June 11, 2013 Newsletter

Dear Friends,

Tangents:

This article appeared recently in The Globe & Mail:

FIVE WAYS TO BUY JOY

-by Nicholas Hune-Brown

In Happy Money, authors Elizabeth Dunn and Michael Norton analyze what spending choices maximize happiness.  Here are some of their suggestions.

1. Buy experiences

Studies have shown that paying for trips or special meals creates more happiness than buying objects.  Even spending a  few dollars to play a video game or hear a song provides more lasting happiness than buying a few trinkets.

2. Make it a treat

Humans adapt to everything, including things that make us happy.  Research shows that we vastly underestimate just how quickly our pleasure will fade.  Instead of cutting out ice cream completely, by limiting to special occasions, we can…. [renew] our capacity for pleasure.

3. Buy time

While wealth theoretically allows us to outsource some of our most hated tasks, most people tend to overvalue money and undervalue time.  Before you make a purchase, think:  “How will this change the way I use my time?”

4. Pay now, consume later

Paying up front and delaying your consumption is one way to increase your happiness on any given purchase.  Vacations make us most happy because of the anticipation.  Studies have shown that even waiting briefly before eating a Hershey’s Kiss makes it taste better.

5. Invest in others

Research shows that spending money on others can make you more happy than spending on yourself.  This is true for Warren Buffett, who famously decided to give away 99 per cent of his wealth, but studies also show that it’s true for Ugandan women buying life-saving malaria medication for a friend.  Earn your money, but to be happiest, it helps to spread it around.

When you are content to be simply yourself and don’t compare or compete, everybody will respect you.  –Lao-Tzu

Photos of the Day –June 11^th, 2013

Clouds are reflected in the floodwaters of the river Elbe near Tangermuende, central Germany. Jens Meyer/AP

Munduruku Indians stand on a balcony of Brazil’s Indian affairs bureau (FUNAI) headquarters after storming the building in Brasilia. They are demonstrating against violations of indigenous rights and calling for the suspension of the construction of a hydroelectric plant. Ueslei Marcelino/Reuters

Market Closes for June 11^th, 2013

International Markets

Bonds

Currencies

Commodities

Market Commentary:

Canada

By Inyoung Hwang

June 11 (Bloomberg) — Canadian stocks fell, sending the benchmark equity gauge to its lowest since April, as commodities producers plunged after Bank of Japan Governor Haruhiko Kuroda left a stimulus program unchanged.

Raw-materials stocks slumped the most out of 10 groups in the Standard & Poor’s/TSX Composite Index amid investor concern central banks will reduce or refrain from expanding stimulus measures. Lululemon Athletica Inc. tumbled 18 percent on the Toronto Stock Exchange after saying Chief Executive Officer Christine Day will leave. Kinross Gold Corp. lost 6.4 percent after deciding to stop developing a mining project in Ecuador.

The S&P/TSX declined 159.10 points, or 1.3 percent to 12,223.57 at 4 p.m. in Toronto. The benchmark gauge for Canadian equities has fallen in seven of the last eight trading days to its lowest level since April 26. Volume was 13 percent higher than the 30-day average at this time of day.

“The market gets overbought and looks for a trigger whether it’s Japan or Bernanke talking about tapering quantitative easing,” Keith Richards, a fund manager with ValueTrend Wealth Management in Barrie, Ontario, said by telephone. He helps manage about C$110 million ($108 million).

“The markets up until the middle of May were starting to reach traditional overbought conditions. It had to correct.”

BOJ policy makers refrained from expanding their tools to address bond-market volatility. The central bank left its one- year fixed-rate loan facility unaltered and Kuroda said the BOJ will consider longer funding operations if they become necessary.

The S&P/TSX 60 VIX, a gauge for options to protect against losses in the index of largest stocks in the Toronto Stock Exchange, jumped 7.4 percent to 17.24, the highest level since May 15.

Commodities fell, as the S&P GSCI Index of 24 raw materials slid 0.7 percent for a second day of losses. Gold for August delivery retreated 0.6 percent to settle at $1,377 an ounce in New York, while copper dropped 1.4 for its fourth straight decline. Oil slipped as much as 1.8 percent before settling 0.4 percent lower.

Nine out of 10 groups in the S&P/TSX fell today, led by a 3 percent decline among raw-material stocks. Yamana Gold Inc. erased 5.3 percent to C$11.11. Teck Resources Ltd. lost 1.1 percent to C$24.76 after Canada’s largest diversified miner was cut to neutral from buy by Dundee Securities Corp. equity analyst David Charles.

Kinross slumped 6.4 percent to C$6.03. Canada’s third- largest producer of gold by revenue decided to stop developing the Fruta del Norte mining project in Ecuador after it couldn’t agree with the government on economic and legal terms. The Toronto-based company will take a charge of about $720 million in the second quarter.

Lululemon plunged 18 percent to C$69.22 after saying Day will step down once a replacement is found. The yoga-wear retailer said yesterday that net income for the quarter ended May 5 rose 1.4 percent to $47.3 million, or 32 cents a share, from a year earlier. Analysts projected 30 cents, the average of 25 estimates compiled by Bloomberg.

Financial companies plunged 1 percent, as 38 of 45 members retreated. Toronto-Dominion Bank slid 1 percent to C$81.67 and Bank of Montreal dropped 0.8 percent to C$60.15.

Health-care stocks were the only group to rise today, increasing 1.9 percent. Catamaran Corp. jumped 4.1 percent to C$54.91. The drug-benefits manager won a 10-year deal with Cigna Corp. to handle prescriptions benefits for the health insurer’s clients.

US

By Lu Wang and Inyoung Hwang

June 11 (Bloomberg) — U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a second day, after Bank of Japan Governor Haruhiko Kuroda said he sees no need to expand monetary stimulus immediately.

JPMorgan Chase & Co. and Citigroup Inc. fell more than 1.6 percent, pacing losses among lenders. Lululemon Athletica Inc. tumbled 18 percent after announcing that Chief Executive Officer Christine Day will leave the company. Sprint Nextel Corp., which agreed in October to a takeover by SoftBank Corp., gained 2.4 percent after the Tokyo-based mobile carrier raised its offer.

The S&P 500 declined 1 percent to 1,626.13 at 4 p.m. in New York. The Dow Jones Industrial Average slipped 116.57 points, or 0.8 percent, to 15,122.02. About 6.4 billion shares changed hands, in line with the three-month average.

“The market has almost become addicted to monetary stimulus,” Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank in San Francisco, said in a phone interview. His firm oversees $170 billion. “Any sense that the monetary stimulus will slow down or stop, and that by no means is the case in Japan, but just on the margin Japan won’t be more aggressive is the reason for the concern.”

BOJ policy makers refrained from expanding their tools to address bond-market volatility and stuck with an April pledge to increase the monetary base by 60 trillion to 70 trillion yen ($713 billion) a year. The central bank left its one-year fixed- rate loan facility unaltered and Kuroda said the BOJ will consider longer funding operations if they become necessary.

Inventories at U.S. wholesalers rose 0.2 percent in April, slowing from a 0.3 percent gain in the previous month, as sales accelerated, data from the Commerce Department showed today.

Stimulus from the Federal Reserve and better-than-estimated corporate earnings have propelled the bull market in U.S. equities into a fifth year and driven the S&P 500 up 140 percent from a 12-year low in 2009. The index has fallen 2.6 percent from its record high on May 21, the day before Fed Chairman Ben S. Bernanke suggested the central bank could curtail its $85 billion monthly bond purchases if the economy improved in a “real and sustainable way.”

“We’re going through a transition process right now, where better growth offset by higher interest rates is causing a lot of volatility,” David Chalupnik, head of equities at Nuveen Asset Management in Minneapolis, said in a phone interview. His firm manages more than $120 billion. “On the longer term basis, higher rates are indicating better economic growth and that’s good for equities.”

Yields on 10-year and 30-year Treasuries touched the highest level in 14 months on concern that the central bank will slow monetary stimulus. Rising bond yields prompted investors to sell telephone and utility stocks that offer the highest dividend payouts. The two groups fell more than 4.9 percent in the past month, the most among the S&P 500’s 10 main industries.

The Chicago Board Options Exchange Volatility Index, or VIX, jumped 11 percent today to 17.07. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, reached a six-year low in March and has since surged 51 percent.

Companies whose growth is most tied to economic swings led the retreat today. Commodity and financial companies fell more than 1.4 percent for the worst performance among S&P 500 groups.

The Morgan Stanley Cyclical Index slid 1.2 percent and the Dow Jones Transportation Average erased 1 percent.

The KBW Bank Index tumbled 1.7 percent as all 24 members dropped. JPMorgan slipped 1.6 percent to $53.49.

Citigroup declined 3.8 percent to $49.95. The bank could lose as much as $7 billion on currency swings, according to Charles Peabody, an analyst with Portales Partners LLC. Peabody, who predicted the mortgage market’s plunge as early as January 2005, said the firm’s reliance on revenue from abroad is now driving his concern that a global economic slowdown will hurt the bank more than U.S. rivals.

Lululemon plunged 18 percent to $67.85 after saying Day will step down once a replacement is found. The yoga-wear retailer yesterday reported quarterly profit that beat analysts’ estimates.

Texas Instruments Inc. fell 3.7 percent to $35.26. The largest maker of analog chips predicted second-quarter profit and sales that may fall short of analysts’ most bullish estimates as some consumer-electronics makers hold off on component purchases.

Corinthian Colleges Inc. tumbled 12 percent to $2.46 after the U.S. Securities and Exchange Commission began an investigation into the for-profit college chain’s student- recruitment practices.

Sprint rose 2.4 percent to $7.35. SoftBank, the Japanese mobile carrier controlled by Masayoshi Son, raised its offer for Sprint by 7.5 percent to $21.6 billion to counter a rival bid from billionaire Charlie Ergen’s Dish Network Corp.

Catamaran Corp., the fourth-largest drug-benefits manager, surged 11 percent to $53.99 after it won a 10-year deal with Cigna Corp. to manage prescription-drug benefits for the health insurer’s clients.

GameStop Corp., the world’s largest video-game retailer, jumped 7.8 percent to $37.72 for the biggest increase in the S&P 500. Sony Corp. said its coming PlayStation 4 will allow unlimited used-game sales.

Dole Food Co. climbed 22 percent to $12.46. Chairman and Chief Executive Officer David Murdock, 90, offered about $645 million, or $12 a share, to buy out other shareholders in the fresh fruit and vegetable producer and marketer.

Questcor Pharmaceuticals Inc. surged 15 percent to $42.11.

The drugmaker said it paid $60 million upfront for the rights to Novartis AG’s immune drug Synacthen in the U.S.

Have a wonderful evening everyone.

Be magnificent!

Man has lost his inner perspective, he measures his greatness by his size

and not by his vital attachment to the infinite; he judges his activity by his own movement

and not by the serenity of perfection, not by the peace that exists in the starry vault,

in the rhythmic dance of incessant creation.

Rabindranath Tagore,1861-1901

As ever,

Carolann

I learned the value of hard work by working hard.

-Margaret Mead, 1901-1978

Carolann Steinhoff, B.Sc., CFP®, CIM, FCSI

Senior Vice-President &

Senior Investment Advisor

Queensbury Securities Inc.,

St. Andrew’s Square

Suite 340A, 730 View St.,

Victoria, B.C. V8W 3Y7