Mutual Fund and RRSP Advice - EMCEfficient Market Canada is an independent investment magazine for Canadian mutual fund, exchange traded fund (ETF), and self-directed RRSP investors. We translate investment research into practical advice for ordinary self-directed RRSP investing, with focus on low-cost exchange traded funds and mutual funds.Picking Stocks: Avoid What You Know- (Found August 15, 2008 ) Many people think that you should only invest in the things you know well. Famously, Peter Lynch wrote in books like One Up On Wall Street that you should be able to pick great stocks by reflecting on things you see in your job and in your daily life. Accordingly, computer programmers tend to invest in software firms, doctors in drug companies, and bankers in financial services, each believing that their expertise in their industry will help them earn an improved return.It sounds like common...http://www.efficientmarket.ca/article/Picking-Stocks The Birth of Plenty- (Found August 15, 2008 ) Another excellent book by William Bernstein: The Birth of Plenty, How the Prosperity of the Modern World was Created.I haven't included this one in the Book Reviews main list because it is not specifically about investing, it's more an economic history of the world. Explores the notion that the four factors which led to modern prosperty were property rights, scientific rationalism, efficient transportationcommunication, and advanced capital markets. The fundamental question the book asks is,...http://www.efficientmarket.ca/article/Benstein_Investing_History The Globe & Mail Misleads On When To Sell- (Found August 15, 2008 ) The Globe & Mail is running a story on when you should sell a mutualfund that has been underperforming:Too patient with your funds Globe & Mail; 20 Nov. 2004.The article investigates several funds which have "underperformed" asa way of illustrating how you might analyze your own funds. There areseveral gross errors in this analysis that investors ought to be aware of.This article suggests that investors who "buy and hold forever" aresomehow fools--which may just be an attempt to fool...http://www.efficientmarket.ca/article/Globe-Mutual-Fund-Selling Past Performance of Mutual Funds and Stocks- (Found August 15, 2008 ) Will a mutual fund that has been a winner for the last five yearsmore likely be a winner next year Will the stock of a company thathas been rocketing up for the past few weeks continue its ascentWill returns in an S&P-500 index ETF over the next twenty years be roughlywhat it has been on average over the last hundred Absolutely not. Thepast performance of a fund, stock, or even stock market as a whole isno indication of the future return.It's not just some lawyer's disclaimer that you can...http://www.efficientmarket.ca/article/Mutual-Fund-Performance Pay Off Your Debts- (Found August 15, 2008 ) Most of the time, for most consumers, debt is a bad thing. If you find yourself carrying a balance from month to month, especially if it's credit card debt, you're in a financial crisis. You need to throw up a red flag, go into emergency mode, and pay that sucker off. Towards the end of this article I'll tell you how--but first, a few words about the very nature of debt. When is it a good thing When is it badhttp://www.efficientmarket.ca/article/Pay-Off-Your-Debts Trading Shares Over Coffee- (Found August 15, 2008 ) The original stock markets evolved from coffee houses where investors would meet and swap paper over coffee. Gradually, as volumes grew, the participants at the coffee tables became agents for others. Eventually, the coffee houses were replaced with full scale trading floors which evolved into the sophisticated web-based trading systems we use today. Well, you can still do it the old way, and I sometimes do. It's a slow, somewhat painful process which instills (in me anyway) a sense of...http://www.efficientmarket.ca/article/Trading-Shares-Over-Coffee Update: RRSP Reform Receives Royal Assent!- (Found August 15, 2008 ) Bill C-43 has received Royal Assent! The old foreign content limits on RRSP's are now officially and legally gone. You can now put as much of your RRSP into foreign securities as you like with no penalty. Thanks to each and every one of you who contacted your MP and demanded passage of Bill C-43. Efficient Market Canada strongly recommends that you increase the US dollar investments in your RRSP and take advantage of the Exchange Traded Funds available on the US stock market.http://www.efficientmarket.ca/article/RRSP_Foreign_Content_Reform_Enacted The Intelligent Asset Allocator- (Found August 15, 2008 ) William Bernstein's Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk is an excellent introduction to modern portfolio theory and other modern theories of investment: one that anyone can read. Bernstein has a deep understanding of the academic literature, and a skillfull way of explaining it all in terms that anybody can understand. You'll learn how to adjust a portfolio to compensate for risk and about the theory of asset allocation in light of real.http://www.efficientmarket.ca/article/Intelligent_Asset_Allocator Closet Margin Traders: Mortgage Loans and Stock Market Risk- (Found August 15, 2008 ) Most people believe that buying stocks on margin is a silly thing to do: Everybody knows you might get a margin call that turns your heavily margined position into pocket change. The guys who jumped off buildings .http://www.efficientmarket.ca/article/Home_Equity_Investment_Loans Why You Don't Contribute Enough to Your RRSP- (Found August 15, 2008 ) Why don't most people save as much as they should Canadians can contribute up to 18% of their income to their RRSP in exchange for a generous income tax deducation--essentially, free money. Yet most fail to take advantage: In 2003 the median RRSP contributor earned &36;43,000 but their median RRSP contribution was just &36;2600, which is only 6%. Overall, only 34% of those eligible to contribute to an RRSP actually did so. When RRSP room left over from previous years is included the result is...http://www.efficientmarket.ca/article/Retirement_Savings_Rate |