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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02 Aug 2011, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Who is Queensbury Securities?

Who is Queensbury and how safe is my money?

A client of mine asked me this question recently and after responding, I thought it would be an ideal Malik’s Corner topic as well. My clients know and deal with me but the ‘investments’ are held under the Queensbury umbrella.

Queensbury is an independent, full service, wealth management firm established in 1987. Queensbury is a member of the Investment Industry Regulatory Organization. www.iiroc.ca . IIROC, as its name suggest is the government body that oversees the investment industry and its participants in Canada. Queensbury is a member of IIROC.

Queensbury is also member of Canadian Investor Protection Fund. www.cipf.ca . The CIPF is a not-for-profit organization that provides investor protection for investor dealer bankruptcy. This is an important protection for my clients and a good idea to tour the website and review for yourself the coverage being automatically provided by having your investments with Queensbury and all other member brokerages.

Why Queensbury?

When I was doing my due diligence on which firm to join, my key criteria was ‘independence’ of choice. Having spent 30 odd years on Bay Street…size did matter, ie one of the major banks, Investors Group, Edward Jones and numerous others. With size came a loss of independence of choice. Does it make a difference? I believe it does. Larger firms run wealth management as a business and have minimum account sizes, quotas of sales production, and higher commissions for in house products. Not that this is bad, it just does not fit my ‘business’ model. For more on me www.premmalik.ca .A recent testimonial by one of my clients describes my model to a tee. http://www.premmalik.ca/clients-and-testimonials/

Markets?

What a year…..started strong and have come off in June. The markets have dealt with Japan, the mid East crisis, the ongoing meltdown in Greece, and when nothing to speak about the talk goes back to US debt.

My two cents:

Markets are inherently risky and will continue to be so. It is proven that timing the markets is the most difficult of investment hobbies and very difficult to master. If it were easy, we would not be reading this email. I strongly believe that the world economies are going through a huge mental shift and over time China, India and other emerging economies will be far stronger than the developed economies. The middle class consumption in these countries will continue to test the demand for commodities and natural resources worldwide. Markets will respond to developing world economies and as they go through their own development. This is not stopping and anyone who says that …just check where the multinationals are opening offices. These companies know where growth is.

Investments in stock markets should be viewed over the long term and the shorter the horizon the less in the markets. Same with just about any investment out there. Short term volatility is here for the next number of years. An investment strategy and sticking to it is critical. As Warren Buffett considered the guru of investing said ‘I buy on the assumption that they could close the market the next day and not reopen for five years‘

Have a great summer and of course keep in touch. I promise…I will.

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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21 Mar 2011, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Malik’s Corner; Japan

 

The tsunami and the earthquake pictures are still fresh in my mind. Quite apparent that regardless of what humans have achieved, Mother Nature has the upper hand. Japan needs our help. http://www.redcross.org/

Markets

As can be expected stock markets around the world are reacting negatively to the catastrophe in Japan. I have received money manager commentaries on the situation in Japan and the impact on industry segments. Before we go there, it is not a bad idea to assess what markets have done in previous natural disasters. This is interesting reading from a Desjardin market strategist on a blog written in the Globe and Mail today.

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/how-natural-disasters-can-affect-stocks/article1942307/

“As equity markets around the world plunge this morning due to the earthquake crisis in Japan, Desjardins Securities market strategist Ed Sollbach has crunched the numbers on eight previous natural disasters over the last two decades and found that the impact to stock markets appears to be minimal.  

“The maximum decline after one week was only 1.3 per cent and after one month only 3.2 per cent,” Mr. Sollbach said in a research note this morning. “The average gain was 0.7 per cent after a week and 0.7 per cent after a month.”

The energy sector was one of the best-performing sectors after a disaster, while gold stocks also did well. Insurance companies didn’t do as badly as one might think. The worst loss for the TSX insurance sector was 2.1 per cent after one month, while gains averaged 1.9 per cent. There were gains in six of eight natural disasters.

What makes matters worse for markets now is that stocks are due for a correction and worries are high that the elevated price of oil will slow the global economy.”

Bigger picture:

1. The renaissance of nuclear power plants around the world will be questioned and uranium stocks will take a hit. Other fuels such as oil, coal, natural gas and hydro will be positively impacted.
2. Significant disruptions in electronic components and the auto industry. In the short term prices could be volatile and stabilize over the long term.
3. Japanese government has injected 23 trillion yen into the money markets and eased monetary policy. This will impact the future tax burden for the citizens of Japan. Debt is insular in Japan and so will not impact global debt markets.
4. Infrastructure companies will benefit from the massive rebuild, along with the forestry and related stocks.
5. With the exclusion of uranium stocks, the Canadian market should settle back in the next few weeks.

I will continue to monitor the situation and keep you all posted. In the meantime, my prayers join yours for the people of Japan.

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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11 Feb 2011, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Queensbury Market Outlook Winter 2010

 

QUEENSBURY GROUP February 2011

Political events in the Middle East may lead to a rise in oil prices, which if they get to more than $150 /bbl, could curtail growth of the global economy. Focus on this situation has taken attention away from the S&P downgrade of Japan whose government debt/GDP now exceeds 200%, the highest in the world. It is unlikely that S&P will stop at Japan, as the US and some European countries could well be subject to a debt downgrade as well. A more aggressive policy by the debt rating agencies is likely to cool the demand for credit. The US appears to be embarked on fiscal and monetary policies of weakening their currency in an effort to make their exports more competitive and in the process provide a stimulus to their domestic economy. We maintain our view that the US dollar will depreciate in value against the Canadian dollar and the currencies of select emerging nations. In spite of signs of improving US corporate earnings we feel that there will be a headwind against improving share prices from a depreciating currency. One of our major banks suggests the following optimistic forecast for the Loonie: “A series of rate hikes starting in May could lift the Loonie, with the currency topping out around US $1.03″.

Another consideration for Canadian investors looking to invest in US investments, or a vacation property, is the tax consequences. Even if one does not live in the United States estate tax applies to anyone who owns “US situs property” made up of shares and debt of US companies including what is held in a deferred plan such as a RRSP, or a RRIF. If at the time of death your worldwide estate assets are valued at less than US $1.2 million there should not be any US estate tax owing. However, you may still face estate tax on US real estate. This is a complicated assessment for which you would be well advised to seek guidance from a tax advisor who is familiar with cross border investment.

In past Market Outlooks we have suggested the merits of investing in emerging market equities. To date, this strategy has proven successful. Although investments in this sector may experience a higher element of volatility, we firmly believe that the current fundamentals strongly support some commitment to this sector. Some statistics to support this position are:

Emerging Markets represent:

70% of the World’s Foreign Exchange Reserves; 75% of the World’s land Mass

Over 80% of the World’s population; 34% of the World’s GDP.

And yet they represent only 13% of the World’s Market Capital.

We believe that the key drivers for growth in the Emerging Markets will be:

Increasing growth in demand from the middle class; Urbanization of population;

Appreciating currency values; Young demographics; Economic reform & change;

Better credit quality; Large amounts of undeveloped natural resources;

Commitments to increased infrastructure spending.

The Globe & Mail ROB recently had an article dealing with questions put to some of Canada’s top money managers. Their surprisingly diverse answers to “Advice for Investors” are:

Bob Tattersall

“It’s tough to think of a developed country that’s better than Canada, so I’d keep 75% of it (investment) here. I think interest rates are going to trend up, so I don’t want to own any plain-vanilla bonds. I’m going to own mainly Canadian equities and I’m a one trick pony. For 25 years I’ve said small cap, small cap”.

- Co-founder of the Saxon family of mutual funds Eric Bushell

“Own cash and equities. The very credit-worthiness of countries is fully in question and that is the backdrop that modern market investors have never had to consider… That means safe havens pose a risk as well. What do you do? It may be that the safe havens are in the places where you don’t expect them to be — stocks as opposed to government bonds”.

- CIO – Signature Global Advisors Eric Sprott

“They should be in fear of the whole financial system collapsing and figure how they are going to survive in a worst case scenario. Invest accordingly. That is why we have always thought that gold and silver were the pre-eminent places to be”.

- CIO – Sprott Asset Management Kim Shannon

“If you’ve bought cheaply and you’re patient, you will create wealth in the long run, especially if the stock has an income component”.

- President & CIO – Sionna Investment Managers Normand Lamarche

“Expect more volatility over the next ten years. Stick to your game plan driven by your age, needs or wealth. In bullish times, you have to tone down your euphoria. In times like today, you have to tone down the fear. You need to be patient and to have a long-term horizon to be a successful investor”.

The foregoing is indicative of just how difficult it is to attain a consensus among some of Canada’s leading investment advisors. We still favour equity investments to generate superior after-tax returns for the long run. Periods of market weakness should be treated as a buying opportunity. Specific recommendations in keeping with individual investment objectives and level of risk tolerance are available from your Queensbury advisor.

- Co-Chief Investment Officer – Front Street Capital Char

S&P S&P Bank 10 yr Cdn

Levels DJIA 500 TSX Prime Bonds $

Jan 2011 11,823 1,276 13,437 3.00% 3.3% 99.89

Jan 2010 10,067 1,073 11,094 2.25% 2.8% 93.52

Jan 2009 8,009 825 8,694 3.00% 2.7% 81.53

Jan 2007 12,621 1,438 13,034 6.00% 4.1% 98.74

Jan 2006 10,864 1,280 11,945 5.25% 4.1% 87.22

Hugh F. McLelland

Chairman & CEO

Queensbury Securities Inc

February 1, 2011

OUTLOOK

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11 Feb 2011, Posted by Prem Malik in MALIK'S CORNER, 0 Comments

Observations and March 1 2011 RSP deadline!

 

Good afternoon

The Super Bowl is three hours away….Steelers or Packers? Not sure but based on what I am reading it is going to be a close one. Looking at the crowds and the million dollar ads also brings me to the bigger point of this blog….where is the recession in the US? Companies like Ford, GM are reinventing themselves, Goldman has started giving out million dollar bonuses and oil is back to $90. The US market indexes Dow Jones, S&P 500 and the TSX are at three-year highs. Gold has tapered off but still hanging around at $1350 an ounce. The Canadian dollar remains above par against the US dollar.

Why? Here is one key reason: 

http://www.forbes.com/2010/04/20/oil-energy-minerals-business-global-2000-10-china-investment-tracker.html

This brilliantly produced map of the world on the Forbes website dramatically shows Chinese Govt world investment since 2005. As you click on the link, the map will start to populate itself showing you where the Chinese are spending their trillions of US dollars and in what sector. This excludes investment by any other country in the world. From an investment standpoint, this chart answers a lot of questions.  

Enclosed is the Queensbury Market Outlook for Feb 2011. It expands on the mid east crisis, the impact on oil prices and the Canadian dollar. It also has independent views from money managers of where they are investing their funds. Worth the read. 

March 1^st 2011 RSP deadline: I don’t have to remind you…television ads have started in earnest and will keep you posted of the date. I do not believe in giving RSP recommendations on mass emails. Each of you has different risk profiles requiring tailored investment portfolios. As my signature notes…Let’s Talk!

 Thanks again for your trust. It is an honor to have you as clients, friends and peers.

Prem

Disclaimer Important from compliance!

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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