Key takeaways from Turmoil

I haven’t written much lately, and that’s been for a variety of reasons. The most important being that I had to ensure clients capital was sheltered from what seems like Tsunami’s of bad news. Not much changing to do, just some re-balancing into less risky investments and continuing to hold our oldies but goodies.

Some of my observations or takeaways over the last few months:

  1. Don’t panic, analyze
  2. Ensure you always have enough cash on hand in case of an emergency (worst case scenario)
  3. Make sure you have adequate Insurance on all hard assets, including your lives
  4. Believe in your ability and instincts
  5. Never rely on others to help you out financially
  6. Never assume someone in authority is smarter than you are
  7. Question what seems too good to be true
  8. You always get what your pay for.
  9. Consistency always pays off
  10. Take care of yourself and your health (mentally and physically)

Stay sharp, stay committed and stay focused

Rick

 

 

Leading a Horse to Water

It’s a classic saying, yet never more appropriate than when it’s applied to professional advisors in any field. Be it medical, legal, counselling or financial. All professions that deal with the public can relate to this expression. In the beginning I used to cringe when good advice fell on deaf ears. But as I matured and raised a family, I learned to let things play out.

Failure is good. We forget about that. I’ll borrow a line from Batman and use these lines as a great reference;

“Why do we fall down Master Bruce?” “So we learn how to get back up Alfred”.

Our culture and especially our families have become too protective over failure, to the point of stifling effort. In sports the score does matter. It provides a clear indication of ones reward or effort and also spurs reflection and drive for those on the wrong end of the scorecard.  Life is similar. It owes you nothing. Sooner or later you will learn its harsh realities. The longer you prolong or protect individuals from these lessons, the harder it will be for them to learn from them.

Parents, Teachers, Counsellors, Lawyers, Doctors and yes Accountants, are all there to help us make good decisions. As professionals, we must also understand that not taking our advice is also sometimes necessary for the greater good. I know I have learned the hard way several times, and wish I had just listened the first time. I also know that these consequences made me who and what I am today.

Rick Barbosa

 

How to fight Internet Price Increases from Rogers and Bell

Recently, there was an article that mentioned Rogers and Bell were increasing monthly internet fees by between $5-$8 a month. That roughly works out to be a 10% annual increase for the average user. Of course the standard response is that they will be using these excess funds to further research and improve service. I call B.S

The next gen internet technology has already been developed (li-fi) and the infrastructure to harness the higher bandwidth is already in place. The real reason is that they are offsetting hundreds of call centre hourly wage increases that came into effect this year. Thank you Kathleen.

What makes it worse is that no one can really compete against the 2 biggest providers. They even collaborate on investments (MLSE). So what can you do?

  1. Buy their stock. I know how this sounds, but they both pay good dividends and it’s nice to have them pay you for a change.
  2. With Netflix and other services inching their way past the CRTC, you need to do your homework and decide what you can live with. I am downsizing my package to the basic one next month in protest and save 30.00/mth or 360.00/yr.

Stay frugal my friends…

Rick Barbosa

 

 

 

 

Can you sit still?

Recently, we’ve increased our positions in a few key holdings including CIBC, Genworth Mortgage Insurance and Blackberry. Initially the returns were positive, lately, based on the news cycle or lack thereof, their values have decreased somewhat. Nothing materially has changed for either one of these holdings, including Blackberry, which made an unexpected profit even when you back out the Qualcomm payment.

Analysts are paid to overreact, we do not. These businesses are sound, make money, and will make more money.

Our Criteria for investing is simple:

  1. Good or Service is Vital (Need)
  2. High Barriers to entry (Financial moat)
  3. Good Management
  4. Strong Balance Sheet and Cash position

The true mark of an investor versus a trader is how long they can sit still when things are not going in their favour at the moment. If you panic and “limit your losses” you are a trader, if you believe in your analysis and see these swings as temporary, then you are an investor. Limiting your losses also means wiping out future returns.

Stay Calm and Carry on.

Rick Barbosa

 

4 Pillars of Building Wealth

Believe it or not, the manner in which you can build your nest egg hasn’t changed since the dawn of the 20th century. The tools may have improved but these foundational pillars still exist.

  1. Discipline – Stay true to your purpose and never lose sight of your goal.
  2. Save – Learn how to keep and grow your money
  3. Research – The best results come from the most informed decisions.
  4. Plan – Anticipate life, surprises, retirement, and set out to meet these obligations.

Contact us to learn how to use these tools and start building your wealth.

Rick Barbosa

 

BBT Financial Update 10 days ahead of Barclays Analyst

Our clients enjoyed a 10 day window to buy up depressed stocks from our client update on May 12th. See the Barclays post below:

BUZZ-Barclays upgrades 5 Canadian banks on valuation, outlook

23 May 2017 – Reuters

BUZZ-Barclays upgrades 5 Canadian banks on valuation, outlook** Barclays raised its outlook on 5 Canadian banks due to low valuations following Q1 results

** Analyst John Aiken writes depressed valuation also attributable to housing market worries arising from non-bank lender Home Capital Group’s rapid decline in deposit accounts
** Cites upcoming switch to 2018 valuation year as painting rosier earnings growth outlook
** Among ‘big 6,’ raises Bank of Montreal to equal weight from under weight, PT to $98 from $95
** Lifts Bank of Nova Scotia to overweight from equal weight, PT to $84 from $78
** Upgrades National Bank of Canada to overweight from equal weight, PT unchanged at $59
** Boosts TD Bank Group to equal weight from under weight, PT to $69 from $64
** Also raises regional bank Laurentian to equal weight from under weight, though trims PT to $58 from $59
** In last 12 months, banks have outperformed the broader Canadian equities market, with the Thomson Reuters Canada Banks Index up 14.9 pct vs. the TSX Composite (up 11.1 pct)

Even with the BMO earnings today,  we see a buying opportunity.

Our Call 05/24/17
We predict that enough republicans will vote for impeachment before US Thanksgiving, leading to further depressed values for banks in the US. Canadian Banks should see continued strength as safe havens. Oil will bounce higher despite incremental supply. Overall infrastructure spending will boost oil demand over the next 2 years so hold on or add to your energy stocks.

Rick Barbosa

 

Client Update 05.12.17

The recent Home Capital transparency issue, and now the downgrade from Moody’s on Canadian Banks has supressed valuations recently. We personally have GIC’s with Home Trust that are coming due.  Although we don’t envision investing in the Company, (once trust is an issue) we do anticipate adding to our CIBC and Genworth positions. Canadian Banks and non-sub prime lenders do a great job of valuing risk, even in this environment. Canadian banks do not write risky loans, you’d know if you’ve ever tried to borrow from them. Hence we see this as a buying opportunity.

Tip Sheet

CIBC  (CM) Close 107.29
P/E Ratio 9.1
Book Value 1.8
Debt to Capital 4%
Dividend 4.73%

Genworth Mortgage Insurance (MIC) Close 33.48
P/E Ratio 7.1
Book Value  .8
Debt to capital 10.3%
Dividend 5.26%

For more portfolio advice, Look up Rick’s Pick’s Page

For individual portfolio management contact our office.