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 10/23   Vanguard's Gerry O'Reilly and Jim RowleyIndexing 
 10/22   Frugality isn't what it used to beThrift 
 10/16   Turning over accepted wisdomIndexing 
 10/16   Sharpening the arithmeticIndexing 
 10/16   The illusion of choiceIndexing 
 10/09   A more balanced S&P 500Indexing 

Frugal News

Vanguard's Gerry O'Reilly and Jim Rowley
10/23/16   7:22 PM ESTIndexing
"This episode is a rare and fascinating look into the world's largest asset manager. My first guest is Gerry O'Reilly, who is the portfolio manager for the largest mutual fund in the world, and oversees more than $800 billion for Vanguard. My second guest is Jim Rowley, a Senior Investments Analyst with deep knowledge of indexing and ETF's. The two provide incredible insight into some of the particulars that make Vanguard and its funds tick."
More Indexing: Turning over accepted wisdom
Sharpening the arithmetic

Frugality isn't what it used to be
10/22/16   8:29 PM ESTThrift
"It used to be that a fancy car or a country-club membership sufficed. But as these became available to more and more people, the acquisition of physical things has mostly taken a backseat to the acquisition of exotic experiences. Now, Westacott writes, because 'not working is in itself no longer a badge of honor,' what the economist Thorstein Veblen in 1899 called 'conspicuous leisure' is being displaced by conspicuous recreation. To describe the behavior of those who tire of this arms race, perhaps there needs to be yet a new term: conspicuous frugality."
More Thrift: Almost nothing in the bank
Save more money

Turning over accepted wisdom
10/16/16   1:47 PM ESTIndexing
"How many of us often just cite 'the average can't beat the average' and move on assuming we've smashed whoever we were debating? I know I have done it many times. Sharpe's insight is, in my opinion, likely still mostly true, perhaps entirely true. But Lasse has, at the very least, created some doubt for me in something I was pretty sure about."
More Indexing: Sharpening the arithmetic
The illusion of choice

Sharpening the arithmetic
10/16/16   1:45 PM ESTIndexing
"I challenge Sharpe's (1991) famous equality that 'the return on the average actively managed dollar will equal the return on the average passively managed dollar.' This equality does not hold in general. It is based on the implicit assumption that the market portfolio never changes, which does not hold in the real world because new shares are issued and others are repurchased. Hence, even 'passive' investors must trade regularly in order to maintain their market-weighted portfolios. Since passive investors may trade at less favorable prices than active managers, Sharpe's equality is broken. The changes of the market portfolio are large enough that active managers can add noticeable returns. Hence, active managers can be worth positive fees, which allow them to provide an important, beneficial, role in the economy - helping to allocate resources efficiently. Passive investing also plays a useful role, especially since the average active mutual fund manager has charged larger fees than their value added."
More Indexing: The illusion of choice
A more balanced S&P 500

The illusion of choice
10/16/16   1:02 PM ESTIndexing
"The challenge with dividends as an investment factor, as opposed to Value, Momentum, or Quality, is that only so many companies pay dividends. As buybacks have become more popular in the U.S., the share of stocks paying high dividend yields has declined. The chart below breaks down dividend payers listed on the S&P 500 by their level of yield. While the share of companies paying small yields of less than 1% has decreased, the share of companies paying greater than 4% has also declined. Historically, about 12% of S&P 500 stocks offer a yield of 4% or greater. As of the third quarter, the tally is half that at 6%."
More Indexing: A more balanced S&P 500
Testing smart beta

A more balanced S&P 500
10/09/16   4:55 PM ESTIndexing
"According to Willis, rebalancing the portfolio of 500 stocks each quarter to its original weight level, as the INDEX does, ensures that investors are adding stocks that have fallen in price and selling stocks whose prices appreciated. Thus, the mechanism of the equal-weight index embeds the 'buy low, sell high' strategy."
More Indexing: Testing smart beta
Index revolution

Trump's tax break
10/09/16   4:16 PM ESTTaxes
"The prevailing wisdom that has emerged in the past week among accounting experts is that Trump was able to use more than $900 million in paper losses to reduce his taxable income via a loophole in the code that allowed losses of private businesses registered as S-Corporations to flow to their owners, even when they didn't put an of their own cash into the companies, which is where the name double dip comes from."
More Taxes: Apple took tax game too far
RBC fund became a tax headache

Scalability for robo-advisors
09/24/16   11:08 PM ESTBrokers
"If this robo is able to attract greater AUM per client - $50,000, for example - we're still talking about at least 40,000 clients. I wonder if the scalability assumptions of robo firms - and the regulatory tolerance for automation - will be challenged."
More Brokers: Almost 80% of day traders lose money
Advisors worth their fees?

Almost nothing in the bank
09/24/16   11:06 PM ESTThrift
"Close to half of those who earn from $100,000 to $149,999 a year have less than $1,000 in their savings accounts. Some 18 percent of them have socked away absolutely nothing."
More Thrift: Save more money
7-day mental quarantine

If you build it
09/17/16   9:09 PM ESTGovernment
"While infrastructure investment is often needed when cities or regions are already expanding, too often it goes to declining areas that don't require it and winds up having little long-term economic benefit. As for fighting recessions, which require rapid response, it's dauntingly hard in today's regulatory environment to get infrastructure projects under way quickly and wisely."
More Government: The $6 trillion public pension hole
Why Americans don't trust government

Corruption in Canada
09/11/16   12:21 AM ESTReal Estate
"Kathy Tomlinson reveals how loopholes and lax oversight are making it easy for a network of local and foreign speculators to play the system, and, in the process, fuel the steep rise in Vancouver home prices"
More Real Estate: Lethargic Canadian economy
Homes disappointing

Apple took tax game too far
09/04/16   9:17 PM ESTTaxes
"When the corporate structures you devise cross the line from frugality into utter absurdity - and a 'head office' with no employees or premises is pretty absurd - you are asking for trouble."
More Taxes: RBC fund became a tax headache
The impact of taxes

The lost decade
08/28/16   11:11 PM ESTStingy Investing
"Bond yields remain near historic lows with long-term Canadian government bond yields hovering near 1.7% this week. That doesn't leave much room for error. If interest rates rise, bond prices will fall. Rising inflation could also wipe out the small gains. More ominously, interest rates and inflation could climb at the same time like they did in the 1970s. It's a period that older investors remember all to well and one that younger investors should learn from."
More Stingy Investing: Be careful what you wish for
Fixed income needs a fix

Almost 80% of day traders lose money
08/21/16   4:02 PM ESTBrokers
"In the end, 79.5% of them lost real money. The median 12-month returns were -36.3%."
More Brokers: Advisors worth their fees?
John Oliver: retirement plans

The $6 trillion public pension hole
08/21/16   3:57 PM ESTGovernment
"Compounding the problem, today's aggregate annual contributions of $160 billion don't even pay for newly earned benefits, adding more debt to be paid by future generations. State and local governments already face making bigger required contributions - even under the measurement approach that ignores risk - requiring higher taxes and crowding out other government spending. That is already happening in Chicago. In Detroit, Stockton, Calif., and Puerto Rico, bondholders haven't been paid."
More Government: Why Americans don't trust government
How politicians poisoned statistics

Testing smart beta
08/14/16   8:05 PM ESTIndexing
"Equal weighting isn't everyone's cup of tea, but the numbers on a trailing 10-year basis, which encompasses a full business cycle of stress testing, are strong enough to give advocates of the strategy plenty of ammunition for arguing their cause."
More Indexing: Index revolution
Cost versus convenience

Sued over retirement plan fees
08/14/16   8:03 PM ESTFunds
"The complaints allege that the universities, as the plan sponsors, failed to monitor excessive fees paid to administer the plans and did not replace more expensive, poor-performing investments with cheaper ones. Had the plans eliminated their long lists of investment options and used their bargaining power to cut costs, the complaints argue, participants could have collectively saved tens of millions of dollars."
More Funds: Curse of the benchmarks
Chasing returns

Index revolution
08/14/16   8:02 PM ESTIndexing
"Charles Ellis on why investing in low cost, passive index funds, not actively managed ones is the best choice for most individual investors."
More Indexing: Cost versus convenience
The high price of low vol

Lethargic Canadian economy
08/06/16   2:44 PM ESTReal Estate
"Real estate and financial services now account for 20 percent of the economy, levels not seen in the data since the early 1960s. That could be a problem, with household debt at a record and policy makers scrambling to slow price gains that are making homes unaffordable for all but the wealthiest buyers."
More Real Estate: Homes disappointing
Housing bubble

Save more money
07/17/16   5:20 PM ESTThrift
"Bonds pay borrowers while lenders earn nothing. Stocks soar to all-time highs. How weird is today's financial world? It's weird, all right, but probably not as weird as you think."
More Thrift: 7-day mental quarantine
How much you'll earn

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