Investing

Last week I asked, can you trust advice from your bank?  The bottom line is you should be wary of any advice you receive from someone who can profit from your actions. That doesn’t just hold true for banks and financial advisors, but the same goes for real estate agents, mortgage brokers, insurance brokers and car salesmen. I received…

Investing isn’t rocket science, but our irrational behaviour often leads to poor returns.  For the 20 years ending December 2010, the S&P 500 Index averaged 9.14% a year, but the average equity fund investor earned only 3.83% a year. This happens because we tend to buy after the stock market goes up, and bail when…

The United States, Britain and Australia have recently introduced legislation to strengthen the legal rights of investors and put in place a professional standard for investment advisors. Unfortunately, Canadian standards are far inferior.  They rely on self-regulatory organizations such as the Mutual Fund Dealers Association, the Investment Industry Regulatory Organization of Canada and the Canadian…

When I started looking for some dividend stocks to add to my TFSA, one of the first places I went was the TD Waterhouse markets and research section.  I was looking for a stock screener to help me narrow down my selections. I’ve held my RRSP, TFSA and RESP accounts with TD Waterhouse since I…

Most people don’t consider using a fee only financial planner when they’re ready to start investing.  The first step is usually to meet with a financial advisor at your bank.  The advisor assigned to you guides you through a basic risk assessment profile and then, based on your assessment, suggests the appropriate investments. Commission Based…

An investment dog is an underperforming stock or fund.  Typically, investment dogs have dropped in value, sometimes substantially, and then stagnated.  Belief in the asset itself, that its value will rebound and the desire to recoup the original investment keeps investors hanging on. Emotional Attachment Making the decision to sell low is quite often painful…

Exchange traded funds have become more popular as investors realize the benefits of lower investment costs and diversification.  Most ETFs track a specific index, like the S&P TSX 60, or the S&P 500, and they are traded on stock exchanges – just like individual stocks. Unlike with mutual funds, which can be traded for free,…

Just as nature abhors a vacuum, people hate randomness … I call this tendency the predication addiction.  Jason Zweig “Your Money and Your Brain” We all know about the economic cycle, the natural fluctuation of the economy going from growth, peak, contraction and trough.  It looks like the bell curve you’re familiar with from school.…

Passive investors have been allowed to define active investing for active investors.  I want to even out the discussion from an active investor’s perspective. How Passive are Passive Investments? Let’s first call into question whether passive investing is really passive investing.  We’ll start with the American S&P 500 index. Unbeknownst to many investors, the S&P500…

I recently read an article about a man who liquidated his entire investment portfolio in 2008, just after Lehman Brothers collapsed.  He was convinced this was the end of capitalism and that currency would be worthless.  To protect himself he converted everything into gold. While I can understand the fear that drives someone to sell…