The Stingy News Weekly (11/11/2012)
Stingy News Flash
MoneySense just published a new book that collects together a bunch of articles on stocks and several of my scribblings are featured prominently. You can find out more about it, and order a copy, via the following link...
MoneySense Guide to Investing in Stocks
Fitting factors into the formula
"For this issue's Morningstar Conversation, we talk with two quant-investing legends. Cliff Asness, co-founder of AQR Capital Management, and Robert Arnott, chairman of Research Affiliates - to gain insights on where academic theory is being practically applied in the marketplace."
Low risk stocks outperform
"The fact that low risk stocks have higher expected returns is a remarkable anomaly in the field of finance. It is remarkable because it is persistent - existing now and as far back in time as we can see. It is also remarkable because it is comprehensive. We shall show here that it extends to all equity markets in the world. And finally, it is remarkable because it contradicts the very core of finance: that risk bearing can be expected to produce a reward."
An old friend: the stock market's Shiller P/E
"It's been a long-time since we've discussed this, but since it's actually the source of some current controversy, now seems like a good time to re-examine the valuation of the entire U.S. stock market, and particularly the relevance and meaning of the Shiller P/E, a measure we have favored in the past."
RBC Direct Investing disappoints
"It came to our attention recently that earlier this year, RBC's discount brokerage, RBC Direct Investing, ceased to offer funds sponsored by Leith Wheeler, Mawer and Steadyhand. The move was described by RBC as a "business decision," and we assume this reflects the fact that the funds offered by these firms do not pay trailers, and thus RBC does not receive any revenue from their sale. If this is indeed the reason behind the decision, it is not a strong one."
Income trust fans have no reason to cry
"For many income-oriented investors October 31, 2006 will forever be etched in their brains. That was the day that our Federal Finance Minister lowered the tax boom and ended the tax arbitrage of income trusts. The market reacted by slicing about 17% from market prices of trusts to reflect the tax impact of the announcement. Despite the massive outcry at the time - and since - it's hard to find reasons for trust investors to shed any tears."
How Apple avoids paying billions in taxes
"Thanks to a complex network of offshore accounts and cleverly named subsidiaries, Apple, the world's most valuable company, paid just $713 million on its $36.8 billion in foreign earnings last quarter. That amounts to a rate of just 1.9 percent, a figure that makes Mitt Romney's 14.1 percent effective tax rate look downright generous. And believe it or not, Apple actually reduced its foreign tax rate by nearly 25 percent as the company's market cap soared to new heights this year. According to the Associated Press, it was 2.5 percent at this time in 2011. Did Apple get a tax cut? Nah, it just got better at avoiding the IRS."
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