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.
Feb 8, 2016 8:00 am
January was not a kind month for equity investors. The volatility was discerning and uncomfortable. While markets may correct further (nobody knows for sure) it’s very important to realise that market sell-offs are par for the course. In times like these it is important to focus on your long term plan and what you own. I believe that it is axiomatic that while capital flows will drive market values in the short term, valuations will drive...
Jan 18, 2016 8:00 am
“Never make predictions, especially about the future”
— Casey Stengel
“Every year I talk to the executives of a thousand companies, and I can’t avoid hearing from the various gold bugs, interest-rate disciples, Federal Reserve watchers, and fiscal mystics quoted in the newspapers. Thousands of experts study overbought indicators, oversold indicators, head-and-shoulder patterns, put-call ratios, the Fed’s policy on money...
Jan 11, 2016 8:00 am
“Humans don’t want accuracy; they want reassurance. The Nobel laureate and retired Stanford University economist Kenneth Arrow did a tour of duty as a weather forecaster for the US Air Force during World War II. Ordered to evaluate mathematical models for predicting the weather one month ahead, he found that they were worthless. Informed of that, his superiors sent back another order: ‘The Commanding General is well aware that the forecasts...
Dec 21, 2015 8:00 am
What follows is a series of twelve facets in the financial markets for 2015. I’m pretty sure you won’t be able to sing this as a carol.
1. One Fed Hike. They did it. Finally. Probably a bit late too. The Federal Reserve hikes interest rates for the first time in nine years! We have been at microscopic rates for so long it’s beginning to feel like Japan.
2. Two Markets Diverging. Growth has been beating value for some time. In fact...
Dec 15, 2015 8:00 am
Tomorrow we will get the Federal Reserve’s decision on whether or not they will raise the Fed Funds rate. The market has been stewing over a rate rise for what seems like an eternity. I think they will move and the market seems to agree, with the Fed Funds futures pricing in a 72 per cent probability as of this writing.
But should they? The Fed has what is called a dual mandate: inflation and unemployment. Essentially they are tasked...
Nov 30, 2015 8:00 am
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, but airplane landings never make the news.
Now that Thanksgiving has come and gone I hope all those who celebrate this seasonal break have had a chance to take a moment and think of those things we can be thankful for rather than worry...
Nov 23, 2015 8:00 am
The investment community is coming to grips with the effects from the horrific attacks in Paris. These abhorrent actions should not be callously dismissed and retribution is being dealt with as we speak. But what of the financial and market effects? The initial reaction, at least as portrayed by the regional stock markets, seems muted.
The CAC 40 (France’s major exchange), ended only fractionally down on Monday (losing less than 0.1...
Nov 16, 2015 8:00 am
Over time prices rise and fall at varying rates. The rate of inflation and its effects on an economy are often talked about endlessly.
The latest jobs report has significantly increased the likelihood of a December rate hike. But is this rate hike necessary in the face of what appears to be underlying deflationary pressures and weaknesses in many sectors of the economy?
It’s difficult to cheer a rate rise when sales for the...
Nov 2, 2015 8:00 am
“Of all sad words of tongue or pen, the saddest are these: it might have been.”
- John Greenleaf Whittier
October 21 was Back to the Future day. This was the day that Marty McFly travelled to from 1985 in the second Back to the Future movie.
A lot of what was portrayed in the movie never really came to pass: think hover boards and making payments with only your thumb print. It’s very easy to point out what the...
Oct 19, 2015 8:00 am
China has been in the news a lot lately. There are many stories of concern, ranging from the currency devaluation, the economic slowdown and the stock market collapse.
When I was in Hong Kong last week and my friend asked me to join him for tea to speak to Mr M, I jumped at the chance.
Mr M is a well-connected man. He sits on six or more boards in China (when he was giving out his business card to me he pulled out a deck of...
Oct 5, 2015 8:00 am
“If we don’t discipline ourselves, the world will do it for us.”
- William Feather, American author
After four years without a 10 per cent correction in the S&P 500, August issued a reminder to investors: stocks do go down. In fact the saying is that stocks take the stairs up and the elevator down. As shares plummet, people begin to focus on their portfolios and regain a sudden, more intense, focus on investing.
Sep 8, 2015 8:00 am
In part one we briefly went through the theory and history of innovation on employment. We covered two aspects that affect Bermuda: the pace of change and the occupational risk mix. In part two we reviewed some implications for Bermuda, including inequality and worker opportunities. Today we will discuss some potential policy options.
“If you want to have good ideas, you must have many ideas” —Linus...
Aug 31, 2015 8:00 am
In Part 1 we briefly went through the theory and history of innovation on employment. Then we covered two aspects that affect Bermuda: the pace of change and the occupational risk mix. Today we will look at the implications for Bermuda.
Implications for Bermuda
Are we actually seeing this disruption? Is all this heralded change actually manifesting itself on our island? The short answer is maybe. One will never be able to prove...
Aug 24, 2015 8:00 am
“If a man takes no thought about what is distant, he will find sorrow near at hand” — Confucius
The world is changing. The very essence of work is changing. As Bermuda’s job market continues to stagnate it’s important we briefly delve into the changing nature of technological innovation and its implications for the future employment and society more broadly on the Island.
David Ricardo in his seminal work The Principals of...
Aug 17, 2015 8:00 am
A flurry of statistics has hit the wires over the last month. The data dump comes in the middle of summer when most would rather be hitting the beach and not the keyboard for inputting data into spreadsheets. I’ll hit the keyboard for you. What follows is a brief commentary on a few of the recent reports.
Labour Force Survey
In short, it wasn’t good. Although the headline drop in the unemployment rate from 9 per cent to 7 per cent...
Jul 13, 2015 8:00 am
Trees don’t grow to the sky. After surging over 150 per cent over the past year, the Shanghai Stock Exchange Composite Index forest has been cut down. The recent breathtaking destruction of capital seen in China has sucked a huge amount of oxygen out of this market.
At one point the rout in Chinese shares was over $3 trillion, which is equivalent to the size of India’s entire stock market. Near the peak the ChiNext (Chinese Technology...
Jun 29, 2015 8:00 am
I probably don’t need to tell you that Greece has a debt problem. Actually, it’s better to call it a crisis. It now faces two very large and imminent debt payments: 2 billion euros due to the International Monetary Fund (“IMF”) within 30 days and by the July 20 it has to pay 3.5 billion euros to the European Central Bank (“ECB”). If Greece somehow manages to negotiate a refinancing or restructuring for these amounts it “kicks the can down the...
Jun 22, 2015 8:00 am
Let’s make something clear, local inflation doesn’t help anyone without pricing power — it lowers living standards by reducing purchasing power. It also can act as a disincentive for business investment and ultimately the level of employment.
If costs escalate then returns on capital invested are likely to be reduced when assuming one has limited pricing power (which is a very realistic assumption in today’s world of hyper...
Jun 8, 2015 8:00 am
For many, the title might remind you of the Greek alphabet. For those in the investment industry it denotes factors for returns.
Professionals in my industry are obsessed with measuring everything. In some cases this is very important. In others, unfortunately, it tends to obfuscate the important dynamics of investment management and financial planning.
For those unfamiliar with the terms, alpha generally refers to the...
May 18, 2015 8:00 am
The unicorn, of course, is the legendary animal rarely seen and difficult to capture. Unicorns are not just part of mythology anymore, however. In fact they are more common than ever. The unicorns I’m referring to are not the beasts with the large pointy horns projecting from their heads. They are the stuff of legend now found in the private market in the fantastic realm of venture capital. According to Aileen Lee of Cowboy Ventures who...
Apr 27, 2015 8:00 am
You might not know this but the North Stars won the Bermuda Ball Hockey championship a week ago. A team that may not have ranked first place upon reviewing the statistics and one that battled all year to make the playoffs came out on top.
What does this team and ball hockey have to do with investing? There are a few lessons here.
1. You Can’t Win If You Don’t Believe.
If the Stars never believed they had a chance there is...
Apr 14, 2015 8:00 am
As a kid I read a few DC comics that were set in the Bizarro world of “htraE” (or “Earth” spelt backwards). It was a world where everything is essentially inverted or the opposite of expectations. In fact, one episode depicts a salesman selling Bizzarro bonds that were “guaranteed to lose money”. Ironically, this is not a comic book story anymore. Bizarro world is now part of our current financial markets.
Mar 30, 2015 8:00 am
In the most recent budget statement, the government has suggested that it is a “national economic imperative” to revitalise Bermuda’s hospitality sector. This can be seen in the $930 million list of projects in Table 1 of the budget statement which all, in some shape or form, touch on the tourism sector.
Bermuda is making a bet that these investments will reinvigorate our fading tourism product and offer a renewed growth engine for an...
Mar 16, 2015 8:00 am
In Greek mythology, Sisyphus was punished by the gods for his deceitfulness by being condemned to ceaselessly rolling a very large rock to the top of a mountain, only to watch it fall back under its own weight, and thus repeat this action forever. It symbolises, in some aspects, a futile exercise or one that appears to offer no discernible satisfactory resolution.
The process of eliminating deficits and debts to many countries has...
Mar 13, 2015 8:00 am
The Berkshire Hathaway’s annual shareholder letter has always been a special event for this writer as I continue to be a devout follower of Warren Buffett (WB). What makes it particularly special is this year marks the 50th anniversary of Warren Buffett at the company’s helm. At the end of the letter, Buffett and his long-time partner Charlie Munger even share what they thought made Berkshire Hathaway so wildly successful. This offers some...
Feb 19, 2015 8:00 am
The Bermuda economy has been mired in a depression now for six years, with its levels of demand and output still far below its peak seen in 2008. There is growing concern among many that the Bermuda economy could suddenly decline from the simultaneous threat of a weakening and slowing global economy, a lack of true domestic reforms and the untimely move to more fiscal constraint.
Over the longer term, whether Bermuda can overcome its...
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