Co-founder of the Saxon family of mutual funds and recently retired chief investment officer of MacKenzie Investments
HOW I WOULD INVEST A $100,000 WINDFALL It's tough to think of a developed country that's better than Canada, so I'd keep 75% of it here. I think interest rates are going to trend up, so I don't want to own any plain-vanilla bonds. I'm going to own mainly Canadian equities, and I'm a one-trick pony: For 25 years I've said small cap, small cap. ...There are 400-odd companies in the BMO Small Cap Index, and about a quarter of them still trade at or below book value. The other 25% of the money, I would probably put in global big-cap stocks that have reasonably good dividend yields: Colgate-Palmolive, PepsiCo and Johnson & Johnson. Then I'd forget about things for five years-that's the hard part for most people.
WHAT KEEPS ME AWAKE AT NIGHT A replay for us of 10 years of Japanese no-progress-a bit of growth, a bit of inflation, and then it falls back. Stocks will seem cheap at the beginning, and then you look back after 10 years and they're still cheap.
WORST INVESTMENT We've had a fair number go to zero, because that happens in the small-cap sector. But I'll give you a couple of examples of cash-rich technology companies, because they're very, very tempting. One was Concord Camera, which made disposable cameras. This was six or seven years ago. But soon every damn cellphone had a camera in it that took four or five megapixels. Another company was Handleman, which essentially ran the CD department in Walmart. Again, think back five or six years-people were beginning to download, but we thought it would take a long time to catch on. That's the thing about technology: Usually somebody doesn't come up with a better mousetrap; they come up with a completely different way of achieving the same thing.