| My girlfriends and I have caught the golf bug this year and I can confidently say that practice really does make perfect (and by perfect I mean a lot less terrible than last year). With the RBC Canadian Open in full swing this week, and before I head there myself tomorrow to cheer on the pros (quietly), I thought I’d share some of my most common golf blunders alongside some common investment pitfalls:
This was a big one for me. I would decelerate through the swing and try to scoop the ball, causing the ball to land short of the target. Instead, I now focus on accelerating through and under the ball - in fact, the key for gaining distance when swinging is following through into the finish (not the backswing). And the strength comes from your core, not from your arms.
Speaking of following through, Not Rebalancing is our first common investment pitfall. Once you have set your asset mix and built a diversified portfolio, it’s important to maintain a good mix over time. Market movements can often cause your allocation to drift from the weightings that were initially set in your portfolio – leading to a very different allocation (and investment experience) than you had originally intended. Sticking to your strategic plan with disciplined asset allocation is vital to long-term success.
Once I got past “keep your head down” I realized there was even more to remember. Your grip is the foundation to a great swing. Keep that thumb (uncomfortably) over and the “V”s pointing up at your shoulders. Your clubface needs to be open and positioned towards where you want to go (so obvious but commonly overlooked). Your posture/stance needs to be solid & athletic – not too curved, nor too straight.
Another obvious but key investment pitfall is Buying High & Selling Low. Sure, it sounds easy enough — to generate gains, all you need to do is buy low and sell high. In practice, however, it’s actually a very difficult task. The key to avoiding this pitfall is to refrain from trying to time the market – time in the market pays off when you stick to your long-term plan. And if you can bear it, remember to be greedy when others a fearful and fearful when others are greedy.
Spend just as much time (or more) on your short game as generally sucking in this area can add to your score quicker than you would expect. Another common mistake regarding the short-game swing is the use of our legs/hips – this swing should be dominated only by the motion of the upper body. Think of a pendulum and follow through to the hole.
Just like you might need different clubs and tactics to reach the green, diversification is needed within your portfolio to reach your end goals. History has shown that different asset classes, industry sectors and geographic regions generally do not move in sync with one another. Since no one can predict exactly when one type of investment will outperform the others, the most effective approach is to hold a diversified mix of investments. Diversification helps to reduce risk and smooth out returns as lower returns in one asset class or market are often offset by gains in another.
With so much going on and information coming at us from every angle, it's sometimes hard to keep your finger on the pulse of what's happening. In an effort to keep you in-the-know and provide you with some conversation nuggets for the weekend, I've compiled the following hit list to fill your conversation pipeline.
Now you are in-the-know with Word on the Street.
Enjoy the weekend,
D.
Market Minute
In this week's Global Insight:
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In Focus this Week: The Loonie
The recent sharp move higher in the Canadian dollar reflects a fairly optimistic view of the economy and expectations of meaningful interest rate hikes from the Bank of Canada (BoC). We believe the unwinding of a significant short position in the Canadian dollar has contributed to the magnitude of the move and we recommend investors use the Canadian dollar’s strength as an opportunity to add U.S. dollar and foreign currency exposure. A rebound in commodities, continued sluggishness in U.S. inflation, and a lack of progress on U.S. tax reform could extend the recent rally in the loonie.
However, we see a stronger set of arguments that suggests upside from current levels may be more difficult to achieve. Namely, high debt levels may curtail the BoC’s ability to meaningfully raise interest rates through next year, especially as regulators mull tighter mortgage regulations which could dampen the need for rate hikes. Moreover, a further rally in the Canadian dollar could be self-limiting because of the negative impact a stronger Canadian dollar would have on exporters.
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Market Movers
Canadian GDP up for the 7th month in a row The Canadian economy is on pace for its fastest annual growth since 2000. Statistics Canada says the GDP rose 0.6% in May, which is up for the seventh month in a row, led by a rebound in oil production. The GDP is up by 4.6% over 12 months. Read more here | CBC
What, me worry? Wall Street’s so-called fear gauge says no. Despite numerous risks ranging from geopolitics to protectionism, the VIX Index continues to plumb new lows. A number of factors help explain the low risk readings, but one wouldn’t want to be lulled into complacency. As Mark Carney said years ago, when he was Bank of Canada governor, “risk appears to be at its greatest when measures of it are at their lowest.” Read more here | WSJ
Putting Markets in Perspective PIMCO expects the eight-year-old global economic expansion will continue to strengthen and broaden for the remainder of 2017, driving global GDP growth to 2.75%–3.25% and inflation to 2.0%–2.5%. Read more here | PIMCO
Prices On the Rise When Ontario's provincial government announced they were increasing the minimum wage from $11.40 per hour to $15 per hour within two years, many Canadians shrugged, some even celebrated, but big businesses knew what it meant. Loblaw Companies Ltd. has warned that such a drastic increase to their employees wages will have to come from somewhere. They estimate the hike will cost them an additional $190 million per year. Loblaw chair and CEO Galen Weston Jr. explained the company was exploring all measures of cost cutting, from digitizing manual invoice jobs and rolling out more self-checkouts. And grocery stores won't be the only businesses suffering. The hospitality industry will face these wage increases too and undoubtedly hike their prices to make up for it. Read more here | CBC
Amazon falls a little short While the online retailing giant delivered sales growth of 25%, its profit fell 70% as total capital investment hit a record US$5.2 billion. Amazon is spending heavily on everything from fulfillment centres to staffing to AI to cloud services, which is why it also warned that it could post an operating loss in the third quarter. Company-watchers said the profit slump should remind investors that Amazon’s big ambitions carry a price. Read more here | WSJ
Billionaire vs. Billionare How does one celebrate becoming the world's richest person? For Jeff Bezos, it likely involves an Amazon splurge, or two. The Amazon founder has just been named the world's richest person, snatching the title from Microsoft co-founder and philanthropist Bill Gates. Bezos can thank a surge in Amazon shares, up 40%, for his newly acquired title, which had Forbes estimating his wealth at $90.6 billion (to Gates's $90 billion). Bezos still holds 17% of Amazon through nearly 81 million shares, but it's his passion project, rocket company Blue Origin, that stands to benefit most. He currently invests $1 billion per year in Blue Origin. Not too shabby for a hobby. Read more here | New York Times
Partners in an Alberta oil-sands project feuding over costs Suncor’s plan to move forward some spending on Fort Hills, which follows its decision to increase spending on the project by up to $1.9 billion, isn’t sitting well with partner Total SA of France. The dispute won’t affect the start of production, since Fort Hills is 92% complete. But it is another sign of domestic and international firms’ diverging approaches to the oil sands since oil prices tumbled—a development that’s seen some domestic firms take bigger bets on the oil sands as foreign firms exit the region. Read more here | Globe & Mail
The storage business is booming In the Toronto area alone, three dozen new sites are being developed, including one billed as the world’s largest storage facility. The growth mirrors what’s been happening south of the border (the U.S. industry is worth US$24 billion) and may reflect an increase in condo living. Or it may simply be due to the ever-present four Ds—death, divorce, downsizing and dislocation—that drive demand for storage. Companies in the space are diversifying their offerings: some now offer niche services like wine storage. Read more here | Canadian Business
Current Events & Politics
Regulators set their sights on double ending Critics argue that realtors cannot fairly represent both buyer and seller, a practice more common in smaller markets Read more here | Globe & Mail
North Korea Tests a Ballistic Missile That Experts Say Could Hit California North Korea tested an intercontinental ballistic missile on Friday that, for the first time, appeared capable of reaching the West Coast of the United States, according to experts — a milestone that American presidents have long declared the United States could not tolerate. The launching, the second of an intercontinental missile in 24 days, did not answer the question of whether the North has mastered all the technologies needed to deliver a nuclear weapon to targets in the United States. But just a few days ago, the Defense Intelligence Agency warned the Trump administration the North would probably be able to do so within a year, and Friday’s test left little doubt that Kim Jung-un, the North Korean leader, is speeding toward that goal. Read more here | NYT
Rocky Tenure as Trump Chief of Staff Reince Priebus, the White House chief of staff who failed to impose order on a chaos-wracked West Wing, was pushed out on Friday after a stormy six-month tenure, and President Trump replaced him with John F. Kelly, the secretary of homeland security and retired four-star Marine general. Mr. Trump announced Mr. Kelly’s appointment on Twitter shortly before 5 p.m. and only afterward sent out another message thanking Mr. Priebus for his service. “We accomplished a lot together and I am proud of him!” Mr. Trump wrote. Read more here | NYT
Petroleum Prohibition Electric cars may soon be the only cars allowed on the road. The U.K. revealed plans yesterday to ban all petrol, diesel, and hybrid vehicles beginning in 2040. India and France have made similar plans in hopes of reducing levels of nitrogen oxide, a public health concern. Currently, electric cars account for only 1% of car sales in the U.K., and the plan will require major changes to the country’s infrastructure. But this hasn’t discouraged the British, who have already set aside £100 million to develop charging bays across the country. And despite what you might think, some gas stations and auto manufacturers are on board with the plan. Shell recently announced plans to add charging bays to gas stations this year, while Volvo plans to produce only electric cars as early as 2019. (Canada has yet to reveal whether it will follow suit.) Read more here | BBC
Charlie Gard, the incurably ill British infant, has died. His plight led to a long, emotional legal fight that reverberated worldwide. He died a week before his first birthday, and a day after a court ruled that he could be moved to a hospice and his life support could be withdrawn. It was reported by the BBC, The Guardian and British news outlets, citing the boy’s parents. Read more here | NYT
A Big Win for the Inuit Community That was the message from the Supreme Court, which looked at whether indigenous groups were properly consulted when Canada’s National Energy Board approved two separate energy projects. The court’s conclusion: the regulator is equipped to handle such consultations on Ottawa’s behalf, but in one of the cases it didn’t do so adequately. That was a big win for an Inuit community in Nunavut, which opposed an oil-exploration project on the grounds that it would threaten the community’s source of food. Read more here | CBC
Senior Tech 75: That’s the age of the youngest of the three founders behind InfoSci, a U.S. tech startup focused on cybersecurity. They expect to get a patent next week thanks to the U.S. Patent Office’s fast-track program for inventors older than 65. Read more here | Bloomberg
Trump in Canada There'll soon be a Trump in Toronto, but not POTUS. First Lady Melania Trump will lead the U.S. team to the Invictus Games in the fall. The event is being held in Canada for the very first time since its 2014 inaugural event in London and will run from September 23 to 30. More than 550 veterans from 17 countries will attend to compete in 12 sports, including track and field, swimming and golf. Read more here | CBC
Grenfell Tower Charges U.K. police are mulling corporate manslaughter charges in the Grenfell Tower fire. That means officials from the local council and the firm that managed the high-rise will likely be questioned about the tragedy, but won’t face prison time. Other offenses are also being considered in connection with the fire, which killed at least 80 people and exposed broad problems with the safety of high-rises across the U.K. The country’s government has ordered a public inquiry into the June 14 tragedy. Read more here | BBC
No More Novak? After retiring from the Wimbledon quarterfinals two weeks ago, the former world number one, Novak Djokovic, decided it’s time for a break, opting to sit out the rest of the 2017 tennis schedule to heal his ailing right elbow. "This is one of those injuries where nothing can really help instantly. You just have to allow natural rehabilitation to take its course," Djokovic said. Since capturing the 2016 French Open and culminating a streak of four straight major championships, Djokovic has struggled mightily, failing to defend all four majors and dropping to number four in the world rankings. His upcoming absence at the US Open next month will snap a streak of 51 consecutive Grand Slam tournament appearances dating back to the 2005 Australian Open. Read more here | BBC
UK Stars The film industry is one of the stars of the U.K. economy. The country’s statistics agency said motion-picture activity has jumped 72% since 2014 and did much of the heavy lifting in the most recent second quarter, thanks in part to the lure of tax breaks. That explains why the industry recently unveiled a £20 million plan to attract off-screen talent—everyone from accountants to caterers to hair stylists. Read more here | The Guardian
Upcoming Events
5th Annual Stocks, Suits, Scotch | More details coming soon...
Just for Fun
This is Our Open Heading to the RBC Canadian Open this weekend? This site has everything you need to know...and if you can't make it, check out scheduled times to watch online, on TV or check the live scoring leaderboard. Read more here | RBC
Reunited and It Feels So Good The Beatles are back together! The last living members of The Beatles, bassist Paul McCartney and drummer Ringo Starr, joined forces to write a new single, their first joint venture since 2010, which will appear on Starr's upcoming solo album, "Give More Love." The collaboration, We're on the Road Again, was described by Rolling Stone as "surprisingly punk-styled." It's certainly no "Come Together" but we'll celebrate anything these two put their minds to. Read more here | The Guardian
The Six Most Delicious Wines You’ve Probably Never Heard Of Pecorino? Nascetta? Gringet? If you don't know these long-sleepy grape varietals, get yourself educated. They're the next hot thing in wine Read more here | Bloomberg
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