Uccmal

The problem with this poll was that in order to see the results I had to vote. So, As a good Canadian, I submitted my vote for Gary Johnson. Therein lies at least one problem wth polls.

I will add: - Increased protectionism - shipping crisis - I had no idea a single container ship carries billions of dollars in goods until the Hanjin bankruptcy the other day.

You have a point with item B. The problem I see is that we have had sustained lower oil prices for nearly 2 years, and continuous central bank stimulus worldwide, and company profits have stagnated.

Sustained (> 3 months) 30-50% drop in S&P 500 and corresponding drops in most other markets.

In conjunction with my other thread on good companies to buy. I have been raising cash (or at least reducing my borrowing) because the S&P is at unjustifiable all time highs and earnings are stagnant. And this is with all time low interest rates, unprecedented stimulus, and low oil prices. Selling down position sizes in great performing stocks is painful. Some: 1) Deflation - possible, although it is a known quantitiy and maybe priced in. "The Amazon effect" 2) The US presidential election. I think just the fact it is over may cause a crash regardless of the outcome. Generating a crash, and a recession, and building things back up for the next cycle has been the modis operandi of first term presidents - Obama had his crisis given to him - Bush was given one by the tech crash. Clinton and Reagan each inherited a moribund econmy. 3) Negative interest rates - Title "What will Apple do with all that stranded cash?". Also a known quantity. 4) Ennui: Its just been awhile since a good old fashioned bear market. 5) Soveriegn debt. 6) Rising interest rates - further out in time (Imo). 7) An oil price spike, whatever the cause. According to Grantham this is the cause of all recessions including 2007/2008. 7) A black swan event - by definition - who the hell knows. 8) A nuclear event.

I dont think it has to be that difficult. In the late 1990s we witnessed it in real time, in Canada, and the US at least. There were hundreds of local companies that started up with a few servers that provided internet access. It looked as though the telecom incumbents were done for: Bell, Rogers, Telus, ATT, Verizon. The incumbents moved into the business with their deep pockets and now the bulk of our home internet is provided by the big incumbents. Without missing a beat, they ate the little guys lunch. Then came cell phones and mobile data. Again the big guys ate everyones lunch. Obviously, overlaying this are the Googles, FB, and Amazons as well, which I guess were the disrupters. But they are still using the pipe provided by the incumbents. Fracking was a big disruption, of a different sort. Here the pipelines remained the biggest long term winners. Had you bought Chesapeake or Sandridge, you got wiped out, but the pipelines, and refiners keep on racking up ever growing profits. Alternate energy providers are the latest disrupter. And guess what, they are being eaten by the big guys: Berkshire Energy, Algonquin Power, Enbridge, etc. The whole carbon trade game has given the incumbents a huge leg up. In fact, it starts to look like there is an 85 year old dude from Omaha who has given this a huge amount of thought. Look at the car business. You have Tesla which gets press for its innovation, in severe disproportion to its size. Does anyone really think the Hyundais, Hondas, Toyotas, GMs, and Fords of the world are going to let Telsa take the entire car business from them. It seems unlikey. As much as I would like to see Tesla succeed, they have a long way to go. I think Elon knows this, and this is why they have invested in the periphery with the battery packs. Teslas are a showcase for the propulsion system. I would never likely invest in the car business directly. Its is too fickle for my taste. Buffett has been at this successfully for 55 years. He has seen dozens of disruptive technologies in his time. To my mind he has invested successfully most of the time. He even gets caught with his pants down from time to time (Washington Post). And what are his major holdings outside of insurance? He owns the pipes: energy production and transmission, part of the transport infrastructure (an oligoply), parts makers for everthing, snacks amd beverages, etc. His portfolio is pretty mundane and allows Berkshire to build up endless cash. Conversely, Everyone of the businesses he holds makes us of disruptive technologies, and some are at the forefront in using this technology.

Don, your making alot of assumptions about what I have written. The title of the thread is "Lowering CEO to average employee ratio". My argument is that this is not unreasonable. CEO pay is out of whack with anything resembling reasonableness 'in my world' and I am hardly a leftist freak. Right now, many CEOs are getting paid 100x or 150x or 200 x, or more than the average worker in their organizations. None of them got these positions purely on merit. Luck played a big role. My other argument is that CEOs making all-star paychecks should feel the pain when the company underperforms to the same porportion as their shareholders and employees. Right now they dont. Brian Moynihan has collected obscene bonuses for what: Giving away 100 B in BACs capital to the regulators. CEO pay needs to be right sized. Dont ask me how. I dont think it will happen until shareholders get so annoyed with returns that they start demanding votes on pay. To get to that point returns need to be suboptimal for a few years. That may well be happening anyway due to deflation and a lower return environment. This discussion has become like flogging a dead horse so I wont be posting again.

I thought I had linked this article yesterday: http://www.bloomberg.com/news/articles/2016-09-01/why-luck-plays-a-big-role-in-making-you-rich Without ever seeing this guys name or article before I was already calling 'super pay' CEOs lottery winners and comparing them to athletes, musicians and actors. He hit the nail on the head. People want to believe we live in a meritocracy. It is anything but. Luck plays a bigger role than any alleged skills of CEOs. And I include Jamie Dimon in this. If he was so good he would have known about the London Whale incident, and not denied it for a month, or the Libor rigging scandal. Or was it just bad luck? If we are operating in a meritocracy Dimon should have refunded his pay for the years affected and said "I wasn't doing my job last year so I shouldn't be paid". I am only picking on Dimon because he is a visible example of luck in action not because he is bad, or good, or skilled, or unskilled. A true meritocracy would work both ways! The system we are operating with right now is a skewed system where the rewards for a select few 'lucky' ones outweigh their risks by a huge amount. The risks are actually borne mostly by lower level workers. Finally as shareholders we carry disproportionate risks relative to CEOs. If we make mistakes we actually pay for them! We need more Jack Bogels, Prem Watsas, and Francis Chous in the world, and fewer Carly Fiorinas.

A whole world of NO! Don't steal from people better off than you because you're jealous! That's extremely petty and pathetic. Take a look at yourself :( Please don't tie the legs of the best swimmers. No one will try to be a good swimmer anymore. I'm a good example. I give about 60% because I don't think I'll be rewarded for doing more. Disagree. CEOs are types who would go for it even with less pay just because they're narcissistic and want control and power and show that they're in the lead. So they should be taxed since the demand there isn't elastic. If there is a high tax, I'm pretty sure a lot of people would still want to be a CEO. Bob Benmosche is a perfect example. He was negotiating with AIG which was controlled by the government, and one stickler point was his pay. He still got around $8M (I recall). If you cut his pay by 1/2 I don't think he would've come. Also here is a guy who made a different in the direction of the company. Some or most wanted to just sell the company off and return the government's money. So he made the correct binary decision. You can say a lot of it was luck in that it turned out well, but some can say there was a lot of skill too. One point about taxes and compensation is that we live in a world of prosperity and freedom. That means a person has freedom of movement and right to private property in all the prosperous countries in the world. If you tax a company or people too high they can move and they will. Look at what Pfizer almost did. If you tax capital gains too much they will take their money elsewhere. Unless you are going to take away those rights high pay and current tax rates are here to stay. The easy solution to whiny companies like Pfizer is to put tariffs on their products for not being produced in a local jurisdiction. Ever Jurisdiction does this with cars, and car parts, forcing local content. Pfizer is playing a dangerous game of brinksmanship, if you ask me.

Besides managing it on their own, what else do you think they should do? I think people are in for a really rude awakening. But, I dont think there is anywhere to hide. To answer your question Paul: What I advise anybody who is not a decent investor (I know ONE who is not a member of this board - just buys good stocks on dips and never sells) 1) Use extra cash to pay down your mortgage 2) I suggest index funds for those who are finished 1) or dont have 1). But I suggest adding to the fund over time. Since no one actually wants the advice and will do what the far lower skilled person at the bank suggests its all a moot point. And to tell the truth I dont give investing advice or stock tips anyway. The problems with actively managed mutual funds, even for the buy and never sell folks, is that redemptions come when stocks have tanked. This causes forced selling and the remaining unit holders suffer for it. I will tell you one thing. In Canada, if I was to invest in a mutual fund, it would be with Francis, and no one else. I suspect he is constantly reassessing what works, amd what doesn't much like I do, and at some point the tide will turn. And I honestly dont understand why Francis bothers to run a public mutual fund. It doesn't strike me as fun but thats me. I cant imagine that the pay check moves the needle for him much anymore. I believe he holds 40 million in Fairfax shares and surely has substantial other assets.

Another one bites the dust. Did anyone expect this fund to continue to beat the indexes after the founder died? The staff costs alone are putting a drag on performance, and then there is the "decisions by committee" problem.

Hi Marve, Manual of Ideas posts on this message board under ManualofIdeas (go figure). His work consists of very good, and extremely detailed analysis, of companies, that are possible value candidates. I am not a subscriber but a friend lent me a couple of copies once. It has no resemblance to value line. Al

Yes, and excepting #1 the rest of the things you list have already happened. Number 1 may now cause a race to the bottom. I think Amazon.com is the leading indicator of how that will play out. I am sure that deflation is something Jeff Bezos and his competition are very aware of, and for which they have no answer. Its like Buffett's parade watchers. The moment Amazon or its suppliers let up the throttle on bringing prices down, someone else will willingly take up the slack.

I think we, collectively, are confusing cause and effect. The stimulus programs are a blunt instrument response to the slowing of the economy. The slowing of the economy started long ago in relation to the aging demographic. Because of all the noise from the tech run up, the twin towers and the war afterwards, the pre-2008 China expansion, and the financial deregulation crisis, we didn't see the slowdown happening. It started in Japan, and Europe, in the 1990s, and moved on to include North America, and parts of Asia. It has now moved into the rest of Asia, and is now encompassing the bulk of the worlds GDP. The governments and central banks are only reacting. There is really nothing they can do. Japan has shown what the long term will look like. Interest rates will settle at the lowest they have ever been. Governments will continue to try and fight deflation. The next thing they will attempt is infrastructure programs. Since the demographic tap has been shut off forever it is an entirely new paradigm for the world. The future is one of much slower economic growth than the past. The major markets have barely made positive territory in the last 15 years. It is not all bad though. I have been investing for 20+ years, during the slowdown, and have done very well.

Taking your thesis a little further Rukawa: Up until 50 years ago, there was no such thing as following your passions. We are evolved to survive and seek stability. The most obvious way to do this is find stable employment and gain some measure of financial security. I dont believe there is such thing as a dream job. Everything requires work after awhile, as Jurgis indicates. Slash, whom I really admire as an awesome guitar player talks about playing twelve hours a day, and making himself sit down to practice when he really didn't want anything to do with the guitar. Stevie Ray Vaughan would play literally to the point of pain. Peoples needs and wants change. Your last line is most pressing.

The question reads: .why does the market as a whole go up, not: why do one geoup of stocks or another go up. The most basic answer reflected here by myself and others is that markets may not always go up 7-10% due to demographics and social changes. There were several one offs in the 20th century that may not be duplicable in the future: reduction in infant mortality, electrification, the rise of consumerism and individualism, the rise of suburbia, the automobile. There will be advances in the future but will they result in greater profits or less - one could argue that there may be a race to the bottom and loss off unregulated profits - Amazon.com being the prime (sorry :-) example of this trend. The bond markets are several times the size of stock markets, and they are telling us that deflation is happening. They are also telling us that near term economic growth and profit growth (5-10 years) is going to be non existent. And they are also telling us that there is nothing governments can do about it. It is part of a long term cycle or pattern and nothing will have any effect on it. I dont think it is likely that markets maintain their 20th century growth rates in this climate. To my mind some stock markets are ahead of themselves and due at least for a 20 % correction, but this is nothing new.

http://www.efficientfrontier.com/ef/402/mep.htm Of course there will be examples of the opposite in a dynamic world. It would be interesting to clean up, and update that data set to reflect the last 20 years, in which several countries are on the verge of shrinking. Over time, as population growth slows, demand for goods also slows, and an aging population is generally not a posiitve sign for an economy, all other things being equal. This can be seen in real time if you look at cities like Leipzig, or Detroit. Detroit is 250 km from Toronto, has the same climate, the same location, on a Great Lake, and major highways, railways etc. Due to its social issues, Detroit has shrunk. As a result real estate is less than 1/5 the cost as in Toronto. I have no proof of this but I am guessing that Laudromats, restaurants, cafes, and Home Depots in Toronto are collectively more profitable than Detroit. Detroit is an extreme example with an actual decline in population. Only a handful of countries are headed for actual declines at the moment. My thought is that slowing population growth will lead to slowing profit growth for most companies, and slowing stock price appreciation, not outright shrinkage. edit: Strike Leipzig: It seems to have undergone something of a rennaissance lately.

The growth in M2 money supply has been significant over the last 8 years. However, the velocity of M2 money supply is at very low level, historically speaking. If the velocity of M2 normalizes over time and money supply continues to grow then it's hard to not expect future inflation, no? Chou raise this concern and I think it's a good one. M2 Money Supply: http://i728.photobucket.com/albums/ww289/MikeNCathy/image_zpsafkdjzjs.jpeg Velocity of M2 : http://i728.photobucket.com/albums/ww289/MikeNCathy/image_zpstfniddz4.jpeg It would seem to me that the inflation we had from the 70s to the early 00s was primarily driven by the demand side of the equation: the baby boom generation across many of the countries that were principals in WW2. Maybe these other factors will have temporary inflative effects. I usually stay out of macro discussions but this idea is greater than macro. The lack of growth in returns from stock markets and other asset classes does not imply no profits. It just implies a much lower growth rate. Perhaps what Matjone suggests.

I am not entirely sure what you are getting at. The assumptions in all the other answers are missing the real reason markets go up: Rising population. At some point in our lifetimes populations are going to stabilize or even shrink. Markets will no longer rise as rapidly as they have in the past once that happens. Japan is your leading indicator for this scenario. There will be some growth due to technology advance, but no inflation, and the 7-10% growth of the past will never be seen again. But without inflation, lesser returns will be acceptable. I actually think alot of the world is starting to exhibit slower growth due to slowing population growth now. I think this is partly why all this ammo (QE) cant juice the major world economies the way it would have in the past. Governments, business, and investors are in denial: This time it really is different.

It has been nasty since they introduced the new version. I prefer the old version and still use. The new version has two much movement, too much information, and I cant seem to customize it.

Anyone else on here experiencing a really bad website experience with the above. Stalled loading, cant put in or execute orders. Website just non functional for hours at a stretch. It has been off and on for at least a year.

That's not entirely accurate. Scotia and TD are big players in the space. They call it non-prime loans but it's definitely what anyone on this forum would call subprime. Interest rates of 19% to 29% are not unheard of. Here's an article about a couple who signed a 25% loan from TD and called a newspaper to complain: http://www.cbc.ca/news/canada/british-columbia/couple-feel-robbed-by-25-interest-td-car-loan-1.2483342 Here's a link to Scotia's Special Finance Program: http://www.scotiabank.com/ca/en/0,,4625,00.html I've studied the space a little bit and from what I remember, both banks don't segregate subprime from prime auto loans in their financials so it's hard to figure out the exact exposure but they both definitely have sizeable subprime auto loan books. I would guess that both banks have over a billion dollars each of receivables of subprime auto loans. Thanks, I didn't really know that. Having had dealings with TD and First National For mortgages and HELOCs I have had to provide everything: Pay stubs, Employer letters, Market Value Assessment,(they paid for this). Now, they are providing me with 3% interest so I guess they want to be sure they are getting paid back. 20% interest on a loan suggest an extremely high expected default rate. I would post the math here but prefer not looking like too much of an idiot. What interest rates are the subprime lenders in the US getting?

A high end auto buyer isn't getting a subprime auto loan. Not sure how auto lending works in Canada, but in the US very few pay cash or bring their own financing. This means the vast majority 70%+ of car buyers are financing through the dealership. A dealership works with the auto financing group of the manufacturer if it's a new car purchase and generally a bank for used car purchases. Most mainline banks do not originate subprime loans through dealers, instead they just deny credit. You can obtain subprime financing at shady dealers. I think every American knows what I'm talking about, but it's a lower end used car lot. The 'office' is usually in an old mobile home and the cars are of questionable quality. They will have signs "We finance EVERYONE" or "NO CREDIT CHECK REQUIRED" and are in less than desirable parts of town. The financing they're advertising is subprime auto lending. It's a lender like NICK that pushes loans through places like this. These buyers aren't looking at BMW's they're looking at very late model cars. I have two experiences with subprime lending. In 2009 I was looking for a used car and wandered onto a used car lot near us. There were some ok cars and I went inside to find out details and prices. There were no prices posted anywhere on the cars, you could only get them through a salesperson. The salesperson said "hi" and then "how do you expect to pay" I said "I'll be paying cash upfront" and she said "I'm sorry, we don't accept cash buyers here, only buyers who finance through us." I was able to get prices out of her and they were very high. She then told me I was wasting my time because their financing wasn't competitive, it was subprime and rates were high. Worked with a woman who had made a series of bad decisions and had been through two divorces and needed a car. She had a very well paying white collar IT job. She couldn't get traditional financing, had zero cash. Ended up driving an hour north to a lot that guaranteed everyone a car no matter what. Turned out they were a combination of subprime lending with their own additional payments layered on top. It was almost like a rent-to-own subprime type operation. I asked her what sort of car she was looking for and her response was "anything that drives." It's the same reason Aarons or Rent-A-Center doesn't have top of the line brands. The people who are shopping there can't afford them. Maybe Canada's different and you can get a subprime loan from a bank at a dealer. I know one dealer who opened their own self-financed subprime operation themselves. Maybe this is popular in Canada. In Canada, you aren't getting a sub prime loan through any of the big 6, 7 banks or the top mortgage lenders. They are simply way too tight. No doubt there are lower tier lenders out there that I wouldn't invest in to save my life.

Given the rest of your answer, I'm not sure if this next question applies, but perhaps it does and/or you've given it some thought: If you use your buffer, how/when do you decide to replenish it? To some extent, I think this replenishing choice is what caused one study to show that the buffer is bad and the other good. I think it is perhaps easier answering it as a value investor than the indexers, since we already have some intuition about "timing the market" based on whether deals are present or not. I think my problem is that I would never want to sell anything (I tend to be fully invested all the time). Joel, I have never not been at least 120% invested even in 2008/2009. That said I have no desire to repeat that scenario without the backup income I had then. At the moment my dividend income will cover fixed costs: mortgage, property taxes, insurance, utilities, phone bills, kids. My kids education fund - RESP is fully funded to get them through school in 7 years. One at a time: RESP: My plan is to let the dividends start to accumulate as cash a couple of years ahead of the withdrawals. I will sell stocks opportunistically as we get closer to the date of use. No leverage in this account. Dividends: I sort of assume a potential 20% cut which leaves me able to meet existing expenses. Anything greater, and we would need to reduce spending. There is also the lines of credit which are untapped at the moment. 20-30% borrow in margin accounts: I market time this, and its time to bring it to the lower side of that range. As to market timing you know what I mean. I am not exiting the market and selling everything, just trimming to bring the debt down. I guess we can call this replenishing my firepower. Two RSPs: with no leverage. I will let dividends add up in these for now. Zeroing in on the margin accounts: 1 Cdn and 1 US: In addition to reducing the borrow through trimming I have in place low lying puts bought on weaker names from the S&P 500. Google Mark Bern at Seeking Alpha to read up on this if your are interested (credit to another board member who bought this up, and credit to Mark Bern - I just increased his readership). These puts are insurance against a major market default. This is a new strategy for me and shouldn't cost anything on an after tax basis. It is likely they will be profitable when the time comes. I have stress tested it recently after the Brexit vote and almost sold some at big profits but I restrained myself. I have to pay taxes on profits which is why I prefer to minimize selling in general. As to the markets right now and why I am trimming: It rhymes wilth 2007. Then the markets had been rising for years and stayed maddenly high for months, then. We aren't seeing alot to take them down this minute but something, somewhere will do it, some time in the not to distant future. I dont want to sidetrack this thread into market discussion so I will leave it at what we can agree on: Markets go up and they come down which is why Joel bought this up in the first place. I feel I need to put in this CAVEAT (not directed at you Racemize). I have been using margin debt for twenty years, have survived margin calls twice (2008/09). One of those times I had to get my broker to front me the money to buy out a put position I had sold to free up margin again. Dont sell puts or calls using margin - I believe this is how Buffett's sister wound up 1.4 Million in the hole. I no longer sell puts.

Yeah, there is that side but the question was about financial, not holistic. I have always wanted to play music live. Call it a work in progress. Dont know about SDs brothel idea... maybe a meth lab. Could meet some interesting characters as Heisenberg North.