Ernst & Young is out with a new report about Canadian consumer banking highlights. I really think the Canadian financial services landscape is at a very interesting point. On one hand, the big banks are making record profits. But on the other…
Financial technology (fintech) companies are nipping at their heels like never before. I don’t think financial services in Canada have been this ripe for disruption in a long time. One of the key drivers, as shown below, is that Canadians are (finally) getting more comfortable with digital banking and online financial services. Can the banks adapt?
Curious to learn more? Check out the executive summary. Or take a look at the infographic below…
You have to face facts – the currency market is becoming more difficult for traders. The markets are battling to make money as liquidity is drying up and investors are reluctant to take risks, which amounts to quicker currency terms. Where it once took weeks and sometimes months for prices to adjust, now in 2016 it is happening very quickly, creating stress for traders.
This is why it is so important to choose your broker carefully. In forex trading, for instance, there are a host of issues that confront traders. A trader therefore wants their broker to have a responsive customer service department – those who will attend to your requests promptly.
The Potential to Make Profit with Falling Market Prices
With spread betting you want answers and CMC Markets, a UK-based financial derivatives dealer, offers online trading in spread betting, a tax-efficient way of leveraging the financial markets. CMC Markets will predict where a price of anything will stand at a specified time in the future. The prediction is in the form of a spread which is the range between low and high estimates. The trader than bets on those prices, buying at the high price if they believe the price will rise from current levels and selling at the low price if they believe it will fall.
Spread-betting profits aren’t liable for capital gains tax, but spread-betting losses can’t be set against other gains to reduce tax.
A financial spread bet is known as a derivative – it isn’t regarded as live share. Traders can take a position against the value of an underlying financial instrument moving down- or upwards in the market place. With spread betting, the trader doesn’t actually own the stock they are betting on – they simply speculate on the direction that the spread of the price of that stock will move.
Trade on Wide Range of Markets
The advantage in this is that the trader can also make money on a stock that goes down. With spread betting, apart from stocks and shares, there are other money market instruments like currencies, indices, gold, oil etc that have spreads to bet on.
The main benefit is being able to bet on things going down – to make money during the good and the bad times. Spread betting offers leverage or margin so that when placing a bet, you don’t have to put down the full value of the bet – you only have to put down a fraction of the total value of the transaction. What this does is it frees up the rest of your money to spend as you wish elsewhere. You can therefore have many bets placed at the same time, as opposed to having all your money put on one single action. Spread betting allows for potentially greater gains.
You can make a bet without taking down the full value of the position. Your funds are not tied up in one trade, and you can use the rest for other investments. Some other benefits of spread betting are:
spread bets are designed for short-term trading. They gave advantages over normal dealing such as the ability to trade on margin and the ability to go short.
no fees or commissions
thousands of markets to trade online
24 hours dealing
mobile trading – apps give you an advantage to trade from anywhere.
spread betting providers are regulated
limit your losses – a risk management system means you’re able to manage your account easily. The simple order functionality means that limiting losses and maximising returns is as easy as ever
Spread bets are a simple but effective way to invest in financial markets. It is particularly attractive for those investors who don’t have pots of risk-capital available. Its advantage lies in that fact that it offers trades a stake in a larger number of shares, meaning the gains can be far higher than if they just bought the actual shares.
Get Going – without Large amounts of Money
If you’re new to trading and still getting into trading, spread betting is a great way of gaining trading experience. This is one of the huge benefits of spread betting for beginners – simply it doesn’t require you to bet with large amounts of money.
Rosland Capital recently released an informative infographic which I posted below. It shows some of the ways that Gold, the US Dollar, and bitcoin compare based on information from their page on precious metals IRAs. Given the big moves in gold and the growing prominence of bitcoin, it makes sense to try and learn get educated about them, especially with the US Presidential coming. Enjoy!
If you look at spread betting and traditional stock investment casually, it might be difficult to understand the difference. In reality, these two investment types couldn’t be more different. They both have their place in the life of the smart investor, but it’s important to understand what the differences are so that you can include them in your portfolio appropriately.
First of all, spread betting and stock market investment may have a lot of the same stocks involved, but this doesn’t mean that they are the same thing. With stock market investment, you are buying up small pieces of different companies. With stock, you are a real owner of a portion of a company. With spread betting, there is no ownership whatsoever. You are making financial speculations about the way a stock’s value is going to change (spread betting also included things like currencies, indices, commodities, and other financial entities).
Second, stock investing and spread betting are totally different in the risk incurred when waiting for that return. With stocks, prices can and do fluctuate very quickly. But most sound investors don’t invest in just one or two stocks at a time. Instead, they diversify, so that if one stock tanks the other ones’ growth balances out that loss. Spread betting is totally different. Since there is no ownership, diversification doesn’t matter in the same way. No matter how many stocks you are focused on (you might be betting on the whole stock market!), you are only concerned with a single price: does it rise or does it fall, and did the value change in the direction that you picked?
Third, stock market investment and spread betting take place in entirely different platforms. Trusted spread betting platforms like ETX Capital allows you to trade on Forex as well as commodities and indices, but (again) they’re not actually selling you ownership in anything. As such, they are regulated completely differently than traditional stock brokers are. If you want to buy stocks, you’ll have to go through a company that is licensed and regulated for the sale of stocks and bonds.
Finally, stocks take time to make money for their investors, especially if the investor is well diversified. Some people strike it rich by picking winners in the stock market, but most people know that this is extremely risky and opt instead for diversified funds. These usually take decades to grow to great levels. On the flipside, spread betting investments can resolve in minutes, hours, days, or weeks. The time period is almost immaterial because you are just concerned with the direction the price changes, beyond the limits of the buy and sell spread.
At the end of the day, stock market investment and spread betting couldn’t be more different, even though they both focus on many of the same financial options. There are investors who prefer one or the other, and many who like both. Both investment forms have their place. At their best, spread betting can provide fast growth and stock investment can give sure, steady growth. Why not try both?
Investing and running might not seem like similar pursuits. One is physical, the other is mostly mental. But I think there are important complimentary qualities.
Running and investing both take discipline. You set goals, come up with a plan to achieve them and then push yourself to execute. In running, you compete against the clock. Investors fight against the market. Both are objective benchmarks. And at the end of the day you’re primarily competing with yourself and your own insecurities.
I think running helps my investing in other ways, too. I hate to sound cliché, but running is meditative. If you can’t think your way through an investment problem during a 2 hour run, then you’re probably never going to get there.
Running gives me time to think about investments, listen to trading podcasts and take in new stimuli which can provide fuel for future stock ideas.
So although I’ve never written about it here, running has become a bigger and bigger part of my life in recent years. When I’m not busy working or researching new stock picks, I’m probably going for or recovering from a run.
For these reasons (and many more) I wanted to let you know I’m further increasing my investment in running by launching a new website. Announcing: TorontoRunClub.ca!
So if you’re a runner, or a Torontonian, I highly encourage you to check it out.
So what should you expect? Well, I’m going to be updating this running blog regularly with my own running exploits, as well as tips, tricks and resources to help others run faster, farther and easier.
Finally, I’m planning to check out the numerous running clubs across Toronto and report back with my findings. I think it will be a fun project that helps keep me excited about running and documents what I’m learning. So check it out!
One of my favourite weekly read is the updates from 361 Capital’s Blaine Rollins. The other day, when reading the most recent edition, there was a graph that jumped out at me. I’ll share it with you in a second.
But first, let me set it up for you.
Think about your stock portfolio. And in particular, think about how much it swings around on any given day. Does that get a reaction from you? Should it?
Well, as I was saying, I saw an interesting graph (source)…
Do you see what that means? Essentially, in the US, over 70% of daily price movement in equity markets is due to macro variance. Talk about correlations!
Basically, that means it doesn’t matter what stock you pick. 7 times out of 10, your fate is going to be dictated by something outside the company.
So what does it all mean? Is it actionable? Well, not really.
First of all, I think it’s Just something to be aware of. When times get crazy, it’s not necessarily because you’ve done anything wrong. It’s just the way it goes. Emotions take over, everything moves in a convoy and it all happens at once.
The other thing that’s not mentioned is magnitude: If during the 30% of the time your stocks are moving on their own accord they are steamrolling higher by huge margins, well, then maybe this isn’t so horrible after all.
As with everything in investing, there are nuances, quirks and
A friend of mine sent me a great infographic, originally created by the folks at RateHub. They’re a wonderful resources for anyone interested in finance (especially when it comes to credit card deals and mortgage rates).
Anyways, without too much more comment here is the infographic. It shares some great tips for financing your life in Canada using registered accounts. Check it out!
It’s that time of year: Back to school. Back to work. And time time to tend to the crop.
There’s something about the pending end of summer that always gets me. It probably has something to do with 20 years in the educational-industrial complex.
Nonetheless, after months of fun, frolicking in the sun, my attention starts to turn. I’m focused on productivity, output and grinding my way through the incoming winter months. It’s time to get busy. Seriously.
So here’s to a good September. To pushing yourself. To committing to a course of action and seeing it through – even when things get tough. You can change your direction to your goals, but not your decision to achieve them.
Now let’s make this fall count: With your work, your investments, and your family. Define your priorities, and focus on them ruthlessly. Cut the noise. Build your peloton. And live your life.
I hope you had fun while the sun was shining. But now, the days are getting shorter. Are you ready for it?
Do you feel a change of atmosphere when September rolls around? What are you going to be harvesting in this upcoming semester?
This book came up on my radar because the author, Jason Voss, writes regularly for the CFA Enterprising Investor blog. Eventually, I started reading his website and purchased his book. In this book review, I’ll tell you if that was the right decision.
But before we get into the book, I’d also like to further introduce you to the author. His credentials and success were another important reason why I bought this book.
First of all, Voss retired before the age of 35. Anybody who has cracked that code is definitely worth listening to, if you ask me. Plus, he was a portfolio Manager for a well-regarded mutual fund. And he beat his benchmark by a long shot, during his money management career. So with that in mind, it’s pretty amazing you can buy his insights for much less than a nice dinner out.
The Intuitive Investor Book Summar:
The Intuitive Investor is a radical guide for manifesting wealth. But the book approaches this in a much different format from most other investment books. And by the way, I’ve read a ton of trading and investing books. Most of these books are analytical or anecdotal accounts of how to beat the market. They focus on methodologies, strategies and tools to help you try and outperform the pros.
That’s because The Intuitive Investor is focused on helping you tap into the powers of your creative right-brain and harnessing insights to drive investment success. And it’s fascinating stuff.
The book starts with a discussion of emotions, feelings and their implications for investors. This is ground that isn’t often covered, but it’s absolutely essential. Because at the end of the day, humans are emotional creatures and if we’re not careful our emotions can have a big impact on our actions. For better, and for much, much worse.
From there, the book introduces a number of frameworks for how to access your right brain, to receive insight and intuition that can help your investments outperform. As far as investing books go, this is pretty esoteric stuff. And I wouldn’t blame you for feeling skeptical.
But keep in mind the author’s credentials, and throughout the book he absolutely emphasizes the importance of sound and diligent left-brain driven analysis. Actually, those are the table stakes. This book goes further into how to access your entire thinking apparatus to achieve the financial future you want. Now let met tell you what I liked most about The Intuitive Investor.
The Best Part of The Intuitive Investor:
If you ask me, the best part of The Intuitive Investor was how actionable the book was. This trait primarily displayed itself in three ways.
First, the entire book is very well-structured. The key concepts are broken down into digestible parts, from the 4 Principles to the 7 Behaviours and Beliefs, this book lays out incredibly insightful ideas in easy to understand pieces. In fact, Voss asserts the most important investment skill is “understanding information.” So he does his readers a big service by sharing his wisdom in straightforward and simple terms.
Next, the book is also very actionable. Each chapter ends with self-assessment questions, and exercises. To be honest, I need to put a little more work into these parts of the book myself. Since I read it while commuting it was a little bit tough to do all of the exercises. Nonetheless, the author put in a lot of thought and effort into helping you get the most bang for your book. Especially since there’s talk of meditation included it’s helpful the author gives specific action steps.
Finally, Voss shares interesting and educational investment anecdotes from his professional career. Not only is it insightful to better understand how a professional portfolio manager finds and considers investment ideas, but these anecdotes
What The Intuitive Investor Is Not:
If you’re looking for a trading system, analytical technique or some crazy scheme to get rich, this book isn’t it. On the other hand, if you seriously contemplate the material in The Intuitive Investor it can help you live a much richer life. Further…
I know there are readers out there who will scoff at this book. They’ll call it soft, fluffy and irrelevant. But I’d be willing to bet a pretty penny that’s just their ego trying to defend itself. Therefore, if you’re willing to think a little bit differently and consider some new ideas you might want to pick up The Intuitive Investor for yourself.
With that, let’s wrap it up…
The Intuitive Investor – The Final Word:
As you’ve probably surmised by now, The Intuitive Investor is an intriguing investing book that will make you think about your portfolio, and yourself, in entirely new ways. For this unique perspective alone, I recommend you pick up a copy of The Intuitive Investor on Amazon.
Now, if you still aren’t sure if this book is for you, I encourage you to watch the video book review below to finally decide once and for all if The Intuitive Investor is the book for you.
Because when it comes down to it, the critical concept of positive expectancy I previously espoused on, is based on trading and investing rule #1. So what is this rule?
Trading and investing rule #1 is: don’t lose money.
Of course, in risky and speculative activities like trading and investing, this is impossible. There’s no reward without risk. But as long as you don’t lose A LOT of money, then you’re doing well. It’s about avoiding the crippling losses that can take a big bite out of your account.
Now, this advice to not lose money is pretty basic. And some of you might even scoff at it. But keeping losses small (and risk in check) is key to lasting success in the stock market. Plain and simple.
So here are some of the common ways people lose a lot of money on their stock trades and investment strategies:
— not having an exit plan
— not sticking to their exit plan, often due to emotional shortcomings or a lack of discipline
— not using stop losses
— changing a stop loss after the order has been placed
— falling in love with a stock or security
— holding a stock in a downtrend
— averaging down into a losing stock
— ignoring data that refutes your hypothesis
— not wanting to admit you were wrong
As you might have guessed, it usually comes down to that last reason. Your ego wants to be right; often, more than it wants to make money. Seriously.
So the question becomes: are you controlling your ego, or is it controlling you?
If you’re not sure, just look at your portfolio. If you’re holding any big unrealized losses then the answer is likely to be yes. Even if you tell yourself it’s a (mis)adventure in fundamental investing, well, are you sure your initial thesis hasn’t changed?
Think about risk management. Like they say in the book What I Learned Losing a Million Dollars: there are only a couple reasons people lose money. There are infinite ways to make bank. But only a couple ways to lose it.
So don’t lose money. Keep losses small. And survive to fight again another day.
You need money management skills the REST OF YOUR LIFE. Take it seriously. And don’t lose a lot of money.
No stock trading methodology is perfect 100% of the time. So you need to know how to lose before you can consistently win. Do you?
And finally, sitting on the sidelines isn’t an option either. Sure, inflation is low right now. But that can change and over the long term, stuffing your cash in a mattress isn’t a viable strategy. The risk of inaction is the greatest risk of all.
Maybe that robo-advisor isn’t such a bad idea after all. At least they’re not likely to lose your money. Can you say the same thing about your trading?