Monday, September 29, 2008

Still Sliding

Does this count as two market blips or just one with a breather in the middle? It looks like it'll be a while before I can really do a comparison of market drops for the year. There sure have been a lot of them.
It looks like pretty much everything is down across the board. Since I tossed together my own index and seeded it with values from sept 23, it's down 6.01%, the s&p tsx capped reit index is down 5.95%, so I'm not doing any better, though it's only been a few trading days, and both those are ignoring yield. Not that it really means anything right now other than I seem to be matching the day to day market fluctuations. No clue if I'll do better in the long run, though off hand, I have better yield by 0.9%. Though that doesn't matter either since I can easily be out grown 0.9%. It's tempting to update my spreadsheet and see if there's a better way I can allocate the cash I'm assuming I can save up by the end of next year. Who knows, maybe this will actually wind up being more than a recreational exercise.
Also reminds me that I haven't written down anything about how I decided on actual share amounts. Maybe I should decide on a methodology for how I'm going to use the data to actually go about investing. Though that'll have to wait for another night. Late and tired, and being depressed doesn't help either.

Sunday, September 28, 2008

March grinds to a halt

I think that's the end of my overtime. It's time to get ready for work again and I am completely drained. Definitely one of the hazards of working too much. I don't know if one week will be enough to get me back at it again, but there's also a holiday coming up this month and I have to file GST. I think that does it for my overtime this year.
So close to the end too, but I can't ignore my limitations.

Saturday, September 27, 2008

Reflections on MK1 REIT Index

I wonder what a table looks like if I just paste it in here?
Value Growth sum
name price current distribution current yield 2008 2007 2006 2005 average Quintiles
allied properties 19.1 1.32 6.91% 4.76% 2.94% 3.76% 3.47% 3.74% 10.65% 3
artis 14.28 1.08 7.56% 2.27% 0.00% 0.57% 0.57% 0.85% 8.42% 2
boardwalk 34.05 1.8 5.29% 12.53% 8.11% 17.43% 1.94% 10.00% 15.29% 5
canadian apartment properties 16.2 1.08 6.67% 0.00% 0.00% 0.00% 0.00% 0.00% 6.67% 1
crombie 10.65 0.8904 8.36% 4.51% 4.41% 1.49% 3.47% 11.83% 4
cominar 21.13 1.44 6.81% 6.19% 10.78% 2.00% 0.00% 4.74% 11.56% 4
calloway 19.15 1.548 8.08% 0.00% 3.20% 3.48% 15.05% 5.43% 13.51% 5
dundee 30.1 2.196 7.30% 0.00% 0.00% 0.00% 0.00% 0.00% 7.30% 2
huntingdon 1.27 0.2796 22.02% 0.00% 0.00% 0.00% 0.00% 0.00% 22.02% 5
H&R 14.87 1.44 9.68% 5.08% 2.70% 2.30% 4.82% 3.72% 13.41% 5
interrent 2.15 0.2604 12.11% -31.55% -31.55% -19.43% 1
lanesborough 5.2 0.564 10.85% 0.00% 0.00% 0.64% 0.00% 0.16% 11.01% 4
morguard 12.15 0.9 7.41% 0.00% 0.00% 0.00% 0.00% 0.00% 7.41% 2
norther properties 23 1.4796 6.43% 0.00% 7.22% 5.50% 4.61% 4.33% 10.77% 3
primaris 16.26 1.2192 7.50% 3.67% 3.16% 0.00% 5.56% 3.10% 10.59% 3
canadian realestate investment trust 28.15 1.3596 4.83% 2.26% 2.59% 1.22% 1.62% 1.92% 6.75% 1
riocan 20.16 1.35 6.70% 0.00% 2.27% 2.33% 2.38% 1.74% 8.44% 2
retrocom 3.5 0.45 12.86% -25.00% 0.00% -26.79% -20.02% -17.95% -5.10% 1
scotts 5.92 0.8496 14.35% 0.00% 0.00% 0.00% 0.00% 0.00% 14.35% 5
whiterock 9.51 1.122 11.80% -0.53% 0.00% 0.86% 0.00% 0.08% 11.88% 4

That's messy to the point of nonsensical. If you can somehow comprehend it, what's interesting about this? To start with my top picks on this method are Boardwalk, Calloway, Huntingdon, H&R, and Scott's. Three of those, I'm ok with. Boardwalk has show good growth and I know they're a big player where residential real estate is concerned. H&R is number two by market cap, so obviously a lot of other people feel that it's worth putting a lot of money into. Calloway as I recall is Walmart's largest landlord in Canada. Very solid anchor tenant. Huntingdon is one that I don't feel comfortable holding a major position in. It scores high on yield, but that's because investors are fleeing. That's something my methodology doesn't work well on, so some tweaking is to be required. I can manually ax it from the list, though that leaves me wondering what to do with H&R, which has taken a considerable slide lately ever since the collapse of Lehman Brothers.
The last name on there is one that I think I like. Scott's, while having a high yield, looks actually stable. It's down considerably from 12 months ago, but it spent the past 5 months hovering around $6. We're in the middle of a major dip in the markets and it is still around $6. There was also a big dip in July, it held steady at around $6. So unlike huntingdon, this doesn't appear to be the result of a distress sale. Latest headlines say that they're making acquisitions and their Q2 earnings report says revenue is up 23% and payout ratio is improving. This might actually be a good name to run with, as the methodology suggests. Granted, they have yet to increase distributions since starting.
In the next tier of stuff, there's Crombie, Cominar, Lanesborough and Whiterock. Four names I don't hear much about. Half of them have shown some growth, the other half hasn't. This raises the question of whether or not all of these are stable/growing. I'll just assume the growing ones are actually growing and cut down the amount of work I need to do. This of course brings to mind another question, if I need to look into almost every company in the list, why bother indexing? Isn't indexing supposed to make things easier? Well, I need to know that my methodology works.
When I look into lanesborough, the first headline on their website is that they're back in the black, which is a cause for concern for me. I like to know why they were loosing money. I also know nothing about what they do, but why they're loosing money has yanked my attention first. The news release claims that a large percentage of their properties are under construction or under lease. A closer look reveals that yes, there are properties that are under construction and some with some very low occupancy rates. It also shows that revenues are increasing quickly. I also see that they're paying out more in distributions than their fund flow from operations. This troubles me. For now, I'm just going to wait and see what happens with it. When converting from play money to real money, this will probably be one of the last ones I buy.
So, what about whiterock? According to the fact sheet on their website, FFO surpassed the distribution rate sometime in Q4 last year. They're landlords to a lot of government offices. Also claim to be making accretive acquisitions and they have access to credit with TD. It's nice having a quick sheet to look at that doesn't force me to wade through financial statements that I still find somewhat cryptic. Though I am looking at them anyway and while I don't feel confident in my ability to read them, things seem decent. I'm hesitant to say they look good, but mainly due to I'm still not entirely convinced I'm fully understanding everything.
Since time is precious, for now I'll refrain from looking up every other name on the list. It's not real money anyway and I can look into things further when I actually have the money to invest.
Another interesting thing to note, Riocan is actually near the bottom of the heap, which I'm not sure I'm ok with. If I had to guess why, I'd assume it's because it's considered a safer place and fewer people have decided to sell off their holdings. Thus it isn't as good of a deal as other reits right now, however remains a high quality investment. Of course, this is all just the uneducated speculation of a first time investor.
Of course, there's still one more next step, translating percentages into actual lots of units. I don't really like the idea of having a lot of odd lots of everything. After that, there's the saving up of money followed by the actual buying of stuff.

Friday, September 26, 2008

Playing with My Own Index

I decided to make my own REIT index since it seems like a good way to get some more income and I wasn't really happy with my current options in that sector. The iShares ETF tracking the S&P TSX REIT index gets a lot of talk for a lot of things. One is for having very few securities, 12 reits and t-bills. The other is for having roughly 25% of it's funds in Riocan and what used to be about 15% in H&R, or about 40% in two securities. Granted, it's not the number of ticker symbols you have in your fund, it's really about what they represent. I can justify having a large position in Riocan simply because it's hard for me to think of a place I lived where they didn't have a very nice looking property nearby and they were always pretty much fully rented out. H&R is also another big name, though they don't proudly post their name on every property they own. In terms of spreading investment dollars amoungst sqft, the two of them do a fairly good job.
One critism that I don't hear all that often is that its holdings aren't adjusted to remove what may not be considered REITs anymore after the big "let's kill off the income trusts" tax change. There's some worry going on over whether or not things like senior's housing and hotels where much of the money comes from the services provided as opposed to the lending of the property. I would like to stick to what is definately going to still be considered a REIT afterwards and still an income trust/mutual fund investment trust.
So, why build my own index? Well, I'm not going to deny that fun is one of the reasons. Also, while those two REITs might spread money over large amounts of rental area, they do not spread money around different management styles, and acquisition philosophies. They're also still only two ticker symbols, so I should be able to reduce volitility with a larger basket. Granted in the bigger picture it's like saying that you don't feel the waves as much, but you're still stuck in the current. So in hopes of getting better returns, I started going about deciding how I'll setup my indext.
XRE is based off an index that uses market share weighting. I am interested in returns and it tends to be a bit of a pain to calculate total returns. Complexity is not something that I'm interested in, keeping things simple is one of the general philosophies of indexing. I decided on a simple scoring process involving yield plus a four year average growth rate. The general idea being if I had a two percent higher yield, I can simply reinvest the difference and wind up with two percent better growth rate, so the two are really interchangable, at least in a taxless world. Four years was kind of an arbitrary decision. The current year is included and counts as a full year even though it's not over, this advantages reits that don't wait till the end of the year to adjust distributions. It's a fudge I'm ok living with. Also many REITs are less than four years old. So I did a simple average of whatever the distribution growth rate was over the age of the REIT. Notably absent is any capital appreciation. I'm less concerned about capital appreciation than I am income. So I now have a MK1 Return Rated REIT index.
It's also getting late, so I'll stop now and leave this post nicely about what I did and follow up tomorrow with a post on what my spreadsheet suggests I do.

Monday, September 22, 2008

Market Dips Year to Date

Heh, I was plotting a post about how different sectors performed in the various market drops so far. Though after looking at today's closing market figures and I must say this one isn't over yet. While I haven't really looked at the data yet, but I think there's been a change. I'll see what I find when it's over.

Saturday, September 20, 2008

Here we go again

One of the things I absolutely hate about elections is the promise of tax credits and deductions. The previous government brought in quite a few and I'm already hearing a lot of praise for a credit for closing costs for first time home buyers. There are already enough of them. I want simpler taxes across the board for everyone.

Wednesday, September 17, 2008

Real-estate risk/Random speculation

What do you get when you combine lack of experience with a lack of formal background into the subject?  Well, I'm not sure, though some thoughts going through my mind since I originally decided that I like REITs and would like to have a significant portion of my portfolio in them.  I can see the damend for office space dropping as financial services shrink.  This will probably result the price of office heavy REITs falling/yield increasing, along with slower growth rates and possibly a small decrease in distributions in the short term.  Part of me expects that things will become oversold and open up opertunities to invest.
I can't really see industrial property moving very quickly.  Yeah, we're loosing car plants, which means that all the connected stuff is going to suffer a bit.  I'm tempted to whimsically remark that all the parts for anything these days come out of China anyway so it'll stay contained.  In all practicality though, it's a bit of a toss up in my mind over whether or not closures will out pace exsisting escallation clauses in the continued leases.
Retail, I have a hard time seeing a decline in high quality retail properties, however, I don't think they'll grow as fast as they would otherwise.
Finally, with regards to residential properties, I'd expect population trends to change slowly.  Granted, rents are probably going to have to come down, or stay the same when unemployment goes up.  I don't expect a major hit.
So in summary, these are the rantings of someone who knows nothing, spent next to no time studying the situation and absolutely no track record.  I expect overall slower growth, and offices will take a significant beating, but there'll be an overshoot period where they'll represent a good buy.

When will it all end?

Today, I found myself asking when all this turmoil in the market will end.  It set me along the train of though that, the reason why credit is tight is because people are concerned with the viability of financial institutions.  Those financial institutions are on rocky grounds because the income they once enjoyed from securitization is gone and mortgages are defaulting, further hampering their revenues.  Of these two, I'd say that the shock from the first one should probably be over already.  The second one though, I don't think we're through the peak of the foreclosures yet.  Beyond that, I don't know what will happen.  I'd like to say that things will be over, but lets face it, some things lead, some things lag.  At this point, I'll say that would be step one.  After it becomes blatantly obvious that part of it is over, I'll start wildly stabbing in the dark about step two and hopefully one of a couple hundred guesses will be correct.

Tuesday, September 16, 2008

End in sight for thousand li march

I don't recall how long ago this started, but I was just told that we now have roughly 6 weeks worth of overtime shifts to go.  It's nice because it's certainly leaving me feeling drained.  I would not like to do that on a continous basis.  At the same time though, I'm going to want the money.  It is a fairly decent chunk, probably about $400/month.  Then as I recall from what people told me, things usually slow a bit and then we start building inventory and run all out towards the start of spring.  So this will probably mean overtime will be available again for a good portion of next year.  I wonder how much of an impact doing overtime has on my estimates.  Though everything still feels so far off in the future right now, so it's hard to tell.

Saturday, September 13, 2008

You can't live life without any luxuries

In another one of my talks with various co-workers one of them told me about how he was contemplating buying a new HD tv. He told me that his concern wasn't so much the cost, but it was all the extras that were with it. You need the HDMI cables to get the most out of it, the bluray as well. Then there's the digital cable that will get you over and over again every month. It all adds up. The thing that struck me about it was not so much that I was having a casual conversation about money, but it made me realise something about myself. Life to me is not so much about the day to day things as it is about the bigger things. Most of my life has been about throwing all my resources at a single objective. I suppose this is easier done when you're young and haven't been out of school for too long. Homework kind of helps create a very focused life. For a while, things are very focused, specially around major deadlines and exams.
I'm not necessarily saying that it's a healthy way to live, but for now it's just the only way I know how to live my life. It has rather violent ups and downs. I don't think that this is the sort of life that leads to longevity, though I suppose that's something that can be sacrificed, like so many other things, to meet an objective.

Thursday, September 11, 2008

Do I need to be a millionaire?

I keep wondering just how much money I need. Do I really need to be a millionaire soon? I think inflation will make it inevitable that I'll want to be a millionaire. Right now, it would be nice, but I think I'd be satisfied wit half that, or less. It's a bit of a milestone. I don't know how long I'm going to be staying at my current job. I kind of have goals for where I want to be when I leave, which reminds me, I have to bump things for inflation. It's still uncertain how my inheritance will change the picture. I've been trying to compute some estimates, but it's hard given that I do not expect the current market conditions to persist. The investments are also postured primarily in small resource exploration firms, which scare me. Most of the accounts also have substantial losses. I'm unsure of how to allocate blocks of money that large right now. There's still months of probate to go through though, so where the jumble lands is still up in the air. I just hope that there's still a good amount left when the dust settles since I get the feeling that many of those investments can fall by quite a bit.

Yay cost of living increase

I was going to write about something else today, but the long awaited cost of living increase finally came in. I got a $0.75, or 4.7% increase, which is roughly in line with local inflation. There was an article in the paper about how the average working wage has gone up about 4% this year. However my memory is a little foggy so I can't really say if I got more than the average, or less. While my increase is greater than 4%, I forget when the previous cost of living increase was. Though I'd be very surprised if it was exactly a year ago.

Tuesday, September 9, 2008

Old Emotions Coming Back

Now that I'm off the St John's Wort, I'm feeling a lot more anger and resentment lately. The same issues over again. It's no way to live, though now I'm in control. Drugging myself so that I can put up with people I can just leave behind feels kind of stupid to me.

Monday, September 8, 2008

Sheep, everyone, everywhere, sheep

Today, I can't help wondering if it's in our nature to view the bulk of the population as a herd of uneducated ignorant sheep. People seem to follow the same trends and hold the same views based on the same biased set of facts that they don't bother to truly learn about. For the most part, many of us live our lives going through the same cycle day by day, week by week. Many of us long for change or improvement. Few of us ever achieve much success at changing things. For the most part, we don't know how or we can't seem to bring ourselves to do it. Many of us just go on hoping that somehow through some wise shepherd we'll wind up where we want to be. As much as I want to be different, it's still too early for me to really feel confident that things will work. When its done, I'll now.

Sunday, September 7, 2008

Getting away from everything

Well, what to say, this week. Been yearning to get away and just break free from the normal routine of work and sleep with food sprinkled in between. I find myself asking several questions, about how much money is enough, and if I'll ever get to make my dreams come true. I don't think my odds are too bad. Somehow I've managed to boil down my desires to the essentials. When you ask little of the world, you'll find that you don't really need as much to have a good time, or so I hope. My efforts are also focused. This helps a lot. Many people can see the gourmet coffee, and focus on that with other things being but a dream.
Though still, I have my doubts, specially since things are really just beginning. While my rough calculations look good on paper, I can't overlook that each line on that page represents close to two years of my life. That's just the beginning.

Thursday, September 4, 2008

Profit Share

One of the many things I perpetually gripe about at work is the profit share plan. Saw someone come in late today and he twalked about how he's been late so many tmies, he's cut out of the profit share now. This period stretches from about June to December. We're about half way through and he no longer has the additional incentive to help increase profits. He also made it a lot further than a lot of people. Many of them were out a month earlier. The amounts also aren't that significant in my eyes. The lowest paid workers get roughly an extra days pay for half a year's worth of hard work. The highest paid supervisors get about a week's pay. That's actually respectable, however that also means everyone else is getting much much less.
For now, the people who can change things are the people who are getting the most. I'm skeptical that they'd feel overly inclined to make changes to this arrangement.

Monday, September 1, 2008

The most important thing I have right now

I saw Kung Fu Panda today. It had me thinking, the most important thing I have right now is a body that can take me places. I might not be a marathon runner, but I like that I have the option of walking places instead of needing to rely on something else. Hiking in and out of the Muir Woods on vacation is something that'll be with me forever. It was also nice that I was able to keep up with everyone and keep moving while we all wandered through San Francisco enjoying the various sights. The fact that I'll one day loose this ability and there's little I can do about it is one of my greatest worries. I already have to think about the toll that my work takes on my body, which is quite sad, granted I've gotten a lot stronger lately. Right now, I'm kind of leaning towards not working on friday. Though that day is worth roughly $100. It's not pleasant to need to seriously think about my physical limitations.

The same question twice

I get the feeling that I'll be asked about working on Friday again, which has happened quite frequently. This time there's no overtime pay since it's going to be a shorter work week on account of the holiday. If I just assume that I naturally work Fridays now and by default have a 49 hour work week, the question I'd be asking myself is am I willing to give up 9 hours of pay to have someone else cover the shift for me. However if I assume that I work 40 hours by default and do not normally work Fridays, the question I ask myself is how much money will make it worth it for me to come in on Friday. This should be asking the same thing and I should wind up with the same result both times, either I work Friday in both situations or I do not work Friday in both situations. In practise, it doesn't quite seem to work that way though. I'm not sure I really want to or not next week when there's no overtime pay and thinking about the decision this way just makes things more confusing.

Poverty line

I now have a bit more information on where my bare minimum goal should be. I’m not sure why I didn’t look this up earlier, but I now know where the poverty line, more formally known as the low-income cut-offs, was two years ago.
It’s nice how it’s broken down by how big the family is and how big the population center is. There is a big leap for living in a place with more than a half million people. Bellow that, the differences aren’t that large. Personally, I kind of want to go for a smaller population and in the 100K-500K range, it says that I want $14,895 of after tax income in 2006. That’s still a long ways away, but 15K is quite a bit closer than 18K. Right now, I’m sitting at about 0.8K of investment income. While it’s a good start, it’s still just a start. Being about 1/20th of the way there really isn’t something to celebrate. I don’t want to spend 20 years of my life doing this. It should accelerate as my income increases through investing, though 3% increases really take time to make significant changes.
http://www.ccsd.ca/factsheets/economic_security/poverty/lico_06.htm
It’s interesting to note that if we assume that the after tax figures correspond exactly to the before tax figures, we can compute the tax rate. That brings me to the rather confused situation where the lower income figures seem to have a higher tax rate than the higher figures. Not entirely sure if that makes sense.