The global investing landscape is poised to shift over the next decade, thanks to the largest U.S. generation: millennials.
As the longest-running bull market enters its 11th year, some portfolio managers are advising clients to stay invested in stocks because a series of trends, including an aging population, smart technology and automation, should further fuel returns in coming years.
Millennials, people born between 1981 and 1996, will be approaching age 50 in 2030, while the tail end of baby boomers will reach retirement age. By 2025, millennials are projected to comprise roughly 75% of the workforce.
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Baby boomers and the so-called silent generation that preceded them control about 77% of wealth, according to Fundstrat Global Advisors’ analysis of the most recent Federal Reserve Survey of Consumer Finances. But that is about to change. By 2030, millennials will hold five times as much wealth as they have today and are expected to inherit over $68 trillion from their predecessors, according to a study by Coldwell Banker Global Luxury.
That demographic shift, economists say, is expected to help boost U.S. economic growth and credit demand as more young adults buy big-ticket items like houses and cars. That will also reshape industries they’re closely aligned with, including technology, e-commerce and social media, they said.
“Economic expansions don’t die of old age,” says Larry Adam, chief investment officer for the private client group at Raymond James. “But I do think it’s going to get more challenging over the next decade.”
The 2020s won’t be all about Big Tech
High-growth technology companies including the popular FAANG stocks – Facebook, Amazon, Apple, Netflix and Google parent Alphabet – have propelled the decade long bull market. Investors, however, have now opted for beaten-down value stocks like energy and financial sectors that have underperformed the broader market in recent years.
Although tech shares aren’t expected to repeat their performance over the past decade, some experts continue to favor them over the long term because of the far-reaching impact they have on other industries.
“The technology sector continues to reinvent itself,” Adam says. “Every sector has some form of technology.”
Investors who are searching for other parts of the market to potentially deliver above-average growth in the coming years should look to stocks that have exposure to sustainable investing, digital transformation and genetic therapies, analysts at UBS said.
Emerging markets come back in favor
Emerging market assets, which have been pummeled in recent years by fears of slowing global growth, are expected to come back in favor as population growth rises and de-escalating trade tensions.
Demographics are expected to be a significant driver of growth across many economies. Investors are betting on growth potential in India, as the economy is on track to overtake China as the world’s most populous country by 2027, according to the United Nations.
Meanwhile, Vietnam, one of Asia’s fastest-growing economies, has been a haven for U.S. multinationals looking to shield themselves from the U.S.-China tariff spat.
“There’s huge growth potential in Asia,” says Rich Sega, global chief investment strategist at asset manager Conning. “The geopolitical stress in Hong Kong has opened up opportunities for other areas in the region for Vietnam, Thailand and Singapore.”
Don’t count out U.S. stocks
To be sure, economists are optimistic about domestic growth and don’t foresee a recession within the next year. Economists project a 35% chance that the U.S. economy will enter a downturn between now and the November presidential election, according to Bankrate’s Fourth-Quarter Economic Indicator survey. That’s down from 41% from the prior quarter.
Some analysts believe this economic expansion and record run still has legs.
“U.S. stocks will surprise investors,” says Thomas Lee, managing partner and head of research at Fundstrat Global Advisors. “Too many people are betting on a bounce-back in emerging markets.”
Investment Horror Stories – And the Lessons They Teach – Morningstar.ca
It’s a dark and stormy night – or a brightly lit desk in an open floor plan office – when you spot an opportunity. Shadowy, distant, and…. perfect. This is the one that will make you rich beyond your wildest dreams. Or is it?…The rising panic as stocks fall, the desperate rush to sell, no value to be found anywhere. These are the stories that Bay Street and Wall Street whisper in the dead of night. Stories so grim, so full of fear, that many try to banish them from their minds.
This Halloween, we asked some foremost financiers and voices of reason to dig deep into the depths of despair, to find their worst investment horror stories, and relive them here, on these pages, and share the lessons they learned, to help you, retail investors, steer clear of these pitfalls and bypass the descent into the madness of financial disaster. March 2020. The oil-pocalypse. The emerging market party that never came…. Hear these tales of terror so that you may tread carefully:
Horror stories are designed to artificially trigger our ‘fight, flight or freeze’ responses that send a wave of adrenalin through our bodies and prompt us to take action to escape the perceived threat. This is typically achieved by a shocking break to gradually-built tension. Investors will be all too familiar with this experience. Like a hapless character in a movie who runs from one threat right into the hands of the villain, a sudden fall in asset prices can prompt us to take swift action, only to discover later that we made a terrible decision. In my previous career managing portfolios directly for individuals, I witnessed several examples of clients who insisted on selling their entire portfolio when assets were falling. While they often saved money when measured at the bottom of the market cycle, they typically failed to re-invest, believing they had escaped the threat of falling prices. Only later did they realize later that they had run into the arms of the great threat of not investing and they drifted further away from their goals. When watching horror movies or market movements, it is typically better to look away when you are feeling uncomfortable.
-Dan Kemp, Global Chief Investment Officer, Morningstar Investment Management Europe
It Emerges – Chapter 1
I cut my teeth in the industry as a closed-end fund analyst at Morningstar in the early 1990s. I felt fortunate when Templeton Emerging Markets EMF was on my coverage list – back then, manager Mark Mobius was the king of emerging markets investing. I’d track down Mobius wherever he was around the globe to get an update on the fund’s holdings. More often than not, I’d be interviewing Mobius in my jammies from my kitchen at home, since it was usually 2 a.m. and he was in some far-flung corner of the world.
Mobius was exceptionally articulate – he sold the emerging markets story, hard. Who could resist the idea of participating in the economic promise of developing markets? And I bought it: Specifically, I bought Mobius’ similarly-run open-end cousin, Templeton Developing Markets, as the first investment outside of my 401(k) plan. I was excited to have the Mark Mobius managing my money – and I couldn’t wait for him to generate a 70% return for me, just as he had for his shareholders the 12 months prior to my purchase.
You know where this is going: Over the next couple of years, emerging markets hit a pothole, and so did Templeton Developing Markets. I sold the fund for a loss. While it might be a stretch to call this an investing horror story, it was nevertheless a meaningful investment lesson: Don’t chase performance, don’t expect a quick return on a story that may need years to play out, and don’t let great manager interviews speak louder than sound investment planning.
-Susan Dziubinski, Director of Content, Morningstar.com
It Emerges – Chapter 2
The year was 1993, and I happened to see Mark Mobius, then-manager of several emerging markets funds for Templeton, speak about the incredible promise he saw in those markets. I was sold–hook, line, and sinker–and convinced my husband that we should invest at least some of our wedding gift money into one of his funds. Never mind that we were trying to save for a house, so we had no business investing in any stocks, let alone an incredibly volatile emerging markets stock fund. The fund was also expensive and carried a sales charge, even for people like us, who weren’t working with an advisor. In short, it was a classic case of an ill-conceived, story-driven purchase made without regard for our risk capacity or our spending horizon. We were lucky we didn’t have more money at stake!
-Christine Benz, Director of Personal Finance, Morningstar
Train to BioNTech
I have a stash of mad money that I deploy to invest in relatively speculative companies and funds. In late 2020, I tapped those funds to buy some BioNTech shares. I had become interested in the company before I understood it was playing such a big role in addressing the pandemic. I read Morningstar’s research about how the mRNA technology it was developing might someday be used to cure certain cancers. When I made the ‘buy’ decision, though, I consciously told myself, “This is a long-term investment. BioNTech is not going to cure cancer overnight.” I did not, however, establish a price—vis a vis a company valuation—at which I would sell the shares.
Thanks in large part to the US FDA’s emergency authorization in late 2020, the company’s shares took off soon after I bought them. While I was on holiday on August 9th the company’s valuation briefly exceeded $100 billion, at a share price of $447. It had achieved what I would consider a long-term valuation level, but it had done so in a very short time. I thought, “Wait, hold on. Don’t sell. You’re in this for the long run.” I didn’t sell. I also must admit that I committed one of the cardinal sins of selling: I wanted to get into long-term capital-gains territory. And for that I’d need to wait until September 21st. Dumb. The stock market doesn’t care about my taxes, and BioNTech shares have since fallen from $447 to about $260. I have held onto all of my shares in the meantime.
- When buying a stock, establish a price at which you’d be comfortable selling it.
- Even when you’re buying for the long-term, sometimes a company hits its long-term valuation target quickly.
- If the stock has already far exceeded your target, don’t let tax minimization concerns cloud your sell discipline.
-Sylvester Flood, Senior Editorial Director, Morningstar
A Nightmare on Oil Street
This horror story happened before my most recent social media-fueled trading spree… but it started everything. I had connected with someone on social media who described himself as an experienced investor in his 70s. He hated the risk profile of stocks and having to hand over his money to portfolio managers. He loved options and had a passion he liked to share. I was skeptical, but we had great discussions and I learned a lot from him. Over many weeks that followed, he took to teaching me the ins and outs of options. He was a big fan of covered calls. Specifically, oil-related plays: ‘You can count on OPEC to control the price. I’ve seen this happen for a long time. Just write a call that’s years out. The price of oil will come back into equilibrium and you’ll keep the premium [on the option] as profit’.
His underlying ETF of choice was ProShares’ UltraPro 3x Crude Oil ETF (OILU) – now-defunct of course. He had been making about 30% annually for a couple years thanks to the volatility with 300% leverage and suggested I try. I remember asking him about potential demand catastrophes and he said over time the underlying ETF would recover. I dipped my toes in and began writing covered calls. I started – and began to make a small but steady return over a few months. It worked! Until oil-pocalypse happened. Nearly my entire investment evaporated… I remember feeling numb as futures dove before heading to bed. But I had been stung in one good way at least, only for options to become a hobby I now enjoy. He disappeared from the forum around that time. I wonder how he did and what he thinks of OPEC now…
My lessons from this experience: 1) When using leverage, keep in mind that your investment can be vaporized between trading sessions. 2) Cartels can lose control without public knowledge. 3) Make sure you’re incorporating all structural elements of funds into your investment strategy. Commodity products involve futures, roll yield (and loss). ETNs differ from ETFs. These factors can affect the overall risk-return profile of your strategy, so make sure you’re sizing your bets accordingly!
-Andrew Willis, Content Editor, Morningstar Canada
Oil Be Back
My worst investment experience is related to an oil services company I spotted in the course of 2013 before the oil market started to crash. I made several mistakes. I was stubborn because I thought I was right on my valuation (assets that I thought would keep their value), and therefore I added to my position at the wrong time. My other mistake is that I completely missed the bigger picture: 1) the oil crash came after a huge capex cycle by the oil & gas industry and there was clear overcapacity in the industry; 2) oil prices are heavily influenced by external factors (geopolitics, macro) which I didn’t factor in appropriately and were out of control by the company I selected. It was an expensive but useful lesson I will always keep in mind. It has helped me improve my checklist before investing. I also try to be careful of the bigger picture, the capex cycle of the industry I’m interested in and any major disruption that might upset it.
-Jocelyn Jovène, Senior Financial Analyst, Morningstar France
A Costly Mistake
I was looking for a mutual fund aligned with the UN Sustainable Development Goal (SDG) n.5: Gender equality. I came across an Italian open-end fund that seemed the right choice. I clicked on the factsheet and I read that it was invested in cash, government and corporate bonds, multi-asset products and derivatives. I dug into it a bit more to find out why “gender equality” was in the name of the funds and discovered that the derivatives were used to get exposure to gender-equality indexes. So you didn’t invest directly in “best-in-class” companies, but you got exposure between 30% and 50% indirectly. Other holdings were bonds or in-house funds without any relation with SDG n.5. More astonishing was the cost: placement fees were above 3%, plus management fees, plus performance fees and exit fees (if you disinvest during the first 5 years). Why must I pay so much if I can get exposure to a gender diversity index with an ETF charging expenses around 0,2% annually?
-Sara Silano, Editorial Manager, Morningstar Italy
Tick, Tock, Time’s Running Out!
While the markets recovered from the March 2020 selloff, I feared a “dead cat bounce” – meaning a further decline. Therefore, I waited patiently on the sideline while the stock markets climbed higher and higher. After realizing that the bull had indeed defeated the bear (at least at that time), I eventually bought stocks at much higher valuations.
- Timing the market is extremely difficult.
- Dollar-cost averaging can serve you well because it can reduce the impact of regret aversion – the tendency of refraining from making decisions to prevent any potential mistakes, e.g. “I should have bought” or “I shouldn’t have bought”.
I think Peter Lynch sums it up well: “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.”
–Christopher Greiner, Data Journalist, Morningstar
As a young kid out of college just entering the world of finance, and having saved up some money from my first few paychecks, I was excited to start investing in stocks. I had been watching Wall $treet Week with Louis Rukeyser and listened as a portfolio manager reviewed their top picks. One of them sounded especially intriguing and I wrote down the ticker. The next Monday morning as the market opened, I eagerly phoned in my order and bought my first stock – only to watch it sink precipitously over the next few weeks. Without having done any of my own work to understand the company’s future outlook or valuation metrics, I didn’t know whether to hold the stock or sell out of it. Finally, I couldn’t take the pain any longer and sold the stock for a couple hundred dollar loss (a good deal of money back then for a 22 year old)….but what I learned was much more valuable.
Before putting money to work, to do your own due diligence, synthesize an investment thesis, decide at what valuation to buy a stock, and learn when to either cut a loss or build a larger position when the market moves against you.
-Dave Sekera, CFA, Chief U.S. Markets Strategist, Morningstar
BEYOND ESG: The Next Investment Frontier – Canada NewsWire
Launch of the TwinRiver Global Impact Fund
TORONTO, Oct. 28, 2021 /CNW/ – Today, TwinRiver Capital Group Inc. (“TwinRiver”), with its partner, Cidel Asset Management Inc. (“CAM”), announced the launch of the Cidel-TwinRiver Global Impact Fund (the “TwinRiver Global Impact Fund” or the “Fund”).
The TwinRiver Global Impact Fund offers investors exposure to companies working intentionally and pro-actively on making a positive social and environmental contribution.
The Fund spans three priority impact themes: Energy and Environment, Health and Wellbeing, and Inclusive Economic Growth. It is comprised of a concentrated but diversified portfolio of 35-50 predominantly Small and Mid-Cap stocks in global, developed markets (North America, Europe and Asia).
Urgent and complex challenges such as climate change and a more equitable recovery from the pandemic, demand consideration of the impact of our choices on people and the planet. This creates growth opportunities for businesses with impact at their core and emphasizes the competitive advantage of managing operational, financial, and reputational risks. Concurrently, investors are increasingly seeking opportunities to better align their investment decisions with their values. The TwinRiver Global Impact Fund addresses these objectives.
“Impact investing has now moved into the financial mainstream, with more investors placing their money to work for the prosperity of current and future generations. These investors want to support businesses making a positive difference, and are looking for credible investment vehicles focused on both meaningful, measurable impact and strong financial returns. The time for this shift is now,” says Eric Wetlaufer, Managing Partner of TwinRiver.
Eric is a seasoned global institutional investor, and has served as Chief Investment Officer at Putnam and Fidelity Investments and, more recently, as Senior Managing Director, Global Head of Public Market Investments at Canada Pension Plan Investment Board (CPPIB). Eric partners with the portfolio management team at CAM in managing the TwinRiver Global Impact Fund.
About TwinRiver Capital
TwinRiver Capital is a new impact firm focused on the dual mission of advancing positive environmental and societal impact globally, while also delivering compelling financial returns.
About Cidel Asset Management Inc.
Cidel Asset Management Inc. (“CAM”), based in Toronto, is the asset management division of Cidel Bank Canada. Cidel, as a group, oversees $20 billion in client assets in its investment management and trust businesses. Cidel offers wealth management services to individuals, families, foundations and institutions in Canada and around the world. CAM is a registered portfolio manager, investment fund manager and exempt market dealer.
TwinRiver Capital is a registered business name of CAM. The Cidel-TwinRiver Global Impact Fund is an investment fund issued and managed by CAM and its registered representatives. CAM has ownership interest in, and a services agreement with, TwinRiver Capital Group, Inc. (“TR Group”). For complete disclosure of all conflicts of interest, please refer to the Offering Memorandum, which is available upon request, or Cidel’s Relationship Disclosure Information.
This communication is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.
Certain statements in this press release are forward-looking. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially.
SOURCE TwinRiver Capital
Saudi crown prince's investment forum draws back Westerners – CKPGToday.ca
Most of the women at the conference, held at the exclusive Ritz Carlton Hotel, wore long-flowing robes, or abayas, over business suits, in line with local customs. But abayas are no longer required and several women opted to forgo them. Others wore colorful abayas, but no head scarves. Such a sight would have been unimaginable only a few years ago when nearly all women wore black abayas and headscarves in public, and often a face covering.
On the opening night, guests attended a gala dinner with live music – also a product of recent reforms – in King Abdullah Economic City. The crown prince hopes to lure firms to open their regional offices there and attract much of the capital now concentrated in the neighboring United Arab Emirates, home to Dubai and Abu Dhabi.
Saudi Arabia has told companies they have until the end of 2023 to establish regional offices in the kingdom or lose access to government contracts. The goal is to attract these companies and their employees, as well as their families, to live, spend and invest in Saudi Arabia, replacing the short fly-in trips from cities like Dubai that many consultants and others currently prefer over life in Riyadh, where Islamic law bans the sale of alcohol.
At the forum, it was announced that 44 multinational firms would be setting up new regional headquarters in Saudi Arabia. The government hopes the strategy will add $18 billion to the local economy and create 30,000 new jobs by 2030, part of a wider economic diversification plan to rely less on oil as the main source of government revenue. Some of the companies moving their regional offices to Riyadh are PepsiCo, Siemens, Unilever, Deloitte, Halliburton, and Baker Hughes, according to a government press release. It’s unclear whether such companies will scale down their operations in the UAE and elsewhere, or add staff in new offices in Riyadh.
The forum is Prince Mohammed’s signature event for trying to bring badly needed investments to the kingdom, but other than the word on plans to open regional offices, there were few major announcements around new investments.
The event is powered by The Public Investment Fund, the kingdom’s sovereign wealth fund, which is behind multi-billion dollar investments outside the kingdom and spending billions more on mega-projects inside the country. This includes new tourism destinations along the Red Sea coast and a new, sprawling modern district called Neom.
Prince Mohammed made a brief appearance at the forum Tuesday, where he sat in the front row for a session that featured Greek Prime Minister Kyriakos Mitsotakis, though he did not take to the stage as he has done in some previous conferences.
The forum opened just a day after a former senior Saudi counter-terrorism official lobbed a slew of accusations against the crown prince on CBS’s “60 Minutes.” He accused Prince Mohammed of detaining two of his adult children in Riyadh to try and force his return to the kingdom, and also alleged that the prince had sent a team of agents to North America to track him down and kill him. Saudi authorities have denied the allegations.
The forum’s delegates appeared unfazed by such allegations. The event saw a flurry of networking, deal-making and business card exchanges on the sidelines. This year, many discussions focused on the kingdom’s recent “net zero” emissions pledge, a target Saudi Arabia aims to reach by 2060.
The kingdom’s net-zero pledge, however, only applies to emissions within its borders. The government has no plans to phase out its fossil fuel-burning exports to countries like China and India, where demand for energy is growing. Critics have accused Saudi Arabia of “green washing.”
Aya Batrawy, The Associated Press
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