Seeking Alpha desperately in Apple

Over 3 years ago, I wrote “Apple: IF I could buy and hold only one stock, this is it”. The premise was:

“I’ve often been asked…If you could buy just one stock for your kid and hold it for at least 5 years, what would that stock be and why? Without blinking, I would always say AAPL.”

And boy, did I have my detractors…

Apple (AAPL) was trading at $390.49 (or $55.78 accounting for the 7-1 split) and SPY was trading at $129.33. Before Apple announced its recent massive quarter, it closed at $109.74 (up 96%) vs SPY at $203.88 (up 57%). Excluding dividends, it beat the “market” albeit with more volatility (which also provided us with more trading opportunities) as you can see from the chart below…

(click to enlarge)

…which worked wonders for our mechanical trading model and

…we still have 4 recently opened positions still in the money.

Last Monday, Apple reported its record breaking quarter. I won’t go thru the fundamental analysis side as I believe there are SA writers here that have done a great job covering it. However, allow me to highlight the items that will serve as some sort of “claim chowder” to support my bullish thesis over 4 years ago despite the noise and drama that was surrounding the company. The highlights of the recent earnings call were:

• Record quarterly revenue of $74.6B; net profit of $18B or $3.06EPS. It holds the record for the largest quarterly earnings result EVER. Do you notice, it doesn’t even blame “currency fluctuations” as an excuse?
• 65% of its sales are now outside of the good ol’ US of A.
• 74.5M iPhones were sold and was a new record.
• 5.5M Macs in a moribund PC market and 21.4M iPads.
• Sold the 1 billionth iOS device during the quarter.
• iPhone sales were up 46% YOY and ASP (average selling price – $687) was also UP (so much for the “Apple need to sell cheaper phones to win “market share” meme).
• Growth in China, India, Japan and Korea. Hello Android switchers!

What Kool Aid was I drinking 3.5 years ago? Could you have seen this as well? Why are some of us so drawn to false prophets? Now, while I certainly don’t have Michael Blair’s following or Henry (the ex-con) Blodgets’ riches, I do know that both have been consistently and more often hilariously wrong when it comes to Apple. Yet, I’m sure they are raking in the money with the same “doomed” angle spun a hundred different ways (some would argue there is nothing fresh with their bear arguments either…how they are able to push those materials out is beyond me. I digress).

If you’ve read my articles here and here, would it have saved you from selling scared? We can’t change the past but we do have an opportunity to build wealth again in the next 5 years using Apple.

What now?

I would still pick Apple as the only stock that I would buy and hold (not blindly, of course) for the next 5 years. Before I share the 5 main reasons why, let’s connect the dots first…

Samsung’s and Google’s betrayal was the best thing that could have ever happened to Apple. Ever been betrayed by a best friend or business partner or girlfriend or spouse? Did the painful lessons learned from those failed relationships contribute to your future successes?

Dot #1

We can certainly thank Samsung for teaching Apple a thing or two about how to exact revenge on a conniving, manipulative, and treacherous partners! The recipe was pretty simple:

• Focus on what you do best. In Apple’s case, it was on building the best products and figure out the enemies’ sweet spots – for Samsung, it was the larger screens. Was it a coincidence that Samsung suffered an earnings implosion during the same quarter that the iPhone 6 and 6Plus were released?
• Minimizing its reliance on what Samsung and Google had to offer. Samsung used to be the dominant supplier for Apple’s chips; now, it has to compete with TSMC in price as well for Apple’s orders…not a great position for Samsung to be in. Facebook (FB) is eating Google’s (GOOG) lunch in mobile; with Apple doing everything it can to rid itself of anything Google, how long can Google continue to put a positive spin on its lack of traction in mobile Ads? How will iAd disrupt this market?
• IMHO, the huge success of the iPhone 6 and 6Plus provides a tipping point – the beginning of the end of the Samsumgs’ Galaxy line. When the next Galaxy line (high on useless specs – “flexible” is the next cool?) bombs, expect it to fade away and get re-branded. The results will be the same as the Emperor really has no clothes at this point of the ball game. This will leave Apple to clean up the mid to top tier market and leaving the bottom to the rest.

Dot #2

Nothing beats home cooking. My wife makes (at least in my taste) the best smoked Salmon Spinach salad with her secret dressing. I’ve tried ordering it, I’ve tried making it, I’ve asked my ex to make it (that didn’t go over well) and nothing comes close! She does the whole dish from scratch (except catching the fish and growing the Spinach!).

Apple, if you haven’t noticed, has been homebrewing (and buying tech companies that it could integrate) its own secret sauce – its OS and its chips. This was the reason why they were able to shock the tech world with the first 64bit mobile chip that its competitors were quick to dismiss as a marketing ploy (funny how they are now racing to have one themselves!). It is also the very same reason that Apple was able to successfully integrate touch ID on its gadgets while the rest are still scrambling to match it.

Currently, there isn’t a smartphone company in the world that controls its hardware and software designs as tightly as Apple. Until that happens, every OS and hardware release will continue to set Apple apart from its competition. Why do they need Intel (INTC) to power its Macs?

Dot #3

What happened to all the “but Android has the biggest market share” ergo Android is “better” than Apple crowd? As Dr. Phil would say…”how’s that working for you”?

Market share alone does not guarantee continued success and profitability over the long run. Blackberry (BBRY), Nokia (NOK), Dell (DELL), and Motorola (MOT) will remind us that there is nothing permanent except change. Apple is not immune to this slippery slope.

Dot #4

Tim is the real deal. We’ve seen what he could do as a CEO for 3 years running now. Apple is in good hands; SJ picked the right person to lead the company.

Dot #5

State of disbelief. The general market (pundits in general) are still in a state of shock. After years of feeding us lies and the meme of “Apple is doomed because (fill in the blanks)”, it continues to doubt Apple’s future. Some samplings…

How do these jokers make a living providing advice is beyond me. I like reading crazy doomsday predictions about Apple. It makes me feel sane and normal.

6 reasons why I think it continues to be a compelling buy…

1. Keep it simple stupid! Why do pundits and arm chair quarterbacks obsess themselves with “new and forward looking” analysis that looks at Apple from a “fresh angle/perspective” when the real story is just in front of them?

For example, why are some pundits fretting now about the iPhone being the single biggest driver of its revenue right now or how will Xiaomi impact iPhones’ China sales? Using this logic, should we discount Netflix (NFLX), Priceline (PCLN), or even Google the same way for that matter? It is almost like the market is viewing Apple as having the same growth potential as Microsoft (MSFT) or Intel . Replace Xiaomi (used to be Samsung) with another “up and coming” competitor and you will notice that the same tired bear story is being written as a “fresh angle”.

Because of this perceived dissonance, Apple will most likely remain “undervalued” and will therefore provide patient long term holders like us with more opportunities to re-balance our holdings as we see fit.

2. The future of mobile computing is in “context” and Apple’s ability (by leveraging its gadgets, software, and partners) to act as an “enabler” to enrich the various activities in our daily lives. Consider this scenario (masterfully written by Kontra)…

The launch and success (it appears to be gaining traction) of Apple Pay, along with the development of future apps/software/hardware that would incorporate this payment system further supports my belief that “context” based transactional chains aided by Siri, Apps, and Apple’s OS will be the next big wave that will further differentiate Apple’s ecosystem from the rest. What do you think are the possibilities when you start adding CarPlay, Healthkit, and HomeKit into the equation?

3. Apple now has the financial clout and freedom (from Steve) to manage its denominator. Since I’ve been following Apple (when Moby Dick was a sardine), I do not remember a consistent time frame wherein Apple had the freedom or ability to manage their share count using buybacks. While purists like me had a hard time adapting to Tim’s use of debt and Cashflow to fund buybacks; it wasn’t difficult to surrender to the logic behind it. I had to trust that Tim knew what was best for the company and the shareholders; the rest is history.

4. Despite Apple’s fundamentals, it continues to be “under-owned” (60% as per Yahoo Finance info) by most fund companies. Netflix (88%), Microsoft (71%), or even Amazon (68%) has been given more love! Not surprisingly, Index funds unconditionally embraced Apple.

5. Just because people are from the Emerging markets, it does not mean that they don’t have money (or still use Rickshaws). Of course, I was being facetious. Do you remember Gene “the Apple TV is really really really coming” Munsters’ line about Emerging markets? He said:

“…the iPhone is growing slower in the Emerging markets because it is priced too high”.

Gene has been so wrong so often that I still cannot believe he is still employed! How could I be so right here and even way back in 2011? If the statistical trend continues when it comes to the population/economic growth outside of the USA, the middle class population in Emerging countries (Asia Pacific specifically) will have the most disposable income. This should not really be a surprise as the transfer of wealth (from North America to Asia/Middle East) have been going on since the 1970’s.

6. It is just a very well managed company with products that consumers do not mind paying a premium for.

When should you worry about Apple?

Remember this chart I shared not too long ago…

Where do you think are we when it comes to Apple, its gadgets, its stock price, and its addressable worldwide market?

Apple is really doomed!

 

WTF happened to the valuation metrics that we were taught? 

…where did all these money come from?

CEO bonus: $7.6 million
Market cap: $54.6 billion (Canada rank: 3)

Scotiabank is Canada’s third-largest financial institution by market cap, so perhaps it’s fitting that CEO Richard Waugh is also the country’s third highest-paid bank executive. Trailing two men you’ll read about later on this list, Waugh was only out-earned by 18 chief execs in 2009. More than 85 per cent of Waugh’s total pay ($8.7 million) that year, including $1.3 million in cash and $6.3 million in company shares and stock options, was awarded in the form of a bonus.

CEO bonus: $7.9 million
Market cap: $63.4 billion (Canada rank: 2)

In defending his massive annual bonus, Gordon Nixon needn’t point anywhere but his company’s stock chart. The RBC CEO took over the bank’s top spot in April of 2001, when the company’s share value had stagnated to around $14.25 per unit. After a decade running the bank, Nixon oversaw RBC’s stock rocketing to nearly $63 a share; it has since sunk back to about $44 per unit, though that’s still a 209 per cent increase from the valuation Nixon inherited ten years earlier. With a 2009 bonus of $7.9 million, all of which was awarded to the bank boss in company shares and stock options, Nixon was that year’s eighth highest-paid CEO in Canada.

CEO bonus: $11.9 million
Market cap: $63.7 billion (Canada rank: 1)

Like Gordon Nixon, the RBC chief executive who runs Canada’s second-largest company by market cap, TD CEO Ed Clark has overseen a meteoric rise in his bank’s stock value since taking the company’s top spot. In December of 2002, when Clark was appointed Toronto Dominion’s boss, the bank’s share price was listed around $21.65 per unit. Now, after peaking at $86.63 in April 2011, TD stock is worth about $70 per share, a jump of some 225 per cent in less than ten years. Clark, Canada’s fourth-highest paid CEO in 2009, received total compensation of $13.3 million that year, including $1.5 million in a cash bonus and nearly $10.5 million in bank shares and stock options.

Dr. Kuntz – pioneer or ?

How Canada’s Top Law Firms Used A Fraudulent Lawsuit To Destroy A Great Doctor and Line Their Pockets
In the history of mankind, great men, men of genius, men of great intelligence, men of great ability and great talent have often been attacked by lesser souls, by the incompetent, by the jealous, by the stupid, by the craven and the greedy who take more satisfaction in the destruction of their superiors than in their own success.

When Dr. John David Kuntz moved to British Columbia to take up the practice of medicine, after graduation from the University of Toronto, the local College of Physicians and Surgeons recommended that he set up shop in his speciality, orthopaedic surgery, in Kitimat, a remote small community, population 8,000, in north western British Columbia. The Vancouver market was already crowded with specialists who did not want more competition and, for Dr.Kuntz, who grew up in the remote northwestern Ontario community of Red Lake, the prospect of spending his working life, near or in “the bush”, as Canadians call their wilderness, was not at all unattractive.

Soon after he arrived in Kitimat, Dr. Kuntz came face to face with the grim reality of the industrial resource extraction economy of rural British Columbia in the form of crippled and injured young and middle aged men who had suffered spinal injuries while working.

Being a man of genius and talent, Dr. Kuntz quickly realized that what was keeping these otherwise healthy men from returning to an active life was the fact that the disks between the vertebrae in their backs had ruptured or collapsed and, at the time, there was nothing that surgery could do for them except a spinal fusion that left them relatively crippled. Dr. Kuntz put his mind to the problem and, using his native genius and god-given talents invented “spinal disk replacement surgery” at his clinic in Kitimat.

Soon afterwards, Dr. Kuntz was the leading orthopaedic surgeon in British Columbia, doing approximately 50 % of all of the spinal surgery in British Columbia from his medical practice in Kitimat. The success of Dr. Kuntz caused problems for two entrenched groups.

1. The other orthopaedic surgeons in British Columbia, especially in Vancouver, who saw their income levels dropping and patient base dwindling because of the genius in Kitimat.

2. The Workers Compensation system in British Columbia that was facing angry demands for a return of assessments from industrial employers whose workers had returned to work. The Workers Compensation system in British Columbia had become an insurance racket where employers of injured workers were fined with heavy up front assessments that were parsimoniously paid to injured workers as paltry monthly benefits. The incoming lump funds generated a huge cash reserve that supported a well paid, nepotistic, bureaucracy while injured workers and their families struggled to survive on minimum monthly support cheques.

Literally, Dr. Kuntz made the lame walk. He was a modern miracle worker, like Jesus, and, like Jesus, Dr. Kuntz was crucified by the lawyers and the judges – the Sanhedrin – not because he healed on the Sabbath but because he healed where others could not.

The adversaries of Dr. Kuntz consulted their lawyers, in Vancouver, and hatched a devious and diabolical plan to destroy Dr. Kuntz by using the College of Physicians and Surgeons to stop his work on the grounds it was “experimental medicine” and by launching a “fraudulent” class action lawsuit against him on behalf of 1,700 patients he had allegedly injured by his experimental surgery.

The plan worked. The medical profession, frightened by the prospect of insurance claims in the hundreds of millions of dollars, payable to some fictictious 1,700 patients, moved quickly to strip Dr. Kuntz of his licence to practice medicine notwithstanding the fact that Dr. Kuntz never treated 1,700 patients and that all, excepting a very few, patients, were living, very contentedly, with the surgery he had performed and many of his former patients signed a petition in support of Dr. Kuntz to help him keep his licence. There were two such petitions one with 5,000 signatures and another wiht 8,000 signatures.

When the insiders with the Vancouver legal establishment realized the success of their bold and diabolical plan against Dr. Kuntz they then turned their sights on an ever greater fraud against the public treasury by persuading a local politicial party, to promise, as part of their electoral platform, that their government would pay the mecical insurance fees of the doctors and, with this bold statement, the party won the support of the medical profession in British Columbia that was now saved form the prospect of huge medical insurance fees to cover the fraudulent claims against Dr. Kuntz and the support of a number of Canada’s leading law firms that made up the Canadian Medical Protective Association, CMPA, and who were set to benefit from the fraud based premiums to by collected from the taxpayers.

At this point, we have to explain to the reader that, in Canada, medical doctors do not pay insurance premiums for malpractice to a properly organized insurance company. Instead, they make regular payments to the CMPA, that describes itself as a “not-for-profit, mutual defence organization for physicians, by physicians” and is essentially an association made up of several large Canadian law firms that decide which claims to pay and which ones to resist.

The lawyers went laughing all the way to the bank, Dr. Kuntz was destroyed and reduced to poverty, every lawyer he hired to resist the fraud against him was disbarred, a series of crooked judges were inserted into every application he made to court to try to get a fair hearing and the fraudulent class action lawsuit against him was quietly dropped because there never were 1,700 injured patients.

How could this happen, you ask, in a democracy, like Canada, that boasts a competent, honest, justice system? Simple, the judges and lawyers in Canada conspired to deny Dr. Kuntz the basic right to cross examine and challenge his accusers. And, why did they do this, you ask? Simple, because they were all connected, in a multitude of ways, to the big law firms that benefited from the huge revenues that were now pouring into the CMPA.

http://drkuntz.blogspot.com/
http://www.ciws.ca/articles_bc_kuntz_wcb_justice4you.htm

Lawyers = Liars? License to print!



B.C. lawyers cashing in on taxpayers’ dime

By Jon Ferry, The ProvinceMarch 21, 2011

Province metro affairs columnist Jon Ferry

Photograph by: File photo, The Province

A burst pipe at my home last week reminded me how easy it is to pour water down the drain . . . or taxpayers’ money. The $6 million handed defence lawyers in the Basi-Virk trial is a prime example.

Here were two sleazy public servants who, with the help of highpriced lawyers, were able to play our justice system for years before finally pleading guilty last fall to corruption charges and getting the usual slap on the wrist.

As Attorney-General Barry Penner confirmed to me Friday, their legal bills, vetted by “a third party,” continued to be paid in instalments. The trickle became a torrent. Then, a couple of deputy ministers, apparently acting alone, decided it was futile even to try to claw back some of that cash.

Penner sums it up nicely: “The legal system has become very expensive, and it’s hard to comprehend some of the bills that have piled up.”

The A-G’s not kidding. The $6 million covered just the defence bills. Taxpayers also paid the prosecution lawyers. And the whole seven-year exercise, according to government figures released in January, cost the province $17.3 million . . . and counting.

It’s not just the Basi-Virk case. There were the Willie Pickton and Air India trials, during which tens of millions of taxpayers’ dollars poured into lawyers’ bank accounts.

Gregory Thomas, B.C. director for the Canadian Taxpayers Federation, wonders why the Picktons of this world need $500-an-hour lawyers to defend them. He calls it an “obscene waste of public funds” that must be capped.

I agree with him. So, it seems, does Canada’s chief judge, Justice Beverley McLachlin, who last month deplored the fact that, with legal fees now averaging nearly $340 an hour, full representation was now out of the question for many Canadians.

Penner, who’s practised as a lawyer, said he understands people’s frustrations. But he noted that, in the Pickton and Air India cases, it was the courts who ruled the taxpayer had to “get out the chequebook for the lawyers’ fees.”

With Basi and Virk it was different, Penner said. The government agreed to pay their bills, apparently on the understanding they would repay them, if found guilty. When the guilty pleas came, however, it was concluded that, given Basi and Virk’s financial condition and the costs of collection, attempting to recoup any of that money simply wasn’t worth it.

Did the deputy ministers consult with their political masters? “Not that I’m aware of,” Penner said, adding he hopes in a couple of weeks to launch a review of the so-called legal indemnity policy for civil servants.

The B.C. Law Society, meanwhile, said a provincewide poll it conducted shows a “modest improvement” in the public’s opinion of lawyers.

But it also shows that, on a scale of one to 10, only 16 respondents rated lawyers between eight and 10 when it came to providing good value for money -and only 15 per cent did so over lawyers’ commitment to public service.

Given the rich and powerful monopoly that lawyers enjoy over legal services in B.C., it’s not hard to understand why.

 

Th3Uglytruth: We spend our lives teaching our children to do what is right…the real world seems to only reward those who can bend the truth!

Japan deserves what it got…..God says so!

Pondexter tweets illustrate bigger issue

By Mechelle Voepel
ESPN.com
Archive

Japan is facing a potential nuclear catastrophe, on top of the killer earthquake and tsunami that already have destroyed so much. It’s impossible to comprehend how anyone could look at what’s happening there and express anything but empathetic solidarity with these suffering people.

Yet, as you’ve probably heard, the New York Liberty’s Cappie Pondexter wrote a series of messages on Twitter over the weekend suggesting God might have intentionally afflicted Japan with these disasters. Then she speculated about what reasons the Almighty could have had for orchestrating such horrors.

 

Ray Amati/NBAE/Getty ImagesCappie Pondexter’s remarks were only part of the problem. The lack of, well, anything from the Liberty or WNBA was equally disconcerting.

Along with mindboggling insensitivity, Pondexter’s tweets appeared to apply a negative stereotype to an entire nation. Thus, she opened a door to a Twitter backlash against her remarks that has turned extremely ugly.  Ah, yes, good old Twitter. Now that technology has provided a “voice” to everyone with Internet access, we’ve found out just how much we don’t want to know what everyone is thinking.

Most of us represent an entity beyond just ourselves and must be cognizant of how our public words and actions might affect the company or team or school, etc., with which we’re affiliated. This can be a problem for people no matter what line of work they’re in.  Pondexter embarrassed herself, her Liberty team, the WNBA and Rutgers, her alma mater, with her tweets. She’ll have to deal with what perception people now have of her.

Of course, it has brought up the Don Imus incident in 2007, when his remarks about Rutgers’ women’s basketball team prompted a national discussion about racism, misogyny and rap/hip-hop lyrics, among other topics.  Pondexter wasn’t on that team, having finished her Rutgers career in 2006, but she did release a statement back then condemning Imus. Now, those words have been unearthed and thrown back at her.

Pondexter apologized via Twitter, although people might find her apology not entirely adequate. I don’t know if Pondexter will learn a valuable lesson from this — think, think, think before you tweet — or whether she’ll somehow erroneously convince herself she’s being victimized for her beliefs.

There’s never going to be a shortage of public figures saying things that get them in trouble. Again, especially with today’s technology, that is a macro problem. But we also can look at this Pondexter fallout in a micro perspective.

Last year, there was some controversy and confusion about why Pondexter, a 2008 Olympian, ended up not playing with the U.S. national team at the world championship. She had missed national team practices to attend Fashion Week in New York, but there was no real explanation of what was going on from USA Basketball. They essentially said, “Ask Cappie.”

I tried to arrange an interview with her, which never happened. She “explained” via Twitter, eventually, that she was tired and needed a break, so she chose not to play in the world championship.

Pondexter does charitable work and is not some awful person. She faced difficult circumstances growing up in Chicago and has achieved a lot. But she’s also shown a propensity for not always weighing the consequences of her words or actions, and now that’s really stung her.

When a player brings the league negative publicity, yes, it is that player’s responsibility alone. But the WNBA’s response shouldn’t be, “Well, let’s just let her dig her own way out of this Twitter mess by saying she’s sorry on Twitter, too.” Or, “If we don’t say anything or do anything about it, it will just go away.”

That’s not leadership, which is something the WNBA and the Liberty sorely seem to need.

Th3UglyTruth?  Racism is alive and well…

Interesting to note how “orderly” the Japanese are in dealing with the disaster…no looting, no shooting, no killing one another for food or anything else.  Maybe it is them that has a higher spiritual sense….

Banking ombudsman receives more than 1,000 complaints

Banking ombudsman receives more than 1,000 complaints in 2010 for first time

The Canadian Press, On Thursday March 10, 2011, 5:18 pm EST

By The Canadian Press

TORONTO – The number of consumer complaints about the financial industry handled in a single year by the Ombudsman for Banking Services and Investments has exceeded 1,000 for the first time since the office was established 15 years ago.

In its annual report for 2010 released Thursday, the ombudsman’s office said it opened 1,024 case files last year, an increase of 3.4 per cent over 2009.

That was a slower rate of growth than in 2009, when the number of cases filed grew by 48 per cent in the wake of the global financial crisis.

By sector, the number of banking cases opened in 2010 grew by 18.2 per cent to 462, while investment cases decreased by 6.2 per cent to 562.

“The fact that complaints have reached another new high demonstrates yet again that financial sector consumers need and deserve an impartial and effective alternative to the courts to consider complaints they have not been able to resolve with their firm,” said Ombudsman Doug Melville.

Complainants received compensation from their financial institution in 20 per cent of banking cases and 38 per cent of investment cases reviewed, for a total payout of $3.8 million.

Investment suitability, mortgage prepayment penalties, service issues and credit and debit card fraud were the most frequently cited complaint areas, the office said.

The ombudsman is an independent dispute resolution service for consumers and small businesses and deals with complaints they cannot get resolved in dealings with their bankers or investment firm.

Th3UglyTruth?  Guess who funds and pays the salary of this Office? Hmmmmmmm Follow the crumbs!

Guess who is raking in the bucks?

ORONTO (Reuters) – Bank of Montreal Chief Executive Bill Downe earned C$9.5 million ($9.8 million) in the bank’s fiscal 2010, a 28 percent raise from the previous year, as BMO’s profit rose and it made acquisitions in the wake of the financial crisis.

Downe earned a base salary of C$1.0 million last year, which actually was a decrease from his base salary of C$1.2 million in 2009, according to a regulatory filing.

But his cash bonus jumped 80 percent to C$2.9 million, and his stock-based compensation increased 20 percent to C$5.7 million.

Profit at BMO, Canada’s No. 4 bank, rose 57 percent to C$2.8 billion in 2010, up from C$1.8 billion in 2009, when the bank was stung by credit losses.

Toronto-Dominion Bank CEO Ed Clark’s pay rose 8 percent to C$11.3 million last year, while Royal Bank of Canada CEO Gordon Nixon earned C$11 million, up 5.8 percent from the previous year.

RBC and TD are Canada’s largest banks.

Since emerging from the crisis, BMO has begun making acquisitions as it seeks to increase its U.S. business. In December, it launched a $4.1 billion takeover bid for Wisconsin lender Marshall & Ilsley Corp.

The bank reports first-quarter 2011 results on Tuesday.

PROFIT ain’t a bad word…but when you lie to do it…why does society need morals?  They lied about the gravity of market disruption in order to justify their price and policy changes; are Canadians willfully ignorant?

Need more proof on who will profit?

Garry Marr, Financial Post · Tuesday, Jan. 18, 2011

It’s the first-time homebuyer who once again feels the pinch of new mortgage rules that restrict the amount one can borrow to buy a home.

“It’s a big thing reducing that amortization from 35 to 30 [years],” said Calgary mortgage broker Mark Herman of Mortgage Alliance about rules introduced by Ottawa that take affect in 60 days.

Amortization was as lengthy as 40 years in 2008 before the government first cracked down. It had been 25 years for decades before this housing boom.

Mr. Herman, who says about 85% of his clients use 35-year amortization, calculates that based on a five-year fixed rate of 3.99% someone who earns $50,000 a year with a $1,200 annual property tax bill and a $100 monthly heating bill will soon just qualify for a $238,620 mortgage as opposed to $257,451 today.

“If you are a first-time homebuyer you are going to qualify for 8% less house,” he said. “That 18 grand makes a big difference. It can be the difference between a great place or even no place.”

The government moves, which include restrictions on home-equity lines of credit and refinancing, are expected to give the housing market an immediate short-term boost as consumers scramble to borrow ahead of a March 18 deadline.

“You got a boost when the changes are introduced and then you get a lull afterwards,” said Pascal Gauthier, a senior economist with Toronto-Dominion Bank.

He suggests the changes to amortization will probably affect thousands of home sales, adding the deals may still get done but there will be an impact.

“They might look for a little bit less [house],” says Mr. Gauthier, “From our perspective, it doesn’t change things a whole lot. At the margin, it will weaken the market for first-timers.”

Another of the substantive changes that would allow consumers to refinance up to 85% of their home, down from 90%, will probably have a bigger impact on the condominium market, said Phil Soper, chief executive of Royal Le-Page Real Estate Services.

“The group hit most dramatically by these changes is the casual investor. These changes and the ones a year earlier have taken a lot of the potential out of the buy-and-flip [transaction],” said Mr. Soper, referring to rule changes in 2010 that forced condominium investors to have a minimum 20% down payment.

Read more: http://www.financialpost.com/personal-finance/Mortgage+changes+will+bite/4123270/story.html#ixzz1DVhdyM5u

And Guess who is raising their rates again?

Flaherty warns of even higher mortgage rates

OTTAWA – Interest rates are going up, and the federal finance minister says he expects them to rise even more.

The Royal Bank increased several of its posted and special mortgage rates on Tuesday, joining TD Bank and CIBC.

All three banks have increased the posted rate for a five-year closed mortgage by a quarter of a percentage point, to 5.44 per cent.

RBC also raised its special fixed rate offer for a five-year closed mortgage by the same percentage amount, to 4.39 per cent.

Finance Minister Jim Flaherty said he’s not surprised.

“The recent increase by a couple of the banks is exactly what we expected,” Flaherty told reporters in the foyer of the House of Commons.

And more increases should be coming, Flaherty predicted, since lending rates have been hovering close to historic lows.

“We’re likely to see higher interest rates as we go forward because interest rates are still very low.”

Flaherty commented as he denounced a Liberal opposition day motion calling on the Harper government to reverse a planned 1.5-percentage-point corporate tax cut.

Th3UGLYTruth? Guess who do you think has Flaherty on their Xmas list?  Guess who Flaherty “consulted” to change the mortgage rules?  With the change in rules and change in rates, guess who is holding the bag again? Exactly!!!  Guess what will happen after the summer?