Posted in Finance, Investing on Sep 20th, 2007 4 Comments »
On Tuesday, Ben Bernanke cut the Federal Funds rate by 50 basis points (or 0.5%) to 4.75%. While most people may not have expected a cut of this magnitude, they definitely were expecting some sort of rate cut. There’s been too much bad news regarding the economy to think otherwise.
Posted in Real Estate on Sep 13th, 2007 8 Comments »
During the July 4th weekend I went to Las Vegas along with some cousins. Rather than book 3 rooms in a hotel at over $200/night each, we decided to stay in a vacation rental. It worked out to be less than half the price and it was a lot more fun.
Posted in Finance, Investing on Sep 9th, 2007 No Comments »
The following hilarious spoof is courtesy of David Fuller’s Fullermoney newsletter (with thanks to Investment Postcards too):
Dear investor, we’d like to take this opportunity to update you on the recent performance of our hedge fund, Short-Term Capital Mismanagement LLP.
As you know, market selection for the entire fund is guided by a proprietary investing tool we like to call “a dartboard”. Once the asset classes are decided, individual security selections are generated by digitizing our unique hexagonal cuboid models. Unfortunately, it transpires that our hexagonal cuboids are not as unique as we thought. Hundreds of other hedge funds possess identical dice. The technical term for this is a “crowded trade”. You may also see it referred to as “climbing on a bandwagon already headed for the wall”.
Posted in Investing, Real Estate on Aug 26th, 2007 6 Comments »
I’ve previously mentioned how much I love investing in Real Estate, with its leverage and all its tax advantages.
But you must have heard about the hedge funds that invested in collateralized debt obligations on subprime residential mortgage-backed securities and are now worthless, mortgage companies like Novistar and American Home Mortgage going bust, home-builders like Beazer Homes (BZH) and WCI Communities Inc (WCI) rumored to be on the verge of bankrupcy, the widespread drop in home prices and a huge spike in the number of foreclosures.
With all this negative sentiment, I bet you’re wondering if it’s a good idea to invest in real estate?
Posted in Investing, Stocks on Aug 19th, 2007 2 Comments »
The past few weeks have certainly been pretty volatile in the stock market. After hitting new highs for the past several months, all the market indices plummeted on July 17th. Its now mid-August and the markets have dropped significantly since then. Not only the US stock markets, but markets all over the world have dropped in unison. Last Thursday (August 16th) saw a retest of the lows created earlier in the year. On that day mutual funds recorded outflows of $19.9 Billion dollars as nervous investors pulled the plug on their investments. As mutual fund managers have to give money back to their investors, they often need to liquidate their positions at the worst time. The bad stocks have dropped the most, so in order to raise the most capital, the sometimes sell the good stocks that have appreciated a lot. This caused huge drop in almost every asset class.
Posted in Finance, Investing, Real Estate on Aug 1st, 2007 5 Comments »
The past week has seen a dramatic drop in the global stock markets. It first happened in the US and then spread to global markets. It seems to have been started when Bear Stearns announced that 2 of its Asset-backed Hedge Funds where completely worthless.
The two bankrupt funds, the Bear Stearns High-Grade Structured Credit Strategies Master Fund Ltd. and the Bear Stearns High-Grad Structured Credit Strategies Enhanced Leverage Master Fund Ltd. had bet heavily on subprime loans. (Funnily enough, these sub-prime Collateralized Debt Obligations or CDOs had received AAA ratings from credit-rating companies like Moodys). Most of the investors had no clue what the Hedge Funds were investing in. In fact, the names are rather complicated and misleading too. (Note that investors broke Warren Buffett’s rule of investing: If you can’t explain what a company does to a six year old, you shouldn’t invest in it).
Posted in Investing, Stocks on Jul 30th, 2007 2 Comments »
Value stocks typically return a dividend between 2.5% to 10% depending on the industry they’re in and the prevailing market conditions. Growth stocks typically do not provide a dividend, and if they do its usually less then 2.5%. They usually retain their earnings for future growth. Many stock analysts and investors believe that returning money to shareholders means that the management is running out of ideas on how to grow the business and avoid dividend paying stocks like the plague! Personally I’m partial towards dividend-paying stocks. I especially like the Canadian Income Funds that invest in Oil and Gas.
Posted in Investing, Oil & Gas, Canroys on Jul 24th, 2007 6 Comments »
The last time I wrote a post about investing in Canadian Royalty Trusts was a few months ago. Since then the price of Canroys has increased and the yields have dropped. If you missed that opportunity to invest, you might have been put off by the lower yields.
However, today’s 200 point drop in the Dow Jones Industrial average has provided another a good opportunity to buy them. Its also a good opportunity to invest new money into them.
Posted in Investing on Jul 17th, 2007 6 Comments »
One of my wife’s childhood friends asked me a very profound question. “You know a bit about investing, don’t you? So what’s asset allocation?”. The friend is pretty smart. She went to school for several years and became a pharmacist and can rattle off various diseases, symptoms, drugs and side-effects which I find quite entertaining (somehow my wife doesn’t share my enthusiasm for “Stump the Pharmacist”). But she doesn’t know anything about investing (or much about anything money-related for that matter).
Posted in Investing, Business on Jul 9th, 2007 No Comments »
BlackStone’s much hyped IPO brought private-equity companies into the limelight. Along with that came the usual ‘Do you think its a good investment or not‘ questions from friends. While thats difficult to answer, the fact that a private-equity company is going public is ironic in itself. And if some other private-equity company decided to take them private, then that would be down right hysterical!
Researching online, I found an excellent article in the Economist.com on Private Equity & The Business of Making Money[subscription maybe required].
First the good:
