As a tourist, I’ve always wanted to visit Greece. The country’s rich history, landscapes, food and fables have long intrigued me. Plus, my wife has run two marathons and has wanted to see where it all began.

As an investor, I’ve also been curious to see firsthand what life is now like in the small Mediterranean country that was the posterchild of the European sovereign debt crisis.

Upon returning from a 2-week holiday, I can say that Greece didn’t disappoint. The scenery was beautiful, the people charming, the temples incredible, and the food & drink fantastic (more on that in a minute).

Life also seems to be on the uptick for many Greeks. After numerous rounds of reforms, tax increases, austerity measures, bail-outs and a brain drain (well-educated people leaving the country), the general consensus was that things are improving. The “Crisis”, as it’s become known, is still talked about but there was a feeling that Greeks are trying to put it in the past.

Economic numbers show that the economy is growing again following years of stagnation (in the wake of the global financial crisis, Greece suffered the worst recession of any developed country since World War II). Unemployment, while still high, is falling. And last August, the country emerged from its final bail-out program.

Young people also told us there are better opportunities now. We could see new businesses succeeding and money being spent. Maybe my wife and I had the blinders on as tourists being indulged with fresh calamari and ouzo. To be sure, Greece still has its share of problems, including a refugee crisis, inefficient bureaucracy and escalating tensions with Turkey over offshore oil & gas reserves. But there seemed to be an air of optimism around the country. One topic, however, that hasn’t faded away is the country’s debt. This is where I stumbled across an interesting story, over a beer.

While taking in the sweeping views of Santorini over lunch one day, the local brew I was drinking, Volkan White, was among the best I’ve tasted. The perfect blend of hops, citrus and a touch of sweetness. I turned to the label to see what exactly was in it and noticed a statement on the bottom: For each 1 euro of profit, we will help reduce the Greek national debt by 50 euro cents.

I did a little investigating and found that the owner of the company, Petros Nomikos, comes from a wealthy shipping family and established a non-profit foundation in 2011 known as Greece Debt Free. The foundation collects donations from businesses and individuals (including those living abroad) to buy Greek bonds in international markets and then cancel them, thus relieving the government of future liabilities. Volkan donates 50% of its profits to the cause.

The goal of the foundation is to help chip away at the country’s massive debt. By establishing a non-government, non-political entity to do so, Nomikos believes that patriotic Greeks are more likely to donate to the cause (mistrust of the government still runs high).

It’s a novel idea. How successful the foundation will ultimately be is still a question mark, but other companies and organizations have joined the pledge, including Athens-based football club Olympiakos. If nothing else, Greece Debt Free is a symbol of philanthropy and progressive thinking in helping a country regain its economic footing. That’s worth lifting a beer to.

1. Make ‘Snowball’ your holiday read.
2. Go to summer school with Professor Buffett.
3. Read ‘The Essays of Warren Buffett: Lessons for Corporate America’.
4. Grab a beer and popcorn and watch a few Buffett videos on YouTube.
5. Head to Dairy Queen for a strawberry milkshake.

By Scott Ronalds

I recently got back from a holiday in Europe. My wife and I crammed a lot into three weeks: Rome, the Amalfi coast, Tuscany, the Adriatic coast, Verona, Venice and Paris. #Yolo, as my niece says. It was our first time to Italy and France, and we took away many great memories, impressions, and carbs.

One thing that stuck out was the uniqueness and authenticity of each area we visited. In investment terms, every city or region had its own competitive advantage that couldn’t be replicated anywhere else.

Rome had its monuments, architecture and colossal fleet of Vespas. Amalfi was the mecca of anything lemon-related (pastries, limoncello, candles, etc.). The pizza in and around Naples was museum worthy. The wine, gelato, pasta and cypress trees in Tuscany made you sit down to catch your breath. Verona had the most storied balcony in Europe (courtesy of Romeo and Juliet). Venice’s gondoliers were the epitome of charm (at least in my wife’s view). And Paris … pain au chocolat, croissants and palaces that were unrivaled.

Each place we visited was the best at something, be it culinary, cultural, architectural or other. This is a key criteria our managers use in their assessment of companies. They look for best-in-class businesses that have a unique advantage over their competitors, whether it be intellectual property, manufacturing and scale, scientific patents, privileged access to natural resources, or some other leg up.

Another key investment consideration is price. A company may have a clear advantage over its competition, but if it trades at a high valuation, it may not represent a good investment. Our managers focus intently on paying what they believe to be a reasonable price for a business. This is a skill that comes largely with experience. I’ve determined that it can also be applied to travel. Venice, for example, trades at a high multiple in relation to Florence, Siena and other cities. In my opinion, the premium multiple isn’t warranted. Paris, on the other hand, is an expensive city that’s worthy of its high price.

In my view, investing and travel have a lot in common: you want to find competitive advantages at good prices. Elaine (our CFO) still won’t budge, however, on letting me write off the trip.

It’s always nice to come home to Vancouver, which has its own competitive advantages and is the best at other things (sadly, hockey wasn’t one of them this year). But I’m dearly missing the pasta, brunellos, cappuccinos and croissants. Did I mention the pasta?

I read a lot in this job, out of both necessity and interest. I often find it refreshing to take a break from the likes of The Wall Street Journal, The Economist, the Report on Business, etc., to read something lighter, inspirational, controversial, or just offbeat. I usually gain an interesting insight or perspective, or if nothing else, fodder for the dinner table.

Below are some of the books I’ve enjoyed over the past year or so. If you’re looking for a spring or summer read, you may find something here that piques your interest.

The Art of Thinking Clearly (Rolf Dobelli). Short insights and interesting stories on how our minds work. Chapters include confirmation bias, the overconfidence effect, groupthink and cherry picking.

Born to Run (Christopher McDougall). A fascinating read that intertwines the barefoot running movement, human evolution and a little-known tribe of Mexican super athletes.

The Signal and the Noise (Nate Silver). This one’s all about the field of predictions, from weather forecasting to earthquakes to politics to investing.

Mick: The Wild Life and Mad Genius of Jagger (Christopher Andersen). The title says it all.

Damn Good Advice (George Lois). Pithy stories, lessons and anecdotes from the “original mad man of Madison Avenue”.

Linchpin (Seth Godin). From the author of Purple Cow and Tribes, this one’s all about the future of work and exceling without a rule book. We’re regular consumers of Seth’s missives at Steadyhand.

Flash Boys (Michael Lewis). This one’s waiting on my bedside table. It’s a post-financial crisis look inside Wall Street and high frequency trading. Lewis tells a good story (Moneyball, The Blind Side, The Big Short) and I’m looking forward to this one. Tom says it’s great.

If you’ve read something lately that you think should be in the Steadyhand library (elective or mandatory reading), we’d love to hear about it.

By Scott Ronalds

My wife made the mistake last year of telling my niece and nephews that we’d take them to Playland as soon as the youngest was tall enough to go on the rides. Well, Finn cracked the 48-inch mark recently and has been judicious in his daily reminders of our promise. With amusement park season in full swing, we were on the hook the other weekend for a day of fear, laughs, tears, lineups, mini donuts and stomach aches.

Everyone’s heard the analogies about investing and roller coasters – both are full of ups and downs – but that’s not where this is going. It’s about the ride of the day, or ROD in 7-year-old speak.

After a solid eight hour shift at the park, there was a lot of discussion, banter and debate during the ride home about what the highlight of the day was. The bumper cars, log ride and corkscrew roller coaster got strong consideration, but it was the Coaster – the original wooden roller coaster built in 1958 – that took the prize.

From its rickety ascents to its steep dives, whiplash corners and bone-hard seats, it was a horrifying experience. Yet, it was thrilling at the same time, which is what a roller coaster is supposed to be all about. The Coaster had a number of things that propelled it to ROD status:

• A nice balance of speed, drops, twists, and camel hops.
  
• A storied history. The coaster has been going strong for over 50 years and carries half a million riders annually. It’s been rated as one of the top 10 roller coasters in the world and it didn’t disappoint.
  
• It’s uniquely simple. There are no extra bells and whistles. What you see is what you get. From the weathered wood planks to the vintage seat belts, it’s all part of the charm … and the terror.
  
• Low Fees. The ride was included in the all-day ride passes we bought, whereas other big name rides cost extra. This scored big in the uncle’s rating.

In other words, the Coaster is a well-diversified, low-fee ride that has a wealth of experience (the gray hair factor is clearly evident) and a strong track record. It’s a throw-back to simplicity surrounded by other rides that flaunt flashy steel pistons, blinking lights and loud noises, but little substance. The famous wooden roller coaster has a lot of similarities to a good investment product. Or maybe that’s just the donuts talking.

By Scott Ronalds

It’s spot prawn season on the west coast. The boats are pulling into Granville Island daily (mere blocks from Steadyhand headquarters) and selling their bounty directly to the public. It’s awesome. They’re live, fresh, sweet and local. And you buy them right from the boat. There’s no middlemen. No commissions. No administrative fees. No packaging charges. No transaction costs. For $12-15 a pound, you get a bag of B.C.’s best.

A short walk away in the Granville Island Market, the same product will cost you 30% to 50% more. You’ll get them in a fancier bag and won’t have to take in any pungent dock & diesel fumes, but they’ll hit you harder in the wallet.

Many spot prawn fans love the direct-to-customer option. It’s cheaper, fresher and is a unique experience. Sadly, the season only lasts for 6-8 weeks (a requirement to ensure the crustaceans’ sustainability).

The direct-to-customer movement is taking hold in many other industries as well (think online retailing) but has been slow to catch on in investment management, in Canada at least. That’s what really stinks.

By Tom Bradley

The latest Steadyhand T-shirt minces no words. In bold white letters on a black shirt are the words Scott came up with to describe our philosophy around stock investing – concentrate dammit!

We’ve had lots of interesting reaction to the shirt, but the best comes from Winnipeg. Lori and I gave everyone in the family (who we thought might wear it) a shirt for Christmas, including our nephew Branton. Brant is in grade 11 at a private school, which requires that he wear a jacket and tie four days a week. On Fridays, he can be himself.

A couple of Fridays ago, Branton was wearing his Steadyhand t-shirt when he was abruptly pulled out of class and sent to the Vice Principal’s office. Contrary to what you’re thinking, it wasn’t because he was wearing an offensive shirt, but rather because he’d had 4 minor infractions in less than a month. He was being reprimanded for leaving the top button of his shirt undone (twice), chewing gum in class and forgetting an assignment at home.

But Steadyhand did fit into the story. As Branton was getting up to go back to class, the Vice Principal looked at him and said, “Nice shirt”.

By Scott Ronalds

My wife and I love wine. While we try to support local Okanagan producers as much as possible, we’ve found that our neighbors in Washington also make some great juice, and at good prices. We hit the road last month to explore Washington wine country with Walla Walla as our base camp. Here are a few random observations from our trip.

Wind Farms

Driving through the Columbia Valley, we had our first up-close experience with wind farms. It felt a little like we took a wrong turn and were in some weird military zone; yet, it was eerily majestic. These huge turbines were a reminder that sources of clean, alternative energy are growing and technology will play an increasing role in a more energy efficient world going forward. Cool stuff.

Walmart

East of the mountains (Cascades), we could drive several kilometers without seeing another car. But Walmart trucks seemed to be everywhere, and the stores were a fixture in every mid-sized town. Sam Walton’s company is one powerful retailer (Disclosure: I own the stock through my holding in the Global Equity Fund).

Real Estate

Real estate is still a big topic of discussion. At the B&B we stayed at, it was a frequent point of conversation over bacon and eggs. As other guests from Seattle and Portland opined that the U.S. market has bottomed and swapped stories about housing prices and conditions in their fair cities, my wife and I were reminded that Vancouver is a different beast altogether. When we threw out some numbers on lotusland prices, jaws dropped. “Wow, that’s crazy!” was the common response. Hmmm.

Climate Change

In my opinion, Washington makes fabulous red wines. The cabernets, merlots, and syrahs are big and bold. Southeastern Washington gets plenty of sunshine and days where the mercury hovers around 100°F, with cooler nights to balance the fruit. Many winemakers told us it’s become the ideal climate for growing these grapes. In fact, climate change came up as one reason why Walla Walla is being touted the “new Napa” and some vintners opine that California’s famous wine region will eventually become too hot to produce good grapes (do they have an axe to grind or are they on to something?). Washington (and B.C.) will flourish, we were told. Stay tuned.

Free Trade

Tasting the wine was a lot of fun. Bringing it home, not so much. Canadians visiting the U.S. are only allowed to bring back two bottles of wine each (without penalty). Anything beyond is subject to duty, taxes and a “liquor mark up fee”. We brought back a case and were hit with a nasty bill. Whatever happened to free trade?

I’ll spare the clichés about wine and investing, but suffice to say you can learn a lot on a wine trip. Turns out that I wasn’t completely lost in the vocabulary either. Value hunting, technical analysis, verticals, and corkscrews are common to both industries.

By Tom Bradley

While I was cleaning out the cottage last week, I found a few old items that brought back memories. The Clarkson Bantam hockey jacket with the black leather sleeves was a beauty, although it doesn’t seem to fit anymore. Fortunately, neither does the Speedo with the maple leaf pattern. I found a pair of flip flops that were so old they were called thongs. And to my great surprise, my wooden toy box was full of custom made cassettes (you must remember Dan Fogelberg, Foreigner and Pure Prairie League).

Also, at the back of the shelf, buried behind the George Athans water ski book, I came across a precious antique. It was a little pinkish book entitled, ‘Monthly Payment Tables on Mortgage Loans’. It looks like it was published in the mid-80’s and bought at Canadian Tire for $3.49. But what really makes it an antique, beside the fact that it was a book and not a webpage or app, is the sub-title on the cover:

From 5% to 30%
From $500 to $100,000

Now that’s an antique!

As a follow-up to my ‘Creep’ column last week (The Dangerous Rise of an Obsession with Safety), we’ve come up with a few more items for the list. As a reminder, we defined creep as a ‘slow and stealthy movement’. One you don’t notice while it’s happening, but later when you do, you go “Wow!”

Length of a song – In the 60’s they were two minutes long. Now the standard is four, even though most songs don’t have the meat to go that long.

Length of an NFL game – Thank God for my PVR, otherwise I’d never watch a game.

Litter – Where has it gone? Low and behold, we’re so much better at picking up after ourselves.

Size of a serving of Coke – Today’s standard size was family size twenty years ago.

Conflicts of interest at financial institutions – It’s deteriorated to the point where sell-side traders compete against their buy-side clients and banks underwrite their own bond and share issues.

Parents fund-raising for schools – An historical note to young parents: Our taxes used to cover books and gym equipment.

Cost of the best bike, concert ticket or stereo receiver – Businesses have figured out that the top 0.001% of the population will pay almost anything for the best.

The Planet’s population – 7 billion and counting.

Do you see other creep out there, investment related or otherwise?

By Scott Ronalds

As a kid, my family and I used to go on a summer holiday every year to Savary Island (a small island about 200 km north of Vancouver). It’s a bit of a hidden treasure, with white sand beaches, warm waters and an abundance of shellfish. There was no electricity, few cars and fewer rules (don’t bury your sister and be home for dinner). We loved it.

I was back on the Island this summer and few things have changed. The tennis court still has a shoddy wood floor, there’s still no electricity (save the odd generator) and the water is just as welcoming. There are a few more boats and cars now though, which gets the old guard steaming, but we won’t go there.

Surprisingly, the owner of the cabin we used to rent dropped by one day with something we left behind 30 years ago – a copy of Canadian Business magazine from June 1981. It cost $2 and had my dad’s name and office address on the front. I took it to the beach one afternoon to flash back to what was going on in the Canadian business world when I was seven years old and the only thing that mattered was how big a fort my gang could build on the beach before the tide swept it away. Aside from some laughable ads from the top word processors of the day, an article on money market funds caught my eye.

The piece led off by noting that most Canadians were investing their spare cash in bank accounts or GICs: “Both these vehicles are safe and now yield a generous, though by no means princely, 13% to 15% a year.” Ah, the good old days! The author goes on to pitch the virtues of money market funds, “where you can earn 16% or more on your money … it’s a game that takes some getting used to but the rewards can be substantial.”

At the time, there were only two such funds in Canada (compared to 99 in the U.S.), the AGF Money Market Fund and Guardian Capital Money Market Fund. The former was yielding 16.7% and the latter 16.4% at the time of writing. (And to think I was wasting my allowance on Dr. Pepper and Bazooka Joe) Neither fund, however, had caught on with investors. The author suggested the major factor holding the funds back was that “Canadians don’t share the dis-satisfaction many US investors have with banks and trusts ... to most people, it seems a lot easier to just throw their money in the bank.”

Today, there are over 300 money market funds in Canada, most of which are yielding 1% or less (after fees). Further, the banks now have a disproportionately large share of the overall mutual fund industry. Canadians still love their banks. With their huge branch network and distribution channels, many investors still feel it’s a lot easier to turn to the banks for their savings and investing needs.

The more things change, the more they stay the same.

As summer winds down, I find myself longing for a Dr. Pepper and some of those generous, but by no means princely, 13-15% returns.

How’s this for two totally different customer experiences.

Recently I went into Sigge’s, a local cross-country ski store, to buy some equipment. I’ve been a ‘classic’ skier for years, but am increasingly feeling the pressure to keep up with my ‘skate skiing’ friends (although they tell me it won’t help).

When I left the store 30 minutes later, I thought to myself, “Wow, that was amazing.” It was so amazing that I pulled out my Blackberry and punched in everything I could think of that made it a great experience:

• The woman was warm and welcoming without being gushy.
• She was clearly into what she was doing – i.e. skiing and equipment.
• She was quietly efficient, or was it quick without rushing?
• None of my questions or requests were a bother.
• She used a few methods I hadn’t seen before, including writing my specs down on a card (boot size, ski and pole length) so I had something to take with me if I decided not to buy or wanted to rent first.
• And most importantly, she knew what she was talking about.

Compare this to the email I received from Air Canada. It came in response to a note I’d sent to compliment them on the service I’d received from Catherine on AC 116 to Toronto on April 18th.

Thank you for contacting us.

This is to confirm that we have received your correspondence and there is no requirement to re-submit your information. Our current processing time is 15 business days for general customer concerns, 10 business days for baggage related issues and up to 4 weeks for baggage tracing. We will make every effort to respond sooner.

We appreciate your patience and understanding as you await our response.

3 weeks for concerns? 2 weeks for baggage? 4 weeks to actually find my bag? Thank goodness they’re going to try to do it sooner.

Chris, Scott, Sher, David ... let’s stay focused on the Sigge’s formula.

Catherine, if you ever get tired of working for the airline, give Sigge’s or Steadyhand a call.

Billionaires in gear – It was announced that 40 billionaires have accepted Warren Buffett and Bill and Melinda Gate’s challenge to give away at least half of their wealth to charity.  Ted Turner, Larry Ellison and Michael Bloomberg are among the names that went public with their pledge.  In face of government cutbacks, it’s encouraging to see the mega-rich taking on some important global issues.  Even if our governments had the money, they probably couldn’t achieve the cross-border coordination that organizations like the Gates Foundation can. 

It feels good when you stop – BP got the well sealed and 75% of the spill has evaporated, broken down or been collected.  Yahoo!

Writing them off – Speaking of BP, I always find it interesting how quickly we write off the ‘down and outs’.  Whether it be countries (Korea, Sweden and Canada a decade ago), companies (Apple, IBM, Teck … the latter by me), politicians (Bill Clinton, Joe Who), athletes (Tommy John, Jim Plunkett, Grant Hill) or entertainers (Britney Spears, Tina Turner, Robert Downey Jr.), bad press and short-term outlooks make us jump to premature conclusions.  Besides BP, we’re doing that now with Toyota (it will never be a power again) and RIM.       

De-accumulators delight – We’re quick in these pages to remind readers that weak markets are a great opportunity for investors who are in the accumulation phase (i.e. putting money in as opposed to taking it out).  Well it’s been hard to hold the stock market down this summer and de-accumulators are being given an opportunity to re-balance and top up their cash reserves. 

A housing breather – I may be the only homeowner in the country that feels this way, but I actually think the news of a slower housing market (sales volumes down significantly and prices weakening) is a good thing.  It was getting silly six months ago and I hated to see young friends and family getting started in that type of environment. 

Now if only I can avoid reading any big picture stuff over the weekend, all will be good.

By Scott Ronalds

Investors have learned to deal with a lot of anxiety over the last couple of years, what with a severe credit crisis, major bank failures, derivatives gone bad and gyrating stock markets. Indeed, stress is becoming the new buzz word.

Below are some stress-related observations and musings on the week that was.

Stress tests: European banks were recently subject to a health check in the form of stress tests that were designed to determine how well they would cope with another recession or financial shock. While only 7 of 91 banks failed, analysts were still stressed this week over the credibility and level of difficulty of the tests.

Stressed leadership: BP (British Petroleum) was so stressed about their heavily-criticized CEO’s (Tony Hayward) inability to effectively deal with the Gulf of Mexico oil spill that they replaced him with Robert Dudley, the company’s first non-British head.

De-stressing: Tom Bradley was on holiday in Ontario’s cottage country for two weeks of R&R. His de-stressing technique: twice daily short-line slalom sessions (waterskiing) at 34 mph. Whatever works for you, boss. I think I’ll stick to something less strenuous, fishing and Heineken.

STRESS nations: With a new acronym hitting the investment dictionary, STINC (Singapore, Thailand, Turkey, Indonesia and Chile), we’ve come up with our own group of high risk, strained economies that may represent attractive investment opportunities for the gamblers out there. We call them the STRESS nations – Syria, Turkmenistan, Rwanda, El Salvador and Somalia. Look for an offering on the ETF product shelf soon.

Stressed wireless: Discount wireless carriers are stressing over Rogers Communications’ launch this week of chatr, its new low-cost brand that targets the unlimited talk and text market.

Salary stress: Canucks forward Mason Raymond and Oilers forward Gilbert Brule were so stressed out about their salary arbitration hearings that they both accepted offers from their clubs before proceedings were set to start.

We could all use a little less stress this summer. Serenity now.

Below are some observations and musings on the week that was.

The Next Wall Street? – I’m desperately trying to come up with an investing analogy for the LeBron James signing with the Miami Heat, but I’m just too mad to think straight.  Three of the best players in the NBA go to one team so they have the highest chance of winning championships “for multiple years”. If we’re looking for the next area of unabashed excess to be shaken out (after Wall Street), perhaps we need look no further than pro sports.

Complexity gone wild – PricewaterhouseCoopers did a report on the risk management problems at Quebec’s Caisse du depot. In the ROB today came the following quote: “...the investment vehicles became so complex that the fund’s risk management group couldn’t (keep up with) them.” We often talk about the four types of risk that fuel investment returns – interest rate, credit, liquidity and equity risk. Unfortunately, a fifth type has emerged that adds cost, not return, to a portfolio – COMPLEXITY.

Bad Math –The Canada Revenue Agency (CRA) is going to review 70,000 TFSAs (Tax-Free Savings Accounts) on a ‘case by case’ basis if there has been over-contribution penalties assessed. Think about the economics of that. It will cost more to crack open the file than the government could ever hope to collect in penalties.  Why don’t the Feds admit they screwed up, clarify the rules and wipe the slate clean...and then put the savings in a TFSA of their own.

A Snowflake in Hell – For the first time I can ever remember, real estate companies are actually predicting lower house prices for the year ahead.  In its latest survey, Royal LePage is calling for a softening in some areas and is warning that there will be fewer situations with multiple offers.  If they are predicting weakness, does this mean the outlook for real estate is REALLY scary?

Procrastination is good...sometimes – As I head off to enjoy the summer heat, Neil gave me a book to look at – ‘The Upside of Irrationality’ by Dan Ariely. I had asked him about it (he’s the source on these types of books) because I saw the following quote from the author, “If you are doing something you hate, like working on your tax return, then it’s better to work straight through without taking breaks, and the opposite for something you like doing. We found that anticipation, savouring the experience and the joy from memory are as strong as the experience itself.” Why is it that we always do it the wrong way?

It's all good – It looks like the summer heat has arrived in most parts of the country, we got a cool new Governor General this week and I only have to mis-pronounce the word vuvuzela for two more days. Enjoy.

By Scott Ronalds

It’s Day 5 of the Games. As we’re lucky enough to be in the heart of the action here in Vancouver (or unlucky enough depending on your viewpoint), it’s time for a few observations:

• Canadians are bursting with pride and patriotism. Which is a good thing, no matter how you look at it.
  
• There have been a few early disappointments for the home team (Manny Osborne-Paradis, Jeremy Wotherspoon) and some pleasant surprises (Alexandre Bilodeau, Mike Robertson). Like any well diversified portfolio, this is bound to happen. The results will come; it’s important to think long term (i.e. 17 days).
  
• Fans are snapping up Olympic gear at a record pace. The line-up to get into The Bay’s downtown store at 10:30 PM last night was still 50 people deep. Their red sweatshirts, scarves and mittens are as hot as income funds.
  
• Spandex isn’t a good look on men.
  
• The weather has been a distraction (this is Vancouver, after all). Just like short-term market noise, best to ignore it.

We’ll report back in a few days, as there’s sure to be plenty more excitement (and easy analogies) to come.

Dig out the white towel and put the razor away. It’s playoff time.

Get in on the action by entering the Steadyhand NHL Playoff Pool. Entry is free, and the winner will walk away with a team jersey of their choice. Tom would suggest a Mats Sundin Canucks jersey, of course.

Register online by clicking here. Enter the pool name (Steadyhand) and password (Steadyhand) in the text boxes to the left of the ‘Sign In’ link and click the drop down box to select ‘Playoffs’. Once you’re logged in, click the Entry Form tab and select your team.

All entries must be submitted by Wednesday (April 15) before 4:00 PM (PST).

Feel free to give us a shout at 1-888-888-3147 if you have any questions.

Good luck to all!

I’m a sports fan.
I’m a Canucks fan.
I was a Mats Sundin fan.  Until now.

Mats’ little dance with NHL general managers is one of the most cynical things I’ve witnessed in sports - the NY Knicks signing of Latrell Sprewell after he choked his coach is up there, Roger Clemens’ retire/unretire routine would get votes, and the signing of Steve Avery later this winter by a team pushing for the playoffs will be another.  

While Mats did his PokerStars endorsement (nice touch for a league icon) and mulled over his decision, his future team (New York, Vancouver, whoever) was fighting and scratching for every point they could get.  He’s had Vancouver’s offer sitting beside his chips since the summer, but he couldn’t make up his mind soon enough to provide veteran leadership at training camp.  He wasn’t around to step up in the dressing room when Roberto Luongo went down with an injury.  And now after he’s finally decided, he doesn’t show up for the press conference in Vancouver, but instead is off to Sweden for the holidays.  His teammates will play another 5-6 games while he hangs around the Christmas tree with his family.

His ‘process’ is so disrespectful of what team sports is all about.  I recognize that he is not the only one to blame – he had to have someone to dance with and Canucks G.M. Mike Gillis left his offer on the table for 6 months – but he has to take most of the responsibility.

It is such an interesting juxtaposition that Mats floats into town (figuratively, not literally) on a week when the city honours a true sports star and hero, Trevor Linden.  Would Trevor leave the team hanging for months?  Would he endorse a gambling company instead of visiting kids in the hospital?  Would the Captain go home to Medicine Hat for the holidays and let his teammates play a bunch more games without him?  No way.

When I turned on CNN after the Palin/Biden debate, there were no less than twelve talking heads ready and anxious to comment on what had just happened.  There wasn't enough content in the event for a high school civics class to discuss, but the discerning dozen went at it for hours. 

Last night Jon Stewart (The Daily Show is my only source of political news) did a thing on the 'Octabox', CNBC's ingenious invention which brings together eight commentators and experts to discuss the markets.  I had seen the eight "little heads" (as Stewart refers to them) last Friday and couldn't believe what I was seeing – analysts and money managers trying to 'out-sound-bite' each other.

As per my usual rant, somebody needs to remind CNBC that nobody can call the market for the next hour, day, week, month or year.  Filling the airwaves with experts debating the impact on today's news on tomorrow's markets is doing the viewers a disservice. 

I like Stewart's idea of adding one more person to the Octabox, (Whoopi Goldberg?) and turning the show into the financial version of Hollywood Squares.  Every time an expert's prediction is wrong, he/she gets eliminated from the game.  The last person standing would be rewarded with their own prime-time show on CNBC. 

If you have an addiction to the financial news, which is totally understandable, I encourage you to take an hour from your viewing time and watch Charlie Rose's interview with Warren Buffett.  After that, if you still need a fix, watch it again.  After that, I suggest you start cruising the internet for video offerings.  One of my favourite destinations is the Financial Times' "View from the Top" series, but Google and YouTube also provide broad access to business executives, analysts and money managers from around the world.

Many great things come out of the Olympics.  For two and a half weeks, the world turns its attention to stories of athletic passion, determination, and raw emotion.  Billions of people will watch a man dive off a springboard, a woman hurdle herself over a fifteen foot bar, and a team of six spike a ball over a net.  Not to mention that for seventeen days, the daily cascade of stock market squatter takes a back seat to sport.  Sort of, at least.

The Olympics have spawned many technological and scientific innovations over the years.  From advancements in broadcasting equipment to dietary enhancements to space age fabrics & materials to safer crash barriers, the Games have been a catalyst for improvement.  The Olympic movement to become higher, faster, and stronger has led to the development of many useful products (and techniques) that we enjoy in our daily lives.

Not surprisingly, Wall Street can’t keep their hands out of the pot.  This time around we’ve seen the creation of the Dow Jones 2008 Summer Games Index, which consists of all 37 publicly traded companies that have signed on as official Olympic sponsors (in December, the 2010 Winter Games Index will make its debut).  Then there’s the all-important stock market research: Did you know that shares in previous Olympiad nations have risen by an average of 28 per cent the year after hosting the games? (with the Chinese market down 60% from its peak last October, there’s a good chance this streak will stay alive.)

If Speedo can team up with NASA to design a ‘fastskin’ swimsuit that holds a swimmer’s muscles in an optimum position and improves oxygen intake, why can’t the financial engineers design something useful?  The creation of new indexes and largely irrelevant data mining only serves to lead investors astray and convince them to make changes to their portfolios.  Making matters worse, the Summer Games Index has been off to a hot start since its inception at the end of 2006, which may convince a few performance chasers to jump on board.  If only the Wall Street inventions were as positive an influence as the Fastskin suit.

The price of a barrel of oil recently topped $135.  Get out the balaclava.  It’s time to steal us some crude.  At least that’s the thinking of the opportunistic criminal in Texas.

An article in the Wall Street Journal yesterday reported that there’s been a sharp rise in oil field thefts in the Longhorn State.  While stealing oil sounds like an obscure and difficult venture, apparently it’s relatively easy.  According to the article, thieves are “tapping into pipelines, paying off truck drivers and sometimes simply driving up to wells in tanker trucks and pumping the oil out of storage containers.”  There’s also a thriving black market for tools and drilling equipment.

It’s a sign of the times, I guess.

At Steadyhand, our managers have exposure to the energy sector, but are spending more time looking at what the thieves are passing over. 

Get your feet wet by entering the inaugural Steadyhand March Madness Pool.  There’s no entry fee, but the winner won’t walk away empty-handed.  For those who read the boss’ prose, you may be aware that he’s a big Steve Nash fan.  So we’ve got an authentic Nash jersey from his days at Santa Clara on the line.  And it gets better.  The victor will also walk away with the official Spalding basketball manhandled by Koda (the bear) in the Steadyhand video.  Click on the “S” in the Steadyhand logo on the homepage if you’re confused.

Register online by clicking here.  Once you’ve completed the registration page, enter the pool password – steadyhand – and make your picks.  All entries must be received by Wednesday, March 19th.

Scoring is as follows:
1st round: 1 point
2nd round: 2 points
3rd round: 4 points
4th round: 8 points
5th round: 16 points
Championship: 32 points

Bonus points will be awarded in the first two rounds, where you’ll receive double the points for picking an upset.  For example, if you correctly pick an upset in the second round, you’ll receive 4 points (2 x 2).

Feel free to give us a shout at 1-888-888-3147 if you have any questions.

Good luck to all!

The Commish

We were inspired by a number of events and marketing campaigns throughout the year to come up with our own list of products that we think have the potential to become the next must-haves. Move over Tickle-me Elmo.

Alas, we are not in the merchandising business. We are simple money managers. So we are making our list public in the hope that some brave entrepreneur will grab one of our ideas by the horns and run with it.

Inspired by:

Lululemon – disposable testing kits to measure the amount of seaweed and marine vitamins in your yoga wear. The last thing you want in the middle of a Bikram session is for your shirt to stop emitting those all-important amino acids into your skin.

Aquafina – ‘Olympic Water’. Apparently it’s O.K. to sell water from a tap, so why not bottle it from a tap at Whistler. Throw a pair of skis and an Inukshuk on the label, and sell to the rest of the world the water that the athletes will be drinking in 2010. Only $4 a bottle.

The U.S. housing market – a mortgage calculator (that works).

Bell advertising – a beaver trap.

Donald Trump – a Rosie O’Donnell dart board. Sales to The Donald and Elisabeth Hasselbeck alone should put you well on the path to retirement with this one.

Everybody already has an iPod, Blackberry and portable GPS. If you’re an entrepreneur looking for the next blockbuster idea, think outside the little black box in 2008.

This month, Lori and I received the following notice with our Visa bill. It comes from the bank that is ‘First for you.’

Take a break this month
No minimum payment required this month

Because you are a valued cardholder, we would like to offer you a RBC Royal Bank Visa payment holiday by waiving your minimum payment this September. Of course you may still make a payment if you wish. Please note that interest charges will continue to accumulate and the minimum payment shown on your next monthly statement will be calculated in the usual way.

First for you
RBC Royal Bank

The bullish camp points to strong fundamentals driving the currency higher over the short-term: high oil prices (the loonie is viewed by many as a petro-currency, with its fortunes tied closely to the price of oil), continued demand for commodities, low unemployment, etc. While the bearish camp points to an oversold U.S. dollar, a slowdown in global growth, and a probable cut in interest rates by the Bank of Canada as key reasons why the loonie is likely to lose steam.

So which camp are we supposed to believe? How about neither. Short-term currency movements are really anyone’s guess and are next to impossible to predict. If the loonie is closely tied to the price of oil, where is oil going? Who’s to say that it won’t fall to $50/barrel? Or rise to $100/barrel? If its path depends on the strength of the domestic economy and the interest rate environment, will Canada steam ahead or pull back? You get the picture. There’s too many variables at play. Not to mention that movement in the loonie isn’t entirely correlated to these variables anyways.

If you can’t sleep at night because the loonie’s rise is killing your foreign equity returns, you can consider hedging away some or all of your foreign currency exposure (although it may not be the best time to do so, given the substantial short-term appreciation that you’ve already absorbed). A better solution is to ignore the headlines and accept that currency movements are too unpredictable to gamble on, and tend to balance themselves out over the long term. And while it certainly hasn’t benefited Canadian investors lately, foreign currency exposure actually provides a layer of diversification to your portfolio and can boost your returns. Remember the 1990s?

We all like to have fun with predictions (don’t kid yourself, even the big addresses on Bay Street have 'friendly' pools on where the loonie will close at the end of the year), but it’s not so fun when you jeopardize your portfolio by acting on them and making the wrong call on something that’s entirely out of your control (read currency movements).

That said, I couldn’t end this posting without a prediction of my own, all in good fun of course. So here goes: Seahawks 27 – Bengals 21. Now you can take that to the bank.

Not surprisingly, Jobs’ email inbox filled up quickly with complaints from angry iPhone customers who forked out $600 to buy the phone. In his note, Jobs argues that changes, improvements, and price decreases are all part of life in the technology lane. But he also apologizes for disappointing the early adopters and stresses that Apple wants to do the right thing for their valued iPhone customers. So the company is offering all iPhone customers who purchased the phone for its original price a $100 credit that can be used to purchase any product at an Apple retail or online store.

Is Apple doing the right thing? Post a comment with your thoughts.

What does In-N-Out have to do with investing? Nothing really. But along with the top-notch fast food fare, they’ve got a great burger philosophy - Keep it Simple. If you want a teriyaki pineapple burger, you won’t find it here. A chicken burger or fish sandwich? Forget about it. They stick to what they do best. You’ve got the choice of a burger, cheeseburger, or the famous Double-Double. As for the fries, don’t expect to find any curly or spicy varieties. And to wash it all down? Choose from a short list of soft drinks or one of three shakes – chocolate, strawberry or vanilla (made with real ice cream, of course).

In the nearly 60 years that they’ve been in business, little has changed at In-N-Out, including the menu. Everything is still made fresh to order (there’s no microwaves or freezers) and the 150+ locations in California, Nevada and Arizona are all privately owned by the founding family. They’ve stuck to a controlled growth plan and don’t franchise out their business. How have burger fans responded to a simple and static menu over the years? The company has a cult following and is the envy of the industry in the southwest United States.

Sweet and simple is the mantra at In-N-Out. That’s a recipe we like.

With the sun shining bright and the ocean gently breaking on the shore, it was a perfect time to stretch out in the hammock and dig into the reading I brought along for the trip. But The Essays of Warren Buffett just weren’t doing it for me in this tropical paradise, so I cracked open Freakonomics, a bestseller written by a “rogue economist” out of the University of Chicago. The author, Steven Levitt, asks questions uncharacteristic of the traditional field of economics, such as ‘What do school teachers and sumo wrestlers have in common?’ and ‘Why do drug dealers still live with their moms?’ It’s an interesting read, to say the least. Levitt looks for correlations between seemingly unrelated events and occurrences to draw conclusions that seem startling, yet totally plausible at the same time.

As a side note, having worked in this industry for a number of years, I’ve developed a quirky tendency to look at the ‘investment side’ of everything (my girlfriend would replace quirky with annoying). For example: my morning bagel – I wonder how Tim Hortons stock is doing? Turning on my computer in the morning – Is Dell releasing earnings this week? You get the picture.

After reading a few chapters, my stomach started to rumble, so I went to grab my suitcase to find the Pepto Bismol that I’d brought along (anyone who has been to Mexico knows that when your stomach starts to rumble, it’s best to deal with it right away). I emptied the contents of my shaving kit onto the counter and found the magic pink liquid. I also had Tums, Gravol, Imodium and Alka Seltzer, among all my other toiletries. Pretty well diversified, I thought to myself.

Let’s look at the contents of my shaving kit from an investment perspective.

• Pepto Bismol (Procter & Gamble - U.S.)
• Imodium (Johnson & Johnson - U.K.)
• Tums (GlaxoSmithKline - U.K.)
• Alka Seltzer (Bayer - Germany)
• Aspirin (Bayer - Germany)
• Sonicare toothbrush (Philips - Netherlands)
• Crest toothpaste (Procter & Gamble - U.S.)
• Axe deodorant & shower gel (Unilever - Netherlands)
• Q-Tips (Unilever - Netherlands)
• Cologne (Armani - Italy)
• Shaving cream & razor (Gillette - U.S)

Products from the U.S., the U.K. and Germany helped me feel good, while those from Italy and the Netherlands helped me look and smell good (according to my girlfriend, at least). Too much exposure to one ‘country’ or too little of another, and I could’ve been in trouble. Without remedies from the U.S. and Germany, I would’ve been in a world of hurt. You make the connection.

The rest of the contents of my suitcase rounded out my geographic diversification, and helped contribute to the success of my vacation. For instance, my camera (Nikon - Japan) represented my exposure to Asia, while my cell phone (Samsung – Korea) and flip-flops (Reef – Brazil) provided me with some emerging market exposure, not to mention contact with the outside world and comfortable footwear.

Reading Levitt’s book, in combination with the intense sun and cold Coronas, prompted a question and correlation that Levitt might appreciate. What do the contents of a suitcase and investment portfolios have in common? Geographic diversification plays a key role in their effectiveness, or success. I’m willing to bet that no economist has studied that correlation before.

You may have noticed that I had no domestic exposure in my suitcase. I made up for this, however, by renting a SeaDoo (Bombardier – Canada) for the day, and enjoying the odd rye and coke (Canadian Club – Canada). My domestic exposure enhanced my short-term vacation returns, but could’ve been disastrous if I had too much of it. I wonder if there’s a lesson here...

I’m referring of course to the actions of the Florida Panthers yesterday. The Panthers traded Todd Bertuzzi to the Red Wings for two conditional draft picks and a forward I’ve never heard of. Just plain ugly in my opinion (not that I’m a fan of Bertuzzi, for the record, but I’m concerned that he could hurt the chances of my beloved Canucks in their playoff run now that he’ll be playing in the same conference).

Oh, and the markets had a pretty hideous day too. The Dow recorded its biggest decline since 9/11/2001, and the TSX suffered its largest drop in nearly three years. This isn’t as alarming to me, however, as the Bertuzzi trade. Sell-offs happen. It’s part of investing. I’ve seen it before and I’ll see it again. It’s not going to damage my portfolio over the long run.

I find it amusing to read the financial headlines and commentaries on days like these. You get a full spectrum of opinions, from the alarmists to the level-headed to the optimists:

“There’s not even a flight to quality into gold or the Swiss franc, which tells me that we’re closer to the beginning than to the end of this.” – Stephen Sachs, Head of Trading at Rydex Investments (taken from cbsmarketwatch.com)

“There seems to be just an air of nothing is safe anymore, there’s nowhere to go and people are rotating into bonds as a safe haven.” – Andre Bakhos, President of Princeton Financial Group (taken from reuters.com)

“We’ll probably see a decline of about 4 or 5 percent and then it will be done.” – Harry Clark, CEO of Clark Capital Management (taken from cnn.com)

“These things happen. You have to look at days like this as an opportunity. That’s our line of thinking.” – Ted Parrish, co-manager of the Henssler Equity Fund (taken from cnn.com)

So who are you supposed to listen to and what are you supposed to do? Clearly, the consensus is that there is no consensus. It’s not a time to look for answers to long-term questions based on what you may read or hear on a day of frantic trading. You’ll hear a different opinion from everyone, so take them with a grain of salt. Here’s mine: the Dow, TSX, S&P 500 and every other major market have had long histories of winning records, with some hiccups along the way. There’s no reason to think this will change. The same can’t be said for the Canucks. So focus your concern where it’s needed most – healthy goaltending and a productive third line down the stretch.

The airline, flying since 2000, has rapidly grown to become the 8th largest carrier in the U.S. But last week’s events were a cruel reminder that the company’s investment in its systems and staff have not kept pace with its growth.

The company’s CEO clearly recognizes the severity of the issue. He announced that JetBlue plans to triple the number of staff to handle similar meltdowns in the future. Little solace to customers who were stuck on grounded jets for as long as 10 hours and to those whose flights were cancelled altogether.

On the customer service front, JetBlue has prepared a customer “Bill of Rights” that identifies the types of compensation that can be expected by clients impacted by a delay or cancellation. Only time will tell whether the company’s overdue efforts in beefing up its staff and systems will win back customers. Would a $25 voucher buy back your loyalty? The lesson: have a plan, and invest as you grow.

Grizzly Facts, Part I

• The Grizzly population of North America is estimated to be between 40,000 - 50,000
• B.C. is home to 1 of every 4 remaining Grizzly bears in North America
• Newborn cubs weigh less than a pound
• A full-grown Grizzly can weigh up to 1,800 pounds
• Grizzlies typically reach maturity at the age of 5

It's been a couple of weeks since Westjet settled with Air Canada for $15 million. As you may remember, Air Canada was suing Westjet for commercial espionage. Westjet was caught illegally stealing data on flight loads from Air Canada's data network. As a result, one of their most senior executives, Mark Hill, was fired. Throughout the legal scuffling that led up to the settlement, Clive Beddoe, Westjet's President and CEO, denied having been involved or having knowledge of what Mr. Hill and his team were doing.

The settlement was hailed by the investment community as a good business move. In the context of these public corporations, the dollars weren't that big and it cleared away a lurking uncertainty surrounding Westjet. As part of putting this issue to bed, Mr. Beddoe admitted to knowing about the scheme.

It has been a couple of weeks since news of this settlement, but it continues to nag at me. I'll tell you why.

I've been a fan of Westjet from the beginning. I like their business model and I like even more that they've stuck to it and executed it beautifully. As a customer, I was so impressed on one occasion (while I was President and CEO at Phillips, Hager & North Investment Management), that I arranged to take a colleague and go see how they ran their call centers. We wanted to be just like them.

The point of all this is to say that my relationship with Westjet has been permanently damaged. Westjet is a company that engages its customers. It keeps things simple, is relatively transparent (as corporations go) and makes its customers feel like their part of the team, or at least, a member of the club. Now we're told that the founder and driving force behind the team, Mr. Beddoe, was cheating. And to make matters worse, he denied the truth for a long time (I do recognize the realities of the legal process, but that doesn't change the fact that he'd didn't step up and admit his mistake when they were caught).

None of this is to say that I won't fly Westjet again. I will when it makes economic sense and fits my travel plans. But I don't want to be part of the team any more. Indeed, I've moved Westjet into the same category as Air Canada. It is now a big, impersonal, ruthless corporation that I will deal with dispassionately.

So to answer the question in my title, I never will feel the same about Westjet again. By dealing with this transgression the way he did, Mr. Beddoe has lost one loyal member of the team.

Technorati tags: steadyhand