|Investor Knowledge +||10 Minutes = Confident Investing|
Fathers are important. They support us. They guide us. They fix things that need fixing. Or they try. This Sunday, our fathers may be firing up the grill. Or microwaving a meal. They may be taking us to the park. Or tidying up the backyard. They may be correcting our schoolwork. Or staying one lesson ahead. However they do it, we salute them. And thank them.
Ahead of Father's Day, we interviewed David Sykes, Managing Director and Head of Public Equities, TD Asset Management (TDAM) on financial matters, family matters, and pulling through a pandemic.
First and foremost, we hope you are keeping safe and healthy! How is your family? What has your quarantine experience been like?
I've been out of the office for ten or eleven weeks now, so it's been challenging. On the personal side, I have two boys (eight and ten years old) who are doing their schoolwork online. On the professional side, markets have been incredibly volatile, both up and down. I'm coordinating work out of my bedroom while getting the kids aligned. Sometimes math questions collide with meetings, but that's life.
In my case, I have a small family. Other people on the team are living alone in a condominium. Some are taking care of three or four kids. Some are married to frontline workers. There are challenges for everybody. There are good days and bad days, but we're all getting through.
This quarantine is showing us how resourceful we are. Even remotely, my team is researching, trading, redesigning and constructing portfolios. This experience has proven that we can work in a new environment and still work at a pretty high level.
Last September, we spoke to you about potential market opportunities. Has your investment philosophy and engagement with investment teams changed in this new environment?
I am 100% positive, beyond a shadow of a doubt, that my investment philosophy has not changed. It remains very, very steadfast. Modes of engagement have changed. We're certainly doing more phone calls, video calls and virtual meetings with colleagues. We're also connecting with the management teams of companies we own and companies we're interested in.
The biggest change has been with clients. They're used to face-to-face interactions and boardrooms. We've gone virtual. And it's working out. We're still connecting and helping them understand the implications of all this. Technology has been a saving grace. Our resources are easy-to-use and very secure. We're getting more done than anyone we know.
As countries start to emerge from lockdown, what types of companies are well-positioned to succeed? Where do you see the best equity opportunities in this current market and from a long-term perspective?
Some people think the world has changed forever. In some ways, that's true. On the other hand, there are reasons to be optimistic. From the perspective of a two, three, five-year investment horizon, our process hasn't changed. We're continuing to focus on companies with a great competitive advantage and solid, consistent revenue streams. Companies that offer growth, strong balance sheets, and positive cash flow for shareholders. One variable is timing. How slowly or quickly we emerge from lockdown. There may be great opportunities today in beaten-down cyclicals like financials and industrials. If the lockdown takes longer, or we have a second wave of this virus, we'll find other opportunities.
As we speak, it looks like confidence is picking up. We're seeing a slight return to normal; a slow return. I believe that, one day, we will go to the office again. We will go to restaurants, get on airplanes, and go to sporting events. It may take more time than people expect. We may need a medical breakthrough to restore that confidence.
We're all creatures of social habit. We want to connect. I miss meeting colleagues at the pub after work and talking about new ideas. We will get there again. In the meantime, we'll work with our circumstances. We may have to work remotely more often. We may have to follow different protocols when we travel. We may have to be a bit more physically distant. We'll adapt.
Some investors may read the headlines and worry about their futures. How do you separate the news from the noise?
Reading the headlines can be a scary experience. I constantly ask myself one question: What am I trying to achieve with my investments? I'm not trying to achieve outsized returns for tomorrow or next week. I'm trying to stand by the companies I've invested in. Companies with a competitive advantage and sustainable business models. I want to own those businesses and their equity well into the future.
Stock prices may take a hit, but our business models are strong. I understand the trepidation. We're facing a lot of uncertainty. At the end of the day, I want to own high-quality businesses that will grow and appreciate. That keeps me grounded.
If you're feeling overwhelmed, try driving by the parking lot of a hardware store. Or checking out a fast food restaurant's drive-thru lane. Or looking up your favourite retailer's order fulfillment. I want to own resilient businesses. I don't want to sell them. In tough times, owning business equity is the right move.
The sun will come out tomorrow. I don't know if tomorrow is six months from now, twelve months from now, or eighteen months from now. I don't know if tomorrow is two, three, or four years from now. I just know it will happen. In the meantime, go outside, keep your distance, and remain positive.
Do you have any pandemic parenting tips for other family men? How will you celebrate Father's Day this year?
My parenting pandemic tips would be three things: patience, patience, and patience. I'd also advise parents to take advantage of this situation and spend as much time with the kids as possible.
Most days, I go for a jog very early in the morning. The rest of the time, I focus on work. This Father's Day, I'd love to sleep in until 7 AM, then have a coffee and read a newspaper. I suspect that will be interrupted by my kids. They'll probably beg me to follow them to the backyard and throw a ball around. When I think about it, I prefer that.
Happy Father's Day from TDAM!
The information contained herein has been provided by TD Asset Management Inc. and is for information purposes only. The information has been drawn from sources believed to be reliable. The information does not provide financial, legal, tax or investment advice. Particular investment, tax, or trading strategies should be evaluated relative to each individual's objectives and risk tolerance.
Certain statements in this document may contain forward-looking statements (“FLS”) that are predictive in nature and may include words such as “expects”, “anticipates”, “intends”, “believes”, “estimates” and similar forward-looking expressions or negative versions thereof. FLS are based on current expectations and projections about future general economic, political and relevant market factors, such as interest and foreign exchange rates, equity and capital markets, the general business environment, assuming no changes to tax or other laws or government regulation or catastrophic events. Expectations and projections about future events are inherently subject to risks and uncertainties, which may be unforeseeable. Such expectations and projections may be incorrect in the future. FLS are not guarantees of future performance. Actual events could differ materially from those expressed or implied in any FLS. A number of important factors including those factors set out above can contribute to these digressions. You should avoid placing any reliance on FLS.
TD Asset Management Inc. is a wholly-owned subsidiary of The Toronto-Dominion Bank. All trademarks are the property of their respective owners. ®The TD logo and other trademarks are the property of The Toronto-Dominion Bank or its subsidiaries..
TDAM Connections at a Glance: