Friday, February 26, 2010

Short Takes: Mutual Fund Scorecard, Credit Card Fatwa, and more

1. Larry MacDonald takes a look at the latest scorecard comparing Canadian mutual funds to their indices. I like the way Larry takes a thoughtful and balanced view. He correctly focuses on longer-term comparisons rather than just one year and points out legitimate concerns about the fairness of the comparisons.

2. Big Cajun Man finds some common ground with an Imam who declared a fatwa against credit cards because they contain usury.

3. Tom Bradley doesn’t think the ability to trade ETFs during the day is an important advantage over mutual funds. I agree. I’d be happy if there was trading for only one hour per week.

Thursday, February 25, 2010

Lack of RRSP Rush?

On my way to a drive-up cash machine recently, I glanced inside my bank branch expecting to see lines of people waiting to make RRSP contributions. After all, the deadline for 2009 RRSP contributions is only about a week away. However, I didn’t see anyone waiting. Of course, this is only a single snapshot in time at one bank branch, but it left me wondering if this year’s RRSP season is fizzling.

There are some good reasons to expect this to be a weak RRSP season. Unemployment is still high, the economy over the last year or so has been weak, and TFSAs are competing for people’s retirement dollars.

I’d be interested to hear what others have observed about the strength of this RRSP season. In particular, if any readers work for a bank or other institution offering RRSP accounts, how is this season shaping up?

Wednesday, February 24, 2010

Conflicting Views of Debt

Larry MacDonald’s piece on the Federal Finance Minister’s Task Force on Financial Literacy prompted me to read the task force’s consultation report. It contains little meat, but one area that struck me was the section on borrowing and debt. I tend to think of debt very differently from the writers of this document.

Here is how the report begins the debt section:
“Taking on debt is a normal — and, some would argue, essential — activity for Canadians. Most people, at some time or another, need to borrow money — whether it be to buy a home or a car, to start a business or to invest in an education. If this is done wisely — at competitive rates of interest, and paid off quickly — debt can be an intelligent strategy. “Good debt” has a number of benefits, including helping to build wealth, assets and credit ratings.”
People tend to feel better about poor choices that feel good in the short term if these choices feel normal. Overeating and over-drinking with friends is fun, but doing it alone is shameful. I think it is a mistake to teach people that debt is normal.

Here is my personal philosophy on debt:
“Debt is a crushing burden that weighs down people’s lives and dreams. Debt takes away choices. Taking on debt can be justified when the money is used for an appreciating asset, such as buying a house or paying for an education, but every reasonable effort should be made to keep the debt to a minimum. Avoid buying too expensive a house, and live frugally while attending school. Cars are an expense, not an investment. It is almost always better to get a modest used car you can buy outright rather than borrow for a more expensive car.”
So there you have two very different takes on debt. Choose the one you like. There is no doubt that the excerpt from the report is more in line with most people’s actual habits than my approach is. But that doesn’t mean they are better off piling up debts.

Tuesday, February 23, 2010

Investing Lessons from Hockey

I don’t claim to be an expert when it comes to hockey, but being a Canadian and a long-time fan, I have an opinion about Canada’s Olympic loss to the U.S. hockey team. Some of the mistakes that can be made in hockey related to risk and reward carry over to the investing world.

There is no doubt that the Canadian team is absolutely packed with talent. However, they seem to play each game from start to finish with the desperation of a team trailing by 3 goals. By taking chances and pushing hard to score, they seem to be increasing the risk of giving up goals.

This is the right strategy when you are trailing toward the end of a game, but is unnecessarily risky at other times. Taking a risk that increases the odds of scoring by 5%, but also increases the odds of being scored upon by 10% is a formula for losing games over the long run.

The same principle carries over to money. For most people, the best hope for making $10 million quickly is to buy a lottery ticket. However, a $2 ticket usually has an expected return of less than $1. So, buying lottery tickets is a formula for losing money over the long run. This is true despite the fact that so many lottery players claim to have won more money than they’ve spent.

In investing, the best bet to make a lot of money fast is to borrow to the maximum and buy some highly volatile stock or option. But the odds of financial ruin are frighteningly high with this strategy as well. The potential reward just isn’t worth the risk.

It is important to take risks when the odds are favourable. This is why we choose to buy stocks instead of just bank GICs. For those who buy individual stocks, you have to ask yourself whether you can live with one or more stocks losing most of their value permanently. For those who are broadly diversified, you need to ask yourself whether you will be able to ride out steep declines in stock prices and wait for the eventual recovery.

If your answer to these questions is that falling stocks prices will lead you to financial disaster, the potential reward isn’t worth the risk. If I’m right about the Canadian Olympic hockey team’s problems, here’s hoping that they start to choose better calculated risks.

Monday, February 22, 2010

ETFs Deteriorating

The average quality of ETFs has been deteriorating lately. Further evidence of this comes from a Morgan Stanley study where they found that U.S. ETF tracking error in 2009 averaged 1.25% compared to only 0.52% in 2008.

Not too long ago we could have summed up the low-cost indexing philosophy by saying “buy ETFs”. Those days are gone. The number of ETFs available has been exploding of late, but their quality is often questionable. Too often they have narrow focus and trade in more exotic investments where trading volume is low.

None of this means that there is a problem with low-cost indexing, though. The broadest and cheapest index ETFs are as good as they ever were. In some cases they have become even cheaper to own and they track their indexes even better. But the proliferation of poorer ETFs is sullying the “ETF” name.

The buyer beware rule is as true in the ETF space as anywhere else. Investors who only understand the low-cost indexing strategy at the level of “ETF = good” can get themselves into trouble.

Friday, February 19, 2010

Short Takes: New Mortgage Rules and more

Those who left a comment on one of my posts this week have noticed the word confirmation that I added to control spam. It has worked so well that I have removed comment moderation on posts less than a week old. So, your comments will begin to appear immediately instead of having to wait for me to approve them. Hopefully this will compensate for the added word confirmation step when writing a comment.

1. I’ve encountered dozens of opinions about the new mortgage rules. The most authoritative source is Canadian Mortgage Trends’ analysis. One point of confusion is exactly which 5-year rate will be used to determine homeowners’ ability to pay their mortgages.

2. Big Cajun Man is a little cynical about the annual call by the big banks to contribute to RRSPs.

3. Canadian Financial DIY reports on a new model for paying internet content creators called Flattr.

4. Larry MacDonald suggests a way to turn your spouse into a tax shelter. Saving money on taxes is a good thing but your spouse may not like the way Larry phrased this.

5. Potato’s wife gets the hard sell from a TD “advisor” who seems to know little about investing and a lot about increasing fees.

6. Where Does All My Money Go? is giving away two copies of QuickTax Standard.

Thursday, February 18, 2010

Justifying Poor Investment Choices

When presented with evidence that investment B is inferior to investment A, a common human reaction is to decide to invest less money in investment B rather than none at all. This kind of thinking may be what is behind some investment choices.

To illustrate what I mean, imagine that you’re playing a game where several decks of cards are shuffled and then you have to guess whether each of the top 16 cards is a spade or not before it is turned over. When asked what the best strategy is, a common response is to choose “not spade” 3/4 of the time and “spade” 1/4 of the time.

However, the strategy that maximizes the number of correct guesses is to guess “not spade” every time. The “not spade” strategy is expected to be right about 12 out of 16 guesses. The mixed strategy will guess “not spade” 12 times and get about 9 right, and will guess “spade” 4 times and get only one right, for a total expected number of right answers about 10 out of 16.

How does this relate to investing? We have many different justifications for allocating a small amount of our savings to investments we believe are inferior. For example, some advocate owning a small amount of gold. Gold has performed poorly over the long haul, but many people think they should have a little.

We are often told that it’s okay to invest the bulk of our savings in solid investments and allocate a small amount of “play money” to invest in dubious high-risk stocks. Others advise investing a small amount in some particular emerging market or market sector, but this makes little sense if we know nothing about that emerging market or market sector.

This idea of investing small amounts in dubious investments is often justified in the name of diversification among uncorrelated assets. This is a worthwhile goal to a point, but beyond a certain point, the benefits are minimal and do not compensate for the loss in expected return.

There can be good reasons for owning a variety of assets, but it should be based on serious thought rather than simply averaging out all the advice you hear.

Wednesday, February 17, 2010

Bizarre Resolution to Fitness Club Saga

Last week I used a problem my wife had with fitness club payments to illustrate the downside of automatic bank account withdrawals. Ultimately, the outcome was favourable for us, but only because of a strange twist.

The saga began when my wife signed up my son to use the fitness club for 3 months, but she was made to pay by automatic bank account withdrawal. We were told that my son could cancel after three months without penalty. This turned out to be an empty promise. The contract was for a year.

When my son cancelled, he believed that the bank account withdrawals would stop. When my wife noticed they hadn’t stopped, my son went back and got another empty promise that they would stop.

After paying for an extra 4.5 months (9 twice-a-month payments), my wife stepped in. She was directed to the head office where they had no record of any promises to stop the withdrawals. As far as they were concerned, we would be paying for the full year.

The head office told us that our only option at this point would be to cancel for a $99 fee. So, what should have cost about $173 was going to cost $532. At this point we weren’t in the mood to roll over and chalk this up to experience. We were prepared to continue the battle, but it turned out not to be necessary.

The head office examined the contract and decided that my son had signed it but was too young (by only a few days). They declared the entire contract void and have returned all of our money including the initial three months!

This has worked out happily for us, apart from the aggravation, but there were some clear lessons. If my wife had signed the contract, the fitness club was prepared to stick to their guns. None of the verbal promises from the individual club meant a thing to the head office. To me, automatic bank account withdrawals aren’t worth the potential hassle.

Tuesday, February 16, 2010

Earl Jones could be out as early as the Fall of 2011

Earl Jones pleaded guilty to defrauding 158 clients in a $50 million Ponzi scheme, and he has been sentenced to 11 years in prison. However, because his crime is non-violent, he could get out of prison after serving as little as one-sixth of his sentence, or 22 months.

It has to be galling for Jones’ victims to see him convicted and sentenced to nearly the maximum possible sentence, and yet he could be out in a couple of years. This shows that there never was any hope of a satisfying outcome for the victims, at least as far as punishing Jones goes.

The only (legal) satisfying outcome for the victims is the return of their money. However, selling off Jones’ possessions will only recover a small fraction of the money people thought they had invested.  (As reader Gene pointed out, here is an explanation of why there is no money left even though investors thought they had a lot of money invested.)

The latest hope for the victims is to find some deep pockets to blame. The deep pockets they’ve chosen are the Royal Bank’s. Jones used a Royal Bank account to handle the money for his scheme. I have no idea whether suing the Royal Bank is a desperate move with little foundation or whether Royal Bank did anything wrong, but this seems to be the only path that could allow the victims to get a significant fraction of their money back.

Monday, February 15, 2010

An Easier Way to Unload Old Electronics

For some time now it’s been difficult to get rid of old electronics such as televisions, computers, and stereo equipment. When I was young, we could just put these things out in the regular garbage and they would be taken away. In most places, garbage collection refuses them now (for good reason) partly because of the environmental concerns.

For quite a while there was a mishmash of businesses and government-run facilities that would take old electronics for a fee. These fees vary wildly. The services that are highly advertised and come to your home can be expensive.

I had been hearing rumours that some stores will take old electronics free of charge. Until recently, I had no corroboration of this rumour, but my mother has tested it.

She loaded up her trunk with an old computer monitor and scanner and headed off to Best Buy. Sure enough, they came out to her car and took them away for free. She hadn’t bought them at Best Buy and was never asked where she bought them. The store has a list of items they will take that apparently includes old monitors and scanners.

So, the next time you’ve got some unwanted electronics clogging up your life, try saving some money and aggravation by calling Best Buy or other businesses that sell electronics and see if they’ll take them off your hands.

Friday, February 12, 2010

Short Takes: The Trend to Online Investing, Taking on the Real Estate Cartel, and more

UFile Giveaway Results: Congratulations to John B. for winning the random drawing in the UFile giveaway. I have contacted him by email, and he will soon get his UFile access. Thanks to everyone who entered the contest.

1. Madhavi Acharya-Tom Yew of the Toronto Star finds that women and the elderly are turning to online investing to take charge of their financial dealings. I may be biased about the importance of this article because I was quoted, although something happened to the first sentence of my quote. My blog was also included in the Toronto Star’s list of best free online investment web sites. Any time I get mentioned in the same list as Canadian Capitalist I’m happy.

2. Larry MacDonald is on the side of the Competition Bureau in its battle with the real-estate brokerage industry over access to the Multiple Listing Service. I agree with Larry’s thinking on cartels. I’m a believer in free enterprise, but it only works when there is true competition.

3. Larry Swedroe reports that bond fund managers fare no better than stock fund managers at beating their index benchmarks according to an extensive study of bond funds from 1991 to 2008.

4. Million Dollar Journey finds what looks like a spousal RRSP loophole. It doesn’t look like a loophole to me because it burns up RRSP room, but it may be an interesting idea for couples who can’t seem to use all of their RRSP room anyway.

5. Where Does All My Money Go? examines home bias: our tendency to invest our money in our own country.

6. Big Cajun Man’s finances are sent out of whack by some big purchases.

7. Ellen Roseman has some words of warning about getting caught by damage charges when renting a car.

Thursday, February 11, 2010

Steadyhand Funds Take a Different Approach

I had the pleasure of meeting Tom Bradley and David Toyne of Steadyhand Funds. They are interesting players in the fund industry in that they use active management but are aiming for lower fees that leave more money in the pockets of investors.

Disclosure: There is nothing to disclose other than that David paid for my lunch. I’m writing this post because I found their answers to my questions interesting. Their web site claims that they are simple and direct and aren’t jerks. I agree.

Steadyhand funds charge lower fees than the typical actively-managed mutual fund in Canada. The equity fund charges at most 1.35%, and the global equity and small cap funds charge at most 1.7%. The “at most” part of those statements are explained in the questions and answers below.

The following are my best recollections of my questions and Tom and David’s answers. Let’s start with my toughest question:

Q: Charles Ellis, author of Winning the Loser’s Game (see review here) says that the investment world today is dominated by skilled professionals with up-to-the-second information and that no one professional can beat the others except by luck. What makes you think that Steadyhand can beat the market?

A: Steadyhand gives managers the best possible chance to beat the market. They are permitted to keep their holdings to 20 or 25 equities and they aren’t saddled with a lot of constraints. We believe that there is enough inefficiency in the market to allow small concentrated funds to beat the averages.

Q: Many large funds have trouble matching the gains they had when they were smaller. What will you do if you are wildly successful and the funds grow to the point where it isn’t feasible to have only 20 to 25 holdings?

A: That would be a nice problem to have. We would have to make decisions about how many holdings to permit, but eventually we would have to close the fund to new investors.

Q: The Steadyhand funds have fee rebates for long-time investors and for larger portfolios (starting at about $100,000). Are the reported returns based on the maximum fees or the actual fees taking into account rebates?

A: Reported returns are based on the maximum fees. So, if you take into account the rebates, some investors get higher returns than the reported returns. The rebates are given to investors in the form of extra units of the fund.

I don’t know if it is possible to beat the market averages these days other than by luck, but if it is possible, Steadyhand is giving their managers a fighting chance. Many mutual funds are closet index funds that are afraid to deviate too much from the index. Steadyhand’s equity funds definitely don’t look like index funds. If they do beat the averages, their investors will be happy, but if they don’t, even their lower than typical fees will look large compared to low-cost index funds.

Wednesday, February 10, 2010

Fun with Spam

I get some great comments on this blog that have contributed greatly to learning about money. However, there are many spam comments that you won’t see because I’ve filtered them out. Recently, the number of these commercial comments has increased to dozens per day.

For this reason, I’m forced to turn on “word verification”. This means that when you make a comment, you’ll have to look at a picture of a twisted word and type it in. It’s not difficult, but I hate to make commenters do this. If it cuts out enough of the spam comments, I may be able to turn off comment moderation which will make the whole experience more interactive with your comments appearing more quickly.

The typical spam comment consists of some gibberish followed by links to web sites selling some dubious products like drugs or porn. To give you an idea of what I’ve been seeing, here are a couple of the tamer spam comments (without the links) translated into English:

“H is common knowledge now one of the girls. And actually pay for one want them to see the H, points in the excitement of shyness or a compliment! She and Ona such Onameru The Ministry of Relief and we would love to hear and Nanako - H”

“Now the beach is an impressive star of here! Mobile PC not only easily find an opponent! New Star Beach probability of meeting markedly UP”

What are these people selling? The nonsense gives some clues, but I won’t follow the links to find out for sure.

I’m sorry to be blogging about blogging instead of blogging about money today. I thought it was important to explain the change. I’m hoping that those who’ve chosen to comment on past posts will continue to comment in the future.

Tuesday, February 9, 2010

The Dangers of Automatic Bank Account Withdrawals

Many people like the convenience of paying bills with automatic withdrawals from their bank accounts. Having all your utility bills and other regular payments paid automatically is definitely a time-saver as long as no mistakes are made.

I don’t like the lack of control that comes with automatic withdrawals from my bank account. I avoid them as much as possible. Past experiences where I had to beg a business to stop taking money they had no business taking made an impression.

In these situations I found my bank to be of little help. Although it may not be a bank’s official policy, I’ve been told that they will give any reputable business money from my bank account if the business asks for it. Banks have made it clear to me in the past that the best way to deal with problems is to work them out with the business making the withdrawals.

My wife is caught in a saga of improper withdrawals right now. My son wanted to use a Goodlife Fitness gym this past summer. She and I approved of an activity that didn’t involve playing video games, and she set about arranging to pay for a membership for the summer.

Strangely, Goodlife didn’t seem able to accept a full payment for the summer months. My wife tried several things, but they were adamant that the only way to pay was by automatic bank account withdrawal each month. She was told that my son could cancel his membership at the end of the summer without penalty.

With some uneasiness, my wife agreed to this arrangement. However, after my son cancelled the membership at the end of the summer, the predictable happened: the automatic withdrawals continued. We have now paid for an additional four months.

After some effort, we now have a promise from Goodlife that the withdrawals will stop, but no word yet on getting our money back. Our confidence that the withdrawals will actually stop is not tremendously high. We’ll have to wait and see.

Even if we are ultimately able to straighten all this out and get our money back, we’ve still lost because of the aggravation and time spent. This experience has strengthened my resolve to avoid automatic bank account withdrawals in the future.

Monday, February 8, 2010

Online Tax Filing and UFile Giveaway

The thought of filing taxes online raises some questions. Rather than do the typical review of the various tax packages available to Canadians, I thought I’d seek answers to questions about online tax filing. UFile was kind enough to answer my questions and provide a giveaway for readers.

The giveaway is a UFile family return suitable for a couple and their dependants. It can be used by a single individual as well. To enter the draw, send an email to the address in the top right corner of this blog. Entries must be received before Thursday at noon, eastern. The winner will be chosen at random among the entries and contacted by email.

When I first thought about filling out my income taxes online, a few questions came to mind:

1. Will my information be safe?

2. Will I be able to access my information again in future years?

3. If I have to refile my 2009 taxes in some future year, will I have to pay again?

Here are the answers I got from UFile:

1. Your tax data will be stored securely on UFile servers protected using encryption and strict security procedures.

2. UFile still maintains tax data back to the 1999 tax year. They may at some point remove very old data, but they will keep at least 10 years of tax information.

3. Once you have paid for the 2009 tax year, you won’t have to pay to access your data for that year again. Your 2009 information will remain available by password access.

The cost of UFile online tax filing is $15.95 plus sales tax for an individual, and $24.95 plus sales tax for a couple and their dependants. For individuals with an income of $20,000 or less, UFile is free. The same applies for a family, but the entire family’s total income has to be $20,000 or less to be able to file for free.

I’m interested in your experience with using UFile and any thoughts you have specifically on online tax filing rather than installing tax software on your own computer.

Friday, February 5, 2010

Short Takes: Hedge Fund Gating and more

1. Preet explains hedge fund gating. If you don’t know what this is, you should probably steer clear of hedge funds.

2. Canadian Mortgage Trends report that the Canadian banking system is leaving a part of the mortgage market untapped: Sharia mortgages. Sharia lenders can’t charge interest directly, but have to become co-owners who charge rent. Apparently there are thousands of customers on waiting lists for the few lenders who offer Sharia mortgages.

3. Big Cajun Man has some fun investing services to alert you that you’re spending too much.

Thursday, February 4, 2010

Deceptive Marketing Backed up by Enbridge

Ellen Roseman has put out another interesting collection of stories about people caught by the deceptive marketing practices of energy marketing companies. The first story is about a woman who received a cheque for $29.99 that she thought had something to do with a water heater she had changed. Unfortunately for her, she was wrong.

The cheque was from Just Energy and the back said “To enroll, cash this cheque at your financial institution. Just Energy will supply 5 years supply at 33.9 cents/m3 under your natural gas supply agreement and JustGreen free of charge.”

She deposited this cheque without even signing it, and now she has been locked into this contract. The writer estimated that the excess gas charges over 5 years will be about $10,000.

It seems obvious that there is no real contract. She should be able to tell Just Energy to go ahead and sue her, except for one problem: both Enbridge and the Ontario Energy Board are backing up Just Energy. Her gas supply will be cut off if she refuses to pay Just Energy.

This policy seems like absolute madness. It doesn’t even matter what a court of law would say about the validity of this so-called contract. The fact that Enbridge will be the enforcer puts consumers in an impossible situation. I agree with Roseman that this madness has to stop.

Wednesday, February 3, 2010

RRSP versus TFSA

Much has been made of the C.D. Howe report on the tax effectiveness of RRSPs and TFSAs. The nod goes to TFSAs over RRSPs much of the time, particularly for lower-income Canadians. However, the analysis for a given individual is often much simpler.

The limits placed on contributions to RRSPs and TFSAs can make the choice easier for some people. Let’s look at a few cases.

Case 1: Low income

As the C.D. Howe report shows, most lower income Canadians are better off with savings in a TFSA than an RRSP. If by some miracle a low-income earner has more savings left after maxing out his TFSA, he can contribute to his RRSP. That case was easy.

Case 2: High income

It’s nearly impossible to achieve the income replacement rates in retirement used in the C.D. Howe report without using both RRSPs and TFSAs. This makes the whole discussion moot. If contribution room were unlimited, then it would be worth debating whether high income earners should contribute to one or the other.

Case 3: Middle income

Middle income earners are also better off if they use both their RRSPs and TFSAs. Often this is impractical though, because these people are unable to save this much money. So, these are the Canadians who need to pore over the C.D. Howe report to make their choice.

By showing that TFSAs are of greater value than RRSPs to a wide range of Canadians, it could be that C.D. Howe is preparing to make the argument that TFSA room should be greatly expanded. This is just speculation on my part, but it’s hard to see the point of most of their analysis otherwise.

Tuesday, February 2, 2010

Ontario College Teacher Demands not about Money?

Any time a union and its management get into a conflict, both sides seek to gain public support. To this end, both sides market their positions to the public. By “market” here I mean that they seek to make people believe things about their positions that don’t seem to be true. The current threatened strike by Ontario College Teachers is no different.

I should start by saying that I have no idea which side is being more reasonable. I’m just observing the spectacle as an interested party because my wife has gone back to school at a college.

The union, OPSEU, is doing its best to portray its position as not being about money. One paragraph about the conflict on the OPSEU web site begins “Although salary has not been the union’s focus ...”

Chair of the OPSEU bargaining team, Ted Montgomery is quoted as saying that “issues surrounding workload and academic freedom are of paramount importance.” However, when you look deeper into the issues, these demands cost money and management’s objection to them is their cost.

Like just about all strikes and threatened strikes, this one is about money. The union wants more and management doesn’t want to give more.

Let me stress that although I’ve picked on the union’s marketing efforts, I have no reason to believe that they have been any more or less reasonable than management.

Monday, February 1, 2010

Money and the Law of Attraction

Usually I like to see reviews of a book before I choose to read it, but I’m less careful with books I listen to on CD rather than read. It’s a good idea to read (or listen to) ideas outside your usual sphere once in a while. I recently took a flier on Money and the Law of Attraction by Esther and Jerry Hicks because the title sounded money-related. What a train-wreck.

Did you know that children born with disabilities chose to be born that way?

Did you know that all disease and other health problems come from failing to focus exclusively on being healthy? Did you know that aging and disease can be banished by focusing only on being healthy?

Did you know that you can achieve anything you want by just “vibrating” your “source” properly? Whatever that means. Did you know that you can attract any amount of wealth you desire through this source vibration?

I actually managed to listen to the whole book, but not because I really wanted to. It had a car accident kind of draw, but this wasn’t enough to keep me listening. I just didn’t think it was fair to write a review without listening to the whole thing.

To the extent that this book made any sense at all, it preached maintaining a positive attitude. Beyond that it is extremely repetitive, hard to make any sense of in places, and contains fantastic claims of the type I listed above. If I used a star rating system, I’d be making a new category for a negative number of stars.