Memo of the week: Bear market bounce

The beginning of the end? Could it be? Sorry, shareholders. No. When the Dow Jones industrial average rose for four consecutive days, world-weary investors pounced optimistically on the rare good news. But their joy at the prospect of a market rally was ephemeral – after analyst after analyst told them this "bear market bounce" would be too. U.S. financial companies, which led the unexpected reprieve, remain dubious to desperate, and economic fundamentals remain poor; the rally, as it were, appeared to be triggered by a "leaked" memo from the chief executive of Citigroup in which he claimed the company made a profit in the first two months of 2009. Not the most solid of foundations on which to base overwhelming confidence. "Before investors truly commit to bank stocks," the Associated Press wrote, "they want official results, not just chief executives' letters to their staff."

– Daniel Dale

Pescod Talks To CEO Bankers Pet. BNK-T

QEC,BNK,TLM Buy And Sells Today

From sizzle to fizzle

From sizzle to fizzle

Friday, March 13, 2009

It was all going so well – until analysts at SunTrust Banks just had to go and bring investors back to reality, arguing that credit card companies will announce delinquencies and defaults next week, renewing concerns that there is another shoe to drop as the U.S. financial sector struggles to find stability.

The Dow Jones industrial average was down 35 points, or 0.5 per cent, to 7135 – threatening to cap the index's winning streak at three days. The broader S[amp]amp;P 500 was down 5 points, or 0.6 per cent, to 746.

Financials were the biggest drags, falling 2.6 per cent after turning in double-digit gains during two of the past five days. Industrials fell 1.7 per cent and consumer discretionary stocks fell 0.6 per cent. However, health care stocks remained hot, rising 1.4 per cent, this time with Merck [amp]amp; Co. Inc. in the driver's seat.

In Canada, the S[amp]amp;P/TSX composite index was down 61 points, or 0.7 per cent, to 8221. Information technology stocks were the big laggards, falling 3.5 per cent after analysts at ThinkEquity issued a “sell” recommendation on Research In Motion Ltd., arguing that the stock faces pressures amid growing competition from the likes of Palm Inc.

Financials fell 0.9 per cent after a promising rise at the start of trading. Energy stocks fell 1.6 per cent after early gains in the price of oil evaporated.


© Copyright The Globe and Mail

Bellwether market sectors pass higher lows test

If you Google "Elliott the recognition point" you will find an item asking; "Have you reached the point of recognition?"

According to Elliott wave theory we reach the point of recognition when investors can see that the stock market is moving strongly in one direction, be it up or down.

Elliott wave sets out a bull market structure to be three impulse waves (or up-legs) separated by two corrective waves or down-legs. The recognition point is the peak of the first up-leg advance and when exceeded by the second up-leg advance can introduce a buying panic as the crowd recognizes the new bullish trend

The recognition point is typically flashed about one-third into the second up-leg advance. The last bull market recognition point occurred in May 2003

Let us go back and assume the first bull market advance of the broader North American stock indexes had its origins in the lows of last October-November 2008. Let us now assume the advance from those lows to the peaks of early January 2009 was an Elliott wave 1, or a first up-leg advance.

If so, the corrective period from the January 2009 peak to the lows of March 2009 was the corrective period we needed to introduce a new second up-leg advance.

In a bull market an Elliott wave 3 (or the second up-leg) is usually the largest and most powerful wave in a trend. The news is now positive and fundamental analysts start to raise earnings estimates.

Once we pass the recognition point, prices rise quickly and corrections are short-lived and shallow. Anyone looking to get in on a pullback will likely miss the boat.

The problem now is to decide if this week's market activity satisfies the origins of an Elliott wave 3 or new second up-leg advance.

Last Tuesday's broad advance in the North American equity markets was technically impressive.

The financials on both sides of the border led the way with the S&P/TSX financial index and the SPDR financial sector jumping 12 per cent and 15 per cent.

Other double-digit gainers were the S&P/TSX diversified metals and mining index, the U.S. REITs and the U.S. broker dealer index.

Notable big-cap winners were General Electric Co., Wells Fargo & Co., Intel Corp. and Research In Motion Ltd., all with double-digit gains.

Our chart this week is that of the daily closes of the TSX composite index spanning the October 2008 to March 2009 trading window.

There are two significant junctures to focus on – the lows of November 2008 and the current lows of March 2009.

Keep in mind that if a new second up-leg advance is to get underway, it should begin from a low equal to or above the important October-November 2008 lows.

Note that while the recent March lows dipped slightly under the November lows, many important stock sectors such as consumer staples, energy and materials posted higher March lows.

In the U.S., important groups such as the SPDR technology and SPDR oil and gas producers also passed the higher low test.

Now refer to the price peak of January 2009; this is the recognition point.

Now in order for us to have an "official" bull market on our hands there is an important test to be satisfied.

The current advance must, within eight weeks, have the legs to carry most of the broader stock indexes above their respective January 2009 price peaks in order to exceed the recognition point.

In 2003 this was accomplished in nine weeks following the March 14, 2003 lows.

This will not be a slam dunk because the TSX must add on another 20 per cent from here and the S&P 500 must rebound 30 per cent

Don't write this off as a pipe dream. During the Barack Obama honeymoon rally of November 2008 through January 2009, the S&P 500 tacked on 27 per cent in eight weeks.

Meet you soon, at the recognition point.

Bill Carrigan is an independent stock-market analyst with a Canadian Investment Manager designation. 

Gas Trend Is Down - Gold Is Up + But Markets Are Up

Markets soar as financial, energy stocks jump

A powerful stock-market buying spree has continued for a third day, yielding triple-digit index gains in Toronto and New York driven by ongoing advances in financial and energy shares.

Toronto's S&P/TSX composite index jumped 271.25 points, or 3.4 per cent, to 8,282.207 yesterday – its highest close in three weeks – as six stocks rose for each that fell.

Toronto's key index has rallied 9.5 per cent over the past three sessions and some analysts said that even if it does retreat soon, it will not pierce the more than five-year low it touched late last week.

"So we're fairly close to a top here for the next day or two, but even if we do have a pullback in the next week or so, the lows should be a little higher," said Levente Mady, broker at MF Global Canada, in Vancouver.

The TSX Venture Exchange added 19.52 points to 843.42, while the Canadian dollar advanced 0.43 of a cent (U.S.) to 78.18 cents.

New York's Dow Jones industrial average moved ahead 239.66 points to 7,170.06, netting 9.5 per cent over three days.

The Nasdaq composite index in New York was up 54.46 points to 1,426.1 while the S&P 500 rose 29.38 to 750.74.

The turnaround in sentiment on the banking sector started with reports this week that U.S. financial giants Citigroup and JP Morgan had an operating profit in the first two months of the year.

Yesterday, Bank of America Corp. became the latest U.S. lender to say it started the year with a profit, adding to the market momentum.

Market gains have spread across most sectors, particularly energy as oil prices have firmed above $45 a barrel.

Analysts say the rally has also been fed by short covering, which occurs when investors are forced to buy stock to replace shares they borrowed and then sold on expectations of a decline.

Some say those reasons aren't enough for a sustainable revival in the market.

"Right now I just call this rally speculative," said Jennifer Dowty, portfolio manager at MFC Global Investment Management.

"We're having parabolic moves – stocks are up 8, 9 per cent in one day; I would rather see some stabilization and a slow re-acceleration justified with positive economic data," she said.

Eight of the TSX's 10 sectors ended the session higher, led by a 5.56 per cent rally in the financials index, up almost 21 per cent since Monday's close.

Energy stocks rose 5 per cent as the April crude contract on the New York Mercantile Exchange moved ahead $4.70 to $47.03 a barrel.

The April bullion contract was up $13.30 to $924 an ounce on the Nymex, and the TSX gold sector rose 3.25 per cent.

Industrials were also supportive and there were small declines in telecom and utilities stocks.

From the Star's wire services

Plus Pescod On Gold

Banks Say- Recession Will Be Long + OPC,TLM-BNK-QEC Houses

The Toronto-Dominion Bank has sharply downgraded its economic forecast for Canada and expects more than 500,000 jobs to disappear by the end of the year compared with the peak of the job market, casting more doubt on the prospects for a painful but short-lived recession.

"There is no doubt that 2009 will go down in the history books as one of the most difficult economic years for Canadians," wrote Beata Caranci, TD's director of economic forecasting.

The bank sees Canada's economy shrinking by 2.4 per cent this year, with the first three quarters in negative territory, before posting sluggish growth of 1.3 per cent in 2010. It had previously forecast a contraction of 1.4 per cent this year and growth of 2.4 per cent in 2010.

That gloomy forecast suggests the recession will be deeper and longer than the Bank of Canada has predicted.

In January, the central bank said real gross domestic product would decline by 1.2 per cent this year and rebound by 3.8 per cent in 2010, a far rosier view than most private-sector economists. But when it cut its key policy rate earlier this month to 0.5 per cent, it noted that the outlook for the global economy had continued to deteriorate, a sign that it may be preparing to lower its forecast.

Caranci emphasized that "this is not a made-in-Canada recession, but the country has certainly imported all the problems surrounding financial market uncertainty, a weakened export market and the plunge in commodity prices that comes with a global recession." As a result, Canada's economy won't recover until conditions in the global economy, particularly in the United States, stabilize, she said.

"We feel that too many issues related to the health of the global financial system remain unresolved for a speedy economy recovery," Caranci added.

Canada's job market will be particularly hard-hit as the recession and plummeting commodity prices eat into national income. The bank expects that 583,000 jobs will be lost by the end of this year compared with the peak of the job market, more than the total employment losses in the recession of the early 1990s. Those losses will push the country's unemployment rate to nearly 10 per cent by the last quarter of 2009, a level that will persist through much of next year, the bank said.

In its forecast, the bank said corporate profits, which dropped sharply in the fourth quarter of 2008, will continue to tumble this year. It also expects nominal gross domestic product, a rough measure of the over-all tax base, to contract by 4.5 per cent in 2009, a factor that will "come to bear on employment, wages, capital investment and government revenues as the year rolls forward."

TD's forecast calls into question the planning assumptions of the federal government, which based its January budget on a more modest drop of 2.7 per cent in nominal GDP this year.

Also yesterday, the Royal Bank of Canada lowered its 2009 economic forecast. It now sees real GDP contracting by 1.4 per cent, compared with its previous forecast for a decline of 0.5 per cent. It maintained its 2010 forecast for growth of 2.6 per cent.

The downgrades came a day after the International Monetary Fund warned that Canada's economic output "is likely to contract significantly in the near term" before recovering as government stimulus starts to gain traction. The international body said that Canada is better positioned than many countries to weather the economic storm, but warned that "downside risks predominate, including negative spillovers if the global environment worsens more than expected."

TLM-T

Stewart, Cramer get ready to rumble

Stewart, Cramer get ready to rumble

BARRIE McKENNA

Thursday, March 12, 2009

WASHINGTON — It was a rant worthy of actor Peter Finch's famous "I'm as mad as hell" outburst in the movie Network.

Standing in the pits at the Chicago Mercantile Exchange, CNBC correspondent Rick Santelli openly mocked "the losers" who can't pay their mortgages and exhorted traders around him to dump on U.S. President Barack Obama's homeowner rescue plan.

It might have ended there. But the theatrics proved too much for late-night comedian Jon Stewart of The Daily Show with Jon Stewart, who mocked the ubiquitous cable business network with a clever montage of wildly off-base predictions by some of its leading stars, including high-strung stock picker Jim Cramer.

"If I had only followed CNBC's advice, I'd have a million dollars today," Mr. Stewart deadpanned last week, "provided I'd started with $100-million."

In what is being dubbed the "Anchor War," Mr. Stewart and Mr. Cramer have been going at each other almost daily on their respective networks. And tonight, the two will square off on The Daily Show in what promises to be must-watch late-night TV.

"Two men will enter! Only two men will leave!" previewed the Comedy Central network, which airs the popular satire.

The sometimes nasty and often hilarious feud, dubbed Cramer vs. Not Cramer by The Daily Show, has dredged up long-standing criticism of CNBC, including allegations of excessive cheerleading in good times, scaremongering on the way down, uncritical interviewing of business leaders and the theatrics of its star performers, such as Mr. Cramer, host of Mad Money.

With the stock market in the tank, the blame game has become increasingly political, too. An outspoken critic of the Obama administration, Mr. Cramer has even attracted the ire of White House spokesman Robert Gibbs.

"You can go back and look at any number of statements he's made in the past about the economy and wonder where some of the backup for those are," Mr. Gibbs said.

CNBC spokesman Brian Steel vigorously defended the network's record, pointing out that it typically does 850 interviews a week, from every point of view imaginable.

"Our viewers like a point of view and we do commentary from both sides of every issue," he said, adding, nonetheless, that the network is "unabashedly a pro-capitalist, pro-business network."

He would not comment on which side initiated tonight's appearance on The Daily Show.

All kidding aside, CNBC is serious business. It's the undisputed king of U.S. business news in a crowded cable field. The network is a fixture on trading floors and brokerage offices. When chief executives, politicians and other key decision makers have something to say, they typically go to CNBC first. And the rest of the business crowd, including fund managers and analysts, crave its limelight.

In the other corner is Mr. Stewart, the edgiest of the late-night comics, with a sharp satirist's eye for news and a loyal following among educated young viewers.

His half-hour show, which typically draws four times as many viewers as CNBC's top rated shows, apparently boasts influence of its own. In 2004, Mr. Stewart, a frequent critic of news-as-entertainment, attacked CNN shows such as Crossfire as shout-fests that distort the news. Within months, Crossfire was gone.

So when Mr. Stewart lambasted Mr. Cramer for supposedly touting the merits of investment banks Bear Stearns and Lehman Brothers not long before they crashed, the former hedge fund manager went on the attack.

 

 

 

In appearances on various NBC news shows, Mr. Cramer accused Mr. Stewart of perpetuating an "urban legend" that he recommended Bear Stearns and accused the show of taking his recommendations out of context. And he portrayed himself as a defender of small investors.

Mr. Stewart was back at it on Tuesday night, poking fun at Mr. Cramer and CNBC parent NBC by using other Viacom properties (Viacom owns Comedy Central) - appearing to talk about his situation on shows from Nickelodeon's Dora the Explorer to MTV's The Hills.

And Mr. Stewart took a swipe at CNBC for promoting their star as if he was the god of stock-picking with its "In Cramer We Trust" ads.

"I don't know about the markets. That's why I don't make claim to any authority," Mr. Stewart told his audience. "Now, of course, I probably wouldn't have a problem with CNBC if Cramer's slogan was 'Cramer: He's Right Sometimes' or 'He's Like a Dartboard That Talks' or 'You Feel Lucky, Punk? Do You?' "

Then, he showed several clips of Mr. Cramer touting Bear Stearns.

"Jim Cramer, you said it here. Buy Bear. [Expletive] you," Mr. Stewart said.

© Copyright The Globe and Mail

Buy and hold investing guru 34 yr old sells all he has

TOBIN GRIMSHAW/STAR FILE PHOTO

Derek Foster, author of 'Stop Working, Here’s How You Can' and 'Money for Nothing and Your Stocks for Free' holds son Kennedy as he poses with his wife Hyeeun Park and Connery Foster near their home in Wasaga Beach.

'I don't think we're close to bottom'

March 12, 2009

Ellen Roseman
Business Columnist

Thanks to a healthy stock portfolio, Derek Foster retired when he was 34 years old.

He later wrote and self-published three books about buying and holding stocks for the long term.

Despite heavy losses in his retirement portfolio, Foster believed that stock markets would recover soon.

Today, he's more pessimistic.

In early February, he sold everything he owned in his online brokerage account – $472,000 worth of stocks and income trusts – and moved into cash.

"I think we're in for more pain," he says when explaining his abrupt about-face.

"My strategy was to buy quality dividend-paying stocks and hold them through thick and thin.

"I held on all last year, but I've been doing lots of research and I don't think we're close to the bottom yet."

Foster admits he bit the bullet and disposed of some holdings at a loss.

"I bought Rogers at around $40 in the summer and sold it for a little more than $34 last month," he says.

"I bought Algonquin Power (an income trust) at $8 to $9 a share years ago. The distribution was cut and the price fell to under $2.50.

"I bought over 30,000 shares at this price and sold them in early February for $2.68 a share."

What caused his change of heart? Why did the poster boy for holding stocks turn so gloomy?

Foster, an engineer by training, has lived on annual income of about $36,000 from his stocks since he retired four years ago. This will not be a short recession, in his view.

"There is massive debt that has to be repaid and boomers are at the stage where they shift from spending to saving," he says.

"The economy will be very slow for quite some time."

Valuations were lower when the stock markets crashed in the 1930s and later in 1973 to 1974, he points out.

The dividend yield on the Dow Jones industrial average fell to 6 per cent before, but is at 4 per cent today.

The total market value of stocks fell to 50 per cent of the gross domestic product before, but is at 70 per cent today.

The price-to-earnings ratio of stocks fell to the single-digit range before, but is still in double digits now.

Will he go back to work to support his four children and stay-at-home wife?

No way, he swears.

He's selling put options on stocks he'd like to own – essentially, bidding to buy companies as their share price sinks.

This strategy – outlined in his latest book, Money for Nothing and Your Stocks for Free – gives him an extra margin of safety and higher dividend yields because of lower stock prices.

He's not trying to make bets about the stock market's direction, but is just hoping to preserve his nest egg.

"The move into cash saved me a little over $70,000 as of last Monday – though probably less with the rebound in the last two days."

The stock market boom from 2003 to 2008 was overdone, he now admits.

"How can a guy retire at age 34? I'm the biggest contrary indicator. It shouldn't happen that way."

Pocklington arrested in California

BRENT JANG

Globe and Mail Update

March 11, 2009 at 4:22 PM EDT

Former Edmonton Oilers owner Peter Pocklington has been arrested on bankruptcy fraud charges in California, U.S. court filings show.

Mr. Pocklington will be formally charged Wednesday afternoon with filing false bankruptcy declarations, as well as making false oaths and accounts in bankruptcy.

He faces up to 10 years in a federal prison, U.S. Attorney spokesman Thom Mrozek said in an interview.

FBI agents took Mr. Pocklington, 67, into custody after executing search warrants at his residence in the Palm Springs region.
Peter Pocklington
Related Articles

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* Peter Puck's last stand
* Alberta targets old adversary
* The lure of the rings

Photogallery

* Items from the Pocklington collection

The Globe and Mail

He filed for personal bankruptcy in California last August, just two days after a raid on his previous residence, initiated by a plaintiff in a civil lawsuit. His net worth is listed in his bankruptcy filing at $2,900 (U.S.) and personal liabilities at $19.7-million.

In his declaration, he submitted that his net worth included $200 in his wallet, a $500 watch, a $500 set of golf clubs, $300 of clothing and shoes, $450 in appliances and furnishings, $450 worth of personal goods seized and $500 worth of memorabilia, trophies and art.

Mr. Mrozek said the discrepancy between the assets and liabilities listed raised concerns that Mr. Pocklington wasn't disclosing all of his assets.

“Court documents also allege that Pocklington, in an effort to partially satisfy a court judgment against him, gave a creditor a piece of art, a rug and a desk that were collectively worth approximately $80,000 and were located in one of his storage lockers,” according to a statement issued by the U.S. Attorney's office.

Mr. Pocklington and his wife, Eva, vacated their exclusive Vintage Club condo in Indian Wells, Calif., last fall. They decided instead to rent half of a bungalow duplex at a golf development, the Lakes Country Club, in nearby Palm Desert.

“The indictment alleges that Pocklington failed to disclose to the bankruptcy court two bank accounts at Palm Desert National Bank [PDNB] for which he has sole signature authority, as well as the contents of the two storage units in Palm Desert. In the seven months immediately preceding a September 2008 hearing in his bankruptcy case, Pocklington allegedly wrote a series of checks on a PDNB account in the name of ‘Dempsey Investment Corp.,' an entity that he failed to mention in the bankruptcy petition,” the U.S. Attorney's office said.

Court filings in a civil case show that a bankruptcy trustee is seeking to recover money from Mr. Pocklington and potentially seize whatever is still in his possession, notably five Stanley Cup rings.

Born in London, Ont., he gained national prominence when he signed Wayne Gretzky, then 17 years old, to the Edmonton Oilers in 1978. The Oilers, in the World Hockey Association at the time, joined the National Hockey League one year later.

But Edmontonians were angered in 1988, when Mr. Pocklington sold Mr. Gretzky to the Los Angeles Kings.

Government-owned Alberta Treasury Branches forced Mr. Pocklington to sell the Oilers in 1998, and the rest of his business empire later crumbled.

The Pocklingtons settled year-round in California in 2002.

Mortgage penalty can be a shocker

TheStar.com - Business -

Mortgage penalty can be a shocker
March 11, 2009
Ellen Roseman

As interest rates fall to record lows, you may want to break your mortgage and negotiate a lower rate.

But the penalty charges can be prohibitive if you're in the early years of a long-term mortgage at a fixed rate.

Take Marilyn, who recently sold her house because she couldn't afford to keep it. She had a $308,000 mortgage, with three years left on a five-year term at 5.74 per cent.

She was shocked when told by the bank that the penalty cost would be about $20,000.

"That means I only pay off the bank, the real estate agent and the lawyer," she says.

"I was hoping to have enough cash in my pocket to cover my basic survival needs while searching for my next position."

Another customer, Michael, sold his condo just a year after taking out a $208,000 mortgage at 5.85 per cent.

He was charged $11,000 to break the mortgage, despite having applied for financing on another property he bought.

Both customers assumed they would pay a penalty of three months' interest. That used to be the case many years ago.

Today, most lenders charge a penalty based on the gap between current and past interest rates, the outstanding balance and the number of months left in the mortgage term.

Called the interest rate differential (or IRD), the penalty is higher now than in the past because of how far interest rates have fallen in the past six months.

There's no standard way for lenders to calculate the IRD, says Isabelle Rodrigue, acting team leader of consumer education at the Financial Consumer Agency of Canada.

"It's not an easy thing to understand and most people can't do it on their own. We advise them to shop around and talk to lenders about the benefits of renewing early."

If you're faced with a stiff penalty, you may have some leverage by negotiating with other lenders first.

"Then, go back to your current lender and say: `I'm planning to leave. Can you do something about the penalty if I stay?'" says Robert McLister, a mortgage planner with Mortgage Architects, who edits a popular blog, CanadianMortgageTrends.com.

Another tip is to make a lump-sum payment before renegotiating.

Many mortgages allow you to pay up to 20 per cent of the balance in any given year.

This lets you lower the penalty, which is calculated on the balance after you have made your prepayment.

Some mortgage brokers find that people are changing their minds about floating rate mortgages.

"There's a significant trend toward variable-rate clients moving into longer term fixed-rate loans," says Calum Ross, senior vice-president at The Mortgage Centre.

"Yes, they're paying a higher rate. But with the current economic uncertainty, they don't feel comfortable taking on additional risk."

With variable-rate mortgages at 3.3 per cent to 4 per cent and five-year closed mortgages at 4.99 per cent to 5.25 per cent, the price gap has narrowed.

In an influential study in 2001, finance professor Moshe Milevsky said that most of the time, people pay less interest over the long run by choosing a variable-rate mortgage.

But in an interview last month at the Canadian Mortgage Trends blog, he said it pays to be in a fixed-rate mortgage 10 to 12 per cent of the time – and this might be one of those times.

Not only has the premium of fixed rates over variable rates largely disappeared, but there are added risks from falling home prices, reduced availability of credit and employment instability.

An environment like we're seeing today brings into question any type of historical study, Milevsky added.

Ellen Roseman's column appears Wednesday, Saturday and Sunday.

There is only one question on the minds of investors right now: Will it last?

Market News: After the Bell


The close: What was that?

RTGAM






There is only one question on the minds of investors right now: Will it last?


Investors have seen these sorts of upward moves too many times recently to be convinced that Tuesday's stock market rally was anything but fleeting. Still, there's the hope.


The problem with answering the question is that the yes and no camps make so much sense. Yes, the rally could last because stocks are cheap based on historical comparisons. Then again, history also shows that stocks tend to get even cheaper when they get caught in these sorts of mind-blowing downturns.


Of course, this impressive rally barely registers as an uptick if you look at a stock market graph over the past year. Indeed, the rally merely takes the S&P 500 back to where it was at the end of February (seven whole trading days), and remains down more than 20 per cent for the year.


Still, it's not hard to appreciate the day for what it was. The Dow Jones industrial average closed at 6,926.49, up 379.44 points or 5.8 per cent. The broader S&P 500 closed at 719.60, up 43.07 points or 6.4 per cent. It was not only the biggest rally of 2009; it was the biggest since Nov. 24.


The other notable point about this rally is that there was no dip toward the end of the day. For the Dow and the S&P 500, both indexes finished the day at their highest levels.


Financials led the way, after Citigroup Inc.'s chief executive said in a memo to employees that the bank of profitable in the first two months of the year. The bank's shares surged 38.1 per cent and dragged others with it. Bank of America Corp. rose 27.7 per cent. As well, General Electric Co. - which has been hobbled by its financial arm - rose 19.7 per cent.


On the other hand, typically defensive stocks registered far less impressive gains. Procter & Gamble Co. rose 2.2 per cent, Coca-Cola Co. rose 1.1 per cent and McDonald's Corp. rose just 0.5 per cent.


In Canada, the S&P/TSX composite index closed at 7,880.41, up 313.47 points or 4.1 per cent - its biggest rally since Nov. 28.


There, the Big Banks were the leaders, following the rally among financials in the United States. Royal Bank of Canada rose 14.4 per cent and Toronto-Dominion Bank rose 11.1 per cent. As well, Manulife Financial Corp. - which has tended lately to over-describe moves in the broader market, on the way up and on the way down - surged 18.3 per cent.


Energy stocks were non-starters after an upward move in the price of crude oil fizzled in afternoon trading, ending the day at $45.71 (U.S.) a barrel, down $1.36. Suncor Energy Inc. rose 0.4 per cent and EnCana Corp. rose 1.2 per cent.


Meanwhile, no one wanted the safety of gold, or gold producers, when stocks turned suddenly hot. Goldcorp Inc. fell 7 per cent and Barrick Gold Corp. fell 8.1 per cent after the price of gold fell below $900 an ounce, down about $22.

Copyright 2001 The Globe and Mail

David Pescod speaks

THOUSAND SPLENDID SUNS:

It was over a year ago, we had booked a vacation to
Mexico, so here we are, but the first thing we learned is
that you can’t get away from the market malaise. Go for a
dip in the hot tub and everyone is talking about Japan just
hitting a 26-year low. Go for a walk on the beach and eve-
ryone is talking about, how low can the Dow Jones go. All
of a sudden, people are talking about how lucky people
are with government jobs.

Yes, you can’t get away from it and here in Puerto Val-
larta, real estate for some of the tourist area is down 20%,
vacationing and tourists is down about 20% and you can
tell that the world has changed. Everyone’s question is,
when is it over?
To get away from it all, there is nothing like a good
book and I might be one of the last people that hadn’t read
“A Thousand Splendid Suns” by Khaled Hosseini, the Af-
ghani-American author who also wrote the Kite Runner.
While the Kite Runner might have been a look at Afghan
history through the eyes of men, 

A thousand splendid
suns is a look at the terrible history of Afghanistan
through some of its women and it’s just not a pleasant
story and so many ethnic groups have had a history of
beating up on each other for so long, one just wonders if
there is ever a pleasant exit.
Maybe having an ugly market is bearable in compari-
son to reading through this book. “Men-wielding pick
axes swarmed the dilapidated Kabul Museum and
smashed pre-Islamic statues to rubble—that is those that
hadn’t already been looted by the Mujahideen.

 The Uni-versity was shut down and its students sent home. Paint-
ing were ripped from walls, shredded with blades. Televi-
sion screens were kicked in, books except the Koran were
burned in heaps, the stores that sold them, closed down.”

The poems of Kajlili, Pajwak...and more went up in
smoke...everywhere the beard-patrol roamed the streets in
Toyota trucks on the lookout for clean-shaven faces to
bloody.”

An amazing book and what a sad time for that country

QEC+ BNK + TLM Houses

Brien Lundin says hold Bankers Petroleum

Lundin says hold Bankers Petroleum

2009-03-02 20:45 EST - In the News

Brien Lundin, in the February, 2009, edition of the Gold Newsletter, says hold Bankers Petroleum Ltd., recently 90 cents. Mr. Lundin said buy Bankers in October, 2005, at 56 cents, and in March, 2005, at $1.30. He then said sell -- half, perhaps -- in April, 2005, at $1.80.

 Assuming a $1,000 investment for each of the two buys, selling half of the total $2,000 investment would have yielded a profit of $1,241. He said buy again four times between August, 2005, and June, 2008, at prices ranging from 52 cents to $2.14. 

(The stock consolidated 1:3 on July 30, 2008.) Assuming a $1,000 investment for each postsale buy, and considering the remaining $1,000 investment after the previous half sale, the total $5,000 investment is now worth $1,635. 

Despite a "cratering" market for oil, the company's exit production rate in 2008 was 31 per cent better than its exit rate in 2007 at its Albanian Patos Marinza oil field. The oil field averaged 6,563 barrels of oil per day in the fourth quarter of 2008 compared with 5,880 barrels of oil per day in its third quarter of 2008. 

Mr. Lundin says that although oil is not currently trading well, his guess is the oil market will make a substantial recovery sooner than later.

U.S. economy has 'fallen off cliff', Buffett says

MARIO ANZUONI/REUTERS

Warren Buffett, CEO of Berkshire Hathaway, addresses The Women's Conference 2008 in Long Beach, Calif. in this Oct. 22, 2008 file photo.

March 09, 2009

Jonathan Stempel
Reuters

NEW YORK – Warren Buffett said Monday that the U.S. economy had "fallen off a cliff" and eventually would recover, although a rebound could rekindle inflation worse than experienced in the late 1970s.

Speaking on CNBC television, the 78-year-old billionaire also said the economy was mere hours away from collapse in September, when credit markets seized up, Lehman Brothers Holdings Inc went bankrupt and insurer American International Group Inc got its first bailout. "The world almost did come to a stop," he said.

Buffett also called on banks to "get back to banking" and said an overwhelmingly number would "earn their way out" of the recession, even if stockholders don't go along for the ride.

"A bank that's going to go broke should be allowed to go broke," but customers should not worry about their insured deposits, he said. Buffett said there was a "paralysis of confidence" in banks, which he called "silly" because of safeguards such as deposit insurance.

Buffett spoke nine days after telling shareholders of his Omaha, Nebraska-based insurance and investment company Berkshire Hathaway Inc that the economy was in a "shambles" likely to persist beyond 2009.

On Monday, Buffett said the economy was experiencing "close to the worst-case" scenario, with business activity declining and unemployment rising, and that the economy "can't turn around on a dime."

He said Americans, including himself, did not predict the severity of the decline in the housing prices, which then led to problems with securitizations, complex debt and other instruments whose value depended on home prices continuing to rise, or at least not plummet.

"It was like some kids saying the emperor has no clothes, and then after he says that, he says now that the emperor doesn't have any underwear either," Buffett said.

Maintaining his long-term optimism, Buffett said that "five years from now, I can guarantee you that the machine will be running fine," although he hoped it would not take that long.

"We do have the greatest economic machine that man has ever created," he said.

But he said an economic rebound could trigger higher inflation once demand rebounds. "In economics there is no free lunch," he said. "We are going to attempt to have a lunch that to some extent we're going to pay for later."

Buffett also urged Democrats and Republicans in Washington to work better together, and to communicate bipartisan efforts to fix the economy to voters. "You can't expect people to unite behind you if you're trying to jam a whole bunch of things down their throat," he said.

Buffett also said the ailing Citigroup Inc, which Berkshire does not own, would probably keep shrinking, but that depositors should not be worried.

Stein: Fear-Mongers Keep Us In Recession

Sunday Morning Today:

(CBS)  Are you up to here with all the grim economic forecasts? Contributor Ben Stein happens to be an economist, among other things, and has the hat to prove it ... 

---

Okay. Let me put on my weather-beaten economist's hat again and try to explain something important. 

As we all know, we are in a recession that is bad and getting worse. So, basic question: How do we get out of it? 

Well, look at it this way. The economy grows because of two factors: M, which is the quantity of money in the economy, which is controlled mostly by the Federal Reserve; and V, the velocity of money, or the rate at which it changes hands - or, as one might say, the speed with which it is borrowed, invested and spent. 

Mr. Ben Bernanke, head of the Federal Reserve, has been doing a fine job of keeping the supply of money pumped up. Score one for him. 

But the velocity of money has slowed dramatically. 

People at every level are afraid to spend because they fear conditions will get worse and they're going to need the money in the future just to survive. So they don't spend it. 

One of the big contributors to fear is the big goombahs in the society saying how bad things are. When Mr. Obama or his economists tell us how terrible things are and how they're going to get worse, they're shooting fear into the economic bloodstream, and that hurts velocity and kills stocks. 

Notice that recently Ben Bernanke said the recession might end this year, and the stock market rocketed up that day. 

What we need, as Bill Clinton aptly pointed out recently, is more cheerleading and less fear-mongering. We elected Mr. Obama to be National Spirit Leader, not National Scary Storyteller. 

If Mr. Obama and Mr. Geithner, his Treasury Secretary, and Mr. Volcker, his well-respected advisor, and some real superstars like Warren Buffett and Jack Welch all came out and said, "The recession will end within 12 months. We are sure of it," the recession WOULD end within 12 months. 

It's all about confidence, and the confidence of the heavy-hitters means a lot. 

After all, no one is bombing our cities right now or poisoning our rivers. This whole thing is about confidence. Ninety-two percent of us are still employed. Roughly 90+ percent are not behind on our mortgages. If we had some confidence, we could get this ball rolling again. 

Let's roll! 

Dec 2008 Ben Said...

Well, look at it this way. The economy grows because of two factors: M, which is the quantity of money in the economy, which is controlled mostly by the Federal Reserve; and V, the velocity of money, or the rate at which it changes hands - or, as one might say, the speed with which it is borrowed, invested and spent.

Mr. Ben Bernanke, head of the Federal Reserve, has been doing a fine job of keeping the supply of money pumped up. Score one for him.

But the velocity of money has slowed dramatically.

People at every level are afraid to spend because they fear conditions will get worse and they're going to need the money in the future just to survive. So they don't spend it.

One of the big contributors to fear is the big goombahs in the society saying how bad things are. When Mr. Obama or his economists tell us how terrible things are and how they're going to get worse, they're shooting fear into the economic bloodstream, and that hurts velocity and kills stocks.

Notice that recently Ben Bernanke said the recession might end this year, and the stock market rocketed up that day.

Canada's banks are finally getting some respect.

Canada's banks are finally getting some respect.

Derided for years as meek and mild while banks around the world expanded wildly, suddenly the reputation of Canada's big lenders as prudent and sometimes downright boring has become an asset instead of a liability.

U.S. President Barack Obama has heaped praise on the management of this country's financial system. Ireland is considering overhauling its system to look more like Canada's. Financial papers around the world are running headlines such as “Canada banks prove envy of the world.”
Bay Street

Since the credit crunch began in the summer of 2007, the Big Five banks have booked a total of $18.9-billion in profits.
Royal Bank of Canada

TD Bank

Bank of Nova Scotia

CIBC

Bank of Montreal

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* Don't pass up a good opportunity over dividend jitters

The Globe and Mail

Whether measured by market value, balance sheet strength or profitability, Canada's banks are rising to the top. Since the credit crunch began in the summer of 2007, the Big Five banks have booked a total of $18.9-billion in profits.

In roughly the same period, the five biggest U.S. banks have lost more than $37-billion (U.S.). One, Wachovia Corp., was forced to sell out to avoid failing. Another, Citigroup Inc., long the world's largest bank, may have to be nationalized and this week became a penny stock. The picture is similar in Britain.

The U.S. has spent most of the $700-billion the government earmarked for bank bailouts, and there are estimates that the final tally could be more in the trillions of dollars. The head of the Bank of England said last month that it's “impossible” to know how much money it will take to fix his country's banks.

Canada, by contrast, has not had to inject capital directly into banks, other than starting a program to buy from banks $125-billion (Canadian) of insured mortgages – any losses from which the government was already on the hook for anyway.

The reason comes down to a fundamental conservatism. From lending practices to bets on trading to financial reserves and takeovers, the Big Five banks have long tended to be more careful than their global peers. And when they did want to get aggressive, government and regulators held them in check.

“The Canadian banks were under a significant amount of pressure from both the analysts and the marketplace in general to be more aggressive in expanding into international markets, particularly the United States, and I think to some degree resisted partially because of a more conservative approach,” says RBC chief executive officer Gordon Nixon.

Still, the industry has had stumbles, most notably Canadian Imperial Bank of Commerce's misadventure in derivatives, which led to a $2.1-billion loss for 2008.

And shareholders in Canadian banks have been battered. As a group, the banks' shares are down almost 50 per cent since Aug. 1, 2007, with most of the decline in the past six months as the economy worsened.

The concern weighing on these bank shares, for starters, is that profit growth in general is a thing of the past until the economy picks up. Most analysts say the banks' profits will shrink in coming quarters as more loans go sour and margins on lending tighten up. There's also nagging doubts that dividend payments are unsustainable and that something bad is still lurking on balance sheets.

More writedowns are likely in store for banks such as Toronto-Dominion Bank and Royal Bank of Canada, both of which made big acquisitions in recent years that now look overpriced.

Still, bank bosses such as Rick Waugh, CEO of Bank of Nova Scotia, say the banks are insulated from lingering problems because they have profits rolling in from many sources.

“We have made mistakes,” he says, “but we made sure that we were well diversified.”

That's a result of a conservatism not just among executives. That same approach extends to consumers, helping the banks sail along on the strength of their domestic lending businesses.

“You've got a more balanced cultural approach towards consumption and savings than we do in this country,” says Charles Dallara, head of the Washington-based Institute of International Finance, and a former managing director at JPMorgan Chase & Co.

Much of that stems from the pain of the last recession. While the downturn of the early 1990s was short and sharp in the U.S., it was drawn out in Canada, leading to more of a social evolution, says CIBC chief executive officer Gerry McCaughey.

Former central bank governor David Dodge agrees. Canadian bank executives keenly remember that period, “and there was therefore perhaps a degree of prudence, a lack of aggressiveness, in comparison with major banks around the world,” he said.

And he gives top marks to the Office of the Superintendent of Financial Institutions, Canada's banking regulator, for being more conservative than those in the U.S. or Britain. “I think that, from a regulatory point of view, you can say that the Canadian banks were more appropriately regulated.”

The final key is the structure of the mortgage market.

While U.S. banks sold a large proportion of their mortgages, Canadian banks held the bulk of theirs on their balance sheets, giving them an incentive to make sure they were good loans. Riskier ones are backed by government insurance. And the law here makes it tough for consumers to walk away from a mortgage because banks can go after other assets.

Still, the banks are wary of getting cocky when a careful approach has worked well.

“It's a good thing for us to recognize the things we do very well, but maybe do it in what is appropriately a Canadian way – with modesty,” said Bank of Montreal CEO Bill Downe.

______

Royal Bank of Canada

First quarter profit: $1.05-billion, down from $1.25-billion.

What's working: The bank's securities arm makes big bucks, and its huge retail bank in Canada generates steady earnings. RBC benefits from strong loan growth and expense control, notes UBS analyst Peter Rozenberg.

What's worrying: A foray into the U.S. leaves it exposed to the sagging American economy. Investors never like to see too much of a bank's earnings come from capital markets, because it's a volatile business. And while the securities division is doing well, it's also booking big writedowns. “RBC's Achilles heel, in Moody's view, is its U.S. operation,” the rating agency says.

What the CEO says: “As a Canadian bank with global operations, RBC does have a competitive advantage relative to many of our global peers. The fundamentals of our domestic economy, while stressed, appear stronger than in Europe and the United States, having benefited from a public policy agenda that for many years valued prudent fiscal management.”

Total assets: $713-billion

Tier 1 capital ratio (Jan. 31): 10.6 per cent

Provision for credit losses: $747-million, up from $293-million

______

Toronto-Dominion Bank

First-quarter profit: $712-million, down from $970-million.

What's working: Retail arm TD Canada Trust is a dominant force across the country. “The bank's sizable capital cushion, combined with the recurring earnings from its Canadian franchise, leave it well positioned to manage through a period of economic headwinds,” says Moody's Investors Service.

What's worrying: TD expanded in the U.S. just as things were getting really bad. Now, the bank has the biggest U.S. retail banking presence of any Canadian bank – half of all the bank's branches are in the U.S. Plus, TD owns a big U.S. wealth management operation that may suffer as markets plunge. The consensus among analysts is that the bank's securities and trading side isn't big enough to make up for declining performance in other areas of the bank.

What the CEO says: “We are living in unprecedented times. So what we consider solid performance in the current environment is certainly not what we would be happy with in the long term. … We are going to take some bruises if the situation gets worse, but we're still going to be able to deliver solid earnings.”

Total assets: $585-billion

Tier 1 capital ratio (Jan. 31): 10.1 per cent

Provision for credit losses: $537-million, up from $255-million

______

Bank of Nova Scotia

First-quarter profit: $842-million, up from $835-million.

What's working: The bank's international business – the largest of the Canadian banks – posted a record quarter, and Scotiabank's reputation for risk management remains intact. The bank's securities and trading arm, Scotia Capital, had a near-record quarter.

What's worrying: Investors are leery of exposure to car loans and the auto industry. They are also keeping an eye on the bank's corporate loan book, the biggest of any Canadian bank.The bank's large international division, with a big presence in Latin America, was much more profitable than anticipated in the latest quarter, but the macro environment in Latin America has deteriorated in recent months, notes RBC Dominion Securities analyst André-Philippe Hardy.

What the CEO says: “The banking sector in Canada is still in good shape. Some say the best in the world. As a group, we are all very well capitalized by global standards. And Scotiabank clearly demonstrated this by the fact that we were able to raise more capital this quarter, all of it from the market, from private sources.”

Total assets : $510-billion

Tier 1 capital ratio at Jan. 31: 9.5 per cent

Provision for credit losses: $281-million, up from $111-million

______

Canadian Imperial Bank of Commerce

First-quarter profit: $147-million, up from a loss of $1.46-billion.

What's working: Most of the big problems relating to exposure to subprime-linked investments are behind the bank, and its balance sheet is rock solid after raising another $1.6-billion of capital this week. Analysts and investors like the fact that its Canadian-focused business means bad U.S. loans aren't a big issue.

What's worrying: The bank is getting out of or cutting back in so many business lines to avoid problems that it's unclear where growth will come from. Investors worry that the bank is becoming so risk-averse that it won't be able to compete.

Its core consumer lending segment saw earnings decline 14 per cent in the latest quarter, due in large part to rising provisions for bad credit card, manufacturing and real estate loans, notes Blackmont Capital analyst Brad Smith.

What the CEO says: “Market conditions worldwide for banks remain difficult. Yet arguably one of the better places to be right now is in Canada. At CIBC, the majority of our revenue is derived from retail markets, where we enjoy strong market positions in a broad range of products and services.”

Total assets: $354-billion

Tier 1 capital ratio at Jan. 31: 9.8 per cent (it's now a whopping 11.5 per cent)

Provision for credit losses: $284-million, up from $172-million

______

Bank of Montreal

First-quarter profit: $225-million, down from $255-million.

What's working: The bank's trading operations are buoying profit, and its retail operations are rebounding after lagging for years. A switch toward more profitable products, such as lines of credit, is helping the core operations churn out strong earnings.

What's worrying: Investors are concerned that trading profits can disappear fast, and the bank has a U.S. loan portfolio by virtue of its presence in the U.S. Midwest. There's also a nagging worry that the bank will cut its dividend that won't go away no matter how many times CEO Bill Downe says the payout is safe.

Credit Suisse analyst James Bantis is watching for rising credit losses in the $42-billion (U.S.) U.S. loan portfolio. He sees a large drop-off in the quality of the U.S. portfolio, which accounts for 27 per cent of BMO's loan book, compared to the Canadian portfolio.

What the CEO says: “Financial institutions everywhere continue to face headwinds in credit markets and the capital markets environment. BMO is well positioned to meet these challenges, having accessed markets to bolster our capital position and having further strengthened our strong liquidity in the period, albeit at a higher cost.”

Tier 1 capital ratio at Jan. 31: 10.21 per cent

Total assets: $443-billion

Provisions for credit losses: $428-million, up from $230-million

Is today's rampant pessimism about the stock market justified?

Although the future looks pretty bleak economically, there are those who aren't passing this opportunity to add some great stock deals to their portfolios
March 08, 2009
DAVID OLIVE
BUSINESS COLUMNIST
Is today's rampant pessimism about the stock market justified?

Of course it is, in the short term. Every day brings news of more layoffs, falling corporate profits, dividend cuts, and, in the U.S. and Europe, government bailouts of financial institutions. It's enough to give the most stoic investor the shivers.

But the long-term outlook – say, the next five to 10 years – is much brighter. And that's the minimum time frame a nest egg-building investor should be concerned with.

Granted, there's no overstating the speed and severity of the current downturn. In just 16 months, the benchmark Dow Jones industrial average has lost a little more than half its value from the all-time peak set in October 2007.

Economic downturns are drearily similar, but each has its unique twist. This time it's the effective failure of the global financial system, which is heavily complicit in the stock market collapse. It has deprived households and businesses of life-sustaining credit. And there is no sign of when banking stability will return.

Making matters worse, stocks were overpriced prior to a market meltdown that has done most of its damage since late last summer, when the magnitude of the banking crisis first became widely apparent. Stocks were more expensive, in fact, than at almost any time over the past century, save the Great Depression and the dot-com and tech bubble of the late 1990s.

Stocks were overvalued because money was so cheap earlier this decade. That drove investors out of fixed-income securities, with their paltry returns. Punters instead crowded into equities, forcing up stock prices to unsustainable levels.

Even blue-chip stocks had lots of room to drop. That they have fallen so hard, so quickly, surprised even Warren Buffett. The world's most successful stockpicker last weekend released his widely read chair's letter to shareholders of his Berkshire Hathaway Inc. conglomerate. He described a "free fall in business activity ... accelerating at a pace that I have never before witnessed. The U.S. – and much of the world – became trapped in a vicious negative feedback cycle. Fear led to business contraction, and that in turn led to even greater fear."

It makes one nostalgic for investors who once advised to "buy on dips." Where are they in our hour of need?

Actually, while thinner on the ground than usual, they're out there. Buffett, who's sticking by his investing adage that "pessimism is your friend, euphoria the enemy," has been bargain shopping at a rather ferocious pace. He has snapped up stakes in everything from Tiffany & Co. to General Electric Co. (down a stunning 82 per cent from its five-year high).

It's tough to argue with a stockpicker who has suffered just two modest declines in per-share book value since launching Berkshire in 1965. Over 44 years, Berkshire has increased its value by 362,319 per cent, against a 4,276 per cent gain in the Standard & Poor's 500.

If you accept that we are enduring a Wall Street crisis, not a Main Street meltdown, it's easier to feel confident about long-term share values. One could even argue that a resolution to the global banking crisis, given its huge complicity in the current woes, could trigger a surprisingly swift recovery.

In contrast to the overvaluation prior to the market implosion, stocks now are reasonably priced. The 10-year average price-earnings ratio of the S&P 500 has slid to about 12.3, below its average of 16 over the past century. Warning that the ratio fell as low as six or seven in the super-bear markets of the Great Depression and the 1970s period of stagflation, veteran market analyst David Leonhardt of the New York Times says stocks may continue to drop, perhaps by a considerable amount.

"But long-term investors – and that describes most of us – should start to feel perfectly fine about buying stocks," he wrote earlier this week.

There are other comforters.

With the collapse in stock prices, yields have soared. For blue-chips with a record of maintaining dividends through thick and thin – Bank of Montreal just marked its 180th year of uninterrupted dividend payouts – yields often exceed, say the 4 per cent return on U.S. Treasury bonds. Even after GE slashed its dividend by 68 per cent late last month, its stock still sports a 4.7 per cent yield. Stock in Buffalo-based M&T Bank Corp., a Buffett favourite, yields 8 per cent. So do shares in Caterpillar Inc. Cat is sure to benefit from the coming hike in government-funded infrastructure spending in the U.S. and abroad.

Most blue chips came into this recession with healthier balance sheets than is usually the case. And many have been loading up on cash by slashing expenses to ride out the storm. GE has a $48 billion (U.S.) cash hoard. DuPont Corp., IBM Corp., Cisco Systems Inc., Google Inc. and Apple Inc. also boast swollen treasuries.

For those not yet brave enough to venture into a still uncertain market, there are some firms you might at least not want to part with. Just avert your eyes as they shed a bit more value before a North American economic recovery expected next year at the latest.

At a time when corporate losses or sharp declines in profit appear to be the norm, these 15 companies I arbitrarily selected posted an average increase in profits last year of 27 per cent: Cisco, Loblaw Cos., Bank of Montreal, Procter & Gamble Co., Johnson & Johnson, Bombardier Inc., Exxon Mobil Corp., Chevron Corp., EnCana Corp., Alimentation Couche-Tard Inc., United Technologies Corp., Kraft Foods Inc., Shoppers Drug Mart Corp., CVS Caremark Corp. and Kellogg Co.

As a group, these well-run companies with sectoral dominance – as close as one gets to stocks you can buy and safely neglect – are trading at a whopping 46 per cent average discount to their five-year highs.

And here are 15 masters of top-line growth that have managed to increase sales in each of the past four years: Cisco, Kellogg, Shoppers Drug Mart, Caterpillar, EnCana, Kraft Foods, CVS, Loblaw, GE, P&G, Chevron, J&J, Finning Equipment Inc., Suncor Energy Inc., and PepsiCo Inc. This group trades at an average discount of 51 per cent to the firms' five-year highs.

No responsible investment adviser would counsel you to file your financial statements unopened, as so many of us do. But if Martha Stewart, who knows a thing or two about comebacks, can adopt a casual regard for her net worth in the short term, so might you. She has a business to run.

And you have kids waiting to be read their bedtime stories.


Full disclosure: The writer holds shares in Exxon Mobil.