精华 苦辣酸甜难书尽，成败得失笑谈中

[mosonk]

Thanks 游子for this wonderful Chat Room about stocks. I learn a lot from you and your guys. Here a specific question for you about trading stocks with TFSA
When we trade stock with TFSA account, we can trade both Canadian and US stocks. But the account is only for CAD, not for USD. So, every time when you sell a stock in USD, the system automatically convert the USD to CAD, then next time when you buy another stock, the system do a second conversion from CAD to USD. The twice conversions can result in a loss in actual benefits.

So, in this case with TFSA, what is a better strategy - US stocks or TSX stocks, long or short?


Thanks



Some proceeds were deployed to buy AEZS. This is in addition to hold AEZ.TO in my TFSA.

CAT: isn't little/no premia for March options great for your hedging play?[/quote]

 

[lazycatcat]

TSFA

Personally, I don't think it is a good idea to use TSFA for trading. It should be used either to hold fixed income securities or for long-term holdings, like broad index funds.

If you can make a lot of money by trading with very high probability, tax should be your least concern. Yes, tax is bad but not that bad. However, if your trading results only have slight advantage, then you can't claim capital loss under TSFA. That is the primary reason I think using this account for amateurs (like me for example) is not attractive.

However, it is a great vehicle to hold fixed income securities or index for say 10 years. Fixed income doesn't mean bonds only. About 6 months ago, there was a good opportunity for buying CND bank preferred's at 20% discount to face value. These type of securities should be ideal for TSFA (perferred dividends are counted towards income).

Just my opinion of course ...

 

[lazycatcat]

DCTH

Thanks for posting FDA procedures. It would save me $50 if I read it on Thursday. So, the date will be 17 days after Feb. 22nd. March 11th will be new date then. We will see what happens.

Bad results for me (with March options) would be normal review process. The stock probably would tank a bit but not far. The other two results, straight refusal or fast track, shall make the stock to move.

I don't have much experience on how big the move will be with fast track. Did you follow any events on this milestone on other bio stocks ?

A return of the stock to say $5 shall also pretty good for hedged positions. My bias is upwards but overall position is tiny.

There might be interesting events on banks in late March or early April. Fed will complete review to decide if banks are all well capitalized and if they could pay dividends. Probably some movement but not big. The muni etc events are still hanging over big banks plus other concerns. Not sure if volatility will return or not but will surely be interesting although not as dramatic as in bio fields.

 

[mosonk]

I slowly get the same conclusion too. With TFSA, it is not good to trade too often.

Maybe TSX stocks are better choice. I am thinking about to buy some US REIT like CIM, AGNC, and NLY, which give really decent dividends. I will keep there as long as I feel it is good time to sell. How do you think, [FONT=宋体]游子[/FONT] and Cat?

 

[lazycatcat]

I slowly get the same conclusion too. With TFSA, it is not good to trade too often.

Maybe TSX stocks are better choice. I am thinking about to buy some US REIT like CIM, AGNC, and NLY, which give really decent dividends. I will keep there as long as I feel it is good time to sell. How do you think, [FONT=宋体]游子[/FONT] and Cat?

Thanks for sharing these three companies. I am not sure how experienced you are in the investment area. If you have been digging for sometime, do you mind sharing your thinking and study on these three companies ?

I am interested for two reasons: 1). Why these three companies survived the crash ? 2). What are their potentials ?

After a very brief look at Yahoo data of the three, I think they are spread earners on mortgage backed securities.

 

[lazycatcat]

REITs

By spread earners, I mean something like the following. Say I have $20 and borrowed $80 from others to buy $100 non-AAA bonds yielding 5% at a discount of say 10%. In other words, I bought around $110 face value of non-AAA bonds yielding 5%.

I paid borrower 4% for $80. The lenders are willing to accept 4% because my $20 would be lost if anything happens. This cushion boosted safety to the lenders.

My potential return is 1% plus 10% of capital appreciation of bond price (say full payment on maturity).

Now, if non-AAA got down graded or $80 borrowing was due and couldn't be rolled over, I would lose all of my $20 equity.

This is a very simple example but I think this is how these three companies should be analyzed. The keys are following:

1. Size of equity cushion.
2. Terms of borrowings, including maturity length, callable terms etc.
3. Quality of holdings and what is the potential capital gain (like 50 cents on the dollar etc).

Did you do some readings to find out these information ?

 

[lazycatcat]

REITs

The index for Canadian reits is rei_u.to. I studied a few before like car_u.to, Reil Can (Mall reits) etc. If you like to read annual reports etc, we can share some information further.

'car_u.to' for instance has average per apartment cost at around $80,000 and has been expanding over last few years.

I generally don't feel comfortable with REITs due to high level of leverage. In current market, I probably like capital appreciation more than fixed income from high leverage ratio.

 

[lazycatcat]

DCTH

I think any movement of price before announcement is meaningless. Getting closer to March option expiration is not bad as time value seems to depreciate pretty fast in DCTH.

 

[shemozhuben]

The index for Canadian reits is rei_u.to. I studied a few before like car_u.to, Reil Can (Mall reits) etc. If you like to read annual reports etc, we can share some information further.

'car_u.to' for instance has average per apartment cost at around $80,000 and has been expanding over last few years.

I generally don't feel comfortable with REITs due to high level of leverage. In current market, I probably like capital appreciation more than fixed income from high leverage ratio.

The law caps the maximum REIT leverage ratio. How is 60% leverage of REIT is considered high when our own home is leveraged at least 80% or 90% ?

 

[lazycatcat]

The law caps the maximum REIT leverage ratio. How is 60% leverage of REIT is considered high when our own home is leveraged at least 80% or 90% ?

Different people have different appetite for leveraging. If a business needs leveraging for a profit, it is hard to justify that the business is a good one.

By the way, this is Jia's thread on bio. I don't want to hijack the thread to fill it with other topics without his approval ....

 

[mosonk]

Hi Cat, thanks for your responses. BTW, You are not lazy at all. Why called Lazycatcat!

Unfortunately, I have a limited knowledge to understand all the financial terms. I don’t have so much time to do a deep research about the stocks either. But I like to read people’s comments and recommendation. Here is a link, where the group likes to play dividends a lot. I started to invest in the three stocks with their help.

http://www.quicktopic.com/44/H/xgxXMQvr3sb

I like to keep 1-3 high dividend stock in my portfolio.

By spread earners, I mean something like the following. Say I have $20 and borrowed $80 from others to buy $100 non-AAA bonds yielding 5% at a discount of say 10%. In other words, I bought around $110 face value of non-AAA bonds yielding 5%.

I paid borrower 4% for $80. The lenders are willing to accept 4% because my $20 would be lost if anything happens. This cushion boosted safety to the lenders.

My potential return is 1% plus 10% of capital appreciation of bond price (say full payment on maturity).

Now, if non-AAA got down graded or $80 borrowing was due and couldn't be rolled over, I would lose all of my $20 equity.

This is a very simple example but I think this is how these three companies should be analyzed. The keys are following:

1. Size of equity cushion.
2. Terms of borrowings, including maturity length, callable terms etc.
3. Quality of holdings and what is the potential capital gain (like 50 cents on the dollar etc).

Did you do some readings to find out these information ?

 

[lazycatcat]

As I said, I don't want to hijack Jia's thread on bio on other topics.

If you like to talk about dividends in more details, you can probably open a thread on that.

In general, high dividend yield of a stock is a warning sign of underlying risks or uncertainties. I normally took extra caution in looking into these stocks ...

 

[lazycatcat]

Thanks for talking about other topics here. I guess DCTH shall have some news in next two weeks. A closer range will be nicer if pricing for volatility remains low.

 

[Aldan]

reading Michael Lewis's "The Big Short", learning interesting stories behind the 2008 stock market crash.
highly recommended.

 

[lazycatcat]

After reading Liar's Poker, I don't really want to read another of his books. He wasn't involved too deep in WS and wasn't objective.

There are plenty of good books about the recent crash: Paulson's book of On the Brink, House of Cards on Bears, another book on Paulson the hedge fund manager, the book on Lehman etc... Previously, the book on Enron, the book on Long Term Capital etc. Also, the book on Goldman. All these books are really nice to read.

Plus, the book of The Quants ........... It is not natural to be short on stocks. A lot of work is required to be really successful.

Jia's specialty of bio is rather interesting. I believe everyone in the game doesn't have real advantage or information over others. So, it is probably a fairest game possible on WS.