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One of my hobbies is playing board games. I am an avid player of Settlers of Catan, Carcassonne, Ticket to Ride, and Lords of Waterdeep, and classics like Risk and Trivial Pursuit. While playing Dungeons & Dragons with a group of friends, I recalled an important investing lesson. For those who don’t know, Dungeons & Dragons is a co-operative game in which players each role-play a character, adventuring through a story of the players’ own choosing. Most of the actual gameplay is decided by rolling dice – usually special 20-sided dice. A player in my group, “Elton”, has had a [...]

Last week at the gym, I struck up a conversation with the gentleman working out next to me. He expressed his frustration with the folks around us who were checking their phones constantly. I sympathized with his irritation but I had to admit that I am also guilty of this transgression. Admit it…You do it too. We feel compelled to check for new emails, respond to a text, change around our playlist on Spotify. If you’re like me, you’ll even glance at the stock market between sets. Needless to say, it’s not just at the gym. We all check our [...]

“Tell me where I’m going to die, so I’ll never go there.”- Charlie Munger A large part of successful investing lies in not being stupid, as opposed to being smart. It is usually much easier to avoid an obstacle course rather than fight your way through it.  Since the most important part of our analysis process is the risk of permanent capital loss for clients, there are several features of a potential investment that can be “deal-breakers” for us. We have no interest in these types of companies, and will end our research process on the stock if we see [...]

Canadian housing prices have been on an undeniable tear over the last few years. Home affordability is a touchy subject, and everyone seems to have a strong opinion on the potential causes and implications. At Baskin, we try to perform our research as objectively as possible and to act upon our conclusions, no matter how unpopular they may be. Our singular goal is to make money for our clients, not to generate clicks to our website. We rely on 3rd party research not for its opinions, but to see if we missed anything important in our analysis. The media and [...]

Pretty much everyone in the investment world agrees that buying is easier than selling. At Baskin, we try to invest in companies with outstanding economics that are run by competent and intelligent management teams. Once we find one of these superior companies, we will continue to buy the stock as long as the price is reasonable. The decision to sell a stock is not as simple. If a stock we own rises to an expensive valuation, the underlying company will still continue to generate strong free cash flows to be used for the benefit of shareholders. Selling a stock after [...]

Barry Schwartz February 27, 2017 The North American markets have had quite a run over the past four months, so it’s natural to wonder where we go from here. In ordinary circumstances, many of the current issues in the markets would be cause for concern: Valuations are higher than they have been in years, markets are responding positively to Trump policies and seem to be ignoring all the negative possibilities. It is easy to imagine that we are due for a meaningful pullback, and it seems risky to commit new funds to the market. Only hindsight can provide answers to [...]

There has been plenty of media buzz around Snap’s proposed Initial Public Offering (IPO). Snap is the owner of the popular computer app “Snapchat”, much loved by teenagers. At an estimated $25 billion valuation, this would be the largest US IPO since Facebook in 2012. Through the last 10 years there have certainly been technology company IPOs that have performed spectacularly, most notably Facebook. It can be exciting to participate in the latest trends and new technologies. At Baskin Wealth, we too own shares of tech companies that we expect to continue to be “trend-setters” tomorrow including Apple, Google, Priceline, [...]

On April 24, 2015, a year before the UK voted on leaving the European Union, a year before Donald Trump won his first presidential primary race, and six months before Justin Trudeau was elected, the TSX closed at 15,408.  Less than 9 months later, on January 15, 2016, it closed at 12,073, a drop of 21.6%.  By definition, this was a market correction. Do you remember that? Me either. Most would think that a drop of more than 20% would stick in our memories as a traumatic event, but clearly most would be wrong. Clients call us on a regular [...]

As most of you know, last year our Chief Investment Officer Barry Schwartz was interviewed in the book “Market Masters: Interviews with Canada’s Top Investors” by Robin Speziale. Anyone who has read this interview or has followed Barry on BNN has continually heard about the importance of free cash flow. For this blog post, I want to talk a little about what this means. Free cash flow or FCF in short, is simply the excess cash flow that is generated by a business after paying for all of its expenses such as employee salaries, advertising and taxes, as well as [...]

People don’t like losing money. This much is obvious. What’s interesting, though, is that people suffer much more psychological pain from losing money, than they enjoy pleasure from receiving the same amount. This is a fundamental concept of prospect theory, developed by Daniel Kahneman and Amos Tversky. Theoretically, a dollar is a dollar is a dollar, and humans should experience the same amount of pain from losing a dollar as pleasure from gaining. But we know from prospect theory that this isn’t the case. Consider critical insurance, like home insurance. Clearly, most people lose money from subscribing to an insurance [...]