Low P/E stocks unlock value + MORE Dec 21st

Critics have lined up to doubt the substance of the stock markets’ Trump rally. But in a world where rational explanations keep failing, maybe it’s time to accept Trump as the embodiment of irrational animal spirits.

Planning changes everything
The wildfires that devastated Fort McMurray in May will go down as Canada’s costliest natural disaster—both when measured by property damage ($3.6 billion in insured losses alone) and in its effect on the GDP. And yet no one died in the sudden conflagration, testament to the culture of safety that pervades the oilsands capital. (Imagine how much harder it would be to rebuild had there been a significant loss of life.) The episode serves as a sharp reminder that training and contingency planning really do make all the difference.
Those who ask, get
Canada’s tech leaders got two big items on their wish list from the government this year: In March, Finance Minister Bill Morneau spared stock options from a proposed tax hike, and in November, Immigration Minister John McCallum outlined plans to help “high-growth” firms recruit foreign workers. These changes didn’t come from air: the new generation of founders (and VCs) are increasingly bold in asking for what they want…

Save, invest, prosper with My Own Advisor.
A couple of days ago I told you these are great and glorious times to be an investor, including a millennial investor.  Never before has a diverse menu of lower-cost financial products and services been made available to the masses.  We have millennials to thank in part for that.
A couple of years ago, a fine introductory personal finance book was released entitled Wealthing Like Rabbits by author Robert Brown – a review you can read here.  In addition to that post here is what I said about Rob’s book, along with other bloggers and writers:

The Canadian Personal Finance Conference in Toronto last month was a nice opportunity to see some old friends and create new ones – including finally meeting Rob in person.  Over lunch one day, I was curious to find out how Rob’s fall speaking tour of Canadian universities and colleges was going with millennials, what he learned from them and what takeaways he might have for the rest of us on our financial journey…

Stock pickers use a variety of techniques when trying to outperform the market. Some seek rapidly growing stocks, others love strong price momentum, and a few are bargain hunters at heart.
Value investors are in the latter group and they are attracted to stocks with low prices compared to their earnings, book value, dividends, or some other measure of financial merit. But let’s focus here on price-to-earnings ratios (P/E) for stocks with positive earnings over the prior 12 months. Stocks with low P/Es might be dull, or even ugly, at first glance, but they have performed quite well over the long term. To get a better sense of this value segment it is useful to examine how it has changed over time.
The accompany graph divides up the Canadian stock market into four groups based on earnings. Let’s define the market as common stocks that trade primarily on the Toronto Stock Exchange with market capitalizations in excess of $100 million. Over the past 20 years to the end of October, 2016, stocks with positive earnings over the prior 12 months represented about 59% of the market (304 out of 518 stocks)…

Foreign takeovers are risky, part one
Remember Viterra? It’s the former Saskatchewan Wheat Pool that was acquired by Swiss conglomerate Glencore International in 2012 for $6.1 billion. In April a 40% stake in its parent, Glencore Agriculture Products, was quietly repatriated by the Canada Pension Plan Investment Board for US$2.5 billion as Glencore shed assets to pay down debt. It’s a story oft repeated, where a foreign giant swoops in to buy a Canadian resource company at the top of the market, only to regret it later. Think: Nexen, Alcan, Inco and Falconbridge. Maybe it’s time to put more faith in canny Canadian investors who know these volatile industries better than anyone.
Foreign takeovers are risky, part two
As Enbridge Inc.’s pending $37-billion takeover of Houston-based Spectra Energy Corp.—which will create Canada’s largest company—shows, mega-deals can go both ways across the border. Given what’s taken place here, Enbridge likely knows it ain’t worth it just for bragging rights…