The Week Ahead – August 3, 2009

The TSX is poised to show a 5% + increase for the month of July with less than 2 hours to go in the trading day while the Dow Jones Industrial Average is up almost 9% for the month.

On the economic front next week, US ISM Manufacturing  numbers come out on Monday. US Pending Home Sales Month over Month and Year over Year for June will be reported on Tuesday, August 4th and June Factory Orders are being reported on the 5th.

In Canada, June Building Permits Month over Month are being reported on Thursday August 6th. The July Unemployment Rate, Net Change in Unemployment  and the Ivey Purchasing Mangers Index are all being reported on Friday.

It will be a very busy week on the earnings front with too many companies to list. For a complete list, you can click on the following link with the dates and earnings per share estimates.

Earnings Estimates

New Research Podcasts

Have a Great Weekend

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Get Your Spousal Loan In Place While They’re Hot

When one spouse is in a much higher tax bracket than the other, one income splitting technique to help reduce taxes is to lend a lump sum of money to lower income earning spouse.

By having a formal lending agreement in place, the lower income spouse can start to generate income from the funds at a lower tax rate. This strategy makes more sense than ever right now.

The lower income spouse must pay interest at the prescribed rate to their partner so the interest earned must exceed the interest that has to be paid on the loan. The prescribed rate is at an all time low of 1% making this strategy imperative if you and your spouse are in significantly different tax brackets.

You can even lock in the 1% prescribed rate for life if your loan agreement is set up properly through a lawyer.  Don’t procrastinate on this strategy as it may not last forever at current rates.

Your thoughts and comments are always appreciated.

Buffett Hits Home Run with Goldman Sachs

A short eight months ago, the media was asking whether Warren Buffett, the worlds most astute investor according to many had lost his touch after placing large bets on Goldman Sachs through his investment fund, Berkshire Hathaway.

Goldman Sachs reported a record profit for the quarter as its stock has gone from a low of $47.41 to its current high of $165  giving Berkshire investors a return of 44% in just  a few months. Ordinary investors shunned the thought of sinking funds into a US based financial firm and financial advisors would be fired by their clients for recommending such action.

Give credit to Buffett for placing his money where his mouth was. He was one of the few and these bets are why he continues to do well. On one of my previous blog postings, I attached a New York Times article that Warren Buffett wrote outlining his conviction for investing and Buying American which you can read by clicking here.

Only time will tell if he is right but 60 years of following his conviction and being one of the richest men in the world because of it provides some backing.

Your thoughts and comments are always appreciated. Have a good weekend.

Microsoft and Google Fight to the Finish

Google and Microsoft look to bury each other with damage to each being a certainty. Microsoft earns most of its revenue from two sources, Its Office software suite and Windows operating system licensing fees.

Google earns most of its revenues from paid search advertising. Both firms have been encroaching on each others territory and both will probably become weaker due to it.  Google launched its own suite of software via the web challenging Microsoft as the suite is offered at no charge creating some painful decisions for Microsoft.

 Google also announced it would be launching its own operating system for computer users and the system would be free as it tries to do what Microsoft has done to many competitors in the past. Offer services for free that would bury the competition as there revenue source dries up.

 Microsoft is fighting back however as it announced that there will be an online version of its Office suite available to compete with Google’s version. They have also stepped up their search engine presence with Bing which has been starting to gain market share on Google although it is too early in the game to know if it will be successful.

If Microsoft can gain market share and generate a greater share of paid search advertising revenue, it can put a dent in Google’s bread and butter. As each encroaches on each others territory, the costs to each will be painful but ultimately better for computer users around the world.

Your thoughts and comments are always appreciated.

What to Look For in a Financial Advisor?

A Bernie Madoff type ponzi scheme reared its head in Canada this weekend with the discovery of $50 million in potential investor losses care of alleged financial advisor, Earl Jones. What was of extreme interest was that he was not registered as an investment advisor at all.

Unfortunately, this is not the first time this has happened and it won’t be the last as there are other so called advisors working hard to manage your money.

How can regulators regulate an advisor if he or she isn’t an advisor? How can investors place trust in an advisor that does not have the credentials to be one?

The Investment Industry Association of Canada (IIAC) has done a good job of providing some information on what an individual should look for when shopping for a financial advisor. Their website www.iiac.ca is a good place to start but I have gone one step further in providing a page on our website with three of their publications.

As we can see from the Madoff and Jones incidents, performance should not be the sole measure of success as their performance could not be measured since investors received their monthly cheques for years without incident until funds stopped coming in to pay existing clients.

To read the IIAC publications on choosing a registered investment advisor, you can click HERE

Your thoughts and comments are greatly appreciated.

The Week Ahead

It will be a busy reporting week on the economic front with month over month Producer Price Index and Consumer Price Index numbers coming out early in the week.

Initial jobless claims and continuing claims are being reported Thursday while Housing starts and building permit numbers will be reported on Friday.

On the earnings front, not many companies will be reporting next week. Alimentation Couche-Tard reports on Tuesday with consensus estimates coming in at .118 per share.

Corus Entertainment reports on Wednesday with expectations at .429 per share and Nexen reports Thursday with expected earnings per share of .284.

US earnings can be found by going to www.earnings.com

Have a great weekend

General Motors IPO….Any Takers?

As GM gets ready to emerge from bankruptcy protection a  much leaner organization with less debt and less product lines, the largest shareholder, the US government and taxpayers, intend on getting some if not all of their money back  in 2010.

An initial public offering has been discussed for the middle of next year which would allow the government to sell off part of the company and allow them to exit this investment in an orderly fashion. The biggest question one should ask is whether there will be any takers?

With the brand tainted and the car industry potentially still in shambles, how many investors will there be? With the overhang of pension costs, health care costs, higher than average salaries, and uneconomic factories, all being disposed of, GM could become an attractive investment with its better selling brands remaining in its fold.

What are your thoughts? Would you consider investing in a new GM without all the former legacy costs? Your comments are greatly appreciated.