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The changing face of offshore programming 12/31/03   link World "Yes, it's still the cheaper option -- but the price differential is shrinking fast, and the hidden costs can be fierce." Atkins world 12/31/03   link Health "When did carbs replace fat as nutritional enemy No. 1? What does it mean for the pork-rind industry? Is Wonder Bread toast? And what the heck is ketato? How low-carb mania is roiling the food business." A Christmas letdown 12/31/03   link Economy "Retailers overall may have fared better than expected this holiday season, but it still looks like Santa Claus couldn't make all the merchants merry this year." Keep more in 2004 12/31/03   link Thrift "Here are 8 resolutions: pick one or two and stick with them to bolster your finances next year." Don't fall for these stupid credit-card tricks 12/31/03   link Debt "Lenders are counting on you to fatten up their profits -- with higher rates, new fees and more fees -- all hidden in the fine print. Here's how to fight back." Trade wars 12/30/03   link World "So is the Bush administration really willing to risk an all-out trade war simply to score domestic political points? Many U.S. free traders certainly think so. "It's a political year, so it's silly season," says David Kotok, chairman and chief investment officer of Cumberland Advisors, Inc., a New Jersey-based money manager. "Whether it is steel or brassieres, it doesn't make a difference: China is a scapegoat." According to Kotok, politicians are smart enough to know it's "easy to blame the state of the U.S. economy on people who can't vote." And like it or not, China's cheap workers, booming manufacturing sector and fixed currency policy have made the Asian country easily identified as a competitor that is undermining the U.S. job creation machine." How to find value, globally 12/29/03   link Value Investing "Peter Cundill, founder of Cundill Investment Research, was named Canada's fund manager of the year at the Canadian Investment Awards gala held in early December. Born in Montreal and now based in London, Cundill spends much of the year scouring the globe in search of value opportunities for Mackenzie Financial's Cundill fund family." Milking lessons 12/29/03   link Stocks "On the face of it, a financial-holding company seems to have been used to grab cash from the operating company, before losing that money through the silly use of derivatives and other speculative financial dealings. As the losses mounted, instead of coming clean, it seems that the stakes were raised in a desperate and ultimately futile effort to keep the scam going. If such a picture is broadly accurate, then Parmalat will look much like other corporate scandals. Until then, the worry is that fresh horrors may yet emerge." Make more mistakes 12/27/03   link Management "Would you like me to give you a formula for success? It's quite simple, really. Double your rate of failure. You are thinking of failure as the enemy of success. But it isn't as all. You can be discouraged by failure or you can learn from it. So go ahead and make mistakes. Make all you can. Because, remember that's where you will find success." Nightmare after Christmas 12/26/03   link Markets "Christmas Day may be about ripping open gifts, but the day after Christmas is about returning the reindeer sweater, the second digital camera, or the DVDs and CDs that you won't watch or listen to -- ever." Losing by instinct 12/24/03   link Markets "The late Benjamin Graham -- erudite classicist, mentor to Warren Buffett, highly successful investor and probably the greatest financial mind of the 20th century -- said it best: "The investor's chief problem -- and even his worst enemy -- is likely to be himself."" Playing in a closed game 12/24/03   link Funds "Unscrupulous mutual funds, as investors have learned to their chagrin, have found plenty of ways to cheat. There are, however, sound alternatives with many of the benefits of mutual funds but without the drawbacks. I discussed one such investment -- exchange-traded funds (ETFs) -- a few weeks ago. Now, consider closed-end funds" Self-Destruction, mother of invention 12/24/03   link Stocks "But what does the joy of destruction mean for investors? A lot. Peters cites a study by Richard Foster and Sarah Kaplan of McKinsey & Co., who examined the first list of the biggest U.S. companies published by a magazine, the Forbes 100 of 1917, and compared it with a similar list 70 years later. Of the 100, only 39 managed to survive, and only 18 of those were among the top 100 in 1987." Manulife, John Hancock in fund probe 12/24/03   link Funds "Manulife Financial Corp. and John Hancock Financial Services have been served with subpoenas for information about trading practices as part of ongoing probes into the mutual-fund industry." Home buying with no money down 12/24/03   link Real Estate "In fact, according to a survey of buyers conducted in early 2003 by the National Association of Realtors, less than half of all buyers put down 20 percent. Among first-time buyers, 33 percent kicked in less than 10 percent of the purchase price, while 28 percent financed the entire price of the home." Herb Kelleher on the record 12/24/03   link Management "What sort of smarts, determination, and ingenuity are required of a world-class entrepreneur -- one who starts an airline against all odds and goes on to build the only consistently profitable carrier in the U.S.? That's what BusinessWeek Managing Editor Mark Morrison hoped to discover recently when he interviewed Southwest Airlines (LUV) founder and Chairman Herb Kelleher in front of an audience of business leaders and MBA students at the University of Texas' McCombs School of Business." Corporate scandals 12/23/03   link Stocks "The near failure of Parmalat is raising questions about how well Europe is reforming its corporate governance." Does your boss want you dead? 12/22/03   link Management "Right now, your company could have a life insurance policy on you that you know nothing about. When you die -- perhaps years after you leave your employer -- the tax-free proceeds from this policy wouldn't go to your family. The money would go to the company. What's more, the company might use this policy to pay for retirement benefits and other perks not for you or your fellow workers, but for your company's top executives." Parmalat admits $5bn black hole 12/22/03   link Stocks "Many of Italy's biggest banks are exposed to Parmalat, leading to fears of a system-wide meltdown if the company were to collapse." Out of sight, out of mind 12/21/03   link Funds "We argue that the purchase decisions of mutual fund investors are influenced by salient, attention-grabbing information. Investors are more sensitive to salient in-your-face fees, like loads and commissions, than operating expenses; they are likely to buy funds that attract their attention through exceptional performance, marketing, or advertising. Our empirical analysis of mutual fund flows over the last 30 years yields strong support for our contention. We find consistently negative relations between fund flows and load fees. We also document a negative relation between fund flows and commissions charged by brokerage firms. In contrast, we find no relation (or a perverse positive relation) between operating expenses and fund flows. Additional analyses indicate that mutual fund marketing and advertising, the costs of which are often embedded in a fund's operating expenses, account for this surprising result." A value investor's secret 12/21/03   link Value Investing "Value investors come in all shapes and sizes. Some invest in real estate, others in bonds (generally distressed ones), still others in stocks. Some specialize in certain industries or countries, while others are generalists. But most value investors have two things in common: (1) They seek to buy at a significant discount to intrinsic value (the proverbial dollar bill for 50 cents); and (2) They generally sell once intrinsic value has been reached." Tax Act amendments could eliminate interest deduction 12/21/03   link Taxes "Golombek is concerned that if the new legislation is passed, it will be virtually impossible for investors who borrow money to purchase dividend-paying investments to pass the cumulative profit test. For example, Golombek gives the example of an investor who buys a stock yielding a 2% dividend today with borrowed money at a 4% interest rate. Assuming the price of the stock increases each year by 7%, he says, it would take approximately 20 years of holding the investment to make a cumulative profit since this profit does include the ultimate capital gain upon disposition. Most investors make regular changes to their portfolio and do not want to hold on to particular investments for so many years. Therefore, he says, any losses investors attempt to write off as a result of interest deductibility could be disallowed by the CCRA." Is the party over for income trusts? 12/21/03   link Trusts "A little over a week ago, mutual fund manager Ben Cheng addressed an audience of 40 or 50 investors who gave him a startling insight into how retail investors view income trusts. "I asked how many of them had an income trust in their portfolio, and all their hands go up," Mr. Cheng recalls. "And then I said, how many people in this room have more than 50 per cent of their investable assets in income trusts? More than half of the hands go up. "That scares the hell out of me," says Mr. Cheng, who manages an income trust fund -- CI Signature High Income. "At the end of the day, it looks like retail investors have jumped again with both feet into an asset class thinking that it's invulnerable and it goes up forever. I don't think that's the case."" Snowbirds should understand tax rules 12/21/03   link Taxes "You should be aware that you may have filing requirements in the United States even if you have no tax to pay south of the border. Certainly if you're a U.S. citizen you're required to file a tax return in the United States each year. But even those who are residents of Canada and non-citizens of the United States (known as non-resident aliens) may have filing requirements in the United States depending on the number of days spent there each year." Scrooge defended 12/21/03   link Christmas "It's Christmas again, time to celebrate the transformation of Ebenezer Scrooge. You know the ritual: boo the curmudgeon initially encountered in Charles Dickens's A Christmas Carol, then cheer the sweetie pie he becomes in the end. It's too bad no one notices that the curmudgeon had a point" Beware the tricky fees on gift cards 12/19/03   link Thrift "Between hefty shipping, maintenance and service fees, all the cheer can be sucked out of gift cards -- and most of the value. Here are 10 questions to ask if you give one or get one." Is Christmas inefficient? 12/19/03   link Christmas "Yale University's Joel Waldfogel, writing in the American Economic Review, condemns what he calls "The Deadweight Loss of Christmas." Once you cut through the calculus and graphs, his conclusion is clear: though Christmas generates a $50 billion gift-giving industry, a tenth to a third of that is sheer loss. Why? Because the recipient doesn't always get what he wants. Given the chance, the recipient would have purchased something else." Humbled 12/18/03   link Management "Now chief executives are regarded by the public with the sort of disdain and distrust usually reserved for politicians, lawyers and journalists." 2 mutual funds you can trust 12/18/03   link Funds "Tweedy, Browne's offerings are the first to make the "Clean Funds" cut. Now, I need your help to find more." Vanishing jobs 12/18/03   link Economy "Structural change in the economy means many jobs are never going to come back." Sadly, lawsuits are best remedy for investors 12/17/03   link Brokers "In Canada today, protections for individuals preyed on by the investing industry are as feeble and inadequate as I've seen in five years of writing this column." Exec Pay 12/17/03   link Management "The IRS is going after the last bastion of accounting creativity -- executive pay" The King Lear syndrome 12/15/03   link Management "For the board, drawing up a succession plan is a good way to spot future problems. Mr Couchman describes one company that found to its dismay that it had only ten possible successors for 30 top jobs. But there are advantages for the boss, too. After all, one way to secure a sort of immortality is to pick one's own successor." Warren, show me the money 12/15/03   link Buffett "Microsoft's fairly recent decision to pay a dividend demonstrates the dawning reality that this company has changed. But, they're not the only one. Market-dominator Berkshire Hathaway generates massive amounts of cash, and the Oracle should also share the wealth." Avoid the home equity hangover 12/15/03   link Debt "Debt in lines of credit has jumped 31 percent this year. Don't let equity become a license to spend." Fund middlemen need to shape up 12/15/03   link Brokers "Why shady sales practices result in higher costs and biased advice." Giving is still sound tax policy 12/14/03   link Taxes "The recent death of gift-in-kind tax shelters doesn't mean the end of charitable giving in Canada. It's just no longer possible for donors to make a profit on the deal." The case for silver 12/14/03   link Grant "Gold may well be a better monetary asset, but the white metal has many more practical uses, from the arts to medicine. And its consumption exceeds its output." Scrooge of the investing world 12/13/03   link Thrift "A a time of year when most people are beingurged to spend, Norman Rothery is going about his business of urging people to be thrifty in how they invest their savings. Examining the menu over a Diet Pepsi at Pangaea, in the heart of the fashionable Bloor Street shopping district in downtown Toronto, the founder of StingyInvestor.com and FrugalFunds.com and publisher of two quarterly newsletters is an unlikely Scrooge -- more of a happy warrior of the value investing world." The virtue of ETFs 12/12/03   link Indexing "But I think it's much easier and ultimately a better strategy simply to stick to ETFs that track the broad market -- for example, the iShares Dow Jones Total Stock Market Index (or Vanguard's Total Stock Market VIPER) for the stock market and the iShares Lehman Aggregate Bond fund for bonds." Merck isn't converting the skeptics 12/12/03   link Stocks "Though the drug giant keeps trying, analysts and investors still don't think its go-it-alone strategy will work in the long run." The new indexing 12/11/03   link Indexing "In the presence of more than one risk factor, the goal of indexing switches from diversification across the available stocks to diversification across the available risk-return dimensions. This might seem like "sector betting" to traditional indexers like Vanguard founder John Bogle, who still believe that market risk primarily determines performance and that small stocks and value stocks aren't separate sources of risk and return. The academic community is arriving at a different consensus, one that recognizes multiple independent risks. Investors might even have natural combinations of the different risk exposures that best suit their individual time horizons and preferences. As long as the portfolios they use to gain these exposures are index funds, and as long as the exposures are consistent and not timed to predict markets, this sort of portfolio structuring is not a "sector bet"it's the new face of indexing." Is there still value in the book-to-market ratio? 12/11/03   link Value Investing "There is one advantage of BtM relative to its peers that should be mentioned. Since book value is a "stock" variable, while earnings, cash flow and sales are "flow" variables, there is a tendency for BtM rankings to be somewhat more stable over time than the rankings based on the other three variables. This reduces portfolio turnover for strategies that are based on BtM rankings. So, in addition to providing at least as much return dispersion as its competitors, BtM may also reduce the number of transactions that are triggered by stocks moving in and out of the portfolio's buy range. This can be especially important for taxable investors." The second largest tax investors pay 12/11/03   link Funds "Well, let's face it -- nothing is worse than inflation. The Voluntary Graduated Financial Services Tax, however, can be a lot worse than the highest income tax rate. By my calculation, accepting an annual expense ratio of 1.39 percent on an equity mutual fund is the equivalent of accepting a 40 percent tax rate from the financial services industry. The amount you accumulate in 40 years will be only 60 percent of what you could accumulate if there were no financial service expense." SEC action on high-yield funds near 12/11/03   link Funds "U.S. regulators are expected to bring an enforcement action as soon as today in their probe of mispricing of shares in high-yield bond mutual funds, people familiar with the matter said Thursday." Patenting air or protecting property? 12/11/03   link Law "Universities, corporations and tens of thousands of Web site providers across the country probably never imagined they would be rooting for the pornography industry." Mutual funds or hole in the ground? 12/11/03   link Funds "How times change. Today, mutual funds are the biggest financial scandal since Martha Stewart phoned her broker. What Martha did was entertaining, but not serious. This is serious. The only reason this scandal hasn't generated more popular outrage is that nobody can understand it." Watchdog says car dealer scams are rampant 12/10/03   link Thrift "A report released Monday by Public Citizen, the consumer watchdog group founded by Ralph Nader, accuses the nation's car dealers of wholesale fraud and asks all state attorneys general to investigate." SEC to act against MFS 12/08/03   link Funds "Sun Life Financial Inc. said Monday its U.S. mutual funds unit may face enforcement action by the Securities and Exchange Commission." Thoughtless reforms 12/08/03   link Accounting "Somehow, proponents of the reforms believe that many recent financial failures could have been prevented by having various cross-checks on the accumulation system for accounting figures. Unfortunately, there are extensive holes in these suggested control-system reforms. Amazingly, the reformers have not grasped the enormity of investor distrust, and are trying to introduce simplistic, and sometimes worthless, proposals. The suggested control-system reforms appear to be based on the idea that every financial statement item will be double-checked. Such an idea runs counter to reality for many reasons." A faded green 12/07/03   link World "How much further might the dollar fall? Predicting the future price of a currency is a mug's game. But there are good reasons to believe that over the medium term the dollar could drop a lot lower, especially against the euro. Whether that will have the desired effects, in reducing America's imbalances, or in causing the expected chaos in Europe's economies, is a different question." Rip-off room revisited 12/07/03   link Thrift "Extended warranties, rust-proofing, Scotchgard: Is this stuff ever worth it?" Scrapped 12/07/03   link World "George Bush has announced the dismantling of America's tariffs on imported steel, while promising to shield domestic companies from dumping. The tariffs have done their job, he says. Have they?" 12 tax tips to munch on 12/07/03   link Taxes "Why do we call money dough? Everyone knows that dough tends to stick to your fingers, while money tends to slip through them. Good tax tips, on the other hand, can be a lot like doughnuts. If you try one, it could make life a lot sweeter. TIM CESTNICK serves up a dozen tasty year-end tax-planning ideas that could keep investors' wallets a little fatter and a little happier in 2004." The child molester next door 12/07/03   link Real Estate "From the start we had vowed not to skip the inspection, despite prodding from our realtor. Yet by the time this house came on the market, we had already lost out to rival bidders on two other homes. In the first case we were outbid because another couple's escalation clause a stipulation in an offer that a buyer is willing to pay a certain amount above the highest bid up to a specified maximum beat ours by a few hundred dollars. We lost the second house because another buyer waived the home inspection outright. After that experience, we were tempted to throw caution to the wind. Thankfully we didn't." Big trouble for Big Pharma 12/05/03   link Stocks "The industry's bloated overheads appear to be driving its decisions on the sort of drugs it seeks to develop. Like a supermodel who will not get out of bed for less than $10,000 a day, Big Pharma has decided that it is simply not worth investing in anything but a blockbuster. This means that lesser, albeit interesting, compounds fall by the wayside. An oft-quoted figure from the Tufts Centre for the Study of Drug Development puts the average cost of bringing a new drug to market at $897m. But as F.M. Scherer, an economist, points out, this is an average cost for big firms producing drugs for chronic diseases. Other firms can bring drugs for other complaintsinfectious diseases or rare conditions, sayto the market for around $100m-200m." Inside Operation Boris 12/05/03   link Crime "It looked like a routine traffic accident on a wet Long Island highway. But it led investigators to a gigantic fraud they're calling the Big Organized Russian Insurance Scam." In defense of bank failures 12/05/03   link Government "The American people have not seen widespread bank runs since 1933. In that object at least, the Federal Deposit Insurance Corporation has succeeded. But at what cost? To insure deposits is to invite bad bankingand worse; it is to foster reckless speculation and unsound investments, help make inflation permanent instead of intermittent, obstruct the curative powers of economic contractions, and divorce freedom from responsibility." Risks in 'buy low, donate high' 12/05/03   link Taxes "Taxpayers prepared to gamble should brace for an audit. The history of tax shelters in Canada is always the same: loopholes are discovered by lawyers and accountants, and the early exploiters are their wealthy clients. By the time small investors get wind of the massive tax savings and government coffers are threatened, the department of Finance closes the loophole." A new charge called 'Oops' 12/04/03   link Thrift "Every few years, economists identify another mutant variation of inflation to keep them awake at night. In the 1980's, it was stagflation. Three years ago, it was deflation. And now, meet the economic specter of the new millennium: stealth inflation." Ripples from a Japanese bank collapse 12/04/03   link World "The Japanese government's November 30 decision to nationalize the insolvent Ashikaga banking group has surprised investors who had expected a Resona-style bailout - in which shareholders weren't forced to take a haircut for the mess. The move means that Ashikaga shareholders' capital will be wiped out, leaving them with nothing, and the government will take 100 percent of the equity in the regional lender." How fund scandals will serve fund owners 12/03/03   link Bogle "It is the myriad conflicts between the interests of fund managers and the interests of fund owners that exist in this industry that bear so much of the responsibility for this staggering gap between the stock market's return and the returns earned by fund investors, and even the returns earned by the funds themselves. While the unacceptable, and partly illegal, market timing scandal has gained a great deal of well-deserved attention, it pales in significance when compared with the powerful impact of high costs on reducing fund returns, on the force of fund size in diminishing fund returns, and on the marketing focus that tempted too many investors to purchase funds that they now wish they had never bought." Stalking a wily prey at Disney 12/03/03   link Management "By shooting for CEO Michael Eisner, Disney ex-board members Stan Gold and Roy Disney are taking on a crafty player who has lots of allies." Tax cuts may prove a mirage for AMT payers 12/03/03   link Taxes "The tax cuts of 2003 may be a boon to the economy and provide welcome padding to some taxpayers' wallets, but for others those cuts will prove to be a mirage. That's because lower tax rates will push more people into paying the Alternative Minimum Tax, rendering some of those much-heralded breaks moot." The value view 12/02/03   link Value Investing "Value managers come in many shapes and sizes. Some are more price focussed and are often drawn to cheap but troubled companies. While a notably larger camp, the GARP managers, conduct an ongoing search for the less typical combination of quality and price. This week is a summary of the opinions and views of what I feel are some of Canada's most skilled money managers." 12 tips for negotiating with debt collectors 12/01/03   link Debt "It pays to know your rights and keep a record of all your communications when you butt heads with debt collectors. Here are some ways to hold your own." CIBC unit may face class action 12/01/03   link Funds "The asset management arm of Canadian Imperial Bank of Commerce is the target of a proposed class action after it allegedly failed to disclose a change to a mutual fund that left investors exposed to the falling U.S. dollar." 3 more mutual fund scandals in the making 12/01/03   link Funds "Reader e-mails tell me there's still more rot in the fund industry that's about to be exposed. Here's what could be next -- and what might happen to the industry as a result." I'd buy that for a dollar (and two dimes) 12/01/03   link World "The euro is worth $1.20 for the first time in its history. That may hurt Europe. Will it help America?" Dow 10,000 is irrelevant 11/30/03   link Markets "The index tells very little about stocks and not nearly enough about value. Dow stocks and stocks in general are priced for a perfect world -- in a world that's far from perfect." Trustmark, Walgreens join 'clean stocks' list 11/30/03   link Stocks "The bad guys get all the headlines, but don't let them scare you into putting your money in the mattress. So far, the "Clean Stocks" project I launched last July has identified six stocks that are clean enough for investors who worry about the never-ending round of financial scandals, yet know they must stay in the markets to stand any chance of reaching their own financial goals." IRS revamps RRSP reporting 11/30/03   link Taxes "The U.S. Internal Revenue Service has spared about 750,000 people in Canada and the United States from a tax-filing headache involving their Canadian registered retirement plans." A year-end registered plan checklist 11/30/03   link Taxes "You don't have to make your 2003 contribution until March 1, 2004, but why wait? Avoid the rush in the new year, contribute today and get your money working." The seven deadly sins 11/29/03   link Real Estate "In 1929 John D. Rockefeller decided it was time to sell shares when even a shoe-shine boy offered him a share tip. During the past week The Economist's economics editor has been advised by a taxi driver, a plumber and a hairdresser that "you can't go wrong" investing in housingthe more you own the better. Is this a sign that it is time to get out? At the very least, as house prices around the world climb to ever loftier heights, and more and more people jump on to the buy-to-let ladder, it is time to expose some of the fallacies regularly trotted out by so many self-appointed housing experts." Of sacrificial lambs, quacking ducks, and pigs 11/28/03   link Markets "This is most unusual. Sure, in a bear market, one expects scandals of accounting, corporate governance, and fiduciary duty. But in the midst of a bull market, when everybody is suppose to get happy again, the scandals are coming thicker and faster." Honoring Benjamin Graham 11/27/03   link Graham "We celebrate Benjamin Graham's 100th birthday--and the 60th anniversary of the publication of Security Analysis--by examining his investment philosophy. For this purpose, we rely heavily on The Intelligent Investor, which he considered more useful than Security Analysis to a young security analyst." Market prices right 11/27/03   link Value Investing "So does Miller. His turnover is about 4% a year, meaning that his average holding period is 25 years. For an undervalued stock, the sweet spot is typically three to five years, and that period can include some scary corrections, Miller suggests. Meanwhile, the average mutual fund is turning over its portfolios entirely in 11 months, because, citing a lesson from behavioural economics, "people overwhelmingly overvalue current information," or what the analysts are saying now. Analysts rarely put a stock on their recommended list before it has shown signs of resurrection, by which time most investors have missed a significant portion of the rebound." Today, scandal is business as usual 11/27/03   link Management "The scoundrels this year are taking advantage of business as usual, which is easy to do because the possible penalties seem so trivial." Research looks much as it used to 11/26/03   link Brokers "Analysts obviously believe there's good potential for some energy and gold, which is sort of a contrarian call when you look at what these sectors have done lately. Then again, it's possible that these sectors are likely to generate lots of investment banking and underwriting business." Pensions: Still a problem 11/26/03   link Accounting "With the stock market's big recovery this year, worries about faltering corporate pension plans have all but faded away. But the pension mess is still very much with us." To sell or not to sell 11/25/03   link Value Investing "Ah, but all other things aren't always equal. Companies and industries change. New information surfaces. Assumptions can prove to be inaccurate. Stocks often decline for very good reasons, and you might be correct in concluding that there are better places for your capital, even though the stock has become cheaper. The key is figuring out which stocks are mistakes and which represent opportunity. That's not easy, but it is certainly much easier if you can overcome the natural human tendency to irrationality cling to losing stocks." Munger on human misjudgments 11/25/03   link Value Investing "Behavioral finance -- which examines how people's emotions, biases, and misjudgments affect their investment decisions -- is one of the least discussed and understood areas of investing." Avoiding value traps 11/25/03   link Value Investing "Companies and their stocks fall on hard times for any number of reasons. Sometimes hard times spell buying opportunities, other times you're better off keeping your distance. The hard part is telling the difference. Whitney Tilson shares some tricks of the trade." CCRA tax shelter donation arrangements 11/25/03   link Taxes "As tax filing season approaches, you may see a growing number of advertisements for tax shelter donation arrangements. While donating various items to a charity (such as art, computers, and prescription drugs) is a legitimate way of making a charitable donation, you should be aware of the risks associated with certain donation arrangements." The greed disease 11/25/03   link Brokers "The crux of his book was that work on Wall Street -- and more broadly in the financial services industry -- was different from other work because it was only about money. There was no product, no goal. There was nothing but the production of endless amounts of money. It tended to make a mess of people's lives." The invention of inflation-indexed bonds 11/25/03   link Bonds "The world's first known inflation-indexed bonds were issued by the Commonwealth of Massachusetts in 1780 during the Revolutionary War. These bonds were invented to deal with severe wartime inflation and with angry discontent among soldiers in the U.S. Army with the decline in purchasing power of their pay. Although the bonds were successful, the concept of indexed bonds was abandoned after the immediate extreme inflationary environment passed, and largely forgotten until the twentieth century. In 1780, the bonds were viewed as at best only an irregular expedient, since there was no formulated economic theory to justify indexation." Putnam: The greed machine 11/25/03   link Funds "If you're like most investors, you probably think that the insider trading scandal at Putnam Investments, the nation's fifth-largest fund company, is a sordid but simple tale of portfolio managers picking investors' pockets." A nimble, cheap and safe ETF portfolio 11/25/03   link Indexing "They're easier to trade than mutual funds, less risky than stocks, and more impervious to fraud than either, making them perfect for the flexible portion of your portfolio." Ottawa eyes charitable tax shelter 11/25/03   link Taxes "10,000 donors audited or reassessed in crackdown. As the year-end tax shelter season goes into overdrive, Ottawa's tax collectors are about to issue a stern warning to investors considering arrangements based on charitable donations or "gifting."" Beating expectations is the same old con 11/24/03   link Markets "Tech companies and analysts still are distorting numbers to make a rough period look like a recovery. It's just more of the kind of rot that almost no one, including the SEC, seems to mind." Mutual fund abuses found in Canada 11/24/03   link Funds "A U.S. economist who tracked mutual fund abuses in the United States says there is evidence of similar trading problems occurring in Canada." Creditors take on Kmart's "frat boys" 11/23/03   link Management "The former top managers are being sued for "gross mismanagement" and taking lavish perks even as the retailer's bankruptcy loomed" Bearish Merrill strategist under fire 11/23/03   link Brokers "Amid a rising tide of complaints, Merrill Lynch & Co.'s chief U.S. strategist, Richard Bernstein, is seeking to defend his bearish view of the stock market from investors who believe he is hopelessly wrong." The SEC makes dishonesty pay 11/23/03   link Government "Providing a veneer of honesty, feeble standards let brokerages and traders get away with millions without breaking the letter of the law." The real costs of turnover 11/23/03   link Funds "Not surprisingly, the most active group trailed the least active group by an average of 5.5% per year. And this doesn't even consider the effect of taxes, which were surely significant. For individual investors and mutual funds alike, the message is clear -- low turnover equals better performance." Break the poverty mentality for a good cause 11/23/03   link Taxes "When it comes to charitable giving, many of us tend to fall short. Some of the numbers published by the Canada Customs and Revenue Agency may surprise you. Of those who reported between $50,000 and $70,000 of income on their tax returns in 2000, 49.7 per cent claimed charitable donations, and they gave an average of 0.67 per cent of income to charity. Between $70,000 and $100,000, 59.5 per cent claimed donations, and gave an average of 0.76 per cent of income. Finally, 69.3 per cent of those earning more than $100,000 claimed donations in 2000, and gave an average of 1.4 per cent of income to charity." In the long run we are all broke 11/22/03   link Bonds "Investors have good reason to worry about states defaulting on their loans: Argentina and Russia provide chastening recent reminders. But both were dysfunctional economies with troubled political pasts. Surely, there is no need to worry about the indebtedness of the governments of stable, advanced countries?" Fed up with protectionism 11/22/03   link World "The current-account deficit is benign, says Alan Greenspan, but protectionism is dangerous. America's garment makers do not agree. Its European creditors may be having second thoughts too" Tell it like it is 11/22/03   link Accounting "The time has come to change the way we design corporate pension plans, and here are seven concrete suggestions to help employers reduce their risk If you don't have a pension plan, don't start one" The value of a fee-based advisory relationship 11/21/03   link Brokers "Instinctively, well-heeled people are far more favourably inclined to work on a fee basis because they understand the business model and how it both aligns interests and embeds transparency. Quite apart from the ethical perspective, there are sound tax reasons for working on a fee basis, too." The dragon binges 11/21/03   link World "Companies around the world, it seems, have caught China fever. When the fever breaks, there could be hell to pay." The horse is dead 11/21/03   link Accounting "I have spent most of my professional life trying to make defined benefit pension plans work -- for members as well as for shareholders. But as time passes and the pension system matures, the risks become harder to manage and the complexities harder to endure. And I wonder: Is there not a better way?" Wall St. Journal 'Buffetted' 11/21/03   link Buffett "The article focused on the difference between the mere $2,264 in taxes Buffett pays on a $4 million house he bought in Laguna Beach, California, in the early 1970s, and the $14,401 taxes he pays on his home in Omaha, Nebraska, which Buffett believes is worth $500,000." Take your medicine 11/20/03   link Stocks "Somebody pass the antidepressants. We have an aging population clamouring for life-saving drugs, we are up to our deteriorating eyeballs in medical breakthroughs, and yet, in these days of generic knock-offs and cut-rate Internet pharmacies, there isn't a major manufacturer in the pharmaceutical business that hasn't had the solid biological waste kicked out of its market cap at some point in the past two years." The hard sell for reverse mortgages 11/20/03   link Debt "Mandatory mortgage insurance ensures that you (or your heirs) don't end up owing more than the house is worth. But it's entirely possible to drain all or most of your home's equity." Bubble junior 11/19/03   link Dreman "There is a bizarre psychological effect overtaking the market these days, where crummy stocks are treated well and good stocks badly. Sound familiar?" When to buy, when to sell 11/19/03   link Grant "If you bought low, now that the stock market has risen again, do you sell high? Or wait for it to go still higher? One problem: The market might not get much higher." Joined at the hip 11/19/03   link Indexing "A few years ago Barclays Global Investors did the unthinkable when it released a wide array of U.S. stock ETFs that actually undercut the expense ratios of several comparable Vanguard index funds. Ever since, Vanguard, BGI, State Street Global Advisors, and other ETF providers have waged a public relations battle for the 'hearts and minds' of investors and advisors who use funds tied to popular benchmarks." A shot in the arm for drug makers 11/18/03   link Stocks "The latest version of the Medicare prescription benefit bill is just what the pharmaceutical sector ordered. Here's why drug makers may finally be on the road to recovery." The oh-oh 00s 11/18/03   link Markets "Bull and bear, terror and war--we're living through some spooky times" The scandal may get much worse 11/18/03   link Funds "Illegal behavior at funds is so longstanding and pervasive, rising to the highest levels in many cases, that some fund firms could very well 'crumble' as investigations proceed, says one plugged-in independent investigator." Fund scandals for dummies 11/18/03   link Funds "There's some reason for confidence. Late trading is less likely in Canada because of FundServ, an intermediary that has been executing fund purchases or sales since 1993. If you buy fund units after markets close at 4 p.m., they are priced at the 4 p.m. close the following day, says FundServ CEO Alan Hutton. That stops investors from profiting from "stale" prices: buying after the market has closed, as has occurred in the U.S." How we take from rich and give to poor 11/17/03   link Government "It's time for that annual bit of nasty business -- the who-pays-who-gets update on the financial workings of Confederation. Once a year, after Statistics Canada produces its provincial economic accounts, we tally the manner in which Ottawa takes from the rich provinces and gives to the poor. The data tell residents of each province and territory whether they are a net contributor to the national public purse or a net beneficiary." The skinny on weight watchers 11/17/03   link Stocks "Popular low-carb diets have dented its stock, but stout fundamentals and a solid long-term outlook may make this a buying opportunity" All roads now lead to inflation 11/17/03   link Markets "The Fed's espresso-strength intervention is going to reignite prices and may endanger the recovery. What's unknown: how big the next bust will be and who will get hurt." Bigger fund ripoffs exist than illegal trading 11/16/03   link Funds "It's fascinating to watch the regulators tie themselves in knots to investigate the fund sector. As usual, they're getting only part of the picture. Illegal late trading is a scandal, sure -- but so are many of the things fund companies do every day that are perfectly legal." A closer look at investment fees 11/16/03   link Funds "Only time will tell whether or not index products out-perform actively managed products. They areuseful tools for certain types of investors who seek alternatives to active management. Yet, it is not unreasonable to conclude that above-average, low-fee, actively managed products stand a strong chance of providing superior returns." Sparks fly over steel 11/14/03   link World "The looming trade war over America's steel tariffs may yet be averted thanks largely to an expected surge in global steel prices" Some mutual fund firms just don't get it 11/13/03   link Funds "The thing about scandals is they usually blow over. So the Canadian mutual fund companies that have been hiding from the U.S. mutual fund industry scandal will probably make out fine. Odds are pretty good that the sort of trading abuses that several U.S. fund companies have allowed will turn out to be rare or non-existent in Canada. Any risk of an investor backlash will melt away. Or not." Business has become a real mob scene 11/13/03   link Management "Next, try this out: Does your company manage earnings, and do you participate in any way? Are you thus failing to represent your company's financial condition fully and fairly defrauding investors in the context of the Sarbanes-Oxley era? And are you benefiting financially, since Wall Street rewards smoothly rising profits, and you hold stock options?" Beat it boss, I'm playing a game 11/12/03   link Fun "Rejoice, my fellow corporate drones, you need no longer hide behind your monitor at work as you sneak in a game of solitaire!" A few small-cap values 11/12/03   link Funds "Mr. Tattersall is the lead manager of the Saxon Small-Cap Fund. Founded in 1985, Saxon Mutual Funds is owned and managed by Howson Tattersall Investment Counsel, and is widely recognized as one of Canada's premier value-oriented investment firms. The fund invests primarily in TSX listed small-cap Canadian stocks with a market capitalization (share price * number of shares outstanding) of less than $300 million." What's Buffett up to? 11/12/03   link Buffett "Warren Buffett's Berkshire Hathaway sells everything from Blizzards to long underwear. But Buffett has also been trying his hand at peddling something else entirely: influence." How mutual funds stole your money 11/12/03   link Funds "While your shares were handcuffed by 4 p.m. closing prices, others could wait for hours -- sometimes the next day -- before swooping in on good or bad news to make a killing." The only company Wal-Mart fears 11/12/03   link Stocks "The nimble first mover can outrun the powerful colossus; the innovator can stay a jump ahead of the imitator; the quality of leadership can trump the quantity of resources. "Here's the difference between Sam's and Costco," says Charlie Munger. "We have a live Sam Walton who's still there, and Wal-Mart doesn't."" Hey, shoppers: ads on aisle 7! 11/11/03   link Stocks "Forget the Big Three. Wal-Mart's TV network is cleaning up." Up against the wall 11/11/03   link Funds "Dick Strong runs his mutual fund firm with a raging passion. And passion can get you into a lot of trouble." I quit! 11/11/03   link Management "Overworked employees are fed up: a survey finds 8 out of 10 Americans want a new job." The battle for Buffett's picks 11/10/03   link Buffett "I have noticed that Warren Buffett does not buy stock of companies listed on the Nasdaq. What are the differences between the exchanges, and why might Buffett prefer companies listed on the New York Stock Exchange over Nasdaq-listed firms?" Your home: Worst-case scenario 11/10/03   link Real Estate "Will rising interest rates unravel all of the gains of the recent housing boom?" The bull is back! 11/10/03   link Value Investing "It's true. Just ask your local broker. Listen to the cheery business commentators on the television and radio. Better still ask your boy genius fund manager; he too believes that it's true. Listen closely ... all you will hear is bull." Big 3 seek pension relief 11/10/03   link Government "The proposal stunned a crowd of automotive executives gathered for a recent conference in West Virginia. Conservative David Stockman, the former Reagan administration budget czar and now head of a Metro Detroit auto parts maker, suggested the federal government take over the under-funded pension plans of U.S. automakers and auto parts suppliers." Nobody sues in a bull market 11/10/03   link Brokers "'Rogue clients' try to blame their advisor for their losses "People don't sue when they're making money." That's a direct quote from a lawyer who specializes in defending investment advisors from "rogue clients."" Inexcusable 11/10/03   link Indexing "Founder and former CEO of The Vanguard Group John Bogle has been speaking out for the past several years against bad trading practices in his industry. Suddenly, a lot of people are listening" 9 ways to look rich but live cheap 11/10/03   link Thrift "Rise above your measly income and worn-out shoes. You can live the Simply Fabulous lifestyle and enjoy cushy perks even without being adopted by the Rockefellers." Playing different games 11/10/03   link World "Central bankers in Sydney and London share similar hopes and fears. On the one hand, their interest-rate decisions represent two votes of confidence in the world economy. America, an important trading partner for both countries, is growing strongly. Japan, the most important trading partner for Australia, is also showing signs of a durable recovery. With growth robust, the motivation for low interest rates is less obvious, and their disquieting consequences more apparent. When you make borrowing cheap, people do more of it. In Australia, consumer debt is growing by more than 20% per year. In Britain, total lending to individuals was 14% higher in September than it had been the year before." Graham Stocks in Short Supply 11/10/03   link Stingy Investing Over the past three years, I've used Benjamin Graham's time-tested strategy for defensive investors to uncover undervalued stocks. So far, the results have been extraordinary with significant gains each year. Darlings of the Dow 11/05/03   link Value Investing "The bottom line is that low price-to-sales ratios and low 12-month forward price-to-earnings ratios are the best measures of value. The five stocks scoring highest on these metrics rallied an average of 20% from October through nine months out between 1976 and 2003." Unequal justice: Can the NYSE police itself? 11/05/03   link Crime "A small transgression can get a broker banned for life, but a well-connected floor specialist who costs investors millions may get just a slap on the wrist." Investor Behavior = Returns 11/04/03   link Funds "What has the largest impact on the returns individual investors get? Is it the actual investments they own, or their own behavior?" Say goodbye to refi madness 11/04/03   link Economy "Clearly, the end of the refi boom is here. Drawing on data from the Mortgage Bankers Assn. and Freddie Mac Corp., BusinessWeek estimates that the number of applications for cash-out refis has fallen about 50% since the refi peak at the end of May. At the same time, housing prices are rising more slowly, so there's less new wealth for homeowners to extract. The Office of Federal Housing Enterprise Oversight home price index rose at an annual rate of just 3.1% in the second quarter -- down from 8.8% a year earlier and the smallest increase since 1996." Buffett, screaming value and the DCF 11/03/03   link Buffett "The lack of precision around valuation makes a lot of people uncomfortable. To deal with this discomfort, some people wrap themselves in the security blanket of complex discounted cash flow analyses. My view of these things is best summarized by this brief exchange at the 1996 Berkshire Hathaway annual meeting: Charlie Munger (Berkshire Hathaway's vice chairman) said, "Warren talks about these discounted cash flows. I've never seen him do one." "It's true," replied Buffett. "If (the value of a company) doesn't just scream out at you, it's too close."" The contradictions Of Warren Buffett 11/03/03   link Buffett "Warren Buffett is not Warren Buffett. In recent editions of Barron's and Fortune, the legendary US investor contradicts three viewpoints long associated with his long-term stock market approach. Here's a rundown of what Buffett has declared in the past, and what he's now saying" Cult of accountability 11/03/03   link Management "Does employee training pay off? Accounting techniques and science-inspired metrics evaluate return on investment" Job-creation schemes don't work 11/03/03   link Taxes "Free-market economists like myself attack government tax-and-spend policies as being damaging to prosperity, accusing the government of "sucking money" or "leeching resources" out of the economy. We claim that taxes damage not only the welfare of the person from whom they are taken, but the whole country." Hot water for Prudential Securities? 11/01/03   link Brokers "Massachusetts' securities regulator is set to charge six brokers -- and maybe the firm itself -- with deceptive trading practices" Worrying about jobs isn't productive 11/01/03   link World "Yes, the U.S. is losing factory jobs; so is the rest of the world. Here's why we shouldn't sweat." Perigee changes name to Legg Mason Canada Inc. 10/31/03   link Funds "Perigee Investment Counsel Inc. is changing its name to Legg Mason Canada Inc. to reflect the money manager's purchase three years ago by Baltimore-based Legg Mason Inc." Substantial savings result when tax planning's a family affair 10/31/03   link Taxes "If your family is like mine, they'll drive you crazy from time to time. But cut them some slack. Without their help, you could be paying a lot more tax. That's right, when a family works together to reduce each member's tax burden, the result can be significant dollars saved." Sceptre rushes to reassure jittery clients over Putnam 10/31/03   link Funds "Sceptre Investment Couns