A Comment -- General Comments From an Expert (A Commentary)

Advantage of DIY Investor: Benchmark blindness. Comparing portfolio performance to a benchmark is one of the most popular ways to gauge the ability of a professional investor, but this practice carries significant behavioural risks. By focusing on short-term outcomes rather than a sound investing process, all kinds of behavioural errors come into play. Decisions are driven not by logic and evidence, but a myopic obsession with short-term comparisons. DIY investors need not be concerned with such benchmarks and are free to focus on process rather than outcomes. 

We have to have confidence in our institutions, our banks. If you don't, you can leave. Something's changed over the last 100 years. We've all seen photos of long lines at the banks during the Great Depression, as people lined up to withdraw their money. Today, in the digital age, we can do it with our phones. That's what we saw last week with SVB, billions of dollars of deposits were withdrawn because of a lack of confidence. Regulators have to address that. The problem of 2023 in banking is liquidity.

Perhaps some. There are 5,000 banks in the US, while there are 34 in Canada. It was not a mistake to buy the bonds, it was a thought-out decision. One side of their business had started to lapse, and the managers decided to take risk. Instead of acting like a bank, they acted like a very large hedge fund. Banks have a function in society, and SVB went beyond the role of a bank. The mismatch of going long on mortgages and short on deposits didn't work their way. Deposits overwhelmed the bonds they could get rid of, they had to take losses on their bond portfolio, which led to a capital raise, leading to an issue of confidence, possible credit rating issue, and then a run on deposits. Where were the regulators while SVB was acting as it did? See his blog at goodreid.com.

In an SVB situation, everyone looks to see what are the highest risk banks. Signature Bank, for example, had a crypto platform and a deposit base that was almost entirely private equity. That money all fled at the same time for the same reason. You have to think about the risks when things are good. We're all wired to think, What's my reward here? A good lesson for all.

He invests directly rather than getting involved with CDRs. He wants to take on the currency risk, as it's a hedge against a lot of factors. Geographic and currency diversification. 

NA is going to hit 13M units this year, and that's coming off the pandemic. Chip situation has solved itself. Still below what was considered normal of 17-18M units. So they're going to produce 13M highest-margin units they can. GM's been more successful at this than Ford.

Not too much. They're generally underweight banks, which has been beneficial this week. He's more looking for opportunities in the sector, such as BX and BN. See his Top Picks.

As a firm, they do equity income. Broadly speaking, they have an income mandate. Within that, there are pockets of sustainable-focused strategies such as clean tech, which don't provide a dividend. 

Yes. The broader theme is rates volatility, which has been so high. Markets across the world in real estate, infrastructure, and private debt have been locked. Large bid/ask spreads means that people are having a hard time  reaching agreement on pricing. We know that inflation is still uncomfortably high, but this week has perhaps made it more difficult for the Fed. When rates volatility comes down, people can then get a better idea on the pricing of different assets, and this should help broader markets. We were starting to see that in US real estate. People were coming back into the market as rates went down.

The economics aren't there yet for hydrogen. It's going to take a long time, when you consider what's already in the renewable energy space. With energy in general, we need a lot of different sources, so it's good to try a lot of different things and see what works.

Advantage of DIY Investor: It’s okay to do nothing. Over-activity is the enemy of performance; not only does frequent trading rack up fees, it often has negative tax implications and, most importantly, exposes the investor to more situations in which to fall prey to behavioural errors. There are three reasons professional investors fall prey to over-activity: first, they are compelled to act by constant awareness of market volatility and financial news-feeds; second, inactivity may be misconstrued as incompetence by peers and superiors; third, it is difficult to justify high fees by doing less, even when it is the right thing to do. DIY investors, on the other hand, have the liberating ability to make evidence-based long- term investment decisions, then leave those accounts alone. As Buffet has said, “The stock market is designed to transfer money from the active to the patient.” 
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The SVB collapse meant a long weekend and an interesting 48 hours for him. FDIC has bailed them out, so they have set a precedent for other regional banks. This is concerning. Shocking to him, but it saved the day. What will the Fed do next week, and what will the ECB do tomorrow with interest rates? We're getting a relief rally, because this is not over. Banks need to raise savings rates a lot in order to compete, so their margins will decline.

He is bearish all oil, though he is bullish the price of oil. But the companies won't make money even at higher prices, because inflation will grind down their profits. These companies will get squeezed over time.

Advantage of DIY Investor: It’s okay to do nothing. Over-activity is the enemy of performance; not only does frequent trading rack up fees, it often has negative tax implications and, most importantly, exposes the investor to more situations in which to fall prey to behavioural errors. There are three reasons professional investors fall prey to over-activity: first, they are compelled to act by constant awareness of market volatility and financial news-feeds; second, inactivity may be misconstrued as incompetence by peers and superiors; third, it is difficult to justify high fees by doing less, even when it is the right thing to do. DIY investors, on the other hand, have the liberating ability to make evidence-based long- term investment decisions, then leave those accounts alone. As Buffet has said, “The stock market is designed to transfer money from the active to the patient.”