I recently revealed my portfolio’s asset allocation and the reasoning behind it . It consists of just 4 Exchange Traded Funds (ETFs). This might make some think that I’m not sufficiently diversified. To explain why this isn’t true, I’ll take a deeper look at these ETFs. I’ll also go over many of portfolio costs that investors face. The following chart gives some basic information about the ETFs in my portfolio: ETF Allocation Asset Class # Stocks MER Purchase Currency VCN 30% Canadian 248 0.05% C$ VTI 25% U.S. 3772 0.05% US$ VBR 20% U.S. Small Cap Value 812 0.09% US$ VXUS 25% World ex. U.S. 5783 0.14% US$ Diversification If we focus initially on the “# Stocks” column, we see that each ETF contains within it a large number of individual stocks....

You wouldn’t think that a book about high-frequency stock trading could be a compelling read, but Michael Lewis’s story-telling skills make his book Flash Boys a page-turner even for readers with a modest knowledge of stock trading. I’ve read several articles explaining high-frequency trading (HFT), but Lewis weaves much clearer explanations in with the stories of the people who set out to stop high-frequency traders from exploiting the rest of us. The book describes many ways that high-frequency traders get an unfair advantage, but the biggest problem was a form of front-running. Stock trades often get split up among different exchanges because no one exchange is offering enough shares to fill the order. High-frequency traders would place “very small bids and offers, typically for 100 shares, for every listed stock. Having gleaned that there was a buyer or seller of Company X’s shares, they would race ahead to the other exchanges and buy or sell accordingly.” So, whichever exc...

I wrote one post this week revealing my asset allocation and my reasoning behind it: My Asset Allocation Here are some short takes and some weekend reading: The Blunt Bean Counter looks into the tax implications of crowdfunding. Potato looks at a wide range of choices for implementing a passive index investing plan. He rates them by simplicity and costs. Big Cajun Man reports that TD Waterhouse has made it easier to make transactions in their RDSP accounts. My Own Advisor reviews the book The Empowered Investor . Million Dollar Journey shows how to figure out where your hydro dollars are going.

I’ve resisted discussing my asset allocation for some time, but now is finally the time to describe it and the reasons behind it. I’m not holding it out as a model portfolio; I believe it’s suitable for me and not necessarily anyone else. With that warning, enjoy the discussion and feel free to ask questions or take some pot-shots. The main reason why I haven’t discussed my asset allocation in detail before now is that I don’t want readers to treat it like a model portfolio and follow it blindly. Everyone’s situation is different. The need for variation in asset allocation from one investor to the next usually isn’t huge, but there is no one-size-fits-all portfolio. A secondary reason for keeping my asset allocation to myself is that I can’t be sure I’ll never change it. For example, I recently made the minor change of switching from an ETF of small-cap stocks to an ETF of small-cap value stocks . I don’t have any plans to change my current allocation, but I may think differe...

Here are my posts for this week: Stock Market Momentum The 4-Hour Workweek Here are some short takes and some weekend reading: Canadian Couch Potato offers three specific reasons why you should stick with your asset allocation plan in the face of recent stock volatility. The Blunt Bean Counter highlights the huge gap in income tax levels between Alberta and Ontario on incomes above $150,000. So far Ontario has kept the top marginal rate a hair under the psychological barrier of 50%. Their game seems to be to lower the income that gets hit with higher rates. If they ever do go over 50%, it should make some people rethink where they want to live or how hard they want to work. Big Cajun Man managed to finally stop paying for AOL. I didn’t even know that AOL was still around. I used to joke that I belonged to their CD of the month plan. I still use some of their CDs as coasters. My Own Advisor runs through the basics of PRPPs, but finds that they don’t add much to e...

I had heard so many different things about Timothy Ferriss’s book, The 4-Hour Workweek , that I thought it couldn’t possibly cover all the subject areas. But I was wrong. Ferriss gives step-by-step instructions for changing many different aspects of your life all unified under the theme of “escape 9-5, live anywhere, and join the new rich.” The main themes of the book are getting past fear of change, eliminating time waste, creating a low maintenance business, getting agreement to work for your current employer remotely, mini-retirements, and living in other parts of the world. Some of these themes may seem familiar, but Ferriss’s detailed strategies for completing these goals make this book unique. Few readers will attempt everything they read about in this book, but almost all readers will find some useful information for improving their lives. The type of reader who will get the most out of this book is the 9-to-5 cubicle-dweller who yearns for a different life. We get some...

People tend to think of the stock market as something that moves up and down like an airplane. There are problems with this way of thinking that cause investors to make poor choices. If the stock market really were like an airplane, it would have momentum that makes it difficult for the market to change direction from rising to falling or vice-versa. The truth is that prices can change on a dime because they are determined by the bid and ask prices of traders who can change their minds in an instant. There is a technical concept of momentum in stock prices, but it isn’t the same as momentum in physics; there is no physical object that must be slowed down and turned in the other direction. The problem with a false analogy like the airplane is that it creates the illusion that if markets move in one direction a few days in a row, they are almost certain to continue that way for a while. But this isn’t true for stocks. The recent downtrend in stock prices has many commentators s...