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Bitcoin plummets, now in the US$19k region



San Francisco, United States of America (USA)- Bitcoin is now trading under US$20 000, at one time it was trading at US$19 149, the first time since November 2020.

This comes on the back of a broader market pullback where all cryptocurrencies are trading well in the red.

Bitcoin has been closely correlated with stock indexes, in particular the Nasdaq, which rose on Wednesday after the Federal Reserve hiked interest rates by 0.75 percentage points. That was the biggest rate hike in almost 30 years since 1994 and the news back on the day it was announced made Bitcoin rise about four percent but then it slightly dropped.

The previous major rate hike was made by the Federal Reserve during the first days of May when it was increased by a half percentage point and that was the biggest hike in 22 years, the reaction of Bitcoin was also similar to the current one first, it held steady and then started falling down.

Federal Reserve chairperson,  Jerome Powell, hinted at another rate hike in July but cautioned that the 75-basis-point increase is an unusually high one and does not expect moves of such magnitude to be regular.

According to the CEO of Euro Pacific Capital and SchiffGold, Peter Schiff, who has been analyzing Bitcoin for years, the cryptocurrency is likely to fall below the US$10 000 mark to US$8 000.

“My guess is that there will be some kind of dead-cat bounce off that line, but don’t get too excited. That bounce may be your last chance to get out above US$10 000,” said Schiff.

Although Bitcoin breaching US$20 000 is a largely symbolic barrier, experts believe a drop below this level could trigger a wave of forced liquidations in which large-scale crypto investors will be forced to close positions on Bitcoin derivatives products because they will now possess insufficient collateral. Such events would likely only further drive down the price of Bitcoin, triggering further liquidations.


Who has the power? – Investment Executive



The term “attorney” is confusing to those who automatically think that the attorney under a power of attorney must be a lawyer. It needn’t be, and the only conditions to be appointed as an attorney are that the individual(s) must have reached the age of majority and must be capable of managing one’s financial affairs. To avoid confusion, note that in some jurisdictions the legal term for attorney is “substitute decision-maker.”

Fortunately, less confusion arises with trusted contact person (TCP).

I correlate a TCP with an emergency contact. The scenario I reference is filling out a form at the dentist’s office that asks who to contact if something goes awry while in the dental chair.

The TCP is part of regulatory measures that came into effect on Dec. 31, 2021, and was established to help financial advisors when they’re concerned that clients are being financially exploited or demonstrating diminished mental capacity and unable to make financial decisions. For example, a client may exhibit memory loss, an inability to communicate their wishes or an unusually dishevelled appearance.

The TCP acts as a resource for the advisor and is someone they can discuss their observations with. Ultimately, the TCP helps protect the client’s financial interests and assets. Additionally, if an advisor is unable to contact or locate the client, the TCP may be able to assist.

While some dealers may have space for only one name on the applicable form, a client is permitted to choose more than one TCP. Further, while there is no requirement that the TCP be the age of majority, it should be someone who can be trusted, understands the client’s personal matters and knows how to contact the client and their family members and loved ones. A TCP should not be the client’s dealing or advising representative on the account.

TCP versus PoA

A TCP can’t make financial decisions on behalf of a client, meaning they can’t initiate or authorize transactions on the client’s behalf. Nor can they make account changes in any form or be given access to accounts and account information.

A PoA can do anything that the grantor (client) could do unless constrained in the power of attorney document and by provincial and territorial law. They may have the ability to authorize the purchase and sale of securities in an investment account.

Each provincial jurisdiction in Canada has legislation governing the powers of attorney, and the rules vary by province. Typically, the duty to act arises when the PoA has accepted the appointment or has acted in a manner consistent with the appointment. In some cases, the power of attorney document will specify a date or an event that triggers the appointment. An example of an event would be a capacity assessment by medical professionals confirming that the grantor is incapable of managing their financial affairs.

Overall, the PoA must act in accordance with a fiduciary standard and abide by the terms and conditions of the power of attorney document. These duties include but are not limited to the following:

  • acting in the best interests of the grantor
  • exercising reasonable care and skill in conducting the grantor’s affairs
  • keeping records of all transactions and accounting for the grantor’s affairs
  • ceasing to exercise their authority and duties if the power of attorney is revoked

A PoA typically cannot do the following:

  • make a will on the client’s behalf
  • change an existing will
  • change the designated beneficiaries of any registered accounts (RRSP, RRIF, TFSA) or life insurance policies
  • grant a new power of attorney to someone else
  • provide gifts, unless allowed per the power of attorney document and authorized in specific jurisdictions, and the gift doesn’t impoverish the grantor
  • co-mingle the grantor’s assets with their own assets (except for property that is registered jointly)

As with a TCP, a grantor can specify more than one PoA, and there can be PoAs for specific assets.

Nuances of the TCP and PoA selection process

A TCP does not assume the PoA role under a client’s power of attorney document. The PoA is specified in the power of attorney document, and such document will specify the conditions required for the PoA to commence acting in this capacity and what duties and powers the selected PoA has.

A client may designate that their TCP and PoA be the same individual. But an advisor should encourage a client to select a TCP who is not making decisions with respect to the client’s account.

Consider this example. A PoA conducts affairs on a client’s account, but the instructions are inconsistent with the client’s best interests. If the PoA and TCP are the same individual, then the advisor is constrained to share their concerns with an independent third party. Further, a TCP who is not the PoA may provide insight into the client’s support network and help mitigate such a situation.

So, while the TCP has a limited mandate and is unable to directly impact the financial affairs of a client, the indirect impact can be significant.

While the roles and responsibilities of a TCP and PoA are distinct, what isn’t is the characteristics these individuals must have. At a minimum, they must both be trustworthy and responsible.

Michael Kulbak, MBA, CPA, CMA, TEP, is principal of Kulbak Trust Solutions in Mississauga, Ont.

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Investing 101: What's the best strategy for investing? – The Globe and Mail



‘Investing’ means taking an existing asset, usually money, and using it to earn financial returns. Here’s what to know about making ‘good’ investments, managing risk and losing money.Illustration by Melanie Lambrick

The world of investing can be baffling for beginners of any age. An understanding of a few simple terms and concepts can make it possible for anyone to become an investor.

The basics

What is investing?

The word “invest” can have broad connotations, as dictionary definitions make clear: You might be invested in your children’s lives, perhaps you recently invested in a new car, new business, home renovation, or you consider your education an investment in your future.

But from the point of view of investing. This is different from saving, which is simply putting money aside. The difference is often that investing carries a calculated amount of risk – though, of course, there have historically been cases where cash is also high-risk, such as in hyperinflationary societies like Germany during the Weimar Republic.

What can be considered an investment?

A lot of things can be considered an investment. Whether they’re a good investment is the question. Common investments include stocks, bonds and real estate, all of which can be purchased directly or through a tool such as a mutual fund or exchange-traded fund (ETF). Cryptocurrency is another kind of investment that has gained popularity of late. Some people who are self-employed have a lot of assets in their business, which is also a type of investment. And then there are the oddball so-called investments that are lucrative for some, until the whole structure crumbles: Think Beanie Babies in the 1990s.

Why should you invest?

It’s a good idea to save money for the future. You will probably need that extra cash down the line to cover costs owing to low cash flow from losing your job, or toward a big purchase like a home, or for your kids’ education and retirement. The fewer savings you have available, the more likely you’re going to have to go into debt when sudden expenses arise.

And while having some easily accessible cash on hand is smart, you don’t want all your savings to be hundred-dollar-bills under the mattress, figuratively or literally. Standard bank accounts pay paltry, if any, interest these days, and even the best high-interest savings accounts offer rates that are significantly below inflation. That’s fine for an emergency fund that you might need to dip into sooner rather than later. But for longer-term savings, inflation means that any cash you have put aside is going to lose a lot of value. A dollar doesn’t buy what it used to, and it’s going to buy even less down the road.

That’s where investing comes in. The goal with investments is that your money will grow faster than inflation, meaning it’ll have more buying power when you take it out than when you put it in. It doesn’t always work out that way, but that’s the general idea.

There are some guidelines on when and how much to invest, but it also depends on your personal situation. For instance, women tend to live longer than men and are more likely to have gaps in their earning years, so their retirement plans should be tailored to that reality.

An important thing to keep in mind is that time is your friend when it comes to building wealth. As columnist Tim Cestnick points out, even starting just five years earlier can have a huge impact on the value of your investments over time.

A good investment is one that you can be confident will work out for your financial needs. A ‘diversified’ portfolio is a mix of stocks and bonds or guaranteed investment certificates that reflect your age, risk tolerance and financial goals.goc/iStockPhoto / Getty Images

Creating a diversified portfolio

What is considered a ‘good’ investment?

It doesn’t need to be flashy, or a “hot stock tip,” or a particular asset class, like real estate, which many who own it claim is failproof. Instead, a good investment is one that you can be confident will work out for your needs.

Investors should keep in mind that it’s easy to get caught up in hype and trends, notes investment consultant Darryl Brown. “The industry thrives on pushing the emotional envelope and trying to convince investors that this is a game that can be played – and played to win,” he says. “If we let the hype get to us, we’re the ones getting played.”

Brown suggests learning about behavioural finance, which looks at the impact of emotions on how we make decisions with money. This includes things like herd mentality, overconfidence bias – being sure that we’re making above-average decisions – and confirmation bias, the habit humans have of seeking out information that confirms our beliefs and ignoring information that doesn’t.

What is an ‘investment portfolio’?

An investment portfolio is simply all of your investments collected together, whether that’s an ETF or two, or a whole range of stocks, bonds and real estate investment trusts.

You might hear the phrase “balancing” one’s portfolio. This simply means redistributing assets so that the distribution matches your investment plan, such as having a 60/40 split between stocks and bonds.

What’s a good portfolio mix to have?

Investing experts often talk about a “diversified” portfolio. What does this mean? According to Globe and Mail columnist Rob Carrick, it’s “a mix of stocks and bonds or guaranteed investment certificates that reflect your age, your investing needs and your comfort level with the potentially sharp ups and downs of the stock market.” Carrick suggests that “asset allocation” ETFs – a fully diversified portfolio wrapped into a single package – is one easy way to achieve this, and an even easier way is to use a robo-adviser.

A longtime guideline for how to allocate your portfolio is the 100 minus age rule: Subtract your age from 100 and invest that percentage in stocks, and the remainder in fixed income. This would result in a 30-year-old allocating 70 per cent of their portfolio to stocks, while a 60-year-old would allocate 40 per cent. This is a good place to start, but some experts think it might be too conservative, so it’s important to also take into account your risk tolerance and personal goals.

“Short-term, returns are often horrible,” says personal finance author Andrew Hallam. But he adds: “Investing isn’t a sprint. It’s a marathon. Over long periods, a diversified portfolio is far less risky.”

While Carrick is a big fan of the “slow and steady” approach to building wealth – making regular contributions to a diversified portfolio – he suggests that those who do want to experiment with riskier investments treat them as a “side hustle.” This means taking a small proportion of your overall holdings (say, 5 per cent) that you can put into investments that you want to try but aren’t a part of your regular portfolio.

Can you lose money investing?

There are many ways in this world to lose money, and investing is one of them. The goal is to have a strategy in place that sets you up for success – which means ensuring your portfolio matches your risk tolerance and time horizon.

In many cases, whether you lose money depends on when you sell. This is why higher-risk investments, which are more volatile, are best to hold for the longer term, as you don’t want to be forced to sell when prices are low. “Don’t be rattled by market setbacks,” advises Globe columnist John Heinzl. “Investors who stay the course during bad times, or use the downturn to acquire additional shares at cheaper prices, make out well in the long run.”

How do you measure and manage risk?

Risk is a big part of investing. Higher-risk investments often offer a higher potential for gains – but also more of a chance of losses. Lower-risk investments, on the other hand, are safer, but tend to have lower rewards.

The 100 minus age rule is based on the idea that your risk tolerance matches your age. Younger investors, the theory goes, will have their money in the market for longer, and therefore more time to ride out any market fluctuations and sell when they’re up. Investors who are close to retirement, or already retired, are likely already taking money out of their portfolios to cover day-to-day living costs, and can’t afford to take as much of a chance on higher-risk opportunities.

But there is also a personal factor at play here. Some people simply don’t like risk, while others are comfortable with uncertainty. This is partly due to personality and partly based on what kind of safety net you might have, be it a high salary or net worth, family money or other kinds of retirement support.

Investment advisers, robo-advisers and other investment tools will often ask you what your risk tolerance is. Some things to think about include:

  • How soon will you need this money?
  • How would you feel if the value of your investments plummeted?
  • What is your future earning potential?
  • Do you have other assets you can depend on if these investments don’t do well?

Many investors want to be selective about the kinds of things they’re investing in.iStockPhoto / Getty Images

Ways to invest

What are ESG, socially responsible or green investments?

The primary goal of investing is to make money, but that isn’t necessarily the only goal. Many investors want to be selective about the kinds of things they’re investing in. This preference has become more popular in an age of climate change and fossil fuel divestment, where people want to be confident their investments aren’t accelerating global warming. Social issues are a factor, too; for instance, you might prefer to invest in companies who treat their workers fairly and have diverse representation at the board and executive level.

ESG, which stands for environmental, social and governance, is one term that’s important in this space. ESG has no formal definition, but the general framework includes: promoting environmental sustainability and reducing a company’s carbon footprint; fostering social justice and responding to concerns of local communities; having an independent board of directors and a diverse management team; and consistently allocating capital effectively to the benefit of shareholders and stakeholders.

Socially responsible investing, or SRI, and green investing can be seen as related terms that also refer to someone’s desire to choose investments based on moral as well as financial factors.

What is DIY investing?

Do-it-yourself investing is pretty much what it sounds like: a method of managing your investments by yourself. Carrick points out that DIY is an especially appealing method for younger investors, who tend to have smaller portfolios that are not worth paying an adviser to help manage.

One reason to go DIY is to keep fees low. Investment fees are charged either on a percentage basis or as a flat fee – for making a specific trade, for example, or paying an adviser to help you organize your portfolio – and they can add up. The downside: the higher the fees, the lower the returns on your investments. Which means, notes Carrick, that too-high fees could even delay your retirement.

Carrick offers some guidance to investors looking to make regular investment contributions without having to pay too much in fees. He notes that some apps, robo-advisers and online brokers offer a range of options with no-fee purchases, and that you should check whether there are maintenance or other fees associated with the account.

How can you get help managing your investments?

The world is full of people who want to help you invest. The question is, how can you find advice that’s trustworthy, and how much are you able to pay?

One economical option is robo-advisers. Carrick notes that these tools are ideal for newer investors with less budget to pay for management advice, but also extremely cost-effective for those with a higher net worth. Investing with a robo-adviser means setting up an account and paying a small fee to have a portfolio that fits your requirements designed and then managed. Then, all you have to do is keep adding to your account and the new funds will be automatically invested.

Robo-advisers laid bare – how they compare on fees, returns and investing approach

Searching online is another good place to start. The internet is teeming with free investment advice, writes columnist Bridget Casey. A lot of it is geared toward people who are just starting out on their investing journey. And while being charismatic on TikTok isn’t a reliable qualification for giving out stock tips, the fact is, says Casey, much of the investing information you can find online is actually really good.

When looking for investment advice, one important thing to think about is the motivation of the person or organization giving the advice. This is what Carrick has in mind when he says, “I’d rather see someone use a robo-adviser than go to a bank branch to buy mutual funds from a salesperson.” Salespeople are paid by – and primarily motivated by – the owner of the product they’re selling, not the needs of the customer. A financial consultant who earns income solely from investors paying for their guidance is motivated only by the needs of their customers, at least in theory.

If you’re looking for a fee-for-service financial planner to help you create an investment plan, Carrick suggests it might cost in the range of $1,500 to $4,000, or more. He suggests getting in touch with a planner to get an idea of what precisely they offer and what it will cost you.

What are some good stocks to invest in?

Ready to start investing? Here are some guides to help you get started:

Rob Carrick’s ETF buyer’s guide 2022: The complete series

Ten stocks with growing dividends that offer a better yield than GICs

A guide to socially responsible investing in Canada

The most basic rule of personal finance

The investing strategy that has your back when stocks go from glory to gory

The bottom line

What is investing? Three things to remember
  1. Common investments include stocks, bonds and real estate
  2. A good investment doesn’t need to be flashy – it only needs to match your financial needs
  3. Investing earlier in life is a smart strategy

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Does your investment advisor understand your social values? – The Globe and Mail



Investors and advisors are having more direct conversations about ESG and responsible investing.Rawpixel Ltd.

Everyone has personal and family goals, and investors have priorities too. Canadians are increasingly aligning their investment decisions with preferred societal objectives, such as combating climate change, advancing human rights, alleviating poverty, protecting workers, or achieving sustainable operations.

These issues fall under the banner of ESG – environmental, social and governance. The rise in responsible investing (RI) is driving discussions between clients and their advisors around values and whether portfolio strategies are in sync with those expectations.

“Financial professionals should have a structured discovery conversation with every client, which includes questions on ESG investing,” says Krystian Urbanski, senior vice-president and associate portfolio manager with Forstrong Global Asset Management Inc., in Toronto.

That’s spelled out in guidance for Canadian financial advisors who are registered with the Investment Industry Regulatory Organization of Canada (IIROC). Their latest know-your-client guidance, which took effect Dec. 31, 2021, says investors should have the opportunity to express their needs and objectives “in terms that are meaningful to them,” which includes “investing in accordance with environmental, social and governance criteria or other personal preferences.”

The Responsible Investment Association (RIA) had been advocating for that for years, and it notes there has been a disconnect between investors and advisors around this topic.

An RIA survey found that 77 per cent of Canadian retail investors want their financial services provider to inform them about responsible investments that are aligned with their values, yet only 27 per cent had ever been asked about it. In a separate survey of Canadian financial advisors, only 37 per cent said they routinely initiated conversations about ESG and RI with their clients, although 85 per cent said they’re comfortable doing so. “The new guidelines will hopefully help kickstart these conversations,” said the RIA.

Those conversations can take many forms. Some Canadians are already quite knowledgeable about RI, some are simply curious, and others have never heard of the investment approach but might be interested if they knew more.

Mr. Urbanski says questions about financial goals will reveal what people are hoping to achieve in broad strokes. Open-ended questions about what matters to them should naturally lead to a discussion about their societal and personal values, he adds.

Brianne Gardner, a wealth manager and investment advisor with Velocity Investment Partners at Raymond James Ltd., in Vancouver, says advisors should start the conversation with one simple question: “What are your thoughts on investing more sustainably?”

The answer will either reveal an opportunity for education or, she says, “it will give you both a chance to dive deeper into the subject” and establish specific RI goals.

Finding the right investing approach

To set those investment objectives, advisors must probe which ESG criteria are most important to clients, Mr. Urbanski says. Some may want to use an exclusionary approach to investing, which would steer clear of certain holdings such as fossil fuels. Others might prefer an inclusionary approach, which would only make investments in areas such as renewable energy.

Prem MaIik, a financial advisor with Queensbury Securities Inc., in Toronto, says clients who are more experienced in RI might ask more targeted questions about how ESG performance is measured, or how to know if a company is transparent about its ESG practices.

Making sure clients are on the same page with each other is critical too. Mr. MaIik mentions a recent meeting with a couple where one spouse was adamant that their investments exclude oil, gas and tobacco, and the other had no concerns about factoring in ESG. It’s an opportunity to determine how to align family values.

One of the more important questions to discuss is whether investing with ESG practices will affect a portfolio’s performance. Does taking an RI approach mean accepting lower returns and growth? In the current environment of higher oil prices, a portfolio that excludes oil companies might be giving up potential profits. However, one report that examined the findings of 36 empirical studies on RI concluded socially responsible investing overall does not hurt returns.

People also want to know how they can participate in ESG investing. Once an investor’s goals and values are clear, advisors can review an individual company’s policies in detail, or they can recommend ETFs or mutual funds that offer access to a broad range of ESG-compliant companies.

“Although you don’t have an opportunity to choose each company, buying shares of an ESG ETF, for instance, can help clients invest according to their values more efficiently,” Mr. Urbanski says.

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