SharperDingaan

The basic discount rate for a new project/acquisition in corporate finance is 25%, reflective of the completion and uncertainty risk that you are taking on. The PV of a resultant doubling 5 years out is roughly 1.33x today's investment, 1.21x today's investment 7 yrs out, and 1.07x today's investment 10 yrs out .... hence, long term is 4-5 years at best. Sadly, changes in the price of what is being sold, have much more of an impact than the quality of the management. Many an o/g firm with truly awful management looks brilliant at USD 90/bbl, and better still at 110 Yet those same assets also look brilliant in a distressed asset sale priced at USD 40/bbl Quality assets first, quality of management a distant second. SD

Look at both CJ-T (9.6%), the CJ-WT-T, and IPO-T (10.3%). We own all of these, and bought when the cash yield was well > 10%. The CJ warrant is particularly attractive if the investment is held within a TFSA, and you are willing to wait for the monthly dividends Why 10%? Allow 2.8% average annual inflation, and the annual real return on that cash dividend is 7.2%. 10 yrs to double (rule of 72); alternatively, 10% of the principal (100/10 yrs) could be withdrawn every year without diminishing the size of the dividend portfolio or its purchasing power, with every dime of annual intervening gain/loss staying in the portfolio until eventual wind up. Lots of possibilities. SD

I live in the real world ASML/NN manufactures a patented drug the US imports. The patented drug is used because it is better at the job, &/or cheaper than alternate generic drugs (if available) and treatments that may do the same thing. ASML/NN immediately stop delivery, and raise the US price of their patented drug by 15%, citing tariffs (the reason doesn't have to be true). The US immediately bitches, but temporarily pays up until it can find alternatives. ASML/NN collects an additional 15% (price hike), and the US importer pays the US government the 15% tariff. The client using the drug pays an additional 30% (15% price hike + 15% tariff). Inflation. ASML/NN takes their 15% and uses part of it to bribe Indian manufacturers of generic alternatives to charge more for their US bound product, and/or take a similar approach to ASML/NN. Of course it is collusion, both manufacturers know exactly how much less product they will sell, and both will reprice to maximise profit. Patented, or generic product, the US pays more for it. Orange boy is pissed. Orders US drug manufacturers to copy the drugs, make them available to the US, and indemnifies them against the resulting lawsuits (they rip off our IP [other countries, other industries, other products], we will rip off theirs!). Problem is that the US doesn't have the domestic drug manufacturing capacity, and a ASML/NN/Generic Manufacturer would also do what they could to actively impede/delay the setup of that US manufacturing. Mid Terms arrive [< 18 months], Trump does not win, and tariffs get rescinded (they're illegal!). That domestic drug manufacturing is not competitive, and the new factories go dormant. ASML/NN/Generic Manufacturers buy the equipment at cents on the dollar, make improvements, and Orange Boy announces a new deal, HUGE deal!; foreign investment in new US drug manufacturing The long game. The markets would also seem to agree .... the first day of trading after Trumps biggest trade 'negotiation' to date, and the markets close DOWN? Donny's loosing his touch .... The real world is not a press release. SD

The smarter sole source producers just stop supply, immediately raise US prices 25-30%, and kick back part of the windfall rake with Indian competitors; the US either pays up or suffers withdrawal, no different to a pusher squeezing the junkies hooked on the product. It is also low risk. The US can threaten all it likes, but it is very unlikely that the US can domestically manufacture (patent theft) and replace the supply within the next 18 months (post mid-term elections). Particularly when those being stolen from, also throw as much sand into the machinery as they can Sure the deals make headlines .... but maybe they aren't quite what they seem. SD

Keep in mind that US products could easily be boycotted, as is currently the case with Tesla. Nobody buys your product, there is no point to exporting. The more expensive Porsche import also becoming a better status symbol. Not quite the intended outcome. These are also just understandings, the detailed signed agreement that eventually follows could well be very different. Again, not quite the current spin. SD

A few things we practice ..... Size isn't the problem; it's liquidity and downside volatility. The sizeable position has to be quality stock, as you can do squat if there's suddenly no market. Deeper the reserve, the bigger the position; size is not an issue if you don't have to sell (deep reserves), but to offset the opportunity loss on that conservatively invested reserves portfolio, you need a bigger win (bigger position). Maximum size at the start, declining as periodic sell offs are initiated to manage the risk. With lesser quality stocks, if we had to double-down we will typically sell 50% as soon as we regain average cost. If it was drama free we will typically sell 50% as soon as we have a double. The interventions largely remove the issue. Side pocketed exceptions (BTC, UBS, etc.) into a separate portfolio; simply because when everything grows at similar rates, the relative weightings of each security will not change much. Add more opportunistic exceptions (blue chips after deep dividend cuts), and the change in weightings become less volatile. A significant consideration when crypto is one of the holdings. Macro hedges. Forced withdrawals as soon as the total portfolio exceeds $X, &/or we hit Y% in a long straddle around Trump. Money systematically off the table so that we live to play another day. Viatical type win if/when we wake up to orange splat tomorrow. Today we're also primarily income vs gains orientated, which lowers our risk profile. No real change in position sizing as cost bases are extremely low. Not for everyone, but we've found that it works very well. SD

Keep in mind that when a 'deal' is signed with a trading partner (i.e. Japan), and the trading partner commits to a billion dollar investment in the US .... it is NOT money going into new US factory tomorrow (per the press spin). It is the trading partner agreeing to roll over a billion dollars of US bonds for a year, versus withdraw the capital as it becomes due (i.e. deferred in return for sweeteners). Same as a corporate issuer stuck with debt that they cannot repay, when it comes due ..... Also keep in mind that the recent crypto changes facilitate a higher market share of the worlds 'hot money', a good portion of which is money laundered funds. Not the kind of thing one does, unless desperate for new funds. Tariffs and DOGE, are further examples of the desperation for funds. USD reserve currency status floats on the US maintaining the confidence of the market. Market confidence is NOT normally distributed, it is a right-hand skewed distribution; with a sudden and material drop off when confidence is lost. If you weren't sure of that, look at the sudden collapse of the US I-Banks during the GFC. How many failures?, in how many days?, and all because of loss of confidence. It would seem that the likelihood of a US debt restructuring/devaluation is starting to resemble a hockey stick. SD

"Reserve currency" replacement is a competitive evolution. For now, more of the displacing settlement lift will fall on the Euro and the Yuan. Longer term changes in the 'stores of value' accomplished via a sale of US assets (grade A RE, blue-chips, etc.) and reinvestment into gold and similar assets outside of the US. BTC benefiting where capital controls are an impediment. Within NA, CAD appreciating against the USD as some of that reinvestment shifts into new CAD pipe and infrastructure to diversify away from the US. CAD fed/crown corp guaranteed bonds preferred over US paper, with FX appreciation giving an added lift. Canada vs Mexico also being the more conservative diversifying exposure. Longer term, there will be a CB to CB digital currency that essentially unitises the SDR. Reserve currency 'status' no longer belonging to a country but the world as a whole. Will not happen while Trump is still around, however nobody lives forever. https://www.investopedia.com/terms/s/sdr.asp SD

For practical purposes, any sycophant would do as the market reaction to a US debt restructuring would drown out everything. 9 months later, as a sop to those pleading the midterm necessity; fire the bum and replace with an adult. Very Trump modus operandi, and hence well within the realm of possibilities. We just don't want to hear it; as this is the fed, and there is no way that anyone would be this crazy. SD

It's just more evidence that those around Trump are starting to worry. So many are pulling money and gold out of the US that the USD is devaluing (10%+ YTD), reserve currency status is being challenged, and debt is getting a lot harder to roll (why yields keep rising). Firing/replacing Powell immediately before restructuring the debt, diverts a lot of blame. Too many of the wrong people are also questioning whether the US actually has the gold claimed. https://www.kitco.com/news/article/2025-06-27/why-central-banks-are-pulling-gold-us-and-why-it-started-germany SD

It's just evidence that those around Trump are starting to worry, as without control of both houses Trumps abilities are much more constrained. Melting ice-cube, melting faster than expected ? SD

I live in the real world. Assassination is just another tool of statecraft that most nations routinely engage in. Whether it be directly (via drone), indirectly (via a proxy), or internally (via an aspiring dictator, &/or entrenched power). Most often it is used to decapitate, &/or change the course of world/national events (assassination of Hitler to end WWII) The US has a long history of presidential assassinations; 4 successful and 2 near misses from the mid nineteenth century to present. Not counting the very long list of unsuccessful ones, that near every US president has had on them. 'Many assassination attempts, both successful and unsuccessful, were motivated by a desire to change the policy of the American government' ... i.e. you reap what you sew. Civil rights activism has a similar assassination history. https://en.wikipedia.org/wiki/List_of_United_States_presidential_assassination_attempts_and_plots https://en.wikipedia.org/wiki/List_of_assassinated_human_rights_activists A sudden Trump demise tomorrow, would result in an asymmetric outcome reflective of Taleb's bar-bell approach. A wise man simply accepts human nature for what it is, and positions accordingly. If it ever pays out you're set for life; no different to winning the Powerball lottery https://www.powerball.com/ Thereafter it's just an insurance policy, that many would prefer not to hear. SD

Everything about Trump (and his economic transformation of the US) ASSUMES that ONLY he can do it, and that he remains in place (and able) to make it happen; the same as every other fiefdom in the world with a dictator at the top. Remove the current dictator, and you instantly change everything ..... as well as getting a possible career advancement opportunity Dictators handbook 101 https://drive.google.com/file/d/0B-NcZObgLr-zbDVvbzF4YWNDVFk/edit?resourcekey=0-AjLf-QH_fS4AeBtmmuUz1w SD

The US has a long history of assassinations as a way of levelling the playing field; and everybody from a JFK/Reagan through to a Martin Luther and various other civil rights activists. Mid-terms are coming up, and those with absolute power typically don't like to give it up. Trump becomes a martyr, and everything changes overnight. SD

Never let a a good opportunity go to waste! We can now routinely do incredible things .... that would never have been possible without Orange Boy's presence https://www.theglobeandmail.com/business/article-algoma-steel-tariff-relief-ottawa-trade-war/ SD

There will be mergers once Canada's new infrastructure projects are underway, and their sizeable existing plant (built years ago) will make them even more competitive. Simply 'cause the cost efficiencies from a new build replacement plant, are not enough to overcome the interest on the cost difference between new build and buy. A moat that will keep getting stronger with inflation (tariffs), higher interest cost (US debt refinancing), and rising throughput efficiencies. SD

Look at time limited partnerships with some of your better known local vendors. The big buy of specialist cheeses, brews, concert tickets, etc ahead of major events. 2-4 partners spreading the financial risk, and selling through the existing channels. 2-3 per year, in different things to spread the risk, and open yourself to different points of view. Those very smart retail people are just as smart as the investment people ... merely playing a different game. Realize that and you could do very well. Good luck! SD

Point is that 2%/yr on current TOTAL production is a very big number. If production is just to stay flat, all of this is new production to be added in the next 12 months ... then do it again next year. Primarily secondary and tertiary recovery from existing fields, NOT NEW FIELDS that take years to develop. As USD 62-65 is pretty much Trumps USD 50 after USD devaluation, markets aren't reacting violently. Most physical oil is sold nation to nation, and usually with some form of trade recycling (weapons, influence, etc). Poorer nations often selling under cost so as to mitigate BoP issues. Most all trading paper as well as physical. Wildcatting is pretty much history today, and good riddance. Now it's all bean counting and asset stripping as the world turns to other energy sources. Lot of money to be made, but it ain't going to be via buy and hold forever. It'll be via dividends and buybacks. SD

Most of those bbls will be nation to nation, and will bypass the market entirely. The physical going into the various SPRs. Companies just cut back on capex and continue with the dividends and buybacks. Once opec consistently fails to deliver on its promises, prices run back up - 'cause they will have run out of excess capacity. Depletion is a bitch SD

Keep in mind the purpose of the BTC holding. To move capital - single account, single funding transaction, multiple staggered sales to pay for purchases, and close. To participate in appreciation a BTC-ETF via an account with a major bank that will be restricted under capital controls. Hence, gains moved off the table via calls and an assignment of the underlying as either bullion outside of the US or as saleable cargo for disposal elsewhere. Too big for us, but often a portion of an oil cargo on one of the shadow fleets. Bribes substituting for duties, taxes, etc. Cargos loading at sea. SD

There is a reason why European CBs are moving their gold out of the US. Most of it via derivatives taking possession of US holdings in those CBs outside of the US. The expectation is that one night there is tweet that both closes the gold window, restructures US debt, and imposes capital controls. Of course, if you were both proactive and on the right side of it ... you could do very well. German friends tell that the early days of Nazi Germany provide some examples. Not about to ignore them when the red flags go up! SD

Traveling in Europe and have came across repeated comment from the friends in low places. There is a growing preference for bullion intentionally held outside of the US, vs bales of USD ... which have lost value. Crypto being used to evade capital controls ... but not as a store of value - gold is. It seems to be widely expected that the US will restructure its debt as soon as the head of the federal reserve is replaced, and highly likely that gold flows out of the US will be restricted. Those bales of USD outside of the US devaluing instantly. When even the friends are preparing ..... one has to think that an inflexion point is coming up. May we all do well Interesting thought is what happens to those bales of USD if the USD suddenly devalues ... there is incentive to dump it into BTC and immediately buy puts at the days market price. BTC spikes higher, then falls back ... with more of it concentrating in strong hands. Again, may we all do well! SD

Nah, it is just a standard City market making process that exploits volatilty. The long position replaced with derivatives, and the inventory sold down by selling calls and intentionally hitting the bid to drive prices higher. The buy 10,000 and get assigned on 25,000 to bleed 15,000 off and collect the net call premium. Eventually the long position is bought back for a lot less than it was sold for, and the derivative sold. Straight forward swing trade. Reverse the process on the way down, and shop the now bigger position into M&A. Feed the position to bots to drive the momo trade. SD

Nah .... the oil bulls were long positions selling into the war premium, and maintaining their exposure via calls. They will lose the premiums but more than make it back when the long positions are bought back at well under what they were sold for. SD

And a cease fire breaks out in the ME ...... https://ca.news.yahoo.com/trump-announces-israel-iran-ceasefire-222214425.html SD