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.
Mar 3, 2014 8:00 am
“In a market economy such as ours, economic activity or growth is not dictated by Government but rather determined by entrepreneurs and their employees working in their own self-interest. The Government’s job is to create a favourable and fair environment for job makers to thrive, just as a farmer’s job is to provide fertiliser and water for his crops to grow. The farmer knows he can’t make his plants grow — nature has to take its course —...
Feb 10, 2014 8:00 am
“ ... there is the dream and the will to found a private kingdom ... there is the will to conquer: the impulse to fight, to prove oneself superior to others, to succeed for the sake, not of the fruits of success, but of success itself ... Finally there is the joy of creating, of getting things done, or simply of exercising one’s energy and ingenuity.
— Joseph Schumpeter, on the nature and essential character of the...
Jan 20, 2014 8:00 am
According to the Book of Odds, a collection of statistics about everyday life, of the 317 million adults in the US, only one in 2.2 make a New Year’s resolution. Of these, one in 8, or 17.8 million will actually keep it for the year. If you do manage to keep the resolutions, however, you are ten times more likely to change your life. So the odds may be stacked against you but the rewards are high. Here is a shortlist of five investing New...
Jan 14, 2014 8:00 am
“While doctors might be able to advise patients about their general health, they could not determine whether a healthy patient would be struck by a brick upon leaving the hospital.” — in “Fortune Tellers” by Walter Friedman
“As I think back over the years, I have been guided by four principles for decision making. First, the only certainty is that there is no certainty. Second, every decision, as a consequence, is a matter of...
Jan 6, 2014 8:00 am
In January of last year I laid out 13 unexpected events or surprise situations that were currently outside of the conventional consensus opinion that I felt had a reasonable chance of occurring (http://www.royalgazette.com/article/20130114/COLUMN05/701149987). Let’s go back and take a look at how these ‘surprises’ panned out:
1. Despite a floundering economy, the BSX Index climbs again. Specifically I stated that the BSX would tack on a...
Dec 23, 2013 8:00 am
This is the final instalment of the three-part series on retirement planning and investing.
“Retirement at 65 is ridiculous. When I was sixty-five I still had pimples.” - George Burns
Retirement planning lore is littered with conventional wisdom, heuristics and rules of thumb. Unfortunately, many of these are dead wrong or far too simplistic. For example, maybe you believe you can put off planning for retirement or...
Dec 16, 2013 8:00 am
This is the second part of a three-part series on retirement planning.
“Fragility is the quality of things that are vulnerable to volatility.”
— Nassim Nicholas Taleb
Life in retirement should be fun and stress free; the “golden years”. However, many people spend 20 to 30 years in retirement and funding these years may present a significant challenge. Here we will concentrate simply on the market risks of a...
Dec 9, 2013 8:00 am
This is part one of a three-part series on retirement planning and investing for retirement that will be delivered over the next couple of weeks.
“It is always wise to look ahead, but difficult to look further than you can see.”
- Winston Churchill
As we run around shopping for Christmas and planning for the festive season I’m pretty sure no one is really spending time considering their financial future.
Nov 25, 2013 8:00 am
The S&P 500 is having its best year since 2003 with gains of over 26 percent year to date. Small cap stocks are soaring even further — up some 30 percent and the Dow Jones Industrial Average has been hitting record highs — up over 20 percent as well. All these widespread gains have sparked a raft of bubble talk and scepticism. Barron’s even had a picture of a bubble on its front cover last weekend. Ironically this is nothing new, some of...
Nov 19, 2013 8:00 am
Bermuda’s national health care issues are indeed numerous (eg, access, pricing, coverage, funding etc) and one of the Island’s biggest fiscal drains. Rapidly rising healthcare costs undermine the all-important confidence of small and medium-sized businesses, costing jobs and ultimately economic growth. The debate has recently focused on “who is without” and “who pays for what”, and not the more important aspect of actually lowering overall...
Nov 4, 2013 8:00 am
Recently Bermuda’s Department of Statistics (DoS) released its fourth annual Environmental Statistics Compendium which claims Bermuda’s population has increased over the past two years.
In our latest quarterly economic update Anchor Investment Management did some work on this issue and we estimate that Bermuda’s population declined by 4.2% since the last census in...
Oct 16, 2013 8:00 am
The Chartered Financial Analyst Society of Bermuda recently hosted the Global Interdependence Conference in Bermuda on October 10 and 11. It was a fantastic forum with some world-class speakers. What follows are a few key takeaways.
1) Sometimes we don’t know
Sep 30, 2013 8:00 am
“The one thing I will tell you is the worst investment you can have is cash. Everybody is talking about cash being king and all that sort of thing. Cash is going to become worth less over time. But good businesses are going to become worth more over time. And you don’t want to pay too much for them so you have to have some discipline about what you pay. But the thing to do is find a good business and stick with it. We always keep enough cash...
Sep 16, 2013 8:00 am
“A democracy cannot exist as a permanent form of government. It can only exist until the people discover they can vote themselves largesse out of the public treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the public treasury, with the result that democracy always collapses over a loose fiscal policy — to be followed by a dictatorship.” — Alexander Fraser Tytler
Sep 9, 2013 8:00 am
How high will bond yields rise and where does the rout in US Treasury securities cease in the short term?
This question has been on bond investors’ minds for some time now.
Much of the recent rise in yields is likely related to investor concerns over the Fed’s intentions to taper its purchases of government bonds as soon as this month and potentially end its purchases completely by sometime next spring.
Sep 3, 2013 8:00 am
There is a branch of economics that deals with the operations of the political process called public choice theory.
Often credited to the economist James Buchman who won a Nobel Prize in economics, it deals with a theory linking individual behaviour to ultimate political action.
In general, the political process works very well when there is a close and transparent relationship between the receipts of benefits and payment of costs.
Aug 19, 2013 8:00 am
I recently watched an online video commentary by Brian Wesbury at First Trust on basic economics (links to the videos below). What struck me about these pieces was their elegant simplicity in summarising what many would consider complex economic aspects. At the end of the day there are two basic economic trains of thought: demand side economics and supply side economics. I’ll summarise each briefly and then end with a great story to narrate my...
Aug 5, 2013 8:00 am
(Second of two parts)
Unit labour cost (“ULCs”) is a well-known measure of international competitiveness which combines labour cost and productivity into a single measure. In general, unit labour costs show how much output the economy receives relative to wages, or labour cost per unit of output.
Jul 29, 2013 8:00 am
The world is increasingly becoming a more open economic forum. As a result the inexorable march in global competition continues every year. (This is Part 1 of 2)
Nations are at war for jobs, economic growth and distinct, sustainable competitive advantages.
As we have written before in Bermudas New Normal, one aspect in determining a nations base growth rate is how productive it is.
Jul 15, 2013 8:00 am
Inertia is one of the fundamental principles of classical physics. It is often referred to as the tendency of an object to resist changes to its state rest or motion. Newton suggested that an object will continue moving in its current velocity until some force causes its speed or direction to change.
Jul 8, 2013 8:00 am
Investors are scrambling and yanking billions from US bond funds since the Federal Reserve rattled markets with its plan to end the central banks unprecedented asset purchase programme. According to research firm TrimTabs Research, mutual funds and bond exchange-traded funds saw a combined $47.2 billion in fund outflows during June. This was biggest monthly outflow on record, even exceeding October 2008. Retail investors who have put...
Jul 1, 2013 8:00 am
The Industrial Revolution marked a major transformation in the way the world manufactured and produced goods. Humans largely went from hand-producing individual items to a new manufacturing paradigm involving the use of new tools and machines, harnessing the power of water and steam, and employing new iron and chemical manufacturing processes.
Jun 24, 2013 8:00 am
On Wednesday the US Federal Reserve (the Fed) indicated that their Quantitative Easing Programme (QE) (a programme where they buy Treasuries and mortgage backed securities) will be more conditional on economic circumstances in the US and is likely to be curtailed or tapered if conditions continue to improve. Specifically, QE will continue until the labour market has improved substantially or the unemployment...
Jun 10, 2013 8:00 am
By Nathan Kowalski
Wow that cost over $20 a drink? said a girl sitting at the table with our group.
Thats crazy, said another guy, peanut shells on the floor crunching beneath his feet.
You all obviously havent had cocktails in Bermuda for Happy Hour, I stated with a grin.
May 13, 2013 8:00 am
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 Tilsons slide deck.
Apr 30, 2013 8:36 am
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...
Apr 15, 2013 8:00 am
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.
Apr 8, 2013 8:00 am
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 Ill find Buffetts letter to the shareholders which always contains gems of advice. This year didnt disappoint.
The following are some of his selected quotes with my comments:
Mar 25, 2013 8:00 am
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 am
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. Its 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 am
A few random comments on the markets and finance:
Yes thats 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.
Dont tell anyone though because most people dont realise it yet. Most Main Street folks are still smarting from the 2008-09 collapse.