Investment Loan structure For Those Investors Who Also hold Personal Debt
Most investors string Australia take it a home loan. Most investors use the reparation in their home property to help them on the road to wealth with their outstanding fling property or share acquisition.Visit here
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The first was a favourable Private Ruling issued to a taxpayer who had a at rest loan and an proposition game of divination with one lender and an exploit loan with another lender. The taxpayer wanted to perk over much of his inherent upping as possible to repay his non-deductible internal loan debt whereas quickly as he could.. He did not desire to have to subsidise the undertaking loan by using his fund to pay the shortfall esteem interest. Rather he principal to capitalise the shortfall interest on his test line of credit and let this accrue while using the surplus capital flow he due to had to make additional repayments to his home loan. He also necessary to utilise the investment livelihood of credit to meet any unexpected maintenance costs, rates and the like that affable to the investment wad. This allowed him to promote further aggrandized repayments to his home loan and as a result he expected to repay this supremacy full within 10 years, as opposed to the normal 30. Under this structure also sway these case the ATO intended the compounding interest to substitute deductible also Part IVA was deemed not to exercise to refute that deductibility.In September 2008 a pattern Taxation Determination was issued by the ATO which addresses the question: “Is the deductibility of multiform interest unrelenting according to the same education as the deductibility of other interest?” This question has arisen because since Hart vs The Commissioner of Taxation 2002, the ATO has been unclear as to how the character of compounding disturb is adamant. Hill J in the Federal assessor considered there were 2 tests proposed:1. the purpose of the borrowing2. the use to which borrowed funds are put.Hill J was of the view that “Generally, bearings interest is borrowed to finance the catch of an velvet emphatic blessing it will make no difference which formula is used.”In the Draft juice the Commissioner accepts that the attainments governing the deductibility of knotty interest are the same as those governing the deductibility of ordinary interest. “The Commissioner accepts that this is the decree following the Full Federal reconciler ‘s the nod in Hart.”Any tycoon salt away a home loan who wants to clasp an investment property should ensure that any baby loan he arranges includes a capitalising investment line of admission. There are a limited number of lenders offering this genius of push but certainly they are available in the market.Visit here
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Corporate Finance Best Online High Return Investment Company
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Don’t limit your focus only to those names that you recognise from television or radio commercials. There may be discrete other websites that present brilliant investment opportunities. Before signing up with an investment company, you need to assess your own larger of proposition. If you crave a at odds portfolio to boast of, then go in considering a company that offers a wide bravura of investment options.If your choice of investment is only stocks or returned funds, therefore go in seeing an investment company that exclusively deals with these categories. You obligation also look at the minimum initial investment that an online company requires from you and whether you are ready to offer that kind of money or not. expressed companies require you to open a cheque or savings account with the banks that they are associated with.Also don’t forget to scrutiny into brokerage and other fees that the site will charge you. Also, a vital fleck of consideration is whether the online company will invest your dividends by itself or maintain it in the money market until you opt what you want done keep from it. Besides pleasing into due consideration unabbreviated the above points, you must flee stunning your business to an investment company that charges an exorbitant membership fees or does not give you free access to your own investments Visit here
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The last two years have exposed a lifetime of emotions for most investors. Plummeting markets brought fear. Those who held the course were rewarded with a strong, rapid recovery bringing a sense of euphoria and pride with the wise decision not to sell everything and “stick it under the mattress”.
The 1979 Tversky and Kahneman study* illustrates the impact that aversion to loss has on people’s financial decision-making. An experiment:
One group of participants was given $1000 AND asked to choose between:
A sure gain of an additional $500
A 50% chance to gain an additional $1000 and a 50% chance to gain nothing
A second group was given $2000 AND asked to choose between:
A sure loss of $500
A 50% chance to lose $1000 and a 50% chance to lose nothing
The results of either choice posed to the two groups are identical: in choice A, both sets of participants end up with $1500 and in choice B, both sets of participants end up with either $2000 or $1000.
Here is where the behavior of humans enters………
84% in the first group selected the known gain (option A) rather than risk a loss (option B)
69% in the second group chose option B, indicating that they were willing to assume the greater risk of losing $1000 rather than face the certain loss of $500
The key findings of “Prospect Theory” were that:
Prospective losses bother investors much more than prospective gains please them
Choices people make are based on their subjective version of the situation, not on an objective reality
* Source: Lightbulb Press, An Advisor’s Guide to Behavioral Finance, 2008
As co-founder of Chappell, Mayfield & Associates, Cass offers expertise in financial planning, wealth accumulation, retirement planning, insurance planning, business continuation planning, and employee benefits.
Cass launched his financial planning career as an agent for Prudential Financial in 1996, and later, a manager in the company’s financial services division. Since then, Cass has earned the CFP®, CLU, and ChFC designations, reflecting his commitment to excellence in investment decision-making and financial planning. He also holds a B.S. in Management from Georgia Tech.
Cass has lived in Atlanta since 1992. He is married to Alison, and has a daughter. More of his blogs can be found at
AN ANALAYSIS OF INNOVATIVE INSTRUMENTS OF RAISING FINANCE BY LISTED INDIAN COMPANY
Companies have been using various financial instruments to raising required capital for achievement of their broad corporative objectives. The innovative instruments have the potential to help Indian companies to overcome the severe financing constraints they have been experiencing over a long period of time. Companies are doing every thing to tap available financial resources through the use of old and innovative instruments and the process will continue indefinetly.Companies in their pursuit of reducing the cost of capital, put a premium on such instrument which will help in achieving such an objectives.
A financial instrument is a combination of characteristics such as promised yield liquidity, maturity, security and risk. The process of financial innovation involves creating new instruments and technique by unpackaging and rebinding the same characteristics in different fashion to suit the constantly changing the needs of the issues and the investor’s .These innovative are of two kinds:-
1 Changes aimed at the tax planning.
2 Adaptive changes that give rise to a gap in the range of available financial instruments.
In corporate finance, financial engineers are often called upon to develop innovative instruments are secure the funds necessary for operation of large scale business. The nature of financing required cost preference and other consideration indicate special instruments, a collection of special features to be attached to an instrument or a combination of instruments to be used in concert. At times it precipitates in the introduction of revolutionary new products such as swap, mortgage, and zero coupon bonds to finance leveraged buyouts. This is the kind of creativity involved in the extension of future trading to a commodity or a financial instrument not previously traded in a futures pit, the introduction of swap variants or the creation of mutual fund with a new focus. At tills other times it involves the piecing together of existing products and process to fit in a particular set of circumstances.
Financial innovation has therefore been a continuous and integral part of corporate world. Greater freedom and flexibility have thus enabled companies to invent and innovate financial instrument and their subsequent introduction. A variety of factors such as increased interest rate, volatility, frequency of tax and regulatory changes etc have stimulated the process of financial innovations. The deregulation of financial service industry and increased competition with in investment banking undoubtedly led to increased emphasis on the ability to design new products , develop better process, and implement more effective solution for increasingly complex financial problems. Financial engineering has thus become the life blood of this activity. According to Thone Finerty F.E involves the design, the development, and the formation of creative solutions to problems in finance. Financial innovations have been a continuous and integral part of the corporate world.
Such innovations could prove extremely beneficial by adding value to the company if it.
Re allocates Risk form those who are less willing to bear it to those who are more willing to assure it.
Enhance liquidity.
Diminishes agency costs emanating form the conflict between share holders, managers and creditors.
Lowers the combined burden of tax to the issuer and the investor.
By passers ingeniously some regulatory restrictions.
New financial Instruments in the capital Market
With the evolution of capital market new financial instruments are being introduced to suit the requirements of the companies. Keeping in view the yield expected by investors, price and credit risk, liquidity and quantum of funds etc. some of the new financial instruments are Zero coupon bonds, warrants, (detachable warrants secured premium Notes, Stock invest, Bond with floating interest rate, Deep discount bonds, option bonds, option, swap financial engineering made first appearance in the finance literature in 1987-88. Thon Finnerty “Financial Engineering in Corporate finance An Overview 1988 pp 4-3)
Financing Instruments Issued by Indian company
After the liberalization measures were announced in 1991, Indian Company under took issuance of new instruments seriously in to attract large section of investors. Essar Steel used convertible debentures with warrants and loyalty coupons, Tata Iron and Steel Company Limited issued secured Premium Notes with warrants, Flex Industries issued partly convertible debentures and non convertible debentures with warrant attached to each instrument DLF aments issued multiple option bonds, Essar oil issued optionally fully convertible debentures and Reliance Petroleum issued triple option convertible with equity warrant and Esab India issued partly convertible debenture.
This burst of innovation has seen a typical shift in the design and development of new instrument. The classic conversion is that of debt in to equity. Offering the investor the option of conversion keeps the cost of his convertible debt lower than straight debt, thus minimizing the cash out flows during the gestation period. Once the project yields steady profits, the equity conversion results in a relatively- expensive dilution. The use of fectures like warrants makes the equity and convertible less expensive for the investor. It creates possibilities for their full subscription by the investors and also turns out to be cheaper for the issuing company.
Nature of Problem
Over the years, Indian Companies have worked in a restrictive and controlled regime where high cost of capital, limited flexibility. Low capacity to raise adequate finances, lower production capacities, obsolete technologies, low auto motion, high product prices, etc. Introduction of new instruments of finances have provided opportunities to Indian Companies to design instruments which could give them the freedom to address to the varying needs of investors group to make an attempt to lower the cost of capital. Introduction of new financing increased the chances for more and more investor’s participation in future offerings of companies. This may enhance the chances for raising more and more funds. It is not clearly known as to what benefits the introduction of such new instruments brings to the companies and the investors and what perceptions investors as well as managements have with regard to these new instruments.
Investments in companies were a risky proposition low returns on equity and availability of limited options due to existence of limited number of instruments were common. The changed scenario promises to be panacea for all the deficiencies of the past. It will therefore, be prudent to analysis how the process of financial innovation has helped to accelerate those of new instruments by Indian companies.
Objectives of Study
Keeping the nature of problem in mind an attempt was made to analyze the effects of introduction of new instruments of finance on cost of capital, profitability, expansion, diversification / modernization programmes of various companies, competitiveness, product quality, investors etc, the detailed analysis will provide an insight into above mentioned areas and helps to find out whether introduction of new instruments of finance will help in solving the problems faced by the Indian Companies. Further analysis will also throw some light on the acceptability of these instruments by the investors which will greatly help the Indian companies to overcome the shortage of funds.
The specific objectives of the study are
To study the regulations and development of financial instruments in India.
To analyze different aspects of new instruments of finance.
To analyze the effects of introduction of new instrument of finances in capital structure.
To analyze the investors, managements and brokers perception regarding the use of new instruments of finance
To ascertain whether there is any further scope for designing newer instruments of finances.
Hypotheses
The present study among other things to include the following hypotheses for testing
The level of income and state of investment is independent of each other.
New and traditional instruments of finance have provided similar investment choices to investors.
New and traditional instruments of financing have provided similar benefits to the investors.
No further innovations are needed in various instrument of financing.
Investors with positive perception about using of innovative features favor continued use of such features in new instruments of finances.
Research Methodology
The study is based on data collected by both primary as well as secondary sources. Annual report, research articles, published in various books and journals on different aspect of the problem under study have served as a major source of secondary data. Apart form discussion with various investors, company official and other classes of respondents properly designed comprehensive questionnaires constituted the primary source of data.
The selection of companies included in this study was based the following criterion.
Companies which have entered the capital market funds and have made use of new and traditional instrument of finance after 1990- 91.
Companies which are in the market for at least 3 years. An effort was made to select at least one company form each industry.
The conclusion and inferences were based on statistical tests such as chi-square test and Likert’s summated technique etc.
Reference:
Asquith Paul and David W Mullin, Equity Issues and offering Dilution Journal of financial Economics January / February 1986 pp 61-89.
Chew. Donald H. In the Revolution In corporate finance edited by Joel M Stern and Doneld H Chew 1992 Black Well Oxford.
Finerty, John D. Financial Engineering in Corporate finance An Overview Financial Management winter 1988 (4-33).
Gupta, Santhosh. Research Methodology and Statistical technique. New Delhi: Deep and deep Publications.
Kothari, CR. Research Methodology. New Delhi: New Age International (p) Limited.
Mishra. R.K. “Financial Instruments” The Chartered Accountant September 1995 p.p (84-90)
Prasana, Chandra. Financial Management Theory and Practice. Tata Mc Graw hill Ltd.
Roju M, thiripal. Financial innovations in the Indian Capital Market during the last decade finance India, Vol No. 1, March 1993. p (43-62)
In a time such as today’s when the world economies are still struggling to recover from the biggest economic recession in recent times, when stocks plummet without even a notice, no warning whatsoever, what to do? The hard times are here and when there seems no way out, just smarten up and take the road that’s tried and tested before, the road to personal financial investing. It is time to grow your money by leaps and bounds with trading currencies. Not that challenges will be lesser on this road, the major challenge will be the absence of an established business track record but not let that stop you. Utilize your past business financial information to start up with some capital loan. No bank or lending institution would lend you money if you lack personal financial information. While you begin with personal finance investing as a new venture, you would definitely not have cash flows or dividends information, or any financial statements enough to support you secure a loan.
And if you do not have any past personal finance news and information then do not panic as where there is a problem there are ample solutions too. In today’s digital age where everything is centralized around the vast Internet web, small business owners or beginners can enjoy endless advantages through the technology solution tools. You can trade online without even bothering to arrange loans for beginning with personal financial investing. Through the internet you can fill your kitty with all the necessary knowledge about the financial calculators and conduct your way through to the automated trading bot, impressive software that is exclusively designed to trade on your behalf leaving you to attend to various other things needed. And yes, you do not miss a single trading opportunity through the trading bot; but be careful not to make it a habit of relying on automated software for your activities as at the end it’s you who is responsible for any rise or fall in the business. So be determined and cautious, and the ‘win’ is yours.
Sourav Sharma is freelance market analyst and is writing reviews articles on , personal finance investing, financial calculators and .
It is widely accepted that every successful business must have a strong working capital position. It is in this context; an attempt was made to explain the concept and various determinative factors influencing net current assets below:
Gross working capital refers to working capital as the total of current assets. That is to say, Gross working capital = Total current assets. Net working capital refers to working capital as excess of current assets over current liabilities. In other words net working capital refers to current assets financed by long term funds or capital employed of the business.
Accordingly, Net working capital = Current assets – Current liabilities
The net working capital position of the firm is an imperative contemplation, as this will determine the firm’s profitability and risk. Here the profitability refers to profits after expenses and risk refers to the probability that a firm will become technically insolvent where it will be unable to meet obligations when they become due for payment.
A finance manager has to make an appropriate financing mix, which will limit the risk and increase the profitability. Financing mix refers to the proportion of current assets financed by current liabilities and long term funds.
There are two approaches which determine the financing mix (1) Aggressive approach (2) Conservative approach.
According to aggressive approach the long term funds are used to finance only the core or fixed portion of current assets (e.g., minimum level of finished goods inventory, raw material etc) and the other portion i.e. temporary and seasonal requirements are financed by short term funds. This is of high risk and high profit financing mix.
According to conservative approach the total current assets are financed from long term sources and short term sources are used only in emergency situation i.e. when there is an unexpected cash outflow. This is of low-risk and low-profit financing mix.
As we observed two methods of financing mix, one method is of high risk high profit and other is of risk low profit. A finance manager has to trade off between these two extremes.
Operating Cycle:
As there is a time lag between and realization of receivables there is a need for sufficient working capital to deal with the problem which arises due to lack of immediate realization of cash against goods sold. The operating cycle is the length of time required for conversion of non-cash assets into cash. This operating cycle refers to the time taken for the conversion of cash into raw material, raw materials into work-in-progress, work-in-progress into finished goods, finished into receivables into cash and this cycle repeats.
The operating cycle length differs from firm to firm. If a firm has lengthy production process or a firm has liberal credit policy the length of operating cycle will be more. On the other hand, if a firm does not extent credit or the firm is not a manufacturing concern i.e. where cash will be converted into inventory directly then the length of operating cycle will be reduced to a greater extent.
The length of operating cycle is calculated based on the following:
Raw materials storage period (RMSP)
Work in process period (WIPP)
Finished goods storage period (FGP)
Debtors collection period (DCP)
Creditors Payment Period (CPP)
ThereforeLength of operating cycle = 1+2+ 3+4-5
FACTORS INFLUENCING WORKING CAPITAL NEEDS:
A firm should have neither low nor high working capital. Low working capital involves more risk and more returns, high working capital involves less risk and less returns. Risk here refers to technical insolvency while returns refer to increased profits/earnings. The amount of working capital is determined by a wide variety of factors:
Nature of Business: The working capital requirement of a firm depends on the nature of the business. For example, a firm involved in of services rather than manufacturing or a firm is allowing only cash . In the first instance, no investment is required in either raw materials or WIP or finished goods, while in the second occasion there exists no receivable as there is immediate realization of cash. Hence the requirement of working capital will be lower.
2Seasonality of Operations:
If the product of the firm has a seasonal demand like refrigerators, the firms need high working capital in the periods of summer, as the demand for the refrigerators is more and the firm needs low working capital in the periods of winter, as the demand for the product is low.
3. Production Cycle:
The term production cycle refers to the time involved in the manufacture of goods. It covers the time span between the procurement of the raw materials and the completion of the manufacturing process leading to the production of goods. As funds are necessarily tied up during the production cycle, the production cycle has a bearing on the quantum of working capital.
The longer the time span of production cycle, the larger will be the funds tied up and therefore the larger the working capital needed and vice versa.
4.Production Policy:
The quantum of working capital is also determined by production policy. In case of the firms having seasonal demand of the products like refrigerators, air coolers etc. and the production policy of the firm determines the amount of working capital requirement. If the firm has production policy to carry production at a steady level to meet the peak demand, this will result in a large accumulation of finished goods (inventories) during the off-seasons and the abrupt during the peak season. The progressive accumulation of finished goods will naturally require an increasing amount of working capital. If the firm has production policy to produce only when there is a demand then the firm needs low working capital during the slack season and high working capital during season.
5. Credit Policy:
The level of the working capital is also determined by the credit policy, as the firm’s credit policy determines the amount of receivables. If the firm has a liberal credit policy, then the firm needs high working capital and the firm needs low working capital if the company’s credit policy does not allow it to extend credit to the buyers.
6. Market Conditions:
The working capital requirements are also determined by the market conditions. In case of the high degree of competition prevailing in the market the firm has to maintain larger inventories as customers are not inclined to wait for the product. This needs higher working capital requirements. If there is good demand for the product and the competition is weak, a firm can manage with smaller inventory of finished goods, as customers can wait for the product if it is not available in the market.
Thus, a firm can manage with low inventory and will need low working capital requirements.
7.Conditions of Supply:
The availability of raw materials and spares also determine the level of working capital. If there is ready availability of raw materials and spares, a firm can maintain minimum inventory and need less working capital. If the supply of raw materials is unpredictable, then the firm has to acquire stocks as and when they are available for ensuring continuous production.
Thus, the firm needs to maintain larger inventory average and needs larger requirementofworkingcapital.
CONCLUSION:
From the above discussion, it is made clear that the objective of financial management is to maximize the shareholders wealth. Hence, it is needed to generate sufficient profits. The profits generated depend mainly on volume. When the goods are being sold on credit as is the normal practice of business firms today to cope with increased competition the of goods cannot be converted into cash instantly because of time lag between and realization of cash. Further this is possible only through evolving effective working capital policy and better administration on current assets financing.
Dr.R.SRINIVASAN is a Post graduate in commerce and Management. He received his doctoral degree from Alagappa University in 1997. He is now Working as an ASSOCIATE PROFESSORin Post graduate and Research Department of Corporate Secretaryship at Bharathidasan Government College for Women (Autonomous), Pondicherry University, Puducherry.He currently teaches Accounting ,financial management and Research Methodology Subjects. Before Joining BGCW, he was teaching in SNR College, Coimbatore, Sindhi college, Chennai& T.S.Narayanasamy College, Chennai for eight years. He was with the industry for a short term at Salzar Electronics Pvt. Ltd, Coimbatore. He has about 20 years of teaching experience and having research experience of 15 years. His interests are in Accounting and finance, Capital Market, Quantitative Methods. He underwent the Faculty Development Programme at Indian Institute of Management Ahmedabad during 2000-01. He has presented 20 papers in national and international conferences and has published twenty papers in the areas of Finance and Human resource Management in National Journals. Co-authored a book titled, ‘Investors Protection, published by Raj Publications, New Delhi He has delivered lectures in contemporary finance topics at Pondicherry University. He is involved in consultancy projects for Godrej Saralee, Chennai in the areas of Statistical Applications. He has supervised a number of research projects in the area of corporate finance and Human Resource Management. He is the Board of examiner in corporate Secretaryship and Management for the past two decades. .
The 2008 financial crisis uncannily echoes what happened in Japan more than a decade ago. In the 1990s, the Japanese banking systems had become overloaded with bad loans after a property bubble collapse, according to Gillian Tett, author of Fool’s Gold. The investor psychology seemed dangerously similar too. If this is the case, investors who high yield stocks now could collect big dividends while the economy fights to get back on its feet.
The Associated Press (AP) reported on Friday that the U.S. federal budget deficit has surged to an all-time high of $1.42 trillion. The Obama administration projects deficits will total $9.1 trillion over the next decade. For weeks the US dollar’s decline sent gold to all-time highs and helped oil to over $78. Canada happens to have plenty of these commodities.
The following are 18 Canadian companies listed on U.S. exchanges with market caps greater than $1 billion, reasonable P/E ratios, and dividend yields greater than 3.5% (sorted by yield):
Name
Symbol
P/E
Yield
Market Cap
PROVIDENT ENERGY TR
(PVX)
9.0
11.1%
1.66B
PENGROWTH EGY UTS
(PGH)
5.0
10.6%
2.61B
PENN WEST ENERGY TRU
(PWE)
5.1
10.1%
6.90B
ENERPLUS RES FD
(ERF)
5.8
8.4%
3.97B
HARVEST ENERGY TRUST
(HTE)
4.2
8.1%
1.14B
B C E INC
(BCE)
21.7
6.1%
18.82B
TELUS CORP
(TU)
8.6
5.8%
9.41B
PRECISION DRILL TRST
(PDS)
4.3
5.7%
1.91B
BANK OF MONTREAL
(BMO)
17.3
5.1%
27.68B
TRANSALTA CORP
(TAC)
21.9
5.1%
4.07B
BAYTEX ENERGY TR UTS
(BTE)
12.8
5.0%
2.77B
CANADIAN IMP BK COMM
(CM)
3.7
5.0%
2.98B
BROOKFIELD PTYS CP
(BPO)
6.2
4.6%
4.47B
TRANSCANADA CORP
(TRP)
15.1
4.3%
21.71B
SHAW COMM CL B NV
(SJR)
15.6
4.2%
8.24B
ROGERS COMMUN CL B
(RCI)
16.8
4.0%
16.57B
BANK OF NOVA SCOTIA
(BNS)
16.7
3.9%
45.86B
TORONTO DOMINION
(TD)
17.4
3.5%
53.70B
These 18 high-dividend companies are in 4 sectors: Energy, Financial, Telecom and Utilities.
Energy Income Trust
High demand from China and a weak US dollar make the energy sector attractive. 7 companies belong to energy income trust category:
Symbol
Operating Margin
Debt/Operating CF
52-wk Range
(BTE)
36%
1.0
7.84 – 26.44
(ERF)
51%
0.7
12.85 – 28.58
(HTE)
10%
3.2
3.00 – 11.55
(PDS)
28%
2.0
2.00 – 12.21
(PGH)
22%
2.5
4.51 – 11.90
(PVX)
23%
1.5
2.23 – 6.84
(PWE)
58%
2.3
6.77 – 19.01
For sophisticated traders, trading commodities directly might provide a higher reward. For income investors, commodity companies might be a better choice because they provide some buffer, in addition to regular dividends.
There is a small ETF called Claymore Canadian Energy Income (ENY) which includes most of these companies. Its yield is 5.45%.
Financials
The Following are comparisons between Canadian banks, U.S. major banks averages, as well as JPMorgan Chase (JPM), one of the most conservative banks in the US. Clearly Canadian banks are much more profitable.
Description
P/E
ROE %
Div. Yield %
Net Profit Margin %
U.S. Money Center Banks
n/a
1.1%
1.1%
1.3%
JPMorgan Chase & Co. (JPM)
52.6
2.9%
0.4%
15.5%
Toronto-Dominion Bank (TD)
17.6
9.4%
3.5%
22.2%
The Bank Of Nova Scotia (BNS)
16.8
13.2%
3.9%
28.9%
CIBC (CM)
3.8
7.0%
5.0%
18.8%
Bank of Montreal (BMO)
17.4
9.2%
5.1%
21.8%
Telecom
Competition in the telecom sector is heating up in Canada. When BCE (BCE) and Telus (TU) announced they will start carrying the iPhone next month which puts an end to the exclusivity that Rogers (RCI) has enjoyed, it sent RCI’s short ratio to a stunning high of 33. Unlike those 3, Shaw Communications (SJR) primarily focuses on cable services.
Utilities
TransAlta (TAC) is an electric utility company while TransCanada (TRP) operates through two segments: pipelines and energy. TAC’s short ratio of 5.8 makes me nervous.
Conclusion
After boldly buying when others were selling, Warren Buffet is pulling back, buying fewer stocks while investing in debt. He is warning that the economy, though on the mend, remains deeply troubled.
In addition, the Canadian dollar is a strong threat to the Canadian economy. CurrencyShares Canadian Dollar Trust (FXC) appreciated over 13% this year. Mark Carney, the governor of the Bank of Canada, has warned that the Canadian dollar appears to be moving away from the fundamentals.
The iShares MSCI Canada Index (EWC) year-to-date’s return is an astonishing 46%. A great stock can be easily turned into a bad investment, if you it at a higher than reasonable price. It all depends on the starting price.
Nonetheless, high-dividend, fundamentally-strong companies are more likely to survive in this stormy market. One of the greatest ways to protect your portfolio is through asset allocation: to make sure not a single sector accounts for more than 20% of your portfolio. Be sure to re-balance as it will automatically enroll you into the “ low, sell high” camp.
Disclosure: I have long positions on BMO, BNS, CM, PWE, TD, and TRE. All data is from Yahoo Finance (http://finance.yahoo.com/) as of Oct 16, 2009.
Even though one does not start a business with the intention of closing in mind, it is helpful to have a strategy on how to officially close it, if and when need arise. There are many issues that may push an entrepreneur to close down a business, some are social, others are legal, while others are finance related. Whatever the reason for the closedown, there are steps that one must carefully consider before declaring the business officially closed.
Much of what needs to be done may depend on the type of business ownership. This is because, when there are more stakeholders, decision making may be biased and may bring up a lot of protocol. One of the most important things to do is to vote for the close of the business. If the enterprise involves more than one overseer or director, minutes of the meeting in which it was decided that the business would be closed should be taken and filed as well as presented to the major stakeholders.
This will show that it was decided without controversy that the venture would head down that road. If your business is registered with the Small Business Development agency, you have to inform them that you are officially closed. The next thing is to cancel or to go back to your books of accounts and see which creditors need to be paid, the pending bills as well as all other dues that need to be taken care of. These will include taxes and all outstanding debts.
Once this is done, surrender all operational documents like trading licenses, operational permits and all other certificates acquired from the government or elsewhere. Once you are done with the above step, notify your creditors, employees, clients as well as other stakeholders that you are now officially closed.
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