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Regional Party!

We expect Thursday, January 20, 2011 between 11h and 15h for Combronde for a tasting of regional products, all accompanied by music bio.

No speech, no training, nothing! We eat and that's it! On Thursday 20

! Nathalie and Laurent

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MOVE

Hello everyone!

's it! We've moved! We are now in our Combronde building. While waiting to invite you to celebrate the event, Please note our new address:

Auvergne Bio Distribution
ZAC de la Varenne
Rue de Bretagne 63460
Combronde

Tel 04 63 85 80 18 and 06 33 86 00 51

soon,

Nathan, Lawrence and Sebastian.

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Auvergne effective! Soon to

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's it, "local organic" is installed in the canteens of Auvergne. Our region with its platform Auvergne Bio Distribution serves as an example to other French regions (and even in Belgium!) Auvergne is on top in terms of organization to make the link between local production and canteens. Very good notes regarding the number of schools with integrated bio in the menus! In short, we are strong in Auvergne!
After these few words necessary for self-congratulation and good fun, here are some guidelines on what is emerging at the national level.
According to our policy makers, catering is the ideal place to implement the NAP (National Food Program) enrolled in the LMAP (Law of Modernization of Agriculture and Fisheries). The NAP will be prepared every 5 years by the Government, and produced in association with the PNNS (National Health and Nutrition).

This program must include:
- to create the link between farmers and consumers and promote the development of short circuits;
- improve the quality of food, train staff, managers and cooks;
- install monitoring and control of nutritional requirements.

Returning on these 3 points:
- On the link between producers and consumers and the development of short circuits in our country, the minister said that the change in the threshold of public procurement in place and removed few months later did not comply with Community law. Then there is the provision of catering LMAP incentive to buy more local. Also, the Minister announced a future amendment to Article 53 of the Procurement Code to allow, in case of equivalent tenders, the application of a right of preference to offers from short circuits. In addition, to encourage local shopping, a guide for drafting tendering is being prepared. Finally, DRAAF each region have created catalogs identifying local products.
Note that with a big lead, Auvergne Auvergne with its platform Bio Distribution offers more than a catalog listing the producers, since it is responsible to seek goods from producers and the organic Auvergnats redirect catering. (A study of the same organization for non-organic products Auvergne is in progress).
- The PNA should improve the quality of meals. We have long known that only the introduction of organic labels and AOC is not sufficient to improve the quality of the provision of catering. Training is essential to improving the quality and sustainability of local ingredients in menus. That is why we offer training in Auvergne since 2006. We are pleased to note that the NAP plans to reflect and to structure the offer of training for cooks and managers. Regarding the bio, without training, we open the door to imported industrial organic, and as regards the non-organic local produce we break down significantly their introduction.

- Finally, the Minister announces that it has been decided to make compliance mandatory nutrition. Indeed, given the rise in obesity and diabetes and noting that the implementation of recommendations Circular 2001 is very poor, it was therefore decided to mandate compliance. Again, I hope that teaching will its place!

In conclusion, it appears that there is a national political will to support short courses and the department of agriculture has been considering how to implement it. Hope the Minister Bruno Le Maire think to work with Christine Lagarde Minister of Economy on the issue. For the moment, the LME (Economic Modernization Act) by Christine Lagarde does not promote the development of short courses and shopping nearby. Not really.


For more information, please read the interview with Bruno Le Maire, Minister of Food, Agriculture and Fisheries in the magazine "The Community Kitchen" in September 2010.

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After the return ... the start!

If I announced my return last week on this blog, I announced my departure now.

My new professional activities keep me continue to keep this blog so I'll stop it. This column is the last I'll write.

I would advise you to keep an eye on the U.S. and Europe. In the U.S., it will be necessary to resume the use of force while the old continent will oversee the development of its debt.

Good luck to all my fellow bloggers and hope to see you soon .. Goodbye!

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Back ... with a discussion CFA

After a full month out of the blogosphere, I am now back.

Today I wanted to tell you about the review of the CFA. Before I begin, I am bound by the rules the organization not to divulge the content of the exams so do not ask me (in comments or email) of sample questions. For cons, I can safely speak of the format.

So the title is for CFA Chartered Financial Analyst . Many have asked me if it was useful and I would respond by comparison. The CFA designation is to finance what the CA is to accounting. It is not necessary to have the title to be successful in their field, but it is very well seen. Following my column will answer questions I am frequently asked about the CFA.

"I passed the CSC (Course on Trade securities) of Canada. The CFA is there the same level of difficulty? " Answer: NO . The CSC is exceedingly easy and as ridiculous review. If you have struggled to achieve the CSC considers the CFA as above your abilities.

"How long does it take to get my CFA designation?" On average, five years. For CFA, you must first pass the 3 exams that are given only once a year (the first Saturday of June), except for the first which is also given on the first Saturday in December. And succeed three in the first test is not given to everyone. In addition, you must also have sufficient work experience (5 years) in the financial sector even if you passed the exams.

"What is the workload for each exam?" It depends on the level of knowledge you have when you begin your CFA. In normal times, it takes at least 200 hours of reading and study for a tour of the area. Each review includes 6 books of readings. The number of pages varies (depending on the year and examination) between 2500 and 3500 pages, but the first consideration has more content than the second which is more than the third.

"How was your experience CFA so far?" I did and passed the first exam in December 2009. I put about 100-125 hours of study, because the material is essentially the CFA I saw in a degree in finance. I did the review of CFA II in June 2010 and I put about 200 hours due to time (I wrote my thesis at the same time). Of the 3200 pages of material, half were new or more advanced than what I knew (despite my almost complete mastery). The study was longer than expected and I found myself with a week revision before the exam so that we recommend at least a month. On 26 July, I knew it was a mistake to have so little time to review: I did not pass the CFA II.

"What grade did you get to your two tests? What is the grade? " CFA does not give grades. The idea is that you succeed with 97%, 85% or 78%, you spent. The organization does not create a category of CFA (like "we hire him because he got 86% while the other had 80%"), they therefore indicates FAIL or PASS. For them, two CFA will also be qualified as the other, regardless of their examination score. By cons, for each "discipline" tested in the exam (ethics, economics, portfolio management, ...) indicate whether your rating is below 50%, between 50% and 70% or above 70%. These three categories can be seen as FAIL / DEPENDS / SUCCESS and allow you to see what categories should be reviewed.

In case of failure, the organization also tells you the depth of your fail (!). It brings these people in 10 categories and tell you if you're one of absolute failure and deep (category 1) or if you've spent close to succeed (Class 10). (My rating 9 leaves me confident that with more study, I will be able to succeed next year.) The way the CFA determines the level of success or failure is unclear. I know by cons as above 70% you're sure to succeed. Officially, officials meet to determine the level of success. But informal discussions are coming out full of assumptions to describe the passing grade. Someone told me that he took the note of 1% of the top and set the passing grade to 70% thereof. Others told me about a complex algorithm that gives importance to the ethical category (like "you spend ... you unethical not pass the exam "). And the list could be long. All I know is that the pass rate usually varies between 35% and 45%.

If you have further questions on the CFA , ask them in comments.

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Combronde

Auvergne Bio Distribution advantage of the lull of the summer to prepare for the development of local Combronde and organize the move. As the work has been delayed, we will be moving finally in late October during the school holidays to start the activity in our new building Tuesday, November 2.
activity "Local and Organic 'Auvergne develops slowly around the supply of catering. Diversification projects of the cooperative activities Auvergne Bio Distribution should be realized during 2011 to strengthen its future development and can continue its economic support of the Auvergne region.
We will offer activities and operations for the week of taste which will take place this year from October 11 to 15.
Happy holidays to all, we find ourselves at the beginning!

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MTY Group (TSX: MTY) released its figures for Q2

A little out of my break to try to put into perspective the numbers of MTY. If the numbers are good, my view on the company, although still positive, is reduced.

The results announced today make me see this year's EPS to $ 0.90. This value is up compared to my previous expectations, but my vision of growth is sharply reduced. In my opinion, management does not enough importance to the growth component.

I do not mean that there is no growth. Simply that the company could act more quickly. It's like having a train that has a cruising speed of 125 km / h and is rolled to 80 km / h ... it does the job and that's fine, but we could have better performance.

On this, I want to clarify certain points in the press release. For example, we are told

For 2010, MTY has Already Realized icts objective of opening 75 new locations and Will Continue to Pursue The Growth of Existing ITS concepts.

Perhaps, but a few lines before we are told

79 new locations Were Added For the first six months of 2010, while 44 Existing leases Were closed, Representing a net addition of 35 rentals

[...] Note that the company has not made acquisitions for a long, that it has only 35 net additions in 6 months (with 1600 sites, we are talking about a capacity increase of 2.2%) and sales are down. How it

sales down you say!?!? Because in the industry of retail trade (such as catering), the most important is the Sami store sales, or sales in restaurants open more than a year. And on this point is lowered. Same store sales

declined, by 1.15% and 1.14% for The Second Quarter and Six Months Periods ended May 31, 2010, respectivement.

And let me just talk about recession. Here we compare the figures for Q2-2009 (in recession) than in Q2-2010.

What does this mean?
This means that MTY not getting its growing its existing businesses. Its growth came from adding new stores.

But we have just seen that MTY in internal development, adds only 2.2% of capacity in 6 months (about 4.5% per year). If we extrapolate crudely, this means 4.5% growth of -1.15% and falling sales. So 3.35% growth.

MTY should be more aggressive on the development of its banners or make acquisitions.

Without seeing these elements in MTY, a target of $ 19 as I was practically impossible to maintain. With the current growth from Country Style, I think $ 13.50 is a better target. With this target, the ratio of forward P / E is 15 ... a reasonable value for a company with ordinary growth.

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a break during the summer will be good.

First, stock markets are acting now so completely irrational. In those moments, I watch what I have in portfolio and I ask myself the following questions:

• What are the events that could justify a reduction in value of the title?
• If the price has already dropped, is it rational that the decline?
• Conversely, does an increase is correct?

When I say that markets are irrational, I mean not just that we have suffered declines in recent weeks. Indeed, some titles have been planted with the market and instead mounted. On the other hand, some titles are unrelated to current macroeconomic problems and have suffered a huge drop.

Take the latest results from Research In Motion (RIM). The company announced its results last Thursday. Sales are up 45% from last year, but 2.5% below analysts' expectations. Profits are up 20% from last year ... and 3% above expectations.

So, revenues are growing weaker, but profitability is present. According to the results, the company has sold fewer than anticipated BlackBerry by analysts, which explains the lower income.

Such results are negative? Not according to me ... but the markets have dropped the title of 11%.



So I take a break for the summer. It could be that I write a comment or two, but it should not have many activities here in August.

good summer.

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Break The profitability of financial analysts

After my review of the CFA (which has relatively smoothly), I worked on the completion of my memory and it is that explains the lack of anything for a tip. I'm almost finished and the deposit should be by the end of the month. Since I really learned something interesting during the creation of this memory, I thought I would share with you some relevant information.

Analysts Are Pay?
is the question at $ 100. Is it possible to rely on analysts' recommendations to make money? Can we, by simply reading a report, transact in markets and be a winner. The answer to this question ... ... ... ... ... Theoretically, yes!

I already see many doubters. First, why only in theory? Because we must deal quickly (explained below) and a simple client like you and me did not have access to the findings of analysts quickly. Consider an analyst who files his report at noon. All major clients (institutions, mutual funds, managers, ...) are invited to a conference call to discuss its conclusion at noon. But his report could be available for small investors between closing and opening tonight for tomorrow (for reasons of compliance and quality of language among others). I therefore said that analysts are paid in theory, because small investors lack access to conclusions pretty quickly. And even if you were given such access ... you should be available anytime to receive this information, which is unrealistic.

I can still hear the world tell me they doubt whether even paying for big investors. Well, I must tell you that Analysts, on average, however, are actually paying. Notice I said average, some recommendations will be losers, while others will benefit.

What that analyst recommendations are paying?
The answer to this question is very simple ... what are the updates recommendation. It is known that analysts are biased. It is not in their nature to recommend the sale of a security. However, what matters is not the recommendation as it is (buy, neutral, sales ...), but rather the change. In other words, it must monitor whether the title has just been upgraded or downgraded. That is charges. And when you think about it logically. We are not supposed to do returns with information already known. However, if an analyst with a buy recommendation for 5 years on the title, I think his position is known to the market. Although it decreases this recommendation, it is a new information and research on the subject shows that the price adjustment is not instantaneous.

Today, there is performance to the period of one month following the update recommendation. And if the recommendation is supported by forecasts of earnings (that is to say that in the event of an upgrade, the analyst also increased its profit forecasts and vice versa), then the performance achieved is even greater.

performance may be achievable within one month after the update, but most of it takes place in the first 48 hours. Compromise after 48 hours without interest after the transaction fees paid.


What does this mean for ordinary investor?
For us, the conclusion is simple: do not blindly follow the recommendations of analysts. Even if the recommendation is less old and he is repeating an old recommendation. For the small investor, the interest of an analyst's report from the analysis on the inside, not small conclusions on the first page.

Implement a strategy to recoup the recommendations of analysts is to buy ALL the upgrades and sell short ALL downgrades. According to the results of my memory, it means having about 300 holdings, and deal 40-50 per day. I do not need to explain why, net of transaction costs, such a strategy is not really profitable. Even if we reduced the sample investable is always ± 15% of the sample which is traded at each day. Net of fees, such a portfolio will never be really interesting.

Do not come to the conclusion that the analysts are therefore useless. I told you that on average they are paying, but it should settle quickly if transaction costs prevent us to enjoy. It means rather that financial markets are efficient enough to recognize that the opinion of an analyst to value and prices adjust quickly to the market. To the point where net cost is no more money to be made. The only people who truly benefit from a recommendation from analyst are those who hold the title before the publication of these findings. It why the rules against front-running are important.

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The importance of market timing

After discussing the evaluation of market timing analysts, I thought I would add you a little demonstration to represent the importance of good market timing.

First, remember that many love to say "I expected" or "I told you so" (and I myself am guilty of doing so ... go back to my assessment of the banking system U.S. in early 2009). Is to see who can actually boast that this way of evaluating the predictive ability of analysts is important. Whoever is right most of the time well we can make small "crises of bragging), but when it's been years and you say" you'll see "bad" it's coming "... your ability to market timing is a bit .. . probation. If someone says since 2003 "you'll see, the markets will crash!" it is certain that he will eventually be right. But he has been wrong for several years. The timing is therefore an important concept in preparation for movement. Besides, it's one thing repeated by the CFA ... a prediction time frame without is worth NOTHING! View Dow at 12 000 points says absolutely nothing. When does it reach 12 000? In a month? a year? 25?

The time factor is critical to good recommendations and forecasts. And then I'm not talking about short term market timing . I do not speak to predict whether tomorrow the market will be bullish or bearish. I talk to have good timing in the month, quarter or year. To demonstrate the importance of market timing, I'll redo this a little simple exercise is done in some of my current portfolio management at work to see the interest compounds and better grasp the basic concepts of risk. Take six investors (managers or analysts whatever):

• A: Do not believe in any way the stock markets. They are too expensive and too risky. He therefore prefers to invest only in Treasury bills.
• B: Do not swear by the stock market. Is fully invested at all times.
• C: He has the gift of seeing into the future and knows at the beginning of each month if the market will yield a positive or negative. He buys when the market will be positive and less Treasury bill when it is more profitable investing in the market. We say that C has a perfect market timing.
• D: A good friend C. It follows the same direction as C, but the opportunity to sell short the market when it is negative.
• E: Did not the gift of C. So he decided to chance it invested in the market or Treasury bills. Chance makes it right about 1 to 2 times as much to market. bull and bear. His score in my last post would be 0.
• F: Does as E except that it leaves nothing to chance. His ability to understand markets allows it to make a good prediction 6 times out of 10. His score in my last post would therefore be 0.20.

If every investor had started his career in January 1926 and was completed in December 2003, what would you think their respective returns? How much would $ 1 invested by each? To leave a little suspense, I will give lower results only.

The time period is that I have available. During my data stopped in 2003. You can continue to 2004-2010, but we should see the same thing. I checked and the difference between each portfolio is very stable over time. I'm not talking about the concept of risk here because it is a little catch with the calculation of risk for investors, C and D. But otherwise, E and F is a standard deviation less than B. For fans of methodology, projections of E and F were produced in a Monte Carlo simulation. Well here are the results:



... even lower ...

• $ 1 for Investor A is $ 17.56: annual yield of 3.7%
• $ 1 for Investor B is 2 $ 114.95: annual yield of 9.9%
• $ 1 for Investor C is 21,792,606 728.67 $: annual return of 30.9%
• $ 1 for Investor D is 61 950 641 518 119 $ 856.00: annual return of 50.6%
• Investor E $ 1 worth $ 277.17: annual yield of 7.2%
• $ 1 for Investor $ 654.03 worth 11 F: annual return of 12.1%

I think I can let you draw your own conclusions the usefulness of market timing in our forecasts. Note that for F, it is right 6 times out of 10 is a performance comparable to a normal financial analyst. A very good analyst could achieve a score between 0.4 and 0.6 according to the formula of previous post.

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How to determine the quality of forecasting models by multiple

One thing that is difficult is whether the forecast of an "expert" is strong. In other words, is what this expert is really good in its ability to predict the future?

Well, it looks like that says that I speak of fortune teller. But I actually spoke to these economists and the market analysts tell us that if the economy will go well or not and whether the markets will be positive or not.

Consider the situation of an analyst that we call ABC. So ABC does not believe in equity markets in their current composition and leans on a very conservative assessment of the value of a stock. ABC works for a large company and one of his colleagues, DEF, has a totally opposite and still believes that markets are undervalued as ever. XYS is more tempered in his vision of markets and through its analytical capability, meaning it will always find the market. Finally, OPQ is the lead manager of the firm which ABC, DEF and XYZ make their recommendations. OPQ does at its head by suggesting to analysts that are important and chose his title by chance (throwing dart, dice, etc.).. It is just 1 out of 2 in its final selections no matter the market direction.

Evaluating the quality of a forecast
Can we say that 3 analysts are as good? No. But how to analyze their performance? While markets have been rising for 8 years and down for 2 years, can we say that ABC is right 20% of the time and DEF instead because 80% of the time??

Such an analysis would leave aside the material weakness ABC and DEF: there are always biased (from the top or bottom). Then we must evaluate the analyst twice. Once the bull market, and once in a bear market.

The CFA proposes to calculate the probability that the analyst is correct in bull market (PA) and it is true in bear markets (PB). Calculated once you add the two values and subtract 1. Thus, our three analysts would obtain scores:

• ABC: 0 + 1 - 1 = 0
• DEF: 1 + 0 - 1 = 0
• XYZ: 1 + 1 - 1 = 1
• OPQ: 0.5 + 0.5 - 1 = 0

While we note that the value maximum for this ratio is 1. This means that the analyst is correct every time. A quick scan of the formula allows us to understand that the minimum value is -1. However, a result should not be below 0, because that would mean that the analyst is really bad! Indeed, if an analyst is below 0, it means that the orientation by chance would be preferable in terms of accuracy.

You see that ABC and DEF are also 0? This is because they are excellent in their respective markets (up or down), they are exceedingly bad in another. Their predictive ability is nil. It is as if Cole was telling us every day that will fine tomorrow. It will be right just when it will be fine. Other days it will twist. Does she give good weather forecast? Well no!

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is the third article in a series of 4 on the evaluation of an action. In these volatile markets (I see no reason why they are the same, but this will be the subject of a future column), it may be interesting to see what is the value of his company.

Today I will talk with multiple models. The multiple most popular is undoubtedly the P / E. All know, but some use it without knowing what his involvement.

Before going further I should explain the difference between the sales comparison approach and the method based on the fundamental set. The first case is that you all know. The market price is $ 20, earnings per share (EPS) is $ 1 ... P / E = 20. The second situation is similar but slightly different. Instead of taking the values of markets, it takes values provided. For example, you estimate that your stock is worth $ 12 a discounted ( see my post on this type of model ) and that are estimated EPS of $ 0.80 ... your P / E is 15. The analysis is slightly different as well. In the first case, it seems that buying a business at 20 times earnings. In the second case, it seems that the company is worth 15 times earnings. Both methods are used on all multiples. Here I will focus on the sales comparison approach when describing ratios

And finally, before presenting each multiple, know that it would be very irresponsible to look the same ratio from 2 different sources. Ideally, you should calculate them yourself. It's not as if the calculation was difficult!

Yet another thing, such ratio can be compared to the history of the company, but also the present value of these peers.

Price / Earnings
I do not think at present this ratio. The denominator of the equation is obvious. The denominator ... a little less. For example, some data providers calculate a TTM-P / E. TTM means trailing twelve months therefore earnings are actually the sum of last 4 quarterly results. Others will take the last annual figure and some will make a serious error (can not see it anymore, but it's happened before) taking the last quarter and multiplying by 4. Personally, I prefer to use TMT.

Some say that the ratio is bad because it looks in the past while this is the future that interests us in finance. It is also possible to consider the prediction of earnings as your earnings. We then speak of a forward P / E.

An important problem of the P / E is that it is useless when earnings are negative, zero or unusually small. It is then possible to speak of an earnings yield (E / P) ratio is the reverse. The figure will now be economically significant, but will not be useful for comparative purposes. This is why companies with volatile earnings are not analyzed with the P / E.

There is also some love PEG ratio (P / E divided by growth) to separate firms according to their assessment based on their growth. Personally, I think that ratio is bad. It assumes a linear relationship between P / E and growth and the growth rate is unique. It's like the Gordon model (see model here) ... well thought out in theory, but no realistic practice.

Price / Book
This multiple is cherished by all investors values. We say that P / B \u0026lt;1 means that the company is really cheap. However, sometimes there are reasons for which P / B \u0026lt;1. A company that destroys value has a P / B under 1. Such a ratio can also raise questions about the quality of financial statements. Recall that the denominator is the book value of the shares. If the company's assets are overvalued, while the book value of the shares are too.

The reverse is also true. A company with a P / B of 5 is not necessarily expensive. A company like Becker Milk, who owns property purchased 50 years ago and has a fully depreciated book value far less than the resale value of assets.

The P / B has the advantage of not having the same problem as the P / E. The book value is relatively stable and not negative. Ok, some companies have negative book value ... in which case this ratio is useless. But saying do not have a PhD to understand that the situation is not rosy for the company. The P / B has a weakness ... Is that the book value is representative of the company? The answer is very rarely. This is besides the manipulation of figures in the balance sheet that may affect the book value.

Price / Sales
This multiple is less subject to manipulation (you can only manipulate sales ... the P / E is about the manipulation of sales and expenses). The comparison between peers here is somewhat more complex since not all companies the same cost structure. Also, some companies see their sales as net of certain expenses (discounts, returns, ...), while others will put these costs in expenditure (promotional and marketing collateral, ...).

Price / CashFlow
Which calculation of cash flow to here? Whatever you want! This is one reason why I told you to calculate it for yourself. Me, I'm normally Cash flow from operations . The advantage of cash flows on earnings is that they are less subject to accounting manipulations.


Price / Dividend
We are used inverse ratio (Div / Price) that gives the dividend yield . Some like to use it, but I do not like ... how to evaluate a business without dividends. This ratio is interesting to do method based on the fundamental set. Not for a comparable analysis.

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Why do we say that the euro is dying?

You hear it everywhere ... the euro is about to disappear. But why? At last news, the euro stood at U.S. $ 1.24. Considering that in January 2002 (the debut of the euro), the currency was worth approximately U.S. $ 0.88, I do not see the drama. In the words of leaders of European finance, the problem is not its current value (the euro worth U.S. $ 1.24 last year too), but rather the speed at which the currency has fallen.

How does the establishment of a currency for a country?
Before going to see what happens with the euro, explain how the establishment and maintenance of a currency operating in a context where one country adopts. Consider the Canadian dollar. That dollar is effective only in Canada and is governed by the Bank of Canada. The Canadian dollar is affected by two kinds of factors: internal factors and external factors. When evaluating a currency, is by comparing it to another. So inevitably, the value of $ CDN is influenced by another currency (external factors).

Canada does not control external factors, but can control the internal factors. Internally, the dollar value of a country is influenced by supply and demand. The offer is the country that makes it. The application is foreigners who want the Canadian dollar. Here is a list of economic factors that would increase the Canadian Dollar

• increase foreign tourism in the country (higher demand)
• Lower Canadian visits abroad (reduced supply)
• Exports Rise (increased demand for pay of $ CDN)
• Lower imports (Down the offer of $ CDN for pay)
• Reduction of government debt (reduced supply)
• Rising interest rates (higher demand)
• Reduction of currency in circulation ( decrease in supply)

course, all points would reduce the currency reversed. If Canadian authorities (banking and / or government) wanted to control (we could discuss at length the ability of authorities to effectively control a currency. Speaking here as a synonym for control supervision), what are their options?

The first 4 points are a bit out of control authorities. In extreme cases, governments could tax the imports / exports quite significantly, but such action would damage the local economy long term. There remains only the last three points, one of which is under government control. The last two are the responsibility of the Bank of Canada.

And what's different in Europe?
In Canada, if the value of our currency was becoming a serious problem, the government would act with the Bank of Canada. In Europe, if the situation becomes problematic for the euro, European Central Bank will act with 22 countries. Everyone should take the same side at the same time.

The problem in Europe is not the value of the euro, but his downfall (some see this fall as being the result of speculation, I rather think that the euro was heavily overvalued for years). To stop, the authorities should increase its value. However, as we saw above, the Bank controls interest rates and the amount of money in circulation. Governments control public debt.

To avoid a "disappearance" of its currency, a country must avoid the need for the machine to print money to pay his expenses. Zimbabwe has so abused that inflation was 100% at 24 hours in the last calculation (calculate inflation in Zimbabwe is now a crime!). This is one of the perverse effects of tests in a currency (and why I mentioned earlier and non-supervisory control).

That leaves interest rates and government debt. Interest rates have an impact on the real economy. Raise rates pushed up the value of the currency, but decreases economic growth. That's why banking authorities intelligent (as in Canada) use interest rates to control inflation. That leaves only

debt public. Europe has long been known that the debt was what could bring down the currency and undermine the economic stability of the entire region. Therefore, all countries in the euro area have agreed to limit the annual deficit to a maximum of 3% of GDP. The problem is that it was a guideline . That was not the force of law and several countries irresponsible (sorry for the Greeks and others, but you do not deserve to be part of the euro area) are ignored. For example, the deficit in Greece is more than 4% per year for 5 years. In 2009, it reached 12% and this year is expected to reach 9%.

Europe has understood that there are countries where fiscal discipline is wrong (I wanted to say no to shit, but I'll be polite) and table currently on a law that would force all countries to respect the measures in place. There is even talk of strengthening these measures (because the debt problem is a serious problem in Europe).

And why not just leave these countries in the Eurozone and leave them with their problems? Because that would say that the single currency has been a failure. And we must admit that Germany likes it. A weak currency allows it to export to the ton!

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speculators responsible for the crisis in the euro area?

is what I read in the newspapers for some time. Sarkozy said that the need to control speculators who are breaking down the euro. The Greek finance minister says that those who speculate against Greece will bite the dust. And then goes on.

Speculation against the euro by selling it, which lowers the price of the currency. Speculation against Greece is asking a very high risk premium on government bonds (a bond of maturity 2 years Greece has an efficiency of 10-15% depending on the day ... in Canada, we're talking about 1.5 -2%).

But is that speculators are responsible? How? Why? Who? When? As questions, so few answers ...

• Is there any speculation on the euro and the Greek bonds? Answer: yes
• Are these speculators are now so important that they are partly responsible for the current declines? Answer: yes
• Does the presence of these speculators would affect the soundness of financial markets? Answer: No
• Are these speculators are responsible for the problems of contagion views on the markets? Answer: yes and no

I do not deny the presence speculation on the markets (and good, the definition of speculation can be relatively large ... if you're planning a trip to France and you're wondering whether you're better off buying your euros today or next week, do your Some of these speculators ...), but I do not think it would be healthy for the markets to prevent speculation. I answered yes to question 2, but much of the week declines are due to systemic change to which speculators have nothing to do.

Why say no to the third question? Because say yes is to say that markets are not efficient and ineffective. If the speculators have done too much lower prices, they rise in the short term (days or weeks) to achieve a balance. Speculators are therefore responsible for having unnecessarily increase volatility. If prices remain stable, while speculators have allowed markets to reach the new equilibrium price quickly, which is excellent.

Why this ambiguity in the answer to question 4? Because speculators are indeed responsible for having pointed out the country likely future problems. In fact, having seen that Greece was also in the hole, the European financial actors (That the world now call speculators) have searched the public finances of all countries in the euro area. Results: The acronym that presents the country with a debt "problem" goes the PIGS (for Portugal, Italy, Greece, Spain) in recent years STUPID (Spain, Turkey, UK, Portugal, Italy, Dubai). "Speculators" have indeed these names hammered in the markets and beginning to demand a risk premium higher in these countries (causing the phenomenon of contagion), but they are not responsible for the underlying problem.

An analogy to understand
I'm surrounded in my life everyday people who know nothing about finance and I have often find situations easier to explain any economic phenomenon. So here is my analogy of the crisis euro.

Take a big family. The father, mother and their children share a joint account. They also each have a personal bank account. Grandparents and other members have their own bank accounts, but does not participate in the joint account.

For those who have not seen ... family = European Union, parents + children = countries with the euro as its currency, other countries with own currency = (UK, Switzerland ...)

All goes well for the whole family. Together, they bought a house that everyone must pay according to their capabilities. Everyone can achieve the spending he wants, but the owners of the account-husband have adopted strict rules to avoid causing harm to other owners of the account partner. The house

= European Union, rules = rules to maintain maximum leverage single currency

But, one child wanted to live above the means despite the strict rules. It therefore pays significant care and returned to school for years. It takes advantage for travel (business class) in beautiful destinations (after 5-star hotels). One point, finding himself soon dry even to pay the minimum on his credit card, call a family meeting at the bank to say that in 5-10 weeks there will be more a cent. He wants help.

The child is irresponsible Greece. Expenditures represent the luxury of having lived beyond these means. The meeting at the bank is having said aloud "In late May, I go bankrupt if the EU does not help me. "

The whole family quick to lend money to the child to prevent it taints the joint account. Also avoid the loss of the house and save the family reputation. Bankers income of the family then decided to scrutinize the finances of each member and discovered that two other children are borderline, but not necessarily critical. Parents call an emergency meeting to create an emergency fund to protect the spouse account. The grandfather refuses to participate in this fund.

The other two children are Portugal and Spain . The grandfather is the UK refuses to participate in an emergency fund to stabilize the euro area in case of future problems.

Bankers reassess income family where the whole family. Because all children (including irresponsible) have access to the account-spouse, banks lower the credit rating of the joint account. With regard to personal accounts, they are reviewed on a case by case and those irresponsible children have seen the interest rates on future borrowings increase.

Need I explain?


So ... would you want to bankers in the case of my analogy of doing so? It preventive some say, but said higher risk said performance required higher. Notice that they did not categorically refused to swear or demanded immediate payment of all scales ... just required risk premiums higher.

If you answered yes to my question, do you think the banks have done well in the United States to lend money to people who wanted to buy a home without passing the tests of creditworthiness (hence of making subprime) on terms as favorable as regular mortgages? If your answer to my last 2 questions is not the same, you are incoherent. (Normally, I expect no-no ... say yes-yes it does not understand the workings of finance)

In my analogy, some bankers may speculate on the difficulties of their customers (through higher interest rates, but long term the situation must necessarily reach equilibrium). And can we say that the crisis in the family is the fault of bankers? So why say that speculators are responsible for the crisis euro?

Nerf Gun Clip Art Free

models discount

In finance, the value of a property is the value of future cash flows that we will release the property in today's dollars. For example, a government bond that will give me $ 100 in 12 months could claims $ 98 today. For a more detailed explanation of the concept of discounting, see the note on the intrinsic value of a company blog Financial Portfolio.

can be divided into 2 main models types: models of dividends and free cash flow models. In reality, there are hundreds of models that are all derivatives of these basic forms. Therefore in business schools we just normally thereof.


dividend discount models
( Dividend discount model )

As its name suggests, these models update the value of future dividends on the company to determine the intrinsic value of the action. A major flaw is that it assumes that the dividend is the only form of shareholder remuneration. All businesses that pay no dividends (or do not pay in the foreseeable future) are not assessable by these models. But even for companies that pay dividends, it is difficult to clearly assess the value of a share. First, some companies pay dividends irregular, is making complex modeling. Then, several firms have dividends that are not correlated with company performance (and therefore unsustainable in the long term). For example, GM has paid 30% of its profits in dividends in 2000, but 113% in 2001 and paid from 2005 to 2008 despite operating losses. Using a dividend discount model in such a case is without interest.

The first step of a model dividend is to determine if the company lends itself to such analysis. Normally, only mature companies with steady growth and relatively low (we'll see why soon) are good candidates for a model with dividend.

Model Gordon
This is the simplest and most popular of the dividend discount model. To find the price of a stock (P), we need the next dividend (D), the rate of dividend growth (g) and the shareholder's required return (k). The formula is:

The greatest weakness of this model is mathematical. First, k and g must be constant over time. But mostly, kg must be positive and nonzero. However, many companies have an average growth over the past 5 years 20 to 30%. The application of the Gordon model is impossible.

The two-stage model ( Two-stage model )
To overcome the problem of excessive growth, some will prefer to do the evaluation in two stages. First, we will evaluate a series of growth "extraordinary" (ie where g> k) and then create a regular pattern of Gordon. For example, one could say that business will grow 30% annually for 10 years and then return to a normal level of growth (long term) of 8%. Mathematically, the model is written :

The first section (before the +) calculates the value of dividends that are extraordinary growth. The second calculates the value of the Gordon model is the extraordinary growth over time (and, of course, updated to today). gs represents the extraordinary growth rate (short term) with n like many of the period. gL is the rate of growth in the long term.

One weakness of this model is that it directly affects the rate of growth to another. In my example, it would therefore immediately from 30% to 8% overnight. It is for this reason that the next model was created.

Model-H (H-model )
The model assumes H as the previous rate of growth in the short term and long-term rates. But here, we assume that the rate will decrease linearly over the duration. In the numerical example above, the growth of 30% to 8% decrease over 10 years. So the growth rate decrease of 2.2% per year. The model is written:

The variable H is the half-life of extraordinary growth. In my numerical example, H would be 5 (or 10 / 2 !!!).


free cash flow models
( Free cash flow valuation )

As mentioned previously, models of dividends suffer a major problem: they evaluate dividends! One possible change is to use the same models, but replace the variable D CWF (or MLF for free cash flow). How to calculate cash flow? Which make? It is the purpose of this section.


Free Cash Flow the firm (FCFF)
The first type of FML is the FCFF. It gives us the amount of cash flow that are available throughout the enterprise. Its formula is:

Why all these changes in net income (NI variable)? Because creditors and shareholders have no direct access to profits. In fact, some of that profit must be reinvested in the company. Also, part of the profit comes from non-monetary item. Let each of the variables of the formula. First, NCC is for Non-cash charges or, in French, non-cash charges. Often, this item such as depreciation. WCInv is investment in working capital ( Working Capital Investment ). Int represents interest expense and taxes the tax rate. It adds that element because we want to here all cash flows available to all donors of the company. We must add the burden of interest because it belongs to the creditors (but the tax savings remains in force). CAPEX investment is needed in long-term assets (for Capital Expenditures ). It also removes that amount of free cash flow because you have to reinvest the money in the company for its normal functioning. The insightful

have noticed that NI + NCC - WCInv = cash flow generated from operations. We could reduce the calculations by taking directly the number of the statement of cash flows.

As the flow of money we use is for the company, the rate k is taken to the enterprise. Normally, we take the weighted average cost of capital (WACC or WACC in English). Note that the calculation here does not give the share price, but the value of the whole enterprise. Suffice it to remove the value of debt and divide by the number of shares to find a value per share.


free cash flow available to shareholders (FCFE)
The FCFE FCFF is comparable except that it now seeks only the cash flows available for shareholders. Such a calculation has the advantage of keeping the same k that models dividend and give us directly the value of the shares. It will also take into account changes in capital structure already provided as shown by the formula:

The NetBorrowing represents the net of new borrowings. Just subtract the loan repayments to new issues to find the value of NetBorrowing.

Free Redhot Freeview 2010

How to evaluate an action?

Before I begin, I must confess that future articles are designed primarily to enable me to properly review the various models for the CFA Level II. This is a form of summary for 750 book pages in 4 sections. It will discuss methodologies for financial analysis and the next three will address the following topics:

1. models discount
2. models by multiple
3. residual income (revenu residual )

The importance a comprehensive analysis
Have an overview on the economy is essential before starting the analysis of a title. Normally, we proceed in order:

1. Analysis of the global economy and / or local
2. Analysis of the global industry and / or local
3. Company analysis

Thus, before analyzing a company, we'll start to see in what universe it operates. The best company in an industry fail is still a company to avoid (eg the best company in the production of DVD discs and is doomed to failure today). The presence of "and / or" points 1 and 2 is that some companies operate around the world (and requires a global analysis) while others are smaller and only local.

In point 1, we try the economic and politico-economic factors that may affect the industry. For example, U.S. protectionism has an important impact in agriculture. Political instability in Africa could affect the operations of mining companies therein. In the same vein, the runaway inflation in Zimbabwe (98% per day at last count in 2008 ... so prices doubling every 24.7 hours) can quickly kill economic potential.

In point 2, it is important initially to define the industry. If one wants to study CN, we take as the rail industry, transportation or transportation of goods in general? And can we use as comparable European companies in the industry or whether to restrict themselves in Canada and the United States? Once the list of companies forming the defined area, we try to evaluate the following:

• stages (starting, growing, mature)
• External Factors Affecting the
• Technology: How technological advancements change the industry?
• Government: government regulation could it affect the industry?
• Demographics: demographic changes they will force the industry to adapt?
• Social Change: how social changes affect the industry?
• Development of demand and supply at the aggregate level
• Factors strengths and weaknesses points

If we take the example of the tobacco industry, we know that she is mature or even declining. The new laws banning the consumption of tobacco in public places and tax increases (as well as new and future regulations) result in lower sales in the industry. The aging population should mean lower sales. The change in public attitudes in relation to cigarette smoking makes it difficult for industry growth. With these new external factors, aggregate demand will decline over time. However, major barriers to entry protect reasonably well the current players of future competition, but the smuggling of cigarettes is a scourge that hurts the industry's sales.

With such an analysis of the industry, we are now able to analyze our business. This step will be described in future articles.

Top-Down vs.. Bottom-Up
The top-down method is to study the industry to extrapolate the overall situation in our company analyzed. For example, one could determine the expected sales for grocery stores in Quebec and use that with the market shares of Metro to evaluate its sales.

The Bottom-Up method rather seeks from micro variables. Thus, one could take the sales per square foot historic Metro and predict the next values of this ratio. For sales, simply multiply the number of square feet planned in the future.

The industry Either method seems more appropriate. For example, the Bottom-Up in the tobacco industry is unattractive. But in retail it is appropriate.

I tried here to write the process as possible as a recipe, but much of the work of an analyst is to see when certain "ingredients" are irrelevant and that others would be more relevant.

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MTY Food Group (CVE: MTY)

That finally my own analysis of MTY. I know some people are eager to see if my conclusion on the title has changed. Here are the assumptions that I sent (who knows, maybe you have best idea or it could help improve your designs):

• First, I noticed that, historically, the operating costs (admin, marketing, etc..) represent between 61 and 64% of sales (average 62%).
• The tax rate is between 30 and 32% with an average of 31%.
• Historically, quarterly sales following equation: Sales = 2.55 + 0.228 LTA-1. In this equation, LTA-1 represents the book value of long-term assets over the previous quarter. I do not use this equation to model MTY, but I noticed that the equation was thrown in my data. (Those who want to know the Rcarré of the equation is 88%)

Those are figures based on the past. For others,

• annual sales growth of 22%. It comes from organic growth of 5% (based on the objective of the company to open 75 new schools), a 15% growth through acquisitions and rising prices (inflation) of 2%.
• To achieve the objective of growth through acquisition of 15%, MTY will make acquisitions to increase by about 25% per year long-term assets (ie $ 20M this year ... up $ 32M in 5 years ).
• I also assume that all acquisitions are profitable and that no revision of goodwill is required. Note that this assumption may seem strong, but I must admit that Stanley seems to take my time to make a roadmap without fault.

I also tested a model in which I have made no growth by acquisition. This model was intended primarily to see if the stock remains attractive where MTY took years to find an interesting company in which to invest. Sorry for the big fans, but not growth by acquisition (or a BIG house development shops ... like 75 per quarter), the Title is not worth much. My ticket is already pretty long, I'll avoid going any further in this worst-case scenario.

Statement
Here is the statement (click to view larger). Basically, Y-1 is estimated at three months and Y-2 Y-5 follow the main principles decry before. I have no complaints about the rest.

Review
The record was built inverted. That is to say that I have included the figures would be accurate to observe the relationship between the income statement and balance sheet (or shareholder's equity section). Level of debt, I assumed a growth in accounts payable to support business growth, but no other form of indebtedness. This allows me to find the value of my assets (debt + equity).

I maintain the cash position to 1-2 million by putting everything in the short-term investment, but for me, 2 are the same case. Goodwill is included in "Other assets" and is indicated only for presentation purposes. (Actually, I use it for other calculations and was too lazy to remove it before doing a print screen!)

Here is the link for the report I wrote:
http://sites.google.com/site/financialanalysisjournal/mty-food/04-19-2010-MTY.pdf


I want to reiterate that I can not be held responsible for your investment decisions. If my report helps you build a good idea, but I can not be held responsible for your future losses (because if I were, I would also be held responsible for prizes!).

Those who want to know what are my models in my assessment, my next few posts (in the coming weeks) will tour models used in finance and I will indicate my favorite. For the curious, my target price is based on MTY 6 models that seemed to converge!

Koleston Color Chart For High Light

5Banc Split Corp. (TSE: FBS.B)

I updated my list of the top position and performance and I thought I would add a little explanation about what 5Banc Split Corp. since all the people I have spoken did not fully understand the product.


What's this?

First, FBS is a company that is structured like a mutual fund capital closed trades on the stock exchange. It's a bit between the ETF, the common background and a business. The best way of looking at it is that it is a shell company that invested in the stock market. The aim of BSF is to invest in the 5 largest banks. The weighting for each stock is put in almost 20%, but a slight variance may occur in response to market fluctuations and other factors.

Why is it so special?
Everything is in the ownership structure. There are two groups of owners FBS: preferred shareholders (AP) and shareholders (AO). PAs receive 4.75% per annum, payable quarterly, based on the issue price of the share ($ 10). The AO also receive the remainder of the capital gain. The structure is made so that the ratio AP / AO = 1 at any time. In December 2011, FBS redeem all preferred shares and new issues (the official process is a bit more complicated but the result is not bad in this genre).

The first reaction is to tell the world "You're sick! To pay 4.75% PA, while banks pay a dividend in the 4%". However, FBS is able to pay a dividend of 2.5% currently. Why? Here's the best description I can do:

• Issuance of $ 100M to $ 100M AP and AO.
  
• $ 200M investment in a portfolio generating returns of 3.8% ($ 7.6 million in dividends per year) or the approximate average dividend yield of Canadian banks [TD (3.2%), RY ( 3.25%), BNS (3.8%), BMO (4.4%) CM (4.6%)]
  
• Dividend Payment of $ 4.75 million to the PA (or 4.75 million = 4.75% x $ 100M)
  
• Rest $ 2.85 million available to cover the costs of business operations (approximately $ 500K, or 25 basis points) and pay dividends to AO.
  

Still leverage ...
I already hear several start criticizing This product takes the lever on companies that already have the handle (and I speak not even I could purchase the lever in a margin account ...). I can already hear me lecturing the world about the dangers of debt and / or structure such as this. But where is the danger to the AO? For me, it is certain that there is a greater risk that investment in just five banks. But if you think the banks will quietly raise their value and dividends in the coming years (that is, if you think bonds are cushy), add a little lever is interesting in terms of performance.

Also, return on assets is not really 3.8%, but $ 7.6 million per year. The dividend is stable ... whatever the value of assets. To decrease the value of the dividend, should the banks cut theirs. But even in times of crisis, they have not done. If you believe that there is a strong likelihood that banks cut their dividends ... Do not invest in their titles!

I know that Scotia and TD have created many such products (the latter comes from TD Securities), but not all products are interesting. For example, I believe that the risk even companies in the sectors of health and energy are such that adding a additional leverage is dangerous. But for banks ...

I repeat: this title is simply more risky investing in 5 banks. However, the expected return is also larger (the risk-return relationship holds). The risk of leverage is a risk that I know well and that I find preferable to an operational risk for banks.

Fear of leverage
Some say I picking on those who preach about the lack of debt ... they are right! I just do not understand how a person may want to avoid at all costs any form of debt. At a minimum, the debt allows flexibility in the activities Company. And there, beware! I'm not talking about debt at the ceiling all our businesses. I talk to have a reasonable presence of debt to significantly improve the level of yields. The returns can come from the systemic risk of the company and / or financial risk. The idea that I preach is to not think in binary (thus either), but rather to assess the systemic risk of a company and to add financial risk accordingly.

If my argument back in personal finance, not because it is dangerous to have 3 credit cards met, a line of credit being fully utilized, an auto loan and a big mortgage we should avoid all the credit. A mortgage that you know are reasonably able to pay in the foreseeable future is not bad in itself. There is even a tool that allows you to make a project many years ago ... provided that the interest rate charged is lower than your required return.

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The impact of debt

After working with beginning students in finance, I realized that the leverage that allows the debt is not well understood by the whole people. A comment from the author on QuébecBourse Intel and AMD has pushed me to make some clarifications.

You understand why the debts of a company after my opinion the principle of "enough is like not enough." Consider the situation

Intel and AMD, but by simplifying and standardizing the data situation for 2 companies easily comparable:

• Let $ 50G Intel to 11.5g of assets that are funded by $ debt (ie D / A = 23%, real numbers)
• Assume that AMD also has $ 50 billion in assets, but $ 42G are financed by debt (or D / A = 84%, real numbers)

Suppose now that both companies are as profitable as the other one (so we gives the same income and it has the same operating costs). We will also assume the debt service of 5% for Intel and AMD 10% (plus hat because more debt) with a tax rate of 30%. I know there are many hypotheses, but simply to simplify understanding.

Say this year, both companies have released earnings before interest and taxes (EBIT EBIT in French or English) of $ 15G. For Intel, the net profit of $ 10.01G (0.7 (15 - [11.5 * 5 %])). For AMD, it is 7.56 billion dollars.

The first conclusion to draw is that the benefit net of a company made no mention of its productivity and operational efficiency. For this, it is better to use the revenues and EBIT (or EBITDA).

per share, assuming that both firms have identical shares of par value to $ 10 per share, we find for Intel and AMD $ 2.60: $ 9.45. We see a big difference here mainly because of the leverage. Reminder: AMD only needs $ 8 billion of funding per share (800M shares).


Another reminder: no figures here is real, it is pure fiction to explain a phenomenon Financial.


And for real life then?
If we see the return current market reality, it is normal (and healthy for the markets) that the same good performance affects more AMD than Intel. Lorsqu'Intel has published good results, the markets are extrapolated to perform well on AMD. Historically, such a method is not without merit. If the jump in earnings per share was important to Intel, we are entitled to expect something of 2, 3, or 4 times greater in AMD. The same dollar increase in net income for Intel and AMD do not have the same effect on earnings per share. And we know very well that the price of a share is based on earnings per share and not net income.


But the risk associated with debt in all this?
Some will say while it does not make sense because AMD is much more risky (after all 84% of its assets are financed by debt). Or make such a comment is not understanding how the financial markets. We already know the danger of debt from AMD. This risk is already built into the share price. Besides, look at the P / E ratios of two companies based on last quarter output. We find a P / E of 13.6 and 7.2 for Intel for AMD. It therefore gives the markets a more favorable Intel AMD.



So to say that markets are deregulated because AMD was up higher on anticipation that Intel was on good news is false. Intel has announced an increase in its operational performance (which resulted in higher profits). If you consider that AMD was able to have a similar increase, higher earnings per share would have been even more important because of the high leverage of debt.


So you see why I like that my companies have some leverage in their operations. This improves the net without operational improvement. A well-managed company should not be 0 debt, but rather have a reasonable debt that does not endanger the situation of the company. Of course, AMD does not fall into this category. Its debt is ridiculous and dangerous. But a business without borrowing (eg Becker Milk) does not give its shareholders the returns they are entitled.

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A temporary return on investment

After reading some comments on the temporary investment on the web, I began to wonder questions about my vision of the thing.

Basically, my question was why I dislike the fact that MTY Food has 25% of his business in cash, but a company like Westjet does not bother me (it has 28% cash).

I quickly realized that it's my gut feeling who initially said no to MTY but YES to WJA. I learned to listen to my inner voice in 2008 ... because I have always advised before my mistakes during Q2 and Q4 2008 (of course I had not heard). In short, it was my lesson of the day: Never go against how I feel now ( if you do not like, Then do not touch ).

To answer my question, I had still something more concrete. And I found today: my confidence in management. Let me explain: For

Westjet, I have confidence in the future of the enterprise and project management. I know there are nearly 45 new aircraft to be delivered over the next 5 years and the company management intends to see Westjet among the largest airlines in the world by 2016. To survive in the industry, it is common knowledge that should also hold about 10% in cash. By comparison, WJA has a cash position far too great, but I'm comfortable with. I know what are the intentions of the company (or rather the direction) with that money.

Conversely, I do not know what it means to MTY Food with its funds. I am unable to see what are the objectives of MTY. I know they are already leaders in fast food food court. But what are the objectives of management? How do they intend to spend this money? Where do they make acquisitions? In

Alimentation Couche-Tard, I know that the goal of management is to improve its position in the U.S., to shop south of the border to acquire companies competitors. But MTY? do they want to develop a new niche in Quebec? Expand their exposure in the rest of Canada? From the American adventure? Moving to Europe?? I do not know.

I'm not comfortable investing in a company where I do not know what direction the research and holds a significant amount of cash on hand. I'm not saying it is a sure failure. I'm just saying that this is a new venture to add into the equation (the uncertainty of management objectives) that I do not wish to take. Some may take love, I am me. After

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The concept of value

a large text on the Quebec budget, I thought it would be interesting to settle for a small column on the simple concept of value.

WhiteShad As mentioned in his blog ( http://portefeuille-financier.blogspot.com/ ) in February, the intrinsic value of an enterprise is the maximum amount you are willing to pay to buy the future cash flows generated by the company. I will now explore this concept of value and introduce the concept of risk.

The value of continuity: going concern value

This value has described and WhiteShad that we tend to regard as the single value. It is the value of the company, considering that it will continue its operations in the foreseeable future. In the situation where one seeks the value of business continuity, we must look to the future of the company and ONLY the future. Past performance gives no value (but it could serve as a basis for calculating future Cashflows).

In such a situation, how to assess the value of the company? We must determine the future Cashflows and update to the present with a discount rate that we have chosen.


Take the example of a company which has only one client with whom she has a long-term (75 years) that will provide a net profit of $ 100 000 guaranteed per year (the Cashflows are some). How much is this company? It depends on the discount rate chosen. If we require a 10% return, the value will be $ 999 214. But at 11%, the value is only $ 908 728. At 15%? $ 666 648!

This shows that the required rate of return assumption makes it very volatile the value of the company. And it was not even incorporated the concept of risk on the side of the cash flows! Indeed, we have assumed that the $ 100 000 was secured and stable. But in a business, this amount varie et cette variation peut être complexe à prévoir. Quel sera le bénéfice de Bombardier dans 8 ans ? Nous pourrions tous avancer un chiffre, mais il sera aussi réaliste que la prévision météo pour le jour de Noël l'an prochain !

Calculer la valeur de continuité d'une entreprise par l'actualisation des flux monétaires futurs est une lourde tâche et un léger changement de 2 ou 3 hypothèses peut affecter grandement notre calcul de la valeur intrinsèque d'une entreprise. C'est pourquoi plusieurs analystes utilisent des méthodes d'évaluation relative, i.e. qu'ils comparent l'entreprise à d'autres. La méthode la plus populaire est sans contredit le P/E, but there are more than twenty (I will not cover here).


And the concept of risk in all this?
A method for using the discounted cash flow is the use of sensitivity analysis. Such an analysis would include a notion of risk in each case and it would run the model a thousand times (or more) to see what value comes out every time. This gives a mean value with a potential distribution. A simple example based on what has been said before:

• Profits of $ 100 000 now have a standard deviation of 10% and follow a normal
• The required rate of return is 10%, and follows a normal distribution with standard deviation of 1%. In stock

model a thousand times on a mathematical platform (eg Matlab), we could obtain a value of the company in the confidence interval [902,150; 1096250]. In our model, there would be 95% chance that the true value is in this range. If the market value is $ 910 000, we can not declare that the company is currently undervalued (then as above, with 10% it was like she was).


The NAV
This enterprise value is often forgotten by people because it is normally less than the value of continuity. The NAV is that if the company would shut its doors, liquidating its assets and paid all its liabilities. This value is convenient for a company that announced the imminent closure of its doors (in such a situation, there is no continuity).

So how is this calculated value? A quick way to assess the asset value is the book value of the action. However, such a method assumes that the long-term assets, net of depreciation is indeed the resale value of assets. Rather, it should proceed in assessing the overall assets at prevailing prices in the markets. Let Becker Milk. This company owns real estate for over 50 years, she rented to stores. The book value of these assets is approximately $ 15M, but on the market, they easily worth $ 40M.

It is interesting to calculate the net asset value of a company. Why? Because it will find the wrong business. Let Becker Milk. The value of continuity is about $ 12-13 per share (the title is 10 now). Its net asset value is estimated at $ 20 per share with very conservative assumptions. So this tells us that the company would be more expensive if it liquidated its assets and closed shop. There are two possible answers to this situation (and both me off this type of track). Either the industry in which the company operates is no longer viable, or the company is mismanaged and management destroys value. So there

two important values for a business: the value of continuity and its net asset value. The first should be consistently higher than the second and should be calculated by considering the uncertainty in setting our assumptions.

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cooperative Auvergne Auvergne Bio Distribution positioned in first place!

The year 2009 ended in a good mood Auvergne Bio Distribution has doubled the number of meals served in schools. This year has seen excellent acceleration especially bio in primary schools. Pushed by parents or by elected officials, many municipalities choose to integrate bio for improving the quality of meals served in restaurants of children.

The platform is now at cruising speed, the system is oiled. It allows the provision of schools Auvergne, restaurants businesses, nurseries and nursing homes who wish, and parallel development Auvergnates channels. Indeed, 69.53% of purchases of the platform were made in the region.
Transport is optimized in each case thought to be as clean as possible, and limit the costs to pass on to schools.

Auvergne Bio Distribution is in great demand in other regions to support projects, a sign that demand for local products continues to rise in the French regions. These interventions allow us to measure the advance taken by the Auvergne in terms of professionalization of the distribution, and quality of its structuring tool chains.

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Quebec Budget 2010-2011

At first I did not want to talk about the budget because I thought it was a bit off topic for my blog. After all, there is not much relationship between stock market investment and the budget of a provincial government. However, I changed my mind after hearing several reactions Deplus me.

Reminder hotspots

1. Rise in QST at 8.5% on 1 January 2011 (already budgeted for last year).
2. Rise in QST at 9.5% on 1 January 2012.
3. Increase gas tax by 1 cent per liter per year for 3 years. Montreal and Quebec City may impose additional 1.5 cents.
4. A health contribution of $ 25 this year, $ 100 in 2011 and $ 200 in 2012. This amount will be paid by every citizen is not considered "poor ben ben.
5. Evaluation of the possibility of imposing a deductible medical (nice name for co-payments) in the next few years.
6. The heritage pool electricity will increase by 1 cent per kilowatt hour over the period 2014-2016.
7. Increase tuition fees from 2012 levels indefinitely. Increases of $ 50 per session is already in force until 2011.

And then??

What is the impact on the average of all these measures? It's very simple ... higher taxes payable. It is quite certain that the world is tired of paying and they are disappointed. But what would you do instead of the Minister of Finance? At TVA, the morning of the budget, the journalist asked the people in the street if they were willing to make concessions to keep the same level of services. All, without exception, said they were willing to make concessions. When the reporter offered them some "concessions" (QST increase, higher taxes, higher electricity), there is not one who said yes to the proposed measures. Of course, the reporter was too pitcher did not think to ask them what concessions they were ready to go!

To people around me who criticized them, I asked this famous question. The first response I got was to cut the bonuses paid to bosses of the public (instead of dipping into our pockets again). Nice try, but this is already part of the budget!

I also speak of a water tax. Even if the budget already includes a water tax to large business users of $ 0.0025 per cubic meter in a production (which increases to $ 0.07 if water enters into the composition of the product), I admits that this is very low. I would have preferred a water tax that is stronger (the current measure would provide only $ 8M per year in the state).

I'm also told he must reduce the size of the state. I agree with the reduction of government, but too often reduced to just reduce the number of services offered (or quality). I think the measures in this budget as the disappearance and / or merger of some thirty organization, reaffirming the policy of replacing a retiring two and freeze the salaries of MPs and ministers ( even though more symbolic than anything else) are a step in the right direction. After

that, instead of going back with a constructive about what should have been done, I was entitled to "Anyway ..."," Charest is a stain "and other words that mean nothing . At most, I got a reply sentence would not hurt to say that the rich pay enough taxes and that is to them that they should pay the bill.



A cultural revolution?

If Quebecers have grumbled a bit at points 1 to 3 in the list above, the reaction was (still is) strong in point 4 (and the possibility of 5). I have some French colleagues (and socialist) at school who were offended by this form of taxation. I will copy here what one of those French who were after the health contribution.

You find it normal that the guy who earns the minimum he will pay $ 200 as the boss super rich? Well, not me! When you have an emergency surgery, to $ 20 000, but you will not pay for the sub, I'll come hold your hand in the hallway, where they'll put you on hold. For my part I do not worry, I still have my French Carte Vitale.

[...] But I think especially that there are other ways to save money than to cut spending on vital as health or education. Must take the money where it is rather than cut the remaining bit of business in Quebec. See a health care system here in American, there's nothing to be proud!

[...] Then [when you say "the rich already pay enough tax through Quebec and taxes"], excuse me but I will not complain about the poor if they pay a tax by more chouille solidarity. No this is not normal that everyone pays the same thing when everyone does not earn the same.

It sums up the thought and fear of many Quebecers. Unfortunately people confuse the arrival of the health contribution to having now pay for care. HEY! There is talk of a tax for all to KEEP our public health system. There person who talked about having to leave the checkbook in order to have surgery. And not tell me that the health contribution is just the first step towards privatization of the system. Such a remark is unfounded and completely false. If this were true, then I could say that increasing taxes on the wealthy would be the first step to seize 100% of their income!

Where the world can criticize is the fact that this new tax is not progressive as the income tax (so you win more expensive the more you pay) but simple. You earn $ 30 000 or do you make $ 200 000, your additional contribution to the health system will be $ 200 per an.J put him in additional capital because the world tend to forget. The rich already pay a tax far above the class average. They therefore contribute in greater proportion to the payment of the health system.

You see, if some find this abnormal health contribution, I think it's just that it is fair to all. Why should the rich pay $ 2,000 while the middle class person would pay $ 200? Do the rich have better access to the network than others? No. The solidarity of the rich towards the poor is already widely present in the progressive tax in Quebec. There is a small fee ($ 200 per year is $ 0.55 per day) for which each contributes does not seem to remember that this tax exagéré.Je seeks to cover a fraction of the cost of the system . This contribution will provide $ 945 million per year versus a system that cost $ 28 billion per year.

I still hear people say that the rich pay no taxes. A simple example demonstrating the importance of the sales tax the rich over the poor. I think you will quickly understand that they already pay a lot. In Canada, you're rich citizen consider as soon as your income reaches $ 130,000 (approximate changes with inflation). From this level, each additional dollar of income is a tax charge of 53%. Take a Quebec citizen who earns $ 200 000 per year. It will pay $ 41 305 tax to the Quebec government and $ 46 500 Canadian government. In total, $ 87 800 tax. By adding $ 600 to EI, the QPIP $ 315 and $ 2,160 QPP, we arrive at $ 90 860. I include the QPP as a tax. In total, 45.4% of its share in income tax. We are not talking of consumption taxes, school taxes, municipal taxes and others.

Let's do the same scenario now for a citizen to pay $ 30 000. The bill will be $ 2,950 to the Canadian government $ 2 700 in Quebec, $ 415 to EI, $ 150 and $ 1,310 QPIP QPP. In total, $ 7,535 that citizen will pay in taxes, or 25.1%.

So now, the rich pay 45% of his salary to the company while the citizen "ordinary" pays 25%. Some say there are plenty of loopholes that the rich can take to reduce their bill. True ... but there are also middle class. And I can claim to have benefited greatly these tax credits offered to the middle class last year.

Had the government increased the tax on the first tax bracket or reduce the basic income sheltered from tax, it would have reached the same result as the imposition of a contribution to health for all. In this situation, all those who pay taxes, have paid $ 200 more. The big difference between this mandatory contribution and increase the tax, it is known that the money raised with this contribution will go directly to health.


In conclusion, I remind those who often forget that the money who enters the government must be equal to the money that comes out. An imbalance will be offset by debt (loan for a gap and reimbursement for a surplus). Currently, we are far from surplus and will soon take us to the Greek situation (not tomorrow, but if it stays like this for 5-10 ... yes). To balance its finances, the government currently has two choices: increase revenues and / or reduce expenses. We can not work miracles; money not grow on trees. If you want to complain, go ahead, but offer a solution to improve the situation. Arrive with enough to make sense and be constructive.

Updated:
solution
I thought a bit after writing this post and I thought why not increase the corporate tax? What would be needed to cover rising health contribution? The current deficit? Well the answer to both questions is simple: raise corporate taxes by 25% and 45% respectively.

In Quebec, the average tax rate is 12% regular. The combined federal-provincial income is 30%. This rate is comparable to Ontario (32%) and British Columbia (29%), but is below the U.S. rate (± 35%). To cover the deficit this year should rise 12% to 17.35%. Such an increase would eliminate the tax competitiveness and employment in Quebec Quebec would suffer. But the increase of two percentage points (from 12% to 14%) would bring $ 650M per year over the state. And 14%, we would be identical to Ontario.

If Something Is 20% Polyester And 80% Shrink?

Performance Q1-2010

I am pleased to announce that my performance has been updated and that my wallet can celebrate its fifth quarter in positive performance. During Q1-2010, my portfolio produced a return of 4.37% compared In my March to 2.26%.

I'll enjoy this first post on my performance a bit to explain my calculations. Among other things, for those who do not know what March 1, I suggest you read my column for almost a year ago on the comparison benchmark vs MAR ( http://financeanalyse.blogspot.com/2009/ 04/le-benchmark-une-bonne-chose.html ).

I would add one important point to this quote I had written this note: "The important thing is to try to beat [our MAR] ... and to truly! So you want to do At a minimum, as well as passive management [which is our March]. " This sentence is obvious in a sense. If I offers a choice between 2% yield on one month and 74% ... my decision will not be very long if we have the same level of risk! The subtlety that was missing in my text on the benchmark was the whole notion of risk. It's fine to want to beat her in March, but it should be maintaining a similar degree of risk.

For my part, unfortunately, I calculate my performance only at the end of the month. This meant that I only have 12 observations to assess the change in my portfolio over the year. A risk assessment of the portfolio is complex and not statistically significant due to the insufficient number of observations. And take the values before December 2008 to calculate my risk would be absurd: I learned my lessons and it has drastically decreased.

The only measure of risk that I calculate is the standard deviation of my portfolio. Culated, my deviation from March 2009 is 22% (12% in March) compared to 55% in the period before March 2009 (20% in March). This is a significant decrease is largely attributable to redesign my portfolio in March 2009. My standard deviation higher than 10% in March was mainly due to the fact that I was on line a good portion of that period. The content of the next paragraph is also partially responsible. My calculation

monthly performance also cause an impact in relation to deposits and withdrawals that I do. However, I adjusted my performance calculation to make sure I underestimate automatically imposing deposits on the first day of the month and withdrawals at the end (only in my calculations). For example, this method gives me a yield of 4.42% in March 2010 instead of 4.70% if I had seen the magazine as being made at the end of the month.


positions in sales mode

Currently, some titles are still in the portfolio because the right time to sell is not yet come. In fact, all my titles, Except for Westjet and ECB are in sales mode. I have also completed the sale of Canadian REIT Monday.

Manulife was an error. A few weeks after holding the title, management took decisions without logical to me. I still kept telling myself that I will well understand. I'm still waiting for a revelation!

I like GE but I feel that looking at the figures of the company that no major additional gains to be made. I will most likely retain the title, but selling shortly (1-3 months) my option.

ETFC was also a mistake, but partial Pay! I intend to sell the security before the shareholders meeting to be held in May. The company should then have the okay to proceed with a reverse-split ...

option on Citigroup expects the next results in less than a month. It should normally be sold in the week after publication unless new changing all that.


ECB is preserved because it provides great stability in my portfolio and a steady income and interest (dividend over 5%). Westjet offers instead the element growth and potential.

How To Make A Pamper Cake

My next post will be on my performance in the first quarter and will fit a new habit that I will. Each month, I'll take a few lines to dissect my performance and look to see if my asset allocation always say to my goals.

For now, I want to talk quickly of Google Analytics. This tool Google is a wonder in web traffic management. By adding in the core code of the site a couple of lines provided by Google, I get the statistics of visits ever. For example, since QuébecBourse mentioned my blog, daily traffic has increased by about 50%.

Even better than just knowing what level of traffic, I know its provenance. Thus, 2010:

• 50% of visitors come from Google search
• 16% of through traffic (eg by their favorites)
• 15% from a link on QuébecBourse
• 10% from a link on financial newspaper of a "y"
• 5% from a link on Entrepreneur Fellow

Before going further, I would like to thank these three gentlemen for bloggers put a link to my blog on their site (usually through the list of Blogger). Your three sites also have a link on my blog.

The next thing I wanted you could do with more of a blow. If you believe that your visit is anonymous on the web, think again! Without you even knowing it, many websites retrieve information about its users (like mine) to improve its presentation, compatibility and more. For example, I know:

• 35% of visitors use Internet Explorer 7
• 11% use IE 8
• 11% use IE 6 or older
• 15% use Mozilla Firefox 3.5
• another 15% use Firefox version
• 6% use Safari
• 5% use Chrome

Your browser is not the only thing I can find. In fact, I can also learn about the language of your keyboard, your ISP (Videotron is the most popular), your operating system (Windows = 90%), your screen resolution and your location (country - region and sometimes city).

course, these data remain confidential. That is to say that I am not able to pass their data to see if users are using IE6 Paris site or if the keyboard is French.

This information was not very useful for a blog. At most, the geographic distribution and counting the number of visit is interesting, but I have no use of other information. Large websites by cons in great need. Take src.ca (site of Radio-Canada). Knowing what is the main browser visits and the operating system or even the version of Java, the developer company's web service will be able to build a website more suitable. For example, If he finds that 0.01% of visits are under Linux platform and the new tool to be inserted on the website (eg video area) is not compatible with Linux, so small to satisfy customers is not worth thousands of dollars to invest to become compatible.

With a bunch of powerful tool, we can understand now why Google is a giant web.