FILE - This July 29, 2015, file photo shows Amazon's Echo speaker, which responds to voice commands, in New York. A prosecutor investigating the death of a man whose body was found in a hot tub wants to expand the probe to include a potential new kind of evidence: the suspect’s Amazon Echo smart speaker. Amazon has called the request “overbroad or otherwise inappropriate." (AP Photo/Mark Lennihan, File)The Associated Press
I now own a functioning Amazon Echo and I have heard the future.
The device is essentially a stand-alone speaker with an artificial personal assistant, Alexa (similar to Apple's Siri), controlling the sounds that come out of it based on user voice commands. The device itself if available in Canada but the smartphone app necessary to set it up is not 'officially' accessible (presumably because Alexa can't converse in Quebecois yet).
Alexa sits in our kitchen. While I'm cooking with busy or slimy hands, Alexa will answer questions on any subject, tell jokes, play business news and weather, set alarms when food is ready to come out of the oven, read out tomorrow's meeting schedule, lower the temperature in the house, convert fluid ounces to cups, play radio stations, music, Jeopardy!, blackjack, and read from my Kindle book.
Yes, smartphones can already do all of these things if your hands are free. Based on pure functionality, no one really needs Alexa at this early stage. That will change as more applications - Amazon calls them Skills - are designed to increase the utility of the device. Software developers have a clear open field for ideas and products for voice activated programs and will likely flock towards this new opportunity. Some of these apps will make huge money for investors in software companies.
The real reason for excitement where the Amazon Echo and HomePod, the newly announced similar offering from Apple Inc., are concerned is that they represent the friendliest, least-intimidating, enjoyable operating system in the history of technology. People (like me) are using it because it's fun to use – you will want to use Alexa for every task it can do rather than type on a laptop or mobile phone.
I think devices like Echo and HomePod will be in a majority of homes 10 years from now, setting up numerous investment opportunities. It will be a long time before Echo or HomePod significantly affects profitability for corporate behemoths like Amazon.com or Apple Inc., but successful peripheral plays in software and home devices that link to them should be profitable investors.
Still doubt voice-activating computing won't be ubiquitous? Watch this video of the soon-to-be-released Amazon Echo Show – Alexa with a touchscreen and camera.
-- Scott Barlow, The Globe and Mail's market strategist
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Stocks to ponder
Richelieu Hardware Ltd. This stock has been a solid long-term investment for shareholders. The company was last featured in the TSX Breakouts Report in May, 2016. Since then, in a little over a year, the share price has increased 24 per cent. There is seasonality in the business with the company entering its seasonally strongest period and set to report its second quarter fiscal 2017 results in a few weeks, writes Jennifer Dowty.
Uni-Select Inc. This company is in the penalty box after reporting weaker-than-expected quarterly financial results. As a result, the share price has declined sharply and the stock's valuation has become rather interesting. In order for the share price to recover on meaningful volume, investor sentiment needs to be restored, and for that to occur, the company has to deliver solid financial results. Positive earnings momentum (year-over-year growth) is expected to accelerate starting in the second half of this year and continue into 2018 owing to a recently announced acquisition. In recent weeks, four insiders have taken advantage of the price weakness, buying shares on the pullback, writes Jennifer Dowty.
The Rundown
Home Capital
Home Capital short seller says he isn't buying the Buffett rescue story
Short seller Marc Cohodes, Home Capital Group's chief foil, says he is not closing out his short position in the stock and is prepared to combat the new narrative that renowned investor Warren Buffett has saved the beleaguered lender. "They say Warren Buffett this, Warren Buffett that," Mr. Cohodes said Thursday as Home Capital shares leapt on the news that Berkshire Hathaway Inc. has agreed to invest up to $400-million in equity and provide a $2-billion loan to replace more expensive financing. "In the press release, they say it's subject to [Toronto Stock Exchange] approval based on the exchange's financial hardship provisions." Read more of David Milstead's story here.
Exclusive: Buffett on how he struck the Home Capital deal
Legendary value investor Warren Buffett's interest in rescuing Home Capital Group Inc. was piqued by an e-mail from 82-year-old Don Johnson, a Canadian banker who sends his thoughts to the investing guru now and then. "This one wasn't long, but it was to the point and that got my interest," Mr. Buffett, a fellow octogenarian at 86, told The Globe and Mail by telephone from his office in Omaha, Neb. Read the rest of the story here.
Why copycats can't follow Buffett's lead on Home Capital
There is one thing to keep in mind if you are considering investing in Home Capital Group Inc.: You are not Warren Buffett. Mr. Buffett, a legendary investor who attracts copycats with his every move, has agreed to provide financial backing to the beleaguered Canadian mortgage lender, in the form of a $400-million equity investment and a $2-billion line of credit. Investors love it. Home Capital shares jumped 27.2 per cent on Thursday, closing at $19 – for a gain of 225 per cent from the stock's low point in early May. Read the rest of David Berman's story here.
Wavering on Home Capital high-interest GICs? Buffett's got your back
If Warren Buffett likes Home Capital enough to invest in its shares, then there's less reason to hold back on the company's GICs. That 3.25 per cent, five-year guaranteed investment certificate that Home Capital's selling under its Oaken Financial brand? Get it while you can. With Mr. Buffett's Berkshire Hathaway helping to financially support Home Capital, the company may not need to offer premium rates like this for long, writes Rob Carrick.
Investment advisers regaining confidence in Home Capital savings products
As Warren Buffett swoops in to save the day for Home Capital Inc., a surge of renewed confidence has been restored throughout the investment community, writes Clare O'Hara. Earlier this year, Home Capital was seen as an attractive mortgage lender that was able to offer better-than-average interest rates for both high-interest savings accounts (HISAs) and guaranteed investment certificates (GICs). But after regulatory concerns surfaced within their mortgage business, brokers at other financial institutions grew wary and a flood of investment dollars was immediately pulled from the company's HISAs.
The new big winners and losers among Home Capital investors
When Warren Buffett makes a move, investors tend to follow. This was certainly true on Thursday, after Mr. Buffett's Berkshire Hathaway Inc. agreed to take a $400-million position in Home Capital Group Inc., supplying a big shot of confidence in the Canadian mortgage lender. Less than two months ago, Home Capital announced that it needed emergency funding to offset fleeing deposits. Its share price plunged 65 per cent on the news in late April, raising troubling questions about the health of Canada's housing market and other lenders. Some investors dumped their Home Capital shares during the swoon, others swooped in on an apparent bargain, while vocal short-sellers gloated over their conviction that market convulsions could only get worse. Now, with Mr. Buffett's arrival on the scene, Home Capital has a new swagger – and the market is anointing new winners and losers. Read David Berman's list of new winners and losers.
Also new this week:
A value manager's top dividend growth picks
Most people hate it when the stock market tumbles. Not Norman Levine. As a value investor, the managing director with Portfolio Management Corp. has been "expecting and hoping for a correction" so he can pick up stocks on the cheap. So far, only half of his wish has come true. Since closing at a record in mid-February, the S&P/TSX composite index has slumped by nearly 5 per cent, dragged down by commodity producers and banks. Read the rest of John Heinzl's Yield Hog column, in which Levine gives his top picks.
ETF fee cut in the dividend aisle
One by one, the higher-cost ETF categories are getting cheaper for investors. Bond funds, at one time over-priced by the standards of the exchange-traded fund business, have become cheaper to own in the past year or so. Now, fees for dividend ETFs are getting the chop, writes Rob Carrick.
Other stories
Q&A: Three stock picks from analyst Elias Foscolos from Industrial Alliance Securities
The week's most oversold and overbought stocks on the TSX
Thursday's Insider Report: Companies insiders are buying and selling
Wednesday's Insider Report: Companies insiders are buying and selling
Number Crunchers
Searching for riches in gold and silver stocks
Ten TSX stocks that combine earnings momentum, staying power
Five blue-chip Canadian stocks offering value and profitability
Ask Globe Investor
Question: I have a GIC that purchased five years ago which is coming near its date of maturity. I didn't purchase this GIC in a TFSA account but is it somehow possible to add it to a registered account before maturity?
Answer: If you have a self-directed TFSA you could move the GIC into it if you have contribution room but it won't do you much good. The tax people will view that as a deemed disposition and all interest earned up to the date of the transfer will be taxable. You would be better off taking the money at maturity, contribute it to a TFSA, and then buy a new GIC within the plan, if that is how you want to invest. Frankly, with interest rates so low, I would look at some more aggressive options for reinvesting.
--Gordon Pape is Editor and Publisher of the Internet Wealth Builder and Income Investor newsletters.
Do you have a question for Globe Investor? Send it our way via this form. Questions and answers will be edited for length.
What's up in the days ahead
In Saturday's Globe Investor, Ian McGugan reports on the latest research into what are realistic long-term market returns. Be warned: the projected returns are meager – but also hard to refute. Meanwhile, David Milstead will reveal some new insight into why investors should think twice before buying into the beaten-up shares of Asanko Gold.
More Globe Investor coverage
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Compiled by Gillian Livingston