Insight is Capital™ Podcast

John De Goey, Senior Investment Advisor and Portfolio Manager at Wellington-Altus Private Wealth joined us for this episode to discuss dangers of complacency arising from the industy's optimism bias, as well as numerous others, threaten to derail the best laid plans of investment and financial planning and the finances of everyday investors. Our conversation covers a range of topics, including John's career in finance, his latest book "Bullshift: How Optimism Bias Threatens Your Finances," and the importance of addressing biases in investing. We also discuss the challenges of introducing new ideas in the financial services industry, the importance of realistic financial planning assumptions, and the need to reassess one's investment strategy regularly. Among the ideas we emphasized here, was the importance of being 'prepared' for potential changes in the market, such as inflation, and building a more balanced portfolio that can withstand unexpected gyrations. Please enjoy our conversation, and thank you for tuning in. HIGHLIGHTSJohn De Goey's career path [00:01:37] John De Goey moved to finance after studying public administration, has written books and articles to help consumers understand the industry and have better relationships with advisors.[00:09:04] Advisors can provide value through behavioral coaching, which helps investors remain grounded and stay invested while being realistic.[00:19:58] Lower expected returns and longer life expectancies may require more savings and a longer working life to achieve desired retirement lifestyle.[00:26:00] 40-year bull market in bonds ended in 2022, rates to stay high, need to reassess investing strategies, widely anticipated recession.[00:40:21] Invest in products with reasonable, risk-adjusted returns and non-correlated weekly returns to maintain optimism for the long run.[00:45:14] Be prepared with two strategies, each less than 5% exposure; consider 15% allocation to alternatives, plan carefully to avoid large losses.[01:06:30] CAPE is not good for timing markets; past experience doesn't dictate future outcomes; risk of not paying attention to valuations.[01:13:18] Central banks need to fight inflation to pivot; pain must be manufactured before pivot is possible.[01:18:09] Investors may be taking on more risk than they think due to optimism bias and need to reassess, prepare for potential issues, and reflect on their portfolio.[01:20:41] Advisors must recognize and reflect on their own biases to give better advice.Where to find John De Goey:John De Goey on LinkedinJohn De Goey at Wellington-Altus Private WealthGet the book:Bullshift: How Optimism Bias Threatens Your FinancesWhere to find the RYA Crew:Rodrigo Gordillo on LinkedinReSolve Asset ManagementPierre Daillie on Linkedinhttps://AdvisorAnalyst.com

Aahan Menon joined us to discuss Prometheus Research's investment framework, which is based on economic forecasting of growth, inflation, and liquidity. He emphasized the importance of market regime confirmation to mitigate the risk of being wrong in economic forecasting.HIGHLIGHTS:Aahan's background and founding of Prometheus Research [00:02:59] Aahan talks about his career journey and how his experiences led him to found Prometheus Research, a systematic macro research firm.Unique approach of Prometheus Research [00:03:27] Aahan explains how Prometheus Research provides real-time insights into the evolution of markets and the economy through a data-driven, rules-based process, and how they aim to help investors of all sizes navigate macroeconomic cycles.Navigating the tension between market and macroeconomic modeling [00:06:31] Discussion on how to navigate the tension between the market's forward-looking discounting mechanism and the utility of macroeconomic series.Opportunity set in macro investing [00:07:48] Explanation of how understanding the likely gap between a potential acceleration and what's discounted in terms of a linear path is the opportunity set in macro investing.Factors driving the forecast [00:19:33] Discussion on the factors driving the current forecast, including monetary tightening and debt service burdens.Housing activity and employment contraction [00:20:45] Discussion on the contractionary condition of the economy, the impact on the housing sector, and the potential for a recessionary condition.Softening of the labor market [00:26:34] The potential for a recessionary contraction despite historically low unemployment rates, and the projection of sub 2% unemployment rate by the end of the year.Employment and Inflation [00:34:25] Discussion on the recent pulse in employment and its impact on inflation, as well as the unlikelihood of it continuing in the future.Productivity and Economic Growth [00:37:42] Mention of a recent McKinsey paper on the potential impact of productivity increases on inflation and debt, and how it could affect economic growth.Retirements and Wealth [00:40:46] Discussion on the excess retirements due to windfalls and wealth, especially in housing, and the possibility of retirees returning to work.Labor Force and Profits [00:43:46] Analysis of the impact of labor force participation and employment growth on the economy, and the squeeze on profits due to businesses' own reinvestment.Recomposition of the economy [00:51:04] Explanation of the shift towards a services-oriented economy and the impact of income injection on the economy.Navigating the cycle [00:53:02] Discussion on navigating the cycle and the relative strength of cyclical sectors.Investment decisions [00:53:46] Explanation of how Prometheus Research's algorithmic work informs investment decisions.Investment Framework [00:54:22] Aahan explains the economic forecasting framework used by Prometheus Research, focusing on growth, inflation, and liquidity. They also discuss the challenges of forecasting and the importance of market regime confirmation.Portfolio Construction [00:56:02] Aahan discusses the timing tools used by Prometheus Research to create stable return streams that are impervious to any particular regime or auto-correlation structure. They also talk about the importance of managing volatility and risk in the current tightening liquidity environment.Current Positioning [00:57:57] Aahan shares Prometheus Research's current positioning, which includes a high level of cash and a focus on relative value trades such as being long the dollar and long T-bills. They also discuss potential trades, such as shorting the two-year and being long bonds.Term Structure Dynamics [01:17:01] Discussion on the impact of the Fed's manipulation of the term structure on asset prices and risk premia.Private sector credit creation and liquidity [01:20:42] Discussion on the impact of private sector credit creation and liquidity on the economy and financial markets.Improvement in banking and corporate activity [01:22:16] Analysis of the improvement in lending and issuance of commercial paper, high yield, and IG in 2022.Factors affecting liquidity creation [01:24:00] Explanation of the rush to issue commercial paper in anticipation of rate increases and the impact of nominal activity and inflation on liquidity creation.Pro-cyclical liquidity and economic activity [01:25:04] Discussion on the potential effects of quantitative tightening and responsible treasury policies.Where to find Aahan Menon:Prometheus Research SubstackWhere to find the RYA crew:Adam Butler on LinkedinPierre Daillie on Linkedin

Advisors are currently facing some significant challenges when it comes to working with millennial clients. The challenge lies in the fact that most high-net-worth clients are around 70 years old, while millennials are looking for advisors who can offer innovative, non-traditional approaches.The idea that millennials don't want professional advice is an under-informed perspective. As a practitioner, it's not about whether millennials want advice or not; the question that begs an answer is, "What kind of advice do millennials want?" and "How do they want to get it?"To stay relevant and attract millennial clients, advisors must adapt their strategies and align them with the clients' objectives. This means that advisors need to change their approach to incorporate new technologies and methods that are in line with the way millennials prefer to manage their finances.Fintech is a challenge that advisors must consider. With the proliferation of apps available today, millennials can manage their finances without intermediaries, all from their smartphones. Advisors should integrate Fintech into their approach to ensure that they remain relevant and useful to their clients.Justin Castelli, Investment Advisor and Founder at RLS Wealth, joined us to share some the ways he's navigated these challenges. One of the reasons he's uniquely qualified to explore this topic is because he realized and envisioned much of the ideas we discuss at the point of breaking away from a larger financial institution after many years, and becoming an independent advisor.Fortunately, most of what we discuss here can be, with some tools (including fintech), thought, and effort, painlessly integrated into your existing practice, so as to grow your book into the millenial market, as well as reduce your practice's potentially high succession risk.Where to find Justin Castelli:Justin Castelli on LinkedinJustin Castelli at RLS WealthJustin Castelli at All About Your BenjaminsFor a Canadian WealthTech resource/solution, one example to check out is AdvisorFlow that allows you to easily and efficiently onboard new clients of all types. (This is not an endorsement. Canadian advisors use AdvisorFlow as a wealthtech solution).AA is looking for a subscription platform that can support advisors looking for a solution for flat rate services for smaller clients seeking professional advice.Copyright © AdvisorAnalyst

Simplify Asset Management's Chief Strategist, Michael Green, a prolific researcher and writer, with a huge and popular following on Twitter, where he tweets as @ProfPlum 99 and Real Vision where he shares his thoughts and industry contacts in his Mike Green – In Conversation series, as well as a famed observer of probabilistic market and economic outcomes, provides a deep dive into the current economic landscape and his investment strategy. The market is in a state of uncertainty due to various factors, such as inflation data, recession, and passive investing dynamics. Green discusses the Federal Reserve's actions and its potential impact on the economy, and explains his thoughts on why, in his opinion, the Fed has overreacted in terms of the bluntness and depth of it's policy response, and what that means for investors and the economy going forward.He believes that we are already in a recession (the Fed has gone too far too fast) – without considering that the severity of the recession is often a function of who is trying to get into the job market (e.g. highly skilled, highly paid workers vs. average workers). We examine the unemployment story and the heightened risk of a two-speed economy, as well as specific impacts of recent events such as the Ukraine conflict and the pandemic stimulus.The episode delves into the potential impact of technological advancements on the economy, such as the deflationary and inflationary effects of technology.We discuss potential negative impact on equities of profit (EPS) recession on equities, due to less investment as a result of the decrease in capital availability, arising from an increase in unemployment.Join us for a fascinating, thought-provoking analysis of the economic landscape and provides valuable insights for investors and policymakers alike.Where to find Michael Green:Michael Green at SimplifyMichael Green on TwitterMichael Green on SubstackCopyright © AdvisorAnalyst.com

Alfred Lee, Director, Portfolio Manager, and Investment Strategist at BMO Global Asset Management joined us to discuss his outlook for 2023. 2022 was a year of challenges in the financial markets, with investors facing a lot of uncertainty. For 2023, we talk about whether inflation and interest rates are moving in a positive direction. We cover portfolio strategy, zoom in on interest rate policy, fixed income strategy, and take a look at his 2023 market outlook. We discuss factor and sector equity strategy, banks, energy, gold, alternatives, key risks, and his 50/30/20 asset allocation portfolio framework, risk budgeting and asset mix.We talk about:• A lot of investors moved to short term instruments during the last half of 2022. Was that the right move, or was that fear driven? • What's the likelihood the Fed as well as BoC will soon pause or slow on hiking rates, and if so, for how long?• Wild cards? The stickier parts of the economy, labour market, the effect higher interest rates are having on housing prices, discretionary income and spending, 18-24 months lag time, China re-opening• What's your fixed income strategy in this climate where we're hearing a lot of talk about rates remaining where they are for a while, and the high probability of a recession?• The 'big story' for 2023, is fixed income, and what to do with it, where to go?• the strategic thinking behind the 75 / 25 split in fixed income allocation• Is it a new regime? Or back to the "Old Normal"• equities strategy and rationale - Multi-Factor & Sectors?• alternatives / liquid alternatives strategy?• The demand for diversifiers, liquid alts• The 50 / 30 / 20 asset allocation framework.Where to find Alfred and his team at BMO ETFs:BMO ETFs DashboardBMO ETFs Trade Ideas and PodcastsAlfred lee on LinkedInCopyright © AdvisorAnalyst.com

Erika Toth shares her first hand perspective about the work she's doing with advisors to assist them into the realm of top shelf wealth management. This was a comprehensive talk about the trends shaping the wealth management business, the evolution investment advisors have undertaken to become Fee-based, to earn PM designations, and to level up and grow their business, to go toe-to-toe with ICPMs (Investment Counsel PMs).What's driving this massive change, this levelling of the playing field?Erika Toth is the director of Institutional and Advisory for Eastern Canada at BMO ETFs. She has extensive experience in investment analysis, portfolio construction, and trading of equities, fixed income, foreign exchange, options, ETFs and mutual funds. She is known for her attention to detail and providing support and education to advisors and portfolio managers in a consultative manner.We discuss:- Erika's experience and background- The size and growth of the ETF space in Canada- The proliferation of ETF options/solutions in ten years, ranging from simple to very complex- the trend of advisors graduating to PM in the field, gaining the credentials to do so- from index ETFs to liquid alternative ETFs.- how ETFs are levelling the playing field between Investment Advisor PMs vs. Investment Counsel PMs- how ETFs are providing advisors with all the building blocks they can use to compete- how advisors are competing with ICPMs using ETFs- how she and the team at BMO ETFs are assisting advisors on a daily basis to level up their competitiveness- how the playing field is levelling- ideas and strategies advisors can implement to be competitive in the business and vs. ICPMs.- portfolio construction and investment planning tools BMO ETFs have created for advisorsConnect with Erika Toth on LinkedinYou can find pretty much everything we discussed at https://bmoetfs.caBMO ETFs Trade Ideas and PodcastsETF tools and resources: https://www.bmogam.com/ca-en/advisors/tools-and-resources/etf-investing-basics/etf-tools-and-resources/ Thank you for listening. Thank you for watching. Please make sure to like us and share us wherever you can. It helps more people like you find us.

Alfonso Peccatiello, Founder, CEO, & Macro Strategist at The Macro Compass (https://themacrocompass.com) joins us for an amazing deep dive into what is behind all of today's macro-economic and macro-market considerations and discussions. If you're interested in getting at what is at the heart of today's volatile inflation, interest rate, bond yield, and monetary policy considerations across all regions including Europe and the US, don't miss this conversation.Alfonso Peccatiello's explanation of what is driving all macro considerations in the sobering monetary policy environment we find ourselves in today, is eye-opening. Macro Alf, (@macroalf on Twitter) as he is otherwise known across the internet, provides an eloquent and lucid view of the bewildering plumbing of the economy and markets.Alfonso once ran a $20-billion portfolio at ING Bank, and while there, operated in the midst of personal consultations with among many others, all central bankers, central banks, and trading floors across Europe and the UK. He has a deep understanding of global bond markets, and his familiarity with all things macro has bestowed him with a rare gift of being able to explain some of the most complicated topics of the financial system so that anyone can begin to understand how it all works.His substack and podcast are/were among the most popular finance outlets across the financesphere of the internet.****************Where to find Alfonso Peccatiello, The Macro Compass****************The Macro CompassAlfonso Peccatiello on TwitterAlfonso Peccatiello on LinkedinThe Macro Compass Substack***************Where to find the Raise Your Average crew:***************ReSolve Asset ManagementReSolve Asset Management BlogMike Philbrick on LinkedinRodrigo Gordillo on LinkedinAdam Butler on LinkedinPierre Daillie on LinkedinJoseph Lamanna on LinkedinAdvisorAnalyst.com

This is part two of our thought provoking conversation with Richard Heft, President and Co-Founder at EXT. Marketing, which is in my opinion, one of Canada's premier expert financial communications and marketing firms. I'm always excited to talk to Richard; he's one of those folks who talks to everyone in the business. He always has a ton of takeaways and insight to share, every time.In part two, we talk about how advisors can add gravity to their communications with clients at a time when little else matters more. Clients are getting their statements every month and each time they do, especially these days with the rough year it's been, it's potentially a trigger for all their fears and concerns about their investments, about you their advisor, and about whether it's time for a change of direction or worse. This is the call to arms if there ever was one. It's a time to be proactive, it's a time to be sensitive, and Richard and I talk about how you can cement your brand as an advisor, in this critical moment.Please enjoy our conversations and thank you again for listening.

We recently had a thought provoking conversation with Richard Heft, President and Co-Founder at EXT. Marketing in Toronto. We like talking to Richard as he as a uniquely qualified perspective on the entire Canadian investment industry, as one of the heads of what is arguably one of the best institutional communications consulting and production teams, now on both sides of the border. Along with EXT.'s co-founder, Jillian Bannister, Richard leads a group of communications and marketing experts working with North America's largest financial institutions.They talk to just about everyone in the business about what's going on and all of the thought leadership that's occurring across the investment company ecosystem, and have a bird's eye view all that is happening, all of the opinions that are floating around, from all sides of the investment business.Please enjoy our conversation and interview. This is part one of our conversation.We will share part two of our conversation tomorrow, in which we discuss a multitude of ways advisors can step up their communications strategies with their clients in what is and has otherwise been a very difficult and challenging year and transition period, for all as investors.

David Burrows, President & Chief Investment Strategist, at Barometer Capital Management joins us for an in depth discussion on the markets, inflation, monetary policy, outlook, his base case, and exchanges his contrarian case for what possibly lies in the future vis-à-vis domestic and global economics, as well as sharing a few of his surprising ideas regarding what he's doing in the alternative investing space.David provides the Barometer team with macro driven quantitative analysis. Covering mobile markets and asset classes, Barometer tactically manages investment portfolios, targeting structural revaluations.David co-founded Barometer Capital Management, in 1991 after beginning his career in 1986 with the Private Client Group at Scotia McLeod. With Greg Guichon, David sits on the firm’s investment policy committee and is responsible for the overall construction and daily review of all client portfolios. David is a frequent guest as a market commentator on CTV, CBC and BNN Bloomberg.Barometer manages discretionary investment portfolios for private investors, foundations and endowment funds. Their stated purpose is to earn consistent, absolute returns while preserving capital. In an industry that measures success by relative performance to the market, Barometer is unique for its commitment to, and history of, producing consistent absolute returns.=======================Where to find David Burrows=======================David Burrows on LinkedinDavid Burrows, Barometer Capital Management=======================Where to find the Raise Your Average crew:=======================ReSolve Asset ManagementReSolve Asset Management BlogMike Philbrick on LinkedinRodrigo Gordillo on LinkedinAdam Butler on LinkedinPierre Daillie on LinkedinJoseph Lamanna on LinkedinAdvisorAnalyst.com*****"You don't have to be brilliant, just wiser than the other guys, on average, for a long time." Charlie MungerWelcome to Raise Your Average, our deep dive journey into learning from the people and process behind the world of investing. Through conversations with leaders in the investments game, we peel back the layers of the onion on how these holders of the keys to the kingdom allocate their time, their energy, and their dollars. We are all students and we are all teachers. We are the average of the 5 people we spend the most time with. Come hang out with us for a while and raise your average, as we raise ours.Music credit: In Hip Hop, Paul Velchev (8MJZA6T3LK)