In today’s age of information overload, finding credible sources is more critical than ever. With countless sources vying for attention, you can find support for virtually any belief on the internet. As Patrick Daniel Moynihan famously said,
“You are entitled to your own opinions. But you are not entitled to your own facts.”
At Thomson Financial Partners, we don’t just rely on information—we ensure it’s reliable and the best guidance available for our clients. We invest significant time in reading and sourcing different perspectives. What sets us apart isn’t just the time we dedicate to research, but our years of experience and the rich history we’ve lived through. Most importantly, it’s the relationships we’ve cultivated over the past fifty-eight years with experts who share their well-founded insights that make our advice truly valuable.
Recently, we attended a conference where we had the chance to hear from portfolio managers at CI Global Asset Management, BMO Insurance, TD Asset Management, EdgePoint Wealth Management, Fidelity Investments Canada, and Mawer Investment Management. We also delved into legal and tax matters, focusing particularly on the proposed changes to the capital gains inclusion rate—from 50% to 66.67% on annual realized gains over $250,000 for individuals, and from dollar one for corporations. We’ve discussed this before and will continue to plan with our clients to minimize any negative impacts of this new taxation level.
Listening to six different managers, each with their own sound approaches and strong long-term track records, provided a wealth of perspectives. Our job is to distill this information and apply it appropriately for our clients.
A few key insights were clear to us:
- We’re just at the beginning of the Artificial Intelligence revolution, and
- Active management is poised to become more crucial than ever.
Alfred Lam (SVP and Chief Investment Officer, CI Multi-Asset Management) and Peter Hofstra (Portfolio Manager & Director of Research; Equities) from CI GAM highlighted some major trends:
- In the early 1980s, the advent of personal computers and Microsoft’s Windows revolutionized industries, creating many successful businesses. While some of these innovators remain, many have faded away.
- In the late ’90s and early 2000s, the introduction of the mobile phone and the internet triggered a market boom and subsequent bust. Investors, driven by fear of missing out, often paid exorbitant prices, only to learn that the cost of a business determines its investment success.
- As we enter the AI era, we’re ready to adapt and thrive. History teaches us that while some businesses will achieve lasting success, overpaying can lead to poor investment experiences—a mistake we’re determined to avoid to keep our clients’ investments secure and profitable.
Qualcomm exemplifies this lesson.
In 1999, its stock price peaked at around $89, a figure not reached again until early 2020. Despite Qualcomm’s impressive business growth—with sales and profits per share growing 14% and 19% per annum over 23 years—its high valuation in 1999 led to a poor investment experience. Research Affiliates pointed out that this great business provided poor returns for over two decades due to its initial high valuation. As shown in the chart, EdgePoint began purchasing shares in 2023 at compelling valuations and attractive prices.
Here’s What Could Slow Nvidia’s Momentum
We are thrilled about the future and the incredible innovations on the horizon in technology, healthcare, and even traditional industries. The efficiencies brought by artificial intelligence will revolutionize the experience economy, creating vast new opportunities. Our commitment remains steadfast—we will continue to devote significant time to research, ensuring we partner with money managers who are as dedicated to achieving your financial goals as we are.
Wishing you a fantastic weekend ahead!
Eric
