Mar 162020
 

Opportunity for the well prepared

Well it’s finally happened. The record breaking 11 year long bull market has come to a screeching halt as stocks tumbled more than 30% in the fastest pace ever recorded. Last Thursday the TSX dropped 12% in a single day, the most in recorded history. But this should come as no surprise if you’re an avid reader of this blog. We saw this coming miles away. 😀

I began warning fellow investors two years ago explaining the early signs of an economic downturn. But since there were no red flags I didn’t expect an immediate market correction. Here’s an excerpt from that 2018 post.

Playing a strong defense game

So how did I prepare? Well last summer in 2019 I shared my thoughts on which asset classes would likely perform relatively well in a low interest rate environment. I wrote that adding defensive investments would make a lot of sense going into 2020.

So I had called out bonds, real estate, and precious metals as good assets to have, at least in the short to medium term. This is partly why I started to look for a rental apartment to purchase last fall.

Finally I warned readers several months ago of 10 signs that an economic downturn was just around the corner. My suggestion was not to sell everything and wait for the crash to happen, but instead to rebalance and reduce market risk. Here’s the final paragraph from that post.

planning ahead can protect the downside

Which brings us to the present. Both Canadian and U.S. stock markets are down about 20% year to date. Oof. 🙁

It’s a good thing we had time to prepare for this downturn since the signs were plenty and hard to miss.

So let’s see how my prediction and planning paid off so far. 🙂

  • As of writing this post gold is up 7.5% so far this year in $CAD.
  • Bonds have done well. The iShares Canadian Universe Bond ETF (XBB.TO) has returned +2% year to date.
  • Real estate is on the rise. We can use the Canadian Apartment Properties REIT (CAR.UN) as a proxy for residential real estate in Canada. This REIT has gone up 4% year to date. Personally, my new real estate purchase is earning me 6.25% a year in net rental income, after all expenses. Furthermore, the median rent price in the city of my new condo is up 15% this year. 🙂

As I said last year, governments will go deeper into debt, print more money, and all of this will benefit holders of bonds, precious metals, and real estate. Owning these types of assets – which I have about $500K in right now – will add stability to a portfolio during a major stock market correction. The key is to use economic data to align my investments in order to limit downside risks. 🙂

 

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Oct 142013
 

Some say Canadians are being charged too much for our cell phone plans 😯 I used to think the same 5 years ago, when Bell, Telus, and Rogers were the only options for most people. But not anymore 😉 Because today there are so many less expensive alternatives out there to choose from.

To compare, let’s look at what the “big 3″ are offering on their websites. (as of 10/14/13)

  • Bell offers $70/month for unlimited voice + 250MB data
  • Rogers has pretty much the same $70/month plan
  • Telus tries a different approach by breaking up their voice and data package, but with a $55 phone plan, and a 250MB data plan that costs $15, the total still comes to $70/month

Now let’s look at what some of the alternative wireless companies are offering. (as of 10/14/13)

  • Manitoba Telecom Services (MTS) offers a 1000 min voice + 1GB data plan for $55/month
  • The crown corporation SaskTel offers a comparable plan for $45/month
  • Public Mobile offers unlimited voice + data for $40/month
  • Wind Mobile also has unlimited voice + data for $40/month
  • Mobilicity has a similar package for $35/month or $55/month for upgrading to their 4G network

I’m sure there are other companies I’ve missed but in general it appears for a standard voice + data package, the smaller wireless players offer a 43% discount over the larger companies (~$40 vs ~$70.) 5 years ago when I got my first cell phone I paid $40/month, and that was talk only with limited minutes 😡 But today, I can get so much more for the same price! According to fellow PF blogger Stephen Weyman, even when it comes to add-on packages for traveling to the U.S., the smaller players offer better value. So I think prices have gone down, not up 😀 My current wireless package is only $20/month because I have no data plan, just unlimited talk + text.

So it’s a bit perplexing when I read reports like this one by J.D. Power and Associates that claim in 2013, 49% of Canadian wireless customers who have data packages pay on average $86/month, and the other 51% who do not have a data plan (oldschool people like me) pay $65/month. Good heavens! (;゚д゚) Who is still paying $65/month for just talk + text? No wonder people are so upset 🙁 But don’t get me wrong, I actually like it when consumers pay more 😉 Here’s a look at how our telecom sector’s average revenue per user compare with other countries.

13-10-2011arpu

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