StubbleJumper

Whoa there! If the great majority of us underperform the market over the long term, that implies that research has negative value or that our costs entirely eat the value of our research. I can tell you that my costs are very low....like 0.1% per year. Even Vanguard would have trouble doing that. I'm pretty confident that I can meet that 0.1% hurdle. SJ

I think its closer to 1.5% each time. I dont let them convert for me anymore but inside the RRSP account its hard to get around. Yeah, it might be 1.5% each time. It's been a long time since I have allowed them to convert anything on my behalf. For the RRSP, in the past I used a variety of elaborate in-kind exchanges between my RRSP and my after-tax accounts in $US in $CDN to avoid currency exchange. These types of swaps are not permitted for TFSA, so I was quite happy when the dual-currency support was introduced!

RBC has recently implemented US$ accounts for RRSP and TFSA. In my experience, it is in these areas where I was getting badly raped by my brokers. In the past, if I wanted to make a change in my RRSP to sell perhaps $20,000 of KO to buy $20,000 of PG, the broker would charge me US$10 commission to sell KO and US$10 commission to buy PG....but then they would also take the US$20,000 in proceeds from the KO sale and convert it to $CDN and screw me for about a 1% charge, then they'd take that money and convert it back to $US to buy PG and screw me again on the currency conversion for about another 1% charge. Well, when you add it all up, I'd end up paying ~$400 on currency conversion and ~$20 for stock commissions! That whole process amounts to being seriously bent over :'( :'( :'( by the banks! All of this to say that the availability of $US registered accounts can be a big plus for Canadian investors. Be very careful about understanding the hidden costs (or less well publicized costs) rather than just focusing on the headline costs of $X per trade. If you are not a day trader, then the commission costs for stock trading amount to bugger-all anyway (like who really cares whether it costs $5, $8 or $10 for an equity order if you are only making 20-30 trades per year?). Those banks can be sneaky in how they empty your pockets. At this point I am a relatively happy RBC client. The commissions are $10 if you hit a modest assets threshold. They have $US registered accounts. If you hit a more significant assets threshold, you qualify for "Royal Circle" benefits which reduce costs even more. So, overall, they're pretty good on the cost side. Unfortunately, their website is about the same as it was in 1996 ??? ???, and their trading platform does not give you Level II quotes which is seriously sucky.... SJ

That's it! I'm gonna sell FFH and buy whatever's been hottest over the past 6 months! But seriously, Sanj is right in focussing on BV. If BV grows, share price will eventually follow. SJ

I actually do not like the industry. Most of the green energy projects that I've seen over the past 5 or 10 years needed large piles of government money to make them work. In Ontario we even have solar energy, despite being in a part of the world that might be considered suboptimal.....and the reason why we have it is that the provincial government is promising homeowners $0.80 per kilowatt hour for the energy they put back into the grid. That's only like 15-20X the cost of our coal plants. So I guess my issue with this type of business is that its success is predicated on continued silliness from governments. However, given the tight budgets that the US federal and state governments will face over the next few years, is it reasonable to expect that they'll continue to waste so much money on alternative energy when some of them can barely afford to keep teachers in classrooms? SJ

Why do they always schedule these things on the shortest most depressing day of the year. I hope they schedule the next extinction event after that for summer holidays, or around early June, so we can have some time off. Well, the Mayans lived in the Southern Hemisphere so they got it right scheduling it for their summer. ;D oec, I think you are confusing the Mayans with the Incas. Must be the extra gravitational pull from the asteroids :D Oops! Hope my investing skills are better than my history or geography - otherwise, I'm in deep s.... No, THAT would be gravitational pull from your hemorrhoids.... SJ

Sure, but isn't the world supposed to end in 2012 anyway? Given Prechter's forecast and the impending end of the world, it's obvious that the optimal solution is to simply liquidate our portfolios and expend the proceeds on wine, women, and song.... SJ

I did read the article. So, when private debt is repaid, what will the creditors do with the proceeds? The article conveniently ignores the fact that creditors must either re-invest the cash, spend it, or stuff it under their mattress. Since #3 is an unlikely outcome, the reduced aggregate demand argument does not really hold water....unless the author is of the view that the private debt repayments will be issued uniquely to foreign creditors (which would seem implausible). I do not deny for a minute that there remains a great deal of pain coming down the pipe as businesses, households and governments deleverage. However, I am having some difficulty arriving at an apocalyptic conclusion. My larger concern is that markets still look to be 10-35% overvalued in a historical context (even in the absence of a drawdown in GDP), and careful shopping is therefore my preferred strategy. SJ

ORH-A is up over $26 again today. IMO, these will be toast by year end. Might be a good opportunity to head for the exit if anyone still holds them.... SJ

Dazel, The Canadian Wheat Board serves as a single-desk seller of all wheat originating in Western Canada that is destined for export markets (there is a free market for low quality domestic feed wheat). The CWB purchases all high quality wheat from western farmers and then sells it to domestic or export buyers. The proceeds are pooled for each grade of wheat and distributed to the farmers. Viterra's operations in Western Canada should not meaningfully benefit from the higher wheat prices, as their function is primarily grain handling rather than marketing. As you noted, planted acreage is drastically lower due to a wet spring, so grain handling volumes might be a little shorter than previous years. The one area where Viterra could benefit is from farm input sales (ie, fertilizer, certified seed, pest control, etc) for next spring. When prices are high most farmers crank up the inputs to get better yields. But even that probably wouldn't move the needle too much. If you want to play the wheat story, better to look at US-based companies like Cargill or ADM. SJ

Yep, for this quarter they beat their hurdle of 15% annualized ROE. Good job in a tough environment. Anyone else think it was strange to see growth in Net Written at NB? SJ

I'm thinking much lower than that. Equities did not do well in the quarter, especially some of their bigger holdings like DELL, GE, WFC, USB, LVLT -- ugly. How much do you figure they made in bonds? The equities are partially hedged. I took a quick look at the bonds a few weeks back, and figured that the unrealized gain might be as high as $1B (using the sensitivity table that FFH publishes, I applied about a 100bps decline). But that was pretty quick and dirty. Ultimately I don't much care about the quarter-to-quarter results. The bigger question is whether management is positioning the company correctly for solid long-term returns...and I would say that is a resounding yes. SJ

Often message boards are just plain wrong, or worse intentionally deceiving. Our old friend Brolgaboy dragged FFH through the mud for a few years based on twisted tidbits of fact combined with innuendo. Read this garbage for entertainment, but do your own research! SJ

I usually go to quantumonline.com for lists and descriptions of preferreds. They have tables of the various flavours, including a table for TRuPs. You can get a brief description of the securities' characteristics too which saves the trouble of going to the prospectus during the screening phase. SJ

Nope, I don't think you're missing anything. FFH issued more preferreds in Canada earlier this week at a dividend rate way lower than the ORH-A shares. I'd say the Odyssey preferreds are toast. SJ

Looking at Shiller's data, in a historical sense, the broad market is still over-valued. The degree of over-valuation is much more acceptable now than it was in the decade or so leading up to the financial crisis, but they're still higher than historical norms (my calcs suggest that it is somewhere between 12% and 34% higher than historical averages....). However, despite the modest broad market overvaluation, as we have discussed on this board there are currently a number of compelling large cap opportunities. It is possible to buy WMT, JNJ, MCD or even KO at earnings-yields that are reasonable and with some prospect of modest earnings growth. IMO, all four of those companies have a solid 5 or 10 year outlook. You won't necessarily make 20% returns annuallized, but you might be near 10%. In an overvalued market, it's nice to have that option. As a final observation, if you are a believer in Siegel's Constant, a ~10% annualized return from these very large-caps is pretty good in a zero-inflation world. SJ

Hell yeah! Margin is the way to go when valuations are compelling and when it is used in moderation. I do not hesitate to margin up to 110% or 120% equities. Right now I am about 106% equities (ie, margined 6%). As others have stated, margin interest is tax deductible and is currently stupid-cheap. There are a few decent large-cap valuations that have earning-yields well over margin interest rates.... In Feb-Apr 2009, I margined about 10%. I should have cranked it to 30-40%. Opportunity missed. I have a very long term time horizon. SJ

Just because someone is willing to pay you to do something, doesn't make it worthwhile, or even meritorious. By your logic this guy should take any job, whether its using guerilla marketing tactics to sell addictive pharmaceuticals for off-label uses, or marketing candy bars and soda pop to school lunch rooms. I would sleep under a bridge before taking some 'jobs,' money just isn't all that. Sometimes jobs comes with intangible costs that are hard for some to identify. I'm not in a position to cast judgment on this kid's decisions, and give him credit for leading his own life. If the kid were drawing an ethical line in the sand and was refusing to perform work of dubious ethics, then I would understand that (though I still would not accept the whining to a journalist). However, this kid's point of view is not that the $40k job is somehow unethical, but rather that it is beneath him. So instead of taking the entry-level job, he sits around the house waiting for somebody to offer him a job half-way up the corporate ladder. And he has the audacity to whine to a journalist about how tough life is? Shame on him. SJ

I'd be ashamed if anyone in my family started life with a university education, no debt and then refuse a $40k job......and then agreed to do an interview with a journalist to whine about how tough things are. I guess success is just supposed to be served on a silver platter?

Thou art not a value investor?

I seem to recall that a 100bps parallel change in the term structure of interest of would drive an increase of about $1b in the value of their fixed income holdings. BV could be a good deal higher at the end of Q2! SJ

I wonder what Prem Watsa, Brian Bradstreet, et al. have been doing over the past few days.... Dumping treasuries and buying large caps? Personally, I could not resist increasing my Manulife position today. MFC looks be valued at PE~7-8, and has enormous potential in the Asian markets.... I'm happy with this opportunity! SJ

Agreed. There are plenty of large caps trading at similar multiples to MSFT that face much lower execution risk. You mentioned WMT, we've discussed JNJ in the past, and even WAG has nicely plummeted if you like the pharma-retail space. There are plenty of good values out there, but not that many astounding values. SJ

I've been there, done that. I tend to think they're a little bit like hell -- seemingly easy to get into, and almost impossible to get out. SJ

Yeah, I still hold some ORH-A, and I'm guessing that they'll be toast in October. They trade X-D later this month, so it'll be interesting to see whether they're worth anything more than $25 X-D. If so, I'll probably dump them. SJ