There’s No Time Like Fund Time

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In this latest edition:

  • Feature: There’s No Time Like Fund Time
  • Trading note: Real Resources (RER on the TSX)

The other day, I was talking about the markets with Tim at Carleton. We were discussing the amount of time it takes to manage a portfolio and he asked about my time commitment. Rather quickly I replied “about a half-hour a day.” I’d never really thought about it, but that sounded right. Still, I was curious.

So, for the next few days I kept a record of how much time I was actually spending. And well, my assessment was a tad off. Here’s what I found: I spent about an hour checking stock quotes, browsing the latest research from brokerages, and doing some of my own crunching of numbers. This was hard core stuff and required a fair amount of brain work.

On the lighter side, another hour was spent watching ROB-TV and CNBC. I say “lighter side” because I regard business programming as 2 parts entertainment to 1 part information. Market Gal would say it’s just 3 parts annoying. Each day she spends an hour with Oprah, so I’m giving her assessment zero weight. Back to me: Add another 20 minutes with theGlobe and Mail’s Business section. If I don’t read this each and every morning, I get the shakes. Add about a half-hour related to Market Guy(answering emails, talking with other investors, a number of column activities). All of this tallies up to almost 3 hours. So my initial assessment was off by a factor of 6. What’s going on here? Is it a case of time flies when you’re having fun? You bet.

vs. If ROB-TV is wrong, theMarket Guydoesn’t want to be right  

However, this exercise in temporal accounting prompted a broader consideration of how I spend my time. OK, work is really busy these days. I teach very enjoyable, but high maintenance courses. I just finished reviewing a social psychology textbook for an American publisher, and I have a number of other projects on the go. On the home front, we just moved and that took up an incredible amount of time. Yup, we said goodbye to the original Market Shack. For now, we’re living with relatives until Market Shack 2 is ready in September (why move once when you can move twice, I always say). So how exactly am I spending my time? Let’s break it down:

I’m in bed for about 7 hours a night, so that leaves me with 17 hours to be productive. Toss out 2 hours for cooking, eating and personal hygiene. This may be an overestimation, but I recently picked up one of those scrunchy shower thingies, so the whole experiment with exfoliation has thrown my day into flux. Toss out the hour in the car because that hour is dedicated to 80’s music, and who can be productive while listening to 80’s music? Toss out the 2 hours when my brain is incapable of directed activity. Instead, I’m nothing more than a passive mound of humanoid goo. So that leaves me with about 12 hours to make this world a better place. And of that, I spend almost 3 hours on the markets. That’s 25% of my available brain time.

How much of your brain is focussed on the markets? Keep in mind, the Market Guy may not be well.  

At first I was alarmed by the number, feeling like there was something wrong with me and that my family and friends would soon be staging an intervention. I mean the ones with the problem are so often the last to know. Are you reading this, members of the NHL Player’s Association? Anyway, the jury is still out. So either this column will be an important step in my gradual move towards wellness, or it will plunge me deeper into the existential abyss. So at least I have that going for me. At the moment, I’m content to lean on a number of defence mechanisms: denial and repression being two of my personal favourites.

However, I am prepared to admit that there is one market-related activity that does require a substantial time commitment. In fact, when I’m engaged in this particular activity, I’m hunkered down in my den, I’m leaning into my computer monitor, and I’m completely focused. There is no point in approaching me or attempting communication of any kind. You may be there, but I will not see you. You may speak, but I will not hear. If you prick me, I will bleed…but won’t notice. What could I be doing? Surely it must be something of considerable importance. It can only be one thing: I’m researching mutual funds.

When I’m looking at funds, I’m like Sonny Crockett on Miami Vice, when he went on a mission to avenge the killing of his wife; man, was he focused. Or the 1993 Blue Jays with White, Alomar, Molitor, Carter, and Olerud (WAMCO) topping the order. Sure, the Phillies scored 14 runs in game 4 of the World Series, but that was OK because you knew the Jays would score 15 (and they did). Simply, some individuals and groups will not be denied. For me, I will not be denied the purchase and subsequent holding of quality mutual funds.

This may come as a surprise, especially to longtime readers of the column. This owes much to the fact that it’s taken 21 issues before mutual funds even came up (save for a couple of sentences in the Market Guy #7: Money Gripes column). It’s not that I dislike mutual funds. It’s not that I’m avoiding mutual funds. It’s just that I don’t follow my funds on a day to day basis. In fact, apart from my obsessive and bordeline pathological research period, I don’t pay much attention to my funds at all. I have compartmentalized them quite differently than my stocks and other investments (more on this later).

So, I’m going to dedicate a few columns to mutual funds. I’ll take you through the process I use to research and purchase funds, and talk about specific fund choices that I’ve made. I have a multi-point system that helps me to process the reams of available information.

Mutual funds have been given a rough ride as of late. Much of the press and analyses have been focused on the negative side of the equation. With so many bad funds out there, I believe this skeptical treatment is long overdue. However, I’m not here to pile on. The fact of the matter is, I do believe funds can represent an important part of a portfolio.

To get the ball rolling, I’m interested in how you approach funds. What do you look for in a fund? What performance expectations do you have? Where do you obtain your information? Which funds have attracted your attention? Do you have any tips that might benefit other investors? Don’t feel compelled to answer all of these questions. Whatever you share is gold. I’ll include a selection of reader comments as we move along. No matter how you slice it, I think this is time well-spent. Remember never closes. Stay tuned.

Trading note

I picked up some shares in Real Resources at $7.40 (RER on the TSX). This is a junior energy company with operations in Alberta and Saskatchewan. Current production is 7000 barrels a day and at the time of my purchase, the shares were trading at a discount to many of its peers. For me, this is purely a speculative play based on the fact that it is nearing the production levels at which many juniors consider trust conversion. Failing that, the company is growing its production and there are a number of opportunities for further expansion. The company does not pay a dividend, but I don’t expect any income from my spec plays. As I’ve mentioned, I allocate a small percentage (about 5%) of the portfolio for goofing around. My other energy holdings remain Acclaim Energy Trust (AE.UN on the TSX) and ARC Energy Trust (AET.UN on the TSX).

The Market Guy is an Instructor with the Department of Psychology at Carleton University. He’s not a professional advisor. He’s just a guy who loves investing and talking about the markets. His temporary residence lacks cable, Internet, air conditioning, and even Globe and Mail delivery service (the delivery guy says he couldn’t get a key to the building). Although the Market Guy is urban camping for now, there’s still a world of amenities to be found over at