Ottawa Investment Advisor John Bruce

Time to buy discounts

November 22, 2018

With the markets selling off and giving back all their gains for the year on the Dow Jones in the last two months, and the TSX going back to levels of 2016, I have been looking for a conservative approach to buying into these discounted areas with the use of specific mutual funds that have an excellent assortment of many of the companies that are on sale yet still have strong earnings and a promising future.

I see a strong economy that is not over heated by any inflationary definitions and believe that the recent shakeout and selling is once again a very good opportunity to buy into a discounted market for the longer term.

What people don’t understand is that if you are a long term investor you WANT the market to be down and stay down when you are buying and then when it reverses you can sell bits and pieces as it peaks again. That is what I have done with you and that is why we have been sitting on cash for quite a while.

The market may go lower, it may take off. Who knows? What I do know is that in the long run it always goes higher and when the economy is still strong you want to buy at discounted prices.

I will be sending you one page summaries of the specific mutual funds that I have assembled for you and will call you to discuss allocation of cash to them.

I am also looking at placing many of our holdings that qualify, into a dividend reinvestment plan so we can use the income our stocks pay us to acquire additional shares at these lower prices. This too I will discuss with you when we speak.

Call me if you have any questions at 613-491-3344 or toll free at 1-866-860-4190.

It may be challenging times for the current market, but I for one like to see the companies I want for the long run encounter short term drops so I can get more.

Remember this quote from Warren Buffett- “Price is what you pay, value is what you get. Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”

John S. Bruce
Investment Advisor

November 2018 Update

November 2, 2018

I would like to prepare you for what is likely a decline in your accounts from the previous month. This recent sell- off, like most sell- offs, has occurred fast and with an apparent fury that it has created fear with investors. As of today’s date the Dow Jones Industrial Average, the NASDAQ and the S&P 500 have given up all their advance for the year. The TSX has fared worse and gone back to levels achieved two years ago.
The markets are moved by fear and greed and fear has taken hold.
I saw this coming and prepared you for this event with previous letters in July and August and again in October. We took profits when we could and built up our cash. What we have that has gone down has not necessarily gone down because of anything intrinsically bad within the investment. What has happened is that we have more sellers than buyers and that is sending the market lower.
That is the good news in so far as it is giving us a chance to buy the best companies in the market at sale prices.
Many are saying it is the end of the bull market, or it’s 2008 again. It is not 2008 again. We are in a very different set of circumstances than we were in 2008. I have attached a report (click on this underlined area) from Drummond Brodeur, CFA, Senior Vice-President and Global Strategist with Signature Global Asset Management. He is one of a few fund managers that I value and respect.
His perspective is encouraging and factually supported. I invite you to read it.
Please call me if you have any concerns at (866) 860-4190 or direct at (613) 491-3344.

John S. Bruce
Investment Advisor

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