Blog

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Think of Risk like Lawyers Do

Perhaps more than any other profession, lawyers are keenly aware of the need to manage liabilities – both real and perceived.  The liabilities being managed can range from overlooking evidence to underestimating opposing counsel to reputational risk to out and out malfeasance.  All professionals need to be careful, but lawyers

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Successful Afrcan Businessman

How (IN)Credible is the Transitory Inflation Argument?

If there’s one thing we’ve all learned in the past two years, it is that central bankers mean business – both literally and figuratively.  In other words, when central bankers say they ‘have our backs’ in both extending the business cycle by promoting fuller employment and doing so without causing

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Teenage Boy Drinking Caffeine Energy Drink Gaming At Home Using Dual Computer Screens At Night

Overconfidence leads to Optimism Bias

Are you an above average driver?  What about love making?  Are you better than most, worse than most or about average?  Surveys have shown over and over that people tend to overestimate their own abilities.  This tendency has become known as the “Lake Wobegon Effect” as a hat tip to

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Whose Bias is it, Anyway?

One of the great benefits of living in a free society is that people can have legitimate differences of opinion about the meaning of information and best courses of action.  In this space and, more recently, on social media, I have taken to pointing out the small army of credible

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Domino game. Dominoes on a black table

History Might Just Repeat

Churchill is reputed to have quipped that, “those who fail to learn from history are doomed to repeat it”.  The quote is trotted out whenever something bad happens in the present day that seems similar to something bad having happened previously. Most of the time, however, the quote is used

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Great Expectations

With apologies to Charles Dickens, our views of what the future might hold may need some re-calibration. Like his novel Great Expectations, the world today is full of challenging circumstances.  The modern financial planning world is dealing with a situation that may ultimately border on becoming an existential crisis.  

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The Debt Cycle gets a Stick in the Spokes

I’ve written a fair bit about market cycles over the past few months.  In truth, I have touched on the equity market, the bond market and the real estate market.  In doing so, I have opined that all three are in a bubble and that all three are being driven

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Political speech

The interplay between politics and economic choices

The past 16 months or so have been fascinating.  As we entered the 2020s, the world was a simpler, happier place.  People got together in public settings to socialize and strategize. In contrast, these days, we just sequester and soliloquize.  The other change that you may not have noticed is

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Cute dog behind the kitchen table

How to Invest in this Market

There are many who feel there’s a tragedy of epic proportions brewing in the stock market. The problem is we humans tend to have short memories and therefore expect the future to replicate the recent past. Research done by market economist Robert Shiller of Yale shows there’s a striking correlation

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Doctors discussing chest x-rays

Get Out!

  Owing to everyone cocooning during the pandemic, I suspect many of us have watched more movies than usual over the past year or so.  One of my personal favourites of the recent past is Get Out, a fantastic 2017 psychological horror (i.e., no ‘monsters’ in the traditional sense) film

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Bubble

The Bubble Blowing Contest

  One element of Bullshift that I cannot help but notice is how the finance business has selective and self-serving definitions and explanations that abound when explaining the business to the public.  We’ve already discussed how a 10% move downward is called a “correction”, but there is no term for

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Thoughts on the 2021 Budget

Overstimulated

By now, you’re likely aware of the many sordid details found in the 2021 federal budget.  I’ve been following the discussions closely and I was glued to my TV set as the long-awaited details were finally released on Monday.  This is a brave new world.  I’m a bit excited and

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Sport game hockey

The John Tavares Principle

This is an homage to number 91 in your program, the captain of your Toronto Maple Leafs – John Tavares.  It’s about a quick and dirty calculation hack you might find useful then thinking about market gyrations.   Big moves and market volatility can be killers to your portfolio value.  Even

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Define “Inconsiderate”

For better or worse, I tend to be a stickler for semantics and exactitude.  As you might imagine, that usually means going through life with this mindset is “for worse”.  I dislike it when advertisers use the word “fast” instead of “quickly” even though, as I have grudgingly learned after

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Are People Denying the Real Estate Bubble, Too?

By now, you’ll know that I have been alarmed by stock market valuations for a long time.  Late 2019, in fact.  Recently, I pointed out that the bond market is severely stretched based on current valuations.  It is now time to complete the TINA Trifecta by examining real estate.  

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Innocent by Association

Ever notice how there’s no counterpart to certain words?  For instance, have you ever met anyone who is “gruntled”?  The same might apply to phrases.   One phrase that I have heard often is “guilty by association”.  If that’s possible, shouldn’t it also be possible to be innocent by association?  I

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Belief Perseverance

According to Wikipedia, “Belief Perseverance” (also known as ‘conceptual conservatism’) involves maintaining a belief despite new information that firmly contradicts it.  Astonishingly, such firm beliefs may even be strengthened when others attempt to present evidence debunking them, a phenomenon known as the ‘backfire effect’.  We’ve all seen this playout south

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What About the Bond Market?

Over the past several months, much has been said about the stock market, and for good reason.  What can be lost in the shuffle is what has been going on concurrently in the bond market.  It’s at least as bad. Therefore, if you’re worried about stock valuations, you should probably

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How to Portray the Past 50 Weeks

On March 23, 2020, stock markets hit a bottom.  In places like Canada and the United States, they had just experienced a massive drop of about 1/3 in only 5 weeks.  Now that that experience is almost a full year behind us, we can look back on it to assess

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Unintended Consequences

Now that we’re into March, most of the world is coming up on the one-year anniversary of the start of a pandemic that almost none of us were prepared for.   Before it happened, the world was ‘normal’ – and very little of what has happened since would be described in

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What Are Your Prospects?

As we head into the dog days of winter, many people are feeling a sense of disconnectedness.  Many people have gone months without seeing their extended families and phone calls and zoom calls have replaced good old-fashioned face to face contact over the winter months.  There might even be a

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The Route Taken Matters

Last week, I had a lovely exchange with some friends on Twitter about advisor behaviour considering current market valuations.   Every time I write about this, I need to begin with the caveat: this is NOT about forecasting or market timing.  I can’t do it.  You can’t.  No one can do

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To Infinity – and Beyond!

With apologies to Buzz Lightyear, there seems to be a fair bit of cognitive dissonance in the world.  Over the years, advisors have collectively convinced their clients that it would be reasonable to expect high single digit returns on a fairly traditional (say 70% stocks; 30% bonds) portfolio.  I got

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How Rational is that Decision?

    Today marks the one year anniversary of my blog.  In celebration, I am announcing that it is now easier than ever to find and use it.  In addition to the usual way, you can also access it by visiting either: www.standuptobullshift.ca  or www.standuptobullshift.com *** Yogi Berra once quipped

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Stop Reassuring People with Stories

Almost everyone likes a good story.  That’s especially true about investment clients, and the financial advice industry has taken it upon itself to offer reassurance.  Too often, people who give advice to retail clients are so determined to keep those clients calm that they write and say things that they

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The Value of Advice

Over the past few years, there have been dozens of articles in magazines that are distributed to financial advisors about both the value and cost of financial advice.   Most are overly simplistic to the point of being inaccurate and downright misleading.  As you might imagine, any publication that caters to

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How Will you React to the 50% Incorrection?

Words are important.  Not only because of what they say, but also what they imply without saying.  The finance business is full of such words and phrases.  Today, we’ll look at one of my (ahem) “favourites” – the word “correction”.  Within the field of finance, a correction is when the

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What’s Truth Got to do with it?

Many of us know a few top-of-mind quotes because they are used so frequently and have nearly universal applications. We sometimes trot these quotes out in order to sound worldly, well-read and, at times, even a bit cynical.  The funny thing about personal finance is that many people recognize many

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Pascal’s Wager, a Vaccine and a Portfolio Hedge

  There’s an example from the history books that will help to illustrate the risk / return tradeoff between two alternatives that may or may not come to pass.  It’s called Pascal’s Wager.  In the 17th Century, a young French philosopher named Blaise Pascal suggested that a rational person should

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The First 100 Days of 2021

Happy New Year!  Later this month, Joe Biden will be sworn in as the next American President.  He has made an audacious promise to vaccinate 100 million Americans within the first 100 days of taking office.  It is an ambitious, optimistic and highly laudable objective.   One of the concerns

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Don’t Semmelweis Me

Some days, in my own small way, I feel as though I might get an inkling of what Ignaz Semmelweis must have felt.  Semmelweis was a physician who merely wanted what was best for his profession and endured a great deal of criticism for pointing out that the status quo

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A Proposal for Income Redistribution

One of the public policy issues I think about frequently is income inequality. It is becoming increasingly understood and accepted that this is a real problem that is contributing to societal unrest. Are there ways where we could change laws on the extreme ends of the income scale only? In

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If a Tree Falls in the Forest

We all know the existential question: if a tree falls in the forest and there’s no one there to hear it, does it make a sound?  While you contemplate how you might personally respond to such a query, here’s a follow up: if a stock market bubble gets bigger and

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Fear the GIC Refugee Renaissance

When I started in the business in September of 1993, it was a great time for new client acquisition.  The reason is simple: there were so many new clients to be had – in the form of first-time investors.  As interest rates plummeted from their all-time highs in the early

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The Great Reset

By now, you may have heard about “The Great Reset”, a theory (and book of the same name) promulgated by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum (WEF).  It seems our Prime Minister has caused a bit of a stir on social media for musing out

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Cautiously Pessimistic

If I had a nickel for every time I heard someone say they were ‘cautiously optimistic’ about one thing or another, I’d be wealthy.  This got me to thinking – why do I never hear anyone say they’re ‘cautiously pessimistic’ when invited to prognosticate about the not so distant future?

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Why I Continue to Play Defence

At least I’m consistent.  For about a year now, I’ve been telling everyone who would listen that markets the world over are expensive to the point of being dangerous…. especially in the U.S.  The thing to remember is that even people like Professor Robert Shiller who win Nobel Prizes in

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No Progress Trumps Uncertainty

See what I did there?  I worked the word “Trumps” into the title in a blog about American politics.  Cute, huh?  For years, the prevailing wisdom has been that markets hate uncertainty.  Now, as I write this, it has been nearly 48 hours since polls closed in the U.S. and

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Bullshift Culprit 3: Resulting

In Annie Duke’s excellent book “Thinking in Bets”, she points out a simple, yet often-overlooked aspect of decision-making.  Too often, it seems, people gauge their decisions by the outcome they experience.  Good outcomes are deemed to be the result of good decisions and bad outcomes are deemed to be the

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Bullshift Culprit 2: TINA

Last time, we looked at how the Fear Of Missing Out (FOMO) might be contributing to markets being expensive.  That’s not the only plausible behavioural explanation for what’s going on in capital markets these days.  There’s another obvious candidate to explain sky-high valuations: the utter lack of a viable investment

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Bullshift Culprit 1: FOMO

For anyone who has been out of the loop, there are a number of acronyms and memes that have popped up over the past decade that help commentators to capture contemporary zeitgeist.  One of the most popular is FOMO – the Fear Of Missing Out.  The basic idea here is

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Do Not Say You Didn‘t See This Coming

At the beginning of the year, pretty much everyone was caught off guard when a global pandemic of unprecedented proportions in our lifetimes hit the world.  People were frightened.  Office, stores and restaurants were shuttered, markets tumbled and everyone was a bit out of sorts by the changes we were

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Modern Monetary Theory

For generations, undergraduates have been fed a steady diet of what might otherwise be called “traditional” economics – economic theory that is predicated on the plausible but largely unsubstantiated premise that people make rational decisions in their own economic self-interest.  That notion of economic self-interest, first championed by Adam Smith,

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Welcome to Autumn

People normally associate spring with rain; not autumn.  Metaphorically, however, it’s raining out there.  As the calendar moves into the official start of the autumn, markets on both sides of the border are facing the prospect of a correction – a drop of 10% or more from a previous peak. 

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Under-Promise and Over-Deliver

One phrase that has become so trite over the years as to be threadbare is the old chestnut that certain people and businesses aim to under-promise and over-deliver.  That sounds fine in theory.  Most people don’t even question the sentiment.  Here’s a way to test the sentiment in the investment

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Déjà Vu (all over again?)

Now that we have passed Labour Day and summer is over (at least unofficially), the time has come to get into new routines.  It’s back to school time.  Time to close the cottage, put away the golf clubs and hunker down on the big push to hit your yearend sales

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The Buffett Indicator

For pretty much all of 2020, I have been offering somber and cautious warnings about the dangers one implicitly accepts when investing in markets with valuations as high as they are currently.  I have been particularly concerned about the U.S. market as represented by the S&P 500 and by the

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Lower for Longer and the Implications for Public Policy

In the second half of August, the two countries that share the bulk of the North American continent independently signaled that they are shifting their economic courses and pursuing a public policy initiative which had been considered somewhat heretical until very recently.  We are now left to reflect upon what

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The Future of Financial Advice

One thing that many observers notice about financial services is that the evolutionary process is slow to change.  Glacially slow.  As a simple illustration, Ontario Securities Commission (OSC) Commissioner Glorianne Stromberg wrote a report in 1995 (!) where she clearly indicated that embedded commissions in mutual funds – both in

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The information contained herein has been provided for information purposes only.  The information has been drawn from sources believed to be reliable.  Graphs, charts and other numbers are used for illustrative purposes only and do not reflect future values or future performance of any investment.  The information does not provide financial, legal, tax or investment advice.  Particular investment, tax, or trading strategies should be evaluated relative to each individual’s objectives and risk tolerance.  This does not constitute a recommendation or solicitation to buy or sell securities of any kind. Market conditions may change which may impact the information contained in this document.  Wellington-Altus Private Wealth Inc. (WAPW) does not guarantee the accuracy or completeness of the information contained herein, nor does WAPW assume any liability for any loss that may result from the reliance by any person upon any such information or opinions.  Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances.  WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.