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Risk Management
Let’s talk about bubbles
“I was talking with my friend Bruce about various financial things. One of the things that we talked about is how it seems that everyone has a story about knowing some guy that made a lot of money in cryptocurrency. Which is interesting, given that cryptocurrencies have been plummeting for some time. Bitcoin, the most prominent cryptocurrency, has lost more than 50…
Also posted in All Columns, Investment Management
350,000 Canadians qualify for a Registered Disability Savings Plan and yet they are not using it
“I came across an unpleasant statistic this week. It’s not a surprising statistic but, still, it’s a darn shame. There are over 350,000 Canadians who qualify for a Registered Disability Savings Plan but have not yet established one. Often these are the people that could really use a hand, and yet they are not using…
Also posted in All Columns, Money Management
What’s the big deal about inflation?
“There has been a lot of talk about inflation recently. Generally, this is the type of bland subject matter that only intrigues economists, but lately more and more people are paying attention. So, what is inflation, and why should you care?” Smart Money Whats the big deal about inflation
Also posted in All Columns, Investment Management, Retirement Planning
Chasing past performance
“All things being equal, if investment decision making was rational, then we would have seen record purchases of mutual funds in 2020 when investment prices were on sale, and a return to regular buying activity in 2021 after the big sale was over. Instead, we saw people stop buying in 2020 because the future was very…
Also posted in All Columns, Investment Management
How do you handle uncertainty?
“You can’t reach your goals without taking some risk. The question is, how much risk can you handle? Typically, there is no riskless financial planning strategy. Even “playing it safe” has an opportunity cost. You can’t just abstain from making decisions until you have perfect knowledge because then you would never leave the house.” Smart…
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Protect yourself by naming a trusted contact person
“Think of naming a trusted contact person like wearing your seat belt. You may take 10,000 car trips and never need your seatbelt. But you put it on anyway, every time you ride in a vehicle, just in case. The trusted contact person is like a seatbelt. You may never need it, but its good…
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These good times are here to stay, right?
“Some people will look at past performance and extrapolate what has happened out into the future. They think the recent trend of good performance will continue without interruption, and they jump in because they want a piece of the action too. But trends don’t last forever. Just because an investment has already appreciated is no…
Also posted in All Columns, Planning Encyclopedia, Retirement Planning
Using leverage to help reach your financial objectives
“Used wisely, leverage can help you reach your financial objectives. But you do want to make sure the idea fits your situation, and that you understand the entirety of the strategy, including what could be daunting levels of risk. Certainly, you can cut a lot of wood in a short period of time with a…
Also posted in All Columns, Investment Management
Are precious metals still precious?
“Precious metals, especially gold, have a reputation for being a hedge against inflation. This reputation, however, is difficult to support. Gold has had a surge lately, and there is a tendency to take recent results and extrapolate them. But the reality is that gold has a 200-year history of abysmal long-term returns, briefly punctuated by…
Also posted in All Columns, Investment Management
The cycle of market emotions
“Buying low and selling high is intuitively rational. But, often, that’s not what people actually do. There’s overwhelming evidence that many people seem to be hardwired to do just the opposite: to buy an investment after it has already appreciated only to sell the same investment if it goes down in price. So why do…
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