Wednesday, July 18, 2007

Where is the Value?

With the exception of resource companies I invest for the long term based on a number of factors (mainly fundamentals). However, lately I’ve been having a hard time finding any attractively priced equities that I’d want to hold for the long term (if you’ve found any let me know). I have a personal philosophy that once money enters my investing account it can’t be taken out until retirement. As a result, I’ve been accumulating cash in my regular bank account (which isn’t included in my monthly nest egg statements). Instead of depositing this money into my nest egg investing account I am going to be using this money on real estate in 1 of 2 ways:

1. Going to pay down my existing mortgage (which would be equivalent to generating a guaranteed after tax return of 5%)
2. I’m in talks to purchase a house privately and would use this money as a down payment/deposit (would be over a year closing time).
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18 comments:

  1. MG (moneygardener)July 18, 2007 at 8:04 AM

    Well, depending on your view of the $USD, this could be a great time to buy many U.S. equities (for us Canadians).

    Currency situation aside, I agree that it is difficult to find any value, I believe the following to be pretty good value at the levels that they trade at today. Going forward I believe they will all garner better than 5% after tax return.

    Manulife Financial
    Sun Life Financial
    Bank of Nova Scotia
    Walgreen
    Bank of America

    ReplyDelete
  2. AnonymousJuly 18, 2007 at 11:16 AM

    Markets in the US and Canada are hitting all times highs. I can't blame you for having trouble finding value.

    However, if you can't find value, then there is nothing wrong with paying down your mortgage which carries a guaranteed rate of return.

    ReplyDelete
  3. AnonymousJuly 18, 2007 at 11:28 AM

    I agree that there is still some value in the US but I want to limit my US exposure to no greater than 35-30% and I'm at about 30% right now.

    However, since posting this morning I've revisited ATD.B and think that there could be some value in it (it doesn't fit my dividend growth strategy but I think it might be an attractive entry point---I'm going to check it out later today).

    ReplyDelete
  4. AnonymousJuly 18, 2007 at 8:51 PM

    There is still some value but its hard to determine... a lot of value can be found in the Income Trust arena due to the uncertainty. Of course, that uncertainty is making it difficult to tell which ones are undervalued... a real issue.

    Several years ago I created a Income Trust portfolio (it did really well) but one of the stocks that I thought was undervalued at the time was Clearwater (CLR-un) and I was obviously wrong (they had some setbacks since) but now that its down 50% it MUST be a bargain... especially with thier new state of the art ship coming on board and I heard rumours of a LARGE share buy back because management can't believe how cheap the stock is... I should check to see if they have done that buyback yet as I'm not up-to-date on the stock (I don't really like the industry its in to be honest).

    There must be a hundred stories like this though... value... but hidden really well...

    ReplyDelete
  5. AnonymousJuly 19, 2007 at 5:09 AM

    I personally like Alimentation Couche-Tard as the stock dropped this year but the company is still in a really good shape. They plan to buy another 250 stores in the US for the following year. It could also be a good defensive stock if the market starts to slow down.

    ReplyDelete
  6. AnonymousJuly 19, 2007 at 6:47 AM

    financial blogger,

    Great minds think alike! Just after I posted "Where is the Value?" I started looking back at my old watch lists and rediscovered ATD.B. I agree there is some value there.

    ReplyDelete
  7. UnknownJuly 19, 2007 at 10:36 AM

    Implement Smith Maneuver with extra cash. You will still get to purchase instruments with your money, and earn tax credit for it.

    ReplyDelete
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