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This and That: Stocks are cheap but could get even cheaper

November 7th, 2008 ·

  1. Stocks for the Long Run author Jeremey Siegel says that stocks are “extraordinarily cheap” and selling at valuations not seen in 30 years.
  2. Gordon Stockman, a financial planner, is tired of hearing people saying that the latest market turmoil is forcing them to postpone their retirement and work longer. He wrote a guest post in the Wealthy Boomer blog wondering if investors have the right perspective on the current market turmoil.
  3. Warren Buffett is a great stock picker and a great businessman. The latter is the other reason for his success says Jason Zweig in The Wall Street Journal. Speaking of Buffett, Where Does All my Money Go? is giving away a copy of The Snowball: Warren Buffett and the Business of Life.
  4. James Daw of the Toronto Star checks with Derek Foster to see how the young retiree is coping with the market downturn.
  5. Million Dollar Journey wrote a primer on reverse mortgages.
  6. Larry MacDonald notes that the average dividend yield on the Canadian banks exceeds the current yield on 10-year Canada bonds by a wide margin.
  7. Canadian Financial Stuff compares buying an iPhone with an expensive monthly plan to an iPod Touch and a cell phone.
  8. Canadian Financial DIY sees signs that the market panic may be over.
  9. Michael James had some fun with market timing.
  10. Money Grubbing Lawyer opened a Questrade account and wrote about the experience.

Around the Personal Finance Network

  1. Four Pillars takes issue with CARP’s stand on mandatory RRIF withdrawals.
  2. Squawk Fox asked her readers about their three worst financial decisions.
  3. I’m not sure how prevalent credit repair is in Canada. Blunt Money warns that the only real way to repair credit history is to change behaviour and give it time.
  4. Clever Dude offered some frugal car maintenance ideas.
  5. Money Ning on what his parents taught him about money.

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Tags: Miscellaneous

13 responses so far ↓

  • 1 Four Pillars // Nov 7, 2008 at 1:00 am

    Thanks for the link. I still have to read “Stocks for the Long Run” - Mr. Cheap is reading it right now and will be doing a review soon.

    As for the CARP caper - I sent an email to “Jim” to let him know that my post and his Chevereau email were one and the same…no response. :)

    Mike

  • 2 Big Cajun Man // Nov 7, 2008 at 8:01 am

    Thanks for the mention, I enjoyed the discussions last night but we do look like cheap old men, me drinking diet Pepsi, you with your Tea and Larry with his coffee. I think if Michael James hadn’t ordered dinner we might have been turfed out! :-)

  • 3 Michael James // Nov 7, 2008 at 9:34 am

    Thanks for the link. I was quite surprised to read Siegel’s near promise of a 20% return in stocks over the next year. It is plausible enough that the median possible outcome is 20%, but other possibilities are -10% and +60%.

  • 4 WhereDoesAllMyMoneyGo.com // Nov 7, 2008 at 10:20 am

    Thanks for the plug CC - have a great weekend!

  • 5 larry macdonald // Nov 7, 2008 at 11:17 am

    CC
    Thanks for the link.

    Big Cajun Man: Personal finance bloggers have to set an example of frugality for their loyal readership. Or else they have to invite more guest speakers from the finance indsutry who will take care of every one’s bill.
    LM

  • 6 CanadianInvestor // Nov 7, 2008 at 11:18 am

    Hi CC, thanks for the link. Maybe I should have said the panic is over but that doesn’t mean we are home free and things will start to go up now. I wouldn’t be surprised to see the TSX go down another 1500 points or so, since that would be about the decline of the most severe combinations of credit, banking and stock crises seen in the past. We are merely in the known but nasty territory again. I certainly hope not because I am 100% invested and don’t have any spare cash. Big question - should I borrow/buy on margin to take advantage. It’s a tough one.

  • 7 Canadian Capitalist // Nov 7, 2008 at 1:22 pm

    I think a lot of people are tempted to take advantage of the severe downturn by leveraging to invest. I’m fully invested and though it is tempting, I’m avoiding leverage. It is hard to play that game.

  • 8 mike at second opinions // Nov 7, 2008 at 6:32 pm

    The real problem with leveraging is that it always is the right move “in theory”! For most advisors it is an automatic enthustiastic positive response since the commissions arrive up front for them. In reality, leveraging is a bet on market timing and for many, continued employment/cash flow. I thinks it is safe to say those folks who leveraged portfolios in 2006 are in a state of shock. One person I know leveraged into a hedge fund that folded and now has a nice mortgage with a 20 year amortization. Can it work, absolutely! Is it risky, absolutely! Remember though, margin calls only happen at the worst of times!
    Pessimism has it’s benefits!

  • 9 Coldcall // Nov 8, 2008 at 4:47 am

    Thanks for the Larry Macdonald link re bank divs.

    I did buy some BNS late yesterday, and while I agree that most bank div yields are looking extremly attractive at the moment; I’m still concerned that there are skeletons in closets with toxic exposure.

    However i should think RY, TD and BNS are the safest of the lot though they dont give quite the yields of BMO and CM.

    I also would not be surprised if at some stage one of BMO or CM gets taken over by one of the big three. Holding either of these if that is the case would be a money loser.

  • 10 Coldcall // Nov 8, 2008 at 4:50 am

    I agree about being against leveraging. The fact hedge funds and banks were allowed to leverage themselves to the hilt is practically criminal.

    My motto is if i cant outright buy shares i dont. It also concentrates the mind as to what i invest in. If i was using tons of borrowings to buy shares i think id be way more risky.

    And i would never be able to sleep at night :-)

  • 11 Coldcall // Nov 8, 2008 at 4:54 am

    By the way, as a Canadian living in the UK, i just found this website and must say its excellent. Thank you.

  • 12 Phil S // Nov 8, 2008 at 8:15 am

    I’m a firm believer in leveraged investing for the taxation benefits, but in the same breath, I’d have to add that I’m currently completely de-leveraged.

    This is just one man’s opinion, but I think the best time to buy this year will be in December when the tax loss selling occurs in earnest. But I don’t think EVERY stock will necessarily go down, only the “dogs” of the TSX. So, I’ll have to wait and see exactly which babies may be tossed out with the bath water… Keeping in mind that a lot of the stocks being traded down WILL be garbage, but it may be worthwhile to wade through the garbage to try to find some gems.

  • 13 Coldcall // Nov 10, 2008 at 7:51 am

    Phil S,

    Yes ive heard that xmas should be good for buying with people selling for tax writeoffs. To be honest I dont know much about tax-planning so i am probably missing some smart strategies. However, i just have this odd aversion to borrowing in order to gamble..even calculated gambling :-)

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