Forum Financial Wisdom Forum

This might replace “play money” that some people use for entertainment? Or would the AI agent end of having all the “fun” thus defeating the purpose? That would probably depend on how successful the AI agent is. Getting rich can be fun in and of itself I would think. Imagine giving your AI Agent $10K (play money), let it do it's thing for 12 months and find out it made $10 million. Getting the windfall might not have been fun, but spending it would be. Interestingly, such an outcome would lead to one of those financial conundrum things. If an AI Agent could be successful at investing (presumably by exploiting some market inefficiency), soon all AI agents would do the same thing, making the techniques employed by the AI agents ineffective by removing the inefficiency. Of course, super powerful AI agents might find new market inefficiencies, but Joe public would not have access to those. However, the AI tech bros might get even richer.

The bond selloff continues and rates are continuing to go up. If this trend continues can the stock market maintain its current levels? hHstory would say no. May-be its different this time. I wonder were this bond market is going ? Worth checking are charts for the Dow 30 (DIA) and the equally weighted S&P 500 (RSP) each about 6.5% off their highs. By comparison the NASDAQ 100 (QQQ) off one percent. "Don't fight the Fed" Martin Zweig

As I work my way through In Your Best Interest , I see that Cunningham advocates owning a few Canadas for liquidity and holding other bonds to maturity. In 2012 he was interested in ETFs as an alternative to his old-school strategy of building a bond ladder to get around extortionate mutual fund fees. I wonder if he shared his thoughts as ZIRP dragged on and the reward for buying a ten-year bond instead of a two-year crept lower and lower. It looks like he disappeared from the Internet in 2013 but I hope he had a good retirement. I always enjoyed Hank Cunningham's commentary, basic straight to the point. iframe iframe iframe

Yes, well, I am (and will remain) fully invested in any event...as I did during the GFC, Covid and the 2022 bear. That does not mean I don't expect a correction, imminent or otherwise. I just keep my fixed income short duration. FWIW, my IPS doesn't dictate what my fixed income should look like other than being low risk to protect capital. That said, I do have a 40/60 all-in-one ETF in my inconsequential RRIF to mitigate degree of volatility.

As I work my way through In Your Best Interest , I see that Cunningham advocates owning a few Canadas for liquidity and holding other bonds to maturity. In 2012 he was interested in ETFs as an alternative to his old-school strategy of building a bond ladder to get around extortionate mutual fund fees. I wonder if he shared his thoughts as ZIRP dragged on and the reward for buying a ten-year bond instead of a two-year crept lower and lower. It looks like he disappeared from the Internet in 2013 but I hope he had a good retirement.

Short answer is probably not. Who knows? "Making predictions is hard, especially about the future" -- Niels Bohr. The real problem with making and then acting on these predications is that is requires you to be correct twice, once on the sell decision(s) and then again when deciding to re-enter the equity market. That doesn't seem like good odds to me. I prefer to remain fully invested per my IPS and only act when things get outside specified target ranges.

Short answer is probably not. Equity markets have been trending down lately not unlike 2022 as a result of increasing interest rates and when 10 year bond yields (Canada) went from 2 to 3.5%. This year alone, they have gone from 3.5% to 4% and that is high enough to whack-a-mole both dividend stocks and highly leveraged companies. It has been even more significant stateside. I would not be surprised if we are heading into correction territory but as we all know, that is just a WAG and markets have a mind of their own. I am keeping my fixed income short.

I would welcome a charitable donation option that offers the following: 1. I donate say $500k to my favourite charity 2. in the event I need some of that money for end of life issues, I will get up to the principal amount plus interest if I end up needing it. 3. If the costs are uncertain and rising, I may need to make multiple donations to cover such eventualities.. I asked about that when doing estate planning with a lawyer from TD Trust. Basically it won't work because the tax credit is granted only when the charity gets the money and there can't be any strings attached. Using a donor advised fund wouldn't get around this as you can't take back money put into a DAF. I have a basket of blue chip Canadian stocks bought during the 2007 global financial crisis. I no longer need the dividends for expenses because they're covered by my mandatory RRIF withdrawal. So I donate the dividends to charity. The TD lawyer suggested donating the shares themselves to avoid capital gains. But I decided to keep them as a reserve for long-term care. If I don't need high-cost LTC the shares go to charity at death. The lawyer pointed out that this is a bit less than totally effective from a tax planning viewpoint because the Ontario donation credit is not based on the top-bracket rate as the federal one is. So the combined credit would not offset all CG tax due if the govt ends the current tax holiday on donation of shares with accrued gains. But having an LTC reserve is more important to me th

As hamor pointed out in response to my post on PBO numbers, my assumption defining 'affluent' was investable net worth, not including principal residence. I don't see why a $4M portfolio could not be considered affluent, albeit some of that depends on the returns such a portfolio generates. I would expect those with such portfolios to be equity heavy and tax efficient, able to generate ~6% CAGR on a sustained basis (per per FP Canada assumptions, not a lame 60/40 balanced portfolio of high MER mutual funds. If it was all GICs in 'when you have won the game, stop playing' mode, that is a different story.

The bond selloff continues and rates are continuing to go up. If this trend continues can the stock market maintain its current levels? hHstory would say no. May-be its different this time. I wonder were this bond market is going ?

I would double the portfolio value suggested to achieve "affluent" level. Why do you say that? Table 2 of PBO suggests the top 5% had a net worth threshold of $2.8M (2023) holding some 40% of total net worth in Canada. Would you not consider 1 in 20 households to be affluent? Or perhaps somewhere between that and the top 1% with a net worth threshold of $7.4M (2023)? Maybe the 2-3% percenters? I think the $3.8-4.2M level is not a bad estimate. $5M if you wish to be picky or whether you define Affluent slightly less than Wealthy (Rich). Good luck paying for "high end international travel, luxury vehicles, private club memberships", etc with a $4m portfolio. $200k a year gross is not going to cover this level of spending. $200k net alone might cover the travel, vehicles and memberships but you would have to live in your Porsche. Again it comes down to how you define affluent and very affluent. Does your definition depend on certain expenditures (international travel, clubs, Porsche, etc) or is it defined based on percentile net worth of the population. At the very least the percentile method should be location dependant (ie GTA) and probably demographically as well (retirees,etc). Also, the expenditure method depends on very personal spending preferences. Ie “I don’t need a Porsche, cottage, club, to be affluent”. I do tend to agree with you that if you use the “expenditure” method I would need more to feel affluent than the top 5% of Canada would imply.

I would double the portfolio value suggested to achieve "affluent" level. Why do you say that? Table 2 of PBO suggests the top 5% had a net worth threshold of $2.8M (2023) holding some 40% of total net worth in Canada. Would you not consider 1 in 20 households to be affluent? Or perhaps somewhere between that and the top 1% with a net worth threshold of $7.4M (2023)? Maybe the 2-3% percenters? I think the $3.8-4.2M level is not a bad estimate. $5M if you wish to be picky or whether you define Affluent slightly less than Wealthy (Rich). Good luck paying for "high end international travel, luxury vehicles, private club memberships", etc with a $4m portfolio. $200k a year gross is not going to cover this level of spending. $200k net alone might cover the travel, vehicles and memberships but you would have to live in your Porsche.