Friday, March 8, 2013

Book Review "The Clash of the Cultures: Investment vs. Speculation" & Stock Thoughts

As stated in a previous post, being a passionate reader (about two books a week), I end up reading most of the popular investment books published each year. Having found John Bogle's latest offering at the local library, I was drawn to the red and white cover with "Investment vs Speculation" on it. Being a recovering speculator, and always yearning to move further toward the rationale investor persona, I checked out "The Clash of the Cultures: Investment vs. Speculation".

For those of you who are unaware, Mr. Bogle started the first index fund in 1977, and his company, the Vanguard Group, grew into a major investment powerhouse by promoting low-cost, index funds geared toward long-term investors. It was interesting to read Mr. Bogle's thoughts on the mutual fund and investment industries, his reasoning behind starting the first index funds, and his perception of ETFs. Also educational to find out that institutional investor account for almost 90% of the investment holdings, making us retail investors a small minority. My only criticism of the author is that he spends most of the book preaching to the converted, instead of explaining in detail (instead of generalities) how a long-term investor could prosper in today's markets. The book reminded me a lot of a university text, until I reached the second half of the last chapter where the author presented "Ten Simple Rules for Investors" that although general, were pretty useful. 

It's been a weird week in the markets. After completing my post last Friday, lamenting how difficult of a time I was having finding attractive Canadian companies to add to my portfolio, I ended up doubling my position in H&R REIT. It seems that REITs have been a bit out of favor with Canadian investors through the first couple months of 2013, and I decided to take advantage of a temporary dip in the stock price to buy a solid REIT, yielding almost 6%, and with a history of increasing their distributions.   Sometimes, the market baffles me, as it has done in the last two days with the reaction to the latest results for Canadian Western Bank (down 5% after reporting another strong quarter and increasing their dividend payment) and SNC (down 6% after reporting record revenues and boosting their dividend). Neither have a dividend yield high enough to make my 'Buy' list, but I'll continue to hold both companies given I like their long-term investment potential and their strong financial fundamentals. 

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