Typically short-lived? (TWTW – Feb 14-18, 2022)

As geopolitical concerns continue to brew in relation to the Ukraine, UBS CIO Mark Haefele opined that “Drawdowns driven by geopolitical stress events are typically short-lived for well-diversified portfolios” …

Great point to keep in mind. That said, markets are obviously VERY preoccupied by this situation, with President Biden at week’s end claiming he is convinced that Putin has already made up his mind to attack the Ukraine. Tense days and weeks ahead … Prayers for the Ukrainian people. Problem for Europe in general = you can place sanctions on Russia, yes. Unfortunately this will result in the Energy situation in Europe being even worse than it already is, given their dependence on Russia for Energy, most notably Natural Gas. Nuclear – Anyone? Power plants, that is, of course. Oh wait … Germany still decommissioning – as if that made sense …

Another “interesting” week, to be sure, as Shopify was this week the victim of elevated volatility conditions for tech stocks under a microscope of growth, versus what happens to valuations when rates rise in the context of inflation which … well, inflation as we all are reminded with powerful regularity of late … is a problem. So much so apparently, that the Deputy Governor of the Bank of Canada spoke perhaps the unspeakable … aka – it could be they might have to be forceful to deal with inflation. Markets – well, don’t like the sound of that particular issue resulting in anything forceful.

NVIDIA – The Semiconductor Chips powerhouse reported strong Q4 results, also providing a strong outlook for Q1 underway => click HERE!

which … didn’t prevent the stock from coming under pressure as well. Of course, anyone looking to participate in all things AI driven would want to look at considering the company’s stock (which … naturally is a stock found in myriads thematic ETFs).

Horizons / Global X Thematic webinar =>I tuned into a good webinar with Horizons Mark Noble, and Global X Head of Research Jay Jacobs, who looked at several themes that may be worth considering in 2022:

AI and Robotics (helpful in dealing with a) difficulty replacing aging workforce and b) … Robots don’t get “raises” so helps with productivity/inflation issues.

Lithium – as described by Jay – all roads lead to Lithium … underscoring the importance of that specific rare metal.

Infrastructure – aging infrastructure? need for “new infrastructure” – the BIDEN plan should provide tailwinds for some time to come …

and finally, disruptive Materials (needed to power up a lot of disruptive innovations etc – see Lithium).

Bottom Line – AUM Growth across the thematic space has been dramatic in 2021. Themes can be very compelling, but represent long term opportunities, which in some cases can take decades to manifest themselves.

Moving on from the Horizons/Global X Themes discussion, here is another one you may want to look at:

Defensive theme – anyone? ProShares PAWZ? => click HERE!

I earlier held PAWZ, which I sold too early … as it went on to greater heights. It has though, retraced a long way back, and interestingly, tuning into a ProShares Webinar recently, the fundamentals in terms of the underpinning of the “story” remain highly supportive. Growth drivers remain in place; the theme is arguably recession resistant … What’s not to like? I am considering putting this one back on my list of “themes” I plan on possibly investing in πŸ™‚ at some point this year.

Other:

The Globe and Mail’s Rob Carrick’s ETFs buyers’ guide for 2022 => click HERE!

Starts with Canadian Equity ETFs – lots of good / simple / straight forward what one could describe as “core” ETFs for Canadian equity exposure.

One thing though … How can HXT show a performance of 62.82% when XIU shows 40.25%

I get the difference in fees; the Total Return swap etc, but that is inherently IMPOSSIBLE based off of the same underlying index! To Jan 31, 2022, HXT as per Horizons website was up 28.42%; and XIU 28.24% (ishares.ca website).

NOW, that’s more like it … Not sure how

Weekly performance:

Sector:

  • Evidently tough week, particularly for technology … AND WHEN we see Financials as well as Energy, which have been leading for some time now also retreating … well, the “correction” isn’t over …

Thematic:

  • the lone positive territory Thematic ETF this past week: Travel and Entertainment … possibly a tad counterintuitive if the world is standing on the cusp of an armed conflict in the Ukraine … BUT – otherwise underpinned by travel restrictions removal in many jurisdictions, and of course, massive pent-up demand on the part of consumers that have been cooped up for too long!
  • ARKK continuing under pressure. 2022 thus far hasn’t been any more hospitable than 2021 was for ARKK.

Factors:

  • several factors continuing to best broader market, notably Fundamental and Value category

YTD performance:

Sector:

  • Canada is in a good place – absent a recession, or a global market pullback on war related fears, given our market, traditionally described as inappropriately diversified in terms of sector exposure, due to its concentration in Financials; Energy; and Materials … Well, these, it so happens are the new leadership in the context of a reopening economy, and particularly so with oil prices where they are, at multi year highs …

Thematic:

  • The forward investing nature of many if not most factors has meant a meaningfully deeper correction in their ranks than in those of traditional sectors. YUP, the price being paid for future growth has declined sharply. 2022 should provide great opportunities to establish positions in solid themes for the mid-longer term if you aren’t already there πŸ™‚

Factors:

  • Relative positioning here has and can continue to make a difference. Exposures in particular to Energy, but also to technology is a key differentiating element to this relative performance story πŸ™‚
  • Specific to the factor “story”, I would note that outperformance relative to a broad TSX Composite type exposure has been notable, going back already to last November, as FED Chair Powell put the “transitory” descriptive to rest …

Other – what I found to be a very interesting read from Professor Scott Galloway => Click HERE! and his thoughts regarding Apple … also should be of interest for those following the Peloton story …

Stay safe, have a great week-end πŸ™‚

Happy Family day long week-end everyone πŸ™‚