Friday, August 17, 2012

Short Takes: Bogle on Stocks, Pumping up Mortgage Penalties, and more

John Bogle says the recent past has been the “worst time for investors that he has ever seen,” but “long-term investors must hold stocks, because risky as the market may be, it is still likely to produce better returns than the alternatives.”

Canadian Mortgage Trends reports that the 3-months interest penalty on some mortgages is based on a higher interest rate than your actual mortgage rate. Maybe people need to start hiring lawyers to read their mortgage contracts.

Rob Carrick gives us some tongue-in-cheek definitions of financial terms. I liked “Contrarian: Someone who is wrong in predicting what will happen, but in a different way than the herd.”

Big Cajun Man details his experience trying to get a reasonable deal on a new cellphone from Telus.

Give Me Back My Five Bucks has a very sensible way to look at prioritizing spending.

Canadian Capitalist has a guest post about whole-life insurance. It turns out that if you compare the return in the investment portion of a whole life policy against long-term bond rates, it looks reasonable. But the whole life policy doesn’t look very good compared to expected stock returns. So, a whole life policy should be viewed as partially life insurance and partly a bond issued by the insurance company.

Million Dollar Journey has a take from Ed Rempel about why Bill Gross is wrong about the death of equities. I prefer the simple explanation that Gross ignored the fact that dividends get spent.

Larry MacDonald continues to fight it out with housing bears.

Preet Banerjee looks at some research showing that women tend to outperform men at investing.

3 comments:

  1. Well commented, I think we only got a reasonable deal, the GREAT deals are to be had by insiders only.

    I also thank you for your informative and qualitative alcoholic materials when I visit.

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  2. “long-term investors must hold stocks, because risky as the market may be, it is still likely to produce better returns than the alternatives.”

    That is not anywhere near good enough. We each have only one lifetime to save for retirement. Do we want to depend on stocks because they are the most likely' to give us what we need?

    Not me.

    When gambling, sure I want to be on the most likely winner - if I get the right payoff (odds).

    But this is our lives. This is a bet that we cannot afford to lose. Do you want to take the chance of being forced to live in poverty?

    Not me.

    There is just too much to lose to bet your financial future on something that provides the 'most likely' chance of meeting our goals.

    That may be a good place to begin, but don't we want to improve our chances? I do.

    And standard passive investing just doesn't do it.

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  3. Perhaps your caution is warranted, Mark Wolfinger, but I am an unapologetic bull. We've had over a decade of sub-average stock market returns. That makes me think that the next dozen or 14 years will feature above average gains.

    The bears may well be caught sucking their thumbs as the market surprises on the upside. Warrent Buffett wrote an article back around 2000 predicting 14 years of below-average returns, to be followed by 14 years of above-average returns.

    Yes, this could very well be wrong, since interest rates are very low, and rising rates are bad for the market. But, like I said, I'm pretty optimistic we will have good returns going forward.

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