Friday, November 23, 2012

Short Takes: Hot Water Heater Door-Knockers, Stock Picking Games, and more

Preet Banerjee has some more fun with a hot water heater door-knocker in his latest podcast. Watch out for shoe thieves!

Andrew Hallam argues convincingly that well-meaning teachers who have their students play typical stock picking games are actually teaching all the wrong lessons.

Scott Adams reasons that “the majority of hedge funds are criminal enterprises hiding behind ‘secret’ algorithms.” Given how poorly hedge funds perform as a group, Adams may be overestimating the amount of corruption. But, as usual, his ideas are entertaining.

Larry Swedroe has some fun debunking excuses for why only one out of 5 active managers are on track to beat their benchmarks this year.

My Own Advisor tackles the tricky subject of foreign income reporting to CRA and when you have to file a T1135 form with your income taxes. He runs through a number of scenarios that help explain the rules.

The Blunt Bean Counter lays out the rules for when employment benefits are taxable.

Tom Bradley at Steadyhand responds to a BNN host who asks what investors should do amid all the financial turmoil the world is enduring. Bradley’s answer is that if you have a sound plan that you’ve been following, stick to it. A steady hand indeed.

Canadian Capitalist examines Malcolm Hamilton’s contention that right now saving in a taxable account is futile in the sense that guaranteed investments make a negative after-inflation return. It may be true that sticking with guaranteed investments you will see an erosion of purchasing power, but what alternative is there? If you don’t need the money for a long time, you can choose stocks and bonds to get a positive real return as Canadian Capitalist illustrates. But if, for example, you need the money as a down payment on a house in two years, there is little choice but to accept this eroding purchasing power. You could get full value by blowing all the money right away, but that won’t do much good when it comes time to buy a house.

Big Cajun Man displays something similar to ethical investing by refusing to invest in a company that treated a loved one poorly when employed by the company.

Million Dollar Journey debates the necessity of having an emergency fund. One thing I learned from all the comments is that we all seem to have different definitions of “emergency fund”, and that too many people can’t even imagine becoming unemployed for an extended period of time.

4 comments:

  1. I don't think I'd call it ethical, more like vengeful investing. Have a great weekend!

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  2. Hey Michael, thx for link.

    I have been swamped and did not have a chance to add my two cents yesterday, but what an absolute brilliant analogy yesterday

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  3. Thanks for the mention.

    Preet's podcast was great.

    Andrew's article about stock picking being a poor instructional can be beneficial, in that, it's extremely difficult to pick winners.

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  4. @Mark: I think stock-picking contests actually send the message that picking winners is easier than it really is, which is dangerous. Out of a class of 25 students who all make high-risk stock picks, at least a couple will pick big winners randomly. This creates the illusion that everyone can do it with enough effort. A secondary bad message is that investing is all about stock-picking, which it doesn't need to be.

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