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This and That # 108

September 4th, 2008 ·

  1. The Bank of Canada decided to stand pat and gave no signals on the direction of rates in its interest rate decision this week. The prime rate to which personal loans and variable-rate mortgages are tied remains at 4.75%.
  2. With markets resuming their downward trend once again (it took the TSX just 3 trading days to drop more than 1,000 points), William Bernstein’s column in Money is a timely reminder to stay sane in a wild market.
  3. It is entirely predictable — investors are reacting to the market turmoil by flocking to the safety of money market funds. Rob Carrick makes a persuasive argument to start investing the mountains of cash accumulating in money market funds.
  4. What happens to mutual funds that sport truly disastrous performance numbers? Why, they get merged with a better performing fund and get a “past performance” makeover! Jon Chevreau writes about a recent example of this practise.
  5. Squawkfox is offering an e-book filled with fabulous food and fitness ideas for new and existing subscribers.
  6. Investing Intelligently debunks the reasons indexing may not be for you.
  7. Million Dollar Journey reviews the book - Work the System.
  8. It ain’t easy but Michael James suggests cheering a bear market.
  9. Canadian Mortgage Trends thinks that the days of the cash back mortgage may be numbered and points out that it is a bad deal for homeowners.
  10. Picking stock market bottoms is a tricky business but Larry MacDonald wrote about a Legg Mason report that suggests a bottom is in place.

Have a great weekend everyone!

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7 responses so far ↓

  • 1 MillionDollarJourney // Sep 4, 2008 at 9:46 pm

    Thanks for the mention CC. Enjoy the weekend!

  • 2 Michael James // Sep 4, 2008 at 10:07 pm

    Thanks for the link. Have a good weekend.

  • 3 Four Pillars // Sep 4, 2008 at 10:10 pm

    Thanks for the link to the Bernstein article! I spend too much time reading blogs about nothing and not enuf time on major media which does have some good stuff now and again.

    Mike

  • 4 DAvid // Sep 5, 2008 at 10:44 am

    Re: #2 & #3, while the smart money guys state now is the time to invest, it is tough to watch investments purchased last month drop 3%!

    I want to learn how to invest retroactively in the Stock Market!

    DAvid

  • 5 Aleks // Sep 5, 2008 at 5:08 pm

    It’s possible we’ve reached the bottom, but I question the validity of any indicator based on research done since 1987. I don’t think this is just going to be a brief dip followed by a rebound. Has there even been a true bear market since 1987? More far-reaching research shows that stocks can fail to outperform bonds for a decade or more.

    There’s a lot of bad stuff related to the housing bubble that hasn’t happened yet and I don’t think has been priced into the market, but is virtually inevitable. There’s still a ton of bad debt hidden in level 3 assets. If it were all marked to market right now, a lot of banks would be insolvent. The bond insurers cannot continue with their current business model. And here in Canada, our housing bubble is just starting to burst.

    Of course, all that can happen without the stock market dipping lower. It may just stay more or less flat for a long time. But I think using investor sentiment since 1987 as a metric is fundamentally flawed. How low did sentiment go during the depression or stagflation? How many bottom calls were made on the way down?

  • 6 Squawkfox // Sep 7, 2008 at 11:45 am

    Hey CC! Thank you so much for mentioning my eBook! I’m so happy you liked it. (It was a lot of work putting it together) :)

  • 7 Canadian Mortgage // Sep 19, 2008 at 4:39 pm

    Hi CC, Appreciate the mention. It’s funny that the finance department hasn’t closed this loophole (i.e. cash back to effectuate 100% financing). Hopefully consumers will become informed enough to avoid cash back mortgages on their own. Cheers, Rob

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