Thursday, January 29, 2009

two small victories

the moneygardener, shovel ready.

First Victory
I have lost count of how many times I've tried to move this blog from the blogspot domain to just plain dot com. My fingers are crossed, as now the transition appears to have been a success. I would appreciate it if anyone linked to this blog would change their link to:

The blogspot address seems to be redirecting to the dot com domain fine for now. I also hope my RSS Feed remains in tact for all. If by chance there are any issues with the feed, you can re-subscribe by clicking the feed for posts icon at the top of the right sidebar. I've lost my precious Google page rank of 2/10, as well as any type of search engine recognition in the process. Oh, well I'm sure I'll build it back in spades.

Second Victory 500
the moneygardener has reached an important milestone. For months I've been looking forward to the day when the number of fine people subscribed to this blog reaches 500. Well the day is finally here, hooray! That's one person for every dollar that I had invested back in 2003, when I began my journey to financial freedom!

Tuesday, January 27, 2009

Pfizer goes soft

Pfizer's (PFE) recent acquisition of competitor Wyeth (WYE) was certainly a large one. The pharma giant paid $68B, but at the same time the maker of Viagara couldn't keep it up as their dividend went limp when they chopped it by 50%. Not quite the disappearing dividend act that many US banks, including B of A, have pulled, but size ultimately mattered as Pfizer needed the cash and just wasn't producing the earnings growth to back the payment.

I am by no means a perfect stock picker, and time will tell if I am even an adequate one, however my stock evaluation process weeded Pfizer out early. Pfizer/Wyeth could turn out to be a fabulous long term investment, however when I looked at Pfizer's merit as an investment over the last two years I stayed away basically for this reason:

Pfizer's Earnings Per Share Over The Last 4 Years
2004 EPS = $1.44
2005 EPS = $1.03
2006 EPS = $1.51
2007 EPS = $1.18
2008 EPS = $1.19

This is basically no growth in earnings over the past years. This is not good. One of the first trends that I want to see when analyzing a potential dividend investment is a trend of growing earnings with maybe a few blips. Consistency and modest growth are ideal. At the same time look how Pfizer was compensating shareholders during this time by increasing the dividend, which importantly was not backed by earnings growth.

Dividends Per Share Over The Past 4 Years
2004 = $0.68
2005 = $0.76
2006 = $0.96
2007 = $1.16
2008 = $1.28

2009's dividend pay out ratio was actually around 97% according to So while earnings were trying to keep their head above water, the company was raising dividends at a compounded rate of about 17%.

Whether management would have cut the dividend if not for the Wyeth purchase is beside the point. The trend was not your friend as an investor in Pfizer. While it is nice to receive an ever increasing dividend, the earnings per share trend must be in tact to back the dividend up. Failure to provide a solid earnings trend will lead to an impotent dividend.

Sunday, January 25, 2009

recession reflections

By all popular accounts it now seems as though we are well into a recession in North America. The doom and gloom in the media is extremely evident, and now terms like 'uncertainty', 'recession', and 'tough economic times' have completed the long journey from CNBC to Subway commercials. Grade 10 girls are reflecting on the economic downturn in discussion around their lockers between classes. It is official, the sentiment is bad and times are indeed tough.

Despite the decisiveness of most on this issue though, it is an interesting discussion to have with friends, colleagues, and relatives. How has this all affected you?

Losing your job is very unfortunate, and for those who have been affected I wish them luck and success in the future. I've seen countless examples of where the recession is really hurting on the news; but where is it hurting locally and in the lives of those around me? Well...
  • Of all the folks that I know, I am aware of one person who has been laid off recently
  • Personally, my investments have been hammered beyond belief, and I'm sure I'm not alone on this

On the other hand:

  • I know a few small business owners who are reporting business as usual
  • In minus fifteen degree weather I still can't get a parking spot at local malls
  • An 'edible arrangements' business just opened up in my area
  • Real estate still seems to be on the expensive side

Right now I do feel like there is a chasm between what appears to be going on in the world and what is actually happening locally and to those that I know personally. Is anyone noticing the same thing?

Friday, January 23, 2009

CNR earnings & dividend raise

Canadian National Railway (CNR) reported their latest quarterly results this past week and hiked their dividend by 10%. Any dividend hike, especially in these 'tough economic times' usually gets my attention. Let's have a look at the quarter for the economically sensitive railway.

  • Hiked dividend by 10%
  • Earnings on a comparable basis were up about 24%
  • Revenues were up 13%
  • Results beat analyst expectations
  • Falling $CAD caused US earnings to inflate
  • Lagging fuel surcharges helped, given lower fuel costs


  • Volume was down 9.8%
  • Much of the earnings gain was attributed to the falling $CAD and the lagging fuel surcharges

I own competitor CP Rail (CP) within my non-registered account.

Wednesday, January 21, 2009

top secret obama priority list

Now that Barack Obama has had a full 48 hours in office as the ruler of the free world, I'm sure he is on track to solve all of the world's problems. What are his priorities though? Luckily for my readers, an official memo was leaked directly from the Oval Office to the offices of the moneygardener. This top secret memo basically outlines what problems President Obama has solved and will solve in the months to come. To be safe, you may want to clear your Internet cache after reading this. If you are reading this at the airport you may want to install your 3M Privacy Filter now. Without further adieu here are the contents of the leaked memo.

  • Will figure out how they get the soft flowing Caramilk into the Caramilk bar
  • Make 'Joe The Plumber's' house worth more in 2009 than it was worth in 2008
  • Implement universal health care without raising taxes
  • Help Oprah Winfrey lose some weight, and keep it off
  • Pay China back big time
  • Tell Global Warming to 'Cool It!'
  • Find Osama Bin Laden, Jimmy Hoffa, and Real Killer of Nicole Brown Simpson and Ron Goldman
  • Award Stanley Cup to Toronto Maple Leafs already
  • Fix long standing feuds between Israelis & Palestinians, Red Sox & Yankees Fans, and Seacrest & Brangelina
  • End High Gasoline Prices (completed)
  • Ensure General Electric maintains their dividend
  • Upgrade Costco Membership to 'Executive' (completed)
  • Make Really F#cking Cold Weather a thing of the past
  • Conquer World Poverty, Cure AIDS, & make Heineken and Stella Artois more affordable in countries bordering the U.S. on the North.
This would make for a solid first term and might just guarantee 4 more years.

Tuesday, January 20, 2009

10% off houses in Windsor

Thinking of buying a house in Windsor or Essex County, Ontario, Canada? The Canadian Federal Government and the Government of Ontario will actually cover your 10% down payment for you.

In an area being hard hit by the downturn of the auto industry, this program began on January 1, 2009 and ends on March 6, 2009. As of December, 2008 Windsor's unemployment rate sat at 9.1%. Details on the program can be found here.

Some of the details:
  • Maximum home value of $160,000
  • Maximum income of $61,400 annually
  • Loan must be paid back if applicant does not own and stay in the home for at least 20 years
  • If the home is sold for less than the original price paid the loan is forgiven

I thought this was an interesting program; it is actually called 'The Canada-Ontario Affordable Housing Program Homeownership Program. I have never heard of such a thing. Like the Hyundai 'Lose Your Job, Return Your Car' program, this is a sign of the times in Southern Ontario.

Thursday, January 15, 2009

net worth update, january 2009

Results for the 2 Months Ended January 15, 2009:

  • Debt/Asset ratio rose to 0.54 from 0.53
  • Net Worth moved up 1.3%
  • Total Assets increased 2.6% (record high level)
  • Total Liabilities increased 3.8% (highest since Sept. 2006)
  • House Value/Total Assets fell to 68.6% from 70.4% (record low level)
  • Non-Registered Portfolio rose 16.3%
  • Calendar Year to Date Gain/Loss: +0% (first update)

I have to consider this good progress. Assets are at a record high while our debt/asset ratio is still very manageable, as it is at March 2008 levels. What having a debt/asset ratio of 0.54 means is that we have 54 cents of debt for every dollar of assets. Net worth moved up by a small percentage from a very low level. In the next four months we need to pick up our net worth growth or we will have a negative year over year result when I record our fiscal results which wrap up on May 15, 2009; and that would be depressing indeed.

For the two month period the S&P 500 index was down about 3.5%.

Tuesday, January 13, 2009

but do they give you a ride home after?

Surely a sign of the times, Hyundai US is offering up an interesting proposition to new car buyers, which are now a rare breed. It is apparently a 'no lose' :)

Hyundai: Lose Your Job, Return Your Car
From (Aaron Gold)
“The car market is in shambles right now. It's a great time to buy -- dealers are hungry, gas is cheap, and lenders are loosening their pockets, so cars are hella cheap -- but people are worried about keeping their jobs, so they're understandably reluctant to commit to a car payment. Enter Hyundai and their new Hyundai Assurance program.

Here's the deal: If you buy a new Hyundai and then lose your job, you can walk away from your new car and your new car payments. If you're upside down (you owe more on the car than its worth), Hyundai will even cover the negative equity, up to $7,500. The program is free and covers the first twelve months of ownership. The program also covers disability, loss of driver's license, disability, accidental death, or a last-minute job transfer to Belgium. Details of the program can be found at”

Sunday, January 11, 2009

the moneygardener 2009 financial goals

In my recent post, 2009, a new financial year, I talked about how I believe it is important to have a vision for what the upcoming year will look like for us financially and to write it down. Well we might not all have a blog, but I do, so conveniently I can write my 2009 financial vision/goals right here.

Current Situation
We are quickly approaching 30 years of age and over the last 4 years we've carried out some important financial steps toward building a secure, prosperous future.

Financial Vision For 2009

1. First and foremost, in keeping with my stated goal #1, in 2009 we want to continue to save at least $1,000 average per month for our non-registered portfolio. Ideally I'd like to save much more than this, considering that last year we managed to save an average of $1,395/month. This will enable us to be well on our way toward our goal of the portfolio being worth $175,000 (net value after any debt) in February of 2014.

2. 2009 will see us spend a good amount of money on home-related items. We will also spend some serious money on a vacation.

3. We will start 2 TFSAs (Tax Free Savings Accounts) in 2009 and contribute the maximum amount to both.

4. Over the past 3 months I've been using borrowed money to invest in our non-registered portfolio and paying it off in large chunks with saved money. I am expecting that this buying activity is largely completed and I will slow purchases now and concentrate on using saved money to pay back the line of credit. I am happy with the fact that I have now bought a good chunk of my portfolio at much lower prices and higher yields. This obviously depends on the market, but unless we breach the S&P 500 lows of the last few months I don't think I'll get excited about the opportunity to invest as often.

5. Our dividend income within our non-registered portfolio has grown from $1,523 one year ago to it's current level of $3,524. Savings and borrowed funds over the last year have really juiced our dividend growth. Over the next year I expect that this rate of growth will slow down dramatically as we rely on companies raising dividends for growth instead of mainly new funds coming in.

What I won't Aspire To Do:

Grow Net Worth By X% - This is a pointless exercise for me because I rely heavily on the stock market for net worth gains. The market is out of my control.

Accelerate Mortgage Payments - This just ain't how the moneygardener rolls. I've chosen sides already. Having a low interest mortgage and an interest in the long term prospects of investing I've set my mortgage payments on cruise control, and I like it that way.

Follow The Crowd - I'll march to my own drummer again in 2009 like I've always done. I don't care what the majority of people are doing and why. I'm sticking to our long term plan.

What does your financial 2009 look like?

Friday, January 9, 2009

january net worth preview

Since May of 2008 our net worth has started to look a little funky. Things were generally only up until the markets really started their hard downward dive in May of 2008.

The stock markets seem to be least settling down, which is adding some stability to our net worth value. We are continuing to save a significant portion of our employment income each month, and our home value is flat. These are the probably the three factors that will affect our net worth the most in 2009.

I'll update our net worth next around January 15, 2009.

Thursday, January 8, 2009

more cheese please

On December 1, 2008 I initiated a new stock position in Canadian food products firm, Saputo (SAP). You can read why I like Saputo in my Saputo purchase post. I picked up this first group of shares at $22.20.

This week I added to my Saputo position at $19.91, that is over 10% below my initial price. This brings down my adjusted cost base on the stock. Saputo now makes up about 5% of my non-registered portfolio. 3 out of my last 4 stock purchases have been food related....mmm food..

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Tuesday, January 6, 2009

the real environmentalists

Back in May, 2007 in my economic green post, I explained that I believe that being green must be economic, otherwise motivation of the masses is lost. Over the past few months I have slowly become aware of something that is going on right now, that I believe falls into this category.

As many readers know I religiously shop at warehouse club operator Costco Wholesale. The thing with Costco is that their products are addictive. Over the years we have begun to buy more and more household goods from Costco. What makes their products addictive is that they are such high quality for such a fair price. Once you start buying the product, you are basically hooked because you won't compromise by buying an inferior product for, heaven forbid, a higher price. Two such examples in our home are Kirkland White Kitchen Garbage Bags with Drawstring and Kirkland Liquid Gel Dish washing Detergent.

Being addicted to using these two products, and considering how many times our kitchen garbage fills up and the number of times our dishes need washing, you can imagine how many times I handle these products. Combined I probably handle the products thousands of times per year, so subconsciously I've become quite used to the physical feel of the garbage bags and the plastic jugs. I really like these white garbage bags with a red drawstring. They never break, are a good size, and tie up nicely. The dish washing detergent works really well and is much less expensive than anything I've seen anywhere else.

In recent months something has happened. First it was the kitchen bags. As I pulled the bag from it's fresh roll in the bathroom closet it felt different in my hands. The bag was noticeably thinner. Was it just my imagination? They still worked great. A few weeks later I pulled two new huge jugs of dish washing detergent off the shelf at the Ancaster, Ontario Costco and instantly I noticed it; the pressure I exerted on the jug caused my fingers to push the plastic in further than normal. The jug was much thinner than it previously was.

It is reasonable to assume that the time a product design change decision is made at a consumer products company's boardroom table until the product gets to the consumer is likely about 6 months to 1 year. It is a lengthy process to design, test, manufacture, and market a new product. These two products are both made up in part with petro chemicals. The bags contain resin and the jugs other petro chemical-based polymers. They are both nasty items that will take years to decompose in landfills. The price of many commodities including oil really took off roughly around February, 2007. The innovative minds at these consumer product companies were likely called to force in the name of cutting costs and saving margins. "Make it thinner" demands the Clorox Co. (CLX) executive! They're all environmentalists, aren't they?

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Thursday, January 1, 2009

2008, a net worth disaster

2008 was a very bad year for the personal net worth of the majority of people and households. Declining real estate values coupled with a stock market crash sent net worths reeling, especially in the latter half of 2008. Our net worth actually peaked out in September during 2008.

Even though I typically measure my net worth on the 15th of the month bimonthly, I wanted to see how we made out in calendar 2008. Considering how ugly the year was in every asset class we did not fare half bad.

Net Worth 2008 Calendar Year
January 15, 2008 = $135,456
December 31, 2008 = $145,555
2008 Calender Net Worth Gain/Loss = +7.5%

In a year where my wife was on maternity leave, the S&P 500 index was down a whopping 39%, and my home value was flat, any gain in net worth should be considered a small victory.

Other 2008 results from the blogosphere:
Canadian Dream Free at 45 (+2%)
Million Dollar Journey (+11%)
The Financial Blogger (+17%)
Frugal Bachelor (+23%)