Posted by Michael Hainsworth on October 29, 2009

The world's largest retailer already sells products for its customers "cradle to grave," but now Wal-Mart is taking that strategy online.

It already sells diapers online, now it started selling caskets on its website at prices that undercut traditional funeral homes. There are 14 variations on the ol' pine box. The cheapest is less than $900 US. The "White Haven Steel Casket" offers a high-gloss finish with gold highlights. The most expensive retails for $2,900.

Funeral homes are the traditional outlet for buying caskets, but a U.S. law requires them to allow the bereaved to bring their own for their loved one. Wal-Mart isn't saying if it plans to expand its offerings beyond the more than a dozen already available. While it's basically a beta test, the margins may be tough for the company to turn down. The average casket at a funeral home has a mark-up of several hundred percent, and most are twice the price of what Wal-Mart is offering.

Caskets ship within two business days. No word on shipping costs, however. Wal-Mart suffers from what every online retailer fears: customers abandoning shopping carts before finishing their transaction. But while I don't need a casket today, I tried to buy one in the interests of quality journalism -- but a bug in Wal-Mart's e-commerce system wouldn't accept my multiple attempts to put the sale through. Comscore reports we spent $130 billion online last year -- but the number of shoppers who abandon their virtual carts is as high as 60 percent.

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Posted by Anne Gaviola on October 27, 2009

Bond ETFs are popular. In fact, investment in bond exchange-traded funds soared 60 percent to $91 billion US in September in the span of a year, according to TrimTabs Investment Research. The number of funds has grown too, with 67 on the market in early September compared with just six back in 2006.
 
ETFs are a much cheaper way for investors to play the bond market, but some holders are crying foul over the fact that many bond ETFs aren’t keeping up with their benchmarks. It’s a phenomenon called index drift, and the discrepancies are noticeable. Consider this: State Street Corp.’s SPDR Barclays Capital High Yield Bond ETF gained 14 percent over the past 12 months to September. Meantime, its benchmark rose 25 percent! 
 
"Bond ETFs can’t always get access to certain bonds that are held in their benchmarks," says Tom Lydon, editor of the website http://www.etftrends.com. "When those bonds rally, then the funds can get left behind."
 
Some of those missing bonds are lower-quality ones that ETFs can’t get their hands on. In fact, some bond indices are so vast (we’re talking thousands of bonds) that it’s too expensive for ETFs to get an exact replica of the benchmark’s contents.
 
The ensuing drift reminds me of the butterfly effect where a small variation in the initial condition of a system may produce large variations in the long run. Something as seemingly insignificant as a butterfly flapping its wings in one part of the world can eventually unleash a storm an ocean away, or so the theory goes. In this way, a few unrepresented bonds can lead to noticeable discrepancies over time. If you factor in volatile markets, the differences can be amplified.
 
It boils down to this simple fact: there’s no exchange for bond markets like the Toronto Stock Exchange or the NASDAQ. And many bonds don’t trade for days or weeks at a time.
 
"Unfortunately, many individual investors as well as financial advisors do not understand that the illiquid nature of bonds cause their corresponding ETFs to stray away from tracking the performance and holdings of their underlying benchmarks, thus defying what they were originally set out to do," writes StoneRidge Investment Partners portfolio manager Camari Ellis in his blog. Ellis helps to oversee $400 million in assets.
 
This doesn’t mean you should avoid bond ETFs, but you need to do your research. And have an exit plan. ETF Trends’ strategy, for example, is to buy when a price goes above its 200-day moving average and to have a set exit price.
 
"This keeps you in the markets for any potential long-term uptrend, while the stop loss helps protect you on the downside," says Lydon.

Anne Gaviola is a BNN producer.

 

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Posted by Andrew Bell on October 26, 2009

Looks like Walt Disney Co. doesn’t plan to do much for Canadian parents who were caught by the Baby Einstein sales pitch and now feel dumb.

Disney has already stopped touting the DVDs as educational for children under 2, and is now offering a refund for Baby Einstein videos bought in the United States in the past five years.

"The unusual refunds appear to be a tacit admission that they did not increase infant intellect," The New York Times says.  

"'We see it as an acknowledgment by the leading baby video company that baby videos are not educational, and we hope other baby media companies will follow suit by offering refunds,'' Susan Linn, director of Campaign for a Commercial-Free Childhood, told the paper.

"In fact," says The Chicago Tribune, "research has found that an hour a day of watching Baby Einstein was associated with slower acquisition of new words." 

Baby Einstein, founded in 1997, acquired by Disney in 2001, includes books, toys, flashcards, clothing and other DVDs including Baby Mozart, Baby Shakespeare, and Baby Galileo. 

You have to dig and dig at the Baby Einstein website to find news of the refund so click HERE to view it.  

As you can see, U.S. buyers can get their money back if they purchased between June 2004 and September 2009.

But the Canadian refund guarantee (click HERE to view it) covers DVDs only bought in the past 60 days, and you have to provide the receipt and original packaging. 

We’ve asked Disney why Canadians are getting an inferior offer and will bring you their response. And we’ve asked Indigo Books & Music Inc. if it plans to go on stocking Baby Einstein products and whether it’s happy with the apparently unequal treatment of Canadian buyers.

 

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Posted by Andrew Bell on October 23, 2009

We always enjoy the inflation-adjustin’ charts from the gang at chartoftheday.com for perspective on what asset classes have really returned.

They’ve got one today that shows the Dow in constant dollars since 1925. (To see the chart, click HERE)

"The inflation-adjusted Dow is now a little more than double where it was at its 1929 peak and trades a mere 51-percent above its 1966 peak – not that spectacular of a performance considering the time frames involved," the site warns.

In other words, over the past 43 years, U.S. blue chip stocks have risen at an annual compound rate of only about 1% in real terms (of course, that does exclude dividends).

And despite the run-up in stocks since March, the Dow is still 30-percent below its 2007 peak.

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Posted by Michael Kane on October 22, 2009

"The wind was a torrent of darkness among the gusty trees
The moon was a ghostly galleon tossed upon cloudy seas…"

These are the opening lines of a beautiful poem, The Highwayman by Alfred Noyes.

When I heard that the Galleon Group hedge fund had been caught in the gusty winds of alleged insider trading activity, I was struck by the imagery.

Billionaire founder Raj Rajaratnam maintains he is not a highwayman nor any other kind of ne’er-do-well. And that, indeed, may be the case, although his decision to wind down Galleon funds suggests the ship was sunk the day he was arrested.

The media reports naming a former Galleon employee as providing insider information, then turning government informant, paints an intriguing picture. What was her motivation?

From the David Mamet movie Heist:

Gene Hackman as Joe Moore: "It (money) makes the world go around."

Delroy Lindo as Bobby Blane: "What’s that?"

Joe Moore: "Gold."

Bobby Blane: "Some people say it’s love."

Joe Moore: "Well they’re right too. It is love. Love of gold."

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Posted by Michael Kane on October 20, 2009

I love the marketing business. It hooks up two of my favourite topics: money and the human psyche.

A young phenom named Miley Cyrus is about to head out on her first singing tour as herself. She’s been out there on the road as alter-ego Hannah Montana but this is the first shot at putting her own personality at risk.

How much of a risk is it for the Walt Disney Company? Disney owns the rights to the Hannah Montana character, which earns Disney enough that they can pay 17-year-old Miley a cool $3.5 million US a year. That put her on the 2007 Forbes list of richest child stars at number 17.

What if she can’t pull it off as herself, causing damage to the franchise?

Disney is not taking any chances. Her latest video, sure to be the anthem of her concert tour, features lots of pretty girls, interesting guys, tightly-produced music and the biggest American flag I’ve ever seen.

And lest Party in the USA offends some who get the impression Miley is all about empty-headed horsing around and flag-waving, the video has also been re-cut with a well-thought-out message to address some very negative sides to young adult life: drugs, alcohol, cancer, pregnancy and teen suicide.

The music was recast to offer an acknowledgement of these challenges but ends with the visually moving message of hope -- Everything’s Gonna Be Okay. It is heart-rending.

It is smart.

Disney-smart.

And will it help to ensure Miley’s success?

I’m nodding my head like "yeah."

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Posted by Michael Hainsworth on October 19, 2009

China Mobile is spending as much as $4.4 billion US next year to upgrade its 3G technology. It's about competing with rival China Telecom and China Unicom.

While China Mobile holds 70 percent of the market and has more than 500-million subscribers, its subscriber growth is eroding because rivals are using the 3G standard. China Mobile has 3G -- but it's a homegrown version. It's already spent more than $8 billion on the so-called "TD-SCDMA" network expansion.

And it's about the iPhone. China Unicom has landed Apple's device. China Mobile is known for its BlackBerry rival the "RedBerry." And it's recently launched a line of smartphones called O-phones using Google's Android operating system.

But despite Google's involvement, China Mobile may have shot itself in the foot. It's being said the speed of its proprietary 3G technology lags its rivals -- and higher subsidies necessary to attract customers may cut into margins next year.

For more click here:

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Posted by Michael Hainsworth on October 16, 2009

Britain's Bobbies are going to get smarter.

Most of the country's police forces will be equipped with smartphones by the spring of next year.

More than two dozen forces across the country already use smartphones and the productivity that comes with replacing the Walkie-Talkie has already been proven. The BBC reports officers with smartphones spend 30 minutes less per shift in the police station -- putting them on the front lines 36 percent more often. They also get access to crime databases. And the global positioning system (GPS) units embedded in today's smartphones would give officers critical information tied to the neighbourhood they're patrolling. The smartphones also contain cameras -- giving investigators a chance to photograph evidence to compare it to files back at headquarters.

Research In Motion is seen as the likely candidate to benefit from the smartening up of the world's police forces. The company is predicting further developments in GPS tied applications in the next five years. RIM has the ability to remotely wipe a Blackberry and the strong encryption already present on the current generation phones alleviates fears that an officer may lose their handheld.

About 85 percent of the Bobbies given smartphones are using them -- the others are being encouraged to go high-tech because it cuts down on paperwork back at the cop shop.

Britain plans to spend £80 million on the gadgets -- or about $150 million Cdn.

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Posted by Michael Kane on October 5, 2009

While researching the past 10 years of BNN for our first-decade anniversary show, I came across some personal flashbacks too.

In the early part of the decade, Amanda Lang and I were partnered on air. It was her show. I reported on the stock markets.

We were sent to spend a Saturday afternoon at the annual Financial Forum in Toronto. It was held at the Convention Centre and drew huge crowds.

Our appearance was meant to present the personal side of this fledgling business channel and answer questions from what we expected would be avid and curious viewers. We were not disappointed.

At one point, an intense little man scurried up to me and with a squint demanded to know "Who's the Communist at your station? Is it you?”

Amanda, standing close by, looked out the corner of her eye at me as a slight, silent smile crossed her face. It was an expression I would see many times and one that I quickly grew to love. She sensed what was coming.

"I am not a Communist, sir" I replied. "What would make you say that?"

"You said on the air that you don't own any stocks. You don't play the stock market. How can you work at a business channel and not play the stock market."

Again I felt The Glance from Mona Lisa Lang.

I know what he was getting at. This was not the first time I heard that disbelief in a viewer's voice. The inference is that if you're not personally invested, if you don't feel the same agony when the value of your portfolio goes down, and the ecstasy when it goes up, how could you possibly do a good job on a business channel?

"I'm just a reporter," I said.

In my radio days, I reported on a variety of events. When it came to crime, I didn't feel I had to get involved with the criminal element to do my job. Nor did I have to ride with the cops. Crime reporting itself is pretty straightforward. (And my experience with it has come in handy recently for business reporting !)

What's definitely not straightforward is politics. And the fact that I had no political affiliation was an obvious benefit in maintaining objectivity.

And when it came to labour stories the fastest way to lose credibility with everyone is to get involved with either the union or management.

So my current view is that becoming involved with the stock market should not be a prerequisite for reporting on it.

Communist? No.  But I do have a cat named "Mao-se."

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Posted by Andrew Bell on October 2, 2009

PI Financial says its "top picks" in Q3 beat the market and it’s revising the list for Q4. Descartes Systems Group (DSG–T) and Fairborne Energy Ltd. (FEL–T) are out after posting strong gains, and specialty software provider Matrikon Inc. (MTK–T) joins the selections.

The brokerage reports that the stocks its analysts chose for Q3 posted an average gain of 31% from June 30 to Sept. 30, versus 10% for the S&P/TSX composite and 21% for the Canadian Small Cap Index. I blogged about the Q3 picks on July 7.

The best performer was Fortuna Silver Mines Inc. (FVI-X), which jumped 65% on strong silver prices and a new resource estimate for Caylloma, the company’s Peruvian mine. Analyst Wayne Hewgill says the name is still his top pick for Q4, arguing that "the company currently trades at a deep discount to its peers."

Shipping software provider Descartes climbed 40% in the third quarter. "With the stabilization of global trade and shipping volumes and strong performance of new acquisitions, Descartes was able to offset any declines due to the recession," analyst Pardeep Sangha says.

After its big run-up, Sangha is replacing Descartes as a Q4 top pick with Matrikon, a supplier of process-control software and consulting in oil, gas, mining, power, petrochemicals and forestry. During the past five years, Matrikon has grown its annual revenues to $80 million from $54 million Sangha says, pointing to "recent customer wins, growth in the power generation market, and ultimately a recovery in the oil, gas and mining sectors."

PNI Digital Media Inc. (PN–X), PI’s other technology top pick in Q3, rose 29%. The software company provides photofinishing technology to Wal-Mart and Costco. Sangha is keeping it as a top pick for Q4, arguing that the company "has large growth potential in the recently entered online business printing market."

PI’s oil and gas top pick for Q3, Fairborne Energy, returned 22%, outpacing the 9% gain in the TSX energy index. Q2 production rose 34% on gains in the company’s core areas and its acquisition of Grand Banks Energy Corp.

Liquor Stores Income Fund (LIQ.UN-T) was another top picks winner in Q3, with the units appreciating 18%. The booze retailer is "again our Top Pick for Q4," analyst Sheila Broughton says. "Fundamentally, LIQ.UN continues to be a strong performer generating solid revenue, EBITDA and earnings growth as it continues to expand its operations through acquisitions and new store openings."

Finally, Pure Technologies (PUR–T), which sells technology for inspecting pipes, pipelines and bridges, gained 11% in Q3. Analyst Jason Zandberg is keeping it as a top pick, arguing that the company stands to benefit from $6 billion US in spending earmarked for U.S. infrastructure.

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