Hi Lou.

I’m looking at STB-T as an income on my TFSA. What are your thoughts on it?  Safe time to buy without to much down side?

Ben

Hi Ben,

I last posted on the prospects for Student Transportation Inc. (STB TSX) on March 15, 2010 on a request from John. At the time it looked like the shares of the company had more to give and it certainly did. Just over a year ago the dividend yield was 11.6% and the stock was in an uptrend. Currently the yield is 8.4% and the stock is in a downtrend. Lets put the charts under the scope and see if this is a good time to get on the bus.

The three year chart embellishes our appreciation of a solid uptrend and the wealth it generates for investors who get on the ride at the right time. The advance started in June of 2009 when the shares were trading at $2.75. When John asked about STB in March of 2010 it had already made a nice move to $4.85 but it appeared to have more left in the tank. By April of 2010 it got overbought and pulled back in May to $4.50 where a double bottom formed sending the stock to the recent high of $7.00. 

The six month chart depicts the overbought situation signalled by the RSI in February of 2011. The MACD also indicated that the momentum was shifting to the sell side at the same time. STB met resistance at $6.90 and then pulled back to $6.60 where it caught a bounce off its 50 day moving average. The move to $7.00 in late March was followed by a lower high in early April setting up a breach below the 50 day moving average.

I am not sure that now is the best time to be buying STB. The company is set to report its Q3 results on May 11, 2011 which is an event that can cut both ways. That in concert with the fact that neither the RSI or the MACD are suggesting a shift in momentum to the buy side puts a yellow flag on the track for me.  Best case scenario is that it retest support at $6.60 and catches a bounce. Worse case we have to retest support at $6.00 along the 200 day moving average.

Happy Capitalism!

Hi Lou,

Whats your take on- STB TSX

Always enjoy your comments.

John

Hi John,

Student Transportation Inc., ( STB TSX) provides bus services to school districts in Canada and the US. Thirty percent of school bus services in North America are provided by some 4,000 private operators which looks like a segment ripe for consolidation.

STB has already racked up 35 acquisitions to date and will continue to search for good quality assets to add to their portfolio. The company operates 6,300 vehicles and is one of the largest operators in the industry. In addition the company offers a generous dividend which at its current price yields 11.6%.

The three year chart paints the picture of a stock that has broken to the upside and is enjoying a nice ride from the 2009 lows. There is resistance at $5.00 that needs to be overcome if STB is to continue to generate capital gains for its shareholders. There is an unbroken trend line in place as well as a golden cross which suggests that there is still some gas left in the tank.

The six month chart provides a view of the recent trading indicating that the shares of STB have tested support on the 50 day moving average repeatedly which suggests that investors are buying on the dips. The MACD is aslo providing a good signal generator for entry and exit points for the stock.

Given the generous dividend, in addition to an unbroken uptrend and a golden cross STB is providing ample evidence of a stock that has more to give. The one factor to keep in mind is that the summer season is a difficult one for school bus operators. With schools out for summer holidays revenue dries up for the bus operators who scramble to find bookings to make up for the regular income that flows during the academic year.

Happy Capitalism!

David from Oakville, Ontario writes:

How is it possible to recover from scam artists. How do you shut them down. SEC doesn’t seem to care. They operate in Canada, USA, Cayman Islands.

Thank you

Hi David, Thanks for your email. To save us both a ton of time in court I have chosen not to list the companies you mentioned and will deal with the issue of financial crimes in general. I feel your pain having gotten skinned a few times myself. Here’s what I have learned..

The bulk of the resources we spend as a society for law enforcement is spent chasing the same bad actors day in and day out. That means we have to prevent ourselves from falling into traps set by sophisticated predators.

You mentioned that the company that you invested in traded over the counter in the U.S. on the Pink Sheet grey market. The first lesson to learn from this is to avoid high risk environments. If you want to play cards its always better to frequent a reputable casino that is regulated by some arm of the government, as opposed to taking on the risk of playing in an unregualted road house.

The over the counter market in the U.S. is for all intents and purposes a road house. It is totally unregulated and as such will attract operators who seek an opportunity to do business with no oversight. If you are thinking about investing in a company and they trade OTC a warning flag should go up and your capital preservation warning system should move to defcon one.

The other part of your question is in regards to the Securities and Exchange Commission and their role as the marshall of the saloons in Dodge City. What you need to know about government regualtory agencies is that they have two main functions. They create regualtions, and conduct investigations. Most of their time and resources are devoted to those two activities. They spend very few resources on financial crime prevention.

If you find yourself in Dodge City with a pocket full of cash and you think that the local Marshal will be of any help in recovering your money after you have been fleeced you are living in a dillusion. Take steps to protect your capital by avoiding high risk environments and don’t for a minute believe that you will get satisfaction from the SEC.

Happy Capitalism!

Hello Lou,

I am interested in trading sectors as opposed to individual stock, where would I find these symbols and on what exchange.

Thank you in advance

Tino

Sector Opportunities

Hi Tino,

A good  way to invest in a sector of the economy that you think will outperform the broad index or other individual sectors is through the use of exchange traded funds or ETF’s.

Here is a link to the ETF’s listed in Canada

http://etf.stock-encyclopedia.com/category/etfs-listed-in-canada.html

Here is a list of  ETF’s listed in the U.S.

http://etf.stock-encyclopedia.com/category/us-etfs.html

As you can see there are lots of choices so start doing your research and see which one of these ETF’s fit your pistol.

Happy Capitalism!

Hi Lou,
I listen to your commentary daily on the radio.  I am interested in hiring a financial planner, but am reluctant to discuss anything with anyone.  How does a person with a net worth of say 250k – 1000k go about selecting a financial planner?
How much should they expect to pay for financial planning services?

Mark

Find A Suitable Candidate

Hi Mark,

Hiring the right person to help you manage your financial affairs is a matter of interviewing candidates and reviewing their style and track record to make sure that they are a good fit with your needs.

A great place to start your search and gain a better understanding of what financial planning can help you accomplish is the Canadian Institute of Financial Planners. Here is a link to their site

https://www.cifps.ca/Public/default.aspx

If you spend some time navigating the CIFP site you will find a host of resources to help you better identify what to expect from a planner and what to focus on during the interviewing process.

You mentioned that you are not comfortable talking to anyone about your financial affairs which is something you will have to overcome. Its like going to a doctor and not giving them any information. It just won’t get you a proper diagnosis.

One thing that might help you overcome your reluctance to discuss your affairs  is to get some training in behavioral interviewing techniques. Investigative Solutions Network Inc. offers training in these techniques that can help you better evaluate candidates that you will be interviewing for the job of helping you plan your affairs.

I recommend the services of ISN to organizations that want to improve their hiring outcomes. How do you hire the best candidates for a job? Through better interviews! You might find it strange that I am recommending a service that has its origins in police work but if you want to conduct better interviews you should go to people who absolutely must get to the truth.

Here is a link to the ISN site http://www.investigativesolutions.ca/legal.html

In regards to your question about the costs of developing a financial plan most firms have their own fee schedule. Some planners  develop a plan at no cost and earn commissions when they sell you a financial or insurance product. Others develop a plan and charge a fee for the service but refer you to other providers to supply the products that you might need.

Spend some time enhancing your understanding the financial planning process and you will be well rewarded. The best planners will tell you the best clients are educated clients.

Happy Capitalism!

Learn Baby Learn, So You Can Earn Baby Earn

Deb  from London writes about study/test taking tips:

Hi Lou,I am a regular listener on AM 980.  This morning I heard you say you have tips and suggestions regarding study skills, test taking and more for students. I am very interested in any guidance you can provide.

I have a high school student going back for the ‘victory lap’ in September in hopes of upgrading. It would be great to help her make the most of the current term and her final year.
Any tips will be greatly appreciated.

Thanks Lou,
Deb.

Hi Deb,

Happy to help in anyway that I can. As a professor at Sheridan College Institute Of Technology and Innovation I spend a great deal of time motivating my students to grab a big piece of their education and make the most of their investment.  Statistically 75% students at the college level do not go on to earn a BA, MA,  or PHD.

In that environment its vital that students get the most out of the college both in and outside the classroom. For three quarters of the kids in my class it will be the only investment they will make in higher education and I want them to be successful. What I think most students need to be successful in the classroom is a system to manage how they learn, how they use their time, and how to take a test.

These links are all from the resources at Sheridan:

Study Skills

http://counseling.uchicago.edu/resources/virtualpamphlets/study_skills.shtml

Time Management

http://counseling.uchicago.edu/resources/virtualpamphlets/time_management.shtml

Test Taking

http://counseling.uchicago.edu/resources/virtualpamphlets/test_taking.shtml

Once the framework for success in the classroom is in place the next step is getting your child excited about being in school not just for the chair learning but all the opportunities to try new things that schools offer.  Too many students don’t take the opportunity to participate in clubs and activities that could light a fire in their minds about all the possibilities that lay before them.

I have a power point presentation I created for students titled ” The Seven Things You Need To Do To Be Successful Before You Graduate” if you want a copy for the young people in your life send me an email and I’ll send you a copy. Maybe someday I’ll figure out how to post a power point on this site.

Happy Capitalism!

Hard Come, Easy Go

John from Brampton, Ontario writes about what “losing money” actually means:

Hi Lou,

I listen to your report with John Oakley at 6:55am and was wondering if you could answer the following silly question for me and others like me:

When you say that “GM lost $10billion”, what do you mean by “lost”?  How do they lose money? And who keeps giving them money to go out and lose? Sorry for the newbie question, but the “losing money” term is just thrown around and I don’t know what it means.

Hi John,

Thanks for asking this question and please never be afraid to ask for clarification of any item that you don’t understand. That’s what learning is all about!

When we say GM Lost $10B it means that their expenses exceeded their revenue by $10B in the period discussed be it the fiscal quarter or the fiscal year. Typically when a company loses money on that scale they have to dip into their assets and borrow more to get to the next period. Unfortunately for GM they have burnt through their assets and cash and have tapped out their ability to borrow and are now leaning on the U.S. Government to provide them with cash to keep the door open.

Not to get into abstractions but there can also be non- cash charges to earnings that result in an quarterly or fiscal year loss when a company writes down the value of their assets. These charges are usually a write down of good will from an asset but don’t drain cash out of the treasury.  If you look at the recent quarterly report from Torstar they wrote down the value of their assets in CTVglobemedia which resulted in a loss for the quarter but no draw on cash.

Happy capitalism!

Don from Ontario writes about Education:

Greetings Lou,

I love your show on AM640.  I am a 42 year old high school dropout. I currently work as a construction manager for an infrastructure repair company. I make a fairly good salary as I have 26 years of experience in my field ($75,000.00 to $100,000.00).

My wife currently attends a University law program after 16 years as a legal assistant. She will graduate in another two years. Lately I have been feeling a desire to obtain my high school diploma and possibly attempt a college or university degree in business or economics once my wife graduates.

My question to you is considering my age and the time between my wife’s graduation, as well as the two years of full time high school I would need to graduate, then considering undergraduate and graduate time required. Would I be farther ahead to just focus on earning money at this stage of my life, or is the education worth the time investment needed?

Thanks for all you do.

Hi Don,

Congratulations  to you and your wife on having the courage to consider breaking out of your comfort zones to reach another level!
The best advice I can give you is to go after your dream while maintaining your cash flow. At your income level and assuming retirement at age 65,  the opportunity cost of not earning  while going to school full time would not add up from an economic perspective.

To earn your High School Diploma I would encourage you to research the GED program in Ontario. Its designed for people like yourself who have accomplished a lot in their career but want to complete some unfinished business. Here’s a link to start the research on GED  http://www.ilc.org/cfmx/GED/GED_info_brochure.cfm?Menu_ID_Sel=31300&Lang_Sel=1.

Basically you prepare for a series of exams and when you are successful you have crossed the first bridge on your journey.

When you are ready to go for a university degree or even a graduate degree look for night courses or on line programs which you can fit into your work schedule. It will definately take longer to complete your journey this way but it will give you the best bang for the buck.

If you decide to go after your dream full time then do it. Economics is not a perfect science and with the right combination of events you could finish up you journey with a better than average outcome which would put you back in the black financially.

Make the most out your choices and happy capitalism!

You Could Choke On This Bad News Pill

Larry from Brampton, Ontario writes about bad news:

I always hear how company’s have lost so much money, like Rogers this week  with a loss of hundreds of millions. I think this is based on their forecast for the year or quarter.but not sure if this is correct. Should they not also report How Much Money They Made? It`s always the bad news they report .

Hi Larry,

My great pal Steve Kalil taught me that there’s no good news and there’s no bad news. There’s just news. How you respond to the news will determine the outcome for you and your family.

Sell Off In Place For 19 Months

When you take the case of Rogers Communications getting whipped this week on their quarterly results where they wrote down the value of assets in their television operations it was the continuation of a downtrend that the stock has been in place  since July of 2007!

As you can see, Larry, following the news isn’t as important as following the trend.

If you are looking for good news, and by that you mean stocks that are going up, then start looking at the gold stocks.

Happy Capitalism!

Hey Lou:

Happy Family Day to you and your family.  Hope you enjoy the day.  There are 2 things I wanted you to comment on.

1. Wondering if you could do an analysis on your web page on Agrium.

2. I really want to get a better understanding of how to read charts (i.e. technical analysis).  Are there any courses you can recommend or some type of 2-3 day seminar that would give me a basic understanding of the concept.  As well, if I wanted to take a course on day trading, what could you recommend.

Thanks again Lou and we’ll hear you tomorrow morning.

Robert

Hi Robert,

I have had a great weekend. My daughter Madeline turned 6 on Valentines Day. We went to the Ontario Science Centre and had lunch at the Palace Restaurant where we were treated like Royalty. Yesterday Madeline had her skating party for her friends and today was a perfect day of leisure and reflection!

I love the fact that you want to improve your skills and that you are willing to put some effort into it! The headline I used today is actually my favorite quote from Dr. Martin Luther King who knew that educating yourself would translate into upward mobility.

The best place to get a solid grounding in technical analysis is through the Canadian Securities Institute. They offer a self directed learning course in Technical Analysis that is excellent. Use the link to the CSI to get started.

Agrium took a hit lit everyone else in the fall of 2008 as the world economy went into a tailspin after Lehman Brothers blew up.

Making the Turn

When you look at the chart you can see that the MACD turned positive in late December of 2008 after the stock hit a hard bottom at $30.The run to $50 has been quite generous for investors who took a position earlier in the year.

The next level of resistance is at $60 and the $70 so watch those levels if you are going to enter at this point. There seems to be support at $40 so think about that as a significant level if it reverses on you.

The other pattern that you can see in this chart is the head and shoulders indicating a reversal of the uptrend. Right and left shoulder at $90 and the head at $110.

Remember Robert this a a trading market so check your position every day so you can book some profits.

Happy Capitalism!