Stock Market Comments October 1, 2008

I'm expecting the TSX Index (at 11715 today) to continue lower before this Bear Market has ended. POT (at $136.5) and RIM (at $71) are two of the key stocks on the index. They both appear to be set up to go at least somewhat lower before the ultimate lows are reached. As usual the timing of the lower lows is uncertain. Wait for it.

The US bailout plan, if approved, will not prevent this. At best it can only delay the inevitable for a short period of time and perhaps not even that.

I was visiting False Creek in Vancouver by boat not long ago and took this photo of the Science Center building.

Is Blogging Writing?

This question appeared on the Retirement: A Full Time Job blog.

She had a writing course teacher question whether blogging was actually "writing".

Putting marks on paper in any fashion including a blog page, a page that one can print out on paper, qualifies as being a form of "art". Writing and drawing are also forms of art.

Perhaps the question should be... Is a blogger an artist, like a conventional writer of articles or books? I think so. The PC and Internet are just new tools for putting marks on paper. More than that they allow instant publishing in a form that is available around the world.

Perhaps blogging goes one step further than conventional writing. The reader can immediately comment on their reaction to the post, or as I just did, go to his/her own blog and continue the discussion.

Deer Fawn Photo

The other day I was driving home along a gravel road after a few hours of paddling a small lake in my kayak. I came across a couple of very young fawns on the road. They were so small that at first I first thought they were small dogs or something. They were the youngest I have ever seen in the wild.

Talk To Your Enemies

The current news reports about the US Presidential Election has got me thinking about an important concept…what motivates people.

One side, the Obama group, thinks it is better to talk to your enemies. The other side, Bush supporters, believe it is better never to talk to your enemies except to try and scare them with threats. They believe that enemies can be scared into going away, or just eliminated with bombs and bullets. Perhaps there is some truth in both positions. The correct answer may be "it depends".

If you are dealing with someone who can be scared and bombed into submission, or… at least scared into leaving you alone - then the "make them afraid or dead" approach works fine. On the other hand, if you are dealing with someone who would rather die than give up…the "make them afraid or dead" approach will not work.

Suicide bombers (SB) are an extreme example. Japan tried this during the Second World War but made the mistake of organizing their SBs into a formal military. The US defeated Japan with more resources and more killing power and a strong resolve.

The more recent SBs, the ones who blend into the general population, and surprise you many times - over and over again - are quite a different problem. It requires I think…a different approach. The WW II Japan solution may not work here.

One should take this same approach in everyday one-on-one life.

Pension Income Splitting...Sweet!

Every year I force myself to do my own income tax and I spend the $50 or so to buy QuickTax to try and ease the pain of it all.

This year, without pension splitting our total refund would have been ~$5,000. I know I could reduce this refund but I have my emotional/fussy logic reasons for keeping it that high. But...back to the point-- with the new Canadian 2007 pension income splitting allowance our total refund comes to about $6,000. An increase of just over $1,000.

The second point I want to make is that 2007 QuickTax doesn't optimise the transfer amount, it just inserts the maximum 50% transfer. The summary graph (a nice feature) looked lob sided to me so I used the old trial and error, bracket approach method to search for an optimum transfer amount.

I tried changing the T1032 transfer amount in increments of several thousand dollars from a low of $2,000 to the max of ~$18,000 and found that I increased our total refund from ~$800 up to just over $1,000. Our optimum transfer amount was in the vicinity of $16,000.

When I saw that there was indeed an optimum amount somewhere...that is, the total refund went up as the transfer amount increased, then it started to go down as the amount increased beyond a certain transfer amount, I went back and used smaller increments of several hundred dollars to bracket and zero in on the optimum amount. It turns out there was a range of about $1,000 that provided the same total maximum refund.

Stock Market Status April 12, 2008

The Canadian and US stock markets have been moving sideways since January. This week may have seen an important downturn point but there is no way to know for certain. The minimum requirements appear to be in place for an important turn but as always this is only one possible future.

The US government, with the best of intentions, continues to throw "easy credit" at various firms trying to shore things up. Those actions may in part be helping to keep the markets in a sideways holding pattern for a time. Eventually even the US government may run out of cash/credit to do this type of thing.

This bear market may only be in the early stages. It takes time for all that bullish enthusiasm to get worn away. In addition, those trying to "guess the bottom" and make a quick buck also need to be taught a lesson. They will stop guessing after losing enough money.

TSX Composite Index Forecast April 1, 2008

Here's a short-term forecast for the TSX Comp Index. I called the last couple of turns correctly and thought I would stick my neck out a little this am to see if I can do it again. I see a possibility of the next downturn occurring at a point no higher than ~13,450. I can often call the turns correctly but the extend of the move that follows and the duration of the move are much less certain.