In this episode we welcome Peter Bowen and Michelle Munro from Fidelity Investments Canada, two leading minds in the field, to discuss their insights and discussing the findings from the recent 2023 Fidelity Retirement Report.

Today's financial climate is more complex than ever. The cost of living continues to rise, and market volatility seems like the new norm. Yet, amidst all of these challenges, Canadians are maintaining an optimistic outlook towards retirement, thanks in part to sound financial planning and advice.

Fidelity Investments Canada' 2023 Fidelity Retirement Report, now in its 18th iteration, is a vital resource for financial advisors and investors alike. It aims to shed light on current retirement trends and offer strategies for both preparing for and living during retirement.

The report discusses a wide range of influencing factors, including inflation, housing costs, interest rates, and, of course, market volatility. All of these elements play significant roles in how we plan and strategize for our retirement years.

Peter is Vice President of Tax and Retirement Research and Michelle is Director of Tax and Retirement Research at Fidelity Investments Canada.

Thank you for listening. Don't miss what Peter and Michelle have to say about how we can all better equip ourselves for the financial realities of retirement, no matter what changes the market throws our way.

Read the 2023 Fidelity Retirement Report

Copyright © AdvisorAnalyst.com

In this episode, BMO Global Asset Management's Jeffrey Shell and Lillian Ferndriger join us to discuss newly accessible opportunities in private market assets. Jeffrey is Head of Alternatives, Commercial ESG and Innovation from BMO Global Asset Management. And Lillian is Director of Alternatives Distribution at BMO Global Asset Management.

We delve into the realm of private market investing, now a more widely accessible and vital instrument for portfolio diversification that promises attractive risk adjusted returns.

These markets offer an entrance into asset classes and strategies that were previously largely inaccessible territory in the public domain. Moreover, the defining features of private markets, their risk return profiles stand as a powerful key to unlock the full potential of a private wealth portfolio.

A look back in time reveals the compelling performance of private markets as they have consistently outshone public markets becoming a beacon of wealth accumulation and differentiated return stream. In recent times, this asset class has been winning hearts transitioning from its longstanding institutional clientele to captivate high net worth individuals, the segment that's been growing the fastest.

Now we're witnessing an exciting shift, often referred to as the democratization of access. This transformation marks a significant stride for the wealth management industry as it throws open the doors to a broad suite of previously inaccessible specialized strategies within private equity, private debt, real estate infrastructure, and other real assets.

The allure of reduced minimum tickets, enhanced transparency in reporting and lower fees adds to the appeal of these markets. But perhaps the most enticing advantage of this democratization is the boon it provides to private wealth. It serves as the final puzzle piece in portfolio construction, enabling clients to harness and all-encompassing asset allocation in private market sub strategies.

This allows for portfolio diversification, enhanced returns, volatility reduction, and crucially a shield against inflation. Today we're gonna delve deeper into these fascinating dynamics of private market investing. Thank you for listening.

Where to find Jeffrey Shell and Lillian Ferndriger, BMO Global Asset Management

Jeffrey Shell on Linkedin

Lillian Ferndriger on Linkedin

More on BMO Partners Group Private Markets Fund.

In this episode, Cole Smead, CEO & Portfolio Manager at Smead Capital Management, which oversees in excess of $5-billion AUM, joins us to discuss markets, the current investment climate, investing, and his firms 8 criteria investing philosophy. Our conversation begins with Smead discussing how he and firm work to uncover underloved, and underfollowed investment opportunities à la Charlie Munger, Peter Lynch and Warren Buffett. We then get into a discussion about the significant differences between value factor investing and what Smead does in its long term investing strategy, both in the US and Internationally. Though Smead's investment strategy is go-anywhere, their current investment darling opportunity is in the energy and commodity complex, where they have uncovered what can only be described as generational opportunities, something Smead has gotten right in the 15 years since William Smead, Cole's father founded the firm, following a long career in the industry, investing on behalf of other firms.

Thank you for listening. Smead has an encyclopedic knowledge of both the fundamental and quantitative aspects of investing, so it made for a lot for an enthralling discussion on markets, value investing, making money, avoiding losses through exceptional views on risk management.

Timestamped Highlights:

[00:02:18] Investment discipline includes 8 criteria developed by Bill Smead reflecting great investors, concentrated portfolios of 25-30 securities, and low turnover. It is a negative art based on eliminating things rather than finding things that fit, and markets change over time.

[00:14:47] Various investors needed to outperform by 40% to beat the index at some point. Volatility is unpredictable and there is no ability to price momentum. Understanding individual investment values is unique and cannot be commonly attached to a group.

[00:21:27] This text discusses the Jevons paradox and the relationship between technological innovation and energy consumption, arguing that as technology advances, energy consumption increases. The author also emphasizes the importance of having a framework for understanding an unknown future and the impact of energy consumption on economic growth in different parts of the world.

[00:23:53] "We've never used less energy doing all these great things in human society with all the ingenuity and all the innovation and all the technology available to us and Devin's really you know his the paradox he he created really pushes back on the scarcity of supply argument as well as the um lack of demand argument because we always have more and more and more."

[00:26:47] Investing in renewable energy and solar is necessary due to high energy needs. Market is picking winners and losers, but the need for more of everything is present. Lithium batteries are a great technology but require a lot of energy consumption and deplete metals. Combustion engine paired with electric motor is a feasible hybrid model.

[00:36:33] The fear of repercussions for owning certain investments causes portfolio managers to allocate capital based on what is profitable and to avoid "bad commodities." This is leading to a lack of competition and oligopolies in certain markets. Taxing these investments could make them acceptable across society.

[00:41:05] "There are those who want to invest in funds that invest in oil and those who don't correct? To your point it appears to be becoming binary where you have  a cohort of investors saying oh no no i don't want fossil fuels in my portfolio and then that's actually creating this huge inefficiency."

[00:44:05] The NBA has evolved to favor the three-point shot due to its efficiency, with players opting to shoot from beyond the arc rather than take shots from closer to the basket. Similarly, in investing, easy money strategies like the S&P 500 may no longer be the most rewarding, with riskier investments like commodity-driven businesses and those that align with ESG frameworks offering better returns.

[01:01:06] Bear market rally may be misleading, as companies' revenue growth decline due to inflation. Market participants are uncertain about their investments. Potential opportunities in commodity and cyclical businesses, but overall caution is advised.

[01:06:48] The next decade will be tough and require perseverance. It will be challenging for all investors and necessary to diversify and stay educated.

======================================

Where to find Cole Smead and Smead Capital Management

======================================

Cole Smead on Linkedin

Smead Capital Management Blog - Advice Blog

Smead Capital A Book With Legs Podcast

Seeking strategies to capitalize on the current market conditions? In this episode, featuring Paul Kornfeld, President of SIACharts, we discuss the utility of a framework to cope with fluctuating markets. We delve into the significance of technical analysis amidst zero interest rates and undervalued fundamentals over the past decade, along with the challenges of risk management during market shifts, such as the current climate of inflation and rising rates.

Kornfeld provides an overview of current market conditions, underscoring cautious optimism and a bullish stance on international markets. He also introduces new SIACharts' developments, emphasizing the importance of chart analysis, particularly point and figure charting.

He explains SIACharts system, which performs billions of calculations daily, employs point and figure comparison charting to examine the supply and demand dynamics of various asset classes. The system's rankings, based on longer-term trends, are not designed for day trading but to provide forward insights into stocks, ETFs, mutual funds, asset classes, sectors, and model portfolios.

The key takeaway is the essential role of tools like SIACharts in offering immediate and ongoing guidance to navigate markets. Using charting analysis to highlight investment opportunities, it liberates advisors from daily analysis rigors. SIACharts aids in identifying top investment prospects and offers risk management tools to minimize drawdowns and enhance the total capture ratio.

<strong>Thank you for listening!</strong>

<h2>Timestamped Highlights</h2>

Importance of having a framework to navigate changing market conditions [00:00:15]

Importance of charting analysis and point and figure charting [00:02:05] The usefulness of charting analysis and point and figure charting

Shift in market leadership [00:08:04] The speakers discuss the importance of having an exit plan and tools to adjust one's narrative.

The winter of discontentment [00:10:31] Paul Kornfeld talks about the quarterly outlook and recap, called "The Winter of Discontentment."

Concentrated Market [00:17:41] Discussion on the current market conditions, including the concentration of the market and the performance of underlying stocks.

Asset Allocation and Risk Management [00:18:30] Importance of having a framework to navigate changing market conditions.

Asset Class Rankings [00:23:17]

Point and Figure Comparison Charts [00:24:09] Explanation of the methodology behind the rankings.

Identifying Long-Term Trends [00:26:31] Importance of longer-term trends in the market and how the rankings help advisors make informed decisions for their clients.

European stocks and international opportunities [00:30:56] The speakers discuss the surprising performance of (surprise) European stocks despite the ongoing war and energy vulnerability.

ETF country heat map tool [00:33:17] Paul Kornfeld introduces the new ETF country heat map tool, which visually shows the performance of different countries and sectors over timeframes.

Following the money [00:38:04] The speakers discuss the importance of following the money and tracking money flows

Avoiding hitting bottoms [00:39:27] Importance of avoiding dead money in the portfolio and staying out of trouble.

Sector analysis [00:40:23] Using charting analysis to visually see the money flowing in and out of markets and the importance of sector analysis.

Short-term overbought/oversold [00:43:06] Understanding short-term overbought/oversold sectors, portfolio weighting and timing.

Using the Reports Tactically [00:48:28] Paul Kornfeld encourages advisors to use the reports tactically as a confirmation tool for allocation decisions.

Staying Away from Banking [00:49:24] Paul Kornfeld provides an example of how the reports e.g. helped advisors avoid sectors like banking, which has been red since December and has fallen by 18% over the last quarter.

Finding Opportunities in the Market [00:50:54] Paul Kornfeld discusses using a top-down approach and combining sectors to find the best names.

Eliminating Guesswork with Relative Strength [00:52:53] We discuss how using relative strength eliminates guesswork and biases when deciding where to invest.

Saving time in volatile markets [00:56:51]

Reservations about technical analysis [00:59:25] Paul Kornfeld addresses two reservations about technical analysis.

Using SIA Charts to empower advisors [01:05:13] Paul Kornfeld discusses how SIA Charts can empower advisors.

(One of) SIA Charts' Most Valuable Feature [01:08:59] Paul Kornfeld discusses the most valuable feature of SIA Charts.

Risk Management and Analytics [01:10:34] SIA Charts' biggest value add is risk management, which is not talked about enough.

Simplifying analysis for advisors [01:16:12]

======================

Where to find Paul Kornfeld and SIACharts:

======================

Paul Kornfeld on Linkedin

SIACharts.com

SIACharts on Twitter

SIACharts on Linkedin

Cole Smead, CEO & Portfolio Manager at Smead Capital Management joins us for a fascinating conversation. "Investing is not just about buying stocks and hoping they go up in value. It requires strategic thinking, planning, and a willingness to learn about niche industries," says Smead.

In this new podcast episode, Smead discusses the importance of seeking out profitable opportunities by investing in industries (the energy sector is their current focus) that other investors are not playing. He calls this "mafia investing," and believes that this strategy can lead to high returns and the possibility of becoming "insanely wealthy."

Smead instead chooses to be one among a choice of ten shrewd investors, rather than one among a million average investors.

He cites the example of the oil tanker market, where high steel prices have led to a shortage of supply and higher cash rates for those still in operation. He also notes that there are opportunities to become billionaires in commodity businesses that may not be popular, such as the coal business.

Smead emphasizes the need for active investors to earn their profits through the learning process and by studying successful capital allocators and billionaires. He recommends the book "The King of Oil" by Daniel Amman, to listeners, which, among others, intensified his interest in commodities.

To clarify, Smead Capital Management are 'go anywhere' investors, but one of areas that has become the current focus of their long term strategy is the energy sector.

Overall, Smead's investment philosophy emphasizes the importance of strategic thinking, planning, and a willingness to learn about niche industries. By seeking out profitable opportunities in these industries, investors can potentially achieve high returns and become "insanely wealthy."

This was a fascinating conversation. Buckle up and thank you for listening.

Timestamped Highlights:

Background

Background and Investment Philosophy [00:01:54] Cole Smead discusses the genesis of Smead Capital Management and his investment philosophy, including the eight criteria used to find investment opportunities.

Starting in the Investment Business [00:02:30] Cole Smead talks about how his father's legacy and teachings inspired him to get into the investment business.

Investing in stocks [00:05:16] Cole Smead talks about his early interest in investing in stocks and how it drove him to pursue a career in the investment business.

Experience and learnings

Psychology of markets [00:06:40] Smead shares his experience of the late 1990s and how it left a huge impression of the psychology of markets and how damaging they can be.

Disagreement with markets [00:08:05] Smead discusses the huge rewards of being in disagreement with markets at times with businesses that produce good economics and how people forget about those ideals.

Bear Market Rallies [00:10:21] Speaker 1 discusses the nature of bear market rallies and how they can frustrate investors.

Top 10 Market Caps by Decade [00:11:49] Speaker 1 talks about how the top 10 market caps by decade have historically underperformed the S&P 500, and how this affects investment probabilities.

Active Investing [00:14:28] Pierre and Cole discuss the negative sentiment towards active investing in recent years and how macro and fundamental factors have been overlooked.

Active Investing is Dead? [00:15:29] Discussion on the dispersion of returns within the index and the belief that active investing is dead.

Flexibility of Investing [00:17:03] Importance of being flexible in investing and not limiting oneself to certain industries or sectors.

Sticking to Investment Philosophy [00:20:18] The history of Smead Capital Management and their investment philosophy of active management and concentration.

Importance of Reading [00:22:52] Cole Smead and Pierre Daillie discuss the importance of reading and how it inspires their work.

Technology is Bullish on Oil

The Jevons Paradox [00:24:08] Cole Smead explains the Jevons Paradox and how it relates to energy efficiency and consumption.

Efficiency and Energy Usage [00:25:42] Cole Smead discusses how technological efficiency does not necessarily lead to a decrease in energy usage, using the example of LED light bulbs and the laser. In fact, it has tended to lead to maximum use of efficiency - i.e. energy enables more technology and more technology unlocks demand for more energy, and so on.

Energy usage and economic growth [00:26:36] Discussion on the relationship between energy usage and economic growth, and the potential consequences of going back to lower levels of economic growth.

Electricity usage and technology infrastructure [00:28:58] The potential shortfall in electricity usage versus growth of technology infrastructure, and the risks of having too little energy.

Germany's last nuclear reactor [00:32:29] Germany's closure of its last nuclear reactor and the implications of relying on different sources of electricity.

Nuclear vs Oil and Gas [00:34:19] Comparison between nuclear and oil and gas as the most economic forms of energy, and the geopolitical risks of nuclear energy.

Renewable Energy [00:37:15] Discussion about the economic return of $3 trillion spent globally on renewables, the least concentrated form of energy being solar, and the concentrated form of energy being gasoline.

Electric vs Combustion Engines [00:38:54] Cole Smead discusses the benefits and risks of electric and combustion engines, and predicts a hybrid world for cars.

Continued Energy Shortages [00:40:20] Cole Smead and Eric Al discuss the inventory shortfalls and the need for more energy, warning against governments' calls for less investment.

Long-Term Holdings [00:40:57] Cole Smead shares the story behind his key long-term holdings, including the importance of paying attention to great capital allocators and the value of longer duration assets in the oil and gas industry.

Long-dated asset production [00:44:12] Cole Smead discusses the importance of long-dated asset production and the potential for consolidation in the oil and gas industry.

Capital allocation [00:44:54] Smead explains the importance of capital allocation in the oil and gas industry and the benefits of buying back stocks.

Borrowing Knowledge

Investing as a liberal art [00:47:29] Smead and Daillie discuss the importance of learning and education in investing, and how it is the last liberal art.

Interest and Passion in Investing [00:49:21] Cole and Pierre discuss the importance of being interested and passionate about investing, as it requires a significant investment of time.

Underinvestment in Energy [00:50:35] Cole and Pierre talk about the underinvestment in energy over the past 10 years, leading to shortages in new production and the need for significant catch-up investment.

The Coming Consolidation in the Energy Industry

Consolidation in the Energy Industry [00:54:08] The speakers discuss the potential for consolidation in the energy industry, with many small Canadian companies having less than $3 billion in market cap, and the benefits of acquiring existing assets versus developing new ones.

Fractured dollar system [00:55:39] Cole discusses how the post-pandemic and post-Ukraine world has created niche opportunities to make money in the oil and gas business, such as the oil tanker market.

Studying successful investors [00:56:21] Cole emphasizes the importance of studying successful investors and capital caterers, such as John Fredericks and Harold Ham in the oil and gas business, and Jay Gould, the railroad baron.

Investing in coal [00:57:40] Cole talks about how he learned about the coal business and how there are good economics in the coal business, which has created billionaires in the last 10 years.

Consolidation and Active Investing [00:59:37] Cole Smead discusses how consolidation feeds into the moat idea and how active investors should seek to earn profits.

Investment Philosophy: Commodity Businesses [01:00:17] Smead explains how he uses a negative art approach to investing in commodity businesses, particularly in the coal industry.

The Glencore / Teck Takeover

Tech and Glencore's Bid for Teck [01:04:28] Pierre Daillie asks for Cole Smead's thoughts on Glencore's bid for Tech and how it seeks to take advantage of ESG.

The Genesis of Interest in Commodities [01:04:54] Cole Smead discusses his interest in commodities and how reading the book "The King of Oil" intensified his interest.

The Dual Commodity World [01:05:44] Smead explains the dual commodity world and how companies like Tech Resources are trying to detach themselves from coal to focus on copper.

Glencore's Coal Business [01:08:38] Smead discusses Glencore's coal business and how they plan to spin it off, while still owning it and paying out 100% of the income or free cash flow of the business.

Conclusion

Extracting High Returns [01:10:15]

In this episode, Mark Noble, Executive Vice President and Head of ETF Strategy at Horizons ETFs, joins us. We dive deep into the benefits of yield producing strategies, fixed income strategies, and the focus of our conversation – covered call ETFs. We dive into the current market volatility and how rising interest rates and inflation are impacting market dynamics, and explore how investors can shift some of their matched equity exposures in this period of economic and market uncertainty to enhance portfolio yield, mitigate risk, discuss their tax advantages, and the idea that these strategies enable you to do all of the above without having to alter core fixed income allocations, or investment policy.

Mark discusses the launch of Canada's first ultra-short-term Canadian and US T-bill ETFs, discussing why these weren't previously available. Mark also offers his insights on alternative assets, diversifying strategies, and the role of covered calls as a timely and productive equity alternative strategy.

Our conversations turns to Noble's take on the interesting macroeconomic shifts in the gold market and the impact of the financial crisis and Fed's balance sheet expansion.

Finally, we wrap up with a discussion on the optimal conditions for implementing covered call strategies, especially in our current uncertain market environment. Tune in for a deep dive into ETFs, market volatility, and timely strategic investment tactics.

Timestamped Highlights:

Yield Producing Asset Strategies - Why Now? [00:00:00] Introduction

Launch of Canada's First Ultra-Short-Term Canadian and US T-Bill ETFs [00:02:13] Mark Noble talks about the launch of Canada's first ultra-short-term Canadian and US T-bill ETFs by Horizons ETFs, and why there were no T-bill ETFs on the market before.

Current Market Conditions and Volatility [00:03:11] Mark Noble and the host discuss the current market conditions, volatility, and the shift in market dynamics due to rising interest rates, inflation, and investors seeking strategies to outpace inflation and traditional GICs.

Short-term T-bills as a cash alternative [00:08:33] Discussion on the attractiveness of short-term T-bills as a cash alternative and a low-risk way to generate income on the bond portfolio.

Market conditions and volatility [00:10:09] Talk about the current market conditions, volatility, and the shift in market dynamics.

Covered call ETFs [00:14:25] The rise of covered call ETFs as a mainstream investment strategy, their risk-return perspective, and how they can enhance the yield of an overall portfolio.

Covered Call Strategy and Premiums [00:17:29] Mark Noble explains how demographic shifts and rising interest rates have increased premiums for covered call strategies, which aim to generate monthly income while maintaining capital appreciation.

Tax Treatment of Covered Call Income [00:22:17] Mark Noble discusses the tax treatment of covered call income in Canada, which is viewed as hedging and generally taxed as capital gain. However, there are nuances to this treatment, and in some scenarios, the income may be taxed as return of capital.

Alternative Assets and Diversifying Strategies [00:25:22] Pierre and Mark Noble discuss covered call strategies as alternative assets and diversifying strategies, particularly when writing calls at or near the money. They also touch on the importance of considering the total return and the potential impact on the underlying securities.

Covered Call ETFs and Equity Alternative [00:25:50] Mark Noble explains the risk-return profile of covered call ETFs and how they can be an equity alternative.

Gold Market and Macro Shifts [00:27:27] Mark Noble discusses the macroeconomic shift in the gold market and the central bank gold buying trend.

Financial Crisis Contagion and Fed's Balance Sheet [00:33:22] Mark Noble talks about the similarities between the current situation and the financial crisis, and the Fed's balance sheet expansion due to the bailout.

Covered Call Strategies Case Wrap-up [00:38:11] Mark Noble and the host discuss the benefits of covered call strategies in the current market conditions, with interest rate volatility and uncertainty around inflation creating an advantage for call writers.

Optimal Conditions for Covered Calls [00:39:32] The host and Mark Noble talk about how covered call strategies have always been available, but the current market conditions make them more optimal than ever before.

=============

Where to find Mark Noble:

=============

Mark Noble on Linkedin

In this episode, we explore the concept of diversification by way of capital-efficient investing, through a strategy coined 'Return Stacking' and how historically, institutions have traditionally had more access to sophisticated strategies than retail investors and financial advisors. That has changed in the last 2-3 years with the advent of the introduction of ETF wrapped strategies now available to retail investors.

We discuss why diversity and prudent use of implicit leverage are important factors in investing, and how adding leverage to an asset that is already expected to outperform cash can increase excess expected returns. We touched on the performance of a 60/40 portfolio and why adding something to the portfolio that will diversify and have positive expected returns may be beneficial, particularly if you don't have to trade down or out of core model portfolio allocations.

We also discuss the 2022 market environment as an example of a growth down/inflation up environment and how using capital efficient ETFs can allow investors to introduce a diversifying secondary return stream and enhance returns, without introducing tracking error risks.

The episode also covered the lack of building block solutions in the ETF space, led Newfound Research to partner with Resolve to bring several ETFs to market. The ETFs, called "Return Stacked," were launched in February 2022, offering diverse combinations of stocks, bonds, and alternative trading strategies as building blocks for diversified portfolios.

Both Newfound Research and ReSolve Asset Management understand deeply the importance of education, which is why we prioritize engaging with the advisor community and providing accessible content.

We encourage you to reach out to us via LinkedIn, Twitter, or our websites (Newfound.com, InvestReSolve.com and Returnstacked.com) with any questions or comments.

We hope this episode provided valuable insights and tools to help you make informed investment decisions.

Thank you for tuning in, and we look forward to bringing you more unique perspectives in future episodes.

[00:07:24] "ETFs: Key Driver in Evolution of Investment Strategies"

[00:14:10] The Capital Efficiency Strategies of Institutions Explained

[00:24:15] "Unlocking Capital Efficiency through Alternative Investments"

[00:35:39] "Exploring how investments respond to economic environments"

[00:38:34] "Managed Futures and Systematic Macro: Diversification Done Right"

[00:43:47] Newfound and ReSolve Launches ETF Building Blocks for Advisors.

[00:48:37] The Pros and Cons of Leverage in Investing

[00:59:51] "Understanding Hurdle Rates and Leveraging Investments"

[01:04:05] "Efficient markets drive fair compensation for risk"

[01:16:37] "Maximizing Advisor Allocation with Passive Investments"

=======================

Where to find Corey Hoffstein, Rodrigo Gordillo, ReturnStackedETFs.com

=======================

Return Stacked ETFs

Newfound Research

ReSolve Asset Management

Corey Hoffstein on Linkedin

Corey Hoffstein on Twitter (@choffstein)

Rodrigo Gordillo on Twitter (@rodgordillop)

=======================

Where to find the Raise Your Average crew:

=======================

ReSolve Asset Management

ReSolve Asset Management Blog

Mike Philbrick on Linkedin

Rodrigo Gordillo on Linkedin

Adam Butler on Linkedin

Pierre Daillie on Linkedin

Joseph Lamanna on Linkedin

AdvisorAnalyst.com

In this episode we get into an insight-filled conversation about the current state of the markets and economy and analyze the potential risks and opportunities on the horizon with Jeffrey Sherman, Deputy CIO, DoubleLine Capital.

Timestamped Highlights

[00:07:52] Bond Market Reacts to Economic Slowdown and Banking Crisis

[00:14:32] "Regional banks face loan cost hikes and credit contraction"

[00:21:06] Banking Crisis Causing Recession Watch to Rise

[00:28:16] "Commodities may be key to combating inflation"

[00:32:49] "Banks brace for coming regulations amid pandemic"

[00:42:21] "Bank Liquidity and Outflows: Understanding the System"

[00:49:39] "The Crisis of Confidence: Crypto and Tech Markets"

[00:58:19] "Credit Suisse's Risky Business: Warnings Ignored"

[01:00:48] The downfall of Credit Suisse: Privacy and Market Punishment.

[01:03:42] "Managing Risk and the Fragile Economy: Insights"

=======================

Where to find Jeffrey Sherman

=======================

Jeffrey Sherman on Twitter - @ShermanShowPod

Jeffrey Sherman on The Sherman Show

DoubleLine Capital

=======================

Where to find the Raise Your Average crew:

=======================

ReSolve Asset Management

ReSolve Asset Management Blog

Mike Philbrick on Linkedin

Rodrigo Gordillo on Linkedin

Adam Butler on Linkedin

Pierre Daillie on Linkedin

Joseph Lamanna on Linkedin

AdvisorAnalyst.com

On this episode of Raise Your Average™, Dave Nadig - Financial Futurist at VettaFi's ETFTrends and ETFdb.com, joins us to discuss the interconnectedness of the banking system, the increasingly hyper-compliance culture in investment management, and the impact of emerging technologies like Chat GPT and AI. We dive into the recent banking crisis at SVB and how it highlights, for example, the need for better communication between advisors and clients during uncertain times. We also explore the potential of AI tools like Chat GPT to improve advisor services and the long term impacts of AI on the financial industry. Thank you for joining us for this thought-provoking conversation on the future of finance.

Highlights

[00:04:19] "Polycrisis: Understanding the Interconnectedness of Economic and Market Problems"

[00:07:44] "Financial Advisors React to SVB's Collapse – how and when matters!"

[00:09:41] Navigating Compliance Culture in Investment Markets.

[00:13:08] Navigating Compliance: Finding Middle Ground for Communication.

[00:21:02] "The Banking Crisis: A Simple Systemic Issue?"

[00:28:36] "Overestimating and Underestimating AI: Mythbusting Explained"

[00:37:07] "e.g. Maximizing Chat GPT's Editing Potential"

[00:42:03] "Trust and Providence: The Future of Reviews"

[00:46:08] "Improv and Humor: Keys to Achieving Sentience? AI is not capable of either, but it is highly capable and extremely useful."

[00:47:59] "e.g. Chat GPT and Wolfram Alpha: Creating Connections"

Episode Summary

- The issue in the banking industry is systemic

- Fractional reserve banking allows for asset and liability mismatching, causing systemic risk

- Tightening the system is the solution to prevent people asking for their money back

- Financial advisors with wealthy clients had a different weekend due to SVB banking crisis

- Advisors reassure clients by showing portfolio's exposure

- Rules in the investment market create a hyper-compliance culture

- Advisors need to find ways to communicate with clients that firms are comfortable with

- Multiple factors contribute to the SVB crisis

- Investing in high volatility opportunities has risks and rewards

- Design collaboration is essential for successful projects

- Advisors should stay informed and learn to effectively use AI tools like Chat GPT

- AI tools are developing quickly and will disintermediate big chunks of financial services workflows.

Where to find Dave Nadig, VettaFi

Dave Nadig on Linkedin

Dave Nadig on Twitter

ETFTrends.com

ETFdb.com

Where to find the Raise Your Average crew

Mike Philbrick on Linkedin

Adam Butler on Linkedin

Rodrigo Gordillo on Linkedin

ReSolve Asset Management

Pierre Daillie on Linkedin

Joseph Lamanna on Linkedin

In this episode, Sri Iyer, Head of i3 (i-cubed) Investments™, and Portfolio Manager at Guardian Capital LP, joined us for a provocative conversation about the banking crisis, the Fed, monetary policy, ChatGPT and AI, and the case for dividends as a core and resilient equity allocation for all portfolios.

We discussed the current state of regional bank stocks in the US, which took a hit due to the uncertainty surrounding the Silicon Valley Bank meltdown/collapse. However, Federal Reserve Chair Janet Yellen's statement guaranteed all deposits, implying that the US government will guarantee 100% of deposits, providing some relief.

Turbulent Times

In a turbulent period, investors are seeking companies with wider moats and stable or growing dividends, as well as companies whose moats have shrunk. Depositors may pull their money out of lower-tier banks and shift them into tier one banks, while investors default back to high-quality, dividend-paying stocks. So, it's essential to focus on consistent companies with a proven track record of growing dividends during uncertain times.

Stagflation?

We also discussed the concept of 'stagflation', which is a recession amid high inflation. The market believes that the Fed can engineer a soft landing, but this is a mistake. The main components of inflation are supply chain problems and persistent high labor costs due to labor force participation issues.

More Market Volatility Ahead

Geopolitical issues, such as the Ukrainian war and China's impact on supply chains, are structural issues that cannot be solved by mere rate increases. These structural issues will lead to market volatility and turbulence, making it essential to separate beta and alpha. As a result, many experts believe that active management may be better than passive management right now.

Democratization of AI

We discussed the democratization of AI through open source tools such as Pytorch, which is making AI accessible to a wider audience. Chat GPT is one such AI tool that can be used for making decisions. It has the potential to revolutionize several industries such as software development, big data storage, cybersecurity, search engines, media content generation, music, legal sector, healthcare, pharmaceuticals, predictive analysis, and aerospace engineering.

Dividend Investing

Lastly, we talked about how dividends can provide a good conduit to capture duration visibility and have a mid space between safe deposits and risky duration, playing a vital role in this market. Also, we discussed how the Fed's response to the market cycle is measured, and it's more concerned about protecting the average investor than bailing out failing institutions.

Thank you for listening to our podcast. Stay tuned for more exciting episodes!

Timestamped Highlights:

[00:01:46] The Fed is responding to the market in a measured way, balancing inflation and protecting the average investor; not bailing out failing institutions.

[00:06:06] ChatGPT revolutionized the average person's interaction with AI, leading to new levels of "humans and bots merging" and the emergence of new forms of AI like regenerative AI.

[00:09:00] AI processing data and training has been drastically changed with the introduction of ChatGPT, leading to democratization of AI.

[00:15:30] ChatGPT is a revolutionary AI that can change software development, data centers, cybersecurity, search engines, communication, media content, healthcare, pharmaceuticals, banks, and aerospace engineering.

[00:26:32] Dividend paying stocks help investors in turbulent markets with low volatility, downside capture, cash flow visibility and increased yield at cost.

[00:31:35] Secular cash flow/dividend growth gives consistency to company/cash flow, allowing for cleaner valuation and better market mismatch detection.

[00:39:51] Fed guarantees bank deposits to protect against cascading credit risk and inflation. Dividends provide mid-space between deposits and risky duration.

[00:51:59] Recession and high inflation due to labor costs and geopolitical issues, leading to market volatility and the need for active management.

[00:55:35] Dividend strategy has no cuts since inception; trained model on COVID data to recognize behavior and infer future trends.

[00:59:24] AI using transformers to create abstract data and learn from predictions of other models.

Guardian Capital LP is a sub-advisor on numerous funds for BMO Global Asset Management, BMO Exchange Traded Funds, and Horizons Exchange Traded Funds, in addition to managing its own suite of investment funds, and assets for large institutional clients.

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