Archive for October, 2005

Why do WestJetters care so much?

October 25, 2005

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WestJet (TSX: WJA) is running commercials in print, radio and TV that asks, “Why do WestJetters care so much?” and answers “Because we’re also WestJet owners”. The ads are very creative and from what I hear WestJet is a fine airline.

But I do hope WestJet employees are not over-invested in their company stock. The airline industry is a tough place to do business: cut-throat competition, high operating (fuel) costs, huge capital expenditures, terrorist attacks, government regulations etc. are just some of the risks facing investors. After the September 11 terrorist attacks, the industry has witnessed a large number of bankruptcies (Air Canada, JetsGo, Delta, US Airways, United Airlines, NorthWest). It doesn’t make financial sense for most people to depend on a fickle industry for a pay check and also be invested heavily in it.

Making Less Trips to the Grocery Store

October 24, 2005

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Globe and Mail ran a story today on how companies are targeting “quick shoppers”, those of us who make frequent trips to the grocery store to pick up just a few items, perhaps for a quick dinner. The story points out that “quick trip shoppers prefer to save time over money. They seek fast, efficient solutions instead of hunting for the lowest price”. While it may be good news for consumer staples companies and grocery stores, isn’t so great for our pocketbook.

We visit the grocery store and the local Wal-Mart or Costco once every week. We keep a magnetic board on the fridge door and add items to the shopping list as we run out of things during the course of the week. I do make quick trips to the store every once in a while, but try to keep it to a minimum. Such quick trips tend to be a waste of time (park the car, run into the store to pick two or three items, wait in line at the check-out) and money (driving the car to the store).

Increasing Cost of Living

October 22, 2005

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Report on Business is running a cover story on how inflation is starting to bite the bottom line of most ordinary Canadians. Here are some of the ways in which the cost of living is increasing:

  1. Mortgages: Variable rate mortgages have gone up by 0.5% in just a few weeks. Fixed-rate mortgages have also started edging up.
  2. Line of Credit: Many forecasters see the prime rate at 6% by the end of 2006.
  3. Gasoline: 15% increase over the past year. Over the next year, who knows?
  4. Home Heating: Rates have been contained so far but some predictions call for a 33% spike this winter.
  5. Hydro: At least in Ontario, hydro may be very expensive next year.
  6. Property Taxes: Some homeowners are facing soaring property taxes.

At a time when wage growth is anaemic and the savings rate is in negative territory, inflation is likely to hit many Canadian families hard.