Surveying the damage -- November net worth

Not exactly a banner month for the ol' portfolio.

Net worth went down by nearly 2% for the month, and that's after the $1000 of new cash I put into it during the month. There were fluctuations throughout, but the real mover and shaker was Biovail.

I didn't write a post on the company's latest woes because frankly, I'm tired of writing about them, but suffice to say it's hard to bounce back when your largest single holding loses more than 10% of its value in a month.

I've been really close to dumping the entire thing, cutting my losses and putting what's left into something steadier, but I still think the market's overreacting to it. They've got cash, and they've got new drugs slowly coming along the pipeline. I just need to be patient. That dividend will tide me over. Time will tell if my instincts are right on this one, but for now there's no denying it's an ugly blotch on my portfolio.

Still, there's no accounting for luck sometimes. The stock market's been open for less than an hour today, for example, and Google Finance informs me I'm already up $500. Much like Kyle Wellwood, this too, shall pass.

The BMO Yo-Yo

I wasn't expecting good tidings when my RSS reader stomach-punched me with the headline "BMO earnings drop 35%" earlier this week, but such is the craziness of the stock market at the moment that it was actually received as good news.

The stock is up more than 10% since they posted their results.

The theory, I gather, is that everyone is relieved that BMO has laid their cards on the table so they can see how bad the damage is, and the results weren't as bad as anticipated (they actually beat analyst expectations) if you don't count the one-time writedowns.

So now it's onward and upward, and everyone just keeps piling back into bank stocks despite the fact that their underlying business is in the exact same condition it was this time last week, when people were running for the exits. Apparently that's what you call an efficient market.

Me? I'm standing pat. I don't have any more RRSP room for the year, and I'm in the red from my initial purchase price of $71 for BMO in April. If it's at that level or lower in March when I'll have cash and fresh contribution room, I'll throw some more in. If not, no big deal -- I'm in it for the long haul.

I can't claim to be as zen-like as Mr. Cheap is when his margin-bought dividend payers are in the red, but I'll survive.

EI update

Last week, news that a think tank deemed Employment Insurance biased against women, and now, Toronto Mayor David Miller has a bone to pick with the program.

The rules are overly harsh against Toronto, the mayor says.

36 per cent of unemployed Montrealers qualify for EI, whereas only 22 per cent of unemployed Torontonians do, the mayor claims. Since those people are generally pushed on to welfare -- a program the city pays a part of -- it's not hard to see why Miller's complaining here. It goes with his long-standing beef that Canadian cities are paying more than their fair share of society's infrastructure.

An interesting story, but I wish the mayor -- or perhaps, more accurately, the story in the paper -- listed a few more specifics about how and why, exactly, the rules are unfair to Toronto, according to him. That more unemployed people in Calgary (there's an oxymoron) get EI than do in Toronto is largely irrelevant. I want to know the reasons for it, if there are any.

Maybe I'll see what else I can find on Miller's views on the Internets.

money mistakes

I suspect that when Canadian Capitalist asked readers to submit stories of their money mistakes in honour of his wonderful blog's third birthday he was expecting nice, neat little narratives about people changing their habits, learning lessons and vowing never to do them again.

I've got a few of those I could share, but for me, my major money mistake is an ongoing one -- albeit one that I'm diligently working on.

In a nutshell, my mistake is accepting less than I've paid for. In a myriad of circumstances. Whether it's my current pissing match with Canada's largest bank, not getting around to returning defective merchandise because I'm too lazy to get around to it (but vowing to "never go there again" -- as if that's going to do me an iota of good) or even something as seemingly innocuous as accepting substandard service because I think it might be awkward to have the audacity to actually ask for what I've paid for.

Not that I want to turn into a fire-breathing penny-pincher overnight, but the lunacy of obsessing over reducing fees in my investment portfolio on the one hand while throwing good money out the door on, say, being charged twice for orange juice while ringing me through at the cash register, has struck me of late.

I realize I'm coming off as a bit of a cheapskate here, which is unfortunate because I'm actually willing and eager to pay top dollar for the things that are genuinely important to me. But the never-ending leeching of money to things that don't fall under that category are just death by a thousand cuts.

I have a friend who's an absolute peach to those to know her, but she has a well-deserved (and hilarious) reputation for absolutely, positively refusing to give an inch when it comes to business dealings that don't live up to her expectations. She's always the first to pick up the tab for a round of drinks at the bar, but don't you even dare think of sending her a chest of drawers with an almost-indecipherable scratch on the back, tell her the rental car reservation has been lost, or try to tack on a previously-unknown service charge for something. I can't count the number of times she's regaled me with stories of apologetic CEOs leaving messages on her answering machine. The e-mails are almost as good.

It's sort of a lifelong process, but I think continuing my efforts at change in this regard would do a lot of good for my finances without making me insufferable to those around me. If nothing else, I'll probably have better stories. :)

Is EI sexist?

I already have a feeling I'm stepping into a hornet's nest on this one...

Came across some interesting reading today -- especially pertinent considering Krystal's recent job loss and subsequent need to apply for employment insurance to tide her over until she's back on those field-hockey-playing feet of hers.


A report by the Canadian Centre for Policy Alternatives claims that EI, as it's currently structured in Canada, is biased against women. The report says that while 40% of unemployed men qualified for EI in 2004, only 32% of women were. The reason for this, the report concludes, is that unfair rules concerning how many hours your have to log to qualify are stacked against women. In the words of the report's authors: "it doesn't take into account the fact that women have to be out of the workforce for periods to look after their children and that may make it harder for them to qualify for benefits." (italics mine)

Is it me, or is that a curious position to take?

I won't dispute that women, the way our society is currently set up, do a disproportionately large amount of house and family-related work. And I imagine that certainly would put a damper on their career opportunities, or indeed any other aspect of their lives. But isn't it shooting yourself in the foot to set out on a feminist cause that something is biased against women, and then say "women have to be out of the workforce to take care of children" as one of your arguments at the same time? Is that not making a pretty large deductive leap that that's what all women want? Or worse, are worth?

To me, the real meat of this issue is the face that EI, as it's currently set up, is taking in far more money than it will ever pay out in premiums because of too-restrictive requirements to qualify. That's for everyone, whether you quit your job to have children as a man or a woman, or whether you're a seasonal worker somewhere. The cards are simply stacked in the casino's favour, here. I expect that sort of activity from a private insurance company, but not from a government entity allegedly doing this as a service to citizens. EI rakes in a $2-billion surplus a year, and currently is sitting on more than $51-billion since it was revamped in the 1990s. More than $51-billion or your money!

You can argue all you want that the EI system is unfair, but I'm having a hard time seeing the sexism. There's nothing that says women have to be the ones who stay home, or work reduced hours, to take care of kids, just as there's nothing that says men can't do the same. Under these rules, if a man left his job to raise children, wouldn't the system be just as unfair to him?

I get that there's a systemic inefficiency here. I'm just not seeing the sexism. The argument that we need to revamp EI so that women can go back to making babies seems like a ridiculous one to me on many different levels.

Food for thought, anyway. I'd love to hear feedback from women in the comments.

This just in -- banks like money

Regular readers will recall my post last month about how I finagled my way to a free chequing account at RBC. Through their multiproduct fee rebate, anyone who holds an RBC chequing account and at least two other qualifying RBC accounts has their regular bank fees on the chequing account waived.

I thought I qualified because I have an RBC Visa card and my self-directed online brokerage is RBC Direct Investing, but alas, the latter didn't qualify under the program since it was a different division of RBC. Undeterred, I sat though a 20 minute phone call with RBC, and after eventually getting transfered to the right person and pleading my case, I was assured I qualified for the rebate.

Or so I thought. It's been more than a month since that call and I recently got my monthly statement where (surprise surprise) I'm still being charged monthly fees. I've called RBC numerous times trying to get it sorted out, but the response is always the same -- "anyone who said she'd bend the rules for you to apply shouldn't have said that, because I don't qualify for this promotion. Please buy one of our crappy GICs instead."

Bad move. I haven't quite pulled the chute on RBC yet (the logistics of transfering my Visa Card with tens of thousands of RBC points, not to mention registered and unregistered investment accounts to another broker make me queasy) but I have gone out and signed up for a President's Choice No-Fee Chequing account. I already park my savings in a PC high-interest savings account, so signing up was a snap. 10 minutes at the kiosk across from my office, and I was done. Free cheques, no monthly fees. Beauty.

At the moment, it's sort of an insurance policy. I want to be 100% sure RBC isn't going to play ball before I play the "close my account" card with them, but even if they accede there's no harm done. The PC account has no fees, so I'll probably just transfer some money into it and collect points when I buy groceries, since I go to Loblaws for groceries to begin with.

I suppose there' s a slim chance this is all a misunderstanding and the RBC's recent fee was simply the last month before they'll be waived from now on, but since I don't have the name or phone number of the person at RBC who said she'd credit my account, I have no way of tracking that person down to make sure that's the case. As I said, in all my dealings since then, I've been given the distinct impression that I'm SOL.

I still shudder at the thought of having to transfer all sorts of accounts and bill payments away from RBC, but the satisfaction I'd get in the end may be worth it. There's simply no reason to pay bank fees in this day and age and there's simply no reason to put up with crappy service when others are only too happy to do business with you.

I'll keep you all posted on how this plays out. And RBC, you're on notice.

A modest proposal

A resounding BRAVO to the people behind this little beauty of an organization.

Dedicated to maximizing the utility of the "exciting, fast-growing demographic" known as the working poor, the Predatory Lending Association is truly fighting the good fight. I urge you all to sign up for their newsletter and contact your local politicians, to make sure North America's treasured payday loan businesses aren't lost forever. There are only 22,000 of them across the United States left, and they loaned out a mere $40-billion last year.

We're running out of time, here, people. If you're not part of the solution, you're part of the problem.

Be sure to check out the site's informative FAQ section:

Myth: The government should regulate predatory payday lenders.
Reality: Although it is true that our government regulates some free market activities such as prostitution and drug abuse, payday lending is fundamentally different because it is a financial service.

Rome is burning

You know, I can't emphasize enough how much I hope that the hoopleheads camping out on the street for a week for the privilege of owning one of the 1 Bloor St. condos in 2011 get what's coming to them. Whatever that may be down the line.

Although I must admit, I admire realtors' resourcefulness in hiring college students to sleep in the street in their stead. Who else has time on their hands and a keen desire for money? Gotta love the market system.

Change can be good

I changed jobs a few months ago, and a somewhat-unexpected cost of that change is that my hours have been turned completely around. I used to have a fairly conventional 9-to-5 (ish) gig, but I now find myself not going into the office until the early afternoon and subsequently not getting home until 9 or sometime 10 o'clock.

On the surface, it doesn't really bother me. I sort of take the position that one day I'll have to grow up and get a "normal" job that forces me to deal with gridlock traffic or crowded subways and a blaring alarm at 7 a.m. -- why not enjoy my ability to sleep in until 10 and stay out as late as I want for as long as I can? But it's safe to say this sort of arrangement poses a problem when dealing with family members who have a more conventional schedule. In my case, "family" consists of my girlfriend (whom I've lived with for a few years) who has a regular 9-to-5 gig.

My getting home near 10 o'clock is particularly troublesome, however, with regards to planning and having meals. She gets home at 6, and quite logically, starts to think about dinner after a long day. But she's a peach, so she generally gets cracking on the cooking in the interim, while I hurry home as soon as I can. Best case scenario? We're sitting down together for 9.

How do abnormal meal hours relate to personal finance? I'm glad you asked. Before this recent change of ours, one thing we used to do quite a bit was go out for dinner. Not out or laziness or inability to cook for ourselves (we're actually quite good in the kitchen, if I do say so myself) but because we enjoyed the experience of dining out.

I'd say we averaged one dinner costing about $100 (for both of us, wine included) every few weeks. I can already hear the latte factor diaspora throwing up a little in their mouths, furiously calculating what that money would have done after 20 years in a no-load index fund, but what can I say -- it was an extravagance I was willing to allow myself because we both enjoyed it and I managed to save my couple of hundred a month into a rainy day fund anyway.

But now? We haven't been out for dinner once since my new job started. It hasn't really been a conscious effort, but when you're getting home from work at like, 9:30, and one of you has to be up at 7, it's not really an option. We eat dinner at home out of necessity, and that tends to be a lot cheaper.

My free time, ergo, tends to be before work in the mornings and early afternoon -- not exactly prime socializing time. So it's not even just my food budget that's been slashed -- it's entertainment too. Going out to have a few beers after work, watch the hockey game, eat chicken wings and convince oneself that the waitress thinks you're hilarious used to be a major outlet of my disposal income. But I don't really do that anymore either, since I don't seem to be living on the same schedule as anybody else I know.

It all adds up, is what I'm trying to say, so I find myself with a lot more cash around than I used to. Finding ways to spend it during the hours of 9 a.m. and noon proves difficult. I also get a modest shift differential stipend for working during evening hours. My new job pays less, on paper, than my old one did. But for the reasons outlined above, I actually find myself with more cash in my pocket at the end of the month than I used to.

Just one more way money issues can often work themselves out in ways you didn't imagine.

The anti-picker

I know, I know, obsessing over the stock market's short-term fluctuations isn't investing, it's speculating, but geez -- it's tough to feel any confidence about one's decisions in the stock market at the moment.

Take my latest move (editor's joke: please!) of putting the remainder of my RRSP contribution for 2007 into Nasdaq-listed asset manager American Capital Strategies earlier this week. I liked the company's history of steady-but-significant capital gains, but I fell hard for that juicy dividend yield, so I jumped in on Monday.

What's happened since? You mean besides having the equivalent of an entire year's worth of distributions knocked off the company's market cap, you mean? Not much.

Truth be told, I don't think it's all that dire. I still don't see how and why the subprime boogeyman is applicable here, although the company did run across some nasty news about a bankrupt subsidiary to get the slide started. But ultimately, I'm really just venting here. I have nothing drastic planned, whether it's liquidating the position or increasing it. Staying in it for the long haul is just how I roll, as the kids say.

I shouldn't actually feel too bad about myself -- after all, everything's down. The other thing I was considering for the funds was plowing it into BMO, but it too hit a new 52-week low today.

We're all in this together. The sun'll come out tomorrow, and all that...

You should hear her views on mortgage-backed securities

I must admit I got a bit of a chuckle from the story this week that supermodel Gisele Bundchen, the highest-paid model in the world, is apparently bearish on the U.S. dollar's prospects, as she's insisting on being paid in euros from now on.

Warren Buffett doesn't see any end to the greenback's misery any time soon, nor do a whole host of more intelligent economists than I. But as far as I can tell, this is the first time a supermodel has extolled the virtues of international currency diversification.

And you're right -- I have no good reason for posting this picture. But it should increase the number of clicks I get.

Feel free to insert any joke you can think of relating to "appreciating assets" right about here.

Trading note

As discussed previously, I finally made my second RRSP purchase of the year. I'm now the proud, only marginally anxious, owner of $3000 worth of American Capital Strategies, a Nasdaq-listed diversified investment manager. I liked the the company's track record of steady performance in good and bad markets, so I'm confident of modest capital gains. Plus the firm boasts an impressive dividend yield of nearly 10% -- so I'll get paid while I wait.

I'm sure U.S. equities have a ways to fall yet as this subprime / real estate mess plays out, but I like ACAS's odds of standing up better than most (what was it Benjamin Graham wrote about a margin of safety?) and over the long term, the U.S. is going to remain a powerhouse of the global economy. Running away and hiding simply isn't an option.

The fact that my loonies go further than they ever have before is the icing on the cake.

Banks 2.0

When most people think of Web 2.0 applications like Facebook, YouTube and Myspace, they don't really equate them with big business and high finance. But that doesn't mean the banks aren't dipping their toes in the water. The banks are moving into Facebook, with both RBC and TD sponsoring their own personal finance-related groups to try to court new, young customers. I sort of find the idea of stodgy old banks starting a toehold on facebook kind of funny, but it's serious business for their perspective. If You can't get Mohammed to come to the mountain, bring the mountain to Mohammed, I guess. TD's group boasts more than 10,000 members, so maybe it's working.

Me? I have my doubts. When I hear the word "YouTube," I think of an inexhaustible catalog of videos of dudes getting hit in the crotch. Not exactly the kind of "sound investment" I like to put my money into, but what do I know? Market darling Google thought enough of the potential to slap down $1-billion to own YouTube outright, and who am I to disagree. Then, last week, Microsoft bought a tiny ownership stake in Facebook, in the process valuing the company at more than $15-billion. I have my doubts that Facebook will be able to maintain its popularily with users once the endless parade of unsolicited "friend requests" from commercial entities start flooding inboxes, but I've been wrong before.

From an investing standpoint, I wouldn't touch these companies with a 10-foot pole, but once the baby boomers have been squeezed for every penny they're worth, the industry needs to move on to the next generation of financial illiterates.

The fact that they're all hanging out on facebook at the moment might be as good a reason as any to stake your ownership claim, or failing that, make sure your product is being pitched with reckless abandon on it in the interim.

It's happening before my very eyes. All in know is this -- some people are going to make a lot of money in this trend, and some will lose a ton. Whether it's shareholders or facebook users that are left holding the bag remains to be seen.

Net worth update

You just never know. After a few months of mediocre progress, my net worth jumped an impressive 4% last month, and I barely noticed.

Just goes to show what an automatic savings program and a little luck in the stock markets can do for you.

I'm now at more than $36,500, a little bit off my ambitious end-of-year goal of $40,000 by the end of 2007. I didn't think I had a hope of making it, but two more months like this past one and I just might. if I don't, I was swinging for the fences anyway.

I'll be making my second (and final) RRSP purchase of the year in the next few days. I had planned on diversifying more into U.S. equities, but given the worsening subprime crisis down there, coupled by the undeserved hammering Canadian banks have taken of late, as of this moment I'm leaning toward doubling down on BMO when the cash clears into my account. I'm sure my mind will change in 20 minutes though.

I'll keep you posted.