Weekend Reading – Shorting primer, Robinhood, pretending to FIRE, “I’m out”, dividend all-stars to own!
Wow. What. A. Week.
Welcome to my latest Weekend Reading edition, highlighting some of my favourite (and entertaining) articles from the week that was across the personal finance and investing blogosphere.
Just in case you missed last week’s edition about some funny Bernie memes, why we should practice failure, the benefits of a cash reserve, top REITs to own for 2021, and why cash flow is KING, you can check that out here.
First up, a primer on shorting that I found interesting that’s actually a decent explanation overall, should folks want to know what this shorting buzz (when it comes to Gamestop and other stocks) is all about.
What does this have to do with Robinhood?
Robinhood, TD Ameritrade, and Charles Schwab, which purchased Ameritrade in 2020, all placed restrictions on certain trades regarding GameStop (and other stocks this week). In fact, retail investors on Robinhood were temporarily barred from completing certain transactions involving GameStop.
Yikes.
So, what side are you on?
Do you support the wealthy hedge fund managers and the wealthy folks that invest with them – who have been “allowed” to short and hedge stocks for years, with full-on Wall Street permission?
Ponder away!
At the time of this post, there is a significant class action lawsuit pending against Robinhood, citing negligence and a “breach of the implied covenant of good faith and fair dealing.” No doubt. I hope they have great lawyers otherwise that company is done in my book. Too bad Robinhood, you reap what you sow people.
I got around to posting some new original content this week – I guess my article was rather timely!
Should you speculate with your retirement portfolio?
Enjoy this lengthy list of Weekend Reading material and see you here next week!
Weekend Reads
Freedom 35 Blog, who has a YouTube channel now, told us about the dozens of ways to FIRE (Financial Independence, Retire Early). Whatever he wants to call it, I would agree with him there is certainly a ton of “Celebrity FIRE” these days – whereby some content creators pretend they are retired, they tell you they’re retired, but they still work and they need to work to pay their bills. Sigh.
Done by Forty said “I’m out” when it comes to his job – to save his mental health and well-being. I found this post rather raw but equally honest. Good on him to I don’t think we can overstate how important mental and physical wellness is.
LowestRates.ca interviewed some of my fellow PF friends and highlighted what they believe are some great mortgage and insurance tips for 2021. Check it out!
Mindful blogger, photographer and explorer Chris Istace shared his thoughts and those of other bloggers who incorporate personal elements of mindfulness into their financial journey.
Chris shared his desire to reduce his personal footprint, less possessions, and increase walkability in his life some time ago. Great stuff.
In fact, my wife and I have the same motivations and we’ve acted on them. We downsized our home into a condo almost 2 years go. We simply don’t have room or space for “crap”, just our essentials. We walk to get our groceries, for restaurants (when they are open!), I bike three seasons for exercise (I live in Ottawa remember…), and I avoid spending money on things I simply don’t need or use.
I’m also on a path for semi-retirement, as you know, so that’s very liberating and has mindfulness embedded!!
I checked out some “sturdy” Canadian dividend paying stocks. What are your thoughts on this list? (Image courtesy of Morningstar).
MoneySense didn’t want to be outdone, so they recently released their dividend all-star stocks for 2021.
MoneyGal aka Alexandra Macqueen said this 60-something is best to leverage her human capital, and keep working for a bit, to optimize her government benefits such as Canada Pension Plan (CPP).
This reminds me of this case study on my site: Age 60, can this retiree actually retire on a lower income?
Dale Roberts from Cut The Crap Investing reminded us that some dividend ETFs did not perform very well in 2020.
Family Money Saver shared some tips to recognize stock manias.
Reader question of the week (adapted slightly for the site!)
So Mark, thanks for your newsletters and insights.
I think you mentioned you owned a handful of ETFs, such as XAW, QQQ, and VTI.
I looked at those returns, for all those funds, and those long-term returns ALL have better 1/3/5 year returns than any of the funds I’m in.
When I looked at QQQ (in particular), it has 42.4%, 23.7% and 25.8% returns respectively.
That is absurd!
So, the big question I do have for you, Mark – are these funds the ones you’ll stick with long-term? What are some signs or trends you look for that say it’s time to move “funds” around?
Thanks again for your answers!
Great questions.
Well, first of all, thanks for researching my site including what I own!
Kidding aside, those are funds I do own and I will share more in the coming weeks why.
While I cannot predict the future, how my mind might change over time including how I invest, I can offer these comments below to you and all readership.
- I now own a few hundred shares of iShares fund XAW and I have made the decision to own XAW to diversify beyond Canada’s borders in a tax-free way.
- I’ve owned the Invesco fund QQQ for a while now. I decided to own QQQ for a small tech-growth kicker.
- Last but not least, Vanguard’s VTI. What should I say or write? I’ve owned a very small portion of VTI for a decade + since diversification matters with VTI that owns >3,600 U.S. stocks.
In terms of, “are these funds the ones you’ll stick with long-term? What are some signs or trends you look for that say it’s time to move “funds” around?” – stay tuned. I’m going to write a separate blogpost soon on the 3 ETFs I want to buy more of in 2021.
You can check out the 5 stocks I hope to buy more of this year – here.
Thanks for your questions and keep them coming!
Save, Invest, Prosper!
Mark
Mark
My name is Mark Seed - the founder, editor and owner of My Own Advisor. As my own DIY financial advisor, I'm looking to start semi-retirement soon, sooner than most. Find out how, what I did, and what you can learn to tailor your own financial independence path. Join the newsletter read by thousands each day, always FREE.
Mark,
Thanks for the reply. The Hbal, Xbal or Vbal are the type of ETF that I would consider except in US dollars. I haven’t been able to find any USD balanced ETF portfolios from Vanguard, Ishares, etc.
Hummm, looking for USD-denominated ETF then? Vs. CDN?
I recall iShares has a U.S. fund like this one?
https://www.ishares.com/us/products/239729/ishares-aggressive-allocation-etf
It might have have as much bonds as you would like though Gary?
I would flip iShares and Vanguard an email – they might be able to direct to somewhere within their menu but I would need to review their portfolio to be sure myself 🙂
Mark,
I sold a investment property in the US last year and was looking at investing the proceeds into a Global balanced ETF in US dollars in a non-registered account. Do you have any recommendations for any balanced ETFs that are tax efficient and low fees. Thank you.
Hummm, global balanced ETF in a taxable account. Thoughts on any of the Horizons ETFs?
https://www.horizonsetfs.com/one-ticket-solutions
Not advice of course, just for further reading.
What questions do you have for your fund in particular? I could always have a blogpost about that 🙂
Cheers,
Mark
Thanks Mark. Lots of different stocks and ETFs to consider with this post. Like you, I would like a smaller footprint..but this year the tv room and indoor gym is really appreciated.
Ha. Great stuff Paul. You picked a good year to have a home gym! Stay well.
Don’t fully understand the saga. Will the current high GME price not attract new institution shorts? Can it increase another few times to over 1000 -3000 a share? But even then, new shorts will be happy to come and push this back down with more profit. Who will win at the end? What is the point of this whole fight after that price went up way out of where it should be. Point made then move on. Why to let new shorts win big and the “common” guys lose big, when everything settles.
I suspect it might Bruce, the ‘shorts’ will come in again for GME as it goes higher. A game of cat-and-mouse per se.
As long as hedge funds exist I’m not sure these retail investors can “win” at this game. It will be interesting to watch this play out!
I’m not playing – staying boring here.
Ha.
All the best.
Hi Mark, great article this week.
I have most of those stocks on the list except Shaw, as the dividend growth has been almost non existent. I also don’t have any Reits except for Grantite REIT. That stock has done well over the past number of years and will continue to do so. What is are your thoughts on Manulife and Sunlife. I own Sunlife and it has been a good long hold for me. They are in competition with each other but IMO they are the best of breed in the insurance business in Canada.
Look forward to next weeks blog.
David
I used to own Shaw almost a decade ago but dumped it because of the lack of dividend growth and capital gains. I far prefer BCE and Telus in the CDN telcos.
Granite has done very well. Summit REIT might do well long-term as well.
I own both MFC and SLF and have done so for a decade although they are combined <2% of my overall portfolio. Some are saying MFC could break out soon. We’ll see!
Thanks for the kind words David!!
Mark
I bought Manulife more than ten years ago, it was rated as a great pick. It promptly lost 50 percent of its value and has never recovered to being even close to its book value in my account. I finally sold it off in December as I was tired of seeing that red. Fortunately I didn’t put a lot of money into it, I didn’t have much then.
Ya. I’m not saying it’s been a stellar selection of mine Barbara! Thanks for sharing.
Nice roundup as always Mark, I am assuming you are owning XAW in your TFSA, just wondering where do you hold QQQ ?
Stay tuned Nish – post next week on that 🙂 Yes, XAW in TFSA and will buy more in January 2022.
On the wallstreetbet topic. The best quote I have heard so far is “for every winner there has to be a loser”
For right now it is the shorts who were trying to beat down a company(s) so that they could make money off the demise in part due to their own shorts. So they are getting a taste of their own medicine. No sympathy for them.
Never the less some of the higher bets will be called and might lose a fair amount of dinaro. I would think fairly soon when the glamour and thrill of the “hunt” wears off and focus shifts somewhere else. They can not just keep winning. There is an end game. Sooner or later someone will say No, this stock – company – is not worth that kind of money. After all. in theory, you are buying a stock because you believe they have a good product and you are hoping that the company will prosper. Not because you want to stick it to the shorts. A noble cause but never the less without financial merit. Except for those that are in and out. IMHO
RICARDO
Oh no doubt this stock will come crashing down eventually, I just don’t know when!! I wouldn’t want to trade it that’s for sure 🙂
Stay well!
I think everyone keeps forgetting that so many have bought this stock as an FU.. profit, fundamentals, bla bla bla mean nothing. I’ve watched so many news videos on YouTube today listening to reporters, analysts and politicians that don’t realize that the everyday retail investor involved in this have placed money they don’t care about, it is entertainment and just want to be part of it. $100-200 to many people out of their portfolio is an amount to spend and forget. Also so many people talking down to us self brokerage types saying we have no idea or dont understand markets, this is part of why we are saying FU !
Ha. Very fair assessment Chris.
I spoke to my son last night. When I brought it up, he said he had had some fun with it. Buying and selling a few shares, just for fun. Made some money and also kept a few shares just to see what they will do. So even if it goes to zero, he is ahead.
They like to depict these guys as low income, sitting in a parent’s basement. My son earns a very high income in Boston, so perhaps there are a lot like that, too? I just wish they would focus on a stock that I owned!
Great roundup this weekend, first off a big thanks for featuring my blog article on simple living.
I really enjoyed that old retire @ 60 case study and absolutely agree with many of the commenters, reduce your expenses as first priority as it has the single greatest impact on your retirement. Going to work through the rest of the links now, thanks for sharing. Have a great weekend.
Most welcome Chris. I enjoyed that article and the premise of it. We’re trying to be more mindful over time, I think it’s simply a natural shift for my wife and I – we’ve been on a steady path for so now long, it just feels natural not to be wasteful and be more intentional with time and money.
Reducing expenses/knowing your complete expenses if the key to your “enough” number. Too many people assume you need a massive nest egg. You only need what you intend to spend with some buffer built in. Nothing more. As long as those expenses don’t change drastically, and you have a plan to secure more income if those plans do change drastically, then most people are good.
All the best!
Mark
100% , I don’t factor CPP, OAS or our large home equity into our retirement plans with regards to our current investments. Those all become huge safety buffers to the plan when we turn 65. I want our investments to cover my share of the expenses between now and then. I’ll hustle a little here or there as needed to keep my FI freedom to generate income on my own terms. I am just done with the traditional career concept of work. Embracing contentment in frugalism and avoiding debt is the biggest key to our success.
That seems smart. I will consider CPP x2 + OAS x2 as “icing on the cake” since I intend to semi-retire in my 50s and I won’t be old enough for either program for many, many years.
I suspect once our mortgage debt is gone (3-4 years) we are going to feel very liberated having already realized one of our major financial savings goals now.
Unfortunately, GameStop or any other stock cannot be controlled by small guys on Reddit.com because it is already controlled by institutions. Read Al Brooks’ blog at https://www.brookstradingcourse.com/analysis/emini-minor-sell-signal-bar/#7-stock-market-news
Interesting read Maryanne. I’m not sure it was institutional investors trading so much though recently? Is there evidence of that?
The evidence comes from transaction volume: on January 8, 2021 the price was $17.69 and the volume 6 million, i.e. $106 million that Reddit.com can handle. However, on January 28, 2021 when the highest price was $483 and the volume 197 million, i.e. $95 billion. Who does have that kind of money?
Well, apparently there were millions of traders, kids, other in on the action. I doubt most of it was institutional money but I don’t have the facts to back that up. No smart money manager with tens of millions in a fund, in his or her right mind, would day trade on this one. That doesn’t make sense to me.
Not traditional money managers, but HFTs all around the world, for instance. Their business is day trading and the work is done by computers. This is why day-trading is not a good idea for individuals, it’s impossible to compete with robots at computing speed, discipline , and lack of emotions.
I hope the kids that put money in this understand that GameStop is only a speculative occurrence on the capital markets that will end up in tears for some… the last who entered the game or those not fast enough to get out with a profit.
Yes, the “bots” Maryanne, I would agree with that then.
The challenge for these kids is exactly that, do they know when to get out? Some will, most won’t in time! That’s just the way it all works.
We’ll see. Not playing the game here. 🙂
Have a great weekend,
Mark
Re: MoneySense’s All-Star Dividend funds – 4 of the 6 A-Team are pure insurance plays, and 1 has heavy insurance exposure (Power). This is what I hate about these sort of annual lists – they can lead people to shift holdings too frequently in a way that increases their risk and defeats longer term growth.
It would be far more useful to see a list that focuses on what to invest in for the next 10 years, but I guess that would be harder to calculate and would defeat the click-bait value of annual lists.
Good points. I don’t see insurance plays as the be-all, end all right now. We’ll see of course Bart. I do hold a few lifecos myself, GWO being one in a decent portion of 1-2% of my portfolio. POW might get interesting to own? Diversified a bit from within?
Crazy week for sure – while we may have some satisfaction seeing the Robinhood avengers stick it to the hedge fund industry, it’s not going to end well for them. Whoever is caught holding the bag last when this collapses is going to be in for a very rude awakening that may scar them for future investing.
Several people are saying that this is the equivalent of getting stock tips from shoe shine boys – signaling the beginning of the end. I’m not sure that’s going to be happening, but we should all be careful here.
Yes, indeed be careful and I think there are just getting started to be honest. I’m staying the course myself!
Mr Done by Forty made the right, for him and his family, brave choice.
Getting ready to retire myself. The spreadsheet says I can, with a “bare bones” retirement. Success is dependent on investing in dividend stocks, which I didn’t do enough of. I sense a buying opportunity.
I worry what other people will think. “People would love to have your job!”. Realistically, they probably don’t care.
I’ll be successful in retirement. I’m excited about it now.
I sense a buying opportunity as well – it’s always buying time for me 🙂
Yes, Mr. Done by Forty absolutely made the right decision. Jeepers.
Stay well!
You would be surprised how little people care or even pay attention. I was one of the top in my industry and well known and a key player in the company I worked. I left work at 43 and not a person blinked an eye or even followed up.
Thanks for your insight. I did it. I’m retired 🙂
Congrats!!
two weeks in a row now i have tried to sign up for the one month free 5iResearch special you promote. It always says expired or invalid code. Can you refresh or delete that, please
Hi Mike,
Works for me?
https://www.5iresearch.ca/index.php?p=qt_redeem_code.NewAccount&code=MOA
Not sure what the issue is?
Thanks,
Mark
Just a reminder Mike, I sent an email directly to 5i for you 🙂
“Mrs. Done by Forty and I were juggling full time work and Toddler AF, trying to make sure the kid was engaged and learning (or at least not running face first into furniture) all while sticking to our rule of no screen time. ”
Gee, having a job during these times must be an added burden. I can see that the situation is hard on you! Really? Instead of being grateful they still have a job, while thousands or more would do almost anything to get to working full time, they are complaining about life. Having a job and raising kids is nothing new and people have been getting by, happily, for centuries doing just that.
Yes, life can be very stressful for many. I’m glad he made that decision – my goodness.
Agree Cannew, although I did not read the link. Does the toddler have life threatening diseases?
Last night I was updating Family Tree info and putting it into the 23andMe site. So I was back looking at a family history book. There were moms who died young, leaving 8 kids with the youngest being 1 year old. My great grandparents having a successful business and an upper middle class life with music and theatre, losing it all and having to go to start a farm in Manitoba. Plenty of things like that. Bet none were whiners.
I feel for Mr. Done by Forty. My husband and I also have stressful days at work, but never so bad. I am wondering though, maybe all he needs is switching to another job? About two years ago, although not as bad, I was also quite stressed at work. I managed to change my role at work without getting a new job and it worked out quite well.
Now we know we can retire at any time and shouldn’t have a financial problem, that helps a lot to deal with stress at work.
Terrible to be that stressed and feel you have no way out. I’m glad he made the decision he did. We’re getting much closer to semi-retirement/work on our terms ourselves May.
Stay well!
What a crazy week indeed , the Gamestop stock was all over the news and i read how some people made 300 and 400% profit in days and how some crazy gamblers liquidated all their portfolio and put a bet on the stock , I wouldn’t even try with 1000$ never mind all my money it’s simply insane .
as for VTI i do own VUN which is the same and it has done very well and like you said knowing that you own some 3600 stocks in one etf gives me some peace of mind .
Just wild Gus.
Yes, VTI vs. VUN essentially the same fund as you know (U.S. vs. Canada) and a very sleep easy at night way to invest.