Canadian Personal Finance Blog

Archive for the ‘Financial Apocalypse’ Category

Stats Canada announced some improving numbers for February in the world of Employment, which bodes well for the economy, but also points towards a recovery, which will cause the government to maybe get out of the way, by lowering their intervention, but also have them stop making money so easy to get (i.e. upward pressures on interest rates). This seems to be the opinion from a few folks about these numbers.

Underlying February’s employment change was a notable gain in full-time work (+60,000), which was partially offset by a decline in part time (-39,000). Since the summer of 2009, employment growth has been all in full time.

On Going Employment Graph

Employment Better for Over 55

An interesting figure is that employment for folks over the age of 55 was one of the biggest growth areas in February. This means lots of older folks, who maybe should be thinking about retirement are actually going out and getting jobs?

Employment for men and women aged 55 and over has been trending up for a number of years, the result of employment growth combined with more people moving into that age group.

Yes we are all getting older, but why are we looking for jobs? Guess we need to save a little more for our retirement?

Unemployment Down Too

This month the unemployment numbers trended down, which is good as well.

Big Picture Graph for Unemployment

The Big Table

And here is the big table to ogle for more information:

Last night I watched a very interesting interview on the Daily Show with Harry Markopolos, one of the men who blew the whistle on Bernie Madoff (back in 2000). The interview with the Daily Show is astoundingly frank and entertainingly funny, and at the end of it, incredibly disturbing. The Comedy Network in Canada does not allow me to embed this interview so you’ll need to click to get to it, but it is well worth the hassle. Markopolos’ book No One Would Listen: A True Financial Thriller is an interesting read.

CNBC does have a more serious interview with Markopolos and a former co-worker Frank Casey, which outlines that Madoff’s shenanigans and financial tom-foolery had been noticed, but it seems no one did anything much about it for a long time. The best line is about how you never had to use Madoff’s last name, if you said, “Bernie” everyone knew who you meant.

This has been mentioned by a few bloggers, but I think the topic is a good case study in investing in “growth areas” (or as I would call it speculating on stocks).

Olympic Final Hockey Tickets

When the Olympic Hockey Final tickets went on sale about 2 years ago, they were snapped up very quickly, but were all sold (presumably) at their face value by the Vancouver Olympic Committee. VanOC made their money selling those tickets, and this is much like a company issuing stock or like an IPO (for a newer company). The profits have been made by the issuer.

Now we get into the world of presumed value of the tickets, and what they start being re-sold for.

As the Olympics came closer and closer the value of the tickets rose from their face value, to what folks are willing to pay for this Final Game, and I would assume that they started appreciating in value the day they were sold by VanOC. The appreciation may not have been much, but I am sure you could have made some good money simply “flipping” your tickets as soon as you got them.  At this time there is very little “risk” in this investment, because other than the Olympics being cancelled or Team Canada refusing to use NHL players, the tickets are worth at least as much as what they were bought for.

Speculation Time

When Team Canada was announced a month or so ago, that is when the value of the tickets might have started going UP and DOWN (i.e fluctuating), with all the Arm Chair GM’s looking at the roster and deciding whether Team Canada could make it to the game.

The big risk now introduced is, if Team Canada does not make it to the game, the tickets value drop significantly (possibly well below face value).  This is what now will drive the value of the tickets, Canadians would go watch the game if Team Canada was going to win 100-0 or lose 0-100 (maybe not pay as much) but if there is no Team Canada your investment is going to “tank”.

Tournament Starts

Team Canada blows Norway out to start the tournament, and Confidence is high, so your ticket value is going up, and you are sitting pretty. No reason to sell right now, right? What about locking in your profits, because remember what happened in 2006? No, you decide to keep your tickets, and keep going!

Team Canada then plays a worrisome game against Switzerland to begin with and now the ticket value could go up or down with “experts” saying there is a chance this team may not “have the stuff” that is needed to get to the Gold Medal. Do you take your profits now, or do you hold on and hope for  Team Canada to turn it around? You decide to keep your tickets and pray for the best.

Team USA appears with a hot goaltender and puts a beating on Team Canada that causes a collective PLOTZ in Canada, and the experts are now sure this team does not have what it takes and now some of your implied profit disappears, because now Canada must play Germany and then Russia to get to the Semi-Finals. Your ticket value has now dropped a great deal, and you kick yourself for not selling after the Norway game, when your value must have been at the highest, but you decide to ride this donkey to the end.

Canada knocks off Germany handily, and now your ticket value is increasing again, and that voice in your head asks, “Is it time to sell?”, but you are a gambler, and you know that if you hold on and Team Canada beats Russia (the experts are again saying this is going to be a rough game) your ticket value will rebound, so you hold on.

Holy cow, Canada obliterates Russia, and your ticket prices sore, with the possibility of a re-match between the US and Canada in the finals a real possibility (this would give you the Maximum pay back on your ticket, because not only could you sell to Rich folk from Vancouver you could make Yankee Dollars from Americans there too). You are on Cloud 9, thinking, all Team Canada has to do is knock off the Slovaks, and you will make a fortune, on your simple investment!

Here come the Slovaks and Team Canada is cruising, until that Goal and suddenly the market for your tickets gets a lot more nervous. That second goal and you are again panicking that you should have sold after the Russian game and taken your profits!!! OH NO!!! But, Team Canada pulls it off and you are given the added bonus of the Americans pulverizing the Finns, so here you have the ultimate appreciation of your ticket investment, Team Canada vs. Team USA in the finals, your investment has paid off.

Congrats Your Investment Has Come in!

Or has it? Should you sell the day before the game, or what until the day of the game? How are you going to sell it? Will you sell it to a scalper, or will you stand in front of Hockey Place and try to sell the ticket yourself (risking running afoul of the law enforcement agencies that frown on that kind of free enterprise?)? What happens if you don’t find a buyer who is willing to pay what you want?

Maybe you are a Hockey Fan and you don’t care what anyone offers now, you are going to enjoy what you paid for, and don’t care of how much money you can make (you will however feel smug when the two guys who sit down beside you at the game saying they paid $10,000 each for the tickets, or will you? Will you have non-sellers remorse?).

An interesting case study, what would you have done?

Attention Ottawa-area readers: CBC Ottawa is looking to talk to a regular investor between the ages of 25 and 50, who actively keeps an eye on the stock market and may have lost money during the economic downturn and are changing their investment strategy. If you are interested please contact Sannah Choi at 613-288-6471. You can also reach Sannah via e-mail at Sannah-(dot)-Choi-(at)-cbc-(dot)-ca.

RRSPs are Coming to Town

Yes it is that magical time of the year, where banks and institutions beg you to put more money into your RRSP, because it would be a good thing for you when you get older.

Show of hands: Who believes they do this because they are worried about your Golden Years? None? Not surprised.

Banks (and Insurance companies and whomever else sells Mutual Funds) want you to put money into your RRSP now, so that you go and buy their High MER Mutual funds (with the big fat entry fee, and exit fee as well).

How many times have I heard co-workers or friends say, “I just put my money in the Canadian Stock Fund and will move it later”. When I query about the MER for this Canadian Stock Fund usually the buyer is unaware, and what the front or back load is on these funds is a mystery as well. How many folks will move it from this fund at a later date? Don’t know, but my guess would be not many move the funds ever.

I don’t have time to think about this, is another argument folks have given me for buying some very dubious Mutual Funds, which may be true, but why did you spend your money is the answer I give. Would you buy a car, house or even major appliance without knowing that there were hidden fees to buy it and then a yearly “support” fee?

So I shouldn’t buy RRSPs now? No I didn’t write that either, but wherever you invest your money, be sure you understand the costs of investing in this financial device. This doesn’t mean you should blindly go out and buy ETF’s or Index Funds, if you don’t know where (or how) they invest.

Get educated is what I am saying before you go out and buy your RRSP. If you don’t have time to do it right now, then wait until you can figure it out.

Maybe I should just get a Financial Advisor?Caveat Emptor is my response to that idea. The past few months more and more stories are coming out about Financial Advisors, and how they work, so you need to find one that you trust, and ask them, How do you make money? especially if they are offering you their services for “free” (you would be surprised what free really costs). If the advisor suddenly tries to sell you whole life insurance, get up, get your coat and walk out without a single word, and don’t come back.

The hasty or rushed decisions I have made in my life (financially) are rarely the ones I look back on with fond recollections.

Top 10 lists

I was wandering through yet another Top 10 List, and it struck me just how many Top Ten lists there are out there (not to mention David Letterman’s output of a list every night), so here is:

Top 10 Top 10 Financial Lists

Here in no real order is my Top 10 list of Financial Top 10 Lists I have seen over the past little while:

• Top 10 Reasons why High Tech will recover (published in 2001).
• Top 10 Ponzi Schemes to invest in, and the questions to ask your Advisor about their latest Home acquisition.
• Top 10 Ethical Reasons for failed Bank CEO’s to get their bonuses
• Top 10 Ways to save money by not paying off your credit cards.
• Top 10 Most expensive bank service charges, and why we love them
• Top 10 Matresses to store your money sorted by level of comfort (assuming you are only using paper money, no loonies or twonies please).
• Top 10 Mutual Fund by MER (sorted by highest MER), and why they really are a good investment
• Top 10 ETFs that have nothing to do with any index and why you will outperform the market doing this
• Top 10 Reasons that Whole Life insurance policies are better than term policies.
• Top 10 Why 1,000,000 slugs love Vancouver’s weather (even in the winter) and why they are the only ones who can afford to live there

Did I miss any? (yes this is what happens when I get stuck in long meetings and my mind wanders)

As my regular readers see, sometimes my mind wanders to weird places and I must admit I am not sure where most of this came from. On Sunday night at 5:00 PM I had nothing to write for Monday, but looked at the GPS I had just received from Christmas, started writing about a Financial GPS and from their we got to Financial Shock Collars and here we are Friday with a whole week of very odd postings by me.

I empathize with those in dire financial quandaries, but in some cases the Financial Shock Collar may be the only answer. As Mrs. C8j pointed out in a comment she made, a lot of issues with money in couples comes from lack of communication, so maybe it’s time to start talking to your spouse about money? Just an idea.

Random Shocking Thoughts

This week other Personal Finance Bloggers found more solid issues to write about, and some are well worth checking out in this weeks Random Thoughts:

• Given the C.D. Howe institute put out a very good e-brief Saver’s Choice: Comparing the Marginal Effetive Tax Burdens which has caused many bloggers to discuss this interesting point.
• Michael James spoke of this in his post RRSP versus TFSA where he discusses various scenarios about putting your money in either savings vehicle.
• The Canadian Capitalist also posted talking about the C.D. Howe’s take on TFSA versus RRSP where he talks about the Howe findings specifically.
• Canadian Financial DIY also comments on the Howe findings in New Data on TFSA vs RRSP and Canada’s Rube Goldberg Tax System.
• On a related topic, Larry MacDonald talks about RRSPs and business owners and how business owners might want to think about setting up RRSPs for their retirement, or perhaps even TFSAs?
• Preet wraps up his expose with Severing the Link Between Price and Weight Part IV.
• Million Dollar Journey talks about where they might get the money to put into their RRSP or TFSA with a the post How I saved 70% on my grocery bill, remember 50% off meat should be eaten the day you buy it too!
• Gail Vaz-Oxlade writes an important spiritual posting about Keeping Focus, which is important in this day and age, don’t get distracted from your goals.
• Let’s stop the madness is a very good rant by Ellen Roseman about the dirty tricks being played on some consumers, read this and be warned!
• I hadn’t noticed but Dave over a Investing Intelligently Got Laid Off, now it looks like he has found something, but does bring home that the alleged “recovery” may not be fully entrenched yet!

Enjoy your weekend, and remember, if you think you need a Financial Shock Collar, please get some help!

On Monday, Labor numbers which are out today!