We all make mistakes

We tend to dismiss when we're right and really focus and agonize on the mistakes, but the mistakes just something sometimes to cherish and say how can we do it better each time? And you can do well, even though you make mistakes.

There will be errors of judgment all the time. So, that's where the value of an advisor and portfolio construction can can come into place.

You can escape it, but you can mitigate it. You can put things on your side. Warren Buffett always says his first rule of investing is don't lose money. And his second rule of investing is don't forget your first rule of investing.

What he means by that is not volatility. He means about the permanent impairment of your capital. Not the fact that one stock went down, but that the portfolio or the sum total of all of your assets continue to grow and move forward.

The importance of having a process

I work to find how is it that people make great wealth? How is it accumulated? What is the process that people through investing can feel comfortable?

Because investing is the road less traveled.

It never ends. It's a marathon. So you have to have a process that nothing works all of the time. But most of the time this will provide you with the framework that you can achieve your goals, your successes, what matters to you.

It's never too early to start investing

The earlier you start, the less you need to save to be able to become really comfortable. A lot of people have that tomorrow, that manyana viewpoint. I'll start tomorrow, I've got to deal with these other things. But what we need to do is learn how to prioritize and make sure that we're taking care of all of these priorities, because the essence of being a great investor is really just the power of compounding. that's what Einstein said. Compounding is the eighth wonder of the world. And it's so easy, just anybody who looks at the compound interest tables can see how mighty it is. And if we can only recognize it early and make small contributions one, we can get very, very wealthy. But two, once you are wealthy and thinking of retirement, you can see you still have more time than you expect. Where 30 years ago when you retired at 65, your life expectancy was 70. It's not the case anymore. We have to bring those realities in, accept the realities of the way they are, or they could come back and hurt you.

Why Alan is so passionate about helping investors succeed

You know, I went to university in Toronto, really didn't know what I wanted to do with my career. A good friend of mine actually went into the investment business and I started working with him. I gave him some money. It was all the money I had at the time. Right. Which wasn't a lot. But, you know, within a month, I'd lost it all. You know, not a little bit, not half of it, but I lost all of it.

It was one of those epiphany, one of those wow moments like, oh my God, whoa, you know.

This isn't how I expected it to be. It was traumatic. What transpired wasn't his fault, and I've never blamed him for it. We were good friends then, we're good friends now. What I realized is what I was doing was really speculating. It wasn't investing. But more than anything, I thought to myself, wow, I could do better than that.

I treat all my clients as if it's my money because I don't want you to ever experience what I did. I know the feeling of disappointment when you invest and it doesn't work. And it inspired me really to sort of be a student and learn what works.

My name is Alan Friedman, I'm an investment advisor and portfolio manager, at CIBC Wood Gundy.

Alan's thoughts about successful investors and their emotions

Everybody believes you're making rational decisions. Nobody wants to make an irrational decision. We are preconditioned by who we are and those preconditions make us behave in certain ways. We can sit here today. And I would pose questions to you and you would tell me now, oh, absolutely I'm prepared to do that. But at that critical moment where that experience is really happening to you, you might say, I know I said that, but I take it all back. You see prices declining. You don't necessarily know the values. You hear the news, the press, it seems so dire.

They say that the four most important words never to say is this time it's different, but it's said all the time. 2008, this time was different. 1974, this time was different. Today it's different. But it's not, it's your behavior that can determine your success. There's studies that show the performance of a typical mutual fund and the performance of investors and the typical mutual fund. And the investors perform at half the return of the actual fund because they invariably buy high and sell low. When we all know the essence of the equation is to buy low, sell high. Or maybe as Mr. Buffett would say, never sell.

My job is to try to control your behavior and I can't control your behavior at that moment of crisis. The only way I can control that behavior is to have the discussions and provide the tools in the better moments to be able to make you feel better. So each time we lived through a crisis, it becomes less traumatic. That's what we do. To really recognize that we are very emotional as we deal with their money and to be truly respectful of that and to work with people to really understand their feelings about it.

Alan on mutually-beneficial Advisor/Client relationships

The more I think about it, chemistry is vital.

When someone comes to see me, I know that all the time they're saying, is this the kind of person I can do business with? Is this the kind of person I can trust and feel good about? But I think that the reverse is also very important that for me, for the effort that we make, that I want to have that same feeling. That I feel good about you, I feel good that you really want to work with me, that you understand the effort that I put in this work that I've done to get to this point in time.

There is a lot of miles on my odometer and a lot of experiences and a lot of things that I know through that period will help you. But if we don't have the right chemistry, it's so hard. So I guess and again, it brings back that word. If we are a coalition of common interests and we need to both feel good about it, I think that's very important.

And I'm very cognoscitive, every dollar that you pay me as a dollar that doesn't go towards your future returns.

And I want to align the value of what I do with you. So I preferred charging a fee. So if we make a decision to buy something, you don't think that I'm buying it because I'm going to earn something or if I make a decision to do nothing, that it's a valid decision or if I think you should sell it that that is. But the way I can double my earnings and is only if I double your capital. So I think that working on a fee base will align our interests. And if you do well, I do well.

Transcript: 2020 – Why Bull Markets May Endure

[Soft Music playing in background]

[Title Reads: 2020 – Why Bull Markets May Endure]

[Onscreen Text: Benjamin Tal, Deputy Chief Economist, CIBC World Markets]

2020 - the big worry is that 2020 will be a recessionary year. And we have a very long expansion and we have the yield curve suggesting an inversion, maybe a recession down the road. But the key question is to what extent? What we are seeing now from the Fed, the 75 basis points that we got, was it a mid-cycle easing or a late cycle easing?

[Onscreen Text: Key question – Do recent interest rate cuts by the U.S. Fed indicate mid or late-cycle easing?]

That will determine where you are in the recession call. I suggest that what we have seen was a mid-cycle easing. The Fed cut by 75 basis points exactly because they can. They can do it because inflation is not an issue.

[Onscreen Text: Fed likely in mid-cycle easing prompted by low inflation]

And this cut will postpone the next recession, and that's why I think this is a mid-cycle easing like in 1995, 1998, and that's actually positive when it comes to markets. So I will call not a recession in 2020.

[Onscreen Text: We believe recession is unlikely in 2020]

1) Because of the cut by the Fed. 2) Because of the fiscal stimulus that will come from Washington and from Ottawa.

[Extreme close-up shot of a US $100 bill, followed by a wide timelapse of a busy shopping mall, followed by a shot of a mother and daughter shopping for clothes.]

And 3) We believe that the trade dispute between China and the U.S. will be resolved, at least on a temporary basis, by 2020 - that will help markets as well.

[Aerial shot of a shipping yard, followed by a second aerial shot of a shipping yard showing a newly-loaded transport truck driving away, followed by wide shot of a shipping port featuring a large shipping boat.]

[Soft Music playing in background]

[Title Reads: Strong year ahead for Canada?]

Within this same framework, I see the stock market outperforming the bond market.

[Onscreen Text: We think the stock market is likely to outperform the bond market in 2020]

Within the stock market, there is a point to make that maybe the Canadian stock market will outperform the U.S. stock market.

[Onscreen Text: Canadian stock market may outperform the U.S. in 2020]

1) Because of valuations; we are cheaper. We also have a situation in which some segments of the market now are so dominant - banking, communication, grocers –

[Wide shot looking up at four skyscrapers, followed by a close-up of someone typing on a smartphone, followed by a close-up of a woman taking an apple from bin of apples]

- all those forces are actually positive and they are paying dividends, and the rate at which Canadian companies are paying dividends and buyback stocks is much higher than you have in the U.S.

[Onscreen Text: Canadian share buybacks higher vs. the U.S.]

So we have a situation in which all those forces might suggest that the Canadian stock market will outperform the S&P 500 in 2020. Both markets will do fine. I believe that most of the improvement will be in the second half of the year when we have enough time to get the positive impact of monetary policy and fiscal policy.

[Onscreen Text: Stronger stock markets likely in 2^nd half of 2020]

[Soft Music playing in background]

[Disclaimer reads: This video is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this document should consult with his or her advisor. All opinions and estimates expressed in this video are as of the date of publication unless otherwise indicated, and are subject to change. ^®The CIBC logo is a registered trademark of Canadian Imperial Bank of Commerce (CIBC). The material and/or its contents may not be reproduced without the express written consent of CIBC.]