Value #5 Business and Digital Disruption: Perspective

Value #5 Business and Digital Disruption:  Perspective

Being a single parent when my daughters Cara and Shannon were toddlers meant keeping them on a schedule and providing for them.  Being too busy to enjoy some of the miracles of seeing through a young one’s eyes wasn’t all that unusual.  And being blinded by the stresses, trials and tribulations of everyday life meant that even when I wanted to, I couldn’t.

This past Friday I took the day off work and got to slow down a bit accompanying my oldest grandson, Alessio, on his adventures.  Going to see the dinosaurs at the Royal Ontario Museum (ROM) was as much about the journey there and back and giving him freedom to wander around the galleries that caught his interest.

I couldn’t help but notice that as much as we say that ‘childhood is wasted on children’ it was the parents who were rushing around ticking off the requisite destinations and once arriving rushing to and fro making sure to hit all the high points and exhibits.  Childhood is more often wasted on them.

As a grandparental I not only have the luxury of time if I wish to take it, but the great advantage of living close to many enriching opportunities, and can seek the opportunities to see the world through a two-year old’s eyes.

The fact that the ant crawling along the cracks of the sidewalk in Queen’s Park was more exciting than the prospect of seeing the dinosaurs at that one point shouldn’t have surprised me.  I was fascinated by Alessio’s focus on the insect struggling to climb up and around mountainous boulders in its path that to us were smaller than pebbles.  Only when he had satisfied himself by removing the “boulder” was he prepared to move on to his next adventure.

We all move about with blinders on.  I’m not sure we could cope with the constant bombardment of stimuli if we didn’t.  But if having perspective means having a broad vision, doing so from the tunnel of our own needs, experiences and expectations limits us to the often-heard refrain, “I should have seen that” or “I knew that!”

If there is one value that the advice-giving channel has as a competitive advantage, it is our ability to create and maintain perspective for our clients.  It doesn’t serve as a governor or limiter on actions or client behavior (in other words a conscience).   Instead we can provide a balance from which to make more informed decisions.  What a client does with their money is not my concern, but telling them the consequences of their decisions is.

Blowing past the blinders in social media can be difficult.  How far do I push provocation?  How blunt do I need to be?  What should my image be?  If I can’t get past people’s elaborate paradigms, particularly as wholesale change threatens the very foundation of those elaborate mental structures, how can I ask them to see my perspective as valid even though I resorted to some sort of shock approach?

Surfing through my morning social media take, I continue to be surprised by the depth and breadth of “sex, drugs and rock and roll” in messaging.  The seven deadly sins, or as a friend, mentor and supervisor from earlier in my career summed it up, “fear, greed and envy” are equally prominent.

My thirst for perspective, whether dealing with the sloppy commodity markets or with the specter of looming interest rate increases, is a combination of experience and an academic thirst for knowledge.  Communicating it and blowing past investor’s preconceptions is both a function of making bold statements and using bold imagery.

In fact, of the five values that forms our professional value proposition, it is this one that I work hardest at and yet the images we choose to use have the biggest impact.

But what I cannot do is rely on sex, drugs and rock and roll.

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

Value #4 Business and Digital Disruption: Professional Experience

Fidget Spinners.

I want one.  After all what better mindless activity can I find that will keep me amused for hours that requires little or no skill.  And who knows, maybe I can get a premium one made of matt aluminum alloy that has lights so I can really get into it?

For all the controversy that is as predictable, like the corrupting power of the hula hoop in one single season in the 1950’s, or so said parents concerned about the perceived link between sex and toys, fads in children’s lives come and go.  My only disappointment is that Alessio, my grandson, aged 2, is too young to take part in it or I would have sufficient rationalization to jump on the bandwagon and endeavor to remain a cool gramps.

Excesses are seemingly hardwired into us.  Whether it is blockchain currencies, or Toronto real estate prices, or for that matter the recent plunge in oil prices, the madness of the masses and whole industries that promulgate the trends are part of the human condition.

But I am no more able to tell you how long excess can exist or what the post-excess fallout might look like than you can.  Many of us easily spot excess but that is more of an observation of the human psyche.

I have a commentary written about Blackberry that I leave up to keep me humble.  Living in my own cognitive dissonance I jumped into a Blackberry Z10 believing that it would solve all my answers, eschewing an iPhone 5.  I lost out on two key realities.  One, iPhone, by comparison, was a breeze to learn and use.  Secondly, I started to understand the disruptive nature of technology, particularly mobile technology, first hand.

Linda, life and business partner, used to tell our adult children that we were expecting a letter to Santa and that whatever they asked for had to be available on Queen Street between University and Dufferin.  This year, half on a lark, we told them that if it wasn’t available on Amazon they weren’t getting it and to send us their wish lists.

The process of ordering, wrapping and labelling was done in about 1 ½ hours from the comfort of the den, for 4 adult children, 2 significant others and finally a grandchild.  The hardest part was the daily stop at the concierge in our condo to retrieve the boxes, unpack them and put them under the tree.

Where professional experience plays a role is knowing when a trend is real and being smart enough, credentials notwithstanding, to be able to step back and admit that you don’t know and dig deeper into cause and effect.

The same is true of history repeating itself.  Yes, it does, but never the same way in the same place twice.  Yet, I work in an industry that constantly points to the past as if surely will repeat itself.  We’ve had almost nine years of record low interest rates and many of us made the mistake of believing, simply because it has in the past, that interest rates would eventually rise.  9 years in and maybe, just maybe, we’re finally seeing the signs of reversal.  There’s a reason regulators force us to use an expression akin to “past performance is not necessarily indicative of future returns” when talking about returns.

I am fortunate enough to have a formal education in business.  I am blessed with an insatiable curiosity.  And I know, if I relax and leave myself in an environment that is constantly changeable and fluid that I won’t lock myself into some sort of intellectual brain freeze.  After all, dogma once suggested that all swans were white or that the earth was flat.

Being a professional in an age of digital disruption means abandoning the academic and entrenched biases in our business communicating observations in new ways and in new mediums.

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

 

Value #3 Business and Digital Disruption: Simple Answers

If I can’t leave you with that “smack yourself in the head, why didn’t I think of that” feeling, then I’ve failed.

All too often in the past I took what was self-evident to me and dressed it up in ‘tails and top hat’.

If I look at my success as a university lecturer, it was that I could build a simple paradigm for my students and bolt on or take off the complexity as it was necessary.  Instead I have been altogether too prone to dress up my ideas in finery, but a pig in a gown is still a pig.  Too bad you’re now focused on the pig.

This past weekend I spent a lot of time surfing through videos and making notes on what moved me, what inspired me and what amused me.  In every case, the proposition being communicated to me was short, simple and direct.  Leaving aside classic videos of fails for which I have an infinite patience and morbid fascination, I found myself flipping to the next one if the video failed to stay within the tight boundaries.

Even the ‘crystal kid’ stuff I used to tease Linda mercilessly about was interesting.  In every case, and I twice typed the video scripts out to be sure, they averaged three minutes in length, had less than 250 words of dialogue and regardless of their production value stuck to three points.

Let me use early retirement as an example.

Our ability to retire is dependent on three things – how much will I need, how much I can save and how much I already have.

I can take any of those three things and break them down into three more, and those three, three more.

What doesn’t help is that all that extraneous data muddies the fact that the three most important variables must be answered before any active consideration of the rest.  And if in the interests of proving how smart I am if I write a thesis and try to introduce all those extraneous points all I’ve done is disquieted you, frustrated you or bored you.

If I’m reaching out to you in a digital world, I am altogether too conscious of how easy it is for you to click your mouse without ever having to say, “next”.

So, what are my three principals of simple answers:

  1. If you can’t provide simple communications you don’t know the issue;
  2. If you can’t frame simple communications you don’t know your audience;
  3. If you won’t speak simply you’re too busy trying to impress yourself.

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund  (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

Value #2- Business and Digital Disruption: Communication, Much Like Investing, Should Be Direct

I had a peer in the early part of the last decade whose idea of selling life insurance was to hold a Bic lighter up, sparking it, and then looking at the flame say, “this is your life.”  Promptly extinguishing it he would add “and then you die.”  As blunt as that little ‘show and tell’ was, I was never sure what point he was trying to make.

I’m sure you’ve had experiences of what I have always called ‘smoke and mirrors’, where frustratingly you’ve been brought through a process, all the while waiting for the sales pitch and a presumptive close.  I’m not talking about sitting through a couple of hours trapped in a time share seminar, desperate to leave only to be confronted by the toughs guarding the door.  As often as not, those ‘toughs’ are our own value system and respect for the time and effort of the person pitching us.

I don’t know how many times I’ve walked into the tiny offices of the back of a bank branch, to sit down with the manager, only to have him or her ‘hmm’ing and um’ing” staring at their computer screens, clicking the keys, repeating the same sub-verbal noises.  Don’t you just want to reach over and rip the screens around so you can see what personal financial pornographic images he or she are staring at?

Instead, I sit there growing increasingly irritated to the point where their behavior has so masked communication I don’t hear much.

I suppose that given my years of experience in my industry coupled with snow white beard and head of hair in a ponytail I have a little more leeway than younger professionals.   You can ask my peers, who seemingly wait during and after a corporate presentation for me to say something blunt or outrageous.  Don’t get me wrong, I’m always prepared and pursue a genuine line of questioning because I’m interested.  At the same time, if I remain silent it sends a stronger message to those that know me.

If you look at what appeared to be a frothy real estate market in Toronto earlier this year, or the trials and tribulations of Home Capital Group (HCG), Warren Buffet’s rescue of HCG, or the recent run up in block chain currencies, I am blunt if I’m asked.  But I don’t elaborate my response because I am a fundamental investor and every one of those is at best highly speculative.  I’ve worked through the Asian Currency Crisis of ’98, the dot com bubble burst of ’00, corporate malfeasance of ’03 and the biggest of all, the financial crisis of ’08, and been burned on the more speculative aspects of the market.  That is not the market I choose to be in.

Blunt talk means nothing.  Direct communication on the other hand is formulated around issues of audience interest and suitability.  I don’t like communication that panders to the seven deadly sins.  And I don’t like communication where a seller is trying to hide their motive behind ritual and stealth.

The digital marketplace is fascinating in that rather than dealing with people in close geographic proximity the whole of the market is open.  And as focused as I want to be, I can let my message narrowcast into a market that is sufficiently large, albeit specialized, that I can make a good living in it.

And I can be direct and honest in my writing.

If ideas are my currency, plain and direct communication is my mode.

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

 

Value #1 Business and Digital Disruption: Idea Generation and Communication

Linda (@lindaodnokon) and I often have arguments about how often I give away my investment ideas for free.  Love of my life and business partner, I often frustrate her or lose my temper, but I fail to explain myself fully.

Ideas mean nothing without the ability to execute, and we have that capability in spades.  Nor does anybody benefit from taking advantage of an idea on their own; they have no idea when that thesis comes to an end nor will they subsequently benefit from the next idea, and the one after, and the one after that.

There is a whole industry out there dedicated to selling investment ideas.  It doesn’t matter what the quality is, and for the average investor something like the Motley Fool is superlative whereas some of the shills, otherwise known as newsletters, are nothing more than sensationalized pieces of poop, preying on baser emotions of fear, greed and envy.  Without subscribing for or paying for enriched content, you don’t get access to the ideas.

What is more important is that the ideas that appear in the press, whether publications like the Globe and Mail, or on business news networks like CNBC, or even newsletters good or bad, quickly result in a crowded trade.  I would love to be in a place where my opinion could move a market, but that’s not going to happen.  On the other hand, I won’t crowd the trade – I make money not on selling the ideas, but in executing timely ideas in an efficient and compliant way.

I have built a considerable business on at least five occasions relying on selling the “big idea”.  I’ve used seminars, cold calling, referrals and prospecting of friends and acquaintances. I’ve built extensive explanatory communications to make sure that I could explain both the complexity in simplest terms and in an ego gratifying way show that I can take all those disparate parts and package them up into something elegant.  And inadvertently I’ve built into those projects their own obsolescence – markets, tax regimes and economic conditions change, but a well-built structure is worthless because you can’t renovate the bones that it has been built on.

Information has become so much more freely available.  But as communication has disrupted tightly constrained paradigms, I have more freedom than ever to communicate timely ideas that cumulatively represent a whole that is unique. I can let the body of my work, the constant flow of ideas, cumulatively to represent a dynamic “big idea”.  And I don’t have to spend endless amounts of effort explaining myself, because either an investor will have to rely on my expertise or do the heavy lifting for themselves.

(CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

Babies, Puppy Dogs and Kittens: Struggling to Find Engagement and Action in Social Media

Let’s face it, pictures of warm cuddly adorable things get more attention than subjects that are germane to my business.  In fact, measured purely on engagement rates, a picture of me beaming with pride holding my newest grandson Adriano is a home run.

It doesn’t matter that I had neither self-serving or ulterior motives to “puppy dog” my twitter feed, that I was beaming with pride.  I was gob-smacked by the high engagement rate.  Putting up a picture of the lovely and talented Linda (@lindaondokon) as we celebrated the anniversary yesterday of my proposal to her shows that as cute as she is, she doesn’t rate baby numbers (but close mind you).

I’ve yet to share a picture of me in battle kilt, leather chest protector and gore-covered claymore, my own blood dripping down my arm and covering the grip.  It doesn’t exist but I will admit I am curious to know what engagement rate would be.

I have seen the benefits of picking the right hashtags and seen both impressions and aggregate engagements, if not the rate, skyrocket.  But sometimes I feel like I’m waging an internal war, with heels and a little black dress on the one hand, and, standing on the street corner gripping a megaphone and beseeching pedestrians on the other.

In both cases, getting attention isn’t “getting laid”.

For all our expenditures in social media, what we don’t have is conversion.  The fault is largely ours.  We don’t create a clear bias for action, or in fact, even define what that action should be.

“You don’t call, you don’t write,” may be a comedic routine suitable for sitcoms, but legally I am not able to cold call a prospect or send them unsolicited letters or emails.  Our industry has, to protect the consumer, very real and germane limits of what and how we can say it.  Prospecting for clients at bars, the current social milieu of my generation, is both hard on the liver and on the pocketbook.

I have the great fortune to not only partner with Linda in life, but professionally in business too.  She is taking a course at the University of Toronto in digital marketing and storytelling and has become the snarly side of “you call me a bitch like it’s a bad thing.”[1]

Working backwards, we earn a living charging fees and commissions.  To do so we need to open accounts and move money into them, in effect creating a client.  Moving a prospect to a client is rather easy after decades of experience (Linda and I have been in this business together for almost 20 years).  What we’re not able to do is create a pool of prospects that we can genuinely communicate with.

After over a year of babies, puppy dogs and kittens, we’ve gained a lot of experience in social media.  We’ve become aware that as easy as it is to create and maintain an identity, to be commercial at it, to make it do what we need to earn not a return on our expenditure as so often euphemistically expressed by suppliers, but to multiply every dollar spent into income.

We have answers to that dilemma.


[1] “You Call Me A Bitch Like It’s a Bad Thing”; c. 2012; Warner/Chappell Music, Inc.; Hale, Elizabeth Mae/Ossoff, Nina Meryl/Calitri, Dana D./Briley, Martin Steve

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.

ON POT, STOCKS, & ETFs

on pot stocks and etfs

On Pot, Stocks and ETFs

My visceral reaction to toking will always be feeling like, at best, I’m doing something naughty.  Too, I will always regret that I wasn’t old enough to be one of those “long-haired freaky people” that pushed societal boundaries.  And the stuff we smoked as teens was as tepid as the “Baby Duck” we learned to drink as our go-to for wine (and forever ruined me for champagne).

Long before seeing legislation legalizing recreational pot use, the capital markets have pushed boundaries.  The hefty market capitalization of pure pot plays seems to be predicated solely on an emerging robust market for recreational marijuana.

Horizons Exchange Traded Funds launched their newest ETF this morning, Horizons Medical Marijuana Life Sciences ETF (HMMJ).  Opportunities for humor aside, this launch undoubtedly is an unqualified success.  By 10:15 the ETF had traded over 1,500,000 shares[i]; National Bank Financial was responsible for over 75% of the selling which suggests to me that they were actively creating new units on the heels of running through the seed capital.

In my opinion, Horizon has done four things with HMMJ’s launch today:

  1. Horizons has created a safer play on the whole sector, something that ETF’s traditionally do very well;
  2. By launching the ETF Horizons in some respects sanitizes the somewhat sordid feelings more establishment-minded people have towards pot stocks, otherwise lending a measure of respectability;
  3. The success of the ETF will provide support for stocks that are included in the index and otherwise slowing the growth for a slew of opportunistic promoters;
  4. It provides a relatively inexpensive way for smaller investors to take part in the sector and achieve a measure of diversification.

About two weeks ago, my partner (@lindaodnokon) and I attended a presentation of a recent new and publicly traded medical marijuana entrant.  To be frank, I had already rejected them as a stock that I wanted to invest in.  But like all presentations we attend, we always learn something new such as issues for medicinal prescription and use and splitting the recreational consumer market into a “VQA” segment (what we laughingly called “douchey” pot).  We certainly gained an appreciation that the competitors in the space each have their own approach and only a developing market is going to show us clearly the winners and losers.

Linda applied the same aggressive due diligence to HMMJ.  To their credit, Horizons stepped up and addressed every one of her issues succinctly and directly in a timely fashion.  Her work certainly left me feeling more comfortable about including the ETF in my offerings.  And Horizons’ success means we can offer interested retail clients an offering that removes a great deal of single-issuer risk.

I would like to warn you that ETFs are not suitable for all retail investors and that Linda and I always discuss investments in the context of suitability.

[i] Source:  Datastream 10:15 am 4/5/2017

Industrial Alliance Securities Inc. (IAS) is a member of the Canadian Investor Protection Fund (CIPF) and the Investment Industry Regulatory Organization of Canada (IIROC). iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates.

This information has been prepared by David Chellew, Portfolio Manager for Industrial Alliance Securities Inc. (IAS) and does not necessarily reflect the opinion of IAS. The opinions expressed are based on an analysis and interpretation dating from the type of publication and are subject to change. Furthermore, they do not constitute an offer or solicitation to buy or sell any the securities mentioned. For more information about IAS, please consult the official website at www.iasecurities.ca. David Chellew can open accounts only in the provinces where he is registered.