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The following 2 communications were provided to clients of Baskin Wealth Management regarding the launch of the Client Focused Reforms in 2021

On Thursday November 11th, our Chief Investment Officer, Barry Schwartz gave a webinar about how we invest for our clients. In this insightful presentation, Barry reviewed the investment approach we use to find the best businesses to own for the long-run.

In September the days grow shorter, the nights are cool, and the stock market gets crazy. The first two are easy to explain but the third is a mystery. However, this year was a good example. In the last ten days of September the Dow Jones Industrial Average had four moves of greater than 500 points. That compares to only three such moves in the previous four months. Clearly traders came back from summer vacation ready for action.

Our family owned a cottage for 12 years. Our kids were little and we used it a lot, four seasons a year. Then, as happens, our kids grew up. They started going to camp in summer and had hockey or swimming or other activities in the other seasons. By the end, I was going up by myself to cut the grass in summer and get the snow off the roof in winter. We sold out more than twenty years ago.   Do we miss it? Sure. The sunsets over the lake, the joy of jumping into the cool water, the pure pleasure of canoeing on a windless day. Can’t beat it. But things have changed. We paid less than $100,000 for our place. Now, the same property would likely go for close to $1 million. Would it still make sense to buy?  Here is some advice I gave to a client who asked us just this question. 

In the early 1720’s, exactly 300 years ago, all of England was overtaken by a surge of stock market speculation which we now know as the “South Sea Bubble”.  Ignited by a monopoly granted by Parliament to a company to trade in South America, all manner of companies suddenly were brought to the market, and their shares were purchased with wild abandon by all and sundry. Two strong emotions ruled; today we call them “FOMO – fear of missing out” and “YOLO – you only live once”.  No idea was too bizarre and no scheme too outlandish.

At Baskin Wealth Management we never stop learning. We always strive to improve our investment approach and to learn from our mistakes as well as the mistakes of others. However, in our lifelong pursuit to become better investors, we strictly adhere to one important rule: Always think like a business owner.

How many times have you gone with the cheaper product or service, only to regret it later? In other words…You get what you pay for.  Don’t feel bad, we all make this mistake. The other day, I was looking for a charge cord for my Apple AirPods, and instead of paying $40 to buy the quality product from Apple, I bought a cheaper knock-off from Amazon for a quarter of the price. Not surprisingly, I threw the crappy knock-off cord into the garbage a few days later.

Before 1972 there was no tax on capital gains in Canada. In that year, as part of a major overhaul of the tax scheme, capital gains taxes were imposed. The inclusion rate for capital gains (the percentage subject to tax) has varied over the years from the present level of 50% to as high as 100%, with stops (both in the year 2000) at 75% and 66% along the way. There is currently much speculation that the federal government will increase the inclusion rate in order to help finance the enormous budget deficit being rung up due to the COVID-19 crisis. Some accountants we know have urged their clients to realize existing capital gains now, before the rates go up. Is that a smart idea?