Thursday, January 21, 2016

Alberta's economy pinched by oil

Canada's economy relies heavily on the energy sector and nearly all of its oil and gas exports target a U.S. market less dependent on foreign reserves because of the shale boom. Lower export revenue and even lower crude oil prices are hurting exporting economies like Canada's.

"There is no question that Alberta's and the broader Canadian economies are now facing serious shocks," Finance Minister Joe Ceci said in a statement. "These shocks are having a serious effect on government revenues in all energy-producing jurisdictions -- including ours."

DYI Comments: Canada being a petro-state will be serious trouble if oil and gas prices stay at low prices and God forbid they drop below $20(U.S.) per barrel. Canada will go into an outright depression as this will hammer Canada's over inflated real estate market. Canadian's are also far higher in debt than Americans as shown by the chart below. Our northern friends could very easily experience a deflationary smash.

As for investors DYI will have our eye's on the Toronto market for if it drops substantially it will be time to dollar cost average into your favorite fund specializing in Canadian securities. DYI favorite is Fidelity Canada Fund symbol FICDX.

Be prepared interesting times lie ahead.

DYI

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Quotes

Social Security operates on a simple principal: "You give your money to politicians and they squander it on something else!"

Harry Browne

Fail-Safe Investing

"The only way to "Beat an Index" is to invest in a different and significantly greater - undervalued index."

The Dividend Yield Investor

"Men, it has been said, think in herds; it will be seen they go mad in herds, while they only recover their senses slowly, and one by one."

Charles Mackay

Extraordinary Popular Delusions and the Madness of Crowds

"Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook."

Benjamin Graham

The Intelligent Investor

Estimated 10yr return on Stocks

Using 5.4% as the historical growth rate of dividends and 4.0% as the ending yield.

Starting Yield*---------return**
1.0%-----------------------(-5.7%)
1.5%-----------------------(-1.7%)
2.0%------------------------1.3%
2.5%------------------------3.8%

3.0%------------------------5.9%
3.5%------------------------7.8%
4.0%------------------------9.4%
4.5%-----------------------10.9%

5.0%-----------------------12.3%
5.5%-----------------------13.6%
6.0%-----------------------14.8%
6.5%-----------------------15.9%

7.0%-----------------------17.0%
7.5%-----------------------18.0%
8.0%-----------------------19.0%

*Starting dividend yield of the S&P500-**10yr estimated average annual rate of return.

DISCLAIMER!

This blog site is not a registered financial advisor,broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.