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Article Archive: 2013

Dilbert's investing gift
12/29/13   Indexing
"Don't dismiss it because Dilbert is just a world-famous comic hero. I'm here to authenticate it, to tell you this one-pager is no joke - it really is one of the best books on investing and personal finance you'll ever read. Moreover, it's actually less than one page, just 129 words, 9 simple points. Rarely has any financial writer ever been so darn succinct."

Avoid these missteps to be a better investor
12/29/13   Hallett
"With a new year quickly approaching, investors would do themselves a favour by resolving to avoid some of the portfolio weaknesses I've noticed of late. Doing so is bound to make for smarter investors."

Words of wisdom to value investors
12/29/13   Value Investing
"One thing that has always pleasantly surprised me on my travels is how generous so many value investors are with their time and advice, no matter how demanding their positions and other commitments are. I've come to believe that this willingness to share with one another, the attitude of 'there are no secrets,' and the modesty of talking about one's successes as well as failures, is what distinguishes our shared global value investing community."

Moguls shelter wealth forever
12/29/13   Taxes
"In the past four years, the amount of money administered by South Dakota trust companies like these has tripled to $121 billion, almost all of it from out of state. The families needn't actually move to South Dakota, or deposit their money at a local bank, or even touch down in the private jet. Little more than renting an address in Sioux Falls is required to take advantage of South Dakota's tax-friendly trust laws."

Accidental tax break
12/29/13   Taxes
"Federal law requires billionaires such as Adelson who want to leave fortunes to their children to pay estate or gift taxes of 40 percent on those assets. Adelson has blunted that bite by exploiting a loophole that Congress unintentionally created and that the Internal Revenue Service unsuccessfully challenged."

Bank stock contest
12/21/13   Stingy Investing
"The idea is to choose one of the bank stocks to sell and one to buy. After making the choice, the fantasy portfolio will start 2014 with $20,000 in your favourite stock, nothing in the one you want to avoid, and $10,000 in each of the remaining four." [Enter over in the G&M comments section]

Where value investors are donating
12/18/13   Stingy Investing
"A sleigh full of holiday cheer was brought to a West Coast pancake house this month. The well-aged regulars were treated to flapjacks by an anonymous benefactor who picked up the tab. He had the staff wish them a merry Christmas and asked if they could pay it forward."

Mike Rowe on the high cost of college
12/15/13   Academia
"If we are lending money that ostensibly we don't have to kids who have no hope of making it back in order to train them for jobs that clearly don't exist, I might suggest that we've gone around the bend a little bit" [video]

How to fail your way to success
12/15/13   Fun
"Billionaires like to say passion is the secret of success. But what else could they say without sounding like total jerks? They can't say they are smarter than poor people. They can't say they work harder than poor people. They can't say they simply got lucky because that would ruin their images. So they say passion is the key because it sounds like an appropriately modest answer."

Job creation plan won't create a single job
12/15/13   Government
"However, reading through the details of this plan, skepticism turns to outrage. This is a plan that is explicitly designed to increase income inequality and transfer money from poorer regions of the province to one of Canada.s wealthiest cities and will likely not create a single new job."

Warren Buffett talks to students
12/15/13   Buffett
"Warren Buffett (WB) met with 20 MBA students from each of eight universities, including the University of Maryland, on November 15, 2013. The MBA students asked 16 questions..."

Why a cheap stock can be a bad buy
12/15/13   Value Investing
"When you can buy merchandise at 40 per cent off the last ticketed price in the weeks before Christmas, you know that the current retail environment is grim. But when even the liquidators are closing up shop, maybe the situation is worse than we realize."

My top 10 peeves
12/08/13   Markets
"Clifford S. Asness discusses a list of peeves that share three characteristics: (1) They are about investing or finance in general, (2) they are about beliefs that are very commonly held and often repeated, and (3) they are wrong or misleading and they hurt investors."

Hewlett-Packard may finally compute
12/08/13   Stingy Investing
"When it comes to stocks, I take a different tack and look for the long-term losers. It might seem counter intuitive, but such stocks tend to be inexpensive based on various measures of financial merit and they've had time to make improvements. Both factors are positives."

Index effect raises concerns
12/08/13   Indexing
"Goodhart's law was widely cited in the 1980s, when the UK government tried to control inflation by targeting the money supply. But policymakers found that as soon as they focused on a monetary aggregate such as M-3, the measure started to misbehave. The law is familiar to those in the indexing business, too. Investors have long been aware of the distortions that can arise when large volumes of money track or reference a particular measure of the stock market."

Prem Watsa opens up about BlackBerry
12/08/13   Watsa
"Bets on debt-ravaged Greece or ailing phone maker BlackBerry would make many investors flee, but for Prem Watsa both are part of a 'cautious' strategy he employs to manage Fairfax Financial's US$23.3 billion portfolio. Indian-born Watsa, 63, often compared to U.S. investor Warren Buffett, another self-made man, prides himself on a strategy of investing in stocks and markets others avoid."

Norbert's gambit
12/08/13   Brokers
"Norbert's gambit remains the least expensive way to convert Canadian and US dollars at a discount brokerage. For investors looking to buy US-listed ETFs, learning this technique can save hundreds of dollars by sidestepping the wide currency spreads charged by brokerages."

Key new findings on stock selection
12/02/13   Value Investing
"Better and more consistent results are achieved when a composite of individual factors is used. A value composite helps avoid value traps and can show some seemingly pricey stocks to be attractively valued. Financial strength and earnings quality composites are better used to identify stocks to avoid."

Why a stock screen is only a first step
12/02/13   Stingy Investing
"Take Reitmans (Canada) Ltd. as an example. The ladies' wear specialty apparel retailer, based in Montreal, ran into trouble over the last few years."

Frugal life leaves rich legacy
12/01/13   Thrift
"He clipped coupons, wore sweaters with holes in them to make people think he was poor and took a bus - not a cab - to the University of Washington when he attended an alumni luncheon in his later years. Only a tight circle of family and friends knew that MacDonald was nurturing a secret fortune. When he died in September at the age of 98, he left in his will a $187.6 million charitable trust to Seattle Children's Research Institute, the University of Washington School of Law and the Salvation Army."

Don't fall for the 'Santa Claus rally'
12/01/13   Markets
"Wall Street does - or at least is hoping that you do. Every year around this time, many analysts and brokers begin referring to a 'Santa Claus rally' that will propel the market higher. Don't fall for the sales pitch. The stock market's average performance before Christmas is no better than mediocre. It is only in the last week of December that the market has strong seasonal winds blowing in its sails."

Still beating the market after 9 years
12/01/13   Stingy Investing
"Finding the right Christmas gift can be difficult and some people are particularly hard to shop for. The combination can, on occasion, make the holiday season feel like an exercise in passing the proverbial brown sweater back and forth. Investors suffer from a similar problem when looking for good stocks. But, in some ways, they have it even worse because they have to wait for months, if not years, before finding out whether their picks turn out to be duds or stars."

Who needs Wall St.?
11/24/13   Stingy Investing
"Many people go to New York to try to make a fortune on Wall Street. But value investors often thrive in smaller cities, where they're insulated from the groupthink that can infect those in the big city."

The best brokers
11/24/13   Brokers
"The best reason to be a do-it-yourself investor is to cut costs, and the online broker that helps you do that best is Virtual Brokers. Cost is a huge category in the 15th annual Globe and Mail ranking of online brokers, and VB aces it."

Survivorship bias
11/24/13   Behaviour
"The military looked at the bombers that had returned from enemy territory. They recorded where those planes had taken the most damage. Over and over again, they saw the bullet holes tended to accumulate along the wings, around the tail gunner, and down the center of the body. Wings. Body. Tail gunner. Considering this information, where would you put the extra armor? Naturally, the commanders wanted to put the thicker protection where they could clearly see the most damage, where the holes clustered. But Wald said no, that would be precisely the wrong decision. Putting the armor there wouldn't improve their chances at all."

Computers have enhanced chess skill
11/24/13   Idle
"In the world chess championship match that ended Friday in India, Norway's Magnus Carlsen, the cool, charismatic 22-year-old challenger and the highest-rated player in chess history, defeated local hero Viswanathan Anand, the 43-year-old champion. Mr. Carlsen's winning score of three wins and seven draws will cement his place among the game's all-time greats. But his success also illustrates a paradoxical development: Chess-playing computers, far from revealing the limits of human ability, have actually pushed it to new heights."

Showing returns a big advice industry challenge
11/24/13   Hallett
"The financial advisory industry has long been challenged to report accurate, personalized performance to its clients. Investment management clients have always wanted good reporting but most retail clients didn't require it because returns seemed healthy. But having survived two bear markets, investors have grown disappointed with their portfolios' growth even without knowing percentage returns. Securities regulators have mandated the reporting of personalized rates of return starting in a couple of years. I believe that this will prove more challenging for the advice industry than any other regulatory initiative - including the much-discussed best interest standard."

The lesson from market extremes
11/24/13   Hallett
"On November 20, 2008 I spoke to a powerpoint presentation loaded with slides showing the then-current bear market in a historical context - while doing the same with a variety of valuation statistics for North American stocks. A summary of my conclusions: North American stocks were at 20-year lows relative to earnings and book value. On an interest-rate-adjusted basis, U.S. stock yields were at a four-decade high. High yield bonds were sporting the highest spreads and yields in several decades. Stocks and high yield bonds were very attractive and they should be purchased with a focus on their longer-term fundamentals. While it's now clear that it was a good idea to invest five years ago, it's helpful to add some numerical context."

Markets are partying like it's 1999
11/17/13   Stingy Investing
"As a buyer of stocks, my preference is clear. I would like to buy stocks at more reasonable valuation, which should enable them to achieve good returns in the years ahead. That means I would prefer to see the market come crashing back down to earth sooner rather than later - provided it doesn't cause too much collateral damage along the way."

Where will the boot land next?
11/17/13   Taxes
"But there is another kind of political risk: the temptation for governments of all political colours to change the rules, whether they relate to tax, the way that companies operate or how markets behave. And that risk has increased significantly since the 2008 crisis."

Paul Krugman's blind spot
11/17/13   World
"Few have written more about the European financial crisis since 2008 than the Nobel laureate, New York Times columnist, and Princeton economics professor Paul Krugman. After five years, it is clear that the eurozone has survived contrary to his predictions and the countries that pursued fiscal discipline, contrary to Krugman's advice, have done better -- both economically and politically -- than those that did not."

Confessions of a Quantitative Easer
11/17/13   Government
"Even by the Fed's sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn't really working."

A clever way to beat the taxman
11/17/13   Cestnick
"Many seniors would like to have the opportunity to claim RRSP deductions even after age 71 when their RRSP is no longer around. You can do this by contributing to a spousal RRSP if your spouse has not yet reached at 71 and still has an RRSP. Or, you can consider a 'senior's overcontribution.'"

Different strategies find common ground
11/17/13   Hallett
"Two recent but different research papers on the mechanics of withdrawal strategies find some common ground against the conventional wisdom while sharing some aspects of the popular "bucket" strategy, in which assets are segmented by certain categories."

Treasure hunters of the financial crisis
11/10/13   Value Investing
"Five years ago, the global financial system was falling apart. Lehman Brothers had imploded. Banks had stopped lending. Foreclosure signs were as common as weeds on the front lawns of suburban homes. And Bruce A. Karsh saw the buying opportunity of a lifetime."

More than three little letters
11/10/13   Academia
"Several hundred individuals who hold a Ph.D. in economics, finance, or others fields work for institutional money management companies. The gross performance of domestic equity investment products managed by individuals with a Ph.D. (Ph.D. products) is superior to the performance of non-Ph.D. products matched by objective, size, and past performance for one-year returns, Sharpe Ratios, alphas, information ratios, and the manipulation-proof measure MPPM. Fees for Ph.D. products are lower than those for non-Ph.D. products. Investment flows to Ph.D. products substantially exceed the flows to the matched non-Ph.D. products. Ph.D.s' publications in leading economics and finance journals further enhance the performance gap."

Companies that lower their share count
11/10/13   Stingy Investing
"Most investors focus on a company's share price. They should spend more time looking at a related question - how many shares the company has, and whether that number is growing or shrinking."

How to find bargains
11/10/13   Stingy Investing
"Great bargains can be found by sorting stocks into piles using different measures of financial merit."

Prem Watsa the Canadian Warren Buffett
11/03/13   Value Investing
"Fairfax, which has a portfolio worth US$24.1 billion, has gained 31% this year, compared with a 7.8% rise in the Standard & Poor's/TSX Composite Index. The investment firm has returned 13% annually over the past 20 years, mirroring the rise of Warren Buffett's Berkshire Hathaway Inc., according to data compiled by Bloomberg."

Obamacare's losers and why they matter
11/03/13   Government
"If we want health inflation to stay low and health care costs to be less of an anchor on advancement, we should want more Americans making $50,000 or $60,000 or $70,000 to spend less upfront on health insurance, rather than using regulatory pressure to induce them to spend more. And seen in that light, the potential problem with Obamacare's regulation-driven 'rate shock' isn't that it doesn't let everyone keep their pre-existing plans. It's that it cancels plans, and raises rates, for people who were doing their part to keep all of our costs low."

Political fear vs technical needs
11/03/13   Government
"Inside the Department of Health and Human Services. Centers for Medicare and Medicaid, the main agency responsible for the exchanges, there was no single administrator whose full-time job was to manage the project."

The pension dragon
11/03/13   Government
"After days of struggling to understand the financial condition of the retirement system for state employees and teachers, she came to realize that the system no longer made sense. Years of mismanagement and underfunding had allowed money to be drained that was needed to pay promised pensions. The crisis was much worse than Raimondo had expected."

Beat the pack by steering around disaster
10/27/13   Stingy Investing
"The riders careened down narrow paths while desperately trying to avoid an overly intimate encounter with the surrounding trees. Those with a sharp eye might have spotted money manager David McLean cruising by."

Cliff Asness
10/27/13   Value Investing
"Cliff Asness interview on WealthTrack"

Nick Brown smelled bull
10/27/13   Academia
"Cultivate a 'positivity ratio' of greater than 2.9-to-1 and sail smoothly through life; fall below it, and sink like a stone. The theory was well credentialed. Now cited in academic journals over 350 times, it was first put forth in a 2005 paper by Barbara Fredrickson, a luminary of the positive psychology movement, and Marcial Losada, a Chilean management consultant, and published in the American Psychologist, the flagship peer-reviewed journal of the largest organization of psychologists in the U.S. But Brown smelled bullshit. A universal constant predicting success and fulfillment, failure and discontent? "In what world could this be true?" he wondered."

CMS Slides
10/25/13   Stingy Investing
Slides for my talk at the Canadian MoneySaver Seminar

Time to stop this pretence
10/20/13   Economics
"The Nobel prize for economics remains separate from the main prizes, and so it should, as the namesake was a scientist and economics is categorically not"

Debt limit
10/20/13   Government
"A satirical short film taking a look at the national debt and how it applies to just one family."

Beer and biodiversity
10/20/13   Economics
A fun little video, if perhaps a little simplistic.

How science goes wrong
10/20/13   Academia
"A simple idea underpins science: "trust, but verify." Results should always be subject to challenge from experiment. That simple but powerful idea has generated a vast body of knowledge. Since its birth in the 17th century, modern science has changed the world beyond recognition, and overwhelmingly for the better. But success can breed complacency. Modern scientists are doing too much trusting and not enough verifying - to the detriment of the whole of science, and of humanity."

Practise what you preach
10/20/13   Stingy Investing
"Problem is, even the most strident index investors I know have a tendency to say one thing and to do another. None of them strictly follow what I would call a pure approach to passive investing. Instead, they tend to slip back into some old habits."

Graham & Doddsville: Fall 2013
10/13/13   Behaviour
Be sure to read the Guy Spier interview: Build Your Life in a Way That Suits You

America's default on its debt is inevitable
10/13/13   Grant
"This is the unsustainable conceit of the world's superpower-cum-super debtor. By deed, if not audible word, we Americans say: 'The greenback is the world's great monetary brand. You have no choice but to use it. Like it or lump it.' But the historical record of paper currencies is clear: Governments always over-issue it. The people finally do lump it."

Why cash is not trash
10/13/13   Stingy Investing
"Holding a concentrated portfolio that contains only a few stocks is a two-edged sword. If you pick the right stocks, they can pay off in spades. But if you don't, you might be taken to the poorhouse."

Finding value among U.S. dividend stocks
10/13/13   Stingy Investing
"To obtain a well-rounded portfolio, dividend investors should pick up at least a few international stocks. That's why I'm on the hunt today for U.S. dividend payers that might also appeal to value investors."

Cyclically adjusted valuation measures
10/13/13   Academia
"We confirm the effectiveness of using cyclically-adjusted valuation metrics to identify high performing stocks. The Shiller P/E, or cyclically-adjusted price-to-earnings (CAPE) ratio, is not the optimal way to implement a cyclically-adjusted value measure. At the margin, the cyclically-adjusted book-to-market (CA-BM) is a better measure to predict returns. We find that more frequent rebalancing and momentum can enhance strategies based on cyclically-adjusted valuation metrics."

The dark side of compound interest
10/12/13   Thrift
"If being in thrall to compound interest is a problem for you, just imagine how it feels for Warren Buffett. The world's richest man has compounded his wealth by 20% since the early 1970s. Before that has was doing even better. Every can of soda the notorious Coca-Cola fan swigged in the 1950s therefore cost him thousands of times as much as he paid for it, compared to if he'd put the money into his investments and had a glass of water."

Hate debt again
10/06/13   Debt
"Why 2.5 billion heartbeats might change the way you think about money by Preet Banerjee"

Was tulipmania irrational?
10/05/13   History
"there has been little attempt to understand how speculation actually works. The example of tulipmania shows the importance of doing that - rather than relying on lazy quips about 'animal spirits' or irrationality."

12 things I've learned from Graham
10/05/13   Graham
"Everyone makes errors and mistakes and so having insurance against those mistakes is wise. With a margin of safety you can be somewhat wrong and still make a profit. And when you are right you will make even more profit than you thought. Finding a margin of safety is not a common event so you must be patient. The temptation to 'do something' while you wait is to hard for most people to resist. The best investors are those who have a temperament which is calm and rational. Excitement and expenses are the investor's enemy."

Market underestimates BlackBerry
09/29/13   Value Investing
"'The market's very emotional,' he adds. 'You'll find huge optimism when everything's going well, huge pessimism when things are not working out as well. And what we say is the truth is in between.'"

The price of Coke
09/29/13   Economics
"Prices go up. Occasionally, prices go down. But for 70 years, the price of a bottle of Coca-Cola didn't change. From 1886 until the late 1950s, a bottle of Coke cost a nickel. On today's show, we find out why."

How low can prices go?
09/29/13   Indexing
"This is what it has come to in the ETF business after about 15 years in Canada: Companies are now competing with price cuts that amount to mere cents on a modest investment. Some may mock this as a sign the ETF business has run out of ideas to attract new customers, but not people who understand that low costs are one of the foundations of successful investing. Switch funds over a difference of 0.02 of a percentage point on fees? That's pointless. Put the fund with the lowest fees on your short list of places to invest new money? Definitely."

A recipe for a better dividend portfolio
09/29/13   Stingy Investing
"As the weather gets colder and I get older, I've begun to enjoy the comfort provided by a warm bowl of soup. There's nothing like a delicious mix of vegetables and chicken to ward off the chill in the air. As I sat down to my first bowl of the season my thoughts turned to how I might pay for my humble repast for years to come. A few good dividend stocks might do the trick."

Fishing for a bargain among small-fry
09/22/13   Stingy Investing
"Insisting on value helps to keep the prices I pay in line, while keeping an eye on dividend growth points the way to reasonably healthy businesses."

How to choose an actively managed fund
09/22/13   Stingy Investing
"There is a myth going around that most fund managers are bad stock pickers. It is undoubtedly true that some are, but it turns out that most beat their benchmarks over the long term."

Industry risk rating failing investors
09/22/13   Hallett
"Floating rate note (FRN) funds are gaining in popularity because of their marketed 'promise' to protect capital during periods of rising interest rates. In Canada since the mid-2000s, FRN funds invest mainly in corporate loans bearing a fluctuating interest rate. They appeal to investors who fear rising interest rates - which is most - but offer competitive current yields. Investors seduced by this class of funds should be aware that hedging one risk often heightens exposure to other risks. And standard industry risk ratings fail to communicate this trade-off, which risks significantly understating these funds' true risk exposure."

Never bubbles today
09/22/13   Markets
"A cursory reading of the academic literature on asset prices reveals a litany of puzzles, conundrums, paradoxes, and anomalies. Much of the research on asset prices continues to rely on highly stylized models with identical agents, rational expectations, and optimizing behavior. According to the prevailing view, asset price surges that many would perceive to be bubbles are not really so. Instead, they are seen to reflect the influences of fundamental forces, such as a decline in risk appetite. This reminds me of the White Queen in Through the Looking-Glass, who says jam will be given every other day, but never today. Adherents of this view may admit that bubbles have occurred in the past - like the dot-com boom and bust. And they may even be willing to accept that bubbles are something to worry about in the future - say, in financial supervision. But, in practice, they are never willing to find a bubble in the present. There's always a reason why what looks like a bubble, walks like a bubble, and quacks like a bubble is not actually a bubble."

More on long-term returns
09/22/13   Markets
"Throw bonds into the mix and a 60/40 portfolio will generate just 2.77% real, the fourth lowest result in all the years since 1871. If we assume a 2% inflation rate, then nominal returns will be a little under 5%, compared with the 7.5-8% assumed by pension funds."

Berkshire billionaire with more than Gates
09/22/13   Buffett
"There are probably other Berkshire billionaires to be uncovered. In a June 2010 Fortune magazine article, Buffett said that he knew of two Berkshire shareholders who qualify for the Forbes 400 list of wealthiest Americans, and weren.t on it."

Puerto Rico's pension crisis
09/22/13   Government
"Puerto Rico can cover only 11.2 percent of its public pension costs, which is even less than the notoriously underfunded Illinois retirement system"

It doesn't work all the time
09/22/13   Value Investing
"There are valid theories on investing, and they work on average. If you pursue them consistently, you will do well. If you pursue them after failure, you can do better still."

Risk-free returns for everybody
09/22/13   Thrift
"Investment professionals too often forget that a dollar saved in costs or fees is actually worth more than a dollar earned from investment returns (thanks to taxes). In addition, investing in cost and fee reduction can provide far greater returns per unit of risk than anything else an investment organization can do. In fact, there.s an argument to be made that cost and fee savings represent risk-free returns to investors."

How Detroit went broke
09/16/13   Government
"Detroit is broke, but it didn't have to be. An in-depth Free Press analysis of the city's financial history back to the 1950s shows that its elected officials and others charged with managing its finances repeatedly failed - or refused - to make the tough economic and political decisions that might have saved the city from financial ruin."

The disappearance of James Duesenberry
09/16/13   Economics
"This is puzzling because his theory of consumer behavior clearly outperforms the alternative theories that displaced it in the 1950's - a striking reversal of the usual pattern in which theories are displaced by alternatives that better explain the evidence. His disappearance from modern economics textbooks is an intriguing cautionary tale in the sociology of knowledge."

The tragedy of the commons
09/08/13   Behaviour
"The problem with Hardin's logic was the very first step: the assumption that communally owned land was a free-for-all. It wasn't. The commons were owned by a community. They were managed by a community. These people were neighbours. They lived next door to each other. In many cases, they set their own rules and policed those rules."

Quality Minus Junk
09/05/13   Academia
"We define a quality security as one that has characteristics that, all-else-equal, an investor should be willing to pay a higher price for: stocks that are safe, profitable, growing, and well managed. High-quality stocks do have higher prices on average, but not by a very large margin. Perhaps because of this puzzlingly modest impact of quality on price, high-quality stocks have high risk-adjusted returns. Indeed, a quality-minus-junk (QMJ) factor that goes long high-quality stocks and shorts low-quality stocks earns significant risk-adjusted returns in the U.S. and globally across 24 countries. The price of quality - i.e., how much investors pay extra for higher quality stocks - varies over time, reaching a low during the internet bubble. Further, a low price of quality predicts a high future return of QMJ. "

Francis Chou seminar
09/05/13   Value Investing
"Francis talks value at the Ivey business school"

Canadians can afford retirement
09/05/13   Retirement
"A recent study from Statistics Canada on 'The Adequacy of Household Savings' explicitly takes wealth into consideration. It found that two-thirds of Canadians exceed optimal savings for retirement; for the rest, the 'undersaving is small' at less than $30,000 on average and concentrated among low income earners, who already get substantial pension supplements from government. These arguments are validated by the OECD Report on pensions that found that Canada has one of the lowest rates of elder poverty in the world."

Hard-wired for giving
09/05/13   Behaviour
"The Darwinian principle of "survival of the fittest" echoes what many people believe about life: To get ahead, you need to look out for No. 1. A cursory read of evolutionary doctrine suggests that the selfish individuals able to outcompete others for the best mates and the most resources are most likely to pass their genes on to the next generation. Then there is classical economic theory, which holds that given the choice, we will often opt for a personal benefit over a personal loss, even if that loss involves a benefit to someone else. The philosopher and economist John Stuart Mill championed the self-centered theory in the mid-1800s, describing man as a creature that "does that by which he may obtain the greatest amount of necessaries, conveniences and luxuries, with the smallest quantity of labor and physical self-denial." But the latest science shows that, in fact, we are also hard-wired to be generous."

Munger on milk
09/05/13   Economics
"Mike Munger of Duke University talks with EconTalk host Russ Roberts about why milk is in the back of the grocery store. Michael Pollan and others argue that milk is in the back so that customers, who often buy milk, will be forced to walk through the entire story and be encouraged by the trek to buy other items. Munger and Roberts argue that competition encourages stores to serve customers and that alternative explanations explain where milk is found in the store."

Charlie's secret
09/05/13   Munger
"Charlie Munger is Warren Buffett's co-chairman of Berkshire Hathaway and an investing genius in his own right. He's almost 90, six years older than Buffett, but every bit as sharp and cagey even in his advanced age. And also, he kicks the shit out of all you momentum investor hotshots, what with your risk parities and your quant factors and your newfangled social networking stocks. Munger has run into more burning buildings than the NYFD, dodging scores of other investors fleeing in the opposite direction without even a second's hesitation."

Why the paradox of choice might be a myth
08/25/13   Behaviour
"It could be one of the most memorable economic studies of the last half century. Researchers presented an array of tasty jams and enticed shoppers to buy a jar. In one version, there were six varieties shown to shoppers. In another, there were 24 jams. The second, larger array attracted more traffic. But the smaller array led to ten times more purchases. Sometimes, they concluded, too many options repel us. The researchers called it "the paradox of choice." You might call it "feeling overwhelmed by options." But some economists are calling it something else: "complete hogwash.""

The 1975 Buffett memo that saved WaPo's pension
08/25/13   Buffett
"The letter alone is quite amazing. In it, Buffett identifies the pension problems that others would key in on only a decade or so later. But he also lays out perhaps for the first time -- Buffett was 45 when he wrote it and years away from attaining the investment fame he has today -- his philosophy behind what it takes to be a successful investor. His main pieces of advice: Think like an owner, look for a discount, and be patient."

Ben Graham did not give up on value investing
08/25/13   Graham
"So, no, Ben Graham did not give up on value investing. One could easily say that he was arguing for value indexing."

Confessions of an institutional investor
08/10/13   Indexing
"I've spent my entire career managing institutional portfolios for pensions, endowments and foundations. A few have used a simple, conventional approach while the majority have used the more complex, alternative model that is so popular these days. My current job is with a large fund that uses a complex approach with a focus on downside volatility and the use of hedge funds and private investments. This experience has cemented my opinion that the simple approach is just plain better."

The case for banning tips
08/10/13   Management
"For over eight years, I was the owner and operator of San Diego's farm-to-table restaurant The Linkery, until we closed it this summer to move to San Francisco. At first, we ran the Linkery like every other restaurant in America, letting tips provide compensation and motivation for our team. In our second year, however, we tired of the tip system, and we eliminated tipping from our restaurant. We instead applied a straight 18% service charge to all dining-in checks, and refused to accept any further payment. We became the first and, for years, the only table-service restaurant in America where you couldn't pay more money than the amount we charged you. You can guess what happened. Our service improved, our revenue went up, and both our business and our employees made more money."

Time as money
08/10/13   Thrift
"But their data, primarily drawn from the Consumer Expenditure Survey from 1980 to 2003, provide an alternative explanation for why expenditure falls as people enter old age. To start with, they reveal that spending on non-essential items does not drop. In fact, it increases. But three categories do see declines: food, transportation and .personal care. (which includes clothing)."

Cohen hauls fortune in unmarked trucks
08/10/13   Stocks
"There's a reason why Richard B. Cohen escapes attention. The chairman of C&S Wholesale Grocers Inc. works out of a nondescript office park once slated to house a county jail in Keene, New Hampshire, a leafy mountain hamlet 90 miles northwest of Boston. The truckers who deliver goods from the company's 54 distribution centers drive unmarked tractor-trailers. Cohen's last interview was published a decade ago. Even the Keene Chamber of Commerce overlooked C&S as one of the town's largest employers."

A dangerous season for stocks
08/10/13   Stingy Investing
"But the idea that stocks might also have a natural rhythm is a little more controversial. It's obvious that the market isn't perfectly correlated with the seasons, but research points to a weak relationship between the two that some investors might want to try exploiting."

Did Goldman Sachs overstep?
08/04/13   Government
"A month after ace programmer Sergey Aleynikov left Goldman Sachs, he was arrested. Exactly what he'd done neither the F.B.I., which interrogated him, nor the jury, which convicted him a year later, seemed to understand. But Goldman had accused him of stealing computer code, and the 41-year-old father of three was sentenced to eight years in federal prison. Investigating Aleynikov's case, Michael Lewis holds a second trial."

The case for low-fee balanced funds
08/04/13   Stingy Investing
"While balanced funds aren't a cure-all for the ails of market timing, they do represent a useful tool for new investors and for those who get a little jittery in downturns. When shopping for balanced funds it is important to keep a close eye on the fees they charge. All too many funds offered to Canadians charge outrageously high fees."

The weather rock
08/04/13   Hallett
"When asked for shorter-term predictions, I always respond candidly that I can guess what's going to happen from year to year but I don't know. Nobody does despite the proliferation of forecasts that our industry produces for each coming quarter, six months or year. And stock market returns from the past several years illustrate this nicely."

America has changed the way it measures GDP
08/04/13   World
"The problem is that there is scant information on investment costs. Moreover, the asset - the right to the music, manuscript or TV format - is rarely sold. Rather it is used to create a future stream of products, like books and TV shows. So the BEA must estimate likely future royalty fees, and translate them into today's money to value the investment."

The romantic appeal of savers
08/04/13   Fun
"The desire to attract a romantic partner often stimulates conspicuous consumption, but we find that people who chronically save are more romantically attractive than people who chronically spend."

Consuelo interviews Jason Zweig
08/04/13   Zweig
"'There's no doubt that the pursuit of yield is bordering on a mania' says Jason Zweig, The Wall Street Journal's Personal Finance Columnist. Don't miss Consuelo's discussion when she asks Zweig about dangerous investor behavior and why he is concerned as investors are abandoning bonds and flocking to dividend-paying stocks."

Quality could still be underpriced by markets
08/04/13   Markets
"The researchers measured value creation with their own metric that they call CFROI, for cash flow return on investment. It is based on cash flows (not earnings, on which accounting manipulations are possible and which are affected by leverage), adjusted for inflation, as a proportion of operating assets - a measure that excludes accounting devices such as depreciation allowances. By taking inflation and different accounting rules out of the equation, the metric allows comparisons across time, countries and industries. It produces some fascinating findings."

Who should try to beat the market?
08/04/13   Indexing
"Instead, Zweig thinks Graham would have advised those who have an edge at stock-picking to do so, while recommending those who don't take a passive approach with index funds"

Price-to-long-term-earnings ratios
07/28/13   Stingy Investing
"The idea of using long-term earnings when evaluating companies is hardly a new one. Benjamin Graham, the father of value investing and a highly successful money manager in his own right, suggested employing a similar technique when studying individual companies."

Why Buffett bailed on India
07/28/13   World
"India has long been viewed as a value investor's dream: rapid growth, 1.2 billion people pining for a taste of globalization, and underdeveloped industries ripe for turnarounds. So it surprised few when the genre's guru, Warren Buffett, placed a bet on the world's ninth-biggest economy. What did come as a surprise, though, was last week's decision by the billionaire's Berkshire Hathaway Inc. to give up on India's insurance market after just two years. Adding to the drama, the withdrawal came the same week India unveiled plans to open the economy as never before to foreign-direct investment."

Slow ideas
07/28/13   World
"Some innovations spread fast. How do you speed the ones that don't?"

Munger triples publisher's value
07/28/13   Munger
"Daily Journal Corp., the California publisher that counts Charles Munger as its chairman, more than tripled in value since 2008 after the company jumped into stocks during the financial crisis."

Bullish on cash
07/21/13   Markets
"Charles de Vaulx has an investment idea: cash. That may seem an odd choice, since cash earns less than inflation, making it a money-losing proposition. But Mr. de Vaulx, who oversees $17.8 billion as chief investment officer at International Value Advisers in New York, has been boosting his cash position. He is having trouble finding stocks he considers cheap and won't buy overvalued stocks. He considers bonds even more overvalued than stocks, leaving him perched on a lumpy cash pillow."

Negative EV stocks
07/21/13   Stingy Investing
"Enterprise value has one peculiarity that market capitalization does not. It's possible for a company to have a negative enterprise value. That might sound odd at first but remember the calculation subtracts a firm's cash from the market value of its equity and debt."

Hedge fund math
07/21/13   Stingy Investing
"The lesson here is to try to minimize your costs and employ sensible tax planning methods. While a 2-per-cent annual fee might not seem like much, it can really add up over time. Throw in a performance fee on top, as most hedge funds do, and the costs skyrocket." [Btw, the calculations included a high-water mark]

The problem of small accounts
07/21/13   Brokers
"Good advice costs money. Really good advice costs a lot of money, and is worth it, if you have enough money to spread the cost over. But when you have a small account, you have a problem in getting advice."

Stock pickers' markets a myth
07/21/13   Hallett
"Whenever the notion of a volatile sideways market bubbles up among portfolio managers, they claim indexing will fail in comparison to active stock selection. In other words, portfolio managers argue that trendless volatility is ripe for active management skill to shine. They call it a stock pickers. market. I call it a myth for retail investors."

Feds vs. raisins
07/21/13   Government
"The government allows them to sell one out of every two raisins.The farmers were always supposed to get a percentage of the money raised from the reserve pool raisins, but as profit margins dwindled over the years, so did the return to farmers. The tipping point came in 2003, when farmers received zero dollars in return for the 47 percent of the crop they had surrendered."

China roundtable
07/21/13   Munger
"China Bilateral Investment with Victor K. Fung, Charles Munger, and Jim Sinegal"

Detroit gap and pension math
07/20/13   Government
"Until mid-June, there was one ray of hope in Detroit's gathering storm: For all the city's problems, its pension fund was in pretty good shape. If the city went under, its thousands of retired clerks, police officers, bus drivers and other workers would still be safe. Then came bad news. Seemingly out of nowhere, a $3.5 billion hole appeared in Detroit's pension system, courtesy of calculations by a firm hired by the city's emergency manager."

The ever increasing value of parsimony
07/14/13   Thrift
"We're in a bull market for parsimony. Maybe even a parsimony bubble. Parsimony, which is a polite way to talk about penny-pinching, has never been a more valuable habit. Even with investment yields up from their recent lows, I think it is safe to predict that parsimony is well on its way to becoming a high art."

Chinese stocks earn 1% per year
07/14/13   World
"The MSCI China Index has gained about 14 percent, including dividends, since Tsingtao Brewery Co. (168) became the first mainland company to sell H shares to international investors in Hong Kong in July 1993. That compares with a 452 percent return in the Standard & Poor's 500 Index, 322 percent in the MSCI Emerging Markets Index and 86 percent from Treasuries. Only the MSCI Japan Index had a weaker performance among the 10 largest markets, losing about 1 percent."

The long cash squeeze
07/13/13   Markets
"But there's a similar emotion that I am seeing and hearing a lot of - the long cash squeeze. That is the feeling of being long cash that you want to deploy as the market rises."

Mind the expectations gap
07/06/13   World
"So it should come as no surprise that the economic performance of the past few decades has strongly influenced expectations about economic growth. However, when optimistic expectations get detached from reality we risk creating a significant expectations gap - a disconnect between what we take for granted given our recent experiences and what we should anticipate given simple arithmetic."

Lottery raided
07/06/13   World
"Argentina owes itself more money than ever as President Cristina Fernandez de Kirchner squeezes pesos out of public institutions from the pension agency to the lottery, a decade after losing its access to overseas financing."

Jon Chevreau talks Findependence
07/06/13   Thrift
"I thought it would be great to have Jon back. This time we go into a bit more detail about his book."

In Paris, value stocks are in bloom
07/06/13   Stingy Investing
"I have a soft spot for Mr. Tobik's value investing philosophy. But, much like a slice of Roquefort cheese, the tiny firms he favours aren't for everyone. If you're looking for a bit of extra flavour to determine whether these firms might suit your own palate, check out what his site has to offer."

A warning for dividend lovers
07/06/13   Stingy Investing
"Even a little bad news has the potential to go a long way. Should rising interest rates slow the economy down, it's fairly easy to envision the possibility of much lower stock prices and more than a few dividend cuts along the way."

Is wine BS?
06/30/13   Thrift
"A Lafite Rothschild Bordeaux sells for a minimum of around $500 a bottle, while humble brands like Charles Shaw and Franzia sell for as little as $2. But as far as 'wine economists' are concerned, the level of correlation between the price of a bottle of wine and its quality is low or nonexistent. In a number of damning studies, they suggest that wine is not just poorly priced, but that the different tastes we describe in wine may all be in our heads."

Saving investors from themselves
06/30/13   Markets
"I was once asked, at a journalism conference, how I defined my job. I said: My job is to write the exact same thing between 50 and 100 times a year in such a way that neither my editors nor my readers will ever think I am repeating myself. That's because good advice rarely changes, while markets change constantly. The temptation to pander is almost irresistible. And while people need good advice, what they want is advice that sounds good."

Last Leucadia letter
06/25/13   Value Investing
"Forty-three years ago, the two of us met at Harvard Business School and thirty-five years ago was the beginning of a remarkable partnership - the results of which are tabulated on the opposite page. The end of 2012 marks the end of this partnership and the last letter from the two of us."

The next financial crisis
06/23/13   Markets
"The 2007-2008 financial crisis, you might think, was an unpredictable one-time crash. But Didier Sornette and his Financial Crisis Observatory have plotted a set of early warning signs for unstable, growing systems, tracking the moment when any bubble is about to pop."

What's your outlook on the markets
06/23/13   Markets
"No one is happy with these answers. They are not what they want to hear, but often what they need to hear."

A new Graham defensive stock
06/23/13   Stingy Investing
"It's rare to find ancient structures that have stood the test of time. But those that survive hold lessons for the modern world. One of those lessons was recently learned by researchers at the Lawrence Berkeley National Laboratory who cracked the puzzle behind Roman concrete. When used to build ports, the ancient stuff significantly outlasts the common version, which can handle only a few decades in the waves."

Too much liquidity can drain returns
06/23/13   Stingy Investing
"Liquidity sounds like something an investor might need after a bad day in the market. But when it comes to stocks, a highly liquid approach is not the way to go. Instead, teetotallers are more likely to outperform."

The importance of expectations
06/16/13   Value Investing
"I've come to appreciate that investments always take much longer than I expected to work out. This is why investors seek out catalysts, it's an effort to reduce patience. I'd rather work on my patience skills, because there are a lot more investments without catalysts out there, than with them."

Value around the world
06/16/13   Value Investing
"Over the last decades the value premium has well been documented for various time spans and countries. It is proven to be a consistent asset pricing anomaly. This study presents the largest international study on portfolio returns formed according to the book-to-market ratio and examines how cultural differences affect the magnitude of value returns. The cultural differences are measured in two dimensions: patience and risk aversion based on the data collected by the International Test on Risk Attitudes (INTRA). In accordance with a consumption based Gordon model we find that risk aversion is positively and patience negatively related to the magnitude of value profits. Similar results hold for the average stock volatility. Although patience is positively related with the degree of economic development, its relation to value returns does not disappear after controlling for general economic and financial development measures. Furthermore, we find that the value premiums are also positively associated with the country price earnings ratio and negatively related to firm size."

A rising star at Berkshire
06/16/13   Buffett
"When Tracy Britt arrived in Omaha, Neb., in 2009 to meet with Warren Buffett, she brought a Harvard M.B.A., a glittering resume and a boatload of ambition. But she also brought the famed investor a gift to highlight their shared Midwestern roots: a bushel of corn and a batch of tomatoes."

Ancient Roman concrete
06/16/13   Tech
"After 2,000 years, a long-lost secret behind the creation of one of the world's most durable man-made creations ever - Roman concrete - has finally been discovered by an international team of scientists, and it may have a significant impact on how we build cities of the future."

Pathological Altruism
06/16/13   Behaviour
"Oakley defines pathological altruism as "altruism in which attempts to promote the welfare of others instead result in unanticipated harm." A crucial qualification is that while the altruistic actor fails to anticipate the harm"

The Top 200 for 2013
06/15/13   Stingy Investing
"Short term results are one thing but the All-Stars really shine over the long-term. If you had bought equal amounts of the All-Stars and rolled your gains into the new stocks each year, you'd have enjoyed 15.2% average annual returns over the last eight years. By way of comparison, the S&P/TSX Composite (XIC) only climbed 4.5% a year over the same period. The All-Stars outperformed by an average of 10.7 percentage points a year."

Top 500 U.S. Stocks for 2013
06/15/13   Stingy Investing
"Canadian stocks have many fine qualities but are far less numerous than their U.S. counterparts. It's only natural to look across the border for bargains to round out a diversified portfolio. That's why we extended the Top 200 methodology stateside and are pleased to present this year's MoneySense Top 500 guide to U.S. stocks."

Boring stocks can bring exciting returns
06/09/13   Markets
"In the stock market, boring is often beautiful. That is because 'boring' stocks - those that have exhibited the least historical volatility - on average outperform the most 'exciting' issues - those that have been the most volatile. And not by just a small margin, either."

Canada's mixed blessing
06/09/13   Real Estate
"This is a mixed blessing to say the least, since there was already plenty of concern that the Canadian job market had been artificially pumped up in recent years by the building boom - well, double down on those concerns, as construction payrolls now account for a record high of overall jobs at 7.6%."

Markel thrives on buy and hold
06/09/13   Stocks
"Piece by tiny piece, Thomas Gayner is building the next Berkshire Hathaway."

Stocks with a bounty
06/09/13   Stingy Investing
"I have a soft spot for old Westerns, the type where it's easy to tell the villains and heroes apart - largely because the bad guys are framed in posters proclaiming they're wanted either dead or alive. When it comes to stocks, is it possible to want them dead or alive? It might be, provided they have enough assets that can be liquidated at a profit. In such cases, investors stand to make money if a firm goes bankrupt, but can also do very well should it turn around and thrive."

A fresh perspective
06/02/13   Fun
"Economics Lecturer Number 14,000,006"

This fund is likely to chop its payout
06/01/13   Hallett
"I continue to be amazed by some of these products that pay out fat monthly cash amounts. I know of this fund but have not followed it closely. When I first looked it up in response to Derek's note, the sub-$4 unit price prompted me to double check to make sure I had the right fund. But such is the (negative) power of overdistributing - particularly in a volatile fund. IA Clarington Canadian Dividend is entirely invested in stocks (unlike the many others I have reviewed and analyzed, which were balanced funds with stocks and bonds)."

Extreme saving
06/01/13   Thrift
"Today, the 31-year-old father of three saves more than 70% of his net income with the goal of retiring in a few years."

8 Stingy Stocks for 2013
05/31/13   Stingy Investing
"I started the Stingy method in 2001 in an effort to beat the S&P500 by picking value stocks within the index itself. So far the results have been highly satisfactory."

On stock splits
05/26/13   Markets
"This brings me to my conclusion: stock splits are a momentum effect, but it is larger when companies are still have a cheap valuation. Perhaps splits have no effect on stock performance - it is all momentum and valuation."

Vitamins seen delaying dementia
05/26/13   Health
"Now, in the latest of a steady drumbeat of research that suggests diet, exercise and socializing remain patients' best hope, a study published today in the Proceedings of the National Academy of Sciences shows that vitamins B6 and B12 combined with folic acid slowed atrophy of gray matter in brain areas affected by Alzheimer's disease."

The mystery of the missing experiments
05/26/13   Academia
"Francis makes the argument that when sample size, effect size and power are low, datasets that are replicated repeatedly without occasional, or even relatively frequent null findings should be treated as suspect. This is because in experiments where it is reported in the data that certainty is low, it should be expected that we'll see null effects with frequency due to the rules of probability." [Watch Gregory Francis' talk]

Value with a touch of quality
05/26/13   Stingy Investing
"I believe that value comes first. Despite their apparent ugliness, bargain stocks do quite well, as a group, due to their low prices. But some of them deserve to trade for even less. That's why many value investors look at business quality in an effort to find stocks that are both cheap and relatively safe."

Trying to catch a falling stock
05/26/13   Stingy Investing
"Perusing the list of stocks hitting their 52-week lows inspires a little ditty called Down, Down, To Goblin Town to play in my head. It's the victory song of a horde of goblins in the 1977 animated version of The Hobbit, and they sing it while dragging the heroes down into the bowels of their dark lair. It neatly captures the dangers investors face when buying falling stocks."

How predictive is the Fed model?
05/19/13   Markets
"Are stocks cheap on the basis of the Fed model? It seems so. Should we care? No."

The toilet paper revolution
05/19/13   World
One of the most hilarious things I've read recently ... "'The revolution will bring the country the equivalent of 50 million rolls of toilet paper,' he was quoted as saying Tuesday by state news agency AVN. 'We are going to saturate the market so that our people calm down.'" Viva la revolucion!

How Benjamin Graham revolutionized activism
05/19/13   Graham
"Like much of Graham's investment wisdom, his writings regarding shareholder activism remain relevant in our time. They are especially pertinent, given recent high-profile disputes between activist shareholders and well-known public companies."

Is saving for suckers?
05/19/13   Stingy Investing
"From time to time, opting for a touch of spendthrift indolence might be the right move"

Making money out of junk
05/19/13   Schloss
A 1973 interview with Walter Schloss

The active passive investor
05/12/13   Indexing
"Today, the more affluent investor's default strategy is - increasingly - indexing, inspired by the likes of John Bogle, Charles Ellis and William Sharpe. But I have often found that indexing advocates implement strategies that are quite a departure from the underlying theory they use to support their choices."

The hidden DB in DC plans
05/12/13   Retirement
"The greatest attraction of a DB pension plan is the appearance of certainty in the levels of retirement income it promises to its members, which contrasts with the uncertainty of retirement income levels that a DC pension plan can provide to its members. Readers may be interested to discover, though, that their DC pension plan (or other retirement savings plan such as a group RRSP or deferred profit sharing plan) may have a minimum level of DB hidden within it; in fact, it.s highly likely to be the case for any Canadian DC arrangement."

IRS: not good at math
05/11/13   Taxes
"About a half-hour into a conference call with reporters Friday afternoon, senior Internal Revenue Service official Lois Lerner said something she will regret. 'I'm not good at math,' she confessed as she tried to summon a statistic."

Doubt yourself
05/05/13   Buffett
"There was no big news at Berkshire Hathaway Inc..s annual meeting this past weekend, but there was one great lesson for investors: Perhaps the most important thing you can do when everything seems to be going right in your portfolio is to listen to somebody who insists you are wrong."

Investors earn handsome paychecks
05/05/13   Buffett
"Warren Buffett's decision to hire two investment lieutenants is paying off for Berkshire Hathaway, and it's paying off for the two younger money managers, too."

Stock buybacks beat the market
05/05/13   Markets
"Still, numerous studies over periods extending back more than three decades have found that the average buyback stock proceeds to outperform the market."

Vanguard total int'l bond fund
05/05/13   Indexing
"The latest filing provides additional details on the fund that.s designed to track the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (dollar hedged), and will tap into a universe of 7,000 high-quality corporate and government bonds from 52 countries."

Fairfax meeting slides
05/05/13   Watsa
A few of their reasons for hedging...

Berkshire Hathaway meeting notes
05/05/13   Buffett
"MoneyBeat was live in Omaha's CenturyLink Center where more than 35,000 Buffett lovers crowded for some six hours while Buffett and sidekick Charlie Munger's dished out investment wisdom and wit. Read our recap"

Colorful Charlie Munger
05/05/13   Munger
"One of Munger's biggest zingers today had him saying the European Union's decision to allow Greece to join was as stupid as someone using rat poison as whipping cream."

Buffett and the long view
05/05/13   Stingy Investing
"As Warren Buffett takes the stage this weekend, it's time to ask if his flagship company is still worth investing in."

The underground recovery
04/27/13   Economy
"Ordinary Americans have gone underground, and, as the recovery continues to limp along, they seem to be doing it more and more."

Meet the man who retired at 30
04/27/13   Retirement
"But I didn't start saving and investing particularly early, I just maintained this desire not to waste anything. So I got through my engineering degree debt-free - by working a lot and not owning a car - and worked pretty hard early on to move up a bit in the career, relocating from Canada to the United States, attracted by the higher salaries and lower cost of living. Then my future wife and I moved in together and DIY-renovated a junky house into a nice one, kept old cars while our friends drove fancy ones, biked to work instead of driving, cooked at home and went out to restaurants less, and it all just added up to saving more than half of what we earned. We invested this surplus as we went, never inflating our already-luxurious lives, and eventually the passive income from stock dividends and a rental house was more than enough to pay for our needs"

The retirement gamble
04/27/13   Retirement
"Retirement is big business in America, but is the system costing workers and retirees more than what they're getting in return?"

You cheeky monkey
04/25/13   Stingy Investing
"Some index investors have suggested that expensive portfolio managers could easily be replaced by monkeys willing to work for bananas. Now a recent study goes even further. It suggests that a chimp can outperform not just the typical money manager but the traditional index fund as well."

Prem Watsa counsels cash
04/20/13   Stingy Investing
"Investors are often advised to buy low and sell high. But such advice has an under-appreciated corollary: They also have to be prepared to weather the bad times. All too many people crumble in the face of adversity and simply don't have any money left to buy when prices are low."

Why did baby catalogs arrive at our house?
04/20/13   Tech
"Marketing Genetics is a data company based in Nebraska. They gather up data that companies share with each other about purchasing behavior and sell it to other companies that are looking for certain types of customers. They've got a database of 100 million people and more than a billion transactions (most of those from the last couple of years). As they show in a sample report on their site, Marketing Genetics takes a company's data and creates a statistical profile of their best customers. Then they look for similar people within their own databases, so those companies can send these people catalogs or other direct mail. They call this Data Navigation Analysis (DNA)."

Meet the student who shook Austerians
04/20/13   Economics
"Herndon became instantly famous in nerdy economics circles this week as the lead author of a recent paper, 'Does High Public Debt Consistently Stifle Economic Growth? A Critique of Reinhart and Rogoff,' that took aim at a massively influential study by two Harvard professors named Carmen Reinhart and Kenneth Rogoff. Herndon found some hidden errors in Reinhart and Rogoff's data set, then calmly took the entire study out back and slaughtered it."

The high dividend yield return advantage
04/20/13   Dividends
"In the pages that follow, we set forth a number of studies, largely from academia, analyzing the importance of dividends, and the association of high dividend yields with attractive investment returns over long measurement periods. You may be familiar with our prior booklet, What Has Worked In Investing, where we provided an anthology of studies which empirically identified a return advantage for value-oriented investment characteristics. In the same spirit, we attempt to examine what some in our industry have referred to as the "yield effect"; i.e., the correlation of high dividend yields to attractive rates of return over long measurement periods. Much has been written about dividends, and what is contained herein is not meant to be an exhaustive analysis, but rather a sampling of studies examining the impact of dividends on investment returns. We hope it will provide you with added insight and confidence, as it did us, in pursuing a yield-oriented investment strategy."

A value tilt in disguise?
04/20/13   Dividends
"The yield factor associated with high-dividend-yielding stocks actually detracted from performance."

Economic experts vs. average Americans
04/20/13   Academia
"The topics most covered in the economic literature, where economists agree among themselves the most, are also the topics in which their opinions are most distant from those of average Americans. This difference does not seem to be driven by knowledge, since informing people of the expert opinions does not have much impact on the responses of ordinary Americans. The explanation most consistent with our limited evidence is that people do not trust many of the implicit assumptions embedded into the economists' answers and that economists give them for granted."

Cisco provides a lesson in patience
04/20/13   Stingy Investing
"We're fast approaching that special time of year when we celebrate the silly things our government spends money on by donating to the cause. Yes, it's tax time again."

What if they're wrong?
04/20/13   Economics
"Our debates, however, are based on a simple assumption that the set of numbers we use to measure the economy are accurate, or at least close enough. But what if they aren't? What if we are making powerful assumptions about the economy based on statistics that are at best half-right?"

The lure of hedge funds
04/19/13   Funds
"Investors often buy what they think is exciting, sophisticated, and complex with the embedded assumption that all of these attributes will lead to greater returns. We see this today where we witness the continued explosive growth of hedge funds. But, a careful examination of the data reveals that these fancy lures fail to hook as much in excess, after-fee returns as more time tested strategies."

Will Portugal be the first one out?
04/14/13   World
"Portugal's leading elder statesman has called on the country to copy Argentina and default on its debt to avert economic collapse, a move that would lead to near certain ejection from the euro."

Why home prices change
04/14/13   Real Estate
"In an ideal world, steady and uniform inflation would have no effect on rational decision-making because it affects incomes as well as prices. But in the real world, inflation does affect our psychology. People feel more optimistic when their nominal pay rises or when a neighbor's house sold for more than they paid for theirs. But in thinking about investments for the long term, we should focus on fundamentals - on real, inflation-corrected values and on the economics behind them."

Making sense of small cap returns
04/14/13   Hallett
"Depending on the particular fund or product under examination, you could draw very different conclusions on otherwise similar portfolios and performance levels. When looking at retail mutual funds, for instance, old income trust funds are now in one of three categories - i.e. Canadian Dividend and Income Equity, Canadian Small/Mid Cap Equity or Canadian-Focused Small/Mid Cap Equity. (It's interesting to note that some institutional databases continue to track a Canadian Income Trust class of products.) For those looking at returns over the past five years, all of this background is relevant because two factors are skewing the performance comparison today."

News is bad for you
04/14/13   Behaviour
"News is bad for your health. It leads to fear and aggression, and hinders your creativity and ability to think deeply. The solution? Stop consuming it altogether"

Why Canada can avoid banking crises
04/10/13   World
"Since 1790, the United States has suffered 16 banking crises. Canada has experienced zero - not even during the Great Depression."

Absolute momentum
04/07/13   Momentum Investing
"There is a considerable body of research on relative strength price momentum but relatively little on absolute, time series momentum. In this paper, we explore the practical side of absolute momentum. We first explore its sole parameter - the formation, or look back, period. We then examine the reward, risk, and correlation characteristics of absolute momentum applied to stocks, bonds, and real assets. We finally apply absolute momentum to a 60-40 stock/bond portfolio and a simple risk parity portfolio. We show that absolute momentum can effectively identify regime change and add significant value as an easy to implement, rule-based approach with many potential uses as both a stand- alone program and trend following overlay."

Jolt from the blue
04/07/13   Stingy Investing
"When you're enjoying your cup of coffee this weekend, download a copy of Francis Chou's annual report. It'll help you to become a better investor."

Housing and the never-ending recession
04/07/13   World
"They argue that the recession is far from over and that the lingering effects of the collapsed housing market will be felt for years to come."

Deposit insurance may increase bank risk
03/31/13   Economy
"The argument for deposit insurance is that banks are inherently unstable, by virtue of their economic function they borrow money in the form of deposits (which can be instantly withdrawn) and lend to businesses on a longer-term basis. They are thus vulnerable to destabilising and self-fulfilling bank runs. But the counter-argument is that of moral hazard depositors have no incentive to choose between banks on grounds of riskiness, and bank executives can take risks knowing that they are underwritten by the insurance scheme."

Regulators should ban this leveraging strategy
03/31/13   Hallett
"A while ago, I was asked by a regulator to speak to its enforcement staff about T-series mutual funds, which pay investors generous monthly cash distributions. The regulator wanted an independent view on product mechanics, common uses and risks, and was particularly interested in my thoughts on leveraging. I happily obliged, ending my talk with a firm recommendation: If I were the chief compliance officer of a dealer, I would not allow any T-series fund sales that involved: borrowing to invest in funds that have a policy to pay distributions exceeding pure yield taking the mostly 'return of capital' (RoC) distribution in cash and using that cash to pay down the loan. Here's my reasoning"

Chou's 2012 letter
03/30/13   Value Investing
"In general, we are not that bullish on the stock market. Aside from a couple of industries like the financial institutions in the U.S. and companies in the retail sector, we are not that comfortable with the prices of many stocks."

Fishing for value
03/30/13   Value Investing
"There are generally three scenarios under which they buy into a company - it's ignored by Wall Street, is misunderstood by investors, or has suffered from panic selling."

The best stock-picker
03/30/13   Value Investing
"By buying companies with safe, high dividend yields, Norman assured himself of getting only companies that had solid financial characteristics (after all, they couldn't have been paying dividends for many years without a good underlying business model and strong cash flow), at prices that were usually - in hindsight - ridiculously cheap, because Norman generally bought them during a hysteria that was causing Mr. Market to offer that particular stock at a particularly attractive price."

Buffett and Hussman on the market
03/30/13   Markets
"My point is that there are a variety of highly predictive, methodologically distinct measures of market-level valuation (I used the Shiller PE and Tobin's q, but GNP or GDP-to-total market capitalization below work equally as well) that point to overvaluation."

Cyprus details heavy losses for bank customers
03/30/13   World
"Major depositors in Cyprus's biggest bank will lose around 60 percent of savings over 100,000 euros, its central bank confirmed on Saturday, sharpening the terms of a bailout that has shaken European banks"

The power of investor checklists
03/30/13   Stingy Investing
"Developing a good checklist is well worth the effort and it can save you from running aground when using stock screens. Both work well together and they allow investors to follow a consistent, well reasoned, and systematic approach. If checklists can improve the results of pilots and surgeons, they should also be able to help you become a better investor."

Cyprus said to reach deal
03/24/13   World
"Deposits below the EU deposit-guarantee ceiling of 100,000 euros will be protected, and a loss of no more than 40 percent will be imposed on uninsured depositors at the Bank of Cyprus, two EU officials said. Uninsured depositors at Cyprus Popular would largely be wiped out, two other officials said."

Most large acquisitions are errors
03/24/13   Markets
"One use of free cash flow is acquisitions. Companies that focus on small acquisitions and organic growth use free cash flow wisely. Large acquisitions overpay to buy a trophy asset that the acquirer may unintentionally destroy. Avoid such acquisitive companies. The company may grow, but the stock price likely will not."

Teach Americans to be cheap
03/24/13   Thrift
"The most potent way to get more wealth to the poor and middle-class is to get these people to save more of their income, and to invest in assets with higher average rates of return."

Earthquakes and the markets
03/24/13   Markets
"Like the devastating Japanese earthquake of 2011, the stock market crash of Oct. 19, 1987, came as a total shock to most people. Yet the crash wasn.t entirely without warning. Five days before, the Dow Jones Industrial Average dropped 95 points, which was then an all-time record. Two days later, it closed down another 108 points. Just like others crashes -- 1929, for example -- and all major earthquakes, the 1987 crash was preceded by significant rumblings."

The perils of picking stocks
03/24/13   Stingy Investing
"There are strange things done in the midnight sun by the men who moil for gold. Stranger still than the events in Robert Service's poem are the sights to be seen when screening for stocks. They might not be as bloodcurdling as witnessing the cremation of Sam McGee, but simple stock screens can lead you to infernal stocks."

The search for balance
03/17/13   Stingy Investing
"Even low-fee tax-optimized balanced portfolios face difficulties today because the yield on Canadian bonds is very low. To get a real return of 5 per cent on an equally mixed stock and bond portfolio you'd need to see stocks gain more than 9 per cent a year, which seems unlikely at this point. Because most people wind up in reasonably balanced portfolios, it's more critical than ever to avoid high fees. Unless, of course, they're keen on the Freedom 75 plan."

Retirement is cheaper than you think
03/17/13   Retirement
"The Statistics Canada Survey of Household Spending for 2010 found senior couples on average spent a combined $53,100 a year (including money paid to income tax). From looking at that figure as well as talking to seniors and their advisers, I estimate that a retirement lifestyle that you might call middle class or a bit better costs about $40,000 to $70,000 per couple (also including income tax payments)."

Would the real Peter and Paul please stand up?
03/17/13   Behaviour
"But we must also understand that exchange is only possible to the extent that people trust each other: when eating in a restaurant we trust the chef not to put things in our food; when hiring a builder we trust him to build a wall which won.t fall down; when we book a fl ight we entrust our lives and the lives of our families to complete strangers. Trust is social bonding and societies without it are stalked by social unrest, upheaval or even war. Distrust is a brake on prosperity, because distrust is a brake on exchange."

Trust & growth
03/17/13   Behaviour
"Trust is core to all economic activity. You only want to act if you think you will not be cheated. Poor societies are often characterized by a lack of trust, which hampers exchange, and hampers credit as well. To the degree that you doubt that you will be rewarded for the fruits of your labor, you will face frictional costs in doing business, and you might reduce your business in areas that don.t seem to be worth the risk."

Unfair, short-sighted and self-defeating
03/16/13   World
"The logic behind both of these reform initiatives is that bank deposits have two, contradictory properties. They are both sticky, because they are insured; and they are flighty, because they can be pulled instantly. So deposits are a good source of funding provided they never run. The Cyprus bail-out makes this confidence trick harder to pull off."

Levy on bank deposits
03/16/13   World
"They call Sicily the island of the mafia. It's not Sicily, it's Cyprus. This is theft, pure and simple"

Why quality can be a drag
03/10/13   Stingy Investing
"Value investors have it easy. A far bigger challenge is making money with quality stocks."

Big U.S. banks on 3-for-1 sale
03/10/13   Stingy Investing
"Two-for-one sales can inspire mixed feelings in the aisles of the grocery store. While I love big discounts, I have a hard time accommodating an extra bag of potato chips. But I never get my fill of bargain stocks and the market is now offering a rare three-for-one deal on U.S. bank stocks."

Hugo Chavez: Good timing, not good leadership
03/10/13   World
"Chavez was not a dictator, exactly. Like Vladimir Putin in Russia, Chavez could claim genuine support. Also like Vladimir Putin, Chavez carefully controlled the country's institutions - courts, media, bureaucracy - to ensure his rule. Chavez mimicked Putin in one final way: His power ultimately rested on his control of his nation's oil."

Momentum investing shouldn't work
03/10/13   Momentum
But it does work, prompting Eugene Fama to describe it as 'the premier anomaly'"

Financial stress index back down
03/10/13   Economy
"According to yesterday's press release, the Kansas City Financial Stress Index (KCFSI) for the month of February continues to indicate that financial stress in the U.S. financial system remains low. The KCFSI fell to -0.61 in February, the lowest reading since June 2007, well before the Great Recession and financial crisis"

Chavez was bad for Venezuela
03/08/13   World
"Politically, what Chavez did was successful. But that success came at the cost of the future. Instead of building a more stable foundation for long-term prosperity, Chavez started cutting chunks out of the house and handing them out to the crowd. Socialists, especially, take note: he essentially destroyed one of the most competent, successful, state run companies in the world. Thirty years from now, that--and not the transitory social programs that were thereby funded--will be his real legacy to Venezuela."

How not to run a pension fund
03/03/13   Government
"I love alternative investments. I love Wall Street. I don't mind paying fees. But I want returns."

We aren't the world
03/03/13   Behaviour
"It is not just our Western habits and cultural preferences that are different from the rest of the world, it appears. The very way we think about ourselves and others - and even the way we perceive reality - makes us distinct from other humans on the planet, not to mention from the vast majority of our ancestors. Among Westerners, the data showed that Americans were often the most unusual, leading the researchers to conclude that 'American participants are exceptional even within the unusual population of Westerners - outliers among outliers.' Given the data, they concluded that social scientists could not possibly have picked a worse population from which to draw broad generalizations. Researchers had been doing the equivalent of studying penguins while believing that they were learning insights applicable to all birds."

The gross profitability premium
03/02/13   Academia
"Profitability, measured by gross profits-to-assets, has roughly the same power as book-to-market predicting the cross-section of average returns. Profitable firms generate significantly higher returns than unprofitable firms, despite having significantly higher valuation ratios. Controlling for profitability also dramatically increases the performance of value strategies, especially among the largest, most liquid stocks"

Buffett's annual letter
03/01/13   Buffett
"wishing makes dreams come true only in Disney movies; it's poison in business."

Mohnish Pabrai interview
02/24/13   Value Investing
"I don't invest in technology stocks because I understand it. Basically, Buffett would say that he doesn't invest in tech businesses because they are subject to change. Industries with rapid change are the enemy of the investor. Tech businesses, particularly biotech, is a problem from that point of view. All industries work with change but you should ideally be investing in businesses with a low rate of change, not a high rate of change."

Tough times for classic value investors
02/24/13   Value Investing
"While the U.S. equity market has performed exceptionally well since its bottom in March 2009, Warren Buffett's Berkshire Hathaway has trailed the index by nearly 6%. Buffett is among a number of prominent classic-value investors who have fared poorly over this period. Over long time horizons, value investing has consistently outperformed growth strategies and the broad market index. So what is causing this recent phenomenon?"

Teaching college students about finance
02/24/13   Education
"I would revise the concept of the cost of capital to make it credit-centric. All the efforts to calculate the cost of equity capital from equity market correlations are bogus. They don't make any economic sense. In most cases, the cost of equity should not exceed the yield on an average CCC bond."

Mindful of bubbles in a boom for deals
02/24/13   Markets
"Thomson Reuters reports that during the first two months of 2013 there have been over a thousand deals valued at almost $163 billion in total. That's more than double the amount for the same months in 2012. If this blistering pace continues, merger and buyout deals could surpass $2 trillion in 2013, far more than the $1.57 trillion in 2007."

Put cheapness first
02/24/13   Stingy Investing
"EBIT/EV alone outperformed the magic formula's combination of ratios. Investors would have been better off simply looking for cheap stocks and not paying any attention to quality."

Why investors lag funds
02/16/13   Funds
"Big surges and big declines spur greed and envy, then fear and anger. The more emotional an investor, the worse his decisions will be. The past two bear markets are perfect examples. Some people bought stock funds heavily prior to the bear markets only to see their investments plunge. Then they bailed close to the bottom only to miss big rebounds. Not everyone did that, of course--many were patient--but flow data tell us too many went in the wrong direction."

The 'scrooge' who begat plenty
02/16/13   Thrift
"Perseverance, property rights, contracts, civility to one's opponents, silence, smaller government, trust, certainty, restraint, respect for faith, federalism, economy, and thrift: these Coolidge ideals intrigue us today as well. After all, many citizens today do feel cursed by debt, their own or their government's. Knowing the details of his life may well help Americans now turn a curse to a blessing or, at the very least, find the heart to continue their own persevering."

Try some disciplined rebalancing
02/16/13   Hallett
"After considerable discussion and research a few years ago, our firm settled on a +/- 20% method whereby we invest clients at target allocations, and allow their allocations to each chosen manager to drift up or down by 20% of the target."

Retirement 100 (Fall 2012)
02/16/13   Stingy Investing
"Like avid gardeners, conservative investors want their stock dividends to grow. They aren't in it for a quick trade and, instead, follow a slower steadier method that requires only a little weeding and pruning from time to time. It's an approach that has allowed more than a few investors to enjoy a comfortable retirement."

What would Buffett buy?
02/16/13   Stingy Investing
"Warren Buffett is one of the best investors of our age and his extraordinary record spans many decades. Such is his renown as both an investor and businessman that even presidents seek his advice on economic matters. But Buffett isn't shy about sharing the factors behind his investment success."

Investors shortchanged by Dell
02/16/13   Stingy Investing
"In this case, the takeover price of $13.65 per share is rather parsimonious. Indeed, it has raised the ire of the smart folk at Southeastern Asset Management who believe Dell is worth much more. Their reasoning is worth reading because it shows, at least in part, how they go about valuing stocks."

David Brooks on The Social Animal
02/16/13   Behaviour
"In a lecture entitled How Success Happens, New York Times columnist and author, David Brooks, draws from the research in his latest book The Social Animal"

Hyperinflations, hysteria, and false memories
02/16/13   Montier
"To say that the printing of money by central banks to finance government deficits creates hyperinflations is far too simplistic (bordering on the simple-minded). Hyperinflation is not purely a monetary phenomenon. To claim that is to miss the root causes that underlie these extraordinary periods. It takes something much worse than simply printing money. To create the situations that give rise to hyperinflations, history teaches us that a massive supply shock, often coupled with external debts denominated in a foreign currency, is required, and that social unrest and distributive conflict help to transmit the shock more broadly."

6 Graham Stocks for 2013
02/12/13   Stingy Investing
"If you had bought equal dollar amounts of the Graham stocks and replaced them with the new crop of stocks each year, you would have gained 681% (19% annualized) over the full period."

Beware of the bias
02/10/13   Markets
"The sponsors of American corporate-pension plans still expect 7.6% nominal returns from their portfolios, and fund their schemes accordingly. But given the plans' allocation of assets to low-yielding bonds, such targets imply a nominal return of 12.5% from equities, or 10% after inflation. That is way above the historical experience of stockmarket returns. Congress has relieved the pressure on pension-plan funding by allowing companies to fiddle with the discount rate so as to make their liabilities look smaller. But as Mr Marsh remarks, this approach is akin to a homeowner who, upon hearing of the approach of a hurricane, decides not to board up his house but to smash his barometer."

New cough medication
02/09/13   Fun
"It's a suppressant. Sometimes."

Shiller on housing
02/09/13   Real Estate
"Robert Shiller, a professor at Yale University and co-creator of the S&P/Case-Shiller index of property values, talks about the outlook for the U.S. housing market."

Tetanus for Tim?
02/09/13   Stingy Investing
"Spartan accommodations are one reason I became interested in a stock owned by money manager Tim McElvaine. He quipped that he felt the need to get a tetanus shot before visiting the aging headquarters of the company"

The Psychology of Human Misjudgement
02/04/13   Munger
"Audio of the often referred to speech by Charlie Munger on the psychology of human misjudgement given to an audience at Harvard University circa Jun 1995."

Legacy of Benjamin Graham
02/04/13   Graham
"Legacy of Benjamin Graham: The Original Adjunct Professor."

Small towns can offer big savings
02/03/13   Retirement
"Studies have shown that a majority of Canadians have thought about where they want to retire but only a small portion would actually leave the country. Some appear to be moving to smaller communities, according to 2011 census data which shows the population of people 65 and over growing in small towns."

Wall Street hates you
02/03/13   Brokers
"Don't buy what someone wants to sell you. Buy what you have researched."

Francis Chou on value
02/03/13   Value Investing
"What keeps you awake at night? I worry if my valuations are wrong. If they are wrong, then you don't make money. I am looking for something that I believe is worth 100 cents, but which I can buy for 50 or 60 cents. But is my 100 cents accurate? Did I miss something? Is the earning power there? Are the assets really worth what they're saying? And is management honourable, or will they run off with the money?"

Rethinking the importance of financial literacy
02/03/13   Education
"Malcolm Hamilton talks about financial literacy"

How much does that indexed portfolio cost?
01/31/13   Stingy Investing
"If you need advice on building your portfolio, indexing may not be your best option"

Big Med
01/27/13   Health
"Restaurant chains have managed to combine quality control, cost control, and innovation. Can health care?"

A new housing boom?
01/27/13   Real Estate
"After the traumatic collapse of the last price bubble, Americans seem less sanguine about owning versus renting. According to the Census Bureau, the homeownership rate has been falling, from 69.0 percent in the third quarter of 2006 to 65.5 percent in the third quarter last year."

Biggest controversy with commissions
01/26/13   Hallett
"Type the phrase 'financial advisor commissions' into Google and the results will be less than flattering to the financial advice industry. Understandably, regulators and the media are focused on full service brokers or financial advisors when this issue arises. But there is a good reason for both parties to cast their eyes on another closet door concealing a well-kept secret."

Make headlines with media-shy stocks
01/26/13   Stingy Investing
"If anything, the media spotlight seems to hurt stock returns, according to Lily Fang and Joel Peress in an award-winning 2009 Journal of Finance study."

We're number 1
01/26/13   Real Estate
"Canada has a new worthwhile initiative. After years of booming prices, that bastion of politeness north of the border is looking to avoid a catastrophic housing bust for something more, well, boring. Initiatives don't get more worthwhile, and perhaps not more difficult considering Canada just might have the biggest housing bubble in the world right now."

World is right to worry about US debt
01/26/13   Debt
"The world's overwhelming presumption is that Americans will find a path to budget sustainability. Nevertheless, it is hard for many in the US to escape the nagging feeling that just maybe this time we won't. With more than $5tn of US Treasury debt, and memories of the huge inflation of the 1970s and default on gold clauses in the 1930s, foreigners would be right to worry a little."

Aswath Damodaran compiles global stock data
01/20/13   Stocks
"For the last two decades, I have dedicated the first two weeks of each new year to a ritual. I obtain/collect/download data on all publicly traded companies listed globally, using a variety of data sources, and then analyze and present the data, aggregated at a number of different levels: by country, by region (US, Europe, Emerging Markets, Japan, Australia and Canada) and by industry. I report on measures of operations (profit margins, turnover ratios, working capital), measures of leverage (debt ratios), measures of risk (beta, standard deviation, equity risk premiums, country risk premiums) and pricing measures (earnings multiples, book value multiples, revenue multiples). I just completed my 2013 update and you can find it by clicking here."

Are leveraged ETFs the new portfolio insurers?
01/20/13   Academia
"This paper studies Leveraged and Inverse Exchange Traded Funds (LETFs) from a financial stability perspective and emphasizes their similarities with portfolio insurers of the 1980s. Mechanical positive-feedback rebalancing of LETFs resembles the portfolio insurance strategies, which contributed to the stock market crash of October 19, 1987 (Brady Report, 1988). I show that a 1% increase in broad stock-market indexes induces LETFs to originate rebalancing flows equivalent to $1.04 billion worth of stock. Price-insensitive rebalancing of LETFs results in price reaction and extra volatility in underlying stocks. Although LETFs are not as large as portfolio insurers of the 1980s and have not been proven to disrupt stock market activity, implied price impact calculations suggest that their effect could reach a tipping point after a large market move in periods of high volatility."

High yield market is out of control
01/20/13   Bonds
"I find it interesting: Many many people realize the market is heavily overvalued in terms of compensation of return versus risk, but they still are buying."

Fewer, richer, greener
01/20/13   World
"The world has been going to hell in a handbasket for as long as anyone can remember, but it never quite seems to get there. In fact, according to just about any objective measure you choose, the health and wealth of the human race has been improving rapidly and almost continuously for at least the last 200 years."

Is sitting like smoking?
01/20/13   Health
"As we work, we sit more than we do anything else. We're averaging 9.3 hours a day, compared to 7.7 hours of sleeping. Sitting is so prevalent and so pervasive that we don't even question how much we're doing it. And, everyone else is doing it also, so it doesn't even occur to us that it's not okay. In that way, I've come to see that sitting is the smoking of our generation."

Why Apple investors should remember Nortel
01/19/13   Stingy Investing
"Thankfully, most giant companies don.t implode quite as spectacularly as Nortel, but the stocks with the biggest market capitalizations tend to disappoint shareholders nonetheless."

National balance sheets
01/19/13   World
"But Morgan Stanley reckons the shortfalls are so large (between 800% and 1,000% of GDP in the US and UK) that the situation is hopeless. In effect, the public sector must impose a burden on the private sector but the only question is how."

We are the 98 percent
01/12/13   Government
"The only way to finance a big European-style state is to have it paid for by massive taxation of everyone, mostly the middle class. Right now, we are avoiding honest debate on this fact."

Examining Benjamin Graham's record
01/12/13   Graham
"The evidence suggests that Graham's simplified approach to value investment continues to outperform the market."

The future of shopping
01/12/13   Thrift
"How long can brick-and-mortar retailers afford to operate stores that serve as display cases for someone else? More importantly, will that be long enough to transform themselves into something less vulnerable to Internet competition?"

Howard Marks on Bonds
01/12/13   Bonds
"These are unhappy times for bond investors according to Howard Marks."

The uncertainty of market returns
01/09/13   Markets
"The dawn of a new year gives birth to a plethora of predictions. Stock market prognostications are entertaining, but they should taken with a big grain of salt."

Net-nets are not for faint of heart
01/09/13   Value Investing
"Strategy Lab contributor Norman Rothery recently tackled an issue that's important for those investors who rely on screens to identify attractive stocks. Should you buy all of the stocks that pass your screen, or simply view them as prospects, which require additional analysis before you sort out winners from losers?"

The winners curse
01/05/13   Markets
"Our previous studies suggested that top dog status is of no advantage in the United States; indeed, it's often something of a curse. As we globalize this study, the results confirm the global relevance of "too big to succeed." In the G-8 test of developed economies, we find the same phenomenon in each and every market: a statistically significant performance shortfall for top companies, relative both to the companies' sectors and the stock market as a whole, with no countries immune to the effect."

Advice to the lazy investor: Be even lazier
01/01/13   Stingy Investing
"A peculiar investment trust put the buy-and-hold experiment into practice many years ago. The trust takes passivity to such an extreme that it makes many index investors look like a bunch of drunken day-traders."

Asset Mixer Update
01/01/13   Stingy Investing
We've updated our Asset Mixer to include nominal data for 2012.

Periodic Table Update
01/01/13   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include nominal data for 2012.

The real fiscal problem
01/01/13   Government
"Why it's not repaying the swelling national debt that necessarily by itself creates a problem for the U.S. economy; rather it's the government's increasing spending on unproductive programs in the first place, financed with increasing levels of national debt, that creates the real problem for the economy."

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