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Old 09-26-2009, 12:22 AM   #21
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Also consider Derek Foster's web site and his books:
Stop Working
Apparently Derek decided to liquidate his portfolio in February.

TheStar.com | Investing | Buy and hold investing guru sells all he has
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Old 09-26-2009, 11:06 AM   #22
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Apparently Derek decided to liquidate his portfolio in February.

TheStar.com | Investing | Buy and hold investing guru sells all he has

<snort> I love the title of the article!
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Old 09-26-2009, 11:19 AM   #23
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Well, he didn't sell at the bottom. I wonder if he got back in before the end of April, or if he's
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Old 09-26-2009, 08:13 PM   #24
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freebird, I appreciate the link but if I could understand the info in the link I think I'm be on my way to become a DIYer and wouldn't need an advisor. I'm also not familiar with many of those US companies, maybe because I'm from Canada.
It's possible you or I missundertood, I wasn't asking what is a reasonable return since nobody has a crystal ball, what I was asking is what was a reasonable return above the Toronto Stock Exchange if investing in Canadian funds?
Oh, geez. I did not read your post correctly. Oops!
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Old 09-27-2009, 01:24 AM   #25
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Apparently Derek decided to liquidate his portfolio in February.

TheStar.com | Investing | Buy and hold investing guru sells all he has
Bad move. I stayed the course and I am up about 40% since Feb. Part of this is due to Canadian bank stocks, oddly enough. (I have an international high yield ETF.)

Don't try to time Mr. Market. And diversify.

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"I think we're in for more pain," he says when explaining his abrupt about-face.
He is in for more pain. I am hurting but I didn't shoot myself in the foot like that.
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Old 09-27-2009, 07:24 AM   #26
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Apparently Derek decided to liquidate his portfolio in February.

TheStar.com | Investing | Buy and hold investing guru sells all he has
Hmmm, he has $472,000 and is lives off of $36,000/year??
I don't think a 7% distribution rate is going to last 60 years.
It probably was $900,000 not too long ago.
Of course being Canadian, he has free health care...if I had free health
care I could retire too.
TJ
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Old 09-27-2009, 08:17 AM   #27
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As said, a reasonable rate of return if investing in TSX index is the return of the TSX index less any fees. if the fess are 1.5% of your assets, then you will be 1.5% in the hole every year. Whether you believe it or not, folks (advisors, lay people, whoever) do not beat the indexes on average. In any given year, some folks will and some folks won't. It would be exceedingly rare if an outfit could beat the TSX year-in-year-out by charging 1.5% annually in fees. I will say that is impossible.

However, I want to point out that "indexes" does not mean just the TSX index or just the S&P500 index. If one used a set of indexes that were not correlated and kept the fees exceedingly low, then one can do well. By "well" I mean that one be on the efficient frontier of risk vs reward. These ideas are described in many places such as the book "The Only Winning Investment Strategy ..." by Larry Swedroe, "All About Asset Allocation" by Rick Ferri, and "The Four Pillars of Investing" by William Bernstein.

It may be too much to ask "My Dream" to read three books. However, a million dollar portfolio will usually be good for $30K to $40K for the rest of your life. If you are paying $15K of that each year to fees (up to 50%!!!), then I think 3 books might be work $15K this year and each and every year until you die.
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Old 09-27-2009, 08:23 AM   #28
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Maybe I can ask a question in return? You stated that you "tried several investment companies as well as an advisor", so you have quite some experience in the use of outside help. How has your portfolio done with all this help?

I can guess the answer because if your outside help was reasonable successful, you probably would not have started this thread. This forum is filled will do-it-yourself success stories and didn't-do-it-myself failed stories.
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Old 09-27-2009, 08:30 AM   #29
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It seems I'm stuck on this thread ...

Do you "need" to outperform the TSX index? If you can achieve your financial goals with less risk, why take the risk?
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Old 09-27-2009, 10:21 AM   #30
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Apparently Derek decided to liquidate his portfolio in February.

TheStar.com | Investing | Buy and hold investing guru sells all he has
thereby destroying any credibility he had.
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Old 09-27-2009, 10:49 AM   #31
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Hmmm, he has $472,000 and is lives off of $36,000/year??
He also works the system. He knows all the special programs the government has an utilizes them to the max. He also gets royalties from his--self-published--books and has had income property in the past.

He has $472,000 and is lives off of $36,000/year, but he has other income. His real message is that you can do it, too.

He has been called to task for not talking about his other income very much.

He has at least one long-standing thread on financial webring.
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Old 09-28-2009, 08:37 AM   #32
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For example, has your private wealth management outfit offered to provide free estate planning, tax planning, etc? Is your advisor a registered bond trader, who can purchase bonds for your portfolio at a 1-2% discount? (I know, you don't have any bonds). And finally, don't forget: management fees on assets under private management are tax deductible.
Yes he has offered us Estate, tax etc. but my wife who does our taxes for the most part did take advice from our advisor. I agree, we should utilize there services more since we're in essence paying for it.


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One last suggestion, My Dream,
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If you want to learn about investing, BNN is the last place to go. You have good resources here and at FWF. Read what they have to say. Read books and articles that they suggest.
I stopped trying to read book on investment since I found it somewhat confusing I tend to learn more from BNN, maybe due to the wording. I don't for the most part go and purchase stock based on there advice although RIMM sounds like a good buy today depending on what it opens at this morning.
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You might want to look around financial webring:
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Financial Webring Forum :: Index

It is sort of the Canadian equivalent to this forum.Enjoy.
As for FWF, I find that they're a great source of advice, knowledge and help, in my opinion as well as several other newbie's we just can't seem to get by the sarcasm and bashing that tends to migrate towards newbie's. I've been a member for couple years and truly heisted in posting more for the above reasons. I'm pm'd several lurkers or other newbie's that either don't or stopped posting and we share the same thoughts. I don't want to bash FWF, I'm only giving some newbie's point of new and believe me when I say it's not just me that has noticed this.

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As said, a reasonable rate of return if investing in TSX index is the return of the TSX index less any fees. if the fess are 1.5% of your assets, then you will be 1.5% in the hole every year. Whether you believe it or not, folks (advisors, lay people, whoever) do not beat the indexes on average. In any given year, some folks will and some folks won't. It would be exceedingly rare if an outfit could beat the TSX year-in-year-out by charging 1.5% annually in fees. I will say that is impossible.
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It may be too much to ask "My Dream" to read three books. However, a million dollar portfolio will usually be good for $30K to $40K for the rest of your life. If you are paying $15K of that each year to fees (up to 50%!!!), then I think 3 books might be work $15K this year and each and every year until you die.
Another reason for asking what a reasonable return is and bear with me while I tell you a short story. My neighbour retired at age 50 (sales rep) on a salary of less then $100,000.00 (sole income), raising a wife and 4 kids. His investment style is as follows.... he would take two mutual funds such as Canadian Equity and Latin America and invest approximately $200k. When the mutual fund would reach a peak of let's say 10% he would do a switch and purchase Money Market funds. When CE and LA would go down for what ever amount he felt comfortable he would buy back in. I checked those funds and indeed they went up and down during the year with favorable gains (on average). He was able to make the 200k grown to over 600k in less then 10 years. I don't believe he withdrew money from this account but he has consistently done well. He claims he started investing when he was a teenager and even gathered a bunch of friends together and met once a month to discuss the world of investing.

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How has your portfolio done with all this help?
I've been with Manulife, IG, TD among others and I have to say TD PIC has been the best so far in regards to advisor communication, knowledge and experience. With the recent downturn in the economy it's difficult to gauge TD PIC success since I'm still down.
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It seems I'm stuck on this thread ...
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Do you "need" to outperform the TSX index? If you can achieve your financial goals with less risk, why take the risk?
No I can't achieve my personal financial goal, since I sometimes feel I'm doing catch based on my previous poor advisors investments of which I did loose some of my principal. Can I survive on what we have, well of course but I wonder if there is an opportunity to do better.

I appreciate the feedback and I'm hoping that some don't feel I'm asking for too much. It was only a question and I haven't made any harsh decisions based on some good comments in this thread. I do respect the opinions in this thread and it has given me some food for thought.
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Old 09-28-2009, 02:26 PM   #33
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All the way back to the original question (what's a realistic percentage above the TSX index). You're talking about return above the benchmark index (called the "alpha") and I presume without more risk (a "beta" of 1.0). A really consistent one or two percent alpha annually would be really good I think, three percent outstanding, and 4 percent exceptional. Maybe that answers your question...

The key though is what is the "beta" of the stock or investment portfolio they would build for you. You can "easily" construct it to outperform the benchmark by 50% in the good years (1.5 beta) but in the bad years you'd lose 50% more, too. That's where they're trying to find out your "risk aversion;" they're trying to determine what is that beta you want. If you're telling them I want minimal risk (less than 1.0 beta) but also returns higher than beta-times-index, that's why they're probably telling you it's unrealistic.

Now, that all they're doing is buying stocks for you, they're basically just running a personal mutual fund with your supposedly individualized investment objectives, for a 1.4% management fee, plus they have no track record (since it would be "customized" for you). My city is full of "investment firms" like that as well, and I don't get it. You can already buy mutual funds with just about every imaginable investment objective and target beta to match your desires, for less fees than 1.4%, and with a track record you can compare. Why not pick a few good mutual funds and buy those instead? Or have an advisor help find a few for you for a one-time fee?
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Old 09-28-2009, 02:33 PM   #34
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One thing I learned a long time ago is that folks (i.e. neighbors) like to talk about their conquests. They seldom talk about their failures and shortcomings.

If you believe your neighbor, then what you should do is obvious: Let him run your portfolio for you. I would suggest you look at his financial statements first if he will let you.
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Old 09-28-2009, 02:52 PM   #35
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You're talking about return above the benchmark index (called the "alpha") and I presume without more risk (a "beta" of 1.0). A really consistent one or two percent alpha annually would be really good I think, three percent outstanding, and 4 percent exceptional. Maybe that answers your question...
You can already buy mutual funds with just about every imaginable investment objective and target beta to match your desires, for less fees than 1.4%, and with a track record you can compare. Why not pick a few good mutual funds and buy those instead? Or have an advisor help find a few for you for a one-time fee?
I don't mind accepting more risk since I've seen my portfolio go up and down by more then 400k in one year and I didn't freak out. I'm starting to understand this more, thanks for making it bit more clear.

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One thing I learned a long time ago is that folks (i.e. neighbors) like to talk about their conquests. They seldom talk about their failures and shortcomings.

If you believe your neighbor, then what you should do is obvious: Let him run your portfolio for you. I would suggest you look at his financial statements first if he will let you.
He has told me about stock/mutual funds that he's lost throughout his life, that's why he now only deals with mutual funds, he's never sugar coated it. I can appreciated the statement "if you believe"..... he's been my neighbour for 25 years, I see his lifestyle as well as talk to him almost everyday, therefore I want to give him some benifit of the doubt. Either way, I know for a fact he's hasn't been employed for about 10 years and have an idea of his spending habits. He has also told me on several occasions before he has bought and sold, not after, I've montored the results and it's come true each time. Therfore..... he talks the talk and walks the walk. I've even taken some of his advice and made over 10% on Canadian Equity and Latin America, mind you I didn't invest anywhere near what he has. He will not however invest for anyone (except his kids) or actually tell me what to buy and sell. He only gives advice and allows you to make your own decisions.
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Old 09-28-2009, 05:36 PM   #36
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Suppose your neighbor is simply matching the returns of a diversified portfolio as described in Larry Swedroe's book? Pretty much anybody can do that since it is all presented in the book in a clear way. It is not hard at all. Your neighbor would still be able to walk the walk. And you would be able to as well.
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Old 09-28-2009, 06:22 PM   #37
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Suppose your neighbor is simply matching the returns of a diversified portfolio as described in Larry Swedroe's book? Pretty much anybody can do that since it is all presented in the book in a clear way. It is not hard at all. Your neighbor would still be able to walk the walk. And you would be able to as well.
So if I understand correctly it's not hard at all to get over 10% returns per year after fees as my neighbour has done? I haven't been able to get anywhere close to that through IG, Manulife etc.
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Old 09-28-2009, 06:27 PM   #38
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No. It was not hard to get over 10% returns per year in you keep the fees less than 0.20%. The future may be different. So far 2009 YTD, everybody should be up about 20% to 25% or more.

Also, how did your neighbor do in 2008? You want to see real proof. LOL!
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Old 09-29-2009, 07:08 AM   #39
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No. It was not hard to get over 10% returns per year in you keep the fees less than 0.20%. The future may be different. So far 2009 YTD, everybody should be up about 20% to 25% or more.

Also, how did your neighbor do in 2008? You want to see real proof. LOL!
In 2008 he saw the market going down and decided to put most of it in money market. He was down in 2008 by probably 30% but this year he's already broken even and is on the upswing. Since he's averaged over 10% per year during the last 10 years, last year brought down his average closer to the 10%. I asked on FWF last year whether it was difficult to obtain an average of 10% per year over a 10 year period since my neighbour has done so and the poll suggested it was next to impossible. Maybe he's got horse shoes up his..........***. He does however spend about two hours per day checking and reading the markets.
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Old 09-29-2009, 09:39 AM   #40
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Broken even? This poll: Bogleheads :: View topic - Portfolio change since 12 months ago? showed that most people were up over the past 12 months. It must be very easy to do. If your neighbor was really in cash for ALL of his investments, he must be up over 50% and not a mere "broken even" since he was probably smart enough to invest at the market bottom last March.
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