19 Apr 2015, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Malik’s Corner……What’s bothering clients? Investment Insights Looking Ahead.


Good afternoon on another cold day in March.

 

Some client worries and in no order……When is oil going to recover?  Should I convert US dollars to Cdn as the exchange is so good? Should I sell my bank stocks? And what about the US…when is it going to meltdown? …and when are we going to have some warm days?

 

Oil: I attended a presentation by David Wolf of Fidelity, ex Bank Of Canada Advisor to Mark Carney. He defined the current oil crisis to a supply crisis and not a demand crisis. So quite different to the 2008 demand crisis when oil rebounded back up. The supply crisis is being caused by the surplus of oil, creating a downdraft on the price….and according to him, oil could stay down for some time.

 

Benefit of low oil are huge especially for the world’s largest importers of oil……US, Eurozone, China, Japan and India and in this order. Cheaper oil results in improved bottom line for all manufacturing and more money in the hands of the consumer. So in brief, good for global growth and so investment strategy should be global in nature. IMPORTANT

 

Negatives…..Canadian dollar will be negatively impacted and may stay at current levels for some time. However oil savings are going to be felt at the pumps and means more dollars in the hand of the Canadian consumer.

 

US dollars vs Cdn Dollars

 

Correct answer: We are so close to the US….so not a bad idea to hold a US dollar savings account at your local bank. I would not move in and out of currencies….I believe the exchange rates offered at the banks are not that pleasant and the fees charged are quite high as well. As we live in Canada, we should have a majority of our funds in Cdn dollars.

 

Selling my Cdn bank stocks?

 

Canadian banks are long term holds…..and currently on sale, according to money managers on the street.  Not a good idea to sell if they are held for the long term. The current dividend yield makes them quite attractive buys.

 

US Meltdown?

 

I don’t think so….. A strong US dollar allows the world’s biggest companies in the US to use this to their advantage and invest globally. Furthermore cheaper oil is having a very positive impact on the bottom line of manufacturing companies and making quite profitable. I do expect volatility to continue for the foreseeable future…..but the trend is upwards. I would not still put short term funds in the stock markets….whatever predictions you read in the local press.

 

Investment Insights, the Long Term View

 

I read a recent report, The Long View, Investment Insights, by the Capital Group. It is enclosed for weekend reading as I believe some of the observations are important reading for young parents as they picture what the world will look like for their children in the next few years.

 

Five key observations from the report…please read it.

 

  1. The digital revolution is transforming the world and lifting mankind to a new level. The innovation in technology, and the adoption of products among consumers is changing the world of how we see it.
  2. Money is setting a new speed record…..e.g. South Korea’s GDP per person has grown from US$2,600 in 1980 to $YS$32,000 in 2014. This new wealth is going to have a transformational impact on the world’s economy.
  3. Innovation opening new fronts in the war on Cancer. Medical science appears to be on the brink of a paradigm shift in the treatment of many troubling conditions. The payoff from an investment nature will be huge.
  4. US Energy Independence…..loud and clear. The report shows the production levels of some US states to be more than some countries!
  5. The driverless car…..will eradicate automobile accidents, eliminate traffic and significantly reduce the real estate needed for automobiles…..freeing land for more productive use.

 

Enjoy the read…..I am excited about the future for the generations to come.

 

Kind regards and thanks for being clients….I enjoy my relationship with each one of you.

 

Thank you,

 

Prem

 

Disclaimer

 

The information contained herein are obtained from sources believed to be reliable, however, its accuracy or completeness is not guaranteed and Queensbury Securities assumes no responsibility or liability. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities. These comments and opinions are not necessarily the opinions of Queensbury Securities Inc. Securities mentioned may not suit all types of investors. Before making any investment decision,

contact your investment advisor to discuss your investment needs.

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08 Aug 2013, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Malik’s Corner: Markets, Flash Floods, Insurance, Joint Bank Accounts, Credit Cards, GIC’s and More..


Finally, we have a welcome summer in Toronto. I hope that the flash floods of last week are one off incidents and not a sign of things to come. From a financial planning standpoint, do look up your insurance policies for your personal and recreational properties and increase insurance coverage as you see fit. It will allow you to sleep well at night.   

 

Markets:

 

As mentioned in my previous commentaries, volatility is here to stay. Headlines make nervous investors jittery and this is not going to end soon. US finance chief Bernanke made comments in June and the US stock market fell 5% over two weeks. It has since climbed back by 7%. Expert readings on these markets are from extreme bullishness to extreme panic. Stay the course if invested for the long run. Returns in most clients’ portfolios are high single digits to low double digits for 2013. If you are on the sidelines waiting to get in, dollar cost average back into the markets.

 The enclosed article is simple and to the point and there is little to argue of why the US economy is resilient and the future looks good. Canada looks cheap, as the markets have done nothing in 2013. Today’s purchase of Shoppers Drug by Loblaws is a reflection of things to come. Consolidation, share buy backs will create investor value. Gold and energy stocks are now available at 30 cents to the dollar from their highs but you have to know what you are doing. 

 In brief, over the long term, markets look good and you must stay the course.

 

Other important pointers based on a recent conversation with new clients:

 

  1. Joint bank accounts: Not a bad idea to have a joint account to deposit income cheques and pay your bills from. This allows the family to compare income vs. expenses and make adjustments where necessary and budget for big expenses. The account should serve as a reservoir to feed other savings such as RSPs etc. As the account is joint, both husband and wife have access to it that is very useful if one of them should die unexpectedly. Single name bank accounts are frozen on death and released after probate and can create financial headaches.

 

  1. Credit Cards: The problem with credit cards is that they are credit cards and in a majority of cases have in-built rewards that entice you to use them. If you do not have a disciplined way of paying them off every month, they can create financial headaches. I recommend that a family should sit down and talk about the use of credit cards or debit cards and then choose the best one for them. A family should chose one card where the rewards system benefits their choice collectively and make sure it is used to collect the points and paid off 100% on due date. There are a number of very good sites that help compare credit cards and their ‘perceived value adds’ and their costs. Good idea to do your homework. http://www.ratesupermarket.ca/credit_cards/

 

  1. GIC’s: Make sure you have an idea of your GIC’s and when the come due. Most financial institutions will roll them over for the same period you bought them. I just saw a GIC paying 0.66% locked in for 2 years. My advice to clients is that long-term money should be in dividend paying funds or ETF’s. The difference in return is staggering. Short-term funds should be in a high interest account such ING or others of this nature.

 

  1. Beneficiary on registered accounts such as RSP’s and TFSA’s. I have seen documents which list the beneficiary as an ex spouse, or the estate. Be mindful as without a will this will create a problem. This is important and should be done immediately.

 

  1. Please do not sit on cash in an ING account when you could open an RESP and get a government grant of 20%.

 

  1. Please do not sit on cash in ING…open a TFSA and stick the cash into a high interest account with ING….if the need is short term. At least the interest is tax-free.

 

Have a safe and enjoyable summer. I am in Toronto and am available to meet at your convenience.

 

Kind regards,

 

Prem

 

Disclaimer

 

The information contained herein are obtained from sources believed to be reliable, however, its accuracy or completeness is not guaranteed and Queensbury Securities assumes no responsibility or liability. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities. These comments and opinions are not necessarily the opinions of Queensbury Securities Inc. Securities mentioned may not suit all types of investors. Before making any investment decision, contact your investment advisor to discuss your investment needs.

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03 Jun 2012, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Facebook, Europe, JP Morgan, Gold, Oil, Real Estate & Interest Rates….my views


 

It is a beautiful summer evening and what is better than a dose of Malik’s Corner. Here are some topics raised by clients over the past few months and my thoughts.

 Facebook launched their much hyped IPO at $38. It is currently trading at around $31. An 18% drop in under a week. There are many experts with different views on the price of this stock. In what I read, it is expensive when compared to the underlying financials of the firm. As one of the Financial Posts columnists writes, Facebook is priced at 107 times annual earnings, which is more expensive than every single member of the S&P index by sales other than two companies. Make your own call.  Would I buy it? I do not think so. There is uncertainty about the revenue stream and until that proven, we cannot value the stock properly. Currently the value is all hype by the bankers underwriting the stock. Personally, I like stocks with proven earnings and with dividend streams. They do not make as much as the tech darlings of the world but you do not lose your shirt either. I still believe Facebook has awesome goodwill in its name. Now they have to prove their earnings potential.

 Europe: Not sure how this will be resolved and it is not happening any time soon. Reduced earnings and increased taxes are not a recipe of happiness. The problem is that any new event in Europe results in stock markets gyrations around the world. Europe is not over and for that reason the volatility in the markets will continue. Over time, money will leave Europe for safer havens. There is a flood of money leaving Greece, Spain etc. The more this continues it will affect the stronger Euro economies such as Germany and France. Interesting times ahead for the Euro and related countries.

 JP Morgan :  I am not sure how JP Morgan sales executives can talk to their institutional clients when they have just lost 2 billion by an incorrect hedge. As one of the financial papers wrote….a hedge reduces risk not lose 2 billion dollars. Reason I point this out in my note is that diversification is becoming more and more critical in an overall portfolio. I am more concerned about the drop in the stock price. An individual stock making up a large percentage of an overall portfolio increases risk dramatically. Sell and buy an equivalent ETF in the same basket. It diversifies risk. Impact of the mistake will be more supervision by the regulators and as one of my clients put it….the job prospects for a senior compliance officer are looking very good in the US.

 Gold, Oil and Commodities :  The TSX is down 5% YTD and key reason is that it’s commodity rich portfolio is out of favor. Slowdown in China and the other developing markets, the correction in Europe, is having a negative impact on the TSX overall and specifically in the commodity stocks. Some are down 50% and this has hurt some portfolios. The rebound will be equally aggressive and we have seen it in the past couple of years. Most Canadian dominant portfolios are exposed to gold, oil and commodities and it is no surprise that they are down. As my client’s portfolios are diversified, the drop is not that severe but there is a drop.

 Real estate and the condo market:  Average home prices are 12 times disposable income in Canada. That is way ahead of what it used to be but is it a bubble. Not sure about this one…..a number of different events are impacting the real estate prices and in no order they are low interest rates, increased flow of new immigrants looking for accommodation, both rental or purchase. The volatile stock market is driving money out of stocks and into real estate. My two cents: if you are looking at your real estate portfolio and are worried….you own too much. Pare down and pay off debt or build your equity portfolio up with cheap stocks. Yields on dividend paying stocks are at record highs and as an example, bank stocks are paying in the 4 to 5% bracket.

 If you do not own real estate right now and feel the urge to jump in…make sure the decision is a long term one and not one to buy and sell. You do not want to buy at today’s prices and sell when a 20% sale is on. Long term the purchase will prove itself as for any long term asset.

 Interest rates: Over time they should rise. However, any increase in interest rates will have an impact of slowing down a slow economy and will hamper the growth south of the border. Therefore, the pundits are calling for a very slow increase in interest rates. I would still recommend the paying down of credit card debt and mortgage debt. As these are not tax deductible, you have to earn double the interest rate to pay the loan.  Better to pay down such debt and then borrow the funds back to invest when the markets settle down a bit.  Makes for a more intelligent investment using borrowed money.

 Look out for more frequent Malik’s Corners over the next couple of months. Please feel to share them with friends and family. They will appreciate reading it as much as I will.

 Enjoy the summer, be safe, and diversify!

Prem

Disclaimer

The information contained herein are obtained from sources believed to be reliable, however, its accuracy or completeness is not guaranteed and Queensbury Securities assumes no responsibility or liability. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities. These comments and opinions are not necessarily the opinions of Queensbury Securities Inc. Securities mentioned may not suit all types of investors. Before making any investment decision, contact your investment advisor to discuss your investment needs.

 

 

 

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03 Jun 2012, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Patience and Listens…..genuinely cares


Prem Malik is the ideal investment advisor for people who HATE investing as well as for pople who love it. When I first met Prem, I couldn’t – or wouldn’t – balance a chequebook, and the remainder of my investing savvy came from playing Monopoly. He listened and gave me what turned out to be excellent advice, even though at that point I had nothing to invest, and very little prospect of having anything to invest with him in the foreseeable future.

Prem has infinite patience, really listens, and genuinely cares about finding things that are the right fit for me. He wants to know a bit about my life, my aspirations, my plans. And then he comes back with suggestions, a range of possibilities, and lets me choose. There is never any hard sell, and I feel that Prem sincerely cares about finding things that are the best possible fit with my situation, my needs and my tolerance of risk. He never makes me feel ignorant for asking endless questions; in fact, he welcomes them, and takes pains to make sure my questions are fully answered. I would recommend him without reservation – but only to people I really like!!

Ms. VW

Dated Feb 28 2012

Disclaimer

The information contained herein was obtained from sources believed to be reliable, however, its accuracy or completeness is not guaranteed and Queensbury Securities assumes no responsibility or liability. Neither the information nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities. These comments and opinions are not necessarily the opinions of Queensbury Securities Inc. Securities mentioned may not suit all types of investors.Before making any investment decision, contact your investment advisor to discuss your investment needs.

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24 Oct 2011, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

The Sept 30th Portfolio Review


In previous Malik’s Corner commentaries I have been keeping you all informed of the market volatility and my reasoning behind these rather aggressive moves in the market indexes around the world. What a year it has been. Starting with the Japanese disaster, the riots in the Mid East, the debt crisis of the US and now the meltdown in Europe and it is not done yet. For these reasons, there is not one stock market in the money year to date.

Client questions:

Why is Europe having a negative impact on Canadian markets?

Investor sentiment is very negative and the continued uncertainty of the safety of the Euro banks and their exposure to our banking system is one key reason. Canadian banks are key components of the Canadian stock exchanges and are down approx 10% year to date. Other companies impacted negatively are the ones who are major exporters to Europe, China and the other emerging economies.

Why are the emerging markets deeply in the red? What about the 200 million people coming through the middle class and their consuming power?

It is becoming quite evident that the emerging market indexes require vibrant global markets. Over the past few months, the emerging markets have sold off and billions of dollars have been bought back to their local currencies by global fund managers. The local economies continue to thrive and the companies continue to show record profits. However, majority of the emerging markets population is not an investor in this ‘emerging’ stock market. They are savers and not investors and have some of the most incredible savings rates in the world. For this reason, these markets will continue to mimic global markets, a bit more aggressively on the upside as well as the downside.

What about Gold? Is has fallen 15% from its high and Europe continues to flounder and the US debt has not been resolved?

A variety of views on this…..India and China slowing down, meteoric rise of gold and profit taking, governments like the safety of the US dollar over gold. I believe all these reasons have had an impact on the price of gold and will continue to do so.

The US dollar?

I am no currency expert but this one does boggle your mind. All I read about the US debt crisis is that it is going from bad to worse and in the past month money has flowed out of gold and to the US dollar. Go figure.

When do you see the stock market turning?

One fact noticed by the business press is the large amounts of dollars sitting in the coffers of major multi nationals, pension funds and other money managers. These funds are earning slightly over zero and for that reason will be finding their way into the over sold global stock markets like we saw in 2009 and 2010.

My two cents:

Let’s look at the big picture. A well diversified retirement portfolio is critical and important. This includes all asset classes, real estate, stocks and mutual funds, GIC’s, cash, gold, insurance policies and government funded pension plans such as CPP and OAS.

Another key component, and which needs to discussed by all families is the transfer of generational wealth. There is a report that there is about a trillion dollars exchanging hands over the next 20 plus years. Good planning is essential to make sure that the transfer is tax effective. I will be writing about a few ideas in my next Malik’s Corner.

As always, thanks for being clients and allowing me into your financial lives. I am honored.

Regards,

Prem

DISCLAIMER: “The information contained herein was obtained from sources believed to be reliable. Its accuracy or completeness is not guaranteed and Queensbury Securities assumes no responsibility or liability”

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