Archive for June, 2013

This and That: Money in a mattress, falling markets and more…

June 21, 2013

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Stuffing money in a mattress literally!
From the “why didn’t I think of that file” here is an interesting story on Bloomberg TV about a mattress maker in Spain who is tapping into today’s mistrust of the banking system by selling a mattress with a built in safe.

Falling Markets are a good thing!
Stocks, bonds, REITs, commodities and even good old bonds are falling like nine pins lately. The Wall Street Journal’s Jason Zweig says that if you are going to be accumulating assets for the next little while, lower asset prices are good for you (though it might not seem that way).

Things to avoid at garage sales
If you are going to shop at garage sales this summer, Reader’s Digest offers a list of items to avoid. It seems to me that avoiding items on the list such as bike helmets are just common sense.

Frugal Disney World
A wag said that the true magic of Disney is the amount of money they can extract from your wallet everyday. Still, it looks like Canadian Money Forum members have tips on how to save money at Disney World.

No Irrational Exuberance
In an interview with CNBC’s Squawk Box, former US Fed Chair Alan Greenspan says that stock markets are “significantly undervalued” based on equity risk premiums (here’s a good explanation of ERP).

Why ERP should be used with care
In a blog post, Aswath Damodaran, a Professor of Finance, pokes holes in Greenspan’s comments and points out that historically an increase in interest rates has tended to reduce the equity risk premium (the return from stocks is risk-free rate plus ERP), so stock prices may not be so undervalued after all.

Bond Bear, Stock Bull
Fortune magazine explained why Greenspan’s comments that bond yields are going to rise and stocks are a bargain based on current equity risk premiums makes little sense.

I’d like to be a couch potato, but…
Michael James says that while many investors are convinced by the arguments in favour of indexing, true couch potatoes are rare.

Blogs as a business
Million Dollar Journey shares some insights into how much it costs to start and maintain a blog or website.

The Power of Denial
Here’s something completely different: CBC’s The Current ran a story on an intriguing theory that the thing that is so special about humans is… denial. That would explain a lot of why so many people still believe in active management (sorry, couldn’t resist it).

This and That: Million Dollars Nest Eggs, Commodities, and more…

June 13, 2013

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Million Dollars ain’t what it used to be…

A New York Times column points out that with bond yields low even retirees who have saved up as much do not have a lot to live on.

Commodities for the Long Run

What can we say about commodity prices over the long run? This paper provides fascinating insights into real commodity prices over 160 years. One example: prices of stuff that is grown have depreciated over time but prices of non-renewable resources have increased.

Another week, another alleged fraud

The Vancouver Sun reported on yet another alleged fraud in which a former financial advisor sold extremely risky securities to retirees and senior citizens.

Are Homes Investments?

The Wall Street Journal asked a panel of experts how a personal residence fits into one’s investment portfolio.

The knock against credit cards

This article says that credit cards are making us poorer and fatter. Are credit cards also responsible for global warming?

REITs down

With bond yields spiking up, the hunt for yield may be at an end says this Bloomberg article. One of the hardest hit categories is Real Estate Income Trusts, which have dropped sharply in the past few weeks.

The Hindenburg Omen

Hindenburg Omen is supposed to foretell a stock market crash. If you believe in these things, it probably will distress you that the Omen has reportedly occurred five times in recent weeks.

Effects of the housing bubble

A recent story on CBC’s The Current looked at the effect high housing prices are having on Canadians.

Housing Bubble or not?

Canadian Money Forum members weighed in on whether Canada is experiencing a housing bubble.

Stephen Harper, Funny Man

Here is a funny video of Prime Minister Stephen Harper mimicking Brian Mulroney, Joe Clark and Preston Manning. You can safely skip the video after the two minute mark.

This and That: Cheap Stocks, bond allocations and more…

June 7, 2013

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1. Money magazine interviewed Bill Nygren of Oakmark Funds, a well-regarded value mutual fund in the United States. In it Mr. Nygren scoffed at the idea that equities are expensive saying buying stocks today should be like “shooting fish in a barrel”.

2. Conventional wisdom has it that investors should diversify their investments among stocks, bonds and cash. But with bond yields so low these days, The Wall Street Journal says that some investors are moving to an all-stock allocation and offers some considerations for investors contemplating such a move.

3. Also, if an investor decided that now is the time to increase the allocation to stocks, she has to take steps to avoid selling out of fear when things turn sour, says The New York Times Bucks blog.

4. The Wall Street Journal asked a panel of experts on the No. 1 thing that investors shouldn’t be worried about but are and got some interesting responses.

5. Don’t look now but interest rates on bonds have started to creep up in recent days. Ironically, interest rates are rising when it looks like inflation is slowing down everywhere. This blog post in The Economist magazine takes a stab at explaining why.

6. Loblaws has filed for an IPO of its properties into Choice Properties REIT. The REIT is reported to target an yield of 6 to 6.5 percent and will be valued at $3.6 to $3.9 billion.

7. The Financial Post kicked off a series of columns called TFSA Bragging Rights by profiling an investor who held penny stocks in the account. Of course, it goes without saying that penny stocks are a high risk proposition.

8. Canadian Money Forum members shared how their TFSA is doing early in the New Year.