Have you ever been to a dinner party where the host doesn’t eat their own food? They prepare a beautiful four course meal that they have clearly spent hours preparing, the house smells wonderful, the wine is decanting, conversation is interesting, the table is set and everyone is seated. However as we dig into the meal, the host sits down with a bowl of plain rice?
This actually happened to Lindsay and I recently! Needless to say it left us slightly perplexed and we had a laugh at how different and wonderful our friends can be. That being said, what is a rational response? Is the food not tasty enough? Is it too fattening, not healthy? There is a legend from the middle ages that the act of ‘cheers’ – clanking glasses together so the contents of each person’s beverage mixed – was originated to show that drinks weren’t poisoned…ha, ha, were we being poisoned?
Eating & Investing
We eat our own cooking. At home and in our investments.
ALL investments that make it through our screening and due diligence process must be held in a portfolio of at least one of our team members. It forces us to be even more accountable for the allocation choices of the portfolio we recommend.
We are personally vested in you as well as ourselves meeting our desired outcomes.
Converting Currency Using Me as Guinea Pig
Recently, we learned of a low cost method to convert Canadian Dollars to USD and back again while getting the best institutional rate available. This required a ‘test case’ which required raiding my account to ensure the process went smooth and achieved the low cost outcome we wanted. Given my vested interest I watched every step and came out on the other end intact.
New Policy and Procedures were written and we now can execute USD/CAD exchanges seamlessly and at a low cost. Again, we use our own capital first, before we use yours.
If you’re planning on converting currency anytime in the future, please ask us about this process as there is potential for significant foreign exchange savings.
Investment Managers: We Prefer Those Who “Eat Their Own Cooking” – They Must Invest Their Own Capital Alongside Your & Ours
In addition to us owning the same investments as you, when we screen investment managers, one of the questions we ask is how much of their own wealth do they own in the portfolio is question? When we asked David Barr, CEO & Portfolio Manager at Penderfund Capital Management, he strongly stated ‘greater than 95% of my investable assets are in the funds I manage’. A conviction in their ability is what we look for along with vested interest in the outcome.
A Morningstar study conducted in 2009, made the conclusion that the more personal wealth a manager had directed at their fund, the higher the success rate (success being defined as outperforming the peer group average)*.
Further, a manager that buys her own fund is incented to bring down the cost of the fund they manage to reducing costs for all!
We believe that investing alongside you, and hiring investment managers that do the same, provides a better long term outcome for everyone.
Pete & The Wooding Group