Archive for July, 2012

This and That: Bernstein Interview, League REIT and more…

July 26, 2012

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In an interview with the IndexUniverse website, Bill Bernstein, among other things, takes a dig at Peter Schiff and explains the importance of cash as an asset class.

In this thread, Canadian Money Forum members discuss League, a private REIT, that recently suspended their distributions to investors. Ironically, the Internet is littered with League ads still promising 8 percent returns.

An op-ed piece in The New York Times argues that voluntary, self-directed and commercially run retirement plans such as our RRSPs are doomed to failure.

Jason Zweig highlights some recent research that blames an area of the brain just behind the forehead for investors falling prey to recency bias — the tendency to extrapolate recent returns into the future.

In the US, the average expense ratio and bid-ask spreads of exchange-traded funds are going up. But if you look at asset weighted costs instead, ETFs remain a very low cost investment product, says Vanguard.

Investors are flocking to covered-call ETFs. Dan Hallett warns that investors who are loading up might be giving away too much future upside in exchange for current income.

Tom Bradley explored some of the similarities that a game of golf has with investing.

Jon Chevreau weighed in on how both “cash is trash” and “cash is king” can be true depending on the context.

Investors don’t seem to have much appetite for stocks these days but this article suggests that stocks are likely to significantly outperform bonds over the next decade. It would have been nice if some compelling arguments had been presented in support of this thesis.

 

This and That: Invisible Hand, Tipping income and more…

July 20, 2012

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The Invisible Hand on CBC

CBC Radio has a new show called The Invisible Hand that takes a look at how economics plays a role in our everyday lives. The latest episode titled Love and Economics explored the role that concepts such as supply and demand and comparative advantage play in marriages and romantic relationships. Previous episodes are archived here.

How tips worth billions go unreported

This Globe and Mail column discussed how wait staff at restaurants and bars report just zero to ten percent of their tip income on their taxes. It is surprising to learn that tips made through debit and credit cards are not included in the T4 slips of wait staff.

10 Investing Rules to Ignore?

The Financial Post featured a story on the 10 investing and personal finance rules that can be ignored. Some sound sensible but a lot of the rules still cannot be entirely ignored.

A case for dumping your money market fund

This column argues that rock-bottom interest rates are making money market funds unattractive. Though it targets US investors, Canadians also have the option of parking cash in high-interest savings accounts.

(Slightly) lower cable bills

The CRTC is directly cable companies to phase out the Local Programming Improvement Fund fee. Before you get too excited, the savings will only amount to 56 cents per month.

Warning on Return of Capital

Investors are often excited by high yielding investments even though much of the “yield” may be just return of capital. Jason Zweig writes about one such investment that is popular these days.

Can ETFs be trusted?

The bull market these days seem to be in financial crimes. In such an environment, it is natural for investors to wonder if Exchange-Traded Funds can be trusted.

Don’t forget to pack travel insurance

A useful reminder from InsureEye that not having travel insurance might result in a hefty bill. But first check whether your employer first because many cover employees’ personal travel as well.

This and That: Dividend Investors, Financial Advisors and more…

July 12, 2012

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Lessons for Dividend Investors
The Globe and Mail’s John Heinzl wrote a column on the seven lessons he has learned as a dividend investor. We could quibble about some of the points but most of the points apply to all intelligent investors.

Who is a “Financial Planner”?
This article in the New York Times explains the difference between brokers who only have to satisfy the “suitability” standard and true financial advisors who are held to the “fiduciary” standard.

Buy European (stocks)
The economic crisis in Europe is no reason to avoid European stocks. In fact, since the crisis has depressed prices, this may be a good time to go shopping for European stocks, says this SmartMoney article.

Other interesting reads
Fortune magazine recently released its list of the biggest companies in the world ranked by revenue. It is astonishing to see the increase in the number of Asian (mainly Chinese) companies that made the Fortune 500 over the past decade. Canada currently has 11 companies in the list.

In an interview with CNBC’s Squawk Box, Warren Buffett says that while US housing is picking up, the rest of the economy is slowing down. He also says that in the last couple of months, “things have started to slip pretty fast” in Europe as well.

The Globe and Mail’s Tim Cestnick explained some of the basic rules that need to be satisfied for an investment to be interest deductible.

Rob Carrick says that a slow decline in home prices isn’t such a bad thing after all.

The National Post’s Gary Marr cautions against fibbing on the insurance policy application.

SmartMoney magazine offered an interesting peek into the work day of a professional trader.