Archive for November, 2007

Jon Chevreau Interviews Ziv Bodie

November 26, 2007

9 comments

You may want to check out Jon Chevreau’s interview with finance professor Ziv Bodie, author of “Worry-Free Investing”, who calls into question most of todays widely held financial wisdom:

  • Prof. Bodie argues that ordinary investors do not have to take any stock market risk when there is a safe, guaranteed long-term investment in the form of real return bonds.
  • He doesn’t view stocks or gold as inflation hedges and points out that REITs have a slightly positive correlation with inflation but cannot be counted on to go up in proportion to inflation.
  • Prof. Bodie points out that since you can’t get a higher return without taking on higher risk, the investment industry’s claim that people can just save less and invest in stocks for the long-term is a lie. By taking risk, investors are also exposed to the possibility that they could do worse.
  • He calls the conventional wisdom that over the long-term there is little risk in equities as a fallacy. “If you spread risk across uncorrelated assets then yes you get diversification of risk but over time there is no diversification because the good years don’t necessarily cancel out the bad”.

Having read The Four Pillars of Investing in which William Bernstein warns against extrapolating recent experience ad infinitum, I wasn’t terribly surprised by Prof. Bodie’s interview. “Worry-Free Investing” is now on my “to read” list and I hope Mr. Chevreau will post the rest of the interview.

Note: If you haven’t done so already, you may want to enter your name in the third anniversary giveaway. Your odds of winning are much better than the 6/49 and best of all, there is no ticket to buy!

Christmas Gift Ideas

November 25, 2007

11 comments

I love to receive and give books as gifts and I am hoping Santa would give me The Complete Calvin and Hobbes this year. With Christmas just around the corner, here are some gift ideas for the financially inclined person on your list:

Starters:

Spend Smarter, Save Bigger: We spend a lot of time discussing investment topics on this blog but the basic step of saving money is arguably far more important. Margot Bai’s recent book (full review) offers a number of ideas for saving money.

The Wealthy Barber: David Chilton, the best-selling Canadian author, covers the basics of financial planning in an easy-to-read format.

Investment Beginners:

The Little Book of Common Sense Investing: John Bogle, the founder of US mutual fund giant Vanguard has written one of the best introductions to investing (full review).

Advanced:

Your Money & Your Brain: If you’ve ever asked yourself how we tend to make stupid money decisions, you should read this book. Money magazine columnist Jason Zweig brings the world of behavioural finance (full review) to the lay reader.

A Random Walk Down Wall Street: Hundreds of books are written on investing every year but this classic was first published in 1973 and is now in its 9th edition. Prof. Burton Malkiel makes the case for investing in index funds for the average investor.

The Intelligent Investor: First published in 1949, this book by Benjamin Graham is considered the bible of investing.

Four Pillars of Investing
: William Bernstein’s scholarly work (full review) will make you question even the most widely held investment beliefs.

The Warren Buffett Way: Robert Hagstrom reveals the “secrets” of the world’s greatest investor.

Unconventional Success: David Swensen is a storied money manager but his advice to most investors is simple: stick with index funds.

Please note that all the links are affiliate links. Also, if you haven’t done so already, you may want to enter your name in the third anniversary giveaway. With three prizes up for grabs, you chances of winning are pretty good!

Three Years and Counting…

November 22, 2007

225 comments
[Front cover of Your Money & Your Brain]

Exactly three years ago, I launched this blog with a short post on how to get Aeroplan points reinstated because Air Canada started expiring them in dormant accounts. I doubt anyone ever read that first post. From such humble beginnings, this blog has grown to about 800 posts and more than 5,600 comments. While things were quite slow for the first two years, the past year has seen vigorous growth with a total of 340K visits and 625K page views so far.

I would like to sincerely thank you for your comments, your contributions, your kind words via email and for just stopping by. In appreciation, I am giving away three prizes: one 4GB Apple iPod Nano (valued at around $150) and two $50 Future Shop gift cards.

If you have a friend who you think might be interested in the blog, please do let them know. They might pick up a tip or two and they get to enter their name in the draw for their trouble. Thank you for your support.

Entering your name in the draw is very easy. Just leave a comment to this post and don’t forget to include your email address. You can earn an extra entry by posting a substantial comment (say 50 to 100 words) on your financial success story or money mistake (yes, I am trolling for ideas for the new Your Turn segment!) and what others can learn from it.

Attention bloggers: You can earn an extra entry by participating in a group writing project. Write a new post on “My Money Mistake and How to Avoid it” and leave the link in the comments. I would appreciate a trackback but it is not necessary for the extra entry. After the contest closes, I’ll publish a list of submissions.

Here are a few simple rules for the giveaway:

  • Deadline for entries is 8 p.m. EDT on Thursday, November 30, 2007.
  • A maximum of two entries per person and one prize per person.
  • Canadian mailing addresses only.
  • Your privacy is very important to me and your email address will be used for the sole purpose of contacting you if you happen to win.
  • I’ll pick three entries at random and announce the winner after the deadline.

Thanks once again and good luck!