Portfolio Corner: Tried And True For 2022

5 HOT SHOTS

In 2022 Easter Seals Ontario celebrates 100 years of being a champion for children and youth with physical disabilities from all backgrounds within the communities of Windsor Essex and across the province.

Its roots emerged from Rotary, locally, which spearheaded the founding organization, The Ontario Society for Crippled Children (November 28, 1922).

Programs include funding for essential mobility and accessibility equipment, fully accessible summer camp opportunities at its two properties, Camp Merrywood and Camp Woodeden, online virtual camp programming, public awareness, and information resources.

Easter Seals provides its programs and services thanks to the generous support of its donors and sponsors. For more information or to donate, visit: EasterSeals.org.

portfolio corner

Discipline Matters

By Steven Mayo

True portfolio management is part experience, part diversification, part an appreciation of a company’s strength, and part psychology.

For a majority of my clients their portfolios are worth more than their homes. This means that a greater attention is on the quality and suitability of their portfolio structures.

Each family likely has retirement accounts, investment accounts, TFSAs, and some have corporate and trust accounts. Each account has its own goals, time horizons, income needs, and risk management guidelines.

This is the big picture.

As a Senior Investment Advisor it is my responsibility to properly guide my clients in each account.

I’m unable to control interest rates, inflation, economic data, political and global news, but I can filter all of these inputs and their importance. I’m able to control diversification and risk management factors.

It’s only human to consider risk management after a market (or stock) drop.

Often, after a strong market performance, like 2020/2021, complacency creeps into our collective psychology and there becomes a general belief that the “good times” will keep going.

Presently, I am comfortable thinking that entering 2022 the markets are in good shape, but as we get deeper into the year, trimming of positions may be required.

For example, if over the last year a portfolio’s equity allocation started at 60% and is now 80%, it’s likely that some good ol’ fashioned profit taking should be considered. Re-balancing is a normal part of risk management.

So what is it that we do control? Diversification by way of asset, sector, and geographical allocation.

The ability to focus on world renowned companies, the ability to review balance sheets, the ability to be review share prices and act accordingly.

Whether we are buying, or selling/ trimming a position that is greater than 5% of the portfolio, we evaluate price history. I do my best to incorporate this thinking over the long-run, but am always mindful of short-term surprises.

The quality of a portfolio structure matters. We want to own companies that are industry leaders which grow and adapt. Earnings drive share price appreciation.

I remain mostly focused on the “tried and true” companies, not the “bold and new.” Many of the hot stocks in 2021 finished the year down 50% or more from their peaks.

The question for 2022 is — does your portfolio have the quality to withstand a normal market correction? Entering the new year, this is my focus for client portfolios.

Wrapping up this article, I’ll continue on my theme of Discipline Matters with a list of 10 things that require zero talent, but can still lead to success . . . 1. Being on time 2. Making a bigger effort 3. Improving your health and energy 4. Having a positive attitude 5. Living with passion 6. Using powerful body language 7. A willingness to learn 8. Going the extra mile 9. Being prepared for anything 10. Having a strong work ethic. Steven Mayo is a Senior Investment Advisor with RBC Dominion Securities Inc. (Member — Canadian Investor Protection Fund). This article is not intended as nor does it constitute investment advice. Readers should consult a qualified professional before taking any action based on information in this article.