Stephen Groff's blog

Is Holding a Canadian Portfolio "Risky"? Not with the Right Focus

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A recent opinion piece by Ian McGugan in The Globe and Mail highlighted a dubious distinction for Canada: it has the highest proportion of unprofitable listed companies in the world, according to research by Aswath Damodaran, Professor of Finance at the Stern School of Business at New York University. Based on Damodaran’s calculation of negative net income based on an equal-weighted metric, Canada topped the list with 75% of public companies failing to meet this measure of profitability, well above the U.S. with 45% and the global average of 30%.

Why we are still not owners of Canadian banks

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Early last year we published "Why we are not owners of Canadian Banks today,” which summarized our rationale for avoiding investing in the industry. Now, nearly 18 months later, we thought it was a good time to provide an update. We will touch on what has changed and then review capital levels, which we believe are important but less frequently discussed. Again, special thanks to our global financials analyst Danesh Rohinton on our team for providing much of the data and insights.

In times of speculation, examples of how Cambridge is reducing risk

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For lower risk mandates such as the Cambridge dividend suite and Cambridge Asset Allocation, protecting capital from permanent impairment is the primary objective. While this does not mean being immune to market volatility (they are not), it does mean extra emphasis must be placed on focusing on the downside.

How we adapt when facts change

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We live in a highly dynamic world where technological forces only continue to accelerate the rate of change. This has important implications for both society at large as well as how we analyze and select investments for our clients. While it is nice to discuss examples of businesses where we spotted an important inflection point and everything worked out exactly as we hoped, today we will do the opposite and review a recent case where industry drivers have changed (and gone against us).


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