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November 8, 2019 | Too Much Cash Can be a Good Thing

Warren Buffett’s Berkshire Hathaway is invested in a lot of cash and cash equivalents, about $122 billion in August 2019. Most investment managers cannot afford to wait to invest in stocks when the market is rising, as missing out on gains upsets investors. A decision to delay investing cash can be a career-ending move if […]

November 1, 2019 | IMF Warns of Slower Growth

The International Monetary Fund cut its forecast for world economic growth for the fifth straight time this week. The IMF sees growth slowing as global trade tensions escalate and business investment is weak. The words “synchronized slowdown” and “precarious outlook” were used. Is the world experiencing prolonged stagnation? The full IMF report runs 208 pages while […]

October 25, 2019 | Canada Suffers from Dutch Disease

Canada, like some wealthy countries that receive substantial resource income, suffers from “Dutch disease”, according to some analysts. That label is used to describe a country that enjoys the income from selling natural resources but is hurt by the side effects of that activity, such as elevated currency valuation, inflated costs and atrophy of other […]

October 18, 2019 | Technology Disrupts Autos

The automobile industry is vulnerable to the advent of new technology. Electric-drive technology will force a revolution in the manufacturing and sale of automobiles. The incumbent car makers, auto dealers and those who finance the purchase of cars may not be ready. Worm Capital, of La Jolla, California wrote a report titled “The Big (Auto) […]

October 11, 2019 | Value Investing is Only for Very Patient Investors

Investment strategies get divided into two camps, growth and value. Most successful investors like Warren Buffet believe that value investing is better than growth investing. However, in the last decade, value investing has performed abysmally compared to growth. Is value investing dead? A Globe and Mail article in August 2019 is titled, “Five reasons why […]

September 27, 2019 | The 2020 U.S. Election Generates Anxiety on Wall Street

The next US election will be held on Tuesday November 3, 2020.  It’s probably too early to speculate about who will win. But markets will soon start to anticipate the outcome so investors might want to think about rebalancing their investments, especially if a substantial change looks likely. Is there a dramatic shift underway in […]

September 20, 2019 | Iran and the U.S. are Heading for Confrontation

The recent bombing of one of the most important oil processing facilities in the world brought everyone’s attention back to the Middle East and Saudi Arabia and the threat of war with Iran. If knocking out 5 million barrels of daily production can be done with armed drones, how worried should we be about renewed […]

September 13, 2019 | China Growth Rate Sputters

China’s GDP has overtaken the U.S., measured by purchasing power parity. Economic growth in the Middle Kingdom has outpaced the rest of the world for four decades, since economic reforms were instituted in the early 1980s by Deng Xiaoping. If China’s economy slows, due to the global trade war and other factors, the rest of […]

September 6, 2019 | Dr. Michael Burry Predicts a Crash in Passive Investments

Dr. Michael Burry, the lead protagonist in the movie “The Big Short” and successful speculator during the 2009 Global Financial Crisis, has called out the passive investing fad as a bubble that will end in a crash. He says that “the longer it goes on, the worse the crash will be”. Will the passive investing […]

August 30, 2019 | The New UK Prime Minister Pushes for a Hard Brexit

The deadline for the exit of the United Kingdom from the European Union arrives on October 31 this year. This new deadline was set after a six-month extension from the original deadline of March 31, following the two-year time frame triggered by the invocation of Article 50 in 2017. The probability of a no-deal Brexit […]

August 23, 2019 | Recessionary Warning Bells are Getting Louder

The possibility of a global recession has been discussed openly in the last few months. New data released this week reinforce the view that a recession might be imminent. There are many indicators of when recessions are likely, but indicators are not always reliable, so they are ignored by market traders. Trading the markets by […]

August 16, 2019 | The Strange World of Negative Interest Rates

For most of my four-decade career, interest rates have been much higher than today. In the late 1970s, and for most of the 1980s, interest rates were consistently above 10 percent. In the last five years a new phenomenon appeared that most observers thought could never happen: Negative interest rates on government bonds. What are […]

August 9, 2019 | China and the U.S. fight for leadership role

The U.S.-Chinese competition for global leadership keeps escalating. Although most people see this current conflict as a trade war, there is much more at stake than just trade and tariffs. Throughout recorded history there have been many instances of an upstart challenging the established leader. In 1900, Britain was still the most important military and […]

August 2, 2019 | The Fed Responds to The Pressure

The Federal Reserve Bank, headed by Jerome Powell, took the unusual step this week of cutting interest rates when the economy is strong, and the S&P 500 hit all-time highs. Powell stumbled during the press conference while giving reasons for the cut. And then things got more confusing when he called the cut a “mid-cycle […]

July 26, 2019 | Tesla Results Feed Both Bulls and Bears

Tesla came up short for the second quarter, in the eyes of Wall Street analysts who forecast earnings. On other measures, the company succeeded by shipping a record number of new cars and announcing the highest amount of quarterly free cash flow in its history. Bears, usually short sellers, are very vocal on social media, […]

July 19, 2019 | Change Generates Disruption and Opportunity

Change is constant, in life and in investing. Most of us would prefer that things continue as they are, especially when it’s to our benefit. But change is often unavoidable and sometimes disruptive. While many people and firms fail to adapt to change, others can prosper by predicting what will come. What are some of […]

July 12, 2019 | The Bank of Canada Says The Housing Correction Is Over

The Bank of Canada Monetary Policy Report was released this week, along with the announcement that the Bank interest rate would remain at 1.75 percent. As happened in the U.S. and with other central banks, the Bank of Canada hinted that rates will be lowered, perhaps as soon as September. The Bank of Canada also […]

July 5, 2019 | Iran is Desperate and Dangerous

Iran and the United States are escalating their hostilities, with recent attacks on commercial tankers by Iran and a U.S. air strike canceled at the last minute by the U.S. Although President Trump ran for election on a policy of opposing any U.S. military involvement in the Middle East, the chances of a confrontation have […]

June 28, 2019 | A U.S. Recession Predicted

  A highly regarded forecaster, who has an excellent track record going back to the 1960s, claims that a recession may have already started in the U.S. There is ample corroborating evidence of a slowdown, as the Federal Reserve abruptly shifted their policy stance to cutting rates in January 2019. The first rate cut of […]

June 21, 2019 | The Fed Hints at Rate Cuts

On Wednesday June 19, 2019, the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve Bank announced its decision to hold policy interest rates steady at 2.25% to 2.50%. Market participants are watching the Fed closely to see if rate cuts are coming, as there are some signs of a weakening economy. The wording […]

June 14, 2019 | Two Hundred Years of Financial Crises

A new book, called “A Brief History of Doom: Two Hundred Years of Financial Crises” by Richard Vague, covers the causes of financial crises. Consistent with my recent book, “When the Bubble Bursts: Surviving the Canadian Real Estate Crash”, Vague finds that most crises in history were preceded by a surge in private sector debt. […]

June 7, 2019 | Toronto is the Epicenter of the Housing Bubble in Canada

This week I visited Toronto, did several interviews and gave a keynote address. The topic was housing bubbles, debt and Canadian banking. So far, the Toronto housing market remains more resilient than in Edmonton, Calgary and Vancouver although there are some cracks appearing in the suburban areas surrounding Toronto. Is the Toronto housing market immune […]

May 31, 2019 | China Threatens The U.S. Again…

China escalated the trade war by using language in a warning that’s only been used twice previously. The latest threat involves withholding the sale of components known as “rare earth elements”. These metals are used in many applications and China is the largest producer in the world. “Don’t say that we didn’t warn you” was […]

May 24, 2019 | Key Risks to the Canadian Financial System Redux

The Bank of Canada (BOC) released its Financial System Review on May 16, 2019. This periodic review includes the BOC’s assessment of the key risks, or vulnerabilities, to the Canadian economy and the financial system. One of the central bank’s main responsibilities is to “promote safe, sound and efficient financial systems, within Canada and internationally.” […]

May 17, 2019 | China Might Not Back Down

  The U.S. trade war with China escalated last week, as a deadline imposed by the U.S. administration passed, without any agreement. The U.S. placed additional tariffs on imports of goods from China that take effect on June 1. The outlook for an agreement, which, until recently, many felt was a certainty, has dimmed substantially. […]

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