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io A valuable financial lesson from the Sears Canada bankruptcy ometimes life is hard. We have been reminded of just how hard with the news that, after 65 years in business, Sears Canada has declared bankruptcy. The hnal liquidation process to close the remaining 131 stores and lay off 12,000 employees started this month. Many of us underestimate risk, believing failure and bad fortune won't happen to us. The key take-away from the Sears Canada failure is that any business venture, even a historically large, prohtable, and respected Canadian retailer, has an element of risk. In hnancial planning, it is impor tant to identify potential risks and protect yourself against them. I will use the Sears failure to il lustrate a few of the consequences that can happen when risk becomes reality. Since Sears received court protec tion from its creditors in June, a lot of focus has been on the staff mem bers who had suddenly lost their j obs. Thousands lost their income in June and thousands more are about to. These laid-off employees will be --i c / ) CL O O i-- + S looking for work. Many retired Sears employees rely on receiving their company pension. The Sears Canada pension is underfunded making it unlikely that full pension benehts will be re ceived. Both large and small suppliers no longer have Sears as a valuable cus tomer and now have to replace that lost income. They will also have to worry about not being paid in full for products already delivered. Will that hnancial hit cause some of these suppliers to lay off staff? Other retail stores could be nega tively impacted. Sears liquidation of assets will go on until Jan. 22 of next year. For m ost retailers, the holiday shopping season is their m ost prof itable time. How many sales will these retailers lose because shop pers are looking for inventory bar gains at Sears? One strategy for large shopping centres is to have prominent retail ers as anchors. Customers go back and forth be tween these large retailers and pro vide walk-by traffic to the smaller Dollars & Sense Peter Watson Guest Contributor stores, increasing their sales. Until a replacement anchor is found for the space occupied by Sears, those smaller stores will also be adversely impacted. It' s safe to say that many people will be negatively affected by the demise of Sears. In life, we all take risks. Most are calculated -- where the likelihood of a positive outcome outweighs the risk or cost of failure. For Sears employees' the calcu lated risk was that the company wouldn't go out of business. For the small stores owners, it was that the anchor would get cus tomers in the door. For suppliers, that their invoices would be paid in full. The fact is, no one can predict the future and no business is immune to failure. The one investment strategy people have to protect themselves against risk, is diversihcation. In other words, don't put all your eggs in one basket. The starting point for any invest ment portfolio is to spread the risk as best as possible. Own both large and smaller stocks. Invest in Canada and world wide. Canada only accounts for about four per cent of global eco nomic activity so it is advisable to branch out from our home country. Own companies in different in dustries. Diversihcation is also advisable for the hxed income part of your portfolio. Bonds should be owned in differ ent companies and countries. Hopefully we can all learn from the Sears bankruptcy. Risk is every where and unforeseen consequenc es of those risks can easily happen to you. Diversihcation is your friend and should be used to help protect yourself against normal investment risk. Anticipate risk and develop a di versihcation strategy. -- submitted by Peter Watson. o cr CD CD fo fO -~nI o o > < m =5' c / ) CL CD Peter Watson is an agent of, and se curities products provided by, Aligned Capital Partners Inc. (ACPI). ACPI is a mem ber o f the Investment Regulatory Organization o f Canada and the Canadian Investor Protection Fund. The opinions expressed are those o f the author and not necessar ily those o f ACPI. Peter Watson pro vides wealth management services through Peter Watson Investments =r o p b o 3 QJ_ 1 --H C A U S E 4 C A N IN E S Successfully managing condominiums in Oakville for over 20 years F U N D R A IS E R Join us for an evening o f fun at the second annual CAUSE 4 CANINES Fundraiser featuring cocktails, beer tasting, hors d'oeuvres, silent/live auction, 50/50 draw, music and more! D A T E : Saturday, N ove m be r 18th, 2017 T IM E : 7:30 PM L O C A T IO N : Oakville Club 56 W ater Street, Oakville, O N C A U S E 4 C A N IN E S is d e d ic a te d t o ra is in g fu n d s f o r g lo b a l fo u n d a tio n s c o m m itt e d t o e n d in g th e c ru e lty a n d s u ffe r in g o f th e D o g M e a t T ra d e . T h e re w ill be a d o n a tio n bin a t th e e v e n t f o r n e w o r used d o g ite m s (b o w ls , to y s , c o lla rs , be ds). A ll d o n a tio n s w ill b e g iv e n to v ic tim s o f th e tra d e as th e y a w a it a d o p tio n . WB W ils o n B la n c h a rd M anagem ent Condominium, Management with Experience and Integrity P lease c a ll fo r y o u r n o -o b lig a tio n c o m p lim e n ta r y p ro p o s a l. T IC K E T S ARE AVAILABLE TH RO U G H O U R F A C E B O O K PAGE www.facebook.com/cause4canines/ O R AT www.universe.com (search Cause 4 Canines) SPO N SO RE D BY: JL LEWIS HOMES ACM O