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Spring 2009                                                               CFA Victoria 2009 Inaugural
PreSIdent’S Letter  .  .  .  .  .  .  .  .  .  . 2
                                                                     Financial Market Forecast dinner
InVeStMent tHeMe:
GLOBAL deMOGrAPHICS                                                    1: The sages of the CFA Victoria Forecast Dinner:
And tHe IMPACt                                                             presenters (from left to right) Martin Barnes,
                                                                            managing editor of the Bank Credit Analyst,
On InVeStMent
                                                                       Tony Gage, former Chair of the Board of Phillips,
OPPOrtUnItIeS  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 3                Hager and North Investment Management,
                                                                           and Martin Murenbeeld, president and chief
2009 InAUGUrAL                                                                  economist of Dundee Wealth Economics.
FInAnCIAL MArket                                                                                                                                                           1
FOreCASt dInner  .  .  .  .  .  .  .  .  .  . 4-5
rePOrt FrOM tHe CHAIr:
rOB Bennett, CFA  .  .  .  .  .  .  .  .  .  .  .  . 6

UPCOMInG eVentS  .  .  .  .  .  .  .  .  .  .  . 7

MeMBer rePOrt  .  .  .  .  .  .  .  .  .  .  .  .  .  . 8

Opinions expressed in the CFA Victoria
newsletter do not necessarily represent
those of the authors’ firms of employment
or of CFA Victoria and do not constitute a
solicitation for the purchase or sale of any
financial instruments . Information herein
is obtained from various sources and is not                                                                                                                                3
guaranteed for accuracy or completeness .
the authors’ firms and CFA Victoria there-                     2: Mark Frey, Vice President, Foreign Exchange Trading, of Custom House Ltd., explains what he expects to be the
fore disclaim any liability arising from the
use of information in this publication .
                                                                 major themes dominating investment markets in 2009. 3: Attendees at the Inaugural Financial Market Forecast
                                                               Dinner enjoy the reception beforehand: from left to right, Jim Megson, Carolyn Thoms, CFA, and Stephen Barlow,
                                                                         CFA, both of Barlow Capital, Victoria, and Joan Wiggins, CFA, of RBC Private Counsel Inc., Victoria.

       Published by CFA Victoria
2                        Newsletter
                           Spring 2009

President’s Letter                                  of the woods – a sentiment echoed on the
                                                    aggregate by the attendee forecast ballots
                                                                                                         Lisa Gray (www .graymatterstrategiesllc .com)
                                                                                                         on March 31 . Ms . Gray exclusively consults
Andrew Shortreid, CFA                               we received .                                        with global families to design and implement
                                                                                                         goal-based asset allocation strategies that
                                                    the discussion at our monthly board meet-
                                                                                                         incorporate family dynamics and governance
                                                    ings continues to revolve around two core
                                                                                                         into wealth management decisions . this
                                                    themes that we want to define the society’s
                                                                                                         event format will involve an afternoon pre-
                                                    activities – innovation and collaboration .
                                                                                                         sentation and case study, open to the general
                                                    As a group, we continually seek new ways to
                                                                                                         investment community, followed by a more
                                                    provide member value through initiatives
                                                                                                         intimate reception and working dinner with
                                                    that the society has taken and fresh endeavors
                                                                                                         attendance limited to CFA Victoria members .
                                                    in the future . we are an open, communica-
                                                                                                         the goal is to provide a forum where our
                                                    tive and forward thinking leadership group
                                                                                                         members can engage a globally recognized
                                                    with a deep desire to continually present our
                                                                                                         expert in two-way, case-based discussion
                                                    society and its members to the world around
                                                                                                         to achieve a deeper comprehension of
                                                    us in the best possible light .
                                                                                                         specialized wealth management topics .
                                                    to amplify these efforts we are working
                                                                                                         the other don’t-miss event is on May 27th .
                                                    through a growing network of local, regional
                                                                                                         CFA Victoria, the Art Gallery of Greater
                                                    and national partners to extend the reach of
                                                                                                         Victoria and Custom House are proud to
                                                    our initiatives beyond both the professional
                                                                                                         present an evening with Steve Sitao Xu .
                                                    borders of CFA Charterholders and the
                                                                                                         Based in Shanghai, Mr . Xu is the economist
                                                    physical borders of Greater Victoria . the
                                                                                                         Group’s Chief representative in China and
                                                    foundation of this partnership group is
                                                                                                         head of its economist Intelligence Unit . He
                                                    comprised of Custom House Ltd . and other
MUCH HAS CHAnGed In tHe wOrLd SInCe                                                                      will be speaking on the Chinese banking
                                                    CFA societies in Canada and the US Pacific
our last newsletter, but I’m happy to report                                                             system, foreign exchange reserve and rate
                                                    northwest (Programming); the University
that despite recent events in world markets                                                              management, interest rate policy and other
                                                    of Victoria’s Faculty of Business and Stalla
CFA Victoria is prospering mightily and                                                                  factors . Attendees will be invited to enjoy a
                                                    review for the CFA Program (education and
moving forward on many fronts .                                                                          catered reception beginning at 5:00pm, and
                                                    Membership); and the Art Gallery of Greater
we kicked off the new Year in fine fashion                                                               to experience Edo, Arts of Japan’s Last Shogun
                                                    Victoria (Public Awareness) . Collectively these
with our Inaugural Forecast dinner on                                                                    Age exhibition, following the presentation
                                                    organizations share our values of integrity
January 15th at the delta Ocean Pointe . By                                                              at 7:30pm . to bring Mr . Xu to Victoria, we
                                                    and excellence, while individually each
all accounts this event was an unequivocal                                                               quarterbacked a three society tour that will
                                                    enhances our offering to diverse, yet equally
success for the society, due in no small part                                                            include stops in kelowna and Seattle .
                                                    crucial elements of our stakeholder base .
to the hard work of our volunteers and the                                                               As always, our efforts are aimed at providing
                                                    we have an exciting line-up for the spring
broad support received from our members,                                                                 society members with opportunities to enrich
                                                    slate of programming events . the full listing
partners and the local investment community .                                                            their professional lives and engage the wider
                                                    can be found on page 7, but two in particular
For readers not in attendance that evening,                                                              community in ways that will enhance public
                                                    demonstrate our commitment to innovation
we have provided an account of the festivities                                                           awareness of what CFA Victoria and our
                                                    and collaboration .
and prognostications beginning on page 4 .                                                               members stand for . regarding these efforts,
Suffice to say, the common message from our         the first of these events is the launch of CFA       we thank each of you for your feedback,
presenters was that investors are not yet out       Victoria’s Private wealth roundtable with            volunteerism and continued support .

     Share your knowledge and insights with readers of the CFA Victoria Newsletter
    Do you have a story idea or a topic that will    Potential topic areas include, but are not        If	you	have	an	idea	for	an	article,	please	
    interest and inform CFA Victoria members?        limited to:                                       send it to:
    Send an e-mail to let us know what you           •	 Industry	developments                          Gord Walker, CFA
    would like to see in the newsletter or if you    •	 Investment	themes                    
    want to write something yourself.                •	 Profiles	of	notable	members
InVeStMent tHeMe                                                                                                Newsletter                             3
                                                                                                                Spring 2009

Global demographics and the Impact
on Investment Opportunities
Philippe Monier, CFA                               of its people . In China, he claims, 1 .2 billion    real GdP in this sort of analysis .
                                                   people are not or will not be covered by             Hokenson next showed the growth rate of
Economist, Research & Risk
                                                   pension funds and will have to rely solely on        age groups from 2005 to 2015, highlighting
Measurement, bcIMC
                                                   family support in retirement .                       the decline in the age 20 to 29 cohort, espe-
dISCUSSInG deMOGrAPHIC trendS And                  In Japan, the aging population is leading            cially in western europe and Japan . this age
how they will affect investment opportuni-         to chronic deflation . the labour force size is      group is characterized by high consumption
ties in coming years at a recent CFA Victoria      declining, with labor shortages already severe       as young people make the purchases neces-
Society luncheon, richard Hokenson offered         in many areas . Hokenson attributed the grow-        sary to set up their first homes, and a reduction
several bold predictions that challenge widely     ing use of robots in Japan – which already           in this segment of the population does not
held views . Founder of Hokenson & Company,        has 40% of the world’s robots – to the lack of       bode well for demand or the businesses
a new Jersey consulting firm, Hokenson was         labor and a reluctance to open the door to           that hope to meet this demand . Hokenson
previously chief economist at donaldson,           immigrant workers .                                  commented, though, that “despite this
Lufkin & Jenrette (dLJ), where he pioneered                                                             incredible predictability, it takes every market
                                                   How do countries prepare for “retirement”?
the application of demographics to economic                                                             by surprise .”
                                                   Hokenson’s answer: Like individuals, they
and financial market forecasting .                 save, in a country’s case by building up            the significant exception among developed
Hokenson began by stating that the world           foreign reserves . He feels that China is not       countries is the United States with a rela-
population will never reach 8 billion people .     prepared, however, estimating that for this         tively high fertility rate (about 2 .0 children
He referred to a global phenomenon he              purpose the country will need reserves of 5         per woman of child-bearing age) . Hokenson
called the race to zero population growth,         to 10 trillion U .S . dollars (compared to current  observed that the number of U .S . marriages is
and attributed it to a combina-                                                                                      rising, and the number of divorces
tion of government policies to
                                           “Encouraging higher U.S. savings and increased is falling, and thatbuy homes .
                                                                                                                     are more likely to
                                                                                                                                        married couples
limit family size and changes in
lifestyles . His warning was that           Asian consumption will be a recipe for disaster” these demographic factors will
world population is now growing                                                                                      support consumer spending in
too slowly and aging too quickly to support        reserves of roughly 2 trillion U .S . dollars), and the U .S ., and Hokenson believes that given
healthy economic growth .                          pointed out that a big difference between           the importance of household formation, the
                                                   China and Japan is that Japan managed               key to resolving the current crisis is to “get
Among large countries, the two most rapidly
                                                   to become rich before it got old, while the         housing right” .
aging populations are in China and Japan .
                                                   opposite is true for China . Under these            responding to questions, Hokenson said that
Both countries experienced a similar period
                                                   circumstances, and given that the U .S . popu-      the synchronized economic growth of the 6
of economic take-off, China’s coming about
                                                   lation is not aging as quickly as that of either    years prior to the current global downturn is
three decades after Japan’s, during which
                                                   China or Japan, Hokenson’s controversial view unlikely to be seen again in the foreseeable
they rapidly became highly competitive play-
                                                   is that policies aimed at encouraging higher        future . He also expressed doubt that current
ers in the world economy . Hokenson pointed
                                                   U .S . savings and increased Asian consumption efforts by governments to stimulate the
out that aging populations are now putting
                                                   will be a recipe for disaster .                     world economy by injecting massive amounts
these successes at risk .
                                                   In a similarly controversial vein, Hokenson         of funds would be sufficient, as these are
even if China was to reverse its one child
                                                   predicts that fewer people than expected            dwarfed by the amount of private wealth
policy, Hokenson argued that little would
                                                   means global deflation is more probable             sitting on the sidelines .
change in its population growth given the
                                                   than inflation as demand shrinks . Comparing        In summary, richard Hokenson’s outlook is
choices already made by families and the
                                                   long-term treasury yields to the smoothed           that global population growth will be too low
current population structure . the aging of
                                                   growth of current-dollar U .S . GdP, and then       to maintain the demand needed to prevent
China is a process that has lasted for a long
                                                   the growth of the U .S . labour force to current-   severe consequences, such as deflation and
time, and Hokenson noted that Mao tse tung
                                                   dollar GdP, he pointed out the similarity in the chronically low GdP growth, and this will
refused to acknowledge the predictable con-
                                                   paths they follow . Since the future labor force    have critical implications for investors . Other
sequences of this process when imposing his
                                                   can be predicted from today’s population            experts clearly think otherwise . they see
views concerning family planning . Hokenson
                                                   structure (taking into account legal and illegal slower population growth as a positive trend,
said that too many people think of China as a
                                                   immigration), he concluded that the predicted       as it will limit overuse of scarce resources,
vast reservoir of low-cost workers, when the
                                                   low labour force growth will lead to low GdP        reduce activities contributing to global warm-
demographic reality is quite different .
                                                   growth . Hokenson admitted, though, that it is ing, and enable countries to cope better with
Hokenson believes that China will need much unusual to use current-dollar GdP rather than
                                                                                                       the needs of their citizens . time will tell .
higher birth rates to prepare for the retirement
4                          Newsletter
                             Spring 2009

CFA Victoria 2009 Inaugural
Financial Market Forecast dinner
IS nOw tHe tIMe tO ABAndOn ALL HOPe                  best investments for the long run, noting that    Perhaps fearing that his audience might
or is it the buying opportunity of a lifetime?       total returns relative to 10-year bonds were      think his outlook ambivalent, Mr . Barnes then
Always eager to help resolve an investing            now back to where they were in 1965, and          explained that his feelings about the current
dilemma, CFA Victoria broke new ground in            that from as far back as 1872 U .S . bonds had    investment situation were akin to those of a
2009 with its Inaugural Financial Market Fore-       performed as well as U .S . stocks .              soldier fighting in the trenches of the Great
cast dinner in January . Guests were treated to                                                        war who had just seen his friend take a bullet
                                                     the golden era for stocks was the 1950s,
an abundance of thought provoking and bold                                                             in his face . He felt a strong incentive to just
                                                     when stocks were “dirt-cheap” coming out
commentary from a slate of notable speakers                                                            keep his head down as best he could .
                                                     of world war II with price-to-earnings (P/e)
sharing their thoughts on the dreadful events        ratios around 6 and lots of pent-up consumer      the next speaker, Yoram Bauman of the
of 2008 and providing a glimpse at what lies         demand . Mr . Barnes pointed out that many        University of washington, the world’s only
ahead . Approximately 150 guests filled the                                                            stand-up economist/comedian, provided a
Grand Ballroom of the delta Ocean Pointe                                                               more light-hearted perspective on what’s
resort, enjoying what promises to continue          “I cannot recall any time so much                  going on in the markets . His tongue-in-cheek
as a premier event for Victoria’s financial and       economic data looked so bad”                     assessment of the current economic situa-
investment community in coming years .                                                                 tion is that the U .S . economy is like a tired
Following opening remarks, the evening’s             people thought the current market cheap           hamster: Mr . Bauman thinks the economy
presentations began with a special address by        at a P/e of 15, but he personally would not       just needs some rest, but policy-makers want
Martin Barnes, managing editor of the Bank           consider that a bargain in the midst of a         to feed it crystal-methamphetamine . His
Credit Analyst, who spoke with his usual dry         recession . nor did he consider bonds particu-    economic prognosis is that in two years time,
Scottish wit . Mr . Barnes last addressed CFA        larly attractive given the likely medium-term     “we’re going to have one ugly hamster .”
Victoria at a luncheon in november, 2006, and        inflationary impact of the huge amounts of        Martin Murenbeeld, president and chief
a few weeks afterwards in an interview with          monetary stimulus being applied . He allowed      economist of dundee wealth economics, was
Barron’s magazine he likened the investment          that equities could do better, but it will not    the first forecast panelist to speak, and his
environment at that time to the eponymous            be like the 1950s since the earnings outlook is   theme was The Great Depression of 2009 . He
town in the movie Pleasantville, “…where             not great, and, in fact, real earnings have not   began by stating that ‘greedy bankers’ are not
everything appears normal and orderly and            grown since the 1960s .                           the problem – there have always been greedy
very calm, but under the surface it’s very           Mr . Barnes was decidedly pessimistic in his      bankers, especially when there is a lot of
oppressed and unnatural .” He felt the markets       outlook, saying that “I cannot recall any time    money around . the real problem, as he sees
were “certainly not in a state of equilibrium        so much economic data looked so bad .”            it, is that the world has suffered from serious
here in terms of financial imbalances . But I        referring to a spike in the bank loans to GdP     imbalances, such as the U .S . current account
don’t see the catalyst for change yet .” two         ratio, he commented “I find it very hard to be    deficit, for many years, and some countries,
years later, with the catalyst revealed and          optimistic about the economic outlook or the      notably China, manipulate their currencies
market orderliness a faint memory of happier         earnings outlook .” Furthermore, he predicted     according to a mercantilist model of eco-
days, Mr . Barnes looked at the current invest-      eventual nationalization of the U .S . banking    nomic growth .
ment environment and what he could see               system . despite positive considerations –
happening over the coming year .                     such as the fall in P/e ratios, extraordinarily
Mr . Barnes began his presentation, A Historical     stimulative monetary conditions, equities               Forecast Dinner panelist Tony Gage listens at-
Perspective on the Equity Market, by noting          dropping to 35% of U .S . household discre-           tentively to the analysis and outlook provided by
that during the past year “economists and            tionary investments, and the fact that there is                     fellow panelist Martin Murenbeeld.
financial analysts haven’t covered themselves        a mountain of cash on the sidelines earning
with glory .” He then examined the belief of         “squat” – Mr . Barnes said his bias was to be
many investors that stocks were invariably the       cautious and on the sidelines .

       CFA Victoria 2009 Inaugural Financial Market Forecast Dinner — Audience Predictions
                                Crude Oil         Gold       CAd/USd          10-Year      S&P/tSX
                                 (US$ Per      (US$ Per      exchange           Gov’t    Composite
                                   Barrel)      Ounce)            rate     Bond Yield        Index
 Mean Of All respondents            63 .19         947 .58         1 .15       2 .97%         9,493
 Mean Of Lowest 20%                 33 .30         682 .96         0 .99       1 .99%         7,926
 Mean Of Highest 20%              106 .20         1290 .81         1 .31       4 .15%        11,138
                                                                                                                Newsletter                               5
                                                                                                                Spring 2009

the foreign exchange reserves of the larg-          expected the euro to drop by another 3 to            he considered the investment environment
est holders (e .g ., China, Japan, russia) now      4 cents against the U .S . dollar . Interestingly,   bearish and expected Bank of Canada cuts of
exceed five trillion U .S . dollars, and Mr .       he said that nobody was talking any longer           another 100 basis points .
Murenbeeld pointed out that this money has          about foreign reserve diversification away           Making his predictions, Mr . Frey confessed
been recycled through lending in the U .S .         from the U .S . dollar .                             that “never has it been more difficult to put
and other developed countries . He thinks           For the Canadian dollar, Mr . Frey said the          my name on a forecast .”
this could lead to a crisis much like the Latin     negative factors were the ongoing correction
America crisis of the 1980s caused by a similar                                                          the final panelist was tony Gage, director of
                                                    in commodity prices and some pressure due            PSP Investments and Sky Investment Counsel,
recycling of petro-dollars in the 1970s . He        to political risk, presumably referring to the
noted that easy credit had led to rising house                                                           and former Chair of the Board of Phillips,
                                                    uncertainties of minority government . On            Hager and north Investment Management .
prices around the world in countries like           the positive side was the fact that Canada’s
Canada, Spain, France and the U .k ., not only      current account was in the black and the
in the United States .                              fiscal environment was favorable . In contrast
                                                                                                                                   Continued on page 8.
describing the stages of a depressionary            to six months earlier, he said, employment
spiral, Mr . Murenbeeld noted that we are           and domestic demand were sagging . Overall,
well into the process . His solutions to stop
the downward spiral are to massively boost
demand to soak up excess supply (i .e ., the
keynesian prescription), monetary easing                                 A Perspective on
to arrest bank failures and counter credit
contraction, and currency devaluation,
                                                         China’s Banking System and Exchange Rate Policy
 particularly against Asian currencies .
reflationary policies are generally very good
                                                         A	PresentAtIon	by:                               Steven Sitao Xu
                                                                        Director, Advisory Services China, Economist Intelligence Unit
for gold; conversely, deflation due to reces-
sion could hold gold back . On balance, Mr .
Murenbeeld expected reflation to win out .                                                       May 27, 2009
next up was Mark Frey, Vice President,                   CFA Victoria invites you to a special           the	 Industrial	 and	 Commercial	 bank	
Foreign exchange trading, of Custom House,               presentation and evening at the Art Gal-        of China (Asia), where he was respon-
who discussed the current themes dominat-                lery	 of	 Greater	 Victoria.	 our	 featured	    sible for macroeconomic and market
ing the foreign exchange markets . He began              speaker, Steven Sitao Xu, will address          research, while also helping to develop
by saying that prices were no longer driven              an	issue	of	great	economic	and	financial	       treasury and renminbi products, for the
by fundamentals, but by a market transfixed              impact: the path that China will follow         overseas flagship company of China’s
by risk aversion . Although hard-asset defla-            with regard to its banking system and           largest bank.
tion still supported the U .S . dollar, Mr . Frey        exchange rate policy. Guests will have an      Steven currently writes a column for
expected the dollar to lose its shine once               opportunity to socialize at a reception        the	 economist	 Intelligence	 Unit’s	
fundamentals were again of more conse-                   before the presentation and afterwards         Business China and Caijing, a leading
quence . However, he warned that traders                 enjoy a curator’s tour of the Gallery’s        Chinese business publication. He can
were pricing in a second round of risk                   current exhibit, Edo, Arts of Japan’s Last     often be seen on BBC, CNBC, CNN
aversion, and investors were flooding into               Shogun Age.                                    and Bloomberg TV as a commentator
U .S . treasury bonds as a safe haven .
                                                         steven	leads	the	economist	Intelligence	 on Asian economic affairs.
Mr . Frey said that for the U .S . housing slump         Unit’s advisory services in China and                    Reception: 5:00pm
to bottom out, there would have to be a                  acts as The Economist Group’s chief rep-                Presentation: 6:00pm
recovery in employment, but this was unlikely            resentative in the country. He chairs the       Curator Tour of Edo, Arts of Japan’s
if extreme risk aversion continued to prevail .          economist	Intelligence	Unit’s	Corporate	             Last Shogun Age: 7:30pm
On the positive side, the trade balance was              Network meetings in Beijing and often
moving in the right direction, largely because           speaks at major conferences and forums                      The Mansion,
of lower oil prices .                                    both within China and abroad.                      art Gallery of Greater Victoria
                                                                                                              1040 Moss Street, Victoria
turning to the euro area, Mr . Frey commented            In	 addition,	 steven	 is	 frequently	 called	
that it had also been infected by the global             upon to advise multinational compa- Members: $30 | Non-Members: $40
epidemic, and the european Central Bank                  nies seeking to understand and navigate to	reserve	or	request	more	information,	
had been slow to recognize the softening                 China’s macroeconomic and industry please e-mail with
of the economic picture . However, the eCB               shifts. Before joining The Economist “Art Gallery of Victoria Presentation” in
had just cut its base rate by 50 basis points            Group, he was head of economics at the subject line.
and he thought there was more to come . He
6                          Newsletter                                                                                     rePOrt FrOM tHe CHAIr
                             Spring 2009

rob Bennett, CFA
education Chair

CFA VICtOrIA enGAGeS In SeVerAL ACtIVItIeS aimed at helping those                                        Practice exam
preparing for a career as an investment professional to recognize the value                              A practice CFA exam is scheduled for May
                                                                                                         2, 2009, likely to be held at the University of
of the CFA Charter . Here, I would like to explain what we are currently doing
                                                                                                         Victoria . the practice exam is prepared for
in this area .                                                                                           the Boston Society of Security Analysts, and
                                                                                                         it uses the same format as the exam given by
Investment research Challenge                       new York to compete in the Americas com-             the CFA Institute at the beginning of June .
                                                    petition at the end of March . From there, the       CFA candidates wishing to test their exam
Five University of Victoria students recently
                                                    winning team will go to London, england, for         preparedness in a setting that replicates
participated as a team in the CFA Institute’s
                                                    the global competition . At each level, teams        what they will experience in the June exam
Investment research Challenge, placing third
                                                    will use their report and presentation from          are encouraged to register . registration
in the western Canada area competition . this
                                                    the local area competition .                         costs $60, and registration forms and further
competition included teams from five other
western Canada universities: the University         On behalf of CFA Victoria, I congratulate the        information are available online at the CFA
of regina, University of Alberta, University of     University of Victoria team on their perfor-         Victoria website (http://www .cfavictoria .com/
Calgary, University of British Columbia, and        mance, and thank Professor downey and tony           default .aspx) .
Simon Fraser University .                           Gage for their generous support and guid-            study Groups
                                                    ance . As well, I would like to thank CFA Victoria
the six western Canada teams were each                                                                   two study groups, one each for level I and II
                                                    members Jill Sing and Jeff Constantinescu for
sponsored by their local CFA society, with CFA                                                           candidates, are being formed . Candidates
                                                    their support of the research Challenge by
Victoria sponsoring the University of Victoria                                                           interested in participating in a study group
                                                    volunteering to be members of the team that
team .                                                                                                   should send their name to rebennett@shaw .
                                                    graded all six of the reports from the western
the objective of the competition was to pro-        Canada teams .                                       ca (attn . education Chair, rob Bennett), and
duce the best investment research report and                                                             we will share the names and email contact
                                                    scholarship Program                                  information of those who wish to participate
presentation on a publicly traded company .
All team members had to be students and             CFA Victoria gave scholarships for the June          in a study group with other similarly inter-
none could be a CFA Charterholder .                 2009 CFA exam to eight candidates from the           ested candidates .
                                                    Victoria area . the scholarship covers the           University Outreach
the University of Victoria team consisted of
                                                    enrolment fee, if applicable, and all but
todd McSween, Atish Gadyar, Peter Hunnisett,                                                             CFA Victoria gave presentations to University
                                                    US$220 of the recipient’s exam registration
Bart Johnson and reia Ly . the team was                                                                  of Victoria business students in October, 2008,
                                                    fee, making the scholarship worth at least
supported by Professor Angela downey,                                                                    and to University of Victoria business and eco-
                                                    US$380, or up to US$1,175 .
as faculty advisor, and tony Gage, as the                                                                nomics students in mid-March, 2009 . Much
industry mentor . [See this issue’s recap of the    CFA exam candidates were asked to submit             of the presentation material was prepared by
Forecast Dinner for more on Mr. Gage.]              their scholarship applications in december .         the CFA Institute, and the presentations were
                                                    each applicant had to explain why the Charter        mainly about the CFA Program, the role and
each western Canada team prepared a
                                                    was of value, present their case for financial       objectives of the CFA Institute, and the value
research report on empire Company which
                                                    need, and explain how the CFA standard               of a CFA Charter .
had to be submitted by the end of January,
                                                    of conduct applies to their workplace .
2009 . the teams then traveled to Calgary to                                                             CFA Victoria Board member Jeff Hunter joined
                                                    Applicants were evaluated based on their
make their presentations on February 28 .                                                                me in giving the October presentation, which
                                                    responses .
Similar competitions took place worldwide                                                                was attended by about 20 students . For the
                                                    Candidate reception                                  March presentation, Jeff and I were joined by
with overall sponsorship and funding pro-
vided by the CFA Institute . the global com-        CFA Victoria hosted a candidate reception on         Board member Philippe Monier, and this pre-
petition has three levels: local (e .g ., western   January 15, 2009, prior to the Forecast din-         sentation was also attended by 20 students .
Canada), regional and global . the winning          ner . the reception was co-hosted by Stalla, a       In the future, we plan to make additional
team from each competition at the first two         company that provides exam review material           presentations of this nature at the University
levels goes on to compete at the next level .       to CFA exam candidates . twenty-eight CFA            of Victoria and other educational institutions
                                                    candidates and potential candidates attend-          in the Victoria region .
the University of Alberta team, winner of the
                                                    ed the reception and Stalla provided prizes
western Canada competition, will go on to
                                                    that included scholarships and invitations to
                                                    the Forecast dinner .
                                                                                                                   Newsletter                                7
                                                                                                                   Spring 2009

Upcoming CFA Victoria Events
Optimizing relationships with Clients                 surviving economic lassitude                       behind investor behavior is extremely impor-
of wealth                                             Dr. rICHArD GlICkMAN                               tant when applying these tools .
lIsA GrAY, FOUNDer                                                                                       In this presentation, John nofsinger will delve
                                                      dr . Glickman is co-founder and past CeO of
Graymatter Strategies LLC                                                                                into the psychology affecting investments .
                                                      two public healthcare/biotech companies .
Richmond, Virginia                                                                                       He will describe how investors behave, why
                                                      In his presentation, he will talk about insights
                                                                                                         they behave that way, how such behavior
CFA Victoria launches its Private Wealth              gained during his 25 years in this sector,
                                                                                                         hurts investors’ wealth and what they can do
Series with a special workshop, reception             and about his experiences, strategies, and
                                                                                                         about it . topics include overconfidence, fear
and dinner featuring Lisa Gray of Graymat-            challenges during the founding, growing,
                                                                                                         of regret and seeking pride, mental account-
ter Strategies LLC.                                   financing and selling of two Victoria-based
                                                                                                         ing, mood and investing, and self control and
                                                      public companies . From what he has learned
Ms . Gray consults extensively with global                                                               decision making .
                                                      over the years, dr . Glickman will provide his
families and their advisors on the direct influ-
                                                      perspective on how the current business            Mr . nofsinger, is a leading authority on
ence of generational perspectives, family dy-
                                                      climate is different and how this is a chal-       behavioral finance and a frequent speaker
namics, and governance on wealth manage-
                                                      lenge to a company’s growth and survival .         at investment management and academic
ment decisions .
                                                                                                         conferences . He often is quoted or appears
Ms . Gray will discuss the true definition of         dr . Glickman was a co-founder of Aspreva
                                                                                                         in the financial media, including The Wall
family wealth, and how and why client needs           Pharmaceuticals and served as Chairman and
                                                                                                         Street Journal, Financial Times, Fortune, Busi-
have changed . She will share with us what            CeO until 2007 . Prior to that, he was co-found-
                                                                                                         ness Week, Money Magazine, Washington Post,
she believes clients of wealth wish from their        er and CeO of StressGen Biotechnologies Cor-
                                                                                                         Bloomberg and CNBC .
advisors, how best to meet their expectations         poration . dr . Glickman was also founder of
                                                      Ontario Molecular diagnostics, a diagnostic        Mr . nofsinger has authored (or coauthored)
and what actions to take during unsettling
                                                      facility that evolved into one of the largest      seven books which have been translated into
times .
                                                      molecular diagnostic laboratories in Canada,       six languages . He has also published more
After the workshop, a reception and dinner            and co-founder of Probtec Corporation, a           than 30 articles in scholarly and practitio-
will be held for those wishing to participate         rational drug design and molecular genetics        ner journals, and his academic research has
in a candid discussion on optimizing relation-        firm, where he established and introduced          won many awards . In addition, he has done
ships with clients of wealth, focusing on how         the first licensed dnA-based forensic and          research for private investment firms, policy
advisors can best serve clients of different          paternity testing services in Canada .             think-tanks, the new York Stock exchange,
generations . this special dinner, hosted by                                                             and the CFA Institute .
CFA Victoria in the Union Club’s Palm Court           dr . Glickman’s roles on numerous boards
dining room, will include a case study and            have included Chairman of Life Sciences B .C .     April 30, 2009
discussion facilitated by Ms . Gray .                 and director of the Canadian Genetic disease       12:00pm – 1:30pm
                                                      network, a Canadian Centre of excellence . He      Begbie Room, The Union Club of BC
Ms . Gray has 21 years experience in wealth           is currently a member of the British Columbia      ___________________________________
management and is the founder of Gray-                Innovation Council and Lead director for           Perspective on China’s Banking system
matter Strategies LLC . of richmond, Virginia .       Cardiome Pharmaceuticals Corporation .             and exchange rate Policy
Based on her experience working with cli-
ents of wealth, she developed the diagnostic          dr . Glickman has received the ernst & Young       steVeN sItAO XU
wealth Optimization Consulting™ model of              entrepreneur of the Year 2004 Award for the        Director, Advisory Services China
service presented in her book, The New Fam-           Pacific region Life Sciences Group and both        Economist Intelligence Unit
ily Office: Innovative Strategies for Consulting to   Canada’s and British Columbia’s top 40 under
                                                                                                         Join us for a special presentation and evening
the Affluent (euromoney Books, 2004) .                40 Award for entrepreneurs .
                                                                                                         at the Art Gallery of Greater Victoria . Our fea-
A sought-after speaker and educator, Ms .             April 27, 2009                                     tured speaker, Steven Sitao Xu, will address a
Gray is a regular contributor to the Journal of       12:00pm – 1:30pm                                   particularly topical issue of great economic
Wealth Management and Trusts & Estates mag-           Begbie Room, The Union Club of BC                  and financial impact: the path that China will
                                                      ___________________________________                follow with regard to its banking system and
azine . Her new book, Generational Wealth
Management: A Guide for Fostering Global              the Psychology of Investing                        exchange rate policy .
Family Wealth, will soon be published by              JOHN NOFsINGer, PhD                                May 27, 2009
euromoney Books .                                                                                        Reception: 5:00pm
                                                      Associate Professor
March 31, 2009                                        University of Washington                           Presentation: 6:00pm
Afternoon Session: 3:00pm-5:00pm                      Lang Fellow, Department of Finance                 Curator Tour of Edo, Arts of Japan’s Last
Evening Session: 6:00pm-8:30pm                        Washington State University                        Shogun Age: 7:30pm
Begbie Room, The Union Club of BC                                                                        The Mansion,
                                                      traditional finance provides many tools with       Art Gallery of Greater Victoria
                                                      which investors optimize expected return           1040 Moss Street, Victoria
                                                      and risk, but understanding the motivations
                                                                                                         See page 5 for full event details .
                                                                                                      Newsletter                             8
                                                                                                      Spring 2009

                                      CFA Victoria Mission
CFA Victoria promotes the highest standards of integrity, professionalism
and ethical behaviour within the investment industry, and encourages
                                                                                                            2008 / 2009
professional development through the CFA Program . we facilitate the open
                                                                                                            CFA Victoria
exchange of information and opinions between members of Victoria’s                                           Leadership
investment community .
                                                                                                                     Andrew Shortreid, CFA
                                                                                                                          VICe PresIDeNt
“2009 Forecast Dinner” continued from page 5.
                                                                                                                         Jeffrey Hunter, CFA
displaying an admirable sense of full dis-        the silver lining for Mr . Gage was that “lenders
                                                                                                                        Carolyn thoms, CFA
closure, Mr . Gage advised the audience that      are finally back in the driver’s seat” because
this was his sixth time speaking at a forecast    once again “liquidity has value .”
                                                                                                                      trent karl Moore, CFA
dinner and that he had been wrong on all five     turning to the outlook for equities, Mr . Gage
previous occasions .                              pointed out that for the first time since 1958                     Board of directors
Looking back at 2008, Mr . Gage said the is-      the P/e yield was above the bond yield . In                      & Committee Chairs
sue was credit as investors felt an extremely     2009, though, he expected stocks to provide a                               MeMBersHIP
strong desire to delever their positions and      3 .5% dividend yield with no price appreciation .                          Jeff Hamel, CFA
gain liquidity . He noted that the return on      In the longer term, he foresaw a sea change in                                 eDUCAtION
federal government bonds in 2008 was about        investor’s attitudes, with their focus moving                           rob Bennett, CFA
15%, while that on corporate bonds was            away from total return to sustainable return                               teCHNOlOGY
minus 1% .                                        and more stringent balance sheet analysis .                                Yan Lyesin, CFA
Mr . Gage said the credit bubble was caused       In all, the dinner was a wonderful evening                          PUBlIC AwAreNess
by bankers having to find ways to give money      and a milestone in CFA Victoria’s ongoing                               Jeffrey Good, CFA
to consumers, and that it is a mistake to         efforts to encourage the exchange of ideas                         DIreCtOrs At lArGe
blame China . to illustrate the severity of the   and opinions within the investment commu-                            Philippe Monier, CFA
bubble’s bursting, he described the explo-        nity . we hope to see everybody again at next                              Jill M . Sing, CFA
sion in credit spreads as a 16 .6 sigma event .   year’s dinner to compare notes on how well                             eDItOr-IN-CHIeF
Quoting James Grant, editor of Grant’s Interest   our predictions shape up against the reality                             Gord walker, CFA
Rate Observer, Mr . Gage said this was not just   of 2009 .
a black swan: it was a black swan with two
heads and a propeller!

                                                                                                       A Call for Volunteers
                                                                                                           CFA Victoria depends on
Member report                                                                                           volunteers to enable all of our
                                                                                                      activities	and	initiatives.	you	can	
Members on the Move                               would you like to be included                        help by applying your time and
                                                                                                        skills in any number of ways.
Jill M. Sing, CA, CFA, CIM, CFP                   in Members on the Move?
                                                                                                        It’s	a	great	way	to	meet	others	
(formerly of CA firm, Hayes Stewart Little        It’s important to keep your contact                 in	the	local	financial	community	
& Company)                                        information up to date and let others know               and show off your talent.
To                                                where they can reach you .
                                                                                                       Interested?	of	course	you	are!	
Senior Vice President                             Please let us know if you’re changing jobs or        Contact Andrew Shortreid at
eFG wealth Management (Canada) Limited            making any other move .                     for
jill .sing@efgcanada .com                         Send your information to Gordon .walker@                   more information.
www .efgcanada .com                               rBC .com with “Members on the Move” in the
                                                  subject line .

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