New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby George$ » 13 Aug 2011 11:37

Peculiar_Investor wrote:Tom's blog posting on Aug. 10th, What Now? Part II - Steadyhand Investment Funds ......

Thanks. I always appreciate reading Tom's views. He references Lunn's "outlook". Here is a link to it. and a bit of text (my emphasis)...
It is apparent that because of all the uncertainties and the fear of
a looming recession, investors are now demanding a higher risk
premium for equities, as indicated by the current price-earnings
ratio of 11 times which translates into an earnings yield of 9.3%
for the S&P 500 index compared t o a 2.1% yield for Treasuries
(see Chart 3). This is one of the widest valuation spreads in history.

Nonetheless, given the structural damage to equity markets,
prices could fall further before fi nding a bottom somewhere in the
neighbourhood of 1050 to 1100 for the S&P 500 index and 11,000
to 11,500 for the S&P/TSX Composite index (see Chart 4).
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby big easy » 14 Aug 2011 13:38

Tom Bradley wrote:the current price-earnings ratio of 11 times


1178 divided by 11 = $107 in earnings, sounds a little optimistic no? PE10 is still over 20.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Taggart » 14 Aug 2011 14:04

For those who missed it, this is what Jason Zweig said just a week ago in the Wall Street Journal:

Stocks Are Cheaper, but They Aren't Cheap
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Shakespeare » 20 Aug 2011 11:20

When fear rules the market, it’s time to say ‘buy’
’ve talked before in this space about being "approximately right," which is what my firm calls our approach to asset allocation. Approximately right means keeping your portfolio stuck on its long-term asset mix (strategic plan) most of the time. This part of the process is dead flat boring, even when rebalancing is required. But approximately right also means taking advantage of extremes in the markets – extremes in terms of valuation (cheap or expensive) and investor sentiment (fear or greed). This is the more interesting, and dare I say, challenging part of the process....

Safety is even more expensive than it was, while risk is back on sale.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby George$ » 15 Oct 2011 07:56

Another worthwhile reminder from Tom Bradley in this morning's G&M

A winning strategy for investors ... and their advisers
I’ve written in the past about the tension between the investment profession and the investment business. As asset managers, we need to find a balance between managing portfolios to achieve the best return for our clients, and making a profit for our firms’ shareholders. In a recent paper published in the Financial Analysts Journal, Charley Ellis says the industry has failed to find that balance. “We are losing the struggle to put our professional values and responsibilities first and our business objectives second.”
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby George$ » 07 Jan 2012 10:02

This morning in the G&M. As always, sound advice from Tom Bradley.

Five keys to staying on the long-term track

concluding with
It’s easy building a long-term portfolio. It’s tougher sticking to it. But it’s not rocket science. If you’re committed and consistent, the markets will present you with some wonderful opportunities and the process will be very rewarding.
“The search for truth is more precious than its possession.” Albert Einstein
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Peculiar_Investor » 07 Jan 2012 13:12

Thanks for the heads-up on the article. Well worth the read for all. For those looking for the highlights, I'd add two more to George$'s list
First, you need to recognize that investing is like no other product decision you make. It’s perverse. Your best moves will feel terrible when you’re making them. Your well-thought-out plan will appear to not be working for long stretches of time. And, like golf, there will always be someone telling you they’ve figured out a better way (usually someone who posts higher scores and lower returns than you).

<snip>

The third key: You need to work from a Strategic Asset Mix. This is a plan, a place you go when you’re confused, disappointed, frightened or over confident. Your SAM should be the basis from which all decisions are made. “How does this new product fit into my portfolio? Should I be buying or selling these lousy foreign stocks?” Your SAM won’t vary much from year to year and should never be changed drastically at extreme times. When markets are going wild, it’s time to lean on your plan, not change it.

Challenge yourself to ponder the implications of those statements to your own investment process. Look back on how you reacted to things in the 2008-09 time-frame and possibly review some of the lively discussion on FWF during those times.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby George$ » 17 Mar 2012 06:29

I make a point of reading Tom Bradley's thoughtful opinions in his blogs and in the G&M.

This Saturday (March 17, 2012) morning his thoughts on real estate investments via ....
Real estate as an investment? Look elsewhere
It concludes with ...
When I pull together the economic fundamentals, valuation and sentiment, real estate, as an investment, doesn’t look very attractive. The distribution of potential outcomes looks asymmetrical to me – limited upside and plenty of possible downside. But what really screams out at me is how many important factors are at extremes … bad extremes. One or two off-trend numbers can be explained away, but too many are jumping off the charts – price increases, mortgage rates, loan growth, consumer debt and home ownership levels.

To invest in an asset class that is illiquid, has high holding and transaction costs and involves large amounts of leverage, I want a significant margin of safety. Right now, there are more warning signs than guardrails

Added later: - if it interests you, see the recent -
Real Estate - Video: Mortgage war update
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby DanH » 17 Mar 2012 20:18

One of the more significant developments at Steadyhand - for its current and future clients - is the launch of Steadyhand's first balanced fund. It's a significant launch that I'm happy to see.

Introducing the Founders Fund.

I was one of those that questioned the logic of launching a direct selling fund company in the beginning. But once I got to know a bit about Tom and speak with him a couple of times, I was doing nothing but cheering for him to succeed. But after all of this time, the whole firm still has just $160 million in total assets. I really think that the launch of the Founders Fund (a balanced fund) will give the firm its best chance of surviving and thriving longer-term. And, as usual, Tom has gone about it the right way.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Peculiar_Investor » 14 Apr 2012 10:06

They are celebrating their 5th birthday this week and Tom's written an article about the experience, Lessons learned in the wealth management trenches - The Globe and Mail. A couple of quotes from the article struck me as useful advise to the DIY investor, although they need to be adapted to the individual investor.
Tom Bradley wrote:A bias toward change: The investment industry has the attention span of a 4-year-old. Two of its key drivers – compensation (fees and commissions) and past performance (what’s done well recently) – lead to changing strategies and a steady stream of new products. Unfortunately, this hyperactivity kindles clients’ psychological need to take action (especially males). It makes a “stay the course” strategy, which is often the best option, difficult to maintain.

Although I try very hard to "stay the course" and just execute my investment policy, I would agree with the statement about the "need to take action". For those that do not have an investment policy, the need for action must be even more difficult as the plan and end-game is unknown.
Tom Bradley wrote:Skating to open ice: This brings me to my last piece of advice. When it comes to generating client returns, the investment industry has plenty of what I call structural inefficiencies – short time horizon, over-diversification, high fees, high turnover (staff and stocks), complexity and an overemphasis on macro-economics over valuation. For you and your clients to win, you need to exploit as many of these enduring inefficiencies as you can, and conform to few or none.

I believe this speaks to being a contrarian as much as practical. Is your investment policy structured to go with the herd? Have you minimized fees and costs wherever practical?
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Shakespeare » 12 May 2012 10:35

Covered call ETFs: Are they for you? - The Globe and Mail
The first thing investors must know is there is no magical source of investment return being created. Long-term fund returns will relate closely to the dividends and capital appreciation from the underlying stocks.

What these funds do is move the deck chairs around, exchanging future capital appreciation for current income ....

The holder is accepting a gradual deterioration of the market value in return for a healthy income in the early years....

Personally, I don’t like their chances, because they have a number of factors working against them....

In its first 10 months of operation, HEX’s trading costs were 1.2 per cent of assets, which exceeded the fund’s management expense ratio of 0.8 per cent (BMO doesn’t disclose ZWB’s cost of trading options). Also, with the growth of these funds and a relatively thin options market in Canada, there will be times when managers have to pay up for liquidity. As one hedge fund manager told me, “The bid/ask spreads are not insignificant.”

When over 10 years ago my broker tried to sell me a covered-call closed-end fund I stared at the ceiling for 20 minutes and decided it wouldn't work [in an efficient market you can not make money buying and selling probabilities and are out the costs of the transactions. In an inefficient market you are likely the patsy].
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby George$ » 09 Jun 2012 06:23

Today's G&M
The most despised asset is poised to surprise

Some interesting points - like -
So where do we find ourselves today, other than frustrated and worried? Is the scenario for investing better or worse than it was in June of 2002?

Well, I can't answer that question definitively, but can absolutely guarantee that the sources of return over the next 10 years will be different than the last 10. I say that because the bond component of our portfolios will do nowhere near 6 to 7 per cent. With yields where they are today, 1 to 3 per cent is a more reasonable expectation. Government bonds used to provide "risk-free return," but now it's "return-free risk."
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby gsp_ » 09 Jun 2012 09:03

But things look considerably better today. Price to earnings multiples are closer to ground level and more reflective of a high, as opposed to zero, interest rate environment. It's not hard to find growing companies trading at 10 to 12 times earnings with dividend yields above bond yields. At a minimum, there will be a firmer link between profits and stock prices going forward. And when the markets get a little less fearful, we should see higher valuations, which, when added to dividends (2 to 3 per cent) and profit growth (a subpar 3 to 4 per cent), will mean returns in the neighbourhood of 7 to 9 per cent per annum.


Is there a convenient resource where we can consult P/Es for various market indexes or geographic regions and be confident the reported numbers are accurate?

Thanks.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Taggart » 07 Jul 2012 08:19

Funds vs. ETFs: peeling away some of the myths

Saturday, July 07, 2012
TOM BRADLEY

"There's one research report in my reading pile I've been avoiding, although it eventually worked its way to the top.

Vanguard, the giant U.S. mutual-fund company ($1.8-trillion U.S. under management) produces some great research, particularly in the area of investor behaviour. In conjunction with the launch of its exchange traded funds in Canada, Vanguard published a paper entitled A Case for Indexing - Canada."
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Bylo Selhi » 07 Jul 2012 08:41

Tom Bradley wrote:In the studies, however, mutual funds aren't measured against actual index portfolios, but rather market indexes that have no costs attached. Unfortunately, investors can't replicate these benchmark returns. ETFs have MERs too, and when they're bought or sold, trading commissions are charged and a small premium/discount to net asset value is absorbed. My indexing friends tell me it costs about 0.5 per cent (all in) to run a balanced ETF portfolio at a discount broker. Investors wanting advice would expect to pay an additional 0.75 to 1.25 per cent at a full-service firm.

FWIW when I used to post annual indexing vs. actively managed "couch potato" 15-year portfolio performance comparisons I always subtracted 50bp from the index returns in order to simulate MERs. Nevertheless indexing won so consistently that I stopped running the numbers every year. That 50bp is a realistic average MER for TD eFunds investors. ETF portfolios incur under 20bp MERs, but then there are brokerage fees. For those who are truly passive investors, especially who have enough at their broker to get sub-$10 trades (or even free trades), then 50bp overstates their true costs.

Like mutual funds, ETFs can also miss their performance targets. A report published in May by Morgan Stanley showed that of more than 700 ETFs in the U.S., 47 per cent lagged their benchmark by more than just the fee. These shortfalls (they're rarely additive) vary depending on the type and size of fund and market conditions.
Bradley fails to mention how many of those laggards had large asset bases in broad market indexes and how many were tiny funds that concentrated in some obscure sector and/or leveraged. He also fails to point out that some of the former, especially from Vanguard (e.g. VTI), even achieved returns greater than index return less MER.

In the long run, everyone would be better served if more rigour was brought to the active-versus-passive comparisons. ETFs have a good story to tell without tilting the playing field.
The same could be said for the proponents of active management, sadly including Tom.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby NormR » 07 Jul 2012 15:08

He has a very good point when it comes to advisor assisted indexing. Far too many novices hear that indexing is good and then head to an advisor to help them out only to windup paying far too much. Mind you, it might be marginally better than the tender mercies inflicted by the banks/IG/etc. :(
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby skepticus » 06 Nov 2012 05:03

Tom Bradley, former CEO of Phillips, Hager & North slams his old company.

Advantage: Before Steadyhand, you were CEO of a large national firm, Phillips, Hager & North. Why did you strike out on your own?
Tom Bradley: Because they buy high and sell low, and—because they trade too much—investors tend to lag behind the funds they invest in. I felt very strongly that we could help people address that. Personally, it also was time to get down to something smaller where I could make a big decision quickly without having to go through committees and boards. A desire to get back to basics and keep things simple was a big motivator.


Ouch!
http://advantagemagazine.ca/2012/steady ... vestments/
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby scomac » 06 Nov 2012 08:25

skepticus wrote:Tom Bradley, former CEO of Phillips, Hager & North slams his old company.

Advantage: Before Steadyhand, you were CEO of a large national firm, Phillips, Hager & North. Why did you strike out on your own?
Tom Bradley: Because they buy high and sell low, and—because they trade too much—investors tend to lag behind the funds they invest in. I felt very strongly that we could help people address that. Personally, it also was time to get down to something smaller where I could make a big decision quickly without having to go through committees and boards. A desire to get back to basics and keep things simple was a big motivator.


Ouch!
http://advantagemagazine.ca/2012/steady ... vestments/


I think this article suffers from poor writing. While, at first blush, it sounds as though Bradley is being critical of PH&N's investment management practices, what I suspect he was trying to get across is that the clients of the firm were behaving poorly -- buy high, sell low and trade too often. The handholding, so-to-speak, just wasn't present with PH&N and as a result investor behavior had suffered. ]

As an institutional money manager, PH&N has a broad array of offerings to meet the needs of its various clients. Their job is money management, not so much people management. With Steadyhand the objective is at cross purposes to this where people (client) management is the key element. In an effect to facilitate this, product offerings are streamlined so as not to paralyse people with choice and remove the temptation to churn.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Bylo Selhi » 06 Nov 2012 08:26

skepticus wrote:Ouch!

Methinks the interviewer, the interviewee and some readers all misunderstand each other ;)

Let me clarify...

Q: Why did you "strike out" after you went on your own?
A: RBC bought PH&N "high". When I left PH&N prior to that, I sold my shares "low".

:rofl:
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby George$ » 05 Oct 2013 11:28

On Oct 3, 2013 Tom Bradley had his G&M article
What the Past Two Years Should Have Taught Investors About Forecasting - and a bit
Price rules

In the investment business, valuation is the closest thing we have to gravity.

Over time, security prices will reflect long-term fundamentals. It’s not a precise trading tool, but it works.

I enjoy reading him, thoughtful and sound, methinks - same article now printed at his blog - "Cutting Through the Noise"
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby Peculiar_Investor » 14 Nov 2013 16:30

Following up on the discussion here, a couple of blog posts worth reading It's Time for Investors to be Patient - Tom Bradley
Tom Bradley wrote:Adding it all up, it’s time for investors to be patient. To use Warren Buffett’s baseball analogy, there’s not a lot of “fat pitches” out there right now. You can afford to let a few go by.

<snip>

But while your bat is on your shoulder, there are things to do. You should compare your overall portfolio to the asset mix targets you set out for yourself. Stocks are up a lot and bonds have retreated, so it’s likely some rebalancing needs to be done. In addition to topping up fixed income, you should look hard at the other laggards in your portfolio, and consider nibbling away at resources and emerging markets.

and Delaying the Inevitable - Tom Bradley.
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Re: New Kid/Old Kid on the Block (Tom Bradley / Steadyhand)

Postby George$ » 02 Apr 2014 08:51

Today's Globe & Mail has another fine article from Tom Bradley -
Three ways we let the power of compounding slip through our fingers

a few words from Tom ...
In general, Canadians pay too much for investment services. Cost overruns come in many forms. Most investors need help and there’s a cost to that, but the fees have to match up with the service provided and have a positive effect on returns. Unfortunately, too many pay for advice they’re not getting. One call a year in late February is not advice.

Many fund investors pay to have their portfolio actively managed (as opposed to indexed), but don’t end up getting it. A significant number of funds in Canada, particularly the larger ones, are almost indistinguishable from the index they’re trying to beat. In other words, investors in these funds pay “active” fees for “passive” management.
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