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Monty Spivak  

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  • Analyzing Canadian REITs, Part X: Highest Yields And Lowest Risks [View article]
    Hi vmirage,

    Although I am not a huge fan of funds, I do like REIT INDEXPLUS Income Fund IDR.UN:TSX. High yield, diversification, etc., are good reasons, but it does have a small market cap of around $120M. I have not considered a real estate fund, personally, as many of my positions are Canadian real estate securities, so I would just be buying more of the same. Additionally, REITs defer taxes, and I am not sure that you would achieve this goal through this fund.

    Now that I have said this, I propose that you wait to buy on dips. I believe that it may be worthwhile to try for a price closer to $11.50 CAD than the current $11.85 - particularly given the less-than-positive outlook for Canadian real estate, and the summer market doldrums are just a few months away.

    Of course, it is just my opinion - I believe that most of the TSX - particularly banks and real estate - is a ``Hold`` at the high current levels - except for gold, O&G, and other resources which are low.

    Thanks for your interest and question!

    Cheers, Monty
    Jan 31, 2013. 03:43 PM | Likes Like |Link to Comment
  • Should Investors Buy The Defense Sector? [View article]

    SA posted this in the Market Currents section:

    Wednesday, January 30, 8:39 AM ET
    More on Q4 GDP: Defense spending falls 22% - the biggest drop in 40 years - leading real federal spending -15%.

    It links to this Bureau of Economic Analysis article, as its source:

    Again, the diversified conglomerates are the best-bet in the Defence Sector (but will also "feel the pain"), and stay with the dividend growers/payers if you choose to invest.

    Cheers, Monty
    Jan 30, 2013. 10:03 AM | 1 Like Like |Link to Comment
  • Which Form Of Gold Investment Provides The Best Hedge For A War Or Global Crisis? [View article]
    Hi James,

    Thanks for your comment and question.

    I own GGN, and it is one of the few securities that I DRIP. I receive and read their Quarterly and Annual reports, which clearly identify their call-option strategy to generate income. I double-checked this before writing this response, and the report is here:

    Although I participate in relatively few funds, and those that I do write options contracts, I have never seen one state that they would modify their strategy in the event of a crisis. That said, these are likely smart and experienced fund managers, who would probably have incentives to seek the best return. So... I believe that they would respond appropriately to a global crisis, and cover and/or write new options.

    GGN provides income as a trade-off to capital gains. When one sells a call, the gain is capped at the call price - in other words, the GGN fund manager is deliberately trading-off the gold-mining stock upside in exchange for the fee income. I suppose that my view is that you cannot have both the price appreciation and income stream without some degree of trade-off. I see that we have both chosen the income stream model with GGN.

    Cheers, Monty
    Jan 28, 2013. 01:07 PM | 1 Like Like |Link to Comment
  • Analyzing Canadian REITs, Part X: Highest Yields And Lowest Risks [View article]
    Hi whmitch,

    Thanks for your positive feedback and questions. Yes, my last comment is from 2 weeks ago, in 2013.

    I am afraid that my opinion and actions have not changed - to me, much of the TSX looks like a "hold".

    That said, this market is a stock-picking game, and there are many different opinions out there. I try to buy at the recovery point of dips - to various degrees of success - and with diverse daily news, who knows where the Canadian stock market is going. I rarely have bought a security within 20% of its 52-week high, and as rarely buy at more than 25% higher than the low.

    I feel that mid-cap Canadian O&G, Gold securities, and mid-cap Utilities are currently priced low. Banks, Infrastructure - such as the larger-cap Pipelines - and, Real Estate, appear high.

    As usual, this is just my $0.02. There are many smart people out there who disagree with me :)

    Cheers, Monty
    Jan 18, 2013. 10:33 AM | Likes Like |Link to Comment
  • Which Form Of Gold Investment Provides The Best Hedge For A War Or Global Crisis? [View article]

    Thanks for your readership and comments. These are great questions and observations, and I will try to do justice to respond to them.

    tonyconnolly: Royalty and streaming companies, such as Sandstorm, have the right to buy a percentage of production at a fixed price, in exchange for financing. Although these are financial, rather than operating companies, their return would fluctuate with the price of gold (without reduced operational risk). I suggest that you would lump them in with gold mining companies, as they would have a long-term benefit from the increase of bullion price, but probably would not behave correlated with bullion price (in fact, I charted SAND and GLD, and SAND is far-out-performing the bullion ETF - of course, I do not know if this would be the case should there be a global crisis).

    User 353732: I agree that gold, weapons, and food will provide the best hedge for a war. In fact, I plan to author a few more articles on this subject. I am optimistic that the developed countries can avoid converting our financial crisis into a military one - of course there is lots of room for disagreement :)

    coindog: Holding physical coins and bars is an option that I lumped-into Gold ETFs, and referenced an Instablog from David Fry. In terms of a hedge for crisis, physical bullion would probably behave in the same way as the GLD ETF, but GLD probably enjoys a lower transaction cost.

    Jack Levenstein: As a Canadian, most of my gold holdings are securities traded in Toronto. MNT or MNT.U (Exchange Traded Receipts) have their own characteristics, as you have summarized. It is a matter of preference (and for US investors, access and the price of TSX trades) to consider this option. The Government of Canada sponsored, Royal Canadian Mint, is very safe, but GLD has a $72B market cap, and is probably more accessible to non-Canadian investors.

    Thanks, again, for your readership and support!

    Cheers, Monty
    Jan 16, 2013. 09:54 AM | 1 Like Like |Link to Comment
  • Analyzing Canadian REITs, Part X: Highest Yields And Lowest Risks [View article]
    Hi galicianova,

    My view is that Canadian real estate (and the TSX in general) is a "Hold".
    - The projection for the Canadian real estate market is not positive - particularly for residential.
    - That said, our REITs are enjoying ridiculously-low financing costs, and a market that has not (yet?) crashed.
    - So... my view is that it is fully valued, has some degree of downside, and continues to provide a steady (high) yield.

    I am not buying more, and I have not sold any RE positions. If we experience any significant dips, I may add to existing positions, but this has not happened in months. I continue to hold Riocan, Dundee, and the many other Canadian REITs, that form a substantial portion of my portfolio. I have sold most of my Canadian bank positions, which are disproportionately exposed to the same debt and mortgages (and provide lower yields and tax breaks) as the REITs.

    Of course, this is only my opinion - I am sure that many others would disagree with me :) I hope that this helps!

    Cheers, Monty
    Jan 4, 2013. 02:28 PM | 1 Like Like |Link to Comment
  • No 'Bull' About Leveraged Gold Bull ETFs [View article]

    Thanks for your readership, support, and comments!

    eagle1003: This is an amazing strategy! It seems a lot more manageable than a collection of put and call options - I follow other authors and avidly read about these, but have never ventured beyond one put or call per security. That said, with these leveraged plays, one seems to need a strong sense of when to buy and sell a position. Frankly, I once held a Canadian leveraged natural gas ETF (TSX:HGU) for a couple of months, as I had believed that an increase in NG prices was imminent and TSX:HGU had reached another new low - I kept waiting - fortunately, it was not a large position. For leveraged funds, I will personally need more than a trend break, based on my previous experience. That said, I am watching, and one of the two leveraged gold funds - PowerShares DB Gold Double Long ETN and ProShares Ultra Gold ETF - will probably be my trading candidates.

    LindaClark: I am also optimistic about the price of gold. The article that you referenced, with the reasons, is brilliant. I believe that the author, Jeb Handwerger, omitted a compelling reason. It is entirely based on the US political situation, deficit, and economy. For example, "Close to 23 million people are unemployed in this country and close to two-thirds of our citizens don't pay income taxes." Personally, I believe that the US will muddle its way to a resolution. The greater risks - and therefore, opportunity for "gold bugs" - may be outside of the US; Europe, India, and China have their own issues which could easily generate a global economic/political/fin... crisis; Iran may cause a new war in the Middle East - in fact, I am assembling material for a series about investing for war, and gold will be one of my top choices:

    There are potentially many causes, but it does appear that gold is a hedge for instability. The question is one of timing. I am inclined to agree with you that 2013 may be a great year for gold, but my guesses (or "predictions"?) are often wrong - it may take until 2014, 2015...

    Again, thanks for your feedback and ideas!

    Cheers, Monty
    Nov 22, 2012. 09:57 AM | 2 Likes Like |Link to Comment
  • Dig This: 9.7% Brigus Gold Convertible Bonds, Mature In 2016 [View article]
    Thanks for the great article!

    I authored an article about Brigus and other Canadian gold miner convertible bonds - Hedge For Inflation And Deflation With Precious Metals Convertible Securities - Part 2 - Canadian Securities:

    So... there are a few alternatives in this space.

    Disclosure: Long Brigus convertibles.

    Cheers, Monty
    Nov 21, 2012. 12:12 PM | Likes Like |Link to Comment
  • Gold Bullion ETFs, Closed-End Funds, Or Gold Mining Stocks - Follow-Up On CEF, GTU, GDX, NUGT [View instapost]
    Hi KRWinston,

    Thanks for your feedback. Other than a move up for both, today, I agree that there is no reason to pay a premium at this juncture, and am also just waiting and watching - the entire market, not just gold-related securities!

    Cheers, Monty
    Nov 19, 2012. 08:15 PM | Likes Like |Link to Comment
  • Gold Bullion ETFs, Closed-End Funds, Or Gold Mining Stocks - Which Is The Best Investment? [View article]

    Thanks for your readership and comments!

    Mbcy has probably enjoyed a far greater return on his physical gold than I have ever realized through my alternatives, but my one attempt of purchasing and holding physical silver - over a number of years - resulted in breaking even. In the event of a catastrophe, this may be an excellent alternative.

    Mr. Bass raises a good point about junior gold miners, but again, these do not track the commodity; that said, I choose to purchase (Canadian) junior gold miner convertible debentures and preferred shares (discussed in previous articles).

    Because of my very-long response, I have addressed the questions about the CEFs and ETFs from Noneleft and David at Imperial Beach in an Instablog - Gold Bullion ETFs, Closed-End Funds, or Gold Mining Stocks - Follow-Up on CEF, GTU, GDX, NUGT:

    I appreciate your interest and participation, and that all of you raise such interesting points.

    Cheers, Monty
    Nov 6, 2012. 10:09 PM | 2 Likes Like |Link to Comment
  • Caribbean Utilities: Moderate Risk With A 7% Yield [View article]
    Thanks, p_eyler!

    This is an excerpt from your link to the CUC website:

    Finally, CUC has sufficient disaster insurance coverage in place for its generation and T&D equipment. This coverage includes US$10 million for its T&D assets, US$50 million in business interruption insurance and an insurance reserve fund of approximately US$3 million that can be used to cover deductibles or uninsured losses.

    I am unfamiliar with "business interruption insurance", and do not know if it would cover lost revenues (to address Howard's concern to protect the dividends). I believe that this demonstrates that CUC has taken reasonable steps to mitigate their business risks in the event of a hurricane, but does not provide an investor dividend protection.

    Cheers, Monty
    Oct 26, 2012. 02:42 PM | Likes Like |Link to Comment
  • Extract Over 7.5% Yields From Vedanta Resources PLC [View article]

    This is a very interesting opportunity. Perhaps it is worth mentioning to be mindful of the ownership and governance of Vedanta - see this article on political contributions from the controlling shareholder in India:

    Cheers, Monty
    Oct 26, 2012. 09:38 AM | Likes Like |Link to Comment
  • Caribbean Utilities: Moderate Risk With A 7% Yield [View article]
    Hi Howard,

    I am sorry, but I did not come across a mention of Hurricane Insurance. That said, if they have it in place, it did not in the past, and would not likely in the future, provide dividend protection - I do not believe that insurance policies cover "lost income" for damages; they tend to insure the assets. Therefore, the dividend is at risk of hurricane if there is hurricane damage - just like a REIT's income and distribution is at risk when a major property has a fire, or is damaged in an earthquake; they may have insurance, but it will not replace the income stream.

    That said, I live in a climate which is far more likely to have snow damage than hurricane damage :) What do I know about hurricane insurance? If you have a different perspective, or learn anything different, I (and am sure that otrhers) would be pleased to know.

    Thanks for your readership and interest!

    Cheers, Monty
    Oct 26, 2012. 08:51 AM | Likes Like |Link to Comment
  • Analyzing Canadian REITs, Part II: Diversified Office, Retail, And Industrial [View article]
    Hi Howard,

    Thanks for this clarification, and for sharing this with us! Unfortunately, the sources (that I identified in the 1st article) did not get it right. As it is not one of my holdings, I did not validate the distribution/yield with the company website.

    Cheers, Monty
    Oct 14, 2012. 06:23 PM | 1 Like Like |Link to Comment
  • Caribbean Utilities: Moderate Risk With A 7% Yield [View article]
    Hi p_eyler,

    I share your frustration - I build a lot of my positions through partial fills - sometimes to watch them decline further after I have all that I plan to hold. That said, I feel that the small caps, and thinly-traded stocks, are the best opportunities for both yield and gain - they are outside the target scope of almost all funds and analysts, which may help them trade on fundamentals instead of whims?

    Yes, there are a lot of Canadian who share my family name - I live in Ontario and have actually worked with a "Spivak" who is unrelated. There are also a few variations in the spelling. It seems like it is like "Jones" or "Smith" for Eastern Europe. Unfortunately, none of my extended family has become either rich or famous, so no relation ;)

    Cheers, Monty
    Oct 12, 2012. 08:32 AM | Likes Like |Link to Comment