Lessons About Life, Enterprise, from Baking Christmas Cookies
A couple of hours in a hot kitchen can teach you as much about business and management as the latest books on re-engineering or total quality management. That's my take, anyway, after a bout of Christmas-cookie baking. Here are 11 lessons for life (and enterprise), fresh from the oven:
1. Engagement. Watching others helps, but you've gotta get your hands dirty. I hadn't made cookies for years, so I observed a friend do a few batches. I thought I was learning something, and I suppose I was—but nothing really clicked until my hands were covered with flour.
Lesson (for trainers especially): Cut the lectures. Get folks involved in "real stuff" very quickly!
2. A plan. I'm not keen on planning in general, but a time-tested recipe is a godsend. First, it's roughly "right." More important, it gives you the confidence to get started.
Lesson: Any plan is a help; it gives folks the sense they aren't aimlessly flailing.
3. Art. The plan is an outline—not Holy Writ. Plans, including recipes, are made to be tinkered with—and eventually torn up. Cookie making, software design, and real-estate lending are art. And it's the artists, not the slavish followers of others' recipes, who land in the world's halls of fame.
Lesson: Blind devotion to any plan is downright dumb!
4. Trial and errors. Yes, I'd watched a master at work (or at least a pretty good cook), but in my first hour of hands-on work, with instructions close at hand, I made dozens of mistakes, large and small. And in business life, real life, and cookie-making life, error is the fuel that drives you.
Lesson: Don't "tolerate" mistakes. Embrace them!
5. The same mistakes. "Mistakes are OK," some concede, "but don't make the same mistake twice."
Rubbish! I made virtually the same errors, in something as relatively simple as cookie making, over and over ... and over.
Lesson: Nobody ever did anything (interesting) right the first, or 51st, time.
6. A sense of humor. I was awkward at the start. (And at the finish.) I turned the kitchen into a disaster area. Kids and adults made their day laughing at me (or so it seemed). Experimentation—the nub of life and business—depends on learning to laugh at yourself.
Lesson: Learning is precisely about making a fool of yourself—often in public.
7. Perseverance. An ability to laugh at yourself and suppress your ego is key—but so is steely-eyed determination. Sure it was "just" cookie making. But I did want to do it right.
Lesson: Winners want to do everything well, no matter how trivial; and that takes focus and unrelenting drive.
8. Perfectionism. Certainly, the kitchen was a mess. Yes, I was the object of ridicule. But to master one's craft requires nothing less than pain-in-the-butt perfectionism. Most see artists, and creative types in general, as scatterbrained. I'm sure there are scatterbrained artists (and bakers), but their work doesn't end up in museums (or cookbooks).
Lesson: Creativity and perfectionism are essential handmaidens.
9. Ownership. It was made clear to me: I was responsible for the Christmas Eve dinner cookies. There were no backups available—and a long ginger-cookie tradition hung on my frail (i.e., incompetent) shoulders. The monkey was ensconced squarely on my back. So I did the job.
Lesson A: No ownership, no passion.
Lesson B: No passion, no perseverance.
Lesson C: There is no half ownership.
10. Accountability. When I'd helped with some previous cookie making (the day before), I'd screwed up the baking time twice. Now I was on my own. That should have made things more difficult. But, to the contrary, I was so attuned to the task that I didn't come close to blowing it.
Lesson: Until you're engaged in all aspects of a job, you don't fully engage.
11. Taste. OK, I'll brag: I made good cookies. Greatness takes practice—and exquisite taste. I may or may not practice more, but I doubt I'll ever become to baking what Tom Clancy is to techno-thrillers.
Lesson: If we want great products, we need to find, attract, and retain great creators. Period.
Saturday, December 29, 2007
Wednesday, November 7, 2007
Stock pickers dig for hidden gems - ANDREW ALLENTUCK
Stock picking has some of the qualities of a treasure hunt. The goal is to find stocks that others have not seen - or at least not appreciated. Here are some stock picks that are off the beaten track, from fund managers who specialize in doing exactly this. From a printer of euros to a worm-farm company, these are not mega-caps such as the Royal Bank of Canada that are followed by hundreds of analysts, but are companies with potential that has yet to be appreciated by the market.
DEEP VALUE MANAGER
Irwin Michael buys stocks that seem to be unassailable bargains. At 57, he's running hard to keep up with his own record. That includes a 121.8-per-cent gain in his Toronto-based ABC Fundamental Value Fund in 1993. He plays down the success as a "once-in-a-career year."
Mr. Michael's ABC Dirt-Cheap Stock Fund is up 31.5 per cent for the 12-months ended Sept. 30, almost twice the 18.7-per-cent return of the Canadian-focused small- to mid-capitalization equity fund average.
His knack: Buying companies with large discounts to book value and other metrics, hidden assets, negative market sentiment and a reasonable chance of getting some respect.
Among his top picks is Whitemud Resources Inc. (WMK-TSX), a Calgary-based company that digs up kaolin, a paper and concrete additive. Mr. Michael bought it at a net asset value of $8; the shares closed yesterday at $10.45. He also owns Dublin-based Babcock & Brown Air Ltd. (FLY-NYSE), which pays an 8.7-per-cent dividend that he expects to grow by 15 per cent next year.
And a remarkable find: Fortress Paper Ltd. (FTP-TSX), a Vancouver-based company that owns a Swiss printer that makes passport paper and prints euros. Fortress has a replacement value of $425-million and a market capitalization of nearly $79-million. "That's an 80-per-cent discount to net asset value," he says. RELATIVE VALUE MANAGER
Roger Dent, 46, started his career in corporate finance at Wood Gundy and eventually became a small-cap hunter for Mavrix Fund Management Inc. in Toronto. His Mavrix Strategic Small Cap Fund produced a 35.9-per-cent return for the 12 months ended Sept. 30, and beat every other Canadian-focused, small- to mid-cap fund from 2003 to 2006. His method: value stock picking.
"I have spent 15 years building a network of contacts," he says, noting the usual value measures of price-to-earnings and price-to-sales do not work well when companies are in early stages.
Among his winners - VendTek Systems Inc. (VSI- TSX-VEN), a Vancouver company that operates electronic systems for merchants to load time on prepaid cellphone cards. Purchased at 25 cents, the shares closed yesterday at $1.07.
He picked Centenario Copper Corp. (CCT-TSX), a Toronto-based miner with a soon-to-be launched operation in Chile. Shares purchased at $1.50 closed yesterday at $6.60 and could go to $12.50 in a year, which would be five-to-six times estimated cash flow, he says.
His most unusual pick is reWORKS Environmental Corp. (REW- TSX-VEN), a Toronto-based worm farm that turns food processors' scraps into castings, that is, worm-poop fertilizer. The stuff is eco-friendly and can be walked on soon after application, which is not true for alternatives such as compost. Shares purchased at 22 cents are trading at 11 cents. One reason for the drop: The company's production growth is on hold until the workers, that is, the worms, get amorous, Mr. Dent notes. Shares could go to 40 cents in a year, he suggests.
GROWTH MANAGER
Gerry Brockelsby, partner and chief investment officer at Marquest Investment Counsel Inc. in Toronto, has a recent record any stock picker could envy. His Marquest Bridge Fund, started in mid-2005, has not weathered a full market cycle, but is up 45.8 per cent for the year ended Sept. 30, more than twice the 19.9-per-cent return of the S&P/TSX composite index in the period. He wants growth companies that, he says, have pariah characteristics that others won't touch. "When market psychology is negative, that is the time to buy," he says.
Among his top current picks - Timminco Ltd. (TIM-TSX), a Toronto-based company that mines the raw material for silicon wafers for making solar panels. He paid $2.30 a share last April; the shares closed yesterday at $14.66.
He bought Ipico Inc. (RFD-TSX-VEN), a Burlington, Ont.-based maker of radio frequency identification tags that work in moist environments where other RFID technologies do not work. Shares purchased at 65 cents closed yesterday at $1.xx and could hit $1.75 within 12 months, he says.
Another pick, SilverBirch Inc. (SVB-TSX-VEN), develops games for PDAs and cellphones. Shares purchased at 9 cents last November are trading at 34 cents. The games are sponsored and come with ads. "It's new media for the under-35 set," he says. "If they play, they get pitched, and if they like it, the company's fortunes will rise. Call it micro-marketing, it is a new way to get eyeballs, he says.TECH INVESTOR
Howard Sutton, trained as an engineer, has run the Tera Capital Global Innovation Fund since its inception in October, 1998. For the three years ended Sept. 30, the fund was in the No. 2 spot in the science and tech sector with a compound annual return of 47.5 per cent. The winner was the U.S.-dollar version of the fund with an average annual compound return of 59.6 per cent. The median average annual compound return for science and tech funds was 6.2 per cent for the period.
Among his current picks: Active Control (ACT-TSX-VEN), a Burlington, Ont.-based wireless communication company specializing in tough environments. He paid 6 cents a share in March, 2006. It is now trading at 66 cents.
He bought Detroit-based data manager Perceptron Inc. (PRCP-Nasdaq) at $10.36 in August; it closed yesterday at $14.43.
Mr. Sutton invested in Newport Beach, Calif.-based Acacia Research (ACTG-Nasdaq), for which he paid $14.50 in mid-summer; shares closed yesterday at $16.05 (U.S.). These are not common picks, but, as he says, "if you just want Cisco, you can buy an ETF."
*****
Looking for value in unexpected places
IRWIN MICHAEL
ABC Fundamental
Value Fund
Style: Looks for small and medium-sized companies with hidden
assets.
Hot pick: Dublin-based Babcock & Brown Air pays an 8.7-per-cent dividend, and he expects that to improve by 15 per cent in the next year.
ROGER DENT
Mavrix Strategic Small Cap Fund
Style: Likes to use his network of contacts to root out value stocks.
Hot pick: Worm-farming ReWORKS Environment makes fertilizer. Its shares are down, but once the worms start reproducing there could be plenty of profit to spread around.
GERRY BROCKELSBY
Marquest Bridge Fund
Style: Seeks pariah companies that other investors are staying away from.
Hot pick: Timminco - no longer a pariah - mines the material used to make solar panels. It traded for less than $3 last April and now hovers around $15.
HOWARD SUTTON
Tera Capital Global
Innovation Fund
Style: Looks for technology stocks that aren't obvious choices.
Hot pick: Active Control is a wireless company specializing in tough environments. He paid 6 cents a share last March, and it now trades closer to 60 cents.
DEEP VALUE MANAGER
Irwin Michael buys stocks that seem to be unassailable bargains. At 57, he's running hard to keep up with his own record. That includes a 121.8-per-cent gain in his Toronto-based ABC Fundamental Value Fund in 1993. He plays down the success as a "once-in-a-career year."
Mr. Michael's ABC Dirt-Cheap Stock Fund is up 31.5 per cent for the 12-months ended Sept. 30, almost twice the 18.7-per-cent return of the Canadian-focused small- to mid-capitalization equity fund average.
His knack: Buying companies with large discounts to book value and other metrics, hidden assets, negative market sentiment and a reasonable chance of getting some respect.
Among his top picks is Whitemud Resources Inc. (WMK-TSX), a Calgary-based company that digs up kaolin, a paper and concrete additive. Mr. Michael bought it at a net asset value of $8; the shares closed yesterday at $10.45. He also owns Dublin-based Babcock & Brown Air Ltd. (FLY-NYSE), which pays an 8.7-per-cent dividend that he expects to grow by 15 per cent next year.
And a remarkable find: Fortress Paper Ltd. (FTP-TSX), a Vancouver-based company that owns a Swiss printer that makes passport paper and prints euros. Fortress has a replacement value of $425-million and a market capitalization of nearly $79-million. "That's an 80-per-cent discount to net asset value," he says. RELATIVE VALUE MANAGER
Roger Dent, 46, started his career in corporate finance at Wood Gundy and eventually became a small-cap hunter for Mavrix Fund Management Inc. in Toronto. His Mavrix Strategic Small Cap Fund produced a 35.9-per-cent return for the 12 months ended Sept. 30, and beat every other Canadian-focused, small- to mid-cap fund from 2003 to 2006. His method: value stock picking.
"I have spent 15 years building a network of contacts," he says, noting the usual value measures of price-to-earnings and price-to-sales do not work well when companies are in early stages.
Among his winners - VendTek Systems Inc. (VSI- TSX-VEN), a Vancouver company that operates electronic systems for merchants to load time on prepaid cellphone cards. Purchased at 25 cents, the shares closed yesterday at $1.07.
He picked Centenario Copper Corp. (CCT-TSX), a Toronto-based miner with a soon-to-be launched operation in Chile. Shares purchased at $1.50 closed yesterday at $6.60 and could go to $12.50 in a year, which would be five-to-six times estimated cash flow, he says.
His most unusual pick is reWORKS Environmental Corp. (REW- TSX-VEN), a Toronto-based worm farm that turns food processors' scraps into castings, that is, worm-poop fertilizer. The stuff is eco-friendly and can be walked on soon after application, which is not true for alternatives such as compost. Shares purchased at 22 cents are trading at 11 cents. One reason for the drop: The company's production growth is on hold until the workers, that is, the worms, get amorous, Mr. Dent notes. Shares could go to 40 cents in a year, he suggests.
GROWTH MANAGER
Gerry Brockelsby, partner and chief investment officer at Marquest Investment Counsel Inc. in Toronto, has a recent record any stock picker could envy. His Marquest Bridge Fund, started in mid-2005, has not weathered a full market cycle, but is up 45.8 per cent for the year ended Sept. 30, more than twice the 19.9-per-cent return of the S&P/TSX composite index in the period. He wants growth companies that, he says, have pariah characteristics that others won't touch. "When market psychology is negative, that is the time to buy," he says.
Among his top current picks - Timminco Ltd. (TIM-TSX), a Toronto-based company that mines the raw material for silicon wafers for making solar panels. He paid $2.30 a share last April; the shares closed yesterday at $14.66.
He bought Ipico Inc. (RFD-TSX-VEN), a Burlington, Ont.-based maker of radio frequency identification tags that work in moist environments where other RFID technologies do not work. Shares purchased at 65 cents closed yesterday at $1.xx and could hit $1.75 within 12 months, he says.
Another pick, SilverBirch Inc. (SVB-TSX-VEN), develops games for PDAs and cellphones. Shares purchased at 9 cents last November are trading at 34 cents. The games are sponsored and come with ads. "It's new media for the under-35 set," he says. "If they play, they get pitched, and if they like it, the company's fortunes will rise. Call it micro-marketing, it is a new way to get eyeballs, he says.TECH INVESTOR
Howard Sutton, trained as an engineer, has run the Tera Capital Global Innovation Fund since its inception in October, 1998. For the three years ended Sept. 30, the fund was in the No. 2 spot in the science and tech sector with a compound annual return of 47.5 per cent. The winner was the U.S.-dollar version of the fund with an average annual compound return of 59.6 per cent. The median average annual compound return for science and tech funds was 6.2 per cent for the period.
Among his current picks: Active Control (ACT-TSX-VEN), a Burlington, Ont.-based wireless communication company specializing in tough environments. He paid 6 cents a share in March, 2006. It is now trading at 66 cents.
He bought Detroit-based data manager Perceptron Inc. (PRCP-Nasdaq) at $10.36 in August; it closed yesterday at $14.43.
Mr. Sutton invested in Newport Beach, Calif.-based Acacia Research (ACTG-Nasdaq), for which he paid $14.50 in mid-summer; shares closed yesterday at $16.05 (U.S.). These are not common picks, but, as he says, "if you just want Cisco, you can buy an ETF."
*****
Looking for value in unexpected places
IRWIN MICHAEL
ABC Fundamental
Value Fund
Style: Looks for small and medium-sized companies with hidden
assets.
Hot pick: Dublin-based Babcock & Brown Air pays an 8.7-per-cent dividend, and he expects that to improve by 15 per cent in the next year.
ROGER DENT
Mavrix Strategic Small Cap Fund
Style: Likes to use his network of contacts to root out value stocks.
Hot pick: Worm-farming ReWORKS Environment makes fertilizer. Its shares are down, but once the worms start reproducing there could be plenty of profit to spread around.
GERRY BROCKELSBY
Marquest Bridge Fund
Style: Seeks pariah companies that other investors are staying away from.
Hot pick: Timminco - no longer a pariah - mines the material used to make solar panels. It traded for less than $3 last April and now hovers around $15.
HOWARD SUTTON
Tera Capital Global
Innovation Fund
Style: Looks for technology stocks that aren't obvious choices.
Hot pick: Active Control is a wireless company specializing in tough environments. He paid 6 cents a share last March, and it now trades closer to 60 cents.
It's a bubble(y) economy: Champagne eyes more soil - ANGELA CHARLTON
Those few venerable vineyards that boast the right to produce real French champagne may be facing competition.
France's agency in charge of food and drink quality is looking into expanding the strictly defined area where champagne is made, amid growing global demand for its prestigious bubbles - in an industry with €4.1-billion ($5.5-billion) in sales last year.
"Production is reaching a limit," said Daniel Lorson of the Champagne Growers Committee. "We are almost entirely covered in vines."
Like everything involving France's treasured "terroir," or wine-growing areas, such a move will require extensive study and probably involve dragged-out debate. If the expansion plan gets the go-ahead, it will likely be 2015 before new champagne hits the supermarket shelves, Mr. Lorson said.
But a group of government-commissioned researchers has already taken the first step.
For 18 months, a group comprising a geographer, historian, geologist, agricultural engineer and plant biologist prodded soil in potential new champagne zones, questioned vintners and sampled their wares.
Last month, it submitted a report to the National Institute for Origin and Quality, or INAO, said Eric Champion, the institute's representative in the Champagne region. In February, the institute's national committee will decide whether - and by how much - to expand the authorized champagne territory.
Currently, that territory covers about 35,000 hectares - nearly six times the area of Manhattan - in the plains and rolling hills of eastern France. The area was determined by a 1927 law taking into account sun exposure, soil quality and groundwater levels. Only wine made from grapes grown within that territory can officially be called champagne.
Large champagne houses are enjoying booming demand from a growing class of nouveau riche in countries such as China and Russia, who are drawn by the prestige of real-thing French champagne. As other French wines have suffered competition from New World rivals, French champagne production has grown, reaching 357 million bottles last year.
Smaller houses, however, are more cautious. Marie-Paul Cheval-Gatinois, whose family has been in the business for 11 generations, has expressed concern that the "new" champagne retain the drink's exceptional quality.
In recent years producers have gradually expanded their planted area and currently grow pinot noir and chardonnay grapes for champagne on more than 32,000 hectares, according to the Champagne Growers Committee.
"We cannot expand much farther as it is," Mr. Lorson said.
The researchers' findings remain confidential. Mr. Champion said only that any newly approved territory would be adjacent to existing champagne land.
Global warming, which has already shaken up the wine industry worldwide, is also complicating the researchers' lives. As they investigate new territory, they have to project what the climate could be in another generation or more.
Champagne producers have long pushed for more space. Plots are squeezed together, with vines of Moët and Chandon pinot noir facing off less than a metre away from the competing grapes of Veuve Clicquot.
If the plan is approved, the INAO would start parcelling out new plots in 2009. The new champagne would need to meet strict quality controls before it could be marketed.
That may take a long time. A previous effort to revise champagne territory delineations, launched in 1951, took 25 years.
Emerging markets put a fizz into sales
$5.5-BILLION
Value of 2006 global champagne sales.
287 MILLION
Bottles of champagne sold
globally in 2002.
321 MILLION
Global sales in 2006
350 MILLION
Projected maximum number of bottles that could be produced from the current Champagne
region.
39%
Growth in 2006 sales
of champagne to Russia.
50%
Growth in 2006 champagne sales to China.
129%
Growth in 2006 champagne sales to India.
France's agency in charge of food and drink quality is looking into expanding the strictly defined area where champagne is made, amid growing global demand for its prestigious bubbles - in an industry with €4.1-billion ($5.5-billion) in sales last year.
"Production is reaching a limit," said Daniel Lorson of the Champagne Growers Committee. "We are almost entirely covered in vines."
Like everything involving France's treasured "terroir," or wine-growing areas, such a move will require extensive study and probably involve dragged-out debate. If the expansion plan gets the go-ahead, it will likely be 2015 before new champagne hits the supermarket shelves, Mr. Lorson said.
But a group of government-commissioned researchers has already taken the first step.
For 18 months, a group comprising a geographer, historian, geologist, agricultural engineer and plant biologist prodded soil in potential new champagne zones, questioned vintners and sampled their wares.
Last month, it submitted a report to the National Institute for Origin and Quality, or INAO, said Eric Champion, the institute's representative in the Champagne region. In February, the institute's national committee will decide whether - and by how much - to expand the authorized champagne territory.
Currently, that territory covers about 35,000 hectares - nearly six times the area of Manhattan - in the plains and rolling hills of eastern France. The area was determined by a 1927 law taking into account sun exposure, soil quality and groundwater levels. Only wine made from grapes grown within that territory can officially be called champagne.
Large champagne houses are enjoying booming demand from a growing class of nouveau riche in countries such as China and Russia, who are drawn by the prestige of real-thing French champagne. As other French wines have suffered competition from New World rivals, French champagne production has grown, reaching 357 million bottles last year.
Smaller houses, however, are more cautious. Marie-Paul Cheval-Gatinois, whose family has been in the business for 11 generations, has expressed concern that the "new" champagne retain the drink's exceptional quality.
In recent years producers have gradually expanded their planted area and currently grow pinot noir and chardonnay grapes for champagne on more than 32,000 hectares, according to the Champagne Growers Committee.
"We cannot expand much farther as it is," Mr. Lorson said.
The researchers' findings remain confidential. Mr. Champion said only that any newly approved territory would be adjacent to existing champagne land.
Global warming, which has already shaken up the wine industry worldwide, is also complicating the researchers' lives. As they investigate new territory, they have to project what the climate could be in another generation or more.
Champagne producers have long pushed for more space. Plots are squeezed together, with vines of Moët and Chandon pinot noir facing off less than a metre away from the competing grapes of Veuve Clicquot.
If the plan is approved, the INAO would start parcelling out new plots in 2009. The new champagne would need to meet strict quality controls before it could be marketed.
That may take a long time. A previous effort to revise champagne territory delineations, launched in 1951, took 25 years.
Emerging markets put a fizz into sales
$5.5-BILLION
Value of 2006 global champagne sales.
287 MILLION
Bottles of champagne sold
globally in 2002.
321 MILLION
Global sales in 2006
350 MILLION
Projected maximum number of bottles that could be produced from the current Champagne
region.
39%
Growth in 2006 sales
of champagne to Russia.
50%
Growth in 2006 champagne sales to China.
129%
Growth in 2006 champagne sales to India.
Saturday, November 3, 2007
How to make the high loonie work in your portfolio - LORI MCLEOD
The soaring loonie may be taking a big bite out of your portfolio of U.S. stocks, but instead of bringing it all home, investment advisers say you should consider bulking up on cheap American equities and greenbacks.
The Canadian currency is unlikely to stay at its current $1.07 (U.S.) in the long term, and patient investors could cash in when it declines.
“One of the things I'm looking at doing now… is simply moving Canadian money to the U.S.,” said Drew Abbott, vice-president and investment adviser at TD Waterhouse Private Investment Advice.
While it's a moving target, Mr. Abbott said he expects the loonie to settle in the 95 cent to $1 range within the next 18 months.
“Even if you put that into a U.S. money market fund earning 5 per cent, if the dollar comes back down from $1.07 to $1, that's a 12-per-cent return over a year. The major move's obviously been done. Whether we're timing it properly is impossible to tell, but that's one strategy.”
It's an encouraging piece of advice in what has been a tough market for investors who thought they were doing everything right by diversifying their investments. It's a trend that really started to take hold in Canada after the 30-per-cent foreign content limit on RRSPs was dropped in 2005 and a wealth of global investment products entered the market.
Now, as the dollar soars on the back of high oil prices, these careful investors have seen the value of their holdings drop in tandem with the U.S. dollar, and dramatically underperform the TSX.
What it all boils down to is a loonie that has defied expectations, climbing from 62 cents in the past five years, an increase of 70 per cent.
Rising oil prices, weakness in the U.S. and Canada's overall economic strength have combined to make the loonie the world's best-performing currency so far this year, up 7 per cent in the past month alone.
It's a mixed blessing for Canadians investing in other countries, who on the positive side can now purchase more stocks, real estate or U.S. dollars for their loonies. However, losing so much ground on currency losses while local stocks rise can be difficult to ignore.
“Some people get frustrated, especially those that chase the limelight and always want to be in the hottest sectors. They're the ones who look at their U.S. stocks and say ‘What have you done for me lately?'” said Murray Leith, director of research at Vancouver-based investment adviser Odlum Brown Ltd.
Forty per cent of Odlum Brown's equity holdings are outside of Canada, and their returns are taking a direct, currency-related hit as a result. Returns are in the 2- to 3-per-cent range so far this year, compared with 11 per cent for the Toronto Stock Exchange.
In some ways, those trying to chase the loonie aren't unlike technology investors late in the 1990s. In that boom Mr. Leith stuck it out with “boring, Old Economy” stocks he believed offered good value, to the dismay of some of his investors.
“For our clients, '99 was a tough year. We were up 20 per cent, but not the 33 per cent the TSX was up, and that frustrated some people.”
Then Odlum Brown slapped its first sell recommendation on Nortel in June of 2000, when it was trading at $75 a share. Telecom companies were spending freely despite their deteriorating businesses and horrible balance sheets, said Mr. Leith, who believed they would soon become unable to buy Nortel's equipment.
Yet before its infamous correction Nortel stock kept on climbing to $125 a share, taking some of Mr. Leith's hair along with it as he tugged it out in dismay.
However, sticking to his strategy has also protected his clients against downturns, buffering them when technology stocks eventually headed south.
Mr. Leith said he'll continue to look for U.S. stock deals while his loonies stay strong, and he is particularly interested in firms that cater to the aging population, such as health care companies.
One of the keys to investing well in this tumultuous market is to have patience and resist the urge to yank all of your funds back to Canada, said Irwin Michael, portfolio manager at ABC Funds.
“In the short run, you may be hurt by staying offshore or in the United States, but in the long run you'll do well with U.S. stocks. You can take your $1.06 or $1.07 and buy some pretty cheap stocks in the United States but you need staying power and patience, and a lot of people don't have that,” he said.
The Canadian dollar may not curb its run in the next few weeks or even years, and could even gain slightly in the short term, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc. In the very long term, however, the loonie will likely settle somewhere between the mid-80s to mid-90s depending on commodity prices, he said.
“Over the longer haul this is a golden opportunity to at the very least consider slightly increasing holdings in foreign securities. We've had an unbelievable run between the Canadian dollar and the TSX over the last five years, and I just cannot believe we're going to have another prolonged period like that of extreme outperformance,” Mr. Porter said.
For Michael Morrow, who runs a financial planning business in Thunder Bay, the value of diversification has only been hammered home by the loonie's rise. By choosing to invest in funds with strong managers, Mr. Morrow said he and his clients are buying years of “collective wisdom,” one benefit of which is that they were approximately 50 per cent hedged against the currency increase well before the loonie's recent flight.
“The safety net that I've built in is that we're very, very broadly diversified and putting our money with more than one portfolio manager,” he said.
The Canadian currency is unlikely to stay at its current $1.07 (U.S.) in the long term, and patient investors could cash in when it declines.
“One of the things I'm looking at doing now… is simply moving Canadian money to the U.S.,” said Drew Abbott, vice-president and investment adviser at TD Waterhouse Private Investment Advice.
While it's a moving target, Mr. Abbott said he expects the loonie to settle in the 95 cent to $1 range within the next 18 months.
“Even if you put that into a U.S. money market fund earning 5 per cent, if the dollar comes back down from $1.07 to $1, that's a 12-per-cent return over a year. The major move's obviously been done. Whether we're timing it properly is impossible to tell, but that's one strategy.”
It's an encouraging piece of advice in what has been a tough market for investors who thought they were doing everything right by diversifying their investments. It's a trend that really started to take hold in Canada after the 30-per-cent foreign content limit on RRSPs was dropped in 2005 and a wealth of global investment products entered the market.
Now, as the dollar soars on the back of high oil prices, these careful investors have seen the value of their holdings drop in tandem with the U.S. dollar, and dramatically underperform the TSX.
What it all boils down to is a loonie that has defied expectations, climbing from 62 cents in the past five years, an increase of 70 per cent.
Rising oil prices, weakness in the U.S. and Canada's overall economic strength have combined to make the loonie the world's best-performing currency so far this year, up 7 per cent in the past month alone.
It's a mixed blessing for Canadians investing in other countries, who on the positive side can now purchase more stocks, real estate or U.S. dollars for their loonies. However, losing so much ground on currency losses while local stocks rise can be difficult to ignore.
“Some people get frustrated, especially those that chase the limelight and always want to be in the hottest sectors. They're the ones who look at their U.S. stocks and say ‘What have you done for me lately?'” said Murray Leith, director of research at Vancouver-based investment adviser Odlum Brown Ltd.
Forty per cent of Odlum Brown's equity holdings are outside of Canada, and their returns are taking a direct, currency-related hit as a result. Returns are in the 2- to 3-per-cent range so far this year, compared with 11 per cent for the Toronto Stock Exchange.
In some ways, those trying to chase the loonie aren't unlike technology investors late in the 1990s. In that boom Mr. Leith stuck it out with “boring, Old Economy” stocks he believed offered good value, to the dismay of some of his investors.
“For our clients, '99 was a tough year. We were up 20 per cent, but not the 33 per cent the TSX was up, and that frustrated some people.”
Then Odlum Brown slapped its first sell recommendation on Nortel in June of 2000, when it was trading at $75 a share. Telecom companies were spending freely despite their deteriorating businesses and horrible balance sheets, said Mr. Leith, who believed they would soon become unable to buy Nortel's equipment.
Yet before its infamous correction Nortel stock kept on climbing to $125 a share, taking some of Mr. Leith's hair along with it as he tugged it out in dismay.
However, sticking to his strategy has also protected his clients against downturns, buffering them when technology stocks eventually headed south.
Mr. Leith said he'll continue to look for U.S. stock deals while his loonies stay strong, and he is particularly interested in firms that cater to the aging population, such as health care companies.
One of the keys to investing well in this tumultuous market is to have patience and resist the urge to yank all of your funds back to Canada, said Irwin Michael, portfolio manager at ABC Funds.
“In the short run, you may be hurt by staying offshore or in the United States, but in the long run you'll do well with U.S. stocks. You can take your $1.06 or $1.07 and buy some pretty cheap stocks in the United States but you need staying power and patience, and a lot of people don't have that,” he said.
The Canadian dollar may not curb its run in the next few weeks or even years, and could even gain slightly in the short term, said Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc. In the very long term, however, the loonie will likely settle somewhere between the mid-80s to mid-90s depending on commodity prices, he said.
“Over the longer haul this is a golden opportunity to at the very least consider slightly increasing holdings in foreign securities. We've had an unbelievable run between the Canadian dollar and the TSX over the last five years, and I just cannot believe we're going to have another prolonged period like that of extreme outperformance,” Mr. Porter said.
For Michael Morrow, who runs a financial planning business in Thunder Bay, the value of diversification has only been hammered home by the loonie's rise. By choosing to invest in funds with strong managers, Mr. Morrow said he and his clients are buying years of “collective wisdom,” one benefit of which is that they were approximately 50 per cent hedged against the currency increase well before the loonie's recent flight.
“The safety net that I've built in is that we're very, very broadly diversified and putting our money with more than one portfolio manager,” he said.
Stock websites offer benefits of collective wisdom - ROB CARRICK
The Internet-driven empowerment of investors has entered a new phase.
Let's call it co-operative investing and define it as investors offering up their own thoughts, ideas and stock picks and in return benefiting from the wisdom of others. This sort of online dialogue has existed for a while through Web-based discussion forums and blogs. Now, it's being broadened and refined in ways that help investors get good information and avoid the hot air and bluster that pollute cyberspace.
Three websites that exemplify that co-operative investing are part of the Portfolio Strategy column's latest roundup of useful online resources you should know about. A site with appeal to investors interested in global markets is included as well, as are sites that can help you track historical share prices. With the sale of BCE Inc. looming early next year, a lot of people will have to try to figure out how much they paid for their shares years ago.
A fixture on the Canadian online investing scene, the website Stockhouse.ca has set about relaunching itself in a way that exemplifies the co-operative investing theme. Stockhouse has long been a sort of investing vox populi through its BullBoards feature, which is an online discussion forum, and more recently through its directory of blogs maintained by site members. The newly rejigged Stockhouse builds on these features by helping users find the most useful content.
From its earliest days, the Internet has provided a means for investors to discuss their ideas and compare notes. But if you've used any of the major online investing discussion sites, you'll know that it's a bit like mining in that you have to churn up a lot of ground to locate a useful chunk of information.
One way to get an idea of what investors are saying about a particular stock is to use a directory called TheLion.com, which aggregates postings to all the major U.S. financial discussion forums. If you'd checked out the buzz on General Electric this week, you would have found a mix of intelligent debate about the impact of the low U.S. dollar on the company and an overheated digression about Iran, the United States and Israel.
Online discussions on any topic have a way of attracting people with nothing much to say but a burning need to be heard. Helping you avoid their musings and ranting is what Stockhouse is trying to do.
The new site is just coming out of its test stage, so it's not yet possible to say how effective it is at highlighting the smartest, most useful blogs and BullBoard postings. But you can see how Stockhouse is trying to maintain some quality control. BullBoard postings can be rated according to their clarity, credibility, usefulness and overall quality, while blogs can be evaluated according to the number of people who have listed them as favourites and offered up comments.
Stockhouse has also created a unique homepage with a graphic showing which stocks are the most actively discussed on the site. On any given day, most of the hot topics are stocks listed on the TSX Venture Exchange.
For another view on co-operative investing, check out a pair of U.S. sites called Covestor and Marketocracy. Both are based on the idea of having users disclose their own stock trades so they can be tracked by the community. They offer recognition to the gifted investing amateurs out there, while everyone else benefits from the ability to see what they're up to.
Both sites are not set up to allow users to anonymously soak up the best investing ideas without contributing anything back. The point is to get you to strut your stuff and then benefit from looking on as others do the same.
Covestor calls itself a "real-trade sharing service," which in practical terms means you'll set up a portfolio of stocks and allow the returns to be monitored in a way that measures them in a professional sort of way using recognized benchmarks. Covestor actually vets aspiring members by requiring a copy of their account statement (you send it through a secure link). Only if you're accepted into the community do you get to set up a username and password that lets you into the site.
Once you're in and have your own portfolio online, you can view the holdings of top-performing portfolios and look at their returns against a variety of stock indexes. You can also view the most widely held and best-performing stocks in Covestor portfolios.
Marketocracy is set up almost like a farm system for a family of mutual funds run under the same name. If the returns from the portfolio you maintain on the site are stellar, they get included in the site's m100 index, which is an aggregate of the top 100 portfolios on the site. The m100 index is in turn used to help run the Marketocracy Masters 100 mutual fund, which is available to U.S. investors and has outperformed the S&P 500 over the past five years.
Marketocracy claims to have recruited 55,000 people to manage virtual accounts, but you can't get detailed information on the stocks they're trading unless you pay for the premium service at $180 (U.S.) a year.
Covestor and Marketocracy are great generators of investing ideas in the U.S. market. For global markets, try Site-by-Site, which describes itself as an international investment portal and research centre. Site-By-Site has been around since the early days of the Internet, and looks its age. But with interest in global investing on the rise, it's a website whose time has come.
Pick a country and then use Site-By-Site to find links to its stock exchange, its central bank and sources of information on business and economic news, facts and figures. Whether you're interested in the Indian stock market or the latest on the Riga Stock Exchange in Latvia, this website will get you what you need a lot faster than playing around with the usual Internet search engines.
Site-By-Site is also useful if you're on prowl for foreign companies that you can by as American depositary receipts, which are basically a special class of shares issued on a U.S. exchange by a company located in another country. It also links you to good sources of data on closed-end funds, which are basically mutual funds that trade like stocks.
The takeover of BCE won't be completed until next year, but it's already highlighting the need investors periodically have to look up historical share prices for tax reasons. If you want to know how much of a capital gain or loss to report, you need to know your purchase price.
A new generation of online stock charts has greatly simplified the process of looking up historical stock prices. Just create a price chart for a stock you're interested in, ease your cursor along the line showing price movements and watch a pop-up box display the day-by-day open, high, low and closing prices.
Let's say you bought some BCE shares five years ago and need to obtain the purchase price. Just go to Globeinvestor.com, call up a quote for BCE and then click on the "chart" link. Click again where it says "interactive chart" in the upper left corner of the screen, and then adjust the time frame for your chart to five years. If you move your cursor to the far left of the chart, you'll find that BCE shares closed at $27.24 for the trading week ending Friday, Nov. 1.
Yahoo Finance offers interactive stock charts as well, as does Google Finance. If you need a historical price on a particular day, go to the historical charts section of BigCharts.com. For Canadian stocks, type CA: in front of the symbol, as in CA:T.
Let's call it co-operative investing and define it as investors offering up their own thoughts, ideas and stock picks and in return benefiting from the wisdom of others. This sort of online dialogue has existed for a while through Web-based discussion forums and blogs. Now, it's being broadened and refined in ways that help investors get good information and avoid the hot air and bluster that pollute cyberspace.
Three websites that exemplify that co-operative investing are part of the Portfolio Strategy column's latest roundup of useful online resources you should know about. A site with appeal to investors interested in global markets is included as well, as are sites that can help you track historical share prices. With the sale of BCE Inc. looming early next year, a lot of people will have to try to figure out how much they paid for their shares years ago.
A fixture on the Canadian online investing scene, the website Stockhouse.ca has set about relaunching itself in a way that exemplifies the co-operative investing theme. Stockhouse has long been a sort of investing vox populi through its BullBoards feature, which is an online discussion forum, and more recently through its directory of blogs maintained by site members. The newly rejigged Stockhouse builds on these features by helping users find the most useful content.
From its earliest days, the Internet has provided a means for investors to discuss their ideas and compare notes. But if you've used any of the major online investing discussion sites, you'll know that it's a bit like mining in that you have to churn up a lot of ground to locate a useful chunk of information.
One way to get an idea of what investors are saying about a particular stock is to use a directory called TheLion.com, which aggregates postings to all the major U.S. financial discussion forums. If you'd checked out the buzz on General Electric this week, you would have found a mix of intelligent debate about the impact of the low U.S. dollar on the company and an overheated digression about Iran, the United States and Israel.
Online discussions on any topic have a way of attracting people with nothing much to say but a burning need to be heard. Helping you avoid their musings and ranting is what Stockhouse is trying to do.
The new site is just coming out of its test stage, so it's not yet possible to say how effective it is at highlighting the smartest, most useful blogs and BullBoard postings. But you can see how Stockhouse is trying to maintain some quality control. BullBoard postings can be rated according to their clarity, credibility, usefulness and overall quality, while blogs can be evaluated according to the number of people who have listed them as favourites and offered up comments.
Stockhouse has also created a unique homepage with a graphic showing which stocks are the most actively discussed on the site. On any given day, most of the hot topics are stocks listed on the TSX Venture Exchange.
For another view on co-operative investing, check out a pair of U.S. sites called Covestor and Marketocracy. Both are based on the idea of having users disclose their own stock trades so they can be tracked by the community. They offer recognition to the gifted investing amateurs out there, while everyone else benefits from the ability to see what they're up to.
Both sites are not set up to allow users to anonymously soak up the best investing ideas without contributing anything back. The point is to get you to strut your stuff and then benefit from looking on as others do the same.
Covestor calls itself a "real-trade sharing service," which in practical terms means you'll set up a portfolio of stocks and allow the returns to be monitored in a way that measures them in a professional sort of way using recognized benchmarks. Covestor actually vets aspiring members by requiring a copy of their account statement (you send it through a secure link). Only if you're accepted into the community do you get to set up a username and password that lets you into the site.
Once you're in and have your own portfolio online, you can view the holdings of top-performing portfolios and look at their returns against a variety of stock indexes. You can also view the most widely held and best-performing stocks in Covestor portfolios.
Marketocracy is set up almost like a farm system for a family of mutual funds run under the same name. If the returns from the portfolio you maintain on the site are stellar, they get included in the site's m100 index, which is an aggregate of the top 100 portfolios on the site. The m100 index is in turn used to help run the Marketocracy Masters 100 mutual fund, which is available to U.S. investors and has outperformed the S&P 500 over the past five years.
Marketocracy claims to have recruited 55,000 people to manage virtual accounts, but you can't get detailed information on the stocks they're trading unless you pay for the premium service at $180 (U.S.) a year.
Covestor and Marketocracy are great generators of investing ideas in the U.S. market. For global markets, try Site-by-Site, which describes itself as an international investment portal and research centre. Site-By-Site has been around since the early days of the Internet, and looks its age. But with interest in global investing on the rise, it's a website whose time has come.
Pick a country and then use Site-By-Site to find links to its stock exchange, its central bank and sources of information on business and economic news, facts and figures. Whether you're interested in the Indian stock market or the latest on the Riga Stock Exchange in Latvia, this website will get you what you need a lot faster than playing around with the usual Internet search engines.
Site-By-Site is also useful if you're on prowl for foreign companies that you can by as American depositary receipts, which are basically a special class of shares issued on a U.S. exchange by a company located in another country. It also links you to good sources of data on closed-end funds, which are basically mutual funds that trade like stocks.
The takeover of BCE won't be completed until next year, but it's already highlighting the need investors periodically have to look up historical share prices for tax reasons. If you want to know how much of a capital gain or loss to report, you need to know your purchase price.
A new generation of online stock charts has greatly simplified the process of looking up historical stock prices. Just create a price chart for a stock you're interested in, ease your cursor along the line showing price movements and watch a pop-up box display the day-by-day open, high, low and closing prices.
Let's say you bought some BCE shares five years ago and need to obtain the purchase price. Just go to Globeinvestor.com, call up a quote for BCE and then click on the "chart" link. Click again where it says "interactive chart" in the upper left corner of the screen, and then adjust the time frame for your chart to five years. If you move your cursor to the far left of the chart, you'll find that BCE shares closed at $27.24 for the trading week ending Friday, Nov. 1.
Yahoo Finance offers interactive stock charts as well, as does Google Finance. If you need a historical price on a particular day, go to the historical charts section of BigCharts.com. For Canadian stocks, type CA: in front of the symbol, as in CA:T.
Thursday, November 1, 2007
The key to Web research: knowing what to ignore - GAVIN ADAMSON
Canadian investors building or fine-tuning their portfolios need to find ways to choose from between more than 1,000 stocks on this side of the border and about 9,000 in the United States.
There's a lot written about every one of those companies, and that's not even counting the mutual funds investors might choose, says Dan Hallett, president of the independent financial analyst Dan Hallett & Associates Inc.
"I think the key, really, for online research is knowing what not to pay attention to," adds Mr. Hallett, who is based in Windsor, Ont.
Generally, he describes a process that ends with picking a security and transferring cash to your online brokerage to make the trade.
The process includes identifying an investment needed in a portfolio that you have constructed to meet a specific goal and then finding the exact product (such as a single security or a fund) to meet your needs and tastes - and at the right price.
"If somebody wants to have a diversified portfolio they won't find overseas stocks that they can buy online," says Mr. Hallett, who is a chartered financial analyst.
"To get good foreign exposure, you pretty much have to go to a fund."
Some of the strongest research is available on Internet brokerages' websites - some for free, some at additional costs.
Beyond those domains, you can do your basic homework on free websites that focus on investor education, and then progress to analytics on specific stocks and mutual funds on websites, which usually incur a fee.
Getting the basics
A couple of basic sites will help you determine what type of investor you are, clarify your goals, and focus on what general investments you should be looking for.
If you're in your mid-40s and using your online brokerage account to supplement retirement savings, for example, your approach will be different from that of a 25-year-old who is aggressively trading stocks to make a quick cash killing.
Provincial regulators
On their websites, every provincial securities regulator offers quizzes, downloadable booklets and PDFs loaded with investment information, but some sites are better than others. The sites of both the Alberta (http://www.albertasecurities.com/Investors) and Ontario securities commissions (http://www.investored.ca) have updated their sites recently, while Quebec's Autorité des marchés financiers (http://www.lautorite.qc.ca) offers booklets on understanding investments.
SEDAR
Another free website is SEDAR.com (the acronym stands for the System for Electronic Document Analysis and Retrieval), which Mr. Hallett describes as the cornerstone of his Canadian stock and mutual fund research.
The site provides most public securities documents and information filed by public companies and investment funds with all of the provincial regulators for the past 10 years
"Pretty much any time I'm doing research on a fund or a stock, I'm on SEDAR," Mr. Hallett says.
One of SEDAR's purposes is to disclose publicly to investors all of the latest securities information, so the language in all the documents is standardized and relatively easy to read - something that can be hard to come by in the securities industry, Mr. Hallett notes.
Honing your skills
Your online brokerage
Every online brokerage offers a research suite with portfolio-building tools to help you narrow your search for investments. E*Trade, for example, offers a portfolio optimizer that takes investors through a quiz to determine their risk tolerance and invested time horizon. "It helps them decide how their portfolio should be weighted," says Duncan Hannay, president of E*Trade Canada in Toronto.
To help you in your research, every firm offers analytics, tools for comparing stocks and mutual funds, plus its own spin on matters. Royal Bank's Royal Direct offers daily comments from its own equities analysts, for example. E*Trade, which isn't owned by a bank with its own analysts, offers Canadian and U.S. research from such third-party providers as BNY JayWalk, Sabrient Systems and Rochdale Research.
StockChase
This graphically stripped down, basic website (http://www.stockchase.com) offers ratings from Canadian analysts and mutual fund managers based on what they say publicly about various large-cap and small-cap securities. You can search for equities by their names, or by analyst or mutual fund manager. The site makes no pretensions about its limited purpose as "one of the investing tools in your arsenal for wise investing in the stock market," as its disclaimer reads. StockChase reports only on what is discussed by individuals who appear on business television shows, mainly on Business News Network.
Morningstar
Most Canadian investors will know the site www.morningstar.ca in relation to the mutual fund industry, but its Chicago-based U.S. parent, www.morningstar.com, also offers U.S. stock research analysis for about $125 a year.
"That's pretty reasonable," notes Mr. Hallett. You'll find some Canadian company stocks listed on U.S. exchanges. "[The American site] offers the same analysis that they started with on the mutual fund side," he says. The U.S. site offers filters as well as analytical reports, "so you've got some qualitative coverage," he adds.
For-fee sites
Investors will find that many sites such as Yahoo Finance (finance.yahoo.com) and Thestreet.com, deliver a fair amount of original, free content and analysis, but you'll pay upward of $10 (U.S.) and as high as $300 for individual research reports on specific stocks. A complete subscriber service on Thestreet.com costs about $400, for example. Investors might find better value in some of the free insight pieces at Thestreet.com's "university section," which details the basics of value fund management, a lower risk stock-picking strategy.
Fine tuning
Jennings Capital Inc. provides a rare website (http://www.jenningscapital.com) that offers free equity research on about 200 Canadian stocks. Jennings Capital is a Calgary-based independent firm that invests in oil and gas and mining sectors, as you might guess, but also some consumer retail and technology and biotechnology companies. Ten analysts make buy-and-sell recommendations on the stocks for Jennings, and you can access all of their reports online. Limited in scope, but free.
There's a lot written about every one of those companies, and that's not even counting the mutual funds investors might choose, says Dan Hallett, president of the independent financial analyst Dan Hallett & Associates Inc.
"I think the key, really, for online research is knowing what not to pay attention to," adds Mr. Hallett, who is based in Windsor, Ont.
Generally, he describes a process that ends with picking a security and transferring cash to your online brokerage to make the trade.
The process includes identifying an investment needed in a portfolio that you have constructed to meet a specific goal and then finding the exact product (such as a single security or a fund) to meet your needs and tastes - and at the right price.
"If somebody wants to have a diversified portfolio they won't find overseas stocks that they can buy online," says Mr. Hallett, who is a chartered financial analyst.
"To get good foreign exposure, you pretty much have to go to a fund."
Some of the strongest research is available on Internet brokerages' websites - some for free, some at additional costs.
Beyond those domains, you can do your basic homework on free websites that focus on investor education, and then progress to analytics on specific stocks and mutual funds on websites, which usually incur a fee.
Getting the basics
A couple of basic sites will help you determine what type of investor you are, clarify your goals, and focus on what general investments you should be looking for.
If you're in your mid-40s and using your online brokerage account to supplement retirement savings, for example, your approach will be different from that of a 25-year-old who is aggressively trading stocks to make a quick cash killing.
Provincial regulators
On their websites, every provincial securities regulator offers quizzes, downloadable booklets and PDFs loaded with investment information, but some sites are better than others. The sites of both the Alberta (http://www.albertasecurities.com/Investors) and Ontario securities commissions (http://www.investored.ca) have updated their sites recently, while Quebec's Autorité des marchés financiers (http://www.lautorite.qc.ca) offers booklets on understanding investments.
SEDAR
Another free website is SEDAR.com (the acronym stands for the System for Electronic Document Analysis and Retrieval), which Mr. Hallett describes as the cornerstone of his Canadian stock and mutual fund research.
The site provides most public securities documents and information filed by public companies and investment funds with all of the provincial regulators for the past 10 years
"Pretty much any time I'm doing research on a fund or a stock, I'm on SEDAR," Mr. Hallett says.
One of SEDAR's purposes is to disclose publicly to investors all of the latest securities information, so the language in all the documents is standardized and relatively easy to read - something that can be hard to come by in the securities industry, Mr. Hallett notes.
Honing your skills
Your online brokerage
Every online brokerage offers a research suite with portfolio-building tools to help you narrow your search for investments. E*Trade, for example, offers a portfolio optimizer that takes investors through a quiz to determine their risk tolerance and invested time horizon. "It helps them decide how their portfolio should be weighted," says Duncan Hannay, president of E*Trade Canada in Toronto.
To help you in your research, every firm offers analytics, tools for comparing stocks and mutual funds, plus its own spin on matters. Royal Bank's Royal Direct offers daily comments from its own equities analysts, for example. E*Trade, which isn't owned by a bank with its own analysts, offers Canadian and U.S. research from such third-party providers as BNY JayWalk, Sabrient Systems and Rochdale Research.
StockChase
This graphically stripped down, basic website (http://www.stockchase.com) offers ratings from Canadian analysts and mutual fund managers based on what they say publicly about various large-cap and small-cap securities. You can search for equities by their names, or by analyst or mutual fund manager. The site makes no pretensions about its limited purpose as "one of the investing tools in your arsenal for wise investing in the stock market," as its disclaimer reads. StockChase reports only on what is discussed by individuals who appear on business television shows, mainly on Business News Network.
Morningstar
Most Canadian investors will know the site www.morningstar.ca in relation to the mutual fund industry, but its Chicago-based U.S. parent, www.morningstar.com, also offers U.S. stock research analysis for about $125 a year.
"That's pretty reasonable," notes Mr. Hallett. You'll find some Canadian company stocks listed on U.S. exchanges. "[The American site] offers the same analysis that they started with on the mutual fund side," he says. The U.S. site offers filters as well as analytical reports, "so you've got some qualitative coverage," he adds.
For-fee sites
Investors will find that many sites such as Yahoo Finance (finance.yahoo.com) and Thestreet.com, deliver a fair amount of original, free content and analysis, but you'll pay upward of $10 (U.S.) and as high as $300 for individual research reports on specific stocks. A complete subscriber service on Thestreet.com costs about $400, for example. Investors might find better value in some of the free insight pieces at Thestreet.com's "university section," which details the basics of value fund management, a lower risk stock-picking strategy.
Fine tuning
Jennings Capital Inc. provides a rare website (http://www.jenningscapital.com) that offers free equity research on about 200 Canadian stocks. Jennings Capital is a Calgary-based independent firm that invests in oil and gas and mining sectors, as you might guess, but also some consumer retail and technology and biotechnology companies. Ten analysts make buy-and-sell recommendations on the stocks for Jennings, and you can access all of their reports online. Limited in scope, but free.
Friday, October 26, 2007
Analyst Test-Takers Anciously Awaits Results - Lynn Cowan
For months, they alternately ache for it and dread it. They shake. They lose sleep.
Methamphetamine addicts? Hardly. It is the thousands of people who take the Chartered Financial Analyst exams, a multi-year series of financial industry tests that require nearly a whole summer of waiting after each exam for the results, creating a nerve-wracking period of limbo right now after a grueling year of studying.
"I didn't pick up a fiction book for three years," recalls Beth Hamilton-Keen, an investment counselor at CIBC Private Wealth Management in Calgary, Canada, of her time cramming for the three required CFA exams in the late 1990s. "When you work a twelve-hour day, then you have to fit it into your nights and weekends. Taking long plane rides helps a lot. You can't do anything else on a plane."
Ask any academic, analyst or portfolio manager awaiting the CFA results, and they will tell you: The wait for results is almost as bad as the test itself, which quizzes participants on everything from accounting to ethics.
The tests, administered by the non-profit CFA Institute in the U.S., are given worldwide in 89 countries on the same day in early June. Results come out in late July for people who took the first-year test level, and later in August for the following two test levels. CFA candidates are currently in the thick of the waiting period, mulling over the questions they think they flubbed.
There has even been a liquor commercial made about it: In a reality spot that was aired in South Africa last year, Bells Scotch Whiskey's cameras followed equity analyst Johan de Bruijn as he logged on to a computer to find out if he had passed the final level of the exam. The 28-year-old Cape Town resident, who hadn't slept the night before, jumped out of his chair and screamed when he found out he had passed.
"I've made it!" he bellowed as the logo for Bell's whiskey appeared. "Ah, I'm shivering!"
Bruijn recalls that day, nearly a year later. "I was shivering because I was so relieved. It was more like shaking," he said. Immediately after the commercial was filmed, he went to his office and told everyone there he had completed the third level.
"There is huge pressure on the candidate to pass, especially from colleagues, some of whom have already received their charter," he said.
Where Exams Outnumber Residents
While CFA exams takers may know how to evaluate the trickiest equity derivatives, few claim to understand the long wait required before they receive their results. The answer lies in Charlottesville, Va., population 40,000, home to the CFA Institute, which changed its name from the Association for Investment Management and Research in May.
From June 5, when the exam was given this year, until late August, when the final grades are reported, the institute does little else besides organize, grade and double-check grades on the 83,000 exam booklets that CFA candidates filled out. While the first-year level of the test is a multiple-choice exam that can be machine-graded - and thus delivered to those exam takers about a month earlier - the final two years' exams include essay questions that must be read and evaluated by hand.
The initial grading process takes place over a two-week period in which 750 people who already hold CFA designations descend upon Charlottesville, located at the foothills of the Blue Ridge Mountains about 70 miles northwest of Virginia's state capital of Richmond. The influx of people fills seven area hotels and generates an estimated $1 million in revenue for the local economy.
An entire high school is taken over for the grading process, its library shelves cleared out and turned into a massive storage area for exams in various stages of grading. Test graders are assigned to teams of 20, who focus on one exam question at a time, and their efforts are tracked and bar-coded by a group of temporary workers. The graders, who are flown in from 30 countries and fed two meals a day in the school cafeteria, emerge at the end of each day blinking in the sunlight, and board shuttle buses that take them back and forth between their hotels and the high school.
A mix of academics, retirees and active money managers and analysts, many CFA holders use their vacation time to grade the tests, receiving a stipend of $300 a day. Most, like CIBC's Hamilton-Keen, think the conference helps them network and stay abreast of new trends in the investment management industry.
The test-grading process also reminds them of the intensity of the exams. It takes an average of four years to complete all the exams, all of it self-study using textbooks. Of the 83,284 who enrolled for the exams in 2004, only a little more than half can expect to pass. About 25% never even show up for their tests after getting a gander at the study guides. Nearly 80% of the people who enroll in the program never get a CFA designation.
Jim Galloway, who taught finance and investment courses at the Rochester Institute of Technology in upstate New York, said decades ago when he was preparing for the exams, fellow faculty members would sit for the test at a location outside of Rochester, to avoid taking it at the same site as their graduate students. Their fear: A student would ask how they did later, and they would have to admit they flunked.
"I would have had no confidence at all if I hadn't passed," said Galloway, who has been grading tests for 21 years.
"I Didn't Study...But I Had To Show Up"
After Galloway and his fellow charter holders complete the two-week initial grading process, the test grades are re-checked, tallied and re-checked some more. When the process is over, the results are posted online.
In some circles, particularly outside the U.S., holding a CFA is considered more important than where a prospective job candidate attended college, and carries more cachet than advanced degrees like a master's in business administration. In the U.S., the only way a Wall Street analyst can bypass taking the practical knowledge portion of a new mandated exam by next April is if he or she has passed the first two levels of the CFA.
The CFA exams have been taken by Securities and Exchange Commission Chairman William Donaldson, Goldman Sachs Group Inc. (GS) investment strategist Abby Joseph Cohen, famed asset manager Mario Gabelli, Nobel prize-winning economist Robert C. Merton and Sir John Templeton.
It has also been taken by a few lesser-knowns, including one candidate who scrawled on his booklet, "I didn't study for this exam, but my boss is sitting behind me so I had to show up" before doodling pages of nonsense for hours in the exam room, waiting for the day to end. Yet another wrote in his book, "What I'd rather have been doing today was golfing," and proceeded to fill his booklet with a description of the various holes of his favorite course.
Those who have failed must try, try again, as was the case for CFA Institute President and Chief Executive Tom Bowman, who flubbed his first attempt at the first level in the 1970s because he was so confident he would pass without studying. Bowman isn't alone; it takes the average successful candidate four exam sittings to earn a CFA.
"I had been managing money for five or six years," and thought there couldn't possibly be any unknowns on the exam, said Bowman. "I opened the study guide about a week before they exam and said, "There's no way I'm going to be able to do this." Sure enough, I failed. At the time, I almost wished I never opened the study guide."
Methamphetamine addicts? Hardly. It is the thousands of people who take the Chartered Financial Analyst exams, a multi-year series of financial industry tests that require nearly a whole summer of waiting after each exam for the results, creating a nerve-wracking period of limbo right now after a grueling year of studying.
"I didn't pick up a fiction book for three years," recalls Beth Hamilton-Keen, an investment counselor at CIBC Private Wealth Management in Calgary, Canada, of her time cramming for the three required CFA exams in the late 1990s. "When you work a twelve-hour day, then you have to fit it into your nights and weekends. Taking long plane rides helps a lot. You can't do anything else on a plane."
Ask any academic, analyst or portfolio manager awaiting the CFA results, and they will tell you: The wait for results is almost as bad as the test itself, which quizzes participants on everything from accounting to ethics.
The tests, administered by the non-profit CFA Institute in the U.S., are given worldwide in 89 countries on the same day in early June. Results come out in late July for people who took the first-year test level, and later in August for the following two test levels. CFA candidates are currently in the thick of the waiting period, mulling over the questions they think they flubbed.
There has even been a liquor commercial made about it: In a reality spot that was aired in South Africa last year, Bells Scotch Whiskey's cameras followed equity analyst Johan de Bruijn as he logged on to a computer to find out if he had passed the final level of the exam. The 28-year-old Cape Town resident, who hadn't slept the night before, jumped out of his chair and screamed when he found out he had passed.
"I've made it!" he bellowed as the logo for Bell's whiskey appeared. "Ah, I'm shivering!"
Bruijn recalls that day, nearly a year later. "I was shivering because I was so relieved. It was more like shaking," he said. Immediately after the commercial was filmed, he went to his office and told everyone there he had completed the third level.
"There is huge pressure on the candidate to pass, especially from colleagues, some of whom have already received their charter," he said.
Where Exams Outnumber Residents
While CFA exams takers may know how to evaluate the trickiest equity derivatives, few claim to understand the long wait required before they receive their results. The answer lies in Charlottesville, Va., population 40,000, home to the CFA Institute, which changed its name from the Association for Investment Management and Research in May.
From June 5, when the exam was given this year, until late August, when the final grades are reported, the institute does little else besides organize, grade and double-check grades on the 83,000 exam booklets that CFA candidates filled out. While the first-year level of the test is a multiple-choice exam that can be machine-graded - and thus delivered to those exam takers about a month earlier - the final two years' exams include essay questions that must be read and evaluated by hand.
The initial grading process takes place over a two-week period in which 750 people who already hold CFA designations descend upon Charlottesville, located at the foothills of the Blue Ridge Mountains about 70 miles northwest of Virginia's state capital of Richmond. The influx of people fills seven area hotels and generates an estimated $1 million in revenue for the local economy.
An entire high school is taken over for the grading process, its library shelves cleared out and turned into a massive storage area for exams in various stages of grading. Test graders are assigned to teams of 20, who focus on one exam question at a time, and their efforts are tracked and bar-coded by a group of temporary workers. The graders, who are flown in from 30 countries and fed two meals a day in the school cafeteria, emerge at the end of each day blinking in the sunlight, and board shuttle buses that take them back and forth between their hotels and the high school.
A mix of academics, retirees and active money managers and analysts, many CFA holders use their vacation time to grade the tests, receiving a stipend of $300 a day. Most, like CIBC's Hamilton-Keen, think the conference helps them network and stay abreast of new trends in the investment management industry.
The test-grading process also reminds them of the intensity of the exams. It takes an average of four years to complete all the exams, all of it self-study using textbooks. Of the 83,284 who enrolled for the exams in 2004, only a little more than half can expect to pass. About 25% never even show up for their tests after getting a gander at the study guides. Nearly 80% of the people who enroll in the program never get a CFA designation.
Jim Galloway, who taught finance and investment courses at the Rochester Institute of Technology in upstate New York, said decades ago when he was preparing for the exams, fellow faculty members would sit for the test at a location outside of Rochester, to avoid taking it at the same site as their graduate students. Their fear: A student would ask how they did later, and they would have to admit they flunked.
"I would have had no confidence at all if I hadn't passed," said Galloway, who has been grading tests for 21 years.
"I Didn't Study...But I Had To Show Up"
After Galloway and his fellow charter holders complete the two-week initial grading process, the test grades are re-checked, tallied and re-checked some more. When the process is over, the results are posted online.
In some circles, particularly outside the U.S., holding a CFA is considered more important than where a prospective job candidate attended college, and carries more cachet than advanced degrees like a master's in business administration. In the U.S., the only way a Wall Street analyst can bypass taking the practical knowledge portion of a new mandated exam by next April is if he or she has passed the first two levels of the CFA.
The CFA exams have been taken by Securities and Exchange Commission Chairman William Donaldson, Goldman Sachs Group Inc. (GS) investment strategist Abby Joseph Cohen, famed asset manager Mario Gabelli, Nobel prize-winning economist Robert C. Merton and Sir John Templeton.
It has also been taken by a few lesser-knowns, including one candidate who scrawled on his booklet, "I didn't study for this exam, but my boss is sitting behind me so I had to show up" before doodling pages of nonsense for hours in the exam room, waiting for the day to end. Yet another wrote in his book, "What I'd rather have been doing today was golfing," and proceeded to fill his booklet with a description of the various holes of his favorite course.
Those who have failed must try, try again, as was the case for CFA Institute President and Chief Executive Tom Bowman, who flubbed his first attempt at the first level in the 1970s because he was so confident he would pass without studying. Bowman isn't alone; it takes the average successful candidate four exam sittings to earn a CFA.
"I had been managing money for five or six years," and thought there couldn't possibly be any unknowns on the exam, said Bowman. "I opened the study guide about a week before they exam and said, "There's no way I'm going to be able to do this." Sure enough, I failed. At the time, I almost wished I never opened the study guide."
The Toast of Roasts - Bryn Nelson
When the auction began on the afternoon of May 29, six cartels had set their sights on 500 pounds of an almost mythical Panamanian product. For eight hours, they bid and counterbid online, with one determined group lodging a total of 27 separate offers—all in vain. After a frenzied tit-for-tat between the final two contenders, the price for the juggernaut known as La Esmeralda Special steamrolled past the record set the year before, fetching an astonishing $130 per pound. The winning bid was more than 11 times the price of the auction’s next-highest-earning coffee bean.
Yes, coffee beans.
Anything described as “explosively floral on the palate” by the Specialty Coffee Association of America might be expected to attract a certain amount of attention, especially after being named the world’s best coffee by the association for three years running. A judge from Kansas City scored it a perfect 100 in this year’s Best of Panama competition. A Seattle coffee executive blogged that “its aroma practically sings to you from between endless rows of other exemplary coffees.” A New York barista dubbed it the “undisputed heavyweight champion of coffee.”
La Esmeralda Special is all the more remarkable given that, a decade ago, the spindly trees that produced the beans were little more than windbreaks owned by the family of a prominent American banker. But while the hefty price may be a curiosity, Esmeralda’s popularity signals a broader shift in an industry where quantity, not quality, has long reigned supreme. In a post-Starbucks world, specialty coffee has become a hot commodity, and La Esmeralda Special is far from alone in the upper echelons.
“I think we’re seeing a fundamental shift in the coffee industry in terms of making coffee much more of a personal and exciting beverage than it ever has been,” says Susie Spindler, executive director of the Alliance for Coffee Excellence, an organization in Missoula, Montana, that runs the Cup of Excellence competitions and online auctions in eight countries.
The most recent rush of excitement has been over a roasted bean variety called Geisha. Originally from Ethiopia, the relatively low-yielding but disease-resistant Geisha trees were transplanted to Central America in the 1950s. They were soon yanked from coffee farms, however, as the market shifted to mass production in response to exploding demand.
In 1964, Swedish-born Rudolph Peterson, then chief executive of Bank of America, bought Hacienda La Esmeralda, a dairy and beef farm in Panama’s Chiriqui highlands. The property was eventually passed on to his son Price, who in 1996 expanded the family’s holdings, buying a nearby farm with a “mish-mash” of coffee trees on its upper reaches, according to Price’s son Daniel. Almost immediately, the family could smell and taste something special in the cups of coffee produced from the farm’s beans.
When they isolated the taller Geishas and planted more at a slightly higher altitude for the 2003 to 2004 season, the coffee really blossomed, Daniel says. In 2004, La Esmeralda Special swept the intense Best of Panama and Rainforest Alliance cupping competitions—at which the few dozen entrants with the best aroma, sweetness, mouthfeel, flavor, aftertaste, and balance are identified—and set the first of its auction records with an online price of $21 a pound. “This is a flavor that had not been found in the Americas,” Daniel says. It can now be found at high-end online retailers and some of the best coffeehouses in the U.S. and Canada.
At a basic level, industry insiders are increasingly defining well-regarded specialty coffees by what they are not: blended or—Sacre bleu!—French roasted. Jeff Taylor, co-owner of PT’s Coffee Roasting Co., in Topeka, Kansas, says top buyers, wholesalers, and retailers are more interested in single-origin coffees and lighter roasts that highlight a bean’s best features.
Like a vineyard’s grand reserve wine, the finest coffee beans are often found in microlots, or small subsets of farms like Hacienda La Esmeralda, where, as Taylor puts it, “all of the stars align.” In the partial shade of the higher-elevation lot, Esmeralda’s Geisha trees may not be models of productivity, but the slower cycles let them pack more sugars and oils into their beans and turn heads in coffee competitions.
Coffee enthusiasts also make comparisons with the wine industry’s success in marketing nuanced vintages; some boast that chemists have identified about 850 natural compounds contributing to the flavor of roasted coffee—many more than in a classic Bordeaux. An Ethiopian coffee called Biloya Selection One is acclaimed by PT’s Coffee for its “syrupy pineapple sweetness that’s supported with deep blueberry overtones,” while an offering from Panama’s Bambito Estate is lauded by Groundwork Coffee Co., a Los Angeles firm, for its “juicy, apple-cider-like texture and sweetness that pairs decadently with tones of dark chocolate, pepper, and clove.”
On a leafy side street in New York’s Chelsea neighborhood, other discoveries are showcased at Café Grumpy, where cheerful baristas preside over steady sales of individually brewed, single-origin coffees and espressos. Coffeehouse co-owner Caroline Bell says she secured a bag of the prized Esmeralda beans before May’s recordbreaking auction, through a roaster who had a direct relationship with the farm. A 16-ounce cup of the famous java was the most expensive item on her August menu and, at $8, was far closer to what nearby restaurants were charging for a glass of pinot noir.
With its notes of Italian bergamot, orange rind, lavender, and jasmine, the coffee was worth every cent, according to Café Grumpy barista Jay Murdock. Customers apparently agreed, snapping up about 80 pounds of the café’s 100-pound allotment before Labor Day. (The café is saving the rest for the holidays.) Bell says that ultra-discriminating coffee drinkers are akin to those who shop at farmers markets: It’s the difference between buying waxy tomatoes in a supermarket and springing for a Brandywine heirloom cultivar. Or perhaps it’s the difference between the aroma of a boxed wine and the toast-and-cherry-tinged nose of a ’95 Shafer cabernet sauvignon.
Yes, coffee beans.
Anything described as “explosively floral on the palate” by the Specialty Coffee Association of America might be expected to attract a certain amount of attention, especially after being named the world’s best coffee by the association for three years running. A judge from Kansas City scored it a perfect 100 in this year’s Best of Panama competition. A Seattle coffee executive blogged that “its aroma practically sings to you from between endless rows of other exemplary coffees.” A New York barista dubbed it the “undisputed heavyweight champion of coffee.”
La Esmeralda Special is all the more remarkable given that, a decade ago, the spindly trees that produced the beans were little more than windbreaks owned by the family of a prominent American banker. But while the hefty price may be a curiosity, Esmeralda’s popularity signals a broader shift in an industry where quantity, not quality, has long reigned supreme. In a post-Starbucks world, specialty coffee has become a hot commodity, and La Esmeralda Special is far from alone in the upper echelons.
“I think we’re seeing a fundamental shift in the coffee industry in terms of making coffee much more of a personal and exciting beverage than it ever has been,” says Susie Spindler, executive director of the Alliance for Coffee Excellence, an organization in Missoula, Montana, that runs the Cup of Excellence competitions and online auctions in eight countries.
The most recent rush of excitement has been over a roasted bean variety called Geisha. Originally from Ethiopia, the relatively low-yielding but disease-resistant Geisha trees were transplanted to Central America in the 1950s. They were soon yanked from coffee farms, however, as the market shifted to mass production in response to exploding demand.
In 1964, Swedish-born Rudolph Peterson, then chief executive of Bank of America, bought Hacienda La Esmeralda, a dairy and beef farm in Panama’s Chiriqui highlands. The property was eventually passed on to his son Price, who in 1996 expanded the family’s holdings, buying a nearby farm with a “mish-mash” of coffee trees on its upper reaches, according to Price’s son Daniel. Almost immediately, the family could smell and taste something special in the cups of coffee produced from the farm’s beans.
When they isolated the taller Geishas and planted more at a slightly higher altitude for the 2003 to 2004 season, the coffee really blossomed, Daniel says. In 2004, La Esmeralda Special swept the intense Best of Panama and Rainforest Alliance cupping competitions—at which the few dozen entrants with the best aroma, sweetness, mouthfeel, flavor, aftertaste, and balance are identified—and set the first of its auction records with an online price of $21 a pound. “This is a flavor that had not been found in the Americas,” Daniel says. It can now be found at high-end online retailers and some of the best coffeehouses in the U.S. and Canada.
At a basic level, industry insiders are increasingly defining well-regarded specialty coffees by what they are not: blended or—Sacre bleu!—French roasted. Jeff Taylor, co-owner of PT’s Coffee Roasting Co., in Topeka, Kansas, says top buyers, wholesalers, and retailers are more interested in single-origin coffees and lighter roasts that highlight a bean’s best features.
Like a vineyard’s grand reserve wine, the finest coffee beans are often found in microlots, or small subsets of farms like Hacienda La Esmeralda, where, as Taylor puts it, “all of the stars align.” In the partial shade of the higher-elevation lot, Esmeralda’s Geisha trees may not be models of productivity, but the slower cycles let them pack more sugars and oils into their beans and turn heads in coffee competitions.
Coffee enthusiasts also make comparisons with the wine industry’s success in marketing nuanced vintages; some boast that chemists have identified about 850 natural compounds contributing to the flavor of roasted coffee—many more than in a classic Bordeaux. An Ethiopian coffee called Biloya Selection One is acclaimed by PT’s Coffee for its “syrupy pineapple sweetness that’s supported with deep blueberry overtones,” while an offering from Panama’s Bambito Estate is lauded by Groundwork Coffee Co., a Los Angeles firm, for its “juicy, apple-cider-like texture and sweetness that pairs decadently with tones of dark chocolate, pepper, and clove.”
On a leafy side street in New York’s Chelsea neighborhood, other discoveries are showcased at Café Grumpy, where cheerful baristas preside over steady sales of individually brewed, single-origin coffees and espressos. Coffeehouse co-owner Caroline Bell says she secured a bag of the prized Esmeralda beans before May’s recordbreaking auction, through a roaster who had a direct relationship with the farm. A 16-ounce cup of the famous java was the most expensive item on her August menu and, at $8, was far closer to what nearby restaurants were charging for a glass of pinot noir.
With its notes of Italian bergamot, orange rind, lavender, and jasmine, the coffee was worth every cent, according to Café Grumpy barista Jay Murdock. Customers apparently agreed, snapping up about 80 pounds of the café’s 100-pound allotment before Labor Day. (The café is saving the rest for the holidays.) Bell says that ultra-discriminating coffee drinkers are akin to those who shop at farmers markets: It’s the difference between buying waxy tomatoes in a supermarket and springing for a Brandywine heirloom cultivar. Or perhaps it’s the difference between the aroma of a boxed wine and the toast-and-cherry-tinged nose of a ’95 Shafer cabernet sauvignon.
Thursday, October 18, 2007
Carlsberg, Heineken move on U.K. brewer - AMY WILSON AND MEERA BHATIA
Carlsberg AS, the biggest Nordic brewer, has teamed up with Heineken NV to make a hostile offer for Scottish & Newcastle PLC, the U.K. maker of Kronenbourg and Foster's lager.
Scottish & Newcastle shares surged 19 per cent, valuing Britain's largest brewer at £7.2-billion ($14.3-billion). Carlsberg would gain control of Baltic Beverages Holding AB, its Russian venture with the Edinburgh-based company, while Heineken would get the U.K. brands.
The approach is "unsolicited and unwelcome," Scottish & Newcastle said. Baltic Beverages, which owns Russia's largest brewer, had £724-million in sales last year and would increase Carlsberg's emerging market profit as Western European growth slows. Larger rival SABMiller PLC agreed to combine its U.S. assets last week with Molson Coors Brewing Co. to cut costs and widen distribution.
"Carlsberg is desperate to get its hands on BBH and control over the biggest-growth part of its business, which has been half-owned," said Bruce Davidson of Blue Oar Securities in London, who has a "sell" rating on Scottish & Newcastle. "The driving force is the need to get into emerging markets."
Any offer is likely to be made in cash, and there's no certainty a bid will proceed, the companies said.
The British company's stock rose 12 per cent in the 12 months before today, partly on speculation that Valby, Denmark-based Carlsberg would bid. Amsterdam-based Heineken, Carlsberg and Scottish and Newcastle are the third-, fourth- and fifth-largest brewers headquartered in Europe, respectively.
Marcel Hooijmaijers of Kepler Landsbanki in Amsterdam said the offer could be more than £8 a share and Carlsberg may have to sell new stock. He said the offer may be worth as much as £10-billion, including £1.9-billion of debt, and Carlsberg may have to contribute £5.4-billion to a bid.
Scottish & Newcastle shares advanced £1.195 to £7.56, the biggest gain since at least 1988. Carlsberg shares climbed 1.7 per cent to 770 kroner ($143) in Copenhagen, and Heineken stock was up 52 cents or 1.1 per cent to €46.49 ($64.40).
The U.K. brewer said it's "confident in its future as an independent group" and urged investors to take no action.
"I am surprised Scottish & Newcastle already rejected it," said Nikolaas Faes, an analyst at Exane BNP Paribas in London. "The share price has come up from below 500 pence. Does the company want it to drop back to that level?"
Heineken would gain the assets elsewhere in Europe, and become the top brewer in the U.K., where Scottish & Newcastle has about 26 per cent of the market.
The SAB-Molson U.S. merger announced last week has spurred speculation Anheuser-Busch Cos. may come under pressure to combine with larger rival InBev NV, uniting the world's two biggest brewers.
Scottish & Newcastle shares surged 19 per cent, valuing Britain's largest brewer at £7.2-billion ($14.3-billion). Carlsberg would gain control of Baltic Beverages Holding AB, its Russian venture with the Edinburgh-based company, while Heineken would get the U.K. brands.
The approach is "unsolicited and unwelcome," Scottish & Newcastle said. Baltic Beverages, which owns Russia's largest brewer, had £724-million in sales last year and would increase Carlsberg's emerging market profit as Western European growth slows. Larger rival SABMiller PLC agreed to combine its U.S. assets last week with Molson Coors Brewing Co. to cut costs and widen distribution.
"Carlsberg is desperate to get its hands on BBH and control over the biggest-growth part of its business, which has been half-owned," said Bruce Davidson of Blue Oar Securities in London, who has a "sell" rating on Scottish & Newcastle. "The driving force is the need to get into emerging markets."
Any offer is likely to be made in cash, and there's no certainty a bid will proceed, the companies said.
The British company's stock rose 12 per cent in the 12 months before today, partly on speculation that Valby, Denmark-based Carlsberg would bid. Amsterdam-based Heineken, Carlsberg and Scottish and Newcastle are the third-, fourth- and fifth-largest brewers headquartered in Europe, respectively.
Marcel Hooijmaijers of Kepler Landsbanki in Amsterdam said the offer could be more than £8 a share and Carlsberg may have to sell new stock. He said the offer may be worth as much as £10-billion, including £1.9-billion of debt, and Carlsberg may have to contribute £5.4-billion to a bid.
Scottish & Newcastle shares advanced £1.195 to £7.56, the biggest gain since at least 1988. Carlsberg shares climbed 1.7 per cent to 770 kroner ($143) in Copenhagen, and Heineken stock was up 52 cents or 1.1 per cent to €46.49 ($64.40).
The U.K. brewer said it's "confident in its future as an independent group" and urged investors to take no action.
"I am surprised Scottish & Newcastle already rejected it," said Nikolaas Faes, an analyst at Exane BNP Paribas in London. "The share price has come up from below 500 pence. Does the company want it to drop back to that level?"
Heineken would gain the assets elsewhere in Europe, and become the top brewer in the U.K., where Scottish & Newcastle has about 26 per cent of the market.
The SAB-Molson U.S. merger announced last week has spurred speculation Anheuser-Busch Cos. may come under pressure to combine with larger rival InBev NV, uniting the world's two biggest brewers.
Hot job market for commodity traders - SAIJEL KISHAN
JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and BNP Paribas SA say oil, wheat and metals traders are Wall Street's hottest commodities.
Banks and securities firms hired a record 450 people for commodities this year, up 33 per cent from 2006, according to Options Group, the New York-based recruitment and consulting firm that has tracked the industry since 2002.
While the increase is equal to only 3.4 per cent of the 13,100 new hires in the securities industry last year, commodities traders are so coveted that headhunters are turning to fired mortgage bond salesmen to fill the help wanted.
Lehman doubled its commodity unit to 200, and JPMorgan added 45 to bring its total to 170, including Foster Smith from Deutsche Bank AG as head of U.S. power and gas, and Andrew Harrison from Goldman Sachs Group Inc., where he traded oil.
The subprime mortgage defaults that led to $21-billion (U.S.) in losses at securities firms, according to data compiled by Bloomberg, are having no impact in commodities, where hiring is increasing faster than ever, said Blythe Masters, the global head of commodities at JPMorgan.
Revenue from commodities may rise 20 per cent this year to a total of $15-billion at the world's 10 largest securities firms, said Ethan Ravage, a financial services industry consultant in San Francisco. Rising prices for oil, grains and metals are stoking demand for traders even as Wall Street firms eliminate more than 2,300 jobs because of slowing U.S. growth and the worst housing slump in 16 years.
"There's no question that competition for talent over the last few years has increased and is peaking right now," said Charles Watson, 57, the co-head of global commodities at New York-based Lehman, and former Dynegy Inc. chairman.
Lehman, the largest U.S. arranger of mortgage-backed bond sales, this year hired Jeff Frase and Roy Salameh, two energy traders from Goldman Sachs. Lehman said this month it's firing 850 people at its Aurora Loan mortgage business.
Trading in oil and gas is growing twice as fast as in the 1990s, when Enron Corp., then the world's largest energy-trading company, led a boom in demand for energy contracts, data on the New York Mercantile Exchange website show.
Oil has advanced 44 per cent this year on the Nymex, topping $88 a barrel.
Agricultural commodities trading at the 159-year-old Chicago Board of Trade has increased 26 per cent this year.
Headhunters say they expect people who lose jobs in fixed-income departments to seek employment in commodities. Paul Chrispin, a recruiter at Principal Search Ltd., who has been placing traders in the industry for eight years, said in an interview from London he's never been busier.
To be sure, commodities profits are unlikely to make up for all the losses in fixed income.
The $15-billion revenue from natural resources forecast for the biggest firms this year barely surpasses Goldman Sachs's $14.3-billion of revenue last year from fixed income, currencies and commodities, according to data compiled by Bloomberg.
Profit at Goldman Sachs will rise 16 per cent in 2007 to $11.1-billion, the slowest rate of growth since 2002, according to analysts' estimates.
Morgan Stanley's profit will increase 13 per cent to $8.4-billion, beating the 10 per cent gain in 2005, according to estimates compiled by Bloomberg. Both firms are based in New York.
Morgan Stanley said Oct. 2 that it's eliminating 600 jobs, or 25 per cent, of the positions in its residential mortgage origination and servicing unit in the wake of the subprime collapse.
The company hired 40 to 50 people through July this year in commodities, bringing the total to about 320, according to Marc Mourre, global head of commodities marketing in London.
UBS, Europe's largest bank, announced 1,500 job cuts on Oct. 1 because of hedge fund losses and writedowns related to subprime securities.
The Zurich-based firm has expanded its commodities group 60 per cent during the past two years, mainly by transferring people from other teams, Peter Ghavami, 39, global head of the unit, said in an e-mailed response to questions. He declined to say how many people UBS employs for commodities.
Deutsche Bank, Germany's biggest bank, doubled its commodities team this year, according to David Silbert, the global head of commodities who joined the bank this year from Merrill Lynch & Co.
Commodities traders are taking more control at the firms, where the top positions are typically held by the people who bring in the most profit.
David Sobotka, 51, the global head of commodities at New York-based Merrill, was put in charge of fixed income, currencies and commodities this month.
Neal Shear, 53, a former energy trader, was given the same role two years ago at Morgan Stanley, the second-largest securities firm by market value.
The chief executive officer at Goldman Sachs, the biggest investment bank, is Lloyd Blankfein, 53, who started his career as a gold salesman at J. Aron & Co., the commodities unit.
Compensation has swelled along with commodities prices. Mr. Shear earned $35- million at Morgan Stanley in 2006, more than the $30-million paid to his boss, co-president Zoe Cruz, 52, according to the company's proxy statement filed with the U.S. Securities and Exchange Commission. Only chairman and CEO John Mack's $41.4-million compensation was higher.
Banks and securities firms hired a record 450 people for commodities this year, up 33 per cent from 2006, according to Options Group, the New York-based recruitment and consulting firm that has tracked the industry since 2002.
While the increase is equal to only 3.4 per cent of the 13,100 new hires in the securities industry last year, commodities traders are so coveted that headhunters are turning to fired mortgage bond salesmen to fill the help wanted.
Lehman doubled its commodity unit to 200, and JPMorgan added 45 to bring its total to 170, including Foster Smith from Deutsche Bank AG as head of U.S. power and gas, and Andrew Harrison from Goldman Sachs Group Inc., where he traded oil.
The subprime mortgage defaults that led to $21-billion (U.S.) in losses at securities firms, according to data compiled by Bloomberg, are having no impact in commodities, where hiring is increasing faster than ever, said Blythe Masters, the global head of commodities at JPMorgan.
Revenue from commodities may rise 20 per cent this year to a total of $15-billion at the world's 10 largest securities firms, said Ethan Ravage, a financial services industry consultant in San Francisco. Rising prices for oil, grains and metals are stoking demand for traders even as Wall Street firms eliminate more than 2,300 jobs because of slowing U.S. growth and the worst housing slump in 16 years.
"There's no question that competition for talent over the last few years has increased and is peaking right now," said Charles Watson, 57, the co-head of global commodities at New York-based Lehman, and former Dynegy Inc. chairman.
Lehman, the largest U.S. arranger of mortgage-backed bond sales, this year hired Jeff Frase and Roy Salameh, two energy traders from Goldman Sachs. Lehman said this month it's firing 850 people at its Aurora Loan mortgage business.
Trading in oil and gas is growing twice as fast as in the 1990s, when Enron Corp., then the world's largest energy-trading company, led a boom in demand for energy contracts, data on the New York Mercantile Exchange website show.
Oil has advanced 44 per cent this year on the Nymex, topping $88 a barrel.
Agricultural commodities trading at the 159-year-old Chicago Board of Trade has increased 26 per cent this year.
Headhunters say they expect people who lose jobs in fixed-income departments to seek employment in commodities. Paul Chrispin, a recruiter at Principal Search Ltd., who has been placing traders in the industry for eight years, said in an interview from London he's never been busier.
To be sure, commodities profits are unlikely to make up for all the losses in fixed income.
The $15-billion revenue from natural resources forecast for the biggest firms this year barely surpasses Goldman Sachs's $14.3-billion of revenue last year from fixed income, currencies and commodities, according to data compiled by Bloomberg.
Profit at Goldman Sachs will rise 16 per cent in 2007 to $11.1-billion, the slowest rate of growth since 2002, according to analysts' estimates.
Morgan Stanley's profit will increase 13 per cent to $8.4-billion, beating the 10 per cent gain in 2005, according to estimates compiled by Bloomberg. Both firms are based in New York.
Morgan Stanley said Oct. 2 that it's eliminating 600 jobs, or 25 per cent, of the positions in its residential mortgage origination and servicing unit in the wake of the subprime collapse.
The company hired 40 to 50 people through July this year in commodities, bringing the total to about 320, according to Marc Mourre, global head of commodities marketing in London.
UBS, Europe's largest bank, announced 1,500 job cuts on Oct. 1 because of hedge fund losses and writedowns related to subprime securities.
The Zurich-based firm has expanded its commodities group 60 per cent during the past two years, mainly by transferring people from other teams, Peter Ghavami, 39, global head of the unit, said in an e-mailed response to questions. He declined to say how many people UBS employs for commodities.
Deutsche Bank, Germany's biggest bank, doubled its commodities team this year, according to David Silbert, the global head of commodities who joined the bank this year from Merrill Lynch & Co.
Commodities traders are taking more control at the firms, where the top positions are typically held by the people who bring in the most profit.
David Sobotka, 51, the global head of commodities at New York-based Merrill, was put in charge of fixed income, currencies and commodities this month.
Neal Shear, 53, a former energy trader, was given the same role two years ago at Morgan Stanley, the second-largest securities firm by market value.
The chief executive officer at Goldman Sachs, the biggest investment bank, is Lloyd Blankfein, 53, who started his career as a gold salesman at J. Aron & Co., the commodities unit.
Compensation has swelled along with commodities prices. Mr. Shear earned $35- million at Morgan Stanley in 2006, more than the $30-million paid to his boss, co-president Zoe Cruz, 52, according to the company's proxy statement filed with the U.S. Securities and Exchange Commission. Only chairman and CEO John Mack's $41.4-million compensation was higher.
Wednesday, October 17, 2007
Sin stocks: Take a shot and roll the dice - ANDREW ALLENTUCK
Casinos and weapons are the high-tech components of the sin stocks sector. After all, gambling combines elements of mathematics and showmanship, architecture and technology while weapons -- from pistols to machine guns to warplanes -- embody varying amounts of advance technology. For the investor, the appetite of the two sectors for capital creates opportunities and risks.
Casinos are not what they used to be. The hoods that once owned them are gone. Food at giveaway prices and free floor shows are memories. The gambling palazzos of Las Vegas have become combo shopping malls, entertainment extravaganzas and, of course, places at which the luckless can be fleeced. Now customers pay for the fringe benefits that go with a chance to lose money at the tables. The result is a high-margin business, said Nico Cape, a vice-president and analyst at Sceptre Investment Counsel Ltd. in Toronto. "With the growth of casinos into entertainment businesses, the net spend per customer has gone up considerably."
Casino stock prices have also been pushed up by technical factors in the sector. A wave of mergers and acquisitions has reduced the number of major casinos that trade publicly. But that trend has been good for casino stock prices.
Las Vegas Sands Corp. (LVS-NYSE) owns a casino empire that includes The Venetian, internet gambling company Venetian Interactive, and Venetian Macao in China. The stock trades at nearly 65 times 2006 earnings of $1.25 (U.S.) a share, up 50.6 per cent from 83 cents in 2005. The market expects Sands to do in Macao what it took the company 50 years to do in Nevada, Mr. Cape said.
MGM Mirage Inc. (MGM-NYSE) owns the MGM Grand Hotel & Casino, Bellagio, Mirage, New York-New York and other properties in Nevada. It trades at 28.4 times 2006 earnings of $2.29 a share, up from $1.56 a year earlier. The stock is a more U.S. play than Sands.
Harrah's Entertainment Inc. (HET-NYSE) is a purer casino play than other major industry operators. At 25.5 times trailing earnings of $3.29 a share, it is due to be taken over by private equity investors led by Texas Pacific Group and Apollo Management LP, subject to an April vote by shareholders.
Great Canadian Gaming Corp. (GCD-TSX) operates casinos in British Columbia and Washington state. Revenue for the 12 months ended Sept. 30, 2006, rose 44.8 per cent from a year earlier, but the company ended the period with a loss of 18 cents (Canadian) a share. Casino growth in Canada appears to be limited, said Sebastian van Berkom, an institutional fund manager in Montreal. "Governments across Canada have put moratoria on new casinos," he said.
Weapons makers can be divided into traditional manufacturers of hunting weapons and other firms that make military weapons. For the investor interested in buying the stocks, the problem is finding relatively focused, pure plays.
Boeing Co. (BA-NYSE) is a massive aerospace company that makes passenger planes, fighter jets, combat helicopters and military cargo planes. The company has been going through a difficult period, with profit dropping 13.9 per cent in 2006. For those who want to invest in defence, the company is a mixed blessing, for its civilian operations dilute military sales.
General Dynamics Corp. (GD-NYSE) is a major defence contractor. It makes submarines that carry guided missiles, land warfare information systems, naval vessels and data systems that are used throughout the U.S. armed forces and its allies. Revenue rose 13.4 per cent in 2006 while profit per share gained 26 per cent.
Sturm Ruger & Co. Inc. (RGR-NYSE) makes pistols and rifles. Analysts expect 2007 profit to rise to 36 cents (U.S.) a share from 20 cents last year. That would represent a turnaround for the company, which has gone through a period of slumping earnings.
Smith & Wesson Holding Corp. (SWHC-NASDAQ) makes handguns and handcuffs for the U.S. military and police forces. With military engagements up and crime thriving, business ought to be good. Smith & Wesson trades at a lofty multiple of 40 times estimated 2007 earnings.
Ceramic Protection Corp. (CEP-TSX) is a Calgary-based company that makes anti-weapons, that is, ballistic inserts for bulletproof vests used by police and soldiers. Earnings are climbing, with analysts projecting a profit gain to $1.98 (Canadian) a share from $1.31 a year earlier. Call this an anti-weapon business and it's hard to see a moral objection.
Casinos are not what they used to be. The hoods that once owned them are gone. Food at giveaway prices and free floor shows are memories. The gambling palazzos of Las Vegas have become combo shopping malls, entertainment extravaganzas and, of course, places at which the luckless can be fleeced. Now customers pay for the fringe benefits that go with a chance to lose money at the tables. The result is a high-margin business, said Nico Cape, a vice-president and analyst at Sceptre Investment Counsel Ltd. in Toronto. "With the growth of casinos into entertainment businesses, the net spend per customer has gone up considerably."
Casino stock prices have also been pushed up by technical factors in the sector. A wave of mergers and acquisitions has reduced the number of major casinos that trade publicly. But that trend has been good for casino stock prices.
Las Vegas Sands Corp. (LVS-NYSE) owns a casino empire that includes The Venetian, internet gambling company Venetian Interactive, and Venetian Macao in China. The stock trades at nearly 65 times 2006 earnings of $1.25 (U.S.) a share, up 50.6 per cent from 83 cents in 2005. The market expects Sands to do in Macao what it took the company 50 years to do in Nevada, Mr. Cape said.
MGM Mirage Inc. (MGM-NYSE) owns the MGM Grand Hotel & Casino, Bellagio, Mirage, New York-New York and other properties in Nevada. It trades at 28.4 times 2006 earnings of $2.29 a share, up from $1.56 a year earlier. The stock is a more U.S. play than Sands.
Harrah's Entertainment Inc. (HET-NYSE) is a purer casino play than other major industry operators. At 25.5 times trailing earnings of $3.29 a share, it is due to be taken over by private equity investors led by Texas Pacific Group and Apollo Management LP, subject to an April vote by shareholders.
Great Canadian Gaming Corp. (GCD-TSX) operates casinos in British Columbia and Washington state. Revenue for the 12 months ended Sept. 30, 2006, rose 44.8 per cent from a year earlier, but the company ended the period with a loss of 18 cents (Canadian) a share. Casino growth in Canada appears to be limited, said Sebastian van Berkom, an institutional fund manager in Montreal. "Governments across Canada have put moratoria on new casinos," he said.
Weapons makers can be divided into traditional manufacturers of hunting weapons and other firms that make military weapons. For the investor interested in buying the stocks, the problem is finding relatively focused, pure plays.
Boeing Co. (BA-NYSE) is a massive aerospace company that makes passenger planes, fighter jets, combat helicopters and military cargo planes. The company has been going through a difficult period, with profit dropping 13.9 per cent in 2006. For those who want to invest in defence, the company is a mixed blessing, for its civilian operations dilute military sales.
General Dynamics Corp. (GD-NYSE) is a major defence contractor. It makes submarines that carry guided missiles, land warfare information systems, naval vessels and data systems that are used throughout the U.S. armed forces and its allies. Revenue rose 13.4 per cent in 2006 while profit per share gained 26 per cent.
Sturm Ruger & Co. Inc. (RGR-NYSE) makes pistols and rifles. Analysts expect 2007 profit to rise to 36 cents (U.S.) a share from 20 cents last year. That would represent a turnaround for the company, which has gone through a period of slumping earnings.
Smith & Wesson Holding Corp. (SWHC-NASDAQ) makes handguns and handcuffs for the U.S. military and police forces. With military engagements up and crime thriving, business ought to be good. Smith & Wesson trades at a lofty multiple of 40 times estimated 2007 earnings.
Ceramic Protection Corp. (CEP-TSX) is a Calgary-based company that makes anti-weapons, that is, ballistic inserts for bulletproof vests used by police and soldiers. Earnings are climbing, with analysts projecting a profit gain to $1.98 (Canadian) a share from $1.31 a year earlier. Call this an anti-weapon business and it's hard to see a moral objection.
Saturday, October 13, 2007
FP Trading Desk - Jonathan Ratner
Uranium One, SNC Lavalin and Fortis considered most likely candidates to replace Alcan in TSX 60
Relative to the S&P/TSX composite index, which is most heavily weighted in financials and energy, and underweighted in health care and utilities stocks, the TSX 60 index's most underweighted sector is industrials.
But that doesn't mean S&P will look for more balance when it chooses a replacement for Alcan Inc. (AL/TSX) if and when the aluminum company's takeover by Rio Tinto Plc is complete by the end of 2007.
CIBC World Markets strategist Yin Luo says its replacement could come from either the energy, industrials or utilities sector. Uranium One Inc. (UUU/TSX) is the most likely energy name because of its high level of liquidity, he said in a note to clients. Uranium One would also boost the TSX 60's energy weighting, which is underweight relative to the TSX composite, he added.
Among industrial names, Mr. Luo points to SNC-Lavalin Group Inc. (SNC.TSX) as the most likely candidate given that it has the largest market cap ($6.6-billion) in the TSX completion index.
Fortis Inc. (FTS/TSX) is his pick from the utilities sector due to its underweighting in the benchmark index. There is currently only one utilities stock in the TSX 60, Mr. Luo noted.
Relative to the S&P/TSX composite index, which is most heavily weighted in financials and energy, and underweighted in health care and utilities stocks, the TSX 60 index's most underweighted sector is industrials.
But that doesn't mean S&P will look for more balance when it chooses a replacement for Alcan Inc. (AL/TSX) if and when the aluminum company's takeover by Rio Tinto Plc is complete by the end of 2007.
CIBC World Markets strategist Yin Luo says its replacement could come from either the energy, industrials or utilities sector. Uranium One Inc. (UUU/TSX) is the most likely energy name because of its high level of liquidity, he said in a note to clients. Uranium One would also boost the TSX 60's energy weighting, which is underweight relative to the TSX composite, he added.
Among industrial names, Mr. Luo points to SNC-Lavalin Group Inc. (SNC.TSX) as the most likely candidate given that it has the largest market cap ($6.6-billion) in the TSX completion index.
Fortis Inc. (FTS/TSX) is his pick from the utilities sector due to its underweighting in the benchmark index. There is currently only one utilities stock in the TSX 60, Mr. Luo noted.
Do Stocks Dance to the Dollar's Tune? - Sam Stovall
Year to date through the end of September, the dollar index, representing the value of the U.S. dollar vs. a trade-weighted basket of foreign currencies, closed near 77 (a discount of 23% to 100, or parity, with the basket), registering a 6-percentage-point fall from the 83 level at the end of 2006, and equal to the forecasted average value of the dollar for all of 2007, according to Standard & Poor's Chief Economist David Wyss. He predicts the dollar will fall further in the year ahead, averaging 71 in 2008 and bottoming at 68 in 2011.
For American tourists venturing abroad, that's not good news. For U.S. exporters, however, that's very good news. Indeed, Wyss expects U.S. exports to rise 9.5% in 2008, as compared with the projected gain of 7.3% in 2007. Exports should increase another 8.4% in 2009, says Wyss, which could aid earnings per share for U.S. multinationals that don't hedge their currency exposure.
Slight Influence
Specifically, S&P Index Services estimates that 45% of 2006 sales for companies in the S&P 500-stock index came from overseas (using the 236 member firms that provided global revenue breakdowns). This figure is up substantially from the 32% estimated in 2001. Companies in the S&P 500 Energy and Information Technology sectors showed the greatest overseas revenue exposure at 56% each, followed closely by the Consumer Staples group at 47%. The sectors with the least exposure included Financials at 30% and Consumer Discretionary at 32%. No data was available for companies in the S&P 500 Telecommunications Services group.
Investors might wonder whether the price changes of these standout sectors were helped or hurt by a falling dollar. In other words, have the S&P 500 and its sectors and subindustries showed any strong correlation with movements in the dollar? Since Dec. 31, 1989 (which is as far back as S&P 500 sector data extend), the monthly percentage change in the S&P 500 index posted a 0.03 correlation with the monthly change in the value of the trade-weighted dollar, indicating that the dollar and "500" had almost no correlation over this extended period.
Selecting five periods over the past 17 years of identifiable weakness in the dollar (6/91–8/92, 12/93–4/95, 7/98–10/98, 2/02–12/04, and 12/05–9/07), however, the correlation was more pronounced at –0.27, indicating that the market's rise during these periods was, at least partly, explained by the dollar's weakness, in our view.
Info tech surprise
In addition to the overall market showing an increase in correlation to the dollar during these selected periods, the S&P 500's growth and value components also saw more pronounced negative correlations, as each fell to or below –0.2 from a prior reading equal to or above zero. What's more, small-cap stocks (as seen in the Russell 2000 for 1990-94 and the S&P SmallCap 600 index since 1995), also showed rising negative correlations.
On a sector level, the results were fairly similar to those for the overall market. The correlation between monthly performances for S&P 500 sectors and the dollar since 1990 were highest for Financials and Consumer Discretionary (indicating a slightly positive correlation with the dollar—meaning as the dollar fell, so did they) and lowest for Energy. All other sector correlations appeared too small to be of consequence, in our opinion. Surprising, however, was Info Tech's relatively high correlation, in light of its large overseas revenue exposure.
During the selected periods, however, even though all 10 S&P 500 sectors registered negative correlations, the S&P 500 Energy, Utilities, Materials, Consumer Staples, and Industrials sectors showed the highest negative correlations, at –0.46, –0.34, –0.29, –0.21, and –0.21, respectively, while the Info Tech and Consumer Discretionary sectors registered the lowest correlations, at –0.07 and –0.08.
Conclusions
We think subindustry leadership corroborated sector-level patterns. Six of the eight S&P 500 subindustries with the highest negative correlations (Oil & Gas Drilling, Oil & Gas Exploration & Production, Oil & Gas Equipment & Services, Integrated Oil & Gas, Electric, and Gas Utilities) were from the Energy and Utilities sectors. Yet only 6 of 81 subindustries that participated in all five periods registered positive correlations, with three of these six coming from the S&P 500 Consumer Discretionary sector. Only three of the six had correlations that were above 0.10: Movies & Entertainment (0.14), Hotels & Cruise Lines (0.12), Office Services & Supplies (0.10).
One might think that dollar weakness usually coincided with falling interest rates, yet two of the five periods observed occurred during Fed rate-tightening cycles.
In conclusion, we think there are three conclusions that can be taken from this study:
1) Past performance is no guarantee of future results. The interrelationship of global economies and equity markets evolves continuously.
2) There are many factors that affect share prices. There was almost no correlation between the U.S. dollar and the S&P 500 from 1990 to 2007. In the long run, we recommend that investors focus more on a company's fundamental improvements than in trying to anticipate which will benefit from changes in the value of the dollar.
3) Should the dollar continue to weaken and history repeat itself, the greatest share-price opportunities may be found in the S&P 500 Energy, Utility, and Materials sectors.
Industry Momentum List Update
Here is this week's list of the industries in the S&P 1500 with Relative Strength Rankings of 5 (price performances in the past 12 months that were among the top 10% of subindustries in the S&P 1500), along with a stock with the highest S&P STARS (tie goes to the highest market value).
For American tourists venturing abroad, that's not good news. For U.S. exporters, however, that's very good news. Indeed, Wyss expects U.S. exports to rise 9.5% in 2008, as compared with the projected gain of 7.3% in 2007. Exports should increase another 8.4% in 2009, says Wyss, which could aid earnings per share for U.S. multinationals that don't hedge their currency exposure.
Slight Influence
Specifically, S&P Index Services estimates that 45% of 2006 sales for companies in the S&P 500-stock index came from overseas (using the 236 member firms that provided global revenue breakdowns). This figure is up substantially from the 32% estimated in 2001. Companies in the S&P 500 Energy and Information Technology sectors showed the greatest overseas revenue exposure at 56% each, followed closely by the Consumer Staples group at 47%. The sectors with the least exposure included Financials at 30% and Consumer Discretionary at 32%. No data was available for companies in the S&P 500 Telecommunications Services group.
Investors might wonder whether the price changes of these standout sectors were helped or hurt by a falling dollar. In other words, have the S&P 500 and its sectors and subindustries showed any strong correlation with movements in the dollar? Since Dec. 31, 1989 (which is as far back as S&P 500 sector data extend), the monthly percentage change in the S&P 500 index posted a 0.03 correlation with the monthly change in the value of the trade-weighted dollar, indicating that the dollar and "500" had almost no correlation over this extended period.
Selecting five periods over the past 17 years of identifiable weakness in the dollar (6/91–8/92, 12/93–4/95, 7/98–10/98, 2/02–12/04, and 12/05–9/07), however, the correlation was more pronounced at –0.27, indicating that the market's rise during these periods was, at least partly, explained by the dollar's weakness, in our view.
Info tech surprise
In addition to the overall market showing an increase in correlation to the dollar during these selected periods, the S&P 500's growth and value components also saw more pronounced negative correlations, as each fell to or below –0.2 from a prior reading equal to or above zero. What's more, small-cap stocks (as seen in the Russell 2000 for 1990-94 and the S&P SmallCap 600 index since 1995), also showed rising negative correlations.
On a sector level, the results were fairly similar to those for the overall market. The correlation between monthly performances for S&P 500 sectors and the dollar since 1990 were highest for Financials and Consumer Discretionary (indicating a slightly positive correlation with the dollar—meaning as the dollar fell, so did they) and lowest for Energy. All other sector correlations appeared too small to be of consequence, in our opinion. Surprising, however, was Info Tech's relatively high correlation, in light of its large overseas revenue exposure.
During the selected periods, however, even though all 10 S&P 500 sectors registered negative correlations, the S&P 500 Energy, Utilities, Materials, Consumer Staples, and Industrials sectors showed the highest negative correlations, at –0.46, –0.34, –0.29, –0.21, and –0.21, respectively, while the Info Tech and Consumer Discretionary sectors registered the lowest correlations, at –0.07 and –0.08.
Conclusions
We think subindustry leadership corroborated sector-level patterns. Six of the eight S&P 500 subindustries with the highest negative correlations (Oil & Gas Drilling, Oil & Gas Exploration & Production, Oil & Gas Equipment & Services, Integrated Oil & Gas, Electric, and Gas Utilities) were from the Energy and Utilities sectors. Yet only 6 of 81 subindustries that participated in all five periods registered positive correlations, with three of these six coming from the S&P 500 Consumer Discretionary sector. Only three of the six had correlations that were above 0.10: Movies & Entertainment (0.14), Hotels & Cruise Lines (0.12), Office Services & Supplies (0.10).
One might think that dollar weakness usually coincided with falling interest rates, yet two of the five periods observed occurred during Fed rate-tightening cycles.
In conclusion, we think there are three conclusions that can be taken from this study:
1) Past performance is no guarantee of future results. The interrelationship of global economies and equity markets evolves continuously.
2) There are many factors that affect share prices. There was almost no correlation between the U.S. dollar and the S&P 500 from 1990 to 2007. In the long run, we recommend that investors focus more on a company's fundamental improvements than in trying to anticipate which will benefit from changes in the value of the dollar.
3) Should the dollar continue to weaken and history repeat itself, the greatest share-price opportunities may be found in the S&P 500 Energy, Utility, and Materials sectors.
Industry Momentum List Update
Here is this week's list of the industries in the S&P 1500 with Relative Strength Rankings of 5 (price performances in the past 12 months that were among the top 10% of subindustries in the S&P 1500), along with a stock with the highest S&P STARS (tie goes to the highest market value).
Thanks to Mao, Zhang Yin's a billionaire - Will Hutton
It was one of China's proverbs that Mao loved to quote; women, he would say, hold up half the sky. But until the communist revolution of 1949 the Chinese had not meant it. The Chinese imperial system, famously, had been one of the most anti-feminist societies on Earth. Women had no rights, existing only to have babies and please men, the richer forced to hobble and disfigure themselves by binding their feet from birth to affirm their essential purpose - decorative daintiness.
But last week it was reported that China's richest billionaire is now a woman - 49-year-old Zhang Yin is worth a cool $3.4bn (£1.8bn). The tycoon is the world's richest self-made woman, having built China's largest paper recycling business, Nine Dragons Paper, which was floated on the Hong Kong stock market just six months ago. She seems an eloquent symbol of the new China; a capitalist whose success and wealth was unthinkable before Deng Xiaoping freed China from the embrace of Maoism in 1978. It is capitalists such as her who are proof that paradoxically it is communist China that is home to the globe's most vigorous capitalism. And she is a woman.
In China, though, beware. Nothing is quite what it seems. Zhang Yin owes her success both to pro-market Deng Xiaoping and ardent communist Mao. As the eldest daughter of a family with eight children, her expectation before the communist revolution would have been to grow up illiterate before becoming her husband's chattel. Mao's radical egalitarianism may have given China the murderous mayhem of the Cultural Revolution. But he also transformed the role, expectations and education of women.
In 1949 female illiteracy in rural China was 99 per cent. In 1976 when Mao died it was 45 per cent and today it is 13 per cent. One of Mao's first acts was to give women the same rights in divorce as men, and for all his other barbarism he consistently championed the equality of women.
China is still a sexist society, but compared with the rest of Asia it is light years ahead. Female illiteracy in rural India, for example, is still 55 per cent. The change has gone deep into the marrow of Chinese society. One survey recently revealed that Chinese girls between 16 and 19 name becoming president, chief executive or senior manager of a company as their top career choices; Japanese girls between 16 and 19 say they want to become housewives, flight attendants or child-care workers. One of China's most formidable economic and social resources has become its women.
As the daughter of an officer in the People's Liberation Army, Zhang Yin also understands the corrupt and controlling pathology of Chinese communism well - and has understood the imperative to keep ownership and direction of her company as distant as possible from Beijing. In China the party controls, or has the capacity to control, everything; the number of companies forced into decline or even bankruptcy because they were compelled to support party aims - bailing out an endemically loss-making company to protect jobs or buying a state-owned company at an astronomic price to feather the nest of a senior official - is beyond counting. Indigenous Chinese capitalism is a form of hit-and-run guerrilla economic warfare in a constant battle with the world's greediest and most corrupt officialdom. Survival depends upon paying tribute. It is no accident that two thirds of China's six million private businesses are owned and run by ex-communist officials. Almost every private businessperson in China is either a party member or applying to join.
Zhang has avoided much of that - courtesy of Hong Kong, a Taiwanese husband and managing to get out of China in the months after Tiananmen Square when repression was at its height and the prospects for any kind of private enterprise seemed nil. Her cleverest moves were her first; incorporating her company in Hong Kong in 1985 and then marrying a Taiwanese with a non Chinese passport. In exile in Los Angeles in 1990 the pair founded America Chung Nam - a company specialising in scrap paper brokerage as she had been doing in Hong Kong.
Scrap paper is one of the few industries the party considers non-strategic and which it indulges - another smart choice for an ambitious woman. In December 1991 the Soviet Union collapsed, and in January 1992 the ageing Deng Xiaoping declared in a tour of Guangdong, China's most pro-capitalist province, that as international communism was dead the only way for Chinese communism to survive was to embrace pro-market reform. In particular it should welcome inward investment from foreign companies with know-how and technology. It was glorious, he said, to be rich.
There was an avalanche of inward investment, including America Chung Nam building a paper and board mill in the very same Guangdong- a foreign investor even if owned by a Chinese living abroad. After all, China's booming exports would need to be wrapped in paper and paperboard. Guangdong's exports have grown phenomenally; so have sales of paper and board.
And six months ago Zhang Yin and her husband cashed in - floating their shares not in one of China's stock markets on the mainland, but in Hong Kong. Here a private company can keep its distance from the party; if there is a dispute with the communists it gets settled in Hong Kong's still independent legal system - legacy of the British - and not in one of the mainland's rigged courts.
The extent of China's reform, and its subsequent growth, is stunning. It is also true that Ms Zhang could not have made her money if China had not opened to the world. But nobody should believe that somehow her fortune means that China has made the full transition to capitalism. Rather she has exploited the system's fault lines. This remains a one-party state, in which every institution - from the media to its companies - is constructed to sustain its monopoly of power.
Entrepreneurs such as Zhang Yin only succeed if they find ways around the system; they can only push the economy so far. One day the party will have to let go properly. The issues are only how and when.
But last week it was reported that China's richest billionaire is now a woman - 49-year-old Zhang Yin is worth a cool $3.4bn (£1.8bn). The tycoon is the world's richest self-made woman, having built China's largest paper recycling business, Nine Dragons Paper, which was floated on the Hong Kong stock market just six months ago. She seems an eloquent symbol of the new China; a capitalist whose success and wealth was unthinkable before Deng Xiaoping freed China from the embrace of Maoism in 1978. It is capitalists such as her who are proof that paradoxically it is communist China that is home to the globe's most vigorous capitalism. And she is a woman.
In China, though, beware. Nothing is quite what it seems. Zhang Yin owes her success both to pro-market Deng Xiaoping and ardent communist Mao. As the eldest daughter of a family with eight children, her expectation before the communist revolution would have been to grow up illiterate before becoming her husband's chattel. Mao's radical egalitarianism may have given China the murderous mayhem of the Cultural Revolution. But he also transformed the role, expectations and education of women.
In 1949 female illiteracy in rural China was 99 per cent. In 1976 when Mao died it was 45 per cent and today it is 13 per cent. One of Mao's first acts was to give women the same rights in divorce as men, and for all his other barbarism he consistently championed the equality of women.
China is still a sexist society, but compared with the rest of Asia it is light years ahead. Female illiteracy in rural India, for example, is still 55 per cent. The change has gone deep into the marrow of Chinese society. One survey recently revealed that Chinese girls between 16 and 19 name becoming president, chief executive or senior manager of a company as their top career choices; Japanese girls between 16 and 19 say they want to become housewives, flight attendants or child-care workers. One of China's most formidable economic and social resources has become its women.
As the daughter of an officer in the People's Liberation Army, Zhang Yin also understands the corrupt and controlling pathology of Chinese communism well - and has understood the imperative to keep ownership and direction of her company as distant as possible from Beijing. In China the party controls, or has the capacity to control, everything; the number of companies forced into decline or even bankruptcy because they were compelled to support party aims - bailing out an endemically loss-making company to protect jobs or buying a state-owned company at an astronomic price to feather the nest of a senior official - is beyond counting. Indigenous Chinese capitalism is a form of hit-and-run guerrilla economic warfare in a constant battle with the world's greediest and most corrupt officialdom. Survival depends upon paying tribute. It is no accident that two thirds of China's six million private businesses are owned and run by ex-communist officials. Almost every private businessperson in China is either a party member or applying to join.
Zhang has avoided much of that - courtesy of Hong Kong, a Taiwanese husband and managing to get out of China in the months after Tiananmen Square when repression was at its height and the prospects for any kind of private enterprise seemed nil. Her cleverest moves were her first; incorporating her company in Hong Kong in 1985 and then marrying a Taiwanese with a non Chinese passport. In exile in Los Angeles in 1990 the pair founded America Chung Nam - a company specialising in scrap paper brokerage as she had been doing in Hong Kong.
Scrap paper is one of the few industries the party considers non-strategic and which it indulges - another smart choice for an ambitious woman. In December 1991 the Soviet Union collapsed, and in January 1992 the ageing Deng Xiaoping declared in a tour of Guangdong, China's most pro-capitalist province, that as international communism was dead the only way for Chinese communism to survive was to embrace pro-market reform. In particular it should welcome inward investment from foreign companies with know-how and technology. It was glorious, he said, to be rich.
There was an avalanche of inward investment, including America Chung Nam building a paper and board mill in the very same Guangdong- a foreign investor even if owned by a Chinese living abroad. After all, China's booming exports would need to be wrapped in paper and paperboard. Guangdong's exports have grown phenomenally; so have sales of paper and board.
And six months ago Zhang Yin and her husband cashed in - floating their shares not in one of China's stock markets on the mainland, but in Hong Kong. Here a private company can keep its distance from the party; if there is a dispute with the communists it gets settled in Hong Kong's still independent legal system - legacy of the British - and not in one of the mainland's rigged courts.
The extent of China's reform, and its subsequent growth, is stunning. It is also true that Ms Zhang could not have made her money if China had not opened to the world. But nobody should believe that somehow her fortune means that China has made the full transition to capitalism. Rather she has exploited the system's fault lines. This remains a one-party state, in which every institution - from the media to its companies - is constructed to sustain its monopoly of power.
Entrepreneurs such as Zhang Yin only succeed if they find ways around the system; they can only push the economy so far. One day the party will have to let go properly. The issues are only how and when.
Wednesday, August 22, 2007
Golden advice from a mining magnate - HARVEY SCHACHTER
Philanthropist Seymour Schulich has an MBA school named after him at York University. But when it comes to giving career advice, the former stock analyst who struck it rich with his gold company in Nevada is anything but academic.
In Get Smarter, written with The Globe and Mail's business columnist, Derek DeCloet, he ladles out homespun wisdom in two-to-four-page crisply written, anecdote-laden chapters aimed at 30- to 40-year-olds, but golden at any age.
He starts with the decision-making tool that he began to wield back in university days and continued to employ in the decisions that helped him to become a billionaire. It's a variation of the pro-con method, but with weighting that allows you to strip away emotion and examine the importance of all the points at stake.
Here's how it works: Start on one piece of paper listing all the positive things you can about the issue in question, giving each item a score from zero to 10 -- the higher the score, the more important it is to you. Then move on to the negatives, scoring them from zero to 10 as well, only this time 10 refers to a major drawback.
Now add up the scores on each sheet. If the positive score is at least double the negative score, you should do whatever is under consideration. But if the positives don't attain that two-to-one advantage, you shouldn't tackle it -- or, at least, you should think twice.
"Yes, it is ridiculously easy. But one of the great fallacies of modern life is that decision-making has to be complicated to be effective," he says.
Picking a field to work in is just as easy, to his mind. Go for a business with high profit margins since the jobs usually pay more, have fewer layoffs and bankruptcies, and are less stressful. He spent a good chunk of his life in oil and mining, where the great advantage is that you can double or triple the value of a company with one drill hole. "No other industry can create wealth as rapidly," he observes.
But stay away from foreign oil plays, where you can run into expropriation. Closer to home, given the poor margins, he warns against airlines, auto parts, retailing, biotechnology, grocery stores, chemicals, wholesaling, machinery manufacturing, paper and forest products, auto manufacturing, restaurants, appliance manufacturing, trucking, any manufacturing competing with China, and telecom service.
"Don't misunderstand: You may be able to find fulfilment and a rewarding career in any of the above. But you're more likely to find satisfaction and superior financial rewards in industries with superior economics," he says.
You also want to be wary of four enemies of business people:
Ego: This destroys more people than any other single thing.
Greed: It can lead you to lose everything, he warns, as with the dog in Aesop's fable clutching a lamb chop in its jaw that crossed a stream and lunged at his reflection, hoping to get the second chop but dropping the first.
Alcohol and drugs: These two can destroy many an executive career.
Assistants who are sexually attractive, or, as he crudely puts it, "assistants with big breasts":Men have lost their career and fortune by succumbing to this temptation.
At the same time, he adds an important rule learned during 50 years of observation: Don't take your spouse or "significant other" to business meetings out of town or on tours. They aren't interested, and don't want to be there. They also can be a giant distraction, and can create havoc if they interact poorly with others.
But it helps to have a partner as a sounding board, both on the home front and in the office.
Many of the greatest start-ups in the past 30 years -- think of Apple, Oracle, Berkshire-Hathaway, Yahoo, and Google -- started as teams of two.
Mr. Schulich has worked all his life with partners, and recalls the many times he woke in the middle of the night with a brilliant idea that the next day his partner patiently talked him out of by listing many factors he had ignored. "Good partners are a blessing!" he says.
To keep them, you need to abide by the Golden Rule of Partnership: mutual veto power. If you cannot agree on a major proposition, you don't do it.
In the introduction, he states his hope that each reader who invests time and money in the book will leave with 20 to 30 ideas -- some that can help transform or shape their lives.
That seemed like a bold statement, but, in fact, he delivers enough solid, diverse advice to meet that goal for many readers.
It's also an interesting approach to a memoir, since he confines himself in the main part of the book to offering business advice and leaves his own experiences with his mining company, Franco-Nevada Mining Corp., to the second appendix (the first appendix, showing his sense of what appeals to readers, lists his top 10 all-time movies).
In Get Smarter, written with The Globe and Mail's business columnist, Derek DeCloet, he ladles out homespun wisdom in two-to-four-page crisply written, anecdote-laden chapters aimed at 30- to 40-year-olds, but golden at any age.
He starts with the decision-making tool that he began to wield back in university days and continued to employ in the decisions that helped him to become a billionaire. It's a variation of the pro-con method, but with weighting that allows you to strip away emotion and examine the importance of all the points at stake.
Here's how it works: Start on one piece of paper listing all the positive things you can about the issue in question, giving each item a score from zero to 10 -- the higher the score, the more important it is to you. Then move on to the negatives, scoring them from zero to 10 as well, only this time 10 refers to a major drawback.
Now add up the scores on each sheet. If the positive score is at least double the negative score, you should do whatever is under consideration. But if the positives don't attain that two-to-one advantage, you shouldn't tackle it -- or, at least, you should think twice.
"Yes, it is ridiculously easy. But one of the great fallacies of modern life is that decision-making has to be complicated to be effective," he says.
Picking a field to work in is just as easy, to his mind. Go for a business with high profit margins since the jobs usually pay more, have fewer layoffs and bankruptcies, and are less stressful. He spent a good chunk of his life in oil and mining, where the great advantage is that you can double or triple the value of a company with one drill hole. "No other industry can create wealth as rapidly," he observes.
But stay away from foreign oil plays, where you can run into expropriation. Closer to home, given the poor margins, he warns against airlines, auto parts, retailing, biotechnology, grocery stores, chemicals, wholesaling, machinery manufacturing, paper and forest products, auto manufacturing, restaurants, appliance manufacturing, trucking, any manufacturing competing with China, and telecom service.
"Don't misunderstand: You may be able to find fulfilment and a rewarding career in any of the above. But you're more likely to find satisfaction and superior financial rewards in industries with superior economics," he says.
You also want to be wary of four enemies of business people:
Ego: This destroys more people than any other single thing.
Greed: It can lead you to lose everything, he warns, as with the dog in Aesop's fable clutching a lamb chop in its jaw that crossed a stream and lunged at his reflection, hoping to get the second chop but dropping the first.
Alcohol and drugs: These two can destroy many an executive career.
Assistants who are sexually attractive, or, as he crudely puts it, "assistants with big breasts":Men have lost their career and fortune by succumbing to this temptation.
At the same time, he adds an important rule learned during 50 years of observation: Don't take your spouse or "significant other" to business meetings out of town or on tours. They aren't interested, and don't want to be there. They also can be a giant distraction, and can create havoc if they interact poorly with others.
But it helps to have a partner as a sounding board, both on the home front and in the office.
Many of the greatest start-ups in the past 30 years -- think of Apple, Oracle, Berkshire-Hathaway, Yahoo, and Google -- started as teams of two.
Mr. Schulich has worked all his life with partners, and recalls the many times he woke in the middle of the night with a brilliant idea that the next day his partner patiently talked him out of by listing many factors he had ignored. "Good partners are a blessing!" he says.
To keep them, you need to abide by the Golden Rule of Partnership: mutual veto power. If you cannot agree on a major proposition, you don't do it.
In the introduction, he states his hope that each reader who invests time and money in the book will leave with 20 to 30 ideas -- some that can help transform or shape their lives.
That seemed like a bold statement, but, in fact, he delivers enough solid, diverse advice to meet that goal for many readers.
It's also an interesting approach to a memoir, since he confines himself in the main part of the book to offering business advice and leaves his own experiences with his mining company, Franco-Nevada Mining Corp., to the second appendix (the first appendix, showing his sense of what appeals to readers, lists his top 10 all-time movies).
Monday, August 20, 2007
Clash of generations: Myth or mainstream? - Harvey Schachter
The conventional wisdom is that the different generations in our workplace clash because they each want different things. But Jennifer Deal, a research assistant with the Center for Creative Leadership, says studies show we all want the same basic things at any age. "Conflict has less to do with age or generational differences than it does with clout - who has it and who wants it," she writes in Executive Excellence. Leaders therefore need to take advantage of the common ground between the generations:
All generations have similar values
Family is the value cited most frequently by all generations. Other common values include integrity, achievement, love, competence, happiness, self-respect, wisdom, balance, and responsibility.
Everyone wants respect
Older people talk about respect in terms of "give my opinions the weight I believe they deserve" and "do what I tell you to do," while younger respondents characterize respect more as "listen to me" and "pay attention to what I say."
Leaders must be trustworthy
Individuals of all generations trust the people they work with directly more than they trust their organization (and their organization more than they trust upper management). All generations expect their leaders to be worthy of trust.
People want leaders who are credible and trustworthy. They want managers to listen, and to be farsighted and encouraging.
Internal politics is a problem at any age
Individuals of all generations are concerned about organizational politics, being recognized for the work they do, and getting the resources they need to do their job. At the same time, they recognize political skills are needed to move up.
No one really likes change
The stereotype is that older workers dislike anything about their workplace being changed while younger people relish change. But few people say they actually like change. "Resistance to change has nothing to do with age; it is all about how much you have to gain or lose as a result of the change," she stresses.
Loyalty depends on the context
People of all generations don't think that being loyal in the old sense is good for their careers. However, people closer to retirement are more likely to want to stay with the same organization. The time a worker puts in each day has more to do with position than age.
Everyone wants to learn
People are interested in gaining the skills to move to the next level. They want development in leadership, skills training in their field of expertise, problem-solving and decision-making, team building, and communication skills.
All generations have similar values
Family is the value cited most frequently by all generations. Other common values include integrity, achievement, love, competence, happiness, self-respect, wisdom, balance, and responsibility.
Everyone wants respect
Older people talk about respect in terms of "give my opinions the weight I believe they deserve" and "do what I tell you to do," while younger respondents characterize respect more as "listen to me" and "pay attention to what I say."
Leaders must be trustworthy
Individuals of all generations trust the people they work with directly more than they trust their organization (and their organization more than they trust upper management). All generations expect their leaders to be worthy of trust.
People want leaders who are credible and trustworthy. They want managers to listen, and to be farsighted and encouraging.
Internal politics is a problem at any age
Individuals of all generations are concerned about organizational politics, being recognized for the work they do, and getting the resources they need to do their job. At the same time, they recognize political skills are needed to move up.
No one really likes change
The stereotype is that older workers dislike anything about their workplace being changed while younger people relish change. But few people say they actually like change. "Resistance to change has nothing to do with age; it is all about how much you have to gain or lose as a result of the change," she stresses.
Loyalty depends on the context
People of all generations don't think that being loyal in the old sense is good for their careers. However, people closer to retirement are more likely to want to stay with the same organization. The time a worker puts in each day has more to do with position than age.
Everyone wants to learn
People are interested in gaining the skills to move to the next level. They want development in leadership, skills training in their field of expertise, problem-solving and decision-making, team building, and communication skills.
Monday, August 13, 2007
That next promotion could be at your fingertips - AMY VERNER
Are you wondering why you might not have nailed that potential new account despite having stellar storyboards and a thorough understanding of your client?
Maybe the problem wasn't so much in the presentation of your proposal as in the presentation of your hands.
Regular readers will know that I'm a strong proponent of the word "polished." It's difficult not to be when the word's various definitions include refined, cultured, flawless and skillful - all qualities exemplified in a role-model employee.
Today, I will address polish in the context of nail care - and this applies to men, too
Consider some highly possible scenarios: You're meeting your lawyer and he's thumbing through some documents. You notice chewed nails. Red flag No. 1: You think he's way too anxious.
Alternatively, you notice crud underneath his nails. Red flag No. 2: You think, if he doesn't notice that, then what else isn't he noticing?
Or, if your lawyer's a lady, you are concerned that her nails are the colour of oxblood and so long that they resemble talons. Red flag No. 3: You wonder whether she's passive-aggressively saying, 'Don't mess with me or I'll claw your eyes out.' "
All this is to say that people don't realize how quickly they judge others based on the hard layer that protects the tips of your 10 digits.
"A lot of people associate clean hands with being more trustworthy," says Ashley Cox, a lead aesthetician and manager of the Men's PowerSpa in downtown Toronto.
There, construction workers and executives spend 30 minutes and $40 for the "Essential Hand Care" treatment that includes cut, shape, cuticle work and massage. In other words, a manicure, which ironically sounds too feminine.
Handling paper and working in dry offices can be dehydrating. Some customers come in as often as twice a month because, as Ms. Cox points out, "Your hands and your face are your best business card."
Vancouver image consultant and personal shopper Diana Kilgour says men will only pay attention to their own hands once they see what a difference a manicure can make.
A little pampering in the name of looking professional seems reasonable enough, but women have been known to treat their nails as mini-canvases. Airbrushing on long, artificial nails makes it possible to create detailed, multi-coloured designs. But only women who own stock in the tools responsible for these techniques should consider arriving at work with sunsets or paw prints on their nails.
Ms. Kilgour is a proponent of polish, even more so when women have large nail beds. She is adamant, however, that certain looks work better than others. Black polish has transcended its association with Goth-obsessed teens and is now considered progressively fashionable. Chanel's Vamp and OPI's Lincoln Park After Dark lacquers have been popular enough over the years to spawn waiting lists.
Just remember Ms. Kilgour's advice: "If you are brilliantly groomed in every way and doing a wonderful job, then yes, I suppose you can have dark polish on short nails if it's always on," she says. "But there's nothing less attractive than dark polish that's half on, half off. That's just a nightmare."
A much safer option is the French manicure, where the nail attached to the skin gets a pinkish coat not far from its original shade and the white end is emphasized with white polish. Irene Lee, owner of Pure Nail Bar, which has five locations across Vancouver, says women can get 10 days out of a French manicure ($25) depending on how often they use their hands.
For Ms. Kilgour, the bottom line is not what people can get away with, but measuring up to a standard. "When someone else is writing our paycheque and doing performance reviews, the rule would be, 'Are your hands speaking louder than you are?' "
So now raise them up if you'd like a raise.
Maybe the problem wasn't so much in the presentation of your proposal as in the presentation of your hands.
Regular readers will know that I'm a strong proponent of the word "polished." It's difficult not to be when the word's various definitions include refined, cultured, flawless and skillful - all qualities exemplified in a role-model employee.
Today, I will address polish in the context of nail care - and this applies to men, too
Consider some highly possible scenarios: You're meeting your lawyer and he's thumbing through some documents. You notice chewed nails. Red flag No. 1: You think he's way too anxious.
Alternatively, you notice crud underneath his nails. Red flag No. 2: You think, if he doesn't notice that, then what else isn't he noticing?
Or, if your lawyer's a lady, you are concerned that her nails are the colour of oxblood and so long that they resemble talons. Red flag No. 3: You wonder whether she's passive-aggressively saying, 'Don't mess with me or I'll claw your eyes out.' "
All this is to say that people don't realize how quickly they judge others based on the hard layer that protects the tips of your 10 digits.
"A lot of people associate clean hands with being more trustworthy," says Ashley Cox, a lead aesthetician and manager of the Men's PowerSpa in downtown Toronto.
There, construction workers and executives spend 30 minutes and $40 for the "Essential Hand Care" treatment that includes cut, shape, cuticle work and massage. In other words, a manicure, which ironically sounds too feminine.
Handling paper and working in dry offices can be dehydrating. Some customers come in as often as twice a month because, as Ms. Cox points out, "Your hands and your face are your best business card."
Vancouver image consultant and personal shopper Diana Kilgour says men will only pay attention to their own hands once they see what a difference a manicure can make.
A little pampering in the name of looking professional seems reasonable enough, but women have been known to treat their nails as mini-canvases. Airbrushing on long, artificial nails makes it possible to create detailed, multi-coloured designs. But only women who own stock in the tools responsible for these techniques should consider arriving at work with sunsets or paw prints on their nails.
Ms. Kilgour is a proponent of polish, even more so when women have large nail beds. She is adamant, however, that certain looks work better than others. Black polish has transcended its association with Goth-obsessed teens and is now considered progressively fashionable. Chanel's Vamp and OPI's Lincoln Park After Dark lacquers have been popular enough over the years to spawn waiting lists.
Just remember Ms. Kilgour's advice: "If you are brilliantly groomed in every way and doing a wonderful job, then yes, I suppose you can have dark polish on short nails if it's always on," she says. "But there's nothing less attractive than dark polish that's half on, half off. That's just a nightmare."
A much safer option is the French manicure, where the nail attached to the skin gets a pinkish coat not far from its original shade and the white end is emphasized with white polish. Irene Lee, owner of Pure Nail Bar, which has five locations across Vancouver, says women can get 10 days out of a French manicure ($25) depending on how often they use their hands.
For Ms. Kilgour, the bottom line is not what people can get away with, but measuring up to a standard. "When someone else is writing our paycheque and doing performance reviews, the rule would be, 'Are your hands speaking louder than you are?' "
So now raise them up if you'd like a raise.
Friday, August 3, 2007
To get ahead: Tried and truisms - WALLACE IMMEN
The book shelves groan with volumes of the latest fad theories. Plenty of coaches are eager to impart their advice. And there's always a mentor to search out for guidance from the perch of experience.
So who does James Dale turn to for wisdom on how to advance his career successfully? Why, himself.
And what magic formulas has he come up with? None. For Mr. Dale, it's the tried and true that count. He's learned that the most effective strategies are the ones you already know.
"In fact, the secrets to career success aren't secrets at all but, rather, ideas, values and strategies most of us know so well that we tend to ignore them," says Mr. Dale, who credits applying the principles imparted by his parents, teachers and church leaders as major factors in his rise to chief executive officer of Detroit-based advertising agency W.B. Doner & Co. from 1991 to 1995.
His new book, The Obvious: All You Need to Know in Business. Period. is laced with advice like:
Simple is better. Don't look for complications that will distract you; stay focused on the goal and throw out mental trash that gets in the way.
Mean what you say. Exaggeration and embellishment undermine your credibility.
Honesty is the best policy. There's no such thing as a good liar and the truth invariably emerges. So take responsibility and apologize rather than hiding behind excuses.
If you don't know, ask. Don't be arrogant or afraid to admit that you don't understand. It saves making a lot of uninformed mistakes.
Yet, "we can tend to ignore such time-tested truths because they are obvious," says Mr. Dale, now a partner in management consultancy Richlin/Dale LLC in Baltimore. "Human nature is to look for miracles and magic shortcuts."
But in order to state and apply the obvious, you still have to find ways to tap your inner knowledge, career coaches say. So books and advisers can still be essential for shaping our thinking. The key is not to get sidetracked by following the latest fads.
You have to keep up with the current thinking, if only to remind yourself of what you already know, says Toronto-based career coach Nina Spencer, president of Nina Spencer & Associates, and the author of Getting Passion Out of Your Profession.
Self-help books and coaching can help you develop insight because they make you focus on what you are doing well and what you need to improve on, she says.
And no matter how seemingly new career fads may sound, "in reality, they are based on long-standing truths about human nature, told from different perspectives and in different ways," she says.
People may hear versions of obvious truths again and again - but ignore them until they are ready to use them. "There is always someone who is reaching a position to put the advice to immediate use," Ms. Spencer says.
At the same time, "jumping on every fad can distract you from what your our life experience, intuition and common sense can tell you should be done," says Steve Mitten, president of Principal Evolutions Coaching and Training Inc. in Vancouver.
By making the effort to distill the lessons that emanate from your life experience, intuition and common sense, you will develop an inner management expertise, he says.
"It takes work," Ms. Spencer adds. "It is not as easy as saying 'I know that.' You have to discover what you know, but are not paying attention to."
She suggests delving into books you may not have gotten around to reading that explore professional and personal values. "The original self-help books are religious texts we still lean on, whether it is the Torah, the Bible or the Koran. It can also be classics of motivational literature or current bestsellers about leadership and productivity," Ms. Spencer says.
Reading them isn't enough: "You also have to make a conscious effort to apply the truths you discover and step back regularly and examine what you are doing and how it relates to what you value and believe in," suggests career coach Irene Gardiner-Harding.
And it is easier than ever to get sidetracked in the modern workplace, says Ms. Harding, a partner in the coaching company playsthatwork Inc. in Victoria.
"We lose track of our intuition because of the hectic pace of daily tasks and being told what to do by the boss," Ms. Gardiner-Harding says.
"You can end up not knowing what you want because of all the clutter in your mind and the conflicting advice from people around you who say they know better," she adds.
But, invariably, she finds, when you go with your gut instinct, you'll get an answer that's good for you.
"You may still makes mistakes along the way, but they are based on your knowledge and experience, and you can learn from these mistakes better than you can from making mistakes based on what someone else tells you," Ms. Gardiner-Harding says.
That's the approach Mr. Dale advocates.
People have a terrible fear of failure and would rather rely on someone else's advice than their own instinct they because they don't trust themselves.
But "you can learn more from failure than you do from success because it points out what needs to be done the next time around and gives you the fuel for success," Mr. Dale says.
His favourite example is that Babe Ruth is remembered for setting a record number of home runs. But he actually also struck out a record number of times.
"Ignore the obvious at your own peril," Mr. Dale advises. "Learning and applying what you know requires long-term effort rather than an overnight fix, but the reality is that these truths are miraculous because they work. And nothing is better than something that works."
Stating the obvious
Truisms that are easily overlooked can be key to advancement, says James Dale, author of The Obvious: All You Need to Know in Business. Period.
Here are some of his favourites:
Obsessive-compulsive isn't all bad. Being on time, returning calls, proofreading, editing and rerunning the numbers should never be beneath you. "If you just do the details right in your job, you will put yourself ahead of about 95 per cent of your competition."
Be on time. People who are late develop a reputation for being late, which takes away from anything else they may have to offer in a meeting. Promptness builds an impression of reliability.
Work is a challenge, or it should be. "You perform at your best when you're tested. So, if you're good at what you do and if you can almost do it blind-folded, stop doing it and raise the stakes. Even if you fail, you fail at something hard, not easy, and you learn something you didn't already know."
Keep an open mind. "It isn't just a 50-year-old who gets set in old ways. You can get hardening of your thinking in your twenties if you aren't open to new ideas," he says. "The career implication is that if you are resistant to change and change is the norm, you're destined not to survive long in the organization." He recommends getting into the habit of noticing and entertaining new ideas, fashions and technology. Whether you like them or not, you have to know the current trends and why they have appeal because they will have influence in the future.
Failure is good. Fear of failure leads to inaction, which leads to failure. By taking a chance, you either come out with a success, or at least knowledge you can apply to the next chance you have to take.
Consistency beats a hot streak. If you watch somebody at the gambling table, hot streaks end sooner or later - and they can turn into cold streaks. So, if you hit a big win, don't get carried away with your success.
Don't be a jerk. The person who consistently commands respect is reasonable, kind, decent and fair - in a word, nice. "There are a remarkable number of people in management who believe the route to success is to be a bastard, take no prisoners and be tough," Mr. Dale says. But that's not being smart because people will fear you rather than respect you, he adds.
Life isn't fair. Get over it. There is no upside in dwelling on slights or missed opportunities.
Cut your losses. Not everything works out. If it isn't working, try to fix it; if it still doesn't improve, move on because the situation is unlikely to get better.
So who does James Dale turn to for wisdom on how to advance his career successfully? Why, himself.
And what magic formulas has he come up with? None. For Mr. Dale, it's the tried and true that count. He's learned that the most effective strategies are the ones you already know.
"In fact, the secrets to career success aren't secrets at all but, rather, ideas, values and strategies most of us know so well that we tend to ignore them," says Mr. Dale, who credits applying the principles imparted by his parents, teachers and church leaders as major factors in his rise to chief executive officer of Detroit-based advertising agency W.B. Doner & Co. from 1991 to 1995.
His new book, The Obvious: All You Need to Know in Business. Period. is laced with advice like:
Simple is better. Don't look for complications that will distract you; stay focused on the goal and throw out mental trash that gets in the way.
Mean what you say. Exaggeration and embellishment undermine your credibility.
Honesty is the best policy. There's no such thing as a good liar and the truth invariably emerges. So take responsibility and apologize rather than hiding behind excuses.
If you don't know, ask. Don't be arrogant or afraid to admit that you don't understand. It saves making a lot of uninformed mistakes.
Yet, "we can tend to ignore such time-tested truths because they are obvious," says Mr. Dale, now a partner in management consultancy Richlin/Dale LLC in Baltimore. "Human nature is to look for miracles and magic shortcuts."
But in order to state and apply the obvious, you still have to find ways to tap your inner knowledge, career coaches say. So books and advisers can still be essential for shaping our thinking. The key is not to get sidetracked by following the latest fads.
You have to keep up with the current thinking, if only to remind yourself of what you already know, says Toronto-based career coach Nina Spencer, president of Nina Spencer & Associates, and the author of Getting Passion Out of Your Profession.
Self-help books and coaching can help you develop insight because they make you focus on what you are doing well and what you need to improve on, she says.
And no matter how seemingly new career fads may sound, "in reality, they are based on long-standing truths about human nature, told from different perspectives and in different ways," she says.
People may hear versions of obvious truths again and again - but ignore them until they are ready to use them. "There is always someone who is reaching a position to put the advice to immediate use," Ms. Spencer says.
At the same time, "jumping on every fad can distract you from what your our life experience, intuition and common sense can tell you should be done," says Steve Mitten, president of Principal Evolutions Coaching and Training Inc. in Vancouver.
By making the effort to distill the lessons that emanate from your life experience, intuition and common sense, you will develop an inner management expertise, he says.
"It takes work," Ms. Spencer adds. "It is not as easy as saying 'I know that.' You have to discover what you know, but are not paying attention to."
She suggests delving into books you may not have gotten around to reading that explore professional and personal values. "The original self-help books are religious texts we still lean on, whether it is the Torah, the Bible or the Koran. It can also be classics of motivational literature or current bestsellers about leadership and productivity," Ms. Spencer says.
Reading them isn't enough: "You also have to make a conscious effort to apply the truths you discover and step back regularly and examine what you are doing and how it relates to what you value and believe in," suggests career coach Irene Gardiner-Harding.
And it is easier than ever to get sidetracked in the modern workplace, says Ms. Harding, a partner in the coaching company playsthatwork Inc. in Victoria.
"We lose track of our intuition because of the hectic pace of daily tasks and being told what to do by the boss," Ms. Gardiner-Harding says.
"You can end up not knowing what you want because of all the clutter in your mind and the conflicting advice from people around you who say they know better," she adds.
But, invariably, she finds, when you go with your gut instinct, you'll get an answer that's good for you.
"You may still makes mistakes along the way, but they are based on your knowledge and experience, and you can learn from these mistakes better than you can from making mistakes based on what someone else tells you," Ms. Gardiner-Harding says.
That's the approach Mr. Dale advocates.
People have a terrible fear of failure and would rather rely on someone else's advice than their own instinct they because they don't trust themselves.
But "you can learn more from failure than you do from success because it points out what needs to be done the next time around and gives you the fuel for success," Mr. Dale says.
His favourite example is that Babe Ruth is remembered for setting a record number of home runs. But he actually also struck out a record number of times.
"Ignore the obvious at your own peril," Mr. Dale advises. "Learning and applying what you know requires long-term effort rather than an overnight fix, but the reality is that these truths are miraculous because they work. And nothing is better than something that works."
Stating the obvious
Truisms that are easily overlooked can be key to advancement, says James Dale, author of The Obvious: All You Need to Know in Business. Period.
Here are some of his favourites:
Obsessive-compulsive isn't all bad. Being on time, returning calls, proofreading, editing and rerunning the numbers should never be beneath you. "If you just do the details right in your job, you will put yourself ahead of about 95 per cent of your competition."
Be on time. People who are late develop a reputation for being late, which takes away from anything else they may have to offer in a meeting. Promptness builds an impression of reliability.
Work is a challenge, or it should be. "You perform at your best when you're tested. So, if you're good at what you do and if you can almost do it blind-folded, stop doing it and raise the stakes. Even if you fail, you fail at something hard, not easy, and you learn something you didn't already know."
Keep an open mind. "It isn't just a 50-year-old who gets set in old ways. You can get hardening of your thinking in your twenties if you aren't open to new ideas," he says. "The career implication is that if you are resistant to change and change is the norm, you're destined not to survive long in the organization." He recommends getting into the habit of noticing and entertaining new ideas, fashions and technology. Whether you like them or not, you have to know the current trends and why they have appeal because they will have influence in the future.
Failure is good. Fear of failure leads to inaction, which leads to failure. By taking a chance, you either come out with a success, or at least knowledge you can apply to the next chance you have to take.
Consistency beats a hot streak. If you watch somebody at the gambling table, hot streaks end sooner or later - and they can turn into cold streaks. So, if you hit a big win, don't get carried away with your success.
Don't be a jerk. The person who consistently commands respect is reasonable, kind, decent and fair - in a word, nice. "There are a remarkable number of people in management who believe the route to success is to be a bastard, take no prisoners and be tough," Mr. Dale says. But that's not being smart because people will fear you rather than respect you, he adds.
Life isn't fair. Get over it. There is no upside in dwelling on slights or missed opportunities.
Cut your losses. Not everything works out. If it isn't working, try to fix it; if it still doesn't improve, move on because the situation is unlikely to get better.
Living up to the challenge - MARCIE GOOD
The collection of old warehouses, industrial buildings, an auto body shop and empty stretches of pavement southeast of Vancouver's Main Street and Terminal Avenue is hardly a utopian vision.
In the minds of a team from Stantec, however, it is.
A group of 12 architects, engineers and urban designers from the Vancouver company recently won second place in the "most visionary" category in an international contest sponsored by the Seattle-based Cascadia Region chapter of the U.S. Green Building Council, which includes member offices in British Columbia.
The 19 entries in the competition had to meet the criteria of the so-called Living Building Challenge, which calls for ultra-green sustainable buildings capable of meeting their own energy and water needs using renewable resources. Two winners were chosen in each of the "most visionary" and "realizable" categories. Stantec, the only B.C. winner, picked up $1,000 (U.S.) for its prize.
For their entry project, the Stantec team chose a rundown, seven-acre Vancouver site that is ripe for renewal. The model they envisioned features 16 buildings offering residential, light industrial and commercial components, all of which would make maximum use of rainwater, daylight and solar power to meet energy, heat and water needs.
The design team focused not only on reducing waste but also reusing it, outlining methods to collect compostable material from kitchens and restaurants and transform it into heat, power, vehicle fuel and soil. The end result was an ideal community that could provide its own energy, heat and water, with enough surplus to sell to others.
It might sound like an Al-Gorian pipe dream, but according to Stantec intern architect Max Richter, this kind of community is closer than we think.
"We wanted to push the envelope, but at the same time we wanted it to be feasible," Mr. Richter said of the Stantec entry.
"We're using technology that exists. We're not relying on NASA to develop something that would make this work."
Along with the sustainable energy and water measures, the Stantec team proposed planting trees on the site to help improve the soil after decades of industrial pollution. It also scored points for choosing a site close to the Main Street SkyTrain station and locating workplaces in a high-density area.
Rather than tearing down the old warehouses on the site, the Stantec designers proposed making them more energy-efficient with a covering of photovoltaic panels and recycled glass. The skin would collect water and act as a ventilator, responding to changes in airflow, humidity and temperature. This idea was particularly noted by one of the competition's three judges, Jason McLennan, executive director of the Cascadia Region chapter who drew up the guidelines for the Living Building Challenge in the mid-1990s.
Among the 16 criteria for a living building is the need for "net zero water," meaning that the building's annual water allotment is the amount that falls on the site; it might draw from a municipal supply sometimes, but must contribute an equivalent amount of water to other sites. It also treats its own water on site.
Similarly, the criterion for "net zero energy" means the building provides for its own power needs through renewable energy generation, such as solar or wind. When sunlight is low, it might draw from an outside power grid, but it can also sell excess power.
Other requirements include that the building generate no pollution, and that it improve the health and diversity of the local ecosystem. Each of the 16 criteria have been demonstrated in existing buildings, but a living building that meets all of the standards has yet to be built.
However, Mr. McLennan expects to see one within the next 18 months: a classroom building at Cambrian College in Sudbury, Ont., is in the final stages of design while three projects in Portland, Ore., are vying to be the first.
"There would be no barrier, technologically, to these buildings — we've proven that," Mr. McLennan said.
"The biggest barrier is attitudinal, or human-based, barriers. Right after that would be economic ones."
Because ultra-green buildings cost more at the outset, Mr. McLennan says the most likely candidates to build them are institutional. That's part of the reason the Stantec group chose the Main and Terminal site: It's owned by the City of Vancouver, and thus their theoretical project could conceivably go ahead some day. (A Stantec study of a living building concluded that, over a 100-year period, it would cost less to build, operate and take down than a structure built to LEED Gold standards.) Stantec's current projects include the Vancouver Aquarium expansion and the Greater Vancouver Regional District's water treatment plant, both of which are aiming for LEED Gold rating. The water plant design collects methane from waste and uses it to generate power and heat, an idea that was used in the competition entry for the Main and Terminal site.
The team from Stantec, which has 390 employees in its Vancouver office, spent about a month on company time designing their entry. Mr. Richter said they took part in the Living Building Challenge contest to encourage other designers and developers to expand their ideas about what a sustainable building or community could be.
That, too, was the rationale behind the Living Building Challenge. For most of the 20th century, Mr. McLennan explains, building practices reflected architect Le Corbusier's famous line that houses are "machines for living," guzzling energy, heat and water and spewing out waste. When he drew up the guidelines, Mr. McLennan replaced the machine metaphor with that of a flower, envisioning structures that would be as much a part of their natural environment as a perennial plant.
The Living Building Challenge was recently endorsed as a national program by the Canada Green Building Council, which notes that buildings currently contribute 30 per cent of this country's greenhouse-gas emissions.
In the minds of a team from Stantec, however, it is.
A group of 12 architects, engineers and urban designers from the Vancouver company recently won second place in the "most visionary" category in an international contest sponsored by the Seattle-based Cascadia Region chapter of the U.S. Green Building Council, which includes member offices in British Columbia.
The 19 entries in the competition had to meet the criteria of the so-called Living Building Challenge, which calls for ultra-green sustainable buildings capable of meeting their own energy and water needs using renewable resources. Two winners were chosen in each of the "most visionary" and "realizable" categories. Stantec, the only B.C. winner, picked up $1,000 (U.S.) for its prize.
For their entry project, the Stantec team chose a rundown, seven-acre Vancouver site that is ripe for renewal. The model they envisioned features 16 buildings offering residential, light industrial and commercial components, all of which would make maximum use of rainwater, daylight and solar power to meet energy, heat and water needs.
The design team focused not only on reducing waste but also reusing it, outlining methods to collect compostable material from kitchens and restaurants and transform it into heat, power, vehicle fuel and soil. The end result was an ideal community that could provide its own energy, heat and water, with enough surplus to sell to others.
It might sound like an Al-Gorian pipe dream, but according to Stantec intern architect Max Richter, this kind of community is closer than we think.
"We wanted to push the envelope, but at the same time we wanted it to be feasible," Mr. Richter said of the Stantec entry.
"We're using technology that exists. We're not relying on NASA to develop something that would make this work."
Along with the sustainable energy and water measures, the Stantec team proposed planting trees on the site to help improve the soil after decades of industrial pollution. It also scored points for choosing a site close to the Main Street SkyTrain station and locating workplaces in a high-density area.
Rather than tearing down the old warehouses on the site, the Stantec designers proposed making them more energy-efficient with a covering of photovoltaic panels and recycled glass. The skin would collect water and act as a ventilator, responding to changes in airflow, humidity and temperature. This idea was particularly noted by one of the competition's three judges, Jason McLennan, executive director of the Cascadia Region chapter who drew up the guidelines for the Living Building Challenge in the mid-1990s.
Among the 16 criteria for a living building is the need for "net zero water," meaning that the building's annual water allotment is the amount that falls on the site; it might draw from a municipal supply sometimes, but must contribute an equivalent amount of water to other sites. It also treats its own water on site.
Similarly, the criterion for "net zero energy" means the building provides for its own power needs through renewable energy generation, such as solar or wind. When sunlight is low, it might draw from an outside power grid, but it can also sell excess power.
Other requirements include that the building generate no pollution, and that it improve the health and diversity of the local ecosystem. Each of the 16 criteria have been demonstrated in existing buildings, but a living building that meets all of the standards has yet to be built.
However, Mr. McLennan expects to see one within the next 18 months: a classroom building at Cambrian College in Sudbury, Ont., is in the final stages of design while three projects in Portland, Ore., are vying to be the first.
"There would be no barrier, technologically, to these buildings — we've proven that," Mr. McLennan said.
"The biggest barrier is attitudinal, or human-based, barriers. Right after that would be economic ones."
Because ultra-green buildings cost more at the outset, Mr. McLennan says the most likely candidates to build them are institutional. That's part of the reason the Stantec group chose the Main and Terminal site: It's owned by the City of Vancouver, and thus their theoretical project could conceivably go ahead some day. (A Stantec study of a living building concluded that, over a 100-year period, it would cost less to build, operate and take down than a structure built to LEED Gold standards.) Stantec's current projects include the Vancouver Aquarium expansion and the Greater Vancouver Regional District's water treatment plant, both of which are aiming for LEED Gold rating. The water plant design collects methane from waste and uses it to generate power and heat, an idea that was used in the competition entry for the Main and Terminal site.
The team from Stantec, which has 390 employees in its Vancouver office, spent about a month on company time designing their entry. Mr. Richter said they took part in the Living Building Challenge contest to encourage other designers and developers to expand their ideas about what a sustainable building or community could be.
That, too, was the rationale behind the Living Building Challenge. For most of the 20th century, Mr. McLennan explains, building practices reflected architect Le Corbusier's famous line that houses are "machines for living," guzzling energy, heat and water and spewing out waste. When he drew up the guidelines, Mr. McLennan replaced the machine metaphor with that of a flower, envisioning structures that would be as much a part of their natural environment as a perennial plant.
The Living Building Challenge was recently endorsed as a national program by the Canada Green Building Council, which notes that buildings currently contribute 30 per cent of this country's greenhouse-gas emissions.
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