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Q2 2023 - Investment Update

The second quarter offered positive but mixed results for equity investors. Strong gains in big tech facilitated a welcome rebound for investors who suffered the biggest declines on their growth portfolios in 2022. Once again, a small handful of the stocks on the S&P500 accounted for most of the return, suggesting that it remains a marketplace with very little breadth (strength across multiple sectors). The S&P500 USD total return was 8.74%, however the Canadian dollar investor only saw 6.6% of that due to a rally in the CAD$. The equity picture in Canada was markedly different with the TSX Composite generating a meager 1.1% in total return. After a stronger first half of the year in equity markets than was originally anticipated, the question becomes: What can we expect in the second half? For now, inflation continues to dominant the headlines. A strong labour market sticky food and gas prices led to a surprise rate hike on June 7th by the Bank of Canada. Operating costs for businesses are higher and the cost of living should be catching up to ordinary people. While central bankers are careful to remind us that future decisions will be data based, the argument for further rate hikes is quickly waning. The chart below overlays interest rates with inflation in both Canada and the US since late 2013. Central bankers appear to be finally winning the battle, although there is still some work to be done.

Source: Ycharts

This year we have taken opportunities to average down on some of our oversold positions, while maintaining a healthy amount of cash at good short term rates. Our suite of Private investment pools has continued to perform well. Notably, the Laurier Private Equity pool returned to growth, posting a 3.03% return in Q2. Since its inception date in January 2021, the pool has outperformed all major North American stock markets.

Source: Ycharts

Have an excellent last few weeks of summer!

-The Gilman Deters Team


I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone and may not reflect the views of Harbourfront Wealth Management. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by Harbourfront Wealth Management Inc.”

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