What do you do with your money?
If you’re waiting out the current real estate market in the hope for a return to sane prices, chances are you’re saving up at least some of the difference between rent and sales prices. The question then is: what are you doing with your money? Do you have it stuffed in a mattress or buried in a jar in the backyard? What are your expectations of return on capital and do you expect to beat inflation?
Stock markets are way up again, the local real estate market is close to it prior peak again and rock bottom interest rates mean any guaranteed returns are pretty low, so the challenge is to find sectors with room to grow. Are you content with the 2% you can get on a saving account or are you playing the markets and buying up bonds and GICs?
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September 25th, 2009 at 10:09 pm
Where the heck is my money? The OP’s question got me to briefly assess my situation, so thanks for the reminder.
About 60% in equities, with a slant toward small-cap value stocks (a la Fama/French research). Got hammered last Oct to March, but seem to have bounced right back.
Remaining 40% in cash. Cash still feels like a pretty comfortable hedge to me, because I’m anticipating significant deflation in house prices over 5 years. If I’m wrong about house prices, I’ll shift the cash over to bonds.
Not too sexy, but it’s edging me ever closer to financial independence. I am not persuaded by arguments which insist on home ownership as a necessary condition of financial independence, so I agree with the mood of many posters here.
September 24th, 2009 at 10:13 am
Well, I meant to say I don’t use specialized merger arbitrage sites. I take my news from the standard sources, globeanddmail, sedar, stockhouse, etc and of course also googling …
September 24th, 2009 at 10:05 am
@Jim:
Hi Jim,
The most obvious indicator is the spread between the proposed transaction price and the market price. The larger the spread, the bigger the risk (on average!).
I try to think about the transaction. Does it make sense to everyone involved? The BCE deal is a clear-cut case where it made no sense to the buyers or to the lenders. That eliminated BCE from my purchase criteria.
You certainly have to take on risk with merger arbitrage. There are so many things that could go wrong, although each is very unlikely, taken together, there is serious risk. So I don’t recommend it to anyone, but of course I do lots of stupid(?) things that I wouldn’t recommend to someone else.
Some risk can be contained by spreading your bets around, risking a smallish proportion of one’s money or by selling before the deal is consummated. I don’t risk money that I could not afford to lose.
I don’t use web sites, although I know they are out there for US plays that make targets easier to find. Scotiabank I hear gives advise for these things through their full service broker, but I am do-it-yourself guy.
-VB
September 24th, 2009 at 8:59 am
@Anonymous:
Rents are falling.
September 24th, 2009 at 8:10 am
crabman, yet they can still sign mortgage contracts….
September 24th, 2009 at 7:34 am
@VultureBoy: Thanks for the explanation of merger arbitrage, it almost seems too simple, but I can see where it could get pretty risky. Looks like you’d need to make big bets to make it pay off at those margins. Are there any warning signs for mergers that are likely to fall through, or central source for merger news?
September 24th, 2009 at 6:24 am
After reading this article in yesterdays Sun, this RE market is starting to make a little more sense!
September 24th, 2009 at 1:53 am
The voice of OZ is tinted with hallucination.
http://www.federalreserve.gov/.....90923a.htm
How can anyone read this and not laugh?
This is either the over view of a new financial paradigm or a hint that when they pull back on the spending you better be ready to stand on your own two feet.
September 23rd, 2009 at 10:38 pm
I promised to post this when I found it. So far only BCTC has published their salaries for 2008. The other crown corps havent’ yet. There is an org chart to see who does. What. It is sick to think of the disparity between private sectro empoloyees and crown corp workers in BC.
http://www.bctc.com/about_bctc.....return.htm