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Nathan Kowalski
BUSINESS COLUMNIST
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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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  • Apr 3, 2014 8:00 am

    The wisdom of Warren Buffett

    “Investment is most intelligent when it’s most businesslike.”

    - ‘The Intelligent Investor’ by Benjamin Graham

    The Berkshire Hathaway 2013 Annual Shareholders Letter came out on Saturday, March 1. As many readers will know, I am a huge fan of Mr Buffett and his straightforward and practical approach to investing. In a world awash with reams of information that gets fed to the consumer through a fire hose, it’s refreshing to...

  • The end of Bermuda’s debt super-cycle
    Mar 11, 2014 8:00 am

    The end of Bermuda’s debt super-cycle

    Leverage is a wonderful thing when it works in your favour. It enables development, amplifies returns and at times offers illusory periods of above-trend growth. Eventually, however, the effects of additional debt begin to fade and, on the margin, offer less and less benefit. Once a nation, company or individual gets to a point where potential incremental growth does not justify higher levels of indebtedness, repayments begin, and the...

  • In defence of capitalism
    Mar 3, 2014 8:00 am

    In defence of capitalism

    “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 —...

  • Labour pains in the job market
    Feb 10, 2014 8:00 am

    Labour pains in the job market

    “ ... 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...

  • Investing resolutions for 2014
    Jan 20, 2014 8:00 am

    Investing resolutions for 2014

    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...

  • 12 surprises for 2014
    Jan 14, 2014 8:00 am

    12 surprises for 2014

    “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...

  • Not a bad hit rate for my surprises of 2013
    Jan 6, 2014 8:00 am

    Not a bad hit rate for my surprises of 2013

    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...

  • Retirement myths and misconceptions
    Dec 23, 2013 8:00 am

    Retirement myths and misconceptions

    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...

  • The market risks of retirement
    Dec 16, 2013 8:00 am

    The market risks of retirement

    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

    Non-market retirement risks

    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.

  • Is this a bubble?
    Nov 25, 2013 8:00 am

    Is this a bubble?

    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...

  • Make Bermuda health care a free-market product
    Nov 19, 2013 8:00 am

    Make Bermuda health care a free-market product

    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...

  • Bermuda’s true population
    Nov 4, 2013 8:00 am

    Bermuda’s true population

    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...

  • Highlights from Bermuda’s GIC conference
    Oct 16, 2013 8:00 am

    Highlights from Bermuda’s GIC conference

    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

    Is cash king or is cash costly?

    “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

    Canada’s redemptive decade: Lessons for Bermuda

    “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

  • Bond yields on a leash
    Sep 9, 2013 8:00 am

    Bond yields on a leash

    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.

  • Public choice and economic inefficiencies
    Sep 3, 2013 8:00 am

    Public choice and economic inefficiencies

    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.

  • It’s the net that matters — not necessarily the desire for fish
    Aug 19, 2013 8:00 am

    It’s the net that matters — not necessarily the desire for fish

    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

    Competitiveness: Is it time we addressed the elephant in the room?

    (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.

  • Bermuda’s competitiveness: Our ‘productivity has been flat
    Jul 29, 2013 8:00 am

    Bermuda’s competitiveness: Our ‘productivity has been flat

    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 “Bermuda’s New Normal”, one aspect in determining a nation’s base growth rate is how productive it is.

  • Jul 23, 2013 8:00 am

    Motor City runs out of gas

    By Nathan Kowalski

  • How low can we go; Has Bermuda economy reached the bottom yet?
    Jul 15, 2013 8:00 am

    How low can we go; Has Bermuda economy reached the bottom yet?

    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

    The unappreciated risk in bond ETFs and funds for retirement

    Investors are scrambling and yanking billions from US bond funds since the Federal Reserve rattled markets with its plan to end the central bank’s 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...

  • The 3D printing revolution: An area to keep on your radar screen
    Jul 1, 2013 8:00 am

    The 3D printing revolution: An area to keep on your radar screen

    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

    Taper tantrum

    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

    Singapore sling

    By Nathan Kowalski
    “Wow that cost over $20 a drink?” said a girl sitting at the table with our group.
    “That’s crazy”, said another guy, peanut shells on the floor crunching beneath his feet.
    “You all obviously haven’t had cocktails in Bermuda for Happy Hour,” I stated with a grin.

  • Fear of heights: ‘Most hated bull market’
    Jun 3, 2013 1:45 pm

    Fear of heights: ‘Most hated bull market’

    In clinical terms the extreme or irrational fear of heights is known as acrophobia. It’s derived from the Greek word meaning “peak, summit, and edge”.

  • 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.

  • 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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