Mirador Portfolio Management Update for the Third Quarter of 2025

Dear Friends and Clients,

It has been another good quarter for new clients joining Mirador so I will start off this letter by again welcoming all our new clients to the Mirador family. Thank you for placing your trust in us. We will always do our best to provide you with high income and comfortable stability. Joyce & I will always be just a phone call away if you ever want to talk. This letter is somewhat different and longer. We want to get back to more of the data-focus that really defines our investment style. I hope you find it more comprehensive and helpful in knowing what’s happening with your precious nest eggs.

This latest quarter has been characterized by a high degree of stability. Hopefully this is not the “calm before the storm”. Out here, where I live as close to the land and nature as one can, I have seen this in real life. The wind dies down, the birds get quiet, the goats and pigs make their way to their shelters,,,,, and then bam!!! Over the hill comes that dark cloud that drenches the land. That tends to be the way I think, so be comforted that as a risk manager, despite how calmly and well things have been progressing, I continue to be suspicious and I am ready if this autumn turns into one of those awful times we have experienced before, when that dark market cloud comes along, I hunker down, and I get to do my risk management magic. But until then I continue to do what has been working well for so long.

The broader world stock markets continue to be driven by large capitalization technology companies. This dominance has occurred for quite some time now, and the numbers are starting to be reminiscent of the late 1990s when the major indexes had much of their value in only a handful of technology companies trading at lofty valuations. This technology dominance is being driven by the growth in Artificial Intelligence and the related increased demand for semiconductors and associated hardware. From where I sit, it looks like there is some room left for this trend to continue because there seems to be a second tier of companies taking over the momentum of the initial companies like Nvidia, and they may carry the overall trend further.

A very recent development has been a momentum increase in large-cap pharmaceuticals. This has been triggered by deals with the Orange Man to have tariffs reduced if drug pricing concessions are made. The U.S. Mirador Income and Stability program will be adding some key Equity Income positions from the pharma sector with very attractive dividend yields and dividend growth potential.

In Canada, the technology and pharma developments are not a significant factor because Canada does not have much presence in these sectors. In Canada technology represents approximately 10.5% of the market whereas in the U.S. it is around 35%. And just as important is that Canada has miniscule exposure to the key technology subsectors driving current trends which include semi-conductors and servers. Instead, Canada is seeing huge growth and outperformance due to precious metals. Starting with Golds, and then more recently a stunning parabolic move in silver. And just in the last number of weeks I have been observing increasing momentum in base metals, especially copper. The Mirador Income and Stability programs have participated in all these moves via the Premium Plus covered write programs. The capital gains & call premium income have been wonderful.

Portfolio Stability Data

2025 Greatest Drawdowns as of Tuesday September 30th, 2025

The most important measure for risk management is drawdown. Drawdown is the percentage measure of the decline from the most recent high for a portfolio, index, or security. By reducing drawdown, we make life more comfortable so our clients sleep better, and we ensure that we have more capital intact for when things improve, which allows us to recover more quickly when the good times return.

2025 High-Water Marks (HWMs) as of Tuesday September 30th, 2025

There is little benefit to less drawdown if we are not also providing new high-water marks when the markets are positive. A high-water mark is an all-time new high for a portfolio, index or security. HWMs don’t completely indicate performance, but they do measure positivity and consistency which is helpful when combined with the rolling return numbers that follow later in this letter.

Standard Deviation as of Tuesday September 30th, 2025

Statistically, standard deviation is the square root of the variance. Variance is the spread of a data set from an average and uses the squared value of the spread. Standard deviation is one of the most suitable and common measures of volatility or consistency in data sets such as the weekly returns for a portfolio or index. The lower the standard deviation, the lower the volatility, and the more consistent and stable the results are. The following table shows the standard deviation of Mirador’s benchmark, the benchmark components, and the Canadian Mirador Income and Stability Fund:

Portfolio Income and Results Data

Current Income Picture as of Tuesday September 30th, 2025

Stability in your portfolio value is a key goal of our work so that you remain comfortable with your investments and so that we preserve your capital as well as possible. But, high income is the key result for our investors who depend on the cashflow from their capital in order to live their best lives possible. Income is best expressed in annual percentage terms. The following summarizes the annual percent yields on some comparative income alternatives along with the Canadian Mirador Income and Stability Fund.

Rolling Return Data as of Tuesday September 30th, 2025

As you might recall, just like draw-down is the most important risk measure, rolling returns are much better for examining results (versus calendar defined periods). Rolling returns are simply the returns for a time period specified prior to the stated “as of date”.

Data Notes: The benchmark is 40% XBB, 30% XIU, 30% SPY

Summary Comments on the Above Stability, Income, and Overall Results Data

• Mirador’s drawdown has been the least this year by a significant amount in all comparisons
• We have the highest number of HWMs so far this year
• Our volatility (standard deviation) is significantly lower than all comparisons except for bonds
• Mirador’s income is substantially higher than all the comparisons
• Our income is very tax efficient (approximately 9-10% interest equivalent)
• We are on track to meet our 7.5% distribution for 2025, and like last year, there is a good chance it might be exceed the annual rate with an additional year-end bonus distribution
• We are projecting a 2026 distribution of 7.5% again
• Because the unit value has increased, this 2026 distribution projection would represent a 7.4% increase in annual cashflow based on the September 30th 2025 unit value
• Our shorter-term rolling returns have underperformed due to our high energy allocation which has underperformed recently. The most positively performing sectors like gold, base metals, pharmaceuticals, and technology do not have good enough dividends for our Equity Income program so we can only buy these in Premium Plus. Many of our Premium Plus positions in these sectors are in the money (price>strike), so further gains in those positions are not counted in valuations. Soon I may be rolling up the strike prices and rolling out the option dates to create additional income and more gain potential. Despite this short-term lull, we are well positioned for what the data seems to be indicating for the near future

Current Subsystem Allocations for the Mirador Income and Stability programs:

Sector Allocations for the Mirador Income and Stability programs

Subsystem and Sector Allocation Comments

The Magic of “Auto Rebalancing” Although a comparison to last quarter’s numbers makes it seem as though little has changed between the relative quarter-end allocations, a lot happened during the quarter because the different subsystems grew at different enough rates and that led us to perform considerable rebalancing. This is one of the beauties of our process for our subsystem and Market Exposure allocation process – to keep all components in balance, we end up taking the profits from outperforming areas and allocating the proceeds to lagging areas. This has a good impact on diversification, portfolio stability, and realized gains for enhanced distribution potential. Last quarter we:

• Added to Fixed Income Preferred to maintain its percent allocation
• Increased Premium Plus because the market increases shifted us to a less bullish stance
• Reduced Equity Income to allocate more capital to fixed income preferred shares and Premium Plus

Please note that the above energy sector allocation includes nuclear, alternative / green energy, energy infrastructure, pipelines, and oil and gas companies. Based on relative strength and relative income analysis, last quarter we shifted sector exposure more towards:

• pipelines
• precious metals
• base metals
• real estate

Seasonality, Market Psychology and Sentiment Factors

Those of you that have been with Mirador for decades will remember how seasonality can be a factor. The Bloomberg Professional Terminal subscription allows us to monitor seasonality, and I have used their Graphical User Interface to do this for over 16 years. Seasonality has less of an impact than it did 16 years ago, but the historic data still indicates that it is a factor to keep tabs on. There was an old saying “sell in May and stay away”,,,,,,, (and then come back in November). Well, good thing we didn’t sell in May this year! But I will be looking for clues as to whether there is a seasonal pick-up in momentum starting in November through to year end and maybe beyond.

In the 1990’s we had what we called the cocktail party indicators. If at a party I introduced myself as an investment advisor and was told all kinds of stories about people’s recent investment successes, I knew to be more cautious and suspicious. If on the other hand I introduced myself and got the response “oh that’s interesting” as they turned away, I knew it was time to invest more aggressively. The same applies today. Basic human nature does not change significantly. But today, I gauge this contrarian sentiment more based on social media posts, emails, and the mainstream media articles I am seeing.

And this is what I am seeing in my sources of market sentiment recently. As an income and stability portfolio manager, Mirador has participated more greatly in the recent bull markets than one might expect. We are having a good run. But we genuinely add the most value and really earn our keep when the market party is over, the bull gets mauled by the bear, and Mirador gets to work its magic keeping your portfolio more stable by reducing your drawdown.

Recent Theme(s) - Momentum Fades

With investing, think of momentum as the percentage rate of price change over time. The direction and duration of momentum determines the trend. For conservative income-oriented investors like we are at Mirador, it is the trend that is most important. And the changes in momentum can provide clues about the trend and trend changes so that we are better able to respond in a timely manner to protect the portfolio from possible adversity, or to take advantage of possible positive opportunities.

Overall stock index momentum is declining. Prices are decelerating,,,,,, not enough to change the trend, but enough to take note and become prepared for a possible negative trend change. Like my comments above on Mirador’s Auto-Rebalancing subsystem process, the Market Exposure allocation process automatically adjusts between Premium Plus and inverse index ETFs. The following is a tabular representation of the auto-adjusting nature and principles that are the foundation Mirador’s Income and Stability program’s Market Exposure system:

Other Data We Watch Closely

Yield Curve

The curve has continued to steepen. The U.S. finally dropped the short rates, driving the short end of the curve down. Initially the longer end increased but then it settled, but the steepening remains, just less so. This is a very good sign for the business activity that makes the economy grow

Currencies

Despite reasonably strong commodity prices, the Canadian dollar has weakened. This is mostly attributable to Canada’s relatively low short term rates causing capital to seek better rates with comparable risks in other countries. It may also have to do with macro concerns about the new leadership’s commitment to infrastructure catch-up and general support of the economy.

Earnings

The revenue and earnings on both sides of the border were surprisingly good last quarter from both a growth and surprise perspective.

On the Personal Side…

Joyce is working on your Q3 reports and they will be emailed to you soon. Joyce is also busy with maintenance and winter preparation for the Kananaskis cabin, which gets its main use in the snowy times. Out here in the hills southwest of Longview we are at the maximum autumn colour impact, and it is stunningly beautiful this year. If it is your kind of thing to do, now is the best time to take that trip along the number 40 highway in Kananaskis and stop at the village for a lovely lunch. Last weekend was the first snow – a couple of inches, but it is mostly gone. I am busy getting ready for winter. I have 6 cords of firewood near the back door, and 100,000 tons of hay in the yard. Now I just need to change the oil in all the equipment, clean the fireplace flues, and haul in the other winter feeds, grains and supplements for all my four-legged friends. Jessica’s job at the Crossing Resort on the Jasper highway has gone well and she will be back home by the end of October. She is hoping to find a job at a ski resort with one of her friends from the Crossing. Emily is now busy with grade twelve making sure her marks will get her into wherever she decides to go after high school. Emily continues her time in Rugby as her team prepares for a trip to Australia next February. I continue to keep my weight low and fitness high and soon I will resume my work on music and drumming as the nights get longer, and longer,,,,, and longer!!

Once again, I have a serious request for you,

your family, and friends,,,,,

Please visit our website and read and click on it lots

Please click the link below:

Mirador Corporation

The more visits and clicks etc., the better we do on internet searches. The better the search results the more interest we get. Obtaining more new clients is the best way to keep our fees low. Economies of scale are very important now because we have not raised our fees in ages, yet all our custodial, administrative and trading costs have increased greatly. That’s it for Q3 2025. As always, phone to just say hello, or if you have any questions, comments or ideas.

Sincerely,

Stan 403-608-4664

Joyce 403-978-6798