It’s déjà-vu all over again. After rallying relentlessly from the market bottom of March 2009, stock markets have been beating a retreat for the past couple of weeks. Today alone, S&P 500 dropped 4.78%, the TSX Composite dropped 3.4% and stock markets across the globe experienced similar losses. Note however that bonds rallied and the drop in the Canadian dollar somewhat cushioned the fall in the US market. As an aside isn’t it funny how the investors seek refuge in the US dollar at the first hint of trouble?
What should investors do now? The answer as in the past remains the same (see Stock Market Recovery: What to do Now?, August 3, 2009, Japan Earthquake: What to do Now, March 16, 2011 and Greek Woes: What to do Now?, April 27, 2010): stay the course with the proviso that you have a sensible plan to begin with because nobody knows what tomorrow will bring. This could be the start of a bear market à la 2008-09 or a false alarm à la the summer of 2010. Unfortunately, nobody knows (though many pretend they do) and those who really do aren’t about to tell us.
- The Boston Globe reported an interesting story on how a small group of people exploited a loophole in the Massachusetts State Lottery to earn impressive profits. Now that the story is widely published, the State has introduced new rules to limit lottery sales in stores and plans to eventually shut it down.
- Jon Chevreau says that if you want excitement go to Las Vegas. Investing should be boring and dull.
- Unfortunately, says The Blunt Bean Counter, many investors crave excitement from their portfolios. I personally don’t find passive portfolios boring at all. The markets dived 50% in 2008-09 and pretty much doubled from the lows. That’s plenty of excitement for me, thank you very much.
- Ellen Roseman visits Teksavvy, a company that exclusively employs Canadians, offers an alternative to Bell and Rogers. Based on my experience with them so far, I have to say I have no complaints on Teksavvy either.
- Larry MacDonald wrote about a new study that says pension funds that actively invest 75% to 85% of their portfolios on average are able to beat the market. I haven’t read the paper but Larry Swedroe points to studies in The Quest for Alpha that pension funds do not beat their benchmarks.
- Michael James points out that unlike other walks of life, working hard offers no guarantee of success when it comes to investing.
- Canadian Financial Stuff says that even staycations are pretty expensive these days.
- Steadyhand’s Scott Ronalds recently wrote about a wrap product that held 18 mutual funds managed by 13 different managers. What’s next? A Total Mutual Fund Market fund that holds every mutual fund in Canada?
- Retire Happy Blog’s Jim Yih points out that since mutual funds trail their benchmarks, investors should ask themselves whether they are receiving value for the fees they are paying.
- A recent widow grappling with whether to receive a defined benefit pension or transfer out the commuted value received some valuable suggestions on the Canadian Money Forum.
- Million Dollar Journey featured a handy post on the US dollar credit cards in Canada.