Matthew Lekushoff |
Gold | RRSP deadline | New reads

It looks as though February will close out with similar gyrations to the first month and a half of 2016.  As the TSX and oil prices slid this week after last week's rally, and markets in general continue to be volatile this year , the third and last part of my series on the psychology of investment biases can provide some context behind all the ups and downs.

This post discusses the two final major biases : home country bias and scarcity. Home country bias is something many Canadian investors are realizing right now-it can be dangerous to have too much of your investments in your home market. Scarcity, on the other hand, occurs when investors want to invest in something more because they believe it to be a rare opportunity that won't last.

Although it may surprise you to hear this, there have been a few bright spots in the investment world over the last few months, though none have shone quite as brightly as gold . Broadly speaking, when it comes to investing in gold, there are two very different perspectives which have contributed to the many peaks and valleys it's endured over the years.

One camp shuns the shiny metal-it doesn't pay any dividends and has had prolonged periods of underperformance. The other camp, often referred to as "gold bugs," believe that in the current quantitative easing environment, governments are playing with fire and when everything comes crashing down, gold will be the last thing standing. 

I see both points, but believe a balanced approach between them is best. Historically, gold has had many years of underperformance ; however, it's particularly good to have in a portfolio when inflation increases or when markets, economies, and currencies are vulnerable. Gold's often low correlation to many other investments means it can effectively be used to diversify a portfolio. I generally always have some gold in my portfolio, understanding that there will be years it hurts our performance and years it acts as insurance against a poor market, such as now.

As you would expect, this allows us to trim our gold positions when we rebalance to buy securities that have fallen to attractive levels!

Financial Planning Corner

We are a few days away from the RRSP deadline of February 29, 2016.  If you haven't made a contribution and are considering doing so, feel free to contact me to discuss your options.  Since many of you found the tools from our last newsletter helpful, I have included them here:

Changing technologies

Payment by selfie: Canadian MasterCard holders with smartphones will be able to pay for their online purchases by taking a selfie or using their fingerprints, after successful pilot programs in the U.S. and the Netherlands. These biometric payments are more convenient and secure than passwords, according to MasterCard.

In the audible queue

I've almost finished listening to  Sapiens: A Brief History of Humankind   by Yuval Noah Harari. Sapiens is written with a similar broad scope as Jared Diamond's Guns, Germs, and Steel . The book walks the reader/listener through the history of Homo Sapiens from our humble, non-differentiated beginnings to the current day. Although I've found it interesting, I don't feel like Sapiens is a must-read the way Guns, Germs, and Steel is. Although I don't agree with many of Harari's controversial ideas, he should be commended for putting them forth for people to discuss. If you are interested in the history of our species and are looking for some new perspectives, you likely won't be disappointed.

As a relatively new, but avid reader of the Farnam Street Newsletter, I came across a great interview by its founder Shane Parrish and the author of  30 Lessons for Living: Tried and True Advice from the Wisest Americans . The interview focuses on the Parrish's experience as a gerontologist (someone who studies elderly people) and what life lessons he's learned from his studies. The interview is worth the read, if for no other reason than to remind you what is important in life. 
Kick back and relax
In our spare time, my girlfriend and I love to watch Jimmy Fallon videos on YouTube, particularly his Wheel of Musical Impressions. In its most recent iteration he had singer/songwriter Demi Lovato. Although I enjoyed it, nothing for me will top the one he did with Jamie Foxx!


Matthew Lekushoff, CIMA

Financial Advisor 

Raymond James Ltd.


T: 416-777-6368 | F: 416-777-7020


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