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Canadians opened 2.3 million DIY investing accounts in 2020. Should you? – Global News

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The pandemic-fuelled stock-trading frenzy saw Canadians open more than two million do-it-yourself investment accounts in 2020, a development that has regulators worried.

The risk is that inexperienced investors will “bet the farm” based on information they don’t fully understand and lose, the Investment Industry Regulatory Organization of Canada (IIROC) warned in a recent press release.

READ MORE: How COVID-19 is luring Canadians into the stock market

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“We urge investors to be careful about where they are getting their investing information, as many sources are unregulated and may contain inaccurate information,” Lucy Becker, IIROC’s vice president of Public Affairs and Member Education Services, said in a statement.

Canadians opened more than 2.3 million new DIY investing accounts between January and December 2020, according to data provided by financial services research firm Investor Economics and shared by IIROC (the numbers reported do not indicate how many accounts were closed in the same period). That’s nearly triple the number of new self-directed accounts opened in 2019, the figures show.

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Why are Gamestop stocks booming? Financial expert explains


Why are Gamestop stocks booming? Financial expert explains – Jan 28, 2021

Meanwhile, IIROC says the volume of inquiries and complaints it receives from DIY investors nearly quadrupled between March 2020 and January 2021 compared to the same period in 2019. The surge has prompted the organization to recirculate its Investor Bulletin to help Canadians evaluate whether DIY investing is for them.

In both the U.S. and Canada, the COVID-19 health emergency has seen scores of small investors flock to self-directed accounts offered online and through mobile apps. It’s a development market-watchers have attributed to pandemic boredom — with adults and teens cooped up at home turning to stock trading for a thrill. Consider the dizzying stock-market rally — with the S&P 500, the U.S. benchmark index, up around 75 per cent since its low on March 23, 2020 — and the rise in low- or no-commission trading, which makes buying and selling stocks affordable even for everyday investors.

READ MORE: Does Bitcoin have a place in every investment portfolio?

But commentators have also blamed the trend for injecting volatility into the market, with DIY investors using social media to share tips and pile into stocks that have seen wild price swings over the past few weeks. That’s what happened, for example, with shares of struggling video game retailer GameStop after traders in an anonymous chat room on the website Reddit, started targeting the stock.

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IIROC told Global News it is worried about the impact the increased volatility may be having on some investors. Over the past few weeks, it has experienced a sharp increase in calls from investors complaining about delays in accessing their accounts, especially from clients who prefer to reach their dealers over the phone, the organization said via email. Since 2017, more than half of Canadians calling IIROC about DIY investing have been over the age of 55, the organization said.

READ MORE: The Bitcoin craze is back. Is it different this time?

“Now more than ever, investors must be informed and must ask themselves important questions before embarking on the path of DIY investing – because DIY investors must be comfortable with not receiving any help with their investments,” Becker said in an email statement.

Still, DIY investing doesn’t necessarily mean trying to make a profit by frequently buying and selling individual stocks — an approach many investment experts equate to gambling. Canadians can also use self-directed investing to pursue simple, mirror-the-market investment strategies that come with both low fees and low effort, says investor advocate Larry Bates, author of Beat the Bank: The Canadian Guide to Simply Successful Investing.

With investing in general — whether it’s self-directed or not, “there’s the extreme of speculating on options and on the other end, long-term investing, maybe with a diversified portfolio of index funds or even GICs (Guaranteed Investment Certificates),” says Benjamin Felix, portfolio manager at PWL Capital.

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Money 123: Should you use a robo-advisor to invest?


Money 123: Should you use a robo-advisor to invest? – Aug 11, 2018

And yet, investing without help from an advisor isn’t for everyone. If you’re contemplating the DIY route, here are some of the questions the IIROC says it’s important to consider:


What’s your level of investment knowledge?

You don’t have to be a Wall Street whiz to embrace DIY investing, says Bates.

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“You don’t need to know about options and shorting and all that stuff — that’s for professionals,” he says.

But you do have to know the basics, Bates adds. You should know what stocks, bonds and dividends are, and how financial markets behave, he says.

In the long run, a stock’s performance is tied to a company’s earnings and expected earnings.

“You need to know the difference between using the stock market as a speculator or gambler versus using the stock market to become a long-term investor in great companies,” Bates says.

Canadians can get a start on learning about investing on websites like GetSmarterAboutMoney.ca by the Ontario Securities Commission or InvestRight.org by the B.C. Securities Commission, Bates says.

READ MORE: All-in-one ETFs — why you may be fine buying a single investment and holding it until retirement

Buying and holding a group of stocks that behave like a broad market index, for example, by purchasing units of an index mutual fund or an index exchange-traded fund (ETF), is a simple strategy embraced by many DIY investors with a long-term horizon.

The tough part for many, though, is sticking to that index-based strategy, Felix says.

“A lot of people are getting compelled to invest because they’re hearing about stuff like GameStop and they’re seeing Bitcoin double in price in a couple of months,” he says.

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And it can be difficult to stay committed to index investing when the investing platform you’re using is also advertising the possibility to day-trade or invest in cryptocurrencies, Felix adds.


Click to play video 'Money 123: Canadians could be losing a lot to investment fees'



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Money 123: Canadians could be losing a lot to investment fees


Money 123: Canadians could be losing a lot to investment fees – Jan 12, 2019


How much time do you have to invest in investing?

Researching investments and tracking their performance can be time-consuming. But DIY investing doesn’t have to be labour intensive, Bates says.

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These days, self-directed investors can set their investments on autopilot with all-in-one ETFs — also known as asset allocation ETFs, Bates says. These are funds that may include both stocks and bonds and offer global diversification across Canadian, U.S. and international markets, low fees and automatic rebalancing, meaning you don’t have to worry about re-aligning your portfolio to maintain your desired value split among different types of assets despite price fluctuations.

READ MORE: The ‘wealth formula’: Bay St. insider has two simple rules for making money


What’s your appetite for risk – how do you personally deal with the gains and losses you may experience?

While stocks come with the potential for higher gains, they’re also more volatile. Lower-risk investments like bonds, on the other hand, are more stable but also offer lower returns. What portion of your investments should you risk in the stock market?

That’s the most important question for any investor, whether you’re DIY-ing it or working with an investment advisor, Bates says.

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The right balance between risk and reward usually depends on your own ability to emotionally tolerate market fluctuations, your financial goals and how long you can keep your money in the financial markets without the need to draw from your investments.

If you’re a DIY investor, you can use online questionnaires provided by investment firms such as Vanguard to help you assess your risk tolerance.

At the same time, “blindly following one of those tools might not give you an appropriate answer, they may be too conservative or too aggressive,” Felix says.

Choosing the right asset allocation without having a conversation with an investment advisor can be “challenging,” Felix says.

READ MORE: Robot vs. human — When you should invest with robo advisors

How much money can you lose?  If you were to lose money, how much can you afford to lose before your standard of living is affected?

Over the long term, the stock market has performed well, but day-to-day it can go up or down. If you invest with money you’ll need soon, you may be forced to sell your holdings at a loss.

One way to manage the risk that comes from the volatility of the stock market is to invest with money you know you won’t have to touch for several years.

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But riding out the swings of the market is one of the hardest skills for investors to master, Felix says. Having an investment advisor can help you remain disciplined when stocks are crashing — or skyrocketing.

Felix says he’s dealt both with clients who wanted to cash out their investments after stock prices tanked and others who wanted to borrow to invest more.

“I talked people off the ledge of selling and I talked people off the ledge of getting more aggressive, because the market just changed like that,” he says. “That’s not a reason to change your allocation.”

© 2021 Global News, a division of Corus Entertainment Inc.

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Amazon Adds $2.75 Billion To Anthropic Investment, Sora Goes To Hollywood – Forbes

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Amazon invests $2.75 billion in Anthropic. This brings Amazon’s investment to $4 billion, as it follows its previous investment of $1.25 billion, which gave the company the option to invest the additional funds. This comes as Anthropic’s new Claude-3 chatbot outperforms ChatGPT- 4 in recent tests. Amazon has unique insight into Anthropic’s performance as it is one of the suite of AI models offered by AWS, which include most of Claude’s competitors.

Sora Goes To Hollywood. Everyone is reacting to a Bloomberg report that OpenAI will soon be meeting with studios and other Hollywood stakeholders to demonstrate the capabilities of the text-to-video generator and explore partnerships. OpenAI says unnamed “A list” directors are already using it.

Based in Toronto, shy kids are a multimedia production company who utilized Sora for the above short film about a man “who is literally filled with hot air.” His head, as you can see, is a yellow balloon. “We now have the ability to expand on stories we once thought impossible,” shares the trio made up of Walter Woodman, Sidney Leeder and Patrick Cederberg. Walter, who directed Air Head, said as great as Sora is at generating things that appear real, what excites us is its ability to make things that are totally surreal.

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Neuralink Shows Paralyzed Patient Playing Chess on a PC. Elon Musk’s brain-computer interface company shared a video of its first human patient, Noland Arbaugh, playing chess and Civilization VI using their brain implant. Arbaugh, who is paralyzed below the shoulders, described the experience as “just stare somewhere on the screen” to move the cursor. While some experts see this as a promising step, others emphasize that it’s still early days and the technology has limitations. Arbaugh acknowledged that there’s still work to be done, but the implant has already changed his life.

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Illuvium Labs Raises an additional $12 million for NFT Gaming Universe. Following an extensive three-and-a-half-year development journey and $60 million in funding, Illuvium Labs is on the cusp of unveiling its interoperable gaming universe. It will feature three interconnected titles designed to utilize the same NFTs seamlessly across all games, promising a first-of-its-kind experience. The influx of $12 million in Series A funding from esteemed firms like King River Capital, Arrington and Animoca will be allocated to developing new gaming titles within the Illuvium ecosystem.

Databricks’ DBRX claims the crown as best open-source LLM. It’s a list that includes Meta’s Llama 2 and Mistral’s Mixtral. Leading companies like OpenAI, Google, and Anthropic sell, or rent, their proprietary private models to enterprises and subscribers. DBRX was produced for just $10 million, orders of magnitude less than its competitors. On Monday, Wired reported that the company showed data proving its AI model’s reading comprehension, answers to general knowledge questions, and coding is superior to other open-source models that can be downloaded from Hugging Face and modified by users.

Shiba-Inu Metaverse leader steps down amid dispute over IP. Marcie Jastrow, the well-regarded Hollywood executive who led Technicolor’s XR efforts, has left the company. This led the company’s legions, known as the Shib Army, to speculate about malfeasance, which is easy to do, because Jastrow is the only person involved who is not anonymous, including Ship’s charismatic leader Shytoshi Kusama.

This live football experience was built by Immersiv.io to showcase how AR can transform the live sports broadcast and fan experience using the Apple Vision Pro. Immersiv.io worked with the Bundesliga (the German Football League) on the production. In a post on X, the company said. “This is a 3D reproduction of the live game integrating TRACAB Gen 6 live skeletal data of all players and the ball, complemented with real-time insights, offering the ultimate live tactical perspective of the game.”

SXSW 2024: XR That Makes You Go Wow. The XR competition was won by an AI experience, The Golden Key. This is the second year in a row that an XR experience did not take the immersive festival’s grand prize.

The second annual AI Film Festival is coming to Los Angeles on May 1, and New York May 9. Seats are limited, request to attend at http://aiff.com

This column, once called “This Week in XR,” is also a podcast hosted by author Charlie Fink, and Ted Schilowitz, former studio executive and co-founder of Red Camera, and Rony Abovitz, founder of Magic Leap. This week our guest is Liz Hyman, CEO of the XR Association. We can be found on Spotify, iTunes, and YouTube.

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Where Will Virtual Reality Take Us? (Jaron Lanier/New Yorker)

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FP Answers: What is a 'behavioural edge' in investing and how does it affect returns? – Financial Post

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Temperament is the unsung hero of investing success

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By Julie Cazzin with Felix Narhi

Q: What is a “behavioural edge” in investing? How does it potentially enhance returns? How can an investor develop it? — Giovanni

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FP Answers: Giovanni, the term behavioural edge is just another way of saying “temperament,” which refers to the habitual way a person behaves in each situation. For example, one person may be easygoing and relaxed while another is more likely to be impatient and assertive.

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Temperament is the unsung hero of investing success. Gaining insight about our innate emotional temperament and learning how to work with it gives investors an edge.

The common misconception is that you need a high level of intelligence to be a successful investor. No doubt, that can be helpful, but based on many years in the industry, I’ve seen it is not always the most important differentiator.

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Once someone has at least an average level of intelligence, it is temperament that often provides the investing edge in leading to better returns over the long term. “Investing is not a business where the guy with the 160 IQ beats the guy with the 130 IQ,” famed investor Warren Buffett has pointed out.

Having the right temperament can potentially enhance investment returns in several ways. An investor who is very reactive to external events is likely to fare poorly over the long term because, quite simply, the world is full of uncertainty and always will be. Markets are highly reactive, abetted by algorithmic trading and automatic rebalancing by exchange-traded funds. Individual investors should not be.

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Research shows that investors who trade frequently or try to time the market underperform. On the other hand, those investors who can remain calm and patient throughout market cycles do better because markets historically trend upwards. Hands down, being calm, cool and collected is the right temperament for an investor to have.

The concept of “homo economicus” — or economic man — describes a hypothetical person who consistently makes rational decisions. In real life, our decisions are coloured by our formative experiences, moods, external circumstances, what we ate for lunch and a host of other factors. These influences drive our behaviours, but they often operate below conscious awareness (even artificial-intelligence apps “hallucinate”).

Given that behaviour is some combination of cognitive and emotional inputs, an investor can create an edge by developing a disciplined investment process that overrides temperament, especially during highly volatile periods.

The term “active patience” means being clear about your investment principles and what you are looking for, and practicing active patience until the right opportunity arises.

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In contrast, regular patience is making an investment decision and sticking with it no matter what, even if it was the wrong decision. The latter approach is unlikely to bring financial success, which is the major goal of investing.

Active patience is what Buffett would call the “fat pitch,” which occurs when the market (occasionally) presents a very attractive opportunity. It is easy to spot a great opportunity and take full advantage of it when an investor has clear principles on what they are looking for.

Can we change our temperament? Recent studies show that personality traits and moods are subject to change, sometimes within the hour, so temperament may not be as fixed as we’ve been led to believe.

Becoming a better investor starts with self-knowledge — and lots of practice. The behavioural traits associated with good investment outcomes are patience, discipline, emotional control and risk awareness. It so happens, these qualities lead to good life outcomes, too. A calm temperament is the bedrock of making sound investment decisions.

Every investor must determine for themselves how to achieve greater equanimity and there is no shortage of books, videos and TikTok tutorials on that evergreen topic. I would also add the importance of staying humble.

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In investing, as in life, the learning never stops. Staying open to new information and having the courage to challenge our own and others’ beliefs and habitual behaviours are the keys to future success.

Felix Narhi is chief investment officer and portfolio manager at PenderFund Capital Management Ltd.

Bookmark our website and support our journalism: Don’t miss the business news you need to know — add financialpost.com to your bookmarks and sign up for our newsletters here.

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Lenders Rally After India’s Central Bank Eases Investment Curbs – BNN Bloomberg

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(Bloomberg) — Indian banks and shadow lenders rose Thursday after the country’s central bank eased capital requirements for a unique type of investment, a move that may free up more funds for loans.

The gains came after the Reserve Bank of India issued Wednesday modified rules on lenders’ required provisions for exposure to alternative investment funds, or AIFs, that invest in the lenders’ borrowers. Under the new policy, a lender needs to set aside capital only for the amount the AIF invested in the debtor company, and not the entire investment of the lender in the AIF.

Shares of Piramal Enterprises Ltd., which reported among the biggest provisions for such investments, closed 1% higher after rising as much as 6% during the day. A gauge of financial services firms climbed 1%, the most since March 1.

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Lenders led the rally in the broader market, with the NSE Nifty 50 Index registering its best day since beginning of the month.

The RBI’s softening stance came after industry players raised concerns over clarity and uniformity after it announced in December restrictions on lenders’ exposure to AIFs that hold stakes in their borrowers. The latest move will likely help firms including Piramal, HDFC Bank Ltd. and IIFL Finance Ltd. reverse some of their relevant provisions made previously, according to analysts at Citigroup Inc. and Jefferies Financial Group Inc.

Read more: India’s Crackdown on Financial Risks Puts Industry on Watch

“Select private banks and NBFCs like Piramal had provided for their entire AIF exposure during 3Q and could see some write-backs in 4Q if they decide to reverse the excess provision,” Jefferies analyst Bhaskar Basu wrote in a note.

Regulators introduced a flurry of new rules last year to prevent a buildup of financial stress at a time when India’s economy remained resilient in the face of rising interest rates, slowing global growth and unabated geopolitical tensions.

©2024 Bloomberg L.P.

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