Warren Buffett Says Fees Are Too High

We Agree

On February 15, I wrote a blog asking the question: "Are you getting value for what you are paying for?"

http://familywealthmanager.blogspot.ca/2017/02/are-you-getting-value-for-fees-that-you.html

In his annual letter to shareholders (released last Saturday), Mr. Buffett took Hedge Funds and expensive money managers to task, suggesting that billions ($100B to use his number) have been surrendered to pay for relatively poor performance over the last decade.

In 2008, he bet that the S&P 500 (using a Vanguard index ETF) would out-perform a collection of "active" fund managers. It did so significantly and his bet winnings will be awarded to a charity of his choosing.

Why did the managers under-perform: fees and fees on top of fees.

Now, we at High Rock use a combination of index ETF's (in our Global Equity model) and individual securities (in our Fixed Income and Tactical models) to reduce MER costs to a bare minimum. That is one source of fees that is embedded or "hidden" and not required by the regulators to be fully divulged in a completely transparent manner. They only require those to be in the "microscopic" fine print at the bottom of a Fund Fact document that is sent when you buy a mutual fund or ETF. Many don't even look at the document, let alone the fine print. We have shown many of our prospective clients the difference on a weighted average basis and it has certainly turned their heads.

Are we "active" managers?

Only partially. We believe that the "average" portfolio manager will fail to "beat" the index that they are compared to for performance. We also think that our skill and deep research will guide us in making good tactical portfolio adjustments and re-balancings (to lower risk).

However, we also believe that Mr. Buffet is correct and at High Rock we always try to minimize fees and have reasonable exposure to the equity indexes for their long-term out-performance.

And don't forget the client service factors as well.

We are "stewards" of our clients wealth and that is what drives our day to day work. It is not just about collecting fees (as Mr. Buffett notes). It is about being paid for doing good work.

Mr. Buffett's letter: (start at page 20)

http://www.berkshirehathaway.com/letters/2016ltr.pdf

As part of our ongoing offering to clients, we will conduct a (shorter than usual) regular Tuesday client webinar, but with Mr. Trump's 9pm EST address of the US Congress tonight, there will be plenty of financial market "what ifs" that may alter the current level of volatility and we will spend more time on those details next week.

Tune in to the recorded version if you like: http://highrockcapital.ca/current-edition-of-the-weekly-webinar.html at or about 5pm EST for our latest update.

What Are The Bond Markets Telling Us Now?

We have often referred to the fact that the bond market (in gold on the above chart) leads all other financial markets (it was one of our themes for 2016).

10 year US government bond yields spiked following the Trump election reaching 2.6% in late December, more than 0.75% increase from pre-election levels (stocks, S&P 500 in white,

 followed bond yields higher).

This was a reflection of an expectation of significant fiscal stimulus (from the new administrations promises) and the potential for higher inflation (known as the "reflation trade") as well as an increase in potential bond issuance (more supply of bonds driving prices lower and yields higher).

Bond investors want to ensure that they are protected from potential increases in inflation which erode the real return on their fixed income stream of bond coupon interest (see last Friday's blog about Canadian CPI data for more on "real returns").

So with inflation fears in their psyche, they sold bonds in November, hoping to replace them at lower prices and higher yields.

Lately, however, bond investors have been picking away at replacing some of what they sold back in November pushing yields down toward 2.3% (as we explained to our clients in our Webinar last Tuesday, we were also doing a little buying) .

Why?

They / we are not fearing inflation quite so much.

Politics aside, we are all waiting on more detail from the Trump Administration on what fiscal policy will look like. That may come tomorrow when the president addresses congress. However, the lack of any of that detail to date (markets are not known for patiently waiting) has been slowly and gradually impacting the outlook and bond yields have slipped. 

Will stocks follow?

Stay tuned.

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scott@highrockcapital.ca

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bianca@highrockcapital.ca

Canadian Headline CPI Jumps

But It Is All Gas.

Canadian total CPI was 2.1% yer over year in January (quite a bit higher than the December reading of 1.5%), but up only 1.5% if you take out the impact of higher gas prices.

For those of you who drive, taking out the impact of gas prices may make little sense on your day to day lifestyle expenses.

For the Bank of Canada, who look at longer term trends in prices so that they can ensure that they are fully versed on their key mandate of price stability, the month to month volatility of some goods and services is not as significant.

In fact the "core" prices which the BOC focuses on (most preferred measure: CPI-common) in making their monetary policy decisions, remains below their 2% target.

Dipping from December's reading of 1.4% to 1.3% in January.

In a nutshell, there is no chance of an increase in interest rates at the March 1 meeting, Bank of Canada interest rate decision day.

Why does this matter?

For all of you variable rate borrowers, you can continue to comfortably stay the course.

As far as our Wealth Forecast assumption on personal annual average inflation at 2.5%, this still remains a relatively conservative estimation.

If you are getting an annual average (multiple year) return of 5% after fees and taxes, your net after inflation ("real") return is about 1% higher than otherwise assumed:

5% - 2.5% (assumed inflation) = 2.5%

5% - 1.5% (actual inflation) = 3.5%

That is a good thing!

Have a great weekend!

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scott@highrockcapital.ca

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bianca@highrockcapital.ca

Earnings Expectations Are Falling

While Prices Continue To Rise

On the surface the euphoria continues. Behind the scenes, analysts are lowering Q1 forecasts for earnings growth.

The full year expectations for earnings growth in 2017 have also been reduced from 11.5% at the beginning of the year to 10.2% currently (data according to FactSet).

This has brought the Price to Earnings (P/E) ratio to the highest level in 14 years at 17.6 times.

Which is well above the 14.4 times, 10 year average. 

At current levels, to get back to the 10 year average (and we know that in time most things revert back to the mean), either earnings growth would have to grow at about a 20% better than currently expected rate or prices would have to fall by about 20% (or a combination of both).

As we mentioned in our client webinar yesterday (http://highrockcapital.ca/current-edition-of-the-weekly-webinar.html): 

We are not interested in putting our clients into that kind of risk.

We would prefer to find assets with better value (via deep research) to invest in (and our track record shows that we have been able to provide a better return per unit of risk as a result).

That is our discipline.

And...the usual disclaimer... historical returns are no guarantee of future returns, but you know that at High Rock, we work darn hard to always provide the best possible risk-adjusted returns.

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scott@highrockcapital.ca

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bianca@highrockcapital.ca

Responsibilities To Our Clients:  

A Voluntary Code Of Conduct

Hoping that you all had a wonderful Family Day. My family provides me with my daily dose of inspiration: each day they plow so much energy into their lives, it truly does leave me in awe! It is all that I can do, just to keep up.

My life's work, to help other families reach their goals, especially their financial ones, is what drives my day to day existence and it is what I pour my energy into: trying to make their experience working with us as rewarding and fulfilling as possible.

This weekend, we (at High Rock) spent some of our time ruminating over how our commitment to our clients culminates in exactly how and why we interact with them.

First and foremost is our duty to, at all times, act for the benefit of our clients: we must always put their interests ahead of our own (which means that we can not have any conflicts of interest). 

Of course we do need to be paid for our work (we have expenses to cover and tables to put food on), but it should be completely transparent to our clients as to what they are getting for the fees that they pay.

Our investment strategy for each client and client family needs to be specific to their particular circumstances: their objectives, their tolerance for risk, the time horizon required to achieve their goals, their need for liquidity and cash flow, any financial constraints or other relevant information that might affect their investment policy.

We call this preparation a Wealth Forecast (and I have written frequently on the need for a plan and the fact that without a plan, it is not possible to properly create an investment strategy).

This is what drives our High Rock mission statement: that "managing a family's wealth is about three things and we strive to do all three extremely well".

Planning is the beginning.

Investment management is the essence of what we do: based on deep fundamental research (both micro and macro) and keeping our "ear to the track". We act with skill, competence and diligence to have a reasonable and adequate basis for all of our investment decisions.

This is not financial or investment advice. It is portfolio management, which at all times is  based on getting the best possible risk-adjusted returns (another topic which I have come back to on numerous occasions in this blog) for our clients within the framework of their Wealth Forecast.

The only way we can create credibility for our actions is by investing in the exact same assets as our clients. If we don't buy them for ourselves, how could we justify buying them for our clients if we truly put their interests ahead of our own.

Just to ensure that we do what we say, we have an Independent Review Committee that reports directly to out clients each quarter to provide this comfort.

To deal fairly and equitably with every one of our clients, all transactions occur simultaneously for everyone and clients receive their "fills" before we do.

The third and equally important facet of our responsibility to our our clients is communication: 

To make it relevant, a Wealth forecast needs to be monitored, reviewed and updated. At a minimum this should happen twice per year. At the same time, a client's investment strategy has to be reviewed and adjusted accordingly.

Quarterly portfolio summaries and client notes are part of the communication process as are frequent blogs and our 24 /7 availability.

There you have it, a lot of what makes us unique (different and better), inspires trust and drives our effort to be the best that we can be for our clients.

Our conduct is how we roll. That is our discipline.

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scott@highrockcapital.ca

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bianca@highrockcapital.ca

 Capital Gains Tax: Whispers Of An Increase

http://www.theglobeandmail.com/globe-investor/soak-the-rich-federal-budget-could-be-coming-soon-says-rosenberg/article34045810/

You may want to have a look at the article above, but basically, it says:

Gluskin Sheff + Associates chief economist David Rosenberg says he has been hearing whispers that the federal Liberals will table a “soak the rich” budget in the weeks ahead – one that includes a steep hike in the tax rate on capital gains.

Mr. Rosenberg said in his morning note that the capital-gains inclusion rate could rise to 75 per cent from the current 50 per cent, which has been the rate since 2000. Returning the rate to that level, combined with the most recent uptick in the top marginal personal income tax rate, would mean that Ontario investors would pay as much as 40 per cent tax on capital gains.

This would be significant. If your "buy and hold" strategy has amassed a large unrealized capital gain in your non-registered (sometimes referred to as a "cash") account, you may want to have a chat with your accountant about the ultimate implications. Especially if you are retired and rely on the sale of non-registered assets for your cash flow. It will certainly have implications for your estate or any other circumstances where a "deemed distribution" (deemed to have disposed of/sold assets) might be necessary.

Depending on how this scenario is phased in (if in fact it actually happens) it could have serious implications for the selling of stocks, bonds, ETF's, mutual funds and secondary (investment) real estate. Needless to say, the impact on these asset prices would be negative.

It is why a Wealth Forecast is a dynamic process or "working model" (monitor, update, re-assess) because as new scenarios evolve in your financial life, you want to be able to build in those new scenarios (and assumptions) to understand how this will impact your net worth into the future.

Of course this is pure speculation at the moment.

However, it is better to be prepared than to be caught of guard, if it actually does happen. 

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bianca@highrockcapital.ca

Are You Getting Value For The Fees That You Pay?

In his column in yesterday's Globe Investor: "A novel way to react to advisor fee shock", Rob Carrick suggests asking for more advice (to cover the cost).

http://www.theglobeandmail.com/globe-investor/inside-the-market/a-novel-way-to-react-to-adviser-fee-shock/article34017182/?cmpid=rss1&1487094194374

I have a better solution: Forget the "old school" Investment or Financial Advice channel because more than likely they are just "middle-men" who will want to sell you mutual funds or a basket of ETF's (they all have embedded MER costs and it is not required by the regulators that these have to be revealed).

Instead look at the Private Client division of a portfolio management company (like High Rock) who does all the investing "in-house" and if and when ETF's are utilized, will show you exactly what that means to your total cost:

For example:

And make sure that there is a process and stewardship:

I have said it before and I will say it again (and again), you cannot have a proper portfolio strategy unless the portfolio manager(s) know your goals.

A good portfolio strategy needs to be tailored to your very specific needs and it has to be reviewed regularly on an on-going basis (at least semi-annually) to ensure that you are on the path to your targeted goals.

There has to be a reason that you are invested in the assets that you are invested in. The buy and hold, one size fits all type of portfolio is easy to achieve without advice at all. Save yourself the 85 basis points (or more) of the middle-man Investment / Financial Advisor and buy a basket of ETF's.

If you want to get the index average return, buy a global equity index ETF and a bond index ETF and voila, you have a "balanced", buy and hold portfolio".

If you want real portfolio management, turn to a real portfolio manager and get what you pay for.

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bianca@highrockcapital.ca

Economic Growth, Inflation And Central Bank Policy

Fed Chair Yellen testifies in front of the Senate banking Committee today and the house financial services committee tomorrow.

Financial markets will look for clues of the timing of the next rate increase from the Fed. At the moment, nothing is expected for the March meeting, but there is some expectation of a rate increase in June.

In all likelihood, they are waiting for fiscal policy detail from the Trump Administration and the February data on the PCE (Personal Consumption Expenditure) core price index, which is their preferred measure of inflation. Currently it sits below their 2% target at 1.8% (see the chart above).

Globally, inflation is inching higher with the latest data from the UK showing an increase (to 1.8%), however this was mostly related to the lower pound and the higher cost of fuel. Core inflation was 1.6%.

For the moment, there are no expectations of any short-term changes in monetary policy.

Needless to say, we are all looking to the future and without the detail of US fiscal policy (although we are lead to believe that there is a tax plan coming soon, deregulation as well and infrastructure spending to follow).

According to a Bloomberg report, Goldman Sach's economists suggest that 

“An increase in the effective tariff rate on imports seems likely and we now assume a somewhat bigger decline in net immigration flows than we did immediately after the election,” they wrote.

Hatzius and Stehn compiled a “full Trump” case that includes $450 billion in fiscal stimulus through a combination of infrastructure and tax cuts, tit-for-tat tariffs, and immigration restrictions that reduce the labor force by 2.5 million from the pre-election baseline underpinning the Federal Reserve’s September projections.

https://www.bloomberg.com/news/articles/2017-02-13/trump-looks-like-a-net-negative-when-it-comes-to-growth-goldman

As you can see in the chart above, their assumptions show some immediate benefit, but it is short-lived over a longer time period.

As we are more concerned with longer-term wealth growth for our (High Rock) private clients, we will continue to focus on value and risk as the main tenets for our portfolio strategies. We don't believe in short-term "hype" (and there is plenty of that at the moment) until we are able to ascertain that risk is at a reasonable level. At the moment, risk remains high (most certainly so in equity markets).

In honour of Valentine's Day (https://en.wikipedia.org/wiki/Valentine's_Day), we have postponed our weekly webinar, so that those of us and our clients with romantic inclinations can focus on those! (Back to our normal schedule next week).

Happy Valentine's Day!

Equity Prices Are Rising While Earnings Expectations Are Falling

According to FactSet (Earnings Insight) data, S&P 500 companies earnings for 2017 at the outset of this year were anticipated to grow by about 11.5% (after basically flat earnings growth in 2016). 

For the 1st quarter of 2017, 57 (out of 82) companies issuing forward guidance have issued negative guidance: lower than expected earnings per share (EPS).

For all of 2017, expected earnings growth has been lowered to 10.3%.

The forward 12 month price to earnings ratio has jumped to 17.3 times.

Remember that the S&P 500 provided a total return of 11.3% through 2016, while earnings were, as I said basically flat. Which in simple terms, means that investors were looking ahead to 2017 for growth (even though the P/E ratio remained well above its 10 year average at 14.4 times).

So far this year, the S&P 500 is higher by about 3.5%.

In other words, earnings need to grow by close to an additional 15-20% (above the current 2017 expectations of 10.3%) to bring the P/E ratio back to its 10 year average (if S&P 500 prices remain at current levels).

Needless to say, we have more than built in a "phenomenal" US tax plan (if, as and when it becomes a reality) and buyers are pushing emotion to higher levels, while the fundamentals are showing us that prices are rather expensive on a relative basis.

As always, with our (High Rock) focus on the long-term, we think that short-term caution is the order of the day.

Equity market risk is rising and that becomes a warning signal. 

Have you looked into the risk levels in your portfolio?

Happy to help.

Feedback...

scott@highrockcapital.ca

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bianca@highrockcapital.ca

"Have I Got A Deal For You":

Advisor Conflict Of Interest

I get feedback, a fair bit of it sometimes, depending on the topic, but recently I have received a significant amount asking about the difference between the "standard of care" that is required by IIROC (Investment Industry Regulatory Organization of Canada) licensed financial / investment advisors ("brokers") and the "fiduciary duty" required by portfolio managers (like High Rock) licensed by the OSC (Ontario Securities Commission).

As it stands at the moment (because the various provincial regulators continue to kick the can down the road with "proposed targeted reforms") there is only a requirement of "suitability" for those who offer financial advice (from a bank or independent investment dealer, IIROC licensed). At best, pretty vague terminology. At worst, as the great majority of them are paid commission, wherein there is the potential for a conflict of interest. 

Even those who charge you a "fee" (fee-based account) are in fact paid a "commission" as a percent of that fee by their employer (the bank or investment dealer). If you are a "top producer" (generate lots of fees / commissions) you are paid a bigger % of that fee (as commission). If you are a top producer, you are put into the "Presidents or Chairman's Club (at your respected firm) and held in high (if not somewhat dubious) esteem. (see Paul's blog:http://highrockcapital.ca/pauls-blog.html :I Am Going To Blow My Top! 1/25/17)

Dubious because the standards you are measured by (generating revenue for your firm) are not necessarily in your clients' best interest (performance). I know this because I have been there. In fact, at one bank where I was a financial advisor (and Branch Manager), the president of the "brokerage" operation told me that they would not publish client performance returns on the client website because the advisors didn't want it. My response: "are you kidding me?", was not well received. I didn't last at that institution for very long (my decision). My moral and ethical standards were considerably higher than theirs were: Shareholders (and the bottom line) were their first priority. Not their clients (other than the revenue they generated).

So, in a nutshell, even as a fee-based financial advisor, they are incentivized to build their "assets under administration" (AUA), otherwise known as "asset gathering". This becomes, in and of itself a conflict because it may leave you, as a client, fighting for the attention of your advisor. How many times a year do you get to have a one on one with the girl/guy who "sold" you on joining her/his "wealth management practice" as a client?

If they are a "big producer", unless you are a "big client"... forget about it. I know, because I have been there. There is only so much available time in a day, week, month and year (and not enough to have a meaningful conversation), especially if the focus is on bringing in new clients (because that is where the $$ are).

Fiduciary duty requires that portfolio managers put their clients interests before theirs: no conflict of interest. Period!

So we ( at High Rock) have taken on a very challenging task of trying to change the existing order of things which is controlled, for the most part by the biggest financial institutions.

Not only are we (as a licensed portfolio management company, with our legislated fiduciary duty) held to a higher standard, we are trying to change the conversation about what exactly is a conflict of interest: selling mutual funds, structured notes (or new issue stocks, bonds and preferred shares) for a commission and trailer fees are fairly obvious,  but so is the pressure to have an enormous "book of business" over-populated with clientele.

So we limit the number of families that we look after. The personal contact is, for us, extremely important and we need the time to make sure that we are in touch. Regularly.

In the end, we don't sell. We serve. It is a very major difference. 

We are trying to change the conversation (and the world of financial literacy and "advice").

Join us!

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scott@highrockcapital.ca

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bianca@highrockcapital.ca

Conversations About Risk:

In my world I get to talk to a great many folks across a very broad cross-section of financial knowledge and literacy. Some of them have titles like Doctor because they have studied economics or behavioral finance (for quite some time and are recognized for the expertise that they have developed). Some are pure traders who rely on things like market momentum and other technical factors to assist them with their decision making and yet others have a Finance education (CFA) and do in-depth research on specific companies and are masters of understanding the "fundamentals" for finding value in a company in which they might invest.

My job, in a nutshell, is to listen, learn and bring a great deal of this information to my clients in terms that they might understand. Some folks may have a greater understanding than others. Some folks want to understand at different levels than others. Some just put their full faith in my/our ability to know what is right for them. I certainly do not take that lightly.

I do hear lots of commentary about what other advisors do (and don't do) because we are still growing our business and interviewing with plenty of prospective clients.

Lately, I have been hearing a lot about how (now that equity markets are up) folks are feeling better than they were at the beginning of 2016 (we seem to get a significantly higher number of in bound calls when equity markets are more volatile).

The common denominator of a large number of my conversations reveals that so many have a very limited grasp of how much risk they actually have in their respective portfolios.

Most advisors really don't want you to know.

If portfolios are rising in value, it is human nature to be less concerned (and you are less likely to be paying close attention). In fact, it should be the exact opposite. You want to be asking yourself (and your advisor): "what is the downside potential from here?" and "how well am I protected?".

If you get a "don't worry about it" type of response, your antennae should pop up.

Every investor should have a deep understanding of their risk profile: what happens when the market (relatively complacent at the moment, despite some potential for a shock) all of a sudden gets volatile. Because, as history has revealed, when things do turn ugly, advisors tend to vanish and that discussion may be difficult to come by.

As I asked in last night's client webinar: http://highrockcapital.ca/current-edition-of-the-weekly-webinar.html

Would you like your portfolio to look like this? (a new High Rock client's old portfolio, before High Rock):

or this? (an actual High Rock client)

(Over the exact same time period)

As I have said before, it is all about not losing sleep.

Remember that historical returns are in no way a guarantee of future returns, but at High Rock we work darn hard to get our clients the best possible risk-adjusted returns as we possibly can.

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scott@highrockcapital.ca

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bianca@highrockcapital.ca

Uncertainty Is High and Volatility Is Low: 

Yet Another Relationship Suffering From Changing Correlations

Our key theme for 2017 is that being "tactical" (with portfolio strategy) becomes even more important because normally reliable and long-held relationships between asset classes have been breaking down (and as a result adding greater risk to what was previously understood to have lower risk). 

We saw this beginning to happen in 2015 when we began High Rock Capital Management and as a result,  added a third dimension to the standard balanced portfolio of equity and fixed income with a model that features a more tactical approach. This is intended to be a vehicle that is non-correlated to the standard balance which helps to lower risk and increase 

risk-adjusted returns : more return for the amount of risk taken. 

This has allowed our clients to avoid the very volatile swings through 2015 and early 2016 and come out with a significantly better 2 year performance (to the end of 2016).

So far this year, volatility has remained at very low levels, while the uncertainty swirling around the global geo-political and economic fronts has been rising significantly.

Certainly the new US administration has made some robust promises that favour stock market fundamentals. However the rhetoric and the tweets coming from the President have focused on immigration and protectionism. 

Stock markets remain hopeful (and relatively expensive), but await detail and timing to justify their current levels and recent economic data has been mixed at best (inflation slowly ticking higher, employment and wage growth stalling, manufacturing index rising). 

So we wait, with growing levels of anxiety over what happens next and what priorities emanate from the White House.

Our strategy: be nimble,  (don't wait for the markets to go ballistic before you make adjustments to your strategy).

Be tactical.

Remember that historical returns (as mentioned above) are in no way a guarantee of future returns, but at High Rock we work darn hard to get our clients the best possible risk-adjusted returns as we possibly can.

Today is webinar Tuesday, where we will discuss the above as well as developments in global geo-political and economic circumstances and financial markets with our clients and how all of it impacts portfolio strategy for our and their wealth management and portfolio strategies. We will post this on our website at or about 5pm, so feel free to watch and listen: http://highrockcapital.ca/current-edition-of-the-weekly-webinar.html

Feedback...

scott@highrockcapital.ca

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bianca@highrockcapital.ca

This Blog Might Be A Long One!

Let's start with US Employment: the headline number of a robust 227,000 new jobs in January was about 50,000 more than anticipated. However, as I frequently have stated, this is a number that is potentially subject to significant revisions and looking back to November, lo and behold, the data was revised from 204,000 to 164,000 so over the last 3 months of data, a net change of plus 10,000 (above the expectation)... overall, I think that we can basically call that a wash.

Wage growth stalled and is now down from an annualized 2.9% to an annualized 2.5%. That might not be good for the consumer.

More people were looking for work (they are more hopeful) and that pushed the unemployment rate up to 4.8%. And while the current psychology of the masses doesn't even consider a US recession a possibility, here is how our unemployment rate stacks up against the ever-telling 36 month moving average:

(a shout out to Paul and the Help team at Bloomberg for getting this chart functioning again!)

When they intersect, historically(white line moves up through the gold line), it has been a very accurate predictor of a recession to follow.  The gold line is falling fast, the white line is leveling off (stay tuned).

Fed "watchers" suggest that the data isn't enough for a rate increase at the next meeting.

Good for stocks in general (perhaps not for the consumer durable sector), temporarily, anyway.

In other news... In order to prevent a financial crisis - like scenario from developing, the Dodd-Frank law was created back in 2010. This was intended to put more scrutiny on bank lending policies and practices. On Friday, President Trump signed an order to  scale back the law that had added significant compliance costs to financial institutions.

Good for financial stocks.

And, a little closer to our world, a new Obama regulation called the "Fiduciary Rule" which was intended to force financial advisors to put their clients interests ahead of their own (and allay any potential conflicts of interest) was also put on the chopping block.

Good for advisor commissions, good for financial stocks, perhaps (in my humble opinion) not so good for the unsuspecting clients of less than fiduciarily responsible financial advisors in the US.

Fortunately in Canada, although the financial industry continues to resist, new CRM2 regulations have come into force and advisors at least must show all their commissions (and trailer fees!) It is not enough (MER's should also be shown), but it is a start.

At High Rock, the company receives a fee (we are not advisors, there is a huge difference, check out our intro: http://highrockcapital.ca/private-client-division.html ). Paul and I are paid a salary, not a commission. We also go above the required rules and regulations to ensure our clients that we have no conflicts of interest with an Independent Review Committee (IRC). You can visit our website to see the quarterly letter that is sent to our clients at http://highrockcapital.ca/index.html.

So, short-term, Dow is back above 20,000. Long-term, while details are skinny, it appears that all the Wall Streeters in the new administration are reducing regulations for their peers and quite possibly putting the general public at greater risk.

Feedback...

scott@highrockcapital.ca

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bianca@highrockcapital.ca

Groundhog Day!

Tired of the front page news headlines? Exhausted from the mental math of assessing every Trump tweet, policy pronouncement  and executive order (is it real or reality TV)?

I have never put much stock in groundhog prophecy, but it was always a welcome hope (on the coldest days of February) when it was determined that there might be a chance of an early spring (whether it was true or not). Punxsutawney Phil (Pensylvania) has apparently been correct only 38% of the time. Closer to home Wiarton Willie (Ontario), only 37% of the time.

So this year Phil predicted 6 more weeks of winter (which technically is fairly accurate, because the spring equinox falls on March 21), however, his northern "cousin", Willie, thinks that spring will actually come early this year! 

Get the golf clubs ready Ontario!

And maybe this sort of upside-down (early spring in the north / long winter further south) prognosticating is a function of the current debate (at some levels there is debate, anyway) surrounding environmental issues and the changing climate?

Or perhaps it is just a nice distraction from all that is currently swirling around in the winds of change in the global geo-political and economic cyclone.

Buy the rumour, sell the fact (or so goes the old financial market trading cliche that I grew up with). Whatever the case, the crystal ball is looking awfully cloudy these days and rumour and fact are not so easy to discern.

So when a client asks: "what's going on ?", I have to pause and think of a reasonable answer: how much time have you got? There is so much going on and we are so busy trying to assess all of the potential scenarios (and the possible impact) that Groundhog Day (and its ultimate relevance) becomes a comically wonderful metaphor for the times: get it right or get it wrong, there is only a 37-38% percent chance of it happening (and like Phil Connors, the Bill Murray character in the movie, you might just wake up tomorrow and have it happen all over again).

Enjoy!