- Why do actively managed mutual funds under perform their respective indexes? Mark Hulbert writes in The New York Times that according to recent research, it is due to successful funds attracting too much new money swamping the fund manager’s stock-picking ability.
- Investing Intelligently has rightly panned Rob Carrick’s quest to seek out hot mutual funds. Reams of research shows that past performance is a poor indicator of future returns (which is what new investors get) and a hot fund rarely keeps outperforming. So, why bother?
- The Globe and Mail’s Rob Carrick writes about two conflicting studies: one reporting that 37% of homeowners aged 55 and older are carrying a mortgage and the other claiming that Canadians need to save even more for retirement than previously thought.
- The Money Diva is hosting the next stop of the Canadian Tour of Money Blogs. I will be submitting a post for the tour and will be hosting the tour on Tuesday, May 22nd.
- Vancouver-based Lululemon Athletica, which announced that it is going public, is likely to be this year’s hot IPO. The offering price has not been set but the application indicates that it will seek to list on the NASDAQ (Ticker symbol LULU) and TSX (Ticker symbol LLL).
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12 responses so far ↓
1 Mike // May 3, 2007 at 7:49 pm
I didn’t understand why Carrick wrote that article. I thought he was going to list the ‘hot’ funds and then warn readers not to buy them.
2 rob // May 3, 2007 at 11:59 pm
Point three is stupid, 80% is far too high. A more reasonable percentage would be in the 60%. As people age expenditures drop considerably. Carrick is smokin some good stuff recently.
I used to think the guy was pretty reasonable, but now he has become a shill for the mutual fund industry if you look at his recent columns.
3 Mike // May 4, 2007 at 7:05 am
Rob, I was wondering about that myself (shill part).
That increased income retirement stuff is stupid - they always talk about how seniors “are needing more money these days”…how bout seniors spend what they have available to them and no more? Kind of like the rest of us.
4 Steve Heath // May 4, 2007 at 7:07 am
The only problem with saying 60%, or 80% of your income is that when you are very advanced in years, you may need a nursing home, and those things are not cheap! So you might start needing 100% of your income, drop down to 60%, and then in your 90’s jump up to needing 100% again.
Now, if you own your own home, that’s not so big a deal because if you’re moving into a nursing home, you’re most likely selling your current home and freeing up that equity, which should make the difference, but if you’ve already liquidated that, then you theoretically could have a problem.
I have no idea what percentage is “right”, I’m just saying that there are times when expenses go back up in retirement.
5 Mike // May 4, 2007 at 8:34 am
Steve, you’re absolutely correct. However some of the “rationale” for seniors needing more money that I’ve seen are: “they have more time to shop, participate in expensive activities”, “tend to buy more expensive condos than the house they used to live in”. Rubbish - once you are retired you have to live within your means.
6 Steve Heath // May 4, 2007 at 10:00 am
LOL Mike… I could even maybe see the condos if tons of boomers want to abandon houses for condos and there aren’t enough condos out there, but having more time to shop! How about more time to sit there for hours trying to get you to lower your price by a nickel or two, or drive two towns over to save at most a buck or two after paying for the gas
7 Canadian Capitalist // May 4, 2007 at 10:11 am
The Fidelity press release on the “new retirement math” is pretty thin on details. It simply says that its research shows that Canadians would need 80% of their pre-retirement income to maintain their current lifestyles. I have requested a copy of the full report, so hopefully we can find out the details.
Steve: Couldn’t agree with you more. Expenses in retirement will vary just like before. You may have to postpone that trip you’ve been meaning to take for the next year because unexpected expenses came up. The key is being flexible, which as Mike points out, is similar to our working years.
8 Mike // May 4, 2007 at 10:43 am
Lol. Steve, you just described a day in the life of my (retired) dad.
9 hepman // May 5, 2007 at 8:54 am
When I retire I want to golf, learn to curl maybe, travel a lot till I get to feeble to do it, spend money helping my neice and nephew etc. I will need more than 100% of my current income the way I see it
10 Monty Loree // May 6, 2007 at 11:57 am
Hey CC,
I’m glad you’re participating in the Canadian Tour of Personal Finance blogs. That is good news! I register you into our system.
I also want to thank you for hosting the event on May 22, 2007. I know that you bring along alot of experience with these Tours and Carnivals.
Please do contact me by email to coordinate the tour items.
Thanks again for participating…
11 Dave // May 16, 2007 at 6:46 pm
There is no way I would buy stock in Lululemon. This yoga trend will die out eventually and so will the tight pants. It also has tons of competition nowadays. Walk down 4th Ave. in Vancouver and witness all the Lululemon wannabe stores.
12 Canadian Capitalist // May 16, 2007 at 6:50 pm
IPO = It’s Probably Overpriced.
I am still capturing my Canadian equity portion using stocks, but there’s no way I am going to invest in an IPO.
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