Short Takes: Bogus Research, Dumb Things We Do, and more

Here are my posts for the past two weeks:

Nudge

Becoming a Millionaire

Should You Invest or Pay Down Your Mortgage?

Here are some short takes and some weekend reading:

Kewei Hou, Chen Xue, and Lu Zhang say that “The anomalies literature is infested with widespread p-hacking.” In plain English, they investigated hundreds of claimed ways to beat the market and found that almost everyone was full of it. For those who know a little bit about statistical testing, the one-paragraph abstract of their paper is worth a read. If correct, the paper is devastating to a huge area of investment research into market-beating anomalies.

Meir Statman says it’s possible to make better investment decisions if we recognize that our tendencies sometimes push us in the wrong direction. It’s interesting that he says “Normal people are not irrational.” I’ve seen this statement elsewhere from other thoughtful writers. I can say with certainty that I am sometimes irrational, and I see others act irrationally as well. Perhaps experts use a different definition of “irrational” than I use. Another possibility is that they are simply avoiding the term because people react badly to being told they are irrational. The language Statman uses is gentle and much more likely to help people make positive changes.

Canadian Couch Potato explains why you should probably own some bonds, even though bond yields are very low right now. Curiously, I found myself nodding in agreement as I read, even though I don’t follow this advice myself. Keep in mind that I lived through the dot-com bust and the 2008-2009 financial meltdown with an all-stock portfolio without flinching.

Andrew Hallam reproduces an excellent article by Mark Dowie, “The Best Investment Advice You’ll Never Get.”  (Web crawlers complain that this article's address is broken, but it seems to work: https://andrewhallam.com/2017/05/the-best-investment-advice-youll-never-get/).

Preet Banerjee had an interesting discussion with Dan Hallett, Vice-President and Principal at HighView Financial Group. The big news is that Preet seems to have changed his name to Preset.

Big Cajun Man explains that some low-income families don’t bother applying for the Disability Tax Credit mistakenly thinking it won’t help them. But it leads to being able to open an RDSP and getting some free government money.

Boomer and Echo explains how CDIC would protect deposits if Home Capital goes bankrupt. It seems that once CDIC steps in, depositors get access to their money in a few days. What’s not clear is how long depositors could be left without access to their money prior to CDIC stepping in. I’m interested in how long depositors have been left without access to their deposits in past bankruptcies, but haven’t found any useful information yet.