Canada savings bonds, convertible debentures, HP good news and no one cares

[selkirk]

Canada Saving Bonds

was at a bank at picked up the rates on the Canada Savings bonds, these are sold by the government to retail cdn. customers.

a great savings vehicle in the past, ie. 70, 80s, where the rate you got was locked in, and sometimes that rate was very good. also you could cash it in at any time, or wait until they matured.

however today the rate changes, the regular series pays 1.85% and is cashable at any time.
so you lose to inflation.

there is another series cashable once a year pays 2.35% year 1, 2.50% year 2, and 2.65 year 3. 2.49% avg. rate.

Canadians are better to ingore these rates, some high interest saving accounts (money can be withdrawn at any time, and no fee) get 3-3.50%.

also saw at a bank where they were paying 4.25% for a 2 year GIC (CD), and 4.35% for a 3 year. in three weeks this was lowered to 4.05 for 2, and 4.25% for 3. however still a good rate, (BMO was the bank and insured for up to 100,000 deposit insurance).

most banks have better offerings than CSBs, the government should improve the product, go back to the old way, or just dump the product. feel sorry for anyone who buys them today.

Convertible debentures

oil (oilexco) announced last week they were going to raise money through a convertible debenture.

when you here a small to midcap (resource, or any other company) fund a company and mainly through a convet. debenture....you should in most cases sell the stock.

not sure what oil (oilexco (toronto) was thinking however this is a terrible way for a small to midcap to raise money. short sellers then buy the convert and short the stock.....a good hedge.

to do not blame the short sellers, blame idiot management. blew the remaining stock out the door on Friday....


my cash position is 20% and will rise to 30% by the end of the week, (options expire), the market ignores good news.

HP numbers yesterday should have sent the market higher from the start, however barely a yawn. most of the day it was down.

HD had good numbers however no one wants a retail stock in this environment.

when the market does not rally on the HP good news, it is a bad sign.
so will build up cash 30% and write, sell more uncovered calls, until things change.

thanks
selkirk

 

[DOGS THAT BARK]

Got 3.5 interest in MM account at my bank and 4% on CD (13 months) --a no brainer to me --will give up a 1/2 to have flexibity to withdraw at any time.

Have savings account in China paying almost 5% and got about 20% appreciation vs $ on top of it over past 2 years--pretty simple process unless 50K or over then it would take 2 days to fill out forms required.

On the HP situation--agree not good sign--have never seen a time when good earnings and reports mean nothing--While not a lot china stocks (or any others) left--those still holding have taken big hits with nothing but good reports coming out.
Decide to hold till doomsday despite 50% decline-- if fundementals stay same--will add to positions once brunt of fiasco subsides.

Lots of stocks out there that people will make tons on when stocks bounce back and anxiety subsides--

Don't want any part of U.S. market--every time I think things can't get worse they do. They just selected Waxman as head of Energy and Commerce--he is probably biggest pro greenie in politics--and adding higher energy cost in equation will be a killer IMO.

You have any sectors in particular you like when markets rebound

Got 2 I'll be looking to get back into that have really took beating-Natural Resouces and shipping.

 

[selkirk]

there will be a great number of sectors that will rally, though libor has come down what companies (good ones that show a profit), have to pay 9-10% often more.

so in the short term looking at debt, only US financial holding is JPM preferred, great yield. would not own the common. looking to buy back in Wells Fargo.

In resource
Ag. (corn prices will go back up and for the most part these fert. companies have cash and cash on the balance sheet.

energy not sure if oil can hold 50 would buy here, thouigh these things often overshoot on the upside and downside, so will wait, the energy sr. names are cheap. would also look at jr. but the big ones move first.

base metal stocks, when they have no earnings and look expensive probably a good time to buy. most are 25% of their value. some will blow up however the ones who cut back production will survive and then go up 400-500%


Infastructure plays will move, have not been in the sector on the way up or on the way down.
some are getting really cheap.

in a way city and states are so strap for cash that they will kill infastructure projects even if needed. money may come from federal, it will have to be done and now is the time, labour and materials are cheaper.
many in the US and two in cnd. looking at, want companies that only count a project as backlog with a large down payment. these will move.

Tech
for the most part I hate tech, even during the late 90s when I had some great returns, had a sci tech fund return 280% in 1999, and 145% the year before.

tech is often hype, however now you can buy companies for 10-12PE with large amounts of cash on hand, these multiples will just grow in a bull market, at least a double.

Financials
for long term bank with a retail focus, US and Cdn. this week Cdn. banks took a hit BNS, and TD, both had profit warnings, however they are still making profits. would give the whole space time, however these come back.

Emerging markets
in a world wide slowdown, and if europe and US show economic growth, no one cares about emerging markets, in fact investors throw the stocks out, who cares.

however unlike in the past when they grew by debt (shaky debt) and most of it was a house of cards, most now have surpluses. and far less debt than the US and europe.

first year of a bull market an emerging etfs probably make between 25-80%. and then go from there.....

finally small caps
(no I have not mentioned every sector... )
will go into this in more detail but there is just dozens hundreds of small caps that are cheap.

some are more spec, however have little downside, just no debt and good balance sheet and some will go up 200-400% will list a few..... in another thread.... no rush these will not move for a while.

thanks
selkirk