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moneysense.ca, 14/06/07
This and That
- The biggest story this week is the continuing upward trend in bond yields.
- On the bright side, it might be a good time to initiate a position in fixed income. Money magazine’s Walter Updegrave offers a short primer on bonds.
- Prof. Jeremy Siegel says that rising bond yields signal near-term trouble for almost all asset classes.
- It is a vexing question for Canadian investors: How much of the equity portfolio should be devoted to our home market? According to an economist with Ibbotson Associates, 25% to 50% should be allocated to North American markets and 10% to 20% to Canada.
- Money magazine says investors shouldn’t count out the bull market just yet.
- BusinessWeek magazine interviews Burton Malkiel, the author of “A Random Walk Down Wall Street”.
- Rob Carrick offers some tips for folks renewing their mortgage and points out the high costs of principal protection products.
moneysense.ca, 14/06/07
This is regarding Point 4, How much of the equity portfolio should be devoted to our home market? I think this question does not have any definite answers. It all depends on personal preferences and comfort level. I am comfortable to allocate 70 to 80 percent of my portfolio to time tested great Canadian companies and my ROR has been awesome.
A Dawn
http://www.adawn.net
http://adawn.squarespace.com
I don’t know how long you’ve been investing, but I am not surprised that your returns have been great lately because the past four years, the TSX has an annualized return of more than 20%. But sooner or later, markets have a nasty habit of reverting to mean.
If you look at the longer term, the TSX has posted lower returns with higher volatility compared to other markets. With the foreign content limit gone, I think Canadians should diversify their portfolios globally. Now is especially a good time because our currency is strong and foreign markets are relatively undervalued compared to Canada.
A Dawn,
Years ago I heard someone say:
“I am comfortable to allocate 70 to 80 percent of my portfolio in high-tech stocks and my ROR has been awesome.”
And more recently I heard someone say:
“I am comfortable to allocate 70 to 80 percent of my portfolio in real estate and my ROR has been awesome.”
If anything abnormally high performance in X should be an indicator to get out of X.
Oh and “time-tested” is an oxymoron (for lack of a better word). Future performance cannot be predicted from past performance.