I just wanted to let readers know about this resource that I came across:
http://www.canadianinsider.com/
The site allows you to see which corporate insiders are accumulating or selling shares. Personally I don’t put very much importance on insiders selling as they could be selling for a number of reasons unrelated to the future of the company (ie- purchasing a new yacht, divorce, etc...) However, I believe that insider buying can be a powerful indicator of insiders’ opinion on the future of the company. It’s reassuring as a small investor to see corporate big wigs put their money where their mouth is. They live and breathe the company and if they think the company is cheap enough to buy then I definitely think it’s worth a look.
Monday, March 26, 2007
Friday, March 23, 2007
Dividend Growing Stocks - I
A big fat juicy dividend is nice but...in my opinion a modest but rapidly growing dividend is better. So I thought that every once in a while I’ll point out which stocks I think are high quality, stable, long term dividend growers.
I’ll start off with: 3M (MMM)
-49 years of consistent dividend growth.
-362 consistent quarters of paying a dividend
-Current yield of 2.5%
I’ll start off with: 3M (MMM)
-49 years of consistent dividend growth.
-362 consistent quarters of paying a dividend
-Current yield of 2.5%
Wednesday, March 21, 2007
Bank Comparison Website - A Middle Class Rant III
I came across this website ( http://www.moneytools.ca ) while doing my daily read at http://www.milliondollarjourney.com. It is an online guide to bank fees created by the Canadian Government. It provides you with the “tools you need to help you shop around for bank accounts, credit cards and other financial products from the comfort of your home.” The site allows you to search for the best product based on: location, minimum balance, age, number of transactions a month etc...
Although the site could be useful for some people I don’t like the fact that the government has gone ahead and wasted time and money on the construction of it (if an individual or business created it then hey no problem). In my opinion it’s really none of the governments business. I think that consumers are smart enough to shop around on their own (and if not then the dumb ones can pay a higher fee and raise the EPS of my bank stocks). Part of my problem with the government poking its’ nose into bank fees has to do with the fact that bank fees really aren’t that high (I bank at a big bank and pay $0 a year in fees). Why is the government wasting time and resources in an effort to save Canadians a few dollars a month at best? Additionally, the type of people who are going to be visiting the site are mainly going to be financially savvy people like you and me who probably don’t pay many fees anyways. Those who pay extravagantly high bank fees probably won’t use the site, because if they’ve been dumb enough to pay high fees up to now and haven’t done anything about it why is this website going to make a difference?
Since when is the government in the business of being a comparison shopper for consumers anyways? What’s next? Restaurants? Hotels? Groceries? Actually, I think that a grocery comparison website would save the average Canadian far more money each year than the bank fee website (I converted a friend from A&P to No-Frills and he now saves about $30 a week in groceries --- for him that’s about 3 years worth of bank fees saved each week). Anyways...my point is the government should stick to governing (defense, infrastructure, health, education) and leave the rest up to the market.
Although the site could be useful for some people I don’t like the fact that the government has gone ahead and wasted time and money on the construction of it (if an individual or business created it then hey no problem). In my opinion it’s really none of the governments business. I think that consumers are smart enough to shop around on their own (and if not then the dumb ones can pay a higher fee and raise the EPS of my bank stocks). Part of my problem with the government poking its’ nose into bank fees has to do with the fact that bank fees really aren’t that high (I bank at a big bank and pay $0 a year in fees). Why is the government wasting time and resources in an effort to save Canadians a few dollars a month at best? Additionally, the type of people who are going to be visiting the site are mainly going to be financially savvy people like you and me who probably don’t pay many fees anyways. Those who pay extravagantly high bank fees probably won’t use the site, because if they’ve been dumb enough to pay high fees up to now and haven’t done anything about it why is this website going to make a difference?
Since when is the government in the business of being a comparison shopper for consumers anyways? What’s next? Restaurants? Hotels? Groceries? Actually, I think that a grocery comparison website would save the average Canadian far more money each year than the bank fee website (I converted a friend from A&P to No-Frills and he now saves about $30 a week in groceries --- for him that’s about 3 years worth of bank fees saved each week). Anyways...my point is the government should stick to governing (defense, infrastructure, health, education) and leave the rest up to the market.
Tuesday, March 20, 2007
Budget
Well big surprise… today I’m writing about the budget. In my opinion this budget had a lot of hype and very little substance. I (like many others) was expecting some announcement (or even direction) on were the government is going on capitals gains tax but...sigh...nothing...maybe next year… I’ve outlined the good and bad of the budget below.
The Bad
-No capital gains tax relief (despite the fact that this was a campaign promise). The exception to this is if you’re a small business owner, fisherman or farmer, who received an increase in the one time capital gains allowance from $500,000 to $750,000.
-No broad based tax cuts.
The Good
-If you make over $40,000 a year you’ll save $310 a year for each child (under 18).
-Eliminated the annual $4,000 RESP limit and raised the lifetime maximum to $50,000.
-Raised the maximum RESP grant limit (20% of annual contribution) from $400 to $500 annually
-Raised the age limit of RSP conversion from 69 to 71 (In my opinion this is a mixed blessing. Call me pessimistic but I think it’s the first step in increasing the receiving age of both CPP and/or OAS)
-If you buy a qualifying fuel-efficient car you could get a rebate of $1,000 to $2,000.
In my opinion none of the positive aspects of the budget even come close to being able to provide the same benefits as the promised, but not delivered relief from capital gains tax.
The Bad
-No capital gains tax relief (despite the fact that this was a campaign promise). The exception to this is if you’re a small business owner, fisherman or farmer, who received an increase in the one time capital gains allowance from $500,000 to $750,000.
-No broad based tax cuts.
The Good
-If you make over $40,000 a year you’ll save $310 a year for each child (under 18).
-Eliminated the annual $4,000 RESP limit and raised the lifetime maximum to $50,000.
-Raised the maximum RESP grant limit (20% of annual contribution) from $400 to $500 annually
-Raised the age limit of RSP conversion from 69 to 71 (In my opinion this is a mixed blessing. Call me pessimistic but I think it’s the first step in increasing the receiving age of both CPP and/or OAS)
-If you buy a qualifying fuel-efficient car you could get a rebate of $1,000 to $2,000.
In my opinion none of the positive aspects of the budget even come close to being able to provide the same benefits as the promised, but not delivered relief from capital gains tax.
Monday, March 19, 2007
How Many Securities Should You Have?
I’ve been asked this question before and my general rule of thumb is 20. I touched on this in my January post about diversification however I’ll just rehash it a little bit. I think that if you own over 20 stocks you run the risk of becoming too diversified. If you’re too diversified you basically become the market and if that’s the case why waste the time and commission fees buying individual stocks? Simply buy some low MER index funds and get it over with, because if you diversify too much you’re going to mimic the index anyways.
There are of course exceptions, for example if you’re pursuing a high risk strategy such as penny gold stocks it would probably be wise to create a basket of these high risk stocks and hope for a few big winners. Additionally, if your portfolio is under $70,000 I don’t think that you should be aiming to hold 20 stocks. I believe that if you can’t commit a minimum of 2.5% to 3% of your portfolio to a stock you probably shouldn’t buy it. I will often buy a half position ie- 2.5 to 3% of a stock and if it increases and grows into my target 4 to 8% of my portfolio great! but if not I will wait and average down to increase the weighting. You might have noticed that I have a few holding under 2.5% (which I better explain) --- BA.UN was spun off of BCE and the commission to sell it doesn’t make it worth while. The other 2 mutual funds I’ve owned since I was 16 – bought on the recommendation of a broker and haven’t looked at or added to since. Incidentally they are some of my worst performers.
(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)
There are of course exceptions, for example if you’re pursuing a high risk strategy such as penny gold stocks it would probably be wise to create a basket of these high risk stocks and hope for a few big winners. Additionally, if your portfolio is under $70,000 I don’t think that you should be aiming to hold 20 stocks. I believe that if you can’t commit a minimum of 2.5% to 3% of your portfolio to a stock you probably shouldn’t buy it. I will often buy a half position ie- 2.5 to 3% of a stock and if it increases and grows into my target 4 to 8% of my portfolio great! but if not I will wait and average down to increase the weighting. You might have noticed that I have a few holding under 2.5% (which I better explain) --- BA.UN was spun off of BCE and the commission to sell it doesn’t make it worth while. The other 2 mutual funds I’ve owned since I was 16 – bought on the recommendation of a broker and haven’t looked at or added to since. Incidentally they are some of my worst performers.
(Disclaimer: I’m not your boss or your spouse so do you own research and make your opinions on when to buy or sell. Nothing I say should be bastardized or construed in any way to be advice)
Friday, March 16, 2007
Limit vs. Market Orders
This question was asked recently on the www.moneysense.ca forum whether it’s better to use limit orders or market orders. Personally, I always use limit orders. I usually put them in for a 5 day period but will occasionally adjust them (depending on the market). Using limits has caused me to miss some opportunities in the past (sometimes within a penny of my strike price) but it has also allowed me to buy some good companies 3% to 5% lower than a market order would have. I am a long term investor so the 5% initial savings will add up over the long term and will hopefully make up for any missed opportunities. Although, there’s no problem with market orders I would definitely advise that investors who purchase low volume stocks use limit orders in order to avoid any spikes caused by liquidity issues.
Thursday, March 15, 2007
Questrade Process
I now have a working Questrade account.
Setting up my Questrade account was relatively easy and trouble free. There are basically 3 easy steps:
1. Fill in the online forms and print the acceptance agreement afterwards.
2. Send the following item to Questrade
-Signed acceptance agreements
-$5 personal cheque (deposited to your account once it’s approved)
-Photocopy of both sides of your drivers license
3. Fund your account. You need to deposit at least $2500 before your account can be activated (I did bill payment from my bank account – it took about 2 business days to get from big bank to Questrade)
After all 3 steps have been completed they will send you your trading account username which works with the password you setup in step 1. I haven’t used it yet but I can now trade for $0.01 a share.
Setting up my Questrade account was relatively easy and trouble free. There are basically 3 easy steps:
1. Fill in the online forms and print the acceptance agreement afterwards.
2. Send the following item to Questrade
-Signed acceptance agreements
-$5 personal cheque (deposited to your account once it’s approved)
-Photocopy of both sides of your drivers license
3. Fund your account. You need to deposit at least $2500 before your account can be activated (I did bill payment from my bank account – it took about 2 business days to get from big bank to Questrade)
After all 3 steps have been completed they will send you your trading account username which works with the password you setup in step 1. I haven’t used it yet but I can now trade for $0.01 a share.
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