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moneysense.ca, 28/10/10
This and That: Premium hikes, battered investors and more…
In light of the market crash of Fall 2008, does diversification still make sense? In this video excerpt, Harry Markowitz explains the even in the market crash, different asset classes did behave as one would have expected them to:
- Citing a low interest-rate environment, Manulife Financial has announced that it will be hiking premiums on universal life policies. James Daw writes in The Star that consumers who foresee a need for permanent insurance may benefit from shopping sooner than later.
- Battered Investor Syndrome. That’s the colourful term value investor David Dremen employs to describe the mindset of investors who have experienced a couple of bruising bear markets in the past 10 years.
- Pay a salary or a dividend? It’s the eternal dilemma of a small business owner. Tax expert Jamie Golombek has a clear-cut answer: small business owners may actually be better off if they paid themselves enough dividends each year to fund current consumption and retained any surplus funds inside the corporation, where they would be invested in a diversified portfolio.
- Here’s a questionnaire from KPMG to help you decide if you need to update your estate plan.
- Million Dollar Journey has some wealth building tips for new graduates. The most important, in my opinion, is to simply learn to spend less than we earn.
- Money Smarts Blog did an exhaustive comparison of discount brokers. I like TD Waterhouse the most among the brokers I’ve used.
- Larry MacDonald says that there may not be much of a price difference between Canada and the US for cars like the Porsche Cayman due to currency rebates.
- Canadians investing in US-listed ETFs take a substantial initial hit on the currency exchange. Canadian Couch Potato offers some methods for reducing the cost of currency conversions.
- With investors suffering from the afore-mentioned Battered Investor Syndrome, you don’t hear much about the Smith Manoeuvre (SM) these days. In his Globe column Preet Banerjee says that leverage investing strategies such as the SM require a strong stomach for losses that a lot of investors lack.
- The Financial Blogger took a look at the pros and cons of using a credit card for all your payments.
- We hear a lot about modest returns from investments. Michael James points out that in a low inflation environment, these returns are not all that modest after all.
- For two long months, Canadian Financial Stuff had been running around trying to withdraw money from a RESP. He shares the lessons learned during the process here.
- Though he mostly invests for dividends, My Own Advisor says ETFs offer an effortless way to invest.
- Canadian Finance Blog shares some tips on how to watch cheap or free TV. These offerings are not strong enough to cut cable just yet (at least here in Ottawa).
- Young & Thrifty listed the pros and cons of growing up wealthy.
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. I try and keep my tweets to an average of not more than 5 per weekday.
Happy Halloween everyone! Have a great weekend!
moneysense.ca, 28/10/10
Thanks for mentioning the brokerage comparison.
Mike
Thanks for the mention, hopefully my RESP problems are finally done? nah, I don’t think that either, but you never know. Have a great weekend!
“Battered Investor Syndrome” is some nice melodrama. It’s tough when you start with a ton more money than other people and end up with only a lot more money than other people. If that Forbes article resonates with most readers, then I’m just not wired the way most people are.
Oops. After the ray of sunshine in my last comment, I forgot to say thanks for the mention. I liked the Markowitz interview. Instead of hand-wringing about being battered as an investor, he just analyzes things and says that’s the way it goes.
[...] This post was mentioned on Twitter by Canadian Capitalist, Arjun Rudra. Arjun Rudra said: RT @CCapitalist New Blog Post: This and That: Premium hikes, battered investors and more… http://su.pr/2Yyc9t [...]
I don’t understand why an investor should feel battered after living through a couple bear markets. There is nothing like the experience of a few market cycles to give an investor an idea of how markets work and the seasoning that enables them to stick to the discipline of buying low and selling high. In other words, the result should be a better investor, one with the “iron stomach” for buying into stock markets when pessimism is heavy and the fortitude to rebalance away from stocks when it’s optimism’s turn to peak.
Hi CC! Thanks for including my post on your lovely blog!
Hope you have a great weekend.
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@Michael, @Larry: It makes total sense that the more stocks go down, the more attractive they become. But most investors become queasy after a sharp decline. I know so many who quit stocks entirely during the 2001-03 bear market and during the 2008-09 bear market. The irony? Some of the investors who swore off stocks entirely after the first bear market, started dipping their toes into the market again in 2006 or 2006 after years of double digit returns.
Hi CC, I was just a little put off by the phrase “battered investor syndrome” because it draws a comparison between a battered wife and an investor who loses some money in the stock market. Outside of this implied comparison, the rest of the article made sense. Investors who don’t understand markets are indeed likely to stay away after being burned.
@Michael: I liked that phrase because I didn’t make a connection between it and battered wife syndrome. But now that you mention it, I don’t like it as much anymore!
Everything tastes better when it’s battered and then deep fried. But it’s very bad for your arteries so you should only have it on occasion.
Thanks very much for the mention CC! Enjoy your weekend!
Thanks for the mention! Hopefully Hulu will be working (legally) in Canada soon, that would be a major improvement for free TV online.