An indictment of the whole strategy

I’ve written before about how the Canada Pension Plan has transitioned from a successful passive investment strategy to a less effective method of actively picking investments. The results, as Andrew Coyne documents here in the National Post, are disastrous. The CPP spends much more than it used to and is getting far poorer results on behalf of Canadians than if it had just put the money in index funds.

As Coyne writes, “The inability of active managers to consistently beat the market is one of the most well-established principles of modern portfolio theory.” So why does the CPP keep choosing a more expensive, less effective strategy?

By: Mark Sutcliffe | 0 comments

Investing like a technology entrepreneur

If you were asked to speculate on how the founders of Shopify or other exciting and successful technology startups were investing their personal money, what would you guess?

You might think that they rely on their business expertise and knowledge of future trends to put money in specific technology companies that are certain to grow at an exponential rate. People like that are well-positioned to play the market, you might reason, because they know so much.

You might guess that they have some exclusive access to investment vehicles unavailable to ordinary people like you and me, some kind of elite instruments only available to millionaires. After all, why would they accept the kind of returns that mere mortals achieve?

Or perhaps you would think that, being in the technology space, they followed the latest fads and trends in investing and opt for the newest and most exciting strategies.

Would it surprise you to find out they were investing using a very simple and straightforward philosophy, a method universally available to even the most ordinary investor? That they don’t try to beat the market, they simply try to capture the returns of the market, largely through index funds?

As this feature article from the Globe and Mail’s Report on Business Magazine points out, many of Ottawa’s fresh crop of technology company founders don’t just embrace the same philosophy as PWL Capital, they are actually clients of PWL Capital. And it makes perfect sense, for three reasons: One, it works. It’s simply the most effective way to generate returns, regardless of whether you’re a gazillionaire or not. Two, it’s supported by data and evidence, something to which a smart CEO can relate. And three, it’s affordable. Even if you have a lot of money – especially if you have a lot of money – you don’t want to waste any of it on unnecessary fees and charges.

I’ve been talking for years about why I believe in PWL Capital’s evidence-based philosophy. This Globe and Mail article not only carefully spells out the logic, it references some pretty smart and successful people who feel the same way.

By: Mark Sutcliffe | 0 comments