Investing in stocks and mutual funds is like having relationships with different people. Sometimes you hate them, sometimes you like them, sometimes you are not sure if you can trust them or not. These days, your relationship with investment must be pretty chaotic; like a bad marriage 😉
Steve Alexander presents The Week Capitalism Failed posted at MagicDiligence – Optimizing Joel Greenblatts Value Stock Strategy. An interesting analysis of what happened.
Trying to hit the cutest girl / boy
We are sometimes tempted to get into a bar and try to talk to the cutest girl/boy on the dance floor. We know that we don’t have much chance, but if it ever works, it’s going to be the night of our life. Choosing the perfect investment may get you the investment return of your life:
Dividend Growth Investor presents Toronto-Dominion Bank (TD) Dividend Stock Analysis posted at Dividend Growth Investor.
Long Term Relationship
When you are planning to get married, have children, buy a house and a dog, you are planning to have a long relationship with your wife / husband. Planning your retirement or trying to make money with investments over a long period of time are very similar relationships with your investments:
Contrarian Profits presents 5 Reasons Why Stocks and Commodities Will Soar Over Next 9 Months posted at Contrarian Profits.
Cade Krueger presents How Do I Find A Small Business Franchise Opportunity posted at Small Business Franchise Opportunity.
FIRE Finance presents Early Retirement Case Study – My Dollar Plan Retires At 29 posted at FIRE Finance.
The Smarter Wallet presents Freshman Fund: Save For College With A 529 Plan Registry posted at The Smarter Wallet.
When you are in a relationship, you must control your emotions. Over reacting to an event can lead to a lot of pain. While investing, selling everything because the market is down one day can be very painful as well:
Tushar Mathur presents Are you disappointed with your mutual fund investments? posted at Invest In India.
Tyler presents Are Dividend Investors Idiots? | Personal Finance 101 posted at Dividend Money.
Kevin presents CGM Focus: A Perfect Example of Why Chasing Returns is Foolish posted at No Debt Plan.
Steve Alexander presents The Week Capitalism Failed posted at MagicDiligence – Optimizing Joel Greenblatts Value Stock Strategy.
Michael presents Real Estate Investing Startpoints: Negotiation, Legality, and Referrals posted at Small Business Blog.
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KCLau reminds us of 8 basic principles to stay out of bad debts.
The Digerati Life asking: “Does The Economy Affect How You Save Money?”. I personally hope that what is going on will convince people to save more money!
The Personal Financier writes an interesting post about how you can see the recent economic crash as a perfect opportunity to make money. You must not hesitate… even if there is blood on Wall Street.
Money Ning is enjoying his Star Bucks Coffee without a guilt (and it is god damn good!!)
Canadian Capitalist wrote a quick but very useful-straigt-to-the-point post about how to pick a winning mutual fund. Not bad for an ETF fans 😉
MDJ relates the pros and cons of a career in the Financial Services. Being a Financial Planner myself, I can say that he did a great job. I’m glad that I have a based salary with bonuses on my numbers so I can avoid a big part of the conflict of interest!
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After three days, I head couldn’t take it anymore. Even my manager who came to meet me for a two hours coaching session couldn’t believe it was going on for that long. All day we are hearing whistles. They are about 50 and they are louder than 10,000 ducks going down South. Our branch is located nearby a big hotel and apparently, the ducks are pissed. Every three years or so, they do it: they do down in the street and annoy as many people they can because they are not happy with their job.
In Quebec, about 40% of all jobs have a union organisation behind them. That mostly includes everybody working for the government, teachers, nurses, police officers, firefighters and several other jobs. While some groups are pretty quiet and we don’t hear much about them, some others like to make noise and shout loud and clear that they are not happy and that they will “break” the management in order to get what “they deserve”.
One of my MBA colleague once have half of his staff with a union and the other half not affiliated with any groups. This was the result of a fusion of two branches. Believe it or not, after a year, the employees decided to get rid of the union because they realized they were getting exactly the same benefits than the others but they were paying the union to “work for them”.
I am obviously annoyed to hear all those whistles since the beginning of the week but there is more behind it. I don’t understand the point of pissing off other people because you are not happy. I would seriously never empathize with who are doing such things. If you are really not that happy, just change job!
Honestly, I don’t really see the benefit of having unions anymore. I truly believe that the employment market has exploded enough and there is so much competition that employers now have the responsibility to treat their employees right if they want to keep their business running. Would unions really improve anything? As a worker I don’t want to be protected, I want to be recognized for my work and have the possibility of having promotions, getting bonuses and a nice work environment. I believe that if I work well, my protection will be assured by my value as a good employee instead of having a strong union behind me so I can relax when I feel like it.
I understand that unions were necessary a while ago since employers were treating their employees like dogs. But I think that this time is over.
So tell me, do you find any good point of having a union at work?
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I see that almost everyday when I meet a client dealing with a broker. I look at his stocks and most of them are Canadians. Even worst, he has every single big company based in our province. Even when I look at my trading portfolio, most stocks are Canadians. Is our market that good? Or our knowledge that limited?
I would say that the answer lies in the fact that we prefer buying company that we know, that we can see than company that we can only read about.
People who were home biased for the past 5 years must be laughing since the Canadian Market beat most stock established stock markets and definitely did a lot better than the S&P 500. Most TSX stocks did pretty well along the way and encourage Canadian investors in their choices.
The major problem with this kind of approach is the concentration level into a small market that is highly dependent on resources and financials. The past few weeks was another good example of what happens when we have all our eggs in the same basket.
We have to remember that the Canadian Stock market only represent 3% of the global economy. In addition to that, take off the resources, the financials and RIM and you don’t have much left in the TSX.
The first solution would be to sell your losers and start looking South of the border. The US market didn’t do so well since our Canadian dollar increased by 40% over the past 5 years. If we look at what is going on with our dollar this year, we can determine that it probably won’t go over parity and that the time to invest in the US market might be interesting.
Problems are definitely not over in the States but the market took a severe hit and I think it could be the right timing to move a part or your assets toward that market.
If you want to invest in other countries, I would suggest that you use indexes or mutual funds depending on your level of knowledge and involvement in your portfolio. Some people prefer to manage actively their investment. Those should trade ETFs as they show a low MER and offer a great potential of returns.
If you want to smoother the ride but still participate in the global economy, mutual funds could be a good alternative. While their MERs will be around 2%+, they offer a good diversification and take off the pressure of managing your investment on your own.
The key point is not to let everything in the Canadian market. We had some really great years but the party is now over. It’s time to move your money around and get your hand on other countries where they might be ready to start their party 😉
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Is it time to buy financials? Stop laughing, I’m serious. Actually, I’m not the one telling you to pull the trigger, Warren Buffet is. Who is Buffet? In case you’ve never heard, he is (not much debate about it either), the most famous investor of all times. He runs Berkshire Hathaway inc, an investment company that has had exceptional returns for decades now. I will discuss more about the Buffet methodology and what he looks in when investing, but the basics are: value, market leader, simple business.
Now, it’s easy to see that in this specific case (Warren Buffet announcing a 5$USD billion investment in Goldman Sachs (GS), the attractive part is not the simple business. In fact, Warrant Buffet probably thought for a long while before investing in this one as he usually sticks to very simple businesses (except for maybe the several ties to insurance companies). So an investment of this magnitude is done because Buffett and his very talented team have determined that Goldman Sachs is vastly undervalued.
Sure, Buffet has been wrong in the past, and might be in this case. But errors from the famous investor have been fairly rare and I would guess that if he determined it was time to get back into the beaten down financials (GS is actually down 42% so far this year), that sounds good enough for me. Of course, it will be a bit more expensive to buy the stocks as there are quite a few “Buffet followers”. In fact, the stock jumped 11% in overnight trading today after the announcement.
And while there are still a few worrying aspects about Goldman Sachs such as its high leverage ratio (owning 23$ of assets for every dollar of shareholder equity), we tend to think that Buffet probably has a very good idea about the stock and a lot more info than we do.
“Goldman Sachs is an exceptional institution,” said Buffett, the 78-year-old chairman and CEO of Omaha, Nebraska– based Berkshire Hathaway. “It has an unravelled global franchise, a proven and deep management team and the intellectual and financial capital to continue its track record of outperformance.”
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