Markets Update & Great Investment Alternatives

Hello to all and a belated Happy New Year!

I wanted to send out a brief email on what’s going on in the Capital markets and also some alternatives that are currently available to you in the investment world.

Toronto Stock Exchange (TSX) – The TSX has been very volatile over the last 52 weeks as most people are aware of. It has a 52 week high of 14,329 and a low of 10,848. It started trading on Jan 2, 2012 at 11,955 and is trading currently at 12,490. Even though this index is just an indicator, it is still a very good tool to keep an eye on Canadian stocks to see how they are performing.

Oil – The price of crude Oil has been very rocky over the last 52 weeks as well. It has had a low of $75.92 with a high of $114.18. Oil started trading on Jan 3, 2012 at $100.2 per barrel and is currently trading at $100.31 per barrel as of 2:15pm today.

Canadian Dollar – The Canadian dollar has traded in a somewhat wide range over the last 52 weeks. It has had a low of .9384 and a high of 1.0630 against the greenback. (US dollar). The Canadian Dollar is currently trading at par with the US dollar at 1.0000. It is expected to gain strength on anticipated higher Oil prices because of the European Union Oil Embargo on Iran as well as European Leaders insisting progress is being made with Greek debt talks. The US dollar is lower in general with high beta currencies like the loonie rising.

Gold – Gold has had a Rocky yet very profitable ride over the last 52 weeks. 2012 has started quite well for the precious metal as well.. Typically investors flock to Gold when the capital markets get volatile as it is seen as a safe haven for unstable markets. The stock markets were down on average of 8% for 2011 while gold made 28.51%. It has traded in quite a range over the last 52 weeks. It has had a low of 1319 an ounce while having a high of 1889 an ounce. It is currently trading at 1719 an ounce as of 2:15pm today. It is projected to go a lot higher depending on who you listen to. (some say as high as $2200 per ounce by years end) If this is true, it could mean the opposite for stock markets.

GIC’S – As of January 26, 2012, these are your best nation wide posted GIC rates according to

1 year – 2.50%

3 year – 2.35%

5 year – 2.76%

Looking back at an email I sent in May, 2011, these rates are actually down except for the one year term.

Mutual/Investment Funds – 2011 was a very up and down year for investment funds with no gains being made on average. The average fund lost 2.14% which is very tough for people needing to take income and not having time to wait to recoup losses. Below is what the last 1, 3 and 5 years look like for Canadian investment funds.

1 year – -2.14%

3 year – 11.60%

5 year – 0.84%

Investment funds have started the year out strong as on average funds Canadian Equity funds are up 4.16%. As we all know, this can be erased in a single day or simply keep climbing to double digit returns by year end. Right now with all of the uncertainty, nobody really knows.

We at IFG have a few real estate investment products which offer fixed rates of return with defined terms and no stock market volatility.

  1. Jaymor Capital 10% Bond: This Bond will be closed within next 30 days as Jaymor is almost ready to launch next bond offering. For a short window, you can still earn 10% per year, fixed rate with interest being paid monthly. The remaining term on the bond is 3 years and 4 months as it matures on June 30, 2015. If you have funds that aren’t performing or are looking to make an RRSP contribution, this is a great option. The next bond will be significantly less so don’t wait if you are interested.
  2. Fortress Real Capital Syndicate Mortgages: Fortress has an ongoing list of investment options within their syndicate mortgage product offerings. They currently have 4 property offerings that all work in the same manner. Each pays a fixed 8% per year interest payment which is paid quarterly. Properties have a 2 or 3 year term depending on project. Each investor is registered directly on title against property which is very unique. Upon maturity of project, an additional 12% is paid to investor in the form of a deferred lender fee. This works out to be an average rate of return of 11% to 12% per year depending on project. Please also understand that every property is Canadian and being developed by some of Canada’s top developers.

With all of the uncertainty in the stock markets and all time low GIC rates, why not take a serious look at some other safe and fixed rate of return options. You can risk losing another 2.14% or know you are going to make 10% to 12% with no volatility. If you have any questions or if you would like term sheets on any of these offerings please don’t hesitate to call us anytime.

Here is to a healthy and prosperous 2012!