On this page your editor, John Budden,
will take some interpretive license and introduce you to some great
investment ideas in a timely fashion. In addition he will point you
toward relevant articles and opinion from some of the best investment
minds...
Tuesday
September 20, 2005
During the
September 20th edition of CFRA's Business@Night, I had
the pleasure of speaking with John Embry of Sprott Asset
Management and Jeff Sandler from National Bank
Financial.
( Listen here:
http://www.cfra.com/interviews/index.asp )
Sandler on uranium:
"The international uranium players, some with strong
Canadian ties, have been very quietly having spectacular
years, rivaling anything in the oil patch."
Embry on select junior gold shares: "At this stage, I
think the stocks will outperform the bullion, if the
bullion starts to move up sharply here. But as we get
closer to the end, and we're a long long way from the
end of the move, I think you'll probably see - as they
often do - the stocks will stop moving up long before
the bullion does."
Tuesday
September 13, 2005
Say what you will about Michael Cowpland.
He thinks big.
I talked to Dr. Cowpland today, for about 10 minutes.
I've been having these conversations for seven years
now. I've probably chatted with him 40 times.
I've been through the cycle with Dr. Cowpland. I don't
know where to begin.
For example:
At the height of the Linux craze, in the days when the
Clinton administration was threatening to dismantle
Microsoft, Cowpland swung a merger agreement between
Corel and Borland of California. The newly merged
company, would be 'an instant threat to Microsoft in the
OS market'. It didn't quite work out that way. Borland
cancelled the deal.
The entire Linux craze was a blast, while it lasted.
Things were great at Corel, for about four months.
Cowpland was incognito after the bust. Many shareholders
felt 'taken' by Corel. There was no trust. There was no
faith.
Among the Corel staff, it became a place to work before
you moved to something better. Such a shame, really. The
headquarters sits in plain view from the city's main
highway. Thousands once worked there, competing with the
best in the world. No more.
For Cowpland, there were insider trading charges to
settle, involving Corel shares sold in 1997.
Mike Brown running Rebel.com into the ground certainly
didn't help.
Then, with the dust settled, he was back. This time with
ZIM, the poor man's RIMM.
After watching him and speaking with over so many years,
through so many experiments, I'm convinced this is the
Cowpland way:
Exploit technologies with massive 'potential market',
dominated by a single player. Attempt to grab a
fractional market share. (What was 1% of the telephone
equipment market? What was 1% of the desktop software
market? Now with ZIM, the poor man's RIMM, what is 1% of
all the instant messages sent by cell phone?)
ZIM, like Mitel or Corel, will try to grab its fraction
of the this new massive market. Cowpland told me he
loves running ZIM. He's having fun because "it's
global."
Like I said. He thinks big.
Say you what you will. He lives in a big house, full of
Ferraris.
Now, I can't help but reminisce.
Netwinders.
Do you remember these? Every office was going to have
that little server, called the Netwinder? It was made by
Ottawa's Rebel.com. Remember? Mike Brown's Rebel.com
acquired the old "Corel Computer" unit. As it turns out,
in the server business, 'no sales channel' equals 'no
sales'.
Still, there was a true stroke of genius.
To gain a competitive media advantage, Rebel made a deal
to grab some marketing rights from the estate of James
Dean.
Wow, did we eat that up!
That really was "technology with attitude." To back it
up, Rebel would rent Ottawa's Hard Rock Cafe for the
night, to schmooze the media and the beautiful.
Underwriters and bankers would plead with the company to
show some restraint.
Still, looking back, restraint does not come to mind.
Gluttony is a far more fitting term.
Thursday
September 8, 2008
Riddle me this...
Will we ever accept paying full price for an American
car again? Last week radio stations were warning us
"Today is your last day to take advantage of this
incredible deal!" Now we have until the end of the
month. I know a few used car dealers. They can't move
the product. Why buy used when they're giving the new
ones away? Things are so tough at Ford; it has to unload
Hertz to raise cash.
It's not like things are any better at GM. First it was
Cadillac branded bicycles. Now the company has inked a
deal with Itronix to sell Hummer branded laptop
computers. They'll cost $3,000 and will combine shock
resistant padding and parts as well as being temperature
and water-resistant.
Has Apple's Steve Jobs replaced Howard Stern as the
"King of all Media"? The newest I-Pods are out and
they're so cool even John Budden wants one. They play
tunes by the thousands. They have a telephone. And soon,
you will be able to listen to every Harry Potter book
via podcast.
Why is a man whose prior job was "Chief Rules Enforcer"
for the International Arabian Horse Association now in
charge of FEMA? I'm not kidding. From the San Jose
Mercury News: "Michael Brown's job from 1991 to 2000 was
to make sure that horse-show judges followed the rules
and to investigate allegations against those who
didn't." Come again? This is the head of the Federal
Emergency Management Agency?
Vancouver is more than 2,600 miles from New Orleans. So,
how was a search and rescue team from Vancouver able to
arrive in St. Bernard Parish (just east of New Orleans)
five days before the U.S. Army? From Louisiana Senator
Walter Boasso: "Fabulous, fabulous guys. They started
rolling with us and got in boats to save people. We've
got Canadian flags flying everywhere."
Sunday,
September 4, 2005
Let me start by saying a few things about my own
industry, radio broadcasting. Things are buzzing in the
Ottawa radio market.
New formats are coming to town; others are rumored to be
on the way. Everyone's wondering about podcasting and
its coexistence with the traditional broadcast universe.
It's encouraging that this business, once thought to be
in serious decline, seems to be growing.
Broadcast companies are unleashing capital, investing in
new ventures, hiring staff - and in some cases -
stealing staff from competitors. Salaries are on the
rise. There are jobs to be found. Locally, the Ottawa
market could soon have 22 English language radio
stations. Great things are happening in the francophone
market too. Ottawa-Gatineau is the most competitive
radio market in the country and its getting fiercer by
the day.
Radio is still the most reliable form of media. When the
lights are out, when the waters are rising, when the
ground is shaking, you need only a set of batteries and
a radio - and you're in business.
During the great ice storm of 1998, so many radios were
tuned to our station (580 CFRA); the Bureau of Broadcast
Measurement refused to recognize the ratings "book". It
was, we were told, an inaccurate reflection of "ordinary
tuning". Think about WWL 870AM in New Orleans.
Remarkably, it is still broadcasting. It's the station
that aired the passionate plea from New Orleans Mayor,
Ray Nagin last week, lambasting federal officials for
their slow response to a catastrophic event.
In a time of great crisis, there is no TV - and if there
is - there is usually no electricity - so you can't
watch. The Internet is questionable, newspapers are
dated. Radio provides reliable, uninterrupted, immediate
information to the public, regardless of the conditions.
Keep that in mind the next time you're sitting in the
dark, wondering when help will arrive.
OK, on to other things.
I'm usually not a big fan of Jim Cramer.
Jim Cramer is a former hedge fund manager. He's the host
of "Cramer's Mad Money" on CNBC. It's hard to watch.
It's a lot of hype, a lot of yelling and a lot of dumb
sound effects. But, he's made a fortune in the stock
market, so we know he's not a complete idiot. That being
said, I did catch some of his show last week. The topic
was "how to build a diversified stock portfolio".
I ran this by John Budden on our radio show and even
John agrees that Cramer's approach is sensible enough.
John suggests we be Canada-centric and insists we own a
gold stock.
Cramer suggests not holding any more than ten stocks at
a time. Any more than ten and it can get difficult to
keep on top of things. To emphasize diversification,
Cramer says we should pick ten stocks from ten different
categories. I ran this approach by a few savvy investor
friends of mine. Here's what we came up with.
The following is a list of Jim Cramer's suggested stock
categories, followed by some possible examples of stock
picks. Please don't buy these because it's written here.
It's just an example of how we could approach things.
1) Non-tech "hope" - These are businesses like
Starbucks. We like the coming IPO of Tim Horton's.
Although we'll wait for it to settle down.
2) Retail - Cramer likes small retailers with lots of
room to grow. We like Wal-Mart for obvious reasons.
3) Cyclical -We came up with Finning International &
Precision Drilling
4) Secular - Cramer likes P&G. We like J&J.
5) Speculative - What's your favorite penny stock? This
is your 'play' money.
6) Oil - We like Imperial Oil.
7) Financial - My pals debated this one a lot. We ended
up picking BMO, because it's a takeover target.
8) Blue Chip, yield of 2% or more - Unanimous - GE
9) Tech - Cramer emphasizes top quality, like Intel.
We're thinking Cisco, Microsoft or Dell.
10) Pick a business you know. Cramer says this could be
a local company. Maybe you know the staff or management?
This can give you an advantage over the street. We love
Ottawa's Cognos and Ottawa's Orezone.
Here are some stocks I'll be watching, out of curiosity.
Martha has lost the tracking anklet. She'll be on TV a
few times a week, with her version of The Apprentice.
Shaw Industries is based in Baton Rouge and is sure to
get a lot of work rebuilding the U.S. Gulf Coast. Shaw
is a primary contractor to the Federal Emergency
Management Agency. It's also a Warren Buffet play.
I'll be watching Wal-Mart. Technically; it still looks
awful here in the crucial back-to school season.
Christmas is just a few months away.
Finally, don't forget! CFRA's Business@Night can be
heard at its new time - weeknights at 7 in Ottawa on 580
AM. The entire show is archived nightly at
www.cfra.com/interviews.asp.
Tuesday August
30, 2005
"New Orleans is sinking man and I don't want to
swim. " - The Tragically Hip.
The last two days, in my opinion, is the paradigm of
"event driven risk". Imagine if we had been listening to
those calling a top in oil. Imagine if we had followed
the advice of those who had described the current
commodity run as a "bubble". Or imagine, just imagine,
if we had shorted oil on Friday.
Playing on margin provides exponential opportunities to
the upside. Guess wrong, and the losses are unlimited.
There's an old saying for traders on margin: "They only
give you enough rope to hang yourself."
What the last two days have shown, beyond any reasonable
doubt, is the precarious situation in which the United
States finds itself. Any hint of a disruption in the
supply chain - be it a storm - be it a terror attack -
and prices can move with fury.
Perhaps the public is finally waking up and smelling the
trouble. The VIX has been tracking higher during the
late summer months, although a close in the mid-13 range
is not cause for celebration.
For those who will continue to argue that we have
reached the top of this oil market - and to those of you
who insist the run into commodities right now is
reminiscent of the technology frenzy - I want you to
look at this chart:
This is JDS Uniphase. It was in founded here in Ottawa.
This is what a bubble stock looks like - before and
after. JDSU was once worth as much as Wal-Mart, boasted
a market cap of some $200-billion and had a P/E in the
thousands (the thousands!).
By way of comparison, Imperial Oil which has put in a
great ten year run still has a reasonable P/E of 20 and
a market cap of $39-billion. These are not bubble
numbers.
By the way, Imperial Oil is profitable, something JDSU
could never say.
Sunday August
28, 2005
I'm back from my summer holidays. Yet, looking at
the market, it's as though I never left.
It’s been a stagnate stock market. Bond yields have done
a round trip. Gold has gone nowhere. The only play has
been oil.
When I signed off in late June, I wrote about the stock
market's euphoria over the retreat in oil. A close of
under $60 put the Dow in rally mode, cheering each slide
with triple-digit gains. In reality, the Dow was unable
to gain any traction during the summer.
When watching the Industrials, I am still fixated on the
10,400 to 10,800 range. In my own opinion, any drop
below 10,400 has been stomach turning. It puts 10,000 at
risk and creates serious psychological worry about a
four-digit Dow. A move above 10,800 only seems to bring
a failed test of 11,000.
Yes, the story of the summer was the resurgent oil
price. It caused the Dow to wither in the summer heat.
There is only one oil company among the Industrials, XOM.
Yet, investor appetite for XOM, the biggest oil concern
of them all, seemed to wane during the summer period.
I guess $68 oil causes difficulties for those selling
big luxo-cruisers. In early June I told you GM would
start offering its "Employee Discount" to everyone.
Well, almost four months later, the discounts are still
here and Ford and Chrysler have had no choice but to
join the parade.
Remember the Buick LaCrosse?
When it was introduced, it was priced near $40,000 (US).
Discounts drove that down to $32,000. And now you can
drive one today for $19,999.
Let's think back to the spring of 2004. Investors (and
I'm using that term loosely) were flocking to see
"Nortel - The Sequel". Turns out, it ends the same as
the original. Nevertheless, at the time Nortel boasted
the same market-cap as the Royal Bank of Canada. That
just didn't sit right with us. We determined that a swap
made a lot of sense.
Good Call.
Tuesday June
27, 2005
As I write, it's 88 degrees in Ottawa, 82 degrees in
Toronto. The humidity is 53 percent. The government is
pleading with us to live like the Amish. Turn everything
off. Sit in the dark. And pray the lights don't go out.
There's just not enough juice. We need more. We buy it
from the United States. Have you ever heard of anything
so ridiculous? Here we are, one of the world's greatest
energy exporters - and we are importing - of all things
- electricity from the world's great energy importer,
the US. It's bizarre.
The market cheered today's oil decline.
It seems $58 oil is a bargain. The Dow climbed 114
points, clawing and scratching its way back to 10,400.
Today, newindpress.com reports:
"India earlier this month signed a 22-billion dollar
deal with Iran to import 5 million tonnes of Liquefied
Natural Gas (LNG) for 25 years beginning 2009. It is
negotiating to increase the LNG quantities by 2.5
million tonnes and separately import gas through a
2600-km pipeline running through Pakistan."
And this:
“What goes up must come down. People who have nothing to
do with oil are behind the bubbling up of prices. At one
stage the bubble will burst we might get oil at 35 to 40
dollar a barrel.’’ - Indian Petroleum Minister, Mani
Shankar Aiyar.
Thanks to Fred Ketchen of Scotia McLeod for pointing out
Bank of Nova Scotia's enviable track record. The common
stock has appreciated 1100% in the past 20 years,
ex-income.
In the last week I have been told by the Chair of the
City of Ottawa's Transportation Committee that the costs
of providing public transportation is growing at many
times greater than the posted CPI. Yesterday, the City
Manager said taxes would have to increase between 8.5
percent and 10.7 percent, just to maintain current city
services. Can someone explain to these municipal leaders
why the federal government maintains this charade,
insisting there is no inflation?
Did I hear that right? Amazon is down 38 percent so far
this year? Ebay is down more than 58 percent?
Did I hear that right? Health South's Scrushy faced 87
counts? Fifteen Health South execs pleaded guilty in
front of him? He made $270-million in one year? And he
was acquitted? On all charges?
I hope they invite him back on 60 Minutes.
Thursday June
16, 2005
Let's replace the CPI and the PPI.
It's a wholly inaccurate yardstick. We may as well pull
out the Ouija board.
Oil is near its highs, at almost $57. Copper hit a new
all-time today.
Yet, again the latest US PPI and CPI dropped. Yep. Down.
It's sheer insanity.
The latest lines:
"Someone is eating the costs."
or...
"Businesses are not passing on the increased burden to
their customers."
I'm sorry, but capitalists almost always pass the cost
business over to the consumer. In fact the ability to
pass MORE than the cost of a business over the consumer
is the very definition of PROFIT.
Something has to give. The true underlying effects on
inflation will be felt by businesses. But you won't know
it by reading the PPI or the CPI. Those statistics are
now mere fairy tales.
Dr. Bob is a genius.
This is such a nugget.
Aside from his holdings in Microsoft, Bill Gates has 70
percent of his holdings in short-term high quality bonds
and 30 percent in equities. He owns positions in three
Canadian companies and his single largest equity holding
is CN Rail. He's the second-largest shareholder in CN
Rail, with a better than five percent stake. He's also
the largest shareholder in Pan American Silver.
Silver is poor man's gold. I can't help but wonder why
is the rich man buying it?
By the way, I'm not sure if this widening gap between
Canadian short-term rates and US short-term rates is
really the currency story anymore. The C-dollar tracks
oil these days (nicely I might add).
(
Monday June 14,
2005
In the news...
Michael Jackson was acquitted today.
Gilles Duceppe picked the BQ over the PQ.
The heat is on Steven Harper. Bourque.com says big-C
conservative Jim Flaherty is plotting an overthrow.
The Liberals are comfortably ahead in the polls.
Oil up two points, cracks $55 to the upside.
Stocks flat. Boeing ends down on a $4-billion order.
Ottawa is into its fifth day of smog alert. Saturday's
high temperature broke a 57-year record.
Sears Canada put its credit business up for sale.
Cineplex and Famous Players are getting hitched.
Opinion...
Who needs OPEC? Save me the headaches. Give me Norway,
Russia and Canada.
Deal or deflation? If I sign up for 2 years of Bell
Sympatico high speed Internet service, Dell well sell me
a computer for $299.00 (Canadian). This machine comes
with all the accessories...printer...monitor...Windows
XP...40 gig hard drive...2.4 ghz processor. (I spent
about $1800.00 for the same machine three years ago). Oh
- and shipping is included.
The loss leader at Future Shop these days is a 17" LCD
monitor, also $299.00 (Canadian). A company called BENQ
makes it. I think it's the old Acer, headquartered in
Taiwan.
BENQ, "'Bringing Enjoyment and Quality to Life".
Wednesday June
8, 2005
I heard an interesting line from a fellow on ROB TV
the other day. I'm sorry for not jotting down his name.
B-A-N-A-N-A. Build absolutely nothing anywhere near
anyone. The ROB TV guest explained that this was the
prevailing attitude toward mega-infrastructure projects
in North American suburbs.
You see, this activism makes it incredibly difficult to
build oil refineries. Nobody wants to live anwhere near
an oil refinery.You don't just 'slap up' an oil
refinery. That's why a grand total of ZERO have built in
the United States in about three decades. These are big
jobs. Hundreds of millions of dollars. Deep security
issues. I simply can't fathom the process. Hello
neighbor.
One of the principals of an investment is "the cost of
money".
How much does my money cost to borrow? How much can I
lend my money for?
A bank will make money borrowing short term money and
then lending it out for the long term, collecting the
difference.
It would seem that soon, you won't be able to borrow
money for the short term and lend for the long term. It
won't be profitable. In fact, you'll lose money.
That's why I worry about this:
Housing starts were down more than 40 percent in Ottawa
in May. It's the fifth straight monthly decline.
Hopefully (fingers crossed), this is our soft landing.
Maybe the retreat won't be as bad here as it will surely
be in other markets.
For the locals, 700 Sussex is coming along.
The 2,000 sq. ft model would satisfy the tastes of any
hedge fund manager. Stay off Sussex though, it's a
nightmare.
But at least the Daly Site Saga is settled. For those
from outside Ottawa, I am talking about a once single
plot of vacant land at the corner of Rideau Street and
Sussex Drive. It was once of the home of the Daly
Building. It was built in 1905 and was Ottawa's first
department store. It was demolished in 1991. Yep, 14
years ago.
)
And 700 Sussex is almost done. If you live at 700
Sussex, the Chateau Laurier is right next door.
Parliament is two doors down. The Rideau Centre is kitty
corner. And life - for you - is pretty good.
Saturday June
4, 2005
From a recent TV News report (KSLA - Shreveport,
LA):
For the entire month of June and the first part of July,
GM is offering its employee discount to everyone. "Craig
Smith thinks it's quite a sale, saying, "based upon what
I'm hopefully going to be buying this (Silverado) truck
for, I think I'm going to be saving about 8,000
dollars". You will see cars and SUV's on sale for $2,000
to $10,000 less than usual. A brand new $55,000 Yukon
Denali has an employee sticker price of $43,677.
From the San Diego Tribune:
The average price of unleaded regular gasoline dropped
about 4 cents last week, according to a survey by the
Utility Consumers' Action Network, declining to about
$2.42 a gallon.
From The Arizona Republic:
Fresh off Memorial Day weekend, when a record number of
drivers took to the road, gas prices fell for the fifth
consecutive week, to an average of $2.23 a gallon in
Phoenix on Friday. Some stations were offering gas for
as low as $2.16 a gallon.
From the Yankton Daily (South Dakota):
The South Dakota statewide average price of self-serve
regular gasoline as of Wednesday was at $2.266, down 10
cents from last month.
It would seem some feel the pinch...
And others don't...
Boeing has had a great run through the first half of
2005. It's the best looking chart of the 30 industrials.
Thursday May
26, 2005
A little nostalgia.
I missed the glory years of Cape Breton Island by about
100 years. And I fear Cape Breton Island is missing its
second run at glory.
There were once so many Cape Breton coal mines.
Most of them just had numbers for names.
Number 1, Numbers 12, 14, 16, 18, 20 26. There was the
Prince Mine, in my hometown.
I remember Phalen, Caledonia (My uncle lived on
Caledonia Street), Lingan.
Thousands of men worked there. Hundreds more in the
steel plant.
It's all gone now. The Sydney steel plant is in the
dismantling stages as we speak. And there's not a coal
mine to be found.
It's all very sad.
More tragic? The present day – and its missed
opportunity.
I recently spoke with the former mayor of Sydney,
Manning MacDonald. He told me "there's lots of coal in
Cape Breton, someone just has to come and get it."
The coal price has tripled in the last three years.
Forty-dollar oil is in the rear-view mirror.
This isn't exploration. This isn't even speculation. The
world needs coal. And it's going to need much more, for
a very long time.
Cape Bretoners have mined coal for hundreds of years.
It's what we do. We dig it out of the ground and we ship
it - anywhere in the world.
The hesitation is mind boggling.
Rise again! Get Cape Breton coal miners back to work!
Wednesday May
25, 2005
I thought tonight I would take a look at a few
'Ottawa' stocks and reflect on some of the winners and
losers, as we approach the mid-point of the trading
year.
Cognos, the business intelligence software maker, is the
local darling. It has shown an enviable ability to post
record earnings, even during the depths of the tech
downturn. Cognos, with its Fortune 500 client list,
world class management and continuous earnings growth,
is up about eight percent YTD.
Like the metal it hopes to mine, Ottawa-based junior
gold play Orezone has been all over the place. It seems
to have serious support at about C$1.35. It’s bounced
off that level on three occasions since mid-April.
Orezone has been a lovely long. Look at the three-year
chart...
Many of you may not realize that Adobe has one of its
largest operations right here in Ottawa. From my
recollection, most of the Adobe's Ottawa operations
surround the development of mobile document technology.
Adobe made a serious move into this space and this city,
with its acquisitions of Accelio (the old JetForm Inc.
to the locals). The stock has spent most of the year
volleying between $28 and $34.
Mosaid, a local fabless semiconductor play, has been in
patent litigation as long as I can remember.
Are some folks getting fed up?
And the winner is?
Olympia & York, the massive real estate complex backed
by the Reichman heirs. Most of the portfolio is on the
block. And patient bottom fishers couldn't be happier.
They've essentially doubled their money in the last 52
weeks.
Thursday May 19, 2005
Take the summer off. Your MP is.
And when your MP returns, there will the Gomery Report -
and then a federal election.
The Liberals will win.
What a great reason to think the C-dollar will rise.
It's trading at .7939 US as I write.
Here's how it all went down:
There were two votes in the House today. The first, in
the most basic terms, was a vote on the original Liberal
budget. The opposition conservatives liked this budget
when it was introduced months ago. The Prime Minister
though, needing socialist votes in the House, aligned
with the NDP. Five billion dollars later - and we need
second a vote on the 'amended' budget. That second vote
was the closest vote in Canadian political history. The
Speaker cast the deciding ballot. Final score: 153-152.
The Prime Minister owes Belinda Stronach. And the HRDC/Gomery
Clean Up gig doesn't begin to cover the tab. They say
she's a ditz. They call her stupid. They make sexist
remarks. Well, Dan Quayle was one accident away from
being leader of the free world - and he was "no Jack
Kennedy."
As for markets, not much for the bears to growl
about today. Up all the way around. The Dow is back
above 10,400. It was quite a rapid decent after breaking
below 10,400 last week. I think my ears popped.
Lastly, I'm no expert on yield curves, but could you
find me a market bull that likes the look of this?
Monday May 17, 2005
I must write quickly and save often. My computer is
on the fritz.
Belinda Stronach, ex-CEO of Magna International, crossed
the floor of the House of Commons today. Ms. Stronach
was the conservative MP for Aurora-Newmarket. She
sought, with no luck, the leadership for the new
Conservative Party a little more than a year ago.
Now she's a Liberal cabinet minister, wooed to the
government side by the Prime Minister. She will be in
charge of HRDC (human resources and skills development).
She will also have the unenviable task of implementing
any recommendations resulting from the Gomery Inquiry.
What does it all mean? The short answer: Any chances of
a quick election have essentially evaporated. There is
to be a crucial vote in the House this Thursday on the
federal budget. The vote is already too close to call.
The conservatives need every single conservative member
in the House on Thursday (something that likely won't
happen because of the failing health of at least one
conservative member). The conservatives also need the
unanimous support of the Bloc Quebecois and the support
of two independent MP's. The chances of conservative
success later this week is now in serious jeopardy. The
good money now rests with a fall election.
The currency market certainly appreciated today's news
from Ottawa. The C-dollar has been on a losing streak of
late. The loony has been under pressure thanks to the
widening spread between US and Canadian short-term
rates, a falling oil price and the uncertainty on
Parliament Hill.
However, Ms. Stronach's switcheroo act, prompted a
mid-session reversal for the Canuck buck today (below).
In other news...
This from Stats-Can today:
"Canadian companies spent a record amount on foreign
purchases last year, led by Manulife Financial's
takeover of John Hancock Financial Inc. Manulife's
C$19.1 billion purchase of John Hancock bolstered the
C$41.7 billion increase in Canadian purchases of
companies abroad to C$445 billion. Canadian companies
bought more as they earned a record C$205 billion in
operating profits and their purchasing power was
enhanced by the Canadian dollar's rise against its U.S.
counterpart."
I've been watching RIMM lately. Why? Well, it's getting
crowded in Blackberryland. Microsoft is out with its new
mobile devices software, dubbed "RIMM Killer". Nokia is
also taking off the gloves, with the new 'N' series
promising to be all things to all mobile people. I am
curious if RIMM put in a double top near $80. It's now
closer to $70. What happens here, in my own humble
opinion, is something worth watching.
Monday May 9,
2005
Yesterday I wasted an hour watching "Live from the
Dallas International Auto Show" on the Speed channel.
This is pickup country - think Ford F-150. The Dallas
truck crowd (on this broadcast) was buzzing about the
serious move into the full-size pickup truck market by
Toyota and Nissan. Japanese automakers have tried many
times to crack that market, never with much success. It
will be interesting to watch it unfold. These are
high-volume, money making vehicles. The prices can top
$40,000.
Japanese cars already rule Dallas. The Honda Accord, the
Toyota Camry and the Honda Civic are 1-2-3 in sales.
From The Detroit News this week:
"More than 300,000 pickups are sold each year in
Texas, by far the single biggest market for the
top-selling vehicles made by General Motors Corp., Ford
Motor Co., and DaimlerChrysler AG...One in 4 vehicles
registered in Texas is a full-sized pickup, nearly twice
the national average...GM, Ford and Chrysler own well
over 90 percent of the Texas pickup market...Toyota
dispatched engineers to the parking lot of Texas Stadium
during a Dallas Cowboy game to gain an understanding of
the Texas truck market. The experience led to the
creation of the Toyota Tundra, which went on sale in
1999, and planted the seeds for the automaker’s decision
to build a truck plant in San Antonio. "
Nissan's entry into the space, the Titan, arrives
supersized for the Texas market, the "Texas Titan" has a
305HP - 5.6 litre V8. I'm sure it's great on gas. It's
assembled at Nissan's plant in Canton, Mississippi.
I've been thinking...
A riskier-than-average borrower could probably get a
loan from a reputable financial institution at 11 or 12
percent (maybe a few points higher, if at all). That's
about what GM bonds are paying right now.
The Ontario budget will come down Wednesday. Yuck.
Lousy. Still a six billion dollar annual deficit. This
is after the tax hikes! Tobacco, alcohol (the easy
targets) were the first to go. Then the new health tax
($600 to 900 a year if you have any decent income). You
name it, they raised it. Premier McGuinty will blame it
on the imaginary (made-up... fake...pretend...make
believe) "fiscal imbalance", between the feds and
Queen's Park. My friends in Cape Breton laugh with
sarcasm at the idea of a "poor" Ontario. So should you.
The Prime Minister though, is in desperate needs of
votes. So, he has just 'guaranteed' the McGuinty
government another five billion dollars over five years.
It's been raining money here in Ottawa. Twenty-two
billion dollars in funding announcements in just the
last couple of weeks.
Think of it as GO, without the G. More O-Trains are
coming to Ottawa. Light-rail. "Built for the future".
It's a North/South route nobody can find on a map, in a
city where most of the commuter traffic runs East/West.
You with me so far? It's been in the works a long time.
It's success or failure will determine the legacy of
Mayor Chiarelli. It's $600-million (for now). It was
Bombardier's deal to lose, from some accounts. Now it's
an open field, we're told.
Quickly on markets...
The Dow is inching up to 10,400. I'm fixated on 10,400.
Thursday May 5,
2005
As you may know, we routinely have the pleasure of
speaking with Dean LeBaron. Dean is the founder of
Batterymarch Financial. Often styled an investment
futurist, he is among the pioneers of indexing,
quantitative investing and emerging markets. He's also
the author of several books, including "Dean LeBaron's
Book of Investment Quotations".
Here are some of Dean LeBaron's investing rules:
1) Observe the views of others, especially the most
prestigious and widely recognized, but do not follow
their prescriptions.
2) Ignore earnings and follow the cash.
3) Recognize that corporate control is worth everything
or nothing; there is no point in between.
4) Learn more about enterprises from competitors than
from the enterprises themselves.
5) Avoid company visits, since they are usually
successful promotions.
6) Observe commercial bankers, who usually know the
inside story and are a source of hints.
7) Ignore investment bankers and their advice.
8) Recognize that prestige is inversely related to
future investment success.
I've never had the chance to speak to Peter Lynch
(yet...). Lynch is quite likely the world's most famous
mutual fund manager. When he started managing the
Fidelity Magellan Fund in 1978 the fund had assets of 20
million dollars. When he retired in 1990, the fund had
assets of 14 billion.
Here are some quotes from Lynch:
1) "Everyone has the brainpower to follow the stock
market. If you made it through fifth-grade math, you can
do it."
2) "Go for a business that any idiot can run - because
sooner or later, any idiot probably is going to run it."
3) "The person that turns over the most rocks wins the
game. And that's always been my philosophy."
4) "In this business if you're good, you're right six
times out of ten. You're never going to be right nine
times out of ten."
5) "I've found that when the market's going down and you
buy funds wisely, at some point in the future you will
be happy. You won't get there by reading 'Now is the
time to buy'."
On these pages, you will read many quotes from Jim
Rogers. He's authored several important investment
manuals; "Adventure Capitalist" comes to mind right
away. His latest work "Hot Commodities" is the talk of
Bay Street.
Jim Rogers on investing:
1) "There is no such thing as a paper loss. A paper loss
is a very real loss."
2) "Brokers tell you that stocks will keep going up
because it is different this time. Never believe this.
It is never different."
3) "People should be more concerned with the return of
their principal than the return on their principal."
Warren Buffet's mentor was Benjamin Graham:
1) "The fact that other people agree or disagree with
you makes you neither right nor wrong. You will be right
if your facts and your reasoning are correct."
2) "Confronted with the challenge to distil the secret
of sound investment into three words, we venture the
motto, Margin of Safety."
3) "Individuals who cannot master their emotions are
ill-suited to profit from the investment process."
4) "Many skeptics, it is true, are inclined to dismiss
the whole procedure (chart reading) as akin to astrology
or necromancy; but the sheer weight of its importance in
Wall Street requires that its pretensions be examined
with some degree of care."
Finally, I noticed the oil price was up today. With that
in mind, this quote from Paul Getty:
"My formula for success is rise early, work late, and
strike oil."
Monday May 2,
2005
-We spoke with Leonard Lee today, legendary Ottawa
entrepreneur, founder of world-renown Lee Valley Tools.
Lee Valley Tools is now in the capable hands of
Leonard's son, leaving the elder Lee time to focus on
his latest venture - Canica Design. Canica designs
surgical tools. Today it announced a multi-million
dollar agreement with DeRoyal Industries of Powell,
Tennessee.
A few quotes:
"Canica will never be a public company as long as I'm
running it. The last thing I want to do all day is talk
to stock analysts."
"We have patented our product in China."
"What isn't manufactured in Canada, is manufactured in
the United States. It's much easier to monitor quality."
How's this for customer loyalty.
Customer letter re: Lee Valley gardening pants:
"I am enclosing my best friend, which was hard for me to
part with, but my wife said that I look like Rip Van
Winkle in them and not to mend them again. She bought me
a new pair which I wear all the time. I am sending them
back to you as I did not have the heart to throw them
out." -J.B. Smithers, BC
In other news...
-The average Buick buyer is 68 years old. The New York
Times reports Buick sales have fallen two-thirds in the
last 20 years. While sales have steadily risen since the
$32,000 Buick LaCrosse went on sale last fall, it is
being discounted much more, and is sitting at
dealerships longer, than competitors.
-New 52-week low for Nortel today, down almost 10
percent. $2.89 (CAN). Now wasn't that worth the wait?
-Barrick is paying $10-million for a 20 percent stake in
a small Canadian diamond exploration play, Diamondex
Resources Ltd. DSP.V up 12.5 percent on the news to
$0.90. It's Barrick's first foray into diamonds. The
average annual salary for a worker in Canada's diamond
industry is about $63,000. A basement apartment in
Yellowknife can fetch $1,500 a month. Prospecting
companies have laid claim to more than 70 million acres
in the Northwest Territories and Nunavut.
-It's going to be a busy week in Ottawa. The Canadian
Tulip Festival starts Thursday. A quarter-million
tourists are coming to town. At the same time, Canada's
new War Museum opens this weekend. Tens of thousands are
expected. It's second-to-none. Expect a glowing review
next week.
Saturday April
30, 2005
More weekend
snippets:
-Remax, Canada's largest residential brokerage, reported
this week that housing prices in the Ottawa market have
appreciated more than 69 percent between Q1 of 1995 and
Q1 of 2005.
"More Canadians bought into homeownership during the
last 10 years than in any previous decade. In Vancouver,
for example, demand is so heated that purchasers are
including 'trump clauses' in their offers, allowing them
to ante up on any higher offers that may be presented.
That's a first for this industry."
Rank Market Q1-05 Avg. $ Q1-95 Avg. $ % +/-
1. Montreal $194,963 $104,902 +85.9
2. Calgary $245,049 $134,834 +81.7
3. Halifax $183,110 $103,279 +77.3
4. Saskatoon $139,763 $79,331 +76.2
5. Kelowna $253,019 $143,721 +76.1
6. Edmonton $185,437 $108,209 +71.4
7. Ottawa $244,565 $144,071 +69.8
8. Victoria $352,825 $212,386 +66.1
9. PEI $100,713 $62,766 +60.5
10. Toronto $330,093 $205,905 +60.3
11. St. John's $137,365 $85,725 +60.2
12. Winnipeg $128,123 $82,336 +55.6
13. Regina $116,815 $75,249 +55.2
14. London $174,878 $129,886 +34.6
15. Saint John $114,773 $86,744 +32.3
16. Vancouver $395,390 $332,003 +19.1
For the locals...
-While the next race for Ottawa Mayor isn't for another
two years, things are already heating up. A poll in
today's Ottawa Sun indicates strong support for former
Kanata councilor, Alex Munter. The incumbent Mayor, Bob
Chiarilli plans to run again. Other names include
Barrehaven councilor Jan Harder and local conservative
activist, Terry Kilrea (both have no chance). The
newcomer to the race - and one to watch - is Brian
McGarry. McGarry is a successful and community minded
entrepreneur. Still, Munter is no slouch. He's
media-savvy, founded a newspaper at 14, was a councilor
before the age of 20. He now lectures at Ottawa
University.
-The Motley Fool on MSFT this weekend:
"Go back 15 years and you'll see that revenue and
earnings increased every year...after returning $39
billion to shareholders via a $3 special dividend,
quarterly dividends, and share repurchases ($3.8 billion
so far this year), the company's cash and short-term
investments still stand at a mighty $37.6 billion - and
there is not a dime of debt on the balance sheet."
-Let's look at some charts:
Oil backed off again this week, in volatile trading and
every newspaper in the country is celebrating Friday's
close below $50.00.
The Canadian
dollar surrendered 80 cents US this week. The retreat in
oil stocks will get much of the blame, as well as the
widening spread in US and Canadian short-term rates.
Gold up more than 3 percent for the
week.
-The Sprott
Energy Fund is up 67 percent since inception.
Top Ten Holdings (as of year-end 2004)
Calfrac Well Services Ltd.
Cash & Short Term Investments
Centurion Energy International Inc.
Crew Energy Inc.
Delta Petroleum Corp.
Fairborne Energy Ltd.
Ketch Resources Trust
Precision Drilling Corp.
Trican Well Service Ltd.
Ultra Petroleum Corp.
-Look at some of these numbers. Quite impressive. These
were the Top 10 oil and gas royalty trusts within the
Brascan Soundvest Diversified Income Fund, as of Dec 31,
2004:
(Disclosure:
John Budden is a Director at Soundvest)
Units Trust Cost Market Value
30,000 Acclaim Energy Trust $345,563 $432,000
37,175 Advantage Energy Income $622,446 $818,222
265,000 Baytex Energy Trust $2,747,578 $3,384,050
240,000 Bonavista Energy Trust $4,339,422 $6,504,000
90,000 Crescent Point Energy Trust $2,316,974 $3,201,500
15,000 Enerplus Resources Fund $510,825 $654,000
1,250 Focus Energy Trust $17,526 $24,963
45,100 NAV Energy Trust $387,747 $457,314
205,000 Peyto Energy Trust $ 5,155,400 $9,805,150
195,000 Vermilion Energy Trust $2,907,500 $3,923,400
Headlines:
New York Times - "Attacks Kill 10 as Violence Continues
in Iraq" - (ed: 40 dead in two days)
National Post - "Stock markets surge as crude oil prices
fall more than $2.00 US a barrel"
Toronto Star - "Martin pushes his way back"
Wall Street Journal - "Buffett Won't Discuss
Investigation" (ed: Bill Gates to be on BRK board )
San Jose Mercury News - "Fast Food Salad Could Boost
Demand, End Grower's Slump"
USA Today - "Huge burrito mistaken for weapon"
Saturday April
30, 2005
It's a good bet the
Canadian government will fall in mid-May.
What happens next is anyone's guess.
The country is angry, not because the numbers stolen are
so large, but rather because they are so small.
There is apathy when governments lose track of billions
of dollars. It reinforces our belief in a cumbersome,
bumblesome monstrosity. This is different. Here, we are
being spoon-fed government fraud in small denominations.
It's fifty-grand here. Thirty-grand there. No work done.
This, we understand. And we do not approve.
The conservatives smell blood. But they may have missed
their chance. While, they see support climbing to
heights not seen since the Mulroney era, there has been
no 'breakthrough' in southern Ontario. A poll today
showed the Tories well behind in the GTA (greater
Toronto area). And I mean well behind.
The Tories may have also blown an obvious chance to wipe
out the Liberals. The conservative caucus abstained from
voting on the federal budget. Steven Harper could have
easily toppled the fragile Liberal minority, but instead
sat on his (you know what). It was the first time in
Canadian political history the 'official opposition' had
not registered a vote on a federal budget.
Instead, we have the Prime Minister swinging desperate
deals with the NDP (the socialists). Cha-ching. The
Prime Minister once argued against an election, because
of the cost to the Canadian taxpayer (about
$300-million). Now he has added nearly $5-billion to the
government's annual budget.
Did you see the market today? Ugly.
US Durable Goods
(appliances...cars...furniture...lawnmowers...just about
anything built to last longer than three years...). Way
down. Biggest drop in two years.
US GDP down to 3.1 percent, also weak. Worst number in
two years.
Home Depot was down 2.5 percent. It traded as high as
44.30 in the first week of January (within the first few
days of the New Year). It has not been there since. It
closed at 35.09 today.
The new Molson/Coors fell 18 percent today. That's
one-year's gain, gone in one day. Anyone for a drink?
Caterpillar has a P/E of 14. EPS of $6.18. Had rallied
from $70.00 to $100.00, closed today at $86.70. The
Finning International chart is your Canadian mirror.
JDS Uniphase closed at $1.49(US) today. It was once
worth 100 times as much. It has a market cap today of
$2-billion. It was once $200-billion, or about the same
as Wal Mart today.
Wednesday April
27, 2005
Henry Groppe - Groppe,
Long, Littell
Houston, Texas USA
"In 1973, after many many years of 2-dollar oil, we ran
out of 2-dollar oil. Some eight or ten years later we
ran out of 8-dollar oil. Then we ran out of 20 and
25-dollar oil. We've now reached the point, because of
our continuing exploitation of this resource, where we
have run out of, in our opinion, 40-dollar oil."
On Canada:
"Canada stands
out as the rare exception. All of the others are in
decline."
"Canada, because of its enormous oil sands, has been
seeing steadily increasing oil production for something
close to 25 years. We project, by 2015, Canada will be
the largest non-OPEC producer in the world, with the
exception of the former Soviet Union. It will have a key
role in the future oil industry."
"A couple of years ago, Canada revised its total oil
reserves upward, something toward 187-billion barrels.
That's second in the world only to Saudi Arabia, with an
estimated 250 to 260-billion barrels. A distant third
would probably be Iraq. Canada has an appearance of
political and economic stability. And it is located
adjacent to the largest oil market in the world."
"The United States consumes about 25 percent of the
world's oil production, about 20-million barrels per
day. But as its production has declined steadily,
imports have grown dramatically, and as a result, we now
import over 60 percent of that 20-million barrels per
day."
"When you put all of those things together, our
conclusion is that Canada is probably the most
attractive place in the world today for new investment
in the oil and gas business."
Visit the CFRA website and listen to the entire 4-part
interview.
Business@Night Interviews
Monday April 25, 2005
First of all, kudos to the Canadian Mint.
The poppy coin was a smash (so what if some of the color
comes off, that's not the point). Terry Fox is now the
first non-Royal to be placed on a coin, in this case the
dollar. And today, the Mint announced it is reviving its
wartime nickel next month to commemorate the 60th
anniversary of VE-Day. The five-cent piece will feature
a torch superimposed on a V on its reverse, a design
last seen on circulating nickels in Canada in 1945.
David Dingwall, former Mulroney cabinet minister (ah-hem
public works), (Cape Bretoner), all around power broker,
is CEO of the mint these days.
So you wanna be in tech eh?
I wonder what life is like in money heaven:
Sun Microsystems:
This stock traded north of 70
during the boom. It hasn't been higher than six bucks in
the last three years.
Closed at $3.52 today. And now, it too, has broken down
below its 200 day MA.
Nortel Networks has simply been putting in a series of
lower-lows. $3.75, $3.50, $3.00, $2.75, $2.50.
Is there any reason why the slide stops here? Closed at
$2.76 today (US).
Some of the more interesting headlines:
"Bush and Saudi Prince Discuss High Oil Prices in Ranch
Meeting"
synposis of that conversation: "More please."
"Microsoft Demonstrates New Operating System to PC
Makers"
should be on shelves just in time for Christmas 2006,
we're told
-Lost in the shuffle - "Beijing research lab founder to
lead Microsoft "Windows Mobile"
new version out in a few weeks - dubbed "RIMM Killer".
"Liberals pledge millions to help immigrants"
anyone for a summer election?
Saturday April 23, 2005
Some snippets for the weekend:
-Bombardier is getting some bad ink in the New York
Times. The Times reports Amtrak has been forced
to sideline its entire fleet of 20 'Acela' high speed
trains, to replace cracked brakes. Bombardier, along
with GEC Alstom of France, won the contract to build
these locomotives in 1996. Seems the US Federal
Railroad Administration required the machines meet very
strict safety guidelines. As a result, the trains (once
touted as Amtrak's savior) are too heavy and weigh twice
as much as the European models (the
workers call them Le cochon - the pig). Wheels, brakes,
shock absorbers...all are failing. "The
French-Canadian consortium offered the lowest bid and
best financing deal, one heavily subsidized by the
Canadian government.”
-It appears the Chinese are winning the button war. The
Globe and Mail reports Canada's last major button
manufacturer will scuttle production of polyester
buttons later this year. Canadian Buttons Ltd. had been
in
business for 121 years. The president of Canadian
Buttons blames it all on the lifting of quotas on
imported Chinese textiles and apparel. 65 jobs will
disappear in LaSalle, Que.
-"When it comes to beer, all that matters is taste."
Molson purchased a very successful microbrewery this
week, called Creemore Springs. Creemore has been around
less than a decade, but in that short time, it
has managed to develop an almost cult following among
beer connoisseurs. It's best selling brew is a
lager, widely considered one of the best brews on tap.
Production is small. (Or is it "limited"?). Creemore
is one-tenth the size of the market leader, Alexander
Keith’s. The Keith's product is an India Pale Ale.
Founded in 1820 in Halifax NS. All labels are stamped 'Veritas
Vincit', Latin for "Truth Conquers". Motto of
the Clan Keith.
-The new Big 3? Ebay, Yahoo! and Google have a combined
market-cap of $149-billion. GM, Ford and
Daimler Chrysler have a combined market cap of
$75-billion (and more than half of that is thanks to DCX,
worth about $42-billion).
-This from Canada's Housing Minister, Joe Fontana this
week: "Home ownership is up. Home construction
is up. People are buying homes like crazy." CMHC
announced it is cutting mortgage insurance premiums
by 15 percent. It means savings of about $1500.00 for
the first-time buyer. CMHC already allows entry into
the market with a credit card and 'sweat equity'.
-Quote of the week: "As matters stand, my fear is that
Greenspan-Bush "team" has placed the US in such
a vulnerable position, that as the second phase of this
bear market grinds on, and when the third phase of
the bear market arrives, the nation will be dealing with
an utter disaster. But, of course, by that time the
bumbling Maestro will be retired from the Fed, just a
bumbling, egotistic little fraud -- and the greatest
inflationist in US history." Richard Russell - Dow
Theory Letter - April 20, 2005.
-How do they do it? 2L carton of 2% milk at national
chain = $4.68. Giant Tiger = $3.28.
30 to 35 peeled, de-veined frozen shrimp (product of
Vietnam) - national chain = $8.99 - Giant Tiger
$4.80. (250kg - gourmet coffee beans - Byward Market
retailer - $5.00).
-The top of the line 2005 KIA Amanti lists for $36,000.
"Good Credit, Bad Credit, No Credit, No Problem".
-The Canadian Government is close to selling
$3.3-billion worth of real-estate, one of the largest
such
transactions in the country's history. The buyer may be
the CPP. The Caisse is said to be ready to buy
some of the O&Y portfolio. Hmm..The Feds and O&Y getting
out. Does that say something?
Thursday April 21, 2005
I hate being stumped. And today an ‘average investor’
stumped me.
This average investor earns an above average income -
listens to my business radio show every night - and he's
perplexed.
Why?
He wants to know why his broker/advisor never brings up
any of the topics we mention on CFRA's Business At
Night.
"I've never heard him say a word about gold or buying
Imperial Oil or any of that other stuff", he tells me.
I can't offer him specific advice. I'm no broker. I only
write and talk on the radio.
But what I could do was suggest this average investor
find a new advisor, preferably one that listens to our
radio show.
Back to the original question. Why is nobody talking
about this? Why is nobody reporting the nightmare
scenarios of Richard Russell and Paul Volker?
Are advisors naive? Ignorant? Unwilling? Unable?
This is the best answer I could come up with:
The street has a vested interest in being bullish. The
street, to function, must tell you investments will
rise, must have the research to prove it and offer the
products that allow you can take advantage of it.
Without that little chain of command, the street has a
hard time keeping up.
Think of what we have been put through in recent years.
Name a large investment house that has not run afoul of
authorities.
We have the dirty pictures. We have the proof of the
illicit romance between a firm's research department and
its sales office. There is a vast amount of evidence of
an unholy marriage between research and investment
banking.
This is what they were doing to us:
Brokerage X publishes and promotes research on company
Y. There is a BUY recommendation, with a price target of
Z.
Sadly, the BUY hinges on company Y's ability to hire
Brokerage X for investment banking purposes.
Think CSFB's Frank Quattrone and the "friends of Frank".
This average investor told me, "I don't even bank with
this bank, I've just known this guy for years."
I humbly offered this:
When it comes to 'what to own' and 'when to own it', buy
because you believe it, not because it's all your broker
offers.
Tuesday April 19, 2005
Shame on you, Reuters.
“U.S. producer prices inched up 0.1 percent last month
with volatile energy and food prices stripped out,
easing inflation fears, while housing starts plummeted
as weather slowed new construction.”
This is Reuters, the original “source” copy for
newsrooms around the world.
Let’s take a closer look at today’s PPI. Yes, well done,
core prices up 0.1 percent.
Now, let’s all eat and drive cars.
Suddenly, the PPI is up 0.7 percent for the same month.
Holy smokes!
And what, pray tell, is the LEAD sentence in the Reuters
story?
Prices “inched up”. We’re told of “easing inflation
fears”.
Housing starts, meanwhile, “plummeted” 17.6 percent
(biggest drop in 14 years), as “weather slowed
construction.”
Favorable weather never gets any credit. Besides, they
build homes all year round now in Ottawa and it gets
very cold here in the winter. If they can build all year
round here, they are building all year round just about
everywhere else.
The Bloomberg write-up on today’s PPI was more
balanced...at first.
“The Labor Department said wholesale prices excluding
energy and food rose 0.1 percent in March, less than
economists' forecast of 0.2 percent. Including those
items, wholesale prices increased by the most in four
months, driven by higher oil costs.”
But, here’s the next line:
``The concern about inflation over the next several
months will begin to wane,'' said USAA Investment's
Wester. `
`That's good for the stock market.''
Oh good, nothing to worry about then. Whew.
GM was down another three percent at one point today. It
rallied with the broader market later in the session.
Still, down about 11 percent in the last week.
The market has been up two days in a row now. It could
be a bit of ‘techphoria’. The numbers from Intel and
Yahoo! looked good.
But the gold and oil markets aren’t convinced. Both were
higher. One is clearly causing inflation. The other is
our hedge against it.
Monday April 18, 2005
It’s a beautiful thing, this Internet.
Every interview from CFRA’s Business at Night is now
archived at the 580 CFRA website.
http://www.cfra.com/interviews/index.asp
Listening back, here are some interesting quotes from
recent days:
Ross Healy – President of Strategic Analyses
Corporation
On the present market climate and that of the 1970’s:
...the similarities are absolutely astonishing. Whenever
you get a strong commodity market, it can be a sign of
the end of the market and the end of the economic
cycle.
...’73 was marked by rapid increases in commodity
prices. It was dominated by gold. I think in 2005, it’s
being dominated by oil. I have said this for several
years; I would rather be in black gold than yellow gold.
I remain very much of that opinion.
..when you look at 1973, the S&P 500, against the
backdrop of a strong Canadian stock market, lost 16
percent. It (The S&P 500) tanked in 1974. I wouldn’t be
surprised if we were following that same kind of model
here, in 2005-2006.
Gavin Graham – Director of Investments – Guardian Group
of Funds
On the some of the holdings in the GGOF Resources Fund:
..about 30 percent is in incomes trusts, 20 percent is
high yield bonds issued by resource companies. Equities
are managed by Wally Kusters at Barrantagh Investment
Management, Barrantagh is Gaelic for “trustworthy”...
Names include Calfrac...Breaker Resources...the next
Shell...Fording Coal...CP Rail...the western rail-line
with coal exposure.
...it’s mostly mid and small cap because we think
there’s some potential there.
..Canadian Oil Sands Trust...still looks great longer
term...Seymour Schulich owns about four million units,
with a price target of $207.00... he paid $44.00 I
think.
Eric Sprott – Founder – CEO – Sprott Asset Management
On GM:
..we run hedge funds here and we have to pick some
shorts. And GM is right at the top of our list. They
don’t make money in their automotive business. There’s
likely to be much tougher competition going forward.
There will be a much tougher climate in which to sell
autos. And you’re already starting with red ink.
...now you look at the area that’s producing all the
earnings, the financial side.
1) You see administered rates going up. 2) You see GM’s
credit rating going down. So GM’s rates are rising
faster than everyone else’s rates.
...GM has something like 300-billion dollars in debt. If
interest rates go up by five points, which is not
impossible to imagine, GM is probably paying two points
more already, because of the recent downgrade; that’s an
extra 15- billion dollars a year of interest costs on a
company with a market cap of 15-billion dollars. There
could be difficult times for GM going forward.
Friday April 15, 2005
To
start, a few words on the Canadian political climate.
Conservative leader Steven Harper seems to change his
mind on a daily basis about his intentions to bring down
the Liberal minority, with the good money now betting on
a late-June trip to the ballot box.
The
Conservatives have surged in the polls of late, thanks
to a horror story called “Gomery”. Yet still, there is
no clear breakthrough in the Liberal stronghold of
southern Ontario.
The
far-left-leaning NDP has seen its polling data climb
more than ten points. If Steven Harper needs the support
of Jack Layton’s NDP and the Bloc Quebecois in a
minority parliament; it’s a potential recipe for
gridlock.
I’m
told by some that Gomery will be shrugged off by
international investors. It’s a hiccup, no more. Some
see it costing about two cents versus the
