Editor’s note: The newsletter sent out Tuesday evening was an older version. The newsletter below is the correct version.
The Of Dollars and Data site published a personal finance article so good it qualifies as life advice. The author, Nick Maggiulli, begins by relating a question asked by a longevity expert, “Would you trade places with 87-year-old Warren Buffett?”
Most people wouldn’t, unless they were of similar age or very ill. What Mr. Maggiulli’s getting at is the important relationship between money and time, or in his own words, “The key to changing your worldview on time is knowing when to trade it for money.”
He explains the practical way this works, paying for services like laundry that cost less than your hourly wage. He also advises to trade money for time to do things that if not done, you’d regret on your deathbed.
“If you can imagine yourself regretting skipping an event in your final days of life, then you should trade money for it today… I would probably spend money to visit a good friend, but I wouldn’t spend money to have a nice car. I will (hopefully) remember seeing my friend on my deathbed, but the car? No chance.”
It’s very easy, and I’ve done this for years at a time, to focus so hard on making money in the market or elsewhere, to forget what the money’s for.
-- Scott Barlow, Globe and Mail market strategist
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Stocks to ponder
Atrium Mortgage Investment Corp. (AI-T). This security appears on the positive breakouts list (a stock with positive price momentum) with its share price closing at an all-time high on Friday. However, the share price may be due for a pause in the near-term according to analysts’ expectations. It pays its shareholders a monthly dividend, currently yielding 6.6 per cent. Toronto-based Atrium Mortgage Investment Corp. is a mortgage lender that specializes in providing loans outside of the traditional bank lending environment. Jennifer Dowty reports (for subscribers).
Dorel Industries Inc. (DII-B-T). Dorel Industries Inc. has fallen on hard times. Its profits are down and its share price has wilted 40 per cent over the past 18 months. Analysts, none of whom have a buy recommendation on the stock, are expressing no enthusiasm. So is all the bad news priced into the stock? David Berman reports (for subscribers).
Titanium Transportation Group Inc. (TTR-X). This is a micro-cap stock and is best suited for consideration by investors with a high risk tolerance. The company is well covered by the Street for a micro-cap stock with five analysts following the company, and all five analysts have buy recommendations. The average 12-month target price suggests the share price has over 40 per cent upside potential, which is on top of its 93 per cent year-to-date gain. Industry fundamentals are positive and management expects these tailwinds will remain in place in the near-term. Jennifer Dowty reports (for subscribers).
‘A very unprecedented situation’: CIBC’s Benjamin Tal on where the trade war, interest rates, home prices, and markets are heading next
he Globe and Mail recently spoke with Benjamin Tal, deputy chief economist from CIBC World Markets, to get his view on the state of the economy, undervalued areas of the stock market, the loonie, and so much more. Read Jennifer Dowty’s interview here (for subscribers).
Tariffs are threatening to ruin what otherwise is shaping up to be a stellar earnings season
Will tariffs spoil the earnings party? So far, second-quarter results have been exceptionally strong, reflecting the favourable impact of U.S. tax cuts and solid domestic and global growth. But for some companies, tariffs are already starting to bite. John Heinzl reports (for subscribers).
FAANG stock slowdown? Here’s one reason to be deeply skeptical
If Wall Street is right, FAANG stocks are about to get boring. Over the next 12 months, the group – comprising Facebook Inc., Amazon.com Inc., Apple Inc., Netflix Inc. and Alphabet Inc.’s Google – will post an average return of 5.4 per cent, according to consensus price targets from analysts who cover the companies. That would mark a dramatic turn for a group that has posted blistering growth – last year, the FAANGs romped to an average return of nearly 50 per cent – and at times, does a lot of heavy lifting for the S&P 500. A broader chill on Big Tech would have an outsized effect on the market. There is, however, at least one argument against this subdued outlook: Based on past experience, the Street has absolutely no idea where the FAANGs are heading. Matt Lundy reports (for subscribers).
A tax-smart way to get the U.S. stock market into your TFSA
DIY investors, please stop stressing about holding U.S. ETFs paying dividends in a tax-free savings account. A 15-per-cent U.S. withholding tax is applied to dividends paid into TFSAs by U.S. companies and ETFs. In registered retirement savings plans, this tax does apply. In non-registered accounts, you may be able to claim a foreign tax credit for the amount paid in withholding tax. Is avoiding U.S. content in TFSAs the right approach? Probably not - especially when you can buy an ETF that tracks the U.S. without dividend payouts. Rob Carrick reports.
How investment author Michael Batnick is managing his own portfolio
Michael Batnick, 33, is the author of Big Mistakes: The Best Investors and Their Worst Investments, which looks at some of the bad moves made by top investors such as Warren Buffett, Jesse Livermore and Paul Tudor Jones, illustrating the behavioural pitfalls that hold investors back. Mr. Batnick also hosts a weekly podcast and is the director of research at Ritholtz Wealth Management in New York. Larry MacDonald talked to him about how he invests. (For subscribers).
The value premium: What this indicator is telling us about the business cycle
Is the aging U.S. business cycle entering its last inning, or is there yet a lot more life left in it? Given U.S. tax cuts and historically low unemployment rates, pundit consensus is for the latter – and the U.S. Federal Reserve seems to agree. In its semi-annual report to Congress, the Fed said it saw the economy’s solid economic growth continuing and reiterated its expectation of further gradual interest-rate increases. With most companies reporting earnings beating expectations and recent gains in stock prices, it’s apparent this expectation of economic growth is widespread. However, a more forward-looking market indicator raises concerns about the continuation of the economic cycle – at least as far as the smart money are concerned. This indicator has to do with the value premium, given recent evidence of its relationship to economic activity. George Athanassakos takes a look.
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Ask Globe Investor
Question: I’ve heard that I could be barred from entering the United States if I own shares of a Canadian cannabis producer. Is that true?
Answer: It’s highly unlikely. However, if you admit to smoking marijuana, or if you invest in or do business with a U.S.-based cannabis company, you could be asking for trouble at the U.S. border.
Canadians can and do get barred from the United States for so much as admitting that they have used the drug. Olympic snowboarder Ross Rebagliati was the most famous example, but other Canadians have been shut out of the United States permanently for the same reason.
Because marijuana is a controlled substance that is illegal under federal U.S. laws, U.S. border officials can block people who have simply used the drug in the past. Even though nine U.S. states have legalized cannabis for recreational purposes and 30 states permit medical use of the drug, when you enter the United States, the federal laws apply. (Tip: Never carry marijuana-oriented paraphernalia – including clothing or magazines – that might draw attention at the border.)
It’s not just drug users who are at risk. Canadians who invest in a U.S.-based marijuana business can also run into major problems at the border. Sam Znaimer, a venture capitalist in Vancouver, was trying to travel to the United States in May when U.S. agents questioned him about his investments, which include stakes in the U.S. cannabis industry. He’s now barred for life from entering the United States.
Canadians who are barred can apply for a temporary waiver to allow entry, but the process can take up to a year and the waiver must be renewed periodically.
Len Saunders, an immigration lawyer in Blaine, Wash., has recently seen a spike in cases of Canadians who were denied entry to the United States or barred permanently because of direct or indirect business ties to the U.S. cannabis industry.
“I saw a gentleman up in Edmonton who owns some commercial property in Colorado. He had some leases in his briefcase a couple of weeks ago and was coming through pre-clearance in the Edmonton airport,” Mr. Saunders said in an interview. When U.S. border officials realized that one of the Edmonton man’s tenants was involved in the cannabis industry, they “barred him for life for living off the avails of drugs because he was getting paid as a landlord.”
Another case involved three individuals in Vancouver who were trying to sell agricultural trimming equipment to a cannabis business in Washington State. “They hadn’t done any sales yet, but they were going down for business meetings. They were barred for life,” he said.
What if you’re a Canadian who holds shares of a Canadian-based marijuana producer such as Canopy Growth Corp. or Aurora Cannabis Inc.? Are you taking a risk at the U.S. border?
“I think you’re okay, because it’s all within Canada,” Mr. Saunders said. U.S. border agents “have not taken any interest in Canadians doing business in the cannabis industry in Canada. It’s strictly Canadians doing business in the cannabis industry in the U.S.”
“But after the last two or three months, I don’t know. I never thought I would see people like Sam [Znaimer] being denied entry. This is a new phenomenon,” Mr. Saunders said.
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What’s up in the days ahead
Rogers stock has outperformed both BCE and Telus - by a very healthy margin - over the past three and a half years. Rogers is also the only one of the Big Three that has not raised its dividend over that time. So what does our dividend growth investor John Heinzl think about that? We’ll soon find out.
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Compiled by Gillian Livingston