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.
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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.