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 09/19   ETF taxation in the crosshairsTaxes 
 09/12   Negative value-addFunds 
 09/05   Future housing returns are starkReal Estate 
 09/05   Death of the starter homeReal Estate 
 09/05   Conspicuous corruptionCrime 
 09/05   Avoid 'breaking the buck'Funds 
 08/21   A wealth tax will disappointTaxes 

Frugal News

ETF taxation in the crosshairs
09/19/21   5:19 PM ESTTaxes
"The real damage will be done to anyone who's had the temerity to do a little investing outside their 401(k). ETFs have been an incredible boon for smaller investors, giving them access to the same funds, the same fees, and the same tax advantages wealthy investors have so many other ways to access."
More Taxes: A wealth tax will disappoint
Capital gains planning to save tax

Negative value-add
09/12/21   8:20 PM ESTFunds
"Low-fee funds tend to have positive net value-added while high-fee funds have negative net value-added, suggesting, again, a systematic relation between net value added and percentage fees. However, in aggregate, the total net value added for the 'All funds (Index + Mutual)' sample amounts to a negative $125 billion USD. This number can be interpreted as a measure of the total economic value added or lost by the mutual fund industry for its investors."
More Funds: Avoid 'breaking the buck'
Deferred sales charges banned

Future housing returns are stark
09/05/21   4:06 PM ESTReal Estate
"I wouldn't have the success of my financial plan be wholly dependent on further prices increases on residential real estate. Speculating on prices increases in real estate is fine - so long as if the amount at stake isn't material to the success of your financial plan."
More Real Estate: Death of the starter home
Hyper zip code inflation

Death of the starter home
09/05/21   4:04 PM ESTReal Estate
"If we take this to the extreme - the monthly payment for a $1,000,000 home is now $520 lower than the monthly payment for a $750,000 home in 2002. Add in fewer homes being built, a touch of inflation, scarred homebuilders, HGTV messing with our expectations and it's no wonder new home sales prices have risen over the past 20 years."
More Real Estate: Hyper zip code inflation
Canadian home prices a deal vs US bubble

Conspicuous corruption
09/05/21   3:32 PM ESTCrime
"People can exhibit their status by the consumption of particular goods or experiential purchases; this is known as 'conspicuous consumption'; the practice is widespread and explains the market characteristics of a whole class of goods, Veblen goods, demand for which increase in tandem with their price. The value of such positional goods lies in their distribution among the population - the rarer they are, the more desirable they become. At the same time, higher income, often associated with higher status, has been studied in its relation to unethical behavior. Here we present research that shows how a particular Veblen good, illicit behavior, and wealth, combine to produce the display of illegality as a status symbol. We gathered evidence at a large, country-level, scale of a particular form of consumption of an illictly acquired good for status purposes. We show that in Greece, a developed middle-income country, where authorities cannot issue custom vanity license plates, people acquire distinguishing plate numbers that act as vanity plate surrogates. We found that such license plates are more common in cars with bigger engines and in luxury brands, and are therefore associated with higher value vehicles. This cannot be explained under the lawful procedures for allocating license plates and must therefore be the result of illegal activities, such as graft. This suggests a pattern of 'conspicuous corruption', where individuals break the law and use their gains as status symbols, knowing that the symbols hint at rule-breaking, as long as the unlawful practice cannot be incontestably established."
More Crime: A famous con man
My worst investment

Avoid 'breaking the buck'
09/05/21   3:27 PM ESTFunds
"Why penalize those who exit in a crisis? They are causing the crisis. Liquidity is not a free good, and certainly not in a crisis. This will make them think twice about liquidating, because they will absorb a disproportionate amount of the loss."
More Funds: Deferred sales charges banned
Hedge fund performance fees

A wealth tax will disappoint
08/21/21   10:58 PM ESTTaxes
"Such a tax would be an exercise in futility. And this isn't simply conjecture - wealth taxes have been tried. In 1990, 12 European countries had a wealth tax. By 2018, that number dropped to four"
More Taxes: Capital gains planning to save tax
CPP premiums go up

Cash is the only thing
08/07/21   5:56 PM ESTManagement
"The only thing that helps a company survive these extreme revenue shocks is access to cash. Companies that either had lots of liquidity at hand or could tap into existing credit lines to increase their cash at hand were more likely to survive and recovered more quickly."
More Management: Who invented Flamin' Hot Cheetos?
Rookie CEOs outperform

Charles Ellis interview
07/25/21   7:42 PM ESTIndexing
"If you look at all those different component parts, most of us have way too much in stable assets, which is what bonds are supposed to do, which is why in the present circumstances, where the expected inflation is higher than the rate of return on the bond, it's really hard to justify being a bond investor today."
More Indexing: Beat the stock market
The problem with momentum ETFs

Beat the stock market
07/19/21   9:55 AM ESTIndexing
"His firm's research finds that buying the outgoing stock in discretionary deletions from the S&P 500 at the closing price on the day it's removed from the index has beaten the market by an average of nearly 20% over the following 12 months."
More Indexing: The problem with momentum ETFs
Indexes proliferate

Pay down debt
07/04/21   7:11 PM ESTThrift
"A safe withdrawal rate is the lesser of the yield on the 10 year treasury +1%, or 7%. The long-term increase in value of assets is roughly proportional to something a little higher than where the US government can borrow for 10 years. That's the reason for the formula. Capping it at 7% is there because if rates get really high, people feel uncomfortable taking so much from their assets when their present value is diminished."
More Thrift: Go figure
What it takes

Hyper zip code inflation
07/04/21   7:00 PM ESTReal Estate
"In its effort to control asset prices, we believe the Federal Reserve has lost control of the real estate market. While they have succeeded in building a floor under home prices, they forgot about the ceiling! Assuming zip code hyperinflation spreads, we expect wealth inequality and housing affordability to become an increasingly hot topic in upcoming elections. In the meantime, the Federal Reserve's balance sheet continues to inflate as millions of potential homeowners are being squeezed out of the market. How much longer will the inequalities created from ultra-easy monetary policy be tolerated and left unchecked? We're not sure, but given the growing extremes, we believe it is the Fed's ability to QE without consequence that has become transitory, not inflation."
More Real Estate: Canadian home prices a deal vs US bubble
A bad time to be a homebuyer

The problem with momentum ETFs
06/13/21   7:21 PM ESTIndexing
"This highlights the challenges with momentum ETFs that rebalance only twice a year. In a rapidly changing market environment, the strategies can be slow to catch-up meaning any hope of outperformance, especially in the short term, is most likely wishful thinking."
More Indexing: Indexes proliferate
One-click portfolios

Canadian home prices a deal vs US bubble
06/06/21   7:56 PM ESTReal Estate
"Canadian real estate is receiving a big warning sign from an indicator that was an alarm for the US in 2006. The house price-to-rent ratio shows Canadian real estate is overvalued. When contrasted to the US is when you really get a feel for how much Canada went all-in on real estate. It makes 2006 America look like a sleepy backwater market of value investors."
More Real Estate: A bad time to be a homebuyer
Canadian property bubbles

Indexes proliferate
05/30/21   2:20 PM ESTIndexing
"The lines have blurred between what constitutes an index and what is simply another active investment strategy"
More Indexing: One-click portfolios
ETF pairs for tax-loss selling

A bad time to be a homebuyer
05/30/21   2:13 PM ESTReal Estate
"Because houses are selling so quickly, buyers are having to make all kinds of concessions to get the place they want. People are waiving inspections, paying in all cash and offering well over asking price in many cases."
More Real Estate: Canadian property bubbles
Affordable cities in Ontario

Canadian property bubbles
05/23/21   5:06 PM ESTReal Estate
"They found Canada's hottest real estate markets are now less affordable than globally influential US cities. Heck, Canada's property bubble even pushed the tiny steel city of Hamilton to become less affordable than Los Angeles or New York City."
More Real Estate: Affordable cities in Ontario
Canadian systemic risk

Work in progress
05/23/21   3:00 PM ESTRetirement
"Thanks to the pandemic, most of us have discovered there's plenty of fat in our budget. Think about how much you saved over the past 14 months by not going on vacation, cooking at home and avoiding the shopping mall. During retirement, if your nest egg looks a little depleted, perhaps you should adopt a 'pandemic budget' for six months or a year."
More Retirement: Built for Ease
Sustainability of withdrawal strategies

A famous con man
05/09/21   6:46 PM ESTCrime
"But though the movie claims to be based on a true story, creating the myth of Frank W. Abagnale Jr. might be the best con that Abagnale actually pulled. A new book contends that the story of the charming teen running from the FBI and pulling off all those impersonations without getting caught is mostly made up."
More Crime: My worst investment
The imposter

Affordable cities in Ontario
05/09/21   6:40 PM ESTReal Estate
Hello Deep River, Smooth Rock Falls, Rainy River, Marathon, and Englehart.
More Real Estate: Canadian systemic risk
Homes in a bubble

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