Net Worth Update

As of March 1st, my net worth was $65 874 (down 3.8% from $68 441). If I exclude house-related assets and liabilities, my net worth is $41 149 (down 6.25% from $43 890).

It certainly felt that way. My investments keep melting as if was spring already, and with the large yearly expenses that I mentioned last month... Ouch! At the end of the month I added $2k to my RRSP account, and it simply looks as if it simply disappeared when you compare the current value with last month's.

So let's look at the detailed carnage.

Assets ($133 989, down 0.5% from $134 669)

• Bank Accounts $4 425 (up 11% from $3 990)
• Emergency Funds $3 394 (up 0.3% from $3 383)
• RRSP Accounts $28 993 (down 3.5% from $30 033)
• Non-Registered Investments $10 728 (down 3% from $11 058)
• Home $86 100 (stable)

Liabilities ($68 115, up 2.8% from $66 228)

• Credit Cards $4 642 (up 0.9% from $4 601)
• Mortgage $54 989 (down 0.2% from $55 110)
• Heat Pump Loan $6 386 (down 0.7% from $6 439)
• Line of Credit $2000 (up 100% from $0)

Although the cash in the bank accounts was higher, this was because of the planned expenses. A bit of that money is already gone, with more coming out next week. Liabilities have crept up this month, because the $2k I added to my RRSP account came from my line of credit. This is a very short-term move, which gave me the flexibility to contribute right before the limit for the fiscal year 2008. It also transformed a tax bill into a tax return. I plan on paying back this part of the line of credit with the next 3-4 months. Credit card debt was fairly stable but remained high. This was caused by some car repairs that were financed on the card.

For the next couple of months I will concentrate more on debt reduction than on investments. It now looks like the recession will be long and painful, so I will probably feel less stressed if my debt load is lower. And since we have some more renovations planned for this summer, less debt seems like a good idea.

Harvest Energy Cust Distributions 87%

Harvest Energy, that I own in my RRSP, announced their 2008 results, as well as a 87% reduction of the distributions to $0.05 per month.

So I was too optimistic yesterday when I purchased more units of the trust. I was estimating that the cut would be to $0.10 per month. Now, based on my purchase price of $5.83 yesterday, those units are yielding 10%. The units have falling quite a bit this morning, hitting a low of $4.50 (which yields 13%).

I figure that as long as the price of oil remains in the $35-45 a barrel, the trust units will trade in a $4-$5 range. The question is, how long will the barrel of oil stay that low? I still believe that over the long term, this is a good investment. It still hurts, though!

Well, I already knew that I'm not good at timing the market...

Added to Harvest Energy

Today, I added to my position in Harvest Energy Trust (Toronto: HTE.UN) within my RRSP by purchasing 400 units at $5.83 each. They are reporting tomorrow, and like everyone I expect the distributions to be cut. The question is: By how much?

Looking at how much of a beating the stock has had lately, to me it looks like the market is pricing it as if the trust was about to completely eliminate the distributions. I think that's highly unlikely. I'm expecting a cut from $0.30 to $0.10 per month -- which would leave the yield at 20% based on the current price. At that yield, I don't mind keeping the units for a long time. But if the price pops up, as I expect it will, then I may sell that additional stake for a quick profit. After all, there's a lot of sales going on.

One thing to remember about Harvest Energy is that, while a large part of their income is from pumping oil and gas out of the ground, it also owns a refinery. Have you noticed that the price of gasoline hasn't fallen as much as oil itself? Refiners are still making good margins, maybe even better margins than last year, because the price they pay for oil is down more than the price they receive for refined products. So for Harvest the refining part of the business is acting as a counterweight against the free-falling oil price.