January 6th, 2014


Given the controversy recently regarding Toronto’s Mayor Rob Ford, I thought you may find the following information about New York’s former Mayor Michael Bloomberg to be interesting and inspirational.

- When Bloomberg was elected Mayor, he installed two giant aquariums inside City Hall for tropical fish.  The cost to him for having the tanks cleaned every week:  $62,400
- Whenever he and his aides travelled anywhere, it was by private plane.  Price tag to him was roughly $4 Million.
- He paid to feed his staff breakfast and lunch daily.  Total bill for his mayoralty about $890,000.

In total, during his years as Mayor, Bloomberg doled out at least $650 Million of his own money for perks, bonuses, charitable and social giving, etc.

2013 was an interesting year for investors, here are some highlights:

- TSX went up 9.5%
- S&P 500 went up 30%
- Canadian Long Bonds (10 year) went down 9%
- Our Loonie went down 7% relative to the $U.S.
- Gold Bullion dropped 29%
- Precious metals sold off and Crude Oil went up 6%

Source: Richardson GMP Monthly Market Monitor (M3)

Our investing theme of being focused on Income Producing Securities and Products continued to deliver us strong results with most of our portfolios delivering double digit gains.

The U.S. Federal Reserve will begin tapering (reducing) their monthly Bond purchases by $10 Billion this month, as the U.S. economic engine begins to grow strongly.  I expect further tapering as the year goes by.

One of the interesting aspects of the increase in the stock market indices, was P/E Multiples expanded combined with earnings growth.  This reflects investor confidence.

As Bond Investors look for alternatives, the Equity Markets are likely to be in favor and P/E expansion could reasonably continue.  It is possible we are at the beginning of the next long term Bull Market for equities, as the S&P 500 closed out the year at an all-time value.

We have been in a long term Bear Market since 2000 which began when the tech market rolled over.  Although most Bear Markets last longer than 13 years, it is possible the aggressive monetary policies of Ben Bernanke have worked their magic, and this Bear has come to an early end.

Canada has at least a few major challenges to deal with, and they are:

How do we get our Oil to The U.S. markets and refineries?  Will the Keystone Pipeline be approved and if not, then what? 
The demand for Copper, Zinc, Iron Ore, Gold and Silver needs to return to bolster our resources driven economy, presumably driven by growth in China and other BRIC countries.
Our hot real estate market may be a bubble about to pop, and if it does there will be a negative effect on our overall economy.

Have you noticed all the news lately about marijuana being legalized?  I was recently approached to invest money in a Toronto based business that is already licensed to grow medical marijuana, and is now expanding.  This investment is not for me, but it sure makes me think about “How times change”!

Our Investment Loan Strategy has been very successful.  Here are the highlights of how it works:

- Investor contributes $100,000 and borrows $300,000 from TD.
- TD charges prime plus 1% on the loan, which totals 4%.  This is a floating rate.  4% X $300,000 = $12,000 year interest cost.  This interest expense is tax deductible because we are borrowing money for the purpose of earning income.  This is a no margin call loan.
- We invest the $400,000 in the TD Dividend Growth Fund (T series), which pays 8% annual income.  8% X $400,000 = $32,000 income.  This income is paid 75% tax free (deferred).

Our clients have used this strategy for a variety of purposes, including:

- To accumulate additional money for retirement.
- To use the surplus income to pay down non-tax deductible debt, such as their home mortgage.
- To use the surplus income for personal spending.

This investment strategy is not suitable for everyone.  Please call or email me if you have any interest, and we can discuss if it is appropriate for you.

We appreciate your confidence and business, and want to provide you with the products and services you need.  Here are a few questions to consider, and if you would like us to follow up on anything in particular, please send either Bonnie or I an email.  Bonnie is at Bonnie.Wilson@Richardsongmp.com and I am at Fred.Banwell@Richardsongmp.com

- Would you like to be added to our email distribution lists?
- Would you like to have on line access for your statements and trade confirms?
- Would you like e delivery of your statements?
- Would you like to attend a seminar on a particular product or service?
- Do you want to open a RESP or TFSA?
- Do you want/need to borrow money to top us unused RRSP contributions?
- Are you looking for a place to invest cash?
- Do you want to consolidate investment accounts you have at other Dealers?

We have also included with this newsletter an Acknowledgement Form relating to Richardson GMP and ask that you please sign it and send back to us in the envelope provided.  If you have any questions on this please call Bonnie at 905-968-1919.

I wish you the best of Health, Happiness and Prosperity in 2014.


Sincerely yours,


Fred Banwell