Weekend Reading: Stock Market Dive Edition

It’s been a rough ride for the stock market this month – the TSX is down more than seven percent in the last 30 days – leading to speculation that we’re headed for another big correction or crash.

It’s been all uphill for investors over the last five years, so any blip on the radar was bound to bring out the doomsdayers.  You’ve got Carl Icahn shorting the S&P 500, and Bill Gross saying goodbye to double-digit returns.  Meanwhile, oil prices are down 20 percent and economies around the globe are on the brink of slipping back into recession.

It helps to think of the bigger picture during these volatile times.  Here’s some wisdom from Warren Buffett in his 1997 letter to shareholders:

“A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef?  Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices?  These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period?  Many investors get this one wrong.

Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall.  In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying.

This reaction makes no sense.  Only those who will be sellers of equities in the near future should be happy at seeing stocks rise.  Prospective purchasers should much prefer sinking prices.”

This Week’s Recap

On Monday I wrote about robo-advisors and how the new online advice services stack up in terms of fees, methodology, and ease of use.

Marie asked an interesting question – when it comes to managing your portfolio, how many stocks (or funds) do you own?

Over on Rewards Cards Canada I looked at retailers who offer a cash discount as an incentive to curb credit card swipe fees.

Finally, don’t forget to subscribe to my new-ish blog, Earn Save Grow.

Weekend Reading

Companies have spent the last decade or more converting defined benefit pension plans into defined contribution plans to save costs and move the risk over to their employees.  But a new study suggests that public sector pension plans considering a move could find that defined contribution plans cost up to 77 percent more to provide the same benefit to workers.

Can your kid pass the marshmallow test?  Adam Mayers looks at five signs your kids may not be headed for financial failure.

Farnoosh Torabi wrote an eye-opening piece on the financial habits of happy stay-at-home parents.

Pension expert Doug Runchey worked with a client to determine the best month to start CPP.

Alan Whitton talks about his time at Nortel and getting laid off after 20 years. Fortunately, Alan received his severance pay and was able to remove funds from the pension plan before Nortel declared bankruptcy.

Financial Uproar discusses why he would never make additional mortgage payments.  #BecauseInvesting

Dan Wesley explains how Canadians can save money on all online purchases by using a shipping outlet at the border.

Travel expert Barry Choi stops by the Canadian Budget Binder blog to offer up 10 ideas to save money on travel.

Have a great weekend, everyone!





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  1. Dan @ Our Big Fat Wallet on October 10, 2014 at 6:44 am

    Thanks for the mention Robb, and great quote from Warren Buffett. Enjoy the long weekend!

  2. Bernie on October 10, 2014 at 9:01 am

    “Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.”

    More Buffett quotes…

    “Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”

    “Our favorite holding period is forever.”

    Buffett loves his predominantly dividend stock holdings.

  3. Barry @ Moneywehave on October 10, 2014 at 10:49 am

    Thanks for the travel shoutout!

    I was hoping to take advantage of these sell offs but since everything is down I don’t actually need to rebalance. Might be a good buying opportunity though.

  4. Big Cajun Man on October 10, 2014 at 3:42 pm

    Thanks for the inclusion this week, the Nortel stuff, I think I am going to write some more about, just need to figure out how to write it without sounding like a whiny former employee. Have a great weekend.

  5. canadianbudgetbinder on October 11, 2014 at 8:53 pm

    Thanks for sharing Barry’s post on CBB. Happy Thanksgiving!

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