Monthly Archives: January 2016

Falling Loonie strategies

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The Canadian dollar or loonie is under pressure amid weak oil prices and a strengthening U.S. currency. Today, the loonie dropped to 78.39 cents for a U.S dollar the lowest in a many years.By Adrian Mastracci, KCM Wealth

Special to the Financial Independence Hub

“Investors who have US cash and/or US portfolios are advised to revisit their currency strategies.”

Canada’s Loonie has been falling to under 70 Cents against the US Dollar.
Recall it climbed from near 86 cents in mid-2009 to over parity.

Many market forces, such as currencies, are well beyond investor control.
Currency adds yet another potential hazard or reward to portfolios.

Of course, currencies are extremely hard to predict. They can also move very quickly in either direction.

Treat currency as an asset class

Treat currency as an investment with longer time horizons. Those with US cash and/or US portfolio may consider the merits, if any, of converting to Canadian Dollars.

It is important to get a handle on the Canadian tax cost of the US cash/portfolio before taking any action. It may also make good sense, depending on account values, to convert on more than one occasion.

Other considerations: Continue Reading…

The economy in 2016: half-speed ahead

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Couple Relaxing on BoatBy Aubrey Basdeo

Special to the Financial Independence Hub

Coming off a tumultuous 2015, Canadians are ready for some good news in 2016. When it comes to the economy, however, they might have to wait a while longer.

This is not to say we foresee uniform doom and gloom. One bright spot remains the U.S. economy, which was given a vote of confidence last month when the Federal Reserve raised its target interest rate. If the U.S. expansion is as robust as the Fed thinks it is, that should bode well for the Canadian economy and exporters, which rely heavily on the American market.

On a broader level, the Fed liftoff was also a signal that monetary policy, which has dominated the macroeconomic landscape for years now, will be less important going forward. The days of easy money may have begun to draw (slowly) to a close, and as they recede we’ll have a clearer picture of other factors – like the business cycle and asset valuations – which have been masked by accommodative monetary policies for nearly a decade.

But we might not like what we see. Growth globally is poised to be slow in 2016. Canada’s prospects will be tied to this low-flying trajectory, in large part because there are so few potential growth drivers in the domestic economy.

5 reasons for only modest growth in 2016

Continue Reading…

Sell everything? Consider these costs and drawbacks first

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Depositphotos_14227153_s-2015My latest Financial Post blog addresses the controversial call earlier this week from the Royal Bank of Scotland to “sell everything.” Click on this headline for the blog: If you try to time the market to sell everything you have to time it to get back in.

In a nutshell there are both commissions and taxes to consider. It all depends on whether you’re in discount brokers, full-service brokerages or use Managed Money, and the split between Registered and Non-Registered Funds. It’s going to cost much more to liquidate individual stocks in a taxable portfolio than a single “Go anywhere” global ETF held in registered accounts. And depending on the kind of mutual funds you own, the costs could be negligible or significant.

Guess what Buffett isn’t doing right now

See also an excellent piece by investment writer Dan Solin that ran in today’s Huffington Post: What Warren Buffett isn’t doing. For starters, he’s not listening to media pundits. As Solin points out, the financial media loves market crashes because it creates fear and anxiety, hence more TV ratings or web traffic. And the more people panic by “selling everything,” the more commissions generated for the financial industry, as we demonstrated above.

If anything, people should be considering buying if markets sag much further, the very opposite of selling everything. But that’s a topic for another day. Generally, though refer to the series of videos we’ve been running the last few months, including the one earlier today titled Winning the Loser’s Game, part 5.

Video: How to Win the Loser’s Game, Part 5

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UntitledThe fifth video instalment in SensibleInvesting.TV’s How to Win the Loser’s Game has been posted here and at Findependence.TV.

Often we hear say someone ask us the question, “Do you play the market?” The answer should be a resounding no, as the market is not a game. In fact, it’s quite scientific. A trio of Nobel Prize winning economists each have created a model that better helps us to understand the science behind the market.

This 8-and-a-half minute video features interviews with various executives from DFA and Vanguard and reviews the groundbreaking academic research on modern portfolio theory spearheaded by Harry Markowitz, William F. Sharpe and Eugene Fama. The screen shot above shows Eugene Fama on the left and DFA board member Ken French on the right. Continue Reading…

Stock market investment advice for worry-warts

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patmckeough
Patrick McKeough, TSINetwork.ca

 By Patrick McKeough, TSI Network.ca

Special to the Financial Independence Hub

Many investors spend a lot of time worrying about the wrong things. In particular, they worry about things that are unpredictable. Even if they happen, these things may have only an indirect impact on their long-term profits. As a result, they have little time to pay attention to things that have a direct impact on the value of their investments. Our stock market investment advice will help you become a worry-free investor.

For instance, at times they may mull over every tidbit of economic information that comes out, and how it differs from its predecessor of a week or a month earlier. They hope to detect a pattern—a sign that the economy is mending and headed for a return to steady growth, say, or perhaps deteriorating and doomed to plunge into a new recession.

Others look for patterns or omens in domestic or international politics, or in demographic data, or in the price of gold. This can eat up an awful lot of time and no stock market investment advice out there can save you the time you’ll waste.

These investors often feel they can cut their investment risk by selling some or all of their stocks in times of high risk, and buying them back when risk is low. This never works well for long. After all, risk as portrayed in the media, and genuine market risk, are two different things. No matter how you try, it’s hard to pinpoint market turning points, if only because you have to outguess so many other smart people who are trying to do the same thing.

Why stocks imitate the traffic on freeways, not elevators’

Continue Reading…