Panic at Orlando airport spoiled my golfing trip

Golf season in Canada can be very short because of bad weather. One of my guilty pleasures is heading south for an annual golf trip with the boys every November. We started this tradition sixteen years ago and I would have to be very ill to miss it.

As a volunteer driver, I experienced first-hand the panic at the Orlando airport while dropping off a friend after our last round of golf. We decided to go early so we could have   dinner together at the airport. Walking in, we faced a stampede of frighten travelers running and screaming to the exits.

Some travelers thought they heard gun fire while others thought that they heard an explosion. Standing outside watching the Orlando Police conduct their investigation with weapons drawn was very alarming.

It turns out that a camera battery exploded in a bag which cause people to panic and the airport to be evacuated. Thousands of travelers faced hours of waiting at security checkpoints.

Phil Brown, CEO of the Greater Orlando Aviation Authority, said a full ground-stop was issued at 5:30 p.m. and lasted until 9 p.m. At a press conference Friday night, Brown said 24 flights were canceled and 27 others were diverted. He acknowledged that some passengers will have to book new flights, and others might struggle to find hotel rooms for the night.

He added that some airport staff and TSA agents instructed the crowd to take cover, when the initial explosion created confusion among staff and passengers.

At first glance, it may seem that the Orlando Aviation Authority may have over reacted to a faulty camera battery. However, it happened on the same day that Americans celebrate veteran’s day.  Plus no one wants to read about children getting hurt after visiting Disney World.

I felt bad for my friend who ended up sleeping at the airport as his flight was cancelled and rescheduled for 2:30 p.m. the next day. I was lucky that my early morning flight was cancelled and I got some extra sleep. It made delays in my rescheduled flight a little more bearable.

Will this unfortunate incidence stop me from going south golfing? Not a chance, however I may decide to spend a few extra days driving instead of flying.

The moral of this story is managing risk extends beyond the financial markets. Panic and over reaction can easily cause a major sell off in stock markets. You can’t predict what will cause a stampede to the exits.

 

 

 

 

 

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Investing ideas: I liked the product so much, I bought the company

Victor K. Kiam made a fortune as the President and CEO of Remington Products which he famously purchased in 1979 after his wife bought him his first electric shaver. Kiam became famous as the spokesman for the Remington shaver. His catchphrase, “I liked the shaver so much, I bought the company”, it made him a household name.

Your iPhone is your BFF and you can’t function without a Starbucks latte. You post something on your Facebook page every day, go home from work and chill out by watching Netflix. They’re all products you love and know well.

But does that mean the companies behind them are good investments?

The short answer: At least it’s a good starting point.

At first glance, it isn’t a terrible idea to own stocks if you have a good understanding of a company’s products and have a good feeling it will be successful. Yet knowing whether a business makes a good product and has excellent customer service are by no means the only measurements for investing.

For example: Snapchat (SNAP) and Twitter (TWTR) are both very popular but can they become sustainable businesses with positive earnings growth? So far, it isn’t looking very good for either of these companies. Before you invest, you have to determine whether the product or service is just a new fad or a money-making long-term trend.

One of my best investment ideas in 2016 came from going on vacation on a cruise line. Talking to other passengers I got very positive feedback on their cruise line experiences. Plus many of my boomer friends confirmed that they also loved taking a vacation on a cruise line.  The baby boom generation is getting older and I had dinner with many passengers in their eighties and even with one women in her nineties. (This could be a long-term trend)

Although I was on vacation on a Carnival ship, I bought shares in Royal Caribbean after extensive research.

Price / Earnings Earnings growth (5yr) Operating margin
Royal Caribbean 17.7 times 16.45% 19.95%
Carnival 18.5 times 8.95% 16.63%

It turns out that I could have beaten the returns of the S&P 500 index by owning either RCL or CCL as illustrated by the chart below.

Finding good, long-term investments is exceedingly difficult, there are only a few good ideas out there. When you find an extraordinary business and you have an understanding of what its future looks like, you should invest some money into it. Unfortunately, going that takes time, effort and know-how, often more than casual investors will do on their own “but it can be done”.

Could President Trump cause another Great Recession?

Republican presidential nominee Donald Trump shakes hands with Democratic presidential nominee Hillary Clinton following the second presidential debate at Washington University in St. Louis, Sunday, Oct. 9, 2016. (AP Photo/Patrick Semansky)

Being Canadian, I am not trying to influence any of my American readers on who they should vote for next Tuesday. However, my investment portfolio is heavily invested in the U.S. stock markets, I shudder at the thought of what could happen under President Trump. Naturally enough, investors and analysts hate uncertainty. Hillary Clinton largely represents the status quo. Mr. Trump is more like Forrest Gump’s box of chocolates “You never know what you’re going to get.”

What exactly happens the day after? To markets? To the economy?

The conventional wisdom is that a Trump victory would lead to a swift, knee-jerk sell-off. Many investors will choose to sell stocks and ask questions later. The Mexican peso would most likely fall on fears of a trade fight along with ETFs that contain Mexican stocks. Some insurance companies could tumble on the uncertainty of what would happen if Obamacare was repealed.

A worst case scenario is Mr. Trump’s anti-trade policies would send shock waves around the world. Add a stock market crash and it would plunge the world into recession. Europe’s economy is very fragile and it wouldn’t take much to tip Europe back into a full blown recession. This would lead to a serous banking crisis that could spiral into emerging markets.

The biggest test for the stock markets might be pegged to the future leadership of the Federal Reserve. There is much more uncertainty regarding who Trump might nominate, though he has made it clear he would not re-nominate Chair Yellen.

Now, a handful of economists have suggested that despite all of the promises made by both candidates, odds are high that whoever the next president is, they will preside over a recession. They argue that we are in the second-longest bull market of all time and the eighth year of this economic expansion. It is hard to believe that we will go through the next four years without a hiccup. If merger activity is a gauge of the market’s cycle, the recent spate of deals suggests we’re closer to the ninth inning than the first.

In reality, it’s impossible to predict how the markets would settle after an initial sell off. It will take time for investors to truly make sense and “math out” how his policies would affect the economy. Now, Trump’s bark will be a lot worse than its bite in terms of actual implementation of his anti-globalization position. Hopefully, a split in the congress and the senate will stop Trump from carrying out any outrageous election promises.

Am I worry about the U.S. election? Not really because I am an option trader. I have sold covered calls to protect most of my U.S. stocks. I have sold only a few cash secured puts on stocks that I am comfortable holding long – term. Plus, I have some extra cash just in case of a market sell-off. I am very comfortable switching from selling cash secured puts to buying puts if there is a bear market.

Where am I going to be next week? On vacation from the markets in Orlando, playing golf with my golf cronies. Hoping that they don’t ask for any financial advice and looking for another hole in one.

hole-in-one

 

Will that be Debit or Credit?

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Most financial writers would recommend purchasing items using a bank debit card or cash instead of a credit card to control impulse buying. A debit card transaction will allow the vendor to take money right out of your bank account. It is so quick, you can see the transactions appear on your online bank statement minutes after your card has been swiped. This is good advice because spending money that you don’t have can lead to accumulating a lot of unnecessary debt.

However, my only problem with using a debit card or cash is security. Lose your wallet or purse and kiss the cash good-bye. If thieves get a hold of your debit card, the bank will not cover your loss. I am fortunate that the credit card companies in Canada have all adopted chip technology with a 4-diget Pin number for added security. Plus most retail stores even have a tap option for purchases under $100.00, so tap and go is quick and easy.

My decision to always use credit over debt, just saved me $1,470.67 because my wife’s credit card was recently compromised. The thief was very smart, only one big transaction which the credit card company didn’t red flag as an unusual purchase. I always check my monthly statements and recognized the bogus charge immediately. This is the third time in less than ten years that I have had to get a new credit card due to fraud.

The previous two times, the credit card company called me after they noticed some unusual activity. Although, it was a little embarrassing to have my credit card purchase declined but it is better than losing money. My experience with credit card fraud has made me into a frantic when it comes to making sure that I don’t lose any credit card receipts. I always cross-reference the receipt with my monthly statement. We even record each on-line purchase on a separate piece of paper and file it with the rest of our receipts.

Thieves have become very bold! I received a phone call at 6:00 a.m. from someone pretending to be from my credit card company. He stated that my credit card may have been compromised and requested that I should turn on my computer to check my debit card transactions. He wanted to get access to my banking information. Warning bells went off in my sleepy head. What the thief didn’t know was that credit card and debit card were with two different banks.

Protect yourself from fraud

  • Use a credit card for all your on-line purchases for added protection
  • Keep your receipts and check your monthly credit card statements
  • Hang up on questionable phone calls and call your financial institution
  • Use a pin number that doesn’t have any personal dates, like your birthday
  • Change your pin number from time to time
  • Share with family and friends information on current scams in your area

What is your answer to the question? Will that be debit or credit?

 

Some money saving tips for cruises

My wife and I just returned from a 10 day Caribbean cruise. It was only our third cruise but it was the first time that we booked an inside cabin. Not only did we save money but the darken cabin made our sleep time more restful. We didn’t miss having a baloney as there were plenty of places on the ship to sit and enjoy the view. (Pack a night-light for your night-time bathroom visits)

Avoid specialty restaurants

Most cruise lines have expensive cover charges for fine dining at their Italian, seafood and steakhouses. It doesn’t make economic sense to book a package but look for deals on embarkation nights. You may get a 2 for 1 deal or a free bottle of wine if the restaurants are not busy.

Don’t automatically buy a beverage package

Most people won’t keep up the drinking pace needed to break even on these packages. These packages range in price from $8.00 per day for sodas to $55 per day for alcohol. Read the fine print, there could be some surprising restrictions such as per-meal or per-day caps and most are not transferable.

It’s often cheaper to buy a bottle of wine than a few glasses but what do you do if you don’t finish the bottle? Cruise ship waiters can mark the bottle with your room number and save it for another night or you can bring it back to cabin.

Go on your own on shore

Many people save money by booking independent shore excursions and sightseeing tours. It is important to have cell service at the port of call in case of problems like traffic jams or vehicle breakdowns which could cause you to miss the ship’s departure time. The main advantage to booking the cruise line’s own tours is that, ideally, the ship will stand behind its quality, and if the tour runs late, the ship will wait.

Seek spa deals by choosing your time wisely

Most of the time prices for onboard spa treatments rival what you would pay at luxury resorts on land. There are exceptional deals that could save you as much as 30% by booking your treatment on embarkation and port days. Plus sometimes, the spa will offer a discount near the end of your cruise.

Steer clear of photo galleries

Many ships employ their own onboard photographers. You can purchase official pictures of your family embarking, eating, dancing and all dressed up for formal night for $20 to $30 per 8-by-10 inch image. Ask your fellow passengers to take some pictures for you using your own camera or cell phone.

Avoid onboard internet

Internet access and Wi-Fi are the more expensive amenities at sea and prices range from 55 to 75 cents per minute. Satellite internet onboard is very slow and it could cost you as much as $7.00 just to read and respond to one email. Can’t live without internet, many ships will offer extra-minute specials if you sign up on day one. (Our cruise line offered 40 free minutes)

Laundry, pressing & dry cleaning

Cruise lines will gladly do laundry for you with prices starting at around $2.50 per item. Instead use the self-service laundry facilities which will only cost you around $5.00 per load. They usually feature an iron and ironing board in addition to washer and dryer. You could also pack a steamer to get rid of wrinkles or hang them in the bathroom when you have a shower.

Tips to enhance your dining experience

We always pick opening seating for our main dining room. It allows us the flexibility to spend more time in port, catch an onboard show or activity. We usually go for shared seating which allows for more interesting dinner conversations and the opportunity to make new friends.

In addition, you are not limited to one appetizer, entrée and desert in the main dining room. You can order two entrees or three desserts if you choose. You can also order appetizer-sized portions of entrees as starters or order a few appetizers for your main meal. It’s a great way to try new foods you’re not sure you’ll like (escargot, anyone?).

Don’t miss the last formal night which offers some specialty dishes like Lobster or Beef Wellington. You don’t need a tuxedo or fancy evening gown to enjoy formal night. However, men do need to pack a jacket & tie and for women a skirt & blouse or cocktail dress will do just fine.

Travel bargains for Americans, thanks to a stronger U.S. dollar

can3  canada

Most of the travel world is on sale for Americans right now since the U.S. dollar is enjoying one of its strongest periods in forty years. Central banks have been printing money to devalue their currencies. The U.S. Fed keeps talking about raising interest rates which could further strength the U.S. dollar. There is a 74% chance that the Fed will raise rates at their Dec 16 meeting.

First of all, don’t rule out Canada as a vacation spot. It is home to many U.S. hotel chains, retailers and fast food outlets. You can drive, fly or even take a train ride across the border. The current exchange rate gives U.S. travelers a 33% discount and could be as high as 40% by this summer. Being Canadian, I have gone whale watching and salmon fishing off Vancouver island. I have also gone horseback riding in Banff, canoeing on Lake Louise, white water rafting on Kicking Horse river and walked on a glazier in August!

 

ice can1

Canada offers Americans a wide range of vacation activities at a big discount and we even speak the same language.  (excluding same cities in Quebec where French dominates) I dare you to come to Toronto and walk on the edge!

cn cn3

 

Two other countries that offer deep discounts and speak the same language are Australia and New Zealand. Their currencies offer a 35% to 45% discount for American travelers. Plus their time zone is opposite to North America, our winter is their summer. I am a” Lord of the Rings” fan so visiting New Zealand is on my bucket list. Plus it is one of the few places that gives our Canadian dollar a 11% travel discount.

A few other destinations to consider but safety could be an issue:

Calling all Russian Vodka fans. Moscow is a can’t miss for cold-weather travelers right now. Russia’s ruble has been tanking as its economy gets hurt by western sanctions and plunging oil prices. One dollar would get you 68 roubles, a 32% savings. I wouldn’t recommend walking around with any items containing American symbols.

South America is a bargain, especial Brazil. Pack your bikini or speedo, it’s the right time to go to Rio De Janiero or anywhere else in Brazil. Brazil’s currency, the Real, has lost almost 33% of its value against the dollar from a year ago. That means places like Rio and Sao Paulo are much cheaper to visit now. By the way, you want to go now before prices possibly soar again for the Summer Olympics in 2016.

Have you been dreaming of going to Europe? The Euro is now nearly equal with the U.S. dollar. One euro costs $1.08, compare that to two years ago when one euro was about $1.37 which works out to a 21% savings!

There are plenty of destinations to choose from, so grab the kids and go abroad.

 

 

 

 

My 100th Post: If Money doesn’t buy Happiness, than you are spending it Wrong

sad-face-plus-money-equal-happy-face

I wouldn’t have worked as a financial advisor or be writing a financial blog if I didn’t believe that most people have a happiness number.  Your happiness number will be adjusted over time based on changes in your lifestyle choices.

You don’t need a degree in psychology to recognize that happiness is a state of mind. I have to admit that after a modest level of income, there isn’t really any evidence to suggest that people’s happiness increases with their wealth.  Money is not going to turn an unhappy life into a happy one. Some people are unhappy no matter how much money they have. However, I have also seen where spending money that you don’t have can turn a happy life into an unhappy one. Whether you are loving life or hating it, I do believe that it could really depend opon how you are spending your money!

“I’ve been rich and I’ve been poor. Rich is better.” This insightful bit of personal financial wisdom has been credited to entertainer Sophie Tucker, comedian Joe E. Lewis, comedienne Fanny Brice, actress Mae West and many others.

Some tips on buying some happiness:

Tip 1 – Buy experiences instead of things

Who we are as individuals is the sum of our experiences not the sum of our possessions. The joy of buying something new tends to deteriorate over time but creating memories last a lifetime. Sharing those experiences with family or friends can make you even happier.

Tip 2 – Many small pleasures might be better than a few big ones

Will you be happier saving money for a big-ticket item like a luxury car or indulging in small things like going to a spa or out to dinner with friends. You may be surprised at how many small pleasures can add up to a happier lifestyle.

Tip 3 – Spend on others and not yourself

There is a lot of merit to the saying “it is better to give than receive” The holiday season is just around the corner. Isn’t seeing the reaction of family & friends opening a gift that is thoughtful and unexpected, priceless?

Tip 4 – Rent a dose of happiness

You can enjoy something without having to own it. Rent a cabin hideaway if you enjoy the great outdoors. If you love the thrill of driving a luxury sports car, rent one occasionally or sign up for a weekend racing experience.

Tip 5 – Before you buy think about all the downsides

Often people buy with rosy colored glasses, they only see the good buying points and forget all the shortcomings. For example; some people think that owning a truck and a large trailer would be a great way to see the countryside. What they don’t see is having loud neighbours at camp sites, buzzing insects, traffic jams and vehicle breakdowns. Happiness is often in the small details.

 

glass    glass1

During my career as a financial advisor, I helped many clients find their happiness number. For some it was buying their first home, for others it was seeing their children graduate or get married will little or no debt. In my own case, my happiness number allowed me to retire early and spend more time with family & friends.

I am very fortunate to go south every November to play golf with my buds. We started 13 years ago with a total of 8 golfers, we now have 20 and there is a waiting list to join our group. We have so much fun that one of my house mates made a surprise comment. ” I would have to be on my death bed,  for me to miss this golfing trip” (Money well spent!!!)

When you think about it, money has no real value except that it can be exchanged for goods & services that we need and want. In my humble opinion, the whole purpose of having wealth is to use it as a tool to create a life you desire, enhance the lives of people you care about and hopefully leave a legacy that you are passionate about.

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