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Investment Update

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Investment Update

Since our update a week ago we continue to monitor the daily information on what is happening with the Coronavirus (Covid-19) and the investment markets. We wrapped up the latest round of information gathering with a conference call with IA Wealth’s Chief Economist, Clement Gignac this morning. Here are some key points to share with you at this time:

  • If what China is reporting is true, new cases of Covid-19 have stabilized in China and the work force is gradually getting back to work. As you know the virus began in China and as such, they are the first country to see progress at containing and recovering from the virus.

  • The virus is spreading in other countries – those countries are all significantly ramping up their efforts to contain the virus. Both Canada, the US and Britain have announced large stimulus measures to support the health industry to contain the virus.

  • The markets will stabilize when the future becomes clearer with actual data. At this point we are not sure if we will officially go into a recession (which is two consecutive quarters of negative growth) or if we will narrowly avoid a recession. When there is uncertainty, without data, the stock markets are uneasy, and it is very normal to see the large daily swings as data (good or bad) becomes available.

  • To further complicate things – Russia and Saudi Arabia are in an oil price war, with Russia wanting to keep the price of oil low to do damage to the US oil industry. On the negative side, this can have a significant impact on Canada as oil exports are a large part of our economy. On the positive side – low gas prices help to stimulate the economy for individuals and companies who spend a lot on fuel cost (you can see this reflected in the price of gas at the pumps). As usual numerous economic factors are intertwined and interdependent on each other. Also, on the positive side Saudi Arabi and Russia are talking and negotiating a solution as the low oil prices will hurt Russia in the short-term.

  • As usual, the fund management teams are re-aligning their portfolios to the current conditions and taking advantage with their cash to find buying opportunities where they see fit. There are certain industry sectors that do better than others during an economic slow down period.

  • Another factor causing volatility is the US election process. Who becomes the Democratic Nominee to run against President Trump in the fall US election will drive different market expectations.

    We have reviewed many of our clients’ portfolios to compare performance to the actual stock indices. In most of those instances our client portfolios are down less than half of the overall stock markets. We are expecting the volatility to be around for several weeks until the economic data becomes clear.

    Volatility & market corrections are an inherent component of investing, and that can make many investors uneasy. People are fond of saying that it is ‘different this time’ – the reality is it is not different this time, only the trigger causing this slow down is different. In the last quarter of 2018, we had a

correction in the stock market that was caused by a perceived China economic slow down, US/China trade dispute as well as rising interest rates. Those were the triggers that caused the 20% drop in the stock markets at that time. Those issues were addressed, and we ended up with a significant investment market rebound in 2019.

We have Covid-19 and an oil war triggering a slow down this time and we are unsure how far it will go. Measures are being implemented to correct those problems and eventually the economy will recover and come out of this economic cycle. As in the past we don’t panic and make rash decisions in the middle of a volatile period. We wait for things to bounce back and then examine how your specific portfolio reacted during that time period. If necessary, we make changes at that point in time to prepare for the next downturn.

In this current market environment, we would like to share with you a well written article from one of our partners, Franklin Templeton instead of re-inventing the wheel. Please click on the link below:

www.franklintempleton.ca/en-ca/investor/planning/investor-education/five-ways-to-deal-with-market- volatility

As we always say, market volatility is part of a long-term investment plan; however, should you have any specific questions about your personal portfolio please call us.

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    This years’ dose of market volatility brought to you by... COVID-19    Anytime we hear the old refrain “this time it’s different” or “don’t worry, this is just the same as before” regarding the market ‐ alarm bells begin to go off in our

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This years’ dose of market volatility brought to you by... COVID-19

Anytime we hear the old refrain “this time it’s different” or “don’t worry, this is just the same as before” regarding the market ‐ alarm bells begin to go off in our heads. While market volatility and corrections of 10% seem to have become more the norm lately that does not mean we should ignore them and just go merrily on our way. Neither should we panic blindly due to the media touting “largest point fall ever”, which it was, but as a percentage not so.

We have not seen a significant correction since the end of 2018 so, in a way you could say one was overdue and could just as easily been set off by this as something else. The cause of this volatility however is slightly different, and we are paying special attention to it. It could go away relatively quickly, and markets would likely rebound quickly... but it could also be prolonged and tip the world into a global recession which we would still recover from but might take much longer.

In general, many of our partners have been finding the market pricey as of late and difficult to find great new investments. They have been raising the amount of cash they have on hand over the last year to 18 months in order to look for company/stocks going on sale in market dips. It appears that although they were waiting for an opportunity like this, they are going to continue to be patient and careful before starting to buy in in this case. It makes us feel good that they are being extra careful. We would rather miss a little bit of the “sale” than rush blindly in without good data.

It is important to understand that the managers are constantly fine tuning the portfolios to reduce risk in areas of concern or increase/decrease cash holdings or take advantage of a market dip to get a good deal on a particular stock. This is not to be confused with taking large portfolio bets, this is done with a great deal of thought and research. They try to use short term volatility to actually increase their performance compared to the markets.

We are constantly receiving research from our partners. They take special care to make sure that when there is market turmoil, we get even more up to date research and thoughts from the managers and economists who help us manage your investments. As usual we are sifting through all kinds of research to make sure we are able to help you make the most informed decisions possible regarding your investments. We thought providing you some quotes from our partners might be interesting to some of you. The following are clipped from the hundreds of pages we have been through in the past week.

Eric Benner, Global and US equities Dynamic “it is important for us to remember that corrections are a normal (even healthy) part of functioning markets and occur in more years than not. There were two such corrections in 2018 (the latter quite deep), which provided an attractive setup for 2019” “over time if events turn out more benignly, we’re getting our shopping list ready” February 2020

David Fingold, Vice president & Senior Portfolio Manager for Dynamic “As is our custom we mitigate risk by raising cash. We have done this throughout our tenure. Similar to prior corrections we are looking for the signals that will lead us to put that cash to work.” February 27, 2020

Bill McCleod, Canadian equities for Dynamic “This is not a SARS‐like event and the SARS playbook is not applicable. The risk of “a recession driven by inventory correction and travel industry (with some associated financial distress) remains the primary downside scenario.”

“we remain on the sidelines generally, with high cash levels. We are waiting for either better entry points or better data.” February 2020

Oscar Belaiche, Head of equity income team for Dynamic “As always corrections don’t hit you between the eyes, they whack you in the back of the head.”

“Dynamic Strategic yield fund and Dynamic Dividend income fund have raised cash to over 10%.”

“our view in this environment would be to have a shopping list prepared ready to begin buying once we believe the Coronavirus situation is settling down, i.e. the 2nd derivative of change is “less bad”. Currently the situation is “more bad”” February 2020

Todd Martina, PHD Senior VP, Chief economist Mackenzie Investments ‐ “investors were initially reassured by China’s robust measures to contain the rapid outbreak.”

“However, the coronavirus narrative began to shift in late February as the contagion accelerated internationally.”

“Forecasting the short‐term economic impact of the outbreak is inherently uncertain given the unprecedented nature of the virus.” “As the spread of the contagion stabilizes, we expect a bounce in economic activity as global supply chains resume normal functioning.” February 27, 2020

Tye Bousada President and Chief Investment Officer Edgepoint wrote recently regarding market volatility reminding us that an investor who invested $100 in Berkshire Hathaway 55 years ago would now have approximately $2.7 million but........ there were 3 times that your investment would have been down more that 50%, there were 18 years when the stock performed worse than the S&P (11 of those years by more than 10%).

Further he comments on the “Absolute Dread” of watching investments go down in value and I quote “You’ve surely seen a video of a herd of gazelles being chased by a lion. They’re running for their lives. Most people feel that way in the stock market at some point during their investment journey. Prices are going down, panic sets in and there’s a stampede to sell. The stampede occurs because there’s very few things in life as uncomfortable as watching the price of something you own go down if you don’t know what the value of it is. Most people don’t know the true value of what they own, so dread sets in. The easiest thing to do is sell, so they join the stampede.

Here’s the positive side to the absolute dread – unlike the average participant in the stock market, we make it our job to know the value of the businesses we own and to take advantage of that dread. We certainly haven’t been perfect, but nothing in the past has helped us buy more growth for free than a good stampede. Here are some of the previous stampedes that you or someone you know may have found themselves in:

  • The economic slowdown in the fourth quarter of 2018

  • The U.S. debt downgrade of 2011

  • The European sovereign debt crisis of 2011/12

  • The U.S. financial crisis of 2008/2009

  • 9/11

  • The dot‐com bubble burst of 2000 to 2002

  • The emerging market crisis of the mid‐1990s.”

    According to the CDC, in 2017/2018, in the United States alone 45 million Americans contracted the flu leading to 810,000 hospitalizations and 61,000 Flu related deaths. We only remark on the CDC statistic to remind us of perspective when considering current market upheavals.

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During times like these, it’s important to remember that panic is a very human emotion, but never a good investment strategy. Market volatility and corrections are a reminder to review your objectives regularly, stay appropriately invested, stay diversified and stay the course.

As this communication goes out, we are busily re‐scheduling our calendars for updates, conference calls and webinars with all the fund companies so we don’t miss any new information we might need.

As always, if you have any concerns regarding your accounts please let us know how we can help you.

Health, Happiness & Success!

Deborah Kohlsmith, Gary Elder &

Kelly Wood

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2nd Place Essay Winner of The 2019 Helping Hands Scholarship

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2nd Place Essay Winner of The 2019 Helping Hands Scholarship

Elijah- 2nd Place Helping Hands Scholarship Winner

My Life Goals

By Elijah Zimmerman

“I am Elijah Zimmerman and I am of seventeen years of age as of July 26, 2001. I am the fourth and youngest child of Rosanne and Bernie Zimmerman. I grew up on the family farm outside of Emo Ontario and worked on it throughout my childhood and through elementary to high school. I am currently applied and accepted in a history program at The University of Trent. My community involvement has been mostly of advisement and counsel for other youths within the area, I enjoy history and am intrigued by the legal system and it is what I plan to study, and I plan to enter criminal law as a prosecutor or defence lawyer. My life goals for an education and career as a defence lawyer or a prosecutor are reasonable aspirations because of my abilities and experiences that favour those goals, but the Helping Hands Scholarship would also be instrumental in allowing me to pursue them.

I have a long history of community involvement. Even before high school I was involved in numerous fundraisers for my church, my school, and charities such as the Salvation Army and Development and Peace. Entering high school, I was a member of the Fort Frances Junior Band and Intermediate Band for three years, as well as an actor playing Wes for “Footloose The Musical.” Beyond local art, I was also a junior counselor for Discovery Camp for two years, amounting to well over one hundred hours volunteered there. Discovery Camp is a local bible camp that tries to initiate a sense of community, a sense of belonging, and tries to strengthen education about Christianity. Just this year I was involved in a school fundraiser for the school’s “Chem Free Grad” which provides a safe environment for highschool graduates a safe place to celebrate were they will not abuse drugs or alcohol. The fundraising was split into various events throughout the year and the one I worked on, the bake sale and barbeque, had the largest revenue in school history, raising in excess of fifteen thousand dollars. I also was academically inclined throughout high school and was in the Advanced Placement English program which carries with it the possibility of counting for a first year university credit. This culminated into the school approaching me and asking if I would like to join their tutoring program where I would be helping other students in their classes, to which I accepted. I spent about forty hours volunteering to tutor in my grade twelve year. My volunteering has mostly been about helping youths and helping them realize their own potential, and that is also the part of my volunteering that I am most proud of.

I have not always been interested in law, but I have almost always been interested in history. Even in kindergarten you could find me reading, or at least looking at the pictures in history books, specifically the second world war, a passion still present and securely with me today. I took grade twelve history in grade eleven, skipping grade eleven history. During my late middle school and early highschool grades, I was interested in programming and game design taking a few classes in it. But in grade eleven I changed my focus to law as I became interested in it and as it had a more promising future if I follow it. I became increasingly interested in law as I took a law class and I followed current cases as they were released to the public on my own. I started following the history of law from the Babylonian Code of Hammurabi, to Mosaic Law, Roman Law, and British Common Law which is the basis for our modern Canadian law. Along with this I looked over the contents, evidence, and the results of many older and newer cases in Canada and the United States, blending the pre-existing and long-lasting interest of History with the new interest of law. This allowed me to understand the law more intimately and I became increasingly interested in pursuing the many careers of law, from lawyer and lawmaker to police officer. I always sought justice for others throughout my life, which is most likely one reason why I took a quick liking to it. I would often come to the defence of classmates if they became the targets of teasing or harassment and would make a conscious effort to treat everyone with respect. Another reason I have taken a quick liking to the study of law is that I like to debate, whether it be philosophy or politics, I often engaged in debates with those around me if they had formed an opinion of their own on the matter. The idea of debating and finding the truth for a career thus became appealing to me for that reason as well. After I became so enthralled and moderately proficient in law, I decided I would pursue a career in being a lawyer. History is one of the most common undergraduate degrees among lawyers and is considered to promote critical and sequential reasoning which is why it is so common. My love of law and history is sure to propel my journey through post secondary school.

 

Even before I was interested in law, I always sought justice in the world. As a child I wanted to make sure everyone was treated fairly and I often took it upon myself to do so. I would be sure that everyone was included in activities and would often make friends with those described as more troublesome and help them through their difficulties and disadvantages in school. This led me to be highly revered in my classes and schools among both the teachers and students. This regard by my peers led to my winning of the student council class representative. Although the class representative role meant I had to give up many breaks for council meetings, for there was at least one a week, I took the position and my responsibility to my class seriously and was not deterred. Knowing that the other classmates were able to go on break while I participated in a meeting at an age most people would choose the break did not bother me for two reasons: Firstly, I had a duty to my class and school to represent my class to the student council. Secondly, I did not become disinterested in the face of it; I found as much pride and joy in my service as someone my age possibly could. I developed these values of justice, duty, and initiative throughout my childhood and they are something I brought through highschool and I bring with me as I leave. As a defence lawyer or prosecutor in criminal law, these values are important not just for the job and pay, but to make considerable contributions to society. I was always disheartened by societal injustice, by those left behind unfairly, and by those who escape punishment for their actions. Because of this I always attempted to make a more just community. I would form friendships with people in all groups and help people through school or life. I helped people get over problems and helped people mend relationships. In a few distinct cases I was able to talk with someone who was struggling with severe mental health, someone who thought that they could give up on life, thankfully they did not and I was able to refer them to resources that could help them. It is not always fun to help people, people in desperate situations can express many different emotions. Anger, sadness, depression, dread, and fear all come from those who need help. In criminal law, it is no different. There are people from all places and positions in society, in all sorts of situations and circumstances. But despite it being hard sometimes I try to help anyone I am able. In my career, I want to aid people, including people overlooked or dismissed by society; victims and the wrongly accused alike. A defence lawyer or a prosecutor is in a primary position to help these individuals. As a defence lawyer or a prosecutor, I can argue for justice, for those who cannot speak for themselves, and for a better society for all those who need it, regardless of race, religion, or any other label placed upon a person. That is what I hope to achieve in my career.

Therefore, I would appreciate and be thankful for the help offered by HollisWealth’s Helping Hands Scholarship in fuelling my life goals of achieving an undergraduate in history, going to law school, and becoming a defence lawyer or a prosecutor, which I intend to follow dutifully. I hope my community involvement with the youths, my investment into history and law, and my aspirations of being a prosecutor or defence lawyer are evident of that. My trip from Emo to Oshawa and into adulthood to study history and law is not going to be easy for me, but it is important.”

-Elijah Zimmerman

 

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1st Place Essay Winner of The 2019 Helping Hands Scholarship

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1st Place Essay Winner of The 2019 Helping Hands Scholarship

Carter- 1st Place Helping Hands Scholarship Winner

My Life Goals

By Carter Metcalf

     My name is Carter Metcalf, I am 18 years old. My parents, Nancy and Chad Metcalf are clients of Gary Elder. In August I will be attending the University of Ontario Institute of Technology, for Mechatronic Engineering.  I am starting one week early, as I have volunteered to be part of the University’s welcoming committee and move-in crew. I thought this was an excellent way to meet new people and start giving back to the university.

     I love that I grew up in Ontario, a province that has four seasons, amazing opportunities to explore, learn about nature and meet new people. I have dedicated as much time as possible to make it an even greater place to live. I accumulated 895 volunteer hours during my high school career, and I hope that I am setting a good example for my peers and particularly boys my age. I feel like young men get a bad rap, are overlooked or even undervalued and sometimes I think they struggle to see ways they can contribute.  I am not sure if society better recognizes this potential in girls, but I have worked very hard to dispel the stereotype that high school boys aren’t involved or interested in being involved. I have always wanted to please people and maybe more importantly I have wanted to feel good about the decisions I make. I believe that hard work, helping others and contributing to society through solving problems, is important.

     I work hard at school and have always achieved Honour Roll Status. In grade 8 I was voted valedictorian, both by my classmates and the school staff. In high school I continued to demonstrate active leadership and have been involved in many activities including being a grade 9 mentor, grade rep, member of band council and a member of the Relay for Life Committee. I played in three school bands and I was sectional leader. This was a huge time commitment, having a minimum of three practices a week with additional sectional practices over lunch. Outside of my nearly 900 volunteer hours, I coordinated two large band fundraisers that helped offset our costs to travel to New York and play at Carnegie Hall. I competed with the high school badminton team and play in the city league. I graduated with 5 extra high school credits (in my four years of high school) as I elected to take on-line courses and summer courses to allow time in my schedule to participate in music, technology courses, co-op and a year-long missions leadership program. I have two part time jobs during the school year. I taught Mytes skating twice a week and I am a swim teacher on the weekends and pick up shifts during the week when I am needed. I really enjoy working with the young kids in our community and helping them feel excited and proud of their accomplishments. I participated in Single A hockey but found that the coaching staff was often verbally degrading and demoralizing. In my final year of competitive hockey, the coach was demeaning to a few players and two of those players quit the sport altogether. I still loved the game of hockey and I wanted to play, so I continued with house league and I vowed I never wanted anyone person or child to feel that way, so I made sure I was the best Mytes skating coach I could be. I worked for seven years with the city’s Mytes skating program and I often coached the most shy and fragile players, helping them to feel confident and proud of their accomplishments. In the summer I run a swim program and last year we had a record number of registrations. This is a program that offers free swimming lessons to any child that registers, with the hope of preventing any drownings in the region. I was responsible for teaching, organizing, assessing and communicating with over 130 children and their families. It was an incredible amount of work and responsibility, but I really learned a lot and all the kids had a fabulous time. I have been rehired to run the program this summer and because of the program success, I was asked to run a similar program in another northern community.

     In grade 11, I participated in a year-long Missions Leadership Program, with focus on local, national and international missions’ activities. We travelled to Ecuador and helped build a school. It was an incredible experience that involved hours of work outside of the normal school day. I collected nine packed suitcases of new clothing, sundresses, baby layette sets and book bags. It was an amazing feeling being able to provide our mission group with these items and donate them on our trip. Recently, because of my school involvement, I was one of five students awarded a School Letter, which is awarded to students who have accumulated a minimum of 800 points. The points are awarded in categories and are weighted, based on grade averages, involvement in music, sports, clubs, mission work, councils and school events. I was the only male student to receive this honour and I hope that I will inspire other male students to get involved.

     Along with being busy with school, music, work and sports, I try and volunteer as much as possible. I have accumulated 895 volunteer hours during my time at high school. I have participated in parades, Rogers Home Town Hockey, Ontario Winter Games, Fundraisers for animal shelters, helping seniors, neighbourhood clean-ups and what I am most proud of, is that I established a network to divert useable goods from a casino warehouse to charities instead of going to the landfill. In April the casino and local newspaper highlighted this work.  In the past two years I have helped divert over 100,000 items from landfill. These items, deemed as scrap by the casino, are all reusable and often new. I pick up any items that can be directly used by a local charity and deliver them. This winter I delivered cases of surplus hot chocolate mix to the men’s shelter and Legion. I have set up a new dining hall in the men’s shelter with tables, giving them additional seating to service more clients. I take linens weekly to local animal shelters. This diversion program has even helped create a re-sale program that creates a revenue stream for a private no-kill cat shelter in our city. When unique items come available, I find creative ways to rehome or repurpose the item, while still helping charities. I am very proud of how many items have been kept out of our landfill and how many charities have been helped. One of the reasons I chose to attend the University I did, was so that I could come home more frequently and continue to support this program.  Another significant volunteer position I have is as the trail steward for a large provincially advertised walking trail and nature area. After I had volunteered for years helping with trail maintenance, I was asked by the board to take on this official role, which makes me accountable to the board for trail maintenance, trail promotion and fundraising.

     From a very early age I told my teachers that I wanted to be an inventor when I grew up. I liked the idea of creating something new and something useful. As I grew older and realized there wasn’t a university course for future inventors, I thought that engineers were inventors, and they did have a program for that. I have never strayed from that vision. I like the idea of being creative, solving problems and improving lives and the environment, with principles regulated by the rules and order of science. When I learned of the multidisciplinary degree that Mechatronic Engineering offered, I knew I had found my future program. I was excited and proud to be accepted to several university engineering programs, but I chose to accept my offer at the University of Ontario IT, recently rebranded as Ontario Tech U.  For many reasons this feels like a perfect school for me including the fact that I could still come home to help with my waste diversion program, contribute and participate in community wide events throughout the year and stay connected with my family and friends.  Ontario Tech U is one of only a few universities that offers Mechatronic Engineering, so I was excited to be able to take my program of choice at my university of choice.

          Throughout my schooling, I hope to secure several co-op placements, that will give me exposure to new fields and hopefully direct me to a final career destination.  I spent a day in the SNOlab in Sudbury and I would love to spend more time in mines and explore that possibility as a full-time career.  Either in my career or in a volunteer capacity, I want to be able to develop robotic type systems that can help save our planet. We need to get the plastic out of the lakes and oceans, out of landfill and out of consumer products. With my family’s involvement with the Canadian Guide Dogs for the Blind, several animal rescues and wildlife rehabilitation centres, I have developed a passion for giving back. In my career or continuing my volunteer work, I would like to be able to build affordable aids to assist disabled people, disabled pets and injured wildlife; contributing to their quality of life. I would love to design and build these affordable aids and donate them to people and rescues in need.  I want to make a difference and I want to help the planet before it is too late. I have grown up in a family that has instilled the principle of giving back more than you take, to being kind to others and to protect animals and the environment.  Our planet is on the verge of irreversible damage and while I do everything I can to minimize my footprint, I want to do more to help reverse the damage done and protect our future. I’d like to be able to raise a guide dog in my upper years of university, as the guiding association is always in need of students for this role. On a personal level, I would like to increase funding opportunities to students to help them with the costs associated with their schooling. I’d like to help Ontario Tech University become aligned with the Loran Scholar Foundation. I was selected as a semi-finalist for this prestigious award and spent a day in Toronto being interviewed multiple times by committee members. Unfortunately, my University of choice, was not affiliated with this incredible program and I was not selected as a finalist. I would love a future UOIT student to have this opportunity and have the support of the Loran Scholar community. I have been nominated for an Order of Orillia award, and am a finalist. This is a nonmonetary award, but highlights community members that have given back to their community. It is an honour to be nominated and considered for this award. If I am selected as a finalist, I hope that it inspires other teenagers to be involved in their community and to find ways to give back. 

     While some of my life goals feel well defined, I think others will come into focus as I further my education. I do know that I will continue to support and grow my charity work and hopefully I will inspire the next generation to get involved.

Carter Metcalf 

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