The David Miner Communiqué—Winter 2008

Happy 2008!
As often the case, Dorinda and I did manage to escape from the big (and cold) city last calendar quarter. This time we visited Hawaii in December. While we both love our chosen professions (Dorinda is a lawyer), neither of us has a nine-to-five mentality, frequently working into the evenings and weekends. We find that the brief “escape” in most quarters to get out of the city is not only an indulgence, but a way of keeping energy levels higher throughout the rest of the year. And fortunately - with computer laptops, Internet, and cell phones – one can be almost anywhere and still connect to the office and clients.

Market Comments

Financial markets provided us with mixed results in 2007. Investors were treated to a much bumpier ride than they have been used to over the past four to five years. The volatility stemmed mainly from the weakness in the U.S. sub-prime mortgage market, which had a domino effect throughout worldwide financial markets. As the year drew to a close, the fallout of this credit crunch is still being tallied.

Though many equity markets reacted to the credit crunch, they also managed to post gains for 2007 thanks to continued global economic expansion. Emerging markets charged ahead, reflecting the growth of economies such as Brazil, China and India.

Stocks in other major world markets also rose during the year. In Canada, the S&P/TSX Composite Index was up 9.8%, helped once again by robust commodity prices, which supported the materials (mining, metals, forestry and commodity-related industries) and energy sectors. U.S. stocks also finished the year with small gains, as did many European indexes, while Japan’s stock market struggled and posted negative results for the year. In nearly all markets, banks and other financial stocks were dragged down by ongoing concerns about the extent of their exposure to poor-quality credit instruments. Returns for bonds and other fixed-income investments were also dampened by the sub-prime market woes.

Perhaps a bigger story for Canadian investors, however, was the rapid rise of the Canadian dollar. Opening the year with a value of about US$0.86, the loonie climbed steadily through the first half of 2007, soared to US$1.10 in mid-November and ultimately retreated to near parity with the U.S. greenback. Net decline of the US dollar for the year relative to our Canadian dollar was 15.2%. Our currency’s rapid ascent was frustrating for investors, as gains in foreign securities were reduced – and often turned to losses – when converted to Canadian funds. This is an important point to remember when reviewing your year-end account statements.

While the recent moves in the Canadian dollar have been dramatic, currency changes tend to “wash out” over the long term. Asset allocation geared to your long-term goals and risk tolerance remains one of the most important considerations when assembling a portfolio. This objective should be revised in response to changes in your financial goals or stage of life – not in response to short-term moves in the financial markets or currencies (see “Over four decades of returns examined”).

As we enter 2008, you may wish to review your personal financial priorities. For example, you may want to look at your RRSP ahead of the February 29 contribution deadline. Or, other tax planning or retirement income planning issues may be a more immediate concern. If you would like to discuss these or any other topics, please do not hesitate to contact us.

Fidelity Investments – Making Our Lives Simpler

Good portfolio managers provide a service which most of us individually have neither the skills nor the time to do ourselves. As a matter of fact, even good portfolio management requires a team approach to optimize opportunity and manage risk. It is much more than a one person job, particularly when we talk about investments in a global context.

Our job at David Miner & Associates is to identify superior management and provide it to clients in a fashion that best suits their needs. One firm which often appears on our client statements is Fidelity. We like Fidelity because of the firm’s depth of management and infrastructure. Fidelity is the largest investment management firm in the world with offices around the globe. They grew because they are very good.

While a dominant firm on the global scene, Fidelity has also developed one of the very best “benches” for Canadian equity and bond managers over the last twenty years. Fidelity’s “Team Canada” performance has been exceptional.

Thanks to Fidelity, we provide you with three simple ideas to make more money over time on a risk adjusted basis.

Idea #1: The risks of “safe” investments
So-called “safe” investments such as GIC’s often only guarantee mediocrity. And even at only 2% inflation, $10,000 turns into $6729 after 20 years. The Erosion of Purchasing Power chart indicates the impact of inflation at various rates.

Idea #2: Think globally
If you think Canada is the only place to invest, look at the Performance of Canadian vs. international markets: 1997-2006 chart. Simple diversification both reduces volatility and enhances your long term performance.

Idea #3: Don’t miss out
Study after study shows that when individual investors try to buy low and sell high, they do exactly the opposite. Looking at the Value of $10,000 invested in the S&P/ TSX Composite Index, $10,000 invested between January 1975 and December 2006 grew to approximately $400,000. If the 60 best months had been missed (i.e.; not invested), the same investor would have lost money!

Fidelity offers a number of excellent funds and wrap programs which fit well into every investors long-term strategy. For non-registered accounts, Fidelity also offers tax effective corporate class and T-SWP options. Of course, through David Miner & Associates, we are pleased to provide service on a no-commission basis which benefits you by lowering your costs and increasing your flexibility.

Feel free to contact us today!

Mutual fund performances changes in share value and reinvestment of all dividends but do not take into account sales, redemption, distribution of optional charges or income taxes which may have reduced returns. Fees and expenses are associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual funds are not insured by the Canada Deposit Insurance Corporation or any other deposit insurer and are not guaranteed.