Originally published September 2021
The Big Picture
The investment world continues to buzz about the market being overvalued and there being an eminent crash or worse, a decade of poor or negative returns. At the same time indexes continue to gain week by week. How can the market be both about to collapse and continue to rise at the same time? If everyone truly believed that the market was going to go bust, everyone would obviously bail, but they have not. The reason for this is complicated, but for the most part, it comes down to the fact that no one really can predict the immediate future. Overall this year’s returns are looking super, though that is not the sentiment on the street. As always, the smart investor stays in the market no matter what, through the good times and the bad times knowing that their time in the market that will eventually provide good returns.
The Small Picture
The hobby portfolio’s performance has emerged from what would seem to be a bad dream. It’s no longer losing ground to my benchmark, the SP500, and in fact, has gained ever so slightly. Hopefully, this trend can continue. I apologize that there was no newsletter in August… me bad and life got busy. I don’t get paid enough to guarantee a newsletter every month, lol.
One New Purchase and One Old
I have added MSOS, a cannabis ETF, to the portfolio. I have been historically anti-cannabis stocks due to the high prices and high volatility. What has changed? Pot stocks are out of favour right now and stock prices keep falling. Could they continue falling? Absolutely but after an almost 50% fall from their previous highs, it seems like a good entry point. The legalization of cannabis in the USA continues to move forward but slower than most had expected. If the trend continues I could forsee the day when Americans can buy pot stocks legally on the main stock exchanges. When the move to list these companies on mainstream exchanges occurs, there will likely be a pent-up demand situation where stocks could get bid up. As a result, I do like the long-term chances going forwards.
On the volatility side of the equation, I have chosen an ETF instead of a single stock position. This will obviously lower the chances for a huge homerun return, but it will also ensure that I don’t end up murdering money with a bad luck pick. This is not a casino after all.
I double downed on Alibaba (baba) the Amazon of China. It’s been out of favour for quite some time and my losses are mounting. Buying something out of favour is difficult because it usually continues to fall and it drags down returns. However, if the investment strategy is solid, then sometime in the future when trends reverse, you get over performance. Buy low sell high… simple but often difficult and generally counterintuitive to achieve. Patience and discipline are hard at work here and are obviously being tested. This purchase averages down my cost basis, which is good if things work out. If the outlook remains bleak, then in hindsight the purchase will look like I threw perfectly good money after bad money. In the end, they can’t be all winners, but as long as your winners win more than your losers lose, then it’s all good.
I sold off my small cap ETF VTWO. I still like it, and it has provided good returns – 15% over 6 months. However, I needed to pay for new purchases with something…always a compromise!!
My new uranium play Cameco (CCJ) is up 16% in six weeks, not bad, but it’s really just good luck and luck can always run out. It could have easily fallen just as much as is often the case for out-of-favour stocks.
My Morning Brew Recommendation
Some of you already have “Morning Brew”, a daily financial newsletter. If you can get past the obvious ads, it does provide a daily pulse of what’s going on and some entertainment as well. It’s free, so no cost to you. You can find it here.
Happy investing.
Marc’s Monthly Moves
| Buy | Sell |
| MSOS Cannabis ETF Alibaba (BABA), more | Vanguard Russell 2000 Index Fund ETF (VTWO) |
Marc’s Portfolio YTD Performance
- Portfolio return 15% (Including currency losses/gains)
- Portfolio return 16.6% (without currency losses/gains)
- SP 500 return 20.75%
- TSX return 19.43%
The portfolio underperformed the SP500 by -4.15 points.
Money with Marc 