My full interview with Peter Brieger of GlobeInvest Capital Management originally appeared in my national bestselling book, Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca.

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Peter Brieger would tell you that it’s time in the market and not market timing that matters most for investment success. He has a long-term investment horizon. Peter holds high-quality stocks as long as they deliver ample returns. This is the reason why Peter has a sweet spot for income-producing securities that provide a consistent dividend stream.
With 50 years in the industry, it’s hard to fathom just how many dividend cheques Peter has received for himself and on behalf of his clients. In addition to dividends, there’s capital appreciation. The Canadian stock market has gone from $800 to $15,000 in that time period. Imagine buying into the market at $800, and then selling out at $1,000, on the belief that after a 25% return, markets were “too lofty.” That’s the major downfall of timing the market. Not only can you miss prolonged run-ups in the market, but significant short-term advances, too. Based on my analysis in Lessons from the Successful Investor, the S&P 500, from 1871 to 2009, delivered positive returns 72% of the time, while negative returns only 28% of the time. That means that for every ten-year time horizon, you can expect seven years of positive returns and just three years of negative returns in the market. These findings can be extrapolated to the TSX, as the returns in Canadian and U.S. stocks are similar. From 1934 to 2014, compound annual returns on Canadian stocks were 9.8% while 11.11% on American stocks. And, importantly, over that 80-year period, an investment in Canadian stocks has grown 1,597-fold despite 13 recessions, double digit
interest rates, and several world crises.

Peter has worked in the top financial centres in the world — Toronto, London, and New York — as a research analyst, then market strategist, and then portfolio manager. He started GlobeInvest in 1988, with the mandate to invest in high-quality businesses that benefit from global operations, in which he requires that 50% or more in revenues come from non–North American markets. Now, Peter finds himself at a crossroads. While his passion remains the market, investing, and making money for his clients, he recently sold his firm, GlobeInvest, to Christine Poole. Peter jokes before the interview starts that he’ll “stick around as long as Christine still needs me.” But if I was a betting man, I’d wager that Peter would come in to the office whether or not he was being paid. As a result of the sheer amount of time he’s had in the market, the seventies-ish Peter is the market. He’s an asset.

On interview day, I walked into Peter’s spacious office to find him slouching comfortably in a giant red leather chair behind his enormous wooden desk, clearly in his element. I saw a cane leaning on the desk to his right. A poster to my right caught my eye, a photo of an old bi-plane that had crashed into a tree. A caption read Money management and aviation are in themselves not inherently dangerous. But to an even greater degree than the sea, they are terribly unforgiving of any carelessness, incapacity, or neglect. Before we started our conversation, Peter riffled through and organized several stacks of paperwork on his desk, preparing the material that he would later use in the interview to explain his investment process. In his distinctive, growly voice, Peter went on to share with me some of the most crucially significant milestones in not just Canada’s market history, but that of the world. I felt like a student. And Peter Brieger was the master teacher.

Peter Brieger’s 15 Investing Lessons:

1) “Once I’ve decided that I like an industry, I focus on the leaders.”

2) “Aside from any macro-economic inflation or disinflation indicators, I focus on micro-economic factors.”

3) “I . . . look at . . . the shape of the yield curve. Nothing will kill an economy and stock market faster than a flat or inverted yield curve because they are usually the forerunner of a recession.”

4) “There are two sources of investment returns: income and capital gains.”

5) “On a global macro-economic basis, if you take a look at the world demographics, we like emerging markets long-term. Why? Because, with the exception of China and a few others, the emerging economies have the same demographic trends we had in North America in the fifties and sixties.”.

6) “One can gain exposure by investing in major international companies that have at least 50% of their business in emerging markets.”

7) “I believe it was Professor Jeremy Siegel of the Wharton School who pointed out that long-term stock returns were between 6% and 8% but half of that return came from dividends and their growth.”

8) “My biggest theme now is water. I think water’s the next oil, and fortunately we’ve had good luck with water companies that have been taken over. [However], water is not the next three-month, six-month, or one year story — it’s a twenty- to thirty-year story.”

9) “If you believe the emerging market story, their populations will demand a higher standard of living, especially with better quality foods. So we review fertilizer, seed, and agriculture equipment stocks.”

10) “The basic truth is that if you give 10 different money managers the same information, you may see 10 different reactions.”

11) “I think book value matters less. . . . It’s what the assets produce that actually matters.”

12) “If the price takes a hit, we quickly determine whether that hit was a one-off or something more serious. If it is the former, we buy. If we think it is the latter, we don’t buy.”

13) “Earnings’ growth must be what powers markets upward.”

14) “People’s time horizons have drastically shrunk. They want instant gratification through returns. That’s not investing — it is sheer speculation. ‘Slow and steady wins the day.’”

15) “Staying with a discipline is key. From time to time it may seem not to be working but, assuming it has been well thought out, it will serve you well in the long run.”

Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.

Macro or top-down investors generally base their decisions on current or future economic events. They start their selection process by analyzing asset classes, themes, markets, sectors, and industries, before (if at all) moving on to analyzing individual companies. Macro investors may very well pick a basket of stocks that fit their top-down profile or macro prediction.

For example, if an investor predicts that water will be a scarce and profitable resource in the future, then he or she will invest in stocks that operate in that sector currently. Because of this, macro investors are generally different in their approach than bottom-up investors (value investors, growth investors, or fundamental investors).

The inherent risk in top-down investing is in the case that one’s macro prediction does not materialize (perhaps water utilities do not become a very profitable business). In that example, the associated positions that were invested in to initially capitalize on that macro prediction do not achieve the expected returns for the investor.

Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.

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My full interview with Derek Foster; The Idiot Millionaire originally appeared in my national bestselling book, Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca.

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Derek Foster is an “idiot.” He saved, then invested, and then quit the rate race at age 34. He spent his twenties backpacking across Europe, Australia, and New Zealand, and lived a number of years in Asia. Who does that? He should be broke, living paycheque to paycheque, and working a dead-end job until he’s 65. Instead, he’s independently wealthy, having amassed around a million dollars in investable assets.

While Derek has branded himself as the “Idiot Millionaire,” he’s anything but — Derek is very, very smart. He uses the “idiot” angle to inspire the average Joe or Jane Canadian to achieve their own financial independence. And he sells a lot of books in the process. Stop Working: Here’s How You Can! propelled Derek into Canadian financial folklore. I was enthralled by Derek’s path to financial freedom, and have read most of his six books. Today, he touts buying strong dividend-paying companies. But dividends alone won’t propel you to the million-dollar mark. There’s more to it, and it’s all revealed in my conversation with Derek.

The truth is that Derek Foster was a prudent saver who made some great calls in the market, from leveraging up on a cigarette company, piling into income trusts, taking advantage of the Canadian/U.S. dollar parity, and selling puts. He made these great calls by taking what the market gave. My favourite line from our interview comes when Derek describes his advantage in the market: “It’s not foresight. I’m opportunistic. The opportunity was there and I took it while I could.” One can glean Derek’s investment mantra in his words — he isn’t a value investor or a growth investor or a macro investor. Derek is a market “taker.” Derek himself would tell you that anyone can use his “simple investment strategy that any six-year-old can follow.” But as you’ll soon learn, there’s a higher learning curve to beating the market. Here’s how a sophisticated investor amassed around a million dollars in the market by 34.

Derek Foster’s 16 Investing Lessons:

1) “With the exception of tech, the market leader usually stays the market
leader for many years.”

2) “Even though the cigarette industry’s volume is going down 1 to 2% a year, it doesn’t matter because the prices increase 5 to 6% a year, so they’re actually making more money.”

3) “I was a very avid saver. I saved a high percentage of my income throughout my life. Probably about 70% of my paycheque.”

4) “You have to take what the market gives you.”

5) “I look for quality. I look for a company that I feel has a sustainable competitive
advantage . . . And then after that I look for a good price . . . Once I find that stock, ideally I want to hold that stock forever.”

6) “I don’t think my portfolio’s ever gotten above 25 stocks. Usually that’s where it tops out.”

7) “Most companies increase their dividends over time, so in actuality my standard of living increases slightly every year in perpetuity.”

8) “I have sold put options on companies I want to buy. Also, I have sold a couple of covered calls on companies that I’m thinking of dumping.”

9) “I look for a moat: a reason that the company can continue to make obscene profits for years into the future. Unfortunately, there’s not many of those companies out there. In the world, there’s probably a hundred or even less than that.”

10) “Stocks are almost like wine — they get better with age. Oftentimes, you’re looking for businesses that have been in business for decades or ideally even over a century.”

11) “It’s not foresight. I’m opportunistic. The opportunity was there [buying U.S. stocks with the CAD at parity] and I took it while I could.”

12) “The advantage that young people today do have, and I’m a huge advocate of, are the Tax-Free Savings Accounts (TFSA), which weren’t around when I was young.”

13) “Baby boomers’ kids have left the house and they’ll dig a little deeper in their pockets for higher quality.”

14) “I stick to my circle of confidence. Because I’m not that bright, my circle’s fairly small, but that’s okay as long as I stick within that circle.”

15) “That’s the secret to why the rich get richer — the second million, and then the third million, and then the fourth million all get easier and easier and easier.”

16) “Only a fool, somebody who’s really stupid, would not change when the circumstances change.”

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Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.

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My full interview with Peter Hodson of 5i Research originally appeared in my national bestselling book, Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca.

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Peter Hodson finally hung up his hat in 2011 after wrangling up tremendous returns in the Sprott Growth Fund. “It was a high-risk, small-cap growth fund, like a cowboy fund,” he says. After a disagreement with Eric Sprott over the fund, followed by a 62% drop in 2008, Peter finally decided it was time to ride out into the sunset. During the resource bull run from 2002 to 2007, Sprott Asset Management was a high-flying firm. As Peter quipped, his experience at Sprott Asset Management could be a book on its own.

Today, Peter Hodson is CEO of 5i Research Inc., an independent research network that provides conflict-free advice to individual investors. The five Is stand for integrity, independence, individuals, investments, and insight. “We’re just trying to use our experience to help people,” as Peter puts it. Through 5i Research, investors can get access to many easy-tounderstand research reports, written for the average investor, with a simple rating system from F to A-plus. Additionally, the company offers over 28,000 questions that have been answered by Peter, as well as three model portfolios to follow. And it seems that Peter got trigger-happy  again, because he recently announced the introduction of the Growth Portfolio model, in addition to the Income and Balanced-Equity models. Once a cowboy, always a cowboy.

Peter’s still got a good shooting hand, judging by his ability to pick off new high-flying stocks in today’s market. For example, Peter picked Amaya Gaming before many investors even knew it existed on the exchange. It was April of 2013 when Peter said, “Three very good acquisitions have set Amaya up for excellent growth, and it is wellpositioned to benefit from legalization of online gaming. Revenue growth will be big this year, and the company is becoming profitable. It is wellmanaged, has excellent shareholder support, and is a relatively unique name in Canada.” Following that recommendation, Amaya went on to post a whopping 500% gain through 2015.

It will be interesting to follow Peter’s new growth stock picks. The Growth Portfolio holds 22 securities and is initially biased toward the technology and health care sectors, two areas that Peter expects will remain strong in the near term. As Peter explains, “these are also usually the more growth-oriented sectors.” Peter is also the owner of Canadian MoneySaver, a fully independent financial magazine, published since 1981, which is chock-full of quality investment features written by Canadian experts in the industry.

Peter and I arranged to meet for the interview at Coffee Culture in uptown Waterloo. Memories of my University of Waterloo days flooded over me as I drove down King Street. When I arrived, I ordered an iced coffee, secured a table, and waited for Peter. When he entered the coffee shop wearing a tan leather jacket, black shirt, and jeans, it felt almost like a scene from a cowboy flick, the lead walking in through the swinging saloon doors seeking either a drink or a showdown. Our conversation was as entertaining as it was insightful, although no one was thrown through a saloon window. Peter is a funny guy who has a fun and compelling way of presenting his stories on the market.

Peter Hodson’s 21 Investing Lessons:

1) “The best lesson is losing money, so I learned some really good lessons.”

2) “I saw everybody do the exact wrong things for the exact wrong reasons. I saw greedy people get killed, and I saw fearful people get killed.”

3) “That ‘do nothing’ lesson was huge for me, especially when I became a fund manager. The tendency to do something because you’re getting paid is really high.”

4) “Corporations think differently than investors. As a corporation, you don’t really care what the stock’s doing right now.”

5) “Sometimes it doesn’t even matter how good of a company you are; if you’re in the right sector, you’re automatically hot.”

6) “I’ve probably made more money from this philosophy than anything else: you have to take a stock from $2 and go to $4, and then be willing to buy more of it at $4 than you bought at $2.”

7) “There’s this really sweet section of companies that go from $50 million to $100 million in value. At $100 million, people care. At $50 million, they don’t care, but it’s exactly the same company.”

8) “You have to take that leap of faith and convince yourself that you’re right.”

9) “We had a whole portfolio of 200%, 300% potentials, and of course they’re not all going to work; some are going to flame out badly. So we needed the big giant ones to make up for the ones that went to zero.”

10) “One of my mantras is not to sell too early. You know, you’re never going to get a Google or an Apple, or any 50-bagger, if you sell too early.”

11) “I assume every stock I own could drop 50% tomorrow.”

12) “If it’s an A-rated stock, you can own it for 10 years, and not even care. The market will go up, the market will go down, the stock will go up, the stock will go down, but through it all, it’s a fundamentally secure investment that’s not priced ridiculously high and that’s not one you have to worry about.”

13) “Every time I saw one of my stocks go down I would basically ask myself, ‘Why are people selling? Are people selling because of earnings? Are they selling because they’re worried about the market? Or are they selling because it’s down?’”

14) “I think in periods of time there’s massive inefficiency. Over a longer period of time it’s more efficient though.”

15) “We barely make any changes ever, because if we’ve chosen right, we shouldn’t make any changes.”

16) “On the tech side, if you’re in early on a theme, then it works well for you. [But] it’s harder for Microsoft to grow at a fast rate, whereas it’s easier for the little guys to grow.”

17) “Put yourself into a position to ask yourself, ‘Why am I selling?’ But more so, ask yourself why the other guy’s buying it from you. Are they buying it because they think it’s going up? If yes, then maybe you should rethink your position.”

18) “Companies that grow their dividends are vastly superior to companies with high-dividend yields. Don’t get sucked into the 8% yield. Buy the 1% yield that’s going to go to 2%, 3%, 4%, 5%.”

19) “If you consistently invest then it really doesn’t matter if the market goes up or down. At the end of 10 years you’ll have a good average price.”

20) “If I had a dollar for every person who said, ‘I’ll sell when it breaks even,’ I’d be a bazillionaire. Breaking even is a bad investment strategy.”

21) “One of my best techniques to finding a great stock is to just look at new highs. When you see a new high, ask yourself, ‘Why is that a new high and what’s the deal with that?’”

Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.

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My full interview with Martin Braun of JC Clark Adaly Trust originally appeared in my national bestselling book, Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca.

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You know that saying, “Don’t judge a book by its cover”? I was reminded of that adage when I met Martin Braun for the first time. As I walked into the colourless JC Clark offices, Martin greeted me with a somber hello, wearing jeans and a pressed shirt and sporting a beard. Martin walked me over to the room where we would hold our interview. Before we started our conversation, he opened a can of Dr Pepper and ripped open the wrapper of a granola bar. I don’t know many adults who drink Dr Pepper these days. Was this his lunch? Martin was cool as a cat, to the point that it almost seemed as though he had checked out of work. But again, don’t judge a book by its cover. Instead, judge Martin by his returns.

The JC Clark Adaly Trust, which Martin runs, has achieved 15.83% compound annual returns since inception in 2000. Clearly, he’s beat the TSX by a wide margin. Martin’s cumulative return since 2000 is 875%. If you had invested $100,000 with him in 2000, he would have made you a millionaire by 2015. In his best month, Martin achieved a 21% return. In his best year, Martin achieved a 57% return. And in 2015, a year that was
marred by market volatility, Martin was already up 17% by June. In other words, don’t underestimate Martin. It’s true that he makes investing look easy. But don’t be fooled — the market is a very complex and treacherous place, and Martin has found a method that works for him.

Early in his career, in 1988, Martin joined Gluskin Sheff + Associates, where he spent 10 years being responsible for the analysis and management of the Canadian and U.S. equity portfolios. But Martin struggled. That may seem surprising in light of his current returns, but it’s because, as Martin explains it, “I started out as a value investor.” It was only when he found himself sitting on the sidelines and not participating in the spectacular gains others generated during the bull market that Martin converted to a GARP (growth at a reasonable price) investor. After his epiphany, Martin decided to leave Gluskin Sheff + Associates and strike out on his own, co-founding the Strategic Advisors Corp.

Over the next seven years, as Strategic Advisors’ president and portfolio manager, he managed the Adaly Opportunity Fund (now rebranded the JC Clark Adaly Fund). In those early days, Martin’s core strategy was purely risk arbitrage. He explains in the interview that during the early 2000s, merger and acquisition spreads in the market were often overlooked, and so one could capture 20% spreads on a consecutive basis. Once the market became more efficient, though, and squeezed those spreads, Martin shifted to what remains his strategy today: growth at a reasonable price. Martin is a high-conviction investor, so his hedge fund is usually limited to under 20 stocks. Those stocks can be described as highgrowth, small- to mid-cap companies that are on the verge of making it
to the big leagues. Martin has a knack for finding and then investing in companies before they make rapid price advancements in the market.

Martin Braun’s 21 Investing Lessons:

1) “I’ve learned that being a value investor is very often a bad idea because a lot of value stocks are value traps; they lure you into the position because they’re ‘cheap.’ But in actual fact they’re cheap for a reason.”

2) “Growth is the key driver in the markets. [But] it’s the combination or synthesis of all three — growth, value, and catalysts — that create, for me, the investment thesis that I’m looking for.”

3) “You have to make some concessions to the fact that the market’s much bigger than you and that you need to figure out the market; the market doesn’t have to figure out you.”

4) “Every time a company announced it was being acquired it would go into that database and we’d just go trolling through the database looking for the best spreads with the least risk.”

5) “It didn’t take me very long to figure out that I didn’t just have to trade on announced deals. I could also trade rumoured deals or theoretical deals.”

6) “A good hedge fund manager is not limited by those little boxes where you need to play within a specific sandbox. You can do whatever the spirit moves you to do.”

7) “In the mid- to late nineties and then after the crash, I couldn’t just sit there and say, ‘This is what I do and I can’t do anything different.’ Something works for a while and then it doesn’t work. Then it works again, and then it doesn’t. We adapt.”

8) “I invest in a handful of businesses, not a whole bunch of them, and get to know them really well. . . . ‘Just put a few eggs in the basket but watch the basket very closely.’ I’m looking for 20 good stocks.”

9) “Once you’ve learned so much about that business don’t put just a couple bucks in — put a lot of bucks in. If one of those stocks goes off the rails then you’ll be one of the first ones to realize that it’s coming off the rails, and push it out the door before everyone else.”

10) “I want to invest in a company that most people don’t appreciate how good it is or how good it’s going to be. Sometimes it’s already achieved something special but people don’t realize how good it truly is.”

11) “It takes a certain skill to be able to execute. It’s one thing to say, ‘I’m going to do this,’ and it’s another to actually do it. The stocks that I didn’t make money on or I lost money on was because I misjudged management.”

12) “Don’t invest on the basis of a tip. Do your own research. Even if someone tells you that you should go buy some shares, don’t just go, ‘Okay!’ and buy some shares.”

13) “Try to get as close to the business as possible. Maybe it’s a consumeroriented
business and as a consumer you can check it out and see if it makes any sense to you as a consumer.”

14) “I think that, generally speaking, the research and the commentary from media is very bad. You generally don’t want to do what they tell you to do.”

15) “Reading the paper thinking you’ll find some good stock ideas is very treacherous. By the time those stocks make it to the mainstream media they’ve probably been largely exploited and there’s not much money left for you.”

16) “You might get lucky the first time or the second time, but you’ll get wiped out by the third time. It’s like a guy who goes to Vegas and gets ‘hot.’ Day One at the table he cleans up. Day Two he breaks even. Day Three he gives it all back to the house, plus some.”

17) “I always think about the risk first. If I can deal with the risk side then I find that the return side tends to take care of itself.”

18) “There’s a lot of cheap optionality embedded in stocks. In other words, you’re not paying for this happening, and you’re not paying for that happening; you’re paying maybe a little teeny bit for a third thing and maybe a little bit more for a fourth thing happening to the stock. If any of those four things were to happen you’d make good money because the market’s not really paying for them.”

19) “If the market was paying for 75 cents and the company makes 90 cents, then, ‘Oh. The market’s happy.’ and the stock goes up.”

20) “I figure my upside is at least three to one of my downside. That’s all you want to do when you put together a portfolio: make sure the ratio of the upside to the downside is in your favour.”

21) “The best money managers are quite whole-brained in their approach. They can somehow synthesize the analytics side with the intuitive side of the brain.”

Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.

Growth investors invest in stocks that have higher-than-average return potential compared to other stocks in the market. That means growth investors use criteria such as revenue growth, earnings growth, return on equity, and return on invested capital, among other metrics, to inform their investment decisions. These criteria can be augmented by strong management that is skillful at capital allocation, such that those managers can maintain high growth rates for as long a period as possible.

The law of large numbers often means that growth stocks’ compound returns do lower over time, and so the once high-growth achieved by those growth stocks can stall. That is why growth investors tend to allocate their money into new growth stocks that should experience high multiple expansions into the future, at least until they, too, face an abatement in high growth compound returns.

The risk inherent in growth investing is that growth investors can “chase hot stocks,” effectively buying high and selling low, or simply rack up high commission fees from a higher-than average turnover in their portfolio. The risk/reward concept argues that growth investors are rewarded for their assumption of greater risk in the market. Usually, growth stocks exist in the micro-cap, small-cap, and mid-cap segments of the market, because as previously mentioned, growth stalls due to the law of large numbers (that is, compounding returns can’t be high forever). Eventually growth stocks can become large “steady” stocks.

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My full interview with Barry Schwartz of Baskin Wealth Management originally appeared in my national bestselling book, Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca.

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Should Barry Schwartz be smiling? An 18-year compound return of 8.7% doesn’t put him at the front of the pack. Though his clients, who must invest a minimum of $1 million with Barry, sleep well at night knowing that their hard-earned money isn’t wildly gyrating year after year, but growing at a safe and steady pace, albeit above market returns. That’s why Barry is smiling. Barry Schwartz tells it like it is. He’s direct and quick to answer, in such a succinct way that you’d swear he practised his answers days before the interview. To think that Barry pretty much stumbled into the investing world is unusual. Investing wasn’t his original game plan. David Baskin invited Barry into his firm, took him under his wing, and groomed him to be a prudent investor. Barry joined Baskin Wealth Management in 2000 and became a partner in 2005. Today, Barry is completely focused on strong large-cap franchise businesses with explosive free cash flow and an enduring competitive advantage.

Throughout the interview, Barry repeats “free cash flow” over and over again to exemplify its importance. Seriously, as you read through the interview, count how many times Barry says “free cash flow.” In Barry Schwartz’s court, cash is king.

While Barry publicly describes himself as a value investor, it isn’t in the Graham and Dodd sense of the term — buying deep value stocks at below their intrinsic value. Rather, Barry invests in businesses for the long term. Businesses that will not lose their value in 10 years’ time. In fact, Barry invests based on Warren Buffett’s ideologies, ideologies that in my opinion are derived more from Philip Fisher than they are from Benjamin Graham, even though Buffett himself would say otherwise: he claims, “I’m 15% Fisher and 85% Benjamin Graham.”

Before heading up to interview Barry in his office, I grabbed a quick sandwich and drink at Starbucks on the ground floor of his building. It was only until after the interview that I realized Starbucks would fit perfectly into Barry’s ideal portfolio. Upon reaching Barry’s office floor, I was greeted by his assistant, who asked me to take a seat before seeing Barry. When he arrived, it was with a huge smile. Barry struck me as a man who was doing exactly what he wanted to be doing with his life.

Barry Schwartz’s 15 Investing Lessons:

1) “Do you know the famous story about Joseph Kennedy? When he heard the shoe-shine boy or the cabbie give him investment advice, he knew that it was time to sell or short everything.”

2) “We don’t buy Nortel for our clients because it’s not profitable. We stick to profitable companies.” (As recounted by Barry Schwartz)

3) “I only put maximum 5 or 6% in any one stock.”

4) “Stop-losses don’t make sense. For example, you can wake up the next day and find our great stock down 10% for no reason, and you’re cashed out. You’re really giving up all your control in the stock market to nervous people. Lots of stocks are volatile. Even the great ones can go up or down 50% in a year.”

5) “We don’t let the stock market drive our investment decisions. We research companies, we think about their fundamentals, and we buy them with an eye that they’ll be worth a lot more in the future.”

6) “To really make a lot of money with an investment, you need to have conviction and an egotistical attitude to say, ‘The stock market is wrong, and investors are misinformed.’”

7) “Bad things happen to good companies, but that provides you with opportunities. If they’re profitable companies, they can get through it, and sentiment may revert.”

8) “When companies generate free cash flow, and a high amount of free cash flow, good things happen. If you shoot a bazooka, you’re going to blow something up. It’s the same effect with free cash flow. I’ve never made a bad decision by buying into a company paying 8% or 9% free cash flow yield or higher.”

9) “Warren Buffett said something along the lines of, ‘If you have to have a meeting before you go out and raise your prices 10%, that’s not the type of business I want to be in.’”

10) “We’ve gotten smarter over time. When you stick your fingers in the tiger’s cage, you get bit. So you don’t do it again. You know, the cat doesn’t go sit on the hot stove. It learns its lesson and moves on.”

11) “[Great] stocks all have something in common: they’re quality businesses that raise dividends almost every year, that generate a lot of free cash flow, that are in businesses that sell products and services that people use every day, and that have potential for growth.”

12) “You can’t be dogmatic and say, ‘I only buy companies with 10-times earnings, and if I don’t find them, I don’t buy them.’ Well then, of course, if you did that you would never find anything to buy over the last four years.”

13) “Value will often be recognized in the market. That’s why you buy and diversify, because you’re never going to be right on every stock.”

14) “There are always opportunities in companies that don’t have analyst coverage or are neglected or are smaller ideas.”

15) “It is easier [for retail investors] to buy some smaller-cap companies. The billion-dollar or less stocks that a company like ours can’t get access to anymore because we have gotten too big and would own too much of the stock.”

Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.

Value investors seek out and invest in undervalued stocks in the market. “Undervalued” simply means that those “value stocks” trade below their intrinsic value — the actual worth of a business. That mispricing — a stock’s price trading below its intrinsic value — can occur for a variety of reasons, namely sentiment, perception, unusual or short-term events, and broad market declines. Intrinsic value is a culmination of a company’s brands, tangibles, intangibles, future earnings, and competitive advantage, among other things. Intrinsic value is seen as a better gauge of a company’s worth than merely its book value (assets less liabilities), which doesn’t adequately account for the true worth of a company.

Value investors invest in these undervalued, or mispriced, value stocks, in the anticipation that their market prices will revert to their mean or go back to their intrinsic value. But inherent in value investing is the risk that reversion to the mean does not occur in a short time frame and the stock’s market price may continue to decline or be volatile. The biggest
risk, though, is what is referred to as a value trap, in which a value investor misjudges a stock’s intrinsic value, such that the company’s fundamentals completely deteriorate and, in effect, validate the stock’s lower price. For this reason, value investors must identify a catalyst (for example, a change in management) or a set of catalysts in each value stock to determine whether they will actually revert back to their intrinsic value.

Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.

We in the Great White North have a lot to offer the world. And yet we usually take a back seat to our American brethren, whether in movies or politics or music. The same is true of the investment industry. While Canada is flush with experts on the markets, not much is written or said or thought about them. Why is that? Do we lack able investors? Are they
all too timid? Have the best of them moved to the U.S.? In my opinion. . . none of the above. Rather, there’s a lack of strong platforms to showcase the investment talent that exists in Canada. “Out of sight, out of mind,” as the popular saying goes. I can’t remember ever seeing a worthy made-in-Canada investment compilation on any bookshelf, whether that be in a store, house, or school. My mission in writing Market Masters: Interviews with Canada’s Top Investors is to create a strong platform (but not the platform, as that would be much too grandiose), to grow awareness of Canada’s Market Masters, and to share their timeless market wisdom with you, the reader. Some are well known; others not so much. Some are top-down, others bottom-up. Some are growth-oriented, others value focused.
Some are active, others passive. You get the point — these Market Masters differ in their approach. Although the 28 Market Masters featured in this book span different areas on the market paradigm, their objective (with exception of the passive investors) is all the same: to beat the market. All of the Market Masters seek to compound wealth over time,
which, collectively, amounts to tens of billions of dollars.

But then the question becomes, so what; why should I care? I am aware of the common perception of the Canadian stock market, specifically the Toronto Stock Exchange (TSX), as a “primitive resource-based market.” Through this book, I hope to not only debunk that misconception but also to establish why the Canadian market is essential not only to Canadian investors but to international investors, too. While some may discount the Canadian market, others capitalize on its breadth, depth, and activity to further their investment winnings. A striking example came up in my conversation with American-born Bill Ackman. “We’ve had a very favourable experience in Canada in pretty much everything we’ve done,”said Bill. In another conversation, Kiki Delaney explained, “[On the TSX], there’s a lot of world-class international companies.”

In most people’s eyes, though, the Canadian market remains “chockfull of resource stocks.” As you will learn throughout this book, and as echoed by many of the Market Masters, there are many strong multinational Canadian companies on the Toronto Stock Exchange. And the exchange, in and of itself, has a storied history, and during my research I discovered facts that surprised even me.

The Canadian market is strong, resilient, and progressive.

Strong: The TSX, which is more than 150 years old, contains roughly 1,500 listings that together make up $2.575 trillion in market capitalization, with 39.7 billion shares trading hands on an annual basis. That makes the TSX the ninth-largest exchange in the world, just behind China’s Shenzhen Exchange, but ahead of the German, Indian, Swiss, Australian, South Korean, Spanish, Taiwanese, and Brazilian stock exchanges. The TSX boasts the greatest number of listings of any exchange in North America and has the second-most listings worldwide.

Resilient: The Great Depression of 1929 did not have as significant an effect on Canadian trading activity, or on the brokerage business, as it did on the U.S. and its stock exchanges. Also, the TSX was not as hard hit after Bloody Monday (1987), posting a one-day loss that was half that of the U.S.’s New York Stock Exchange.

Progressive: In the late nineties, the TSX was the world’s first exchange to introduce decimal trading and to install a female president, Barbara G. Stymiest, and was North America’s first large exchange to move to a completely electronic trading environment. Recently, there’s been a push, most likely perpetuated by investment bankers in light of a commodities bear market, to further diversify the TSX, which may be deemed a renaissance of sorts if the trend continues. For example, many significant non-resource IPOs have sprouted on the TSX: Cara Operations, Spin Master Toys, Hydro One, Sleep Country Canada, and Shopify, to name but a few.

The Canadian stock market is essential. And there’s no better authorities to teach you how to capitalize on its treasures than the Market Masters I have interviewed for this book. Ignore this “dark horse,” the Canadian market, at your own peril. Little may still be known about the Canadian market by the world’s investors, but it will continue to succeed, whether expectedly or unexpectedly, recognized or unrecognized. Canadian stocks have exceeded the returns of international stocks (8.3%), bonds (6.2%), and T-Bills (4.6%),
from 1934 to 2014. And we’re not very far behind the U.S. market’s compound annual return of 11.1% versus Canada’s 9.8% over that same 80-year period.

The market is like a cherished childhood videogame of mine, Pokémon. At the start of Pokémon, Ash, the protagonist, is tasked by Professor Oak with choosing one of three Pokémon before starting on his epic journey: Bulbasaur or Squirtle or Charmander. For a naïve young gamer, picking just one Pokémon was quite the dilemma: which Pokémon was strong enough to actually beat the game? What I found upon playing Pokémon three separate times, once with each of the three characters, is that I could beat the game with any Pokémon. Any of the three cute characters a player chooses will achieve his or her objective, just as one can beat the market by employing any set of strategies on any part of the market paradigm. With this book at your fingertips, you can pick your favourite Market Master, or even a couple of them, to invest alongside with and beat the market. It comes down to identifying which Market Masters’ strategies appeal the most to you and which of those strategies you are most comfortable using in the market. For instance, if you’re a conservative person, the risks involved in growth investing most likely aren’t for you. Conversely, if you thrive on risk, you may very well find value investing boring. You can be certain that at least one of the Canadian Markets Masters featured in this book will be suitable for you. The only question is which one.

I finally started writing Market Masters: Interviews with Canada’s Top Investors in January of 2015. The motivation was ever present as the oil crash of 2014 continued to rattle the markets, most notably Canada’s market. At that time, market support levels were tested, and then broken, sending investors into a panic. While “a rising tide lifts all boats” such as when a broad bull run — a prolonged inclining market — pushes all stocks higher, there’s a heightened level of skill required to navigate the markets through volatility. Luckily for me, the Canadian investors I had followed since the age of 18 taught me not only how to invest through an upward period but also through an uncertain downward period. It finally seemed the right time to start on the Market Masters journey, to capture Canada’s top investors’ stories and the strategies they use to beat the market.

It was soon after that glimmer of inspiration, though, that I hit a brick wall. While I was eager to meet with and interview the chosen Market Masters for my book, only a small fraction of them actually replied to my initial letter in the mail and accepted the request for an interview. If I wanted to make this work, I thought, I would have to remain persistent. I sent another round of requests, this time via email. Only another small fraction of the Market Masters actually responded to me and agreed to the interview. For weeks to come, I would send follow-up emails, and then actually call the remaining Market Masters, to finally schedule all of the interviews. But then reality sank in once again, and my heart sank with it. I’d never interviewed anyone before.

So I researched and then practised various interview formats. I meticulously studied each and every Market Master, above and beyond what I already knew about them. I oriented the interview questions such that the actual conversations with each interviewee would be timeless, regardless of when the reader came across them, but also tailored the questions to highlight the areas that made each particular Market Master unique. I strived to elicit as many investing market strategies as I could from each of the Market Masters, to be certain that readers would actually be able to apply these strategies to make money in the markets. Also, I wanted to make sure that all of the interviews were entertaining and fun to read. I don’t want you to fall asleep, but rather to stay excitably awake in anticipation
of what you’ll learn or which Market Master you’ll hear from next. I want you to feel that you are actually there in the room with each and every Market Master, talking to him or her yourself.

Happily, all of the interviews flowed smoothly, for which I thank all of the Market Masters for being so accommodating, and my assistant, Elena Toukan, for being so thorough in transcribing. The interviews took place over a five-month period, after which point Elena transcribed and then consolidated all of the interviews into book format. Though the pile of interviews was a mess at first, the gradual finessing of the interviews and information over the next couple of months would evolve into the book you’re holding now, Market Masters.

When you embark on the journey that is Market Masters: Interviews with Canada’s Top Investors, you will be whisked away into a world and into the minds of Canada’s incredible investors. They will share with you their own unique and intriguing stories. They’ll divulge their investing philosophies, strategies, processes, successes, challenges, and outlooks. They will open your eyes to a market that you’ve never quite seen or experienced before. Your perspective will surely change and, in turn, your winnings in the markets will become more plentiful, predictable, and profitable. Whether you are a novice, intermediate, or advanced investor, I can guarantee that you will learn at least one new concept in this book that you can apply to the market to advance your portfolio. And if you’ve just started out in the market, then this book will be a treasure trove for you in that your investment journey will commence with an enviously advantageous foundation.

I hope you enjoy these exclusive conversations with Canada’s Market Masters. I certainly enjoyed meeting, interviewing, and learning from all of them. To complement the interviews I’ve provided pre-interview lessons that establish key concepts a reader should understand before they read through each conversation. This is especially important if you consider yourself a beginner investor. Also, these lessons are cumulative, so that as you progress through the book, your knowledge of these core concepts will grow, and each interview down the line will flow more easily than the one before. That is why I suggest that you read through Market Masters a second time to fully absorb all of the complex strategies  that build on the core knowledge foundation developed on the first read through. You can also consult the glossary at the end of the book if you come upon a term you’re not sure about.

Finally, make sure to read all of the bonus material that I include at the end of the book. Especially the Collection of Master Keys section, which is a compilation of the most important things that I learned from each of the Market Masters. These Master Keys can help you unlock the market and open your world to tremendous money-making opportunities.

Health, happiness, and prosperity.

Happy Investing,
Robin Speziale
August 6, 2015

Robin Speziale is the national bestselling author of Market Masters, which is available at Chapters, Indigo, and Coles as well as Costco and Amazon.ca. He lives in Toronto, Ontario. Learn more about Market Masters.