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XXX warning
John Heinzl


Wednesday, January 30, 2008

Yesterday, my editor forwarded an article entitled "Investment Pornography" that purported to include a picture of a "beautiful naked blonde chick."

"Read this," he said.

"If you insist," I said.

Alas, after a few sentences it became apparent there would be no pictures of sexy pension fund managers covering their private parts with Post-it Notes. Instead, what followed was a sober discussion of the endless financial pornography that litters the print and electronic media. (As for the naked chick, it turned out to be just that - a baby chicken.) With financial markets roiled by credit worries and recession fears, the article (posted at investorhome.com/porn.htm) makes for timely reading. Even though it appears to have been written several years ago, the observations are just as relevant - if not more so - today.

The article defines investment pornography as "the depiction of investment and/or financial information in a sensational manner so as to titillate or arouse a quick intense emotional reaction." If you read newspapers, watch financial TV stations or surf the Web, you know what they're talking about.

In the old days, investors used to peruse the stock tables and - if they were really ambitious - read the companies' quarterly statements. Nowadays, they're pounded with more financial data than the human brain can possibly process.

The surfeit of information, much of it spun for maximum effect, can be hazardous to investors' health. It causes them to chase hot stocks and sectors after they've already soared in price; it panics them into bailing out of perfectly good stocks experiencing temporary setbacks; it focuses on short-term profits (trading) instead of on building wealth over time (investing).

In other words, it leads investors to do precisely the opposite of what they should be doing. Being able to read analyst recommendations online and enter "buy" and "sell" orders with the press of a button exacerbates the problem. And it's only going to get worse, as investment blogs spring up every day and wireless devices make it possible to access financial information 24/7.

So how is an investor to cope with all this noise? By ignoring most of it.

One downside of having so much information at our fingertips is that it makes investing seem more complicated than it is. We've said before that building a portfolio of stocks isn't as hard as some of the pros would have us believe, and it bears repeating.

The trick is to buy stocks that you can feel comfortable holding, through good times and bad, no matter how ugly the headlines get. That means sticking with large, dividend-paying companies with a track record of increasing their payouts.

Bank stocks are a great example. When the credit crunch hit, Canadian banks tumbled and many investors panicked and sold. But banks have been rebounding since, and these investors are now kicking themselves. Will banks go down from here? Maybe. Will they be lower a few years from now? Doubtful.

Pipeline operators are another example. Yesterday, TransCanada hiked its dividend by 6 per cent after fourth-quarter profit rose 40 per cent. Many electricity generators, life insurance providers, mutual fund companies, real estate investment trusts, cable operators, pharmaceutical makers and consumer staples companies also have strong records of dividend growth.

Why is financial porn popular? Because it sells magazines and newspapers. Buy and hold strategies, on the other hand, aren't sexy. Dividends may not be sexy. But when it comes to investing, you want something that's going to allow you to sleep at night - not keep you awake.

© The Globe and Mail

RBC OPENS OFFICE IN INDIA


MUMBAI, February 1, 2008 — RBC (RY on TSX and NYSE), the largest bank in Canada, today announced that it has entered the Indian market by opening its first (representative) office in the financial hub of Bandra Kurla, Mumbai.

RBC has a three pronged approach to India:

· To provide capital markets products and services including global debt funding to Indian banks and corporations;
· To provide wealth management services for high net worth individuals;
· To provide correspondent banking and trade finance services to Indian financial institutions.

“The strong growth of the Indian economy presents huge opportunities,” said Gordon M. Nixon, RBC president and chief executive officer. “RBC is committed to expanding outside North America into areas where we can show competitive strength and India is a natural choice for our strategy in Asia. India is showing an increasing demand for areas in which RBC has competitive strengths – infrastructure and project finance, energy, metals and mining, structured products, currency and bond trading, and wealth management services.”

Akhauri Sinha, country head, RBC India, will lead RBC’s overall operations in India, while Dipendarra J. Singh will lead RBC’s wealth management business with a focus on high net worth individuals, and Vikas Jambotkar will focus on providing RBC services to Indian financial institutions, as well as capital markets services to corporations.

- more -

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With people from India comprising the second highest Asian immigrant population in Canada after China, RBC is now well positioned to help them invest back into India’s buoyant economy. “Indo-Canadians have made and continue to make a huge contribution to the fabric of Canadian life. Their presence and cosmopolitan imprint on our cities, especially Toronto and Vancouver, have been profound. They form an important, indeed critical, link between India and Canada,” continued Mr. Nixon.

About RBC
Royal Bank of Canada (RY on TSX and NYSE) and its subsidiaries operate under the master brand name of RBC. We are Canada’s largest bank as measured by assets and market capitalization and one of North America’s leading diversified financial services companies. We provide personal and commercial banking, wealth management services, insurance, corporate and investment banking, and transaction processing services on a global basis. We employ approximately 70,000 full- and part-time employees who serve more than 15 million personal, business, public sector and institutional clients throughout offices in Canada, the U.S. and 36 other countries. For more information, please visit http://www.rbc.com." rel="nofollow">LINK

Tuesday 5. Toronto

Rising U.S. recession fears have sentstock markets down sharply today (most major stock indices are down more than2% today)

U.S. economic data heightened worries amongst investors that the U.S. is headed for recession and financial stockstook a hit on concerns about more writedowns of securities linked to soured U.S.consumer mortgages. In addition, stock markets were already poised for anegative day with many traders ready to take more profits out of a two-weeklong rebound (the TSX was up by almost 10% since the January low).

Investor sentiment also worsened after theInstitute for Supply Management non-manufacturing index slumped to 44.6 inJanuary from 54.4 in December (almost 20% drop). It was the first time inalmost five years that the ISM had recorded shrinkage in service activity,which accounts for two-thirds of the U.S. economy (manufacturing has left the U.S. a long time ago for China).

The financial stocks lost more groundfollowing an announcement from Fitch Ratings that it plans to lower the ratingson more than half of the US$220 billion wrapped up in collateralized debtobligations (CDO’s). In Canada,CIBC World Markets warned that more mortgage-related writedowns in a slowing U.S.economy will likely send stock markets down further (although, CIBC bank is inthe Canadian bank in the middle of it). Their chief strategist statedthat "the tandem of falling (U.S.) housing prices and rising default ratesshould trigger as much as another US$30 billion to $50 billion in assetwritedowns by North American banks over the next quarter, which, together witha visibly struggling U.S. economy could be a catalyst for another stock marketcorrection, already at US$140 billion, worldwide writedowns on U.S. subprimemortgage assets are likely to peak in the US$265 billion range over the nextyear."

Currencies where volatile today as the Eurodeclined amid speculation that the European Central Bank (ECB) will not raiseinterest rates in a decision due this Thursday, and the British pound was downon expectations the Bank of England will cut rates – growth is slowingglobally as everything starts to slow down.

The slump has made stocks cheap andvolatile by historical standards, Europe'sStoxx 600 is valued at a price to earnings multiple of 11.1, the lowest sinceat least 2002, according to data compiled by Bloomberg. The 1,953-member MSCIWorld has a price to earnings multiple of 14.3, the cheapest since at least1998.

Global stock markets turned down againtoday as major stocks markets (especially stock markets not correlated toresources or commodities) fell to an 18-month low (i.e. the S&P 500), todaythe decline was led by financial and commodity shares, after Federal ReserveChairman Ben S. Bernanke urged banks to write down more mortgage debtand oil, gold and copper prices dropped from records.

In short, investors get spooked when you have Ben stilltalking about the weakness in the economy and banks' mortgage exposure (thestory just doesn’t want to end), he stated that the “U.S. isbattling the worst housing recession in a quarter century” and he“urged lenders to forgive portions of mortgages held by homeowners atrisk of defaulting” thereby, indicatingagain that he sees housing as a serious threat to the economy that can't beaddressed by fiscal or monetary policy alone (stimulus plan by the Bushadministration plus cutting interest rates).

The Fed's Feb. 27 report to Congress called for lenders to``pursue prudent loan workouts'' through means such as modifying mortgage termsand deferring payments (let’s hope that home owners actual address thereal issue i.e. spend less then they earn instead of just finding another‘band aid’ solution). ``Efforts by both government andprivate-sector entities to reduce unnecessary foreclosures are helping, butmore can, and should, be done,'' Bernanke said in a speech to bankers inOrlando, Florida, today. ``Principal reductions that restore some equity forthe homeowner may be a relatively more effective means of avoiding delinquencyand foreclosure.''

What I found interesting in today’sremarks is that Ben current call goes beyond the stance of the Bushadministration and previous Fed comments.

Anyway – as I have previously mentionedinvestors avoiding financials and the U.S. market plus hedging theircurrency, investing in private placements, resources, commodities, healthcareand technology have generated superior returns relative to the overall marketand the typical balanced fund that just invests in cash, bonds andequities.

There is no ‘magic bell’ that willbe rung to suggest that the current market volatility that we are experiencingwill be over however, investors with a medium to long-term time horizon havealways done better by investing during periods of market volatility versusperiods when all things appear to be ‘smooth sailing’.

Comments already on another thread but this is a diff source


http://www.globeinvestor.com/servlet/story/RTGAM.20080304.wboc0304/GIStory/

http://www.globeinvestor.com/servlet/story/RTGAM.20080304.wific0304/GIStory/


Mutual funds gain $6.2-billion in new cash
SHIRLEY WON


Tuesday, March 04, 2008

Canadians pumped an estimated $6.2-billion into mutual funds in February as they poured cash into their registered retirement savings plans.

Canadians were feeling in a better mood as global markets bounced back somewhat.

The S&P/TSX composite index gained 3.25 per cent last month, recouping some of lost ground from January when it tumbled 4.9 per cent.

Fund sales, however, were still down from last year's nearly $8-billion in net new money for the same month, according to figures from the Investment Funds Institute of Canada.

The fund arm of Royal Bank of Canada enjoyed $2.2-billion in new cash last month, followed by the fund arm of Toronto-Dominion Bank, which attracted $845-million.

Not all fund companies enjoyed inflows of new money.

Investors yanked $442-million from Toronto-based AIM Funds Management Inc. as concerns grew about the departure of key fund managers, and disappointment over short-term underperformance of the value-oriented Trimark fund family.

AIM Funds suffered from the most net redemptions for February, followed by AIC Ltd., with $135-million in net outflows.

© The Globe and Mail

Breaking News from The Globe and Mail

Canada's changing work force: a snapshot
TAVIA GRANT


Tuesday, March 04, 2008

Rising commodity prices have ignited demand for workers in everything from construction to energy, mining and retail, making Canadian employment growth the fastest among G7 nations, latest census data show.

Total employment in Canada swelled at an annual average rate of 1.7 per cent between 2001 and 2006, the fastest percentage increase among the Group of Seven nations, Statistics Canada said in its sweeping study of changes in the labour market.

“Employment rose in every part of the country,” the report said. “However, growth was strongest in the West, and especially in Alberta and British Columbia.”

The fastest employment growth was in the mining, oil and gas industries, where employment jumped at nearly four times the national average. “Alberta alone accounted for 70 per cent of the employment growth in this industry,” the report said.

Oil and gas well drillers, testers and related workers led the gains, soaring 78 per cent Growth in the larger construction sector increased 4.5 per cent on average per year, driven by low borrowing costs and a healthy economy. In the five-year period, the sector added almost 200,000 workers, particularly carpenters.

Canada's second-largest service industry — health care and social assistance — also added almost 200,000, translating into 2.6-per-cent growth on average each year, much more than the national average. The gains were widespread, from ambulatory services to medical laboratories to hospitals, the study said.

Healthy consumer demand also prompted growth among retailers such as grocery stores, building materials and supplies stores and car dealerships. The industry increased 1.8 per cent a year on average, putting the number of retail jobs at just over 1.8 million.

On the downside, factories shed 136,700 jobs during the five-year period, or a 1.4-per-cent drop per year, as the Canadian dollar appreciated and companies shifted jobs offshore.

The number of sewing machine operators plunged by a third, while the number of metal fabricators, including steel workers, also dwindled.

Many workers moved west. More than half a million people, or 3.4 per cent of the total work force, moved to a different province or territory in the five-year period, with mobility rates the highest in the territories and Alberta. Most of the movement took place in the mining, oil and gas and public administration industries in 2006, the report said.

Among cities, Barrie, north of Toronto, had the country's fastest employment growth, followed by Kelowna, Calgary and Edmonton.

Of the three largest cities —Toronto, Montréal and Vancouver— Vancouver had the highest employment growth, amid a flurry of condo and Olympic-related construction.

Both Toronto and Montréal experienced slower employment growth, though, compared with the previous five years. Both cities were hurt by factory losses, though Toronto was helped by strong housing and financial markets and Montreal by increases in the construction and child-care sectors.

Windsor appears to be suffering the worst. The southern Ontario town saw steep declines in auto parts manufacturing, prompting the jobless rate to hit 8.3 per cent by 2006 from 6.3 per cent in 2001. That's the third-highest in the country after Saguenay and St. John's, however, jobless rates in both Saguenay and St. John's declined during this five-year period.

Atlantic Canada and pockets in the North still have the country's highest jobless rates.

Immigrants are making up a greater share of the work force. Foreign-born residents made up more than one-fifth of Canada's labour force in 2006, a greater share than in 2001.

The employment rate for core working-age immigrants increased to 77.5 per cent in 2006 while the comparable rate for Canadian born workers was 82.4 per cent.

© The Globe and Mail