In “How to beat the next bubble” Jonathan Clements of the WSJ says that innovation and easy money has been the root of the last two bubbles (internet and real estate). Don’t fall into the next one by avoiding ‘mental mistakes’: assuming rising investments will keep rising, buying after assets already significantly appreciated, rising markets make you overconfident (i.e. think you are smart, rather than lucky), ‘house money’ effect (playing with your winnings), unwilling to sell at a loss. (I will shortly do an in-depth blog on behavioural finance, which focuses on such ‘mental mistakes’)
The New York Times reports that paid volunteerism is the new trend “For love and a little money”  Reasons cited for the change may include: need to fund longer retirements, if (professional) work is pro bono, then not taken seriously or acted upon (hmmmm…I have to think about this some more…). ReServe and Experience Corps are organizations which help match needs with (low) paid volunteers.

The Globe and Mail tackles the problem of defined benefit pension plans in “It’s time Alberta killed off defined-benefit pension” While the problem statement is articulated well, the solution (switching to a defined contribution plan) of merely forcing employees from a flawed DB plan to an even more flawed DC plan, is hardly the answer. (If you are interested in the topic, see my recent recommendations on Pension Reform to the Ontario Expert Commission on Pensions)
Tim Cestnick in Globe and Mail’s “Y’all better file if y’all stay a while”  reminds readers, like snowbirds, who meet the Substantial Presence Test (spend more than 31 days a year in the U.S. and number of days spent in the U.S. in current year, plus 1/3 previous year plus 1/6 two years ago is 183 or more) can save themselves a lot of trouble by filing U.S. Form 8840! Don’t take it lightly, it is easy to do (I’ve been doing it for years) and it can save you a lot of aggravation (filing a U.S. return) and costs (fine).

Globe and Mail’s Brian Milner in “Pension funds the new riverboat gamblers”  discusses the risks undertaken by many pension funds by over-reaching for yield (sub-prime market) or returns (hedge funds and private equity with high built-in costs of 2+% in a 4-6% return environment). The advice, also applicable to individuals, is “lower the objectives rather than search for ever more creative ways to lose money”.

Rob Carrick “Income splitting, dividends give seniors a leg up”  reminds readers the significant tax-savings offered by the new pension splitting tax changes in 2007 tax year. Rob also suggests, quoting financial advisors, that retirees consider replacing some of their fixed income asset allocations (in their unregistered part of their portfolio) with tax-advantaged (bank) preferred shares (which of course come with the risk price falls and retraction risk)

An on the Florida property tax front the ‘tragi-comedy’ continues. The Miami Herald reports that (governor) “Crist opens tax plan drive” while the Sun-Sentinel warns that “Firefighters, teachers and others lining up to oppose property tax cuts” and opposition is building against the property tax amendment to be voted on January 29th. Lining up in NO corner are firefighters and the teachers (fearing reduction in essential services and no doubt job losses), Florida TaxWatch ( “relief to those who need it least, while giving virtually nothing to those that have seen their taxes rise the most”, but not clear if part-time out-of-state residents are considered are even on their radar), League of Women Voters, League of Cities (we don’t want to get off the gravy train), Florida PTA. In the YES corner next to Governor Crist is Donald Trump (?), Florida Association of Realtors , Florida Chamber of Commerce, Associated Industries of Florida, Florida Medical Association, Florida Power and Light. Not clear to me if the partial truths stated as the reasons as to why most of these groups have taken a particular position would stand up to even superficial logical scrutiny, but then this is Florida, and few care or have the foresight to care about much beyond their immediate short-term self interest, with total disregard of how the collateral damage inflicted on many others (renters, first-time home buyers, part-time residents, businesses, investors) will come back to haunt the state’s future economic growth or shrinkage!