Investment Books

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FinEcon
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Re: Investment Books

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Taggart wrote:Just a heads up that there's a new Canadian investment book released. It's called "Market Masters". Copies are on order through my local library system so put a hold on it.

Got the idea from Derek Foster's latest e-mail newsletter.
You'll like it. This book is a series of interviews aimed at novice investors but will provide specific nuggets of info for all levels as well as some useful themes in the industry. For example, Donville's comment about the idiotic but popular b-school view on same store sales growth and several people comment specifically on the perverse situations in the money management industry. I picked it up the day it came out and overall, it's a great book. Hopefully, the author continues along this path with more in depth work for a more technical audience.
longinvest wrote: It's not a good sign when the promoting site says: "Do you want to beat the market, make more money, and achieve financial independence?"
What do you expect, it's a book the goal is sales. There has to be marketing and a catchy tagline. Should it be titled: "Market Participants: interviews with boring people on a boring subject few care about but may provide the novice investor with some insights on investing?".
longinvest wrote: I would classify this book into the "noise" category.
wtf :? Try reading it before dismissing it completely.
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Re: Investment Books

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A new book, The End of Accounting, argues that traditional earnings measures and book value, have become steadily lea relevant to investors over time.

That's the first part of the book, and I found it interesting, perhaps because I already believed it. In the second half of the book, the author comes up with his own substitute, and I found that much less convincing. Still, half of an interesting book is better than the repetitious pap that passes for advice these days.

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Re: Investment Books

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Here's a list of recommended books from a finance blog audience. It looks like stock picking is still alive and well in retail with 3 of the first 4 recommended books relating to that subject.

I was surprised to find my second favourite book Winning the Loser's Game by Ellis down with the likes ofRich Dad, Poor Dad. I've read most of the books on this list and I think it shows how difficult it can be to get good book recommendations on the internet.
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Re: Investment Books

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couponstrip wrote: 29 May 2017 15:03 I was surprised to find my second favourite book Winning the Loser's Game by Ellis down with the likes of Rich Dad, Poor Dad.
Speaking of Rich Dad, Poor Dad, here's my favourite site debunking all his advice: wrong, bad, dangerous, and virtually no good advice.
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Mordko
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Re: Investment Books

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couponstrip wrote: 29 May 2017 15:03 Here's a list of recommended books from a finance blog audience. It looks like stock picking is still alive and well in retail with 3 of the first 4 recommended books relating to that subject.

I was surprised to find my second favourite book Winning the Loser's Game by Ellis down with the likes ofRich Dad, Poor Dad. I've read most of the books on this list and I think it shows how difficult it can be to get good book recommendations on the internet.
Graham in The Intelligent Investor, in my opinion, advocates indexing. He does not call it "indexing" - the term wasn't invented, but he talks about mutual funds losing to the market all the time and how one can put a lot of effort and intelligence and still underperform an arbitrary selection of stocks.

Also the author - Mel Farber - took his own books off the list and a couple that I read advocate indexing.

The one I would have put in the top 10 is Zweig's "your money and your brain". This is the one that doesn't just prove that indexing outperforms (on average) but explains why it is so.
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Re: Investment Books

Post by Taggart »

Mordko wrote: 29 May 2017 15:50
Graham in The Intelligent Investor, in my opinion, advocates indexing. He does not call it "indexing" - the term wasn't invented, but he talks about mutual funds losing to the market all the time and how one can put a lot of effort and intelligence and still underperform an arbitrary selection of stocks.
Also expressed on page 8 of Ben Graham's speech in San Francisco 1963.

"If an investor had been able, by some rough across-the-board diversification to make up a portfolio approximating these averages he would have every reason to expect as good results as were shown by the very intelligent and careful stock selections by the investment fund-managers. But the great justification for the mutual funds is that very few investors actually do follow such a sound and simple policy."
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Re: Investment Books

Post by Mordko »

^ Yep, that is it. Simple. Impressive how good advice has been out there for an awfully long time but most of us have screwed up at one point or another. and many continue to do so.
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Re: Investment Books

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Taggart wrote: 29 May 2017 17:36

Also expressed on page 8 of Ben Graham's speech in San Francisco 1963.

"If an investor had been able, by some rough across-the-board diversification to make up a portfolio approximating these averages he would have every reason to expect as good results as were shown by the very intelligent and careful stock selections by the investment fund-managers. But the great justification for the mutual funds is that very few investors actually do follow such a sound and simple policy."
YES YES YES, I knew if I looked long enough I'd find something to support my idea or maybe it was Norm's idea and I just copied it, I can't remember.
http://www.stingyinvestor.com/cgi-bin/ETFsVsStocks.cgi
The second option is to buy the index's stocks directly. In this case many more brokerage commissions are charged but there is no annual fee.
This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed
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Re: Investment Books

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BRIAN5000 wrote: 30 May 2017 14:59 YES YES YES, I knew if I looked long enough I'd find something to support my idea or maybe it was Norm's idea and I just copied it, I can't remember.
http://www.stingyinvestor.com/cgi-bin/ETFsVsStocks.cgi
The second option is to buy the index's stocks directly. In this case many more brokerage commissions are charged but there is no annual fee.
Even with $1,000,000 to invest into the Canadian market it would be quite difficult to replicate VCN (MER 0.06%) with its 224 holdings for as little as $600 per year in commissions. At $5 per trade (assuming a cheap discount broker), one would only be able to buy half the holdings, let alone manage new contributions or withdrawals.

We could discuss VUN (MER 0.16%) with its 3,575 holdings, too. :wink:

Low-fee ETFs are a very efficient way to invest into the market's index. They make the portfolio much simpler to manage, too!
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Re: Investment Books

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longinvest wrote: 30 May 2017 15:10 Low-fee ETFs are a very efficient way to invest into the market's index. They make the portfolio much simpler to manage, too!
Especially for POAs and heirs. Almost a certainty that individual holdings would either be consolidated post-death or handed over to a professional advisor. The latter might be the most cost efficient especially if there is no ACB rollover to a surviving spouse.
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Re: Investment Books

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Those aren't the ETF's I'm closet indexing to I'm just using XIU & DIA very few stocks required and combined with an existing portfolio with 1/2 mil of embedded CG it's the best I can do. Any new buys could be more broad based ETFs like you suggest. Rebalancing and death are problems but in absence of any better ideas or planner SO can just let it roll, daughter is coming on board soon.

Starting over or starting from new, and that may happen if we have another 2008/2009, I would use broad based Etf's.
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Re: Investment Books

Post by Taggart »

Many people seem to think that the first working index came out of Vanguard via Jack Bogle. According to the book Five Eminent Contrarians by Steven L. Mintz there were at least three other competitors that came out with their own versions in the early to mid 70's, Batterymarch, Wells Fargo and American National Bank, mostly selling to big institutions. Obviously, Vanguard marketing the S&P 500 index to the general public turned out to be the survivor from that period.
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Re: Investment Books

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I seem to recall that the "Wells Fargo" index fund in 1970s was actually John Bogles' idea (and managed by him). Except it wasn't cap-weighted and didn't fly.
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Re: Investment Books

Post by longinvest »

Brian,
BRIAN5000 wrote: 30 May 2017 15:43 Those aren't the ETF's I'm closet indexing to I'm just using XIU & DIA very few stocks required and combined with an existing portfolio with 1/2 mil of embedded CG it's the best I can do. Any new buys could be more broad based ETFs like you suggest. Rebalancing and death are problems but in absence of any better ideas or planner SO can just let it roll, daughter is coming on board soon.

Starting over or starting from new, and that may happen if we have another 2008/2009, I would use broad based Etf's.
It's perfectly understandable that you want to avoid triggering capital gains just to move the money into ETFs.

People seem to forget that indexing in Canada has only become easier recently. 20 years ago, it was virtually impossible. TD e-series, the first (and only*, so far) family of relatively low-cost index funds has been introduced in late 1999 / early 2000, 17 years ago. iShare's Canadian index ETFs (XIU, XBB, etc.) were also created around that time.

* I would qualify all other Canadian-based index funds as expensive, including TD's I series which is similar to the e-series but with higher fees.

It's not until Vanguard came to Canada in late 2011, less than 6 years ago, that really low-cost Canadian-based ETFs became available in Canada. As for low commissions and commission-free trades, to acquire the ETFs, they're recent too. The lowest commission used to be $30 per electronic trade.

There's probably a good number of people on this forum who had to create and grow their portfolio in a world where low-cost indexing was virtually impossible. We can't criticize them for not having embraced indexing at a time they couldn't do it!

Personally, I wasn't even aware of indexing. If I remember correctly, I started to learn about it in 2007. We moved our then small portfolio into index funds in early 2008. Before then, all I had been exposed to was random financial articles in French-language newspapers, all about selecting individual stocks, which I tried to do without success. Luckily, we didn't lose much in the 2000 debacle (we didn't have much money invested and only lost a relatively small portion of it), but we would easily have had reasonable returns if we only put half our money in XIU and the other in XBB instead of selecting stocks. After the debacle, my wife and I kept all our new savings out of the market; instead, we accumulated a sizable down payment, bought our home, then started aggressively paying down the mortgage. In hindsight, I guess that this was better than continuing to try selecting stocks.
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Re: Investment Books

Post by Taggart »

Well, basically last month marked the 20th anniversary of Eric Kirzner's Easy Chair portfolio here in Canada. Unfortunately, I don't think he got the credit he so well deserved. I knew about it around about that time, but it was basically a novelty. I just took a wait and see attitude for several years after.
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Re: Investment Books

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Never heard of Eric but the article seems to be sound advice, updated of course, for current investment products.
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Re: Investment Books

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Never heard of Eric
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Re: Investment Books

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Taggart wrote: 30 May 2017 19:05 Well, basically last month marked the 20th anniversary of Eric Kirzner's Easy Chair portfolio here in Canada. Unfortunately, I don't think he got the credit he so well deserved. I knew about it around about that time, but it was basically a novelty. I just took a wait and see attitude for several years after.
I read the linked article. Impressive! I've searched about the TIPS 35 and found this: Field Notes - Get Ready for the i60s
by Eric Kirzner.

So, indexing, in Canada, goes back as far as the early 1990s. How did I miss all this until 2007? 🤦
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Re: Investment Books

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longinvest wrote: 30 May 2017 18:30 (...) Before then, all I had been exposed to was random financial articles in French-language newspapers, all about selecting individual stocks (...)
Stéphanie Grandmont has been writing ETF articles in La Presse on occasion. So there's hope. She even had a piece on a three-fund portfolio (VAB-ZCN-XAW) last year: Un portefeuille de conte de fées.
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Re: Investment Books

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Quebec wrote: 01 Jun 2017 07:39
longinvest wrote: 30 May 2017 18:30 (...) Before then, all I had been exposed to was random financial articles in French-language newspapers, all about selecting individual stocks (...)
Stéphanie Grandmont has been writing ETF articles in La Presse on occasion. So there's hope. She even had a piece on a three-fund portfolio (VAB-ZCN-XAW) last year: Un portefeuille de conte de fées.
Back in the late 1990s, wanting to educate myself about investing and business, I bought a subscription to Journal Les Affaires. That lead to some of my worst individual stock losses, thanks to recommended stock picks on what amounted to penny stocks. Classic pump and dump. :evil:

Of course, when I look back at this, today, I realize how uninformed I was. The thing is that such serious-sounding publications did not help me improve my knowledge. Were there articles about indexing and I was just blind to them? I don't know; I have to admit that it's a possibility. Sometimes, the only way we get to learn something is the hard way. :(
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Re: Investment Books

Post by hamor »

Taggart wrote: 30 May 2017 19:05 Well, basically last month marked the 20th anniversary of Eric Kirzner's Easy Chair portfolio here in Canada. Unfortunately, I don't think he got the credit he so well deserved. I knew about it around about that time, but it was basically a novelty. I just took a wait and see attitude for several years after.
I remember reading the book, IIRC they also recommended REITs, may be it was another book...

His updated portfolio:
10 per cent of your portfolio be kept in cash in a high-interest savings account. He recommends another 30 per cent be put into an ETF of diversified bonds <snip>

the rest should go into ETFs that offer a selection of internationally diversified equities, including emerging markets and EAFE (Europe, Australasia and the Far East), but also including a chunk in U.S. and Canadian ETFs.
"Speculation is an effort, probably unsuccessfully, to turn a little money into a lot. Investment is an effort, which should be successful, to prevent a lot of money from becoming a little." Fred Schwed " Where are the Customers’ Yachts?"
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