By Mike Andrews

When I started in the advisory business in 1987 there were no “free lunches” with investment management, in fact an investor’s cost of doing business was expensive. As computer technology exponentially expanded and countries became more developed, global connectivity created the ability to purchase securities around the world cost effectively and with a higher degree of transparency.

The ability to own in excess of 11,000 securities in a client’s portfolio, in a cost-effective manner could not have happened in 1987. The ability to trade these securities instantaneously would have been impossible. In 2023 the ability to do both, at a nominal cost is normal business practice. It is virtually a “free lunch.” In times of turbulence (and there’s always turbulence somewhere), this “free lunch” of diversification is tremendously advantageous to investors.

The last month has been dominated by Silicon Valley Bank, Signature Bank and First Republic Bank (in the US) and Credit Suisse (Switzerland). There are over 4,000 commercial banks in the US with the top four controlling more than 50% of all U.S. bank assets. Comparatively, Canada has 34 domestic banks (including two federally regulated credit unions). The Big Five banks together constitute more than 85% of the Canadian banking industry. The Canadian centralized banking system is considered one of the best in the world. The decentralized system in US has its advantages, of having a more personalized service and awareness of local customers (which is the marketing slogan of the credit union I’m with in Canada). The concern, in the US is customer concentration and less regulation which leads to banks sometimes owning good assets (compared to 2008 when some assets were junk) but weak leadership making bad decisions without proper regulatory guardrails such as Silicon Valley Bank.

This bad decision-making led to unrealized losses in their bond portfolios and ultimately to customer nervousness. The world that exists today with social media allows concern with a few to turn into panic for many. The difference between a banking business and a non-banking business, like manufacturing, distribution or retail is when confidence is lost in these other industries their stock price drops, their cost of doing business increases, they may have to file for bankruptcy or creditor protection, but their businesses can continue to build products, distribute products and sell products. In a bank business the product is confidence. When confidence suffers like it did, customers want their money NOW and ill prepared banks, like Silicon Valley Bank become insolvent. Insolvency creates doubts and the markets react. There is no doubt, there is a need for the US banking industry to be a more highly regulated industry. There are indications this process is beginning again in the United States, as confidence is the foundation and is paramount.

So, what should we do?… Keep enjoying the benefits of our “free lunch.” Take comfort that we own thousands of securities across the globe, diversified by country and by industry. Canada continues to represent approximately 3% of all global stock market opportunities, the USA is approx. 59%, international developed markets approx. 26% and emerging markets approx. 11%. There is safety and security in knowing that this diversity minimizes the financial impact in our portfolios when a situation like this occurs. It also provides a greater opportunity for higher expected returns by investing in countries that represent more than 3%, like Canada. There are no guarantees in life (if anyone tells you an investment is guaranteed, it means that person/institution is earning more than you). All we can do is tilt the odds in our favor. We do this in other areas of our life, like enjoying time with others, moving more, and eating better. None of these activities guarantee we will live longer but they certainly tilt the odds in our favor. It’s even better when we can tilt the odds and get a “free lunch.”

Mike Andrews is a Wealth Advisor with Assante Capital Management Ltd. The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd. Please contact him at 519-438-0338 or visit to discuss your particular circumstances prior to acting on the information above. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

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