Making money in turbulent times takes wisdom, patience - and a cast-iron stomach. Our annual investing package once again asks 10 legends of Bay Street and beyond what the heck they think is going on, and how to make money in 2012. This year, we also go behind the numbers to explain two mysterious phenomena influencing market volatility: behavioural economics and algorithmic trading. And finally, we take a real estate road trip to the American Southwest to figure out where the buys are right now. (We hear Maricopa County is quite lovely this time of year...)
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David Dreman
Chairman and managing director of Dreman Value Management, LLC, and author of Contrarian Investment Strategies: The Psychological Edge, published in January, 2012
How I'd invest $100,000 right now
I'd put it in good-quality stocks in a portfolio large enough to diversify, or, for the average investor, an index fund. Stocks have traditionally gone up if we see inflation coming. We're not seeing much inflation yet, but we've been printing an awful lot of money; in the United States, they've printed $7 trillion since 2008. I've never seen the two not meet.
Best investment
The sin stocks - tobacco. We've owned Philip Morris and R.J. Reynolds for many years. These stocks collapsed in the early 2000s because the companies were losing court cases. But we studied this carefully, and it looked like the Supreme Court was swinging the other way. When it put a lid on punitive damages, the stocks took off.
Worst investment
Fannie Mae and Freddie Mac. They were more political disasters than anything else. FDR set up Fannie Mae in the Depression, and it worked well. But both Republicans and Democrats wanted to have more low-cost housing, and they pushed Fannie and Freddie to lower the standards on mortgage loans.
Biggest opportunities
U.S. stocks, and I'd include Canada there. For my book, I went back 25 years on the S&P 500 versus foreign markets, and this was just before the European downturn. It was a dead heat - in fact, U.S. stocks did somewhat better. There isn't a lot of liquidity in markets in developing countries, so you're taking extra risk for the same gain.
Advice for investors
On the whole, investors don't do as well as markets. Even money managers want to buy hot stocks, and they waive their valuation rules. It's very hard not to go along with something that's exciting. The Internet, for example, was going to change our lives forever - and it did. But people paid 50 times what stocks were really worth.
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Mark Mobius
Executive chairman, Templeton Emerging Markets Group, part of Franklin Templeton Investments Corp.
How I'd invest $100,000
Right now, I'd put all of it in emerging markets. Stocks in emerging-market countries have come down by about 10% over the past year and the fundamentals are terrific. Those countries now have better financial statistics than the developed ones - lower debt-to-GDP levels, more foreign currency reserves and they're growing faster. The stars are all aligned.
Best investment
In our private equity area a couple of years ago, we made 17 times our money in a company called China High Speed Transmission Equipment Group. It makes gears for windmills. General Electric got involved and it went through the roof.
Worst investment
An Indonesian company called Asia Pulp and Paper. We probably lost about 25% of what we put in. The family who controlled the company basically took money out and put it into a Cook Island bank that had the same name as a legitimate bank.
My strategy for the year ahead
We continue to seek the best bargains, patiently, and buy more if they go down. Some companies benefit from crises. For example, if an entire industry gets in trouble, you have consolidation, and the strong companies survive and get more market share.
What keeps me awake at night
It's the follow-on from subprime: Some banks are still involved in derivatives in a big way. They're taking money from the deposit-taking and lending side, and putting it to use by the gamblers. There should be a separation of commercial banking and investment banking, so that banks don't put their whole balance sheet at risk.
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QUIZZ NO. 1
Last year, many of our legends were hot on commodities.
Match the metal with its 2011 performance
1. Gold
2. Steel
3. Silver
4. Platinum
5. Copper
6. Tin
a) -18.5%
b) -14.9%
c) -25.5%
d) +12.8%
e) +3.9%
f) -31.5%
Answers: 1. d), 2. e), 3. b), 4. a), 5. c), 6. f)
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David Bissett
Founder of Bissett & Associates Investment Management Ltd., now part of Franklin Templeton Investments Corp.
How I'd invest $100,000 right now
One of the opportunities in the short term is to take advantage of other people's problems.
A lot of people have tax losses that they'd like to take, because on balance it was a pretty good market last year. I would look for tax-loss candidates with yield, like Davis + Henderson Corp. and Trimac Transportation Ltd.
Best investment
Setting up the first income trust fund in Canada in 1996 and putting my money in it. It's still there, in what is called the Bissett Canadian High Dividend Fund. Just look at the performance: It has been astronomically better than the TSX.
Worst investment
A start-up called Baron de Boeuf sandwich bars. It taught me a lesson: Don't get involved in start-ups that you don't understand. I remember walking into the first sandwich bar after I bought the stock - I hadn't done it beforehand - and I thought: My God, why did I do this?
What keeps me awake at night
That investors are going to realize that the U.S. emperor has no clothes. The shit is going to hit the fan there sooner or later, unless they can get their act together - and I don't think they can.
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QUIZZ NO. 2
Match each recently deceased businessman to his personal accomplishment
1. French-fry magnate Wallace McCain
2. Oil patch entrepreneur Gordon Stollery
3. Financier John A. Tory
4. Investment guru Peter Cundill
a) Ran 22 marathons
b) Second at the 1965 Canadian Junior Golf Championship
c) With family, donated over $8 million to National Ballet School of Canada
d) Helped negotiate Thomson family's interests in North Sea oil fields
Answers: 1. c), 2. b), 3. d), 4. a)
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THE OUTLIERS
Who climbed the highest and fell the furthest in 2011?
Does Canada have competitive advantages in tech, or in digging stuff out of the ground and selling it?
Canada - S&P/TSX Composite
Trilogy Energy (oil and gas) +198%
Research In Motion (technology) -73%
Solar may be the energy of the future, but petroleum is way cheaper and more profitable right now
U.S. - S&P 500
Cabot Oil & Gas (oil and gas) +90%
First Solar (solar panels) -76%
Latin America is moving toward First World economic status, and issuing enough Visa cards to prove it
Brazil Bovespa
Cielo SA (credit and debit cards) +39%
B2W (fashion) -71%
2011 was not a good year in which to own a nuclear power plant in Japan
Japan Nikkei 225
Nitto Boseki Co. (Nittobo) (fibreglass) +54%
Tokyo Electric Power Co. (utilities) -89%
A government-established national phone company in China - there aren't many competitors
Hong Kong Hang Seng
China Unicom Ltd. (telecom) +39%
Esprit Holdings (fashion) -72%
Germany doesn't have a sovereign debt crisis, but its second-largest bank loaned billions to Greece, Ireland, Italy, Portugal and Spain
Germany DAX
Merck KGaA (pharma and chemicals) +24%
Commerzbank (banking) -71%
Recession or not, lots of kids and adults with attention deficit hyperactivity disorder take Shire's Adderall
U.K. FTSE 100
Shire PLC (biopharma) +37%
Essar Energy (oil refining and electricity) -67%
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UNCOMMON INVESTMENT
SCOTCH
Dalmore 62
Current value: $200,000 Singapore dollars
In 2005, one of the 12 bottles of Dalmore 62 in existence - each a blend of five whiskies distilled from 1868 to 1939 and aged in sherry casks - was sold at a hotel bar in Surrey, England, for £32,000. Since then, its value has risen fourfold, with the market for expensive whiskies being driven largely by interest from Asian buyers. If the Chinese businessman who bought this, the most costly bottle of whisky ever sold, keeps it as an investment, he won't get to savour what Dalmore calls a mix of "honey, Seville oranges, coffee, bitter chocolate, cardamom, cloves, ginger and almonds." Nonetheless, he can still admire the wooden case, which took 100 hours to make.
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QUIZZ NO. 3
A 2004 study found that "sell" ratings accounted for what % of all stock recommendations?
a) 2%
b) 6%
c) 11%
d) 19%
Answer: b
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Veronika Hirsch
Hedge fund manager and chief investment officer of BluMont Capital Corp.
How I'd invest $100,000 right now
I would buy all high-yielding dividend stocks - my cut-off would be about a 4% yield. I would buy BCE, Telus, Gibson Energy, MI Developments, Student Transportation, CI Financial, the Boyd Group and Labrador Iron Ore Royalty. A bunch of the companies I have picked also have potential to be taken over. It's not unthinkable that one day Bell and Telus will get together.
Best investment
I have done well with Detour Gold, which I bought at around $5 a share. I would have bought it several times and taken profit several times while I owned it. The high was $39 a share in September; I sold some above $30, and have trimmed my position a bit.
Worst investment
Going into 2011, I was feeling bullish on gold and that it'd do well in this kind of environment. Instead of buying gold, which would have been the smart thing to do, I stayed with my gold exploration stocks. But they are looked at as a risky asset in this environment, so they got pummelled.
What keeps me awake at night
It is a pretty nerve-wracking time. Things can unravel pretty quickly in Europe, and I think there is still the possibility five years down the road that the euro zone doesn't exist. I think they would actually be better off if they were back to their own currencies with a trading union.
My strategy for the year ahead
I am running a more defensive portfolio. Historically, I have relied on cash a lot when times were bad; now, rather than holding cash, I want to be invested in high-yielding stocks. I am thinking that this financial mess is with us for the next three years. I can't sit in cash because there is not enough yield.
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Prognosticate like a pro
Tradition - or superstition - holds that if the winner of the Super Bowl is an original NFL team, markets will rise. If the victor is an original AFL team, the markets drop. In 2011, the Green Bay Packers (an original NFL team) won Super Bowl XLV and the Dow Jones posted a modest 2% increase through late December. As we wait for Super Bowl XLVI, let's look at some other indicators for our 2012 forecast
The Haircut Index
Japanese business daily Nikkei reported that women wear their hair shorter when the economy gets trimmed. This year's hair trend: braids. We'll call that an improving outlook. Sunny
The Hemline Index
The shorter the skirt, the better the stock market does. The problem is, longer hemlines are trending in London, but short skirts are the thing in New York. Variable clouds
The Latvian streetwalker Index
Falling prices for ladies of the night mean a tanking economy. Outlook clouded by lack of strong data. (Uncle Niklavs won't return our calls). Variable clouds
The Baked Bean Index
Shoppers shift to less expensive tinned goods during recessions, sending baked bean sales skyward. In November, the H.J. Heinz Co. announced it is refreshing its line of baked beans. Cloudy
The Tie Index
Employees purchase extra neckwear during weak economic periods to impress the boss. Sales of suits, sport coats and ties were all up in 2011, and outlook is buoyant for 2012. Cloudy
Hot Waitress Index
According to New York magazine, "the hotter the waitresses, the weaker the economy." Statistics Canada yet to survey wait staff. Haze
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QUIZZ NO. 4
Components of a "head and shoulders pattern" in a stock chart include
a) Three successive peaks with the middle peak higher
b) The existence of a prior uptrend
c) Symmetrical shoulders or peaks
d) Volume decrease during downtrend
Answer: a), b) and d)
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"This is a market where you really have to identify the needles in the haystack. The less cyclical the stock, the better - and earnings visibility is key. Within the equity market, I would be focused on segments that are non-cyclical and transcend what's happening in Europe right now: secular themes like raw food, energy security - even ways to play the revival of consumer frugality, such as private labels or do-it-yourselfers, or cocoon themes."
David Rosenberg
Chief economist and strategist, Gluskin Sheff + Associates
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W. Brett Wilson
Chairman of Prairie Merchant Corp. A former panelist on CBC's Dragon's Den, he's now host of Slice TV's Risky Business, a series that gives ordinary folks a shot at making big money.
How I'd invest $100,000 right now
We manage a portfolio of over 200 investments in the public and private markets. I would invest in the real estate and energy sectors, largely in Western Canada. I already own 20% of Forent Energy Ltd., an oil and gas company drilling wells onshore in Nova Scotia, and Maxim Power Corp., which is developing a coal mine in Alberta. I'd continue to invest in these companies.
Best investment
Co-founding FirstEnergy Capital. As a boutique investment bank, we took over market share from the bank-owned dealers and effectively displaced them through the late '90s and early 2000s.
Worst investment
Merit Energy - a junior oil and gas company that I bought at 10 cents over 10 years ago when it first got started, and held on to as it hit $7 and then went back to zero. I took my eye off the play, and wasn't paying attention to their financial performance. I decided to hold on, thinking it would turn the corner. But that was a mistake.
Advice for investors
Understand what you are investing in, so you're not rolling the dice. You have to separate yourself from the Las Vegas mindset of taking a flyer on one stock. Rather, make sure that you invest in a portfolio. The easiest way to do so is to buy mutual funds because they give you a portfolio of stocks instantly.
What keeps me awake at night
I sleep well...I have enough financially, so I am not overly worried about global issues.
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UNCOMMON INVESTMENT
OLD PAPERWORK
Apple Computer Contract and Dissolution of Contract
Sold for: $1.6 million (U.S.)
Ron Wayne's tenure with Apple lasted just 11 days - the co-founder got cold feet and sold his 10% share of the company to Steve Jobs and Steve Wozniak in 1976 - but the three-page partnership contract he signed, along with a yellow sheet of paper marking his withdrawal, sparked a bidding war in December, 2011, and sold for over 10 times its estimate. Wayne originally sold it to University Archives; they flipped it to a client who purportedly made a "seven-figure profit in less than 15 years." Jobs's death last October likely inflated the price; what's more, the paper-free technologies he helped develop are increasing the value of original, analog documents such as these.
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UNCOMMON INVESTMENT
OLD FERRARIS
1957 Ferrari 250 Testa Rossa Prototype
Sold for: $16.4 million (U.S.)
One of the first Testa Rossas off the assembly line, this 1957 model survived various crashes - as well as being set on fire in an insurance scam - to become the most expensive car ever bought at auction. Now restored to its 1958 North American Racing Team livery - when a pair of those ostentatious pontoon fenders were the first across the finish line at Le Mans - it shattered the previous record of $12.4 million (U.S.), set in 2009 by another Testa Rossa. Fact is, unrestored cars are becoming even more valuable due to historical character and rarity. One wonders what this prototype might have fetched with a few of its many nicks intact.
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QUIZZ NO. 5
Who said
"Our favourite holding period is forever"?
a) Stephen Jarislowsky
b) Warren Buffett
c) John Templeton
d) Peter Cundill
Answer: b)
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QUIZZ NO. 6
The 2% Rule states
a) No more than 2% of your portfolio should be invested in a single company
b) If your annual investment fees exceed 2% of your portfolio, get a new adviser
c) Use available equity to reduce debt rather than invest when interest rates fall below 2%
d) No single trade should exceed 2% of available capital
Answer: d)
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Frank Mersch
Hedge fund manager and co-founder of Front Street Capital
How I'd invest $100,000 right now
I would put 40% in oil and gas stocks like Athabasca Oil Sands and Celtic Exploration, and 40% in gold stocks like Barrick Gold and Continental Gold, an exploration play. I would put 10% in agriculture companies in the palm oil industry and food-handling and storage business. The rest would be invested in technology plays like Canyon Services Group, an oil field service company specializing in fracturing services, and EcoSynthetix, which uses environmentally friendly alternatives to petroleum-based chemicals for high-gloss coated papers.
Biggest opportunities
I see the opportunities in hard assets - oil and gas and gold stocks. At the end of the day, you would rather have something that is tangible than just a piece of paper from a government.
Best investment ever
I invested in Arequipa Resources at about 20 cents a share, and Barrick Gold at around $30 a share. Canadian Natural Resources was a great investment: I started buying it at 20 cents during my days at Altamira, and now own it in my hedge fund and the equity funds as well.
Worst investment
C.O.R.E. Digital Pictures, a private animation house. I invested in it for about six or seven years; it was working okay, and then went belly up in 2010. They had a contract with Disney, and I thought they would get follow-up business from them, but they never did.
Advice for investors
Be patient. Rather than making very short-term decisions, I prefer to look two, three or four years out. Right now, everybody is in a panic again. I have never seen so much good value and growth companies trading so cheaply, but everyone has gone defensive. We are back to the levels and fear that we saw in 2008.
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Paul Musson
Portfolio manager with Mackenzie Investments and head of the team running the Ivy mutual funds. Named Morningstar's foreign equity manager of 2011.
How I'd invest $100,000 right now
I would buy a selection of very high-quality companies from around the world with strong balance sheets, a competitive advantage, and which are not too expensive to own. Some names to include: Colgate, Nestlé, Brookfield Asset Management, H&M and Omnicom Group.
Biggest opportunities
In defensive, consumer-type companies like Nestlé, Unilever, McDonald's and Danone. As far back as 2002, over 60% of Ivy Foreign and Ivy Canadian would have been in cyclical- type names, and a lesser percentage in defensive names.
In 2002-'03, we started getting concerned about the macroeconomic environment, the amount of debt going into the system, and the housing market. So year-by-year, cyclical names were leaving the funds.
Best investment
One that sticks in my mind is Essilor. The French company dominates the global market in progressive lenses, which replace the old bifocals. We bought Essilor in the fall of 2001 after the market dropped, and the investment has returned about 12% per annum in Canadian dollars. It's a small weighting in our portfolios, due to valuation, but we still believe it's a fine business.
Worst investment
Aggreko, a U.K. company in the business of renting portable power-generating equipment, was benefiting from power shortages in California in 2000-'01. What we hadn't bargained for was a number of large players, like Caterpillar and Cummins, producing a lot of portable power equipment to take advantage of the power shortage. Once the crisis went away, there was a lot of excess equipment on the market. It was essentially cheaper to buy portable power equipment than it was to rent it.
Advice for investors
If you are investing in a mutual fund, make sure a manager has a proven track record through a market cycle. Even with a five-year track record, they may have benefited from a very strong economy and a strong market. Managers may be doing very well simply by taking on more risk, and when the market falls, they'll fall a lot more than others.
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Which country are you?
Desperate politicians tend to talk about an indebted country as if it were a person with a spending problem. To get a better view of your own money woes, we turn the tables: What if you were a nation in need of fiscal discipline? - Dave Morris
What kind of house do you own?
1. I RENT
HOW MUCH DO YOU SAVE FOR RETIREMENT? - 30% OF MY INCOME
YOU ARE ...GERMANY
Thrifty and responsible, you are in good shape for whatever the future throws at you.
2. BUNGALOW
a ) WHEN THE TOILET BREAKS, DO YOU HIRE SOMEONE OR GO DIY? - DIY. It's how I was raised
HOW MUCH DO YOU SAVE FOR RETIREMENT? - COUNTING ON THE KIDS
YOU ARE ...CANADA
You could stand to save a bit more for a rainy day, but at least you've been frugal.
b) WHEN THE TOILET BREAKS, DO YOU HIRE SOMEONE OR GO DIY? - DIY. It's how I was raised
HOW MUCH DO YOU SAVE FOR RETIREMENT? - Wait, I'm going to die?
YOU ARE ...ITALY
The cupboard is bare, your debt is huge and you're nearly out of time. But all is not lost...yet.
c) WHEN THE TOILET BREAKS, DO YOU HIRE SOMEONE OR GO DIY? - You're kidding, right? Ewww
YOU ARE ...U.S.
You've had some luck, but years of overspending are catching up with you. Rein it in, or else.
3. THREE-STOREY McMANSION
a) WILL YOU BE ABLE TO PAY IT OFF? - Barring catastrophe, yes
ARE YOU RETIRED? - NO
DESCRIBE YOUR LIFESTYLE - PUBLIC SCHOOLS, MINIVANS, STARBUCKS
YOU ARE ...U.K.
The rest of the world's woes will drag you down a bit, but you've been through worse.
b) WILL YOU BE ABLE TO PAY IT OFF? - Barring catastrophe, yes
ARE YOU RETIRED? - NO
DESCRIBE YOUR LIFESTYLE - SWISS BOARDING SCHOOLS, LEXUS PERSONAL TRAINER
YOU ARE ...U.S.
You've had some luck, but years of overspending are catching up with you. Rein it in, or else.
c) WILL YOU BE ABLE TO PAY IT OFF? - Barring catastrophe, yes
ARE YOU RETIRED? - YES
HOW COMFORTABLE ARE YOU? - BURNING COPIES OF ZOOMER FOR WARMTH
YOU ARE ...SPAIN
You've got too much house and not enough cash. Expect to be working until you drop.
d) WILL YOU BE ABLE TO PAY IT OFF? - They don't have debtor's prison any more...do they?
ARE YOU RETIRED? - YES
HOW COMFORTABLE ARE YOU? - WINTERS ON THE RIVIERA, SUMMER IN CENTRAL PARK WEST
CAN YOU AFFORD THAT? - YES
YOU ARE ...GERMANY
Thrifty and responsible, you are in good shape for whatever the future throws at you.
e) WILL YOU BE ABLE TO PAY IT OFF? - They don't have debtor's prison any more...do they?
ARE YOU RETIRED? - YES
HOW COMFORTABLE ARE YOU? - WINTERS ON THE RIVIERA, SUMMERS IN CENTRAL PARK WEST
CAN YOU AFFORD THAT? - NO
YOU ARE ...GREECE
Your finances are thermonuclear. Grab a shotgun and wait for collectors to come knockin'.
f) WILL YOU BE ABLE TO PAY IT OFF? - They don't have debtor's prison any more...do they?
ARE YOU RETIRED? - NO
HOW DO YOU PLAN TO SURVIVE? - KRAFT DINNER
YOU ARE ...SPAIN
You've got too much house and not enough cash. Expect to be working until you drop.
f) WILL YOU BE ABLE TO PAY IT OFF? - They don't have debtor's prison any more...do they?
ARE YOU RETIRED? - NO
HOW DO YOU PLAN TO SURVIVE? - RICH GERMAN COUSINS
YOU ARE ...ITALY
The cupboard is bare, your debt is huge and you're nearly out of time. But all is not lost...yet.
PRIVATE ISLAND
And I don't pay taxes
Truthfully, I have no plan. Who lent me this money, anyway?
YOU ARE ...GREECE
Your finances are thermonuclear. Grab a shotgun and wait for collectors to come knockin'.
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UNCOMMON INVESTMENT
STOLEN COMICS
Action Comics #1 Current value: $2.2 million (U.S.)
A mere 13 of this anthology's 64 pages are dedicated to Superman, but the Man of Steel's first appearance - along with a milquetoast Clark Kent and an unimpressed Lois Lane - is enough for Action Comics #1 to remain the most prized comic book in the world. At most, 100 copies are said to survive, and this issue was speculated to be the one that was stolen from actor Nicolas Cage in 2000. Cage bought the anthology for $150,000 in 1997 - then the highest-ever price paid for a comic book - and this latest sale also set a record. Stocks go up and down, but you can count on a superhero to keep your investment safe.
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QUIZZ NO. 7
Number of changes made to the bank rate by the Bank of Canada since summer 2009?
a) 0
b) 2
c) 3
d) 5
Answer: c)
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Leo de Bever
CEO and chief investment officer, Alberta Investment Management Corp.
How I'd invest $100,000 right now
Capital preservation should be top of the priority list. I find it hard to have strong convictions about near-term trends because a lot of the issues in financial markets have binary outcomes. For example, Europe's leaders will pull it together, or not. There is a flight to quality in U.S. fixed income, but it is not clear that this is any more than a short-term lesser of two evils.
Best investment
The 5.25% real return bond on Highway 407, made when I was at Ontario Teachers' Pension Plan.
Biggest opportunities
Institutional investors like AIMCo see more opportunities because the scramble for bank reserves is bringing lots of risky assets on the market, in areas like infrastructure and private equity. For individuals, cash does not look so bad until we get a bit more clarity on whether the financial system will hold together.
What keeps me awake at night
Our collective inability to imagine a better future and work on achieving it. I see a lot of anger everywhere and very dogmatic policy positioning. Can we forget the dogma and make sure we create better conditions for employment and economic growth?
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How to celebrate
So, you've read all the advice from the previous 10 pages, made some smart moves and somehow beat the market. Good for you! Now you get to take your significant other out for a nice meal and show off your good fortune.
Here's where we'd go.
If you just made next month's salary...
Splendido
88 Harbord St., Toronto
416-929-7788
Ask chef Victor Barry to reprise his seven-course tasting menu ($115), where decadent black truffles are doled out as liberally as parsley, even appearing in a truffled chocolate cake with aged balsamic vinegar and meringue. Wash it down with a mezcal cocktail, the Smoke and Mirrors, since you stopped celebrating with cigars and cocaine in the '80s.
If you just made next year's salary...
La Queue de Cheval
1221 Boulevard René-Lévesque Ouest, Montreal
514-390-0090
Because no other restaurant in North America serves marbled Kobe steak with its bone intact. And if anyone deserves to suck the meat off that bone, it's you, Monsieur Grand. A 28-ounce porterhouse will set you back $199 and feeds two. Pair it with a vintage Bordeaux (most of Queue's are older than your firm's junior partners).
If you just made Gord Nixon's salary...
The Fat Duck
High Street
Bray, England
44 (0) 1628 580 333
A four-hour, 14-course dinner for two runs about $600, but it's sheer, unadulterated theatre - nitrogen-poached aperitifs, sleight-of-hand turtle soup, fresh sashimi nestled over spiced-tapioca sand. The 1995 Krug champagne, one of only 3,000 bottles in the world, adds a little over $6,300 to the bill, but you did good this year - so go ahead and order two.
And if you just took a bath...
Finer grocery stores everywhere
Call this a four-course dinner for one. For a few dollars, the "three meat" option includes salty pepperoni, chewy sausage and, yes, we think it's fair to call that bacon. It's enough to make you think that maybe pork belly futures were a wiser stash for your cash. Pair with a bottle of your finest brown liquor.
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QUIZZ NO. 8
Match the movie with the investment opportunity or asset
1. Trading Places (1983)
2. Wall Street 2 (2010)
3. Boiler Room (2000)
4. Margin Call (2011)
a) Fusion energy
b) Toxic assets
c) Frozen concentrated orange juice futures
d) Microcap or penny stocks
Answers: 1. c), 2. a), 3. d), 4. b)
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Timing an Apple launch
Five out of five pundits agree: Apple is the reigning consumer-product darling. But giants fall, so if you'd rather make a quick buck off Applemania than stay for the long haul, take note of the share-price trend around its product launches. - Dave Morris
LAUNCH DAY
Oct. 14, 2011 - iPhone 4S
March 11, 2011 - iPad 2
June 18, 2010 - iPhone 4
April 30, 2010 - iPad
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QUIZZ NO. 9
Rank these four indexes in order of performance over the past 10 years
__ Shanghai
__ Hang Seng
__ DJIA
__ S&P/TSX
Answer:
1. Hang Seng (+250.94%) 2. DJIA (+90.86%) 3. S&P/TSX (+45.28%) 4. Shanghai (+18.63%)
*Dec. 28, 2001 - Dec. 23, 2011
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Dennis Gartman
Publisher of the daily Gartman Letter
How I'd invest $100,000 right now
I'd buy bank stocks - probably 25% or 30% of the money. I think U.S. banks are egregiously undervalued relative to book value. It would be a quasi-bet on eventual strength of the economy and a turnaround on real estate. I'd put another 25% or 30% in simple, dividend-paying corporations, the makers and movers of the things that, if I drop them on my foot, will hurt - makers of steel, the railroads, miners of copper. I'd buy a small number of agricultural-oriented exchange-traded funds, because people do have to eat. And I'd buy a smorgasbord of strong currencies - Canadian dollars, Aussie dollars - and some gold.
Biggest opportunities
The great winner in the next several years is going to be those who sell things to the Chinese - Canada and Australia. Commodities, yes, but you guys also have high-tech. You have RIM. You have one of the great universities there, Waterloo. It is an amazing asset, and the Chinese understand that. Just because RIM is having a hard time competing with Apple, do you really think the engineers coming out of Waterloo aren't going to come up with new ideas in the next couple of years?
Advice for investors
Never, ever, ever average down. If you buy a stock at $30 and it goes to $20, don't buy any more. The market has already told you that you're wrong.
What keeps me awake at night
Iran. A nation run by madmen, with an important asset that the world needs - oil - should keep everybody awake at night.
My take on the Occupy movement
I think they all need to take a bath, and they need to get a job. And there are plenty of jobs to be had if they go to North Dakota or South Dakota or Alberta to work in the fields to find natural gas and crude oil and make $100,000 a year. They would have to take a bath to get that job, but they won't. So, I say, to hell with them.
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