PerFi 3 – WWIII

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(1.) A CBC Marketplace investigation revealed the incredibly bad advice offered by commissioned investment salespeople. You’re reading this blog so you’re probably already aware that a commissioned mutual fund salesperson cares less about protecting your financial interests than a used car salesman. But… hidden cameras!!

Horse-head-shaped feeder for squirrels

In lieu of generating unique content, here’s my comment from Reddit, and a response from friend of the blog Sandi Martin:

Me: This kind of behaviour is endemic to the industry. It is not individuals conning people, it is the entire system of banks and MER-based mutual fund sales organizations masquerading under the pretense of providing unbiased advice. Just look at banks’ advertisements; making the implication that a market-linked GIC has a chance of making 15% (per 5-year term, but the average person will interpret it as 15% a year, and their marketers know this) when an outcome of under 2% a year is statistically far more likely than 3%. Cherrypicking their massive mutual fund selection for the few funds that have generated 10%+ per year for five years for advertisements, and ignoring the sub-market returns and ridiculous MERs that drain their average investors’ savings.

The industry is the con. It’s such a big lie that nobody notices.

Sandi: Exactly. Blaming the individual salespeople actually benefits the financial sales industry as a whole, since it allows the industry to hide behind the “a few bad apples” defense, when these salespeople are doing exactly what they’re incentivized to do.

(2.) CMHC raised its mortgage insurance rates.

Don’t insurers raise rates in response to risk and payout increases? I thought overextending ourselves into unprecedented debt:income ratios by purchasing an illiquid, non-income-generating asset that has experienced its biggest price run in history was prudent and riskless.

The real danger is the stock market, you know. If you diversify yourself then some of your stocks will go down sometimes!

(3.) Russia sought approval on the weekend to invade Ukraine beyond Crimea.

It’s no secret to this blog’s audience (of three) that I co-opt the PerFi 3 format to rant about tax-and-spend premiers and Stalinist prime ministers. But I generally tie everything back to money in general or building wealth in particular, if only in a tangential manner. This news story, however, is huge. An informed observer of recent political news about Russia is bound to see parallels to Germany in the 1930s and, on a larger scale, an analogously complicated geopolitical environment of intertwined ideals and alliances.

A former super power has suffered from massive shifts in social structure (i.e. Russia’s collapse of communism vs Germany’s loss in World War I and hyperinflation). Russia has begun to brutally oppress certain minority groups while economically dominating neighbours by abusing its stranglehold on energy resources. Now, in two cases, it has directly invaded neighbours (South Ossetia and now Crimea).

China’s cyber war against the west continues to intensify, as does its war rhetoric against Japan.

The Arab world remains fragile from roiling factional disputes. A massive proxy war between East and West rages in Syria (oh, and don’t forget all of the Al Qaeda militants). Even though the Liberal Media continues to say Iran lacks the capacity to build nukes, the truth is that they could now assemble many with just a few weeks in turn around (the technology to deliver such weapons to their presumed target has been in the Iranians’ hands for years).

We need to recognize that the world has become a powder keg and deescalate the broader confrontations immediately, specifically the Russia-USA and China-Japan rows.

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1 Comment… Share your views

  1. Yea, well its amazing the reaction when Russia threatens the heartland of the EU by unilaterally taking parts of a neighboring nation. I am disappointed with Russia`s behavior in this case.. I mean Putin`s (who are we kidding). However, I`m not sure what the right move is.

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