Tag Archives: indexing

Peter Grandich interviews Paul Philip about his conversion to DFA’s strategic indexing

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Peter Grandich

Peter Grandich is a well-known financial and economic commentator and author, based in New Jersey. His fascinating story of financial success and setbacks and gradual transition to more spiritual matters can be found in his recent book, Confessions of a Wall Street Whiz Kid. ( I provided a testimonial.)  You can also get a free PDF version. Find out more at his website at PeterGrandich.com.

Paul Philip is a Toronto-based financial planner and head of Financial Wealth Builders Securities. I’ve known both gentlemen for years and can say they are intimately familiar with the concept of Findependence.

In the Q&A below, Peter asks Paul about his (that is, Paul’s) conversion from a belief in active security selection to strategic indexing via the index mutual funds of Dimensional Fund Advisors (DFA).

Yes, mutual funds, not ETFs. As you will see in the interview, the pair certainly sing the praises of this “best-kept secret” but I believe it’s in the best interests of consumers to learn about this firm and the advisors who are building practices sometimes exclusively around DFA index funds. I have in the past attended several all-day seminars presented by DFA Canada and personally own some of their funds (though not exclusively). Several other guest bloggers here at the Hub focus on DFA funds and Paul will be providing the Hub with a regular blog on these topics.  — Jonathan Chevreau

Peter:  Paul, what are your thoughts on investing in today’s uncertain times? Continue Reading…

Of harness racing and asset allocation

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Harness racing. Racing horses harnessed to lightweight strollers.
Harness racing: go Horse #5!

Here’s my latest MoneySense blog, which bears the headline When dividend investing trumps a balanced portfolio.

That’s an accurate depiction of the content but here at the Hub we’re sticking with the more offbeat headline used above. Because this column really does begin with a true story about harness racing in Florida.

How can that possibly relate to asset allocation and dividend investing? Click the above link to find out, or the Hub’s version below. And yes, the happy winner depicted below clutching a winning ticket is my wife, Ruth Snowden.

She’s known in her industry by that name. When we got married more than a quarter century ago she was concerned I might take offence that she didn’t want to use my surname in business circles. My response won’t surprise those who know us: “Honey, you can call yourself whatever you want as long as you pay half the mortgage!”. Of course, the mortgage has long been paid off, consistent with the Hub’s philosophy that “the foundation of Financial Independence is a paid-for home.” Continue Reading…

TSX celebrates 25th anniversary of the birth of ETFs

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TSX marks 25th anniversary of 1st ETF. L to R: Atul Tiwari, TSX’s Ungad Chadda, Pat Chiefalo, Mark Yamada. Photo by Jonathan Chevreau

By Jonathan Chevreau

Canada is home to the first ever ETF and today (Monday, March 9th) Exchange Traded Funds celebrated their 25th anniversary at their birthplace — in Toronto, Canada.

TIPs — Toronto 35 Index Participation Units — were the first ETFs in the world and were launched in 1990 by the Toronto Stock Exchange.

To celebrate the occasion, members of the Canadian ETF Association (CETFA) and some media and analysts (including myself) were on hand this morning to ring the bell to open the TSX. Other events are planned in 2015 to further celebrate this 25th anniversary of the ETF.

The ETF industry continues to grow in Canada and reached an all-time high of $86.1 billion in assets at the end of February, with inflows of approximately $2 billion in the first two months of 2015, according to CETFA. It says investors and advisors have embraced ETFs and their benefits, which include low cost and a range of investment options.

Nine providers offer 425 ETFs in domestic market

ETF-25Y-medallion-ROUND-ENNine providers in Canada currently offer almost 425 ETFs. “It’s been incredibly exciting to see the trajectory of ETFs, and their continued adoption in Canada, and globally,” said Atul Tiwari, managing director of Vanguard Investments Canada Inc. in a release.

He is also the incoming Chair of the CETFA (pictured on the far left of above photo.) “ETFs are a powerful tool that give investors low-cost, transparent access to markets with precision, the ETF is arguably the most disruptive innovation the fund industry has seen in decades. Whether its investors, advisors or large institutions, ETFs have really put everyone on the same playing field. ETFs have empowered us all to build portfolios that can truly reflect the unique goals and objectives of each investor.” Continue Reading…

How to overweight your portfolio for an oil comeback (and avoid Gambler’s Ruin)

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Oil pumps on sunset

By Jonathan Chevreau

Here’s my latest Motley Fool blog, entitled (nicely by them, I thought!) How to overweight your portfolio for an oil comeback — and avoid Gambler’s Ruin.

Gambler’s ruin is a phrase popularized by Rotman Business School finance professor Dr. Eric Kirzner and refers to having a good idea about a sector (example energy) but choosing the wrong individual stock to capitalize on it (example Enron back in the day or in the telecommunications sphere a stock like Nortel Networks). The risk reduction via diversification is the strength of specialized ETFs focused on particular sectors.

The piece explores the idea of whether Canadian investors already have sufficient exposure to oil and gas via ETFs or index mutual funds based on the broad indices.

Because the Motley Fool requires full disclosure of the individual holdings of the writer, those curious can see my personal holdings in the energy sector in the disclaimer at the end of the piece. As per the full article, there will of course be more exposure to the energy sector via the broad ETFs.

The trouble with core-and-explore

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Robb Engen, Boomer & Echo

By Robb Engen, Boomer & Echo

Special to the Financial Independence Hub

We all know how the story goes: You get a hot stock tip from your uncle who works in the oil & gas industry, or from your brother-in-law who works in the tech space, or from your mortgage broker (who’s an idiot).

I’m sorry, but just stop right there. No, Tiger Mike’s Drilling Co. is NOT going to be the next Suncor, and Flappy Bird (or whatever the kids are playing these days) is definitely not going to be the next Facebook or Instagram. And your mortgage broker is still an idiot, no matter what his day-trading recommendation was this time. So why are you listening to him?

Many investors obsess over fees, trying to shave tenths or even hundredths of a percentage from their mutual fund or ETF expenses. But some investors are willing to throw away those benefits by trying (and failing) to hit a home run picking junior mining stocks on the Venture Exchange.

“Play money” doesn’t belong in your retirement plan

The problem with a core-and-explore approach is when investors view “explore” as play money to gamble on risky penny stocks or the next up-and-coming trend. Was it play money when you first decided to save instead of spend your hard-earned dollars? Why is it different now that the money is in your brokerage account?

Why take that kind of risk with your investments? If you feel like gambling, go to a casino. “Play money” does not belong in your retirement plan.

I get it – it can be fun to try and find the next Microsoft or Google from a list of up-and-comers. But the odds of that happening are overwhelmingly not in your favour.

There’s a reason why most “hot stock tip” stories end up as cautionary tales for investors. So why do we keep doing it?

Remember, you don’t need to swing for the fences when a base hit will do just fine.

In addition to running the Boomer & Echo website, Robb Engen is a fee-only financial planner. This article originally ran on his site [note the comments that follow it] and is republished here with his permission.