Sunday, February 23, 2020

Should We Panic?



My brother texted me on Friday asking advice on whether he should sell his 1,968 shares of TD bank that sit in his employee savings plan. My brother is 59 and will be retiring next year. He's single and owns his own house.

My response;

"Not a chance in hell would I ever do that. Consider and focus on the income those shares spit out year after year and will continue to spit out throughout your retirement. Forget the stock price and instead focus on the dividend growth that plan will provide you. This is a great problem to have but don't let fear guide you through a possible market crash. This is when you are likely to do something stupid."

My brother works for the bank so consider that next time you run down there and talk to someone about buying bank mutual fund investments. Do this yourself.

He further goes on to tell me that he has another 1800 shares of TD in his investment account. Obviously that's a lot of money tied up in one stock. He was just blind loyal to his employer. He just needs to address his stock selection once he is pensioned off and addresses his retirement needs.

The main point here is don't panic because everyone in the financial industry tells us that a crash is coming. 

All they ever talk about is a market sell off so they can sell more ads and products to investors tuning into their shows.


Why the Sell-Off Friday?

Forget the virus named after a beer, that's not why.

The 30 year U.S. government bond just hit a historic low. (1.92%) Yes it happened and it's different. It's never been this low in it's history.

The U.S. dollar also got walloped down to the tune of a half percent.

This all equaled out to a market sell-off. It still finished above it's lows on the day. Did you panic and sell stocks? The Dow was not even down 1% but yet investors are fixated on the corona virus and in some cases like my brother are thinking of selling.

There is however no doubt that we are in the midst of a

DEBT SUPER BUBBLE!

This is what makes this market different than all the previous bubbles in history.

The bond market is definitely flashing red. There is a problem here but does that mean you should start bouncing in and out of your stock positions?

Most people can't do that. If you are a DIY investor you probably think about this all the time. You have to be right on the sell side and then you have to be right timing the buy to get back in the market. Tough to do.

What Happens Next?

A couple things come to mind.

Interest rates will be cut.

Negative rates will soon be here.

The attempt to avoid a yield curve inversion has failed. The Fed's money printing repo scam has created distortions in the stock and housing markets. Don't believe that? Check housing prices in Toronto. Just insane.

Look at the price action in gold and silver. What does that tell you? All of a sudden we have these spikes in precious metals. It's telling us that there is a flight now to safety. Investors are flocking to gold, silver and the bond market.

You MUST ignore what the stock market does on a day to day basis. It only matters to day traders.

We all know that this pumping of the debt bubble, hyper inflating assets can't go on forever. Yes I worry about it too.

If you own a lot of risk assets like big tech with sky high multiples with exposure to China, I would punt them here.

As an insurance hedge you could buy some physical gold and silver. Take the high road and buy some crypto currencies. This is just you taking action and protecting yourself away from central banks and the control they have over these markets.

The stock market will go up and then down until it doesn't. I'm just offering up alternatives and strategies to help preserve wealth and prevent panic on those down days.

Expect more debt to be issued by the Fed and also more intervention by the Chinese central bank.


Watch the Bond Market


A 30 year Canadian Gov't Bond now pays 1.39% interest
A 5 year pays you 1.50%

Why would you go that far out on the yield curve when you can make more by going short. The yield curve is flattening out and inverting. 

The inflation rate in Canada as of January 2020 is 2.4%
Why would you lock up money and fix it at rates below inflation? Is that safe?
Not if you're retired and seeking income. I do not seek to fix my income in retirement. I want to grow cash flow. Cash flow is king when you stop working. Nothing else matters, except for time and what is your time worth?

Warren Buffett on bonds;

“It is a terrible mistake for investors with long-term horizons - among them pension funds, college endowments and savings-minded individuals - to measure their investment 'risk' by their portfolios ratio of bonds to stocks. Often high-grade bonds in an investment portfolio increase its risk.”

It is the financial industry that wants you to have a 60/40 split of stocks and bonds. Pure unadulterated twaddle born from modern portfolio theory to sell you products.

Friday, February 21, 2020

Should a Retiree Own Bonds?


If you believe in Modern Portfolio Theory then you probably have 40% of your portfolio in bonds, bond ETFs or bond mutual funds.

I don't own any but have owned lots of different bond ETFs in the past.

I just don't see the case for fixed income products in a retiree's portfolio. I want my income to grow and don't want it fixed to a stagnant distribution rate.

Let's look at one of the biggest and most heavily promoted Bond ETFs on the planet. This is the one offered from ishares XBB. It holds 1,314 bonds.

Yield = 2.6%
MER - .10%
Distribution Per Share - 7 cents 
paid monthly

So after fees you are making 2.5% per year in income. Just above inflation but nonetheless above inflation. Here's exactly why I hate bonds for a retiree needing and relying on income to fund retirement.

The distributions are going down on an annual basis so we are losing income. Look at this 10 year period showing a loss of income of 44 cents per share. That's a huge loss. You would be forced to sell some of your units to make up for that income. The fund gained 6.8% in value last year while the distribution went down slightly.

2008  $1.32
2018 $0.88

You want a growing income in retirement and NOT a shrinking one.

Why Do People Own Bonds?

Just brainwashing and listening to too many bloggers, planners and analysts who adhere to MPT which focuses on asset allocation, diversification, rebalancing and other such financial jargon and twaddle.

You don't need bonds and they are a poor proxy for income in a retiree's portfolio.

So why?

It is a parachute to safety is how it is usually sold. Bonds are safe so keep 40% of your money in safe assets. 

But they're not safe and at present in one of the biggest bubbles in history. Even CNBC admitted as such today.

Bonds should never be bought for income so if you are retired like me shouldn't you own income producing assets? Yes you should is my answer. A retiree should be investing for income. My opinion.

Because of the inverse correlation to the market that bonds have, while the market rises the income yield on bonds goes in reverse. The price of the bond rises making a lower yield cost you more money.

I just hold income producing assets. Retirement is about cash flow and the future growth of that cash flow.

I don't worry about asset allocation, re-balancing or diversification. Check out the link below on more ideas to generate that retirement cash flow.


You Can Retire Sooner Than You Think

How I Built My Own Dividend Stock Portfolio




Friday, February 14, 2020

Monthly Dividend Update January 2020



Just a short post reporting the dividends I received in our retirement accounts during the month of January.


LIRA

CNR, CP, BNS, TD and TRP

Dividends Received = $302.60

Dividend Income January 2019 = $247.00

Monthly Income Increase of $55.60

My RRSP

TRP, TD, BNS, CM, CP, and BCE

Dividends Received = $537.91

Dividend Income January 2019 = $483.24

Monthly Income Increase of $54.67

* Sold 5 shares of CSU. Low dividend but a mistake as the stock has risen almost 50% since I sold it. I still hold some shares in my trading account.

Her RRSP

TRP, TD, BNS, CM, CP, BCE and T

Dividends Received = $629.17

Dividend Income January 2019 = $471.30

Monthly Income Increase of = $157.87

* Sold TFII in 2019 so no future dividends from this stock.

Total Income Received All Accounts = $1469.68

Total Income 2019 = $1201.54

YOY Monthly Increase of $268.14


Percentage Increase = 22%

In Sum

Monthly Dividend Income has jumped up 22% over the same period last year. We have 13 years before my wife needs to switch her account into a RRIF and I have another 8 years. This is how you keep up with the ravages of inflation in your retirement accounts.

These accounts are stuffed with dividend growth stocks so the hope is the monthly income will steadily rise over time.

I only converted the LIRA account in 2018. Before that the money was invested in MAW104 a Global Balanced Fund. This account now delivers better results because there is no bonds dragging down the monthly income.

I sold 2 stocks in 2019 for having low dividend yields which in hindsight was a mistake because they were both rising in value. 

They were CSU and TFII. Both great companies but for income not so much. I ended up just adding to existing positions in TD and FTS. More to follow next month.

I take all dividend income and buy more stock of existing positions. I will continue to do this until the law requires us to convert to RRIFs.

Related Posts:



Required Reading:




Sunday, February 9, 2020

The Borrowing Binge


If the fed is pumping tens upon tens of billions of dollars into the market everyday, how can stocks go down?

We are in the midst of a deliberate debt bubble. Investors are lining up and paying up for companies whose earnings are flat to going down. Huge multiple expansions on some companies who don't even make money.

Think TSLA here. This is what a classic bubble and a massive top looked like.



You have to recognize the signs to profit from these moves. Trade the market that's in front of you. I never owned TSLA. I came real close to owning it about 3 years ago when talking to a fellow patient at the hospital. It was trading around $250 but I didn't know shit about the company so I balked. Congrats to all those who made money.


The Debt Bubble is the biggest in the history of the world. This time it really is different. I really hate that tagline but in this case how can it not be true?

Do debts have to be paid back?

How does $1T a year get paid back anyhow?

More money is being pumped into the system to prop up this economy. They lie and tell us it's temporary, but it's not. 

If the economy is booming as they claim why is so much money being pumped into this Frankenstein debt market?

Focus on what they don't tell us and not what they reveal.

The stock market being high is just an illusion that everything is OK.

Trillions of dollars of debt being added with no end in sight.


From the Fed's own website, here we go again;


Repurchase Agreement Operational Details


Yes this time it really is different.

Don't we have a really different President this time around? One with business experience and nothing else.


How's that for different? All the while the fed is printing more and more money to throw at this debt expansion bubble that hyper inflates the stock market.

Oh yes! Stocks are going higher.

Where else are they going to go?

Larry Kudlow hints he wants fed to be bolder with rate cuts.

Job numbers were too good for that to happen.

Trump loves debt. He's the king of debt.

Welcome to the age of epic debt and a borrowing bnge the likes ofwhich the world has never seen!

Friday Market Close

Crude down 1%
Crypto - flat
Metals - flat

Buy some physical Gold
Buy some physical Silver

Buy Crypto currencies of your choice

Shouldn't we all be betting against this debt to protect our wealth?

What hedge are you using?


This Week's Posts

Friday, February 7, 2020

The Fed Keeps Pumping and My Stock Update


There were more people working during the great recession than there are right now.

Less people are participating in the workforce than there were in 2008/9. Yes LESS!

This is another great deception when the President and his government spew that the unemployment rate is the lowest in 50 years. Ya, because less people are working.

Know and recognize propaganda when you hear it.

Do you feel like a mushroom? You should because you are being intentionally kept in the dark like a shroom.

The fed is pumping tens of billions into this market. They don't tell you the truth because the truth will set you free. NO! Slavery is their goal. Debt slavery that is. To create a nation of debt slaves via cheap money to feed on.


Should You Be in the Stock Market?

Stocks just have nowhere to go but higher until the money pumping stops. The addiction will continue until the patient is cured or taken off the money medication. The system is sick. They don't tell you that. The cure is more money being pumped into the ailing body.

Again, recognize the propaganda when you hear it. Everything is the greatest in the history of our country. Remember those speeches?

Illusions and lies.

Asian markets are now surging because the virus scare is over done. Serious yes but still over hyped. Drug companies making a fortune. Don't be blinded by propaganda.

The world is not over and this is NOT a pandemic! It's a distraction to what is really happening to the global economy.

The debt expansion cycle will continue. More money will continue to be pumped into the system and more lies and deception will be fed to the unsuspecting masses.

We have no choice but to play the hand that has been dealt to us. Go long, go short and know the rules of this rigged game.

Stocks will continue to go up as long as the money pump stays primed. So far there is no sign that it is stopping. This is NO temporary measure from the Fed.

Stocks have only one way to go but higher. So yes you need to stay here.

Bubbles Everywhere

This is the mother of all bubbles.

Government debt has exploded to levels never seen before.

GDP numbers are anemic.

Manufacturing and Services sector are trending down and layoffs are happening.

Is this a great economy?

Earnings are not that great. Multiples on stocks are too high and stocks are expensive in spite of earnings not justifying the multiple.

Will the Fed pump more money into the market or stop?

There is a major disconnect between the market and earnings.

How will it all end?

When they decide to pull the plug we will have a meltdown.

This is the mother of all bubbles.

It looks like cryptos and physical gold/silver are the places to be. They also continue to move higher along with this hyper inflated market.

Not to hold forever but to later convert into something else you want to buy for yourself.

Impeachment is over. Trump victorious.

The show must and will go on!

There is no other choice.


Update on Stocks purchased 21 Jan 2020


AMZN up 11 %
AAPL up 4.3%
BRK.B flat

MSFT up 11%
CSU up 6%
V down 1.5%

FB sold lost 2.2%

Why sell FB at this time. Earnings were disappointing and expenses were too high. Maybe later as I don't see an alternative platform out there. Instagram is a big winner also. This is a trading account not a hold and forget it account.

My shares in COST Costco are up 43.8% since purchase.


Why I Bought Costco?

All these stocks (except COST) were purchased in the midst of the market hitting new highs and most investors debating whether to sell and go to cash. Fear was rampant. Still is. Costco is in my RRSP.


I said stocks were going higher and since then all the major indices in NA have hit new highs, yet again.

There is no other place to go until this whole thing melts down. I'm going to try and hold on until the 3 November election. I suspect then the fed will pull it's QE program.

Just like we're not supposed to know it's happening, we won't know when they stop. I suspect when markets react violently to the downside.

Nobody Knows Anything

My retirement accounts have just been rocketing higher since the new year with many companies increasing their dividends.

My Dividend Portfolio

How is your portfolio doing?

Thursday, February 6, 2020

The Socialist Stock Market


Just a short post on yesterday's action on the market and the debt bubble.

How about that slaughter-fest that was TSLA Tesla on Wednesday?

Classic pump and dump. Yes it happens to big companies not just junior mining companies.

It's NOT about the corona virus. The virus that will start the zombie apocalypse. Remember that. Another pumped up scare to get you sitting in front of the TV sweating over this world distraction.

Drug companies are doing great in the middle of all this hype. This is nothing but a distraction to just maybe get the market to plunge and institutions to benefit.

$94B just about every day is being pumped into the debt market. Most of it happens while we are sleeping. This is socialism as the money is being used to subsidize the stock market. Why? Nobody ever comes clean on this. The truth would be too scary to talk about, so they don't.

The president doesn't mention this when he rants on about the evils of socialism. What of the billions given to prop up farmers?

America already is a socialist country. You know it when he says that America will never be one. Another distraction from the big picture. This will go on every day until the election.

The fed has socialized the stock market.

The President is socialist #1 with the treasury secretary #2.

A capitalist would just leave the stock market alone. What's the difference?
This is a form of socialism. Let's get real. It's now a communist market. We are being lied to daily. Try and think as an individual.

Both parties are socialists but it feels so good to be and act tough. The masses would rather believe the lies than the truth.

The truth is this is all deliberate and hyped up by the fed and the media.

They love to dumb it down. The grand plan is to turn everyone into a debt slave. Borrow money, buy a house, work two jobs and be force fed the lies that everything is great.

If it was so great why pump billions into the stock market? Can you imagine what all that money could do to support real socialist programs? All you hear now is the government is set to cut Medicaid. Really? All the while pumping billions into the stock market where only a small percentage of people benefit.

  1. The dollar is too strong
  2. Interest rates are too high
  3. We need negative rates
  4. Issue debt at unprecedented levels
Hyper inflate the debt bubble and hyper inflate the stock market. The President talks this all the time and believes it. He wants you to believe it too. Socialism is bad unless it's for farmers and stocks. OK got it!

The Worst Part

What happened to Tesla yesterday will happen to a lot of investors. If you only make money when stocks go up you will get wiped out.

Crude went up 3% yesterday. Cryptocurrencies all moving higher and the hyper inflated stock market is higher than when the virus started.

Socialism is bad unless you're talking about the stock market. Then it's real good.

Start thinking for yourself and never believe what the main stream media hypes up to sell ads and scare you into doing something you'll regret.

Protect yourself and insure yourself against this economic chaos.

Oh and did I mention never believe the government or politicians from all parties. They all act and do the same.

What are you doing to protect yourself from the real crisis?


Related:


Investing and the Debt Bubble





Wednesday, February 5, 2020

Investing and the Debt Bubble



The Federal Reserve keeps pumping more money into the system expanding it's balance sheet to unprecedented heights.

It is inflating the stock market to a bubble that will eventually make 2008/9 look like child's play. Debt is being inflated as banks need liquidity to lend out to borrowers. The fed has stepped in to be the lender of last resort.

It also is a buyer. It buys treasuries to support the yield curve. You can just bet that when the interest rate on a 1 year bond exceeds that of a 10 year bond, the fed will step in to support the long end of the curve.

Why would anybody buy bonds at 1.5% when inflation is running at 2.2%? Why would anybody lock up money for 10 years when you can get the same rate for one year?

The short answer is, they don't usually. There is speculation that interest rates in the U.S. are soon going to go negative. The President has been complaining about how high rates are for 3 years. He would love for that to happen but never explains how that would help middle class working people.

Instead of helping it would eventually wipe them out in my opinion.

So, the fed is printing money and then using that helicopter money to buy treasuries and lend to investment banks. They then use that money to lend, use on share buybacks and pay out bonuses.

Yesterday's Headline

Dow Rips 500 Points Higher as $94 Billion Fed Repo Juices Stock Market


How does one invest while this game is going on?

Become your own central bank.

Now is the time to own hard assets as a hedge against this massive debt bubble that is hyper inflating the stock market.

Forget the virus hype and bluster. The S&P 500 has risen over 2% since the outbreak started. It's not about the corona scare. It's about the fed's money pumping.

Crude oil has a correlation to the general stock market. Not always but when it goes up so does the market. It diverges and then comes back. It's not an exact line but it does follow in the general direction.

Crude is down 20% since the start of the year.

Just a hint that OPEC and Russia are getting together to discuss production cuts is enough for oil to catch a bid. We are awash in oil but still these major economies need and feed off of a higher oil price.

If you are trading stocks for short term capital gain then watch crude for a lift up. It's not the only thing but it's a big thing. Don't let a short term virus scare distract you from the big picture which is the price of crude and the massive debt bubble the fed has created.

What to Do?

I'm placing bets against the debt. Like buying:
  • physical gold
  • physical silver (cheapest precious metal out there)
  • crypto currencies (BTC, BTC cash, Litecoin and Ether)
NOT to get rich but as insurance against this debt. Protect yourself and diversify some of your wealth into hard assets. This is insurance. Think of it that way and not as an investment. I have allotted 10% of my portfolio to hard assets and crypto. If you don't like crypto then don't buy it. This is just what I'm doing at the moment.

This is just a hedge against the massive money printing of fiat currencies by central banks around the world. 

When interest rates go negative here like has happened in other countries it will be good to own alternative assets. A lot of people say that is Europe and it will never happen here. Those same people trust what governments say and do.

I'm a bit more pessimistic than that.

You're either a contrarian or you become a victim. Good luck!

Should We Panic?

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