The Stingy News Weekly (01/29/2018)
New from StingyInvestor
"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."
Asset Mixer Update
We've updated our Asset Mixer to include real data for 2017.
Periodic Table Update
We've updated our periodic table of annual returns for Canadians to include real data for 2017.
A momentum signal
"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." [Momentum Investing]
The bankruptcy of modern finance theory
"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" [Markets]
"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] [Value Investing]
Ontario making it easier to underfund pensions
"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." [Government]
Policy-based evidence making
"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." [Government]
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