Once in a while, life knocks us for a loop.

Sometimes it presents itself as the abrupt end to a 15-year marriage. Or maybe it’s a child who refuses to communicate with his parents. It can even be a poor business decision that results in bankruptcy.

Sadly, countless people endure these and other life-changing experiences. While each situation is unique, the initial response from most every one often is “I didn’t see it coming.”

Let’s be honest. There probably had been indications along the way. Signals that, had they been acknowledged, might have prevented the problem from escalating. But in some cases there are no warnings, particularly, when it involves one’s health. One day we’re running 10K, the next we’re on life support.

There’s no telling when life will throw a curve ball at us, or in the case of Sandra, hit us over the head with a sledge hammer.
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How can you get the government to give more money to your favorite charity or cause?

One way may be to lobby your MP or MLA. The prospect of a positive response would be less than certain, and the effort might not be the best use of your time.

A certain way to get the federal and provincial governments to support your charity is through their support of your contribution.

How does that work?

When you make a contribution that qualifies for a tax receipt, you get a credit against your income tax liability.

For the first $250 of receiptable donations, the tax credit is based on the lowest rate of tax.  However, if your donations total over $250 during the year, the tax credit is then based on the highest tax rate, currently 43.7%.
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Effective January 1, 2010, you now have another $5000 contribution room for your TFSA.  This is in addition to any unused contribution room you may have left from the $5000 entitlement for 2009.

Also, if you withdrew money last year, you can now replace it without affecting this year’s limit.

As with RSPs, personal investments can be transferred into TFSAs to avoid tax on future income.  Don’t forget though, you might trigger tax on any capital gains earned to the date you transfer investments.

The last day for topping up your 2009 RSP contribution is coming up fast.   Amazingly, many of us do not contribute our maximum, even though it still remains one of best ways to both save for retirement and reduce taxes.

If you don’t have the cash:

• Ask us about RSP loans.  They are quick and easy, and with interest rates so low, its a great opportunity to get the tax deduction and meet your retirement goals.
• Consider making a ‘contribution in kind’.  You can transfer investments you own personally to your RSP, and get a receipt for the current market value.  But don’t forget that any capital gains to the date of transfer will be triggered.

With the Winter Olympics taking place during the last two weeks of February, don’t wait until the last minute!  Getting around town during that time will be a challenge for everyone.

Consider a regular monthly RSP contribution, instead of coming up with a large amount at once.  It’s often easier on the pocket, and it’s often a better way to invest (dollar cost averaging).

Don’t forget to use your tax refund wisely!  Repay loans or mortgages, or get a jump start on your 2010 RSP contribution to make a significant improvement to your financial needs.

ZLC clients and friends enjoyed our recent workshop where our guest speaker, Doug Towill, presented several interesting and provocative thoughts on what we can expect in retirement.  Doug shared ideas on how we can best prepare ourselves to maximize our opportunities, and enjoyment, of this important, and hopefully long stage of our lives.

Highlights from the presentation included discussion on:

• The risks we face with Longevity (will we outlive our money during our 25 to 30 years of retirement?) inflation (what will a dollar buy us in 20 or 30 years?) and Market Volatility (will a drop in the market set us back?)
• The Sandwich generation (most middle age people have more parents than children)
• Our increased awareness of the dangers of retirement and whether products exist to help protect/manage losses (tragically, far too many assets are now held in tax inefficient and low interest bearing investments)
• The concerns we face in maintaining our lifestyle in retirement (a large percentage of us are finding that our expenses are much higher than we expected)
• The events that trigger retirement readiness (financial freedom, a significant age, health, death of someone close, career setback)
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Welcome to the next decade. Investors were tested to extremes this past decade; yet, wherever there is crisis, you can be sure there is opportunity close by. So as we all collectively stared into the abyss a year and half ago and our discipline was tested, we chose to focus and trust our independent analysis on the opportunities that were presenting themselves in 2008. The end result was a truly outstanding year for our Van Arbor Funds.

The Canadian Fund led the pack in 2009, doubling in value and more importantly outperforming the TSX Index by nearly 70%. The World Fund also stood out with its 43% return, beating the World benchmark index by nearly 35%. There is no doubt that 2009 offered better opportunities than most years; however, we like to look at the full two year cycle to gauge our performance over the down and up market.

The more important statistic we like to look at is the performance of the Funds since the  TSX  peaked in the summer of 2008. Since then, the  TSX remains 20% below its peak value, yet both the Van Arbor Canadian and World Fund have increased in value by nearly  40%  since  the  TSX peak. We are proud of that statistic because it exemplifies our focus on capital preservation alongside capital appreciation.
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Ever since the middle of September, even though it may not feel like it, the TSX Index has been trading in a flat range. Markets are essentially digesting this year’s big gains. Van Arbor has had a nice feast on material, energy, and cyclical companies for most of the year, but as of late we have been repositioning into companies with better current risk/reward prospects.

More recently we have been snacking on food stocks (pardon the pun) as well as high yielding telecom & utility stocks. These have been doing great relative to the market and should benefit from earnings momentum and developing macro trends. See the charts below to get an idea of why this is a stock picker’s market.

So with markets digesting, that begs the question: when is the next big meal? As opposed to business which is about creating opportunities; investing is all about spotting the best opportunities before everyone else. Usually 90% of a good trade is planning, while 10% is executing it.
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So with winter in full gear, how is Van Arbor positioned for the next couple of months? With the TSX index consolidating some of its gains over the last couple of months, we have become more selective to the point where the portfolio almost has no resemblance to a typical index portfolio.

Why? Given our expectations over the next two to three months; risk management, selectivity, and looking for new opportunities, are our main priorities moving into the New Year. Sometimes it pays to follow the crowd (read: index portfolio), but that time is not likely now.
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Loblaw’s reported very positive earnings this morning, helping solidify our thesis in the company. Below is our analysis on the company, which also translates to other companies that we own in the grocery industry.

Our key thesis on Loblaw’s can be summarized as follows:

- The company is trading at two decade low valuations and is one of the better bargains in the today’s market (see chart 1 and 2).
- The extremely low valuation is attributed to multiple years of negative news regarding operations and the industry; thus, like any value stock with low expectations, it does not take much to lift the price of the stock (see chart 3).
- A good example of a comparable company is Safeway, which we have been building a stake in lately for our World Fund. Another turnaround story which seems to have put in a multi year bottom and has begun to see some gains (see chart 4).
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Don’t worry, be happy….that you don’t own a passive Fund
 
 October Performance   (F Series, Net of Fees)

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