All Posts (246)

To Good To Toss


Local Company impacting our planet !


Sustainable ideas


With the proposed carbon tax being mandated by the federal government, lots of discussions on this issue. 

My biggest concern is the giving away of rebates to all Canadians , frankly it’s simply a tax redistribution scheme. 

Perhaps, to qualify for the credit, one had to participate in  a info course online on how to reduce their carbon foot print to make them eligible for the rebate. I could accept that. The intent would be to educate which would encourage wider adaptation of best practices. The more you learn, the bigger your credit and eligibility for other grants perhaps.

Education is key. 

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Public Policy Dialogue for Charities


Terrance S. Carter  B.A., LL.B., TEP, Trade-mark Agent and Ryan M. Prendergast  B.A., LL.B. 
On October 25, 2018, the Department of Finance Canada tabled in the House of Commons a Notice of Ways and Means Motion,  which contained a number of amendments to the Income Tax Act ("ITA")  and other legislation to implement certain provisions previously announced in Budget 2018 and other measures, including amendments to the ITA to modify the rules governing political activities (now referred to as "public policy dialogue and development activities") by charities in Canada. The proposed amendments were introduced as Bill C-86, Budget Implementation Act, 2018, No. 2, ("Bill C-86"),  which received first reading on October 29, 2018, and is included as an appendix to this Charity & NFP Law Bulletin for ease of reference. Bill C-86 significantly improves upon the draft legislation released on September 14, 2018 by the Department of Finance Canada ("September Draft Legislation"),  discussed in last month's Charity & NFP Law Bulletin No. 428
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Set Your Sails in the Gales

Set your sails, the gales blow, yet the sails set will guide you in the direction you want to go, vs the direction of the gales.


I started a book a number of years ago, “Set Your Sails... Your Guide To Financial Freedom”

Well, I never finished it. I am reminded today to pull up my socks and get that done. 


Todays devotion speaks to sailing and some thought provoking counsel that we all can benefit from. Joseph has a wonderful story, so much can be drawn from his life. Here is one part of it Joseph's Temptation (Part 2 of 2) - Broadcast - Truth For Life



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Elected Compliance

We received our reminder this morning regarding compliance reporting if you have a client who is an elected official.

If your a newly elected candiate you should let your advisor know of your change in status. This is a little thing that may get overlooked in the excitement of securing your position, however compliance is a serious matter and proper due dilegence is requried to ensure the integrity of our systems.

If this directly affected you, Congratulations !  If your a close friend to a candiate please let them know.

"With municipal elections completed, please review your client list for any clients that may have been elected to a seat of office. If you have a client who has been elected, you must report this information to our office as per FINTRAC regulation. "

An elected municipal official is considered a "Domestic Politically Exposed Person"

PEP for short.

The regulations also extend to members of the family of as well.

Glad to be of service

Timothy Ross


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Trusted Contact

i came across this article today about the trusted contact. I have discussed this with a few clients and hopefully over time will have this setup as a service that we have with all clients. 


Here ia the article, please post any other resources you find in the comment section for additional review. 


If if you have had experiences with that and are able to share, please post as well or email me in confidence at



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The Beginning of the Story


This discussion has been going on since I started serving customers and clients in this field of service. I like the proposals that my professional organization Advocis has recommended. They are common sense proposals and I know that they have put a lot of thought and work into the recommendations. They represent the advisor who wants the best for his or her customers and clients. 


Advocis was the result of two groups that I belonged to merged a number of years ago. I belong to a few organizations and Advocis really focuses on lobbying the government to listen to the folks actually doing the job. The way many decisions are made and many proposals are made by past governments and regulators often excludes the advisors , kinda weird if you think about it. The way it is,  we are starting to see some changes to this with the current government in my province. I don’t want to write a big long option on that, but a Saturday morning reflection , reminiscing of my own journey as it relates to this matter at hand.  


I shared a post from a pastor who knows the heart aches of having a family member with Alzheimer’s and it had some recommendations for language choices .  Remember vs Reminiscing, Reminiscing is the better approach .  Thank goodness my phone has spelling recommendations, Reminiscing is a word I struggle to spell correctly. Yet here I did it and I learned to adapt and move on with the aid of the tools provided. I did not have this tool when I first started. It was called a dictionary and I still have mine from public school Euphemia Township. I remember my grade one teachers name. Mrs Johnson or was it Johnston ? I do not remember what she looks like, I just remember her name and that feeling, I must of liked her. I wonder if they still let you bring a mat to school and have a nap on the floor a couple times during the day ? 


Now The years keep marching on, I remember when I first  started with Professional Investments , my dealer , my intermediary that held  my license and gave guidance in what where good choices to invest in, and who made sure the paperwork was done properly. I believe my business stock card from the dealer said  Sales Representative . It was not long that with my background in tax and accounting and under the guidance of my quasi branch manager / mentor Elaine Gray ( poor lady passed away much too young) and 

My new zeal for the industry I looked at the card as a way of distinguishing myself in the financial services industry and Independent Financial Advisor became card number two. This is going back to 1993 , over 25 years now.since I studied and qualified for my Mutual Fund licence and subsequent Life & Accident Sickness License being sponsored by Great West Life at that time for the Life License. 


After quite a few years, think about 5 years If memory services me, there was a decisions made, promoted by the regulators, OSC or perhaps it was when the MFDA got rolling, in the firm to change every one back to Sales Representatives, and discontinue the use of Independent , I think Financial Advisor was still ok. But the talk was not for long, only way to say you where a financial advisor was if you studied and achieved the CFP designation. However the writing was on the wall sort of speaking. 


I always was ( and still do) giving a lot of thought to branding and trying to figure my Why. Why am I doing this business?  for Whom ( that was a given in that it could be for everyone, yet specializing, niche markets are the buzz words of the day and still are, and not just my industry. The What and the How . 


“Where Client Goals Become Our Goals”


That was my first official Vision and Mission statement. I would often call that my tag line, yet it represented the vision, mission and core values of what I was doing and want to do for my customers and clients.  We write it on everything, letters, cards, magnets, spoke about , seriously got those words out there. It made more sense to me to share with prospective customers and clients and advocates what we did and how it could benefit them than engage in the discussions about what my title was. 


I see that the title about what I am is still being debated like it will make you a better choice in a crowded marketplace with more choice than ever before, the choice is literally insane. 


Now what on earth are you trying to share about Timothy ? Here is the link , 


Survey results underscore the need for title protection for financial advisors | Investment Executive

As the famous and legendary fellow, would always say “Now for the rest of the story “. What was his name, do you remember ?  I will post my favourites once done writing.
Now for the rest of the story.
I decided that I did not want to get in this title game and the challenges of regulations, so I made my own .  Simple and practical, and actually better describes my who and what I do with two words. 
Family Advisor ®
And the rest is history, and another story. 

Thank you
Tim Ross, Family Advisor ®
Family Office providing Omega Stewardship ®
613-345-0016 Office
613-213-4625 Cell/Text

Helping Families Achieve ...Life’s Major Goals ®

* One Stop Process Driven Approach for Retirement & Income Planning
* Personalized Tax Management Solutions for Individuals & Business Owners
* Confidential Wealth Management Solutions

Mutual Funds through Professional Investments

Brock Shores Financial
 If you want to get reminded of your Why, I encourage you to connect with Gary , his Kick Ass presentations are inspirational 
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Chamber of Commerce Update

Rapid Policy Update:
Bill 47, Making Ontario Open for Business Act, 2018
Rapid Policy Update: Bill 47, Making Ontario Open for Business Act, 2018
Brockville & District Chamber of Commerce <>
On October 23, 2018, the Government of Ontario's announced Bill 47, Making Ontario Open for Business Act, 2018. The announcement included a near full repeal of Bill 148, dissolution of the Ontario College of Trades, and improvements to the journeyperson-to-apprentice ratio.

This is a huge advocacy win on behalf of our 60,000 members in 135 communities across the province. The OCC applauds the government for taking swift action to introduce many critical reforms that we have persistently advocated for on behalf of Ontario business.

What do these changes mean for Ontario business?

  1. Minimum wage paused at $14 per hour.
  2. Partial repeal of scheduling provisions. 
  3. Removal of equal pay for equal work.
  4. Returning to previous calculation of public holiday pay.
  5. Return to previous union certification policies.
  6. Amended personal emergency leave.
  7. Maintain domestic or sexual violence leave.
  8. Maintain paid vacation expansion. 
  9. Apprenticeship ratios set at 1:1. 
  10. Dissolution of the Ontario College of Trades.
The OCC is encouraged by the labour market reforms announced today and looks forward to continuing to work with the Ontario government to support economic prosperity and business competitiveness across the province.

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Second Harvest

I had a nice little article writing about this and some how it didn’t save in time and I am running out of time, snows coming as they say in the fall harvest mode. So just the links and a few pics . Be sure and watch the video link. I like the reusable bags that Purolator uses. Good branding, reusable.




Purolator, Food Bank Video


Link to Gleaning Effort this year and many history links and photos


we got another 15 bags of squash harvest last Friday, so we would have gathered almost 20,000 pounds of produce overall on this years gleaning effort. 

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Let’s not miss this

This is a great story for leaders, the story of Joseph is legendary,  this is just the surface, in this lesson the minister touches on a variety of topics that can nurture us, some joy in our parting and hello’s, some sound advice for teaching our sons and daughters how to be better in society , some valuable life lessons. 

 Sent, Sold, Sad, Safe (Part 1 of 2) - Broadcast - Truth For Life


Genesis 37 , picks up the story of Joseph 

Remember that there is moments of life in 

Our good byes 

Our greetings 

We need to teach our children, train them to stand on their own two feet. 


Go Check Report Back , his dad’s plan to teach independence 

Looking people in the eye

Parting is such sweet sorrows, full of emotions 

speak when spoken to

common courtesy’s teach to children

Teach them to be responsive , to pay attention, look in my eyes example , in your eyes I see your soul, I find out who you are

its a wonderful world, Louis Armstrong 

friends greating friends

saying how are you 

there is is a last time for every journey 


you will never know when it is the last time


It is good to make much of our partings and our hello’s

they are significant events in life


let’s not miss the chances in the common simple every day events of life


Love baby love , that’s the secret ;










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A great article on forecasting, some valuable insight in how this can improve your future, be it your personal financial plans or your business projections , worth a deep look and plan of action  - TLR


The creative process makes building a financial forecast very rewarding. You work within a framework of the client’s business model, but you also add your own financial instinct and know-how. Sometimes, your drive can push a business beyond where they thought they could go, and also help an owner understand the financial potential in their business. This is what makes forecasting uniquely different from budgeting. Budgeting is usually very conservative, and it’s much more granular. Forecasting is about potential. What’s possible? How can we get there?


article link

Financial Forecasting: The Foundation of Strategic Advising [Source: @LivePlanSA]


Then I got a great chart that looks at some mistakes we make by simple cognitive biases 

dig deep to learn more at this link


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Devotion on awakeness , three big daily reminders


When you wake up tomorrow, look up to God. Look around to his world. Look ahead to your life that day. And ask God to awaken you.

Scott Hubbard wrote an article on awakenessinspired by a quote from Clyde Kilby, “I shall not fall into the falsehood that this day, or any day, is merely another ambiguous and plodding twenty-four hours, but rather a unique event, filled, if I so wish, with worthy potentialities.” In the article, Scott models how to come alive again to the wonder around us. He reminds us, “This is the day that the Lord has made — a unique day, a meaningful day, a day that comes to us from the hands of divine love.


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Sharper Image Story

I got this really interesting story this morning from the purveyors at Hustle, it is long, interesting, cool and worth sharing. Enjoy. 

Timothy Ross



How one man built The Sharper Image into the world's wackiest gadget store

It took a marketing genius to build the kingdom of flashy gadgets — and a $229 air purifier to take it all down.


The Sharper Image was a kingdom.

It was a kingdom where you could, in an afternoon trip to the mall, purchase an electric nose trimmer ($39), a motorized surfboard ($2,450), and a bulletproof raincoat ($400), then take a ride in a $1,500 massage chair while being serenaded by a bird-calling robot.

It was a kingdom once described as the “breast implant” of retail, a place where man and child alike could bask in the artificial glow of flagrant consumerism.

This is the story of the man who founded this great kingdom — and how one flashy gadget ultimately led to its downfall.

King Richard I

Richard Thalheimer had all the trappings of a world-class salesman.

Born in 1948 in Little Rock, Arkansas, he spent his youth working odd-jobs in the toy section of his father’s department store. He went on to study psychology and sociology at Yale University, where — during his freshman year — he sold enough encyclopædias to buy a brand new Porsche.

In his early 20s, Thalheimer ventured to San Francisco and started a wholesale business that catered to the then-burgeoning photocopier industry.

“I named it The Sharper Image,” he says, “because I thought that my paper and toner would help people make good copies.”

Left: A young Richard Thalheimer poses for a yearbook photo; Right: In the early days of The Sharper Image (via SF Examiner)

While running The Sharper Image, Thalheimer enrolled at Hastings Law School — but making physical deliveries to businesses in the Financial District every afternoon between classes began to take its toll.

“I was completely taxed,” he says. “So I thought, ‘Why don’t I try mail-order?”

The million-dollar running watch

The mail-order catalogue — a publication that lists products and allows customers to order them remotely via mail or telephone — had been around for a century. As early as the 1880s, Tiffany’s and Sears were hawking their wares in 300-page booklets. 

But in the 1970s, the mail-order industry was having a renaissance moment: Roger Horchow had just launched the first luxury color catalogue without a physical retail location, and Joe Sugarman was running the first-ever mail-order magazine ads — beautiful, full-page photos with poetic product descriptions.

Thalheimer wanted to try his hand at it. But first, he needed a product.

At the time, Seiko had just rolled out a first-of-its-kind fully digital watch — but at $300, most runners couldn’t afford it. Coincidentally, Thalheimer came across a small booth at the Consumer Electronics Show in Las Vegas, where a man was selling a “very similar” product for $35 wholesale.

He struck a deal with the vendor and bought out a full-page ad in Runner’s World Magazine, offering the watch for $69. For the copy, he chose to feature his friend, Walt Stack — a “legendary, fully-tattooed 70-year-old” who was known around San Francisco for his crazy daily routine, which included a 17-mile run across the Golden Gate Bridge.

Left: Walt Stack on his daily 17-mile-run in the ‘80s (Eric Risberg/AP); Right: Thalheimer’s first Sharper Image ad, for the Realtime watch, starring Stack (Courtesy of Richard Thalheimer)

At a cost of $1k, the ad netted Thalheimer $10k in sales (about $5k of which was profit). He repeated this process — each time, with better results — and by the age of 27, he’d made his first million dollars. 

By 1979, Thalheimer’s system of advertising was so successful that he decided to launch his own catalogue high-tech gadgets nobody knew they needed.

The Sharper Image catalogue

Thalheimer embarked on a quest to find the most unique products on the market — things that “other people didn’t sell.”

“At the Consumer Electronics Show, everyone would gravitate toward the big guys, Sony, Panasonic,” he says. “I’d go straight for the little booths, the people selling things nobody had ever heard of.”

The first catalogue contained 25 items, including the first cordless phone, answering machine, and car radar detector. He avoided superfluous adjectives in his copy, and focused on the features that made the products exceptional.

Very quickly, his experiment began minting money: The first year, sales topped $500k; the second year, they reached $3m; by 1980, $12m. Soon, the catalogue was being sent to 3m people around the world, at a cost of $1.4m per mailing.

He catered specifically to the 20% of Americans who had credit cards, and offered them a 1-800 number to place orders over the phone. In a small San Francisco office, with a staff of 5 or 6 people, a dozen orders were processed every 60 seconds.

The Sharper Image catalogue featured products like the Snore-No-More ($59) — a device that shocked snorers with an electric pulse (via Flickr user Mike Mozart)

The Sharper Image struck at the right time.

In the 1980s stock boom, flashy gadgets and conspicuous consumption were in. “He who dies with the most toys wins” was the ethos of the decade.

Thalheimer expanded into physical retail, opening stores in well-to-do enclaves across America. In New York, bankers dipped in to peruse $1500 massage chairs; in Hawaii, tourists fawned over electric nose hair trimmers and talking scales. By 1985, The Sharper Image was grossing $100m in sales — with no outside capital or debt.

At the company’s helm, Thalheimer was what the New Yorker described as the “very model of a major entrepreneur:” Tanned and muscular, deliberate and tenacious, and infallibly gifted at curating ridiculously niche gadgets, like a mini electric fan on a necklace (priced at $49, it sold 10k units a month).

“I can see the future,” he toldan LA Times reporter in 1984, “I know when a trend is coming and when it’s leaving.” In an AP interview, he hailed himself as a “marketing genius.” Nobody could disagree.

When The Sharper Image IPO’d at $10 per share in 1987, the chain, and its outspoken CEO, seemed incapable of failure. That is, until the ‘80s ended.

Do I really need that gadget?

In the early ‘90s, the economy weakened and sparked a recession: Suddenly, conspicuous consumption was out and frugal environmentalism was in. 

The Sharper Image tried to switch gears by selling more “socially responsible” products (like Birkenstocks, vitamin energizers, and benches made of recycled plastic), but the strategy had a limited effect.

Between 1989 and 1991, sales fell by 28%. Staff was was cut by 20%. Stock tumbled to $2. And for the first time in company history, The Sharper Image posted a loss.

The Sharper Image saw a dramatic decline in the early ‘90s (The Hustle)

“The Sharper Image has become a cliche for the worst excesses of the last decade — the Donald Trump of specialty retailing,” wrote the SF Examiner. “Nobody needs what they sell.”

For a CEO of a publicly-traded company, Thalheimer was unusually involved in minute decisions: His penchant for controlling what color clothes employees could wear, how they decorated their desks, and what type of coffee mugs they used earned him a citation in California Magazine’s 1988 Worst Bosses in America list.

So, he decided to step back from day-to-day operations and go back to his roots: Finding wacky, one-of-a-kind products. It didn’t take long.

At a “hippie street fair” in San Francisco, Thalheimer stumbled across a blue gel shoe insert — the first of its kind. “I stood up in front of all my deflated employees, pulled this thing out of my suit pocket, and said, ‘This is going to turn us around,’” he recalls. “Everyone thought I was nuts.”

At $19.99 a pair, the inserts went on to become the company’s best-selling product, selling hundreds of units a day and adding 50% to their sales figures.

Several years later, in 2000, Thalheimer came across another game-changing product at a toy fair in Hong Kong: The Razor scooter. He negotiated an exclusive 24-month deal and sold a million of them in the first year. It was, he says, “a second lease on life” for the company.

Razor scooters revitalized The Sharper Image, but raised new concerns (via the AP)

Bolstered by the rise of the internet and online sales, the Razor led The Sharper Image to the best performance in its 23-year history. It was no longer just a place for “tech-loving snobs” to buy elitist gadgets.

But this success came with a looming concern: The Sharper Image was turning into what analysts described as “a one-product company.”

The air purifier that killed the company

Thalheimer had long operated by finding intriguing products elsewhere, signing exclusive distribution deals, and selling them under The Sharper Image brand name. But he knew that if it designed and patented his own products, margins could be higher.

In a secret location north of San Francisco, Thalheimer assembled a team of engineers and designers and formed Sharper Image Design to make gadgets in-house. 

“[It was a place] where where the inner child could come out in every man, with gizmos blinking and whirling,” later recalled an employee. “The only thing missing were white coats and propeller hats.”

The team churned out some 300 patents and 100 products, ranging from fogless mirrors to anti-snoring wristbands that jolted the offender with an electric shock.

But the crown jewel of the operation was a noiseless air purifier called the Ionic Breeze.

Ads for the the Ionic Breeze (via The Hartford Courant, 1999)

The Sharper Image put all of its resources behind the machine, taking out hundreds of thousands of dollars worth of magazine, newspaper and TV ads. Despite its $229 price tag, it became a smash hit.

By the turn of the millenium, the Ionic Breeze was so popular that it made up 45% of all of the chain’s sales. And as it turned out, this was a huge problem.

In 2002, Consumer Reports(a nonprofit product review publication) ranked the Ionic Breeze dead last in a feature on air purifiers, deeming it “ineffective.” Thalheimer was furious, and filed a lawsuit against the magazine, claiming it had “negligently disparag[ed] the product.” It was tossed out, and cost Thalheimer $525k in legal fees.

“We did a very stupid thing by making a big stink out of it,” cedes Thalheimer. “It was like suing Jesus infuriated them, and just led to more trouble.”

Three years later, Consumer Reports struck again — this time alleging that the Ionic Breeze didn’t just suck at purifying air, but actually emitted harmful amounts of ozone. Once again, Thalheimer took them to court and lost.

The blowback cost The Sharper Image millions of dollars in store credits and refunds — and soon, stockholders began to question Thalheimer’s magic touch.

Held at Knightspoint

In the Spring of 2006, a group of outside shareholders by the name of Knightspoint Partners snapped up 13% of the company.

Led by famed corporate raider Jerry Levin, the group demanded a shakeup of the board. At first, it seemed they genuinely wanted to help Thalheimer guide The Sharper Image back on track, but it soon became clear that they were gunning to oust him and remodel the company in their own image.

The Sharper Image’s “new image” included some poor decisions, like featuring Trump Steaks on the cover of a catalogue; meat packages started at $1k (The Hustle)

In September, Thalheimer was fired and forced to sell all of his remaining shares for a sum of $26m — a fraction of what his holdings were once worth. When he came into work the next day to gather his belongings, the door was locked. His desk, still covered with the wacky emblems of his career, his now occupied by Jerry Levin.

Knightspoint set to work recrafting The Sharper Image into a general electronic retailer, like Circuit City or Best Buy. Or, in Thalheimer’s estimation, “stripping away the imagination.”

By 2008, stock had plummeted to 28 cents per share. Within a year, The Sharper Declared bankruptcy, closed down all 183 stores, and laid of 4k employees.

The company, now run by an investor group, continues to exist online — but it’s a shadow of its former self. The weird gadgets have been usurped by USB drives and motion-activated light bulbs — and Thalheimer’s oddball charm is nowhere to be seen.

Richard Solo

Looking back, Thalheimer doesn’t harbor much ill-will. He runs his own gadget site, aptly named, and has taken up investing.

“My days are a lot more enjoyable,” he says. “It’s not as egocentric as being the head of my own company. But at this point, I’d rather be alone.”

He tells The Hustle that his net worth is “3-4x higher” than when he got pushed out, and that his studies of the stock market have earned him beefy returns of between 50% and 100% per year.

Thalheimer poses with a favorite from The Sharper Image catalogue (via Richard Thalheimer)

But Thalheimer hasn’t completely abandoned the kingdom.

At his Marin County mansion stands a lavishly-adorned suit of armor — a $2,450 relic from The Sharper Image catalogue. An old cordless telephone dangles from its ear.

It is a sight that can only be described as perfectly Thalheimerian: A blend of the old and the new, the eclectic and the cutting-edge, the blunt and the sharp.

Shop #onshrooms →

Weekend Recap

Miss an email this week? Here’s a rundown of our top headlines from the past 7 days:

1. WORDPLAY OF THE WEEK: You smoke, bud?

Canadians once again prove they’re chill after the country officially made weed legal for all uses on Wednesday, but some industry experts believe the share prices have gotten too highhhhhhhhhhhhhh, man. What a buzzkill.

2. OUR FAVORITE: The Palm Pilot is back -- but more useless than ever

All was a buzz as the Palm Pilot brand announced its new “ultra-mobile” Palm phone that is smaller than a regular cell phone and aims to eliminate digital distractions -- only problem is it has pretty much all of the same features as normal cell phones.

3. ‘TODAY I LEARNED’: That if a concert sells out, it usually means ticket prices were too cheap

As ticket scalpers and resell sites continue to run rampant on the industry-wide ticket inflation problem, Taylor Swift and her team concocted a strategy to help combat the issue… and so far, it’s working.

4. OLD DOG, NEW TRICKS: The ‘Real World’ returns... on Facebook?

The world’s first hit reality show announced it is coming back to a cell phone screen near you. The old format will come with some new interactive surprises, and air on Facebook’s new premium content platform, Facebook Watch.

5. TECH TROUBLES: Lime tried to sue San Francisco for getting snubbed on scooter permits

After being denied the highly anticipated San Francisco scooter permit, Lime filed for a temporary restraining against the city, in hopes that it would delay scooter releases for the 2 companies that did receive permits.

Now Playing Now Playing:
The Masterplan, Oasis. Everybody’s got one.



Now, back to the corn field

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Expectations vs Reality of Past

Gleaning some info from the archives answer came across this get insight. - Tim



By Andrew Pastor, portfolio manager

In the 1930s, Winston Churchill had left politics and was teaching a class at Cambridge University. He started a lecture with the following question, “What part of the human body expands to 12 times its normal size when subjected to external stimulation?” The class gasped, it was the 30s after all!

Churchill pointed to a young woman in the class, “What’s the answer?”

Blushing, the woman replied, “Obviously it’s the male sex organ.”

“Wrong! Who knows the correct answer?” asked Churchill.

Another student answered, “It’s the pupil of the human eye which expands 12 times when exposed to darkness.”

“Of course!” replied Churchill. He then turned to the first student and said, “Young lady, I have three things to say to you. First, you didn’t do your homework. Second, you have a dirty mind. And third, you are doomed to a life of excessive expectationsi.”

In this commentary I want to discuss investor expectations. If you’re reading this there’s a good chance you believe the future will be similar to the recent past. If that’s the case you’re setting yourself up for disappointment.

We believe that over the next decade equity returns will likely be lower, and the ride not as smooth.

A rosy future

Schroders recently interviewed 22,000 investors in thirty countriesii. According to the study, the average investor said that they expect their overall portfolio to return 10.2% per year over the next five years. If we assume that the average investor holds a mix of 70% equities and 30% bonds this would suggest that investors are expecting a stock market return of 13%/yeariii. (Remember this number as we’ll be referring to it later).

Why are investor expectations so high? It probably has something to do with their experience over the past five years. Here’s a list of stock markets and their annual returns since 2013.

(12/31/12 TO 12/31/17)
NASDAQ Composite Index 19.49%
The Nikkei 225 Index 19.06%
S&P 500 Index 15.77%
The CAC 40 Index 11.42%
Deutsche Boerse AG German Stock Index 11.15%
Shanghai Composite Index 10.43%
S&P/TSX Composite Index 8.62%

Source: Bloomberg LP.

The past five years have been favourable for investors. Prior to this period, investors were still fearful about the future and valuations were low. Today investor sentiment has improved resulting in higher valuations which has boosted returns.

To predict is human

When people make predictions about the future they often draw from their recent experience and extrapolate it into the future. Behavioural economists call this the recency bias. It creeps into our daily lives all the time.

Think about your favourite team. At the beginning of the season it gets off to a strong start. They win the first three games and you’re already booking the day off work for their celebratory parade. You forget (or at least try to!) that the regular season alone is 82 games long and they haven’t won a Stanley Cup since 1967!

When it comes to making investment forecasts, our recent experience also tells us little about the future. As I will explain later, the experience of investors over the past five years is an aberration not the norm.

The super-forecasters

In previous commentaries we’ve discussed the follies of forecasting. We explained why financial experts are almost always wrong about the direction of the stock market, interest rates or commodities.

But there’s a small group of forecasters that has consistently been able to make more accurate predictions. A Wharton professor named Phil Tetlock wrote a book called Superforecasting: The Art and Science of Prediction which studied the behaviours of these super-forecasters.

What can we learn from Tetlock’s work? Instead of making predictions based upon their recent experience (the inside view) the super-forecasters use history as a guide (the outside view). They ask whether there are similar situations in the past that may provide insight into what may happen in the future. The idea being that what’s happened over long periods is likely to be more relevant than what’s happened most recently.

Let me illustrate the concept with an example.

Big Brown

One of the most coveted prizes in sports is the Triple Crown. A horse must win the Kentucky Derby, the Preakness and the Belmont over a five-week period.

In 2008 Big Brown was the horse to beat. He’d won the first two legs of the Triple Crown by a significant margin. Shortly before the final race his main competitor, Casino Drive, had to drop out due to injury. Horse racing experts predicted that Big Brown was going to win by a landslide. When the bets were placed Big Brown had a 75% probability of winning the Triple Crown.

What happened on race day? He finished dead last.

After the race was over, questions emerged. Was Big Brown injured? Did the jockey change the strategy for race day? Perhaps the horse was fatigued from the grueling race schedule?

The truth is that Big Brown’s defeat shouldn’t have been a surprise to anyone. It’s a classic case of people forecasting based upon their recent memory (the inside view) and ignoring history (the outside view).

The inside view was that Big Brown was undefeated, he’d won the first two races by a wide margin and the competition was weak.

The outside view asked one important question: What happened in the past when a horse won the first two legs of the Triple Crown?

It turns out that from 1950 to 2008 there were 20 horses that had won the first two races. Only three (15%) went on to win the Triple Crowniv.

Big Brown was always a long shot to win. Even the professionals fell victim to recency bias in predicting the future.

Fighting the last war

GraphicA classic example of “inside view” behaviour can be observed through investor expectations over time. History has shown that investors consistently look in the rear view mirror rather than out the windshield. After the market has had a strong run investors expect the good times to continue forever.

1999 is a good example. During the tech bubble investors were asked what they expected stock markets to do over the next 10 years. The least experienced investors (those who’d invested for less than five years) expected annual returns of 22.6%. Even the most experienced investors (those who’d invested for more than 20 years) were expecting annual returns of 12.9%. Not surprisingly the returns over the next decade were subpar and investors were left disappointedv.

Conversely, following a market correction, investors reset their expectations and are more apt to believe stocks will have low returns forever. Here’s a look at how investors behaved during the last downturn.

In the years leading up to the financial crisis investors piled into stocks. From 2005-2007, U.S. investors put $256 billion into equity funds. In 2008, investors pulled almost all of it out ($254 billion) in a single year, cashing out their investments at the bottom of the marketvi.


Where are we today? After nine years of rising stock prices, investors have very ambitious expectations for the future.

The outside view

Let’s take what we learned from the super-forecasters and apply it to the stock market. If we want to set reasonable expectations about the future we should start by looking at how the stock market has performed over long periods. The U.S. market has the longest history so it can be used as a proxy for equity returns.

Since 1928, the average annual total return of U.S. stocks is 9.4%vii. Let’s call this the base rate. If history is a reasonable guide, investors should expect a similar return.

Over the long term, the stock market can’t outpace the growth in earnings and dividends of the businesses that make up the market. However, in the short term the market can fluctuate wildly for a multitude of reasons. When the returns of the market no longer reflect the growth of the underlying businesses within it, the market will correct itself. Higher returns eventually lead to lower returns in subsequent periods and vice-versa.

Over the past five years, the stock market has risen much faster than corporate earnings. Since 2013, approximately 2/3 of the S&P 500 Indexviii returns have come from multiple expansion not earnings growth. The market can’t continue to rely on multiple expansion forever.

It’s impossible to predict the short-term movements of markets. But we would probably all agree that we’re closer to the top of the cycle than the bottom. Equity valuations are higher than they’ve been since we started the firm in 2008. As such, annual total returns are more likely to be lower than their long-term average of 9.4% than above it.

Another way to think about investor expectations is to invert the situation. If you want to assume that the market will provide annual returns of 13% you need to make certain assumptions. Perhaps you think that the economy will grow faster than in the past? Maybe interest rates will go lower? Or you believe the P/E multiple will continue to expand?

While all of these are possibilities, they’re also unlikely. Economic growth over the past decade has been the second slowest period since the Great Depression. Interest rates might stay lower for longer but they’re already approaching zero. Valuations can always climb higher but they’re at the upper end of where they’ve been historically.

Where does that leave us? Over the next few years the market might continue to roar ahead. But it’s hard to make the case that equity returns over the next decade will be as strong as they’ve been in the recent past.

A bumpy ride

Up until now we’ve focused on stock market returns. The other part of the investor experience is volatility – how smooth or bumpy the ride is. At the same time that stock market returns have been pleasing, volatility has been unusually low.

Compared to other asset classes equities have proven to be one of the best ways to build long-term wealth. But the ride has never been smooth. Stock prices are quoted daily which means that investors’ emotions are constantly tested. This is the trade-off you make as an equity investor – superior returns in exchange for a bumpier ride.

What is a normal level of volatility? A simple way to measure volatility is to look at the annual drawdown. This captures the peak-to-trough decline of the market in any calendar year. Since 1928 the average annual drawdown is 16%ix. This means that in a typical year you should expect your stocks to move 16% from their highest point to lowest point. This is normal.

Over the past five years the average annual drawdown was only 8%x. In fact, the annual drawdown has been under 10% in each of the past five years. 2017 was an extreme example because for the first time on record, the S&P 500 Index delivered a positive total return in each and every month.

While volatility might be temporarily hiding, it hasn’t gone away. Going forward, investors should be prepared for the calm waters of today to inevitably be replaced by rougher seas.


Source: Bloomberg LP, price returns in US$.

We’re not the market

The discussion up to this point has been focused on return expectations for the overall market. As you know EdgePoint doesn’t own the market. We own a small collection of businesses where we have a proprietary insight. Perhaps we’re immune to the headwinds that other investors face?

The reality is that our investment opportunity set is less attractive than it was five years ago. When we buy a business today we need to make more aggressive assumptions about the company’s future growth and profitability.

For example, in 2012 we invested in Drew Industries, a supplier of components for recreational vehicles (RVs). The RV industry took a significant hit following the financial crisis with annual shipments down to 286,000. Because of that, we were able to buy the business at a 7% free cash flow yield (translation: our first year return would be 7% before any growth) and we would get any recovery in the RV market for free.

Today, Drew is trading at a 4% free cash flow yield and annual RV shipments are over 500,000, 30% higher than the previous cycle peak. Compared to 2012, the starting valuation is higher and growth prospects more muted. Drew might continue to be a good investment, though we no longer own it, but investors need to be more creative with their assumptions for the idea to play out.

Our promise to you

If we can’t promise that equity returns will be as good as they have been in the recent past what can you expect from us? Here’s a list of things that we can promise you:

  • We’ll operate in a narrow emotional band
  • We’ll own businesses that can be bigger in the future and not pay for that growth
  • We’ll try to capitalize on other people’s mistakes during periods of volatility
  • We’ll stick to our investment approach through good times and bad
  • We’ll treat your capital as if it’s our own, because it is. We’ve invested $160 million of our own money alongside you
    (as at December 31, 2016)

The glass is half full

If you’re still reading this commentary you might be feeling pessimistic about the future. You shouldn’t be.

Investors have four primary ways of saving over the long term – cash, fixed income, real estate and equities. Compared to the other asset classes we believe equities are the most attractive option. Inflation eats away at your cash, bond yields aren’t sufficient to offset their risk and Canadian real estate is more expensive than at any other time in history.

We’ve never been ones to sing the praises of the stock market. We own a concentrated portfolio of growing businesses where we have a variant view. The environment might be more difficult today but we continue to find many new equity ideas: 15 in our Global Portfolio and 10 in our Canadian Portfolioxi. If our proprietary insights play out as we expect, our portfolios should deliver higher returns than the overall market.

Our investment approach has built wealth over multiple decades and across various cycles. We continue to expect that our long-term returns will be pleasing.

Just don’t make the same mistake as Churchill’s student or you’ll be doomed to a life of excessive expectations!


iAn apocryphal tale taken from Barton Biggs, Hedgehogging (Chichester, U.K.: John Wiley and Sons Ltd., 2008).
ii Total investment portfolio returns: we’re assuming this is the return expectations of stocks and bonds in a portfolio.
iiiAssuming bonds return 3%.
vi2017 Investment Company Fact Book – Net new flow is the dollar value of new sales minus redemptions combined with net exchanges. Data for funds that invest primarily in other mutual funds were excluded from the series.
viiSource: Bloomberg LP, 12/31/1927 to 12/31/2017, total returns in US$.
viiiSource: Bloomberg LP, 12/31/2012 to 12/31/2017, price returns in US$.
ixSource: Bloomberg LP, price return, 12/31/1927 to 12/31/2017, in US$.
xSource: Ibid.
xiNames purchased in the Portfolios during 2017. Global names purchased in the Canadian Portfolio are excluded.

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Cost Cutting Tips


Here is some great tips to consider. It is interesting how the numbers add up.


one culprit is the famous Starbucks. 


Enjoy this parody 






"And your savings is ...
If you eliminated all of these costs, you would save $5,978.75 in just one year. That’s a lot of money to add back into your budget. But if you invested that money every year and earned 5 percent annually, you’d see even bigger long-term benefits.
After 10 years: $72,958
After 20 years: $165,667
After 35 years: $366,331
Even more impressive is how far that money can go in retirement. The OnTrajectory calculator shows that if you stopped investing money into your retirement fund at the $366,331 mark, and then withdrew 4 percent of your balance annually to help cover living costs, you’d still have a little more than $300,000 left by the age of 90. It might seem hard to believe, but that’s the power of compound interest."


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B Corps People Planet Profit


I discovered this certification this morning when I noticed a presention planned on Ottawa Business Journal, I noticed the BDC logo and it tweeked my interest. I learned that it dovetails nicely with our ESG / SRI philosophy and decided it was worth adding to this blog for sharing.


The B Corporations webiste is below, click to learn even more

About B Corporation

Locally we have a few business associations that represent our local business communities. Chamber of Commerce and various networking groups. Some like my friend David Annable have taken the certifcation approach to give consumers some additional assurance that the companies they are considering using that they with meet some good standards, have proper licenses, insurance, etc.

I think there is a place for all.

I have been a member of RIA Responsible Investment Association for a few years now and it gives me insight of what is happening in the Enviromental Social and Goverence "ESG " world of thought and action.

Professional associations like Advocis advocate for my profession

There is a number of other online social media spots were there is info on our firm and myself

Linked In profile


Facebook Business Page for Brock Shores Financial  #ImprovingFutures

Well there is some evaluation compenents to become B certified, will be checking it out and perhaps we will seek this designation for our business in the future. 


We envision a global economy that uses business as a force for good.
This economy is comprised of a new type of corporation - the B Corporation -
Which is purpose-driven and creates benefit for all stakeholders, not just shareholders.
As B Corporations and leaders of this emerging economy, we believe:
That we must be the change we seek in the world.
That all business ought to be conducted as if people and place mattered.
That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all.
To do so requires that we act with the understanding that we are dependent upon another and thus responsible for each other and future generations.

I think we could aspire to this declaration. When I started over 30 years ago I made a somewhat similar declaration idea, it is still hanging on the wall, let's see if I can get a picture of it added into this posting.

I certainly like the idea for business's that want to make a difference, like Natures Energy Water, one of the slogans we developed from the trailer business was "Be The Adventure", I liked that the B Corporations have in their slogans "B The Change" … what is important is that you "Be" not just talk about it , there is a promise that you will and are doing , so I encourage us all to embrace necessary change, engage the adventures that are in your life, be the adventure, be the change , let's hear your story !  

Let's make a difference

One Step At A Time!

Timothy Ross

CEO, Founder 

Brock Shores Financial

Chaga update, he is growing into a nice young cat. Lean and adventurous. Every morning he has a little milk with my cereal and today he must have wanted to go to work as he found a cozy spot amongst the papers in my briefcase. Chaga stands for healing properties that grow on the birch trees , a little inspiration
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