After 12 months of campaigning, mudslinging, attack ads, apologies – and oh yes, an election – the day (we’ve all feared?!) is finally here – Donald Trump’s inauguration.
Let the roller-coaster ride begin!
Actually, I have a plan in place for this. Every time I read something stupid from Trump from his Twitter feed, I’m going to put $5 into my investment account. I have a feeling I’ll have a big year…
Enjoy your weekend and see you here next week – including a post about my 2017 predictions.
Here are some suggestions for how to get the best term life insurance.
This was my latest dividend income update on our way to a big financial goal.
Boomer & Echo has some tips to invest like a pro.
Dan Bortolotti made some changes to one of his model Canadian Couch Potato portfolios – including a new bond ETF (ZAG).
Young & Thrifty provided a review of Questrade’s Portfolio IQ.
Dining on Dividends is not fonda on Fonda.
Another stellar video from Preet Banerjee – Risk Part 2.
Have you ever considered your debt destruction plan?
Don’t forget about this giveaway for a copy of Victory Lap Retirement.
Michael James on Money wondered if you compare your investment returns to a benchmark.
Dividend Earner believes in Fortis.
ModernAdvisor listed their top-10 blogposts of 2016. Thanks for including me in some of your articles. A reminder you can find out more about hassle-free investing with them here.
I agree with Ben Carlson about no perfect definition of investing risk but certainly in my line of work (healthcare) – the severity and probability of a loss are two very important elements.
Steadyhand believes the benefits of investing diversification can be summarized, nicely, here.
Roadmap2Retire has some goals for 2017 – one of them is to start a portfolio for his daughter. Very smart.
I’m not sure Fintech is the answer for every investing need but it will certainly help many people – check out Big Cajun Man’s post.
Last but not least, a reminder about this new online Canadian Investors Conference. Check it out – including how you can attend for free. As promised in my last weekend reading update click here for your chance to win a Premium Pass to access all materials from this conference.
Ya. I do have cash that can be deployed but no where to deploy (tax free) that makes sense. My daughter has RDSP room but that is too restrictive to get money out of. My nephew and daughter share a house that I co-own with him. I was thinking of using some of his TFSA room to generate funds for the shared payments (hydro, taxes, insurance, etc.)
Interesting. Can’t offer any direct advice of course but you can certainly give family members money, so they can contribute to their TFSA (i.e., gifting allowed). Drawing income from it though…I dunno…not too sure of that one; meaning as far as I know it’s a big no-no in the eyes of the CRA.
Kind of off topic but what the heck…..has anyone used or looked at “borrowing” other peoples TFSAs? (Using unused contributions in another persons account.)
Outside of your immediately family? Can’t be done as far as I know! What prompted that Lloyd – looking for more contribution room!?
Judging a tweet of 5 years old, as if a certain HC and JC hasn’t said and made stupid things.. yeah OK we are in Canada after all.
Thanks for the weekend’s interesting reading list.
Ha, yes, very true 🙂 Updated your comment. Thanks for being a fan and enjoy your weekend.
SST – love your commentary. You should think about writing a blog. I think it would be good when you look at some of the c_ap on some of the PF blogs.
SST has some good insights for sure… I like reading about counter-perspectives.
It’s not so much a “counter-perspective” as it is holistic thinking. If you think like everyone else, you’ll get what everyone else gets. As Munger says, know all sides of the argument.
I’ve thought about slapping together a blog, but then I consider the actual value it would provide (very little) and the cost of resources (very a lot), which always leads me very quickly to do something else.
Munger also says, think about what you want and then think about everything that will not accomplish that goal. It’ll get you much closer if you don’t do all those things first. Adding to the noise isn’t the answer, but noise reduction is a good start.
I think MyOwnAdvisor is a fairly solid PF blog; its value derived not from content but from Mark presenting himself as a level-headed owner and open to developing dialogue.
PF and investing noise reduction, among other things, would be a good thing. I run this blog because I’m interesting in sharing what I know but equally what I don’t – and hearing and learning from others.
If folks feel the information provides them value – great. If not, I have no problem if they do not subscribe. This money was not designed nor run to make millions per year like other site hacks. If it makes money, great. This site is about my journey, my perspectives and my thoughts about what money means and doesn’t mean to me. If readers share similar interests and perspectives – happy to hear them. I’m equally happy to hear and learn from counter-arguments or holistic thinking or any brand of information in between.
Cheers…back to some NHL hockey and a cold beer.
As always, so much to say. I’ve given up the daily blog trudge; lucky MOA, with its comprehensive round up, gets the full value of my commentary.
re Trump: highly unpredictable at this point, but I’m going to predict that his results will significantly diverge from his rhetoric (at least greatly dampened), due to the many forces greater than one man’s ego. However, having said that, one cannot ignore historical (and modern) examples of leadership gone awry.
A strong Trumpvestment plan might be to pile into American P2P loans, American private equity, or any other business which gets the majority of its sales and profit from within American borders. My American oil well investment should see bigly returns as protectionist policies ramp up. Also looks like the next 4 years (as I and many others have long charted) could be another stellar era for fear-based gold and silver. #cashinginonallfronts
re Invest like a pro: What does this even mean?! (Un)fortunately only a “pro” would use a statement such as this. As a non-pro, well, ex-pro twice over, I’ve read enough research, analysis, and data which starkly reveals that exceptionally few “pros” beat the market or even do as well as market returns on a consistent and long-term basis. Thus, ‘investing like a pro’ really means doing worse than a simple diversified portfolio across a small handful of super cheap index funds and ETFs (which, btw, is what most pro fund manager do any way). Not only that, but let us not forget that it’s the “pros” who crash markets and engage in all sorts of poor behaviour. The article is nothing more than an advert for the blog’s financial planning services. The snakey ways of a pro die hard.
re Risk: No! This video is wrong and only perpetuates completely wrong ideas about investing. What’s even more damaging is that these videos are made for and presented to investment newcomers and beginners. Thus, right out of the gate, these people are trying to operate with faulty information. Risk pt.1 was great, pt.2 is abysmal. My list of readables just got one lighter.
re Investment returns to a benchmark: a lot of words on an almost useless matter. One cannot go back in time (unless you happen to find a flux capacitor on Alibaba), thus all you are doing is comparing what could have been. Not only that, but at least 10-20 years of portfolio data is required in order to make any type of relevant analysis, and by that time, it’s far, far too late to jump ship. As well, comparing to other benchmarks on such short timescales leads only to chasing returns and trends (if your own portfolio is down), which is almost always expensive; or loading up (with bias) even more on your benchmark-beating portfolio, thus perhaps adding undue risk and instability.
There is also zero mention of benchmark inflows/outflows, followed by a lot of questions: How are those calculated, if at all? Can we make a fair comparison if we calculate the index and the portfolio if we use two different methods? Why would I remove ‘luck’ from my own portfolio when it’s fully included in the benchmark returns? Does Buffett, who fully admits his foundation of luck, remove such from Berkshire’s returns? Illogically, the article concludes that we must seek “to get at a measure of the results of the things you did control”, however, the only two things you control are allocation and cash flow, thus you must omit any and all investment returns, as you have zero control over those. Also, illogically, we are asked to discount “luck in the timing”, yet timing is truly one of the things we CAN control. So, do we omit or include what we control? Perhaps MJ enjoyed the intellectual rigour of this exercise far too much to see the forest.
For a host of reasons, benchmark comparison is deeply inferior to comparison to your own personal required rate of return.
An additional (dis)honourable mention…
re 5 Myths People Still Believe About Personal Finance
Advice: Myth #6. The PF blogosphere is knowledgable about economic and financial operational functions.
re “Even if you own the index there are risks – you are accepting you get all the bad performers with all the good ones.”
Yup, that’s true. But let’s tell the WHOLE story, shall we? The good performers within an index almost always dominate the weighting, and thus will provide most of the index return. The “bad performers”, or the risky constituents, will almost always hold very minor weightings, thus their “bad performance” will, mathematically, have very little effect on the index return. The risk is not being minimally exposed to the bad performers, it’s in being minimally exposed to the superstars (e.g. Netflix @0.3% vs Apple @3.3%). Would be interesting to backtest an equal-weighted index portfolio vs weighted (perhaps not of any practical benefit, just entertaining).
It’s +10 here today…time to play outside!
I appreciate your commentary. I have a few more books to giveaway, just a heads-up, so you can ignore those posts and not enter to win 😉
Trump is like a magic 8-ball, you don’t know what you’re going to get.
I’ve never been a big gold or silver guy. I’m boring SST. I hold a few stocks for income and then I index invest.
I think ‘investing like a pro’ really means read this article please. That’s OK. We all want our blogs to succeed although few really do on the big scale.
I think Preet’s videos are great and to be honest, when he talks about risk being focused on possible losses – that is exactly what you need to stomach. Do you not? That’s why insurance exists – the risk of the loss is so great – you cannot financially recover from losing.
“Why would I remove ‘luck’ from my own portfolio when it’s fully included in the benchmark returns?” I wouldn’t because contrary to what many people think, because there are so many factors that go into daily decisions, it’s pretty much impossible to believe that some sort of luck (or chance) does not play into everything – investing very much included.
“Advice: Myth #6. The PF blogosphere is knowledgable about economic and financial operational functions.
The entire PF blogosphere and financial media space is largely recycled information – sad but true. There are a few investing tenants and then everything else could be considered noise when you think about it. I should write a post about that but I might piss off many authors. Heck, maybe they would agree with me? That’s why you like only a few PF books and you don’t care too much about the 79,999 others. For a ex-pro, or ex- ex- pro? – I fully get that 😉
“I think Preet’s videos are great and to be honest, when he talks about risk being focused on possible losses – that is exactly what you need to stomach. Do you not? That’s why insurance exists – the risk of the loss is so great – you cannot financially recover from losing.”
“Fluctuation, volatility, and risk all essentially mean the same thing.” — Preet
This is absolutely WRONG.
Here’s what Buffett has to say on the matter:
“That lesson has not customarily been taught in business schools [e.g. Preet’s ‘Money $chool’], where volatility is almost universally used as a proxy for risk. Though this pedagogic assumption makes for easy teaching, it is dead wrong: Volatility is far from synonymous with risk. Popular formulas that equate the two terms lead students, investors and CEOs astray.”
Why would I, or anyone, adhere to a “teacher” who not only harbours but aims to widely distribute a false understanding of a basic notion? It’s especially damaging because it’s aimed at the beginner ‘no nothing’ crowd. If you want to teach then you first must bear the responsibility of providing correct material. If what he truly means is “risk is possibility of loss”, then why say “risk is volatility”? Is it good enough to get 90% of the material correct? Nope. Not when you most have the access, opportunity, and resources, as Preet does, to make absolute sure the material is 100% correct. Too harsh a criticism? I don’t think so, not when he thinks it’s an important enough topic to dedicate resources to produce a video series.
We should also ask what the risk is of consuming “educational” material such as is presented in these videos. Will it lead to a future loss because action is taken based on incorrect information? (One of the main reasons I twice exited the financial sector).
“…everything else could be considered noise when you think about it. I should write a post about that but I might piss off many authors.”
Wouldn’t worry about that. Trump is President and look how many people he continues to infuriate! But seriously, I think an example of an ok ‘anti’ PF blog would be Nelson’s Financial Uproar.
Until next weekend!
For sure there are more than one class of risk.
Concentrating into fluctuation and volatility is only a sign of trader mentality, not from a long term investor that care about a business and sectors of industry.
These are my layman’s definitions…
1. investing fluctuation – the ups and downs of prices over a particular period of time. The latter part of the definition is very important I believe – because it’s related to risk, but not the same thing (to me).
2. volatility – the variance of the ups and downs. Depending upon when you sell assets – definitely related to risk (potential for loss).
I would largely agree a short-term investor might worry about these more than an investor with a long-term horizon. FWIW, I don’t really care too much about either. Maybe I should?
Well, to be picky SST…true I don’t agree personally these all mean exactly the same thing. I wrote back to farcodev with my basic definitions. They are related in my opinion but not identical – they can’t be – by definition.
Nelson’s blog is very interesting and definitely “anti” PF by design – that’s his nature.
Great stuff. Enjoy the weekend.
Mark you may reach your $1M goal faster than you think with the $5 per stupid Trump tweet,
throw in $10 for every stupid Trump policy and you’ll hit $2M real soon 🙂
LOL…I can’t afford that many tweets!! 😉
Thanks for the mention, Mark. Great set of links and I will be spending some time reading through these on the weekend.
Have a good one
All the best!
Surely “global warming” (global cooling this winter) wasn’t entirely perpetrated by the Chinese. The retreating ice age must have something to do with it 😛
He is a “special” kind of person isn’t he?? Geez….
I like the Ben Carlson article concerning Risk. Too many people, especially so called experts express percentages or odds of losing money, by saying the only way to reduce risk is to own the entire index. I disagree. I don’t want to get cute, but certainly risk with any investment strategy and there is no one best strategy. But comparing any strategy to the entire market doesn’t seem to be the best measurement but more like an apples to oranges comparison.
Can one reduce risk, I think so. By how much, who knows, but it seems if one sticks with just the Better, Bigger, and ones with a consistent history of making money, then you reduce the odds of losing money. There are about 1500 stocks in the TSX and maybe 100 to 150, or even 200 might be considered the better ones.
By owning or buying the lessor stocks at the right time yes, they could grow much faster than the top stocks and one could sell and make much more. But the odds of picking those winners is, who knows.
I do like the Buffett statement: Don’t Lose Money. So by sticking with the Better stocks, you might not make the big bucks (slim to no chance), but your odds of losing money is much smaller.
There is absolutely risk with any investment strategy…totally agree.
I’ve often read the risk of owning 30 stocks vs. 20 stocks, goes down only a bit – can’t quantify the exact amount because it depends what you own. Even if you own the index there are risks – you are accepting you get all the bad performers with all the good ones.
As long as I get paid by dividend paying stocks, and those raises keep coming, I will continue to believe this is the best inflation-fighting approach to invest AND cover expenses for semi-retirement. We hope to cross another great milestone after end of January – $14k in dividends per year 🙂