Archive for May, 2009

According to a Sun Media story Friday, May 29: “Despite a loss of $23.7 billion last year, Prime Minister Stephen Harper has ruled out cancelling $7 million in bonuses for the top four executives at the Canada Pension Plan Investment Board.” The fund reported an 18.62 percent loss in fiscal 2009, ending March 31.

According to the Toronto Star the fund’s return is now less than the interest which would have been earned on 10-year Government of Canada bonds issued at the time the CPP Investment Board was created in 1999.

It is hard to fathom how such a loss is in keeping with the stated goal of the CPP Investment Board — “our mandate (is) to maximize investment returns without undue risk of loss . . . ”

I believe that I am doing better than the financial wizards on the CPP Investment Board but I don’t have figures going back ten years to prove it — but TD Asset Management is another matter. They have an Internet site allowing one to calculate gains enjoyed, or losses suffered, by each mutual fund in the TD family of funds.

According to the TD Asset Management Site, the TD Monthly Income mutual fund returned an annualized 6.2 percent over the same time period.

The TD Monthly Income Fund bested the CPP over the decade.

The TD Monthly Income Fund bested the CPP over the decade.

According to a May 21, 2009, CPP investment board press release, ” The four-year annualized return (of the CPP fund) of 1.42 percent is less than the 4.2 percent average real rate of return that the Chief Actuary of Canada estimates is required . . . ”

To be fair, after the huge losses suffered by the world financial markets this past year, this poor showing is actually a better return than that achieved by many funds with similar goals.

But a 1.4 percent return when 4.2 percent is needed should put the kybosh to all bonuses for the time being. Over the past decade the fund has returned only a 4.3 percent annualized return — 1/10th of a percent more than the actuary’s requirements. After ten years, 1/10th of a percent! Clearly all bonuses should be halted.

Let’s take a quick look at some other TD mutual funds.

— the TD Canadian Equity fund delivered a 6.0% annualized return.

the TD Canadian Bond fund gave a 5.6% annualized return for the decade.

Amazing, eh? Both the equity fund and the bond fund outperformed the CPP fund over the past decade. If you combined the two TD funds to make a balanced investment, you would cut down on volatility and still beat the CPP fund.

If you want to play, go to the TD Asset Management site. Click on the name, in blue on the left, of the mutual fund in which you are interested. Click on Price & Performance. Look for Advanced Graphing Options and click on Advanced Graph Growth. You are now ready to investigate your chosen fund. Enjoy. You may be amazed. You may even come to believe, as I do, that the KISS principle applies to investing.

Let’s look at some iShares ETFs. If you had gone to the library and taken out a thin book on investing and then split your money, putting 60 percent in XIU, a Canadian equity ETF, and 40 percent in XSB, a bond ETF, you would not have lost more than 15.5 percent over the same one year period that the CPP lost 18.62 percent. (Because of a stock split affecting the XIU ETF units, the loss is actually somewhat less but I do not have the time to do the research.)

Well you get the point…A balanced portfolio composed of just the two TD mutual funds mentioned would have performed better than the CPP fund over the decade. A balanced fund based on two iShares ETFs would have lost less than the CPP when compared to their recently ended financial year. Like I said, I find the KISS principle is one of the better guides when it comes to investing.

The CPP folk will not release the benchmarks that they use to calculate the bonuses they are paying. Let me suggest that they not only stop paying the damn bonuses but find some better benchmarks. Set the bar higher. Let me suggest the FPX Balanced Index found daily in the Financial Post.

Most of us work damn hard for our money and we must produce or else. The payment of millions in bonuses is appalling and outrage is growing. The Toronto Star quotes Diane Urquhart, of the United Church Pension Fund’s investment committee, “We would fire them . . . ” The church pension fund’s investment losses were a fraction of the CPP’s. The church lost only 10.6 percent in their 2008-09 fiscal year, making it one of the best run pension funds in the country.

According to The Toronto Star, The National Pensioners and Senior Citizens Federation believe, “The CPP executives should pay back their fiscal 2009 bonuses.” The federation is not alone in this belief.

If they were leading all the others in the financial investment game, they’d have earned their bonuses. They are not leading the pack. I will allow that they are not bringing up the rear, either. But if you aren’t a winner, you’re a loser. Bonuses are for winners.

Sorry, Mr. David Denison, President and CEO, CPP Investment Board, but you lost — you’re a loser this time — as well as the others on the CPP board. Losers should not get bonuses. On the bright side, even without the bonuses, you are well compensated for your work: a salary of $490,000, $59,000 in pension contributions and $9,600 to cover such stuff as life insurance and health and dental benefits.

Canadians should be calling or writing their Federal Member of Parliament to ensure that something like this doesn’t happen again.

Addendum: I’ve taken some flak for my position on this issue. Well, check the performance of FPX Balanced as of March 31, 2009. As you can see, it was down only 10.9 percent during the time period that the CPP wilted 18.62 percent.

For another take on this subject, check Pension Pulse, another blogspot blog.


The following was published in Letters to the Editor, Peterborough Examiner. It was written by Ian Dale, senior vice-president, communtications and stakeholder relations, CPP Investment Board.

After reading my blog, you are now aware of the returns of other pension funds, other balanced funds, etc. So, what do you think of this fellow’s argument?


Critics of the management compensation system at the CPP Investment Board (CPPIB) are ignoring facts that do not support their story.

We manage the $108.9 billion CPP Fund to fulfill our long-term mission to help sustain the CPP for decades and generations. Our investment programs are designed to generate returns over four-year periods, rather than focusing on a single year. Correspondingly, compensation rewards performance also over four-year periods and operates on a pay-for-performance basis that links a significant portion of compensation to two key criteria: (a) valueadded returns above a market-based benchmark, and (b) absolute fund returns.

In the four-year period ended Dec. 31, 2008, the CPP Fund generated investment income of more than $10 billion, including $5.3 billion in valueadded returns. While the CPP Fund returns were negative 14.4 per cent in 2008 the compensation system incorporates results over a four-year period, not just one year.

And for additional context, in order to operate effectively in global financial markets and to continue building a diversified portfolio, we need to employ investment professionals, whether they are located in our offices in Toronto, London or Hong Kong, with the specialized skills required to generate the longer term returns needed to help sustain the CPP.

We take very seriously our mandate to “maximize returns without undue risk of loss” and our responsibility to the 17 million Canadians who rely on the CPP.

IAN DALE Senior vice-president, communications and stakeholder relations

CPP Investment Board



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I love newspapers. As a child, I practised reading by tackling the words printed in the paper. I’d stretch out on my stomach, on the cold linoleum, and follow the words on the pages with my ink-smudged finger. I’m still comfortable spreading the paper over the kitchen counter and blackening both elbows from rubbing the newsprint.

But I am no longer comfortable with the newspaper itself. It seems to have lost more than pages over the intervening years. It has lost a sense of quality.

Before I go on, I want to make one thing perfectly clear. It is not the staff that has forgotten quality. It is management. The staff at most papers is composed of exceedingly competent individuals. It is the staff’s competency and depth of knowledge that enables them to get out a paper every day despite the roadblocks thrown in their way by head office.

Take something as simple as putting a dot on a page. Today, many newspapers don’t seem to be able to do it well consistently. They can’t put ink on a page in the right amount to make a clear, bright picture.

How the picture looked in my paper.

The picture in my paper.

It should have looked better than even this.

It could be even better than this.

To illustrate this point, I took a photo of a picture appearing in my daily paper. That’s it, on the above left, just as it appeared in the paper. Then, I made a duplicate and set the copy’s white and black points in Photoshop. The corrected copy is on the above right. It looks better. If I can achieve this using a crude copy of the printed halftone, just think how bright and crisp this picture should have looked in the paper. They were working with the original image.

Pictures in papers are called halftones. If you look carefully, you’ll see that each picture is composed of thousands of pure black dots. The dot in the highlights should be so small that it is almost invisible. The dot in the shadows should be so large that, in the darkest of the dark areas, it spreads into the surrounding dots.

The ink spreads because this is newsprint, almost blotter paper, and dots soak into the paper and spread. This spreading is called dot gain. The only places where there are no dots are in light sources, if shown, or in reflections of light sources.

And that is about it. Oh, there are few numbers but you now have the idea. Sadly, you now have more of an idea than most heads of our daily newspapers. They run a newspaper but they know almost nothing about running a printing business. If they understood, surely they wouldn’t turn out papers day after day with editorial pictures plugged and ads so dark they are an embarrassment.

What happened to the concept of quality, of professionalism? It is no wonder that many newspapers, unable to print a decent paper with regularity, are failing to ‘publish’ quality on the Internet.

As of today, this text is still a mess.

I just checked. The blue box is still obliterating text after more than a week.

It is so frustrating. They can’t get dots on a page. They can’t get type on a screen. And newspaper Web sites are jumping into live streaming video with the same understaffed, underfunded approach that they have brought to everything else of late.

When my local paper bragged about their upcoming live streaming video from a police press conference, the paper failed to deliver and I ended up watching the conference live on television. (I believe the newspaper Internet site rebroadcast the live streaming video 24 hours later. How do you rebroadcast something you failed to broadcast in the first place? Also, I find it difficult to still think of it as live streaming video, although technically their use of the term is correct.)

Years ago the Queen Mother was coming to town to light an eternal flame and I was covering the event. The present chief photographer at the paper and I went to the site the night before. We found the best location to shoot the event. The chief photographer also had some good suggestions on how I could reach our shooting position of choice. This was going to take some doing as the press was assigned a totally different, and somewhat remote, vantage point for the event.

A knowledgeable chief photographer, the time to prepare, ample staff to provide back-up, and the result was a unique picture. The same knowledgeable chief photographer is still at the paper but the paper is now understaffed and there is no time available for professional preparation. What we did so many years ago would be far harder today. (I refuse to say impossible as newspaper staff do what seems impossible on a daily basis — they continue to put out a daily paper with a staff depleted by numerous layoffs and buyouts. Newspaper folk always rise to a challenge and, if they do it too often and too well, they suffer another layoff.)

Newspapers let a lot of editors go over the years and today we see the result, lots of spelling errors, etc. Today, they are making a similar mistake with the Internet but not just with spelling mistakes. (And, they are making lots, such as, “. . . a see (sic) of yellow . . .”)

Spelling errors and overflowing text errors remain forever. Why?

Spelling errors and overflowing text errors remain forever. Why?

I don’t have an editor and how I would love to have one. After posting, I often catch errors. Spelling errors and coding errors. The difference between me and the paper: I correct the mistakes.

Pronunciation is to the spoken word as spelling is to the written one. I watched a reporter having his name mangled by one of the newsroom department heads who was doing the on-air introduction.

Please, learn how to pronounce names before appearing in front of the camera. Think professionalism, quality, preparation.

Addendum: 24 hours after posting this blog, I noticed the word “To” floating between the pictures. I added some code to force the word down the page and back to the front of the sentence. I also noticed that a paragraph, added at the urging of a helpful reader, contained some errors. I corrected these. If I can correct my errors, surely newspaper sites can do the same.

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Atlantic & Pacific Tea Co.

The Great Atlantic & Pacific Tea Company

While cleaning the garage today I uncovered a dusty, forgotten, cardboard box filled with ancient copies of the Reader’s Digest. The February 1948 issue had an article, condensed from Fortune, entitled “The Great A&P.”

It seems that in 1948 the Great Atlantic & Pacific Tea Company was the biggest single buyer, distributor and seller in the world of all but a few food products. A&P accounted for ten percent of the total food store sales in the United States. They had sales of two billion dollars, just about equal to the combined totals of their five biggest competitors.

(By 2007, A&P, the chain that Reader’s Digest wrote had an approach that “made deserts bloom and nations wax great” had dropped about 21 notches and its days of dominance in the food industry were long gone.)

In 1948 A&P owned two huge laundries for keeping their many uniforms clean. They used so many labels, they owned their own printing plant. A&P had their own Alaskan fishing fleet, enabling them to deliver vast quantities of fresh and frozen seafood deep into the American Midwest for the first time.

A&P operated 37 bakeries in the U.S. and two in Canada. They baked more cakes and fried more doughnuts than anyone else – nearly 2,000,000 a day. And A&P was no slouch when it came to bread either; They baked 1,000,000 loaves a day.

According to the Digest, despite the massive amount of baked goods produced, A&P made allowances for regional preferences: bitter-chocolate icings east of the Mississippi, sweet chocolate west; mostly white bread in the west, 25 different varieties in the east.

Eggs were candled, graded and quickly sold at the peak of freshness. The east got medium-light yolks while those in the west were a deeper colour. Bostonians got premium brownshelled eggs while New Yorkers got the white eggs they demanded.

Attacked under the antitrust laws in the States, even its detractors conceded that A&P’s savings on mass buying and inhouse production were being passed on to consumers.

(In the early ’30s the number of A&P stores peaked at about 16,000 and then the slow decline set in. In the ’60s A&P retreated from the west coast, selling their stores to Safeway. In the ’90s the shrivelling giant pulled out of Alabama, Georgia, North and South Carolina, Kentucky, Tennessee and Virginia. Today, thanks to”Fresh Thinking Since 1859″, A&P operates about 460 stores.)

The article ended by saying A&P, the great discounter, was firmly attached to “the one great principle – the selling of more for less . . . ”

I was but a hesitant toddler when this article was written. Today, I am a retired geezer with a fading memory, but A&P’s memory faded long before mine. In 2005 Metro Inc., the successful Quebec food retailer, acquired A&P Canada. Soon all Canadian stores will be rebadged with the Metro name.

Ironically, ten years before their sale to Metro, A&P Canada opened, with great fanfare, its first discount store, Food Basics, designed to attract customers by offering better value and lower prices.

A&P lost its way, forgetting that it, The Great Atlantic and Pacific Tea Company, was the original discount food store dedicated to the “the one great principle – the selling of more for less . . . ”

Postscript: It is interesting to note that a November, 1950, Time magazine coverstory reported that, next to General Motors, A&P sold more goods than any other company in the world.

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Watching the sunrise over 401 from the Morgan.

A rare run down 401, heading for its annual check-up by Martin and Steve Beer.

It’s not cool to defend cars. They are nothing but polluting, carbon-belching, resource-consuming pigs. For getting to the store, you’re better off walking – it’s better for your health and the health of the world – or so we are told. For getting to Toronto, rapid transit is the answer and not the car.

I found all the above very easy to write as I kinda believe it. The other day I walked home from Westmount Mall swinging my purchase at my side. I like walking but, and it is a big but, I also like driving.

There, I’ve said it. I like driving, and not just any old car – nope – one particular old car. My soon-to-be-41 Morgan roadster. She’s a feisty girl, so I wouldn’t call her an ‘old girl’ and I certainly would never call her a pig. Never. If she overheard such remarks, she might get her proper English knickers all in a knot.

But she is a cheap date. She is easy on the pocket and relatively easy on the planet. Think about it. For more than four decades this car, this hunk of steel on wheels, has been taking me from A to B and delivering great pleasure while doing it.

My heart belongs to Morgan

My heart belongs to Morgan

She is willing to go almost anywhere if asked. She spent a Christmas in Kapuskasing braving the Arctic watershed. She took my wife and me to San Francisco in 2005. She took my mother grocery shopping in the ’60s and she takes me shopping in St. Jacobs today. There is one place she won’t go, and I won’t take her, and that’s the auto wrecker’s.

Look, I confess, I have sent quite a number of cars to wrecker’s. I even drove one right to the devil’s door and got nothing more in return than spare change. But, these were not Morgans.

Morgans are special and in ways that may not be immediately evident. Please bear with me as I explain. Morgans are simply made. A steel, ladder frame onto which a strong, wooden frame is mounted. The steel body sections are attached to the wooden frame. They are hand-built.

I know what you’re thinking: “Wood? This car has a wooden frame?” To which I reply, “Yes, and much of the wood in my car is original.” Wood is a fine building material and has been in use in canoes, planes and homes for years. When it does finally deteriorate, it is easily replaced.

The steel in my car is solid and tough and long lasting – as it is in most cars. Eventually, steel rusts. But steel, if you are skilled, can be repaired – fully restored to original condition. My car has been restored. The rusty, diseased metal was removed and new, fresh metal welded into place.

FL020021_Dash_180My power steering has never required repair but then my power steering is an oversized Brooklands Bluemel steering wheel. The large diameter wheel uses the power of leverage – mechanical advantage – and leverage carries a lifetime guarantee. The steering wheel itself is another matter. After 41 years it needs some attention.

I like to say that if you added up all the stuff my car doesn’t have, you’d almost have another car. Power windows, no. It doesn’t even have window cranks. I have side curtains.

Power brakes, no. With a car that doesn’t weigh a ton or a tonne, take your pick, my disk and drum combination works just fine. Power door locks, no, and when used in the winter the exterior door handles never freeze. Why not? You guessed it; I don’t have them.

This summer the Morgan Motor Company is celebrating its 100th anniversary. Yes, they are still making Morgans and they are available in many parts of the world. A tangle of bureaucratic rules keeps them from being imported into Canada at present.

Being a centenarian doesn’t mean the Morgan folk are not forward looking. They have a fine web site. And they have a new, experimental hydrogen model. Zero emissions. Cars in the future will pollute even less than my little four-cylinder gas sipper.

Tomorrow’s cars will be close to 100% recyclable. BMW has already publicly stated this as one of their goals. According to an article in the Independent: “Once proper disposal of vehicles becomes legally enforced, financial advantages will be drawn by owners of cars whose producers have invested most in maximising the number of re- useable parts, and in designing cars that are easy to take apart.” BMW plans to be competitive.

In the future, if BMW is correct, cars will encourage the repair and reuse of parts just like my old Morgan does today. Such reuse and repair will create  employment for many skilled, knowledgeable people. Good folk will be given good jobs. The fellows that keep my Morgan on the road are almost like family to me.

I have logged more than a hundred thousand miles in my Morgan. Being small hasn’t stopped it from being useful. Think Smart Car. It may not be able to carry a family of six but that was never its intention. (I saw my first Smart Car in Nice in the south of France and immediately went looking for a car rental shop. My wife and I needed a car for a day and the Smart Car looked perfect.)

World's twistiest, Snake Alley, Burlington, Iowa

World's twistiest, Snake Alley, Burlington, Iowa

We may have paved over a lot of the earth but please don’t try to foist the blame onto my little Morgan. She hates the large freeways. She’s happiest on narrow, older roads. She delights in finding a way from here to there that is slow but fun. If you are in a hurry to get somewhere, you might be better off taking the train.

That’s right; owning a Morgan actually encourages the use of rapid transit. But it also encourages runs to Shaw’s dairy bar south of St. Thomas for a chocolate malted milk shake or a Sunday morning visit to Telegraph House in Port Stanley for a lovely brunch on the patio.

Oh, one last thing, my Morgan doesn’t do drive throughs.

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An open letter to Paul Berton, editor-in-chief, The London Free Press:

The newspaper stock and mutual fund tables are disappearing from the business pages of our local dailies. This is not a big loss for most of us as we have switched to the Internet for this information.

Carrying those tables is expensive and inefficient. Most of us are interested in one or two dozen entries at most. But some readers are missing those pages and are upset.

Paul Berton, editor-in-chief of  The London Free Press, addressed this recently when he wrote, ” . . . it’s a hard pill to swallow for those who a) like tradition, b) live in a rural area and have only dial-up service, or c) don’t have a computer or the Internet at all.”

Earlier Berton pointed out, when it comes to these tables, “you can get them more efficiently at money.canoe (sic).”

Money.canoe.ca brings up a screen with a stock and mutual fund search box at the top of the page. This is O.K. for searching one or two stocks or funds but it is painfully inefficient for checking one’s portfolio.

This is where Berton and newspapers in general are dropping the ball. The Canoe site is quite good and a lot of work has been invested in making it perform some neat tricks for the Internet-savvy investor interested in keeping careful tabs on his portfolio.

Sell the site, Paul. Coax tradition-bound readers to migrate to Canoe and to The London Free Press on-line. Sow the seeds of future growth. Make these readers feel you have their best interests at heart, and not just your bottom line. Don’t let it be, “. . . tough on them . . .”

Hold their hand. Give them a step by step guide on how to track their stocks and mutual funds, using the tools so generously supplied. Tell them, that it’s free and it’s incredible.

And, if the site is slow for those without a high-speed Internet connection, work with Canoe and Quebecor to supply a dial-up friendly site as well. Don’t give your readers an incentive to go googling in search of another portfolio tracking package.

Negative stuff like the comment from P.J. Harston, business editor of the London Free Press, has no place here. P.J. wrote, “Change is sometimes a bitter pill to swallow and I certainly lament anytime that pill comes from us. But change, like death and taxes, is inevitable — perhaps more so now than ever before . . . The switch will be difficult for some and then it will get easier for everyone.”

For most the change is not bitter. And if clear instructions were being provided the switch would not be difficult for anyone. Make it easy for all, right from the start.

You’ve got a good product. Sell it.


If you read this in the past, you may notice today that I have corrected some (maybe even all, hope springs eternal) of the spelling errors. Oh, how I miss a human editor. I should go back and check more of my posts. And then there’s punctuation to tackle…

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Berton was correct, sort of

This has been moved to my newest blog, Rockin’ On: the blog.

But, it must be mentioned that there was an error in the original post concern a man named Nando Sostilio.

Next, a big thank you goes out to anonymous whose comment disputed my original position on a fellow named Nando Sostilio. It was reported on the Internet in a nicely detailed story that Nando Sostilio married Joey Buttafuoco a few years back. Didn’t happen. It could not have happened. Anonymous is right: Nando Sostilio is a man.

From Major Wager.com: “Joey’s a class act,” said Nando Sostilio, the owner of Sin, where the statutory-rape convict partied on his last night before wedded bliss. “He wanted to talk to the girls, he wanted to shake their hands, but he wasn’t interested in any lap dances.”

The ex-lover of “Long Island Lolita” Amy Fisher wed Evanka Franjko at a 5:30 p.m. ceremony at the Rio Casino. Franjko, 42, was walked down the isle by her ex-husband, while their son, Andrew, 10, was the ring bearer.

“It was a beautiful ceremony,” Buttafuoco said.

And the record is set straight, I hope. Maybe anonymous has more comments. I welcome them. Again, thank you.

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Today’s weather forecast in The London Free Press.

Today's weather forecast is guaranteed accurate come rain or come shine.

Today's weather forecast is guaranteed accurate come rain or come shine.

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