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As we approach the end of what has been a very good year for North American equity markets, the energy sector has fallen precipitously and as I write this issue, is still trying to find a bottom. The declines that we have seen thus far are reminiscent to the panic declines that we witnessed during the financial crisis in 2008-09. That was a very, very trying time that investors are still recovering from; but we did recover. There were many stocks that did not recover in that period but there also many other companies that incurred unwarranted dramatic declines but presented great opportunities for entry and/or continued investment in them. With perfect hindsight, which unfortunately none of us has, the top in the energy sector was occurring around the time that I featured the four energy stocks in the quarterly “Summer” issue of The Lato Letter. There is no question that...

I apologize for being a little tardy but here’s the commentary I submitted to BNN and Globe & Mail for my Market Call Tonight appearance on Wednesday night. I have also provided a link to the Report on Business online article which has a link to the video of the Top Picks. Market Outlook We have come through a very turbulent few weeks in the equity markets and the question in the forefront of investors’ minds is whether or not we have seen the last of new all-time highs in the indices for a while. My answer is that we have NOT, particularly as we enter the historically strongest six months of the four year US election cycle. The six months from November to April of the year of the mid-term election, as measured by the S&P 500 return, has greatly outpaced any of the eight six month periods in the four...

Last week, I was asked by a couple of clients if I was concerned about the fact that October was coming because October is ALWAYS such a horrible month for the equities market. There is no doubt that there have been a few very notable Octobers that have been absolutely horrible months for equities. Now approaching 100 years ago, the Great Depression was sparked by the market collapse of October 1929 and I can certainly remember the fear that my clients and I had on October 19, 1987 when the S&P 500 Index fell over 20% in a single day. More recently, the 2008 financial crisis encompassed an October decline of 16.8%. You would think that these three Octobers alone would be enough to make October the worst month for equity markets but that is not the case. The chart below, courtesy of Yardeni Research, shows the average monthly return for the...

To give credit where credit is due, the following analysis is based on the commentary by a gentleman by the name of Gary Morton who brought this line of thinking to me in an article that he wrote for the website “Seeking Alpha” on August 9, 2014. Factoring in the 7 for 1 stock split in June 2014, Apple set a new all-time closing high yesterday with a close of $100.53, just shy of the all-time intra-day high of $100.72 set on September 21, 2012. However, as you are probably aware, Apple has added significant amounts of cash to its balance sheet since that time and has used some of that cash to re-purchase over 500 Million shares of its own stock. This accumulation of cash and retiring of shares impacts the “Enterprise Value” of the company. The enterprise value of a company is determined by taking the market value of the...

I have written and spoken about Tourmaline Oil Corp. (TOU-TSX, $55.70) many times, including the last issue of The Lato Letter. This time I thought I would let the company speak for itself. Tourmaline’s President and CEO, Mike Rose, was interviewed earlier today on BNN’s Business Day. You can watch that interview at the following link. You can also have a look at the Tourmaline’s latest slide presentation by clicking the following link to their website. Tourmaline remains the heaviest weighting on the Canadian side of Padlock’s portfolios and after watching the interview and reviewing their presentation, I am sure you will understand why. This information, including any opinion, is based on various sources believed to be reliable, but its accuracy cannot be guaranteed and is subject to change without notice. To receive The Lato Letter by email from now on, please click here....

Thought I would share the notes with you that I provided to BNN for my appearance earlier today on Market Call. If you missed the show, you can retrieve it from the Library section of this website or on the BNN website. Market Outlook There is still enough healthy skepticism among investors to remain constructive on longer term - 2 to 3 years - market outlook. Valuations have risen but so have earnings. Seasonal factors may not be positive but that should not dictate remaining investments in solid, properly valued equities. Low yields on interest rate alternatives and the increased risk to investors’ capital in the longer term bond market further favour equities. Top Picks Gilead Sciences (GILD-NASDAQ) Owned by clients only. Initiated position late April at $72.60, latest purchase couple of weeks ago at $81.79. The stock has a compelling valuation at less than 11 times 2015 earnings with outstanding pipeline providing strong earnings...

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