An examination of the valuation of Apple’s shares is an excellent way to demonstrate the extreme divergence that has taken place in the stock market in the last six months. Not much has changed in the underlying profitability of Apple. What has changed is that investors are willing to pay a mania-type multiple not seen since the 2000 dotcom bubble.
read moreIn this episode, Bill Harris and Bryden Teich discuss the Avenue Q2 2020 Quarterly Letter and some of the things investors should be thinking about for the second half of 2020.
read moreThe level of US Government debt was an issue before this recent crisis. Now we believe excess debt will come to define financial markets in the coming years.
read moreIn this quarter’s letter we would like to give our assessment of the many contradictions of financial orthodoxy in which we now find ourselves. The economy is in terrible shape and yet the stock market has had a strong rebound from the March 23rd low.
read moreIn Episode 9, Bryden Teich and Matt Manara discuss news from the recent Federal Reserve meeting and the concept of yield curve control. They highlight previous examples of yield curve control and the impact it had on real interest rates and asset prices.
read moreBryden Teich and Bill Harris discuss the partial recovery in the stock market during May and what has been driving the recent moves. They also discuss why the stock market and the underlying economy have diverged and highlight some of the fiscal and monetary policy responses that are causing this divergence. They also discuss the debate between Value vs. Growth investing in light of the current market environment.
read moreIn Episode 7, Paul Gardner and Bryden Teich give an updated assessment of fixed income markets in April 2020. They talk about the impact that bond ETF’s had during the selloff in March and highlight a few areas where they are finding value in the corporate bond market.
read moreWe have lived through an extraordinary few weeks. Across the country Canadians are now bracing for the full impact of the virus. Hopefully all our collective efforts at social distancing will pay off. Currently, we don’t know of anyone within our Avenue network who is ill with the virus, and we truly hope it stays that way. We give our thanks to all of you who are on the frontlines in the medical and support professions as you work tirelessly to keep Canadians safe.
read moreIn Episode 6, Bryden Teich and Bill Harris discuss the impact that COVID-19 has had on the markets and the global economy through the first quarter of 2020.
read moreWe have been getting lots of questions about how our investments are faring in the face of this historic market decline. We have attempted to lay out our comments in a question and answer format.
read moreIn Episode 5, Bill Harris and Matt Manara discuss the incredible events in the global stock markets for the second week of March 2020.
read moreIn Episode 4, Bryden Teich and Bill Harris discuss the events in the stock market for the last week of February 2020 and how Avenue has been positioned for this.
read moreIn Episode 3, Matt Manara and Bryden Teich discuss the U.S. Federal deficit and how it is impacting the direction of monetary policy. They also discuss the reach-for-yield going on in corporate and high yield bond markets and discuss other risks they are seeing in the market.
read moreIn Episode 2, Bill Harris and Bryden Teich discuss how global stock markets are currently being impacted by central bank liquidity and relate that to previous periods of market exuberance. They also discuss the signal that the underlying economy is sending at the outset of 2020, and they discuss the outlook for the Canadian energy sector.
read moreBryden Teich and Paul Gardner discuss Avenue’s outlook for interest rates and Federal Reserve policy as we enter 2020. The past year saw a significant change in policy from the U.S. Federal Reserve with three interest rate cuts and a significant re-expansion of their balance sheet starting in September. The conversation touches on the economic outlook for both the United States and Canada and the impact on interest rates and stock prices.
read moreThe case study is where we discuss specific details of our investment process. Today we will tackle stock market multiples and how it relates to risk. I wish I could say we can also make it entertaining, but the subject matter probably precludes this.
read moreThis past year was a year to celebrate Avenue’s unique equity strategy where the foundation of the portfolio is built on limiting the risks we take, instead of trying to ‘beat the stock market’ in any given year. For 16 years we have developed our brand and place in the Canadian investment industry where when you think of Avenue, you think of stability. Investment stability is achieved by diversification of the portfolio, the stability of the underlying investments, and rigorous attention to avoid owning securities that we believe are overvalued.
read moreAvenue’s stock market investment strategy is to find business that have consistent earnings and trade at a fair price. Technology is difficult to fit into these parameters because technology companies by nature have disruptive business models which don’t always result in consistent earnings. Our topic today is to show just how expensive and erratic many of these technology companies have become. We will examine the influence of Softbank’s Vision Fund and WeWork on tech venture investing.
read moreThere are three distinct themes emerging that separate the world of investing and define our times.
read moreWith Canadian bond yields dropping below 2%, these are dark days to be a bond investor. Gone are the days when one could hope for 5-7 % annual returns from the bond market. With global central bank policy using quantitative measures to lower interest rates close to zero, the global $40 trillion-dollar bond market is searching for a “normal” return.
read moreWe are now in record territory; a full decade of economic growth and stock market expansion has many investors fearful that we are overdue for a correction. In this quarter’s letter we make the case that the investments we hold in Avenue’s portfolios remain compelling, but at the same time we need to actively avoid certain stocks and sectors where there is excess valuation.
read moreWe have experienced good performance in the last three months in both Avenue’s Equity Portfolio and Bond Portfolio. The key reason is an extraordinary reversal in interest rates.
read moreIn Avenue’s equity portfolio, Enbridge is a great example of an investment which demonstrates the current valuation paradox.
read moreIn last quarter’s letter we wrote that as interest rates rise, they will likely cause a stall in the economy given the level of consumer and corporate debt. It is always hard to predict the timing of when the market will react to a slowdown, but that reality finally happened in December. What is unusual is that this was a global phenomenon where almost all asset classes were down worldwide in 2018.
read moreIn a rising interest rate environment there are times like the last nine months when it seems like nothing is happening. We have had a few questions from clients about why we own bonds at all. We believe it is helpful to lay out Avenue’s bond portfolio, so you can see all the individual bonds and you can better understand the return profile of the entire portfolio.
read moreThe 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.
read moreIt seems many Canadians are in denial of what we actually do as a county to create wealth. A majority of the Canadian population have voted for federal politicians to extract us from the carbon economy. This may sound like a good idea except we don’t really have a substitute non-carbon economy ready to replace it, just yet.
read moreIn investing it is important to directly address the challenging and ever-changing economic environment head on. It was only last quarter when there was a real fear of inflation and surging interest rates. Now escalating trade wars are threatening a global recession. In this quarter’s letter we will discuss how we see these challenges playing out and what we are doing about it within Avenue’s fixed income and equity portfolios.
read moreSometime a picture can relay information more clearly than a long-winded description.
read moreIn the first quarter, Avenue’s Equity Portfolio experienced its first decline since January of 2016. The Avenue bond portfolio’s performance also had a small decline. Both portfolios were affected by the market’s reaction to rising inflation expectations as interest rates rose and the added new risk of a global trade war reduced the outlook for corporate profits. We were conservatively positioned ahead of this market move and we argue that a significant amount of the correction has already taken place.
read moreA new investment mania is always just around the corner. All you need are the right ingredients of hope, unquantifiable potential and greed. Cannabis stocks and Bitcoin qualify for this distinction as we observe them both dominating the headlines. So, we thought we would take this quarter’s Case Study to discuss why a speculative craze does not fit with Avenue’s strategy of investing in consistent and profitable businesses.
read more2017 was a challenging year for bond investors as interest rates rose in Canada. That challenge contrasted with what was a decent year for Avenue’s equity portfolio where the return was roughly in line with our expectations. However, within the portfolio there were certainly plenty of variables which we will discuss in this quarter’s letter. Also, we would like to reaffirm how Avenue’s portfolio strategy is always looking to lower risk given our view that there are now parts of the stock market that we would describe as overvalued.
read moreCompounding investment savings using bonds requires a grasp of a few simple concepts. However, it is amazing how complicated the financial industry makes it sound. What tends to get lost in the noise of interest rates going up and bond prices going down is the far more important result that bond interest and maturities can be reinvested at a higher rate.
read moreAvenue’s fixed income and equity portfolios historically have little turnover of the individual securities from year to year and 2017 has been no exception. However, this year has been notable in terms of big moves in interest rates, the Canadian dollar and many stock market sectors and individual stocks. In this quarter’s letter we would like to discuss where our portfolios stand in relation to these many moves.
read moreThe stock market of 2017 is starting to feel a lot like 1997. It is now a full 20 years after the first stock market internet bubble. The peak of that market phenomena was in 2000, but it was two and half years earlier when the market started to differentiate between those businesses who used this new phenomenon called the internet which could attract millions of ‘eyeballs’ and those businesses who did not. The world was never going to be the same. Owning your Mum and Dad’s stocks was as sexy as wearing a one-piece wool bathing suit.
read moreThe Avenue Bond portfolio is up 1.3% for the first half of 2017 as the expectation of higher inflation and a sell-off in the bond market has not materialized. The Avenue Equity portfolio is up 1.0% for the first half of 2017. While we have not had a market pull back this year, after a good performance in 2016, the type of income producing stocks that Avenue invests in seem stalled as investors’ attention remains on technology and more specifically disruptive technology companies.
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