- The biggest news this week that will directly affect your personal finances is the Bank of Canada’s decision to hike interest rates. The prime rate at the chartered banks immediately jumped to 6.25% and you will be paying more interest on variable rate mortgages and personal loans. Fortunately, the bank clearly signalled that it is not planning on a long series of rate hikes at this time by suggesting that future increase is likely to be “modest”.
- The rate hike was the first increase in interest rates in more than a year. The Toronto Star’s Ellen Roseman writes that the rate hikes are bearable.
- The online high interest savings space is getting very crowded. Rob Carrick reports in The Globe and Mail about the new trend of offering “teaser rates” for new contributions.
- Paul Farrell tracks “lazy portfolios” designed by David Swensen, William Bernstein and others and regularly reports on their progress in his MarketWatch.com column. In his latest update, most of these boring portfolios have beaten the returns of the S&P 500 over three and five years.
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5 responses so far ↓
1 Phil S // Jul 13, 2007 at 7:40 am
CC. It seems as though volatility on the stock market is increasing - it’s now becoming a rollercoaster ride of being up or down by more than 100 points on any given trading day. The only way I know how to profit from this is to use an option straddle, where you buy both calls and puts on the TSX index. Then, it doesn’t matter which way the market moves, as long as it moves by a lot you make money. Anyways, executing a straddle seems like it would take a lot of time to do… Is there a fund manager out there that you know of who uses this strategy that I can invest in (and has a low MER)?
2 Canadian Capitalist // Jul 13, 2007 at 10:15 am
Phil: Yes, volatility is increasing (VIX goes up and down like a yo-yo these days). I understand your point but I am a long-only investor, so I haven’t really explored these options.
3 FourPillars // Jul 13, 2007 at 10:35 am
Hey Phil, was that your question I saw this week in the online chat with Douglas Porter? If so - pretty cool.
Mike
4 Phil S // Jul 13, 2007 at 12:56 pm
Hi Mike. If you’re referring to the question about who has the biggest influence on the currency exchange rate, then yes that was my question. Unfortunately, he wasn’t able to say what the percentage weighting of each source was responsible for our exchange rate, only that our trade affects it the most.
5 Deborah // Jul 14, 2007 at 2:35 pm
I couldn’t agree more with your first point and I think it is going to affect personal finances far more then people realize in how it will ripple through the economy.
This is my analysis on interest rates.
http://makingsenseofmyworld.blogspot.com/2007/05/low-interest-rates-as-destructive-as.html
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