Investorial

Investment and Personal Finance bloggers enjoy their craft because they don’t want to hear the sound of one hand clapping. I am no exception! Though I may be strong with my opinions at times, I am not afraid to learn from the opinions of others!

I was recently contacted by a CFA portfolio manager/analyst regarding my article on Einstein’s rule of 72. His name will be withheld until I can probably thank him for his comment, and obtain his permission to publish full details. Instead, I will paraphrase his analysis of the article for this post. (more…)

Doesn’t it warm your heart seeing those kids grow up right in front of your eyes? I remember when mutual funds were plain-jane investment vehicles. Then came sector/industry funds, followed by asset-allocation funds, fund-of-funds, life-cycle funds. Each evolution becoming more exotic than the last incarnation — not as a way to provide better returns for investor, but as marketing gimmicks to attract investor capital.

ETFs are now heading down the same path. Arriving first on the scene were boring old index ETFs, then came currency ETFs, fixed income ETFs, and precious metal ETFs. The latest version from ProFunds has stirred some talk around the financial blogosophere (found here, here and here) and even prompted a MarketWatch article; where I first read about leveraged ETFs. I have strong feelings about ETF’s new brother, and also the way they are marketing it. Care to hear my opinion? (more…)

My favourite deep-value fund manager, Irwin Michael of ABC Funds, reflects upon the past month’s correction in commodities and looks forward to the future. Speculators are certainly becoming braver since the last big market crash. Their work is evident in their hasty retreat in the last 2 weeks.

Playing the contrarian, Irwin still believes that there are values away from the hot sector that remain unexploited.

[...] We continue to believe that common shares are the last major asset class to participate in the mid-2000 decade asset price run-up which includes gold, silver, base metals, real estate, art, jewelry and collectibles. In effect, we believe that it is cheaper to drill for oil on Bay or Wall Street versus actually drilling for oil in the ground in Alberta, Texas, the North Sea or the Middle East. [...]

There is also a new picture of Irwin Michael at his work-space that wasn’t there in previous months!

I was worried when I checked MightBargainHunter around noon today, but felt relieved just now realizing that my submission to the 23rd edition of the Carnival of Investing came through last minute. I must have been blind to not see it mentioned this afternoon. Much thanks goes to MBH for hosting this week!

I must also admit that my submission, “The 20-Bagger That Got Away“, is not the usual flare you would find at Investorial. This is not a blog focused about my experiences and personal investing exploits. But when the shoe fits, you must wear it. I welcome the carnival visitors and hope you can stick around to find something that might interest you!

Hindsight is always 20 / 20. I’m a huge advocate for learning from the past but would like to remind readers that it is not beneficial holding onto past mistakes. Learn from your experience and look forward to the future to become a better investor!

Investorial readers will be familiar with my slant towards value & contrarian investing principles. But I wasn’t always that way. I started out doing what most people just getting into the stock market would do — a speculative trader. My first true value & contrarian decision was a good one. Looking back on it, it could have been a great one. Here’s the story! (more…)

Albert Einstein’s spirit is still being conjured up to sell the idea of compound interest / returns. The genius physicst regaled compound interest as the ninth wonder of the world. He was also credited with popularizing compound interest by introducing a simple mathematical approximation (click on picture!) :

72 divided by interest rate return = # of years it takes for your money to double.

The rule of 72 also has a cousin, the rule of 115, that helps you determine when your money may triple while earning an arbitrary interest rate.

Financial companies and advisors often use this gimmick to “open the eyes” of less sophisticated investors — your average joes. Primerica is not the only company to leverage the rule of 72 for encouraging people to pursue higher returns. Many other companies have use different derivations of the rule for their own purpose. I’ve also heard of the 7-10 rule, where if your money is earning 7% it doubles every 10 years and vice-versa. Seeing the rule of 72 can be enlightening (as it was for me), but the problem is that such information without the proper context can be very misleading too! (more…)

Big Cajun Man blogged about how his daughter was learning about credit cards and interest rates over at Canadian Financial Stuff. I commented that it is a great idea to get young people learning to respect their credit and building their credit score. However, I was confused by a myth (not the big myth I’m still working on busting tomorrow!) that I heard regarding the right way to build your credit score.

Is it better for your credit score to pay off your entire credit card balance each month or to carry a balance and never miss a payment?

Military Money has the answer! (Got to love that site’s title!)

Investorial’s web statistics revealed that a few visitors came over via Jim Cramer Alerts. It’s not an overwhelming rush of visitors, so I wondered if Cramer faithfuls were hip to the blog game yet. Guess not! It might help if the blog welcomed you with graphic overlays and sound effects!

But it also got me thinking about what it takes to gain television fame! Mad Money has turned into an institution. And so has Jim’s CNBC colleague, Suze Orman with The Suze Orman Show. Many people have come and gone with their own hour of financial tidbits, but these two have the staying power. What does it take to (more…)