Given current valuations, I believe that you are likely to make money in the long run on almost any equity fund that you buy now. And if you can find yourself a downtrodden fund that has temporarily underperformed its peers, you might be able to do even better. In saying this, I am not predicting that the bear market will end tomorrow. The financial crisis rocking the world is by far the worst that we have seen since the Great Depression. How long it will last, or how much further pain will be involved, is anybody’s guess.

But I do think that many stocks are selling for tempting prices. No matter which metric you examine — price-to-earnings, price-to-book, price-to-sales — you can find dozens of solid companies selling for prices that would have been considered unbelievably low a year ago. These stocks may stay cheap for a while, but in the long run, they should provide you with a good return.

I know it takes courage to keep your money at risk in these volatile markets. It’s tempting to get your cash out now, and plan to jump back into the market in a year or two, when things will presumably be less chaotic. I wouldn’t recommend this manoeuvre, though. Market timing is likely to hurt you in the long term, because you won’t know when to get back in. You are almost guaranteed to miss the beginnings of the next upswing.

A smarter strategy is to minimize your risk of loss by investing in battered mutual funds that are likely to lose less than the market if the crisis continues and gain more than the market when the turmoil finally ends. The idea in picking these funds is to ride the ups and downs of what academics call “reversion to the mean.” This is the tendency of any volatile process to go through periods of unusual highs or lows, but eventually come back to its long-run average.

In the world of mutual funds, reversion to the mean implies that good fund managers often have periods of poor performance followed by periods of superior performance. So at times like this you should identify funds that have underperformed in the past year or two for reasons that you think are temporary. As long as the manager remains at the helm, and stays faithful to his or her style and portfolio focus, you should be able to expect much better times ahead.

The trick, of course, is to understand the factors behind the recent weakness and make sure that these factors are temporary, not permanent. Permanent weaknesses would include an unreasonably high management fee, or a flawed investment approach that has consistently delivered poor returns both in good and bad times.

Trying to select funds ready to rebound is not a straightforward exercise. I’ve scoured my database and come up with only six funds that I think fit the bill.

Mackenzie Cundill Value Fund is headed by Peter Cundill, a manager with an excellent long-term record. The fund has lagged the market recently, in large part because of its low exposure to oil and other commodities. That said, this is a fund that sticks to a philosophy of buying bargain stocks on the cheap and that operates with an investment horizon of three to five years. I think it is well suited to patient investors. Drawbacks? I do not like the fund’s large size (more than $6 billion in assets), because it’s difficult to be nimble when you have to put large amounts of cash to work.

Brandes Global Equity has lost 25% of its value in the past year, mostly because of its high concentration on financial stocks, which have been hammered by the recent crisis. But the fund’s bold approach has delivered good results in the past and I have no reason to doubt its ability to repeat its past successes when the tide turns in its favor. Just remember: this is a fund that will experience big ups and big downs. Invest only if you have a healthy appetite for risk.

PH&N Dividend Income has trailed its peers in recent months because of its hefty holdings of financial stocks and its relative lack of energy stocks. But I’m not too worried by its sluggishness. As a dividend income fund, this fund is supposed to stick to high dividend-paying stocks, such as banks. It has done exactly that. But its mandate has proven to be poisonous over the past year, as one bank after another has run into problems. Other dividend fundshave done better because they’ve taken liberties with their mandate and bought hot stocks, particularly in the energy sector, that do not pay high dividends.

I expect PH&N to do much better in the future as the current turmoil in the financial sector eases. Yes, the recent mess will take time to clean up, but all signs are that the U.S. government is finally taking serious action to fix things. At press time, the financial sector looks undervalued to me. I believe that Canadian banks, in particular, are sound.

Because I like bank stocks, I’ll point out Mackenzie Maxxum Dividend Fund, which contains a high weighting of those stocks. This fund would not be my first choice since its management expense ratio is almost double that of PH&N Dividend Income, but if you already have other Mackenzie funds, you can switch to this one without incurring redemption fees. The fund also has a “corporate class” version that protects you from capital gains taxes if you invest outside your RRSP.

PH&N Canadian Equity Fund has fallenbehind its peers in recent months, but this unpretentious fund is cheap and it’s good. It does not make big bets. Its long-term track record is impeccable. And guess what? You can grab it for a management expense ratio of only 1.12%.

RBC O’Shaughnessy International Equity Fund follows a by-the-numbers approach to stock selection. It had a disappointing 2007 because of its low weighting in energy and materials stocks. The rising Canadian dollar also hurt, because most of the fund’s holdings are denominated in other currencies. The fund’s management expense ratio is somewhat pricey, but not outrageous compared to others in this category. You are paying for an investment formula that has been proven to work in the long term. This fund, like the others I’ve listed, should be in for better days ahead.

Betting on a rebound

These funds have recently lagged the market, but have the right ingredients to do better than their peers over the next few years.

In keeping with that philosophy, I thought it would be interesting to select a handful of stocks that cater to humanity’s worst impulses. “Sin stocks” like these are often excellent investments, particularly in bad times, because they tend to benefit from steady customers, no matter which way the economy is headed.

I used the seven deadly sins as my guide to naughty behavior and I selected one stock per sin. Just to be clear, I’m not saying that the stock itself is sinful, nor do I think that these firms or their employees are destined for the fiery pit. My intent was to pick companies that provide products or services that may aid others with their sinning. When given the choice between similar sin stocks in the same industry, I stuck to larger firms, with relatively little debt, that trade at modest price-to-earnings ratios. Call it value investing for the damned.

All joking aside, I think these picks deserve your attention. Sin stocks often trade at a premium because they tend to be outstanding businesses. They are now selling at bargain levels. That doesn’t happen often. Most sin stocks are also big dividend payers. Such stocks tend to do better than average during downturns.

Let’s kick things off with the sin of wrath — or, as we say these days, the military-industrial complex. In this category I nominate Goodrich (NYSE:GR, $34.38*) of North Carolina. It provides aerospace components to the defence andhomeland security markets. The company trades at a price-to-earnings ratio of 6.95 and it pays a dividend yield of 2.62%.

To illustrate the sin of greed, what better than a gambling stock? I like Boyd Gaming (NYSE:BYD), $6.73) despite its decision to temporarily halt construction on a new $4.8-billion Las Vegas casino complex because of tight credit conditions. Boyd remains profitable and has boosted its share repurchase program. It should fare well when the good times return.

Gluttony happens to be one of my favorite sins, but instead of food and drink I’ll focus on cigarettes. Cancer sticks are both deadly and consumed with relish by far too many. My puff of choice at the moment is Reynolds American (NYSE:RAI, $44.71), which has a price-to-earnings ratio of only 8.72 and a dividend yield of 7.6%. Smoke ’em if you got ’em.

Lust is also a mighty addictive sin — perhaps even more so these days, thanks to Pfizer (NYSE:PFE, $17.78). Its blue Viagra pills have brought a new urgency to romantic relationships. The drug maker’s 7.2% dividend yield and $26-billion cash hoard are also reason forarousal.

After all the lust and gluttony, I enjoy a bit of sloth. I’m thinking of a nice Sunday morning spent reading the paper. Newspapers themselves have been accused of being slow to react to the Internet, but one of the few with a good online presence is The New York Times Co. (NYSE:NYT, $13.39). It pays a dividend yield of 6.87%.

Turning to another communications medium, let’s consider television. It inspires desire in millions of viewers, so it’s a natural symbol of envy. I like CBS Corp. (NYSE:CBS, $11.91). It trades at 6.95 times earnings and pays a 9.07% dividend yield.

Last but certainly not least is the sin of pride. I’ve been told that pride goeth before a fall. So, it seems appropriate to select a stock to short. Shorting a stock involves borrowing it, selling it, waiting, and then hopefully buying it back at a lower price. If you short a stock, you’re betting that its price will fall. It is a complicated procedure that should be avoided by most investors. By suggesting a short candidate, yours truly might be the one who’s in for a fall.

Nonetheless, I’m going to suggest Royal Bank of Canada (TSX:RY, $45.13) as a potential short based on its high price-to-book value. You can’t actually short Royal at the moment because of a short-selling ban imposed by regulators who are worried about the slide in financial stocks. So call this a short-on-paper suggestion — in other words, a warning to be wary. Keep in mind that Royal is a fine firm. Its stock just happens to be a little expensive compared to historical levels.

I hope that you’ve been tempted by a sin stock or two. But make sure that any stock is right for you by investigating it more thoroughly before investing. And let me make one final suggestion. If you happen to profit from these sin stocks, give a portion to charity. That’s the most effective way I know to turn vice into virtue.

* Stock prices as of Oct. 7, 2008

The idea for the makeover came out of a long-running debate here at MoneySense. Over the years, we’ve interviewed hundreds of people — some of them financial disasters, others financial superstars. We’ve observed that some people seem incapable of managing their money wisely, while other folks appear to have born with a natural understanding of high finance and probably toddled off to nursery school with compound interest tables under their arms.

Our experience has left us wondering if it’s possible for people to change their financial personality. Can an impulse shopper turn into a bargain hunter? Can a day trader become a disciplined investor? Can a couple that always argues about money find ways to live happily ever after?

MoneySense has always operated on the assumption that the answer to all the above questions is yes — but, in all honesty, we’ve never tried to change people’s lives, then monitor the results. It was only fair, we decided, to put our beliefs to the test. We would go looking for people who were stressed about money. Then we would bring them to Toronto for a week, expose them to some of the brightest financial minds that we know, and see if we could transform these self-confessed financial messes into money masters. Perhaps we would accomplish nothing. Or perhaps we would have the satisfaction of seeing people’s lives take a U-turn for the better as a result of some sage financial advice.

Our great experiment began early this year when we invited people to write us and explain why they needed a financial makeover. The response was enthusiastic. More than 220 people took the time to write us lengthy letters — essays, in some cases — about their financial situations.

Many of your letters touched our hearts. We heard from people with serious medical problems. We heard from single moms who were trying to raise kids on minimum-wage jobs. We heard from people who had made disastrous investments, often as a result of trusting in some supposedly expert advice.

We also got more than a few letters that left us shaking our heads. A handful came from young couples with incomes of $200,000 or more a year who seemed genuinely perplexed about why they couldn’t afford all the toys they would like right away. And, yes, we did get a couple of letters from former financial planners, who had run up large amounts of debt and were wondering if, gee, we might have any insights into how they could get out of their troubles.

Trying to pick winners was agonizing — in part, because we were forced to realize that we had no financial magic to offer people mired in minimum-wage poverty or suffering from devastating medical problems. We have enormous sympathy for people caught in these plights, but their problems are not problems of investing, or tax, or insurance — which is where our very limited expertise lies.

Looking at the other extreme, we had problems with the idea of treating a young couple earning $200,000 to an all-expenses paid week in Toronto, with dollops of financial advice thrown in for free. As much as these affluent couples might need advice on investing, tax and insurance, we figured they could buy it themselves.

In the end, we chose three couples and one single person to take part in the makeover. Our winners came from across Canada and from different age groups. None of them was rich, but they all had enough money to have options. Most important, each of them was stressed about money and each was ripe for change.

We held the makeover in the Fairmont Royal York, a beautiful hotel in the core of downtown Toronto. As we waited for our winners to arrive that morning in June, we gobbled muffins and braced ourselves for the worst. Would our participants be pleasant? Interested in what we had to say? Or just looking for a get-rich-quick scheme?

We shouldn’t have worried. As our seven winners filed into the room and we started talking, we were delighted to discover an amazing fact — we liked each of them a lot. They were bright, engaging people. Oh, and forgiving too. It turned out that three of our participants, all from the West Coast, were on a plane that had been diverted to Hamilton the previous day because of bad weather. They had sat on the tarmac for six hours before finally making it to Toronto. Despite the horrific flight, everybody seemed in good spirits.

That first day each of our participants met with a core group of three financial planners. Norbert Schlenker was the lead adviser and the person who would eventually present each of our winners with a financial plan. We had chosen him for that job because Schlenker is one of the smartest people we know. He holds a master’s degree in computer science from Princeton; he’s also a chartered financial analyst and a certified financial planner, and has spent years working in the financial industry. His firm, Libra Investment Management of Victoria, specializes in offering unbiased advice to wealthy clients, and Schlenker would offer that same unbiased — and sometimes very blunt — advice to our participants.

Our core group of advisers also included Warren MacKenzie of Second Opinion Investor Services of Toronto, and JoAnne Anderson of the MoneyPower Group at Raymond James in Mississauga, Ont. Both are experienced and wise advisers. MacKenzie is a chartered accountant, certified financial planner and the author of The Unbiased Advisor, while Anderson was named Adviser of the Year in 2005 by Advisor’s Edge Report and has impressed us over and over again with her ability to see into the psychology of individuals in financial distress.

Over the course of several days, our winners met with these three advisers, as well as a star-studded lineup of other experts. (For a complete roster of our speakers, see “The advice squad” below) On the final day each of our participants received a personal financial plan. You can read their stories in the rest of this issue and you can follow our winners’ progress on their own blogs, which will debut in September. We hope you’ll visit the blogs frequently to see how our makeover participants come to terms with their money issues over the next few months.

What were the big lessons that we and our winners took away from the makeover? Four crucial points impressed us:

Most people pay way too much for investment advice

Most small investors put their money into what are known as actively managed mutual funds. These are funds run by a manager. The manager invests your savings in the stocks or bonds that he or she thinks have the greatest potential to beat the market.

If this is how you invest your money, you’re probably paying your money manager 2% to 2.5% of your savings in fees. (You can find out the exact amount by looking at your fund’s management expense ratio, or MER.) You pay the fees every year, but they are deducted before your results are calculated, so you never see them. Still, the invisible fees take their toll. On a typical $200,000 RRSP account, you’re shelling out $4,000 to $5,000 a year.

That’s a lot of money — and the amazing thing is that those thousands of dollars in fees don’t buy you any extra performance. Just the opposite, in fact. The vast majority of actively managed funds lag behind the market.

Let us underline that point: you are paying a lot of money for nothing. “There is absolutely no value to investment management,” Schlenker told one of our participants. You can do better than most investors in actively managed mutual funds by investing in a simple assortment of what are known as index funds. These funds don’t try to beat the market. Instead, they aim to keep pace with it. They do this at very low cost — as little as a few hundred bucks a year on that $200,000 account of yours. The thousands of dollars you save every year go directly to your bottom line. (For more on how to build a good low-cost portfolio, see “Be a Couch Potato” or look up “Couch Potato investing.”)

Most people don’t know how to choose an adviser

If advisers can’t help you beat the market, what good are they? According to Schlenker, a good adviser can help you estate planning and tax planning. He or she can also help give you the discipline to stick to an investment program.

Given the limited nature of what an adviser can do, you should carefully assess whether you need one. If you decide that you do need help, be aware that most advisers still operate on the basis that “advice is free.” What most don’t tell you is that they make their living from the large but invisible fees that you pay on the mutual funds and other products they sell you.

A better way to pay advisers is to have them split out their fees so you know exactly how much you’re paying for advice. The most transparent way to do this is to find an adviser who won’t sell you products, but will charge by the hour to tell you what to do.

No matter how you pay your adviser, ask some tough questions. “The financial industry is full of people looking to line their own pockets at your expense,” Anderson told our participants. “As Canadians, we’re very good at not asking questions. But if you want to find a good adviser, you have to probe. Most important, you have to find out how your prospective adviser is being compensated — how they’re going to be making money off you. You should never be afraid to ask an adviser: how much are you making off this product that you’re recommending to me?”

Anderson suggested some other topics to raise with any prospective adviser. “Ask them how long they’ve been in business. Ask them about their professional qualifications. And ask them if you’re the typical type of person they deal with — most advisers specialize in a certain type of client. If you’re an outlier, an unusual case, the adviser is going to have a big learning curve if he or she really wants to give you good advice.”

Most people are doing better than they think thy are

All our participants entered the makeover feeling huge amounts of stress. They were convinced they were falling behind and not doing as well as they should be.

They were delighted to discover they were in much better shape than they thought. In fact, most of our participants were amazed when they learned the average wealth figures for people their age. According to Statistics Canada data, updated by MoneySense, Canadian families headed by a 40-year-old had median net worth of $160,000 in 2008. By the time the primary income earner hits 50, that figure rises to $265,000 and at 60, it bumps up to $450,000. Yes, the net worth figure spans both husband and wife. It includes real estate, RRSPs, pension plans, investment portfolios and money in the bank. So you don’t have to have a million bucks to be doing better than average. Far from it.

And the news gets better, because many people ignore the wealth they’ve accumulated in their pension funds at work. Especially if you’re in your fifties, your company pension could be your largest asset. You can find out the current value of your pension by asking your human resources department. Yet many of us — including some participants in the makeover — ignore that asset when we’re fretting about how little we’ve saved.

Most people overestimate the cost of retirement

Malcolm Hamilton, a consulting actuary at Mercer, a Toronto benefits consulting firm, gave our participants a dazzling presentation on the realities of building wealth in Canada. His key finding? A typical Canadian couple who are working and raising kids actually has less money to spend on themselves than the typical senior couple. While many of our participants had worried about saving for retirement, the reality is that they are likely to have more cash in their wallet at 65 than they do now. With no more child-rearing expenses to cover, or mortgage payments to make, they will probably live better in retirement than they do now.

Hamilton offered some simple life lessons. First and foremost, repay your debts. Then diversify your investments and keep your investment expenses low. Paying even 2%-a-year in fees will consume one third of your retirement savings over time, Hamilton noted, so try to keep your costs substantially below that figure.

Other tips? Don’t be afraid to invest in yourself or your kids, but be prepared to roll with the punches — life has plenty of surprises, both good and bad. A habit of frugality is always good, but savings may not be: you don’t want to live in poverty today simply to squirrel away money for some distant future that may never come. Finally, said Hamilton, “Make sure you understand what you’re investing in. If you don’t understand an investment, you’re probably not the one getting rich.” We couldn’t agree more.

The advice squad

We brought in a cross-section of financial experts to advise our winners:

Joanne Anderson, a financial planner with the MoneyPower Group at Raymond James in Mississauga, Ont.

Margot Bai, author of Spend Smarter, Save Bigger

Derek Foster, author of Stop Working: Here’s How You Can

Debbie Gillis of K3C Credit Counselling of Kingston, Ont.

Malcolm Hamilton, a consulting actuary with Mercer, a benefits consultant in Toronto

Warren MacKenzie of Second Opinion Investor Services of Toronto

Amanda Mills, president of Loose Change Financial Therapy of Toronto

Ed Olkovich, a Toronto lawyer who specializes in wills and estates. He is author of Estate to the Heart.

Norbert Schlenker, president of Libra Investment Management of Victoria

That’s the word from a study called Life-Cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk. The study, by Yale University professors Ian Ayres and Barry Nalebuff, argues that most of us have things backwards. Rather than load up on stocks in your 40s and 50s, you should start investing heavily in equities starting in your 20s.

How? By borrowing an amount equal to what you have set aside to buy stocks. For instance, a 25-year-old who has $5,000 to invest should borrow another $5,000 and put the whole $10,000 in a stock market index. He should do the same for another 15 years or so before slowly deleveraging in his 40s.

Following that strategy will, on average, leave you with 90% more money when you turn 65 than conventional investment strategies, and give you enough to comfortably finance your retirement until you’re 112. According to the professors, the worst-case scenario is that you retire with only 30% more than the conventional investor.

Why does the strategy work so well? Ayres and Nalebuff base their calculations on U.S. stock market data going back to 1871. Over that time the average return on equities has been 9.1% and the cost of borrowing 5%, leaving someone who borrows to invest with a 4.1% net return after paying off their loan costs. By borrowing to invest early, you make the most of that favorable math.

Ayres and Nalebuff argue that borrowing to invest while you’re young is actually less of a gamble than the conventional path of saving first, then starting to invest only in your 40s. Take that 25-year-old again. This year he may only have $5,000 to invest, but 20 years from now he might have $45,000 to put into stocks. Fine. But by investing nine times as much in 2028 as he is today, he’s unwittingly betting that the stock market 20 years from now will über-outperform today’s market. If he’s wrong, and the best time to snap up bargain stocks occurred when he was young, he has no chance to make up for the lost opportunity.

“At what point in their life people invest the most money isn’t based on any strategy. It’s based on the availability of money,” says Nalebuff. Most people wind up making their biggest stock market bets when they have the most money on hand, not when it’s necessarily the right time to invest. If you’re unlucky, you could plop your life savings into the market just before it slides. In contrast, borrowing money lets you spread the risk of investing over many more years. “So our way of doing things is actually less risky,” Nalebuff argues.

Well, maybe. “I see a lot of problems here,” says John Nofsinger, a finance professor at Washington State University and author of The Psychology of Investing. The most obvious one: sleepless nights worrying about how much in debt you are when the stock market falls. When that happens, most people panic and sell.

“I call that the behavioral bomb,” says author and financial educator Talbot Stevens. “It’s not that the math of leveraging doesn’t work out, it’s that human emotions get in the way.”So is leveraging to buy stocks a good idea? Unless you’re sure you’ve got the stomach to ride out the market’s downswings while carrying substantial debt, probably not. If you do decide to borrow, specifics matter. Using a traditional margin account at a broker means that if stocks fall, you may be called upon to put in more money or be forced to sell. A handful of lenders offer no-margin-call loans to buy mutual funds or seg funds. Another option is to tap into a home equity line of credit.

But don’t go overboard. Stevens suggests asking your bank how much money you qualify to borrow. Whatever that number is, take out a loan for less than half the amount. Or be really conservative and don’t go over 25%.

Either way, keep the loan small enough that it won’t keep you up at night worrying. If, as the Yale study suggests, you will still be living the good life at 112, you’re going to need your sleep.

Only one problem: At 99 cents a song, iTunes and similar paid music sites can be costly. I decided there must be a better way — and I think I’ve found it.

The secret is in knowing that bands today earn most of their money from touring and merchandising. To attract new fans to their concerts, they’ll often give away songs for free online. If you know where to look, you can assemble a treasure trove of music without paying a penny, no matter what your tastes may be. “If you’re into Scandinavian bagpipe music, there’s probably a site for you,” says Ian Danzig, publisher of music magazine Exclaim. To see what’s on, visit these sites:

Jamendo.com
I’ve been stuffing my iPod from this Luxembourg-based website, which pays musicians by selling ads on the site. Most of the albums are by lesser-known artists, so don’t expect to find any U2 or Madonna. But half the fun is discovering new music. In my case that includes a crazy Brazilian surf band called the Dead Rocks and the wonderful voice of Canadian singer-songwriter Allison Crowe.

Music.download.com
Another place packed mainly with independent artists. But with regular visits it’s easy to stock up on free songs from well-known acts like Ani DiFranco and the Stills. There’s also some good jazz and a bit of classical.

LastFM
This Internet radio station gives away songs at www.last.fm/music/+free. Again, you’ll need to visit often since the selection changes.

Seeqpod.com
Who says your music has to be on your hard drive? Seeqpod is like an Internet radio station — except you program the tunes. Once you’ve created a playlist, you can go back again and again to hear it. “To me, it doesn’t matter that I don’t own the music,” says Danzig who uses Seeqpod at work and at home.

SpiralFrog.com
There’s good news and bad news about SpiralFrog. The good news is there’s over three million songs for free from a who’s who of stars like Aerosmith, Rianna, Coldplay and Keith Urban — all of whom are paid through advertising. The bad news: songs are delivered in a format called WMA rather than the more popular MP3, so they won’t work on an iPod. Plus, downloaded songs will freeze up if you fail to re-register on the site every 60 days. Still, there’s not another place on the Internet with this many free albums from major stars. Including the Stones. Which means you get the music you want, and Mick can still afford his next dream home.

Our advice? Be wary.

A typical case is Arizona Acquisition Fund of Alberta, offered by CBI Group Investments of Calgary. It plans to buy homes in the Phoenix area, rent them out, then sell them when real estate prices rebound — which the fund figures will happen within five years. The fund promises to pay investors 6% a year on the money they invest, as well as give them 60% of net profits when the homes are sold.

Problem is, the returns aren’t guaranteed. In fact, the fine print in CBI’s marketing material states that “the funds [sic] actual results performance or achievements could differ materially from those expressed by us.”

“That’s a red flag,” says Mark Dickey, senior communications adviser for the Alberta Securities Commission. “It’s easy for them to say, ‘It didn’t work out the way we thought.’ If that happens, you could lose your money.”

Before investing in any fund make sure it’s registered with the securities commission in your province. If not, that’s a red flag. If it is registered, see if it’s been involved in any violations you should know about.

For instance, if you look up CBI’s executives on the Alberta Securities Commission (ASC) website, you’ll find that Keystone Real Estate Investment Corp., owned by the same group that manages CBI, recently ran afoul of regulators. This past summer Keystone reached a $250,000 settlement with the ASC after the company admitted that Keystone advertising included untrue claims about past projects and that it provided investment advice when it was not registered to do so. (CBI says this was because of faulty legal advice.)

Even if a fund’s background checks out perfectly, investors should ask questions. The biggest question, of course, is whether U.S. real estate prices will quickly rebound.

Many observers think not. “The Phoenix market in particular still has 20% to 30% to fall,” says Robert Campbell, a real estate economist in San Diego.

Tsur Somerville, director of the UBC Centre for Urban Economics and Real Estate in Vancouver, is also skeptical. If you still want to bet on a rebound, he suggests you simply buy a house or condo in an area of the U.S. that your family enjoys. “You’ll need a 30% down payment but you’ll have control,” says Somerville. “And your family can enjoy the property for a few years, even if real estate prices don’t bounce back soon.”

Colleagues may feel like friends when you’re burning the midnight oil to finish a project, but you should never forget that you’re among your fiercest competitors, says Jamie Gruman, a professor of organizational behavior at the University of Guelph in Ontario. “The higher up [the corporate ladder] you go, the more strategic you have to be,” he says. “The more you know, the less you can talk about what’s going on. In large organizations, you’re jockeying for position, so you don’t want to give away the tactics you’re working on.”

Don’t expect your spouse to understand your plight. He or she may enjoy the lifestyle attached to your paycheque, but probably not the hours you’re putting in to earn it. Toronto management consultant Michael Stern tells of a client whose job required him to be reachable via BlackBerry 24/7. Before long, his wife grew tired of the constant interruptions to what little home life they had. But instead of offering a hug, Stern says, she simply decreed “the BlackBerry must be off at mealtimes and during intimate moments.”

So who can you talk to? If you’re lucky, you have a friend who is just as overachieving as you are, and who can understand your special issues. Bill Gates and Warren Buffett are the perfect example: not only are they business associates, they’re also buddies who collaborate on everything from charitable giving to bridge playing.

Most millionaires aren’t so lucky and, as a result, many are now quite happy to pay for an understanding ear. An increasing number of these high-powered executives and entrepreneurs are turning to the services of coaches to help them through the rough patches. In fact, says Stern, who’s been in the executive search business for 20 years, coaching now eclipses everything else that his firm offers. The Queen’s School of Business in Kingston, Ont., recently added coaching to its menu of executive development programs, with 25 staff to help outwardly successful people figure out why they feel unfulfilled.

“People look for coaching because they can have a frank conversation,” says Barbara Dickson, the program’s director.

There can be a lot to talk about. Gruman, who has a master’s degree in clinical psychology, says that among overachievers “imposter syndrome is common” — the feeling that no matter how stratospheric your net worth or enviable your career, you merely lucked into your riches and don’t truly deserve them.

More often, though, that niggling sense of dissatisfaction may be the fault of the very character traits that launched your success in the first place. Wonder why you’re on the brink of yet another divorce? “The type of person who rises to the top is a hard-driving, hard-playing, A-type personality,” Gruman says. “That type of person tends not to be satisfied with the status quo. Those are the same attributes that lead them to engage in wife turnover.”

OK, you’re thinking, so that does sound a little bit like me. But if I’m such a bastard, how come no one’s ever called me on it before? Gruman has an explanation for that, too. Rich, successful people hang out with other rich, successful people who act and live pretty much the same way you do.

Which is why, for those in search of a reality check, the services of a disinterested outsider, like an executive coach, makes a whole lot of sense. Admitting to insecurities or asking for help isn’t an option at work or at home, where there’s pressure to keep up with the Joneses. But with a coach, who is outside your sphere and has nothing to gain from seeing you stumble, you can let your guard down. “It’s a relief,” says Gruman.

Most firms will offer you a choice of coaches so that you can choose the one whose background and approach fit what you’re looking for. If you want to bounce business ideas off your coach, you’ll want someone with a business background. For “soft” issues, someone with a background in psychology or counselling, like Toronto executive coach Katherine Vanderberg, might be right for you.

Vanderberg, a partner at the firm Feldman Daxon, recalls working with a vice-president of operations who bemoaned the all-consuming nature of his career. “He was trying to do it all — he was trying to be a VP but also trying to stay hands-on.” Through discussions with the VP, and so-called “360-degree interviews” with a number of other people in his company, she determined that the executive’s long office hours were a way of compensating for his lack of a personal life. “We recognized that as a problem and then put an action plan together to help him get more balance.” Similarly, Stern helped a client who realized he was missing out on his children’s upbringing. Together, they determined “one of his objectives was to attend 75% of his kid’s hockey games.”

The cost of coaching can vary. Queen’s University Executive Coaching Service runs about $4,500 over six months, which includes two hours a month of one-on-one conversation with the coach of your choice, plus as many follow-up emails as you need. At Feldman Daxon, the price tag is steeper — $10,000 to $20,000 — but includes a little more face time: meetings up to 90 minutes twice a month, then phone calls every other week to check in on your progress.

Some execs, like Barbara Judt, stumble upon the personal benefits of these services after being sent to one on the corporate tab for “professional development” purposes. The Winnipeg grain industry executive, who’s been taking time off since receiving her severance package, liked the result so much that she sought out a coach on her own dime to help her change directions in her career. “I knew coaching would help me accelerate my transition and help me sharpen my focus better than me trying to figure it out on my own,” she says. Vanderberg notes that many of the clients she’s helped to achieve specific goals continue to check in with her about smaller stuff months and even years after the fact.

If you’re new to the concept of coaching, a quick Internet search using the keywords “executive coach (your city)” will probably turn up at least a dozen options. Keep in mind that a coach is not a mental health professional, so if your problems run deeper — your decision-making skills are cloudy, or you turn to alcohol or drugs to cope — Gruman suggests that it may be time to ask your MD for a referral to a licensed therapist or counsellor.

Trouble is, you may not twig to the fact that you need help until you’re way, way down the rabbit hole. As Stern notes, “It’s difficult without outside intervention for someone to sit up and say, ‘I’m off the track.’” This is where a coach can come in handy. Jeff Morris, a lawyer and head of Jeff Morris Coaching in Toronto says holding his clients accountable is a big part of why coaching works. “One of my favorite questions to ask is ‘What’s the next step?’ ”

On occasion, Morris has sent clients troubled by addiction or marital breakdowns to see an appropriate mental health professional, but he believes that coaches can help most people stay on target with their goals. “Coaching offers objective feedback,” he continues. “It’s not like [confiding in] friends and family, who have different agendas. The coach’s only agenda is to help the client reach his goals.”

No, it’s the city’s ghosts. A century ago, Belfast was an Edwardian boomtown. Its citizens had invented the pneumatic tire and the tractor. They dominated the linen trade and served as master shipbuilders to the world. In fact, the Belfast shipwrights of 1909 had just started building their biggest ship yet — a mammoth ocean liner that was to be called the Titanic.

As you probably heard, that venture ended badly for everybody except Kate Winslet. The sinking of the Titanic seemed to cast a curse upon Belfast. It soldiered through a world war, a depression, and then another world war in which nearly a thousand of its residents died in an air blitz. Starting in the late 1960s, the Catholic-Protestant battles known as the Troubles ripped society apart for three decades.

Today, as you fork down your penne and take a sip of a saucy little dolcetto in a restaurant on Belfast’s oh-so-stylish Lisburn Road, it’s possible to shrug off the past and go back to reading the entertainment listings. But if you come to Belfast simply for the clubs and the shopping, you would be missing what gives this city its strut.

It’s a matter of character. Belfast is a place that prides itself on grinning through bad times. It likes its heroes hard, its drinks strong, and its humor black.

A case in point is George Best, the local boy whose name graces one of the city’s airports. Best, who died in 2005, was, for a few years in the 1960s, the most dazzling soccer player on the planet. He was also a world-class drinker who didn’t apologize for his excesses. When asked what he had done with his earnings, he replied, “I spent a lot of money on booze, birds and fast cars. The rest I just squandered.”

Belfast loves that brand of muscular flamboyance. A walk though the centre of the city turns into an extended gawk at the red-brick offices and warehouses constructed at the height of Belfast’s 19th-century boom. The buildings tower over you with arched windows, carved lintels, sculpted balustrades. Linen merchants and distillers erected these Victorian showpieces to announce their success to the world. More is more, the gaudy buildings proclaim — an architectural philosophy that reaches its fullest expression in Belfast’s City Hall, a gigantic wedding cake of white stone that bristles with colonnades, cupolas, arches and parapets.

As City Hall demonstrates, subtlety is not the Belfast way. When I tell a taxi driver that he lives in a beautiful city, he snorts. “Now, sooo-nny Barcelona — that’s beautiful,” he tells me. “But rrrrainy Belfast? What we are is interesting.”

To prove his point, he takes me on an impromptu tour of the drab row houses of the Clonard district. We stop in Bombay Street, scene of a bloody riot between Protestants and Catholics in 1969. A marble memorial on the street commemorates IRA soldiers and civilians who died in the Troubles. Just behind it rises a seven-metre-tall metal barrier, or peace line, that separates the neighborhood from the Protestant enclave down the way. Homeowners who live by the wall have built chicken-wire cages around their backyards to protect their backyards from whatever could come hurtling over the fence. “Oh, we’re doing better now, for sure,” my driver says, “but I’ll only believe we’re truly at peace when that chicken wire comes down.

"To be fair, Belfast has enjoyed a remarkable run of peace since a power-sharing agreement between Catholic and Protestants was signed in 1998. But the conflict still defines everyday life. When I go on a group tour of the decommissioned Crumlin Road jail, a sprawling Victorian penitentiary, our guide is charming — but he also makes it clear that he will not go near certain topics, for fear of starting a fight. When he explains how an IRA man escaped from the prison during a soccer game, or another dodged the guards by coating himself with butter then hiding in the sewer, he’s quick to say that he’s not glorifying the escapees — just giving us some of the prison’s history.

And fascinating, creepy history it is. The jail dates from 1843. Its gloomy corridors have housed everyone from Victorian urchins arrested for stealing laundry, to First World War-era suffragettes to 1980s IRA members. Prisoners were forbidden to talk. Guards wore flannel slippers so their steps were noiseless. “They say the only sound you could hear was the sound of men weeping,” our guide tells us.

If you want to shake off the shadows of the prison and experience Belfast’s brighter, more genteel side, I highly recommend the C.S. Lewis bus tour. It traces the early life of the writer who would go on to create Narnia and become the foremost Christian apologist of his time. The tour sweeps through posh Belfast neighborhoods, tracing the background of the Narnia tales,and the events that shaped Lewis as a child. You see the house he lived in as a boy and the door knocker on his grandfather’s house that may have inspired his creation of Aslan, the divine lion of Narnia.

Our guide tells us that Lewis’s biggest loss was the death of his mother when he was only 9. Of course, Lewis turned that tragedy into inspiration. You could argue that his native city has made a practice of doing much the same. Yes, it built the Titanic — so it’s now building a huge Titanic Quarter that, among other things, will tell the story of the doomed ship and open in time for the centennial of the ship’s launch, in 2012. Yes, the city and surrounding region lost much of its population to emigration over the past century and a half — so nearby theme parks now cater to thousands of North American tourists who want to trace their roots back to this city.

It’s the thumbprint of history that marks Belfast as a special place. A few days after my visit, I try to explain to friends in Toronto what I felt in Belfast. I tell them the story of my taxi driver. “But he was wrong,” I say. “Belfast isn’t just interesting — it’s fascinating."