April 20, 2021

Markets were moderately negative on Tuesday. The S&P 500 was down 0.7% and Toronto was down 0.85%.

CN Rail was down 6.3% after getting into a bidding war with CP Rail to buy Kansas City Southern Rail. The sure winners of the bidding war are the Kansas City share owners. Whether the price paid will end up too high remains to be seen.¬† I’m a bit inclined to grab some CN shares on this dip but will probably just hang onto my cash.

Toll Brothers was down 3.6%. It continues to be more  volatile than it probably should be.

Canadian Tire was up 2.0% and is now just shy of $200 per share. I have been complimentary of its management for many years. It’s been very well managed. It has thrived while many retailers have faltered. It’s probably getting expensive at this point however. People like to say “Buy and Hold is dead”. Well, Canadian Tire is up 771% since I first put it on this site as a Strong Buy in February 2000. That’s 10.7% per year compounded and that does not include dividends. I’m not saying I always had it as a buy. I may have had it marked sell once or twice, I’d have to look that up. But the fact is buy and hold would have been fantastic on this one.

Regarding the federal budget. I wanted to calculate the $154 billion projected deficit as a percent of federal revenue. I found the 724 page budget document but it contains no summary of revenue and expenses. I looked at the Financial Post today and they had no summary. The goal seems to be to baffle us with a thousand tiny bits so we don’t see the big picture. To me, the budget is shameful because they are paying for vast new spending with debt. If they really think the spending is needed they should have the guts to raise taxes and make it apparent that the spending must be paid for. I think the $154 billion might represent spending of about 44% in excess of revenue. (Try that in your own life). But I can’t be sure given the lack of summary data.

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