RISCARIO INSIDER

December 24, 2011

THE MOST SPECIAL TIME OF YEAR

It's Christmas Eve. Whether you celebrate or not, snow makes today special and there isn't any.

As a child, Christmas was the most special time of year. It wasn't our festivity but we celebrated just the same. There was joy in the air. People were happier. Everything was delicious and nothing had calories. The decorations looked wonderful. The snowmen, the lights, the sounds, the stockings, the cards, the music. Pa, rum, pa, pum, pum. Me and my drum.

The joy and wonder. Santa Claus is coming to town! The magic even changed Scrooge and The Grinch.

Wonder

We had an artificial tree with shiny silver branches. Like any good child, I believed in Santa and was rewarded. How did he get in when we had no fireplace and the chimney led down to the furnace?

Since the real Santa was busy at the North Pole preparing for his annual visit, he sent mall Santas to get our wishes. This was more convenient than writing a letter in those pre-email days. Plus we got a sweet treat. Joy to the candy canes! The lineup was worth the rewards.

We had a black & white TV with one over-the-air channel. This was in London, Ontario. That was fine. We watched uplifting old black & white classics. Year after year.

Boxing Day

When I became a teen, Boxing Day mattered more than Christmas. On December 26th, I'd head downtown to Sam The Record Man where everything was on sale. This was the time to buy imports or expensive back catalog records (yes, the vinyl ones). The popular titles were discounted at other stores.

In those days before websites and home computers, you couldn't do your “Boxing Day” shopping on December 24th or 25th. Now we can. What "progress"! Can’t we get any break from shopping? We have to rely on our self-control, which can be weak.

Fujifilm FinePix 6800Z: click for review at dpreview.com

If you still like shopping in person, Best Buy and Future Shop now open at 6 AM on Boxing Day. Even 7 AM was too early.

I remember lining up in 2001 to get our first digital camera: a Fuji FinePix 6800Z with a body designed by Porsche. Having photos felt important since 9/11 ended innocence a mere three months earlier. The normal price of $1,000 was now reduced to $700. That was for 3.3 megapixels, shutter lag and a noticeable pause between shots. A 64 MB memory card was pricey but necessary accessory. The “good old days" weren't for gadget lovers. The store only had four but I got one and still have it.

Hot Chocolate

As a child, we never needed to travel for Christmas because we were already together. When I started working, travel added stress because the weather was unpredictable whether driving or flying. Sacrifices.
We didn't have global warming concerns in those days. Since we were in a snow belt, we could count on lots of the white stuff. That's a wonderful excuse for hot chocolate.

We didn't have treats regularly. That made the shortbread cookies and boxes of chocolate so much more delectable. This year we have Costco sized boxes that last months.

Why Not?

We live in such a complicated world. On this day in 2008, we were at the hospital emergency ward. We deserve to remember lighter times at least once a year. This is the best time because so many others are looking back and enjoying too. We also have time to think and try new things. Since the New Year is about to begin, this is also a great time to act on new resolutions.

Will it snow tonight?

More than once, we've gone to bed with green grass and awakened to snow. There's such a lull when you open the door. Snow dampens the sounds and makes the day even more special. Even the shoveling is fine when you return to a nice warm house with delicious aromas wafting from the kitchen.

This is the final post of 2011.

The best to you and yours during the holidays.
May your 2012 be swell, swell, swell!

Podcast 149 (6:05)

direct download | Internet Archive page | iTunes

PS If this post is just nostalgia talking, I'm still listening. How about you?

December 17, 2011

KEEPING PROMISES: CORPORATE GOVERNANCE 2011

Corporate governance is a measure of how well companies are run and keep their promises. The Globe and Mail has done an annual study for the last 10 years. Here are some of the biggest scandals: Enron (2001), Worldcom (2002), Nortel (2003), Parmalat (2003), Tyco (2005), HP (2006), RIM (2006-2007) and Olympus (2011). Do you remember why? For highlights, check out this slideshow.

We last looked at the 2007 rankings. It's time for an update.

Lots has changed since 2007. That's when the iPhone was introduced. That novelty is gone and the devices are commonplace. Not all changes have such happy evolutions.

We have endured financial turmoil. Major companies have had difficulty keeping promises. Countries too. Financial services are especially important since they are intangible. You can't touch the return on an investment or feel the quality of an insurance policy by holding the contract.

Canadian companies have proved resilient. That’s a sign of being well-run. The regulators deserve credit for setting high standards and ensuring they are enforced.

Trends

The best 15% of boards did well before Enron and would have done well without any reforms. The 70% in the middle have benefitted most from the governance revolution, and the 15% at the bottom are unchanged.
— TD Bank chairman Brian Levitt (Corporate Canada sees a quiet revolution in governance)

Corporate governance has improved. We’ll focus on financial services. In 2007, only 12 companies scores 80% of more. Now there are 16, despite the tough times and higher standards.

Rankings

2011 corporate governance for financial services (click to enlarge)

Here are the five highest ranked companies in financial services:

Manulife (#2 overall, down from #1 in 2007)
Scotiabank (#4 overall, up from #18)
Sun Life (#7 overall, up from #8)
tie: BMO (#10 overall, down from #5) and TD Bank (#10 overall, down from #3)
tie: CIBC (#12 overall, up from #18) and Industrial Alliance Insurance (#12 overall, up from #21)

The Bottom

As in 2007, Power Corporation of Canada is at the bottom at #237 (a drop from #178). This group owns companies like Canada Life, Great-West Life, Investors Group, Investment Planning Counsel, Mackenzie Financial and London Life.

For more details, click on the table. You’ll find much more about corporate governance on the Board Games 2011 microsite. The University of Toronto prepared the data at the Clarkson Centre for Business Ethics and Board Effectiveness. How do you fit that on a business card? You can download the full results in a spreadsheet to do your own analysis.

No Guarantees

We can't predict the future until tomorrow becomes yesterday. That doesn't make us helpless. We can take steps to put the probabilities on our side. You might want to support larger companies which rank high in corporate governance — especially leaders in 2007 and now. Thanks to competition, you rarely pay more but get extra peace of mind. What’s the downside?

Even well-run companies may have products with poor promises. For instance, you’ll find pitfalls in mortgage life insurance and investments with high expense loads. You might do better as a shareholder than a customer.

Corporate governance is also a way to gauge whether your advisor is putting your interests first. If you were sold or shown products from companies with low scores, did you get tires with less tread? On a warm sunny day, you won't notice the difference but freak storms strike. When the roads get treacherous, it's too late to change your tires.

Nothing stops companies from scoring high on corporate governance. Do they? Nothing stops advisors from recommending those companies. Does yours?

Podcast 148 (6:39)

direct download | Internet Archive page | iTunes

PS How good are you at keeping your promises?