Here are my posts for the past two weeks: Useless Activity The Most Important Thing Am I Fixing a Mistake or Making an Active Decision? Here are some short takes and some weekend reading: Tom Bradley at Steadyhand gives three potential sources of illusory wealth in the markets today. Along with his thoughtful commentary, he uses the great terms “bezzle” and “psychic wealth.” Justin Bender goes into detail about tax-loss selling strategies. This stuff can get tricky. Fortunately, it’s only relevant in taxable accounts. Even people with million-dollar portfolios often don’t have enough in their taxable accounts to bother with tax-loss selling. Dan Hallett says Bitcoin is for speculating, not investing. I agree (https://www.michaeljamesonmoney.com/2018/04/bitcoin.html). Ellen Roseman says phone scams are on the rise.

I recently discovered a mistake in my spreadsheet related to my fixed-income allocation during retirement. Fixing it will involve selling off a sizable chunk of stocks. But I think this may be more of an active portfolio decision than just fixing a mistake. For years I’ve been striving to come up with mechanical decisions about how to handle my portfolio rather than making active decisions that amount to a form of market timing. One of my rules now that I’m retired is to maintain 5 years of after-tax spending money in fixed-incomes investments, including short-term government bonds, GICs, and savings accounts. Poking through the spreadsheet that holds my mechanical rules, I noticed a problem with the 5 years of fixed income calculation. I didn’t factor in CPP and OAS pensions properly. I treated these pensions as though I’m receiving them spread out over my whole retirement instead of just getting them later in life. So, my 5 years figure is too low now and will be too high o...

It’s a compelling recommendation when Warren Buffett says “This is that rarity, a useful book.” He said this about The Most Important Thing: Uncommon Sense for the Thoughtful Investor , by cofounder of Oaktree Capital Management, Howard Marks. It turns out that “investor” in this book means active investor. The lessons on risk management and other topics are top-notch for those trying to beat the market, but passive investors won’t get much out of it. One lesson for active investors is to seek out inefficient markets and be better than others at assessing value. This makes the S&P 500 a poor place to look for undervalued stocks. Another lesson is that risk is the possibility of losing money, which is different from volatility. Risk comes mainly from high prices. Markets always seem riskier after they decline, but in reality, stocks are riskiest when their prices are highest. To be a successful investor, it’s necessary to be skeptical. This means being skeptical of bot...

A recommendation for a podcast caught my eye recently because it hinted that there was some interesting discussion of Nortel. It turned out that the Nortel discussion wasn’t interesting at all, but I did have a strong reaction to the rest of the podcast. The three speakers went on for about an hour on a wide range of active investing topics, and all I could think was that I can’t believe I wasted a decade of my life on this crap. It’s one thing to have a hobby that contributes to an otherwise balanced life, but it’s another to devote a huge proportion of your waking hours to such a societally useless pursuit. If these three guys had chosen to plant trees instead of pick stocks, the world would be a slightly better place. It would be fantastic if investors woke up and stopped paying huge amounts for portfolio management. This would eliminate the incentive for so many brilliant young minds to waste their lives on useless pursuits.

My only post in the past two weeks is a review of a book dedicated to Charlie Munger’s wisdom: Poor Charlie’s Almanack Here are some short takes and some weekend reading: Mr. Money Mustache explains some of the values of the FIRE movement. The Blunt Bean Counter explains the basics of RRIFs clearly. The most intriguing part of this guest post comes at the end: “RRIFs can be used in a surprising number of ways.” It would be good to learn some of those ways. John Robertson uses the closing of Planswell as a check to see how investor assets are protected from a robo-advisor’s failure.

Most people have heard of the great investor Warren Buffett, but fewer have heard of his long-time business partner Charlie Munger. Charlie’s approach to understanding the world is laid out in Poor Charlie’s Almanack , a long, but interesting, book edited by Peter D. Kaufman. This book covers such a wide array of topics that it resists summary. To this reader, Munger’s biggest ideas are 1) that we should understand the biggest and most useful ideas from a broad range of fields, and 2) that we should understand the many ways that our psychology gets in the way of drawing sensible conclusions. Whether we agree or disagree with Munger’s ideas, I found a great many worth thinking about. I’ll list a few here as an enticement to reading the book. Munger is known for challenging and often abandoning his best-loved ideas: “a thing not worth doing is not worth doing well.” It may not be a good idea to change your mind too often, but we have to be open to the possibility that our ideas...

Here are my posts for the past two weeks: Now We Know What Followed the Lost Decade for Stocks The Clash of the Cultures Here are some short takes and some weekend reading: The Rational Reminder Podcast looks at the future of ETFs in a very interesting interview with Dave Nadig, founder of etf.com. Nadig also has some pragmatic ideas for how to pay for financial advice. Robb Engen at Boomer and Echo says Canadians have an income problem, not a debt problem. This is undoubtedly true for some people. However, there are others who are going to outspend whatever income they get. The question in my mind is how is viewing the problem this way going to help? Probably the biggest effect is that it allows people with big debts to decide the problem is someone else’s fault. This is more likely to trigger giving up than solving anything. On the positive side, it might spur some people to seek higher income. I find the change in expectations since I was a young adult interestin...