Investment Fees, Advisor Compensation, and Added Value

Investment Fees, Advisor Compensation, and Added ValueDespite the strong argument about the advantages of lower fees, I think most people are not wired to be do it yourself investors. There is no doubt some can do it but more people can’t, won’t and don’t want to do it themselves. If you are not wired to do it yourself, they you need to find help from investment and financial advisors who can help you make better investing…

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Eggs, Baskets, and Diversification

Eggs, Baskets, and DiversificationIt’s almost Easter and many of us have thoughts of eggs and baskets running through our heads. Everyone’s looking forward to enjoying a little chocolate and some quality time with family and friends. In terms of finance, however, we often speak of eggs and baskets in the context of diversification. Diversification means spreading your investments among asset classes that are less correlated with one another. You can put some of…

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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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To fee or not to fee? That is the question

To fee or not to fee? That is the questionAfter the financial crisis of 2008-09, governments around the world started looking at ways to make the investment business more ethical and transparent to consumers. Some countries are changing the compensation system for financial intermediaries. Instead of allowing product providers to pay commissions to product sellers, they want consumers to pay sellers directly for their services. Embedded commissions are hidden from consumers and represent a conflict of interest that makes…

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5 Canadian Portfolio Managers You Should Follow

5 Canadian Portfolio Managers You Should FollowWhen it comes to the capital markets, information overload is a very distinct reality for most people, including ourselves. From countless websites and blogs dedicated to stocks, options, mutual funds, hedge funds, personal finance etc. etc. to print media and television, how can one not be inundated with too much information? We would liken this predicament to a fairly prevalent movie scene, where prosecutors demand the surrender of documents from…

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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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A Time to Sell?

A Time to Sell?Recently in the comments section of a post from July 2008, titled 30% today vs. 50% tomorrow, a reader John asks the following question, “I noticed some of my mutual funds are showing a 70% return from one year ago (market low). Do you agree it’s a good time to sell some now and wait for a dip in the major indexes before getting back in? I’m of course talking about…

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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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