By 2 Cents on January 1st, 2012 | Category: 20 Cents |  I missed posting the November 2011 edition of 20 Cents due to my short blogging sabbatical, so I’m combining some highlights from November and December here. There are a few bonus links in there too. Enjoy!
1. Let’s get things started with 3 great articles courtesy of Barry Ritholtz at The Big Picture. Barry calls out Cognitive Dissidents, says the U.S. Is a Corporate Monarchy, and highlights 29 Systemically Dangerous Global Banks. All are well worth your time.
2. Million Dollar Journey posted an excellent article on Why Cash Is King. In a volatile marketplace, cash provides a much-needed, if low-yielding, margin of safety.
3. Global investors watched Eurozone leaders make unequivocal statements followed by very equivocal retractions for most of 2011. John Hussman did his best to sort out this economic Hokey [...]
Read on and enjoy … 20 Cents from November and December 2011
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 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 29th, 2011 | Category: Economics |  Growth for the sake of growth is the ideology of the cancer cell.
~Edward Abbey
Although I visit the grocery store at least once a week, lately I’ve had the feeling that I’m in a different place – and that’s not just because we recently moved. I sometimes can’t believe the prices I’m seeing on staples like milk, cheese, or sugar and I can’t help but notice that my cart doesn’t have to be very full in order to rack up a pretty big bill.
My shopping trips highlight several economic trends I’ve been noticing over the past few years. These trends are having a direct effect on our finances, and I’m curious to know whether others are finding the same thing. Here are 5 of the most salient trends that seem to be affecting our personal finances:
1. Less for More
Not only [...]
Read on and enjoy … 5 Economic Trends Affecting Your Money
By 2 Cents on September 26th, 2011 | Category: Economics |  Wisdom is knowing what to do next; virtue is doing it.
~David Star Jordan
It’s funny how rather complex issues can sometimes become a little more clear by accident. One of the spelling riddles I sometimes come across when I’m writing is the difference between principal and principle. Unlike other words like favourite and favorite, this is not simply a matter of unique international spelling conventions. Principal and principle actually have completely different meanings.
Principal vs. Principle: What’s the Difference?
According to my trusty dictionary, principal can refer to:
a school administrator something or someone of first rank or importance capital bearing interest
Principle, on the other hand, is:
a fundamental truth, or doctrine on which others are based rules of conduct or ethical behaviour Who Cares?
I’m sure some of you can already see where I’m going with this. It’s not about spelling [...]
Read on and enjoy … Too Much Principal and Not Enough Principle
By 2 Cents on August 8th, 2011 | Category: Investing |  Poetry is nearer to vital truth than history.
~Plato
In our recent discussions about the Couch Potato style of investing, I mentioned that this strategy relies on historical market returns. I pointed out that including a component that reflects valuations might improve the strategy. This is basically the Valuation Informed Indexing approach about which Rob Bennett often writes.
I mentioned in my last post that I like to look at historical data regarding market performance and valuations, but that I didn’t want to rely on it completely. I’ll explain my thinking here and you guys can let me know what you think.
Past Performance Is Not Indicative of Future Results
“History is a vast early warning system.” ~Norman Cousins
One of the [...]
Read on and enjoy … History Only Rhymes
By 2 Cents on August 7th, 2011 | Category: Investing |  It was widely rumoured around trading desks on Friday that S&P would downgrade the U.S. credit rating, stripping its coveted AAA status. Many dismissed the rumour. After the markets closed, it happened. Now what?
I have no idea what will happen when markets open tomorrow morning. It seems like there’s a pretty good chance of another major sell-off, although the market seems a lot more concerned about the situation in Italy than the U.S. debt downgrade. So far, Middle Eastern markets have opened down sharply, but they weren’t open on Friday, so they could just be playing catch-up.
On the optimistic side, it’s possible that the ECB will come up with something that (at least temporarily) calms the market’s concerns about the European debt crisis. According to some, there’s even a chance that markets could enjoy a kind of “sell the news” rally in the wake of the [...]
Read on and enjoy … What Happens Monday?
By 2 Cents on July 1st, 2011 | Category: 20 Cents |  It’s been a busy couple of weeks as my son had a significant surgery on his leg last week. Caring for him afterwards has been a round-the-clock job. I hope to be able to jump back into writing a little more in the coming weeks, although we have our big move looming as well. I’ll do my best to keep up with my one post a week minimum and add in a few bonus articles when I can. In the meantime, I did manage to find some good thought-provoking articles from around the web this June. Enjoy!
1. In an article published in the Washington Post, Barry Ritholtz of The Big Picture blog shared 7 Life Lessons from the Very Wealthy. This one is well worth a few minutes of your time.
2. What If 8% Is Really [...]
Read on and enjoy … 20 Cents from June 2011
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