So I'm browsing through the cookie aisle at Longo's today, trying to find the crackers (Eventually found out that crackers have their own section, apparently putting them near the frozen food section is a more logical place for them) - when someone comes up to me and asks me if I work there. I was a bit annoyed, because I certainly didn't think I was dressed like a Longo's employee (not to disparage longo's employees, but they don't generally walk around in dress shirts and ties)... I wonder if the same question would have been asked of me had I been white and dressed the same way (the guy that asked me the question was black).
Anyhow - on to other things.
So we're right in the middle of bank earnings season. BMO, NA & RY have reported. RY reported some frigging amazing earnings. But it looks like my earlier comment was right, since even with the stellar earnings, RY tanked. Well... maybe tanked is a bit too strong of a description, but it closed down anyhow. We'll see if the trend remains flat / negative when CM, BNS & TD weigh in. Meanwhile, my interest has been kinda piqued by OSK-N, especially since I decided it was time to get out of ECA after a nice little run up in the price. The price seems reasonable (seems to be some pricing pressure due to the JLG acquisition, as well as some pissed off employee in finance who did bad things). We'll see...
Thursday, November 30, 2006
Tuesday, November 21, 2006
OJ Loses Book Deal
What's the big deal about this book. So what if OJ did it? There is such a sense of injustice and outright anger (in white America, it seems to me) over the fact that one could even consider publishing a book by such a deviant. Black America appears to continue to celebrate the fact that one of their own was acquitted of a crime that a white guy of his status would never have gotten convicted of. Its understandable, I mean, have you seen the incarceration rates for blacks vs whites? I don't like to get caught up in issues of race, as I think its a slippery slope (as Russel Peters says, all races are racist), but stats are stats, and the incarceration rates clearly speak to black America constantly getting the shaft when faced with similar crimes as other races.
And what's up with Kramer's tirade? I don't think I'll ever be able to watch another episode of Seinfeld again.
And what's up with Kramer's tirade? I don't think I'll ever be able to watch another episode of Seinfeld again.
Finally, a Potty Success!
Yes, that's right. Last night saw my 2.5 year old daughter go potty for the first time! It took me reading 1.5 Dora book's to keep her on the potty long enough to get it done, but it was worth it. Now going potty for the first time may not be a big deal to non-parents, but I think most parents will agree that this is a huge step! It saves you about $50 / month in diapers and wipes (which means more money to invest in an RESP), gets rid of that big diaper bum that makes you have to put clothes 2 sizes too big on your kids, and eventually, gets you out of diaper duty. Made for a happy day (Man! The things I celebrate these days ).
Friday, November 17, 2006
Bank Earnings
Came across a National Post article which discussed investor's expectations of bank Q4 / FY-06 earnings. Apparently expectations are quite high. I'm still licking my wounds from my poorly executed GOOG option play, so I plan to make that up. My belief is that if expectations are that high, then CDN bank stocks are already overpriced, and anything short of spectacular earnings is going to result in profit-taking. Now according to Yahoo Finance, RY has gained 12% since August 15th's closing price, and TD is up 14%. I'm going to watch for the next day or two, but might lock in my profit on RY sometime over the next week.
INVESTORS EXPECTING THE BEST FROM BANKS' EARNINGS SEASON
Annual bank earnings season starts in less than two weeks and anything less than a series of gargantuan profits will be a major disappointment.
"We expect that the banks' string of profitability will remain unbroken in the fourth quarter of 2006, with respectable levels of earnings to be reported by all institutions," said Dundee Securities Corporation analyst Susan Cohen.
But with that performance already built into bank stock prices, how do you pick which one gives the best return?
Ms. Cohen has narrowed down the choice for the year ahead, based on the assumption that earnings growth will slow to less than 10% for all the banks, but to around 5% for some.
"[Previously] we had mentioned that we expect only Toronto-Dominion Bank, National Bank and Royal Bank of Canada to provide investors with double-digit return over the next 12 months," she said in a note.
However, with RBC's stock outperforming most of its major rivals last week, jumping 2%, compared to 0.6% for the sector, the number of banks likely to provide investors with returns of more than 10% in the next year has fallen, said Ms. Cohen.
"The list is getting thinner, with only TD and National Bank filling this criterion," she said.
Meanwhile, notes Ms. Cohen, four banks could hike their dividends this quarter. The government's clampdown on trusts has sent cash scuttling to the banks where steady dividend payouts are perhaps the closest proximity for investors to the trust's distributable income. And some bank dividends are set to become even more attractive.
"We anticipate Canadian Imperial Bank of Commerce, Bank of Montreal, Bank of Nova Scotia and National Bank will announce dividend increases in conjunction with fourth quarter 2006 earnings releases," said Ms. Cohen. Duncan Mavin
dmavin@nationalpost.com
INVESTORS EXPECTING THE BEST FROM BANKS' EARNINGS SEASON
Annual bank earnings season starts in less than two weeks and anything less than a series of gargantuan profits will be a major disappointment.
"We expect that the banks' string of profitability will remain unbroken in the fourth quarter of 2006, with respectable levels of earnings to be reported by all institutions," said Dundee Securities Corporation analyst Susan Cohen.
But with that performance already built into bank stock prices, how do you pick which one gives the best return?
Ms. Cohen has narrowed down the choice for the year ahead, based on the assumption that earnings growth will slow to less than 10% for all the banks, but to around 5% for some.
"[Previously] we had mentioned that we expect only Toronto-Dominion Bank, National Bank and Royal Bank of Canada to provide investors with double-digit return over the next 12 months," she said in a note.
However, with RBC's stock outperforming most of its major rivals last week, jumping 2%, compared to 0.6% for the sector, the number of banks likely to provide investors with returns of more than 10% in the next year has fallen, said Ms. Cohen.
"The list is getting thinner, with only TD and National Bank filling this criterion," she said.
Meanwhile, notes Ms. Cohen, four banks could hike their dividends this quarter. The government's clampdown on trusts has sent cash scuttling to the banks where steady dividend payouts are perhaps the closest proximity for investors to the trust's distributable income. And some bank dividends are set to become even more attractive.
"We anticipate Canadian Imperial Bank of Commerce, Bank of Montreal, Bank of Nova Scotia and National Bank will announce dividend increases in conjunction with fourth quarter 2006 earnings releases," said Ms. Cohen. Duncan Mavin
dmavin@nationalpost.com
Tuesday, November 14, 2006
Investing in Bank Stocks
Ok so my GOOG option play did not work out in my favour. I could have made 10%, but held out for a bigger upside and ended up taking a hit. 'll take another crack at it when I'm done licking my wounds.
Now on the registered account side, I read an article in Business Week (11. Why Bankers Keep Seeing Bears; Mara Der Hovanesian, 13 November 2006, BusinessWeek). It basically suggested that banks are overvalued, and a correction is coming as morgage revenue moderates, high concentration of risky commercial loans becomes more of an issue, and consumer credit quality deteriorates. On one hand it sounds a bit like Chicken Little (the sky is falling.... Come, on don't tell me you don't know the story of Chicken Little!). On the other hand, CDN banks have had a great run for the past few years. RY to me seems particularly overvalued. On the other hand, HSBC Canada seems like an interesting play if corrections in bank stocks occur, due to its lower domestic exposure & focus on import / export financing & global cash management.
Now on the registered account side, I read an article in Business Week (11. Why Bankers Keep Seeing Bears; Mara Der Hovanesian, 13 November 2006, BusinessWeek). It basically suggested that banks are overvalued, and a correction is coming as morgage revenue moderates, high concentration of risky commercial loans becomes more of an issue, and consumer credit quality deteriorates. On one hand it sounds a bit like Chicken Little (the sky is falling.... Come, on don't tell me you don't know the story of Chicken Little!). On the other hand, CDN banks have had a great run for the past few years. RY to me seems particularly overvalued. On the other hand, HSBC Canada seems like an interesting play if corrections in bank stocks occur, due to its lower domestic exposure & focus on import / export financing & global cash management.
Friday, November 10, 2006
Growth in India
Ajay Argal
Birla Sun Life AMC Ltd. by Diana Cawfield 10 Nov 06
Manager says growth in India is here for the long run.
Ajay Argal, co-manager of the $177.9-million Excel India, believes that the India growth story is a sustainable one.
"India is no longer a market for short-term players," says Argal, a senior portfolio manager with Birla Sun Life AMC Ltd. in Mumbai, India. "There is broad-based growth happening and the opportunities are spread out in many, many sectors."
Argal sees three broad trends driving the growth story: capital investment, consumption and outsourcing. He says capital investment will be spurred as industries reach their capacity constraints.
Argal is seeing a lot of industries, such as oil refining, cement and steel, that are operating at capacity levels he has not seen in the last 10 or 15 years. He says the manufacturing sector has been growing at 8% to 10% over the last three years.
Birla Sun Life AMC Ltd. by Diana Cawfield 10 Nov 06
Manager says growth in India is here for the long run.
Ajay Argal, co-manager of the $177.9-million Excel India, believes that the India growth story is a sustainable one.
"India is no longer a market for short-term players," says Argal, a senior portfolio manager with Birla Sun Life AMC Ltd. in Mumbai, India. "There is broad-based growth happening and the opportunities are spread out in many, many sectors."
Argal sees three broad trends driving the growth story: capital investment, consumption and outsourcing. He says capital investment will be spurred as industries reach their capacity constraints.
Argal is seeing a lot of industries, such as oil refining, cement and steel, that are operating at capacity levels he has not seen in the last 10 or 15 years. He says the manufacturing sector has been growing at 8% to 10% over the last three years.
Thursday, November 9, 2006
National Post on Mutual Fund Fees
10. Mutual funds feel the squeeze: Caught in middle between ETFs, hedge funds
Jonathan Chevreau
9 November 2006
National Post
FP8
Canada's high-priced mutual funds are being attacked from two directions -- by even higher-priced actively managed "hedge" funds and by low-priced exchange-traded funds, or ETFs.
At the World Hedge Fund Summit -- which concluded yesterday in Toronto -- a popular view was that ETFs and hedge funds nicely complement each other.
In effect, speakers argued, mutual funds are 90% closet index funds -- a fact Morningstar Canada confirmed last year when it scrutinized some of the most popular Canadian equity mutual funds.
What's wrong with that, you ask, given the growing popularity of passive indexing strategies? The problem is the 90% of the "beta" or market effect can be purchased more cheaply through real index funds or ETFs. Mutual funds may charge an annual fee of 2.5% that applies both on the "passive" part of the portfolio as well as the 10% where managers actually deliver "alpha" through their stock-picking "prowess."
Holt Capital Advisers' Christopher Holt argues such investors might be better served by separating the alpha and beta components of active management. Thus 90% of an investor's money could go in an ETF, with the rest going to a suitable hedge fund. Their "2 and 20" fee structure works out more cheaply since it applies only to 10% of the total portfolio. That's why hedgies think their high fees are relative bargains.
The best talk was by Dr. Randy Cohen of the Harvard Business School. That's the same place Peter Tufano toils. Tufano is one of three co-authors of the infamous global study showing how Canada's mutual fund MERs are higher than 18 other nations.
Asked about his colleague's study, Cohen said he finds Canadian MERs "amazingly high. In the U.S. I grew up with funds charging 100 basis points (1%). I found it amazing the rest of the world is much higher and that Canada's are even higher than western Europe's."
Nor have fees fallen with economies of scale, he said. He concludes high-priced funds appeal to "naive investors who are not fee sensitive and listen to their brokers ... It's an unfortunate situation, especially up here. People should look to alternatives where the fees will be lower."
Cohen reviewed the well-known literature familiar to most indexers; that in aggregate active management does not make back its own fees. However, Cohen says the highly intelligent, motivated and well-compensated managers of both mutual funds and hedge funds can beat the market and pick stocks. The problem is they may only have four or five "best ideas."
As their funds get large and popular they end rounding out their holdings with "filler," which amounts to closet indexing.
Cohen finds active managers do beat the market by 130 basis points but those gains are given back in trading fees, their own fees and from the drag of holding cash. Even average managers are good stock pickers but "Wall Street is sucking out all the money."
The solution is to eschew broad diversification and concentrate portfolios only in their best ideas.
If an investor owned 20 such funds each with just six good picks, they'd have a well diversified portfolio that might well beat the indexes.
So why don't they? Here, Cohen sounds like David Swensen in his book Unconventional Success.
"Mutual funds are asset gathering businesses." Success breeds mediocrity since no billion-dollar fund can hold just six names: any trading activity would move the market in those stocks.
Cohen's research shows smaller funds do better than larger funds and concentrated smaller funds do better still.
These smaller concentrated funds sound more like hedge funds, which have more flexibility to concentrate portfolios, use leverage or go short certain stocks or sectors.
But the most popular segment of the hedge fund industry are so-called "funds of funds" that are also in the asset gathering business.
These add extra layers of fees and end up being so diversified they look like just another broadly based mutual fund.
The results are typically little better than the yield of the average bond.
I was on a panel on the retailization of hedge funds, though as I noted in my blog, felt like the proverbial skunk at a picnic. My view is that with more than US$1.3-trillion invested in this asset class worldwide, a reversion to the mean is almost inevitable.
Mutual funds have largely failed to make the little guy rich and I fail to see why hedge funds will do any better as a mass retail product. That doesn't mean there may not be a place for them in pension funds or for single-manager funds for rich people who want to fill holes in their portfolios: perhaps long/short equity funds that do something neither ETFs nor mutual funds can give them.
Indeed, several American speakers confirmed the mass of money coming at them is making the game more difficult. There is a wider variance between the top managers and the bottom ones, said Maxam Capital's Sandra Manske.
Guess which will end up in Joe Average's high-priced fund of funds portfolio?
There was no shortage of charts showing allegedly superior returns for the hedgies but the survivorship bias that plagues mutual funds also affects hedge fund data.
See Swensen on this topic, where he reports that the collapse of Long Term Capital Management did not end up reported in hedge fund performance data bases.
We'll look further at this in Monday's Advisor Post.
Jonathan Chevreau
9 November 2006
National Post
FP8
Canada's high-priced mutual funds are being attacked from two directions -- by even higher-priced actively managed "hedge" funds and by low-priced exchange-traded funds, or ETFs.
At the World Hedge Fund Summit -- which concluded yesterday in Toronto -- a popular view was that ETFs and hedge funds nicely complement each other.
In effect, speakers argued, mutual funds are 90% closet index funds -- a fact Morningstar Canada confirmed last year when it scrutinized some of the most popular Canadian equity mutual funds.
What's wrong with that, you ask, given the growing popularity of passive indexing strategies? The problem is the 90% of the "beta" or market effect can be purchased more cheaply through real index funds or ETFs. Mutual funds may charge an annual fee of 2.5% that applies both on the "passive" part of the portfolio as well as the 10% where managers actually deliver "alpha" through their stock-picking "prowess."
Holt Capital Advisers' Christopher Holt argues such investors might be better served by separating the alpha and beta components of active management. Thus 90% of an investor's money could go in an ETF, with the rest going to a suitable hedge fund. Their "2 and 20" fee structure works out more cheaply since it applies only to 10% of the total portfolio. That's why hedgies think their high fees are relative bargains.
The best talk was by Dr. Randy Cohen of the Harvard Business School. That's the same place Peter Tufano toils. Tufano is one of three co-authors of the infamous global study showing how Canada's mutual fund MERs are higher than 18 other nations.
Asked about his colleague's study, Cohen said he finds Canadian MERs "amazingly high. In the U.S. I grew up with funds charging 100 basis points (1%). I found it amazing the rest of the world is much higher and that Canada's are even higher than western Europe's."
Nor have fees fallen with economies of scale, he said. He concludes high-priced funds appeal to "naive investors who are not fee sensitive and listen to their brokers ... It's an unfortunate situation, especially up here. People should look to alternatives where the fees will be lower."
Cohen reviewed the well-known literature familiar to most indexers; that in aggregate active management does not make back its own fees. However, Cohen says the highly intelligent, motivated and well-compensated managers of both mutual funds and hedge funds can beat the market and pick stocks. The problem is they may only have four or five "best ideas."
As their funds get large and popular they end rounding out their holdings with "filler," which amounts to closet indexing.
Cohen finds active managers do beat the market by 130 basis points but those gains are given back in trading fees, their own fees and from the drag of holding cash. Even average managers are good stock pickers but "Wall Street is sucking out all the money."
The solution is to eschew broad diversification and concentrate portfolios only in their best ideas.
If an investor owned 20 such funds each with just six good picks, they'd have a well diversified portfolio that might well beat the indexes.
So why don't they? Here, Cohen sounds like David Swensen in his book Unconventional Success.
"Mutual funds are asset gathering businesses." Success breeds mediocrity since no billion-dollar fund can hold just six names: any trading activity would move the market in those stocks.
Cohen's research shows smaller funds do better than larger funds and concentrated smaller funds do better still.
These smaller concentrated funds sound more like hedge funds, which have more flexibility to concentrate portfolios, use leverage or go short certain stocks or sectors.
But the most popular segment of the hedge fund industry are so-called "funds of funds" that are also in the asset gathering business.
These add extra layers of fees and end up being so diversified they look like just another broadly based mutual fund.
The results are typically little better than the yield of the average bond.
I was on a panel on the retailization of hedge funds, though as I noted in my blog, felt like the proverbial skunk at a picnic. My view is that with more than US$1.3-trillion invested in this asset class worldwide, a reversion to the mean is almost inevitable.
Mutual funds have largely failed to make the little guy rich and I fail to see why hedge funds will do any better as a mass retail product. That doesn't mean there may not be a place for them in pension funds or for single-manager funds for rich people who want to fill holes in their portfolios: perhaps long/short equity funds that do something neither ETFs nor mutual funds can give them.
Indeed, several American speakers confirmed the mass of money coming at them is making the game more difficult. There is a wider variance between the top managers and the bottom ones, said Maxam Capital's Sandra Manske.
Guess which will end up in Joe Average's high-priced fund of funds portfolio?
There was no shortage of charts showing allegedly superior returns for the hedgies but the survivorship bias that plagues mutual funds also affects hedge fund data.
See Swensen on this topic, where he reports that the collapse of Long Term Capital Management did not end up reported in hedge fund performance data bases.
We'll look further at this in Monday's Advisor Post.
Wednesday, November 8, 2006
Google vs Sandisk
My Google calls are not taking quite the direction I expected. The stock hit $481 & change today, yet the calls are down $0.15 from where I picked them up (the stock was trading @ around $477 at the time I think?), and that was less than a week ago.
Sandisk is looking like a better play, especially after reading a recent article from Asif Suria (http://ce.seekingalpha.com/article/19748).
On a positive note though, Encana has been on a decent uptick. Its up between 5-7% from my various purchase prices over the past week.
Sandisk is looking like a better play, especially after reading a recent article from Asif Suria (http://ce.seekingalpha.com/article/19748).
On a positive note though, Encana has been on a decent uptick. Its up between 5-7% from my various purchase prices over the past week.
Monday, November 6, 2006
What it takes to be a leader...
Here's the National Post's take on business leadership...
"Mitch Moxley
4 November 2006
National Post
There is a shifting dynamic at the top. Many of our business leaders are reaching retirement age, creating a demand for fresh executives. This is opening the door to a new set of business leaders -- many of today's rising Canadian executives are young, many are women and many come from the West.
Take Sean Durfy, for example. He is WestJet Airlines Ltd's. recently appointed president. He just turned 40. Research in Motion Ltd.'s wunderkind Dennis Kavelman is still in his mid-30s. And Kathleen Sendall, senior vice-president at Petro-Canada, is a rising star in the oil patch and the first woman to chair the Canadian Association of Petroleum Producers.
They may be new faces but they are commanding attention. Today, the leaders of top companies must be more than business-savvy. They must be inspirational, says Don Nolan, president of Nolan Associates, an executive recruitment firm in Toronto. "People want to join companies managed by great leaders," Mr. Nolan says. "The best leaders are those who are empowered by their followers." "...
Here's my take on characteristics of a good leader (at least the type of leader I aspire to be):
Motivated, inspirational, decisive, charismatic, good communicator / public speaker
"Mitch Moxley
4 November 2006
National Post
There is a shifting dynamic at the top. Many of our business leaders are reaching retirement age, creating a demand for fresh executives. This is opening the door to a new set of business leaders -- many of today's rising Canadian executives are young, many are women and many come from the West.
Take Sean Durfy, for example. He is WestJet Airlines Ltd's. recently appointed president. He just turned 40. Research in Motion Ltd.'s wunderkind Dennis Kavelman is still in his mid-30s. And Kathleen Sendall, senior vice-president at Petro-Canada, is a rising star in the oil patch and the first woman to chair the Canadian Association of Petroleum Producers.
They may be new faces but they are commanding attention. Today, the leaders of top companies must be more than business-savvy. They must be inspirational, says Don Nolan, president of Nolan Associates, an executive recruitment firm in Toronto. "People want to join companies managed by great leaders," Mr. Nolan says. "The best leaders are those who are empowered by their followers." "...
Here's my take on characteristics of a good leader (at least the type of leader I aspire to be):
Motivated, inspirational, decisive, charismatic, good communicator / public speaker
Sunday, November 5, 2006
Google overvalued?
Bought GOP Dec 550 C on Friday after GOOG had been down for 3 days running. Then saw the following article today:
"ReutersBig money picks GE, sees Google as pricey: Barron'sSunday November 5, 2:38 pm ET
NEW YORK (Reuters) - Diversified manufacturer General Electric Co. (NYSE:GE - News) is a favorite pick of major money managers, some of whom see the shares rising as much as 30 percent in the coming months, Barron's said in its November 6 edition.
Such investors are cheered by expectations of tame U.S. inflation, low interest rates and modest stock valuations, the financial weekly said.
Web search leader Google Inc. (NASDAQ:GOOG - News) and automaker General Motors Corp.(NYSE:GM - News) were named as the market's most overvalued shares in Barron's Big Money poll of major money managers. "
It'll be interesting to see what happens with GOOG in the coming week. I'll be happy making 30%+. Then I need to find the next dead stock and ride it while it comes back to life.
"ReutersBig money picks GE, sees Google as pricey: Barron'sSunday November 5, 2:38 pm ET
NEW YORK (Reuters) - Diversified manufacturer General Electric Co. (NYSE:GE - News) is a favorite pick of major money managers, some of whom see the shares rising as much as 30 percent in the coming months, Barron's said in its November 6 edition.
Such investors are cheered by expectations of tame U.S. inflation, low interest rates and modest stock valuations, the financial weekly said.
Web search leader Google Inc. (NASDAQ:GOOG - News) and automaker General Motors Corp.(NYSE:GM - News) were named as the market's most overvalued shares in Barron's Big Money poll of major money managers. "
It'll be interesting to see what happens with GOOG in the coming week. I'll be happy making 30%+. Then I need to find the next dead stock and ride it while it comes back to life.
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