Thursday, November 27, 2008

two sides of the coin

One of the reasons why stocks change hands a million times over everyday is because no matter how great or dire the economic/corporate earnings outlook is, there is always two sides to the story. Optimists and pessimists will always disagree, and each side can usually make a compelling case to either leverage yourself to the hilt and buy stocks with all your resources, or to sell everything stash most of your cash underneath your mattress and use the rest to build a bomb shelter. I think most would agree that it feels like we are on a very bad footing right now economically, but yet stocks are still finding bids, and the sun continues to rise every morning. Here are some reasons to be optimistic or pessimistic about the near-mid term economic/corporate earnings outlook:

Pessimists

  • Consumers and businesses are buckling down for a number of reasons which include economic uncertainty, rising unemployment, recessions, falling home prices, and trouble obtaining credit.
  • The U.S. government is building a massive debt load, and recent actions that they've taken shake the very foundations of capitalism and promise more risk aversion, and government regulation, of industries and markets in the future.
  • The former 'BIG 3' automakers are in trouble, putting millions of more jobs at risk.
  • The growth within emerging markets like China and India is slowing and recent terrorist acts add to the fear and uncertainty in these markets.
  • Deflation is now taking over from inflation as a worry because the price of goods are declining quickly.

Optimists

  • Fuel and other commodities are much more affordable than they were just months ago. This allows consumers and businesses to cut costs and leave room for consumption and investment.
  • The S&P 500 index has fallen over 40% since the start of 2008. Shares of many companies can be bought for significantly less now versus in 2007. Severe declines in forward earnings have been priced into many stocks making them less risky investments.
  • Interest rates around the world are coming down making credit and mortgages cheaper for many.
  • Emerging markets like China and India are still growing at very high rates and demographic, and lifestyle trends indicate that they will require the rest of the world's goods and services in a big way for years to come.
  • In a Darwinian type of way, plenty of the inefficiencies, mismanagement, redundancy, greed, and waste is being washed from the system. Most of the issues which have been dealt with and are being dealt with right now will come out the other side cleaner, leaner, and more stable. (ie Big 3, Financial sector, credit markets, consumer debt)

Feel free to comment on which camp you are in and why.

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Wednesday, November 26, 2008

must-read blog posts

Here are three posts that I really enjoyed over the past little while from three must-read blogs:

Why Don't We Buy Stocks When They're On Sale, by Dividend Money. This is not the first time the U.S. has looked like a very bleak place to be invested in the stock market.

Lotteries Millionaires, and a Sense of Scale About Money, by Michael James on Money. Whenever you are struck by a large sum of money, think about it in daily increments. Whether it is winning the lottery, being paid in dividends, or buying a ball glove for your son, you'll see it differently.

In Leveraged Investing & Prime Interest Rates, Million Dollar Journey provides an interesting chart on the Dividend Yield Required to Break Even with Leveraged Dividend Investing. I would add that this chart indicates the yield required on purchase to break even on returns from dividends alone given no dividend cuts, and a steady or dropping prime rate.

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Tuesday, November 25, 2008

potato wedges - luggage

After enjoying and featuring "..Kraft Dinner.." by the colourful blogger, Potato, over at Blessed By The Potato, we thought we'd sign him to a temporary guest column series contract with the moneygardener for an undisclosed sum... This post series promises to be unlike any other consumer reporting/ offbeat commentary you've ever read. John Stossel eat your heart out.... This series will be a change of pace, and we're calling it potato wedges. Enjoy...

potato wedges
Luggage
It's important to have good luggage if you're going to go travelling for an extended period of time, or so I've heard. For the most part, I've found it important to have a good backpack (which I use daily), and then when I go away I just muddle through with a duffel I got for free. Occasionally I've found the need for a rolling suitcase -- which I found fairly cumbersome, especially on the train -- but couldn't deny the obvious benefit in the airport. It's been rare enough though that I just borrow one from my parents.

So when Wayfare and I got married, we registered for some good wheeled luggage, paying particular attention to it being lightweight (though I don't know why we bothered, since what we fill it with is going to be the main determinant of the final weight) and having good wheels and bearings. I remember having to haul my (borrowed) suitcase down a long gravel walk at one hotel, and having wheels that were a little bit bigger than average really helped there. Some particularly small plastic rollers will lock up on the smallest piece of dirt, turning your wheeled luggage into dragged luggage. Another point we looked for was a handle that would operate smoothly with one hand (retract, extend): Wayfare's old suitcase required holding the suitcase and button with one hand and yanking the handle with the other, trying it one-handed would as likely as not just lift the suitcase entirely, or tilt it over on its side.

Luggage, I've found, is ludicrously expensive. A lot of that must be mark-up, because we've seen some pretty incredible sales come by, including a 65% off sale on some Air Canada brand pieces at the Bay last week (Wayfare went with one of those for our new stuff). As much as I ripped into the Bay for their gift registry, they do offer some benefits after the wedding is over: for the next year, we can use all those gift cards we got (as well as our own cash when those run out) to buy stuff to "complete" our registry. And when we do that, they give us a minimum discount, equivalent to their typical sale (or, a recent sale price if we're lucky). So, we can get ~25% off kitchen stuff on our registry for the next year, ~10% off sheets, and 50% off luggage. So that right there should tell you what kind of discount you should be looking for if you're waiting for a good luggage sale (or if you are looking to negotiate).

For reference, the one really huge piece Wayfare originally registered for was $400 (Swiss army, which my parents can't recommend highly enough for their luggage, but you really, really pay for the name). Thankfully, nobody bought us that (I would have felt bad if they paid full price). The Air Canada piece was roughly equivalent in size, weight, and quality, and was even a little bit more visually attractive, too. It was normally about $250, and we got it for $85.

Sunday, November 23, 2008

7 money tricks rich guys know

I recently picked up a copy of the magazine Men's Health as part of my ongoing effort to lose 50 pounds (240 - 190lbs). I'm 80% of the way to my goal which I started in May, 2008. I haven't looked at a Men's Health in years. Apparently they now run a regular section called 'Men's Wealth' where they deal with all things financial. When I first glanced at the article in this section titled '7 Money Tricks Rich Guys Know', I wasn't expecting much, as I find typically when media resources that don't focus on personal finance try to tackle the subject the advice comes out weak and scripted. I must admit Richard Sine from Men's Health does a nice job on this article thanks to Charles Farrell, a Denver-based investment advisor. Here is a summary of the first 3 tricks:

1. Figuring Out Your Net Worth
Would you start a diet without knowing your weight? I think that's a great point. For all the slings and arrows shot at net worth from the personal finance universe, if you take it as a relative measure to gauge your progress I think measuring your net worth regularly is fundamental to working toward your financial goals. Apparently fewer than half of Americans can even approximate their net worth. It's even a good way to better understand whether you should take on certain debts etc. Men's Health goes on to warn that the equity in one's home is an asset but its value is subjective and it's not as useful in a pinch as cash or non retirement investments (too bad more people hadn't concluded this recently).

2. Running Your Ratios
Men's Health points out checking three key ratios to see if you are on track for a secure retirement.
Savings / Income = Changes through life 0.1 to 12.0
Debt / Income = Changes through life 1.70 to 0.0
Savings Rate / Income = 12%

More good advice. As readers have seen from my net worth updates and savings rate calculations, I really like using ratios like this to gauge my progress. I also use:
House Value / Total Assets = Currently about 70%
Debt / Asset = Currently about 53%

3. Gauging Interest
Men's Health argues that all debt is bad debt if you do not keep debt in proportion to your income by using the Debt / Income ratio above. By the way the 1.70 above is suppose to apply to 30 year olds. My Debt / Income is currently 1.36. Men's Health also notes that it is not always better to pay off 'bad debt' before 'good debt' citing an example that shows that the size of the loan matters more given close interest rates. This is good advice that seems to be lost on many people judging by peoples love for real estate and student debt in recent years.

I'll review the next 4 tricks in a future post.

Friday, November 21, 2008

added to Inter Pipeline

I added to my position in Inter Pipeline Fund (IPL.UN) yesterday at $7.04, where is yielded 11.9%. This is close to Inter's 52 week low of $6.91, where it traded down to on October 10. Sporting a pay out ratio of around 60% of earnings, this is another company that is very economically resistant, has perhaps been unfairly sold off, and shouldn't have a problem withstanding a recession. I expect to hold Inter Pipeline through 2011 when it converts from an income trust structure into a regular dividend paying corporation.

How low can the DOW go?

Thursday, November 20, 2008

added to IGM

I added to my position in Canadian wealth manager IGM Financial (IGM) today at $31.84. This purchase reduces my adjusted cost base on this stock significantly, and boosts my yield on cost significantly.

IGM was yielding 6.4% and trading at a P/E of less than 10x at my time of purchase. I was actually surprised how well IGM's earnings stood up to the market's recent dramatic down turn. Investor confidence is extremely bleak. I believe this is a good time to add to my position in this best of breed Canadian wealth manager. Most of IGM's customers should take the rational action during these volatile times and stand pat or only adjust their portfolios slightly.

Monday, November 17, 2008

new position - CP Rail

Today I initiated a new position within my non-registered portfolio in Canadian Pacific Railway (CP) at $39.94. CP is a transcontinental railway that transports bulk commodities, merchandise freight, and intermodal traffic.

Why A Railway?
One of the most compelling reasons to invest in a railway is the fact that by their nature they possess incredibly high barriers to entry. What is meant by this is that railways and the rail industry have characteristics that act as barriers to other potential competitors entering. How many North American entrepreneurs will have the desire to build a cross country railroad anytime soon?

Other attractive features of investing of railways include their fuel efficiency vs. trucking (1/4 cost advantage), hauling coal over long distances belongs to the rails, increased trade with Asia mean longer distance runs, truck driving hour regulations, innovations like double stacked and computer guided cars are making rail even more competitive with trucking. Thanks to the monopolistic nature of railroads they also have serious pricing power.

Why Canadian Pacific (CP)?
  • Canadian dividend tax credit makes CP more attractive for me than U.S. names
  • Canadian National Railway (CNR) is a much more expensive stock

Why Now?

I've wanted to own a railway for a few years now but I have never been able to justify a purchase based on the richness of the stock valuations. CNR and CP have traded well over 12x earnings for much of the last few years as the economy grew at a reasonable pace. Now that economic activity and commodity prices have really started to sputter, so has CP's share price. Here are the specifics that really got me interested:

  • P/E ratio of 8x earnings
  • Dividend yield of 2.5%
  • Price to Book ratio of 1.1x
  • Dividend Payout ratio is under 15%
  • Return on Equity is 18%
  • Stock last traded at these levels in early 2005

Compare these numbers with CNR, and the two stocks are not even in the same rail yard as far as valuations go.

I really like the idea of owning CP for the long term because this railway is really tied into Western Canadian commodities, including agriculture, while at the same time the company by nature should experience much less volatile earnings than an actual commodity producer would. CP is an extremely boring business that should continue to stay on "track" with growing long term earnings and dividends.

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Friday, November 14, 2008

net worth update november, 2008

Results for the 2 Months Ended November 14, 2008:

  • Debt/Asset ratio rose to 0.53 from 0.50

  • Net Worth moved down 7.9%

  • Total Assets decreased 0.7%

  • Total Liabilities increased 6.5%

  • House Value/Total Assets rose to 70.4% from 69.9%

  • Non-Registered Portfolio rose 8.0%
  • Calendar Year to Date Gain/Loss: +5.1%

I have to admit that I was dreading putting this net worth report/post together. Our net worth has been hammered down almost 8% since the last bi-monthly update in September. The S&P 500 index is down about 28% since the last update, so this comes as little surprise. Basically the last seven months of net worth gains have been wiped out, as we are now back to April, 2008 levels. As readers know I am buying fist fulls of dividend paying stocks down at these levels. Let's just say that I am investing in future net worth reports. I can take the pain now, and it does hurt, with a look to the future.

Leverage - Liabilities are up 6.5% this update due to us utilizing line of credit funds in order to fund our non-registered portfolio at these low stock valuations. Whether these low stock prices continue for the next few months or next few years, or, god forbid, go much lower, I'll still be glad I started investing these funds now because I'll be receiving dividend income from the funds months earlier.

House Value - I have maintained our house value in net worth calculations at the same level since July of 2007. During this time we've made improvements to our home, however I feel that their affect on the value of the house are negligible when you consider the recent weakness in Canadian real estate prices.

Wednesday, November 12, 2008

how to get rich, explained

If we could boil achieving financial freedom and independence down to one habit, what would that habit be?

LIVE BELOW YOUR MEANS
Seems simple enough doesn't it? This basically means, ensure that your lifestyle costs much less than your true financial wherewithal. Do this for many years and you'll find yourself in a very good position financially.

We often hear the phrase 'Live Below Your Means' espoused by several personal finance pundits but what does this really mean?

Here are some of the most important specifics that I feel define what it is to LIVE BELOW YOUR MEANS:
  • Do Not Purchase a Home for Nearly the Amount that your Lender Pre-approves You For. Lenders obviously want you to borrow as much money as you can theoretically handle based on your income. This figure is usually ridiculous when you consider the fact that you do need money for other items aside from your mortgage, property tax and other related home expenses. Write up a monthly budget and actually examine where your money will go in reality before purchasing a new home. You'll find that your lender would like you to lead a house-poor lifestyle of stress and worry.
  • Save First, Then Spend. "I would save money but there is nothing left at the end of the month". This is a common excuse. Until you adopt the habit to put money aside as savings before you even think about paying bills or buying things, you'll feel like a hamster on a financial treadmill. Automate this by setting up an automatic money transfer to a separate account and it's fool proof. Save at least 15-20% of your gross income and you'll be well on your way.
  • Forget About The Jones'. You might as well face it, your friends and relatives your age will live above their means and you will look poor when compared to them. Until you resign to this fact, you will be extremely tempted to veer off course, following the herd by making irresponsible financial decisions that lead into debt and stress. Let others become house-poor, live paycheque to paycheque, drive overpriced SUVs they can't afford, and take vacations on credit while you manage your finances responsibly by sticking to your plan. Remember, the Canadian banks own the Jones', while you can own the Canadian banks if you choose.



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Tuesday, November 11, 2008

investing carnival remembrance edition

Welcome to the Investing Carnival brought to you by The DIV-Net. Without the ultimate sacrifice that brave men and women have provided and are providing for citizens of the United States and Canada, the pursuits below would not be possible. Lest We Forget!

Stock Analysis
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Stock Pursuit presents Walmart vs Target posted at Stock Pursuit.

Carlos Sera presents A Trader's Tale; Financial Tales posted at Financial Tales.

Fatty presents Automated Day Trader: Double Moving Average Crossover, Test 1 posted at Fatty Fat Fat.

Nurseb911 presents Taking Stock in MFC: posted at Triaging My Way To Financial Success.

Investing
Surfer Sam presents Stock Investing With Warren Buffett. Investment Advice From a Billionaire. posted at Surfer Sam and Friends.

Ripe Trade presents Trend trading system posted at Ripe Trade.

greg group presents How to Make Money by Laddering Covered Calls - Associated Content posted at Associated Content.

The Financial Blogger presents Obama is the new President, now what? posted at Intelligent Speculator.

Dorian Wales presents Review: The Gone Fishin' Portfolio by Alex Green posted at The Personal Financier.

Shadox presents Late Day Rallies and Crashes: Why Do They Happen? posted at Money and Such.

Investing School presents Try Buying When You Want to Sell and Vice Versa posted at Investing School.

Michael Cohen presents The Hidden Advantage Of Mutual Fund Investing posted at The Fund Investor.

Timothy Lutts presents The Future of America posted at The Iconoclast Investor.

Paul Goodwin presents Market Timing Simplified posted at The Iconoclast Investor.

D4L presents Stock Analysis: Emerson Electric Co (EMR) posted at Dividends4Life.

FMF presents Why I Sold My Mutual Funds posted at Free Money Finance.

Stock Pursuit presents Walmart vs Target posted at Stock Pursuit.

hank presents How Is What We Are Going Through Now Different From The Great Depression in the 1930’s? posted at MiB Smarter Money.


Value Investing
Vlada Kynsky presents Emerging markets fundamental valuation. posted at StockWeb.

Wealth Accumulation
Bill presents Social Security Sense posted at Learn The Stock Market And How to Trade.

MBB presents How To Calculate Your Net Worth posted at Money Blue Book.

Real Estate
Joe Manausa presents How To Stay Calm In The Real Estate Market posted at Tallahassee Real Estate Blog.

Ned Carey presents Lessons from Warren Buffett on Real Estate posted at Baltimore Real Estate Investing Blog.

LAL presents Mortgage Modifications posted at LivingAlmostLarge.

Alternative Investments
Benjamin presents Gold: A Few Points for the Prospective Investor posted at Trees Full of Money.

Thanks to all that submitted content! Please take a moment to browse the moneygardener.

Saturday, November 8, 2008

november limit orders

When I look out a few years many stocks are still looking like very good value at today's recession fear induced levels. As I continue to accumulate stocks for my non-registered portfolio during these dreary times, here are the current limit orders that I have placed with my online broker to expire on at the end of November:

United Parcel Service (UPS) at $45.01
General Electric (GE) at $18.00
Walgreen (WAG) at $21.50
IGM Financial (IGM) at $32.00
Reitman's Canada (RET.A) at $12.01

GE, IGM, and Reitman's are all yielding over 6% at my strike price. They should all report lower near term earnings but a 6%+ yield should limit downside and give me some nice immediate return in lean years. Walgreen is trading under 10x earnings at $21.50, and UPS at $45.01 is under 12x earnings and yielding 4%. Each of these stocks with the exception of Reitman's have touched levels below my strike price during the last month or so. I hope we get another test of the October 10 lows and I can pick up some or all of these great companies at bargain basement prices.

Friday, November 7, 2008

potato wedges - income trust yields & valuations

After enjoying and featuring "..Kraft Dinner.." by the colourful blogger, Potato, over at Blessed By The Potato, we thought we'd sign him to a temporary guest column series contract with the moneygardener for an undisclosed sum... This post series promises to be unlike any other consumer reporting/ offbeat commentary you've ever read. John Stossel eat your heart out.... This series will be a change of pace, and we're calling it potato wedges. Enjoy...

potato wedges
Income Trust Yields & Valuations

The market has been a little insane lately. The market can stay irrational longer than you can stay solvent, as the saying goes, and one is often instructed not to catch a falling knife. Nonetheless, I couldn't help but plow the money I got from Q9 being taken over right back into the market, specifically into some high-quality income trusts that I think are just ridiculously under-valued at the moment. Quarterly results have just been released, and while I recognize that they are lagging reports (for the period ended Sept 30, though the markets and economy didn't really go totally batshit loco until October), they seem to underline just how non-catastrophic some sectors are.

Yellow Pages income fund (YLO.UN) had very strong results: they are well on track to keep up the modest ~4% revenue growth needed to maintain their distributions after a conversion to a corporate structure. They had impressive improvements in their margin, so net income was up even more, 19%, helped also by the growth of their online business. If a temporary bump in the road comes along, the distribution is less than 80% of their cashflow, so there is a safety factor there. I know that the coming recession hasn't really hit them yet, but at the same time, keeping up your ad in the Yellow Pages is pretty much necessity for any small business. Advertising spending may get chopped next year, but the part of it that goes to YLO will surely be the last to go. MG likes and owns them as well, and just had a post on averaging down. Right now YLO is down so much it's yielding about 15%.

H&R Reit (HR.UN) is a real estate investment trust that has commercial real estate (office space, industrial buildings, and retail space) that it leases out. It has a preference for long-term leases with large, stable companies. To go with that, it has long-term fixed mortgages, so the credit crunch shouldn't really affect them much. Nonetheless, it's down to below the value of the real estate it owns (though the balance sheet values of real estate holdings must be discounted in this market) and is also yielding about 15%. They haven't released their quarterly results yet, but I would be incredibly surprised if it was anything other than "steady as she goes". Their payout is a little higher at 90%, but they don't need to build up the tax cushion other trusts do (REITs are, AFAIK, immune to Harper's tax).

Why did I bold the 15% yields? It's because they are, to my senses, screaming for attention. The gains for the market as a whole will likely average about 10% per year over the next decade or two, a prediction by John Bogle that Canadian Capitalist recently commented on. I personally expect equity nominal returns to be somewhere in that range as well, possibly a little lower on a 20-year timeframe (unless inflation is high). So when these stable companies are offering a 5% premium to that (or put another way, a third higher), which can be continued (hopefully) indefinitely, and moreover, predictably -- the payout comes every month, despite what the market may do (and that ~10% prediction is going to feature lots of ups and downs along the way) -- I sit up and take notice. To top it off, once Yellow Pages converts, that regular, lucrative distribution will become a dividend, which will have the added benefit of being favourably taxed.

I think these trust valuations have gotten so low, and the yields so high, that it just can't be ignored any more. There could be more bad news ahead. Given the trends, there probably will be. But I think 10 years from now I am not going to regret buying something that's this stable and yielding 15%.

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Thursday, November 6, 2008

more Yellow Pages

I have added to my position in Yellow Pages Income Fund (YLO.UN) today. Earnings, which came out today were up 20%. Organic online revenues were up 38%. Distributable cash per unit was up 8.8%. Earnings and margin from paper directories were both up.

Their current distribution is solid according to their CEO, Marc Tellier. Stock is currently trading at a P/E of under 8x, and yielding 14.6% in distributions. This purchase lowered my ACB significantly. I am confident in their future ability to continue to pay out a significant yield. I also believe that at their current unit price YLO is priced for a severe recession, while a recession will not hurt their earnings as much as is expected because of the staple-type nature of their advertising offerings.

A very high yield combined with earnings and margins that continue to grow made this purchase hard to resist.

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Wednesday, November 5, 2008

Newalta, new dividend kid on the block

Canada's leading industrial waste management and environmental services company, Newalta currently (NAL.UN) has announced it is converting to a corporation. Newalta plans to eventually pay a quarterly dividend of $0.20/quarter (eligible dividends), this represents a yield of 8.9% on Tuesdays closing price.

Newalta also announced a 5% rise in earnings per share and that they are cutting their cap ex growth budget by 30% for 2009. Half of Newalta's growth as a company to date has been through about 50 successful acquisitions.

Here are some highlights of Newalta's distribution history
March 2003
Monthly distributions initially set at 9.0¢ per unit at conversion
Sept 2003
Distributions were increased to 10.5¢ per unit
March 2004
A further improvement was made to 12.5¢ per unit
March 2005
Distributions reached 15.0¢ per unit
Nov 2005
They were raised to 16.5¢ per unit
May 2006
Most recently, distributions were increased to 18.5¢ per unit

Newalta has shown some pretty impressive growth of the distribution since 2003, which should be noted was boom time for the oil and gas industry which Newalta relies on for a large part of their revenues (47% to be exact).

I like the Newalta story, as I believe this should be a stable and growing business and we move into a future of heightened environmentalism and attention toward the better management of waste and recycling programs. I actually had a close look at Newalta last year when I was selecting income trusts for my portfolio as part of our maternity leave strategy, where I ended up selecting IPL.UN and YLO.UN instead. At that time I ruled out Newalta because of it's heavy reliance on the cyclical oil and gas industry. This is certainly one to keep an eye on as we move into 2009.

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Tuesday, November 4, 2008

J&J, safe, solid, & consistent

This article was originally posted at The DIV-Net on October 15, 2008.

Global health care company and perennial dividend grower, Johnson & Johnson (JNJ) announced yesterday that they grew their third quarter earnings by 10.4% over 2007. Sales were up across the board and were largely driven by international efforts. Generic drugs are having a negative impact on J&J's pharmaceutical business. Johnson managed to grow consumer sales by 13% driven primarily be U.S. allergy sales (Zyrtec) and Chinese moisturizer sales (Dabao).

The company also increased its earnings guidance for full year 2008. Overall, the earnings report looked very solid, a nice reprieve from the dark day to day headlines in the market these days. JNJ is being viewed as a safe harbour from the storm lately and they are certainly living up to that billing as they continue to execute despite current conditions.

Here is a glance at J&J's recent dividend activity:
2006-$1.47
2007-$1.64
2008-$1.80

That is a compound annual growth rate of the dividend of about 11% over the last few years

Monday, November 3, 2008

net worth declines abound

Declining North American home prices coupled with plunging stock markets mean that personal net worths are declining everywhere from Los Angeles to Halifax. This is a phenomenon that is not only occurring in North America, but in most of the world. Personal finance bloggers are no exception.

Here is how some of the usual suspects fared on their November 1 updates:

American, Clint from Accumulating Money saw his net worth decline by 9.9% since October 1.


Eastern Canadian, FT from Million Dollar Journey had his net worth decline by only 0.3% since last month due to some strength in his savings as well as stable real estate values. FT has had a strong performance in 2008, as he is sitting at a net worth increase of 13.3% year to date.


Western Canadian, Tim at Canadian Dream: Free at 45 saw his net worth decline by 3.6% since his last update in late August. He is still hanging on to a 1.9% increase year to date.

How bad will my November net worth damage be? I report my net worth on or around the 15th of the month, every other month. My next report is scheduled for around November 15. See the blog sidebar for all previous net worth updates, like my last one in September here.

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Sunday, November 2, 2008

portfolio update nov. 08

31 months ago we started a non-registered portfolio by transferring $5,000 from a mutual fund account into an online brokerage with the intention to buy stocks. Over the last 2.5 years we've saved new funds and managed the portfolio for the future by purchasing dividend growing stocks at reasonable value and using the following philosophy:

Investing Philosophy
I'm foremost a buyer, seldom a seller, with a long-term view.
I'll only buy stocks that I would average down on.
I will be patient, disciplined, & stick to my system.
I don't worry or panic, & I always remember my reason for the initial purchase.
Dividends are half the journey.
Consistency, quality, brands, & demographics matter.


Asset Allocation
This portfolio is invested for the long term (at least 7 years) and is allocated 100% in equities. Here is the breakdown. (click on the image below for better viewing). See the side panel for specific stock allocations.


2008 Performance
Return including dividends = -18.5% (some benefit from currency fluctuation)
S&P 500 Index return without dividends = -34.0%

Key Metrics
Portfolio Value = $48,649
Total Number of Stocks = 20
Last Year's Return = +0.2%

Portfolio Yield = 5.3%
Portfolio Yield on Cost = 4.3%
One Year Dividend Growth Rate = 88%
Income From Investments Per Day = $7.01

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Saturday, November 1, 2008

td bank & 404 errors

On Thursday of this week I added to my existing Toronto Dominion Bank (TD) position, which I started back in April, at $55.23/share. This brought my average cost on TD Bank down to about $62/share. I continue to pick away at adding to my existing stock holdings when I see value. TD was 26% off of its 52 week high and yielding 4.4% when I made the purchase. This purchase makes TD our largest holding in our non-registered dividend stock portfolio. This portfolio is designed for the long term and will provide years of dividend income. Purchases made today during very bleak times should prove to be smart as time marches on.

I think TD's very strong retail franchise in Canada as well as their avoidance of large scale involvement in toxic instruments and investments should enable them to keep their earnings per share more steady than most of their competitors in Canada and abroad. Much of what is hurting TD's share price is the general negative sentiment against financials and non-hard asset earnings. Economically, there are rocky times ahead but I believe TD is the best positioned Canadian bank to whether the storm and emerge successful on the other side. Canadian bank earnings will be interesting indeed when they come out later this month.

--
My apologies for anyone experiencing a 404 error when attempting to access the moneygardener over the past few days. Google is having some difficulty transferring the blog over to a custom domain name (dot com), vs. the current blogspot format.

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