The Stingy News Weekly (12/04/2011)
Stingy News Flash
I'm pleased to say that I've been hired on to do a column for the Saturday Globe and Mail every other week. The first one is linked below.
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Teaching the professors how to pick good funds
"Imagine standing at a podium in a lecture hall and being questioned by 100 professors for two hours. Itís the stuff of student nightmares. But thatís exactly where I found myself when I recently addressed a bevy of professors from the University of Toronto on financial matters."
China's hard landing
"Property construction became 'the most important sector in the universe,' in the words of UBS economist Jonathan Anderson. It directly accounts for about 13% of the economy, 20% if one includes related industries like concrete and steel. It also provided 40% of local government revenues through land sales. Worsening inflation forced the government to put on the brakes this year. As with most property busts, transactions dried up, followed by a free fall in prices. Land prices were down 60% year on year in September. Property developers are slashing prices of new homes to stave off bankruptcy."
Buying a dollar for fifty cents
"What makes the stock of particular interest to a value investor is the fact that management reports the value of the investment portfolio every quarter and, as of Oct. 31, the investments and cash were valued at $1.15 a share. So, you are effectively buying an actively managed resource portfolio at 50 cents on the dollar."
What Bay Street doesn't want you to hear
"A substantial number of do-it-yourself investors are paying for financial advice they are not getting and never will. That's what can happen when you buy mutual funds from an online broker. While you typically pay nothing to buy and sell your funds, the cost of owning them can be identical to what is paid by investors who have advisers. There's almost a conspiracy of silence on this matter in the investment industry and it results from the fact that the status quo serves brokers and fund companies quite well."
U.S. taxman to go easy
"Americans living in Canada whoíve neglected to pay their U.S. taxes are getting a big break from Uncle Sam. The U.S. Internal Revenue Service is poised to waive potentially massive penalties for Americans who agree to come clean and donít owe any taxes, The Globe and Mail has learned."
Unintended consequences: nanny state edition
"Today and tomorrow mark the last days that put-upon parents can satiate their youngsters by simply throwing down $2.18 for a Happy Meal toy. But, thanks to the new law taking effect on Dec. 1, this is no longer permitted. Now, in order to have the privilege of making a 10-cent charitable donation in exchange for the toy, you must buy the Happy Meal. Hilariously, it appears Mar et al., in their desire to keep McDonald's from selling grease and fat to kids with the lure of a toy have now actually incentivized the purchase of that grease and fat -- when, beforehand, a put-upon parent could get out cheaper and healthier with just the damn toy."
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