Nov 022015
 

Big Turnaround

It was a huge win for the markets in October. 🙂 Most stocks performed very well. The technology sector in particular experienced the most appreciation. Intel shares increased 12% over the past month. Alphabet (Google) shares jumped 15%. And Amazon shares soared 22%. Both GOOG and AMZN prices are now at new highs. As a shareholder of many technology companies, including the names just mentioned, my portfolio saw some awesome gains in October. 😀 I also received a rental paycheque of $4,600. So that was a nice bonus on top of the stock market rally.

*Side Income:

  • Part-Time Work = $500
  • Dividends = $600
  • Interest = $200
  • Rent = $4,600
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1400

*Net Worth: (MoM)15-10-networthiq_chart

  • Assets: = $913,900 total (+20,600)
  • Cash = $2,200 (+200)
  • Stocks CDN =$95,900 (+10100)
  • Stocks US = $68,900 (+5500)
  • RRSP = $61,100 (+4600)
  • MICs = $15,800 (+200)
  • Home = $259,000
  • Farms = $411,000
  • Debts: = $499,300 total (-2800)
  • Mortgage = $191,800 (-400)
  • Farm Loans = $198,800 (-500)
  • Margin Loan CDN = $27,700 (-200)
  • Margin Loan US = $27,000 (-600)
  • TD Line of Credit = $24,000  (-500)
  • CIBC Line of Credit = $10,000
  • HELOC = $18,200
  • RRSP Loans = $1,800 (-600)

*Total Net Worth = $414,600 (+$23,400 / +6.0%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.76 USD

This was one of the best months of the year. 🙂 It was mainly thanks to the positive stock market performance, especially the high single-digit gains on the U.S. stock exchanges. The farm rent helped a lot as well. I used it to pay back the $4K I borrowed to buy some new Royal Bank shares. I took on debt hoping my investment would pay off. So far RY shares are up 5% since I bought them, and I’ve paid 0.35% interest on the loan. So my plan to make money using other people’s money is working.  I hope things continue to go smoothly for everyone’s investments for November as well. 😀

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Random Useless Fact:
China is ending its one child policy.

china ending one child policy. they'll need more space.

Jul 102015
 

You’ve probably heard on the news about the stock market correction in China. Last year, Chinese stocks experienced huge gains and surged more than 140%. Oh my Buddha, that’s insane! 😯 But since June 2015, the market has dropped by almost a third in value. Some people in the media claim this is some sort of catastrophic event comparing it to the Great Depression.

But we know better. 😉 First of all, a 33% drop, after a 140% gain is not such a bad thing. In fact that’s a net positive return of 60% in about 18 months, so who’s complaining? 🙂 Secondly, due to strict foreign investment regulations only 1.5% of all the stock market shares in China are owned by foreign investors like Canadians and Americans. So this recent market decline has very little direct impact on investors outside of China. And lastly corrections inevitably happen after a parabolic upward trend, so this shouldn’t be a surprise to any informed investor. “Those who cannot remember the past are condemned to repeat it.” ~George Santayana

The Boom and Bust of China’s Stock Market

It all started a couple years ago when the Chinese government wanted to boost the country’s economy. It implemented policies making it easier for retail investors (average folks) to invest in the stock market. Things worked out even better than expected and the market quickly became detached from the fundamentals of the underlying economy. Last month the Shanghai Composite Index (SSE) started to fall. To make things worse many investors were investing on margin and had been forced to sell their stocks as their shares lost value which only perpetuated the downward momentum. 😕 Within a few weeks the SSE had dropped almost 33%. Here’s a comparison of stock markets over the last 12 months. (blue line = China, red line = Canada, yellow line = U.S.)

15-07-china-stock-market-shanghai-sse

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Apr 042015
 

The overall stock market in March dropped a little bit. It appears growth has stalled in Canada due to continuing low oil prices. But thanks to my side incomes I ended the month with a slightly more positive net worth. 🙂 Side hustles are important during tough economic times because if I lose my full time job at least I’ll have a financial cushion to fall back on. One of the more popular forms of making extra income is through online surveys. They don’t take too much time and you even get free products to review sometimes.

Emerging countries have been growing their economies faster than Canada or the U.S. in recent times. One way to profit from this trend is to invest directly in the currencies of those countries. The value of the Chinese currency, for example, should make people in North America pay attention. But instead, too many of us just yuan. 😀

Back in late 2013 I wrote an article about how I had invested in China’s currency, the RMB. I mentioned I would keep everyone posted. So today I’ll give you guys an update. 🙂 Back then I purchased ¥5,000 for $900 CAD. Today, my ¥5,000 is worth $1015 CAD if I convert it back into Canadian currency. It appears my instincts were correct. Wahoo! 😀 I made 12.7% return in 15 months. It’s not a lot of money. But every little bit helps to reach early retirement.

*March Side Income:

  • Part-Time Work = $600
  • Dividends = $500
  • Selling Options = $200
*Discretionary Spending:
  • Fun = $300
  • Debt Interest = $1500

*Net Worth: (MoM)15-04-networth-update-beyond-borders

  • Assets: = $855,400 total (+800)
  • Cash = $3,500 (-500)
  • Stocks CDN =$93,500 (+2600)
  • Stocks US = $58,700 (-400)
  • RRSP = $52,700 (-900)
  • MICs = $15,000
  • Home = $259,000
  • Farms = $373,000
  • Debts: = $515,100 total (+500)
  • Mortgage = $194,600 (-400)
  • Farm Loans = $202,100 (-500)
  • Margin Loan CDN = $29,200 (+2400)
  • Margin Loan US = $25,900 (+100)
  • TD Line of Credit = $29,000  (-500)
  • CIBC Line of Credit = $10,000
  • HELOC = $18,200
  • RRSP Loans = $6,100 (-600)

*Total Net Worth = $340,300 (+$300 / +0.1%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.79 USD

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Jun 052014
 

Want to invest in China? The Shanghai stock market index (SSE) has returned an embarrassing -22% in the last 5 years. A buy and hold strategy would have lost money. Doh! The Chinese stock market is too mainstream anyway. So I’ve developed a better strategy to invest in the world’s second largest economy. My plan is a bit risky, and you’ve probably never heard of it before, but so far it’s proving to be very effective. If anyone else had held the same investments as me, their net worth would have also increased by more than $100,000 over the last 12 months 😀 See my fiscal updates category for details.

To successfully invest in China we have to think like hipsters, and buy stuff before it becomes cool 😉 So here is my strategy. Invest directly in China’s economy by purchasing financial assets OUTSIDE of China that the wealthy Chinese are also buying. Let’s study what the rich in China are investing in so we can predict with relative certainty how the next cohort of new Chinese millionaires will use their money as well. Then we just need to invest before they do.

So what are Chinese millionaires buying?

Generally speaking Chinese investors love real estate. An investment bank recently reported that the richest 1% in China owns about one third of all residential properties in the country. Holy hamburgers! Such property hogs 😯 They are so enamored with housing that it’s no surprise Chinese investors are looking elsewhere in the world to satisfy their real estate addiction 😕 The top three countries that are attracting Chinese investors are the U.S., Australia, and Canada.

14-06-chinese-realestate-foreign-countries Chinese foreign investors invest in china

Real estate agents do not have to disclose their client’s information to any global anti-money laundering organization. So foreign Chinese buyers can land with suitcases full of cash and get real estate deals done clean and fast.

China’s outbound real estate investment jumped by 25% in the first quarter of this year. Great Scott! The top cities to attract Chinese money so far in 2014 have been Chicago ($464 million), London ($348 million), Sydney ($243 million), Melbourne ($150 million), Los Angeles ($144 million) and San Francisco ($72 million), according to real estate firm Jones Lang LaSalle. Chinese buyers spent $30 Billion on overseas real estate in 2012. About $9 Billion of that went to the U.S. and a lot of that was in California.
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Dec 082013
 

StatsCan says 18.7% of Canada’s assets were controlled by foreign enterprises in 2011. Not surprisingly about half of these entities are based in the US 🙂 The UK and Dutch-controlled enterprises held the second and third highest spots respectively. No other country had more than 5% of foreign-controlled assets. The shares of foreign-controlled assets and revenues declined from 2010, while the share of profits under foreign control was up over the same period.

I’m glad that over 80% of our country’s assets still belong to Canadians 😀 Despite what we hear in the news, it doesn’t appear that we’re completely selling everything we have haha. But this study is a couple years old and doesn’t account for more recent takeovers like the record breaking $15 billion CNOOC/Nexen deal last year. There is obviously not enough data here to extrapolate a trend, but it would be interesting to see the updated 2013 numbers, which probably won’t be released until 2015 😆

The U.S., Spain, and many other countries around the world experienced a housing market crash in the last recession. Japan, the 3rd largest economy in the world is undergoing a frustratingly stubborn secular bear market in its equities for over 2 decades now. In other words people who have used the popular buy-and-hold strategy to invest in the Japanese stock market index would have lost a lot of money, even with dollar cost averaging 🙁 China, the 2nd largest economy, is laden with highly volatile asset prices and opaque regulations. Many people in Hong Kong literally went from millionaires to filing for bankruptcy when the local real estate bubble popped in 1997/1998, and home prices fell by over 50% on average 😕

For better or for worse, I expect foreign interests to grow in Canada as entrepreneurs, sovereign wealth fund managers, and investors from abroad look for a relatively safe and financially stable place to find prosperous opportunities 🙂

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Random Useless Fact: honesty-buffett-quote