Winter Is Coming...or maybe not.Submitted by Cameron Woods Portfolio Management on January 12th, 2017
By: David Cameron
Within the first week of welcoming the New Year much of the Pacific South West (and usually warm) coast was getting snow covered and very cold. I grew up in Northern Ontario and if I'd wanted freezing cold winters and snowy streets I would have stayed there! Of course, -1 or -2 in January is quite balmy by 99% of Canadian standards and if it seems like I've lost my Northern Ontario "street cred" it's because I have. I'm a winter wimp now. That being said, despite knowing what country I live in, our blustery and barely negative cold snap hasn't stopped me or many other residents of the Garden City from complaining.
It is my observation that the threat of winter weather typically forces people into one of three categories. First, you’ve got the “Meteorologist-in-training.” You know this person well. In fact, you may have one in your very own family. They have closely studied no less than three separate weather models, they use words like “system” and “nor’easter” and “squall” as they enlighten you on exactly how many inches to expect and precise starting and ending times based on their analysis. While this person doesn’t typically prove to be any more useful than your favorite Weather App’s push notifications, they do manage to be slightly more annoying.
Next up on the list is the “Cub Scout.” Living up to the “always be prepared” motto, this person is not going to spend much time trying to predict what will happen, but is also not going to be left without a replenished supply of bread, eggs, and milk. They’ll make sure they can find last year’s shovel and confirm the ice scraper is in fact wedged underneath the passenger seat in the car. They may even pick up some extra firewood, you know…just in case.
Lastly, we have the person that is inevitably caught completely off guard. They’ve either chosen to ignore the signs and warnings for some reason or another, or they simply weren’t tuned in. As a result, they are unequipped to handle the outcome, and hopefully live next door to one of the “Cub Scouts” that will at least lend them a shovel.
If you think about it, the weather is not unlike the market. Both offer an infinite number of data points that can be analyzed, and many can (and have) made predictions on what will happen next. However, no one has the crystal ball. Sometimes no matter how clear the path may seem, the unexpected becomes reality, leaving even the experts scratching their heads.
The way people react to the market can also be categorized broadly. There are those that suffer from paralysis by analysis, using their resources to try to predict what will happen. On the other extreme, there are individuals that do nothing, falling in to the “buy and hold” camp not by choice, but by default. Our goal is most consistent with the Cub Scout mentality.
We don’t know what the next year has in store for us, but what we do know is equities continue to demonstrate a bullish picture moving in to the New Year. We know that it is sectors like Energy, Technology, and Financials that are largely leading the charge. Most importantly, however, we know that we have several objective tools and indicators at our disposal that we monitor regularly. We have a plan in place that allows us to participate in leadership trends, yet remain adaptive enough to change should the market veer off course.
I hope your 2017 is off to a great start (despite any inclement weather)! If you have any questions about your portfolio, or would like to further discuss opportunities within the markets, please give us a call.