POW, Power Corporation of Canada.

It is amazing that this company has not been featured in this blog earlier. It is a very “classy” conglomerate or oligarchy created by the Desmarais family, more specifically by the pater familias, the late Paul Desmarais. He was always very well connected in political circles and was highly regarded by everyone.

     The chart is a textbook model of an EW pattern or cycle that is as yet not complete ;

pow sept 23 2016

The main assets are Great West Life and the Investors Group. Life insurance and wealth management. Both are under siege by the relentless determination of the Fed. to continue with a misplaced policy of ultra low interest rates. Life insurance because it has become next to impossible to invest policy premiums at rates that compensate for the risks taken, and wealth management because we are living in a world where everything is “macro” driven and binary. Given that fundamental backdrop it should not surprise anyone that this stock has been and will remain under pressure for the foreseeable future.

     In EW terms we are no doubt looking at a large A-B-C correction that will erase a good part of the ten or so fabulous years going into 2007. The B wave is exceptionally clear having two equal components a and c and travelling right into the level of a previous b wave within wave A. Wave C started more than a year ago and wave 2 of C is already most likely complete. That means that we are starting wave 3 of C now. It targets about $10 in another year or two which, coincidentally, corresponds quite well with the wave 4 of previous degree ( or alternatively wave 4 of 3 on the way up).

     Large chunks of stock have been sold over the past ten years or so, some of it for estate planning purposes whatever that means. We hope the family continues to do well.  Having said that we also have it from good authority that generally speaking about 70% of the wealth is gone by the time the second generation “handles” it and an even larger 90% once the third generation gets a turn at managing it.