Big Alpha

Together Canadians have $1,467,000,000,000 in mutual funds. That’s almost a trillion and a half. Average embedded fees to own an equity fund are north of 2%. This is why the Investor’s Group parking lot is full of Boxsters and Cayennes.

What’s a mutual fund? It’s a pot of money made up of contributions from many investors that a manager then uses to buy stuff. Like stocks or corporate and government bonds. Managers charge big money to do this job (they have Porsches, too) which is charged back to the investors, and in return try to add ‘alpha’. That’s financial speak for ‘special sauce’, which means they attempt to get better returns than you’d achieve just buying the same assets and holding them. In doing this job they buy and sell frequently, often generating capital gains taxes, which the unitholders also pay.

Trouble is, most of these cowboys fail.

Last year, for example, the number of Canadian mutual funds which focus on US stocks and which outperformed the index was… zero. Nada. Donuts. Not one. In the States almost 70% of fund managers investing in large-cap stocks failed to match the index and yet charged big bucks to do so. Over the last 15 years, the failure rate among managers is 90%.

Ouch. Makes you wonder what you’re paying for. What also hurts is that the fees these non-alpha dudes charge are buried within the funds themselves, unseen by investors who cannot even deduct them from any gains they might make for tax purposes. Meanwhile the so-called advisors who collect the trailer fees from selling funds do not actually engage in any investing themselves and often collect an extra upfront fee for selling them to folks, or create a seven-year mutual-fund prison that penalizes anyone trying to get out.

But, credit where credit is due. There are $1,467 billion in mutual fund assets in Canadians’ RRSPs, TFSAs and other accounts, and yet only $141 billion – a tenth that total – in ETFs (exchange-traded funds). Dinosaurs still rule the landscape!

What’s the difference between the two?

Simple. ETFs are like Teslas – they drive themselves. There is no manager, so there’s no fat management fee for investors to pay. They don’t compensate some fancy guy to try and beat the market, then have to explain why he didn’t. They just pace the market itself. What the S&P 500 does this year, for example (up 18.4%), is what an ETF holding those 500 companies does. Plus, they’re traded on the stock market, which means you can buy or sell with the click of a mouse and get instant liquidity. Try doing that with a mutual fund (you can’t). In fact, most funds have the ability to halt redemptions, so if a crisis emerged you might not be able to sell when you wanted (just like Bitcoin).

ETFs are not free, however. Across a balanced portfolio you can expect to pay an embedded cost of about 0.2% – which is a hell of a lot cheaper than 2.0%.

Now, mutual fund salesguys, for obvious reasons, hate it when they hear such talk. And being in sales, they are daunting adversaries, able to woe naive investors with tales of giant, throbbing Alpha and heaving bosoms. (I may have exaggerated there.)

Jane, in fact, encountered exactly this schtick after she told her mutual fund guy she was leaving to embrace ETFs.

“I talked to him today for the formal “thank you and best of luck” nicety and needless to say he thinks I’m making a huge mistake.  I feel quite defenceless when it comes to talking to financial advisors. My boyfriend tried to do his best to help explain it and then reverted to “Ask Garth.”   For ease I will just lay out what was said by mutual fund guy in bullet form and hopefully you can help me out

  • ETFs are cheaper but that is because they have a much lower rate of return.  So if you compared mutual funds to ETFs, Mutual funds are far better.
  • Fee-based advisors are cheaper because they do not actively manage my account, unlike mutual fund account managers. He said the MER is to pay for someone to manage my account. ETFs don’t charge this because no one is managing anything.
  • ETFs are for old people in their 50’s that can’t absorb a loss.
  • In 2008 ETFs took a much harder hit than mutual funds (50% compared to 20%)
  • Young people should be aggressively investing and diversity is for old people and wusses

“Can you shed some light on this for me?  My mutual fund guy did make me feel a touch uneasy. I would appreciate the insight just for building my own knowledge and confidence.”

You betcha, Janey. ETFs are cheaper because they don’t come attached to some Bay Street smartie with three kids in private school. They are pure reflections of a transparent market. The rate of return for nine out of ten has been higher than an actively-managed mutual fund, at a fraction of the cost. Fee-based advisors (who should collect a fee of no more than 1%) actually build and manage client portfolios. They all shop at Costco and recycle their socks.

ETFs for old people? Did he mention dwarfs?

As for the 2008-9 crisis, a balanced ETF portfolio declined 20% while the stock market slid 55%. It recovered all lost ground in a year, then advanced 17%. It’s not the structure of the asset that is owned (active or passive fund), but the weightings between various asset classes that will protect you in declines. You can be as conservative or aggressive as you want with either kind of funds. But if you like paying more for less, mutuals are for you. (He was really zooming you on that one.)

Anyway, Jane, good luck with the choice. If you stay with your guy, at least get him to take you for a ride. Another one.

109 comments ↓

#1 TurnerNation on 12.08.17 at 5:41 pm

Typcial Kanada, T2 giving all our money away under banker’s directive to BK with a TKO.
when ordinary Canadians cannot get a hospital bed in this banana republic. Why do they hate our freedoms so?

World class?:

http://www.cbc.ca/news/canada/toronto/hospital-overcrowding-leaves-patients-in-hallways-despite-addition-of-beds-1.4438907

But wait! Of course Agenda 21. Back to rickshaws and pedal bikes in this frozen clime.

“Ontario ready to spend $93M to expand bike lanes, boost cycling infrastructure by 2018”

#2 Fan#1 on 12.08.17 at 5:44 pm

I’m still trying to convince mates to ditch their mutual funds for ETFs, even though they winch and detest that my simple RRSP portfolio is on 16% for the year..they stay with a measly 3ish% in mutual funds. The psychology of money is an interesting trait.

#3 jerry on 12.08.17 at 5:46 pm

actually not. my bad.

#4 jerry on 12.08.17 at 5:47 pm

this is why no one trusts me to manage their money

#5 Howard on 12.08.17 at 5:47 pm

Need to add three more zeroes to make that a trillion, Garth.

#6 dakkie on 12.08.17 at 5:48 pm

Stress Testing Canada’s House of Cards – Tread lightly

http://investmentwatchblog.com/stress-testing-canadas-house-of-cards-tread-lightly/

#7 Buddy O Pal on 12.08.17 at 5:48 pm

Yes, agree entirely. Waiting for someone to answer my question about when an ETF closes at the worst possible time, when it wouldn’t be advisable to sell (market decline). Who can predict which ETFs will close and when? Will owning the most liquid ETFs protect you? Looking at the all world funds available to Canadians (VXC, XAW) where many may park most of their portfolio, volume is low and they hold other ETFs. Who’s to say they won’t up and close one day??

#8 D.D. Corkum on 12.08.17 at 5:51 pm

To lump in all etfs as having a certain rate of return is, frankly, criminal. Anyone in the business of selling a financial product should acknowledge there are different categories of these products — both in the ETF and mutual fund space.

Some mutual funds are heavy into equity, for example, while others focus on fixed income. Ditto for ETFs tracking indexes of the same.

Its one thing to argue that actively managed mutual funds can offer the (often unsuccessful) pursuit of higher returns, but a sweeping statement like that bullet point is a flat lie.

#9 Joshua on 12.08.17 at 5:51 pm

I’m a big fan of ETFs and TD eseries mutual funds.

The only concern I have is that the posted MER is not always the full cost of the security.

For example when buying Canadian listed ETFS (etc VUN/ XUU – tracking the US Market or VIU/XEF – tracking the International Developed market) foreign withholding taxes on dividends come into play.

The above mentioned ETFs have one layer of withholding tax which is fine but does it have a large effect on returns when compared to holding US Listed securities in a RRSP (where no tax is withheld)?

#10 Rooster on 12.08.17 at 5:56 pm

#172 Renter’s Revenge! on 12.08.17 at 4:09 pm

I’m squandering my life just by living it. Between working, commuting, working out, shopping, cooking, eating, cleaning, sleeping, and hanging out with friends and family once in a while I don’t even have time to spend money. When I get married, buy a house and have kids, I’ll have even less time.
_———–++
IMHO you need to buy a bicycle and hire a maid, at least till you get hitched.

#11 SmarterSquirrel on 12.08.17 at 5:58 pm

If one of the greatest investors of all time, Warren Buffett suggests people go for low cost index funds… then chances are that’s better advice to follow than the advice of some guy trying to sell you high fee mutual funds.

“Consistently buy an S&P 500 low-cost index fund,” Warren Buffett told CNBC’s On The Money in an interview recently. “I think it’s the thing that makes the most sense practically all of the time.”

#12 Jimmy on 12.08.17 at 5:59 pm

My gosh, how can information like this be free?

In Garth We Tryst.

In Garth We Trust. Typo.

I’m giving you my bitcoins to look after!

#13 Bonhomme Carnaval on 12.08.17 at 6:00 pm

Mutual Funds are still better than Canadian Real Estate.

Why buy individual funds when you can buy Portfolios (funds of funds) with 15 to 20 funds for ~ 2% MER?

ETF have to be purchased through an online discount brokerage account. Most people feel it’s ‘hard,’ just like math.

IG’s the McDonald’s of investing. If you do business with them, GET OUT! Oh and the quirky robot-investor dudes, guess what (?), same parent company!

#14 ETFvsESEIRES on 12.08.17 at 6:01 pm

Hi Garth, i know you don’t comment on specific brands but e-series mutual seems very close to ETF atleast cost wise. Would you consider then equally evil?

Not quite. — Garth

#15 Alberta Ed on 12.08.17 at 6:05 pm

Our IG fees are significantly lower than 2%, and our advisor drives a humble VW (he also farms, and worked his way through business school by driving heavy equipment). Our portfolio, which pretty well mirrors your recommendations, is balanced and diversified and structured to take maximum advantage of tax allowances — thanks to excellent advice from our advisor. IG and similar financial institutions are also subject to stringent regulations and controls.

Nice, But you still pay twice what you need to, non tax-deductible. — Garth

#16 Cindy on 12.08.17 at 6:05 pm

Mr. Turner, the language you use is offensive!

– dwarfs
– conservative
-aggressive
-zooming
-‘take you for a ride’

#17 Mark on 12.08.17 at 6:05 pm

ETFs can be lent out to short sellers, for extra income. You can’t do this with mutual funds. Score more points for the ETFs.

#18 etfman on 12.08.17 at 6:06 pm

I have a few friends that signed up for Mutuals years ago, and no matter how hard I try to plead the ETF case, they JUST WON’T LEAVE THEM. They even admit it’s not the best returns but still they carry on with the bank-sponsored fleecing.

On the other hand, more ETF’s for us :)

#19 Anne on 12.08.17 at 6:14 pm

Right on Garth! To add to this, I wish companies would stop sending their employees to the slaughter with Defined Contribution pension plan by the insurance companies. I went to our latest “info” session and was the only asking about fees, etc. Next to HR but they probably will pass the buck as I’m sure there is some deal around our health plan if the company funnels employees pensions to them. Yikes!

#20 Fake News Again on 12.08.17 at 6:14 pm

#16 Cindy on 12.08.17 at 6:05 pm
Mr. Turner, the language you use is offensive!

– dwarfs
– conservative
-aggressive
-zooming
-‘take you for a ride’

_____________

#MeToo

(barf)

#21 The real Kip on 12.08.17 at 6:14 pm

“This is why the Investor’s Group parking lot is full of Boxsters and Cayennes.”

What do Ryan and Doug drive? Dodge Caravans?

#22 Raincouver on 12.08.17 at 6:14 pm

https://www.moneygeek.ca/weblog/2017/10/16/canadian-housing-market-bubble-interview-seth-daniels-jkd-capital/

#23 Deplorable Dude on 12.08.17 at 6:14 pm

I’ve been through the Investors Group sales pitch….luckily I’d already found this pathetic website so dispensed their BS with ease.

In other news…..or not as it turns out…..CNN spreading fake news again today about Trump Jr…..having trouble keeping up with all these fake stories…..seems to be every day.

I suspect these are Canary traps….Trump is feeding false info and seeing where it leaks out to catch the leakers. Both CBS and CNN today leaked the same false info…..Trump now knows who is leaking on the House Intelligence Committee…..and embarrassing the Media presstitutes as well…

Big MOAB incoming when the Inspector General drops his report on FBI/DOJ corruption soon.

#24 HateRBC on 12.08.17 at 6:23 pm

An advisor at RBC tried to tell me: ETFs don’t pay dividends!

#25 Smartalox on 12.08.17 at 6:25 pm

The OTHER difference between high MER mutual funds and passive ETFs is periodic rebalancing. This is how you get the ‘alpha’.

As often stressed by Garth here on this site, rebalancing means assessing the weightings (%) of what you hold (in case, equities, fixed income, by geographic region and market sector) versus targets, and then SELLING OFF THE WINNERS to buy more of what’s cheap.

The mutual fund manager charges the high MER because they’re (allegedly) doing exactly the same thing, only mutual fund holdings are pretty opaque (ask the IRS what they think of Canadian mutual funds), and if you own more than one fund, you can’t be assured that any rebalancing of the parts will benefit YOUR portfolio as a whole: one manager might rebalance in one direction, the other in a different direction, negating the advantage – and you’d never know the difference.

At least you can pick your ETFs by type, sector and market cap, and they’re easy enough to track, chart and rebalance.

But sure as shooting, if you get a mutual fund sales twerp, and they go on and on about ‘alpha’ and ‘past performance’, but can’t explain the criteria that the fund manager uses to re-balance and harvest gains, take your money and run the other way!

#26 Old Salt on 12.08.17 at 6:31 pm

While I find my employer’s matching contribution to a group RRSP to be a nice perk compared others who have no benefit of this type, the limited selection of funds is painful at the 2.3% MER plus range.

I calculated that if someone started at age 25 they would be better off investing through their own lower fee advisor at age 65 than they would by taking the dollar for dollar match and staying in the group plan. Amazing how half as many invested dollars can be more in retirement.

I wonder if my employer realizes that as each year passes their plan becomes a bigger incentive to leave for another job just so I can liberate those funds to my own RRSP?

#27 Greg on 12.08.17 at 6:45 pm

You can write call options on ETFs. Reduce volatility and increase income.

#28 Penny Henny on 12.08.17 at 7:04 pm

#154 MF on 12.08.17 at 1:04 pm
#32 Penny Henny,

Lol I’m back.

No condos for me yet. Still waiting on OSFI to pass then I will start (unless I chicken out).

I have a good excuse though. I’m in the process of reading an investing book someone on here recommended (The 8 pillars of investing). Trying to get confidence back up in the process.

Thanks for the shout out!

MF
////////////////

The eight pillars of investing?
I just read the four pillars of investing.
I guess you read it twice.
:/

#29 Screwed Canadian Millennial on 12.08.17 at 7:07 pm

You know when you hear of the classic story of the poor old lady who got taken in by a smooth talking vacuum salesman and signed some bizarre contract? Or the old geezer who sends $5,000 to the Nigerian prince expecting to get $1 million back? You know what we call these people? Conservative voters. Easy marks. Dupes voting against their own self interest. Garth’s story yesterday of thst poor old lady reminded me of that.

This country is such a joke. Scam central. BC looks like the epicentre. Anyways that’ll be all for today.

Happy Kwanzaa boomers

#30 I’m stupid on 12.08.17 at 7:09 pm

Just refer him to this…

https://www.google.ca/amp/s/www.cnbc.com/amp/2017/09/18/warren-buffett-won-2-million-from-a-bet-that-he-made-ten-years-ago.html

Nothing else to say!

#31 Kelsey on 12.08.17 at 7:18 pm

@ #26 Old Salt – if you have a brokerage account you can use a form T2033 to transfer to your self-directed RRSP. I do this every 6 months or so for the same reasons (high MER and limited selection). It takes about 10 business days and I can only do 90% at a time without closing the entire employer-sponsored account, but I think it is worthwhile. I am sure if you were using the services of someone like Garth you could do something similar.

#32 Cristian on 12.08.17 at 7:22 pm

“In 2008 ETFs took a much harder hit than mutual funds (50% compared to 20%)”

It all depends what ETFs we’re talking about: bonds? stocks? real estate? gold?
What is important is not one ETF or another but the portfolio and how balanced it is.
I remember that 17-18 years ago when I was silly enough to invest in mutual funds some of them decreased 60% or more, same as the market (or worse, some of them) so the mutual funds sales guy is a liar saying that mutual funds cannot suffer heavy losses.

#33 Damifino on 12.08.17 at 7:27 pm

#29 Screwed Canadian Millennial

You know what we call these people? Conservative voters.
—————————————-

Sometimes these are people suffering from dementia and have become fair game for the lowest of the low. You should pray that science delivers a remedy by the time you’ve forgotten not only where your house key is but also what to do with it.

#34 naive on 12.08.17 at 7:30 pm

Serious question here. How does one go about setting up an ETF and then transferring current RRSP holdings into this ETF?

Other way around, dude. — Garth

#35 Nonplused on 12.08.17 at 7:35 pm

I hope ETF’s aren’t like Teslas! Expensive, short range, almost impossible to obtain, and burn on impact!

Turns out there is a problem with electric cars that nobody really thought about, and that is what happens when you put so many lithium ion cells in one place strung together to create high voltage. Turns out if there is a short circuit caused by and accident or something the battery can catch on fire! And once it’s going it isn’t easy to put out, because the battery doesn’t need oxygen to discharge. So gas in your tank may actually be safer, although gas cars burn to the ground occasionally too.

#36 TortyPapa on 12.08.17 at 7:39 pm

Conservative investing. 80 Fixed income 20 Equity (about $100K in gold). Why not? Trump is gonna nuke NK so the gold should do well. And no Bitcoin. I missed that train :(

#37 Doug t on 12.08.17 at 7:39 pm

Right up there with realtors they are – it’s bad enough that the banks fee you up the wazoo let alone giving your money to clowns like this. What happened to the days of getting 6% on a simple savings account – everywhere you go you get fee’d to death – it’s criminal the profits our banks make while slowly gutting their “customers” – it’s no wonder the frenzy swirls around crypto currencies – the financial dinosaurs are heading towards extinction brought about by their own GREED –

RATM

#38 Invictus on 12.08.17 at 7:44 pm

#16 Cindy on 12.08.17 at 6:05 pm

If you tell us that someone is holding a gun to your head and forcing you to read the blog I would certainly agree with you. But since I am pretty sure that is not the case, maybe you could find a different blog that is full of pretty words, hugs and kisses to read and censor.

The moment I don’t like what he writes I will stop reading it.

Invictus
M44ON

#39 A Yank in BC on 12.08.17 at 7:49 pm

Are there no passively-managed indexed mutual funds in Canada at all? Very common in the U.S.

#40 I’m stupid on 12.08.17 at 8:06 pm

All you need to know or say about paying fees to beat the market.

https://www.google.ca/amp/s/www.cnbc.com/amp/2017/09/18/warren-buffett-won-2-million-from-a-bet-that-he-made-ten-years-ago.html

#41 young & foolish on 12.08.17 at 8:12 pm

How about a few remarks on what happens when most investors move into passive indexing/ETF strategies?

Irrelevant. Will never happen. — Garth

#42 mike from mtl on 12.08.17 at 8:30 pm

#8 D.D. Corkum on 12.08.17 at 5:51 pm

Its one thing to argue that actively managed mutual funds can offer the (often unsuccessful) pursuit of higher returns, but a sweeping statement like that bullet point is a flat lie.
////////////////////////////////////////////////////////////////////////

Like Garth or Buffet I have also yet to see ANY active fund meet or even beat a passive index fund over a medium duration.

Even the simplest passive mutual or ETF 60/40 over 10 years is 5+ annualised inclusive of fees.

Still waiting….

#43 crowdedelevatorfartz on 12.08.17 at 8:31 pm

@#16 Cynthia

Dont spend any time with me Cindy….
It aint just my language thats “offensive”

#44 NoName on 12.08.17 at 8:33 pm

#145 Ace Goodheart on 12.08.17 at 11:41 am
RE: #116 NoName on 12.08.17 at 1:31 am

Yes the electric car debate and how all of us will soon be riding around in battery powered automobiles that drive themselves.

I guess if that ever happens Bolivia will become the capital of the free world (and the richest country on the planet – that’s the only place you can mine lithium in any quantity other than on asteroids)

In Ontario, despite the government throwing free money at electric vehicles ($14,000 + rebates!!!) it has become apparent that by 2022, electric cars will still represent less than 5% of all vehicles on the road.

Cars are made of steel and plastic. Plastic is made of oil. Lots of oil. Steel requires oil in its production process (go to a steel mill you’ll see what I mean).

The question really is not what is oil used for, it is what is oil NOT used for (not much it turns out, it’s in pretty much every consumer product).

So, yeah, the future you’re looking at, with nothing but electric cars, built out of materials that do not require oil in the manufacturing process, is while nice, not very realistic.

i agree demand for oil wont disrepair but, not if, but when self driving cars takes off it will affect volume of cars sold, change might not be fast but its coming.

i talked to frend today again and he was telling me about salt flats and this and that just wait until people clue in that they are “evaporating” underground aquafur and call that mining.

i dont know how long it takes to process a batch, but its not days for sure, it might be fesable now to do salt flats but in not so distance future litium will come from rock, need more litium crash more rock, or wait for lets say weeks on slat flat to go “empty”, simple as that.

year ago i was thinking along those lines but i changed my mind or what ever was left of it.

#45 Mark on 12.08.17 at 8:33 pm

DELETED

#46 Old Salt on 12.08.17 at 9:05 pm

@ #31 Kelsey on 12.08.17 at 7:18 pm

Thanks for the pointer. I’m stuck with a minimum vesting period if I want the employer contribution to continue… for now…

In the meantime I find the group RRSP advisor entertaining with his recommended funds for the upcoming year.

#47 Learning on 12.08.17 at 9:20 pm

Was waiting to post this question for a while … until I saw today`s article. This is perfect opportunity.

I have few MFs. Several times I searched for an ETF with good track record. However, I was unable to. It may be that I wasn’t searching correctly or ETFs are new and don’t have a long history.

I would love to see one ETF that anyone can recommend.

I will start by recommending a MF.
TDB645 – TD Science & Technology Fund
http://quote.morningstar.ca/quicktakes/Fund/f_ca.aspx?t=0P000071HD&region=CAN&culture=en-CA

Please keep risk and taxes (sheltered/non-sheltered accounts) out; just talking straight returns.

#48 tccontrarian on 12.08.17 at 9:32 pm

US ETFs currently in my P/F:

GDXJ, SIL, SILJ, KOL, URA, OIH, FCG, NGE, GXG,…and a couple others I can’t remember now.
Yes, heavily weighted in commodities/energy cause that’s where the most upside is.

And no, I don’t see the need to EVER own Mutual Funds! And Bitcoin? Well that’s for gamblers, which I’m not.

TCC

#49 Michael Trani on 12.08.17 at 9:46 pm

Hi Garth,

Your statement about fee deductibility is not true. Let me quote the conclusion from an on-line article from 2015 that examined this matter in detail.

“When investing in a mutual fund, whether the advisor fee is deducted from income generated within the fund structure (as is the case with embedded mutual funds), or whether the fee is deducted at the investor level personally, the net after-tax result is the same.”

The complete article explaining this can be found at:
http://www.advisor.ca/my-practice/are-there-really-benefits-to-advisor-fee-deductibility-172664

Take care,
Michael

Wrong, no matter how the mutual fund industry spins it. — Garth

#50 Loonie Doctor on 12.08.17 at 9:50 pm

I recently hosted an active manager versus passive ETF smackdown cage match where I looked at some of this data. http://www.looniedoctor.ca/2017/11/09/active-manager-versus-passive-etf-investing-performance/

There were blows exchanged on both sides, but overall the data favours ETFs – primarily because of fees and there is also a linear relationship between higher fees and worse outcome. Sure there is the occasional awesome manager – goodluck picking them.

Fees kill. The only ones worth paying are those that come with good general financial planning/advice. The good news is that the higher your income, the more those fees are worth it in terms of help with efficient planning and the less they actually are (higher the write-off since you are in a higher marginal tax rate). Don’t tell T2 – he won’t like that part.

#51 meslippery on 12.08.17 at 9:53 pm

on 12.08.17 at 6:14 pm

“This is why the Investor’s Group parking lot is full of Boxsters and Cayennes.”

What do Ryan and Doug drive? Dodge Caravans?
———————
No seen here Ryan coming in from the burbs.
http://www.arcticrange.com/sites/default/files/imagecache/gallery_big/gallery/11adds.jpg

#52 westcdn on 12.08.17 at 9:53 pm

My preferreds have taken a hit recently. It was a fun ride and now I have to look elsewhere for profit (think Ferengi – love the laws of acquisition). I will keep them as they pay a decent dividend and after all they are cumulative rate resets and rank higher than common shares in a bankruptcy.

Someone mentioned IOTA cryptocurrency. I looked into it. IOTA is a currency rather than a store of value in my estimate but it is cheap. I have wanted to experiment with cryptocurrencies and this seems to be a good entry. The wallet downloaded easily as compared to my frustrations with a Bitcoin wallet. The irony is that I have to buy Bitcoin to trade for IOTA. That means I need a Bitcoin account through an exchange. The recommended exchange was Bitfinex. They were apparently too busy to allow me to register but I do have IOTA membership. I will keep trying.

My education never ends. The school of hard knocks is cheap and fast unless you can’t learn.

#53 dumpster fire on 12.08.17 at 9:59 pm

Does the price of an ETF reflect the price of the underlying assets or is it based on the bid? Does any difference just get arbitraged away?

I occasionally hear chatter about ETFs being in a bubble but can’t square that circle… Maybe they mean to say that a whole index or sector is in a bubble.

~ breathe deep

#54 TurnerNation on 12.08.17 at 10:40 pm

The Agenda again? That most of rural area will become “no-go” zones for people. Oh there will be reasons given, forest fires, or in article it says “climate change” and water protection.
Wait the same water large corps like Nestle are permitted to drain – for pennies – for their bottled water enterprise?

Watch their actions…and wait till electric cars with short ranges and no rural charging stations are forced. Then we’ll really be confined to the city. They are moving fast folks. Remember your old freedoms.

https://www.thestar.com/business/2017/12/08/ontario-may-expand-greenbelt-to-protect-water-supply.html

#55 Bob Spartus on 12.08.17 at 10:42 pm

The vast majority of wealth management ‘professionals’ in Canada do not yet have a clear understanding of their true role as they appeal to prospective clients. Most believe that the value that they add is through their ability to effectively add value (alpha) as investment managers. This is absurd. Only a slim minority will be able to add value in this realm over a meaningful period of time. This is a simple fact – even Garth and his team of ‘wicked smart’ partners will regress to the mean over time. The investment advice piece of the equation is quickly becoming commoditized. The only way advisors will be able to add value in a credible way in the future is to expunge themselves from the one dimensional view of themselves as ‘investment managers’. Instead, the advisor of tomorrow will ‘hold’ relationships with their clients. Instead of focusing of the silly notion of adding alpha they will focus on discipline – typically through an investment policy statement – and they will focus on more meaningful aspects of their clients lives – retirement planning, estate planning, taxation and family succession. The next generation of investor – if they haven’t already migrated to a Robo or another DIY model will also expect technology, communication and a service model that does not currently exist in most full service models. The day will soon come where this expectation will be hoisted on all Advisors who want to deal in the mass affluent segment.
The primary problem that exists in the wealth management industry today – in Canada – is the regulatory obligation to the client. Currently advisors are only obliged to perform their duties according to what is ‘suitable’ for their clients. Not what is in their ‘best interests’ – this is an obvious problem. But this is highly contested issue at the among dealers. Yes – the majority of investment dealers only feel consumers of investment advice should settle for what is just suitable for them – the notion of doing what is in a clients best interests or God forbid acting as a fiduciary – is anathema to their operating model. This is a problem that has to be resolved and eventually will be. As a looong tenure operator in the industry – I hold a similar view to Garth – fees are critically important, active management is often corrosive to performance. But where the rubber really hits the road is in the discipline and the ability of an wealth manager to offer a full stack of services to justify their fee. As an Advisor recently told me – if I have to mention a stock, mutual fund or ETF in the course of client meeting I consider that meeting a failure. Truth.

#56 45north on 12.08.17 at 11:12 pm

Simple. ETFs are like Teslas – they drive themselves. There is no manager

ETFs don’t charge this because no one is managing anything.

Garth I’ve got a problem here – household debt levels are at an all-time high, credit is being tightened, the housing market in the GTA has peaked. My point is there is going to be deleveraging. Maybe nice gentle deleveraging and maybe not so nice. Mutual funds, ETFs, stocks whatever – deleveraging is going to hit them – some hard some not so hard or at all. In this environment, I want some one managing my money.

#57 Spencer on 12.08.17 at 11:39 pm

How exactly does one ‘recycle’ their socks?

#58 45north on 12.08.17 at 11:46 pm

Raincouver: from your link:

Jin Won Choi is interviewing Seth Daniels

J: Do you think that the Canadian housing bubble is worse than the US bubble in 2006 or do you think it’s not as severe here?
S: I think it’s worse.
J: Okay, and why do you think that it’s worse?
S: Because the size of the debt bubble is bigger

J: Yeah, it’s interesting – I used to work in the risk capacity for one of the big banks and they’re prepared, at least theoretically, for a 50% decline in Canadian housing prices. I can’t remember if that’s regional just for Toronto, or across Canada.
S: Yeah, we’ll see about that.
J: Yeah, as someone who creates these models, I take those models with a grain of salt, to be honest.
S: Yeah, generally people miss the non-linearity of what happens in the down part of a credit cycle,

#59 not so liquid in calgary on 12.08.17 at 11:46 pm

D.D. Corkum on 12.08.17 at 5:51 pm

====================================

just continue reading this great blog. one day you’ll understand…took me a while as well :)

#60 fishman on 12.08.17 at 11:48 pm

Yes, your right Happy Millennium,B.C. is scam central. But it wasn’t always this way. Howe Street was the poor cousin of Bay street until you guys shipped Murray Pezim out here. You couldn’t handle a Toronto Jewish butcher with a grade 4 education. That was akin to the Germans bundling up Lenin & sending him into Russia.

Vancouver’s still the mining headquarters capital of the world, & the cash that’s been dumped into this town is legendary. Welcome to Scamcouver; where we’re secure in our knowledge that we’ve been coached by the best expats that TO had to offer. And a lot of us listened & learnt & came out of the sausage making machine pretty rich.

#61 not so liquid in calgary on 12.08.17 at 11:52 pm

Alberta Ed on 12.08.17 at 6:05 pm

=======================================

my parents once had ‘the visit’ from their local IG guy. he was very open concerning his fee. what was it? 50% of the first years’ contributions. I asked my parents what they thought those fees could bring in, in extra investment revenue…bullet dodged

#62 not so liquid in calgary on 12.09.17 at 12:01 am

Learning on 12.08.17 at 9:20 pm

=========================================

just keep reading this great blog, gradually, day after day, you will live up to your nom de plume

#63 not so liquid in calgary on 12.09.17 at 12:03 am

NoName on 12.08.17 at 8:33 pm

=========================================

MFL. what the hell was that??

#64 Greyhelm on 12.09.17 at 12:14 am

Chasing Alpha

It can be done, but it’s a lot of work.

I have been in mutual funds since the late ’80s, when that was the only game in town (other than stocks and bonds, i.e. before ETFs). In the ’90s there was certainly alpha. Think Frank Mersch and Altimira Equity, and their long-bond fund. HUGE returns above the market. Or Alan Jacobs at Sceptre Equity. Or Howson and Tattersal at the Saxon funds. They consistently beat the market for many years.

The problem is they get flooded with new money and have trouble allocating it as effectively. Or they get old and retire. That’s what happened to me when I moved my wife’s spousal account to David Bissett in Calgary. He could consistently produce alpha. His Multinational Growth fund (where he put all his money) and his Micro-Cap fund both made me huge gains above the market, and the Canadian Equity and Income Trusts funds also out-performed. Then he retired. Fred Pynn continued to do well with Canadian Equity, but then they were bought out by Franklin Templeton. And shortly after, Pynn retired as well.

So I moved my wife’s account to Mawer, another Calgary firm with a record of alpha. Their Balanced fund is a fund-of-funds with an MER under 1%. VERY happy for the first few years (well above benchmark for 3, 5, and 10 years) but slipping recently (only 4.3% for 1 year). But I will give them a while longer. Everyone has a bad year. But it made me nervous when they opened a Singapore office. Stick to what you do best.

My RRSP is with PH&N. Originally, they produced lots of alpha in their Canadian funds (not so much international) partially because of very low fees (less than 1% on a balanced portfolio, never paid trailers). Now, they’re just middling on equities, but still, arguably, “the best fixed income house” in Canada. Their High-Yield Bond fund was my second-best performing fund last year. And their service is exceptional. I have an assigned advisor, but I never use her, as whenever you call, you immediately talk to someone who can do anything you want and give you good advice. Amazing.

Going forward, I will heed Garth’s advice more and invest the dewinding of my mutuals (3% per year) into preferred share ETFs in a TFSA. Although my new grandson’s RESP will include a preferred ETF, but mainly go into TD’s e-series funds with low costs and NO trading fees, so you can make small contributions at no cost.

Thanks Garth for lots of good advice, but there are still a few mutuals out there that do not suck. But if I were a millennial starting out, I’d probably follow your advice. Chasing alpha is hard.

#65 Spectacle on 12.09.17 at 12:50 am

#24 HateRBC on 12.08.17 at 6:23 pm
An advisor at RBC tried to tell me: ETFs don’t pay dividends!

————————————

Hah! The village idiot at BMO gasped when he looked at the balance of my account. He stammers and sputters , ” um sir, you should think about investing some of this in our mutual fund or investments”. I told him it wasn’t my investment account. It’s JUST my bank account…..

Isn’t that a big boundary or professional violation?

#66 Spectacle on 12.09.17 at 1:24 am

Hello Turner Nation ! I must Thank You for your inclusion of Agenda 21-30 and variants of the earthly Scourge that it is; by any name.

Refreshing to see your input here, do keep it up. It didn’t occur to me that the spin the Agenda would take against Tesla owners ( e Cars of every name brand ! )
Keep it up, Thanks.

TurnerNation on 12.08.17 at 10:40 pm
The Agenda again? That most of rural area will become “no-go” zones for people. Oh there will be reasons given, forest fires, or in article it says “climate change” and water protection…………

……Watch their actions…and wait till electric cars with short ranges and no rural charging stations are forced. Then we’ll really be confined to the city. They are moving fast folks. Remember your old freedoms.

https://www.thestar.com/business/2017/12/08/ontario-may-expand-greenbelt-to-protect-water-supply.html

#67 Jamie Dimon on 12.09.17 at 1:45 am

Wow….I’m with Jimmy #12, it’s amazing the amount of no bs wisdom this blog provides. Keep em’ coming Gartho!

#68 Nick on 12.09.17 at 1:55 am

I’m an ETF DIY guy. However a good manager does have benefits in terms of tweaking allocations real time in response to.changing markets. Not worth 2% though. Some ETFs don’t have the right underlying sector allocations or exclude key companies.

#69 crowdedelevatorfartz on 12.09.17 at 2:54 am

@#50 Michael Tranni

No matter how a commission based financial “advisior” spins it….

You….are…..ONLY……..interested …..in….the….commison.

You dont care that you are squandering the life savings of an investor.
You dont care that you are toying with someones future retirement.
You dont care that what you do directly affects the potential long term growth of the client.

You….dont….care.
Its all about YOU.

Clients are a means to an end for your commision. Nothing more.

Speaking from long term personal experience.
I dont give a shit how you spin it.

I would take a fixed fee advisor over a comission based huckster…..ANY time.

Commission based Realtors.
Commission based Investment advisors.

The exact same conflict of interest when it come to goiving clients “advise”.

#70 Smoking Man on 12.09.17 at 3:32 am

#29 Screwed Canadian Millennial on 12.08.17 at 7:07 pm
You know when you hear of the classic story of the poor old lady who got taken in by a smooth talking vacuum salesman and signed some bizarre contract? Or the old geezer who sends $5,000 to the Nigerian prince expecting to get $1 million back? You know what we call these people? Conservative voters. Easy marks. Dupes voting against their own self interest. Garth’s story yesterday of thst poor old lady reminded me of that.

This country is such a joke. Scam central. BC looks like the epicentre. Anyways that’ll be all for today.

Happy Kwanzaa boomers
….

Seek help. You have a mental disorder.

Dr Smoking Man
PhD Herdonomics

#71 Big Daddy on 12.09.17 at 5:30 am

Or…..you just buy the best stocks for a one time fee of $6.50 per trade, regardless of amount, and never pay another fee or charge of any kind….then you kick back and watch as the companies credit your account monthly, quarterly, semi-annually and annually with cash dividends. Will Rogers, TD, ENB etc etc ever go out of business….no…..have companies like these ever with held dividends…..so extremely rare that it’s not statistically significant. Individual companies in $5000 increments is fine for a small portfolio…..35 stocks is plenty when you just choose the cream. Buy the best companies in the world as the bulk of your portfolio…..and even in downturns the continue to pay. When it comes to the US market, the same applies…… If you go global…choose Vanguard for fees so minute they may as well be zero…..like .14% p/a……I own the VWO. Don’t buy bonds…..that’s dead money…..buy preffereds instead and collect 5% dividends…..et voila…..great returns….paid in cash…..no fee’s….zzzzzzzzzzzzzzz

#72 I’m stupid on 12.09.17 at 5:32 am

# 50 Micheal Trani

They double charged the fees you pay. That’s how they got the same numbers. If you go to your link and look at the breakdown you’ll notice 1 row above net cash flow deduction of fees then 4 rows above that deduction of fees again. Talk about blantanly trying to fool your clients. I agree with Garth that all advisers should be feduciaries.

#73 Rooster on 12.09.17 at 6:31 am

My query on how big a pile? yielded some good advice ranging from the cost of staving off the reaper (Damifino) to worries about inflation ( LivinLarge) to going out with a bark not a whimper (Garth). With my family history I don’t expect to live long enough to regret it. Inflation is astronomical for home buyers, but we endured @ 11% and our needs are modest. We are debt free and our only extravagance is of medical necessity; we share an allergy to domestic beer and wine.

Before the Common Sense Revolution, those approaching retirement (next year :-) would reduce equity exposure to reduce risk. The fallback was bonds, but there is no more free-ish lunch. If I stay in equity and suffer a setback I will be sunning in Cape Breton not Costa Rica. My view is that I take all the risk, but the government gets a large chunk of the reward, although I do get most of it back from CPP and old man money. My financial guy takes a (well deserved) small slice (bit more in a down year(s)).

The new retirement buzz is all about allocating for the “glide path” and it looks good on paper. Apparently our longer life expectancy means we throw caution to the wind. But I seriously wonder where the millennials are going to come up with the scratch to keep this Ponzi market aloft. Maybe once the free pot for seniors program is introduced none of this will matter. But I still wonder how much will I really need ? Is there a substitute for cat food, because it is crazy expensive.

#74 maxx on 12.09.17 at 6:54 am

“Over the last 15 years, the failure rate among managers is 90%.”

Yup. Made our escapes in ’98 and never looked back. Got really tired of being a “churnee”, watching the useless things do absolutely nada – at a time when interest rates were hovering around 7%, dot.com was exploding and beanie babies were a hot item.
We went our own way, had far better results and never looked back. Middlemen always have to be (over) paid. For instance, realtards. Meddlers one and all…..Garth excepted.
Trouble is, I’ve seen so many people I know get financially creamed by “respectable” organizations that I ended up terminally jaded and, as much as I’d love better returns, seeking “alpha” is thankfully no longer essential.
I will never invest without an airtight performance guarantee.
Alpha my a$$………that special sauce belongs on fast food……..only it very rarely supersizes your net worth.

#75 Dobermanduke on 12.09.17 at 7:13 am

#53 westcdn on 12.08.17 at 9:53 pm

I am also intrigued with Bitcoin, just for a few bucks. I haven’t pulled the trigger. However if you are having trouble buying it, can’t imagine trying to sell on a run.

#76 BG on 12.09.17 at 7:22 am

Even though I do invest in indexes, there’s still one thing I like about Mutual Funds: they really simplify your taxes.

With ETF you need to handle events like splits and stuff.
Mutual Funds are much simpler.
So I invest in ETF in all my registered accounts where I don’t need to report taxes, and I use TD’s eSeries index Mutual Fund on unregistered accounts where I need to report taxes.

I’m not sure how much it costs me compared to going full ETF. But I know TD eSeries are the cheapest index Mutual Funds in Canada.

#77 BG on 12.09.17 at 7:46 am

#53 westcdn

Be careful with IOTA.
They created their own cryptography algorithm, which is a terrible practice.
The good practice is to reuses proven existing algorithms.

Cryptography is really complex, and used for security purposes. If you create your own, there are so many things you can overlook and end up with a security vulnerabilities.

That’s what happened with IOTA. And when people started pointing out these vulnerabilities, the IOTA team responded by stating they put those vulnerabilities there on purpose so that they could attack someone that copies their technology…

This is an extremely stupid statement to make.
It is obviously a lie.

#78 Holly on 12.09.17 at 9:18 am

Last February , I invested 10 K with the Credit Union , They put it in a mid risk mutual fund . After 4 months the face value was about $ 9600. They said that they do not invest in ETF’S . Who can I move to , to invest in ETF’S ?
Credit Unions are crooks . Years ago , they were for the members , Now they are against them.
I will invest another 20 K this feb. What amount of $$$ do I need to use your services ???
Sincerely Holly

#79 Peter Burrell on 12.09.17 at 9:35 am

Mr. Turner,

Can you direct those of us who are interested in researching more information to a good resource for ETF’s ?

#80 crowdedelevatorfartz on 12.09.17 at 10:00 am

@#58 Spencer
“How exactly does one ‘recycle’ their socks?’
+++++

Go to WalMart.
Buy a new pair.
Remove the old pair.
Put on the new pair.
Leave the old pair by any dumpster.
They will be taken within minutes by an unemployed realtor.

“Recycled socks” aka “Charity” to a person that doesnt deserve it. .

#81 Mike in Toronto on 12.09.17 at 10:08 am

#76 Dobermanduke

When the Bitcoin exits jam, it’s going to be a long ride down before the exchanges clear your orders.

I have some BTC lined up for sale, but my wife, insistent that she doesn’t want to miss out on what could be a new paradigm or something, refuses to let me sell. I got her to agree to a specific insane dollar figure… which we’re slowly approaching.

Of course I’m diversified, I have BTC, LTC, ETH, ETC, BCC!

I would have been out a long time ago. 8x return was enough for me. We’re now at 48x and growing… at least my wife isn’t thinking of buying any… so we’re safe I guess.

#82 D.D. Corkum on 12.09.17 at 10:40 am

#42 mike from mtl on 12.08.17 at 8:30 pm

—-

We are agreeing. Note the careful wording in my comment. I called mutual funds the mostly unsuccessful “pursuit” of higher returns; not the actual achievement of those returns.

People can be looking in the wrong places for something, and they are still looking. Doesn’t change the fact they likely won’t find it there.

#83 crowdedelevatorfartz on 12.09.17 at 11:08 am

Whats old is “new” again?

More language foolishness by the “Separtistes’ “?

http://www.google.ca/url?url=http://montrealgazette.com/opinion/opinion-bonjour-hi-spells-ridicule-for-quebec-in-both-languages&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjdrM-Zp_3XAhVX3GMKHWRRDAIQFggyMAY&usg=AOvVaw1mZFFb2bnKWTXyXKD5397a

They may have lost the referendum but that wont stop them from their “National” dream.

The new Law passed in the Quebec Provincial Legislature ( Errr sorry….the Quebec “National’ Assembly)…..

#84 just wow on 12.09.17 at 11:19 am

I’m still trying to convince mates to ditch their mutual funds for ETFs, even though they winch and detest that my simple RRSP portfolio is on 16% for the year..they stay with a measly 3ish% in mutual funds. The psychology of money is an interesting trait

…………

ignorance is bliss

#85 i'll pass on said advisor on 12.09.17 at 11:22 am

As an Advisor recently told me – if I have to mention a stock, mutual fund or ETF in the course of client meeting I consider that meeting a failure. Truth.

………..

good grief

#86 NoName on 12.09.17 at 11:23 am

Indexing vs active managament feud goes way back.
Minneapolis, the Leuthold Group called indexers unpatriotic way back in 75.

https://cdn-images-1.medium.com/max/1200/1*qEI0lrBuUdKYqTr42_44vw.jpeg

#87 For those about to flop... on 12.09.17 at 11:33 am

Recent Sale Report.

Here’s some fresh bacon for brunch.

2696 w 11th ave,Vancouver.

Originally asking 2.598 then 2.498

Just sold for 2.375

Tax assessment 2.722

They talked about the trees surrounding this house more than the property.

Perhaps that’s going to be the new realtor spin.

Trees….they’re not making anymore of them…

M43BC

https://www.zolo.ca/vancouver-real-estate/2696-w-11th-avenue

#88 Stan Brooks on 12.09.17 at 11:51 am

Mutual funds by definition make money for the banks/the mutual fund company.
(as pensions funds managed by wild bill’s company make money for the company, not the retirrees)

They are a product of the bank sold to the people.
When you buy bank’s mutual funds you are not their client/they are not working for you as they claim, but instead their customer/they sell you a prepackaged product.

If majority of the population moves to ETFs, the government will take their money away from them and will give it to the banks to manage.

#89 No shorts possible on 12.09.17 at 11:57 am

Just like I predicted, no shorting btc:

“Interactive Brokers Group Inc. will offer customers access to Cboe’s bitcoin futures, but only for so-called “long” traders betting on a bitcoin price increase, Chief Executive Thomas Peterffy said in an email. That would help protect Interactive Brokers in case bitcoin futures skyrocket, causing potentially unlimited losses among “short” traders betting on a price fall.”

#90 rainclouds on 12.09.17 at 11:57 am

#16 “Mr. Turner, the language you use is offensive! ”

– dwarfs
– conservative
-aggressive
-zooming
-‘take you for a ride’
—————————————————————-
Offensive? to your imagination……..

the less strident members of society (the vast majority) have perspective. Accordingly, their personal indignation radar is set to normal.

A select few self appointed arbiters of social interaction keep it on full power. Usually they only infect Universities. The disease seems to be spreading?

#91 Leo Kolivakis on 12.09.17 at 11:58 am

Been reading the comments and think it’s important you understand that preferred shares are not a perfect substitute for bonds. Here is an old but good article which explains the pros and cons of preferred shares:

http://www.moneysense.ca/magazine-archive/are-preferred-shares-a-good-buy/

In Canada, many of my investment friends (brokers, traders, etc.) just buy boring but steady dividend stocks like BCE, the big banks, pipelines, utilities, etc., and collect dividends and capital gains.

The problem right now is a lot of dividend shares are grossly overvalued, so you risk losing on capital gains more than what you get from dividends, and if things go badly, company can cut its dividend. Case in point, GE, where investors got hammered by tumbling stock price and then the company cut its divvy, hammering them more!

We have yet to experience a prolonged debt deleveraging period, one that will clobber all risk assets for a very long time.

This is why I tell people to load up on US long bonds (TLT) and protect their portfolio from serious downside risks. I prefer US bonds because in times of crisis, they rally most along with US dollar.

You won’t get rich with bonds, but you’ll weather the debt deflation storm ahead and preserve your capital.

There is no debt deflation storm coming. Utterly bad advice. — Garth

#92 TurnerNation on 12.09.17 at 12:04 pm

#67 Spectacle …don’t encourage me but…did it occur to anyone that the trumped up “VW Emission scandal” was just that: a corporate take down?

The DIESEL powered VW Golfs and Jettas as I understand it could obtain 1000km + per tank. Perfectly fine all these years.
Then, price of diesel was raised to equal that of gas.
Then, the scandal came. Now you can only buy the Electric GOlf..and they ran out of those!

Clean diesel is the way to go. If Lefties complain, halt the trucking industry and let our store shelves go bare.
See what I mean, the emissions thing is garbage. Not a peep over the millions of diesel trucks powering our economy and way of life.

Say didn’t Buffet add another large investiture into a USA Truck Stop company? He sees the future. Drill baby drill.

#93 TurnerNation on 12.09.17 at 12:07 pm

Crowdedelevator F keep buying your man-sized cases of rotgut, I’ve been building a long position a week ago in Molson-Coors (TAP.US) looking for a few points.
I come here seeking alpha with zero hedge

#94 Ronaldo on 12.09.17 at 12:44 pm

Interesting Doc on Blockchain Technology

https://www.youtube.com/watch?v=YwtEUD2crwA&feature=youtu.be

#95 For those about to flop... on 12.09.17 at 12:51 pm

rainclouds on 12.09.17 at 11:57 am
#16 “Mr. Turner, the language you use is offensive! ”

– dwarfs
– conservative
-aggressive
-zooming
-‘take you for a ride’
—————————————————————-
Offensive? to your imagination……..

the less strident members of society (the vast majority) have perspective. Accordingly, their personal indignation radar is set to normal.

A select few self appointed arbiters of social interaction keep it on full power. Usually they only infect Universities. The disease seems to be spreading?

//////////////////////////

Hey Rainy,the funny thing for me about Cindys post was that out of all the words that supposedly offended her “special sauce” was not one of them.

I took no chances and went and put my goggles on before reading any further…

M43BC

#96 Tony on 12.09.17 at 1:18 pm

Re: #40 I’m stupid on 12.08.17 at 8:06 pm

Seems Buffett is privy to all the inside information. He obviously made the wrong bet but the central bankers rigged the stock market and indexes to the nth degree. Instead of DOW 2,500 we might see DOW 25,000. I did read one comment on youtube about two years ago about a pastor who spoke with the elite bankers. They told him they were going to pump the DOW to 40 to 50 thousand and gold and silver would go nowhere. So far that information has been correct.

#97 Lost...but not leased on 12.09.17 at 1:25 pm

Re: Investing and human nature…

I submit that the majority of people are gun shy as they recall the “bad news” of past RE and stock market crashes.

It appears there will always be a minority of parties that will have the savvy and patience to deal in stocks, no different than politics etc.

The majority will likely recall Bre-X, Dot.com bomb, 2008 crash etc. and thus remain at the sidelines. RE is more tangible, moreso for people with short memories, as it floods their psyche daily.

Or, conversely, what if say 90% of the people became involved in the stock market…that would be an interesting dynamic.

#98 robert james on 12.09.17 at 1:44 pm

#95 Ronaldo on 12.09.17 at 12:44 pm This whole blockchain business is pretty interesting ,, it is much more than just Bitcoin or currencies I learned.. I received this letter in the mail a couple of days ago.. This company uses the block chain for data collection for predicting infrastructure failures,, pipe lines,,dams etc.. I will keep an eye on it.. Who knows !!! If anyone is interested :: https://oilprice.com/Energy/Energy-General/The-Tech-Company-Solving-A-Trillion-Dollar-Problem.html

#99 mark on 12.09.17 at 1:49 pm

#9 Joshua on 12.08.17 at 5:51 pm

Justin Bender I believe his name is, has calculated the actual cost of holding ETFs in various accounts.

For Example the XAW all world global equity fund has a MER of about 22 basis points.

The real cost of owning this fund (and similar like xef etc) in a RRSP is closer to 75 basis.

Visit the awesome CPP website for tons of great articles on passive investing.

#100 crossbordershopper on 12.09.17 at 1:58 pm

fees in the usa are dirt cheap compared to Canada. Vanguard etc. huge assets under admin, coffee money fee;s and a tone to choose from.
IG, really who still deals with those guys. Who still has a canadian mutual fund. Like you really need help owning CN Rail, or BMO? and pay a couple points a year for what? Canada is one of the worst countries where you have to pay someone to manage your money because there is so few quality tier 1 names. Then the fund manager makes large fee’s on top of that.
So what do these money managers think they ad to owning a bank stock for clients.
as well banks in canada charge crazy bank fee’s, go to the usa, most small banks charge nothing for banking.
Canada is a serious rip off and limiting yourself to Canada, canadian dollars, high fee;s
simply go to the USA.
NYSE- Financial Capital of the World.

#101 Lost...but not leased on 12.09.17 at 2:32 pm

#95 Ronaldo

Re: YOUTUBE Documentary on blockchain, Bitcoin etc.

NOTE: ***I see several W-A-R-N-I-N-G signs****.

First off, I came across some statistics on Bitcoin ownership….one that stood out was 97% of Bitcoin owners own .01% of a Bitcoin….the vast majority of Bitcoin is owned by approx. 2%. That’s not democracy..that’s a Rockefeller wet dream (ie Competition is a SIN).

The Bitcoin “mining” facility featured is in Iceland?…hmmmmm? That’s the country that either kicked out or jailed their bankers after 2008 crash…YET is fully prepared to host this Bitcoin mining facility…why?…what if Bitcoin crashes or some scandal emerges…Iceland egg on face?

Also intriguing is the Bitcoin mine is powered by politically correct energy…on an Island…separate from other grids. Always mentioned is the huge electric power requirements for Bitcoin. Iceland=Coincidence or for geo-political reasons. Politically neutral Switzerland is also a player in cryptocurrencies.hmmmm…the stage is set for ____?

Bitcoin claims to have limited quantity and is decentralized. This is a good thing? There appears to be no limit as to how many times Bitcoin can split..the promoters seem to literally brag about this.

Bitcoin IS centralized if the vast amount of Bitcoin is in the hands of a few…even the documentary states that many people will no longer be able to afford “mining”Bitcoin and then cash out( aka convert to another currency)to the bigger players.

What’s the difference if fiat currency is printed ad nauseum by Central Bank vs Bitcoin continually splitting and its capitalization goes parabolic ? The vast majority of the population won’t be able to utilize it, and/or afford to, hence what practical value does it have except perhaps to lure in suckers?

The REAL icing on the cake was Giustra involvement. This guy pops up frequently.Quite the intriguing man..moreso since gold mining is his forte’…..has he given up on REAL gold or covering his bets.

Giustra is one of Bill Clinton’s most generous donors(ouch !!!)..and who was involved in a deal(via Hillary Clinton’s political position as Secretary of State) that sold approx. 25% of US’s uranium to Russia ?!? Ol Frank’s business plan seem to be to ingratiate himself with people who have global political “connections”.

Thanks for the link…I am even more convinced to stay away from Bitcoin and other cryptocurrencies. The video seemed nothing more than a slick promotion to lure more people in who will blindly invest for FOMO…moreso in an area the vast majority won’t ever understand, which ironically seems to be its attraction.

#102 45north on 12.09.17 at 3:04 pm

Spencer: How exactly do you recycle your socks?

cut the toe off square, cut longitudinally so the cut goes through the heal – makes a good rag

#103 DON on 12.09.17 at 3:28 pm

Kid brother calls me up…he initiates the subject of bitcoin and I am the sounding board – he has a chance to go in with some people. Well it has become a fade, people around him at the local firehall, greasy (but good) restaurant,etc are talking about bitcoin. City of 10 thousand!

Being well prepared (due to this blog) I asked him how he plans on cashing in? He replied he hadn’t figured that out yet and even the local bitcoin guru (a successful mutual find salesman) didn’t tell him. But passed on some bullshit stories about his successes with bitcoin (supposedly buddy bought them way back – in 2010 and forgot about them till recently…FFS!)

The conversation went on to the unbelievable rise in bitcoin. He thought it has been rising exponentially for the last 7 years. I said nope! There is a graph kicking around check it out bro – Bitcoins historic rise began within a year. I also mentioned to him that 64 Million was recently stolen. I them reminded him of our parents and the pyramid schemes where people bring in new blood and the top cash out. He left with questions to ask his friends. Like how to secure his bitcoin, how to cash out when he wants, where does bitcoins value come from? etc

So Bitcoin’s historic rise started around peak housing? People could no longer afford a first, second or third…home(s) in small towns and big cities across Canada and started piling into bitcoin? Talk of real estate has decreased and now the craze is bitcoin, bitcoin, bitcoin. Ant it is different this time!

I wonder how much credit card debt and house equity are being used to purchase bitcoin? I mean this is fool proof right? I remember people saying that about the dotcom bubble as well. The concept of bitcoin can go forward but this first maiden flight may crash hard. No one can explain the fundamentals – just peer pressure and a get rich quick scheme.

On that note. Just a reminder to all blog dogs that I am almost sold out of Holiday Unicorns and the complimentary Unicorn Santa hat. So get your orders in now, before its too late…you wouldn’t want little Johnny or Jane without a Unicorn rid on Christmas morning…would you?

And to all a good day!

We chatted

#104 DON on 12.09.17 at 3:39 pm

#23 Deplorable Dude on 12.08.17 at 6:14 pm

I’ve been through the Investors Group sales pitch….luckily I’d already found this pathetic website so dispensed their BS with ease.

In other news…..or not as it turns out…..CNN spreading fake news again today about Trump Jr…..having trouble keeping up with all these fake stories…..seems to be every day.

I suspect these are Canary traps….Trump is feeding false info and seeing where it leaks out to catch the leakers. Both CBS and CNN today leaked the same false info…..Trump now knows who is leaking on the House Intelligence Committee…..and embarrassing the Media presstitutes as well…

Big MOAB incoming when the Inspector General drops his report on FBI/DOJ corruption soon.
**************

I could see Trump doing this! Not a bad strategy.

#105 DON on 12.09.17 at 3:46 pm

#38 Invictus on 12.08.17 at 7:44 pm

#16 Cindy on 12.08.17 at 6:05 pm

If you tell us that someone is holding a gun to your head and forcing you to read the blog I would certainly agree with you. But since I am pretty sure that is not the case, maybe you could find a different blog that is full of pretty words, hugs and kisses to read and censor.

The moment I don’t like what he writes I will stop reading it.

Invictus
M44ON
******************
Agreed.

M46BC

#106 DON on 12.09.17 at 3:53 pm

#44 NoName on 12.08.17 at 8:33 pm

#145 Ace Goodheart on 12.08.17 at 11:41 am
RE: #116 NoName on 12.08.17 at 1:31 am

Or maybe other materials or combination of materials to make batteries…who knows in this time of scientific advancements.

#107 Weekend Reading: Your Trusted Advisor Edition on 12.09.17 at 5:45 pm

[…] don’t link out to Garth Turner that often but he absolutely nails this post where a reader presents her advisor’s arguments for why she shouldn’t switch from […]

#108 EV expert on 12.10.17 at 11:36 am

Reply to #35 Nonplused
>>>>
I hope ETF’s aren’t like Teslas! Expensive, short range, almost impossible to obtain, and burn on impact!

Turns out there is a problem with electric cars that nobody really thought about, and that is what happens when you put so many lithium ion cells in one place strung together to create high voltage. Turns out if there is a short circuit caused by and accident or something the battery can catch on fire! And once it’s going it isn’t easy to put out, because the battery doesn’t need oxygen to discharge. So gas in your tank may actually be safer, although gas cars burn to the ground occasionally too.
>>>>

Your comment on electric cars is very misleading when you try to suggest that a gas tank may be safer. Were you aware that there are about 200,000 gas car fires in the U.S. alone every year (on average)?
They did think about that (the high voltage), and that’s why it’s not really a problem:

Tesla also guards against thermal runaway events with an extensive liquid cooling system designed to cool the cells so fast that if one cell catches fire, its neighbors won’t.
https://greentransportation.info/ev-ownership/safer/index.html

The small handful of electric car fires have made some worry whether the cars are safe. Actual indications are that electric cars are safer, from fire, than gasoline cars. Especially when you compare the rate of gasoline car fires to electric car fires.

Of course we want safe vehicles and safety on the road. As a result governments around the world have safety regulations, vehicle safety agencies, testing methodologies and more. Just because a car is driven by electricity doesn’t mean it can skip being certified by those agencies. Electric vehicles have to pass the same vehicle safety code requirements as gasoline powered cars. Well, except for the bits concerning gasoline tanks and the like because electric cars don’t have them.

…Batteries aren’t inherently explosive while gasoline is. Gasoline tanks are essentially fuel bombs waiting to explode, but with top-notch engineering meant to reduce the occurance of that event.

#109 Management Expense Ratio (MER) - Pursuing Retirement on 12.11.17 at 3:02 am

[…] That Scary about her sister and a nice mutual fund lady and then Saturday morning on A Greater Fool Big Alpha Garth turner wrote an article on how Canadians own $1,467,000,000,000 in High cost mutual funds. […]