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New Feature on Yahoo Finance

I just noticed this new feature on Yahoo Finance this morning. I'm not sure if I was just blind to it before or if they just turned it on but this looks pretty good.

I sit in front of a computer all day. One of the first things that I do when I sit down at my desk is open Firefox and open a few tabs; one for a forum I like to watch, one for blogs I like to read, one for my online brokerage account and one for my Yahoo finance page which has a portfolio on it of stocks that I own or that I am interested in for some reason (either I want to buy the stock if the price is right or it is a competitor of another stock I am watching or own). The Yahoo page is probably the page that I look at the most during the day. There are short periods of time when I am refreshing that page every 5 minutes or so when something is going on with a stock I am watching.

Yahoo has now introduced a new feature that seems to make that refreshing unnecessary. They now have streaming quotes on their portfolio pages. I was considering moving over to Google finance (and I would have if I could put Canadian stocks in a portfolio on Google) but this streaming quotes feature (even though the quotes are still at least 15 minutes delayed) seems like it could be a pretty good reason to stay with Yahoo. Isn't competition good for consumers? :)

It looks like the streaming quotes are available on the individual stock pages as well, not just on a portfolio page.
category: Personal Finance posted on Wednesday August 30, 2006 at 09:08:17 by: 0xCC

Back From Vacation

We just got back from a little vacation a couple of days ago. I have a couple of posts brewing and I will post one of them before the end of the month.

In the meantime (just to give a little hint of what I'm going to post about) take a look at this article in last week's Toronto Star by James Daw. The Ontario government has made some changes to the dividend tax credit that put Ontario's taxes in line with the federal government's taxes on dividends. In particular note the level of income an individual can have before paying any income taxes if their only income source is dividends.
category: General posted on Monday August 28, 2006 at 08:26:00 by: 0xCC

Cinderella Man

Last week M and I rented Cinderella Man, the movie about the boxer James J. Braddock. If you didn't see the movie you may be wondering why I would be making a post about the movie under a personal finance category. The answer to that lies in the time period of the movie. The movie starts in the summer of 1929 and ends around the summer of 1935. The movie did a good job of depicting the soaring heights of the roaring twenties to the depths of the Great Depression. The movie follows the life of Braddock over that period of time and his personal life seemed to mirror the economic/market conditions at the time. He ran into some problems in 1929 and these problems sent him into a tail spin until around 1935 when he was given a chance to step into the ring again.

Anyway, the thing that struck me about the movie (aside from the pretty good story) was the contrast between the highs of the Roaring Twenties and the depths of the Great Depression. In the movie Braddock and his family went from a nice house on a lovely tree-lined street to what looked like an inner-city one-room basement apartment that they couldn't even afford to keep the lights or heat on in. Braddock went down to the docks every morning where he tried to be picked as one of the lucky few in the crowd of men to be picked to get work that day. Watching this contrast made me think about how well M and I would do if the market and economy went through similar declines now. I think the chance of seeing a similar decline right now is very slim since a lot of current monetary policy is geared towards making sure we never see a Great Depression again but at least thinking about the possibility is probably a good exercise.

So what would a 1929 level crash look like today? In two months (September and October 1929) the market lost 40% of its value. For the TSX currently at around 12000 that would be a 4800 point decline over two months to 7200. That would take us back to 1999 levels. By July 1932 the market lost close to 90% of the value of the September 1929 highs. In addition to the market declines the economy was a total train wreck, unemployment levels reached close to 25%, GDP was shrinking. In that situation I would probably lose my job but I think there would be a good chance that M would keep her job. So if that were to happen (and if stocks lost 40% of their value) what position would we be in?

One of the things that I like to keep tabs on with respect to our financial position is how much "net" debt we have. In other words, how much do we owe if we took all our loans (in our case that means our mortgage, an investment loan and a little bit of margin in our brokerage accounts; we don't have a car loan or credit card debt) and subtracted the current market value of our investments after taxes. The reason I want to track this is I what to know what would happen if we had to renew our mortgage and interest rates had jumped to 17% or something (as they did in the 80's). Would we be in a good position to deal with that? I was feeling pretty good because in the last 6 months or so our "net debt" has dipped under $5000 and I expect that by the end of September we will be at $0. This means that if our investCinments stayed where they are and we sold them all we would be able to pay off our mortgage (not including the fees the bank would charge us for closing the mortgage early) and our investment loan/margin. That was making me feel pretty confident.

However, watching the effects of the Great Depression on the Braddock family shook my confidence a little bit. What would really happen if the economy totally fell off a cliff like it did in the 1930's? As I mentioned, I would probably lose my job. The value of our portfolio would lose between 40 and 80 percent of its value. We would be getting margin calls for the little bit of margin that we have in our accounts (currently accounts for less than 15% of our overall portfolio value). The only positive thing would be that interest rates would probably drop instead of going up so our mortgage payments might go down if we could figure out a way to do some refinancing without incurring fees. In addition, even if our portfolio dropped 40% we would still be able to pay off about half of our mortgage if we had to. I think that if M were to keep her job and keep her salary at the same level and if we saw a little bit of a decrease in the price of things like food and natural gas and hydro there would be a good chance that we could get by. We wouldn't be building our portfolio or doing anything more than treading water but we could probably get by.
category: Personal Finance posted on Monday August 21, 2006 at 09:04:41 by: 0xCC

Mad Money

For those of you that don't know, Jim Cramer is a Wall Street guy that has a show on CNBC called Mad Money. He is a bit of a wild guy and likes to scream and yell about stocks. The show is sometimes entertaining, always loud. Anyway, the basis of that show is that Mr. Cramer talks about stocks that he says you could use your "mad money" to invest in. The idea being that mad money is money that you are totally willing to lose (and can afford to lose) on taking some risks in the stock market.

I am starting to think about having a "mad money" component to my portfolio. I have been watching some good opportunities unfold over the last year or two and I knew that they were good opportunities in the relative short term (less than about 2 months or so) but I didn't have the intestinal fortitude to sieze the opportunity. If I had some mad money set aside to take advantage of some of these speculative opportunities then I might have been able to take advantage of a couple of these situations. Generally there have only been two things that have kept me form pulling the trigger on some of these situations. The first thing has just been a straightforward lack of cash. The second thing is a lack of a framework or structure that I could use to first decide when to get into a stock and also when to get out.

So let's take a look at the first issue; the lack of cash. This is a fairly easy problem to fix. All that needs to happen is some cash needs to be set aside that would be available to use for special opportunities as they arose. The question then becomes how much cash? My answer to that is that I have no idea. I think there are some parameters that may be used to determine a minimum amount of cash that should be used for this and my overall risk tolerance should be used to determine the maximum percentage of my portfolio to use. The factors that determine the minimum amount of cash are basically the fees (buying and selling) as well as the predicted return.

Looking at the fees that I pay are $29 for buying and selling a stock and that is pretty much all, so that is $58 for getting into and getting out of a stock. Now if I say that I would like to keep trading costs under 1% of total investment cost that puts a minimum level for this cash at $5800.Now that we have a minimum level of required cash for this kind of investment what else am I looking for to set up a frame work for the use of this money. The first thing to think about is what would it take to make me want to invest at all? What sort of minimum level of anticipated return am I looking for? I think that something around 10% is probably a good idea as a minimum. The flip side of this is at what point do I admit that I am wrong and throw in the towel? I know that things are not going to work out for me all the time on these opportunities that I see unfolding. If I am hoping for a minimum of a 10% return when things do go the way I expected maybe I should be looking at a 5% decline as the maximum I would be willing to suffer before admitting that I was wrong getting out of a stock.

Maybe I should take a look at a couple of examples. I have seen a couple of opportunities over the last 3-4 months that have been sort of interesting. The first one was probably Encana. Back in early to mid March or so Encana was trading under $50 on the TSX. There was good reason for Encana to be trading so low, natural gas prices had been sliding after a very warm winter. I would consider anything under about $49.50 or so a pretty good deal for Encana stock. Between February 21, 2006 and March 10, 2006 Encana traded between $46.12 and $50.24. If I stuck to that and put a limit order in for Encana at $49.50 when the stock was on the way down at the end of February I would have put in an order on February 21 that would have been filled on Febuary 22 probably at 49.25. Using a 5% decline as my stop-loss position I would have put in a stop-loss at $46.79 (5% of 49.25 = 2.46 and 49.25-2.46 = 46.79). I would have been out of my position the very next day,
February 28 at the open of 45.90. However, if I had waited until the stock started to recover a bit after the bottom on February 28 at 44.96 and put my order in on March 3 for the same $49.50 it would have been filled at $49.50 before the stock closed at $48.55. This time the stop-loss would have been in at 47.02 and my 10% hope would have been at $54.45. By March 24 the stock reached 54.45 and didn't touch $47.02, only getting as low as $47.58. Using as much of the $5800 allocated for this strategy as possible I would have been able to buy 116 stocks. The cost to buy would have been $5771. The proceeds of the sale would have been $6287.2 for a total gain of $516.20 or 8.9% after commissions.

Another example is Petro Canada. In early June it was trading well under $50 which I thought was a pretty good deal. I would have been willing to pay anything under around $47 for the stock. On June 20 it traded between 46.20 and 47.92. An order for $47 would have been filled that day. Using the $5800 allocated for this I would have been able to buy 122 shares for a total of $5763 including commissions. My stop-loss would have been at $44.65 and my get-out point would have been at $51.7. Well Petro Canada never got close to $44.65 and on June 30 it reached $53.09 before closing at 51.34. If I had sold for $51.70 on June 30 that would have meant $6278.40 after commissions for a total gain of $515.40 or 8.9% again.

A third example is Trans Canada Pipelines. During last half of June Trans Canada was trading under $32.50 which I consider a good price for the stock. On June 30 I could have bought the stock for $32.00 which would have allowed me to buy 180 shares for a total cost of $5789.00. My stop-loss price would have been $30.4 and my 10% price would have been $35.20. Between June 30 and July 31 the stock only got as low as $31.70 and on July 31 it traded up to $35.38 and on August 1 it traded as high as $35.30 so there is a pretty good chance that I would have been able to get out at $35.20 which would have meant proceeds of $6307 for a total gain of $518 or 8.9% once again.

Of course I have just gone back and looked at examples that I have remembered and that have worked out well (otherwise I don't think I would have remembered them). I think this strategy may work in a few cases but I wonder if over the course of a year to two it would actually end up making money rather than losing money. I haven't decided yet if this is something I'm willing to try with real money. Maybe I should just try it on paper for a year or so in order to see if I can make it work over a longer period of time. I'll post here if I decide to track an opportunity as it unfolds.

Disclaimer: I am not suggesting that this is a good idea for me or anyone else to use this investment strategy. What I am suggesting here amounts to little more than playing the lottery. The odds of doing well using this strategy are probably worse than buying the winning ticket. You should do your own research and consult with your investment adviser before making any investment decisions.
category: Personal Finance posted on Tuesday August 15, 2006 at 16:29:00 by: 0xCC

PC Financial High Interest Savings Account

Shortly after a few other bloggers mentioned the fact that PC Financial had a new high interest savings account which pays 4.0% on balances over $1000 I applied online to open a joint account with M. I had been planning for some time to open a PC Financial account in order to 'clean up' our investment transactions and since this account carries a nice little interest rate I figured it was time to make the leap.

So what do I mean by 'clean up' our investment transactions? Well, the way we have our joint investment accounts set up right now we would have a hard time defending ourselves to the Canada Revenue Agency (CRA) if they ever looked the way cash flows into that joint investment account. This joint investment account is a little complicated so let me see if I can explain it clearly. The account is in both our names and in theory we both put equal amounts of cash into that account. We also have borrowed money to invest in that account which means that the interest we are paying on that borrowed money is tax deductible (as an aside I personally think that long-term borrowing for investing isn't a good idea for the majority of people and I am currently working to set up a strategy to eliminate this loan). In theory both M and I should be able to claim 50% of the total interest we are paying as an investment expense. The problem is that every month that we contribute to that joint investment account the cash comes directly out of my account, not a joint account. So if the CRA wanted to get really sticky about this they could claim that the account really is all my cash so any income/capital gains should be taxed in my hands and all the interest expenses should be attributed to me (not split 50/50 with M). Now that I have a shiny brand new joint account I can make sure that all cash that goes into that account is split 50/50 between M and I and that means that any cash coming out of that account will be half hers and half mine which means that everything is the way it should be. Then all I have to do is hope that the CRA doesn't come knocking in the next 7 years so all of that not so clean stuff will be out of their reach...
category: Personal Finance posted on Tuesday August 08, 2006 at 22:30:21 by: 0xCC

Hot Hazy Summer Days

It has been scorching hot here in Southern Ontario the last few days. A couple of nights ago the low was 26 degrees C which Google tells me is about 78 F. That was the overnight low. The daytime highs have been in the 36-38 C (98-100 F) range with the humidex values in the 47-48 (116-119 F) range. Very hot. Trying to cope with these temperatures without air conditioning has been challenging. I think that we may replace the furnace in the fall and get AC along with that.

Anyway, I have been on a bit of a buying spree lately. As I write this I am looking at a new LCD display that is quite nice (although I think I am pushing the limits of my video card with it). Also on Thursday I had a friend from work help me pick up a new barbeque (he has a minivan that works out well for those kinds of big items). M and I were assembling the barbeque together on Friday night and she went inside to get something. Less than five seconds later I heard her screaming from inside and looked up to see her running back outside as fast as she could. My first reaction was that there was a wasp or something inside that she was running from but just as she got to the door I saw something fly over her shoulder and turn back towards the inside of the house. For a second I thought it was a bird. As I looked more closely once M was outside I recognized a very familiar flight pattern.

It was only about 7:00 in the evening when this happened so I'm not really sure what this guy was doing out at that time:

He decided after a little bit of flying around that he would just hang out and not really show much interest in going back outside. After it got dark I had to convince him with a broom and a flashlight that it was in his best interest to go outside for the night (of course I had to take a bunch of pictures before doing that). He begrudgingly agreed.
category: General posted on Wednesday August 02, 2006 at 20:20:28 by: 0xCC