Tuesday, September 26, 2006

A sobering thought

I have no idea why this is the case, but...

A story up on CNN Money claims that on average, drinkers earn 10 to 14 per cent more than their teetotaling colleagues.

Specifically, the study (originally found in The Journal of Labor Research) found that those who regularly drank in social settings earned higher salaries than those who only drank at home or not at all.

The difference was apparently larger for women than men.

The obvious explanation I can think of is that social drinkers are more likely to be sociable, networking people in general (hence, more likely to get ahead in their careers due to their outgoing nature) but part of me doubts that there's a causal relationship going on here.

Isn't it just as likely that the inverse is true? Namely, that high earners are just more likely to drink, because they have more disposable income than someone who's budget is stretched and can't afford frivolities like booze.

Still, it makes you think. I think i'll organize an after-work tipple with some friends this evening. And for once, I'll have the excuse that it's actually good for my finances.


Friday, September 22, 2006

RBC's Inaction Indirect

An e-mail from my on-line broker this morning.

Subject : RBC Action Direct Inc. is changing its name
Date : 22 Sep 2006 23:59:59

Thanks to your feedback, and in an effort to better identify our direct investing business, RBC Action Direct is changing its name to RBC Direct Investing . On October 15, 2006 the online investing site will be updated to reflect the new name.

Our new name is just one of the changes you will see in the online investing site in the coming weeks. We will be adding more tools and resources making it easier for you to stay on top of the market and make informed investment decisions.

Some of the enhancements you will see include:

An Intraday View that will show you your holdings and cash balances in real time;

The expanded Stocks tab with more Research & Tools including aggregated Canadian & US market commentary, stock comparison tools and performance chart views of equities.

Not that it hasn't been harped on before, but this latest round of complaining about the Big Banks' on-line brokerages seems to be de rigueur right now. I think the Globe's Rob Carrick got the ball rolling, and since then it's been picked up by some of my most esteemed personal finance bloggers.

The consensus? The Big Banks, as is their custom, are screwing over do-it-yourself investors with high fees and sub-par services. My own broker, RBC's Action Direct seems to be slowly waking up to these criticisms, by implementing a nominal cut in fees, offering more research tools and intraday price tracking.

It's a nice start I suppose, but it seems like a whole lot of window-dressing to me. More research is theoretically good, but given my general skepticism over analyst reports, I doubt I'll be overly swayed by having access to more of them. Good raw material in terms of numbers for my own research, though, I suppose. And I fail to see what having intra-day stock prices will do for a theoretically long-term investor like me. It's not like I'm going to start buying Tim's shares at $27.40, selling them at $27.84 a few hours later and buying them back for $27.13 at market close or something. That sort of short-term thinking would go against what I'm trying to do here.

At the end of the day, the one feature I really want to see (and that isn't a part of RBC's forthcoming changes) is an improvement in performance reporting. At the moment, all they have is rudimentary tracking of how much +/- your portfolio value has gained or lost compared to the book value of the equities since inception. I'm left to fiddling around on Excel to monitor how I'm doing on a monthly and yearly basis.

If RBC really wanted to help me out (or, indeed, convince me to shell out for some investment advice from them by showcasing my shortcomings) the greatest thing they could do would be to embed some sort of long-term performance tracking system into the home page.

And reduce the fees. That always helps. Although I'm not holding my breath on that one.

They are a bank, after all.

Tuesday, September 05, 2006

Book Review: Generation Debt

I recently got my hands on Generation Debt: Why now is a terrible time to be young by U.S. journalist Anya Kamenetz.

In the book, Ms. Kamenetz goes through the myriad of financial pitfalls that face young people today. From credit cards, to student debt, to affordable housing, to the constant cycle of internships and underemployment, to total lack of employment, to the cost of children and finally marriage, the author covers them all at one point or another. The book is written from a first-person perspective of someone who's lived through a lot of it and found her way out, but the real meat of the book is in the personal anecdotes Ms. Kamenetz collected about money from hundreds of twentysomethings from all walks of life.

I wasn't surprised to learn that Ms. Kamenetz is a Yale grad because at the end of the day this book reads a little like an essay -- complete with citations and studies to quantifiably back up her contentions.

I must say I'm of two minds on the book. At first, I wasn't all that fond of it, mainly for it's somewhat whiny tone, and the way she seemed to just arbitrarily blame the greediness of baby boomers for the plight that befalls her generation.

I'm generally reluctant to buy into the "blame whoever was here before us" mentality because I think it feeds every new generation's arrogant view that it's somehow better from the one before it. Every generation intuitively seems to think that their music is the best, their technology is the most innovative, their political events are the most earth-shattering and generally, that nobody else has ever had their unique set of problems.

Frankly, I don't buy it. I have a history degree, so I'm very much aware that history is full of people who somehow think that they're mysteriously different than everyone else before them. That they're somehow immune to the mistakes that previous generations made.

All the factors she lists ring true to me of my generation, but essentially, I just found it hard to believe that other generations didn't face similar challenges and managed to overcome them en masse. They survived their financial calamities as I'm sure we will when all the hand-wringing is done. As Oz, my favourite character from my former favourite TV show, Buffy the Vampire Slayer, once remarked: "Well, we know the world didn't end, because ... check it out."

Still, the book has its moments. Her views on the consequences of giving easy credit to students are bang on -- it's a practice I think needs to be seriously curtailed. Ditto for her thought on the practice of keeping young people permanently underemployed by trapping them in the neverending internship cycle -- being a journalist, it's a cycle I know all too well.

And I also caught myself nodding in agreement with her views on marriage: namely, that financial issues have managed to pervert the marriage decision to the point where young people no longer ask "do we want to be married?" but rather "can we afford to be married?" and "do I want to hitch myself to life for someone who's shown a serious inability to deal with money?"

When I was a kid I never thought money really entered into the decision to get married. But as I age, the prospect of linking up with someone with, say, $40,000 in student loan debt and a $5,000 credit card balance actually enters into it for a lot of my generation.

In Ms. Kamenetz's defence, she does cut out the whining and offers some real practical solutions by the end of the book. I just think she overstates her case a bit. All in all, I'd say the book was well worth a read.

Monday, September 04, 2006

Well, that certainly qualifies as news...

Not for most people, but for me anyway.

I meant to write about this a little earlier, but I wanted to digest the news a little bit before posting.

In the halcyon days before I cared about things like dividends, value investing, and staying in for the long haul, when all I really wanted was to get rich quick on the next big tech-stock darling, I bought a handful of shares in Parlay Entertainment, a TSX-listed on-line bingo software provider, hoping it would be my ticket to riches.

The rocket-to-the-top never really materialized for me, but I've held on to my shares mainly because the company was actually managing to consistenly post growing quarterly profits. Still, I was confused because while the findamental numbers were getting consistently better, the stock was basically languishing, even somewhat regressing.

I never really had an exit strategy for the stock, but I was just on the verge of selling the shares on the grounds that the market didn't appear to give a crap about what the company was doing, when Parlay made legitimate news last week.

Management has signed a letter of intent to merge with better-known on-line gaming company Chartwell Technologies.

The whole deal is going to a shareholders vote in October, but the gist of it is that if it goes through, I'll be the proud new owner of 0.75 Chartwell shares for every Parlay share I own -- 650 to be exact.

Chartwell's currently hovering around $2.50. A quick number crunching reveals that my initial Parlay investment would be in line for about a 25-30 % gain if I were to immediately flip my Chartwell shares for cash. Not too shabby.

I haven't really done my homework yet on Chartwell, but I'd consider holding on to the shares if i thought they had long-term potential. I'm a little concerned about the U.S. crackdown on Internet gambling, but I still need to take a closer look at their last few quarterly reports to see if i think they're a solid company in an industry going through a rough patch.

Any thoughts, Chartwell shareholders?