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"High Interest" rates at discount brokers
February 14, 2015
6:14 pm
Jon
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Loonie said

In response to Norman1's post #17, I can't bring myself to assume that there is anything magical about a time frame of 10 years. There is no guarantee that things will work out after 10 years.

It always makes me nervous when there are rules of thumb that are invoked as reliable. It's the role of the unanticipated that one has to worry most about. If everything always went according to plan, then it would be a no-brainer.
.

There are nothing magical or "oft-state" with what Norman, or the Vanguard report say as it only argue that stock will always go up in the very long run because economy is growing in the very long run due to increase in productivity from the use of technologies. So it is better off to start invest early so one can weep the benefit of the long term growth trend. The biggest problem here is; in the long run, we are all dead. In this sense, the entering and exiting time matters because we do not have many decades to out-live the effect of buying at all time high, this is especially true when you are about to retire or in retirement.

I however, believe DCA is suitable for most of us, because we only have stable cash flow from jobs, not a lump sum amount, unless you win lottery sf-laugh

February 15, 2015
2:41 pm
Norman1
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There no guarantee. But, it is highly likely things will work out over ten years. S&P 500 history suggests around 94% probability. sf-smile

I analyzed the annual calendar S&P 500 returns from 1928 to 2014 from New York University Stern School of Business: Annual Returns on Stock, T.Bonds and T.Bills: 1928 - Current. Results are below for calendar holding periods of one year to 32 years.

From 1928 to 2014, five of the 78 ten-year holding periods (6.4% of the holding periods) of the S&P 500 had a negative return. That suggests the probability of breaking even or better is around 94%.

None of the 72 16-year holding periods lost money. That suggests the probability of breaking even or better of at least 71/72 = 98.6%.

Holding Period (Years) Periods Losing Periods (Number) Losing Periods (%)
1 87 24 27.6
2 86 16 18.6
3 85 15 17.6
4 84 15 17.9
5 83 11 13.3
6 82 7 8.5
7 81 6 7.4
8 80 2 2.5
9 79 4 5.1
10 78 5 6.4
11 77 3 3.9
12 76 2 2.6
13 75 2 2.7
14 74 2 2.7
15 73 1 1.4
16 72 0 0.0
17 71 0 0.0
18 70 0 0.0
19 69 0 0.0
20 68 0 0.0
21 67 0 0.0
22 66 0 0.0
23 65 0 0.0
24 64 0 0.0
25 63 0 0.0
26 62 0 0.0
27 61 0 0.0
28 60 0 0.0
29 59 0 0.0
30 58 0 0.0
31 57 0 0.0
32 56 0 0.0
February 15, 2015
7:38 pm
Loonie
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Looks good, and I hope that past success proves to be a predictor of future, although every Prospectus in existence warns us never to assume that.

16 years is a long time for me. I'll be in my early-mid 80s by then, if I'm still here. Even 10 years could be a stretch. I have an excellent gene pool, but, in reality, it's a cr*p-shoot. I am always amused by financial planners who ask how long one expects to live, as if some reliable planning can be premised on the completely unknowable. They usually suggest 90. Why 90? I met with one who resisted my insistence that this be extended to 100. Maybe he was afraid he couldn't devise a plan for me that would last that long!

Presumably, however, one could improve the odds on the S&P with more diversification and periodic rebalancing, making the shorter term more likely to succeed? but maybe not, if the S&P500 is really the strongest index. Should one simply buy and hold this one index?

On the other hand, I don't know what the future is for the US economy. I do know that the US gov't is massively overextended financially, with unprecedented levels of debt which have not come close to stabilizing and probably can never be paid off. Long-promised interest rate rises have not been possible due to the fragility of the economy, resulting in some of the lowest rates ever. There is nothing much backing the dollar but faith. Other economies are on the rise. GNP is not strong enough, so I am told. The world seems to be in a state of great flux. Foreseeable environmental crises are going to be expensive in ways we cannot yet imagine.
And nothing lasts forever. The future? I have no idea.

I would love to avoid doom-and-gloom but I am just not hearing solid answers to these issues.

February 16, 2015
10:27 am
Bill
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Couple of thoughts:
1. Re the 16-year periods above, looking at break-even in the stock market over 16 years is overly rosy. You also need to factor in at least inflation plus the opportunity cost of interest you could have made in interest-bearing securities during that time. That would change the numbers above a lot, I'd guess.
2. Governments at all levels throughout the West are swimming in debt so I'd don't see how interest rates can rise. A rise would trigger more defaults on sovereign debt (and never mind personal debt). For example, Ontario is in debt tens of thousands per citizen (not counting any federal or municipal debts, so it's funny to hear people say the government has more revenue tools - it does, but I don't see it squeezing out near enough more per citizen!), the province can barely keep its head up with today's unprecedented low rates. I've read that there are increasingly more places where negative interest rates exist or are a real possibility, so maybe savers won't be getting anything for their money for some time to come. And not good for seniors who depend on interest as income, though I guess deflation means life is getting cheaper.

February 16, 2015
1:11 pm
xxxx
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Ontario made a poor choice to bring back the Liberals - McGuinty and his gang were a disaster for the province and looks like Wynne will try to continue the big spending. I think the debt per capita in Ontario must be close to $40K per person now. (I think it may have doubled in the last 10 years.) Really, too bad that Hudak presented his platform so poorly - people were afraid of the cuts he was going to do to try to balance the budget - the funny thing Wynne is now faced with doing those cuts. I really don't know how she can even think of bringing in a provincial pension plan at this time - the cost will be exorbitant - more debt. Maybe if the province gets another downgrade from the bond rating agencies then maybe the expenditure cuts will start seriously - or perhaps Wynne will increase income taxes and other taxes as well.

February 16, 2015
3:28 pm
Loonie
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I was flipping through a book recently which was quite interesting for its directness and specifics - meaning I could understand most of it! The author is a British economist. He suggested that one of the ways that the heavily indebted industrialized nations will "deal" with their debt is by keeping interest rates really low and refinancing at lower rates. I am not sure what this would mean if we got to a below-zero rate situation but I presume it means you have to go further afield to find people willing to buy your debt. The author seemed to feel that there would be a need to keep interest rates very low for a very long time for this reason. (Emerging markets in an upside down world: challenging perceptions in asset allocation and investment. by Jerome Booth. Chichester, West Sussex: John Wiley & Sons Ltd, 2014.)

Borrowing more money and spending it on regrettable items seems to be a no-brainer for all governments of all stripes sooner or later. Helicopters and no-strings freebies to large corporations which leave the country a little while later come to mind.

Former Ontario PC leader John Tory, current replacement for Rob Ford as mayor of Toronto, recently announced his firm intention to "borrow" many millions of dollars from the city's reserves - originally he planned to borrow it on the open market, it seemed.

The reason for this is so that he can honour his ill-considered election pledge of not increasing property taxes above the rate of inflation. Toronto has some of the lowest property tax rates in the province, and certainly in the GTA. Opponents estimate it would cost the average home about $62/yr to provide the necessary funds without borrowing again and putting the city at risk for dealing with true emergencies. That's pennies a day, and yet there is still an ideological opposition to increased taxes.

Given all the dumb things governments sometimes spend money on, I'd much rather it went into a decent pension plan so that future generations won't have to support their elders to the same degree that they have to now. That would be forward-thinking. But it has to be affordable for people too, and it needs to be a better plan than the one the Ontario Liberals are promoting. Of course, they are only doing it because the Federal gov't refused to beef up the CPP.

For those who are interested in related fascinating facts, here are some numbers to ponder:
http://www.rbc.com/economics/e.....fiscal.pdf

February 17, 2015
9:23 am
Bill
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Brian, you say "Wynne is now faced with doing those cuts". I have no idea where this popular idea comes from, this idea that all of a sudden a certain government will stop borrowing and start paying off debt. The present Ontario government has shown zero indication the numbers even cross their minds, they continue to borrow every day for the daily shortfall, and as long as there are folks on earth who are willing to lend Ontario their money it works great. And in a society where so many individuals love debt it makes sense that the same voters would elect governments that reflect that financial philosophy - Hudak was done the minute he said he'd cut. But, again, the implication for savers is that there's a reason rates in the West have been at record lows for an extended time now (the often-glimpsed rates hikes never seem to actually happen) and there seems to be no reason, aside from wishful thinking, for savers to believe things will change.

February 17, 2015
11:38 am
xxxx
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Bill
The present cutting of doctors' billing rates - I believe doctors' fees are being rolled back around 2.65% by Wynne - would that not be considered a "cut" to Health program expenditures? Very unusual to roll back doctor fees don't you think? Usually a freeze takes place say for a year or two, but rolling back is not that common.

February 17, 2015
12:36 pm
Loonie
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Apparently doctors' fees went UP a generous 61% since 2003 before being reined in last month. Clawing back 2.65% is hardly earth-shattering, but has not stopped physicians from threatening service reductions.
http://www.thestar.com/life/he.....-fail.html
I am so fed up with physicians who already choose not to put in even a 40-hour week, leaving patients stranded during the many hours when their offices are closed, with no back-up from anyone who has access to the records. They do this because they can well afford to do so.

According to the article, this will save $580,000,000 /yr. However, we are not told how many new medical licences will be issued or how many physicians are expected to retire annually, so it is hard to know what this really means.

They have a long ways to go to deal with the budgetary problems.

February 17, 2015
9:32 pm
Norman1
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Loonie said

Looks good, and I hope that past success proves to be a predictor of future, although every Prospectus in existence warns us never to assume that.

16 years is a long time for me. I'll be in my early-mid 80s by then, if I'm still here. Even 10 years could be a stretch. I have an excellent gene pool, but, in reality, it's a cr*p-shoot. I am always amused by financial planners who ask how long one expects to live, as if some reliable planning can be premised on the completely unknowable. They usually suggest 90. Why 90? I met with one who resisted my insistence that this be extended to 100. Maybe he was afraid he couldn't devise a plan for me that would last that long!
...

I think the data can give us an idea of what the odds are like for the different holding periods. Is it 40%, 50%, or 90%?

Since there isn't 1,000 years worth of S&P 500 data, I would resist the temptation to predict any more precisely, for example, that one should hold for 16 years instead of 15. I would be comfortable with concluding that the odds at better than 90% for holding periods of ten years. The odds are better for even longer periods.

The losing periods for the longer periods seem to involve the Great Depression in the 1930's and what we just went through in 2008. I guess ten years has been put forward because there wasn't a losing 10-year period since the Great Depression, until 2008 came along:

First Year Last Year Years Compound Annual Return
1928 1937 10 -0.62%
1929 1938 10 -1.67%
1930 1939 10 -0.92%
1999 2008 10 -1.36%
2000 2009 10 -0.95%
1929 1939 11 -1.62%
1930 1940 11 -1.85%
1931 1941 11 -0.48%
1929 1940 12 -2.41%
1930 1941 12 -2.81%
1929 1941 13 -3.25%
1930 1942 13 -1.28%
1928 1941 14 -0.47%
1929 1942 14 -1.79%
1929 1943 15 -0.20%

Loonie said

...

On the other hand, I don't know what the future is for the US economy. I do know that the US gov't is massively overextended financially, with unprecedented levels of debt which have not come close to stabilizing and probably can never be paid off. Long-promised interest rate rises have not been possible due to the fragility of the economy, resulting in some of the lowest rates ever. There is nothing much backing the dollar but faith. Other economies are on the rise. GNP is not strong enough, so I am told. The world seems to be in a state of great flux. Foreseeable environmental crises are going to be expensive in ways we cannot yet imagine.
And nothing lasts forever. The future? I have no idea.

I would love to avoid doom-and-gloom but I am just not hearing solid answers to these issues.

I think doom and gloom were also there in the 1928 to 2014 period. There was the Great Depression in the 1930's. World War 2 (1939 to 1945). Wasn't there a US-Russia nuclear arms race in the 1970's in which an accidental intercontinental missile launch could trigger mutual nuclear strikes and end the world? Lesser-developed country debt crises in the 1980's.

February 17, 2015
10:01 pm
Loonie
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thanks for the encouraging perspective, Norman!
I remember laying awake late at night as a child overhearing my parents argue in heated tones about whether Kruschev was going to make good on his threat to bury us. I was scared then too, but I was very young.

Still, though, absolute disaster has befallen some countries and ruined their economies. Do we really have the right to think we are perpetually exempt? I would not want to be a Greek right now. I remember traipsing around Europe as a young adult and arriving in Italy and carrying around bundles of 1000s of Lira which were worth only a few dollars because of devaluation. I would not have wanted to be an Italian then.

It's not clear to me that we have fully recovered from 2008, especially with these scary high debt levels. "Recovery" is still fragile. There is the risk of relapse and longterm seriously bad news. WW1 was set off by a single unexpected incident although the conditions were ripe. Are we not in a similar situation economically? If the deck of cards on which the economy is built (unsecured debt) starts to collapse, we are all in very deep doo-doo. The major argument I can see against this is that none of the players can yet afford to push this button, but they might in my lifetime as other economies strengthen.

But, to be honest, I can't afford another 10-15 years like the ones you have outlined in the chart covering the Great Depression and 2008. It would be interesting to see dividend charts from these periods if such exist. Perhaps that's a more reliable route?

Much to ponder. I appreciate that it may indeed be a case of assessing the odds. I think one of the big problems is that most of us are very poorly educated in matters of finance and international finance in particular. I have lots of years of formal education behind me from some very distinguished institutions, but never did anyone insist that I learn anything about this. And it seems that even the people who did learn this don't have the answers.

"Financial literacy" is a fashionable goal right now, but I have yet to see any set of learning goals which will clearly reveal what goes on when decisions are made at the highest levels which affect us all so profoundly. How can we even vote intelligently when we know so little about the factors and players which control our economic future? Every election campaign is plagued with dueling numbers. I think people have largely tuned them out because we don't know what's true and truly indicative, and then we get low voter turnout etc.

February 18, 2015
7:44 am
Jon
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The biggest problem why recovery is very sluggish is because of income inequality. If you can recall what I have mention about Marginal Propensity of Consumption, you will see that the world with very severe income inequality means less consumption as poorer people spend greater portion of their income. As consumption is the biggest portion of GDP (and really, the only purpose of building an economic system), growth will be slow. Make this problem more severe, a slow growth in consumption will also reduce capital investment from company which reduce growth in future as company themselves expect a slow growth in economy. (I can go more in detail, but not until people ask more about it) In this regard, inequality have permanently damage growth in economy.

This is also the reason why there are more consumer debt than ever before, as middle class get more poor because their income growth stagnant when inflation pick up, they attempt to maintain their level of consumption by borrowing (Scale down on spending are difficult, as suggest by Ratchet effect). I however, are not excluding cultural reason through.

We may see government around the world taking up more debt, but in reality, they are all secretly balancing their budget by covertly cutting expenses, just dig up some GDP information and look for change in "government expenditure" column over the past 7/8 years. The reason why the debt over GDP ratio is not going down is because GDP itself is not growing. In fact, any attempt to cut debt will result in worst economy which yield less tax as it reduce government expenditure and reduce consumption by taking money away from people.

Ontario (and Quebec), and Greece have structural issue with their government and economy. Both place have lost most of its industry (which hire a lot of people) as they are less competitive compare with developing country, unlike the German that have very high-tech industrial bases which require very skill mechanics where education and years of experiences is difficult to replicate, both place where more or less focus on things that are low tech and can be more cheaply produce elsewhere. Furthermore, government generally have difficulty taxing the few wealthy that benefit from service sector as they can essentially move else where tax is low as they don't require big and bulky equipment. Make it worst, Greece (and ON & QC to some extend) have very inefficient government in terms of spending while Greece also face severe tax eviction issue. Make it worst for Greece, they just pour whole bunch of money 11 years ago in the Olympic game; no wonder the Greek screw up badly. However, the lesson to learn here is that the best way to reduce government debt is to promote growth in economy by building a new leading industry, I don't see any candidates/parties in ON or QC or even Canada use that as their platform.

Loonie, believe or not, we are actually closer to a world war than ever before. As the old order is collapsing slowly and replace by the new order. Just like what happen before WWI when the old order (UK) is being challenge by the new power (Germany). If you put WW1 in today's context, you will see US as UK, EU as France, China as German Empire and Russia as Austrian Hungarian Empire.

Anyway, we need a new thread here

February 18, 2015
6:01 pm
Norman1
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Bill said

Couple of thoughts:
1. Re the 16-year periods above, looking at break-even in the stock market over 16 years is overly rosy. You also need to factor in at least inflation plus the opportunity cost of interest you could have made in interest-bearing securities during that time. That would change the numbers above a lot, I'd guess.
....

It makes some difference. But, the odds still look quite good.sf-smile

This is the data for 0% to 6% thresholds of annual compounded returns:

Holding Period
(Years)
Losing Periods Below +1% Periods Below +2% Periods Below +3% Periods Below +4% Periods Below +5% Periods Below +6% Periods
1 24/87 (27.6%) 25/87 (28.7%) 26/87 (29.9%) 27/87 (31%) 28/87 (32.2%) 29/87 (33.3%) 33/87 (37.9%)
2 16/86 (18.6%) 21/86 (24.4%) 22/86 (25.6%) 22/86 (25.6%) 22/86 (25.6%) 23/86 (26.7%) 27/86 (31.4%)
3 15/85 (17.6%) 16/85 (18.8%) 17/85 (20%) 18/85 (21.2%) 20/85 (23.5%) 21/85 (24.7%) 25/85 (29.4%)
4 15/84 (17.9%) 16/84 (19%) 17/84 (20.2%) 18/84 (21.4%) 22/84 (26.2%) 25/84 (29.8%) 27/84 (32.1%)
5 11/83 (13.3%) 14/83 (16.9%) 15/83 (18.1%) 19/83 (22.9%) 22/83 (26.5%) 24/83 (28.9%) 26/83 (31.3%)
Holding Period
(Years)
Losing Periods Below +1% Periods Below +2% Periods Below +3% Periods Below +4% Periods Below +5% Periods Below +6% Periods
6 7/82 (8.5%) 7/82 (8.5%) 9/82 (11%) 16/82 (19.5%) 19/82 (23.2%) 21/82 (25.6%) 24/82 (29.3%)
7 6/81 (7.4%) 7/81 (8.6%) 11/81 (13.6%) 12/81 (14.8%) 17/81 (21%) 20/81 (24.7%) 22/81 (27.2%)
8 2/80 (2.5%) 3/80 (3.8%) 8/80 (10%) 11/80 (13.8%) 15/80 (18.8%) 20/80 (25%) 22/80 (27.5%)
9 4/79 (5.1%) 5/79 (6.3%) 5/79 (6.3%) 8/79 (10.1%) 9/79 (11.4%) 17/79 (21.5%) 20/79 (25.3%)
10 5/78 (6.4%) 6/78 (7.7%) 8/78 (10.3%) 9/78 (11.5%) 13/78 (16.7%) 13/78 (16.7%) 17/78 (21.8%)
Holding Period
(Years)
Losing Periods Below +1% Periods Below +2% Periods Below +3% Periods Below +4% Periods Below +5% Periods Below +6% Periods
11 3/77 (3.9%) 5/77 (6.5%) 8/77 (10.4%) 9/77 (11.7%) 12/77 (15.6%) 14/77 (18.2%) 17/77 (22.1%)
12 2/76 (2.6%) 3/76 (3.9%) 6/76 (7.9%) 8/76 (10.5%) 11/76 (14.5%) 12/76 (15.8%) 18/76 (23.7%)
13 2/75 (2.7%) 3/75 (4%) 5/75 (6.7%) 6/75 (8%) 8/75 (10.7%) 14/75 (18.7%) 16/75 (21.3%)
14 2/74 (2.7%) 3/74 (4.1%) 3/74 (4.1%) 4/74 (5.4%) 7/74 (9.5%) 9/74 (12.2%) 14/74 (18.9%)
15 1/73 (1.4%) 2/73 (2.7%) 3/73 (4.1%) 3/73 (4.1%) 3/73 (4.1%) 7/73 (9.6%) 11/73 (15.1%)
Holding Period
(Years)
Losing Periods Below +1% Periods Below +2% Periods Below +3% Periods Below +4% Periods Below +5% Periods Below +6% Periods
16 0/72 (0%) 1/72 (1.4%) 1/72 (1.4%) 2/72 (2.8%) 3/72 (4.2%) 5/72 (6.9%) 9/72 (12.5%)
17 0/71 (0%) 0/71 (0%) 0/71 (0%) 2/71 (2.8%) 3/71 (4.2%) 4/71 (5.6%) 5/71 (7%)
18 0/70 (0%) 0/70 (0%) 0/70 (0%) 2/70 (2.9%) 2/70 (2.9%) 4/70 (5.7%) 5/70 (7.1%)
19 0/69 (0%) 0/69 (0%) 0/69 (0%) 2/69 (2.9%) 3/69 (4.3%) 3/69 (4.3%) 5/69 (7.2%)
20 0/68 (0%) 0/68 (0%) 0/68 (0%) 1/68 (1.5%) 3/68 (4.4%) 3/68 (4.4%) 3/68 (4.4%)
Holding Period
(Years)
Losing Periods Below +1% Periods Below +2% Periods Below +3% Periods Below +4% Periods Below +5% Periods Below +6% Periods
21 0/67 (0%) 0/67 (0%) 0/67 (0%) 0/67 (0%) 1/67 (1.5%) 3/67 (4.5%) 3/67 (4.5%)
22 0/66 (0%) 0/66 (0%) 0/66 (0%) 0/66 (0%) 0/66 (0%) 2/66 (3%) 3/66 (4.5%)
23 0/65 (0%) 0/65 (0%) 0/65 (0%) 0/65 (0%) 0/65 (0%) 1/65 (1.5%) 2/65 (3.1%)
24 0/64 (0%) 0/64 (0%) 0/64 (0%) 0/64 (0%) 0/64 (0%) 0/64 (0%) 2/64 (3.1%)
25 0/63 (0%) 0/63 (0%) 0/63 (0%) 0/63 (0%) 0/63 (0%) 0/63 (0%) 1/63 (1.6%)
Holding Period
(Years)
Losing Periods Below +1% Periods Below +2% Periods Below +3% Periods Below +4% Periods Below +5% Periods Below +6% Periods
26 0/62 (0%) 0/62 (0%) 0/62 (0%) 0/62 (0%) 0/62 (0%) 0/62 (0%) 0/62 (0%)
27 0/61 (0%) 0/61 (0%) 0/61 (0%) 0/61 (0%) 0/61 (0%) 0/61 (0%) 0/61 (0%)
28 0/60 (0%) 0/60 (0%) 0/60 (0%) 0/60 (0%) 0/60 (0%) 0/60 (0%) 0/60 (0%)
29 0/59 (0%) 0/59 (0%) 0/59 (0%) 0/59 (0%) 0/59 (0%) 0/59 (0%) 0/59 (0%)
30 0/58 (0%) 0/58 (0%) 0/58 (0%) 0/58 (0%) 0/58 (0%) 0/58 (0%) 0/58 (0%)
Holding Period
(Years)
Losing Periods Below +1% Periods Below +2% Periods Below +3% Periods Below +4% Periods Below +5% Periods Below +6% Periods
31 0/57 (0%) 0/57 (0%) 0/57 (0%) 0/57 (0%) 0/57 (0%) 0/57 (0%) 0/57 (0%)
32 0/56 (0%) 0/56 (0%) 0/56 (0%) 0/56 (0%) 0/56 (0%) 0/56 (0%) 0/56 (0%)
February 19, 2015
4:21 am
Loonie
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Jon, I feel badly that you, as such a young person, find it necessary to have such a distressing view of the world. It's bad enough that I have concerns, but I am old enough to be your grandparent and will have fewer years to live through whatever comes next.
And I in turn have a parent who is well over 90, a veteran of WW2, who also thinks war may be upon us, so you're not alone.

The history of the world clearly shows that empires come and empires go, usually if not always because of internal weaknesses which are successfully tackled by the next rising power. Do you think US hegemony is on the way out? And, if so, what is going to replace it?

Just wondering... you may not want to answer this publicly, but what do you see as the way out or forward for yourself personally?

Is decreasing consumption necessarily a bad thing? We have already used up a vast amount of the earth's resources, and often for frivolous reasons. We can't do this indefinitely. I note that Dollarama and its competitors are considered strong stocks these days. Do you think there is another way of doing things that would be better? or are cataclysmic events inevitable?

I have trouble seeing more spending as the way forward, even if it were possible. Like many people in my age group, I am not very interested in buying, although I never have been a big spender. I have always saved, bought used, happily accepted hand-me-downs, etc., and spent on books and education. I've spent a grand total of about $500 on TVs in my entire life (they are a dime a dozen from other people's discards), and maybe $20,000 on buying 3 cars (plus 2 hand-me-downs- still using the last one), so that gives you an idea. There is so much stuff in this world already that I am bewildered by the apparent need to consume more. I read that even the antique market is very slow. There's gotta be a better way, which can still keep us happy, healthy, and productive.

February 19, 2015
4:24 am
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I presume Premier Wynne will be investing much of the contributions collected for her new Ontario Health Care Plan in the stock market - that should be positive for the markets.

February 19, 2015
10:30 am
Jon
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Loonie, only thing I am hoping for is the fact that leaders are rational enough to not destroy our civilization, but consider people are only rational in the long run, but we only have limited time for making decision, that may be a bit difficult.....

I think we have overstretch our ability to spend in the last few decades and we end up spend to the point that we have huge debt burden (which reduced current consumption). But the interesting thing is, when everybody try to cut debt (include cooperate), nobody will be successful as what everybody spend is what everybody gets in the end and we will end up facing long term over-capacity because economic system only get use to our old spending habit, which is what happen right now. (However, as proven by WW2, it appears a effective way to stimulate growth again is by a war as it destroy whole bunch of excessive capacity and the rebuild process force people to spend money, but I am sure nobody want a war because of thatsf-surprised)

One way we can make sure a sustainable future is the factor in the cost of destroying the environment and people's health via a special type of tax call Pigovian tax, but just like all other tax. People hate it sf-yell

Added later:
Congratulation for the 1000 post Loonie !

February 19, 2015
9:39 pm
Loonie
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thanks for the thoughts and the congratulations, Jon. I didn't even realize I'd hit 1000 posts. sf-surprised
But, since I have, is there a prize???sf-laughsf-laugh

Interesting.
I'd never heard of a Pigovian tax. At first, I laughed, as it sounded like a tax for being a "pig", using up more than our share of resources. But on further search, I see it is named after someone who had the possibly unfortunate name, in this context, of Pigo. I suppose this would be along the lines of the recycling fee that we pay in Ontario when we buy technology, mandated by govt. As you say, it's very unpopular.
Another option is something like Bullfrog Power, also in Ontario, where you voluntarily pay a little extra to support alternative electrical power sourcing in paying your bill.
Do you think, then, that things like this count as "spending" for GDP purposes, and therefore could help with the current problem?

February 21, 2015
1:36 pm
Norman1
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Loonie said
...
Still, though, absolute disaster has befallen some countries and ruined their economies. Do we really have the right to think we are perpetually exempt? I would not want to be a Greek right now. I remember traipsing around Europe as a young adult and arriving in Italy and carrying around bundles of 1000s of Lira which were worth only a few dollars because of devaluation. I would not have wanted to be an Italian then.
...

I don't think we are exempt. I just think we will trip, fall, recover, and continue. Things here are not the same as in Greece and Italy. Illegal tax evasion is not a national pastime here. We enjoy hockey instead.sf-laugh

...
It's not clear to me that we have fully recovered from 2008, especially with these scary high debt levels. "Recovery" is still fragile. There is the risk of relapse and longterm seriously bad news. WW1 was set off by a single unexpected incident although the conditions were ripe. Are we not in a similar situation economically? If the deck of cards on which the economy is built (unsecured debt) starts to collapse, we are all in very deep doo-doo. The major argument I can see against this is that none of the players can yet afford to push this button, but they might in my lifetime as other economies strengthen.
...

We have debt. But, not as serious as Greece or Italy. That people are voicing concern with what debt we do have is a good sign that we won't end up like Greece or Italy.

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But, to be honest, I can't afford another 10-15 years like the ones you have outlined in the chart covering the Great Depression and 2008. It would be interesting to see dividend charts from these periods if such exist. Perhaps that's a more reliable route?
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That's the risk one is taking on in return for the kinds of returns that come from equity investing. I think those numbers are total returns, including dividends. I'll see if there are separate numbers for just dividends.

Much to ponder. I appreciate that it may indeed be a case of assessing the odds. I think one of the big problems is that most of us are very poorly educated in matters of finance and international finance in particular. I have lots of years of formal education behind me from some very distinguished institutions, but never did anyone insist that I learn anything about this. And it seems that even the people who did learn this don't have the answers.
...

Having the answers would be good. The next best thing is being able to figure out the answers when the time comes. I think to date we have been able to pull the latter off.

July 12, 2020
5:55 am
Bill
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I have various investment accounts at CIBC, RBC & TD discount brokerage entities. I've got increasing amounts just sitting in the accounts in cash, I've no interest in any investments or savings vehicles at the moment, so I just let it sit there earning zero.

Anyone know if I've CDIC coverage for these amounts? CDIC site does not list, for example, CIBC Investor's Edge.

(Sorry for reviving this old thread but it's never been obvious on this site how to start new threads, at least to me, something I only do infrequently anyway.)

July 12, 2020
7:09 am
Norman1
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Bill said

Anyone know if I've CDIC coverage for these amounts? CDIC site does not list, for example, CIBC Investor's Edge.

(Sorry for reviving this old thread but it's never been obvious on this site how to start new threads, at least to me, something I only do infrequently anyway.)

I wrote answer in new topic Insurance of cash balances in discount broker accounts.

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