Time to go small

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RYAN   By Guest Blogger Ryan Lewenza
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Last year, after the markets had taken the big Covid-19 drop, we saw a great opportunity to add US small cap stocks back to the portfolio. Thankfully we sold this position a few years earlier due to our concerns of being ‘late cycle’ and the rising prospect of a US recession, and you do not want to hold US small caps in a downturn!

Well, with the big drop, we changed our tune and added this sucker back to client portfolios. And boy are our clients happy we did this since US small caps have been on a tear, up over 50% since last summer. More recently we’ve seen them trade sideways for much of this year and we believe this sideways action is potentially setting up small caps to begin another move higher in the coming months. Basically, I believe we’re just in the third inning of this trade with still lots of innings (i.e., gains) to come.

Today I’m going to walk you through the bull case on US small caps and review some of the metrics and tools we use in coming up with our investment trades.

First, is the state of the US economy and interest rates. US small companies are more heavily impacted by the economy than large companies like say Pepsi or Microsoft. Meaning, their revenues and earnings are more dependent on the direction of the economy. So coming out of recessions, small cap companies will often see a larger rise in earnings, which can lead them to outperform.

As the US/global economy recovers from this pandemic, we should see a synchronous rise in interest rates, which historically has been positive for US small cap stocks. This can be seen in the chart below where I’ve overlaid the Russell 2000 (main US small cap index) with the US 10-year treasury yield. Note how they move together. When interest rates fall, largely due to a slowdown in the economy, small caps tend to underperform. But when interest rates rise, this is generally very supportive to US small cap stock prices.

I see the US economy and interest rates continuing to recover from the pandemic, which should help to drive US small cap revenues/earnings higher, and in turn, stock prices.

US Small Caps Correlate Strongly with Interest Rates

Source: Stockcharts.com, Turner Investments

Speaking of earnings, US small caps look set to deliver much stronger earnings in the coming years relative to US large caps (S&P 500). As seen below, the Russell 2000 is forecasted to deliver earnings growth of 184% this year (over 2020) and 28% in 2022. Contrast that to the S&P 500, which is forecasted to deliver earnings growth of 61% this year (still amazing and why we’re bullish on the US equity markets), and 9% next year.

Having been in this business and analyzing the equity markets for many years, I know that analysts can be overly optimistic with their earnings growth assumptions. So we might not see as explosive growth as current estimates are currently calling for, but I’m quite confident that US small caps will deliver stronger earnings over the next few years, which is a key reason why we’ve added them back to client portfolios.

Earnings Outlook is Much Stronger for US Small Caps

Source: Bloomberg, Turner Investments

Next up are valuations. When looking at the ‘fundamentals’ of a stock index like the TSX or S&P 500, I focus on key factors like earnings growth, valuations, dividend yields, money flow and sentiment. Focusing on valuations, small caps look pretty attractive, especially compared to the S&P 500.

Currently the price-to-book (P/B) ratio for the Russell 2000 is 2.7x versus the S&P 500, which currently trades at an elevated 4.6x. To accurately compare the two I then divide the Russell 2000 P/B ratio by the S&P 500 P/B to derive a ‘relative valuation’. Dividing the 2.7x P/B for US small caps by the 4.6x P/B ratio for the S&P 500 we get a current level of 0.59. Finally, I then compare that to the long-term average, which since 1995 has been 0.71. Readers at this time might be cursing me for all the numbers, especially on a Saturday, so all this essentially means is that US small caps are attractively valued versus large cap stocks.

Russell 2000 P/B Relative to the S&P 500 P/B

Source: Bloomberg, Turner Investments

Almost there!

Finally, I always try to combine the technicals with our fundamental work to improve our odds of being correct in our calls. We can all have opinions of whether an asset, market or stock is attractive or not, using these metrics outlined above, but at the end of the day the price and technical trends confirm whether an asset or market is in an uptrend or not. Price is truth as the expression goes.

Below is the daily chart of the Russell 2000 ETF. It’s in a long-term uptrend and above the rising 200-day MA. Check. As mentioned earlier, you can see that the Russell 2000 has been in a tight trading range of roughly 210 to 230 since early this year. I believe this is due to the rise in Covid cases stemming from Delta, a slight moderation of recent economic activity, and a drop in interest rates. But I see all this reversing and interest rates moving back up. This should then help to boost stock prices and we could see the Russell 2000 breakout from this recent range, and make new highs later this year and into 2022.

Based on both the fundamentals and bullish technical trends we’re pretty bulled up on US small caps. They’ve done very well for clients since adding them but more gains should be in store in the months ahead.

Russell 2000 is Consolidating but Could Breakout Soon

Source: Stockcharts.com, Turner Investments
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.

 

77 comments ↓

#1 Paddy on 08.28.21 at 10:15 am

Thanks for breaking it down Ryan. Glad to be with TI and have exposure/diversification to US small cap companies in my portfolio.

#2 paddy on 08.28.21 at 10:16 am

oh…..and Firzzzzt!!!???

#3 LewenzaCountry aka Prince Polo on 08.28.21 at 10:17 am

If you are bullish on US Small Caps, are you doubly-bullish on Global Small Caps? Seems like the world as a whole, is slightly behind on the Covid vax trajectory.

#4 crowdedelevatorfartz on 08.28.21 at 10:21 am

Another informative Saturday morning school session.
Two thumbs up!

Ryan does the rising interest rates and dropping consumer spending ( July numbers down even after receiving stimulus cheques and most stimulus cash handout will end this Fall ) worry you at all?

Or does the average consumer and their spending generally not affect investment numbers in the markets?

#5 Horrorscopes on 08.28.21 at 10:50 am

Adding technical analysis to your thesis does nothing to support your case for long term investing. It reminds me of when I speak with my neighbor and she discusses her latest OTC / pink sheet stocks but then goes on to tell me about how horoscopes/astrology affected her decision making.

#6 Andrewski on 08.28.21 at 10:53 am

Great returns Ryan for those who have diversification & rebalance their portfolios based on sage recommendations from professionals like you.

#7 Nick on 08.28.21 at 11:14 am

.
Just buy a house in lower Brainland. 10% down, 90% government sponsored leverage.

See money doubled every 3-4 years. Stocks can’t beat the leverage and return.

Lower Brainland folks are so smart!! Everyone needs to move here.

#8 the jaguar on 08.28.21 at 11:25 am

Today’s photo. Those eyes. That look. It says “I know you can be a better person. You have to be for me”….

#9 Alberta Ed on 08.28.21 at 11:30 am

Professional insights like these make us value TI even more.

#10 'come on... on 08.28.21 at 11:34 am

you guys are hilarious…. while i agree with you for different reasons, what if something goes wrong? you have a stop? or would you plan on holding the position if breaks the lows and drops 25% to the next support level? always have an exit point established before you enter a trade.
try and give both sides of the equation… not just the bullish case.

#11 We are in Big Trouble on 08.28.21 at 11:46 am

Ryan, are you not very concerned with much higher inflation rates sticking around for years maybe a decade or more and the US dollar being doomed as a reserve currency in the years coming up by Jeffrey Gundlach’s July-2021 interview. Look at the EU, that is another socialist experiment gone really wrong.

China, Asia will slow as well, top out probably likely by end of this decade 2029-2030. They will probably be Japan like or somewhat Japan like. Putting most of our faith, confidence as a reserve currency and economic leader in a covered up, pseudo, capitalist government like China which people still forget is a communist government will not end well for Canada and other countries. This would bring down Canada very hard as we are trading with the US for at least 75% of goods, products etc. We have a high tax, high debt, high deficits government Trudeau, Liberals and many provinces, municipalities are in very high debt loads too. It does not look good, actually very bad in the next 2 to 4 years.

#12 Flop… on 08.28.21 at 12:10 pm

Selling something that you think is overvalued and then buying it back when you think you are getting a deal?

Sounds familiar.

Oh yeah, that’s exactly what Manchester United did with Cristiano Ronaldo…

M47BC

#13 THE DANDADA on 08.28.21 at 12:13 pm

The NASDAQ Small-Cap is going to go bonkers soon.

#14 Johnson Gaul on 08.28.21 at 12:18 pm

News media makes no mention
Of gas prices in GVA hovering
At 154.9 compared to 169.9
Just a week and a half ago.

Can somebody explain the drop?

Would sure make the inflation
Numbers for August look good

#15 Ryan Lewenza on 08.28.21 at 12:31 pm

LewenzaCountry aka Prince Polo “If you are bullish on US Small Caps, are you doubly-bullish on Global Small Caps? Seems like the world as a whole, is slightly behind on the Covid vax trajectory.”

Many of the same macro factors that apply to US small caps (ie interest rates) would apply to global small caps so yes I would be bullish on them as well. – Ryan L

#16 crossbordershopper on 08.28.21 at 12:38 pm

the iwm has an mer of .19%, and you can trade for free with national bank now. i dont understand why people need mutual funds with such crazy fee structures, and bad tax planning. the current yield .86% not great, because there all small cap which are young and small companies and generally dont pay dividends, but its simple and visible and paid quarterly. with mutual funds , i dont know you get t3 t5, you dont know what this manager is dong and your taxed on it. not clean and visible.
for me, you buy the russell, at one price you sell it, at another, straight forward.
of course you can do crazy option stuff but thats for next class.
canadians are 20 years behind at least when it comes to investing. they should teach it in school. and taxes as well, no one knows interest rates, taxes, compounding, etc.

#17 Ryan Lewenza on 08.28.21 at 12:40 pm

crowdedelevatorfartz “Another informative Saturday morning school session. Two thumbs up!

Ryan does the rising interest rates and dropping consumer spending ( July numbers down even after receiving stimulus cheques and most stimulus cash handout will end this Fall ) worry you at all?

Or does the average consumer and their spending generally not affect investment numbers in the markets?”

It’s something I’m watching but not too worried right now. A key component of our bullish outlook for the US economy is our belief that consumer spending is set to explode as we slowly get control of Covid. So if the Delta variant starts to weigh on consumer spending then this would make us a bit worried. But for now our base case is that the Delta uptick will not lead to more shutdowns and that the US economy will continue to rebound. – Ryan L

#18 Baba Novac on 08.28.21 at 12:40 pm

Thanks for the great schooling, numbers and all!

What would you say is a proper exposure to US small caps? 3%? More? Less?

In fact, what percentage of US exposure should be to small caps in your suggestion? That might be a better way to look at it, if one is deviating in either direction from a 60/40 allocation.

#19 DON on 08.28.21 at 12:41 pm

Observation: Just in time produce trade.

Friends have been mentioning the poor quality of produce. I have also noticed produce going bad two days after bringing it home – bag of potatoes and carrots.

Thanks for the data and analysis.

#20 Penny Henny on 08.28.21 at 12:46 pm

835 covid cases in Ontario today
Unvaccinated-500
Partially vaccinated-100
Fully vaccinated-160
Vaccination status unknown-75

The numbers almost seem made up. But why would they do that?

https://covid-19.ontario.ca/data/case-numbers-and-spread

#21 Quintilian on 08.28.21 at 12:47 pm

#4 crowdedelevatorfartz

” [does }the rising interest rates and dropping consumer spending”

No significant interest rates for a generation, and possibly never.

Developed economies will control inflation through taxation going foreword.

That does not mean the bubbly inflated price of your house won’t drop.

Tick Tock Tick Tock

#22 mike from mtl on 08.28.21 at 12:53 pm

I’m not convinced, r2000 basically trails the sp500 anyway so you’re adding more volatility and while omitting the winners from the sp500.

#23 Oracle of Ottawa on 08.28.21 at 1:00 pm

Thanks Ryan. Great blog. And I would certainly buy small caps and dump them when the economy looks like it’s about to tank. The only problem is I read Doug’s blog a week ago about the perils of market timing. So it’s a no go for me.

#24 TurnerNation on 08.28.21 at 1:06 pm

Things which have the permanency in Kanada:

1. Fictional ‘State of Emergency’.
2. Flags at half mast
3. CV Rules. Always the rules Comrade.

—I posted before, so much must be rolled out by September/October. Why we see the daily changes.
Our rulers are scrambling to get things into place

— Back to Normal! Very soon. Gee Maybe Economic Locksdowns are just that.
To flatten the small business curve.

.Manitoba introduces vaccine mandate to attend almost all non-essential businesses. Mask mandate reintroduced in public spaces. (winnipeg.ctvnews.ca)

.New Zealand Covid update: 82 new cases as outbreak worsens despite nationwide lockdowns (theguardian.com)

.Vaccine passport program coming to Honolulu(kitv.com)

#25 Quintilian on 08.28.21 at 1:35 pm

The elderly crowdedelevatorfartz:

Your assertion rests on a faulty premise. You assume Central Bankers set policy based on economic theory and principals.

That is not the case. (I know Garth thinks so too, but he is wrong).

Old generals fight old wars, with old weapons.

Central bankers are on a leash controlled by politicians- I don’t think we need to elaborate on the distortions and moral hazards; that is another yarn.

In the early stages of capitalism, the people that held political power, also had money with which to generate income.
Eventually old working stiffs like you accumulated cash, and the central bankers are told not to pay you much, because the people with political clout need to borrow that money for speculation.

Don’t believe me?

There are trillions of dollars in bonds maturing at basically negative rates, when they get converted into cash.

Where is the cash going to go?
Into negative yielding bonds. Again,

#26 Ryan Lewenza on 08.28.21 at 2:06 pm

We are in Big Trouble “Ryan, are you not very concerned with much higher inflation rates sticking around for years maybe a decade or more and the US dollar being doomed as a reserve currency in the years coming up by Jeffrey Gundlach’s July-2021 interview. Look at the EU, that is another socialist experiment gone really wrong.”

Not as much as you. There’s always risks to our outlook. But often these risks don’t materialize hence why markets rise 80% of the time. And Jeffrey Gundlach is no god. He’s wrong a lot too. – Ryan L

#27 Inequity on 08.28.21 at 2:21 pm

Timely! I was just thinking of moving some of my VTI into small cap. Thank you Ryan!

#28 Dolce Vita on 08.28.21 at 2:50 pm

Agree.

My version of Bonds, Small/Mid Cap BDC, for my threadbare portfolio:

MAIN • NYSE

YTD = 34%.

A part of that is dividends. Calcs to a 5.4% yield (did a week ago). I just reinvest them. Apparently according to Seeking Alpha:

“A Fan Favorite For Retirees That Pays Monthly”.

Yup, it is.

Well diversified investments, from/per Seeking Alpha (industry exposure over 25 sectors and includes minimal exposure to cyclical industries):

https://i.imgur.com/EoGs8wS.png

——————

Let the bullets fly Ryan and Garth.

#29 Dolce Vita on 08.28.21 at 3:11 pm

#18 Penny Henny

They’re doing it to scare people into getting vaxd.

If what the Infectious Diseases Society of America says is true “well over 80% and potentially approaching 90%”

https://fortune.com/2021/08/04/delta-variant-herd-immunity-higher-threshold/

…well, Canada not there yet (yesterday): 84% single dose, 76% two dose vaxd, +12 yrs eligible, 5.4M unvaxd.

Vax rates abysmal, 1/5 of what they were in late June:

https://i.imgur.com/Zq4JOdj.png

Per my Projections (-0.08% max error yesterday) when 80, 90% achieved:

80% Sep 17
90% Nov 1

Those dates slipped by +1 week vs. last weeks date estimates.

Why Delta cases still rising in Canada (too many unvaxd, more transmissible vs. prior strains). Mercifully, the cases/deaths disconnect remains intact – IF you are 2 dose vaxd. If NOT think of it this way:

Natural Selection (of the unvaxd).

Mother Nature does not know about Human Politics, she just is and does her “thing” shepherding along her latest creation best she can.

That’s it folks.

#30 Flop… on 08.28.21 at 4:01 pm

Rhino, I see all the Financial Advisory commercials on television, and they always seem to have clients photos on their desk.

Must take up a lot of space?

Was always advised about asking another man this question, especially with my Aussie accent.

How big is your desk…

M47BC

#31 cuke and tomato picker on 08.28.21 at 4:12 pm

Does anybody have an opinion as a Canadian citizen of our Prime Minister being unable to campaign yesterday
because of safety concerns etc.

#32 Dolce Vita on 08.28.21 at 4:36 pm

Off topic, last salvo, if you will let me Ryan (and Garth).

Really taken aback by this Afghan and his family on NBC Nightly News last night:

https://i.imgur.com/yveKwup.png

Gushing about freedom, a better life, etc. and when asked by Richard Engel where he was talking about he said:

Italia

Engel, hesitated on that response and said “Buon Viaggio” and he pronounced that well…ot bad for a Mangia Cake.

I hope the guy and his family were not on that Italian military plane* that got shot at taking off from Kabul.

It was really heart-warming to see his face BEAM with happiness and a look to a brighter future. All I can say to you Khalilzad & Family:

BENVENUTI NELL’ITALIA!

*And here is our female military C-130 pilot, from Palermo, that got shot at and flew everyone aboard safely home:

https://www.ilmoderatore.it/una-palermitana-ai-comandi-del-c130j-della-46-brigata-aerea/

——————–

Last I checked, Italia still airlifting from Kabul.

Like the Americans, “damn the torpedoes…full speed ahead”.

Hats off to them. Some of our very best.

#33 I'm Alright Jack on 08.28.21 at 4:54 pm

Great idea, Ryan. I am looking for a home for some US$ in my RRSP and IWM would fit nicely, since I’m underweight small caps.

I was waiting for a better entry point (the ‘normal’ fall selloff, especially with an overbought SP500), but it might not happen, and my market timing usually sucks.

#34 Nonplused on 08.28.21 at 5:36 pm

Interesting analysis Ryan. It makes sense that there must be some relationship between big and small cap stocks since they both work in the same economy, so it makes sense to arbitrage differences, since the tail does not wag the dog.

#35 Joseph R. on 08.28.21 at 6:06 pm

#31 cuke and tomato picker on 08.28.21 at 4:12 pm
Does anybody have an opinion as a Canadian citizen of our Prime Minister being unable to campaign yesterday
because of safety concerns etc.

———————————————————–
The angry mob will help get JT gain sympathy amongst voters.

#36 Yukon Elvis on 08.28.21 at 6:21 pm

#31 cuke and tomato picker on 08.28.21 at 4:12 pm

Does anybody have an opinion as a Canadian citizen of our Prime Minister being unable to campaign yesterday
because of safety concerns etc.
++++++++++++++++++
Yah, i have an opinion. Next time you go to one of his campaign events bring some of your dirty rotten stinkin’ cukes and tomatoes. Aim for the head with the tomatoes. Not gonna tell ya what to do with the cukes.

#37 Zxcvbnm on 08.28.21 at 6:30 pm

Goodness gracious, 85% single dose 75% double dose? How is Covid still a thing?

#38 Grunt on 08.28.21 at 6:31 pm

Ironically (some years ago) we switched out our DCP Russell funds with Sunlife. For Blackrock due to lack of performance. No reflection on Ryan’s say today.

#39 Peter on 08.28.21 at 6:42 pm

DELETED

#40 the Jaguar on 08.28.21 at 6:58 pm

@#31 cuke and tomato picker on 08.28.21 at 4:12 pm
+++++++++++

I’ll give it a shot.

Without public debate and consensus the door has been opened up to bad behaviour from the far left and far right. That has led to lots of various wing nuts in between jumping into the ring, the Anti-Vax thugs among them.

We saw it all through the Pandemic, especially in the USA. The burning, looting and violence, sometimes done under the guise of protest ( George Floyd), sometimes to loot, sometimes just because. Even before the Pandemic we had the rail blockades and nobody did a damn thing.

There have been recent serious clashes in places like Portland, (Proud Boys/Antifa) (and ‘no’ Faron/Sean, not trying to bait you, just providing a recent example).

Protesters targeting people having dinner or at other events. We saw it recently in Toronto with the Mayor of that city.
Violent crime, murder, sacking of personal and business property.

It’s all on an upward trend. Canadians are clueless if they think this only happens in New York and Chicago neighbourhoods and will never come to Canada.

Everything goes and nothing matters. Nobody speaks up for fear of being ‘cancelled’.

That’s what happened on the campaign trail yesterday. They did it because they could get away with it.

Anybody and anything can be publicly attacked and no one will raise an objection. But isn’t that what the people advocating ‘Defund the Police” wanted? Just put the Social Justice Warriors phone number on speed dial. I’m sure they can sort it all out…………

#41 ImGonnaBeSick on 08.28.21 at 6:58 pm

#31 cuke and tomato picker on 08.28.21 at 4:12 pm
Does anybody have an opinion as a Canadian citizen of our Prime Minister being unable to campaign yesterday
because of safety concerns etc.

—–

I think Alan Fryer’s comment sums it up nicely;

“Some journalists’ tweets yesterday made it sound like they were facing off against throngs of Taliban militants instead of a few dozen angry Canadian moms yelling nasty things at a politician. Get a grip boys and girls. “

#42 mark on 08.28.21 at 8:23 pm

Funnily enough, I was looking at something like this during the week using US stocks. I was trying to figure out at what point could you increase your bond exposure to, while increasing small over large, and maintain a comparable performance with a portfolio with higher equity exposure. The model portfolio had a 50/30/20 Large/Value/Small breakdown, so I flipped it around to 50/30/20 SVL.

I only used two portfolios. 75/25 with higher small vs 90/10 with higher large. Going back to 1926 the 90/10 beat the 75/25 by 0.11% pa. The 75/25 had lower SD by over 1.5%. On rolling annual monthly returns, 75/25 won 48.6% of periods and 90/10 won 51.4%.

As you’d expect 90/10 won over the past decade due to large’s performance and lower returns from FI. What I did find interesting was 75/25 only trailed by 0.74% over the past year, even with how poorly FI was doing.

The real interesting part is when you finally compare the 75/25 with the same LVS construction as the 90/10. It trailed the 90/10 by 0.67% pa since 1926 and lagged the other two options by nearly 10% over the past year.

I think what it does show though, if you want to target higher returns (nothing’s guaranteed) you don’t necessarily have to abandon the defensive side of your portfolio. Clearly it’s not without risk though. In short term periods you may be confronted with low FI returns and a more volatile equity exposure, and at that point, how disciplined can you be in sticking with your strategy?

#43 Stone on 08.28.21 at 8:26 pm

I normally like your posts Ryan (actually, I love them) but this one smells of market timing.

Look, we were in. Then, we were out. Then, we got back in. Guess what we’re gonna do next?

I haven’t changed anything in my B&D portfolio since pretty much March 31, 2020 outside of reinvesting cash in ETFs I already own. For 2020, it returned 11.15%. For 2021 so far, it’s returned 18.35% ytd. Full disclosure: I don’t own an ETF that invests specifically in small caps.

Can you please advise your ytd return for 2021? It’s just that having to go back to the summer of 2020 to explain why adding small caps (please don’t tell me it represents 3%-4% or less of the portfolio because that’s inconsequential to the big picture) was a great buy when a lot of other stuff did the same or better doesn’t seem to add value.

Not trying to be an arse. Just calling a spade a spade.

#44 Stone on 08.28.21 at 8:34 pm

#23 Oracle of Ottawa on 08.28.21 at 1:00 pm
Thanks Ryan. Great blog. And I would certainly buy small caps and dump them when the economy looks like it’s about to tank. The only problem is I read Doug’s blog a week ago about the perils of market timing. So it’s a no go for me.

———

x2.

Sorry Ryan. I normally love your posts but Doug outdid you this time. Doug was spot on.

#45 crowdedelevatorfartz on 08.28.21 at 8:36 pm

@#21 One Quintillian dollars deeper in debt
“No significant interest rates for a generation, and possibly never.”

++++

Bwahahahahaha

You Gen-X kids better hope there are no interest rate climbs or the tax increases just to pay the INTEREST of Trudeau’s One Trillion dollar DEBT will be so punative…..you’ll bite the head off a bat and wish it was the 70’s again……

Call me “Ozzie” this time next year.
:)

#46 The Woosh on 08.28.21 at 8:59 pm

#26 Ryan Lewenza on 08.28.21 at 2:06 pm
We are in Big Trouble “Ryan, are you not very concerned with much higher inflation rates sticking around for years maybe a decade or more and the US dollar being doomed as a reserve currency in the years coming up by Jeffrey Gundlach’s July-2021 interview. Look at the EU, that is another socialist experiment gone really wrong.”

Not as much as you. There’s always risks to our outlook. But often these risks don’t materialize hence why markets rise 80% of the time. And Jeffrey Gundlach is no god. He’s wrong a lot too. – Ryan L

—————————————

It’s really strange. My family doctor was talking about investing his free cash in the R2000. Later that same day I overheard a couple of taxi drivers talking about the sane thing. You know what that leads too…

Crowing about a 50% return on 1%-2% of a total portfolio value is bunk. Totally insignificant. If you’ve made more than 20% this year for your clients on their total portfolios based on your market timing, that would be something to talk about. But I thought Turner Investments is not about market timing? Could have fooled me.

#47 Rodeny deerhunt on 08.28.21 at 9:00 pm

Ryan, How high can the Shiller PE get before you start to take some money off the table?

#48 Stop watching tv on 08.28.21 at 9:01 pm

#37 Zxcvbnm on 08.28.21 at 6:30 pm
Goodness gracious, 85% single dose 75% double dose? How is Covid still a thing?
—————————————————

It’s not.

Not in Canada at least, although some seem to really want to keep the fear alive. Must be an election going on.

12 deaths per day on average in the entire country.

It’s hard to imagine how you could be lower than that unless you are Sweden, Australia or NZ, where deaths are 0 to 3 daily.

Interesting that those countries got there by completely different paths.

But looks like we’ll adopt an authoritarian response anyway.

People will not obey, but the precedent will have been set.

p.s. Studies showing people who have recovered from Covid have much stronger and longer lasting immunity than the vaxed, as almost anyone would expect. Some people seem to really want to suppress that information for some reason.

#49 Ryan are you sure on 08.28.21 at 9:14 pm

I don’t think the US dollar will be the reserve currency in 10 years. Ryan, I hope you are right that things will work out but it looks like the EU, UK, Russia, some Asian countries want China to take over the world reserve currency.

If this happens watch out for US interest rates, ouch 7%+ is easily doable. Remember what happened to Italian bonds 7%+ 10 year yields when possibility of Italy leaving the EU.

When the US goes down nobody can save it. Canadian and US bank stocks, financials, mortgage companies down the crapper.

#50 BillyBob on 08.28.21 at 9:53 pm

#31 cuke and tomato picker on 08.28.21 at 4:12 pm
Does anybody have an opinion as a Canadian citizen of our Prime Minister being unable to campaign yesterday
because of safety concerns etc

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

Actually I thought the wording of Trudeau’s response was interesting:

“We all had a difficult year. Those folks out protesting, they had a difficult year too, and I know and I hear the anger, the frustration, perhaps the fear,” Mr Trudeau said.”

Do you, Justin? We have some doubts about that. Condescending clueless fratboi to the last.

No, Justin, it isn’t fear. It’s anger. And instead of relentlessly talking down to people, maybe it’s time to try and figure out why people are angry?

Could it be your government’s utter hypocrisy, corruption, arrogance, and economic destruction of the country?

Nahhhhh….people are just frustrated by having to wear masks and you’re a victim. After all, you’ve had a difficult year too, hiding in your cottage and spraying borrowed taxpayer billions around with a firehose.

smh

#51 Capt. Serious on 08.28.21 at 10:25 pm

If you’re going to small cap, you should probably small cap value. Don’t take it from me, take it from Fama – French. Super ugly the past few years relative to large cap, but finally seeing some days in the sun.

#52 joe kahn on 08.28.21 at 11:42 pm

Much Respect For Mr. Ryan Lewenza and follow technical analysis to take advantage of this knowledge to time the markets.

#53 joe kahn on 08.28.21 at 11:44 pm

Whether we like or not things will happen to markets according to laws of physics.

#54 Don Guillermo on 08.29.21 at 2:12 am

#41 ImGonnaBeSick on 08.28.21 at 6:58 pm
#31 cuke and tomato picker on 08.28.21 at 4:12 pm
Does anybody have an opinion as a Canadian citizen of our Prime Minister being unable to campaign yesterday
because of safety concerns etc.

—–

I think Alan Fryer’s comment sums it up nicely;

“Some journalists’ tweets yesterday made it sound like they were facing off against throngs of Taliban militants instead of a few dozen angry Canadian moms yelling nasty things at a politician. Get a grip boys and girls. “
**************************************
LPC strategy now is to turn this into sympathy votes. T1 used this successfully in his day. MSM will spin it so.

#55 Francine Goodwell on 08.29.21 at 2:42 am

Good stocks never disappoint. Indexes do. I buy the good companies that spit out great divvies and ride easy. I don’t really care about the volatility because dividend income always pours in, letting me buy more when my favorites go on sale, good market or bad. And selling….well, if you like paying taxes, sell away…but dividends are taxed preferentially which negates the need for crystallization. Live long and prosper friends. Oh and, can you imagine what resource, manufacturing, energy , banks and agricultural stocks ( to name but a few sectors being held back by Trudeau) will do the day after a confirmed Trudeau Liberal loss? My guess, a majority CPC sweep will cause businesses to boom with enthusiasm.

#56 LewenzaCountry aka Prince Polo on 08.29.21 at 7:53 am

Who knew that the title of the blog would also correctly predict the quantity of comments? Well, now at least we know how to get the cerebral steerage section to shut up: post something technical about the stock market. Kudos, Ryan!

#57 Trudeau Heckled again on 08.29.21 at 8:27 am

Does anybody have an opinion as a Canadian citizen of our Prime Minister being unable to campaign yesterday
because of safety concerns etc.

Yes we do, Justin Turdeu is a POS, human garbage, excrement, the creature that single handedly destroyed Canada IN ONE YEAR

He is a paid Globalist and Chinese Agent

#58 crowdedelevatorfartz on 08.29.21 at 9:37 am

@#50 Billy Bob

“No, Justin, it isn’t fear. It’s anger. And instead of relentlessly talking down to people, maybe it’s time to try and figure out why people are angry?

Could it be your government’s utter hypocrisy, corruption, arrogance, and economic destruction of the country?”

++++

Thats a Bingo!

#59 Dennis on 08.29.21 at 9:39 am

Post # 57…tell us how you really feel. Glad you posted because I feel the same way about Trudeau. Every time he comes on tv I immediately switch channels as I can not afford a temper tantrum. Mr “Sweet Words” is a true example of how when a politicians mouth is moving, count on a lie. He is a real waste of skin as a politician and quite embarrassing. A true liar who puts corporate interests ahead of “for the people” He is always reactive to serious issues and not a fore front leader to mitigate what needs to be done for the people.

#60 Dharma Bum on 08.29.21 at 9:53 am

I only had trouble comprehending one part of that post.

The part after: “Last year”.

#61 crowdedelevatorfartz on 08.29.21 at 9:59 am

@#57 Trudeau Heckled Again

Sooooo.
You’re not voting Liberal?

#62 KLNR on 08.29.21 at 10:10 am

@#48 Stop watching tv on 08.28.21 at 9:01 pm
#37 Zxcvbnm on 08.28.21 at 6:30 pm
Goodness gracious, 85% single dose 75% double dose? How is Covid still a thing?
—————————————————
Studies showing people who have recovered from Covid have much stronger and longer lasting immunity than the vaxed, as almost anyone would expect. Some people seem to really want to suppress that information for some reason.

https://www.healthline.com/health-news/people-whove-had-covid-19-should-still-get-vaccinated-heres-why

#63 Ryan Lewenza on 08.29.21 at 10:10 am

Capt. Serious “ If you’re going to small cap, you should probably small cap value. Don’t take it from me, take it from Fama – French. Super ugly the past few years relative to large cap, but finally seeing some days in the sun.”

We also have a US value ETF in our portfolio so agree here. – Ryan L

#64 Dharma Bum on 08.29.21 at 10:11 am

#37 Zxcvbnm

How is Covid still a thing?
————————————————————————————-

It’s not, really.

The lazy mainstream media just can’t seem to let it go.
They got soft over the last 18 months not having to look for breaking news. Just go on the air and blather on about the COVID numbers. 793 cases in the GTA today blahblahblah…hospitals overwhelmed blahblahblah…everybody is doomed forever blahblahblah…masks save lives blahblahblah…masks don’t work blahblahblah…eating in restaurants can kill you blahblahblah…line up for hours in stores because that prevents COVID blahblahblah…

Life was so easy for media talking heads during COVID. They wish it was still a thing. But it ain’t.

It’s over, Rover.

Unless, of course, you’re an unvaccinated idiot.

#65 crowdedelevatorfartz on 08.29.21 at 10:12 am

Such is the fickle fate of politics.

It appears the Right Honorable Member of Peterborough – Vaughn may be losing her seat?

Polling Numbers in her riding indicate the Minister of Womens Rights and Gender Equality has a bit of a battle on her hands…..

Cons polling 38%
Libs 30%
Ndp 18%

Time to get out and shake hands, kiss babies and leave the Zoom calls to the adults?

Oh well, there might be some govt positions to fill….in Afghanistan….

#66 Ryan Lewenza on 08.29.21 at 10:20 am

Ryan are you sure “ I don’t think the US dollar will be the reserve currency in 10 years. Ryan, I hope you are right that things will work out but it looks like the EU, UK, Russia, some Asian countries want China to take over the world reserve currency.

If this happens watch out for US interest rates, ouch 7%+ is easily doable. Remember what happened to Italian bonds 7%+ 10 year yields when possibility of Italy leaving the EU.

When the US goes down nobody can save it. Canadian and US bank stocks, financials, mortgage companies down the crapper.”

I’ve been hearing this for years and I didn’t believe that then and don’t believe it now. What’s going to replace the USD? The EUR? The yuan? Don’t see it happening. If it’s just the high US debt that you’re worried about then I counter by saying the whole world is awash in debt. Italy’s debt to gdp ratio is 150%. Japan’s at 220%! And the best companies in the world are in the US. Maybe they’ve peaked as far as power and economic dominance but I wouldn’t count the US out. As Buffett likes to say “never pays to go against the US”. – Ryan L

#67 Ryan Lewenza on 08.29.21 at 10:24 am

Rodney deerhunt “ Ryan, How high can the Shiller PE get before you start to take some money off the table?”

Higher. Until interest rates move meaningfully higher I don’t see a major collapse in the equity markets. And we’re global investors. We have money in other ‘cheaper’ areas as well. – Ryan L

#68 The sweet sweet joy of steerage on 08.29.21 at 11:27 am

T2 crashing hard!!

This is delightful!

https://338canada.com/

#69 TurnerNation on 08.29.21 at 11:53 am

The future: destroying more small business.
Possibly a push toward more universal serfdom and UBI.
We were already trained: the government shut down your business declaring you “non essential”.

https://nationalpost.com/news/canada/ontario-plans-to-announce-vaccine-certificate-system-next-week-joining-b-c-and-quebec

— This has been planned for DECADES. By 2030 every human and animal and thing must be given a digital identity into the Blockchain. Like an asset tag; our rulers own us
It’s why Ontario is not “opening up”, until their Digital ID is ready. New System?


— The This EU Passport doc rollout timeline is from Q3 2019. Say wasn’t that before CV?

https://ec.europa.eu/health/sites/default/files/vaccination/docs/2019-2022_roadmap_en.pdf

————-

How long will this all be lasting?
From April 2020 the bankers plan. Page 6. Financial aid is planned until March 2025!

http://documents1.worldbank.org/curated/en/993371585947965984/pdf/World-COVID-19-Strategic-Preparedness-and-Response-Project.pdf

Country(ies)
World

Project Name
COVID-19 Strategic Preparedness and Response Program (SPRP)

Expected Project Approval
Date
02-Apr-2020

Expected Project Closing
Date
31-Mar-2025

#70 Never Say Never on 08.29.21 at 12:43 pm

Ryan, the points about the US dollar as a world reserve currency, I am not counting the US dollar out but the UN, IMF, World Bank, China, EU are hell bent on removing the US dollar as the world reserve currency.

Remember when Mark Carney hinted at the US dollar should be replaced with something else. I have a very good memory and these things may seem little now but it looks the next few years, maybe decade most the world elites want the US kept under control and not as a world leader in anything.

Obama, Biden for 8 years kept mentioning that the US was never an exceptional nation and has to be fundamentally transformed meaning they don’t really believe in the founding fathers, US constitution and many aspects of the US as it is and was founded upon.

It is not only the debt levels but the infiltration of economic sabotage of socialist, communist, marxist ideology in every aspect of their society from banking, government, finances, trade, education, US border, economic policies, immigration policies, defunding, cutting funding of police, military, central bank policies, medical and healthcare policies etc.

I know nobody wants to believe but they did this to the UK losing it’s reserve currency so why can’t they do it to the US.

#71 'cmon on 08.29.21 at 1:28 pm

#22 mike from mtl on 08.28.21 at 12:53 pm

I’m not convinced, r2000 basically trails the sp500 anyway so you’re adding more volatility and while omitting the winners from the sp500.

___________________________________________

the RUSSEL outperformed the SP500 from 1999-2013
by a fairly LARGE margin. same with 1990-1993

that’s half the time since 1990 it’s outperformed the SP500

#72 crowdedelevatorfartz on 08.29.21 at 1:29 pm

@#68 Steerage.

As much as I loathe Trudeau and his politically correct lecturing from on high to the great unwashed.

ANYTHING can happen in 3 weeks of an election.

And pollsters can be notoriously wrong.

#73 baloney Sandwitch on 08.29.21 at 1:34 pm

Cool, good and useful post. Recently a small business man I know bought a brand new Bentley. My guess is a lot of bail out money from the govt went to these greasers.
Will sell some puts on IVM next week. The thing is you gotta dance close to the exit to bail out if the economy starts to stall as the stimulus starts to dry up.

#74 BillyBob on 08.29.21 at 2:26 pm

#48 Stop watching tv on 08.28.21 at 9:01 pm
#37 Zxcvbnm on 08.28.21 at 6:30 pm
Goodness gracious, 85% single dose 75% double dose? How is Covid still a thing?
—————————————————

It’s not.

Not in Canada at least, although some seem to really want to keep the fear alive. Must be an election going on.

12 deaths per day on average in the entire country.

It’s hard to imagine how you could be lower than that unless you are Sweden, Australia or NZ, where deaths are 0 to 3 daily.

Interesting that those countries got there by completely different paths.

But looks like we’ll adopt an authoritarian response anyway.

People will not obey, but the precedent will have been set.

p.s. Studies showing people who have recovered from Covid have much stronger and longer lasting immunity than the vaxed, as almost anyone would expect. Some people seem to really want to suppress that information for some reason.

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

Your entire post is just the same tiresome repeated non-sequitur that is hardly worth unpacking, but…

“It’s hard to imagine how you could be lower than that unless you are Sweden, Australia or NZ, where deaths are 0 to 3 daily.”

Except, Canada taking a “zero-Covid” approach was never remotely a possible “path” – not sure if you noticed, but there are some marked geographical differences between Canada an OZ/NZ. Sweden is 1/6 of the population and has hardly been untouched by Covid death, either.

“p.s. Studies showing people who have recovered from Covid have much stronger and longer lasting immunity than the vaxed, as almost anyone would expect. Some people seem to really want to suppress that information for some reason.”

There is no reason to suppress irrelevant data. Achieving immunity from having Covid is hardly “superior” to achieving it through vaccination when the risk of death is far higher for the former than the latter.

But of course, if you feel that immunity though having Covid is the “better” path, you could always go and deliberately infect yourself. A tad selfish towards society and particularly health care workers, but at least you’d be putting your money where you mouth is.

#75 westcdn on 08.29.21 at 3:15 pm

Several teepees were erected in the field behind me. It is a good location several hundred meters from me. Porta pots were brought in and the teepees are intended to be rented.

I watched the guy from the reserve instruct people how to build them. Then he brought in his tribe members to entertain – good people. I am sure some will be chowing down on bannock and maybe some Alberta beef tonight.

Sunday maybe fun. I see a chip wagon has shown up – offers more exotic food.

Nothing exciting on the investment front. What I win today, I give back tomorrow. Still fun and I think I will still be rewarded come December. I am bothered why Canadians have become salespeople. Dudes, have you forgotten how to get things done? I have my Saskie farm boy roots – not afraid to hurt my back or lose a couple of fingers.

BTW, my mother was Métis and it hurt her to be called a Squaw. She was much better and actually quite pretty.
She could beat your pants off when it came to getting things done.

#76 Buford Wilson on 08.29.21 at 8:47 pm

Justin appears to be losing his grip.

He knows it’s over.

#77 Jan Bachman on 08.29.21 at 10:10 pm

#76 Buford. By the look of the Trudeau campaign coverage, the only ones in the pictures are his two hundred plainclothes RCMP members wearing backpacks ( likely full of extra ammo) over thick bulletproof vests….and his CBC sycophants. If there’s any Justice Trudeau will be taken out…at the ballot box…of course. He’s saying that protestors are anti vaxxed, even though his own MPs haven’t been vaxxed. Hah, he accuses the people of hate, hah, no one hates Canada more than Justin.