A Canadian's Trading Diary

Finning International

2009-08-10T11:30:00.006-04:00

Sorry for the lack of posts this year as I've only made a few trades over the past few months.

Here`s today's investment:

Finning International (FTT-T):

Sold AGU

2009-02-09T20:46:00.004-05:00

I didn't notice the resistance Agrium previously encountered at the $50 mark until this morning.

So before work, I just entered a sell price just below the $50 mark and it reached it before dropping back down.

Luckily for me, I scored a short-term winner. We'll see if it can break the $50 mark in the upcoming days. If it does, I'll be watching from the side lines as I'll probably be offline during trading hours for most of this week.

Fertilizers Stocks

2009-02-06T19:00:00.004-05:00

Purchased shares in Agrium and Mosaic today.

Here are their charts for future reference:

Government Relief Index

2009-01-23T17:26:00.002-05:00

I'm a few weeks late to this news releas e but thought it was pretty funny:

NASDAQ OMX Introduces a Government Relief Index

New Benchmark Tracks Companies That are Participating in the U.S. Government's Financial Relief Plan

NEW YORK, Jan. 8, 2009 (GLOBE NEWSWIRE) -- The NASDAQ OMX Group, Inc. today introduced the NASDAQ OMX Government Relief Index(sm) (Nasdaq:QGRI). The index enables investors to track the performance of U.S.-listed securities that are participating in U.S. government sponsored relief programs such as the Troubled Asset Relief Program (TARP) or other direct government investments. The NASDAQ OMX Government Relief Index is the latest index launched by NASDAQ OMX Index Group and underscores its commitment to designing and calculating relevant world-class indexes.

"This Index allows taxpayers and other investors to measure the performance of U.S. companies that are participating in the government's financial relief plan," said NASDAQ OMX Executive Vice President John Jacobs. "We believe the NASDAQ OMX Government Relief Index will be useful in helping investors evaluate the government's investments and the impact of the relief plan on the economy during this period of historical significance."

The NASDAQ OMX Government Relief Index consists of companies across multiple industry groups that have received a direct investment from the U.S. Government greater than $1 billion. The Index is the first of the Government Relief Index Series that NASDAQ OMX will be launching in the coming weeks.

The Index is calculated in real-time across the combined exchanges and is disseminated in dollars. The index began calculation with a value of 1000.00 on January 5, 2009...

Sold AEM

2009-01-23T17:22:00.002-05:00

Agnico-Eagle hit my long-standing sell price today so I squeezed out a small gain.

$25 ING Direct Orange Key - 21633702S1

2009-01-04T21:42:00.006-05:00

When you open an ING DIRECT account with a minimum of $100, ING will start you off with a $25 bonus when you register via their "Refer a Friend" Program.

All ING DIRECT products are eligible - not just their Investment Savings Account anymore. This includes the Tax Free Savings Account, unmortgage referrals and Streetwise Funds too.

So, if you're looking for an ING DIRECT Orange Key code to earn your $25 bonus, feel free to use Orange Key 21633702S1

The offer is valid for new Clients who open an ING DIRECT Account with a minimum initial deposit of $100. The offer is limited to one $25 bonus per new account (including joint accounts) and is limited to one account per new Client.

The 2009 Game Plan

2009-01-01T19:04:00.005-05:00

All things considered, 2008 was a pretty good year.

From a financial standpoint, my net worth was up approximately 11.9% and my realized capital gains more than doubled (year-over-year) but that doesn't mean it couldn't have been better.

With that in mind, I will recycle last year's resolutions and add a few more for this year.

So without further adieu, here are my goals for 2009 in no particular order:

Set up a Tax Free Savings Account at Questrade
Take advantage of the economic downturn to pick up some Canadian dividend-paying stocks to increase my dividend income (to a minimum of $1k / year)
Establish stop-losses and stick to them no matter what happens
Stay away from companies I don't understand or even pretend to understand
Establish an investment plan for my RRSP & TFSA
Let my winners fly until the trend is broken
Find a feasible way to make short-term trades while at work
Earn a minimum of $10k in capital gains
Stick with bigger, well-known names for a minimum of 80% of my stock portfolio
Reach a net worth of $335k in liquid assets (cash / stocks / mutual funds / RRSP / TFSA)
Get another promotion at work
Exercise at least 1 hour a day, 3 times a week
Improve my French language skills

10 in a Row

2008-11-27T20:46:00.001-05:00

According to The Globe and Mail, the Canadian stock market has posted a positive close every time U.S. markets closed for Thanksgiving since 1998.

The TSX closed up 110.25 to 8,753.77.

Oil is Going Down to $25 or less

2008-10-22T20:29:00.003-04:00

Well, that's my gut-feeling prediction for the price of a barrel of oil when it hits its low point this time around.

Meanwhile, Bespoke Investment Group highlights a Fibonacci Retracement chart of oil since the low of $16.70 that it made in late 2001 and Chart of the Day showcases an inflation-adjusted chart of oil since the 1970s.

Broke Even on POT

2008-10-11T20:02:00.002-04:00

Just a quick note this weekend:

I sold my Potash shares earlier this week to break even. The fluctuation in its share price of late can only be described as wild so I got out and hope to get back in at a lower price.

Happy Thanksgiving everyone.

Buying on Rumour, Selling on News

2008-10-04T08:44:00.004-04:00

After Thursday's collapse in its share price, Mosaic shares recovered a bit with the rest of the market before the big Congress bailout package vote. Once the Bill was passed, most stock prices dove.

Luckily, I had decided to cash in my quick profit in Mosaic just before the vote in the fear that the expected passing of the vote was already priced into the little rally earlier in the day. Surprisingly, I was right! Well, at least in the very short term. It should be another interesting week next week.

Yesterday's Action:

Mosaic Company (MOS-N)
Close $40.88 (+$1.23, +3.10%)
Open $41.95
High $45.07
Low $39.66

When There's Blood On The Street...

2008-10-02T19:55:00.009-04:00

it's time to buy fertilizer stocks. Well, at least that's what I ended up doing today, with purchases of Potash Corp and Mosaic Company shares today. Both stocks took big hits today so we'll see how they pan out in the days to come.

Today's Data:

Potash Corp. of Saskatchewan (POT-T)
Close $101.00 (-$35.50, -26.01%)
High $116.00
Low $100.00

Mosaic Company (MOS-N)
Close $39.65 (-$27.86, -41.27%)
High $52.59
Low $39.41

Agnico-Eagle Mines' Double Bottom?

2008-09-22T16:37:00.007-04:00

I'm a few days late to the party on this one but Agnico-Eagle Mines (AEM-T) has formed a really nice double bottom formation that I hope I can still take advantage of.

I should point out that I was deeply debating today if I should invest in the HBP Gold Bull+ ETF or shares in a gold miner. I'm not thrilled about my entry price in this stock today but we'll see if the pattern fulfills itself over time.

Agnico-Eagle Mines (AEM-T):
Open $65.00
High $69.58
Low $65.00
Close $68.32 (+$3.32, +5.11%)

Kitco New York Spot Price for Gold:
Low $874.50
High $909.90
Close $898.30 (+$26.50, +3.04%)

Potash Thoughts

2008-09-13T20:28:00.005-04:00

Canadian Dollars asked for my thoughts about Potash after its nice rebound the past few days so without further adieu, here are my opinions on the stock.

I think it is a great stock to own yet the volatility (especially of late) also makes it a great shorter-term trading play so if you have the ability to trade in and out of it on a frequent basis, go right ahead and give it a try if you'd like. I know I would if I had the time!

Looking at the chart, POT is still within its current downtrend.

Depending on how you draw the upper resistance line, you can say that it's close to breaking that trend. That being said, I personally would wait for one of the following to occur before entering into a position:

It closes above the downtrend line and/or fills the gap (shown by the green lines).
Retests and finds support at its recent lows.
Bounces of the bottom line of the downtrend.

Waiting for POT to hit one of these three price targets would be the lower-risk time to invest. One of my goals going forward is to start acting on low-risk trading opportunities or at least considering the risk/reward ratio when entering trades. I guess we'll see how that goes in future trades.

I hope that helps you Canadian Dollars!

My 10 Questions for Election Candidates

2008-09-13T13:23:00.005-04:00

If a candidate comes knocking on my door during this election campaign, these are the ten questions I intend to ask them:

What will your party actually do to reduce government spending?
Will your government allow private enterprises provide health care services to the Canadian public via our existing provincial health care system?
(i.e. Patients will not have to pay extra for these type of health care services as the the provincial health care system will cover the costs - just swipe your health card and you're free to go)
What concrete efforts will your government take to protect Canada's fresh water supply?
Do you think the carbon credit trading system will actually reduce air pollution?
Would your government agree to be legally and monetarily binded to a "Kyoto-type" agreement on air emissions if major polluting countries like China, India, Russia, and the USA do not commit to the same reductions?
How will your government tax capital gains and dividends?
Will your government toughen the Young Offenders Act?
How will your government ensure that judges give tough sentences to criminals (especially repeat offenders)?
Does your party believe government should be providing handouts and loans to companies in any sector (including the automotive, aerospace, environmental sectors)?
Does your party support income-splitting between spouses?

I recommend that you create your own list of questions about the issues that concern you so you'll be ready to ask the tough questions to any election candidates that come by your neighbourhood requesting your vote in the upcoming weeks.

Sold Royal Bank

2008-09-11T17:54:00.003-04:00

I sold my shares in Royal Bank today. This is a temporary withdrawal of RY shares from my portfolio.

With the massive collapse in the share prices of commodity-based stocks, RY has fared fairly well of late. I suspect when the eventual commodity rally ensues, the money stowed away in financial stocks will pour into the commodities causing bank stocks to fall in value.

False report sends UAL stock on wild ride

2008-09-08T18:19:00.004-04:00

Today's UAL Corp. (UAUA-Q) share price incident reveals how easily the stock market can react to so-called "news".

In case, you haven't heard the news, here's The Globe & Mail article on the incident:

False report sends UAL stock on wild ride

STEVE LADURANTAYE
Globe and Mail Update
September 8, 2008 at 3:31 PM EDT

UAL Corp. saw its shares temporarily melt down Monday morning on false rumours that it planned to file for bankruptcy protection.

Shares in the parent of United Airlines were halted on the Nasdaq stock exchange at 11:08 a.m. (ET) after falling 76 per cent. Trade resumed at 12:30 p.m., with the shares down 8.6 per cent from their opening price to $11.25.

Stock quotes had the shares as low as 1 cent in morning trade, but terminals were updated to show an intra-day low of $3.

Morning trades would not be cancelled, the exchange said on its website.

The company said the panic was sparked by an old story from the Chicago Tribune reappearing as current news Monday morning. It was published on Dec. 10, 2002, and detailed the company's $22-million in daily losses and its bid to restructure while under bankruptcy protection.

“Reports that the company filed for bankruptcy are completely untrue and were cause by the irresponsible posting of a six-year-old Chicago Tribune story by the Florida Sun Sentinel newspaper website with the date changed,” the company said in a statement. “The story was related to United's 2002 bankruptcy filing, and United has demanded a retraction from the Sun Sentinel and is launching an investigation.”

The Chicago Tribune distanced itself from the situation Monday afternoon, with a story on its website saying internal tracking records showed that nobody at the paper had touched the original story file since 2003. The Sun-Sentinel and the Tribune are owned by the Tribune Company.

The chain said that the story was picked up early Monday from the Florida newspaper's site by an investment adviser at Miami's Income Securities. He posted the file on Bloomberg, where it would be disseminated to anyone with access to one of the data-company's terminals.

The rumours come at a difficult time for the airline industry, with most major carriers cutting routes and downsizing in a bid to survive higher fuel prices.

UAL reported a $2.7-billion (U.S.) loss in its second quarter, hurt by a $773-million increase in the price of jet fuel. Earlier this year it said it would have to cut 7,000 jobs, ground planes and reduce flights to cope with the higher costs.

Sold POT

2008-09-08T18:01:00.006-04:00

I wish I was at home this morning to act on the quick drop in share prices after the market opened. Unfortunately work got in the way so I had to rely on my broker's telephone trading platform to get my quotes and place my sell order. I still fared pretty well compared to the closing price so I'm still somewhat happy.

This is today's chart of POT-T:

Today's Info:
High: $177.40
Low: $160.92
Close: $162.50 (-$9.850, -5.72%)

Bought some POT today

2008-09-04T19:49:00.007-04:00

Well, maybe not that kind of pot...

I'm talking about Potash Corporation of Saskatchewan (POT-T, POT-N).
Hopefully this support level will provide a nice rebound in the share price...

or I might just might need some of that other pot to get me through the day :)

Today's POT-T numbers:
Open $164.02
High $165.70
Low $155.39
Close $160.370 (-$4.16, -2.53%)

Long Weekend's Hurricane Miss

2008-09-03T06:03:00.003-04:00

What happens when a hurricane expected to cause massive damage to the U.S. Gulf coast over the Labour Day long weekend ends up having little effect on the coast's energy infrastructure?

Tuesday's closing prices of some Horizons BetaPro ETFs:

-17.96% NYMEX Natural Gas Bull Plus ETF - HNU
+18.47% NYMEX Natural Gas Bear Plus ETF - HND

-9.58% NYMEX Crude Oil Bull Plus ETF - HOU
+9.26% NYMEX Crude Oil Bear Plus ETF - HOD

-11.57% S&P/TSX Capped Energy Bull Plus ETF - HEU
+11.48% S&P/TSX Capped Energy Bear Plus ETF - HED

Genius Can't Be Scheduled

2008-09-01T18:37:00.003-04:00

With Labour Day here, summer has come to its unofficial end and traders should be coming back into the market which should lead to some interesting times in the weeks ahead. The summer months haven't been too friendly for me in terms of my investments so hopefully things will change very shortly to meet my year-end financial goals. I guess it's time to take a closer look at my charts and spot any new trends that might be emerging.

In the meantime, here's Sunday's Dilbert comic that nicely highlights my thoughts on the ridiculous notion of the 9-to-5 workday regiment employers still insist on despite the amount of downtime in the office.

Wi-Lan's Friday Jump and Today's Announcement

2008-08-11T19:17:00.009-04:00

First of all, I'd like to apologize for the lack of posts lately. It's been a pretty busy time around here, with a new job, new friends and new extra-curricular activities. All good stuff! The only downfall is I've had very little time to concentrate on the markets and my net worth has been pretty much stagnant since then.

Nevertheless, I'd thought I'd highlight the interesting increase in Wi-Lan's stock (WIN-T) on Friday and today's great news that WIN settled a pending lawsuit with BlackBerry maker Research In Motion (RIM-T) and that it was sharply raising its forecasts for fiscal 2008.

The 1-year chart:

and the 30-day chart:

The last 3 days price history (close / high / low / volume):

Aug 07 1.62 1.65 1.62 48,933
Aug 08 1.78 1.85 1.62 526,705
Aug 11 2.19 2.43 1.80 1,983,473

Notice the big, 'unusual' jump in price on Friday and the nice run-up after today's announcement.

This serves as just another reminder of the value of following 'irregular' price changes that break technical patterns.

Big Volume on TSX

2008-06-22T10:16:00.008-04:00

The S&P/TSX Composite Index closed Friday at 14,580.67 (-209.48, -1.42%) on a volume of 392,121,642.

The high volume caught my attention as it was one of the highest volume days in the past year based on the chart below.

I guess we'll soon see if this higher volume is a pre-cursor to a bigger move in the TSX.

Retirement is for Losers

2008-06-22T10:05:00.003-04:00

Some food for thought for those of you thinking about early retirement...

A Car That Runs on Water

2008-06-14T16:51:00.005-04:00

Imagine having a car that simply runs on water...

Well, you no longer have to imagine!

Earlier this week, Genepax Co Ltd revealed a car that uses its new "Water Energy System" fuel cell system that uses water as a fuel and does not emit CO2.

The system can generate power just by supplying water and air to the fuel and air electrodes, respectively. Since they are still working on the patent, they aren't providing many details on how the system actually works but its current prototype allows a litre of any kind of water - rain, river or sea - to get the engine going for about an hour at a speed of 80 km/h. With those kind of numbers, it's no surprise the Internet is abuzz about its potential.

I really hope this technology is the real deal and can't wait to see these cars for sale in showrooms around the world.

Tax Freedom Day, TSX Index Changes, and Floods

2008-06-14T08:50:00.004-04:00

Happy Tax Freedom Day Canada!

The day Canadians have paid off the total tax bill imposed on them by government and can finally start working for themselves, arrives today, four days earlier than in 2007, according to The Fraser Institute’s annual Tax Freedom Day calculations.

Canadians can calculate their personal Tax Freedom Day using The Fraser Institute’s Personal Tax Freedom Day Calculator.

Toronto Stock Exchange Index Changes

According to Reuters, six stocks will be removed from the Toronto Stock Exchange's main index, while three will be added as part of a routine quarterly review.

The changes to the S&P/TSX composite index will take effect at the start of trading on Monday, June 23, S&P said.

Removed from the index will be:

Crystallex International KRY.TO
Breakwater Resources BWR.TO
Aastra Technologies Ltd AAH.TO
Tesco Corp TEO.TO
Ballard Power Systems BLD.TO
Allen-Vanguard Corp VRS.TO.

The additions will be:

Birchcliffe Energy Ltd BIR.TO
Crew Energy Inc CR.TO
Iteration Energy ITX.TO.

Record Corn prices with Floods Hitting Mid-West Cities

Heavy rainfall and floods in the U.S. mid-west have in my opinion, pretty much ruined any hopes of a decent corn and soybean crop from these areas this year. It will be interesting how this weather event will effect agricultural stocks in the weeks to come as the fertilizer plays don't seem to be affected by it just yet while corn futures have gapped up a few times over the last few weeks. Ethanol stocks have already been downgraded as a result.

Out of Hanfeng

2008-06-10T18:20:00.003-04:00

I sold my position in HF today to break even on the trade. Of course, it scurried on up afterwards but settled back down a little by the end of the day.

After reviewing the charts of several agricultural plays last night, I came to the realization that HF hasn't been participating in the most recent rally and the chart doesn't look too promising. I'm not smarter than the market! As such, I have revised my trading strategy; I now intend to stick to stocks that are leaders in their sectors and those sectors must be in solid uptrends. So I'll try to invest in momentum plays in the months to come and see how that goes.

Back in Hanfeng

2008-06-07T12:06:00.006-04:00

I've talked about Hanfeng on several occasions in the past so I won't tell its story again. I'll just say that I now have a new position in the stock.

I was banking on it bouncing off of its short-term support level yesterday (as shown in the 1-year chart below) but it of course, had to keep going down.

That's one of the downfalls of setting target buy prices for stocks when you don't have access to your trading account and want to make short-term trades. Sometimes, they work and sometimes they don't. Oh well, HF is a well-positioned company so I'm not concerned for the time being.

HF-T ended the day yesterday at $10.99 (-4.43%).

Shop Online & Get Cash Back

2008-06-02T17:38:00.003-04:00

With gas prices soaring, more and more people everyday are doing their shopping online to save on gas money and the hassles of going to the mall.

Well, now there's another great reason to shop online:
You can earn additional savings on your online purchases!

How?

Simply visit a site that offers to share some of their commissions with users such as yourself and you can save a bunch of cash!

From books to computers to airline tickets to hotel rooms and everything in between, these sites provide you with the opportunity to get a rebate on your online purchases.

Great Canadian Rebates is probably the most popular Canadian cash rebate site.
Before making any online purchases, visit their site and shop at over 300 of your favourite merchants and automatically earn Cash Back Rebates.
Smart Canucks also offers Cash Back Rebates.
Their program is a little more hidden on their web forum but they're there. Just look for the 'Cash Back' links on the left-hand side of the web page.

Both sites provide you with a monetary registration bonus, special promotions, and access to different retailers so it doesn't hurt to register right away and shop at both sites to maximize savings.

And while on the subject, Visa offers its cardholders VisaPerks at selected retailers online and in-store.

So the next time, you go shopping online, be sure to check out these three sites to make sure you're not missing out on any special deals.

Is it Worth Being a Farmer?

2008-06-01T06:28:00.000-04:00

With food prices on the rise, one would think that these are good times for farmers but think again: fuel prices have gone up, so has fertilizer, herbicide and seeds amongst others things.

Saturday's Globe and Mail looked at who is responsible for the global food cris is and as part of the article, they including a flow chart that demonstrates some of the challenges a Canadian grain farmer faces to make a living. It looks a bit like a 'Snakes & Ladders' board game that pretty much screws the poor farmer unless he's extremely lucky which makes me wonder if it's even worth the time and effort to be a farmer nowadays. One can make as much money, if not more, by playing the futures and stock markets, without getting your hands dirty and taking on that much risk. With all the games being played on the markets by the big boys, you also have to wonder if this is all just part of a bigger plan to kick small farmers off their land so the huge corporations can take over and control the entire food market from end-to-end.

So if you ate today, thank a farmer!

And be sure to buy Canadian, if not locally-grown produce, to help your small, independent farmer continue the honourable tradition of growing food for generations to come.

Buying a New Car? You Absolutely Need This!

2008-05-31T15:31:00.003-04:00

If you're shopping for a new car, you need to get Canada's most powerful negotiating tool.

Car Cost Canada provides Canadian dealership invoice prices to its members and can save you hundreds, if not thousands of dollars on your next new car purchase.

It's so simple too.

After registering at the Car Cost Canada web site, just select the car models you're interested to get the wholesale invoice price reports and instantly see the car dealer's true cost. Print out the report and take it to the dealership.

Since the dealer knows that you know their true cost, all their negotiation games and hassles are thrown out the window and you regain the power to get the deal you want.

"New Car Buyers stand a better chance of getting a great deal if they know the dealer invoice price" - The Globe and Mail

I know it did for me as I saved a lot of $$$ when I bought my car a few years ago with the report in my hands!

So if you're shopping for a new car, I'd definitely recommend using this handy web site to help you get a real deal.

Free US Real-Time ECN Quotes

2008-05-31T10:38:00.007-04:00

Earlier this week, Yahoo! Finance announced the return of free unlimited US real-time ECN quotes on its web site. Kudos to them for bringing back this very useful feature!

MSN Money also offers real-time quotes but they limit it to 1,500 per month.

Meanwhile at Google, I haven't read anything about their real-time quote offerings recently but back in January 2007, they reported that they were trying to make it a reality.

Hopefully, this is just the beginning of a new real-time stock data era and we'll soon see freely available Level II quotes at your favourite online financial portal...

June 2nd Update:
Well, that certainly didn't take long!
Barrons now has real-time prices for U.S. stocks on its site and Google Finance announced today that it's now offering real-time quotes on NASDAQ securities.

I can only wish my blog had such power to influence :D

Lucky ETF Investors

2008-05-27T18:18:00.003-04:00

Here's an excerpt from Pett's article entitled 'Investors get lucky on Claymore pricing glitch' that I came across today:

"According to Claymore vice president Jeff Logan, market makers for Claymore ETFs, including Bank of Montreal, use Reuters as a pricing vendor. He said that Reuters, based out of the U.S., had a reset or pricing glitch right at the end of the day yesterday, causing Bank of Montreal's automated trader to make markets at a much lower price than the fund's actual net asst value.
"While BMO lost money on the trading, many retail investors were able to pick up the ETF at a big discount to the net asset value," said Mr. Logan. "Bank of Montreal could have canceled the trades but given the relatively small loss, they decided not to, making many investors very happy."
In total, about 7,300 units in the global mining ETF were bought during the last minute of trading as the price fell from $25.70, to a low of $19.55. The ETF closed at $20.05. Mr. Logan said the Claymore Global Agriculture ETF was also affected by Reuter's pricing glitch, although not as drastically.
Mr. Logan said the error has been corrected and secondary pricing sources and failsafes have been put in place to prevent this isolated occurence from happening again.
Units in the Global Mining ETF are back trading above $25 to $25.20 at 12:30 p.m. ET."

I'm just wondering who the lucky investors were?

Calling Oil's Top

2008-05-23T19:28:00.005-04:00

As per my comments on the Million Dollar Journey, the quick rise in oil prices has created a very tempting reason to try shorting oil.

The HBP NYMEX Oil Bear+ (HOD-T) and HBP Energy Bear+ (HED-T) ETF's can help you accomplish your shorting strategy but since it offers ~2x the opposite move of the commodity / index, I still haven't figured how much, if any, I should invest / gamble in it. In any rate, if I were to short oil, it would be a short-term position in my portfolio and I definitely would have to keep a very close eye on it and place a stop loss.

Another way to bet on lower oil prices would be to invest in airline and other transportation-related stocks. As big consumers of oil, they can only only benefit from lower oil prices.

But before you place your bets on a correction in oil, please keep in mind that there's a limited supply of oil and prices will eventually be higher than they are today.

Medical Wait List Insurance

2008-05-20T19:01:00.005-04:00

With waiting lists for medical procedures in our so-called "public" healthcare system at all-time highs, it comes as little surprise that the entrepreneurial spirit of the private sector is now offering a means of bypassing those long line-ups.

Acure Health Corp. offers what they like to call "Medical Access Insurance (MAI)" which according to Acure Health, is Canada's first "Wait List Insurance." According to the CBC, the insurance is now offered in five provinces, most recently in Ontario.

So What is Wait List Insurance?

According to their web site, Acure's Medical Access Insurance

"provides Canadians with expedited access to specialist consultation (see MAI Plus+), diagnostics, and surgery for over 135 treatments and conditions. Medical treatment for covered conditions will be provided in weeks, not months or years. Our policyholders are serviced independently, resulting in shorter waiting times for others... If a physician recommends a covered diagnostic procedure or surgery and you are placed on a medical waiting list more than 45 days long, MAI will arrange to expedite your diagnosis and treatment in the United States or, in Canada when services are available."

Should You Buy It?

Just like life insurance, I consider wait list insurance a personal choice but unlike life insurance coverage, you might personally benefit from it.

With that in mind, is it worth the average 75+ bucks per month for coverage?

If you come from a strong gene pool, you might consider twice but if you've ever known someone waiting for months or years for an operation and witnessed their agony, then you'll most likely say yes.

The price may be steep but in the grand scheme of things, it might be well worth it in the time and money you save in not being in pain and suffering. Keep in mind that it was originally promoted as an addition to group insurance packages for companies so you might want to try convincing your employer to share in the costs as well.

I am not an insurance expert nor a doctor, so as always, you should not rely on any information found on this blog. I encourage you to conduct your own research and consult with your physician before signing any documents. Acure Health Corp. did not commission the writing of this article.

Which Canadian Bank Should You Buy?

2008-05-20T05:07:00.002-04:00

David Parkinson asked this question in a recent Number Cruncher article and came up with the following result:

... which banks to buy? For that, we return to well-regarded equity quantitative-analysis firm CPMS Computerized Portfolio Management Services Inc., which has crunched the Canadian banking numbers and identified the key metrics that historically have pointed to superior stock performance.

PRICE-TO-BOOK IS KING

CPMS has back-tested bank stock performance over the past 10 years against a variety of quantitative measures, and found that buying stocks with the lowest price-to-book-value (P/B) ratio would have netted investors the best bang for their buck, outperforming the group as a whole by almost 10 per cent annually.

Underperformance in the previous year – as indicated by both the worst 12-month price change and the highest dividend yield, both of which suggest a relatively low stock price – also tended to point to superior returns in the year that followed, with better than 4-per-cent outperformance of the group benchmark.

Conversely, bank stocks with the best price gains over the prior 12 months and the lowest dividend yields tended to be duds, underperforming the benchmark by the biggest margins.

You can view the complete result set on the RoB site.

TSX: On the Brink of 15K

2008-05-19T14:13:00.005-04:00

Just a few months ago, there was a lot of talk about the global economic downturn and dire warnings of a major bear market. Well, if you're an investor of the TSX Composite Index, you might be wondering what all the recession talk's all about as the TSX is within a few points of reaching the 15,000 mark. Well, I didn't expect that to happen so soon!

Thanks in most part by the latest surge in oil prices (and natural gas too), the TSX is in record territory and the question is, will the party continue...

Well, I have no idea but considering I didn't really partake in this rally in any major fashion, I am currently establishing a list of stocks (including some energy-related bear ETF's) I'd like to get my hands on if a dip does occur anytime soon.

Wishful thinking?

Perhaps, but like we have seen in the last year, stranger things have happened.

ETNs vs. ETFs

2008-05-09T21:02:00.006-04:00

Today's RoB article about the launch of U.S. Platinum Exchange Traded Notes (ETN's) mentioned an interesting point on a key difference between Exchange Traded Funds (ETF's) and ETN's:

Investment bank UBS launched two ETNs offering long and short trading strategies in platinum. ETNs, unlike exchange-traded funds, do not purchase physical platinum to back the number of shares sold.

Investopia defines an ETF as

A security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange, thus experiencing price changes throughout the day as it is bought and sold.

Because it trades like a stock whose price fluctuates daily, an ETF does not have its net asset value (NAV) calculated every day like a mutual fund does.

By owning an ETF, you get the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETFs are lower than those of the average mutual fund. When buying and selling ETFs, you have to pay the same commission to your broker that you'd pay on any regular order.

while it says that an ETN is

A type of unsecured, unsubordinated debt security that was first issued by Barclays Bank PLC. This type of debt security differs from other types of bonds and notes because ETN returns are based upon the performance of a market index minus applicable fees, no period coupon payments are distributed and no principal protections exists.

The purpose of ETNs is to create a type of security that combines both the aspects of bonds and exchange traded funds (ETF). Similar to ETFs, ETNs are traded on a major exchange (ie. NYSE) during normal trading hours. However, investors can also hold the debt security until maturity. At that time the issuer will give the investor a cash amount that would be equal to principal amount (subject to the day's index factor).

One factor that affects the ETN's value is the credit rating of the issuer. So, the value of the ETN may drop despite no change in the underlying index, instead due to a downgrade in the issuer's credit rating.

It should also be noted that structures like the Central Gold Trust and the Central Fund of Canada physically hold bullion.

Royal Bank of Canada

2008-05-05T20:37:00.006-04:00

So I finally took the plunge and invested in a bank today. The Royal Bank of Canada (RBC-T) to be exact.

I must admit that I am not particularly confident about my entry point but as shown in the charts below, RBC's recent downtrend appears to have been broken.

Now, I could have only taken a partial position in RBC and see what happens before investing the rest but I decided against this. Since I plan on investing in at least two other Canadian dividend-paying bank stocks, I decided to invest the full amount in RBC and avoid paying a few additional dollars in commissions. If markets deteriorate again, I'll enter a position in another bank I have on my watch list. And if bank stocks have already completed their downtrend, I have picked up RBC at a yield of just over 4%.

Hopefully, ten years from now, none of this will matter with RBC hopefully reaching much higher highs and providing an ever-increasing dividend to boot.

Oil vs. US Dollar Index (Inverted)

2008-04-28T19:23:00.002-04:00

Courtesy of Bespoke, the oil bulls worst nightmare... a stronger US Dollar

Trailing Stop Orders

2008-04-25T05:14:00.000-04:00

This week's dip in the share value of Timminco (TIM-T) triggered my long-standing buy order on Wednesday (see the April 23rd intraday chart below).

Unfortunately, the quick run-up soon thereafter was much faster than I ever thought possible and I cashed out way, way too early as my eager sell finger was not stuck in a meeting that morning.

If only I knew I had access to trailing stop orders!

As you can see from the 5-day chart below, the stock had a pretty wild week thanks to severe shorting pressure from the professionals.

Since I didn't want to lose my quickly earned cash on a volatile stock, I sold my shares to secure my profit but I could have used a trailing stop order to provide similar protection while leaving my position open to bigger gains.

It was an expensive lesson but is one that I think will revolutionize my trading style and hopefully, lead to bigger gains in future trades.

Intrepid Potash IPO

2008-04-22T19:24:00.004-04:00

After kicking myself countless times over the past several weeks for not following my 2008 portfolio plans of placing 50+% of my assets in fertilizer stocks and my quick trades for relatively small profits of the agricultural stocks I've held this year, I noticed that a new Ag. player arrived to the stock market today.

Intrepid Potash IPO'ed and shot up over 50% on its debut today. Just like I did with VISA, I've included today's action of IPI-N for future reference.

Interestingly enough, I'm finding different chart views of the market open for this stock on various web sites. I ended up using the Google Finance chart above since it appears to have the least amount of noise on the open.

I haven't had any time to do any research on this company just yet but for those interested in reading up on the company, 1440 Wall Street appears to be covering the story very well.

Watch for a Flip in Real Interest Rates

2008-04-21T19:41:00.005-04:00

In a Market Blog posting, David Berman refers to John Hussman's weekly market comment, and states:

On that note, Mr. Hussman – who worked at the Chicago Board of Trade in the mid-1980s – is particularly bearish. He believes that the commodity bull market will shift into reverse within a few months, when the yield on the 10-year U.S. Treasury bond rises above the year-over-year inflation rate, as measured by the consumer price index.

In other words, he believes that commodity prices will be in trouble when real interest rates flip into positive territory from negative territory. At the moment, the 10-year benchmark bond is yielding 3.7 per cent and the CPI was 4 per cent year-over-year in March, meaning that real rates are slightly negative – which is widely identified as one of the drivers of the current commodities boom.

Something to keep an eye on...

Happy Earth Week

2008-04-20T12:57:00.003-04:00

To coincide with the start of Earth Week, I thought I'd mention a piece of software called GreenPrint I just came across...

GreenPrint is a simple idea, but it solves a problem nearly everyone can relate to: The ubiquitous wasted page. This is the page with just a URL, banner ad, legal disclaimer, etc. These wasted pages occur many times a day littering homes and offices around the world and wasting money, trees, and time.

In an effort to end wasteful printing worldwide, GreenPrint World is available at no cost to home users around the globe. With widespread use we will save over 100 million trees and reduce greenhouse gasses by over 300 million tons. The World Edition is perfect for anyone who wants to eliminate the frustration and waste of unwanted pages and have a positive environmental impact right at home.

GreenPrint provides a simple solution to printing to PDF. This preserves the document format including web pages without wasting paper. This PDF writer is also incorporated into the print preview so any document can easily be saved to file (after eliminating wasted pages) rather than being printed. For most users, this will also eliminate the need to buy a separate PDF writer such as Adobe Acrobat.

GreenPrint also integrates a reporting function that allows users to easily monitor their printing habits in order to quantify the dollars and pages the software has saved.

Agrium Hit Resistance

2008-04-12T09:15:00.006-04:00

Last week, I picked up a few shares of Agrium when it appeared to have broken out of its down trend. Well yesterday, AGU-T hit an obvious resistance point of around $75 that it couldn't pass through with any real conviction.

The quick move to the upside yesterday triggered my sell order.

While I still believe Agrium could go higher, I couldn't resist taking profits at such an obvious resistance point and lock-in a nice gain. In the very short-term, it looks like I made a wise choice. But when it comes to the longer term horizon, I've been wrong many times before. It's a great stock in a hot sector so we'll see what the markets bring us next week. Hopefully, they'll give me an opportunity to get back into this stock at a lower price.

AGU's April 11th Trading Range: $72.00 - $75.20 (Closed at $73.19).

Global Fertilizer Conference

2008-04-09T16:00:00.001-04:00

If you're interested in learning more about the agricultural fertilizer market and how you can potentially profit from the currently booming business, BMO Capital Markets held its 2008 Global Fertilizer Conference on April 2nd where leading fertilizer companies (including Agrium) offered an in-depth global perspective on the sector’s current challenges and future opportunities.

Moderated by Chemicals & Fertilizer Analyst Edwin Chee of the BMO Capital Markets equity research team, this webcast includes presentations and panel discussions that may be of interest to you.

Tax Filing Time

2008-04-05T10:53:00.004-04:00

If you're like most Canadians and myself, you dread April since it's that time of year when you are expected to file your taxes.

Well, this weekend is the perfect time to sit down and get your income tax return out of the way. Who knows, maybe the government owes you money so you're losing out. I personally like to fill out my taxes the old fashion way on paper first, and read up on all the various deductions and credits available so just maybe I can do something differently this year. Once I think I've got it all done, I like to double-check my return with one of the online tax software packages like QuickTax

The online version of QuickTax allows you to fill out your return for free; you only pay if you actually want to file your return with them.

So if you just want to get your taxes done as quickly as possible or want to double check your calculations, you might want to give QuickTax a try.

Agrium Breaks Down Trend

2008-04-05T08:40:00.007-04:00

I've been keeping an eye on Agrium (AGU-T, AGU-N) for quite some time but never actually pulled the trigger. That is, until this past Thursday afternoon. As you can see in the 6-month chart below, AGU broke out of its down trend on Thursday and signaled a buying opportunity for me.

Typically, I would wait until the next day to buy a stock exhibiting such a pattern to confirm that its closing price actually broke the downtrend but my gut instinct told me to get in there (plus work commitments would prevent me from following the market opening on Friday morning). Well, luckily for me, AGU gapped up on Friday thanks to a competitor (and partner) reporting quarterly numbers that exceeded analysts' expectations.

Agrium is a major retail supplier of agricultural products and services in North and South America, a leading global wholesale producer and marketer of all three major agricultural nutrients and the premier supplier of specialty fertilizers in North America through their Advanced Technologies business unit. Agrium’s strategy is to grow across the value chain through acquisition, incremental expansion of its existing operations and through the development, commercialization and marketing of new products and international opportunities.

As mentioned in an earlier post, Agrium also has a 19.6 percent equity position in Chinese specialty fertilizer company, Hanfeng Evergreen.

Interestingly, Recognia's Technical Events Report gave a target price range
of $87.00 to $91.00 for AGU-T after Thursday's close.

StockCharts noted on Friday that AGU-T had a double top breakout
based on their Point and Figure chart pattern (below) giving a
preliminary bullish price objective of $87.

It might be tempting for me to grab some profits before that 'target' is reached so we'll see what the markets do and how I react.

AGU-T Price Range on Thursday, April 3rd: $63.50 to $67.50 (Close: $66.75).
It closed yesterday at $70.01.

Hidden Benefits of Being a Stockholder

2008-03-22T09:09:00.005-04:00

One of my favourite Canadian web sites, RedFlagDeals, had an interesting post regarding the Lenovo and IBM Employee Purchase Program.

Within the post, there's a link that directs you to the IBM Stockholder Purchase Program web page where Lenovo offers discounts on its entire product line. You require a passcode to sign in to the IBM Stockholders store where you can apparently shop for ThinkPad notebooks, ThinkCentre desktops, ThinkVision monitors, ThinkPlus accessories from Lenovo.

According to IBM Investor Relations,

The IBM U.S. Shareholder Purchase Program (SPP) is a program that makes a wide range of IBM products available at discounted prices to IBM Shareholders. Please note that this program is available only to residents of the United States and Canada.

In order to participate in the program, you must be a current stockholder and have a current Stockholder Offer ID Number. Stockholder Offer ID Numbers are mailed to stockholders. If you are a stockholder, look for future offers in the mail.

Depending on the discounts available, the SPP could be an amazing perk to IBM shareholders in the market for IBM and Lenovo equipment.

Perhaps other companies also offer similar purchase programs for their shareholders so if you know of any, please share them with us.

Is the Bottom in for Bank Stocks?

2008-03-21T19:54:00.013-04:00

With the value of bank stocks falling precipitously for numerous weeks and their dividend yields reaching highs not seen in recent memory, eager dividend investors jumped back in after the Fed cut announcement, causing a quick rebound in the bank share values.

Here are the 5-day hourly charts for the bank stocks that I follow for future reference:

Bank of Montreal:

CIBC:

Royal Bank of Canada:

Bank of Nova Scotia:

TD Bank:

National Bank of Canada:

Canadian Western Bank:

Citigroup:

Bank of America:

But with headlines like "BMO, Scotiabank and Royal Bank likely to issue more capital: Citigroup" on FP Trading Desk still making the news, it makes you wonder if this is just a sucker rally (in an attempt to raise more capital at higher valuations) or the real deal.

I missed out on this week's big bounce so I'll wait to see if another shoe drops before initiating positions for the first time ever in these very tempting dividend-yielding stocks.

Lucky Lotto 6/49?

2008-03-20T18:01:00.004-04:00

Imagine checking your lucky Lotto 6/49 numbers and realizing that you just got 5 out of the 6 numbers plus the bonus number.

Oh, so close to winning the big jackpot but no luck there...
hey, at least second prize should be worth something worth while... right???

Well, maybe not. You might not be as rich as you think.

Check out the results from Wednesday's Lotto 6/49 draw:

An amazing 239 people hit the second best result! Unfortunately, they had to share the pot, and thus ended up winning less than the third prize winners. According to the CBC, the "winners will be splitting the prize, getting $1,193.70 each, compared to the $131,000 awarded to last week's winners." Now, that's got to hurt!

I just wonder if you can decline the use of your bonus number ;)

Visa IPO

2008-03-19T17:36:00.005-04:00

After all the talk that Visa (V-N) would IPO in the $37-42 range, Visa was able to raise an amazing $17.9 billion for its IPO with its $44 offering price yesterday evening.

The shares hit the market today and here's what happened:

Want to learn more about Visa?
The Thicken My Wallet blog had a very good post on its IPO Offering document last week that's definitely worth a read.

Imminent Canadian Bank Mergers?

2008-03-17T20:13:00.003-04:00

Back in 1998, the Canadian government rejected the proposed mergers of the Royal Bank with the Bank of Montreal and CIBC with the Toronto-Dominion Bank.

According to about.com, the Finance Minister concluded that the mergers were not in the public interest as they would result in too much concentration of economic power in Canada in the hands of too few financial institutions, a reduction in competition in the Canadian financial services sector, and a reduction in the Canadian government's flexibility to address future concerns.

With the scandalous turmoil affecting American financial institutions and Canadian bank share prices dropping in value (particularly those of BMO and CIBC) thanks to concerns of their own credit woes, one has to wonder if Canadian bank mergers are just around the corner.

After all, the current crisis would provide the perfect excuse for the government to give in to industry demands and allow bank mergers to occur for the "best interests of the nation's economy."

Sold AEM

2008-03-09T12:41:00.005-04:00

I sold my AEM position on Thursday. I still expect AEM to fulfill the technical target established by the ascending triangle but I honestly believed (hoped) it would happen by now with the mania of gold hitting ~$1000. Anyways, I sold my shares to pay half of the property tax bill so in that sense, I'm happy.

Many of the gold / silver stocks look a bit 'tired' to me at this point in time so I'll be patiently waiting on the sidelines.

As for the market in general, the TSX looks like it's in a "sideways to slightly negative slope" market so the buy-and-hold mentality probably won't make you much money for the next few months. That being said, the active trader can make a killing in these volatile times if you stick to the right strategy.

Thursday's AEM Intraday Price Range: $70.90 - $73.85 (CDN).

Canadian Tax-Free Savings Account

2008-02-26T17:11:00.005-05:00

The Conservatives delivered the Government of Canada 2008 Budget today and one of the major surprises was the introduction of a tax-free savings account.

The new Tax-Free Savings Account is "a flexible savings vehicle that allows Canadians to contribute up to $5,000 a year to the account. Investment income, including capital gains, earned within the account will not be taxed and withdrawals will be tax-free."

How will the Tax-Free Savings Account Work?

Starting in 2009, Canadian residents age 18 or older will be eligible to contribute up to $5,000 annually to a TFSA, with unused room being carried forward.
Contributions will not be deductible.
Capital gains and other investment income earned in a TFSA will not be taxed.
Withdrawals will be tax-free.
Neither income earned within a TFSA nor withdrawals from it will affect eligibility for federal income-tested benefits and credits.
Withdrawals will create contribution room for future savings.
Contributions to a spouse’s or common-law partner’s TFSA will be allowed, and TFSA assets will be transferable to the TFSA of a spouse or common-law partner upon death.
Qualified investments include all arm’s-length Registered Retirement Savings Plan (RRSP) qualified investments.
The $5,000 annual contribution limit will be indexed to inflation in $500 increments.

You can read more about the specific details of the proposed Tax-Free Savings Account (TFSA) in Chapter 3 and Annex 4 of the Budget 2008 document.

Although I would have preferred a higher contribution limit, this is a great step forward.
Next step: Tax-free capital gains :)

Agnico-Eagle's Ascending Triangle?

2008-02-20T20:00:00.006-05:00

After making the mistake of selling my remaining Agnico-Eagle Mines (AEM-T) shares last year, and missing the big swing up since then, I entered back into AEM today after it broke through its resistance yesterday.

Once again, I entered my position at a higher price than I would have liked on the day but based on the ascending triangle (that I think I recognized properly), this stock hopefully has some upside in the months to come if gold continues its gallop to $1000 and beyond.

After the market closed today, AEM reported record fourth quarter results.

Agnico-Eagle finished the day at:
(AEM-T) $67.93 +0.93 (1.39%)
(AEM-NYSE) $66.77 +1.36 (2.08%)

According to Kitco, Gold closed with a Bid of 944.00 and Ask of 944.80 (+16.30, +1.76% for the day).

Follow Up on the Last TSX Index Rebalancing

2008-02-17T19:10:00.009-05:00

Back on November 3rd, I posted an article on the upcoming TSX Index rebalancing and the likely candidates for addition and removal.

Like I had mentioned back then, I had always wondered what kind of performance boost a stock gets when it's added to an index.

Some Key Dates to Keep in Mind:

November 2, 2007: National Post's FP Trading Desk publishes Yin Luo's predictions
December 14, 2007 : Standard & Poor's Announces Changes in S&P/TSX Canadian Indices
December 24, 2007: Changes Come Into Effect

So let's have a look at the five additions and their performance since mid-October 2007:

Aecon Group Inc. (ARE)
Allen-Vanguard Corporation (VRS)
Gold Eagle Mines Ltd. (GEA)
High River Gold Mines Ltd. (HRG)
Jazz Air Income Fund (JAZ.UN)

Aecon Group Inc. (ARE)

Gold Eagle Mines Ltd. (GEA)

High River Gold Mines Ltd. (HRG)

Jazz Air Income Fund (JAZ.UN)

Allen-Vanguard Corporation (VRS)

Many things can influence a stock and this example was only one instance so this was definitely not a scientific experiment so I'll let you come up with your own conclusion on the influence of having your stock added to the Index.

Canadian School Ratings

2008-02-16T21:06:00.004-05:00

The Fraser Institute recently rated Canada's schools. The downloadable school report cards include detailed tables for each school that show how it has done in academics over a number of years.

Now some may object to the methodology used for the rankings and question their validity but they might come in handy for your real estate investments. After all, having a top-ranked school in your neighbourhood can't hurt the resale value of your home.

Get a Free Extra Computer

2008-02-10T19:10:00.001-05:00

I just came across a web site that offers an interesting piece of software that promises to turn one computer into two by turn your dual-monitor PC into a two-user PC using free software from Userful. The basic concept of this program is based on the fact that your computer is rarely used to its full potential so instead of wasting resources on multiple computers, why not use one computer to its full potential.

Being a single guy, I personally have no need for such software (at the moment) but the premise is so simple yet powerful at the same time that it's worth a mention for those of you who need to share your computer with others.

According to their web site:

Share your PC, worry free: Have friends or relatives visiting and don't want them messing up your PC? This live CD is the perfect solution. Not only does it give the equivalent of an extra fully-functioning PC, it also ensures that your personal files are kept private and that no viruses or other malware are accidentally installed by your guests. Need an extra computer but don't have the space money or energy to or don't want to maintain one?

The World's Greenest Computer: This free CD is limited to 2 users, but using Userful's commercial software products can create up to 10 independent workstations from a single standard PC box. This software is being used around the world in schools, libraries, hotels, and other businesses and has provided huge savings on desktop computing costs by reducing the number of computer boxes that need to be purchased and maintained. Userful is quickly becoming the standard for green computing worldwide. Attaching 10 monitors, mice and keyboards to a single computer reduces CO2 emissions by up to 15 tons per year per system and reduces electronic waste by up to 80%.

Q. What kind of computer can I use?

A. Most standard PCs will work with the Live CD. If you wish to try the two-station features, you need a computer with 2 monitors connected, using a dual-head video card (two video ports on the same card), and an extra USB keyboard and mouse.

I haven't tried the software so I can't personally recommend it but if you have the necessary equipment and are thinking of purchasing another computer at home or at the office, you might want to try this program first to see if it will be suitable for your needs.

Euro Savings Accounts for Canadians

2008-02-09T09:14:00.001-05:00

With the growing trend of people shying away from US-denominated currency, it comes as no surprise that the big Canadian banks have started to jump onboard.

Earlier this week, The Bank of Nova Scotia announced that it has become the first major Canadian-based bank to offer Euro-denominated savings accounts. I doubt that the other banks will be far behind.

According to Scotiabank's web site:
The Scotia Euro Daily Interest Savings Account is a savings account denominated in Euros that allows you to deposit and withdraw Euros at your branch without the need to convert them to or from Canadian dollars.

It should be noted that ABM, telephone and Internet banking services, direct payment transactions, bill payments, cheque-writing privileges and overdraft protection are not allowed on this account; only teller assisted debit and withdrawal transactions conducted at your branch of account are allowed on this account.

Scotiabank also states that a deposit to the Scotia Euro Daily Interest Savings Account does not constitute a deposit that is insured under the Canada Deposit Insurance Corporation (CDIC) Act.

For those interested in having some exposure to the Euro or simply want an account to store those valuable Euros in between trips overseas, you might want to visit your local Scotiabank branch for more information.

While on the topic, HSBC Bank Canada, a division of United Kingdom-based HSBC Holdings PLC, has apparently offered a euro-denominated savings account for years so they might also be worth a look for those of you interested.

Chinese Factories to Close?

2008-02-09T09:01:00.000-05:00

With the Beijing Olympics just a few months away, I recently heard on the news that the Chinese government may order construction sites and factories in Beijing to stop work ahead of the Olympics to counter the high levels of air pollution in the city.

If this actually happens, it could create a temporary dent in China's commodity needs and create a great buying opportunity for the astute investor.

How to Hold USD in RSP

2008-01-14T17:28:00.004-05:00

Here's some good news for all of you interested in trading US Dollar denominated stocks within your registered trading account:

For the FIRST time in Canada, hold U.S. cash in your RSP.
Trade U.S. stocks and option without the currency hits.

How?

With Questrade, that's how!

The Questrade RSP lets you:

Hold US currency
Manage the currency used to trade US stocks & options online
Avoid paying hefty conversion fees

USD in RSP is available in all registered accounts. There is no need to call anyone to place a trade.

Here’s how it works:

Hold USD and CAD in any registered savings plan.
Simply opt in to hold USD through myQuestrade.
Choose to settle trades in USD, CAD or the currency of the trade.

For accounts that settle in CAD, you still SAVE BIG when you buy and sell USD securities in the same day. Questrade only converts the net proceeds of the trade – the difference between any buy and sell.

React instantly to the market with your trading decisions. Once your settings are in place, there is no need to advise Questrade in advance of any buy or sell requests for U.S. securities.
Questrade only charges currency conversion fees when you decide to exchange your money – no more forced currency conversions.

If you do have to convert currency between USD and CAD, take advantage of Questrade's low fees of only 50 pips – or .5% of the trade. This is a significant saving compared to the industry fee of 1.5% to 2% per trade. On $10,000, that’s $150 savings!

Questrade also has other promotions available when you sign up.

So if you're thinking of changing brokers and/or want some U.S. stock exposure in your RSP, you should consider Questrade.

If you sign up or are already in the process of signing up with Questrade, please use the affiliate /coupon code: TRADER.

If you are a blogger / webmaster and would like to take advantage of Questrade's new affiliate program, you can join their affiliate system. Please use TRADER as your parent affiliate ID.

All realized affiliate program proceeds from A Canadian's Trading Diary will be donated to charities.

Bought a Diamond? You Might Get Some Money Back

2008-01-13T13:07:00.000-05:00

I'm not sure if Canadian diamond buyers qualify, but if you bought a diamond within the past few years the following settlement agreement might be of interest to you...

Bought a Diamond? You Might be Due $$
by David Migoya on January 11, 2008

In a little-known class action lawsuit out of New Jersey, attorneys have worked a settlement agreement with the world’s largest diamond producers, De Beers, that will divide roughly $135 million among Americans who purchased the gem from 1994 to 2006.

Before you spring out of your chair, the ultimate per-person payout might not be that much. The only thing you’d need to qualify for part of the divvy is to have purchased a diamond — any kind of diamond will do — from Jan.1 1994 through March 31, 2006.

The deadline to file a claim is in May. The settlement agreement still needs a judge’s approval, which is expected to happen in April.

The lawsuit alleged that De Beers’ group of companies fixed, raised and controlled the price of diamonds worldwide. Seeing as De Beers supplies the bulk of the world’s diamonds via its mines in South Africa, the allegations might not have been a stretch.

You can read more about the lawsuits and file an online or mail-in claim to register for the eventual payouts at www.diamondsclassaction.com. The classes vary, meaning consumers who purchased diamond jewelry from anyone other than De Beers — and that includes private sales — would share in one pot of money while individuals who bought loose gem stones would qualify under a different class. Resellers, too, would have standing for a claim.

Now, to read and learn — and brother, you will indeed learn a lot! — about how the worldwide diamond market is a little more man-made than you might have realized, Atlantic magazine published a dandy piece in 1982 that’s worth a read. Find it here: http://www.theatlantic.com/doc/198202/diamond

Source: DenverPost.com

Meet The Lazy Investor

2008-01-04T19:09:00.001-05:00

For those of you residing in the Ottawa-area who are interested in Derek Foster's strategies to early retirement, you might want to attend one of his four presentations during the month of January at the Ottawa Public Library.

Who's Derek Foster, you ask.

Learn more about him in the two part book review of his latest book, The Lazy Investor:

Year-End Stock Data

2008-01-04T17:50:00.000-05:00

Report On Business has posted year-end stock dat a for the Toronto Stock Exchange, New York Stock Exchange, Nasdaq Stock Market, TSX Venture Exchange, American Stock Exchange and
Indexes.

They might come in handy in your search for new investment ideas.

The Secret to Tax-Free Living

2007-12-30T16:21:00.003-05:00

After reading this article in the Globe Investor Magazine, it's no wonder why Canadian investors like Derek Foster like dividend paying stocks so much...

The secret to tax-free living
How to leverage the dividend tax break

Globe Investor Magazine, Nov. 21, 2007

THAT OLD SAW ABOUT death and taxes being inevitable is only half true: If you live in Canada, you can earn a tidy five-figure income without paying any tax. And you won't have to open an offshore bank account or work a single job under the table, because it's perfectly legal in the eyes of the Canada Revenue Agency.

How is this possible? Dividends.

Though the CRA is greedy when taxing employment and interest income, it's uncharacteristically generous when it comes to dividends of publicly-traded Canadian corporations. By taking advantage of the dividend tax credit, an investor with a sizable nest egg can live off the dividend income without sending a penny to Ottawa. Here's how.

Suppose you've worked hard, saved diligently and have a million dollars. You decide to invest the money in a portfolio of dividend-paying Canadian stocks that yields 4.5%. Let's further assume the $45,000 in dividends that rolls in every year is your sole source of income. Now, let's examine what happens to those dividends at tax time. The first thing the CRA does is apply a "gross up" to the dividends. Specifically, it multiplies the $45,000 by 1.45, for a total of $65,250. This is your taxable income. So far, things look pretty bad, right? The CRA is making it appear you earned more money than you actually did.

Including the basic personal exemption, your federal tax owing would be about $10,550. But-here's the key-because you're earning dividend income, you qualify for the generous dividend tax credit, which equals the grossed-up amount multiplied by 18.97%, or $12,375. Now for the best part: Subtract $12,375 from $10,550 and what do you get? That's right, a negative number! Translation: You don't owe any tax to the CRA. And because provinces offer their own dividend tax credits, depending on where you live you might not have to pay any provincial tax either.

In Ontario, for example, it's possible for an individual to earn up to $48,000 in dividends without forking over any federal or provincial tax, apart from a $600 Ontario health premium. In British Columbia dividend tax credits, an investor can earn up to $66,000 essentially tax-free, according to Michael Smith, an analyst with National Bank Financial. And the tax-free thresholds are set to rise over the next few years as provinces boost their dividend tax credits.

Though the tax-free dividend strategy is powerful, few people know about it, Smith says. "I've shown it to at least a dozen people in the financial industry-portfolio managers, investment bankers, analysts. Basically, they all say, 'Wow!'"

It's especially appropriate for retirees with significant savings and no other sources of income.
Now, let's look at what would happen if, instead of earning dividend income, you invested the $1 million in a bond or guaranteed investment certificate that yields 4.5%. Because interest is taxed at full marginal rates, if you live in Ontario you'd end up paying $9,050 in tax on $45,000 of income.

From a tax perspective, dividends are the clear winner. But dividends are at--tractive for another reason: Many companies-including banks, insurers, pipelines and utilities-raise their payouts once a year or more. Manulife Financial, for example, has hiked its dividend at an annual rate of about 25% over the past five years.

A bond or GIC, on the other hand, pays a fixed amount of interest. If you can stomach some volatility in the stock market and have a long-term investing horizon, dividends are the better choice, in my books.

That's why, for my own portfolio, I buy nothing but dividend stocks with rising payouts.

JOHN HEINZL is an investing reporter and columnist with The Globe and Mail's Report on Business.

2008 Resolutions

2007-12-29T10:18:00.000-05:00

As a follow-up to the previous post of my biggest regrets of 2007, I hope to learn from those mistakes as I set my goals / resolutions for the upcoming year. So without further adieu, here are my goals for 2008 in no particular order:

Take advantage of the financial stock slump to pick up some dividend-paying Canadian bank stocks to increase my dividend income.
Set stop-losses and stick to them no matter what happens.
Stay away from companies I don't understand or even pretend to understand (i.e. the entire biotech industry).
Finally establish a plan for my RRSP and invest the cash that is currently just sitting there.
Let my winners fly until the trend is broken.
Take advantage of any extra cash in my portfolio for quick wins.
Earn higher capital gains than in 2007.
Stick with bigger, well-known names for a minimum of 80% of my stock portfolio.
Take advantage of season trends in certain stocks / sectors.
Start buying quality stocks if and when I hear the mass media and regular folks on the bus discussing the collapse of the market.
Reach a net worth of $300k in liquid assets (cash / stocks / mutual funds + RRSP).
Get a promotion at work.
Exercise at least 30 minutes a day, 3 times a week.
Find Miss Right For Me (probably a long shot, but I'll throw it in there anyways).

Biggest Regrets of 2007

2007-12-27T17:54:00.000-05:00

With 2007 quickly coming to an end, I thought it would be appropriate to reflect on my investment activities for the year and come up with a list of my biggest regrets of the year:

Thinking that I was smarter than the market.
The most explicit example of this would be Timminco (TIM-T). I had become aware of this stock when it was trading in the three to four dollar range. At that point, I had done some preliminary research on the company and determined that it was too expensive. Perhaps more importantly, in retrospect, is the fact that I had also read that silicon (the main future driver for this company) would soon be replaced by other elements in newer solar power technologies. With that in mind, I thought this stock was over-hyped. TIM ended the day at $21.91. Enough said.
Not investing in stocks in clear uptrends like I had in 2006.
This cost me dearly by missing out on some impressive gains this year.
Missing my chance to re-enter / add to positions during the August meltdown.
Between being pre-occupied with my new job and not having the guts to go all-in when the casino is burning down, prevented me from making over forty percent in several of my favourite stocks.
Not letting my winners fly until the trend is broken.
Cashing in my profits too early resulted in not getting the full benefits of the rise of stocks like Thompson Creek (TCM-T), Hanfeng (HF-T), Migao (MGO-T), Oilexco (OIL-T), and Silvercorp (SVM-T) amongst others.
Not cutting my losses early enough.
Call it my abundant optimistic outlook on life or stupidity, but by not having an exit strategy when things go wrong resulted in my losses killing most of my gains this year. Thanks for nothing Nova Uranium (NUC-X) and Liponex (LPX-T).
Not taking advantage of seasonal trends like I had earlier noted to myself.

My next post will be on my goals / resolutions for 2008. Stay tuned!

What happens when someone makes a mistake

2007-12-03T19:32:00.000-05:00

and a BIG mistake at that?

Well, in the case of Thompson Creek's trading activity today, the stock gets halted.

The following issues have been halted by Market Regulation Services (RS):
Issuer Name: Thompson Creek Metals
TSX Ticker Symbol: TCM
Time of Halt: 12:59 EST
Reason for Halt: To clear erroneous orders and to restore fair and orderly market
For further information: Market Regulation Services Inc., (416) 646-7299

Trading resumes in:
Issuer Name: Thompson Creek Metals Company Inc.
TSX Ticker Symbol: TCM
Resumption Time: 13:12 EST
For further information: Market Regulation Services Inc., (416) 646-7299

Here's the intraday chart to provide some insight as to what happened:

and the 1 year chart just for kicks:

Apparently, orders were actually undone according to at least one Stockhouse Bullboard poster so I question the accuracy of these charts in demonstrating today's activities. But these charts may cause trading software to trigger interesting recommendations and transactions in the days to come... let's see how it plays out.

And on a side note: Wouldn't it be nice to have an undo button on your trading platform?

Having a Second Job without Working

2007-11-28T19:20:00.000-05:00

What would you say if you were able to make a few extra bucks two or three times a week on top of your regular job without working?

If you're like me, you'd probably ask where you can sign up!

Well, with the recent major swings in the market I think it would be possible to accomplish such a feat fairly easily by taking short-term positions (ie. daily, overnight) on stocks that are experiencing a fair amount of volatility lately.

Now, I'm not talking about investing in a highly speculative stock that will cause you to lose sleep over or an illiquid, cow-pasture stock that you'll have to convince your neighbour is the next big diamond mine just so you can sell your stake... I'm talking more about the big boys. You know the ones: The guys on the main index with all those shares freely flowing from one hand to the next with recognizable names that just happen to be the ones you wouldn't mind owning for the long-term in the event things don't go quite according to plan.

Surely, you would have to take commissions into consideration with such a strategy but wouldn't it be nice to make an extra 100 bucks a day or so by just buying and selling a blue-chip stock within a few hours or days?

And oh yeah, don't forget that capital gains are taxed at only half the rate of your regular job's income.

Just something to keep in mind while you keep your treasure chest on the sidelines during these volatile days on the market...

How the Market Really Works

2007-11-25T12:27:00.000-05:00

Since it's Grey Cup Sunday, here's a funny skit that provides an explanation of the ingenuity of the financial markets at work...

Too bad it's true!

How Call Options Work

2007-11-20T18:59:00.000-05:00

If you've ever been curious as to what the heck "Options Trading" is all about, Preet from WhereDoesAllMyMoneyGo has written an excellent three-part series on the subject at Million Dollar Journey:

How Call Options Work I - The Basics

How Call Options Work II - Examples

How Call Options Work III - Call Option Writing

Highest Cash Levels in Years

2007-11-18T14:08:00.000-05:00

After updating my spreadsheets this weekend, I can safely say that I haven't had such a small percentage of funds held in stocks in years. My portfolio is currently approximately 87% cash. Looking at the charts of stocks on my watchlist, I can't say that I see anything very intriguing to invest in so I'm either going to have to wait from the sidelines or expand my horizons. I've missed out on the big bounce from the August lows but at this point in time, I see a lot of stocks as being 'tired' and ready to rollover. That being said, we're well into the month of November, which anectodally is the start of the run-up to the RRSP-buying season. Time will tell what happens.

McInerney's Assessment

2007-11-17T08:18:00.000-05:00

It's always interesting to read up on new ways to assess companies based on their fundamentals. Brian Milner's article, "RIM: out of the stall zone?", discusses Francis McInerney's methodology.
What follows is an excerpt from the article:

Mr. McInerney has developed an innovative means of assessing which companies are likely to exceed even the wildest expectations of the market while others are destined to bitterly disappoint and still others are at risk of squandering huge leads over rivals.

Dedicated followers of his analysis would have jumped on the Apple bandwagon long before it got overcrowded, embraced Google, Comcast and Intel, been wary of Nokia and Microsoft and steered well clear of the likes of Viacom, News Corp., Alcatel-Lucent, Ericsson and the auto makers. They also would have understood why retail giant Wal-Mart continues to brush aside all challengers and why Dell is no longer able to do the same.

But the Canadian expatriate had never subjected RIM to his rigorous formula, an oversight he vowed to correct at the behest of The Globe and Mail.

What he discovered was less than flattering, although by no means a disaster in the making.

RIM started the current fiscal year with a lousy grade of C- from Mr. McInerney, managing director of New York-based North River Ventures. But it has since improved markedly.

“It had a high velocity of capital – operating earnings as a percentage of enterprise value [equity plus long-term debt] – but a mediocre velocity of cash.”

The latter describes how fast a company can turn sales into cash, which is a simple way of assessing how efficient it is at managing its working capital. Those that excel at it get better information at a faster rate from their customers, can afford to take more risks and are more likely to sustain profits.

To measure cash velocity, Mr. McInerney's equation takes days of sales in receivables, adds them to days of inventory and subtracts accounts payable turnover.

Of course, there is more to it than that. After determining how effective a company is in managing cash, capital and the flow of information, he applies an algorithm to come up with grades from A to F, although he doesn't bother with an E.

“After you hit D, there's just no point,” he laughed.

In RIM, Mr. McInerney discovered a relatively slow organization with a strong rate of return.

Michael Dell used to describe such companies as pools of cash waiting for smarter competitors to come along and siphon off their profits.

RIM had a profile similar to Nokia's, which has made them both vulnerable to such predation, Mr. McInerney said. “Companies like this are in my risk zone.”

But in the first six months, RIM slashed inventory days to 21 from 33 and receivables to 57 days from 69. Payable turnover was down to 25 days, indicating that RIM has tightened its supply chain and cleaned up its operations. Its grade is now a more respectable B.

“During the first half, management appeared to have realized how vulnerable it was and seemed to get religion,” Mr. McInerney opined. “If it can get to an A- by the end of the fiscal year, this will indicate a major turnaround. The stock will be a keeper.”

The top-rated companies have closer to 10 days worth of inventory and no more than a month of receivables. Dell, for example, had about five days worth of inventory at its zenith, and its direct-sales business model enabled it to collect from customers before paying suppliers.

The next quarter will tell the tale for RIM, Mr. McInerney said, warning that the company is now in what he calls the stall zone. Why? Because it's much easier to slide backward at this level than it is to improve the fundamentals.

How well you manage the demands of the future depends on the number of cash wait states in your business. McInerney has developed proprietary wait state metrics to gauge your management's ability to navigate the future. You can calculate your company's Management Grade by entering your numbers at their web site.

If his North River Management Grading System throws you an A, you have one of the best performing companies in your sector. If you come up with a C, or worse, you have deep structural problems that you must address immediately. You don't want to tell shareholders after their earnings have evaporated that you got North River's Management Grade F, for free, and did nothing about it!

IBM Takes Over Cognos

2007-11-12T08:41:00.000-05:00

Cognos has long since been considered a takeover candidate in the highly-consolidatory business intelligence software industry and it finally happened today as IBM announced its intentions to purchase the company in an all-cash deal.

FP Trading Desk notes that Cognos showed deviant trading behaviour in days ahead of IBM takeover:

Cognos shows deviant trading behaviour in days ahead of IBM takeover

Ottawa-based software maker Cognos Inc. (CSN/TSX, COGN/NASD) said on Monday it agreed to be purchased by IBM (IBM/NYSE) in an all-cash deal of US$58 per share. But in the two days before the US$5-billion deal was announced, Cognos shares rose 9.5%. The stock closed at $45.69 in Toronto trading Wednesday, before rising to end the week at $50.02.

Measuredmarkets' analysis shows deviant behaviour trading in Cognos shares on Nov. 8 and 9, despite any major news from the company. However, it has long been considered a takeover candidate.

Measuredmarkets Inc.'s Early Warning Service alerts investors to when a stock’s trading pattern changes significantly from its normal behaviour. The trading analysis covers nine time periods, examining closing price, total volume and the number of individual trades. It surveys the NYSE, NASDAQ (National Market), AMEX and TSX, and is available at measuredmarkets.com

Upcoming TSX Index Rebalancing

2007-11-03T21:45:00.001-04:00

I have always wondered what kind of performance boost a stock gets when it's added to an index. One would think there would be extra demand for such a stock and hence a higher share price but from what I recall from casual observation, this is not always the case. So as a bit of an experiment, let's make a note of the likely candidates and revisit these stocks at year's end to see how they performed.

On November 2nd, The National Post's FP Trading Desk noted that:

Ahead of the December 2007 rebalancing of the S&P /TSX composite index – due to be announced by Dec. 14 and to take effect after markets close a week later – CIBC World Markets analyst Yin Luo is making his predictions as to what some of the changes may be.
QLT Inc., Angiotech Pharmaceuticals Inc., Cyries Energy Inc. and Ballard Power Systems Inc. are the four members of the benchmark index consider likely to be removed, based on data as of Oct. 30.
Meanwhile, nine companies meet the criteria for addition, Mr. Luo said in a research note. These include Allen-Vanguard Corp., Canadian Hydro Developers Inc., Canaccord Capital Inc., Mega UraniumLtd., Gold Eagle Mines Ltd., Gateway Casinos Income Fund, Timminco Ltd., Absolute Software Corp, and Sandvine Corp. European Goldfields Ltd. is also on his watch list for potential candidates for addition.

Chartgame

2007-11-03T09:18:00.000-04:00

As an avid investor, you've probably wondered how well you can predict the future performance of a stock. Perhaps, you've heard a thing or two about technical analysis but believe it's fruitless or you think you're a TA-expert, but don't feel comfortable placing your own money on the line.

Well, now there is a great time-lapse stock trading game called Chartgame where you can test your stock prediction strategies.

When playing Chartgame, the web site will present you with a random historical stock chart of an actual large cap (S&P 500) security, without telling you which company and time period the chart represents.

You are then given the opportunity to reveal the stock chart one day at a time, selecting to "buy" or "sell" the stock at various times. After a maximum of one year is played for the security, the actual name of the company, and what time period the graph was for is revealed, and you move on to another stock chart for an unknown company and time period.

You are rated on how much gains you made over how many days invested. The computer compares you to a strategy of "buy and hold" on the stocks played. Your goal is to beat that.

This a great game to sharpen your trading skills with actual historical stock charts. It is straight-forward as it simply provides you with the stock chart, daily stats, and associated volume so you don't have to be an expert in moving averages, bollinger bands, etc. to play the game. This may be a bit too simplistic for TA-experts but for the average-Joe investor like me who likes using simple technical analysis techniques to help predict future stock performance, Chartgame is an excellent way to improve your skills.

If you have time this weekend to test your skills (and/or luck) in the market, I recommend you give Chartgame a try.

Good News from our Sponsors

2007-10-31T19:38:00.005-04:00

Some of you may have noticed the new 'sponsors' displayed on the right hand side of this blog.

I encourage you to check them out as some of them have recently introduced great promotions.

Questrade, the online discount brokerage, offers a number of free trades and great commission rates. If you feel inspired to join this firm, please use the Referrer ID 'TRADER' (without the quotes) when filling out your Questrade application form.

Chapters Indigo also announced some price cuts to reflect the value of the Canadian Dollar.

You can also check out my list of recommended books on topics like Personal Finance, Real Estate, and Job Hunting by visiting my book store.

And while on the topic of blog features, you can subscribe to this blog with your favourite RSS feed reader by clicking here.

Living Small

2007-10-28T17:33:00.000-04:00

How much room do you really need to live in?

Well, if you come up with a figure like 300 square feet, then this house is for you.

According to Radu's blog, Toronto's smallest house is up for sale for approximately $600 per sq. ft.

GStock

2007-10-27T15:57:00.000-04:00

Would you trust a supercomputer to perform stock trades on your behalf?

Well, you don't have to go that far but you can have one help you with your analysis. GStock is a virtual supercomputer formed by many computers calculating a huge amount of investment strategies to give you timely buy and sell stock picks.

The site covers over 4,000 large and mid-sized US traded stocks. I just came across this site so I decided to give it a shot. Unfortunately, it doesn't currently cover several of the US stocks on my watchlist so I was disappointed but if you invest in American equities, you might want to check it out to see if your stock is covered.

Exit Strategies

2007-10-27T08:43:00.000-04:00

After examining my trading activities over the past few years, I've come to the realization that my main downfall is the lack of an exit strategy in the event that I'm wrong in my analysis. I've been hesitant to place stop loss orders in the past since I suspect brokerages take advantage of such orders to grab 'cheap' shares. Nevertheless, stop losses can play an important role in limiting your downside.

I recently heard a trader say that you should have a minimum 2:1 reward-to-risk for every trade you enter so you only have to be right half the time to break even. Of course, that's easier said than done but placing stop loss orders are a great way to force you to stay the course with your trading system and getting rid of some of the emotions involved in trading.

Another thing that has limited my gains is selling my winners too early. When I enter a trade, I have a target sell price in mind. That's all fine and dandy but what happens when it hits that target? That's right, I usually sell it. Like they say, you can never go wrong taking a profit but sometimes I'm right and I sell at or near the peak while other times, the share prices goes through the target price and the really big returns just begin.

In addition to being sure to limit my losses going forward, I'm going to have to develop a more concrete exit strategy. I have a few ideas that come to mind that I will have to refine over the next few weeks but while I do that, I'd also be interested in hearing about your strategies.

Price Drops Across Canada

2007-10-26T21:02:00.000-04:00

With the steep rise in the value of our Canadian Dollar, the media is having a field-day filling up the news hour with stories about cross-border shopping and the question as to when prices will finally drop in Canada to reflect the Dollar's strength.

Sure, prices in Canada should eventually drop but somehow I doubt they will drop to American levels. In fact, I suspect U.S. prices will increase to those levels currently found in Canada so be sure to take advantage of the "deals" across the border if you have the opportunity to do so.

Useful Links for Cross-Border Shopping:
How to Import Vehicles into Canada
Tax Exemption for Cross-Border Shopping

In other news, the Government of Canada recently launched a website to inform families of recalled food and children’s products.

S&P/TSX Canadian Dividend Aristocrats Index

2007-10-16T20:31:00.001-04:00

Standard & Poor's launched a new index to track Canada's most consistent dividend-raisers.

The S&P/TSX Canadian Dividend Aristocrats Index is composed of Toronto Stock Exchange listed Canadian companies that have increased dividends annually for at least seven years. The index consists of 35 stocks, with each stock weighted based on its indicated dividend yield of each component stock.

The index includes all of Canada's six big banks except CIBC, which didn't increase its dividend in 2003.

S&P stated that based on back-testing, the index has produced yields ranging from 3.1 per cent to 4.2 per cent over the past five years.

The Lazy Investor - Part 2

2007-10-14T16:04:00.001-04:00

Every since Derek Foster's Stop Working: Here's How You Can book hit store shelves in 2005, there have been critics of his early retirement strategy and questions surrounding its feasibility and the luck involved.

To follow-up on my previous post, The Lazy Investor - Part 1, in which I reviewed Foster's latest book, The Lazy Investor: Start with $50...and no Investment Knowledge, I thought it would be appropriate to present an interesting article I came across a few days ago that helps answer some of those questions.

Ellen Roseman's October 10th article in the Toronto Star provides some additional insights after her discussions with Foster.
What follows is an excerpt of Roseman's article, "Retiree, 34, helped by windfalls":

Last Thursday, he drove from his suburban Ottawa home – where he lives with a stay-at-home wife and four young children – and pulled out a stack of paper.

These were all his discount brokerage mailings going back to 1999. But since they weren't filed – or even unfolded – I wasn't going to sort through eight years' worth of transactions.

Meanwhile, the statements didn't tell the whole story. His investing career started in 1990, when he was 20. (He's now 37.)

Luckily, he'd prepared a summary. So, here's what I can tell you about Foster's strategy.

While he talks about saving and investing $200 a month over 12 years, that's just a baseline or minimum amount. He also added some windfall money (such as income tax refunds, GST credits, Christmas commissions while working at retail jobs and a pay-equity settlement).

He started with mutual funds, but now holds only dividend-paying stocks and income trusts. He's looking for companies whose products you use every day and whose shares you can hold forever.

Over time, he traded less and less. But in 1996, he borrowed money from his broker to buy Philip Morris, the U.S. tobacco manufacturer. Despite a $60,000 gain in a year, he sold the shares, fearing the company was vulnerable to lawsuits, and bought them back again later.

Still fond of leverage, he has more than $130,000 worth of stock bought on margin in his account (about 25 per cent of its current value).

He's been buying U.S. stocks that have become cheaper because of the falling U.S. dollar, such as Bank of America, Johnson & Johnson, Pfizer, Starbucks and Wal-Mart.

Why use borrowed money? Doesn't that make his strategy more risky? Well, Foster needs a tax break. His self-published books have brought in $150,000 in revenue he'd like to offset. (Interest paid on an investment loan is tax-deductible.)

And, as a self-described "control freak" who makes up his own mind, he's not afraid to take big stock positions. For example, he owns 1,000 Wal-Mart shares, now worth $45,000 (U.S.) and 700 J&J shares (worth $46,000).

Gutsy and confident, skeptical of conventional wisdom, Foster is not a typical investor. But he doesn't pretend to be. "Retiring at 34 is exceptional, as I state in my book," he says.

"However, this strategy is the surest way to early retirement without undue risk, and if readers follow this strategy and retire 10 to 15 years earlier than they thought, it's a success."

The Lazy Investor - Part 1

2007-10-14T15:18:00.002-04:00

Self-proclaimed as Canada's youngest retiree, Derek Foster recently published his second book on his 'no thinking strategy.' I had a chance this weekend to read his latest book, The Lazy Investor: Start with $50... and no Investment Knowledge so here's a quick book review.

Compared to his first book and national bestseller, Stop Working: Here's How You Can!, Foster concentrates his efforts this time on describing how to start investing in dividend aristocrats with a small amount of cash through DRIPs and SPPs. Foster takes you through the steps to acquire that all important first share and also provides different strategies to help teach your children about the importance of money. The book also provides an update on Foster's investments and thoughts on the future of income trusts.

While I found the original Stop Working book more inspirational (probably because it introduced me to new investment strategies at the time), I would still recommend The Lazy Investor for Canadians interested in learning about investment / early retirement strategies that you probably will never hear from the so-called "financial experts."

Derek Foster's two books would make an excellent Christmas gift for anyone you think might benefit from learning a thing or two about personal finance.

Click here for "The Lazy Investor - Part 2"

The Fed is Irrelevant

2007-10-12T18:23:00.000-04:00

Jim Rogers, author of Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market, was recently interviewed on Bloomberg and stated that the Fed is irrelevant. This obviously caught the anchorwoman offguard. If you want a good laugh while listening to some good financial insights, take a few minutes out of your weekend to watch it.

Breaking Even on SLW

2007-10-11T18:25:00.001-04:00

Today's jump in Silver Wheaton passed through my exit price target that I set a few weeks ago.

So I am now out of SLW and I didn't lose any money on a 'bad' trade that was based on emotion as expressed in my initial post on the subject stock.

This sale continues the trend of late for me. The strategy hasn't fared too well for me but it has allowed me to grow my war chest should a dip occur as I suspect it will in the next few weeks. In fact, the start of that dip might be today at many of the Canadian stocks on my watch list surged forward in the morning only to collapse in the afternoon. SLW happened to take part of this market activity as shown in the intraday chart below.

File Sharing with Pando

2007-10-06T21:55:00.000-04:00

With this being Thanksgiving, you will probably snap a few photos of friends and family when you get together this long weekend. But how do you share all those photos?

One of the easiest ways that I've found to do this is with a little piece of software called Pando.

Just download and open up Pando, enter your friend's email addresses, drag over the folder with your photos, videos, and other files (up to 1 GB at a time), and click on send.

No more worries about emails bouncing back for exceeding your friend's inbox limit.
Best of all, it's a free download.

Happy Thanksgiving!

TED Spread

2007-09-29T12:09:00.000-04:00

Brian Milner wrote a great article regarding a possible indicator of the next financial crisis:

When will the next financial crisis hit?
by Brian Milner
September 28, 2007 at 6:56 PM EDT

As the U.S. dollar plumbed new depths yesterday against the euro and other major currencies and woes stemming from the U.S. mortgage mess continued to mount, the question in the marketplace was not if, but when the next major financial crisis would hit.

To which we would add: Will we have enough warning to take cover from the coming storm? And what form should that shelter take?

It's certain that we can't rely on central bankers or other government officials to clue us in. Most are still reassuring the public that all is right with the world and that there will be little economic spillover from the turmoil in the credit and currency markets.

Two days after Bank of Canada governor David Dodge said that the beleaguered credit market was getting back to normal, the central bank showed that the situation is anything but normal when it poured nearly $1-billion into the money markets to stabilize rates.

Dealing with a separate credit issue, the European Central Bank had to provide another €3.9-billion in emergency lending to meet the borrowing needs of banks this week, which means they couldn't get the cash at a reasonable rate from other banks.

That's a bad sign, because if anyone knows whether a financial institution is harbouring buckets of bad mortgages and other junk among its supposedly high-quality assets, it's another bank.

There's a way for investors to measure this lack of confidence called the TED spread, which has largely fallen into neglect in recent years.

Mention this gauge of financial system health to a bunch of MBA students today and they are apt to look perplexed. Some may even wonder why you're talking about bed linens.

All of which upsets Donald Coxe to no end.

“It was my guiding light,” says the esteemed author and global portfolio strategist with BMO Financial Group. He credits it with keeping his job on Wall Street 20 years ago when he used it to correctly forecast the 1987 market crash.

And Mr. Coxe insists that it still has considerable value today, despite vast changes in the global financial system in recent years.

The TED spread originally was the difference between interest rates on three-month futures contracts for U.S. Treasuries and Eurodollars with identical expiration months. The higher the spread between T-bills and Eurodollar rates the greater the perceived risk of defaults. U.S. Treasuries are considered risk free, while Eurodollar rates reflect the risk that lenders won't get paid back.

The Chicago Mercantile Exchange dropped T-bill futures this past summer due to lack of interest, leaving dedicated TED followers to rely on the less precise comparison of cash bills to Libor (London inter-bank offered rate). But it still does the forecasting job, as the summer's events proved.

Before the credit crunch hit with full force, the TED spread was at a benign level of about 0.40 per cent. But it soared to a high of 2.40 in August, a level not seen since 1987 crash, and stood at 2.15 the day of the big meltdown. It soon fell back to the 1.30 level, before creeping back up. Yesterday, it clocked in at close to 1.45. So it comes as no surprise to the shrinking band of TED fans that central banks would still be facing crunch issues.

“If the banks aren't sure a bank can meet a claim, they stop advancing money to each other and the TED spread jumps,” Mr. Coxe says. “So it tells you when it is that the banks don't trust each other.”

The world of financial liquidity has changed dramatically in just a few short years. Today, there are other huge pools of international capital denominated in yen and euros, which, collectively, dwarf the eurodollar market for seekers of short-term capital. Neither existed during the last major credit crisis nearly a decade ago. Another twist is the ability of traders to move millions electronically into other currencies at blinding speeds.

But for all that, if the good old TED spread widens again beyond, say, 1.75, it's a safe bet that the system has yet to repair itself.

The TED is not going to be the only alarm bell that goes off if things spiral out of control. Others to watch include the Japanese yen strengthening, gold prices skyrocketing and U.S. financial stocks plummeting. But if the TED takes off, it will definitely be time to lower the lifeboats.

One More Hiccup?

2007-09-27T18:22:00.000-04:00

Came across this blog entry today:

One more hiccup before the rally
Leonard Zehr, today at 2:21 PM EDT

Ron Meisels’ charts are telling him to expect another market down leg that may be less severe than the August sell-off but could take some time to run its course. “Just in time for the usual start of the late- October/early-November year-end rally,” he writes.
The main reason for another swoon is that sentiment in mid-August never reached extreme proportions because after a couple of days, the consensus suggested it was just another buying opportunity. “Markets bottom on fear, not greed,” he warns.
When markets complete the latest negative wave, he predicts a new bull market could take flight, lasting through 2008 and possibly the first half of 2009.
His current sectoral reading has energy “selectively positive,” as stocks such as Canadian Natural Resources Ltd., Petro-Canada, Imperial Oil Ltd, EnCana Corp. and the more speculative Connacher Oil & Gas Ltd. have all held their ground, despite the August sell-off.
In materials, Barrick Gold Corp., Agrium Inc. and Teck Cominco Ltd. are “targeted significantly higher,” while insurers “look much better” than the banking sector.
Consumer staples are still a “major disappointment,” as Loblaw Cos. Ltd. and George Weston Ltd. are hitting multi-year lows, he adds.

I also have this feeling and will probably wait until November before dipping my toes in the market in a big way (unless some great deals come up). Unfortunately, I got out of my Chinese fertilizer plays way too early but I didn't fare too badly with my other recent sells of Agnico-Eagle and Rogers. We'll see how October shapes up...

"True" Yield

2007-09-24T18:18:00.000-04:00

Leonard Zehr of The Globe and Mail posted the following article:

Going beyond dividend yield
Leonard Zehr, today at 8:50 AM EDT

Take the dividend yield and subtract the three-year compounded annual growth rate of shares outstanding. What you’re left with is “true yield,” which provides a “more comprehensive measure of how firms return capital to shareholders,” contends UBS strategist George Vasic.

By his reckoning, there are only nine stocks in the TSX composite index, with a dividend yield 1.5 per cent, a true yield of 3 per cent, no share dilution over the last three years, five consecutive dividend increases with growth of greater than 10 per cent and a payout ratio of less than 50 per cent.

They are: Methanex Corp., National Bank of Canada, Canadian National Railway Co., Manulife Financial Corp., Canadian Imperial Bank of Commerce, Bank of Montreal, Bank of Nova Scotia, Sun Life Financial Inc. and Royal Bank of Canada.

Par

2007-09-21T19:00:00.000-04:00

It finally happened! $1 CAD = $1 USD.

More Selling into Strength

2007-09-18T18:38:00.001-04:00

Well, I did it again. I sold my shares in Hanfeng today.

As with my other recent transactions, I still believe Hanfeng is a great company but a ~40% rise in just over a month makes one wonder what the risk-reward ratio is at this time.

Had I been less occupied at work and quite honestly, had more guts, I would have made a killing in the past month with some of my stock picks as I had some extra cash available to invest. Oh well, another lesson learned: when markets are tumbling, be sure to put in stink bids to take advantage of that one day when everything collapses completely and bargains are abound.

Hopefully, I can re-establish a position at a lower price later this year.

Selling into Strength

2007-09-06T17:12:00.001-04:00

Continuing my recent theme of selling some of my holdings into strength and in the process, redefining my portfolio, I took advantage of today's gold rally to sell my Agnico-Eagle shares.

Agnico jumped 9.67% today as gold jumped 2% (according to Kitco). I still believe that Agnico is a great company and has excellent prospects going forward but it's another one of those stocks that has had a huge jump since hitting a low of $36.68 on August 16th; that almost 39% in three weeks!

By selling these shares, I have reduced my precious metals exposure. This might not be the brightest move as gold and silver tends to perform best at this time of year. That being said, I still hold Goldcorp and Silver Wheaton; both of which, had good days, as well today.

I intend to utilize the cash from this transaction to finance a future investment that will help diversify the assets in my stock portfolio.

Migao - Too Much, Too Soon?

2007-08-31T16:25:00.001-04:00

Migao has bounced back nicely since its recent low of $5.51 during that wild session on August 16th.

In two weeks' time, the share price has jumped back up to $7.82; that's almost 42% in two weeks! For this reason alone, I decided to sell my Migao shares today and wait for a re-entry point later this year. We'll see how this decision turns out.

Check Your Brokerage Account Regularly

2007-08-28T18:12:00.000-04:00

The recent security breach at online brokerage firm, TradeFreedom Securities Inc., re-emphasizes the importance of checking your account activities on a regular basis, even if you are a passive investor. I would suggest logging in at least once a week just to make sure nothing fishy is happening and report any irregularities right away.

Another Reason to Check Your Lottery Tickets

2007-08-28T18:01:00.000-04:00

If you play the lottery, you should always check your tickets manually as this news story identifies a potential issue with automated lottery checkers.

VOIP to Cut Cell Phone Rates

2007-08-25T12:19:00.000-04:00

Although I don't have a cell phone, I found the following article interesting:

New firm uses VOIP to cut cell phone rates

Fri Aug 24 2007
By Geoff Kirbyson

A Vancouver-based next generation mobile company is hoping to carve out a niche in the long distance cellular market by offering voice over Internet protocol calls for just pennies a minute.

Bill Tam, CEO of EQO, which is pronounced "echo", said it developed its technology because long distance charges on mobile devices are still sky-high compared to those on land lines.

EQO's service, which was launched across the country Thursday, charges 2.6 cents per minute for long distance calls in Canada and to 30 other countries. It also offers free instant messaging using a number of different platforms, including MSN, AIM, Yahoo!, Google Talk, ICQ and Jabber.

In order to use EQO, users have to go to the company's website, download its application to their wireless device and click on an EQO icon when making a long distance call.

"Consumers already have cell phones," said Tam. "We said, 'let's do it in software so they don't have to buy another piece of equipment.'"

Eamon Hoey, a Toronto-based telecommunications analyst, said EQO is playing in the same space as Yak Communications and Gold Line.

Blog Roll Suggestions

2007-08-23T17:59:00.000-04:00

Over the next few weeks, I'll be establishing a 'blog roll,' listing my favourite Canadian personal finance blogs.

If you feel that your blog is a valuable information source for Canadian investors, feel free to leave a comment with your URL and I'll check it out. If I agree, I'll place it on the roll.

You can also nominate other PF blogs that you believe Canadians shouldn't live without.

Holding on Tight

2007-08-20T21:10:00.000-04:00

The good news is the cash in my portfolio is growing, percentage wise (at least); the bad news is that it's at the sake of my equities! The hemorrhaging has stopped temporarily... hopefully, for good!

I'm holding on tight to my hard-earned cash as I'm still not comfortable in investing in some of the discounted stocks on my watch list. Although they have present good buying opportunties. I have a sneaky suspicion that we will see another downdraft in the weeks and months to come, and we might not recover from this downtrend until November.

Hopefully, I'm wrong and the worst is over... but just in case I'm right, I'm taking this time 'away from the market' to identify some stocks that I'd like to get my hands on and decide if I should average down on the stocks I currently own. I'm also trying to figure out how much of my cash position should be devoted to each of these two strategies.

Once I've identified these stocks, I will try to determine their long term support levels and place a low-ball bid that just might happen, should the worst case scenario actually occur.

The volatility of late presents excellent daytrading opportunities to make quick cash but my work obligations make it impossible for me to partake in any such activities. As such, the long term view of stocks must take precendence in my portfolio at this time.