In the second part of my review of Morgan Housel's terrific presentation at the MicroCap Leadership Summit, I share his takeaways on the remaining two historical cases he cites that can teach us a lot about investing (Part 1 here - iTunes, Google Play). In this part of his presentation he talks about State of the Union speeches and the Wright Brothers.
I have to be honest, I'm getting a bit of bro love for this Morgan Housel of the Collaborative Funds. He just keeps hitting his blog posts out of the park. I may be projecting a bit of Confirmation Bias here and I'm fine with it because go to the heart of what I do as an investment coach. I've referred to his posts many times here and I recommend you check out his blog. A lot of times, we can learn more about something when we view them from a totally different perspective. Housel demonstrates this in an excellent presentation he delivered at the MicroCap Leadership Summit where he examined 5 seminal events in history and parsed out some takeaway learning points that can be applied to the investing realm. It's a fantastic presentation full of learnings and I wanted to share them with you. It turned out there was so much insights to gain, that I had to break the podcast down into two separate episodes. In Part 1, I offer some takes on his cases involving nuclear power plants in Austria, the war on cancer, and 9/11.
Three years ago I decided to try an experiment. I setup an account with one of the big Robo Adviser firms and invested $5000 of my own money into it. My goal was to go through the process and blog about my experience and more importantly, try to find if using this type of service can generate better returns than if I did it myself or used a traditional adviser. I said that we need a good five years to really get a handle on how effective these services are compared to traditional wealth management services. Well, we’ve now crossed the 3-year anniversary of my ROBO account, so let’s take a look at how it’s doing now.
We start a new year with hope that the investment decisions we make will lead to positive outcomes, hopefully this year, but if not then at some point in the future. The year has started off with a bang as the markets around the world have surged and continue to set records. In this episode, I share the thought processes I was using that lead to my investment decisions this past month.
- Added to position in Nutrien (Ticker: NTR)
- Added to position in Imperial Oil (Ticker: IMO)
- Added to position in Spider US Financials ETF (Ticker: XLF)
- Sold shares in Nike (Ticker: NKE) for a 22.5% gain (factoring in currencies)
While my core investing ideology revolves around buying quality businesses, I also try to structure my portfolios to have exposure to certain business themes that are evolving in business. In the past, I've developed themes in the areas of water stocks, luxury/discount retail stocks, and even investing in a world of Trump. We live in a time where having the most market share does not necessarily translate into being the leader in the market. Market share is nice but if you can control the distribution channel in how products are accessed by customers, you can build a durable competitive advantage, which is something Warren Buffet loves. If you wanted to sell a product, you would need to go through the gatekeeper who would charge you a fee to get into their operating system (OS) or ecosystem. Traditionally that would have been a department store or some kind of physical retail store in a mall. This is changing. The distribution channel in the 21st century has become online. The Internet.
Whoever can offer a compelling online platform/ecosystem/operating system will have a durable competitive advantage as consumers will stick to and out of convenience be loyal to an operating system. Consequently, the stock market will put a premium on those companies that own the OS for a specific sector or industry.
In this podcast, I set out to try to figure out who the next great stocks are or could potentially be the companies that will own the OS for the Pillars of Companies I often refer to when I try to figure out what stocks to buy.
Over the last 20 years the biggest disruptor in investing has been technology. Technology has enabled more people to access investing services in variety of ways from executing trades, to accessing investment research, to tracking the status of their investments in real-time. It has also lowered the costs of investing. At the same time technology has also enabled some bad investing behaviour. In this episode, I offer some hot takes on how a new service by one of the leading online brokers could potentially enable investors to engage in behaviour that could negatively impact their portfolios.
At first I thought this podcast was going to go into a full rant on the investment industry but the more I thought about it, the more my frustration is not with the industry but with individual investors. Some recent surveys about investors engagement have revealed some worrisome trends especially in terms of reading their investment statements. This despite recent changes that have mandated investment firms to be more transparent in how they present financial results to their clients. In this episode, I throw down some takes and issue a call to action for investors to get more engaged in their investments.
One of the values I feel strongly about as an investment coach is that I practice what I teach…and be transparent about it…good AND bad. It’s one thing for me to coach people how to make better decisions and develop and teach courses on how to buy and sell stocks and ETF’s. It’s another thing to model the behaviour. Throughout the year I’ve shared and tweeted (#trade2017) with you the investment decisions I’ve made throughout the year. Well it’s that time of the year where we set scroll down the page and see what I what I did right AND more importantly what I did wrong (and believe me I did some stuff I'm not happy about)…and did I gain any insights that will help me become a better investor?
I came across this wonderful blog post by Morgan Housel of the Collaborative Fund where he shares his take on the 4 most important fundamental investing skills. It's a fantastic article (I've read 5 times already and I'll probably read it another 20!) in that it really reinforces a lot of the principles and ideas I've tried to develop in people who are getting into investing. In this episode, I review his article and offer some additional takes and perspectives.
I thought I would be done speaking to this passive investing (sorry I mean low-cost investing) versus active investing debate for while, but it just keeps pulling me back in!
After my recent episode where I tried to bring a bit of a reality check into the whole passive/low-cost investing, another revelation has been presented to us. This time by none other than Vanguard, one of the pioneers of low-cost index investing. Recently the company said that they would be releasing a new line of actively managed ETF's.
Wait...what! The company of John Bogle who has been firm, consistent crusader for index investing is now changing teams and going to the Dark Side?
If this is really going down then Bogle will join other passive-investing ambassadors such as Burt Malkiel and Rick Ferri, who have pounded the table (and sold a few books) about the virtues of low-cost index investing and now seem to be OK with the concept of picking stocks.
In this episode, I offer my takes into the latest passive investing flip-flop.
When I started my consulting business, my main work centred around doing investment analysis on Canadian stocks and companies. My main motivation at the time was that it was very hard to find credible, independent, and unbiased financial analysis. Back in the mid 90's, the investment industry was rife with conflicts of interest. Investment reports was more of marketing copy for investment banks to promote their IPO's. Sell recommendations were few and far between. It's been almost 20 years since that insanity. Some regulations were introduced after the Dot Com, Nortel, and Enron meltdowns. Has anything changed? Is investment research better now? In this episode I share some recent stats that appear to show that investment analysts continue to shoot blanks.
Passive investing has been the rage as more and more money has shifted away from traditional actively managed portfolios to portfolios that track broad based indexes. There's enough evidence that it can be an effective strategy, but is a passive strategy really that passive? When you look underneath the hood of ETF's or index funds, there is really not much that's truly passive about them. A lot of it has to do with the indexes that the ETF's are tracking and benchmarking to. It has changed how I look at passive oriented products and I will refer to them in the future. In this episode (iTunes), I'll take a deeper dive and try to give the straight, honest sh$t about passive ETF's and index funds.
October was pretty active month for investment decisions, especially as the market continues to surge and set records on an almost daily basis. Because of this I had to break up this post into a couple of smaller posts. In this first of a 2-part series, I share my thought process that I was going through with several investment decisions that involved buying more stock as well as a decision where I decided at first to hold my position but eventually I decided to sell and incurring a loss.
The essence of my coaching practice is to teach people to make more successful investment decisions. Investing is about making decisions. Should I buy, sell, or hold a stock or ETF? At face value, successful investment decisions are a product of improved education of the mechanics of investing as well as continuous engagement. This is great however it does not on its own lead to making consistent successful investment decisions. There is another level of thinking that needs to go into the process and the great investors incorporate this level of thinking into their investment decisions. In this episode, Aman shares some insights into what is called Second Order decision making, which can when practiced consistently and implemented within an investment playbook can improve the probability of making successful investment decisions.
This episode is a total going down memory lane thing. 99 episodes ago, I dared myself to prop up my phone, open up Periscope and put myself out there for the world to see me um and ah'ing my way to babbling about investing. I thought I had maybe 3 clips of 3 minutes before I would run out of things to say. Somehow though, I was able to do it for a year before a colleague suggested that I try podcasting which from what I knew was a pretty labour intensive project, however it turned out the mechanics were much easier than I thought and the practice of doing Periscope videos gave me both a library of content as well some confidence. The next thing you know, I'm knocking on my 100th episode of Stock Talk. I honestly cannot believe and I honestly cannot believe the response since I switched over to podcasting from Periscope. It's been quite astonishing. So as I knock on the door to episode 100, I decided to look back on some of my favourite episodes and also some of yours based on your feedback. Thanks to all for your support. More to come!
It appears that central banks around the world are either engaging or leaning towards increasing interest rates. At a first level thinking, rising interest rates spell trouble for stocks in the short to medium term, however as we've been living in a prolonged era of excessively low interest rates, an increase interest rates is actually a welcome event in the long term. In this episode I share my thoughts on why higher interest rates are a welcome tonic for free market economies.
Since the financial crisis of 2007-08, there has been a big proliferation of dividend oriented investing strategies. There is vast inventory of material that has been shared by many that have benefited from adopting an investing ideology of investing in stocks that pay dividends. The two main drivers for the popularity of dividend investing has been uber low interest rates that has forced investors to seek riskier investment opportunities and secondly, just a basic fear to protect what's left of their savings. This is all well and good and I always say that there is no single investment strategy that rules them all, however what concerns me is that simply adopting a strategy of investing in dividend paying stocks can give people a false sense of security. In this episode Aman gives us a crash course on what dividends are all about and while they are a welcome source of extra income for investors, they can still expose investors to risks.
For some reason, we tend to gravitate to making decisions that are complex rather than going for a more simple elegant solution. We find the rational and thought process that incorporate words we've never heard of, lengthy math formulas, and fancy charts to be the validation that we need in order to take our investments to the next level. In the investment industry this is quite evident in the types of portfolios that financial professionals design for their clients. The reality is a simple portfolio of low cost baskets of assets are suitable enough for most investors, but for some reason, we never see these type of portfolios created. Why is this? Well Alan Roth penned a piece trying to figure out why the investment industry struggles to keep portfolios simple. In this episode I speak to this and offer some takes.
Young people, especially millennials appear to be always coming under some element of criticism, be it a lack of motivation and excessive coddling among other things. Now a paper by finance professor claims that people who start investing in their younger years are predisposed to make bad decisions. In this episode Aman offers his takes on this premise and wonders if youth and investing are indeed a toxic mix?