Canadian Personal Finance Blog

Our friends at Stats Canada published their Leading Indicators for August 2008 yesterday and things in the Canadian economy seem to be doing ok, not great, but not as bad as some might think. 

The most interesting statement made was:

Household demand has remained the most consistent source of growth in recent months. Sales of furniture and appliances grew steadily, helped by a steady housing market. Housing starts rebounded in August. Meanwhile, personal services have become the main prop to growth in services employment. Sales of other durable goods were an exception to the strength in household spending, reflecting slower auto sales over the summer in response to record gasoline prices.

The housing index dropped, which may mean more reasonable housing prices or a slowing of the price increases we have seen, which is good as well.

Speaking of House Prices

The Citizen talks about how new price valuations for homes across Ontario are about to be sent out by The Municipal Property Assessment Corporation. Remember these valuations have been frozen for the past two years, so these new numbers could be pretty darn crazy (given a 20% price increase since 2005 on average in Ontario). 

“Residential property values have increased by an average of approximately 20 per cent across Ontario since 2005, when the last assessment update was done. Because of the four-year phase-in, property taxpayers will see an average assessment increase of five per cent next year,” Carl Isenburg, president and chief administrative officer of the Municipal Property Assessment Corporation (MPAC)…

 
I look forward to seeing this envelope in the mail.

Quick Run Around the Blogs

Some excellent articles this week from other bloggers worth having a look at:

• Nancy Zimmerman writes about 10 tips to change a small money habit, where she discusses how to stop buying lunch out (micro economics at it’s best). 
• Michael James writes about the Current Financial Mess and gives a very philosophical view that we are still living good lives, we just need to figure that one out. 
• All About Nortel has an excellent article questioning the former Telecom Diva’s decision to Sell Off Their Metro Ethernet product. Good research.
• The Canadian Capitalist writes about the implications of the Fall of AIG, a little depressing, but good research as well. 
• No Debt Plan writes an interesting view on Credit Card Victims Don’t Pay for 100% of My Credit Card rewards. 

Lies, Damn Lies and Stock Price Trends

To paraphrase Benjamin Disraeli. One of my favorite times of the year is here, with the opening of the N.F.L. season and with baseball coming down to the end of the season, the orgy of numbers coming from both games is astounding and quite satisfying for a number nut like me.

As a kid I reveled in the numbers from Baseball and loved collecting them and comparing them, but even as a kid I learned that all the numbers in the world are only telling you what happened in the past (which can be very important), but these numbers do not necessarily point to what will happen in the future. It is important to know what has happened in the past (because we do not wish to re-do our previous mistakes) but to know the future is what we all crave.

Football is awash in numbers to the point where there is an entire industry that has been created to use the statistics created by football games (Fantasy Football leagues), which astounds me, that you create a game from a game (is that recursion?).

Financial analysts do the same things to investors. They have mega-tonnes of data on every single stock and what it has done since it’s inception, and there are entire companies making fortunes analyzing these numbers, predicting what stocks “might” do by doing this analysis.

My understanding of the stock market, is that it has no conscience and no memory. Each day is a new day, and it’s like a Simpson’s episode (i.e. most of what happened yesterday isn’t relevant and it is forgotten) on the Equities market.  The simple fact a stock went down the previous day does not mean it will drop the next day (that fact alone, there may be other much better reasons, but the previous drop means nothing).

I have to laugh when I hear about “downward trends” and “upward trends” being reasons alone to buy or sell stocks, you may as well base your purchases on your lucky rabbit’s foot if you are going to think that way.

Keep crunching those numbers, but remember the numbers alone are meaningless without the context of why the numbers happened.

I guess the good news is that Gas is back to being more expensive than bottled water (but still much less expensive than Coffee at Starbucks). I had to double take when I saw that my fill up price per liter yesterday was $1.11 per liter, so the $20 I put in my car wasn’t very much (luckily it was in a small car, so it still seems not too bad).

More interestingly I see that the car I am currently driving (Toyota Corolla) has dropped in price in Canada to reflect the new stronger dollar, took them long enough to do that. I bought my car used, but it’s good to see I could get a new one much cheaper these days too. What if I had bought a new one in November, does Toyota have a rebate plan for the poor shmucks that bought last fall?

RRSP Clarification

Yesterday’s post about the RRSP Silly Season I wasn’t clear enough to point out that I do in fact put money away for retirement in a few different ways, I just do it directly from my pay cheque to ensure I do not mistake it for spending money and not put any money away for my retirement. This is really the best way for me to do this kind of saving, if I do not see it, then it is likely I won’t rely on having it to pay off bills and such.

Leading Indicators Up

Another confusing piece of data claiming to show that the Canadian Economy is just fine was published yesterday, with Stats Canada. The Leading Indicators composite index was up 0.2% in January after December’s no growth, so I guess this is a good thing. Another confusing set of data from Stats Canada you can mull over this morning too.

Canadian Leading Economic Indicators Unphased by Financial Market Stupidities

So the leading indicators are up 0.4% over August, and more importantly don’t seem to reflect any “wear and tear” from the financial market fiascoes of that time frame (i.e. lower than prime mortgage stuff).

Household demand remained the driving force behind growth. The housing index leapt by 5.3%, its largest gain in almost six years, due to higher housing starts. Spending on durable goods also accelerated. Strong consumer demand for services was the largest contributor to the growth of services employment.

So the Canadian economy continues to chug along happily, which is a good thing.

And the Loonie will Dive

RBC claims that by next year, the Loonie will be back down to 93 cents American, but I am not so sure about this one. I think the U.S. government has made a conscious decision to force their economy back to a more manufacturing base, and not have to rely on imports as much. A sliding American dollar makes for much more expensive imports, which means American manufacturers are on a much more even playing field now? Yes, it’s simplistic on my part, but if you want to kick start things, maybe creating a “Buy American” ground swell, by forcing the prices of imports up (without having to use tariffs) is pretty smart.

ATM Fees a little Math

After finding out that the banking machine at my office has become a “white” ATM machine to me (being a TD customer), it now means that if I take out $20, I pay $3 in service charges. What does that mean?

• Effectively I am paying 15% interest (at that moment) to get money from this machine. Yikes that is a hell of a lot of money to pay just to get $20
• Yes, I shouldn’t just take out $20 at a time, I should take out MORE, but I actually take the next logical step which is to go to a banking machine for my bank and not get charged anything.

As I said, invest in banks, no one else could get away with this.