Tariffs and Time Part 2

Hi All,

Further to my email last week there are a few more items to lay out on volatility. There are two other things not being taken into account right now.

1: Tax-Loss Selling:

Many of you may recall almost every October/November, except last year, I put an email out about tax-loss selling. When you sell an asset for a gain you must pay tax on that in the calendar year you are in, yet with a capital loss you can go back three years to offset previous gains and/or carry forward that loss indefinitely. You cannot re-purchase that position for thirty days though to lock-in the loss.

That said, I believe we are seeing heightened volatility right now with this added reason to sell assets at a loss and to also take profits on last year's gains and not have to pay tax until next year's filing now that we are in 2025. I often explain to try not to ascertain why some positions are acting so insane at that time of year, and I think we have moved that season to now, along with the piling on of trade issues we are facing.

For example, Capital Power (CPX) gained over 70% in 2024 as it went from $36.05 to $63.72 in 2024 ( we sold some at 60.92 in Dec to take profits). Today it sits at $45.46 (as of March 10, 2025). As we all know power needs have not changed with trade wars and the need for more power will likely be very high in the coming years. CPX should be a leader with the amount of natural gas generation they have and also the growth they have in the U.S. Capital Power

It is down over 28% ytd. Should I panic and sell it? Is that because we need less power or your prices have dropped on your bill? I believe they have some margin compression due to higher gas prices and maybe less activity in the data center hype, but should I sell it because of a trade war and short-term volatility? Is some pension fund or hedge fund trying to make you sell it to them at a discount while they wait 30 days to buy it back again?

Today's report on CPX shows it scores a 10 out of 10 (Source: LSEG Stock Reports Plus). This is just a taste of what we own. I do not think I should be selling it, do you? I should be buying more but have to have an asset to sell to do so. Should I sell ENB or CLS? CLS only scores 7 (Source: LSEG Stock Reports Plus). It has gone down 50% in the last 3 weeks yet I do not see any changes in the data center build out ahead. Data Centre Spending

I would love to have sold CLS three weeks ago and bought it back today, but my crystal ball did not project that pullback. What I do know is once all this nonsense is over with trade wars we will get back to fundamentals.

2: Earning season ended in February:

When Is Earnings Season?

Every year you see more volatility when the news takes over instead of company earnings. The Canadian banks usually "close-off" the earnings season and that was just at the end of February. And boom! Here we are 2 weeks later and there is nothing left to talk about except trade wars. This too will be the chatter when earning season ramps up in a month or so again and I think many companies we own are well-positioned to handle these issues. We are close to 20% weighted in Real Estate. Almost 15% utility-like stocks. Along with almost 4% in PEY which is a natural gas play with an 8.6% yield, where I think we will need more of as energy needs continue to be an issue.

This trade war has put us all on edge. We are aware of the issues and aware of the volatility it brings. I am also aware that this is not a Black Swan event, and many people think it is. It is man made and can just as easily be changed in one press release. We cannot panic while waiting on edge for the news.

I will reiterate, as things pay out in REAL-TIME, we will adjust to things like the VXX, or TLT, etc., if needed. We should be buying more while things are beat down and many of you know that, you just hate to hear it as we feel, as humans, we must fix what we perceive to be broken, when in fact companies like CPX are not broken at all.

Cheers

Steve

This information has been prepared by Steve Switzer who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.