1. Many “financial advisors” in Canada are simply mutual fund salespeople. This article on Morningstar weighs in on how to tell true advisors and product pushers apart.
  2. A recent report said that as many as 1.7 million households in Canada are worth more than $1 million. Garry Marr writing in the Financial Post explains why this isn’t as big a deal as it first appears.
  3. Globe & Mail’s John Heinzl weighs in on the question of how often to rebalance a portfolio.
  4. Preet Banerjee explains what dollar value averaging is and why it might be better than dollar cost averaging.
  5. Housing bubble? What housing bubble? Apart from Vancouver and surrounding areas, there is no housing bubble in Canada says Larry MacDonald.
  6. Boomer and Echo offered some useful tips on how to use e-post to organize and manage bills.
  7. Options are something I’ve never dabbled in. Million Dollar Journey has written up a step-by-step guide to writing covered call options.
  8. Money Smarts Blog has some useful pointers for parents who are planning on setting up RESPs for older kids.
  9. Canadian Couch Potato investigates how many actively-managed mutual funds outperformed a globally diversified index fund portfolio over a 10 year period.
  10. Michael James explains why he is sceptical of the rule that says you should cut your losers and let your winners run.

I’m unable to highlight all the articles worth checking out in my weekly round-up but you can check them out through my Twitter feed.

Have a great Victoria Day long-weekend everyone!

This article has 13 comments

  1. How about that LinkedIn IPO? I think it ended up double what you already thought was an insane valuation.

    Thanks for mentioning my e-post article. Enjoy your long weekend!

  2. I’m not sure Larry McDonald is saying there is no housing bubble in Canada. In fact, he points out (though he fails to clearly define the RBC Index, which may confuse some readers), that home ownership costs in Vancouver, even with today’s incredibly low interest rates, are 77.8% of *pre*-tax household income. i.e. After tax, the average household would have substantial negative cashflow if they were to buy a home. It is difficult to see how that is not a bubble.

    • @Viscount: RBC’s take on the Vancouver housing market:

      “Vancouver — Testing the boundaries of rationality

      Frenzied pricing action in the Vancouver-area market has shown few signs of letting up since the start of 2011. Fuelled by strong demand for high-end properties (according to local reports), home prices crushed old records in the first quarter of this year, surging between 4.5% and 7.2% depending on the housing type relative to the closing three months of 2010. This represented increases of as much as $50,000 in a single quarter based on Royal LePage data. Such steaming up of property values far outpaced income gains
      of Vancouver-area households and further exacerbated the market’s already poor affordability. The RBC Measures climbed by between 1.0 percentage point for condominium apartments and 3.4 percentage points for detached bungalows, moving closer to their all-time highs reached at the start of 2008. We fear that the Vancouver market is becoming increasingly disconnected from local demand conditions and vulnerable to a painful correction, especially once interest rates resume their ascent.”

      http://www.rbc.com/economics/market/pdf/house.pdf

  3. That Morningstar article was pretty good. That’s really the problem with getting financial advice – there are probably a lot of good advisors out there, but they are outnumbered by the mutual funds salespeople.

  4. @Echo: It’s deja-vu all over again. When .coms went IPO they routinely doubled and tripled on opening day.

    @Viscount: Larry’s column does say that “it would certainly seem valid to affix the “bubble” label on Vancouver and surrounding areas”. I’ll correct the post.

    @Mike: I think so too. Thanks for your comment.

  5. Unfortunately, I think many people would find it difficult to apply the Morningstar fiduciary test because it feels very confrontational. I think investors would benefit from applying the test, but I doubt that most would, even after reading this article. Thanks for the mention. Have a great long weekend.

  6. I liked the Morningstar article.

    I read the Larry Macdonald article but had trouble following his arguments. He focuses on Affordability but that is based on very low interest rates. This means you can afford to pay more for a house and this drives up the prices leading to overvaluation.

    But he concludes this is not the case, I just don’t understand how he gets there.

  7. I have not read the Deloitte study referenced in the FP article, but the article appears to suggest that 1.7 million households have assets north of $1M. I would imagine the number of those with net worth greater than $1M is significantly less.

    If I take out a $1.2M mortgage to buy a $1.5M house, I do not become a millionaire because the house is worth more than $1M.

    If the Deloitte study is only looking at assets, I would imagine a lot of these “millionaires” come from Vancouver!

  8. @CC. The Financial Post article about the number of millionaire Canadians is really just a real estate bashing article in disguise. The article doesn’t talk much about how they calculate the other parts of net worth – for example, are they measuring RRSPs at par? Is a $300K RRSP worth $300K in your calculation, or do you value it at $150K because that’s all you would have left after-tax if you took it all out in one lump sum while you’re still working?

    With all of that being said, if you calculate everything at par, I definitely fall into the category of Canadians feeling quite “underwhelmed” at being a millionaire. I thought I could stop working when my net worth hit a million – but nope, I’m still a wage slave, working for “the man” making a few shekels every two weeks, living in a home that’s a total “construction zone”. I guess being a millionaire just ain’t what it used to be – or else I had very inflated expectations of what a millionaire meant when I was a kid.

  9. @Darth. I think common sense would dictate that Net Worth = Assets – Liabilities. In your example, the net worth from your house would be $1.5M house – $1.2M mortgage = $300K.

  10. Late to the party but thanks for the mention!

  11. Regarding the housing bubble article, it could seem – with no suprise – that Vancouver’s housing prices are indeed unrealistic with salaries/etc. However, I’d almost doubt whether there would be a correction based on what the following link says about the foreign investment impact to the GVA (greater Vancouver area). The affordability looks at things for an average person, but it would seem, it’s anything but the average person buying up the real estate…

    http://www.bloomberg.com/news/2011-05-16/chinese-spreading-wealth-make-vancouver-homes-pricier-than-nyc.html

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