February 22, 2012 Comments

The Canadian market was up 0.6% today but the U.S. markets were down modestly. Some of our key stock picks here and three that I own were whacked down today. Walmart fell for the second day after disappointing earnings. Toll Brothers was down 5%, Canadian Tire was down 2.2%. I am tempted to add to my position in these but instead am trying to have the discipline to hold onto my cash in case further bargains emerge. (One of my RRSP accounts is one third in cash, but the other RRSP account has only little cash and my non-registered account is leveraged (negative cash) so overall I have little net cash). Markets have been up a LOT in the past few months and it’s no surprise to see a pull-back. There are always things to worry about but on the other hand there are certainly positive signs in the U.S. economy as well.  And U.S. election promises may also have some positive effects.

Buffett’s annual letter will be out on Saturday morning. We already know, from the Fortune magazine article that I mentioned last week,  that in the letter he will suggest that Stocks are a better investment in the long run than is gold or bonds. This has prompted may to argue that he is wrong that Gold is a poor investment (which he did not even say!). He will be on CNBC on Monday morning. I would like to hear his views on the Greek debt swap charade.

A company that I used to have on this site has reported earnings tonight. This is Aimia which was formerly called Groupe Aeroplan and before that just Aeroplan. (I wonder why the name change?) They lost money in Q4 and in 2011 but they spin a story that they were profitable without goodwill impairments and breakage adjustments. Their accounting has always been complex by nature and subject to estimates. For a variety of reasons I have lost all trust in this company. I sold my shares some years ago. I would steer clear. They may in fact be a good investment and they may be entirely ethical. But the way they report things and the way they expire Aeroplan points after 7 years (and worse after one year of inactivity) all combined to give me a bad feeling. A few years ago I saw but excused somewhat similar red flags regarding Kingsway Financial and lost money as a result (and worse, we gave a rating here that proved far too optimistic that some subscribers followed, albeit at their own risk and albeit I did reveal the flags I saw). Once bitten, twice shy. (I will assume the rat I think I smell at Aimia is real, even if it might not be a real rat).

Searching back, I see that my last comment on Aeroplan was December 30,2010 when I mentioned the complex accounting, rated it Speculative Weak Buy at $13.75 and said I would not buy it. Today it closed at $10.97. (Update to comment, actually that was the price under the old stock ticker AER from October 6, the new ticker is AIM and it closed yesterday at $13.08).


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