Blessed by the Potato

Well, the recent cuts to the bank rates have percolated through to the PC-Financial Interest Plus savings account: down to 3.85% now. That’s not quite as low as the rates have been cut, but it still sucks a little. 4% was a nice psychological number to earn. It gives me more incentive to put my money in the stock market, as soon as I find another stock or two to invest in. (Of course, that’s exactly the response the goblins at the Fed were trying to put in my brain).

Wayfare’s been on my case for gambling via picking stocks. Gambling — addiction to — has been an issue for me that I’ve always kept very tight control of, so she gets (somewhat legitimately) worried when she sees me pore over the market reports in the morning tracking my picks and deciding which to buy, trying to decide if the market has bottomed yet, etc. I get whacked about the ears doubly so because I just did some research about beating the market being a fool’s game, and had a post linking to the great articles on low-cost index mutual funds. I am building a small portfolio of index funds with TD’s e-series funds, but am mostly just putting new money that I manage to save in there. Money that was in individual stocks is being churned back into individual stocks, and money that was in my high interest savings account is being split into individual buying opportunities as well as index funds (with, I’m somewhat sorry to say, most of the money going into individual stocks rather than the funds).

There was a foul run of freezing rain here coating everything in a thick layer of ice, on top of which we got a bit of heavy snow. I went out to scrape my car, and spent nearly an hour just to get part of the windshield done. In that time, over a centimeter of snow had piled up on the parts that had been brushed (but not scraped). I had curling, but after spending that long I just decided to say “fuck it” and stay in (by the time I checked my watch I doubt I could have called a cab to make it on time even if I did want to blow $15 just to make curling). My skip called me from the rink in a foul mood “It doesn’t matter how bad the weather is, they never cancel curling” and asking why I didn’t get a spare. I was at a loss for words, since I was fully intending to go right up until it was too late to get a spare anyway. He hung up in a tiffy, and I lurked about at home in a bit of a funk.

And the stock market was also in a funk this week, dropping nearly 5%, and the week’s not over yet. Despite this drop, and my renewed interest in moving all but the slimmest of emergency buffer out of my PC Financial account, there haven’t been any individual buys that I liked at this point. I’ve been looking particularly at getting something in the oil sector, and have looked at Petro-Canada (PCA) long and hard for a while now. My original price point was $43, which it just touched today, but recent results might force me to rethink that number, so I’m holding off for now. I like Petro-Canada in general, in part because it’s an “integrated” company: they extract oil, refine it, and sell it at retail stations. Sometimes, that might work against them: for instance, while oil extractors are making a killing with high oil prices, there appears to be a bit of a limit in terms of what can be passed along to drivers at the pumps, so refiners and retailers may suffer a bit. This might average out Petro-Canada’s results, but it saves me from having to guess at which particular part of the energy sector will perform well. It also appears (pending my reanalysis) to be a little under-valued relative to some of the other companies such as Imperial Oil (IMO). I’m also considering taking some of the guess work out and getting my oil fix with an exchange traded fund from iShares (XEG). However, that one I don’t think is as bargain-priced at the moment, so I might sit back and wait a while longer.

I did make some small, incremental buys of those TD e-series funds with this dip, buying a tiny bit more of each of the 4 indexes I’m using: the Canadian, US (S&P500), Dow Jones Industrial, and International. At the moment, I haven’t put a huge amount of thought into how I want to allocate things there, since there is plenty of time to rebalance later. I’m basically going with a nearly even split between them all, which would make my US part about twice as big as the Canadian and International parts. I think that for sure the US part should be bigger than the Canadian one as long as the individual-stock-picking part of my portfolio is already largely (nearly exclusively) Canadian. In the longer run, I will probably aim to have them be about equal. I think, academically, that the international index should be just about as big as the US components combined to get good global weighting (or complemented by another international index such as a “BRIC” ETF), but the markets are volatile as it is, and the international index is even more so, which has turned me off a tiny bit. I still don’t have a bond fund component, which is another post in its own right.

Priszm (QSR.UN), which I mentioned 2 weeks ago hasn’t really moved anywhere. It’s still yielding a very attractive 19%, though there is a good chance that will be reduced somewhat: my guess is it will get cut to about 15%, based on the current price of about $6.35. That’s still pretty good looking though. My dad and I can’t quite figure out why it hasn’t taken off on this news. There was a huge sell-off from a single broker last week, what my dad terms an “iceberg order”. It is so named because there is a huge amount of stock to be sold, but you only ever see a small part of it on the market at a given time, with the rest lurking just below the surface. This one broker kept putting up small lots of shares at the same price — as soon as one lot sold, he put up another one, keeping the price down. No real way to know if it was a mutual fund bailing out of it, or what the story was. Anyhow, that seems to be over, but the price just hasn’t moved since then.

Another income trust to look at is Teranet (TF.UN). They’re yielding a conservative 8% at the moment. This is a company that collects the Ontario and Toronto land transfer taxes, earning royalties from those activities which it pays out to unit holders. Now, the Toronto land transfer tax collection deal was only mentioned a few days ago, and it’s not clear how much more they’ll collect in terms of royalties, let alone whether city council will stick with the tax (they can’t seen to make up their minds about a budget in the slightest lately). The stock jumped up to about $10.25 on the news, and then a few days later dropped back down to the $9.75 range. Now, part of that drop appears to be an analyst’s report released that said Teranet was at risk of cutting their distribution since it represented over 90% of its cash flow. My dad noticed a mistake in the analyst’s math: he was using the wrong figure for cash flow/income, and the payout ratio is really only about 70%. That might signal a potential increase in the distribution to come, or give them a buffer in case of an economic problem. Speaking of which, I can’t make up my mind about how recession-proof this company is. On the one hand, they make money from any housing transfer, even a foreclosure (or so I am lead to believe), no matter if the price is astronomical or busy crashing. However, I worry that there may be a volume issue — my dad disagrees. It should be a relatively safe harbour for an 8% return anyway, especially with some extra revenue to come from the city of Toronto and a bit of a buffer in their payout ratio.

As always, a standard disclaimer that I’m not a financial advisor, I’m not very experienced in matters financial, and that if you do let my ramblings (so-called since they can hardly be construed as advice) on stock market issues percolate into your brain and you somehow lose money, don’t blame me.

There was an article in the London Free Press that made my head spin. The government is giving away free money (forgivable, interest free loans).

And very few people are taking advantage of it.

I have no idea why the government has this program (presumably to encourage home ownership or to prop up the bottom of the housing market), and the article doesn’t really give any reasons.

Funded by the senior governments but administered by municipalities, the program gives qualified renters a five or six per cent down payment. The loans usually run between $5,000 and $7,000.

The money must be paid back if the home is sold within 20 years, otherwise the loan is forgiven. Renters must get a pre-approved mortgage amount and have an annual household income below a maximum amount, which in London is $50,000.

No one is sure why the program hasn’t produced the expected flurry of applicants.

The London program had a tight deadline and a price limit of $120,000 on any home bought through the program. London launched the program Jan. 9 and expected to receive as many as 1,000 applications for 120 available loans. Officials planned to decide the “winners” through a lottery.

But by the deadline day Thursday, only 25 people had applied. A late rush boosted the total to 60.

[quoted out of order]

Wow, an interest free down payment, and if I stay in the house for 20 years, the money is free? If I was looking for a house, you could sign me up. Hell, I’d take two. I wonder why I hadn’t heard of this before?

Louise Stevens, London’s director of municipal housing, said the program was well-publicized in London in lending institutions, libraries, realtors and the media.

“We promoted the heck out of it,” she said.

Now granted, I’m not shopping for a house so I don’t talk to realtors or shop for mortgages, but I still never heard about it in the media or libraries. They must have hired the same advertising agency who spread the word about electoral reform. (What? Exactly.) In fact, here is an article on this program, and through the whole thing the program is never given a name! It’s simply “the program” or “a program”, no name, no website, and no managing department to contact (the closest we come is the “Municipal Affairs and Housing Ministry in Toronto”, which is I gather not the London part administering this program, and the name Louise Stevens).

Still, it seems like a somewhat silly program: while an interest-free loan of $5000 is nothing to sneeze at, it’s probably not going to make the difference between a renter getting a house or not. The article doesn’t mention whether that 5% down payment figure is the only down payment the prospective buyer would be allowed to make: i.e., could they take $15,000 of their own savings and make a 20% down payment? If so, that might be a killer, as the extra payments from having to carry mortgage insurance would quickly eat into the government’s interest free down payment.

Or maybe it’s that price ceiling: $120,000 doesn’t buy a heck of a lot in London these days. If I had a salary of ~$50,000 I could rent some awful nice houses (like the one I’m in now!) or 2/3 bedroom apartments and have some income left over for a car, savings, etc. (whatever it is people who don’t use all their money on food and housing spend it on). According to MLS, there’s only a handful of places under $120k in North London: 11 condos and 2 houses; half of those are one-bedrooms; about 120 in all of London. Granted, that’s just right now, and there could be more over a longer period of time (or before the “rush” on Thursday); but it would be a close thing indeed to potentially enough to fill this program in the span of just a month. I highly doubt there would be 1000 such places, as the London officials seemed to expect.

Sometimes I wonder where people get their ideas from. In searching for this program, I found an article from Jan 9 in the London Free Press announcing the beginning of the program, where they say that there were “22 homes and 83 townhouse or apartment condos for less than $120,000 in London.” Having read that then, how could they have possibly expected so many applicants? Sure, more renters can apply than there are homes, but to get 10 unique prospective buyers per house? That earlier article also gives this snippet of information: “If the home is sold within 20 years, the buyer must pay back the original loan, without interest, plus five per cent of any increased value of the home.” Now I think that this would probably work out quite well for the homeowner, but if you’re expecting your home to double in value within 3 years and then move, that little clause might send you off. On further thought, there’s another good reason why this program was doomed to failure: let’s say you were a renter/prospective homeowner, and wanted a house in the $120k neighbourhood. Or even more appropriately, someone who didn’t qualify for this program (an existing homeowner, or someone making over $50,000/year). Knowing about this program, you’d realize that there would potentially be a bidding war fueled by government money on houses/condos under $120k, and that all those bids would be capped at $120k. So if you really wanted a particular place, you could probably safely bid $120,001 and come in as the highest bidder (at least, higher than the government-handout mob).

Oh, and that earlier story has a web address for the program: but it’s wrong and points to a domain squatter instead. The proper address should be http://www.housing.london.ca/

God the Free Press sucks. One of these days it’s going to get to the point where I’d rather do work than read the LFP. I think that day might be tomorrow.

Sword of the Stars has been way, way in the back of my mind for a long time now. I got the demo shortly after it was released, but just didn’t have time to play through it, and CivIV: Warlords came out, and all kinds of other stuff just conspired against me… not the least of which was that the first half hour or so I did spend playing the demo didn’t exactly knock my socks off.

So this weekend I found myself with some free time to play video games (a very rare and wonderful and much needed break), and decided to give SotS another go around. The demo has been updated, so I started off by getting a fresh version. For those who don’t know, SotS is a space strategy game along the lines of Master of Orion, Galactic Civilizations, or Space Empires. What sets it apart, and what really got me salivating, was that it doesn’t just pick one flavour of FTL space transportation. Each race has their own method of getting around the stars: the humans take advantage of natural proto-wormholes, leading to a network of space lanes which they can’t deviate from, kind of like the Space Empire series, Wing Commander games, etc.; the lizard-folk can just spin up their hyperdrive and shoot off in any old direction, like in MOO2 and several other titles; the bug creatures have to travel by sub-light drive and build a network of instant teleportation warp gates. Having all these different ways of getting around the galaxy seemed really interesting. On top of that, the galaxy map is truly 3D, the kind of galaxy map MOO3 was supposed to deliver (sigh, MOO3).

Despite my high hopes, I haven’t really been blown away by SotS so far. Unfortunately in the two demo games I’ve played so far, I’ve ended up as the humans both times playing… the humans. So the different galactic transportation strategies haven’t come into play yet. Other things have started to bother me. Tactical combat for one: it’s quite neat and intuitive when you’re near the beginning of the game with some small fleet skirmishes. But later on, I was annoyed that I could send a massive War Armada of Doom and still only got to deploy 3 ships at a time. I also found the complete lack of a mini map made it impossible to engage the enemy at a distance: they’d be lobbing missiles at me, I’d be hemmoraging ships, and I still couldn’t even see them. It was highly frustrating (and improved sensors tech didn’t seem to help, either, but I can’t say for sure if my upgraded sensor squadron ever made it into the battle). So then I started using the auto-resolve for tactical combat, which brought with it its own slew of frustrations. First off, it wouldn’t give a summary of the battle, so if my armada was wiped out completely, I would have no idea whether their defending fleet was left with just one limping destroyer, or was at full health laughing at me. And, in what might be a bug, if I used auto-resolve for one of my attacks, I was then forced to manually defend myself against their attacks.

Other little things started getting to me. The voice work for one really seemed amateurish and grating. Some things I might just need the manual for, but I had trouble controlling my empire. The game is very much built around getting to the basics of the 4X genre, with a tech tree almost solely devoted to improving your ships and production thereof, and economy and planets that are just shells of what they are in other games. Because of that, I didn’t seem to understand or control what my economy was doing. Some turns I seemed to be raking in cash like crazy, and other turns it seemed starting a new colony would bankrupt me and suspend all my research. In the demo I didn’t get to see much in the way of diplomacy, so it’s really just exploration, expansion, and combat.

So now I’m a little torn. On the one hand, I wasn’t thrilled with the demo, and the issues with tactical combat in particular would lead me to pass by the full version. On the other hand, I didn’t get to see how the different FTL technologies would interact, and I think I’m willing to ignore the obvious faults I’ve seen to get to the gimmick real appeal of SotS…