Monthly Message
The Wutherich & Co. Composite was up 1.6% in July. This compares with the S&P/TSX up 4.5% and the BMO Small Cap Index up 7.8%.
Gold stocks have provided a large boost to Canadian indexes. We look at the space from time to time and have even owned a few names in the past. In our view, very few gold companies are sustained value adders. Most of them trade on the sentiment of the day. Currently, the sentiment is very positive. However, in my 28 years as a money manager, I have seen times when sentiment on the Gold Sector can be very negative for extended periods of time. This wipes out many of the companies that don’t have the very best of underlying fundamentals. Our core investment philosophy is to look for companies that have stronger, more stable demand characteristics for the products and services that they offer and that this can perpetuate itself for years to come, regardless of current market sentiment. The coronavirus will pass. Will people still be as interested in the price of gold at that time? They will probably still be consuming beer, using telecom equipment, getting colonoscopies, taking out consumer loans, buying sports shoes, and using convenience stores (to name a few of the characteristics of the companies that we invest in).
JF and I continue to hope that all of you are faring well during these difficult times.
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