Archive for May, 2008

Are you comfortable with your portfolio?

May 6, 2008


Stocks have staged a significant recovery after falling sharply in the first quarter of 2008. The TSX Composite is up about 19% from its low in January and the S&P 500 is up about 11% from its mid-March swoon. If the lows reached in the first quarter was indeed the market bottom, we can classify the plunge as a severe correction – the TSX was down 18% from its 52-week high and the S&P 500 tiptoed into bear market territory when it was down 20.25% briefly. During the market storm, diversification within stocks wouldn’t have helped; cash and government bonds provided the only refuge.

While the reasonable course of action when markets are correcting is not panicking and staying the course, now may be the time to revisit your asset allocation in light of your reaction to falling stock prices. At times of market turmoil three options are available: (a) sell enough to reach your comfort level (b) stay the course or (c) scrounge every nickel you can find and invest it in stocks. If your inclination was to sell some stocks, your risk tolerance may be less than you originally believed and you may want to increase your allocation to bonds and cash (Now may not be the ideal time to buy bonds either as Government of Canada 5-year bonds are barely yielding 3%).

YTD 2008 chart comparing XSB with XIC, VTI, VEA and VWO

Welcome Globe and Mail Readers

May 6, 2008


I picked up a copy of The Globe and Mail newspaper this morning and was pleasantly surprised to see that Rob Carrick and Boyd Erman picked this blog for a column titled “Best of the Blogs”. Other blogs mentioned include The Dividend Guy Blog, Million Dollar Journey, Quest for Four Pillars and Middle Class Millionaire.

If you discovered us through the Globe and Mail website, feel free to poke around the site – we have more than 900 posts and thousands of comments. You can also subscribe to our feed and get full posts delivered through your favourite reader. If you prefer to have posts delivered to you via e-mail, you can sign up in the sidebar on the right (your e-mail is not shared with anyone. We have a strict privacy policy).

The Globe website is also running a poll where you can pick your five favourite finance or investment blogs.

News from the Berkshire Hathaway Annual Meeting

May 5, 2008


Warren Buffett hosted the annual general meeting for Berkshire Hathaway shareholders in Omaha last weekend. The most anticipated part of the meeting is the Q&A session that Buffett and partner Charlie Munger hold with shareholders and this year the duo lived up to expectations and dished out wit and wisdom: