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bargainman

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Everything posted by bargainman

  1. a few questions. 1. why only an IRA? why not do this in a taxable account? Is it just because of the taxable events associated with TIPS? 2. I don't quite understand how low risk this is.. How far in the money would you go? The further you go, the larger the spreads, so there's slippage, plus the higher the likelihood that you get assigned the shares.. which comes to my next point.. 3. Say there's another crash and your stocks drop 50%. You're on the hook for 50K worth of stocks right? So what you're saying is that in that case you'd either use margin or sell half your TIPS and buy the stock? Is that right? 4. What about your comment regarding beating the S&P? I'm trying to wrap my head around that. How would this beat the S&P? Maybe my brain just isn't working right, but can you walk me through it... Thanks.
  2. Man, I wouldn't be making those kind of assertions on here. :-) I heard Canadians hate being referred to as the 51st State. Only when the speaker is somebody who lives in the 11th province. I've always found this very amusing.. The funny thing is that when an American says "Canada is like the 51st State" they are basically giving Canadians the biggest compliment they could possibly give anyone. They mean it like "hey you're one of us! you're our brothers and sisters!". But saying "Canada's the 51st state" is about the one thing Canadian's hate to hear! I've seen so many Americans say this to Canadians who are then angered by what was meant to be a compliment :-) It's really pretty amusing to see this over and over again :-)
  3. Amazing considering his monopolistic deeds a decade and a half ago. Nobel invented smokeless gunpowder enabling the death of many. Here's a write up I found: http://www3.telus.net/st_simons/cr9802.htm "When Alfred’s older brother Ludwig died, one newspaper accidentally printed Alfred’s obituary instead. The obituary described Alfred as a man who became rich by enabling people to kill each other in unprecedented numbers. Deeply shaken by this assessment, Alfred Nobel resolved, from then on, to use his fortune in awarding accomplishments that benefited humanity. In his will, Alfred designated five annual awards to benefit leaders in physics, chemistry,medicine, literature, and peace. The Nobel Peace award was for ‘the person who shall have done the most or the best work to promote fraternity between nations, for the abolition of standing armies and for the holding and promotion of peace congresses...’"
  4. Just FYI, you don't actually have to pay for the quotes. You can choose not to and just get your quotes elsewhere. There will be a $10 minimum commission per month still. IB is a mixed bag. Customer service is so so. The minimum monthly commission is a bit annoying, as is the charge for quotes, and the charge for canceling an order. But you can't beat their costs. I mean free assignment and exercise are very sweet.
  5. This is an interesting point. That said he wasn't always loved, especially by the firms where he took an active role. There were entire towns that loathed him at times in his life, something he found very hard to deal with. I think of Bill Gates and where he falls in this equation. And of Mr Nobel. Remember, 10-15 years ago everyone in software loathed Gates and everything Microsoft stood for. He destroyed software companies left and right using monopolistic power to crush anyone in his way. Now he's taken that cash, which some would argue was gotten through 'evil' means, and turned it around, trying to do good things for the world. History will likely remember him more for his humanitarian doings, even though they rest on many questionable acts. This is the story of the Nobel prize as well.
  6. What makes you think Kindle will be obsolete? 2-5 years from now they'll incorporate newer technology. Today's Kindle will be obsolete, but tomorrow's won't be. I agree though that the moat is tough to determine. This may sound crazy, but I think that amazon's low margins may actually be an advantage to the company. I've worked at a company that has 40%+ margins and it's really tough for them to grow. The expectations from shareholders are so high that they keep their margins up. But the problem is that it's tough to expand into another business since there are no other businesses with such high margins. Amazon's margins are so low that they can keep growing while making minimal profits without raising the ire of shareholders... I know it sounds crazy but it's a thought after seeing the opposite side of the equation... :-)
  7. I was thinking about this fund but the expense ratio of 1.4% for a bond fund kind of turned me off. Isn't that high for a bond fund?
  8. You see this is where I'm confused. In the same article I linked to it says: "That was in 2007. Since then there’s every indication things have gotten worse. In fact, for people taking out mortgages today it’s estimated the average amount of equity they have is just 6%. The leaves 94% of the house value as debt. And while reliable statistics on this are hard to find, my banker buddies tell me that virtually every new loan they write these days is for 5% down, with a 35-year mortgage. After all, if you’re buying in Vancouver. Calgary or Toronto, that’s the only way banks can swing the deal." I know for sure one thing.. Vancouver housing is as expensive or more so than that in the SF Bay area. Thing is, in the bay area I know many techies who make 100K+. When I lived in Vancouver I knew no one who made that much... On top of that mortgage interesting in Canada is not tax deductible. The other thing that confuses me is this: You say "There were no subsidies by governments like mortgage interest deduction or "teaser" rates by the lender." But in Canada every loan is an ARM or close to an ARM. There are no 30 year fixed rate mortgages. They are either 5 year, or 10 year max fixed rate, after which there is another reset. Or at least that's what my friend who's held several positions as personal and commercial loan manager for bank branches in BC. So to recap: CMHC is backing loans with ~6% equity at no extra risk premium. Canadian loans are pretty much ARMs Vancouver's housing market is supported by thin ice not income. I was also told that CMHC's insurance premiums are tiny so the leverage is greater than what AIG had at the peak of the bubble (But I haven't confirmed that) "They insure something like $425 billion in assets, and have $8 billion in equity. So, they're more leveraged than the investment banks, Fannie and Freddie, and all the others were at the height of the bubble." This can't be a good thing for Canadian banks.. What if it does blow up? Vancouver real estate did blow up in the past. One source had the following to say: 1979-1981 - prices increase by 119% 1985, they're back to 1979 levels - ie loss of ~50-60% 1986-1990 - prices increase by 69% 1991 - decline 16% in one year. So if the CMHC doesn't have enough equity, what will the government do? Raise taxes to pay for the bad loans? Or monetize them by printing money? Will the Canadian public be disgusted as the US public was? But then what will happen to housing demand, will there be a downward spiral like there was in the US? Or because the government will still support the banks, will lending standards not tighten dramatically allowing for a slow deflation instead of a sudden drop? Sorry for rambling.. I just want to get a better feel for the canadian banking industry.. Thanks!
  9. In a recent post someone (I think it was Dazel) stated that the Canadian banking system was one of the strongest in the world. Is this really the case? I was a bit surprised when I read that. I've been doing some research into Canadian real estate (Vancouver for example), and my feeling is that it's very much hanging by a thread, propped up by the Olympics, a constant, but not guaranteed, influx of immigrants, and the CMHC funding sketchy loans. I was also looking at the Canadian banking system a bit and found articles like this: http://www.greaterfool.ca/2009/10/16/ottawas-bubble/ and this: http://www.demographia.com/dhi-ix2005q3.pdf Which talk about CMHC, and how it's basically acting like the AIG of Canada selling insurance against first time buyers and making the risk premiums for those buyers incredibly small. It sounds like a disaster waiting to happen. On the other hand there is this sentence: "The answer’s simple: the banks don’t take any risk. It’s all on the taxpayers, thanks to CMHC. And these days, Canada Mortgage and Housing Corporation is turning into a financial behemoth, as Ottawa uses it to fuel a housing boom that’s clearly turned into an asset bubble. Last year alone, CHMC did 919,780 deals worth a staggering $148 billion, or about twice what it had planned. To accommodate that, the feds have raised its allowable insured mortgage limit to $600 billion, or about double what it was two years ago. Here’s how CMHC and the federal government are inflating the real estate bubble: CMHC provides insurance to the lender (the bank) for the entire amount of any mortgage it makes when the purchaser has less than 20% to put down. These days, that’s virtually every new deal. If the homeowner defaults, the bank gets 100% of its money. The taxpayer’s on the hook for the loss. This insurance means the banks face no risk lending money to people with little or no credit rating and virtually no equity, so they charge no rate premium." etc. So I'm wondering.. this says the bank takes no risk.. but what happens to the price of real estate when prices collapse? Don't the banks end up having to mark down assets when this happens? Is there a risk for the banks that could trigger something like what happened in the US if the Canadian real estate bubble deflates? Any thoughts? Thanks Bargainman
  10. What are the details behind ARM resets? My understanding was that they would reset to something close to the market rate at the time. Since the market rate is about as low as it was 5 years ago, won't they just reset at the same rate, thereby not increasing payments? The loans I'd be more concerned about were the option ARM(?) ones where people had the option to only pay the interest payment for 5 years and now must pay down principal. Or are those the ones that are really resetting? Thanks
  11. Ok.. let's back up a wee bit here... It was humor. The rest of what you said is true, I agree with all of that. I guess you didn't catch my sarcasm. The funny thing (to me anyway) is the line about the big bad bank bully who wants to take advantage of me by offering me super low rates with no money down. Doh! :-) Well hopefully the articles I linked were at least partially informative. I didn't know before reading them what the history of the non-recourse laws was. Well 'Big bank bully' might have been a mischaracterization back then, but certainly not now that banks aren't letting people refinance or modify loans, in that respect they are being 'bullies' to some degree. Back then though you could argue in the case of Wamu and Countrywide, who specifically trained their agents to push ARMs that were likely to cause defaults, and to conceal the changing rates etc, that in that case they were bullies? Or maybe not.. They knew they were pushing ponzi lending and they were training agents to do just that (At least from the articles I read). Maybe they just got caught up in all the new Wallstreet products and securitization? Regardless, sorry if I missed the sarcasm, certainly didn't mean to offend :-)
  12. Here are a few alternatives to also consider. Closed Ended Funds: http://www.smartmoney.com/investing/stocks/Pipeline-to-Profits-17281/ FEN FMO KYN TYG
  13. Ok.. let's back up a wee bit here... What caused this in the first place? Banks, securitization, CDOs, CDS, mortgage brokers with misaligned incentives, and the rating agencies. People like Wamu CEO, CountryWide CEO and others who basically decided that Ponzi lending was a viable business plan. Ie it was better for them to lend loans to people with lousy credit and have them default years later, since the bank could then repossess the house and then sell it at a profit. Also let's go way back up and examine the reason loans in some states are non recourse to begin with, dating back to 1860. Look here: http://www.thebigmoney.com/articles/money-trail/2009/10/08/go-ahead-walk-away?page=0,1 In particular, these three paragraphs: "The history of the recent mortgage boom is one of bankers racing to outdo one another in lending more money on the basis of ever-flimsier collateral. This is not a new phenomenon. It is a speculative mania, as has appeared in real estate time and again, and one reason for the restrictions on banks collecting the full face value of busted mortgages is to make it less common. These restrictions on banks are not some newfangled innovation. California's one-action rule, for instance, dates back to 1860, a period during which ranchers bid up the price of land, thanks to easy backing from lenders who encouraged speculation in the hope of quick returns. Even the term walkaway is by no means new—it appears in this nearly 50-year-old (and lecture-free) story from Time, which cautions bankers that if they keep making careless mortgages they'll have to deal with debtors who abandon them. That old news story has things exactly right. It's banks, not home buyers, that are in the better position to judge the real estate market and how much their collateral is really worth. The bank approves the assessment and decides how much equity a home buyer will be required to put up. All the mechanics of mortgages are designed to let a lender avoid the situation in which it is owed more on a house than it is worth. The limits on banks' ability to collect on badly underwritten mortgages places the responsibility for judging the sanity of real estate loans in the hands of lenders. Clearly in the last few years all these mechanisms failed utterly. They failed, not because of morally bankrupt borrowers who go back on their “promises,” but because bankers decided to count on a perpetually rising real estate market to absolve them of the necessity of responsible lending. Far from misusing the lending laws, borrowers who use the rights the law gives them to walk away from mortgages merely place the risks of insane lending where the law intends them to lie. What they do is not dishonest; on the contrary, a key reason we give borrowers the ability to do that is to keep bankers honest and responsible." Here's the article from Time that they reference: http://www.time.com/time/magazine/article/0,9171,827500,00.html Now I'm not saying there weren't irresponsible buyers. Of course there were, and there were also immoral speculators flipping property, and taking advantage of the irresponsible banks. But by and large people were trying to buy a house "before it got too far out of range". If banks and wall street firms with teams of Ph.Ds from MIT and Chief risk officers couldn't determine that they shouldn't be lending on the basis of ever higher real estate prices, with ever lower downpayments, because the ponzi scheme was going to pop, what chance did the normal Jane and Joe off the street have? There is no way people who are not real estate experts could cause a speculative mania without the banks. People just don't have hundreds of thousands of dollars laying around to bid up the prices of housing. Banks provided the easy irresponsible leveraged lending via ponzi lending. Without that there would have been no bubble at all. Now banks are paying for it, except that they are being bailed out by uncle sam, whereas ordinary people are not! To make things worse banks are refusing to modify loans even in pretty dire situations. For some reason they'd rather have people default on their homes, so that's what people are doing. That's really their only option since banks aren't modifying payments.
  14. I agree with pretty much everything you wrote Cardboard!
  15. They are bidding $.05 according to yahoo.. which is 1% on the strike price for a year.. Also count commissions on the sale of $5 and I'm not sure you have much left. Now the $10 puts sell for .25 which is 2.5%.. That looks a bit better to me.
  16. Ummm.. what does this mean? Will the FFH I hold in my US account be force sold leaving me with a big tax bill?
  17. Interesting link: http://www.valueinvestigator.com/datavalue/elf_.pdf What is the equivalent to a 13F? I didn't find a doc in the sedar site with the investment portfolio, (but I didn't look at all of them). Where is this disclosed?
  18. Um.. China's currency is pegged to the dollar so how is the devaluing dollar going to affect cheap stuff from China?
  19. You can opt out of their quotes charge (at least you can in the US). In that case they have a $10/ month minimum in general. That said their commissions are so cheap that it usually doesn't matter. If you want free quotes and are a less frequent trader you can also try thinkorswim.ca, although it looks like their commissions are higher in Canada than the US. $1.50 per contract with $7.50 minimum per trade (spreads - each leg represents a trade). IB also has free, yes free, assignment and exercise which rocks.
  20. Yes I was kidding. That's why I put a ;-). Goodness, it's ok to joke around once in a while, even on such a serious topic as value investing!
  21. T-Bone? Hmm isn't Warren Buffet's bridge handle T-Bone? Is that you Warren? ;-)
  22. Just saw a national geographic issue about gold. Apparently all the gold ever mined up is just enough to fill 2 olympic sized pools! 50 percent of that mined in the last 50 years it said. They also had a distribution graph which showed that the *vast* majority was used for jewelry. I can't seem to find that graph online. Does anyone have a source that shows Gold use? The other uses were ETFs, hoarding, electronics plus some others, but those were much less.
  23. I think this entire discussion is highly over blown. On the list of 'things that are wrong with corporate America and governance in general', splitting shares is pretty far down the list of things I'd be concerned with. (assuming I believed there was something wrong with doing so, which I'm not convinced that I do. If I remember correctly Buffet started selling B shares when BRK was pretty overvalued no? So he was essentially selling BRK shares at a very high price. I seem to remember that from Alice's book. I mean really it should be up to management to take advantage of the market as they see fit. Smart management should buy back shares when the price is cheap, and sell shares, raising equity when the price is high. I remember back during the height of the Internet boom I read something about Amazon raising cash via debt! At the height of the boom when their shares were floating above the clouds they went for debt instead of issuing shares! Amazing.
  24. To me, a small retail investor, after the share price gets too high it makes things more difficult for 2 reasons. First for BRK-B pre split at 2-4K a share it's tough to 'average in/average down' etc. Second for any stock over $50 it's tougher to trade options on. I like selling puts to acquire and selling calls to sell and lower my cost basis. But options are in 100 share contracts. So once the stock hits $50 you're up to 5K per shot so to speak. To me that makes it more difficult. So honestly I personally, as a retail investor, think it's a bit problematic to have a high share price. I would actually think that institutional investors would have an easier time with the high share price, since if you're throwing around several million $, there's little difference... Not sure if that's really the case or not...
  25. Is there an easy way to get this for any company? I was thinking I could potentially seek out the CIK and the name, but was wondering if there was a way to just go from ticker symbol to this holdings screen? Thanks.
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