Choosing a Career: an interesting Paradox

My youngest daughter will be graduating from high school in a few months and she is concerned that she has not got a solid idea of what she wants to do at University and where she wants to attend. I have told her not to worry about it, I didn’t really know what I wanted to do until I graduated and even then I am not completely sure I ever really decided it just kind of happened (and I was very lucky).

She then said to me that a friend was talking about going to Africa to teach English (interesting I would have thought you were going over there to work for OXFAM or some aid group, do the folks in Africa even want to learn English? They have over 200 dialects, don’t they? But I digress).

I heard that one and said I wasn’t sure that was a great career move, and my daughter said she agreed with me, she thought it was a very interesting choice. I thought about it further and in my mind it strikes me as a very adventurous choice for an 18 year old to take be they male or female.

Last week I started French training, and when I walked into class I smiled. I have two instructors (one does the morning and one does the afternoon) and both of them are from the area around the former French Congo (Burundi, Zaire, etc.,) , so they are Africans that have come to Canada to teach French. Their skills at teaching are very good, and I think they have made a good career choice: they have come from Africa to Canada, to teach French.

I understand people coming to Canada to teach and enjoy a good standard of living and such, I am not as sure about “adventurous” choices like going to Africa to teach. I am glad my daughter has chosen not to investigate the “English teacher” option any further.

When I was younger folks talked about going to Europe to travel, and see the world, and I didn’t think that was a very good idea either (so this may just be a personal opinion), but I told my French instructors this story (about young ladies going to Africa to teach English, and their opinion was going to Africa to teach English might be  a little too “adventurous”  as well.

Maybe I am just a little too conservative? Xenophobic?

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De-Cluttering Financially

Time to get your collective brooms out and sweep out your investments.

As a start of year/end of year task I went through my many investment accounts (boy I really do have a lot of those, holy cow), I noticed that I had a lot of investment vehicles that I should really just eject from my portfolio. Why was I keeping them around? Some of the odd reasons I think were in my mind were:

  • They might actually rebound sorry Charlie, that boat has sailed for these stale leftover investments (some from the tech boom), so that is not a good reason.
  • They seem to be paying OK dividends might not be a bad reason, but then again, if I looked at the MER on these Mutual funds, I was paying other people a lot of money to get these dividends.
  • I’m a lazy sod who just won’t admit when he is wrong I believe we have a winner!

What were the nature of this financial clutter?

  • Two AGF Mutual funds that plodded along but had absurd MERs on them
  • Some left over Cisco stock that used to pay out, but still has not got back to where I bought it some 10 years ago
  • A crappy TD bond mutual fund that was useless as well

Took all the proceeds from those sales and bought a Dividend ETF, unfortunately the losses cannot be taken advantage of, since they were in an RRSP. Should I be buying Dividend devices in an RRSP? Some say no, I like dividends, so that is what I did.

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Eating Your Own Dog Food?

Interesting turn of phrase I have seen used to mean a few different ideas in the software development world and in a few other places as well.

The Interpretation I got for this phrase from the person who sent me was:

Eating your own dog food

  1. Coined by a Microsoft manager, to use the products you develop in your office as your customers would (with the same software quality), to ensure you understand your product and understand your customers needs as well.

It seems to be an extension on the concept of “Practicing what your preech” or “Walk to the walk, don’t just talk the talk…”, but finding a company that actually uses their own product can be a good thing, I have found in my travels in the world of high tech.

Financially Eating Your Own Dog Food

Investing and Financial Institutions are a little harder to figure out if they “Eat their own dog food“, I think it would be amusing to find out that the CEO of my bank didn’t use the bank for his finances (if not very disconcerting).

I would be very interested to see if the following might be happening:

  • The President of the insurance company that espouses “Freedom 55″ actually uses that program him or herself? I kind of doubt that one, but I’ll gladly retract that statement if it is not true.
  • Does the CEO of BMO  use their “Mortgage Insurance” facility, or does he or she simply buy term insurance as others do? My guess is No, they don’t use that either (they may not have a Mortgage mind you either).
  • All those insurance sales folk who want to sell me “Whole Life” insurance, do they buy the product? My guess is some do, but maybe at a much cheaper rate than we do.
  • Does the President of TD use their Stepper GIC product? I think no is the answer on that one too.
  • Do the CEO’s of the Mutual Fund companies that have MER’s of 4 and 5%, buy their own mutual funds? My guess would be not likely.
  • Did Mr. Madoff buy into his own Ponzi scheme? Don’t answer that, it’s rhetorical, by the by, he got 150 years, given he is 72, he’ll be spending the rest of his life in prison (is that enough).

Any other examples of “Eating their dog food” in the financial world I have missed, please chime in the Comments section.

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Balanced Passive Investing

This is the active part of passive investing, balancing (or actually re-balancing) your investments, to fit your investment goals after a period of time. 

Suppose you decide that you are getting older and you want to set up a conservative investment plan for your RRSP, so you decide the following investment goal splits:

  • 40% of the RRSP will be in Bonds, GIC’s or the like (slow growth, but loss less likely)
  • 60% in equities, which you then split into
    • 25% in Canadian Equities  (Canadian Wonder ETF)
    • 25% in U.S. Equities  (U.S. Super ETF)
    • 10% in International Equities  (Worldwide Amazing ETF)

Remember this is an example, you can set your plan up however you wish. You would then decide which index funds, ETFs or the like that you want to act in your passive investment plan, take the money you have available and buy the equities you have identified to act as your category investments. (I have included wacky fictitious names to help out with the example).

Re-Balance

After a period of time you will wish to make sure that your investment gaols are relatively the same percentage wise, and that period of time is your decision, you could choose:

  • Never, simply leave the purchases as is, and walk away (now that is really passive investing), and take out the funds when you need them (I am not espousing this theory simply pointing it out).
  • Every Quarter, if you are really into making sure you aren’t caught out by any market adjustments.
  • When you have more funds to invest in the RRSP, which is usually when I do the re-balance.

I don’t feel good selling one equity to buy another in this methodology (unless something heinous is going on in the markets which dictates that might be the most prudent thing to do (e.g. ETF CEO ran off with all the funds, etc.,)), to ensure the correct balances, so when I have more money to invest, I simply see where I need to put my money to get my investment goal percentages back to where I planned, and hopefully that will put things back into balance.

An example would be that Worldwide Amazing ETF has dropped to actually being 6% of your RRSP (due to your other investments doing so well, let’s say), so you need to buy more of this ETF with your extra funds to get your portfolio back into balance, it’s really that simple (if you look at the Sleeply Mini Portfolio with the Canadian Capitalist he even gives you a nifty little spreadsheet that you can adapt for these types of calculations). 

Time

Over time, more likely your investment goals for where the money should be will change (hopefully becoming more conservative), so you can change your goals when you have more money to invest, or you can sell your equities to change the balance as well. 

This is not an original idea by me, I borrowed it from the Canadian Capitalist and I have seen it around in a few investment books as well, but it is one way to manage your investments, if you don’t want to be an Active investor (or hyperactive).

I also have the dividends in my funds reinvest themselves which helps out too (i.e. I use the DRiP capabilities of the ETFs and Index funds that I hold).

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Jon Stewart is a Big Meanie!

After watching the Jon Stewart vs. Jim Cramer “Smackdown”, I am amused to declare Mr. Stewart the victor in this “Media Showdown” but it is even funnier to think that this makes Mr. Stewart the hardest hitting interviewer on Television.

Let that one sink in, a man who is a Comedic Actor/Comedian is the toughest interviewer on Television right now. This is a scathing and amusing indictment of the state of “Television News” in it’s current incantation.

When I grew up if we wanted to find out about the U.S.A. we watched the CBS Evening news with Walter Cronkite and from that thome you felt confident you were getting the news and it had a high level of integrity. Fast forward to today where most people in the U.S. get their news from the Daily Show and the Colbert Report? Something is not quite right here.

The Financial Smackdown

The Daily Show played up this showdown well, and made it the main part of the show on Thursday, and it did not disappoint.

Mr. Cramer came out in his traditional rolled up sleeves and open collar, but looked very contrite from the get go. Mr. Cramer continued to hide behind the statement, we (CNBC) didn’t do anything to cause regulators to get upset with us, but Stewart shot back with the nastiest hit of the night:

“…Now why when you talk about the regulators, why not the financial news network? That is the whole point of this? CNBC could be an incredibly powerful tool of illumination for people that believe that there are two markets: One that has been sold to us as long term. Put your money in 401ks. Put your money in pensions and just leave it there. Don’t worry about it. It’s all doing fine. Then, there’s this other market; this real market that is occurring in the back room. Where giant piles of money are going in and out and people are trading them and it’s transactional and it’s fast. But it’s dangerous, it’s ethically dubious and it hurts that long term market. So what it feels like to us—and I’m talking purely as a layman—it feels like we are capitalizing your adventure by our pension and our hard earned money. And that it is a game that you know. That you know is going on. But that you go on television as a financial network and pretend isn’t happening…”

This kind of retort continued with Stewart continuing to ask, “What were you guys thinking?” in many different ways.

I do include this clip of Lou Dobbs’ celebrating Jon Stewart’s “victory”:

 

Final Comments

I hope that this lampooning by Jon Stewart sheds some light on the CNBC “coverage” of the Financial Apocalypse (and the stock market in general)  and on Financial Reporting in general, and maybe brings back the Watch Dog portion of the media, but I am not hopeful.

CNBC and most financial shows on TV are pure entertainment and rarely take into consideration what their opinions might do to their viewers. They are paid for by advertisers and answer to those advertisers as well. Until a way that unbiased reporting can be shown on TV, the reporting will continue on the way it has in the past few years (IMHO).

Oh and if you want another place to find interesting information about the Financial Apocalypse, check out Front Line from PBS Inside the Meltdown. It also mentions CNBC as well.

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