Legal Bills in Madoff Case Will Be Over the Top

Investors with Bernie Madoff have not only lost most of their life savings, whatever is left to salvage will be eaten away in legal fees.

An article posted on Bloomberg.com indicated that U.K. regulatory lawyers advising clients on the financial crisis and the Bernie Madoff scandal will bill as much as as 1,000 pounds per hour ($1,800 Cdn). With multiple lawyers working on a given case at the same time, the legal bills will be astronomical.

Perhaps the SEC can cough up some funds for investors and pay for the legal bills in this case after being warned about Madoff for many years.

 

Your thoughts and comments are appreciated.

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Quebec Stock Savings Plan II Should Be Copied

The Quebec government announced plans of introducing a revamped stock savings plan allowing small to medium sized public companies located in that proivnce to raise capital and provide investors with a tax break of up to 150%.

In todays economy it is nearly impossible for smaller companies to raise any capital regardless of industry. Manufacturing companies in Ontario, junior oil and gas companies in Alberta, and mining companies in B.C. could all benefit from a similar program being implemented as a tax break like this would do much to offset the risk  investors seem unwilling to take in todays environment.

Do you think a savings plan with a 150% tax break would benefit small business in other provinces?

Your comments are greatly appreciated.

Can The TSX Breakout Tomorrow

The TSX is up approximately 10% this week as financials have rallied off of their lows as the major banks and brokerage firms in the US are indicating that they should have positive results for the first quarter of 2009.

Retail sales in the US were stronger than forecast and strength in crude oil has lead to higher prices for oil stocks. The next question for alot of investors is whether we have hit bottom?

Some investors swear by something called “Technical Analysis” where charts are looked at to determine whether to buy in or sell out of an underlying investment.

I took a look at a chart that shows the 50 day moving average of the TSX. Over the last 6 months, the TSX has briefly touched the average before heading lower. I have attached the chart that you can see by clicking here.

When the “Green Line” breaks above the “Blue Line” on the chart, the market is trading above the 50 day moving average.

Traders will be looking closely at the charts tomorrow as we are trading at the moving average now and a slight breakout to the upside could lead to alot more cash going into the market.

What are your thoughts? Did we hit the bottom of this market cycle? Your comments are greatly appreciated.

Steps Being Taken to Prevent Another Meltdown

One of the most difficult things for investors both professional and amateur to do is analyze some of the structured products that are now being called Toxic Assets. Pricing them has become difficult because in alot of cases, the assets backing them are hard to identify and disclosure documents can contain hundreds of pages of data that can take days and even weeks to analyze.

In order to analyze the data, a more efficient reporting framework is being developed to extract the releveant numbers so one pool of mortgages or asset backed securities can be analyzed and compared to another.

This will allow investors and analysts to compare investments and make informed decision in a very timely matter. The reporting system being worked on now is called XBRL that stands for eXtensible Business Reporting Language. For more information on it, I have added a link to the CFA Institute website.

When the government can stop worrying about which company will fail next and concentrate on prevention, you will hear alot more aboout XBRL. Your thoughts and comments are greatly appreciated.

Actively Managed ETF’s Coming to Canada

Up until now, Canadians have had access to Exhange Traded Funds known as ETF’s that give exposure to an underlying stock or bond index, commodity index, or commodity.

Horizon BetaPro launched a class of ETF’s that provide double the daily movement up or down on a variety of indexes or commodities. They are going one  step further taking a page out of ETF’s available in the US for quite sometime offering Actively Managed ETF’s which will allow investors to invest with a particular manager or strategy in a format that gives people intra-day pricing and lower fees.

The Horizon AlphaPro Gartman Fund is being launched later this month witgh an opportunity to have some funds managed by Dennis Gartman. This closed end fund will convert to an ETF no later than March 2010.

You can get more information by clicking here. More ETF’s are sure to be launched in the coming months. Don’t be surprised to see another ETF manufacturer, Claymore Investments, launch their own line of actively managed ETF’s in the months to come.

Do you thing actively managed ETF’s will catch fire in Canada? Your thoughts and comments are greatly appreciated.

Bank Rate Down…Line of Credit Rate Up

Most Canadians with a personal line of credit (PLC) or Home Equity Line of Credit (HELOC) are rejoicing as rates come down as our Bank Rate dropped to an all time low 0f 0.5%  that should ultimately lead to a 0.5% reduction in the Bank Prime rate that is currently 3%.

Hold off on re-doing your budget as your interest costs may be going up rather than down. Most people believe that their line of credit adjusts up or down with prime and the premium above prime stays constant.

This is not the case as I found out recently that the small print in some line of credit contracts indicate that the bank can increase the premium above prime at their discretion. I read one contract that indicated the bank could increase rates to as much as 6% above prime and intended to increase their premium by 1% on all lines of credit in April.

While the government is trying to encourage consumers and businesses to spend our way out of recession, banks are taking steps to increase margins and profitability. There is nothing wrong with wanting to increase profitability but one questions the timing based on the struggles that our economy is currently facing.

What are your thoughts on this interest rate increase? Were you aware of a banks ability to increase rates at their discretion? Your thoughts and comments are greatly appreciated.