BMO Nesbitt Burns Technical analysts have provided the following currency exchange prediction (May 27, 2009 – Relative Strength Research Notes)

"Technically, we (BMO Nesbitt Burns analysts) expect the Canadian $ to appreciate to the .93 to .97 cent zone.  The only question is whether we get there in weeks or months." 

Another view expressed by Avery Shenfeld CIBC Economist (on June 8/09) was  that "we still see the Loonie averaging not much below 90 cents (US$) over the next four quarters. 

So, should we wait for the buck to get to the .93 to .97 cent zone or buy now at about .90 cents? 

During the week of June 1, the Canadian $ did climb to almost .92cents.  I, therefore, went ahead and bought $1000. for our US Savings Account which is used to fund our  winter getaways.  My strategy is to buy US$ whenever the Loonie hits a new significant high against the US greenback and build enough US$ reserves to pay for a few months down south come winter.

Tony Almonte, updated June 9, 2009

If there is only one rule you must follow as a retail investor, it is to "buy low and sell high".  Easy eh!  So why can so few investors point to a record of consistent success?  

Dan Richards in a recent Globe and Mail article points out that the root of this investing mystery lies in our emotional reactions to market movements, creating an impulse to buy high and sell low – exactly at the wrong times.  Peter Lynch, a famous and successful fund manager was also puzzled by the extent to which investors who owned his funds had dramatically lower returns than the funds themselves. The reason for this, quite simply, is the typical investor’s inability to stomach the markets ups and downs – buying at the peaks and selling at the troughs.

So here’s the lesson we’ve learned, take some valium and  "buy low, sell high"  easy eh!

For a complete read of the referenced article, see the Globe and Mail (Business Section) of May 25, 2009.

 From an article  published in the Ottawa Business Journal in April 2009

Canada‘s workforce is clearly aging, putting increased pressure on employers to find new ways to attract young talent. At the same time, Investors Group reports that 58 per cent of all working Canadians – and 67 per cent of those are in the 45 to 64 baby boom age group – definitely plan on working during retirement.

For this group, retirement will no longer signal the end of working, but rather a career and lifestyle transition.

To do this effectively, you’re going to have to develop a "deceleration" phase in your career, says Tammy Erickson, author of Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent. People tell her they enjoy their colleagues and their work, and would definitely consider staying on longer if options to slow down a bit were more available. This way, they could ease up and step down, without the angst that comes from leaving altogether, she maintains.

Trouble is, though, that most of them are still going to want to get paid.

Recognizing this, more employers are creating programs that allow older workers to ease out of their jobs by reducing their work time, rather than just showing them the door when they hit a magic number of combined age and years of service.

But this causes problems when it comes to calculating future pensions, particularly for participants in defined benefit pension plans such as those enjoyed by teachers and public sector workers.

In these cases, employees have been prevented from working and earning additional pension credits while receiving a pension from the same employer. Either the pension had to be postponed, or the additional pension accruals had to stop.

Some companies have found ways to get around this by hiring former employees as consultants or contractors. However, the resulting loss of seniority and job security — to say nothing of forgone medical, dental, and future pension benefits — often makes these arrangements both unwieldy and unpopular.

Happily though, changes in the rules regarding how pensions are treated are starting to solve this problem for many people.

Last year, the federal government changed the pension rules so that workers 55 and older, who are eligible for a full pension from a DB plan, will be able to draw as much as 60 per cent of their pension while still continuing to work and earn benefits.

Under the new plan, as income decreases with lower hours of work, pension payments can actually increase.

In the past, employees who opted to stay on the job despite being eligible to receive a decent early retirement pension often ended up working for substantially less than the wages received, taking into account the value of missed pension payments. But that’s changing now.

The big winners here are plan members whose spouses are in a lower tax bracket.

Now, they’ll be able to negotiate a reduced work schedule, earn a matching salary, take a partial pension and split at least some of that income with their spouse for tax purposes – as they do now with Canada Pension Plan benefits.

If you file for a CPP pension at 60, for instance, you’ll get a reduced benefit that will stay reduced for the rest of your life. However, because benefit payments are based on how much, and for how long, you contributed to the plan, you could rack up bigger monthly cheques by staying on the job longer and not collecting CPP payments.

Waiting until full retirement later in your 60s raises the payment 20 per cent to 30 per cent, depending on your age.

Or, at age 60, you can draw a CPP pension even if you continue to work full-time. You can work as much as you want without affecting your pension amount, but you aren’t allowed to contribute to the plan on any future employment earnings.

To get CPP between the age of 60 and 64, you either have to stop working or earn less than the current monthly maximum CPP benefit ($909) for the current and prior month in which your pension begins.

It remains to be seen whether the 60-per-cent pension with ongoing accrual will be enough to entice employees to remain at work instead of collecting 100 per cent of their pension, and working elsewhere or for the same employer as a contract employee.

And, while the option of returning to work and starting to build up a pension again may be attractive to some retirees, others will have to see whether stopping their current pension payments and stepping back into a phased retirement makes good financial sense.

An article in the June 2009 edition of Reader’s Digest titled “Do You Fear Retirement” (by Stephanie Whittaker) discusses 2 types of retirement attitudes and findings that as many as 40% of the workforce is afraid of retiring.  Organizations specializing in counselling individuals and employers on how to plan for retirement indicate that “it can be an existential crisis for a lot of people”.  This fear is based upon people identifying themselves with what they do and not in other ways.

The article presents a number of similar findings about the fear of retirement based upon research conducted by a number of individuals and organizations.  People, whose main focus was on their career, can face more  retirement trauma…..especially for those who are closer to the CEO level.  Other people associate retirement with the final stages of life and thoughts of one’s mortality intensifies the fear.  Some fear centres around spending more time with one’s spouse putting new pressure on the marriage.

For those who are self employed, the article indicates that these individuals tend to handle retirement better because they have been self-regulating in their careers – better able to deal with themselves and their emotions.

The article goes on to present 5 easy steps  to help with the next stages:

1. recline the lazy boy one notch at a time – avoid diving into retirement at the last minute – look for ways to ease into it – possibly explore working part time and use the new free time to explore your passions
2. lay your cards on the table – have an honest discussion with your spouse what new life you see for yourself
3. reach out – solidify existing family and friend relationships and create new relationships with people of all ages – exposes you to new points of view
4. stay on the ball – stay involved physically and mentally with your prior lives and interests – keeps you mentally alert and up to date on things
5. protect your health – take care of yourself – exercise, healthy eating, regular checkups, get enough sleep, relax

Begin the process of preparing for retirement when you are employed.  The article suggests starting 5 years before your actually exit the workforce.  Plan for the first 2 or 3 years and don’t lock yourself into a plan for the rest of your life.

Other retirement related articles exist at www.readersdigest.ca.

Lane@lifepast50

An early update as I continue my quest to lower my handicap -5 rounds into my 2009 season and I’ve accomplished the following:

• score consistency:
  • 4 rounds of 88
  • 1 round of 93
• averaging 34.4 putts per round – higher than my usual average of 33
  • attribute this to the early spring green conditions with about 1/2 the greens suffering some winter kill affecting overall putting
• 72% of my shots were made using my 7, 8, 9, wedges or putter
  • I’m calling this my HiWePu metric – Hi (high irons), We (wedges), Pu (putter)
• averaging 1.8 penalty strokes per round – down from my usual average of 2.4
• interesting that I’ve only used my 3, 4, 5 and 6 irons for 4% of my shots

Reach me at Lane@lifepast50.ca

Other than golf lessons, what practical steps can I take to lower my handicap and improve my game?  My logical beginning point is to self-assess – better understand how I play the game and what parts of my game need improvement.

I have tracked my scores online since 2001 using some free golf score tracking websites so I have some statistical information for analysis.  These provide me statistical details like average overall score for par 3s, 4s and 5s, average putts per round and per hole, greens hit in regulation per round, and penalties per round.  To date, I’ve really only used the information to know what my unofficial handicap is.  Now its time to put this info to better use.

What game parts make sense to track?  A recent article published in the Ottawa Citizen (One Way To A Lower Handicap) identifies some key items based upon another golfers experiences.  Greens in Regulation (GIR) – improvement here means fewer chip shots and you are putting for birdie and par.  This immediately highlights the need for a better short game – the ability to get on the green with your tee shot on a par 3, your 2nd shot on a par 4, and your 3rd shot on a par 5.  Can’t argue with that.  Course management seems to come go along with GIR improvement as well – knowing where you want to hit the ball and keeping in mind where you want missed shots to end up (as best as you can control that).  Basically using your early shots on a hole to provide you with the best chance to make par or better with the remaining shots on the hole.

The noted article indicates you need to improve your game by starting at the green and working backwards.  Improve your putting from 3 feet and in, then from 10 feet and in.  At the same time you need to work on chipping and pitching – first from 50 yards and in and then from 100 yards and in.  The article also notes not to worry too much about having your tee shot land in the fairway but you need to keep your tee shot in play.

This does make sense when I look at the parts of my game in a typical round:

What does all of this add up to?  Pretty much my average score of 90.  I clearly see that more than 2/3’s of my game is short iron/wedge play and putting – sometimes this approaches 3/4’s of my game.  Obvious where I need to concentrate when I look at it in this way.

My initial self assessment reveals the following mistakes:

• trying to sink long putts on the practice green – correction: concentrate on shorter putts, 3 to 6 feet.
• inconsistent at hitting greens on approach shots (low GIR)
• poor course management – play to spots on the course that give me the best chance to get par

Things I’m doing right:

• continue practicing my short game on the range – hitting my 9 iron and wedges so that I attain better accuracy, consistency and distance control – something I started a few years ago and has improved my game to date

Becoming a better short putter and improve my GIR………this will result in a lower scoring average and a lower handicap.

Lane@lifepast50.ca