The latest Evidence-Based Investor Video is now live at FWB Securities.com as well as Findependence.TV.

Titled Lies, Damned Lies and Statistics, the short (3.5 minutes) segment recaps the phenomenon called “Survivorship Bias.”

The title of the segment is of course a famous phrase coined by Mark Twain, and is used to describe the persuasive power of numbers, particularly the use of statistics to bolster weak arguments.

When we look at the statistics of what percentage of actively managed funds underperform, they are even more dire when survivorship bias is taken into account — in other words, the industry often “shoots the wounded,” closing down poorly performing actively managed funds. This has the effect of removing them from overall performance statistics, leaving only the “survivors” or better-performing surviving funds, which naturally have better track records. 

The segment features Craig Lazzara, Global Head of Index Investment Strategy for S&P Dow Jones Indices (pictured, right). Lazzara  notes that the semi-annual “SPIVA” report cards in Europe show that 89% of actively managed global equity funds and 91% of US equity funds failed to beat the indexes over the last five years. And the 10-year performance numbers “are even worse.”

How widespread is survivorship bias? Well, among British small- and mid-cap funds, more than half were closed or merged over a ten-year period.

Mistakes? I’ve made a few! This weekend the Financial Post is running a column I wrote based on a speech in the spring reprising my seven biggest financial mistakes. It’s titled I sold my Apple shares too early and 6 other financial mistakes that still haunt me.

And of course, a week ago — as we mentioned in last Saturday’s Wrap — MoneySense.ca ran a series of blogs by me on “the mistakes you’re probably making” in various subsets of personal finance: saving, debt repayment, selling a home, investing and retirement.

I have no problem making mistakes, the key is to learn from them and try not to repeat them!

For some reason, the media seems fixated on financial mistakes. Curious, a Google search revealed more on this theme. Check out Investopedia’s Top 7 Most Common Financial Mistakes or Forbes’ The 13 Biggest Money Mistakes People Make.

Sneak peek of Victory Lap Retirement

On Sunday, I’ll be speaking in Calgary, giving attendees at Larry Berman’s education event a sneak preview of the new book I’ve written with Hub blogger Michael Drak: Victory Lap Retirement. Continue Reading…

Motley Fool Canada has just published my blog Why a $10,000 TFSA limit will help the middle class. It lays out my argument that if the new Liberal government truly wishes to help out the beleaguered middle class, then the logic used to justify the cut in the middle-income tax  bracket from 22% to 20.5% should apply equally to the 11 million Canadians who have  TFSAs.

As we have noted before, a poll by Angus Reid showed that more than half of those 11 million do NOT want to see Prime Minister Trudeau keep his election promise cut the TFSA limit almost in half.

And as Bill Tufts argued Wednesday on the Hub, the larger TFSA limit is only one step to pension parity vis a vis the generous public-sector pensions that are ultimately backstopped by those same middle-class taxpayers. See Let’s level the playing field between TFSAs and Public-sector pensions.

Finally, a reminder that Catherine Swift and her WorkingCanadians.ca group continues to attract support for its petition to preserve the $10,000 TFSA limit.

See also Catherine’s blog on the Hub, entitled Majority of TFSA owners want the $10K limit: join petition to preserve it.

As we have noted before, in order to get the arithmetic growth of petition signers, it’s not enough just for YOU to sign it. We’re suggesting you use email, social media and one-on-one conversations with like-minded family and friends, and get at least six others to sign it too.

Here’s my latest Financial Post blog, titled More than two thirds of Canadians worry ‘a lot’ about money, but 69% still don’t have a plan.

You can also find some of the factoids from the survey here.

In case you missed the kickoff on Sunday, we’re now well into the seventh annual Financial Planning Week, which started on November 15th and runs until November 21st. As the link reveals, there’s something every day on the program.

On Thursday night, the Canadian ETF Association (CETFA) celebrated the 25th anniversary of exchange-traded funds, the first of which began trading in Toronto before trading anywhere else in the world: the TIPs or Toronto 35 Index Participation Units were later merged into the iUnits S&P/TSE 60 Index ETF.

As this link observes, the actual launch date was March 9, 1990. That was almost a full three years before the first ETF was listed in the United States: the SPDR S&P 500 ETF (SPY)  on January 29, 1993.

At the gala event in Toronto commemorating this milestone, CETFA’s new chair –Vanguard Investments Canada Inc. managing director Atul Tiwari, who recently replaced outgoing chair Howard Atkinson — passed along the following remarks by Vanguard founder, the legendary John Bogle:

“Next week marks the 40th anniversary of the first retail index mutual fund. At first it was a flop. Only $11 million received. It was nine years before a competitor created one. At the time indexing was only 1% of equity fund assets. They have grown since then. Today indexing is fully 34% of equity fund assets … broad market ETFs remain sound investments just as long as investors do not trade them. Staying the course with less exciting low-cost, broad-market index funds may not be the greatest investment strategy ever devised but the number of strategies that are worse is infinite.”

Learning from our mistakes

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