Measuring the Economy

containershipIt is very difficult to get a true gauge of the economy, the media is full of pundits and economists who create a dizzying amount of idle speculation. Getting down to brass tax is critical. When evaluating a business as a potential investment I often find myself in similar circumstances- too much information. To get past the noise I find the best thing to do is to focus on the fundamentals. In looking at the overall economy I think a similar approach can be taken.

The Vancouver port is one of the largest on the western sea board.  If you are exporting odds are the product went through this port. If you are importing odds are it came through. If we want to evaluate the overall health of the economy looking how the inbound and how outbound shipments have varied is at the very least an interesting prospect and perhaps can also provide some insight into the overall health of the economy.

Have we heard the last of the European Bank Crisis?

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Investing in Bp after the Oil Spill


bp logo 200x200 Investing in Bp after the Oil SpillI bought BP shares this past month. In some ways the decision was dead easy, in other ways I must admit that I am still questioning my choice- but not for the regular reasons. Let me explain to you first why it was an easy decision (my rational side) and then lets talk about why it was a tough decision (let’s call it my emotional side).

Waiting for Great Companies


fishing1 003 200x200 Waiting for Great CompaniesI always have a running list of great companies I would buy if they were priced a whole lot differently- my wish list you might say. Being value investors we all spend a lot of time trying to differentiate between garbage and gold. Usually when I am looking at a company it has hit my screens because it is suddenly cheap – my job is to find out if there is a good reason or a bad reason for this, and invest accordingly. This activity can take some time, days, sometimes even weeks. Some opportunities simply don’t last that long though, they can dry up in a matter of a day, an hour or even mere minutes.

Greece Debt Default


greek Greece Debt DefaultGreece is in a bad state, there is no doubt about it. When a country builds up a billion dollars in debt (some estimates are 30% of GDP) and shows no mechanism to repay there is little good that can be said about the circumstance. Without the continued assistance of an EU German backed bailout there is a very good chance Greece will be forced to default on its debt. If you were to believe the general media this is tantamount to the outright failure of the nation which can result in nothing short of the entire country descending into chaos and likely taking the rest of Europe and the West with it.

Actively Managed ETFs, ETFs, and Mutual Funds


etfsA few years back the SEC licensed a new class of ETFs called actively managed ETFs. Being a big fan of the ETF area I thought it would be worth saying a few words about this new class.

ETFs are usually passive investments, some of my favorites are those that model an entire market like the S&P 500 or the S&P TSX. These funds emulate the components of the S&P 500/TSX allowing an investor to gain a diversified exposure to the market at a very very low cost or MER. In these traditional ETFs there isn’t a fund manager making a decision about which stocks to select- which is the chief reason for the low MER.

Learning to Invest- Reading Buffett’s Letters


buffett 200x200 Learning to Invest  Reading Buffetts LettersTaking the time to read the time to read Buffett’s letters to shareholders is, in my opinion, the best investment of a few hours a young investor could possibly make. It provides the unusual opportunity get behind the scenes and get a look at the some of the thinking that goes into some of Berkshire Hathaway’s largest buys and sells. It also provides the opportunity to learn from the mistakes made by one investor in the hopes that you won’t repeat them in your own investing experiences.

Interesting Links


links 200x200 Interesting Links
For your reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles- enjoy!

Insider Trades: 3/22/2010


insider buyingBack by popular demand… Below is our list of the top 10 ‘interesting’ insider trades for the week of 3/22/2010. These are companies that have been selected by the buyingvalue filter application. Read more about our value filters here. The companies selected are those that have cleared the first filter in the last 7 days and are the highest ranked filter 2. See here for more about the current selection criteria.

symbol P/E Ratio (TTM) P/E Low – Last 5 Yrs. Price to Book (MRQ) Dividend Yield Dividend 5 Year Growth Rate EPS – 5 Yr. Growth Rate Current Ratio (MRQ)

Is Now the Time for US REITS


investREIT main Full 200x200 Is Now the Time for US REITSEvery industry faces periods of rise and periods of decay. The last few years have, not surprisingly, been a period of decay in the REIT Area. But like nuclear stocks after 3 mile island, or banks after the savings and loan scandal, or bonds after the junk bond era, after a sector has been decimated what is often left are the high quality well managed companies that will rise to dominate the sector in the future. Is now the time for REITs?

Interesting Links


links 200x200 Interesting Links

For your reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles- enjoy!

Anticipating Dividend Increases


parachute 200x200 Anticipating Dividend IncreasesI am a big fan of companies that make it a regular habit of dialing up a dividend. This is why I have been such a proponent of the dividend aristocrat group. Nothing perturbs me more though than to buy into a 2% dividend stock that I believe will crank up its rate only to be forced to wait multiple years before seeing that increase. To counteract this here is a simple parachute that can increase your confidence that a rate will increase.

Interesting Reading Links


links 200x200 Interesting Reading Links

For your weekend reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles.

Buffett Gets a Bullseye


thumbs up 200x200 Buffett Gets a Bullseye
I have written about the benefits of boring businesses in previous posts. I thought Buffett summarized some of the arguments quite well in his latest letter to shareholders:

“Charlie and I avoid businesses whose futures we can’t evaluate, no matter how exciting their products may be. In the past, it required no brilliance for people to foresee the fabulous growth that awaited such industries as autos (in 1910), aircraft (in 1930) and television sets (in 1950). But the future then also included competitive dynamics that would decimate almost all of the companies entering those industries.Even the survivors tended to come away bleeding.

Three Key Ratios For Investors


question mark 200x200 Three Key Ratios For Investors
if you could only have four ratios to evaluate a company what would they be? This is a fun question that is popular in investing circles. For a laugh I’ll take my shot at it, what would you pick?

1) Current Ratio

Current Assets / Current Liabilities

Why?

This ratio keeps track of the company’s ability to pay its short term debt. If a company doesn’t have safety money to deal with debt then they might not be in business tomorrow and I don’t need any of that.

2) Dividend Yield

Annual Dividend Per Share / Price Per Share

Microsoft Pirates Arrr


microsoft logo11 200x200 Microsoft Pirates ArrrI had a fellow investor tell me one day that they would never buy shares in Microsoft (MSFT) as their software is so widely pirated. I’m not a big fan of Microsoft stock but I’ve heard that reason given before and it is just silly- let me tell you how it works.

Microsoft widely subsidizes licensing for high schools, universities and colleges. They also provide university bookstores with deeply discounted licenses for their products to sell to students. This puts the product front and center and forces students to learn it or face failing their courses. After four or more years working with the product students in all ranges of study become proficient users. This indoctrinates users into Windows’ users. The cost of retraining these people would be tremendous, so the net effect is that it forces future employers to buy Microsoft products.

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Reading Links


links 200x200 Reading Links


For your reading pleasure a few interesting articles from around the globe about dividends, stocks, the economy, the market and other just plain interesting finance or economic oriented articles.

 

Dell- a Dud


dell jpg 200x200 Dell  a DudBefore any investment in a company I try to do business as a consumer with that company. Balance sheets can only tell you so much about the “true” story of a business. When the option came up to buy a new laptop for my wife I thought, Dell (NASDAQ:DELL) stock has been interesting to me for some time, let’s give them a go.

Let me tell you, it wasn’t pretty. After going through far too many pages and a number of strange web errors on the dell site my order was lodged. Content to write off these bizarre website errors I went over to the track order page. To my surprise I discovered my estimated delivery date for an off the shelf, uncustomized, mass manufactured, laptop was over a month away.

Weekend Reading Links


links 200x200 Weekend Reading Links

For your weekend reading pleasure a few interesting articles from around the globe about dividends, stocks, the market and other just plain interesting finance or economic oriented articles.

The Effects of Layoffs on a Business


pink slipA recent mass layoff at my company has given me a fresh perspective on layoffs. Normally, as an investor, we see layoffs as a courageous way to drive profits forward by shaking off some areas of weakness. I have personally invested in companies shortly after a mass layoff if I believe that such changes will benefit the profitability of the business. From a purely financial perspective viewing a company as a machine is an easy thing to catch one’s self doing. However there are some soft costs involved in layoffs to a company culture that I wasn’t really aware of until the week after I witnessed fellow employees walking out the door for the last time:

Check your Sources


film 200x200 Check your SourcesIt has become formulaic that when a movie comes out one of the advertisements will feature reviewers comments like “riveting”, or “one of the must see movies of the year” and of course my favorite “an instant classic”. The point, obviously, of these reviews is to convince you, based on some other expert’s testimony, that you need to see this movie.

Patience


patience1 200x200 Patience

The largest struggle I have as an investor is not researching companies, or finding and analyzing data, or even pricing a stock; it is having the patience to do all of these things properly.

Patience serves as a protection against wrongs as clothes do against cold. For if you put on more clothes as the cold increases, it will have no power to hurt you. So in like manner you must grow in patience when you meet with great wrongs, and they will then be powerless to vex your mind.

Taking Advantage of a Day Off


desk calendar 200x200 Taking Advantage of a Day OffA day off from US markets is a great opportunity. With the world being what it is markets are not entirely driven by internal factors. Use your day off today to read international business news.  This news can certainly give you a heads up as to what you should expect from the markets in the next day.  This trick helped me immensely during the early days of the credit crunch.  Bad news would break crashing out European and Asian markets while US markets were closed for holidays- guessing what the US market would do the following day?


Today is a good day to look closely at the Google vs. China story. While China’s business accounts for very little of Google’s bottom line, as the story evolves we have certainly seen market fluctuations. Maybe today is a good day to setup a buy if you have been looking for some weakness, or maybe if you think the market will overreact to Google leaving China (if stories today point that way), and today is a good time to plan your exit from Google. Your call read the news and see what you think.

More on this topic (What's this?)
Andy Xie on China’s Empty Apartments
Quick news – August 31 2010
Read more on Google, Investing in China, 2007 Credit Crunch at Wikinvest
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