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Vox canum

Just in time for the federal election the stock market laid an egg. Well, a little one. But nonetheless fowl.

Why did equities give up 2% in the biggest daily slump since July? No, it was not just anticipation of the GreaterFool poll results (more on that below). Also (a) worry about China’s sick property conglomerate Evergrande, (b) expectation the US Fed will lay the groundwork this week for turning off the stimulus tap, (c) a looming American debt ceiling deadline with the potential for a government shutdown, (d) higher inflation and lower housing sentiment (e) too much Covid, too many unvaxed and (f) concern Biden’s massive $4-trillon stimulus package won’t progress.

So it’s the September sell-off a lot of analysts were expecting. Markets have broken below key support levels, suggesting this will go further than 2%. Let’s hope so. Ten per cent would be nice – blowing off some of the excess exuberance, punting the crowdfunding Reddit manipulators out on their artfully-tattooed backsides, and reminding the all-equity cowboys in the steerage section there’s a reason smart investors have balance and a nice collection of differing assets.

Corrections are normal. They’re healthy. We haven’t had a decent one since the reopening trade started well over a year ago. From the virus-low of March, 2020, markets have about doubled. The longer we go without modest pullbacks, the greater the risk of a more serious retreat. The current bundle of worries is triggering a wave of selling and taking risk off the table. Do not be deterred. With less than 30% of the global population vaccinated, there is a helluva reopening trade still to come.

Now, about Canada.

Might be a late night but there’s no need to wait up. According to 4,906 blog dogs who voted here in the last few hours, the Tories have it in the bag. Massively. You gave O’Toole 60% of the ballots, with the Libs a distant second, forming an opposition coalition with some party called ‘None of the Above.’ Trailing badly were the Dippers, barely beating out Mad Max while the Greens turned into compost. Most of you voted in advance, believe the economy (duh) is the major issue and concluding the campaign sucked.

Finally, who are you?

The bulk are Mills and GenX, with a fifth being wrinklies. Ontario and BC residents dominated the poll. Half have a household income north of $150,000 and more than 50% have net worth (including real estate) of a million to five mill. Dozens and dozens of you possess more than $10 million, and we have just sold your data to some dude named J.Singh. Expect a call.

Well, there she be. Now let’s see what the rabble does.

The GreaterFool 2021 Election poll

CLICK IMAGE BELOW TO SEE POLL RESULTS (a new browser window will open, then click on the reduced image to view full-size)

About the picture: “Hey Garth, I read your column everyday and appreciate all your free financial advice, B & D always,” writes Randy.  “This is my sister’s dog, named Trudeau. She is a millennial who has given permission to use this picture after Sept. 20th when his namesake is top dog again.” Do you have a pooch to share with the pack? Send me a picture – [email protected]

Wise guys

DOUG  By Guest Blogger Doug Rowat

I want to thank you — the Retire Wise Trading Group — from the bottom of my heart.

Normally, I’m swamped with absurd, waste-of-time sales pitches, but yours was different. What you’ve created here is clearly game changing:

Source: My email inbox

If you don’t mind, I’d like to go through your brilliantly crafted email point by point, so I can better express to you my thanks for calming not only my fears about funding my retirement but the fears of my blog readers as well. It may read a little bit like a love letter, but that’s just because I’m so excited by your story and the trading system you’ve built:

1. I noticed a bit of space between “Hi” and my first name, but I wasn’t worried. Poor salutation formatting doesn’t always mean it’s an impersonal, automated, blast email. And you had me at “Douglas”. I loved the formality.

2. “John Marshall here”. I don’t know you John, but I feel that I want to. And you not identifying yourself in any other way or offering a bio just added to my intrigue.

3. “Around March of this year Greg B., Scott B., Dave J. and myself….” March? So, you’re promoting a trading strategy that’s only seven months old? Very bold. Some might say valueless and unvetted, but I prefer bold. It’s a shame your buddies were too shy to give their last names. But I get it, they’re Canadian.

4. It really sucks that the four of you couldn’t find anything to aid your retirement planning except for the “get rich quick schemes or empty promises by investment firms for amazing returns!” But I hear you, I’m so sick of that too! And what a relief to know that you aren’t planning to show me some get-rich-quick scheme promising amazing returns yourselves.

5. “After many months of research, trial & error, sleepless nights, you name it…” So, after only a few months of research you four Canadian fellas solved capital markets and ended our retirement worries? I’ve never been prouder to be Canadian. And all the “fear”, “anxiety”, “embarrassment” and “sleepless nights”? This has clearly been a stressful process for each of you. Which brings me to: “you name it…”. I’m now curious, please name it. What else did this important and ground-breaking project do to you? Addictions? Marriage breakups? Nervous breakdowns? Tell me everything.

6. “We finally landed on one single strategy that has seen our small group average 2% per week gains consistently by coming up with a safe, reliable & easy to follow trading system…2% per week will double your money in 1-year.” 100% returns per year with apparently no risk. That’s what? 10–15x what equities normally return in a year? Incredible! Your sleepless nights definitely paid off. However, should I be worried that you started developing the strategy only in March and it hasn’t even been a year? But that’s just my own anxiety talking. I didn’t mean to suggest that you’re making empty promises.

7. “We have decided to share this trading strategy with anyone that may be worried about being able to retire with enough money….” Very generous, thank you. But I do pause here to think of the words of economist, and Harvard and Princeton graduate, Burton Malkiel: “If such a regularity [for solving the market] was known to only one individual, he would simply practice the technique until he had collected a large share of the marbles. He surely would have no incentive to share a truly useful scheme by making it available to others.” But forget the logic of Ivy League snobs like Malkiel, what possible incentive would you humble Retire Wise guys have for sharing your truly useful scheme other than simple generosity?

Source: Retire Wise Trading Group

8. “Portfolio performance from July 2-present: 13.6%”. I’ve been told that a 2.5-month track record is worthless, but that’s just the opinion of bitter analysts who don’t understand the genius of what you’re doing. I could ask if your performance is being independently audited and is therefore verifiable, but I would never do that because I trust you and I now know all of you on a first-name basis (and some of the initials of your last names).

Finally, Retire Wise, I particularly loved the below image in your email. Someone suggested to me that it could have double meaning and reflect how your customers might feel after forking out their hard-earned money on your trading system.

Personally, I don’t see it that way. Keep up the great work.

Source: Retire Wise Trading Group
Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.