Monthly Archives: May 2016

A Walk along Risk Road #3 — The Disruptors vs. The Disrupted

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Cameron Webster

By Cameron Webster, CFA

Institutional Portfolio Manager, Mawer Investment Management Ltd.

Special to the Financial Independence Hub

At Mawer, we spend a great deal of time asking and answering the question: So what? A company’s share price is down 6% … so what? A central bank moved interest rates up … so what? Google re-named itself Alphabet … so what?

It’s not always an easy question to answer and often leads us to ask even more questions in an effort to develop key investment insights.

“So what?” is one of the questions that can lead us to investment action (or inaction) in our process of building well-diversified, resilient portfolios. In an effort to pass on our “so what” learnings, I interviewed our Chief Investment Officer, Jim Hall, with specific questions pertaining to his views on risks in the current environment.

Cameron Webster: Jim, we decided at the conclusion of our slow growth world discussion that we’d address technological disruption. Let’s get into the “so what?” of it. What is technological disruption?

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Jim Hall

Jim Hall: It’s many things. It has happened in many industries; rail to auto, telegraph to telephone, typewriter to word processing, CD’s to online music. Of interest to me is where an innovation ends up displacing a whole industry and the ones that support it—and sometimes changes society too.

For example, take e-commerce and the sharing economy. Companies like Uber and Airbnb are changing the economy in significant ways through the application of technology. These companies are growing very fast and they are stealing business from other companies. This may lead to lower growth overall, at least temporarily. That’s the disruption. This dynamic has been around a long time. Clayton Christensen called it “disruptive innovation” and John Maynard Keynes called it “technological unemployment.” Many people have written and talked about the consequences of structural economic disruption over the years—and many are fretting about it now.

CW: How does the disruption manifest itself? Continue Reading…

Four secrets for overcoming Student Debt

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woman-570883_960_720By Barney Whistance

Special to the Financial Independence Hub

According to the Federal Reserve Bank of New York, 43 Million Americans have student loan debt. Recent graduates have the highest amount piled up, roughly $35,000 each, which means that monthly payment installments are around $350 – money that could be put to better use elsewhere. Here are the best ways to get rid of student debt, without even having to pay it.

1.) Be helpful. Volunteer opportunities are a great way to positively affect your larger community, while also helping pay down your debts. Volunteering also creates lots of tangible and intangible benefits. Find opportunities that will waive off your student loans, while you’re serving the community.

Some of the organizations where serving will help you waive your student loans are AmeriCorps and Peace Corps. They not only help you get your student debt waived, but they also pay you a modest living stipend and health benefits as well. If you are willing to join AmeriCorps or Peace Corps only to get your student loan waived off, make sure you qualify for their specific types of student loan waivers.

Other options include ZeroBound and SponsorChange:  both programs that connect donors with recent graduates to help pay down their loans while volunteering. Taking advantage of the Military Loan Forgiveness Program, part of the Public Service Loan Forgiveness program can also pay off debt while providing excellent long-term career opportunities.

2.) Work it out. Certain professionals qualify for a 100 per cent loan waiver through the Federal Perkins Loans Program. Continue Reading…

Stop making investing mistakes, avoid junk science

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Steve Lorie

By Steve Lowrie, Lowrie Financial

Special to the Financial Independence Hub

You probably first heard this classic joke years ago. Maybe you even laughed at it once or twice:

Patient: “Doctor, doctor, it hurts when I do this.”

Doctor: “Then stop doing it.”

Yes, it’s silly … and yet wise. We’ve all been known to ignore what is painfully obvious, especially as investors.

For example, even though we know it’s a mistake to buy high and sell low, there’s ample evidence that this is exactly what most of us end up doing anyway. In “How Investors Leave Billions on the Table,” Wall Street Journal columnist Jason Zweig shared a litany of analyses on how investors lose available returns through hyperactive trading. Zweig published his post in 2013, but human nature hasn’t changed, so the stats undoubtedly remain relevant: We’re hard-wired to trade at all the wrong times.

Why we make mistakes

Continue Reading…

Can you put the number “Trillion” in context?

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Money background with US dollars, British pounds, Lithuanian litas and Zimbabwe hundred trillion dollarsBy Ian Campbell

Special to the Financial Independence Hub

I recently had dinner with the owner of a large, successful U.S. family business. Between the main course and dessert he asked me for my thoughts on the U.S. presidential race and economy in the context of family businesses.

When the conversation turned to existing and prospective government debt I asked him if he had ever put “a trillion” in context. He certainly could identify with “a million.” We were having dinner in a house worth at least that. He knew “a billion” was “one thousand millions.” He also knew “a trillion” was “one thousand billions.”  But in terms of comparisons that he could identify with, the best he could do was say that “a trillion” was a humongous number.

About the word trillion and its meaning

“Trillion” without context regularly rolls off the tongues and pens of politicians, economists, executives, and lots of others. So I gave my friend the following comparisons to think about. His reaction: one of real shock at just how big a number “a trillion” is. Continue Reading…

Millennial Wrap: Budgeting while living abroad

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The Hub’s Millennial blogger teaching ESL in Hong Kong

By Helen Chevreau

Hub Staff

As a millennial living abroad, I am constantly discovering new challenges that I’m supposed to overcome with a smile and a positive attitude. Creating and keeping to a budget while I’m on the other side of the world, it turns out, is one of those challenges.

I suppose this is really a challenge that every recent graduate is facing — whether at home or away. When the learning curve is so steep in every other aspect of life, though, it can often be a bit more difficult to feel financially stable while abroad.

How to budget in expensive Hong Kong

After teaching english at a learning centre for a year, I’ve now begun volunteering for a grade 2 class at an international school here in Hong Kong, where the kids are learning about how to use similes in poetry. As I was sitting in class listening to the children share their similes, I found myself envisioning a poetic simile of my own.

Depositphotos_10524892_s-2015 Continue Reading…