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A View From Here December 2013

December 2, 2013 • Print This Article

“When the past makes you laugh and you can savor the magic that let you survive your own war, you find that the fire is passion and there’s a door up ahead, not a wall” - Lou Reed - Magic and Loss

It’s All Lies and that’s the Truth

The above-mentioned is the title of a business memoir by Hollywood Agent, Bernie Brillstein who wrote about his life in the entertainment business. It proved to be a practical guide of examples and anecdotes that I have found myself re-reading many times. It reminds me that managing a business is difficult at the best of times, and Financial Services is no exception. A mentor once described our role as 'the management of disappointment'. By this he referred to the dissatisfaction when things go backward (2007 – 2009) or not high enough (2000). Advisors can take a lot of grief for what they should have known and among its largest challenges is the overwhelming information that is tied to daily fluctuations. Add in a touch of what has already occurred, and there’s a whole lot that we should have acted on. I am surprised how often I am reminded of how high Stella Jones (an investment from 10 years ago) has gone since we sold it. Imagine if our homes were priced on the same basis…would people be motivated to trade them more? Over time the value of this asset tends to increase and I’m sure my parents wouldn’t have imagined that their purchase in 1968 would sell for over 5x in 1991.

Excellent investments exist on the periphery rather than the headlines. I am sure that to many, Blackberry has looked tantalizing as its share price declined and many purchased in hope that it would return to some version of its former glory (it hasn't), or Apple whose lineup of excellent products make it a simple way to produce returns (it also hasn't). Excellent companies do not necessarily make a great investment, especially if they are popular. It stands to reason that their valuation is based on current success and their popularity attracts many. By extension, we must presume that smarter people have done their work and valued the company accordingly.

Most often a great investment entails a less than popular company that has been overlooked by the investing public. But with most forces working against this practice, you almost have to tune out the news (or lack thereof) and allow the time it takes for the investment to produce its possible return.

Fear and Fear Itself

The US stock market continues to make new all-time highs. This has brought out a new round of pundits who warn of a bubble fueled by low interest rates and an accommodative US federal reserve. For what it’s worth, my view is that while there has been a clear valuation uptick due to those things, the events of 2008-2009 are still too fresh in the minds of investors, that another crash just doesn’t feel right…we need more time to forget.

For our investment accounts, November has been another excellent month as we continue to experience growth in our bottom lines. People who do not hold investment accounts with us remark to me that they have been underperforming for years. I find it funny (for lack of a better term) that if I told them how well our accounts have performed this year and over the long term, they may think its “All Lies and that’s the Truth. Our month end statements tell the real tale.

These are indeed good days for us.

All Good Things,

P.S. – Musician Lou Reed passed away on October 27th. His wife, Laurie Anderson wrote a beautiful eulogy in Rolling Stone that I thought I would share. http://www.rollingstone.com/music/news/laurie-andersons-farewell-to-lou-reed-a-rolling-stone-exclusive-20131106?print=true

Filed under: Uncategorized

The opinions, estimates and projections contained herein are those of the author as of the date hereof and are subject to change without notice and may not reflect those of Mackie Research Capital Corporation ("MRCC"). The information and opinions contained herein have been compiled and derived from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to their accuracy or completeness. Neither the author nor MRCC accepts liability whatsoever for any loss arising from any use of this report or its contents. Information may be available to MRCC which is not reflected herein. This report is not to be construed as an offer to sell or a solicitation for an offer to buy any securities. Member-Canadian Investor Protection Fund / member-fonds canadien de protection des épargnants.

Mackie Research Capital Corporation (MRCC) makes no representations whatsoever about any other website which you may access through this one. When you access a non-MRCC website please understand that it is independent from MRCC and that MRCC has no control over the content on that website. The content, accuracy, opinions expressed, and other links provided by these resources are not investigated, verified, monitored, or endorsed by MRCC.

 

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