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DEC 18, 2020

Merry Christmas from Monty the Penguin


For over a decade the British retailer, John Lewis, has aired what has become an iconic holiday season commercial. Although this year’s “Give a Little Love” was clever, in my opinion nothing comes close to 2014’s “Monty the Penguin”. Ironically, given our opening Dr. Seuss quote, it is a rather slick piece of marketing directly targeted to tug on our heart strings… and open up our wallets and purses! Having said that, I challenge you to watch this two-minute advert without getting even a little bit choked up, not to mention the ear worm of a song, “Real Love“, by John Lennon that will have you humming all day long.

As this pandemic year winds down, I sincerely hope that you have the opportunity to spend more time with your family and, on a socially distanced basis, your friends. Perhaps during these quieter times we can reflect on who and what brings significant meaning to our lives. It is with this parting thought in mind, and your own interpretation of the moral from “Monty the Penguin”, that I wish you all the best for the season and a very happy New Year.

Merry Christmas!


There is no such thing as information overload – only filter failure.
Clay Shirky


NOV 1, 2020

Filter failure


One critical challenge we face is choosing what to ignore. This is especially true when it comes to investing. 

I was reminded of this fact during the lead up to the recent U.S. election after having numerous conversations around what the stock market might do if Trump either lost or won. A number of  individuals I spoke with were adamant that they would not invest or add to their portfolio until the outcome was clear, even after I attempted to point out that, based on historical facts,  it actually did not matter! This was another example of how behaviour alone has a much greater impact on one’s lifetime investment returns than the combination of stock selection, asset allocation, fees, taxes, etc.

It is said a picture paints a thousand words. Nowhere is this more true than Carl Richard’s Behavior Gap sketch below. His accompanying words also contain much wisdom.


I’d like you to try a little experiment with me.


Think back over the last couple of years to a time when you read something about money in the news, you acted on it, and with the benefit of hindsight, you were glad you did.


This could include any number of things. IPOs, bear/bull markets, mergers, market collapses. 




Go ahead, I’ll wait. Close your eyes and think about it.



I’ve done that experiment hundreds of times around the world, and in all those experiments, I’ve only had one person come up with a valid example. It was news about a change in the tax law.


That’s it.


Because most of what is out there in the financial news begging for your attention is … Just. Noise.


Now, that’s not to say all of what’s out there is noise. Of course not. Within that ocean of noise, there’s occasionally information. You know, facts, data, evidence. 


But most information is useless. It either doesn’t matter or it is beyond our control. 


What we’re looking for is the Stuff That Might Be Useful. You can also call it Wisdom.” 


—Carl Richards

I encourage you to keep Carl Richard’s picture and words in mind when you are critically deciding what is noise, information, or wisdom.


There is no such thing as information overload – only filter failure.
Clay Shirky


OCT 1, 2020

Mindset is everything


Who knew that Canada is one of the happiest places on the planet. Granted the info-graphic below was published pre pandemic, one could still make the argument that compared to the rest of the world during Covid 19 Canada is still a pretty happy place


Please click here to enlarge and read the full article.

It’s heartening to realize that as a country we are a fairly happy bunch. But, depending on how you want to count it, the reality of our current situation is that we are now into month nine of this pandemic with no end in sight. That’s the bad news. The good news … eventually this too shall pass.

To protect my sense of optimism in these unprecedented times I remind myself of the Stockdale Paradox. James Stockdale was the highest ranking naval officer held captive during the Vietnam War. During his horrific seven years in captivity the only thing that kept him  alive was balancing the harshness of his situation with a healthy dose of optimism. This was in comparison to a number of his fellow prisoners who clung to the belief that “this Christmas” or “this Easter” they would be released. Unfortunately, it was these optimists who didn’t make it out alive. When Christmas and/or Easter arrived with no release, they were devastated to the point of quite literally dying of a broken heart. The Stockdale Paradox  reminds us of the inherent contradictory dichotomy between “hoping for the best and planning for the worst”.

And so it is with with the pandemic that we are all suffering through together. Perhaps there will be a vaccine next year but then again, perhaps not. Perhaps we will return to “normal” in 2021 but then again, perhaps not. I believe by embracing the Stockdale Paradox we will not only get through this time but emerge from it psychologically stronger than ever.

Mindset is everything


Happiness has to do with your mindset, not with outside cirumstances.
Steve Marboli


SEP 2, 2020

Calm has a coefficient


As we continue to live through this pandemic, I have observed that there seem to be two very distinct groups of people. The first group appears to be in a constant state of agitation, frustration and/or a heightened state of anxiety. However, the second group seems to have settled into a state of “Covid acclimatization” that I would best describe as almost “calm-like”.

Seth Godin shares his opinions on this perceived state of mind in his excellent post entitled, “Calm Also Has a Coefficient”. Godin makes the observation that so much of how we “feel” is directly related to whom and what we are exposing ourselves on a daily basis. Who are the people I am spending most of my time with? What influence are they having on my life? And the most important question … is this influence impacting me positively or negatively? And be especially careful regarding your daily media consumption. I very much appreciate the wisdom in Godin’s observation that, “Being up-to-date on the news is a trap and a scam. Five minutes a day is all you need”.


No one knows when this pandemic will run its course. However, I do believe that if we consciously curate our environment, not only will we successfully navigate this unique period in history … we may even flourish in it.


Trying to determine what is going on in the world by reading newspapers, is like trying to tell time by watching only the second hand of a watch.
Ben Hecht


JUN 1, 2020

Reflection on the last six months


The first six months of 2020 saw the advent of the worst global public health crisis in a century—since the 1918 influenza pandemic. In response, the world locked down, putting its economy into a kind of medically induced coma.

In this country, the immediate effects were (1) a savage and nearly instantaneous economic recession, accompanied by record unemployment, and (2) the fastest, deepest collapse in stock prices in living memory, if not ever.

Though I usually write you an extended personal summary annually concerning the year past—and will again—the stark drama of the last half year has been such that I wanted also to report to you now.

This letter follows the format of my annual reports to you. It’s divided into two parts, the first a statement of general principles, especially those most relevant in the current crisis, with a restatement of how I practice my stewardship of your invested wealth. The second is a review of what little can be known at this point, and of how I propose we continue to deal with the pervasive uncertainties of the moment.

General Principles


  • I believe that all lastingly successful investing is essentially goal-focused and planning-driven. All failed investing is market-focused and event-driven.

  • Stated another way: every truly successful investor I’ve ever known was acting continuously on a long-term plan. Every failed investor I’ve know continually reacted to sudden and terrifying market shocks.

  • Thus I’ve found that long-term investing success is only incidentally a function of the economy and the markets. It is a direct function of how the investor reacts – or, more properly, how he/she refuses to react.

  • You and I are long-term, goal-focused equity investors, acting on our plan with patience and discipline. The smaller part of what I do for clients is the crafting of that plan. The much larger part is helping you not to react in stressful times like this.

  • I continue to believe that the equity market can’t be consistently forecast, much less timed, and that the only certain way of capturing equities’ superior long-term returns is to sit through their occasionally steep but historically temporary declines.


Review and Outlook


  • At midyear, the best that can be said is that the first great wave of the pandemic appears to be abating, and the economy is slowly reopening. As it continues to reopen, there will inevitably be some flareup in new infections. The interaction between the pandemic and the economy in the short to intermediate term is therefore perfectly impossible to forecast, as is the timing of the development of a vaccine.

  • The equity market crashed from a new all-time high on February 19 to a bear market low (so far) on March 23, down 34% in 33 days. There is no historical precedent for this steep a decline in so little time. Confoundingly, it then posted its best 50 days in history. The S&P 500 closed out the first half at 3100, 9% off its all-time high. (Source: Wall Street Journal, WSJ Markets Historical Data,

  •  It is not possible to forecast the near-term course of corporate earnings or dividends, as they—like the economy they reflect— are still largely hostage to the pandemic. That said, I invite your attention to the fact that at June 30, 2020 the yield on the Canada 10-year benchmark bond yield was 0.52%. (Source:

  • I infer from the current state of interest rates that though it is impossible to forecast equity earnings, dividends and prices, it can be stated as fact that few if any of my clients can continue to advance toward the achievement of their long-term financial goals in bonds, at anything close to today’s yields. This is just another reason why I’ve advised you to stay the course in equities.

  • I’ve very deliberately laboured in this summary to convince you of the sheer unknowability of the short (say, the third quarter of 2020) to intermediate (say, through the first quarter of 2021) term economic and market outlook. In the next breath, I remind you that not one of you is investing for the next one to four calendar quarters. I say again: you and I are long-term, goal-focused, planning-driven, patient, disciplined investors. Our focus is on history rather than headlines, and our mantra is from Churchill: “The farther back you can look, the farther forward you are likely to see.”

  • Finally, I would urge you to think back to January 1st of this year. Have your most cherished lifetime financial goals changed since then? If not, I see no compelling reason to change your plan—and no reason at all to change your portfolio.

  • Be of good cheer. This too shall pass. Optimism remains, to me, the only long-term realism.

By all means, please be in touch with me with any and all questions and concerns. In the meantime, thank you—as always—for being my clients. It is a privilege to serve you.


Our favourite holding period is forever.
Warren Buffet


MAY 1, 2020

The key to happier and more productive life


At the risk of straying into “life coach” territory I would like to share with you how I became happier and more productive during Covid-19. It all started this past March with our family’s trip to Kenya. I had minimal access to T.V., radio, print media, and the internet given that we were on safari in the middle of nowhere for most of our holiday. The interesting thing I found was that when I returned to Canada, even with the world in the grips of a full scale pandemic, I experienced reduced stress and no loss of access to what I considered relevant and important information. Since March, because of this serendipitous outcome, I have placed myself on a strict “media diet” with the result that I am definitely happier and certainly more productive.


Lessons learned? Putting aside entertainment consumption, the question I now try to ask myself is, in one year could my life be better as a result of what I’m about to watch, listen or read?. If the answer is no, I attempt to focus on sources of wisdom like Morgan Housel’s “Permanent Assumptions” which will indeed improve my life … and perhaps yours.


If everything is amplified, we hear nothing.
Jon Stewart


APR 2, 2020

The bill comes due


Normally I don’t like to begin these newsletters with dry statistics but please indulge me with the excuse that these are not “normal times”.


With that out of the way I would like to point out that since 1871 market downturns have recovered as follows:


  • 33% of market downturns recover within a month;

  • 50% of market downturns recover within two months;

  • 80% of market downturns recover within one year; and

  • 95% of the time those big “once or twice in a lifetime drops” return to being even in three to four years.


Collectively, the average time it takes for the market to recover (from top to trough to top again) is 7.9 months. (Source: Above the Market March/31/20.)


Now, eight months doesn’t seem like a long time to wait out a market downturn but it can seem like a very long time when you are in the middle of it and there is no end in sight. I would also be remiss if I didn’t point out that eight months is the average time it takes for the markets to recover. By definition, 50% of the time it takes longer.


If you are reading this then there is a 99% chance you are a ”buy and hold” type investor. One of the challenges of adopting this investment philosophy is that it is easy when the markets are positive. However, during periods like right now … not so much. Another way of looking at it during periods like today is that this is exactly when the bill comes due for being a successful buy and hold investor! For more on this topic I encourage you to click through to Ben Carlson’s excellent article, The Hardest Part of a Buy & Hold Strategy.


Don’t do anything is the best advice for most people most of the time, but it’s not intellectually stimulating enough for many people to take seriously. Most fields have a positive correlation between effort and results. Investing is one of the few where the correlation is negative, especially for amateurs. The higher your IQ is, the harder it is to accept this.
Morgan Housel


MAR 1, 2020

Context is everything


It seems like a lifetime ago (COVID time?) when on March 13th I last sent out this newsletter. Back then my family and I were on March Break having breakfast with the local wildlife at Giraffe Manor.

Although the “shut in” world we are now experiencing has changed, one thing should not … thoughtful context. Whether it was the 2008/2009 financial crisis, 9/11, the tech bubble, or the crash of ‘87, one thing we do know is, as Mark Twain is reputed (probably falsely) to have said, ”although history does not exactly repeat, it often rhymes.” And so it is with the stock market.

It is easy to get caught up in the short term gyrations of the market and forget that over the years the stock market declines on average about 30% once every five years. So far this year, at its temporary worst, the market was down approximately 34%*. At the risk of being blunt, as long-term investors in quality companies from around the world, this is the price you must pay in order to secure returns at significant multiples to GIC’s. The good news regarding this temporary, albeit severe decline, is that “this too shall pass”.

As you can see here, since the Second World War it has taken a surprisingly short time (see far right column) to recover all the losses from previous bear markets. This most definitely is not a crystal ball prediction of the immediate future, but history does indeed tend to rhyme.

The number one determinant of investor success is behaviour. Fortunately, this is 100% within your control! And, as the illustration below highlights, your context determines whether you choose to focus on the next five days … or five years.


Wisdom is intelligence in context.
Raheem Faroog


FEB 1, 2020

I don't want to invest my money now because


Every year Stonegate updates the article/graphic “I Don’t want To Invest My Money Now Because …”. Here’s the thing, there will always be a reason not to invest! I have seen too many families handicap their financial future by trying to time their entry into the market. As the father of modern quality management, W. Edwards Deming, once said, “In God we trust; all others bring data.” To that end, I invite you to match up the years below with their corresponding year ending Dow Jones Industrial Average numbers. The data is clear … it’s time in the market not market timing that is one of the keys to successful wealth creation.

The Coronavirus is the “new” reason many individuals do not wish to invest today. I do not claim to have any idea how far this outbreak will spread, nor how many lives it will claim before it is brought under control. I’m reasonably certain that many (or perhaps most) of the world’s leading virologists and epidemiologists are working on it and that their efforts will ultimately succeed. Clearly this is nothing more (or less) than my personal opinion. However, if the rich history of similar outbreaks in this century are any guide this would seem to be a reasonable hypothesis. For evidence I draw your attention to:

  • SARS in 2003-04 also originating in China.

  • The bird flu epidemic in 2005-2006.

  • In 2009 a new strain of swine flu.

  • The Ebola outbreak in the autumn of 2014.

  • The mosquito-borne Zika virus outbreak in 2016-17.

Or as Mark Twain once said, “History doesn’t repeat itself, but it rhymes.”

For an excellent data based article on how previous viruses have impacted the stock market I encourage you to read How Will Coronavirus Affect Your Portfolio?

Please click on the image below to open the larger PDF version.


The only thing new in the world is the history you do not know.
Harry S. Truman


JAN 1, 2020

It was the best of times, it was the worst of times


It has been my annual tradition with these and my sister blog, PhilanthropyMatters, to begin every year with a brief commentary on how our world is making tremendous progress on just about any metric you care to focus on. Unfortunately, it seems many of us believe the planet is quite literally going to hell in a hand basket! This perspective is understandable given that we are continually bombarded 24/7 with news reports and articles to the contrary.

Edwards Deming once wrote, “In God we trust, all others bring data”. To that end, I give you 99 Good News Stories You Probably Didn’t Hear About In 2019.


Perhaps I can offer this summary … just because the world has a lot of bad shi# going on it doesn’t mean things aren’t getting better. It is with this theme in mind that I wish you, your family and friends, an even better 2020!


It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.
Charles Dickens (1859)

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