SharperDingaan

Keep in mind that the closer we get to 21M token, the more the price of a BTC is driven entirely by demand. And that as demand becomes larger with increasing adoption, price volatility declines at an accelerating rate. Daily volume changes dividing over a progressively larger total volume, reducing price volatility, lower price volatility accelerating adoption, and further raising total volume. The feedback loop until BTC equilibrium is reached... On a fixed supply, the higher the volume (demand) transacting in BTC, the higher the price of BTC will be. And as the price of BTC rises, it drags the rest of the crypto asset class up with it. Lots of ways by which to play this; but it comes down to knowledge, risk tolerance and time horizon. If you have the temperament. It is essentially Microsoft at cents in the dollar. We live in interesting times. SD

Lot of crypto 'underpinnings' are being tested, and there will be failures. Ideally a very prominent peg breaks the buck; following which the big players step in to defend the peg, and run it thereafter. Market reactively does a temporarily 20-30% drop, then business as usual. Down-market version of WEB's convertible share bail out of GS, during the Lehman's collapse. There is also a lot of garbage in the NFT and Stable Coin space. Those without a 'real' business case unlikely to do well, and their progressive demises contributing to the funk. However, 3-5 years out? everyone screaming 'that was the time to buy!' SD

BTC and ETH are currently at USD 31,000 and USD 2,400. Depending on your risk tolerance, liquidity, and holding period ... there is an opportunity in NFT. Most NFT is priced in WETH. When crypto is buoyant, everyone is flush, and the price of ETH is high, the WETH price of the NFT is bid up. IE: The NFT sells for .3 WETH versus .2 WETH. When crypto is down, everyone is depressed/broke, and the price of ETH is low, the WETH price of the NFT is bid down. IE: The NFT sells for .1 WETH versus .2 WETH. So what? Had you simply bought ETH, you could only make the market high - low. But had you bought the NFT, you would magnify that ETH price difference by the difference in the WETH bid (1+((.3-.1)/.2))/1. And were you an enterprising lad ... those low price NFT's would have been bought with the MTM settlement on ETH puts No different to buying NY RE in a slump, and flipping it in a boom - but at multiple times less of a capital requirement. Gotta love crypto! SD

The NA reality is that the infrastructure was built for a different time, that has long since passed. This is not a simple repeat of the 70's oil crises; raise supply, and the whole problem goes away. This time around it is the fuels themselves transitioning to cheaper alternates, auto makers changing to entirely new tech (IC versus electric engines), and blockchain technology fundamentally re-making the old 'world orders'. Organic and disruptive change, without a plan, scaring the sh1t out of everyone. Example: National electric grids are elderly, and were just not designed for this century's requirements. Nukes providing base load are at retirement, and will not be replaced until waste disposal is permanently addressed. Clean energies are limited primarily by energy storage, and 'not in my back yard'. US coastal electricity should be almost entirely from offshore windmills Spent fuel rods; packed into rockets, and fired into the sun. The obvious approach is to asset strip the o/g investments, and redeploy the capital. Same as the energy majors have already been doing, and for some time. SD

Sorry, but in the real world there are no guarantees. You currently have two houses, and can only live in one of them - sell at an opportunity loss, or learn to live with the possibility of damages. SD

Pay your friend roughly 3-4% of the rental receipts, and buy them a case of Wine/Champaign every year. Keep the place rented for a year, with no damages, and there's also a pair of Calgary Flames hockey tickets in it for you. Professional management fees would be around 7% of rental receipts. 3-4%, plus goodies, as an attractive/reasonable saw-off. SD

Buyers stretched to buy the bigger house they could now afford; when rates went from 5% to 2.5%. The interest cost remained the same, 'cause the mortgage was now bigger. Why the bigger house? 'cause all else equal, a 20% net gain on a 700K asset, is bigger than a 20% net gain on a 500K asset - see how smart we are! Thing is, buyers did not recognize that over the holding period, life stage was ALSO changing. 5 years in, and 1-2 kids later, it is not just sell the house and buy someplace else anymore. It's now sell and buy in the same neighborhood, and if all the houses cost about the same ... there is no monetary transactional gain to apply against the mortgage. There is just a bigger mortgage, at higher rates, and everyone using the foodbank to augment the Kraft dinner 4 nights/week. Buyers either divorce, give up the neighborhood, or moms/dads help cover the mortgage payments while the kids are young and there is only one income. Divorce high on the list, as it ends the fighting, forces a location/status change, and releases the equity built up on the bigger house. Money to start again with .... Not a hard problem to resolve, but the divorce stats would suggest a great many are unable to. Obviously, not the way to go. SD

Seems a helpful 'slip of the knife' could make the transfer permanent. Putin was #1 for as long as he was, because he was smarter and more ruthless than all the rest. This is a transfer to a varsity team patsy, being set up to take the fall. It would appear that Putin in a box is getting closer. SD

A lot of the buying has been boomer investment in 2nd property purchases. Boomers using the equity runup on their existing house, to fund the DP on the 2nd property via a Heloc. The 2nd property pledged as collateral against a mortgage for the (cost - DP) difference, and rented out to cover the monthly operating cost. Accumulated negative carry financed against the heloc, and repaid from future expected capital gain, Highly speculative to many, but actually quite smart. The second property is often the smaller retirement condo the boomer expects to downsize into; a new build bought cheap off plan, taking time to construct and be finished as requested, and upon completion - available whenever mom/dad choose to move in. Until then - rental income covering most of the cash cost, net investment carry costs generating tax refunds, and asset/liability inflation covering erosion of purchasing power. Not a guaranteed solution, but a very good one. In the interim, the property is often simply rented to the kids. They need a reasonable place to live, and mom/dad need a reliable tenant. Sure rising interest rates hurt, but they don't cause widespread selling. SD

Purely a speculation, but most would argue that part of the BOC interest rate raise is to intentionally drop housing prices in Toronto and Vancouver. Bust some of the speculation and immediately force some of those speculative houses back onto the market, to raise supply, and drop house prices further. A controlled fall vs panic selling. Longer term it is going to require large quantities of fiscal investment in lower end housing, in a similar solution to the post WWII baby boom. Build in quantity, force the lower end price of a house down, and fill them with annual mass immigration in the 400-600K/yr range. Let the population numbers drive the economics/politics, and get out of the way. Change. SD

An immigrant to Canada, is here primarily for their kids future; they've come from devastation, and the future Canadian 'life' their kids will grow up in is not going to be given up. Sure you can emigrate someplace else to evade your mortgage obligation; but the bank has both the equity cushion of your DP, and insurance against the mortgage. You will also have a difficult time moving your money out of Canada, with this kind of a default against your name. Very small minority. Worst case, maybe the 800K house is 20% overvalued, and only worth 666K (800/1.2). But it's a hard asset, growing at the inflation rate (7% in Canada) - all else equal, one year out; that 666K value is 713K (666x1.07). Actual amount at risk?, maybe 87K (713-800), or 11% (87/800) of the asset value. The thing is, that 800K house, 20% DP, also has a 640K mortgage. A hard liability devaluing at the 7% inflation rate - all else equal, one year out, that 640K liability is worth 595K (640x (1-0.07)). Inflation gain of 45K (595-640). 87K of asset loss, offset by 45K of inflation gain; net reduction in spending power of 42K, or 5% (42/800) of the asset. In real (after inflation) terms, a 5% change is squat. SD

The financial structure of the Canadian market is materially different from the US, and not comparable. Mortgages are recourse, and anything over an 80% LTV is insured. A US resident accustomed to a 10% DP, would have to pay an additional 2.4% of the mortgage as insurance premium. A 800K house, 20% DP (typical), will have a 640K mortgage. After CHMC insurance, a 15-yr fixed rate mortgage will cost 7.275% (4.875+2.4), or $46,560/Yr (7.275% x 640K), or $3,866/mo. https://www.cmhc-schl.gc.ca/en/professionals/industry-innovation-and-leadership/industry-expertise/resources-for-mortgage-professionals/mortgage-loan-insurance-and-premiums https://smartasset.com/mortgage/td-bank-mortgage-rates So what? The market goes down 30% the banks aren't going to sell. They are going to foreclose, toss you out, and CMHC is going to defease the mortgage until it resets. No cascade of distress selling, market prices staying high enough to stall further foreclosures, and stability. Market activity slows down, real estate and mortgage brokers starve (fewer transactions). As mortgages reset, CHMC simply refinances at roughly the 180 day BA rate; the BoC financing on behalf of CMHC. New borrowers don't get a mortgage period, unless they can pass a financial stress test at 150bp above the expected cost. No pass, no play, no additional risk. The BoC isn't mommy/daddy; borrowers can whine/raise a fuss, etc. as much as they like - but it remains no play. SD

Keep in mind that 'Bitcoin' is actually crypto as an 'investment class'; which reporters just don't 'get'. BTC, ETH, CME BTC/ETH futures/options, NFT, Stable Coin, CBDC, carbon/pollution trading, and crypto exchanges. A wide enough class to enable reasonable internal diversification, that improves as liquidity improves. It is pretty hard to see how these assets don't increase in value over time at a significant CAGR. It is also a given that there will be significant volatility along the way. WEB's 'buy/hold forever' is all about buying < IV, selling > IV, and continuing to hold the underlying over time; IV is simply whatever you think the stock is worth at the time. When WEB was young the choice was industrials, in 2022 it's 'crypto'; same approach, just different times. Too large a stretch for grandpa, hence 'too hard'. A stretch for mom/dad as well - if they need stability to keep making the mortgage, car payments, school fees, etc. But to a young person, not yet 'encumbered' by life responsibilities? this is as obvious an approach as breathing. Hence, these funds should do well over time; if only because as everyone ages, they accumulate greater numbers of people comfortable with the asset class. SD

Just to add to Gregmal's post ... Consider making the most recent 15 posts on every investment idea visible to all; thereafter, offer a 1-month time-limited membership for a small fee. Upon expiry, offer a lifetime membership for a higher fee. You are targeting those looking at a specific company, that have been referred to the COBF site - there is no need to give them the milk for free. SD

Think in terms of impact x probability. At the top of the chain, people very likely saw high impact, but almost no probability of it occurring - as it just wasn't rational. Then Putin goes crazy, and they all have to follow. The generals will all be familiar with Hitler's failed foray into Russia. Their best hope is that Ukraine falls, failing which what happened to von Brauchitsch happens to them. https://www.britannica.com/biography/Walther-von-Brauchitsch SD

Selling the family hovel, is a 'joint' decision - she decides, you're just informed. Most aren't going to sell unless there is a very clear need; divorce, downsize, infirm spouse, etc. Investment pro/con has very little to do with it, though a great many prefer to think otherwise. We've never owned a vacation home; we want a place we rent it, and almost always in a different place. We own a few equity interests in small 'pensions', but always on the European model, and on a hobby basis. The 4% ownership thing, and 2-weeks/yr on site in an oversight capacity. We can travel to different places, but we're working while we're there. Were it me only, I would have no hesitation ruthlessly flipping investment property on a dime, and exploiting financing. But I would also have a realtors license, at least 1-2 trade certs, and would treat the whole thing as a side hustle in its own corporate shell. Always the agent on one side of every trade, always rolling 3-4 properties, and one sell/buy roughly every 9 months. Stop when the day job pays more, &/or the future spouse shows up. Let the corporate shell go dormant, earning a passive income. Home/investment have different risk profiles...... the reality is that some can successfully mix the two, but most cannot. I know my limitations! SD

Just to throw out some current rates, from one of the Canadian Sched-A banks. https://www.td.com/ca/en/personal-banking/products/mortgages/mortgage-rates/ The current 5-yr closed fixed rate is 4.19%, the 5-yr closed variable rate is 2.70%. The difference is 149bp, and almost exactly the expected increase in interest rates over the next 2-3 months. If you chose to 'hedge' tomorrow, by switching from a variable to fixed rate mortgage, that 150bp difference on a 720K mortgage (10% DP) is $10,800/yr, or $900/month This $900-1000 number keeps coming up, and as most people couldn't make their offer without variable rate financing .... there is a lot more of this than you think. Assume 3% commission/legal/land transfer costs to buy/sell a house. You are panicking, and immediately want out, 'cause if the proceeds are < the mortgage - you're still on the hook for the difference (recourse lending in Canada). You bought at 800K, and sold at 720K, which wiped out your 80K DP. However ..... you're still in the hole that 3% exit cost, or 21.6K (0.03x720K). This is the incremental housing supply that rapidly cools the market, and improves the economy. The bulk of these sales being the airBnB/mostly empty houses, going to families who will actually live in them full time as principal residences. That mostly empty house ?? What do you think your cottage in the country is - when you're only there maybe 2-3 months/yr. SD

Canada/Australia: commodity boom is a definite tailwind. Very strong economies. Canada will have very high immigration (400,000). As interest rates go higher what happens to housing bubbles? Does air come out slowly or not? We have already seen the answer. In a Toronto - there are are now only 2 bids above offer, versus 20 Today's Toronto Star has the example of a 800K house (Toronto average), with a 10% DP, and a floating rate mortgage. On a mortgage of 720K, a 50bp increase in interest rates, raises the monthly debt cost by $300. Should the BOC raise by the expected additional 125bp over the next 3 months, the monthly debt cost rises a further $750. If you had stretched to buy 2 months ago, and got the house; during your first 6 months of ownership your monthly debt cost will haven risen by $1.050/month - along with the rise in your gas, food, and utilities costs, etc. Hence the screaming over inflation. House prices may fall 5-10%. but that's it. You don't have to buy in a Toronto, you simply buy in the GTA and commute - as does everyone else. SD

On the Canadian side, there is now a 2/3 expectation that the BOC will now raise by 75bp on June 01, and not the previously expected 50bp. Inclined to agree as after the raise, the BOC will simply be back to what it was at the start of Covid. Thereafter it would make a lot of sense to do a 2nd 75bp raise, a lot sooner vs later, and use the 150bp raise to get ahead of inflation. Big raises north of the border, aren't going to influence the US. However, they do indicate that material raises are on the table, and sooner versus later. Obviously, not what the market wants to hear. SD

We've done well by bonds, but in all cases it was a bet against the market - and we had to risk significant cash. The only time to buy a bond index, is when you expect the yield curve to decline over time. Today, in most places, we are looking at the yield curve rising 150-300 bp. Hence, anything with a straight future cash stream is going to discount to a lower PV, and the longer the duration the worse it is going to be. To get around this you either need the convexity of a high coupon (mostly junk bonds), or a convertible. We've bought distressed bonds that ultimately matured at par, and zero-coupon sovereigns at market yields > 14%. We did well, but ultimately it just wasn't worth the mental stress or the portfolio restrictions over extended periods. Dropping 50K on 1M+ of Greek zero-coupons attracts a great deal of ridicule, and a great deal of envy when you subsequently exit, a few months later. Obviously, there is a need for some FI investment - however, it is almost always better to hold it as T-Bills, and as part of a broader strategy. Walk away from your non-recourse mortgage (US) today, with little consequence, and your banker will hate you. But walk into his/her bank the next day. with 100K of T-Bills, and he/she will happily give you a margin loan against it, at great rates, while smiling nicely, and gritting his/her teeth. You're still scum, but the loan is secured against the federal reserve - and now your shit don't smell! FI is held primarily for security, and it's pretty hard to beat a US T-Bill. SD

Had a couple of games of chess recently with some Russian friends, all of whom had retired and escaped from Russia many years ago. Already good to start with, they have all have dramatically improved their 'game' over the last few months. Learnt all kinds of new ways of doing things. The Russian goods, vs currency, FX rate is dramatically different - and widening. Cross the border with a railcar of Beluga Vodka under a layer of coal, and in some places - it will buy you an entire house. SD

Agreed, it's simply different POV's. Putin cannot afford to lose, simply because he has too much on the table. He needs a victory in the east, a Ukraine annexation (before May 9 Victory Day), and can only continue doubling down. Should the new push fail, the remaining choices are biological or nuclear - both of which will provoke a GLOBAL response.. NATO, and UN participants, are NOT the same thing - the US supplying weapons via the UN does not trigger a NATO response. The Gulf Wars and Kuwait were coalition forces, the same as the GLOBAL escalation response would very likely be. NATO does not go to war. If you are going to escalate, you burn the boats (blow the pipelines). The objective is a decisive win as rapidly as possible, avoidance of a WWIII via an end to the escalation, and European (German) ongoing commitment. The world bears the temporary costs (higher gas prices), it does so because it is cheaper than escalation into WWIII, and it tries to minimize costs by getting to a practical political solution, as rapidly as possible All else equal, it will be brutal, but Russia should win the current push. But it is somewhat questionable if the Ukraine has access to unlimited supplies of western high-tech weaponry - hence the threats to cease supplying it. Of course - that is unlikely to happen. Russia is collapsing, and it is using its last reserves on Donbas. They fail to annex, the Iron Curtain comes down very quickly, and we get the political 'compromise'. Different POV. SD

Dropping a nuke WILL provoke a response. Most would expect it to be conventional precision weapons, targeting all high-value targets in the Ukraine theatre, including leadership, and the pipelines carrying Russian gas. US gives the weapons to the UN, and UN participants prosecute the strikes. The Russian calculus relies on the US not matching the ante (by supplying the required weaponry), for fear of nuclear retaliation. The reality of course is that MADD immediately ratchets up the ante for all - as soon as any one player goes nuclear. The weaponry has little choice but to flow. The Ukraine needs an interim political solution. Most would expect a return to a cold-war iron curtain that includes parts of the Ukraine, NATO missiles parked in nearby countries, and the Ukraine in the middle; growing food. Nobody 'likes' it, it simply freezes the situation; but its the Russia 'old-men' know. Do nothing further, and over the next 30 years, they will all be dead from old age. All things Russian, point back to Putin. The reality is that 'Putin in a box' pops the boil, and allows the sepsis to safely drain out; the mystery is what comes after, and who does the deed. The reluctance is that whatever precedent is set, it could in-turn, be used on you. Hence, the preference for internal resolution, and limited outside 'official' help. A nuke comes down, Russian forces in the Ukraine get annihilated, and the Iron Curtain comes down very rapidly. Obviously, not the optimum solution. SD

Drop any kind of nuke, anywhere, and you set off an unpredictable global chain of events; your odds of surviving it are very slim indeed. Nukes are simply a table stake, used when your current total ante is enough to ruin you - should you lose. Win/lose is irrelevant, the purpose is to intimidate, and make opponents back off. The reality is that 'spheres of influence' are simply an attempt to halt 'change' at a point favorable to you. However, history has long demonstrated that change is akin to a permanently flowing river; it can be damned up for a time behind the 'powers of the day', and 'controlled' via planned releases - but the damns eventually collapse. Old men, unable to change, striving for the 'old days', taking everyone else with them. Obviously, 'Putin in a box' is the best outcome for everybody; and at this point, it is now more just a matter of time. Something that Putin, as a former KGB spy master, will be well aware of. Hence .... keep scanning that daily copy of Pravda! SD

Russia also has the issue of getting paid for their crude.... In theory, the west pays OPEC USD for the 'blend', and OPEC passes the USD through to Russia. In practice, Russian tankers cannot use western port facilities, and Russia cannot receive USD on new crude purchases. However, there are no restrictions on loans , at an interest rate commensurate with both the smell and the risk. The west simply sets up a USD payable, secured against frozen Russian funds. Thereafter, OPEC is simply paid for each delivery of 'blend', with a portion of this USD payable, and OPEC/China relends USD to Russia at a premium rate Blended only 'on paper', the physical Russian portion is simply re-sold directly to China/India - where there are no off-loading/port restrictions. OPEC facilitates the trade by buying the Russian crude at a steep discount, charging a steep 'handling' fee for the 'processing', a steep spread on the loans, and keeps 2-3 months of float. The west facilitates the trade by netting against the frozen funds (free crude oil), earning interest on the frozen funds, and essentially never releasing them. Free oil continues to flow until the frozen assets are exhausted, bribes continue to get paid, Russia avoids a sovereign default, and everyone is happy. There are very few ways Russia can access large quantities of USD. One is this way, the other is the Chinese agreeing to swap crude oil Yuan proceeds against their US USD reserves. Both ways are very expensive, and yet here Russia is trying to cut a deal? An indication as to just how desperate the Russia Central Bank actually is ???? The LNG/NG issue will largely resolve itself over the summer, and Russian gas demand will be reduced in stages designed to inflict as much financial damage on Russia as possible. The longer the war drags on, the worse it gets Capitalism at work! We live in interesting times, SD