Stuffing money in a mattress literally!
From the “why didn’t I think of that file” here is an interesting story on Bloomberg TV about a mattress maker in Spain who is tapping into today’s mistrust of the banking system by selling a mattress with a built in safe.

Falling Markets are a good thing!
Stocks, bonds, REITs, commodities and even good old bonds are falling like nine pins lately. The Wall Street Journal’s Jason Zweig says that if you are going to be accumulating assets for the next little while, lower asset prices are good for you (though it might not seem that way).

Things to avoid at garage sales
If you are going to shop at garage sales this summer, Reader’s Digest offers a list of items to avoid. It seems to me that avoiding items on the list such as bike helmets are just common sense.

Frugal Disney World
A wag said that the true magic of Disney is the amount of money they can extract from your wallet everyday. Still, it looks like Canadian Money Forum members have tips on how to save money at Disney World.

No Irrational Exuberance
In an interview with CNBC’s Squawk Box, former US Fed Chair Alan Greenspan says that stock markets are “significantly undervalued” based on equity risk premiums (here’s a good explanation of ERP).

Why ERP should be used with care
In a blog post, Aswath Damodaran, a Professor of Finance, pokes holes in Greenspan’s comments and points out that historically an increase in interest rates has tended to reduce the equity risk premium (the return from stocks is risk-free rate plus ERP), so stock prices may not be so undervalued after all.

Bond Bear, Stock Bull
Fortune magazine explained why Greenspan’s comments that bond yields are going to rise and stocks are a bargain based on current equity risk premiums makes little sense.

I’d like to be a couch potato, but…
Michael James says that while many investors are convinced by the arguments in favour of indexing, true couch potatoes are rare.

Blogs as a business
Million Dollar Journey shares some insights into how much it costs to start and maintain a blog or website.

The Power of Denial
Here’s something completely different: CBC’s The Current ran a story on an intriguing theory that the thing that is so special about humans is… denial. That would explain a lot of why so many people still believe in active management (sorry, couldn’t resist it).

This article has 5 comments

  1. Given Greenspan’s inability to see that the personal interests of top bankers do not line up well with the interests of their employers, I don’t have much confidence in his judgements about the stock market. (Not that I really have confidence in anyone’s stock market forecasts.)

    • Canadian Capitalist

      @Michael: I concur that predicting the stock market is a fraught business. Also, like the Fortune column points out, the thesis that interest rates will inevitably rise, so bonds are a bad idea but stocks are now undervalued because of wide premiums over bonds is seriously flawed because if bond yields rise, it will be bad for bonds but the equity premium will drop as well, so it may not be necessarily good for stocks.

  2. Pingback: This and That: Money in a mattress, falling markets and more… | MoneySense

  3. If you did that with Spanish pesetas and then you did not go to bank and exchange it for Euros or spend it fast enough before pesetas were no longer legal tender you would of lost all the money anyway.If they did not change their currency to Euros inflation over 15,20,30 years would get you too.Inflation at 2.50% over 20 years means you lost 63.86% of your money’s value.You would need 1,638.60 pesetas to buy what you could 20 years ago.

    • Canadian Capitalist

      @Don: It makes no sense to stuff money in a mattress. It has its own set of risks. It could get stolen. Or the owner could mistakenly throw away the mattress. Or owner would forget to tell heirs and the money would be lost. Then there is inflation that you point out which slowly but surely erodes the value of a cash pile over time.