FAIR Canada applauds Saskatchewan’s OBSI bill
"Landmark" legislation is significant step forward in protecting investors, organization says
By James Langton |May 28, 2024
2 min read
These unfunded liabilities are estimated to be in the range of 300% to 400% of GDP, or several times larger than all existing current debt (see “The cupboard is bare”). Our observation is that they are unaffordable and, as such, many of the promises made about funding health care and government pensions will be reduced. The bottom line is: we will work longer and be more directly responsible for our own health care – perhaps a better outcome and one more likely to lead to a healthier and more productive life.
Long-term effects
The prolonged effect of the recession – and what some observers are calling The New Normal – will likely cause:
Investment strategies
The last decade was, in terms of making positive returns, the most difficult in well over a century. Ten-year returns for 10 different asset classes – a diversified portfolio of 10% in each category – would have netted about 2% per year after fees for the last decade.
While the importance of diversification can’t be stressed enough, our main focus is (and will continue to be) cash flow – through assets that generate a sustainable or growing income stream. That approach has worked very well over the last 10 years, especially when compared to traditional balanced fund approaches (typically 60% equities and 40% fixed income as represented by the Globe Peer Index.
As we look forward to the next 10 years, we are reminded about how difficult it is for anyone to make accurate predictions this far out. How many people would have predicted a Canadian dollar over par in January of 2000 when it was trading at $0.69US, or that the noughties would provide the lowest return for U.S. stocks of any decade ever (including the 1930s) when for the previous two decades it had increased by 1,400%?
Our approach is to develop a strategy based on value principles, cash flow and diversification, and then look for good opportunities within each asset class.
Some of those opportunities could include:
We remain in a challenging environment where the two main factors will be the deleveraging of both consumers and governments, and the political and lifestyle changes society will make as a result of aging populations. This does not mean that good investment opportunities will not exist. As usual it will take significant effort to find value.
These unfunded liabilities are estimated to be in the range of 300% to 400% of GDP, or several times larger than all existing current debt (see “The cupboard is bare”). Our observation is that they are unaffordable and, as such, many of the promises made about funding health care and government pensions will be reduced. The bottom line is: we will work longer and be more directly responsible for our own health care – perhaps a better outcome and one more likely to lead to a healthier and more productive life.
Long-term effects
The prolonged effect of the recession – and what some observers are calling The New Normal – will likely cause:
Investment strategies
The last decade was, in terms of making positive returns, the most difficult in well over a century. Ten-year returns for 10 different asset classes – a diversified portfolio of 10% in each category – would have netted about 2% per year after fees for the last decade.
While the importance of diversification can’t be stressed enough, our main focus is (and will continue to be) cash flow – through assets that generate a sustainable or growing income stream. That approach has worked very well over the last 10 years, especially when compared to traditional balanced fund approaches (typically 60% equities and 40% fixed income as represented by the Globe Peer Index.
As we look forward to the next 10 years, we are reminded about how difficult it is for anyone to make accurate predictions this far out. How many people would have predicted a Canadian dollar over par in January of 2000 when it was trading at $0.69US, or that the noughties would provide the lowest return for U.S. stocks of any decade ever (including the 1930s) when for the previous two decades it had increased by 1,400%?
Our approach is to develop a strategy based on value principles, cash flow and diversification, and then look for good opportunities within each asset class.
Some of those opportunities could include:
We remain in a challenging environment where the two main factors will be the deleveraging of both consumers and governments, and the political and lifestyle changes society will make as a result of aging populations. This does not mean that good investment opportunities will not exist. As usual it will take significant effort to find value.
Demographics, deflation and debt will impact investment strategies.
As part of our annual review of the markets, the economy, and consequently our investment strategies going forward, Nicola Wealth Management organized two seminars whose theme revolved firmly around the impact of massive global government fiscal stimulus and the debt that goes along with it.
We discussed the questions that are on everyone’s mind:
For any answers to emerge, first let’s summarize the current government debt situation.
It would be kind to say the picture is not pretty, although the world has now split between what appears to be the profligate spenders of the developed world and the industrious ants of the developing world.
Debt levels are rising, because countries are trying to mitigate the impact of the financial crisis that began in 2008. On average, the G20 nations will have a 2010 fiscal deficit equal to 8.6% (anything more than 3% is not considered sustainable in the long term) and a current debt-to-GDP of 100%, which puts them at the tipping point of default, according to a detailed analysis of government debt written by Carmen Reinhart and Kenneth Rogoff (This Time it is Different: Eight Centuries of Financial Folly).
Their observations about sovereign debt and the numbers are sobering – especially the fact that over the last 200 years it was far more common for countries to have defaulted on their debt than to have repaid it.
Other countries are also facing a wall of resistance from the bond market regarding their never-ending deficits. Portugal has just experienced a reduction in its bond ratings; Britain, Spain, Ireland and even the U.S. may not be far behind.
To exacerbate this current fiscal mess, we have much bigger future problems with the joint unfunded liabilities of health care and pensions in an aging world.
These unfunded liabilities are estimated to be in the range of 300% to 400% of GDP, or several times larger than all existing current debt (see “The cupboard is bare”). Our observation is that they are unaffordable and, as such, many of the promises made about funding health care and government pensions will be reduced. The bottom line is: we will work longer and be more directly responsible for our own health care – perhaps a better outcome and one more likely to lead to a healthier and more productive life.
Long-term effects
The prolonged effect of the recession – and what some observers are calling The New Normal – will likely cause:
Investment strategies
The last decade was, in terms of making positive returns, the most difficult in well over a century. Ten-year returns for 10 different asset classes – a diversified portfolio of 10% in each category – would have netted about 2% per year after fees for the last decade.
While the importance of diversification can’t be stressed enough, our main focus is (and will continue to be) cash flow – through assets that generate a sustainable or growing income stream. That approach has worked very well over the last 10 years, especially when compared to traditional balanced fund approaches (typically 60% equities and 40% fixed income as represented by the Globe Peer Index.
As we look forward to the next 10 years, we are reminded about how difficult it is for anyone to make accurate predictions this far out. How many people would have predicted a Canadian dollar over par in January of 2000 when it was trading at $0.69US, or that the noughties would provide the lowest return for U.S. stocks of any decade ever (including the 1930s) when for the previous two decades it had increased by 1,400%?
Our approach is to develop a strategy based on value principles, cash flow and diversification, and then look for good opportunities within each asset class.
Some of those opportunities could include:
We remain in a challenging environment where the two main factors will be the deleveraging of both consumers and governments, and the political and lifestyle changes society will make as a result of aging populations. This does not mean that good investment opportunities will not exist. As usual it will take significant effort to find value.
Demographics, deflation and debt will impact investment strategies.
As part of our annual review of the markets, the economy, and consequently our investment strategies going forward, Nicola Wealth Management organized two seminars whose theme revolved firmly around the impact of massive global government fiscal stimulus and the debt that goes along with it.
We discussed the questions that are on everyone’s mind:
For any answers to emerge, first let’s summarize the current government debt situation.
It would be kind to say the picture is not pretty, although the world has now split between what appears to be the profligate spenders of the developed world and the industrious ants of the developing world.
Debt levels are rising, because countries are trying to mitigate the impact of the financial crisis that began in 2008. On average, the G20 nations will have a 2010 fiscal deficit equal to 8.6% (anything more than 3% is not considered sustainable in the long term) and a current debt-to-GDP of 100%, which puts them at the tipping point of default, according to a detailed analysis of government debt written by Carmen Reinhart and Kenneth Rogoff (This Time it is Different: Eight Centuries of Financial Folly).
Their observations about sovereign debt and the numbers are sobering – especially the fact that over the last 200 years it was far more common for countries to have defaulted on their debt than to have repaid it.
Other countries are also facing a wall of resistance from the bond market regarding their never-ending deficits. Portugal has just experienced a reduction in its bond ratings; Britain, Spain, Ireland and even the U.S. may not be far behind.
To exacerbate this current fiscal mess, we have much bigger future problems with the joint unfunded liabilities of health care and pensions in an aging world.
These unfunded liabilities are estimated to be in the range of 300% to 400% of GDP, or several times larger than all existing current debt (see “The cupboard is bare”). Our observation is that they are unaffordable and, as such, many of the promises made about funding health care and government pensions will be reduced. The bottom line is: we will work longer and be more directly responsible for our own health care – perhaps a better outcome and one more likely to lead to a healthier and more productive life.
Long-term effects
The prolonged effect of the recession – and what some observers are calling The New Normal – will likely cause:
Investment strategies
The last decade was, in terms of making positive returns, the most difficult in well over a century. Ten-year returns for 10 different asset classes – a diversified portfolio of 10% in each category – would have netted about 2% per year after fees for the last decade.
While the importance of diversification can’t be stressed enough, our main focus is (and will continue to be) cash flow – through assets that generate a sustainable or growing income stream. That approach has worked very well over the last 10 years, especially when compared to traditional balanced fund approaches (typically 60% equities and 40% fixed income as represented by the Globe Peer Index.
As we look forward to the next 10 years, we are reminded about how difficult it is for anyone to make accurate predictions this far out. How many people would have predicted a Canadian dollar over par in January of 2000 when it was trading at $0.69US, or that the noughties would provide the lowest return for U.S. stocks of any decade ever (including the 1930s) when for the previous two decades it had increased by 1,400%?
Our approach is to develop a strategy based on value principles, cash flow and diversification, and then look for good opportunities within each asset class.
Some of those opportunities could include:
We remain in a challenging environment where the two main factors will be the deleveraging of both consumers and governments, and the political and lifestyle changes society will make as a result of aging populations. This does not mean that good investment opportunities will not exist. As usual it will take significant effort to find value.