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Sunday, January 8, 2012

Gordon Pape 2012 super stock pick: Brookfield Infrastructure Partners L.P. (BIP)

Gordon Pape top stock recommendation for 2012 is not a Canadian stock, but it’s a US one: Brookfield Infrastructure Partners L.P. (BIP). This company is from our fantastic TSX under the ticket symbol BIP.UN.

While the Canadian market offer many great investing possibilities, despite it all, Gordon Pape decided to go South for his 2012 top pick. What a shame coming from a well-known financial advisor who made his career in Canada. But don’t be surprise. Gordon Pape is not a Canadian. He was born several decades ago in the USA. The fact that Gordon Pape is not Canadian certainly played on the way he analyses the Canadian stock market and also on the way he perceived Canadians and our super-super Canadian stock market.

Believe it or not, we have one of the best stock market of the worldwide world. With their natural arrogance, Americans put their country in heavy deficit. Their recession has almost destroyed forever the capitalist worldwide. Nothing to be very proud of. However, despite it all, I had been able to turn the capitalist system to my own advantage with an investment portfolio that is almost 100% Canadian oriented. I have been investing since 2005. I start my personal financial blog in 2007 and I placed my first stock investment in 2008, shortly before the stock crash. No matter how bad was the hit, I totally recovered from the 2008 stock market crash. 2011 also been a difficult year for the stock market. It was a year where I experiment a 0% return, despite day trading, despite investing in the risky silver PHS.U. Despite is all, with all the risk I took, I didn’t lose money. Why?

The answer to this is because my investment portfolio is almost 100% Canadian. With many good stuff like PPL, ENF, BNS, CDL.A, FTS, DH, PBH and many many other, I had been able to survive the 2011. Fact is, I had made Canadian stocks the pillars of my lifetime investment project.

Companies like CNR, PPL, AGU could have easily earn the 2012 super stock title, but Gordon Pape decided to go to his homeland country. I don’t have any problem with that but I do know better.

There’s major problems with Gordon Pape 2012 favorite Brookfield Infrastructure Partners L.P. (BIP). First of all, Brookfield Infrastructure Partners L.P. (BIP) headquarters are located in the Bermuda.

You need to know that while deciding to invest overseas, you double the risk for your investments. The stock market is already rough in the present stock market we live in. While investing, you need to do it on the best stock market of the world. And you know that it’s the Canadian one.

Also, as soon you step outside Canada, you fall under a different accounting authority, a different legislation. Accounting “laws”, if I can name those like that are not all the same worldwide. Basic accounting principles are not always being followed in emerging countries and in other countries as well. And that being true about Bermuda and also China.

In order to explain better what I mean, I am partly copying a post that I wrote back in June 2011:

“I will always remember what a financial planner working for Manulife Financial once told me about business located in China. That was in 2007, when I invested in segregated funds for my RRSP. Back at the time, I didn’t want to handle any investment risks and despite my young age (I was 27 back than), I decided to invest like a senior, I invested in some Manulife Financial segregates funds, in the following: Maritime Life International Equity Fund (Templeton), Manulife Simplicity Growth Portfolio, Maritime Life CI Harbour Seg Fund, Maritime Life Fidelity True North Seg Fund and Manulife GIF MLIA B World Invest.

We had that conversation after I mention to her that mutual funds invested in Chinese companies that were performing well. At the time, I was closely following a BMO Bank of Montreal mutual fund: the BMO Greater China Class. The fund was performing extremely well and I was impressed by the BMO Greater China Class.

Following what, the financial planner told me that it was because in China, the regulations were not the same when it comes to financial statements and that there was a lot of business fraud in China. Also, all investments made in Chinese companies needed to be handle with a lot of care. Those words never leave me because I was absolutely fascinated by China economy of the time. I still have the same fascination. But I do not invest in anything related to China for the reason that the regulation is not the same. It’s already risky enough to invest, why should you add another risk by investing overseas? That’s why I am mostly Canadian oriented when it come to investment.

Anyhow, today, a very sad story came out about a company that I never really notice before: Sino-Forest Corp. (TRE). Despite investing in stocks, I am in a way very conservative in my investments. I am not very attract to the big shinny names who are extremely well-rank by analysts. Personally, the only analysts I trust are Derek Foster (the guy who stop working) and SP Brunner (a well established blogger). I never lost anything by following those 2. Brunner is quite modest, saying in her stock reviews that they are not stock recommendations but hey, when you read her hot stuff about K-Bro Linen Inc. (KBL), per example, is that really anything else that would do than just invest in the company after reading her review? :0)

Anyhow, until recently, Sino-Forest Corp. (TRE) was performing extremely well, its value had gone from a 5$ to a 20$+ very quickly. It was the darling of everyone... Until someone of the name of Carson Block arrived in the show. Carson Block is a good looking 35 years, gangsters rap fan and a trained lawyer (got the portrait?) who declared that Sino-Forest Corp. (TRE) does not have real trees and that the company is not operating a real business. That might be true, but investors will have to do a trip in China to see for themselves if Carson Block declarations are true of false, because Sino-Forest Corp. (TRE) operates in China only... That Sino-Forest Corp. (TRE) operates a real business or not has any incident for me. I am not an investor of Sino-Forest Corp. (TRE). So why do I care?

Well, this incident surrounding Sino-Forest Corp. (TRE) shows the importance of diversification inside a portfolio. On the stock market, everything and anything can happen. I received bad comments in different occasions, saying that my portfolio is too complex, too bizarre, too diversify. Investing is not necessarily easy and in the investment game, diversification is your best friend.” (The Dividend Girl, June 9, 2011).

We have the best stock market of the world, there’s no reason why you should be following Gordon Pape footsteps and invest in a US company based in Bermuda on top of that. I mean come on.

Also, Brookfield Infrastructure Partners L.P. (BIP) doesn’t have enough in history to be name best stock of 2012. The company began to trade way AFTER the 2008 stock market. So we don’t know for sure if BIP can handle an in deep stock market volatility and, even worst, a stock market crash affecting the economy worldwide. The stock crash of August 2011 doesn’t count because it was related to the Euro, it wasn’t major enough for us to analyze BIP.

When I invest in a stock, I look at the chart on date of the creation of the stock on date of today. First thing to check: you want a chart that goes on like a rocket, not a yo-yo stock. What I am running after is constancy, something that will be strong enough to support my margin and my appetite for trading. Good past results doesn’t mean that the future of the stock is brilliant. However, it’s a good indicator about the volatility of the title. While investing, I want is all, I want a title stable in value that will also grow in value overtime and I also want a good dividend yield. It’s difficult to have it all but not impossible. BIP is a too young company to be name best 2012 stock pick. And fact that BIP is located in Bermuda is not helping either. Stay away from companies having their headquarters overseas. Be extremely careful with those.

Brookfield Infrastructure Partners L.P. (BIP)? No, it’s not for me, and it’s not for you either.


Anonymous said...

There are stocks in the US that do fairly well like JNJ,KO,WMT,PEP,PG,GIS,CL and WM. WM is Waste Management. These companies have products or services that people use or need in good times and bad. Take for example KO, I believe most of their sales are outside the US.

Some of these companies are divdend aristocrats, which raise dividends for more than 25 straight years.

Anonymous said...

I agree with the other person said. You should look into companies that grow dividend rather than high dividend stocks. Ask a question like this, if you go into a forest with no access to the outside world for the next 20 years, will the company still be around when you get out? If the answer is yes, there is a good possibility that it is a good investment. Many big U.S. blue chips fall into that category, WMT, JNJ, KO, IBM etc ...

In Canada, you can look at GBT.A . It delivered amazing returns to its shareholders by buying back stocks.

Ray (Windsor)

Anonymous said...

Hi Sunny,

Am I correct in assuming you are never going to consider investing in US/International securities?


Anonymous said...

Please Sunny,

Make your pages shorter.

I have to scroll down 10 regular sized pages to get to the bottom of this website page.

No more than 2 posts per page!

Gordon Pape said...

You can criticize my stock picks all you like but how dare you say I am not a Canadian! Yes, I was born in the U.S. but I became a Canadian in 1967 (45 years ago!) and renounced my U.S. citizenship at that time, as dual citizenship was not permitted then. And one other point: there are good dividend stocks in other parts of the world. Canada does not have a monopoly. I suggest you climb down off your high horse. Gordon Pape

Sunny said...

Gordon Pape or not Gordon Pape, being Canadian mean for me being Canadian born. I would have say such things to anyone who wasn't born in Canada, who ancestors haven't participate in the Canada that we know today.

You have the freshness of the Americans, American citizenship or not, Gordon Pape or not.

Because anyone can post a name and a link. It doesn't take Gordon Pape to do that.

Let's play the game and say that you are Gordon Pape.

You are good at handling the financial crap like TFSA rules but when it come to give stock advices, you sometime fail. Accept your failures and you'll be going much much better.

The stock market is already risky enough, you add more risks to that reality by going with a Bermuda company. You actually decide to double the risk taking. WHY?

The money that investors have available to invest need to be exclusively invested in the Canadian market to ensure an economy boost.

I only hold little in US dollars for that reason.

I want to be better than myself.

I want to participate in the Canadian economy and that's what I do each and single time I invest in a Canadian stocks.

Americans have destroyed their economy and it created huge problems. In 2008, I taught that I will never recovered from the stock crash but I did. At 28 of age, it wasn't meant for me to go through a market crash.

There's a price to be paid for arrogance.

The US stock market needs to be avoid in result of that arrogance, of all that non-caring.

Anonymous said...

You keep going to new lows. You have no respect for no one. Gordon Pape came to Canada 45 years ago, and has contributed to our Canadian society just as much as the ones that where born in Canada before him. How can you say he's not Canadian. Like he said, if you don't agree with his stock pick, just ignore it. Lord knows you should have ignored a lot of your other small Canadian picks from other posters or from MR Sprott himself.

I won't agree with everything from MR Pape or any other advisor for that matter, but to show disrespect just shows your true self and it's not pretty. I see why you don't want to show yourself here.

As far as his stock pick being too risky, you would think you would like is pick as you seem to like holding risky stocks (take a look at your holdings).

Now as far as being invested in Canada only, good luck with that. Buying all the companies in Canada will not give you more diversification. If you want to diversify you will need to invest in big blue chip companies like Wal-Mart, Coke, Pepsi, Nestle, Chevron, IBM, Google, Apple, McDonalds, Toyota, Samsung, Shell and so on which are all outside of Canada. Even Derek Foster has realized this.

And why would someone post as a Gordon Pape or Derek Foster imposter. Come on!

Your lack of financial knowledge is obvious. Another thing that's getting to be obvious is your lack of social skills.

Good luck in your future, you will need it.

The accountant

Anonymous said...

The stock market is one big auction.

If you buy shares in the market, you are buying someone elses shares of that same company. This has no effect on the day to day operations of the company usually unless something needed to be voted on.

Consider investing in these stocks from US Dividend Aristocrats eventually. Canada is only 3% of the global economy.

Ruth said...

ah Sunny, you are not only anti' quebec , you are anti American. I have only one stock in the US and i bought that when the dollar was $ will gain when it goes the other way which it is now. i like that page u did with the answers to your blogs..

Anonymous said...

I have to agree with you. If you limit the countries you want to invest, then you can't take advantage of our high Canadian # do go buy stocks in the US. Sunny has a lot to learn about investing and I suspect her attitude will change with time. Our economy is in a good period, but that won't always be the case. As we witnessed last year, US stocks outperformed Canadian stocks by a wide margin.

Anonymous said...

Derek Foster invested advised people to invest in Canadian stocks because of the favorable tax treatment of dividend from Canadian Corporations.

This works for most people up to a point as you do not have to worry about the exchange rate.

Eventually people, as Derek Foster did, need to invest in the US as some of the companies are the best of the best

Anonymous said...

I got my BIP when it got spun out of BAM.A on feb.2008 at about 18 bucks. It is trading at 28.61 and it pays a nice dividend. So what do you mean it started trading after 2008 correction?

Anonymous said...

Who pays taxes to Canada is Canadian. We no longer live in our nests.
Sunny you are a racist.


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