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portfolio corner

Essentials & Trends By Steven Mayo

Through 2015 investing performance has been more about avoiding pain and relying on a narrow number of stocks for performance. It’s quite likely this will continue in 2016. No stock or sector is immune from a 10% correction, but it is a positive recovery that provides a portfolio boost. Essentially it’s more important to get the companies you own right, rather than the market right. Let’s refine the list of potential buy sectors based on what people “have to do.” Consistent Trends: i) They have to eat > restaurants and grocery stores ii) They love coffee > there are three publicly traded companies in this area iii) They have to buy gasoline > refiners iv) They travel > airlines and cruise companies v) They get older > pharmaceuticals and retirement homes

vi) They have to live somewhere > apartments and retirement homes vii) They need to stay connected > electricity, phones, cable TV/online content providers viii) They need financial services > banking and insurance As you can see from the above trends, investing can be in sectors that people deal with on a daily basis. However, I can refine this strategy one more step. Let’s be sure the companies are shareholder friendly; minimal debt, growing dividends, and strong market leadership. Dividend growers are important; it reflects management’s belief in their long-term viability, and continued strong positioning in the marketplace. Many railroad companies possess these qualities and now many U.S. banks are developing into shareholder friendly businesses again. While I’m discussing simplifying investing, I still think it’s best to stick to

North America, which has fewer issues, in general: less political risk, less currency risk, less regulatory risk, and less economic risk. Although North America is a more stable economy versus the rest of the world, we are still subject to global events that contribute to our market volatility: That’s enough exposure for me! As we enter 2016 expect more of the same. Choppy markets, the need to sell on strength, and buy on weakness. Building cash remains a powerful investment tool to reduce portfolio volatility and capitalize on “sectors on sale and companies on sale” moments. Ending with a quote as usual: “We look forward to a world founded upon four essential human freedoms. The first is freedom of speech and expression. The second is freedom of every person to worship God in his own way. The third is freedom from want . . . the fourth is freedom from fear.” ~ Franklin Roosevelt Steven Mayo is a Vice President, 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.

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Biz X magazine January 2016. Vol 19 - Issue 1  

ON THE COVER — “100% Local Content Always!” As a locally owned and operated family business, Biz X magazine enters its 19th year of publishi...

Biz X magazine January 2016. Vol 19 - Issue 1  

ON THE COVER — “100% Local Content Always!” As a locally owned and operated family business, Biz X magazine enters its 19th year of publishi...