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A View From Here February 2013

February 25, 2013 • Print This Article

"Today people who hold cash equivalents feel comfortable. They shouldn't. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value" - Warren Buffett

Markets, Indicators, Myths and Superbowl's

While many try and figure the outlook for the stock market, there have been two interesting indicators that have an unusual success rate. However, this year, they are at odds. Firstly, "The January Effect"; this indicator basically works on the premise of 'however January goes, the rest of the year will go in the markets'. Its accuracy rate is 91.7%. So far. So good. The stock markets had their best January since 1997 gaining more than 3% in the first 31 days. Contrasting this is the 55% accurate "Superbowl" view that teams that win in the traditional NFC division occurs during advancing years. That did not happen this year….so it looks like we are back to trying to predict what has never been predictable in the first place. It would be amazing to really see someone prove, that for the past 50 years, they determined their success in investing on any of these two principals.

With 2012 in the books, most of you will have seen one of our best performance years conclude and this advance only strengthened further in January with most investment accounts at all-time highs. This will be evident when you check your January statement, as we saw monthly returns range between 3 - 4%. We have been very active in January adjusting portfolios in the areas where we see strength continuing….which is good because February has continued this trend.

What a lot of pundits and market strategists seem to miss out on is how well companies have realigned their operations for future growth through cost savings and investment. It is our hope that this continues to bode well for the markets as valuations of the companies in our universe remain attractive. That has been the key to our success and cannot rely on "Superbowls" and "January Effects" to guide our thinking….but we like to view them anyway.

RRSP Season

February marks the last month where Canadians can make RRSP contributions to affect taxation for 2012. I believe that an RRSP is the best long-term investment account for a few reasons:

  1. It is a forced savings for retirement, so people tend to not touch it
  2. Contributions are tax deductible
  3. The account will grow tax free until funds are withdrawn

Essentially, I view the RSP as life insurance…money that you will use in your life. Looking back on my career I am amazed at how large accounts have become over time. This should go a long way to augmenting retirement income needs. If you want to discuss further, please let us know.

Thanks for taking a look.

All Good Things,

Adam

Filed under: Uncategorized

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation ("MRCC"). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

 

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