Arco Investment

NetDebt has changed the landscape of the debt industry by creating the land’s only completely internet matriculation solution. All of the answers to your queries and all that you need to sign up in the program are provided online.

Of course there are always live reps standing by, just in case you need them. The best part is that you can do it all from the comfort and seclusion of your home or office. “To present Americans with an easy, no-twaddle means of gaining watertight debt guidance and offering them an internet answer that will eliminate their debt difficulties.”

By bringing together what they believe are the countryside’s most talented and skilled people in the areas of law, finance and debt eradication, NetDebt has successfully tailored a completely on-line debt solution.

NetDebt not only shympathises the value of getting good debt suggestion, but also how difficult, confusing and disconcerting finding it, using the traditional procedures can be. They have effectively quashed the need for distressing and time consuming “counseling” sessions that accompany all other debt programs.

The idea and enterprise statement at NetDebt is extremely uncomplicated.

Where has all the money gone?

So this topic comes from a comment from my friend Michael James on commenting on my “self pitying” posting of getting older yesterday. The quip is actually quite topical, I have earned well over a million dollars in my 20+ years of working. Where did all that money go?

If you think about it, where it always goes:

• Taxes
  • Federal Taxes which had to have eaten 10-20% of it over the years
  • Provincial Taxes which ate about the same if not a little less
  • GST and PST can’t even fathom how much I have paid for those little consumption taxes.
  • Municipal Property Taxes, which keep going up as well. How much? 4-8% of my income is a good guess.
  • Employment Insurance payments, and I have never claimed against this system (touch wood). That is money completely lost.
  • Canada Pension Plan Payments (and a little QPP as well), hopefully I’ll get some of that back one day.

  That’s about 25-45% of the money right there, and I haven’t spent a cent yet!

• Living, which might include rent and mortgage payments and such, which has to be about 10-20% of that money.

So I have about 40% of my income left and I haven’t fed anyone, bought a single coffee or gone on a wild spending binge?

It’s interesting just to look back and if I told myself when I started working that I’d have earned over a million dollars by now, but not be living in a villa on the Riviera, I don’t think my younger self would have believed it.

Tax Preparation Coming

It is that time of the year to start looking at tax software and start monkeying around with my taxes. Our friend the Canadian Capitalist is looking at Ufile instead of Quicktax this year. Quicktax seems to be cutting the number of possible returns to be done down to TWO (2) but I need to research this more to figure out whether I can use this or not, given my oldest daughter now is old enough and has income. Stay tuned, I am sure I will rant more about this topic very soon.

Move Complete

My Blogspot account is now permanently aimed at this site. The move over is complete, I hope.

The professional colleges are frequently called to as Career College or commerce schools and are in authority for giving occupational learning.Usually students who are in the closing years of their high school learning or those who have completed their high school education are considered eligible for these vocational schools.However, in recent times, a certain problem has been noticed in case of vocational schools.Now, educational bodies supply alternative occupational course to aid their students.Different scientific areas are now open to employment.Vocational educational institutes form a significant part of this system.It is to be remembered that till now vocational educational institutes are available mainly for the development of expertise and therefore their main plan is not more of distrubution education but to ensure good training.It is crucial to point out that there are separate kinds of colleges which are set up for the distrubution of knowledge and the main level commences for the primary universities and is followed by the secondary school and then the institutes of higher education like the colleges and universities.In these cases the occupational educational establishments come of immeasurable help as they are in control for providing the essential preparation to the interested students.These universities have emerged to be of many importance at present due to a few reasons.But in most of these examples, a evident amount of prior knowledge or tuition is awfully obligatory.An online degree by studying a few hours a day and taking exams on your computer may be a healthier lifestyle fit.

For some,a traditional further education college degree is not for them.This is doubtless one significant reason which has contributed to the fall in the number of vocational schools in the United States of America.One of the primary factors being that at present with the advancement of science and technology, human progress has moved on by leaps and bounds and thus new routes have opened up.Here learning does not simply suggest to book based education but it refers to the whole development of temperament and behavior.The most significant years in course of a child’s development are spent in educational institutes and it is therefore doubtless that the university learning takes a very important role in designing the future of the child.Schools offer uncomplicated education and their main resolve is to imbibe appropriate amount of interest in the child to love education.

In most of the premier nations of the world, professional universities are mostly private endeavors nonetheless there are particular government supported professional schools as well.More often their broad schooling has been under scanner for their below the grade quality and also they have also been blamed for sewing the seeds of over expectation related to their future jobs amidst students.

Normally you can put general household waste, office cleanup waste, green waste, masonry, concrte etc into a skip bin.

Many companies, such as Rentaskip Australia which specialises in Internet booking of skips, can collect a wide range of waste types in their skip bins, but also have some exclusions.

Normally, unless the skip company specifically states that it can collect a particular hazardous material, all hazadous materials are prohibited from being placed in skip hire bins. Liquids including oils cannot be placed in skip bins. Skip bins cannot be overfilled.

Aditionally certain items such as refrigerators and air conditioners may contain ozone depleting substances in the form of refrigerant gases. Many governments prohibit the venting of such gases to the atmosphere and prior to disposing of such items you should consult your local government or the skip company to ask if you need to arrange safe collection of the gas.

Some companies that hire skip bins, have a web page that lists the waste types that may and may not be placed in their skips.

It’s not just me and this blog that’s back in action but the markets:

Since the bottom in late ‘02/early ‘03, we have seen dips followed by relatively quick erasing of the drawdown. Something as fundamental as poor credit practices looks now to be rather minimal in terms of market effect although 1) we’ll see just how accommodative the monetary authorities remains for the rest of 2007 and 2) we’ll see how the remainder of the year turns out as we’re yet to get the full reporting (latest quarterly earnings from the financial sector, inflation numbers, hedge fund performance numbers).

You’ll note that the dips are getting deeper but the time to recovery seems to be constant. We have V shapes that are only being stretched vertically. I’m a bit surprised that VIX hasn’t dropped back below 15. No forecasts from me now. After hurricanes, subway bombings and credit crunches, this global market has shown resilience that makes me think we’re well into the area where behavioral finance takes over. Kind of has that late 90’s feel (I’ll comment again on this below).

I have not submitted a blog entry since June 21st, nearly three and a half months ago. Is it me, or has it been relatively quiet in ETF land? Not to say that there haven’t been new products launched, there have been … some good and some not so good. But my feeling is that the conveyor belt has not only eased up on its acceleration rate but may have actually decelerated. If this is not true, someone please let me know. But if I’m right, then let’s all give a collective sigh. This pause in product launches should give investors of all types the time to reconfigure their processes to determine their investable universe and even tighten up their actual potential short list.

But don’t be mistaken. This pause is temporary. Although I may have been silent online, I have been in contact with many in the industry. We are going to see more from the big 3 (BGI, SSGA, Vanguard) although I’m thinking that PowerShares should be included in this group soon. However, the more interesting developments will come from the new entrants … some of them you have already heard of and others you likely haven’t. Some will provide exposures “with a twist” to asset classes already covered. Some will provide exposure to new areas of the capital markets.

It is the arrival of many smaller new entrants into this space that will provide what some will call innovation or differentiation while others might simply call (in aggregate) crap. I mentioned before about the feeling of the 90’s. If the new ETFs coming out focus on new ideas … there’s way too many to list so I might go over them one-by-one in future postings … then wouldn’t this new chapter in the ETF story be similar to the dot-coms? It’s simply the transfer of capital to new ideas, some that will work and some that won’t. Most of these new entrants have the backing of VC firms. You have to make your way to them to understand why they think their story is unique (i.e. why they have skin in the game). It’s pretty much the same idea on the hedge fund side. Except the manager doesn’t usually have the backing of a VC firm although they may be involved in some way (distribution). But the hedge fund is also about an idea. Unlike the ETF that provides (hopefully) a new or significantly meaningful market exposure, the hedge fund’s idea is about some new actively managed opportunity. I personally don’t see that significant a comparison with the dot com craze. The anti-ETF crowd surely sees it differently.

In this tough environment where getting paid for risk premium is suspect, it’s no surprise that we continue to hear about the growth of both ETFs and hedge funds. Hat tip to AllAboutAlpha for the latest commentary on this subject from InvestmentNews. Having now passed the half trillion dollar mark, you just have to wonder if the real asset growth of ETFs will be in the tried/true SPY-type behemoths or will the smaller players and new entrants be able to gain significant market share.

An interesting development is the cross border (or in most cases cross-ocean) movement of firms and operations. For example, SPA who is based in Europe have recently set up operations in the US. For those interested in the fundamental indexing approach from the likes of WisdomTree and PowerShares (via Research Affiliates), you’ll want to check out SPA and their fundamentally driven ETFs which are advised by MarketGrader who are based out of the US. I’d like to see this type of development (international operations) continue and the trend lead to more fluid trading of instruments. A good start would be to have NYSE-Euronext allow for a full ETF menu for US and European domiciled funds to be easily traded on a convenient online platform. We must be already headed that way.

I’ll find out additional information on these little tidbits and more in a few weeks at the “World Series of Exchange Traded Funds -West” conference in Scottsdale Arizona. From what I can tell, this should have a similar feel and scale as IMN’s similar event in Miami back in March. However, it won’t be as big as the upcoming “Superbowl of Indexing” which is also in Scottsdale and has more of an institutional investor bent.

For those of you who know me or have communicated with me in the past few months, you’ll know that I focused my attention on finding a new role for myself. My consulting work from earlier this year was meant to be a transition for me as was the blogging. One of the potential avenues open to me is writing. I have been given suggestions by several people about starting up a paid newsletter focused on ETFs. I remain cautious on this as there are a lot of these types of newsletters and there will surely be many more. In New York, I have spoken with a group that is interested in institutional level research of course with an ETF focus. Think I-bank but with an adamant spotlight on independence. One individual suggested that I have a 3-tiered service: free blog; low fee newsletter and top shelf institutional service. I just don’t know if I see myself in the online media business as all I’ve focused on in the past 12 years or so is the management of portfolios. It would be nice to do both (hence the blog), but you can only spread yourself so thin.

So, I have been speaking with a small number regarding possibly joining their organization. Some small, some large. This is where I have focused myself over the past couple of months. The upcoming busy conference schedule over the next few months helps in the networking so we’ll see how it goes. Like Yasser Anwar and various other bloggers who have spent far more resources than I have on their site (with surely more impressive results such as number of visits … mine is certainly a bare bones blog), I have found that as much as I enjoy blogging, the opportunity to turn this into a business is possible but likely not my path. The 3-tiered online service is something I have been thinking about for a while and I now have some potential partners to work on this with. But deep inside, I feel like that that would be a nice place for me to be AFTER I decide to stop managing money.

Let’s face it: This has got to be one of the most interesting times ever to manage portfolios. It’s a low yield world where it’s also harder to find alpha. This has forced sophisticated investors to explore new asset classes and strategies. This kind of thinking is making many market participants attempt to emulate others who are ahead of the pack … have you noticed how so many people online and in the mainstream press are talking about Yale’s endowment? We could certainly be in a point right now where the next ten years will have negative annual average returns.

For me, despite my focus on ETFs on this blog, I’m interested in the broader asset allocation problem. Writing about this just isn’t as much fun to me as compared to actually managing the money. So for now, I’ll put up the occasional blog posting here but hopefully I’ll be notifying you soon about where my career path takes me.

Within a few hours…this site should morph

Runners World

My daughter ran in a 10 Km race on Sunday, and I was very impressed with her ability to stick with it and work hard and get a very good result. I never had the “intestinal fortitude” to run (I get bored, sore and I stop), and that kind of “drive” is important in Life (and can be applied to Personal Financial Planning easily). An ability to deal with a short term pain for a long term gain is what runners are all about.

More interestingly was the technology around the race, which was very unobtrusive but gave amazing results. Each runner had a radio transponder ankle bracelet, so that their “time” was very real, since it started when they crossed the start line and stopped after the crossed the finish line (given the number of people starting in MASSIVE races like the Boston Marathon, I now understand better how they can get such clear times).

What was MORE amazing was the web site that the Running Community in Ontario (or is it Canada) has where all I had to do to find my daughter’s results was, open the page type in her name and the results appeared on line right there. Now that is a good use of technology.

I wish financial tools on line and on computers were that easy to use. Some are relatively straight forward like the Bank Web Sites, Quicken and Microsoft Money, but end up becoming very cumbersome, because they are trying to attract too broad a customer base (i.e. be all things to all customers). Something a little simpler might be what is needed?

I was impressed with this whole running thing.

Canadian GDP Up in August

The GDP is up again for August, with an increase of 0.2% which is small but at least not negative.

Retail and Mines and Petroleum showed the biggest gains overall, but another up month for the GDP is a good thing:

In August, economic activity increased 0.2%, its average pace since the beginning of 2007. Increases in retail trade and oil extraction propelled the growth, while a decline in utilities dampened it. Both the goods- and services-producing industries advanced. Gains were also registered in construction, forestry, mining excluding oil and gas, and wholesale trade. In addition, the accommodation and food services, and financial sectors moved ahead. Conversely, utilities retreated and manufacturing stood still.

By industry you can see where money is being spent and money is being made, no surprise that Minerals and Petroleum are strong here. Canada is now the Natural Resource house for the Americas, or one of them. Interesting, because most governments have tried to NOT be labeled that way, and now Canada seems to be happy with this label.

Even though most financial advisors will tell you that taking a withdrawal, and many times even a loan, from your retirement account, should only be a last resort if you’re in a financial pinch, many people lately have been taking early withdrawals (with penalties and taxed as income), and loans against their 401k retirement accounts to help them through difficult economic times.

Although I must admit that I did take a loan against mine about 6 years ago for a financial hardship, I can honestly say that I will never, if I can help it, take that loan again. Even with me paying myself interest when I paid the loan back, directly out of my paycheck, I still missed out on precious compounding interest on my stocks because my balance was lower and the money I had withdrawn was not earning interest during the time.

Although when you take a loan, versus a withdrawal, there are no tax consequences, you are still taking money out that could be earning interest and is not, until you fully pay off the loan, and this can definitely impact your bottom line when you finally retire.

Many people are citing difficulty in paying their mortgages and credit card and other debt as reasons for taking withdrawals and loans, however, financial planners say that it still should be used as an absolute last resort, because who knows when you’ll get around to paying it back.

Also cited as reasons for the increase in borrowing against 401k’s is the whole credit crisis, as well as credit card companies lowering charge limits, when many people rely on credit cards (not good) to pay monthly expenses in one way or another. Also, it is increasingly harder to get low APR credit cards, so people are more heavily relying on lump sum money and other sources of income.

As part of the capping of my pension and putting me into a different kind of pension, my company automatically put me in the stock purchase plan, where every quarter the company will allow me to purchase stock in my company at a 15% discount (which in turn becomes a taxable benefit and I am taxed at the end of the year for that 15% discount) very quarter year. This stock is then available to me, to do with what I want, and the amount of my pay cheque that I wish to commit to this stock purchase plan is variable as well (currently I have started at a very low percentage), up to a maximum of 10% of my salary (and there is a monetary value which is a maximum that you can purchase in the year).

Is this a good thing? I don’t really know, but let’s weigh a few points:

• If I hold this stock, I am investing more money in my company. As has been pointed out by a few of the financial bloggers, I am already heavily invested in my company, in that they pay my salary, now I am putting more money into this company. Putting this many eggs in this basket might be imprudent, with any company (unless you are working for a bank, in which case invest away).
• If the company stock is volatile, holding the stock could mean that I get taxed on the 15% discount (as straight work income) however that value may disappear from the company stock, and thus I will be taxed on something that does not exist any more.
• Are there other points I am not thinking about? I’m open to further points that I might be missing here.

So the obvious strategies for this are:

• As soon as the stock is available to me, sell it right away, and realize the 15% discount and then invest it in some other investment vehicle (presumably something less volatile than the stock might be).
  • A corollary to that would be sell the stock right away and take this money and put it on the largest debt that I currently have (Mortgage or Car Loan), given the money has already been segregated from my normal funds. I still have to pay the 15% discount, but that is now thrown onto a debt accruing interest already.
• Transfer the stock into my RRSP right away, and thus hide the 15% discount in the RRSP and have an 85% add into the RRSP, and then either hold or sell the stock on the basis of how comfortable you feel holding it.
• Hold the stock as an investment vehicle, and continue to hold it in that fashion. Set up stop sell rules for it, and forget about it.

I’m not completely sure what my plan actually is going to be, but for now I am leaning towards the corollary of idea #1 (Grab that Cash with both hands and, pay some bills (to paraphrase Pink Floyd)).

Any ideas from the readers?

Once perceived as just another tourist destination, Cyprus has evolved into much more, thanks to the approaching EU enlargement.  For a potential half - billion people, Cyprus is now a place to work, raise a family, operate a business and retire.

This new vision of Cyprus has construction companies working around the clock, new roads and marinas under construction, more EU companies looking at the Cypriot market, and increasing numbers of young EU citizens migrating there.  Also, the government is planning to introduce VAT on property purchases.  In other words, Cyprus Real Estate is on the rise.

According to current Cyprus law, a non-Cypriot can purchase as much Cyprus Real Estate as he likes but he’s only permitted to transfer one house or one plot of land up to 4,000 sq. meters in his own name.  Also, Cabinet approval is required before the deed can be transferred.  The exception to this is if the person has lived and worked on the island for many years, in which case he might be granted permission to own a second home.

This restriction may soon be lifted, however, once EU accession is complete.  At that point every EU citizen will be allowed to work, settle and move freely in the EU.  Nevertheless, Cyprus has negotiated a transitional period for the next five years regarding the lifting of restrictions on secondary residences.  In other words, EU citizens will still not have exactly the same rights as Cypriots when it comes to owning property on the island until 2009.

Loizou, a property analyst, believes that Cyprus Real Estate prices could jump by 30 – 50% by then. “There will be a huge rush to buy before VAT comes on. But the freedom of movement and labor that comes with EU accession will increase demand for Cyprus Real Estate considerably,†he said. “At the moment, only foreign retirees buy property for their own use. Once restrictions are lifted we will have a younger generation of purchasers wanting to work here, investors buying up houses and leasing them, companies investing provident funds, and eight new member states with no sea and sun. That’s millions of people,†Loizou added.

Loizou also pointed out that EU accession would open Cyprus Real Estate to a market with a high standard of living, making leisure time cheaper for its citizens. “Air fares will eventually go down with cheap, no frill flights, like EasyJet, coming to Cyprus. This removes a major obstacle to Cyprus. It also means another boost to the Cyprus Real Estate market. Prices will not be falling,†he said.

“Prices will continue to go up. There’s a lot of construction activity and infrastructure development at the moment. Not only is Cyprus becoming a top destination for retirement, but also, younger people are coming here because they see it as an investment,†said Hadjikyriakou.

Loizou also noted that the government’s plan to impose a VAT on property purchases will also cause an increase in property prices: “VAT is going to cause us a lot of problems. But we don’t have a choice; we have to impose VAT on property purchases. The government might abolish transfer fees to offset VAT, but they only account for 5-8 per cent. Compare that to 15 per cent. Buying will definitely be more expensive,†said Loizou.

Regarding the transitional period for VAT on land purchases and the fact that full VAT will have to be paid on houses from the time of accession on May 1, Loizou believes it will hurt locals:

“This is bad news for locals. If you own property, it might be worth more, but once you sell it, other properties will be just as expensive,†warned Loizou. “Cyprus Real Estate Prices will increase gradually, at least by 20-30 per cent by 2009. But if you add five per cent related inflation to the increase in demand from EU countries as we come nearer to 2009, because there is less risk in buying two years before the restrictions are lifted, then prices are more likely to rise by 50 per cent,†he said, adding, “after 2009, God help us.â€

Hadjikyriakou contends that the government should step in if Cypriots can’t compete in the property market. “Many Cypriots cannot afford it. Those that don’t already have property will find it very difficult. Newlyweds are also having a hard time and are obliged to rent where possible. The government is not helping.â€

According to one government source, presently there is no plan to eliminate transfer fees as a balance against VAT.  “This issue was not raised during the tax reforms and currently there are no plans to do that. But that doesn’t mean it wont be addressed in the future.†The source emphasized that the reduced interest rates did help alleviate the rising prices. “One can see interest rates further decreasing or staying at current low levels. This should help people who wish to buy residences.â€

Of course, if a solution to the Cyprus Real Estate problem is found, the perspective on these problems will be different.

“It depends on what type of solution we end up with. Other things being equal, and if they give back Varosha, then there will be a shift in the population which could lead to stagnation in property prices in residential areas,†said Loizou.

The Annan plan is not yet in effect and it’s still not clear whether the plan would restrict Turkish Cypriots from moving to the south and Greek Cypriots from moving the north. It’s also unclear whether EU citizens will face similar restrictions.

“If the Europeans can buy in the north freely, then they are more likely to do so. But an overall solution will encourage investment both in the north and south,†said Loizou. “Overall, it could lead to two or three years of price stagnation in the Cyprus Real Estate market in the south. It all depends on the solution. It will take years to sort out the land and property issue. However, there will be a gradual, not major effect.â€

As things stand now, a wait-and-see approach seems best.  A sudden rush to buy immovable property could cause dramatic price increases and the implications of the VAT are still not completely clear.