Think about it – the Canadian dollar is not likely to stay at its $1.07 level in the long run. Drew Abbott, vice-president and investment adviser at TD Waterhouse Private Investment Advice expects the loonie to settle in the 95-cent to $1 range within the next 18-months.

I understand its hard to watch the value of your investments offshore drop with the U.S. dollar – especially when your Investment Advisor told you to “diversify with foreign investments”. I also understand it makes it even harder when you see local stocks and the TSX performing much better than your own foreign holdings. Finally, I’ll probably get on your last nerves when I tell you to ignore it.

Well, don’t chase the loonie like a bunch of running bulls. Remember what happened when you chased those tech stocks? That’s exactly what the Canadian dollar is turning into – a growth stock, rather than a currency. One the most important keys to investing is PATIENCE. Right now, we have to resist the urge to pull back all our investments back to Canada, and take advantage of the long-term opportunities we are presented with.

“Over the longer haul this is a golden opportunity to at the very least consider slightly increasing holdings in foreign securities. We’ve had an unbelievable run between the Canadian dollar and the TSX over the last five years, and I just cannot believe we’re going to have another prolonged period like that of extreme outperformance” –Douglas Porter, deputy chief economist at BMO Nesbitt Burns Inc.

“In the short run, you may be hurt by staying offshore or in the United States, but in the long run you’ll do well with U.S. stocks. You can take your $1.06 or $1.07 and buy some pretty cheap stocks in the United States but you need staying power and patience, and a lot of people don’t have that.” –Irwin Michael, portfolio manager at ABC Funds.

“Even if you put that into a U.S. money market fund earning 5 per cent, if the dollar comes back down from $1.07 to $1, that’s a 12-per-cent return over a year. The major move’s obviously been done. Whether we’re timing it properly is impossible to tell, but that’s one strategy.” –Drew Abbott, vice-president and investment adviser at TD Waterhouse Private Investment Advice.

2001 had only 46 issues, but with a total value of $2.1-billion. The-year-to-date, 2007, had 63 IPOs with a combined value of only $1.2-billion. This means that more than $900-million in new issues would need to be done in the fourth quarter of this year just to match 2001 (the decade low). Last year, at this time, there were 95 IPOs with a value of $4.7-billion.

“At the current rate of activity, it is unlikely we will even reach the 10-year low-water mark, set in the aftermath of the collapse of tech stocks in 2001,” said Ross Sinclair, national leader of PricewaterhouseCoopers’s IPO and income trust services.

What caused IPOs to lag this year? A number of factors – most notably the federal government’s policy changes to income trusts, blocking that source of financing.

(Source: survey by PricewaterhouseCoopers LLP)

Even a clock that does not work is right twice a day is a good statement and it is true that we do sometimes stumble on precious stone but the probability of it’s happening in business world is pretty dim. In this process business clock does not give the right time twice a day!

What is needed is a proper business analysis, and than one have an idea of what the business is worth. On this route financial analysis is of prime value. The following point need to be kept in mind while doing financial analysis-

• Is the company public or private entity?
• The business’s sales and earnings for the past five years?
• Salaries/dividends have been paid to owners and stockholders for the past years?
• Is the top management having very high salary and cashing out.
• How does the financial analyst perceive the company in case it is public company?
• In case it is private, what is the market image for it?
• The state of inventory? What is the normal inventory level, and where is it presently?
• Is there a redundancy factor to the inventory?
• The details of the accounts receivable and accounts payable?
• What loans are outstanding, to whom are they payable, and on what terms?
• What is included in accrued expenses payable, and what is the current amount?
• Are all taxes current?
• What overhead rates are used in determining costs?
• What are the company’s departmental budgets?
• Does the company own equity in any other businesses?
• What liabilities exist in connection with warranties?
• Are there any existing claims or known liabilities?
• Are there any contract disputes or negotiations?
• Are there any outstanding stock options or the like?
• How much is the working capital?
• How much is the current ratio?
• How much is the quick ratio?
• How much is the quick ratio?
• Debt/Worth Ratio?

Today’s preparation determines tomorrow’s achievement and it is very true if we want to enter into the game. Let’s the clock give the right time everytime!

Robin C. Trehan is an industry consultant in the field of mergers and acquisitions. He can be reached at robin@tafunds.com

Under the terms of the Hilton Hotels takeover/buyout, Blackstone will pay Hilton shareholders $47.50 per share in cash. Including assumed debt, the total deal is valued at $26-billion.

Shares of Hilton Hotels rose 14 cents to $46.12 during afternoon trading. Blackstone Group shares rose 23 cents to $23.88.

Hilton Hotels [HLT-N]

Blackstone Group LP [BX-N]

• Blackstone raised $4.1 billion in an initial public offering last month, the largest on Wall Street in five years.
• Beverly Hills-based Hilton Hotels operates more than 2,800 hotels in 76 countries. The company also manages or franchises brands such as the Hilton, Hampton Inn, Hilton Garden Inn and the Waldorf Astoria Collection.The company generated $8.11-billion in revenue last year.
• Blackstone already owns more than 100,000 hotel rooms in the U.S. and Europe under the La Quinta Inns and LXR Luxury Resorts and Hotels brands.
• On completion of the deal, Blackstone will become one of the largest hotel groups in the world.

In Canada, Hilton has dozens of properties, including a flagship hotel on Richmond St. in Toronto, and a popular Hilton Suites Markham Conference Centre and Spa.

“We certainly plan to grow and enhance the business, so things will stay more or less the same in Canada,” said John Ford, a spokesperson for Blackstone in New York.

Amid the current instabilities, I would still encourage one word: buy

The exchanges have publicly trod increasingly separate paths this year, signing up high-powered U.S. allies and getting set to compete head-on when an agreement giving the MX sole possession of Canada’s derivatives market lapses in early 2009.

In private, there have been high-level talks in recent months, with top officials at the two companies going so far as to discuss who would run a combined company and who would be chairman.

Sources said MX chief executive officer Luc Bertrand recently broached the idea and TSX CEO Richard Nesbitt is not unwilling to consider a combination, but there appears to be resistance at the board level for reasons that are unclear.

The shareholder group that met by phone yesterday believes a combination of Canada’s two exchange companies is something that should happen, or each company will ultimately become a target on its own, Mr. Caldwell said yesterday.

“I’m of the opinion that Toronto and Montreal have to think in those terms, because if they don’t, they’ll be taken out individually,” he predicted.

“I don’t know if they’ve got to lock their key people in a room and say ‘Don’t come out until you’ve got a deal done.’… If it doesn’t happen, it will be a real mess.”

The rationale for a combination is that investors will be able to trade Canadian stocks and derivatives at the same exchange, leading to increased volumes and cost savings. If TSX and MX don’t get together, there’s concern among some investors that the derivatives market isn’t big enough for two and the fighting will leave both companies weakened and vulnerable.

Mr. Nesbitt and Mr. Bertrand declined to comment on any discussions, as did spokesmen from each of the companies.

Sources said the latest talks, which took place in summer, included at least one face-to-face meeting that included Mr. Nesbitt, Mr. Bertrand and senior representatives of each company’s board.

But nothing was sealed, and sources say Mr. Bertrand has since expressed frustration about his inability to get the TSX onside.

By the end of July, with no deal imminent, the TSX launched a share buyback that could consume almost all of the $370-million in cash that the company had stockpiled for a potential acquisition. However, Mr. Nesbitt said at the time he wasn’t giving up on making purchases and that if any potential deal arose, the TSX could borrow or use shares to pay.

The MX has a market value of about $933-million after a slump in recent months amid slower-than-expected growth. TSX is three times the size, but on price-to-earnings basis, its shares are not as highly valued, making the economics of a deal now difficult to swallow for the TSX.

Sources familiar with the TSX board’s thinking say the company may play a waiting game, betting that the TSX and its partner, U.S. options powerhouse International Securities Exchange Holdings Inc., can steal significant share from Montreal in derivatives in 2009. That would likely lead to a big drop in Montreal’s share price. “Without that business, it’s worth a fraction of the price,” said one source familiar with the situation.

Financial, timing and personality issues are not the only concerns. Both companies have restrictions that prevent takeovers without the approval of financial regulators in their home provinces, but the real decision is widely believed to rest with the provincial governments.

That means any deal must be friendly, and must maintain significant control in Montreal. The TSX has made overtures on that front, placing the executive in charge of its listings business in Montreal and holding meetings there.

Some of the overtures haven’t been well received, however. When last year Mr. Nesbitt pledged that Montreal would be a “centre of excellence in derivatives” after any combination, Mr. Bertrand responded acidly: “We’ve been here for a long time. I don’t need someone from somewhere else to tell me I could remain a centre of excellence.”

Mr. Caldwell took pains to insist that the shareholder group doesn’t want to add to any antagonism. He said no one is looking to strong-arm the exchanges into anything. Instead, he said he hopes to have constructive discussions with some exchange directors next month.

“They know that people want to see this happen,” he said, stressing both companies have a duty to put “principles ahead of personalities.”

–Globe and Mail, Aug 31/07

Waterloo-based RIM’s shares rose $2.10, or 2.42 percent, to $88.90 in Toronto. Meanwhile in the U.S., the stock climbed $2.18 (USD), or 2.66 percent, to $84. Microsoft shares also seemed to be advantageous to the rumours, who rose 24 cents, or 0.8 percent, to $28.83.

The takeover chatter also made its way into the currency market, helping send the Canadian dollar up by a third of a cent. The Canadian dollar traded at 94.65 cents from Tuesday’s close of 94.30.

My bet: just a rumour. A very good one though. Currency trading is not at its best right now, so investors are extra quick to react to any speculations (not that they usually aren’t anyway). Logically, the rumour sounds a bit too -umm… illogical? For those of you who have been living on the moon: Microsoft already has a handheld product.

Then again, the rumour can’t be totally invalidated either. And if true, partly-living in Waterloo, I can say the takeover would not please the area residents, Blackberry users, or ambitious Canadian entrepreneurs. There are more than 20 RIM buildings in Waterloo, employing many in the software and hardware industry – including many neighbouring university students from the University of Waterloo and Wilfrid Laurier University.

RIM holds the image of a distinguished and innovative brand, which is partly the reason for its Blackberry users’ loyalty. The buildings in Waterloo provide ambitious young university students with a entrepreneurial passion while passing the buildings everyday. Perhaps that’s the reason RIM CEO, Mike Lazaridis, chose RIM to be based in Waterloo – not California. Research in Motion spells out a Canadian success story. It would be a shame if this really happened. Sorry about the emotion, but once again, my bet: just a rumour.

The S&P/TSX dropped 200.06, or 1.5 percent, to 12,848.70, with a record numbers of trades and volume in Toronto. The benchmark has dropped 12 percent from a record it reached last month on rising commodity prices and record takeovers metals companies.

Canada is just one of a large number of stock markets around the world suffering heavy selloff. Markets all over the world, in Europe and Asia, are facing similar problems. The fear has spread beyond the borders of the United States and its subprime mortgage market. The international fear continues to grow with concern that a global credit crunch will hurt profits and growth. People are starting to be more and more afraid of a possible global slowdown.

Many Canadian firms have already announced difficulties to this massive selloff. Toronto’s Coventree Capital, announced on August 13 and 14, 2007, that it was experiencing market disruption and as a result was unable to meet its repayment obligations until its liquidity providers fund such repayments. Today Vancouver’s Redcorp Ventures Ltd. said that it is awaiting more than $100 million of its unspent cash, frozen in distressed paper issued by Toronto’s Coventree Capital. Redcorp’s share price fell nine cents to 28 cents, and Coventree’s dropped another 20 cents to $3.70 today.

Before you run off and kill whoever made your investments, remember this ‘Goodbye’ isn’t forever. Finance Minister Jim Flaherty, Governor Dodge and the Bank of Canada are all monitoring the global situation, and ready to provide all means to help. The Bank of Canada injected another $370-million in temporary credit into the financial system in its latest bid to help loosen the credit squeeze.

“It’s a shock, but a necessary one for expansion to continue. Financial shocks can create tremendous opportunity, but if you buy at the wrong time you can have your head handed to you.” –Peter Gibson, vice chairman and head of portfolio strategy at Desjardins Securities in Toronto

The situation right now is simple: market correction – getting stocks out of weak, and into stronger hands. Look at your hand now. DO IT! Tell me if you see strength of weakness. If it’s weakness… no comment. If it’s strength, you should also see all the reasons you have to BUY. Look for for both smart Canadian AND international buys.

The following is a list of some of New York’s bellwether stocks. (Courtesy of Capital IQ) Look what’s happened:

… I think you get the picture.

But as of yet there still seems to be plenty of cash moving around; and anyone with a decent chance of paying it off, should receive a loan at a reasonably a low rate. The central banks around the world have also provided this assurance by injecting cash into their systems during the tough times. So why are the markets still plummeting? Simply put, market stupidity.

Investors are panic selling. Why are they panicking? Because they are unsure; unsure of how many hedge funds will fail because of this, how many banks will take massive writedowns, how many consumers will lose their homes. And another side-effect, or further creation of panicking, is only more panicking. I panic, you panic, he panics, she panics. But what we all need to do is… relax.

Think logically, don’t follow the herd. When stock markets tank like they have been the last couple of weeks, it means there are more sellers than buyers. Yet for every panicking, desperate seller, there is always a happy, smiling investor on the other end. Are they smiling because they are stupid, looking to commit suicide, or don’t know about the credit crunch? I doubt it. They are probably looking for quality stocks at a bargain price.

The point is, you have to do your analysis. I’m not saying to go buying like there’s no tomorrow; but take the emotion out of trading and have a plan (write it down if it helps). Have a predetermined buy target, sell target and stop loss target. Panic selling and impulse buying are some of the worst enemies of traders. Investors always go too far. Throughout this crisis, companies will probably sell at great deals. Look to see what best suits yourself, buy, then wait for herd to come running back, sell, then count your money…

The coffee and doughnut chain (thus it’s comparison with Starbucks) said Friday that second-quarter profit fell 12%, despite higher revenue, because of a higher tax rate. Owned by U.S. fast food chain Wendy’s International, Tim Hortons said it earned $67.2-million ($63.4-million USD), or 36 cents a share; which is down from a profit of $76.3-million, or 39 cents, in the year-before period. The company is looking to push its stores south of the border, where it faces stiff competition and lack of brand recognition.

Speaking of south of the border (that’s you – Americans), I now come to the suffering Starbucks. Unlike in Canada, Starbucks actually sells in America – right? Apparently their stocks don’t tell the same story. There are several reasons the stock is trading near a 52-week low. First of all, the company is being over-optimistic. The chain is looking to expand itself to 40,000 stores. Apparently, when a company says that it plans on growing as big, or even bigger than a company like McDonald’s, investors think it’s just a fairytale – yes, even for a company like Starbucks. The company has also come short in sales for the quarter, versus Wall Street estimates – a big deal when you’re planning massive expansion. The company also had senior executives selling nearly half-a-million shares during the past 6 months, despite the stock’s slide – insider selloff?

All in all, you can now make some sense out of the title. We are also now seeing other fast food chains such as McDonald’s, Dunkin’ Donuts, and Burger King, heating up their menu with fancy coffee lines. These introductions have, and will continue to undoubtedly slash some business from the coffee and doughnut franchises. Maybe a plain cup of coffee isn’t like the blue jeans after all – it needs some innovation to survive.

Lululemon, already an established brand in Canada, only has 17 stores south of the border. Along with those stores, and the 38 located here in Canada, Lululemon tripled its sales in two years. Right now, its growth strategy leans heavily on expansion to the U.S.

Chip Wilson, the company’s founder, started a business selling surf, skate and snowboard equipment in 1980, remaining Westbeach Snowboard Ltd.’s chief executive officer until 1995. He turned to yoga after taking a class in Vancouver on the stretching and breathing exercise based on Hindu philosophy. Wilson founded the company in 1998, and very quickly began its rapid expansion.

Lululemon offers a unique and differentiated brand – one that spells out success. Whether Lululemon lives up to expectations, we are yet to see. With society’s healthy living concerns today, and Lululemon’s alignment with that trend, I bet my money on its success.

——————————–

Brief Company Overview:

Lululemon Athletica Inc.; Close: $29.72 (Cdn.), up 73¢

Niche:Â Trendy yoga gear for the yummy mummy set.

History:Â The first store opened in Vancouver’s Kitsilano district in 2000. The concept was to create a community hub where people could learn and discuss healthy living, from yoga and diet to running and cycling.

Stores:Â 38 in Canada, 17 in the United States, 2 in Australia and 3 joint ventures in Japan

Stock symbol:Â LLL (TSX), LULU (Nasdaq)

Offering price:Â 18 (U.S.), up from an initial target range of $10-$12

Intraday high:Â $28.64

Closing price:Â $28, up $10 on the day

Strategy:Â The company wants to add 25 stores in North America this year, 35 in 2008.

Details:Â Lululemon had planned to raise about $200-million in the offering, with new investors having a 26-per-cent stake. The company had mulled reducing the size of its IPO but this week decided to keep the offering at 18.2 million shares.

2006 financials:Â The company reported annual revenue of $149-million (U.S.) for the fiscal year ended Jan. 31, up from $84.1-million (U.S.) in revenue the previous year.

2007 Q1 financials:Â The company reported first-quarter revenue of $44.8-million (U.S.) on April 30, compared with $28.2-million (U.S.) for the same period last year.