Thursday, October 30, 2008

The Day Before I Leave

I've been in the USA regularly for long enough to want a solution to avoiding carrying large amounts of cash every time I travel. This morning, I found an ad for Citizen's Bank that's offering just what I need. Whoo, no debit fees for Canada and the USA, and no atm fees on their end. Of course, now is a little late for opening an account before I travel.

Wednesday, October 29, 2008

Crisis

Amidst all the chaos, I happen to have a non-financial crisis in my life. I lost my father, some time before that, I lost a great aunt, just earlier I lost an uncle, and someone who probably would have become an in-law is just about through. There's a dramatic spike in fatalities in my personal life. I'm not sure what to make of this other than, I'll probably see a good stretch of everyone being ok for a while afterwards. At least I hope so.
I'm dashing off for a funeral this week and I am completely torn apart from work, taxes and trying to straighten out accounts. Would love to comment on this week's market activities but I'm tired.

Sunday, October 26, 2008

No More Inheritance?

Personally, I believe that there are lines that once crossed are hard to return from. I've been on the other side of more than one of them myself. My mom has some built up resentment and she feels like lashing out and well, external validation of her claim is important to her so I don't think I'll step in the way.
There isn't really much of use to me in the estate anyway. Assets are locked up and hard to do stuff with. I'm estimating that under the will I'd get roughly $130k, of which $30K is actually liquid. $100K is locked up in the family holding firm in one way or another. I wasn't really counting on it, but I was looking forward to it. To a certain extent, I don't really want to be tied down by a business right now. I need to be able to take off and just be for a while.

Sunday, October 19, 2008

Alternative visualizations

Goals are only good if they’re well defined. They key to doing any big task is to break it down into small manageable parts. Old clichés but well, I felt the need to do something innovative. My goal right now is essentially to get up to the point where I don’t need to work to make ends meet, which I’ve roughly defined as being half of minimum wage. Though I really would feel a lot better with full minimum wage. Anyway, 52 weeks in a year, 26 letters in the alphabet. I think I’ll visualize my goal as being the letters of the alphabet. Each one being worth one week of minimum wage earnings per year, or about $8.40/hr x 40hr/week = $336. The important part is the beginning, so I’ll put the capital letters there.
I’m nowhere near as far along as I would like to be in my goal. For now I’ll use the excuse of most of my resources are tied up in a bridge loan to bail out the family holding firm. For now, I express my progress as being 2 weeks or visually as
ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz

Thursday, October 16, 2008

I want a play fort!

A silly post today. Maybe it's the temperature, or maybe I seek more security in this time of economic uncertainty but right now, I have this strange desire to build a play fort to curl up in when I sleep. It gets harder to find appropriate fort building items as you get bigger. Maybe I should rectify that when I get my own place.

Tuesday, October 14, 2008

To Do List

Well, I could talk about the election or I can talk about the bank bail outs. I think I've already beaten the market rebound to death. Though right now, I'm feeling tired, so I'll talk about that. I'm setting a new goal, and that is to try to reduce the anxiety that I feel when I'm about to go to sleep. It always feels like I didn't get enough done or I have something looming on my mind. I'm told writing it down helps, so here goes.
Tomorrow, I need to make a phone call regarding the accounts of the family holding firm, get some money transferred so that the bills can be paid and because GST need to be paid at the end of the month. I've already phoned once this month, I hope things are underway already but this is already late enough to make me uncomfortable.
The day after, I need to buy a phone card.
That pretty much sums it up. I hope this helps clear my mind.

Monday, October 13, 2008

DOW up 11%

I've probably beaten this issue to death already but if you had left the market completely on Friday doing all your trades at the end of the session and ignored today, you'd have missed out on a bit 11% increase. The actual mechanics of doing that only really works with a really small portfolio though.

Declaring Victory

I'll declare an early victory here. Canadian Markets are closed, but the DOW, S&P500 and NASDAQ are all up over 6% right now. One of the best days of the year, and when did it happen? After what'll hopefully be the worst decline of the year. Or at least I hope there isn't a bigger one. I like that everything is cheaper now, but I'm kind of worried about unemployment and economic collapse.
Also, this hardly makes up for the losses, but who knows maybe the markets will surge another 12% before closing, or shoot upwards for the rest of the week. Anyway, those one day blips are little more than curiosities.

Friday, October 10, 2008

A Handful of Days

"Recently, a group called Dimensional Funds studied the performance of the S&P 500 from January 1970 to December 2006, during which time the annualized return of the market was 11.1%. They also noted something amazing: Of those 36 years from 1970 to 1986, if you missed the 25 days when the stock market performed the best, your return would have dropped from 11.1% to 7.6%, a crippling difference.

Now, if only we could know the best investing days ahead of time.
"
I keep running into this quote, verbatim including the 36 years from 1970 to 1986, which is actually a 16 year time frame, so I assume they mean 2006. I also assume that it's no longer recent, after all who would do a study that abruptly stops at the most significant economic event in recent history. Anyway, I suspect that there's a touch of insanity and twisting of the facts at work here. I'm not going to study 36 years, but I have kind of noticed something about the best investing days and I think we're missing something very important here.
Year to date, there have been four days when the TSX went up more than 400 points. Those four days amount to a total of 2371.58 points. That's a very impressive sum. Even if you compare it to the peak of 15073.13, which happened on June 18, 2008 instead of today's close of 9600.18 it is still impressive.
I put forth the assertion that yes we do know when these days are but no, it doesn't make all that huge of a difference.

And for another good quote, "Please excuse the crudity of this model, I didn't have time to build it to scale or to paint it." Shown here are the best four investing days of the Toronto Stock Exchange in the year thus far. When do they occur? They occur during downward trends when the "Gee, things are getting cheap" people are joined by the "Wait a sec, we're really over reacting" group. One and four are perhaps the best examples of this due to my arbitrary cropping. I'll take a wild stab in the dark and assume that over the last 36 years the very best of the best have also happened like this. My hypothesis is partially based on the largest of the bit ones in my ever so limited time frame study, #3 at 848pts, is huge compared to all the day to day movements I can remember. Unless you're an ultra agile day trader who can move a fortune in minutes, you realistically can't avoid the best trading days. So if you were to miss them, maybe you'd be out of the market for at least a week. You also wouldn't be back in the very next day. In addition to missing the best day, you'd miss a huge drop and a bit of the settling down afterwards (and I regret not leaving enough to show whether that was generally upwards or downwards). Counter-intuitively, you'd probably get a better return trying to miss the best days rather than moving money into the market in anticipation of the best days.
Of course, this being the end of one of the worst weeks that I can recall, I'll have to say that maybe if we focused on a longer time period like months or years, this would have some meaning.
To toss one more thing out there, one of my other observations about the market is that the intraday swings can be quite powerful as well. If we did a study on cutting the best one hour stretches of trading from an index's multi-decade return I'm sure it would have some ridiculously disproportional impact as well and people would be quoting it out of context and talking about it as if it held some profound meaning.

Are the Indexes Cheap Again?

Prices have declined considerably lately. Though what has been declining faster? Personally, I questioned whether or not energy and material prices would really stay high. When there was a big run up, they started occupying a larger portion of the indexes. The more you pay for stuff you don't particularly want, the more expensive the indexes are. If I were interested in oil, I suppose the indexes have become more expensive lately, though for what I'm interested in, it seems that buying index funds might make sense now. Dividend yields are also getting higher. Question is, what are earnings like?
I've tentatively decided to wait until the next quarter to make investment decisions, it's amazing how much things have changed since I last sat down and did some brain storming. That as only a few weeks ago too.

Thursday, October 9, 2008

Irony

On my way home today, I had a very interesting thought. One of the things causing economic chaos these days is the collapse of banks, uncertainty of credit and dangerous balance sheets. Interestingly, the way out of this economic slow down might not necessarily be to spend money. If we saved money instead, there'd be deposits, deposits would be stable and reliable and thus lendable. Funds that banks feel comfortable lending out would then free up the credit market and spur spending again. Then everything keeps chugging along.
I'm sure the spending part is important too, but we already have a lot of loans on the books.

Monday, October 6, 2008

$514.70

I couldn't think of a good title for this post, but I was reading earlier that the average canadian has $514.70 left in their primary transaction account after all the bills are paid. How do I stack up? Frankly, I try to keep that under $10. Though in all practical sense, predicting my expenses with the accuracy to run with $500 less than average in my primary transaction account is worth about $15/year. Somehow it doesn't quite seem worth it. Then again, in my life what might happen to me? The car I don't own could get a flat tire and need replacement. Hmm, my computer could die and I'd have to patiently wait and plan the purchase of a new one. Umm, I could get sick and need medicine which I'll have to put on my credit card and move money out of my savings account to pay for. Maybe I'll think of something.
In other news, I'm once again rethinking my investment plans. Since September 23rd, my hypothetical portfolio of reits is down 16.34%, compared to 15.06% for the reit index I'd like to beat. Though I did out perform the TSX, which fell 18.37% in the same time period. The venture exchange has dropped almost that much in the past two days. The Dow though did a 8.28% drop, which is considerably better. The correlation data is valuable, though the current allocations no longer reflect the amount of money I anticipate I'll be able to invest. Granted there's still a heck of a lot of time for them to bounce around. Meh, it's completely hypotheical for now anyway. I'll defer decisions for when resources free up again.

Sunday, October 5, 2008

Overtime?

Well, fun time is over again. Question on my mind is whether or not I want to do overtime this week. I think what I need is a good long stretch of not doing overtime and get things back to where getting through the week isn't nearly the challenge it is now. Granted, there isn't going to be much overtime left, also weighing in on this is that it's a four day weekend.

There's Signal In The Noise

Ok, so maybe adding some factor for the income breakdown of a reit wasn't a good idea after all. I quickly discovered that for many reits, those don't stay very consistent year after year. They actually bounce around quite a bit. There's probably still some useful measure in there, but it seems like there's far more noise than signal. I wonder what else I might be able to consider for a mkII reit index.

Friday, October 3, 2008

Adding an Additional Consideration to my Indexing

During one of my many dull moments at work, I realized that there was another factor that I could easily add to my indexing, other taxable income. In general, distributions are split between capital gains, return of capital and other taxable income. As much as tax rates are higher, marginal rates, for other taxable income, compared to half of marginal for capital gains, I want to see other taxable income. If you don't have more taxable income than your depreciation, then you're not doing a good job of recuperating your capital costs. Question of the day is how do I want to scale this one. Maybe I want to increase the weighting of growth as well since price volatility seems to throw yield around wildly and growth provides a measure of long term stability as well.