SharperDingaan

CBDC has been in 'test' for some time (eKrone), and has been very successful. The current push is because of Libra, the digital currency that will be used on Facebook to facilitate payments between Facebook accounts anywhere in the world. Every nation in the world quoting a bid/ask fiat/Libra exchange rate, and every other global Google/Amazon/AliBaba, etc doing much the same thing. Go into an FX exchange and you will see two boards - one for fiat currencies, and one for digital. Transformative, as a Libra would not be under anyone's regulatory control, and backed only by the full faith and credit of Facebook/Zuckerberg. Coin backed by Facebook, Google, Amazon, etc. having a higher credit rating than some sovereigns? Great idea of course, until the one ring that rules them all shows up (Lord of the Rings). A master CBDC, backed by the worlds central bank (and its network of CB's). ONE master digital currency, as the reserve currency of the world, and every transaction in that currency (anywhere in the world) visible to central banks. All the quant data that you could possibly want, materially less tax leakage, and far harder to money-launder. Reduce the quantity of physical bills (issued by CB's), and you have to take payment in goods that keep accumulating. Inventory is a bitch!!!!, and the bigger your acorn pile, the more visible it is, and the more likely your 'friends' are to liberate it. The age-old problem of wealth - easy to get rich, keeping it is something else ;) The wise accountant would simply dump the inventory at a loss, put the proceeds into Bitcoin, and hedge the value via options/futures. Problem is, the Bitcoin wallet it went into is visible, as well as any transfers out of that wallet - and the ledgers have to be visible to keep the 'system' honest. Ways around this of course, but they cost - and some Oracle, 'somewhere', knows who you are - as they issued the keys to the wallet. Simply make the Oracle an offer that it cannot refuse? Welcome to the 21st century. My money is on the master digital currency. SD '

The Politics Category serves a useful function. Continuation is subject to diminishing return, but PTD it has been fairly effective. The US election is over in 17 days, following which we will all know if a divisive president is still in power. Should he lose, most would expect a divisive transition of power for a couple of months - as abusive 'pardons' are revoked, 'Gucci' ankle-bracelets become fashionable, and stayed prosecutions come into effect. 2021 is a new year, ripe with new promise. It would make a great deal of opportune sense to shut down the Politics Category on the one-year anniversary of the Covid-19 lockdown in Canada. Replace the category with links to a political book-making shop, re-set the expectations base line, and symbolically just move COBF on to a better place. It is an investment forum - so give members a place to make their bets instead, and earn something to offset the cost of upkeep ;) Different strokes. SD

Always seek out the colourful 5%. You meet the most interesting people! SD

Many, many years ago I had the good fortune to share a plane ride with him while working the McKenzie Valley Pipeline between the Fall and Winter semesters. Our bush-plane had been delayed, I needed to get to the Beaufort quickly, and he had a spare seat and room on the floor for my gear. I had no idea who he was, at the time I was in my 2nd year of petroleum engineering at university, had been in Canada for barely 2 years, both Canada and I were 'adapting' to each other, and the oil boom was weeks away from collapse. We ended up betting that I would do far better in business, that I would in engineering, and exchanged signed $10 bills (his American $10 for my Canadian $10 - as I'm not dumb!). The oil collapse was brutal, and ultimately I ended up switching from petroleum engineering, via geology, to business (finance/acctg) - picking up some business scholarships along the way. Came graduation day, when I gave the signed $10 note to my dean, I found out who he was. Following which we arranged for the bill to be archived. Needless to say we got on famously - as I wasn't the only former bootlegger on the plane! Salt of the earth, and sadly gone now. SD

Reporting delays are because 'independents' are balking at signing off - typically 'cause it's not what it seems. Long-term holders (FFH, FAH) believe going concern is not a problem? but have had to demonstrate it by supporting the market, versus just injecting more equity? Kind of implies that without the support ... they expect a run on the FAH share-price, and a 're-set'. Hopefully we're wrong. We wish them luck. SD

The major catches to all this is availability of high-speed internet with adequate band width, zoning restrictions within the surrounding small towns, and integration. There is often a very real drop-off in connectivity as soon as you go rural, limiting where you can go. That 60's style SFH in a small town is typically demolished and replaced with a new-build monster home - with every other new (& rich) arrival on the street doing the same thing. Yes it reflects highest and best use of the serviced lot - but it really pisses the old-timers off. Small towns are sleepy - because they like it way. A few rich folk is one thing, too many is gentrification. SD

If you want detached, pay up. Toronto's 'burb prices are rising because there is no supply, and everyone wants one. But if you're a builder - greenfield developments are multiple residences as there's more money in it. Hence the CAD IM+ detached house in many surrounding Toronto burbs, at 45 minutes main-line train travel, every 1/2 hour, to/from downtown Toronto. Much of the offshore investment is 'safety' money, in case owners ever have to run. There is no appetite for a visible sale, so much of it will either sell 'underground', or just rent for whatever it can get - with the owner covering the shortfall. IE: It's not going on the market, and further lowering prices. SD

The Toronto downtown vacancy rate (Grade A space) has gone from a little over 1% in January, to 4.7% as at September 30 - increasing at 2%/quarter. Of course, some segments are doing far worse, and Covid will remain with us for at least another 3 quarters. At only 10% vacancy by June 30, 2021, there aren't going to be any dislocations within the institutional ownership. Toronto condo vacancies are materially higher, but it is primarily the owners problem - not the builders. Many are also off-shore investments, and liquidations at a loss will not adversely affect the local economy. There will just be more condos available, for cheaper, and fewer AirBB's. Minimal incremental tourism impact as everything is already in lock down, and no dislocations amongst the builders. Point? Opportunities will be market specific, and more likely in the US vs Canada - the best probably being anything 'Trump' related. The US election is Nov-03, most polls have Trump 10% behind and worsening, and the current stays on prosecutions lift if Trump loses the presidency. Do you really think that post election - it's going to be 'business as usual' at the empire? To some this is 'political', the reality is that it's just trying to make a buck -as opportunity presents. As even Trump might say ... it's just business! SD

The reality is that a shareholder can only either buy, hold, or sell - whether the investment hold period be nanoseconds (HFT), or years. Hence, current price has little to do with value. To move the price up/down, all one need do is use the media - and stampede demand or supply in the desired direction. If you want quality investors, the solution is simple - either DON'T go public, or go private. One can't trade if there's no liquidity &/or a very high bid/ask spread, instantly eliminating the low-quality shareholder ;) The ancillary benefit is a focus on dividends, and the ongoing ability to pay them - wonderfully, focuses the mind! And if YOU are one of those quality investors? - you would rather not have anything change. Can't short shares unless somebody lends them. Can't really sell calls either, unless you can get someone to borrow. And really, the more volatility the better - as gains/fees/premium can easily increase a position without any additional investment requirement. Different strokes. SD

You aren't quitting the day job. You're buying your stake in stages, using proceeds from working holidays/weekends (under their supervision) to pay for your entry stake. Demonstrate your commitment, grow the business (incremental weekend work), while you learn the trade. Fit in - and the partner sells you the rest of his/her shares. Don't fit in - you're just paid for your time (with interest), and shown the door. Invitation only, means what it says. SD

Think more along the lines of industrial cleaning. Over time, pipes can accumulate different types of debris such as calcite, roots, waste, and other materials that can clog them or slow them down. Industrial pipe cleaning methods clear out these obstructions and others. Think effluent, sewage, fat downstream of restaurants, etc. Very stable businesses, very stable customer bases, high market share within their niche, relationships go back decades. Just starting something up in the space, not really viable. Internal return more than covers growth and dividend requirements. Private businesses that don't need public money, & all under the radar. Invitation only. SD

Hate to disappoint .... The bigger 'off sites' are primarily sales junkets, tax deductible if there's a business purpose. Typically quarterly, exotic locales, & to reward top performers - nothing to do with employee needs/wants. Downtown NY/Chicago/Miami/etc does not compare to Rio/BA/Bali etc. Of course, top performers bitch, but when competitors are doing the same thing .... there's no real competitive disadvantage. Standard practice varies across industries, but it's all about cutting overhead - at 33% margin, every 1M in OH reduction offsets 3M in lost sales. It's not hard to reduce the rent bill by 1/3+, solely by re-configuring existing footprint. Most could cut their footprint an additional 10-15% as well, as growth needs are not going to meet original projections. Downtown 'glamour' also has an image problem. Most of the workforce have family responsibilities that are easier to manage, and cheaper, when the commute is shorter - it is also a lot less frustrating getting to/from the 'office'. Relocating to the 'burbs, is the same as a raise for many. Of course the 'glamour' office downtown still has cachet, but it's maybe 25% (top quartile) of the total space requirement, at best. There's just too much downtown space, and much of it - just not prestigious enough. Obviously, not what your broker wants to tell you! Sure, demand may eventually come back to 'normal', but it's not going to be for quite some time yet. Even if mass quantities of a fully effective covid vaccine were immediately available tomorrow. SD

"Maybe there are short-term to medium-term hiccups for transit, but I wonder if long term, businesses located on the outskirts will be able to afford to move their shrunk footprints into Manhattan for its central transit-accessible location, giving themselves access to wider pool of employees to pick from, or choose to do their "onsites" in a central location accessible through transit for most employees in the region." Standard practice is an "on-site" in the burb, and the bigger "on-sites" in the central location. Rent the space as you need it, do your motivational (sales) meetings downtown, versus some resort somewhere. Minimizes the Covid risk, and saves on the airfare/accommodation/ancillary costs. Subways/metro's are funded from climate change related fee collections. Drive a SUV? Pay more gas tax on your monster, and some of it goes to covering the costs of the lesser polluting subway/metro. SD

There is a big difference between starting a business that can actually support you, and one that may throw off maybe 5-20K/yr at best - net of all costs. In the former case, buy an existing business and expand it - don't start it. In the latter case, work for someone else and let them take the business risk. Most people are the latter case. Covid and it's long-term implications has tipped a great many owners, with very good small businesses, into retirement mode. As a consequence, there are a number of very unglamorous, limited scalability, and highly profitable businesses available. Deep knowledge benches, but invitation only. Zero tolerance for financial cowboys. SD

The full article: https://www.morningstar.com/news/dow-jones/20200926885/inflation-is-already-here-for-the-stuff-you-actually-want-to-buy Wherever they can, every business has been passing on the lockdown costs of Covid. PPE, plus the additional per unit cost of fixed overhead distributed over fewer units sold. For most, the % increase has been substantial, but not noticeable by the average consumer. If you primarily eat out, vendors/subsidies have been eating much of the cost. If you primarily eat in, you are eating the cost. Within Canada, covid delayed the arrival of agricultural migrant workers, resulting in less plantings. PPE measures, and covid outbreaks added significant costs. Much higher costs/smaller volumes = higher/unit costs = inflation. Every time you choose to eat something fresh. If you are primarily importing food, and food is a material portion of the nations aggregate purchases, devaluation can absorb some of the inflation. If the food is primarily home grown .... welcome to inflation. SD

Stress is just inability to guarantee a particular outcome - discovery that you are NOT a 'master of the universe!' You can react to it (rip out eyeballs, etc.), accept it (ulcers, etc.), let it just flow past (meditate, etc.), or use it. It's gaming, and little irritates a boss more, than an employee NOT reacting to stress (Don't worry, be happy!; Bobby McFerrin). Lot's of ways to NOT play the game, and most people will naturally find what works best for them. Of course, if you also know what stress does at the extremes - there should be little hesitation to exploit it. 'Market discontinuities', 'dividend cuts/eliminations', are high stress events. So don't offer a door to anyone rushing the exits of a burning building, until you can see the flames/smell the billowing smoke. Stress - becomes fear - and your friend. On the upside, stress - becomes greed - and your friend. Both underscoring the reality that cold, hard CASH is your only real friend. Value investing 101. That said, it is a lot of fun to be in a riot - and you meet all kinds of interesting people! Just know who the predators are. SD

The great thing about a mortgage is that you just need to pay the interest. If you have remaining borrow capacity, you don't even need to do that. Your banker simply increases your mortgage, credits your chequing account, and you just pay it back to him/her as last months interest. With a little help from the BoC ;) no defaults as long as the price of the average residence keeps going up. Same thing applies to rent, the lender just needs to receive the interest, the landlord just needs to receive interest and operating cost. A little regulatory grace ;) a refi to reduce the interest rate, and everything can stay open - at 25-50% less rent. More people back at work, and spending again. The home owner also benefits from inflation ;) 'cause the real asset inflates, and the monetary liability deflates - increasing your equity. Compare the major fiat currencies to gold - and we can see that inflation both exists, and is sizeable. The incremental $'s just don't spread evenly over the same fixed supply. Hence the 31% price rises in PEI, and 5% in Alberta. Point? It's going to be a very long time before real estate blows up in Canada. SD

Just to tie it into the behavioural thread on social norm bias ... The 'formula' value investor looks to the price today, versus the price one-year ago - per mean reversion, if today's price is 70% less than it was last year, the shares are cheap! But the investor then measures performance, on a 1-yr TWR basis - 'cause that's the industry standard! Social norm. Problem is that the 'formula' then fails miserably if mean reversion takes more than a year - O/G, airlines, Covid-19, etc. Assume year-0 return was -70%, year-1 return is -20%, year-2 return is 3%, year-3 return is 250%. The 'formula' investor would buy at the beginning of year-1 - cheap at 70% off! End of year-1 ? the investor sells, takes the tax loss, and tells the world what a rancid POS this was! End of year-2 ? the investor looks back and congratulates him/herself on their great decision!, they made more than the 3%. The reality is that the investor is actually dumb as a brick. He/she never saw the year-3 return, and lost 20% of their dollar when they exited. Had he/she stayed they would have made 200% (1X30%x80%x250%=0.60/original investment=1x30%=.30). And more multiples still, had they simply stayed for year-4 - when mean reversion actually takes place (assumed timing). It wasn't the approach that was wrong - it was the performance measure being used. Following the norm. Severely cripples a value investor using OPM. But if you're private money, with a more relevant performance measure, it's help yourself time :D SD

Trying to do 'value investing' purely by formula is pretty meaningless. Assume 12 month forward earnings of $1/share, market P/E of 25x, current price is $40. To the value investor, the stock is overpriced to the $25 it is worth (25 x $1/share), and he/she should walk away. But if you expect 60% growth in 12 month earnings (ie: $1.60) ... the stock is fairly valued (1.60 x 25 = $40). At any one time, consensus 12 month forward earnings are just a market guess. But compare any forecast strip price against the subsequent actual, and you quickly see how inaccurate these guesses are. All that we really know that is that if a company is in the early stages of a growth cycle, an earnings miss will typically bias upwards. The nearer to the maturity stage, the more random the bias. So what? if this company was a Tesla, and in its early growth stage, you would think $40/share dirt cheap. Simply because a SINGLE 5% positive earnings miss is worth $2/share, and relatively easy to obtain as economies of scale kick in. Do it every quarter, and the P/E multiple will also expand. Value investing still works, you just need to apply it differently. Change. Something a great many value investors have real difficulty with. SD

Ultimately you have to be able to think for yourself, and be comfortable executing your decision. Because when you make an investment you are forecasting an outcome over a specified time frame, and backing your forecast. 'Success' means you were directionally correct, AND within the time horizon. However, to many people 'putting your money where your mouth is' - is paralysing. No confidence. Social licence is before the fact, social proof is after the fact - licence is priming the pump ($ in the mason jar). proof is ending with more than you started with. Make the mason jar bigger, and you have the structure of most HF's. Relying on proof essentially dooms you to always being a follower, and momo trading. Nothing wrong in that - provided that is your style, and you are good at identifying the patsy. Hence all the poker and gambling literature. Licence to 'set' the game, is valuable, and comes with responsibilities (don't manipulate). Doing your own thing is essentially 'setting' a game, that the market will hopefully reward you for (via a gain). if your 'set' is a short position, don't rub it in the markets face, if your 'set' is a long position, don't lord it over everyone else - responsible behaviour. If you're prone to this - you essentially have no confidence in your decisions, and are unable to step away from the flame. Either invest very little, or hand your investment dollars to someone else to manage on your behalf. SD

Not familiar with Bitcoin Tracker One, I use Coinsquare and assume that it will be hacked. Move token in/out for the trade, and cold-store directly at Mt Gox. My reliance is on Canadian regulatory BoC/OSFI enforcement, as I assume Coinsquare enforcement is rubbish. https://coinsquare.com/ For most uses, BTC as an investment in a retirement account just isn't worth the effort - regulation &/or adequate instruments haven't sufficiently evolved yet. If you insist on speculating in BTC, assume 2-3 swing trades per year, and accept the tax as just another cost of doing business. Sometimes you will be paying tax, sometimes the tax man will be paying you. BTC is also NOT an investment, just as holding a USD is NOT an investment. Sure you can buy/sell to capture a valuation difference, but BTC is just a parking spot - it could just as easily have been a tulip, or a 2nd property, denominated in the other currency. If the investment objective is protection against inflation, simply hold bullion directly &/or units of a precious metals fund. SD

Always keep in mind that BTC is just the obverse side of digital currency. It is extremely good at what it does, hedgeable, and highly suitable for large transactions that would otherwise be visible. The problem is that the founding libertarian view of BTC's use, and the criminal view of BTC's use, almost perfectly overlap. The good news is that it puts a cap on both transaction frequency, and mining cost. Total mining fees for the materially major activity < total cost of laundering, or about 1-3% of aggregate transaction value. The end by-product is reduction in overall money-laundering activity, and recognition of mining fee as a commission. Commission means demonstrate application value, benefit > cost. Good link! SD

Sadly, a CEO's ability to implement CSR is very limited - essentially set the tone from the top, and walk the talk. Obviously, it is a lot easier to do it in a small company, a private company, and a family owned one. If you are unsure, walk into any family owned business - it will be immediately obvious. CSR caps the Maslow Hierarchy, owners are already rich, and dynamics are very different. To an owner - the value of that extra dollar earned, after tax, is minimal. Were that dollar spent on additional staff costs - it's value would be 2-3x higher. So you pay your junior staff more, match retirement savings, cover health care benefits, etc. - and watch it come back to you in spades. Smart business. For some folks - this is just plain wrong. Not a problem, it's just not for them - they can vote with their feet. Just keep in mind that people are the limitation, not money - and that the new technologies are removing cost as a barrier to entry. The world is rapidly changing, and Big Inc. is not the glamour show that it once was. Interesting times. SD

We all remain perfectly free to consume as we wish - we just wear the consequence of our actions. When the same person is on the floor for the 4th time, and is both severely obese and drug addicted, he/she is just not resuscitated. He/she simply chose to die by gluttony, and was successful. Ultimately, it's the right to die - on your own terms. No interference in personal freedoms whatsoever. SD

Healthcare is insurable, and covers everything from dental, vision, and a basic level of service - we pay a small amount every year (premium, tax, etc,) so that we never have to pay a catastrophic amount. Loved ones never have to choose between OUR life, and a future life of extreme hardship. To some this is socialism (if the state does it), to others it is just common sense - so much so, that almost all companies offer some version of healthcare as one of the company benefits. Level of service is the key. There are those who argue that if you smoke, or are a drug-addict (drugs, opioides, etc.), alcoholic, diabetic, or obese - it's 3 strikes and you're out. Whatever put you there, after 3 strikes you wear it - thereafter healthcare is limited to making your exit, as painless and humane as possible. Others argue that you have the right to die on your own terms, and healthcare is to assist you - quality of life, versus longevity of life. Level of service evolves over time. Sure, if you have the money, you can buy a higher level of service - wealth gives you that privilege. But recognize that while in a different swim lane, it still leads to the grim reaper. SD