Friday, January 16, 2009

Second Day, Toronto Financial Forum

Today, the first speaker I heard was John De Goey, who had a talked entitled “You Get What you Don’t Pay For”. This talk was to be about Professionalism in the Financial Advisor field. He said some very interesting things. He wrote a book called “The Professional Financial Advisor II – How the financial services industry hides the ugly truth”. See a review at The interesting things he says is that there is greater value in planning than in market timing or stock picking. He also said that the Discount Brokerage firms earn trailing commissions on Active Managed Mutual Funds you buy in your discount account.

However, the main thrust of this talk was that it is better to buy ETFs than Actively Managed Mutual Funds; in that ETFs have less risk and higher returns than the Actively Managed Mutual Funds and that the ETFs have a statistically stronger probability of producing a positive return. He goes on the quote William F. Sharpe’s study on this subject. Sharpe, who has made this argument before, has his own web site at John De Goey thinks that investors would be much better off paying an advisor, than getting “Free” advise from a financial advisor who sells Mutual Funds.

The next speaker I heard was David Baskin. He gave a talk on economics of “What Happened – the Crash of 2008 – and What Next”. This is one of the reasons I go to the Financial Forum, whick is to hear about what the economy is doing and what it will do. Basically, he said we are in a recession, but we are not going to have a depression and we certainly are not going to have a depression like happened in the 30’s. I am sure we all know now that this crisis was caused by the over selling of mortgages in the US. It affects the whole world as US mortgages were sold in bundles to the whole world. The other problem was inter-bank lending. When banks refused to do inter-bank lending, the banking system froze. The good news is the inter-bank lending rate has just come down. (He talked about the TED spread and since this is quite complex, I will refer you to this subject in Wikipedia at

We had a great depression because there was no bank insurance, no unemployment insurance and welfare and the government response was all wrong. One reason we are not going to have a great depression is that unemployment in US is expected to go to 7.3%, when in the great depression it reached 25%. He feels we are closer to the end of this recession than the beginning. In fact, most economists expect that we will start to recover in the summer of 2009. He thinks that we should start to buy stocks, but should focus on good quality blue chip stocks.

The next speaker I listen to was Doug Nelson on “How to Tweak Your Portfolio Like a Pro”. He has three points to make, which are: be pro-active, review your portfolio regularly and take ownership of your money. He advises that we all go to and assess our risk level.

The next speaker was Sanjiv Sawh on investments in guaranteed funds. This is just a variable annuity with a Guaranteed Minimum Withdrawal Benefit rider. You pay .3% to .8% fee in order to buy this guarantee. If it helps you sleep at night, this might be a great idea. These are sold by insurance companies, like Manulife, so you will have to go to an insurance agent to buy one. You are basically buying insurance to guarantee your variable annuity will not run out of money if the market crashes.

I also heard how to donate shares to Princess Margaret Hospital Foundation and why I should invest in Preferred Shares. For this last one, it was given by James Hymas and you can get the information from his site at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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