Owner: Financial Jungle URL:www.financialjungle.com Join Date: Fri, 27 Apr 2007 02:43:40 -0500 Rating:0 Site Description: A Vancouverite's journey to financial freedom. Tools include stocks, mutual funds, ETFs, dividends, value investing and real estate. Site statistics:Click here
New Deep Value Investor On BNN 2007-04-27 17:43:28 Value investors will be pleased to learn that Pat Naccarato, manager of the successful AIC Value fund, is now sharing his value wisdoms on the Market Call segment of BNN. Okay, I can hear some people giggling. BNN guests are often stereotyped as talking heads by many investment forums, but I believe each guest should be evaluated on his own merits.
Deep value investors are a rare breed, because they’re natural contrarians who go against the crowd. It is the ability to think independently that helps them hunt for out-of-favour gems when no one is looking. There are plenty reasons to like Pat Naccarato. It is not because he outperformed S&P 500 13 out of 15 years, or that I’m holding many of his current recommendations. It is the way he rationalizes his investment philosophies. Pat puts capital preservation as his number priority. He emphasizes one way to keep your risks in check is to buy companies at or near their book value, because book value is a more stable yards Read more:Value
, Investor
CMHC Fee Reduction 2007-04-26 18:52:50 I just learned homebuyers are finally getting some relief in the overheated real estate market. Effectively immediately, buyers with at least 20% down will not longer pay a dime for the CMHC insurance premium.
“We believe that a great number of home buyers will benefit from this change and we are delighted to be able to take a leadership position in making this new option available immediately,” said Cid Palacio, Vice President, BMO Bank of Montreal.
Ms. Palacio noted that based on an average home price of $300,000, a home buyer with only a 20 per cent down payment can now save an average of $2500 in insurance premiums.
To the best of my knowledge, the new fee structure will look as follow. Since the news is so recent, I can’t find official confirmations of these numbers. Not even CMHC’s own website is updated as of this writing. I’ll update this post as I learn more.
[Edit: Just gotten words from my mortgage broker that the only change is the elimin
Do You Get What You Deserve? 2007-04-25 17:49:23 Not according to my real estate mentor, Ozzie Jurock, “In life, you don’t get what you deserve; you get what you negotiate.” In the end, I concede that real estate isn’t my real calling, but one can easily relate this marvelous quote to other aspects of personal finance. Salary comes to mind, but the less obvious is investing. We don’t realize this, but buying and selling stocks is a constant negotiation with the market. When you look at a stock like Scotia Bank, even though the intrinsic value of the bank doesn’t change much over the course of days, weeks or months, the share price swung widely by nearly 10% over the past two months. Luckily for us, negotiating with the market doesn’t require a thick skin. Just make a note of what you’re willing to pay, and wait for the right offer to come along. To quote Warren Buffett:
There are no called strikes so you can watch stocks come by and wait and wait until the right pitch and no one is going to call a strike.
That
Claymore S&P/TSX Canadian Preferred Share ETF 2007-04-23 17:52:20 I recently came across a Claymore Canadian
Preferred Share
ETF article written by Rob Carrick of the Globe And Mail. Although I’m by no mean a preferred share guru, I can’t help but feeling leery about the impeccable timing of this release. Just a few months after our finance minister derailed the income trust gravy train, income-seeking investors are now crying for second best options. There is one important lesson I learned during the dot com era: the financial industry creates new products for investors who are too late in the game. This trend never fails. You have technology in the late 90’s, resource and income trusts in early 2000, and now preferred shares. Who knows? Maybe this time is different, but James Hymas from Hymas Investment Management doesn’t think so. To quote Mr. Hymas, who is a formidable force in preferred share:
This construction difference is apparent from the release. The top three constituents are GWO.PR.X, BCE.PR.A and BCE.PR.C. You know what
Model Portfolio: ETFs 2007-04-22 05:53:50 For investors who don’t have the inclination or time to study the stock market, there is a terrific alternative that is easy, cheap and tax-efficient: buy a basket of low cost Exchange Trade Funds (ETF). An ETF is a security that tracks an index, such as the TSX 60 and S&P 500. You can trade them just like regular stocks through your brokers. Many studies cite the vast majority of actively managed mutual funds have under-performed their passive counterparts. Personally, I’m not a believer in the Efficient Market Hypothesis, but ETFs have other merits. For one, you can easily diversify across the entire globe with a few simple mouse clicks. Secondly, ETFs are many times cheaper than actively managed mutual funds. Thirdly, ETFs’ low turnover rates allow your portfolio to compound tax-efficiently.
Just for fun, I assembled this passive model portfolio consisting of 100% ETFs. The weighted average Management Expense Ratio (MER) is a rock bottom 0.1535%, inst Read more:Portfolio
Jungle Bulletin 2007-04-28 09:53:11
Economists used to think consumers made rational purchasing decisions. But a new field of research is revealing neural forces that leave classical theorists scratching their heads.
Canadian Imperial Bank of Commerce released a report predicting that Canadian house prices are likely to double over the next two decades.
Most owned stocks by admired investment gurus.
Money, Matters and More Musings on Can You Save Too Much On Emergency Fund.
Read more:Jungle
, Bulletin
New Deep Value Investor On BNN 2007-04-27 17:43:28 Value investors will be pleased to learn that Pat Naccarato, manager of the successful AIC Value fund, is now sharing his value wisdoms on the Market Call segment of BNN. Okay, I can hear some people giggling. BNN guests are often stereotyped as talking heads by many investment forums, but I believe each guest should be evaluated on his own merits.
Deep value investors are a rare breed, because they’re natural contrarians who go against the crowd. It is the ability to think independently that helps them hunt for out-of-favour gems when no one is looking. There are plenty reasons to like Pat Naccarato. It is not because he outperformed S&P 500 13 out of 15 years, or that I’m holding many of his current recommendations. It is the way he rationalizes his investment philosophies. Pat puts capital preservation as his number one priority. He emphasizes one way to keep your risks in check is to buy companies at or near their book value, because book value is a more stable y Read more:Value
, Investor
CMHC Fee Reduction 2007-04-26 18:52:50 I just learned homebuyers are finally getting some relief in the overheated real estate market. Effectively immediately, buyers with at least 20% down will not longer pay a dime for the CMHC insurance premium.
“We believe that a great number of home buyers will benefit from this change and we are delighted to be able to take a leadership position in making this new option available immediately,” said Cid Palacio, Vice President, BMO Bank of Montreal.
Ms. Palacio noted that based on an average home price of $300,000, a home buyer with only a 20 per cent down payment can now save an average of $2500 in insurance premiums.
To the best of my knowledge, the new fee structure will look as follow. Since the news is so recent, I can’t find official confirmations of these numbers. Not even CMHC’s own website is updated as of this writing. I’ll update this post as I learn more.
[Edit: Just gotten words from my mortgage broker that the only change is the elimin
Do You Get What You Deserve? 2007-04-25 17:49:23 Not according to my real estate mentor, Ozzie Jurock, “In life, you don’t get what you deserve; you get what you negotiate.” In the end, I concede that real estate isn’t my real calling, but one can easily relate this marvelous quote to other aspects of personal finance. Salary comes to mind, but the less obvious is investing. We don’t realize this, but buying and selling stocks is a constant negotiation with the market. When you look at a stock like Scotia Bank, even though the intrinsic value of the bank doesn’t change much over the course of days, weeks or months, the share price swung widely by nearly 10% over the past two months. Luckily for us, negotiating with the market doesn’t require a thick skin. Just make a note of what you’re willing to pay, and wait for the right offer to come along. To quote Warren Buffett:
There are no called strikes so you can watch stocks come by and wait and wait until the right pitch and no one is going to call a strike.
That
Claymore S&P/TSX Canadian Preferred Share ETF 2007-04-23 17:52:20 I recently came across a Claymore Canadian
Preferred Share
ETF article written by Rob Carrick of the Globe And Mail. Although I’m by no mean a preferred share guru, I can’t help but feeling leery about the impeccable timing of this release. Just a few months after our finance minister derailed the income trust gravy train, income-seeking investors are now crying for second best options. There is one important lesson I learned during the dot com era: the financial industry creates new products for investors who are too late in the game. This trend never fails. You have technology in the late 90’s, resource and income trusts in early 2000, and now preferred shares. Who knows? Maybe this time is different, but James Hymas from Hymas Investment Management doesn’t think so. To quote Mr. Hymas, who is a formidable force in preferred share:
This construction difference is apparent from the release. The top three constituents are GWO.PR.X, BCE.PR.A and BCE.PR.C. You know what
Lottery Dream 2007-05-02 17:47:32 Always be nice to the people who play Lotto 6/49. You never know.
Although I’m not a frequent lottery player myself, the story is always the same. Like a regular Joe, I put off my will planning, tax filing, oil change, dentist visits, and etcetera. You name it. Yet, whenever I buy lottery tickets, I immediately kick off a fresh spreadsheet in my head planning how much to spend, how much to invest, how much goes to my parents, in-laws, siblings, relatives and friends. That’s right, my friends. You know the jackpot that I didn’t win? I was going share it with you. How about that poker game, eh?
Not all investments must return tangible dollar figures. The odds of holding a winning ticket is 1 in 13,983,816, or 0.000007%. Why do people keep buying them when the odds are enormously low? Because it’s fun to dream, it creates excitement around the office, and it promotes positive thinking:
Ahhh, I stepped on dog poop! It must be my lucky day. I must buy Lotto 6/49.
Wh Read more:Lottery
, Dream
TSX Group 2007-05-01 18:56:42 Just a quick update on my portfolio. I accumulated more shares to my existing TSX Group
position today. The stock is down recently, because first-quarter profits of $0.53/share miss the consensus estimate by 3 cents.
I don’t mind it as long as revenues are up 15% on stronger listing and market data revenues. The drop in profits is attributed to raising costs, but it is not wasted money:
Expenses jumped 29 percent to C$47 million, due in part to additional employees taken on after the acquisitions of Shorcan Brokers Ltd. and certain fixed income assets from Scotia Capital last year.
Also boosting costs were advisory fees related to joint ventures TSX entered into with the International Securities Exchange Holdings Inc. and IntercontinentalExchange Inc. during the first quarter.
“While we continue to aggressively manage our cost base, we’re not going to hesitate to invest in initiatives that we believe will grow the business over the long term,” TSX Chief Financ
BMO Is Feeling The Heat On Derivatives Losses 2007-04-30 17:49:52 The market has a magnifying glass over Bank of Montreal’s recent confession on its commodity trading losses, which will likely cut second quarter earnings by $350 million to $450 million, or around $0.50 per share. BMO has traditionally been a more conservative bank, so this news came as a surprise to shareholders. Credit Suisse analyst Jim Bantis explained:
Profit growth at its bread-and-butter Canadian consumer banking operations has lagged its rivals, and that’s likely what led the bank to take on extra risk in its commodity trading business as it hunted for other ways to boost the bottom line.
On the bright side, the new BMO Chief Executive Officer Bill Downe reassured investors:
The commodity trading losses were the result of decisions that did not adequately recognize the vulnerability of the portfolio to changes in market volatility. We are conducting a thorough review and actions have been taken to address the current situation and reduce the likelihood of a recurren Read more:Feeling
, Derivatives
, Losses
Financial Jungle Blog Updates 2007-04-30 17:27:10
The Money Diva will feature FinancialJungle
along with 14 other blogs on the second Canadian Tour of Personal Finance Blogs. I missed the deadline for the original tour, but I’m glad to be in the lineup this time. I have a few possible topics in mind, but I’m leaning toward something on the lighter side.
The first calendar month for Financial Jungle is nearly over. Here are the latest stats for April, and thank you for your support:
Unique Visitors - 396
Pages - 8,432
Hits - 39,867
To Leverage Or Not? Take The Middle Of The Road 2007-05-04 17:48:16 Two of my most admired personal financial blogs are pressing the hot button on a very sensitive topic: leveraged investing. To read more on the lively discussions, check out The Canadian Capitalist and Million Dollar Journey.
The pro-leverage group believes that when done properly, leveraging is an effective way to build wealth. The anti-leverage group advocates the old fashion method, which is to pay off your mortgage and invest with cash. It is not necessary to leverage your portfolio in order to reach your financial goals. As The Canadian Capitalist put it:
If you are like me, you want to pay off your home, save for retirement, send your kids to University and eventually, not having to depend on a paycheck. You are not aiming for a spot on the Forbes 400 and couldn’t care less about the list. Do you need leveraged investments to achieve your goals? Not really. A far simpler and less-risky path is to spend less than you earn and invest the difference in a low-cost, diversifie Read more:Leverage
Real Estate Myth: Avoid The Most Expensive House In The Neighbourhood 2007-05-04 09:03:09 How many times have you been reminded of this adage? Presumably, the cheaper homes will somehow drag down the higher priced home. Or, cheaper homes have more room to catch up. When you think about it, expensive homes are expensive with good reasons. Perhaps they are situated on more desirable lots or constructed with marble stones. Maybe they have more square footages, more bedrooms, tiled roofs or double garages. Since homeowners relish these extra features, shouldn’t these homes command a premium price over the inferior ones?
Let’s go ahead and test this myth with a numeric example. Suppose we have two houses. The smaller one is worth $350k, while the bigger one is $400k, and they appreciate 6% and 3% per year respectively for the next five years.
Small Home
Big Home
Initial Worth
$350k
$400k
Rate of Growth
6%
3%
Number of Years
5
5
Appreciated Value
$468
$463
As you can clearly see, this isn’t an optimal pricing between these t Read more:Estate
, Avoid
, House
, Neighbourhood
, Real Estate
Top 10 Exciting Semi-Retirement Jobs 2007-05-07 09:19:20 I had so much fun writing the Top 10 Reasons For Dividend Investing post that I decided to do another one for the Top 10 Exciting Semi-Retirement Jobs.
Many folks don’t know what they want to do with their retirement, but semi-retirement is a fabulous way to phase in by sampling the various possibilities out there. Is it really work if you enjoy doing it? If you’re passionate about a hobby, why not turn it into a cash cow 10 years ahead of your scripted retirement? If you can’t think of a hobby, I have some good news for you. Below is a list of potential semi-retirement jobs which I compiled with help from a couple of forums. The list is sorted by a complex-proprietary algorithm, and is subject to change.
Without further ado, here’s my Top 10 Exciting Semi-Retirement Jobs in reverse order:
Geek Squad Agent - Geek Squad needs you to lead their “fight against computer upheaval: a critical mission in their goal of obtaining world domination.”
Second Canadian Tour of Personal Finance Blogs 2007-05-05 16:48:16 Please remember to visit on Monday for the second Canadian
Tour of Personal
Fianncial Blogs
. You can find the list of participants at the Money Diva financial blog. Did you notice that Ellen Roseman from the Toronto Star is on the list too? There are a number of other top guns, such as The Canadian Capitalist, Million Dollar Journey, Investoid, and Canadian Finance DIY just to name a few. I’m really looking forward to read their articles. It’ll be a blast.
Read more:Second
The 5 Gremlins Of Market Growth GIC 2007-05-09 08:21:33 Darren Rowse from ProBlogger is hosting another get-together among bloggers. The mission is to write a top 5 list on any topic relevant to the blog, and the winning price is a cool $1001. But more importantly, I want to elevate Financial Jungle's presence in the blogging ecosystem, and mingle with fellow bloggers who share similar interests.
A discussion over at MillionDollarJourney prompted me to do a little digging into MarketGrowth
GICs offered by Canadian banks. Many investors are risk-adverse, while not wanting to relinquish the growth potential of the stock market. This is why Market Growth GICs are so seductive. Investors' original principal is guaranteed regardless of what the market is doing, while the performance is linked to the market indices tracked by the products. Being a cynic, I've investigated and uncovered the following five gremlins of Market Growth GICs:
1. No Dividends - They stole my precious!
Although Market Growth GICs do track the underlying i
Jungle Bulletin: Time Management, Gas-Saving Myths, And Unethical Investor 2007-05-13 08:59:11
Do you think it’s possible to accomplish the same amount of work with fewer hours? Timothy Ferriss claims he’s doing just that by applying the Pareto’s law to his sports-nutrition business.
Gas is $1.36/L in parts of Vancouver. There are many gas-saving tips out there. Here’s an article to weed out the myths.
Ian McGugan, a MoneySense editor, is admitting to the world he is, in fact, an unethical investor.
Read more:Jungle
, Bulletin
, Management
, Saving
, Myths
, Investor
, Time Management
BMO. A Poster Child For Cash Flow Leverging? 2007-05-13 07:39:59 I’ve been noticing that a number of bloggers - including myself - are topping up their BMO positions as the stock is rattled by commodity trading losses. Money Diva initiated 400 shares of BMO earlier in the week. My own BMO position grew to 250 shares last week with a new adjusted cost base of $63.20. BMO, to me, has the best balance of high yield and dividend growth. At $68.69, the stock is yielding a cool 3.99%, while its dividends surged from $1.20/share to $2.26/share over the past 4 fiscal years. At this price point, I think this is a window of opportunity for aggressive investors to snatch up some BMO with leverage, and still maintain a positive cash flow.
Continuing with my dividend tax calculation post, a BC resident in the 30.65% bracket wouldn’t pay any dividend taxes. If you leverage to buy BMO, you’d receive 3.99% in dividends tax-free and a small tax refund. The loan interest rate would be 5.75% from Interactive Brokers, but the interest is tax- Read more:Poster
Debunk Passive Investing As The Holy Grail 2007-05-11 18:39:43 80% of actively managed mutual funds under-perform the benchmark over a long period.
Although there is a truth to this adage, one has to peer beneath the surface instead of simply painting over the entire mutual fund spectrum with the same brush. There is always a flip side to a story. If you’re up to the challenge, read this long article on how closet index funds are contaminating the statistical finding.
Occasionally, the underperformance of fund managers vs. the index is trotted as evidence of the efficiency of the market. However, this confuses the absence of evidence with evidence of the absence. A new study suggests that closet indexing accounts for nearly one third of the US mutual fund industry. Stock pickers account for less than 30% of the market, yet they have real investment skill.
Before going further, I’d like to emphasize that I’m a proponent of passive investing. ETFs and index funds are the way to go if you’re looking for something easy, e Read more:Passive
, Investing
, Grail
Human For Sale. How Much Are You Worth? 2007-05-10 19:21:56 I came across this funny little page to measure how much you’re worth. It’s not the typical Assets - Liabilities formula.
Ever wonder how much money you could get on the open human market? HumanForSale.com will attempt to place a value on your life using a variety of criteria in 4 basic facets of life. Among the criteria used include athletic ability, education level, income, amount of exercise, weight, and sense of humor. This is obviously a very subjective matter and is not intended and does not claim to be scientifically accurate. The more honestly you answer the questions, the more realistic the dollar value returned will be.
I’m worth $1,675,000. I’m insulted!! (I guessed at some of the answers though.)
Check it out, and begin by selecting your gender. Read more:Worth
Blog Updates: 3 Touch Ups To Boost Readership 2007-05-10 18:49:54 For the past couple of weeks, FinancialJungle.com has been stuck at around 40+hits and 30 RSS feed readers. To increase traffics to the blog, I’ve implemented the following enhancements:
Migrated permalinks to display the post titles instead of the post ids. According to some experts, search engines incorporate the URLs into their indexing.
Made the RSS Feed icon larger, and placed it within the blob near the upper right corner of this blog.
Installed the autometa Wordpress plug-in to insert meta and Technorati tags, so surfers can find this blog easier.
Hopefully I will see a difference within the next couple of weeks. In the meantime, please feel free to drop me a comment if you have any other suggestions. Read more:Boost
Who's Benefiting From Your Asset Allocation? 2007-05-15 17:41:17 Canadian Capitalist is graciously hosting the third Canadian Tour of Personal Finance Blogs. There is no way I am passing up this opportunity to be mentioned in his blog. This will be my second participation to this tour. Enjoy!
Organizing your portfolio into neatly divided asset classes appears to be the sensible thing to do, but what if your financial advisor is offering you only a half-baked solution? Take my friend, Mel, for example. He and his wife walked in to a bank seeking an optimal way to invest a $10,000 windfall. The advisor had them fill out a Know Your Client form to learn their financial goals, risk tolerance, investment knowledge, time horizon and financial position. Based on his assessment, the advisor recommended a 70/30 split between equity and bond funds commanding a hefty 2% in management expense ratio (MER.)
What's wrong with this picture? Like typical young couples, Mel and his wife still owe an approximate $200,000 worth of mortgage. Since homeowners p Read more:Asset
10 Signs That You May Be a Blog Addict 2007-05-14 18:06:52 SearchRank recently wrote the 10 Signs That You May Be a Blog Addict. I think I may in trouble. At the moment, it is a bit of an addiction to me, but I’m sure I’ll get over this a few months down the road. I hope.
Here are some of my favourites on the list:
In order for your family to keep up with what’s going on in your life, they have to read your blog. Furthermore, if they want to communicate with you, they have to comment on your blog.
You have actually considered setting up a blog for your pet of which you would post the entries pretending you are your pet (weirdo).
You can’t remember dates for your wedding anniversary, kids birthdays, etc., but you know what your Technorati rank is.
You tell customers that you missed a project deadline because “some things” came up but in reality, you were blogging.
Jungle Bulletin: Around The Blogosphere 2007-05-18 18:48:16
Canadian Capitalist reviews the two bond ETFs offered by iShares: iShares CDN Bond Index Fund (XBB) and iShares CDN Short Bond Index Fund (XSB). In his article, Canadian Capitalist explains what investors should look for in a bond fund and offers a few links for further research.
Frugal Trader from Million Dollar Journey outlines his top 5 reasons why buying a home is better than building.
Big Cajun Man from Canadian Financial Stuff isn’t surprised by the disappearing of middleclass in Canada.
Middle Class Millionaire shares his view on the potential pitfalls to look out for when pursuing your dream job too early. This is a 2-posts series.
Before accepting the next “hot tips” from your friends, co-workers or family, be sure to read Investoid’s post on How To Access Hot Stock Tips.
The charismatic Money Diva announces to the world that she’s indeed an impulse shopper.
Who wouldn’t want to click on a catchy title like 5 Ways To Become A Millionaire Read more:Jungle
, Bulletin
, Blogosphere
I’m A Guilty IGM Shareholder 2007-05-17 18:05:28 The Dividend Guy is rightfully scolding IGM’s Investors Dividend fund for milking $291,117,000 a year in mutual fund fees. I’m both proud and guilty of being an IGM Financial shareholder. I’m proud because IGM has been steadily increasing revenues, profit margins, earnings and dividends, while maintaining Return on Invested Equity above 20%, and decreasing debt levels. I’m guilty because the prosperity rides on the backs of investors’ ignorance. Let’s face it. By analyzing Investors Dividend’s top holdings, one can easily conclude that the Investors Dividend fund is nothing more than a closet index fund with a tilt toward dividend paying stocks. Even an amateur like myself can assemble an index look-alike portfolio. Heck, pay me 1/100th of $291,117,000, and odds are favouring me to beat this fund over the long-term.
Not only is the Investors Dividend the largest mutual fund in Canada, the MER is also a whopping 2.88%. So much for econom Read more:Guilty
How Much Does It Cost To Own A Dog? 2007-05-16 18:12:43 Introduction: My wife, Financial Jungle Gal, has written the following piece out of her own free-will. She’s been busy as a bee fixing up my goof-ups in every post - including this intro. To show a token of my appreciation, I’ve decided to share the fame with her. Please give her a warm welcome.
“How Much is That Doggie in the Window?”
If you are a dog-lover, it can be hard to resist taking home every puppy that looks at you with its doggy eyes through the window. The puppy is small and cute, oh so cute, especially when it does funny things like rolling around with its roommate or trying to terrorize a toy. The breeder asks for $$$$ or the pet shop lists the sale price for $$$$$$, but how much does it really cost to own this dog?
Here is a list of common items that need consideration for Fido (estimates):
One-Time
Dog: $500 to $1,500
Pet carrier: $50
Brush: $10
Leash / Collar / Harness: $50
Dog Mattress: $30
Food & Water Dish: $10
Annual
Food: $250
Vet Exami
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