December 9, 2014 Newsletter

Dear Friends,

Tangents:

David Brooks wrote this article in The New York Times last Sunday:

Why Elders Smile

A few months ago, Ezekiel Emanuel had an essay in The Atlantic saying that, all things considered, he’d prefer to die around age 75. He argued that he’s rather clock out with all his powers intact than endure a sad, feeble decline.

  The problem is that if Zeke dies at 75, he’ll likely be missing his happiest years.  When researchers ask people to assess their own well-being, people in their 20s rate themselves highly.  Then there’s a decline as people get sadder in middle age, bottoming out around age 50.  But then happiness levels shoot up, so that old people are happier than young people.  The people who rate themselves most highly are those ages 82 to 85.

  Psychologists who study this now famous U-curve tend to point out that old people are happier because of changes in the brain.  For example, when you show people a crowd of faces, young people unconsciously tend to look at the threatening faces but older people’s attention gravitates toward the happy ones.

  Older people are more relaxed, on average.  They are spared some of the burden of thinking about the future.  As a result, they get more pleasure out of present, ordinary activities.

  My problem with a lot of the research on happiness in old age is that it is so deterministic.  It treats the aging of the emotional life the way  you might treat the ageing of the body: as  this biological, chemical and evolutionary process that happens to people.

  I’d rather think that elder happiness is an accomplishment, not a condition, that people get better at living through effort, by mastering specific skills.  I’d like to think that people get steadily better at handling life’s challenges.  In middle age, they are confronted by stressful challenges they can’t control, like having teenage children.  But in old age, they have more control over the challenges they will tackle and they get even better at addressing them.

  Aristotle teaches us that being a good person is not mainly about learning moral rules and following them.  It is about performing social roles well – being a good parent or teacher or lawyer or friend.

  It’s easy to think of some of the skills that some people get better at over time.

  First, there’s bifocalism, the ability to see the same situation from multiple perspectives.  Anthony Kronman of Yale Law School once wrote, “Anyone who has worn bifocal lenses knows that it takes time to learn to shift smoothly between perspectives and to combine them in a single field of vision.  The same is true of deliberation.  It is difficult to be compassionate, and often just as difficult to be detached, but what is most difficult of all is to be both at once.”  Only with experience can a person learn to see a fraught situation both close up, with emotional intensity, and far away, with detached perspective.

  Then there’s lightness, the ability to be at ease with the downsides of life.  In their book, “Lighter as We Go,” Jimmie Holland and Mindy Greenstein (who is a friend from college) argue that while older people lose memory they also learn that most setbacks are not be end of the world.  Anxiety is the biggest waste in life.  If you know that you’ll recover, you can save time and get on with it sooner.

  “The ability to grow lighter as we go is a form of wisdom that entails learning how not to sweat the small stuff,”  Holland and Greenstein write, “learning how not to be too invested in particular outcomes.”

  Then there is the ability to balance tensions.  In “Practical Wisdom,” Barry Schwartz and Kenneth Sharpe argue that performing many social roles means balancing competing demands.  A doctor has to be honest but also kind.  A teacher has to instruct but also inspire.  You can’t find the right balance in each context by memorizing a rule book.  This form of wisdom can only be earned by acquiring a repertoire of similar experiences.

  Finally, experienced heads have intuitive awareness of the landscape of reality, a feel for what other people are thinking and feeling, an instinct for how events will flow.  In “The Wisdom Paradox,” Elkhonon Golberg details the many ways the brain deteriorates with age:  brain cells die, mental operations slow.  But a lifetime of intellectual effort can lead to empathy and pattern awareness.  “What I have lost with age in my capacity for hard mental work,” Goldberg writes, “I seem to have gained in my capacity for instantaneous, almost unfairly easy insight.”

  It’s comforting to know that, for many, life gets happier with age.  But it’s more useful to know how individuals get better at doing the things they do.  The point of culture is to spread that wisdom from old to young; to put that thousand-year-heart in a still young body.

PHOTOS OF THE DAY

Holiday lights illuminate the small harbor of Neuharlingersiel, Germany, by the North Sea. Ingo Wagner/dpa/AP

Municipal workers walk along a fence surrounding a Christmas market in Red Square, with St. Basil’s Cathedral in the background, in Moscow. Pavel Golovkin/AP

Market Closes for December 9^th, 2014     

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Eric Lam

     Dec. 9 (Bloomberg) — Canadian stocks rose, after plunging the most in 18 months yesterday, as a rebound in commodities producers with gold and crude prices offset a fourth day of declines for banks.

     Iamgold Corp. and Detour Gold Corp. surged at least 7.2 percent as gold jumped to a six-week high. Crew Energy Inc. and Surge Energy Inc. increased more than 9.9 percent as oil climbed from a five-year low. National Bank of Canada lost 2.5 percent, the most since May 2012, to pace declines among the nation’s largest lenders. AGF Management Ltd. plunged 15 percent after saying it will cut its dividend in the first quarter next year.

     The Standard & Poor’s/TSX Composite Index rose 51.56 points, or 0.4 percent, to 14,195.73 at 4 p.m. in Toronto. The equity gauge sank 2.3 percent yesterday, the most since June 2013, after dropping 1.8 percent last week. The benchmark for Canadian equities has pared its advance to 4.2 percent this year.

     Iamgold soared 9.9 percent to C$3.01 and Detour Gold surged 7.2 percent to C$10 as raw-materials stocks jumped 2.3 percent to snap a three-day decline. Gold futures for February delivery climbed 3.1 percent to $1,232 an ounce in New York, the highest since Oct. 23.

     Crew Energy added 13 percent to C$6.26 and Surge Energy increased 9.9 percent to C$4.10 as West Texas Intermediate jumped 1.2 percent to $63.82 a barrel.

     The 14-day relative strength index for WTI stood at 26.1178, according to data compiled by Bloomberg. Investors typically start buying contracts when the reading is below 30.                        

     Talisman Energy Inc. jumped 12 percent to C$4.81 after people with knowledge of the matter said Spain’s Repsol SA has revived acquisition talks with the company.

     Seven of 10 industries in the benchmark Canadian equity gauge gained on trading volume 39 percent higher than the 30-day average.

     Oil, bank and raw-materials are the biggest laggards in Canada for the first time since at least 1988, fueling concern the nation’s economy is fading just as the U.S. is taking off. The three industries, which collectively account for two-thirds of the S&P/TSX, are the worst performers among 10 groups this year, according to data compiled by Bloomberg.

     While commodities shares gained today, financial companies continued to slump.

     National Bank, Canada’s sixth-largest lender, dropped 2.5 percent to C$47.93 for an eighth straight day of declines, the longest streak since 2010. Financial stocks in the S&P/TSX retreated 0.2 percent. The group has tumbled 3.9 percent over four days.

     AGF Management plunged 15 percent to C$8.28, the biggest drop ever, after the investment management company said it will slash its quarterly dividend 70 percent to 8 Canadian cents a share from 27 cents in the first quarter of 2015. The asset manager said it will also renew its share buyback program when the current one expires in February.

US

By Oliver Renick and Callie Bost

     Dec. 9 (Bloomberg) — The Standard & Poor’s 500 Index was little changed after erasing a drop of 1.3 percent, as a rally among energy and technology shares offset concern over China and Greece that sparked a global equities selloff.

     Citigroup Inc. and Bank of America Corp. dropped at least 0.6 percent as financial shares declined, while Verizon Communications Inc., Merck & Co. and AT&T Inc. led the Dow Jones Industrial Average lower. Newmont Mining Corp. jumped almost 5 percent as gold futures rallied.

     The S&P 500 fell less than 0.1 percent to 2,059.82 at 4 p.m. in New York after yesterday sliding the most in seven weeks. The Dow average dropped 51.28 points, or 0.3 percent, to 17,801.20. The Nasdaq 100 Index added 0.4 percent and the Russell 2000 Index of small companies rallied 1.8 percent, as energy companies in the index rallied the most in three years.

     “You had some real change in the situation in both China and Greece and yet that wasn’t enough to keep the market down, that’s very bullish,” Matt Maley, equity strategist for Miller Tabak & Co. in Newton, Massachusetts, said via phone. “With the Russell and Nasdaq up on the day, this is the type of thing that hopefully will get us to break out of the tight range we’ve been in the last week or so.”

     Global equities fell after China said certain lower-rated bonds can no longer be used as collateral for some short-term loans, sparking a selloff in riskier debt that spread to government notes and stocks. Stocks in China tumbled the most since 2009 and the MSCI All-Country World Index dropped 0.5 percent. About 7.3 billion shares traded hands on U.S. exchanges, 7.3 percent above the three-month average.

     The Stoxx Europe 600 Index lost 2.3 percent as Tesco Plc slumped, energy companies extended losses and U.K. manufacturing output unexpectedly fell for the first time in five months. Meanwhile, Greece’s move to bring forward the process for choosing a new head of state risks triggering parliamentary elections that could put in power a party that opposes the terms of the nation’s bailout by the European Union.

     Oil touched a five-year low yesterday, stoking concern that lower demand points to a slowing global economy.

     “There was a bit of baby with the bathwater this morning so you’re seeing some quality rally with other stuff staying down,” Benjamin Dunn, president of Alpha Theory Advisors, which advises hedge funds with about $6 billion in assets, said in an e-mail from Crested Butte, Colorado. “If you think the secular tailwinds and positive growth in the U.S. is for real then you shrug off China.”

     The S&P 500 has rebounded 11 percent from a low in October amid speculation the U.S. economy is strong enough to withstand a slowdown overseas and tighter monetary policy after the Fed wound up its asset-purchase program.

     The index dropped 0.7 percent yesterday, following a seventh straight weekly gain that pushed the gauge to a record as better-than-estimated payrolls data increased optimism in the economy. The gauge ended the week trading at 17.3 times its members’ projected earnings, the highest valuation since 2009. The Dow also reached a record last week, climbing within 10 points of 18,000 before retreating.

     The Chicago Board Options Exchange Volatility Index, the gauge of options prices known as the VIX, climbed 4.8 percent to 14.89, after jumping 20 percent yesterday, the most since October.

     Five of 10 major industries in the S&P 500 fell, with telephone companies dropping 3.2 percent as a group and health- care shares losing 0.4 percent. Energy shares added 0.9 percent, after retreating 5.8 percent over the previous three days.

     The Russell 2000 Energy Index surged 6.1 percent, the most since November 2011, rebounding from a 7.3 percent selloff yesterday.

     Citigroup Inc. fell 0.9 percent to $55.85 after Chief Executive Officer Michael Corbat said the company will report $2.7 billion of legal costs in the fourth quarter and $800 million in expenses tied to headcount and real estate.

     Bank of America declined 0.6 percent to $17.56 after the second-biggest U.S. bank said it expects trading revenue to decline this quarter from the previous three months and a year earlier.

     Verizon Communications Inc. slipped 4.1 percent, the most since August 2011, after saying phone discounts and promotions will hurt profitability at its wireless business.                         

     Merck & Co Inc. lost 3 percent to $60.01, ending three days of advances. Cubist Pharmaceuticals Inc., the drugmaker being bought by Merck for $8.4 billion, lost a bid to block Hospira Inc. from offering a generic version of its top-selling Cubicin treatment for flesh-eating infections beyond 2016.

     Lululemon Athletica Inc. advanced 6.2 percent to $47.73 after Wells Fargo Securities analyst Paul Lejuez raised his rating on the clothing company to “outperform” from “market perform.”

     Newmont Mining Corp. jumped 4.9 percent to $20.01 as gold futures rose to the highest in six weeks. The global selloff in equities revived demand for the metal as a haven.

     T-Mobile US Inc. dropped 8.3 percent to $25.85 after offering to sell as many as 17.4 million new convertible shares.

     H&R Block Inc. fell 5 percent to $32.34 after the provider of tax services posted a larger-than-estimated loss for the second quarter, while sales for the period also disappointed analysts.

Have a wonderful evening everyone.

Be magnificent!

In music, I am the melody.

The Bhagavad Gita

As ever,
 

Carolann

There is no cure for birth and death save to enjoy the interval.

                                          -George Santayana, 1863-1952

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

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square,

Suite 340A, 730 View St.,                                                                                                             

Victoria, B.C. V8W 3Y7