Aug 292012

When we talk about investing we generally think about the stocks or fixed income market. But as we all know the Toronto stock exchange hasn’t done very well in the last 5 years and bond yields are still relatively low. More investors are starting to look into alternative ways to put their cash to good use. One way to do this is through alternative investments.

Alternative investments behave differently than traditional markets. Their returns have a low correlations with those of standard asset classes. In other words, they don’t follow the stock market or the bond market. Some examples of alternative investment classes include commodities, hedge funds, managed futures, wine, art, private equity, real estate (residential, commercial, farmland, REITs, etc.)

Earlier this year I bought some silver coins. These are pure commodities. The value of these coins over the last 5 years definitely out performed the TSX composite.  Hedge funds and derivative contracts are usually for accredited investors with deep pockets. Vintage wine, paintings, or other types of art also do not fluctuate with the stock market and can be a great store of value over the long term. Real estate is a tough one. Depending on location this investment can either be hit or miss in the last 5 years. But it doesn’t follow the financial markets, and I don’t know anyone who has invested in land for a long time and have lost money consistently.

Getting into alternative investments isn’t difficult (^_^) If you own a REIT, either private or public, then you are already investing in this space. Buying a rental property also makes you an alternative investor. Please keep in mind that alternative investments are usually less liquid than traditional assets so if you are thinking about doing anything in this space I suggest you take a long term approach.

Random Useless Facts:  The first European stock exchange was established in Antwerp, Belgium, in 1531.

Aug 252012

Big win for Apple yesterday as a jury group ruled that Samsung has infringed on Apple’s patents and should pay Apple over a billion dollars for copying the technologies in iPads and iPhones. For consumers this probably doesn’t change anything in the immediate future. Samsung said they will try to appeal, so this case is just beginning and can last for years before we see a final outcome. Lawyers from both sides will have their works cut out for them.

Apple and Samsung have been fighting legal battles not just in the US, but all over the world where smart phones and tablets are sold. It raises an interesting question about how far you can patent something. For example Apple has a utility patent ‘163 which lets users zooms in on an item of interest by tapping on the screen. At what point should a function be standardized? I’ve heard that in the past Apple has been sued for violating a double click patent.  Maybe some things are better left open source, so others can improve upon it to foster innovation. But on the other hand, if you have a great idea and get it to market, shouldn’t you be entitled to a period of time to profit from it before everyone else can use it? What’s the point of spending time and money on research and development if you can’t protect it?

Aug 212012

There doesn’t seem to be anything stopping the giant Apple Inc from its ever expanding size. Each Apple share now is worth more than $650. Investors believe that Apple, as a corporation, is worth altogether over $615,000,000,000. That’s quite a lot of moola. In fact Apple recently broke the historical world record for the largest market capitalization ever, meaning the largest company in the world. Its ridiculous size is roughly equivalent to the combined market caps of technology giants IBM, Google, Intel, and HP, all combined!

To explain what market cap is, let’s imagine a blogger who wants to sell his site for $1,000. But a buyer thinks the blog is only worth $200. The seller wants to value his blog at the highest price possible, but the buyer wants it at the lowest price possible. The price point in the middle which both parties can agree on is the market capitalization of the blog. In Apple’s case, buyers and sellers of Apple shares agree that the company is worth $615 Billion today… If tomorrow investors believe Apple is worth more then each share will be more expensive signalling people are willing to buy/sell the company at a higher price point. (Share price) x (Number of existing shares) = (Market Cap)

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Key Apple Market Cap Milestones

  • May 30, 2007 – Apple tops $100 billion
  • March 9, 2010 – Apple passes $200 billion
  • May 26, 2010 – Apple becomes 2nd largest stock, surpassing Microsoft’s market cap of $219 billion
  • Jan. 3, 2011 – Apple crosses $300 billion milestone
  • Aug. 10, 2011 – Apple becomes world’s largest stock, topping Exxon Mobil’s $331 billion market cap
  • Jan. 25, 2012 – Apple rises to $400 billion
  • Feb. 29, 2012 – Apple becomes 5th stock ever to cross $500 billion
  • Aug. 17, 2012 – Apple closes with a $600 billion market cap for the first time

Source: CNBC Analytics and S&P Capital IQ


I have also updated my Hedge Fund...

More than 5 stocks DRIPed. A couple raised their dividends. And some new additions to the party include, Bombardier (they manufacture the skytrains I ride in Vancouver)  Vodaphone, Pengrowth Energy, and Keyera.

Aug 172012

Read an article in the Globe that paints a pretty clear picture of who the richest 1% are. In order to join this elite club an individual has to make more than $230,000 a year. Sounds like a lot, but it’s still lower than what’s needed in the United States which is $380,000. Before we criticize these greedy pigs let’s take a look at some key points from the study.

  • Over half of them work more than 50 hours a week (o.O)
  • 58% of them have at least a bachelor’s degree. But only 19% of the entire adult population are university graduates.
  • Only 10% of these top earners work in the financial/insurance industry, despite getting the most heat from the public.
  • Only 17% of them are women
Most of us in the general population work around 35 to 45 hours a week. If you work more than 50 hours, you are in the top 20% of the hardest working folks in Canada.  A $230,000 salary translates into less than $150,000 of take-home pay here in BC. Sure that’s still a lot, but if I lived in a dual income household where my partner made as much as I do right now, then our combined after tax income would equal more than half of $150,000. So if a top 1% earner spends $100 on dinner, then we would spend maybe $50 or $60. Instead of buying a million dollar house we can only afford a $500,000 house. The quality of life for a top 1% earner and that of the average family’s isn’t that huge of a difference. Not even the 1% can have it all lol. I’m sure some of them lied, cheated, or didn’t work their way legitimately to the top.  But I believe many are diligent, hard working people and deserve what they get paid.

Random Useless Facts: Ok, not so useless today. Here are some innovative ideas to try out if you spend a lot of time cooking or being around food. Found this on awhile ago.

Aug 132012

A new study by experts reveals that only 1/3rd of Canadians will admit to being overweight, despite national statistics suggesting the real proportion of people overweight is approaching 2/3rds.  Speaking in general terms, maybe we’re just too afraid or embarrassed to admit how we really feel about ourselves. A professor at the University of Calgary said that “we collectively as a nation don’t tell the truth on our driver’s license. We’re two inches taller and five pounds lighter.

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But denial isn’t just a river in Africa. It’s time we faced reality. This will become a big social and economic problem down the road if we don’t do something about it now. I strongly believe that self motivation is more effective than any government program. So instead of lobbying for more public awareness, education, or medical funding, I say we take this matter into our own hands.

Here is one way you or your friends can live a healthier lifestyle. A CMA study suggests that for households making less than $30,000 a year, only 39% reported to have very good or excellent health. But for those making more than $60,000 a year, the reported number is 68%!  The lesson here is obvious. Wealthy is healthy. You can increase the quality of your health just by making more money. Canadian doctors agree. And best of all, it’s free \(^_^)/

There you have it! One more reason to become financially stable. You can potentially live longer and decrease your chances of diabetes and other illnesses just by making more than $60,000 a year. There are many ways to do that. Here’s one example from personal experience. Work diligently and live modestly, and put any savings towards dividend growth stocks. Over time as your wages and dividends grow, you should eventually reach a combined income of $60,000. You may take on a second job to speed up the process . It may take 5 or 10 years, but it’s not impossible. Think about all the good it will do for your health, according to medical experts anyway ( ̄ー ̄)

Of course nothing beats the old fashioned way to a healthier lifestyle. From now on I’ll try to eat more whole foods, and less junk/fast foods. Watch my meal portions. Drink lots of water. Watch my caloric intake and go get me some exercise (^◇^)Feel free to join me!

Random Useless Fact: The word count for this post, without the title, is exactly “404”