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Article Archive: 2019

The Stingy News Weekly: April 21, 2019
04/21/19   SNW
This week we have bear market, concentration, survival, and more.

Direct indexing
04/21/19   Indexing
"ETFs disrupted mutual funds by offering something a little bit better. Now ETFs face disruption because direct indexing offers several new features that make them much better."

Concentration is cool
04/21/19   Value Investing
"Sharpe ratios tend to be maximized in a value portfolio around 25 positions."

A bin of bargains
04/21/19   Stingy Investing
"The Canadian stock market is up 20 per cent from its Christmas Eve low. Despite the gain, it appears to be reasonably valued. Looking at the exchange sector by sector reveals a bin of bargains." [$]

The will to survive
04/21/19   Markets
"In the world of investing, you don't have to be bold. You don't need to find alpha. You just need to survive."

Recessions vs. bear markets
04/21/19   Markets
"So stress is not necessarily proportional to how good or bad things are in. Much of it has to do with the changes to our current situation. Going from great to just OK could cause a much worse reaction in the markets than going from awful to not-so-great."

Ten behavioural advantages
04/21/19   Behaviour
"Amateur investors have a number of behavioural advantages"

The Stingy News Weekly: April 16, 2019
04/16/19   SNW
This week we have factor, happy, space, cats, and more.

You have to live it
04/16/19   Behaviour
"Another takeaway is remembering that people whose views and decisions look crazy to you may be less crazy than you think, because they're being made by people whose views on risk and reward were shaped in a different world than you've experienced."

Notes from the FFH AGM
04/16/19   Watsa
"Fairfax's meeting day is a miniature version of Berkshire's, with better food."

Never be happy
04/16/19   Behaviour
"There is a silver lining here though. One of our defining characteristics as humans is that we're rarely, if ever, satisfied or content. Maybe it's a good thing people haven't decided to rest on their laurels just because things have gotten better over time. There's still room for improvement."

Factor exposure of Berkshire Hathaway
04/16/19   Buffett
"BRK.A had positive exposure to the Value, Size, Low Volatility, and Quality factors as well as negative exposure to Growth and Dividend Yield"

Stock picks from space
04/16/19   Markets
"Panos N. Patatoukas, one of the study's co-authors, told me he thinks the use of satellite imagery creates opportunities for sophisticated investors at the expense of small individual investors."

The Stingy News Weekly: April 13, 2019
04/13/19   SNW
This week we are recovering from the Fairfax Lollapalooza in the research graveyard.

OSAM Q1 letter
04/13/19   Funds
"One of the best ways to evaluate a manager is to ask them about their research graveyard. Of the research projects we've pursued over the decades, a significant majority end up like the ownership data project - dead. The quantitative research process is default frustrating."

Tax-loss harvesting alpha
04/13/19   Taxes
"We find that a tax-loss harvesting strategy yields a geometric average of 51 basis points per year from 1926 to 2018. However, this tax alpha is highly variable: over four successive 23-year periods, the tax alpha ranged from 26 to 88 basis points per annum"

We overestimate and underestimate our abilities
04/13/19   Behaviour
"Do you think you are an above-average driver, as most people do? How do you compare with others as a parent? Are you better than most at dancing? Where do you rank in your capability to save humanity? Many of you will answer these questions incorrectly. For some of these skills, you will think you are better than you actually are. For others, you will think you are worse."

Multi-factor ETFs
04/12/19   Indexing
"There is a lot to consider in relation to the composition and performance of multi-factor ETFs in the US stock market. Perhaps the most interesting insight is that these products feature factors such as growth that are not supported by academic research and lack exposure to established ones like quality and momentum."

Dividends fade
04/12/19   Dividends
"In the past, dividends were the only reason investors placed their money in equities. Now, dividends play a much smaller role, for better or worse, in the overall stock market."

The Stingy News Weekly: April 3, 2019
04/03/19   SNW
This week we are preparing for Fairfax Lollapalooza and more.

Fairfax Lollapalooza 2019
04/03/19   Value Investing
Check out the schedule of events for next week's Fairfax Lollapalooza.

Real estate vs stocks
04/03/19   Real Estate
"Comparing real estate to the stock market or bonds or any traditional asset class is difficult because there are so many other variables involved in real estate. There are taxes and costs involved just like there are in the stock market, but then you have to consider the leverage involved, the cost of borrowing, the length of time in the home, the imputed rent, the psychic income from home ownership and the fact that you have to live somewhere."

Momentum in Imperial Russia
04/03/19   Momentum Investing
"Some of the leading theories of momentum have different empirical predictions that depend on market composition and structure. The institutional theory predicts lower momentum profits in markets with less agency. Behavioral theories predict lower momentum profits in markets with more sophisticated investors. One risk-based theory predicts occasional momentum crashes. In this paper, we use a dataset from a major 19th century equity market to test these predictions. We find no evidence to support the institutional theory due to the lack of delegated management. We exploit a regulatory change in the middle of our sample period to test behavior theories. We find evidence consistent with overreaction theories of momentum. We find no evidence to support a rare disaster theory."

ETF tax dodge
04/03/19   Indexing
"It turns out that transfusions like these are tax dodges, carried out by the world's largest asset managers with help from investment banks. The beneficiaries are the long-term investors in exchange-traded funds."

Forward vs trailing price to earnings
04/03/19   Value Investing
"It also became clear in my study that had an investor focused on low trailing P/E ratio stocks she would have done much better than focusing on low forward P/E ratio stocks."

Price matters
04/03/19   Thrift
"Motusbank's fee for chequing accounts is zero, and that includes unlimited debits, including e-transfers, and an interest rate of 0.5 per cent (competitive for a chequing account). On savings, the bank will pay a rate of 2.25 per cent on regular accounts and 2.5 per cent on tax-free savings accounts."

Chou's letter
04/03/19   Chou
"In summary, although the markets have been less kind to value investing, we exacerbated the problemas practitioners." [pdf]

The Stingy News Weekly: March 25, 2019
03/25/19   SNW
This week we have small, fees, taxes, budgets, indexing, and more.

The size premium should persist
03/25/19   Markets
"To repeat, investors must expect that any risk-based factor will experience long periods of underperformance. One only has to observe the U.S. value factor to see that it's having a very rough decade. However, that's not a reason to avoid exposure to a factor, such as size. In fact, investors should find satisfaction in the erratic performance of small stocks. If you believe that small stocks are riskier than large stocks, it should follow that small stocks should not always outperform large stocks in all periods - sometimes the risks show up. This is true even though the expected returns are greater for small-cap stocks over the long term."

Canadian Government's predatory mortgage scheme
03/25/19   Government
"The Government of Canada is using taxpayer money to invest in real estate at near peak valuations. The Department of Finance revealed the 2019 Budget yesterday, including new housing measures. Most notable is the First-Time Home Buyer Incentive, which allows the CMHC, Canada's national housing agency, to become an investor in your real estate. On the surface, it seems like it may provide a boost to the market, and is a generous gift to first-time buyers. The program's timing however, makes it a predatory loan scheme that will do more harm than good."

People do not value informative news
03/25/19   Media
"We examine how people's perceptions of media bias affect their demand for news. Drawing on a large representative sample of the US population, we measure and experimentally manipulate people's beliefs about the extent to which newspapers suppress information. Inconsistent with the 'more-information-is-better principle,' we find that people who learn that a newspaper is less likely to suppress information have alower demand for news from this newspaper. Our results demonstrate that people have a demand for biased news, consistent with a desire to confirm pre-existing beliefs"

The equilibrium consequences of indexing
03/25/19   Indexing
"As indexing becomes cheaper (1) indexing increases, whileindividual stock trading decreases; (2) aggregate price efficiency falls, while relativeprice efficiency increases; (3) the welfare of relatively uninformed traders increases; (4)for well-informed traders, the share of trading gains stemming from market timing in-creases, and the share of gains from stock selection decreases; (5) market-wide reversalsbecome more pronounced. We discuss empirical evidence for these predictions." [pdf]

Don't open a restaurant
03/25/19   Management
"there is a limit to what people will pay for a sandwich and what people feel comfortable paying for a sandwich. Despite the quality of the ingredients inside, despite the amount of labor that goes into all that, there's a certain amount you can charge for a sandwich and people will not pay any more." [audio]

Fees and taxes can ruin your retirement
03/25/19   Stingy Investing
"The stock market produced big gains in the past and investors dream about retiring on similar returns in the future. But their plans might be ruined because the market's gains do not include some major costs." [$]

The Stingy News Weekly: March 18, 2019
03/18/19   SNW
This week we have the good, the bad, and the ugly of value investing, and more.

The good, the bad, and the ugly of value investing
03/18/19   Stingy Investing
"The simple low-P/E method generated good long-term returns. But I doubt many investors would have been able to stick with it through its bad and ugly periods." [$]

Guy Gottfried talks at Ivey
03/18/19   Value Investing
"Guy Gottfried talks to Dr. George's class" [video]

Most Amazon brands are duds
03/18/19   Stocks
"Turns out most Amazon-branded goods are flops that don't threaten other businesses at all, according to Marketplace Pulse."

Getting high on their own supply
03/18/19   Stocks
"The industry will surely grow on a macro level, but whether the stocks are investable is a different story. Incorporating even the most optimistic assumptions about future growth, the industry is trading at nosebleed valuations. The total market cap of all marijuana stocks in the US and Canada is about $50 billion, despite sales of only $580 million. That translates to a price/sales multiple of 85x."

DSCs should be banned
03/18/19   Hallett
"The financial advisory industry needs to think about what being a client is like, and remember the adage: 'Take care of clients and they will take care of you.'"

Seventy over seventy
03/18/19   Kahn
"One of the things that's great about the investment business is that there are people who stay active and sharp into their eighties and nineties. Buffett and Munger, the archetypes of the category, will once again be on stage in a packed arena come May."

The Stingy News Weekly: March 12, 2019
03/12/19   SNW
This week we have GARP, taxes, downside, information abundance, and more.

What is the heck is going on
03/11/19   World
"The striking parallels between commerce, education, and politics isn't a coincidence. In fact, it's inevitable. In the past decade, the information environment has inverted from information scarcity to information abundance, and the effects are evident in every corner of society."

How hedge funds get rich
03/11/19   Funds
"However, what if I told you that in less than 20 years the hedge fund would have more money than you (regardless of the size of your initial investment)."

A leader in tax compliance
03/11/19   Taxes
"Then there's Greece, where economists have struggled to even calculate a VCR. According to the International Monetary Fund, more than half of Greek households pay zero income tax. Indeed, tax evasion is practically a national sport. Take the swimming-pool trick. After the 2008 recession, the government placed a luxury tax on private pools. When only 324 residents in the ritzy suburbs of Athens admitted to having one, tax collectors knew they were being swindled - but didn't know how badly until Google Earth photos revealed the real pool count: 16,974. It's now common to conceal chlorinated assets with floating tiles, army nets, and pool interiors painted to mimic grass."

Building a trading wall
03/11/19   Fun
"Look, obviously the move here is to build the hotel, no? Why shouldn't Aurora have a 40-story hotel in the middle of a field? With no windows? And made out of lead? Then just put your tower on the other side of it. Building your own tower is good, sure, but again you can get most of the same benefits just by blocking theirs."

Growth at a reasonable price works
03/11/19   Value Investing
"Our results suggest a GARP approach can generate enviable results, although how enviable depends on the observation period. Perhaps the strategy's key benefit is forcing investors to adopt a systematic framework so they can allocate to exciting growth stories - the rising Amazons - albeit only when they are trading at reasonable valuations."

Pure downside
03/11/19   Behaviour
"A miserable event with no offset, no silver lining, is when the economy stalls and asset prices fall, and because the economy stalls you lose your job, and because you lose your job you have to sell assets at low prices, all because you didn't have enough cash."

Guy Gottfried at Ivey
03/11/19   Value Investing
"Ivey Business School's Value Investing Program of 2019 welcomed Guy Gottfried as a Guest Speaker." [video]

The Stingy News Weekly: March 4, 2019
03/04/19   SNW
This week we have a blockbuster study from Dan Rasmussen, and more.

The private debt crisis
03/04/19   Debt
"One of the key and largely overlooked reasons for this disappointing growth is hiding in plain sight: the increasing global burden of private debt - the combination of business debt and household debt. Even though government debt grabs all the headlines, private debt is larger than government debt and has more impact on economic outcomes."

Superstar economy lacks superstars
03/04/19   Economy
"Imagine that in the 1960s you were to double the productivity of GM - that would clearly have a huge impact on the economy. If you were to double the productivity of Facebook overnight, it wouldn't even move the needle. Nothing would happen. You would get slightly better targeted ads, but zero impact on the economy"

Bill Gates on Energy
03/04/19   World
Bill goes nuclear on energy. [video]

On being wrong
03/04/19   Markets
"All of the fundamental investors - the straight-A students - don't want to make an investment with a 40% chance of being wrong. Imagine being an analyst at Viking and pitching stocks with 40% error rates each month: How many disasters would it take before you got fired? In contrast, quantitative investors would look at the base rates and prefer these characteristics."

The MBA Myth and the Cult of the CEO
03/04/19   Management
"MBA programs simply do not produce CEOs who are better at running companies, if performance is measured by stock price return."

From Time to a Ponzi scheme
03/04/19   Media
"Spin your radio dial, download a podcast or sit down at your next corporate gathering and you'll have no trouble finding a self-styled financial guru to tell you what to do with your money. What you may not know: Financial experts, even those with bulletproof credentials, may be trying to sell you something."

Retirement plans
03/04/19   Retirement
"Saving for retirement means navigating a potential minefield of high fees and bad advice." [video]

Investing at a market peak
03/04/19   Stingy Investing
"Starting at the market peak in 2000 didn't result in disaster for diligent savers. Instead, they were able to buy more when the market was low and profited over the long term. Young accumulators who fret about investing at a peak should remember they'll be buying more for years to come." [$]

Too risky
03/04/19   Behaviour
"It's a little odd to pay someone to tell you to do what you should be able to do on your own, but an adviser wouldn't even be necessary if you didn't have a portfolio that scared the bejeezus out of you once every few years. It wouldn't be necessary if you had a portfolio that you could set and forget."

The soft side of planning
03/04/19   Brokers
"To my reading, the rise of the independent financial planner is the most significant financial event of my tenure at Morningstar. We did not anticipate this movement, but it proved crucial to our company's success. More importantly, millions of investors have benefited from this development as financial services began to work for those who purchased them, as opposed to mostly enriching those who sold them. It was a powerful and profound change."

The Stingy News Weekly: February 25, 2019
02/25/19   SNW
This week we have Warren, productivity, population disaster, a puzzle, and more.

What else matters
02/25/19   World
"All economic growth is just population growth plus productivity growth. Half of that equation turns ugly over the next 30 years in a way it wasn't over the last 30 years. Or 50. Or 200."

Buffett interview
02/25/19   Buffett
"CNBC's Becky Quick sits down with Berkshire Hathaway CEO Warren Buffett. The billionaire investor weighs in on Kraft Heinz, Apple, the financial sector and his own investment strategy." [video]

Why markets go up
02/25/19   Markets
"The data point we seek to explain is real earnings growth of 3.42% using the forces of Productivity and Population Growth."

How to invest a lump sum
02/25/19   Markets
"While 3.7% is the average underperformance of DCA, 5%-10% underperformance is far more common. More importantly, the distribution is quite symmetric, meaning that DCA has roughly the same amount of underperformance as outperformance at the tails of the distribution. So your fear of a market crash needs to be balanced out by the fear of being left behind as the market shoots upward."

Buffett's 2018 letter
02/23/19   Buffett
"Long-time readers of our annual reports will have spotted the different way in which I opened this letter. Fornearly three decades, the initial paragraph featured the percentage change in Berkshire's per-share book value. It's now time to abandon that practice."

The Stingy News Weekly: February 20, 2019
02/20/19   SNW
This week we have Charlie, value investing, worst case, and more.

The dirty little secret of value funds
02/20/19   Value Investing
"The mystery is deepest in the case of value funds. Many shelves of academic research have demonstrated that one of the more dependable ways to beat the market, at least on paper, is to buy cheap stocks and shun expensive ones." [$]

Why most active managers fail
02/20/19   Value Investing
"To put it simply, the cheapest stocks are disproportionately small in terms of size and volume. This means that an active manager looking to choose, say, the best 40 of these stocks would be unable to manage more than $200M or so. Even a more passive, quasi-indexed, approach owning the 200 cheapest stocks could only handle about $1B."

Time varying factor premiums
02/20/19   Value Investing
"For value investors, the above findings are good news, as the relatively poor performance of value stocks in the U.S. over the past decade has led to a widening of the book-to-market spread between value and growth stocks, restoring it to about the same level it was when Eugene Fama and Kenneth French published their famous study"

Charlie Munger's AGM
02/20/19   Munger
"Charlie Munger addresses shareholders at Daily Journal annual meeting" [video]

The Next Millionaire Next Door
02/20/19   Books
"Sarah Stanley Fallaw says seventy-five percent of millionaires paid less than $1000 for their most expensive suit. Fifty percent of millionaires paid less than $300 for their most expensive watch. Three-quarters of American millionaires paid less than $300 for their most expensive pair of shoes. She also found that 65 percent of American millionaires live in homes that are currently worth less than a million dollars."

The worst case
02/20/19   Markets
"Then I came to realize that just getting market returns is no walk in the park."

The Stingy News Weekly: February 13, 2019
02/13/19   SNW
This week we have timing, retirement, in a shrinking world, and more.

Retiring on low income
02/13/19   Retirement
"Retirement savings advice doesn't always work for everyone, especially those living on low incomes. The Agenda discusses the reality of retirement for Ontario's low-income earners." [video]

The world is shrinking
02/13/19   World
"Dire predictions about an impending overpopulation crisis have loomed large in the human imagination for centuries. Darrel Bricker and John Ibbitson co-authors of, 'Empty Planet: The Shock of Global Population Decline,' say these predictions have been greatly exaggerated. In fact, the global population is on the decline." [video]

DCA vs buy the dip
02/13/19   Markets
"My point in all of this is that Buy the Dip, even with perfect information, typically underperforms DCA. So if you attempt to build up cash and buy at the next bottom, you will likely be worse off than if you had bought every month. Why? Because while you wait for the next dip, the market is likely to keep rising and leave you behind."

Where big leaps live
02/12/19   Behaviour
"Few talented people get all their value from being great at one thing. Being so good at one thing that it's enough to make you extraordinary is rare. More likely are people who are pretty good at a few things and combine those things to make a big leap into something great."

Paul Volcker talks to Ray Dalio
02/12/19   Government
"I sat down with one of my greatest heroes, Paul Volcker, to talk about the state of the economy and U.S. government as well as learn about the principles that guided his incredible career." [video]

Sovereign bonds since Waterloo
02/12/19   Bonds
"This paper studies external sovereign bonds as an asset class. We compile a new database of 220,000 monthly prices of foreign-currency government bonds traded in London and New York between 1815 (the Battle of Waterloo) and 2016, covering 91 countries. Our main insight is that, as in equity markets, the returns on external sovereign bonds have been sufficiently high to compensate for risk. Real ex-post returns averaged 7% annually across two centuries, including default episodes, major wars, and global crises. This represents an excess return of around 4% above US or UK government bonds, which is comparable to stocks and outperforms corporate bonds. The observed returns are hard to reconcile with canonical theoretical models and with the degree of credit risk in this market, as measured by historical default and recovery rates. Based on our archive of more than 300 sovereign debt restructurings since 1815, we show that full repudiation is rare; the median haircut is below 50%."

Trying to time the market
02/12/19   Stingy Investing
"Trying to time the market might be tempting but it's failure-prone. Most investors should focus on the fundamentals instead." [$]

Broken beta
02/12/19   Indexing
"Smart beta will disappoint some investors, but that's as much their fault as the product providers. Investors do not appreciate the significant tracking errors relative to their benchmarks. This has led ETF issuers to create index products with only slight factor tilts. Given the higher price tag of smart beta ETFs compared to plain-vanilla equity ETFs, they are probably not worth the higher fees."

Looking for the intuition
02/12/19   Value Investing
"After a very tough 2018 for many quantitative strategies, particularly in market-neutral stock selection, one hurdle many investors face is getting some basic intuition about results, and even more elementary, about what one actually owns in such a portfolio. This matters as the more intuitive something is the easier it is, all else equal, to stick with it. I can't fully fix this problem. A multi-factor process, by design, lacks simple one-liner explanations. Frankly, that's much of the idea of diversifying across factors and stocks. But, while I can't fix this completely, I do hope I can help."

The Stingy News Weekly: February 5, 2019
02/05/19   SNW
This week we have rebalancing, retirement, happiness, and more.

Time for happiness
02/05/19   Behaviour
"most of us fall into a trap of spending time to get money, because we believe money will make us happier in the long run. Our thinking is backward. In fact, research consistently shows that the happiest people use their money to buy time."

One big thing
02/05/19   Thrift
"74% of retirement success had to do with one thing: savings rate. The other 26% was explained by asset allocation and related decisions."

An economic story
02/05/19   Markets
"The Great Depression experienced a GDP decline of nearly 27% with a high unemployment rate of 25%. The downturn technically ended in 1932. In that year, wages fell 60% while stock market dividends were slashed 57%."

Where is the Value
02/05/19   Value Investing
"The countries noted above as being deeply discounted relative to peers and history are also showing up as having favorable Earnings Growth relative to peers - Portugal, Greece, and Russia."

Rebalancing for ETFs
02/05/19   Indexing
"Rebalancing spreadsheets are not new, but this one has an additional feature I hope you will find useful: it allows you to incorporate ETFs that hold more than one asset class."

The retirement age is too low
02/05/19   Retirement
"When the Canada Pension Plan came into effect in 1965, life expectancy was just shy of 72 years. Canadians could thus expect six or seven years of public pension benefits before moving on to their greater reward. Since that time, however, tremendous improvements in health care and geriatric medicine have pushed life expectancy to 82 while the traditional retirement remains stuck at 65, creating an extra decade of leisure."

The Stingy News Weekly: January 28, 2019
01/28/19   SNW
This week we have solace for retirees, fake goose, tax, and more.

Morgan Housel talk
01/28/19   Behaviour
"Morgan Housel's presentation on What Other Industries Teach Us About Investing" [video]

Is risk a function of sector or size?
01/28/19   Markets
"It would appear that the realized risk and returns in these were largely functions of their sector characteristics as opposed to size."

A fake goose
01/28/19   Fraud
"When the coat arrived, it was army green instead of the forest green I had ordered. It was heavy, not lightweight. It didn't fit. It smelled of chemicals. And the white Canada Goose patch? It looked off; it's the patch on the right at the top of this article. On Canada Goose's website, a page dedicated to the dangers of counterfeiting explains that every one of its products has a hologram label with a polar-bear image, proof of authenticity. With a $925 pit in my stomach, I checked my coat. It had a hologram sewn into the seam but, sure enough, no polar bear."

Tax reform
01/28/19   Taxes
"We have to do better, not just for the sake of convenience, but for reasons of fairness. As things now stand, the staggering amount of red tape discourages people from applying for credits they deserve. In 2018, a Senate committee discovered that fewer than 40% of the adults who were entitled to the disability tax credit in 2012 succeeded in claiming it, in large part because of the daunting amount of paperwork required. The question is how to reform a system that has sprawled in every direction"

The ugly future of news
01/28/19   Media
"Years of erosion have damaged the paper's ability to cover the community. This is true everywhere: Since 1990, nearly 65 percent of all newspaper jobs have been eliminated, more than in the fishing, steel or coal industries."

Venezuela is a socialist catastrophe
01/28/19   World
"In the meantime, the larger lesson of Venezuela's catastrophe should be learned. Twenty years of socialism, cheered by Corbyn, Klein, Chomsky and Co., led to the ruin of a nation. They may not be much embarrassed, much less personally harmed, by what they helped do. It's for the rest of us to take care that it never be done to us."

Bob Robotti's blog
01/28/19   Value Investing
"In this first video Bob Robotti follows-up on our year end letter with the story of Mr. Market, a tale well known to value investors. We look forward posting more short videos as a regular feature of the blog."

Solace for those retiring at a peak
01/28/19   Stingy Investing
"Investing in retirement can be nerve-racking. Take the wrong step and you might walk into the poor house. But a sensible approach can help you make it through the bad times." [$]

The Stingy News Weekly: January 22, 2019
01/22/19   SNW
This week we have a moat, mixer, momentum, arbitrage, and more.

The Bogle collection
01/22/19   Bogle
"John C. Bogle was well-known for being the founder of The Vanguard Group and father of the index fund. What is sometimes not known as well is that he was a prolific educator and author - having written 10 books and countless articles, including 16 for CFA Institute. Below are the 12 he wrote for the Financial Analysts Journal."

A bad bond idea
01/22/19   Bonds
"The Agenda assesses the value of social impact bonds - a tool used by some governments to raise private capital to pay for social services." [video]

Whither fragility
01/22/19   Momentum Investing
"Those wanting to reduce short-term volatility can add a modest allocation to bonds instead of using multiple lookback models. This would be easier to do, less costly, and potentially more tax efficient. Results are also better."

Conventional retirement advice may fail
01/22/19   Retirement
"For many Canadians, retirement income planning is a bit like completing a jigsaw puzzle: the challenge is to fit all of the pieces together. But for those approaching retirement with fewer resources, the puzzle can be more difficult to complete."

Retail arbitrage
01/22/19   Markets
"I was introduced to a suspiciously profitable practice called retail arbitrage. The concept is fairly simple: You purchase products from a retail store, like Walmart or Target, and then you sell them somewhere else, like Amazon, for a higher price."

Is risk a function of sector or size?
01/22/19   Markets
"It would appear that the realized risk and returns in these were largely functions of their sector characteristics as opposed to size."

Buffett's wide-moat theory works
01/22/19   Stingy Investing
"While the no-moat portfolio won when it came to raw returns, it got those returns at the cost of a huge amount of volatility. It's a pattern that's fairly common when it comes to different stock picking (and market timing) strategies." [$]

Asset Mixer Update
01/18/19   Stingy Investing
We've updated our Asset Mixer to include nominal and real data for 2018.

Periodic Table Update
01/18/19   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include nominal and real data for 2018.

The Stingy News Weekly: January 16, 2019
01/16/19   SNW
This week we have doing something, for the long-term, and the passing of a legend.

Time to do something
01/16/19   Behaviour
"How sensitive are your investment actions to new information?"

Long-term thinking
01/16/19   Markets
"On a daily basis, it's more or less a coin flip between being positive or negative but the further out you extend the time horizon the better your chances of success."

Payday anomaly revisited
01/16/19   Markets
"First, by replicating and comparing the initial paper to other data sets, we found out that yes, there were days with stronger average returns, specifically day 16, day 1, day 2, and end-of-the-month days."

Dual momentum fragility
01/16/19   Momentum Investing
"By simply diversifying across multiple implementations, we can dramatically reduce model specification risk and even potentially see improvements in realized metrics such as Sharpe ratio and maximum drawdown."

Battle for Stuart Olson
01/16/19   Value Investing
"As a long-term shareholder, I wish Crescendo Partners and Jamarant Capital every success in their quest to reduce the valuation discount that we all see in the Stuart Olson stock price. Depending on whom they nominate for the board, I may very well vote for their candidates. But in spite of my optimism, I suspect that we have seen only the opening salvo of a protracted battle for the future of the company." [$]

John Bogle dies at 89
01/16/19   Indexing
"John C. Bogle, 89, who revolutionized the way Americans save for the future, championed the interests of the small investor, and railed against corporate greed and the excesses of Wall Street, died of cancer Wednesday at his home in Bryn Mawr, his family confirmed."

The Stingy News Weekly: January 8, 2019
01/08/19   SNW
This week we have the long awaited Top 200, Top 500, Asset Mixer, and Periodic Table updates.

Declines in hours worked
01/08/19   Economy
"Declines in hours worked per person are among the least-sung benefits of economic development. In the late 19th century workers in industrialised economies knew labour and little else. In 1870 full-time work generally meant between 60 and 70 hours of labour per week, or more than 3,000 hours per year. Over the century that followed rising incomes were accompanied by a steady drop in weekly hours, which had fallen to about 40, on average, by 1970. Though less conspicuous a boon than larger pay packets or higher living standards, the drop was a gift to working people of a thousand or so precious hours of free time each year."

Bad economics
01/08/19   Taxes
"A top marginal income tax rate of 70 percent is bad economics and even worse politics."

Popularity
01/08/19   Behaviour
"Popularity is a word that embraces how much anything is liked, recognized, or desired. Popularity drives demand. In this book, we apply this concept to assets and securities to explain the premiums and so-called anomalies in security markets, especially the stock market."

The forgotten bear markets
01/08/19   Markets
"There's been plenty of ink spilled about history's great market crashes but investors pay little attention to the other historical bears that didn't reach ludicrous mode. Here is a list and short synopsis of some of the forgotten bear markets of the past 80 years"

Top 200 2019
01/08/19   Stingy Investing
"The Heroes have done well over the long term. They climbed by an average of 12.2% per year since we started way back in 2004 not including the dividends they paid along the way, which would have added a few percentage points to the total (Up until this year, it was published as the MoneySense All-Stars). The return assumes an equal dollar amount was put into each Hero in the first year and rolled into the new Heroes each year thereafter. By way of comparison, the S&P/TSX Composite (as represented by the iShares XIC exchange traded fund) climbed by 4.0% per year over the same period. The Heroes beat the market by an average of 8.2 percentage points per year."

Top 500 2019
01/08/19   Stingy Investing
"The U.S. Heroes have been on a roll since the crash of 2008. They surged 14.5% per year, on average, over the last 10 years while the market (as represented by the SPDR S&P 500 exchange traded fund) gained 10.2% annually."

Asset Mixer Update
01/02/19   Stingy Investing
We've updated our Asset Mixer to include nominal data for 2018.

Periodic Table Update
01/02/19   Stingy Investing
We've updated our periodic table of annual returns for Canadians to include nominal data for 2018.

The Stingy News Weekly: January 1, 2019
01/01/19   SNW
We start the year with the cost of living, after-tax, in a late cycle, retirement, and more.

What I learned at work this year
01/01/19   World
"Global emissions of greenhouse gases went up in 2018. For me, that just reinforces the fact that the only way to prevent the worst climate-change scenarios is to get some breakthroughs in clean energy."

Cost of living
01/01/19   Thrift
"Living in less costly areas can enable you to spend less and to invest more of your income. You will pay less for your home and correspondingly less for your property taxes. Your neighbors will be less likely to drive expensive motor vehicles. You will find it easier to keep up, even ahead, of the Joneses and still accumulate wealth."

After-tax alpha
01/01/19   Taxes
"The costs of our active strategies are high enough without paying Uncle Sam. Capital gains taxes, when combined with transactions costs and fees, make indexing profoundly advantaged, I am sorry to say."

Late cycle lament
01/01/19   Montier
"In order to believe that U.S. equities are going to generate a 'normal' return from these levels, you have to believe some quite extraordinary things. Perhaps you believe that P/Es are going to soar to levels not even seen at the height of the TMT bubble; or perhaps you believe that profitability is going to rise (from already extended levels) so that every firm in the U.S. looks like a FAANG stock; or perhaps you believe that growth is simply going to reach unprecedented levels."

Retirement finance
01/01/19   Retirement
"If we were to over simplify and say that there are three types of retirees - the non-feasible, feasible but just barely, and really rich - only the middle cohort cares about this subject and the closer to the line the bigger deal it is. This is why I took up retirement finance: fear of the line."

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