Canadian Capitalist

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This and That

November 15th, 2007 · 8 Comments

  1. What’s the sub-prime fiasco all about? This article in Fortune magazine explains how Wall Street managed to put lipstick on a pig.
  2. Though the Canadian dollar has slid back from its nose-bleed levels, investors who have significant direct exposure to foreign equities are likely feeling the pain. Rob Carrick suggests ideas for positioning your portfolio for different scenarios for our dollar.
  3. The Star’s James Daw says there are bargains to be had in preferred shares.
  4. The National Capital Financial Bloggers Association met recently. Along with the blogger behind Michael James on Money, Larry MacDonald of Investment Ideas Blog, Canadian Financial Stuff, Canadian Money Blogs Reviewer and Dividend Matters met to discuss stories from the investment trenches.

Blog Roundup

  1. Periodically, the big banks runs into trouble and when they do it usually is a good time to invest in them. Thicken My Wallet wonders if this is such a time.
  2. Canadian Dream: Free at 45 celebrated his first anniversary of blogging. Congratulations and we wish him many more years of happy blogging.
  3. Canadian Banks and Insurance posted a preview of the upcoming earnings parade from our big banks.
  4. Canadian Financial DIY weighs in with his opinion on the supposed superiority on Fundamental indexing over traditional indexing.
  5. A Million Dollar Journey reader shares his experience with investing in second mortgages.
  6. Four Pillars looks at Individual and Family plans as part of his big, fat RESP series.
  7. Loonies and Sense compares RESP and RRSP with the corresponding US savings plans.
  8. The Financial Blogger shares five tips to save money on Christmas gifts.

Have a nice weekend!

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Tags: Miscellaneous

8 responses so far ↓

  • 1 FourPillars // Nov 15, 2007 at 10:14 pm

    Thanks a lot for the mention.

    Carrick was one of the reasons (among others) for my diversification out of Canadian equities. I remember reading an article of his from around the beginning of 2006 where he suggested diversification because the dollar had done so well and oil was very high.

  • 2 thickenmywallet // Nov 15, 2007 at 10:53 pm

    Thanks for the mention! Its funny that preference shares have become the forgotten sibling in the investment family. Perhaps they will make a comeback when the income trust tax is finally levied.

  • 3 Phil S // Nov 16, 2007 at 7:22 am

    The problem that I had with preferred shares is that each series of preferred shares with each issuer of preferred shares has different expiry dates, terms and conditions. Also, the proceeds of the sale of the preferred shares are used for different things, only some of which are asset backed, but many of which are not. It requires a lot more due diligence to figure out what it is that you’re buying. In income trusts, the asset class that the preferred shares are being compared against, all of the data is presented to the potential investor in the quarterly report. For me personally, I don’t have enough spare time to dig that deeply into the terms and conditions, credit quality and expiry dates of the preferreds, so I just stay away from them. By the way, most preferred shares are very thinly traded, which is another problem with them - there is often up to a 5% price difference between high bid and low ask, so you will likely lose 5% of your investment just trying to execute the transaction. And since most of the preferreds only yield about 5%, then you’re basically losing an entire year’s worth of distributions trying to execute the trade.

  • 4 The Financial Blogger // Nov 16, 2007 at 7:50 am

    thx for the mention!

  • 5 Canadian Capitalist // Nov 16, 2007 at 10:07 am

    To tell you the truth, I’ve never looked at preferred shares. Maybe, when I am retired and looking for tax-efficient income…

  • 6 Phil S // Nov 16, 2007 at 10:28 am

    CC. The income from preferred shares is a qualified dividend for the dividend tax credit. It is actually more tax advantageous for you to earn qualified dividends when you are still working. Once you are retired and your earned income drops to zero, then I don’t think you would be as concerned about qualified dividends versus interest income as your basic exemption will usually take care of a lot of the taxes that you’d be normally on the hook for compared to when you’re working. In other words, the tax efficiency aspect isn’t as much of an issue if your earned income is zero. My mother is in that situation where she is retired and her total income from everything is essentially non-taxable, which is why income splitting from my father makes sense for them (my father has a full government pension).

  • 7 Loonies And Sense // Nov 16, 2007 at 10:54 am

    Thanks for the mention!

  • 8 Canadian Dream // Nov 16, 2007 at 4:35 pm

    CC - Thanks for the mention. I’m still trying to figure out where the year went. It feels like I just started reading your blog not too long ago.

    Tim

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