Monthly Archives: March 2020

A Message from Our Team

 

A Message from Our CEO, Bruce Murray

Over my career, I have witnessed almost a dozen selloffs of 20% or more, which is about one every 3-4 years. Of these, the following are remembered:

  • 1973-1974 
    • Creation of OPEC and the first oil embargo
    • Concern over inflation and the collapse of the Nifty Fifty
  • 1979-1982 
    • 2nd OPEC crisis resulting from Iran/Iraq war
    • The Central Bank intervention to break inflation and the Third World Debt crisis
  • 2000-2003 Tech Bubble collapse
  • 2008-2009 Mortgage Crisis
  • 2020 COVID-19 Pandemic

Of the above examples, the 1980-1982 downturn was the one that scared me the most. We were hostage to OPEC, inflation was rampant, already high, and rapidly rising, interest rates were devastating to both businesses and consumers, bankruptcies were widespread.

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Crude Oil Drinks a Corona (catches a virus)

 

MWG SPOTLIGHT ON CURRENT EVENTS:

Crude Oil Drinks a Corona (catches a virus)

This is reminiscent of late 2014 when Saudi took aim at the US Shale industry, creating an all-out price war which led to oil prices falling from US$100+/bbl to US$30/bbl a year later. The energy industry has adjusted its cost base and mostly survived that fall but it’s in for another fight as Russia has indicated it will continue to pump as planned. For Canada, this is another blow to Alberta and could push the province into a recession in short order.

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February Portfolio Update | 2020

 
The stock market panic of late February, due to fears to COVID-19 and a Bernie Sanders presidency, led to one of the sharpest selloffs in recent history. However, a resurgent Joe Biden has emerged as the frontrunner for Democratic nomination and health care stocks are recovering. We expect the virus will reduce GDP with the travel industry being the most obvious victim. We feel the damage was discounted by more than enough last week and will proceed with fully invested portfolios. A potential positive of these events is that the current economic cycle may be extended yet again.

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