Comments on: Analysis Paralysis

By: telly

telly — Wed, 06 Feb 2008 13:59:40 +0000

Mike & Guinness, you’re not the only ones. Our house is nowhere near perfect but we’ve grown to really like it (and the low mortgage payments that come with it). Some of the things we’d change now are things we hadn’t even considered previously.

Great post Mike. A lot of things really hit home for me. Like you, I dream about Assest Allocation as well (sad, I know) and find myself overthinking and tweaking too much as well.

By: Four Pillars

Four Pillars — Wed, 06 Feb 2008 03:40:38 +0000

BB – I’ll keep the alternative energy in mind.

That’s great that you enjoy your house so much.

Mike

By: Brip Blap

Brip Blap — Wed, 06 Feb 2008 02:21:52 +0000

My hot tip? Buy low, sell high. Seriously, alternative energy – if not now, 20 years from now. The oil’s not lasting forever.

I dunno about the house. I don’t like the area I live in much – it’s expensive and the schools suck – but I knew that going in and the house itself is wonderful and four years in still feels just about perfect. I bought it sight unseen – it was still under construction when I bought it, so it’s even more impressive (I guess) that it has been such a nice place, since the first time we saw it was the day we closed…

By: Four Pillars

Four Pillars — Wed, 06 Feb 2008 00:55:20 +0000

Guinness – that was certainly my experience.

Funny thing is that I know a number of people who moved to different provinces and were able to buy a house on a visit. Never mind the fact that you don’t have time to learn the area or real estate market but they all seemed to be pretty happy with their choices.

If I moved to a new area I would probably want to rent for a while to get the lay of the land.

Mike

By: guinness416

guinness416 — Tue, 05 Feb 2008 14:29:07 +0000

I agree that buying a house is an emotional decision but couldn’t agree more with Mike that it’s almost impossible to be able to articulate properly “what you want/need” until after you’ve made that first home purchase and lived there for a while. We can’t be the only people to have had that experience, can we?

The other one that sprang immediately to my mind was health insurance (from the US perspective). I remember sitting in meetings every time they changed our insurance provider – which seemed to be annually – boggled by the differences in copays and coverage etc and essentially flipping a coin.

By: Four Pillars

Four Pillars — Tue, 05 Feb 2008 12:13:11 +0000

BB – good call on the emerging markets…any more “hot tips”?

Mike

By: Brip Blap

Brip Blap — Tue, 05 Feb 2008 03:57:28 +0000

I’ve gotta go with Updog. Buying a primary residence isn’t an emotionless investing decision, it’s emotional and therefore needs to be “closer to perfect.” I’m with you on the other points, though – avoiding the worst case should be a higher priority than capturing the best case in investing, simply because you have a higher rate of sucess.

I bought tons of emerging markets a few years ago, incidentally, largely in the Chinese/Russian markets that my wife and I have studied and know pretty well – they’ve done quite well. And you make a great point, Mike – US and Canadian companies are already heavily invested in emerging markets, so we’re all probably touching the emerging markets already.

By: Four Pillars

Four Pillars — Tue, 05 Feb 2008 03:01:57 +0000

FS – good story. I think it’s a common term in project oriented workplaces.

Updog – interesting perspective. I guess my point with the houses is that you might not be able to determine the true order of the houses until you live there for a while.

SP – I’m waiting to buy emerging market if I ever do. One thing to keep in mind that a large part of corporate earnings in the US and Can. are from emerging markets so you probably already have some exposure.

Y HAT – simplification is a good thing.

By: Y HAT

Y HAT — Tue, 05 Feb 2008 01:55:28 +0000

I agree with the simplify approach. I even nicked named my portfolio the Keep It Simple Stupid RRSP.

By: Silicon Prairie

Silicon Prairie — Mon, 04 Feb 2008 22:26:40 +0000

The choices for asset allocation can be reduced a lot. Even something that’s still relatively limited like the canadian ETF market has too many choices for a regular investor. But if you really look at the returns for each one, some of them are completely unnecessary because there’s better choices. I like the way Unconvential Success describes this – for example, corporate bonds aren’t necessary because they have a higher risk and don’t offer enough additional return over government bonds. If you look at the choices available to you carefully you might find that a lot of them are actually worse than another comparable choice so they can be ignored safely.

Even if emerging markets continue to do well before I get to that part of my portfolio I think I’ll add them as a small percentage. That way the risk is minimal but if they continue to go up I can generate some extra returns and move them to other investments. When they do start to go down buying will look a lot better though!