Monthly Market Commentary
Consequences have Consequences
January 2018
Physics is a pretty straightforward field of study. Those who are well-versed in it can accurately predict the timing of a solar eclipse, map the path of a rocket, or design the voltage of an electrical outlet. Human behaviour, by contrast, is much messier to study. Trying to predict how humans...
Bitcoin and Baseball: Evaluating the Quality of Decisions
December 2017
Moneyball is one of our favourite books. Written by Michael Lewis, it gives an insider’s view of how the Oakland Athletics’ front office made decisions about trading and signing players. As the book describes, the Athletics focused on improving their player evaluation process so...
Equity Markets Checkup
November 2017
It has been a lucrative year to be an equity investor. Unless you’ve been invested in Canada. Or Australia. Or the U.K. But other than that it’s been great! As the following chart shows, equities in emerging markets, the U.S., and Japan have all posted solid returns. Owing to our...
The Power of Incentives
October 2017
There are two ways you can get a mule to move: with a stick or with a carrot. You could punish the mule by hitting it with a stick until it moves. Alternatively, you could encourage the mule to move by dangling a tasty carrot in front of it. Either way, if you want it to move you need to provide it...
Warm and Fuzzy Investing
September 2017
We like sports. We like investing. Which is why the recent sale of the NBA’s Houston Rockets caught our attention. The sale price of US$2.2 billion struck us as an awful lot of money to pay for a team based in only the tenth-largest market of the big four professional sports (NBA, NFL, MLB,...
ETFs in a Bear Market
August 2017
Exchange-traded funds (“ETFs”) have enjoyed tremendous growth since the financial crisis. We’ve discussed this growth previously, but as a refresher, the following chart illustrates how passive investment funds have been stealing market share from funds that are managed actively....
Canadian Household Debt: What’s Next?
July 2017
Canada turned 150 years old this month. Over this century-and-a-half, the country’s GDP has grown from under $400 million to over $2 trillion. From beaver pelts and codfish to bitumen and car parts, the face of Canada’s economic growth has changed considerably over the last 150...
What is Risk?
June 2017
A question for you. Let’s say that you invested $100 in each of two different securities. Suppose you held both of these securities for five years before selling them. Over the five year period, the securities’ prices performed as shown in the following chart. Which of these two...
The Cost of Decisions
May 2017
You are currently reading this. That means there are many other things you aren’t doing. You could, instead, be exercising at the gym. Or you could be working a part-time job at a coffee shop. Or you could be writing your own blog post for an asset management firm. The world is your oyster....
When Hindsight Isn’t 20/20
April 2017
We’re wrong a lot. We didn’t anticipate the oil price collapse in 2014. We were concerned that the overheating Canadian housing market would cause widespread economic problems years ago. And we thought that United Airlines had some of the best customer service among air carriers. But...