Monthly Archives: December 2008

Odette Morin

Techinical Problems at the TSX for the first time in History

The Toronto stock market has missed an entire trading day because of computer glitches for the first time in its history. The exchange operator will say only that it intends to resume trading tomorrow morning.  “We will be working internally through the night and remain confident all systems will be restored and fully operational for business as usual tomorrow,” Mark Jarrett, director of equity operations said in a statement.

Canadian stocks traded on other exchanges however, but still this type of technical difficulty is not going to help in restoring confidence. 

This isn’t the first time the Toronto market has had to close however.  You might remember that it was shut after September 2001 terrorist attacks. About a year before that, a flood of trading in Networks took the system down for about four hours. The difference this time is that it is created by technical difficulties.  This is totally unacceptable for a country like ours to be experiencing these types of problems.  A lot of investors were not able to make their trades today. 

Fortunately, mutual fund clients, are able to sell and trade your investments even when events like these occur.  Thus, another advantage of investment funds.

Odette Morin

RESP Contribution - Deadline December 31st

Have you made your RESP contribution yet?  Do you need to top it up?  In order to get the maximum annual Grant of $500, you have to contribute $2,500 per child in your RESP account.  We can let you know how much you have contributed this year so far. 

Please note that Odette an Terry will be gone on Holiday from December 18th to January 5th, so please let us know in advance if you wish to make a contribution.  We will prepare the paperwork.  Thank you!

Odette Morin

New RRIF payment relief rules, a bit of a mess!

On November 27, 2008, the Federal Government introduce a measure to provide relief to seniors with RRIF who suffer losses due to the market meltdown.  Seniors would get a 25-per-cent reduction in the minimum amount of money they must withdraw from their registered retirement income funds (RRIF) for 2008.  The problem is that it is an administration nightmare for investment companies to make changes to their systems in time.

“All is not lost for seniors if their bank or investment dealer can’t accommodate a reduced RRIF withdrawal for 2008. People who make the full withdrawal for this year will have the opportunity to put 25 per cent of the amount back into their RRIFs until March 1, 2009, or 30 days after the government’s RRIF measure is passed into law.” reported Rob Carrick in the Globe & Mail this morning.

Click here for the full story

To make things easier, you may simply want to take your minimum annual payment (MAP) in kind.  Therefore, you would not sell the investment but have it transfered to your non-registered account instead of taking it in cash.  This would ensure that you do not suffer a permanent loss on your investment.  Just let us know if you want to take advantage of these measures.  We will figure out what is best for you.

Odette Morin

Cheap stocks show cash exceeds current price on the market

Cash is King, especially nowadays.  There is so much values in stock prices that reports show 2,267 companies around the globe are offering profits to investors for free. That’s eight times as many as at the end of the last bear market, when the shares rose 115 per cent over the next year.  Yes eight times.  Read on this ROB article to find out more.

click here for the full article

Odette Morin

Even Prophet of Gloom is currently invested

Even Prophet of Gloom Nouriel Roubini, the blunt-talking professor of economics at New York University likes stocks.  Really?  Roubini, predicts that the US economy will get worse before it gets better but admits that his 401K plan is invested in equities. 

“You know, I’m not an active investor. I decided for the long haul I’m going to hold equities because over a horizon of 10, 20 years equities outperform any other asset class,” he said.  His surprising disclosure may offer some comfort to investors who have lost a big chunk of their savings in the crash. Read the whole story here.

click here for the full article

Odette Morin

Your investments are down in value and so is your home.

The Canadian real estate market is entering a cyclical downturn but should avoid the cataclysmic devaluation seen in the U.S., according to a report from RBC Economics.  “Many of the factors that triggered the collapse in the United States are either absent or of much lower significance on this side of the border,” said Robert Hogue, senior economist, RBC.

The upside to the waning marketplace is that housing affordability is improving. RBC’s affordability index measures the proportion of pre-tax income needed to service the costs of owning a home.

Nationwide, the standard condominium unit remained the most affordable in the third quarter, costing 31.4% of household income to service. The standard townhouse requires 36.9% of income, while a detached bungalow needs 45.7%. A standard two-storey home remains the least affordable, gobbling up 52% of household income.

Using the bungalow as a benchmark, Vancouver remains the least affordable major city, requiring 74.8% of income. Toronto is the second least affordable, at 53.3%.  In a financial planning perspective, 74% is way too high to be sustainable over the long term.  Before buying make sure that you can afford the new housing costs without jeopardizing your lifestyle.  In the meantime, housing is becoming more affordable as prices drop and the overall market enters a healthy correction.

Read more here