Issues

Magazine Cover for February 2023
February 2023

A couple of disparate points this month:

We think all investors need to work hard to avoid 'anchoring' and 'recency' bias:
Anchoring is when an investor sets expectations based on 'old' news or an old price. Recency bias is when an investor looks at the recent past, and expects that to continue.

Both can be portfolio killers. On anchoring, be careful if you catch yourself saying, ever, "I
paid $XX for that stock". The stock does not know what you paid for it. The market doesn't care. The buyer of your stock doesn't care what you paid for it. Frankly, unless you are considering tax implications, the price you paid for a stock is completely irrelevant, once you own it. The only thing that matters now is the future. A stock down 50% can still decline ANOTHER 50%, infinitely (until delisting at least).

Recency bias is never good, but this year could be more harmful. After a horrible year, where both stocks and bonds declined sharply, you might want to 'go conservative', or 'go to cash'. There is nothing wrong with that, if that meets your goals. But we would caution against making major changes AFTER a decline. We do not know if the market is going to rise this year. But we do know that it has always risen, eventually, after every decline. Something to think about before you go stick your head in the sand and hide from the markets this year.

Peter Hodson, CFA

Featuring: Matt Poyner, Rita Silvan, Fred J Masters, Keith Richards, Wynn Quon, Richard Morrison

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Magazine Cover for January 2023
January 2023

In case you hadn’t heard, the Tax Free Savings Account (TFSA) limit for 2023 has been
raised to $6,500, from $6,000 last year. That’s due to inflation, so there is at least one
benefit from the inflation problem that wrecked a lot of stocks last year.

We would strongly advise everyone to utilize their TFSA as much as possible. If you can’t
fund the maximum, put in what you can. Tax-free compounding is a wonderful thing.

Anyone over 18 can set up a TFSA and fund it with $6,500 in 2023. Someone who turned
18 in 2022 can put in $12,500 this year. The current lifetime contribution limit is now $88,000, assuming you have contributed the maximum since the TFSA’s inception in 2009.

TFSA withdrawals can be made any time, tax-free. All withdrawals can be put back into
account in the year after the withdrawal.

If you have children, and the means, we think the following is a good idea, to help your
childrens’ futures: Once they turn 18, tell them you will fund all, or half, of their TFSA
contribution every year. But, once they take ANY money out, that gift program stops. Sure, it is a bit of a bribe....but it will help show your kids that time is the most important factor when investing.

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Peter Hodson, CFA

Featuring: Brian Quinlan, Richard Morrison, Ed Arbuckle, Julie Petrera, Steve Benmor, Giles Jordan, Caitlian...

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