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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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  • The future of work in Bermuda — part two
    Aug 31, 2015 8:00 am

    The future of work in Bermuda — part two

    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...

  • The future of work in Bermuda
    Aug 24, 2015 8:00 am

    The future of work in Bermuda

    “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...

  • Bermuda’s statistical summertime madness
    Aug 17, 2015 8:00 am

    Bermuda’s statistical summertime madness

    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...

  • China: Where markets ain’t markets
    Jul 13, 2015 8:00 am

    China: Where markets ain’t markets

    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...

  • The Greeks’ end game
    Jun 29, 2015 8:00 am

    The Greeks’ end game

    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...

  • Pricing ourselves out of the market
    Jun 22, 2015 8:00 am

    Pricing ourselves out of the market

    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

    Know your alpha, beta ... and gamma

    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...

  • Seeing unicorns
    May 18, 2015 8:00 am

    Seeing unicorns

    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...

  • What you can learn about investing from hockey
    Apr 27, 2015 8:00 am

    What you can learn about investing from hockey

    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...

  • Welcome to Bizarro World
    Apr 14, 2015 8:00 am

    Welcome to Bizarro World

    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.

    Bizarro Bond...

  • Doubling down on tourism
    Mar 30, 2015 8:00 am

    Doubling down on tourism

    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...

  • Sisyphean task of dealing with Bermuda’s debt
    Mar 16, 2015 8:00 am

    Sisyphean task of dealing with Bermuda’s debt

    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...

  • Fifty years of Warren’s wisdom
    Mar 13, 2015 8:00 am

    Fifty years of Warren’s wisdom

    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...

  • What is needed to carve out a bottom
    Feb 19, 2015 8:00 am

    What is needed to carve out a bottom

    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...

  • The call on energy
    Feb 9, 2015 8:00 am

    The call on energy

    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...

  • 12 surprises for 2015
    Jan 20, 2015 8:00 am

    12 surprises for 2015

    “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...

  • Surprises of 2014: How they panned out
    Jan 12, 2015 8:00 am

    Surprises of 2014: How they panned out

    “A good forecaster is not smarter than everyone else, he merely has his ignorance better organised.”

    — Anonymous

    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”...

  • Is the Bermuda patient in recovery?
    Dec 15, 2014 8:00 am

    Is the Bermuda patient in recovery?

    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...

  • Be grateful for your delayed gratification
    Dec 1, 2014 8:00 am

    Be grateful for your delayed gratification

    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...

  • Election reflections – a Republican House and Senate, what that means
    Nov 8, 2014 8:00 am

    Election reflections – a Republican House and Senate, what that means

    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...

  • Scary stuff that isn’t really scary
    Nov 3, 2014 8:00 am

    Scary stuff that isn’t really scary

    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...

  • The myth about currency
    Oct 6, 2014 8:00 am

    The myth about currency

    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...

  • Alibaba IPO — and a corporate governance lesson
    Sep 30, 2014 8:00 am

    Alibaba IPO — and a corporate governance lesson

    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...

  • Braveheart economics
    Sep 15, 2014 8:00 am

    Braveheart economics

    “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...

  • Historic yields — or what’s left of them
    Sep 2, 2014 8:00 am

    Historic yields — or what’s left of them

    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...

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