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moneysense.ca, 8/07/10
This and That: Generic advice, debt worries and more…
- This blog post on the New York Times website cautions against blindly following generic financial advice that you obtain from newspaper columns, television programmes and blog posts.
- Worries about debt dominate the headlines these days. Money manager Leith Wheeler analyzes the four components of aggregate debt and finds the picture to be decidedly mixed.
- Odlum Brown’s Murray Leith argues yet again that US blue chips offer far better value than their Canadian counterparts. I’ve been hearing the same argument for 5 years now and it is going come true sometime and I wish I could tell when.
- Larry MacDonald wonders if Beating the TSX, a Canadian variant of the Dogs of the Dow, can sustain its outperformance.
- Preet notes that the original Dogs of the Dow strategy might have become too popular for its own good. Over the past 15 years, it is underperforming the DJIA by 2 percentage points even before accounting for those pesky frictional costs.
- Michael James says that indexing allowed him to stop worrying and start loving investing. I agree that keeping up with a basket of stocks is a chore I could do without.
- Canadian Financial Stuff loathes what the Harmonized Sales Tax has done to prices at the gas pump. Ontarians, though, gave the HST a collective shrug. BC Premier Campbell must be green with envy at how smoothly the HST went down in Ontario.
- Mr. Cheap figures that most claims that a home turned out to be one’s “best investment” are based on some rather shaky arithmetic.
- The Financial Blogger lists the positive financial benefits that come with home ownership.
- Gail Vaz-Oxlade is not pleased with rising costs. It’s not just the HST; she is also paying more for electricity with time-of-use metering.
- Canadian Couch Potato shows why the new Claymore Bond ETF is an instrument for short-term gambling.
- Million Dollar Journey featured a post that claimed that truly active managers outperform. Unfortunately, the problem still remains the same: picking the winning mutual fund manager ahead of time.
- If an investor assembles a portfolio and never rebalances, she is likely to become overweighted in stocks. Thicken My Wallet on why this happens and how to avoid it.
Just a quick reminder that you can read my posts in your favourite reader or delivered by e-mail. Have a great weekend everyone!
moneysense.ca, 8/07/10
Thanks for the mention, BC is always a much greener province anyhow. Have a cooler weekend (we can only hope).
[...] This post was mentioned on Twitter by Canadian Capitalist, bigcajunman. bigcajunman said: RT @ccapitalist This and That: Generic Debt advice etc., http://tinyurl.com/3xfe2vr and even I get mentioned with my #HST rant! [...]
Thanks for the link Ram!
Thanks for the mention – the bulk of my portfolio is indexed and I never worry about it. I have active bets in there as well. I actually don’t worry about those either, come to think of it…
Have a great weekend!
I agree that it makes no sense to take generic advice. Unfortunately, the advice I got from financial advisors years ago was pretty generic. Following other people’s advice is no substitute for thinking.
Thanks for the link.
I definitely agree with the post about listening to advice found on blogs.
Mike
thx for the link!
stats shows there are only 5% of the fund managers who beat their index after 5 years… I guess you must be pretty lucky to get a hold of those guys
Thanks for the link. Gotta love Dilbert.
62 comments on Gail’s post (so far) and no one has challenged her assertion that costs will “double” under Time of Use pricing.
Has she not ever looked at her electricity bill?
Consumption charges are one fraction of the cost (and the lowest-cost rates actually decreased under TOU pricing to 5.3c per kwh).
However, there are 10 additional delivery and regulatory charges. The “cost of electricity” (understood as your total monthly bill) did not and will not double under TOU pricing even if you move ALL consumption to the highest-tier cost!
What was that caution about blindly following advice on financial blogs?
@Alexandra: Fair enough. I suppose the caution against blindly following advice on financial blogs also applies to other bloggers
I plead guilty to a temporary brain cramp and promise to follow up on this…
@CC – she isn’t “wrong,” per se, just misleading; and the error goes both ways. She talks about the cost of (for example) doing laundry doubling if she does it during the highest TOU price…and she implies that “the cost of electricity” will double under TOU prices. What does double is consumption prices…but consumption is only a (surprisingly small) component of the overall cost to consumers (all examples from Toronto, where she and I both live). So the total cost of electricity (expressed as total cost to consumer per kwh) is not half at the lowest rates of what it is at the highest rates…both ends of her assertion are incorrect.
I actually spreadsheeted my entire electricity consumption for one month (and compared to 11 other months) to see if I should worry about TUO pricing to shift my behaviour. My conclusion was no (although when I can shift with minimal disruption to my plans, I do).
The actual change if I shifted ALL consumption to the highest-rate blocks was very low in my case, and below the threshold I worry about. If you want to reduce your electricity bills overall, you must reduce total consumption, not shift consumption.
I should probably start blogging again; this is the kind of stuff that totally winds my crank, as you can see. Double meaning of “crank” intended.
Thanks for the mention CC. I thought the article would stir the pot a little more than it did!
The New York Times blog about generic advice makes a good point. I sometimes come across an article where the advice doesn’t take into account differences across people and you can see how some of the readers may act on the advice end tho’ it would not be suitable for them.
That’s odd… I thought maybe in your weekly roundup, someone would have blogged about Magna shareholders getting raped once again with the nearly $150 million “consulting fee” on top of the nearly $ 1 billion that they’re already going to get raped for on the elimination of Stronach’s dual class share structure.
Personally, I can’t stand the stock and the way that the shareholders have been treated by King Frank and so I’ve never bought it in my own portfolio. That said, I’ve seen that many pension funds and mutual fund managers are in love with Magna stock. They’re ultimately the ones who are financing Frank Stronach’s hubris – and then by extension, the holders and beneficiaries of those funds.
Phil, those shareholders willing bought into a dual-class share system, knowing that Frank had the upper hand.
If they don’t liked to get raped, then they shouldn’t have bent over in front of him.
This is a fantastic article. I’m always looking for smart resources to send to my coworkers, and your piece is absolutely worth sharing!
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