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Energy stocks have underperformed in 2023 following a year of massive outperformance. YTD, the sector is up 5%, while the S&P 500 is up 15%. However, the sector continues to attract interest from value investors due to its low valuations and high dividend payments. The Energy Select SPDR (XLE) has a P/E of 8.2 and a dividend yield of 3.7% vs a P/E of 25 and yield of 1.5%.

Recent 13-F filings show that prominent value investors continue to build a position in the sector. Warren Buffett’s Berkshire Hathaway boosted its stake in Occidental Petroleum by 5% and now owns 25% of the company. Despite his appetite for the stock and approval from the SEC to buy up to 50% of the company, Buffett has dismissed speculation that he is looking to buy the whole company, remarking that “We’re not going to buy control. We wouldn’t know what to do with it.” 

Carl Icahn also owns Occidental albeit a much smaller stake at 1.5%. He also owns positions in Southwestern Oil & Gas and CVR Energy. Like Buffett, his career has been defined by buying into industries that are unloved with compelling valuations that are being ignored by the broader market in favor of ‘hotter’ sectors. 


Many see a looming catalyst for energy in that oil producers have reduced production in the second-half of the year which should provide a healthy tailwind for prices the rest of the year.  

Finsum: The energy sector is one of the cheaper parts of the market. So, it’s not surprising to see that many value investors are making big bets on the sector.


Wednesday, 23 August 2023 16:38

Global economy’s no one’s punching bag

Stress in the bank sector? Sure, okay.

Uncertainty spawned by the U.S debt ceiling? Yep, no one can legitimately propose an argument to the contrary.

Political uncertainly festering in Russia? Well, yeah, if you’ve watched even a scintilla of news lately.

Despite that exhaustive list, the global economy’s hanging tough, strutting its resilience, according to, which believes a restored allocation to core fixed income can help boost the ability to reinforce the resilience off portfolios to periods of bearish sentiments. That’s especially in light of a bounce in yields which have bolstered the protective power and income benefits of high quality bonds.

Meantime, the economy continues to perform better than expected, seemingly shucking aside rates hikes that have been a mainstay since last March, according to

Consumers, buoyed by high employment, not to mention escalating wages, have hung tough.

For this cycle, with Canadian rates riding high and the stream of rate hikes -- for the most part, at least -a thing of the past, the time to take another look at fixed income allocations is right.


Saturday, 19 August 2023 07:53

Growth Tips for Financial Advisors

For ThinkAdvisor, Jeff Berman reviews some takeaways from the “Future of Practice Management: Boosting Business in 2023.” Overall, the majority of advisors are struggling with growth while a slim minority are accounting for the bulk of growth in terms of clients and assets.


In fact between 2016 and 2022, the average annual growth rate of revenue for registered investment advisors (RIA) was 11.3%. However, this was mostly due to the market appreciating rather than advisor-driven growth.  According to research from Charles Schwab, most advisors see growth between 6 and 7% primarily due to referrals, while they lose around 5% every year due to clients taking distributions.


In terms of growth tips, the panel recommends that advisors start using AI tools especially for marketing and back-office purposes to get more effeicinet. Having an organic growth plan is also essential especially given that most advisor growth is solely due to client referrals and asset appreciation. Part of the growth plan is defining your ideal client and figuring out how you can get in front of them on a regular basis. 


Finally, advisors need to think about thier clients holistically, and how their services will improve all aspects of a clients’ life rather than just financial areas. WIth competition from robo-advisors and other technological solutions, advisors need to emphasize the human touch and become a trusted advisor and source of personalized financial advice. 

Finsum: Many advisors are falling short when it comes to growth, solely relying on referrals and asset appreciation. Here are some tips on how to accelerate your practice’s growth trajectory. 

US Treasury yields surged to their highest levels in 16 years following the release of minutes from the July FOMC meeting. The minutes made clear that the Fed continues to lean in a hawkish direction despite some signs that the economy is decelerating, softness in the labor market, and moderation in inflation. Essentially, it’s another sign that rates will remain ‘higher for longer’ and that any pivot in Fed policy is nowhere near. 


In the minutes, the Fed said that there were ‘significant upside risks to inflation, which could require further tightening of monetary policy’. Following the release, yields on the 10-year Treasury reached 4.3% which is the highest level since before the housing collapse and Great Recession in 2007. 


In addition to the Fed, there are other factors that are contributing to selling pressure in Treasuries such as foreign governments reducing their holdings and expectations of supply hitting the market in the coming months due to the federal government’s funding needs.


Already, equity markets started to wobble and give back some of the gains made in recent months. Previous breakout in yields have resulted in sharp sell-offs in equities, and there is a risk that it could reignite the crisis in regional banks.

Finsum: US Treasury yields shot up to their highest level in 16 years following hawkish minutes from the July FOMC meeting. Other factors are also contributing to Treasury weakness, and it’s worth watching if it will result in damage to parts of the economy.


Saturday, 19 August 2023 07:51

An Intermediate Step for Succession Planning

More than anyone else, financial advisors intuitively understand the value of planning in order to create successful outcomes. Their entire career is built around that concept, and they provide that service for their clients on a daily basis to help them reach their financial goals and attain a comfortable retirement.


So, it’s a conundrum that many advisors don’t apply the same rigor when it comes to their practices especially as it may impact their ability to recruit and retain clients if they are at a more mature age. Succession planning can also help advisors maximize the value of their business when it comes to selling, but it can be overwhelming given the variety of options. 


A good intermediate step for advisors who are just beginning the process is to have a management succession plan and a buy/sell agreement in the event of a death or disability. A management succession plan details who will take control of the business in terms of operations. Typically, it’s an employee or possibly a trusted colleague in the industry. The buy/sell agreement is usually funded by life insurance and is a legal document that clarifies how ownership of the business is transferred if the principal unexpectedly leaves the business. 


Both steps are essential as it guarantees the successful continued operation of the business, while assuring that the interests of the advisors’ heirs and family are also taken care of. 

Finsum: Ironically, many financial advisors don’t take succession planning seriously. It’s understandable given the variety of options and implications, but here are some small steps to get you started.


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