Portfolio Manager’s Weekly Commentary

Daryl Cooper

November 18, 2016

Taking care of business at both ends of the rink
November 18, 2016

Let me start out by saying that hockey history is a great passion of mine. So if you came here this week expecting to read about what may happen with the new President of the United States, I will redirect you to the following link: Reflections on the Trump Presidency, One Week after the Election – Ray Dalio, Chairman & CIO at Bridgewater Associates, L.P.

If you are a hockey fan one of the greatest debates will always be, who was the greatest of them all? I have always had a pretty strong opinion on this topic even though there are many greats in the history of our national game.  Saskatoon’s own, Gordie Howe, Wayne Gretzky and Bobby Orr usually top most people’s lists.

I have always argued for Bobby Orr and the reasons are many. Orr was fantastic at both ends of the rink and he was tough as nails. In an era when fighting was still a big part of the game one of the world’s greatest superstars seen himself in many a fights with some of the games toughest hombres. He was not only a great skater, passer, stick handler and goal scorer as a defenseman he also took care of things in his end of the rink. He blocked shots before blocking shots was an art and he would defend his teammates in any battle.  He could hit, score, pass, defend and fight when needed. He was competitive and played with an obvious passion and love for the game. If not for the mighty Montreal Canadiens (in my opinion probably the best team ever assembled) of the 1970’s the Bobby and the Bruins would have certainly won a few more Stanley Cups.

Orr revolutionized the game. He was so much better than anyone of his era that it is hard to make an argument for Howe or Gretzky. True, Howe was a powerful forward who was as mean as nails, strong as an ox and could put the puck in the net but he had completion from the great Rocket Richard and later Bobby Hull for dominance of his era. Gretzky was possibly the games smartest player. He was wide open on offence setting scoring records that are unlikely to be broken. He made anyone that played alongside him a great player including making a journeyman line mate named BJ McDonald  (look him up, he is real)  a 50 goal scorer one year.  But Gretzky wasn’t as complete as Orr. His team would fill the net and allow just about as many in at their own end. He never played a physical game as he wasn’t built for it nor was he intended to take care of the rough stuff, he had Semenko and McSorley to take care of those duties for him.

Bobby Orr could lag the puck and kill a penalty, he knew when to play defense and he knew when to go on the offensive and make a rush. Orr ushered in a new age of the ultimate player. He was an oddity and he changed the game.

Rules Based Investing is new as well.  Most advisors still cling to the age old Buy-and-Hold derived from academic work books designed in the 1950’s. It takes time and pain for people to grasp a hold of the new. Being ahead of the curve isn’t always easy but as Orr proved, if you take care of business good things happen.

If Bobby Orr was an investment strategy, he would be Rules Based Investing (RBI). RBI demands you play at both ends of the rink. It commands a discipline to protect and the ability to know when to rush up and score.

2016 has been a year to play defense. It’s a year that started off with the worst stock market crash in any January in history, followed by an equally as insensitive February. The prudent strategy was to play defense, the team was hemmed in and no need to take chances. Ragging the puck to kill time until a zone opened up was Orr’s greatest gift and that is what we have done all year. We’ve protected the puck, stickhandled around one attacker after another protecting your puck; your dollar. Along with the horrible start came Central Bank intervention, kind of like pouring the all 18 players of the 1970’s Montreal Canadiens team on the ice at the same time to stop the cash drain. We had the monthly gnashing of teeth over what the US Federal Reserve was going to do, a shocking vote in Britain known as Brexit and a most combative and controversial US election with equally shocking results. If you were doing your best imitation of Wayne Gretzky through this, all out offence or as I shall call Wayne, Buy and Hold, then you are fortunate you came through unscathed. The number one rule in investing is don’t lose money and rule #2 is not to break rule #1. We aren’t talking short-term like period to period; we are talking a full seven game series here. If you focus on one period you will always be disappointed at some point in your investing lifetime. Our strategy has asked us to protect all year and wait until we see what happens, what opens up and when that does the returns will be evident as they were the past many years.

It is easy to be average. Every closet indexer out there will look pretty good in bull markets and then be able to blame the markets when things go bad. That isn’t the way we play the game. Bobby Orr never settled for mediocrity nor do we.

There is a great YouTube video of Bobby Orr that gives me shivers and a lump in my throat every time I watch it.  At the end, he scores the winning goal of to capture his first Stanley Cup; the culmination of a process and sticking to a strategy ending in a winning way.

Have a great weekend.

Daryl Cooper
Portfolio Manager, Director, Wealth Management