By now, all of the clients in The Nick Glen Group will have received our May 2009 Newsletter. If there is anything in there that catches your eye and that you would like to discuss, please call us.
BMO Nesbitt Burns (Michael Herring, author) published a portfolio strategy piece last week titled Investing Roadmap (click here to access). A few points:
- It is interesting to compare the views expressed in Michael Herring's piece with the views in our newsletter. - Michael asks and answers an interesting question: "Is a new equity bull market finally underway?"
There is much food for thought in both documents. Enjoy!
Nick Glen May 11, 2009
Notes from Nick
The Volatility Continues
In our seminars, presented in mid- to late January this year, I commented that we expected the volatility in the stock market to continue -- rallies to be followed by declines to be followed, again, by rallies. I commented that the declines would be worrying. Since the seminars, we have had a rally, a sharp decline and, this week, the markets are again rallying. And yes, during the sharp two-week decline which ended last week, we fielded many calls from nervous clients. These are challenging times.
We expect the volatility to continue for a while. Eventually, we expect the stock market to move significantly higher.
Tony and I also discussed the opportunities available to clients wishing to increase the yields being paid on their portfolios. In recent weeks, we have made many recommendations to clients in this regard. We are pleased to have the opportunities we are seeing to lock up higher yields and plan to do more of this in the weeks ahead.
Finally, I spent a great deal of our seminar time discussing the outlook for the Canadian Chartered Banks. In the last two weeks, all of the Canadian Chartered Banks have reported their earnings for the first quarter. Our thesis that our Canadian Banks would be able to work their way through the recession is still intact. BMO Bank of Montreal and TD Bank are our two current top choices, although a strong case can be made for investment in a number of the other banks as well.
I am attaching two reports. The first is the quarterly Portfolio Strategy published by BMO Nesbitt Burns. There is much food for thought in this report. The second is, I think, a more interesting piece entitled Frugal Future which discusses some of the changes in behaviour that we can expect in the next few years. The article discusses a future in which there is much more emphasis on savings and less on consumption. Long-term, this behaviour will support much higher stock prices.
Nick Glen March 12, 2009
Notes from Nick
Rumination from Nick Glen
In January, we invited our clients to come to one of four seminars - in Vancouver, in Victoria, in Comox and in West Vancouver. We were astonished by how many of you came out on winter evenings to listen to us. Thank you. Saying often, as we do, that we appreciate and value our clients does not do justice to the depth of our feelings on this point.
We also heard from a number of you who would like to have known what we were saying but who were not able to come to one of our meetings. So we organised a conference call which could have been listened to live or on a recording after the live call was finished. Again, we were astonished by how many of you dialed in.
Would you like us to do more seminars and conference calls in the future?
At our seminars, we mentioned that The Nick Glen Group was going to offer a discretionary management option to many of our clients. We call this MPA (“Managed Portfolio Account”). A number of you have contacted us to find out more about MPA and we have been more than a little busy processing the paperwork for those of you who have decided to convert. We have also been answering a number of questions about the pros and cons of MPA, and welcome these questions.
Before drafting this note, I took a look at our website. It is time it was "refreshed" and I will get to this in the next few weeks. Please bear with us on this.
Finally, at our seminars we spoke about the yields available on selected common shares, preferred shares, bonds, debentures and notes. As we are completing our first-quarter reviews for client portfolios, we are making adjustments to add some of these selected investments to increase yield where applicable. If you would like to discuss these investments with us and we have not yet contacted you, give us a call.
Nick Glen February 6, 2009
Notes from Nick
An Invitation
A very good friend of mine (who is also a client) commented to me over Christmas that she just wanted to ignore what was going on in financial markets. She went so far as to say that she didn’t want to look at her monthly statements or check her account on line. This reaction is, unsurprisingly, common. It is also a mistake. If ever there was a time to pay attention to the opportunities presented by financial markets, this is it. This is not a time to be frozen.
Therefore, Tony Hume, Scott Mosher and I are going to host a number of meetings for our clients at which we discuss the investment outlook for 2009. As I write this, four such meetings have been “booked.” Take a look at the dates and locations listed below. If you would like to come to any of these meetings, please call Ruth Hume at (604) 443-1426 or e-mail her at ruth.hume@nbpcd.com.
January 12th, 2009: Westin Bayshore Hotel, Vancouver, 5.00 p.m.
January 15th, 2009: Laurel Point Inn, Victoria, 5.00 p.m.
January 16th, 2009: Crown Isle Resort and Golf Community, Courtenay, 7.00 p.m.
January 20th, 2009: Hollyburn Country Club, West Vancouver, 7.00 p.m.
I think I can promise you that you will not be bored. We have strong views about what is going to work in 2009. There are staggering sums of money currently invested by nervous investors in U.S. treasury bills, short-term treasury notes, and treasury bonds with up to 10 years to maturity. All of this money is earning little or no return. All of this money will not stay invested in such low-yielding investments for the long term. Similarly, in Canada, there are large sums of money invested in short-term government bonds and treasury bills. Success will come to the investors who are invested in the securities which these nervous investors will buy once their panic subsides. And subside it will. There are so many attractive investment opportunities available at the moment, more than at any other time in my career. Portfolios should now be re-positioned for the recovery. Tony, Scott and I would love to have the opportunity to share our views with you. Come to a meeting or, if you cannot make it to a particular meeting, call us and we will try to arrange for one of us to see you individually or to put together a smaller meeting in our office.
Nick Glen January 5, 2009
What to do in the current financial market chaos?
The TSX is now down over 20% from its high. The Newspapers and TV are reporting panic. Government had had to come to the Rescue.
Lehmann Brothers have gone broke. Merrill Lynch has been folded into Bank of America. Russia's financial markets are frozen.
We are getting calls from worried clients -- what to do?
When I joined Burns Fry in 1985 the head of research for the firm lectured me, sternly, about the fact that I would have to cope with the "ups and downs in financial markets."
He also expressed the view that if I survived in the business (he seemed very dubious about this) then I would be able to look back on a very interesting career. He then proceeded to tell me about all the bad periods that he himself had survived. I never got a word in. He retired shortly after this meeting.
Well, I did survive. Like him I have seen some difficult periods -- the crash of 1987, the so-called "Asian contagion" of 1998, the tech market "meltdown" of 2001/2 and the collapses of Barings in 1994 and Long Term Capital Management in 1998. The very-long-time clients of the Nick Glen Group have come through all of these periods.
The current crisis which is the unwinding of years of excessive lending in the US and to a lesser extent the UK, Spain, and other countries is yet another difficult period. Apart from the crash of 1987, which made everybody think about the crash of 1929, the current crisis is perhaps the most serious. What to do?
A few clients have called us to ask if they should "sell everything now and buy it back later when times are better?" The answer to this is an emphatic NO. Clients who sell now will be selling when stock prices are low. When "times are better" stock prices will be higher. Selling Low and Buying Higher is no way to invest.
Quite a few clients have called us to ask if this is a good time to add cash to their portfolios and to buy stock. My answer to this is that, it is certainly a good time to add cash to portfolios, but this cash should be invested gradually. Only when the current crisis environment has passed would we recommend the investment of the remaining cash. Some clients have asked us when this will be. We do not know. It may be weeks away. It may even be a few months. It is likely to be before 2009.
Investors have three choices with each investment: BUY, SELL, or HOLD! It is, with hindsight, too late to SELL. It may or may not be too early to BUY but I am prepared to recommend that investors wait to buy more equities. If ever there was a time to HOLD, this is it. I gave the same advice during all of the periods referred to above and this advice always, without exception, turned out to be right.
I must add that I am more confident of this advice to HOLD than I was during any of the previous periods. This is because I am quite satisfied as to the overall quality of the investments in client portfolios. In recent years we in the Nick Glen Group have paid particular attention to the strength of each of the companies our clients are holding in their portfolios as well as at the diversification and balance of the portfolio as a whole. We have, during our periodic reviews, discussed these points with our clients and have written about them in our newsletters. Great care has been taken to the process of building the portfolios and I am satisfied that they will perform well when financial conditions finally settle down -- and they will.
General comments on the state of client portfolios many not be enough for a particular client because portfolios belong to individual clients. So, if you have any questions about the quality and suitability of your own portfolio please call us. We welcome, re really welcome, these calls.
2. BMO Nesbitt Burns has just published its Red Book which summarizes the firm's current views on each company we follow. For those of you who use Gateway (the firm's system enabling clients to read the research on line) take a look. Any questions you have on particular companies will likely be answered by the research.
My late Dad, who I often think about and always miss, always used to say "keep your chin up" when times were difficult. Our chins in the Nick Glen Group are up. I hope your chin is up too. And if you would like to talk to us -- call us.
Nick Glen September 18, 2008
PS. Some interesting facts that came across my desk:
Since 1996, the TSX is up over 170%. If you missed just the 10 best days each year in the market over that time period your return would have been -71%.1
There have been 30 bear markets since 1900 in the US, and while it can take a long time to recover, the market does recover. At worst it took just over 500 days to trough (in the 1900s) from the 20% decline that defines a bear market, and at best immediately.
Even seasoned investment professionals with years of experience are reluctant to make predictions about the stock market. There is simply no pattern or logic to the timing of the market’s best days.
Consider that, of the 2,519 business days during the past decade (Feb 2008-Feb 1998):
None of the market’s 10 best days were consecutive 4 of the 10 best days were in one year 4 of the years* did not have any of the 10 best days3
There’s only one strategy to ensure capturing the best days. Remain invested for the entire period in an asset mix that reflects your long term goals and tolerance for risk.
In retrospect, market declines have provided good opportunities.
____________________
1. The New Retirement, Dr. Sherry Cooper 2008 2. JP Morgan research report from Sept. 3rd, 2008 3. Capital International, February 2008
Ideas for the Management of a Portfolio Come From Many Places
We have been reviewing our client's accounts for the five months ended May 30th, 2008. We have been surprised, pleasantly surprised, that most clients have had a good five months despite the very gloomy news coming from the financial press. We, in the Nick Glen Group, constantly debate about whether we should be buying, selling or holding particular stocks.
This morning, BMO Nesbitt Burns published a list of Actionable Ideas which we are posting on this website. Our clients will know that the ideas listed in this document are not meant to be a list of things to do. Instead, we review client accounts constantly and regularly to ensure that each portfolio is suitable for the client who owns the portfolio. But the article we are posting may cause clients to wonder about their own accounts -- if it does, we welcome your questions.
It is, after all, your money.
Nick Glen June 10, 2008
A Flat First Quarter in 2008 -- It Doesn't Feel Too Bad
Over the next month, Tony Hume, Scott Mosher and I will be attending investment conferences. I plan to write a newsletter in May, which will be sent to our clients.
I spent some time over the weekend looking at client accounts and am very pleased to note that most of our clients' portfolios are, so far this year, flat to up. Some of the clients who have called us (because they have been made nervous by all the media coverage of the stock market declines) have been surprised to find that their capital is essentially intact. It is very gratifying to have come through such a tumultuous first quarter quite well.
Our clients know that our newsletters are not posted on the website until they are somewhat out of date. The newsletter is for clients, while this website can be read by anybody. It is time, however, to post the January 2008 newsletter on the website and you can now find it here.
We are very optimistic about the outlook for the stock market in the next couple of years. This is not a time to be sitting in cash and waiting for the bell to ring that signals it is time to invest. Rather, it is a time to make sure your portfolio is properly balanced and well-positioned to take advantage of the equity markets.
We have lots of ideas -- new ideas, and refinements on old ideas. A number of the investment opportunities we see are timely. Call us.
Nick Glen April 7, 2008
1The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of BMO Nesbitt Burns Inc. (“BMO NBI”). Every effort has been made to ensure that the contents have been compiled or derived from sources believed to be reliable and contain information and opinions that are accurate and complete. Information may be available to BMO Nesbitt Burns or its affiliates that is not reflected herein. However, neither the author nor BMO NBI makes any representation or warranty, express or implied, in respect thereof, takes any responsibility for any errors or omissions which may be contained herein or accepts any liability whatsoever for any loss arising from any use of or reliance on this report or its contents. This report is not to be construed as an offer to sell or a solicitation for or an offer to buy any securities. BMO NBI, its affiliates and/or their respective officers, directors or employees may from time to time acquire, hold or sell securities mentioned herein as principal or agent. BMO Nesbitt Burns Inc. and BMO Nesbitt Burns Ltee/Ltd. ("BMO Nesbitt Burns") will buy from or sell to customers securities of issuers mentioned herein on a principal basis. BMO Nesbitt Burns, its affiliates, officers, directors or employees may have a long or short position in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon. BMO Nesbitt Burns or its affiliates may act as financial advisor and/or underwriter for the issuers mentioned herein and may receive remuneration for same. A significant lending relationship may exist between Bank of Montreal, or its affiliates, and certain of the issuers mentioned herein. BMO NBI is a wholly owned subsidiary of BMO Nesbitt Burns Corporation Limited which is a majority-owned subsidiary of Bank of Montreal. Any U.S. person wishing to effect transactions in any security discussed herein should do so through BMO Nesbitt Burns Corp. and/or BMO Nesbitt Burns Securities Ltd.
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