Will Actively Managed Mutual Funds Ever Go Away?

Will Actively Managed Mutual Funds Ever Go Away?These days, the passive investing movement is gaining momentum faster than I get rejected for dates by attractive ladies. And for good reason. Actively managed mutual funds may sometimes outperform the index, but are more often than not surpassed by their passive brethren. Math would indicate that the average fund would match the overall stock market, since mutual funds are such large participants. And this is true, except for one…

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Markets Finish Higher

Markets Finish HigherThe Toronto Stock Exchange finished Friday with a 50-point gain, leaving it up about 290 points on the week. In the U.S., however, markets surged, pushing the gain for the Dow Jones to about 425 points on the week, the S&P 500 to 45 points and the NASDAQ to 63 points. The S&P gain left that index ahead on the year since Dec. 23, 2010. The Dow was already ahead,…

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Index Investing Becoming a Victim of Its Own Success

Index Investing Becoming a Victim of Its Own SuccessToo much of a good thing can end up being bad. That includes using a benchmark index as the basis for an investing apparently. In the July 2010 paper (download here from SSRN; acknowledgement to Stingy Investor where I found the link) On the Economic Costs of Index-Linked Investing, NYU prof and NBER research associate Jeffrey Wurgler reviews some research results that are disquieting for investors who follow a passive…

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Relief by Indexing

Relief by IndexingMy transition from being an active stock-picker to investing in low-cost index ETFs is mostly complete, and I’d have to say that it has been a relief. While I enjoy thinking about investing topics, having to track a basket of stocks can be a chore when I’d rather be doing something else. I used to own between 10 and 20 individual stocks at any one time, and it takes time…

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Investor Sentiment Declines In Canada

Investor Sentiment Declines In CanadaAccording to a national poll released today for Manulife Financial that measured how Canadians say they felt about investing in 11 different categories and vehicles, the survey recorded declines in all categories and vehicles, showing the largest quarterly drop for stocks, which fell back 15 points, coming to rest at 3 after a 23 point jump in March. The overall Manulife Investment Sentiment Index declined eight points in June to…

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Using Put Options to Protect Your Portfolio

Using Put Options to Protect Your PortfolioAs options are a fairly sophisticated method of investing/speculating, I rarely write about them as I’m a big believer in sticking with the basics.  However, with the expectation of some sort of market correction between now and October 2010, I’ve had thoughts on ways to hedge a portfolio to reduce the potential for loss. One way to protect a portfolio is to purchase insurance in the form of put options. …

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Financial Bubble Still Here with Yet More to Unravel?

Financial Bubble Still Here with Yet More to Unravel?Is there such a thing as a secular financial bubble? Has the financial sector become bloated out of proportion to the economy over the last few decades and is there be a contraction in store, abrupt or prolonged, back to a smaller financial sector? Was the crisis of 2008 merely the start? I’m not sure of the answer but a couple of data points have stuck in my mind recently:…

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ETFs Deteriorating

ETFs DeterioratingThe average quality of ETFs has been deteriorating lately. Further evidence of this comes from a Morgan Stanley study where they found that US ETF tracking error in 2009 averaged 1.25% compared to only 0.52% in 2008. (I found this article through the Stingy Investor site. Not too long ago we could have summed up the low-cost indexing philosophy by saying “buy ETFs”. Those days are gone. The number of…

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7 Warning Signs You Need to Repair Your Portfolio

7 Warning Signs You Need to Repair Your PortfolioDoes this sound familiar? The stock market has been going up significantly since the beginning of the year but your portfolio is down. That is one clear warning sign that it is time to do some work on your portfolio before things get even worse. There are a number of additional warnings signs that an investor should look for when analysing their portfolio. Each one of these warnings signs signal…

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The Index Finger Moves on – Shrinking TSX and Declining Index Effect

The Index Finger Moves on - Shrinking TSX and Declining Index EffectThe Shrinking TSX Another ones bites the dust. As I noted last year, the TSX Composite Index has been shrinking for years. That seems to be continuing, though at a slower pace. When Enerflex Systems Income Fund (EFX.UN) leaves the index next week as the result of a buyout (see Standard & Poors press release) the TSX Composite will be down to 210 companies, a third fewer than a mere…

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