William Chin, Portfolio Manager, Caldwell Investment Management

FOCUS: Technical analysis and macro portfolio strategy

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MARKET OUTLOOK

Experimental monetary policies have driven interest rates to zero (and then some) and unleashed countless “unintended consequences” that we have yet to deal with.

One phenomenon that we are all living with is the destruction of interest income. With this comes the relentless search for yield, often at the expense of risk and sound judgment. Asset bubbles are everywhere and, while the going is (still) good, we need to start looking for protection.

Take the stock market for example; there are many overpriced stocks, and only a small number of stocks that are fairly priced or even undervalued. Therefore, actively selecting the good stocks is very important for the health of your portfolio. Buying the index, or an ETF, is not the way to go because you are buying the good with the bad. Many equity mutual funds look very much like the index of the market they are in. We at Caldwell believe strongly in active management, actively selecting the good ones and avoiding the bad ones. The Caldwell Canadian Value Momentum Fund just celebrated its five-year anniversary, and it is ranked number one amongst its Morningstar Canadian Equity peer group. It is not an accident or luck, but the result of hard work and sound risk management. The lead portfolio manager is Jennifer Radman, a regular on your show. I advise the Fund on macroeconomic and technical analysis, myself being the Chief Technical Analyst. Speaking of risk management, technical analysis is a fantastic tool.

For example, the S&P 500 Index made a new high two months ago, but there is no confirmation from a very important momentum indicator (the MACD), making it one of the ugliest new highs I have ever seen. To be sure, it is not a stock market but a market of stocks. Individual stock performance diverges tremendously from one another. You need a good stock picker and a good chart reader to guide you.

Top Picks

Imvescor Restaurant Group (IRG.TO)

Sleep Country Canada (ZZZ.TO)

AGT Food and Ingredients (AGT.TO)

 

Disclosure Personal Family Portfolio/Fund
IRG  N N Y
ZZZ N N Y
ART N N Y

 

Past Picks: July 26, 2016

Clearwater Seafoods (CLR.TO)

  • Then: $14.18
  • Now: $13.59
  • Return: -4.16%
  • TR: -3.80%

Hardwoods Distribution (HWD.TO)

  • Then: $18.05
  • Now: $18.75
  • Return: +3.88%
  • TR: +3.88%

ZCL Composites (ZCL.TO)

  • Then: $8.90
  • Now: $10.39
  • Return: +16.74%
  • TR: +16.74%

Total Return Average: +5.61%

 

Disclosure Personal Family Portfolio/Fund
CLR  N N Y
HWD N N Y
ZCL N N Y
 

Fund Profile: Caldwell Canadian Value Momentum Fund

Performance as of August 31, 2016:

  • 1 month: Fund 3.9%, Index* 0.3%
  • 1 year: Fund 21.8%, Index* 8.7%
  • 3 year: Fund 11.1%, Index* 8.1%

* Index: S&P/TSX Composite Total Return Index

 

Top Holdings and Weightings

  1. ZCL Composites: 7.2%
  2. IBI Group: 7.2%
  3. Tree Island Steel: 7.1%
  4. Imvescor Restaurant Group: 6.7%
  5. Boyd Group: 6.6%

 

Website: www.caldwellinvestment.com