Sep 192014
 
E-Commerce  Giant

Don’t feel bad if you don’t know what Alibaba Group Holding Ltd does. An Ipsos poll conducted for Thomson Reuters found that 88% of Americans had never heard of the e-commerce company. Based out of China, Alibaba is like a combination of Ebay + Amazon, and is responsible for 80% of all online sales in the world’s second largest economy. Starting today Alibaba’s shares can be purchased on the New York Stock Exchange. This is the largest initial public offering in U.S. history, estimated to raise close to $22 billion for the company. There is a lot of interest in this IPO. Between 35 and 40 financial institutions placed orders for $1 billion or more shares each. Alibaba and its subsidiaries have huge brand recognition in Asia.

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With a starting price of $68 per share, the company’s market cap starts at $167.6 billion, making it more valuable than iconic American brands like Walt Disney, Boeing, Amazon, and Ebay. For working or retired Canadians this is great news because the Canadian Pension Plan (CPP) invested $160 million when Alibaba was still private back in 2011 and 2012. Analysts predict that investment has at least tripled in return. Whether the CPPIB will hold the stock after IPO is another question but we shall see. The stock symbol is BABA if anyone is interested :) Expect the trading volume to be huge today.

No to Independence

Yesterday Scotland voted on a referendum whether or not they want to separate from the U.K. 45% said yes, but the majority, 55%, voted for no. I guess Mel Gibson died for nothing. Jokes and politics aside I’ll explain the economic significance of this event. The central government in the U.K. currently gives equalization payments to Scotland which works out to be $2200 per individual. If Scotland had broken off from the U.K. they would lose this income along with other benefits such as financial insurance and economic stability. Banks in Scotland currently hold 12 times the country’s own GDP. If their banking system were to ever fail, Scotland alone would not be able to withstand such financial turmoil. The argument for separation is that Scotland would no longer have to give part of their oil revenue back to the central government in England. The North Sea oil off the coast of Scotland is like the oil sands in Canada. It generates a lot of money, and can easily replace the $2200 given to each person and maybe even more. But the question is what would Scotland do once that oil reserve runs out, which is only a matter of time? The uncertainty of future consequences outweighs the immediate thrill of economic freedom. Similar to Quebec’s referendum in the 1990s, it’s exciting to talk about the idea of independence but at the end of the day cooler heads prevail.

Tuition Inflation

Experts say that if current trends continue, the outlook is gloomy for would-be students in the U.S. as it will be much more expensive to attend college, and more of those that do attend face substantial student loan debts. The current average cost of tuition, room and board at a private non-profit college is $40,917, which is 1.7% higher from the previous year, according to The College Board. If the cost increases at 2% per year, then in 25 years from now incoming college freshmen might expect to spend as much as $68K in today’s dollars for their first year, and about $300K on an entire 4 year program. So heads up to would be parents. Be prepared. Start saving today :)

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May 302014
 
Apple and Beats

The world’s largest company, Apple Inc, has purchased Beats Electronics for $3 billion. Beats by Dre is a popular brand of headphones that sells for $300 a pair. #veryprofitable. As an Apple shareholder I approve of this deal and hope to make lots of money from this strategic move :) I hope consumers are ready to buy the most overpriced piece of commodity gadget made in China ever!

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April Inflation

The cost of living increased 2%, which is the highest it’s been in recent history. Gasoline, natural gas, shelter, and food have all become more expensive. This is great news for investors! I own many shares of Suncor and Encana, which are oil and gas companies. They are both listed in my Hedge Fund page for disclosure. The price of gasoline at the pumps is up 6.6% since April of last year, but my Suncor stock is up 30%! Encana’s share price is up 25%! Real estate prices are also up.

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Inflation is good for those who own the right assets. So we have to invest in order to profit from this trend. Don’t wait for a good time to buy investments. Just buy them first, then wait for your investments to go up ;)

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Jan 102014
 
Retiree Wins Lottery – Then Gives it all Away

What would you do if you won the lottery? Tom Crist, retired CEO of an electrical wholesale company who lives in Calgary, said he’s giving away his entire $40 million Lotto Max prize. He lost his wife to cancer 2 years ago. He now plans to put the lottery winnings into a trust fund to be given out over the years to charities such as the Canadian Cancer Society. “I don’t really need that money.” He said. Faith in humanity restored :D

 

Weak Loonie

The Canadian dollar fell to just 92 cents USD lately. This is the lowest our currency has been since 2009. Fantastic news for manufacturers and exporters :) If you are American this is great news for you too because Canadian goods are now more affordable for you. Last year when we were at parity I suggested Canadians should buy U.S. assets like stocks or currency. I wrote about buying Google, Qualcomm, Starbucks, and Disney when the $CAD was still high.  Now the tides have turned, our Loonie’s value has dropped, and I’m reaping the rewards :D

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2014 Movie Releases

Speaking of Disney (DIS), they have several Marvel blockbuster movies coming out this year. Each one is expected to make huge profits. Disney shares are up 43% year over year! How can anyone possibly resist investing in this globally diversified, money printing company? :D Anyway, here are a list of popular movies that are coming out this year :)

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TFSA Participation Fail

A recent ING DIRECT survey revealed that 53% of Canadians still don’t have a TFSA.

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Not having the money to contribute is the main reason they haven’t opened a tax free savings account yet. If you are currently in school and have $50,000 of student loan debt and no income yet, then it’s understandable that you have no savings. But for most people who can put some money away the TFSA is one of the best tax saving vehicles there is. We have a perfectly legal way to not pay any taxes on our investment gains, yet less than half of us are actually using it? ( ಠ_ಠ)

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Video of the Week

Caterpillars in Hawaii have developed hunting skills

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Blog roundup – Below are some finance and other articles from around the web this week.

Dec 202013
 

Fed Taper

The Federal Reserve announced earlier this week that they will begin to taper their bond/mortgage program from $85 billion a month to just $75 billion starting from January next year. I was a little surprised when the stock markets jumped on this news. I suppose investors believe the economy is doing better. What does this mean for regular folks? Not much. It’s a pretty small taper relatively speaking so I expect stocks to continue going up in early 2014 :) I’m planning to do some more investing next week.

CPP Reform Talks

Also this week, the Canadian finance ministers gathered to discuss policies. One hot topic talked about was enhancing the Canada Pension Plan (U.S. Social Security equivalent.) The concern is that some Canadians aren’t saving enough for retirement on their own. So one proposal is to increase the contribution rate, effectively forcing people to save more, which will allow for higher pension benefits at retirement age :) I wouldn’t mind paying more into this public pension fund if it means I can get more out of it when I retire. But what really grinds my gears is that the earliest you can start receiving benefits is at age 60, which makes it difficult for people who want to retire earlier like myself :? I currently pay about 5% of my income into the CPP program every year, but if I wanted to retire at 45 I would have to delay the fruits of my contributions by 15 years. There’s no choice to retire early and receive a reduced pension like you can in the private sector (>_<)

Positive News For Consumers

Credit monitoring company TransUnion recently said it expects loan delinquency rates to decline next year, “falling to 1.66% at the end of 2014 compared with 1.76% forecast for the fourth quarter of this year.” Less people defaulting on their loans must mean it is becoming easier for Canadians to handle our consumer debts. Yay! I guess there’s no rush to pay back my $69K of consumer debt between my various lines of credits :D

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I just saw a cool camera pen in London Drug’s flyer. I don’t have a lot of money in my bank account right now. I guess I’ll have to dig deeper into my LOC again lol. I should also probably get a new fridge this holiday. The one I currently have is over 20 years old :) #AddictedToCheapCredit

Video of the Week

This is why we haven’t sent any people to the moon in decades…

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Blog roundup – Below are personal finance and other articles from around the web this week.

Oct 252013
 

Thanks a Latte

For all of next week there will be free coffee being served at participating McDonald’s restaurants in Canada. You can see their Facebook page for more detail :) If you want to exploit other people’s caffeine addictions like I have, then consider investing in profitable coffee companies :)

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I bought shares of Starbucks and Tim Hortons earlier this year. On average these 2 companies have so far produced over 30% return on investment since I blogged about buying them in January. I hope some of you guys were also able to take advantage of that opportunity. I predict their prices will rise even higher going into 2014!

Growth Downgraded 

A couple days ago the Bank of Canada pointed out that the country’s economy is growing slower than previously thought. It’s even considering to lower the interest rate. This changes everything for businesses. For the past couple of years, we’ve believed that rates could only go up. But now we realize that they could just as easily go down in the future. This is excellent news for investors like myself :)

How can we benefit from this news?

  • First. Realize that this means borrowing to invest is now less risky than before because we know with relative certainly the cost of short term lending won’t be going up any time soon (exception being in the fixed rate mortgage market.) So personally I’m going to use more of other people’s money to hopefully accelerate my own profits.
  • Second, buy US assets. After the Bank of Canada announced this news my net worth increased by $400 immediately :D Why? Because I have $40,000 USD in American stocks, and the news brought the Canadian Loonie down by a whole 1% compared to the U.S. dollar. I have a feeling the $CAD will fall even more over the next 12 to 18 months. Since I calculate my net worth in $CAD, for every 0.25% weaker our currency becomes I’ll get an extra $100 for free :D

The Panes of Building a Home

A young couple, both artists like myself in their 20s, had quit their jobs to build a home in the woods in West Virginia. They scavenged abandoned yard sites for building material and spent as little money as possible. Slowly but surely they built their dream home for only $500.13-10-glasshouse

They also claim their diet contains a lot of rice and beans, which is understandable since they purposefully quit working! But hey, good for them. I admire their creative passion and how they did something meaningful with their lives :) This is a great example of frugality taken to the extreme! But it’s not something I’d want to do myself.

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