December 23, 2016

On Friday, the S&P 500 was up 0.1% and Toronto was down 0.1%.

Boston Pizza Royalties Income Fund rose 1.4% to $22.94 and is up 28% this year. And it is up 36% since I rated it a (higher) Strong Buy on February 10.┬áThis was a very good “call” because this was a low risk entity yielding 8.2% at that time and seemed clearly under-valued. Sometimes the big returns do not require big risks. This was basically a “bargain hiding in plain sight”. It seemed clear that it had little downside risk. One reason I want to build my cash position is to take advantage of opportunities like this when they arise. I did have a very healthy allocation to Boston Pizza though most of it was made at higher prices than the lows certainly. If I’d had more cash I would likely have bought more near the lows.

The Canadian Western Bank preferred share CWB.PR.B was down 2% to $18.85 and got as low as $18.66 today. I believe the decline was related to a slight drop in the 5 year Canada interest rate which in turn was related to the weak GDP numbers. I placed an order at $18.75 as I think this will increase in price in 2017 and probably has little downside risk.

GDP is estimated to have declined 0.3% in October with manufacturing down 2.0%. The lower Canadian dollar has not had the hoped for impact of spurring manufacturing. Somehow though consumer spending has continued to grow modestly. This report is reason to be cautious on the prospects for the Canadian economy.

The Canadian dollar is down to 73.8 U.S. cents. I plan to move some U.S. dollars back to Canadian dollars and perhaps I should have done so today.

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