The Cost of Certainty

The Cost of Certainty

When the pandemic started in North America last year, the global financial markets started to slide into a rapid downfall and thus the chaos began. CH identified the four stages of 2020 in our February Portfolio Minute, which can be read here. The third stage of 2020 was the Early Rally, which occurred from April to October. A very small number of equities rallied mostly during this time, with the six largest companies in the world finishing the year representing over 25% of the entire New York stock market. So, why did this happen? Clients flocked to the certainty of mega-cap company’s stocks (companies with a market cap typically over $200 billion), whose stock prices recovered more rapidly as more and more of them were being traded. These stocks were and continue to be severely overpriced (P/E ratios nearing or above 100), so is the cost of certainty worth it?

Being Drawn to Certainty Isn’t New

The pandemic has been a unique and interesting time, to say the least, but investors being drawn to certainty is not. This happened in 1999 when the internet was going to change the world, leading to an extremely overvalued tech sector. Again, we can also look back to between 1973-1974 labeled as the “Nifty 50” craze, where a group of 50 companies became the “must-have” stocks to own. And yes, you guessed it- their stock prices skyrocketed to very high valuations. Investors justified paying whatever they needed to join the crowd despite market timing not being in their favor.

What Certainty Does Look Like?

Below is a table from EdgePoint that illustrates some of the “great” mega-cap stocks that were labeled as “must-own.” These companies reached at least a 3% weighting in the S&P 500 index and were all admired for the past successes, leaving investors certain this would turn into future gains. Investors paid the cost of certainty to own these companies, with the result being lackluster performance over 5 and 10 years.

The Certainty of Uncertainty

Our portfolio managers crave uncertainty. This allows them to have views about a business that their competitors do not. If every investor shared the same views, the market would achieve perfect certainty. There would be no undervalued stocks available to purchase, leaving no surprises and no positive outcomes. The market would simply produce a risk-free rate of return for every investor. What would this look like? A Canadian 10-year government bond is considered one of the safest investments, which is currently hovering around 1.50%. Now imagine this was your risk-free rate of return in our perfect market scenario. This doesn’t get an investor very far ahead, let alone break even if the rate of return can’t keep up with inflation.

When it comes to finances, our human nature draws us towards certainty. Who doesn’t want to have that level of comfort when they are about to retire, purchase a first home or start a family? When it comes to investing, CH believes uncertainty is not something to shy away from but an opportunity. As with all of our Portfolio Minutes, we welcome any questions or comments you may have.

All the best,

Devin Gorgchuck, Wealth Advisor

& Your CH Financial Team


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We’re looking for aspirational clients who require the whole spectrum of financial services because managing the whole is how we’re able to deliver unbeatable value – it’s our “secret sauce.”If this describes you, let’s set up a meeting andget to know each other.

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I just want to say we have been with your team since 1993, and we have never had any bad advice. The investments you set up for us during this time has paid for university education for our two granddaughters and provided a significant monthly income for us to augment our pensions.

We are with you for the long run and are not going anywhere. Jeremy has told us that at these times the numbers tend to scare you, but you haven’t really lost anything if you don’t panic and sell.

Ken M, Calgary

With CH Financial since 1993

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When I became a client of CHF it was a real game-changer as I was going through a very difficult time both professionally and personally.

I went through a divorce and the loss of a job and a parent, all within a 12-month period. While it was very tough to deal with at the time, I was reassured by the fact that the team at CHF had my back and really cared about me and what I was going through.

Looking back now, I’m not sure how I would have managed without the support of the CHF family.

Jeremy and his team were there every step of the way to help me navigate my way through the complexities of a divorce and inheritance. They got me back on track both financially, as well as emotionally.

I have now been a client of CHF for over 10 years and thanks to their expertise, I know that my family will be well taken care of for many years to come. I am now in a position where I don’t need to worry about money thanks to a solid financial plan.

I would highly recommend the CHF team to others going through life-changing and difficult situations as your financial partner.

Linda, Victoria

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As an investment industry professional, I am constantly on the go and maximizing my peak career earning years in my 40s. With travel and work commitments I am very limited for time to spend with family and do the things I love to do and chose CH Financial to allow me more freedom and lifestyle balance.

Being in the investment industry my whole career and an extremely busy professional, I know I could probably do a good job at managing my money as I work in the industry after all while I rely on and trust the CH Financial team that they will take care of the details, both growing my assets as well as taking care of every aspect of my financial situation, including my tax, investments and insurance, they simply take away the stress of having to worry about it all and help me to navigate the complexities for me so it all meshes together and importantly saves me valuable time and headaches.

At the end of the day, the reality is I truly value my time and the opportunity cost of my time and would rather hire the best in the industry so ultimately my wife and I can do the things that we love to do, have more leisure time, relax and enjoy spending time in the great outdoors, exploring new countries, hiking in the mountains and volunteer work.

Since engaging CHF more than 5 years ago we have enjoyed significant growth in our investments but more importantly, we have peace of mind and sleep much better at night knowing the team at CHF has our financial back and anything financial they will take care of for us.

I would have absolutely no hesitation in recommending the team at CHF to other career-focused busy professionals who really value their time and lifestyle balance.

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Prior to joining CH Financial as a client, I had been partially managing our investments and using a bank-owned broker for many years, with moderate success. When we became clients of CHF, I quickly realized how little I knew about the complexities of managing investments and the importance of seeking out the best specialists in the industry to assist with my family’s full financial picture.

Brian and the team at CHF encouraged us to take an introspective look at our assets and expenditures and even helped us implement a comprehensive budget. The team really stepped up to take care of all aspects of our financial picture, including portfolio design, CH Financial introduced us to a lawyer who took care of everything for us, estate planning and tax, while helping us simplify our financial affairs.

Being of the sandwich generation my wife and I spend considerable time caring for our surviving parents and our grandkids, so

freeing up valuable time is essential to allow us to do the things we love to do. The team at CHF takes care of the details and today my wife and I enjoy a comfortable, stress-free financial situation.

Over the years as a client of CHF, both our portfolio and wealth has grown exponentially, more than we could have ever imagined. Now that we are both happily retired, having the CHF team in our corner helps us to sleep better at night knowing that our somewhat complex financial puzzle is being looked after by a team of people that really care, as opposed to being treated like a number by a big bank.

I would have no hesitation in recommending the CHF team to others looking for a superior financial home in Calgary and a safe place to invest your hard-earned money.

Ian C, Calgary

Comfortably retired thanks to CH Financial