A roundup of what The Globe and Mail’s market strategist Scott Barlow is reading today on the Web
New York-based Josh “The Reformed Broker” Brown discussed the top investing ideas for young investors. There’s some obvious content like ‘start immediately’ and with as small an amount of money as necessary. There’s some U.S.-specific tips for Canadians to skip over but other more interesting advice follows, like ‘rightsize housing and transportation’, which are the two biggest expenses most young people have.
I would add that younger investors should concentrate on the amount of savings and to take as little risk as possible in the beginning. Losing $500 when you’re 25 years old doesn’t seem like the end of the world, but because of long-term compounding, it can limit returns by tens of thousands of dollars over the long term.
“Advice for Young Investors” – Reformed Broker (video)
The biggest argument in finance right now is the importance, or lack thereof, of a flatter yield curve. Citi credit strategist Matt King notes that this discussion is heated even within his firm’s research department,
“In general, the internal debate at Citi rages between those (like us and our rates strategists) who think that the flattening yield curve is right and that risk assets as such are vulnerable – with some even starting to ask questions about the timing of QE4 – and those (like our economists, and most of our equity strategists) who think that the yield curve is hugely distorted and should steepen in the face of rising inflation and who are confident that this is still “late cycle, not end cycle”” .
“@SBarlow_ROB Internal dissension among strategists at C re yield curve as indicator (King)” – (research excerpt) Twitter
“Yield curve crunch shows Fed hiking even amid global agitation” – Bloomberg
National Bank thinks the Bank of Canada might be behind the curve in raising rates, an argument that will put a chill up the spine of real estate investors,
“Excluding the volatile food and energy components, the consumer price index was up 2.3% on a year-on-year basis, the highest in 11 years. So much so that the ex-food and energy inflation differential with the U.S. has now disappeared. And yet, Canadian interest rates remain unfavourable relative to those of the U.S. Just how unfavourable? … considering a near-zero inflation differential, the Canada-U.S. 2-year yield spread is the most negative we’ve seen in the last 20 years.”
“@SBarlow_ROB NBF: Is the Bank of Canada behind the curve ?” – (research excerpt) Twitter
The Humble Dollar blog listed what they believe are the Ten Commandments for a comfortable retirement. I liked number four: “It’s a big mistake to think of retirement purely as leisure time” and number 10: “You want a steady flow of income. Do not be totally exposed to stock market fluctuations. You don’t want to worry about where that 4% withdrawal rate will come from each year.”
“Ten Commandments” – Humble Dollar
Two related reports warn that technology stocks, which have led upside global equity performance, are flagging,
““Since the start of June, the EM tech sector has accounted for 40% of the decline in the value of EM equities” – (research excerpt) Twitter
“Chinese internet stock sell-off may shake faith in FANGs” – Reuters
Tweet of the Day: “@morganhousel I'm going to write a book explaining Warren Buffett's success. It's called "He's a Pretty Good Private Equity Manager Who Doesn't Charge Fees and Has Been Compounding for Eight Decades. That Explains like 90% of His Success." – Twitter
Diversion: “The Great Chinese Art Heist” – GQ