Cutting Through the Noise
October 18, 2011
China, India and the other emerging economies will grow considerably faster than the developed world over the next ten years. That statement appears to be as close to an economic certainty as anything we can say today. Does it follow then that any...
Read MoreOctober 15, 2011
I’ve written in the past about the tension between the investment profession and the investment business. As asset managers, we need to find a balance between managing portfolios to achieve the best return for our clients, and making a profit for...
Read MoreOctober 12, 2011
In preparing our Quarterly Report, I compiled some numbers that speak for themselves: Global stock markets had their worst quarter since Q4 2008; Greece was down 42%. Italy, France and Germany were all down 25%. Canada was down 12%. Japan was...
Read MoreOctober 11, 2011
It was an ugly quarter for stocks, with most major markets suffering double-digit declines. The bond market, on the other hand, had its strongest showing in 15 years (government bond yields now stand at levels not seen since the 1940s). Our funds declined, but held up better than the market. Their focus on high-quality, non...
Read MoreOctober 7, 2011
We write a lot in this space about investor sentiment. Art Phillips, the founder of Phillips, Hager & North, taught me to pay attention to the mood of other investors. Like every tool, sentiment is not a failsafe indicator, nor is it a precise timing tool. It is, however...
Read MoreOctober 3, 2011
Dan Hallett published a piece today about mutual fund fees and how they compare to the U.S. It puts some meat on a topic that so far has been laden with hyperbole. Management expense ratios (MERs) are a lot higher in Canada, but as Dan points...
Read MoreOctober 1, 2011
“In calmer moments, investors recognize their inability to know what the future holds. In moments of extreme panic or enthusiasm, however, they become remarkably bold in their predictions: They act as though uncertainty has vanished and the...
Read MoreSeptember 28, 2011
Below is an internal email from Chris Stephenson today. It wasn’t meant for public consumption (it’s an email, not a blog), but Chris is OK with me doing this. With David’s experience with the [un-named fund company] rip-off, the Globe article about $1,305...
Read MoreSeptember 26, 2011
"The risks are the usual: what you don’t know; what you’re not thinking about; probably the biggest risk is what you are 100% sure about.” Bruce Berkowitz, Fairholme Capital Management, in a speech at Columbia University earlier this year...
Read MoreSeptember 22, 2011
The CBC woke me up this morning with rain warnings (Is summer really over?), big stock market declines and the voice of Finance Minister Jim Flaherty. The rain and markets didn’t get me too worked up, but I found the minister’s attempt at optimism...
Read MoreSeptember 21, 2011
I was talking with a client last week about portfolio re-balancing and the challenges of volatile markets. I often tell the story of Bob Hager’s shaking hand to illustrate how hard it is to do the right thing when markets are down, but his story is just as good at bringing the...
Read MoreSeptember 19, 2011
The passive (indexing) vs. active management question is a polarizing debate, but it shouldn’t be. The bottom line is that both strategies have merit when they’re done right. As Morningstar USA’s President of Fund Research (Don Phillips) notes, credible...
Read MoreSeptember 17, 2011
“Isn’t it funny when you walk into an investment firm and see the financial advisers watching CNBC. It gives me the same feeling of confidence I would have if I walked into the Mayo Clinic and the doctors were watching General Hospital.” This little...
Read MoreSeptember 15, 2011
Wil Wutherich, the manager of our Small-Cap Equity Fund, is in town this week on a research trip. We booked an afternoon of his time to discuss the fund. Since we've covered his investment process in previous sessions and his philosophy is well documented on our site, Tom sat down with him to talk stocks...
Read MoreSeptember 13, 2011
‘skin in the game’ … ‘eating our own cooking’ … ‘co-investment’ … ‘manager-client alignment’ … These are all phrases we use to describe our commitment to clients and the desire to have our interests closely aligned to theirs. This alignment takes many...
Read MoreSeptember 12, 2011
As a kid, my family and I used to go on a summer holiday every year to Savary Island (a small island about 200 km north of Vancouver). It’s a bit of a hidden treasure, with white sand beaches, warm waters and an abundance of shellfish. There was no electricity, few cars and fewer rules (don’t bury your sister and be home for dinner). We loved it. I was back on the Island this summer and few things have...
Read MoreSeptember 9, 2011
"The stock market has forecast nine of the last five recessions" - Paul Samuelson (Nobel Economist)
Read MoreSeptember 7, 2011
We often remind our clients that they don’t need to do much once their portfolios are set up, as our managers do most of the heavy lifting. While it may sound like lip service, it’s a phrase that carries weight. In times of heightened volatility, such as the past two...
Read MoreSeptember 3, 2011
I got turned on to finance while stumbling through my MBA at the University of Western Ontario. I suddenly found myself reading Report on Business right after the Sports section (go figure). When it came to finding a job, I got lucky. There weren't many...
Read MoreSeptember 1, 2011
Last month we introduced Bruce, a forty-something investor with a balanced portfolio (tilted towards equities). Bruce spent the last three weeks of August on vacation and tuned out the noise in the markets as best he could. The single malt helped. While catching up on his reading this week, however, he came across two pieces by Tom which encouraged him to make an adjustment to his portfolio (What Now? Part II and When Fear Rules the Market, it's Time to...
Read MoreAugust 26, 2011
It was announced this week that Vanguard will start in Canada with 6 ETFs. In response to the news, blogger Michael James expressed disappointment that the 2 foreign equity funds would be hedged back into Canadian dollars. I wholeheartedly agree with his view.
Read MoreAugust 25, 2011
Tom was on BNN this morning discussing how we think about asset allocation and portfolio positioning in volatile markets. It’s all about being ‘approximately right’ rather than exactly wrong. In other words, you’re never going to pick the top or bottom of...
Read MoreAugust 24, 2011
Nalco, the world’s leading water treatment company, recently entered into a merger agreement with Ecolab (a provider of cleaning, food safety and infection prevention products and services). CGOV, the manager of our Equity Fund, sold the stock...
Read MoreAugust 21, 2011
In light of the recent weakness and volatility in the stock market, both statements are particularly poignant. It’s easy to agree with the logic and simplicity of Warren Buffett, but not so easy to behave like him. My former partner's shaking hand reinforces...
Read MoreAugust 16, 2011
One of the richest men in the world wishes he was taxed more. Warren Buffett paid $7 million in federal taxes last year, which equated to 17% of his taxable income. Surprisingly, this was the lowest rate of any of the 20 employees in his office. In a...
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