Monthly INsync Chit Chat May 2024

What!? No Glow? [by David Cox]

My daughter Eloise (9) and I love to work on puzzles together and recently finished another 500-piece puzzle that was VERY difficult and, no doubt, our most difficult ever (who ever thought of making a puzzle without any standard type pieces!). It was supposed to glow in the dark and we were so excited when we charged it up with bright light (timed perfectly for the coming nighttime) before the darkness covered the room, only to find out that it didn’t work (my mom, who had loaned us the puzzle said, yes, she too found out that it didn’t glow -oops).

Puzzle with Birds

I continue to be impressed with our employer, Raymond James Ltd., who helped facilitate our appearance in December 2022. As an organization, it continues to impress me on many fronts and makes a clear, concerted effort to contribute to the businesses we all manage on behalf of clients. Unlike the bank, where we were before, they have a real interest in helping us access the tools, the learning opportunities and the expertise that we need to provide better service to our clients. I attended the recent RJ Portfolio Manager Conference in Calgary, along with approximately 130 fellow PM’s from across Canada, and it was an excellent opportunity to network and learn more about how others navigate things in their own practices.

News – Some That You’ve Heard, Most That You Haven’t [by David Cox]

Canadian federal budget raises capital gains inclusion rates from 50% to 66%, with no threshold on corporations while claiming the tax will only affect 0.13% of the population. Federal NDP party puts forth a private member’s bill that says promoting oil & gas can lead to 2-year jail time and fines. Canada increases the Home Buyers’ Plan withdrawal limits from $35K to $60K to help eager home buyers trying to afford housing (while putting their future retirement growth at risk). Bank of Russia announces support for crypto currency for international settlements. Canadian doctors express outrage about the capital gains tax increases, threaten to leave Canada and Prime Minister Trudeau responds, announcing the government will help facilitate a faster approval process for foreign doctors to fill the void that would be left. Video of a man at Royal Bank trying to withdraw $3K in cash goes viral, globally, as he’s denied the service and asked to provide receipts for the money he requests (he rightfully claims it’s his money on deposit). Pfizer says it’s deeply sorry after the sixth reprimand in the U.K. for false statements around the promotion of the COVID vaccine. U.S. Title IX changes make it possible that a man can now self-identify into the full rights of a woman including competing in sports, getting female scholarships, grants and housing opportunities. The UAE conducts a week-long episode of cloud seeding and causes the biggest flood ever experienced in the desert city.

Things We Recommend [by David Cox]

From the first moment that I saw a “Henson” razor being advertised to me on my phone, I was intrigued. I watched the video of the guy shaving half his face with the “Henson” and I figured I had to try it. They pitched cost effectiveness and a better shave, all without having to dispose of so much waste (for the record, I used an electric shaver for most of my life until my early 40s, save for the 17 years I was bearded, but I digress). It arrived neatly packaged, cost like $125 and had approximately 105 blades supposedly sufficient to last for up to three years. I like it. It is simple. It feels good on the hand (and face!) and the easy-to-twist handle allows for a new blade to be dropped in for those less technically inclined. If you’re interested in checking it out, they’re at (and no, I don’t get any royalties or blades if you try it out like I did!).

Lifestyles To Consider! [by Criselle Tung]

It’s that time of the year again, time to make our gardens beautiful and our backyards smell like BBQ! But while we’re at it, let us not forget to plant the seeds for our financial future too.

Just like tending to our garden, consistently cultivating our assets can lead to big rewards. Think of each dollar saved as planting a tiny seed. Over time, those seeds grow into mighty money trees, thanks to the magic of compounding! It's the gift that keeps on giving. And before you know it, years have passed, and your savings already bear fruit.

As we wrap up the 2023 tax filing season, it's crucial to review your CRA account and check your available registered account contribution room to ensure it is (or will be) maximized. Registered plans not only provide tax-sheltered or tax-free growth, but they also come with tax perks. With RRSPs, you can lower your taxes now, and pay tax later. On the other hand, TFSAs let your money grow tax-free. It's an opportunity you would not want to miss! If you have extra cash sitting around elsewhere, perfect! Contribute it to your registered accounts.

If not, then as a starting point, we highly recommend setting up automatic contributions towards a savings account. This promotes discipline to “Pay Yourself First”. This strategy is also extra helpful when you set it up at the same date you receive your income. This way you won’t even feel the money leave your hands, as it is immediately allocated to your savings before it even comes to you.

Next step; when you reach a point where you’ve already accumulated so much and don’t know what to do? Talk to us and we will gladly guide you through it!

How’s the (Bigger Picture) Market? [by David Cox]

After a big breakout in the fall for the S&P 500, April has been a little more challenging (to say the least!) but after a big rally, it’s fair to see some pullback and that’s where we’re at. We went from weekly overbought to weekly oversold and are still consolidating as I write this (late!) on May 1st. That said, there are certainly differences underneath, from a market character standpoint, but the big picture remains in an uptrend and we’ll continue to lean with that thesis until the information (price) guides us in a different way.

SandP 500 Weekly

Source: Optuma
* * as at April 30th, 2024

Market Summary and Trend of “All Assets” [by David Cox]

Sorting out “all-asset” list by one-month % performance, we can see the recent weakness, almost across the board, save for commodities, which are quite strong, led by copper +13.9% (more comments in the “Chart of the Month” below). You can see that the weakness has changed the short-term and intermediate-term trends downwards on many risk assets, but the “long-term” column, which is based on the condition of the 13-week and 34-week moving averages, remains green in most assets except for bonds, which remain in a downtrend (meaning yields are rising in each of short, intermediate and long-term uptrends).

code table

Source: Optuma
* * as at April 30th, 2024

We All Need To Keep Learning! – “The Psychology of Trading” [by Conor White]

Trading in the financial markets isn’t just about analyzing charts and indicators. It’s also about understanding and managing your own psychology, which is often overlooked. In this segment, we’ll look at some common psychological biases that affect traders as well as some strategies to overcome them.

Fear of Missing Out (FOMO)
FOMO is a powerful emotion and psychological phenomenon that affects traders across all experience levels. It usually happens when a trader sees a rapid rise in the price of an asset and fears that they will miss out on potential profits if they don’t enter the market immediately. It is an intense desire to be a part of a market move and can have a major impact on our trading decisions. Those experiencing FOMO will often make impulsive decisions without conducting proper analysis or managing risk in order to “chase” prices.

Loss Aversion
Loss aversion stems from the asymmetrical way humans perceive gains and losses. It refers to the tendency of traders to feel the pain of losses more powerfully than the pleasure of gains. Those who are experiencing loss aversion in the markets will often hold onto a losing position for too long, hoping that the market will eventually turn in their favour. They are also reluctant to cut their losses even though it’s clear that the trade is going against them. The emotional distress caused by loss aversion can make it difficult for traders to make rational decisions.

Confirmation Bias
Confirmation bias occurs when traders seek out information that confirms their existing beliefs while ignoring contradictory evidence. This bias can distort our perception of the market and lead to suboptimal decision making. Imagine a trader who believes that a particular stock is undervalued and poised for a significant rally based on their fundamental analysis. Despite technical indicators signaling a clear downtrend, the trader only focuses on news articles and analyst reports that support their bullish thesis, ignoring the warning signs given by price and trend.

Overconfidence leads traders to overestimate their abilities and underestimate the risks involved in trading. It can result in taking excessively large positions and ignoring the principles of risk management. Consider a trader who has experienced a series of winning trades, leading them to believe that they have a special talent for picking stocks. As a result, they start taking larger and larger positions, convinced that their winning streak will continue indefinitely.

Strategies To Overcome Psychological Biases:

1) Develop a Trading Plan. Having a well-defined trading plan helps you stay disciplined and avoid impulsive decisions driven by emotions. At Financially INsync, we make use of a “playbook” that includes entry and exit criteria, risk management rules, and guidelines for managing trades.

2) Use Stop-loss Orders. Implementing stop-loss orders will help limit potential losses and prevent emotions from taking over. They completely remove emotions from the decision-making process and enforce discipline in trading by ensuring that you stick to your pre-defined risk management rules.

3) Keep a Trading Journal. Maintaining a trading journal allows you to track your trades, analyze your performance, and identify patterns in your decision-making process. It ultimately helps you learn from your mistakes and get better over time. At Financially INsync, we practice a monthly “trade review”.

4) Practice Mindfulness. Mindfulness techniques, such as meditation and deep breathing exercises can help you stay calm and focused during volatile market conditions. The goal is to enable you to make rational decisions rather than being entirely driven by emotions.

5) Continuously Educate Yourself. The more you understand about psychology, the better equipped you’ll be to manage your emotions. Read books, attend webinars, and seek out resources from other traders to deepen your understanding. I recommend the “Market Wizards” series by Jack Schwager.

This Month in Innovation [by Conor White]

How Microsoft and Quantinuum achieved reliable quantum computing.

Terraform Industries converts electricity and air into synthetic natural gas for the first time.

At Starbase, Elon Musk provided an update on the company’s plans to send humanity to Mars, the best destination to begin making life multiplanetary.

Aston University researchers send data 4.5 million times faster than average broadband.

Boston Dynamics unveils new Atlas robot for commercial use.

One UPtrend, One DOWNtrend [by David Cox]

This month, let’s contrast two 10-year charts dating back to 2014. On the top, we have a company recognized by most (the world round!), and that would be Coca-Cola (but not the mammoth $265 billion $KO that most would be familiar with, but instead the division(?) that provides beverages under license from Coca-Cola). The ticker is $COKE. This stock meets our “INsync” universe screen, which means, at the end of March 31, 2024, it had outperformed the S&P 500 on a 1, 2, 3, 4, 5 and 10-year time frame. Even without that knowledge, we can see that it moves from the lower left in 2014 to the upright right at current day.

Contrast that with one of the biggest real estate investment trusts in Canada Riocan ($REI.un:TSX), which is the owner of a lot of the big malls in Canada (like, Orchard Park in Kelowna, for example, that those of you in B.C. would know), and you can see the difference. This is price only, but I can tell you that even with the yield (dividend), this isn’t doing very well and is on a general, bigger picture trend of lower highs and lower lows. You can see the intense selling that took place in 2020 during the COVID crash, but the downtrend is continuing in the past couple of years. While it’s possible to assign a narrative of challenges to keep long-term tenants in malls and accept the impact of higher interest rates on real estate, the chart speaks and concludes what investors need to understand. Let’s identify the trend and follow it, seeking to own stocks and securities that are rising and to avoid stocks that are falling.

Coca-Cola consolidated stock

Source: Optuma
* * as at April 30th, 2024

We Like Fundamentals Too! [by David Cox]

AppFolio ($APPF) is an $8.2 billion cloud-based company that specializes in offering software for the property management and legal industries and is a stock that some of our clients will recognize in recent months.

You can see their very strong +30%+ sales growth (y/y) in the table below and they’re starting to make some serious profits. A year ago, they lost 5 cents/share and in December 2023, they earned 88 cents. The last two rows in the table show the analyst forecasts. And the stock is another one of the “4 quarters rising” stocks that you’ve heard me refer to… that means there have been an increasing number of reporting institutions buying the stock and taking an interest in what they see.

Quarterly table

Source: MarketSurge
* * as at April 30th, 2024

Appfolio Inc

Source: Optuma
* * as at April 30th, 2024

It’s a very tricky stock and broke out of a nice base in early January on earnings, but we weren’t patient enough (in hindsight) and let it go, only to try again on the recent breakout (second green circle). And then of course, it comes back in with the market (so classic). It’s volatile and admittedly in the technology sector, which has been losing oomph. So, a couple of challenging factors against it, but it checks lots of the boxes we like to see and is, fundamentally, a strong story that might become more known over time.

Chart of the Month [by David Cox]

Last month, it was gold that I shared, and this month, it’s copper, which took the top spot for performance in April and is leading commodities higher into what appears to be some broader participation. Unlike gold, the underlying copper equities are outperforming and that’s a positive sign. In the chart below, you can see in the lower panel that the stocks broke out (green circle) earlier than the copper price and above those 2023 highs and even touched new all-time highs in April. In the top panel, the copper price still has more work to do to exceed those 2022 highs. But when the equities are leading the metal, it does suggest the market is willing to take the “higher beta” approach and is expressing a more bullish view.

Let’s also not forget that copper is one of the economically sensitive industrial metals and its strength is suggesting U.S. and, more broadly, the world, is in better economic shape than some headlines might suggest. For those of us Canadians, we really have to understand and acknowledge there are stark differences, especially these days, in what’s going on south of the border, vs. up north in Canada. The U.S. economy is chugging along very well and they don’t have the consumer drag from rising housing costs given the long-term (up to 30 years!) mortgages that many homeowners have, offering built,in protection against this new rate environment.

Cooper Futures Stocks

Source: Optuma
* * as at April 30th, 2024

A Service You Don’t (Maybe?) Know About [by Donald Daggett]

Cancer, heart attack, and stroke are the three leading life-changing critical illnesses that you may encounter during your lifetime.

Statistics show that nearly 1 in 2 Canadians will be diagnosed with cancer in their lifetime. About 1 in 12 adult Canadians over the age of 20 live with heart disease and 62,000 strokes occur in Canada every year. (Manulife Lifecheque basic brochure).

Critical Illness Insurance has been designed to pay a lump sum benefit in the event of any of the three leading critical illnesses as well as a list of others. The benefit is tax free and can be used to seek additional treatment or pay for services currently not covered by government health insurance plans.

Having the proper protection in place is very important.

Our team at “Financially INsync” via Raymond James Financial Planning Ltd. (a wholly owned subsidiary of Raymond James Limited) can help you determine a suitable level of coverage and to compare that with your existing coverage to ensure you’re properly protected for some of the uncertainty that life may bring.

Please feel free to contact me, Donald, directly with any questions you may have.

Social Media and Our Website [by David Cox]

I was excited to make a first appearance on BNN Bloomberg TV this past month and certainly not an opportunity I could have taken advantage of at the bank(!). In case you missed the short segment, here it is!

David Cox tweet

Upcoming Dates, Seminars, and Announcements [by David Cox]

What: Canadian Bitcoin Conference
Where: Montreal, PQ
When: May 17-18th, 2024
Who: I will be attending.

What: Bitcoin 2024 Conference
Where: Nashville, TN
When: July 25-27th, 2024
Who: I’m very excited to check out this growing event!

What: Rossland/Trail, British Columbia
When: September 9-16th, 2024
Who: Visiting with B.C. clients!

What: Nomad Capitalist Live!
Where: Kuala Lumpur, Malaysia
When: September 25-28th, 2024
Who: Another long flight, but the conference looks VERY awesome!

Thanks for reading our “Monthly “INsync” Chit Chat”! Please don’t hesitate to offer comments, criticisms or ideas to make this a more valuable publication. Thanks in advance!


David Cox, CFA, CMT, FMA, FCSI, BMath
Senior Portfolio Manager, Wealth Advisor
Raymond James Ltd.
Phone: 519.883.6031
Unit 1 – 595 Parkside Drive | Waterloo, ON | N2L 0C7
Twitter Logo @DavidCoxRJ

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