Friday, November 7, 2014

Short Takes: When a DIY Investor Passes on and more

Here are my posts for this week:

Flash Boys

A Deeper Look at My Portfolio

Here are some short takes and some weekend reading:

Dan Hallett looks at the options for how a surviving spouse should manage a portfolio after a DIY-investor dies. My strategy has been to have my wife do all the trading in her own accounts. Slowly but surely she is learning the details of our fairly straightforward portfolio strategy.

Preet Banerjee reports on a study showing that professional fund managers in Sweden don’t manage their personal portfolios any better than non-experts in the same socio-economic class. I hope the study’s authors split people into classes by their wealth before the time period of study and not after. Otherwise, the results are biased. Wealthier classes always have some people who were in a lower class but got lucky taking big investment risks.

Tom Bradley at Steadyhand takes some shots at index-linked GICs offered by Canada’s big banks. I’ve never seen one of these GICs that I thought was good for investors.

Big Cajun Man gives us his take of advice to borrow to invest: “Blow it out your ear.”

Sean Cooper at Million Dollar Journey updates his net worth. He is known for living very frugally but has decided to live a little and has quit his part-time job.

My Own Advisor discusses his strategy for short-term savings.


  1. Was I too subtle with my message? Thanks for the inclusion, enjoy the cold and wet of November in Ottawa

  2. I don't think people's risk tolerances change... I think it's just that effectively asking "So.. what's your risk tolerance?" leads to inaccurate responses, much like asking "Do you feel well today?" may not be the best way to predict someone's health in a few years. The very basic and simplistic questions many advisors use to determine someone's risk tolerance is the problem.

    Asking people their risk tolerance in different market conditions is also not going to be effective, because it could take many years to get that picture, during which time their portfolio could have an inappropriate amount of risk.

    1. @Anonymous: I think we're caught in semantics here. If we define "risk tolerance" as how comfortable a person feels with his money in the stock market, then it definitely changes over time. If we define "risk tolerance" as the biggest stock market drop a person can handle without losing his resolve to hang on, then perhaps it doesn't change much over time (or at least doesn't change quickly).

      I agree that a simplistic questionnaire doesn't get the answer we need, but taking such questionnaires multiple times in different market conditions might give a better picture. The problem with this, of course, is that it would take an impractically long time.

  3. Thanks for the mention Michael, very much appreciated!

    Hope you had a good weekend, ours was busy!