New Year’s resolutions feel good when you’re making them, but rarely have an impact on behaviour since they don’t tend to last beyond the first few days or weeks of the year.
Gyms are the poster child for this lack of staying power. Right after New Year’s, you need to fight for a machine or a place on the mat. It stays that way for a couple weeks and then the numbers start to steadily drop until, by February, everything is back to normal.
I’m not inclined to make resolutions, but I encourage investors to do so. Why the contradiction? Well, investment resolutions are different. One month at the gym and the next 11 on the couch amounts to no good, but if you put your head down and work on your investments in the first few weeks of 2021, you can set yourself up for months, perhaps years.
Look in the mirror
You’re the CEO of your portfolio. Whether you’re an experienced investor or raw rookie, the buck stops with you, so your 2021 resolutions should revolve around the high-level questions a CEO would ask:
- Am I saving enough?
- What’s the purpose of the money: i.e., retirement, kitchen renovation, down payment?
- Is what I’m doing working?
- Am I ready for the next market dip, whenever it comes?
- And, a related question, what did I learn about myself from last year’s extreme volatility?
These questions should be answered with the utmost intellectual integrity. Don’t let yourself fall into the trap many investors do, which is to take credit when their stocks or funds are going up, and blame the market when they’re going the other way.
Your self-evaluation should include an assessment of your strengths and weaknesses. This will help with the next step of the process: assessing the people who work with you on your portfolio.
Review your employees
Last year was very revealing because it tested the mettle of everyone, including advisers, investment managers and discount brokers. This makes January 2021 a particularly good time to sit back and assess the investment professionals you work with.
Here are some questions you should think about:
- How prompt and effective was the service?
- How transparent were they about long-term returns and fees?
- Was the investment advice timely and useful?
- Are their strengths your weaknesses?
- Do I trust them to put my interests first?
If the answers to these questions are unsatisfactory, then it’s time for a change. If you’re supposed to hear from your adviser regularly (and are paying fees for it,) but didn’t get a call in the first half of 2020, or the whole year for that matter, then you’ve got grounds for divorce.
Revisit your strategies
It’s tempting to dive into your individual holdings, but resist until you’ve confirmed that each of your investment buckets has an appropriate strategy.
I’m specifically speaking about asset mix. For example, there should be little or no equity exposure in the “kitchen renovation” bucket. On the other hand, the “winters in California when I retire” bucket should be mostly in equities.
The past year was a wild one and many investors scored big on tech, gold and health-care stocks, but that doesn’t negate the importance of having the right mix of asset types for each investment goal. Your passions and hunches still need to fit into an overall portfolio.
Automate your routine
One of your 2021 resolutions should be to automate as much of the process as possible. This is especially important if you’re a disinterested investor and your resolutions are likely to fall by the wayside.
I’m talking about things such as reinvesting dividends and fund distributions, and setting up pre-authorized contributions, or PACs, whereby your registered retirement savings plan (RRSP) and/or tax-free savings account contributions automatically come out of your bank account each month.
This routine takes the stress out of RRSP season, gets your money working sooner and, importantly, dials down the emotion that goes along with investing.
Perhaps the best automation tools you have are balanced funds that, in combination, align with your goals and risk tolerance.
If you act like a CEO for at least a few weeks and address the higher-level questions, then implement your strategy using an appropriate balanced fund(s), you’ll benefit long after the New Year’s glow wears off.
Tom Bradley is chair and chief investment officer at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at
Copyright Postmedia Network Inc., 2020
More China coal investments overseas cancelled than commissioned since 2017
More China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017, research showed on Wednesday, highlighting the obstacles facing the industry as countries work to reduce carbon emissions.
The Centre for Research on Energy and Clean Air (CREA) said that the amount of capacity shelved or cancelled since 2017 was 4.5 times higher than the amount that went into construction over the period.
Coal-fired power is one of the biggest sources of climate-warming carbon dioxide emissions, and the wave of cancellations also reflects rising concerns about the sector’s long-term economic competitiveness.
Since 2016, the top 10 banks involved in global coal financing were all Chinese, and around 12% of all coal plants operating outside of China can be linked to Chinese banks, utilities, equipment manufacturers and construction firms, CREA said.
But although 80 gigawatts of China-backed capacity is still in the pipeline, many of the projects could face further setbacks as public opposition rises and financing becomes more difficult, it added.
China is currently drawing up policies that it says will allow it to bring greenhouse gas emissions to a peak by 2030 and to become carbon-neutral by 2060.
But it was responsible for more than half the world’s coal-fired power generation last year, and it will not start to cut coal consumption until 2026, President Xi Jinping said in April.
Environmental groups have called on China to stop financing coal-fired power entirely and to use the funds to invest in cleaner forms of energy, and there are already signs that it is cutting back on coal investments both at home and abroad.
Following rule changes implemented by the central bank earlier this year, “clean coal” is no longer eligible for green financing.
Industrial and Commercial Bank of China, the world’s biggest bank by assets and a major source of global coal financing, is also drawing up a “road map” to pull out of the sector, its chief economist Zhou Yueqiu said at the end of May.
(Reporting by David Stanway; Editing by Kenneth Maxwell)
Bank of Montreal CEO sees growth in U.S. share of earnings
Bank of Montreal expects its earnings contribution from the U.S. to keep growing, even without any mergers and acquisitions, driven by a much smaller market share than at home and nearly C$1 trillion ($823.38 billion) of assets, Chief Executive Officer Darryl White said on Monday.
“We do think we have plenty of scale,” and the ability to compete with both banks of similar as well as smaller size, White said at a Morgan Stanley conference, adding that the bank’s U.S. market share is between 1% and 5% based on the business line, versus 10% to 35% in Canada. “And we do it off the scale of our global balance sheet of C$950 billion.”
($1 = 1.2145 Canadian dollars)
(Reporting by Nichola Saminather; Editing by Leslie Adler)
GameStop falls 27% on potential share sale
Shares of GameStop Corp lost more than a quarter of their value on Thursday and other so-called meme stocks also declined in a sell-off that hit a broad range of names favored by retail investors.
The video game retailer’s shares closed down 27.16% at $220.39, their biggest one-day percentage loss in 11 weeks. The drop came a day after GameStop said in a quarterly report that it may sell up to 5 million new shares, sparking concerns of potential dilution for existing shareholders.
“The threat of dilution from the five million-share sale is the dagger in the hearts of GameStop shareholders,” said Jake Dollarhide, chief executive officer of Longbow Asset Management. “The meme trade is not working today, so logic for at least one day has returned.”
Soaring rallies in the shares of GameStop and AMC Entertainment Holdings over the past month have helped reinvigorate the meme stock frenzy that began earlier this year and fueled big moves in a fresh crop of names popular with investors on forums such as Reddit’s WallStreetBets.
Many of those names traded lower on Thursday, with shares of Clover Health Investments Corp down 15.2%, burger chain Wendy’s falling 3.1% and prison operator Geo Group Inc, one of the more recently minted meme stocks, down nearly 20% after surging more than 38% on Wednesday. AMC shares were off more than 13%.
Worries that other companies could leverage recent stock price gains by announcing share sales may be rippling out to the broader meme stock universe, said Jack Ablin, chief investment officer at Cresset Capital.
AMC last week took advantage of a 400% surge in its share price since mid-May to announce a pair of stock offerings.
“It appears that other companies, like GameStop, are hoping to follow AMC’s lead by issuing shares and otherwise profit from the meme stocks run-up,” Ablin said. “Investors are taking a dim view of that strategy.”
Wedbush Securities on Thursday raised its price target on GameStop to $50, from $39. GameStop will likely sell all 5 million new shares but that amount only represents a “modest” dilution of 7%, Wedbush analysts wrote.
GameStop on Wednesday reported stronger-than-expected earnings, and named the former head of Amazon.com Inc’s Australian business as its chief executive officer.
GameStop’s shares rallied more than 1,600% in January when a surge of buying forced bearish investors to unwind their bets in a phenomenon known as a short squeeze.
The company on Wednesday said the U.S. Securities and Exchange Commission had requested documents and information related to an investigation into that trading.
In the past two weeks, the so-called “meme stocks” have received $1.27 billion of retail inflows, Vanda Research said on Wednesday, matching their January peak.
(Reporting by Aaron Saldanha and Sagarika Jaisinghani in Bengaluru and Sinead Carew in New York; Additional reporting by Ira Iosebashvili; Editing by Sriraj Kalluvila, Shounak Dasgupta, Jonathan Oatis and Nick Zieminski)
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