# Should I sell Canadian Funds now?



## jserrg (Apr 17, 2013)

I have small RESP Portfolio. I do not manage it much. As I know nothing about investments - it is probably a good thing.

My investments are for the most part in Canadian Equity Funds. I was very happy with fund performance so far. Well last time I looked at it - it was probably 10 months ago.  Now Canadian dollar dropped and sure enough my funds lost its value. So instead of +20% in 2013. I am getting -9% in the recent 12 months.
My first intention was - immediately selling the funds with poor performance. But then I remembered what they say: "buy low - sell high". Selling fund at a very low price (as it is now) is not going to do me any good. Right? And buying now say US Equity funds (which are outperforming any other funds recently) at a high price with weak Canadian dollars - is not a good move either.
So I am sitting here now thinking - I should not do anything. I should keep my Canadian Funds and wait for them to regain price. They should eventually bounce back, right? 

Is my thinking correct? I started contributing to my RESP only a few years ago. So I would like to hear from more experienced investors.

Thanks!


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## none (Jan 15, 2013)

This:

http://canadiancouchpotato.com/model-portfolios-2/

and this: http://canadiancouchpotato.com/2010/11/05/taking-risk-in-an-resp/


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## OhGreatGuru (May 24, 2009)

2013 was an unusually good year for CDN equity, so don't use it to set your expectations for performance in the future.

It sounds like your portfolio is nearly all CDN equity. You need to consider whether a more balanced asset allocation would be better, to reduce volatility.

You haven't said how old the beneficiaries are, so it's hard to comment on what balance would be considered prudent.

I am not a fan of the constant mantra of "diversify globally to increase returns". IMHO it's over-hyped; with an RESP you should be mainly concerned with what the return will be in $CDN when the beneficiary reaches post-secondary education age.

PS: I'd like to know what "Canadian Equity Funds" you have that went from +20% in 2013 to -9% for the past 12 months. That sounds like the returns from a CDN Energy fund, not a diversified CDN Equity Fund. The latter have returned 6-7% from Apr. 1, 2014 to Mar.31, 2015.


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## londoncalling (Sep 17, 2011)

My advice to you is hurry up and wait.


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## Oldroe (Sep 18, 2009)

You are typical investor, who looks every 5 years when they hear something bad and then are surprised it's there stuff.

To be successful investor. When everybody is running away you need to running towards the sale.

Takes knowledge to run to the right stuff.


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## 0xCC (Jan 5, 2012)

jserrg said:


> <snip...>
> 
> My investments are for the most part in Canadian Equity Funds.
> <snip...>
> Now Canadian dollar dropped and sure enough my funds lost its value.


These two statements are not tied as closely as you seem to think. In this case it is likely that the drop in oil (among other things) had an impact on the Canadian dollar and at the same time had an impact on the energy sector which probably made up a fair percentage of the Canadian equity funds you held.

I agree with londoncalling, and OhGreatGuru: think about getting that account a little more balanced and the hurry up and wait. This assumes that your kid(s) aren't already teenagers that will need the money in less than 5 years. If that is the case you might want to consider moving some of the account to fixed income or cash/high interest savings.


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## jserrg (Apr 17, 2013)

Hmmm... I understand what you are saying: 
When everybody is running away - buy. When everybody is buying - run. It all sounds good. And I am sure it works... , if you are a trader, investing in stocks.
But I am not a trader. I would not even call myself an investor to be completely honest.
I am rather just a "client of a bank". I can't change my bank, btw. My employer matches my contributions. But they only do it with that one bank - Great West Life.

GWL knows I can't go to a competitor. So they provide very basic services. They give us a choice of a dozen funds. A few Bond funds. A few Balanced funds. A few Equity. That's it. All funds within each category are practically the same. They don't have say energy sector fund. No industry funds at all. They only have Geographic funds - there are a few Canadian funds and a few US funds. They also have funds called Global or International. But when I looked at their fund reports - 90% of these "International" funds are US companies. So the name is only a marketing label. Can't diversify too much here.

Of course I don't have neither control nor I am informed of any changes to the fund. The fund is called 'Canadian Small Cap Equity Fund'. Fund report describes it as 'investments in small- to mid-sized Canadian and U.S. companies'. Does not sound like oil but you never know. In 2013 it made +20%. Great! But today it might have completely different companies in its portfolio. So yesterday's performance does not mean anything today.

I looked at this fund report. At least it taught me to look at the fund reports. I did not know before they had fund reports.  4% of that fund is invested in Indigo Books. You don't have to be a genius to figure out that fund investing in a dying book store will not perform well.

Yes. I am buying that fund cheaper and cheaper. I understand it is good to buy cheap. But that also means that two weeks ago I paid more than it cost today. And that trend continues for about a year. So a year ago or 6 month ago I was buying that fund every two weeks and I was paying too much. It now costs considerably less.

And then I have a US fund next to it. It keeps growing. US dollar is strong. There are terracts in Europe, war in Russia, mess in the Middle East - of course everybody will only invest in US companies. And that means US funds will continue to grow.

I don't know... But I traded my Indigo Books fund for US Equity. 

This is RRSP. And I am 30+ years away from retirement. And the amount is relatively small yet. So I guess I can play a little bit.


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## OhGreatGuru (May 24, 2009)

So your original post saying it was RESP is a misprint - it is RRSP.

I think you need to read a basic book or two on Canadian Mutual Fund investing. Suggested readings have been listed in other threads. "CDN Small Cap Equity" would not normally form the core of a long-term, prudent investor's portfolio. Too volatile. And the CDN stock market is so small (compared to US) that there aren't a whole lot of good small cap equity stocks out there. Ordinarily a Large Cap fund would be used as your starting point.

Apart from fund precis on web sites such as Globefund; Fund library; and Morningstar; you should be able to get more details on your funds by going to Great West Life's site and downloading Prospectuses and Annual reports for their funds.

Given your statement: "As I know nothing about investments ..." you should probably just go with one of the their balanced funds now.


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## Oldroe (Sep 18, 2009)

And each time you buy at a cheaper price you receive more shares. This is dollar cost avg. and it would be great for you if it lasted years. I would dig a little deeper past the indigo books see what else they own.

Another thing you need to be aware of is MER Management Expense Ratio. Some of these GWL are likely to be near 3%.


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## 0xCC (Jan 5, 2012)

It looks like your "Canadian Small Cap Equity" is probably this one:
http://www.globefund.greatwestlife....ap+Equity+(BT)+75/100&pi_universe=PUBLIC_FUND

Google is your friend, and " Fund report describes it as 'investments in small- to mid-sized Canadian and U.S. companies'. Does not sound like oil but *you never know*." does not apply to publicly traded financial instruments. There is always information available and it is usually fairly recent (within the last 3 months or so.

If that is the fund, the MER is rather steep, the fund is roughly 30% in Energy which probably explains the performance over the last 6 months or so. You can do the same sort of search for the new fund that you have moved over to (I searched for Great West Life Canadian Small Cap Equity).

PS: It is commendable that you are taking the steps to become more informed about investing in general and what your specific company-sponsored plan offers you. Taking advantage of your employer's matching contributions is also a good thing. It can be a little bit confusing and intimidating at first but learning about investing will give you more options and control over your future. You are asking good questions and as you work through those questions you will get a better overall understanding of how to choose the investments that you are comfortable with.


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## GreatLaker (Mar 23, 2014)

If You Can: How Millennials Can Get Rich Slowly by William Bernstein says more about investing in 16 pages than many authors say in hundreds. It also has a reading list of other good investing books.
http://www.etf.com/docs/IfYouCan.pdf


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## jserrg (Apr 17, 2013)

Yes. It is RRSP. Sorry.

Do you think there is a book on Canadian Mutual Funds? I mean I have 12 GWL funds to choose from. They are all pretty much Balanced. Just some are Bonds, some are Equity, some are a mixture of the two. 
Just asking questions here clarifies some basic things for me.
But if you can suggest a title that would explain Mutual Fund/RRSP/limited choice basics - I would appreciate it.
When I started contributing to RRSP I read a couple investor's books. But their advice was more applicable to stock trading. So googling for "Investing for Dummies" does not give good results for my case. Which I thought would be a very common case for a lot of people: Don't want to become an investor. Just wanted to have money for retirement.

Of course there are other good companies in that CDN Small Cap fund. But still I don't think I should trust a fund manager who is buying Indigo Books stocks. Who knows what he/she will buy next. Sorry.

Management Fees should be low. At least this is what I was told by GWL people. My employer has good volume discount.  Sales people. I don't really know what's the normal/acceptable fee % for a mutual fund company. But most of their fund fees are below 1%. That CDN Small Cap is the most expensive fund at 1.25%. Another reason to sell it.

Another CDN Index Fund that I owned was 0.7%.

GWL Fund report is a 1 page pdf with very basic information about the fund and historical performance numbers. Performance numbers are cut off at Dec 31 of last year. So you don't really know how this particular fund is performing currently.


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## jserrg (Apr 17, 2013)

0xCC said:


> It looks like your "Canadian Small Cap Equity" is probably this one:
> http://www.globefund.greatwestlife....ap+Equity+(BT)+75/100&pi_universe=PUBLIC_FUND


Thanks 0xCC!
You found more with google on GWL site then I could find when I log into their online banking. My fund report only shows remote history while yours is up-to-date. Great!


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## lonewolf (Jun 12, 2012)

Sell, Sell, Sell & or short the market with long term put leaps This is the most dangerous market since the inception of the DJI. First stop around the 2009 yearly lows. strong support 4th wave support in the price action of a previous 4th wave from the years 1966 - 1982.


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## 0xCC (Jan 5, 2012)

Seriously? This is a thread about someone just dipping their toe into the waters of understanding the investing world and posting advice about leaps is the most constructive information you can give?


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## lonewolf (Jun 12, 2012)

Yes

I said sell, sell,sell & or

The worst possible advice is telling someone to buy stocks, bonds or real estate @ this moment in time.


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## CalgaryPotato (Mar 7, 2015)

If it's small to mid cap Canadian and American that isn't too bad it's still not the way I'd want my whole investment to be. On the plus side it sounds like the fees are very reasonable. 

There isn't a lot of advise on mutual funds online because the common advise is avoid the , although in your case you can't. But as long as you can read the descriptions you can learn about the classes as a whole.


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## Oldroe (Sep 18, 2009)

You follow the herd you will look like the herd.


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## Cal (Jun 17, 2009)

Holy MER on that fund Batman!

Any way you can post your mutual fund options that you have to chose from?

Personally I don't think a small cap fund is for you, you seem concerned with the volatility. You should be happy to be buying low, with your retirement 30 years out, and yet you worry about being down the past few months.

IMO if you could split between a Balanced Canadian Fund, and a Balanced US or International Fund, great, then don't look at it until you retire. Autopilot. Read the links posted above about couch potato investing. It was good advice.


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## Davis (Nov 11, 2014)

lonewolf said:


> Yes I said sell, sell,sell & or The worst possible advice is telling someone to buy stocks, bonds or real estate @ this moment in time.


Do keep in mind that lonewolf's qualifications to provide investing advice are that he is some guy on the internet. Nothing more. My qualifications are no better, so either do your own research using credible sources Report on Business, Financial Post, etc ), or buy and hold. The latter is not a bad strategy given your long time horizon. 

Most people will tell you that trying to time the market is a bad idea unless you think you are smarter than the market. If you do know more than the professional investors who spend their careers watching the market, please share your wisdom with us.


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## humble_pie (Jun 7, 2009)

jsserg you are getting some great suggestions here. Read more about investing, you're picking up the right stuff.

this forum will be thin on books about mutual funds because folks here don't buy mutual funds. But we appreciate that you are stuck in em for the time being, what with your employer contribution & all.

yes you owned a canadian small-cap fund that boasted a peck of energy, so it suffered recently in the energy meltdown. Others here have suggested that a balanced fund would do you better, these are smart suggestions! the same folks are suggesting some reading material, won't you please try this also? i have a feeling you'll do well as an investor, once you get your sea legs.

i'm not against a US equity fund if you are prepared to take the currency haircut. I'd also hope you'd stick to senior US equity, the good old, solid old kinds of large-cap stocks that pay decent dividends & are not likely to flame out in a broad market downturn. 

as for lonewolf, he is most cmffers' favourite mascot by far. Right now he might be preaching end-of-the-world-is-coming-buy-puts but that's fine, the forum needs diversity of opinion.

in the off chance that the wolf might be correct, though, how are your TFSA & your emergency funds structured? these are outside your employer's grasp, i would believe? 

a TFSA can serve as an emergency fund & it's there that you could place your guaranteed savings products such as a HISA deposit or a GIC. If we do experience a major stock market reversal, these will survive intact.


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## Financialplannerdude (Apr 30, 2015)

A good starting point would be reading Andrew Hallmans Millioniare Teacher. He'll walk you through all the basics, only negative is he's biased towards low cost MF whereas I prefer dividend stocks.


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## OhGreatGuru (May 24, 2009)

Further thoughts:

- In Group plans of this type the mutual fund company usually, (but not always), offers funds in lower-MER series than the retail A-series funds. From OP's comments that appears to be the case here.
- The employer's contributions compensate for the fact the MER's are higher than you could get with DIY investing.
- It is typical for the plan to offer a choice of diversified income funds, and diversified balanced funds with a variety of asset allocations. This allows participants to select one or 2 that suit their investor profile.
- They would not normally offer a wide variety of sector or specialty funds, so that investors can make up their own portfolios. They are designed to accommodate investors who may have little or no knowledge of investing. They are aimed at the average investor, using average rules-of thumb, not the self-selected group of DIY investors you will find on this forum.

I would have thought the fund company would offer a self-evaluation questionnaire to determine your investor profile, as an aid to helping you choose your funds. If not, surf a few on-line financial institution sites for such evaluations. Then pick one of the balanced funds that comes closest to your profile. If you want to spice it up by adding something like small-cap CDN Equity, fine, but you need a better understanding of the volatility and risks of such funds.


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## jserrg (Apr 17, 2013)

First: Thanks everybody who responded so far. Some great pieces of advice.

While I appreciate some good-night theoretical reading on how etf funds are different from index funds - I am looking for some more practical advice.
I am not too excited about monitoring my funds every day. But in my particular case with CAN Small Cap fund... had I known that this fund is mostly Energy - I would have sold it at least in November last year. I mean sometimes you don't have to predict the future. You just need to react to news. And probably being 1 month late is better then being 6 month late, right.

And I am willing to spend a little bit of time. I just don't want to study investing for months and months. 

So... about these fund reports... It is an eye-opener for me that GWL is just a reseller. They sell me funds that are not their funds but are some public mutual funds.  That means: performance information is available somewhere else online.
It is a pain in the *** to log in to GWL online banking and check pdf fund reports one by one. And as I said their fund reports are outdated.
That Global Mail DB is much better. You can compare different funds in a spreadsheet side-by-side. Though I can't seem to find some of GWL's funds in that Globefund DB. 

Are there other such online db-s?

In particular I am looking for this fund. Anybody knows what it is and how to find a more up-to-date report for this GWL fund?


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## RBull (Jan 20, 2013)

The name of the fund is in your screen shot. 

TD Emerald US Index

Here is a source to look at it in more detail. Simply put it's a passive index of the US S&P 500 which is around 70% of us stock market. I think it's hedged to CDN dollars. If it's cheap for you, probably a great long term set it and forget it hold. 

http://www.tdaminstitutional.com/tmi/content/IS_InstitutionalFundDetail?key=E15710&language=en_CA


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## blin10 (Jun 27, 2011)

sell everything, sky is falling, markets will go into -50% decline, house market will collapse (might as well sell your house), oil is going to $10 by end of year...


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## OhGreatGuru (May 24, 2009)

jserrg said:


> ...
> So... about these fund reports... It is an eye-opener for me that GWL is just a reseller. They sell me funds that are not their funds but are some public mutual funds.  That means: performance information is available somewhere else online.
> ...
> 
> ...


GWL is not just a reseller. They have 650 funds of their own listed on Morningstar. But in this instance it appears they are acting as pension fund managers under contract to your employer, and they are offering some funds from other companies (presumably in addition to some of their own.) Which is probably a good thing.

The specific fund you asked about is from TD Asset Management, and is a US Equity Index fund, tracking the S&P500. The fact that you couldn't figure this out from the brief report in the screen shot is disconcerting.


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## Butters (Apr 20, 2012)

blin10 said:


> sell everything, sky is falling, markets will go into -50% decline, house market will collapse (might as well sell your house), oil is going to $10 by end of year...


this guys is joking



I havent read many of the comments on this

but i heard the TSX has underpreformed the US for 4 years

now that oil going back up, we should overpreform


don't sell..


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## jserrg (Apr 17, 2013)

SheaButters said:


> but i heard the TSX has underpreformed the US for 4 years
> now that oil going back up, we should overpreform


Why would anybody think that TSX will outperform US? US is the LARGEST economy in the world. They have 10 times more people then live in Canada. That's only internal market. Investors from everywhere - China, India, Russia: bring money to US to invest. It is considered the safest haven. US dollar is de facto main trade currency in the world. All oil trading is done in US dollar.
Seriously? You think Canada can compete with US? I don't want to hurt anybody's patriotic feelings. I mean we also have a couple oil wells and a few lumber mills too. But I think Canada is playing in a different league completely with all due respect.


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## james4beach (Nov 15, 2012)

jserrg said:


> Why would anybody think that TSX will outperform US? US is the LARGEST economy in the world . . . Investors from everywhere - China, India, Russia: bring money to US to invest


Largest economies don't necessarily produce the best returns. There is no such correlation. An economy that rapidly grows, gets ahead of itself, and ends up as a big economy that has run out of steam can result in catastrophic returns... like Japan.

As for attracting capital from "everywhere". This attraction is weakening.

The global feelings around the US market have changed a lot in the last 10 years. Wall Street and the 2008/2009 financial crash are a big reason: American financiers absolutely screwed global investors. They sold bad products, conducted terrible banking fraud, were NOT convicted of the frauds, and left many Europeans and Asians to eat their losses (e.g. villages in Norway who were sold bogus derivative products, and who lost everything). Because there were virtually on convictions, Wall Street is the same today as in 2007 or 2008. They are very, very likely to once again screw investors in US markets.

The US is not as attractive an investment environment as you think. There's an additional problem of taxes: the US has turned very aggressive with respect to taxation of foreign entities. Estate taxes alone are a huge deterrent for wealthy foreigners. This is important: there are potentially severe consequences of holding US based investments. And the US has showed they're on a path to more aggressively tax foreigners (FBAR, FATCA, estate tax, etc)

The above are reasons that foreigners no longer look fondly at the USA as a place to invest. If you think capital will keep flocking to the US in the coming decades, I think you will be disappointed. For instance even though I now live and work in the US, I keep virtually all of my assets in Canadian banks and Canadian investments. I strongly distrust Wall Street, I distrust American brokerages, and I fear the next anti-foreigner tax legislation from the US government. Given how things are going, capital controls are not out of the question.


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## lonewolf (Jun 12, 2012)

0xCC said:


> Seriously? This is a thread about someone just dipping their toe into the waters of understanding the investing world and posting advice about leaps is the most constructive information you can give?


 Arch Crawford was on gold seek radio sometime in May 2015. Site would still have recording. In the 08 crash Arch took 2500 dollars on one trade turned it into over 500,000 he used puts. Seldom does Arch recommend options, in the interview he says going forward is a time to be shorting the market with puts. Crawford weeks in advance of the 1987 top said exact day DJI would top with horrendous crash to follow. One of the only timers to out perform the S&P in the 90s. Prechtor said Crawford had the best track record over last 30 years that anyone he knew of a few years back.


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## My Own Advisor (Sep 24, 2012)

A couple of years is a small blip in the investing lifecycle.

I would stay the course to what you decided upon in your asset and portfolio allocation model.

In some years, CDN stocks will soar, in others, the U.S. and international will soar.
https://www.blackrock.com/investing...ation/asset-class-returns-one-pager-va-us.pdf

I tend to buy more of what is not in favour and avoid selling. That's my recipe anyhow


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## jserrg (Apr 17, 2013)

So...
James says: stay away from US.
Mr. Lone Wolf says stay away from buying at all.
My GWL friends sell me mostly only US funds (except a few Canadian ones).
So in my case staying away from US funds would actually mean following Lone Wolf's advice.  Unless I go with GWL Canadian Funds which are all performing poorly at the moment. I understand nobody knows where these funds will go next. It is hard to predict the future.

But I myself have no experience in this field. So I have to trust you guys. 

My five cents about outstanding predictions: some guys out there might see the plans of somebody to sell volumes of stocks so high that it may crash the market a little bit. They can make their predictions on TV about the same time. That creates panic and more people are selling. And then the news pick it up. And even more are selling. And then it is avalanche effect: more bad TV news - more people reacting. 


Maybe you are right My Own Advisor... I am still substantially on the positive side. I mean it was +25% in 2013. Then -15% in 2014. But I am still +10% positive. Maybe I don't have to track my RRSP investments anywhere in the spreadsheets. And I just set and forget. What happens - happens.

I am just used to tracking my everyday income and expenses in a spreadsheet (see attached). 







I like budgeting. And I love spreadsheets.  It helps to control spending. But my RRSP balance is just a single line in my Net Worth spreadsheet. And unlike my regular budget numbers it does not tell me anything other then I have so much money in RRSP. I don't know whether my funds are performing well or not. Should I sell or should I buy more... Well... maybe this is what RRSP is all about. Set and forget. And just budget everyday expenses.

I found globeandmail database very useful so far. At least it gives some kind of comparison analytics to a control freak like myself.
http://www.globefund.greatwestlife.com/


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## james4beach (Nov 15, 2012)

With my post, I did not intend to predict that the US market will perform better/worse in the immediate future.

I just think that investing in the US carries many new pitfalls and risks (to non-Americans). I'm not the only person to say this kind of thing. See the Wegelin bank's famous article on why they recommend avoiding US investments.

For disclosure: I do hold some US investments, in an S&P 500-ish ETF. But this is within my American 401(k) which is a US tax shelter. That money is pretty much trapped in the US anyway, so I might as well keep it in the S&P 500.


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## jserrg (Apr 17, 2013)

Googled Wegelin. It is a Switserland bank. Of course they don't want people to invest in US. They want people to bring money to them instead and lock it in the cell. 
To me the fact that US is raising taxes for foreign investors is only an indicator that they are overwhelmed with clients calling in begging to take their money. If demand is higher than supply - sure the business can jack up the price. The world is unsafe place. And there are a lot of people with a lot of money. The world needs a safe heaven. Just to store money. Today US plays that role for the world. I know a lot of it is a bubble inflated by Hollywood and CNN. Still people from all over the world buy this "Happy USA" story.


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