The Best Day of My Life

Today was the best day of my entire life.

Wal-Mart was having something called an “Anniversary Event”.

From what I can gather, this means that they take a select group of products -- products that, by the virtue of Wal-Mart's 3% net profit margin, are already cheaper than everywhere else -- and put them ON SALE. They then apply limits per customer in some cases, but one can thwart those by simply making multiple trips to the store. A list of the items of awesomeness that can be purchased for a mere pittance can be found in the pesky flier sitting on your front steps. It's absolutely incredible, and ends on Thursday.

Yesterday afternoon, I spent a small portion of the many thousands of dollars my wife and I save each month, by not worshipping real estate, on a new netbook. After a small amount of research, I decided I wanted an Asus product, and I subsequently picked up the Eee PC 1015PED in black. My vintage 2007 MacBook has been failing me for over a year, and after I realized how out to lunch Apple's prices are (look at what you can buy from Dell for less than the cheapest, smallest MacBook), and how very little I actually do with the device (I built a new world-crushing desktop machine back in January that serves all my gaming and multimedia needs), I figured I could improve my portability significantly and save 66% versus buying the new version of the MacBook I have now.

In other news, I wanted to talk a little bit about another company I like: WestJet (TSX:WJA).

I like WestJet, because they continue to have the sense to realize that if you can provide a product that people want at a price higher than your cost, you can make something called profit. In an industry that has summed to a net loss since its inception, this is a pretty important concept. Someone should tell Air Canada.

WestJet also had the sense to realize that if you look after your workers' interests, they are likely not to form an enormous, immobile, margin-destroying labour union. They have 7,700 employees.

When you add to the fact that WestJet only operates one type of aircraft, the versatile Boeing 737, it isn't hard to see why their operating costs are 30% lower than Air Canada's.

Now, I will say that I sold my WJA shares a few months back, which means I do have a few concerns; one of which, is the new CEO. Once I get a feel for the management going forward, I plan to re-evaluate.

Disclaimer: All content on this site is provided as general information only and should not be read as investment advice.  All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy.  The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s).  The author may or may not have a position in any company or advertiser referenced above.  Any action you take as a result of information, analysis, or advertisement viewed on this site is your responsibility.  Consult an investment adviser before making any investment decisions.

Current thoughts

Well here goes nothing.  Let's talk about the market.

A couple of weeks ago, I sold out of my met coal position, realizing an 11% profit that took an agonizing 4 months to achieve.  Earlier in the year I sold the remainder of another producer's shares at a 650% profit -- thank you, 2009 -- and divested a portion of the proceeds into a competitor of similar size, because I viewed it as a better structured business, financially.  Mr. Market has shared this view, as the second company has enjoyed a strong premium over the first since March of 2009 when both of them hit almost the same low. 

My more recently acquired shares in Canada's largest "diversified" miner have jumped back into the black this month, and I'll be watching them very closely.  I rode them down to -15% during the summer and I would prefer to realize my current 12% profit and buy back in later than hang on for the ride down again.

I have become slightly bullish on the energy sector recently, and have taken a small position in one of Canada's integrated producers.  Having read that the more realistic rate of inflation right now is closer to 7% (the government changed the calculation of the CPI in the year 2000, and taking the old formula yields this result), I believe it's only a matter of time before oil starts a bit of an upward move.  That, and some exposure to the possibility of a price shock due to, ahem, potential geopolitical issues in Iran is appealing.

I've been watching silver very closely as well, but haven't made much a move at this point.  It's been rather boring since April, when everything peaked, and I didn't make a single trade between then and a couple of weeks ago.  I've been wanting to catch Goldcorp at under $40, but the teeter-totter fear trade between gold and materials has been thwarting my efforts thus far.  I fear that the next leg down on the index (there's no way we will stay above 12,000) is going to make a bigger dent in materials than the April drop, and I may be priced out of gold for a long time (I refuse to jump in on the hype, I want my price).

That's all for now.  We'll see how the week closes. 

Disclaimer: All content on this site is provided as general information only and should not be read as investment advice.  All site content, including advertisements, shall not be construed as a recommendation to buy or sell any security or financial instrument, or to participate in any particular trading or investment strategy.  The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of sponsors or firms affiliated with the author(s).  The author may or may not have a position in any company or advertiser referenced above.  Any action you take as a result of information, analysis, or advertisement viewed on this site is your responsibility.  Consult an investment adviser before making any investment decisions.

Can't think of a title

I had posted a detailed, negative cash flow, real estate investing example for a half hour or so yesterday, but I became unhappy with it and took it back down. 


It will suffice to say that I am extremely bearish on the Canadian housing market, and have been for the last several years (ask anyone who talks to me on a regular basis...).  I expect a decline in nationwide average prices to pre-2005 levels.  There are a variety of reasons to expect such a downturn, and a great amount of information on the matter can be had at various other sources (see the blog roll on the right of my site for some of the best ones).  I am also increasingly beginning to think that the tide has already turned, given both the shift in the mainstream media's treatment of the issue over the last couple of weeks, and the high number of acquaintances I have that have bought houses in the last 6 months (the majority of which I would never lend money to), but we shall see.

This is a good time to bring up Bob Farrell's 10 Rules of Investing (I get a kick out of the fact that the article I link to below is from the summer of 2008).

As I learned on my Hawaiian vacation last week, all it takes is an hour or two in the airport to witness every flaw in human behavior and learn how one can profit from the ignorance of the herd.

Additionally, I strongly believe that there are only two ways to make money.

Hard work and good fortune.

Only one of these methods is sustainable and it is extremely important not to confuse the two.

What do you think is a better way to grow wealth?

Borrowing a massive quantity of money to acquire a historically and fundamentally overvalued, incredibly illiquid asset, with the hope that your sheer ability to stare boldly at your stainless steel appliances and granite counter-tops will result in a repeat of the price increase of 2006/2007 (which only occurred due to an unprecedented change in lending standards)?

Or, consistently living below your means and investing your savings in a liquid, diversified portfolio of financial assets yielding a rate of return commensurate with the risk taken?

I thought so; though it's amazing how many people shy away from equities but do not even think twice about financing 95% of a real estate purchase over 35 years.

My wife and I happily rent a 1700 square foot, 4 year old townhouse, with an attached double garage, in a great neighborhood, with a crew that clears the snow/mows the lawn several times a week.  Our monthly housing cost is less than 17% of our net monthly income, and we have the ability to move at any time for any reason with just 30 days notice.  We tend to move often to spread the money around different landlords, and to add a degree of excitement to their lives.

While I often get the impression that some people view us as second-class citizens for renting, all it takes is a look at our bank account balance (and maybe a trip to Hawaii a couple of times a year with some of our investment income) to get the warm and fuzzies back. 

I highly suggest reading the following.

Vatican Fashion Police?

The Vatican City has been generating more interest than usual lately with last week's public discussions of how the Sistine Chapel's high volume of human traffic is damaging the building's famous frescoes.  However, the Vatican has already easily topped themselves.  This week, Jaunted picked up a story that the Italian wire service ANSA reported on the dress code inside the Vatican City this summer.

For anyone who has never visited a major church in Europe, there are usually some loose rules on what clothing is and isn't allowed.  In general, midriffs, shoulders, and knees must be covered.  Shorts are generally allowed but must be at least knee length.  Similar rules apply for skirts/dresses.  For (mostly) women with bare shoulders (it's hot in Europe in the summer!), a shawl wrapped around them is almost always acceptable.  In fact, some churches provide free paper ones for this reason.  In other places, small vendors can often be found within a short distance from the entrance of the church that will be very glad to sell a cheap shawl for a few Euros.  This is all very normal in Europe.  You'll see it at the Basilicas of Notre Dame in Paris, St. Mark's in Venice, and St. Peter's in the Vatican.

I have never had a problem with these type of rules.  You are entering (usually) an ancient and (always) sacred site.  A certain modicum of decorum and respect is fair to be expected.  However, the Swiss Guard have been reportedly stopping "unsuitably dressed" people from even entering St. Peter's Square or any other part of the Vatican City.  ANSA reports of the Swiss Guard hassling a 70-year-old Roman woman attempting to enter the Vatican who was stopped because of her sleeveless dress.  After eventually being let in, she quipped "Given all the scandals the Church has been involved in, what possible right can it have to be preaching about the morality of sleeveless dresses?"

Although there aren't exactly strict requirements on crossing the border between Italy and the Holy See, it is definitely its own independent nation.  Other than St Peter's Basilica, the Papal residences, and other church buildings, the Vatican City also contains a post office, pharmacy, and a small store.  The pharmacy offers a wider range of medication often at lower prices than the pharmacies in Rome.  As a result, many Romans frequent the Vatican just to fill their prescriptions.

Although St. Peter's Square often serves as an amphitheatre for Papal addresses and other official ceremonies in the Vatican, it is not itself a holy site.  I'm not sure I understand the need to prevent people who are "unsuitably dressed" from entering the country and just enjoying the magnificent architecture.  If they choose to enter St. Peter's Basilica, the Vatican museum, the Sistine Chapel, or any of the other holy buildings contained inside the Vatican, then that is a completely different story.  I foresee a booming business in small vendors selling their cheap shawls in the area around the Vatican if these rules continue to be strictly enforced.