SharperDingaan

There are a lot of people being seriously harmed by inflation. Seniors on fixed income, the great many on social assistance, and now the lower middle class being forced to foodbanks. Sure, some just made bad decisions, but for most - working more hours/2nd job, for higher pay, is just not practical. Those folks become homeless, and just cost society more. Refuse to deal with the problem, and your government gets overthrown. We see that everyday in most other parts of the world, and we see it in the US as well. Todays toxic political discourse, senate riots, etc. did not come out of nowhere. Wall St is a closed world, under assault; lobbying/bribing on a widespread basis to maintain it's position. Main street can change the politicians every few years, but that's about it - and easily corruptible. The real threat is the changing technology that eliminates intermediation - and Wall Streets reason for existence. The good news is that closed worlds suffer from in-breeding. The why supposedly very smart and independent people all end up in the same failing investment, and in size. Compare the average business smarts of those doing the day-to-day running of mid/large US companies, vs Wall St - the gap is getting wider, and not in favor of Wall St. So what? By and large, trade against the Wall St view - as you know Wall St is compromised. Guerilla trade the discontinuities, where Wall St luminaries will have to lobby their way out - when they are successful, you will be too Defeat the larger force by not going head-to-head with it, toss sugar/sand in its gas tank instead. SD

Good feedback. Widespread smart contract automation is already 'in the box' (Proven daily NYSE, NASDAQ, TSX trade/confirmation/settlement in seconds). It's just not yet implemented, re the widespread change management and CSR impacts that implementation will produce Digital smart contracts are not yet widespread, as the physical world hasn't yet caught up to them. Deliver 100 units to XYZ location, dock 4, at 2pm on Tuesday is easy to program; but hard to reliably do in practice. Short ship you don't get paid, arrive late, the warehouseman doesn't sign off on the delivery, you don't get paid. A delay at the border, a crash on the highway, the contract goes force majeure, and you don't get paid. The digital solution is to simply add a buffer, deliver between 2-8 pm on Tuesday. The problem is that physical implementation is a nightmare - a truck cannot just show up at a busy loading dock anytime within a 6 hour window and expect to be served, just as a plane can't just show up at Newark airport anytime within a 6 hour window and expect to be served. Similarly, it is just not physically practical to test every item received; you accept the 1,000 units, accept that 2% will not work, and build the costs into your contract (consumer electronics). Industry physical standards take a while to work out, and until then, smart-contract automation stalls. Add to this the lack of economical 'off the shelf' smart contract solutions, that can easily integrate with a small/mid sized company's existing CRM, manufacturing, inventory, and accounting systems. Most companies in NA excluded, simply 'cause the software isn't there. The potential benefits/savings of smart contract solutions are obvious to most managements. But unless you are big enough to do this on your own, you're stuck at the glacial pace of vendor roll-outs. Hence (Estonia excluded) for now, it is hard to see broader implementation. The world needs to catch up. SD

Most applications (80%+) don't require a blockchain solution; they could be done better, or just as well, using a standard data base. There is a well known paper outlining a technology cascade by which to determine when blockchain is the better solution. Smart contracts are about automation of the 80% of everyday business, not the legal. A smart contract just has to divide up the legal requirements, code and assign them between buyer/seller, and include a tolerance range on each major variable. There is no contract until the buyer signs; and if there are bugs the buyer has accepted them. It's just a different way of doing business; eliminating 'undo' in favor of higher buyer/seller accountability - you make a fat finger error, you wear it. Stable coin, as they are currently used, are obsolete; CBDC is a far more efficient/effective alternative, and already exists in a major currency (digital yuan). The best use of a stable coin is in securitization; assets maintained at a custodian bank, code automation replacing the workforce processing payments, and an annual audit. Bitcoin itself, is the Yin to the Yang of CBDC. In many parts of the world, CB's are just not trusted, and for very good reason. The genies out of the bottle are the 'every man' ability to evade capital controls, and protect against inflation - and they are never going back. Like the clap, learn to live with it. The real issue is the rapid obsolescence, and permanent job loss, that the underlying block chain technology generates via automation. Creative near term destruction, while the technology evolves to the greater good. Premium on Change Management, ESG reporting, and Corporate Social Responsibility. The various Ponzi schemes are coming to an end, but without them - the technology would not be where it is today. Back in the day there were similar schemes when horses gave way to motor cars, and sail gave way to steam. Lots of opportunities As at 2022-05-15, 12:59PM UCT, BTC is USD 30,269 SD

We're very old fashioned ... Bootlegging is the way to go - cash business, the benefits are direct, and you can easily see how well you're doing; by looking up your bank balance. Make it yourself, smuggle and resell, or just sell someone else's for a commission - the world is your oyster! SD

Always nice to have a confirmation, a day or so after predicting a failure.. https://www.theglobeandmail.com/business/international-business/article-bitcoins-2021-gains-wiped-out-as-stablecoins-send-shockwaves-around/ Tether slipped below its 1:1 dollar peg, hitting as a low of 95 cents around 0724 GMT on Thursday, based on CoinMarketCap data. “The lack of transparency provided by Tether on the quality of commercial paper they hold to back the peg made it the obvious next target,” said BCB Group’s Usher. “However, Tether is a very different animal to Terra, with a more proven ecosystem and I have far more confidence that when volatility subsides it can regain its peg and stability,” he said. Paolo Ardoino, Tether’s chief technology officer, said in a Twitter Spaces chat that the stablecoin had reduced its exposure to commercial paper over the last six months and now holds the majority of its reserves in U.S. Treasuries. Ardoino said a quarterly update on Tether’s reserves would be available later in the month. Now with a bit of luck, BTC drops to USD 20,000, stays there for a while, and we can go shopping Then Uncle Warren shows up with a stack of treasuries, in exchange for a convertible SD

Think of the margin casino as expanding day-to-day volume, and reducing volatility as a by-product; plus an overlay of progressively less frequent market discontinuities as adoption increases. You can still get your teeth kicked in (if you have to sell), but you can manage the risk via use of a VaR model, and a longer time horizon. The margin casino itself as an event generator. Sell into (when sentiment is buoyant), and buy out of (when the sky is falling), as/when you need to. SD

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