Tag Archives: indexing

FWB Video: Should Stock investors rotate between different industries?

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 The latest video from FWB TV’s Evidence Based Investor Video blogs has been posted: Should stock investors rotate between different industries?. 

In the 3.5-minute video Cambridge stock market historian Elroy Dimson (pictured left) observes that  Investors (and consumers) have a tendency to be attracted to the latest “hot” technology, such as driverless cars or 3D printing.

That might be fine for purchasing cell phones and flat screen television sets but it is not necessarily the best course of action when it comes to investing choices.

Sometimes the emerging “Hot” industry can be a money loser, as occurred early in the 20th century when many auto manufacturers went bankrupt. On the other hand, the “old” staid industry of railways actually performed well for many investors.

Dimson concludes that simply rotating from one hot industry to another is a bad idea for most investors, arguing instead for diversifying both across industries as well as across various regions of the global economy.

After watching the video if you want to learn more, download the free guide, 12 Essential Ideas For Building Wealth

 

Weekly Wrap: MoneySense’s 2016 ETF All-Stars; BMO and Horizons ETF Outlooks for 2016

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ETF word on the green enter keyboard image with hi-res rendered artwork that could be used for any graphic design.Lots of ETF developments to report as we close out January. The February/March 2016 issue of MoneySense magazine includes the latest edition of a feature I spearheaded called the ETF All-Stars.

The focus is on low-cost broadly diversified “plain-vanilla” ETFs but we also included several “Satellite” picks, some of them low-volatility products covering Canada, the US, EAFE and Emerging Markets.

Our six panelists strive not to change  the “All-star” lineup too often, since the idea is to minimize turnover and taxes, while having low-cost portfolios that can be bought and held over the proverbial long run. Even so, each year there there are inevitably a few substitutions and replacements and this time around we modestly expanded the number of “All-Stars.”

BMO’s ETF Outlook 2016

Meanwhile on Friday, BMO Global Asset Management released its ETF Outlook 2016. It noted the ETF industry had another record-breaking year in 2015: globally it grew to more than US$2.9 trillion as of December 2015, with a record US$372 billion in new assets the last year.

The Canadian ETF industry also had an historic year, with a record $C16.3 billion in inflows, and assets hitting just under $C90 billion, which is twice as much as five years ago.

Market volatility and ETFs

The report reprises the market volatility of 2015, notable the China-centric selloff of August 24, the surprise non-hike of interest rates by the Fed on Sept. 16th, and its finally raising them by 25 basis points on December 16. And of course there was the continued slide in the price of oil, which hurts resource-based economies like Canada.

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Indexers are terrible at indexing

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Cartoon Humor Concept Illustration of Couch Potato Saying or Proverb

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

Despite all of the evidence that low-cost passive investing outperforms actively managed portfolios, many investors still cling to the belief that an active approach can help steer them through turbulent times in the market.

Even investors who have taken the plunge into index funds and ETFs can’t help themselves when faced with uncertainty. Emotions take over, as do our instincts to tinker with our investments to try and optimize performance.

Earlier this month, Dan Bortolotti updated the investment returns from the ever-popular Canadian Couch Potato model portfolios.

Despite Dan’s best efforts to explain that these new and simplified portfolios should be used as part of a long-term investment strategy, the overwhelming number of comments from readers suggests that it’s nearly impossible for indexers to simply set-it and forget it.

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FWB TV video: Can we expect lower returns in the future?

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Screen Shot 2016-01-18 at 2.07.41 PMThe latest FWB TV video is now up now here and at FWBSecurities.com, titled Can we expect lower returns in the future?.

As usual, it will also be housed at Findependence.TV.

The preamble to the 3.5-minute video observes that If you have invested for any length of time, you will have heard the expression “Past results are not an indication of future performance.” The best minds in the investment industry not only agree with that but some feel that in the coming years we should prepare ourselves for lower returns than we are used to.

The corollary to this is that If the markets are indeed prepared to not be as generous, then keeping fees as low as possible has never been more important. We need to keep as much of the overall return as possible. Continue Reading…

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…