Saturday, November 18th, 2017

Mackenzie conference report

In May 2011 I attended Mackenzie University, a full-day professional development seminar and in September 2011 I attended the annual Mackenzie Due Diligence conference, a full-day session where several money managers and tax and estate planning experts provide perspectives, updates and educational content.  In no particular order, here are some notes I made, divided by category.

Portfolio management

  • Canada represents only 4% to 5% of the world market
  • The Canadian market is almost totally concentrated (80%) in only two sectors – resources and banks
  • The average portfolio of a Canadian investor has 90% exposed to Canada and is thus severely underdiversified
  • Only 11 of the top 500 companies in the world are in Canada

Investment opportunities

  • The U.S. has many more companies than Canada and other countries, a stronger focus on business, and one of the very best legal/regulatory environments
  • Opportunities are everywhere these days.  Prices are at levels that imply poor business results for a very long time and thus represent great bargains.  Some of the most hated business names of the last few years (Bank of America, Citigroup, AIG) are perhaps the best opportunities in large companies in a lifetime.
  • The Cundill team saw 2008 as a once in a lifetime opportunity to buy large U.S. companies, taking their U.S. weight from under 10% to about 50%.  Their next action will likely be to reduce the U.S. in favour of European companies, which they describe as ridiculously cheap.
  • The Cundill team invests in things that other professionals don’t, can’t or won’t.  This has been essential to their long term success.
  • U.S. manufacturing is starting a renaissance because higher transportation costs mean it is once again more economical to produce locally than to ship in from foreign countries.
  • Businesses have more cash on hand than they have had for 30 years, about $2 trillion.  They will eventually use this for three things: increasing dividends to shareholders, buying back shares so the future profits are more concentrated in the remaining shares, or acquiring companies that are weaker and whose value can be increased.
  • 80% of global economic growth in the next few years is expected to come from emerging markets.  This is what will “bail us out”.  Many of these areas are at pricies similar to the last cycle bottom in early 2009.  It is safer to seek exposure to these areas by owning established companies that are active in emerging markets and are trustworthy with good governance and reporting.
  • When fear and panic in all parts of your body is telling you to be safe, that is the best time to buy the shares of the great businesses of the world.

The Value of Advice

  • Households with financial advisors have much higher assets than those without
  • 69% of households with an advisor have RRSP’s vs. 29% of those without
  • 27% of households with an advisor have TFSA’s vs.15% of those without
  • 15% of households with an advisor have RESP’s vs. 6% of those without
  • Households with an advisor have a higher allocation towards long term growth assets

 

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