This document provides a 2019 strategic outlook from Nicola Wealth. It begins with a review of 2018, which was a challenging year for markets. Several presentations then discuss themes including four season investing patterns, concerns around debt and potential economic storms from issues like trade wars and monetary policy. The document advocates an allocation emphasizing equity, fixed income, and alternative investments. It suggests opportunities may now exist more in areas like private debt and private equity versus public markets. Overall the outlook expresses caution about extended economic and market cycles.
Q2 2019 Quarterly Market Commentary: This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets. The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.
The Global Risk Nexus: Economics, Politics, Policy & Markets - MSCI Instituti...Jay Pelosky
I use the Global Risk Nexus framework to develop original insights into the investment landscape. Given where we are calendar wise the Politics and Policy sections are definitely worth a look.
Q2 2019 Quarterly Market Commentary: This report features world capital market performance and a timeline of events for the past quarter. It begins with a global overview, then features the returns of stock and bond asset classes in the US and international markets. The report also illustrates the impact of globally diversified portfolios and features a quarterly topic.
The Global Risk Nexus: Economics, Politics, Policy & Markets - MSCI Instituti...Jay Pelosky
I use the Global Risk Nexus framework to develop original insights into the investment landscape. Given where we are calendar wise the Politics and Policy sections are definitely worth a look.
Will the US election trump the economy in 2017?RBS Economics
With the 2016 US Presidential election approach there have been questions about what this could mean for the US economy in 2017. In this blog, economist Rupert Seggins draws on the historical experience of the US and its G7 peers to offer an answer.
While this time may be different, history suggests that the bar for a President-caused US recession in 2017 is set much higher than may commonly be thought.
Both domestic consumption (higher debt service and cost of living, slower pace of asset price appreciation, low real income gains) and capital expenditure (higher debt service, elevated current spending vis-à-vis GDP, weakening domestic demand, external uncertainties) is expected to ease off, with the fiscal impulse peaking, financial conditions tightening, and negative impact of prior dollar strength. This should taper labour market gains and keep inflation pressures benign. The extent of slowdown will be dependent upon the resiliency of private sector balance sheet and the subsequent impact on demand. It is imperative that the Fed stays ahead in managing overall debt servicing costs (short-run implications on demand; longer-run may short-circuit the feedback from demand to capital spending and future productivity), and limit the negative impact of policy on overall growth.
We like rates structurally, both on adequate valuations and as a hedge for risk assets, taking the under on the (largely) priced base case of a smooth 3 year (2018-2020) rate hiking cycle.
This month’s update is longer and contains more geopolitics than usual. This is because, for the first time in two generations, the economies of every country in the world are growing (with the possible exception of North Korea). This synchronised global upswing presents new risks and uncertainties.
http://www.jsacs.com/
Ey profit warning stress index q3 2018 7Robert Hussey
For those looking at a UK listing – this is a very insightful piece of research based on EY’s Profits Warning Stress Index. In Q3 2018, the market has experienced the highest average share price fall since the financial crisis. 206 earnings downgrades in the first nine months of the year. The Consumer sectors are dominating these earnings downgrades but with domestic and global uncertainty, we are seeing signs of contraction spreading wider a field (industrial and finance sectors). If one combines this with the number of recent IPO’s either being pulled or priced at the lower of the range, a cautionary picture in certainly painted.
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
On April 28, we presented our Strategic Outlook in a new virtual format hosted by President David Sung, featuring presenters John Nicola, Chairman & CEO, and Rob Edel, Chief Investment Officer, for a look back at 2020, how the past 12 months have already shaped the economic landscape ahead of us and where do we go from here.
Will the US election trump the economy in 2017?RBS Economics
With the 2016 US Presidential election approach there have been questions about what this could mean for the US economy in 2017. In this blog, economist Rupert Seggins draws on the historical experience of the US and its G7 peers to offer an answer.
While this time may be different, history suggests that the bar for a President-caused US recession in 2017 is set much higher than may commonly be thought.
Both domestic consumption (higher debt service and cost of living, slower pace of asset price appreciation, low real income gains) and capital expenditure (higher debt service, elevated current spending vis-à-vis GDP, weakening domestic demand, external uncertainties) is expected to ease off, with the fiscal impulse peaking, financial conditions tightening, and negative impact of prior dollar strength. This should taper labour market gains and keep inflation pressures benign. The extent of slowdown will be dependent upon the resiliency of private sector balance sheet and the subsequent impact on demand. It is imperative that the Fed stays ahead in managing overall debt servicing costs (short-run implications on demand; longer-run may short-circuit the feedback from demand to capital spending and future productivity), and limit the negative impact of policy on overall growth.
We like rates structurally, both on adequate valuations and as a hedge for risk assets, taking the under on the (largely) priced base case of a smooth 3 year (2018-2020) rate hiking cycle.
This month’s update is longer and contains more geopolitics than usual. This is because, for the first time in two generations, the economies of every country in the world are growing (with the possible exception of North Korea). This synchronised global upswing presents new risks and uncertainties.
http://www.jsacs.com/
Ey profit warning stress index q3 2018 7Robert Hussey
For those looking at a UK listing – this is a very insightful piece of research based on EY’s Profits Warning Stress Index. In Q3 2018, the market has experienced the highest average share price fall since the financial crisis. 206 earnings downgrades in the first nine months of the year. The Consumer sectors are dominating these earnings downgrades but with domestic and global uncertainty, we are seeing signs of contraction spreading wider a field (industrial and finance sectors). If one combines this with the number of recent IPO’s either being pulled or priced at the lower of the range, a cautionary picture in certainly painted.
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
On April 28, we presented our Strategic Outlook in a new virtual format hosted by President David Sung, featuring presenters John Nicola, Chairman & CEO, and Rob Edel, Chief Investment Officer, for a look back at 2020, how the past 12 months have already shaped the economic landscape ahead of us and where do we go from here.
Did you know total nonfarm payroll employment fell by 701,000 in March 2020, measuring the effects of COVID-19 and efforts to contain it? Employment in leisure and hospitality fell by 459,000, mainly in food services and drinking places. Notable declines also occurred in health care and social assistance, professional and business services, retail trade, and construction.
Positive signs of a continued recovery were prevalent in Q1 2021, with vaccinations gaining critical mass, GDP showing growth, and the country opening back up for business. Additionally, M&A continues to be a tidal wave of activity, preparing to make landfall in Q4 2021.
In this annual Strategic Outlook seminar, we will discuss what the markets have in store for 2018, and beyond.
Presenters:
John Nicola, Chairman & CEO
John will address several issues facing high net worth families:
- How will the Liberals’ tax changes affect financial planning for Canadians?
- How will inflated prices impact future returns?
- Are there best practices for navigating the current environment?
Rob Edel, Chief Investment Officer
Rob will provide an investment roadmap for 2018:
- After a record-breaking period for the S&P 500, what signs might indicate an economic downturn?
- What current events could most affect the economy and investment strategy?
- What should one make of bitcoin, marijuana stocks, electric vehicles, and other hot topics for the upcoming year?
President and chief investment officer, Robert Lutts, of Cabot Wealth Management presents a luncheon keynote where he discusses a bull market, four signs of trouble ahead, and Cabot's top three investment themes.
President and chief investment officer, Robert Lutts, of Cabot Wealth Management presents a luncheon keynote where he discusses a bull market, four signs of trouble ahead in the economy, and Cabot's top three investment themes.
VERTEX's CEO, Bill McConnell, PE, JD, MSCE, CDT, provides his annual outlook on the state of the Construction industry. The US economy has expanded, albeit slowly, for the past 8+ years. The construction industry, which over-corrected during the Great Recession, has rebounded with vengeance on the heels of record private construction spending. On the other hand, public construction spending was considerably less in 2017 than it was in 2006. Moving forward, all indicators suggest that private construction will slow while public construction spending will soon pick up steam. Also, all good things come to an end, and the current economic expansion will be no different—it is likely the US will enter into a mild recessionary cycle in late 2019 or 2020.
VERTEX's CEO, Bill McConnell, PE, JD, MSCE, CDT, provides his annual outlook on the state of the Construction industry. The US economy has expanded, albeit slowly, for the past 8+ years. The construction industry, which overcorrected during the Great Recession, has rebounded with vengeance on the heels of record private construction spending. On the other hand, public construction spending was considerably less in 2017 than it was in 2006. Moving forward, all indicators suggest that private construction will slow while public construction spending will soon pick up steam. Also, all good things come to an end, and the current economic expansion will be no different—it is likely the US will enter into a mild recessionary cycle in late 2019 or 2020.
What North America’s top finance executives are thinking - and doingΔρ. Γιώργος K. Κασάπης
Each quarter (since 2Q10), CFO Signals has tracked the thinking and actions of CFOs representing many of North America’s largest and most influential companies. All respondents are CFOs from the US, Canada, and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. The 1Q 2021 survey was open from February 8-19, 2021. A total of 128 CFOs participated, 69% from public companies and 31% from privately held companies.
In our annual Toronto event, held at the Four Seasons Toronto, we presented Strategic Decisions for an Uncertain Future:
John Nicola, Chairman & CEO addresses several issues facing high net worth families:
• How will the Liberals’ tax changes affect financial planning for Canadians?
• How will inflated prices impact future returns?
• Are there best practices for navigating the current environment?
Rob Edel, Chief Investment Officer provides an investment roadmap for 2018:
• After a record-breaking period for the S&P 500, what signs might indicate an economic downturn?
• What current events could most affect the economy and investment strategy?
• What should one make of bitcoin, marijuana stocks, electric vehicles, and other hot topics for the upcoming year?
2019 CAR Market Outlook - Danielle Hale, realtor.comJessKern
At the 2019 Market Outlook, Danielle Hale, Chief Economist at realtor.com, explores the latest trends, data and economic data in the local and national real estate markets.
The Nicola Wealth Strategic Outlook, hosted by President David Sung, featured presentations by John Nicola, Chairman & CEO, and Rob Edel, Chief Investment Officer, Bijal Patel, CFO and Head of Private Capital, and Mark Hannah, Managing Director, Nicola Wealth Real Estate. Our speakers each weighed in on the issues influencing today’s investing environment and how they impact their respective asset classes.
Similar to 2019 Nicola Wealth Calgary Strategic Outlook (20)
NWRE 2020 Review: Making the Best of the Ups and the DownsCharis Whitbourne
Mark Hannah, Managing Director of Nicola Wealth Real Estate, provides a year-end update on the three Nicola Wealth Real Estate LPs, and specifically addresses how they adapted and evolved through 2020 and the pandemic.
Mark also discussed performance results and shared updates on Acquisitions, Leasing, Financing & Development and some insights into the strategic moves his team is pursuing in 2021.
WEBINAR REPLAY: One Year On: COVID-19, Rapid Testing, Vaccines, and a Return ...Charis Whitbourne
Dr. Don Sin, Director of the Centre for Heart Lung Innovation at St. Pauls Hospital, joined CEO John Nicola to share his experience working through a global pandemic and his work in the development and implementation of a rapid, sensitive, and cost-effective diagnostic test for COVID-19.
In this insightful discussion, they also talked about the vaccines, thoughts on government responses, what to be mindful of with the variants and the path to a return back to “normal” society.
Nicola Wealth Specialty Series: The Business Owner's Path to TransitionCharis Whitbourne
An interactive half-day workshop designed specifically for business owners, their business partners, and their close advisors. This workshop focuses on the challenges and solutions faced during the business transition; whether you are preparing to sell your company or pass it to the next generation.
Featuring a panel of seasoned experts, we review a real-world business transition scenario, providing valuable discussion and insight around the complexities of transitions.
Nicola Wealth CEO John Nicola provides an introduction to dental professionals on investment strategies that go beyond stocks and bonds, demonstrating the integrated possibilities of true wealth management.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Yes of course, you can easily start mining pi network coin today and sell to legit pi vendors in the United States.
Here the telegram contact of my personal vendor.
@Pi_vendor_247
#pi network #pi coins #legit #passive income
#US
Lecture slide titled Fraud Risk Mitigation, Webinar Lecture Delivered at the Society for West African Internal Audit Practitioners (SWAIAP) on Wednesday, November 8, 2023.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
8. 2018 in Review S&P 500
2018 S&P 500 -4.4%First Correction
in 2 Years
-10.2%
Dec 24, 2018
-19.8%
Bloomberg – Feb 22, 2019
9. 2018 in Review S&P/TSX
Bloomberg – Feb 22, 2019
July 12, 2018July 12, 2018 2018
S&P/TSX
-8.9%
Dec 24, 2018
-16.8%
-8.0%
10. 2018 in Review BEAR-o-meter – Global Equity Markets
Bond Yields & S&P 500 Both Move up
Bonds Prices and Stock Prices Negatively Correlated
S&P 500
-19.8%
-18.8%
-27.2%
-23.6%
-16.8%
-22.8%
-34.0%
-22.3%
-18.2%
-16.4%
-23.4%
-18.5%
-26.4%
-21.1%
-25.8%
-30.8%
-23.3%
-16.2%
20.6%
19.0%
21.5%
24.8%
16.8%
9.8%
29.6%
36.7%
15.0%
10.5%
11.0%
16.4%
17.8%
10.7%
18.2%
25.4%
7.4%
18.6%
-40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0%
S&P 500
Dow Industrials
Russell 2000
Nasdaq Composite
S&P/TSX
Mexico IPC
Argentina Merval
Brazil Bovespa
Stoxx Europe 600
FTSE 1000
Germany DAX
France CAC 40
Italy FTSE MIB
Nikkei
Hang Seng
Shanghai Composite
Kospi
Bombay Sensex
Max Drawdown
Recovery
11. 2018 in Review Canadian and U.S. Yield Curves
Jan 1, 2018
Yield Curve
Dec 31, 2018
+60 bps
+69 bps
Yield Curve
Jan 1, 2018
Dec 31, 2018
+28 bps
+18 bps
-8 bps
12. 2018 in Review BEAR-ometer – Fixed Income & Real Assets
-3.2%
-5.1%
-17.7%
-9.5%
-5.5%
-5.9%
-17.3%
-12.3%
-15.1%
-12.7%
-41.5%
-44.3%
-76.8%
-13.6%
-16.2%
-23.6%
-53.3%
-81.2%
-46.1%
-46.5%
6.4%
4.4%
21.6%
8.6%
5.4%
6.6%
4.6%
20.1%
20.8%
20.1%
33.9%
41.4%
277.9%
10.1%
5.7%
14.3%
18.4%
29.0%
53.7%
62.1%
-100.0% -50.0% 0.0% 50.0% 100.0% 150.0% 200.0% 250.0% 300.0%
US Agg Bond
US TIPS
US Leverered Loans
US HY
Global Agg Bond
Global HY
Cdn Preferred Shares
Cdn REIT's
US REIT's
Global REIT's
Brent Oil
WTI Oil
WCS Oil
Gold
Commodities
Copper
Lumber
Bitcoin
Horizons Marijuana ETF
N.A. Marijuana Index
Max Drawdown
Recovery
13. Four Season Investing
S&P 500
Winter
Recession
Rate cut
Min Risk
Summer
Expansion
Rate hikes,
Max Risk
Fall
Slowing Growth
High Inflation
Reduce Risk
Spring
Recovery
Low inflation,
Add Risk
14. 2009-Current
1990 – 2000
1949 - 1956
1957 - 1961
1982 - 1987
2002 - 2007
1974 - 1980
1962 - 1966
1970 - 1973
1987 - 1990
1966 - 1968
1946 - 1948
10%
15%
20%
25%
30%
35%
0 2 4 6 8 10 12
Return(CAGR)
Years
S&P 500 Historical Bull Markets
Barron’s – July 2, 2018
Fortune – August 2018
The Economist – October 11, 2018
Bloomberg Businessweek Aug 2018
Four Season Investing – Investor Sentiment
Sir John Templeton:
Bull markets are born on pessimism
Grow on skepticism
Mature on Optimism
Die on euphoria
15. S&P 500
Four Season Investing – Consumer Sentiment (temperature)
Mar 2000 – 11 mo.
13 Month Average
Apr 1978 - 22 mo
Nov 1980 – 9 mo.
Feb 1989 – 18 mo.
Aug 2007 – 5 mo.
16. Feb 1989 - Aug 1990
18 months
Mar 1997 - Apr 2001
49 months
June 2006 – Jan 2008
19 months
Average
29 months
Four Season Investing – Wage Growth (pressure)
21. The Perfect Storm – Hurricane Donald
New York Times Op Ed – September 2018
I am part of the resistance inside the Trump Administration
“Americans should know that there are adults in the room.
We fully recognize what is happening. And we are trying to
do what’s right even when Donald Trump won’t.”
Betting Odds Trump will be Impeached
In his first Term
(PredicitIt – Mar 25, 2019)
Business Insider – Dec 31, 2018
• March 25 Close – 22%
• Pelosi – “He’s not worth it”
• Mueller Investigation
• No collusion
22. The Perfect Storm – Hurricane Donald
S&P 500
South China Morning Post WSJ – Feb 19, 2019
USA: 25% tariff on $50 billion, 10% Tariffs on
$200 billion (increasing to 25% by end of
2018)
China: Proposed or imposed tariffs on $110
billion by December 2018
The Deal (we think)
• Easy
• China buys more US goods
• Harder
• Protection of Intellectual property
• Reduce government subsidies to
Chinese SOE’s
• End technology transfer from U.S.
companies
• Hardest
• Enforcement Mechanism – Unilateral?
• Existing Tariffs
WSJ – Feb 19, 2019
23. The Perfect Storm – Donald & Jerome
S&P 500
Goldman Sachs Financial Conditions Index
&
Federal Funds Rate
Fed
2018 - Four increases in Federal Funds Rate
24. The Perfect Storm – Hurricane Powell
S&P 500
Double Line Raising Rates Webcast – Feb 26, 2019
Hedgeye Cartoon of the Day – Feb 21, 2019
26. The Perfect Storm – Hurricane Powell
S&P 500
Hedgeye Cartoon of the Day – Jan 14, 2019
Barron’s – Mar 23, 2019
Three Times in 2019
Once in 2020
Twice in 2019
Once in 2020
No increase in 2019
Once in 2020
One Decrease in 2019
27. S&P 500
The Perfect Storm – Hurricane Jerome
Unemployment recently touched it’s lowest level in 49 years (Dec 1969)
WSJ: Current census estimates only 50,000 jobs/month needed to keep
employment stable
Current Gap
-1.0%
32. An Inconvenient Truth Debt
S&P 500
U.S. Unemployment vs. US Budget Deficit as % of GDP
WSJ – Mar 21, 2019
CBO
US Budget deficit to exceed $1T every year
2022-29
Social Security & Medicare = 40% of all
federal spending (excl. interest).
By 2029 will be 50%.
33. An Inconvenient Truth Debt
U.S. Unemployment vs. US Budget Deficit as % of GDP
Deficit increasing while
unemployment
decreasing
Last time we saw this:
Late 60s
Jeffrey Gundlach –
Doubleline
• Last seven recessions
budget deficit
increase average 4%
of GDP
• Last two recessions
5.8% (2001) and 8.8%
(2007)
• Could hit 13% next
recession
34. Bond Yields & S&P 500 Both Move up
Bonds Prices and Stock Prices Negatively Correlated
S&P 500
An Inconvenient Truth US Debt/GDP
Bipartisan lack of interest in reducing debt:
• Republicans – deficit talk a ploy to roll
back tax cuts
• Democrats – deficit talk ploy to cut
Medicare, Medicaid & social security
Washington Post article:
A conversation last year between the President
and senior advisors took place in which a
“hockey stick” spike in national debt was
presented. Trump’s reaction: “Yeah, but I
won’t be here.”
36. Summary - Farmers Almanac
(Old) NWM Forecast
It’s Fall – Getting closer to Winter
No Recession 2019
Economy and earnings to continue growing
Fed to continue tightening 2020
• Create recession in 2020 – 2021
Equities (Dividend Paying) over Bonds
• Remember 1985 & 1995
• Look to reduce risk
• Diversification
• Roots are strong
(New) Nicola Wealth Forecast
Fed keeps rates low – for too long
Result: More severe recession down the road
• Asset Bubble – 2001
• Stagflation - 1973-5
All asset classes under pressure
Longer term – Inconvenient truth
• More debt
• Higher Interest rates
• Less room for fiscal stimulus
• Roots might get severed
53. Top 10% Income Share
31.4%
30.6%
29.8%
26.6%
25.7% 25.4% 25.3%
22.3%
20.0%
22.0%
24.0%
26.0%
28.0%
30.0%
32.0%
China US India France Italy UK Canada Norway
54. Hey Big Spender
Questions
What is lowest cost form of debt?
How much of mortgage debt has been used to acquire assets
or start businesses vs. for personal consumption ?
85%-176% since 1990
55. It’s About the Cash Flow
Debt Service - P and I increase from 12-14.9% since 1990
Debt Service - Interest only decrease from 10-6.5% since 1990
61. Issues
o Illiquid asset class
o Hard to diversify
o Significant minimum investment
o Higher fees on committed capital
o Due diligence on managers
o Fund of funds likely best option
62. Northleaf PE Returns vs. MSCI World
Returns to June 30, 2014. Northleaf returns gross of Northleaf fees.
63. Where has the low
hanging fruit gone?
Getting harder
all the time2%< historical
Still expensive
How low can they go?
Source: Statscan
https://www.quandl.com/data/MULTPL/SHILLER_PE_RATIO_MONTH-
Shiller-PE-Ratio-by-Month
Source: NAREIT
64. Private debt
(mortgages and
corporate lending)
2%< historical
Still expensive
How low can they go?
Asset allocation
Value investing
Dividend growth
Private Equity
Build to own
Value add
Modest leverage
Where has the low
hanging fruit gone?
Source: Statscan
Source: NAREIT
https://www.quandl.com/data/MULTPL/SHILLER_PE_RATIO_MONT
H-Shiller-PE-Ratio-by-Month
65. Market Cycles
Markets more expensive
Lower probability for above
average future returns
Markets less expensive
67. What if Everyone is Above Average?
2006 Survey of 300 Fund Managers
76% said they were above average
The other 24% said they were average
100% were average or better?
68. The Deadly Trio
Cognitive Dissonance
(I agree with every fact
That agrees with me)
Over Confidence
(a Bridge - or apple -
too far)
Confirmation Bias
78. Know Thyself (avoid overconfidence)
Embrace Uncertainty (Minsky Moments)
Play the Odds (Avoid Loss Aversion)
Diversification in asset classes but focus within them
Accept Pain (necessary path for growth)
Behaving Well
79.
80. The 4% Rule
50% success
https://www.onefpa.org/journal/Pages/The%204%20Percent%20Rule%20Is%20Not%20Safe%20in%20a%20Low-Yield%20World.aspx
81. Price is 3 to 4 times as volatile as cash flow
for both real estate and equities
82. A Couple’s Tale
Bob and Linda are both age 60 . In good health and
considering retirement . Here are the other facts:
• Bob is a lawyer and Linda a dentist.
• They are both incorporated and have personal, registered,
and corporate portfolios of $2M each
• Bob’s portfolio is best represented by Morningstar’s
Balanced Index.
• Linda’s portfolio is invested with us in a Core Model
• They want to know the likely impact of withdrawing 4% of
their capital annually and adjusting that to inflation.
• We recreate that model for them going from January 2000
to December 2018.
83. How Well Does It End?
$2.0M $2.0M$1.8M $1.8M$1.7M
$3.7M
$-
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
Bob 60/40 Linda
Start Income End
84. A Couple’s Tale
What Happened?
• Bob’s indexed income greater than his overall return.
• 85% of Linda’s return from cash flow so less volatility
and no need to sell assets during negative years such
as 2008.
• SWP have greater negative impact in losing years.
• Bob has 6 losing years out of 19 with a combined
loss of 28% . Linda has two losing years with a
combined loss of 7%.
85. What Is Next?
Real and Secular Road Bumps Ahead
Behave Well We’ve Been Here Before
86. THANK YOU
This presentation contains the current opinions of the presenter and such opinions are subject to change without notice. This material is distributed for
informational purposes only and is not intended to provide legal, accounting, tax or specific investment advice. Please speak to your Nicola Wealth Advisor
regarding your unique situation. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be
considered as investment advice or a recommendation of any particular security, strategy or investment product. All investments contain risk and may gain or
lose value. Nicola Wealth is registered as a Portfolio Manager, Exempt Market Dealer and Investment Fund Manager with the required provincial securities’
commissions.