Archive for November, 2009

Past Performance of Gold Bullion

November 30, 2009


If you are interested in the past performance of gold bullion in Canadian dollars, you can find annual returns going back to 1970s in this spreadsheet on the Libra Investment Management website. The period between 1971 and 1980 was the golden decade — gold gained a total of 1759% in that time period or an astonishing 34% annualized rate. Since 1980, gold has gained just 50% in 29 years or a 1.5% annual rate. Most of that growth has been in the past decade in which gold has gained 140% or an annualized 9.14%. Year-to-date gold is up 16.75% in Canadian dollars.

[Gold Annual Returns in Canadian dollars, 1970-2008]

[Gold Returns Distribution for 1970-2008]

Some investors allocate a small portion of their portfolio to gold for diversification due to gold’s poor correlation with other asset classes. The data bears this out. The correlation between TSX Composite and gold bullion for the 1970-2008 time period is just 0.08. However, gold’s risk-reward profile leaves much to be desired. Since 1970 gold has returned 9% annually with a standard deviation of 29. By way of comparison, the TSX Composite has returned 9% with a SD of 17.

PS: The returns and standard deviation for gold were computed with the Upside / Downside Calculator available on the Stingy Investor website.

This and That: Lessons from the Crash and more…

November 26, 2009

  1. Macleans magazine’s Jason Kirby on the lessons investors should learn from the fall of 2008 (but probably won’t). Somewhat predictably, David Trahair is still making the case for GICs by ignoring dividend income from stocks.
  2. In theory investors can diversify away non-systemic risk with a portfolio consisting of a random selection of 10 to 40 stocks. In practice, however, writes Jason Zweig in The Wall Street Journal, investors are more likely to assemble non-random portfolios.
  3. Larry Macdonald has compiled a handy synopsis of quotes from a number of books on passive investing in a series of blog posts. You can find Part 1 here and click through to subsequent posts in the series.
  4. In a guest post on Where Does All My Money Go? mutual fund industry critic Ken Kivenko points out yet another downside of active funds in taxable accounts: year-end capital gains distributions.
  5. By all accounts, the job market out there is dismal. Thicken My Wallet offers some valuable tips for job-seekers to stand out from the competition.
  6. Million Dollar Journey did a case study on whether a 50-year old retiring soon should pay down the mortgage or contribute to a RRSP.
  7. Seniors collecting the Guaranteed Income Supplement (GIS) are subject to high effective tax rates on RRSP withdrawals. Michael James debates what, if anything, seniors can do to minimize taxes on their retirement savings.
  8. Hard to believe, but 2009 is almost over. Jon Chevreau posted the top ten year-end tax planning tips from tax expert Jamie Golombek.
  9. Canadian Financial Stuff tries to convert his cellphone plan to pre-paid and is tripped by the weird world of Bell’s customer service.
  10. First, it was fixed-price natural gas contracts. Now, it is water heater contracts. Ellen Roseman warns customers about the underhanded tactics adopted by some companies to lock customers into long-term contracts with stiff exit fees.

Thank you for entering your name in the 5 years and counting… giveaway. I am overwhelmed by the number of responses and much as I would love for the odds to be much better, the marketing budget here is rather limited. Hopefully, I can do better next year.

Have a great weekend everyone.

Five years and counting…

November 24, 2009


Five years may not count as “long term” in the investing world but on the Internet, it is certainly a long time. And that’s how long this blog has been in existence. In those five years, I’ve written over 1,250 posts and you’ve chimed in with over 23,000 comments and registered more than 2 million visits. Thank you for your support!

Giveaway: I’m celebrating by giving away 5 gift cards from a retail store of your choice worth $100 each. Participating in the giveaway is quite simple: Just leave a comment to this post (please don’t send me an email) and don’t forget to include your email address. If you are reading this through your favourite RSS Reader, you have to click through to the website and scroll to the bottom of the page and type in your comment. There are just a few simple rules:

  1. Deadline for entries is 8 p.m. EST on Monday, November 30, 2009.
  2. One entry per person.
  3. Canadian residents only.
  4. I treat your privacy very seriously and your email address will be used for the sole purpose of contacting you if you happen to win.
  5. I’ll pick five entries at random and announce the winner after the deadline.

Thanks once again and good luck!