And that comes from work that was done by a Nobel Prize winner named Harry Markowitz in the early 1950s. And basically what he found was that by combining asset classes that had different correlations, meaning that stocks and bonds do not behave exactly the same in every market condition. And so really that has come to be known as the basis for Modern Portfolio Theory in the first place.
Well, I mean, you’re going to have to pay tax on it at some point in time. And remember, when you turn and kind of getting ahead when that RRSP when you convert it to a RIFF, you’re not taking the whole thing out. And there’s strategies that a lot of our clients we implement where we may not wait till 72 to convert it to a RIFF and take out the minimum because it’s based on a percentage that CRA has placed. So you could take it out earlier, start draining the RRSP a little bit earlier to get those lower minimums and offset the tax.
And so I think what we’re talking about here is getting true diversification. And so true diversification doesn’t result in a sort of exposure to the same names or what have you. And that’s what we talk about obviously all the time. Another one would be what I’d call just kind of a naive extrapolation of what’s happened in the past. So just because some event happened in the past and the result was X, let’s say, doesn’t mean that you can extrapolate that and say with any kind of conviction that that’s exactly what will happen in the future.
I’m going to make some predictions about that. I predict that investing in stock markets and bond markets over the long time will result in returns that will help investors achieve their financial goals. And it’s taken a long time for them not to go up. Here’s one that worked out, FAANG stocks, FAANG being Facebook, Amazon, Apple, Netflix and Google. Sometimes Netflix is replaced by Microsoft in that acronym, but FAAMG is a little harder to say. Anyway, so the prediction was FAANG stocks outperformed the benchmark S&P 500 as a whole. But again, not for the same reason.
May Market Volatility
I don’t know if you’re familiar with that game, Greg. I haven’t seen an actual I’ve actually since purchased it and I’ve tried playing it with my own kids. Basically, you invest in either different commodities, stocks, or bonds and you roll the dice and see what happens. Listen, we’re going to spend a lot of time over the next coming months talking about each of these items, stocks, bonds, cash, digging into each of them as they come across. But, you know, there’s definitely and you talked about it early in this podcast, the difference on the risk return trade off. And I think it’s important that investors understand what that risk return trade off is for them. And not only that, what I always try to encourage people to do, because if you ask people what return are they looking for?
Versus standing on the edge of a four story building, well, that just seems stupid. It’s just a better way of understanding the two forms of risk. So one is sort of like a feeling forex strategies and one is more of a logical debate with yourself over how much risk is relevant to you. But what we wanted to start with is the two fundamental ways to describe risk.
And this particular I’ll call him entertainment character will tell them if they’re diversified. Those are called investment grade bonds, and when we get below the level of investment grade, we get into high yield bonds or sometimes called junk bonds. And again, with fixed income or bonds cryptocurrency brokers as well, we can diversify geographically. Bonds issued in the U.S. or overseas by foreign corporations or foreign governments may have different trading characteristics. And so we tried to diversify each asset class individually with broad diversification across a variety of areas.
Probably goes to the number two is a vaguely formulated investment policy. So we use investment policy statements when we’re dealing with accounts. And the reason for it is it’s to outline exactly how much risk is appropriate for that investor and that will dictate the strategy, even though we already know the philosophy.
It was basically a brand new company with a big Closed-End Fund called EIT, which was about a billion and a half dollars. And they were looking to advance the way into the open ended mutual fund business. And I won the beauty contest and launched the Advantage Fund. They had some internal management, but they didn’t know what to do with Fixed-Income. I had a great track EasyMarkets review record and I was fortunate enough to win that business. We lost a few funds with them out of the gate, and then we brought in our partners from Aegon USA to launch our Global Income Fund in high yield and now Canoe nine years later 2011 to 2020. It’s an eight point seven or eight point eight dollars billion of assets under management with a fully fleshed out lineup.
Well, I was one of those guys that can never answer the question of what do you want to be when you grow up? I knew I was interested in investments and I went to school in Tacoma, Washington, or Russell was headquartered for a very, very long time, got an internship in college and never left. Or the term that I like to use is rest and digest, which I’ve heard a while ago, and this applies to investing as well. So any time something seems obvious, I guess you got to question it or even ignore it. Stay invested rebalance your portfolio a couple of times a year, ignore the noise, the entertainment media or information.
The Easymarkets South Africa Tour Was A Memorable Experience
They’ve run thousands of marathons or thousands of miles training. And there times they know pretty much what their times are. Peter Gibson looked at a portfolio of 10 stocks.
But most of these companies were not based on sound business models or had any kind of plan to actually turn a profit. And in the end, if you’re investing in a company for longer than a few days or a few months, you need to see earnings from that company in order to justify the investment. And certainly it was a wild time, but again, things fell apart almost as quickly as they grew. Not bad, almost 10 percent a year over that 20 year period.
I prefer litcoin to bitcoin, faster transaction time. I’d just like to add my story, I think others would like to hear it.
— Tereska Taylor (@sunacudehulo) October 26, 2018
And so we try to arrange the holdings accordingly. And if they’re all going for the same goal in terms of retirement, then it’s important to kind of set it up that way. So if you’re fortunate enough to be able to contribute both to an RRSP. A perfect world, you have a bit of a pension at work that takes up some of that RRSP contribution room. Then you can top up your RRSP, your own personal, and then have money for a tax free savings account. You get options, especially going in retirement, where you’re pulling money from what you do. And we work with all our clients in kind of coming up with strategies way ahead of time.
What Accounts Does Easymarkets Offer?
The risk the health care system becomes overwhelmed is becoming a very real possibility and will likely lead to even more severe lockdowns, which appears to be the only real defence in the short term. Too much stimulus might be bad for markets if it risks creating inflation, but for now, markets appear convinced it won’t be an issue. As for Trump, before “Insurrection Day” he was still viewed as the Republican party favourite in 2024, but the Donald may have finally gone too far. One uncertainty we thought had already been resolved was who was going to occupy the White House for the next four years.
- And so based on an agreed upon investment strategy or investment policy, then we as advisors have the ability to make transactions as appropriate for the investors risk that’s already been identified.
- It’s not good news is not bad news.
- A bunch of people decided they were going to punish some rich hedge funds and then the price moved.
- There’s lots of other opportunities in the bond market beyond US Treasuries.
So they still definitely have a place in portfolios from a diversification point of view, from a kind of a risk mitigation point of view where they’re lower risk than stocks. So it lowers your overall risk of your portfolio. And then lastly, I’d say he was just talking about buying a government bond and then just sitting there for 10 years in the world of bonds active managers. And I’m not just saying this because I work at PIMCO.
And I would say this is that time when people should just sit back, take a deep breath and then look at it with their coach. It is not RIFF money, this is RRSP. But there’s so much fear gripping their decisions that they are actually redeeming this RRSP to pay down a mortgage when interest rates are at all time lows. Their retirement plans are completely upended, but yet they feel that their objective is, well, you know what, Steve?
I think there’s a movie called Boiler Room, which is about if your audience wants to kind of see what that means, watch that movie. I think it may a profanity in it, I’m guessing, but it gives you a sense of what it’s forex trading about. It seems to me that chat rooms have become the new boiler rooms. Because that’s exactly what happened here. A bunch of people decided they were going to punish some rich hedge funds and then the price moved.