Download our 2015 Q4 Letter to Investors (321KB PDF)

Original article from La Presse – LE PLACEMENT À ÉVITER by RICHARD DUFOUR.

1. What was this week’s most important event on the markets?
Despite last Friday’s deadly attacks in Paris and the subsequent aftermath of the tragedy, the markets defied expectations and rallied this past Monday to post their strongest session in weeks.
In addition to the stock markets being oversold leading up to the Paris attacks, investors have increasingly realized these tragic events have a more muted impact on economies and markets, despite the terrorists’ best efforts to create chaos and fear around the world. While there could be some fallout in the area of travel, which could undermine transportation, hotel and hospitality, retail and luxury stocks near term, the economy should prevail over the longer term, as consumption is deferred rather than eliminated. Also, the European Central Bank is likely to continue its quantitative easing program.

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Download our 2015 Q3 Letter to Investors (2.45KB PDF)

On May 29th, MWG’s David Newman presented to the ACTE (“Association of Corporate Travel Executives”), a professional association representing corporate travel managers and travel service providers in 29 countries. His fundamental analysis makes a strong argument for longer term returns in aviation investments to exceed historical returns.

TMWG Presentation to ACTE May 29, 2015 (2.5MB PDF)

In our inaugural newsletter, I thought I would open up with a few thoughts about The Murray Wealth Group (“MWG”) and the process we use to pick stocks. I am quite excited about the team we have assembled. It is an experienced and motivated team of highly intelligent but humble people, who are working to make your investment experience both profitable and enjoyable.

Joining me in research and portfolio management is the very hardworking David Newman, our Head of Research. David is a veteran Bay Street analyst whose 20 year research career included top rankings in many annual investor surveys. Working with David will be fun and challenging as we both share a passion for the stock markets and corporate stories. We will be continuously reviewing stock fundamentals and interviewing corporate executives looking for opportunities to upgrade our portfolios.

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While some of the bears are starting to emerge from a long hibernation, MWG is still firmly in the camp of the bulls, despite the six year run being the fourth longest bull market in history. We expect the spring and summer to shed even more sunshine on the markets. Many market pundits continue to wag a foreboding finger about the cyclically adjusted price to earnings (CAPE) ratio, the Shiller-P/E, Tobin’s Q ratio, and other signs that signal a market top. We won’t bother to bore you with the details of these various metrics. According to Savita Subramanian, Equity Strategist at Bank of America Merrill Lynch, “When investment strategists have been this bearish in the past, the S&P 500 rose 98% of the time, with average gains of 27%.” While the markets are certainly richer than in the recent past, we believe there is significant room for greater share price appreciation. When the markets do check back (and they will), we would view that as a nice opportunity to buy.

Our work suggests there is no imminent end to the current bull market, despite the fear-mongering of some of the bears. First of all, interest rates remain low. In fact, in many countries, including Canada, interest rates have recently been cut yet again. In the US, the Federal Reserve remains undecided, but given recent jobs data, is unlikely to raise rates until late in 2015, and even at that, the pace of interest rate hikes needs to be relatively gradual to sustain the strong recovery. In today’s environment, consumers and businesses can borrow at near-record low interest rates, which should continue to stimulate the economy. Corporate balance sheets and profits remain strong. The bottom line is that investors looking to grow their portfolio in a low interest rate environment should still prefer equities. Simple supply and demand should dictate that share prices will continue to rise. And cash levels remain high, with the only home for it being equities, in our view.

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