Right now it is becoming trendy to say “I would have been farther ahead buying a GIC five years ago”. However if you are going to measure 5-yr periods, you don’t get to pick the exact starting and stopping points after the fact. You would have to make that decision before the verdict is in.

Yes with the luxury of hindsight, many investors wish they had been in cash over the past year. So they are making the mistake of plowing their money into cash now. That may feel good over the next few weeks or months, but how about three years from now and beyond?

You may hear this and say, “Yeah, but things have never been bad like this before. Well, not precisely like this, but things have been plenty scary before. Rather than listening to the media drones or market analysts (who never saw this coming and have no clue where it is going), why not listen to a true investment genius. Here is Warren Buffett’s take on today’s crisis:

Most of the attention of the average investor has been on either oil or metals during the last three years of this commodity boom. However it is possible that a new player may soon take centre stage in this sector. With the global climate heating up, substantial changes in water resources are being triggered. Here are a few ‘wet’ facts on something we have always taken for granted.

I watch with fascination how people’s approach to varying types of wealth changes. Let’s look at the treatment of three different categories of investments over the past few months.

It is no secret that the value of residential real estate has declined substantially in the USA. A lot of the former hot spots have come down 15-20%, and since there is usually a lag time, Canada’s turn for this adjustment may be just around the corner. Now people may have left their homes or income properties for reasons of foreclosure or payment problems, but I’ve not heard or read of anyone bailing just because values were going down. They hang in and say they are in it for the long run.

When most people think of managing and measuring their portfolio, they typically only consider the investments which are held in designated brokerage accounts. These usually include such items as stocks, bonds, and mutual funds. What they should be managing is their total bundle of assets. The major assets on this list would include income properties, life insurance, the value of their business, pensions, and the family home.

Clients know that I have been a fan of China for some time now, and was investing there before it became front page news in most publications. Some attribute the phenomenal growth to macro factors like currency controls, the welcoming of capitalism, low production costs, high saving rates, and many others. But as with most aspects of success in life it always comes down to people.

I had occasion to be in Panama recently at a real estate investment conference. One evening while Cathy and I were having dinner on a downtown patio we noticed a young non-Spanish couple at the next table. Josh was from Toronto and Mona from Norway. They had seen many parts of the world already at the ripe old age of 23, and we proceeded to strike up a conversation on their plans for success in life.

Attaching an initial value to real estate and then accurately following that value is a subject that has long intrigued me. Real estate is not like the stock market, where prices are determined daily by buyers and sellers and listed for all to see. Something very strange is going on in many North American housing markets right now, and it reminds me somewhat of people who refuse to admit that one of their favourite stock selections is not working. This dilemma is called ‘hanging on to yesterday’s prices’. Many current home sellers seem to have convinced themselves that if they just shut their eyes and believe strongly enough, a buyer will suddenly materialize and pay them what they could have gotten for their home a couple of years ago. After enough people keep believing this the home inventory just keeps stacking up. Of course there are always motivated sellers, as some people can’t wait for a better price because they’re relocating, or they can no longer afford their mortgage. But a lot of sellers, especially those who can afford to be picky, just can’t get out of their heads what they could have gotten for their home at the peak of a market. And so they keep waiting for the ‘right’ buyer to come along.

It is quite common for investors to take bonds for granted but that is not always the case. Trouble at any time can cause their prices to decline just like a stock. A recent example is the news of the attempted private equity buyout of good old dependable BCE. All of this uncertainty about BCE’s future has caused one of their long term bonds to suffer a drop of almost 20% in face value, and send tremors through the entire fixed income market. A bond is only guaranteed if held to maturity.

With so many news stories about company Chief Executive Officers either being vastly overpaid or being crooks, it was refreshing to be able to recently spend a day with Clive Beddoe, CEO of WestJet Airlines. We were both on the judging panel of an international student business plan judging competition at Queen’s University. It is not everyday that someone this busy participates in such an event.

Investor behavior is a fascinating study, particularly when it comes to classifying risk. For example, people will always use a ‘Dr. Jekyll’ approach when managing assets that they tend to have more control over. These might include their own company, their home or cottage, their collectibles, and their holdings of other commercial and residential real estate. Dr. Jekyll is an astute investor and attributes his success to his management style. He takes a long-term perspective. He does not monitor everyday news as he realizes most of it is of little value to him. Returns aren’t frequently or accurately measured. He understands that there will be volatility and is not concerned.