A Little Reminder

It sure is easy to become complacent.  Here we are cruising along enjoying steady growth. On a long term basis the upward move began after the last big dip in March of 2009.  On a much shorter term, we've been on a heck of ride that began last September 1.  As mentioned on these pages, 2010 was flatter than the proverbial pancake to the end of August. On September 1 the TSX took off and we've had pretty much the best six months in recent memory.

On the August 31 the TSX closed at 11,913.  January 31, 13,551 for a gain of 13.7%.  By February 17 it had spiked to 14,136.  An 18.6% gain since the end of August.  Spectacular!

Once again, finance guy is back in the good books of many boomers who stayed the course during the turmoil of the past few years.  Many began to think that he isn't such a dolt after all.  His constant reminders about the long term returns of the overall market hit home.  Stick with finance guy and we'll be okay many once again believe.

For my thoughts on this, have a look at my post of July 16 last year.  A Little More About The Last (Next) Ten Years.  To stick with finance guy and his marvelous mutual funds for the next ten years means you really have to believe that world has not dramatically changed and the markets will settle into the old norm of slow and steady growth...a pattern which we haven't seen since the nineties.  The nineties people, ten freakin' years ago!  Like I said last July, the ten year return for the period ended July 8, 2010 was 10%...in total!  A GIC at 3% compounding annually grows by 34.39% in ten years.  Think about it.

So, will you stick with the funds?  Do you believe that the markets will return to patterns last seen in the eighties and nineties?  Are you thinking that we're enjoying new highs and now may very well be the time to take your money off the table?  Depending on your age and your planned retirement date this may be the case.  It's all about timing as I described in my post last May.  Who Should(n't) Be In Funds?  Most importantly, are you thinking about it at all? Finance guy thinks about your funds each month....when his trailer fee commission cheque arrives.

Blew Past 14,000!!!

When I began drafting this a few hours ago the title was "Flirting With 14,000".  Since then the TSX blew past 14,000 and, right now at least, it sure looks like it's going to finish above that level.

The first time the TSX closed over 14,000 was May 16, 2007.  The last time was July 4, 2008. In the interim it's been on a huge roller coaster ride.  As high as 15,073 on June 18, 2008 and as low as 7,566 on March 9, 2009.

Oil Disconnects
For years the spread between the price of Brent Crude oil which supplies much of Europe and West Texas Crude which supplies the US has been very tight.  Usually they're within a dollar of each other,  Recently Brent Crude has taken off.  It's over $104 this morning.  On the other hand, West Texas Crude, while up a tad today is still in the $85 range.  Why the sudden disconnect?  My guess.  TransCanada's new 30 inch Keystone Line from Alberta to Oklahoma has the US swimming in the stuff.  It's all about supply and demand.

What we need is a pipeline from Alberta to the West Coast so that we can send our stuff to CHINA!  Interesting that CN is making noise about a "pipeline on rails" to do just that.

Canadian Banks
Heard a guy on BNN this morning saying that the Canadian Banks have outperformed the markets every year since 1967.  Duh.  Does that give anyone an idea for a fool proof strategy? Me, just in the past month I was feeling that I was overweighted in the banks which now make up two thirds of my trading account.  I was going to make some changes...but, I think I'll leave well enough alone for a bit.

I think I jinxed it

I was up early on Wednesday and wrote my post about the TSX rollin' along and reaching new multi year highs. Sure enough, the markets open and the TSX sells off for a 107 point drop. At the end of the day I didn't do too badly. My stuff was just off a tick from Tuesday's new multi year high.

I fared far worse yesterday as the TSX regained more than half of Wednesday's loss. The problem was my new Cisco (CSCO:NQ) shares. After gaining nicely since I bought them in January. My entry price was $19.55 and they closed at $22.04 on Wednesday. After hours on Wednesday Cisco released dismal Q2 earnings and the market didn't like it. Cisco shares were the biggest loser yesterday with a drop of $3.12 to close at $18.92. I had great hopes for this stock as I understood that the world would be beating a path to Cisco for all the routers to handle all the data being produced by the smart phone explosion. Apparently lack of government spending overshadowed smart phone growth. The plan now is to unload them as soon as I can my money back. You win some, you lose some.

Today doesn't look great. Oil has recovered a tad to $87.20 but Europe and US futures are all down.

Oh well, happy Friday to all. Enjoy the weekend.

Rollin', Rollin', Rollin'

The TSX just keeps on rollin'...or should I say rockin'?

Added another 80 points yesterday.  Now stands at 13,892. I was surprised by the gain with oil falling off from $90+ a few days ago to the $86-87 range. On the other hand, the other big commodity, gold, seems to be gaining strength...that too surprises me, after what I posted about gold just last Thursday.

TSX On A Roll!

It wasn't that long ago when the TSX reached 12,000 and held for a few days that I asked what we will see next, 12,500 or a drop back to 11,500. Twice last year, in March and again in October I asked this on the old Daily Squawk page. In March it dropped back to 11,500 while in October it continued the upward climb which began in early September.

Fast forward to yesterday and we have the TSX at 13,811...a level we haven't seen since early July, 2007. No small coincidence that my stuff hit its all time high that same month.  Getting real close once again.  The CHARTS are looking sweet!

My new Cisco (CSCO:NQ) investment will be put to the test tomorrow when the Q2 earnings numbers come out.  Today's big earnings reports are Teck Resources (TCK.B) here at home and Disney (DIS:NY) south of the border.   

Gold, losing its luster?

Gold. $1,400 a month ago, now in the $1,330 range. Some may think of this as a buying opportunity. Me, not so much.

Historically 80% of gold production goes to produce things...jewelery for example. Apparently at the present time as little as only 40% of production is going to product production with the remainder going to investors and speculators such as the bullion funds which actually hold bullion instead of gold mining stocks. Seems as though supply is getting ahead of demand. One has to wonder what will happen to the price if speculators continue to accumulate while the market continues to fall off. Who are they going to sell to? Not me. On the other hand, an economic meltdown could cause a rush to gold for safety.

For the time being, I'll stick to my stocks and look for an opportunity in copper. Big fundamental difference between gold and copper. While gold is being stockpiled, the price of copper is at an all time high as China's insatiable need is outstripping demand.

Timing, sometimes it's everything

While I was writing this morning's post about January and bragging about my Suncor (SU) purchase, some guy at the Globe & Mail was writing about Suncor.  My post was published at 5:41 AM 'Peg time.  The Globe & Mail article hit the web eight minutes later.  Have a look; Suncor profit nearly triples. 

Holy crap!  Talk about timing.  I just bought Suncor on January 20 and was real pleased as of close of business yesterday.  Today's news should give it more legs.  Onward and upward!

So goes January, so goes the rest of the year...

At least that's what some believe.  If that's the case we're in for yet another year of crazy volatility with lower growth than we've enjoyed for the past couple of years.

The TSX closed 2010 at 13,443 and peaked on January 18 at 13,559 but not before falling off to 13,245 on the 10th.  After the 18th it fell off again but managed a recovery to 13,551 by month end.  Increase for the month 108 points or .08%  Yup, a full month on the roller coaster for a final gain of less than 1%.

I've said before on these pages that we Canadians seem to greet each month with new found enthusiasm and optimism.  It happened once again yesterday when the TSX jumped 161 points or 1.18%.  Gotta love it.  I'm writing this at 5:00 AM 'Peg time and things are looking good for this, day two of month two.  Asia and Europe are both up along with US futures and oil.

Watch List
Still keeping an eye on Potash Corporation (POT).  Just how sick do you think the guys at BHP Billiton (BHP:NY) are?  Their failed takeover attempt at $130 is sure looking lame now.  POT keeps churning out record numbers and the shares have rocketed to $181.20 as of yesterday. Remarkable!

Real Happy... 
With my recent purchases of Cisco (CSCO:NQ) and Suncor (SU).  Cisco is up 9.8% since my purchase on December 7 and Suncor is up 10.6% since I bought it on January 20.  Sometimes things just work out.

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.