Here are my posts for the past two weeks: The Intelligent Investor Count on Yourself Here are some short takes and some weekend reading: Mr. Money Mustache explains an easy way to go about socially responsible investing.  He also describes all he is doing in this area. Justin Bender estimates future return rates for Vanguard Canada’s asset allocation ETFs (VCIP, VCNS, VBAL, VGRO, VEQT).  They’re not very high because stock and bond prices are very high right now. Neil Gross isn’t impressed with proposed changes to the Ontario Securities Commission’s mandate. Big Cajun Man is getting free online access to his credit report due to a data breach.  It’s crazy that he can’t get them to spell his name right.  My TransUnion credit report swapped my home address with my brother’s home address for a few years, and I can’t get that fixed either.  They even use this address in authentication questions before they’ll send me a free credit report.

Author and personal finance columnist Alison Griffiths wrote the book Count on Yourself aimed at beginning investors to teach them do-it-yourself index investing.  She takes a gentle approach starting with interesting stories and working in financial material slowly.  This approach works well initially, but the final range of recommendations allows so many possibilities that many readers will remain confused about what to do with their investments.  Published in 2012, much of the detailed information about discount brokerages and index ETFs and mutual funds is now out of date. A strong part of the book is the explanation of why low-cost index investing is better than the expensive mutual funds most Canadians own.  She makes this case with stories and case studies presented in a way that is accessible to the many Canadians who know little about investing.  Today, you could simplify the recommendations for the novice investor down to just choosing one of Vanguard...

Warren Buffett credits Benjamin Graham with writing “by far the best book about investing ever written,” The Intelligent Investor . It holds a mythical status among value investors. Graham produced four editions from 1949 to 1973. I read the revised edition, which is Graham’s 1973 edition with added material from Jason Zweig in 2003 to explain parts of the book and to add more modern examples. For anyone planning to read this book, I recommend Zweig’s revised edition. Graham’s writing is at times subtle and indirect, and assumes knowledge of historical context that may be unfamiliar to readers so many decades later. Zweig does an excellent job of clarifying Graham’s meaning at critical points. This book is filled with Graham’s widely-quoted ideas, including the distinction between investors and speculators, the Mr. Market parable, and margin of safety. I won’t explain these ideas here. The most remarkable part of the book is in Graham’s 1973 Introduction: “The determinin...

I wrote one post in the past two weeks: What the Experts Get Wrong about Inflation Here are some short takes and some weekend reading: Rob Carrick and Roma Luciw discuss housing costs for young people today. I had to laugh at remarks in the second half by Bridget Casey. It’s true that certain aspects of modern life are more challenging for young people than they were a generation ago. Even adjusting for inflation, rents are higher, university costs are higher, and finding full-time work is harder. However, her characterization of what life was like back in the 1980s was way off. If I could be young again, I’d rather do it in 2020 than go back to the 1980s. Steadyhand offers help to investors who sold out of stocks during the recent crash and are now faced with the hardest decision in investing: how to get back in. Big Cajun Man has a set of heuristics for what to do with savings. There are exceptions to his rules, but you could do a lot worse than his plan.

“In the following analysis, we assume future inflation of 2% per year.”  How often have you seen something like this in investment projections or other financial analyses?  This kind of assumption leads to biases that can invalidate a financial analysis. Even the great Benjamin Graham wasn’t immune.  In the early 1970s, he wrote the following in his book The Intelligent Investor : “Official government policy has been strongly against large-scale inflation, and there are some reasons to believe that Federal policies will be more effective in the future than in recent years.  We think it would be reasonable for an investor at this point to base his thinking and decisions on a probable (far from certain) rate of future inflation of, say, 3% per annum.” The following footnote was added by Jason Zweig in a revised edition of Graham’s work: “This is one of Graham’s rare misjudgments.  In 1973, just two years after President Richard Nixon imposed wage and price contro...