Asking for Money

There was an interesting article in the National Post a couple of weekends ago about the LCBO asking customers to add $2 to their bill for Toronto's Hospital for Sick Children.

Jonathan Kay seemed to have felt the need to say yes, because other people are watching. I, of course, said no. It was not only the LCBO asking, but my local grocery store also. My first reaction to say no is maybe because I am hit-up for money so often. You cannot go anywhere in TO without being asked for money. It is not just the homeless, but all sorts of charities.

There is Greenpeace, Sick Kids, Because I am a girl and it goes on and on of charities on the street. These charities have two young people, one on each side of the sidewalk to hit you up for money. Also recently there are people are the street with boxes asking for money for the homeless. Where I live this goes on day after day and year after year. There is no break.

It is not that I do not give to charities. I have money for charities in my budget. My current favourites are Kiva and the Salvation Army. I like the Salvation Army as they seem to be the only ones helping the truly needy in TO.

I like Kiva because you are loaning people money, not giving it. People look after money they have to pay back, but seem to be careless with money given to them. With Kiva you get to help someone somewhere with a $25 loan. The Western World has given billions of dollars to poor countries over the past 20 plus and we have virtually nothing to show for it. Kiva seems to be an organization that really helps our poorer brethren in the rest of the world.

Azure Restaurant, Christmas Dinner

We went this year to the Azure Restaurant http://www.azurerestaurant.ca/menus-Festive2012.php for Christmas dinner. It had a great menu that was at $59 per person. They also gave us a 6:30 dinner reservation and we could have a pre-dinner drink in their lounge and bar area.

The meal was lovely and the service was great. We have a choice of mains of Venison or Turkey. Both were good, but I like being traditional and had the turkey.

Each Christmas day, some old friends and I gather at a good restaurant in Toronto. It is great because none of us have to cook on Christmas Day.

Dividend Growth Companies

The sorts of companies that I used to build my portfolio (so I could stop working and live off my dividends) were dividend growth companies. The characteristic of these companies is low but fast growing dividends. When you are working, you do not need a lot of dividend income. In fact, if you have money in an unregistered account, dividends income, together with your salary could put you into a higher tax bracket.

I want to compare and contrast Chesswood Group (TSX-CHW) and the stock I am reviewing today of Stella Jones Inc. (TSX-SJ).

Dividends for Chesswood are 7.33% and for Stella Jones is 1.03%. There is the only place I see where you might think Chesswood is better. However, Stella can afford their dividends and Chesswood cannot. (It can also be a warning that a stock is not thought well of if the dividend is over 4%.)

If you look at the Dividend Payout Ratios in regards to earnings, the Ratio for Stella is 15.1% (5 year median). The same ratio for Chesswood is hard to calculate because they had earning loss years, but is around or above 100%.

As for dividend growth the dividends over the past 5 and 10 years for Stella grow at the rate of 29% and 24% per year. Chesswood has not been around that longer but the 5 year dividend growth rate is a negative 6.7% per year.

Past performance does not guarantee future performance, but if you look at the potential yield on your original investment, after 10 or 15 years Stella, with dividend growing at 24% per year would give you a yield on original investment of 9% and 25%. For Chesswood, it is hard to say. It may have dividend yield of 7.3% but dividends have not grown over 5 years.

Total dividends grew for Stella between 2011 and 2012 at the rate of 24%. For Chesswood dividends grew between 2011 and 2012 at the rate of 6.7%. Chesswood dividends grew more between 2010 and 2011 at the rate of 32.2%. The rate for Stella was slightly less at 31.6%. However, Stella has not had any dividend decreases, but Chesswood decreased dividends by 74% in between 2008 and 2009.

Another thing to look at is debt ratios, especially the Liquidity Ratio. This looks at current assets versus current liability. The ratios, as far as I can figure out as the company does not tell you, for Chesswood have a 5 year median value of 1.18. The current assets can, but just cover the current liability. What you want is a ratio of 1.50 or better. For Stella, the 5 year median Liquidity Ratio is 3.01.

Personally, I would buy a Stella Jones over a Chesswood Group stock any day. I have lived off my dividends since 1999 and I still have stocks such as Stella. This is because of the great dividend growth. My dividend income is currently growing at just over 9% per year.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Secular Bear

We are still in a secular bear market. It is hard to know how long it will last, but so far we have been in one for around 12 years as it started in 2000. A lot of economists feel that it has another 5 years at least to run. A secular bear market is one where the stock market goes nowhere for a long period of time.

We are in a cyclical bull market at present, but this will change again in to a cyclical bear market. We will probably have a cyclical bear market before we pull out of the current secular bear market. (You have cyclical bull and bear markets within secular bull and bear markets.)

We are not going to get out of this secular bear until we, in the western world, do something about our high debt levels. We do not have to solve the debt problem completely, but people will have to believe that we are on our way to solving it.

So far we haven't solved the debt problem, as we have really not got our deficits under control. (Deficits are the new debt we add to our debt because governments are spending more than they are taking in.)

Part of the problem with our current deficit is that when times are rough, countries tend to run deficits because their payouts in social programs get higher and tax money collected gets lower because more people are out of work. However, when times were good, we run up deficits and so now we are in real problems when times are bad.

What countries should do is pay down debt in good times so that we have some room to run up deficits in bad times.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

REITs, Income Trusts and DRIPs

REITs (Real Estate Income Trusts), old income trusts and DRIPs (Dividend Reinvestment Program have an interesting relationship. When I was reviewing Crescent Point Energy Corp (TSX-CPG) an old income trust, some analysts were adjusting the Dividend Payout Ratios (DPRs) because of their DRIP plan.

The theory is that the DPRs should be reduced by the dividends or distributions flowing back to the company to purchase more shares or units. The company is not paying out all the dividends or distributions in cash because of the DRIP plan.

Just the other day, I was reading how RioCan REIT (TSX-REI.UN) DPR should be considered better than what is usually shown because of the number of shares that are part of their DRIP plan.

However, the issuance of new shares does raise the total amount that the company will have to payout in distributions in the future. It also rises what they will need in revenue and cash flow per share for the future. So what is now looked upon as a good thing could potentially cause problems in the future.

So, you may think that things are fine now, but the company could get into real serious problems if they cannot grow their revenues and cash flow.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

My Own Advisor Blog 3

My Own Advisor has been blogging for a couple of years and has a lot to share with novice investors. This is a third and last part for this blogger. The following are the rest of his posts for novice investors including quotes directly from his blog.

Investing
My Own Advisor Blog has some great posts on Dividend Investing, his investing Approach and help for DIY Stock Investors.

To DRIP or not to DRIP, is that the question? This Shakespeare-esque question popped into his head again after reading articles by The Wealthy Canadian and The Passive Income Earner about Dividend Reinvestment Plans (DRIPs). He said "Thanks for that gentlemen, because it's always good to sit back and review your investing approach now and again"...continue...

No doubt the RRSP deadline is approaching fast. If you don't already know, the last day to contribute to your RRSP for the...continue...

A few weeks ago I returned home from a golf vacation, a "boy's vacation" in Myrtle Beach, South Carolina. The vacation was great; great friends, great accommodations, great fun even if the golf game was lackluster...continue...

If you've been following my blog, you might recall a few months ago I called out to Derek Foster, wondering what "Canada's Youngest Retiree" has been up to. Back in September, Derek was a busy guy. I found out he completed an interview ...continue...

For decades, mutual funds have been a hugely popular way for Joe or Jane Canadian to own pieces of companies. For years, I thought this was a great...continue...

With a New Year come resolutions. It seems to make sense. New Year, new = change. I can wrap my head around that. I've made a couple of resolutions, personal ones and maybe at some point I might share them on this blog. For now, I have some financial resolutions and goals drafted...continue...

Know more about My Own Advisor
If folks want to know more about me, and where I'm at with my investing journey, they can always visit the "Dividend" and "Indexing" pages on my site.

A major part of my investment strategy is dividend investing. My wife and I plan on using dividend income to pay for part of our retirement expenses. Our goal is to earn tax-efficient and tax-free dividend income to the tune of...continue...

Outside of dividend investing, I index a major portion of my retirement portfolio...continue...

Mortgage Prepayments
On the benefits of mortgage prepayments, My Own Advisor writes:

I believe one of the larger personal finance debates is the TFSA vs. RRSP contribution vs. mortgage paydown debate; and rightly so. I got thinking more about this debate (than usual) this week because of our fortunate situation...continue...

Saving
On making saving simple, My Own Advisor writes:

One of the great joys (yup, joys) I get from personal finance is watching our savings account grow. Many, many years ago, on paydays, when I found out we had some extra cash in our account, I tended to follow a spend first and save later strategy...continue...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Science Myth

Bankers seemed to have believed in the science myth. They used math to prove that what they were doing was fine for such things as the Collateralized Debt Obligation (CDO). Actually it was modelling. But the point is it was all mathematics. They did not consider people, or things like ethics. Never considering that just because you can do something, it does not mean you should.

They also seemed to forget that models are only as good as their assumptions and data input. Do not get me wrong. I think models are great. They can show you interesting things.

However, scientists and mathematicians with their models should also consider a saying of programmers. That saying is garbage in, garbage out.

The science myth is that US bankers thought that they were doing science. They hired all these mathematicians right? These mathematicians were doing models right? Their models showed that there was something 1 in a million years the whole US real estate market would fall. Of course there would be real estate market falls in some areas, but not the whole US market. One problem was that the banker's mathematicians were only using input data that was digitized. There was only a limited amount of data digitized...

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

TFSA

There is a lot being written on the Tax Fee Savings Account. If you want to save some money, say for a house down payment, this may be the way to go. You need to be fairly conservative in your investments and might just be better off with such things as an ING account. Their site is here.

I friend of mine recommends the ICICI Bank Canada. It also has some of the best rates for GICs in Canada. They have an office on Bay Street downtown if you do not like doing your banking over the internet. See the ICICI site.

The RRSP route is only good for people in the top tax bracket. (That is because you should be paying less tax on withdrawals than you paid in tax when you make contributions to an RRSP account.) If you are not in the top tax bracket, then the TFSA is a better way to go.

I wrote about Dividend Paying stock and TFSA in April of this year. What I said then is still applicable.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Kathleen's paintings - In Transition Series

My friend Kathleen has an art show at Gallery Hittite at 107 Scollard Street Toronto. Scollard Street runs west from Davenport and Yonge, past Bay Street to Hazelton Avenue. The Gallery is on the south side of Scollard Street, between Bay Street and Hazelton Avenue. The closes subway is the Bay Station. Walk north on Bay Street, then west on Scollard Street.

The current show at the Gallery Hittite is called The Christmas Group Show. It runs until the 22 of December 2012. The Gallery is open Wednesday to Saturday from 12 to 6:00pm.

Too see the separate pictures, click here.

Why are you investing?

What do you hope to gain by your investment? Are you looking for capital gain, income or a combination of both? I often buy companies for their increasing dividend payments. The capital gain is nice, but if I never sell the stock, then I do not get this.

When a company I buy for dividends lower their dividends, then I have a decision to make. Should I sell? Should I buy more? Or, should I hold on to what I have? I bought TransCanada Corp (TSX-TRP) in 2000 when they lowered their dividend. I had been looking at the company for some time, but I had not bought it. However, they got slammed so hard, and I thought unduly, for reducing their dividend, I felt it was a good time to buy. I also felt that management was making the right decision for long term viability of the company.

I have Manulife stock (TSX-MFC) when they lowered their dividend. I, of course, reviewed the stock at that point. What I decided to do was just to hold what I had. I did not think that it presented a good buying opportunity as I did not think that the stock price unduly suffered from this move. The stock price was lowered and the company was punished for the move, but it did not seem to have been punished much.

The one cardinal rule of investing is to never make an investment that will not let you sleep at night. Another rule is to not invest money into stocks if you need that money within the next 5 years. The 5 year rule also applies to buying bonds. The good thing about bonds is that they have a maturity date. If the bond you buy matures when you need your money, then it is appropriate to buy a bond.

On my Investment Talk blog I am today writing about CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF). Today, I am discussing if the stock is a good price and what analysts are saying. To read about this stock go here....

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Types of Dividend Stocks

Some companies vary their dividends depending on what they can pay like Goodfellow (TSX-GDL) and oil companies. A company like Leon's (TSX-LNF) has reasonable dividends (around 2.5%) with median growth around 9%, but will pay special dividends when they feel that they can, but do not feel confident enough to raise dividends.

You can buy companies with low, medium and high dividend yields that have low, medium and high dividend growth. A company like SNC-Lavalin has a low dividend, around 1.8%, but high growth in dividends, above 20%. A lot of REITs have high dividends, around 6.5%, but low dividend growth, around the rate of inflation. An example would be RioCan (TSX-REF).

Our banks tend to have median dividend yields (over 3%, but less than 5%) and median growth rates currently around 9 to 10%. However, in the past the yields would be around 3 to 4%, but growth around 10% to 17%. The past would be before the recent crisis of 2007 when all our banks stopped raising their dividends.

You might want to start with companies with low dividends and high growth and when you are to start living off you portfolio go for stocks with higher dividends. The biggest reason for this, especially if you have a trading account is taxes. If you do not need dividend income, you pay less tax on lower dividend income.

Lots of people talk about dividend growth stocks. I did an article on this subject in the past. See article on Dividend Growth Stocks.

On my Investment Talk blog I am today writing about Canada Bread Co. (TSX-CBY, OTC-CBDLF). Today, I am discussing if the stock is a good price and what analysts are saying. To read about this stock go here....

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Pension Plans

Are Defined Benefit Pension Plans really better than Defined Contribution plans? Personally, I do not think so.

It has been suggested that the problems with DC plans start with the fact that employees are not educated investors? I would suggest that with DB plans, employers quite possibly are not educated investors also. (There were a lot of banks (like European banks) that got caught with mortgage-backed securities that were sold on sub-prime mortgages. You might have thought that banks being financial institutions would know what they were getting. Apparently this was not so.)

I think that one of the biggest mistakes made by most pension plans is that they took premium holidays or increased benefits or in some way used the "extra" money in pension plans when they were declared overfunded in the 1990's.

There was a big move up in the stock market between about 1982 and 1999 which is called a secular bull market. Since 2000 we have been in a secular bear market and the market has not done much for anyone. Most pension plans are underfunded or underwater, as it is generally called.

Secular markets last a long time. You will at least have one during the time you should be building up your pension plan. If you were in a DC plan, money would have continued into the plan as the secular bull market continued to play out in the 1990's. You need these markets to build up a decent pension.

The other thing I like about DC plans is that you do not need to worry about your company getting into financial trouble and having problems getting your pension money. With DC plans the money comes into your hands when your company makes a contribution.

When I had the chance to change from a DB to DC I did so. That was because I was not planning on working at the company until retirement. It is easier to move money from DC plans then DB plans. If you move money from a DB plan, you basically get little unless you are older. Everyone under DC plan gets the same amount of money each year.

DB plans are such that older employees get more money put towards their retirement than younger ones. There can be a big difference in what you get if you stop working for a company and ask for your pension to be transferred to a Locked-In RRSP. (That is someone asking for this that has worked for a company for 20 years and is 60 will get a lot more than someone who has worked for a company for 20 years and is 40.)

I think that DC plans are good for companies also. It is a pay as you go pension plan for them. They will not end up with a big pension liability. This is one of the things that brought down the auto companies.

I think that the solution is that we all need to have financial education. If you are not working for the same employer until retirement, you are better off with a DC plan. In today's employment market, how many people can count to work for one employer until retirement? I would guess very few, especially if you do not work for the government.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Investors: Geniuses When Market Goes Up

Investors often think of themselves as smart or "Geniuses" when the market goes up and they gain money. However, the same investors are likely to blame others when the market goes down and they lose money.

The thing that happens a lot in dealing with the stock markets is that people never ask where the money comes from when they make money in the stock market, such as when the market goes up. However, everyone wants to know where their money has gone when the market goes down. Sometimes we are too inclined to accept anything we make as something we personally have done, but anything we lose as someone else's fault. However, no one has forced anyone into investing. People invest of their own free will.

Therefore, any loss is your problem and your responsibility, wholly. To become a better investor, you must accept responsibility for what you have lost. If you do not, you will not learn anything and will never become a better investor.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Beating the Market

As an individual investor do you really think that your goal should be to "Beat the Market"? I think that if individual investors are asking themselves that they are asking the wrong question. The real question is "Are you making any money"? Is your return higher than inflation?

By trying to "Beat the Market", investors might be applying short term thinking. I think that when individuals are out to do this that they will only be thinking short term. I think that to do well in buying stocks, especially the dividend paying kind, you should be thinking long term.

You do not want to get so tied up trying to beat the market, you do not do what you really want to do and that is make money.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Dividend Growth

I have something like 54 dividend paying stocks in my portfolio. It is not as bad as it sounds, my top 5 stocks are 30% of my portfolio and my top 20 are 75%. I am putting any new money into new stocks and buying some dividend paying small caps and such.

Anyway, what I wanted to point out is that in July and August of this year, no stock I had raised their dividends. This is very unusual for my portfolio. I had two stocks raise their dividends in September (Calian Technologies Ltd (TSX-CTY) and Saputo Inc. (TSX-SAP). October was better with dividend raises from AltaGas Ltd. (TSX-ALA), BCE (TSX-BCE), TECSYS (TSX-0TCS), and Toronto Dominion Bank (TSX-TD).

The thing is, is that I think that my 5 year median dividend increase is coming down. It used to be 12% to 15% per year. Last year my 5 year median dividend increase was 11%. Currently it is running at 9%.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Investors: Individuals and Mobs

If you invest in the stock market, you have to realize that investors sometimes act like individuals and sometimes act like a mob. When investors have been acting very mob like, I check my stocks to ensure that they are solid. You will lose if you stock goes bankrupt. You will also lose if your stock is materially damaged. If investors are acting mob-like, you want to have strong solid companies in your investment portfolio.

The current financial crisis was first brought to our notice in 2007. The investors, in their mob-like wisdom did some panicking in the fall of 2007, then they only, periodically, did some panicking until September 2008. In September 2008, there was a full blown panic. There is something about September (and October) that causes investors to panic. This happens a lot.

On my Investment Talk blog I am today writing about Ballard Power Systems Inc. (TSX-BLD, NASDAQ-BLDP), Today, I am discussing the stock. To read about this stock go here....

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Interview with Crystal

I follow Crystal on Twitter and thought my readers might enjoy and interview with her.

Introduction:

I am Crystal, a Canadian income focused investor. I work shift work. My hourly wage is high, yet I only work part-time hours that are in a gradual decline. I have been with my current employer for the past seven years; I enjoy my career and have no immediate plans to quit; however, I am in a position where I am less dependent on my employer, as the income generated through my investments is a sufficient amount to replace my current wages.

What prompted you to start investing? Did anything inspire you?

I began investing to compensate for a lack of job security. I continue to invest because I really enjoy it!!!

If someone was just starting out, what would you advise as a first move?

Prior to investing, I would advise a person to spend a large amount of time on research. Learn who you are as an investor and find companies that correspond with your investment style. If you are too busy or do not enjoy doing your own research, just buy the index, as there is a greater degree of risk in owning individual stocks. A hot stock tip may sound great in theory, but in practice it is very important to understand that wealth is accumulated slowly over time and there are no shortcuts.

Do have any favourite investing books?

Although I have done extensive reading on this subject matter, I cannot identify any particular book or author as my favorite. I learn something from everybody.

What sort of account are you using for stock trading? Are you using a trading account, RRSP, TFSA? Why?

I have a Canadian margin account, U.S. margin account, RRSP, and TFSA with TD Waterhouse. I contribute the maximum amounts to my TFSA and RRSP (I have a very low RRSP contribution limit available due to my employment RRSP and pension plan). I choose TD because it offers the Dividend Reinvestment Program (DRIP) for my Canadian and U.S. stocks, and my option writing limit is based on available margin rather than percentage of holdings.

How do you determine what to invest in? Does any particular site or business news program influence you?

I invest in well-established, profitable, relatively conservative Canadian or U.S. based companies. I prefer corporations having over 2 billion in market capitalization and with a history of paying regularly scheduled dividends that increase over time. Before investing I find out the dividend yield, history of dividend increases, dividend payout ratio, the amount of debt, earnings growth, and potential option premiums.

I listen to business news and search the internet for current information. I obtain a great deal of data from advisors, researchers, traders, analysts, etc. however, the information I acquire does not play an important role in my valuation of an individual stock nor do I make my investment decisions based on the views of professionals.

Where do you generally get your info on stocks you invest in? Do you use any investment tools or specific sites?

I research my stocks through perusing their websites; by listening to their conference calls and by reading their annual reports and other shareholder information

Do you use any system or program to track you stocks and options?

I set up a spreadsheet to enter the purchase and sale prices of my stocks to calculate cost. I also have an additional spreadsheet designed to estimate my projected annual dividends to keep me focused on income rather than stock appreciation. For instance, when I have X amount of dividends coming in, short-term volatility is irrelevant to achieving my objectives.

I follow my stocks through streaming quotes on my iPhone and desktop; however, I do not track my options as I am an option writer, not an option trader.

How did you get into option trading?

I began selling options to add an additional source of income to my account.

How would you categorize the type of stock you invest in? Do you invest in different stocks for stock trading compared to stock options?

I categorize the type of stocks I invest in as easy to understand, quality, conservative, dividend paying stocks. The share price of a company with strong earnings and a good balance sheet will increase over time; however I tend to focus on creating and assessing my wealth through income rather than stock appreciation.

When I invest in a company, I like to sell the put options, however, I sell options of companies that I have held in the past and have sold because they are overvalued or pay very little dividends.

Do you have any plans for the next 5, 10 years?

No, I'm not a goal setter. I don't even make plans for the next 5 or 10 minutes

Did the 2008/2009 crash affect you? Did you change anything about how you were investing because of it?

I began investing on my own in mid 2008; therefore, the crash had more of an impact on my attitude towards investing than it did to the balance of my accounts. I had experienced previous losses during good markets as the result of costly mistakes from financial planners.

Rather than changing how I invest, I decided to change my attitude towards investing. I began to focus more on patient long-term growth and short-term dividend income and ignore the volatility of the market.

Do you mind saying what stocks you are invested in? A lot I see on your tweets are dividend paying stock. Are all your stocks dividend payers?

I only invest in dividend paying companies.

My present holdings are:

Canadian Companies:

Baytex Energy (BTE); Canadian National Railway (CNR); Crescent Point Energy (CPG); Cenovus Energy (CVE); Enbridge (ENB); Keyera Corp (KEY); Pembina Pipeline (PPL); Toronto Dominion Bank (TD); and Tim Hortons (THI).

US Companies:

Colgate-Palmolive (CL); General Mills (GIS); Johnson & Johnson (JNJ); McDonald's (MCD); Pepsico (PEP); and Exxon Mobil (XOM).

Conclusion:

Thank you for taking the time to interview me as I enjoy exchanging ideas with other investors.

You may follow me on Twitter@nachoswithsalsa. I discuss my investments, post my trades, and disclose my income received from dividends and option premiums.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional.

Money Show - Peter Hodson

Peter Hodson is editor of Canadian Money Saver Magazine. For their site click here. Peter also writes for 5iresearch. To see this site click here. His talk is called "How to pick a Good Company: What we've Learned from a Quarter-Century of Stock Buying". His was the closing keynote speech.

He says that investment financial industry is great for the industry's companies, but not so much for individuals. Investing mistakes we make are:

• We gamble, not invest,
• We do not buy a company because we say it is too expensive,
• We sell a stock too early,
• We do not buy because you are waiting for a pull back,
• We keep your losers for too long and
• We look for where a stock has been and this is irrelevant.

There are only 1 or 2 good stocks (like Google) which would be a 5 or 20 bagger. (That is the stock went up 5 or 20 times our buy price.) If a company goes up do you ask yourself why not sell because it just went up? If a company's stock pulls back you need to ask yourself if this is because of a bad market or is there something wrong with the company. If a company's earnings are down you should ask yourself, is it the market or the company?

He likes companies that can go up 3 to 4% per quarter. Diedrich Coffee (NASDAQ-DDRX) went up from $1 to $32.75, which was the full price at takeover. The best sources for investment ideas are the annual information forms. Read everything on a company you want to invest in.

Computer Modelling Group (TSX-CMG)'s dividends start out at $0.1 and are now $0.16. WaterFurnace Renewable Energy (TSX-WFI) started out with a dividend of $0.07 per share and its dividend today is $0.24 today.

Stantec Inc. (TSX-STN) has started to pay dividends. It is a good company and the initial dividend gives are very significant statement. Peter says that the management is good. The company has a history of problem solving. It motivates it staff with a balance of shares, salary and options.

(I follow all these stocks of Computer Modelling Group (TSX-CMG), WaterFurnace Renewable Energy (TSX-WFI) and Stantec Inc. (TSX-STN) on my website).

For signs of a good company you should look for

• Management who have started and grown companies before
• Tech edge
• Patents
• Low cost producer
• Into new markets
• With a new services
• Big brother relationship (i.e. has a parent company to help them)
• Market share
• R&D expenses
• Drives costs lower
• Acquires competitors
• Access to capital
• Cash flow positive
• Has earnings
• Has partnerships
• Has expansion plans and have enough working capital for its needs
• When valuing a company, subtract its cash per share from the share price. If a stock is at $20 and the company has cash per share of $10, then you are really only paying $10 per share.

What else should you look for in a company?

• Clean accounting
• Good auditors
• Companies that do not over promise
• Companies that deal with their problems
• Companies that communicate
• Annual report has goals, does the company mean them?
• Is company growing better than others in industry?
• Are they making money with that growth?
• Barriers to entry in company's market?
• What size is the company's market?
• Is their market cyclical or seasonal?

Webtech Wireless (TSX-WEW) has said that they got a big Brazilian contract. If this did not exist, no one would want to invest in the company. VSM MedTech Ltd. was a small company that paid their new CEO too much (more than revenue) and it got into financial difficulties. Constellation Software (TSX-CSU) is a company where Chairman/owner got $163M in stocks and company had stock price growth of zero.

Look at Calian Technologies Ltd (TSX-CTY) where company is growing its dividend, the P/E is 10 and company has $4 in cash per share. (I follow this stock).

• Strong Industry and growing company
• Competitor edge
• Keeps its advantage
• Well financed
• Able to communicate to investors
• Good Management
• Attractive value
• This equals a worthwhile investment

A great company pays extra. If there is a 20% more in shares, something has happen. You should ignore minor price fluctuations. A big move means "a change". Don't be scarred off a company by big moves.

Lessons from the experts would be: Pull the weeds: water the flowers. In other words, sell the losers and keep the good companies. A good company is rewarded with rising price/market cap and gets more attention. Look for blue skies. Bay Street analysts are conservative. Don't dream, but know the upside. You should ignore target prices. This is the worst thing of all time.

A diamond is still a diamond, even if it is in the garbage. If others do not like a company, it doesn't mean it is not good. Buy companies with:

• High growth
• Low multiple - can have massive margin expansion
• Rapid EPS acceleration
• Operation profit surge due to cost cutting

Do not buy companies with:

• High multiples
• Defensive growth
• Companies with excess cash
• May not get market/multiple expansion
• Market share growth/monopolies
• Merger candidates

(Note: multiples refer to Price/Earnings Ratios. A high multiple is a high P/E Ratio and a low multiple is a low P/E Ratio.)

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Donald Vialoux and Jon Vialoux

Don Vialoux is founder of Tech Talk and here is a link to TechTalk. He also has sites called Timing the Market and Equity Clock. Jon Vialoux is a research analyst for Horizons Investments Management Inc. Their talk today is called "Timing the Market Using a Combination of Technical, Fundamental and Seasonal Analysis".

Don starts off with one stock he recommends, which is AutoCanada Inc. (TSX-ACQ). He is bullish on gas long term, but not so much in the short term. He is bullish on tech stocks. He thinks gold stocks will be volatile. He thinks that US corporations have lots of cash and good margins. They have fired a lot of people and have refinanced at lower rates. He thinks we should buy dividend paying stocks for income.

In the US people realize they are in problems and that the markets will go down. Spain will have to leave the Euro to recover. Agriculture will be good over the long term because of growing population, but sector will be volatile.

You should buy Dividend ETFs or Dividend paying companies. If you have trouble picking 10 to 15 good dividend paying stocks, use Dividend ETFs.

You need to be good at fundamentals, seasonal investing and technical analysis. In seasonality you find periods of seasonal strength and weakness. You use technical analysis to fine tune your entry to and exit from the market.

With seasonality you need to look for annual recurring events. Seasonality has to do with the market or a sector of the market. Look for recurrent tendencies, economic indicators, corporate earnings, consumer or business patterns, and announcement events.

For example retail sales show strong spring, flat summer, strong fall, moderate winters then a strong spring. Retail is the strongest in the fall. In the first half of the year it is driven by industry and in the second half it is driven by consumers. The average ultimate seasonality for retail is to buy on October 28 and sell on May 5th. Based on 60 years of data, these dates can vary by 1 month either way.

Lumber has gone nowhere in the last 15 years. It is volatile, but it has its seasonality. It peaks in February each year and has its lowest point in October. You can do a seasonal trade on this sector. For CanFor (TSX-CFP) you can buy the 1st of November each year and sell it the 1st of April each year and over the past 15 years you would have made a 16% per year average return.

The TSX Financial Services sector has its top in December. You should hold this sector from October 10th to December 31st and from January 21st to April 13th.

The China Shanghai market has seasonality. In fact studies have shown that 35 of 36 tops markets had a similar pattern with the market rising on Halloween (October 31st) and toping at the end of April.

The Metal and Mining Sectors (gold, copper, and zinc) bottoms in October each year. You should hold this sector from November 19th to January 5th and then from January 31st to May 5th. This has worked 82% of the time over the past 20 years. However, it did not work for the S&P Metals and Mining Sector in 2011.

As for gold, this year the consumer demand in China exceeded the consumer demand in India. Hold gold from July 12th to October 9th each year. Hold gold stocks from July 27th to September 25th each year. If you did this over the past 25 years you would have made a 14% annual return. October tends to be the weakest month for gold.

For Platinum, hold this sector from January 1st to May 31st each year. This can be used in Canada. There is a spring buying season and Platinum is up in the spring of each year. This works about 80% of the time.

The US markets are strong just before an election and this generally continues to the end of the year.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Huzefa Hamid

Huzefa Hamid is senior analysts at DailyForex.com. His talk was called "Increasing your Risk/Reward with a High Win Rate".

In order to increase your win rate, you need to look at more than just one time frame. You should use engulfing reversals with short wicks. The bearish engulfing means that the market is going down and the Bullish engulfing means that the market is going up.

You should look at daily charts and then hourly charts to cover different time frames. You want your engulfing candlesticks to have short wicks. If wicks are long, it could mean indecision. Your wicks cannot be more than one third of the candles.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Gavin Graham 2

Gavin Graham is president of Graham Investment Strategy, Ltd. His second talk was called. "Why Gold Stocks are Ridiculously Cheap at Present".

Gold stocks are very cheap. Over the past 5 years the SPDR Gold E.T.F. (NYSE-GDL) is up 100%, while the Mrk Vectr Gold Miners E.T.F. (TSX-GDX) and iShares S&P/TSX Global Gold (TSX-XGD) are up 12% and 15%, respectively.

Earnings for gold companies have gone up with bumps over the past 3 years. Gold is up 55% and gold stocks are up 2 to 3% over this period. Mining stocks leverage your buy on gold. A problem for mining gold is that costs are increasing faster than the price of gold. Also, some gold mines are in politically unstable areas and in these areas you never know when the rules might change. However, profits can also go up fast than the price of gold because when costs are fixed, then any increase in the price of gold goes right to the bottom line.

Gavin says he does not know why the gold stocks are down. Gold has not risen yet past the past gold high which was $850, but would be $2,500 in today's prices. The last rise occurred over 14 to 15 years. Gold is the only class of investment that has risen every year for the last 10 years. Currencies are being printed so gold should go up.

You can buy gold via Sprott's Gold Billion fund. See their website. You can also use SPDR Gold E.T.F. (NYSE-GLD), but this ETF has a slight premium to the price of gold, so be careful.

Kinross Gold (TSX-K, NYSE-KGN) is down because they bought a gold mine in South Africa. Yamana Gold Inc. (TSX-YRI) is up 42% over past 5 years. Allied Nevada Gold (TSX-ANV) is up 170% over the past 5 years. Problem is that stuff happens with gold mines.

Franco-Nevada Corp. (TSX-FNV, NYSE-FNV) is a good stock to have. It is a royalties company and it is up 85% over past year. (With this company there are less problems and less stuff can happen). Also buy major companies, like Barrick Gold Corp (TSX-ABX, NYSE-ABX) as they are no more expensive than minor companies.

To get a copy of Gavin's paper on gold, email him at info@grahaminvestmentstrategy.com. Here is a list of all the gold stocks on the TSX.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Larry Berman

Larry Berman is partner and chief investment officer of ETF Capital Management. His talk was called "How to use ETF's Like a Hedge Fund Manager".

He says we must understand who we are as an investor. How you think about investing is directly related to your income. We all have a fear reaction when we lose. The best people are only right 50 to 60% of the time. So, you got to expect to lose. The market is smarter than you. There is a probability to investing, but you should not trade just to trade.

Everyone thinks differently. Some people can stand risk and some cannot. The cycle of market emotions will be volatile. We should trade when we feel good about the trade and we should back off if a trade depresses us, but do not panic. Whether the stock market is going up or down, your questions is "Do I want to be in stocks now?"

Larry has a blog on BNN. See his blog on BNN.

Anatomy of Candlesticks -Traders footprints

Going long or short on the US market has a lot to do with the currency exchange rate. If the US$ is going up against the CDN, we buy S&P 500 SPDR (NYSE-SPY). If currency is moving the other way, we short the S&P 500 by buying ProShares Short S&P 500 ETF (NYSE-SH).

To do same thing on the Canadian market, longs are iShares S&P/TSX 60 Index Fund (TSX-XIU) or BMO S&P/TSX Capped Composite (TSX-ZCN) versus short of HBP S&P/TSX 60 Inverse ETF (TSX-HIX). The liquidity is better in XIU than ZCN.

To go long or short on Emerging Markets, use iShares MSCI Emerging Markets (NASDAQ-EEME), Vanguard MSCI Emerging Markets (NYSE-VWO) versus ProShares Short Emerging Markets E.T.F. (NYSE-EUM)

To get leverage on shorting the US market, use ProShares UltraShort S&P 500 E.T.F. (NYSE-SDS) or ProShares Ultra S&P 500 E.T.F. (NYSE-SSO). For leverage shorting of the Canadian market use HBP 60 Bear+ E.T.F. (TSX-HXD) or leverage going long on Canadian market use HBP 60 Bull+ E.T.F. (TSX-HXU).

To do leverage buying of Developed markets outside of the Canadian and US markets (i.e. Europe, Australasia, and Far East) use ProShares Ultra EAFE E.T.F. (NYSE-EFO) or leverage shorting use ProShares UltraShort EAFE E.T.F. (NYSE-EFU). For leverage buying of Emerging Markets use ProShares Ultra Emerging Markets E.T.F. (NYSE-EET) or for leverage shorting use the Emerging markets use ProShares UltraShort Emerging Market E.T.F. (NYSE-EEV).

All these ETFs are toxic to if held for the long term. You can also use ETFs that leverage times 3. These leverage ETFs can give you good moves during a day, but not any longer. Hold them no longer than a couple of weeks maximum, as they are high risk.

You can do a market neutral trade during a trading cycle. When discretionary stocks are rising in the trading cycle, buy 5 to 10 rising discretionary stocks and short SPDR Cons Discretionary E.T.F. (NYSE-XLY).

You can also do hedging with volatility risk by using iPath S&P 500 VIX Short-Term (NYSE-VXX). This is a short term holding and you should only use it if volatility is spiking and people are panicking.

For a full list of ProShares products see ProShares ETFs. For a full list of SPDRS products see their website. IShares products are listed here.

What is QE (Quantitative Easing)? The first point is that QE happens when the Fed buys bonds from the banks and gives them money. This will cause money to expand and it is also called injecting liquidity. This is the creation of electronic money. QE can be reversed by the Fed giving banks bonds and taking their cash. This is to contract the money supply.

Is QE working? The problem is that velocity of money is dropping. The velocity of money is at the lowest level since WWII. So QE is not working as the money supply is not expanding. Japan has been doing QEs for a long time and it has not worked. Japan really has no way out. They haven't been able to weaken their currency.

Also, Inflation can be sticky. It appears we have inflation because say a car purchase cost $30,000 5 years ago and same car is now selling for $35,000. However, today's car is much better and has a lot of new features. If you would have bought the exact same car without improvements, if might cost $28,000. So this is really not inflation, but deflation.

Japan is sinking, China is slowing, US has too much debt and Europe is worse. Two areas of interest are dividends and gold. You can buy iShares DJ CDN Dividend E.T.F. (TSX-XDV) or iShares Gold Bullion Fund (TSX-CGL). Dividends and gold are the only exciting areas today.

Warren Buffet is holding some $41M in cash. If you have a portfolio of 50% stocks and 50% bonds, the average return is 8%. However, to get this average return you need 40 years.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Gavin Graham

Gavin Graham is president of Graham Investment Strategy, Ltd. His talk was called. "After Eurogeddon - The New World of Investing".

First he said that we should not be in long term government debt. It is the worst thing currently and you will not make any money. Global Industrial production is down. The Purchasing Managers Index (PMI) is under 50 again. Commodities are rising. China's leaders are changing. Chinese leaders stay in power by raising the GDP by over 8% per year.

Shanghai's market is the worst performing and it is down. TSX is up, but it is the next worse performing market. When governments print money it goes into assets, like housing and commodities. The decline in GDP was 27% in 1922. In 2007, the decline in GDP was 4.1%. Spanish 10 year bond yields are down, with bonds generally selling at 103. Germany's bond rates are going up. They are at 1.66% and rising. German banks hold enough Spanish bonds to wipe out shareholders' value.

Greece's default was the first in the developed world in 60 years. Bondholders got 31.5% of the face and a lower coupon. You cannot say Greece will not default, it already has. Do not buy long term government bonds. America and Europe are no longer driving the bus. Growth will come from Asia and India. Emerging markets were hit by 2007 and growth is slowing down. Inflation is not a worry as it is getting lower at present.

China has 57 cities with over 1M people. They will have 220 such cities by 2020 and 379 in 20 years.

The 5 year return on the S&P is up and the TSX is down. Other stock markets are also down. Germany's market over the past year is up the most. For the TSX, the commodities were the worst performers over the past year. The CDN$ is flirting with parity to the US$. The CDN$ dropped against the US$ in the 2007 recession. Gold and silver stocks are cheap even though gold and silver are up.

The general population is US is growing at 1% and in Canada at 0.6%. The 65+ and 85+ population is growing faster than the general population. The best income will come from dividends, but you can also get some income from corporate bonds.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Roger Conrad 2

Roger Conrad is editor of Utility Forecaster and Canadian Edge. His talk was called "The Revenge of the Income Trusts".

We have been in a bull market since March of 2009. The Canadian economy is solid. Stocks have higher valuations. Asia is slumping. Europe is still fractured. (But Europe still has the political will to hold together.) The US, post-election, is uncertain.

Former Income Trusts are holding to their model. There is the discipline of dividend payouts. The big payouts were a smart capital decision. Their distribution model was a cash flow model. However, some income trusts were slapped together and had no business being income trusts. But, the survival of income trusts is generally good. It was the tax changes that stopped income trusts and caused them to vanish.

Something like 50% of the old income trusts did not decrease their distributions as the tax burden was not as great as people feared. Some have returned to dividend growth. Some examples are Bird Construction (TSX-BDT), Cineplex Inc. (TSX-CGX) and Keyera Corp (TSX-KEY).

His 6 point Canadian Edge rating system.

• Dividend growth is the ultimate sign of safety.
• For Payout Ratios, watch the Cash Flow, not the conventional EPS.
• For debt, look for near-term maturities (debt coming due this year and next year). When credit ceased up in 2008, any one that had to roll over debt had problems. They either could not get a loan or interest rates were very high.
• You need revenue growth for security. How vulnerable is the company to the economy?
• We should focus on value and beware of stock momentum. Do not buy a stock just because it has momentum. Focus on the value of the company.
• Focus on how safe is the distribution. (A company needs capital growth to grow distributions.)

His favourite section is energy midstream. These are companies that ship and refine and then sell energy. Examples are AltaGas Ltd (TSX-ALA) and Pembina Pipelines (TSX-PPL). There is a tremendous need for midstream companies in Canada. Inter Pipeline Fund (TSX-IPL.UN). Americans cannot buy this company because it is still a limited partnership, but it is still a good company.

Another set of stocks are oil companies. He likes ARC Energy (TSX-ARX), Vermilion Energy Inc. (TSX-VET) and Petrobakken Energy Ltd. (TSX-PBN). They have cash flow affected by price volatility. They have undervalued resources and conservative managers.

Crescent Point Energy (TSX-CPG) also could be included in the list. They did not cut dividends and the stock price is up 50% on conversion. (This company used to be Crescent Point Energy Trust (TSX-CPG.UN and made the transition to a corporation in July 2009.) It uses its stock price to buy other companies and to grow.

He also likes Cineplex Inc. (TSX-CGX), Enercare Inc. (TSX-ECI) and Poseidon Concepts Corp. (TSX-PSN). These are strong business in many places. He wants companies that can grow yearly at 10%. He also likes Brookfield Real Estate Services Inc. (TSX-BRE) and Just Energy (TSX-JE).

He said that sweet yields don't always bring sour consequences and price moves don't always reflect value or risks. You should know the company you are investing in and know the risk. He says do not overpay for REITS. We should bet on rising energy prices. Buy on weakness. We should avoid long term bonds because it is a seller's market. His web site is here.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Globe & Mail Paywall

My blogs will no longer have links to G&M articles because of their new Paywall. I see no point in linking to articles my readers may or may not be able to read.

Money Show - Evelyn Jacks

Evelyn Jacks is founder and president of the Knowledge Bureau. Her talk was titled "Year-End Tax and Estate Planning: For a Bigger Piece of the Pie and Peace of Mind". Their web site is here. Their daily blog is here.

The Knowledge Bureau is all about financial education. You need financial education

• Emerging Tax on Capital
• Saving money
• Precautions (manage risks due to living longer)
• Readiness (for Black Swan events)
• Defensiveness (against ongoing financial problems)

Average wealth must go up because life expectancy is longer and retirement will be later or public pension will be lower. An aging population is expected to increase demand for financial assets relative to Real Estate. (We will sell our houses and get a smaller place for retirement.) Overall household wealth increases with age. However, house hold debt is higher than ever in Canada.

Things she expects to happen over next 5 years.

Item	2012	2016
3 month Treasury	0.9%	2.3%
10 year Gov. bond	2.1%	3.5%
Inflation	2.1%	2%
US/CDN $	99.6	100.7

It is a bumpy road ahead, but there is also light at the end of the tunnel. We have too much government debt, both federally and provincially. In Canada, the individual average net worth was $148,350 in 2005. In 2012 the average net wealth was $192,000. The increase was due to house prices.

Our government says that self-reliance is the best for us. The recent trends are changes to CPP and OAS age eligibility. We have new pension vehicles called Pooled Registered Pension Plans (PRPP), Pension Income splitting, business asset write-offs and new auto log rules under E.I. for the self-employed.

The new 2% tax on rich will raise ordinary rates from 46.41% to 41.97%, capital gain rates from 23.2% to 23.98%, dividend rates from $32.57 to 34.52%. Average tax increases in the period ending 2017 will be 5.4%. There will be surtax on RRSP/RRIFs. Getting an inheritance is like winning a lottery (in that we tend to spend it fast). High government debt will lead to high taxes.

In investing, what comes first? We should invest in this order

• Tax Free Savings account (TFSA)
• Registered Retirement Savings Plans (RRSP)
• Registered Pension Plans (RPP)
• Individual Pension Plans (IPPs)
• Pooled Registered Pension Plans (PRPP)
• Registered Educational Savings Plans (RESP)
• Non-registered accounts.

What you should consider when doing your taxes are:

• Reach back and recover capital losses on current capital gain (Go back 10 years)
• Tax loss selling
• Charitable donations
• Political contributions
• Medical Expenses (glasses, dentist)
• Business assets and expenses
• OAS clawback starts are $69,532.

Evelyn left and David took over the event.

He started with selling assets for capital loss. If you sell a stock for a capital loss, you cannot buy it back before 31 days are up or it is considered to be a superficial loss. ETF and mutual funds can be easier to replace. You cannot buy the exact same one, but you could buy something similar. Capital property is Real Estate, bonds, metals, stocks, options, art etc.

If you are buying and selling stocks full time, that is a business and you cannot use capital gains and capital losses. You should read the rules concerning a business and amateur trading. You need to write down your specific goals. If you have investment goals unwritten, they are attained 50% of the time. If you write them down, they are attained 95% of the time.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Robert Sneddon

Robert "Hap" Sneddon is president and founder of CastleMoore Inc. His talk was called "From History to Portfolio Construction to Where We are Today". He had a very interesting talk on cycles.

Cycles are talked about, but not used. Cycles are seen, but not accepted. Cycles are preached, but not practiced. We see all sorts of cycles in the financial world. We have Presidential cycles of 4 years. We have cycles of faith and deposits (Deposits go down when faith (i.e. religion) goes up and vice versa). We have cycles of cash balances and stock prices. (Cash balances and stock prices go the opposite way.) We have cycles of inflation. We have cycles of bull and bear markets.

We are looking for cause and effect. However cycles do not explain things, they just are. The Elliot wave theory says that psychology causes cycles. The moon/tide cycle is a natural cycle. Cycles underpin everything. We humans see patterns in everything. (That is why we do charts.) But, again, cycles do not explain anything.

To read about the Benner cycles and Fibonacci numbers, see David McMinn's site.

Cycles nest. See chart below. Gavin's version of the Benner cycles looks like this. This is what he says the stock market cycles look like. We are in the middle cycle, see the X mark. The next big one will start in 2019.

Because of the bell curve, we have reversion to the mean. Use this reversion to the mean to reduce risk. Look for extreme outliers.

You can see and hear this speaker at the Money Show Toronto, 2012 site.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Roger Conrad

Roger Conrad is editor of Utility Forecaster and Canadian Edge. His short talk was called US Elections and Fiscal Cliff: Cross-border Perspective for Dividend Investors.

Rogers thinks that the economy will get better in the US and this is a positive for Canada. He says that some stocks are highly priced because of high expectations. He feels that maybe it might be time to take some money out of the market after the 4 year bull market.

He thinks that former income trusts are distrusted and some, like Just Energy Group (TSX-JE), Student Transportation (TSX-STB) and IBI Group Inc. (TSX-IBG) have high yields and low stock prices.

He thinks we should focus on earnings. Roger believes that the fiscal cliff will not happen. He thinks that there is less supply than demand for bonds. He says we should focus on good companies in these volatile times. Rogers feels that dividends are a big part of returns today and this will continue. He feels that stocks in Canada are at better prices than stocks in the US market.

Rogers believes that one or two countries will fall out of the Euro, but Europe will get its act together because of political will.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Sean Brodrick

Sean Brodrick is editor of Natural Resources. You can view him on Uncommon Wisdom Daily's website. His talk was entitled the "Best Commodity Picks".

His first topic was energy. He said that oil from the oil sands is going to triple by 2030. All that oil has to be moved, so good buys are pipelines, like Veresen Inc. (TSX-VSN). Sean does fundamental analysis to pick stock and technical analysis to time his buying. Some people are worried about Veresen's dividend, but he is not. He thinks that the stock will be at $19.50 in 12 months.

Another stock he likes is Cenovus Energy (TSX-CVE). He says the stock has a great yield. Currently oil sand companies have to fight for pipeline space. Cenovus is using railway cars to move its oil. He also says he does not suggest anyone purchase the iShares for the Oil Sands (iShares Oil Sands Index Fund (TSX-CLO)) because there is not much trading volume.

Sean next talked about his gold strategy. He said that consumer demand in India and China has moved lower. He said that the Chinese government is buying gold as are a number of central banks. If the consumers in India and China come back, gold will go up.

We are in a deflationary cycle. Central Banks will not know when to stop printing money and we will have inflation. Gold will have a pull back and then it will take off again. His picks include New Gold (TSX-NGD) and Atna Resources (TSX-ATN).

As for Silver, stocks in areas of no political risks are better (i.e. Nevada rather than South Africa). He thinks siver will grow better than gold. Silver has both industrial and currency uses. He likes SilverCrest mines (TSXV-SVL, NYSE-SVLC). See their website. He thinks you should be a buyer on bull backs as he is bullish on the long term.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Ryan Irvine

Ryan Irvine is president of Keystone Financial Publishing Corp. His talk was called "How to Construct a Profitable Small-Cap Portfolio in Uncertain Times and Three Strong Buys to Get You Started".

First, you look at the fundamentals of how to value a business. The value of the underlying business will drive the value of the stock. You should look at cash flow, the balance sheet, and management. You should not be looking at some squiggles on a chart. You are buying a business. There are 10 main things to look for:

1. First you look for a company with a strong balance sheet with good manageable debt levels.
2. You would want a company with positive cash flow.
3. You would want a company with sustainable growth (that is growing cash flows.)
4. You want a company with attractive valuations (compared to its peers).
5. You want a company with the potential for paying a dividend or a dividend increase. (You will be paid to wait). Small caps should have low payout rates.
6. You will want the management team to have significant share ownership.
7. You will want to company to be in a business you understand.
8. You will want to company to operate in a relatively safe jurisdiction.
9. You would want the company's industry to have a positive outlook or the company to operate in a niche.
10. You would want a company with hidden values (like owning real estate that is not properly valued.)

You should focus your diversification. If you want to beat the market, you cannot be the market. Basically, after you have 20 stocks, you are the market. The optimal diversification is 20 stocks. You want to diversify your stock by industry. Warren Buffet said that when an investor has wide diversification, it is because the investor does not know what he is doing. The top 5 stocks in his portfolio were 75% of his portfolio.

A focused diversification in a small cap portfolio is 8 to 12 stocks. Get stocks from a variety of sectors, like management, oil, gas, financial, tech etc. Also have stocks in a variety of regions, like Canada, US, BRIC.

As far as the environment is concerned there is a hint of rationality creeping back in. There is volatility because of what Greece is doing, but this will not affect Canada in the long term.

The first stock he suggested was Exco Technologies (TSX-XTC) which is currently selling at $4.85. It is in the Auto Industry. It has good balance sheet, good governance, solid dividend, and an attractive valuation. The Q3 financials were good. It has cash of $23M, which works out to $0.56 per share. Earnings are expected to be $0.55 in 2012. The P/E is 8.81. Share price is really $4.85-$0.56 cash held. This lowers the price to 7.8 times earnings.

For XTC, the book value is $3.45. The quarterly dividend is $0.04 with a yield of 3.1%. They have a low Payout Ratio. The dividend is increasing with a 25% increase this year. Management and insiders own 35% of the company. It has a good future with good growth in tooling up better engines. See its chart

The second stock he recommended was Capstone Mining (TSX-CS). The current price is $2.40. The sector is mining, mainly copper, but also has some gold and silver. The company has a great balance sheet. Its mining operations are fully funded. There is no debt and it has a strong cash flow. 2012 results were good. It has $5M in cash or $1.27 per share. Half of market capital is in cash.

For CS, the 2012 cash flow is $0.30. Price is only 8times the cash flow. The P/E is 3.76. The book value is increasing. It has growth in its future. The payback period of recent projects is 3 years.

The last stock he recommended was Athabasca Minerals (TSX-ABM). It is on the TSX Venture stock exchange. The sector is industrial materials, aggregate (gravel and sand). The stock price is $1.50. It is a basic and boring company. The balance sheet is improving. It has an attractive valuation. The P/E is 10. The 2012 earnings estimate is $0.175, giving it a P/E of 8.5. Management owns 45% of the company. Their aggregates are used in the Oil Sands. This stock was originally recommended 2 years ago and it is still cheap.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - John Wilson

John Wilson is senior portfolio manager at Sprott Assets Management LLC. His talk is called Behavior's Under Stress - How to Manage Wealth through Volatility.

His outlook is that we are going to have low interest rates for a very long time. Large Scale fiscal debt will require large scale monetization. The monetary expansion will continue to drive asset inflation. Policy uncertainty will keep volatility high for a long time. Also we will have volatility for a long time because we have large problems. Equities will benefit from all this but the ride will be crazy.

There is a possible outcome of hyperinflation if we go to inflation. If we go to deflation, we could have a financial collapse. Why will this last for a long time? It is because of the size of our problem and the breadth of our problem (US, Europe, Japan). The Global financial situation is unsustainable.

(He gave a quote of "One problem with democracy is that it can collapse when governments run out of spending other people's money.")

Japan (QE) spent 8 trillion dollars in 20 years. The US Federal Reserve Bank has spent twice that in far less time. Bernanke says he will print as much money as it necessary to get the results that he wants.

US employment is becoming structural. Unemployment is driving labor participation to the lowest level. (To learn about labor participation rates see Wikipedia.) The US Government is assuming GDP growth rate that is far too high. They will not go over the fiscal cliff, but they will only postpone it.

We should be investing in equities. We should use "active tactical adjustments", that is moving in and out of equity funds. We should be using option overlays (puts are insurance). Use Sprott's process to limit risk. We should protect our portfolio by having equities at 75%, Bonds at 10%, cash at 13% and options at 2%.

The Sprott process limits losses. Good managers are wrong 50% of the time. Great managers are wrong 40% of the time. What we do is cut our winners and let our losses run and this is why we lose money. If any stock is down 30%, we should sell it. Our tools are selling discipline, loss limits, tactical adjustments and option overlays. (A covered call is writing a call to sell stock we own at a higher price than it is now.)

Germany had hyperinflation (just before WWII) because of too much money creation by the government. There are huge social costs to taming inflation. Canada got it act together in the 1990's and got its debt under control. China has stopped buying US treasury notes. They have same amount of notes as they had 2 years ago. (They haven't increased their buying with the increase in supply of treasury notes.)

For market insight views of John Wilson, see Sprott site.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - John Stephenson

John Stephenson is senior vice president and portfolio manager at First Assets Investment Management Inc. His talk is called Booms, Busts and Bailouts.

You need to see the big picture. There is one island in Greece where nearly everyone is claiming to be blind to be eligible for 500Euros a month payment. Everyone jokes about it. This is corruption in Greece.

The current real worry is not Greece, but Spain. Spain was well managed by the government, but had a housing crisis. Their housing prices probably will fall some 50% more. Banks are a problem in Spain.

Italy is a worry and the economy will probably contract 7% this year. Currently hope is winning the day in Europe, but the problems are not solved and will not be solved soon.

The US fiscal cliff is a worry. This cliff involves cancelling the Bush tax cuts, the Obama tax cuts and getting $1B more in savings. This could cut US GDP 1 1/2% to 4 1/2%. This is the difference between growth and recession.

So far this year the S&P is up 16% on low volume. S&P is still cheap at P/E of 12 to 13, but it is not real cheap.

Canada is underperforming the US because of commodities. There is a decreased use of commodities. China is decreasing their use of commodities and its economy is slowing.

The Purchasing Managers' Index (PMI) is showing that the world economy is slowing down. For information on this index, see Wikipedia.

South East Asia will be the future success. The Canadian star has risen. Merkel (Chancellor of Germany) came to Canada to see Stephen Harper and then went home. (She did not stop here on the way to or from the Washington.)

We will have volatility and will need cash when stocks go cheap. We need to invest in dividend paying stocks. We need stocks that are very conservative and very solid.

Bond market bull will go on for a few more years. There are problems in the government sectors. Government bonds are not good to buy. Only buy corporate bonds.

Commodities are good investments, but not as good a dividend paying stocks. We should have pipelines, utilities and REITs. Utilities are regulated and make money in good times and bad times.

Real Estate prices in the US are moving up. The Toronto and Vancouver condo markets have gone wild. There are 189 condo buildings under construction in Toronto and only 89 under construction in New York. Real Estate is going to fall in Canada by 10 to 20%, especially in the condo market.

Stephen said he has started to buy banks again because they are cheap. Gold is going to higher. Canada is on its way to being an oil superpower. Price for oil is going to be around $80 to $90 a barrel.

Saud Arabia is growing at twice the rate that China is growing. The King of Saud Arabia has one more brother and then there are 7,000 princes who will be vying for power.

We have lots of natural gas. Canada is in the best shape of the all countries in the OECD. Fracking has changed the production of gas. With fracking we get 50% of the reserves in the 1st year and then 15% each following year. We used to get 10% of the reserves each year.

There will be other pipelines to the east besides gateway. Gateway has only a 50-50 chance of getting done. Keystone pipeline will get done. The southern part is being built. We are just not building the part across the border.

Germany is not big enough to bail out Europe. There is a cultural divide between Europe north and south. Germany (with Austria, Luxemburg etc.) is fiscally responsible. Greece, Italy, not so much. In the southern countries they think you are stupid to not to cheat on your tax return.

Stock recommendations would be TransCanada (TSX-TRP) and Enbridge (TSX-ENB).

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Money Show - Gordon Pape 2

Gordon Pape is the editor and publisher of "The Income Investor" and "The Internet Wealth Builder". His talk today is called Retirement's Harsh New Realities. He talked about the harsh realities, some solutions on how to deal with the new realities and the Ultimate Goal.

Problems

The first problem he talked about was what surveys were telling us. According to surveys, 2/3rds of Canadians plan to work after age 65. Some 38% haven't enough money to retire. Some 55% have saved less than $20,000 in the past 5 years of those who plan to retire. Some 2/3rds of boomers say they do not have enough money to retire. Some 15% say they have enough to retire. Some 56% of people surveyed said they expect to be debt free at retirement. Only 2 in 10 people have a financial plan. Also 5% count on winning a lottery to retire on.

Boomers are retiring and by 2026, 21% will be 65 plus. We are living longer and at 65 we can expect to live another 19.8 years. The aging boomers will create some financial and demographic problems. In a worry category are boomers that they have no pension plan, have moderate savings and have mortgage and other debts. In a bad category are boomers with above problems plus family that needs financial help. In an extreme category are boomers with above problems and are supporting family members.

A second problem is that Pension Plans are dying. Only 38% of employees have a Pension Plan. Some 84% of public workers have pension plans, but only 25% of private employees do. There is also a trend from Defined Benefit plans to Defined Contribution plans. Some 51% of companies are changing from DB to DC plans. The problems with DC plans start with the fact that employee are not educated investors.

A third problem is that governments cannot help. The US Pension Benefit Guaranteed Corp has a $21.6B deficit. If we expand CPP this could hit business costs hard. We do have new rules to encourage people to delay applying for CPP. This may be the first step in rising the eligible age for CPP. Rules have changed so that if you are 60 or older and working and collecting CPP, you must make CPP contributions.

A fourth problem is that we are not saving enough. In 1990, we were saving 13% of our income, but by 2010 the saving rate was 4.2%. In 1990 we had debt equal to 93% of our income, but by 2010 our debt was 150% of our income. Baby Boomers are the biggest spending generation ever. We need to save between 10% and 20% of our pre-tax income for 35 years to have enough for retirement.

The fifth problem is that we do not know what we are doing. Only 51% of us know that securities can generate income. Only 40% of us know how much we will need to retire. Some 54% of Canadians use financial advisors. (Those Canadians with financial advisors are better off.)

A sixth problem is that there is no safe place for money. We have had two stock market crashes this century. We have near record low for interest rates. Even our low inflation rate can erode the value of our cash. Stocks and ETF are vulnerable to market dictates.

A seventh problem is that the tax system works against seniors. Our current RRIF withdrawals rates erode our capital. The Dividend Tax Credit gross up exposes seniors to OAS clawback and reduction of age amount. Dividends paid to our RRSP/RRIF accounts have double taxation. Guaranteed Income Supplement is reduced by RRSP/RRIF withdrawals.

The eight and last harsh reality with retirement is that we will have to make sacrifices. Some 72% of pre-retirees are concerned about their future standard of living.

Solutions

First of all, only 21% of Canadians have a financial plan. You should do one. This involves more than pure finance. People do not realize how long they will live in retirement. Lifestyle is the key to intelligent planning. If you do not know how you want to live, you cannot cost your living expenses. You must ensure that you understand your income sources. Today people in their 70's spend only 4% less than when they were in their 40's.

The traditional target is that in retirement you need 70% of your pre-retirement income. This is inadequate. Plan on needing 95% of our pre-retirement income. You also have to deal with inflation. You can postpone applying for CPP. You can put off converting your RRSPs to RRIFs. You can keep investing.

The second solution is to pay off your debt. Some 59% of retirees are carrying debt. There is a financial risk in carrying debt into retirement, especially in carrying too much debt. Low inflation is not going to last forever. If current rates return to average interest rates that could mean a 36% increase in debt payments. Debt elimination should be a key part of your retirement plan.

The third solution is to know your pension plan. If you have a Defined Benefit plan, ask Human Resources for help. If you have a Defined Contribution plan get help on deciding which investment options to choose and constantly monitor results.

The fourth solution is to keep building your RRSP. Only 24% of Canadians claim RRSP deductions. Make sure you make yours. You can use automatic contributions. You must use realistic projects and use a pension manager mentality when making decisions on your investments. Do not assume that an RRSP is a better choice.

A fifth solution is the Tax Free Savings Account (TFSA). It is powerful and versatile savings tool. TFSA is better if income is likely to be higher in retirement. You should focus on growth securities. You can direct your RRIF payment to a TFSA.

The sixth solution is to educate yourself. Half of all adults struggle with simple math tasks. You can use apps, websites and software to help. Franklin Templeton site has calculator you can use.

The 7th solution is to minimize taxes. Maximize your RRSP contributions and TFSA contributions. Maximize medical credit. Use dividends to get dividend tax credit (DTC).

The eighth solution is to be multi-dimensional. Review your plans and revise your goals.

The Ultimate Goal

The Ultimate goal is to have a predictable income so you can have a comfortable life style. Gordon Page gave his email address if you want information on his talk at world money show. His email is gpape@rogers.com.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.