The Trump administration will bring us lots of changes, and the markets are still in the process of discounting the future impact. We all have to deal with uncertainties and, inevitably, volatility.
At Caldwell Investment Management, we emphasize active management. That is, we take a pro-active approach to find value for our clients and investors. This includes a strong emphasis on capital preservation. Apart from managing fixed income at Caldwell, my other role as the chief technical analyst has kept me very busy. When properly applied, technical analysis can turn volatility into your friend. Apart from following and guessing what is coming, why not follow the money? That is also the reason I employ multi-market analysis, following all four of the major asset classes — stocks, bonds, currencies and commodities. When big money moves through the market, it often crosses asset classes. If you follow all of them, you will be one or two steps ahead of your peers, giving you a great edge.
One of my roles is to help out on the Caldwell Canadian Value Momentum Fund with technical analysis, macro analysis and execution. The lead manager is Jennifer Radman, one of your regulars.
The Caldwell Canadian Value Momentum Fund is a model-based Canadian equities fund. The model identifies stocks with good valuation that are just starting to be appreciated by investors — a great combination of both value and momentum. Given that these stocks exhibit company-specific catalysts, they are generally more immune to general market volatilities. The strong sell discipline in the model also ensures that should one of our holdings become negatively impacted by new developments, the stock will be gone from the portfolio. This sell discipline acts as an automatic stop loss. As a result, the Fund has a strong down capture of only 35 per cent. The Fund’s five-year return is 11.2 per cent, compared with the TSX’s 7.2 per cent.