I may quit drinking but I refuse to go to those damn meetings!

This actually has nothing to do with my drinking habits.  Rather, it's about meetings. Specifically, it's about those meetings that friends invite you to so you can join them in cashing in on the next giant opportunity.

Years ago such invitations involved soap.  You had to sit through the first hour and were never given a clue that you were at an Amway meeting.  The first hour was all about building a network of friends and relatives so that they too would have the opportunity to get rich. Eventually, well into the second hour you finally got a peek at the product which was about to change your life and the lives of all the lucky people that you bring aboard.  Welcome to the world of multi-level-marketing.

I'm no expert, but my understanding is that MLM operations are legal while similar Pyramid schemes are not. The difference? An MLM involves selling legitimate products and payment of commissions which trickle down through several levels according to who recruited who into the network. Pyramid schemes on the other hand, involve payment of commissions simply for bringing people into the network, usually because there's a huge entry fee. Sometimes this entry fee is simply for the privilege of admission and sometimes it's the price of a over valued start up kit...like $4,000 for $1,000 worth of cheap jewelery.

In recent times these 'Opportunity Knocks' meetings have evolved and often relate to investments.  You might be given the opportunity to get in on the ground floor of the next big idea through an investment in a private company. On occasion these are well meaning people who sincerely believe that they hold propriety rights to the next fuel cell. Other times it involves scammers who claim to have developed a system to extract sugar from wood chips. Yup, we had one of these in Manitoba. Remember, there's no way to value an investment in a private company.  If it ain't trading on the market, who's can say what it's worth?  Have one and don't believe me?  Try to sell it, and get back to me.

Another example involves joining a lending pool for the smartest guys in the real estate business who promise monthly returns of anywhere from 5 - 20%. Where do I sign up for that? For info about these schemes have a look at this site. I've had this in my LINKS panel for some time under the title Ponzi Schemes.

The bottom line is that if it sounds to good to be true it usually is. Legitimate investments are offered by licensed dealers after preparation and filing of a proper prospectus. Always remember...

Meetings are for Amway and Mexican Times Shares.

Young Guys Checking In At TPCI

I've said before that I'm not trying the write the Great Canadian Novel here but on occasion it's nice to know that someone is reading. Feed-back is a gauge of readership. I receive emails from readers as there is a link to my email address on my profile. Some readers provide feed-back for all to see by adding a comment to a post. These are always welcome.

Recently a couple of young guys posted comments to specific posts. Now, you ask, how would I know an anonymous comment comes from a young guy? Have a look at the comments of December 28 under the post Old Guys Getting $crewed... More recently, on January 21, a reader suggested I may be fibbing about historical deposit rates of 8 - 9% with his comment to the Orphan Fund(s) post. So, what's the clue that these comments came from young guys? Simple, all of us old guys remember the interest rates of the eighties and nineties as mentioned in my responses to these two comments.

Yes, most of us remember mortgages with interest rates in the low to mid teens, or even higher for a brief period in 1981. Those who were actually able to save bit, do remember investing in 60 month GICs that paid 8, 9 and even 10%. A common annual RSP contribution was to simply buy an new GIC at the going 60 month rate. Yup, back then, we all knew the rule of 72. The rate of interest received divided into 72 reveals when your money will double. A deposit invested at 10% would double in 7.2 years...and double it did...throughout the eighties and early nineties.

It goes without saying these extremely high interest rates did as much harm as good. Borrowers got clobbered while dept free savers happily doubled their money with absolutely no risk. Different times to be sure. 

Hey Buddy, I'll trade you a Crescent Point for a Suncor

I changed oil companies yesterday.  I'd held Crescent Point Energy (CPG) for some time and had done well with it.  On a bit of whim I decided to switch to Suncor (SU).  Both are often top picks by BNN analyst du jour.

So why the change?  Recent sentiment seems to be tipping away from Crescent Point in favor of Suncor.  There's pretty much a unanimous consensus that Crescent Point has one of the top management teams in the business.  They're building a great company and running it well.  On the other hand, some are beginning to question their expansion plans which regularly involve issuance of new shares.  In 2010 they issued $375 Million of new shares in both June and October.  There comes a point when it would be nice if they would settle down and run the company for a while without these regular dilutions.  Alternately, many believe that Suncor's time has finally arrived.  2011 may be the year when its Petro-Can investment will finally pay off for this totally integrated giant.

I'm not saying that big is better but it's interesting to note that Crescent Point's market cap is $11.6 Billion while Suncor's is $58.9.

For a nice change I was on the right side of stocks moving in different directions with my two trades yesterday.  I sold Crescent Point on a bit of a pop up, on a positive day, at $43.50.  It finished the day up .13 at $43.37.  I bought Suncor on a bit of a dip, on a down day, at $37.60. It finished the day down .20 at $37.67.  On the day, I sold CPG at a high point and bought SU at a low point.  Maybe I should consider becoming a day trader?  NOT!

Opportunity Lost

The overnight news on Monday morning was all about Steve Jobs taking medical leave from Apple (APPL).  This is a company with 46,600 employees and the news was all about how the temporary loss of one guy may adversely impact the company.  In its usual fashion BNN covered the story ad nauseam.  Each shift change brought more comments and analysis from BNN hosts and guest analysts.  I wasn't glued to the tube, but it seemed to me that it was about two to one on the negative side.  The more optimistic talking heads pointed out that COO Tim Cook, who would back stop Jobs in his absence, has twice before successfully run the company while Jobs recovered from cancer and a liver transplant.

While the US markets were closed on Monday Apple shares were selling off overseas.  Down 7% in Germany.  I wondered how Apple shares would open on Tuesday in the US.  I wondered if this may be an opportunity.  I didn't give it much thought as I have no liquidity in my trading account and I'm pretty happy with the stuff I'm holding.  

So, what happened?  Apple shares which closed Friday at $348.48 opened on Tuesday at $327.05 and traded as low as $326.00.  The shares gained most of it back as the day progressed.  In the early afternoon they reached $344.76 before settling back and closing the day at $340.65

So, then what happened?  After the markets closed Apple released Q1 earnings numbers which blew the doors off all expectations.  Sales for the quarter $26.6 Billion, up 71% from a year ago.  Profit, $6 Billion.  EPS $6.43 up 23%.  iPhone sales 16.2 Million units, up 86% year over year.  7.3 Million iPads sold.  This is a device, and a market, that didn't exist a year ago.  Holy crap!

Apple shares traded up to $346.10 in after hours on the Nasdaq.

Yes, Monday would have been a good day to put on a day trader hat, liquidate some assets and get ready for Tuesday's opening.  Day traders who pounced first thing yesterday morning made some serious money.  Yes, an opportunity lost.

It's going to be all about earnings...

With US markets closed yesterday the TSX spent most of the day under water looking for direction.  It peaked around 2:00 PM 'Peg time before dropping off to finish the day with a small loss.  Overnight Asia is mixed, but Europe is all up about 1%.  Oil is holding above $91 and lots of talk about $100 oil in the near future.

BoC interest rate announcement at 8:00 AM 'Peg time this morning.  Expectations are that they'll do nothing and leave the rate at 1%.  Old Guys are just going to have to wait a while yet.

The story this week will be all about earnings reports.  From the US IBM, Citigroup and Apple are reporting today.  Later in the week it's Wells Fargo, Goldman, Google, GE and BoA.  Here at home, Viterra reports tomorrow.

As I'm typing this at 7:00 AM 'Peg time Citigroup just reported and it's a miss...but, fourth consecutive quarterly profit.  We'll have to see what that does to the financial sector today.

Have a look at the CHARTS.  After a slow start to the year, week two picked up nicely.

You win some, you lose some

A friend did some research after reading my post; Dead Money Comes To Life.  He pointed out that shares of Organic Resource Management (ORI) have traded well above my selling price of $2.04 since the day I bailed.  Well, he's right.  After holding for four years I took the very first opportunity to get out with my shirt, and all of my money.  I sold on December 3.

Since then Organic Resource shares have traded as high as $2.70.  That was a single transaction on December 13.  Otherwise  they've been in the $2.01 to $2.25 range on very low volume.  Many days only 200 shares change hands and it's not uncommon for there to be zero volume with this stock.  Liquidity?  Not so much!

No, I don't feel even a little bad about picking up my marbles on this one.  The proceeds from the sale of my Organic Resource shares was re-invested four days later in Cisco Systems (CSCO).  I took money out of stock in a tiny company with a market cap of $9.9 Million and put it into a huge tech company with a market cap of $116.4 Billion.

By the way, I bought Cisco at $19.55.  It's $21.00 this morning.  Organic Resource shares haven't traded since early Tuesday morning.  Over twenty-four hours and zero volume.

Looking for direction

Five trading days into the new year and the TSX has dipped each day. Commodities which had been sold off appear to have stabilized but have failed to reach back to year end levels. I'm surprised at oil. With the fire at Canadian Natural Resources (CNQ) and the leak which closed the Alaska pipeline I expected oil to bounce right back but it's not happening.

Alcoa (AA) kicked off the US earnings season with a beat after the markets closed last night. Many analysts are expecting upbeat earnings reports for the current quarter. Positive earnings may provide some direction for markets which otherwise are down to flat on weak economic news.

Later this week Intel (INTC) and JP Morgan (JPM) report. Here at home we'll be hearing from media and cable companies Corus (CJR.B), Astral (ACM.A), Shaw (SJR.B) and Cogeco Cable (CCA).

Limping into the new year

On Monday when the TSX was closed the rest of the world markets came out smokin' and jumped 1 - 2%. Wouldn't you know it, when the TSX opened on Tuesday, commodities collapsed with gold seeing the largest single day drop in months and oil tanking by a couple of bucks. Three downward days to start the year for the TSX. The gold sell off slowed but the downward trend continues this morning. Oil, on the hand, has has been down and up like a hooker's drawers. An oil day trader's dream environment. Not my cup of tea.

Watch List
I've been watching Potash Corp. (POT) since the failed takeover attempt of the fall. The offer of $130.00 looks pretty lame now as Potash closed at $168.70 yesterday. I first mentioned Apple (AAPL:NY) on these pages back on March 10, 2010. The price that day...$223.00. The price yesterday...$333.73.

Things that make you scratch your head
I wonder about General Motors (GM:NY)...closed yesterday at $38.90 up $5.90 from the $33.00 IPO price of November...this is based on ???

Today...
is anybody's guess. Great Canadian employment data early this morning followed by disappointing US data ninety minutes later. Who knows?

2010...In The Rear View Mirror

Well, that was more like a "normal" year. Not the huge gains of 2009 and not the disastrous losses of 2008. No, 2010 was much more like 2007 which I've previously referred to as the last "normal" year.

The TSX began the year at 11,746 and finished at 13,443 for a gain of 14.44%. My stuff was up 15.13%. That's always the goal, to come out ahead of the TSX. Of 251 trading days, there were 143 to the upside and 109 downers.  

Even better, my trading account gained 26.55%. I made a total of 18 trades during the year, the same as 2009. In the fall it seemed like a trading frenzy as I bought and sold RIM, got out of Encana, bought BMO and RBC, captured my first ever double with the sell of Scorpio Mining, sold Lundin, bought and sold the two coal miners, ended four years of dead money by getting out of Organic Resource Management, doubled my BMO and RBC positions and finally added Cisco Systems, my first ever purchase on the Nasdaq Exchange.  Whew! Seems like a lot when I put it all in the same sentence.

On the fund side, I reduced my possible downside as I took money off the table by transferring from my long held Canadian Resource Fund to a Canadian Bond Fund.  I've missed some upside with that move but as I've said on these pages, there comes a time when it's you've gotta know when fold 'em.  As I approach my next retirement my risk tolerance reduces.  As we've learned, a drop of 25% can occur in an instant and the 33% gain required to get it back can take a very long time.  I can't afford to play that game again! 

I'm still holding the large cap Canadian Endeavor Fund but will similarly convert it on the first sign of weakness.  The most pleasant surprise was that those lame Seg Funds recovered with a gain of 14.87%.  After dropping 38% within months of buying them at the mid 2008 high, I figured the only way I'd ever recover would be to hold for 15 year guarantee period.  Now, I can see a way out by the time I'm clear of those damn Deferred Sales Charges...about six or seven years.

2010 was my second year with TPCI.  I'm always interested in reader feedback.  I heard from a number readers after the May post Who Should(n't) Be In Funds?  As I suggested in the post, nobody I heard from had ever had finance guy contact them about an exit strategy based on their age or approaching retirement.  Pretty much everyone I heard from recognized themselves in the July post Why we fell in love with funds. Do we still love finance guy today?  A week later I wrote A Little More About The Last (Next) Ten Years as I wondered if we will ever again return of the heady days of the eighties and nineties.

All in all, I enjoyed a decent year with my investments and had some fun along the way blogging on TPCI.

Happy New Year and Good Luck To All!