Financial Markets Meltdown

[Dean2]

Originally Posted by bdub

Could not agree more and here is some math coming at it from a different angle for folks to consider. I don't think people really think through what exactly this means to their retirements when they start out and surely advisors don't point it out, ours sure didn't before they got the boot years ago.

Say you start out saving at age 30 with the goal of retiring at 55. At the end of every year you put $20000 into your RRSP and it earns 10% per year.

At age 55 you will have 1.96 million.

Now take off 2% in fees every year to the advisor. At age 55 you will have 1.46 million.

Now lets say you have an advisor charging 2% that puts you in ETF's charging .5% for fund fees plus his 2%. Down to 1.36 million.

Now lets say you have a real dirt bag advisor charging 2% who sticks you in a mutual fund that also charges another 2% a year, not that uncommon to see fees that high for mutual funds in Canada. Down to 1.1 million.
When I took over my own stuff, I was in exactly the last scenario.

So, if at the end of the year your advisor doesn't provide enough alpha(extra return) above the benchmark that makes up for their extra fee's why are you paying them? What other service do they provide?

I could go off on a completely different tangent on the efficiency of the stock market, but the point is you don't have very good odds of finding an advisor that will provide alpha above and beyond their fees over time. You are better off sticking your $20000 in a couple low fee ETF's each year and forgetting about it until you are 55. Most likely you will be several hundred thousand's of dollars ahead.

Sorry to offend any advisors on here but that's the truth imo. And check my math, I didn't.

Kind of mind blowing to think that over 25 years you can easily end up paying an advisor a quarter of a million dollars or more. Takes a LOT of really good advice to be worth that many Shekels. On top of that, it is money that isn't compounding for you.

[raab]

Originally Posted by Dean2

Kind of mind blowing to think that over 25 years you can easily end up paying an advisor a quarter of a million dollars or more. Takes a LOT of really good advice to be worth that many Shekels. On top of that, it is money that isn't compounding for you.

I am convinced most advisors are salesmen, not investment gurus. If they knew how to invest they would not be advisors. Am I wrong?

[Dean2]

Originally Posted by raab

I am convinced most advisors are salesmen, not investment gurus. If they knew how to invest they would not be advisors. Am I wrong?

50 clients with 5 million each or 200 clients with 500,000 each, means the advisors end or cut of the fees is at least 50%, at a brokerage or working on commission. So that is well over a million a year. This is risk free money, they get paid whether you make money or not. You need to have a big chunk of change invested to make a million a year, and it is your money at risk.

Like everything else, there are a relative few that are worth what you pay, but there is a whole pot load that suck big time and still charge large fees. If you are paying, it is well worth your time to ensure you are dealing with a good one.

[Map Maker]

CP rail got approved for the merger with KC southern line.
What does that mean?
CP rail now has a rail line that can access all three countries in North America. The only rail line.
Why is it important?
Rail line has shown their property has more rights than government. Think of how little paperwork to ship goods cross border. I would expect companies are signing up long term contracts to access all markets.

Yes I do own CP. but feel it’s a great stock to own long term.

[raab]

Originally Posted by Dean2

50 clients with 5 million each or 200 clients with 500,000 each, means the advisors end or cut of the fees is at least 50%, at a brokerage or working on commission. So that is well over a million a year. This is risk free money, they get paid whether you make money or not. You need to have a big chunk of change invested to make a million a year, and it is your money at risk.

Like everything else, there are a relative few that are worth what you pay, but there is a whole pot load that suck big time and still charge large fees. If you are paying, it is well worth your time to ensure you are dealing with a good one.

I think a lot of people would be better off putting money into companies who have good management than having an advisor. It took me a lot of years to figure out that I do not need an advisor if I invest in companies with good money managers.

To give an example I can give my money to Warren Buffett and Charlie Munger to manage simply by buying Berkshire Hathaway. Granted I might not be able to call up Warren if things are crazy in the market. That said given his track record I would trust him to do the right thing with my money regardless. Which relieves my stress in environments like this. The same can be said about other top CEO’s, when you invest in their companies, you trust that they will do the right thing with your money. Now you do have to listen to quarterly and annual reports, but that is like a 30 minute checkup every 4 months. Pretty easy to keep track of.

The alternative is Joe the bank advisor who took the Canadian Securities Course so he could sell mutual funds for the bank. He probably has no input into what goes into the mutual funds he sells, and will lose his commission if you leave the bank.

That said some people need an advisor. If I absolutely needed an advisor for wealth management I would look for someone who has their own firm.

[eric2381]

If I used a financial advisor, I’d be more interested to be sure they were investing my money in the right companies at the right times and always always always managing risk. I’d be hiring them to manage my money, not to call me to change my diapers and make me feel happy. I hired them to do a job and I’d expect them to do that job. I wouldn’t be hiring them to be my babysitter.

[eric2381]

No offense meant or implied to anybody. Just my thoughts and raw opinion.

[raab]

Originally Posted by eric2381

If I used a financial advisor, I’d be more interested to be sure they were investing my money in the right companies at the right times and always always always managing risk. I’d be hiring them to manage my money, not to call me to change my diapers and make me feel happy. I hired them to do a job and I’d expect them to do that job. I wouldn’t be hiring them to be my babysitter.

Your financial advisor should be your teacher. You need to understand what investments they are putting your money into and why. And it is hardly babysitting. Emotional control is the hardest part of investing IMO.

If you do not trust your financial advisor, and understand why they put money into a company. You’ll probably fire them and sell when they lose 20% on a pick. Even Peter Lynch had picks that didn’t turn out.

If you don’t care about return and just want to manage risk buying multiple index funds is probably the best way to do it. Diversification reduces risk, but also reduces returns. No one became a billionaire by diversifying.

[eric2381]

If people lack the confidence in themselves and are unwilling to educate themselves and put in the work and effort, which includes controlling themselves, and they just want to hire a “professional “, then why would they not just trust the “professional “ .


When people lose their discipline and can’t control their emotions, that results in failure. When things are bought and when they are sold.

[bdub]

Just kind of a response to the last few posts and my previous question.

So, if at the end of the year your advisor doesn't provide enough alpha(extra return) above the benchmark that makes up for their extra fee's why are you paying them? What other service do they provide?

I can understand the value of an advisor for someone with plenty of wealth whose main concern is holding onto that wealth. Perhaps the fees of a good advisor are well worth it.

But for the vast majority of not wealthy people just starting out, a better route to success is to use the tax vehicles we all have, TFSA's, RRSP's etc. and low cost etf's. And just a small bit of education would go a long way.

And we should be teaching this stuff in our schools so that young people have a basic understanding of the simple concepts before they hit the streets. Right now we are setting most of them up for failure instead. Part of the reason we see the high debt levels and lack of savings.

Maybe they are starting to teach this type of stuff in schools now. I don't know?

[eric2381]

I agree.


Also, would these advisors be calling their clients to calm them down for the client’s sake? Or for the sake of the advisor’s job? If the client wants to fire them because the client can’t control themselves and doesn’t have the knowledge

[Map Maker]

Originally Posted by bdub

Maybe they are starting to teach this type of stuff in schools now. I don't know?

I would say no.
I have a grade 12er at home. I haven’t taught her stocks yet but she was taught it in career planning course. They had all student buy 3 stocks with little to no knowledge. Almost all students lost fictional money. So now my kid doesn’t want to invest.
They also taught about credit cards. It’s a lot different being all smart and talking about risks but whole different scenario when your car breaks down and rent is due. My opinion is credit cards should only be had if you have positive cash flow every month. Then they are always paid off. Then you get the perks as I get a free trip to Vegas every year with mine.

Parents have to step up with finances, birth control and drugs. IMO.

[raab]

Originally Posted by Map Maker

I would say no.
I have a grade 12er at home. I haven’t taught her stocks yet but she was taught it in career planning course. They had all student buy 3 stocks with little to no knowledge. Almost all students lost fictional money. So now my kid doesn’t want to invest.
They also taught about credit cards. It’s a lot different being all smart and talking about risks but whole different scenario when your car breaks down and rent is due. My opinion is credit cards should only be had if you have positive cash flow every month. Then they are always paid off. Then you get the perks as I get a free trip to Vegas every year with mine.

Parents have to step up with finances, birth control and drugs. IMO.

I’d like to know what they invested in, and how long they were allowed to hold the stock? If she gets any lesson from that class it should be that it is very hard to make money on stocks short term.

In saying that if her teacher knew how to invest, he probably wouldn’t be teaching.

[fishtank]

UBS to buy credit Suisse for 0.25 Swiss francs a share !!

[bdub]

Originally Posted by fishtank

UBS to buy credit Suisse for 0.25 Swiss francs a share !!

Unbelievable. Was worth over 100 billion usd$ at one time being sold for under 4 now. This banking crisis’ doesn’t seem to be letting up and is spreading. Wonder who’s next.

[KGB]

Originally Posted by Dean2

Have been watching NVIDIA just out of interest since KGB was talking about them. They are down to $136, from a high of $347 in the last 12 months and from $195 Aug 4th. The stock chart is demonstrating an ongoing down trend with lower highs and lower lows. Next support level is at $73 from pre Feb 2020, so this could easily drop a long ways yet. There have also been export controls to China and Russia just introduced on ALL chip makers so that isn't going to help either. Does not bode well for NVIDIA, the other chip makers or a lot of the Tech market in general. I believe we are a long ways from capitulation in the Tech sector.

I guess we were wrong on this one pal! Closed at $267 for a week today… Huge interest and opportunities in AI… Should’ve bought back in December….at $140…Damn!

[Dean2]

Originally Posted by KGB

I guess we were wrong on this one pal! Closed at $267 for a week today… Huge interest and opportunities in AI… Should’ve bought back in December….at $140…Damn!

Hind sight is perfect. Over the years there are a ton of stocks I have missed out on. Never made any money in Crypto, Shopify, Bombardier, Air Canada, Blackberry, Cannabis stocks and a raft of others, but I have also never lost any money on those stocks either.

In this case Nividia did great and went up double, however its large competitor Intel, went from $70 to $29 in the same period so dropped in half. I am not good enough to tell which chip maker will be the winner in any given year so I don't buy Chip stocks.

Like I have said before, you can get rich investing, but not by swinging at the fences and gambling on 10 baggers. I NEVER buy stocks that pay no dividend, stocks that trade at high P/E ratios, Nividia trades at a PE of 113, which means it takes 113 years of their earnings to match this stock price, or after 20 years still make no money, like Shopify, are not in stable industries that have good long term viability, and the Tech world is constantly being upended by innovations. I also don't buy companies with Byzantine structures like the Brookfield Group of Companie or any industry that I cannot completely understand.

Nividia
Previous Close 271.91
Open 270.31
Bid 267.70 x 1400
Ask 267.71 x 800
Day's Range 263.55 - 271.67
52 Week Range 108.13 - 289.46
Volume 45,541,407
Avg. Volume 50,297,757
Market Cap 667.333B
Beta (5Y Monthly) 1.76
PE Ratio (TTM) 113.95
EPS (TTM) 2.35
Earnings Date May 24, 2023
Forward Dividend & Yield 0.16 (0.06%)
Ex-Dividend Date Mar 07, 2023
1y Target Est 267.83.

I stick to Banks, Utilities, Pipelines, Communication etc. They are dominated by large companies, they are Oligopolies, well run, long track records and pay significant dividends at least quarterly. It takes a long time for the share price to double, but earning 7 to 4% dividend means even if the share price never moves and the dividend stays flat, I double my money every 10 to 18 years. That said, all of these companies increase the dividend annually so it doesn't actually take 7 to 18 years to double your money just through the dividends and share usually..

I would love the have a crystal ball, but since I don't I have to stick to the slow but safe way to invest.

[KGB]

There is absolutely nothing wrong with your strategy. We all have our own ideas. Slow and steady, slow and steady. I’m blaming myself for not getting Nvidia shares back in December. I had a gut feelings about them. Oh well, there will be another opportunity, I’m sure of that.
Now here is another one that we discussed in the past: ZIM. I ended up with 400 shares, collected first dividends at about $2 and the next one is coming shortly at $6 with change…. Share price is hoovering in $20-25 range. Can’t complain so far!

[KC1]

This doctor has an interesting article about digital currency
I guess I just share this one

[KC1]

https://vernoncoleman.org/articles/b...-minute-cities

[bdub]

News just coming out that OPEC+ is cutting another 1.2 - 1.5 million bbls/day starting in May.

[thenaturalwoodsman]

Originally Posted by bdub

News just coming out that OPEC+ is cutting another 1.2 - 1.5 million bbls/day starting in May.

Yes the World is sick of the Crook Joe Biden/Dems, they been manipulating Oil for to long and so OPEC steps in so Biden can then say OPEC is at fault, along with Russia, and Trump as per usual.

[raab]

Originally Posted by bdub

News just coming out that OPEC+ is cutting another 1.2 - 1.5 million bbls/day starting in May.

#1 reason I don’t invest in oil companies. It’s not a free market. Also who benefits from this climate crap shutting down the North American Energy industry?

[bdub]

^^^ That's one of the best things about it right now. OPEC has our back. Lack of investment brought on by the climate cult is another huge tailwind. No wonder Warren Buffet continues to plow more money into Oxy.

Whitehouse is already whining.

https://www.bloomberg.com/news/artic...says#xj4y7vzkg

[raab]

Originally Posted by bdub

^^^ That's one of the best things about it right now. OPEC has our back. Lack of investment brought on by the climate cult is another huge tailwind. No wonder Warren Buffet continues to plow more money into Oxy.

Whitehouse is already whining.

https://www.bloomberg.com/news/artic...says#xj4y7vzkg

OPEC doesn’t have our back. They’re using the climate cult to shut down the North American oil industry to restore their monopoly. Look at how the Trudeau family made its millions. The ties between Trudeau and the Saudi’s run deep.

[bdub]

They have our back in the sense that they are going to keep a floor under the price of oil. They have been pretty clear on that for some time and OPEC compliance has been strong lately. They are all in cahoots. Biden putting the brakes on refilling the SPR at 72$ was probably the last straw for OPEC.

Plenty of Canadian oil companies are still making gobs of money at 70$ oil. Part of the low valuation multiples put on these companies are due to the fact that oil prices can be very volatile. OPEC putting a floor here should help increase those multiples. Hopefully anyhow. We'll see.

[raab]

Originally Posted by bdub

They have our back in the sense that they are going to keep a floor under the price of oil. They have been pretty clear on that for some time and OPEC compliance has been strong lately. They are all in cahoots. Biden putting the brakes on refilling the SPR at 72$ was probably the last straw for OPEC.

Plenty of Canadian oil companies are still making gobs of money at 70$ oil. Part of the low valuation multiples put on these companies are due to the fact that oil prices can be very volatile. OPEC putting a floor here should help increase those multiples. Hopefully anyhow. We'll see.

It’s a pretty simple plan use emotionally charged Climate propaganda to sway public opinion. Then back political parties who will use that public support to introduce regulations and reduce the number of competitors. Also back Climate protestors to ensure no new infrastructure is built.

The goal is the complete shutdown of the North American energy industry. OPEC’s monopoly was under threat when North America was producing enough to support itself. Valuations won’t matter when the industry is regulated to the point of collapse.

[Fisherdan]

Originally Posted by bdub

They have our back in the sense that they are going to keep a floor under the price of oil. They have been pretty clear on that for some time and OPEC compliance has been strong lately. They are all in cahoots. Biden putting the brakes on refilling the SPR at 72$ was probably the last straw for OPEC.

Plenty of Canadian oil companies are still making gobs of money at 70$ oil. Part of the low valuation multiples put on these companies are due to the fact that oil prices can be very volatile. OPEC putting a floor here should help increase those multiples. Hopefully anyhow. We'll see.

That’s interesting. Didn’t realize that they had put the brakes on refilling the SPR. I think that pretty much everything that administration says is a lie. Good for OPEC on calling them out.

[bdub]

Originally Posted by raab

It’s a pretty simple plan use emotionally charged Climate propaganda to sway public opinion. Then back political parties who will use that public support to introduce regulations and reduce the number of competitors. Also back Climate protestors to ensure no new infrastructure is built.

The goal is the complete shutdown of the North American energy industry. OPEC’s monopoly was under threat when North America was producing enough to support itself. Valuations won’t matter when the industry is regulated to the point of collapse.

The current clown show running the West won't be around forever. The tide is turning after what Europe experienced this past year I think. The energy industry isn't going away any time soon.

[bdub]

Originally Posted by Fisherdan

That’s interesting. Didn’t realize that they had put the brakes on refilling the SPR. I think that pretty much everything that administration says is a lie. Good for OPEC on calling them out.

I think they are basically broke.
Gonna drag their buts refilling it.

https://www.reuters.com/business/ene...ve-2023-03-23/