# Seems like "sell in May"wasn't too bad of an idea...



## favelle75 (Feb 6, 2013)

Everything I have and have been following is down. Way down. Any solid-performing ETF's out there still worth a look at this summer, or does the timing not matter at all and is this but a blip on the long radar?


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## Oldroe (Sep 18, 2009)

When things are down should make you smile.


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## uptoolate (Oct 9, 2011)

Timing doesn't really matter if you are buy and hold over a long time horizon and it's not over til it's over on the sell in May this year.


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## dogcom (May 23, 2009)

It seems like timing, but really the sell in May thing is a result of recurring seasonal events that make it so. Before May all that money put into equity funds by RRSP and the like get deployed and whatever other influences like speculators, momentum investors pile in on top of that until it peters out. We then get the correction and settle into summer which is a random season of ups and downs as volume is lower and many traders are on vacation. 

Of course what can change the pattern is if the money running up to May wasn't deployed in the usual manner and then we could see the rally later then usual if the money that is there still in cash or the like is put back to work on equities. This year the money was definitely used by the huge rally we had seen so we were ripe for a correction. I believe it arrived a little late this year as people wanted the party to go on and many players were caught short thinking a correction was imminent and had to cover.


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## RedRose (Aug 2, 2011)

Waiting to buy if we have a correction. I was watching closely yesterday some dips.


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## doctrine (Sep 30, 2011)

The question is, where do you sell and where do you buy. The TSX closed at about 12320 on 1 May, which is still lower than the TSX is today, so you'd actually still be behind despite recent losses. The TSX was below 12,000 on 18-19 April so if you sold early you'd be even farther behind. All of my investments are still paying dividends, and more than they were 3 months ago with all of the dividend increases (one cut, probably 10-12 increases in 2013 so far), so I'll keep a hold of them all.


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## nakedput (Jan 2, 2013)

RedRose said:


> Waiting to buy if we have a correction. I was watching closely yesterday some dips.


isn't THIS the correction? we've had like 5 straight days of losses


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## cainvest (May 1, 2013)

favelle75 said:


> Everything I have and have been following is down. Way down.


Seems like your perspective needs some reference point for "down. Way down." and "getting hammered".

I've provided the following chart link, focus on the august 2002 or start of 2009 areas, for use with the above terms.
Now compare those times with the current blip at the far right, our last week. 

http://ca.finance.yahoo.com/echarts?s=%5EGSPC#symbol=%5Egspc;range=19991115,20130607;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;


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## J Watts (Jul 19, 2012)

I'm not losing any sleep over it. I plan to see how low it goes then buy some more in the worst performing e-Series (which, right now, is the Canadian Index).


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## Belguy (May 24, 2010)

The TSX is down 0.48% so far this year as we approach the half way point.:frown:

However, the S&P is up 15.23% so far!! How good is that!!:encouragement:

So, is the moral of the story not to put too many eggs in just the domestic market?

When Chinese growth slows, the demand for our commodities drops and the TSX has a large concentration in commodities which can be very cyclical.

The other moral of the story is that the U.S. market is much more diversified.

That said, what portions of a Canadian investor's portfolio should be in the domestic Canadian Market, the more diversified U.S. market, and the international markets, and the emerging markets which have also not been performing all that well of late?


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## uptoolate (Oct 9, 2011)

cainvest said:


> Seems like your perspective needs some reference point for "down. Way down." and "getting hammered".
> 
> I've provided the following chart link, focus on the august 2002 or start of 2009 areas, for use with the above terms.
> Now compare those times with the current blip at the far right, our last week.
> ...


Yes this chart puts things into perspective! It is burned in my memory as I had lump summed a bunch of USD into the US market in June 2008! That ride left a mark! But the money is still there, along with that that went in in the spring of 2009 and it all looks good now. That was certainly one year that I was glad that I didn't 'sell in May' as the market was up 15% over the summer!


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## MrMatt (Dec 21, 2011)

favelle75 said:


> Everything I have and have been following is down. Way down. Any solid-performing ETF's out there still worth a look at this summer, or does the timing not matter at all and is this but a blip on the long radar?


It's been a week, how can you draw any conclusions from stocks in just a few days?
My YTD returns are a bit lower than they were last week, but they're still overall positive.

If I would have sold in early may, I'd be doing even worse.


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## Yoqui (Mar 5, 2013)

May was an awesome month for me. Got pretty lucky and had a large portion in Macro Enterprises.


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## nakedput (Jan 2, 2013)

Yoqui said:


> May was an awesome month for me. Got pretty lucky and had a large portion in Macro Enterprises.


The end of May was good for me. I picked up shares in AltiusMinerals very cheap and am already up 7.5% in only a few weeks. Anyone who hasn't heard of this company, I really think you should at the very least take a look into them.


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## daddybigbucks (Jan 30, 2011)

I tried this method this year as per this thread http://canadianmoneyforum.com/showthread.php/14810-Sell-in-May-and-go-away?p=168321#post168321

I completely sold out of one portfolio by the end of March 2013.
I have been keeping track of gain/losses and i saved a whopping 0.83%! but i probably lost close to that in dividends.
8 of the 12 stocks have dropped since end of march.

My conclusion is that *sell in may* is just too little of a change to make profit. BUT having all this cash on hand is making it very nice to restart a new portfolio. Though the only stock i have bought so far was TRP last week.


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## Belguy (May 24, 2010)

I just buy and then hold through all market conditions and don't worry too much about it. I have experienced the ups and downs of the market for far too many years now to make any attempt to try to time it. I'll leave that up to the so-called 'experts'.

If you are an index investor, then just buy, hold, rebalance and prosper.:encouragement::biggrin-new:eaceful::untroubled:

You could have worse strategies.

But then, will the hot stock pickers, swinging for the home runs, ultimately leave us in the dust? 

What d'ya think??


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## Beaver101 (Nov 14, 2011)

For one, you're saving a ton on commissions and fees do count, right? Btw, what happened to the tortoise and hare analogy? :chuncky: How about believing in your own investing capability for a change? :encouragement:


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## Belguy (May 24, 2010)

I have reached my financial goals and so am content with that. However, I do feel that I still have enough experience to pass on to others.

Indexers receive average long term returns at a low cost. 

A boring but effective long term investment strategy.

It worked for me.:encouragement:eaceful::smile::untroubled:


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## Toronto.gal (Jan 8, 2010)

Belguy said:


> 1. I have reached my financial goals and so am content with that.
> 2. will the hot stock pickers, swinging for the home runs, ultimately leave us in the dust?


*1.* Congratulations Mr. Belguy! What about non-financial goals?
*2.* Nope, that's inconceivable. :biggrin:


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## Belguy (May 24, 2010)

I never had any non-financial goals.:emptiness::distant::sleeping::sour:


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## kcowan (Jul 1, 2010)

Belguy said:


> I never had any non-financial goals.:emptiness::distant::sleeping::sour:


How about living until age 80?


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## Toronto.gal (Jan 8, 2010)

Non-financial goals should include some F.U.N. & excitement. No need to :sleeping:

Selling in May & going away, sort of.


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## Belguy (May 24, 2010)

Just had my afternoon :sleeping:

Now, I'm good to go until 9 o'clock!!

Now, what were you saying?

Did we make any money this week? How did the indexes do?


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## Belguy (May 24, 2010)

With the half way mark in the year fast approaching, the TSX is down 2 per cent so far. When you consider that a GIC could have paid you 2 per cent for the past six months, that means that TSX indexers are down 4 per cent so far this year compared to if they had simply invested in a GIC.:upset::eek2:

Stay tuned for the last half of the year!!:hopelessness::cower:

Oh, I forgot, you're not supposed to be concerned about short term market returns--unless you are of the retired persuasion that is.


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## Spidey (May 11, 2009)

It does appear that the spring is often a good time to take some profits and I'm starting to find that the summer is the time to look for bargains rather than autumn. Volumes are likely down in the summer due to vacations and people being occupied by other things (eg. moving) and that often leads to an ideal time to put in low bids.


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## Belguy (May 24, 2010)

Buy when it snows. Sell when it goes.:encouragement:eaceful::cool-new::cool2:

However, maybe that depends on whether you live in Windsor or Whitehorse???


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## marina628 (Dec 14, 2010)

I think about sell in May and go away but never do it .Not complaining here even though I am down about 4% in last 5-6 weeks in most of my Canadian holdings but my other stuff still doing well.I DCA many things by purchasing every month but thinking end of July I will spend some extra cash and top up.For now sitting on my cash and just watching the show .


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## mylund39 (Jan 15, 2011)

*non-financial goals*

I did a sell in May........and the results was that I lost a whole lot of dividends and was stuck with a bunch of cash and basically bought the same stocks at a higher price.My N-F-G is to
shoot my age in golf(73) will probably never happen but it takes my mind off this dip.I should probably leave my smart phone at home and not cheat by looking at the market while on the course.I still walk the course (6-7 K) 4 days a week.

The markets look much better when in shape.
Cheers,
Mylund


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## Belguy (May 24, 2010)

When you invest in the markets, you have to know that you have hopped aboard a roller coaster ride and no roller coaster always goes straight up--except maybe the one that takes you up to heaven.:hopelessness::cower::eek2::eek-new:

If you have confidence in your asset allocation, it should allow you to ride out the ups and downs of the market while resisting the urge to sell, sell, sell, buy, buy, buy.

That's why getting your asset allocation right for your personality and circumstances is much more important than which individual investments you select for your portfolio.

Most investors spend far more time on selecting investments for their portfolio than on their asset allocation.

Hence the popularity of the 'what are you buying' and 'what are you selling' threads in this forum. I don't much participate in those threads because I am seldom either buying or selling other than for rebalancing purposes.

Buy, hold, rebalance and prosper.


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## Homerhomer (Oct 18, 2010)

Just to clarify sell in May doesn't mean to buy first two weeks of June, it usually means to wait for buying opportunities between July and October. ;-)


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## Belguy (May 24, 2010)

Fed keeps the pedal to the metal:

http://www.bankrate.com/financing/federal-reserve/the-fed-keeps-its-foot-on-the-pedal/


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## mrPPincer (Nov 21, 2011)

Belguy said:


> Fed keeps the pedal to the metal


seatbelts everybody! :cower:


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## MrMatt (Dec 21, 2011)

Homerhomer said:


> Just to clarify sell in May doesn't mean to buy first two weeks of June, it usually means to wait for buying opportunities between July and October. ;-)


I didn't sell in May and I'm up MTD on my individual stock holdings. I'll stick to my "market timing is dumb" position.


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## Homerhomer (Oct 18, 2010)

MrMatt said:


> I'll stick to my "market timing is dumb" position.


Nothing wrong with this approach ;-)


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## My Own Advisor (Sep 24, 2012)

Like a few other comments in here, I've thought about sell in May and go away but never do it. I just look at May as another opportunity to buy more stocks. COS and CPG are nicely down in price.


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## sags (May 15, 2010)

Belguy said:


> Fed keeps the pedal to the metal:
> 
> http://www.bankrate.com/financing/federal-reserve/the-fed-keeps-its-foot-on-the-pedal/


No surprise here.

The financial news has talked about Bernanke and the Fed non stop for the past couple of days, as they always do before a meeting.

The Fed drives the market now................they know it..............and they are terrified at what will happen when they stop.

So...........US debt keeps rising at least 1 Trillion dollars a year..........consequences be darned.


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## My Own Advisor (Sep 24, 2012)

Doesn't all this money need to be paid back at some point? That, or just devalue the USD? No doubt I am oversimplifying a messy, complex issue.


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## Belguy (May 24, 2010)

Run for the hills!!

http://www.sfgate.com/business/bloo...4611649.php:hopelessness::cower::upset::eek2:


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## dogcom (May 23, 2009)

What are the fundamentals of all markets today?

Money printing and manipulation through the media and direct intervention are the true fundamentals of the markets today. The Fed can't taper because the market can't stand on its own and can't survive without generous propaganda as well.


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## cainvest (May 1, 2013)

Looks like some buying might be in order soon. 

Wonder how far this fed news will push things down, gold seems to taking a real beating, over 5% down.


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## Belguy (May 24, 2010)

Canadian dollar well on it's way to 96 cents U.S. How low can it go?

Why aren't we hearing from any gold bugs today??:hopelessness::cower::eek2::grumpy:


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## My Own Advisor (Sep 24, 2012)

Thinking the same cainvest. Wish I had more money to buy stuff. In another month, I should have some funds to deploy.


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## Jon_Snow (May 20, 2009)

Starting to feel like a kid in a candy store... XRE, BCE, CPG, ZDV... The list goes on.

I just checked my accounts - I have 360k in investable cash RIGHT NOW. Feeling "analysis paralysis" setting in.


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## My Own Advisor (Sep 24, 2012)

Geez Jon. Not really to pull the trigger on anything? 

I'd like to buy more CPG and COS when I get more funds, probably mid-July I should have enough saved to make a small purchase of $1 K.


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## cainvest (May 1, 2013)

My Own Advisor said:


> Thinking the same cainvest. Wish I had more money to buy stuff. In another month, I should have some funds to deploy.


I hope this is more than just a knee-jerk reaction to the fed and the actual start of a correction, only time will tell. If it is the start of a significant drawdown then you should be good to go in a month or so. 

Even though the S&P500 broke the SMA50 it's still got a long way to go to hit the 200.


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## blin10 (Jun 27, 2011)

man, all those gold holders with big positions with almost no yield must be shitting their pants now...


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## fatcat (Nov 11, 2009)

this is irrational de-exuberance ...
we are all so shell shocked that we can't think straight
the fed says "things are getting better" and everyone sells their equities

bln10, i don't hold any gold at the moment but we could see a springback effect here, if the fed is right and the economy turns in accordance with what the fed is saying, we could start to see some real inflation and gold will come back

is this temporary panic ? or real deflation ?


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## Ihatetaxes (May 5, 2010)

Happy about the "deals" I got this morning. Would still love to see the DJIA drop another 5% or more since I've got another $100k in US funds to spend on VTI. Once that is done I can forget about my portfolio for the rest of the year.


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## dogcom (May 23, 2009)

Fatcat this is the trial ballon, propaganda format being used by the Fed. They see the need for a correction and also the need to test the market with the taper propaganda. As you can see there is no real economy out there to stand on its own and this taper talk is proof of that fact. Having gold go down much farther then the market kind of makes the selloff a neutral event which is good for the fed short term.


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## Belguy (May 24, 2010)

blin10 said:


> man, all those gold holders with big positions with almost no yield must be shitting their pants now...


They're a pretty quiet bunch on a day like today.:eek2::eek2::eek2::eek2:

Also, every time that the markets have a great day, some forum members express great joy. On the other hand, there are another group who are equally as giddy when the markets take a dive.

Conclusion: You can always please some of the people some of the time but never all of the people some of the time or something like that.

The markets go up which is good and they go down which is also good. Go figure!! It makes my head explode!!


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## blin10 (Jun 27, 2011)

it's very simple, let's say you had a ton of money to invest and sitting on cash, wouldn't you be happy how you can buy stuff cheaper?

on the other hand, a lot of people load up to 100% capacity at the top of the market to equities that earn close to nothing in dividends, it is painful to sit and watch getting into huge paper loss.. it's like me, I'm mostly invested, would I want market to revisit 2008 lows? some side of me says yes (even though I'd probably be in a huge paper loss) to buy a ton more, on the other hand I don't want to since it's less risky and balance will be in paper gain... either way, you need to stick to your plan and not panic too much



Belguy said:


> They're a pretty quiet bunch on a day like today.:eek2::eek2::eek2::eek2:
> 
> *Also, every time that the markets have a great day, some forum members express great joy. On the other hand, there are another group who are equally as giddy when the markets take a dive.*
> 
> ...


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## Ihatetaxes (May 5, 2010)

blin10 said:


> it's very simple, let's say you had a ton of money to invest and sitting on cash, wouldn't you be happy how you can buy stuff cheaper?
> 
> on the other hand, a lot of people load up to 100% capacity at the top of the market to equities that earn close to nothing in dividends, it is painful to sit and watch getting into huge paper loss.. it's like me, I'm mostly invested, would I want market to revisit 2008 lows? some side of me says yes (even though I'd probably be in a huge paper loss) to buy a ton more, on the other hand I don't want to since it's less risky and balance will be in paper gain... either way, you need to stick to your plan and not panic too much


I bought about $130 grand worth of stuff today including a couple of ETFs that hit 52 week lows like VWO and DEM. Also bought quite a bit of VTI, happy with the $2 drop.


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## My Own Advisor (Sep 24, 2012)

Nicely done. $130 grand worth? Geez. I've gotta get saving!


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## Jon_Snow (May 20, 2009)

Ihatetaxes said:


> I bought about $130 grand worth of stuff today including a couple of ETFs that hit 52 week lows like VWO and DEM. Also bought quite a bit of VTI, happy with the $2 drop.


Thought about doing something similar, but work got busy and I didn't buy a darn thing today.


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## blin10 (Jun 27, 2011)

Ihatetaxes said:


> I bought about $130 grand worth of stuff today including a couple of ETFs that hit 52 week lows like VWO and DEM. Also bought quite a bit of VTI, happy with the $2 drop.


depends on how much cash you have, if you used all of it in one shot like that, that was a bad idea IMO... but then again who knows


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## Sampson (Apr 3, 2009)

Question: If stocks are falling because they have been artificially inflated to to QE, QE2, and other print money programs, and these programs have been in effect for >2 years, then don't stocks need to fall to 104 week lows before they get interesting?

I'm still keeping my money under the bed.


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## Eder (Feb 16, 2011)

I am waiting to buy...I think in a week or two there will be more clarity.I still think waiting till August is a good idea.


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## Ihatetaxes (May 5, 2010)

blin10 said:


> depends on how much cash you have, if you used all of it in one shot like that, that was a bad idea IMO... but then again who knows


IMO I've already waiting too long and it was just over half the cash I had to deploy. If markets continue to decline I will be down to zero cash in the next month or two, the first time ever. I've wasted too many years with too much cash in my accounts. I know I won't need any of this for 20 years plus so time to stop being a ***** and really commit to a strategy and goal.


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## blin10 (Jun 27, 2011)

makes sense 


Ihatetaxes said:


> IMO I've already waiting too long and it was just over half the cash I had to deploy. If markets continue to decline I will be down to zero cash in the next month or two, the first time ever. I've wasted too many years with too much cash in my accounts. I know I won't need any of this for 20 years plus so time to stop being a ***** and really commit to a strategy and goal.


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## Jon_Snow (May 20, 2009)

Ihatetaxes said:


> IMO I've already waiting too long and it was just over half the cash I had to deploy. If markets continue to decline I will be down to zero cash in the next month or two, the first time ever. I've wasted too many years with too much cash in my accounts. I know I won't need any of this for 20 years plus so time to stop being a ***** and really commit to a strategy and goal.


This is pretty much the story of my brief investing career.


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## bflannel (Apr 21, 2013)

I will be increasing my position in ABX shortly but would like something else. As previously mentioned, the more choice the more difficult it is to chose. Any of you buyers have a tip on whittling down your own buy list in a market like this?


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## Belguy (May 24, 2010)

I think that today is another not so gentle reminder that a 70 year old investor should only have 30 per cent of his or her retirement savings invested in the stock market.

If you are of the 80's persuasion, you should only have 20 per cent in equities.

By 100, your entire portfolio should be allocated to fixed income investments.:eek2::eek-new::wink-new:layful:

Of course, I'm generalizing as personal circumstances vary.


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## dogcom (May 23, 2009)

Bflannel I like SLW for precious metals exposure because they don't take on the risk of mine cost overruns. The negative is SLW is silver and not gold, although silver will outperform gold to the upside and to the downside.


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## kcowan (Jul 1, 2010)

It surprises me that the possible withdrawal of QE generates renewed confidence in the USD, particularly at the expense of oil and the C$. I understand how it signals higher interest rates and that would hurt gold and stocks.


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## Belguy (May 24, 2010)

For the past couple of months, I have heard plenty of predictions for a 95 cent dollar but we got there sooner than I had expected.

Where does the C$ go in the second half of the year?:confused2::confused2:

Also, if higher interest rates are going to hurt stocks, and interest rates have nowhere to go but up, then why would this be a good time to invest in stocks?

Also, rising interest rates make investing in bonds risky.

Oh, and bank accounts are earning nothing.

So, does this lead to the logical conclusion that the best place to put your money currently is under the mattress?

Just wonderin'.


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## kcowan (Jul 1, 2010)

Belguy said:


> Also, rising interest rates make investing in bonds risky...


All good questions. This one is easier than the others. Go short on bonds. It is the long bonds that will get discounted most by the rise in interest rates.

(I was offered a convertible debenture yielding 8% this week. I said "Really? I don't need to take that kind of risk in my stage of life!")


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## Belguy (May 24, 2010)

Should retirees and those approaching retirement risk their retirement savings by investing in equities at that stage in their lives?

Stocks take scary dips as evidenced by yesterday. It doesn't matter much if they recover their losses in relatively short order but what if they take a bigger drop and then take several years to recover?

For an older investor, that can be a hard thing to watch!!:hopelessness::cower::eek2::hororr:


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## Belguy (May 24, 2010)

I guess that most of my investing time has been good for bond investors. I have lived through many instances of equity sell offs but, almost invariably, when the equity component of my portfolio dipped, the bond portfolio would serve as a ballast to cushion the fall.

However, the times they are a changing. This morning, when I reviewed the performance of my portfolio for the past week, I noted, as I expected, that my equity investments took a hit. However, the real shock came when I checked the performance of my bond fund. It took the biggest one week hit in my memory!!!!

Going forward, I expect that my bond allocation will not provide a safety ballast when the equity seas get stormy. In fact, the reverse may be true as bonds take a hit and equities may offset that hit with gains. 

Equities as a ballast during bond losses is an entirely new concept for me.


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## gibor365 (Apr 1, 2011)

Belguy said:


> I guess that most of my investing time has been good for bond investors. I have lived through many instances of equity sell offs but, almost invariably, when the equity component of my portfolio dipped, the bond portfolio would serve as a ballast to cushion the fall.


I noticed the same  I'm not tracking markets as long as you, but for last seveal years when stocks were down, bond were up.... nowdays everything is down. And it doesn't matter what king of bonds, junk bonds, short-term, long-term, emerging markets.....everything is sharply down....


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## MoreMiles (Apr 20, 2011)

gibor said:


> I noticed the same  I'm not tracking markets as long as you, but for last seveal years when stocks were down, bond were up.... nowdays everything is down. And it doesn't matter what king of bonds, junk bonds, short-term, long-term, emerging markets.....everything is sharply down....


Stock markets have been around for about 100 years. Some cycles take 30 years to form. If you think about it, there has not enough time to know how stock markets will behave in the long run (ie, over 1000 years). It is like trying a new experiment in sciences but don't have enough data to observe a conclusion. Then outsiders jump into the experiment adding new variables (ie, QE), further complicated the outcome. 

In human years, there may not be enough time for an investor to ride through these cycles. For example, what you saw in bonds for many decades may be different now. http://blogs.wsj.com/moneybeat/2013/05/10/bill-gross-bull-market-in-bonds-is-over/


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## Belguy (May 24, 2010)

It sounds to me that even longer term investors face a lot of risk and unknowns--longer term being relative. However, shorter term investors, including retirees, face a particular dilemma when there are so many unknowns facing the stock markets and bonds are not there to provide any upside potential or downside protection.

In the final analysis, I guess that you are faced with either putting your life's savings at risk in the stock market where you could suddenly lose half of it in a crash or accepting near zero interest rates in bank deposits and GIC's. I just can't see allocating a significant portion of a portfolio to bonds at the present time although many are still advocating doing just that.

What if you receive anemic returns on your stocks going forward, offset by negative returns on your bonds for a net negative return? 

Gee, what a great choice!!:cower::frown-new::eek2::grumpy:


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## My Own Advisor (Sep 24, 2012)

How on earth is Bill Gross going to add alpha for investors? I just don't see it.


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## gibor365 (Apr 1, 2011)

Belguy said:


> It sounds to me that even longer term investors face a lot of risk and unknowns--longer term being relative. However, shorter term investors, including retirees, face a particular dilemma when there are so many unknowns facing the stock markets and bonds are not there to provide any upside potential or downside protection.


Belguy, I just become more convinced that the best bet is dividend champions/contenders... select those who has reasonable payout and yield 3-6% or those stocks who didn't cut dividends for at least 10-15 years with higher yield. You should hold at least 35-40 stocks like this, that in case that somebody cut dividends (like GE did about 5 years ago) , your income stream won't get seriously affected.


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## MrMatt (Dec 21, 2011)

Belguy said:


> What if you receive anemic returns on your stocks going forward, offset by negative returns on your bonds for a net negative return?


You can get negative real returns from bonds, negative returns not unless you sell before maturity. For that reason I wouldn't recommend a bond fund, as they never mature.


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## supperfly17 (Apr 18, 2012)

Another crazy day on the markets today. Not even mfc and slf are staying afloat. I thought they would.


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## Jon_Snow (May 20, 2009)

Jumped the gun buying on Friday it seems, let alone spending 45k.... cripes. :rolleyes2:


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## supperfly17 (Apr 18, 2012)

Jon_Snow said:


> Jumped the gun buying on Friday it seems, let alone spending 45k.... cripes. :rolleyes2:


Thats ok now buy more. One of my coworkers sold G today, 750 shares. Cut his losses.


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## Ihatetaxes (May 5, 2010)

I've now bought 8 tranches of VTI on the way down, 150 at a time. The lowest price was this morning at 80.48. More to buy...


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## webber22 (Mar 6, 2011)

No doubt a co-ordinated effort by the big boys to drop prices across the board. One has to look no further than the last 10 trades of any stock to witness the guilty parties. On the tsx we have this free luxury.
I saw the same pattern during the last few 'crashes' where the sell programs would kick in by GS, MS, Citi, UBS,JPM, etc. 
When the time is right, huge block trades will be placed end of day to scoop up all the goodies and the small fries will be left cold and damp at the bottom of the tray.


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## Belguy (May 24, 2010)

:hopelessness::cower::eek2::sour:


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## Belguy (May 24, 2010)

As of closing yesterday, the TSX is down 4.8 per cent on the year. How good is that!!!:sour::sour::sour::sour:


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## jamesbe (May 8, 2010)

Crappy but I'm up 8.5% from YTD


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## Dibs (May 26, 2011)

As an experiment this year I made a mock protfolio of index funds. This is the benchmark that I've decided to use to see how much better (or worse) I could do compared to a purely passive strategy. 

I put 10k into:

40% Canadian Index
20% US Index
20% International Index
15% Bond Index
5% Cash

The mock transactions were made at Dec 31 2012 prices.

http://i.imgur.com/2Ngs42D.jpg

YTD it is at +2.93% even with the recent market downturn. So I'm thinking the passive investor should have no worries about the recent market movements. Not as good as jamesbe above, but not terribly bad either.


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## Sampson (Apr 3, 2009)

Not sure what you are trying to say with your example Dibs?

- Market timing is effective (buying Dec 31 was a good idea)
- Diversification is good (holding assets showing low correlation will help retain portfolio value compared to concentrated in a Canadian equity only portfolio)

A passive investor needs to worry just the same, this is the psychological component that no portfolio theory can change. They shouldn't change their strategy during a downturn or upswing though.


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## Belguy (May 24, 2010)

From MoneySense magazine, Summer 2013 edition:

"This spring, the Cass Business School of City University London published two research papers comparing traditional indexing to 13 alternatives. The results were jaw-dropping. Every one of the alternative strategies produced better backtested results in U.S. markets between 1968 and 2011. Over this period traditional indexing delivered an annualized return of 9.4% while the others came in between 9.8% and 11.5%."

"It gets worse. The papers presented a simulation involving randomly generated portfolios of 1000 stocks each. Effectively, according to the author, they programmed the computer to simulate the stock-picking abilities of 10 million monkeys. Guess what? The authors concluded that nearly every monkey beats the performance of the traditional market-cap index. Ouch!

--Dan Bortolotti

This article goes on to state that an indexer can move the odds in his favour by tilting his portfolio towards value and small-cap stocks perhaps by using an alternative to the market cap indexes in the form of fundamental-weighted indexes which give more influence to firms with value characteristics like high book-to-market ratios or high dividend yields.

Since 1927, small-cap and value stocks in the U.S. outperformed the broad market by about 2% annually.

Any thoughts?


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## leoc2 (Dec 28, 2010)

Belguy said:


> From MoneySense magazine, Summer 2013 edition:
> 
> "..Over this period traditional indexing delivered an annualized return of 9.4% ..."
> 
> Any thoughts?


At my stage of life I'll take the 9.4% return to stay out of the stock picker's game.


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## Belguy (May 24, 2010)

leoc2 said:


> At my stage of life I'll take the 9.4% return to stay out of the stock picker's game.


Yeh, I expect that I feel about the same. However, I am intrigued about the idea of fundamental-weighted indexes outperforming their market-cap counterparts over time.

An overweighting on some fundamental index funds plus a bit of small-cap exposure might provide a percentage or two better portfolio performance over the long run than a 'Couch Potato' portfolio of just market-cap ETF's.

Or, maybe not. You pays your money and you takes your chances.


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## scomac (Aug 22, 2009)

Belguy said:


> From MoneySense magazine, Summer 2013 edition:
> "It gets worse. The papers presented a simulation involving randomly generated portfolios of 1000 stocks each. Effectively, according to the author, they programmed the computer to simulate the stock-picking abilities of 10 million monkeys. Guess what? The authors concluded that nearly every monkey beats the performance of the traditional market-cap index. Ouch!
> 
> --Dan Bortolotti
> ...


Yup! I'd go along with that. The monkeys that I employ have managed to keep pace with the S&P 500 and handily beat the TSX Comp. YTD. Long term, I doubt it's even worthy of comparison.

My monkeys are not for sale!:beguiled:


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## Belguy (May 24, 2010)

scomac said:


> Yup! I'd go along with that. The monkeys that I employ have managed to keep pace with the S&P 500 and handily beat the TSX Comp. YTD. Long term, I doubt it's even worthy of comparison.
> 
> My monkeys are not for sale!:beguiled:


Any old run-of-the-mill monkeys will do!! They make great dart throwers and stock pickers!!!:monkey::monkey::monkey:


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## scomac (Aug 22, 2009)

Belguy said:


> Any old run-of-the-mill monkeys will do!!


Hmmm...I guess that means I over paid! :tongue-new:


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## uptoolate (Oct 9, 2011)

I'm not an expert but computer- or monkey generated equity portfolios should beat the basic cap-weighted index. Any combination of stocks that is randomly chosen has a larger small cap-value tilt than the overall cap-weighted index so French-Fama says it wins. I don't think this is news and I think that similar findings have been stated before. DFA has been attracting customers this way for quite awhile - they are very sophisticated about it but I think studies show that just about any reasonably large random stock sample beats the cap-weighted index. I agree with leoc2, 9.4% annually over 43 years including two downturns in the seventies, three in the 80s and so on, where can I sign up, Please!!

Individual investors lose on the equity side from fees (computers and monkeys charge very reasonable fees - not having yachts down at the marina) and by jumping in at out of the market. Studies on individual investors have shown that they would have done much better just buying and holding even actively managed funds, and much better by buying the index.


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## avrex (Nov 14, 2010)

uptoolate said:


> Any combination of stocks that is randomly chosen has a larger small cap-value tilt than the overall cap-weighted index so French-Fama says it wins. I don't think this is news and I think that similar findings have been stated before.


That's exactly what is going on here.
The 13 alternative portfolios in the Cass research papers all had a small-cap/value tilt. i.e. Fama–French


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## uptoolate (Oct 9, 2011)

Thanks Averx and yes you're right - Fama should come before French! Cheers.


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## kcowan (Jul 1, 2010)

MrMatt said:


> You can get negative real returns from bonds, negative returns not unless you sell before maturity. For that reason I wouldn't recommend a bond fund, as they never mature.


I don't recommend bond funds. They are for the ultimate lazy investor. If you can't build a short bond ladder, why are you even here?


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## leoc2 (Dec 28, 2010)

Bond fund = You see the value of the bonds within the fund daily. (Stop looking everyday...relax).
Bond Ladder = You see the value of a bond when you sell on (or before) redemption date. If you want to join the stressed out investors then get a current value quote for the bonds in your ladder each day. 

Bond fund = You pay MER to get institutional pricing and diversification.
Bond Ladder = You pay no MER but you must pick and choose bonds.

Bond fund = Easy to re-invest interest. Buy more fund.
Bond ladder = You get to pick and choose new bond when you get interest and/or a maturing bond.

It seems people think that the bonds within a bond fund behave differently than a bond you buy for your ladder. They are all bonds. If the bond fund maturity is 6 years you will be even after 6 years (less MER) if you don't sell. If a bond has a 6 year maturity the same is true. If I have any hope of my wife managing the nest egg should I precede her to the grave then the bond *fund *makes a whole lot of sense and is worth the MER.


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## Belguy (May 24, 2010)

kcowan said:


> I don't recommend bond funds. They are for the ultimate lazy investor. If you can't build a short bond ladder, why are you even here?


What then are your thoughts on the iShares 1-5 year laddered bond funds or the RBC Target Maturity Bond ETF's?

http://ca.ishares.com/product_info/fund/overview/CLF.htm

http://ca.ishares.com/product_info/fund/overview/CBO.htm

http://funds.rbcgam.com/etfs/overview/fixed-income.html


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## kcowan (Jul 1, 2010)

Different than yours I am sure. Why do you ask?


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## Squash500 (May 16, 2009)

I think that Bond ETFS ....such as XBB or XCB are a good compromise. According to Hank Cunningham .....in his book in your best interest....most individual bonds (including gov't bonds) are subject to matrix pricing. Meaning it's up to the bond trader to figure out what price you pay for the individual bond. All the commissions are totally hidden from the retail investor. The bond market is a very non-transparent market. The only difference is that gov't of Canada bonds are much easier to sell in the secondary market if you need the money before the individual bond matures.

The fact that the bond market is such a non-transparent market is a real turnoff for me. I'd rather just stick with bond ETFS and avoid individual bonds. As usual just my opinion.


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## Belguy (May 24, 2010)

kcowan said:


> Different than yours I am sure. Why do you ask?


I am a buy-and-hold investor and my main fixed income investment currently is the PH&N Bond Fund D which I have held for many years. However, recognizing that the times are changing, I realize that I have to keep an open mind on alternatives to my bond fund. Therefore, I am trying to figure out whether the 1-5 year laddered or the RBC targeted bond ETF's might be a better alternative.

If there is a definitive answer, I would be interested in it. However, sarcasm I can do without.

Speaking of sarcasm, has anyone seen any gold bugs hanging around this forum lately? Just wonderin'.


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## james4beach (Nov 15, 2012)

Squash500 said:


> According to Hank Cunningham .....in his book in your best interest....most individual bonds (including gov't bonds) are subject to matrix pricing. Meaning it's up to the bond trader to figure out what price you pay for the individual bond. All the commissions are totally hidden from the retail investor. The bond market is a very non-transparent market.


Yes the bond market is in general very opaque - especially corporates. It's true that in past years it was pretty hard to get good pricing.

But a bond ETF really doesn't get around this. Corporate bonds generally have poor liquidity (especially now!). They are illiquid whether you quote them individually, or in a bond fund/ETF. I think one of the problems with bond ETFs is that they make bonds look a lot more liquid than they actually are.

Regarding *government* bonds: I would say this all changed with the discount brokerages. I routinely trade government bonds through TD Waterhouse and Scotia iTrade. The prices are very good and fees are very low ... a fraction of the MER you would pay in a bond fund (something like 5 to 8 basis points doing individual bonds versus 30+ basis points in an ETF). I would feel silly using a bond ETF where the fees are literally 4x to 7x the fees of doing it myself.

With iTrade the fees are transparent, actually. There's the wholesale market quote, which you can see on pfin or on TV, and then a $25 fee on top of it. The resulting iTrade fees are identical to what TD Waterhouse charges. In both cases the fee is the same: $25 (for amounts of 5k or 10k) and getting simultaneous quotes from both I've found the total fees are just about identical.

I can't go back to using a bond ETF, except possibly for corporate bonds. And if I do use a corporate bond ETF, I have to remind myself that corporate bonds still fundamentally have poor liquidity no matter what the trading volume on the ETF is.


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## Squash500 (May 16, 2009)

james4beach said:


> Yes the bond market is in general very opaque - especially corporates. It's true that in past years it was pretty hard to get good pricing.
> 
> But a bond ETF really doesn't get around this. Corporate bonds generally have poor liquidity (especially now!). They are illiquid whether you quote them individually, or in a bond fund/ETF. I think one of the problems with bond ETFs is that they make bonds look a lot more liquid than they actually are.
> 
> ...


Thanks for the link to that bond website James. You've been posting a lot of good comments on this forum lately. I personally just find the yields on Canadian government bonds to be much too low for my investing purposes. Also I admit that I don't have the expertise to buy individual corporate bonds on my own. I would be really nervous if I bought an individual corporate and it wound up defaulting etc. That's why I don't mind paying the MER to own the XCB. The XCB trades at least 200000 shares a day and usually has a tight 1 cent spread.

I also have the same attitude with the CPD. I'd rather pay the MER on the CPD ....and to be re-assured that there's approx. 180 holdings in the CPD. After all....I'm a total DIY investor so I can afford to pay these XCB and CPD MERS as I'm not paying an advisor any money at all.

Also I can't see the advantage of holding (for example) a 10 year Canadian government bond in a non-registered account. I just can't see myself holding a gov't bond for 10 years in a non-registered account that only pays a 1.5% coupon and a 2.49% YTM. Also the YTM is not really a true calculation. It assumes that you can invest the 1.5% coupon every six months to come up with the 2.49% YTM.

True you'll make a capital gain on the bond at the end of 10 years....but I would rather take my chances and invest in higher yielding securities. Also I really like the liquidity of the bond ETFS.....you can get your money out in 3 days in an emergency etc. IMHO I think that individual bond ladders only make sense if you hold them in an RRSP or RRIF.


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## james4beach (Nov 15, 2012)

Squash500 said:


> Also I can't see the advantage of holding (for example) a 10 year Canadian government bond in a non-registered account. I just can't see myself holding a gov't bond for 10 years in a non-registered account that only pays a 1.5% coupon and a 2.49% YTM. Also the YTM is not really a true calculation. It assumes that you can invest the 1.5% coupon every six months to come up with the 2.49% YTM.
> 
> True you'll make a capital gain on the bond at the end of 10 years....but I would rather take my chances and invest in higher yielding securities. Also I really like the liquidity of the bond ETFS.....you can get your money out in 3 days in an emergency etc. IMHO I think that individual bond ladders only make sense if you hold them in an RRSP or RRIF.


You've got lots of good points there. And I agree about corporate bonds... I would use an ETF too. I was just talking about government bonds.

I hold mine mostly in tax sheltered accounts, but I do sometimes buy bonds with low coupons in my non-registered account. Low coupon = low interest income = low tax. In the RRSP, I buy ones with big coupons. You're also right that YTM assumes a certain reinvestment rate but remember that bond ETFs do the same calculation.

Regarding liquidity and accessibility in an emergency. As far as I can tell, the government bonds _are very liquid_. You have the same T+3 settlement as the bond ETF, and all it takes is the $25 trade fee to liquidate the government bond (aside from the fee, the spread is very tight). So from the perspective of liquidity, I don't see any disadvantage to holding individual GoC bonds. Having to pull the investment in an 'emergency' is a rare event, and for just a slightly higher fee you can still do it.

There's another benefit too, assuming I have understood this correctly. I believe that brokers treat GoC bonds as near-cash. In a margin account, most stocks and ETFs have a 30% margin requirement. So for example in a 100k account holding entirely bond ETF, your margin requirement is 30k leaving you excess liquidity of 70k, which you could use to make other trades (say you spotted an amazing deal). However if you held a GoC bond (in TD Waterhouse anyway) the margin requirement is only 4% or 4k, leaving you 96k of excess liquidity! That means if you suddenly want to make another trade, you don't even have to sell the GoC bond... the broker allows you to borrow 96% of the bond's value.

The individual GoC bond is top quality collateral, far more than a stock or bond ETF in your account.


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## richard (Jun 20, 2013)

Belguy said:


> From MoneySense magazine, Summer 2013 edition:
> 
> "It gets worse. The papers presented a simulation involving randomly generated portfolios of 1000 stocks each. Effectively, according to the author, they programmed the computer to simulate the stock-picking abilities of 10 million monkeys. Guess what? The authors concluded that nearly every monkey beats the performance of the traditional market-cap index. Ouch!
> 
> --Dan Bortolotti


Maybe more detail was provided in the article, but that initial result doesn't necessarily mean much since there are a lot of fundamental issues aside from the effect of small/value stocks. For example a 0.05% outperformance counts as a win in that study even though it's not enough to get me interested. And when you add in the extra trading costs, management fees, and taxes from higher turnover it would turn into a loss.

Here's a strategy to backtest: look at the individual stocks and funds recommended in Moneysense magazine over the last decade, and see how they have performed in the follow 1 and 5 years. All the informal studies I've seen on this show that they fall far behind the market index. The people getting rich on this advice are the publishers.


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## Belguy (May 24, 2010)

"According to the Ned Davis Research Group, the average time in days for bear market declines of 20 per cent or greater since 1973 is about 445 days (it can happen fast and take a long time to recover losses). The average time in days for a bull market is about 2100 days."

"The average bear market return over the same study period was negative 39 per cent (those drops can be deep!) and the average bull market return over the study period was a positive 212 per cent."

"Clearly, if you're a market timer, the odds of getting it right are against you.":frown::dispirited::sour::culpability:

--Bill Carrigan, 'How ETF's can reduce investing risk', Toronto Star, July 8, 2013


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