Skip to content

(B)(N) What’s A Girl To Do?

September 3, 2015
The Bank is helping us to save money?

The Bank is helping us to save our money?

Drama. The Canadian banks have been pommeling us again with “investment advice” and complaining that we Canadians don’t save enough of our income and that we don’t have any emergency funds and that we have a lot of debt on our mortgages and credit cards.

But both our mortgages and credit cards are mostly owned by the banks and no doubt they want even more of our money to manage. And that’s the problem and that’s the reason that so few Canadians have any money to spare – our money is working for the banks and not for us.

We decided to turn the tables and get them working for us 24/7 at no charge which is a lot less than what we pay them and they should be proud of us for this initiative but they haven’t shown any leadership on it yet.

So we put on our best blue suit and our biggest smile and just bought their stocks (any of their stocks in any amount – it doesn’t really matter; please see below) and we put them into our tax-free TFSA (Tax Free Savings Account) in which our dividends and capital gains can accumulate forever with no tax on them. Nor is liquidity ever a problem – do we need some money for an emergency? Sell some stocks.

Under the regulations, we can only have $41,000 of our own money in it this year and that limit is now increasing at the rate of $10,000 per year but it was less in previous years, so we pulled-back the curtain to see how this plan has worked out since 2012 and to see what the future might be.

There aren’t any guarantees on the capital (our savings) or the income (dividends and capital gains) when our money is invested in the stock market but under this “No Hands” plan we made only 32 transactions in four years and they were all buys (we didn’t sell anything) and we paid the banks $610 to do that for us and we earned $9,640 on our investment for a +22% return over three years to date of which $6,500 was in dividends that the banks paid to us and are still paying to us at about $190 per month and that won’t be affected by the coming market crash which might trim back some of the portfolio value from the current $48,000 but that would not be loss for us as long as we don’t have to sell any of our stocks at low prices or for less than we paid for them.

And they must be proud of us because we’re bankers now too and they can tell everybody what they did for us – they could have a national campaign for just buy our stocks and we’ll pay you to do it – how about that?

Please see Exhibit 1 below for more information (and click on it and again to make it larger as required).

Exhibit 1: (B)(N) The Canadian Bank Plan – Look Ma! No Hands!

Figure 1.1: (B)(N) Look Ma! No Hands!

Figure 1.1: (B)(N) Look Ma! No Hands!

But they ain’t seen nothin’ yet.

For the price of a little management of a more or less (B)-class portfolio that anyone can learn how to do and a drop in the dividends to $5,200 instead of $6,500 and a transactions cost of $1,355 instead of $610 because we’re not just buying anymore but sometimes selling, we can boost our return to +50% and a portfolio value of $61,444 today that nobody can take away from us.

And if we have $41,000 just kicking-around in the bank and waiting to disappear, now is not a bad time to just buy a full portfolio of all the bank stocks and put it into our TFSA; please see Exhibit 2 below.

Exhibit 2: (B)(N) The Hitchhiker’s Guide to the Price of Risk

Figure 2.1: (B)(N) The Hitchhiker's Guide to the Price of Risk

Figure 2.1: (B)(N) The Hitchhiker’s Guide to the Price of Risk

For more information and examples of the Free Market Yield and the terms that we have used above, please see our Posts “(P&I) The Dismal Equation (Ecclesiastes 9:1)” and “(B)(N) S&P 100 Volatility Risk and The Full Moon” and “(B)(N) NASDAQ 100 Volatility and The Stone Bunnies“ and for an introduction to The Barometer “(B)(N) What’s A Girl To Do” or “(P&I) The Swiss Franc Debacle“.

And for more information on real “risk management” in modern times and additional references to the theory and how to read the charts and tables, please see our Post, The RiskWerk Company Glossary and “(P&I) Dividend Risk and Dividend Yield“, and our recent Posts “(P&I) The Profit Box” and “(P&I) The Process – In The Beginning“; and we’ve also profiled hundreds of companies in these Posts and the Search Box (upper right) might help you to find what you’re looking for, such as “(B)(N) TLM Talisman Energy Incorporated” or “(B)(N) ATHN AthenaHealth Incorporated” or “(B)(N) PETM PetSmart Incorporated“, to name just a few.

And for more applications of these concepts please see our Posts which rely on the Theory of the Firm developed by the author (Goetze 2006) which calibrates The Process to the units of the balance sheet and demonstrates the price of risk as the solution to a Nash Equilibrium between “risk-seeking” and “risk-averse” investors within the demonstrated societal norms of risk aversion and bargaining practice. And for more on The Process, please see our Posts The Food Chain and The Process End-Of-Process.

And for more on what risk averse investing has done for us this year, please see our recent Posts on “(P&I) The Easy (EC) Theory of the Capital Markets” or “(B)(N) The Easy (EC) Theory of the S&P 500“, and the past, The S&P TSX “Hangdog” Market or The Wall Street Put or specialty markets such as The Dow Transports & Utilities or (B)(N) The Woods Are Burning, or for the real class actionLa Dolce Vita – Let’s Do Prada! and It’s For You, Dear on the smartphone business.

And for more stocks at high prices, The World’s Most Talked About Stocks or Earnings Don’t Matter – NASDAQ 100. And for more on what’s Working in AmericaBig OilShopping in America or Banking in America, to name just a few.

Postscript

We are The RiskWerk Company and care not a jot for mutual funds, hedge funds, “alternative investments”, the “risk/reward equation” and every other unprovable artifact of investment lore. We have just one product

The Perpetual Bond
Alpha-smart with 100% Capital Safety and 100% Liquidity
Guaranteed
With No Fees and No Loads on Capital

For more information on RiskWerk, please follow the Tags or Categories attached to this Letter or simply enter Search for additional references to any term that we have used. Related data may be obtained from us for free in a machine readable format by request to RiskWerk@gmail.com.

Disclaimer

Investing in the bond and stock markets has become a highly regulated and litigious industry but despite that, there remains only one effective rule and that is caveat emptor or “buyer beware”. Nothing that we say should be construed by any person as advice or a recommendation to buy, sell, hold or avoid the common stock or bonds of any public company at any time for any purpose. That is the law and we fully support and respect that law and regulation in every jurisdiction without exception and without qualification to the best of our knowledge and ability. We can only tell you what we do and why we do it or have done it and we know nothing at all about the future or the future of stock prices of any company nor why they are what they are now. The author retains all copyrights to his works in this blog and on this website. The Perpetual Bond®™ is a registered trademark and patented technology of The RiskWerk Company and RiskWerk Limited (“Company”) . The Canada Pension Bond®™ and The Medina Bond®™ are registered trademarks or trademarks of the Company as are the words and phrases “Alpha-smart”, “100% Capital Safety”, “100% Liquidity”, ”price of risk”, “risk price”, and the symbols “(B)”, “(N)” and N*.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s

%d bloggers like this: