In The News

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Read Through Our Latest News Posts To Gain Insights Into The Market.

6 Big Canada Pension Plan changes arrived in 2012
January 30, 2012
Last week in a speech in Davos, Switzerland, Prime Minister Stephen Harper lit a political powder keg when he hinted at possible changes to Old Age Security benefits. He was quick to point out that the Canada Pension Plan is "fully funded, actuariall...
Investing in TSX-Listed Companies Levered to Global Growth
September 30, 2011
Michael B. Decter is the Senior Portfolio Manager, President and CEO of LDIC Inc., and he is a Harvard University-trained Economist. Mr. Decter is also the Author of three financial books: Michael Decter’s Million Dollar Strategy, The DRIP Strategy a...
LDIC's Decter Sold Cameco, Added Canfor After Japan Quake
September 08, 2011
TORONTO (Dow Jones) - This month's earthquake and subsequent nuclear-reactor crisis in Japan have triggered a steep sell-off in uranium producer Cameco Corp. (CCJ, CCO.T). Among the sellers: Michael Decter, president of money-management firm LDIC Inc...
Trusted Returns
September 08, 2011
Income Trusts Didn't Disappear When The Government Eliminated Their Tax Advantage, But Most Changed Their Corporate Stripes. Can The Remaining Few Hold Out? Michael Decter, the senior portfolio manager, CEO and president of LDIC, an independent inve...
The Globe and Mail - Seeing the big picture with small-cap companies
September 08, 2011
Former public servant sees opportunity for Canadian firms in global trends Michael Decter is a Harvard-trained economist, a former backroom organizer for the New Democratic Party and a former public servant. That background isn't typical for a Bay S...
The homespun value investor
November 20, 2006
Michael Decter, formerly a mandarin in a couple of NDP governments, has undergone a metamorphosis and emerged as a manager of mutual funds that do opportunistic hedging. In his latest transformation, he is president and chief executive officer of La...
DJ CANADA TIP SHEET: Old-Fashioned Value Works For Decter
June 06, 2006
TORONTO (Dow Jones)--Being an "old-fashioned" value investor seems to be working just fine for Michael Decter. Decter is president and chief executive of Lawrence Decter Investment Counsel and lead manager of the C$18 million Redwood Diversified Equ...
Small hedge fund firm moves into mutuals: Redwood hires Decter
January 17, 2005
In the Canadian mutual fund industry, the big get bigger at the expense of the smaller companies. So it is a little unusual to see a new small player hit its stride. Redwood Asset Management, which has been selling hedge funds and now mutual funds, ...
Sharing some good times with the bear
July 28, 2002
Meet Gordon, a friend and articulate chap who goes to work every day in hopes of retiring sometime in the next decade. In a few moments, you may wish you were Gordon. If you are a bad person, you may jealously curse him, because Gordon has watched h...
Michael Decter stays the course
July 06, 2002
Michael Decter is in the daunting process of discovering whether a gifted amateur investor can make the considerable leap to competing with the pros on Bay Street, whether an erstwhile top-level bureaucrat identified with socialist provincial governm...

Markets

It goes without saying the news over the past week has been concerning.   In times of uncertainty, it is also important to cut through a lot of the noise and the flash headlines over the past week.   Let’s remember volatile markets are good for financial media networks revenue as their viewership goes up – regardless of what it does to our nerves.   

While we are all watching the market indicators throughout this week, it is worth noting that your assets under management at LDIC Inc. are not all equities, and they are certainly not concentrated in the S&P 500.  The diversification we apply to your portfolios allow for certain areas of your portfolios to soften declines during these market volatile times.  We hold bonds; preferred shares and real estate investment trust, as well as equities.

Investment is a process that involves asset allocation, diversification and decision-making to identify favourable risk/reward opportunities.  These principles have proven true over the past 20 years in both calm and disruptive markets conditions.

Volatility has been absent in financial markets for many years. During this time, LDIC and our clients have enjoyed attractive risk- adjusted absolute returns and our cash levels were kept to a minimum. In our February 28, 2020 communication, we explained our systematic process, which we began in 2019, to reduce risk in all portfolios given the exceptionally long economic cycle. As part of this program, we increased our fixed income weighting, increased the quality of our equity holdings and increased our cash levels.

Interest Rate Cuts and Stimulus

There is a massive worldwide effort underway to stimulating the global economy.

The Bank of Canada on March 4, 2020 cut its Key lending rate from 1.75% to 1.25% a 50-basis point cut.  Today March 13, 2020 the Bank of Canada cut its key lending rate further by 50 basis points from 1.25% to 0.75%.  These are two very substantial cuts. As well the office of Financial Institutions (OSFI) cut key regulatory buffer requirement from 2.25% to 1.0%. This will allow the Canadian chartered banks to increase lending by $300 billion dollars.

On March 3, 2020 the U.S. Federal Reserve cut its key lending rate by 50 basis pointes from 1.72% to a range of 1 to 1.25%. We are anticipating a U.S. Fiscal stimulus package shortly.

Coordinated overnight global efforts also included:

Australia – injected $5.6B of liquidity into their financial system – biggest injection since 2013 

India – injected liquidity of $2.5B rupee 

Norway – cut deposit rates by 50bps to 1%, first cut since 2016.

China – reserve requirement ratio (RRR) cut by 50-100 bps.

Thailand, Korea, Italy, Spain – restrictions on short selling.

Bank of Japan offered to buy $200 billion of yen bonds (QE).

These measures combined with global efforts to contain the coronavirus lead to a strong rebound in equity markets as the week ended.

Oil Price

More recently, in response to the coronavirus, oil prices have declined sharply, high-yield corporate bond spreads have spiked and U.S. and Canadian government bond yields have declined materially. In light of these recent developments, volatility has dramatically increased. At LDIC, we are monitoring daily developments and are committed to protecting our client portfolios. 

On March 6, 2020 the OPEC meeting ended without an agreement. Russia did not agree to a production cut and in retaliation, Saudi Arabia started a price war by increasing production and cutting their Official Selling Prices by the most in 20 years. The war for market share has been declared. We expect material underperformance for most of the North American Energy sector. At LDIC, we held very little in the Energy space and we have no plans to add exposure.

LDIC Operational Plan

Earlier this week we implemented the following to ensure LDIC Inc. is doing its part to prevent the spread of the virus.

• Our onsite meetings have been rescheduled to a web or phone meeting to limit the amount of traffic and exposure at our office.
• Employees who have traveled, or will be travelling will self quarantine themselves and work from home for a period of time to observe if any signs of the virus are revealed.
• Our Business Continuity Plan has been implemented and is working seamlessly.  Our team is continuing to service our clients’ needs from the office and remotely. 

Investing in turbulent times can be rewarding with the right investment philosophy and prudent execution.

LDIC Investment Team