peoples hands in the air.

Weekly Market Comment: June 9, 2020

Canada is beginning to feel like the laundry operation sitting on top of a Breaking Bad laboratory.

Just as America was opening up post-coronavirus, the death of George Floyd at the hands of police sparked global protests and some riots that prompted local authorities to issue nighttime curfews. The timing of Floyd’s death coincides with major unemployment and economic pain felt by millions of Americans, a powder keg of a combination.

Investors remain focused on a brighter future

For better or for worse, investors took the past 10 days of protesting in stride. American stocks continue to lead the world, though global stocks are catching up. Also, more and more stocks are rising today and not just tech companies or stocks like Home Depot (which is back to its historic highs) that benefited from the stay-at-home orders.

Oil stocks were especially strong today, benefitting our recently purchased Suncor and Parkland Fuels investments.

While we’ve seen improvements across all of our mandates and sub-advisors, Manulife Dividend SMA is up about 2% on the year, as is Manulife Strategic (+2.25%) and Canso (up 3.9% gross). Legacy Aggressive Growth is up over 11% on the year.

three tracks of coronavirus pandemic chart.

(Twitter)

Restaurants are open but not everybody can stomach it yet

Most restaurants have opened their doors again. We visited our old friends at Les Faux Bourgeois to offer some support. Seating capacity was about 1/3rd their normal level while offering about 2/3rds their normal menu items. What’s interesting is that they’ve decided to keep the recently minted take-out business going. They realized that they could handle the extra load, something they never would have believed had Covid-19 not forced them to try it. This is a small example of how many businesses will make permanent changes to their operations after having had some arrangements forced upon them.

Human ingenuity always tries to learn and to find a better way, especially under adversity.

Below is a photo of Burcon Nutrascience’s new Manitoba plant which they expect to be in production in the 4th quarter:

Burcon Nutrascience’s new Manitoba plant

Notable reads:

Musings Beyond The Markets

Bubbles, investment manias and scoundrels that promote them are as old as time. Daniel Defoe, the famous author behind Robinson Crusoe, Moll Flanders and A Journal of the Plague Year, was one of those scoundrels before becoming a successful writer. From the Globe and Mail’s Daniel Defoe wrote Robinson Crusoe to forget about his disastrous investments by Larry MacDonald:

The diving bell investment

One of his big investing moves was to buy shares in a fledgling company that had a patent for a diving bell. He also became treasurer of the company.

Large in size, the diving bell trapped a pocket of air when lowered into a body of water, allowing persons inside the bell to descend into the depths and visit submerged objects. Of particular interest were shipwrecks laden with sunken treasure.

A few years before, in 1686, Sir William Phips retrieved a king’s ransom of gold, silver and jewellery from sunken vessels in the Caribbean. The booty was of sufficient proportions to pay his shareholders a 10,000-per-cent dividend.

This big strike ignited a crescendo of feverish speculation. One sign of the mania: 11 out of the 61 patents issued in England between 1691 and 1693 were for diving bells (according to the November, 1986, edition of The Economic History Review).

However, Defoe’s company never got off the ground, owing to insufficient capital. It might be supposed there wasn’t enough interest in its offering of shares. But what happened was this: Company funds were misappropriated by Defoe (as noted by Katherine Frank in Crusoe: Daniel Defoe, Robert Knox and The Creation of a Myth).

The company’s founder filed a lawsuit against Defoe, demanding the return of funds. But compliance was not forthcoming, possibly because Defoe’s pressing debt obligations had higher priority.

Word Of The Week

affidavit (n.) – Latin for “he has sworn”, a written statement confirmed by oath or affirmation, for use as evidence in court. The judge in the O.J. Simpson case ruled Wednesday there was 'sufficient probable cause' for a search warrant for the football legend's estate, despite inaccuracies and 'reckless' misstatements by police in the affidavit used to obtain the warrant.”

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