Financial Ramblings
BUSINESS COLUMNIST
Nathan Kowalski is the chief financial officer of Bermuda-based investment firm Anchor Investment Management Ltd. He holds Chartered Accountant, Chartered Financial Analyst and Chartered Investment Manager designations. He is currently the president of the Chartered Financial Analyst Society of Bermuda board. Mr Kowalski started his career with KPMG, where he provided assurance, tax and financial advisory services for some of the largest corporations in Canada. He then worked for Deloitte & Touche Corporate Finance Inc, where he specialised in providing advice on mergers and acquisitions, valuations for corporate clients and private-equity firms, entrepreneurs and governments.
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May 13, 2013 8:00 am
The three most dangerous words in investing
The Value Investing Congress just concluded in Las Vegas where approximately 20 speakers gave their pitches for their favourite stocks. I always find this conference a useful source of ideas to take a further look at. Some of the speakers have incredible track records and their analysis is very robust. The one aspect, however, that really caught my eye was not a stock pick. It was on the very first slide of Whitney Tilson’s slide deck.
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Apr 30, 2013 8:36 am
My advice to the SAGE Commission
The SAGE Commission in Bermuda has been formed “to identify activities that are central to the core mission of Government; to evaluate and analyse the operations of Government and its corporate bodies and agencies in line with international best practice; and to make recommendations regarding the streamlining of such processes to improve service delivery (effectiveness), cost savings (efficiency), greater transparency and...
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Apr 23, 2013 8:00 amIs the commodities bull market over?
“Nothing new ever occurs in the business of speculating or investing in securities and commodities.”
— Jesse Livermore’s Trading Rules Written in 1940 -
Apr 15, 2013 8:00 amBank of Japan’s bazooka, gold and “nerd’s gold”
The world continues to be flooded with cheap money as central banks engage in monetary easing. This grand financial experiment is likely leading to some aberrations and distortions in fiat currencies, precious metals and some unique alternatives. This is presenting investors with unique risks and opportunities.
Japan -
Apr 8, 2013 8:00 amWarren Buffett shares his wisdom
Regular readers of this column know that I am a big fan of Warren Buffett. As a shareholder of Berkshire Hathaway, I am always pleased to get my copy of the annual report. Inside I know I’ll find Buffett’s letter to the shareholders which always contains gems of advice. This year didn’t disappoint.
The following are some of his selected quotes with my comments: -
Apr 1, 2013 8:00 amThe Cyprus egg has been cracked!
Cyprus is the third largest island in the Mediterranean (3,572 square miles) with a population of roughly one million people.
Its gross domestic product is minuscule in terms of the Eurozone, estimated to be around $24 billion. -
Mar 25, 2013 8:00 amTrust fuel for progress in finance
Although equity markets are soaring near all-time highs, public trust in the finance profession has moved in the other direction.
Even though the financial service industry does provide a necessary and beneficial services to society such as lending, preparing for retirement or directing investment capital to fund growth, many public opinion polls offer a dim view on the industry. -
Mar 19, 2013 10:31 amEroding bond edge
Modern portfolio theory espouses the benefits of diversification. Essentially holding a basket of securities with varying correlations should help lower volatility and enhance risk adjusted returns. It’s important to note, however, that all periods are different and diversification has helped to varying degrees over time.
See Table #1 which outlines various returns on different allocations. -
Mar 11, 2013 8:00 amS&P 500 returns 150% since March ’09
A few random comments on the markets and finance:
Bull market
Yes that’s right. We seem to be in a bull market. The S&P 500 has produced a total return of about 150 percent since the bottom in March of 2009.
Don’t tell anyone though because most people don’t realise it yet. Most Main Street folks are still smarting from the 2008-09 collapse. -
Feb 27, 2013 8:00 am
‘Bermuda credit rating cut imminent’
After reading through the Budget release and attending the Bermuda Chamber of Commerce’s Budget Breakfast it is my opinion that Bermuda’s economic challenges are both enormous and wide ranging. In which case balancing the Budget will be a significant and difficult task requiring patience and time. What follows are a few negative and positive takeaways from the current situation:
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Feb 11, 2013 8:00 am
The bad & beguiling nature of benchmarking
The investment industry’s obsession with measurement, performance and comparisons has always struck me as odd.
The fact that investment professionals expend so much time and energy devising various measures and comparative statistics seems at odds with what they should be focused on, which, of course, should be generating absolute returns that correspond with their client’s needs and constraints. -
Feb 4, 2013 8:00 am
Immigration economics
Many countries are currently focused on amending and considering immigration changes because they realise that immigration reform can be a powerful toll to enhance the economic prospects for their country. In Bermuda the government has ended term limits in an effort to boost the economy. The United States is also currently considering major immigration reform that has the potential to assist boosting their middling economy as well. Can...
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Jan 29, 2013 8:00 amIs the Apple core rotten?
Apple was taken to the cleaners on Thursday after it reported financial results on Wednesday night. One of the world’s most discussed stocks and a perennial Wall Street darling lost about $63.70 or almost $60 billion in market capitalisation. So what gives? Is Apple in trouble or going out of business? I’m not making a buy or sell recommendation, only giving some food for thought on the world’s second largest company.
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Jan 14, 2013 8:00 am
13 surprises for 2013
“This is the season of the year when a host of high-priced economists unlimber their high-speed computers and uncork their precise predictions for the economy for the year ahead: the exact level of GNP [now GDP], the inflation rate, unemployment and so on. In this lucrative forecasting business, all the forecasts are more or less the same, and they will be usually proven way off the mark.”
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Jan 7, 2013 8:00 am
12 surprises for 2012 reviewed
In January of last year I laid out 12 unexpected events that were currently outside of the conventional consensus opinion that I felt had a reasonable chance of occurring (http://www.royalgazette.com/article/20120109/COLUMN05/701099993). Let’s go back and take a look at how these “surprises” panned out.
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Dec 31, 2012 8:00 am
Five investing New Year’s resolutions for 2013
Every year I spend some time attempting to create a list of New Year’s resolutions to clarify my personal goals. The concept of New Year’s resolutions has a long history and some were actually financial in nature.
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Dec 12, 2012 8:00 amWhat works in investing - dividends
One common concern among investors is the lack of income opportunities in the market. Bond yields have collapsed to record lows and offer very little absolute income. In fact most of the treasury curve actually offers negative real returns after accounting for inflation.
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Dec 5, 2012 11:18 amHow serious is Bermuda’s public debt?
This week, Nathan answers the questions we put to him about Bermuda’s fiscal situation and what can be done to improve it.
Just how serious is Bermuda’s public debt? -
Nov 27, 2012 8:00 am
Three economic things to be thankful for
They call economics the “dismal science”. The world often seems far more interested in the awful things going on rather than positive developments. That’s why we rubber-neck when we see car accidents and airplane landings never make the news. Now that Thanksgiving has come and gone I hope all those who celebrate this seasonal break had a chance to take a moment and think of those things we can be thankful for rather than worry...
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Nov 19, 2012 8:00 amLiving on the side of a cliff
The Ancestral Pueblo people built elaborate housing developments in the cliffs of Mesa Verde (near Cortez, Colorado). Although, it is not definitely clear from historic accounts, one of the main reasons they lived in these precarious dwellings was fear.
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Nov 14, 2012 8:00 amCongratulations, Mr Obama - now what?
President Barack Obama’s victory will likely not have a huge effect on the market and the US economy over the short to intermediate term. Nor will it change the bigger economic or fiscal picture for the US.
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Nov 5, 2012 8:00 am
PPNs: The price one pays to alleviate fear
The large amount of macro uncertainty plaguing the world today has led to a boom in financial products that hope to alleviate one’s concerns and hedge risk.
Hedge funds, of course, have always promised to hedge risk and offer absolute returns but they have not delivered for a ten year period compared to traditional portfolios. -
Oct 24, 2012 9:03 amMarkets: Turn for worse, or pause for refresh
There was a lot of red on my screen Friday.
We appear to be in the midst of a somewhat bearish and uncertain atmosphere.
A third-quarter earnings slowdown appears to be the culprit. According to Thomson Reuters, the companies in the S&P 500 are expected to see a roughly 2.9% decline in earnings and a drop of 0.2 percent in revenues with six of ten sectors set to see declines. -
Oct 15, 2012 8:00 amLiquid gold
“You ain’t gonna miss your water until your well runs dry”
- Bob Marley -
Oct 8, 2012 8:00 am
The ramifications ‘easy money’ might have on Bermuda
Whether you like it or not, the world’s monetary authorities are a significant factor and force in the global economy — especially the US Federal Reserve (Fed).
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Sep 24, 2012 6:00 am‘Still too much bull in the China shop’
By Nathan Kowalski
Investors have focused on China for some time. What is amazing is how difficult it continues to be to get a real read on what is happening.
Recently I was in Hong Kong and I attempted to get a feel for what is really going on while I was there.
Unfortunately I wandered into a Chinese maze that only continued to heighten my scepticism on China and its current situation. -
Sep 10, 2012 6:00 amBermuda's 'coming war on jobs'
Labour Day may have come and gone, but the war for jobs is just getting started.
I finished reading a book by Jim Clifton, chairman of Gallup, called “The Coming Jobs War” and it was a very prescient read on the world's current situation.
It is likely that there will be no issue that policymakers and national leaders will need to address more than the creation of “good jobs” for their nation. -
Aug 27, 2012 8:00 amWithering crops lead to soaring issues
Bermudians have always been concerned about the rain due to a lack of other sources of fresh water. The island’s recent drought-like conditions (barring the rains last week) may have been difficult, but now a global drought is impacting the markets in various ways.
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Aug 20, 2012 8:00 amClimbing a wall of worry
The equity markets continue to grind higher. Given the economic gloom it would probably surprise most people to know that the S&P 500 has risen over 28 percent in the last 12 months (it certainly doesn’t feel like it!). Sentiment continues to exhibit a negative bias and confidence remains elusive.
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Aug 13, 2012 8:00 amIssuing a yellow card to Manchester United public offering
Manchester United (MANU) went public last Friday giving its loyal fans a chance to own a piece of the storied franchise. The club has a long and rich history with millions of fanatical supporters and a great record on the pitch but I was curious to find out if MANU might also be a good investment. What I found is that it might deserve a yellow card.
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Jul 16, 2012 8:00 amCrumbling confidence helps support market
It sounds counter-intuitive but the sheer level of fear and complete lack of confidence inequity markets throughout the world actually provides support. To give you an idea of how far expectations have fallen, here are a few sentiment indicators:
1. Bank of America Merrill Lynch (BAML) may have sounded a contrarian bottom in equities relative underperformance. Take a look at the banner headline pictured. -
Jul 9, 2012 6:00 amEnergy Independence Day
Americans celebrate their independence from the British every 4th of July. Soon there may need to be a new holiday to celebrate a different kind of independence, energy independence.
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Jul 2, 2012 9:00 amNew National Tourism Plan numbers ‘unrealistic’
“Everyone’s a millionaire where promises are concerned.”
-Ovid
“If something is irrational, that means it won’t work. It’s usually unrealistic.”
-Albert Ellis, American psychologist who in 1955 developed Rational Emotive Behavior Therapy -
Jun 25, 2012 8:00 amCracks in the Chinese Wall
The market these days is mainly focused on the drama unfolding in Europe or the fiscal cliff looming in the US. Investors hoping to find solace in emerging markets like China, however, may want to consider a few points.
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Jun 19, 2012 8:00 am
Stuff my dad told me about money
As the Greeks went to the polls this weekend, I was focused on something much more important, Father’s Day.
In light of the gloom and doom in the global markets lately, I have decided to write something on the lighter side this week paying homage to my father and some of the financial advice he has given me along the way, various pearls of wisdom that somehow became common sayings around the Kowalski household. -
Jun 12, 2012 8:00 amThe great ETF bubble opportunity
The financial markets have historically gone through investment product fads. I previously wrote about how hedge funds are having a very difficult time delivering sustainable positive performance given their popularity and explosive growth. Technology mutual funds ascendancy by the end of the 90’s offers another example. Their surge in popularity during the technology bubble helped to exasperate the overvaluation in the tech sector at the...
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May 28, 2012 8:00 am
Facebook falls on its face with IPO
Expectations are a funny thing. Sometimes a positive emotional outlook can cloud one’s judgment and restrict sceptical and rationale thought.
I know personally because I just ran the Bermuda Half Marathon Derby for the first time which I naively thought would be “not so difficult”.
- Should liquor stores be able to sell alcohol on Sundays?
- Yes
- 71%
- No
- 27%
- Don't Know
- 1%
- Total Votes: 2016
- Poll Archive