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Media Co-op Investor: Annual Report

The Conclusion of Our Year Long Series on the Toronto Stock Exchange

by Gwalgen Geordie Dent

Media Co-op Investor: Annual Report

Welcome to Media Co-op Investor!

The Media Co-op Investor Series aims to help the general public understand the stock market, how it works and the major companies which benefit from it.

To learn more go here

Below is our annual report to media co-op (fake) shareholders.

Chair and CEO Report

One year ago, folks from the media co-op fake-invested in dozens of Canadian companies on the TSX.

Using howthemarketworks.com, they were able to fake-buy stocks of some of Canada's largest companies.  Companies were selected from the Standard & Poor(S&P)/TSX 60 Index   which is made up of the 60 largest companies on the Toronto Stock Exchange as measured by market capitalization (For a definition see  ).

The TSX is one of the world's largest stock-market index's and is considered to be a world leader in the number of mining, oil and gas companies listed on it.  It's also massive: over 1500 companies listed, over $2 trillion in overall market capitalization and over $36 trillion raised in financing for the companies and shareholders listed (as of Nov. 2010).

The S&P/TSX 60 is equally massive: according to Standard and Poor, those 60 companies make up over $1 trillion of the TSX's market capitalization.  

In other words, if you follow the money in Canada, often times you'll end up at the doorstep of company listed on the S&P/TSX 60.

Mission Statement

Starting in September 2010, we examined an element or term in the stock market, how the Toronto Media Co-op has done fake-investing in companies on the Standard & Poor/Toronto Stock Exchange 60 Index as well as highlighting the history and operations of 20 large Canadian companies, why their price has gone up and down and what they are all about.

Many companies listed on the stock exchange, are far less than the good corporate citizens they make themselves out to be.  Several have been shown to be damaging the environment, causing massive health problems, having mob connections, getting rich off of stolen land, being profitable government industries that are privatized, breaking labour unions and demanding concessions from workers, having far to strong an influence over corporate policy and generally putting profit before people.

The media co-op is a media model based entirely on the reverse of this principle.  Accountability to our shareholders (members) also includes ensuring that we act and write in the public interest.  That's why, unlike most corporate media outlets, media co-op content is driven by readers and communities as opposed to advertisers and majority shareholders.

Financial Report

To understand the stock market properly one has to understand a very simple element of the investing: it's gambling.  While some people are very good at gambling and others are poor at it, the idea that playing the stock market requires a high degree of education, technical expertise or the best and brightest minds may be a bit exaggerated.

As has been shown by the events over the last 3 years and numerous other individual examples, investors get it wrong all the time.   In the last 10 years they have invested heavily in collateralized debt obligations, credit default swaps, Enron, Nortel, and other companies and products which completely crashed the last 30 years of capitalist doctrine.

With no training, expertise or history in investing, we made money.  Not because we got lucky picking a specific company or because we knew what we were doing, but simply because making money on the stock markets is easy during good times.  Big name investors such as Nouriel Roubini or Warren Buffet tend to invest in a basket of bond, companies, products and indexes to ensure that one company or product going under will not sink them.  As such, when money creation is high (as it has been) they make money and when it's low they tend to lose (or pull their money out and make zero).

Financial Statements

Fake invested:  $50,000 (approx)

Overall return (as of Oct. 2011):  $1,300 (approx) or 2.6%

Highest current return on a 1 year Term Deposit/GIC at a major Canadian Bank: 1%

High-point (May 2011) $6750 or 13.5%

Low-point (Nov 2010) -4.1%

Overall, we did better than a safe investment, but worse than a standard mutual fund or the S&P 500 index, a leading benchmark for over-all market performance.  Again, this was less due to our skill in investing (we sunk most of our money in to 50 out of 60 S&P/TSX 60 companies) and more due to general global economic forces.

Portfolios

Extractives -  $30,000 invested, $1500 profit

The best performing asset class throughout the investor series.  

Best performer: First Quantum Minerals - up 71%
Why: First Quantum, owner of a mine in the DR Congo was one of eight Canadian companies implicated in the UN report entitled “Report on the Illegal Exploitation of Natural Resources and Other Forms of Wealth in the Congo”.  Told by the government that the mining contracts they negotiated under civil war would have to be renegotiated, the company refused sending the case to arbitration. The Congo won the right to seize and sell the mine and FQ stock plummeted.

However, First Quantum was somehow awarded compensation for the mine from any company that buys it off the government, ensuring a windfall.

Worst performer: Agnico Eagle Mines - down 36%
Why: Mining disaster.  A catastrophic failure of a roof wall at their Goldex mine in Quebec caused flooding.  Thankfully it was shut down due to safety reasons.  Also, costs at their Meadowland mine in the Canadian Arctic shot up.  

Company that most affected Canadian policy: Potash Corp.
Why: The company sought after heavily by BHP Billiton, the largest mining company in the world, stayed in Canada ensuring that government royalties continued to flow into Saskatchewan coffers.  The takeover ended up being blocked by the Federal government, who had previously approved several high profile foreign takeovers.  Sadly, the fact that the actual potash itself belongs to several first-nations in the region still hasn't been brought up.
 
Financials - $10,000 invested - $200 loss

Noted as one of the 'best' financial sectors in the world, the bank remained ho-hum.  This was even when the government agreed to cover ALL mortgage defaults for the banks.  That's right, banks loan money for mortgages and get all the profits, however if there's a default (and a loss of money) CMHC (the government) takes the loss.

Best performer:  National Bank of Canada - up 10%
Why:  Buying assets, including Toronto-based Wellington West Holdings.

Worst performer:  Sun Life Financial - down 10%
Why:  They gambled on stocks...and lost.

Company that most affected Canadian policy: Brookfield Asset Management
Why:  Owners of most of the major commercial and financial real-estate in Canada, Brookfield's US company tried to evict Occupy Wall Street protesters from Zuccotti park (which they own) and own Brookfield place in Toronto, home of TD bank right in the heart of the financial district and minutes from the Occupy Toronto Camp.

Consumer - $10,000 invested - broke even

Consumer stocks generally include the well know supermarkets, stores, retail outlets and food companies in Canada.

Best performer: Tim Hortons - up 31%
Why: Well, coffee shops and cheap stores tend to do well during an economic downturn, but Timmy-Ho's seems to be doing especially well.  As far as we can tell, it just looks like people in the US and Canada really like their double-doubles.

Worst performer: Thomson Reuters - down 21%
Why: Financial data from its markets division is less in demand with banks and markets who normally buy its info not doing so.

Company that most affected Canadian policy: Thomson Reuters
Besides being a massive information company and Canada's leading corporate brand, the Thomson family also has been the embodiment of the 1% vs. 99% argument.  With a family fortune of $21.34 billion, the Thomson family is the richest in Canada...by about $13 billion dollars.  They are also the 17th richest family...in the world.

Conclusion

Through banks, pensions, and the corporatization of government investment in the stock market has become entrenched in the way that we live.

Though many in activist or progressive circles often push a lifestyle where we avoid the stock market, many in their later years eventually cave, mainly due to the question of retirement.

While much of the working poor will have limited options in terms of savings, those able, willing or wishing to save more than offered by the Canadian Pension Plan (which is also heavily invested in financial markets) are often faced with a problem.  What can you ethically do with your savings that doesn't involve investing it in evil institutions?

This will be the subject of the next and final installment of the Media Co-op investor series.

Archive

September: Potash Corp

September #2: Suncor and ARC Energy Trust

October: Shoppers Drugmart and Barrick Gold

October #2: Scotiabank and Power Corporation of Canada

November: Cameco Corp and TransCanada Corp

December: Saputo and Bombardier

December #2: First Quantum and Manulife Financial

January: Quarterly report

February: Magna

March: Brookfield Asset Management

April: CN Rail

May: Gildan Activewear

June: Teck Resources Ltd.

July: SNC Lavalin


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Comments

socialist investment

Hi,

I have really enjoyed this series at media co-op.  Although i read the site every day and find it consistantly excellent, the co-op investor is the best part. 

I have been investing in the co-op sector my entire working life - since I was in the my teens.  Mainly because I am a socialist and therefore cannot and will not invest in capitalism.  My investments have out performed those of many of my friends and colleagues (on average) for most of the time I have been investing.  It is not hard to do and not time consuming.  It just means you have to think outside the box.

For example:

Currently my food co-op (west end food co-op, a mulstakeholder co-op) is selling bonds - I am not employed by the co-op nor do I receive any renumeration (in fact, I have contributed a significant amount of time and financial resources to the co-op - and I helped to start it five years ago) although I am the Chair of the Board and feel that should be stated here for transparency sake!

As well - TREC energy co-op is selling solar bonds at the moment and Alterna Savings Credit Union (my credit union for many years) is RRSP eligible investment shares. 

What we need is a place to start promoting alternative, socialist investment so we can build the pool of capital co-ops need to survive and grow.

In Solidarity and Co-operation,

john Richmond (media co-op member and donor) 416-532-9870 john@westendfood.coop

 

 

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