Weekend Reading: Hamburgers Are On Sale Edition

During the tech-stock meltdown at the beginning of the century, legendary investor Warren Buffett served up this famous stock market analogy:

“To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.”

Hamburgers are on sale today. Indeed, the S&P 500 has sunk to levels not seen since (gasp!) the end of November. The notable 10% decline puts the market firmly in ‘correction’ territory, which is great news for stock buyers. And while nobody knows whether this decline is temporary, or the start of a longer bear market, the fact is investors will get more future bang for their buck buying at these levels instead of at the record highs of 10 days ago.

Industry veteran Tom Bradley offers some sage advice with these nine things you need to know about bearish markets to help ensure they work in your favour as an investor. Everyone is scared and prices are down – and for long-term investors, it’s a beautiful thing.

Wall Street Journal columnist Jason Zweig puts things in perspective sharing his investing experience during the 2008/9 financial crisis:

“If I told you the total amount of money I added during the bear market, my wife would kill me now; if I had told her at the time, she would have killed me then.”

This Week’s Recap:

On Monday I put some context to the ‘biggest market drop in history’. Was it really the worst day ever? Hardly.

On Wednesday Marie explained how to determine your cash flow in retirement.

Over on Rewards Cards Canada I shared my latest credit card sign-up – the BMO World Elite MasterCard – which I think just happens to be the best new sign-up offer in recent memory.

Weekend Reading:

Let’s start off with an interesting dilemma: What to do when your advisor retires – just as you are heading into retirement, too?

Andrew Coyne with some sensible advice on why stock markets are falling. No one knows. What should you do? Nothing.

So it’s your first stock market hiccup. What should you do now? New York Times columnist Ron Lieber has the answer.

Canadian Portfolio Manager Justin Bender breaks down Vanguard’s hip new asset allocation ETFs.

Rudy Luukko reports that each of those five-day old Vanguard funds traded at a steep premium during the stock market’s latest plunge.

Ben Carlson on the drawbacks of behavioural finance during a market correction:

“No amount of one-liners or Warren Buffett quotes are going to save you during a downturn if you haven’t planned for it to occur ahead of time. That’s like buying insurance after a disaster has struck.”

Can your ETF pay you $3,000 a month in retirement? Canadian Couch Potato Dan Bortolotti says there are some expensive solutions.

This is worth a read: Our parents are broke and so are we. Now what?

A very good article explaining sequence of return risk by the newly “retired” Tanja at Our Next Life. I use the word “retired” loosely, as the 38-year-old explains:

“Our vision for early retirement has always been that we want work to be completely optional. But I’m not gonna lie – we’re both working a bit this year, and we probably will for a few years. Part of that is just that some super fun opportunities have fallen into our laps, part of it is concern about the future of health care costs, but the biggest motivator is knowing that we have better odds than plenty of other retirees of hitting bad sequence risk. So our goal this year is to earn enough to clear our annual expenses after taxes are taken out. That’s way less than we used to earn and feels totally achievable without having to work much (and while being able to be picky about what we say yes to), but it’s definitely not how we imagined we’d begin our retirement.”

I’m not the early retirement police, but working just enough to clear your annual expenses sounds a lot more like work than retirement. I get that it’s sexier to say you retired at 38, but why not just say you quit your job to pursue other opportunities? Retirement at 40 or 41 is still super impressive. Amirite?

Morgan Housel nails it again with this gem about Sears and why competitive advantages die.

I appreciate this advice from Shark Tank’s Daymond John: Don’t quit your day job to jump into entrepreneurship until you’re absolutely financially ready to do so:

The car insurance industry wants to finally ditch the pink slips, but it’s not as easy as it sounds.

Why 20 percent more mortgages are being denied by big banks and sending borrowers down the credit ladder.

Big Cajun Man discusses an important issue about protecting seniors from schemes and scams.

Finally, Michael James disagrees with Gail Vax Oxlade’s advice on holding conservative investments inside your TFSA.

Have a great weekend, everyone!