I have visited your site ( http://investskeptically.com ) and found out that it is rather informative. We work with you in TLA. And I want to continue working with you. The fact is that I have bought links at the pages of your site that were in TLA and now I want to buy links at other pages of your site, but they are not in TLA. Can you add new pages in TLA? Or can I buy links without TLA? My site contains useful information that will be of great help for many people. Please, let me know about your decision. Waiting for your soon reply. Thanks.

Problem is with my present advisor. Naturally, he’s not keen on me switching everything to e-series when the MER on his funds is so much higher. Of course, like most books I’ve read predicted, he pulled the old “you don’t trust my advice” routine, but I still need to do this switch for my own piece of mind. He tells of people he knows who regularly beat the market (not people I can use, of course, nor people he’d ever encourage me to use; he just wants me to think he’s in the same league), but reluctantly agreed with me that NO advisor can do it consistently over time. I hate being put on guilt trips, but I know it’s time to switch to something else.

The ING news really caught my attention more for the fact that they were actually simplifying the whole procedure for the average Canadian like myself than for their particularly low rates. I honestly think most managers try to keep things muddled with clients with limited knowledge like myself, while claiming they’re speaking “to” us.

The ING and E-series hold appeal because both seem like I could handle them myself, pay a lower fee than I am now, and still have someone working behind the scenes). Unfortunately, to avoid hefty transfer fees, I’m switching WITHIN Quadrus for the moment, and then hopefully later I can switch completely over to TD once all the money’s in their funds.

Such a learning curve even though I’ve been investing for over a decade (with active management, sadly), but having these other products on the market has certainly motivated me more in recent months than anything has for the past decade.

Bri

http://www.ey.com/global/content.nsf/Canada/Tax_-_Calculators_-_Overview

Shows all province rates, marginal rate and eligible dividend rates. They add an updated calculator in Nov-Dec of every year, so it’s convenient for estimating taxes before the year is up.

Bri: I understand that many people want to pay someone else to do all the work but, while you’re doing that, it’s important to remember that the amount of fees you pay over the long run is HUGE. My point with this specific piece is that with the Streetwise product, you’re not even getting anything proprietary and it’s quite easy to recreate the product yourself.

Thanks for the comments!

The book value of their equity is only 1.5% of their portfolio notional. Relatively small increases in CDS spreads can easily wipe that out. If I were long PRS I’d be worried about how much margin of safety is in their ‘AAA’ rating (I honestly don’t have any idea) because they’re not a viable counterparty without that.

Far from being overvalued, the market has priced PRS as if it will never grow again and destroy shareholder value in the process.

But you are also right that default costs have been historically low, running about 2 basis points over the life of the company. The CEO has admitted that this cost is abnormally low and believes that in more normal credit environments the costs associated with potential defaults would be closer to 5 t0 7 basis points.

Financing of growth, as you’ve stated, is the major problem. 31% annual growth may not be feasible anymore and growth may slow substantially. However, I don’t believe that the credit markets will be in turmoil forever and eventually PRS will be able to get financing on favorable terms.

If that financing becomes available (or not), we don’t need to get much growth for this stock to be a winner. If PRS can just post marginal growth, it is currently undervalued by a bit. But, if it can grow at a more respectable rate, say 10%, which I don’t think is unreasonable, then it is grossly undervalued. And who knows, maybe 20+% growth is still attainable. Certainly, high demand exists for PRS’s swaps, especially under current market conditions.

In short, I think at these prices, the margin of safety on PRS is very high.