Canadian Personal Finance Blog

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?

Olympic and RRSP Random Thoughts

Given most Canadians are caught up in the excitement of the Vancouver Olympics, they hopefully will not forget that it is almost the end of RRSP season and you have until midnight March 1st to make that contribution to count on your current Income Tax submission. Given the lack of activity in most banks, I think most Canadians are more worried about Canada beating Slovakia in Hockey, or whether our Curling teams can bring home Gold (but we can forgive folks, after all there is nothing more Canadian than Hockey and Curling).

After all the excitement of hosting yet another Carnival and having my first ever give-away, let’s see what other Personal Finance Bloggers might have had to say this week:

• Michael James keeps with the Olympics feelings, telling investors to “…not grip your stick too tight…” in Investing Lessons from Hockey, oh and I think he also says, Always keep your stick on the ice.
• For all those Hockey Moms and Dads, the Canadian Capitalist points out that Tim Hortons Brews and Expensive DRIP and SPP, strange that they wouldn’t know how to DRiP? They couldn’t be using Instant Coffee could they?
• Million Dollar Journey takes a more financial angle with 5 ways to Reduce Financial Clutter which has some good ideas for those Financial Hoarders out there.
• The Task Force on Financial Literacy published a report this week entitled Leveraging Excellence writes Larry MacDonald, but is the task force made up of the right folks? I don’t know, no one asked me for my input.
• Preet at WheredoesAllMyMoneygo.com’s career as a Financial Talking Head took a minor setback this week when his Lang and O’Leary exchange interview was cancelled. Hopefully you will see Preet’s smiling face on your TV somewhere else soon (he is well worth listening too).
• The Four Pillars does a Quicktax Canadian Tax Software Review, which would be useful if someone gave away the software (like I did).
• Gail Vaz-Oxlade asks, Who are you trying to Impress? and my answer is, no one really. I gave up trying to impress folks once my age passed my waste size.



Go Canada! and remember RRSP season is almost over.

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)

Not Inflating Yet

What with the Interest Rates remaining steady and the CPI only at 1.3% for the year sounds like things are just peachy and rosy in the financial world, but I suspect that the Financial Blogosphere may not completely concur with that statement yet:

• Larry MacDonald crunches some numbers and cries bullshit (his words not mine) for the Life Insurance versus RRSP scam being promoted by some financial planners. Isn’t it fun the games people play with numbers?
• After my post about Financial De-Cluttering I was glad to see the post 3 ways being organized can save you money from the Million Dollar Journey. Yes it seems obvious, but is it?
• Michael James talks about how the Assault on Public Service Pensions Begins a topic near and dear to my heart. I feel like Typhoid Mary, wherever I go, I bring Pension issues.
• Preet does some number crunching of his own in The Counter-Intuitivity of Fixed Income Indices although I am curious about the word Counter-Intuitivity, can I use it in Scrabble?
• The Canadian Capitalist commented on Canadian REITs: No Longer a Bargain one day I’ll have to ask him to give me a tutorial on REITs because I don’t think I completely grasp the concepts in these investment vehicles.
• Gail Vaz-Oxlade asks What Your Mulligan Be? in the area of personal finance. I have far too many of those I’d like to forget, but glad to see Gail confess she bought Nortel as well. I only have a few flaws in my Golf game as well: my stance, the way I hit the ball, my clubs, my inability to judge distance and my lack of hand eye co-ordination, other than that my Golf game is just fine.

Big C8j’s Tech Corner

Occasionally I’ll jump out of my main role of Personal Finance Guru [sic] and show that my real role in life is technical savant, here are a couple of interesting things to note on the technology side of things:

• And for those cheap buggers like me that don’t want to spend $200 on a specialized piece of hardware to read e-books, I give you the Kindle for a PC, so now you can buy a $200 netbook and use it like a Kindle.
• Do you have Windows 7? Do you still want to use your Windows XP applications well? Guess what, Microsoft now has an Windows XP Mode for Windows 7 which sounds like you should get!

Carnivals Too

You can find my post Do you have saving questions? at the Carnival of the Road to Financial Independance.