SharperDingaan

Living in NYC is no different to living in a London, Paris, Milan, Sydney, Barcelona, etc. If you are a young person and shopping for a mate, this is where you want to be .... but it's a limited term engagement (6-7 yrs at most). You are also a big chunk of the annual churn - once you've decided to settle down you're renting in the burbs, 'cause kids are expensive! If most WFH and zoom all day - both the opportunities and the pool of potential mates in NYC just crashed. F*** It!, live in the burbs, travel to NYC on the weekend, and just rent a room in the DT on saturday night. Hotels are hurting, deals are abundant, and you look 'smart'. Not paying inflated rents, no car to maintain, discretionary cashflow, yada, yada. Common practice. 6-7 years? Graduate at 24/25 with a masters/designation, if the family hasn't started by 30/31 it isn't going to. Better get to it - 'cause the clock is ticking! Does it come back? Sure, but anyone's guess as to when Is it cheap? Compared to what, and is the comparative relevant SD

Just to throw something different out. You know squat about this, there's no real upside, and it is unlikely to end well. Of course there are exceptions, but the manager almost always has deep experience/expertise in it. Far smarter to look at the fintech platforms, find something that makes sense to all of you, and put your money there. It's modern, will give all of you very good experience, and if the investment blows up - your friends will not be blaming you. Different strokes. SD

You might want to look at the leasing business models. Typically 70%+ of a lessor is 1-2 big clients paying the bills, with the rest being small clients generating the profit. Profit from small clients subsidizing the net loss on the big ones. Remaining profit going to the investors. Your model only applies to the big SaaS players, and only when in stable state. Smaller players merge/consolidate, fire the big client, and use the lease buyout proceeds to finance the acquisition (&/or go private) ;D . The resultant entity typically ending up as a smaller but materially more profitable company, and a lot easier to manage. Ultimately, the big player then makes the smaller player an offer that it cannot refuse - paying in equity to avoid the tax bite. No change in share count if the big player is also in the market buying shares for cancelation ;) Industries moving into fintech, is not stable state. Look at the better players in the fintech space SD

There is nothing wrong with wealth/income inequality, the problem is the often sh1ty social behaviour of the wealthy. There is a reason for the division between 'old' and 'new' money - 'old' money has hung onto it; in large part 'cause they've learned how to behave. Wealth inequality is the NORM, not the exception. India's 'caste' system, Europe's various 'class' systems, similar things in most of Asia, South America, and Africa. Birds in gilded cages as an inspiration to all, but they ALL have to live/eat/shit somewhere, and when they 'forget' who they are ..... Mansions right next to slums is commonplace, the walls are just gated and guarded. We also call these places compounds, or ghettos. Routinely hire from the community ('cause you DO need the labour), and you make it extended family - everybody lives peacefully. Choose to be dysfunctional, and risk losing your privilege. 'Friends' advise that in many places K&R is the traditional cure to rich arsehole behaviour. If the family pays - the arsehole is returned; if not - well .... 'the tribe' has spoken. I understand that returns are often a 're-education' event, occasionally underlined with the odd missing body part. Essentially the private sector version of the state 're-education' camps (China, Russia). The message? Behave, and you will enjoy a nice life. SD

It's really the difference in net tax (after every possible deduction) that matters, and the remaining # of years over which you expect to pay. To get the lower rates you have to jump a lot of hoops, and both the annual and cumulative difference has to be enough to make it worthwhile. Assume a choice between the US (assume 35% tax) and BVI (25% duties). https://www.investopedia.com/ask/answers/100215/why-cayman-islands-considered-tax-haven.asp 10% on 1M is 100K saved, against which there are the incremental costs of living in BVI vs the US (assume 35K/yr). Are you really going to move to BVI to just save 65K/yr (6.5% on the 1M) in taxes? Probably not, 'cause frankly - you just don't earn enough! But what if you earn 10M/yr, and spend an incremental 100K/yr vs 35K? Moving to BVI now saves you 900K/yr (9% on the 10M) in taxes, and you will live a very nice life. Easy for companies to move (primary capital), not so much for people (secondary capital). Hence there can be some 'lag' in making tax rate adjustments. SD

But then why doesn’t everyone just do this with Switzerland. A country with zero capital gains tax ? Lots of places with zero capital gains tax, but most require you to either be a citizen or resident there. Ultimately You will pay, but it'll just be in other ways. EVERYBODY pays, even the Swiss. SD

The Cdn investment is put up as collateral against a loan, with loan proceeds invested in the US. No sales, no tax triggers, no issues. Blows up if there is a sudden drop in the value of the collateral, so most would over collateralize. SD

Strong possibility that going forward, the capital gains inclusion is tied to length of holding period. Arguably > 50% if the gain/loss is from short term trading, < 50% if the hold period is >'n' years. Estate transfers grandfathered at pre-change rules. Lot of people made 100%+ gains earlier this year when the Dow was swinging 2,000 points/day, and have just done it again with the vaccine announcements - a lot of people also have sizeable UNREALIZED losses. Better to let sleeping dogs lie, and NOT trigger mass sales; creating a net LOSS refunded at 50%+ The principal residence exemption is not going to be retroactively taken away, at worst the minimum residency time might be increased to 1 year or more. Going forward it's always a possibility but politicians still need to get elected, and there is little benefit to playing with live wires. WWII brought in a lot of 'temporary' changes to pay for the war effort, so expect creative fund raising efforts. Our own thoughts are 100% domestic, long term, tax free Covid bonds, with minimum holding periods and 100% inflation linked interest payments. Minimum hold of 5-10 yrs, so that they trade as medium term notes. Long term so that investors can keep the tax free status for as long as possible. Raise CAD 100B+ (fed + provinces) in successive financing rounds, and there is less need to risk messing with tax rates. SD ,

Whether the investment $ is spent learning coding, buying satoshi, or buying something else; the financial metric is the same - risk adjusted internal rate of return. A person invests in their highest IRR investments first, then goes down the list. To a young person interested in crypto, learning how to code will most likely be the better investment. If you are ancient, or already know how to code, your highest IRR opportunities have already been used up! The real value of Bitcoin is its utility as an anonymous mobile alternative to gold and hard currency (USD, Euro, etc). That ability to reliably and quickly move unlimited sums around inflation, capital controls, and corrupt regimes is incredibly valuable. The underworld involvement also keeps it relatively honest - as they collectively have the most to use. North Americans just do not get that. SD

Sadly the reality is that for someone in North America, BTC is just a sh1te investment. Most cannot margin against it and at today's USD 15,400/BTC - you could buy a lot of materially better quality stock, which both pays a dividend AND is marginable. Bit different if you live somewhere where your fiat currency is devaluing monthly (South America, South Africa, etc), but even then it is NOT an investment - it is just a less risky alternative to holding wads of scarce USD notes. A young person would be far better off using the USD 15,400 to learn coding instead, and simply contracting out some of their weeknights/weekends to do coding. Pays way better than McDonalds; at USD 25/hr you only need code an average 25-30 hrs/month to make 50%+/yr on your investment. Not that big a big stretch. SD

Every year until sale, inflation is an unrealized gain. When you sell (upon death), you receive cash for the asset, and the unrealized PTD inflation gain became a realized gain (it monetized). PTD monetary stimulus created the inflation. Upon death, the tax the government collected is passed back to the CB, which essentially repays the PTD monetary stimulus. Throughout your lifetime you benefited from the economic activity that the inflationary stimulus created - so YES, this is a good game to be in. The reality of course is that the $ collected are NOT passed back to the CB, the CB essentially NETS it against the magnitude of the current GROSS monetary stimulus instead. Not the best but reasonably efficient, effective, and robust. All else equal, when the working age population is growing (boomers, plus birth or immigration) - monetary deficits grow. When the working age population shrinks (Japan) - monetary surplus. Fiscal deficits get paid off from the cashflows that the investments (infrastructure) generate. In accounting terms; think of fiscal debt as fixed costs, annual monetary deficits as variable costs, and annual GNP as revenue. As GNP includes inflation - change the inflation rate, and change both the level of break-even activity, and the level of unemployment. SD

To use your own numbers, the 42.3% tax, just returns an investor back to the inflation adjusted equivalent. 235% * (1-.423 tax) = 136% - or about the 124% return with inflation adjustment. Point? The inflation tax is monetized when you sell. The example suggests that the trailing 20-25 year S&P 500 gain before inflation is the benchmark to be beaten. If your business is simply trading bits of paper - to get ahead, you must take on MORE risk than the S&P 500 Beta of 1.00. Pretty hard to argue against. SD

Most recognize that in any 'western' economy, 'government' is an obvious need. The problem is that the government is a monopoly buyer, it's often corrupt, and it's more effective/efficient if someone OTHER than government makes the goods/services purchased. Corruption isn't great, but it obeys the iron laws of economics - to live longer, and maximize the 'take' from a democracy, a ruler needs to keep the little people employed, spending money, and the 'oversight' as lean as possible. Create monopolies, regulate/sell ongoing licences to the few, and pass some of the wealth down as income for the little people. Sure a good/service will cost more than otherwise, but if the little people have more income, the cost as a % of that now higher income is LOWER than it would otherwise be. No higher income, pay the military more to put down the civil unrest, and risk losing your head. As in any good drug cartel - all are replaceable; simply follow the rules, and everyone does well. So what? If you don't like the tax regime regime, leave - you are readily replaceable: you just cant take your gains &/or knowledge with you. Different industries just use different solutions, 'sleep with the fishes' through to extradicial 'expropriation/liberation' - same net result. Every libertarian has to live/eat somewhere. Choose your poison wisely ;) SD

"lol. I've never heard inflation as a justification for the estate tax. I'm generally in favor of an estate tax on some level, but true inflation is a tax in and of itself. So now there will be an incentive to create even more inflation to produce more capital gains taxes! Seems counterproductive." It is used every single year in most places - to raise the excluded and tax exempt thresholds! This is just the other side of the same coin. https://www.williamsmullen.com/news/estate-planning-inflation-related-adjustments-tax-year-2021 We are also talking the same thing. The true annual inflation tax is just collected upon death, versus every year. All else equal, every year the value of the house increases by the inflation amount, and the estate liability increases by the cumulative inflation PTD, leaving the original capital invested on day-1. You leave the world with what you brought into it, and the original capital worth less because you did nothing with it to outrun the inflation rate. Not what the elderly want to hear. SD

Amusing thread. Tax on a capital gain, does not mean being taxed on the entire gain. In most places it simply means than a portion of the gain will be taxable - with the portion typically being a function of how long you held the investment. If you are trading/merchandising, 100% taxable, as buy/sell is your business. If it's something you've had for a long time, 0% taxable, as buy/sell is not what you do. Build a business from scratch and it's 0% taxable on sale - 'cause you paid the tax along the way, by hiring more employees and meeting the employer portion of their benefits. Buy an asset to resell years later and it's 0% tax on sale - 'cause you contributed both stable capital, and liquidity, that the market subsequently used to grow the business. Buy and sell securities in rapid succession, and you pay 100% - 'cause your actions are disruptive, parasitic, and contrary to long-term capital formation. Obviously, not what the financial sector wants to hear. Heresy to say, but inheritance tax is a good thing - and largely neutral. The estate just bitches 'cause it's less money for them. Your assets have benefited from annual inflation every year that you held the asset. If your primary asset is a house that you owned for 25 years, with 1.5% inflation/yr, inflation increased the value of the house by at least 1..015^25 - 1, or 45%. Paying an inheritance tax of 30-35% on death, is just taking back the inflation gain. Given that the sums are large, and 'incentives' huge, most people are going to end up paying around <1/2 what they should. Perfectly 'OK' , if you got there by making charitable donations - at independently assessed market value; as those donations were just another kind of tax. Ultimately either do something useful with your stash, or lose it - your choice. No one likes misers. SD

Both my sister and I went to all girl and all boy boarding schools. Very 'Eton', right down to the dress, high tables, etc - every wall proclaiming the names of former students who went on to win Beit or Rhodes Scholarships, become cabinet ministers, or lords of the empire, etc. Both of us did very well, but ultimately we didn't send the kids to boarding school. The view was that the kids would be better served if they just went to school with ordinary people. Add tutors as/when needed, immersive experiences in overland travel and refugee camps at 16-17, and grown up by 18. Mature well beyond their years, they are now their own men, and both have become babe magnets. So far, the preference seems to be strong women, who speak their minds! Point is, give them their independence, and get out of their way. SD

A lot depends on the age of the kid, the circumstances, and how long they will be there for. Kids are pretty resilient, most are pretty fair minded, and many are only temporarily at these schools because of a family break-up. While the break-up is going on, it's often a more structured and better environment than it would be at home. In most places a kid is grown up by 18 - when they are drafted. Hence a year or two before 18, kids get sent to boarding school. If the kid subsequently chooses to serve, he/she will have an easier time of it. If the kid chooses to dodge the draft, the life skills will help them land on their feet. But no matter what - it's a responsible kid making the decision. Predators and bullying are part of life, all kids have to learn how to deal with it. Obviously, the sooner the better. Seldom mentioned is that a lot of predators in private schools, have the unhealthy habit of attempting to fly from high places. A trip and fall from 3 stories up, cures a lot of attitude. SD

My sister was a boarder at an african all girls school of 500+ teenage girls, ranging from gilded diva through to farm girls from rural areas. Bullying is viscous, primarily mental, and me and my posse. Body shaming, privilege, looks division, and exploitive hair splitting is common. And when every girl is mommy's dearest, it's quite the shock to discover that you are just average, and not 'special'. The reality is that It reflects life, life is a brutal process, and the girls are simply finding their relative level. As their brothers are doing at the boys schools. The skills learned set you up for life, anywhere in the world. It is wealth in your head, totally independent of family wealth that can be taken away at any time. But to get it voluntarily, daddy has to insist, mommy has to cut the apron strings; and the kids have to be left to fledge - despite the tears. You send away kiddies, you get back quite capable women. I'm advised, that almost anywhere in the world, women almost instantly recognize other women who went to boarding/private schools; the imprint is that distinctive. It's quite the gift. SD

What do you want your kid(s) to learn? There is a lot of merit to sending your kids to boarding school, far from home, during their later years. The lessons are cut apron strings, a long leash, independence, leadership, and dealing with bullying. Yes there will be lots of tears, but the 'level setting', and rough and tumble will set them up for life. To quote lyrics from the great Gilbert and Sullivan, HMS Pinafore, A British Tar .... A British tar is a soaring soul As free as a mountain bird His energetic fist should be ready to resist A dictatorial word His nose should pant and his lip should curl His cheeks should flame and his brow should furl His bosom should heave and his heart should glow And his fist be ever ready for a knock-down blow His eyes should flash with an inborn fire His brow with scorn be wrung He never should bow down to a domineering frown Or the tang of a tyrant tongue His foot should stamp and his throat should growl His hair should curl and his face should scowl His eyes should flash and his breast protrude And this should be his customary attitude ... Widely envied across the world! SD

Ledger at the CB only, and no trial bank. Everyone with a wallet at the CB, accessed via a phone/device. There is a need for change management, but not a trial bank (CB can privately check the mirroring of existing bank accounts). A bank, lender, or credit card company is an intermediary - and blockchain is at heart a P2P technology that eliminates intermediaries. The CB network, combined with P2P technology, creates a monopoly – that can be easily regulated, with 21st century tools. In a Canada, this is existing practice, and we still do everyday banking. If you do what the regulator (OSFI) tells you, when they tell you, you will enjoy a nice life. Don’t, and you will either be replaced, or permanently kicked out of the banking cartel. It works, it is effective, and it is robust. Very different to the practices in many other places, that rely on both old plumbing, and the plumbing staying that way. Blockchain doesn’t rip out the old plumbing - it by-passes it, and makes it too expensive to use. Those other places can bitch all they want, but they either get with the program or go out of business, as economics is a bitch. Of course, the underlying assumption is that the ruing CB isn't corrupt. We have Bitcoin as the antidote, it was designed for almost exactly this condition (zero trust), and it closes the circle. Next time you see an anarchist, give him/her a kiss! Yin and Yang, alive and well. SD

E-krona is hard evidence that the public is accepting of digital currency, and using their phone/device as their bank account. And it comes with 2 yrs+ of quant data, covering everything from adoption rate through to granular monetary velocity in whatever sector you would like to know about. If it is representative, incredibly valuable data and impossible to dispute. If I use CBDC I don't need a checking account, and the CB sets the interest rate on my overnight balance of surplus funds. Hence, if a bank wants my money as a deposit - it has to outbid. It means NO negative interest rates, as why pay a bank to keep my money - when the CB with a better credit rating will do it for free? Obviously, this makes a lot of people very nervous - hence change management. The best mouse-trap in the world is pretty useless, if nobody thinks they will survive the disruption. SD

Sharperdigaan, What's your source for posting this? The Riksbank's e-krona project https://www.riksbank.se/en-gb/payments--cash/e-krona/ Designing a CBDC for universal access https://www.bankofcanada.ca/2020/06/staff-analytical-note-2020-10/ Riksbank is the best source for usage experience. Bank of Canada is the best source for principles. There is also related material at both the Bank of England and the Bank of International Settlements. Much of it not public, and for obvious reasons. Point is that CBDC is implementable, it is here, and it works. SD

CBDC is doing very well thank you; the impediment is not the technology, it is the corporate social responsibility that goes with implementation. A very real restraint under Covid, as we need the work that existing systems generate. A very narrow, sectoral, example. Similar things would play out in other sectors as well, and at about the same time. Were a global CBDC in place (one ring that rules them all), ALMOST ALL securities transactions AROUND THE WORLD would settle almost immediately. Value changing hands at the CB wallets, beneficial interest changing hands in a ledger similar to that used by CBDC. To do this at scale, we need to use the hyperledger and private oracles/ledgers. At present we can only do parts of what is required, and don't have the armies of hyperledger coders necessary - a temporary limitation. Every 'financial' city around the world has thousands of clerks involved in transaction settlement, occupying floors of high priced real estate. Settle via CBDC and they are both instantly redundant AND obsolete. All those involved in credit card settlement, A/R, and A/P are gone as well. How on earth do you manage that scale of permanent mass layoff, without it blowing up on you? Corporate Social Responsibility. Velocity of money is simply level of economic activity (transactions value/money supply). Covid materially reduced economic activity, and QE materially increased money supply. Hardly surprising that Velocity has dropped like a brick. In many places the solution has been to just give people a minimum payment every month. Incremental QE simultaneously distributed through mass payment, and withdrawn from the total money supply. Higher activity, on the same net supply of money, but hated by money centers as it deflates asset value bubbles. If ever there was a silver lining to Covid, it is the forced rethink as to how crypto is going to be implemented. Change management and Corporate Social Responsibility forced into front and center. All good. SD

Just to throw one out for the boiler maker .... https://medium.com/incerto/surgeons-should-notlook-like-surgeons-23b0e2cf6d52 "Say you had the choice between two surgeons of similar rank in the same department in some hospital. The first is highly refined in appearance; he wears silver-rimmed glasses, has a thin build, delicate hands, a measured speech, and elegant gestures. His hair is silver and well combed. He is the person you would put in a movie if you needed to impersonate a surgeon. His office prominently boasts an Ivy League diploma, both for his undergraduate and medical schools. The second one looks like a butcher; he is overweight, with large hands, uncouth speech and an unkempt appearance. His shirt is dangling from the back. No known tailor in the East Coast of the U.S. is capable of making his shirt button at the neck. He speaks unapologetically with a strong New Yawk accent, as if he wasn’t aware of it. He even has a gold tooth showing when he opens his mouth. The absence of diploma on the wall hints at the lack of pride in his education: he perhaps went to some local college. In a movie, you would expect him to impersonate a retired bodyguard for a junior congressman, or a third-generation cook in a New Jersey cafeteria. Now if I had to pick, I would overcome my suckerproneness and take the butcher any minute. Even more: I would seek the butcher as a third option if my choice was between two doctors who looked like doctors. Why? Simply the one who doesn’t look the part, conditional of having made a (sort of) successful career in his profession, had to have much to overcome in terms of perception. And if we are lucky enough to have people who do not look the part, it is thanks to the presence of some skin in the game, the contact with reality that filters out incompetence, as reality is blind to looks. When the results come from dealing directly with reality rather than through the agency of commentators, image matters less, even if it correlates to skills. But image matters quite a bit when there is hierarchy and standardized “job evaluation”." In this analogy, the little people are the butchers - dealing directly with reality, everyday. We don't see them, because their gains went into the very unglamorous purchase of multiple rental properties, and mortgage retirement. They live modestly and own their multiple properties outright ;D SD

If NOT following the leader hurts your pocket book, the rational thing is to follow your pocket book -'yes' men exist for a reason. We also actively discourage NOT following the leader - as most employers will fire you if you short or buy puts on your employer, despite it mitigating your employment risk. But if most of the leaders in your industry make similar bad decisions, at about the sane time - the employee is golden!, as now he/she can safely short the competitor, and REALLY mitigate the employment risk. The more gamblers, the higher the odds of a industry blow-up, and collecting on the short. If he/she subsequently loses their job, they will be a collection of severance as well. Group think exists for a reason! Every good leader knows it's a limited term engagement - and to NEVER piss off the little people! If they had your skills, you'd be the one doing the janitors work ;) SD