By 2 Cents on January 19th, 2012 | Category: Investing |  The following is a guest post by Rob Bennett. I’m pleased to announce that Rob will be sharing his thoughts with us here in a monthly column. Thanks Rob!
Gene Mauch was the manager of the Phillies baseball team when I was a boy growing up in Philadelphia. He once said something in an interview that has stuck with me ever since.
Mauch said that, when his team was on a winning streak, his job was to pop holes in the inflated egos of his players. When players are winning, they start thinking that they are so awesome that they can never be beat. They get sloppy. They stop doing sit-ups. They stop backing up throws. They’ve got it. They’re hot. Mauch would yell at the Phillies at such times. It was his job to bring them back to earth.
His job changed when the team [...]
Read on and enjoy … The Gene Mauch Rule for Investing Success
By 2 Cents on January 4th, 2012 | Category: Investing |  Youth is when you’re allowed to stay up late on New Year’s Eve. Middle age is when you’re forced to.
~Bill Vaughn
2011 has now passed into the annals of history. How did the financial world fare? What did we learn in the process?
2011 By the Numbers
Let’s start with a short report card on the 2011 performance of a few key indices: (You can click on each index to see the chart.)
TSX: -11.1%
S&P 500: No Change
CRB Commodity Index: -8.3%
Gold: +13.9%
Oil: +6.4%
Canadian Financials (XFN): -4.4%
U.S. Financials (XLF): -17.1%
Bonds (XBB): +9.3%
Canadian Dollar: -2.1%
Shanghai Composite: -22.6%
You can see that, although commodities in general were down for the year, gold and oil still rose. Copper was down [...]
Read on and enjoy … Post Cards from 2011
By 2 Cents on November 9th, 2011 | Category: Investing |  You don’t get harmony when everybody sings the same note.
~Doug Floyd
Every so often I like to write about what the bulls are saying versus what the bears are saying. Usually, both make a pretty good case. That doesn’t make it any easier for investors to make decisions, but it does offer them some balanced information which they can then use in any way they like. Today’s bull vs. bear debate zeroes in on a few specific factors rather than presenting a comprehensive overview.
I recently came across two differing takes on the market heading into the end of the year. The fourth quarter is often pivotal for portfolio managers as it’s their last chance to meet or beat their benchmark. Like it or not, that’s the nature of the game and it can affect markets as investors jump on trends in an attempt to cross the [...]
Read on and enjoy … Bulls vs. Bears: Q4 2011 Edition
By 2 Cents on November 2nd, 2011 | Category: Investing |  Illusions commend themselves to us because they save us pain and allow us to enjoy pleasure instead. We must therefore accept it without complaint when they sometimes collide with a bit of reality against which they are dashed to pieces.
~ Sigmund Freud
November started out much the same as October. Global markets plunged. By October 4th, however, most indices had bottomed and proceeded to embark on a historic month-long rally in anticipation of some kind of tangible action to quell the Eurozone debt crisis. As of October 30th, Toronto’s TSX was up about 7.7% on the month while the S&P 500 was up a whopping 13.5%. Those gains moderated somewhat to 5.5% and just shy of 11% respectively because of the Halloween dip.
So what caused the October bounce and subsequent fall from grace? Perhaps there were just enough rumours of a Eurozone debt solution throughout October [...]
Read on and enjoy … What Happened to the Euro Deal Euphoria?
By 2 Cents on October 28th, 2011 | Category: Investing |  Eat, drink and be scary.
~Author Unknown
I’ve got a little Halloween-themed Friday Food for Thought for you here today. I came across this article On Market Timing and Whiskey on Twitter via Rob Bennett. Basically, the author takes a 1952 quote about the pros and cons of whiskey and superimposes on it his own take on market timing.
As with any debate, defining the terms is key. Market timing, in some circles, has come to take on a foreboding tone. It is seen as an investment vice, garnering a level of disdain similar to that of whiskey during the days of prohibition. For some, it’s the strategy that shall not be named – the Voldemort of the investment world if you will. As we prepare to celebrate All Hallows’ Eve, I thought it might be interesting to look at whether market timing is [...]
Read on and enjoy … On the Evils of Market Timing
By 2 Cents on October 11th, 2011 | Category: Investing |
There is no hiding from the fact that the current economic climate is as bad as it has been for most of the last one hundred years. Savers are being hit by a combination of low interest rates and high inflation, and there aren’t many places to put your money. However, some economies around the world are continuing to boom, so some banks like Legal and General offer customers the chance to invest in emerging markets in the expectation of a better return.
However, is sending your money to the other side of the world really safe? And is it a good thing to do?
Answering the first question is easy enough, even though certain financial institutions haven’t had an easy ride in the press lately, they are still safe to invest with, particularly institutions who have always had a good record with safe investing.
As [...]
Read on and enjoy … Hope From Afar
By 2 Cents on October 5th, 2011 | Category: Investing |  Every exit is an entrance somewhere else.
~Tom Stoppard
So the markets have really taken it on the chin lately. I read a blog post via Twitter a week ago that said it was a great time to be greedy. It was widely retweeted by many in the personal finance blogosphere. It’s just the kind of confirmation they wanted to hear, but that advice hasn’t worked out too well – at least for now.
I’ve seen plenty of folks chomping at the bit to buy more stocks as prices plummet. Those dividend yields get a lot juicier as the price of the underlying stocks drop! Of course, there’s also room for them to get even more attractive, or to be cut if the economy continues to sputter.
Given the tremendous diversity of opinions out there, I thought it might be a good time to do another Bulls [...]
Read on and enjoy … Another Bear Market: Is It Time to Buy?
By 2 Cents on September 16th, 2011 | Category: Investing | The following is a guest post by Rob Bennett. Thanks for sharing your views Rob!
I am a critic of Buy-and-Hold and an advocate of Valuation-Informed Indexing. The one difference between the two strategies is that Buy-and-Holders say that it is not necessary to time the market while Valuation-Informed Indexers believe it is imperative to change your stock allocation in response to big valuation shifts so as to keep your risk profile roughly constant over time. I wrote two earlier guest blogs here describing the practicalities of Valuation-Informed Indexing (The How to of Valuation-Informed Indexing: Part One and The How-To of Valuation-Informed Indexing: Part Two).
The purpose of this post is to describe and comment on Vanguard Founder John Bogle’s views on Valuation-Informed Indexing. Bogle is widely [...]
Read on and enjoy … What Bogle Says About Valuation-Informed Indexing
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