Matthew Lekushoff |

Remember a few months ago when stock markets were calm and only the Canadian market struggled to stay above even for the year? 

Those days are long gone.

Lately, volatility is the norm, as markets attempt to digest a record-long U.S. bull market, leading to: rising interest rates; the rise of populism; trade wars; upcoming mid-term elections in the U.S.; political tension in the Middle East; and major weakness among emerging market indices. It's been a lot.

As most markets sit firmly in negative territory for 2018, the lone exception are U.S. markets that, as of yesterday, were even over the same time period. 

Having said that, our portfolios have weathered the storm better than most markets on the equity side given our exposure to Canadian REITs, but especially gold. The precious metal has mostly risen on days of market weakness and treaded water on up days. Our bonds, of course, have also done well lately given their short durations and conservative credit profiles.

Moving forward, aside from our religious rebalancing practice, should stock markets fall much further, we may look to adjust our asset allocation from the current defensive positioning to a more neutral stance. Continued market weakness from there could warrant a move to an aggressive allocation.

We are well-positioned to take advantage of further weakness!


I've long believed I won the birth lottery. I was born into a great family that unconditionally loved and cared for me regardless of the circumstances (and trust me...there were circumstances). What I never imagined was that I'd also win, arguably, the second most important lottery in life-----  the spousal lottery.
A year ago, Tanya and I were newlyweds, cruising around South America and making friends with penguins. And today, we're in Mexico celebrating our first year of marriage-----  I've had enough good luck to last several lifetimes!


Win Bigly: Persuasion in a World Where Facts Don't Matter  by Scott Adams: President Donald Trump is one of the most controversial figures of our time. But, while many considered Trump a political punch line throughout the year leading up to the election, Dilbert creator Scott Adams predicted Trump would win-----  easily. This book is about the qualities Adams saw in Trump to confidently make that long-shot prediction. If you remain befuddled by Trump's political success, Win Bigly provides some answers.
As a cautionary note, if you dislike Trump, parts of the book will frustrate and possibly even anger you. But this isn't a typical partisan book. It's filled with lessons on human bias and persuasion tactics that can help you recognize when individuals, organizations, and politicians are exploiting them for their own purposes.
Traffic Signs  by Grant's Interest Rate Observer: A short podcast discussing how some of the economic indicators in the U.S. are pointing to potentially lower than expected inflation in the States. Keep in mind this is only one firm's (Lakshman Achuthan) opinion, but it's interesting, nonetheless.
Lottery Math is Human Math  by Seth Godin: Apparently there was a $1.6-billion-----  yes, you read correctly-----  lottery prize south of the border recently. Seth Godin had some thoughts about it and those attempting to win it.
Howard Marks - How to Invest with Clear Thinking:  The Tim Ferris Show: At 72, Howard Marks has half a century of experience in finance. In this wide-ranging conversation, he opines on his life philosophy, the present state of the U.S. market cycle -----  spoiler alert, he thinks it's a little frothy-----  mental models, and many other things. You may also want to check out his  latest quarterly investment memo , which goes further in depth regarding the state of the U.S. economy.
How Wolves Change Rivers   by Films for Action: One of the reasons I love learning about evolution is it demonstrates the interdependence between species and their environments. This video is a perfect example of how a relatively small change to an ecosystem (adding wolves to a section of Yellowstone Park) can change an environment. This happens in our lives too. Jim Rohn is still  revered  for his quote, "You are the average of the five people you spend the most time with." I believe it's one of the most important principles we can apply.
Homeowners worried about paying down debt as interest rates go up  by Sophia Harris: I've long been concerned about rising interest rates for Canadian consumers and homeowners. Now that interest rates are rising and  Canadians owe a record amount of debt  relative to their income, they are concerned too.
The 5 Biggest Market Risks That Billionaires are Hedging Against   by Visual Capitalist: Here is what some of the world's wealthiest people are protecting themselves against.


"Confirmation bias isn't an occasional bug in our human operating system. It is the operating system. We are designed by evolution to see new information as supporting our existing opinions, so long as it doesn't stop us from procreating. Evolution doesn't care if you understand your reality. It only cares that you reproduce." 
"We humans like to think we are creatures of reason. We aren't. The reality is that we make our decisions first and rationalize them later....Your illusion of being a rational person is supported by the fact that sometimes you do act rationally." 
Scott Adams, Win Bigly: Persuasion in a World Where Facts Don't Matter
"Finally, it's worth noting that nobody who entered the market in nearly ten years has experienced a bear market or even a really bad year, or seen dips that didn't correct quickly.  Thus newly minted investment managers haven't had a chance to learn firsthand about the importance of risk aversion, and they haven't been tested in times of economic slowness, prolonged market declines, rising defaults or scarce capital."
- Howard Marks
"Observations like these tempt me to apply what I consider the #1 investment adage: 'What the wise man does in the beginning, the fool does in the end.'" 
- Howard Marks

  • The funerals of the 11 victims of last Saturday's shooting at the Tree of Life synagogue in Pittsburgh began earlier this week. 

Matthew Lekushoff

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