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.
Wednesday, October 31, 2012
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.
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
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.
Tuesday, October 30, 2012
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.
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.
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.
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.)
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.
Monday, October 29, 2012
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
Things she expects to happen over next 5 years.
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
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.
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)
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.
- 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.
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.
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.
Friday, October 26, 2012
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.
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.
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:
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.
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:
- First you look for a company with a strong balance sheet with good manageable debt levels.
- You would want a company with positive cash flow.
- You would want a company with sustainable growth (that is growing cash flows.)
- You want a company with attractive valuations (compared to its peers).
- 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.
- You will want the management team to have significant share ownership.
- You will want to company to be in a business you understand.
- You will want to company to operate in a relatively safe jurisdiction.
- You would want the company's industry to have a positive outlook or the company to operate in a niche.
- You would want a company with hidden values (like owning real estate that is not properly valued.)
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.
Thursday, October 25, 2012
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.
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.
Wednesday, October 24, 2012
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.
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.
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.
Tuesday, October 23, 2012
Money Show - John Manley
John Manley is a professional trader and portfolio manager at Market Evolution Strategies. His talk was called "Market Evolution Strategies - the Holy Grail Approach". He says we get too much noise via opinions and forecasts. We get too much info that is mostly useless. Other people's opinions should not affect you.
There are three types of analysis, fundamental analysis, technical analysis and mental analysis. We should get rid of our emotions and biases. We are looking for validation of our own opinion and we should not be. Winning and losing affects your thinking (your ego) and we need to stop this. We have fears of losing, of leaving money on the table and of missing out.
He says that Mark Douglas wrote a book called "Trading in the Zone". He says we should all read it. It is all about your mind. Mark Douglas has a website. You can get a quick preview of this book here.
What you can control is the size of your investment and the risk of your investment. You must limit your losses as this is very important. Have a system and consistently follow it. To enter the Holy Grail Mindset, develop your system. You should paper-trade your system to check it out. Trade on the odds. (John Manley is a trader.)
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.
There are three types of analysis, fundamental analysis, technical analysis and mental analysis. We should get rid of our emotions and biases. We are looking for validation of our own opinion and we should not be. Winning and losing affects your thinking (your ego) and we need to stop this. We have fears of losing, of leaving money on the table and of missing out.
He says that Mark Douglas wrote a book called "Trading in the Zone". He says we should all read it. It is all about your mind. Mark Douglas has a website. You can get a quick preview of this book here.
What you can control is the size of your investment and the risk of your investment. You must limit your losses as this is very important. Have a system and consistently follow it. To enter the Holy Grail Mindset, develop your system. You should paper-trade your system to check it out. Trade on the odds. (John Manley is a trader.)
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 - Harry Dent
Harry S. Dent, Jr. is the author of The Great Crash Ahead and founder and president of H. S. Dent foundation. His talk was called "The Great Crash Ahead: Strategies for a World Turned Upside Down".
He says that people reach a spending peak between ages 46 and 50. Older people spend less once the kids have left home. The young are expensive. They produced nothing but inflation. This is why we had inflation in the 1970's.
We will have deflation going forward because older people are deflationary. They spend less and then they retire. We have deflation because of demographics and debt. When you have high debt levels you get deflation.
Stocks peak every 39 years (that is 1929, 1968 and 2007). Recovery from this takes 25 to 27 years. Babies are the key to the future. China is not having babies. They will go in the same direction that Japan did. Japan was the first to have a baby boom peak.
In Vancouver, real estate costs 10 times average income. People cannot afford housing at 10 times income. It is speculators and foreigners who are buying. Real estate is in a bubble and bubbles always go back to their starting point. US housing is down 33%. To get back to the start of the bubble and that is 2000, housing will need to fall 55% to 65%. In 2000, housing in the US cost 3.3% of income. At the peak housing cost 9.2% of income. In Toronto, housing could drop 30% or more. Vancouver's drop will be worse.
Banks used to lend money from deposits, but now banks are borrowing to lend. Private debt needs to be deleveraged. The US has $66Tn of unfunded liabilities. The US debt is at $56Tn. This totals $122Tn and that is 8 times their GDP. We haven't seen the bottom of the US real estate market. Things are better in Canada as debt is 295% of GDP. Corporate debt in Canada is also better.
We are going to have deflation. We have debt deleveraging and this will cause deflation. We will also have another recession. In the US, the velocity of money is dropping like a rock. QE cannot overcome this. And it is not only debt deleveraging. We have a decline in wealth with more and more debt. The GDP is growing slower and slower.
Spain is going to trigger the next crises. Housing market in Spain was 30% higher than in the US. Spain had 13% of its work force in building. The US, in comparison, only had 6% of the workforce in building. Spain is moving into a depression.
China is a BS market. He does not believe that the growth in GDP is 8%. For China there is no soft landing. China is building roads and bridges to nowhere. China has built cities that are vacant. (There are a number of videos about this on YouTube. See oneof these videos.)
Japan has had lots of QE and the stock market is still down (from its peak).
In Canada, our markets peak before the US market does because of our commodities. Commodities peak every 29 to 30 years. In the next boom, Canada will do better than the US. We have real growth in the emerging markets.
Harry Dent has a site here. He said his site was at www.nextgreatcrash.com, but when you Google this site, you get the one above. For an interview with Harry Dent, see YouTube.
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.
He says that people reach a spending peak between ages 46 and 50. Older people spend less once the kids have left home. The young are expensive. They produced nothing but inflation. This is why we had inflation in the 1970's.
We will have deflation going forward because older people are deflationary. They spend less and then they retire. We have deflation because of demographics and debt. When you have high debt levels you get deflation.
Stocks peak every 39 years (that is 1929, 1968 and 2007). Recovery from this takes 25 to 27 years. Babies are the key to the future. China is not having babies. They will go in the same direction that Japan did. Japan was the first to have a baby boom peak.
In Vancouver, real estate costs 10 times average income. People cannot afford housing at 10 times income. It is speculators and foreigners who are buying. Real estate is in a bubble and bubbles always go back to their starting point. US housing is down 33%. To get back to the start of the bubble and that is 2000, housing will need to fall 55% to 65%. In 2000, housing in the US cost 3.3% of income. At the peak housing cost 9.2% of income. In Toronto, housing could drop 30% or more. Vancouver's drop will be worse.
Banks used to lend money from deposits, but now banks are borrowing to lend. Private debt needs to be deleveraged. The US has $66Tn of unfunded liabilities. The US debt is at $56Tn. This totals $122Tn and that is 8 times their GDP. We haven't seen the bottom of the US real estate market. Things are better in Canada as debt is 295% of GDP. Corporate debt in Canada is also better.
We are going to have deflation. We have debt deleveraging and this will cause deflation. We will also have another recession. In the US, the velocity of money is dropping like a rock. QE cannot overcome this. And it is not only debt deleveraging. We have a decline in wealth with more and more debt. The GDP is growing slower and slower.
Spain is going to trigger the next crises. Housing market in Spain was 30% higher than in the US. Spain had 13% of its work force in building. The US, in comparison, only had 6% of the workforce in building. Spain is moving into a depression.
China is a BS market. He does not believe that the growth in GDP is 8%. For China there is no soft landing. China is building roads and bridges to nowhere. China has built cities that are vacant. (There are a number of videos about this on YouTube. See oneof these videos.)
Japan has had lots of QE and the stock market is still down (from its peak).
In Canada, our markets peak before the US market does because of our commodities. Commodities peak every 29 to 30 years. In the next boom, Canada will do better than the US. We have real growth in the emerging markets.
Harry Dent has a site here. He said his site was at www.nextgreatcrash.com, but when you Google this site, you get the one above. For an interview with Harry Dent, see YouTube.
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.
Monday, October 22, 2012
Money Show - Michael Gregory
Michael Gregory is managing director and senior economist at BMO markets. His talk was called Canadian Economic Outlook: Parting the clouds.
Michael Gregory thinks that QE3 might give the US some traction. We got QE1 and QE2 because of worries about recession and depression. We got QE3 because of worries about jobs. The US has had productivity gains. It is producing more than before the recession but with less people. Some 4.5M jobs were lost in the US. The participation rate by population shows that employment is down.
In the housing market, sales and inventories are matching. House prices are up 2.7%. We will have traction in the US housing market when price appreciation is higher than the 30 year mortgage. US 30 year mortgages are at 3.4%.
He thinks that in Canada the housing market will have a soft landing. The US housing market is getting hotter and the Canadian housing market is getting cooler.
Canadian households have higher debt levels than in the US. Canada is going to underperform and going forward we should increase our US investing exposure.
He thinks that GDP growth in Canada will be 2.2% in 2012 and 2.0% in 2013. The US GDP growth will be 2.2% in 2012 and 2.3% in 2013.
He sees global headwinds. European area will bounce between chronic and acute problems. They seem now to be trying to balance austerity and growth. The Chinese economy will slow, but will have growth with inflation cooling. The new Chinese leaders will get credit for a soft landing. Oil prices will remain high but will be offset by natural gas prices.
The US has the fiscal cliff. If it goes over the cliff the US will have a recession. This is because of the $5.28B in measures that will be taken and this is 4.4% of the US GDP. The GDP hit will cause a recession because hit will be higher than GDP growth. Winston Churchill once said that the Americans will do the right thing after they have tried everything else.
He said that 9 of our 10 Canadian provinces are set to erase their deficits. He feels that there is little economic risk for Canada going forward. Emerging markets will continue to grow. It will be gas and grains that will feed inflation in Canada and US. Unemployment will fall in both Canada and US. The Bank of Canada will raise interest rates in 2013.
He says we have inflation when wages go up. Oil and food do not push inflation as they are just relative price changes. We can expect the Loonie to have parity into the future. The US's QEs will continue to debase its currency. There will be international money coming into Canada as Canada is a safe haven. Western Canada, B.C. to Manitoba, will lead growth in Canada (not Ontario or any province in the east).
He thinks that we have challenges of Global Government Debt, strong Canadian dollar, high household debt and weak productivity going forward. What we have going for us is Banking, foreign investment inflows, emerging market demands and a strong fiscal position.
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.
Michael Gregory thinks that QE3 might give the US some traction. We got QE1 and QE2 because of worries about recession and depression. We got QE3 because of worries about jobs. The US has had productivity gains. It is producing more than before the recession but with less people. Some 4.5M jobs were lost in the US. The participation rate by population shows that employment is down.
In the housing market, sales and inventories are matching. House prices are up 2.7%. We will have traction in the US housing market when price appreciation is higher than the 30 year mortgage. US 30 year mortgages are at 3.4%.
He thinks that in Canada the housing market will have a soft landing. The US housing market is getting hotter and the Canadian housing market is getting cooler.
Canadian households have higher debt levels than in the US. Canada is going to underperform and going forward we should increase our US investing exposure.
He thinks that GDP growth in Canada will be 2.2% in 2012 and 2.0% in 2013. The US GDP growth will be 2.2% in 2012 and 2.3% in 2013.
He sees global headwinds. European area will bounce between chronic and acute problems. They seem now to be trying to balance austerity and growth. The Chinese economy will slow, but will have growth with inflation cooling. The new Chinese leaders will get credit for a soft landing. Oil prices will remain high but will be offset by natural gas prices.
The US has the fiscal cliff. If it goes over the cliff the US will have a recession. This is because of the $5.28B in measures that will be taken and this is 4.4% of the US GDP. The GDP hit will cause a recession because hit will be higher than GDP growth. Winston Churchill once said that the Americans will do the right thing after they have tried everything else.
He said that 9 of our 10 Canadian provinces are set to erase their deficits. He feels that there is little economic risk for Canada going forward. Emerging markets will continue to grow. It will be gas and grains that will feed inflation in Canada and US. Unemployment will fall in both Canada and US. The Bank of Canada will raise interest rates in 2013.
He says we have inflation when wages go up. Oil and food do not push inflation as they are just relative price changes. We can expect the Loonie to have parity into the future. The US's QEs will continue to debase its currency. There will be international money coming into Canada as Canada is a safe haven. Western Canada, B.C. to Manitoba, will lead growth in Canada (not Ontario or any province in the east).
He thinks that we have challenges of Global Government Debt, strong Canadian dollar, high household debt and weak productivity going forward. What we have going for us is Banking, foreign investment inflows, emerging market demands and a strong fiscal position.
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 - David Franklin
David Franklin's talk was called Managing Wealth in Uncertain times. He is CEO and market strategist at Sprott Private Wealth, LP. He thinks that uncertainty is going to continue. One thing he thinks is certain is that currency debasement will continue in US, Europe, China and Japan.
He says we are in a bubble of fear. People are lining up to buy negative return bonds. Both Switzerland and Denmark are selling them. He says that currently we have negative real interest rates. That is interest rates less inflation gives us negative real rates.
There is no country that can afford to raise their interest rates. In a negative yield environment, we should be buying gold as it is a safe haven. Also we should buy real assets. Stocks may also be a good thing to buy.
At 2% inflation, which is our current inflation rate, we will have our money devalued by 30% over 20 years. The QE's will not save us and stocks will be devalued overtime.
There are problems with investors going for yield. Investors paid 61% more for BP Prudhoe Bay Royalty Trust (TSX-BPT) than all its future cash flow are likely to be worth. In connection with PIMCO, people traded up this ETF to a premium to net assets of more than 75%. Their distributions included return on capital. He said that for Cornerstone investors got a 22% return, but 90% of that return was return on capital. When the fund runs down, they raise more capital. These are reasons he thinks that there is a bubble in income investments.
As far as the gold market is concerned, China is the gold market. They are purchasing 400 tons of gold each year and this is one half of the gold produced worldwide today. No one is quite sure why China is purchasing all this gold. China is also buying gold mines in Canada and South Africa. One reason they may be buying gold is because gold is a currency.
Volatility is going up. Resource stocks are at historical lows. Stocks are going to be overbought and oversold. What is overbought, including by Hedge Funds, are Utilities, Parma, Tech and Discretionary Staples. What is oversold are materials and energy.
Central Banks are going to expand their balance sheets. The US$ will be devalued. Negative interest rates are going to persist. There is a bubble in liquidity. The QEs will do us little good. China will continue to buy gold. Volatility will continue.
There are some unexpected consequences. One is that Canadian farm land. There is lots of it and it is cheap. We are getting foreign buyers of our farm land.
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.
He says we are in a bubble of fear. People are lining up to buy negative return bonds. Both Switzerland and Denmark are selling them. He says that currently we have negative real interest rates. That is interest rates less inflation gives us negative real rates.
There is no country that can afford to raise their interest rates. In a negative yield environment, we should be buying gold as it is a safe haven. Also we should buy real assets. Stocks may also be a good thing to buy.
At 2% inflation, which is our current inflation rate, we will have our money devalued by 30% over 20 years. The QE's will not save us and stocks will be devalued overtime.
There are problems with investors going for yield. Investors paid 61% more for BP Prudhoe Bay Royalty Trust (TSX-BPT) than all its future cash flow are likely to be worth. In connection with PIMCO, people traded up this ETF to a premium to net assets of more than 75%. Their distributions included return on capital. He said that for Cornerstone investors got a 22% return, but 90% of that return was return on capital. When the fund runs down, they raise more capital. These are reasons he thinks that there is a bubble in income investments.
As far as the gold market is concerned, China is the gold market. They are purchasing 400 tons of gold each year and this is one half of the gold produced worldwide today. No one is quite sure why China is purchasing all this gold. China is also buying gold mines in Canada and South Africa. One reason they may be buying gold is because gold is a currency.
Volatility is going up. Resource stocks are at historical lows. Stocks are going to be overbought and oversold. What is overbought, including by Hedge Funds, are Utilities, Parma, Tech and Discretionary Staples. What is oversold are materials and energy.
Central Banks are going to expand their balance sheets. The US$ will be devalued. Negative interest rates are going to persist. There is a bubble in liquidity. The QEs will do us little good. China will continue to buy gold. Volatility will continue.
There are some unexpected consequences. One is that Canadian farm land. There is lots of it and it is cheap. We are getting foreign buyers of our farm land.
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
Gordon Pape is the editor and publisher of "The Income Investor" and "The Internet Wealth Builder". His talk was called "The Best Investments for the Year Ahead".
He started off with a review of 2012. He said that the sovereign debt crisis just went on and on. Chinese growth is slowing. Falling commodity prices hit the TSX. Political gridlock in the US is slowing growth. The bond bull market continues. The US market outperformed the TSX year over year with the Dow up 9.9% and the TSX up just 2.3%. However, he said that despite all the problems, 2012 is a good investment year.
Next he talked about the winners in 2012. The bond market was a winner, but he thinks that it is the last gasp of the bond bulls. Investors pursued dividend yield. REITs were also another yield story. Limited Partnerships (LP's) and Income Trusts are still around. He said Wall Street stocks have been a winner as well as German stocks. Some TSX sectors have done well and they include Health Care and Consumer stocks.
He also talked about the losers in 2012. Some TSX sectors did poorly and they were mining and energy stocks as well as resource stocks. Greek and Spanish bonds did poorly. He also said that one of the things Canada needs to do is move our oil out to places besides US.
What he sees ahead for 2013 is that the European angst will continue. He sees slow growth there but thinks a recession is unlikely. He thinks that the Middle East tension will unsettle markets. He thinks that there will be more gridlock unless it can be broken. He thinks that China will regain its momentum. As China rebounds we should see a gradual recovery in commodities. The Bond Bull might end. He see New York stock exchange beating the Toronto one. He thinks that gold will continue to rise.
One of the things he thinks will occur in 2013 is the continuation of the yields play. That is people will pursue yield in their investments. Some Canadian stocks he mentioned were BCE Inc. (TSX-BCE), New Flyer Industries Inc. (TSX-NFI), Brookfield Infrastructure LP (TSX-BIP.UN) and Bonavista Energy Corp (TSX-BNP). He said that BIP.UN was a spin off from Brookfield and that it is still at a good value. He liked Bonavista because of the 7.9% yield. He thinks the US market is going to outperform the Canadian one and one US stock he mentioned was Plum Creek Timber (NYSE-PCL).
He thought this stock will benefit from the US housing recovery. He thinks that gold and gold stocks are going to go up because of QE3. He also likes Franco-Nevada Corp. (TSX-FNV, NYSE-FNV). He says that this is a gold royalty company that has month dividends. He also said that he thought that Canadian oil prices will remain low because of the lack of pipelines.
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.
He started off with a review of 2012. He said that the sovereign debt crisis just went on and on. Chinese growth is slowing. Falling commodity prices hit the TSX. Political gridlock in the US is slowing growth. The bond bull market continues. The US market outperformed the TSX year over year with the Dow up 9.9% and the TSX up just 2.3%. However, he said that despite all the problems, 2012 is a good investment year.
Next he talked about the winners in 2012. The bond market was a winner, but he thinks that it is the last gasp of the bond bulls. Investors pursued dividend yield. REITs were also another yield story. Limited Partnerships (LP's) and Income Trusts are still around. He said Wall Street stocks have been a winner as well as German stocks. Some TSX sectors have done well and they include Health Care and Consumer stocks.
He also talked about the losers in 2012. Some TSX sectors did poorly and they were mining and energy stocks as well as resource stocks. Greek and Spanish bonds did poorly. He also said that one of the things Canada needs to do is move our oil out to places besides US.
What he sees ahead for 2013 is that the European angst will continue. He sees slow growth there but thinks a recession is unlikely. He thinks that the Middle East tension will unsettle markets. He thinks that there will be more gridlock unless it can be broken. He thinks that China will regain its momentum. As China rebounds we should see a gradual recovery in commodities. The Bond Bull might end. He see New York stock exchange beating the Toronto one. He thinks that gold will continue to rise.
One of the things he thinks will occur in 2013 is the continuation of the yields play. That is people will pursue yield in their investments. Some Canadian stocks he mentioned were BCE Inc. (TSX-BCE), New Flyer Industries Inc. (TSX-NFI), Brookfield Infrastructure LP (TSX-BIP.UN) and Bonavista Energy Corp (TSX-BNP). He said that BIP.UN was a spin off from Brookfield and that it is still at a good value. He liked Bonavista because of the 7.9% yield. He thinks the US market is going to outperform the Canadian one and one US stock he mentioned was Plum Creek Timber (NYSE-PCL).
He thought this stock will benefit from the US housing recovery. He thinks that gold and gold stocks are going to go up because of QE3. He also likes Franco-Nevada Corp. (TSX-FNV, NYSE-FNV). He says that this is a gold royalty company that has month dividends. He also said that he thought that Canadian oil prices will remain low because of the lack of pipelines.
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 - Kim Githler
Kim Githler is president and CEO of the Money Show. She made the opening remarks for this Toronto Money Show of 2012.
Kim opened with the remark that there are almost 11M high net worth individuals worldwide. High net worth individuals are those that have $1M plus. Most of these individuals (HNWI) are doing fine in this economy.
She also talked about how large losses can be damaging to you portfolio and the fact that losses count more than gains. If you lose 57% of your portfolio, you have to have more than a 100% gain just to make up this loss. In retirement such large loses can be devastating.
She talked about secular market cycles. A secular bear market can last for 12 to 25 years and a secular bull market can last for 10-15 years. We are currently in a secular bear market. She talked about reading Ned Davis's research into cycles. His site is here. You have to subscribe to get information there. However a recent paper by Baird uses some of Ned Davis's charts. There are lots of people who quote Ned Davis.
She said that you have to fight to protect your portfolio in secular bear markets. In these markets alternative investments give better returns. Alternative investments would be gold, minerals and resources.
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.
Kim opened with the remark that there are almost 11M high net worth individuals worldwide. High net worth individuals are those that have $1M plus. Most of these individuals (HNWI) are doing fine in this economy.
She also talked about how large losses can be damaging to you portfolio and the fact that losses count more than gains. If you lose 57% of your portfolio, you have to have more than a 100% gain just to make up this loss. In retirement such large loses can be devastating.
She talked about secular market cycles. A secular bear market can last for 12 to 25 years and a secular bull market can last for 10-15 years. We are currently in a secular bear market. She talked about reading Ned Davis's research into cycles. His site is here. You have to subscribe to get information there. However a recent paper by Baird uses some of Ned Davis's charts. There are lots of people who quote Ned Davis.
She said that you have to fight to protect your portfolio in secular bear markets. In these markets alternative investments give better returns. Alternative investments would be gold, minerals and resources.
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, Toronto October 2012
I will talk about what the speakers I listened to said, speaker by speaker. This will mean that I will have more than one entry each day so that I can cover all the speakers I listened to.
I will bring to post as I transcribe my notes.
On my Investment Talk blog I am today writing about Brookfield Office Properties (TSX-BPO, NYSE-BPO). Today, I am discussing the stock and how it has done over the past 5 and 10 years. To read about this stock go here....
I will bring to post as I transcribe my notes.
On my Investment Talk blog I am today writing about Brookfield Office Properties (TSX-BPO, NYSE-BPO). Today, I am discussing the stock and how it has done over the past 5 and 10 years. To read about this stock go here....
Wednesday, October 17, 2012
My Portfolio
I started saving in the 1970's. I had bonds, GICs, mutual funds and stocks. This was the 1970's and I at first did better with GIC's and bonds. I generally did better in stocks than mutual funds and sold my last mutual fund in 1999. I sold my last Index fund in 2006. I started to get rid of my bonds when interest rates went below 10% and sold my last bond in 1997. (My last bond was a 30 year bond with interest at 9.65%.)
I am now 100% into stocks with some cash in MMF and an ING account. This has to do with the times. You are making no money in interest bearing financial vehicles. I need cash to live off of and for my RRSP accounts so that I have cushion in order not to have to sell any stock for withdrawal purposes at disadvantaged time.
The vast majority of my stocks are dividend paying. I occasionally buy a stock without dividends to make some capital gain, but I do not consider them long term buys. For example I bought RIM in 1999 when it was a fast rising company. However, this has long been sold and I would not be interested in this company today.
My portfolio is currently giving me an overall yield of 3.55%. I have a mix of low (less than 2%), median (2 to 3%) and high (above 4%) yield stock with dividend growth in the low (rate of inflation), median (4 to 8%) and high range (over 10%). Talking about dividend yield and growth leads into my post about "Dividend yields on Original Investments". Click here to view this post.
I have been buying some dividend paying small caps. For example I have Evertz Technologies (TSX-ET), Automodular Corp (TSX-AM) and McCoy Corp (TSX-MCB). You can read about them on my blog. For my most recent blog entries on Evertz Technologies of June 2012, click here or here. For my most recent blog entries on Automodular Corp of June 2012, click here or here. For my latest entries on my blog on McCoy Corp, dated June 2012, click here or here.
I would probably not go into mutual funds again. ETFs and Index funds are still an interesting idea. I have an index fund in my US Currency Account to soak up my excess cash. However, this index fund is to soak up small amounts, it is not much of an investment.
I could use a ladder network of bonds to get a better interest rate for the cash in my RRSP accounts. However, it just seems to me to be lot of work for not much reward. I do have an ING account for excess cash from my Trading account. I have cash in a MMF paying 0.39% for my RRSP accounts compared to ING's 1.35% for cash involved with my Trading account.
On my Investment Talk blog I am today writing about The Keg Royalties Income Fund (TSX-KEG.UN, OHC-KRIUF). Today, I am discussing the stock price and what analysts say about 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.
I am now 100% into stocks with some cash in MMF and an ING account. This has to do with the times. You are making no money in interest bearing financial vehicles. I need cash to live off of and for my RRSP accounts so that I have cushion in order not to have to sell any stock for withdrawal purposes at disadvantaged time.
The vast majority of my stocks are dividend paying. I occasionally buy a stock without dividends to make some capital gain, but I do not consider them long term buys. For example I bought RIM in 1999 when it was a fast rising company. However, this has long been sold and I would not be interested in this company today.
My portfolio is currently giving me an overall yield of 3.55%. I have a mix of low (less than 2%), median (2 to 3%) and high (above 4%) yield stock with dividend growth in the low (rate of inflation), median (4 to 8%) and high range (over 10%). Talking about dividend yield and growth leads into my post about "Dividend yields on Original Investments". Click here to view this post.
I have been buying some dividend paying small caps. For example I have Evertz Technologies (TSX-ET), Automodular Corp (TSX-AM) and McCoy Corp (TSX-MCB). You can read about them on my blog. For my most recent blog entries on Evertz Technologies of June 2012, click here or here. For my most recent blog entries on Automodular Corp of June 2012, click here or here. For my latest entries on my blog on McCoy Corp, dated June 2012, click here or here.
I would probably not go into mutual funds again. ETFs and Index funds are still an interesting idea. I have an index fund in my US Currency Account to soak up my excess cash. However, this index fund is to soak up small amounts, it is not much of an investment.
I could use a ladder network of bonds to get a better interest rate for the cash in my RRSP accounts. However, it just seems to me to be lot of work for not much reward. I do have an ING account for excess cash from my Trading account. I have cash in a MMF paying 0.39% for my RRSP accounts compared to ING's 1.35% for cash involved with my Trading account.
On my Investment Talk blog I am today writing about The Keg Royalties Income Fund (TSX-KEG.UN, OHC-KRIUF). Today, I am discussing the stock price and what analysts say about 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.
Monday, October 15, 2012
Austerity Doesn't Work
There are a number of articles on this subject because the head of IFM started to talk about the subject. See a G&M article I can link you to. Austerity measures in recessions/depressions have never worked. You need to do more than just cut back on spending.
What you need to do is structural changes. Greece especially should be working on reducing corruption and reducing red tape. Of course, the problem with reducing red tape is that it would require politicians to think. They would actually have to think about what they are trying to accomplish with the rules they have and whether or not they are effective.
The problem with governments and generally with a lot of organizations, the longer they exist the more rules they have. As if more rules are better rules, which, of course, is not true. What you need is clear, concise rules that do the job they were meant to do.
Yes, they have to bring the debt under control. However, they could try to soften the blow to the economy by doing some structure changes also. Yes, they have to bring the debt under control, but this cannot be done if we first destroy the economy.
They need to look at all spending programs and see if they are getting value for money spent. Are the programs doing what they should be doing? Are they making a difference?
Every time we have a crisis governments bring in new rules so that we would not have that crisis again. They are like generals fighting the last war. When there are crises, governments want to appear to be doing something. Unfortunately, you cannot produce rules against every eventuality. But you can bring in rules to make life more difficult for people who are trying to make a living.
You would want to get rid of rules that are of no benefit, but which cause business money and make it more difficult for the economy to grow. However, as I said, this might involve the politicians and government workers to have to think and this seems to be a problem.
Government can sell off assets. The governments that seem to make the most money in this are the ones that sell off slowly. Government assets because of the way they have been managed cannot initially be sold off at their potential value. Governments that privatize assets and sell off shares over time make the most money from privatization.
I know that Canada and US has one big problem that I see. That is the schools in poor area are very poor schools. If we really want to help the poor, we would provide better education. In Canada, Alberta seems to be the one province that has helped poor schools and they brought in some reform, including vouchers.
Raj Chetty did a study that showed early exposure to a teacher of excellent standard resulted in an enhanced lifetime income. See write-up on this economist. I think that this points to the fact that we should be putting our best teachers into poor area class rooms.
On my Investment Talk blog I am today writing about Brookfield Asset Management (TSX-BAM.A, NYSE-BAM). Today, I am discussing the stock price and what analysts say about 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.
What you need to do is structural changes. Greece especially should be working on reducing corruption and reducing red tape. Of course, the problem with reducing red tape is that it would require politicians to think. They would actually have to think about what they are trying to accomplish with the rules they have and whether or not they are effective.
The problem with governments and generally with a lot of organizations, the longer they exist the more rules they have. As if more rules are better rules, which, of course, is not true. What you need is clear, concise rules that do the job they were meant to do.
Yes, they have to bring the debt under control. However, they could try to soften the blow to the economy by doing some structure changes also. Yes, they have to bring the debt under control, but this cannot be done if we first destroy the economy.
They need to look at all spending programs and see if they are getting value for money spent. Are the programs doing what they should be doing? Are they making a difference?
Every time we have a crisis governments bring in new rules so that we would not have that crisis again. They are like generals fighting the last war. When there are crises, governments want to appear to be doing something. Unfortunately, you cannot produce rules against every eventuality. But you can bring in rules to make life more difficult for people who are trying to make a living.
You would want to get rid of rules that are of no benefit, but which cause business money and make it more difficult for the economy to grow. However, as I said, this might involve the politicians and government workers to have to think and this seems to be a problem.
Government can sell off assets. The governments that seem to make the most money in this are the ones that sell off slowly. Government assets because of the way they have been managed cannot initially be sold off at their potential value. Governments that privatize assets and sell off shares over time make the most money from privatization.
I know that Canada and US has one big problem that I see. That is the schools in poor area are very poor schools. If we really want to help the poor, we would provide better education. In Canada, Alberta seems to be the one province that has helped poor schools and they brought in some reform, including vouchers.
Raj Chetty did a study that showed early exposure to a teacher of excellent standard resulted in an enhanced lifetime income. See write-up on this economist. I think that this points to the fact that we should be putting our best teachers into poor area class rooms.
On my Investment Talk blog I am today writing about Brookfield Asset Management (TSX-BAM.A, NYSE-BAM). Today, I am discussing the stock price and what analysts say about 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.
Thursday, October 11, 2012
U of T Lecture Series
A friend of my sent me information on a lecture series at U of T. I have put the information below. All these lectures sound so negative. All those powerful people are out to get us little guys. Lectures are Conspiracy theories galore.
What I think is that the world can be greatly influenced by some flawed people, but I do not think that anyone is out to get me. In any event, we are all flawed in some way. People try to manage the situation that they find themselves in. We are, collectively, the author of our current situation. That is, we Canadians are the author of our debt problems. We are comparatively not badly off compared with the debt problems of other countries.
However, I live in Ontario and we have a huge debt. But, it is our fault. We in Ontario allowed our government to spend and spend and then spend some more without covering what was being spent by our taxes. We Ontarian are the author of our financial problems.
If you think countries do not default on their loans, you have never read history. In fact, there are very few countries which have never defaulted. That is right there very few countries have never defaulted.
I also think that people are too emotional for us to have logical markets. Markets seem to go in cycles. Sometime they cycle up and sometimes down. But have no doubt it is our collective emotions that run markets, like the stock market. The value of the stock portfolio I have invested goes up and down and all over the place. You cannot tell me that the value of my portfolio really changes, but it is caused by all sorts of people making all sorts of bids on stocks depending on how they are currently feeling about the future.
We have debt because politicians asked if we wanted free money and we said yes and send us more, please. So debt was run up for social programs that we did not pay for and cannot pay for. We, by the way, pay for governmental programs with our taxes. If our governments spend more than we are willing to pay in taxes, we get governmental debt. It is rather simple. Same as a family, if they spend more than their income, they also get debt. Governments spent more money than they got in taxes, ergo they ran up debt.
So debt was run up for pensions, medical care, welfare, governmental workers and who knows what else. We are living in an age where one quarter to one third of all workers, work for some government agency. Yes, government can help commerce by building roads and bridges and other infrastructure, but most governmental work is not producing money but just using money or is just moving money around. It is the private sector that produces money.
It turns out that the politicians cannot really give us free money and now we have debt we have to manage somehow. But there are still a lot of people that feel that governmental debt does not count, so we do not need to worry about it and we should run up some more debt.
I, like others, invest based on my view of the world. Personally I have done just fine. I do not think that this lecture series follow the quote given by Sydney White. I think that it does not help you navigate this world if you have an overly negative view of it. (I do not think that you should have an overly positive view either.)
Maybe, just maybe, we should be looking at a quote I remember but cannot find about how we tend to think others would behave as we do in similar circumstances. For example, I would not cheat anyone and by and large I do not expect to be cheated by others. We do not have to be a Pollyanna about it. Let's face it, there are people who would cheat me, but most will not.
I have not been disappointed. The thing is to not get cheated by someone you do no need to distrust everyone, but only people who offer you the impossible. Madoff was classic. He offered 10% return each and every year and no down years? No financial investment is risk free and if anyone says so, it is way, way too good to be true. (All cheats offer something too good to be true, I am just talking finance here, but all cheating has similar characteristics.)
If these lectures are typical of what our children are learning in university, heaven help us all.
List of Lectures:
Analysis of all forms of propaganda; media, religion, healthcare, war and most importantly - those who print the money, print the news.
Monday, October 1st: The Bible myths: What really happened? What really didn't happen? Bible scholars versus Bible thumpers.
Monday, October 8th: Thanksgiving - No lecture.
Monday, October 15th: The "Federal" Reserve theft of our money supply. Illegal interest steals all of our public assets.
Monday, October 22nd: Mind control and the corporate police state; "security", surveillance and the Law of Forfeiture.
Monday, October 29th: Monsanto et al put chemical weapons in the food supply. FDA, Codex and their corporate killer drone armies.
Monday, November 5th: Will there be a new Guy Fawkes? Politicians are selling our water and subsidizing health hazards.
Monday, November 12th: War = Banks & Corporations taking over nations. Our children are the collateral damage. War is peace. Slavery is freedom.
Monday, November 19th: The assassinations of all US Presidents who wanted honest money issued by Congress. "Back and to the left".
"The best thing about owning a mind is that you can change it" - Sydney White
Lecture Series
THE FREE UNIVERSITY OF TORONTO - Fall 2012
Sydney White, Investigative Journalist
Mondays from 6pm to 8pm at the
University of Toronto, St. George Campus
Room 1180, The Bahen Centre, 40 St. George Street
On my Investment Talk blog I am today writing about ATCO Ltd. (TSX-ACO.X). Today, I am discussing the stock price and what analysts say about 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.
What I think is that the world can be greatly influenced by some flawed people, but I do not think that anyone is out to get me. In any event, we are all flawed in some way. People try to manage the situation that they find themselves in. We are, collectively, the author of our current situation. That is, we Canadians are the author of our debt problems. We are comparatively not badly off compared with the debt problems of other countries.
However, I live in Ontario and we have a huge debt. But, it is our fault. We in Ontario allowed our government to spend and spend and then spend some more without covering what was being spent by our taxes. We Ontarian are the author of our financial problems.
If you think countries do not default on their loans, you have never read history. In fact, there are very few countries which have never defaulted. That is right there very few countries have never defaulted.
I also think that people are too emotional for us to have logical markets. Markets seem to go in cycles. Sometime they cycle up and sometimes down. But have no doubt it is our collective emotions that run markets, like the stock market. The value of the stock portfolio I have invested goes up and down and all over the place. You cannot tell me that the value of my portfolio really changes, but it is caused by all sorts of people making all sorts of bids on stocks depending on how they are currently feeling about the future.
We have debt because politicians asked if we wanted free money and we said yes and send us more, please. So debt was run up for social programs that we did not pay for and cannot pay for. We, by the way, pay for governmental programs with our taxes. If our governments spend more than we are willing to pay in taxes, we get governmental debt. It is rather simple. Same as a family, if they spend more than their income, they also get debt. Governments spent more money than they got in taxes, ergo they ran up debt.
So debt was run up for pensions, medical care, welfare, governmental workers and who knows what else. We are living in an age where one quarter to one third of all workers, work for some government agency. Yes, government can help commerce by building roads and bridges and other infrastructure, but most governmental work is not producing money but just using money or is just moving money around. It is the private sector that produces money.
It turns out that the politicians cannot really give us free money and now we have debt we have to manage somehow. But there are still a lot of people that feel that governmental debt does not count, so we do not need to worry about it and we should run up some more debt.
I, like others, invest based on my view of the world. Personally I have done just fine. I do not think that this lecture series follow the quote given by Sydney White. I think that it does not help you navigate this world if you have an overly negative view of it. (I do not think that you should have an overly positive view either.)
Maybe, just maybe, we should be looking at a quote I remember but cannot find about how we tend to think others would behave as we do in similar circumstances. For example, I would not cheat anyone and by and large I do not expect to be cheated by others. We do not have to be a Pollyanna about it. Let's face it, there are people who would cheat me, but most will not.
I have not been disappointed. The thing is to not get cheated by someone you do no need to distrust everyone, but only people who offer you the impossible. Madoff was classic. He offered 10% return each and every year and no down years? No financial investment is risk free and if anyone says so, it is way, way too good to be true. (All cheats offer something too good to be true, I am just talking finance here, but all cheating has similar characteristics.)
If these lectures are typical of what our children are learning in university, heaven help us all.
List of Lectures:
Analysis of all forms of propaganda; media, religion, healthcare, war and most importantly - those who print the money, print the news.
Monday, October 1st: The Bible myths: What really happened? What really didn't happen? Bible scholars versus Bible thumpers.
Monday, October 8th: Thanksgiving - No lecture.
Monday, October 15th: The "Federal" Reserve theft of our money supply. Illegal interest steals all of our public assets.
Monday, October 22nd: Mind control and the corporate police state; "security", surveillance and the Law of Forfeiture.
Monday, October 29th: Monsanto et al put chemical weapons in the food supply. FDA, Codex and their corporate killer drone armies.
Monday, November 5th: Will there be a new Guy Fawkes? Politicians are selling our water and subsidizing health hazards.
Monday, November 12th: War = Banks & Corporations taking over nations. Our children are the collateral damage. War is peace. Slavery is freedom.
Monday, November 19th: The assassinations of all US Presidents who wanted honest money issued by Congress. "Back and to the left".
"The best thing about owning a mind is that you can change it" - Sydney White
Lecture Series
THE FREE UNIVERSITY OF TORONTO - Fall 2012
Sydney White, Investigative Journalist
Mondays from 6pm to 8pm at the
University of Toronto, St. George Campus
Room 1180, The Bahen Centre, 40 St. George Street
On my Investment Talk blog I am today writing about ATCO Ltd. (TSX-ACO.X). Today, I am discussing the stock price and what analysts say about 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.
Tuesday, October 9, 2012
Dividend Growth Index
Last July I joining a great group of guys who blog about investing, especially about dividend investing. Back in September 2011, a group of 8 dividend bloggers launched the Dividend Growth Index. Each blogger could pick 3 stocks for the index for a total of 24 stocks. Stock could be either US or CDN. Each quarter, each blogger will follow their picks and the overall portfolio results.
My contribution to this index is also 3 stocks. My pick to add to the Dividend Growth index is Fortis Inc. (TSX-FTS), Toromont Industries Ltd. (TSX-TIH), and Saputo (TSX-SAP). They are all dividend growth stocks of various risk levels and in different sectors.
I try to buy good companies and I try to diversify my portfolio so that a loss of a stock or dismal returns in one sector does not do irreparable damage to my investments. So, I will review my picks and why I like these particular stocks.
Fortis Inc. (TSX-FTS)
This stock was one of my first buys and I have had it since 1987. I also bought some for another account in 1995 and 1996 and then sold some in 1998 because this stock was too high a percentage of my portfolio. Overall, I have made a return of 13.27% per year on this stock to the end of September 2012. Some 8.47% per year of my return was in capital gain and 4.8% per year was in dividends.
This company has a great record of increasing their dividends. The 5 year median dividend yield is 3.3%, which is a decent return. The 5 and 10 year growth in dividends is 11.6% and 9.5% per year. The yield I am earnings on my original investment in 1987 is 25.8% and the dividend yield I am earning for my 1995 investment is 13.4%.
The 5 year median Dividend Payout Ratios are 67% for earnings and 27% for cash flow.
Utilities stocks tend to have lots of debt with low Liquidity Ratios. This stock is no different. However, this stock has a very good cash flow and this makes up for the low Liquidity Ratios. This stock generally has good Debt Ratios.
We are half way through 2012 as far as financial reporting is concerned. Analysts since March have moved the expected revenue down slightly. Over the past 90 days, the expected EPS has remained the same.
See my spreadsheet at fts.htm. For my latest blog postings dated March 2012, click here or here.
This has been a good stock for me and a very solid earner. It is the sort of stock that new investors should start with as it is a utility stock.
Toromont Industries Ltd. (TSX-TIH)
I built my portfolio initially on utility stocks and bank stocks. Once your portfolio gets to a certain size you need to diversify. This is a much riskier stock than Fortis and is considered to be an industrial stock. It is also more volatile and subject to the ups and downs of the business cycle.
Over long periods of time, you would expect this stock to produce better capital gains than a stock like Fortis. However, that long period of time would have to include both a secular bear and bull markets. We have been in a secular bear market since 2000.
I first bought this stock in 2008 and then some more in 2011. The 5 year median dividend yield is 2.23%, which is lower than the one for Fortis. To the end of September 2012, I have made a return of 6.8% on this stock. Some 3.28% per year of this return is in Capital Gain and 3.52% per year is dividend return.
The 5 and 10 year dividend growth is 5.7% and 12% per year. They were having a hard time in the latest recession and earnings are not growing well. So, dividends were decreased in 2011. The company started increasing the dividends again in 2012. This is an industrial stock, so you can expect some variations in dividends.
The 5 year median Dividend Payout Ratios are 32% and 19.5% for earnings and cash flow respectively. I have had no growth in dividends from when I bought the stock, but I expect to have dividend increases in the long term.
We are half way through 2012 as far as financial reporting is concerned. Analysts since March have moved the expected revenue down slightly. Over the past 90 days, the expected EPS has moved down from $1.51 to $1.46.
This stock has brought diversification to my portfolio and I expect it to do well in the long term.
See my spreadsheet at tih.htm. For my most recent blog entries dated April 2012, click here or here.
Saputo (TSX-SAP)
As I had said above, I built my portfolio initially on utility and bank stock. This is also a riskier stock than Fortis. However, it is a consumer products (consumer staple) stock and this would bring some stability to this stock. The 5 year median dividend is just 1.8%. Consumer stocks tend to have lower Dividend Payout Ratios because they need money to grow and invest. Lower Dividend Payout Ratios lead to lower dividends.
I bought this stock first in 2006 and then some more in 2007. My total return to the end of September 2012 on this stock is 16.50% per year. Some 14.19% per year comes from capital gain and 2.31% from dividends.
In August 2012, I sold some of this stock in my RRSP account because the dividends are low and I wanted to increase dividends in my RRSP Account. I replace some this stock with AltaGas (TSX-ALA). When I did this trade Saputo had a dividend yield of 1.76 and Alta Gas had a dividend yield of 4.53%.
Dividends have grown over the past 5 and 10 years at the rate of 13% and 34% per year, respectively. The 5 year median Dividend Payout Ratios for this stock is 33% and 24% for earnings and cash flow, respectively. Dividends increases vary for this company as the dividend increase for 2010 was 10.3%, the dividend increase for 2011 was 18.8% and the dividend increase for 2012 is 10.5%.
Over the past 90 days, the EPS for this stock has trended down from $2.68 to $2.64 to the current $2.62.
This stock has brought diversification to my portfolio and I expect it to do well in the long term. I expect to earn more in capital gains than in dividends compared to utility and bank stocks.
See my spreadsheet at sap.htm. For my most recent blog entries dated June 2012, click here or here.
Other Members of this Group
The other members of this group are listed below. I have also posted links to their October 2012 update for the Dividend Growth Index (DGI) where I know what the link is. Please note that these links will not work until the entry is posted by each blogger on October 9, 2012.
Dividend Growth Investor and DGI
Dividend Guy and DGI
Dividend Mantra and DGI
Dividend Monk and DGI
Dividend Ninja and DGI
My Own Advisor and DGI
Passive Income Earner and DGI
See Dividend Guy 's initial blog entry on this index.
Stocks Covered in this Index
Below is a chart showing all the stocks covered by this index and by which blogger and I have given a link to their sites. Since the inception of this Dividend Growth Index, the return is 22.2%. The year to date return is 6.6%.
We are tracking our index against a number of ETFs. The main drag on our return comes from Canadian National Resources (TSX-CNQ) which is down over 30%. However, this company is into Oil and Gas and these products are down year to date, so this is hardly surprising.
On my Investment Talk blog I am today writing about Keyera Corp. (TSX-KEY). Today, I am discussing the stock price and what analysts say about 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.
My contribution to this index is also 3 stocks. My pick to add to the Dividend Growth index is Fortis Inc. (TSX-FTS), Toromont Industries Ltd. (TSX-TIH), and Saputo (TSX-SAP). They are all dividend growth stocks of various risk levels and in different sectors.
I try to buy good companies and I try to diversify my portfolio so that a loss of a stock or dismal returns in one sector does not do irreparable damage to my investments. So, I will review my picks and why I like these particular stocks.
Fortis Inc. (TSX-FTS)
This stock was one of my first buys and I have had it since 1987. I also bought some for another account in 1995 and 1996 and then sold some in 1998 because this stock was too high a percentage of my portfolio. Overall, I have made a return of 13.27% per year on this stock to the end of September 2012. Some 8.47% per year of my return was in capital gain and 4.8% per year was in dividends.
This company has a great record of increasing their dividends. The 5 year median dividend yield is 3.3%, which is a decent return. The 5 and 10 year growth in dividends is 11.6% and 9.5% per year. The yield I am earnings on my original investment in 1987 is 25.8% and the dividend yield I am earning for my 1995 investment is 13.4%.
The 5 year median Dividend Payout Ratios are 67% for earnings and 27% for cash flow.
Utilities stocks tend to have lots of debt with low Liquidity Ratios. This stock is no different. However, this stock has a very good cash flow and this makes up for the low Liquidity Ratios. This stock generally has good Debt Ratios.
We are half way through 2012 as far as financial reporting is concerned. Analysts since March have moved the expected revenue down slightly. Over the past 90 days, the expected EPS has remained the same.
See my spreadsheet at fts.htm. For my latest blog postings dated March 2012, click here or here.
This has been a good stock for me and a very solid earner. It is the sort of stock that new investors should start with as it is a utility stock.
Toromont Industries Ltd. (TSX-TIH)
I built my portfolio initially on utility stocks and bank stocks. Once your portfolio gets to a certain size you need to diversify. This is a much riskier stock than Fortis and is considered to be an industrial stock. It is also more volatile and subject to the ups and downs of the business cycle.
Over long periods of time, you would expect this stock to produce better capital gains than a stock like Fortis. However, that long period of time would have to include both a secular bear and bull markets. We have been in a secular bear market since 2000.
I first bought this stock in 2008 and then some more in 2011. The 5 year median dividend yield is 2.23%, which is lower than the one for Fortis. To the end of September 2012, I have made a return of 6.8% on this stock. Some 3.28% per year of this return is in Capital Gain and 3.52% per year is dividend return.
The 5 and 10 year dividend growth is 5.7% and 12% per year. They were having a hard time in the latest recession and earnings are not growing well. So, dividends were decreased in 2011. The company started increasing the dividends again in 2012. This is an industrial stock, so you can expect some variations in dividends.
The 5 year median Dividend Payout Ratios are 32% and 19.5% for earnings and cash flow respectively. I have had no growth in dividends from when I bought the stock, but I expect to have dividend increases in the long term.
We are half way through 2012 as far as financial reporting is concerned. Analysts since March have moved the expected revenue down slightly. Over the past 90 days, the expected EPS has moved down from $1.51 to $1.46.
This stock has brought diversification to my portfolio and I expect it to do well in the long term.
See my spreadsheet at tih.htm. For my most recent blog entries dated April 2012, click here or here.
Saputo (TSX-SAP)
As I had said above, I built my portfolio initially on utility and bank stock. This is also a riskier stock than Fortis. However, it is a consumer products (consumer staple) stock and this would bring some stability to this stock. The 5 year median dividend is just 1.8%. Consumer stocks tend to have lower Dividend Payout Ratios because they need money to grow and invest. Lower Dividend Payout Ratios lead to lower dividends.
I bought this stock first in 2006 and then some more in 2007. My total return to the end of September 2012 on this stock is 16.50% per year. Some 14.19% per year comes from capital gain and 2.31% from dividends.
In August 2012, I sold some of this stock in my RRSP account because the dividends are low and I wanted to increase dividends in my RRSP Account. I replace some this stock with AltaGas (TSX-ALA). When I did this trade Saputo had a dividend yield of 1.76 and Alta Gas had a dividend yield of 4.53%.
Dividends have grown over the past 5 and 10 years at the rate of 13% and 34% per year, respectively. The 5 year median Dividend Payout Ratios for this stock is 33% and 24% for earnings and cash flow, respectively. Dividends increases vary for this company as the dividend increase for 2010 was 10.3%, the dividend increase for 2011 was 18.8% and the dividend increase for 2012 is 10.5%.
Over the past 90 days, the EPS for this stock has trended down from $2.68 to $2.64 to the current $2.62.
This stock has brought diversification to my portfolio and I expect it to do well in the long term. I expect to earn more in capital gains than in dividends compared to utility and bank stocks.
See my spreadsheet at sap.htm. For my most recent blog entries dated June 2012, click here or here.
Other Members of this Group
The other members of this group are listed below. I have also posted links to their October 2012 update for the Dividend Growth Index (DGI) where I know what the link is. Please note that these links will not work until the entry is posted by each blogger on October 9, 2012.
Dividend Growth Investor and DGI
Dividend Guy and DGI
Dividend Mantra and DGI
Dividend Monk and DGI
Dividend Ninja and DGI
My Own Advisor and DGI
Passive Income Earner and DGI
See Dividend Guy 's initial blog entry on this index.
Stocks Covered in this Index
Below is a chart showing all the stocks covered by this index and by which blogger and I have given a link to their sites. Since the inception of this Dividend Growth Index, the return is 22.2%. The year to date return is 6.6%.
| Company | Symbol | Blogger |
| Chevron Corp | CVX-N | Dividend Growth Investor |
| Enterprise Product Partners | EPD-N | Dividend Growth Investor |
| McDonald's Corp | MCD-N | Dividend Growth Investor |
| Coca-Cola | KO-N | Dividend Guy |
| Intel | INTC-Q | Dividend Guy |
| National Bank | NA-T | Dividend Guy |
| Conoco Phillips | COP-N | Dividend Mantra |
| Phillip Morris | PM-N | Dividend Mantra |
| Procter & Gamble | PG-N | Dividend Mantra |
| Energy Transfer Equity | ETE-Np | Dividend Monk |
| Novartis AG | NVS-N | Dividend Monk |
| Wal-Mart | WMT-N | Dividend Monk |
| Husky Energy | HSE-T | Dividend Ninja |
| PepsiCo | PEP-N | Dividend Ninja |
| Staples | SPLS-Q | Dividend Ninja |
| Abbott Labs | ABT-N | My Own Advisor |
| Bank of Nova Scotia | BNS-T | My Own Advisor |
| CML Healthcare | CLC-T | My Own Advisor |
| Aflac | AFL-N | Passive Income Earner |
| Canadian Nat. Railway | CNR-T | Passive Income Earner |
| Canadian Nat. Resources | CNQ-T | Passive Income Earner |
| Fortis Inc | FTS-T | SPBrunner |
| Toromont Industries Ltd | TIH-T | SPBrunner |
| Saputo Inc | SAP-T | SPBrunner |
We are tracking our index against a number of ETFs. The main drag on our return comes from Canadian National Resources (TSX-CNQ) which is down over 30%. However, this company is into Oil and Gas and these products are down year to date, so this is hardly surprising.
| ETF | Symbol | YTD |
| S&P/TSX 60 Index Fund | XIU | 5.39% |
| Dow Jones Canada Select Dividend Index Fund | XDV | 3.89% |
| SPDR S&P 500 ETF | SPY | 16.43% |
| Vanguard Dividend Appreciation ETF | VIG | 10.92% |
| Dividend Growth Index | DGI | 5.7% |
On my Investment Talk blog I am today writing about Keyera Corp. (TSX-KEY). Today, I am discussing the stock price and what analysts say about 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.
Wednesday, October 3, 2012
My Own Advisor Blog 2
My Own Advisor has been blogging for a couple of years and has a lot to share with novice investors. This is a second part for this blogger as in my original post on My Own Advisor blog I just noted the investment books he was recommending. The following are posts on this blog for novice investors.
ETFs and Indexing
My own Advisor has a couple of great posts on the benefits of Exchange Traded Funds (ETFs) and Indexing.
While definitions will vary slightly and some are more detailed than others, I like to define Exchange Traded Funds (ETFs) this way: an investment product that is like a stock, but also like a mutual fund that can be bought and sold on a stock exchange...continue...
While dividend-investing takes some considerable time and effort, investing in some ETF products in my opinion, does not. When it comes to our RRSPs and TFSAs, I'll be honest, I'm pretty lazy. That's why we hold iShares products such as XIU, XDV and XBB in...continue...
Asset Allocation and Asset Diversification
Next up are a couple of posts on Asset Allocation and Asset Diversification. The first post is called "Do You have AAAD?" The second post is called "My Asset Location, Location, Location".
It's not a bad thing if you do...if fact, it's a very good thing. No, not ADHD (Attention-Deficit Hyperactivity Disorder) or ARDS (Adult Respiratory Distress Syndrome) or AAA (American Automobile Association) - although the latter is a great membership to have. But AAAD (Asset Allocation and Asset Diversification)...continue...
Investors hear plenty about asset allocation and asset diversification but in my opinion not so much about asset location. Why is that? Is it often overlooked? I know I used to, but no longer, and here's why...continue...
On Dividend Investing
My Own Advisor has a number of interesting posts on Dividend Investing.
The first post is about buying another dull and boring stock. I've done it again. I've bought another dull and boring stock that pays dividends. To help you identify the stock, a little game of "who are they?"
Next up was a post called "My Simple Stock Selection Rule of Thumb". A few years ago, along with index investing using ETFs for my RRSPs, I feel like I saw the light and I became a DRIPper of...continue...
He continues in this vain with a post called "Canadian Dividend Stock Selection Made Easy". Yes, I think the title says it all. Contrary to what some people might have you believe, I think selecting a few quality Canadian dividend-paying stocks can be easy. Again, a few. In fact, the answer to selecting a couple of great Canadian dividend-paying stocks to start your direct ownership portfolio might be staring you right in the face, especially...continue...
The last post of this type is called "Some other reasons why I invest in dividend-paying stocks". According to Jonathon Chevreau's recent article in the Financial Post, the "magic age for the ideal retirement in Canada is 63, according to a CIBC poll out Thursday, although baby boomers are less optimistic...continue...
On my Investment Talk blog I am today writing about Northland Power Inc. (TSX-NPI). 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.
ETFs and Indexing
My own Advisor has a couple of great posts on the benefits of Exchange Traded Funds (ETFs) and Indexing.
While definitions will vary slightly and some are more detailed than others, I like to define Exchange Traded Funds (ETFs) this way: an investment product that is like a stock, but also like a mutual fund that can be bought and sold on a stock exchange...continue...
While dividend-investing takes some considerable time and effort, investing in some ETF products in my opinion, does not. When it comes to our RRSPs and TFSAs, I'll be honest, I'm pretty lazy. That's why we hold iShares products such as XIU, XDV and XBB in...continue...
Asset Allocation and Asset Diversification
Next up are a couple of posts on Asset Allocation and Asset Diversification. The first post is called "Do You have AAAD?" The second post is called "My Asset Location, Location, Location".
It's not a bad thing if you do...if fact, it's a very good thing. No, not ADHD (Attention-Deficit Hyperactivity Disorder) or ARDS (Adult Respiratory Distress Syndrome) or AAA (American Automobile Association) - although the latter is a great membership to have. But AAAD (Asset Allocation and Asset Diversification)...continue...
Investors hear plenty about asset allocation and asset diversification but in my opinion not so much about asset location. Why is that? Is it often overlooked? I know I used to, but no longer, and here's why...continue...
On Dividend Investing
My Own Advisor has a number of interesting posts on Dividend Investing.
The first post is about buying another dull and boring stock. I've done it again. I've bought another dull and boring stock that pays dividends. To help you identify the stock, a little game of "who are they?"
- They are the largest investor-owned distribution utility in Canada.
- They have over 2 million customers.
- Their holdings include natural gas in British Columbia, electric utilities in five Canadian provinces and three Caribbean countries...continue...
Next up was a post called "My Simple Stock Selection Rule of Thumb". A few years ago, along with index investing using ETFs for my RRSPs, I feel like I saw the light and I became a DRIPper of...continue...
He continues in this vain with a post called "Canadian Dividend Stock Selection Made Easy". Yes, I think the title says it all. Contrary to what some people might have you believe, I think selecting a few quality Canadian dividend-paying stocks can be easy. Again, a few. In fact, the answer to selecting a couple of great Canadian dividend-paying stocks to start your direct ownership portfolio might be staring you right in the face, especially...continue...
The last post of this type is called "Some other reasons why I invest in dividend-paying stocks". According to Jonathon Chevreau's recent article in the Financial Post, the "magic age for the ideal retirement in Canada is 63, according to a CIBC poll out Thursday, although baby boomers are less optimistic...continue...
On my Investment Talk blog I am today writing about Northland Power Inc. (TSX-NPI). 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.
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