Here come the Dog Days! It’s time to savour every last moment of summer. Unfortunately, our Dog Days will begin with another surgery for my son. Things aren’t quite going according to plan, so he needs a day surgery to (hopefully) fix that. At the same time, our move out of town is less than two weeks away. As a result, posts in August will be exceptionally sporadic as will email and comment responses. Thanks for your patience!
I’ve got a really nice mix of articles for you here from July. Enjoy!
1. Tony Schwartz presents Ten Principles to Live by in Fiercely Complex Times. There’s some great food for thought here.
2. Bret from Hope to Prosper reminds us that He Who Dies With the Most Toys Is Dead. There are some fine tips here on saving for the future without living like a pauper in the present.
3. Umair Haque wonders aloud Is “Finance” a Cult? He suggests that today’s financial industry “has little to nothing to do with (real) economics. Where economics is about creating authentic value, igniting positive sum games, discovering pathways to prosperity, finance is (or has become) about reshuffling yesterday’s value, extracting the lion’s share in zero sum games.” It’s a fascinating read.
4. According to an article on Business Insider, Shanghai Is Looking More And More Like Japan’s Great Bear Market. There’s an interesting chart there that compares the performance of China’s Shanghai index (from 2007 to present) to Japan’s Nikkei 225 (from 1989 to present). The inference is that China’s market may be embarking on an extended bear market, much like the one Japan has endured for over 20 years – and counting.
5. Frugal Trader over at Million Dollar Journey explains Why We Switched Our Cell Phone from Rogers to PC Mobile. We’ll be in the market for a couple of new cell phone plans soon. Truly, the options are dizzying. But this article offered some good ideas on what to watch.
6. Few Investors Enjoy a Lifetime Stock Return As High as the Average Stock Return. Rob Bennett reminds investors that buying and holding is not always a very effective investment strategy. We need to consider valuations when we buy or sell equities.
7. You Are Not an Equation. Well, that’s a relief. The Big Think made this seemingly obvious observation, taking it a step further to point out how our current reliance on mathematical models to predict just about everything – including human behaviour – can lead us astray: “In finance, people built models that use mathematics to describe markets and to describe people and the participants in the markets. And it becomes tempting for them to believe that the mathematics is a theory and forget that it’s actually an analogy [i.e. model] that only has limited extension.”
8. The ongoing debt crisis in Europe has raised more doubts about the utility of credit default swaps (CDS) as a hedging tool. The most recent deal involving Greece involved a partial default such that the CDS were not triggered. What good are CDS if they don’t pay off when the bonds they’re supposed to insure don’t pay out? The Wall Street Journal covered this in an article on what to do when A Hedging Tool Loses Its Edge. This is just another example of how our financial system has become a Ponzi scheme.
9. On his Retire Happy Blog Jim Yih asked What Rate of Return Should You Assume for Your Retirement Plan? Planning for retirement is not as easy as entering a certain rate of return in a retirement calculator and sitting back to watch that return materialize. Jim provides a good look at why that’s the case and some reasonable ideas on how to plan for a range of returns.
I hope you enjoyed this month’s reading. Feel free to comment on any of the articles below!