January 13, 2016 Newsletter

Dear Friends,

Tangents:

This was in the New York Times on Sunday, January 10, 2016 – it’s worth the read:

Be Happy:  Think About Your Death

                           -by Arthur C. Brooks

Want a better 2016?  Try thinking more about your impending demise.

Years ago on a visit to Thailand, I was surprised to learn that Buddhist monks often contemplate the photos of corpses in various stages of decay. The Buddha himself recommended corpse meditation. “This body, too,” students were taught to say about their own bodies, “such is its nature, such is its future, such its unavoidable fate.”

Paradoxically, this meditation on death is intended as a key to better living. It makes disciples aware of the transitory nature of their own physical lives and stimulates a realignment between momentary desires and existential goals. In other words, it makes one ask, “Am I making the right use of my scarce and precious life?”

In fact, most people suffer grave misalignment. In a 2004 article in the journal Science, a team of scholars, including the Nobel Prize winner Daniel Kahneman, surveyed a group of women to compare how much satisfaction they derived from their daily activities. Among voluntary activities, we might expect that choices would roughly align with satisfaction. Not so. The women reported deriving more satisfaction from prayer, worship and meditation than from watching television. Yet the average respondent spent more than five times as long watching TV as engaging in spiritual activities.

If anything, this study understates the misalignment problem. The American Time Use Survey from the Bureau of Labor Statistics shows that, in 2014, the average American adult spent four times longer watching television than “socializing and communicating,” and 20 times longer on TV than on “religious and spiritual activities.” The survey did not ask about hours surfing the web, but we can imagine a similar disparity.

This misalignment leads to ennui and regret. I’m reminded of a friend who was hopelessly addicted to British crossword puzzles (the ones with clues that seem inscrutable to Americans, such as, “The portly gentleman ate his cat, backwards”). A harmless pastime, right? My friend didn’t think so — he was so racked with guilt after wasting hours that he consulted a psychotherapist about how to quit. (The advice: Schedule a reasonable amount of time for crosswords and stop feeling guilty.)

While few people share my friend’s interest, many share his anxiety. Millions have resolved to waste less time in 2016 and have already failed. I imagine some readers of this article are filled with self-loathing because they just wasted 10 minutes on a listicle titled “Celebrities With Terrible Skin.”

Some might say that this reveals our true preferences for TV and clickbait over loved ones and God. But I believe it is an error in decision making. Our days tend to be an exercise in distraction. We think about the past and future more than the present; we are mentally in one place and physically in another. Without consciousness, we mindlessly blow the present moment on low-value activities.

The secret is not simply a resolution to stop wasting time, however. It is to find a systematic way to raise the scarcity of time to our consciousness.

Even if contemplating a corpse is a bit too much, you can still practice some of the Buddha’s wisdom resolving to live as if 2016 were your last year. Then remorselessly root out activities, small and large, that don’t pass the “last-year test.”

There are many creative ways to practice this test. For example, if you plan a summer vacation, consider what would you do for a week or two if this were your last opportunity. With whom would you reconnect and spend some time? Would you settle your soul on a silent retreat, or instead spend the time drunk in Cancún, Mexico?

If this year were your last, would you spend the next hour mindlessly checking your social media, or would you read something that uplifts you instead? Would you compose a snarky comment on this article, or use the time to call a friend to see how she is doing? Hey, I’m not judging here.

Some might think that the last-year test is impractical. As an acquaintance of mine joked, “If I had one year to live, I’d run up my credit cards.” In truth, he probably wouldn’t. In a new paper in the science journalPLOS One, two psychologists looked at the present value of money when people contemplated death. One might assume that when reminded of death, people would greatly value current spending over future spending. But that’s not how it turned out. Considering death actually made respondents less likely to want to blow money now than other scenarios did.

Will cultivating awareness of the scarcity of your time make you grim and serious? Not at all. In fact, there is some evidence that contemplating death makes you funnier. Two scholars in 2013 published an academic paper detailing research in which they subliminally primed people to think about either death or pain, and then asked them to caption cartoons. Outside raters found the death-primed participants’ captions to be funnier.

There’s still time to rethink your resolutions. Forget losing weight and saving money. Those are New Year’s resolutions for amateurs. This year, improve your alignment, and maybe get funnier in the process: Be fully alive now by meditating on your demise. Happy 2016!

Arthur C. Brooks is the president of the American Enterprise Institute and a contributing opinion writer.

PHOTOS OF THE DAY

Participants in a small local event pose for photographs in a sunflower field in Bangkok, Thailand, Wednesday. Athit Perawongmetha/Reuters

A man walks in front of a cosmetics ad in Tokyo Wednesday. Eugene Hoshiko/AP

Market Closes for January 13^th, 2016

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Dani Burger

     (Bloomberg) — Canadian stocks resumed declines, after posting yesterday the first daily advance of 2016, as selloffs in global equities and commodities intensified.

     The Standard & Poor’s/TSX Composite Index sank 1.6 percent to 12,170.41 at 4 p.m. in Toronto. The benchmark gauge gained yesterday, halting a nine-day losing streak.

     Financial and energy stocks in the S&P/TSX contributed most to declines. Royal Bank of Canada and Toronto-Dominion Bank dropped at least 1.7 percent. Paramount Resources Ltd. sank 9.6 percent. Brent slid closer to $30 a barrel following a U.S. government report that showed crude and fuel stockpiles climbed.

     Global equities have struggled in 2016 as turmoil in China’s equity and currency markets at the start of the year fueled concern about global growth. Canada’s resource-rich benchmark was the second of seven countries to see its benchmark enter a bear market, capping a 20 percent slide on Jan. 7.

     Material stocks advanced as investors flocked to gold as a haven. Barrick Gold Corp. climbed 2.2 percent.

     The consumer discretionary sector also gained. Shaw Communications Inc. led the sector, advancing 5.3 percent. Corus Entertainment Inc. agreed to buy the company’s media business for C$2.65 billion in cash and stock, helping Shaw finance its wireless expansion.

     Among other stocks moving on company news, Magna International Inc. gained 2.3 percent. The auto parts-maker reported a 2016 sales forecast in-line with analyst estimates.

US

By Joseph Ciolli

     (Bloomberg) — The 2016 selloff in U.S. stocks intensified, with the Dow Jones Industrial Average tumbling more than 360 points, as consumer shares led the latest rout in a turbulent start to the year that has erased at least $1.6 trillion from equities.

     An early rally evaporated for a third day as declines of at least 5.8 percent in Amazon.com Inc. and Netflix Inc. paced the selloff. Banks sank to their lowest close since May 2014, and energy companies fell as crude wiped out a 4 percent surge after data showed stockpiles continued to grow. Express Scripts Holding Co. lost 6.4 percent and biotechnology companies tumbled to weigh on the health-care group.

     The Standard & Poor’s 500 Index slid 2.5 percent to 1,890.28 at 4 p.m. in New York, its lowest close since Sept. 29. The gauge fell past 1,900, a level it’s closed below only four times in the past 14 months. The Dow fell 364.81 points, or 2.2 percent, to 16,151.41, and the Nasdaq Composite Index sank 3.4 percent, the most in more than four months. The Russell 2000 Index closed in a bear market, sinking 3.3 percent to its lowest since 2013, and down 22 percent from a record set in June.

     “With energy selling off, we’ve lost a leg of leadership, which is made worse because we’ve already been seeing risk-off,” said Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York. “The FANG gang is making new lows, and small-caps are continuing to get pummeled. What you’re seeing today is some pretty broad-based weakness.”

     It was another volatile session following yesterday’s whipsaw action in which the S&P 500 capped its first back-to- back advance in three weeks. The Dow on Wednesday traveled more than 470 points from the session high to low.

     Concern that turbulence in China’s stocks and currency will spread to the global economy just as the Federal Reserve is increasing borrowing costs has spurred declines in markets in 2016. The S&P 500 posted its worst-ever start to a year, sliding 6 percent last week. The benchmark has declined 11 percent from its record set in May, and is just 1.2 percent above the bottom of an August swoon, which was also sparked by anxiety over the impact of China’s weakness on worldwide growth.

     According to JPMorgan Chase & Co., this year’s tumble is at least partly attributable to robotic selling by quantitative investors who were forced to rebalance their funds when stocks and bonds both fell in January.

     “While this implies there is less risk of a sudden market crash vs. August, it is not imminent that these strategies will start buying equities,” wrote Marko Kolanovic, the JPMorgan strategist. “Moreover, if volatility keeps on rising, there could be more selling to come.”

     The Chicago Board Options Exchange Volatility Index rose 12 percent Wednesday to 25.22. The measure of market turbulence known as the VIX is up 39 percent in January, on track for its biggest monthly gain since August’s 135 percent jump. About 9.8 billion shares traded hands on U.S. exchanges, 36 percent above the three-month average.

     “If this week has shown us anything, it’s that no gain is safe,” said Thomas Garcia, head of equity trading at Thornburg Investment Management Inc. in Santa Fe, New Mexico. “Equities have just been out of favor early on this year. We’ve been taking our cues from what’s been going on from China, but people seem to be getting numb to that.”

     The Fed’s Beige Book survey of conditions released today said the economy expanded across most of the country in the past six weeks as the job market showed strength that’s failing to stoke broad wage pressures. The report underscores the challenge facing policy makers heading into their meeting later this month: The labor market is strengthening without triggering signs of higher wages or inflation more broadly.

     Boston Fed President Eric Rosengren said today estimates for U.S. growth are falling, putting the central bank’s projected path for rate increases at risk. Chicago Fed President Charles Evans said in comments also today he backs an “even shallower path” for future rate increases than his colleagues.

     After this year’s selloff brought S&P 500 valuations down to levels last seen in 2014, investors will be turning their attention to a key determinant of stock prices — corporate earnings. JPMorgan Chase & Co., Intel Corp., and Citigroup Inc. are scheduled to post quarterly results this week. Analysts estimate profits for S&P 500 members fell 6.7 percent last quarter.

     “Corporate earnings could provide some support, especially if the energy and commodities sectors are not as miserable as everyone expects,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG in Bonn, Germany.

     Amid the carnage Wednesday, all of the S&P 500’s 10 main industries fell, with consumer discretionary and health-care shares the worst performers. Eight of the groups lost at least 1.7 percent. Utilities were little changed.

     “There’s big-time negative sentiment in the market right now,” said Mark Kepner, an equity trader at Themis Trading LLC in Chatham, New Jersey. “There’s a lot of growth uncertainty in general. Without enough news to make it go higher, and with negative sentiment, we started selling off.”

     Consumer discretionary companies in the benchmark gauge slipped 3.4 percent, the biggest drop since the August selloff. BorgWarner Inc. led with a 9.5 percent decline after providing 2016 sales guidance that fell short of previous estimates. Netflix lost 8.6 percent, the most since October 2014, while Ford Motor Co. and Delphi Automotive Plc slumped at least 5 percent. Home Depot Inc. dropped 4.8 percent, the worst in the Dow, and its steepest retreat since 2011.

     The S&P 500 health-care index fell 2.9 percent to its lowest since September amid losses in drugmaker shares. AbbVie Inc. and Celgene Corp. decreased more than 5.6 percent. The Nasdaq Biotechnology Index slid 5.3 percent to a 14-month low and its ninth loss in 10 days. The gauge is down 18 percent over the period.

     Express Scripts posted its steepest drop in three years after health insurer Anthem Inc., its biggest client, threatened to ditch it for a competitor unless the pharmacy benefit manager can deliver $3 billion a year more in savings on drug costs.

     Industrial companies in the S&P 500 lost 2.3 percent, snapping a two-day gain. The Dow Jones Transportation Average lost 3.7 percent, the most in almost two years to its lowest since October 2013. Norfolk Southern Corp. and Union Pacific Corp. fell more than 3.1 percent, while Boeing Co. decreased 2.9 percent.

     CSX Corp., the largest rail carrier in the eastern U.S., fell 5.7 percent to its lowest level since February 2013 as demand for rail cargo is expected to drop this year in what Chief Executive Officer Mike Ward called a “freight recession.”

     Williams Cos. plunged nearly 18 percent, the steepest since 2002 and the most among energy companies today as credit downgrades and slumping energy prices exacerbated concerns over the $38 billion deal for the pipeline company to be bought by Energy Transfer Equity LP. Valero Energy Corp. and Tesoro Corp. tumbled more than 8.6 percent.

     In an ironic twist, Chipotle Mexican Grill Inc., the worst non-energy performer in the S&P 500 during the last three months, was the day’s second-best performer. The shares rose 5.9 percent, the most since July after executives told analysts at an investor conference that it can win back the trust of customers and restore its industry-leading restaurant margins by 2017.

Have a wonderful evening everyone.

Be magnificent!

One must become poor inwardly

or then there is no seeking, no asking,

no desire – nothing!

It is inward poverty

that can see the truth of a life in which

there is not conflict at all.

Krishnamurti

As ever,
 

Carolann

Remembering that you are going to die is the best way I know

to avoid the trap of thinking you have something to lose.

                                               -Steve Jobs, 1955-2011

Carolann Steinhoff, B.Sc., CFP®, CIM, CIWM

Portfolio Manager &

Senior Vice-President

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7