Short Takes: Identifying Bubbles, Debt to Foreigners, and more

Here are my posts for the week:

Rule of 72 in Reverse for Mutual Funds

Crazy Arguments in Support of Leverage

Now is the Time to Consider Lowering Your Portfolio Risk (Rob Carrick mentioned this post on his Carrick on Money Globe and Mail blog -- thanks, Rob)

Here are my short takes and some weekend reading:

Jeremy Siegel gave a very interesting hour-long lecture that includes the great quote “a bubble is an asset class that is going up in price that you don’t own.” Siegel takes a very long-term view of various asset classes and argues that Robert Shiller’s Cyclically Adjusted Price Earnings (CAPE) ratio is thrown way off by recent accounting changes that dramatically lower earnings in the last decade compared to decades past.

Big Cajun Man has a nice chart showing that the percentage of Canada’s debt owed to foreigners is lower than the percentage for other nations. However, in just 2 years, Canada’s percentage jumped from 15% to 25% owed to foreigners.

The Blunt Bean Counter has a guest post explaining severance pay laws. It turns out that the terminated employee has an obligation to seek new work to minimize the old employer’s severance costs.

Canadian Couch Potato argues that when leaving expensive mutual funds for low-cost ETFs, it is best to just pay the deferred sales charges (DSCs). He closes with “the best time to implement your portfolio is always now.” This is usually true, but not always. For example, a member of my extended family is currently waiting a month to make a change to avoid a 1.5% DSC. Waiting a year would not have been worth it, but just one extra month of high MERs is far less than the 1.5% DSC.

Million Dollar Journey explains why he finds Qtrade somewhat lacking as a discount brokerage even though many of his readers are vocal about liking Qtrade.

Sandi Martin makes some interesting admissions about her less than perfect financial habits that came from having free banking through her job for many years. I’ve always been wary of employment-related perks. For example, using a work email address for personal email becomes difficult when you change jobs. Similar problems come with joining company sports teams or leaning on other employer freebies. Free stuff is nice, but it’s important not to let your real life get too tangled up with your employer.

My Own Advisor lists some of his favourite financial advice quotes.