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Article Archive: 2016

The Stingy News Weekly: December 26, 2016
12/26/16   SNW
This week we have low-P/E values, time management, liquidity, and more.

Time management is ruining lives
12/26/16   Behaviour
"You can seek to impose order on your inbox all you like - but eventually you'll need to confront the fact that the deluge of messages, and the urge you feel to get them all dealt with, aren't really about technology. They're manifestations of larger, more personal dilemmas. Which paths will you pursue, and which will you abandon? Which relationships will you prioritise, during your shockingly limited lifespan, and who will you resign yourself to disappointing? What matters?"

Be wary of surrendering liquidity
12/26/16   Markets
"My main point is short and simple. Be wary of surrendering liquidity. If you can't clearly identify what you are gaining from giving up liquidity, don't make the investment. You are likely being hoodwinked. It's that simple."

Low P/E stocks unlock value
12/24/16   Stingy Investing
"An equally-weighted portfolio of our universe of TSX-listed stocks with P/E ratios of less than 15, rebalanced monthly, gained an average of 13.8% per year over the 20-year period. The group with P/E ratios below 10 did even better with average gains of 15.6% per year. Investors who only bought stocks with positive earnings gained 11.4% annually. All three earnings-based portfolios beat the S&P/TSX Composite's annual gain of 7.4% per year."

The anonymous billionaire
12/24/16   World
"Luiz Alves Paes de Barros is something of an enigma in Sao Paulo's financial circles. At 69, he's known around town as the 'anonymous billionaire' for quietly amassing a fortune by wagering on stocks almost no one else seemed to want."

Learn from Ben Horowitz
12/24/16   Management
"When I was a CEO, the books on management that I read weren't very much help after the first few months on the job. They were all designed to give you directions on how not to screw up your company. But it doesn't take long before you get beyond that and you're like OK I've screwed up my company; now what do I do? Most books on management are written by management consultants, and they study successful companies after they've succeeded, so they only hear winning stories."

The Stingy News Weekly: December 18, 2016
12/18/16   SNW
This week we have the hot potato, bubbles, retirement, and more.

Lazy work, good work
12/17/16   Management
"Rockefeller's job wasn't to drill wells, load trains, or move barrels. It was to make good decisions. And making decisions requires, more than anything, quiet time alone in your own head to think a problem through. Rockefeller's product - his deliverable - wasn't what he did with this hands, or even his words. It was what he figured out inside his head. So that's where he spent most of his time and energy."

The ace of spades
12/17/16   World
"On his wall, Eric has a framed Cuban cigar, he starts his story by explaining the significance of that cigar."

Long-term losers
12/17/16   Stingy Investing
"Racing to the bottom is something investors don't like to do when it comes to the markets. They tend to avoid stocks that have fallen over the course of many years. Last December, I highlighted 10 Canadian stocks that had shrivelled to less than one-tenth of their 10-year highs." [$]

A Hot Potato feast
12/17/16   Stingy Investing
"As we prepare for roast beast dinner down in Whoville, it's time to consider the Hot Potato as a side dish. When it comes to investing, the Hot Potato is a momentum-based twist on the regular Couch Potato."

Better bubble theory
12/17/16   Markets
"Glaeser and Nathanson's model makes one crucial assumption -- that investors rely on past prices to make guesses about demand, but fail to realize that other buyers are doing the exact same thing. When everyone is making guesses about price trends based on other people's guesses about price trends, the whole thing can become a house of cards. The economists show how if homebuyers think this way, the result -- predictably -- is repeated housing bubbles and crashes."

Retirement - golf
12/17/16   Retirement
"In all my years of working with clients, I can only think of two people who wanted to retire in the traditional sense. Even then, both stayed deeply committed to doing volunteer work, more or less full time, throughout their retirement. So, I have worked with precisely zero individuals who went from full-time work to full-time leisure at 65."

The Stingy News Weekly: December 11, 2016
12/11/16   SNW
This week we have innovation, dividends, Buffett, volatility, and more.

Canada's innovation problem
12/11/16   World
"Why do we export so many world-class business ideas to the rest of the world?"

Is dividend investing dangerous?
12/11/16   Dividends
"Even a fairly vanilla investment strategy, like dividend investing, is not without its critics. There is a significant amount of evidence that dividend strategies - including focusing on dividend payers, dividend growers, or high yielding stocks - have historically generated excess return."

Invest like Buffett
12/11/16   Buffett
"What do George Soros, Warren Buffett and a computer have in common? Turns out, a lot. At least that's the view of AQR Capital Management, the program-driven investment firm whose founders made their names finding the math behind investment success."

Low volatility lottery
12/11/16   Markets
"The abnormal returns associated with the beta anomaly are explained by a lottery demand factor. The beta anomaly exists only when the price impact of lottery demand falls disproportionately on high-beta stocks and is concentrated in stocks with low levels of institutional ownership."

WealthTrack: Arnott interview
12/11/16   Indexing
"When 'smart beta' investing can be dumb. Financial innovator and thought leader, Research Affiliates. Robert Arnott warns about pitfalls with the popular strategy he helped create." [video]

The three coolest studies of 2016
12/11/16   Funds
"It appears that ETFs dropped portfolio returns by 1.1% annually even when they accounted for only a small portion of an investor.s portfolio."

The Stingy News Weekly: December 4, 2016
12/04/16   SNW
This week we have Xmas books, CAPE works, coin tossing, and more.

CAPE works
12/04/16   Value Investing
"CAPE's value is not in predicting what a single asset class or market is going to do all by itself in a vacuum. But as we've intended to illustrate in this paper, when you use CAPE in the broader, logical way, the data seems to prove it's a wonderful timing tool."

How much is enough?
12/04/16   Thrift
"Step back a bit, however, and you will see that every money question eventually boils down to a single line of inquiry: How much is enough?"

Small bets, huge payoffs
12/04/16   Markets
"We discuss how a series of small bets can lead to disproportionally large nonlinear payoffs, in both life and markets."

Mistakes of momentum investors
12/04/16   Momentum Investing
"It is important to remain focused on what is important - accumulating wealth while protecting yourself from severe bear markets. Once you have a good investment strategy, you need to be patient so it can do its work for you. Warren Buffett said the stock market is a mechanism for transferring wealth from the impatient to the patient. This applies to momentum as well as other investors."

Predicting 60/40 returns
12/04/16   Markets
"The result are likely forward real returns for a 60/40 portfolio in the 0-2% range pre-tax with more downside in my view than upside (post-tax - you can take off another 1-2%)."

Kelly coin tossing
12/04/16   Math
"Nothing sounds simpler than winning at such an outrageously rigged game. Yet, when it was played with real money in a controlled experiment, a surprising number of professional investors and finance students somehow managed to go bust." [$]

Books for the holiday season
12/04/16   Stingy Investing
"Christmas is fast approaching and some us aren't looking forward to all of the shopping, cooking, and cleaning the holiday requires. That's why, after consuming the last of the figgy pudding, you might want to settle down by the fire to read a nice book. But instead of rereading the scandalous libel inflicted on poor Ebenezer Scrooge by Charles Dickens, you might opt for some lighter fare in the form of a good book on investing. Here are three recent offerings you should try."

The Stingy News Weekly: November 27, 2016
11/27/16   SNW
This week we have See's Candies squared, Buffett's 17 year bet, and more.

Slice and dice
11/27/16   Stingy Investing
"Last week, our American cousins celebrated Thanksgiving. A great many turkeys were sliced up for the occasion and each gobbler consumed their favourite bit. Similarly, stock pickers slice up the market and invest in companies they expect to provide the most succulent returns." [$]

The quality brand Mittelstand
11/27/16   Buffett
"If you had asked me back then which of the two companies would go the distance, I don't doubt for a second I would have answered the Washington Post. And as late as 1988, when The Powers that Be became the first grownup book I ever read, I still thought of it as a colossus. Yet as events transpired, the Post has come quite a way down in the world, while humble See's is still, in Buffett's words, a 'dream business.'"

Scalability challenges
11/27/16   Hallett
"In Canada, robo-advisors must register as Portfolio Managers, which cannot opt-out of their legal fiduciary duty. In my column for the September 2016 issue of Investment Executive, I explain why this will limit the scalability of Canadian robo-advisors' businesses. If they grow as planned, they will need tens of thousands of clients to succeed financially. Technology infrastructure can be built to easily handle this volume. But obligations of registered Portfolio Managers will also require a significant hiring of people who can speak with clients about their investments - and that limits scalability by adding to costs."

Buffett talks to UofM students
11/27/16   Buffett
"Today, with $1 million, he and Charlie would probably invest in four stocks."

Learning from See's Candies
11/27/16   Buffett
"Berkshire's purchase of a boxed candy business founded by the See family in California fundamentally changed the investing world because it changed the way Buffett and Munger thought about investing. While you may never have the chance to own a business like See's Candies, by better understanding the nature of a dream business you can more easily find a business to invest in that shares some of its positive attributes."

The 17 year bet
11/27/16   Buffett
"But the record shows that the period's gross returns are anemic enough to confirm Buffett's general accuracy. From mid-November, 1999, to last Friday's trading day, the annualized total return to investors from the Dow Industrials was 5.9%."

How to manage an overvalued stock
11/27/16   Management
"It is an unusual situation, but the best strategy for a company with an overvalued stock is to try to grow their way out of it, usually through mergers and acquisitions. The twist I offer you at the end of my piece is this: thus, watch highly acquisitive firms. Not all of them are overvalued or fraudulent, but some will be. Avoid the shares of those firms."

Venezuela, a failing state
11/27/16   World
"Once the richest country in South America, it now has the world's highest inflation rate and is plagued by hunger and violent crime. How did this happen?"

Does decision-making matter?
11/27/16   Behaviour
"We don't decide about life; we're captured by life. In the major spheres, decision-making, when it happens at all, is downstream from curiosity and engagement. If we really want to understand and shape behavior, maybe we should look less at decision-making and more at curiosity. Why are you interested in the things you are interested in? Why are some people zealously seized, manically attentive and compulsively engaged?"

The Stingy News Weekly: November 20, 2016
11/20/16   SNW
This week we have the Top 200, the Top 500, momentum, value, and more.

Why moats are essential
11/20/16   Value Investing
"The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors."

Momentum with indexes
11/20/16   Momentum Investing
"Investors can take advantage of momentum with funds that apply the strategy to individual stocks, or apply it directly using ETFs offering exposure to equity sectors, single countries, or individual asset classes."

Top 200 total returns
11/20/16   Stingy Investing
"Starting on the Canadian side of the ledger, the Top 200 All-Stars gained an average of 16.3% per year over the last five years. By way of comparison, the S&P/TSX Composite gained 7.7% annually over the same period."

Is value investing broken?
11/20/16   Value Investing
"Here are the times Ben Graham invested in: the 1910s through the 1950s. He invested during Two World Wars, the start of the Cold War, the atomic bombings of Nagasaki and Hiroshima by the U.S. and then the testing of nuclear weapons by other countries, The Great Depression, a big explosion (reportedly a terrorist bombing) on Wall Street, and the longest shut down of trading in Wall Street history that I can remember at least (right as World War One started). People talk about political risk today. Political risk in Ben Graham's time meant Marxists and Fascists. Investors saw hyperinflation in Germany after the war and then they saw deflation after the 1929 crash. These were not simple times. If you go back and read the newspapers from the time - you can see how not simple they were."

Top 200 Canadian Stocks for 2017
11/17/16   Stingy Investing
"We created the MoneySense All-Star Stocks guide 12 years ago to help point you to some of the best Canadian stocks on offer. This year we have once again crammed it full the information investors love, including All-Star teams from both Canada and the U.S. We weigh up the merits of each of the largest stocks in both countries and our All-Star teams contain those with the best growth and value characteristics."

Top 500 U.S. Stocks for 2017
11/17/16   Stingy Investing
"The 12th annual MoneySense U.S. All-Star Stocks guides investors to the best U.S. equities on offer. It compiles a buffet of facts and figures on the 500 largest stocks in the U.S. and boils everything down into easy-to-use letter grades. As with their Canadian counterparts, the stocks with the most growth potential and value appeal are promoted to the All-Star team."

The Stingy News Weekly: November 13, 2016
11/13/16   SNW
This week we have the value of momentum, hindsight, low prices, and more.

The value of momentum
11/13/16   Stingy Investing
"A great chasm exists between value investors and momentum investors. The former like to hide behind huge corporate walls and deep moats while the latter take direction from the mob and go along for the ride. As a result, they inhabit very different corners of the market." [$]

Low priced stocks no bargain
11/13/16   Markets
"Low-priced stocks become most overpriced relative to high-priced stocks during high-sentiment periods, meaning the bulk of the strategy returns occur following times of high investor sentiment and, additionally, as sentiment decreases, high-priced stocks attain high returns relative to low-priced stocks."

ILTB: Brent Beshore interview
11/13/16   Management
"Brent has a very specific mission with this company, to cultivate a disaster resistant, compound interest machine. At just 33 years of age he has already built a portfolio of private companies that has produced impressive results. He's done all this out of the limelight and with no outside investors. Brent discusses his rewarding but difficult journey and what he has learned, including sourcing and evaluating businesses, how he and his team have improved profitability at his portfolio companies after acquisition and so much more."

Hindsight bias
11/13/16   Behaviour
"The issue of hindsight bias and fooling ourselves about what we think knew a priori haunts investors constantly. We are reminded of this by those who claim they saw the financial meltdown coming. Despite the lack of proof, they remain convinced they knew what was about to happen all along."

The art of doing nothing
11/13/16   Behaviour
"The thing that makes investing so difficult is that it's analogous to ordering a chicken sandwich in a restaurant while hundreds of sales people are coming up to you explaining why their sandwich is going to protect you against inflation, market crashes, etc. Meanwhile, TVs are blaring in the background explaining how sandwiches are on the verge of imminent disaster... We are constantly barraged with news and events that trigger that urge to act. And 99% of the time you should say no to these sales people and just order your plain old chicken sandwich."

The Stingy News Weekly: November 6, 2016
11/06/16   SNW
This week we have Graham stocks, Miller, Shiller, Greenblatt, and more.

Bill Miller interview
11/06/16   Value Investing
"In a wide-ranging discussion, Miller talks about everything from his stock selection process, his infamous streak, and what he got wrong during the financial crisis."

Robert J. Shiller on behavioral economics
11/06/16   Behaviour
"it doesn't help to have a theory based on wrong assumptions"

Investors must be contrarians to outperform
11/06/16   Value Investing
"If you are not getting more humble over time, you have a flawed system."

MoneySense goes all digital
11/06/16   Stingy Investing
"I've received a large number of emails expressing concerns and asking questions about the recent decision by Rogers to transform MoneySense into an all-digital media brand by ceasing to print the magazine."

Joel Greenblatt interview
11/06/16   Funds
"How do you prevent investors from buying and selling at the wrong time? Financial innovator and successful value investor, Gotham Funds' Joel Greenblatt explains his new hybrid approach combining indexing and his active long/short strategies." [video]

2 Graham Stocks for 2017
11/01/16   Stingy Investing
"If you had purchased an equal dollar amount of each Graham stock in the first year and replaced them with the new crop of stocks each year thereafter, you would have turned $1,000 into $10,140. In comparison, $1,000 invested in an S&P 500 exchange traded fund (NYSE:SPY) would have grown to just $2,090. Translated into percentage terms, the Graham stocks gained 914% (16% annualized) over the full period while the S&P 500 ETF moved up 109% (5% annualized)."

The Stingy News Weekly: October 29, 2016
10/29/16   SNW
This week we have dividend all-stars, the price of advice, semi-retirement, and more.

How Venezuela imploded
10/29/16   World
"Things are pretty bad right now in Venezuela. Grocery stores don't have enough food. Hospitals don't have basic supplies, like gauze. Child mortality is spiking. Businesses are shuttering. It's one of the epic economic collapses of our time. And it was totally avoidable."

The salary class
10/29/16   Stingy Investing
"A few years ago he gave investors a second choice that proved to be even more popular. Investors in the ROMC Fund 'salary series,' pay Mr. McLean a flat annual salary for his services. As a result, the fractional fee they pay declines as the fund's assets rise, which is highly unusual. Indeed, it is - as far as I can tell - unique for a Canadian hedge fund." [$]

Of milk cows and moats
10/29/16   Government
"When considering businesses that rely on a given locality, ask how the health of the locality affects the business. It's worth considering. For those who invest in municipal bonds, it is a critical factor. Particularly as the Baby Boomers age, weak municipalities will come under pressure. Stick with strong municipalities, and services that would be impossible to do without."

Watching the flows
10/29/16   Behaviour
"As the available research shows (and anyone with experience in the business knows), flows follow performance. To varying degrees, it is true in every part of the investment world. Individuals and institutional investors alike chase performance. Avoiding that tendency is behaviorally difficult but essential for long-term success"

Give up the news for a week
10/29/16   Behaviour
"No matter what your reasons for being a news junkie, researchers are finding that consuming news on an hourly or even daily basis is bad for your brain. Studies have shown that an overabundance of news can make you depressed, anxious, and, for the most part, doesn't usually provide you with the ability to actually change or influence anything being reported."

Choose time over money
10/29/16   Behaviour
"Although the majority of people chose more money, choosing more time was associated with greater happiness - even controlling for existing levels of available time and money."

The price of financial advice
10/29/16   Stingy Investing
"The good news is there are several ways to cut fees, some without cutting out an advisor. Broadly speaking there are three ways to do it. You can keep the individualized advice but move to a portfolio of low-fee funds. Or you can opt to do your own planning and choose a low-fee portfolio of professionally managed funds. Finally, those with sufficient knowledge and experience can do it on their own and cut costs to the bone."

Dividend All-Stars 2016
10/29/16   Stingy Investing
"We're pleased to say that our efforts have also been highly profitable over the long term. If you had purchased an equal dollar amount of each A-graded stock in your RRSP and rolled the proceeds into the new ones each year, you'd have gained a total of 148% since we started back in 2007. Similarly, a portfolio of A and B stocks would have climbed 88%. By way of comparison, the S&P/TSX Composite ETF (XIC) logged a return of 39% over the same period while the Select Dividend ETF (XDV) advanced 50%."

Semi-retirement is more fun
10/29/16   Retirement
"I have described elsewhere that my vision of Semi-Retirement is to find a balance that's neither too busy and stressful nor too leisurely and boring: or as the subtitle of the book has it, Work while you play, Play while you work."

The Stingy News Weekly: October 23, 2016
10/23/16   SNW
This week we have international value, Vanguard, frugality, and more.

Vanguard's Gerry O'Reilly and Jim Rowley
10/23/16   Indexing
"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."

Sarah Ketterer on value
10/23/16   Value Investing
"Highly-rated global investor, Sarah Ketterer, Portfolio Manager of Causeway International Value Fund explains why there is still plenty of value to be found in overseas markets." [video]

Let's talk about salary
10/22/16   Stingy Investing
"He asserts that inquiring about salaries is a social faux-pas in Canada. But it is something that I.ve been doing shamelessly for many years because the data empowers rather than impoverishes employees."

Frugality isn't what it used to be
10/22/16   Thrift
"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."

The Stingy News Weekly: October 16, 2016
10/16/16   SNW
This week we have a rocky retirement, the new math, 100 books, and more.

The trouble with 4 per cent
10/16/16   Stingy Investing
"while simple asset allocations proved to be strong relative performers, the study found the 4-per-cent rule wanting when tested in international markets. Even worse, it did not include the corrosive impact of taxes, fees and other frictions investors face." [$]

The looming pension crisis
10/16/16   Retirement
"Guaranteeing pension returns - either before or after retirement, or both - is clearly a popular policy for both savers and sponsors. But the details are daunting, and the risks only grow as the scope of guarantees expands and more people take up the plans, testing the generosity of sponsors - and the taxpayers who back them."

Turning over accepted wisdom
10/16/16   Indexing
"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."

Sharpening the arithmetic
10/16/16   Indexing
"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."

The illusion of choice
10/16/16   Indexing
"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%."

Health spending and life expectancy
10/16/16   Health
"The graph below shows the relationship between what a country spends on health per person and life expectancy in that country between 1970 and 2014 for a number of rich countries. The US stands out as an outlier: the US spends far more on health than any other country, yet the life expectancy of the American population is not longer but actually shorter than in other countries that spend far less."

The next financial crisis
10/16/16   Markets
"Where is the next financial crisis developing? How can investors protect themselves? Answers from two crisis experts, Robert Aliber, Editor Manias, Panics, and Crashes and Global Shocks author, Nicholas Sargen." [video]

Backtesting with unrealistic data
10/16/16   Markets
"I'm picking on this particular asset class to prove a point, but the same conclusion applies to a number of asset classes where Fama-French, Ibbotson, poorly matched mutual fund, etc. data is used. In many cases, that data does not remotely match up to anything that can be traded in today's market."

Read 100 books a year
10/16/16   Books
"If you're an ambitious, goal oriented person, it's possible that one of your New Year's resolutions was to read more books. Books are the gateway to imagination, to worlds we may not be able to access physically, but can emotionally. Books help us to expand what we're capable of being and experiencing. Based on the math, which I'll explain below, I'll likely have read 100 books this year."

The Stingy News Weekly: October 9, 2016
10/09/16   SNW
This week we have dividend stocks, buybacks, Buffett, Trump, Housel, and more.

ILTB: Morgan Housel
10/09/16   Behaviour
"Morgan Housel and I explore the differences between private and public market investing, how to foster innovation and creativity, how businesses are structured and organized, and how Morgan finds interesting books and topics to write about."

Buyback bulls and bears
10/09/16   Markets
"I expect buybacks to continue at high rates so long as interest rates continue to be lower than the earnings yields of companies, and will continue to garner accusations of CEOs of manipulating earnings and stock prices to line their own pockets. But the data offers stronger support for the claims that buyback programs on average generate long-term excess returns for shareholders, driven by the earnings of the companies"

Financial crisis
10/09/16   Markets
"Why have financial crises occurred with such dismaying regularity throughout history around the world? Perspective from renowned financial crisis expert Robert Aliber and leading Wall Street economist and strategist, Nicholas Sargen." [video]

Buyback yield
10/09/16   Stingy Investing
"Canadian investors love dividend stocks. But income seekers should look beyond a company's dividend yield to other factors that can enrich - or impoverish - shareholders." [$]

Top dividend stocks of 2016
10/09/16   Stingy Investing
"We're hard at work on this year's Dividend All-Stars, which grades the largest 100 dividend stocks in Canada. As a preview, I thought you might be interested in a few highlights and some behind the scenes data to whet your appetite for the next issue of the magazine."

Warren Buffett is an artful influencer
10/09/16   Buffett
"Warren Buffett's annual shareholder letter is an opportunity for him to exercise influence. The letter's tone is friendly and homespun, but Buffett takes it even further. He gives Berkshire shareholders the impression that he is actively looking out for their welfare."

A more balanced S&P 500
10/09/16   Indexing
"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."

Trump's tax break
10/09/16   Taxes
"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."

The Stingy News Weekly: October 2, 2016
10/02/16   SNW
This week we have international safe withdrawal rates, Zweig, Berkowitz, and more.

You don't have to play
10/02/16   Markets
"US stock returns should be muted, but not negative. The good news? Many foreign markets are sitting on 3-5% dividend yields and CAPE ratios of 8-15. The equation works much better for those markets and we do expect double digit returns there."

Buffett vs. Vanguard
10/02/16   Buffett
"He noted that retirement portfolios heavily skewed to equities have traditionally been viewed as risky because of their volatility. But for retirees, there are perhaps two greater risks: that the investor will outlive the portfolio; and that the portfolio's value may not be maximized if passing on wealth is the objective."

Retirement glidepath
10/02/16   Retirement
"After considering declining-equity, rising-equity, and static glidepaths, the comprehensive international evidence from 19 countries and the world market over 110 years considered here ultimately suggests that both an all-equity portfolio and a 60-40 stock-bond allocation are simple and very effective strategies for retirees to implement."

Jason Zweig interview
10/02/16   Zweig
"In this episode, Jason Zweig and I discuss investing, financial advice, books, and life in general. The method for living discussed in the last 30 minutes will be useful for everyone."

Berkowitz interview
10/02/16   Value Investing
"An exclusive interview with a deep value investor whose outstanding long term track record has been seriously tested in recent years. Why Fairholme Fund's Bruce Berkowitz says there is light at the end of the tunnel." [video]

The Stingy News Weekly: September 25, 2016
09/25/16   SNW
This week we have the power of incentives, Marks, Mauboussin, and more.

The bubble in Japan
09/25/16   Markets
"Japan offers what I would consider the largest bubble in history, but people have a habit of forgetting about these things and assuming they can't happen again."

Learning to live with low returns
09/25/16   Stingy Investing
"The bond market has been on a multidecade bender. But the party is close to an end and the hangover could last for years." [$]

12 lessons from Howard Marks
09/25/16   Value Investing
"To convey my points in this post I decided to take an investing style that many would consider to be very different from value investing and show that they are in fact based on the same principles applied in different ways to different types of assets. That other investing system I will discuss here is venture capital."

Market charts
09/25/16   Markets
"Once again, we've asked some of the sharpest strategists, economists, and reporters for one chart that's at the top of their minds right now."

The power of incentives
09/24/16   Stingy Investing
"Wells Fargo (WFC) is mired in a scandal of its own making that revolves around the perverse power of incentives. The U.S. bank's problems reminded me of a famous lecture that Charlie Munger gave in 1995 on the psychology of human misjudgement."

Scalability for robo-advisors
09/24/16   Brokers
"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."

Almost nothing in the bank
09/24/16   Thrift
"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."

A share of Berkshire Hathaway
09/24/16   Books
"Imagine opening your mail and finding a share of Class A Berkshire Hathaway stock."

ILTB: Michael Mauboussin
09/24/16   Books
"In this episode, Michael Mauboussin and I discuss everything about asset management: the state of the industry, the active investment process, and Michael's simple but genius 'input/output' method for daily life. This is a full seminar on asset management."

The Stingy News Weekly: September 18, 2016
09/18/16   SNW
This week we have a horse's head, building, restaurants, infrastructure, and more.

Putting it all on red
09/18/16   Retirement
"Imagine two kinds of investment funds, both of which have the same aim: to provide pensions for their employees. You might think that they would invest in a similar way. But when it comes to American pension funds, you would be wrong. It turns out that public funds have a rather different, and more aggressive, approach to risk from private ones (and indeed from their counterparts in other countries)."

The discipline of value investing
09/17/16   Value Investing
"The key to implementing the strategy successfully is separating your investment process from short-term results: to have discipline."

A severed horse's head
09/17/16   Stocks
"Tonight, I am talking about a different sort of scam that sucked in a different class of people. This scam was a corporation where the management took a firm into bankruptcy that could easily pay its debts, at least in the short-run. The management likely conspired with the bondholders against its shareholders, seemingly in an effort to gain a greater reward from the bondholders who would own the firm post-bankruptcy than they could from operating the firm outside of bankruptcy."

Mortgage guidelines
09/17/16   Management
"Canadian banks allow foreign clients with no credit history, including students, to qualify for uninsured mortgages without proving the sources of their income - a practice that exempts non-Canadians who have money in the bank from the scrutiny domestic borrowers face when buying a home or an investment property."

If you build it
09/17/16   Government
"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."

Investing in a restaurant
09/17/16   Economics
"Yet I've come to conclude that the restaurants New York needs are doomed, financially, to fail. That's because amateur capital backed by magical thinking and a desire for fun distorts the economics for everyone."

Time or Money
09/17/16   Behaviour
"We found that the people who chose time were on average statistically happier and more satisfied with life than the people who chose money."

ILTB: Jeff Gramm
09/17/16   Books
"My guest today is Jeff Gramm. Jeff is the founder and portfolio manager at Bandera Partners, an Adjunct Professor at Columbia Business School, and the author of Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism. Jeff and I discuss the history and current state of shareholder activism, and explore how Jeff invests himself, taking large stakes and often board seats in undervalued companies."

Overfitting
09/17/16   Markets
"What we did was to demonstrate that given virtually ANY desired performance profile, one can devise a stock fund portfolio, constructed from S&P500 stocks, that achieves that profile, based on backtests. Do you want a steady 8% per annum growth, month after month, year after year? You can have it - or 10% or 12% or 15% (all based on backtests, over say a 15-year period). We even constructed portfolios that exhibit a stair-step or sinusoidal growth, just to demonstrate that any profile can be used."

The Stingy News Weekly: September 11, 2016
09/11/16   SNW
This week we have nudged out, the pain trade, corruption, and more.

Nudges take a battering
09/11/16   Behaviour
"In yet another setback for the field, researchers have failed to replicate two studies showing that basic techniques can reduce racial achievement gaps and improve voter turnout."

Plenty of stocks
09/11/16   Retirement
"The prudent course for any retiree is to plan on a longer-than-normal life. Retirees typically liquidate only a small portion of their assets every year. Accordingly, the mere act of retiring should not prompt any change in your exposure to the financial asset - common stock - that is almost certain to produce the highest returns over the long run."

Boost returns with low P/E stocks
09/11/16   Stingy Investing
"You can see that adding the low-P/E requirement boosted returns in a big way. The low-P/E portfolio generated compound average annual returns of 13.79%, which is just over four percentage points more than the annual compound return of the baseline portfolio."

Uses of cash
09/11/16   Markets
"Less recognized is that nearly half of S&P 500 revenues come from overseas. Therefore, a strengthening dollar can substantially hamper U.S. company earnings and long term competitiveness."

Underperformance: not a bug, a feature
09/11/16   Markets
"Berkshire Hathaway is a glaring example. If you look at Berkshire Hathaway on a daily, weekly, monthly, quarterly, or six-month basis over its entire history, an investor in Berkshire Hathaway would have underperformed the S&P 500 more than half the time. But despite that, an investor in Berkshire Hathaway would have made tremendously more money than an investor in the S&P 500."

Dead or just painful
09/11/16   Momentum Investing
"On the one hand, stock-selection momentum strategies can have the potential to generate excess expected returns over the long run; on the other hand, these strategies sometimes generate massive amounts of investor pain when they inevitably go through long bouts of poor relative performance. It's a kind of quid pro quo: in order to access the potential gain, you must willing to accept the potential pain."

Corruption in Canada
09/11/16   Real 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"

A culture problem at Wells
09/11/16   Management
"Everyone hates paying bank fees. But imagine paying fees on a ghost account you didn't even sign up for. That's exactly what happened to Wells Fargo customers nationwide."

The Stingy News Weekly: September 4, 2016
09/04/16   SNW
This week we have the 11th sector, Chou's letter, the bargain bin, and more.

The pleasures of the bargain bin
09/04/16   Stingy Investing
"Strategy Lab celebrates its fourth anniversary this month. The lab features four fundamental investment strategies and it has been my pleasure to head up the value investing effort, which is devoted to stocks in the market's bargain bin." [$]

11th sector a boondoggle
09/04/16   Markets
"Real estate will become the S&P 500's 11th sector next month. Market historian and money manager Laszlo Birinyi isn't applauding."

Apple took tax game too far
09/04/16   Taxes
"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."

Chou's Semi-Annual
09/04/16   Chou
"We are alarmed by the torrent of negative-yield bonds issued by European and Japanese central banks. We believe that more than $10 trillion of such bonds have been issued globally to date. Investors have been gobbling them up as if there is no tomorrow. They are not aware of the enormous risks they are taking here. Even a modest increase in interest rates will culminate to an unmitigated disaster. Please stay clear of such bonds. We wouldn't touch it with a barge pole - let alone a 10-foot pole"

Saving, investing and parting thoughts
09/04/16   Retirement
"Each crash was followed by a strong recovery and each recession by renewed economic growth. The lesson is that better things usually lie ahead."

The Stingy News Weekly: August 28, 2016
08/28/16   SNW
This week we have a lost decade, pensions, retirement, Buffett bashing, and more.

The lost decade
08/28/16   Stingy 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."

CPP changes
08/28/16   Retirement
"the CPP enhancement seems to do so little to ensure that future generations have an appropriate level of retirement income"

Most retirement accounts never run dry
08/28/16   Retirement
"Consequently, while most retirees accumulate a portfolio with the plans to spend it in retirement, when faced with the ever-open-ended potential of living many more years they may feel compelled to keep extra assets available, and never actually deplete the retirement portfolio, even in their later years. This isn't a sign of inefficient portfolio spending or a consumption gap, but merely a prudent response to an uncertain future."

Re-evaluation of pension returns
08/28/16   Retirement
"In an April 2016 report, McKinsey & Co. forecast that under a slow growth scenario, U.S. stocks will return 4 percent over the next 20 years while government bonds won't make any money. Ten-year returns for Connecticut's teachers' and state employees' pensions is 5.25 percent and 5.14 percent, respectively, far short of the annual gains it currently expects."

Times are ripe
08/28/16   Markets
"Net profits are dependent on more than just business profitability. Net profit margins are also driven by economy-wide interest rates and corporate tax law."

Take-downs of Warren Buffett
08/28/16   Buffett
"Buffett achieved that record without embracing the tightrope-walking risks, the ethical shortcuts, or the death-by-slow-obsolescence that have undone so many big corporations (of the 30 companies in the Dow Jones Industrial Average when Buffett took the helm at Berkshire, only three remain.)"

The Stingy News Weekly: August 21, 2016
08/21/16   SNW
This week we have traders losing money, precarious pensions, retirement, the new voodoo, and more.

Almost 80% of day traders lose money
08/21/16   Brokers
"In the end, 79.5% of them lost real money. The median 12-month returns were -36.3%."

The $6 trillion public pension hole
08/21/16   Government
"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."

Breakdown of a diversified strategy
08/21/16   Markets
"That thought experiment is really frightening to me. You followed very sound modern portfolio management advice back then and still in ten years your portfolio is gone. I don't think we are really learning the lessons of history, especially now that the global economy is so much more interconnected than it was before."

What 2 years of negative rates tell us
08/21/16   Bonds
"It hasn't worked very well. As many experts predicted at the time, the policy has had only a modest impact on growth. It is also increasingly clear that pushing rates down further wouldn't help much and could, in fact, increase risks to the global financial system."

The reality of retirement
08/21/16   Retirement
"Lyndsay Green, sociologist and author of 'Ready To Retire? What You and Your Spouse Need to Know About the Reality of Retirement,' spoke with men over the age of 60 and their spouses, to learn about the anxieties and unexpected pleasures of retirement. Green joins The Agenda in the Summer to explore the worry and anticipation many feel toward the end of their careers." [video]

The new voodoo
08/21/16   Economics
"Old hydraulic Keynesianism from the 1960s was already a pretty implausible model. But what's happened since 2009 involves not just one, but at least five new types of voodoo"

Why you should not write a book
08/21/16   Books
"There's an unwritten rule that published authors are supposed to encourage everyone who dreams of it to finally go for it and write that book! Except that's just not true. Many of the people who want to write a book should not."

The Stingy News Weekly: August 14, 2016
08/14/16   SNW
This week we have smart beta, withdrawal rates, high yield nightmares, and more.

Be careful what you wish for
08/14/16   Stingy Investing
"The bond market is also caught in a drought - at least as far as yields are concerned. But you should think twice before wishing to return to a high yield era. Not only do bond prices fall when yields rise but, when yields are high, taxes and inflation can turn profits into losses in the blink of an eye."

Testing smart beta
08/14/16   Indexing
"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."

Sued over retirement plan fees
08/14/16   Funds
"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."

Index revolution
08/14/16   Indexing
"Charles Ellis on why investing in low cost, passive index funds, not actively managed ones is the best choice for most individual investors."

New retiree withdrawal rate
08/14/16   Retirement
"Inglis' recommendation: Simply divide your age by 20 (for couples, use the younger spouse's age). So, for example, someone who is 70 could safely spend 3.5% (70 / 20 = 3.5) of their savings, while someone who is 80 could withdraw 4% (80 / 20 = 4) and someone 65 could withdraw 3.25%."

Higher minimum wages
08/14/16   Economics
"As more cities raise minimum wage, the picture will clarify. But the early evidence from Seattle is that a higher minimum wage at the city level doesn't raise total earnings by much, because low-skilled workers end up with fewer hours on the job. "

The Stingy News Weekly: August 7, 2016
08/07/16   SNW
This week we have beer, books boosting longevity, P/B vs buybacks, and more.

Danny Kahneman interview
08/07/16   Behaviour
"In a wide-ranging discussion, Kahneman discusses how he met Amos Tversky, who became his his long time research partner. He describes how 'we' won the Nobel Prize, referring to his sharing of the prize with Tversky, who died prior to the Nobel Prize win."

Has P/B become a bad measure of value?
08/06/16   Value Investing
"A possible reason for the limited effectiveness of P/B is because of the increase in shareholder transactions, primarily through the increase in share repurchases."

10 attributes of great investors
08/06/16   Behaviour
"As a strategist and a student of investing, I have had the opportunity to meet or study many great investors. I will now share the attributes that I believe distinguish them from the rest. The reason for the background is to reveal my bias. I believe in economic value, the importance of constant learning and teaching, and that diverse input combined with rigor can lead to insight."

Lethargic Canadian economy
08/06/16   Real 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."

Quench your own thirst
08/06/16   Books
"In 1984, Koch left his consulting job and started a small brewery in Boston, using a family recipe to create a beer that would start the craft beer revolution in the U.S. His book offers unique insights into the whirlwind ride from scrappy start-up to thriving public company. His innovative business model and frank stories offer counterintuitive lessons that you can apply to business and to life."

No experts on the future
08/06/16   Science
"Experts are notoriously bad at seeing technological change coming. When they do, they often expect it in the wrong area. Fifty years ago, after dramatic changes in transport but not much change in communication, futurologists were all babbling about personal gyrocopters, regular supersonic flights and routine space travel - none of which have yet materialized. Very few of them saw mobile phones coming, let alone the internet, search engines or social media."

Read books, live longer
08/06/16   Books
"Book readers lived an average of almost two years longer than those who did not read at all."

The Stingy News Weekly: July 31, 2016
07/31/16   SNW
This week we have low-fee bonds, retirement, Amazon arbitrage, and more.

Am I saving enough for retirement?
07/31/16   Retirement
"For me, the bottom line is that even though I was aware - on an intellectual level - that returns over the past few years had been lower, I was unprepared for how much lower they appear to have been."

Who bought U.S. stocks after 2008?
07/31/16   Behaviour
"When mutual fund shareholders redeem their investments, thereby causing the funds that they previously owned to sell securities, the buyers of those securities could be pension funds. But they also could be other entities: individual investors, hedge funds, sovereign wealth funds. They might even be corporations, conducting stock-buying programs."

Amazon arbitrage
07/31/16   Markets
"But once everyone could comparison shop online, Bakos reasoned, every site would likely have to offer the same price. And yet, it turns out, many shoppers don't do the research."

Should you work in retirement?
07/31/16   Retirement
"Even a low-paying gig can make a dramatic difference"

Fixed income needs a fix
07/31/16   Stingy Investing
"The recent Ant-Man movie featured a shrinking hero. Unfortunately, interest rates have also been shrinking and are now at historically low levels. That's why it's high time to take a second look at the iShares Canadian Universe Bond Index ETF, which forms the core part of many fixed income portfolios."

The Stingy News Weekly: July 24, 2016
07/24/16   SNW
This week we have an ode to percentage points, reaching for yield, and more.

That 1% move
07/24/16   Stingy Investor
"When describing differences in percentages (interest rates, growth rates, returns, etc.) you'll do your readers a kindness by using percentage points or basis points."

Ted Weschler makes his mark
07/24/16   Buffett
"He honed his skills at Peninsula Capital Advisors, the hedge fund firm he launched in 2000 above a bookstore in a Charlottesville mall. Peninsula's $2 billion fund returned 1,236 percent before he shuttered it in 2011, versus 146 percent for Berkshire during the same period."

Do the hard thing
07/24/16   Bonds
"The reach for yield is becoming a reckless lunge. While high-quality bonds still have their place, too many investors are buying high-risk bonds instead."

Beware 13Fs
07/24/16   Markets
"Sadly, the bottomline is we should follow the SEC's own advice as it pertains to 13F filings: The reader should not assume that information is accurate and complete."

The Stingy News Weekly: July 17, 2016
07/17/16   SNW
This week we have science, saving, home, technology, and more.

Problems facing science
07/17/16   Science
"Science, I had come to learn, is as political, competitive, and fierce a career as you can find, full of the temptation to find easy paths."

Save more money
07/17/16   Thrift
"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."

Bonds aren't wretched
07/17/16   Bonds
"Why do so many bond investors feel nostalgic for the days when yields were negative (after inflation)?"

How technology disrupted the truth
07/17/16   Media
"Social media has swallowed the news - threatening the funding of public-interest reporting and ushering in an era when everyone has their own facts. But the consequences go far beyond journalism"

Homes disappointing
07/17/16   Real Estate
"Buy land: They're not making it anymore. That often repeated adage sounds like good financial advice. But over the long run, it hasn't been. Despite solid price increases over the last few years, land and homes have actually been disappointing investments. It's worth considering why."

The Stingy News Weekly: July 10, 2016
07/10/16   SNW
This week we have advisor fees, quarantines, culture, Graham, and more.

Cultural evolution
07/10/16   Behaviour
"Two brains are better than one; in fact, group thinking could be the very reason the human species survived. According to author Joseph Henrich, it's a wonder that humans made it this far considering we are a comparatively weak and dimwitted mammal."

Lessons from Benjamin Graham
07/10/16   Graham
"Much as Mark Twain said about the weather, Graham understood that people would read the ideas in his books but that nobody would do anything about them."

Wholesale transfer pricing
07/10/16   Economics
"John Malone made himself rich by owning the cable systems and saying to new channels, 'I will be glad to give you distribution on our cable system as long as you issue us AB% of the equity in your company.' The wholesale transfer price of getting distribution on his cable systems was AB% of the equity. On the flip side, John Malone always made sure there were at least two suppliers of set-top boxes for his cable business so he was not on the ugly side of wholesale transfer pricing."

The pitfalls of negative rates
07/10/16   Markets
"Now, not everyone agrees with my view that central bankers have overused interest rates to solve the world's problems (the bank boosters point out that inflation is currently very low, which justifies lower rates), but I hope most of them would agree that by going negative, central bankers have introduced a whole new set of risks and unknowns. After all, the world economy is not designed to work with negative interest rates."

Advisors worth their fees?
07/10/16   Brokers
"The advisor offers us tax advice. He coaches us on ways to keep our household costs down. We meet every quarter to re-evaluate our goals and see how we're doing. He also calms my nerves when markets go crazy."

7-day mental quarantine
07/10/16   Thrift
"My wife and I are setting up a customs screening station in our driveway. No, we're not starting an international airport. And it's not for solicitors, strangers or gift-bearing guests. It's for us and our stuff."

The Stingy News Weekly: July 3, 2016
07/03/16   SNW
This week we have tips for new investors, Brexit-proofing your plan, and more.

Newsonomics
07/03/16   Media
"What you don't want is the brands to disappear in some kind of homogenized platform."

Brexit-proof your plan
07/03/16   Stingy Investing
"Rather than adopting emotional cues from the market, wise investors cast a skeptical eye toward the big news stories of the day because acting on them often leads to disappointment. Instead, it is better to focus on your investment plan and process."

Tips for novice investors
07/03/16   Stingy Investing
"MoneySense's Invest for Success event brings people together with investing experts to hear their hard-worn advice. Here's advice from presenter Norm Rothery, founder of StingyInvestor.com, on how to avoid first-time investing mistakes." [video]

Keep calm and carry on
06/26/16   Markets
"The data shows that markets have on average swung 2 percent up or down once every 11 days since the year 2000. Those of you who may have been paying attention to this detail should not have been surprised by the great volatility markets saw last week - first to the upside as wishful thinking led traders to believe that Brexit was a non-starter, then down and down and down as the votes came in for leaving."

The Stingy News Weekly: June 26, 2016
06/26/16   SNW
This week we have Bexit, Brexit, the life of Riley, and more.

MiB: Wes Gray
06/25/16   Value Investing
"Gray combined his military and mathematical backgrounds as a quant running Alpha Architect. His focus on momentum and value have yielded excellent results."

Bexit
06/25/16   Buffett
"Shareholder activism spares no one, no matter how high their pedestal. Berkshire Hathaway is a public company, and as far as we know, Buffett has not chosen to entrench his successors with new supervoting shares or anything of that sort. How long will his life's work survive in an era of pervasive shareholding activism? It seems almost inevitable that Buffett's company, like the public vehicles of so many other successful investors, will become a target. It will be up to Berkshire's shareholders to defend it."

Timing buyback yield
06/25/16   Value Investing
"the market's overall buyback yield is not something on which you should base any investing decisions."

Cost versus convenience
06/25/16   Indexing
"if you also factor in the management expense ratios, the total cost of VXC in a retirement account is 0.71%, compared with just 0.19% for the US-listed ETFs"

CPP Memo
06/25/16   Retirement
"It has come to our attention that you are not saving sufficiently for your retirement. This does not surprise us. We haven't saved sufficiently for our retirement either. Some of us have made enough money in the housing market to be relatively comfortable, and a good number of us have workplace pensions. Low-income Baby Boomers will be protected by Old Age Security, Guaranteed Income Supplement and the Canada Pension Plan. But middle-income Baby Boomers without workplace pensions - people making $60,000 or $80,000 a year - are facing a big drop of their standard of living upon retirement."

Life of Riley Index
06/25/16   Retirement
"The S&P 500 now yields about 2.09 percent, and the five-year Treasury note now yields about 1.16 percent. Together in a 50/50 portfolio, you get a yield of 1.63 percent. That's down from last years. 1.75 percent."

Howard Marks on Brexit
06/25/16   World
"'Are people going to produce less? Are people going to buy less?' Marks asked rhetorically in an interview Friday with Bloomberg Television's Erik Schatzker. Though the referendum will have significant psychological effects, he added, 'I have trouble viewing it as a financial catastrophe.'" [video]

The Stingy News Weekly: June 19, 2016
06/19/16   SNW
This week we have retirement, fees, inflation, and more.

Economist at the self-checkout
06/19/16   Behaviour
"This insight into what drives decision-making has great practical implications when we wish to change behaviour - a small change in the environment in which agents operate is probably all we need."

The dubious power of power poses
06/19/16   Science
"This story will sound familiar to some. Many notable results in psychology are now being questioned because later research has reached different conclusions."

Inflation and the 4% rule
06/19/16   Stingy Investing
"Simply taking 4% out of a portfolio annually, and not adjusting for inflation, can boost a portfolio's longevity and the payments it produces during bull markets. But it comes with the risk that the payments will shrink during down periods."

John Oliver: retirement plans
06/19/16   Brokers
"Saving for retirement means navigating a potential minefield of high fees and bad advice." [video]

Concentrated value
06/16/16   Value Investing
"The best returns came from a 5 stock portfolio. The best Sharpe ratio came from the 15 stock version. Both return and Sharpe degrade after 15 stocks."

The Stingy News Weekly: June 11, 2016
06/11/16   SNW
This week we have diversification, debt, real estate, and more.

Equally weighted
06/11/16   Stingy Investing
"The idea of heading to the beach has some of us indulging in a little last-minute dieting in an effort to shave off a few pounds before hitting the water. Weight also matters to investors when it comes to how they divvy up their portfolios." [$]

Housing bubble
06/11/16   Real Estate
"Know a bad deal when you see one. Overextending yourself just to get a piece of the real estate action in Vancouver or Toronto is not just a bad deal, it could spell your financial doom."

Fortunes you can't control
06/11/16   Retirement
"March 30, 2000 and September 30, 2007 would have been two of history's worst times to retire. Inflation would have beaten those who withdrew 4 percent per year from a balanced index fund. But there are silver linings. For starters, the race was pretty close. In both cases, the table still had plenty of money left."

Debt buyers
06/11/16   Debt
"Companies that purchase debt cheaply then collect it aggressively are shockingly easy to start. We can prove it" [video]

Norway's Warren Buffett
06/11/16   Value Investing
"Kristian Siem is considered by many to be the Warren Buffett of Norway. Since 1987 Siem has compounded his money at a rate of about 30% annualized, increasing his worth from about $5 million in 1987 to around $2 billion by 2014."

The mistrust of science
06/11/16   Science
"The scientist explains the world by successive approximations."

Diversification disappoints
06/11/16   Markets
"Viewed with the benefit of hindsight, diversification will always disappoint. To judge the outcome of diversification after the fog of uncertainty has lifted, however, misses the point: diversification provides us the incredibly important ability to admit we don.t know. We can be vaguely right instead of precisely wrong. Constant disappointment, then, might be the greatest indicator that we are well diversified."

Mispricing isn't going anywhere
06/11/16   Markets
"Investors can benefit from this knowledge by directly avoiding the purchase of stocks with well-known anomaly characteristics or by investing in long-only funds that screen out such stocks."

Shareholders are disappearing
06/11/16   Markets
"Under SEC rules, a company with fewer than 300 shareholders - or a bank with fewer than 1,200 - may choose to deregister with the federal securities regulator. The stock can still trade publicly, but the company is no longer required to file its financial statements and other disclosures with the SEC."

The Stingy News Weekly: June 5, 2016
06/05/16   SNW
This week we have Pabrai on Coke, Top 200, bonds, culture, and more.

Mohnish Pabrai at UCI
06/05/16   Buffett
"Mohnish Pabrai lecture at The University of California, Irvine: Mental Models Used for the Coca-Cola Investment by Berkshire Hathaway"

Bonds bomb
06/04/16   Stingy Investing
"In other words, it seems likely that bonds will barely break even or lose ground on an after-fee, after-tax, and after-inflation basis over the next little while"

Indexing and small-caps
06/04/16   Markets
"the 15 most popular small-cap-heavy ETFs have traded 3.6 times more than the average dollar volume of the 100 largest members of the Russell 2000 small-cap index over the past three months"

The curse of culture
06/04/16   Behaivour
"culture is not something that begets success, rather, it is a product of it."

Two-star managers
06/04/16   Behaviour
"When I said I would love an interview series with 2-star fund managers, the most common response was 'just go watch the 5-star interviews from a few years ago.'"

The Top 200 Canadian Stocks for 2016
06/03/16   Stingy Investing
"In other words, the All-Star Stocks beat the market by an average of 11.4 percentage points per year."

The Top 500 U.S. Stocks for 2016
06/03/16   Stingy Investing
"We're very pleased to be able to say that the U.S. All-Stars have outperformed over the last decade - despite getting off to a rocky start. Indeed, they bested the market over the last one, three, five, seven and 10 years, with particularly strong relative gains more recently."

The Stingy News Weekly: May 29, 2016
05/29/16   SNW
This week we have value lists, the newspaper code, groaning government, and more.

Why humans run the world
05/29/16   Behaviour
"We often look for the difference between us and other animals on the individual level. We want to believe that there is something special about the human body or human brain that makes each individual human vastly superior to a dog, or a pig, or a chimpanzee. But the fact is that one-on-one, humans are embarrassingly similar to chimpanzees. If you place me and a chimpanzee together on a lone island, to see who survives better, I would definitely place my bets on the chimp."

We haven't cracked the code yet
05/29/16   Buffett
"In most cases there are some years left to crack the code. But we haven't done it. Maybe (the industry) started too late."

Cleaning up La Paz
05/29/16   Behaviour
"Perhaps the most important lesson of the La Paz experience is its emphasis on the promotion of integrity. The city's experience suggests that interventions based on such an approach are likely to prove more successful than more conventional anti-corruption campaigns. Or, to put it differently: cultivating positive values that stand in opposition to graft appears to be more effective than simply instilling a fear of retribution."

Why Americans don't trust government
05/29/16   Government
"Though the bridge took only 11 months to build in 1912, it will take close to five years to repair today at a huge cost in dollars and mass delays."

Retirement 100: Fall 2015
05/27/16   Stingy Investing
"We're pleased to say that our efforts have been highly rewarding since we started way back in 2007. Our A-graded stocks have gained 117% on average since then, including dividends reinvested annually. Similarly, the A- and B-graded stocks have climbed 67%. By way of comparison, the S&P/TSX Composite Index ETF (XIC), which tracks the broad Canadian stock market, logged a return of 25% over the same period and the dividend-oriented iShares Canadian Select Dividend ETF (XDV) advanced 35%."

3 Stingy Stocks for 2016
05/27/16   Stingy Investing
"I'm pleased to say that the Stingy Stocks have gained an average of 13.9% per year since 2001. By way of comparison, the S&P500 (as represented by the SPY ETF) climbed 6.4% per year over the same period. The Stingy Stocks beat the index by an average of 7.5 percentage points annually."

5 Graham Stocks for 2016
05/27/16   Stingy Investing
"If you had purchased an equal dollar amount of each stock in the first year and replaced them with the new crop of stocks each year thereafter, your portfolio would be up a whopping 898% (17% annualized) over the full period. On the other hand, index investors who bought and held the S&P 500 exchange traded fund (NYSE:SPY) gained 86% (4% annualized) over the same time frame."

The Stingy News Weekly: May 22, 2016
05/22/16   SNW
This week we have springtime for value, active vs. passive, momentum, the risky risk-averse, and more.

Largest momentum strategy
05/22/16   Momentum Investing
"Buying during a bear market is probably one of the most difficult things an investor can do, but staying invested as stocks rise may be a close second. There are constant temptations to 'take money off the table' or 'de-risk your holdings' after a nice run-up. It's not easy to allow compounding to occur without getting in the way and screwing things up."

The danger of being risk-averse
05/22/16   Behaviour
"In other words, prevention-focused people generally prefer the conservative option when everything is going according to plan, but they will embrace risk when it's their only shot at returning to status quo."

Go 100% equities
05/22/16   Behaviour
"What Preet Banerjee would tell his younger self about investing: Go 100% equities" [video]

Springtime for value?
05/22/16   Stingy Investing
"Gardeners are busy planting seeds in the hopes that, with a little luck and more than a little effort, they'll enjoy a bountiful harvest this fall. But, when it comes to the markets, value stocks are still locked in the deep freeze" [$]

Active vs. passive
05/22/16   Stingy Investing
"When comparing the active apples to passive pears it is better to think about four different possibilities. DIY investors can buy either active or passive portfolios while advisor-guided investors can also take either path."

High multiples for sales
05/22/16   Markets
"Current median price to sales multiples overall for DM Americas stocks are higher today than they have been at any point since 2001. The median price to sales ratio is 2.33x, which is higher than they highest point reached in 2007 (2.21x) and 2014 (2.27x)."

For food stamps
05/22/16   Books
"My income per book always reminds me of how tough it is to make at living at this gig, especially for writers who only produce one book per year. If I did the same, and my one book performed as well as TF, and my family of four were solely dependent on my income, my net would be only around $2500.00 over the income level considered to be the U.S. poverty threshhold (based on 2008 figures.) Yep, we'd almost qualify for foodstamps."

Ad blockers
05/22/16   Media
"The principal reason why most people haven't yet switched on an ad blocker is simply because they are not aware they could block ads - a stat that should worry businesses that rely on online advertising to make money."

The dead model
05/22/16   Markets
"I think a better comparison is the earnings yield on the S&P 500 vs the yield on the Moody's BAA index if you're going to do something like the Fed Model. That's a better pair to compare against one another."

The Stingy News Weekly: May 15, 2016
05/15/16   SNW
This week we have grit, robots, double compounders, seasonal selling, and more.

52 Pick-Up
05/15/16   Markets
"The one trend that is clear...the largest capitalization stocks--known commonly as mega cap--consistently underperform. From 1964-2015, stocks with the largest market capitalizaitions underperform by 1.7% per year. These are the stocks you here about most often on CNBC and typically find themselves as Dow components."

Chuck Akre: compounding machine
05/14/16   Value Investing
"Great Investor Chuck Akre explains how he finds "compounding machines" -- companies that produce high rates of returns for shareholders. Chuck says these companies are few and far between, but once he finds them, he holds on to them." [video]

Chris Davis: compounding machines
05/14/16   Value Investing
"Third generation value investor Chris Davis discusses why unpopular financial stocks can actually be compounding machines." [video]

Sell in August
05/14/16   Stingy Investing
"The stock market has its seasons. Bears come out in the summer and party in the fall while bulls start their run in the winter and plow on into the spring. It's an ebb and flow that can impact index investors and value investors alike." [$]

Defense wins championships
05/14/16   Markets
"Let's say an investor's portfolio missed the 20% most profitable stocks between 1989 and 2015. Instead, he invested in only the other 80%. His total gain would have been 0%."

When to quit
05/14/16   Behaviour
"Do we tend to quit too soon or quit too late? Are we too stubborn or not determined enough?"

The rise of the robots
05/14/16   Tech
"Companies need fewer and fewer employees to generate each dollar of profit. This trend is likely to continue."

The Stingy News Weekly: May 8, 2016
05/08/16   SNW
This week we have Munger, spuds, dividends, value, and more.

The cost of dividends
05/08/16   Value Investing
"It turns out that the simple value strategy (which included avoiding high yield stocks) actually produced higher returns than the dividend strategy - not just similar returns. In other words, before we even get to the tax benefits, 'value' had already trumped 'dividends.'"

Shrinkage vs. growth
05/08/16   Value Investing
"The most interesting story in the history of capital allocation was the rapid growth and then steady shrinking of Teledyne, a conglomerate formed by Henry Singleton in 1960."

The forgotten bear market
05/08/16   Markets
"The market collapse of 1973-74 has been oddly ignored in the annals of investing. Yet it was truly epochal, and on a par with the 1930s."

The high price of low vol
05/08/16   Indexing
"If you buy a 'low-volatility' fund, make sure you're comfortable paying a higher price. That's the warning that emerges from the surge in popularity of funds specializing in stocks that fluctuate less than the stock market as a whole."

How the Hot Potato is cooking
05/08/16   Stingy Investing
"It seems like high time to provide a quick update on where the Global Hot Potato stands today."

Charlie Munger interview
05/08/16   Munger
"what could be more asinine than making a judgment about something without taking into account both the advantages and disadvantages? What kind of a nut would just look at one side and not the other?"

The Stingy News Weekly: May 1, 2016
05/01/16   SNW
This week we have Buffett, indexing, feedback, a discount, and more.

Ready to Invest for Success?
05/01/16   Stingy Investing
"Join leading market experts, including top strategists from Wall Street and Bay Street, for a must-attend event that'll deliver practical investment advice." [Use the code SPECIAL to get a $20 discount!]

Key moments from BRK meeting
05/01/16   Buffett
"When Buffett and Munger speak, the world listens. Their comments on the economy, the markets, politics, and Berkshire Hathaway are as closely parsed as Federal Reserve statements. But Fed Chair Janet Yellen didn't secure a place in this year's commentary by either Buffett or Munger. Instead, the Oracle of Omaha and his right-hand man focused on business and why shareholders should continue to bet on Berkshire."

Popular at a price
05/01/16   Indexing
"BlackRock hasn't just ignored the fee war. It has raised EEM's fee - a practically unheard move for an ETF. EEM used to charge 0.67 percent. Now it charges 0.69 percent - a rare case when a popular ETF charges more than (gasp) the average active mutual fund."

Pound foolish
04/30/16   Books
"The real story with most of these individuals is that they didn't earn their money by living below their means, saving and investing prudently, but rather by selling products and services that we're told will save and/or empower us. They're more salesman than missionary, telling us what we want to hear and not what we need to hear."

Bond challenge
04/30/16   Bonds
"The challenges of investing in a negative interest rate world. Guggenheim Partners Scott Minerd discusses strategy for his firm and its top-rated bond funds." [video]

Too much feedback
04/30/16   Behaviour
"Checking your portfolio or the market on a daily basis is like getting on the scale every 20 minutes and expecting progress. Even in quarterly and annual returns there is going to be a lot of noise"

The Stingy News Weekly: April 24, 2016
04/24/16   SNW
This week we have hot potatoes, the long term, value, and more.

Minimum volatility investors beware
04/24/16   Indexing
"If the long-term benefits of Low Vol investing are actually associated with some sort of Value premium, then current Low Vol investors should beware. Valuation for Low Vol stocks is expensive. A once good idea has run its course. All of the research I have done or reviewed suggests that high current valuation leads to low future return. Valuations on Low Vol have risen substantially in just the last few years. Based on the PE ratio, USMV is 80% more expensive than it was when it launched. In a best case scenario, Low Vol seems destined for mediocre future returns. In a worst case, the correlations and volatilities underlying the ETF's holdings could change quickly, providing an unexpected return profile for investors whose expectations have been managed for downside protection."

Seth Glickenhaus dies at 102
04/24/16   Value Investing
"Seth Glickenhaus, a bond trader turned money manager whose studies of law and medicine failed to lure him away from Wall Street, his professional home for more than eight decades, has died. He was 102."

FCF/EV backtest
04/24/16   Markets
"Average excess returns seem to increase in almost a linear fashion from the 1st quintile to the 5th quintile, which gives me more confidence that the FCF/EV ratio does have a direct relationship with 1-year stock returns."

How politicians poisoned statistics
04/24/16   Government
"Perhaps the lies aren't the real enemy here. Lies can be refuted; liars can be exposed. But bullshit? Bullshit is a stickier problem. Bullshit corrodes the very idea that the truth is out there, waiting to be discovered by a careful mind. It undermines the notion that the truth matters. As Harry Frankfurt himself wrote, the bullshitter 'does not reject the authority of the truth, as the liar does, and oppose himself to it. He pays no attention to it at all. By virtue of this, bullshit is a greater enemy of the truth than lies are.'"

The wrong kind of savings
04/24/16   Bonds
"Negative interest rates are surely a sign that something is wrong with an economy. Normally, people have to be rewarded if they are to be induced to postpone consumption. Penalising them for doing so seems perverse."

Are you ready for the Hot Potato?
04/24/16   Stingy Investing
"The Global Hot Potato portfolio, rebalanced monthly, gained an average of 16.7% per year from the start of 1981 to the end of 2015. It beat the classic Couch Potato by a whopping 6.7 percentage points annually."

Hot Potato Q&A
04/24/16   Stingy Investing
"I highlighted an active approach to index investing in 'Are you ready for the Hot Potato?', which appeared in the April 2016 edition of MoneySense. The article generated a lot of discussion and I'm going to address a few questions about it from readers today."

Publicis put to the value test
04/24/16   Stingy Investing
"Publicis Groupe was put under the microscope during the final round of the Ben Graham Centre's International Stock Picking Competition. Three teams of students dissected the advertising company and weighed its suitability as a value investment." [$]

The Stingy News Weekly: April 17, 2016
04/17/16   SNW
This week we have bargains, value, chimps, and more.

5 top value stocks
04/17/16   Value Investing
"Who doesn't love to follow Warren Buffett and his value investing approach to stock picking? I know I do and I was lucky enough to attend The Ben Graham Centre at the Ivey Business School's 2016 Value Investing Conference this week - the must-attend event for true, diehard value stock pickers. Lots of great companies and their stocks were discussed and expert panelists gave their tips on finding value stocks. So if you love to do you own analysis before making picks for your own investment portfolio, here are a few stocks that the who.s who of value investing are talking about"

Tyranny of the noncompete clause
04/17/16   Law
"Subjects in simulated noncompete conditions showed significantly less motivation and got worse results on effort-based tasks. Why? We believe that limits on future employment not only dim workers' external prospects but also decrease their perceived ownership of their jobs, sapping their desire to exert themselves and develop their skills. The resulting drop in performance may be more damaging to companies than the actual loss of the employees would be."

Unbelievable bargains
04/17/16   Pricing
"A perceived deeper discount creates a higher conversion event - in other words, more buyers"

Why one size doesn't fit all
04/17/16   Pricing
"Many successful businesses, from supermarkets to Starbucks, offer a vast range without scaring away their customers. A first-time visitor to Starbucks might be confused, but regulars work it out. And clever design can prevent choice seeming overwhelming."

You can't beat all the chimps
04/16/16   Markets
"The fact of the matter is that even a random number generator can, and will, outperform practically all mutual funds. Such random strategies may seem like a joke, and perhaps they are, but if a joke can outperform industry professionals we have to stop and ask some hard questions."

Chou Funds letter
04/10/16   Value Investing
"It is hard for us to believe that RFP is trading as low as $4 per share."

The Stingy News Weekly: April 10, 2016
04/10/16   SNW
This week we have Watsa, Chou, a flock of value investors, and more.

A flock of value investors
04/10/16   Stingy Investing
"A flock of value investors from across North America will land in Toronto this week to hear what Prem Watsa, the CEO of Fairfax Financial, has to say at his firm's annual meeting. But they should think about one of the company's investments on their way there." [$]

Cumulative advantage
04/10/16   Behaviour
"But just because we now know that something happened doesn.t imply that we could have known it was going to happen at the time, even in principle, because at the time, it wasn.t necessarily going to happen at all."

Don't sweat the details
04/10/16   Stingy Investing
"Many investors fret about the small details when it comes to how to divvy up their equity asset allocations. But some wildly different allocations haven't mattered much to returns over the long haul."

Jason Zweig talks at Google
04/10/16   Zweig
"Jason Zweig will discuss his latest book, The Devil's Financial Dictionary, and how he went about distilling everything he had learned in almost three decades as an investing journalist into definitions of Wall Street terms that are, in many cases, only a few words long."

Alpha or assets
04/10/16   Value Investing
"With fees lower across the board, scale becomes a more important consideration for asset managers when deciding what strategies to offer the investing public. When fees fall, assets need to rise. For assets to rise across a business, the strategies offered need to be able to accommodate more invested money."

The Stingy News Weekly: April 3, 2016
04/03/16   SNW
This week we have books, Trump, letters, and more.

The lost art of reading
04/03/16   Buffett
"Mr. Abbott has read roughly 1,500 letters so far. Only 16 jumped out as outstanding. 'I've been flabbergasted at how low the average quality is,' he said."

Trump, trade and the China shock
04/03/16   World
"Freer trade has inflicted a more grievous toll than economists, myself included, had expected."

Curse of the benchmarks
04/02/16   Funds
"Indeed, benchmark requirements coupled with short-term horizons, ironically, serve as poison for investors who allocate to active funds. The only solution is to marry active strategies with investors who are educated and can internalize the fact that sustainable active investing has to be difficult."

Worth a second read
03/28/16   Stingy Investing
"It's time to re-examine the notion that bookstores are dead and to give Indigo Books & Music Inc. a second look." [$]

Multi-factor badness
03/28/16   Markets
"My argument would be that momentum and value mature at different rates. For example, positive momentum tends to be a short-term impulse while expensive tends to be a long-term drag. Negative momentum is a short-term drag while cheap is a long-term positive force. The measurement periods are totally different."

When trading detracts from alpha
03/28/16   Markets
"Whether you decided to invest in actively managed funds, or you were forced to invest in them (maybe because of limited choices inside of corporate retirement plans), you should choose funds not only with low expense ratios, but also with low turnover rates. Those choices will at least reduce the very high odds against generating alpha (risk-adjusted outperformance)."

The Stingy News Weekly: March 27, 2016
03/27/16   SNW
I'm pleased to present our free letter for the week ended March 27, 2016. This week we have the 10% lie, lifetime earnings, Buffett on the media, and more."

How much you'll earn
03/27/16   Thrift
"If you have a Bachelors degree, you will earn approximately $1.8 million in your lifetime. That's it. That's all you have"

Buffett on the media
03/27/16   Buffett
"Twenty years ago, investor Warren Buffett accepted an Omaha Press Club Education Committee invitation to spend an hour talking about media."

How unique is your portfolio?
03/26/16   Markets
"If there is a lot of overlap between your portfolio and the market, there is only so much alpha you can earn. This is obvious. Still, when you visualize this potential it sends a powerful message. Active share - the preferred measure of how different a portfolio is from its benchmark - is not a predictor of future performance, but it is a good indicator of any strategy's potential excess return. As you'll see below, the higher your active share, the more extreme your performance can be, good and bad."

Why 10% returns are a lie
03/26/16   Stingy Investing
"Let's just say that investors are likely to achieve inflation-adjusted returns that are a good deal less than 5% in the future. As a result, they should think about saving a little more and spending a little less than they might have expected."

Canadian banks to face headwinds
03/26/16   Stocks
"Canadian bank stocks provide a generous current yield of 4 per cent or better and trade at about 11 times earnings, so they are not in danger of imminent collapse. Part of their attraction to investors has been the robust growth in dividends over the past few years. The recent trend in marginal return on equity may not erode all the way to 11 per cent, but we should look for lower dividend growth in the future."

A debt of choice
03/26/16   Government
"But the federal debt is only part of our overall debt level. The provinces collectively have debts very nearly equal to the feds, bringing the combined federal-provincial debt closer to 60 per cent of GDP"

JK Rowling's rejection letter
03/26/16   Books
"They have been some of the most painful career mistakes in history: the record-label which turned down the Beatles, the editor who told Walt Disney he lacked imagination, and the publishers who rejected J K Rowling. The misery of the latter has today been compounded after Rowling shared the painful rejection letter she received, warning her adult crime novels could never be commercially successful."

The Stingy News Weekly: March 20, 2016
03/20/16   SNW
I'm pleased to present our free letter for the week ended March 20, 2016. This week we have dividend stock winners and losers, value investing, growth traps, and more."

Dividend stock downside
03/20/16   Dividends
"I had started with a hypothesis: by avoiding dividends might we actually improve 'dividend investing'? But by removing the dividend, it inadvertently refocused the selection methodology on pure value. My research turned out to be a backdoor way of reminding myself that value investing and dividend investing - while often confused as the same thing - are actually distinct strategies. And more times than not, value wins out."

Is value coming back?
03/20/16   Value Investing
"Lots of money is flowing out of value strategies, and the stocks are cheap. I've lost several clients, and may lose some more. Oddly, it is the losing of clients that gives me the most hope. You need people to leave a strategy when it is down and out for the strategy to bottom."

Identify a growth trap
03/19/16   Growth Investing
"Growth Traps are companies that are rapidly expanding their businesses. Rapid expansion requires investment in operating assets. That investment places strain on a firm's infrastructure and results in declining margins. Because investors were overly optimistic for the stocks prospects, it is likely that these high flyers will not grow into their valuations and shareholder returns will suffer."

Mastery or ignorance
03/19/16   History
"Who among stock brokers and investment analysts in 1900 could have foreseen the eclipse of railroads? However, just like de Tocqueville said about the Roman aqueducts and roads, the miles of unused railroad tracks today are monuments (albeit not as conspicuous) not just to a young nation's will to master a continent, but also to the 19th century's ignorance of internal combustion and air travel."

Bond returns imperilled
03/19/16   Bonds
"As bond yields have relentlessly fallen towards - and even beyond - zero over the past few years, investor returns are very vulnerable to small movements in prices and yields."

How to beat the S&P 500 index
03/19/16   Dividends
"From 1991 until 2016, his strategy gained an average compound return of 12.76 percent per year. In a tax deferred account (not including transaction costs) it would have turned $10,000 into $201,315. Investors in Vanguard.s S&P 500 Index (VFINX) would have averaged a compound annual return of 9.7 percent per year. The same $10,000 would have grown to $101,265."

The curse of the Dow
03/19/16   Indexing
"The so-called Curse of the Dow, an old Wall Street adage, holds that companies usually rally leading up to the day they join the blue-chip index, but then underperform in the year after."

RBC fund became a tax headache
03/19/16   Taxes
"RBC had triggered the capital gain - and a related one in 2014 - when it sold the fund's individual stocks and bonds and replaced them with RBC's own mutual funds."

The Stingy News Weekly: March 13, 2016
03/13/16   SNW
I'm pleased to present our free letter for the week ended March 13, 2016. This week we have dividend cuts, beta gone wrong, balance, and more."

Stocks you shouldn't own
03/13/16   Markets
"We believe that in the age of indexing, active strategies should first work hard to remove the poorest quality stocks from consideration entirely, regardless of their weight in the index. Size alone - the driver of a stock's weight in SPY and other index funds - is not a sufficient reason for owning a stock."

Dividend cut hangover
03/13/16   Stingy Investing
"Shareholders can be excused for reaching for a drink after consuming the latest report from Liquor Stores N.A. Ltd. The alcohol retailer delivered a giant quarterly loss this week and followed it up by cutting its dividend to one-third of its former level." [$]

Smart beta gone wrong
03/12/16   Markets
"Many of the most popular new factors and strategies have succeeded solely because they have become more and more expensive. Is the financial engineering community at risk of encouraging performance chasing, under the rubric of smart beta? If so, then smart beta is, well, not very smart."

Best balanced funds
03/12/16   Stingy Investing
"Balanced funds tend to be much less volatile than stock funds, or individual stocks, because they hold diversified portfolios of stocks and bonds. The combination helps to dampen out the market's swings, which makes the funds easier to stick with through thick and thin."

How indexing changes indexes
03/12/16   Indexing
"Rat's tails and dead cobras were measures of progress against vermin overpopulation in Vietnam and India. But those measures then became the targets of enterprising citizens, and in the process ceased to be a good measures. In America, home ownership was a measure of quality of life and happiness, so it became a target, and we know how that ended. This is becoming a bigger and bigger problem in the stock market."

Everything is crumbling
03/12/16   Science
"An influential psychological theory, borne out in hundreds of experiments, may have just been debunked. How can so many scientists have been so wrong?"

The Stingy News Weekly: March 6, 2016
03/06/16   SNW
I'm pleased to present our free letter for the week ended March 6, 2016. This week we have Munger, negative interest, Trump, and more."

Productivity slowdown
03/06/16   Economy
"In mature economies, higher productivity typically is required for sustained increases in living standards, but the productivity numbers in the United States have been mediocre. Labor productivity has been growing at an average of only 1.3 percent annually since the start of 2005, compared with 2.8 percent annually in the preceding 10 years."

Bizarro world of negative interest
03/06/16   Bonds
"Negative interest is hard to even think about. Our whole financial system is built the other way, on positive interest rates. This is mind-boggling."

Munger vs. auditors
03/05/16   Munger
"At the annual meeting on February 10, almost five months later than usual because resolving the disputes with the auditor led to filing delays, Munger noted that 60,000 shares - or about 5% of the total - had voted against retaining BDO. 'I don't know why 60,000 people are mad at BDO,' he teased, 'but it's a big firm.' Who owns the shares voted against BDO this year and also last year? One possibility is Munger himself. Munger controls 50,000 shares personally."

Trump's business disaster
03/05/16   Government
"Why is Donald Trump getting a pass for his disastrous and incompetent track record of running a public company?"

The Stingy News Weekly: February 28, 2016
02/28/16   SNW
I'm pleased to present our free letter for the week ended February 28, 2016. This week we have small, fish, Buffett, and more."

Valuable losses
02/28/16   Value Investing
"A rare interview with Great Value Investor Wally Weitz on finding opportunities where others are seeing losses."

A value catch
02/28/16   Stingy Investing
"Bargain hunters have profited handsomely by buying Canadian dividend stocks at low price-to-sales and price-to-earnings ratios. It's a big reason why I went fishing for such stocks this week." [$]

A history of small cap performance
02/28/16   Stingy Investing
"The Small Cap 100 uses a database of U.S. firms that have annual revenues of $200 million or more. As of the second week of February, the average stock in the database had declined by 19.3% over the prior 12 months, including reinvested dividends. Stocks with market capitalizations of less than $2 billion suffered from an average loss of 25.4%. Firms under $1 billion were down by 29.5% on average. That's a whole bunch of red ink."

Berkshire Hathaway 2015 letter
02/27/16   Buffett
"All families in my upper middle-class neighborhood regularly enjoy a living standard better than that achieved by John D. Rockefeller Sr. at the time of my birth. His unparalleled fortune couldn't buy what we now take for granted, whether the field is - to name just a few - transportation, entertainment, communication or medical services. Rockefeller certainly had power and fame; he could not, however, live as well as my neighbors now do"

The Stingy News Weekly: February 21, 2016
02/21/16   SNW
I'm pleased to present our free letter for the week ended February 21, 2016. This week we have cannibals, trump, fees, and more."

Chasing returns
02/21/16   Funds
"The indexes show strong performance leading up to the ETF launch (or more accurately, until 6 months before launch, when the decision to launch the ETF was probably made). Next the evidence shows that on average, ETF performance subsequent to launch tends to be ... average."

A falling Star
02/21/16   Media
"There's no love lost between Torstar and Postmedia, or between Honderich and Paul Godfrey, chief executive officer of Postmedia. They've been competitively sparring for many years, politically and in business. But the nature and tone of the recent series of Star attacks on Godfrey and Postmedia are beyond anything seen in 100 years of riotous newspaper competition."

The Cost Matters Hypothesis
02/21/16   Thrift
"While markets' efficiency will be forever questioned, there is no question that the costs we incur in investing deduct directly from our returns - it's simple subtraction."

Stock cannibals
02/21/16   Stingy Investing
"Cannibals can be found beyond the silver screen and a few lurk in the stock market, where self-cannibalism goes down well with investors. These aren't a bunch of modern-day Sweeney Todds who grind up redundant employees and stuff them into pies. Stock cannibals simply eat their own shares."

Don't give stocks 100% of yourself
02/21/16   Behaviour
"Go ahead, invest 100 percent of everything you have in stocks. Or, even better, please don't."

A gambler or the house
02/21/16   Value Investing
"Just like the house in a casino, value investors sometimes get destroyed. Several very high profile investors with great long term track records felt that pain in 2015. Real value stocks (and strategies) hurt to buy and sometimes really hurt to hold."

From the tower to the white house
02/21/16   Government
"The era of humiliation came in the 1990s, as the casino business faltered and two of his gambling entities defaulted (two other related casino enterprises defaulted in 2004 and 2009). This destabilised the whole of Mr Trump's operation, which may have had as much as $6 billion of debt in today's prices. Through asset sales, defaults and forbearance from his creditors, Mr Trump clung on and avoided personal bankruptcy."

The Stingy News Weekly: February 14, 2016
02/14/16   SNW
I'm pleased to present our free letter for the week ended February 14, 2016. This week we have bonds, learning to spend, ostriches, and more."

The case for stocks
02/14/16   Markets
"And, so, what I actually say to people who ask my advice is this: Put as much money into the stock market as you can stand. One hundred percent is best, but even if you are very risk-averse, allocate at least 75 percent to stocks."

Credit Suisse Global Yearbook 2016
02/14/16   Markets
"The history of recoveries from these major deflationary shocks reminds us that rapid monetary policy normalization cannot be taken for granted. It also suggests that real bond returns will be close to zero over the next decade, with real equity returns around their longer run average of 4% - 6% per annum."

Embrace your inner ostrich
02/14/16   Stingy Investing
"take two deep breaths, save a little more, and stick to your long term plan."

Yield in a low yield world
02/14/16   Bonds
"Much like value investing in stocks, one can apply a value methodology to global bonds."

Slaves of the markets
02/14/16   Government
"The academics suggest central banks are following a rough rule of thumb. They postpone rate increases when volatility is high, for fear of causing further upset, but respond to high volatility with rate reductions."

Learn to spend
02/14/16   Thrift
"Knowing how hard it would be for me to let go and spend the money, my mother asked my sister to watch over me. Trying to be accountable to her wishes, I tried shopping for myself, but the exercise simply produced a lot of anxiety."

Sky-high bond prices
02/14/16   Stingy Investing
"Overall, federal government bonds don't provide much in the way of income these days and that doesn't factor in inflation, fees, and taxes."

The Stingy News Weekly: February 7, 2016
02/07/16   SNW
I'm pleased to present our free letter for the week ended February 7, 2016. This week we have indexing, asset mixing, value investing, and more."

Kleinschmidt interview
02/07/16   Value Investing
"An exclusive interview with Tocqueville Fund's long-time portfolio manager Robert Kleinschmidt. The contrarian value investor explains why commodities are key to the market and what they are telling him now."

Change in shares outstanding
02/07/16   Markets
"The first quintile barely exhibited a positive annualized return. The stock of these companies that increased shares outstanding underperformed the market in 75% of the years in this 16-year test period. The average excess returns versus the S&P 500 equal weight benchmark were a negative 3.34%. In contrast, the 5th quintile outperformed the benchmark 81.25% of the time and produced average excess return of 5.54%."

Asset Mixer Portfolios
02/07/16   Stingy Investing
The Asset Mixer portfolios of index funds and ETFs have been updated to reflect recent annual fee data (MER)

A select group
02/07/16   Stocks
"Tech-boosters would doubtless love to see a prolonged bout of jostling for top spot between Alphabet and Apple (which before this week had held on to its crown for 653 consecutive days). But an obvious threat to both comes from a company that isn't even listed yet: Aramco, Saudi Arabia's state-owned oil giant, which is almost certainly the world's most valuable firm and is toying with an initial public offering."

Asset Mixer Update
02/07/16   Stingy Investing
We've updated our Asset Mixer to include inflation-adjusted data for 2015.

Periodic Table Update
02/07/16   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include inflation-adjusted data for 2015.

The Stingy News Weekly: January 31, 2016
01/31/16   SNW
I'm pleased to present our free letter for the week ended January 31, 2016. This week we have simple ways, fast cars, real estate, and more."

Why is momentum neglected?
01/31/16   Momentum Investing
"It should come as no surprise that the same irrationality causing momentum to work in the first place also keeps investors from accepting and using it. Behavioral economists have long shown that people are consistently irrational."

Meb Faber interview
01/31/16   Value Investing
"On today's show, co-founder and CIO of Cambria Investment Fund, Meb Faber, discusses a global value investing approach with Preston and Stig. Although the US stock market has recently dropped significantly at the start of 2016, Meb suggests the market might still have more to fall. Meb also reveals how he is invested, and which returns he expects for US and emerging stock markets in the years to come."

The simplest way to select stocks
01/31/16   Stingy Investing
"The stock market can act like a demented Rube Goldberg machine designed to confound investors. But clear away the complexity and it offers some simple methods that perform surprisingly well over the long run. One was revealed by the late Benjamin Graham in a 1976 article called The Simplest Way to Select Bargain Stocks. The famous money manager calculated that his method would have generated 15-per-cent average annual returns over the prior 50 years." [$]

Where can you afford to live?
01/31/16   Real Estate
"Each year, home buyers across North America struggle with a familiar choice: They can pay more to live in a smaller urban property, within walking distance to schools, shops and work; or pay less for a larger suburban home with a big backyard and ample parking, but have to hop in a car for just about everything they need."

The garage self-driving car
01/31/16   Tech
"In the coming weeks, Hotz intends to start driving for Uber so he can rack up a lot of training miles for the car. He aims to have a world-class autonomous vehicle in five months"

Canada's real estate problem
01/31/16   Real Estate
"As a result of its gains in 2015, the real estate industry accounts for 12 percent of Canada's gross domestic product through November."

Bears are bullish for buyers
01/31/16   Stingy Investing
"Forget expensive cauliflower, snap up some cheap stocks instead."

The Stingy News Weekly: January 24, 2016
01/24/16   SNW
I'm pleased to present our free letter for the week ended January 24, 2016. This week we have dividends, robots, optimism, and more."

Why does pessimism sound smart?
01/24/16   Behaviour
"I have observed that not the man who hopes when others despair, but the man who despairs when others hope, is admired by a large class of persons as a sage."

The experiment experiment
01/23/16   Science
"He thinks there's something wrong with the way we're doing science. And he launched a massive project to try to fix it."

Simple dividends
01/23/16   Stingy Investing
"To generate an adequate income, many investors turn to dividend stocks. While they may be riskier than bonds, dividends tend to grow over time. Even better, diversified portfolios of high-yield stocks have a history of outperforming the market over the long term in both the U.S. and Canada."

Financial common sense
01/23/16   Thrift
"If you spend all your time thinking about money, chances are, you're going to get pretty good at thinking about money. Indeed, new research suggests that the poor -- for whom concerns about cash are inescapable -- are not as prone to certain financial mistakes often made by the affluent."

Dorfman's robot
01/22/16   Value Investing
"Are you better off with a robot? Dorfman Value Investment's John Dorfman discusses why his robot list performs so well" [video]

The robot portfolio
01/22/16   Value Investing
"The Robot boasts a compound average annual return of 15.58 percent, compared to 4.17 percent for the S&P 500. Figures include reinvested dividends. The cumulative return for the Robot stocks has been 1,119 percent, versus 123 percent for the index."

The Stingy News Weekly: January 17, 2016
01/17/16   SNW
I'm pleased to present our free letter for the week ended January 17, 2016. This week we have a bank contest, loonies, shorts, fangs, and more."

2016 bank stock-picking contest
01/17/16   Stingy Investing
"As uncertainty abounds it's time to test your stock-picking prowess in my third annual big bank stock contest. All you have to do is figure out the best, and the worst, of the Big Six Canadian banks to invest in this year." [$]

What the Big Short gets wrong
01/17/16   Government
"Oscar-nominated director Adam McKay deserves credit for trying to make such complex financial concepts accessible. But since many Americans will be inclined to believe The Big Short's cinematic version of the mortgage crisis, it's worth noting that its analysis of what actually happened to the American economy - even down to the virtuosic little explainer asides- doesn't really add up."

Situation Normal, All-FANGed Up
01/16/16   Markets
"It is true that a few stocks bailed out the cap-weighted index last year. But it's also true in most years. It's always directionally true, that's just math, and in 2015 it was true by just about the average amount."

Sequoia sued over Valeant stake
01/16/16   Funds
"The investment firm that runs the Sequoia Fund, long known for its ties to Warren Buffett, was sued by shareholders who claim it recklessly took a huge stake in embattled drug company Valeant Pharmaceuticals International Inc, causing more than $2 billion in losses."

The history of the low loonie
01/16/16   Stingy Investing
"Earlier this week the Canadian dollar traded below 70 cents U.S. for the first time since early 2003. The loonie has fallen significantly from where it was just a few years ago and the decline has impacted the price of imports in a big way."

Mohnish Pabrai lecture
01/16/16   Value Investing
"Mohnish Pabrai talks to students at Boston College"

The Stingy News Weekly: January 10, 2016
01/10/16   SNW
I'm pleased to present our free letter for the week ended January 10, 2016. This week we have a periodic table, asset mixing, momentum, and more."

Culture eats strategy
01/09/16   Management
"Nucor probably didn't have any core attributes that were unavailable to its competitors. It simply made better choices and was more fanatical about sticking to them. The resulting success was deserved. This is why culture eats strategy."

Trend following backtest
01/09/16   Momentum Investing
"I'm going to conduct a comprehensive backtest of three popular trend-following market timing strategies: the moving average strategy, the moving average crossover strategy, and the momentum strategy. These are simple, binary market timing strategies that go long or that go to cash at the close of each month based on the market's position relative to trend. They produce very similar results, so after reviewing their performances in U.S. data, I'm going to settle on the moving average strategy as a representative strategy to backtest out-of-sample."

MiB: Michael Covel
01/09/16   Momentum Investing
"On this week's Masters in Business radio podcast, I speak with Michael Covel, author of Trend Following and Turtle Trader. Covel is a student of trading, and has helped demystify a number of fascinating aspects of how top traders achieve their greatness."

Asset Mixer Update
01/09/16   Stingy Investing
We've updated our Asset Mixer to include nominal data for 2015.

Periodic Table Update
01/09/16   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include nominal data for 2015.

Consider the last great tax shelter
01/09/16   taxes
"Self-employment is the last of the great tax shelters."

The Stingy News Weekly: January 3, 2016
01/03/16   SNW
I'm pleased to present our free letter for the week ended January 3, 2016. This week we have a stock contest, dividends, value investing, and more."

Another financial crisis is looming
01/02/16   Markets
"What makes you most nervous about the future? Debt. The idea that growth will remedy our debts is so addictive for politicians, but the citizens end up paying the price."

3 investors meet in a bar
01/02/16   Value Investing
"All three had the exact same investing methodology: buy the cheapest 10% of the market every year, and hold for a year. Each of the three also selected from the exact same list of U.S. stocks. The only difference was how they measured value. Bill used book value, Ernie used earnings, and Sam used sales."

Bank of Nova Scotia is sector buy
01/02/16   Stocks
"Instead, Scotiabank gets this stamp of approval because its stock was a dud in 2015. It fell 15.6 per cent and lagged all of its big bank peers, which is good news for 2016: Buying last year's underperforming bank stock, and holding it for a year, is a remarkably simple and effective stock-picking strategy." [$] Lehman Bro

Can you pick the best stocks for 2016?
01/01/16   Stingy Investing
"Let's start the New Year with a friendly stock-picking contest. The idea is to build a fantasy portfolio using the 10 Canadian dividend paying stocks in this week's Safer Dogs of the TSX list. Each fantasy portfolio will start out with an equal amount of money in the Safer Dogs. The goal is to figure out one stock to sell and one stock to buy. After making that fateful choice, your fantasy portfolio will be fixed for the year with $20,000 in your favourite stock, nothing in the one you sold, and $10,000 in each of the remaining eight."

A value investor's view on 2016
01/01/16   Stingy Investing
"While it might be easy to think that the end is nigh during a soft patch, odds are good that the markets - and value investing in particular - will fare well over the long term. After a dry spell, it's important for value investors to stick to their guns in the new year." [$]

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Disclaimers: Consult with a qualified investment adviser before trading. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. More...