| The Stingy News Weekly: February 13, 2019 |
| 02/13/19 | | SNW |
This week we have timing, retirement, in a shrinking world, and more.
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| 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]
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| 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]
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| 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."
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| 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."
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| 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]
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| 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%."
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| 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." [$]
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| 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."
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| 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."
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| The Stingy News Weekly: February 5, 2019 |
| 02/05/19 | | SNW |
This week we have rebalancing, retirement, happiness, and more.
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| 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."
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| 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."
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| 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%."
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| 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."
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| 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."
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| 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."
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| The Stingy News Weekly: January 28, 2019 |
| 01/28/19 | | SNW |
This week we have solace for retirees, fake goose, tax, and more.
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| Morgan Housel talk |
| 01/28/19 | | Behaviour |
"Morgan Housel's presentation on What Other Industries Teach Us About Investing" [video]
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| 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."
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| 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."
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| 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"
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| 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."
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| 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."
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| 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."
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| 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." [$]
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| The Stingy News Weekly: January 22, 2019 |
| 01/22/19 | | SNW |
This week we have a moat, mixer, momentum, arbitrage, and more.
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| 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."
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| 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]
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| 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."
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| 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."
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| 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."
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| 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."
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| 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." [$]
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| Asset Mixer Update |
| 01/18/19 | | Stingy Investing |
We've updated our Asset Mixer to include nominal and real data for 2018.
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| 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.
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| 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.
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| Time to do something |
| 01/16/19 | | Behaviour |
"How sensitive are your investment actions to new information?"
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| 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."
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| 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."
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| 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."
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| 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." [$]
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| 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."
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| 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.
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| 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."
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| Bad economics |
| 01/08/19 | | Taxes |
"A top marginal income tax rate of 70 percent is bad economics and even worse politics."
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| 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."
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| 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"
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| 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."
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| 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."
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| Asset Mixer Update |
| 01/02/19 | | Stingy Investing |
We've updated our Asset Mixer to include nominal data for 2018.
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| 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.
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| 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.
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| 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."
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| 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."
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| 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."
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| 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."
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| 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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