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moneysense.ca, 29/06/12
This and That: Eurobonds, investors behaving badly and more …
Will Germany say ja to Euro bonds?
Despite Germany’s staunch opposition to issuing bonds jointly with other European countries, this article argues that Germany will eventually cave and pay up because the costs of a Euro breakup will be disastrous for it.
Investors behaving badly
With all the volatility in the markets, it is hardly surprising that investors have responded by stampeding out of stock markets. According to the Investment Company Institute, which tracks mutual fund flows in the US, investors have been net sellers of equity mutual funds in 12 of the past 12 months.
Dividend Investors are worry warts too
If you hear dividend investors talk, you’d think that all there is to investing is to buy some dividend payers, sit back and collect the dividends and not worry what the markets are doing. It turns out many dividend investors worry about the market direction just like other investors. This Globe and Mail column quotes dividend investor Tom Connolly worrying that “stocks may be in a long-term bear market” and “the lows of the 2009 bear market could be retested”.
Adding Commodities to a Portfolio
This article points out that adding commodities to a portfolio can reduce volatility without impacting returns.
Escher in LEGO blocks
And now for something completely different… It is amazing to see M. C. Escher’s lithograph print Ascending and Descending rendered with LEGO blocks here.
moneysense.ca, 29/06/12
Euro bonds – Germany will have to concede something if they don’t want to feel the full amount of pain the dissolution of the EU would cause.
Dividend investors – I dabble and while I’m not abandoning the strategy or thinking it is/will underperform valuations really aren’t terrific. At the heart of the issue, and I believe there is no difference compared to index investing, when to buy. If one were to take a ‘rebalancing’ type of approach, it would be easy to set targets (say even 5% for each holding) and rebalance into stocks when they fall out of target.
Commodities – yet more evidence that diversifying among asset classes is effective. The question is how to get that exposure. I was and am still very interested in CBR, but the it doesn’t appear the operators always hold the same commodities. I checked recently and most contracts had expires so they were about 50% cash. The question is whether they will purchase contracts of the same commodities or rotate through different ones. IF the latter, it will be hard for investors to predict what returns on this product will be.
Lego – cool find.
Have a great weekend!
@Sampson: I think German reluctance is understandable because they are the ones writing the cheque. Still, the bailout will also be in their own interest because like the article points out the alternative is likely to be much more expensive.
I think of dividend investing pretty much as a bunch of stocks and as such more or less representative of the overall market. This article caught my eye only because it suddenly seems to veer into the realm of market timing. If anything, one would think that now is not a bad time to put money to work in the stock market with all the volatility and so many investors negative on stocks.
I agree with you on commodities. However, I wonder how much this applies to Canadians who already have a large exposure to commodity markets through our stock market. Also, the commodity ETPs are evolving. So, I’m on a wait-and-watch mode on commodities.
I know you believe Canadian’s already have decent exposure to commodities through borad-based index funds tracking Canadian indicies, and I have seen some numbers showing that Canadian markets are more closely correlated with commodity prices when compared to other indicies, but that correlation is certainly not too close to 1. I believe there is still benefit, but like you, waiting for and ETF or ETP that is consistent, objective, and broad enough to provide adequate internal diversification.