blog22jul2007

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WSJ’s Jonathan Clements reports that “Investors flock to low cost funds”  He quotes encouraging figures whereby 74% of recent mutual U.S. fund investors considered fees and expenses before buying, and stock-fund costs dropped from 2.32% in 1980 to 1.07% in 2006. Unfortunately Canada’s investors seem to be stuck in 1980 and the blame lies with them, as they continue to buy the funds.
Financial Post’s Jonathan Chevreau in “Group lobbies for better pension deal” reports on a new group Common Front for Retirement Security (CFRS) which advocates for improved pension system for Canadians. They want to re-energize Defined Benefit Plans instead of the RRSP and Defined Contribution plans that are the current dominant models available to most employees. Among the listed problems of newer models are high mutual fund fees and transfer of risk from the sponsor (employer) to employee. Chevreau also mentions one of their suggestions of a national contributory CPP-like plan. (This is actually not a bad idea; Australia, New Zealand and Holland have successfully implemented such plans since the 1990s and it’s one of the recommendations that I am planning to pitch at my scheduled representation to the Ontario Expert Commission on Pensions in Ottawa on November 1st).
In Financial Post’s “Hindsight is overrated” Richard Croft reminds us Warren Buffett story that people are happy when price of hamburgers go down and unhappy when they go up, but “When stocks go down and you can get more for your money, people don’t like them any more.” He furthermore suggests that we must keep in mind that our investment decisions must be based not on past performance but future fundamentals!
And finally, if you read any newspapers or listen/watch any Canadian news you couldn’t have missed the reports on the aging of Canada following the release of the StatsCan 2006 census. So I won’t belabor this any further- we are getting older in Canada, and boomers views/needs will continue to influence Canada’s social and political directions; and the world won’t come to an end.
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