Gold-Platinum Ratio Set to Decline

The gold-platinum ratio hit a new 20-year high of 1.46x in the first week of April. The two precious metals have diverged dramatically since 2008 when platinum hit an all-time high of $2,251/oz and the gold-platinum ratio bottomed at 0.4x. As seen in Chart 1, the gold-platinum ratio has...

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Stick to Gold Bullion during Market Drawdowns

Historically, gold bullion has performed well during periods of stock market turbulence. For example, during the 2008 Great Recession, gold rose over 20% while the S&P 500 fell 57% from its 2007 peak to its March 2009 bottom. Over the course of the prior major market decline...

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Digging Beyond Profit Margins

Profit margins for the S&P 500 constituents, excluding financials and companies in volatile sectors such energy and materials, have been steadily rising since the end of the 2001-2002 recession (Chart 1). The median 2016 EBITDA margin for this group was 22.6%, an all-time high. The median net margin came in at...

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Yield Curves Shifting and Flattening, but No Signs of Recession

We pay close attention to global yield curves. Yield curve inversions (i.e., short rates higher than long rates) have been reliable business cycle peak indicators in the past (see our previous Insight, How We Monitor the Economy). Canadian and U.S. yield curves have converged over the last couple of years...

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Most Valuable Brands Fully Valued

We seek to invest in undervalued companies with durable competitive advantages, clear growth prospects and positive industry dynamics. We pay close attention to companies with leading brands and loyal customers (think Apple, Nike) as these companies typically generate high returns on capital and strong free cash flows...

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How We Monitor the Economy

Monitoring the business cycle is of paramount importance. Since 1965, two-year rolling losses of 20% or more in the S&P 500 Composite Index have always been preceded by a business cycle peak. Equity markets tend to be more volatile following business cycle peaks than during periods of economic expansion...

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