Money Show 2013 Pat Bolland

Pat Bolland is co-host of Sun News Network. His talk was on "The Global Economy and What it Means to You". His website is here.

Did Lehman Brothers cause the last global financial crisis? The answer is no. In 2005 bankers were told that the long term trend was in home ownership. There was deregulation of the banks and mortgages were less local and personal and more all over the place in the US. In Canada you have to put 20% down to buy a house. In the subprime market you had 5% down and 40 years to pay. The housing bubble led to a credit crunch and the Lehman Brothers collapse.

The security of the US banking system was called into question with the Lehman Brothers collapse. The money supply that is money pumped into the economy is controlled by Fed as they control the interest rate at which banks can lend to each other. The central bank's total assets were pumped up in US, Japan, China, etc.

The US Federal Bank bought all sorts of things, including CDO to control interest rates beyond the short term interest rates. Did it work? It sort of did. QE1 and market goes up 47%. QE off and market goes down. QE2 and market goes up 10%. QE2 off and the market goes down. With QE3, 4 and 5, market goes up 16%, 9% and 16%. The perception is that if the Fed takes its foot off the gas the stock markets will go down.

Are markets at a historical high? Is it time to sell? The Taxable Bond Funds were down in 2009, but up since because people want income and safety. Ben Bernanke wanted to help people own their own homes and have jobs. When QE1 came off, mortgage and interest rates dropped. When QE2 came off, mortgage and interest rates dropped.

Are jobs improving? The unemployment rate is 6.5%. The U6 employment rate went from 10% to 17% to 14%. This is a measure of who is underemployed and it measures dissatisfied workers. (I had never heard of this measure before and found a web site that explains it by Dave Manual.

Will US default and what will happen if it does. There are 5 ways to default. Argentina defaulted and walked away. GDP went. Will Ireland default and walk away? The debt is 38% of GDP. Greece was given a payment extension. They were given more time to pay their debt. You can use inflation to pay debt. Borrow today and pay back with inflated dollars. (You do not want deflation.)

There is 7% inflation in India. There is higher inflation in emerging markets. In the develop markets inflation is near zero. Can we control inflation? In the US Housing prices followed inflation until around 1999 and then house prices took off. You can see a chart of this here.

Housing prices have sky rocketed in Vancouver. Toronto has done somewhat better. You can see charts with CPI and housing prices for different Canadian Provinces at the Economist.

You can default by devaluation of your currency. You can decrease your currency so you can sell things to the rest of the world. Canadian oil prices depend on oil prices and there is lots of oil.

There are bail-ins and this happened in Cyrus and Poland. A bailout is when people give you money. A Bail in happens if you have $100,000 in a bank and you lose 60% of the money. In Poland, there were public pensions and private pensions. The private pensions had 50% bonds and 50% equities. The government moved the bonds from the private pension plan to the government pension plan.

Will bail-in occur in US and Canada; will we re-evaluate social contracts? Pensions and health care is in jeopardy in Canada. He gave information on total debts for a few countries and debt per person. He said he got the following information from the economist, but I could not find this.

Country	Total Debt	Debt per Person	Debt % of GDP
China	387B	$308	27.1%
USA	$3,494B	$12.164	33.4%
UK	$630B	$10.630	37.5%
Brazil	$333B	$1.921	74.9%

He also talked about household debt. Canada has some $585B of household debt and around $18,748 per person. US have changed to a country of savers, but Canada has not. The only chart I can find on this is at Ritholtz. This chart points to debt to income, but the chart gives the same results. Americans are reducing debt, but Canadians are not.

In Canada, we owe $1.63 for every dollar we earn. Some 30% of University grads in Canada have no job. There will be lower interest for 5 years longer. Low interest rates cause people to invest in the stock market.

(In looking for the chart of Canadian versus US household debt I came across this article to say we are not as bad as some are saying. See article in the Financial Post in July of this year.

A PDF document from TD Bank makes the same point as the Financial Post article. Canadian debt and income statistics are calculated by Statistics Canada, while U.S. income is provided by the U.S. Bureau of Economic Analysis, and U.S. debt statistics by the Federal Reserve. But there is differences in the way things are calculated between the countries, so things are not as clear cut as some have been saying. See the TD article 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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Money Show 2013 - Laurent Marien

Laurent Marien is Portfolio manager for StockPointer. His talk was called "Build a Portfolio of Top Economic Performers to Beat the Market with StockPointer". The approach in StockPointer is the EVA model. The web site is here.

First you do market allocation and then sector weight and then stock selection (based on StockPointer score and StockPointer reports). The portfolio analysis behind StockPointer is EVA (Economic Value added). This is the Return on Capital less the Cost of Capital. They focus on wealth creation for shareholders. Their Canadian Portfolio has 25 stocks and it is rebalanced quarterly.

In sector selection they have their own Indexes called SPIX and this is a propriety index. They show the top 100 Canadian stocks. They give a relative performance Index for each stock which is Return of Capital /Cost of Capital; a Price/Intrinsic index, and an Economic Performance Index for each stock. All stocks have a market cap of over $200M. Today, what you should hold in each sector is: Energy - 2; Materials - 1; Industrials - 4; Consumer Discretionary - 4; Consumer Staples - 4; Health Care - 1; Financials - 6; Information Tech - 1; Telecom - 1 and Utilities - 1.

For an example of their stock selection, he looked at Consumer Staples. They had 7 top performers. They were Metro Inc. (TSX-MRU), Alimentation Couche-Tard (TSX-ATD.B), Empire Company (TSX-EMP.A), Shoppers Drug Mart (TSX-SC) (still on TSX), Saputo In. (TSX-SAP), North West Company (TSX-NWC) and Jean Coutu Group (TSX-PJC.A). They form a list of top performers and then take risk into consideration.

The first stock he looked at depth is Metro Inc. (TSX-MRU) which was at $65.62 and program said it had an intrinsic value of $137.37, so the Price/Intrinsic Value Ratio is 0.48. The Return of Capital is above 10% and increasing. It has positive Free Cash Flow.

The next stock is Alimentation Couche-Tard (TSX-ATD.B), trading at $70.75 with an Intrinsic Value of $119.61 and therefore a P/IV Ratio of 0.59.

On Empire Company (TSX-EMP.A), he gets a current price of $75.71 and Intrinsic Value of $151.52, so it has a P/IV Ratio of 0.50. The Return on Capital is lower than 10%.

Saputo In. (TSX-SAP) has a current price of $51.46 and an intrinsic value of $64.47, with a P/IV Ratio of 0.84. This company has issues with its dairy divisions. The Return on Capital is higher than 10% and is going up.

North West Company (TSX-NWC) has a current price of $25.18 and an intrinsic value of $28.08. The P/IV Ratio is 0.87. The Return on Capital is above 10% but it is trending down.

Jean Coutu Group (TSX-PJC.A) has a current price of $18.39 and an intrinsic value of $21.08 and the P/IV is 0.87. The intrinsic Value of this stock fluctuations and is not as stable as other stocks in this list and therefore it has more risk. The Return on Capital is above 10% and going up.

The four stocks that you should buy would be Metro Inc. (TSX-MRU), Alimentation Couche-Tard (TSX-ATD.B), Saputo In. (TSX-SAP) and North West Company (TSX-NWC). You would buy NWC over Empire because the ROC on Empire is lower than 10%.

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Money Show 2013 - Paddy Moore

Paddy Moore is editor of Canadian Investor Magazine. His talked was called "Identify the Trends: Sharpen your Strategy". To find investment trends, look for talk about companies and look for news and new trends.

The first trend in the west is the aging of the west. We are getting older and this will be the dominate theme for the next decade to 18 years. There will be slower GDP growth, less inventions and high health care costs. In 1950 there were 16 workers to each retiree. In 2050 there will be 2 workers for each retiree.

Retiree can draw on savings to live on. There are richer and healthier and more mobile seniors than ever before. There are lots of seniors still working. We can invest in travel companies, Real Estate companies, Financials, Health care companies, drug makers and retirement homes. Boomers will need more medical care, financial and insurance products, and consumer products and will want to travel.

His first investment theme is because of the aging West we can invest in such companies as Centric Health (TSX-CHH), Novadaq Technologies (TSX-NDQ), Extendicare Inc. (TSX-EXE), and Savaria Corp. (TSX-SIS). These should all profit from ageing boomers and all these companies are growing.

His next theme is growth in a virtual world. Under Car2Go, you do not need to buy a car. The internet is unlocking stored value. Under Airbnb, Parking Panda, Snapgoods, and Dogvacay you can borrow, rent and share. Under the share economy you are both producer and consumer. This is peer to peer sharing. There is an app for that.

There is also a consumer ownership shift. You can rise money via Indiegogo and Kickstarter. There are looser rules for such things as Kickstarter.

E-commerce is growing. There is a shift to on-line. There are sites of Coastal Contacts and Shop.ca. These are Canadian retailers.

The real cloud is cloud computer. Businesses can reduce cost because they do not need capital costs. There is an increase in risks (so security company's profit). There is the Blackiron data portal, Vmware and Esri Canada for cloud computing in Canada.

Tech is a hot investor area in Canada with 107 tech companies on the TSX and TSX Venture. Stocks like Redknee Solutions (TSX-RKN), NexJ Systems (TSX-NXJ), Sandvine Corp. (TSX-SVC), Bri-Chem Corp. (TSX-BRY), Axia NetMedia (TSX-AXX), Destiny Media Tech Inc. (TSXV-DSY) and QHR Corp. (TSXV-QHR).

Biotech is super-hot. There was a small drop in funds raised last year and this is the first time for that to happen. Companies like Tekmira Pharmaceuticals (TSX-TKM), Cipher Pharmaceuticals (TSX-DND), QLT Inc. (TSX-QLT), Neptune Tech & Bioresources (TSX-NTB) and Transition Therapeutics Inc. (TSX-TTH). These all have recent gains and they are aimed at the boomer market.

We also have sustainability (50 shares of green). We should be doing ESG Analysis on our stocks. Companies need to manage downside risk. ESG stands for Environment, Social and Governance. ESG factors give companies long term performance advantage. ESG companies include Bank of Montreal (TSX-BMO), Best Buy (NYSE-BBY), Cascades Inc. (TSX-CAS) (they have a biogas project that makes things sustainable), Iamgold Corp. (TSX-IMB) (environmental mining), Starbucks Corp. (NASDAQ-SBUX) and Tesla Motors (NASDAQ-TSLA). These companies act financially and environmentally responsibly. People want green investments.

I have found a site that explains in full what ESG analysis is. See the ESG Managers Portfolio site.

See his web site of Canadian Investor Magazine.

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Money Show 2013 - Randy Cass

Randy Cass's talked was called "Myths, Math and Markets: The Truth About Saving and Investing Your Money in 2013". He is host of BNN's Market Sense show. His previous job was working for the Teachers fund.

When you think about what you are do to keep your money, you have 3 choices. We can invest in mutual funds, consult an advisor or do it ourselves. Math tells us there are problems with all three approaches.

First he talked about Mutual funds. Can Mutual Funds have 2.5% per year fees and give us a better return? The purpose given for the original mutual funds was that they provided diversification. Academics originally said that their lousy returns provided diversification.

Vanguard stated the first index fund for a low fee. After that Mutual Funds said that their new mission was to make people money. We no longer were paying for size (diversification) but paying for performance. This idea came from an advertising campaign. It did not come from any research.

Research has shown that over one year 76% of the mutual funds will under the index. Over 5 years, 98% of funds will underperform the index. There are some winners. However, a fund with higher returns over 5 years is no indication that it will do anything good over the next 5 years.

Mutual Fund results are random. Why do mutual fund managers do less well than average? The problem is that size of the pie does not change. The fees come out of the market return. Here the market is a zero sum trade. There is only so much to earn and fees come out of the return.

Next he talked about going with a financial advisor. First no one has an idea of what they are paying their advisors. Most think that they are paying nothing. However, there are payments of trailer fees to advisors.

Fees are revolving away to flats fees, which is a flat percentage of your portfolio. But the flat fees will increase the actual fees depending on the size of your portfolio. Say you invested $10,000 for each year for 40 years at 5%. You would end up with $1.2M.

If you were paying 1.5% fee each year you would end up with $875,000. The fees would be $400,000. This is the worse $400,000 you would ever spend. The advisor puts up 0% of the capital. They take 0% of the risk and get 30% of the return.

The last way to invest is to do it yourself. However, investing is not a level playing field. You could be your own worst enemy. There is also the problem of High Frequency Trading (HFT).

HFT means you are competing with a computer programmed to make money on difference in markets. These programs are making money and they are trading against you. They want you to pay a fraction more when buying and to get a fraction less when you sell.

Individuals underperform fund managers. The fear of losing is more than the joy of winning. We tend to buy stocks when they have gone up and sell stocks when they have gone down. Sometimes we keep a losing stock hoping it will get back to what we paid for it.

We see whatever we want to see and that is a problem. We should look at our mistakes as well as our successes. It is a myth that mutual funds outperform the market. It is myth that small fees do not matter. It is a myth that investing is easy.

Be in control, but be realistically in control. Control what you can control. You cannot control the market. You can have fun, but be realistic. When investing, boring is better for you. Randy Cass is starting a new web site called Nestwealth.

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Money Show 2013 - Peter Schiff

Peter Schiff's talked was called "The Wrong Path: What Canada Should Learn from US Markets". He is CEO of Euro Pacific Capital Inc.

There are rumors that the US economy is recovering and so tapering will happen. This is not true. The US economy is not recovering and QE has not worked and has been like a sedative.

The rising of the debt ceiling must happen because the US cannot handle debt. The threat is that the debt ceiling must be raised so that the US can continue to pay their bills and if this does not occur the US will default. The threat is if we cannot borrow then we cannot pay out debts. The US government is running a Ponzi scheme. If the US paid their bills, the US would not have debt.

China has $2 Trillion in US debt and to get paid might have to loan the US $2 Trillion. The debt ceiling is really self-imposed. The problem is if creditors will not loan more. The US debt will probably be handled by inflation. The US says it will taper, but he feels that they will not because they cannot. When QE was stated they had no exit plan. QE1 did not work so they had QE2.

Peter Schiff says he warned about the subprime crash. He felt that the Fed would re-inflate and a bubble was his worry. Apparently he warned about this in an earlier in a book. QE2 lead to the "Twist" and this lead to QE3. Bernanke monetized the debt by buying Fed bonds. No Treasuries are redeemed, they are always rolling over. Tapering is not an exit it is buying less by the Fed. As soon Bernanke said he would taper, interest rates went up.

The US is not in a real recovery. The debt is growing faster than the GDP. The US government cannot afford current interest payments. So they certainly cannot handle rising interest rates. It is impossible for the Fed to wind down QE. The biggest buyer of US bonds is the Fed. The rising debt ceiling is good for gold. The US cannot taper, but something will happen.

The US creditors could decide to sell. However, the world feels that it must prop up the US because they the US buy their stuff. But the US is giving them US$ not stuff for their stuff. They get nothing of value. They will wake up sometime. The US is exporting inflation when they export money.

The unemployment in the US is lower because labor participation rate are low. More and more are claiming disability and therefore not counted as unemployed. If someone gets a McDonald job they are not counted as unemployed.

The US has an artificial economy based on QE. He thinks the US$ will drop and this will send up US interest rates. The ultimate crash will be much worse than 2008. He thinks that Yellen will print money until it is worth nothing. The rest of the world will boom when the US$ crashes and no longer sells goods to the US that the US cannot pay for.

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Money Show 2013 - Peter Hodson updated

I am republishing this entry as I published it before I had not completely transcribed the whole talk. The original entry missed the last 5 paragraphs.

Peter Hodson is owner and editor of the Canadian MoneySaver Magazine. He put up a quote he wrote of "It pays to be cynical when it comes to your money".

Bull markets climb a wall of worry. The US is in a bull market and it is up 22% this year. We in Canada might be starting a bull market. There is too much cash on the sidelines. Interest rates are very low. There are good earnings. All these things can cause a bull or cause the market to rise and we have all three at the moment.

Stocks that can change your portfolio forever are stock like Google. Closed Mutual Funds start 7% lower than cash they raised because of fees. Do not do these IPO (initial public offering). IPOs in Canada have a horrible record in the market. Smart Tech's IPO was $18 and it is now $2.95. Sprott's IPO was 10 and it is now $2.55.

Research reports are not for you. They are designed to make money for investment bankers. Use them to get information, but not for making a decision. Never take action based on a research report's recommendation. Analysts stay conservative to keep their jobs, so they are always behind the curve.

Look at the accounts receivable. If they are growing faster than sales it means they customers are not paying up. This is a very easy thing to look at. Investor have problem whereby they hope things will get better. However, $5 now is better than $0 later. Sino Forest took 2 weeks to say that they are still checking ownership of the forest lots.

Poseidon Concepts Corp (TSX-PSN) deferred a declared dividend. This is the time to get out. It is a red flag. (This stock has dropped off the TSX.) If orders are delayed and pushed to the next quarter is also a red flag. If inventories are rising faster than sales, it is a red flag. For examples sales are rising at 2% and inventory is rising at 20%, this is bad. If Sales/Revenue is declining, this is bad.

Look at industry growth versus company growth and find out why it is different. For example Magna sales are growing faster than the industry. Magna's stock is hitting new highs. This is good.

Too much debt is bad. Dividend Payout History is important. Did a company pay dividends through the crisis? If a company increased the dividend this is even better. It is a positive sign always when a company increases dividends. A company declaring their first dividend is also a positive sign. An example is Stantec (TSX-STN).

DRIPs may not be good if a company is using them to conserve cash. You should watch executive compensation. Watch the level of shares versus options for executives. A company bringing in a new CEO and paying them lots of cash can be a problem. At Constellation Software (TSX-CSU) executives must buy shares.

Target prices generate commission on sales. They are designed to create uncertainty. Analysts reviewing starts are conservative when the price is on the way down and enthusiastic when it is on the way up. You should always ignore target prices as they are to given to generate commission.

Company presentations have everything looking good, too good in fact. They say finances - no problem. Permits - no problem. The issuance of shares is a dilution. It lowers per share profit and lowers share prices.

For mutual funds, it is fees, fees and more fees. It makes no sense to buy them. Performance Fees for fund managers is an incentive to the fund manager to gamble. Some mutual funds have 750 stocks. They should only have maximum of 50 with each stock having at least a 2% position. Best if number of stocks was at 35. If a fund has more stocks, you might as well buy the index instead.

If a mutual fund has cash the mutual fund manager is being paid to do nothing.

If a mutual fund is slightly above average that makes the fund a superstar. Something like 95% of mutual funds cannot beat the bench marker. Fund managers are basically salespersons. When money comes into a fund, the mutual fund manager gets paid. The fund manager feels that he must do something to earn the 3% fee, so they trade.

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Money Show 2013 - Dave Prince

Dave Price is the founder of Harbinger Capital Markets. His speech was entitled: "Smart Macro Analysis: Understanding the Big Picture will Help Make You Money".

We are short term orientated and we miss the big picture. Deflationary tendencies dominate as core US consumer price index at 1.8% is lower than S&P500's dividends at 2.09%. Canadians think that oil is coming back. Consumer spending is up and this is taking US & Canadian Autos spending up. Canadians can invest in auto parts. The best stock would be Canadian Tire (TSX-CTC.A).

Another investment strategy would be in logistics. There is record tonnage on the road in the US. The railroads are running at record levels. The Ports are backed up. So is the economy bad? The answer is no. There are record sales in the US. There are lots of manufacturing orders. Where is money coming from? First people are less worried about paying their mortgages. Also Dow Chemicals have just recorded record earnings. This was because of cheap gas prices.

For China imports of iron ore will be lower next year. There is no turn around in India. The record earnings in the US is because of cost cutting. Dividend increases are happening in US industrials and tech. The same is happening in Canada. Internet security is a growth industry.

Canadian banks have outperformed other banks and are still a good place to be. REITs are also a good place to be.

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 site for an index to these blog entries and for stocks followed. Follow me on Twitter.

Money Show 2013 - Charles Githler

Charles Githler is owner of the Financial Forum and he said that it was coming back next year, replacing the World Money Show in Toronto. He started off the show with the Opening Remarks. He said that lots of speakers today at the show are deflationist. He said that governments are debasing currencies because of debt.

The reason that people are locking up money in bonds for 30 years at 2.3% is fear. If bond rates were falling this would be deflationary. However interest rates are currently rising so we have no deflationary problem.

He feels we are in a golden age of innovation. NASDAQ is up 22% this year. It is the best performing index in the US. The TSX is up by 6% so far this year. These figures include dividend income.

The last good time for the markets was from 1980 to 1987. Is the DOW still cheap? It is not overvalued. He feels that it still has some way to go and that it has room to rise 18%.

Solar and alternative energy is up dramatically. Biotech is performing very well. It is a golden age for R & D for Pharmacy. The US big banks have broken out. Most US banks normally track at 2 times book value and there are still a lot of banks at 1 times book value. They still have a way to go.

Even Dr. Doom is a neo bull. There will be a big rally over the next 2 years. We will have a turn in the market like what happened in 1980. This will be the results of market forces. There are still a lot of people sitting on cash after a 4 year bull market. This is because

• Materials and gold are up
• Interest rates will remain low
• There will be Reagan style golden era starting.

He gave a quote from Milton Freeman who once said that if the Federal Government was in charge of the Sahara Desert there would be a shortage of sand.

On my other blog I am today writing about IGM Financial Inc. (TSX-IGM, OTC-IGIFF)...continue...

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

Toronto Money Show 2013

I will not be posting today, October 24th nor tomorrow, October 25, because I will be at the Toronto Money Show. I will later be posting my notes from this show.

Merger with US

Diane Francis has a new book out about why Canada should merge with the US. See a review on this book called Merger of the Century here. Here is a review of the book at the Financial Post.

I think that this is an extremely bad idea for Canada. I can see the value of Canada for the US, but not vice versa. The US has just been displaying to everyone how dysfunctional it can be. Our governments are far from perfect, but do we really want to join another country that can be so dysfunctional?

I am not one of those people who think that the US is in decline. I do not believe that. The US will figure out a way forward for themselves. They always do. I just prefer the way Canada operates to the way the US operates. I like being a Canadian. I think that I am very lucky to have been born in Canada. I like the Americans I just do not want to be one. I do not believe that being an American would improve my life.

On my other blog I am today writing about IGM Financial Inc. (TSX-IGM, OTC-IGIFF) continue...

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

Dividend Growth

On Friday, I talked about possible good buys on Dividend Growth Companies that I hold. The table is shown below. Today, I want to address the Dividend Increase and the 5 year Median Dividend yield columns of my table.

If you want a copy of this spreadsheet to update yourself, just email me. To follow a particular line on the spreadsheet, use your cursor to highlight that line.

Name	Symbol	P/Hi	P/Ave	Div Inc	Med Yld
Bank of Montreal	BMO	Exp.	Cheap	0.8%	4.9%
BCE	BCE	Exp.	Cheap	8.5%	5.3%
Calian Technologies Ltd	CTY	Exp.	Cheap	2.3%	5.2%
Canadian Natural Resources	CNQ	Cheap	Cheap	19.7%	0.7%
Ensign Energy Services	ESI	Cheap	Cheap	5.4%	2.5%
Evertz Technologies	ET	Cheap	Cheap	23.7%	2.3%
Hammond Power Solutions Inc.	HPS.A	Cheap	Cheap	21.6%	1.4%
Leon's Furniture	LNF	Exp.	Cheap	8.0%	2.7%
Manitoba Telecom	MBT	Exp.	Cheap	-8.2%	6.9%
McCoy	MCB	Exp.	Cheap	14.9%	2.3%
Power Financial Corp	PWF	Exp.	Cheap	3.8%	5.1%
Royal Bank	RY	Exp.	Cheap	5.8%	4.2%
Saputo Inc.	SAP	Exp.	Cheap	11.6%	1.8%
SNC-Lavalin	SNC	Exp.	Cheap	17.7%	1.3%
Sun Life Financial	SLF	Exp.	Cheap	1.8%	5.4%
Thomson Reuters Corp	TRI	Exp.	Cheap	3.8%	3.6%
Toromont Industries Ltd.	TIH	Exp.	Cheap	0.4%	2.2%
Toronto Dominion Bank	TD	Exp.	Cheap	6.5%	3.8%
TransAlta Corp	TA	Cheap	Cheap	3.3%	5.4%
Veresen Inc.	VSN	Exp.	Cheap	1.2%	8.9%

Besides looking for a stock at a good price, when you look at dividend growth stocks, you need to consider what the dividend yield and dividend growth configurations are. A lot of companies can grow dividends. I include companies that increase dividends over time. I do not require that a company increases their dividends every year like to TSX's Dividend Aristocrat list does.

In basic terms, the closer the dividend yield is to 1%, the closer to the range of 20% to 25% you want the dividend increases to be. If the dividend yield is in the 4% to 5% range increases of at or just above inflation is fine. If the dividend yield is greater than 5%, I think you should question the viability of the dividend payments.

In the table, there are 4 stocks with the dividend increase column figures highlighted. This is because I think that the current 5 year dividend growth per year might not reflect what the dividend growth will be in the future.

For Hammond Power Solutions Inc. (TSX-HPS.A) this company just started to pay dividends in 2009. They have had very good increases in the past, but the latest one, while still good is lower at 11%. See my latest blog on this stock here.

For McCoy Corp (TSX-MCB) the dividends have been all over the place and since they started to pay dividends 2004 they have increased, decreased and cancelled them. See my latest blog entries on this stock here and here.

For Sun Life Financial (TSX-SLF), I think that once they start again to increase dividends they will be giving good increases. However, it is hard to say when they will again increase dividends. For my latest blog entries on this stock click here or here.

The last stock is Toromont Industries (TSX-TIH). They appear to reduce their dividends in 2011, but the reduction was because of a spin-off of Enerflex. The latest dividend increase was for 8.3% and the median dividend increase is probably around 10%. For my latest blog entries on this stock, click here or here.

I have shown only the 5 year growth for dividends. I will make one comment about dividend growth. If a company is not growing its dividends or cannot growth them, do not buy. No matter how good the dividend is, you will make far more money in the long term with a lower yield and a dividend that grows that earing a very good yield on a company that does not grow the dividend.

I have written about the Dividend Yields on Original Investments. This is really what I am talking about now as the combination of dividend yield and dividend increase determines what the dividend yield on your original investment will grow to.

On my other blog I am today writing about Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF) ...continue...

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

Dividend Growth Stock

I used to use Mike Higgs' Dividend Growth Stock list to find stocks to investigate. He felt that you should buy good dividend growth stocks when they were cheap. To him they were cheap if the current dividend yield was above the historical high dividend yield for a stock or if the dividend yield was above the historical average. His spreadsheet only saw stocks as cheap or expensive. There was no middle ground.

I have inserted some of his spreadsheet fields into my portfolio spreadsheet. The applicable sections are shown here and I have updated these fields for the stocks that I hold. I do not have a lot of history on some stocks. Mostly the ones that I do not have much data on have not been on the TSX for a long. I have taken a stab on putting in historical high dividend yield and historical low dividend yields for all my stocks. The average is yield is just the yield between the high and low yields.

I am using the historical high and historical average dividend yield to get my spreadsheet to points out stock that could possibly be cheap at this point. The problem with all filters is that you also get stocks that a cheap for a very good reason. You should always do your own investigation before buying any such stocks.

Below is a table of the stock that I personally hold that the spreadsheet has pointed to as cheap based on the historical high dividend yields or the historical average dividend yields. If you want a copy of this spreadsheet to update yourself, just email me. To follow a particular line on the spreadsheet, use your cursor to highlight that line.

Name	Symbol	P/Hi	P/Ave	Div Inc	Med Yld
Bank of Montreal	BMO	Exp.	Cheap	0.8%	4.9%
BCE	BCE	Exp.	Cheap	8.5%	5.3%
Calian Technologies Ltd	CTY	Exp.	Cheap	2.3%	5.2%
Canadian Natural Resources	CNQ	Cheap	Cheap	19.7%	0.7%
Ensign Energy Services	ESI	Cheap	Cheap	5.4%	2.5%
Evertz Technologies	ET	Cheap	Cheap	23.7%	2.3%
Hammond Power Solutions Inc.	HPS.A	Cheap	Cheap	21.6%	1.4%
Leon's Furniture	LNF	Exp.	Cheap	8.0%	2.7%
Manitoba Telecom	MBT	Exp.	Cheap	-8.2%	6.9%
McCoy	MCB	Exp.	Cheap	14.9%	2.3%
Power Financial Corp	PWF	Exp.	Cheap	3.8%	5.1%
Royal Bank	RY	Exp.	Cheap	5.8%	4.2%
Saputo Inc.	SAP	Exp.	Cheap	11.6%	1.8%
SNC-Lavalin	SNC	Exp.	Cheap	17.7%	1.3%
Sun Life Financial	SLF	Exp.	Cheap	1.8%	5.4%
Thomson Reuters Corp	TRI	Exp.	Cheap	3.8%	3.6%
Toromont Industries Ltd.	TIH	Exp.	Cheap	0.4%	2.2%
Toronto Dominion Bank	TD	Exp.	Cheap	6.5%	3.8%
TransAlta Corp	TA	Cheap	Cheap	3.3%	5.4%
Veresen Inc.	VSN	Exp.	Cheap	1.2%	8.9%

On Monday I will talk about the importance of dividend growth on dividend growth stocks.

On my other blog I am today writing about Kombat Copper Inc. (TSX-KBT, OTC-PNTZF)...continue...

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

Taxes

I make my money from stocks. Mostly I collect dividends. I use the internet and put stuff up there, but I do not want to make money from the internet. Why is this? It is because it would complicate my life. It is not worth it.

This says a lot about our society. It is not that I object to paying taxes. I live in a very nice and comfortable society and I appreciate this and therefore do not mind paying taxes. I think that we would have a better society and certainly a more productive one if taxes were not so complex.

I think that our society would be greatly improved if it did not matter how you made money as far as taxes go. It should be simple and easy to pay taxes. But it is not. Taxes are a very complex and specialized field. I have had a few unusual tax situations over the years. I read the tax law. I read the interpretation bulletins and then there are interpretations of the interpretation bulletins. All this just discourages anyone from doing anything different.

On my other blog I am today writing about Pason Systems Inc. (TSX-PSI, OTC-PSYTF) ...continue...

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

Recessions

What happens in a recession is prices (or value) of things go down and for business often what they make goes down. However, for business, some are hit harder than others. Some see little effect, especially in the consumer staple field, but sometimes, people do spend less as they buy less expensive food. Some businesses go bankrupt.

If you are an investor like me, I see that the value of portfolio goes south, but my dividends are still paid. Yes, some companies do cut dividends in a recession because they can no longer afford to pay what they have been paying. Some company's dividend stay level and some increase their dividends. My point is that, although I have lost portfolio value, I still get dividends or income. My companies generally are still making money.

All recessions are different. In some recessions, real estate values are hit or the recession is caused because real estate values go down. No market goes up forever. If you believe that you have never read history. We have also not been able to tame the economic cycle or business cycle. Yes, I know that there have been efforts towards this, but the results seem to dampen down the expansion part of the cycle, not the contraction part of it.

I am seen people extremely upset over the last recession in the US. The thing is people lost value on their homes, but the bankers still made money. In a recession, things (like real estate) lose value, but businesses, i.e. banks, still make money. For most banks in the US, business was down. Some banks went bankrupt, but the banks that were left still make money.

Since recessions are part of life and you cannot stop life from happening, you should be prepared. Yes, you can spend more in good times, but you should also be aware that good times come to an end. You should never get maxed out in debt and you should always have an emergency fund. You need to put something away for a rainy day. To try to blame someone for a recession means that you have learned nothing. We feel we are geniuses when we make money in an economic expansion and we try to blame someone else when we lose money in an economic contraction.

Most people make money in economic expansions and do not do so well in economic contractions. This is life and you cannot stop life from happening. However, you can make choices. You can choose to put something away from the next rainy day when times are good. But, so be it if you want to blame someone else for your problems. That is your choice, but does nothing to help you prepare for future problems.

Wishing that banks could not make money in recessions comes under the title of "be careful what you wish for". This would be economic disaster. The smart people do not rail against the "system". They know they cannot stop life from happening. They do try to understand it and act accordingly.

On my other blog I am today writing about Equitable Group (TSX-EQB, OTC-EQGPF)...continue...

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

Markets and Cash

Markets rise more days than they fall, so keeping cash raises your chances of missing a rally. I seldom have cash in my trading accounts. I have regretted this at times of a big bear market, but since I have done well overall, I do not think that having no cash is a problem.

On my other blog I am today writing about Canadian Pacific Railway (TSX-CP, NYSE-CP) continue...

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

Kathleen's Show - Transformations 2013

My friend Kathleen with her friends Ethel Christensen, Ulla Djelweh and Wenda Watt is having an art show called Transformations 2013 stating on October 4, 2013.

The show is at the Women's Art Association, Dignam Gallery at 23 Prince Arthur Avenue. Phone is 416-922-2060. This Gallery is near the St. George Subway Station, Bedford Exit.

The Closing Reception is this Friday, October 11, 2013 between the hours of 6 and 9 pm.

On my other blog I am today writing about Canadian Pacific Railway (TSX-CP, NYSE-CP) continue...

WiLan and Waterfurnace

When I was looking at this company and WiLan, I was struck by the fact the WFI was doing real work and earning money. What they are doing could be one of the ways we save our world from some of the environmental damage we have done and also help us get off oil.

WiLan's mode of operation is suing to make money. They sue other the companies on the basis of old tech patents. However, tech changes and I do not believe this is a viable long term basis for a company. You may make some money in the short term, but it is not a company you can stuff into your portfolio for the long term. Also, is WiLan mode of operations good for the economy in the long term? I do not think so.

What would you tell your children? I made money by investing in a patent troll, or I made money my investing in a company with a new way to heat and cool houses and buildings in an environmentally friendly way? What is the better story? What is it they you would be proud to talk of?

On a personal note, it does matter to me how I make my money, what sort of companies I invest in and have in my portfolio and I am earning money from.

On my other blog I am today writing about Waterfurnace Renewable Energy Inc. (TSX-WFI, OTC-WFIFF)...continue...

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

Retirement Age

According to Statistics Canada average life expectancy has increase from around age 60 in 1920 to around 80 in 2009. Why would anyone not expect that the retirement age would not increase also?

Actually, the retirement age has decreased for government workers from around 65 to 55. We have a situation here that some people are collecting pensions for more years that they have worked and this problem is just going to grow. Pension plans were not designed to do that and no wonder lots of pension plans are in financial difficulties. (Of course, there is also the problem, especially in the US where the pension plans have not been properly funded either.)

I have recently read a couple of columns that I think have rather a negative view on older people, their finances and working after what used to be thought of retirement age. If average life e expectancy is around 80, why would people of good health not work into their 70's? There was an article in the financial post about how older workers are changing the face of labor in the US.

There was also an article in the Globe and Mail about how living longer and five financial realities Canadians need to face. I think that people should plan to life and work longer than in the past. This is the only thing that makes any sense.

Currently, if you expect to retire at 65, you would have to fund at least 15 years in retirement. If you expect to retire at 55 you would have to fund 25 years in retirement. And, this is only average longevity. Do not forget with an average life expectancy of 80, it means that while half the people are died by 80, half the people are still alive.

Actually there are more problems. The average life expectancy at birth and at 65 is different. See another chart from Statistics Canada. This one points out that if you are 65, your life expectancy changes and on average you have some 20 more years to live. Here again, it means that only half of the 65 years old will be dead in 20 years and half would still be alive.

I doubt that many people are going to be able to fund 20 plus years in retirement. Therefore retirement expectations are going to have to change.

On my other blog I am today writing about WiLan Inc. (TSX-WIN, NASDAQ-WILN)...continue...

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

Market Seasonality

The Canadian guru of market seasonality is Don Vialoux. If you want to know all there is about seasonality and the Canadian stock market go to his site and see information Seasonal Investing. See also the educational reports on his site.

Also Don Vialoux writes for the globe and mail. See what he is currently writing about here.

On my other blog I am today writing about Molson Coors Canada (TSX-TPX.A, NYSE-TAP)...continue...

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

Kathleen's Show - Transformations 2013

My friend Kathleen with her friends Ethel Christensen, Ulla Djelweh and Wenda Watt is having an art show called Transformations 2013 stating on October 4, 2013.

The show is at the Women's Art Association, Dignam Gallery at 23 Prince Arthur Avenue. Phone is 416-922-2060. This Gallery is near the St. George Subway Station, Bedford Exit.

The Opening Reception is on Friday October 4, 2013 between the hours of 6 and 9 pm. The Closing Reception is on Friday, October 11, 2013 between the hours of 6 and 9 pm.

Viewing between receptions is by appointment and on Saturday October 5, 2013 and Saturday October 12, 2013 between the hours of 6 to 9 pm.

Interview with Gord

Introduction

My name is Gord. I am a high school teacher, husband and father of three small children aged 1, 2.5 and 5. While I enjoy my job, it can be all-consuming during the school year, so my motive for investing is to someday have the freedom to work part time or retire early so that I have more time to spend with my family. I tend to invest monthly in (mostly) blue-chip dividend paying companies with the money that is left over after the mortgage, childcare and other expenses are paid.

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

I started out by investing small amounts in mutual funds based on my banks advice. I watched my money stagnate and/or depreciate over several years. That was the real inspiration for me to start investing. I thought I must be able to do better than what my bank was doing with my money. So, I decided to take ownership of my investment decisions and I have been investing on my own for about 8 years now.

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

Educate yourself. Remember that no one else will care nearly as much about your money as you so you need to understand how to invest it well. Find an investment approach that resonates with you and learn as much as you can about it. For example, The Globe and Mail has an online section called Strategy Lab where they profile and follow four investing approaches (Dividend, Growth, Index and Value Investing. This could be a good place to start.

Do have any favourite investing books?

While not a book, Drip Primer has an excellent, succinct overview of the main investing approach that I use (DRIP investing). It is the first place I would recommend for new DRIP investors.

Derek Foster's "Stop Working" was the book the inspired me to change my investing approach to dividend investing (and specifically DRIPs - Dividend Reinvestment Plans). I am however skeptical of the financial specifics he reports and his stock recommendations are now dated, but his overall strategy is a sound approach.

The Little book of Big Dividends (by Charles B. Carlson) is another favourite. It has an excellent introduction to dividend and DRIP investing, although it is US based.

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

I have direct ownership in most of my investments and these are purchased through a transfer agent (i.e. Computershare or Canadian Stock Transfer Company). These aren't trading accounts, but rather agents that let you buy more of a stock in relatively small amounts commission free on a quarterly or monthly basis. For a list of these stock and minimum purchase amounts, see: DRIP primer site. The advantage of using a transfer agent (other than commission free purchases) is the compounding effect that can be gained by reinvesting your dividends; the "DRIP". In these accounts all of the dividend paid can be reinvested, down to the 1000th of a share, vs. a synthetic DRIP offered through a broker which only reinvests whole shares and pays out the remainder of your dividend in cash.

I also have a trading account, RSP and TFSA with TD Waterhouse. The few companies I own that I can't traditionally DRIP, like Corus (CJR.B) and Power Financial Corp. (PWF) are in my trading account, being synthetically DRIP'ed. I also keep a small amount of my portfolio in index funds (TD e-series) in my RSP account, following a "couch potato" investing strategy.

My long term plan is once I have a substantial position in a company to move it from the transfer agent to my TFSA. I am starting with those that have no dividend tax credit, like Real Estate Investment Trusts (REITs). Every year I move the maximum I can into my TFSA.

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

A valuable site for information on DRIP stocks is here. There is an active community of both novice and experienced investors that share ideas. From here I've met a subset of investors that I correspond regularly with to share ideas and do "group buys" of some DRIP stocks. For example, Dundee REIT can be purchased monthly from the transfer agent (Computershare) but requires a minimum purchase of $1000. Several of us will pool our money to meet the minimum. One person makes the purchase and then transfers the appropriate number of shares, through the transfer agent, to each member of the group buy.

There are a several well-written Canadian blogs I follow, such as this one, which I get ideas from. Another one of my favorites is The Connolly Report , the only subscription site I use. He writes a very conservative value-approach to dividend investing (which I refer to every time I get tempted by an obscure stock with a high dividend payout). One other author I follow for advice is The Globe and Mail's John Heinzl.

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

I use the Globe and Mail's Watchlist application. It is an excellent free application that is fairly customizable. For example, I have my portfolio set up to show metrics that are important for my approach, like 5yr dividend growth, payout ratio and return on equity.

I own and track about 35 stocks; mostly Canadian and a few US. Some I only have a very small position in, others make up the core of my portfolio. It is from this list that I look for buying opportunities each month.

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

I use a Google Drive spreadsheet I created to track my stocks, including their return, adjusted cost base and dividends earned. It's free and highly customizable.

Do you trade options?

I don't do options trading. It requires a level of sophistication I'm not comfortable with yet.

How would you categorize the type of stock you invest in?

They are rather conservative, mostly blue chip and all dividend paying. I focus on stocks that increase their dividend payment over time (or have a high, stable dividend). This amounts to a relatively small pool of Canadian companies so I try to look for buying opportunities within this group, where a company's stock price had decreased recently but the company itself is still solid. For example, this summer the price of BCE and Telus dropped substantially under the threat of Verizon entering the Canadian market, so I purchased BCE at a discounted price.

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

I have a very small portion of my portfolio invested in the US. There are whole sectors in Canada that you can't find quality dividend paying companies, like Consumer Products. For those sectors I plan to diversify into US dividend payers.

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

Yes it affected me! I had been sitting on the sidelines, educating myself about DRIP investing and looking for the right time to jump in. As a conservative investor I remember how afraid I was at the time to "pull the trigger", but in retrospect this was as good a point of entry as you could ask for. My only regret is I didn't invest more.

Do you mind saying what stocks you are invested in? Are all your stocks dividend payers?

Sure, and all of my stocks are dividend payers.

My core Canadian portfolio consists of: RioCan (REI.UN), AGF Management (AGF.B), Sun Life Financial (SLF), Telus (T), Power Financial (PWF), Firm Capital (FC), Bank of Nova Scotia (BNS), Bank of Montreal (BMO), Manulife Financial (MFC), Aberdeen Asia-Pacific Income Investment Company (FAP), Exchange Income Fund (EIF), Reitmans (RET.A), Enbridge (ENB), BCE (BCE), Dundee International REIT (DI.UN), Corus Entertainment (CRJ.B), Fortis (FTS), Suncor (SU), National Bank (NA) and Artis REIT (AX.UN).

My US portfolio includes: PepsiCo (PEP), McDonald's Inc. (MDC), Genuine Parts (GPC), Johnson & Johnson (JNJ), Hasbro Inc. (HAS) and Proctor & Gamble (PG).

On my other blog I am today writing about The North West Company (TSX-NWC, OTC-NWTUF)...continue...