SharperDingaan

BTC, concentration and the money press thing ...... To get ahead is to not just buy and hold something that will outperform the money press, it is ALSO to trade the price volatility of that thing. Then you need to recognise that the return from trading the volatilty will be multiple times that of holding the asset itself. There is a reason why so many of those who have done well at this, have ALSO seen so many market/business cycles; it's a progression. If you had loaded up when BTC was 57K and sold at 75K (+32%), you have done very well for a few weeks exposure. But for the SAME next few weeks of additional exposure are you likely to do as well by simply continuing to hold BTC, or by swing trading it? Most would say swing trading it. To do well at the swing trade, one has to 1) recognise when it's currently the better of the two options, and 2) have the expertise and risk tolerance to execute. The more cycles you have experienced, the better you should be at this. SD

US shale production is a function of price, current break-even is around USD 65/bbl. While most would expect Trump to allow fracking, cut regulation/royalty costs on new drilling, and that new drilling to be primarily 'manufacturing' by the majors; it's mostly a wash net of ongoing depletion. All else equal, similar ongoing production, but at a steadily lowering break-even. Not bad. Near/medium term growth largely depends on a new and reliable supply of heavy oil for blending, and Trump allowing the industry to 'flare' surplus gas without penalty. The obvious solutions are 1) Trump reopening the CAD/US Keystone pipeline project, building the remaining relatively short connection piece, and importing tariff free CDN heavy 2) importing tariff free Mexican heavy, and 3) importing sanctioned heavy. Expect a lot of 'real politic'. The 1st mystery is tariffs; if they apply to oil imports, oil for domestic consumption will sell for more, raising domestic production. The 2nd mystery is Russia; Russia/Ukraine war ends, sanctions removed and importation of heavy Russian crude begun, new drilling with western technology permitted. Sanctions on Iranian exports tightened, Iranian production/facilities sabotaged, everyone else takes up their lost production. Price averages out at about the same, even if Iran attacks the facilities of others. Lot of favours need to be repaid; but over the near term, US shale isn't likely to change much. SD

The real threat is a 'supra' CBDC using a version of BTC protocol, that displaces USD as the global reserve currency. USD devalues rapidly, trade partners competitively devalue; no real short-term change, but the price of BTC (in local fiat) rises as the currencies devalue. Inflation ticks up for everyone, raising hard asset values (real-estate), and market yields (real + inflation). Fed Reserve offers a BTC backed (inflation immune) USD trade currency as the global reserve currency ... that is also protected by the 'might' of the US/NATO. Awesome! Or .... most of the worlds trade blocks, supported by their CB's, collectively agree to denominate and settle their trade in 'supra' CBDC. Also inflation resistant, but reliant on collective management, vs that of a single entity (US) to manage it. Also awesome! ... but not so much for the US. SD

It's the same thesis, it's just integration into main stream finance that's evolving. MSTR as guarantor (central bank) of direct BTC loans (borrow and repay in BTC), lending at maybe 20:1 ... looking like a CB but not actually being one. Over time; MSTR either loses the niche to industry as BTC becomes just another kind of loan, or is replaced by the US Fed Reserve under updated legislation (populating the vault with the silk road seizure &/or acquisition). Fed Reserve USD devaluation, offset against the BTC vault revaluation in USD. New type of US T-Bills secured against the BTC loan book, and BTC options and derivatives more securely tied into the Fed Reserve via the CME. Elegant. SD

Ethics thing. The ethics of the identical situation are different everywhere in the world. You don't rip your client off 'cause it's bad for business, the ethics restriction is just byproduct. Curriculum. There are many ways to doing investment, value is just one. It behooves one to be aware of the other approaches and how they work, agreement is not a requirement. Employer. It's up or out, and no different to accounting, cpg, legal, academia, etc. Cheap bunnies drinking cool aid goes a long way to keeping costs down, and when you're king ... you're the beneficiary. Play the game or walk away, your choice. Everyone makes poor choices, but life moves on, and you either reinvent yourself or live miserably for the rest of your life. Most CFA's and MBA's work in the corporate or public sector, not IB. As it's just not worth the drama. SD

It's a union card, the same as an MBA. Different markets will value the letters differently, but if you don't have them .... don't bother applying. When the employer pays the dues, you don't much care. To the employer it's a marketing and insurance cost, get caught doing something unethical; it minimizes the severance cost. Value is different for everyone. If you know little about investment it's worth considering. If you're doing an MBA later, you will just be swapping your finance course for an elective. The CFA Way is just the starting point; you're expected to evolve your approach as you build your experience. It's also an ego thing. In the early years, gross pay divided by work plus study time is often less than minimum wage. That freshly minted CFA also has the identical skill set, and is now available at cents on the dollar when the holders live in different countries. The supposedly smartest guy in the room ... that is dumb as a brick in a globalized world. Been there, done that, long since moved on. Just a different POV. SD

Very good! SD

A Bitcoin Bank would exist 'cause the founders need to money launder; and they cannot put up the CME margin to hold BTC options or futures directly. Deposit your BTC with us for interest! (chequing account), so that we can margin against it and use the bank to either buy more BTC, &/or drive up the price ( another Tether) !!! Thing is ... a tamer operating version of Bitcoin Bank already exists; and it's called MSTR ... damn! The 2nd/3rd level BTC payment markets need to focus on the 2nd/3rd world, vs the tech community. In these worlds, USD is used for payment 'cause it retains its value against local inflation, and bills are accepted by all (black market) as cash is untraceable. The thing is that at scale, one needs bales of USD bills .. along with the associated organisation and security. 2nd/3rd level BTC payment markets become useful when they can displace USD bill use in these markets... and in part, is why there are all kinds of dire CB warnings around the pending collapse of USD. SD

Hate to tell you this but the inventors were bang on; this is the BTC-ETF (dividend paying) in today's market. Retail: Same as the T-Bill, and held alongside the T-Bill as an interest bearing store of value; cash it in for whichever fiat you want, whenever you wish to buy something. The T-Bill giving liquidity at the expense of inflation exposure, the BTC-ETF giving inflation protection at the expense of diminished liquidity. Institutional: Hold the BTC directly, and trade the derivatives on the CME. 6 weeks ago you could buy BTC in volume at around USD 57.5K, today it's around USD 72.5K (+26%) with a week to go until the US election. If you believe the warnings on out of control US spending, the USD devalues and the BTC USD price rises even further. SD

Re the Middle East. One might want to keep in mind that it is primarily Russia and Iran/Iraq that supplies (sanctions discounted) crude to China and India. Price has fallen as demand from China's slowdown has more than offset India's growth. Russia/Iran can either cut back supply to help raise/maintain price, or flood the market and rely on volume to swamp the price effect. Back in the day, both players had the excess capacity; not so much anymore. Iran has the ability to 'co-mingle' Iraqi production to 'boost' production, Russia doesn't. It's better for everyone in OPEC+ were these two to cut back supply .... in an enforceable way. Lots of ways to keep the 'risk-on' premium up, and lots of room for ongoing Russian/Iranian/Iraqi 'accidents'. Can't supply what you cant produce, deliver, load, or repair .... and refineries, pipelines, pumping stations, etc. are inherently 'hazardous' infrastructure. It is also hard to get replacement parts for old equipment ... petroleum related, or otherwise. The oil facilities are now targets, and it's in all the producers interests to keep it that way. SD

B2 bombings, leaked docs, anticipatory repositioning of assets (all sides), etc, etc. Whatever the eventual outcome, we clearly aren't in Kansas anymore. The reality is that 'spheres of influence' are temporary, and expensive to maintain. Proxies are a cheap means by which to maintain presence, they are either 'created' or are the strong men in the region, and per maintenance purposes ... have to be periodically terminated. Let the proxy's get out of hand and you get the Taliban/Isis, Iraq, Iran, etc. Supplying weapons to both sides works for a while, but there's always another armourer ... and more influence for more weapons. Maintenance that could have been done quietly, now becomes regional wars; while there are preemptive remedies, they rapidly get harder to execute, and errors a lot less forgiving. Ideally everything goes as planned. SD

No dog in this, but quite a few things are coming together here. Gulf airspace restrictions. The only way to/from Iran from Israel is either via Syria/Turkey, or the Red Sea/Arabian Sea/Gulf of Oman/Persian Gulf. Might be OK for the stealth birds, but not possible without protected multiple air-air refuelling top-ups along the way; however, a lot more practical were there protected refuels/rearms on either the African coast or in Pakistan/India. Needs a lot of help. 30 days until the US weapons flow drys up, 6-13 days left to act - if it has to be done at least 1-2 weeks before the US election. Supposedly target types have been agreed; have to think the types of assistance and ordinances have been agreed as well, along with contingency 'aftermath'. Takes time. This is what the professionals do, they do it very well, and obviously we hope it goes as planned. Just keep in mind that one day, in the none to distant future, we're very likely all going to wake up to a major market volatility spike. SD

These things are very specific to the state/province/country they are in; hence, it really comes down to what you would like to achieve, and how. Part of it is also the 'bang for the buck', and ability to do things 'quietly'. There is a great deal of positive to be said for contributing to hiking/walking trails. Quiet, and non controversial. Most often its either capital purchases to help secure the land the trail crosses, or a few operational bucks to buy materials (wood, gravel, nails/screws, equipment rental, etc.) that volunteers will use to maintain the trail. There are many such trails around the world, and the by-product is often a boost to rural/local tourism. The Bruce Trail Conservancy is just one such example https://brucetrail.org/ There is also a lot of positive around botanical gardens; similar to the trails there are both capital and operational opportunities. Again, quiet and non controversial; but the payoff is typically more paid employment at a bit better than minimum wage, and for many who wouldn't otherwise find work. The Burlington Royal Botanical Gardens are just one such example https://www.rbg.ca/ No bullets or drama to these picks; simply young kids through to the aged, building memories and doing their thing outdoors, to the best of their abilities. All cultures, and all year round. Enjoy! SD

Tighter regulation is 'cause shale gas has seeped into both the water table and the subsoil (cattle refuse to graze the land). In some places at night, you can literately see flame come out of the water and ground were you to light it off. Total costs rise (re tighter regulation); per well costs decline as production swings over to 'manufacturing' and there are now multiple bores in the same pay zone. Biases toward field consolidation, and bigger vs smaller producers. Some argue that 'manufacturing' also mitigates the problem, as there are now many more and closer bores in the zone; reducing pressure, and giving the gas an easier way out than surface migration. While today's production suffers a higher gas cut, tomorrows's well also becomes a stand-alone viable gas producer (assuming multiple bores tied into the same well head); and it is also relatively straight forward to convert existing oil collection infrastructure to gas once the reservoir becomes primarily a gas producer. Changes the cash flow profile, and resultant valuation. SD

The argument is that yes your firm may have triggered an event, but you weren't the only contributor to it. Quantify whether the firm contributed 5% or 60% to the event, and damages can calculated/paid - but until then, there's really nothing to report as the amount of damages is unknown. SD

Oddly, I looked at these before deciding on a straight forward swing-trade. Mechanics aside, they looked an awful lot like the insurance version of the CDO/CDO Squared that contributed to the 2007 Great Financial Crises. Our takeaway was that if grey swans were to suddenly change colour, we would be hard pressed to have done better. Big insurer sells the risk to fund X (smart), fund X (smart) sells it to investors spread across the world (diversified contagion). Everything working as advertised as long as there is manageable concentration amongst the investors, and the underlying investments maintain liquidity .... yet the more reinsurance in the cover, the less liquidity, as the potential claim becomes progressively less expected. Snowball to hell .... SD

... More likely that the insurance payout caps out at some maximum amount, irrespective of the amount of damage caused. Anything under the cap the insurer pays (maybe), anything above it the state pays (maybe), and for the months/years until payment is eventually received ... the site remains abandoned. ... It also implies a number of insurer failures, as this kind of payout very likely wasn't adequately stress tested .... 'cause it could never happen! The bad news causing the tide for all insurers to wash out, lowering valuations across both the P&C and Re-Insurance sectors. SD

The main production issues around fracking are water disposal, rock porosity, and concentration. As soon as there's a frack, there's water injection into the reservoir, and a rising water cut as the well ages. Concentrate the fracking in a particular zone, and you've literally filled the rock pores with swimming pools full of highly saline water; and the less porous the rock, the higher the pressure. Generally, there are only 3 ways for that saline water to get out. (1) Via the collector bores (pushing oil ahead of itself), (2) Via migration into rock with greater porosity, and (3) Via rock slippage with the water/oil/gas mix acting as lubricant (seismic tremors). Inevitably, some of the saline water/gas mix eventually migrates to the surface. Water cut cannot be left on the surface, it has to be either re-cycled into a new frack, or re-injected into the ground; ideally at lower pressures, and into a nearby deep and porous rock layer through which it will migrate elsewhere. Obviously, the lower the injection pressure, and the further from fault zones, the better. The drilling issue is conclusive attribution of injection at site X to a seismic event at location Y. Yes, the injection may have triggered the event, but the cumulative cause was part natural and part man-made; how much to each impossible to quantify. Obviously the tighter the reservoir rock (low porosity), and the more fracking in concentrated areas of that tight reservoir, the bigger the potential issue. However, the good news is that these reservoirs are in sedimentary rocks, and the layers above/below the reservoir will often have a higher porosity (enabling migration of escaped water). SD

1% of exposure is still 10M per billion of insured loss, and there are at least another 7+ weeks of this to go. SD

We just see it as a grey swan .... an event that is known and possible to happen, but which is assumed to be unlikely to occur (Wikipedia). As being on the wrong side of the assumption could really screw up our day, a swing trade is just smart insurance. A downgraded hurricane is still a lot of water/wind, no matter where it comes ashore. Atlantic Canada will be primarily covered by Canadian re insurers. The Canaries and the Azores are European holiday destinations akin to North America and the Caribbean, and will be primarily covered by European re insurers ...... significant weather events going north and east are still going to cost. All that one can really do is hope for the best, prepare for the worst; and try to always live on high ground away from the coast!. SD

You might want to keep in mind that while this was bad, it would seem to just be the start for the US/Canadian East Coast. It is now an above average season, Kirk and Leslie are on their way, the Atlantic is still very warm, and there is still 2 months to go. https://ca.news.yahoo.com/2024-atlantic-hurricane-season-officially-142154996.html Sadly, there is a need to make projection. Assume a 35B loss on this event, plus another similar event for each of the next 2 months (conservative?); and cumulative losses could well exceed 1B+ before Christmas. Should FFH have around 1% of the loss ... around year-end there's an extraordinary announcement of 100M+ in related charges. Thereafter FFH goes ex-dividend around Jan-17, further lowering the share price an additional USD 15. Hence, we have put our swing trade on. Hopefully we've overly pessimistic. SD

The hard reality is that fundamental analysis as it is usually practised, is not especially productive. Similarly, technical analysis is not especially productive when the intent is swing trades over extended periods. You do well because you are reasonably good at forecasting whether the tide is coming in or out, and act appropriately; there is no place for buy and hold 'forever', whether that be in o/g, or any other commodity. We would all be a lot better off were the Israelis to actually incapacitate some Iranian/Iraqi supply, and the Iranians were to actually incapacitate some Saudi supply. The market 'surplus' would come down significantly, the OPEC+ portion would decline as well, and Russian supply would remain constricted. Brent/WTI would rise by quite a bit, US shale/Cdn heavy would be back in business, lots of jobs, etc. Consumers pay more, and global alternative energy/EV continues to receive a market incentive. Everybody wins; those who swing-trade the opportunity winning even more. Of course, it's not for everybody ...... but recognise that, and you could do very well SD

The reality is that there will be a lot more 'potted' narratives until the US election day; for those so inclined, most would place their 'bets' according to their volume and timing. All that we really know is that the US election is in 5 weeks, it could go either way, and the approach to crypto will probably be quite different depending upon which side prevails. Chinese stimulus effects aren't going to show up for a while, the escalating ME is a significant interim wild-card, and miner holdings/bankruptcy settlement liquidations are continuing. BTC would seem to be a range bound between USD 58-65K until then; not necessarily a bad thing. Lots of ways to play, depending on whether income or appreciation is the aim. Place your bets, step away from the table, and come back after the election; hopefully it pays for a great New Years vacation SD

The BTC-ETF just gets sold off, and the proceeds put into the BTC-ETF options; temporarily pressures BTC down as the BTC-ETF sells off some of its now too large a holding of BTC. Most people are not going to be using these for risk management purposes; longer term they will be used to increase holdings in BTC-ETF, which will push up the demand for BTC. SD

BTC diversification is attractive because of BTCs low correlation to traditional assets. Whereas the problem is two fold; (1) BTC cannot be objectively valued based on cash flow, and (2) the correlations are wildly unstable, hence it's hard to optimise a portfolio when BTC is one of the assets. However, while a BTC valuation based on 'feel' is a hard sell, that BTC volatility can eliminate a lot of cash drag. Employment risk for the outlier. The reality is that BTC's investment use is an evolving process, and will remain so for quite some time. Most would expect that as usage becomes more mainstream, the outlier risk will decline, resulting in a greater BTC capital allocation; raising the value of BTC. Of course in the meantime, if you can act like a PM, and don't have these constraints; good for you SD