May 082017

How to Invest in U.S. Infrastructure 

Donald Trump’s policies focus on building infrastructure and prioritizing America first. With the U.S. economy growing stronger than Canada’s, I believe this is a good time to look south of the border for opportunities. Thanks to the Trump rally, the S&P 500 market index in the U.S. is up about 7% year to date. It appears the market could reach even higher by the end of the year. 🙂

One way to invest in a country’s growing infrastructure is to buy ownership in stable, and profitable cement and construction companies! But the concrete business isn’t always what it’s cracked up to be. 😄 There is a lot of competition in this space so it’s important to invest smartly. I have done research into several companies such as Martin Marietta Materials (MLM), Vulcan Materials (VMC), and others. But the company I liked most was Summit Materials Inc (NYSE:SUM)

Summit Materials is in the business of cement and small rocks called aggregates used to make roads and buildings. In addition to supplying aggregates to its customers, the company also uses its materials internally to produce ready-mix concrete and asphalt paving mix production. I like the widespread geography that Summit is operating in. It conducts business in over 20 states, including Texas, which borders Mexico. I’m looking forward to that wall being built. 🙂

I guess you can say this company rocks. 😄 Valuation wise SUM is slightly expensive, but is actually fairly valued when compared to its competitors in the market. Over the last year the company earned $0.88 per share. According to analysts, the company is expected to grow its earnings at 10.5% a year over the long run. We can use the Graham Formula which I’ve explained here, to determine the fair market value of this stock.

Doing so will give us a Graham value of $25.96 per share. (V = 0.88 x (8.5 + 2 * 10.5)

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Sep 222016

Lower Cost with Interactive Brokers

Everyone likes a discount, especially personal finance enthusiasts. We tend to get hyped over even marginal deals. 😀


Speaking of margin-al discounts. I recently lowered my stock margin rate from 4.45% to just 1.95%. Hot damn! It’s even lower than my mortgage now, haha. 😁

One of the best things investors can do to increase our net returns is to reduce the cost of investing. When it comes to leverage, or borrowing money to invest, the best way to reduce our cost is to find a broker which charges the lowest interest rates. 🙂

In the past I have held my margin account with TD Direct Investing. The current interest rate they offer is 4.25% or 4.75% per year, depending on which currency investors borrow in.


Although TD’s rates are already competitive relative to the other large banks in Canada, it is not the lowest. After doing some research online I’ve discovered that a U.S. based brokerage firm called Interactive Brokers offers the lowest margin rates, and has cheap trading commissions. So I recently transferred my entire margin portfolio from TD to IB to reap the benefits of lower cost borrowing. 🙂

Interactive Brokers Advantages

Here are 4 reasons why I switched to IB.

  1. Reduced margin rates for more cost-effective leverage. I currently have about $54,000 of margin debt. I was paying on average 4.45% a year for this massive loan with TD. But with Interactive Brokers I’m now paying only 1.95% on average because I have both US and Canadian dollars. This represents a difference of 2.50% between the two brokers, which translates into $1,350 of interest rate savings every year! 😀 “BM” in the table below refers to the benchmark rate set by Central Banks.16-09-interactive-brokers-margin-rates
  2. Cheaper trading commissions. TD and many other brokers charge a flat fee of $9.99 per trade when buying stocks. But IB charges 0.5 cent per share for U.S. accounts, and 1 cent per share for Canadian stocks. The minimum cost per transaction is $1. For example if I buy 200 Shares of BMO (Bank of Montreal) shares, then my total commission would be $2.00 CDN. My trades are typically worth between $1,000 to $3,000. This means I rarely buy more than a few hundred shares of anything because most companies I prefer to own are dividend growth stocks, which tends to be priced at $20 per share or higher.
  3. Access to global markets. This isn’t a big deal for most people, but for more advanced investors Interactive Brokers allows trading in foreign currencies outside of North America. This means we can buy European stocks in Euros, or Australian stocks directly from the ASX using Aussie money. 🙂 TD used to have a platform that lets Canadians like myself trade internationally, but they cancelled that service last year. 🙁 I’ve mentioned in a previous post, that I want to diversify into other countries and there could be some good opportunities in the U.K. after the Brexit event earlier this year. So having access to a global trading platform is important for my financial goals. 😉
  4. Great for options trading. $0.70 per contract; $1 minimum order; volume discount available. And in the unlikely chance that our open options are exercised or assigned, there is $0 assignment fee, unlike $43 for TD or BMO.

Disadvantages of IB

Here are a couple drawbacks with IB.

  1. Penalty for not being an active trader. If investors do not spend at least $10 in commissions per month, we will be charged the difference. Furthermore, there’s a $10 fee for real-time quotes each month which is waived if at least $30 in commissions is spent. I typically trade once or twice a month so I will be paying these fees.
  2. $10,000 USD minimum balance to open up an account. This isn’t an issue for me, but some investors might have trouble coming up with $10K.

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Apr 112016

The New York stock exchange regularly releases information about how much margin (or debt) investors are using to invest. Based on the latest reports from the NYSE market data, Doug Short who writes for advisorperspectives put together the following graph which conveniently compares the credit balance of investor’s accounts to the S&P 500 over the past two decades. We can clearly see some correlation between the two sets of data.


The blue dotted line represents the nominal performance of the stock market index since 1995. The set of red and green bars represents the net credit balance inside investors’ accounts. This credit balance is basically the sum of free credit in cash and margin accounts, minus margin debt. Red bars show that investors have negative credit balances (borrowing money to invest,) and green bars mean they have excess cash or credit.

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Dec 032015

Sick Days

A recent Financial Post article suggests that the most important determinant of your sick leave use is whether or not you work for the government. On average, public sector employees take about 10.6 sick days annually, which is a 47% increase from 7.2 sick days back in 1987. Meanwhile, sick leave use in the private sector is only up 5% from 6.1 days to 6.4 days over the same time period.


Of course the mainstream media does not get into the underlying cause of this dramatic gap between public servants and private sector workers. But I think we all know what’s going on here. 😉

Obviously government jobs are so demanding and stressful that they cause public sector employees to become sick more frequently than their private sector counterparts. It’s either that, or people are taking advantage of privileged opportunities. But your guess is as good as mine. ?

Market News

Speaking of uncertainty, we have received some unprecedented market signals lately. Oil closed lower than $40/barrel. Yet the banking sector announced record profits again. The financial markets have been overwhelmingly bullish over the past 5 years even though the underlying economy has been worryingly weak. That’s why it pays to be financially prepared. Anything can happen. So always maintain a diversified portfolio of fixed income and equities. Stay away from high-fee, actively managed mutual funds. Stick to dividend stocks or index ETFs. 🙂

My Personal Finance Update

I’d like to give a big shout out to the Smart REIT units I purchased a few months ago. This investment is already up 10%. 😀 Yay! Real estate is a major part of the Canadian economy so it makes sense to have at least some exposure to it. Railways also keep the economy chugging along. 🙂 I’m really grateful for our railroads, for keeping us on the right track. ?

November was a great month for my finances. Luckily I live in Vancouver, B.C., where the cost of living is quite low, so I managed to save about $1,200 from my full time job. The rest of my net worth increase this month came from a combination of currency fluctuation, part-time job, passive income (dividends and interest), and appreciating share value. Details below.

*Side Incomes:

  • Part-Time Work = $500
  • Dividends = $500
  • Interest = $200 [bond interest]
*Discretionary Spending:
  • Fun = $200
  • Debt Interest = $1400

*Net Worth: (MoM)15-11-networthiq_chart

  • Assets: = $923,400 total (+9,500)
  • Cash = $2,500 (+300)
  • Stocks CDN =$101,800 (+5900)
  • Stocks US = $71,900 (+3000)
  • RRSP = $61,400 (+300)
  • MICs = $15,800
  • Home = $259,000
  • Farms = $411,000
  • Debts: = $502,000 total (+2,700)
  • Mortgage = $191,300 (-500)
  • Farm Loans = $198,300 (-500)
  • Margin Loan CDN = $30,500 (+2800)
  • Margin Loan US = $29,000 (+2000)
  • TD Line of Credit = $23,500  (-500)
  • CIBC Line of Credit = $10,000
  • HELOC = $18,200
  • RRSP Loans = $1,200 (-600)

*Total Net Worth = $421,400 (+$6,800 / +1.6%)
All numbers above are in $CDN. Conversion rate used: 1.00 CAD = 0.75 USD

I picked up two new positions in November: 100 shares of TransCanada in my Canadian margin account, and 100 shares of Match Group in my U.S. margin account. The stock market was pretty flat overall. I did receive $200 of interest from my Sherritt bonds which was nice. The growing strength of the U.S. dollar was helpful as well since I hold many U.S. equities.

Speaking of stocks, here’s a look at my TFSA portfolio at one of my brokers, TD. I like how its online software can track the performance of my account over time. Due to the purchase of more defensive stocks since 2014, my TFSA has experienced positive returns while the S&P/TSX Composite index has fallen.


I try to be mindful about what I put in my TFSA so it complies with my tax efficiency plan. I don’t have any secrets to picking winners or beating the market. But if anyone is curious to know, here are all my holdings in this TFSA.

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Oct 192015

The Match Company Gets Ready To Go Public!

Do you know what popular dating sites, OkCupid, Tinder, and Plenty of Fish have in common? Well, they are all part of the Match Group of internet dating services which is owned by a single parent company, IAC/InterActiveCorp. This American media and internet business has over 150 brands across 100 countries. 🙂 Recently The Match Group has found some deep-pocketed suitors on Wall St., such as JPMorgan, and Bank of America Merrill Lynch to help it go public.


Once the IPO goes through, Match will be listed on the NASDAQ exchange under the $MTCH stock symbol. It hopes to raise at least $100 million with its initial public offering. Aside from the 4 dating services already mentioned, it also owns about 40 other brands in the online dating space. 🙂 The Match Group products are particularly popular in North American and European markets, and reach more than 190 countries world wide.

Should You Invest in Online Dating?

I’m not usually one to be interested in IPOs. But this one caught my attention because of how fast the online dating space has grown over time. The National Academy of Sciences researched thousands of people who got married between 2005 and 2012 and discovered that more than 33% of those marriages began with online dating. And those people may be slightly happier than couples who meet through other means. Match services have been quite popular with millennials. I’ve used a couple of these sites myself in the past. I talked to this one girl online, but we just didn’t click.

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