Canadian Political Events

Beyond Politics => General Discussion => Topic started by: msj on February 05, 2017, 12:16:39 pm

Title: Investment Culture
Post by: msj on February 05, 2017, 12:16:39 pm
I usually don't let politics or even ethics influence my investing but I will confess that I am feeling dirty right now.

With a Goldman Sachs guy standing over Trump's left shoulder the other day we have seen the gutting of the Dodd's -Frank Act.  https://www.theatlantic.com/business/archive/2017/02/trump-dodd-frank/515646/

Not that I'm necessarily a fan of the act but this is a thread about investing.

The reason I feel dirty is because I have been profiting off of Trump.

I own XLF with 10% of its holdings in JP Morgan and 3% in the devil, er, I mean Goldman Sachs.

At any rate, I have been slowly moving my US positions to cash and I am now thinking this:

Since the US is clearly moving from a developed nation with respect for law and order for all, to a developing nation / banana republic status would I not be better off to simply move my US investments into cheaper emerging market investments?

But if the EM do turn out to be the better performing invesments over the next 10 or 15 years then was it because of the changing political climates or because they were the cheaper invesments.

Meh, whatever.  Think I will buy some cigarrette peddlers instead. 

With this BS preamble now over, what are you investing in?
Title: Re: Investments
Post by: dia on February 05, 2017, 12:28:57 pm


At any rate, I have been slowly moving my US positions to cash and I am now thinking this:

Since the US is clearly moving from a developed nation with respect for law and order for all, to a developing nation / banana republic status would I not be better off to simply move my US investments into cheaper emerging market investments?


My income is such that I invest in my mortgage and food, plus transit to get to work.   But for you who know what you are talking about, the Mexican peso might be worthwhile:  https://www.fxstreet.com/news/usd-mxn-mexican-peso-rises-to-the-highest-since-december-201702021938

Help Mexico resist Trump, and make money at the same time.  Win/Win, right?   :)

(Yeah, you are no doubt ROFL'ing at my investment advice)
Title: Re: Investments
Post by: msj on February 05, 2017, 01:09:40 pm
I do have Mexico on my watchlist. EWW is an ETF that invests in Mexico: https://www.ishares.com/us/products/239670/ishares-msci-mexico-capped-etf

Currency investing is not my thing but if this goes cheapish then I will begin to accumulate. 

Title: Re: Investments
Post by: msj on February 05, 2017, 03:22:44 pm
I will mention TimeWarner.

Back in October (I think) AT&T indicated they wanted to buy TWX for $107.50.

So, I picked up some shares at $87 after thinking things through.

As the stock went up I decided to raise a stop limit.

Sure enough, I raised my limit to $96 and the price fell below that so my shares were sold -10% profit in 3 months. 

This is one of those stocks where politics plays a role: will the regulators allow AT&T to buy out TWX?

CNN is owned by TWX so how does that play out with Trump?

I can see it selling, or not, under many different scenarios.

But it is one invesment that is out there for the picking.
Title: Re: Investments
Post by: cybercoma on February 05, 2017, 03:43:25 pm
Investments!? Let the bourgeois parasites raise their own damn money.
Title: Re: Investments
Post by: SirJohn on February 05, 2017, 06:43:04 pm
I usually don't let politics or even ethics influence my investing but I will confess that I am feeling dirty right now.

With a Goldman Sachs guy standing over Trump's left shoulder the other day we have seen the gutting of the Dodd's -Frank Act.  https://www.theatlantic.com/business/archive/2017/02/trump-dodd-frank/515646/
Not that I'm necessarily a fan of the act but this is a thread about investing.
The reason I feel dirty is because I have been profiting off of Trump.
I own XLF with 10% of its holdings in JP Morgan and 3% in the devil, er, I mean Goldman Sachs.

I'll do you better. I own actual stock in Goldman Sachs, along with Bank of America and JP Morgan. I admit that I've been moving money into relatively secure areas like real estate investment trusts and Canadian restaurant investment trusts like A&W and Pizza Pizza over the past month as the instability of the Trump government becomes more obvious. There is no way of knowing when he'll do something like attack Iran or North Korea, which makes me consider getting out of the market entirely. On the other hand, there's no other game in town. You can't even make enough on bonds to cover inflation, assuming bonds don't lose value,  and standing on the sidelines out of fear of something happening isn't my  thing.
Title: Re: Investments
Post by: msj on February 08, 2017, 11:20:33 pm
Trump tweets to whine about Nordstrom dropping Ivanka's fashion line (and the. retweets it usong the POTUS account which should be an impeachable offence) and the stock drops 2% before going up 4%.

Ugh. I cannot stand Trump and all his BS.

Leave the market alone, do your fucking job, and stop giving the graft to US taxpayers.

The markets will thank you for this. 
Title: Re: Investments
Post by: BC_cheque on February 09, 2017, 12:42:25 am
I'll do you better. I own actual stock in Goldman Sachs, along with Bank of America and JP Morgan. I admit that I've been moving money into relatively secure areas like real estate investment trusts and Canadian restaurant investment trusts like A&W and Pizza Pizza over the past month as the instability of the Trump government becomes more obvious. There is no way of knowing when he'll do something like attack Iran or North Korea, which makes me consider getting out of the market entirely. On the other hand, there's no other game in town. You can't even make enough on bonds to cover inflation, assuming bonds don't lose value,  and standing on the sidelines out of fear of something happening isn't my  thing.

I don't claim to know who you are... but if you are who I think you are, didn't you make a boatload of money from Brexit?  Granted the referendum had an actual date, but this is Trump we're talking about and he's surrounded by deregulating republicans and war-mongers. 

It's not really an if, it's a when. 

I was gonna invest in WEED but seeing JT's promise-keeping, that's looking like a bad decision too.  Sad! (as trump would say)

Startups in renewable energy.  That's where the smart money is right now.  Trump-proof and depending on the company you can get CRCE tax credits.

ETA - without giving away too much information, let's say I've had clients in the industry and I've seen their company performances and who their investors are.  This is the future folks.
Title: Re: Investments
Post by: DuckFace on February 09, 2017, 10:38:22 pm
It would seem like a pretty safe bet to invest money into businesses directly linked to the higher ups in Trump's cabinet.  I would think Goldman Sachs is the safest bet in the world right now.

That said, I try not to invest in individual stocks since I'm not smart enough nor have the time to try and beat the market.
Title: Re: Investments
Post by: wilber on February 10, 2017, 12:05:14 am
It would seem like a pretty safe bet to invest money into businesses directly linked to the higher ups in Trump's cabinet.  I would think Goldman Sachs is the safest bet in the world right now.

That said, I try not to invest in individual stocks since I'm not smart enough nor have the time to try and beat the market.

Hard to say, Nordstrom closed up three bucks after the Trump tweet. His policies will probably be good for some sectors while getting trashed by him may become a badge of honour for some others.
Title: Re: Investments
Post by: msj on February 10, 2017, 12:58:52 am
This tool: http://etfdb.com/tool/etf-stock-exposure-tool/

I use this from time to time.

When I am too chicken to buy a single stock but want exposure to it and others like it.






Title: Re: Investments
Post by: Manob on February 10, 2017, 02:00:11 am
I am sticking with the same old, about 60% in the S&P500, 30% in other ETFs that track major markets around the world, and 10% random stocks and options that I pick for fun and learning.
Title: Re: Investments
Post by: SuperColinBlow on February 10, 2017, 03:54:52 pm
I used to own about 15 shares of Lockheed-Martin.  I sold out around $90.  Imagine my embarrassment now.
Title: Re: Investments
Post by: msj on February 11, 2017, 10:39:29 am
Startups in renewable energy.  That's where the smart money is right now.  Trump-proof and depending on the company you can get CRCE tax credits.

ETA - without giving away too much information, let's say I've had clients in the industry and I've seen their company performances and who their investors are.  This is the future folks.

Maybe.

I think you are just one of those extreme "regression to the mean" types.

TAN, a solar/renewable energy ETF, is down over 90% since April, 2008. $10,000 invested then would be worth about $900 today.

The S&P 500?  $10,000 then would be worth over $20,000 today (plus dividends).

TAN may revert to the mean and become great again.

But most people do not have the stomach for it.

Reminds me of the URA ETF (uranium companies): classic definition of - what is a 90% loss? When an investment drops 80% and then goes down another 50%. [For a 90% total decrease - $100 to $20 is 80% then from $20 to $10 is another 50%]. 

I invested at the $20 point and it dropped to the equivalent of $10 and now is back to about $13 or so.

Regression to the mean, if/when it happens, can take a long time.

Title: Re: Investments
Post by: SirJohn on February 11, 2017, 12:16:19 pm
Sometimes when investing or saving comes up in the conversation with people I know I am amazed at how little familiarity they have with anything related to it. For example, a friend mentioned giving money to his RRSP. I asked, what is it in? He answered, his RRSP. But what is in the RRSP, I asked. He seemed confused. He's not alone. A surprising number of people seem to think an RRSP is some kind of savings investment. It's just an account. You can put money into it, or mutual funds (if you're an idiot) or ETFs or stocks or just about anything.

If you go to a bank, like most Canadians, and ask them to set up an RRSP they will almost certainly set one up with their own mutual funds, and your donations every month or once a year, will automatically go into those mutual funds. Banks love mutual funds. They get a huge share of any profit, but take no risks. Canadians pay higher mutual fund fees than anyone on Earth, way higher. That's partly why the banks are so rich. Never let a bank set up your RRSP without clear instructions on where your money goes, instructions based on the advice of someone whose own self interest isn't impacted by the decisions you make.
Title: Re: Investments
Post by: wilber on February 11, 2017, 02:11:13 pm
We use a financial advisor with an investment company that doesn't have any of its own products or invest in the market itself. Our advisor doesn't buy or sell anything without discussing it with us first. In spite of today's interest rates, at our age protecting capital is #1 so we try to keep our portfolio totals at around 35% or a bit less equities and the rest in GIC's and bonds. We have a bit in a couple of ETF's but except for a few capital gains plays, the rest of our equities are dividend paying individual stocks.

One thing we do is max out our TFSA's every year.
Title: Re: Investments
Post by: SirJohn on February 11, 2017, 04:24:01 pm
We use a financial advisor with an investment company that doesn't have any of its own products or invest in the market itself. Our advisor doesn't buy or sell anything without discussing it with us first. In spite of today's interest rates, at our age protecting capital is #1 so we try to keep our portfolio totals at around 35% or a bit less equities and the rest in GIC's and bonds. We have a bit in a couple of ETF's but except for a few capital gains plays, the rest of our equities are dividend paying individual stocks.

One thing we do is max out our TFSA's every year.

I know that for the longest time the suggested ratio was about 30-40% stocks, and the rest in bonds when you were older. But I don't know that this still holds given the absurdly low rates you get from bonds, and the way bonds have been falling in the face of rising interest rates.
Title: Re: Investments
Post by: wilber on February 11, 2017, 04:58:12 pm
I know that for the longest time the suggested ratio was about 30-40% stocks, and the rest in bonds when you were older. But I don't know that this still holds given the absurdly low rates you get from bonds, and the way bonds have been falling in the face of rising interest rates.

It depends on your risk tolerance and how much cash flow you need. I look for solid companies that pay a decent dividend when I buy stocks. A capital gain is nice but you have to sell to get it and then you are faced with buying something to replace it. I don't sell unless there is a good reason to. With bonds it depends on how much you pay for one and its yield. I look at bonds as income generators, not investments. I will get face value when it matures, so how much is it going to give me in the mean time.

I've been told interest rates are going to rise for at least ten years now and the opposite has happened. I'll probably be dead before they start rising. It depends on where you are in life.
Title: Re: Investments
Post by: msj on February 11, 2017, 05:18:48 pm
Don't know what I will be like when I'm retired.

For now I tend to be all stocks except for now as I have moved to some cash as Imthink things through.

My philosophy for when I'm retired, at least what I think it will be, is this:

Move 5 years worth of living expenses to GIC ladders, conservative corporate bonds,  preferred shares, other conservative/ liquid investments.

Keep the rest in stocks and rotate stocks out each year to maintain the 5 year buffer.

Should be as simple as that but will see in time.



Title: Re: Investments
Post by: SirJohn on February 12, 2017, 10:25:13 am
It depends on your risk tolerance and how much cash flow you need. I look for solid companies that pay a decent dividend when I buy stocks. A capital gain is nice but you have to sell to get it and then you are faced with buying something to replace it.

I don't mind capital gains if they're in my RRSP or TFSA, both of which are maxed out. I am a lousy investor because I lack patience. I trade too much, and have lately realized that my nod to risk has been to buy smaller amounts in each company. That was costing since I had almost forty stocks. I've been paring that down and aiming to own no more than 25. I try to find dividend paying companies which have a long history of steady rises. Then I if I start to get bothered by the fact it's down 6-8% I can reassure myself that this stock has made money every year for the last 5-10 years without fail, and hope that gives me more patience. So far it seems to be working. I mix in these largely unexciting companies (A&W, Pizza-Pizza, Chartwell Retirement, Visa, Fortis, TD, with more reliable tech names like Apple, Google and Facebook and a few cutting edge ones like Shopify, Nvidea and Kinaxis.
Title: Re: Investments
Post by: msj on February 12, 2017, 10:54:11 am
The problem with capital gains in an RRSP is that you will eventual pay tax on those at full tax rates.

In a TFSA there is not tax on it.

In a non-reg account you pay tax now but on only half the gain. 

Title: Re: Investments
Post by: SirJohn on February 12, 2017, 11:32:48 am
The problem with capital gains in an RRSP is that you will eventual pay tax on those at full tax rates.

There is that, but I don't think I'll be in the same tax bracket as I am now (the highest) when I have to pay that tax. I do put my biggest growth names into my TFSA, but keep my dividend payers in my non-registered account.
Title: Re: Investments
Post by: msj on February 12, 2017, 07:06:29 pm
Generally speaking:

Foreign income should be earned in RRSP's so that no foreign withholding tax is withheld (assuming tax treaty in place which is usually the case). 

Interest bearing in RRSP's and TFSA's since it would be taxed at full tax rates anyway.

Eligible dividends ( dividends from most public CDN companies) ideally are earned in non-reg accounts (but depends...).

Cap gains earned in non-reg accounts too since inclusion rate is only 50%.

But all of that assumes a person is paying tax at high marginal tax rates, has fully loaded RRSP's and TFSA's, and still has excess savings to invest in non-reg accounts.

And the person wants to invest in interest bearing and/or Cdn dividend investments.

So we are talking about 5% or so of the population, if that.
Title: Re: Investments
Post by: wilber on February 12, 2017, 07:13:49 pm
There is that, but I don't think I'll be in the same tax bracket as I am now (the highest) when I have to pay that tax. I do put my biggest growth names into my TFSA, but keep my dividend payers in my non-registered account.

Interesting that. My wife thought the same thing but with income splitting, she wound up in a higher bracket after she retired and converted her RRSP to a RRIF. Because of that she has been taking out the minimum every year, but in those four years the thing has still grown by over 20%, in spite of her making the minimum withdrawals. Before someone says cry me a river, I realize it is a good place to be but she would have been better off contributing to a TFSA all those years, had they existed.
Title: Re: Investments
Post by: msj on February 18, 2017, 11:35:05 am
Without any identification, what do you think of this plain, simple, chart?

Is that change in 2014/2015 an indication that it will revert to the mean and break the trendline to go up?

Or am I being too optimistic and this is just a blip for a long term downward trend?


Will provide more details later....

[attachment deleted by admin]
Title: Re: Investments
Post by: SirJohn on February 18, 2017, 11:38:37 am
I'd need to know what caused the multi-year fall, and what changed, as well as whether the uptrend continued through 2016.
Title: Re: Investments
Post by: cybercoma on February 18, 2017, 12:46:35 pm
You've got to say that as a rule something that's been failing for a decade is going to continue to fail unless there's a drastic change.
Title: Re: Investments
Post by: ?Impact on February 18, 2017, 02:26:36 pm
Without any identification, what do you think of this plain, simple, chart?

Not sure, it it related to an investment or crime?
Title: Re: Investments
Post by: Manob on February 21, 2017, 06:02:33 pm
Without any identification, what do you think of this plain, simple, chart?

Is that change in 2014/2015 an indication that it will revert to the mean and break the trendline to go up?

Or am I being too optimistic and this is just a blip for a long term downward trend?


Will provide more details later....

Much like previous flips of a coin have no effect on the outcome of subsequent ones, the previous prices on a chart have no effect on the future ones.

Any correlations that can be found in decades long data sets between certain "technical" features of price action and what follows are results of data drudging.
Title: Re: Investments
Post by: msj on February 26, 2017, 11:30:31 am
Yes, the graph is not of a stock but of the violent crime rate over the past ten years.

The graph has little to no predictive value, imo.

At best, one can say that the downward trend has broken in 2014/2015. Which is visually true.

But that may be a blip which tells nothing of the future. 

Knowing other information such as demographic, economic, etc.... may help us think we can project the future trajectory of the trend line but we will probably only really begin to understand any correlations or causes years later.

The same principles hold for looking at stock charts.

Sure we have moving averages, RSI, advance/decline lines etc, but while price may have some "memory" the underlying trend will always regress to the fundamentals.

Not to say that some people cannot do well with technical analsyis and trading. But sometimes a big deal is made out of small countertrends which may be a fluke rather than any substantive change to the underlying secular trend. 

IOW, violent crime in the US could, ironically, roar back to the good old days when the country was more violent. 

Or this could be a dead cat bounce which will turn over and fall/flatline into the future.

[attachment deleted by admin]
Title: Re: Investments
Post by: msj on February 26, 2017, 11:39:28 am
I will add this as a counter/pro point to my post above:  http://thereformedbroker.com/2016/08/30/everyone-is-a-closet-technician-2/

Title: Re: Investments
Post by: eyeball on February 26, 2017, 03:25:24 pm
I usually don't let politics or even ethics influence my investing but I will confess that I am feeling dirty right now.

With a Goldman Sachs guy standing over Trump's left shoulder the other day we have seen the gutting of the Dodd's -Frank Act.  https://www.theatlantic.com/business/archive/2017/02/trump-dodd-frank/515646/

Not that I'm necessarily a fan of the act but this is a thread about investing.

The reason I feel dirty is because I have been profiting off of Trump.

I own XLF with 10% of its holdings in JP Morgan and 3% in the devil, er, I mean Goldman Sachs.

At any rate, I have been slowly moving my US positions to cash and I am now thinking this:

Since the US is clearly moving from a developed nation with respect for law and order for all, to a developing nation / banana republic status would I not be better off to simply move my US investments into cheaper emerging market investments?

But if the EM do turn out to be the better performing invesments over the next 10 or 15 years then was it because of the changing political climates or because they were the cheaper invesments.

Meh, whatever.  Think I will buy some cigarrette peddlers instead. 

With this BS preamble now over, what are you investing in?
A political party that's willing to tax the snot out of you and your filthy investments.

Nothing personal.

Sent from my E6560T using Tapatalk

Title: Re: Investments
Post by: msj on February 26, 2017, 07:15:05 pm
A political party that's willing to tax the snot out of you and your filthy investments.

Nothing personal.

Sent from my E6560T using Tapatalk

I agree.  I hope Trudeau raises the capital inclusion rate from 50% to 75%.

With RRSP's and TFSA's and the qualifies small business rules and the qualifies family farm rules and qualifies fish rules etc there is no reason for capital gains to be taxed at a higher rate within non-registered accounts.

Only reason I'm okay with 75% rather than 100% inclusion is because an argument can be made for inflation (when inflation becomes a factor again).

 I do not buy into the risk must be subsidized by the government BS. Risk should be taken for its expected reward not because the government is going to give a tremendous tax break for it. 
Title: Re: Investments
Post by: SirJohn on March 11, 2017, 10:05:27 am
Something all people hoping to save for their retirement should read and understand. Banks are not your friend, and neither are most of the 'advisers' you pay.

Louise has been with her adviser for 10 years and has had a net return on her investments of only $1,500 after paying fees of $25,000 (about 2.5 per cent annually), Mr. Miszk says. “Unfortunately, this situation is all too common in Canada.”

http://www.theglobeandmail.com/globe-investor/retirement/retire-planning/artists-portfolio-performance-leaves-little-to-small-about/article34270203/ (http://www.theglobeandmail.com/globe-investor/retirement/retire-planning/artists-portfolio-performance-leaves-little-to-small-about/article34270203/)
Title: Re: Investments
Post by: SirJohn on March 11, 2017, 10:07:37 am
I agree.  I hope Trudeau raises the capital inclusion rate from 50% to 75%.

Why? You're hoping to drive high tech companies out of Canada? You realize the inevitable result will be a stampede of people out of investments in small, fast growing technology companies and into dividend paying stocks from the banks, insurance companies, pipelines and telcos, right?
Title: Re: Investments
Post by: msj on March 11, 2017, 10:51:30 am
Nonsense.

The qualified small business shares capital gains deduction is there to shelter gains for the tech entrepreneurs and other businesses. 

I have had some of these as clients and they never even considered the tax rates on their startups until the day after they sold.

Even then, they didn't whine.

As for the rest of us, in an age of $52,000+ in TFSA room and RRSP's the question is: why not a higher inclusion rate?

It will effect few people (so not many to vote against this) while raising proportionately lots of tax revenue.


 


Title: Re: Investments
Post by: SirJohn on March 11, 2017, 11:19:42 am
Nonsense.

The qualified small business shares capital gains deduction is there to shelter gains for the tech entrepreneurs and other businesses. 

I'm talking about people like me who buy stock in companies like Shopify, Kinaxis, Enghouse, and other non-tech names like Spin Master or Savaria, Grande West Transport, or CRH Medical. What happens to their stock the day after this goes into effect?

Quote
As for the rest of us, in an age of $52,000+ in TFSA room and RRSP's the question is: why not a higher inclusion rate?

Most people don't start seriously saving until their mid to late thirties. And most people don't earn enough to collect a huge amount of money in their RRSP given the allowable contribution levels. I have been seriously saving for about fourteen years now. My RRSP contribution level was quickly maxed out because my earnings in much of my life were very low. If I'm to save enough for retirement there simply is not enough room in my RRSP or TFSA.
Title: Re: Investments
Post by: msj on March 11, 2017, 10:18:04 pm
I'm talking about people like me who buy stock in companies like Shopify, Kinaxis, Enghouse, and other non-tech names like Spin Master or Savaria, Grande West Transport, or CRH Medical. What happens to their stock the day after this goes into effect?

I doubt it would have any measurable effect.

What would you do? All of a sudden sell and trigger tax because the tax rate went up?

Then buy a bond in a rising interest rate environment?

Definition of dumb is letting taxes influence investment decisions.


Quote
Most people don't start seriously saving until their mid to late thirties. And most people don't earn enough to collect a huge amount of money in their RRSP given the allowable contribution levels. I have been seriously saving for about fourteen years now. My RRSP contribution level was quickly maxed out because my earnings in much of my life were very low. If I'm to save enough for retirement there simply is not enough room in my RRSP or TFSA.

Most people don't have non-registered investments since if they will save anything it will be to own a house first (gains exempt thanks to PR exemption), then TFSA's second (unless they are in a higher tax bracket), RRSP's third and finally non-registered last. 

Why investors need a tax subsidy for taking risk has never been a compelling argument to me.

Particularly as a guy who is almost always all in stocks at all times - volatility is why I make more than those putting money into GIC's. If I want to defer tax then I will use my RSP. If I want to save tax I will use my TFSA.

There is no reason to subsidize capital gain returns other than, perhaps, with the inflation argument.

Even that is a weak argument.
Title: Re: Investments
Post by: SirJohn on March 12, 2017, 11:23:18 am
I doubt it would have any measurable effect.

I'll put that up there with "The budget will balance itself"

Quote
What would you do? All of a sudden sell and trigger tax because the tax rate went up?

People who invest in stocks which have no dividends do so in hopes of it going up so they get capital gains. If the taxes rise drastically on those capital gains people are going to stop buying these kinds of stock, which in turn will slow their upward growth. When combined with increased taxes this is something which builds on itself towards a continuing downward momentum. People will dump them in favor of dividend stocks.
 
Quote
Why investors need a tax subsidy for taking risk has never been a compelling argument to me.

Because government is trying to encourage people to put some of what disposable income they have left after their income has already been heavily taxed into savings rather than going down south for a nice warm holiday? Because international investors will flee in droves to other jurisdictions, like the US, where tax on investments will be so much lower?
Title: Re: Investments
Post by: msj on March 12, 2017, 01:20:05 pm
I'll put that up there with "The budget will balance itself"

 

So you think there are enough Canadians in numbers and volume with stocks in non-registered accounts *and* they are stupid enough to allow tax rates drive their decisions, who can move markets?

Really? You have any idea how small Canada is compared to world markets?

Now only consider Canadian non-registered accounts which is a fraction of Canadians total savings.

As I tell my wife: there will be no movement here.

Quote
People who invest in stocks which have no dividends do so in hopes of it going up so they get capital gains. If the taxes rise drastically on those capital gains people are going to stop buying these kinds of stock, which in turn will slow their upward growth. When combined with increased taxes this is something which builds on itself towards a continuing downward momentum. People will dump them in favor of dividend stocks.
 

People invest to earn a return.

If they earn it on their RRSP then they will eventually pay tax on it at the same marginal tax rate no matter the source (i.e. whatever tax bracket their income falls into).

If they earn it in a TFSA then they will pay no further tax on it since the principal they contrbuted to theirmTFSA is already after-tax dollars.

If they earn it in a non-registered account then they can pay tax at up to 48% for interest, wages, foreign income; about 31/41% on CDN dividends, and up to 24% for capital gains.

It is doubtful moving that top rate up from 24% to 36% on caital gains will have a meaningful effect on the markets.


My points:

1) Most people are invested in RRSP/TFSA's (well, besides their home which is tax exempt)
2) There is no need to give capital gains a tax subsidy because
3) if you want a tax break then either defer taxes in your RRSP and/or save taxes in your TFSA because
4) The vast majority of Canadians do not owe those who choose and/or can afford to save above and beyond tax shelters (RRSP/TFSAa) anything. 


Quote
Because government is trying to encourage people to put some of what disposable income they have left after their income has already been heavily taxed into savings rather than going down south for a nice warm holiday? Because international investors will flee in droves to other jurisdictions, like the US, where tax on investments will be so much lower?


This makes no sense.

TFSA's and RRSP's are underutilized by the majority of CDNs because most people can do little more than make their mortgage payments and buy groceries. 

How people choose to save is already incentivized with RRSP's and TFSA's and there is no need for further tax subsidies that, at best, benefit 1 or 2% of the population on a regular basis and maybe 20% on an occasional basis (because they sell a cottage and don't shelter it with the principal residence exemption, for example).

Raising the capital gain inclusion rate will benefit the majority of Canadians because it can ease their tax burden.

Also, you think that a US investor who is buying a CDN stock is going to pay tax the way we do in Canada?

Ever hear of tax treaties?

How much capital gain/loss Canada decides should be included in incomes to be taxed will have little to no effect on foreigners decision to invest here.

Maybe on the real estate side with taxable Canadian property but again one is only taxed on the gain when one sells so other factors such as rate of return on the rental and having a reliable legal system that respects property rights are more important.

Title: Re: Investments
Post by: SirJohn on March 12, 2017, 02:32:37 pm
So you think there are enough Canadians in numbers and volume with stocks in non-registered accounts *and* they are stupid enough to allow tax rates drive their decisions, who can move markets?

Really? You have any idea how small Canada is compared to world markets?

Yeah, you have any idea how small many of these stocks are and how easily they can be moved by people selling? You have any idea what market sentiment is like when momentum moves up or down? TD, one of the biggest, most widely held banks in Canada dropped over 5% Friday because of a CBC report that some tellers were pressured into deceptive practices. No one actually thinks this will have any impact on the profits of that bank, but it doesn't matter. You had people bailing in anticipation of other people bailing in fear of some sort of investigation.

Now consider most stocks are far smaller than them.

But I do congratulate you on having the mentality of the Canadian Left. All the money people earn belongs to the government to be redistributed. Any they are permitted to keep to use as they see fit is the government being generous to them at the expense of others who don't earn (or pay) as much.

And in this case, if the government only taxes them once on earnings and then half again on the investments they make off what remains, that is the government being outrageously generous. Why, there are so many freeloading leaches who need that money! Tax it! Tax it!
 
Title: Re: Investments
Post by: msj on March 12, 2017, 11:00:00 pm
Yeah, you have any idea how small many of these stocks are and how easily they can be moved by people selling? You have any idea what market sentiment is like when momentum moves up or down? TD, one of the biggest, most widely held banks in Canada dropped over 5% Friday because of a CBC report that some tellers were pressured into deceptive practices. No one actually thinks this will have any impact on the profits of that bank, but it doesn't matter. You had people bailing in anticipation of other people bailing in fear of some sort of investigation.

As Benjamin Graham said: in the short run the market is a voting machine; in the long run it's a weighing machine.

I do not concern myself with the idiotic day to day changes in the market because those are based on noise and emotions and, oh, look, the guy on the tee vee said it's a dead cat bounce so lets sell the market short....

Sure, the market will have a little freakout. Then it will get back to normal as people realize that rationally it still makes sense to make money since taxes are a fraction of the income and if the fundamentals of the investment is sound then, meh, whatever, in the long run the invesment should generate a satisfactory return, or not, regardless of tax shenanigans.

Of course active traders will not be happy but most of them are freeloading tax evaders anyway so screw them.*

Quote

Now consider most stocks are far smaller than them.


Again, Canada is a small market, the raise in the inclusion rate would only effect Canadians with non-registered accounts and only when they sell.


Quote

But I do congratulate you on having the mentality of the Canadian Left. All the money people earn belongs to the government to be redistributed. Any they are permitted to keep to use as they see fit is the government being generous to them at the expense of others who don't earn (or pay) as much.

It is a matter of taxing income in a similar fashion.

Dividends are taxed at lower rates (personally) than wages/interest because of tax integration: since the CDN corp pays income taxes on the income then used to pay the taxable dividend to the individual shareholder the shareholder pays a lower rate.

Since the corp deducts interest and wages against income and saves corp taxes the individual pays a full rate of tax on wages and the bondholder on interest earned through a non-registered account.

But capital gains?  For some reason this deserves a tax subsidy because people are taking a risk and there may be an inflation component to capital gains.

Nevermind the fact that the investor should be taking those into consideration prior to investing, but, oh no, the taxpayers must incentivize the stock investor by giving them a tax break of 50%.

Utter BS.

Quote

And in this case, if the government only taxes them once on earnings and then half again on the investments they make off what remains, that is the government being outrageously generous. Why, there are so many freeloading leaches who need that money! Tax it! Tax it!


You do realize that it is only gains that get taxed right?

I sell my time as labour and I pay tax.

I buy a bond and get my coupon then I pay tax on the income earned and on any gain if, say, interest rates fall so I sell my bond for more than I paid for it.

I buy a stock low, earn a dividend, and then sell it high: only taxed on the dividend income and the increase in value of the stock and not taxed on the original principal.

None of this "taxed again" BS.

If you don't understand how principal works as the cost base for an investment then there is little point continuing this discussion.

--------------------------
* Lets talk of freeloaders: if one actively trades an account, and especially if one is a Bay Street broker, then your non-registered (and even registered accounts) are considered business income.

This means the AT (active trader) is supposed to pay tax on 100% of the gains.

In the past few AT's did this and got away with it. 

Now? Not so much as the government gets reports to help it weed put these tax evaders and make them pay tax.

From this point of view, raising the inclusion rate to 75% is helpful as it brings these leaches closer to the taxes that they should be payng even if they manage to slip through the review/audit net that is being implemented to catch them.

Ordinary Canadians should cheer this as it will help keep their taxes lower.

__________________________________

And, with this, I will pickup my award for single longets post on this forum to date (at least until Rue finds this forum).
Title: Re: Investments
Post by: wilber on March 13, 2017, 12:00:00 am
The way he is slashing regulations and oversight, I think the Trumpster is setting us up for another 2008.  I will be reducing my equity exposure over the next couple of years regardless of crappy interest rates.
Title: Re: Investments
Post by: Omni on March 13, 2017, 12:16:28 am
The way he is slashing regulations and oversight, I think the Trumpster is setting us up for another 2008.  I will be reducing my eqityexposure over the next couple of years regardless of crappy interest rates.

Not to mention "yuuuge" infrastructure spending and slashing corporate tax rates. I guess Trump is hoping those interest rates stay crappy or the deficits will become even "yuuuger".
Title: Re: Investments
Post by: msj on March 13, 2017, 12:23:18 am
With my post at 11:00:00 and wilbers at 12:00:00 I think we should try and time the market....
Title: Re: Investments
Post by: cybercoma on March 13, 2017, 06:41:38 am
And, with this, I will pickup my award for single longets post on this forum to date (at least until Rue finds this forum).
I added it to the bottom of your post. :)
Title: Re: Investments
Post by: SirJohn on March 13, 2017, 12:20:37 pm
Sure, the market will have a little freakout.

Wait, what? You said there would be NO MOVEMENT.

Quote
Then it will get back to normal as people realize that rationally it still makes sense to make money since taxes are a fraction of the income

Well... yeah 99/100 is, I suppose a 'fraction' of the income. You seem to be taking the position, here and in previous posts, that taxation is of no interest to an investor, which is patently insane. Over a long term basis the stock market return averages out to about 7% per year.
Now you want to increase the tax rate from 50% to 100%, or in other words, instead of paying about 25% of that gain in taxes, I'd be paying 50% in capital gains. That CLEARLY has a huge impact on my gains. On $1000 gain it means I actually make $500 instead of $750.

And you pretend that's immaterial and no investor should care!?


Quote
Dividends are taxed at lower rates (personally) than wages/interest because of tax integration: since the CDN corp pays income taxes on the income then used to pay the taxable dividend to the individual shareholder the shareholder pays a lower rate.

And I pay income taxes on my primary income. And then take a portion of what is left over - that already taxed money - to invest in the market.


Quote
But capital gains?  For some reason this deserves a tax subsidy because people are taking a risk and there may be an inflation component to capital gains.

It's recognition that that money has already been taxed, and that in most cases, people are saving for their retirement, which is something to be encouraged.


Quote
Ordinary Canadians should cheer this as it will help keep their taxes lower.

Well, given my taxes are at about 53% - not counting municipal taxes and things like the HST or gas taxes, I'd certainly welcome that. But of course, this will simply increase taxes on me to the benefit of those 'ordinary Canadians' who I gather you think are the ones who pay no taxes but enjoy all the benefits of life in Canada.
Title: Re: Investments
Post by: msj on March 13, 2017, 02:43:57 pm
Wait, what? You said there would be NO MOVEMENT.


If you understand what the Benjamin Graham quote means then you understand what I mean: in the short run the market movea due to emotional reactions while in the long run it will be largely meaningless.

Quote

Well... yeah 99/100 is, I suppose a 'fraction' of the income. You seem to be taking the position, here and in previous posts, that taxation is of no interest to an investor, which is patently insane. Over a long term basis the stock market return averages out to about 7% per year.
Now you want to increase the tax rate from 50% to 100%, or in other words, instead of paying about 25% of that gain in taxes, I'd be paying 50% in capital gains. That CLEARLY has a huge impact on my gains. On $1000 gain it means I actually make $500 instead of $750.

I do not see how you help your cause by exaggerating tax rates.

The top tax rate in BC is around 48%. 

High?

Yes, but not 99% so stop attempting to be hyperbolic because it looks like stupidity to me.

As for taxation on gains - yes, of course a higher rate will effect the taxes.

But to claim that paying 48% on that 1% of interest being earned is going to affect your decision to try and make 7% from the stock market (where you currently pay 24% and perhaps will end up paying 36% if the inclusion rate was increased to 75%) is laughable.

Especially since the vast majority of people have their investments in RRSP's and TFSA accounts which would not be effected by this tax change.


Quote

And you pretend that's immaterial and no investor should care!?

To 95%+ of Canadians it will have little to no effect on them at all over the course of their entire lives since the majority will not have taxable capital gains since they have a tax free principal residence, a taxable RRSP account (upon withdrawal) and a tax free savings account.

Quote

And I pay income taxes on my primary income. And then take a portion of what is left over - that already taxed money - to invest in the market.

It's recognition that that money has already been taxed, and that in most cases, people are saving for their retirement, which is something to be encouraged.


BUT THE MONEY IS NOT GETTING TAXED AGAIN!

Honestly, this is one of the stupidest things I hear people say and it is extremely ignorant to say the least.

Think about it:

You make $1,500 and pay $500 in income tax.

So you have $1,000 that you then invest.

You buy ABC company for $1,000, earn a quarterly dividend of $50 and then sell the investment for $1,300.

You will pay tax on the $50 dividend and the $300 gain (gross - taxable $150 at the 50% inclusion rate). 

So, NO YOU ARE NOT PAYING TAX "AGAIN" ON THE $1,000 so stop being so god damned ignorant about it.

If you were getting taxed on it a "second" time then you would pay tax on the entire gain of $1,300.

BUT THAT IS NOT HOW IT WORKS.

If you ever did have a capital gain and ever did fill out your own tax return then you ought to know this.

Instead I think you live in the basement of your parents tax free principal residence.  ;D

As for saving for retirement: use RRSP's to defer tax and TFSA's to save tax (in the future).

Any other investment gains are fair game for the government to tax accordingly and my argument is that since we now have TFSA's to supplement RRSP's, capital gains should be taxed at a higher rate since the vast majority of Canadians can shelter them from tax using RRSP/TFSA tax shelters.
Title: Re: Investments
Post by: wilber on March 13, 2017, 08:58:34 pm
With my post at 11:00:00 and wilbers at 12:00:00 I think we should try and time the market....

 Having been through the tech bubble and 08, I'm at an age where protecting capital has to be my #1 priority.
Title: Re: Investments
Post by: SirJohn on March 15, 2017, 03:41:54 pm
If you understand what the Benjamin Graham quote means then you understand what I mean: in the short run the market movea due to emotional reactions while in the long run it will be largely meaningless.

In the LONG run everything is meaningless.

Quote
I do not see how you help your cause by exaggerating tax rates.

The top tax rate in BC is around 48%.

Why would I care what the top tax rate is in BC? It's 53% in Ontario

Quote
High?

Yes, but not 99% so stop attempting to be hyperbolic because it looks like stupidity to me.

I didn't say it was a 99% tax rate. I was pointing out that ANYTHING short of 100% is a 'fraction'. Sorry if it was too subtle for you.


Quote
But to claim that paying 48% on that 1% of interest being earned is going to affect your decision to try and make 7% from the stock market

It's 53% on each 1%. So if you earn 7% or say $7 the government will then tax away a major chunk of it, bringing you well below 7%

Quote
To 95%+ of Canadians it will have little to no effect on them at all over the course of their entire lives since the majority will not have taxable capital gains since they have a tax free principal residence, a taxable RRSP account (upon withdrawal) and a tax free savings account.

No, it will only impact the ones who pay all the bills, who are also the most mobile of Canadians and who will be looking south with ever more greedy eyes as the Americans lower their tax rates while we continue to raise ours higher and higher. Not that you're in that category, obviously, which is why all you can see is that other people are successful and want the government to give you their money.

Quote
You make $1,500 and pay $500 in income tax.

So you have $1,000 that you then invest.

No, if the government pays all my bills I have $1000 left over. Does the concept of having to pay for your own bills never enter your mind? Have you ever paid a bill, or is mom still taking care of you?

Most people struggle to save a sum of money they can use to invest in their retirement. The more the government steals from that investment - an investment which people use already taxed money for, risking it on the market - the less people have for their retirement. You losers all seem to take the attitude that people who invest in the stock market are rich. They're not.

Quote
Instead I think you live in the basement of your parents tax free principal residence.  ;D

Gee, someone who lived free in his parents basement would be eager to tax those who make money on the stock market, wouldn't he? He'd be clamoring for it, cheering it on, delighted at the thought the government would be taking more money away from people more successful than him, wouldn't he? Kinda like... you?
Title: Re: Investments
Post by: SirJohn on March 15, 2017, 04:56:32 pm
I think Joe Oliver makes an excellent case as to why raising capital gains taxes is a dumb idea.

Moving the inclusion rate from 50 per cent to 75 per cent on $25 billion in gains in 2014 would imply more than $3 billion in additional revenue to the federal government. However, estimates based on previous years’ returns are invariably inflated. The reason is that the tax is voluntary and is only triggered when assets are sold. A high rate produces a “lock-in effect” whereby taxpayers avoid selling assets to delay paying the elevated tax. They can also get creative in re-ordering their affairs to avoid the hit completely. Indeed, tax attorneys are already advertising their ability to create structures to achieve that result.

In the view of most economists, a capital gains tax will slow economic growth, reduce employment and cut take-home pay. Attractive investments may not be pursued because capital will be left in sub-optimal investments simply to avoid taxes. The result is distorted capital allocation and economic inefficiency. Higher taxes also reduce return on capital, discouraging investment. This is particularly true for manufacturers and risk-taking entrepreneurs, leading to diminished research and development, innovation and productivity improvement.


http://business.financialpost.com/fp-comment/joe-oliver-drunk-on-spending-the-liberal-governments-too-addled-to-see-the-idiocy-of-raising-capital-gains-taxes (http://business.financialpost.com/fp-comment/joe-oliver-drunk-on-spending-the-liberal-governments-too-addled-to-see-the-idiocy-of-raising-capital-gains-taxes)
Title: Re: Investments
Post by: msj on March 16, 2017, 12:35:02 am


Why would I care what the top tax rate is in BC? It's 53% in Ontario


Still much less than the stupid claim of "99/100."

Besides, less face reality, it's doubtful you pay more than the first federal tax bracket anyway.  :D

Quote

It's 53% on each 1%. So if you earn 7% or say $7 the government will then tax away a major chunk of it, bringing you well below 7%


No sh!t sherlock.

But you will still have much more in your pocket after tax if you pay 53% on 7% as compared to 53% on 1%.


Quote
No, it will only impact the ones who pay all the bills, who are also the most mobile of Canadians and who will be looking south with ever more greedy eyes as the Americans lower their tax rates while we continue to raise ours higher and higher. Not that you're in that category, obviously, which is why all you can see is that other people are successful and want the government to give you their money.

No, if the government pays all my bills I have $1000 left over. Does the concept of having to pay for your own bills never enter your mind? Have you ever paid a bill, or is mom still taking care of you?


Canadians are not going to leave because their capital gains are taxed a little bit more.

Leave the country and pay the departure tax on all those unrealized capital gains that are deemed to be disposed of?

Kinda stupid.

Quote

Most people struggle to save a sum of money they can use to invest in their retirement. The more the government steals from that investment - an investment which people use already taxed money for, risking it on the market - the less people have for their retirement. You losers all seem to take the attitude that people who invest in the stock market are rich. They're not.



Most Canadians struggle to save and do not have unrealized capital gains in nonregistered investments so they will be unaffected by any increase anyway.

When they do save they use tax shelters that give them tremendous tax benefits (RRSP and TFSA) so there is no need to provide yet another subsidy to the top 1 or 2%. 

Taxation is not theft: it is the price of civilization.  It keeps the streets safe and clean, transit running on time, police, fire and medical servcies operating well etc.... all of which are not just "gifts" that appear out of thin air for anyone to use. These are real services used and paid for by real taxpayers.


Quote

Gee, someone who lived free in his parents basement would be eager to tax those who make money on the stock market, wouldn't he? He'd be clamoring for it, cheering it on, delighted at the thought the government would be taking more money away from people more successful than him, wouldn't he? Kinda like... you?

I want tax fairness in Canada which means ending the tax subsidy of capital gains (or at least substantially reducing it).

Sure, it is unlikely to effect me much: I use TFSA's and RRSP's to my advantage along with my invesment in my accounting partnership which is incorporated (another method to defer tax). 

Even then, a tax increase for me isn't a big deal: I can afford it and it will likely lead to me either saving more (RRSP to defer a tax increase) or spending less on my foreign travels.

That is, the multiplier effect of giving tax breaks even to guys like me (top 2-3%) is likely less than 1 whereas giving a break to those in the next 10-15% is likely to help the economy with a multiplier effect greater than 1 which, in turn, helps me generate more business.

I know how my bread is buttered and it is not on the basis of false supply side trickle down Trumped up tax cut voodoo magic.  Just look at the failure of Kansas for the most recent proof of this. 
Title: Re: Investments
Post by: msj on March 16, 2017, 12:46:07 am
Now onto other things besides taxation of investments: Tesla.

Anyone else find it interesting that they are going to raise more capital (which should still end up getting burned through by Q3) by using an old SEC filing from 2016?

If they wanted to raise a lot more capital then they would have to file a new offering with the SEC which would lead to new disclosures based on more recent market conditions etc. Something they likely do not want to do as the cash burn rate is becoming self-evident to even regular folks with a passing interest like me.

I have no position in Tesla though I enjoy watching Musk and love the technology.

The thing about markets is that they can continue to go up for long periods of time before people realize it is too late and then there is the great gap down.

I hope this does not happen to Tesla but if it does I think it will lead to greater things for solar and electrical cars in the future (sort of how the crash in tech/internet companies in the early 2000's helped the internet become the ubiquitous beast it is today).

Sometimes destruction leads to great things.  No?

Title: Re: Investments
Post by: msj on March 16, 2017, 09:35:22 am
Canada Goose (a company that has been around since 1957 and for which I became aware of maybe 6 months ago - we west coasters live sheltered lives with no need for $1,000 goose down jackets) has made its IPO this morning.

Any buyers?

Not my thing.
Title: Re: Investments
Post by: cybercoma on March 16, 2017, 12:17:07 pm
I think Canada Goose has fallen out of fashion due to recent criticisms in the media. It's not something I would invest in. Frankly, I'm surprised anyone invests in fashion.
Title: Re: Investments
Post by: SirJohn on March 16, 2017, 03:14:43 pm
Still much less than the stupid claim of "99/100."

I never made that claim, as I've already explained. Apparently your grasp of English is even worse than I thought.

Maybe you could have a go at finishing high school one day.

Quote
Besides, less face reality, it's doubtful you pay more than the first federal tax bracket anyway.  :D

Yeah, right. Let's look at some basic logic here (you can look up what logic is on the internet).
Here's guy A bitching about high taxes and raising the taxes on capital gains. Here's guy B demanding the government raise taxes, snarling and insulting those who earn a lot of money, eager to see them stripped of it.

Which of those two guys is a loserboy frantically pounding out flames from his mom's basement and which is paying a lot of taxes?

Not interested in the rest of your opinions on this or any other subject. Going to see if this site has an ignore feature.
Title: Re: Investments
Post by: ?Impact on March 16, 2017, 05:38:05 pm
Going to see if this site has an ignore feature.
Are you a 17 year old Turkish chick?
Title: Re: Investments
Post by: JMT on March 17, 2017, 01:09:12 am
Guys...
Title: Re: Investments
Post by: msj on March 19, 2017, 12:27:46 am
Bill Ackman is a famous hedge fund manager who was once considered among the "Market Masters" in the book with the same name by Robin Speziale. 

This book, which focuses on Canadian investors, included a chapter for the American because of his love affair with Canadian stocks: Tim Hortons, Canadian Pacific, and Valeant.

Ackman's supposed investing principles can be seen in the attached photo.

He ended up losing about $3 billion on Valeant in his fund in what, in hindsight, is clearly a violation of several principles.

Not sure why he fell in love with Valeant that would make him hold it for so long. 

As pointed out here back in October of 2015 by Josh Brown, most traders would have stopped out near the crossover of the 200 day moving average:  http://thereformedbroker.com/2017/03/14/where-traders-sold-valeant-2/

Adhering to this simple principle would have saved investors in his fund billions (or at least hundred of millions).

So, Ackman is human.

And that's the problem with investing.

It's hard because we are human.

Title: Re: Investments
Post by: msj on May 03, 2017, 12:14:05 am
Any takers for Home Capital Group?

Anyone? Anyone?

http://business.financialpost.com/personal-finance/mortgages-real-estate/canadas-boring-but-stable-reputation-shaken-as-industry-fears-home-capital-will-trigger-crisis

I need to timestamp this as I have gone full on old man kooky prior to the age of 44: have a tremendous urge to purchase Swiss francs and hide them around the house...

But not so kooky that I am buying gold or even GLD (the ETF).

Will also go on record here: have purchased shares of VRX (Valeant - USD version) which is probably stupid, but whatevs..... bought it for the Bausch & Lomb and staying for the Salix, as they say.
Title: Re: Investments
Post by: segnosaur on May 08, 2017, 01:05:37 pm
The way he is slashing regulations and oversight, I think the Trumpster is setting us up for another 2008.  I will be reducing my equity exposure over the next couple of years regardless of crappy interest rates.
I agree that Trump may be setting up the financial system for another collapse. And, much of the current rise in stocks is not based on actual changes, but on the (probably soon to be dashed) hopes and dreams of investors, who seem to only be looking at the "good" (possible tax cuts improving dividends) and ignoring the bad (rising deficits).  However, it may take years for reality to set in for investors, so financial stocks may continue to rise for a while before they correct themselves.

All this isn't very relevant to me. All of my investments are in Mutual funds within my RRSP. Most of my mutual funds are in index funds (most Canadian, some global) so I don't necessarily think about individual stocks, and the broad base reduces my risks.
Title: Re: Investments
Post by: msj on May 08, 2017, 02:44:03 pm
All this isn't very relevant to me. All of my investments are in Mutual funds within my RRSP. Most of my mutual funds are in index funds (most Canadian, some global) so I don't necessarily think about individual stocks, and the broad base reduces my risks.

You sound like a guy who does not know what you are invested in.

Mutual funds could be anything from 100% stocks to 100% bonds.

Consider checking out some charts of what happened in 2008/2009:  Emerging Markets down 55%, US markets down 50%, Canada down 53%, even Vanguard Total Index (essentially the world) was down 42% (from 2008 - it was not around at peak values of 2007ish).

But that is for stocks.

Bonds/Preferred shares held their value much better. Some did not even lose money.

Know what you own, know why you own it, and then you can sleep easy at night.
Title: Re: Investments
Post by: segnosaur on May 08, 2017, 03:58:27 pm
You sound like a guy who does not know what you are invested in.

Mutual funds could be anything from 100% stocks to 100% bonds.
Yes they could be.

But as I said, most of my mutual funds are indexed funds. I.e. it is held as a mutual fund, but it basically tracks the performance of the TSX or the NYSE. (So, its based on a broad collection of stocks; no bonds involved. It has very low management fees, and index funds often do better than actively managed portfolios when management fees are considered.)

I also have a few other funds... some balanced funds (mix of stocks and bonds) and a few lower risk funds to provide some diversity. When I get closer to retirement I will move more of my stock-based index funds to my bond funds.
Quote
Consider checking out some charts of what happened in 2008/2009:  Emerging Markets down 55%, US markets down 50%, Canada down 53%, even Vanguard Total Index (essentially the world) was down 42% (from 2008 - it was not around at peak values of 2007ish).
I'm a long term investor. I don't intend to retire for at least a decade. Yes, 2008 was a catastrophe for the stock markets. There has also been times when stocks have experienced strong growth. On average the stock market has performed well. (I think my average growth over the past 10 years has been something like 8-9%, even with the market crash of 2008/2009.)
Quote
But that is for stocks.
Bonds/Preferred shares held their value much better. Some did not even lose money.
That may be true for 2008/2009. But when you are talking about long-term market trends you can't get too fixated on one short time period. 

If Bonds do better in one year, but stocks do better in the next 4 years, at the end you're going to be better off being in the sock market than bonds.

The trick is:
- Diversify (i.e. get a broad base of stocks rather than trying to 'pick' winners and losers). That's the benefit of mutual funds.
- Prepare for the long term (i.e. expect that markets will have occasion wild swings. Don't try to time the market or panic if the market drops suddenly.)
- Invest regularly, rather than making one big lump sum investment and sitting on it
Title: Re: Investments
Post by: BC_cheque on May 08, 2017, 07:02:06 pm
I'm a long term investor. I don't intend to retire for at least a decade. Yes, 2008 was a catastrophe for the stock markets. There has also been times when stocks have experienced strong growth. On average the stock market has performed well. (I think my average growth over the past 10 years has been something like 8-9%, even with the market crash of 2008/2009.)That may be true for 2008/2009. But when you are talking about long-term market trends you can't get too fixated on one short time period. 

This is a perfect strategy and mindset.  Good for you.

Title: Re: Investments
Post by: msj on May 08, 2017, 09:25:39 pm
Mutual Funds and ETF's (exchange traded funds) can follow all types of passive/active strategies and a broad range of asset allocations from stocks to futures to bonds.

I own and have owned everything from sectors (US banks, US homebuilders, US real estate due to a spinoff from US banks, etc) to CDN O&G and CDN Materials to CDN preferred shares, to countries (anyone into Portugal? Italy, Austria, UK, Chile etc).   

Even have owned coffee (JO) and leveraged futures ETF's which I will no longer touch (3 times junior gold minor bear fund or 3 times natural gas bear funds are too easy and too quick to lose money).

But lets face reality- I derive most of my joy from the individual stocks I buy.

Win or lose, I just love reading the quarterly reports each time and deciding if I would be willing to buy at the current price (so hold the investment and/or buy more) or if it is time to sell.

Skin in the game makes me care.

It's why I invested into CDN O&G - so I can focus on what is BS (eg. the political types blaming the AB NDP for all the woes) and the legitimate challenges to the sector (renewables, OPEC, climate change policies etc). 

So sometimes the goals are not entirely financial but investing is always, first and foremost, fun.

Title: Re: Investments
Post by: segnosaur on May 09, 2017, 09:54:27 am
So sometimes the goals are not entirely financial but investing is always, first and foremost, fun.
I'm glad you enjoy the experience.

Personally, I'm a bit more risk-adverse and paranoid, and would probably not have the same sort of enjoyment in trying to pick specific investments. I do realize that investing is necessary and that some risk is needed (hence my use of broad based indexed funds), but not to the point where I'd be risking a good chunk of my retirement funds on whether the oil sector will go up or down in a particular year or whether the coffee harvest will be affected by a swarm of locusts.
Title: Re: Investments
Post by: msj on May 09, 2017, 03:19:44 pm
Will also go on record here: have purchased shares of VRX (Valeant - USD version) which is probably stupid, but whatevs..... bought it for the Bausch & Lomb and staying for the Salix, as they say.

Sold VRX.

Made 21% in less than a month. Haven't done that in a while.

Sometimes even a crazy old man gets lucky. 

Will reconsider purchasing again if it goes down - because I'm crazy.
Title: Re: Investments
Post by: dia on June 18, 2017, 08:28:55 pm
I've never invested in my life, but this month I happen to have $5000 looking to make some money for me.  Any suggestions from the more experienced?   
Title: Re: Investments
Post by: BC_cheque on June 18, 2017, 10:24:50 pm
I've never invested in my life, but this month I happen to have $5000 looking to make some money for me.  Any suggestions from the more experienced?   

If you're thinking of individual stocks, Amazon is starting to look like a pretty safe bet.   

If I didn't have an ethical dilemma about what they're doing, I would buy some of their stocks. 

They're going nowhere but up.
Title: Re: Investments
Post by: JMT on June 18, 2017, 11:17:30 pm
In other news, I'm thinking of renaming this thread investment culture.
Title: Re: Investments
Post by: dia on June 19, 2017, 12:19:57 am
If you're thinking of individual stocks, Amazon is starting to look like a pretty safe bet.   

If I didn't have an ethical dilemma about what they're doing, I would buy some of their stocks. 

They're going nowhere but up.

What are they doing that's unethical?
Title: Re: Investments
Post by: BC_cheque on June 19, 2017, 02:43:57 am
What are they doing that's unethical?

They sell at lower prices than their competitors and then buy them out.  They track the sales of individuals selling on their site and eventually use the sales data to undersell them with their best selling products.  The purchase of Whole Foods was almost a hostile takeover last year and ended up happening this year with Whole Foods CEO basically getting to keep his job in return for the purchase.  They're now in monopoly territory and some would say they already are there.

Nothing illegal and good for them, they've been very successful and I do occasionally buy from them, but generally I like to support smaller businesses so I personally would feel conflicted.

If you can put that aside, they're basically unstoppable at this point and unlike facebook which I could see one day losing ground, I can't see what could possibly change in the future for Amazon.  Their aggressive tactics and expansion into so many different industries (they really are a conglomerate at this point), coupled with their technology and work culture, they're a force to be reckoned with. 

Bezos is gonna takover Bill Gates as the world's richest very soon.
Title: Re: Investments
Post by: MH on June 19, 2017, 06:22:55 am
In other news, I'm thinking of renaming this thread investment culture.

There's no way to know what will make money and what won't.  I park my money with Dominion Securities and it goes up... s l o w l y...

If I cared more, I'm pretty sure I could manage things myself and outperform the market.
Title: Re: Investments
Post by: segnosaur on June 19, 2017, 12:49:43 pm
I've never invested in my life, but this month I happen to have $5000 looking to make some money for me.  Any suggestions from the more experienced?
How risk-adverse are you? Would you be content with a broad-based index fund or something similar?
Title: Re: Investments
Post by: dia on June 19, 2017, 01:09:28 pm
How risk-adverse are you? Would you be content with a broad-based index fund or something similar?

I'm not very risk-adverse, although obviously I'd prefer not to lose my money.   I don't know what a broad-based index fund is.

The other option I'm considering is to do a small kitchen reno, because I plan to sell this townhouse in a year or two and kitchen reno would make it pretty and easier to sell.  it's a bit 'dated' and has some minor cosmetic damage.   

Title: Re: Investments
Post by: segnosaur on June 19, 2017, 02:33:18 pm
I'm not very risk-adverse, although obviously I'd prefer not to lose my money.   I don't know what a broad-based index fund is.
Generally, an index fund is an investment (you can get it from a bank) which tracks the stock markets. (They do so by buying stocks in proportion to the Toronto Stock Exchange, or something similar. )

The advantages? Since you're not betting everything on one stock (or one sector of the economy) then it can be much more stable and you're less likely to loose money. Index funds also tend to have lower management fees (since whomever is offering the fund doesn't actually have to do any work to pick which stocks are going to do better... they just look at whatever the exchange is doing).

The disadvantages? Well, many index funds are based on the stock market, which can be volatile (like after the problems in 2008) so there is some risk.

They usually do pretty good... on average, you might expect them to go up around 5-10% per year (although keep in mind that some years they may actually go down in value.) I'm risk-adverse, but I use Index funds for the majority of my investments.
 
Quote
The other option I'm considering is to do a small kitchen reno, because I plan to sell this townhouse in a year or two and kitchen reno would make it pretty and easier to sell.  it's a bit 'dated' and has some minor cosmetic damage.
If you want to put money into your home, the best investment is to paint or put up new siding. Maybe put in a new front door or do some landscaping. (And make sure there are no leaks.)

Remodeling a kitchen may improve your home's value, but you don't always get as much increase in value as you put into the renovations. Remember, what YOU might like in a kitchen may not be what a potential buyer wants in a kitchen, and they may decide your renovations are horrible and will want to make their own changes.
Title: Re: Investments
Post by: dia on June 19, 2017, 07:58:58 pm
Generally, an index fund is an investment (you can get it from a bank) which tracks the stock markets. (They do so by buying stocks in proportion to the Toronto Stock Exchange, or something similar. )

The advantages? Since you're not betting everything on one stock (or one sector of the economy) then it can be much more stable and you're less likely to loose money. Index funds also tend to have lower management fees (since whomever is offering the fund doesn't actually have to do any work to pick which stocks are going to do better... they just look at whatever the exchange is doing).

The disadvantages? Well, many index funds are based on the stock market, which can be volatile (like after the problems in 2008) so there is some risk.

They usually do pretty good... on average, you might expect them to go up around 5-10% per year (although keep in mind that some years they may actually go down in value.) I'm risk-adverse, but I use Index funds for the majority of my investments.
 If you want to put money into your home, the best investment is to paint or put up new siding. Maybe put in a new front door or do some landscaping. (And make sure there are no leaks.) 
Thanks very much for the information, appreciate that you kept it simple and clear for me.   I may go talk to a bank person, or in my case a Credit Union person since that's who I bank with.

Quote
Remodeling a kitchen may improve your home's value, but you don't always get as much increase in value as you put into the renovations. Remember, what YOU might like in a kitchen may not be what a potential buyer wants in a kitchen, and they may decide your renovations are horrible and will want to make their own changes.
It's in poor enough condition right now that a buyer could reasonably say "Drop the price because I'll have to fix the kitchen".   It's all cosmetic, so shouldn't cost too much to spruce it up, even if I do spring for a stone counter top, and I would keep colors neutral - no bright orange feature walls in my future.   :)     I'm definitely doing some landscaping, regardless of what I do with the kitchen.   :)
Title: Re: Investment Culture
Post by: msj on June 22, 2017, 02:14:33 pm
Anyone following the latest on Home Capital Group (HCG)?

After the OSC gets them for $30 million in penalties, and seeing their liquidity drop dangerously low (remember, this is a mortgage lender at 20:1 ratio) they get a loan from an Ontario pension plan (for which an investigation should be undergoing - if I was a member of that pension I would be livid about the relationship between HCG and the HOOP).

Now Warren Buffett steps in to save the day as one of his subsidiaries will replace the HOOP loan with a equity/debt deal.

On the equity side he gets 38% for about $400 million. 

His real goal, however, is to get $4-5 billion in mortgages which backstop the $2 billion loan on offer (at 9% rate plus other details).

If HCG goes broke, he gets those mortgages and loses on the equity (although who knows, maybe he sells out of the equity after the lock up period).

If HCG does survive, then he can ride the equity which he got on the relatively cheap ($10 per share) while still earning 9% on his loan.

Either way, hard for WB to lose on this deal even if GTA RE collapsed by 40%.  So good for him.

Then we have the chicken farmer from San Francisco, Marc Cohodes, who is shorting HCG from when the stock was around $53, allegedly is still shorting it. 

He is convinced that the equity will go to $0 and is waiting for the "fat lady" to sing.

Frankly, I would have ended my short when HCB touched $7 but whatever.

I think it is still possible for both Cohodes and Buffett to make a lot money here:

A) HCG goes to $0 so Cohodes makes his $50+ per share (since he sold shares around $50 or so and would be buying them at $0 he will have done very well).

B) Buffett loses, worst case, $400 million on the equity and the $2 billion on the loan.  However, he gets $4+ billion in high interest (albeit subprime) mortgages.

Who knows, maybe Buffett will start shorting HCG to hedge his position - hope HCG considered that and wrote it into the deal to not allow him to do this.

Isn't high finance fun?!
 
 

Title: Re: Investment Culture
Post by: kimmy on September 17, 2017, 02:14:18 pm
So, 10 years ago Warren Buffett offered a $1 million bet to any hedge fund manager willing to step up to take him on.  The bet was that investing in a low-cost S&P Index would yield better returns than a professionally managed hedge fund over a ten year period.  Only one hedge fund manager accepted the challenge, and the results have been lop-sided:

Quote
The chart above shows the annual returns on the S&P 500 index and the average annual returns on a comprehensive index of thousands of hedge funds maintained by Barclay over the period of Buffett’s bet: From 2008 through August of this year. A $100,000 investment at the beginning of 2008 would have more than doubled to about $208,000 at the end of August this year, compared to only about $142,000 invested in the average hedge fund. The average annual return for the S&P 500 index over that period was 7.8%, or more than double the average return on the Barclay Hedge Fund index since January 2008. And except for 2008, the S&P 500 index outperformed the Hedge Fund index in every other year: 2009 (26.4% vs. 23.7%), 2010 (15% vs. 11%), 2011 (2% vs. -5%), 2012 (16% vs. 8.25%), 2013 (33% vs. 11%), 2014 (13.7% vs. 2.9%), 2015 (1.38% vs. 0%), 2016 (12% vs. 6%), and 2017 (through August, 12% vs. 6.3%). Not. Even. Close.


http://www.aei.org/publication/warren-buffett-wins-1m-bet-made-a-decade-ago-that-the-sp-500-stock-index-would-outperform-hedge-funds/

In short, the management fees associated with the hedge fund don't even come close to paying for themselves.  Compared to investing in an average index fund, the person investing in the professionally managed hedge fund lost $66,000.


So...    what can the average citizen do with this information?

I save in RRSPs every month, and these consist of funds managed by my bank.  I have long had a sense that these aren't providing a great return. However, I also have a sense of powerlessness about this... I don't know anything about investing, and am concerned that attempting to manage my own investments would just make me lose a bunch of money.

As well, I somewhat need to use actual Canada Revenue Agency recognized RRSP investments... I need to replace the RRSP funds I withdrew to make the down payment on my home, and I also need to reduce my taxable income for tax purposes. So my hands are tied in that respect for at least the time being.

Given that limitation, are there alternatives to wasting a bunch of money on fund management fees that don't pay for themselves?

 -k
Title: Re: Investment Culture
Post by: MH on September 17, 2017, 02:53:00 pm
Can't you just get a trading account, and buy index funds on your own inside an RRSP ?

I have been thinking about this dilemma myself, actually.
Title: Re: Investment Culture
Post by: SirJohn on September 17, 2017, 03:24:58 pm
Can't you just get a trading account, and buy index funds on your own inside an RRSP ?

I have been thinking about this dilemma myself, actually.

Yes. That's what I did some years ago. But of course, the selection is important. A straight TSX index fund would have made very little money this year, because the TSX is heavily influenced by the banks and oil companies, neither of which has done well. If you're a long term investor, however, one year or so doesn't matter. I like some sector funds. BMO has a lot of good ones. It also wouldn't hurt to get a fund from other indexes, like the Dow, S&P and Nasdaq. Not all index funds are super cheap. If you want to go US SPDR funds are good and cheap. The best Canadian index funds this year all contain foreign holdings. ZQQ and ZUH, for example, as well as XSP, XEC and TXF. ZIN is the best performing Canadian stock fund I'm aware of, but you can find more at Ishares, Vanguard and Bmo.
Title: Re: Investment Culture
Post by: kimmy on September 22, 2017, 01:37:05 am
I spent a bit more time reading about this today, and it looks as though if I want to buy these funds with low management fees for my RRSP contributions, I have to buy them and pay a flat rate transaction fee of $10 on each purchase. Is that typical, or is that just my bank being jerks?    If I tried this, am I just exchanging my management fee for transaction fees?

 -k
Title: Re: Investment Culture
Post by: MH on September 22, 2017, 05:56:07 am
My investment advisor isn't getting back to me.  :(  I am seriously thinking about taking an investment course and doing this myself...
Title: Re: Investment Culture
Post by: SirJohn on September 23, 2017, 12:04:46 pm
I spent a bit more time reading about this today, and it looks as though if I want to buy these funds with low management fees for my RRSP contributions, I have to buy them and pay a flat rate transaction fee of $10 on each purchase. Is that typical, or is that just my bank being jerks?    If I tried this, am I just exchanging my management fee for transaction fees?

 -k

Banks and investment firms treat the purchase of ETFs the same as they do the purchase of stocks. They charge a flat fee of anywhere from $7-$10. But that's all the fee they charge. After that, you pay only the low management fee of the ETF, which, theoretically, you hold for years and years. And, if you set a DRIP (dividend reinvestment plan) on the account, any dividends will automatically be reinvested in purchasing more units which you will not have to pay a further fee for.

And incidentally, this article appeared today which should be of interest.

It seems that a decade ago Warren Buffet made a million dollar bet with the hedge fund/mutual fund industry. He would pick a few ETFS and ignore them, and his returns would outperform the best of any group of hedge funds or mutual funds over a ten year period. He won his bet. His passive ETFs completely ran away from the managed funds by all those expensive fund managers.

http://business.financialpost.com/investing/investing-pro/better-to-bet-with-buffett-than-against-him-barry-ritholtz (http://business.financialpost.com/investing/investing-pro/better-to-bet-with-buffett-than-against-him-barry-ritholtz)
Title: Re: Investment Culture
Post by: kimmy on September 23, 2017, 12:17:23 pm
Yeah, reading about the outcome of that bet is what got a bee in my bonnet about fund management fees in the first place.

Where do people learn about stuff like this?  I'm sure that some people get it from their parents, but I sure didn't.  I learned some basic financial skills in a class in high school, and the rest has mostly been through trial and error and some reading.

 -k
Title: Re: Investment Culture
Post by: dia on September 23, 2017, 12:34:41 pm
My investment advisor isn't getting back to me.  :(  I am seriously thinking about taking an investment course and doing this myself...

Skip the course, get some darts and a monkey:

Quote
Give a monkey enough darts and they’ll beat the market. So says a draft article by Research Affiliates highlighting the simulated results of 100 monkeys throwing darts at the stock pages in a newspaper. The average monkey outperformed the index by an average of 1.7 percent per year since 1964.
https://www.forbes.com/sites/rickferri/2012/12/20/any-monkey-can-beat-the-market/#20bb856a630a

(Just kidding, I'm sure there is more to it than throwing darts.  Isn't there?)

 ;)


Title: Re: Investment Culture
Post by: SirJohn on September 23, 2017, 04:54:59 pm
Yeah, reading about the outcome of that bet is what got a bee in my bonnet about fund management fees in the first place.

Where do people learn about stuff like this?  I'm sure that some people get it from their parents, but I sure didn't.  I learned some basic financial skills in a class in high school, and the rest has mostly been through trial and error and some reading.

 -k

I learned by doing. Trial and error. The only book I read, and I would recommend it to anyone who wants to invest - as would Warren Buffet - is The Intelligent Investor, by Benjamin Graham.

http://www.investopedia.com/articles/07/ben_graham.asp (http://www.investopedia.com/articles/07/ben_graham.asp)
Title: Re: Investment Culture
Post by: DuckFace on September 26, 2017, 10:52:35 pm
I spent a bit more time reading about this today, and it looks as though if I want to buy these funds with low management fees for my RRSP contributions, I have to buy them and pay a flat rate transaction fee of $10 on each purchase. Is that typical, or is that just my bank being jerks?    If I tried this, am I just exchanging my management fee for transaction fees?

 -k

Index funds you're ideally supposed to just buy and hold over the long-term, so small transaction fees are moot. You pay much more to your advisor & active fund managers for sure even if you buy and hold for years..  Over the long term you'll historically get around 8% return a year, averaging the ups and downs.

The fact that financial advisors at the big banks have no legal duty to act in your best interests is one of the most disgusting things in this country. Just goes to show how powerful the banks are in influencing politicians & laws.
Title: Re: Investment Culture
Post by: DuckFace on September 26, 2017, 10:54:46 pm
I learned by doing. Trial and error. The only book I read, and I would recommend it to anyone who wants to invest - as would Warren Buffet - is The Intelligent Investor, by Benjamin Graham.

http://www.investopedia.com/articles/07/ben_graham.asp (http://www.investopedia.com/articles/07/ben_graham.asp)

The way Buffett operates is very knowledge & time intensive though.  Even Buffett doesn't recommend the average investor invest how he does.  He recommends investing in an index fund tracking the S&P 500 & letting it sit.
Title: Re: Investment Culture
Post by: SirJohn on September 27, 2017, 12:07:17 pm
The way Buffett operates is very knowledge & time intensive though.  Even Buffett doesn't recommend the average investor invest how he does.  He recommends investing in an index fund tracking the S&P 500 & letting it sit.

True, but unlike in Graham's time we have ready access to a vast array of research on individual stocks. You don't have to go through the books yourself, but can read the numbers right on the Globe's web site if you're a member, and can get tons of opinions (which you have to take with a grain of salt, granted). There is so much more information available about industries and their prospects, about companies, their debt loads, their future spending plans, their growth rates and what's driving them, etc. etc. Still, I do generally agree with Buffett that the average investor is better in Index funds. I'm not the buy and hold type, though, not even with these. I would not have held a broad TSX index fund this year, for example.