With Emerging Market stocks taking a hit, I thought it would be a good time to explore building up a position in the sector. In this episode I evaluate several ETF's to determine which would be an appropriate one to add to my portfolio.
It’s a golden age for investors. Never at any point in history has it been this cheap to get into investing. Management fees and trading commissions have been falling over the past 20 years, thanks mostly to technology which have improved speed and efficiencies of transactions. In the last year or so, the competition over lower fees has been quite intense with ETF companies like Vanguard and Blackrock going back and forth lowering fees to almost zero. This has trickled down into traditional investment products like mutual funds which have lowered their fees, albeit less aggressively. Well the race to the bottom in fees has reached a new level.
Free. As in nothing. Nada. Rien.
It’s a great time to be an investor. Eliminating a focus on fees can allow more due diligence on the investment itself, however I’ve been wondering if these products and service offerings are really free and is free in the grand scheme of things a good thing for investors? In this episode I dive into the the illusion of free that the investment industry has been pushing on us.
In Part 1, I shared some thoughts on a recent report by the Ontario Securities Commission (OSC) outlining the challenges the financial services industry is having in getting Millennials to invest. The OSC report had a great opportunity to address those investing pain points, but like so many financial literacy initiatives, the messaging is not clear, consistent, and understandable. The report identifies solutions, yet they are separate and not integrated and use a lot of industry jargon that people just won’t connect with. They emphasize processes over results. What is the outcome we want Millennials to achieve with investing?
In this episode, I’d like to share from my experience as Investment Coach and as someone who works with people to develop their investing competencies, some ideas that I found have better motivated people and not just Millenials into become more engaged with investing. They address the pain points people have with expressed about investing which include; being scared of investing, feeling overwhelmed by the process, feeling paralyzed when trying to make a decision, and not knowing how to start and take that first step. These are my takes and perspectives. They are by no means the most definitive and all encompassing.
My motivation in starting my own practice to teach and engage people on investing revolved around financial literacy. I thought that if I could improve someone’s financial literacy, they will have a better chance at becoming a successful investor. I was always a big supporter of financial literacy programs, especially in schools. It made sense and I thought it was the right thing to do.
The reality is over the years I’ve learned and witnessed first-hand that while noble and done with good intentions, financial literacy programs just don’t work. A revolving door of programs, a lot of them government and industry sponsored have been rolled out over the years, starting out with enthusiasm and then just petering away in obscurity. Here in Canada, we even have a Financial Literacy Commissioner that acts and cheers Canadians into becoming more financially literate, but to no avail. So much effort, again all with good intentions, has been put into improving financial literacy but it just doesn’t seem to stick.
So queue the latest attempt at cracking the financial literacy daVinci Code. A 42-page report commissioned by the Ontario Securities Commission and prepared by a dream team of consultants and personal finance thought leaders. The report attempts to answer why people, specifically Millennials are not investing and what financial institutions can do to get them to invest. In this first of a two part series, I walk through the report and highlight some of the good points as well why the industry continues to make the same mistakes when it comes to engaging people about investing. In Part 2, I offer some some solutions that I have developed from my own practice and from my own experience helping people make more successful investment decisions.
I continue on with my analysis of video game stocks with a quick dive into Take Two Interactive. They are known for their Grand Theft Auto franchise.
MGM has not been on my watchlist and I really wasn't thinking about getting into casino stocks but a recent Supreme Court decisions that essentially legalized sports gambling in the US I thought was a game changer movement that could really put gaming companies in a strong position to move. I did a quick scan and MGM appeared to be not the most producing gaming company but what drew me was management's foresight to build out sports betting platforms and services in the anticipation of the legalization of sports betting. In this episode I do a quick deep dive that lead me to the decision to buy some MGM stock.
In Part 2 of my Investment Decisions series podcasts for March, (iTunes, Google Play, podcast, mind map video) I walk through the thought process that led me to my decision to buy some shares in Big Lots.
After the mini-meltdown in early February, stock prices boomeranged and made back a good chunk of their losses. In some cases the bounce was pretty big and it forced me to make a few decisions. There were a few days where the market tanked pretty big and I used them as opportunities to open some new positions. Like the previous month, I've decided to break down my decisions into 3 parts. In this post episode (blog post), I will review my decisions to buy more shares and sell some shares. The other two episodes will focus on my decisions to buy shares in Southwest Airlines (blog, podcast, mind map video) and Big Lots (blog, podcast, mind map video).
RANT ALERT: Another annual Real Estate Wealth Expo has made its way through my home town. This year some serious star power was on display. Baseball players, Pop Musicians, and Dragons were regaling attendees and their slightly open wallets with tales of how to escape the rat race and live the 6-49 lifestyle. People leaving these events usually seem to feel they are on their way to financial independence or at the very least got a good cardio workout. Unfortunately the whole thing is a scam. My rant is not about the concept as Real Estate Expos like this are just the latest iteration of get-rich-schemes that prey upon the gullible. What got me concerned was the response by people, especially on social media.Read More
It seems any conversation about stocks these days involves something about Amazon or Apple or Facebook. I remember back in the day when it was Walmart and Microsoft that were the toast of business. Like Microsoft and Apple, they were deemed to be indestructible and now even though they are still significant businesses, they don't carry the same level of cache. What happened to Microsoft and Walmart was nothing different for most companies. Companies, especially dominant one's lose their some of the mojo or comparative advantage. In this episode I share some of the reasons that cause companies to regress. They are worthy of keeping them in your back pocket if you are evaluating any of the big companies.
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.
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.
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.