rb

I would say it's bad. That's because there's only one scenario in which that's good. That is that the fed raises rates to counteract an overheating economy. In that overheating economy corporate earnings surprise on the upside to overcome the increased hurdle rate. I don't think the odd of this are great. Then there is a plethora of other scenarios, all of them bad. So while I can't predict the future I'm going with higher rates not good.

CN Rail, TD

Here's whats bothering me about the slide that EliG posted: Over the period of the chart: May 1963-Dec 2017 10 year treasury has been below 4% in the following periods: May 1963-Jun 1963 Sep 2002-Jul 2003 Jun 2005-Jul 2005 Jan 2008-Present Basically the long period of time is meaningless. All the data in there is recent history which we're all familiar with. Including one month from 1963 is statistically meaningless. Also May 1963 feels like a weird cutoff point for a dataset.

Next time get a Xeon and save yourself some money.

The bond also has lower margin requirement.

Well first of all the money supply didn't grow as fast as you think. At the end of 2007 M2 money supply was $7.5T at the end of 2017 it was $13.8T. An 84% increase. Looking at the previous period, at the end of 1997 M2 was $4T. So from 97-07 it went up 88%. pretty comparable. What did go up was the monetary base. At the end of 07 it was $848B at the end of 17 it was $3,748B a 342% increase. In the previous 10 year period it went up by only 66%. More on this later on. Now you have to understand inflation. Because it doesn't just happen. There's some mechanisms that cause it to happen. There are 2 kinds of inflation. Demand inflation and supply inflation. Supply inflation happens when for some reason you get a shock the lowers your aggregate supply causing prices to rise. Most common one have to do with commodities. Think 1970 oil shock and stagflation. Then there's demand inflation. This is the classic case where too much money chases not enough goods. To have this you need to have strong demand and a supply constrained economy. Basically people are a bunch of spendy buggers. They have money in their hands and want to get stuff. However the economy is supply constrained. It already produces as much stuff as it can. So then prices go up to bring everything into balance. This is the instance where printing money leads to inflation. Because if you give people more money prices will just go up more because the economy cannot produce the goods. But as you can see it's not an automated thing - money supply up then inflation up. You need to be supply constrained otherwise the economy will expand and produce the goods people want and no inflation. Now, how do you make money. The fed creates monetary base and pushes that into the banking system. Then the banks lend that money out to people because lending is a profitable business. People take those loans because they're a bunch of spendy buggers and want stuff. There's a multiplier effect here. A $1 increase in the monetary base will increase money supply by 1/R, where R is the reserve ratio of the banks. So if banks keep 10% reserves for loans. A $1 increase in the monetary base will lead to a $10 increase in the money supply. This is where the term fractional reserve comes from. Now let's get to 2008. You get a massive demand shock and the economy crashed. You have tons of excess capacity so you're nowhere near supply constrained. But that's not so important. What's important is how that demand shock came to be. Basically one day people woke up and realized that they have way more debt than they're comfortable with and they want to pay it down (all of them, all at the same time). This creates the demand shock because they're not spending the money they use to pay down debt. So people stopped being spendy buggers. The Fed pushes some monetary base to the banks the banks then go to the people and say "Hey man you want a loan" and the people say "No thanks, I'm trying to pay down debt". So then the banks turn around and give that money right back to the Fed in the form of reserve deposits and you get this: https://fred.stlouisfed.org/series/WRESBAL Basically, long story short, you don't get that too much money chasing not enough goods that's required to create inflation.

Well, off the top of my head, Canada still has a lower corporate tax than the US. Mexico and Canada have free trade agreements with the EU. Both Mexico and Canada have universal health care so the employer doesn't have to pay for the employee's health care. On top of all that health care is really expensive in the US. However, the fact is that taxes don't actually figure that much into where companies locate operations. At 15% Canada's corporate tax rate has been pretty small but manufacturing hasn't done very well here. On the other hand Mexico and Germany have a corporate tax rate of 30% and manufacturing has done very well there. On to of all that while we have these idyllic pictures of big burly men at work in the factory, manufacturing actually doesn't matter all that much today. Manufacturing employment in the US is about 12.5 million. If they manage to increase that by half a million that would be huge. However the US labour force is about 160 million and half a million jobs is what the US economy would crank in a couple of months on its own without any help. Manufacturing just isn't where it's at for US jobs anymore.

Well first of all if you had all the money in the world you would be able to buy all the real estate in the US. The global money supply I think is about 80 trillion and the real estate in the US is worth maybe around 50 trillion. But that doesn't matter that much. I think you are confusing money with wealth. Think of wealth as what you got. Think of money as an artifact created to facilitate transactions. Since only a small amount of the wealth stock transacts at any time you don't need that much money. To stick with real estate think of a city. That city has a lot of houses that combined are worth a lot. But only maybe 3-5% of that housing stock transacts in a year. You only need enough money to facilitate those transactions. I hope this makes sense.

Sure. But the problem with that statement is that GE doesn't need a turnaround.

I agree. Plus dividend increases would make more sense since the cut is not supposed to be a one time gain but ongoing. However they'll still go for buybacks. Lots of buybacks.

No political agenda here. I'm the chump who got left in the dust in 2017 with my large cash holdings. So trying to reason and learn from my mistake that's all. I would say that not all companies deserve to be 21% higher because the ones with no moat don't deserve to trade higher. To add a few points. A lot of companies did not pay the statutory 35% so the tax cut will be lower for them. I think some will even pay higher taxes. Also there's a lot of talk of buybacks. If the stock prices are overvalued then buybacks will be value destructive.

I posted about this in the GE thread. In my view it's unlikely for Berkshire to chomp GE or large parts of it. GE is a bureaucratic mess. I don't think Buffett would like to bring that into his house. They may pick up smaller cyclical pieces that not many people want like transportation or water. One exception would be if they do the deal with 3G and then the 3G go in slash and burn and get the place ship shape. But 3Gs experience so far has been in consumer businesses I don't know if they would be as effective in an industrial company like GE. Edit: GE is a giant elephant with great big husks. If they actually do pull it off it would represent some massive bragging rights for Berkshire. I'm sure Buffett is tempted after reading their ARs for like 70 years and dreaming about owning it. Must be like a kid that had a Lamborghini poster on his wall as a teenager and now he can actually get the Lamborghini.

Which is essentially paying $18,800/year for 5 years (or about 100k) for your Canadian citizenship. For US healthcare, it's crazy expensive if you're not on an employer-sponsored plan. It's absolutely ridiculous. If I was retired or whatnot, and not wealthy, I would not be living here. I always ask, who is getting rich from all this? Is it the doctors? I don't think so. The government? Doubtful. Insurance/Pharma? Now we're getting warm... Or you could apply to come up here as a regular person under the regular immigration program. That'll only cost you a few grand for processing background checks, etc. The difference is that you wait in line for a couple of years. But once you're here you still get the healthcare. We're nice like that. :) Btw, why wouldn't you live in the US if you were retired? As fat as I know once you hit 65 you go on Medicare and you're on easy street healthcare wise.

That loophole cannot be closed. We are a free country and freedom of movement is guaranteed by our constitution. Specifically section 6 of the Charter of Rights and Freedoms. We either scrap the program completely or people have the right to live wherever they please.

If you have a less than $500 in liquid assets then basically anything is a potential financial catastrophe.

DTEJD1997 maybe I don't get it. As far as I can tell from your post, your associate did use the water he was that led to the bill. So he wasn't charged in error. He was actually liable for the whole amount. In the case of automated payments if you have a large amount come through the payment will bounce and you get an NSF charge from the bank. Not ideal but not the end of the world. Automated payments are great for someone like me. I'm horrible with remembering all the bills I have and paying them on time. The cost for me in late payments, penalties, lower credit score, etc would be much greater than the odd NSF charge. A good idea in life is to not keep a lot of money in your chequing account. This helps avoid being debited for excessively large bills, also it's good security overall preventing a lot of types of thefts.

I think if you have the partnership letters you can work it out. Also a lot of the returns came from risk arbitrage, or workouts as he called them.

https://www.reuters.com/article/us-eastman-kodak-stocks/eastman-kodak-unveils-cryptocurrency-stock-doubles-idUSKBN1EY2AD Berkshire should create GECKOCoin, become the first trillion dollar company.

I'm pretty sure that the Moody's manual was that age's version of a screener. :)

That's part of it yes. But also TD is more focused and has better risk management. Until a couple of years ago they had a great CEO which didn't hurt either. Generally you'll see all around the world that retail banks with good risk management tend to outperform.

TD in Canada, Wells and US Bank in the US, Lloyds in the UK, Santander in Europe/Lat Am. One of the Nordic banks is also really good but I can't remember which one at the moment.

I think it depends on what the goals are. SD's view is not bad. But the goal there is to have balance. Work, save, invest, not too much risk even if it degrades performance, use expenditures to maximize life experiences and comfort. It's really not a bad way to go about it. However if you want to try to maximize long term wealth your way is better. There can be other goals besides wealth maximization. Such as leaving a chunk to your children so they don't have to start from zero like you did. This may involve some financial engineering. It may involve reduced consumption and forgoing some life comforts - like having a bigger house - that you may afford. Or a combination of both. A lot of people on the board are very focused on beating the index and that's a worthy and legitimate goal for investment managers. But in real life that doesn't matter all that much. In real life in a successful investment strategy is one that meets the goals it was setup to achieve.

I don’t think it necessary to have 1B to think different. It’s not the same to invest 1,000 than 100,000 when it’s your own hard earned money. I get the point! Maybe I'm misinterpreting what you are trying to say. If I do I apologize. I think that the original premise is that size restricts the investment universe. My thoughts and reply was that while a lot of people on this board are very successful, in most cases their AUM still doesn't rise to the level where it would actually restrict the investment universe. I think that your premise is regarding risk aversion related to investments. From that point of view views may differ but I can give you mine. I am always more risk averse with my clients' money than I am with my own savings. If I take a flyer with my money and loose... oh well. But I loathe having to sit down with clients and explain that I lost some of their hard earned savings because I had a good feeling about something and I took a flyer. This is despite the fact that I'm authorized to do just that.

I think your AUM starts to become a problem once you cross the billion dollar mark

I'm sorry, I don't mean to be insulting. But if you think those prices are inexpensive you're delusional. I can walk into my liqueur store and buy high quality German beer for $2.10 (tall boys 500 ml). For $30 ($6 a glass) I can buy a good Burgundy. For $18-$24 I can buy a very good bottle of Cotes du Rhone. The quality of these wines are very likely much, much higher than what you get in your grocery store glass. These are regular price btw, no sales. I live in Canada where alcohol is expensive due to taxes. I'm sure the prices are lower in the US for these items. I should mention that I am someone who has plenty of money. I consider the prices you've listed as very high and would not pay. The idea that an average person would consider that very inexpensive is incorrect to say the least. Liquor store is the same as a bar in Canada? Grocery store is the same as a bar in the US?