Matthew Lekushoff |
High Water Marks | RRSPs | Remembering Hans Rosling

Earlier this week, 188,000 people were evacuated from several Northern California counties. Lake Oroville had reached dangerous heights due to rising water levels from the unseasonably high rainfall this winter.

The Oroville Dam is supposed to keep the lake at bay, while a man-made concrete spillway has been used to siphon water, ensuring it doesn't crest over the dam. However, the spillway has endured considerable damage from erosion, leaving it with a rather large hole. Fortunately, there's an emergency spillway for when lake levels reach 901 feet in elevation. It hasn't been needed in its 48-year history-----  until this week.

I bet you're wondering where I'm going with this. Having the emergency spillway to back up the normal spillway, in addition to the dam, got me thinking about high water marks. First used in ancient Egypt to record the Nile's levels, high water marks have been used throughout history to mark a point that represents the maximum rise of a body of water. Future buildings and structures would then be built based on these recorded levels. This line of thinking worked...until it didn't, and new, higher levels took people by surprise. 
Today, we're still prone to this methodology, except progress has added additional blinders. Let's take the market crash of 2008/2009 . The crash caught most people off guard. It wasn't as devastating as that of 1929, yet we had thought our computers, algorithms, and up-to-the-second news would protect us against a crash of 2008's scale.  
One of my fears is that most people in the investment industry consider the '08/'09 crash to be a high water mark (despite the fact the crash of 1929, which caused the Great Depression, saw many markets fall over 80%). I'm also willing to bet many people think another crash like in 2008 is unlikely in their lifetimes-----   a thought that will become more prevalent the further we get from the '08/'09 crash. This kind of thinking is not a problem 99.9% of the time, but when the 0.1% catches you off guard, it can lead to ruin. Given enough time and the right circumstances, something bad will likely happen.

To be clear, I'm not predicting a crash. But let's take the situation at Lake Oroville as one of nature's friendly ways of reminding us that unprecedented events can and will happen. Our job is to observe and learn from these events and ensure we're prepared for anything life throws at us.
Another reminder...
The RRSP contributions deadline of March 1 is quickly approaching. Feel free to contact me if you have any questions about your contributions for the 2016 year.
In the review queue
The Lessons of History  by Will and Ariel Durant: The Lessons of History summarizes what Will and Ariel Durant learned from their life's work, The Story of Civilization-----  a 10-volume, 10,000-page history series. Although first published in 1968, this summary, being an expansive view of history, doesn't suffer the same loss of relevance a science book of the same period might. If you are fascinated by history, this is a book for you.
The Dominant Animal  by Paul R. Ehrlich and Anne H. Ehrlich: The Dominant Animal is about the rise of Homo Sapiens from an unspectacular species to one that is increasingly dominating the planet. Although I enjoyed the book's broad and informative nature, I wouldn't put it on the same level as classics like  Guns Germs and Steel  or  Sapiens . If you're looking for a complement to these books, you'll find The Dominant Animal helpful in understanding our journey and what drives us.
Matt Ridley on the Evolution of Everything  by EconTalk: Another great EconTalk podcast with controversial British journalist, businessman, and author Matt Ridley on his book  The Evolution of Everything.
The Next Digital Revolution  by The Agenda: An interesting interview on how block-chain and crypto-currencies work and could possibly be a big part of our lives in the future.
What Can the Three Buckets of Knowledge Teach Us About History?  by Farnam Street: An enlightening article on three of the big lessons we can learn from history.
How much money have humans created?  by Visual Capitalist: A fun, yet humbling video on how much money has been created.
Something to think about

Swedish physician, academic, and statistician  Hans Rosling  passed away last week after a year-long fight with cancer, and his work has never been more relevant. Rosling was passionate about using hard data to prove global society's progress on important areas, such as, poverty, female education, and response to natural disasters. His proof of this progress is a needed beacon of light.  
His  latest Ted Talk  with his son Ola captures both how far things have progressed, and also his infectious excitement in spreading this message. If you'd like to learn more about him, take a look at  his other Ted Talks throughout the years.


Matthew Lekushoff, CIMA

Financial Advisor 

Raymond James Ltd.


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


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