Stock Market Corrections Are Beautiful… When

A correction is a beautiful thing, simply the flip side of a rally, big or small. Theoretically, even technically I’m told, corrections adjust equity prices to their actual value or “support levels”. In reality, it’s much easier than that.

Prices go down because of speculator reactions to expectations of news, speculator reactions to actual news, and investor profit taking. The two former “becauses” are more potent than ever before because there is more self-directed money out there than ever before. And therein lies the core of correctional beauty!

Mutual Fund unit holders rarely take profits but often take losses. Additionally, the new breed of Index Fund Speculators over-react to news of any kind because that’s what speculators do. Thus, if any brief little market hiccup becomes considerably more serious, new investment opportunities will become abundant!

Here’s a list of ten things to think about doing, or to avoid doing, during corrections of any magnitude:

1. Your present Asset Allocation should be tuned in to your long-term goals and objectives. Resist the urge to decrease your Equity allocation because you expect a further fall in stock prices. That would be an attempt to time the market, which is (rather obviously) impossible. Asset Allocation decisions should have nothing to do with stock market expectations.

2. Take a look at the past. There has never been a correction that has not proven to be a buying opportunity, so start collecting a diverse group of high quality, dividend paying, NYSE companies as they move lower in price— Investment Grade Value Stocks. I start shopping at 20% below the 52-week high water mark— the bargain bins are filling.

3. Don’t hoard that “smart cash” you accumulated during the last rally, and don’t look back and get yourself agitated because you might buy some issues too soon. There are no crystal balls, and no place for hindsight in an investment strategy. Buying too soon, in the right portfolio percentage, is nearly as important to long-term investment success as selling too soon is during rallies.

4. Take a look at the future. Nope, you can’t tell when the rally will resume or how long it will last. If you are buying quality equities now (as you certainly could be) you will be able to love the rally even more than you did the last time— as you take yet another round of profits. Smiles broaden with each new realized gain, especially when most Wall Streeters are still just scratchin’ their heads.

5. As (or if) the correction continues, buy more slowly as opposed to more quickly, and establish new positions incompletely. Hope for a short and steep decline, but prepare for a long one. There’s more to Shop at The Gap than meets the eye, and if you are doing it properly, you’ll run out of cash well before the new rally begins.

6. Your understanding and use of the Smart Cash concept has proven the wisdom of The Investor’s Creed (look it up). You should be out of cash while the market is still correcting— it gets less scary each time. As long your cash flow continues unabated, the change in market value is merely a perceptual issue.

7. Note that your Working Capital is still growing, in spite of falling prices, and examine your holdings for opportunities to average down on cost per share or to increase yield (on fixed income securities). Examine both fundamentals and price, lean hard on your experience, and don’t force the issue.

8. Identify new buying opportunities using a consistent set of rules, rally or correction. That way you will always know which of the two you are dealing with in spite of what the Wall Street propaganda mill spits out. Focus on Investment Grade Value Stocks; it’s just easier, as well as being less risky, and better for your peace of mind. Just think where you would be today had you heeded this advice years ago—

9. Examine your portfolio’s performance: with your asset allocation and investment objectives clearly in focus; in terms of market and interest rate cycles as opposed to calendar Quarters (never do that) and Years; and only with the use of the Working Capital Model (look this up also), because it is based upon your personal asset allocation. Remember, there is really no single index number to use for comparison purposes with a properly designed portfolio.

Unfortunately, only Self Directed 401k and IRA programs are able to use Market Cycle Investment Management.

10. So long as everything is down, there is nothing to worry about. Downgraded (or simply lazy) portfolio holdings should not be discarded during general or group specific weakness. Unless of course, you don’t have the courage to get rid of them during rallies— also general or sector specifical (sic).

Corrections (of all types) will vary in depth and duration, and both characteristics are clearly visible only in institutional grade rear view mirrors. The short and deep ones are most lovable (kind of like men, I’m told); the long and slow ones are more difficult to deal with. Short ones (those that last a few days, weeks, or months) are nearly impossible to deal with using Mutual Funds.

So if you overthink the environment or overcook the research, you’ll miss the party. Unlike many things in life, Stock Market realities need to be dealt with quickly, decisively, and with zero hindsight.

Because amid all of the uncertainty, there is one indisputable fact that reads equally well in either market direction: there has never been a correction/rally that has not succumbed to the next rally/correction—

Think cycle instead of year, and smile more often.

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Andex Chart – Free Canadian Andex Chart

The Andex Chart is probably the single most important investor – advisor learning tool and education wonder when first seen by anyone. The Canadian economy at a glance, what happened when and how things are related and can change often and without notice or comprehension.

One can analyze the information in hundreds of ways and enjoy seeing the big picture of Canada’s capital markets. There is no doubt the value of these important charts that explain a lot and allow the imagination to research and drill down from macro-economics to the local pocket book.

MONEY.CA online – Money Magazine and Money Media are excited to offer Canadian’s who buy Money Membership at $30.00 which includes Money Magazine to the door step and the monthly Money Newsletter to the desktop. When you buy a Money Membership you will receive a 2014 Canadian Andex Chart Handout and you will have caused a 2013 Canadian Andex Chart to be given away free to a child, student or teenager for a first time, eye opening experience right in the palm of their hands; and because of you. Just to let you know one Andex Chart alone will cost over $16.00 + tax.

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When Respect Matters.

Just as there is a growing lack of respect in society as a whole, respect plays an ever-increasing role in business. In a world of ever shrinking margins, gone are the days of the quick sale and one-time customer. Securing repeat business is your future. Lasting relationships are based on respect, and business relationships are no different. Some people will argue that you don’t have to respect someone do business with them. Perhaps. But the lack of respect will erode your relationship over time like rust biding its time on the underbelly of your car.

The kind of respect that will strengthen your relationships has to do with respecting your customers, their customers, and yourself. When you respect your customers you respect their time, and that respect is manifested by your actions: showing up on time, calling ahead if you are going to be a few minutes late, returning all messages (voice and e-mail) and in a prompt time frame. Yes I know this is simple stuff, but it is stuff that is lacking in business just the same, and demonstrating a lack of respect.

Respecting someone’s time also means giving him or her full value for his or her time. The more people value the time spent with you, the more time they will spend with you. Every conversation that provides value has the power to move the relationship forward. Respect for customers is also about respecting their needs, which requires that we take the time to listen to them before offering a solution to a problem we know nothing or little about. It also requires that the solution fit the needs and not the other way around. (Hard selling has no place in a respectful relationship.) Since customers need to understand and relate to what we are saying, the onus is on us to make sure our communication is crystal clear; when questions are asked, we need to have a good answer and verify that the answer actually put the question to rest. Customers also need to know details about our solutions, which mean that we need to know every last detail about them first. Product knowledge demonstrates respect for customers and for their customers who also benefit.

We demonstrate our respect for our customers’ customers by making sure that we stand behind everything we offer and provide excellent service, because our ability to make our customers more effective and efficient ultimately benefits their customers as well. Commitments on any level need to be honored without hesitation.

It is harder to keep such commitments to others when we don’t keep the commitments we make with ourselves. When each of us commits to doing something the act of following through shows respect for ourselves, and makes the ability to keep commitments to others a simple matter of routine.

Perhaps the easiest way to see the power of respect is to look at how you react when you do not get any respect.

When people are shown disrespect, it causes them to be defensive; your whole demeanor is guarded. When that happens the relationship is no longer as open and straightforward as it should be, and that can understandably lead to a holding back on the full level of service that is normally offered in a relationship where one’s own value is fully respected. A lack of respect can cause less dialogue to take place, since why would you want to spend any more time talking to a disrespectful person than you need to? With less dialogue to feed a healthy relationship, relationships starve. A lack of respect shuts down the very communication needed to build long-term relationships. Respect, on the other hand, creates open dialogue. Effective–Two-way communication builds trust, and the more trust you have, the easier it is to move any relationship forward. Simply put, respect is the seed of trust. I trust, with respect, that you will put it to practice.

By: Mark Borkowski is president of Toronto based Mercantile Mergers & Acquisitions Corporation. Mercantile specializes in the sale of privately owned companies to large strategic and private equity buyers. He can be contacted at or

The “Do’s” and “Don’ts” of Effective Business Communication

These two little words can change the way you communicate to your clients and prospects.  Effective communication in business always leads to more success.    It is using the right words to  to help and to facilitate learning while building relationships with your clients.  It is all about trust and rapport.

What is don’t?  It is do not  disguised under the apostrophe banner.  It sneaks into our conversations under this mask.

Here are some Don’t phrases to ponder.

Don’t care!

Don’t think so!

Don’t want to!

Don’t have an interest!

That should be enough, but I am sure you can think of hundreds, but what are these phrases?  You are right! They are negative statements and that lead to dead end streets with no way out. 

Here is the most intriguing concept. We as business  communicators will use the word Don’t  and it leads us nowhere.  I really believe that to be true.    A good example is “I don’t think you should go down that path.”  Now search how you felt or what you thought about when you read this phrase. What ever it was, it had a negative feel to it along with what ever action you would need to take to respond to it. Right!

Now think of the word DO

It is an action word to be taken very seriously. For example we seldom ask people what they don’t do but what they Do?

Do you care!

Do you think so!

Do you want to !

Do you have and interest!

Now look at the difference.  The  word Do is positive by its nature and it requires action or demands open response.   It begs the question “why” and a “because” response. 

Do you think you would learn more about your clients, staff, associates etc.  if you incorporated this word?  Why do you think so? What will it Do for you in your business communications.  Do you think it might help you make more money.

I trust you get the point. It is so easy to change this habit just say the word Do instead of don’t and let the flow of the conversation happen.  Just some fun thoughts for everyday business.  

Joe G. White is Owner of MFR Inc. “The Franchise Rainmaker”. He provides professional advice to people looking to engage in franchise ownership  He can be reached at 647-724-0742 or

success through knowledge”

Internet and E-mail Safety (and security)

In this blog, let’s look more closely at internet and e-mail scams and security.

Knowledge is power – and never truer than when surfing the net. The most common risks are viruses, key-stroke recordings, miscellaneous malware and Trojan horses.

Viruses do the same thing to your computer as they do to us – they make it sick; they can even kill it. Key-stroke recording software is installed by hackers and allows them to record all of your keystrokes with particular attention to usernames and passwords – they love banking, credit card and email access the most. Malware is also malicious as it can take many forms: from tracking your internet use patterns to copying files to a remote computer to erasing key pieces of software. Trojan horses get uploaded and then sit in wait – silently for a triggering date or event and then allow the hackers to take control of your computer and use it for attacking other computers.

The only 100% protection against these threats is don’t surf the net! Now let’s get into reality – hardware and/or software firewalls together with anti-virus and anti-malware software.

Hardware firewalls are called routers and they act as a first line of defence between the internet and your computer and are relatively inexpensive to acquire and are not very complicated to install. Software firewalls are generally a second layer of protection after the hardware firewall. Most reputable commercial ISPs (Internet Service Providers) provide this as part of their customer offering and may reside either on their servers or on your computer.

Anti-virus and anti-malware software is sold by several companies (Norton, AVG, Kasperski, F-secure and MalwareBytes to name but a few). Most suppliers offer free versions of their protection suites but remember if it is free, there is a reason! They are in business to make money and the free versions are teasers only. They do help of course, but don’t provide complete protection, so beware of freebies! Running “in the background” on your computer, they analyse every attempt at both inbound and outbound communication over the internet for suspicious software code and either block or delete access to outsiders. You can control all of these functions through a “control panel” that is installed with this software.

Be very selective on the websites that you visit. Some categories are higher risk for spreading these problems than others – dating sites, erotic picture and video sites together social media are the greatest sources of problems – avoid them!

Rule No. 1 – if you don’t know the sender or you didn’t sign up for any e-mail notifications from stores or websites, DON’T OPEN IT! The “Nigeria” scams and grandchild scams are run constantly on e-mail as are Lottery scams of various types.
Rule No. 2 – see Rule No. 1.
Rule No. 3 – ensure you have a full-version of both anti-virus and anti-malware software installed on your computer that gets automatic signature updates – preferably daily – to stop evolving threats. If you follow these 3 rules, you are going to be safe 98% of the time.

The final 2% is chain-mail – the electronic version of old chain-letters – if you get one, regardless of the identity of the sender, do not forward it – even if it is from a close relative or friend – don’t!

A great reference book on scams is from the Competition Bureau of Canada – The Little Black Book of Scams – click here to get there immediately. The Canadian Anti-Fraud Centre has a website that is all about various scams and identity theft. Click here – Canadian Anti-Fraud Centre Home Page.

Protect yourself from Identity Thieves!

Andrea told her husband Jack that she had noticed a young person going through their condo paper-recycling bins. At first, she thought they were just looking for recyclables which could be turned into cash, but later realized the person was rummaging through all of the containers that were paper-products only.

These bins often contain bank statements, cancelled cheques, private letters, other important documents, credit card statements and envelopes. If the information is from a business office, old client files and related data can often be found. There have been stories in the news about scavengers going through people’s waste and recyclables specifically looking for these items. The information that can be obtained is very valuable to information thieves and can be potentially damaging to you.

Credit Card Statements – Just how valuable is your credit card number to a thief? One couple was vacationing in Montreal when their credit card information got into the hands of an organized crime group in Mexico. Overnight their card had been maxed out. How would you like your next vacation to start this way?

Bank Statements – With an old bank statement, a cancelled cheque and a little bit of today’s technology, anyone can easily print up cheques drawn on your account and forge your signature. You can imagine the havoc this can create.

Envelopes and Magazines – Check your name and address on the magazines to which you subscribe and the notices you receive and you will often find your account or membership number is displayed. With that number, anyone can gain access to your member or account information and re-direct your mail. In some cases, this can be done on the Internet. If someone can re-direct your mail, would you wonder what else they might be able to accomplish?

Office Waste – The information that can be found in discarded office material is very valuable. It can contain confidential information on your customers, correspondence from companies with which you deal, statements of account, customers’ account data, quotations, billing information, purchase orders, etc. Would you like a competitor to get their hands on any of this information? What about your customer’s own identities – could they be stolen from information you discard?

Andrea and Jack decided to foil the information thieves by buying a personal paper shredder for less than $100. They now shred all papers containing anything other than their names and addresses. Though a determined thief might piece the shredder’s output back together, stirring it up should make this practically impossible.

The Canadian Anti-Fraud Centre ( is an excellent resource regarding all types of fraud including Identity Theft. Here are some quick tips from their website.
1. Before you reveal any personally identifying information, find out how it will be used and if it will be shared, and with whom.
2. Pay attention to your billing cycles. Follow up with creditors if your bills don’t arrive on time.
3. Use passwords on your credit cards, bank and phone accounts. Avoid using easily available information like your mother’s maiden name, your birth date, the last four digits of your SIN or your phone number.
4. Minimize the identification information and number of cards you carry in your wallet or purse.
5. Do not give out personal information on the phone, through the mail or over the internet unless you have initiated the contact or know with whom you are dealing.
6. Keep items with personal information in a safe place. An identity thief will pick through your garbage or recycling bins. Be sure to shred receipts, copies of credit applications, insurance forms, Physicians’ statements and credit offers you get in the mail.
7. Give your SIN only when absolutely necessary. Ask to use other types of identity proof when possible.
8. Don’t carry your SIN card; leave it in a secure place.

In my next post, I will share some thoughts on other types of fraud and identity theft – including the internet, your telephone and RFID scanners!

Theories on Motivation….

TSE attractor

Theories on Motivation….

Steve Jobs, the computer genius who co-founded the Apple Corp., was a very charismatic leader of technical people. When his group was designing Apple’s new Macintosh computer, Jobs flew a pirate flag over his building. Its purpose was to signify his team’s determination to blow the competition out of the water. Rather creative motivation.

Good leaders and managers have creative ways to motivate their employees.

Robert Waterman Jr. wrote about Chiyoshi Misawa, founder and president of Misawa Homes — the largest homebuilder in Japan. At least once every decade he “dies” to arrest the momentum of out-of-date assumptions and policies. He sends a memo to his company that formally announces “the death of your president.”

This is his way of forcing the whole company to rethink everything. When employees resist change because they are used to the old way of doing things, Misawa declares: “That was the way things were done under Mr. Misawa. He is now dead. Now, how shall we proceed?”

People can be motivated with threats, fear, example, reward, recognition, etc. I believe threats are overrated and misunderstood. Fear works for a while. However, when people are mature, experienced and professional, they will not regard mistreatment and claims of absolute authority as a source of inspiration.

One of the most powerful motivators is peer pressure. That’s what the armed forces use to motivate soldiers. What makes an 18-year-old kid risk his life in combat? It sure isn’t because he thinks his platoon leader is such a prince. One of the main reasons is because his buddies will think he’s a coward if he doesn’t go with the flow. But peer pressure, despite its powerful impact as a motivator is — like the other motivators — imposed from outside sources. It tends to work best on young people because their personal set of values is not yet fully formed and are more easily influenced by others.

I think one of the best motivators, the one that is most likely to stick with you — even for a lifetime — is the one that comes from within. If you’re looking for a one-word description of a truly motivated person, I’d say “self-starter.”

But let’s face it; no one is able to be up every minute of every day. How do you overcome the inevitable drag on your spirits of doing tasks you hate but have to be done?

I do it by playing a trick on myself. It’s the old peas/pie routine. (That is, you have to eat your peas if you want a piece of pie.) If I have to do something I don’t like, I make it a point to be especially nice to myself later by doing something I really do like. I think about the possibilities all the time I’m plowing through the monthly inventory reports and 90-day-plus receivables. Then a few aspirins later, I’m ready to give myself a new golf club, dinner out or whatever mad and capricious delight strikes my fancy at the moment.

Recognition is another great way of motivating us to achieve more than we ever thought possible. For the record, I have yet to receive my first note from someone telling me that I’m giving him or her too much recognition.

Predictably, money is still one of the top motivating factors.

A manager who had just returned from a motivation seminar called an employee into his office and said, “Henceforth, you are going to be allowed to plan and control your job. That will raise productivity considerably, I am sure.”

“Will I be paid more?” asked the worker.

“No, no. Money is not a motivator, and you will get no satisfaction from a salary raise.”

“Well, if production does increase, will I be paid more?”

“Look,” said the manager, “you obviously do not understand the motivation theory. Take this book home and read it. It explains what it is that really motivates you.”

As the man was leaving, he stopped and said, “If I read this book, will I be paid more?”

Mackay’s Moral: Motivation is the spark that ignites success.

Mark Borkowski is president of Mercantile Mergers & Acquisitions Corporation. Mercantile is a mid market M&A brokerage firm. He can be contacted at


When People Don’t Play Nicely With You

A couple of weeks ago, I watched two of my grandchildren, who are cousins, playing. The 3-year-old wanted to play on a small teeter-totter, the 2-year-old would not. The older one was upset about that. He liked the toy and wanted to play, but being upset about his failure, did not improve his chances much.

Even as adults, life hands us this situation regularly.

Sometimes you know an important fact and people you are trying to influence do not do what you think they should. If you want success with your plan, you need to learn persuasion skills.

There are many reasons for the other’s odd behavior and your expectations are not very important in that list. Here are some of the reasons:

  1. They know something you do not, and that reason is better than yours; at least for them.
  2. They know the same thing you know, but have discarded it as unimportant.
  3. Even if they know the reason, they don’t know how to implement.
  4. There is no urgency. They might want to do it, just not now.
  5. They cannot afford it.
  6. They don’t believe what you are telling them.
  7. They have other priorities that you have missed. They cannot do everything and have chosen a different item from the buffet.

Advisers, get over it.

If you want a hope of success, you need to get past the ever increasing shrillness of the method you have chosen. Louder repetition doesn’t work.

You can get past it in several different ways.

  • Find out where they are and how they came to be there.
  • Find out if they understand your proposal.
  • Be sure they have the resources and that using them your way does not conflict with their other priorities.
  • Understand their social style and relate to it.
  • Help with implementation, at least the first steps.
  • Offer and deliver necessary education.
  • Relate to benefits and deliver the features that relate to the benefits

Persuasion is an acquired skill. People can be lead to places that will benefit them. You cannot lead anyone to a place they don’t want to go or do not understand. Do not try. It reduces the chances of success. People reject the hard closers eventually.

if you are able to make the first sale, the method virtually eliminates long term success because you must keep reselling the plan.

Not bad advice for dating too. Tell your teenagers.

Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.

Is there such a concept as “corporate ethics”?

Much has been written and said recently about an apparent lack of ethics in many segments of our society – in particular our politicians, political appointees and corporate executives. As the political side of this issue is well discussed in the forthcoming issue of Money Magazine, I am going to visit corporate ethics here.

I think the first issue is to answer the question – is there such a concept as “corporate ethics”? I have thought about this a great deal and have come to the conclusion that no – there is no such thing. Corporations don’t think as entities – they merely reflect the ethical values and personal principles of the decision-makers – whether that is a single person in a small company or an entire Board of Directors or members of the so-called “C-suite” for larger national and international businesses.

I find the notion of corporate ethics and responsibility inextricably linked back to those same issues on a personal level for the individuals involved. A corporation doesn’t decide to do anything – the people that control the corporation make the decisions and they should be the ones that pay the price.

Public censure, fines and other forms of discipline assessed against companies only penalise consumers, employees, and in some cases, shareholders. These approaches are punitive and don’t change the fundamental behaviours, beliefs and attitudes of the decision-makers that are involved.

As a result of some financial imprudence (you can provide your own personal interpretation of that statement) in the mid-to late 2000s, some companies were labelled as “too big to fail” and the executives who caused the problems labelled as “too big to jail”. What nonsense – particularly the second part about jailing those responsible for the most egregious acts.

The negotiated settlements see some people parting with, what appears to be large amounts of money – the reality is something very different, unfortunately. Yes they part with some millions but those millions pale into ignominity in consideration of the deliterious effcts of the actions on businesses, consumers, employees and unsuspecting investors. These people deserve nothing less than being stripped of 100% of their ill-gotten gains (both cash and assets), jailed for terms involving double-digits (with no early parole and no “Club Fed”-style prisons) and a permanent world-wide ban on further business activities other than as a consumer.

Harsh? YES. Too harsh? You can judge. What I do know is these people with their suspended or nominal sentences are not being dealt with in an appropriate manner and the “punishment” is certainly not a deterrant.

Is your advisor staying current? Ask about their Continuing Education credits!

Many people are still unaware that all licensed or registered advisors have to complete a certain minimum amount (usually hours or credits) of Continuing Education – called CE Credits – each year in order to continue their licensing or registration. This is very good news for the consumer – or is it?

I wish I could state with absolute certainty that this is good news – but I can’t. One of the challenges of the Canadian System is there is no central body that sets the requirements in terms of hours needed, nor is there consistency on the type of education or training that qualifies. Each Province and Territory sets their own standards and some are well defined while others lack clarity or specifics. Some SROs (self-regulatory organisations) do set standards but again, they are not consistent. Ah that this would change – for everyone’s benefit!

I doubt you will find any advisor or manager that disputes the need for regular updates on products, taxation, international treaties, etc. However some advisors take a more laise-faire approach than others. For example, learning about the technicalities of products is obviously important so that consumers can be assured their advisor is giving them proper recommendations but is that really furthering their “education”? For some regulators the answer is yes while for others the answer is no – so who is right? Ask 20 advisors and you are likely to get 20 differing opinions – not that this would be a real surprise of course.

I have my own feelings, unsurprisingly, and they are rather fundamental to my own belief system – product information is training – it is not education in my opinion – and therefore shouldn’t count for CE purposes, anywhere.

Regardless of that statement, what I do believe very firmly is that consumers have a right to know what regular education their advisor is receiving. Are they current on the advice they are giving or are they 2 or 3 years behind (product training notwithstanding)?

I urge everyone to ask ALL of their advisors at least once every two years to describe the Continuing Education they are taking – you deserve to know!