Taking the Shine off of Manulife

Remember a few years ago, Manulife Financial was the apple in everyone's eye. The stock price was doing well, investors were happy, the CEO was rated one of the top CEOs in the world. Now, not so much. The company just posted a $2.4 billion loss, its share price is as low as it has been in more than a year, and it has lost its coveted Triple A credit status. Does this sound like a company that people want to invest in? Manulife's CEO, Don Guloien, stated that results would have been better if interest rates and the stock market had performed better. No kidding. Not exactly what I want to hear if I am a serious investor. We would all be in much better shape if the stock market had risen higher.

I think the point here is that, although Manulife has stated that they have been working on reducing exposure and risk, they are still very susceptible to market changes, just like we all are. I think the lesson here is about diversity in investing, both from a personal and professional perspective. Understanding what your comfort level is for risk, understanding your investors (which may be your family) and their appetite for risk, and then setting up a portfolio accordingly. You want to ensure that you are able to take advantage of the good times without losing your shirt in the bad times.

I am confident that Manulife will bounce back, and it will be interesting to see if Guloien gets blamed for these poor results since he has only been in the job 16 months and claims he is trying to right the ship (more like the Titanic). How much if this did he cause and how much did he inherit from his predecessor, Dominic D'Alessandro? We will soon find out.


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