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ECONOMIC REVIEW & FORECAST August
2005 |
The energy market is experiencing a bubble. In time, we will look back on this period in the same light as technology during the late 1990's or silver in the 1970's. With
90% of the positive performance of the TSX attributable to 12 companies,
most of which are in the oil and gas business, energy has surely been
the key to equity markets in the past year. No longer are pundits
talking about crude oil at $35 per barrel, but whether or not $80
or $90 are realistic targets. One should remember, even if the markets
do not, that the price of oil has risen from $12 a barrel in the past
seven years. Inventories of fossil fuels are actually expanding, which
would argue lower prices in the future, but geopolitical fears have
maintained a significant risk premium in the oil price, for now. While
we do not believe a retreat to 1998 levels for oil and gas prices
is likely anytime soon, we have sold some of our clients' energy holdings
in anticipation of a price decline toward $50 a barrel. Should we
see this downward move, we would look to replace these holdings, with
a focus on income trusts and stocks with significant dividends for
investors. It
is very interesting to note that even at $60 a barrel, high energy
prices have not yet slowed economies to anywhere near the extent many
would have forecast less than a year ago. In fact, the overall market
both in Canada and the U.S. has been making moderate advances even
into the strong energy headwinds. Two groups that are showing great
promise are technology and materials. Besides financial services and oil & gas, Canada's other forté is basic materials. This sector is interesting because it can move contrary to energy prices. Aluminum, for example, is very electricity intensive in its production. We have used the recent rise in energy prices, and the consequent slump in Alcan's share price to increase our clients' position. The world's economy is booming with growth being driven largely by tremendous expansion in Asia and China particularly. In addition to the possible benefit from a decline in energy prices, materials stocks have yet to fully appreciate from the insatiable international demand for nickel, copper, potash and other commodities which Canada has in rich supply. We have added to our clients' materials holdings by increasing their position in Inco as well as initiating positions in Teck Cominco and Potash Corporation. The non-bank financials, both in Canada and the U.S., have performed very well. C.I. Fund Management, one of the last large independent mutual fund companies, has recently seen its shares reach new highs in anticipation of merger activity. The insurance companies, including Sunlife and Manulife, are also stronger because it is viewed as likely that they will be involved in business combinations along with the major chartered banks. With respect to bank mergers, it is now apparent that the government in Ottawa is leaning toward approving these and other cross financial industry combinations. Even the socialist NDP have spoken out in favour of this, anticipating that mergers among the big institutions will be helpful to Canada's credit unions. During the first three months of this year, interest rates rose and we took the opportunity to switch most of our clients' fixed income holdings to 3-, 4-, and 10-year government guaranteed bonds. In the most recent quarter, interest rates fell causing bond prices to rise. In the coming months, it is very likely that there will be an increase in interest rates. While we may realize some gains in anticipation of this, we already have a fifth to a quarter of our clients' fixed income portfolios in Treasury bills to take advantage of the higher, longer-term rates as they present themselves. We have a concern regarding the future of the Canadian dollar. It has been extremely strong with the rise in energy prices and the balancing of our federal budget. Those two conditions are unlikely to last indefinitely. The coming fall/winter election in the wake of the Gomery report also gives us pause regarding Canada's national stability and the perception of it to the inter-national community. To moderate the risk of a falling Canadian dollar, we have purchased some Ontario bonds that pay in U.S. dollars. We are very pleased with how well our clients' portfolios have performed as a result of the changes we have made over the past six months. This restructuring, coupled with our New York Stock Exchange ("NYSE") investment, has accelerated the performance of the Caldwell Balanced Fund tremendously since the beginning of the year. Interested investors should consult their Investment Advisors to discuss the considerable difference these improvements have made compared to the 562 other balanced funds in Canada. The success
we have had thus far in New York has been very encouraging. At present,
our firm owns one NYSE seat directly and 22 on behalf of clients.
These are owned through our Balanced Fund (1), Urbana Corporation
(3), the Caldwell Growth Opportunities Trust (1) and our Caldwell
New York LPs (17). We have launched the Caldwell New York LP IV with
which we hope to acquire more seats for our clients. We anticipate
that this will be the final vehicle we will create of this kind as
the vote on the NYSE could come as early as September. With NYSE seats
now trading at record prices, our previous ventures have done well,
but as with the Toronto Stock Exchange, we believe that the Investment Management Committee Tom Caldwell, Chairman, Caldwell Securities Ltd. (416-862-7755) |
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MANAGEMENT
MINUTE by Cy Charney, President, Charney & Associates Inc. |
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Meetings Managing People Achieving your meeting objectives will be easier if you manage the people involved. A variety of behaviours will be demonstrated in any meeting, but there are many ways to deal with each. 1.
Dealing with aggressive behaviour can be tough. Strategies
to use include:
2.
You can bring out the best in quiet or withdrawn people if you:
3.
If someone tries to dominate your meeting, you can use many of the
same techniques you use to deal with shy people. But they must be
used in reverse. For example:
4.
If someone tries to sidetrack your meeting, you can:
Cy Charney, President of Charney & Associates. (905-886-5606, www.askcharney.com), is a leading Canadian management consultant focusing on organizational performance improvement. The above is an excerpt from his book, The Portable Mentor, published by Stoddart.
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STAR CANDIDATES |
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FINANCE
& ACCOUNTING
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Sr. Manager, Financial Planning Systems, CMA, B. Math. Strong
strategic/financial planning abilities gained in pharmaceutical
sector combined with advanced systems skills (Excel, Access, JD
Edwards) and very positive interpersonal characteristics. His position
was moved out of province and this individual has elected to stay
here. He is a strong performer and was offered a promotion to move
but has elected to explore new opportunities in the GTA. If
you are interested in this "star candidate" please contact: Director of Finance Outstanding
CA with three and a half years past public accounting experience.
He has worked internationally in reviewing operations and is now
ready for a role at the Director of Finance level. Tremendous interpersonal
skills coupled with great energy and motivation to make a difference. If
you are interested in this "star candidate" please contact: |
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SALES
& MARKETING
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Business Development Manager, Financial Services - MBA -
Strong subordinated debt originator, with big banks and
boutiques VP of Sales
If
you are interested in this "star candidate" please contact: |
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TECHNICAL
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Business Re-Engineering Process Specialist
If
you are interested in this "star candidate" please contact: Engineering Manager, MBA Our candidate with experience in lean manufacturing, project management and design is seeking the challenges of moving forward with a progressively-minded company. He is currently an Engineering Manager in the robotic welding industry and has obtained his MBA. If you are looking for an individual to improve your operations while developing greater cost efficiencies and maintaining a level head in a busy environment, call me about this top-notch candidate! If
you are interested in this "star candidate" please contact:
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FEATURE
ARTICLE by Michelle Collins
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The
Play One place that you should not go is to your family and friends. “I started without lessons and did not enjoy the sport due to my awful swing. I think it is harder to fix a bad swing later. I think the best approach is to set up a recurring schedule with one teacher. This way your teacher can monitor your progress and learn what your recurring mistakes are. My opinion is don't listen to your friends or co-workers on the course. From personal experience they can often make your swing worse since their swing style may be completely different. Only the professionals know how to fix your swing,” says Blair Collins, a CMA in Toronto who has been playing business golf for years. While you don't need to be an expert to play you should at least be able to hit the ball a hundred yards so that the game will be an enjoyable experience for all of you. If you're still in the beginning stages and you've been invited to play tell your host up front about your skill level. “It's never embarrassing as long as you bring up all the intangibles up front. [If] you don't have a lot of skills, as long as you tell someone you're not a very good golfer and this is how I play that's absolutely great for the host because he knows how to respect and treat you on that day,” explains Darrell Cook, Vice President of Sales and Marketing for Strategic Golf (www.strategicgolf.ca). Cook and President Julie Lashmore, founded Strategic Golf for the distinct purpose of showing executives how they could use golf for business. The
Etiquette Safety – Make sure that you stick to the course conditions to avoid stepping into areas where you could get hit by a flying ball. Take care of where you're swinging your club, especially in the practice area where there may be a lot of other people. Lastly, if you're using a golf cart keep in mind that it is a motorized vehicle, don't park on hills or come to an abrupt halt. Respect – Cook explains that most experienced golf club members treat the course as if it were their own backyard. This means do everything you can to take care of the land while you are playing on, don't leave tees in the ground where they can get chewed up by lawnmowers. If you kick up some turf, known as a divot, replace it so that the ground will be even for the next players. Consideration – Golf requires a lot of concentration, so avoid doing things that will distract the other players while you are waiting, this would include laughing and talking. When you are on a putting surface do not walk into someone's putting line. This will leave an impression in the ground that the player will now have to play through compromising their opportunity for a good shot. “Overall, I think if you are polite, ask questions, and hold your temper your fellow players will be glad to provide you with lots of tips,” says Collins. The
Community Branching out from there you could also find out if your local Chamber of Commerce or the city you live in holds a tournament. If it's a charitable event you have the added benefit of being able to write off your fees for the day while building goodwill for your company. If you are thinking about joining a golf course you should know that there are three types – public, semi-private, and private. Public courses are available for everyone to play on and while they are cheaper you may find that there are more people which could increase the time spent on the course. Semi-private and private courses are more expensive, however, game time will be shorter and the course will likely be better maintained. “I've been golfing frequently for five years now and have never felt the need for a private membership. Private memberships are always much more expensive overall than just playing public courses all summer,” says Collins. Golf
and Business “My opinion is that everything you say and do makes an impression that either improves your relationship with your client or hurts it. To me, business golf is about building relationships and having fun rather than talking about business. People do business with people they trust. Don't expect to close a deal on the golf course,” says Collins. Your
opportunity for business talk is likely to arrive at what is referred
to as the 19th hole. Ask your client to have a drink or a meal
following the game where you can recap the day and build that
relationship further. Cook explains that this is usually the time
when your client will bring up business possibilities. However,
if they don't you can sum up the situation by saying that you
really enjoyed your time together that day and you've got a couple
of ideas that you would like to discuss with them in the near
future. ***************** CanadaOne.com
is a business information site designed to help Canadians start,
run and grow their businesses. Visit it online at www.canadaone.com.
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LEGAL
CORNER |
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Protection
Against Age Discrimination: Transition
Period: Collective
Agreements: Pensions: Canada
Pension Plan: Benefits
& Insurance Plans: Employment
Termination After Age 65: Bona
Fide Occupational Requirement: Workplace
Insurance -------------------------------------------------------------------------------- Copyright Ontario Ministry of Labour http://www.labour.gov.on.ca/english/news/2005/05-71b3.html.
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Cathy
Cheng |
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For More Information Visit - www.fulcrumsearchscience.com Thank
you for reading Fulcrum Forum. A proud member of ACSESS (http://www.acsess.org), Association of Canadian Search, Employment & Staffing Services.
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