Graham Westmacott CFA

Portfolio Manager

Susan Daley CFA

Associate Portfolio Manager
  • T519.880.0888
  • 1.877.517.0888
  • F519.880.9997
  • The Marsland Centre
  • 20 Erb St. W,
    Suite 506
  • Waterloo, Ontario N2L 1T2

Looking Back, Looking Forward

Unless there are major market declines in the closing few days of 2013, our clients can expect to see very positive results in the annual review when it is released in mid-January.

During 2013, PWL Capital has grown both in Waterloo and in our other offices. We have attracted new clients who share our core values.

We believe, based on trends in the United States, those investment strategies that rely on forecasting the future are increasingly seen as costly to clients and ineffective. Consequently, firms that focus on a consistent process to harvest market returns without making speculative bets are attracting an increasing proportion of investors.

As we head into 2014 we know, with the certainty of hindsight, that recent performance has been driven, in part, because we ignored the “prevailing wisdom” of a few years ago that Canada would continue the decade long trend of outperformance. We invested in US and International equities when they were cheap and had high expected returns. We do not know the sources of market ups and downs in 2014 but we will continue to be thankful for opportunities to buy assets cheaply across the world in the rational expectation that they will return to more normal valuations in the future. As our director of research, Raymond Kerzerho, points out in his perennial 2014 forecast, equities outperform bonds 70% of the time and both have long term positive expected returns.

Our objective for 2014 is to continue to improve the services we offer our clients. Many Canadians are concerned about whether their portfolios will provide a sustainable income in retirement. By the end of 2014 every client within 10 years of retirement will have from us a continuously updated projection of their maximum sustainable income in retirement. We use this analysis to inform clients about the impact of changing retirement dates, withdrawal rates, and tax minimisation. The first half of 2014 will see a PWL-wide initiative to establish best practices in building retirement income portfolios. We anticipate that this will be supported by collaboration with Wilfrid Laurier University.

We also recognize that many younger investors start by self-managing their own assets often building simple portfolios with low cost index funds and ETFs. We have developed an advisory service to help those who wish to self manage their assets but who value a professional process to ensure their portfolios are well structured and maintained. This is a growing service, especially in the technology and engineering community, lead by Susan Daley. Susan also provides consolidated reporting and performance services to clients who have assets managed by different institutions.

Finally, we are indebted to a recent book by Michael Sandel 1 for a timely reminder that markets do not encompass everything of value. Here are a few examples he cites where markets start to feel out of place:

  • In Santa Barbara, California, a prison cell upgrade is available for $82 per night.
  • In South Africa, the right to shoot an endangered black rhino can be purchased for $150,000.
  • (In the U.S) some doctors will offer access to their cell phone for an annual fee of $1,500 and up.
  • Serve as a human guinea pig in a drug trial for a pharmaceutical company, $7,500.
  • Buy the life insurance policy of an ailing person and collect the death benefit when they die. The sooner they die, the higher the investor return. This is a $30 billion industry. 

So, we encourage you to invest some time with family and friends where value trumps price and let the markets take a back seat over the Holiday Season.

We thank everyone for their continued support and we wish you all the very best in 2014.

With Best Wishes,
Graham Westmacott & Susan Daley


1 What Money Can’t Buy, The Moral Limits of Markets, Michael J. Sandel (2012)

By: Graham Westmacott & Susan Daley | 0 comments