+ It's no surprise that behavior is important, but one of the data points in this article blew us away. Dalbar found that over 1, 3, 5, 10, 15, and 19 year periods, investors in variable annuities, which are notorious for high fees and penalties, outperformed investors in mutual funds. The hypothesis is that the penalties for leaving the variable annuity contracts resulted in better investor behavior....Investors Are Usually Wrong. I’m One of Them [NYT]
+ Figuring out when to take CPP is always an interesting discussion. Someone recently wrote a post explaining that 65 is almost never the optimal time to take it, but that is when most people do take it. This article from Alexandra Macqueen sheds light on a lot of the nuance that goes into this decision. These are important details that nobody is talking about........Could retiring at 61 significantly reduce your CPP benefit? [MoneySense]
+ If you're feeling technical, Hendrik Bessimbinder just came out with a new paper on the performance of global stocks. He and his co-authors found that a staggeringly small 1.3% of global stocks have been responsible for all of the net wealth creation since 1990....Do Global Stocks Outperform US Treasury Bills?
+ We would never advocate market timing and we don't really even agree with the term "bubble", but this data on the Canadian housing market is worth thinking about.
From 2015 to today Canadian house prices have almost doubled relative to rents over that time period - 195.9x.
Canadian house prices have increased 155.3x relative to incomes since 2015
Canadian house prices have increased 124.1x relative to inflation since 2015
Canada’s debt to GDP is 100.7%, which is the fifth highest in the study, behind Switzerland, Australia, Denmark, and the Netherlands. US is at 76.3%
Mapped: The Countries With the Highest Housing Bubble Risks [Visual Capitalist]
Preet Banerjee (Episode 53) came on to talk about his doctoral research into how various advice channels (DIY, robo, full service etc.) rank based on their impact on financial well-being.
We had a fascinating chat with Dr. David Blitzer (Episode 54), the chairman and managing director at S&P Dow Jones Indices, where he is head of the index committee that determines which stocks are added to the S&P 500 and all other stock market indices calculated by the company. Dr. Blitzer has been at the epicenter of the explosion of indexing; he had insights on index construction, active management, factor investing, and lots more.
Jonathan Clements (Episode 55), former Wall Street Journam columnist and author of From Here to Financial Happiness, How to Think About Money joined us for a discussion on the relationship between money and happiness, and the importance of frugality.
In Episode 56, Cameron and Ben discussed the GIC vs. bond fund debate, whether or not the S&P 500 is a good long-term investment, and strategies for optimizing the use of the RESP for education savings.
Evaluating Investment Decisions
Even with a good decision, we are not able to control the outcome. Good investment decisions are based on your intention to take on a specific risk, for a specific reason, with the view of achieving your own long-term financial goals. You can then judge your decisions over time based on the quality of your sound process, rather than the whims of unfolding outcomes.
Is the Market Efficient?
We answered the questions Is the Market Efficient? Spoiler: it is efficient enough that you should behave as if it is perfectly efficient (even if it isn't).
We hope that you found our newsletter useful and informative.
Cameron & Ben