It’s Time for a Change!

After more than 25 years with the same corporate group, it is time for a change. On our terms.

As most of you know, name changes are not new to us! Each of the previous firms we called home has been bought, sold or merged. Clients of 20+ years will remember Great Pacific Management, Cartier Partners, DundeeWealth and of course HollisWealth (first owned by Scotia Capital and now by Industrial Alliance).

We had no say in those changes. We ordered new letterhead, adjusted to new systems and processes, and maintained our focus on the needs of our clients.

On November 1st, we will initiate a change by transitioning to Quintessence Wealth. We plan to bring you with us.

Quintessence Wealth is a boutique firm designed exclusively for established, client-focused discretionary portfolio managers. They offer significantly better technology, tools and resources which will enhance our ability to assist you. We expect that you will recognize the enhancements from day one.

You can learn more on their website: http://qwealth.com/

Change is a given – we choose to adapt – Like many aspects of our busy lives, the financial world continues to evolve quickly. Currently, we seem to be on a heavily loaded freighter which doesn’t change direction easily. We would prefer to be on a nimble speedboat, able to adapt and implement new capabilities rapidly!

Creativity and betterment – Most Canadian advisors still work alone. Since an individual cannot be an expert at everything, we built a top team to strengthen the depth of knowledge, experience and value we offer to you. While existing regulations effectively force 95% of advisors to employ a buy-and-hold strategy by limiting them to one-at-a-time trades, we upgraded our qualifications and added a discretionary investment platform. We embraced technology to better communicate with you and designed a proprietary investment process to protect and grow your hard-earned dollars.

The future – With this next generation platform, we can continue to improve our services. Over the next few weeks, we will show you some of these new capabilities to give you a greater sense of why we are so excited.

What is changing and what is not?

  • The core group of advisors – Mike Holden, Rob Parrish and Andrew Chowne – that make up Elevate Wealth and have worked together for over 20 years will all be moving to Quintessence Wealth. Our administration team will be coming with us as well.
  • Our office location and phone numbers will remain the same. Only our email addresses will change.
  • We will use the same proprietary approach to managing your money that we have continually refined over the years – and if you look at the QWealth website link, you will see Quintessence Wealth offers even greater portfolio capabilities which will help us further improve your portfolios.
  • National Bank, currently the custodian for your HollisWealth accounts, will continue to be the custodian at Quintessence Wealth.
  • The new portal that allows you to view your portfolio details online will be an immediate improvement, with further enhancements on the way.
  • Because this is a change that we have initiated, we will cover all transfer costs.

It would have been simpler in the short run to stay where we were, but the status quo was not an attractive option. We are excited about our future at Quintessence Wealth and our team is working tirelessly to make this transition as easy and seamless as possible for you.

We appreciate that you have trusted us for years with your financial matters. We ask for your trust that this move will offer you even greater opportunities and experience moving forward. We look forward to continuing to assist you in your financial decisions and success.

If you have any questions, please call or email. We’ll be happy to tell you more!

Changing Face Of Returns

Market Commentary – February 2018

“Every single leading economic indicator we know about tells us that the economy will continue to expand over the next 9-12 months. A growing economy should provide the underlying support needed for ongoing corporate earnings gains and, with the added help from the Trump tax cuts, we could very well see 13-15% earnings growth for the S&P500 in 2018”

                           – Myles Zyblock, February 2018

“Refrain from joining the crowd.  Additional weakness should be viewed as a buying opportunity as the secular trend remains powerfully bullish.  For one thing, the global recovery is accelerating and with tax cuts, deregulation, and the upcoming Infrastructure Bill, earnings will continue to surprise on the upside.  For another, the market’s technical structure remains sound.  The long bases completed by so many stocks in so many sectors and in other countries suggest that this bull market still has a long way to go in terms of time and distance.”

                                  – Leon Tuey, February 2018

The S&P500 had one if its best starts to a year in January – and then in February, volatility increased and the market started to correct.

Putting the recent volatility in perspective:

  • Volatility and corrections are a normal part of equity investing. Quite often they are a healthy pause that takes some of the froth out of the markets
  • A correction of 10% occurs about once a year on average. Corrections of 5% take place on average about 3 times per year
  • It is incredibly difficult to time short-term pullbacks in share prices and quite often they bounce back significantly within a month or two
  • Despite these regular corrections, Ibbotson Associates showed that markets were positive 65 out of 89 years from 1926 – 2014

There are really two types of corrections. Smaller declines of 5%-10% are like an emotional knee-jerk during relatively good economic times. Larger bear markets, with 20%+ drops, typically happen during an economic recession. These are the ones we want to watch out for. It would be reasonable to expect us to move some of the portfolio to cash or defensive positions if a recession is looking likely. However, we don’t expect to see a recession in 2018.

  • For the first time since 2007, all 45 countries tracked by the Organization for Economic Cooperation and Development (OECD) are on track to grow in 2018, and growth in roughly three quarters of these economies is accelerating
  • Volatility has been grabbing headlines and has perhaps taken attention away from the stellar filings coming in this quarter. We are now past the halfway mark of Q4 reporting season and S&P 500 quarterly year-over-year earnings growth stands at +13.6% and well ahead of the +10.9% consensus forecast.

Growth looks solid across the globe.  Despite recent volatility, all our indicators are still positive.  Unless something changes significantly, we expect to be fully invested in the coming months and quite likely for the remainder of the year.

Sometimes A Picture Is Worth A Thousand Words

For a Canadian investor, this has been a very frustrating year. How is that possible? Wasn’t the Dow Jones hitting all-time records recently?

Let’s take a look at the three most common places Canadians might invest. The green line is XBB which is a proxy for the Canadian Core Universe Bond Index. The blue line is the Canadian S&P/TSX stock index. The red line is the US S&P 500 stock index – in Canadian dollars.


Source: SIA Charts

The Canadian bond index is up about 1% year-to-date (YTD). The Canadian S&P/TSX stock index is down about 2% YTD. The US S&P 500 stock index, in Canadian dollars, is up about 1% YTD. All figures are as of August 18, 2017.

Based on these returns a simple “balanced portfolio” that is 60% Bonds/20% Canadian Stocks/20% US Stocks would be flat YTD. A “balanced growth portfolio” that is 40% Bonds/30% Canadian Stocks/30% US Stocks would also be flat YTD. Even a “growth portfolio” that had no bonds would be flat YTD.

Note that the US markets have done reasonably well this year, but the Canadian dollar has jumped from about 73 cents to 80 cents since the Bank of Canada raised interest rates unexpectedly in June – which is about a 10% increase. For a Canadian investor, this means all US investments actually dropped in value by about 10% in Canadian dollar terms through that same period. That is the main reason for the red line dropping since June.

US markets have actually done well over the last three years, but the Canadian bond index has only averaged about 1% per year and the Canadian S&P/TSX stock index is negative over the last three years. It is tough to have strong performance in a portfolio when two out of three key components are flat or negative. And for most people, 100% exposure to US stocks – i.e. investments held in a different currency – is too aggressive.

So why bother to invest?

While anything is possible in the short term, stock markets should outperform bonds or GICs over a period of 3-5 years – especially when interest rates are this low. Some years it will be US markets that lead, some years it will be Canadian.

What is the outlook for markets?

In the short term, markets trade on sentiment. Over the long term they trade on fundamentals. We don’t know if we are in the summer doldrums. We don’t know if markets are concerned with the bluster of Trump’s tweets, sabre-rattling with North Korea, Russian intervention or something else. What we do know is that, despite the black headlines, the fundamental backdrop for the markets seems to be improving.

  • S&P 500 earnings for Q2 (second quarter) of 2017 exceeded analysts’ expectations following a stellar Q1. This is the first time the index has posted back-to-back double-digit growth in earnings per share since Q4 of 2011.
  • The growth in both earnings and sales were well above average. Every sector experienced positive growth this quarter.
  • Improving global economic prospects and accelerating earnings momentum continue to underpin this bull market.
  • Globally, investors remain grossly under-invested in equities and are sitting on a mountain of cash. As investors recognize the improving fundamentals of specific companies, some of that cash will likely be redeployed into equities.

Our portfolios have come a long way over the last four years. We are not happy to be treading water in the short term. Our goal is to outperform the indices while providing greater downside protection than a buy and hold approach. We believe we have the right investments in place to achieve this over the next 3-5 years, but based on these improving fundamentals we sure would appreciate an upwards move in the markets themselves.

Our Strengths

We’re not talking about how much we can bench press at the gym, but we are talking about the benefits of our varied perspectives which make for better strategies.

DON’T PANIC!

This came to me from an experienced, very well-respected market technician on U.S. Election night at around 9:00pm. It provides some perspective to what was, for many people, an emotional night. 

– Andrew Chowne

DON’T PANIC!

Another Buying Opportunity Is Being Presented

BY LEON TUEY

Worldwide, markets are plunging on news that Trump is leading the race to the White House.  Such reaction is irrational and unwarranted.  Clearly, the left-wing media have convinced investors that if Trump wins, the market will crash and he may even start a Third World War.

Investors should take a deep breath and consider the following:

1.  Regardless who wins, it’s Janet Yellen who holds the economic lever.  The Fed is an independent body which was created in 1913 to perform all roles monetary.  One of its key statutory mandates is “to maintain orderly economic growth and price stability”.

2.  As mentioned in recent months, after eight years of monetary stimulation, a synchronous global recovery is now in place.  That is a point investors should keep well in mind.

3.  Unlike the Democrats’ model of “tax and spend”, Donald Trump is a free-market supply-sider.  He has promised to cut taxes and cut government spending which will result in economic growth, rising employment, and increased tax revenue.

4.  Investors, big and small, have been selling equities before the election.  Consequently, investors are grossly under-invested and have underperformed the S&P.  Come January, however, the funds will have to report their performance to their clients.  With the year coming to an end, the pressure to window-dress will mount.  This sets the stage for a huge year-end melt-up.

5.  Moreover, the market is grossly oversold and pessimism is at an extreme; conditions are in place for a huge rally.

6.  The secular bull market remains intact and the best is yet to come.

Accordingly, investors should keep their sight on the long-term and do not be distracted by the “noise” and the black headlines.  The sell-off should be viewed as an early Christmas present.

LEON TUEY

November 8, 2016

Simpler & Clearer Statements…Finally!

Our clients come to us looking for advice that simplifies and clarifies their choices, making it easier for them to make financial decisions with confidence.

A familiar complaint through time has been investment statements that gave them scads of information but that were difficult to decipher.

“Why can’t we just see how much we started with, how much we deposited and withdrew, and what it’s worth today?”

Thankfully, our Discretionary clients – for whom we manage investments on a fee-based platform receive Quarterly Portfolio Reviews that do simplify and clarify their account information. The good news is that soon everyone will: all investment industry clients will have this type of reporting beginning in January 2017.

In a layout called “Performance Reports” to be included with monthly statements, both graph and chart views will be presented. These inclusions will personalize the rates of return for each individual account.

“Okay. So how much does this cost me?”

Again, our Discretionary clients have seen our direct management fees on statements since the beginning. Starting in January, all clients will see a breakdown of the costs of their account whether they be direct management fees, administrative fees (for non-Discretionary TFSAs and RRSP/RRIFs only; our Discretionary clients do not pay these fees), commissions or mutual fund trail fees.

Inserts with full explanations and samples were included in September 30th statements. It’s an effort by all Canadian securities firms to report account performance and costs in a standardized “apples-to-apples” presentation.

This is a welcome change. Finally!

A Different Approach

Video Series: An Introduction

At Elevate we take innovation seriously. In the coming weeks you will see a series of short video clips that give you a look at how we work together on your behalf.

These videos may seem like they are about us, but they’re really about you. We hope you like them. They’re unconventional, but then so are we. Let us know what you think and feel free to share them.

A Different Approach

We want you to know how we’re working for you as a team. See how we do it:

Mountain Life can Elevate Everything

Elevate Wealth Choose’s Whistler’s Zero Ceiling

A connection to Whistler runs deep among the partners and clients. We believe that powerful experiences in nature and community can transform lives. This is the work of an amazing grassroots organization called, Zero Ceiling, and we have decided to support them this year.

Zero Ceiling Society of Canada reduces youth homelessness and raises the quality of life for at-risk and homeless youth from Vancouver through the Sea to Sky Corridor. They provide housing, employment and professional support that empowers youth with effective, practical tools to live healthy and independent lives. Through adventure-based learning, Zero Ceiling provide opportunities for youth to experience mountain life and cultivate healthy, purposeful direction in their lives.

Elevate Wealth is proud to support Zero Ceiling and the community in which we live.

 

 

Introducing our Charitable Foundation

We have spoken to many clients over the last few years about the benefits of setting up a Charitable Giving Fund, but we decided the best way to demonstrate the benefits and build awareness is to start one ourselves.

We are fortunate to live where we do and most people we know enjoy a relatively comfortable lifestyle.  Not everyone is so fortunate.  We would like to do what we can to reach out and make a difference.

Over the next few months we will model how clients can:

  • make gifts that continue to give (i.e. How to GIVE SMART)
  • save a considerable amount of tax
  • make a difference in your community
  • help your family/children learn through the process
  • We will get the ball rolling with our initial donation, but our hope is that others will want to set up their own donor-advised giving program.

Each account would have its own name (i.e. “The Smith Family Fund” or “The Bob & Mary Smith Foundation”) and each year the charity/charities of your choice will receive an annual grant.

$10,000 does make a difference, but collectively our aim is to raise $100,000 in 2013.  That would certainly be a huge achievement!

If you’re interested in exploring the benefits of a Charitable Giving Fund, or know someone who is, we can help.