Chris

I know in the olden days when every offering was massively oversubscribed, it was impossible for the little guy to get in on this, but would the same be true today?

I’m guessing the institutional investors are _not_ going to be buying like they used to, but individuals might have some change they might want to throw at something like this.

Any tips (for someone that has never made a share purchase ever) ?

Gerry

Because preferred shares (most of the time) are structured as perpetuals there is no obligation for the corporation issuing preferred shares to redeem them in the future.

If we ever enter a secular bull market in interest rates, preferred shares will be hit the hardest out of all debt-based instruments, due to the fact that they have an infinite maturity date (Hence they have to be discounted to infinity).

Consider the following example: From the highs in the late 1960’s to the lows in January 1980, long term corporate bonds fell by over 60% as interest rates rose from 3% to 18%. As the prices and yields of preferred shares closely follow long-term corporate bonds, we should expect preferred shares to perform similarly to long-term corporate bonds in the future.

In such a scenario, preferred shares would be hit even harder than long-term corporate bonds because there would be no intensive for firms to redeem preferred shares, as they would have to roll over the debt to higher interest rates. This will cause the Present Value of principal amount of the share to go to zero, unlike bonds.

If your goal is to protect your money while investing in preferred shares, you should look into floating cumulative preferred shares of Investment Grade companies, these preferred shares will move with interest rates, hence protecting your initial principal of your investment. While you might be getting a smaller yield, your principal is better protected whether we enter a deflationary of inflationary environment.

Go to http://www.prefinfo.com/
Search for “Floating” Preferred shares which and you will find a couple dozen of them. Note most listed floating preferred shares are currently not floating but have dates in the future where they will start floating.

Cheers,
Tarik

Canadian bank preferred shares are a fabulous vehicle to derive much better returns than any interest paying instrument (GICS, bonds, etc) at a much lower volatility (risk) than common stock. It is inconceivable that a Cdn bank would fail to pay preferred dividends – but the risk of reduced common share dividends (although still very rare) is much greater and common shares in equivalent institutions generally present greater risk of capital gain/loss.

I think Canadian bank preferreds are a ripping bargain right now – CIBC and Royal issues can be bought to pay 7% or better. Why these things are at such high yield is a bit of a mystery to me, but these are strange times….

Thanks

Unfortunately the Tarik.ca Canadian Sustainable Renewable Power Index™ does not trade on the TSX. I created the index as a way to track the performance of renewable power generation companies based in Canada. In the US there are a handful of renewable power ETFs. Unfortunately they mostly focus on companies which manufacture renewable power generation machinery (ie. Wind Turbines and Solar Panels) not companies which actually generate the electricity. This exposes the investor to technology and competition risk, whereas an investor investing in the generation of electricity will experience a lower level of risk much closer to that of a utility company.

The two most diversified renewable power ETFs in the US are:

iShares S&P Global Clean Energy Index Fund (ICLN), which has a balance of power producers and equipment manufacturers from the wind, solar, hydro and geothermal industries.

PowerShares Global Wind Energy Portfolio (PWND), which contains a balance of power producers and equipment manufacturers from the wind power industry with an emphasis on the manufacturers.

Tarik

Raynald Lachance

I did not include IGT since it is identical to IAU which trades on the NYSE. Because IAU is much more liquid than IGT I did not list IGT.

http://www.tsx.com/HttpController?GetPage=QuotesViewPage&QuoteSymbol_1=IGT

The positions are sized at a maximum of 8% of the fund. At any given time the system is either short or long every single one of the 16 Beta-Pro ETF which it tracks. All positions have a 5% stop loss.

Intraday data would increase the efficiency of the system. However, I haven’t found a way to aggregate the data.

Regards,
Tarik

Currently I’m just using themes. I will be working on a fundemental quant based portfolio in the future.

Currently I’m developing a Global Renewable Power Generation Index which will track the performance of Utilities and Independent Power Producers (IPP) who derive greater than 50% of their electricity generation from hydro, wind and geothermal sources.

Tarik

I forgot to update the old link. The link should now redirect to the new location for the Canadian ETF sheet.

Thanks for the heads up,
Tarik

Regards,

Vesc

HJU/HJD – MSCI Emerging Markets
HSU/HSD – S&P 500
HQU/HQD – Nasdaq 100
HTU/HTD – US 30 Year Bond
HDU/HDD – US Dollar Index

Also, they’ve added:
HAU/HAD – DJ-AIG Agricultural Grains (you can chart this at Stockcharts.com using $DJASO as the symbol)

Older ones not in the PDF:
HMU/HMD – TSX Global Mining index
HBU/HBD – Comex gold contract
HOU/HOD – Nymex WTI Crude contract
HNU/HND – Nymex Henry Hub Natural Gas contract

There are now 14 pairs of funds!

Enjoy,

Vesc

Also, I’m wondering how you size the positions with the system. The model runs are done with 1MM starting capital. Does that mean if the first signal is a buy, you buy 1MM worth of the ETF?

Just to be clear, the only way you are flat is if you hit the stop loss. Otherwise you’re in a long or short trade. Are the stops executed intra-day or at the close? I’ve found this makes a significant difference (sometimes) when developing these kind of systems.

Regards,

Vesc

Click the pie graph to see the distribution for individual holdings:

The distribution by sector is about:
41% Energy
25% Material
15% Gold Mining
13% Utilities
3% Transport
3% Retail

Thanks,
Tarik

1) The easiest way to find out if a preferred share is perpetual is to visit http://www.prefinfo.com. This site run by James Hymas provides a good database of information.

2) The second method is to visit http://www.Sedar.com and do a search for the prospectus of the preferred share in question. The prospectus will indicate the details regarding the shares in issue.

Tarik

Dave

Due to the fact that the system is currently being run out of Wealth-Labs Pro you cannot track it online. However, I will post progress reports every month online.

After testing various hypothesis and methods the system uses 2 very simple plays based on Trend Following. The system will put a buy order when the 2 Day SMA is above the 8 Day SMA, and will put a sell order when the 2 Day SMA is below the 8 Day SMA. The System’s second play is a 4% Trailing Stop Loss in order to cut losses short while letting profits run. The Key advantage of the system is the fact that is trades a diversified portfolio of 16 leveraged ETFs which lowers overall system volatility and draw downs.

There is still one aspect of the system which I’m trying to develop further. I’m trying to get the system to self-adjust SMAs and Trailling Stops figures to the current market Beta and VIX levels in order to minimize whipsawed trades.

Thanks,
Tarik

Are you going to post the Tech Trading System plays? Any way to track the progress going forward?

Thanks,
Alex

http://www.jsmineset.com/

I find your analysis of converting energy into BTU interesting, but I think you are forgetting some rather important parameters. I have worked in both the power generation and oil & gas industry in Alberta as an engineer, so I might be able to offer some insight on the price variance of energy.

In short your financial analysis is strong, but you are missing the actual tangible/physical analysis that makes these energy sources what they are and what they are not.

Electricity is one of the most pure and high quality forms of energy. It takes a lot of other energy to create it. This makes it both expensive and desirable. Although it isn’t as useful as it could be since it is hard to transport to market. Electricity can be transformed into almost anyother form of energy quiet easily and cleanly even if it’s production isn’t clean.

As for natural gas prices rising you are onto something, but remember natural gas is limited in it’s end uses. A lot of products can be made from a barrel of light sweet crude, but only a few from a cubic foot of gas. With the addition of LNG terminals on the coast, natural gas will become a truely global commoditity and subject to the global market forces that already affect oil. However, this will only happen if the economic conditions are right. LNG is an expensive alternative compared to the domestic production of natural gas.

I could definately go on, but I won’t. This is a very interesting topic and I suspect you are quite interested in it, but this isn’t the forum for such a discussion.

I will be coming to Queen’s to take an MBA and start May 2008. Perhaps you would be willing to meet over coffee to discuss further? You can reach me at my e-mail listed on my blog (http://queensu-mba.blogspot.com/) about my experience taking the MBA.

Lots of questions but it sounded very interesting.

HANY

HANY

HANY