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Sample Reviews

Investor LiteratureThe following reviews can be viewed with a premium membership at InvestorLiterature.com if you are interested in becoming a member please Click Here for more information.


2011(1) July Equity Duration Download Sample
Extensive work by Martin Leibowitz and his collaborators, using concepts from 'The Franchise Model', explain equity duration – an often misunderstood and important topic in both financial analysis and portfolio management.
   
2011(2) August ABCs of Hedge Funds Download Sample
Updating a similar earlier study, this paper takes a large sample of US hedge funds over a 15 year period, adjusts for survivorship and backfill bias and, using returns-based attribution (including lagged beta), estimates alpha, beta, and costs by subcategory.
 
2011(3) September Real Assets Download Sample
Real Assets – both traditional and new - are reviewed in terms of their ability to hedge inflation. It appears some hedge well, some don't, some only hedge certain types of inflation, and some do but have problems which detract from their value as hedges.
 
2011(4) October Behavioural Finance Download Sample
We review a recent CFA Institute publication and two other books which provide insights into behavioural finance theory. This field has become an important alternative to modern portfolio theory, some of whose assumptions are unrealistic.
 
2011(5) November Private Equity vs Public Equity Download Sample
This review discusses six academic studies, all of which come to the general conclusion that, on average and net of fees, US private equity returns have not produced premium returns to public equities.
 
2011(6) December US Small Cap Download Sample
US small cap has outperformed US large cap by over 2% per annum since 1926, although underperforms at times and is more volatile than large cap. Being a less efficient market, it also allows manager alpha, typically expected to be about 3% per annum.

2012 Reviews

 
2012(1) January Hedge Fund Due Diligence Membership Required
Operational due diligence of hedge funds is important as, while potentially expensive, it can contribute significantly to returns. We offer other readings on this topic, which also support the benefits of operational due diligence.
 
2012(2) February Pension Fund Size and Rates of Return Membership Required
A recent study of pension plan performance suggests bigger plan assets produce superior returns, net of fees and adjusted for different asset mixes. Alternative investments and lower fees are major contributors, depending on good governance practices.
 
2012(3) March ETFs: Pros and Cons Membership Required
A recent presentation by the Kaufman Foundation provides a good review of the implications for markets and regulators of the rapid rise in ETFs. The presentation provides a balanced view and is concerned with the ultimate purpose of capital markets.
 
2012(4) April The Equity Risk Premium Membership Required
This CFA Institute publication on the Equity Risk Premium (ERP) is a follow-up to the 2001 CFA Institute initial ERP project. In that project nineteen leading academics and practitioners expected on average an ERP of 3.7% (US equities over the real risk free rate). This 2011 update assembles eleven papers of such authorities and in general comes to a very similar average – about 4%. The topic is highly relevant today, given the extreme market events of the past ten years and the uncertainty surrounding returns.
 
2012(5) May Divident Yields vs. Bond Yields Membership Required
This Review makes a case for a dividend yield stocks over bond yields. We show historical relationships which suggest stock yields vs. bond yields are at their most attractive since the '40s or '50s. We review a sample dividend yield portfolio and pick one stock to illustrate how the bond math makes it very difficult for bonds to catch up with the higher yield in stocks. Finally, we offer some comments on the implications of all this for liability driven investing – an important area for pension funds.
 
2012(6) June Liquidity: A Fourth Factor Membership Required
While liquidity is recognized as a factor, or risk premium, this paper identifies it as a significant and distinct factor from the traditional factors – style, market cap, and momentum. The paper suggests that liquidity ranks about equal to value in size of premium and slightly ahead of market cap. The paper illustrates how this premium can be earned in various portfolio strategies.
 
2012(7) July Venture Capital Investing - The Kauffman Foundation's Experience Membership Required
The Kauffman Foundation reports their experience in venture capital (VC) investing over 1985-2011 in about 100 funds. Their conclusions include: 1/VC fund returns have disappointed and have not beaten a public market equivalent (PME) by 3% since 1997, 2/ only 20% of funds beat a PME by 3%, and 3/ first quartile VC results may not even be enough to meet this target.
 
2012(8) August Gold as an Investment Membership Required
This Review is a presentation of six opinions on gold (both bulls and bears), plus the conclusions from an excellent paper on gold by academics, Campbell R. Harvey and Claude B. Err - 'The Golden Dilemma'. Gold has done spectacularly well since floating freely in 1975: as at August 2011 it is has outperformed US equities over 36 years. The common theme among the bulls is: gold is an inflation and currency hedge plus a safe haven in a risky environment. The common theme among the bears is: gold is still a commodity, not a productive asset, and (despite its recent performance) has an inconsistent record of delivering the real returns of productive assets like stocks. The paper by Harvey and Erb suggests gold is neither an inflation hedge nor currency hedge and it is doubtful it is a safe haven. Supply and demand of gold, however, may be valid reasons for continued strength.
 
2012(9) September The Real Price of Gold Membership Required
This Mini-Review is a follow-up to the preceding Gold as an Investment. It is based on further research by Claude B. Erb and Campbell R. Harvey entitled An Impressionistic View of the 'Real' Price of Gold Around the World. The authors examine real and nominal gold prices in 23 countries and conclude that gold appears to behave about the same in troubled and nontroubled countries, and that real gold prices are expensive in most countries, suggesting possible overvaluation.
 
2012(10) October Low Volatility Strategies Membership Required
This Review discusses academic and practitioner research on the 'low-risk anomaly' - i.e., low-vol (which are also low-beta) stocks outperform high beta, contrary to CAPM. This research has translated into low-volatility strategies. The overlap of other factors such as size and style is discussed since value stocks typically have low-volatility. Several papers cited herein find that value and low-vol are separate and distinct factors. The Review discusses the reasons for persistence of the low-risk anomaly and suggests it will be around for some time. Finally, we quote two papers which show that combining leverage and low-beta stock selection have allowed Berkshire Hathaway to earn the highest information ratio of all CRSP stocks with a 30-year record.
 
2012(11) November Benjamin Graham and Risk Membership Required
This Review is an update of a paper I wrote for the Brandes Institute in April 2009 entitled "Benjamin Graham and Risk". It is the first of three InvestorLit Reviews on the topic of risk, the next being "Neuroscience and Risk". In "Ben Graham and Risk" we discuss the value investors' view of risk vs. Modern Portfolio Theory (MPT). The conclusion is that, while beta in CAPM theory, says risk and return go hand-in hand, empirical studies have found the opposite. Low-beta value stocks have generally outperformed high-beta growth stocks. Overall the value investors' view of risk stands up very well in practice.
 
2012(12) December Neuroscience and Risk Membership Required
This Review is about the neurological reactions to stressful situations in financial markets, either rewarding or hurtful. These involve the steroid hormones testosterone and cortisol, which, if repeated, alter the propensity for risk taking and, if repeated chronically may promote irrational risk-reward choices. The findings are part of a growing body of knowledge that challenge the precepts of rational markets and suggest that hormones cause or at the very least exaggerate financial instability.
 
2012(13) December Neuroscience: Mind and Body Membership Required
"Neuroscience: Mind and Body", InvestorLit 2012(13), is based on a book by John Coates - "The Hour Between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust". It sets forth in far greater detail his study reviewed in "Neuroscience and Risk", InvestorLit 2012(12) and discusses the workings of the mind and body in a similar modern situation, the financial crisis of 2007/2008. In this Review we discuss stress in modern and primitive situations, implications of and solutions for chronic stress, and further understand of our reactions to stress . including takeaways or lessons wherever possible.
 

2013 Reviews

2013(1) January Asset Allocation vs. Security Selection Membership Required
This Review attempts to clear up a persistent misunderstanding of the relative contribution of asset allocation and security selection to portfolio returns. Academic studies have convincingly shown security selection is actually more important than asset allocation. The topic is important and can significantly contribute to performance. Despite the strong academic evidence supporting security selection, the misunderstanding continues since the original study in 1986. We present the literature and arguments, and show that there should be no misunderstanding. We also provide some of our own experiences on the subject.
 
2013(2) February Asset Mix: Stocks vs. Bonds Membership Required
This Review, the second in a series of three on asset mix, concerns an important and timely asset mix issue: the allocation to stocks vs. bonds. We believe investors are at a generational juncture. Overwhelming evidence favours stocks over bonds. We discuss historical perspectives, the opinions of some notable investors, and implications for fund management.
 
2013(3) March Asset Mix: Pension Funds an LDI Membership Required
In this Review we make the case that liability driven investing (LDI) strategies should seriously consider two arguments. Firstly, asset/liability matching often underestimates the complexities of matching in aspects such as real and nominal duration of both assets and liabilities, and their convexity. Secondly as outlined in the previous Review, rates are at record lows and stocks appear relatively cheap by long term measures. To adopt an LDI strategy at this time could forego potential performance. We thank Malcolm Hamilton, InvestorLit Editorial Advisory Board member, for his very helpful comments on this topic.
 
2013(4) April "Modern Money Theory (MMT)" Membership Required
The main conclusion of this Review is that MMT is a field of economic thought well-worth attention. While some of its beliefs have been challenged, the arguments don't seem to stand up well. As the MMT economists say, their beliefs are not new theory but realistic application of existing theory. Some MMT views have been useful in understanding aspects of government financial problems and limitations. We hope this introduction to the field plus some suggested readings are of value.
 
2013(5) May "Interpretation Difficulties of IRRs in Private Equity Performance Reporting" Membership Required
This Review discusses a recent case study by well-known finance Professor, Ludovic Phalippou. He illustrates how Yale's private equity performance reporting using "Since-Inception Internal Rates of Return" (SI-IRR) can be very easily misinterpreted. The SI- IRR is the CFA Institute GIPS compliance standard for private equity reporting and - despite its shortcomings - is still widely used and misinterpreted by the industry. The author discusses an alternative which would provide much more realistic returns – the "Modified Internal Rate of Return" (MIRR). In this Review we provide a background discussion on performance methodology in general, discuss the MIRR alternative, and comment on another performance measure, the "Public Market Equivalent".
 
2013(6) June Updates on: Equity Risk Premium, Stocks vs. Bonds, and Gold as an Investment Membership Required
This Review provides updates on three InvestorLit Reviews of the past year, based on news or developments in each case. A recent study by the New York Fed of 29 different models predicting the Equity Risk Premium has been found it to be about the best in the past 50 years. A sharp rise in bond yields in May 2013 has moved US and Canadian stock returns ahead of Canadian bonds for 1 to 10 years, from being generally the opposite a year ago. The outlook for Gold as an Investment has again been confirmed by Nouriel Rabouni, who now expects Gold to hit $1000 in 2015.
 
2013(7) July The Future Membership Required
This Review discusses the investment implications of a recent book by Al Gore entitled "The Future: Six Drivers of Global Change". The drivers include globalization, internet connectedness, political change, rapid population growth, developments in science and medicine, and climate change. The investment implications are far ranging and include: growth rates of emerging markets vs. developed markets and wealth gaps, the rapid expansion of internet businesses plus the disruptions of traditional businesses, the effects of political change on governments, stability, sovereign credits, and currencies, the effects of rapid population growth on all resources (mainly food and water), developments in medical care, and the wide-ranging effects of climate change.
 
2013(8) August Equity Performance with Rising Rates Membership Required
This Review discusses three recent articles on this important and hopefully timely topic. A leading US equity practitioner presents US equity performance data following initial Fed tightening which indicates stocks do very well. A leader in the field of equity duration discusses two models which provide theoretical support for this experience. Finally two Canadian economists provide Canadian supporting data and arguments which agree with these findings.
 
2013(9) September Risk Management: Bubbles Membership Required
This Review discusses a recent article from Institutional Investor plus reviews several of the more important books on the topic of financial bubbles. We list and discuss bubbles from Charles Kindleberger, Edward Chancellor, James Montier and the Institutional Investor article. We discuss various models by the authors provide an update on recent research on the important topic of bubbles and risk management in the present environment, which as been called "the era of bubbles".
 
2013(10) October Climate Change Investment Strategies Membership Required
This Review summarizes a number of recent articles on climate change and lists investment implications as we perceive them. The articles are wide-ranging and from sources which include magazines, newspapers, websites, and one book. Links are provided wherever available so the reader can follow-up on the full story. Some very good websites, plus readings, and investment ideas were kindly provided by two outside sources for which we are very grateful.
 
2013(11) November Target Date Funds Membership Required
This Review discusses a frequently noted concern over the asset mix of a type of defined contribution fund – target date funds. These offer an asset mix which automatically increases in fixed income weight as the member approaches retirement. The concern is mainly that, especially in this very low interest rate environment, returns are penalized by this attempt to lower volatility of the portfolio as retirement approaches, when the average new retiree can still expect ample time to let stocks outperform bonds as they historically have. It is also noted that increasing longevity is an additional argument for a higher equity weight.
 
2013(12) December Smart Beta Membership Required
This Review summarizes a number of papers on smart beta plus comments of two sophisticate practitioners - Jacques Lussier, CEO of IPSOL Capital Inc. and David Morris, CEO of Global Wealth Allocation Limited to whom we are very grateful. Smart beta while still in early days, has attracted assets as a potential source of value-added over traditional cap-weighted benchmarks. Moves to more equal weighting imparts a value and small cap tilt, both of which, over the long term are higher performing factors.
 

2014 Reviews

2014(1) January Endowments Update Membership Required
This Review discusses background on endowments from "The Endowment Model" plus three recent articles and a study on endowments and their use of private equity (PE) as an alternative asset class. The themes include shifts in asset mix, the general lack of PE outperformance since about 2000, the recent superior performance of the midsize endowments, and peer comparisons.
 
2014(2) February "Private Equity: The Factor Approach" Membership Required
This Review discusses some recent very good research on private equity (PE) returns - in particular that of Andrew Ang (Colombia), Bingxu Chen (Columbia), William Goetzmann (Yale) and Ludovic Phalippou (Oxford). Their paper constructs a factor model index for PE and in doing so allows the calculation of a PE alpha or premium. The result is the observation that PE premiums in total have underperformed the replicable factor model since about 2000.
 
2014(3) March "Commodity Prices vs. Stock Prices" Membership Required
This Review discusses a recent paper by Professors Christos Ntantamis (formerly Mount Allison University, now TD Bank Group, Economics) and Jun Zhou (Dalhousie University), 2013 winner of the Hillsdale Investment Management Inc. - Toronto CFA Society Canadian Investment Research Award. Their paper presents a very insightful and original analysis of three commodities (gold, oil, and metals), showing that "there is little evidence that the market phases identified for the individual stocks are related to those for the commodity prices." As such, this is a valuable finding for all investors, but especially Canadian investors, where the S&P/TSX 300 has a current weight of 50% in gold, metals, and energy.
 
2014(4) April "LDI Update: The Perfect Storm" Membership Required
This Review is an update of InvestorLit Review 2013(3) "Asset Mix: Pension Funds and LDI". What happened in 2013 was "A Perfect Storm" for LDI strategies. Long bond rates and real rates rose significantly and equities performed very well in 2013, resulting in the best single calendar year improvement in pension funded status since 1957 (at least by my estimation). The case was made in the previous Review, that with rates at record lows and stocks appearing relatively cheap, to adopt an LDI strategy at this time could forego potential performance. We find this still to be the case, despite the recent rise in rates.
 
2014(5) May "Shale Oil – Some Implications" Membership Required
This Review is an update of InvestorLit Review 2013(3) "Asset Mix: Pension Funds and LDI". What happened in 2013 was "A Perfect Storm" for LDI strategies. Long bond rates and real rates rose significantly and equities performed very well in 2013, resulting in the best single calendar year improvement in pension funded status since 1957 (at least by my estimation). The case was made in the previous Review, that with rates at record lows and stocks appearing relatively cheap, to adopt an LDI strategy at this time could forego potential performance. We find this still to be the case, despite the recent rise in rates.
 
2014(6) June "US Small Cap - Update" Membership Required
This Review is an update of one of the original six reviews - InvestorLit 2011(6) "US Small Cap". As noted in that Review: "US small cap has outperformed US large cap by over 2% per annum since 1926, although underperforms at times and is more volatile than large cap. But, being a less efficient market, it also allows manager alpha, typically expected to be about 3% per annum." Three years later, in this Review, we note US small cap has performed very well. To the extent that some managers are cautious about its prospects this Review examines performance, reasons, and offer some views going forward.
 
2014(7) July "Flash Boys - Review" Membership Required
This is a book review of Michael Lewis' new book. It is an enjoyable and very informative read while making sense of some fairly complicated topics. The theme of high frequency trading (HFT) is quite relevant to all in our community and to Michael Lewis' credit he brings the topic to our attention in a book that no doubt will join his list of best sellers.
 
2014(8) August "Berkshire Hathaway 2014 Annual Meeting" Membership Required
This is a Review of Warren Buffett's Berkshire Hathaway 2014 Annual Meeting which long-time friend John Watson and his wife, Josie, very kindly invited me to this year. The meeting was truly a very impressive, memorable and very educational event and I am very grateful for the opportunity to attend. John's guests write notes and John assembles them as "Observations". I have included these (slightly edited) along with some related articles that came out in the press around the time of the meeting.
 
2014(9) September
"The Fallacy of Hedge Funds"
Membership Required
This is a Review of Simon Lack's presentation to the CFA Institute Annual Conference, May 4-7 in Seattle, Washington on hedge funds. I attended this presentation and it was an excellent review of research on this important alternative asset class – currently estimated at some $2.7T. The research is based on Simon Lack's recent book: "The Hedge Fund Mirage, The Illusion of Big Money and Why It's Too Good to Be True". The presentation concludes "If all the money that has been put in hedge funds had been put in treasury bills instead, the results would have been twice as good."
 
2014(10) October
Notes on "Fortune 500"
Membership Required
This is a Review of the very good June 16, 2014 issue of "Fortune" magazine, specifically the "Fortune 500" issue, which is about the ranking of the US's 500 largest companies. It is the 60th anniversary of this listing and the first time the total profits of this group have exceeded $1Trillion. In this Review we provide notes on ten articles, all of which I believe can be found online.
 
2014(11) November
Canadian Bank Stocks
Membership Required
This is a Review of the major Canadian banks - a unique and very attractive sector with outstanding long-term performance, both in Canada and globally. In this Review we: 1/quote a long forgotten but important FAJ article which highlights the Canadian banks, 2/ comment generally on the superior performance of dividend stocks based on work by Jeremy Siegel of Wharton, 3/ quote some data from the websites of the major Canadian banks, 4/ show the very good performance of the Bank sector vs. the next two largest TMX sectors, and 5/ note a recent study by Professors Calomiris and Haber, of Columbia and Stanford respectively which discusses financial crises in Canadian vs. US banks, and why Canada has a much better crisis record than the US. We conclude by comparing the Canadian banks with two other excellent performers – Prem Watsa's Fairfax Financial Holdings and Warren Buffet's Berkshire Hathaway.
 
2014(13) December
2015 Outlook and Comments
Membership Required
This is a Review of the guide and outlook for 2015 of three year-end publications; The Economist, Bloomberg Businessweek, and Fortune. A number of articles from each magazine are briefly summarized along with a link for each magazine. I personally applaud all three publications for their very good articles and hope our readership finds these useful.

2015 Reviews

2015(1) January Liquidity - Update Membership Required
This Review is an update of the 2012(6) Review "Liquidity" which followed Roger Ibbotson's great presentation at the CFA Society Toronto's 2012 Annual Pension Conference. Subsequently Ibbotson and his team wrote an award winning article for the Financial Analysts Journal and presented their update at our Society's 2014 Annual Investment Forum - again very well received. In this update we discuss the four factors: size, style, momentum and liquidity - of which liquidity ranks second to value over 40 years. We also note the risk of the four factors, the returns from combining pairs, and the returns of a regression of all four factors. Finally we show how the authors' work meets William Sharpe's criteria for style analysis. In summary we think the work of Ibbotson and his team is a very significant contribution to the existing field of factor analysis and is very valuable research.


2015(2) February Shale Oil Update Membership Required
This Review is an update of the previous Shale Oil Review written in 2014(5). Since then oil prices have declined from over $110 to around $50 per barrel and considerably changed the economics of shale oil drilling plus other forms of production as well. In this review we show the history of oil pricing since the 1970s, show how shale oil costs compare to the other major oil production sources, review the economics of shale oil production at these lower crude prices, and briefly discuss the impact on oil sands, LNG and rail shipping. We review the reasons for OPEC allowing a crude price decline and conclude with the overall suggestion that shale oil production is likely to slow down and crude oil prices will ultimately likely recover.


2015(3) March

Canadian Bank Stocks vs. US Bank Stocks

Membership Required

This is an extension of the 2014(11) Review of “Canadian Bank Stocks” in which we add a comparison to the leading US bank stocks. We start with a review of a recent Globe and Mail article comparing current valuation measures of Canadian and US banks. We then used the same data source as used in the original “Canadian Bank Stocks” for the long-term returns of these leading US Bank Stocks and compare the returns of the two. Finally we report a very good analysis by Editorial Advisory Board member Professor Sean Cleary of Queen’s who had one of his PhD students perform an analysis.



2015(4) April DC Plans and Target Date Funds - Update Membership Required
This is an update of the 2013(11) Review which noted concern over the asset mix of a type of defined contribution fund – target date funds. These offer an asset mix which automatically increases in fixed income weight as the member approaches retirement. Since that Review, bond yields have fallen about 1%, resulting in the lowest rates in the history of the Canadian bond market as far as I am aware. In this review we discuss how low rates are and how duration and future returns may be affected, comment on the longevity of retirees, and discuss alternatives that DC plan sponsors can offer to their plan members in this environment.


2015(5) May Gender Diversity Membership Required
This Review is about the significant contribution of women on boards and in senior management roles, and the proven performance value of their contributions in these capacities. The name and idea behind this Review came from a Toronto CFA Society conference earlier this year in which a number of presentations were titled "Gender Diversity". We would like to commend Sue Lemon, Toronto CFA Society CEO, who was the leader in organizing this conference. This Review summarizes a number of articles, including some from that conference, which support the case for women in these roles. We would also like to thank one very well-known Canadian board member - Eileen Mercier – a Fellowship Award recipient of the ICD, and long-time Chair of Ontario Teachers' Pension Plan Board, for her great contribution in helping me with this Review.


2015(6) June

Berkshire Hathaway 2015 Annual General Meeting

Membership Required

This is a Review of Warren Buffett's Berkshire Hathaway 2015 Annual General Meeting which long-time friend John Watson very kindly invited me to last year. These meetings are very impressive, memorable and educational and I am very grateful for the opportunity to attend last year. John's guests write notes every year and John assembles them as "Observations". I have included these in slightly edited form from John Watson's attendees at this year's AGM, along with comments from the Berkshire Hathaway 2014 Annual Report plus some related articles that came out in the press around the time of the meeting.


2015(7) July

Updates on Previous Review Topics

Membership Required

This Review provides some recent update information on five previous Review topics, these being: Private Equity Returns, US Small Cap, Risk Premiums, Breakeven Rates on Bonds, and Asset Mix vs. Security Selection. There are various reasons for updating these topics including new information plus simply discussing current status. We have done several update reviews in the past and we hope these updates are helpful to our subscribers and as always, we welcome any comments or suggestions.

 
2015(8) August Environmental, Social, and Governance (ESG) Membership Required
This is a Review of the topic Environmental, Social, and Governance (ESG). Recent changes by the Province of Ontario have required ESG be included in all Ontario Plan SIPPs. Plan sponsors are not required to include ESG factors in their investment strategy, but they must state in the SIPP whether or not ESG factors are considered in investment decisions, and if so, how. We have include a very good discussion on ESG by Debora Ng of Ontario Teachers' Pension Plan, plus we discuss a recent article on how ESG following has grown significantly.
 
2015(9) September Active Share Membership Required
"Active share" is a subject made famous by Martijin Cremers and Antti Petajisto of Yale in their original 2009 study, and followed - up in two 2013 studies. It has grown significantly in use and importance in active investment management. The application of the concept has been expanded from mainly large cap to include medium and small cap. In this Review we sum up the original papers on Active Share plus recent ones, including one which questions some of the original premises, followed by a reply by the original author Petajisto. Our overall conclusion is in support of the concept of Active Share and in agreement with the original work of Cremers and Petajisto.
 
2015(10) October Big data Technology Membership Required
The concept of Big data and Technology was first introduced in our 2013(7) Review of Al Gore's book entitled "The Future: Six Drivers of Global Change in a chapter entitled: "The Global Mind – The Digital Age and Influence of the Internet" – a summary of which we include here as an Appendix. In this Review we begin with a discussion purely about Big Data and then follow up with Data Centre Software and Cloud Computing, Robotics and Drones, and finally Technology's Economic Implications. Overall, big data and technology has and will continue to have a huge impact on what we do, how we do things, and its economic impact.
 
2015(11) November Long-Term Investing Membership Required
In this Review we discuss the concept of "Long-Term Investing" with the great help of two very notable authorities in this area – Mark Wiseman, President and CEO of the Canada Pension Plan Investment Board) and Charles Brandes, Founder and Chairman of Brandes Investment Partners – Mark Wiseman being a very significant pension fund manager and Charles Brandes being also very significant as a fund manager. We very much appreciate their comments and contribution to this Review. We also include several other writers on this topic which support the beliefs and practices of these two.
 
2015(11) December 2015 Review and Outlook Membership Required
This Review and Outlook of the year 2015 and 2016 -as we did last year - is based on three annual year-end publications; "BloombergBusinessweek","TheEconomist",and"Fortune". Webrieflysummarizeanumberofarticlesfromeachmagazine, along with a link for each magazine. "Bloomberg" covers he global outlook plus several other areas. "The Economist" is quite extensive with a wide array of topic. And "Fortune" covers very well significant number of business and investment topics. I personally applaud all three publications for their very good articles and hope our readership finds these useful.

2016 Reviews

2016(1) January Liability Driven Investing (LDI) – Update Membership Required
This Review follows two earlier Reviews on this topic written in 2013(3) and 2014(4), and provides a further update on bond information plus detailed summary of LDI returns of what is called a "dual-portfolio" or "two-fund" approach to LDI investing. We present a background by Barton Waring on the two-fund approach, discuss liability duration in terms of real and nominal rates, cover the latest funding status of Canadian pension plans, provide about 60 years of LDI returns plus Fed tightening, and before concluding, we add a number of alternatives to bonds in LDI strategies. We conclude with a detailed outlook for two-fund LDI returns, given today's very low interest rates. While we overall quite commend the use of LDI strategies over the past 34 years, i.e., since rates peaked in 1981, we suggest that pension funds may be better off today modifying their LDI strategies.
 
2016(2) February Climate Change – Update Membership Required
This Review updates the Climate Change Review of 2013(10), summarizing a number of climate change articles, all dating back to November 2015 and onwards – reflecting the large amount of information written on this topic. We begin with a summary under Climate Change Readings from publications: "Bloomberg", "The Economist", "The Globe and Mail", and the ICD Directors Journal" plus an article about Al Gore in "The Atlantic". We have also included very good Website References kindly provided by friends at Ontario Teachers, as done last time. The articles generally have links and these are provided wherever available so the reader can follow-up on the full story. We then conclude with Investment Implications as we did in the previous Review.
 
2016(3) March Oil Update Membership Required
This Review is an update of the previous Shale Oil Update`` written in 2015(2). Since then oil prices have declined from about $50 then to the $30s per barrel range and considerably reduced the economics of shale oil drilling. In this review we cite several studies on future oil prices and find expected oil prices are in a generally increasing mode. We also discuss various related topics including: the economics of shale oil production and oil sands production, climate change's impact on oil, and Saudi Arabia's plus other world producers' expected oil production. Overall we agree that crude oil prices will ultimately likely recover.

2016(4) April 2016 Annual Spring Pension Conference Membership Required
This Review is about the March 31, 2016 Annual Spring Pension Conference put on since about 2010 by the Portfolio Management Committee (the PMC) of the Toronto CFA Society. I am a Board Member of the TO CFA Society plus have been a Member of the PMC since 2010, including its Senior Advisor recently. In this Review, we first start by outlining the agenda of topics covered in the Conference, then summarize the presentations of the four speakers I invited this year. We would be able to share more details of the presentations should our readers request, plus offer contacts to speakers should our readers wish.

2016(5) May Berkshire Hathaway 2016 Annual Meeting Membership Required
This is a Review of Warren Buffett's Berkshire Hathaway 2016 Annual Meeting which long-time friend John Watson very kindly invited me to again this year, following 2014's previous great invite. The meeting was truly a very impressive, memorable and educational event and I am very grateful for the opportunity to attend. John's guests write notes and John assembles them as "Observations". I have included these "Observations", plus Summary of the 2016 Letter to Shareholders, and some Related Articles that came out in the press around the time of the meeting.

2016(6) June Notes on "Fortune 500" Membership Required
This is a Review of the very good latest June 15, 2016 issue of "Fortune" magazine, specifically the annual "Fortune 500" issue, which is about the ranking of the US's 500 largest companies. It is the 62nd anniversary of Fortune's 500 listing and after our Review in June 2014, total profits of this group have again exceeded $1Trillion. In this Review we provide notes on ten articles, all of which can be found online and we provide access to Fortune's online articles throughout this Review.

2016(7) July "The Future of Pension Management" by Keith Ambachtsheer Membership Required

This is a Review of Keith Ambachtsheer's very good 2016 book: "The Future of Pension Management – Integrating Design, Governance, and Investing". In our Review we begin with a history of the author, his accomplishments, and former books. We then proceed with a discussion of the book's four parts, called: "Touchstones", "Pension Design", "Pension Governance", and "Pension Investing". And finally we add reference to another review of this book by a very good Brandes Institute friend of mine – Barry Gillman – who wrote a great review of this book recently for the CFA Society's "Financial Analysts Journal".

Additional Review - Money Changes Everything: How Finance Made Everything Possible. 2016, By William N.

2016(8) August "Updates on Review Topics" Membership Required
This Review provides update information on four topics, these being: 1/ Canadian Banks, 2/ Alternatives: US Private Equity, Hedge Funds, and Real Estate, 3/Oil and Gas Outlook, and finally, 4/Future Investment Conferences. As noted in previous Review updates, there are various reasons for updating these topics ranging from new information to simply updated status, and we have done various update Reviews like this in the past. Plus in this Review, we have added new topic: 4/ being a listing of Future Investment Conferences, which we hope our subscribers appreciate. We hope all of these topics are helpful to our Subscribers and as always, welcome any comments or questions.

2016(9) September "Financial Analysts Journal " Three Recent Articles Membership Required
This Review provides update information on three hopefully great topics, these being: 1/ ``Q Group Panel Discussion on Looking to the Future``, 2/ ``Conquering Misperceptions about Commodity Futures Investing``, and 3/``A Shiller CAPE Ratio: A New Look``. We have these based on three recent articles in the CFA Society ``Financial Analysts Journal``. As noted in this Review, we selected these for two main reasons: First, we find these are very good extensions of our previous InvestorLit Review topics, and Second, we have met and followed the authors of these articles as they are great and we very much admire and respect their work. We hope all of these topics are helpful to our Subscribers and as always, welcome any comments or questions.

2016(10) October "Interest Rates Outlook" Membership Required
Our "Interest Rates Outlook" Review provides significant update information on: 1) Bond Yields - History and Comparisons, 2) Benefits and Pensions Monitor's "Bond Seminar", and 3) Readings on Interest Rates. This third very good section was kindly provided by Ontario Teachers' Pension Plan, one of our Subscribers plus an Advisory Board Member. Ten year Canada bond yields are currently at a 35 year low, going from 18% in 1981 to 1% on Sept.30, 2016. Our Review's comparisons and commentaries are very dramatic, and we hope all are helpful to our Subscribers. As always, we welcome any comments or questions.

2016(11) November "Investment Implications of Donald Trump's Election" Membership Required
This Review provides information on investment implications of Donald Trump's election as US President on November 8, 2016. We have based this on three publications and their articles, these being from: 1/ Mainly the "Economist", 2/ Some comments from "Bloomberg", and finally 3/Some additional comments from the "Globe and Mail``. We have provided websites for most of the ``Economist`` `articles in this Investor Literature write up, as that magazine has greatly concentrated on the investment implications of this event. We hope all of these topics are helpful and as always, we welcome any comments or questions.

2016(12) December "Value Investing" Membership Required
In this 2016(12) Investor Lit Review we cover the great topic of "Value Investing", beginning with: 1/ Value vs. Growth historic returns, 2/ A Reference from a great value investor - Charles Brandes , 3/ Additional References from Ontario Teachers' on Value Investing, and 4/ A Summary of the new "Book of Value: The Fine Art of Investing Wisely". As always, we welcome our Subscribers to let us know of any comments and further questions should they wish.

2017 Reviews

2017(1) January "Value Investing" Membership Required
This is an addition to our recent "US Interest Rate Changes" Review which we read recently and thought might be of great interest to our Subscribers. This additional review is very brief but we hope of interest to our Subcribers.

2017(2) February "Oil and Gas Industry" Membership Required
Since late 2014, US oil prices have declined from over $100 a barrel back then to under $30 per barrel in early 2016 and have come back currently to about $52 US. We have written three Reviews on Energy since the 2014 decline, and now add a fourth on the Energy topic which makes up about 25% of the S&P/TSX weight. In this review we cover four topics, which cite several studies on future oil and gas prices: 1/ "The Oil and Gas Industry" which is a 120 page publication by the CFA Institute "Industry Guide". 2/ Three Oil and Gas Publications, by Alliance Bernstein, Energy Aspects, and RBC kindly provided by John Berry of Foyston Gordon Payne. 3/ Various Oil and Gas Articles from my own list of publications. And finally: 4/An Ontario Teachers' Pension Plan (OTPP) article on Energy – they have kindly provided some other readings to Investor Lit which send along with this Review.

2017(3) March "Hedge Funds Update" Membership Required
In this 2016(12) Investor Lit Review we cover the great topic of "Value Investing", beginning with: 1/ Value vs. Growth historic returns, 2/ A Reference from a great value investor - Charles Brandes , 3/ Additional References from Ontario Teachers' on Value Investing, and 4/ A Summary of the new "Book of Value: The Fine Art of Investing Wisely". As always, we welcome our Subscribers to let us know of any comments and further questions should they wish.

2017(4) April "Private Equity Update" Membership Required
Following our two past Investor Literature "Private Equity" Reviews produced back in 2011(5) and 2014(2) we offer another one with some updates. Similar to those two which we sent earlier, this update includes three key issues: 1/ Comments on private equity over the past 10 or so years. 2/ A brief but significant point on how US private equity investments which are limited partnerships have US tax implications which have a significant impact on their private equity returns. 3/ Finally, as per past Reviews, a summary of Ontario Teachers' Pension Plan readings on the subject of private equity. I would like to thank a friend - Tom Kennedy– whom I know well. He has done a great job as a private equity manager for the Queen's Endowment, as I knew him during my six years on that Committee.

2017(5) May "Portfolio Structuring and the Value of Forecasting" Membership Required
The following is a research brief edited by Jacques Lussier of IPSOL Capital and co-authored by five authors well-known in their respective field, which was published by the CFA Institute Research Foundation. Jacques Lussier has a PhD. and a CFA, and is the founder of a very good firm IPSOL CAPITAL– in 2012, which is a great investment manage, a factor based systematic asset manager. He was previously Chief Investment Strategist at Desjardins, before starting IPSOL and I have known him well as a Board Member of IPSOL. I also knew Jacques as we were both involved as members of our respective CFA Society. I greatly appreciate being a member of the IPSOL Board since 2013 and continue to enjoy.

2017(6) June "Berkshire Hathaway 2017 Annual Meeting" Membership Required
This is our latest Review of Warren Buffett's recent Berkshire Hathaway May 6, 2017 Annual Meeting which long-time friend John Watson attended and was kind enough to send along the insights of his group. As we have done in past Reviews on this subject – from 2014, 2015, and 2016 - we will report on three areas: 1) Some of Warren Buffet`s notes on the Berkshire Hathaway Annual Meeting, 2) Observations from Omaha as written by John Watson's guests and consolidated by John. 3) Notes by Ontario Teacher`s regarding Berkshire Hathaway and Warren Buffet Citations and Abstracts.

2017(7) July "My Toronto CFA Society Final Board Meeting" Membership Required
This is a very brief Review of my recent three years in which I have been a member of the Toronto CFA Society Board. Plus I have sent a nice note to our Board Members at my last meeting on June 14th 2017. This Review covers my background, plus a brief note on two of my close friends (Sue Lemon and Pater Jarvis) on the Board, plus I list many of the senior people I have invited for speaking to our Society, then finally I have finalized with thanks and a farewell to our Society.