Nov 242013
 

Hello friends in Regina! 😮 What a fantastic game over the weekend 🙂 Our household debt to personal disposable income in Canada is around 163% today. In the U.S. the ratio is only 140%. This ratio is greatly affected by the price of homes. The Canadian housing market has done well since the last recession, but home prices in the U.S. have fallen. So Canadian indebtedness has continued to grow while U.S. households have deleveraged which has lowered their debt to income ratio.

So why do home prices continue to climb up here? I believe there are many reasons but by far the main contributor is the monetary policy of keeping interest rates low for so long. Interest rates have been overall falling for the past 3 decades. When interest rates are lower borrowers can afford to borrow more, which they often do 🙂 And banks are willing to lend more because they only consider ratios, incomes, and whether or not the borrower can afford the minimum payments.

13-11-mortgagerategraph

So with such a high debt to income ratio (163%) are we in a lot of financial risk like the U.S. was back in 2007 when their ratio was also 163% at the time? I recently read a study by an economist on TD Bank’s website (It’s in PDF format) that looks at the differences between Canadian and U.S. debt-to-income ratios and explores why they should NOT be directly compared.

The study suggests the methodologies used to calculate the ratios are different in Canada and the U.S. For example we have different ways to fund health care and tax personal incomes that should be factored into the disposable income amount. But after adjusting for various methodological differences, the Canadian indebtedness ratio in 2013 is lowered to just 156%. And instead of 140%, the U.S. ratio increases to 152%. So we’re not all that different after all 🙂

Mortgage rates have not gone up in Canada for quite some time now. But Canadian wages HAVE been increasing every year since the recession. What happens when our incomes rise, but our mortgage payments stay the same? Yup, it becomes relatively easier to service that mortgage 🙂 The interest costs we pay to own a home relative to our incomes have never been more affordable in my life 😯 Continue reading »

Sep 122013
 

Apple recently revealed their new iPhone 5s and iPhone 5c. Some folks are saying the “s” stands for Same and the “c” stands for Cheap, 😆 But joking aside I think the mobile market will be one of the best places to make money in the future for those who invest today.

Step 1: Research

This is when you read media releases, statistics, analysis, and other information about mobile phones to gather facts and decide whether you want to invest in this space or not. Over 6.6 billion mobile phones will be in use by the end of 2017, according to CCS Insight. Most of them will likely be smartphones. Tablets are also expected to grow in sales over time. Mobile advertising will inevitably also benefit from this trend. The global ad market for mobile devices is estimated to be $11.4 billion this year, and is expected to be $24.6 billion in 2016, according to statista.com13-9-mobilegrowth

A common misconception is all the future mobile phone growth will come from emerging markets since developed countries have already reached market saturation. Fiddlesticks! A report by Google shows that only 56% of Canadians have a smart phone today, which is an amazing increase from 33% in 2012, but there is clearly more room for growth 🙂

Step 2: Take Action and Profit

Once you’ve decided to invest in the mobile market it’s time to pick a strategy. Personally I like the idea of holding three particular stocks: Apple, Google, and Qualcomm. And slowly increase my positions in them over time. Apple’s iPhones and iPads represent a large part of the market. Google is very deeply entrenched in this space as well. With the purchase of Motorola, and its close partnership with Samsung Google’s Android platform has become very popular, very quickly. Google will also benefit from the ad revenue growth. In 2011 iPhones were super popular and AAPL shareholders were very happy. This year however Android devices are the hip thing to buy so AAPL has gone down, and GOOG has outperformed brilliantly. Continue reading »