Monday, October 10, 2011

Happy 1st Birthday!

Well, Canadian Value Investing reached a milestone today.


It has been quite the journey.  I've posted 90 times, had some very lively debates, and most of all I have been able to meet a number of like minded investors.  A special thanks to those who emailed during my intense debates.  I thoroughly enjoy lively debate and all I ask is that you bring facts not conjecture.

While I have no idea what the next year will bring, I am looking forward to some out sized returns when the US economy returns to some sense of normalcy.  Housing will turn the corner eventually as 500,000 housing starts just isn't going to cut it over the long term.  When will this happen?  I couldn't tell you, but I know it will change sooner than later. 

I am worried about Canada and the long term implications of the commodities bubble.  If it does pop quickly the restructuring would be hard on our economy.  For that reason I am bearish on Canadian Real Estate, Canadian Banks, Oil & Gas, Mining & Materials.  It's funny how many of the O&G, mining and material stocks are already pricing in much, much lower commodity prices.  I may well be wrong about this, but the great thing about investing is I'm not forced to invest in those sectors.  Unfortunately for many Canadian baby boomers this crash may come at a terrible time... right before retirement.  I can only hope that the turning of the US housing market occurs at the same time that air is let out of the massive 10 year commodities bubble. 

Hope for the best, prepare for the worst. 


Best Regards,
Kevin

2 comments:

  1. I've been reading your blog almost as long as it's been up, but don't usually comment. Congrats on making it to a year, and here's to another.

    I generally agree that the best picks out there right now are in high quality US large caps. Unfortunately, because the TSX is so resource heavy, I am having a hard time finding similar values at home. The rails (CNR, CP) and telecoms (TU, BCE, RCI) look pretty good, but their US counterparts look even better (UNP, T, VZ). Fairfax Financial (FFH) looks like a fantastic play for deflation, and I have a position in it as a hedge against such a scenario.

    It's interesting to think that today energy and materials make up just over 50% of the TSX. The banks are just under 30%, leaving only 20% for everything else. Incredibly, just over 10 years ago, technology and telecom were the biggest sectors in the index, with Nortel alone taking up over a third of the weighting. That just shows how quickly and dramatically things can change.

    Speaking on gold, I have held some as a form of economic insurance for the past 6-7 years and it has more than served it's purpose. But here is the thing about insurance - if you are a healthy young non-smoker, you will find insurance very cheap. If you are a cancer patient with a history of heart disease, insurance, if you can get any at all, will be VERY expensive. That's pretty much where we are right now, and it's too expensive to buy gold as insurance today. I have started to exit my position.

    Thanks again for writing this great blog.

    -SR

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  2. Kevin,

    Congrats on your 1 yr milestone. Keep up the excellent posts.

    Andre DesRoches

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