Monday, March 24, 2008

RRSP UPDATE


It's been a tough month for the Y HAT RRSP, which is down 8.14% since inception in August 2007. XIN, the portfolio's EAFE ETF, is down 19.1%; XSP, its S&P 500 holding, is down 9.9%. The only holding not in the red is my short bond ETF, XSB, which is up 1.72%.

I'm not surprised with XIN's performance as I knew it was volatile from the get go: from 1969 to 2006, the standard deviation for EAFE's annual returns has been 21.4%. Despite my awareness of this volatility, however, it still hurts to see my investment drop by 20%.

So what have I done to the Y HAT RRSP given all this market turmoil? My original investment plan was to move funds into the portfolio during this first quarter and I have begun doing so by purchasing more XIN (at $23.50). My next purchase will be more XSB, given that the Bank of Canada will probably be lowering interest rates over the year.

Monday, March 3, 2008

WHAT'S UP WITH MY LAYOUT?

The font on the blog seems weird. The paragraph spacing is off too. What's up with that? This is a sample post. Just trying to add a paragraph to test. I added a link to a Google spreadsheet that tracks performance for the Y HAT RRSP. There's a twenty minute delay on the data, but I don't mind.

Saturday, March 1, 2008

CREDIT CRUNCHES AND REAL ESTATE BUSTS

The inevitable collapse of the real estate boom really shook the banks. Uncertainty about the value of the real estate collateral securing their loans made bankers unsure of how much capital they actually had - leaving many of them paralized, frightened, and reluctant to lend further...

Nothing we did at the Fed seemed to Work. We'd begun easing interest rates well before the recession hit, but the economy had stopped responding. Even though we lowered the fed funds rate no fewer than twenty-three times in the three year period between July 1989 and July 1992, the recovery was one of the most sluggish on record. (Alan Greenspan, The Age of Turbulence).
The above is an interesting paragraph from Alan Greenspan's memoir with many parallels to today's economic environment: a real estate bust, a financial credit crunch, and the efforts of a central bank intent on warding off economic Armageddon.