Taking profit: Sell in May and go away may be good advice this year!

As I have said before, it is never wrong to take profit. While no one can time the market (and I certainly am not attempting to do that here) however, taking profit when you are doing well is simply good common sense, especially at a time when macro events may tip the scales against your investment strategy,

As you already know, I like commodities! I like hard assets and hold gold, silver, lithium, copper etc.  I believe that, in the long run, these are great investments. I am concerned at this time, about the strong head winds which seem to be rising at this time in equity markets, and so, today, I took some good profits off the table and sold off shares.

I have done this for the past two weeks in fact, taking profit in the following companies:

Creating wealth or preserving wealth - Why chose?

What should I do with my nest egg? Where should I invest?  How should I invest? Gold, Silver, Stocks, Bonds, Funds?  Can you help me decide please?

These are some of the questions investors have when they seek financial help. Fund managers and bankers know these questions will be asked. They know, because they are quite familiar with the driving force behind those questions.

Bankers, fund managers and money managers often break down clients into two categories. Those who want to create wealth and those who want to preserve wealth. Now, ask yourself this simple question: Are you in either camp?  If so I am sure you have your reasons. Some of you believe your portfolio, which may be fairly substantial or even just adaquate, should be protected and preserved for your retirement years. That, my friends, seems to make good common sense, Does it not?

J.S. Kim, of Smart Knowledge - Investing in Junior Miners in 2011.

Image by slideshow bob via Flickr

Will Junior Mining Stocks Be THE Investment of 2011?

January 25th, 2011

If you think gold and silver as an asset class are severely misunderstood, and they are, then multiply that misunderstanding 10 times, and you will realize the level of misconceptions that exist around junior mining stocks.

The typical propaganda disseminated by bankers that surround gold and silver every single year when gold and silver corrections occur dominates the mainstream financial landscape right now. In fact, even though a rapid correction in gold/silver prices and gold/silver mining stocks is normal behavior at least twice a year, for every single year of this 9-year gold and silver bull, every single correction and consolidation phase has elicited chatter from the same financial shills about the end of the precious metals “bubble”. And amazingly every year, the mainstream financial media grants them a platform to spread their disinformation to confuse investors.

Last year, when gold dipped from $1,421 an ounce to $1,332 an ounce in just 6 trading days in November, an analyst I spoke to in Asia told me that he would not buy gold until after the bubble completely burst and that he would consider buying gold when it reached $600 an ounce. I believe that he is still waiting to buy today.


You may feel that this is an odd time to write a piece about one of the riskiest sectors in the precious metal investment class, especially as gold and silver prices continue to plummet in the futures markets but the proper time to buy, of course, is when fear is high and prices are low.

Travel as an investment niche!

Image via WikipediaTravel, expecially cruise travel, is my second love. My wife, of course, is my first love.

I am a quintessental tourist who especially enjoys cruising and cruise ships in general.  I make no appologies for this.  I worked hard all my life and I am now enjoying the fruits of that labor, and my investments. Speaking about investments.....

Is your Retirefund swimming in bonds? Beware the under tow, and the sharks!

Bond funds and bonds, could be real trouble! Before you know it, they'll  boil and bubble! 
The massive rush into the bond market this year could be the top of a bubble that will sink many investors who believe (wrongly) that bonds are always a safe bet when allocating your retirefunds.
On the contrary, bonds can bubble like any other investment, and that bubble is starting to become so obvious, a bust may be lurking as early as this fall.
The bond market is beginning to send out warning signs and you ignore those signs at your financial peril. Last weeks stock rally, as short as it was, came at the expense of the bond market, and in your case (retail investors) bond funds.
Anyone reading these posts knows full well my aversion (distaste, distrust and dissatisfaction) of the managed mutual fund industry,  and that, my friends, surely includes managed bond funds.  (see: Average investors getting screwed)
Those fund managers will make their outrageous fees until the exodous (which they will lead) when this market pops, and it will pop. You my friends, will be left holding the bag of worthless paper once more, unless of course, you get out now while the getting is good.
The first sign of any interest rate hikes will tip this baby elephant over the cliff.
Don't wait for that, because the big dogs will see it coming long before you do and they run a lot faster than you can.

You can thank me later this year. Meanwhile, take stock of some of the undervalued stocks starting to come alive as a fall rally becomes more and more plausable. If you don't believe the rally has legs, then you should consider these solid, dividend paying stocks for your retirefund.

HP

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Small cap and Micro Caps are the new BIG in investing!

Image via Wikipedia

Diversify young man, diversify!

That has been the mantra of the entire investment industry for 40 years now. However the cracks in the dam of diversification widen immensely when the markets go sideways, or begin to fall, as they are this year (and probably for years to come). Here are some reasons why diversification may well be a huge money pit over the next few years.

In a previous article, I explained how average investors are getting screwed by the mutual fund industry.

Ten years ago, if you invested in most diversified mutual funds, you would have made approximately zero on all your investments to date. (Ten years of ZERO!!!) The mutual fund industry is the most bloated, overpaid and valueless industry in the world today, in this writers humble opinion. They charge you fees from 2-4% for essentially "not managing" your investments. Many of the managed mutual funds out there are actual closet indexers (they follow the index of the country or market they are invested in by buying the large cap stocks as they appear in order in the index) You would do better simply by buying an index fund yourself and paying the .05% fee instead of 3-4% fees. Why is that?

Well there are several reasons for this behavior not the least of which is the fact that (and this has been subject of scientific studies) a trained monkey, picking stocks over an extended period utilizing diversification, on a statistical basis, does as well, within 1 or 2%, as almost all of these fund managers.  In other words, they have no specific skill in picking stocks using diversification.  Diversification works when there is a bull market, but there is no protection when markets plunge (as in 2000 or 2008) and the next two years could be absolutely devastating for fund investors.  That is probably why there has been $50B (approx) removed from these funds over the summer. Being long term investors, most of those won't be back to the market anytime soon unless it is to pick specific stocks in small bull markets.

There have been many studies over the years in regard to this. In the current market, being manipulated by governments around the world employing Quantitative Easing (QE), large traders like GS, JP and the like using super computers and flash trading, in a market notable only for it's very thin trading, the word that comes to mind is "fraudulent" when it comes to stock prices, especially the large cap supposedly "blue chip" variety.

The fund industry wants you to believe that diversification will be your investment savior, however many savvy investors today know too well how this industry works. Just ask yourself, were you diversified in 2000?  Were you diversified in 2008? Did your fund have investments in Enron? AIG?, Dot Bombs? Fannie? Freddie? Nortel?, JDS Uniphase? Citi, GM, Chrysler, AA, etc etc??? Did your funds make you "ANY" money at all? We need to change our thinking, now, and dramatically!

There is, in fact, a way to use this bloated industry, to pad your Retirefund over the next few years. There are indeed stocks out there, flying under the radar (thankfully) of this bloated industry, simply because no tainted ratings agency has noticed them (yet) or because these small caps are not yet big enough for the industry to promote to fund managers. I,m not talking about the \'under $2B\' range of stocks that the managers consider small cap. I,m talking about really small, micro cap entities that are forging niches in future markets that haven't hit the big time yet. That is where smart investors are looking in this market.

Find those gems that have a foot hold in new markets, are front runners with nimble and smart  management, in a market soon to be targetted by the big dogs of the fund industry.

Now you are on to something.   Something that truly makes sense, in a senseless market. Today, you have at your finger tips all of the technology you need and more. More than the so called experts have ever had in the past, so, use it! Do your home work. Dig for information, and evidence of advantage in micro caps, and stay on top of that information. Prosperity will follow.

Using this simple strategy last year, I advanced my own retirefund by over 220 per cent. Last month alone,  I doubled my money on one stock and I believe that over the next two months, it will double again.
This month another of our picks is up 36% on discovery of a new green tech energy process that may revolutionize how we deal with (and utilize) carbon emissions.

Are they all home runs? Of course not. Anyone who tells you they only hit home runs is lying through their teeth. However, if you hit a home run every 5th time at bat, then you will be a heavy hitter over the year.  If you get a single, a double or a walk on 3 of the other 4, you will win the batting championship, hands down.

Here's to your Retirefund!

HP

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Salares Lithium stock holders will double their money as Talison Lithium of Australia swallows Salares.

Image by laughlin via Flickr

News: Hertz and Enterprise to rent Nissan leaf starting in January!
This is an update for those of you who took my advice and bought Salares Lithium in early July for around .60 cents per share. While their is a current hold on trading this stock (LIT-TSX-v) it is by no means a time to worry.  It is a time to rejoice, because you have just doubled your money, at the very least.  Here's why!
About Salares Lithium Inc.
Salares Lithium Inc. is a lithium explorer in Chile that controls the 'Salares 7' lithium project made up of seven salars (brine lakes that are prospective for sub-surface lithium and potassium) and the surrounding concessions in Region III, Chile. Five of the seven salars are clustered within 155 kilometres and are 100% owned by Salares and its Chilean partner.
About Talison Minerals Pty Ltd 
Talison Minerals Pty Ltd is the leading global producer of lithium. Talison mines and processes the lithium bearing mineral spodumene at the Greenbushes Lithium Operations in Western Australia. Talison has an extensive, well established global customer network and a leading position in the growing Chinese market.(Talison produces over 65% of the current lithium being imported by China)
Talison and Salares are merging into what will be the largest pure lithium producer on the planet, and the "only pure lithium production company" to be listed on the TSX (not the venture exchange). That will occur on Sept 17th.
I have spoken with Salares CEO Todd Hilditch and company consultant, Matt Johnston who assures me that the new company (he will provide the stock symbol in the next few days) will strike somewhere between $3.50 and $4 per share when it is launched on TSX in September. At that time, Salares share holders will own 1 share of the new entity for every 2.81 shares they hold of Salares Lithium (LIT)
With a price cap between $340M and $350M, this equates to approximately 35.6 % of the new entity will be owned by current Salares shareholders which should return approx $1.25 per share, or more to those of you who took my advice 3 weeks ago.
If the TSX-v allows trading in Salares over the next few weeks, I will not part with many of my own shares. (of course I will take profit on a portion - maybe 15-20%) as I see this as a strong, bullish move for our holdings.
The new company will be the only lithium producer listed on the TSX at a time when the electric car market is gaining momentum, and new lithium ETF's are popping up on the NYSE.  

The Global X ETF will have no choice but to list the new company as the largest pure lithium supplier into China. If you invest you should do so "before" this occurs.


The combined company will have to be included in the new Lithium ETF's, as a front runner in the lithium space supplying the huge Chinese market and developing the huge Salares 7 project that Salares Lithium brings to the merger table.

When the new entity launches on Sept 17th on TSX, look for the strike price to pop. There is no way this stock will stay under $4 per share after it is launched. We think this new company will be a home run.

Your welcome folks, and here's to your retirefund.
HP

BNN interview with Salares CEO Todd Hilditch

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Pigs really do get slaughtered! So don't be one!

"Bulls make money, bears make money, pigs get slaughtered"
Jim Cramer - Mad Money


Yes, Jim Cramer can drive you nuts with his ranting and raving about stocks and investing. Sometimes he is right, sometimes he is wrong (just like the rest of us) but of all of his rantings, I sure like the quote "Bulls make money, bears make money, pigs get slaughtered". Jim drives home this simple thought every night on his CNBC show, Mad Money.


Jim's style can grate on serious investors and newbies alike, but one thing is for sure, he does try to enlighten the small retail investor and this quote is far and away, one of the best pieces of advice he gives every single night to his viewers. If you don't listen to this golden piece of advice, you stand to lose your shirt, and more.

If your investment strategy is to throw money on hot stocks and hope for a home run, then you should change the game. You are better suited to the game of craps at the local Casino. With that attitude, you may actually do better at the Casino, than in the market.

Economic forecasts are never certain. If you put three economists in the same room, you will end up with three entirely different opinions of where the economy, and by extension, the market is headed. Don't invest in stocks because of an economic forecast! Invest only when you have done your own home work on an individual stock, it's market niche, it's earnings/potential, it's management, it's trading range, and analysts opinions. (Actually we like stocks that are under the radar of analysts, but is for another post).

The bottom for traders is this!  If you have a stock that is up say 20% to 30% and you don't take at least "some" profit, then consider yourself a pig, and expect to get slaughtered. You don't have to sell because a stock is up, but taking "some" money off the table when you are up is simply a fact of good trading.

If as opposed to "trading" you consider yourself a long term investor and you are not concerned with short to medium term profits, you may still wish to "take some off the table". It just make sense because, as you've heard many times, "a bird in the hand is worth more than two in the bush"!

And Pigs can't fly! but of course, you already know that!

Good investing-   HP


PS: and by the way, don't forget to pay down some debt this year. A great investment is not to owe more money than you have. You don't want that burden in retirement, especially in this environment. 

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Average investors are getting screwed and are exposed to the elements of Wall Street excess!

If you are Investing in managed mutual funds, your getting screwed. At very least, you are exposed to the elements and frozen in one spot.



Does your investment adviser think you should be in mutual funds? Does he work for the fund company? Is he more interested in "his" portfolio than yours? Is he texting on his blackberry while you are handing over your meager Retirefunds? does he forget your name? Did he ever know your name?

"The Rich" as Voltaire said, "Require an abundant supply of the poor"!

The monstrous mutual fund industry is built on a simple premise. You give your hard earned money to someone you know, usually only by reputation. That fund manager then invests your money in the markets, in stocks, bonds, gold, commodities and/or companies that are involved in any of these or a myriad of other businesses. Depending on the fund(s) prospectus (an explanation of how it invests your money), you could be invested in any country in the world (or group of countries) The fund manager is paid a salary along with all of his staff, and their company earns money by charging you a percentage of all monies invested. The manager can also earn bonuses based on his agreement with the company, whether he performs or doesn't perform.

Congratulations! You have just hired one of the highest priced bookies in history! They make money whether you win lose or draw. Usually it is lose or draw in the modern mutual fund industry.

Fully 60% of "all" fund managers "do not" beat the index of the market they are invested in. Many are "closet indexers". In other words, they say they are active managers but invest your money by simply matching the index (buying the companies that make up the Index in the exact proportion as they are weighted to the Index). Usually they collect anywhere from 2%-3% of your portfolio, every year, for this so-called management. Why do you keep shoveling your hard earned money into this bloated, gluttonous industry? There is no other industry out there that is so grossly overpaid for providing so little.

This industry got it's start at a time in history when average people were "shut out" of the information streams that made fortunes for those in the know. With the advent of the internet, trading platforms, trading software etc, those days are gone. At the beginning of this industry, managed mutual funds were developed as a way that average people could invest and "diversify" their investments like the big dogs always did when they bought individual stocks, but only with a savvy money manager in control of their savings. It was a good premise that, initially, worked for it's investors but it has morphed into a monster that eats billions of your dollars, every single year. Like every other investment scheme ever created by the Gluttons of Wall Street, it has been milked dry, to the point where it no longer resembles the initial product, and value has dried up like a lake bed in Death Valley.

Three distinguished professors of finance studied the returns of 2076 actively managed mutual funds over 21 years ending in 2006. Their conclusion: By applying a sensitive statistical test to separate luck from skill, the study found that 99.4% of the fund managers had no genuine stock picking ability.

Read more at: http://www.huffingtonpost.com/dan-solin/wall-street-packages-luck_b_283262.html

In other words, with today's information avalanche and trading software, "you" can pick stocks and do as well as most of these vultures .

If you feel you just don't know enough about investing or don't have enough time to research individual stocks, and you feel you must give your retirefund over to someone else to invest, then I promise, if you give it to me I will invest it in an "Index fund" which only costs .5% and I will only charge you .5% for my troubles. In that way you will already be ahead by 1%-2%. You will also beat 60% of "all" fund managers in the world and I will become rich on the shoulders of your hard earned money.

Or, you could just invest in the Index fund yourself and cut out the middle man (Me).
(Shoot, I just talked myself out of millions)

I hope you get the picture. (pun intended)

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The Argument for investing in Gold!

Image by hto2008 via Flickr

I am not a gold bug. I am a realist, but even at $1000 per ounce, gold may be a good investment right now for several reasons. Here are some of them:

The banks have had a great run this summer. After coming back almost 100% since it's lows in March, I have sold some of my TD Stock. (Yes it is still a good stock, but at 100% return, it's time to take some profit, no matter what stock you are in) I have also solidified some other gains, but continue to hold on to some small tech firms with huge upside potential such as Wilan Technologies and Ballard Power .

I don't believe the United States is anywhere near being "out of the woods" in it's recovery. A year after the crash, Wall Street is up to it's old tricks . There is a very good chance of an even larger correction in 2010 than we saw in 2008. No one really knows of course, but all the warning signs are in place. The bounce in the markets has been spurred by massive Government interventions, to the point where the most important man on Wall Street is Barrack Obama.

Many U.S. banks are still in serious trouble and hundreds more will fail over the next year. Institutions like Fannie Mae, Freddie Mac, AIG, etc, will "never" recover!!! The smartest guys in the room (Goldman Sachs, J.P. Morgan etc) as always, have come out on top, but even they have an uphill battle as the USD battles runaway liquidity while they still have to value those "toxic Derivatives" that haven't gone away. Wall Street bankers are now trying to do to our life insurance policies, what they did to our mortgages. They are still trading in over the counter derivatives with no transparency, and are paying huge bonuses to executives (sound familiar).

The commercial real estate market is facing a real crisis of re-financing. It could actually cause the next crisis. The domestic real estate market is sliding again and will until at least 2011. Creditors like China are searching for other stores of value, outside of the U.S. dollar. Besides commodities, China is investing in gold and actually telling it's citizens to do the same. Several large U.S. hedge funds are also investing in gold and finally, the Hong Kong government is currently in the process of moving their gold reserves to a domestic site from London. Now, if there is another crisis caused by the paper creating Vultures of Wall Street , do you really think the American public will allow their administration to launch even more expensive bailouts? Neither do I. That is why many investors are turning to a standard of value that reaches back thousands of years.

Gold investors know full well that, most of the worlds gold supply is already above ground. That is why major firms often go back to old, proven, gold fields with new technology to find and extract what remains. Let's face it, the days of individuals panning for gold in a river bed are long gone, but that doesn't mean exploration stops. It merely changes.

While contemplating which gold investments to make, I have been following this story with keen interest. A small American gold company, Apollo Gold (TSX: APG) (NYSE - Amex: AGT) of Denver Colorado, started producing gold at it's Timmons, Ontario site called "Black Fox" earlier this year. Since May when it produced it's first ounces of gold from that mine, it has been on the radar of a number of gold speculators and has been rated a strong buy because of that production, which has reached over 32,000 ounces in four months. Many feel it is very much undervalued and currently under the radar.

What has gold bugs truly salivating is a recent drill result that, at least in one new hole, in it's "Grey Fox" site (approx 30 km away) indicated a result of 455 g of gold per ton of ore. Now, in an industry where 3-5 "grams" of gold per ton is considered worthwhile, well.... you can fill in the blanks. Since then they conducted more drilling in August at Grey Fox, which have not been officially released yet, but oddly, two weeks ago, Apollo bought up the mineral rights to the entire stretch of land between Black Fox and Grey Fox giving them access to the entire fault line where, in prior years, there was a very productive gold mine.

One of the previous occupants of these claims, Cameco, sold off it's gold interests to concentrate on Uranium (which it now dominates) In one of it's last reports on this area, it's geologists mentioned that they believed a deeper drill may result in a greater find. Apparently, that's exactly what Apollo Gold has done, with a stunning result! I've noticed the share price go from .30 cents to .45 cents in the past 10 days, as they raised another $10 Million through private placement, and no drill results have been officially released yet. I couldn't resist, so I bought in at .45

12 month Analysis estimates (see below) are $2.76 based solely on the Black Fox production. However, the Grey Fox strike has caused an even bigger stir but we won't know the full story until the most recent results are released in late October 2009. I know this part of the equation is speculation but, sometimes, you have to read the tea leaves as best you can then, take the plunge. I believe that, at this price, I am well protected with at least a 250% upside built in. As the rest of the world invests in gold in the traditional sense (bullion, bars, coins etc) or in the large companies which are already producing large quantities from their mines (Rio Tinto, Barrick, Hemlo etc) I think Apollo Gold might be a home run, maybe even a grand slam. One word of caution: Apollo has it's gold hedged at $876, however it's production cost is $400 and dropping.

The last time I made such an investment,( nine years ago) it was in Novagold at $1 share. It went to $18 At that time, gold was just over $300 per ounce. Many analysts are predicting gold in a year at $2,000. Some are even throwing out a top end of $3,000 or more. That seems extremely excessive to me, but the $2,000 range is possible. Certainly, $1200 in the short term is likely.

If you are tired of feeding the Vultures of Wall Street., you may wish to investigate this opportunity like I did. I am not risking too much and neither should you. Now, don't take my word for this speculative gold play (or anyone's word for that matter). Do your own research on this or any company you wish to invest in. You may wish to invest in gold by merely buying gold bars or coin or buying ETF's (exchange traded funds of gold stocks) as I am also considering.

Apollo Gold Corp - check it out (TSX: APG / NYSE Amex: AGT).

Update Sept 25th 2009, Apollo Stock - over 7 million shares traded in two days!

Nasdaq.com Target price for Apollo Gold

12 Month Price Target Range
2.72 Consensus 2.72 2.72 0.52 Previous Close

Gold Analysts Report!

Oct 16th update: First half of Grey Fox Drilling results - Spectacular!

New: How Gold will factor in the enhancement of solar Technology

New: $2,000 Gold is coming

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The Commercial Real Estate Market is headed over a cliff and it will drag another industry over with it!

Image by Thomas Hawk via Flickr

If you think that the housing crisis in the United States is over, you're not paying attention. The inventory of unsold houses is over 1.5 million. Over 40% of home owners will be "under water" by 2011 (meaning their mortgage will be more than the value of their home)

If you think investing in Commercial Real Estate in the form of a REIT (Real Estate Investment Trust) is still a good investment, once again, you are not paying attention. This is the market that could and, most likely will, spark a stock market crash in 2010 (Maybe sooner). Here's why!

Commercial buildings, office buildings, Malls and the like, are the lifeblood of the REIT market. Even before the advent of REITs, investing in commercial real estate brought investors and speculators fortunes. Mostly those investors were already rich or well to do because the average retail investor could not afford to be in this market. REIT's changed all that as they began to trade on the markets much like stocks. During the great depression, a number of distraught investors actually jumped from the same buildings they had invested in. Hopefully that won't happen next year, at least, not to you.

If you are invested in a REIT or similar commercial real estate company, there are some things you need to understand, and you need that information now, before things start to unravel even more than they did earlier this year. Yes, I know that, many pundits are very bullish on this market but as Warren Buffett has put it, "you pay a high price for a cheery consensus".

Now, don't take just my word, or anyone's word for it. Look around you! The last time you went to a mall, how many stores were closed, or closing? Indeed, how many malls are still surviving? Over 200 malls in the United States were abandoned this year alone. Now think back to the last few times you went into an office tower in your city for an appointment. Did you notice a number of empty offices or companies vacating the premises? As these properties financing comes due, where are they going to find new financing?

The banks have had a good run this summer. I know. I just sold much of my bank stock today. (when you have a good run you should not fall in love with the stock you own, even if it is a bank with strong earnings. In this case, TD). Banks, particularly those in the U.S., would be the "second" domino to fall if the commercial real estate crashes. It could even be a "death blow" for some banks as their exposure is over $2 Trillion dollars to the sector which could lose as much as $1 Trillion in value.

REITs trying to re-finance properties this fall and early next year, will run into a wall. No one will want to lend them the billions required to re-finance their operations, especially banks that have been propped up by government bailouts. This does not include the 80 banks that have failed this year, or the 200-500 expected to fail in the next 12 months. Yes, that many, and those are the conservative estimates. Some analysts believe the number is closer to 1,000. Even after all that has happened over the last 18 months, the banks are still holding their cash close. However, if your REIT has solid management, is flush with cash and is keeping their powder dry waiting for the downturn, you might wish to hold on to your shares. Only the strong will feast on the many carcasses that will be strewn across the landscape.

Trust has left this market place. It will leave behind it's offspring, pain and loss!

Update: Sept 10th 2009 from New York Times.
Corus Bancshares - First domino to fall.

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• Lords brand Reits a 'disappointment' (telegraph.co.uk)
• How debt becomes equity, REIT edition (blogs.reuters.com)
• RBS uberbear issues fresh alert on global stock markets (telegraph.co.uk)
• Economic View: An Echo Chamber of Boom and Bust (nytimes.com)

How can you profit from the U.S. dollar decline! A Simple Stragegy.

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The United States dollar is going down! The U.S. Government will be over 13 $Trillion in the hole by the end of this year. Unless something drastic is done to reduce the slide, by 2015 it will be 23 $Trillion in the hole. This summer rally , (some green shoots aside) was predicated on the back of a sinking u.s. dollar . Many American investors are so busy getting angry and waiving the flag to prop up King Dollar , that they are blinded to one of the best investment plays this year and probably through 2010.

Smart Canadians are ignoring the whining from their own Governments and businesses about a high Canadian dollar being bad for exports and they are taking advantage of a situation that Ottawa doesn't want to acknowledge. The Canadian buck will outstrip the U.S. buck over the next year. So how can you play this for the betterment of your Retirefund?

Back in January, when the Canada buck was trading for around .77 cents U.S. I traded my u.s. dollars into Canadian dollars. I have gained about 20% with this simple strategy, however there is another good market strategy that I, and many others, are making some money with. Commodities such as oil, gold, natural gas, are denominated in U.S. dollars. If you bought some of these commodities, with your Canadian dollars, back in March, you have no doubt made good money.

Now, many Americans, whose pride (and pocketbooks) have taken a big hit during this dramatic downturn in their economy, are championing the return of King Dollar. Can't blame them. If your house is losing value, and your dollar is losing value, and the Gluttons of Wall Street have swallowed a good portion of your retirement funds, you are definitely in jam. However, average Americans are once again being led down the garden path into believing their dollar will go higher over the next few years. Feeding those false hopes, every time the dollar goes up a bit (as it did on Monday) the talking bull heads on CNBC (Kudlow, Kneale etc) waive the flag and declare the return of King dollar. I believe they couldn't be more wrong.

In fact, I am so convinced of this that, when I see a rise in the U.S. dollar, and a corresponding drop in our commodities market, I see it as a great buying opportunity for those commodities, especially if you are paying for your shares in Canadian dollars. As I have pointed out before, we have had the best balance sheet of the G20 for the past 8 years (We've been in the black until the crisis hit this year) Our banks have stayed conservative, avoiding the toxic Derivatives debacle and have entered this summer rally strong. We have the second largest deposits of oil and natural gas in the world, the largest deposits of potash, lumber, gypsum, seafood, nickel, uranium and arguably, diamonds. We own 20% of the worlds entire supply of fresh water, with only .03% of it's population. We own the largest claim to the arctic, which is suspected to harbor 25% of the total world's oil supply, and finally, the largest consumer on the planet, is right next door.

Don't get me wrong though. The Canadian dollar and commodities market is by no means the only place with good value these days. They will go sideways for the next month or so, but by the end of the year the Loonie will approach parity. The BRIC countries , or at least two of them, are good investments. (Except China for the rest of this year) The Australian dollar, who's commodities feed into the Chinese economic realm may also be a good bet. We have some excellent, small Canadian companies that are basically overlooked south of the border, until they dominate a market (RIM). They are essentially, under the radar, so to speak. Find them, research them thoroughly, ensure they have good management, good science and technology , and then don't be afraid to invest. You could hit the RIM of 2010-2011!

If you are American, you should be in the stock market right now. Having cash, or cash equivalents sitting on the sidelines for any length of time is a recipe for losses, period! Sadly, the gluttons of wall street are the ones who will actually benefit from the dollar crisis they have caused. Stock Markets go up as currency devalues. It is actually that simple.

The Canadian Government and Canadian manufacturing don't want a strong Canada buck, but they won't have any choice in the matter. It is time our manufacturing and export companies grow because of innovation instead of a weak currency. Those days are gone.

A Canadian buck with a 5-8% premium over the U.S. dollar (a la the 1950's and 60's), is a Loonie I can live with. All of our retirement funds, and our travel budgets, have gone up over 20% this year because of it. The Loonie now buys 20% more than it did 6 months ago. It will go higher still. Here is a quote from Warren Buffett from his "The Greenback Effect"!

"The world "properly" worries about greenhouse emissions causing global warming", says Buffett. "Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar's destiny lies with Congress."

Previous articles: U.S. Dollar dives - Pigs at the trough

Update - Aug 18th from Bloomberg .

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Even a broken clock is right twice per day!

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There are investors and there are traders. Traders trade! Investors invest! However, there is one thing they have in common. None of them can "time the market". Truly, if they could time the market, many of the talking heads on CNBC would have made billions on last years crash, or this springs bounce, instead of keeping their jobs trying to sell us on the benefits of the "hot stock of the day".

For the average Joe or Jill, a good practice is to "Invest for the long term" in increments using dollar cost averaging (ie: have your investment money put into your favorite mutual fund every paycheck) so that you can level out the gyrations in the market. If you are a little bolder and want to do some of your own homework, then Invest in individual stocks of solid companies with great products, market niches and good management

No one is right all the time! Not even the investment greats like Warren Buffett or George Soros. If they make big mistakes, and they do, then how many more mistakes are made by the coffee fueled, adrenaline pumped, talking heads on CNBC (fast money, Cramer, Kudlow, Kneale etc) Just because you took their advice and got lucky once, doesn't mean they are going to be right next time. They make mistakes, just like you do. Just like I do. Just like we all do.

It is important to do your own homework when investing. If you don't feel you have the time or expertise and you just want to invest in mutual funds, then at least do enough homework to pick a good manager. Investing in mutual funds is essentially investing in good management. 60% of fund managers today "Do not beat the Index". In other words, if you just invested in a basic index fund, with a lower fee base (because it is tied to the Index of the market you are investing in) on average, you will beat 60% of the mutual fund managers out there who get fat fees, for their so called expertise.

Nobody sees a bull market in our near future right now, but remember this. Bull markets always climb a "wall of worry". Bull markets are never identified until most of the profits are already made. Bull markets love inflation. A weak currency (read u.s. dollar) always increases inflation. With the current trend to deflation, markets in turmoil, with investors sitting on the side lines and the Chicken Little's clucking that the "sky is falling", Now may be a great time for contrary investors to take the opposite view and invest in a basic Index fund that costs less than 1% in fees. Or maybe not!

You can always keep your dollars on the sidelines, where they are sure to lose value over time. You could invest in mutual funds administered by a good manager who's track record shows a consistant return better than the Index.

Or, you could act on the next hot tip from one of the talking heads on CNBC. After all, "even a broken clock is right twice per day"!

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Investing long term OR trading short term! Do you really need to ask?

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Businessweek recently asked on it's blog if investing long term in the stock market is still a good strategy for your retirefund, or if a short term "trading" system might be more beneficial. Do you really need to ask this question?

Let's answer that with two more questions shall we! How many of you timed last years market plunge? How many of you "timed" this springs bounce? I thought so! If you didn't time either of these obvious opportunities, then why would you even consider trading short term? This is not to say that you shouldn't sell stocks. That is how you book real profit. However, if you buy a classic car at an auction, you don't sell it at the same auction. You bought it because it accumulates value, and that takes time.

Long term strategic investing in the stock market has returned the most value to investors than any other store of value over the past 100 years. It will continue to do so over the next 100 years. Why? To draw a simple analogy, the stock market for investors, is what the ocean is to sailors. If it empties, it won't matter what ship you have your family in because every boat will be on dry land. In investment terms, no other investment will stay afloat if the market is gone.

That is why you hear terms such as "a rising tide floats all boats" from investment gurus. It is the same analogy used when Warren Buffett says " when the tide goes out, you can see who has been swimming naked"!

Now let's draw another simple analogy for "today's market"! Currently the tide is very low and most boats are aground. If you pick the sturdiest, fastest boats from the ones that are currently stuck on the sandbars, you will definitely sail away and win the race when the tide comes in, and make no mistake. It will come in. It always does!

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Reviewing the best investment vehicle ever made! for the Average worker.

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In January, Canada introduced (What the banks like to call) the "Tax Free Savings Account". It is, in every sense of the words, a TAX FREE "INVESTMENT" ACCOUNT! (similar to a Roth IRA in the U.S.)

When I say it is the best investment vehicle ever built for the "average working stiff", (arguably, the rsp is a close second) that is because it has a limit of $5,000 per year that you can put in the account. Large and institutional investors aren't very interested, but I sure am, and so should you. Now here's why!

In this "after tax account" you can put cash, GIC's, money market funds, mutual funds, stocks, bonds or just about anything trading in the capital markets. Now here is the "Golden" part: Every single dollar you make in this fund is "TAX FREE" when you draw it out. Let me repeat that and expand upon it. In Canada, where the nominal tax rate for many middle class workers is 42%, your savings (read investment)income will not be taxed!!

You can put a maximum of $5,000 into this account every year and in the years which you find yourself short, you carry that amount into the proceeding years. In January I opened two such accounts one for me and one for my wife. We transferred the limit into each. In one account I bought stock in my favorite company (see previous posts) and since January, I have to date, booked a gain of 61%. That money is TAX FREE when I take it out!

Now even if you use this account in a more conservative fashion, let's say you buy an Index fund, or any mutual funds and you book 8% per year. When you draw it out it is, as I enjoy saying, "TAX FREE".

One of the best strategies for increasing wealth is to reduce your tax burden where you can. I have never seen a better vehicle for this strategy, for the average working stiff, since the advent of the RRSP (u.s. equivalent 401K).

If you haven't already, go (no run!) to your nearest bank or investment house and set up one of these accounts immediately. Fill it with your yearly quota faithfully, every year. Spread your investments around in it so that your retirefund is not all in one basket (buy stocks, bonds, mutual funds etc) (let me correct that, stay away from bond funds this year) If you are in your 20's (those who are truly in the "drivers seat"! more in future blogs) and you don't know much about investing, buy index funds initially. Do it every year, and your retirement will be sweet indeed.

Even if you are just saving up for a major purchase like a car, a home etc, this is the vehicle to use. So, USE IT!!

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