Tag Archives: risk

Q&A with Mawer’s Jim Hall: Deflation and rising interest rates

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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 is 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, Mawer conducts a quarterly risk review, rating macro risks on both probability of occurrence and degree of severity. I see a few with 9/10 on probability but lower severity and a few with the opposite profile, high severity, lower probability. Help us understand the way Mawer is viewing some of the broader risks at the top of the list right now.

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Jim Hall

Jim Hall: It is not enough to just look at the rankings. We need to ask ourselves is it something we need to do something about? Is this something upon which we need to act? Is it a biggie? Is it important? That’s the value in evaluating these risks on both probability of occurrence and severity of consequence.

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Should couples talk about money this Valentines weekend?

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Shape of heart from hundred dollars at red backgroundBy Josh Miszk, Invisor

Special to the Financial Independence Hub

Almost half of married couples say their investing styles differ from that of their spouses, and about one-quarter of couples fight over money, according to a BMO survey.

While your romantic Valentine’s Day dinner may not be the best time to discuss finances, most of us agree that these discussions really do need to happen between couples. Here are a few tips that will help contribute to a sound financial future for couples.

 Keep it open and honest

 It’s important for couples to be on the same page when it comes to goal planning and how you intend to achieve these goals together. Adopt the “yours, mine and ours” approach and make your finances visible to your spouse so that you both will be in a better place to plan together for the future. For example, some advisors offer a consolidated household online view of their portfolio, which provides easy access to investment accounts for each spouse. Not only does that allow you to have a more holistic view of your position, but having it all in front of you at once can make it much simpler to digest.

 Talk about your goals

Smiling couple reading menu and choosing meal
Surely they’re not reading Findependence Day for this special night out?

Finances may not seem like fun dinner conversation, but talking about your goals can be. Start the conversation with questions like “what are your top goals/dreams?” or “where do you see yourself/us in 10-20 years”? The more you have that conversation, the better you can visualize what your goals are, and the easier they are to quantify.

Once you have identified your goals, start talking about how you will achieve them. It’ll make those goals seem less like a dream and more like a reality. Taking the first steps towards achieving those goals is one of the most rewarding feelings you can get. Continue Reading…

Stock market investment advice for worry-warts

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Patrick McKeough, TSINetwork.ca

 By Patrick McKeough, TSI Network.ca

Special to the Financial Independence Hub

Many investors spend a lot of time worrying about the wrong things. In particular, they worry about things that are unpredictable. Even if they happen, these things may have only an indirect impact on their long-term profits. As a result, they have little time to pay attention to things that have a direct impact on the value of their investments. Our stock market investment advice will help you become a worry-free investor.

For instance, at times they may mull over every tidbit of economic information that comes out, and how it differs from its predecessor of a week or a month earlier. They hope to detect a pattern—a sign that the economy is mending and headed for a return to steady growth, say, or perhaps deteriorating and doomed to plunge into a new recession.

Others look for patterns or omens in domestic or international politics, or in demographic data, or in the price of gold. This can eat up an awful lot of time and no stock market investment advice out there can save you the time you’ll waste.

These investors often feel they can cut their investment risk by selling some or all of their stocks in times of high risk, and buying them back when risk is low. This never works well for long. After all, risk as portrayed in the media, and genuine market risk, are two different things. No matter how you try, it’s hard to pinpoint market turning points, if only because you have to outguess so many other smart people who are trying to do the same thing.

Why stocks imitate the traffic on freeways, not elevators’

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David Trahair’s contrarian stance: Be a loaner, not an owner

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125_Enough_Bull_High_Res_Cover_FinalBy Jonathan Chevreau

Financial Independence Hub

In this summer’s series on the 7 eternal truths of personal finance, one of the articles was entitled Be an Owner, Not a Loaner, which reflects the usual financial industry advice that stocks are more likely to generate long-term investment returns than cash or bonds.

There is of course a contrary view to this eternal truth and it’s best contained in the new second edition of David Trahair’s book, Enough Bull, originally published early in 2009, right at the bottom of the financial crisis..

Trahair, a chartered accountant and author, could as easily have titled his book Be a Loaner, Not an Owner, because he’s adamant that stocks (i.e. equities), whether individual or pooled through mutual funds or ETFs, are just too risky for the average person.

The book cover includes a small image of a bull (as in a steer), so clearly the title Enough Bull is a double entendre: as in no more bullish prognostications on the stock market, as well as no more bovine excrement, whether dispensed by the animals or financial advisors.

Skeptical about the financial industry and its central belief in stocks Continue Reading…

How to cope with stormy markets

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Depositphotos_1819942_s-2015By Adrian Mastracci

KCM Wealth Management

Special to the Financial Independence Hub

The top question directed my way these days is: “What do I do in these markets?”

Investors constantly fret about surviving stormy markets, like the present.
Rising some days then slipping on others.

For example, the Dow trimmed over 12% from its 52-week high.
Similarly, the TSX has fallen more than 14%.

Financial history repeats itself all too frequently.
Price swings of this size should be expected as normal by every investor.

The absence of global growth is felt in all markets.

Some questions

Many questions arise, such as: Continue Reading…