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What will interest rates be this time next year?
August 1, 2009
12:57 am
Hornswoggler
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any guesses?

Its almost as if our money is worthless. Banks don't need it.

Governments want to force those with money to go out into the market and become gamblers betting on stocks to prop up prices of overpriced assets that should be declining.

August 4, 2009
2:32 am
Mike
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Sad Current rates:
(Source: http://www.canadianbusiness.co...../index.jsp)

Financial Institution Savings Accounts Chequing Accounts
ATB Financial 0.750 0.000
Achieva Financial 1.850 N/A
Alterna Bank 1.000 N/A
Alterna Savings 1.000 0.050
Amex Bank of Canada 1.000 N/A
B2B Trust 1.050 N/A
BMO Bank of Montreal 0.250 N/A
Bank of Nova Scotia 0.000 0.000
Bk Nova Scotia Mtg. Corp 0.010 N/A
CIBC 0.100 N/A
Caisses Desjardins 0.100 0.000
Canada Life 0.250 N/A
Canadian Tire Bank 1.500 N/A
Citibank 0.050 0.000
Citizens Bank of Canada 1.000 0.050
Comtech Credit Union 1.200 N/A
Dundee Bank of Canada 0.800 N/A
Effort Trust 0.100 N/A
Empire Life 0.500 N/A
Equitable Life 0.500 N/A
Equitable Trust 0.400 N/A
FirstOntario Credit Un. 0.850 N/A
HSBC Bank Canada 1.050 0.000
ICICI Bank Canada 1.400 0.000
ING Direct 1.200 N/A
Key Savings + Credit U. 1.100 0.000
Laurentian Bank Canada 0.050 0.050
M.R.S. Trust 0.500 0.750
MAXA Financial 2.000 N/A
Manulife Bank 0.900 1.100
National Bank 0.010 0.000
Ontario Civil Service CU 0.450 N/A
Outlook Financial 1.500 N/A
PACE Savings & Credit Un 0.250
Parama Credit Union 0.500
Peace Hills Trust 0.250
Peoples Trust 2.100
President's Choice Fin'l 0.500
Royal Bank of Canada 0.750
SLF Trust 0.250
State Bank of India (C) 1.250
Steinbach Credit Union 1.750
Sun Life Financial 0.250
T-D Mortgage 0.050
Virtual One Credit Union 0.250
Windsor Family C.U. 1.000
Your Credit Union 0.100

Last Update: 08-03-2009 18:30:08

August 4, 2009
3:05 am
Mike
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Hornswoggler said:

any guesses?


Its almost as if our money is worthless. Banks don't need it.


Governments want to force those with money to go out into the market and become gamblers betting on stocks to prop up prices of overpriced assets that should be declining.


True enough it seems, but also the banks can borrow off the Gov't at 0.25% (or lower) so the banks don't feel a need to want savers' money.

With a .25% BoC prime rate, the BoC only has room to go down so much (.20 at most), but that would do nothing for the economy. But there is A LOT of headroom to go up.

Remember the historical prime rate is 5-8% over 40 years. So it will return to that level again... when, you got me kid. I'll hope tomorrow, but we are most likely looking at a 1% increase in 6 months.

Mike

August 4, 2009
12:45 pm
Choppy McSlice
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Economies stagnate when citizens hoard their cash. You should have at most one year's living expenses saved as cash in an emergency fund, or five year's living expenses if you are retired, and any other cash you plan on using to buy a house, car, etc. within the next five years, and the rest should be reinvested in the economy in the form of commercial real estate, bonds, stocks, etc. (your house and gold don't count).

When people hoard their cash, that cash is removed from the country's money supply. That money supply needs to be available to represent economic activity in the form of trade of goods and services. When the money supply dwindles due to hoarding, the central banks **must** print more money (or the economy falls apart and people go back to subsistence farming and bartering). When the cash that people hoarded floods back into the economy during a bull market, its values diminishes (inflation) because now there's too much of it.

Central banks reduce interest rates to discourage hoarding and encourage borrowing for the purpose of economic development.

We just went through a bear market. Stocks are on sale. Go buy some and stop hoarding your cash!

August 5, 2009
6:45 pm
Hornswoggler
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That is a load of Keynesian economic nonsense. I hope to live long enough to see every Keynes textbook burnt.

The free market does not need a central banker to tell it what the price of orange juice should be. Nor does it need a central banker to tell it what interest rates should be. The market should set interest rates not some central banker sitting in an armchair far removed from the real economy. Central bankers need to get a real job instead of fooling themselves & others into thinking they know how to steer the 'free' market.

People don't want to go on a stock market gambling spree for a reason. They don't see any driver for real job growth. Real job growth is not generated by forcing people to piss away their money contrary to what you might think.

Real job growth is only generated when new industries emerge. Throwing confiscated saver's money and tax payer money into a sinkhole to keep (fake) job numbers up does not make these new industries emerge any sooner. They emerge when they are ready and savers are then lined up to fund their growth. That is supposed to be the free market.

What we have are central bankers playing god forcing people to piss away their money and taking on debt when there are no prospects of any positive marginal utility of that capital. Its only making society poorer. The only benficiaries of this are banks/financials which do insider trading, skim money moving in and out of the market and defraud investors into managing (more like losing) their money for a fee & to fund their bonuses.

August 14, 2009
6:47 am
mike
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Choppy McSlice said:

We just went through a bear market. Stocks are on sale. Go buy some and stop hoarding your cash!


I'll tell you (and others here) what I said to my investment broker yesterday on his recommendation of the same line above..

"What has been fixed? Has the problem (people, gov't, businesses taking on too much debt) been fixed? No, it has only gotten worse, so the stock market is a bad investment at this time"

When the problem is fixed, you'll know.

Mike

Have a great day

August 14, 2009
11:23 am
Scone
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The financial market system is far from perfect, but it's not nearly as bad as some on this thread are suggesting. Sure, there's all sorts of market-manipulation by big corporations and big fund managers (hedge fund managers are the worst culprits because of the constant pressure to produce unrealistic returns for their clients), but there are common-sense ways to minimize your exposure to this. Invest in a segment of the market that you think will gain in the coming years through ETFs or mutual funds instead of trying to pick individual stocks that you hope will outperform the broad index that they are a part of. Individual stock-picking is what exposes you to the worst of the market insider activity and exposes you to to the biggest potential losses. If you don't like what's happening in North America, then invest in world equities through world equity ETFs or mutual funds available through just about every broker in Canada. There are all sorts of opportunities out there right now. Use a discount broker to execute your trades and do your own research instead of going through a full-service broker and paying big-bucks for boiler-plate investment advice and having to listen to sales pitches from your broker to buy the broker's employer's mutual funds. Don't get caught up in the daily newscasts about a particular company or sector doing well/poorly, do your research on the funds/ETFs you want to buy, formulate an investment plan and stick to it, have a long-term investment horizon, and chances are very good that you will come out ahead. As an aside, I reinvested almost all of my retirement assets in May (just after world markets bottomed out), and my portfolio is up over 13% since then. Could the markets tank again? Sure they could. Am I going to panic if that happens? No, but I have a plan in place to sell at a particular threshold to lock in some of the gains I've made since May. Today, my portfolio is down about 0.8% simply because of a report that just came out saying that consumer confidence in the US is lower than anticipated. So what? The selling going on as a result of that report has more to do with fear and less to do with fundamentals, and I'm not going to react to it. The world economy is starting to rebound, and I think the US economy will follow, although the recovery will be gradual. The alternative, francky, is unthinkable, and if the alternative came to pass we might as well buy all the guns and ammunition we can and barricade ourselves inside our homes because it won't be pretty (something which I don't think will happen by the way).

August 15, 2009
12:19 am
Hornswoggler
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The selling going on as a result of that report has more to do with fear and less to do with fundamentals, and I'm not going to react to it. The world economy is starting to rebound

What fundamentals are you talking about. The money sloshing around in the stock market is just printed up credit handed out for free by the Federal Reserve to their backers the banks at the expense of savers and those who've taken a short position.

There are no fundamentals other than people losing their jobs left, right and center. And there is no industry left to drive job growth.

If I were you, I'd take profits and exit the market while you are still up on your investments. 13 or 12% is a good return, don't get greedy and lose it all under the foolish assumption that there is some real growth happening because there is not.

August 16, 2009
8:32 am
mike
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Hornswoggler said:

If I were you, I'd take profits and exit the market while you are still up on your investments. 13 or 12% is a good return, don't get greedy and lose it all under the foolish assumption that there is some real growth happening because there is not.


I agree as well, take the profits and smile knowing you did extremely well in a very bad recession. Markets do not go up in a recession on historical job losses, bankruptcies and massive amounts of debts, but this one did, it's a black swan.

I would be thinking in the back of my mind, what if the market goes down, 1% a day? Do you get out now at 12% gain? or "wait it out"? Exit strategies are good in theory, but emotion is not chartable.

If the market drops in a week like it did in October again, would anyone want to buy your stocks?

Mike

Have a great day

August 16, 2009
8:21 pm
Selby
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Given the apparent strength of the current recovery I expect a 2-3 % rate in a year.

August 17, 2009
12:57 pm
epoch
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Some of you guys are leaning away from the stock market. Where are you keeping NEW money at the moment? I have stop loss limits set to 10% currently on all new investments.

I'm currently doing:
25% into TFSA GICs
25% into index ETFs (TSE, SP500, Can Bonds, non-developing World indexes).
50% keeping in cash and waiting as I'm only partially convinced this is the bottom.

I know some people that are buying gold either directly or in ETFs/Funds. Any input?

Thanks for everyone's opinions.

August 17, 2009
3:44 pm
Scone
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I still have some cash on the sidelines that I'm pondering how best to deploy. I'm leaning towards a few global equity funds/ETFs instead of individual stocks. I use long-term put options to protect gains on my stocks and ETFs instead of stop-losses. My thinking is that we're on a long upward trend with a lot of peaks and valleys (today was a pretty big valley, but still nothing to panic over), and I don't want to trigger a stop-loss sale of good-quality stock because of a few dips. My puts expire in January 2011 and at the strike price I bought them at, if I end up having to exercise my options then that means the markets will be in a workd of hurt (which I don't think will happen).

August 18, 2009
3:55 am
mike
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epoch said:

Some of you guys are leaning away from the stock market. Where are you keeping NEW money at the moment? I have stop loss limits set to 10% currently on all new investments.


We are about:

1%ish in stock (Oil and Gas) due to increase to 1.5ish%. But we have little to no confidence in the market or believe there is any basis on why the market is up or will continue to go up.
80% in GIC's
19% in High Savings accounts

A very defensive position to protect captial, but a highly liquidable one to take advantage of the coming interest rate hikes.

As suspected last year the reason savings rates are so low is to get savers to want to move cash from safe positions (GIC's, T-Bills, CSB's, Savings) into risk positions (stocks, MuF's, CorpDebt) to keep the bear market rally going.

Gold is a whole new boat. You buy gold to short the economy. But you have to worry about USD-CDN exhange rate, Gold prices and where to store physical gold (you don't ideally want ETF's).

Mike

Have a great day

September 12, 2009
9:56 pm
Sara
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what does N/A mean beside the listed rates?

Mike said:

Sad Current rates:
(Source: http://www.canadianbusiness.co...../index.jsp)

Financial Institution Savings Accounts Chequing Accounts
ATB Financial 0.750 0.000
Achieva Financial 1.850 N/A
Alterna Bank 1.000 N/A
Alterna Savings 1.000 0.050
Amex Bank of Canada 1.000 N/A
B2B Trust 1.050 N/A
BMO Bank of Montreal 0.250 N/A
Bank of Nova Scotia 0.000 0.000
Bk Nova Scotia Mtg. Corp 0.010 N/A
CIBC 0.100 N/A
Caisses Desjardins 0.100 0.000
Canada Life 0.250 N/A
Canadian Tire Bank 1.500 N/A
Citibank 0.050 0.000
Citizens Bank of Canada 1.000 0.050
Comtech Credit Union 1.200 N/A
Dundee Bank of Canada 0.800 N/A
Effort Trust 0.100 N/A
Empire Life 0.500 N/A
Equitable Life 0.500 N/A
Equitable Trust 0.400 N/A
FirstOntario Credit Un. 0.850 N/A
HSBC Bank Canada 1.050 0.000
ICICI Bank Canada 1.400 0.000
ING Direct 1.200 N/A
Key Savings + Credit U. 1.100 0.000
Laurentian Bank Canada 0.050 0.050
M.R.S. Trust 0.500 0.750
MAXA Financial 2.000 N/A
Manulife Bank 0.900 1.100
National Bank 0.010 0.000
Ontario Civil Service CU 0.450 N/A
Outlook Financial 1.500 N/A
PACE Savings & Credit Un 0.250
Parama Credit Union 0.500
Peace Hills Trust 0.250
Peoples Trust 2.100
President's Choice Fin'l 0.500
Royal Bank of Canada 0.750
SLF Trust 0.250
State Bank of India (C) 1.250
Steinbach Credit Union 1.750
Sun Life Financial 0.250
T-D Mortgage 0.050
Virtual One Credit Union 0.250
Windsor Family C.U. 1.000
Your Credit Union 0.100

Last Update: 08-03-2009 18:30:08

September 13, 2009
2:20 am
Peter
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"n/a" in that chart means that there is either no chequing account or savings account offered. It's more obvious when it's laid out in a table format.

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