2013 Archive

Where Do Returns Come From?

Recently Burgundy’s Chief Investment Officer Richard Rooney stated in our annual client conference call that our equity return expectations for the markets over the next five years are 6-7%. This begs the question: where do return estimations come from? There are three main drivers of future equity returns: earnings multiple expansion, dividend yields and earnings… Continue reading “Where Do Returns Come From?”

Beware the Risks

In my previous post, I listed the reasons why Burgundy invests in Japan, but I also alluded to the risks that exist. Let me illustrate with the story of Olympus Corporation, a Japanese company which perpetrated a financial fraud for decades. Olympus Corporation is better known for its cameras, but its biggest, most profitable and… Continue reading “Beware the Risks”

Lying Down on the Highway: Reasons to Invest in Japan

Today, investors no longer pay much attention to Japan and most underweight their portfolios to Japanese equities or avoid the asset class altogether. Jesper Koll, one of the few long-standing Japanese market specialists still around explains the situation this way: “The Japanese market has disappointed clients so often that most do not have tolerance anymore.… Continue reading “Lying Down on the Highway: Reasons to Invest in Japan”

Beyond the Returns: Selecting a Money Manager (Part III)

In Part I and Part II, I looked at some money manager characteristics beyond performance that should result in an overall positive client experience, and used Warren Buffett as the classic example. In Part III, I conclude my thought experiment with three final characteristics. Buffett is diversified, but not over-diversified. He has most of his… Continue reading “Beyond the Returns: Selecting a Money Manager (Part III)”

On Gold

Given the dramatic drop this week in the price of gold, we thought it timely to revisit Burgundy’s view on the topic. At Burgundy, we are often asked about gold and, more specifically, why we are reluctant to own any in our portfolios. It’s not that we haven’t considered whether gold would be an appropriate… Continue reading “On Gold”