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Tuesday, January 16, 2018

Time to Rebalance Your Portfolio

The stock markets in the USA are hitting new records again. It means your stocks, ETFs, Equity Mutual Funds are probably at all time highs as well.

You probably have a desired portfolio allocation for stocks, bonds, international stocks, cash, etc. Check your holdings and you will likely find you are over-weighted in stocks because of the market's performance.

So now is a good time to rebalance your portfolio if your allocation is out of balance by more than a few percent. Sell some of those winning domestic equity holdings, buy bonds or international stocks or whatever you are underweight. This means "take some of your winnings off the table."

This technique of keeping a balanced portfolio is recommended by Warren Buffet, Vanguard, Fidelity, and most other respected investment authorities.

Disclaimer: this is not professional investment advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.

Saturday, January 6, 2018

Watch Out for Inflation

A few of us remember the 70's and 80's when inflation was around 10%.  When I started work, I was disappointed if I did not get a raise of 15 to 20% and I expected my rent to go up about 10% per year.  President Nixon was so worried about inflation that he passed wage and price controls, and he was a Republican.

USA Inflation % per year


For the last 20 years, inflation has been low.  Drastic increases in interest rates by the Fed (Volker) slowed inflation.  Then, productivity increases due to technology (Internet, wireless, computers..), globalization, and other factors have kept wage and price inflation under control.

Right now we see a perfect storm:
  • low unemployment in the USA and many other countries
  • economic growth in the USA and globally
  • fiscal stimulus in the USA from tax cuts and debt increases
  • employers unable to get workers in the USA, immigration being reduced
  • plenty of money in the financial system due to past stimulus, quantitative easing
  • endless war in Afghanistan and Iraq
This should cause an increase in inflation, but so far we don't see it.  No one seems to know why based on my reading of financial media and listening to Bloomberg.  Every "expert" says something like "I can't explain why inflation is low but I think .."

My opinion is that we will get much higher inflation starting in a year or two, perhaps sooner.  There are too many factors that will drive up wages and then prices.

Disclaimer: this is not professional investment advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.

Wednesday, January 3, 2018

BIG Warm Canadian Winter Coats

My wife just talked me into buying a new winter coat, a warm one.  It cost a fortune and I get heat prostration if I wear it inside or in the car, it is very warm.  The "snorkel hood" is so big I look like an elephant with a trunk if I deploy it.

Canadians seem to really be into big warm winter coats, think "Canada Goose" or similar.  You see them everywhere.  If you wanted to organize a walk to the North Pole, you could round up random people on Ste Catherine Street in Montreal and they would all be fully equipped for the expedition.  Even teenagers wear these Michelin Man coats.


Back in the day (60's and 70's), no one would be seen dead with such a big warm coat.  At our high school, you could identify students by their winter wear when it was -20 Celcius:

  1. The "Cool Kids" - they would have a jean jacket with a short sleeve T shirt underneath, ripped jeans, and adidas sneakers.
  2. The "Regular Kids" - jean jacket with sweater underneath or stylish lightweight ski jacket, jeans, and boots.
  3. The "Uncool kids" - random winter jacket, corduroy trousers for warmth, and overshoe boots over unstylish shoes.  Usually accented with a ridiculous winter hat with a huge pom-pom on top.

I fondly remember going skiing in -40C wind chill weather and wanting to attract girls so I wore a sweater, nylon jacket, tight ski pants, stylish hat and gloves, and I got frostbite and no girl took a second look.  If anything had happened, they would have admired my hidden red long underwear I am sure.

But now I am old and under new management, so it is a super warm super thick super duper jacket for me.

Friday, December 22, 2017

What Not To Like About Canada

Canada is having one of those satisfying moments when it can look at its big brother, the USA, and say "Canada is Better!".  A good economy, a benevolent immigration system, health care for everyone, much less violent gun crime, a leader who is not a narcissistic know-nothing blowhard - Canada is doing well, right?  Well not so fast, not everything is great in the land of mooses, hockey, doughnut shops, and snow.  Let's look at a few Canadian negatives:



  1. The weather - there is no where in Canada with good weather year round, and there are a few places that never get good weather.
  2. Things drop off drastically after the big weather negative, but let me continue with a few much smaller knocks on Canada............
  3. Winter bicyclists - who got the crazy idea that bicycling works in a snowy frozen -20 degree country?  The laws of physics and gravity say that balancing on two skinny wheels in the Winter will not work and it is damn uncomfortable as well.  Yet we have bicycle lanes on our roads year round that are cleared so the snow bicycle lunatics can have at it.  I see about 3 of these morons each day, but it probably costs us millions to keep their bicycle lanes up and running year round.
  4. Solar energy - some idiots decided that Ontario should go green and have renewable solar energy, so they funded and built tons of solar panel fields in this far northern country.  They did it quickly and kept most of the old electricity plants so now we generate too much electricity and our electricity bills are too high.  And who thought that solar panel fields next to the foggy St Lawrence River made sense?
  5. Senior citizens with tattoos, piercings, and orange hair.  Who convinced our seniors that looking like a 20 year old was a good idea?  If you scan the sale flyers for deals on Depends and Tylenol Arthritis pills, stay away from mythical butterfly tattoos and orange or green hair.
  6. Plastic currency.  The plastic 5-10-20-50 dollar bills do not fold well, and it looks like you are paying for your purchase with a Pokemon card.
  7. Cirque de Soleil.  I don't know about you, but I am tired of shows called "Skooza" with weird looking people twirling from the ceilings while lousy music plays.  I think their next show should be tailored to the gun lovers in the USA and called Glock.
  8. Bugs.  Canada has world class insects.  They won't give you malaria or river blindness, but the black flies, mosquitoes, and horse flies will make you miserable during the two weeks of Summer each year.
  9. Well that's all I can think of for now.  Let's keep our Canadian humbleness and not be too critical of our American friends and their nasty, racist, know-nothing, blowhard, narcissistic, lying, ugly President.

Photo credit: Flickr

Wednesday, December 20, 2017

Why The Rich of the USA Should Reduce Wealth Inequality

Inequality in the USA has doubled over the past 20 years according to the Congressional Budget Office (see graph below).  The richest 10% have doubled their share of wealth since 1995.  Good for them, why should they care about the other 90% and their reducing share of the nation's wealth?  The big losers are the middle class, who are sinking towards lower middle class or poverty.  


The middle class has a strong interest in the rule of law, reducing crime, a clean environment, functioning roads and other infrastructure, a strong military, and a generally orderly society.  They own good homes, want their children to go to good schools, want to feel safe, and take pride in their country and community.

The poor do not have as strong an interest as they are too busy surviving and they don't need some of these orderly society characteristics.  They may also need to break the law to survive and may resort to drugs to tolerate their situation.

Now let's look south for what happens in a country with a small and poor middle class.  Some examples are Mexico, El Salvador, Peru, and other central and South American countries.  Their middle class is expanding, but is nowhere near as big and wealthy as the American middle class of the 80's and 90's.

What is it like to be rich and live in Mexico or these other countries?  You must live in a walled fenced house with alarms and maybe armed guards, as crime is high and you are an obvious target.  You must pay off the local police and government to get protection and to ensure you are not hassled or shaken down, because the government is corrupt and their employees are poorly paid.  You cannot wear expensive watches or other items when you go out as you will be a target.  When you are forced to travel outside your home, you are at risk of being kidnapped or robbed, so you keep travel to a minimum.  Your kids cannot go to the park or easily participate in sports, other than at their private school.  You cannot count on clean drinking water, garbage removal, sewer service, or clean air as these are luxuries that the government will not provide as the majority of people cannot afford them.  You should be careful to have your family vaccinated against most known communicable diseases as the population around you lives poorly and is prone to hepatitis, cholera, parasites, dengue fever, etc. 

Not a great place to be rich, right?  This is why the rich of the US should be working to ensure a strong American middle class.  The trend is in the wrong direction.

Monday, October 30, 2017

Facebook is Evil

Traditional news outlets (newspapers, TV news, radio news) were dedicated to reporting the "truth".  While it can be argued that some sources slant their coverage one way or another, most western media try to be honest in their reporting.  This honesty has a few characteristics:

  • Report the facts, not opinion.  If an article is opinionated, identify it by calling it an editorial or opinion piece.
  • Report all the news, do not just pick and choose what to report.
  • Do not let commercial considerations influence reporting
  • And probably a few more that I would have learned if I studied journalism instead of engineering at school
Facebook is becoming people's main source of news, but they are an evil source of information.  This is probably not because they want to be evil, but their business model demands it.  Facebook wants you to spend lots of time on their site so they can advertise things to you.  Therefore, they want to know your likes and dislikes, and want to know what interests you.  So they only show you news and opinion that interests you - things you really like and things that get you angry or concerned.  They also show you comments on these pieces of news - the positive comments make you think you are right and the negative comments make you angry and so you read more comments.  You are getting a biassed opinionated snapshot of some of the news.

On top of this, Facebook allows people to buy ads with no oversight, like Russian operatives, Climate Change Deniers, Big Corporations.  You will only see these ads if you might agree with them.  It is unclear whether you are seeing news or ads, adding to readers' confusion.

People who rely on Facebook are being brainwashed by the Facebook algorithms into thinking they are right, that there is no other valid point of view except the ones they know, and that most people agree with them.  They are also missing all news that Facebook censors out of their news feed in order to keep you interested.

This is amplifying the issues of today:
  • Climate Change is manmade?
  • Can muslims be good citizens of western countries?
  • Should American government help with health care?
  • Is free trade good for workers?
So I think Facebook is evil - a biassed commercially driven unregulated source of news - along with being a good way to find out what your old school buddies are doing these days.

Friday, October 6, 2017

Canada's Best Savings Account Interest Rate?


I was frustrated with the abysmal savings account interest rate in Canada: 0.1% to 0.50% at major banks.  In the USA, you can get 1%+ at Capital One Bank or Allied Bank.

Finally, I found a proper bank (CDIC insured) that pays almost 2% interest and charges nothing to electronically transfer money to and from my big bank (RBC).  This bank is Alterna.  Just thought I would pass on the info for folks who would like to make their money work a little harder.