IN THE KNOW

In The Know is a monthly communication piece created and developed by The Advisory team at Davis Rea. The goal is to keep our clients (and ourselves) informed, entertained and up to speed on the markets, sectors, culture and people that shape, define and drive our business.

July - Chairman's Letter

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May 2024 - Dear Mr. Smith

John

O'Connell

May 1, 2024

Our CEO, John O'Connell read a research note this morning that he immediately knew our client, 'Mr. Smith', would enjoy. ‘Mr. Smith’ is an avid follower of markets, and often asks John for his opinion on current events, particularly when they are interpreted with a pessimistic lens by the popular financial media. John hadn't heard from ‘Mr. Smith’ recently, and this morning ‘Mr. Smith’ was on John's mind as he read a research report about consumers cracking under the pressure of high interest rates. John very much enjoys speaking to ‘Mr. Smith’ and, looking for an opportunity to catch up with him, sent him the following email along with the attached commentary from Ed Yardeni - a highly-respected US economist.

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February 2024 - All the World's a Stage

John

O'Connell

February 21, 2024

We are big believers in facts as the basis for investment. Facts are generally and remarkably easy to find and understand. So, lets address some facts about being “Magnificent” and other observations presently driving the IIC crazy.

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January 2024 - Breaking Bad

John

O'Connell

January 1, 2024

We are thrilled that 2023 was a year that produced strong results. Were we lucky or were we wise? Short periods of time like a year do not provide enough data to make a strong argument one way or the other, but we played the odds. With valuations so depressed, being aggressively optimistic was likely a safe course of action. We pounced.

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I remember when... Reminiscences of a Baby Boomer.

John

O'Connell

November 6, 2023

I was born the last years of the Baby Boomer generation. I started my professional career when the first millennials were just being hatched. Today, the investment landscape is mostly millennials who never even thought about money or the cost of it until 2006 when they first started giving it away for free.

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Introducing Davis Rea 2.0

John

O'Connell

September 14, 2023

I am connecting with you all this morning to announce a very exciting new chapter for Davis Rea. When you visit www.davisrea.com you will see a new brand direction for the firm as well as some additions to our leadership team. This new look of the firm came as a result of reflection. Since I acquired Davis Rea in 2010, we have spent a great deal of time thinking about the future and building the team. As part of that planning process, I made the decision to bring in Don Ritchie as President of Davis Rea. Don is not only one of the most respected people in finance in North America - but one of the best minds in the business. In the coming days and weeks many of you will get to meet and get to know Don. I am delighted that he agreed to come on board and will be adding exceptional value to our client offering.

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Manager Who Called New Bull Market Still Bullish

Davis

Rea

July 20, 2023

Got questions? We've got answers from two seasoned pros who love the game and spend their working days absorbing information and thinking about ways to protect client capital and about which large cap businesses can thrive in any kind of market.

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Chairman’s letter Q2 2023

John

O'Connell

July 1, 2023

Yes, there are problems in the world that are dreadful and complicated. We are constantly reminded of the political and economic challenges, and for investors, there are countless voices vying for our attention-warning of peril.

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The Glass is Half-Full for the Companies We Own

Davis

Rea

June 4, 2023

Glass half-full, glass half-empty. Those are generally the two most prominent types of investors. But who has done the work, assessed the data and made informed decisions about the companies they've invested in?

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Chairman’s Letter Q1 2023: Thinking Generationally — The Age of Change

John

O'Connell

April 1, 2023

The following article was mostly written by Brian Arthur of McKinsey in 2017. I have added content and edited it heavily to update its story to today’s realities and to add context to our investing thinking. It smartly describes the disruption that is rippling through the world today at an ever-increasing pace.

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How Rich Companies Get Richer When the Going Gets Tough

John

O'Connell

February 25, 2023

Sometimes it is helpful to think of companies like teams competing against each other. There are big, strong, elite teams and there are wannabes. Recessions are viewed as bad by investors because profitability is impaired. Investors become pessimistic about the future.

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Chairman’s Letter, Q4 2022

John

O'Connell

January 1, 2023

The 2023 economic outlook for the US is locked in. The Federal Reserve’s goal is to push the rate of inflation back down to 2% over the next few years. It will do this by keeping money expensive enough and for long enough to restrain economic activity.

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Chairman’s Letter Q3 2022

John

O'Connell

October 1, 2022

There is a new war being waged that has not been waged in most investors’ lives. It comes as a shock to many, but the warning signs were there. For the past 14 years governments around the world have directed that money be thrown at every problem that the global community could conjure

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Chairmans letter Q2 2022: THE BINGO HALL

John

O'Connell

July 1, 2022

Successful investors make the bulk of their money when they buy — usually when the majority are losing their minds worrying about BREAKING NEWS and PLUNGING STOCK MARKET headlines.

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Clean up - Aisle 5

John

O'Connell

March 27, 2022

My last missive declared that the market was “a traffic accident waiting to happen”. Well, voila. Everyone seems to have stepped into something unpleasant.

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Chairman’s letter Q1 2022

John

O'Connell

March 1, 2022

The past 90 days have been one of immense turmoil. War, inflation, rapidly rising interest rates, forecasts of economic recession, rumors of tax hikes, and soon companies are to announce quarterly earnings and the going is expected to be far tougher than the easy comparable numbers from last year's COVID recovery.

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Special Report

John

O'Connell

February 20, 2022

Recently, I was reading an article written by a professor of finance who had done a detailed study of “How Novelty and Narratives Drive the Stock Market: Black Swans, Animal Spirits and Scapegoats”.

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Chairman’s Letter Q4 2021

John

O'Connell

January 1, 2022

If you were told that in January of 2020 the world would be beset by a global pandemic where 275 million people would be infected and more than 5 million (20% in the USA) would die, would you have sold all your stocks?

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Chairman’s Letter Q4 2020

John

O'Connell

January 1, 2022

Recently, we wrote that if confronted with the need to forecast the future, but that future is impossible to know with certainty, it is best to acknowledge you cannot know the answer, rather than fool yourself into thinking that you have the answer.

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Chairman’s Letter Q3 2021: Speculator or Investor?

John

O'Connell

October 1, 2021

The following words were written by Edwin LeFevre in 1923 when he penned the oft-quoted Reminiscences of a Stock Operator. They are as true today as they were then:

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Chairman’s Letter Q2 2021: Expectations Are Safer Than Forecasts

John

O'Connell

July 1, 2021

It’s been about 18 months since our worlds were turned upside down. If anyone had prophesied your portfolio valuation on this day 18 months ago you likely would have considered the forecast foolhardy. Yet, here we are.

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Chairman’s Letter Q1 2021: Goldilocks & The Three Bears

John

O'Connell

April 1, 2021

Investors continue to sing an opportunistic tune as evidenced by the continuation of positive results reported on your statement. Generally, equity investors are heartened by continued robust earnings growth, powered by a rapidly recovering economy, fueled by massive dollops of money

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Chairman’s Letter Q3 2020

John

O'Connell

October 1, 2020

The U.S. election is soon to be past tense. The betting odds have Biden as President and a substantial change of control of the Senate in favour of the Democrats. A year ago, this would have been seen as a market negative outcome.

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Chairman’s Letter Q2 2020

John

O'Connell

July 1, 2020

Well that feels better! Portfolios have shown a sharp snap-back as quickly as they plummeted in the early days of the Pandemic. While we are thankful that the reports attached are much improved from the first quarter, we want to assure you that our eye is still very much on the risks and rewards that are always prevalent when investing.

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Chairman’s Letter Q1 2020

John

O'Connell

April 1, 2020

Investing reality today is formed by two fundamental views: the scientific community and the social science community (popularly known as business). The first group considers facts and the second considers forecasts.

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Chairman’s Letter Q4 2019: The Roaring Twenties Starts With the Year of the Rat

John

O'Connell

January 1, 2020

Globally, all central banks are easing interest rates and pumping money into their banking sectors. This is always bullish for stock prices. Everyone agrees that the economic cycle is long in the tooth.

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Chairman’s Letter Q3 2019

John

O'Connell

October 1, 2019

As the relentless barrage of news about Trump, the trade war, the election, impeachment, and interest rate policy captivate national and investor attention it’s easy to feel like the investing landscape is fraught with risk. What are the biggest risks and what's worth focusing on?

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Chairman’s Letter Q2 2019

John

O'Connell

July 1, 2019

The scare from the spectacular 2018 stock market sell-off has completely dissipated and investors are a happier lot—at least those who stuck to their long-term plan. The worry about rising interest rates has turned toward worry about when interest rates will fall.

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Chairman’s Letter Q1 2019: Money Is Like Soap

John

O'Connell

April 1, 2019

For all the talk about robots and index funds taking over the investment landscape, and investors flocking to robo advisors, markets continue to gyrate wildly and most investors relying on these cheap solutions experience results that don’t live up to what is promised.

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