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I actually laughed out loud while reading “10 Things Fund Managers Say and What They Actually Mean.”

The tone is definitively sardonic, but, after spending a decade as a mutual fund analyst, I found a lot of accuracy underneath the cynicism.

The sentiments are not limited to fund management – many of these “lies” can be found whenever a CEO speaks in public.

Many of the 10 statements concerned responsible investing – factoring environment, social and governance (ESG) considerations in investing decisions. The first fund manager proclamation, “ESG is in our DNA” is translated as “We have always done some company management meetings, but have started to take environmental and social factors seriously now we can see it sells”.

The most vicious of the interpretations is “Cognitive diversity is incredibly important to us” converting to “We have one woman on the team."

The darkest humour in the post is probably the most telling in terms of highlighting the existential fears of the asset management industry: “The performance fee structure means that my interests are perfectly aligned with my clients” changes to “If I can just have one or two good years then I am made.”

These are jokes, but there’s a serious message underlying them.

In aggregate, asset managers are aware they’ve been caught charging high fees for sub-par performance, but they don’t, for now, have a business plan to evolve into something useful. There are very, very large public companies that have seen their profits absorbed into Vanguard’s passive investing strategies to investors’ benefit.

It will be interesting to see how the asset management industry changes, because it has to. No amount of dark humour will prevent it.

-- Scott Barlow, Globe and Mail market strategist

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Stocks to ponder

Dollarama Inc. The company’s shares have hit some turbulence because of concerns over the discount retailer’s profit margins. But the sell-off alleviates the biggest downside to the stock: its high valuation. David Berman looks at the investment case for the retailer.

The Rundown

A province-by-province look at how to keep taxes low after you fill your TFSA and RRSP

If you’re one of the diligent, fortunate ones who are branching into taxable investing after using up all your RRSP and TFSA room, then a general rule to follow is that capital gains generate the mildest tax hit, followed by eligible dividends and then interest from bonds or guaranteed investment certificates. But the degree of difference between these three forms of investment gains differs from province to province. Rob Carrick looks at the regional breakdowns.

Big Tech is under attack, and investors couldn’t care less

It was December 2018, and the towering giants of tech were looking wobbly. Apple’s shares were tumbling, and it hadn’t yet delivered the bad news about a sales slowdown in China for the iPhone, a device that had helped make it the modern era’s first trillion-dollar company. Facebook could not escape the shadow of the dueling electoral scandals of Cambridge Analytica and Russian disinformation. And Amazon’s stock was sagging as the president of the United States regularly attacked the company. Just as it appeared that the big tech companies’ endless upward march had finally come to an end, they led a remarkable rally. The New York Times looks at what made them the stocks to own in 2019.

Others (for subscribers)

Wednesday’s analyst upgrades and downgrades

Wednesday’s Insider Report: CEO invests over $1.4-million in this dividend stock

Tuesday’s analyst upgrades and downgrades

Tuesday’s Insider Report: CEO steadily accumulates this stock yielding 3.5%

Number Cruncher: Eight energy stocks riding the shift in demand to natural gas

Number Cruncher: Ten stocks with a stop-loss order applied for value investors

Globe Advisor

How irrelevant numbers can impact investors’ decisions

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Ask Globe Investor

Question: When you’re looking at the yield of your portfolio, do you calculate the dividend as a percentage of the current market price or the initial purchase price?

Answer: The standard definition of yield is the annualized dividend payment divided by the current market price. For example, if a stock is trading at $50 and the dividend is 50 cents a quarter, or $2 annually, the yield would be $2 divided by $50, or 4 per cent.

But some investors also like to calculate their “yield on cost” by dividing the current annual dividend by the original purchase price. Continuing with the example above, say the investor purchased the stock several years ago when the share price was $25 and the annual dividend was $1. The yield on cost would be the current dividend of $2 divided by $25, or 8 per cent. The yield on cost is high because the dividend has doubled since the initial purchase.

If you want to calculate your yield on cost to illustrate the impact of dividend growth, that’s fine. But don’t make the mistake – as some investors do – of comparing the yield on cost of your stocks with the actual dividend yields in the marketplace. This is an apples-to-oranges comparison, because actual dividend yields are based on current stock prices, whereas yield on cost is based on a historical purchase price that no longer applies.

I have even known investors who are reluctant to sell a stock with a high yield on cost because they would never be able to find such a high yield in the market. This reasoning is fundamentally flawed. For the purposes of comparing yields, the price paid for a stock is irrelevant. What matters is how much it is worth today and how much income the stock is generating as a percentage of the current market price.

--John Heinzl

Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.

What’s up in the days ahead

Investors who have embraced Canadian renewable energy stocks for the good of the planet have been rewarded this year with a pleasant side benefit: These stocks have rallied, delivering year-to-date gains that mock the fossil fuel-clinging political leaders in Washington, Edmonton and Toronto. But is the renewable energy sector growing too hot? David Berman will take a look.

Click here to see the Globe Investor earnings and economic news calendar.

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Compiled by Globe Investor Staff

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