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 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...
Feb 9, 2015 8:00 am
Energy feeds into almost everything we do or have. It is a vital building block for growth and our modern economy would not exist if not for it. Some historians even surmise that cheap energy was one of the most important factors that helped propel the great accession and development of the United States through history to make it the world’s largest economy. Because of its critical importance in almost all aspects of the economy, directly or...
Jan 20, 2015 8:00 am
“Unlike, say, meteorologists, who predict specific outcomes at exact times and use percentages to indicate how confident they are about their forecasts, financial pundits rarely assign probabilities to their predictions and make a variety of judgment calls that can be hard to categorise.
“Why, then, do so many people seem to complain that the weather forecast is inaccurate even as they bet a chunk of their life savings on a prediction...
Jan 12, 2015 8:00 am
“A good forecaster is not smarter than everyone else, he merely has his ignorance better organised.”
In January of last year I laid out 12 unexpected events or surprise situations that were, at the time, outside of the conventional consensus opinion that I felt had a reasonable chance of occurring (http://www.royalgazette.com/article/20140114/COLUMN05/140119906). Let’s go back and take a look at how these “surprises”...
Dec 15, 2014 8:00 am
You may have seen the highly acclaimed television show “House”, which is based on a fictional Princeton Plainsboro Teaching Hospital in New Jersey. Dr Gregory House tackles potentially terminal health mysteries as would a medical Sherlock Holmes. His diagnosis is complicated and treatments involve trying different approaches.
Bermuda’s economic situation can be compared to one of House’s patients whose fate lies in the hands of an...
Dec 1, 2014 8:00 am
Thanksgiving is about being thankful. We all should take some time to be thankful for what we have regardless of whether or not we celebrate this American holiday tradition.
The entire process of investing is about sacrificing current consumption for future consumption. Any solid and sensible investment strategy should do the same. Ultimately, to make money you have to be willing to trade off some comfort now for increased comfort...
Nov 8, 2014 8:00 am
The sound and the fury are over. The Republicans have trounced the Democrats in last week’s election. To put the latest shift in a historical perspective, the US President has now lost more house seats since he took office than any White House occupant since Harry Truman. So what does this mean for markets and financial assets? How does the current political landscape affect your investment pocket book and the near-term outlook? Here are some...
Nov 3, 2014 8:00 am
Watching the kids bob along in their costumes awkwardly strolling from house to house in search of sugar nirvana amid a sea of other little hunters made me reflect on recent market volatility. October’s roller coaster ride in the market definitely offered up a dose of panic and fear for many who unfortunately check prices daily. Ironically, like little kids in costumes, it wasn’t really that scary. Here are some comments on some spooky themes...
Oct 6, 2014 8:00 am
Recently the US dollar has surged. Its gain versus a basket of major currencies since the beginning of July as measured by the US Dollar Index ‘DXY’ is almost nine per cent as of this writing. Most of this appreciation has come at the expense of the New Zealand Kiwi, the Australian dollar and the euro. Many people like to point out that the recent weakness in the euro should be a boon to European exporters and large dominant European...
Sep 30, 2014 8:00 am
Two weeks ago Alibaba (‘BABA’), China’s biggest e-commerce company, marked the biggest IPO (initial public offering of shares to the public) in history. The company raised some $25 billion (Visa was second at $19.7 billion in March 2008). This huge IPO also offers a couple large corporate governance lessons.
Economic Risk Doesn’t Equal Voting Control
One of the major reasons why Alibaba went public in New York and not in Hong...
Sep 15, 2014 8:00 am
“Well, I have a message for the Scots: Be afraid, be very afraid. The risks of going it alone are huge. You may think that Scotland can become another Canada, but it’s all too likely that it would end up becoming Spain without the sunshine.” - Paul Krugman
This week Scotland goes to the polls. Recent opinion polls indicate it is very close — maybe too close to call. A “Yes” vote would create considerable economic and...
Sep 2, 2014 8:00 am
A couple of weeks ago we had the central bank “rock-star concert” in Jackson Hole. There we heard Federal Reserve chairwoman Janet Yellen start yelling about the labour market following the Great Recession and provided a few breadcrumbs as to how this narrative may unfold. The president of the European Central Bank (ECB) Mario Draghi meanwhile offered a call for action to halt deflation, even suggesting a European version of quantitative...
Aug 11, 2014 8:00 am
“It will fluctuate.” - JP Morgan, when asked what the stock market will do.
Last week the market took a beating. It shouldn’t, however, change anything you are doing as a true investor. In fact, a great deal of noise in the short-term often obfuscates investors from true long-term fundamental analysis. This is a major reason why investing is so difficult. Sometimes I read the news and just have to laugh. Everyone is trying...
Jul 22, 2014 8:00 am
It is said that ‘demographics are destiny’ and this is certainly a theme that figures into our economic assessment of Bermuda and one that we have discussed many times in the past. By now no one on this Island should be surprised that Bermuda is facing an unprecedented wave of ageing, or a “grey tsunami”, as the baby boom generation — defined as those people born between 1946 and 1964 — move to the end of their productive careers. The...
Jul 14, 2014 8:00 am
All nations’ economic progress through time can be decomposed into four fundamental components:
1) Population growth — We have discussed this many times in different forms. Basically if you have more workers producing more goods the economy expands. The very nature of having more working bodies in a country like Bermuda, for example, magnifies the local economic benefit. This is to say, more workers earning money locally will have...
Jul 7, 2014 8:00 am
Do you remember when you were young and your parents and teachers taught you the importance of sharing? If you have your own kids now, you are probably teaching them to share as well. Sharing does make you a better person as it helps you to interact with others and develop trust with other people.
All these great aspects of the ‘sharing economy’ should be embraced by everyone.
Finally, all those years practicing to share your toys...
Jun 30, 2014 8:00 am
A few random ramblings on the markets and the macro investing situation to start the week:
The turmoil and chaos in Iraq is putting a bid under the energy markets. This of course is helping to escalate the price of crude oil and energy cost worldwide. I have a couple takes on this, outside of the fact that increasing unrest in the Middle East and its possible contagion will escalate the “fear premium” in crude.
Jun 9, 2014 8:00 am
Lower for Longer?
“The stock market is never obvious. It is designed to fool most of the people most of the time.”
-- Jesse Livermore
Remember when everyone called for higher rates? Recall when it was “only a matter of time” before the ten-year yield in the US approached its longer term “fair value” of near 4.5 percent (two percent inflation plus 2.5 percent real growth)? I can remember. I can also understand why we...
May 30, 2014 8:00 am
When you are in a hole the first thing you need to do to get out is stop digging. Ladies and gentleman, it looks like we have finally stopped digging (furiously, at least). While the economy has contracted for five straight years (2009-2013) we are approaching what I’d refer to as a “statistical bottom”. Although we are near this bottom and should hopefully carve one out this year, we have little to cheer regarding the resumption of robust...
May 12, 2014 8:00 am
The high level of computerisation and the liquidity-induced reduction of bid/ask spreads has slashed the cost of investing to an extremely low level. There isn’t a venue in the world, in my opinion that offers a greater chance for investors to compound wealth if done so in a prudent and judicious manner. One of the most efficient ways to invest these days is through Exchange Traded Funds (“ETFs”). Some funds actually let you invest in small...
Apr 29, 2014 8:00 am
For many people the stock market was already viewed as a casino and a giant gamble; its systems and processes opaque and nonsensical. The latest firestorm on High Frequency Trading (HFT) has not helped dispute this view. Lately the market has been buzzing with discussion involving Michael Lewis’s latest book Flash Boys which is all about HFT. The book goes so far as suggesting that the market is “rigged” and that individual investors are...
Apr 3, 2014 8:00 am
“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...
Mar 11, 2014 8:00 am
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...
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