May 3, 2026
Welcome back. When TS Eliot described April as ‘the cruelest month’ he was referring to the awakening of the dead and dormant, as Spring’s arrival forced them to deal with painful memories previously frozen by winter’s icy grip. Or perhaps he was referring to paying income taxes — another unhappy memory which had nearly faded from investors’ minds.
This tax season has been expensive courtesy of the strong performance and gains we enjoyed in last year’s ebullient stock market. And perhaps in some consolation, this happy trend has continued into 2026, as Canadian stocks are again outperforming US and many other markets.
Meanwhile the Iran war refuses to end quickly and is supporting energy and materials stocks and explaining our relative strength. We remain comfortable with larger than usual cash reserves due to the heightened uncertainty of this year and are closely following many trends.
Politics is reluctantly on my reading list more than I’d wish, as its drama and unpredictability forces investors to consider policy decisions much more than we did in the past. Last year’s change in Canadian leadership has contributed to this reality as the new leader attempts to introduce changes to resuscitate our economy. Investors are hopeful, but the larger and experienced ones we chat with are still skeptical and are awaiting concrete actions before getting aboard.
Another group which has been reluctant to act of late is central bankers, the committees who decide upon short-term interest rates. At the end of April, we had these meetings in the US, the UK and here at home. The decision was to make no changes to rates, and then talk extensively about factors which could push future rates in either direction.
In fairness the bankers’ job is extremely difficult and has recently become more so, as politicians try to force central bankers to lower interest rates in hopes voters will respond favorably. In theory the influences on rates should only be inflation and the state of the economy, however as with many things today theory has been overwhelmed by disappointing realities.
As this new month begins and we exit April’s cruelty and turn toward the promise of Summer, have a fine month and enjoy the coming warmer days. Take care.
Philip
May’s Articles
While the Iran war continues to worry investors, stock markets have ‘adjusted’ to this reality and have shown surprising strength over the past few weeks. Markets being markets, this could change in an instant, however the recent new highs highlight how stocks price in news and often look past near-term uncertainty. This is also why investing is hard.
Imagine if on January 1st of this year someone from the future had told us what would occur in the first several months of 2026. Forced regime change in Venezuela, a US-led attack on Iran, along with tariffs and other trade disputes. Few of us would have expected stocks hitting all-time highs in the face of this level of uncertainty.
This outcome is also why I ‘listen’ to the stock market more than any single individual or investment firm, regardless of their recent track record. Stocks represent the aggregate of all investors’ opinions and actions, making their signals more useful.
In the article linked below by Wolfgang Munchau we find a good discussion of uncertainty and its influence on stock markets. As you will read investors don’t need to face uncertainty and make exact decisions but embracing it can help identify general trends leading to profitable moves.
Having the ability to acknowledge things we do not or cannot know is quite useful. And when conditions create enough ambiguity, good investors have learned to hold more cash and remain patient, rather than making moves based on tenuous information or guesses about where events will go in the near term.
https://unherd.com/2026/04/forecasts-are-for-losers/
We have linked various articles by Morgan Housel over the years. I have read one of his books and many commentaries and always appreciate his perspective and stylish writing.
In this example linked below, he covers a topic which deserves more attention than it usually receives in the investment industry. As you’ll read, his take on the long-term growth of prosperity in families and societies will sound familiar to many of you.
When we ask investors why they are working to build their wealth, a variety of responses usually appear, and ultimately most of them echo what Housel sums up in his article: life continues to get ‘easier’, and we continue to have concerns about the next generation.
Some of this is due to human nature, and the rest is thanks to technology and the vast improvements it brings for us all. You might think that by now we’d be used to this trend and generally have fewer worries, however that hope remains elusive.