Active Share: An Investor’s Crystal Ball? When the California Public Employee Retirement System (CalPERS), the second largest pension fund in the US, announced in late March that the fund was contemplating abandoning active investment management – i.e. strategies aimed at outperforming the market – some considered it a very telling development in the decades-long active …

There’s Value in Value Early last month Warren Buffett’s much-anticipated annual letter to Berkshire Hathaway shareholders was released. While the glossy management discussion and analysis (MD&A) pages of a company’s annual report may be “glossed over” by the market, the yearly commentary from one of the world’s most successful investors tends to garner a lot …

Active vs. Passive From a Canadian Perspective Readers of our regular investment commentaries may recall that last January we devoted some time to writing about the recent struggles of active managers. While the past few years have certainly been tough on the investment management industry, the debate over active versus passive strategies has actually spanned …

Market Indicators and the Outlook for 2013 Now that Super Bowl XLVIII is in the books and the S&P 500 was up 5.63% (CAD) in January, the markets are poised to advance further still and investors should rejoice. But, how many of you were even aware that the fate of the markets hinged on the …

The Next “Frontier” in Diversification? Diversification might be the one “free lunch” when it comes to investing. Markets that move in different directions allow a downturn in one to be offset by a gain in another, resulting in potentially higher returns and lower risks over the long term. With anemic growth rates in the developed …

A Distribution is Not the Same Thing as a Dividend It’s that time of year again.  And, the month of December is rife with dates of significance, including multiple holidays, the first day of winter and for anyone who owns a commingled investment vehicle, in other words a pooled or mutual fund, year-end distributions.  But, …

Something’s Got to Give…Better Yield Yields on North American government bonds are at historic lows and are also below the level of inflation, which means investors are potentially facing a negative real rate of return.  Flows into high-yield investments have increased dramatically as investors clamour for vehicles with better yields.  And, high yield has delivered …

Paradox of Thrift Now well into its fourth year, the European financial crisis continues to be the predominant dark cloud hanging over the investment world. While markets were recently placated by further accommodative monetary policy from the major central banks, a clear plan on how to resolve the region’s structural issues remains elusive. Last month, …

Excellent Managers Can and Will Underperform If you’ve ever invested in a mutual fund then you’re likely familiar with the disclaimer statement about past performance not being a good indicator of future returns. This language is included for good reason and is especially true when forecasts are predicated on recent performance data. Virtually every manager …

Gold 101 For a long time, gold was thought of as merely an inflation hedge. In fact, for most of the 70s and 80s, the price of gold seemed to be driven by inflation, but since 2000 that relationship has broken down somewhat. Interestingly, the recent (2001-2011) increase in price has yet to eclipse the …

All Eyes on Europe And, not just because the Summer Olympics are about to get underway in London, England. Investors are concerned about prospects for the region and share prices, as well as investor confidence continue to plunge amid fears of imminent disaster. There have been a host of meetings and conferences of key European …

Don’t Let Emotions Interfere with your Investment Plan Humans don’t always make entirely rational decisions. Studies have shown that even when logic and reasoning clearly point in one direction, people sometimes choose the opposite route, based on personal bias or “wishful thinking,” which is typically driven by emotions. This paradoxical human behaviour is especially prevalent …

Yields are Low, but Bonds Still Have a Place in Portfolios Bonds are an integral component of your portfolio that insulate it from the heightened volatility typical of equity investments and also provide a more reliable source of income.  In other words, you seldom have to worry about a double-digit loss occurring the week before …

But Japanese stocks have gone nowhere for the past twenty years! This is a protestation often heard from clients over the years, especially when other regional markets are advancing.  Why should I have any exposure to Japan?  Can’t we put those assets somewhere that is currently generating better returns?  Demographics may be weak in Japan, …

It’s Buy Low and Sell High not Buy High and Sell Low! The financial media is practically omnipresent these days, with dedicated television networks, magazines and newspapers all clamouring to deliver the most attention-grabbing stories. Be careful what you read or watch though, because it could cost you…literally.  Equity markets have staged rather impressive advances …

Active Management & Correlations Correlation coefficients offer a statistical measure of how two securities move in relation to each other, ranging from -1 to +1. Perfect positive correlation implies that as one security moves, the other security will move in lockstep, in the same direction. Alternately, perfect negative correlation means that when one security moves …

You’re Not Alone As those familiar oversized envelopes arrive in many an investor’s mailbox in the coming days and weeks, there will be some startling similarities across numerous investment statements. And it won’t just be the printed evidence of a flat or negative year for many equity products. Not only was market performance weak in …

A Distribution is Not the Same Thing as a Dividend It’s that time of year again.  And, the month of December is rife with dates of significance, including multiple holidays, the first day of winter and for anyone who owns a commingled investment vehicle, in other words a pooled or mutual fund, year-end distributions.  But, …

A Distribution is Not the Same Thing as a Dividend It’s that time of year again.  And, the month of December is rife with dates of significance, including multiple holidays, the first day of winter and for anyone who owns a commingled investment vehicle, in other words a pooled or mutual fund, year-end distributions.  But, …

BRIC Economies “MightyMighty’ in 2011 Many advisors and investors alike have touted the tremendous opportunities afforded to those who choose to invest in the emerging markets.  It would seem that much of the region’s growing popularity can be attributed to the idea that there is a link between a developing economy’s rate of growth and …

It’s not the peripheral countryPIIGS (Ireland, Greece & Portugal) we need to worry most about right now as sovereign debt yields in Italy, the world’s third largest government bond market, swelled to 6.65%. The widely acknowledged line in the sand for Italian government bonds is a yield of 7%, which marks the point at which the situation is expected to move from tenuous to unsustainable. As a point of reference, yields breaching 6.5% in each of Ireland, Greece and Portugal tended to coincide fairly closely with the onset of outside involvement and talk of bailout packages.

Investment Commentary – October 2011

US Debt Ceiling  In our view, the 2011 debt limit increase was a non-event, primarily fueled by warring political factions in Washington scrambling for votes in the next election. In fact, this was the 11th debt ceiling increase in the last 10 years. However, never before was the debt ceiling increase specifically linked to debt …