Blue Oceans advisor David Little says long term trust gives clients confidence in strategy
As global markets plummet to levels unseen since the beginning of the COVID pandemic, David Little is sensing an opportunity to find undervalued assets amidst the rubble.
“I'm not running into the burning fire,” he said. “But I certainly don't want to be standing outside waiting to clean up after everything is said and done and find out we missed out on all those opportunities.”
Keeping clear and honest communication is essential to maintaining the trust of clients during this moment of high volatility according to Little, senior investment advisor at Blue Oceans Private Wealth. He says his long history working through other times of economic crisis has kept his clients relatively calm – and even optimistic – over the past week of severe uncertainty.
“My clients have been with me a very long period of time, and I think I've got them educated well enough that short term fluctuations in the market like this,” he said. “Most of our clients realize that that there are opportunities when we see things like this, because it's not a systemic problem. It's a self-inflicted wound by the United States administration, so I don't really get a lot of panic in my client base.”
To explain Blue Oceans’ strategy going forward, Little says he is holding a town hall with his clients. While this town hall is focused on the current market challenges, Little also holds more regular meetings to maintain close engagement with clients throughout the year.
“If you have a legitimate game plan that you can express to people so that they can understand that game plan, it does take a lot less stress out of the situation when people see their portfolios go down,” he said. “I have four or five talking points about what is our strategy, what's our principle, what's our process? And it does help people to know that I've gone through this, my first market crash was 1987, I've been in the seat all those years. And it always proves that these are opportunities that present themselves.”
While most major markets were down over 10 per cent in the last week, Blue Oceans has only dropped 6.8 per cent, an indication to Little that his long-term strategy is functioning effectively. He has also kept clients’ cash – most 10-15 per cent, but some up to 75 per cent of their portfolio – as he waits to find the right opportunity. While some of his clients have been eager to invest their cash as markets climbed in March, Little says his patience has allowed him to keep his clients options open.
After the 2020 plunge in oil prices where barrels went into the negatives, Little bought into the sector for his own portfolio, a move that paid off handsomely in the long run. He sees today’s market tumble as a similar opportunity, viewing a bounce back in years rather than months.
“You saw companies in Canada, in the US that I bought for my own personal portfolio. These were $35 or $40 companies that I was buying at under $2,” he said. “Because I knew this was a mispricing, and what that company was going to be worth in three or four years, not what is it going to be worth in three or four months. But I do know that if you have the right way of valuating companies, you can see that's a company that's mispriced.”
With a primarily retirement-age client base, Little emphasizes the importance of a “paycheque portfolio,” with long term investments that pay out high dividends or interest. He says clients’ portfolios often have a quarter of their assets in fixed interest. Little has also remained bullish on most Canadian assets outside the oil sector, instead looking to small and medium cap US and global market stock.
“When you're retired, you can't make those mistakes because they're costly,” he said. “They will cost you on the back end of whether you've had enough income to support yourself until your final day is here. So you have to be a lot more long-term in your viewpoint.”
Trump’s trade policies have seen creeping pushback from influential Republicans, a trend Little sees as a ray of hope to combat the administration’s unprecedented global tariffs. He is also keeping an eye on the impact Democrats could have if they take control of the Senate or the House in the future.
“I think, being self-inflicted, like this has been, we're thinking that some of the Republicans are going to push back on some of the things that he's doing,” he said.
