The 2013 Sleepy Portfolio Report Card

January 12, 2014

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Background

I started the Sleepy Portfolio in 2005 to benchmark my personal portfolio, which at that time was mostly invested in individual stocks. The portfolio started off with an initial outlay of $100,000 but no new money has been added since. This is not simply a model portfolio; it reflects investment returns that can be obtained in the real world by accounting for costs such as spreads, trading commissions, MERs, foreign exchange conversion charges etc. For example, dividend payments on US-listed ETFs are assumed to incur a foreign exchange fee of roughly 2 percent when they are deposited into the account. Note, however, that the portfolio is assumed to be held in a registered account, so it does not take taxes into account.

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Asset Class Returns for 2013

January 5, 2014

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For years, Canadian stocks outperformed international stocks and Canadian investors were left wondering if diversifying into foreign markets was worth it. Investors who showed patience and kept faith in foreign stocks were handsomely rewarded in 2013. The year was a barn burner for US markets with the S&P 500 gaining 41.52 percent (all returns reported in this post are total returns, which includes dividends, distributions or interest payments). The icing on the cake was provided by the US dollar, which gained 6.9 percent against the loonie. Developed markets also had a strong year, returning 31.26 percent. Canadian markets, by comparison, posted modest returns weighed down by the resource sector.

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Tax Treatment of ESPP Benefits

October 29, 2013

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The tax on Employee Stock Purchase Plans (ESPP) has two components: the difference between the offering price and the fair market value (FMV) of the stock is treated as employment income and the difference between the FMV and the selling price is treated as capital gains or losses.

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