID-19 situation in India has prevented them from growing at a rate that was expected. Given how relatively reasonably priced EM stocks are, their young populations, and their incredible potential to grow, there is reason to believe they will outperform in the years to come.
Gold, on the other hand, performed brilliantly during the height of the market crash last year, rising more than 30% at one point. But it began falling last August until finally finding support this March. It has risen since then and, with a 6% increase in May, is almost back to parity for the year. With increased inflation expectations on the horizon, as well as huge governments deficits for the foreseeable future, gold could enjoy increased strength in the months and possibly years to come.
Year to date, Canadian energy stocks continue to lead the way, up more than 37%. U.S. value stocks also remain strong, trading 16% higher on the year, doubling the growth heavy NASDAQ index, while Canadian REITs and the Canadian index have also outpaced the global competition, up 14% and 12%, respectively in 2021.
With rapidly increased rates of vaccinations, there are reasons for optimism. However, we remain in unchartered waters. Although our portfolios are well-positioned for the uncertain future, we will remain vigilant in case of the unexpected.

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.

The latest in my TILF (Things I’ve Learned From) series: Things I’ve learned from Naval Ravikant
Fooled by Randomness (Incerto Series #1) by Nassim Taleb: Humans have a long history of confusing cause and effect. A specific dance or prayer to a rain god when followed by rain would sometimes be credited with ending a drought. We’d like to think we’re wiser today, but our world’s complex nature continues to cloud our understanding of it. Fooled by Randomness, Nassim Taleb’s first book, illustrates how much of what we assign deterministic value to is simply the result of, well, randomness.
But it’s also about: how often luck is mistaken for skill, the dangers of blindly trusting induction, how catastrophes are usually a surprise (WWI, 9/11, U.S. property crash etc.), how most future ones will be surprises too, how poor we are at understanding rare events, and numerous others. 
I first read Fooled by Randomness a decade ago. It changed the way I looked at the world. I’m glad I revisited it and plan on reading the following three books - The Black Swan, Antifragile, and Skin in the Game - in the series. I believe Taleb is one of this generation's most important thinkers. It’s a shame he isn’t better known outside the investment and mathematics communities.

Principles You by Ray Dalio & Adam Grant: If you own a business, manage people, or are just interested in learning about yourself and others, this may be of interest to you. Ray Dalio and renowned organizational psychologist Adam Grant have created a useful personality questionnaire. It’s designed to provide an accurate personality profile to help you understand yourself better. It can also be shared to help understand each other and build optimally composed teams. The best part is that it’s free. Tanya and I both did it and had some fun (well, mostly) looking through the results.
Growing Mortgage Debt Making Canada’s Economy Vulnerable by CBC: Although Canada’s consumer debt has fallen since the pandemic began, total debt levels have risen due to a surge in mortgage debt. As a result, the Bank of Canada is becoming concerned that it could pose a risk to the economy at large.
Moore's Law for Everything by Sam Altman: Sam Altman believes artificial intelligence is a game-changer, leading to unprecedented wealth and transformation. However, he also believes this wealth will increasingly be distributed unevenly. His essay provides suggestions on how the economic system should be structured to ensure everyone can enjoy a reasonable standard of living, while incenting innovators and entrepreneurs to create the products and services required to drive the economy forward.
A Few Short Stories by Morgan Housel: A few short stories on how the world works.

Canso Newsletter (May): The latest Canso letter discusses the current status of the bond market (spoiler alert: it’s not paying well enough to take risks), government spending, the central bank’s printing of money, and how the team feels this will affect inflation.

Biden = Roosevelt (The Analogue) by Ray Dalio: When Ray Dalio looks for historical comparisons to President Biden’s economic plans, he sees many similarities to FDR.
The Biden Tax and Spend Plan & The Big Cycle Swing by Ray Dalio: This provides a detailed look at the Biden economic plan mentioned above, while providing thoughts on the potential results.
Interest Rates by Country in 2021 by Visual Capitalist: We assume that because our interest rates are at record lows, this is the case for everyone. People who live in Turkey, Venezuela, Bolivia, and Argentina are experiencing a different reality.
Why U.S. value stocks are poised to outperform growth by Vanguard: Value stocks have performed very well this year (see market section above). Vanguard provides some thoughts on why value may outperform growth for the foreseeable future.
Why Has Nuclear Power Been a Flop? by Jason Crawford: I’ve found it puzzling as to why nuclear energy hasn’t been a bigger part of the fight against global warming. This article doesn’t fully explain the lack of political will for nuclear power, but it does explain some of the irrational fears around it and the bureaucracy that has caused prohibitively high costs in the U.S. If you don’t know much about nuclear energy and its potential, you may find this short video helpful.
American Experience - JFK by PBS: A frank look into the 35th president of the United States, his tumultuous presidency, and, of course, his extramarital dalliances. This is an interesting period to revisit JFK’s presidency. The current pandemic and the Cuban Missile Crisis are stark reminders that grave danger always lurks around the corner, especially when they’re unexpected.
Patton: Classic movie on the eccentric WWII General Patton, played wonderfully by George C. Scott.
On The Waterfront: A young Marlon Brando at his best. Another classic award-winning movie with a great cast. Fun fact: Karl Malden plays meaningful roles in both this and Patton.
Nature Boy by Rory Karpf: If you know anything about wrestling (not the Olympic type, the one with the predetermined outcome), you know the name Rick Flair. He’s up there with Hulk Hogan. This riveting documentary is about Flair’s life, but also provides a glimpse into the dark side of the industry.
Why Egypt's Lifeline is Drying Up | Nile Conflict: Global warming may lead to unprecedented flooding, but ironically, also lead to shortages of drinkable water. This video provides a short history of why the Nile has been drying up and the issues that could arise from Africa’s largest dam that is being built in Ethiopia.
How to Turn Sea Water Into Fresh Water Without Pollution: Interesting technological opportunity for arid countries.


“Risk is what’s left when you think you’ve thought of everything.”
- Carl Richards
“The cost of making decisions to please others instead of yourself is misery.”
- Shane Parrish

“The best index to a person's character is (a) how he treats people who can't do him any good, and (b) how he treats people who can't fight back.”
- Abigail Van Buren (Dear Abby)
Matthew Lekushoff
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