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<v ->Financial markets in both Canada and the United States</v>

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have seen quite a resurgence

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through the second quarter of 2020,

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which we talked about quite a bit in the latest edition

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of the Canso Market Observer.

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To touch on a couple of highlights though,

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I'm joined by my friend and colleague Brian Carney,

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portfolio manager here at Canso Investment Counsel.

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Brian, good to have you.

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<v ->Thanks for having me back, Jhordan.</v>

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Good to be with you.

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<v ->Brian, I wanted to dive right in with equity first.</v>

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Again, we've seen quite a recovery in equity prices

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through Q2 in no small part

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because of the Fed's stimulus measures,

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but we've also seen a rise in the popularity

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of what I'll call the DIY investor,

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and with apps and web platforms

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that make accessing financial markets a lot easier.

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I wonder if part of this resurgence can be explained

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by market speculation,

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and what kind of impact that would have on equity prices.

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<v ->It's a great question, Jhordan.</v>

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And I would say, individuals have been speculating

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in financial markets

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since there have been financial markets.

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And today it is true that technology makes

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transacting in stocks a lot simpler than it used to be.

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It is instructive

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that during something called the technology bubble,

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20 years ago investors both big and small,

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first made and then lost trillions of dollars

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placing an order or something over something

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called a telephone.

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And so, I would say the internet provides

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an amazing amount of information,

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some of it's accurate and very helpful,

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some of it's well-intentioned but inaccurate.

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And some of it like an old-fashioned boiler room

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is designed to deceive and to con,

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and the challenge is figuring out what to believe.

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So, you're exactly right

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valuations in financial markets have come roaring back,

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in part thanks to the Fed.

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And in part, because people want to believe

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things will get better and in fact, are getting better.

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But I would say time will tell

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whether markets have jumped the gun,

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but suffice to say there's a lot of optimism built-in

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at the moment.

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So, our focus at Canso is on selecting individual companies

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that are solvent and that will survive.

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And to do this,

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there is no substitute for hard work and analysis.

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And no matter what someone says analysis is not a point,

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and click exercise.

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So, it takes time,

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and while people don't like to admit they need assistance.

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Sometimes a professional is just what you need.

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And so, I would say if your motivation

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is getting rich quick, then like diet pills

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and get a new bathroom in a day,

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I hope it works out for you.

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But I think the odds are against you.

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<v ->The odds indeed.</v>

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Brian switching gears specifically to credit.

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In Q2, The Bank of America

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Merrill Lynch corporate bond index was up over 8%

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in the quarter alone and now approaching their March highs.

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I wonder then, does that mean that the window has closed

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to find value in corporate debt?

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<v ->That's another great question, Jhordan.</v>

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And the short answer is no,

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but I'll give you a longer answer as you might expect.

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There has been a huge rally in both investment grade

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and non-investment grade credit generally.

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But I would say, it's still very early days

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in the corporate carnage.

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And as more bankruptcies

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and restructurings occur

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and recoveries to lenders

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prove to be less than previous downturns,

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we think markets are likely to take a pause.

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And so, at Canso we've been doing a number of deals

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with companies with pandemic related challenges,

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some of them very severe, Air Canada and American Airlines

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are a couple of examples.

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In those deals we have a priority position

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in the capital structure,

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and we receive appropriate compensation,

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in fact, equity-like returns.

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So, to us, these are not DIY situations.

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There are still many value opportunities out there,

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but the risk

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needs to be appropriately priced and structured.

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<v ->And as we've said many times before here at Canso</v>

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we only take risk when we're compensated to do so,

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I have that right?

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<v ->Absolutely.</v>
<v ->Very good.</v>

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Well, Brian, thanks a lot for your time.

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Appreciate having you.

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<v ->Thanks again for having me Jhordan, be safe.</v>

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<v ->And if you'd like some more information,</v>

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head to the Canso website and check out the July edition

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of the Canso Market Observer.