Happy anniversary!

RYAN By Guest Blogger Ryan Lewenza

Break out the champagne…the current bull market hit its 10 year anniversary last week! Who would have thought that the S&P 500 would go on to return 400% including dividends following that historic financial crisis and bear market. During that period the entire financial system was on the brink of collapse, the US economy was shedding over 700,000 jobs per month, and nearly $8 trillion in US stock market wealth was wiped out. I get panic attacks just thinking about.

Well things sure have changed since those dark days. The US economy has added 20 million net new jobs since 2010, total US net worth has increased by $47 trillion and since the financial crisis low of March 9, 2009, when the S&P 500 bottomed at 666, the S&P 500 has returned a staggering 400% including reinvested dividends or 17.5% annually. Where does this stack up with the rest of the bull markets? This bull market is now the second longest on record at 120 months. The only bull market to best this is the 1987-2000 bull market, which lasted 150 months and saw the S&P 500 return 723% including dividends. In this week’s blog we review the main factors that have supported this amazing bull market and discuss everyone’s favourite topic – can it continue?

The S&P 500 Has Returned 400% since March 2009

Source: Bloomberg, Turner Investments

While there have been a number of factors that have contributed to this great bull-run I believe the key ones include:

  • A slowly improving US economy. Since the end of the financial crisis in 2009, the US economy has grown at average 2.1% GDP growth rate. This is below the long-term average of 3.3%. Now this is where the bears get it all wrong. They think that because of the half-speed recovery since 2009 that this bull market is not supported by strong economic fundamentals and given this the stock market is doomed. But I think they have it totally wrong. Due to the slower economic growth and low inflation levels, the Federal Reserve has been able to take a very gradual approach to hiking interest rates, which has elongated this business/market cycle and greatly contributed to the phenomenal market gains. Basically growth has been “not too hot, not to cold”, which are ideal conditions for the equity markets.
  • Second, as a corollary, S&P 500 earnings have surged from $55/share in 2009 to $150/share today. This equates to a 170% increase in earnings, which accounts for 43% of the total return (dividends account for 80% and P/E expansion the remaining 150%) since 2009.
  • The third driver of returns has been the massive monetary stimulus provided by the Federal Reserve. This includes the Fed taking interest rates down to 0% (now at 2.5%), and the huge expansion of the Fed’s balance sheet, which has grown from US$800 billion in 2009 to over US$4 trillion today. Without a doubt this Federal Reserve monetary largesse has greatly contributed to the stock market gains.
  • Lastly, the US banks, where most of the problems originated from, are in much stronger shape today having de-risked their balance sheets and increased their capital ratios. The tier 1 capital ratio measures a bank’s financial health and calculates the percentage of capital to a bank’s total assets. Below is a chart of the average tier 1 capital ratio for the major US banks and following the 2009 financial crisis the banks have worked hard at increasing this ratio. The US banks are in solid financial shape these days and a key reason why I believe the next economic downturn and bear market will not be nearly as calamitous as the 2008-09 financial crisis.

US Bank Tier 1 Capital Ratios

Source: Bloomberg, Turner Investments

Now to the more important matter, can this bull market continue?

On a shorter term basis we believe the Federal Reserve backing away from their rate hikes this year and Trump seemingly close to signing a trade deal with China, that this will be very supportive to the equity markets this year.

Next up is how close are we to a recession? This is critically important since most bear markets are brought on US/global recessions, and we just don’t see it for 2019. Could it happen in 2020 or 2021? Sure, but let’s not put the cart before the horse.

As covered in previous blog posts I have developed a “recession monitor”, which looks are key economic and market indicators that have done a decent job forewarning of US recessions. This list includes things like initial jobless claims (they typically spike ahead of recessions), the ISM manufacturing index (it typically rolls over and declines below the key 50 level) and the US yield curve (it inverts before recessions and bear markets). None of these indicators are flashing red suggesting an imminent recession. Some are yellow (the yield curve) and require close monitoring, but the bulk of our indicators remain positive and suggests continued growth in the US economy.

Recession Monitor List

Source: Bloomberg, Turner Investments

Finally, a major reason why I have been bullish on the US markets since 2009, and particularly since 2013 when the S&P 500 made a new all-time high, is that I believe that the US equity markets trade in long-term or “secular” bull and bear cycles.

Look at the chart below. It’s a long-term chart of the Dow Jones Industrial Average and it clearly shows these long-term bull and bear cycles, which last roughly 15 years on average. The most recent secular bull cycle lasted from 1982 to 2000, followed by a secular bear cycle from 2000 to 2013. When the S&P 500 broke out to new all-time highs in 2013, this started the next secular bull cycle, in my opinion. If correct this could mean US stocks have the wind behind their sails well into the 2020s. Now let me be clear, this does not mean that stocks will not endure major sell-offs and bear markets. They will! The business cycle has not been eradicated. But if I’m correct, it does mean that US stocks will continue to post solid returns over the next decade. Wouldn’t that be nice!

Secular Cycles of the Dow Jones Industrial Average

Source: Bloomberg, Turner Investments

So there you have it! I see the US economy continuing to expand this year and see low odds of a recession. This should support further market gains over the next 9-12 months, and longer-term (next decade) I see continued healthy returns based on these supportive secular market cycles.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

71 comments ↓

#1 Gordon on 03.16.19 at 11:19 am

Oh please stop. Obama had nothing to do with the current recovery that started Nov 16 2016 with the inauguration President Donald Trump. The bull market is two not ten.

#2 Chris on 03.16.19 at 12:09 pm

Neither has Trump anything to do with the recovery. Recovery started in 2009 when the recession ended. POTUS has little impact on the economy. Bill Clinton did not cause the dot com crash. Neither did Bush create the housing bubble and the recession.

#3 DON on 03.16.19 at 12:35 pm

#27 MF on 03.15.19 at 5:59 pm

#18 Wallflower on 03.15.19 at 5:19 pm

“one. immigrants are not staying in Canada like they used to stay ”

-Wrong, and I don’t know where this fake story keeps coming from.

Immigrant retention rate after 5 years in Ontario: 91%. Canada wide it’s 86%.

https://www150.statcan.gc.ca/n1/daily-quotidien/181210/cg-a002-eng.htm

And the oversupply thing is a myth. Just look at rents in the GTA as an example why.

Hate to say it, but uppa uppa (that hurt).

MF
**************

MF

I had friends that just took their home family back to Germany (sold house and everything) and they did it for the jobs and affordability and better health care for their children.

I have a friend who is also thinking about moving back to birth country.

I love Canada but all do. I used to live in Vancouver and would never do it again, fun when I was roaming with the boys, but a pain in the ass to drive through. Things change a lot between 30 and 60.

#4 Nada on 03.16.19 at 12:42 pm

(T – C) + (S – I) + (M – X) = O

#5 DON on 03.16.19 at 12:43 pm

Hey Ryan,

How does the Recession Monitor List look for Canada?

I saw this pop up in yesterday’s news. (BC)

Huged Layoffs at Moduline – Slow winter leads to layoffs. Some may be hired back if conditions improve but are not expected to in the short term.

https://www.castanet.net/edition/news-story-251618-21-.htm Huged Layoffs at Moduline

#6 Peter McLean on 03.16.19 at 1:05 pm

HELLA TIGHT!

#7 SoggyShorts on 03.16.19 at 1:25 pm

Should initial jobless claims not be per capita or something? The US population has changed quite a bit since ’73

#8 Smoking Man on 03.16.19 at 1:34 pm

Chris on 03.16.19 at 12:09 pm
Neither has Trump anything to do with the recovery. Recovery started in 2009 when the recession ended. POTUS has little impact on the economy. Bill Clinton did not cause the dot com crash. Neither did Bush create the housing bubble and the recession.
…..
Do not invest your own money, get a financial advisor.

The markets took off when Trump was elected, mr market knew lower taxes and deregulation was in the cake. the catalyst.

The dip late last year was the Democrats winning the house. All settled down after Christmas and the realization Mueller has squat on #1

Now that he has a friendly attorney general expect the markets to continue to surge ahead.

On another note, saw a few minutes of that deranged phyco in NZ had to turn it of. Horrifying.
We should reinstate the death penalty for these types of crimes. Zero mercy. And do it fast.

#9 Ryan Lewenza on 03.16.19 at 1:38 pm

DON “How does the Recession Monitor List look for Canada?”

Recessions odds are higher for Canada – GDP growth is lower, we have higher consumer debt which will weigh on consumer spending and the energy patch is feeling a lot pain. – Ryan L

#10 Penny Henny on 03.16.19 at 1:41 pm

Re your Recession monitor Ryan,
Would it not have more predictive abilities if you compared the current numbers with what the numbers were 6 and 12 months prior to the previous recessions.
As an example Dec 07 was the start of last recession so lets look at where those indicators were in Dec 06 and June 07.

#11 Stan Brooks on 03.16.19 at 2:09 pm

Good choice to show US banks capital ratio. Which is 3 times that of Canadian banks (that are the safest, most prudent in the world with 5.1 %):

https://tradingeconomics.com/canada/bank-capital-to-assets-ratio-percent-wb-data.html

More on Canadian banks:

https://ca.finance.yahoo.com/news/canadian-bank-shares-see-significant-price-correction-2019-analyst-warns-184735353.html

Now imagine what could have been their validations and profits if not for the over 1 trillion ultra sub-primes ‘insured’ by the taxpayers.

Now the incompetent and corrupt liberals want to increase ‘insured’ mortgages to 30 years. To make housing ‘more affordable’.

More of the same insanity. Avoid the loonie and keep your money and assets away, the thieves are coming for it.

#12 DON on 03.16.19 at 2:12 pm

#87 Remembrancer on 03.16.19 at 8:54 am

#82 Hamsterwheelie on 03.16.19 at 5:52 am

Unfortunately logic and numbers alone won’t solve it as there is a ton of emotion wrapped up in a move like this…

Two suggestions – find out what the primary anchor is, e.g. workshop & tools, family pet, walking the land, or simple stubbornness and work out what the best solution will be and sell him on a specific. Is it a care home situation, living with you, rental condo in a wrinkly building etc etc?

Its not going to be a simple process if he’s dug in hard, but give choices and specifics b/c at the end of the day, there’s a common fear of change and loss of freedoms wrapped up in this along with whatever other emotional baggage is specific to him, and you over this.
******************

@Hamsterwheelie.

Hard to move. Maybe have a chat about all the things your Dad wanted to do in life but couldn’t do for various reasons. Guarantee him a room in your house, until he finds one around peers. But leaving his family home (?) and associated memories might be more important to him from his perspective. And that is all that matters in the end. As frustrating as it sounds – from our perspective.

I tried doing the same with my mom, but she exited this life earlier than expected. Now I understand what she taught me my whole life. Enjoy your moments with your family, friends and companions.

Best of luck.

#13 Renter's Revenge! on 03.16.19 at 2:27 pm

Hey Ryan,

What do you suppose is the reason for the market alternating between bull and bear markets?

Is it to give earnings a chance to catch up with prices after the market advances too far?

Is it momentum, or investor psychology?

Was there something better to invest in than stocks
during the bear markets, distracting people and making them lose interest in stocks?

Do you think there’s a reliable way to tell when the next bear and bull markets will start, or will we just have to sit patiently through the cycles as they happen?

Thanks, and good post, by the way.

#14 tccontrarian on 03.16.19 at 2:27 pm

Some ‘great’ investors aren’t so bullish, it seems:

Market Wizards: Why Buffett, Shiller Models Are Bearish On Stocks

“Forecasting the future direction of the stock market is a hazardous business, and even the most eminent experts are frequently wrong. Nonetheless, investors need some sense of the road ahead, and two notable figures worth heeding are billionaire investment guru Warren Buffett of Berkshire Hathaway and Nobel Laureate economist Robert Shiller of Yale University. Each has a favored stock market valuation method, both of which are followed closely by financial experts who use them to forecast market trends.

The latest forecasts, based on Buffett’s and Shiller’s methods, indicate stock market annual returns will slow drastically–or even decline–over the next 10 years. The forecasts based on these methods were compiled by the respected New York economist and financial expert, Stephen Jones, in a detailed story in MarketWatch. (See table below.)…”
/////

https://www.investopedia.com/market-wizards-why-buffett-shiller-models-are-bearish-on-stocks-4589203?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral&yptr=yahoo

TCC

#15 Ryan Lewenza on 03.16.19 at 2:42 pm

Smoking Man “The markets took off when Trump was elected, mr market knew lower taxes and deregulation was in the cake. the catalyst. The dip late last year was the Democrats winning the house. All settled down after Christmas and the realization Mueller has squat on #1”

I disagree. The US equity markets have returned a higher CAGR under Obama than Trump and the market sell off in Q4 was not due to dems taking back the house. The S&P 500 stabilized in November (month of midterms) and then fell 10% in December due in large part to Trump actions (threatening to fire Fed chair, Mattis resignation and Trumps government shutdown). Last December was the worst December performance since 1931! This had nothing to do with the November election results. I do believe Trump is generally good for the stock market but he definitely adds to market volatility with his trade wars and impulsive behaviour. This is another example of how people’s political views shape their views of the markets and the facts. – Ryan L

#16 Ryan Lewenza on 03.16.19 at 3:03 pm

Penny Henny “Would it not have more predictive abilities if you compared the current numbers with what the numbers were 6 and 12 months prior to the previous recessions. As an example Dec 07 was the start of last recession so lets look at where those indicators were in Dec 06 and June 07”

I do this as well. This provides a good starting reference point. Plus the equity markets are 6 months ahead of the economic data so that’s why I monitor the technical trends so closely. – Ryan L

#17 mike from mtl on 03.16.19 at 3:37 pm

“…We have reached a permanently high plateau…”. Pretty close sp500 to the September peak but beyond that I can’t see how it can keep going past 3000. Probably right around the time the FED starts cutting rates and 2020.

Funny how only recently the FED was able rescue confidace the last time 08-09 – prior ‘corrections’ always wiped out the last decade. This run far surpassed that, which is unusual. Most if not all indexes clearly have boom & bust cycles but this time only the 500 was able to avoid that.

#18 Samantha on 03.16.19 at 3:50 pm

I see several commenters trying to link the stock market results with one president or another, but I think this is very short-sighted. The stock markets are very complex and dynamic systems and while the economic policy of the party/president in power does affect them, it doesn’t to the degree that most people think.

#19 Tony on 03.16.19 at 3:53 pm

Re: #1 Gordon on 03.16.19 at 11:19 am

I still think we’re in a long term bear market dating all the way back to the dot-com crash.

#20 Tony on 03.16.19 at 3:57 pm

According to harry S. Dent the last 10 years only produced an average growth of 1.9 percent. The 10 year average growth in the great depression was 2 percent. No one has been locked up for stock market rigging beyond belief the past 10 years.

#21 technical analysis?? on 03.16.19 at 4:14 pm

that last DOW Chart looks familiar. Grab it from Prechter? good job. you’re on the right track, but missed out on a few things.

i. the fed circumvented a proper cleansing out of the last cycle. the markets should not have bottomed until 2015/16, but with the money printing they did, well, we’ll pay for it later… there are always consequences. especially since they will never reduce the balance sheet to pre-crisis levels.

ii. commodity cycles are mirror opposite of stock cycles. you’re not likely going to get big moves in oil, gold/silver, or grains for that matter. sorry gold bugs, of which i was one from 2004-2013.. not any more. you’ll have to wait another decade to ride that train again.

iii. while the SPX has moved up, much much better risk rewards are found elsewhere, europe, emerging markets. by far better set ups. try looking at those markets in USD. ewu, ewd, ewg.. you get the idea. same with canada, australia. those markets will vastly outperform the US in the next decade.

iv. as flashy as the 400% returns sound, YOU don’t own 100% US stocks. you hold a balanced and diversified portfolio, which has returned far LESS. XGRO has returned a paltry 2.81% since inception (this includes the 2008 collapse) and XBAL has done slightly better at 4.5% (also includes 2008 collapse). since you of course don’t publish your investing results (do you?).

in order to have above average returns, you need less US, more rest of the world and far less bonds. then just ride the wave.

#22 Shawn Allen on 03.16.19 at 4:44 pm

The Consistency Award…

Goes to Tony who has been constantly bearish on this blog since time immemorial. He may be wrong, but he sticks to his position and does not hide from it.

#23 Kamloops realtor on 03.16.19 at 5:02 pm

#6 Don

Moduline is unionized that’s the problem. Horizon north in Kamloops does exact same thing. 400 employees atleast, there expanding into Abbotsford and Alberta. No union there!
Kamloops realtor

#24 Glengarry Girl on 03.16.19 at 5:05 pm

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.cnbc.com/amp/2018/12/05/big-money-investors-see-the-bull-market-ending-in-2019.html&ved=2ahUKEwj-q-3Ux4fhAhVBvFkKHULZBCYQFjAJegQIBBAB&usg=AOvVaw3fhbK0HhYdG8XoTUeHwYpg&ampcf=1

#25 akashic record on 03.16.19 at 5:51 pm

Philip Hammond UK Chancellor of the Exchequer floated the idea in his response for student environmental protestors that the country would ban natural gas heating in new houses from 2025.

#26 No Problem on 03.16.19 at 5:55 pm

Ryan’s analysis and narrative have merit based upon his facts at hand. Relax, because if he identifies any material changes he will make adjustments.

#27 AK on 03.16.19 at 6:08 pm

“Who would have thought that the S&P 500 would go on to return 400% including dividends following that historic financial crisis and bear market.”

Indeed. Many have been waiting for a market pullback since 2011. LOL…

#28 AK on 03.16.19 at 6:13 pm

“In this week’s blog we review the main factors that have supported this amazing bull market and discuss everyone’s favourite topic – can it continue?”
=====================================
Absolutely. It will continue through 2024, while President Trump is in office.

#29 dakkie on 03.16.19 at 6:16 pm

REVERSE Mortgage Massive Increase Globally! Huge Fraud and Scams Revealed

https://www.investmentwatchblog.com/reverse-mortgage-massive-increase-globally-huge-fraud-and-scams-revealed/

#30 LP on 03.16.19 at 6:21 pm

#24 Kamloops realtor on 03.16.19 at 5:02 pm

That’s a little rich, coming as it apparently does, from a realtor. Have you tried to list and sell a property recently where you set a widely different sales commission from what is expected among your fellow realtors? Had any success having your colleagues show your listing? You can call it what you want but you’re in a union nevertheless.

#31 AK on 03.16.19 at 6:24 pm

“Next up is how close are we to a recession?”
=====================================
According to a couple of talking heads on BNN, a recession is imminent. It’s a good thing that neither one of them manages my money.

#32 Ken M. on 03.16.19 at 6:38 pm

Warren Buffett told people just to buy the S&P and they did. No chart needed.

#33 far-write English Defence League on 03.16.19 at 7:44 pm

I’m a member of the far-write English Defence League. Your article has more numbers and Latin characters than English.

I have to defend English as a language because the number of English speakers are dwindling despite ESL classes in hundreds of countries around the world. We are enemies with the Quebec Language Police. French is a foreign language to me.

We must speak the Queen’s English which is based off Old French. We must also adopt 10th century British law, which was based off French Napoleonic law.

*We are not affiliated with far-right racist and conspiracy theorist Tommy Robinson.

#34 Bad Fed on 03.16.19 at 8:35 pm

“and the huge expansion of the Fed’s balance sheet, which has grown from US$800 billion in 2009 to over US$4 trillion today. Without a doubt this Federal Reserve monetary largesse has greatly contributed to the stock market gains.”

So when the Fed reduces its balance sheet from $4 trillion back to $0.8, the stock market does what? No effect? I guess it only works one way. :)

#35 IHCTD9 on 03.16.19 at 8:40 pm

#4 DON on 03.16.19 at 12:35 pm

I had friends that just took their home family back to Germany (sold house and everything) and they did it for the jobs and affordability and better health care for their children.

I have a friend who is also thinking about moving back to birth country.

I love Canada but all do. I used to live in Vancouver and would never do it again, fun when I was roaming with the boys, but a pain in the ass to drive through. Things change a lot between 30 and 60.
— ——

The longer the time frame, the greater the exodus. The more educated/skilled the immigrants are, the quicker they leave. Stats Can numbers after 20 years for all immigrants is 30% gone. McMaster U did a study and found that among well educated and skilled immigrants, up to 40% are gone within 10 years.

Lots of domestic folks are moving abroad too.

Same reason for just about everyone, good paying full time jobs are hard to get here.

MF’s link was only at the 5 year mark. Some immigrants barely get their PR settled in that timeframe.

#36 Sam on 03.16.19 at 8:48 pm

Great read

Any sector /spaces/asset class you are over-weighted ? Underweight ?

Thanks !!

#37 Kamloops realtor on 03.16.19 at 8:50 pm

#31 LP
Don’t be jealous we make big cake us realtors
We’re worth every penny we get paid

#38 Not To Mention on 03.16.19 at 8:58 pm

#119 Tater on 03.14.19 at 12:04 pm

#118 MF on 03.14.19 at 11:47 am
111 dharma bum on 03.14.19 at

Usually people who criticize are secretly envious.

MF
—————————————————————–
This post brought to you by a relentless weed critic

—————————————————————————-

Not to mention a relentless “Don’t let the door hit you in the @$$” comment every time someone says they left Canada.

#39 Herkinft on 03.16.19 at 10:06 pm

Thanks for another great post, Ryan!

#40 Smoking Man on 03.16.19 at 10:56 pm

Ryan Lewenza on 03.16.19 at 2:42 pm
Smoking Man “The markets took off when Trump was elected, mr market knew lower taxes and deregulation was in the cake. the catalyst. The dip late last year was the Democrats winning the house. All settled down after Christmas and the realization Mueller has squat on #1”

I disagree. The US equity markets have returned a higher CAGR under Obama than Trump and the market sell off in Q4 was not due to dems taking back the house. The S&P 500 stabilized in November (month of midterms) and then fell 10% in December due in large part to Trump actions (threatening to fire Fed chair, Mattis resignation and Trumps government shutdown). Last December was the worst December performance since 1931! This had nothing to do with the November election results. I do believe Trump is generally good for the stock market but he definitely adds to market volatility with his trade wars and impulsive behaviour. This is another example of how people’s political views shape their views of the markets and the facts. – Ryan L
…..

The threat to fire the fed chair was epic, never done before. Boy did the private federal reserve go all gloomy after that. It was a combo of many factors. But earning were still awesome and any idiot that sold in q4 deserves their loses. Herdonimics 101

But atleased we agree on two things. Yes Trump is good for the markets and yes peoples political views shape their views of the market.

Smokey.

#41 Idiocracy 2019 on 03.16.19 at 10:59 pm

#39 Not To Mention on 03.16.19 at 8:58 pm
#119 Tater on 03.14.19 at 12:04 pm

#118 MF on 03.14.19 at 11:47 am
111 dharma bum on 03.14.19 at

Usually people who criticize are secretly envious.

MF
—————————————————————–
This post brought to you by a relentless weed critic

—————————————————————————-

Not to mention a relentless “Don’t let the door hit you in the @$$” comment every time someone says they left Canada.
——————-

It’s best to just add MF and his nonsense z to the posters you just scroll right on by like I do.

#42 PastThePeak on 03.16.19 at 11:02 pm

Thanks for your analysis Ryan.

#43 Crazyfox on 03.16.19 at 11:27 pm

I do so like your topic of choice, Ryan. Risk!

I like charts too. Lets take a look at the Shiller P/E ratio chart:

http://www.multpl.com/shiller-pe/

Are you seeing what I’m seeing? Y’know, that P/E ratios are past 1929 peaks, 2nd only to dot com mania once again? What does this chart look like to you? Too me, it looks like risk. Granted, there are reasons why we are seeing P/E multiples at 30. Media hype, unemployment numbers are low in the U.S. going back what, 49 years, maybe more now? The economy is humming to put it mildly but there are fundamentals that are out of wack to support this:

1) federal deficits. The U.S. economy has hit a trillion in deficit spending. We’ll know the hard numbers soon but the number out there is a trillion. Here’s what that means. A nation with federal public spending of 4.2 trillion is borrowing 1 trillion to do that. This means they are spending 23.8% more than they are taking in, give or take. Harper’s $52 billion dollar 08′ deficit was the only year Canada came near this percentage and with per capita and GDP pie factored in, its like Canadian feds with a deficit of $110 billion.

If one factored in a trillion dollar deficit with GDP, this would mean that U.S. economic growth is actually all borrowed money with 5% of the U.S.’s economic growth coming by way of federal deficit spending or, y’know, borrowed. Saying the U.S economy is “growing” knowing this is like selling feces for toilet paper. Its more like, “socialized” growth and that can’t last, not without a major jolt to currency valuations and the disruption that would create should not be lost on us.

2.

Trump. His entire presidency has been disruptive and outside of fundamentals. We are witnessing a narcissist traitor running the WH and it won’t end well. People have grown numb to it and/or don’t care because they are working or making money but that can’t last and there are all kinds of reasons to support this whether its PR with North Korea to end military exercises with South Korea in the zone for Putin’s pleasure, or the expressed Trump U.S. withdraw of NATO or the Paris Accord or environmental policy, or steel and aluminum tariffs that hurt U.S. manufacturers or specifically U.S. auto manufacturers or spending cuts in diplomacy or something much more devious like a 14 trillion dollar deficit spending bill over 10 years Trump recently introduced or the latest… ruling by VETO.

Its hard to say if the Muller report will ever be made public. A good deal has already been reported by the media that is waiting for news summarized by a Muller report that may not publicly come. There may not ever be a public report. Better for the markets… y’know… near term. Longer term? Traitor is as traitor does.

Of course it won’t end well and one has to legitimately ask how much longer Putin will go on without going to war with Trump still in power. Trump has a little less than 2 years remaining and in this time, Trump will have to pull the U.S. out of NATO, retreat the military from South Korea and what would really help Putin’s cause, the U.S. to slipping into recession? What would cause a U.S. recession… China in recession causing a world recession? A U.S./China trade war continuing on? These are the shoes that have to drop with Trump still in power for Putin to succeed with his plans for Russian expansion. All of this is set to go down into Trump’s last year of his presidency if he can keep from getting impeached and one shoe has already dropped with U.S. presence around North Korea.

We see that Trump will have a busy year if he is to be effectual for Putin and we can get distracted with nice earnings charts and focus on so called growth and jobs and such but at the end of the noise and distraction is presidential deceit, corruption and the drum beat of war, all to play out within 2 years if it is to happen at all.

Ah, but lets change the subject for a moment. Recessions come and go, engineered or otherwise. Empires collapse with another to take their place whether its engineered from outside or within. The greatest risk of all, and its not as far away as most think, is climate change. I saw some graphs recently this past week that are disturbing concerning Arctic ice and it looks like my prediction of a blue ocean event within 5 to 10 years was too conservative. My best guess now is 2022. Here’s why:

https://www.youtube.com/watch?v=YYJIwGACKY8&t=298s

This will take the ability to read charts, naturally. Shouldn’t be too difficult for most here except the purposefully ignorant and dim. The English bloke on the you tube vid is Dave and he’s smart. All of his past you tube comments are geared towards science and tech with some outliers on world populations and continued biodiversity loss but all in all, the theme is, in an overpopulated world with continued environmental degradation from pollution and over consumption of resources, is there a graceful way out of this mess?

That’s for another time… but I will say this much. To say that climate change risk is decades away is no longer true. A blue ocean event is likely to repeat year over year and shorten winters by 2 weeks and then 3 a decade later, and then 4 weeks 2 decades later, slowing jet streams all the more as it happens. The risk of a methane burst is at 10% between now and 2030 and more than 50% between 2030 and 2040. Heat waves… continued slowing jet streams… more forest fires… crop failures… this will be our new normal and just to generate some extra conversation, 2.7% of B.C.’s forests went up in smoke over the last 2 years, both records since humanity has kept them, that burned more forest by area than forest companies log annually. This is concerning, obviously. Get used to this as a new normal. There’s a tremendous amount of dead wood left over from pine beetle infestations. We could see 30% of the forests burned up over the next decade in B.C. and across the coasts as jet streams continue to slow down coupled with heat waves intensifying the drought effects of future La Nina’s. Its one example in many of how it won’t end well.

#44 SirHani on 03.16.19 at 11:50 pm

7/10

#45 Gordon on 03.17.19 at 12:08 am

#20 Tony, I think your spot on. The interference with market forces by Greenspan was a disaster we still deal with today. Emergency rates to salvage equity out of a few dot com was a colossal mistake.

What happened though was gornments everywhere realizing they could print borrow and spend from themselves at zero rates. Trudeau still thinks spending like a drunken sailor will have no consequence. The consequence so far has been a tsunami of social spending on boondoggles worldwide, the rise in civil service salaries and benefits and the totally unsustainable growth in personal debt. The ghost of Greenspan will inevitably drag us all down into the toilet.

#46 MF on 03.17.19 at 12:59 am

#36 IHCTD9 on 03.16.19 at 8:40 pm

This the study you are referring to?

https://macsphere.mcmaster.ca/bitstream/11375/16057/1/Final%20thesis_H%20Sapeha.pdf

If it is, then a couple things are evident:

-Bigger cities (like the GTA) have higher retention rates than smaller ones.
-Skilled immigrants have higher dis-satisfaction, yes, but this was true for both Australia and Canada (the two countries in the study) and is intuitive (who wants to have to retrain?)
-Immigrants who moved to areas with large sub populations that they were familiar with (like the GTA) had better retention rates.

Most of these make complete sense. Many “skilled” immigrants were trained in countries where the level of rigour is just not the same as it is here. Of course they will be upset if they have to do any retraining (but it’s necessary). And of course immigrants are going to feel more welcome where there are larger sub populations they belong to.

Therefore I still don’t see any evidence of an exodus from Canada, or the GTA, to any extent that is talked about on here. All the evidence points to the complete opposite: increased migration to urban centers, and high retention of immigrants in these urban centers.

Moreover,

The CIA’s comparison of net migration (people coming vs people leaving) has Canada at a healthy 5.7 vs the US at 3.9, Italy at 3.7, and even Germany at 1.5.

https://www.cia.gov/library/publications/resources/the-world-factbook/rankorder/2112rank.html

Since we always talk about the US on here, where do most people who leave the US go to?

1) Mexico, and then it’s Canada and the EU virtually tied for second.

https://en.wikipedia.org/wiki/Emigration_from_the_United_States

MF

#47 Smoking Man on 03.17.19 at 1:00 am

Diversity, inclusion, the fair deal..

Punishes risk takers and real job creator’s. Money and brains have wings.

Feast on each others flesh communists The smart money flipped the middle finger to T2 and the UN. And took a risk in Trumps economy.

He has no decorum, so what. Pisses off a few retarted teachers, and there idiot students where grammar and decorom are everything.

They never had a real job like knoking on doors and selling shit to people that did not want it. But loved what they bought.

Fk teachers. Stupid idiots.

#48 MF on 03.17.19 at 1:09 am

#39 Not To Mention on 03.16.19 at 8:58 pm

“Not to mention a relentless “Don’t let the door hit you in the @$$” comment every time someone says they left Canada.”

-Yup. That’s because people will always project their failures on to someone or something else. We get a lot of older retired folks on here (along with younger frustrated people) who think that if they lived abroad they would be billionaires.

I’m willing to bet that is not the case.

I also frequent a few US based forums. Same level of lame complaining.

MF

#49 MF on 03.17.19 at 1:23 am

#4 DON on 03.16.19 at 12:35 pm

There will always be people coming and going due to their own circumstances. If Germany is better for them, then they should go of course. The corollary to that is that are people in Germany that would be better off here.

In the end it’s the aggregate that matters, and in this case, Canada actually has a higher net migration rate (more people coming than going) than Germany.

You mentioned retirement. I look at my parents who are in their 70’s. They are enjoying themselves. Of course they complain about the winter, but at least they don’t have to worry about hurricanes and typhoons!

MF

#50 will on 03.17.19 at 2:07 am

well ok Ryan but i think you have these drivers out of order.

you say “The third driver of returns has been the massive monetary stimulus provided by the Federal Reserve.”

i think the fed stimulus is the First driver of returns, not the third. by placing it third you make it seem almost inconsequential. all that stimulus led to s&p 5oo companies to borrow cheaply and buy back their own shares (CP for example) which led to increased eps.

it looks like you are saying that s&p 5oo eps surged “as a corollary” to an improving economy. i don’t buy that. eps surged as a corollary to the fed stimulus (and share buybacks) – not as a corollary to an improving economy. the improving economy should maybe be third or fourth on your list.

i don’t have an opinion on bank capital ratios.

love – will

#51 Stan Brooks on 03.17.19 at 5:48 am

The new normal for a G7 country:

Over 300,000 Canadian university students turned to ‘sugar daddies’ and ‘sugar mommies’ to cover costs

https://ca.finance.yahoo.com/news/300000-canadian-university-students-turn-sugar-daddies-cover-costs-155014796.html

On average, ‘sugar baby’ students get $2,925 a month, which is about double what they would make in a part-time job

No, it is not legalized prostitution, why would it be?

=================================

https://ca.finance.yahoo.com/news/exclusive-indian-antitrust-watchdog-raids-162800535.html

Now imagine the feds here raiding the grocery store chains as of the bread fixing scandal or the gas station as of gas price fixing scandal or telcos due to telco services fixing scandal…. , just kidding.

Is the horse face french villa guy taxing the sugar baby’s income? Some idea on how to relieve the budget deficit. We are talking about some significant economic activity here, over 30 k yearly for 300 000 students is around 10 billions in whore’s fees that are currently not taxed. Put carbon tax on it.

As I said: invest in lubricant/Vaseline companies.
Nothing personal, just business.

#52 Stan Brooks on 03.17.19 at 5:51 am

#39 Not To Mention on 03.16.19 at 8:58 pm

Not to mention a relentless “Don’t let the door hit you in the @$$” comment every time someone says they left Canada.

————————————

They are afraid that you will be competing with their kids on ‘seeking arrangements’ lucrative contracts.

#53 Gordon on 03.17.19 at 6:21 am

Why pick stocks? It’s not like you scoop them out of your butt ( and that’s no dig at Trudeau) it’s a product of fundamental analysis. You pick a stock after careful consideration of what they’ll offer you in the future.

Take my call a few weeks ago on BKNG @ USD 1630. The perception of a dip was a product of rigor taking by institutional layers that retail punters misread from conservative guidance. A mini panic set in after the CEO didn’t set his hair on fire, which if they’d known is a style this company set years ago. So, the stock went on sale $200 bucks a share. I bought, reported that here and now sit in a $100.00 per share profit. All this information is in the public domain, you just had to diligent enough to research it. However much Booking goes up know is no concern to me, I bought the stock cheap. Recovery is happening ahead of my expectations, boo hoo.

Ex:2 A few years ago the installation of a relative unknown in Canada, Hunter Harrison , an American , was brought in to drive CP Rail. He was killed in the Canadian media because no one knew who he was. His reputation was enormous in the US and that was public knowledge. The stock dropped like a stone as Canadian pundits dumped on him. Those who knew better bought with both hands. I got mine at $83 and the stock is $274 today.

Ex:3 CGI out of Montreal had just announced a major military contract for the pentagon, yawn said the Canadian financial critics. It has since gone on to purchase with cash billions of dollars worth in acquisitions. I bought it when it was puked up at $15. It trades at &83 today.

Ex: 4 . Tim Hortons was in the crapper. They were going to be replaced by Mom and Pop coffee shops in the NE USA. It was a company the Canadian financial media couldn’t Hate enough. The stock was $14 when I dove in like a pig. It was bought by Burger King, opened 1500 stores in the Midfle East and has announced another 1500 in China, all public information. The stock trades at $82+ today.

I own these issues and many more because they represent the superstock growth you need in a portfolio to make you rich instead of paddling backwards in a sea of corpses. Conclusion, do your homework and don’t believe it when someone tellls you the stock market is a casino. It’s actually a business where smart people work.

I don’t recommend anyone buy any of these issues . The market may be more volatile than your brain is skillful. Chart skill is meaningless in fundamental analysis so Ki won’t comment on the current torrent of excellent work because I never look at charts, only PL and Balance sheets.

https://m.bangkokpost.com/business/finance/1646180/low-inflation-in-southeast-asia-puts-analysts-on-rate-cut-watch

BTW. Rates are going down world wide. What does that say about non correlated issues like the oft discussed. CPD? Decide for yourself.

Ever noticed how stock cowboys are insufferably ego-driven, craving attention and praise? Or how they turn dumb luck into skill? Or never mention their losses? Human nature on display. – Garth

#54 Bankish on 03.17.19 at 6:43 am

There is some great info given here and it’s meant to be used. Invest while your young and it will allow you to have an adventure bound retirement if so desired. If adventure is not your thing you can buy all the toys for you and your grandchildren. Either way you win.

#55 LP on 03.17.19 at 7:01 am

#38 Kamloops realtor on 03.16.19 at 8:50 pm
#31 LP
Don’t be jealous we make big cake us realtors
We’re worth every penny we get paid
********************************

Don’t misinterpret my point there realtor. You were dissing those you think of as “unionists”. And I said that whatever you might call your “association” it is really a union in sheep’s clothing.

Now as to whether you are “worth every penny” for what you do, that’s a discussion for another day.

#56 crowdedelevatorfartz on 03.17.19 at 7:21 am

“May the Devil close the border before Brexit knows its dead” – new Irish proverb.

Happy St Paddy’s Day

#57 crowdedelevatorfartz on 03.17.19 at 7:24 am

@#44 crazyfox

The Real Mark?

#58 Shawn on 03.17.19 at 7:41 am

When one looks under the hood of the market it becomes apparent what is driving it.

Healthcare and technology.

Look at the leadership: VGT IAI SMH IGV

After forming a decade long base US banks look like they’re preparing for a leg higher: VFH

Gold looks like it’s forming another long term top. What does that imply for USD & the S&P500?

#59 Shawn on 03.17.19 at 7:51 am

The US KBW bank index is approximately at the same level it was in 1998. 20 years of consolidation. I think 20 years is enough. Up we go.

#60 dharma bum on 03.17.19 at 9:01 am

Ryan looks cool in those rose coloured glasses!

https://www.google.ca/url?sa=i&source=images&cd=&ved=2ahUKEwjV9aDTnYnhAhXq6YMKHUm6CtIQjRx6BAgBEAU&url=https%3A%2F%2Fwww.ignitumtoday.com%2F2017%2F05%2F23%2Fgods-rose-coloured-specs%2F&psig=AOvVaw3eSRxv1oDZTUW226FutY8T&ust=1552913992278920

#61 expat on 03.17.19 at 9:09 am

It would seem there are very few bulls here. All looking at tops, recessions, and 1929….

The wall of worry is back… GREAT

Here is my two cents
Biotech
US indexes
Fossil Fuels

Green Tech is a joke – (Progressives/Socialists destroying fossil fuel use. I guess they don’t heat their homes in the winter. I can’t wait for the time when they ban Natgas and heating oil in Canada as people light their solar panel heating systems….. OMG

Europe becomes unglued from Broken bond market, Brexit, Recession (Germnay is calving it seems), etc.

Emerging Markets look weak.

Great for US indexes…. Foreign money should flood into US indexes again as the rest of the world becomes unglued….

Canadian indexes heavy on commodities may even be great. They are so hated they just have to be great….
Cause we all know the herd is running the wrong way…

Oil should 100 bucks next year… It’s broken out of its base.

#62 AK on 03.17.19 at 10:09 am

#21 Tony on 03.16.19 at 3:57 pm
“According to harry S. Dent the last 10 years only produced an average growth of 1.9 percent. The 10 year average growth in the great depression was 2 percent. No one has been locked up for stock market rigging beyond belief the past 10 years.”
====================================

I take it that you don’t believe in investing…

#63 Ryan Lewenza on 03.17.19 at 10:15 am

Sam “Any sector /spaces/asset class you are over-weighted ? Underweight ?”

In the US we’re overweight healthcare (aging population, decent valuations, more defensive and had a recent technical breakout) and large cap value stocks (they’ve lagged, attractive valuations and more defensive). Despite our positive long-term view of US markets we would tilt portfolios more to international (EM and EAFE) since they’ve lagged over the last 10 years and offer much cheaper valuations. – Ryan L

#64 nonsense on 03.17.19 at 10:30 am

@#42 Idiocracy 2019 on 03.16.19 at 10:59 pm
#39 Not To Mention on 03.16.19 at 8:58 pm
#119 Tater on 03.14.19 at 12:04 pm

#118 MF on 03.14.19 at 11:47 am
111 dharma bum on 03.14.19 at

Usually people who criticize are secretly envious.

MF
—————————————————————–
This post brought to you by a relentless weed critic

—————————————————————————-

Not to mention a relentless “Don’t let the door hit you in the @$$” comment every time someone says they left Canada.
——————-

It’s best to just add MF and his nonsense z to the posters you just scroll right on by like I do.
______________________________________

thanks for the tip professor lol.

MF may be one of a handful of posters on here that isn’t pushing the usual conspiracy theories garbage.

#65 Sideshow Rob on 03.17.19 at 12:27 pm

“Ever noticed how stock cowboys are insufferably ego-driven, craving attention and praise? Or how they turn dumb luck into skill? Or never mention their losses? Human nature on display. – Garth”

I only buy individual stocks but I put the work in to research them. I wouldn’t recommend it unless you can read financial statements inside out and backwards. My gains have been great but truth be told all gains have been easy the past 10 years. A monkey throwing darts at the wall street journal could make money the past decade.
But as you said easy money makes people think they are better than they are. It’s easy to confuse a bull market with intelligence. I 100% agree with you that it’s better to keep things simple and stick to a game plan. Anyone can achieve 95% if not 100% of the same results a pro gets by just using index ETF’s. No arguments here.
My game plan is different. I only buy individual dividend stocks and I don’t sell. My goals are dividend income related only. So when the markets go up, my portfolio goes up. I win. (sort of). When stocks go down, I can buy great companies with a better dividend yield. I win. I’m not a stock cowboy even though I lived most of my life in Calgary. It’s not for everyone but it works well for me. I wish the best for all investors out there, whatever the market and political circus’ throw at us!

#66 Sam on 03.17.19 at 12:28 pm

Ryan , thank you for taking the to generously reply

Very kind . Have a great Sunday !

#67 NoName on 03.17.19 at 1:33 pm

@61 expat on 03.17.19 at 9:09 am

Green Tech is a joke – (Progressives/Socialists destroying fossil fuel use. I guess they don’t heat their homes in the winter. I can’t wait for the time when they ban Natgas and heating oil in Canada as people light their solar panel heating systems….. OMG

Funy tat you mentioned that, itvtakes an average of 10w per sq-ft to electricity heat a space, i just googled an average house size in Canada and gargler returned two numbers, 1000sq-ft for 70s and 1900sq-ft for 2010. Lets just try my numbers for 1700 sq-ft side split built in 67 with 2×4 outside walls. That is 170A to heat it on 110v, 80A for 220/208 2f. No imagine how hard my 100A service have to work just for heat, and that is befor i put anything in oven or turn dryer on. Ill not mention charging electric cars…

If we dont get 3f 380v/ 1f 220v to households in canada forget about heathi and charging anything using anything.

I remember that time.when i was introduced to split plug in a kitchen, when i realized that you cant run microwave and toster of same plug. Mind @#&+$? blowing experience…

I knowany dot read read my posts but maybe some.do and wonder how did i cut electricity consumption by 1/3 that i stated few weeks back, i got rid of hot tub from backyard. 40A 5hours cycle, (2hrs day time 3hrs night). Good thing about that i free up some juice for my new plugin f-150. Asuming this country dont become Venezuela North.

#68 AGuyInVancouver on 03.17.19 at 1:43 pm

“The US banks are in solid financial shape these days and a key reason why I believe the next economic downturn and bear market will not be nearly as calamitous as the 2008-09 financial crisis.”
_ _ _
Unless of course the crisis comes from the house of cards that is China’s banking system. Everyone seems to think the CPC will be able to control the economy for favourable outcomes forever.

#69 Gordon on 03.17.19 at 1:46 pm

#65 Sideshow Bob. I laughed reading your comment because when I was a kid on the trading floor we actually did throw darts at the list on dull days. Pushing up the volume often created momentum and voila, a gold mine promoter got to keep the lights on another day.

Dumb luck doesn’t come into stock picking . Why would an ETF buyer choose an index with less than ten percent of the issues included profitable, what I call ” clogged with corpses”. The Russell 5000 for example has fewer the 350 profitable companies at the moment.

The trick about trading is to be right more often than wrong. The best are happy with 70%. The losers are juicy tax losses for tax managed profits. It’s never a perfect world anymore than a balanced fund held above water in December.

The reason a good company can be brought down temporarily are almost always due to unforeseen black swans. No matter what the time frame good companies recover. Losses can occur when circumstances drive M&A at less than perfect pricing, but then, you’ll own stock in the merger.

Ego driven or not, at least I give examples in advance ( like BKNG) that were recorded on the buy and reported after the fact as profitable trades. Hardly dumb luck. No, I’m not psychic. But I did put my cards on the table and “predict” a winner. That kind of dumb luck a few times a year can make you fat, and I’m overweight baby.

#70 Dogman01 on 03.17.19 at 2:03 pm

Was down in the US last week, anecdote:

The area I was in was a ground zero for Real Estate crash, down the street was an abandoned neighborhood with streets, fire hydrants and a few near complete houses. Over the last 8 years the local Police used the houses as “zombie land” for tactical training.

Things have changed; all the abandoned neighborhoods are now under construction, Help Wanted signs in window of the local businesses. Projects on the go , highways being built, it is go-go-go.

The good times look like they are impacting “main street” not just Wall Street.

#71 Gordon on 03.18.19 at 9:55 am

Canada in recession going into election. Loonie is tanking. economy is collapsing. Trudeau fighting off criminal charges. NY Times has called him out on corruption. Moroneau spending billions on Trudeau’s reelection. Liberals shut down all internet commentary that expires their faults? What is this, Cuba? This is a bad time to be in Canada. Glad I’m not.

https://business.financialpost.com/news/economy/fidelity-sees-loonie-testing-62-cent-low-amid-slowing-economy