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 02/12   The Stingy News Weekly: February 12, 2018 
 02/12   Lessons from Waffle House 
 02/12   Risk parity derangement syndrome 
 02/12   Rent control needs retirement 
 02/12   Why competitive advantages die 
 02/05   The Stingy News Weekly: February 5, 2018 
 02/05   Vanguard's one-fund solution 


Most Recent Stingy News

The Stingy News Weekly: February 12, 2018
02/12/18 8:59 PM ESTSNW
This week we have waffles, rent, risk parity, and more.
More SNW: The Stingy News Weekly: February 5, 2018
The Stingy News Weekly: January 29, 2018

Lessons from Waffle House
02/12/18 8:48 PM ESTManagement
"You go in there and everyone's drunk. You know everyone's drunk in Waffle House because they have pictures of the food on the menu. How drunk do you have to be to not remember what a waffle looks like?"
More Management: Why competitive advantages die
Creative investing

Risk parity derangement syndrome
02/12/18 8:34 PM ESTMarkets
"You may have noticed the market turbulence lately. You may have also noticed the legion of commentators among the media, politicians, and famous investors, blaming this turbulence on 'risk parity,' 'trend-following strategies,' or my favorite, just 'the machines.' Poppycock. Yes, it's come to this; they've driven me to swear like Mrs. Doubtfire."
More Markets: The bankruptcy of modern finance theory
A letter from an old friend

Rent control needs retirement
02/12/18 8:09 PM ESTGovernment
"If politicians actually want to make sure everyone who needs a place to rest their head has one, there's only one way to do it: Build more housing. Which means, in turn, loosening the legal restrictions and community veto points that make it so hard to add supply. Because there's no way to escape the fundamental math: Unless you build enough housing to shelter the people who want to live in your city, a whole lot of people will be left out in the cold."
More Government: Ontario making it easier to underfund pensions
Policy-based evidence making

Why competitive advantages die
02/12/18 8:05 PM ESTManagement
"The only thing harder than gaining a competitive edge is not losing that advantage when you have one. That's as true for careers and investment strategies as it is for business. And since people are naturally optimistic, there's a tendency to put more thought into finding an edge than not losing it once you find one."
More Management: Creative investing
Rose Blumkin interview

The Stingy News Weekly: February 5, 2018
02/05/18 9:18 PM ESTSNW
This week we have a question of timing, a new balanced ETF solution, and more.
More SNW: The Stingy News Weekly: January 29, 2018
The Stingy News Weekly: January 15, 2018

Vanguard's one-fund solution
02/05/18 8:53 PM ESTIndexing
"It was one of the great mysteries in the Canadian fund market: why had no one created an ETF version of the balanced index mutual fund?"
More Indexing: Direct indexes: cheaper than ETFs
Low vol in perspective

Second childhood
02/05/18 7:43 PM ESTRetirement
"I use the strategy I recommend to others: Occasionally, I will take my portfolio and assume the stock portion loses 35%, which is the typical decline during a bear market. I'll then look at the resulting hit to my overall portfolio's value and ask myself, 'Would you be okay with that?' As the market has climbed over the past year, I've found myself answering 'no' - and that's prompted me to ease up somewhat on stocks."
More Retirement: How Malcolm Hamilton prepared for his own retirement
Time to rethink the RRSP contribution limit

A simple timing strategy
02/05/18 7:31 PM ESTStingy Investing
"I've been eyeing escape pods - as an investor - for some time now. The U.S. market blasted through valuation levels seen at the 1929 market top in recent weeks. I outlined the dire situation using Prof. Robert Shiller's CAPE ratio (cyclically adjusted price-to-earnings ratio) in early January" [$]
More Stingy Investing: Asset Mixer Update
Periodic Table Update

The Stingy News Weekly: January 29, 2018
01/29/18 7:35 PM ESTSNW
This week we have the top dog contest, leveraged value, broken pensions, momentum, and more.
More SNW: The Stingy News Weekly: January 15, 2018
The Stingy News Weekly: January 8, 2018

A momentum signal
01/29/18 7:14 PM ESTMomentum Investing
"Historically, the S&P 500 has been followed by above-average returns over the next 6, 12, 24, and 36 months when this cyclical momentum measure is above 85."
More Momentum Investing: You can have your momentum factor and eat it too
A terrible strategy

The bankruptcy of modern finance theory
01/29/18 6:42 PM ESTMarkets
"The profession of finance as practiced today relies heavily on modern finance theory: the dividend discount model and the capital asset pricing model. These models are the centerpieces of most business school finance courses, and surveys suggest that they are used by over 70 percent of CFOs for capital budgeting. They are also used by almost every fundamental investor and most financial advisers. Yet these theories have been empirically invalidated time and again in well-publicized, peer-reviewed studies. Their continued usage represents another calibration error - between the claimed precision of the models and the actual unpredictability of mark"
More Markets: A letter from an old friend
U.S. equity returns: a best-case

High-debt value
01/29/18 6:40 PM ESTValue Investing
"Dan then delves into leverage and the value premium, telling us how important this interaction is. He gives us great details on the subject based on a study he was a part of while at Bain Consulting. The takeaway was that roughly 50% of deals done at multiples greater than 10x EBITDA posted 0% returns to investors, net of fees." [audio]
More Value Investing: Value and momentum portfolio construction
Fundamentals of value investing

Ontario making it easier to underfund pensions
01/29/18 6:35 PM ESTGovernment
"Pension defaults are rare, but the CCPA study found that of the 39 largest publicly traded companies that have defined-benefit pensions, only nine had plans that were fully funded last year. Rather than loosening restrictions, Ontario should amend the Ontario Pension Benefit Act to require businesses to fund 100% of their pensions. Those that can't shouldn't offer pensions in the first place."
More Government: Policy-based evidence making
Risky mortgage investments

Policy-based evidence making
01/29/18 6:31 PM ESTGovernment
"Social scientists, meanwhile, are discovering that they cannot replicate many of their own findings. The incentives of the profession weigh heavily toward designing experiments that will produce a positive result, analyzing and reanalyzing data until one appears, and then interpreting it as broadly as possible. That kind of research produces headlines, but not knowledge - a fact that social scientists are beginning to acknowledge. With their enthusiasm for EBP, policymakers are running headlong into a collapsing structure, pushing past inhabitants fleeing in the other direction."
More Government: Risky mortgage investments
Mind the gap

Asset Mixer Update
01/29/18 5:46 AM ESTStingy Investing
We've updated our Asset Mixer to include real data for 2017.
More Stingy Investing: Periodic Table Update
Dogs Contest

Periodic Table Update
01/29/18 5:45 AM ESTStingy Investing
We've updated our periodic table of annual returns for Canadians to include real data for 2017.
More Stingy Investing: Dogs Contest
Market puts investors under the gun

Dogs Contest
01/29/18 3:47 PM ESTStingy Investing
"Each January, I like to create a little challenge that adds a bit of flavour to the Safer Canadian Dogs strategy. All it takes is to pick the best and the worst of Canadian dividend stocks."
More Stingy Investing: Market puts investors under the gun
Three strategies for 2018

Creative investing
01/22/18 9:36 PM ESTManagement
"Ali views the world with a fresh set of eyes, and has already become an expert at identifying new investment opportunities where others have not. As the second prodigy 26 year old in as many weeks on the podcast, these young guns are making me feel like an ancient 32 year old." [audio]
More Management: Rose Blumkin interview
The gospel according to Michael Porter

A letter from an old friend
01/22/18 9:30 PM ESTMarkets
"I'm at my lowest equity allocation in 17 years. I am at 65% in equities. If the market goes up another 4-5%, I am planning on peeling of 25% of that to go into high quality bonds. Another 20% will go if the market rises 10% from here. At present, the S&P 500 offers returns of just 3.4%/year for the next ten years unadjusted for inflation. That's at the 95th percentile, and reflects valuations of the dot-com bubble, should we rise that far."
More Markets: U.S. equity returns: a best-case
One-year performance is a terrible metric

Value and momentum portfolio construction
01/22/18 8:43 PM ESTValue Investing
"Being a Value investor is difficult, given that the stocks of a Value portfolios tend to have inherent issues, otherwise, these stocks would not be cheap. Being a B/M-focused value investor over the past decade has been especially hard, as the factor returns were effectively zero - plenty of pain, but no gain. Experiencing this factor cyclicality often leads investors to contemplate adding other factors in the hope of improving performance. An obvious candidate would be Momentum, as cheap and rising stocks are more appealing than cheap stocks. However, it is not quite straightforward for investors to add Momentum to a Value portfolio as there are several options available. In this short research note, we will analyze Value & Momentum portfolios created by three common multi-factor model approaches - the combination, the intersectional and the sequential models."
More Value Investing: Fundamentals of value investing
Graham & Doddsville Winter 2017

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