favourites, general, investing and personal finance, pursuit of happiness, real estate

One Big Update for 2013

It is my feeling that time ripens all things; with time all things are revealed; time is the father of truth. -Francois Rabelais

Well, it’s been a while since I have written anything original on this blog, so this is my attempt on dumping a massive 2013 update on various topics, of varying interest, to my readers and more importantly to myself. I say more importantly to myself for two primary reasons:

1)  I have a few followers, but I’m not actually sure they are active readers of my blog

2) I am using this as an exercise in reflection

So first off, I’ll do a little update on my studies this year. Way back in January I did this blog post


As I embarked in the CMA AP program which was essentially my gateway to writing the 2013 Entrance exam in October of this year. I successfully passed the 4 AP exams and again successfully completed the entrance exam in October. I’ll be enrolling in the CMA SLP program in January which I garner is based on case and and a board examination. I expect I should do ok considering my previous role in corporate finance writing business cases and conducting briefings with senior management.

In terms of study techniques I found the following to be valuable:

  • the reading of my material 3 times through.
      • first for a quick introduction to the material
      • second to read the material in more detail (make notes, ask questions, highlight)
      • to fully understand what was being read (make summary notes, put in my own words, make associations, etc)
  • Feynman technique- was a good way for me to see if I actually understood the material and could recite it to someone else. See my link above if you’re interested in the technique
  • Getting practice exams and taking stats on which questions I was consistently getting right and wrong. As the exams neared closer, I had  very good insight into which were my strong suits and where I needed to focus on to get better.
  • Developing templates or short one-pagers that summarized or gave a template on how to answer each type of question or topic.
  • I also found working for 1-2 hours a day worked better for me then one long extensive work/study session
  • I utilized my time commuting to work by reading notes or going over memory exercises

Moving on to topic #2, a quick update on some key investments of mine. If you may recall, I touted Bank of America, way back in 2011.


The price was around $7 at the time of the post and eventually settled/bottomed out near $5 by December 2011. I continued to buy shares as it dipped and now we sit at price around $15. Now, it’s important anytime someone speaks about returns, that you compare it to something else, otherwise it’s really meaningless. So the standard, would be the S&P500 which over the same period is up around 51%.

Around the same time, I started accumulating a position in AIG which has done well. With a stock return roughly at 110% during the same time frame.

As for current market prices, I’m not really finding any bargains, and there are some calls that the market is over priced and due for a correction, well I have no idea, all I know is I am finding it difficult to put m cash in my portfolio into use.

Going into 2014, my portfolio remains over 50% cash, I don’t expect to put it to work unless I see some issues I have been following get cheaper.

In terms of YTD performance, I think I’m sitting at around 23% which is close to the market YTD (S&P) which isn’t that impressive, but then again I have been in 30-50% cash for the entire year, so I’m not sure if that means I’m an idiot for not utilizing it or I got lucky that I was able to perform as well as I did while holding a significant portion of my portfolio in cash.

Next up we have real estate in Canada. I continue to be bearish on real estate in Canada, and like any broken clock I hope to be proven right atleast once or twice.

Anyways, here’s a great article to read on it.


It would have been nicer if they had used more up to date information but I think the message is still there. I summarize:

  • household debt to income in Canada is out of whack and near levels similar to those in the UK and US before their respective housing crashes
  • household income to housing prices are out of whack
  • economy is terribly dependent on construction now
  • interest rates are low and are keeping payments low and buyers interested

My own additional thoughts, if the Canadian economy is more dependent on the construction industry than in the past, then perhaps that might explain the turn the other cheek attitude some have regarding debt levels and income/price levels. No one wants to face reality, or be the one person that states, hey, a lot of jobs are going to be lost here, yes our economy is still recovering, but the one bright spot (real estate and construction) is demonstrating irrational exuberance and we’re going to be in even worse shape in a couple of years. I think if I was a person in power, I think I would struggle with that internal debate as well. No one likes being the bearer of bad news.

How many people actually realize that if they put 10% down on a house, and prices fall by more than 10% (which by the way isn’t unheard of), their mortgage is actually more than the worth of their house. This is called being underwater. And I know I simplified the 10% drop and the 10% down payment, but the moral of the story is still relevant here. Anyways, so you essentially have no equity left in your house. Want to move to another house? Well you better have  a down payment saved somewhere else because you are not getting it from selling your house.

I could be wrong, but as with most of my decisions involving finances, I’ll more than likely put myself in a conservative position where since I’m facing differing scenario(s) or possibilities, I will make my decisions so I should be OK or at least positioned conservatively in either outcome.

I like to compare it to a betting game. In a made-up scenario, player a is given an opportunity to bet on a game where there are three cards. The cards are as given: Ace, two and a three. If player A gets either an ace, or two he will win with a payout of 1:1. If he gets a three, he loses his bet. How much should he bet? Well the odds are in his favour, at 67% but we also know there’s a good chance he might just happen to lose on any given turn. Now if it’s given that he can play multiple times, we know in the long run the odds are in his favour AND in the long run he will come out ahead. But alas his financial resources are limited so he must manage his resources to let the long run run it’s course (let probabilities do their thing). He must consider two overiding factors:

1) he cannot bet it all on the first bet or risk going bust (it is possible even with a favourable probability

2) he shouldn’t bet so conservatively that he doesn’t maximize his longrun profits

There’s an excellent book that details the answer. Check out Fortune’s Formula by William Poundstone.

In 2013, I made an effort to learn how to cook more dishes at home. I hope to continue to do this going into 2014. My primary motivations for this were many fold and include the following:

1)  I found eating out less appetizing – or plainly put there were times I was paying $30 for a meal that just didn’t taste that great

2) eating and cooking at home saves alot of money

3) looking to cook and trying different foods is a bonding experience with my girlfriend

4) eating homecooked meals is delicious and healthier

I watched a view documentaries on food consumption during 2013, the titles which are slipping my mind  at the moment but I’m sure if you have netflix you can find them. Essentially what I got from watching these documentaries was:


There’s plenty more I could write about but I think I’ll leave at this.



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