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Portfolio Update as of Feb 2, 2008
2008-02-05 13:43:00
-up 1% from last month-up 9% in 2007-CDN 67%-U.S. 30%-International 3%TRP - 4.31%CSH.UN - 4.27%GWO - 4.49%PFE - 4.99%POW - 3.97%WAG - 3.27%L - 2.62%UNS - 2.47%GZ - 2.17%TD - 13.02%EIT.UN - 2.45%JNJ - 5.43%MMM - 3.52%C - 2.68%ATD.B - 3.09%BCE - 5.22%IIC - 2.36%O'Shaughnessy’s Global Fund - 3.39%American Growth Fund - 0.87%CDN Value Fund - 3.11%Small Cap Growth Fund - 3.87%Chou Associates Fund - 9.34%Money Market Fund - 9.08%The only change in my portfolio over the last month was the purchase of IIC. I also contributed some cash to the portfolio which increased my cash position to 9% from 6%. The cash injection was also responsible for the 1% portfolio increase. Excluding the cash injection the portfolio would have been down approximately 2%. The reason for the decrease was the general malaise that the markets have experienced over the last month, no individual name was down in any significant way. As always I’ll continue to monitor the markets and make acquisitions when I percei...
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ING Canada – IIC
2008-02-04 13:44:00
I recently purchased a small amount of ING Canada (IIC - TSX). I am going to continue to follow it and possibly double down in the future. I plan on holding this name for approximately 2 to 5 years (due to the cyclicality of the P&C industry). However, I don’t expect much movement in the stock for the next 6-12 months.ABOUT “ING Canada Inc. is the largest provider of property and casualty (P&C) insurance in Canada, operating through ING Insurance, ING Novex, Nordic, belairdirect and Trafalgar. Our principal products are automobile, property and liability insurance, which we provide to individuals and small to medium-sized businesses across Canada. Consumers can purchase insurance products from ING Insurance through a network of 2800 brokers across the country, from belairdirect through its web site and call centres as well as from Trafalgar Insurance through Grey Power brokers and call centres”Current P/E – 8.5X-2008 Estimated PE – 9.1X-2009 Estimated PE – 8.1X-ROE – 2...

TransCanada Corp ? TRP
2008-01-30 13:43:00
"TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure. Our network of more than 59,000 kilometres (36,500 miles) of pipeline taps into virtually all major gas supply basins in North America. TransCanada is one of the continent?s largest providers of gas storage and related services with approximately 360 billion cubic feet of storage capacity. A growing independent power producer, TransCanada also owns, or has interests in, approximately 7,700 megawatts of power generation."Investors in TranCanada Corp. all received a pay raise yesterday (albeit a small one). TRP raised their quarterly dividend by 6% and reported fourth quarter net income of $0.70/share (up 27% from last year). While fourth quarter earnings were up 8% from 2006. Year over year net income was 5% to $2.31/share, while earning were up 10% to $2.09/share.In my opinion TRP is a solid Canadian company that should part of the foundation of any diversified di...

Dividend Reinvestment Plans - DRIPs
2008-01-28 13:36:00
If you are unfamiliar with Dividend Reinvestment Plans please read the following posts from November, 2007 ?DRIPS? and ?To DRIP or not to DRIP?.I have recently chosen to enroll my entire account in a synthetic DRIP program. In a previous post I had mentioned that I chosen to DRIP some of my holdings however all holdings are now DRIPed and all new holdings will automatically be enrolled in a synthetic DRIP program without me having to notify a broker. Setting up an automatic DRIPing program is extremely easy and can be done with one five minute phone call to your discount broker. You simply call your discount broker, and tell them which account you?d like to enroll. I?ve chosen to DRIP my entire account to take advantage of recent declines in the market. Additionally, my portfolio is now at the point where I won?t be adding a lot of new names and as a result won?t require the cash flow from my current holdings to finance the purchase of new names. Additionally, with approximately 20...
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The Facts about Wal-Mart
2008-01-25 15:06:00
I discovered a great article by Charles Fishman, ?The Wal-Mart You Don?t Know?while doing my daily read over at Million Dollar Journey. The article explores Wal-Mart from the suppliers? point of view and illustrates the enormous power that Wal-Mart can exert not only on their suppliers but also on the entire global economy. The author argues that: ?The giant retailer's low prices often come with a high cost. Wal-Mart's relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line??Here are some aspects of the article that I found interesting. -? Wal-Mart is not just the world's largest retailer. It's the world's largest company--bigger than ExxonMobil, General Motors, and General Electric.?-Last year they sold $255.5 billion worth of goods.-In 3 months they sells more than number-two retailer Home Depot sells in a year.-They do ?more business than Target, Sears, Kmart, J.C. Penne...
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Johnson & Johnson (JNJ) - A Sliver of Good News
2008-01-23 13:41:00
Well it?s been a pretty dismal couple of weeks for the markets with many companies (particularly financials) releasing earning reports that surprised even the bearish of analysts. However, despite all the doom and gloom there are a few positive results out there.Yesterday Johnson & Johnson announced record sales of $16 billion (a 16.6% increase from Q4 2006) and a 10.8% increase in fourth quarter EPS. Excluding special items their fourth quarter EPS was $0.88 beating the analyst consensus of $0.86 a share. Although these aren?t blockbuster results they are exactly what I?d expect from JNJ, consistent and steady. Even more importantly I think it?s important to look at where the growth is coming from:CONSUMER SEGMENTU.S Sales: Up 37.6% to $1.63 billion from $1.18 billionInternational Sales: Up 57.9% to $2.18 billion from $1.38 billionTotal Growth: Up 48.5% (The huge increase in this sector is partially a result of the acquisition of Pfizer?s consumer division.)PHARMACEUTICAL SEGEMEN...
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Warren Buffet?s Holdings as of September 30, 2007
2008-01-21 18:05:00
As Warren Buffet is arguably the worlds most successful investor I think it?s worth the time to periodically check his holdings to see where he?s deployed his capital. The below chart lists his holdings as of September 30, 2007. Although, this information is around 4 months old Warren Buffet is a very long term investor and has been quoted as saying ?Our favourite holding period is forever? as such I don?t think the composition of his portfolio would have changed in any significant way since September.
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Canadian Bank Yields & Payout Ratios
2008-01-18 14:04:00
I came across these numbers yesterday in an article entitled ?Could U.S. bank dividend contagion spread north?? by Rob Carrick from the Globe and Mail. Rob Carrick calculated the below figures based on the stock prices at the close of January 16th, 2008 and on the estimated earnings per share for 2008. Please click here to view Rob Carricks? entire article.Bank of Montreal (BMO)Yield: 5.09% Payout Ratio: 46.7%National Bank of Canada (NA)Yield: 5.06%Payout Ratio: 39.3%Cdn. Imperial Bank of Commerce (CM)Yield: 5.03%Payout Ratio: 38.7%Royal Bank of Canada (RY) Yield: 4.11%Payout Ratio: 41.7%Bank of Nova Scotia (BNS)Yield: 4.00%Payout Ratio: 40.0%Toronto-Dominion Bank (TD)Yield: 3.43%Payout Ratio: 36.2%
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Brookfield Asset Management (BAM.A)
2008-01-16 13:46:00
?Brookfield is a global asset manager focused on property, power and other infrastructure assets with approximately US$90 billion of assets under management. We own and manage one of the largest portfolios of both premier office properties and hydroelectric power generation facilities as well as transmission and timberland operations, located in North and South America and Europe.?In my opinion BAM.A is the perfect candidate for a long term hold as they are in relatively recession resistant, renewable areas that will continue to grow in the future. Their five primary areas interest are:1. Property - $35 billion of property assets under management in North and South America, Europe and Austraila2. Power ? invested primarily in high quality, long life hydroelectric power facilities located primarily in north east North America as well as Brazil.3. Timber - have 2.5 million acres of high quality timberlands under management4. Infrastructure ? over 11,000 kilometers in Northern Ontario ...
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40 Year Mortgages are now in Canada
2008-01-14 13:32:00
Well it?s official 40 year mortgages have been in Canada for about 6 months now. On June 20, 2006 Wells Fargo became ?the first lender to offer nationwide to Canadian consumers a mortgage with a 40-year amortization". Since then virtually all of the major mortgage players in Canada are offering similar products. The timing seems impeccable given what?s currently happening in the United States mortgage market. Now everyone, even those who probably shouldn?t have a mortgage, can afford to buy a house in Canada. Although I disagree with 40 year mortgages in principle and under no circumstances would consider one for myself I?m not complaining as I currently have a significant amount of my portfolio in Canadian financial companies and any chance they get to increase earnings is fine by me. The disadvantages of 40 year mortgages are obvious (from the borrowers point of view) but just to drive the point home here is a little example of how much a 40 year mortgage would actually cost you....
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CIBC A History of Screw Ups and a Time to Buy?
2008-01-10 14:44:00
CIBC certainly seems to be unique among the big 5 Canadian banks. They have made themselves unique by the fact that they can?t seem to be able to avoid screwing up. They seem to have an innate ability to identify and then participate in risky market shenanigans. Let?s briefly take a look at some of the more recent debacles.Dec 22, 2003Canadian Imperial Bank of Commerce agreed to pay 80 million dollars to settle US charges that it aided Enron's financial fraud and pledged to assist a federal criminal investigationAugust 2005They took a $2.5 billion after-tax charge against its profit in the third quarter ended July 31, 2007 to cover the payment and other Enron issues. After taking this huge write down in 2005 CIBC was adamant about avoiding ?risky investments?. Just 2 short years later they announced that they would incur approximately $1 billion in charges due to their exposure to the U.S sub-prime mortgage market. However, many analysts now believe that CIBC will need to write do...
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About Warren Buffet
2008-01-09 15:32:00
I don?t think there is anyone out there who doesn?t know who Warren Buffet is however, just in case I?m wrong I?ll give you a quick bio with a few of the lesser known facts.- Born in 1930, Nebraska, Omaha- Arguably the world?s most successful investor.- 2nd richest man on the planet with an estimated net worth of over $52 billion.- At 11 he bought his first stock. He purchases 6 shares of Cities Service preferred stock [3 shares for himself, 3 for his sister, Doris]- At 13 he filed his first income tax return, deducting his bicycle as a work expense for $35.- Received a Bachelor of Arts/Science from the University of Nebraska Lincoln, Science- Was rejected from Harvard grad school for ?being too young?- Received a Masters of Science from Columbia where he studied under his mentor and investing legend Benjamin Graham.- Bought control of textile firm Berkshire Hathaway 1965. Today Berkshire Hathaway is a huge holding company that owns controlling interests in a multitude of stocks.- I...
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Dividend Growing Stocks VIII ? Manulife Financial (MFC)
2008-01-07 14:31:00
?Manulife Financial is a leading Canadian-based financial services group serving millions of customers in 19 countries and territories worldwide. Operating as Manulife Financial in Canada and Asia, and primarily through John Hancock in the United States, the Company offers clients a diverse range of financial protection products and wealth management services through its extensive network of employees, agents and distribution partners. Funds under management by Manulife Financial and its subsidiaries were Cdn$399.0 billion (US$400.5 billion) as at September 30, 2007.?-Current PE ? 14.2X-2008 Estimated PE ? 12.5X-2009 Estimated PE ? 11.11X-ROE ? 16.32%-Current Yield ? 2.5% -5 Year Average Yield ? 1.7%-Current Payout Ratio ? 30%-5 Year Historical Payout Ratio ? 24%-3 year dividend growth rate ? 28.17 %-5 year dividend growth rate ? 30.10%-Well diversified internationally with a strong presence in the emerging asian markets.-?Manulife Financial is one of two publicly traded life insura...
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Bottom Line vs. Top Line
2008-01-04 19:04:00
I?ve received a few e-mails from readers asking the difference between top line and bottom line growth. I thought it would be appropriate to post my answer here as these are very common terms that most companies use in both their reports and in conference calls and interviews. For example, you?ll often hear statements such as ?although bottom line growth slowed a little more than expected this quarter we were very pleased with the top line growth and are on target to blah blah blah...? Simply put, the bottom line is a company?s income after all expenses have been deducted. If you take a look at an income statement the reasoning behind the term ?bottom line? will become obvious as net income is literally the bottom number on the statement. Other terms for the bottom line are ?net income? or ?net profit?.Top line growth refers to the ?gross sales? or ?gross revenue? of a company. For example, if a company increased their sales or revenue by 20% then they are said to have experienced ...
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Portfolio Update as of Jan 1, 2008
2008-01-02 14:43:00
-up 0.7% from last month-up 8.7% in 2007-CDN 66%-U.S. 31%-International 4%TRP - 4.46%CSH.UN - 4.67%GWO - 4.91%PFE - 4.83%POW - 4.41%WAG - 3.44%L - 2.80%UNS - 2.87%GZ - 2.67%TD - 13.25%EIT.UN - 2.46%JNJ - 5.73%MMM - 3.67%C - 2.65%ATD.B - 3.32%BCE - 5.81%O'Shaughnessy?s Global Fund - 3.65%American Growth Fund - 0.90%CDN Value Fund - 3.39%Small Cap Growth Fund - 4.19%Chou Associates Fund - 9.52%Money Market Fund - 6.39%The only change in my portfolio over the last month was that my very small position in BA.UN was sold through the ?Small Unitholder Selling Program?. My strategy of buying out of favour, high quality, dividend growth companies will remain the same in 2008 as it was in 2007.. I don?t anticipate initiating many new positions in 2008 however, I will be keeping a close eye on U.S financials and suspect that I?ll be making some acquisitions in this sector later in the year.
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Favorite Quotes from Warren Buffet
2007-12-31 01:15:00
I thought I would use my final post of the year to share a few of my favorite quotes from the world's most successful investor, Warren Buffet .?Wide diversification is only required when investors do not understand what they are doing.??We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.??We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'??Time is the friend of the wonderful company, the enemy of the mediocre.??The business schools reward difficult complex behavior more than simple behavior, but simple behavior is more effective.??Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.??Our favourite holding period is forever.??Only when the tide goes out do you discover who's been swimming naked??Only buy somethi...
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2008 U.S Dividend Growth
2007-12-28 17:51:00
It has been a great year for dividend growth investors with over 60% of the S&P constituents increasing their dividend in 2007. On average the companies comprising the S&P 500 increased their dividend payments by a healthy 9.7%. Total dividends paid by S&P 500 companies broke a new record with a whooping $256.6 billion distributed to shareholders. This is up $31.8 billion from $224.8 billion in 2006.According to S&P analysts dividends will continue to rise 2008 with the average estimated increase to be 9.3%. However, this growth is not expected to be evenly distributed amongst the S&P 500 group of companies. U.S financials are going to be the obvious laggards as virtually all growth in that sector is expected to be muted by the on going sub-prime fiasco. Many analysts are in fact predicting some significant dividend cuts from the large U.S financials, which account for 30% of the dividends paid by S&P constituent companies. Respected analysts such as Goldman Sach?s William Tanona, ...
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Canadian ETFs
2007-12-26 18:37:00
Those of you that are pursuing (or interested in pursuing) an index or ETF based investment strategy might find the below list helpful. I?ve listed every ETF that trades on the TSX for your perusal.iShares CDN S&P/TSX 60 Index Fund (XIU)iShares CDN S&P/TSX Global Gold Index Fund (XGD)iShares CDN MSCI EAFE 100% Hedged to CAD Dollars Index Fund (XIN)iShares CDN Scotia Capital Universe Bond Index Fund (XBB)iShares CDN S&P/TSX Capped Energy Index Fund (XEG)iShares CDN Scotia Capital Short Term Bond Index Fund (XSB)iShares CDN S&P 500 Hedged to Canadian Dollars Index Fund (XSP)iShares CDN S&P/TSX Capped Financials Index Fund (XFN)iShares CDN S&P/TSX Capped Composite Index Fund (XIC)iShares CDN Dow Jones Canada Select Dividend Index Fund (XDV)iShares CDN S&P/TSX Capped REIT Index Fund (XRE)iShares CDN S&P/TSX Completion Index Fund (XMD)iShares CDN S&P/TSX Capped Materials Index Fund (XMA)iShares CDN S&P/TSX Capped Income Trust Index Fund (XTR)iShares CDN S&P/TSX Capped Information Technol...
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Recent Canadian Dividend Increases
2007-12-21 14:27:00
There is nothing more satisfying to a dividend growth investor than a nice juicy dividend increase. Here is a quick recap of some of the Canadian dividend increases in the last 3 weeks.1.National Bank (NA) increased their quarterly dividend 3.33% to 62 cents/share.2.Reitmans (RET.A) increased their quarterly dividend 12.5% to 18 cents/share.3.Astral Media (ACM.A) increased their semi-annual dividend 25% to 25 cents/share.4.Canadian Western Bank (CWB) increased their quarterly dividend 11% to 10 cents/share.5.Bank of Nova Scotia (BNS) increased their quarterly dividend by 4.44% to 47 cents/share.6.A&W Royalties Income Fund increased their monthly distribution 2.9% to 10.6 cents/unit.7.Laurentian Bank (LB) increased their quarterly dividend 10.3% to 32 cents/share.8.Fortis (FTS) increased their quarterly dividend 19% to 25 cents/share.9.Cameco (CC) increased their quarterly dividend 20% to 24 cents/share.10.Encana (ECA) stated that they would increase their quarterly dividend 100% to...
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Santa Claus/Christmas Rally
2007-12-20 14:03:00
Every year there is talk about whether or not we are going to have a Santa Claus rally, and like many other phenomenon in the world of investing we can speculate about the possibilities until we?re blue in the face. However, we won?t actually know if there is going to be a rally until after it?s happened.What is a Santa Claus or Christmas Rally ?A Santa Claus rally is the phenomenon of the stock market rallying in the week between Christmas and New Year (this of course doesn?t always happen).Why does it Happen?There is no single reason behind the Christmas rally but there are many possible explanations that have been suggested: 1. People investing their Christmas bonuses2. General happiness of fund managers and investors due to the festive season.3. Investors erroneously equating increased sales over the Christmas period to increased future share prices.4. Money managers pilling money back into the market so that they don?t have to explain why they ended the year with such a high cas...

Recession Resistance Portfolio - compiled
2007-12-17 14:22:00
As promised here is a compiled list of recession resistant stocks. Thanks to ?Thicken my Wallet? and ?Money Gardener? for contributing.Sin StocksCDL.A - TSXMO - NYSEROC- TSXBUD - NYSEDEO - NYSEUTX - NYSEBA - NYSEBTI - AMEXITY - NYSERAI - NYSECG - NYSETAP.A - TSXHealth CareJNJ - NYSECL - NYSEWAG - NYSETEVA - NASDAQPFE - NYSEBAX - NYSECLC.UN - TSXSC ? TSXMRK - NYSECVS - NYSEGSK ? NYSEPG - NYSESGP - NYSEGILD- NASDAQUtilities TRP - TSXENB - TSXEP.UN - TSXFCE.UN ? TSXEMA - TSKCU ? TSXMPT.UN ? TSXAPF.UN ? TSXACO.X ? TSXMPT.UN ? TSXIPL.UN - TSXPIF.UN ? TSXT-NYSET.A-TSXRCI.B - TSXStaplesKO - NYSETHI-TSXL - TSXPEP-NYSECLX-NYSEFinancialsSLF - TSXMFC - TSXGWO - TSX
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Recession Resistant Funds and ETFs
2007-12-14 14:12:00
If you don?t have a lot of capital to deploy or simply want to limit to your exposure to any individual names here are some mutual funds and ETFs that you might want to consider:MUTUAL FUNDS1. Vice Fund (VICEX) ?The Vice Fund invests in companies, both domestic and foreign, engaged in the aerospace and defense industries, owners and operators of casinos and gaming facilities, manufacturers of gaming equipment such as slot machines, manufacturers of cigarettes and other tobacco products, and brewers, distillers, vintners and producers of other alcoholic beverages?2. T. Rowe Price Health Sciences (PRHSX)?To invest at least 80% of net assets in common stocks of companies engaged in the research, development, production, or distribution of products or services related to health care, medicine, or the life sciences. While the fund can invest in companies of any size, the majority of fund assets are expected to be invested in large- and mid-capitalization companies.?3. MFS Utilities (MMU...
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Building a Recession Resistant Portfolio
2007-12-13 13:37:00
As promised in my last post ?Recession Proof your Portfolio ? here is a list of securities that you can use as a starting point to research your own recession resistant portfolio. Please feel free to add any other picks you feel I?ve missed in the comments section and I?ll post a compiled list.Sin StocksCDL.A - TSXMO - NYSEROC- TSXBUD - NYSEDEO - NYSEUTX - NYSEBA - NYSEBTI - AMEXITY - NYSERAI - NYSECG - NYSETAP.A - TSXHealth CareJNJ - NYSECL - NYSEWAG - NYSETEVA - NASDAQPFE - NYSEBAX - NYSECLC.UN - TSXSC ? TSXMRK - NYSECVS - NYSEGSK - NYSESGP - NYSEGILD- NASDAQUtilities TRP - TSXENB - TSXEP.UN - TSXFCE.UN ? TSXEMA - TSKCU ? TSXMPT.UN ? TSXAPF.UN ? TSXACO.X ? TSXMPT.UN ? TSXIn my next post I will list a few mutual fund and Exchange Traded Funds that would be appropriate for a recession proof portfolio. (Disclaimer: As always please do your own research and make your own decisions on which investments on when to buy or sell. Nothing I say should be bastardized or construed in any way ...
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Recession Proof your Portfolio
2007-12-11 16:00:00
If you?re like many other small investors out there you might be feeling a little pang of worry about the possibility of a recession and are starting to unload some of your more cyclical and economically sensitive names. You could simply take the proceeds of your sale and dump them into fixed income products but with bond yield so low what?s the point? Unless of course your only goal is capital preservation as current yields will just barely beat inflation. For those of you nervous about the future of the economy but want to stay invested in equities you might want to take a look at the following three recession resistant areas: 1. Sin Stocks ? These would include companies involved with: booze, cigarettes or weapons. Do you know anyone who?s stopped drinking or smoking when they?ve fallen on economically bad times? Wars continue on regardless of the state of the economy.2. Health Care ? Even if the economy is in rough shape people will continue to visit the doctor, continue to take...
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Recession
2007-12-07 18:16:00
There has been a lot of talk recently in the financial news about the big ?R?? recession. If you?ve tuned in to any business channel in the last week you would have inevitably heard at least one talking head espousing their prediction of whether or not the US will enter a recession. We all know that a recession is bad but what exactly does it mean? And how do we know when we get there?There is no absolute universal definition of a recession however, the definition used in the press and financial media is simply ?two or more consecutive quarters of real GDP decline.? However, I prefer the description given by the National Bureau of Economic Activity (NBER):?It's more accurate to say that a recession-the way we use the word-is a period of diminishing activity rather than diminished activity. We identify a month when the economy reached a peak of activity and a later month when the economy reached a trough. The time in between is a recession, a period when the economy is contracting. ...
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Retirement Nest Egg at the Close of Dec 3, 2007
2007-12-05 13:37:00
-up 1.4% from last month-up 7.9% in 2007-CDN 64%-U.S. 32%-International 4%TRP - 4.37%CSH.UN - 4.24%GWO - 4.91%PFE - 5.12%POW - 4.52%BA.UN - 0.37%WAG - 3.37%L - 2.81%UNS - 2.50%GZ - 2.06%TD - 14.29%EIT.UN - 2.49%JNJ - 5.95%MMM - 3.65%C - 3.06%ATD.B - 3.35%BCE - 5.77%O'Shaughnessy?s Global Fund - 3.78%American Growth Fund - 0.95%CDN Value Fund - 3.44%Small Cap Growth Fund - 4.01%Chou Associates Fund - 10.06%Money Market Fund - 4.92%I made a few changes over the last month, I initiated a half position in C and took a full position in BCE. The 1.4% increase in my portfolio was a result of contributions and not share appreciation. Discounting my contributions in November my nest egg was actually down 2% from the end of October and up only 5.9% in 2007. The majority of the decline was a result of the underperformance of three of my holdings L, ATD.B and CSH.UN. I will continue to watch all three of my decliners and am considering selling L for tax reasons and switching into WN.
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Purchased BCE
2007-12-04 13:35:00
Shortly after Friday?s post I decided to take a full position in BCE. I am fully aware that there is some risk in this play. However, I believe that the risk reward favours investing in BCE. The worst case scenario as an investor is that the buyout does not occur and I?m left holding a position in Canada ?s largest telecommunications company. Although the possibility exists that the deal will not go through here are the reasons I believe it will: 1. The Teachers Pension plan is not dumb and they are aware that there has always been regulatory risk and rumours regarding the opening of telecommunications markets in Canada. 2. The bond holders trying to block the deal are Bell bondholders not BCE bondholders. 3. Credit markets are in disarray due to the sub prime mess, which could cause problems raising the necessary capital. However, if financing cannot be obtained they have other options such as: increasing the amount of capital invested and refinancing later. 4. The consortium coul...
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BCE ? Still a Play?
2007-11-30 17:11:00
As I?m sure everyone knows a consortium led by Teachers' Private Capital, Providence Equity Partners and Madison Dearborn Partners have made arrangements to acquire all of outstanding common and preferred shares of BCE. The deal is expected to close in the first quarter of 2008 and shareholders have overwhelmingly approved the $42.75 offered for each common share. Despite this fact (at the time writing) BCE is only trading at $39.40. This represents a discount of $3.35 or approximately 7.8%. Additionally, two dividends will be paid before the buyout for a total which will add another $0.73 per share. Combine the capital appreciation and the dividend income and that represents an upside of $4.08 or 10.3% between now and the second quarter of 2008. In my opinion a potential six month return of 10.3% is certainly very attractive in this environment. There is only one obvious risk to this scenario, the takeover does not happen. In my opinion the risk of this is minimal (but does exist...
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A Couple Stocks with Huge Buyback Programs
2007-11-29 16:20:00
I just wanted to point readers to these two high quality companies that have initiated massive share buybacks.1. Cisco (CSCO) ? Cisco just increased the amount of their share buyback plan by $10 billion bringing their total buyback program up to $62 billion. With a market cap of 170 billion this buyback represents approximately 36% of their outstanding shares. In further support of the stock David Dreman, a respected and successful value investor has recently been a buyer.2. American International Group (AIG) ? AIG has been aggressively buying back it?s shares over the last year (69 million shares) and will be adding another $8 billion to it?s buyback plan. Supporters of the stock include famous investors Micheal Price and Bruce Kovner who both have positions in AIG.In my opinion any company that is undertaking massive share buybacks are at least worth taking a look at, as it indicates that the management of the company believes that the shares are fundamentally undervalued and are ...
More About: Stocks , Programs , Couple , Buyback , Huge

DRIPs
2007-11-26 15:24:00
After my last post about DRIPs I received a few e-mail enquiries regarding different aspects of DRIPs so I thought it would be worthwhile to go over the basics.What is a DRIP?DRIP stands for Dividend Reinvestment Plan. There are 3 different types of DRIPs however they all work on the same principle, instead of shareholders receiving dividend payouts in cash they receive their dividend payout in the form of more company shares.3 basic types of DRIPsCompany RunThis type of DRIP is administered directly through the publicly traded company. Fractional shares are permitted in this type of DRIP meaning that if you receive a quarterly dividend of $1 and the share price is $5 you would receive an additional 1/5 of a share. Additionally, many company run DRIPs also provide shareholders some incentive for staying enrolled ie ? 3% bonus to the regular dividend. Company run DRIPs also usually offer a Share Purchase Plan which is a plan that allows investors to buy additional shares with no comm...
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