Own Good Companies

The markets were interesting last week.  Much of the news came from the U.S. as Trump, once again, made headlines. Although the political rhetoric between the U.S. and North Korea eased slightly, there were other domestic events to hold everyone’s attention, and to cause many to doubt the leadership of President Trump. The rally and counter-rally in Charlottesville, Virginia that resulted in the death of one and the injury of many, was mishandled by Trump with delayed, ill-conceived, corrected, clarified, and re-confirmed comments. Resignations by business leaders caused Trump to disband two advisory councils and terminate another close advisor.

Mid-week the American equity markets had some of their most volatile days of the year, based on political events that included the rumour that Trump’s Economic Advisor, Gary Cohn, was resigning. CNBC calls Cohn ‘the last pro-business, pro-investor’ member of the White House.

At home in Canada, energy stocks continued to weigh-down the TSX as the price of oil slid further – almost 10% down from mid-August 2016. NAFTA renegotiations also began last week and progress (or lack thereof) was overshadowed by domestic American political news.

During times like these it is important to own quality companies like those that we invest in. Although values change from week to week, which can be unsettling, over the long-term these businesses will continue to make money and have steady earnings regardless of the noise in the media. When Trump’s strategic advisor Steven Bannon left the white house last week, I had a tough time keeping up with the headlines. In the morning I read “stocks soar with Bannon’s departure” and by days end they read “stocks slump without Bannon.” Should we have changed our portfolio in the morning, only to switch it back later in the day? Of course not, as great companies will weather the storm and making a portfolio change for the sake of change can be dangerous.

I recently read a quote which relates to long term quality investing:

“Money is like a bar of soap. The more you handle it the smaller it gets.”

Have a great week,

Kevin

 

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