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  1. #21
    Senior Member Potato's Avatar
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    Quote Originally Posted by CanadianCapitalist View Post
    As an aside, I'm planning a post on this but thought I'd throw the idea out here as well. Anyone notice how REITs have bounced back and now seem fully valued? RioCan, for instance, is trading at $20 compared to a NAV estimate of $16.30 (according to TD Securities).

    Yes, I've been unloading REITs since the summer; paid off all my leverage and then built up a bit of cash too. I wouldn't go so far as to say that they're over-valued, but from this point I don't really expect them to out-perform the broader index, so I figure if I can't have some expectation of that I might as well move the money over to the indexed side of my portfolio.

    I've been partly spoiled by the deep value of the beginning of the year, so I've been (perhaps unfarily) sour on almost everything I've looked at lately.

    I did buy a single share of BRK.B today -- I don't necessarily think it's trading at a huge discount or anything, but there's been a lot of talk in the news lately about Buffet losing his edge, or Berkshire getting too big to continue outperforming, and that's generally been a positive sign in the past. Pretty weak reason to invest, but I figured that otherwise BRK should be pretty safe.

    On RIM: I did buy some (~$70, so I could have done better if I waited a few more months) on the theory that all this noise about competing smart phones is not going to put a stake through their heart any time soon. The TD analyst put it nicely: these competitors will take away their potential market share, but since the overall smartphone market is still growing quite strongly, they will still grow at a nice clip for the next few years. I.e., even if Google and Apple cut RIMs share of smartphones down to X% of the market, the overall smartphone market is still growing so much that their absolute unit sales will keep growing at a decent pace.

    On POT: I might just be bitter about cancelling my bid back in the dark days when it was cheap, but I haven't been too keen on it above $100. I don't know what to make of their breakdown of negotiations with China, but I fear the worst and am staying clear.

    My ace in the hole: Canexus (CUS.UN). They're an off-shoot of Nexen that produces chemicals for various industries, including pulp & paper and water treatment. They are the low-cost supplier of these chemicals in most of their markets. They don't have very good liquidity, so there's a bonus discount there for the small investor IMHO.

    The current yield is just under 10%, with a decent payout ratio. They also are near completion for some plant upgrades that were being funded out of retained cash, which should allow them to further increase volumes/earnings/potential distributions as that capacity ramps up. They weathered the downturn very well since they were the low-cost supplier, which should put them in an even better position as their client industries recover (their competitors have to some extent shuttered production and will probably be slow to respond to the returning demand). That increase in cash production should offset the effect of increasing taxes next year, so I expect the distribution to be maintained in full after a conversion, though I don't recall seeing a press release outlining their plans yet.

    The wildcard in my view is Nexen: they still own a huge percentage (67% of the plant itself and then another % of the income trust which owns 33% of the plant IIRC). Nexen has stated that it's interested in selling off their interest in the plant, but no more details about that have come out. I have no idea if that will negatively affect Canexus (the income trust), by either by the presumed vote of no-confidence from Nexen or the sale itself, or if it might mean the income trust part of Canexus would take over ownership and become larger (and more liquid, potentially attracting institutional investors).
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  2. #22
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    Quote Originally Posted by Potato View Post

    I did buy a single share of BRK.B today -- I don't necessarily think it's trading at a huge discount or anything, but there's been a lot of talk in the news lately about Buffet losing his edge, or Berkshire getting too big to continue outperforming, and that's generally been a positive sign in the past. Pretty weak reason to invest, but I figured that otherwise BRK should be pretty safe.

    I somehow found myself in Buffett's 1983 Letter to shareholders telling them how the last 19 years have been great something like 24%/yr.
    " Considering our present size, nothing close to this
    rate of return can be sustained. Those who believe otherwise
    should pursue a career in sales, but avoid one in mathematics." Warren Buffet 1983.
    So I just had to run some XIRR on that and the next 19 years were 23%.
    Of course the full 26 years since this quote are lower due to obvious reasons but still 18.1%.
    I picked up my first share of brk.b yesterday. Yeah it is a weak reason to invest but I wanted a piece of the pie.

  3. #23
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    Quote Originally Posted by CanadianCapitalist View Post
    I don't understand why XSB is different just because it tracks a bond index. Actually XSB does not hold all the bonds in the index anyway. I uses a sampling to replicate the index as much as possible. XSB is roughly equivalent to 2/3rd CLF and 1/3rd CBO. A bond ladder is no different from a bond fund of the same duration and since CLF and CBO are rolling over their bonds, they are roughly the same as XSB.

    I've been holding XSB long before Claymore introduced the ETFs. I haven't seen a compelling reason to switch from XSB considering you'll have to buy CLF and CBO. The risk-reward profile compares like this: CLF < XSB < CBO.

    The reason I chose XSB instead of XBB has nothing to do with interest rate direction. Instead, I subscribe to the theory that investors do not earn enough returns to compensate them for the extra risk in going from a short-term to an intermediate-term bond fund. Instead, you can take the same risk in equities and expect higher returns than you could in longer-term bonds.
    This was my take on it too, that XSB is functionally the same as 2/3rd CLF and 1/3rd CBO.

    Since CLF has a lower MER than XSB and the same MER as CBO, I went for the two instead of the one. I only started buying ETFs last April.

    I just wanted to check if you saw any significant risk or performance differences, which it seems you think there are likely none. So i will stick with what I have and not move. Maybe new bond $ I will put into XSB since it is 1 fund instead of 2 and to diversify my bond ETFs further.

    What about CAB, any input or thoughts on this new claymore product?

    Thanks CC.

  4. #24
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    Quote Originally Posted by HaroldCrump View Post
    Yes, but XSB doesn't have laddering built into it like CLB and CBO do.
    Maybe not explicitly, but if they are holding bonds of 1 - 5 years, with average of 3 years, then they are in effect laddering, maybe just not calling it that. Maybe there is a technical difference but I do not see a functional one.

    Quote Originally Posted by HaroldCrump View Post
    Yes, but XSB doesn't have laddering built With XSB, the investor is always going short term.
    IOW, the investor is either minimizing interest rate risk and/or expecting interest rates to rise in the near future.
    If by short term you mean bonds between 1 - 5 years, then all 3 ETFs are doing the same thing, at least functional.

    Quote Originally Posted by HaroldCrump View Post
    What I don't understand about CLB and CBO is why they are not using zero coupon bonds for the laddering, but that's a different issue.
    They are based on an index, like XSB is, but different ones:

    CBO: DEX 1-5 Yr Corporate Bond Index
    CLF: DEX 1-5 yr Government Bond Index

    They therefore purchase bonds that are withing the respective index, or a tleast that is what they say.

    Quote Originally Posted by HaroldCrump View Post
    4% is a very low number and BBB is not junk bond status.
    I don't know the % split of bond rating for CBO - do you know the split?
    I couldn't find it on the Claymore site.
    CAB states on the main page nothing below A.
    For CAB, they do not list anything on their main page, odd I agree.

    Found this about the index it tracks though:
    http://www.canadianbondindices.com/p...nd%20Index.pdf

    So nothing is below A for CBO either, since they can only buy bonds that are within the index it tracks.

    Quote Originally Posted by HaroldCrump View Post
    The other question about CBO and CLB is whether they are always buying 5 year term bonds and holding them to maturity or simply rolling over maturing bonds and buying bonds where the TTM is 5 years.
    That makes a difference.
    Again, no clear answer on the fund page - do you know?
    The link above suggests that the tracked index is based on 1-2,2-3,3-4,etc maturing bonds. Not sure if this really answers the question or not though.

    Quote Originally Posted by HaroldCrump View Post
    I meant CAB.
    I understand futures contracts, but what I don't understand is how CAB is using the futures contract for bonds to return you capital gains instead of distributions.
    ....
    I would like to know as well.
    My simple understanding of CAB is that they achieve the tax difference by having the ETF basically buy and sell ''through the use of a forward agreement with TD Global Finance'', so the distributions are mostly cap gains and ROC and not income. Other than that, I have no idea how it really works. ;(

    What they don't tell you on the main page, but do in the small print doc, is that this comes at a cost of paying TD another .4%, so the real MER of CAB is the stated .3% + .4% going to TD = .7%. They should be more forward about this if you ask me.

    Still paying .7% MER may be worth the tax advantage if the yield ends up being OK. Right now it is projected at 3.x %. It is not based on a short term bond index.

  5. #25
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    Quote Originally Posted by Potato View Post
    I've been partly spoiled by the deep value of the beginning of the year, so I've been (perhaps unfarily) sour on almost everything I've looked at lately.
    I feel the same way; I see ETFs I purchased in April / May / June up 30% and because of that say 'no way am I buying more now', but is that a valid reason not to buy? We are still below where things were at pre-crash. Magic question is if things are just going to keep going up to closer to pre-crash levels, or is there going to be another correction or crash? I sure don't know. I more often then not 'think 'we will see another correction / crash, but is that thinking mostly based on me wishing there would be so I could buy cheap, probably yes.

  6. #26
    Senior Member Spidey's Avatar
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    Bought some ENB for my wife's RRSP. Boring, regular dividend increases, relatively stable -- basically the kind of investment I want in an RRSP.

  7. #27
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    recently in registered plans bought arc energy for its expanding gas platform in the montney, fort chicago & dundee for high yield. Dundee subsequently rose too far, too fast, so am contemplating selling. Might re-buy if the froth subsides. Do not believe fundamentals have changed but am waiting on next earnings.

    in non-registered added to mfc & td on dips, sold otm call options.
    may add to tlm & cpg.
    put on & quickly closed another diagonal call spread in potash. Out in 4 days w 15% capital gain. Will repeat. A favourite play.
    closed diagonal call spread in fxi. This one, dating back to early 2009, had gone well also. Will not repeat.
    set up long-term diagonal call spreads in merck, glaxo, canadian xgd. Pharma sector looking good.
    numerous other option trades.
    bought little-known tax-advantaged interest instrument ocs.un. Not for income but for short-term capital gain. Price had reached bottom of band.

    a portion of portfolio is earmarked for hi-risk. Eyeing victoria resources, northland, south gobi energy, sino forest. Familiar w management & business plan 1st 3. This week vit issued another favourable NR that lofted stock 14%, so put plans to acquire more at this moment on back burner. Sino forest still a black box. Isn't everything in china lol.

    would pass on bombardier (if the chinese introduce the line of smaller jets they are planning to build, will negatively impact bbd.b.) Pass on holding long rim although i do continuously sell otm puts in rimm, which is a form of mildly bullish approach.

    tata motors - have exceptional respect for patriarch ratan tata who is a global business king. However stk is richly priced, i would now only buy stk accompanied by a strangle (a combination of both a short put and a short call, in this case to reduce cost base.)

  8. #28
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    I'm not buying anything at this point, in fact I did some selling in the last few weeks. Right now I'm waiting patiently for the markets to come down sharply, and only then I'll be a buyer.

  9. #29
    Senior Member HaroldCrump's Avatar
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    Quote Originally Posted by canadianbanks View Post
    I'm not buying anything at this point, in fact I did some selling in the last few weeks. Right now I'm waiting patiently for the markets to come down sharply, and only then I'll be a buyer.
    I'd be interested to know when you're projecting the downturn to happen.
    I'm not buying equities in that hope as well.
    Guess I have been spoilt by the prices in 2009.

  10. #30
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    I've traded these resources and like the volatility.

    ngd
    tck
    ivn
    fnx
    tcm
    fm
    pot

    I made a jump from abx, rci, bce, rim when things were looking thin and never looked back.

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