The Robo Advisors rule and Warren Buffett speaks out on Weekend Reads.

It’s been a while since we gave a shout out to the Canadian Robo advisors. I’ve suggested for quite some time that the Robo’s are a great option for the bulk of Canadians who are trapped in high fee mutual funds. A recent post from Rob Carrick of the Globe and Mail confirms what I’ve been hearing; the Robo’s are rocking during the stock market correction. We’ve also been waiting to hear from the world’s greatest investor, Warren Buffett. On Saturday May 02, Berkshire held a virtual annual meeting. We’ll check in. Warren Buffett speaks out on Weekend Reads.

There’s nothing like a stock market correction to get investors’ attention. They might actually start to check their statements. They might look at their returns and discover their fees. Many investors will pick up the phone and call their bank or ‘advisor’ and ask why they are paying 2% or more.

Many investors will put 2 and 2 together.

Paying high fees to under perform the market? Ya, not a good long term strategy for wealth building. Many Canadians are discovering that there are many simple and more cost-effective ways to invest. They are turning to the Canadian Robo Advisors. Many more are turning to self-directing their own investments.

They will create their own ETF Portfolios. Investors can also open a discount brokerage account and by entering one ticker symbol they can access wonderful asset allocation portfolios.

You can have a read of iShares adds 3 one ticket asset allocation portfolios. Compared to paying fees of 2% or more, investors can access well-diversified ETF portfolios with fees in the range of .20%. Yes it’s a no brainer.

In early April we had reported that ETF investors had added monies for the quarter as mutual fund investors ran for the hills. As expected some of those mutual fund investors ran into the arms of the Canadian Robo Advisors and the leading discount brokerages.

Here’s Rob Carrick with check your schadenfreude, advisors. Robo advisors are thriving in a bear market.

Rob reported that Wealthsimple had almost twice as many new account sign-ups in March than it did in the same month of 2019. WealthBar had an 81-per-cent increase in new clients in March and April, while Nest Wealth reports that March was one of its best months ever for signups.

Know your Robo’s.

I had also checked in with our friends at Justwealth and they report that investors were well behaved, adding monies on a regular schedule. Justwealth also reported robust new business.

Justwealth. The Canadian Robo Advisor that knows when to get personal.

This is a great trend. I expect this to continue and accelerate. Many advisors are also making the move to digital platforms and are embracing the managed ETF portfolios of the leading Canadian Robo Advisors. Most of the Robo’s have advisor channels.

Warren Buffett speaks out on Weekend Reads.

When the Oracle of Omaha speaks, investors listen. But Mr. Buffett has been very quiet during this violent but brief market correction. On Seeking Alpha I had suggested that you can invest with Warren Buffett, or you can invest like Warren Buffett. Some investors who hold larger cash piles will wait for Mr. B. to give the all-clear signal.

In yesterday’s virtual annual meeting the world’s greatest investor was certainly not giving the all clear. Here’s a summary of key points and thoughts courtesy of CNBC. Berkshire Hathaway has sold out of their airline holdings. Mr. B. admits to that investment ‘mistake’.

“The world has changed for the airlines. And I don’t know how it’s changed and I hope it corrects itself in a reasonably prompt way,” Buffett said. “I don’t know if Americans have now changed their habits or will change their habits because of the extended period.”

– Warren Buffett, May 02, 2020.

Obviously Mr. Buffett does not see any return to normal air travel for the next few years. He could afford to buy a few of the airlines outright if he saw great value. He’s taking a pass on air travel.

What about that largest BRK cash pile ever?

But here’s a more troubling one liner from the Oracle. As you may know, Berkshire Hathaway is sitting on its largest cash pile ever, now at $137 billion. Investors are waiting for Mr. Buffett to get greedy with stock purchases, but …

I thought $137 billion was a lot of money. But perhaps in worst case pandemic scenarios that’s not enough to patch up existing businesses. Berkshire Hathaway might be fixing holes instead of adding a new wing. They had stated that they expect some of their businesses (smaller wholly-owned subsidiaries) to not survive.

All said, Mr. Buffett is a very cautious investor. He needs to see some clarity before he moves forward. I think it’s unlikely he will be left holding that big bag of money with no opportunity to invest.

We don’t prepare ourselves for a single problem, we prepare ourselves for problems that sometimes create their own momentum.

– Warren Buffett, May 02, 2020

He’s waiting for some clarity and for cheap markets. The US stock market has also not yet gone ‘on sale’ to his liking. On a forward and current basis the US markets are as expensive as they’ve been in quite some time. That is of course thanks in part to the recent ‘bull run’.

We’ll continue to keep an eye on Warren Buffett and friends. And yes Mr. Buffett is still a long term optimist and he believes that nothing can stop America.

Weekend Reads.

I honestly try to read and do research on more than pandemics and viruses and vaccines. But that’s not always easy.

So that said, we’ll lead off with the big question. When will we have a vaccine?

From the Bill Gates blog.

Mr. Gates has the wonderful ability to make the complicated simple. That is often (but not always) a trait of those with very big brains. Read that post if you want to know the current situation and likely scenario(s) for vaccine development. Sorry, it’s not all miracle cure kind of reading.

And sorry to Jonathan Chevreau, to make you follow Bill Gates, but here ya go. On MoneySense Jon offers up on the question – should retirees delay their retirement because of COVID-19?

And also on MoneySense Alexandra Macqueen – How the coronavirus pandemic could change the way we think about retirement. Yes, a component of income annuities might look pretty good to retirees and near retirees these days.

Here’s the reads of the week courtesy of Mark Seed at myownadvisor.

Rob at passivecanadianincome delivers his April dividend income report.

Allaboutthedividends adds some juicy income with these 3 purchases.

Erica Alini offers 6 reasons why you might change your investment strategy during the COVID crisis.

Attitudes will shape the new normal. The Atlantic asks will the restaurants come back?

And while we should not think that our current isolation at home is a snapshot of what retirement feels like, Fritz at retirement manifesto looks into boredom in retirement. We need a life plan as much as we need that solid financial plan.

And here’s 10 Weekend Reads from The Big Picture.

Thanks for reading. Have a great weekend.

Be safe. Be well. Be generous.

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Dale