Leading a Horse to Water

It’s a classic saying, yet never more appropriate than when it’s applied to professional advisors in any field. Be it medical, legal, counselling or financial. All professions that deal with the public can relate to this expression. In the beginning I used to cringe when good advice fell on deaf ears. But as I matured and raised a family, I learned to let things play out.

Failure is good. We forget about that. I’ll borrow a line from Batman and use these lines as a great reference;

“Why do we fall down Master Bruce?” “So we learn how to get back up Alfred”.

Our culture and especially our families have become too protective over failure, to the point of stifling effort. In sports the score does matter. It provides a clear indication of ones reward or effort and also spurs reflection and drive for those on the wrong end of the scorecard.  Life is similar. It owes you nothing. Sooner or later you will learn its harsh realities. The longer you prolong or protect individuals from these lessons, the harder it will be for them to learn from them.

Parents, Teachers, Counsellors, Lawyers, Doctors and yes Accountants, are all there to help us make good decisions. As professionals, we must also understand that not taking our advice is also sometimes necessary for the greater good. I know I have learned the hard way several times, and wish I had just listened the first time. I also know that these consequences made me who and what I am today.

Rick Barbosa

 

Royal Bank pulls ahead in Electronic Banking Options for Business

Full disclosure, I use Royal Bank and own Royal Bank stock.

Recently Royal Bank did something that changed the game for small to medium-sized businesses alike. Very quietly they installed two brand new features that automates the electronic collections process previously only available through standalone software.

The first feature is Interact Collections, yes collections, not just payments. You can now issue requests for payment to registered “payee’s” and have them pay you using the familiar Interact System. It allows room for Invoice numbers and comments to provide detail to the recipient.

The second feature is the introduction of Wave to produce invoices and send them with the built-in option to pay via various means. This is a great tool for mom and pop businesses, allowing them to send professional looking electronic invoices to their customers and get paid.  I still would not recommend using Wave to handle your bookkeeping for a few reasons. The main one being that you still need an Accountant to work with you and your business to handle the various remittances, payroll and tax issues that go along with it.

That being said, I have tried both and liked them. There is a free trial period for both options, and available upgrades for various Wave features, but the free version does the job.

Good work Royal.

 

 

 

 

Bombardier-A an example of why welfare does not work

This is a family run company who’s only raison d’etre is to make themselves wealthier, and provide votes for Quebec friendly politicians. All this is at the expense of the Dumb Canadian Taxpayer. Yes I say dumb because no one ever really cares until it affects them personally.

When something is given to you without you earning it, do you really value it? It’s like finding a $20 bill on the sidewalk. Do rush to the bank to save it , do you use it to pay a bill or do you spend it right away?

We as a country and Quebec as a Province have poured billions into a company that does not care about those outside its class A structure. If it did, it would have made profits and been profitable at any cost. Instead, they know that they will be propped up by different levels of government in the name of saving Canadian Jobs. If you did the math, we could have funded a national drug program or a national daycare program with all the lost funds poured into Bombardier.

Now, because there were no strings attached with our money, they went looking for another Sugar Daddy in Airbus. Airbus is a shrewd company who paid nothing for the deal and got all the Intellectual Property that we as Canadians paid for.

Welfare is something for nothing. You (and we as a Country) get what you pay for. Remember this next time you’re at the voting booth.

Rick Barbosa

 

BBT Financial Update 10 days ahead of Barclays Analyst

Our clients enjoyed a 10 day window to buy up depressed stocks from our client update on May 12th. See the Barclays post below:

BUZZ-Barclays upgrades 5 Canadian banks on valuation, outlook

23 May 2017 – Reuters

BUZZ-Barclays upgrades 5 Canadian banks on valuation, outlook** Barclays raised its outlook on 5 Canadian banks due to low valuations following Q1 results

** Analyst John Aiken writes depressed valuation also attributable to housing market worries arising from non-bank lender Home Capital Group’s rapid decline in deposit accounts
** Cites upcoming switch to 2018 valuation year as painting rosier earnings growth outlook
** Among ‘big 6,’ raises Bank of Montreal to equal weight from under weight, PT to $98 from $95
** Lifts Bank of Nova Scotia to overweight from equal weight, PT to $84 from $78
** Upgrades National Bank of Canada to overweight from equal weight, PT unchanged at $59
** Boosts TD Bank Group to equal weight from under weight, PT to $69 from $64
** Also raises regional bank Laurentian to equal weight from under weight, though trims PT to $58 from $59
** In last 12 months, banks have outperformed the broader Canadian equities market, with the Thomson Reuters Canada Banks Index up 14.9 pct vs. the TSX Composite (up 11.1 pct)

Even with the BMO earnings today,  we see a buying opportunity.

Our Call 05/24/17
We predict that enough republicans will vote for impeachment before US Thanksgiving, leading to further depressed values for banks in the US. Canadian Banks should see continued strength as safe havens. Oil will bounce higher despite incremental supply. Overall infrastructure spending will boost oil demand over the next 2 years so hold on or add to your energy stocks.

Rick Barbosa

 

Client Update 05.12.17

The recent Home Capital transparency issue, and now the downgrade from Moody’s on Canadian Banks has supressed valuations recently. We personally have GIC’s with Home Trust that are coming due.  Although we don’t envision investing in the Company, (once trust is an issue) we do anticipate adding to our CIBC and Genworth positions. Canadian Banks and non-sub prime lenders do a great job of valuing risk, even in this environment. Canadian banks do not write risky loans, you’d know if you’ve ever tried to borrow from them. Hence we see this as a buying opportunity.

Tip Sheet

CIBC  (CM) Close 107.29
P/E Ratio 9.1
Book Value 1.8
Debt to Capital 4%
Dividend 4.73%

Genworth Mortgage Insurance (MIC) Close 33.48
P/E Ratio 7.1
Book Value  .8
Debt to capital 10.3%
Dividend 5.26%

For more portfolio advice, Look up Rick’s Pick’s Page

For individual portfolio management contact our office.

Has “Free Trade” really helped us?

In my humble opinion NO.

Here is what I used to base my answer on. When we lowered tariffs in North America it was meant to encourage a freer flow of goods between nations. Economists tell us that increasing trade creates wealth and was essential to grow economies on both sides of the border or for that sake internationally (TPP, CETA). Free or tariff reduced trade is only a recent trend so we must look at why we had tariffs in the first place.

Tariffs or “taxes” were meant to protect our local and mature markets that were the envy of the world. Our Markets (Canada/US) harbored a healthy working population with disposable income and a robust manufacturing sector. Unlike other parts of the world North America (Canada/US) had made investments for the betterment of it’s population that included:

  • Health and Safety
  • Organized Labor
  • Minimum wage
  • Social Security/Government pensions
  • Workplace or Self-Directed retirement plans
  • Workers Compensation
  • Employment standards Legislation
  • Environmental Protection

Anyway you cut it, these programs increased our cost of production, albeit while producing a higher standard of living. The Tariffs made cheaper goods that were made in countries or states that did not have any of these obligations competitive by increasing their landed cost. In most cases local was cheaper when you factored in tariffs. This drove investment in both countries by companies who wanted to serve these rich markets by making it cost effective to produce locally.

We were told that lowering tariffs would drive competition and innovation because we would be allowed access to their markets on an equal footing in exchange for access into our markets. That did not happen. Restricted or limited access is what we got.

Too often national or state interests fell outside of NAFTA like Health and Safety, minimum wage, and environmental standards. So what in essence happened is that for companies to survive the onslaught of cheaper goods they too had to go offshore to remain competitive. In fact the standard of living has not increased in Mexico, the U.S and Canada. All the wealth that has been created did not raise the standard of living in any developed country, instead it only boosted the multi-national corporations bottom lines. This came at the expense of blue-collar and lower level white collar workers.

I am a strong proponent of responsible capitalism and competition. It’s the best system period and one that drives growth and innovation. When Free Trade was introduced and as other European and Pacific agreements pop up we must ask ourselves one fundamental question:

Is the playing field really level on  both sides?

Rick Barbosa

Albert

 

Getting up from “Under the Bus”

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Recently, although it has happened to me before, I let my guard down and confided in someone whom I though I could trust (in a business sense). This information (not proprietary or classified)  was meant as an aid to improve performance prior to any real actions being taken. I was under the impression that the party in question wanted to understand what others where thinking so they could make preemptive corrections, thereby avoiding any confrontations.

It didn’t turn out that way. Instead the party in question confronted the accusers and followed up with proof by using my name in the process. Blind sided as I was to hear of the incident, I knew I needed to react the right way and learn from this mistake. I owned my error and proceeded to acknowledge the issue with those affected. I can’t expect the same level of trust from the group, nor would I give it if I had been betrayed. Wounds will heel, but going after the person who betrayed my trust would just make two wrongs.

When you are in the middle of a situation like I was, how you respond and own it says a lot about your character. I hope to regain this groups trust over time, but I know that individual responsibility and accountability are the hallmarks of my practice. What we do after we screw up is just as important as learning from the screw up.  All of us at times fall prey to this type of betrayal. It’s how we learn to cope with it that sets leaders apart from the rest. We must hold ourselves to the same if not higher standards, as those we manage and consult, otherwise we risk hypocrisy.

Dusting myself off,

Rick Barbosa