It’s only natural to want to have the best investment in your pocket so you can make money investing, and lots of it. So, how might you go about finding the best investment for 2014 and beyond?In hindsight it’s always easy to make money investing, but we’ll play it straight here and look at the past only for clues to the best investment ideas for 2014… and then single it down to the single best investment. Keep an open mind, because most investors overlook opportunities because they are unaware of many of their options.We’re looking for extremes here, like something that appears to be selling real cheap. And to be realistic, we’ll need to take risk into consideration. Not really cheap: stocks and bonds in general, gold, silver, real estate, other commodities, and most foreign securities. There’s always the chance that some small stock somewhere will turn out to be a gem, and the best investment for 2014. But let’s get real, that’s a very risky long shot, not worth betting more than a few hundred bucks on. We want to make money investing, with decent odds to make money.In our search for the best investment ideas, I mentioned looking for extremes, WITH AN OPEN MIND. Nothing appears to be real cheap, so let’s go the other way. What looks too expensive? This is a way to make money investing most folks are not aware of. Bonds are expensive, and you could make money in them with the right bet. But bond prices don’t move fast enough, so let’s eliminate bonds from our list of very best investment ideas. Gold, silver, and most of the other options mentioned above are just not expensive enough.What about looking at stocks in general and different categories of stocks, since we’ve already eliminated trying to find one best stock because it’s just too risky? Stocks look expensive, and in general have gone up in price more than 150% over the past five years. If earnings announcements and expectations disappoint investors, stocks will look even more expensive as 2014 unfolds. Let’s keep them on our list of best investment ideas.Some categories of stocks like certain high tech sectors and small-company stocks in general have become even more expensive. Let’s move them to the top of our list of best investment ideas for 2014 and beyond. Now, how do we make money investing in stocks that we consider too expensive to buy?We don’t buy them… we take a short position… which means we bet that they will fall. Now we get more specific as we look for the best investment to jump on, and then the best and simplest way to do this. The high tech sector is a little too specific for me, so I will focus on small-company stocks in general, as tracked by the Russell 2000 Index. As goes the index, so goes the price of small-company stocks in general. To get more specific, we are going to try to make money investing by betting that the above index will fall.Stock options (called “puts”) could give us maximum financial leverage, but there are two inherent negatives working against us here: higher commissions, and a premium you pay over the intrinsic value, which erodes up until the time the options expire. Options have an expiration date and can expire worthless… making them too risky for average investors. There is a simpler way to make money investing on a bet that a stock index like the Russell 2000 will fall.”Inverse equity” exchange traded funds (ETFs) are the average investor’s best investment vehicle for taking a “short position” in a stock index. They trade as stocks, do not expire, and commission is about $10 per trade with most discount brokers. You make money investing when the stock index falls. Financial leverage can be 3 to 1. Hence, if an index falls 50% in 2014, you could make 150%, as an example.Hindsight tells us that there’s always a best investment somewhere. Finding it in real time is a different matter. But if you want to make money investing on a consistent basis, you should recognize that going short in stocks to hedge against major losses is a valid tool. There’s uncertainty out there in 2014. Open your mind when you look for the best investment ideas.
As the world around us continues to adapt to a new sense of normal in light of COVID-19, we at Smythe LLP (Smythe), recently sat down (virtually) with Kendall Hanson from CHEK News to discuss how we’re adapting to working from home and what is means for us as a firm, as well as the communities we live and work in.
Although we may be smack dab in the middle of our busiest time of year, things at Smythe are still business as usual – with a few notable exceptions.
The first, and probably most obvious, is that nearly all our staff have now transitioned to working from home.
“The first week of office closures and having everyone work from home was definitely a week of transition, but I think everyone’s really quickly adapted to it and gotten used to it and a lot of people are really enjoying it,” said Partner, Trevor Topping.
During a time where our offices would normally be a buzz with client visits and meetings, our offices are now closed to the public and a skeleton crew has been put in place to ensure clients are able to safely drop off necessary files and mail is being received and sent out.
To read the full article and to hear what Trevor had to say about Smythe’s new normal, click here.
For more information on our response to COVID-19, or to learn what support is available to you, please visit our COVID-19 Resource Centre, or reach out to your Smythe Partner directly.
Given the current economic uncertainty, effective cash flow management will be critical for the success of many businesses. This will likely involve a combination of:
Managing working capital levels
Managing discretionary expenses
Obtaining additional financing
Working capital management can take the form of:
Implementing Credit Policies
By implementing credit policies with your customers you can speed up the collection process. This could include requiring upfront deposits, reducing the credit terms or offering incentives for early payment. Always ensure you follow-up on overdue accounts.
Utilizing a Just-in-Time Inventory System
Unless it will hurt your ability to sell, don’t carry extra inventory.
Using Credit Terms to your Advantage
Unless they are offering worthwhile incentives, don’t pay your suppliers until it is necessary.
A tool that should be utilized to help with managements’ decision making, is a cash flow forecast. This will help you assess the impact of working capital and expense management decisions, as well as determine whether additional financing will be required.
If you decide that you need to obtain financing (see below), it is likely that the lender will require a forecast as part of the application process.
Obtaining Additional Financing
As part of the economic stimulus package, the Government of Canada is working to ensure businesses have access to traditional financing, from both the government and private lenders.
Among the products being targeted to COVID-19 relief are:
Working Capital Loans
Funds to provide working capital for the operations, and cover general operating expenses, as opposed to capital purchases or expansions. There are currently programs in place where loans can be approved within 48 hours or maybe available without any payments for the first six months. BDC loans of up to $100,000 can be applied for online.
Loan Guarantee for Small and Medium-Sized Enterprises
As part of the Business Credit Availability Program, EDC is partnering with financial institutions to guarantee 80% of new loans or credit requests up to $6.25 million for small and medium-sized enterprises. Financing is meant to be used for operating costs and is available to exporting and non-exporting companies. The idea behind the program is to encourage additional funding from banks as the EDC provides a re-payment guarantee of 80%. This program is now available through your bank or credit union.
Bridge Financing Program
Offered through BDC Capital, this special program may match (with a convertible note) a current financing round being raised through qualified existing and/or new investors made into eligible Canadian start-ups. This program is best suited for high-potential companies that have venture capital investors willing to support them. BDC will then invest alongside these groups. There are separate criteria for both companies and investors who wish to take advantage of this program – for full details, click here.
Term Loan and Lease Payment Relief
Ability to delay payment of principal for up to six months on existing loans.
Increases to Existing Line of Credit
Financial institutions are providing increases to the borrowing limits on existing lines of credit.
Purchase Order Financing
Flexible terms are being offered to ensure existing and future orders can be fulfilled.
Export Development Canada is providing buyer financing and direct financing for international sales to ensure Canadian businesses are able to participate in international trade opportunities.
If your business requires cash flow management or additional financing, please contact your Smythe Partner directly as additional reporting may be required. Our team can match your business with the appropriate product and guide you through the process and provide financial information to the lending institutions.
the Government of Canada announced the Canada Emergency Business Account interest-free loans that provide up to $40,000 for small businesses and not-for-profits that have been financially impacted by COVID-19. On December 4, 2020, the program was expanded to offer an additional $20,000 to businesses that continue to be seriously impacted by the pandemic. The loans are available through eligible financial institutions, and businesses must apply through a financial institution where they had an existing relationship. The loans are interest-free, and 25% of the original $40,000 of the balance and 50% of the additional $20,000 of the balance is forgivable if the business repays the loan by the end of 2022. Businesses are required to have had an annual payroll of $20,000 to $1,500,000 or non-deferrable expenses of at least $40,000 in 2019 to qualify.
Businesses have until March 31, 2021, to apply for a loan or the $20,000 expansion. In the case where applicants are waiting for their financial institution to finalize the submission of additional information, they will have until May 7, 2021, to complete the submission.