The ongoing financial turmoil and financial discussion thread

[macker]

I am no expert but my bank rankings are : 1.RBC 2.Bank of Nova Scotia 3.TD 4.BMO 5.CIBC. Although Gord Nixon denies it I could see RBC taking a run at a major US bank that is in trouble. The Canadian banking system is the strongest in the world for what it's worth? I would wait to buy in as they should go lower in the short term. Use a limit order and let them come to you....

[pepper24]

Originally Posted by ah123

For all you money experts out there...how are the Cdn banks looking? Is it worth picking up stock in BMO or Scotiabank?

I'd definitely take a look at the Big 6 Canadian Banks. All are trading near 52 week lows with high dividends due to the large drop in share prices. The last bank to cut its dividend was National Bank in the early 1990's but these are turbulent times.

If you pick a BMO, BNS or RY I'd buy 25% or 33% now, then buy the remaining 3 quarters or 2 thirds over the next few months/quarters. Don't buy shares all at once as it's tough to time a bottom and who knows how the news of the US banks will affect Canada though the bank fundamentals are stronger this side of the border. I'd also be prepared to hold these for a min of 5 years as any gains could take a while to happen in this turbulent market so make sure this isn't money you'll need in the short term. Patience is key.

[Daradon]

Markets took a dive today, I thought they may get a bit of a bump from the transition but I guess not.

[pepper24]

Originally Posted by MoneyGuy

Nah, on second thought, banish 'em. Banish 'em! Their slash-and-burn philosophy on WL insurance regardless of any other reasons is ill reasoned and bordering on criminal. Their training is pathetic, unless you consider rah-rah rallies to be training (and they do).

+1, whole life insurance is a brutal product and Primerica is one of the worst offenders of pushing this garbage. Unfortunately, the commission structure of the industry and the business philosophy of this company forces advisors to push these brutal products.

Good to hear that your company thinks otherwise and looks out for the client. Hopefully the good guys selling good products will continue to weed out the bad guys selling bad products.

[Phanuthier]

Originally Posted by Claeren

Well to be honest, my point was more general and just that the big banks around the world are in serious trouble -- more so than many people who have stopped following the situation since December might realize.

Well I think whats affecting these banks are the same things, its just the news happening again. No inter-bank lending, debt writeoffs and so on. For sure, European banks (getting nationalized?) is really hurting the confidence of inter-bank lending.

The way I see things, Citi has been messed up for months, and I guess the last bailout (Dec) wasn't enough to savage them so it wouldn't surprise me the least to see Citi nationalized. BoA is getting hammered for heavy ML writeoffs (as well as some of their own) but to my understanding, the feds initially agreed to help BoA acquire some of that bad debt, and it seems like they're doing it again.

Wells Fargo, as far as I can tell, needs to raise capital so they are cutting their dividend, but in the long run, I don't see why they are getting hammered as hard as they are. Its not like this is new news or anything, and Wells Fargo has historically been conservative, no? (Or am I incorrect to say that?) In the long run, I would have to think acquiring Wachoivia a few months ago should really help them.

And, JP Morgan, to my understanding, they are historically quite conservative as well, they got quite a deal in acquiring Bear Sterns and WaMu along with the debt, so is there really that much to write off? Again, I'm not sure why I see why JPM is getting hammered as hard as they are these days.

I actually own JP Morgan, Wells Fargo and BoA (though in heinsight, BoA was a mistake)

[Daradon]

Originally Posted by pepper24

+1, whole life insurance is a brutal product and Primerica is one of the worst offenders of pushing this garbage. Unfortunately, the commission structure of the industry and the business philosophy of this company forces advisors to push these brutal products.

Good to hear that your company thinks otherwise and looks out for the client. Hopefully the good guys selling good products will continue to weed out the bad guys selling bad products.

Uhmmm, I think he meant Primerica was AGAINST WL. It was years ago, and I'm not sure how it would have changed as getting people off it or educating people on it was one of their biggest philosophies.

[pepper24]

Originally Posted by Daradon

Uhmmm, I think he meant Primerica was AGAINST WL. It was years ago, and I'm not sure how it would have changed as getting people off it or educating people on it was one of their biggest philosophies.

Hmmm, I always thought they were big pushers of WL insurance. If they aren't, then good for them.

I am not too up to date of the advisor world as I handle my own finances.

[Daradon]

^^^ Nope, quite the opposite. I remember getting the spiel once. I think Money Guy was just saying that they way the completely attack WL and label it as bad, doesn't give a comprehensive picture, as it may be good in some situations.

What situations those are, I couldn't tell you.

[Wookie]

What about WFG?

[Slava]

Originally Posted by Wookie

What about WFG?

They are the same thing as Primerica...and I think that they were started by some guys who were not happy with the way that Primerica was being run.

WL Coverage is not for everyone; there are some people who definitely benefit and need this alternative. There are also a lot of people who don't need it and have no business buying it. Even more people have no idea what it is and how it works....clearly they shouldn't be buying it! A good advisor should be able to walk you through this and explain why it is good or bad for your situation.

[Wookie]

Originally Posted by Slava

They are the same thing as Primerica...and I think that they were started by some guys who were not happy with the way that Primerica was being run.

Ah... I dated a girl who worked for WFG. She was smokin... The only reason I could tolerate her. Talked about work soo much. And her seminars, and "closing a deal" and "residual income" my god. It made me want to barf. I think she was just churning out HELOC's and sending the business to other people as well as trying to hire people to work under her. Then I mentioned one time that I had done my CSC, so she said I should come work for her. I replied with "eh, not really my thing" which she lost it over. Freaked out that I called her work a thing... Started talking about the founders etc. It was like she was brainwashed. I was actually insulted that she even suggested I leave my good job for that.

[macker]

Primerica is totally against WL or UL. The foot in the door for them is "buy term & invest the difference". This makes sense if you aren't maxing out your RRSP but WL & UL have a place for the right person. It is surprising that pyramids like Primerica or WFG are still around and if you google Primerica scam you will know what I mean! It is just a way for those higher up the Pyramid to make money off of those lower on the Pyramid in my opinion. They will recruit absolutely anyone and as such you can usually expose them by asking technical questions. As someone already noted they are usually more interested in building a business or getting others into the Pyramid then doing the right thing for the person that they are selling to. Buy term and invest the difference does have its place but Pyramid schemes don't. Where is the regulation? Why can anyone drop into a Primerica office tomorrow and leave as a Financial Advisor? I was always surprised when I would run into a Primerica agent and see the Citi umbrella symbol on their business cards and wonder why they were a "Citi Company" why would Citi even bother with them....Once again, I guess they really don't know what they have on their books....

[Slava]

Originally Posted by Wookie

Ah... I dated a girl who worked for WFG. She was smokin... The only reason I could tolerate her. Talked about work soo much. And her seminars, and "closing a deal" and "residual income" my god. It made me want to barf. I think she was just churning out HELOC's and sending the business to other people as well as trying to hire people to work under her. Then I mentioned one time that I had done my CSC, so she said I should come work for her. I replied with "eh, not really my thing" which she lost it over. Freaked out that I called her work a thing... Started talking about the founders etc. It was like she was brainwashed. I was actually insulted that she even suggested I leave my good job for that.

I have a friend of mine who is a painter (nothing wrong with the trades, and that is definitely not my point with this!), he was approached to work with WFG on the side. I think that is my main dislike of them....people working a full time career on a part-time basis. That and the fact that they earn more money bringing people into the business than they do actually doing what is best for their clients!

[Phanuthier]

Just wondering - does anyone know a good free resource to track historical P/E ratios? (like in a graph)

[Nancy]

Originally Posted by Phanuthier

Just wondering - does anyone know a good free resource to track historical P/E ratios? (like in a graph)

For a specific company, or are you looking for something like this:

http://upload.wikimedia.org/wikipedi..._1871-2006.png

[Phanuthier]

Originally Posted by Nancy

For a specific company, or are you looking for something like this:

http://upload.wikimedia.org/wikipedi..._1871-2006.png

For specific companies, or a index. Just a part of my research.

[MoneyGuy]

Originally Posted by Daradon

^^^ Nope, quite the opposite. I remember getting the spiel once. I think Money Guy was just saying that they way the completely attack WL and label it as bad, doesn't give a comprehensive picture, as it may be good in some situations.

What situations those are, I couldn't tell you.

Exactly correct. I was saying that while I believe that cheap term insurance is the best choice in the vast majority of cases, the idea that whole life is pure evil in all situations is correct. If you need insurance for estate needs, term is almost useless. In all my years in this business, I've never sold a WL policy and I've only ever sold one UL policy. I do think that buy-term-and-invest-the-difference is almost always right, it's not always right.

Originally Posted by Slava

They are the same thing as Primerica...and I think that they were started by some guys who were not happy with the way that Primerica was being run.

WFG was stated by former Primerica reps. It's Primerica on steoroids in the sense that they're very heavily into leveraging. I have a client who came to me about four years ago. They had been with a WFG person who got them to borrow $400K at the start of 2000 and it was aggressively invested. They were down 40% and couldn't afford the interest payments. Investing leveraged money at a market high when it's a struggle to make the interest payments is what WFG flakes do. Sorry if anyone here is with WFG. (Actually, I'm not.)

[SeeGeeWhy]

Has anyone read Niall Ferguson's Ascent of Money?

I'm just starting it and it seems as though it might have some poignant insight into what is happening right now (despite being written in early 2008).

One surprising thing to me was the rapid growth of derivatives - nearly $0 before 1980, and just under $600 trillion in 2007, which is nearly 10x the global GDP (the output of the entire planet each year).

Part of me is wondering if anyone ever really knew what the impact of accounting for that sort of "money" as real would have if it ever went away.

Of course the banking system is screwed up right now by watching that huge sum of money evaporate... but I wonder if there will be another advancement in finance (i.e. another way to generate virtual money) that will help offset this loss to the world economy.

Fotze posted Matt Simmons' latest update regarding the oil industry in the layoffs thread, and Simmons has some poignant commentary on how the halt of the credit system is artificially deflating oil prices as large hedge funds are no longer able to borrow large sums of money to drive up futures contracts.

Its sort of a self fulfilling cycle -> oil price is high, so there is incentive to exploit reserves -> which drives demand for oil in order to supply trucking, shipping, steel, construction, etc -> causes supply shortages as firms compete to extract their resource first -> drives oil price higher -> ad nasuem

If the credit markets recover, oil price will not be far behind...

[photon]

I was reading somewhere that even countries like Saudi Arabia need $70 or $80 a barrel oil to balance their budgets, there's very few oil based countries that can sustain themselves at $30-$40, so depending on how much you believe the price is political...

Conventional oil is just becoming more and more scarce.

It's not like these companies are canceling their huge oilsands projects and such, they're just pushing them out further, which can only be good for Alberta as it will sustain the benefit to the economy for a longer period.

[Muta]

Again, where do you guys do your research? I'd love to start knowing about all this financial stuff but I haven't a clue where to start.