Democracy and Hockey

Image courtesy europeandemocracy.eu

Trump or Hillary, Hillary or Trump: do we know who will make it to the White House in November? There are pundits (political or not) who may have their theories. There are political aficionados (pundit or otherwise) who may deign to decide who it will be.

As a Canadian, why does it matter to me who the US President will be? As USA is Canada’s largest trading partner, the American economy does have remarkable repercussions on us. The Commander in Chief of the largest military undertaking does chart paths for the rest of us to watch with concern. Therefore, as a citizen of the world, it is of great interest to me who will decide where “the buck” should stop.

As an Obama fan, it might be a matter of necessity that a Democrat follow him in the White House. However, as a Canadian, and with the longest open border that separates us, it is essential that we welcome the new President. For that open border does not divide the two neighbors, it is a separation of sorts, that does not lead to divorce after a year. There is NAFTA with the three amigos, there are a host of trade agreements where USA and Canada go together. We play hockey, football, tennis and a slew of other sports together. The Stanley Cup, won by the Pittsburgh Penguins is now in Cole Harbour, NS: for we must remember that the US team that won the Cup has been captain’d by a Canadian.

And to return to November and our predictions of what may happen then. We have known, that the US economy (and the world economy as a result, thereof) takes some unpredictable twists and turns during the first hundred days of the new President’s office. We must necessarily observe the $DOW and $NASDAQ and our forecast of what policy changes will do to the global economy and stock markets. Perhaps a word will suffice: caution will carry the day.

I do accounting, boutique bookkeeping, GST reporting, payroll, personal taxes. I specialize in financial coaching for small businesses, professionals and individuals. #TrushaDesai.com

#strategy

Emotional Investing

However logical, analytical and research-oriented we may be, there is always at least one stock in our portfolio to which we have formed an emotional attachment. It is like a first love, a first kiss, or may be just someone special. And so, that stock stays with us, whether it is heavyweight or under-performs.

Why are we emotional about our investments? I guess, if we buy art, we would only buy a Picasso (if we had the millions plus jingling in our pockets) if we liked it. If we bought a boat, we would only buy one if we “liked” her, the rudder and the speed in the sails. So, why are we not permitted an emotional attachment to our stock portfolio? Why must we be detached, cold-headed and hard-hearted when we sell a stock that we know will never recuperate? There is only response. We are hopeful. We are hopeful that that stock which has gone down in the doldrums will turn around. We are hopeful that we will sustain an eventual gain instead of the current dank dark unrealized loss that stares at us. This leaves us with two options. Either we don’t look at our portfolio (then we don’t need to focus on the red-inked unrealized losses) or we itch it like a mozzy bite that won’t go away.

In an attempt to provide you with a second informed opinion on your investments (I regret that I cannot be benign totally, I do charge a fee for this service), I would like to advise you that emotion is not bad. And logic may not be all good: we need to temper one with the other. I do extensive capital gains schedules for taxation purposes, I do boutique bookkeeping for small and medium sized businesses, professionals, charities and non-profits. I do serious year-end accounting, reconciliation and accrual. I prepare and netfile your GST reports. I also do payroll ~ for we all need a little chunk of change, don’t we? I am always available to efile your personal taxes (prior years included). Please visit my website #TrushaDesai.com for services that I provide.

#financialcoaching #financialplanning

Buy or Sell

Chart copyright Trusha Desai Innovation Management Inc.

Buying a call option is an effective investment strategy in a bullish market. However, are we always certain of the direction of the market or the underlying? Even if we study the fundamentals and technical, read the insider reports, estimate the earnings, trend the dividend growth and peruse the analysis reports for good measure, there is no certainty in life. I guess Warren Buffett will definitely tell you that, for Berkshire Hathaway does not go up every day. If it did, it would hit the roof and aim for Jupiter.

If we own the underlying, a vanilla call strategy might be optimistic. However, in this strategy, are we going to cover in the money or out of the money? If we are too close to the underlying for comfort, or if the underlying’s stock price exceeds the strike price at some point before expiration, there is the threat of being assigned. Unless being assigned is part of our investment strategy, it is essential that we monitor our underlying’s price regularly. It is essential that we exit our vanilla option before that becomes an expensive proposition.

Therefore, we can safely state that a vanilla option is not for everyone. If we do not wish to get an apoplectic fit, we may wish to stay away from vanilla. If we are more sophisticated investors, we may choose to strangle or straddle or simply butterfly. However, if we have not studied these strategies in detail, we may stick to the tried and trusty “buy-and-hold” and live off the quarterly dividends … for it may be the only “safe” strategy we could pursue. Of course, we can invest in gold, we can invest in futures, or simply real estate: all of these strategies have different risk ratios, of which we must be aware. Perhaps, stashing the cash may be the only consideration if our risk aversion has boundaries. Please be aware that propensity to risk should decrease with age: that is, risk and age must be inversely correlated.

Along with accounting, GST, year-end, personal taxes (focusing on extensive Capital Gains schedules), QuickBooks, Sage 50 etcetera, I also do investment analysis. I am available to give you a second opinion on your investments. #TrushaDesai.com

#financialplanning #strategy #options #financialcoaching