Jul 232014
 

Last week I invested roughly $5K into two new companies: Timbercreek, and Atrium. Both are mortgage backed securities called MICs and trade publicly on the TSX.

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Timbercreek (TMC) is based out of Ontario, where it conducts most of it’s lending business. TMC recently lowered its interest payout to 7.8% a year, which is still pretty attractive :) Its CEO recently said “Given our primary objective is preserving capital, we believe it is prudent at this time to reduce our payout to maintain credit quality rather than increase risk in the portfolio.”

Atrium (AI) has most of its portfolio in first mortgages. Its average loan to value ratio is only 64% so a small correction in Canada’s real estate market should not affect the company’s principal investments. Atrium currently pays 7.3% a year.

My new investments are generating $364 every year :) That’s like $1 a day of passive income :) #Winning! Some readers might be thinking “Yeah, but you have money to invest, Liquid. What aboot the rest of us who don’t have $5,000 to buy these MICs?” Well hold on to your toques because I didn’t have any money to invest either. In my latest net worth update I revealed that I only had $800 in cash. So here’s my secret – I used a retirement plan loan to buy these new stocks :)

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May 242014
 

To become successful investors we have to think like marathon runners, because we have to stay committed to the long run :D  So when it comes to the stock market the short term fluctuations are not important. Our perception of risk and performance should be placed on looking further down the road.

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Below are two made up scenarios for the stock market. Let’s pretend they are index funds that track the overall market performance. Both indexes start at $100 per share and play out for five years. If we were to consistently invest $10,000 every year into one of these funds, which of the two scenarios would likely make us more money by the end? Take a guess :)

14-05-stockscenarios stock market perspective performance

If you picked the bottom red chart then congrats! Because you will probably learn something new today and become a smarter investor ;)

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Apr 072014
 

I’m pretty confident that there will always be a healthy number of frugal people in this world. So last Friday, as some of you may already know, I purchased 15 shares of Dollarama Inc (DOL). Each share was purchased at $87.61 for a total investment amount of $1,324.

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This is a dollar store chain with over 800 retail locations across Canada. The reason I decided to invest in this company is because I’m really impressed with how fast it’s expanding, and don’t want to miss out anymore on that growth. It’s also a recession proof company. There are frugal consumers when times are good, and there are even more of them when times are bad. So Dollarama has a very solid customer base that is not going anywhere. Here’s a look at how much profit Dollarama made in the last several years.

2010 – $73 million
2011 – $117 million
2012 – $173 million
2013 – $217 million
2014 – ??? (not released yet)

That looks like a pretty good track record of growing profitability to me ;)

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Mar 062014
 

According to brand consulting company Interbrand, Apple has overtaken Coke as the world’s number 1 brand last year :D Second place goes to Google! For more than a decade Coke has always been on top. No matter where you go in the world people will recognize the smooth taste of Coca Cola, but this time it has fallen to 3rd place.

The research estimates the value of Apple’s brand to be about $100 billion, which is a 28% increase from the previous year. That means the brand itself is worth roughly $110 per share. I invested in Apple stocks not long ago because I believe in the brand. Even though I don’t own any Apple products I trust their marketing and product line to deliver great returns to shareholders :)

Few brands have enabled so many people to do so much so easily, which is why Apple has legions of adoring fans,
~Interbrand

apple-logo-red best brands

Below is a look at the top 10 brands in the report.

Top 10 global brands

Apple*
Google*
Coca-Cola
IBM
Microsoft
GE
McDonald’s*
Samsung
Intel*
Toyota

* = Companies I currently own

I think a smart way to invest is to put your money in companies that have strong brands. In fact, branding is one of the economic moats that will often keep a company profitable during recessions because people would want to buy goods and services from names they trust :D

Looks like I have 4 out of 10 on that list so far. I will add Coke and IBM to my list of stocks to buy and maybe one day collect all 10 of the best brands in the world :D

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Random Useless Fact: It’s an urban myth that gum takes 7 years to pass through the digestive system. It usually only takes one or two days.
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Feb 232014
 

It’s so easy to make money in the market these days :D If you bought the Dow Jones index 18 months ago, your investments would be up 30% today!

But the chart below may be a strong signal that these good times will likely be ending very soon! *gulp* 8-O The darker green line indicates the Dow stock market index today and its performance over the last 18 months. As you can see it’s mostly good news :D But the lighter cyan line above represents the same index, also over an 18 month period, but 85 years ago.

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As you can see the 2 lines are very similar so far ;)  There’s probably something fundamentally the same within the different periods of time that’s driving this synchronicity :? It was right around this time of year back in 1929 when the market had a major correction, and by summer of 1929 the Dow had lost 20% of it’s value from the peak in early January. Does this mean the Dow will do the same this year in 2014? A 20% correction is not that rare for the stock market, and if the Dow continues to follow the historical trend set 85 years ago then maybe it’s time to sell some positions and lock in the profits. I mean, look at how eerily similar the 2 charts are :|

If you believe we are in for a downturn then maybe add more bonds, like XBB, to your portfolio as a bit of protection. But if you think the charts lining up is purely coincidental then carry on with your stock investing. Personally I have no idea what to think about this data so I’m going to sit on the fence and hold all my long positions, and will not buy any new stocks until April.

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Random Useless Fact: Most foreign students only seem smart because all the dumb ones stay in their home countries. #NoOffence