Bill Harris on BNN The Street – December 9, 2016

The consumer may be all the U.S. economy has going for it

The September jobs report released last week served as an important milestone for the U.S. economy. We have now had 72 consecutive months where the U.S. economy has added jobs. In this time, more than 14 million jobs have been added – the equivalent of 200,000 jobs a month for six years. By all accounts, this suggests that the U.S. economy should be firing on all cylinders.

A Case Study On: Politics & Investments

Usually politics grabs the news headlines but does not have much effect on investments. Profit margin cycles and the direction of interest rates evolve gradually over decades and are the real long term drivers of investment returns, unless you experience a dramatic and sustained political interference. So while US politics dominates our news cycle and we would argue that the current US election would have some negative consequences from either candidate, it is important to look beyond this noise and fully grasp how intrusive and stifling domestic politics has become.

Q3 2016 Letter

The last three months have seen the continuing trend of gradually rising interest rates in both Canada and the US. In this quarter’s letter we will elaborate on Avenue’s bond portfolio strategy where the majority of our investments are in shorter maturity Canadian corporate bonds.

A Case Study On: Bryden’s trip to Omaha

The annual proxy season can be a tedious time for money managers as public companies send out their annual reports and proxy materials. Tedious as it is, proxy season is an important time of year, when shareholders are given the opportunity to vote for board members, management compensation, as well as other corporate matters. However, aside from the occasional contentious vote, usually the general consensus towards proxy season amongst investment managers is a collective yawn.

Q2 2016 Letter

We are experiencing a continuous stream of crises, with the latest being Brexit. The results from all these events (the Greek debt, the slowing Chinese economy and Brazilian corruption) are causing ongoing pressures to lower inflation and subdue growth, which hold down interest rates to very low yields. The world is awash in surplus money that needs to go somewhere and any income generating business, asset or higher yielding bond should become increasingly valuable. However, as investors we will always have to live with short term volatility.

Bill Harris on BNN Market Call – July 27, 2016

Bill Harris on BNN Market Call – May 10, 2016

A Case Study On: Higher Taxes

Tax rates are going up in Canada for the wealthy and the moderately wealthy. This has a significant impact on after-tax investment return when Avenue does retirement projections for many of our clients. It is an obvious statement but one we haven’t had to formally address because for the most part the previous federal conservative government had spent the last ten years lowering various tax rates. This is important because we need to make sure we use realistic expectations for planning retirement income.

Q1 2016 Letter

In the first three months of 2016 we experienced a dramatic stock market sell-off followed by a rapid recovery. At Avenue, we have argued that along with low interest rates, and higher stock market valuations, comes increased volatility. Just a small change in investor perception of the future can trigger a pronounced stock market move in either direction. An important part of Avenue’s investment strategy is to be ready for the unexpected and to take advantage of it.

Paul Gardner on BNN Market Call – Feb 17, 2016

A Case Study On: A Liquidity Crisis

A very real challenge we face is a lack of liquidity in both the bond and stock market for smaller investments. We see three reasons for this liquidity crisis; two are global issues and one is unique to Canada.

Q4 2015 Letter

2015 was a hard and stressful year. At times it felt like mini-crisis after mini-crisis. By year-end, Avenue’s bond portfolio was up a bit and Avenue’s equity portfolio was down slightly. Low interest rates continue to be a challenge for returns in the Bond portfolio. However, the equity portfolio is faced with multiple challenges from currency, from commodities, and from investors’ perceptions of the future direction of interest rates. On the positive side, the high yielding stock investments that we favour are now at decent valuations and we believe they should offer better returns this coming year.