Month: January 2013

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Digging for Opportunities with a Mercenary Geologist – An Interview with Mickey Fulp

If there’s one truth about a mercenary – it’s that they mean business. In a resource conference filled with stories, opinions and “potential”, it’s a challenge for professionals and novices alike to identify real opportunities from the pipe dreams.  Enter a mercenary geologist. We had a chance to speak to Mickey Fulp, otherwise known as “The Mercenary Geologist” about his take on the companies attending the Vancouver Resource Investment Conference, what his outlook was for the overall junior mining and exploration space and how investors can capitalize on the current environment.

Looking first at the big picture, Fulp described the investing climate as being “risk off”.  What that means is that the venture capital is looking for less risky opportunities as the perceived rewards for investing in highly speculative stocks are low.   The junior mining and exploration sector is, according to Fulp, “the riskiest game on the planet” and as such investing in companies in this space is not something venture capital has an appetite for at this time.   He also pointed that lack of confidence may also be why the appetite for investment in this sector is waning.   At issue, said Fulp, was his opinion that many of the junior mining and exploration companies tend to over promise and under deliver.

So how does a mercenary geologist find opportunities amidst all of this pessimism?  Ironically, it is actually pessimism that Fulp keeps his eye out for as a cue to hunt for bargains.  His strategy involves buying companies “when nobody wants them” and wait for prices to significantly appreciate, which he believes, they often do.   With so many companies to choose from, not just any company makes the cut.  Fulp focuses on three key aspects of a company: a tightly held share structure, the experience and track record of the people in a company and the project itself and whether that project is likely to turn into a mine. By comparing companies against their peers in this way, opportunities can become easier to spot.

Ultimately, however, the decision to enter or exit a stock is based on a suggestion we’ve heard time and again from other savvy and experienced investors: have a plan for entry and exit.  From the perspective of a mercenary geologist, knowledge is important to have on a company and a stock, but if the reason(s) why you entered the stock ceases to be true, look for the exit and move on.

The Mercenary Geologist Michael S. “Mickey” Fulp is a Certified Professional Geologist with a B.Sc. Earth Sciences with honor from the University of Tulsa, and M.Sc. Geology from the University of New Mexico. To learn more about Mickey Fulp, you can visit his website at www.themercenarygeologist.com. 

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3 Tips For Do It Yourself Investors Researching Online

In another discount brokerage survey confirming that Canadian do it yourself investors are turning to online resources to help manage their financial futures, TD Direct Investing recently released results of a survey it commissioned in December 2012 that explored the online habits of Canadians.   According to the TD Direct Investing survey, convenience, control and content are what online channels of information offer to Canadian investors.

For most individuals, the notion that Canadians are turning to online resources for research is probably not surprising.  In fact, earlier in 2012, BMO Investorline conducted a similar study that found Canadian online investors research in order to help make effective investment decisions.  These types of discount brokerage sponsored surveys, however, stretch back across the past decade and largely confirm one another in the observation that do it yourself investors are, in fact, doing it themselves.

Not surprisingly, if you are reading this post, you are probably part of that group of do it yourself investors that is looking online for resources they can use to help navigate the management of their personal finances.   Looking to online resources generally means having to wade through lots of opinions, in order to find quality tools and resources – something we at SparxTrading.com know all too well.

So, given that so many Canadians are going online to do their research on financial products and services, here are several tips that we can offer when looking for discount brokerage accounts and resources offered by them.

  1. Be skeptical.  Even though you don’t need to be a stick in the mud, don’t take everything you read at face value.  Ask yourself whether the “facts” presented to you by writers, advertisers, surveys or other sites support the claims they make – i.e. “what makes someone the best discount brokerage?”
  2. Ask how the writer/source is compensated.  Many independent blogs or writers online earn their living by the quality of their content – usually by advertising dollars.  Others, however, have affiliate relationships or are clearly savvy marketers.  Learning the difference between them isn’t easy, however take note of whether there is a balance of perspectives presented.
  3. Take your time. Great timing is what savvy investing is all about, but stepping in for fear of missing out is the enemy of investors everywhere.  Knowing when a discount brokerage deal is actually a deal versus when it is a sales tool comes with experience and, you guessed it, research.

Comparing features, pricing and promotions are what can make you a savvier shopper when it comes to finding a discount brokerage or any financial product online.  Our comparisons sections are designed around making discount brokerage research not only easy but also value-focused.

While it does take time and effort to research online, often some research ahead of time is the best investment to avoid costly experiences and heartache in the end.  Keep your wits about you and happy hunting.

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Event Review – 2013 Vancouver Resource Investment Conference – Cambridge House International

Continuing in its tradition of providing a forum for investors to connect with resource and exploration companies, great speakers and one another, the 2013 edition of the Vancouver Resource Investment Conference by Cambridge House International was by many accounts, a successful event.

The official numbers reported over 10,000 individuals in attendance over the two days, taking in just over 500 companies, 50 speakers and 130 company presentations.  Some of the highlights of this year’s show were a treasure hunt and an art exhibition and of course, the iconic bull.  The presentations ranged from topics as diverse as gold market manipulation to mining on asteroids ensuring there was something entertaining, relevant and engaging for all types of investors to think about.

Even though the junior mining sector was well represented at this show, there were some heavyweight names in the room, such as Silver Wheaton and Detour Gold.  Interestingly, the combined market capitalization of the top 6 companies was about equal to the combined market cap of 230 other companies present, so there was no mistaking the room was full of companies hopeful to grow.   Our pre-show analysis showed that about 80% of the companies exhibiting were precious metals-related companies, highlighting the popularity of these metals in spurring companies looking to cash in on the historically high prices of gold and silver.  Of course, one of the burning questions on the mind of many investors is why, in spite of the performance of gold prices, share prices of producers and explorers of gold have not rallied in step – questions that were tackled by several speakers.

While a conference dedicated to resources and exploration will usually have a lot of junior companies jockeying to tell their story, there were a couple of noteworthy speakers, such as Brent Cook, Sid Rajeev and Danielle Park that painted a picture in numbers that put the enthusiasm of the conference floor into perspective.  A common thread among many speakers was that a lot of junior mining companies are facing challenging times raising money or have to confront increased costs to exploration.

The bottom line: there is good data suggesting investors have to work harder to understand what they’re stepping into, especially in the commodity space, because many companies around today may not be around by year’s end.

In spite of the darker clouds, there were some ‘silver’ linings.   The treasure hunt put on by Visual Capitalist managed to literally net some lucky conference attendees pieces of silver.  Also, the sentiment from exhibitors we polled was positive overall.  On twitter, the comments we measured from exhibitors, attendees and media were also mostly positive.

Overall this conference was a great experience filled with lots of walking as well as opportunities to meet and engage with junior mining and exploration companies.  The Cambridge House conference tour will return to Vancouver in May for the World Resource Investment Conference, however between now and then there will be shows in Calgary (April 5/6) and Saskatoon (April 19).  It will be interesting to see how many of the forecasts play out between now and the next time the show comes to town.

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Special Series: Review of Globe and Mail’s Discount Brokerage Rankings – Part II

In part one of this series, we looked at the background of the Globe and Mail discount brokerage rankings as well as how they’re structured and who they’re targeted towards. In this next part, we take a detailed look at what the discount brokerage rankings are actually measuring and some interesting observations we made about the Canadian discount brokerage industry over time.  Lastly, we provide some important tips to keep in mind when using rankings as part of your product research.

What Do the Discount Brokerage Rankings Measure?

When looking at any ranking or rating, one of the most important questions to be clear on is what the ranking or rating is actually measuring.  In our review of the J.D. Power Investor Satisfaction Survey, we saw that “investor satisfaction” was being measured by six components: interaction, trading charges and fees, account information, account offerings, information resources and problem resolution. By comparison, the Globe and Mail discount brokerage rankings are measuring what Rob Carrick thinks is the “best discount brokerage” for “mainstream” investors.

As we saw in part one, when looking across the last eleven rankings, it appears that the categories that go into defining “the best” discount brokerage are not static. The most stable characteristics of what it means to be “the best” seem to cluster around costs, trading and tools. According to Carrick, the categories that he chooses vary in large part because they are based on a combination of data from reader surveys and his perceptions of what mainstream investors are curious about or would find worthwhile.

Strengths of the Discount Brokerage Rankings

A strength of this approach is that the discount brokerage rankings are somewhat reflective of the mood or sentiment of mainstream Canadian investors.  If investors are curious about certain features, such as commission free ETFs or user experience of a discount brokerage, the rankings have incorporated these kinds of innovations into their structure.  Having looked at a decade of results, it is fair to say that the rankings reflect the pulse of what mainstream investors are exposed to from the discount brokerage industry and hence curious about.

Limitations of the Discount Brokerage Rankings

While Rob Carrick’s opinion is certainly informed by monitoring Canadian discount brokerages for over 14 years, his opinion may not necessarily be shared by other investors, something that readers should keep in mind when doing their research.  The degree to which his opinion can be generalized rests on how accurately the needs of “mainstream investors”, a term that is loosely defined, are captured in the questions he uses to survey discount brokerages and in the process he uses to evaluate their products and services.

A second limitation of the rankings is historical comparability.  Because the criteria have changed as often as they have, it is difficult to compare historical performance of Canadian discount brokerages in a meaningful way.  It may be possible to compare results on costs, trading and tools because of their relative stability as categories however the total scores from year to year are largely incomparable.

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The Mindless Investor Chapter 6 – The Little Guy Has An Advantage

Highlights of this Chapter – The Mindless Investor

Chapter six of The Mindless Investor looks at the advantages that everyday investors have over the bigger players.  As it turns out, smaller investors have better maneuverability and lower performance hurdles.  What it takes for smaller investors to succeed is a strategy that fits their size.

Key Point #1: Use your size to your advantage

The Mindless Investor Ch. 6 - Use Your Size To Your Advantage

Often many ordinary investors look at big investors like Warren Buffet with envy – after all who wouldn’t want a portfolio of a few billion dollars?  Well, as the song goes ‘mo money, mo problems’.  The problem with very large portfolios is that they are difficult to maneuver.  In this instance, having a smaller portfolio means you can be nimble and can take advantage of opportunities that bigger players can’t.

Key Point #2: Use a strategy that works for your size

Mindless Investor Ch. 6 - Use A Strategy That Works For Your Size

Most investors don’t have hundreds of millions of dollars in their portfolio.  Large mutual or hedge fund managers need teams of people doing a lot of research and analysis to identify the right kinds of opportunities for the money they work with.  As a smaller investor, strategies that are nimble and don’t take a lot of time and resources to use make the most sense to start with.

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Special Series: Review of Globe and Mail’s Discount Brokerage Rankings – Part I

Introduction

As part of our continued look at Canadian discount brokerage rankings, we review the longest running comparison and ranking of Canadian discount brokerages: The Globe and Mail’s annual ranking of online brokers, which had its start back in 1999. In part one of this series, we go through how we conducted the review, who the rankings are aimed at, the discount brokerages covered in the rankings and how the rankings are structured.

Our Methods

The scope of this review covers the 11 Globe and Mail discount brokerage rankings published from 2002 to 2012.  Even though the rankings started in 1999, we felt the window we used to be sufficient to explore the recent history of discount brokerages within Canada, and more importantly to illustrate the nature of how the rankings have changed over time.  The data was retrieved by searching for each years’ results via Google, The Globe and Mail website as well as from several websites that contained archived copies of articles. In addition to researching online, we also had the chance to speak to Rob Carrick of The Globe and Mail directly about his experiences in putting together the reviews.

Once gathered, the data was compiled into tables for sorting and analysis. Initially we thought it would be possible to compare scores and how they changed from year to year, however given that the ranking criteria changed so frequently, such a comparison would offer limited value.  Instead, we have included a figure (see next page) that details the criteria for each year and how the criteria have changed over time.  Although it is also of limited reliability, we nonetheless took the historical average rank of each discount brokerage currently referenced in the 2012 rankings which can be seen in the table to be included in part two of this series.

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Discount Brokerage Deals & Promotions – January 2013

ArchivedDealsHappy New Year to all of our deal hunting readers and welcome to another edition of Discount Brokerage Deals & Promotions. One of the most popular New Year’s resolutions for folks is to slim down. As it turns out, the number of deals being offered by discount brokerages has also slimmed down.  Right out of the gate, we noticed that a couple of discount brokerages did not update their deals section (Scotia iTrade and Virtual Brokers) and still had posted deals that expired on December 31st, 2012.  We’ve since let them know and will update our deals section when we hear back from them. Update: as of January 7th, it appears that Scotia iTrade has updated their promotions page and extended out their 100 days of free trading offer to March 31st, 2013. Virtual Brokers has yet to update their promotional offer.

Those discount brokerages that did start off 2013 on the right foot were CIBC Investor’s Edge and Disnat, both of whom have extended out their respective promotional offers well into 2013 (and had their sites updated by Jan 1, 2013).   Interestingly, BMO Investorline‘s 150 trade offer expires on January 3rd so we’ll also be on the look out for the update on whether this deal is extended out or replaced. Update: As of January 4th, BMO Investorline has launched a new deal offering 250 free trades or 250 free trades + $250 depending on whether you deposit $100,000 or $250,000 respectively. Their advertisement might be a bit confusing as it advertises 90 days of free trades, however the fine print reveals that is actually 90 days to use up to 250 trades. It is NOT an unlimited trading offer. Be sure to read the fine print carefully as there are a number of conditions attached to this offer.

One of the big deals we’re tracking is Questrade‘s unlimited trading offer which is due to expire in mid-January.  As we mentioned in our outlook for 2013, we think that there will be more discount brokerage deals coming down the road especially now that TFSA contribution limits have been raised and because we’re headed into RRSP season.

Check back here throughout January as we get some more visibility on upcoming discount brokerage deals, promos and special offers for 2013.

Discount Brokerage Deals & Promos

Company Brief Description Minimum Deposit Amount Commission/Cash Offer Type Time Limit to Use Commission/Cash Offer Details Link Deadline
Jitney Trade A Sparx Trading exclusive offer! Use the promo code “Sparx Trading” when signing up for a new account with Jitney and receive access to their preferred pricing package and a massive 45% discount on the Real Tick trading platform. n/a Discounted Commission Rates none For more details click here none
Open a new account (TFSA, Margin or RRSP) and receive $50 commission credit . Use promo code: kdkfnbbc $1,000 $50 commission credit none none none
Open and fund a new registered, margin or TFSA account and fund it within 30 days with either A)$1,000 B )$25,000 or C)$50,000 and you will be eligible to receive either unlimited free trading for A) 1 month, B) 2 months or C) 3 months depending on your deposit amounts. You must the code INFINITE to qualify. This is open to new and existing clients. There’s lots of fine print so be sure to read the details link. A) $1,000 B) $25,000 C) $30,000 Unlimited trading (No commissions charged on any trades placed) A) 31 days B) 62 days C) 90 days Unlimited Free Trades Promotion January 15th, 2013
Refer a friend to Questrade and when they open an account you receive $100 and they receive $50. To receive this deal you must be an existing client with an equity account and refer a person that does not reside with you and who has not previously opened a Questrade account. $1,000 $50 commission credit (friend) $100 commission credit (referrer bonus) 60 days Refer a friend none
Get up to 100 free trades when you fund an account with a minimum of $10,000. You must open this account by November 15th, 2012 and fund it with $10 000 within 30 days of account activation to qualify. You must enter promo code “100FREEQ”. There are quite a few other details, including a minimum balance requirement, so be sure to check the details link. $10,000 100 free trades ($495 value @ cheapest commission rate) 60 days 100 Free Trades January 15, 2013
Scotia iTrade If you refer a friend/family member who is not already a Scotia iTrade account holder to them, both you and your friend get a bonus of either cash or free trades. You have to use the referral form to pass along your info as well as your friend/family members’ contact info in order to qualify. There are lots of details/conditions to this deal so be sure to read the details link. A)$10,000 B)$50,000+ A) You(referrer): $50 or 10 free trades; Your “Friend”: $50 or 10 free trades (max total value:$199.80) B) You(referrer): $100 cash or 50 free trades; Your “Friend”: $100 cash or 50 free trades (max total value: $999) 60 days Refer A Friend to Scotia iTrade February 28, 2013
Scotia iTrade Open and fund a new Scotia iTRADE account with at least $25,000 before December 31, 2012 and the commissions associated with your first 100 trades placed within 60 days of the date the account is activated and funded. Also, the new FlightDesk platform is being offered for free for 60 days. Use promo code WAC13-EN. See details link for further terms and conditions. $25,000 100 free trades ($999 value @ $9.99 commission rate) 60 days Scotia iTrade 100 free trades + FlightDesk March 31, 2013
TD Waterhouse Open an account with $25,000 or more and receive 10 free trades. This offer is only valid at the downtown Vancouver TD Waterhouse Investor Centre. 10 trades must be completed within 6 months of account opening; reimbursement based on $9.99 commission rate. $25,000 10 free trades ($99.99 value at stated commission rate) 6 months scanned photo of flyer none
Open and fund a new account with National Bank Direct Brokerage with $25 000 or more, and your commission rate for 6 months will be $6.95 Flat. $25,000 $6.95 Flat commission rate 6 months Take Control of the Markets Promo February 28, 2013
Open an account with either: A) $25,000 or more and receive a $100 cash credit and 25 free equity trades. or B) $50,000 or more to receive $200 cash back and 50 free equity trades. A) $25,000 B) $50,000+ A) $100 cash credit + 25 free equity trades ($823.75 (min)total value @ standard equity rate $28.95) B) $200 Cash credit +50 free equity trades ($697.50 total value @ active trader rate $9.95) 60 days Cash back offer March 1, 2013
Disnat Disnat is celebrating its 30th anniversary by offering new & existing clients $300 in commission credits which can be used for up to 6 months. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1 800 268-8471 and mention promo code Disnat30. See details link for more info. $50,000 $300 commission credit 6 months Disnat 30th Anniversary Promo February 1, 2013
BMO InvestorLine Open a new account with $100,000 or more (or for existing clients make a deposit of $100,000 or more) and get $150 cash back and 150 free trades. Use the promo code BONUS when opening a new account (or when making a new deposit of $100,000 or more). See the details link for qualifying account types and conditions. $100,000 $150 cash 150 free trades ($1492.50 value) 60 days Path to Online Investing Promotion January 3, 2013 [EXPIRED]
BMO InvestorLine Open a new account or upgrade an existing account with either A) $100,000 or B)$250,000 to receive 250 trades (for those who deposit $100K) or 250 trades + $250 (for those who deposit $250K). Use Promo Code: RSP2013. NOTE: There are lots of details/important conditions attached to this promotion. Be sure to read the terms and conditions carefully. A) $100,000 B) $250,000 A) 250 Free Trades ($2497.50 value @ $9.99/trade) B) 250 Free Trades + $250 ( $2747.50 value @$9.99/trade) 90 days Path to Online Investing Promotion March 4, 2013

Transfer Fee Deals

Below are the discount brokerages deals that cover transfer out fees from other discount brokerages.

Company Brief Description Maximum Transfer Fee Coverage Amount Deposit Amount for Transfer Fee Eligibility Details Link Deadline
Qtrade Investor Qtrade Investor will reimburse your transfer fee up to $125 when transferring a balance of $25,000 or more. For reimbursement, please mail or fax a copy of your statement from the transferring institution that shows the transfer charge to Qtrade Investor at 604.484.2627 and indicate your Qtrade Investor account number. $125 $10,000 Transfer Fee Promo March 31, 2013
Move your brokerage account to Questrade and they’ll cover the transfer-out fee up to $150. $150 $25,000 Transfer Fee Promo none
TD Waterhouse Open a TD Direct Investing account with a minimum of $25,000 by March 1, 2013, and get up to $150 to cover your account transfer fees. $150 $25,000 Switch for free March 31, 2013
Transfer $25,000 or more to a National Bank Direct Brokerage account and they will pay up to $135 plus taxes in transfer fees $135 $25,000 Transfer Fee Rebate none
Disnat Disnat is celebrating its 30th anniversary by offering up to $150 to cover the cost of transfer fees from another institution. To be eligible, new/existing clients need to deposit $50,000 into a Disnat account. You’ll have to call 1 800 268-8471 and mention promo code Disnat30. See details link for more info. $150 $50,000 Disnat 30th Anniversary Promo February 1, 2013
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4 things for do-it-yourself investors to look out for in 2013

If you are a self-directed investor prepare for even more marketing, incentives and competition for your business in 2013.  With modest trading volumes and account openings in 2012, a gun-shy investor base and increased downward pressure on commission pricing, discount brokerages will be trying very hard to win new business in 2013 but also to keep their existing clients from jumping ship.  So what should do-it-yourself investors keep an eye out for in 2013?

#1 Lots of deals and even more fine print

Investors - Lots of deals and more fine print

Bigger deals for self-directed investors mean lots of fine print to pay attention to. Although they may seem like deals, make sure to ask “What’s the catch?”

Look over and understand the strings attached to offers that require longer-term commitments of your capital. Large numbers of “free trades” are being offered but if you don’t really use them to their fullest, it may not be the best deal for you.  Also, pay close attention to “cash back” offers because those usually have restrictions on minimum balances or moving your money around within certain time frames.

#2 The marketing of “value” instead of “price”

Investors - Marketing of value instead of price

2013 will be an interesting year for pricing.  The ‘race to the bottom’ in pricing will come up against those players who will try to offer more “value” for the money.  The result: brokerages will try to offer “new” services.  Unfortunately, in finance “new” is a double-edged sword.

Sure it may seem like a reasonable premise to try something new especially if something old isn’t working, however unless some new product can be demonstrated to work, why risk one’s money as the guinea pig? So-called “new” services are likely to be repackaged older services so be ready to ask how the “new” service is so different than similar “older” services.

Also, adding bells and whistles that you don’t need or use becomes a frivolous reason to pay more than you otherwise would to forego the frills.  Requesting trials of accounts or services before you commit to opening an account is a great way to test drive whether or not a discount brokerage’s services are worth the price they charge.

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