Hurricane Season

After last week's depressing market activity, it seems strangely coincidental that there's now talk from the US Government about Hurricane season. Depending on your news source, some are predicting that this year the hurricanes will be worse than last year while some are saying that they won't. This sort of guessing is speculative at best. Nobody knows for sure how many of the storms will turn into hurricanes.

Late last week there was also a sensationalist article from the National Post that claimed that Iran passed a law that would require jews and christians to wear badges. Of course this story was talked about throughout friday. The contents of the article were disputed and subsequently the National Post pulled the story.

So what was the point of the article? Fear mongering? Again it seems strange that such an article came out right after several straight days of horrible results from the market. Could this sensationalist article have been fabricated for the sake of stimulating the markets?

You see, by shifting attention to Iran, this has the effect of potentially increasing the possibility of an upcoming war with Iran. As they are a major oil producer, a war there would disrupt operations and would help drive up the price of oil.

Is this a buying opportunity?

Now that metal stocks and gas/oil stocks have pulled back quite a bit, it may be very tempting to find some value in some of the metal and gas stocks that have been beaten up over the last couple of days with the intent on holding them for the long term.

As the market is still very volatile, I am currently looking into safer and boring stocks that could be good defensive plays instead.

Among the ones I am currently investigating are:

Danier Leather (DL)
Yellow Pages (YLO.un)
Maple Leaf Foods (MFI)
Sterling Shoes (SSI.un)
Arctic Glacier (AG.un)
True Energy (TUI.un)

Of the 6 stocks I am currently studying only one of them is an energy stock. I am currently about 15% weighted to energy/oil and do not really wish to increase my weighting in that sector but True Energy is paying out at an extremely high rate. There is speculation of course that a dividend cut may occur as the price of natural gas approaches $5.

I feel that the stock is already trading as though a distribution cut will happen. The question is how much of a cut will be made (if any)?

I will comment futher on the above stocks in future posts.

As always, please do your own DD. What may appear to be good may be bad to you.

Top 25 Money Tips of all time.

In this week's MoneySense, there is an article about the Top 25 Money Tips of All Time. Most of the advice given is very simple with things like how to save money, and how to invest wisely. A lot of the advice is very common sense but there are a few gems in it. One tip that really hit home was "Put first things first". Having witnessed all the health problems I've seen in the last year, I really do think that this has to be my top priority.

Goals for 2006

The following are some goals I have for the forthcoming year:

1. Grow my total assets by $15,000 from now today. This assumes a savings rate of about $1250 a month. This is also factoring in the fact that I plan on taking a vacation in 2006.
2. Trim and possibly get rid of services I'm not using.
3. Take advantage of more benefits from my work place (eg. Dental, Eyeglasses, Massages)
4. Reduce the insurance premium for my car by increasing the deductible
5. Buy fewer frozen prepared foods and purchase more produce. Not only is it healthier, but it will save money as well.

Exchange Traded Funds

Lately I've been reading a lot about Exchange Traded Funds (ETFs) and am very close to switching a large chunk of my RRSP and Non-RRSP holdings into ETFs. This is a very big change from my current situation.

In my Non-RRSP account, I am currently holding 50% cash and 50% value stocks. In my RRSP account, I am currently holding 25% in fixed income and 75% in various mutual funds.

My RRSP account has been performing very well with very stellar results. The mutual funds I have chosen are all performing well, but the biggest downside is the high MERs that I am paying. For example, one of the funds in my portfolio has an MER of 2.80%. Unfortunately this fund has a DSC, which means that I will not be able to sell it under 4 years from now when the DSC is completely eliminated. At that point, I am looking to switch to either
a) Barclay's iUnit fund (ETF) or
b) An Indexed mutual fund with a low MER.

Which one I choose will depend on two factors:
1. what is tracking error of the fund (ie. how much does it deviate from the actual index)
2. how much is the MER and all associated transaction fees.

For my Non-RRSP account, I plan on adding an ETF to it. It is difficult to pick the winners (especially value stocks). As such adding an ETF that mirrors the large cap or mid cap index should provide some much needed diversification.