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How Guns N' Roses bassist became a wealth manager

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From rocker to wealth manager Fortune magazine has a fascinating look at how Duff McKagan, the former bassist with Guns N' Roses, came to launch a wealth management company for rockers with a British investor.

In 1994, Mr. McKagan was out of action for months with a pancreatic problem he says was caused by alcohol and drug abuse.

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Part of his recovery was spent scouring the band's six years of financials, and, according to the magazine, he panicked when he understood he didn't understand them.

Now, Mr. McKagan, later with Velvet Revolver, is launching a wealth management company that will teach musicians about finances, which the magazine notes isn't easy among people who think "suits" are the enemy.

Now 47, Mr. McKagan outlines how he took a finance course at Santa Monica Community College, and later took more classes at a community college in Seattle.

Then it was off to the Albers School of Business at Seattle University.

His own portfolio ran from equities to property, and soon he found himself being asked by friends in the music world about how they should invest.

"I'm not a financial planner - I was just trying to figure this out for myself," Mr. McKagan said.

"I didn't want to be 60 years old and broke, having made all this money in my 20s ... that was my simple goal."

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Krugman's Canada fears Paul Krugman, the New York Times columnist, author and Princeton professor, looks today at Canadian house prices and household debt levels in an aptly named blog post headlined "Oy, Canada."

Mr. Krugman believes the housing bubble and family debt were key to the U.S. crisis, and "if I take all that seriously, I should be very worried about Canada."

U.S. jobless rate dips to 8.9 per cent Just how strong is today's U.S. jobs report? Employers added 192,000 people to their payrolls in February and the U.S. unemployment rate declined to 8.9 per cent, boosting hopes amid the U.S. jobs crisis. The jobless rate is now below 9 per cent for the first time in about two years. The private sector created 222,000 jobs, and January's numbers were revised to show a somewhat bigger gain than initially reported.

Still, there are almost 14 million people who want work. And here's a tidbit from The Wall Street Journal: Since September of 2008, local governments in the United States have slashed 377,000 jobs.

Some questioned the strength of the reading. Here are several views:

"Although February was a frigid month on the weather front, the job market is showing real signs of thawing. Normally we would be cautious about getting too excited over a single month of positive data, but February's outturn echoes the positive momentum seen in a myriad of other indicators over the last few months. Jobs - at least in the private sector - appear to have finally showed up at a party that started a long time ago. Economic growth is likely to accelerate further in the second quarter, which should make 200,000+ jobs/month the new normal." James Marple, Toronto-Dominion Bank

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"Yet another false start for the U.S. labour market. Non-farm payrolls were up 192,000 roughly matching consensus expectations. But if one subtracts from today's numbers the jobs which arguably should have been in January's report absent the weather-related disruptions, the tally isn't all that impressive. Government continues to shed jobs in numbers and wage growth remains tepid, throwing a sour note to the report. However, a positive from the report, in addition to January's upward revision, was that the private sector, yet again, provided all the jobs (+222,000), not just confirming the earlier-released ADP numbers, but also seemingly gathering some momentum. While that's a positive development, the report, overall, is a bit disappointing given the heightened expectations and considering the jobs that should have been in January's employment report." Krishen Rangasamy, CIBC World Markets

"Judging by what we've seen recently, particularly in jobless claims, there is good momentum heading into March. And job growth is needed to help make this recovery more self-sustaining. But as Fed Chairman Bernanke warned in his testimony earlier this week, 'it could be several years before the unemployment rate has returned to a more normal level.. But we're getting there." Jennifer Lee, BMO Nesbitt Burns

"The 192,000 increase in U.S. non-farm payrolls in February is healthy enough, particularly when we take into account the upward revisions to the preceding two months that added an additional 58,000 jobs, the only question is how much of last month's gain was a reversal of the severe weather impact in January? ... Over the next few months, we expect monthly payroll gains to accelerate a little from the current underlying pace of about 135,000 a month, moving into the 150,000 to 200,000 range. However, we expect the unemployment rate to decline only gradually from here." Paul Ashworth, Capital Economics

"The big question marks remain the unemployment and labour force participation rates. Both had been expected to rise with a more hospitable labor market. Yet, unemployment has declined by 0.9 percentage point since November. Meanwhile, the labour force participation rate remains as low as it was in the mid-1980s. Aging baby boomers, many of whom are retiring early, are an explanation for much of the decline. Yet, there are also many younger workers who remain on the sidelines and are expected to begin to search for jobs soon. Therefore, the unemployment rate is still expected to rise in coming months to about 9.5 per cent." Sophia Koropeckyj, Moody's Analytics

Oil prices rise again Oil prices rose again today amid worries over supply disruptions from the turmoil in Libya.

In the United States, The New York Times reports today, calls are mounting for the government to look at tapping oil reserves that now account for more than 700 million barrels.

"Between the lost production in Libya, the crude oil dislocation associated with additional Saudi production and the prospect of further turmoil in the region, we are now unquestionably facing a physical oil supply disruption that is at risk of getting worse before it gets better," Senator Jeff Bingaman, who chairs the Senate Energy and Natural Resources Committee, said late on Wednesday.

Others have voiced similar concerns, the report said.

As it released its monthly consumer outlook index today, Royal Bank of Canada said that one in every three consumers in the United States has already cut back on discretionary spending because of the increase in prices at the gas pump.

"There has been quite a lot of debate about the impact of rising gasoline prices on consumption in general," said Tom Porcelli, the chief U.S. economist at RBC Dominion Securities.

"Specifically, the conversation focuses on what particular price level of gasoline would lead to a shift away from discretionary spending. The RBC survey finds that this level has already been breached for 32 per cent of consumers, and is within range for another 18 per cent. Somewhat encouragingly, however, is that 40 per cent of Americans place their threshold at or north of $4 per gallon."

SNC-Lavalin profit climbs, boosts dividend SNC-Lavalin Group Inc. said Friday its fourth-quarter profit climbed to $139.2-million or 91 cents a share from $98.7-million or 65 cents a year earlier. The engineering and construction multinational also hiked its quarterly dividend by 23.5 per cent to 21 cents.

"I am pleased with what was accomplished in 2010," said chief executive officer Pierre Duhaime, whose company is active around the global, including Libya.

"We signed many new contracts, were awarded two new concessions in Canada and invested in one concession in India , disposed of two non-core Infrastructure Concession Investments and added about 1,200 new employees from business acquisitions, mainly in Colombia . We also increased our net income by 21.6 per cent, continued to build up a strong revenue backlog, and maintained a solid cash position. Even given recent events, we expect our 2011 net income to be in line with 2010, when we exclude the gains recorded in 2010 from the disposal of the two Infrastructure Concession Investments and from the disposal of certain technology solution assets."

Desjardins analyst Pierre noted that SNC excluded from its backlog previously booked projects in Libya until the situation there becomes clearer.

"In our view, management took a conservative approach in swiftly removing Libya-related business from its backlog until the political and social situation is resolved," Mr. Lacroix said in a research note.

"The company now expects that revenues from Libya will be lower than the $418-million generated in 2010 (vs. $279-million in 2009). SNC's backlog continues to be strong, along with its end markets. Still, the company's recent solid performance is clouded by country risk, which should put a cap on the upside until investors become more comfortable with the situation."

Was Renault tricked? Renault now says it may not have been the target of industrial spying, sparking a warning from the French government.

Last month, the auto maker ousted three executives in a widely publicized case, saying it suspected industrial espionage involving its electrical vehicles, and some attention turned to China.

But the company's chief operating officer, Patrick Pelata, now says in an interview with Le Figaro that there may be reason to doubt the allegations, and that Renault may have been tricked.

"Either we are confronted with a case of espionage and a senior security executive is protecting his source despite everything," he said, according to Reuters. "Or Renault is the victim of a manipulation, which we don't know the nature of but which could be a fraud."

France's Finance Minister Christine Lagarde told a radio interviewer today that Renault had better get to the bottom of the case quickly and that "justice be done" if the allegations are unfounded. Renault is 15-per-cent government owned.

"One shouldn't shoot without a sight or accuse without proof," Ms. Lagarde said.

Analysts boost TD, RBC targets Analysts are revising their outlook and boosting their price targets on shares of Toronto-Dominion Bank after its strong first-quarter results and dividend hike yesterday.

"We rate TD outperform on the view that the market currently undervalues the underlying growth potential in TD's Canadian and U.S. non-wholesale financial services platform," said National Bank Financial's Peter Routledge, who hiked his price target on the stock to $95 from $86.

"TD's U.S. P&C balance sheet, in particular, has significant upside due to the inexpensive funding provided by its core deposit-rich liability structure, and due to a low relative weighting towards higher yielding loans. We also forecast reliable earnings growth within the Canadian P&C and wealth management business, driven by their underlying financial strength, sales and service machines, and cost advantages."

UBS Securities Canada analyst Peter Rozenberg upgraded the stock to a "buy" and boosted his target to $92, also from $86.

"The payout ratio was 35 per cent," he said of the nickel increase to the dividend.

"We estimate that TD can raise dividends further in [the second half of the fiscal year]underpinned by a projected 16-per-cent increase in [earnings per share in fiscal 2011]"

Desjardins Securities analyst Michael Goldberg, meanwhile, hiked his target for shares of Royal Bank of Canada , though he questions whether Canada's biggest bank can continue to report the strong earnings levels of yesterday.

"Royal remains on a roller coaster of earnings surprises (positive this time) driving volatile performance," Mr. Goldberg said.

"We do not expect strong [first-quarter]results to continue. While management has warned of this likelihood, the warning does not seem to be reflected in yesterday's 5-per-cent increase in the share price. Conditions are improving for Royal but remain volatile. We maintain our Buy-Average Risk rating but caution that the shares may weaken from their current level."

He upped his target to $64 from $58.

Mr. Routledge also boosted his RBC target, to $64 from $57. Not only did he increase his profit forecast, he also projected RBC will announce a dividend hike next quarter.

"This quarter's dividend payout ratio of 40 per cent is at the bottom of [RBC's]target payout range of 40 per cent to 50 per cent. Going into the quarter, we expected [RBC]to raise its dividend in [the third quarter, announcing the move in the second quarter] Our confidence in this forecast has grown with this quarter's result."

Boyd Erman's Morning Meeting The private equity deal will be back soon, says veteran buyout executive David Bonderman, Streetwise columnist Boyd Erman reports today.

In Economy Lab today

Washington correspondent Kevin Carmichael looks at global inflation trends and how the world's central banks are responding.

In Personal Finance today

Adviser Ted Rechtshaffen looks at three common investments that tie up your cash with the threat of fees and how you can avoid them.

Depending on your policy, the definition of being disabled can affect your benefits, writes Preet Banerjee.

Improving fuel economy not only saves drivers money, it also benefits the environment and reduces a nation's dependence on oil and oil imports.

From today's Report on Business

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More

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