SharperDingaan

Yes, the data goes back almost 20 years, and we're not going to share it. No exceptions. SD

Your comparative is not the S&P, it is the YTD performance of the various index funds your employer offers. A swing-trade win: You sold the index fund at a high price, bought it back at a lower price, and gained additional units. A index win: You sold a bond index fund, bought an equity index fund at a low price, and made no further changes. Your win is the year-end value of your equity index units, less the year-end value of what your bond index units would have been. For the more astute employee, it's not uncommon to add a annual 5% to your portfolio value via fund rotation. If it were just you, you wouldn't do it as transaction costs would exceed the benefits. If the employer is paying, you're typically allowed a maximum 2 asset mix changes/year. If you're trading bonds, this is the place to do it ;D SD

Consolidation is not a bad thing, particularly in NA, and US shale. Thousands of analysts will disagree but the reality is, that at the margin, prices have long been driven more by politics than by change in supply/demand. Nobody makes money at these levels, so we will not be here for long. However, MbS is the royal who drove the failed Aramco IPO, the royal who ordered the botched Khashoggi killing, the royal who botched today's OPEC+ price support, and the royal driving the Yemen thing. It would be a lot better for literally everyone if the Saudi/Iran conflict ceased, and MbS has just put down what he thought was a US backed coup d'etat - including putting 3 more very senior royals (including his brother) in the Hilton. To a great many in the NA industry, fracking has to go. It has severely disrupted the economics of literally trillions in capital investment, and severely damaged landholder relations throughout the industry. The only positive is that shale fields are really GAS fields that happen to CURRENTLY produce light oil/liquids; manage the current flow in a consolidated fashion, and you get decades of production of cheap, land-based, largely local, and clean gas as the dividend. In the US that means either kill shale via legislation (new president), or via bankruptcy and consolidation. Again, politics being the major driver. Obviously, depending on your risk tolerance, volatility is either your friend or foe. Hence, o/g, commodities, etc. is not for everyone. SD

Most investors hold their investments for < 1 year. Trading, that is largely based on anticipated results, catalysts, etc. over the next 1-2 quarters at best. Hence o/g is terrible, getting worse, and how does anyone just not get this. And totally ignores the fact that an investor can SIMULTANEOUSLY have both a SEGMENTED short AND long term view, on the same sector, at the SAME time. HUh? :o US shale is in truly sh1te shape. Production is rapidly declining as capital discipline is being imposed, drill target quality declines, and the water/gas cuts rise. Can't produce without producing gas, can't flare the gas, hence little choice but to dump it in the pipelines; driving gas prices to record lows that go lower every day. When gas proceeds no longer cover transportation costs, or pipelines reduce volumes due to reduced demand (corona virus), the wells shut in; and for many it will be permanent. Then there's Alberta. Just as video was supposed to kill the radio star, oil prices were supposed to kill the oil sands mega-projects. The latest being the proposed Frontier mine, along with roughly 19 other proposals. However oil sands isn't dead, it's now stronger. Now, if you want to play in the space you have to do it via an expansion of an existing player, raising the market value of all existing mega-projects, reducing the financial risks of any existing party, and creating an oligopoly over the flow of any new oil sands production above existing levels. But unlike the US, that rising gas cut from Alberta's shale has a nearby market, as oil sands is a hungry beast. Same industry, same timeframe. Night and day difference. But over the long term the Canadian pipelines eventually will get built; permanently improving both egress, and value for the product. US shale has nowhere to go but down. SD

Did you read/research anything here that convinced you to be a buyer on Monday? Or did you think that you, and probably most others, are most likely just going to stay pat and see how this thing plays out? Short-term, do nothing. Long-term, no idea What do you think a homeless person, or a drug addict, is going to do, if/when they get the virus? Is quarantine going to be effective - or is it more likely that they just wander around spreading the virus until they've either recovered, or died. The US is not a China, you can't quarantine millions on pain of force With no one buying, and no reason to buy, why should the market not continue to fall?, and materially? We all think the smart thing is to stay out. And if the smart thing is to stay out ... doesn't that also mean sell down our holdings, go to cash, and do it sooner versus later? Our shares contributing to the daily sell, and driving share prices still lower. And speculators not buying the underlying shares, but buying the options instead - both leveraging their short side gain, and materially reducing their risk? Welcome to 2020. SD

Most investors are just gambling, rationality is way down the list. Were it easier to borrow stock to short; the headlines of the day would be how great this is!, how much money can be made, and how easily!! The gambler just needs pieces of paper to trade, a liquid market, and a stream of bids. He/she really could care less about the underlying companies that those pieces of paper represent. But even if you have the means, the investment horizon, you like the stock, and the price is right, why throw out a bid? Isn't it just better to collectively starve the order book? panic the monetary authorities, panic the gamblers even more, and simply force market makers into an order-balancing daily clear of sizeable blocks at a significant discount? That even Uncle Warren has been offering to buy, if the individual deal is good enough... The Coronavirus is unfortunate, and sadly, contracting it is almost a given at this point. What do you think happens when the virus sweeps through US retirement holmes? In an election year? All those guns, weapons, military muscle ... and it didn't work. Most would expect the market correction(s) to become a lot worse. Why buy shares tomorrow, when next week they will very likely be cheaper still? At best, buy a few options/futures to benefit from volatility ... but the underlying shares themselves? ... why bother? SD

Totally anonymous cash If I don't earn at least 20-30% on it over the next 3-4 months, I will be very disappointed :) SD

The Dow Jones made history today, recording its largest 1-day drop ever, 1,191 points. The same day the Toronto Stock Exchange had to execute a circuit-break, and shut down early ... as sell orders overwhelmed the buys. What do you think happens when more Corona cases get reported tomorrow? And when it emerges that it is now in the US, and well beyond the 15 currently being reported? As apparently only the Chinese hide the numbers .... the US and Europe does not :o SD

You might want to bring yourself up to date, re Chicago. What happens to a new product, when the underwriters launching short expires ?? https://bravenewcoin.com/insights/cme-bitcoin-options-launch-to-strong-interest SD

Husband for sale... A store that sells husbands has just opened in Zimbabwe , where a woman may go to choose a husband. Among the instructions at the entrance is a description of how the store operates. You may visit the store ONLY ONCE! There are six floors and the attributes of the men increase as the shopper ascends the flights. There is, however, a catch .. You may choose any man from a particular floor, or you may choose to go up a floor, but you cannot go back down except to exit the building! So, a woman goes to the Husband Store to find a husband . On the first floor the sign on the door reads: *Floor 1 - These men have jobs and love the Lord.* The second floor sign reads: *Floor 2 - These men have jobs, love the Lord, and love kids.* The third floor sign reads: *Floor 3 - These men have jobs, love the Lord, love kids, and are extremely good looking.* "Wow," she thinks, but feels compelled to keep going. She goes to the fourth floor and sign reads: *Floor 4 These men have jobs, love the Lord, love kids, are good looking and help with the housework.* "Oh, mercy me!" she exclaims, "I can hardly stand it!" Still, she goes to the fifth floor and sign reads: *Floor 5 These men have jobs, love the Lord, love kids, are gorgeous, help with the housework, and have a strong romantic streak.* She is so tempted to stay, but she goes to the sixth floor and the sign reads: *Floor 6: You are visitor 4,363,012 to this floor. There are no men on this floor. This floor exists solely as proof that women are impossible to please.* *Thank you for shopping at the Husband Store. Watch your step as you exit the building, and have a nice day!* Courtesy of https://upjoke.com/zimbabwe-jokes SD

Venereal disease and condoms ;) You'll always be in business! SD

When you get an opportunity, look at the MD&A risk management disclosure of a Cdn Sched-A bank. Not a lot different to any other major global bank, but you really need a PhD in Finance to fully understand the transactions/stress tests. You also need a CPA to understand that you are only reading what had to be disclosed. To buy the bank, is to bet on the quality of the governance structure within the bank, and within its regulatory oversight. To sell the bank is to anticipate a breakdown; hence euro-banks as a favoured fishing hole. Every time you use a forward curve to estimate today's value, you are essentially doing the same thing. It is well known that forward curves are useless predictors; less well known is that when using them - you also need to see the ongoing graph of actual vs prediction, and the stress tests. Ever seen that in the financial statements of a resource company? Enron, and others, just show investors what they want to see. Greed does the rest. And if you suspect early on that there is manipulation? It is very much in your interest to abet: keep on buying the shares (pushing price up), while also buying puts (profit on the way down). Not walk away, not short the stock in a rising market, etc. For most of these, look at the governance then make a decision. Is it an opportunity worth the risk? SD

The meaning is very precise. P2P NPV(10) is the Net Present Value of the future net cash flow of the proven and probable reserve, at the point-in-time price deck specified, at the specified 10% discount rate. It assumes the reserve is put into immediate runoff, the o/g is extracted at the proven (mostly last 12 months) historic cost/bbl, and is the un-hedged discounted cash flow at the well head. P2P NPV(10) is a requirement of all listed o/g companies, and is an independent appraisal of the NPV of the reserve, prepared by qualified reservoir engineers familiar with the geology of the various reservoirs being assessed. No different to the Auditors Report confirming that year-end numbers are fairly presented. 10% is the industry standard, as is the price deck. As a result, all Reserve Reports in the same year are directly comparable. The cowboys bitch is that it makes poor operation way too visible. Hence everyone screaming that the discount rate is too high, and the price deck is too optimistic/conservative - to avoid anyone looking too closely at their sh1te rock, and low inventory of high-quality drill targets. SD

My guess is that because you don't need the land for the reservoirs. You don't need nearby hills/elevations (to pump the water to). You can put it right next to the user (big factory, downtown core, etc). The 'patent' is the out-of-the-box solution. Sure people can/will copy it, but you will have the first leader network advantage; first on the 'go to' list, and the more copying and popular they become, the more your phone rings :) SD

There are a number of far cheaper solutions, that are already available. https://www.hydrostor.ca/toronto-a-caes-facility/ Hydrostor essentially pumps air into a bladder 180ft below the surface of Lake Ontario. Ancillary technical benefits are off-the-shelf technology, heating and cooling from air expansion and cooling, and storage primarily as a liquid versus a gas. Basically 4 businesses, 1) spread on the KwH, 2) centralized industrial HVAC (data centers and office towers), 3) centralized warehouse refrigeration, and 4) design/build/consulting. Hydrostor is typical of today's solutions; the only way you get their stock is either via a P3 partnership, or working for them. Point being that if your approach is to only buy/sell the shares of a publicly listed company, you are fishing in the wrong pool. Annual dividend ROE's are typically in the 15-26% range. SD

Ultimately it is SABC that wants your shares. Hence it is highly likely that they will work with their custodian/transfer agent to create a TRANSACTION SPECIFIC Euroclear facility. IB in turn, simply tendering the shares into the facility, as they would for any other share on Euroclear. However, the price will remain fixed, and the shares will be unencumbered. No market trading, no derivatives, no loans, etc. SD

As is well know, we had two nephews growing up in the UK. Everyone in the family is well versed in physics, chemistry, biology, etc; and my job was to teach the nephews 'business' and 'money management' - obviously as a former bootlegger, there are lots of opportunities. Everything went great until the youngest concluded there was way more money in making meth, and accidentally set off a flash fire in the basement - converting a home-made still that I'd quietly shown him how to build. Lots of drama, mostly first degree burns and some burnt hair, but that was the end of his business career. Be careful what you wish for, and keep your siblings thousands of km away! SD

Just to throw out a different approach ;) Contribute the first dollars to the RESP limit, then every other $ to your mortgage as additional principal repayment. Every 20K or so, increase the mortgage, buy a Sched-A bank in the kids accounts, margin to 50%, and repay 10K of mortgage. Repeat every 3-4 years or so. There's little risk to holding a Sched-A bank, dividends typically increase over time (raising CF and value), it is tax efficient, and CF will more than cover interest. Your mortgage will also be paid off years early, leaving free CF just as the kids are going to school. After the kids graduate, remortgage to the amount received over the years, and contribute the cash to their RRSP. Which they can then re-lend to themselves as a discretionary repayment zero-interest mortgage (ie: down payment equity). Different value-add. SD

China is just trying to put its best face forward. But like lipstick on a pig - it looks way better from far away, than it does up close. Comes Monday the quarantine period is supposedly up for the 33M+ quarantined over Luna New Year. Yet ... https://ca.reuters.com/article/topNews/idCAKBN2020SN "China’s cabinet said on Sunday it would coordinate with transport authorities to ensure the smooth return to work of employees in key industries such as food and medicines. The State Council’s special coronavirus group also said workers should return in “batches”, rather than all at once, in order to reduce infection risks." "Authorities had told businesses to tack up to 10 extra days on to holidays that had been due to finish at the end of January and some restrictions continued. We all know we can’t purchase masks anywhere, why are we still going back to work?” said a second. "Hebei province, which surrounds Beijing, will keep schools shut until March 1, the People’s Daily newspaper said. Several provinces have shut schools until the end of February." Universities are doing something similar. To most people, it would appear that the mass quarantine is being extended until the end of february. The short supply of masks also very likely being rationed to just those returning batches of workers in food and medicines (or essential services), as added incentive to return to work. Most would also recognize that these are essentially war-time measures, and that they would not have been implemented were the fallout not serious. To China's credit it is a one-party state, and the party has acted both rapidly, effectively, and forcefully. This level of intervention, and message control, could not have been executed as rapidly in a Western democracy. Ultimately, the final body count may well be a lot lower than it otherwise might have been, because the epi-center was in China. Credit, where it is due. SD

The Shanghai market opens on monday, after being closed six business days for Chinese New Year. Since the exchange closed on Jan-23, the viral impact on China has materially worsened. Friday last week; the S&P fell 2%, and the Dow 600 points, on fears of contagion. Wuhan is where things get made in China. Inventories were deliberately elevated going into New Year, they aren't any more; and a great many workers will still be under 'quarantine' for about another week. Universities have begun shutting down the last half of their Winter semesters, in favour of resuming over the Spring/Summer. Container shipping time from Wuhan to the US West Coast is about 6-10 weeks from factory gate to inland warehouse - net of rail, trans-shipping, and customs clearing. Starting in April, today's 'quarantine' impacts in Wuhan, show up in the US. Offshore 'outsourcing' is already being affected. SD

You might want to keep in mind that location and investment horizon matters. If you're US based, and just trading, it's hard to see past the pending shale BKs, falling nat gas prices, and the various reporting 'spins'. To you, the whole industry is sh1te, and getting worse - because you're trading headlines, not fundamentals. And you do so as you've no intent in holding long enough for changing fundamentals to matter. Nothing wrong in that. But you're the gambler in the casino, and addicted to 'the trade'. Not a good combination. SD

3 main drivers ... 1) We're in a great depression, and have been for the last decade. The only reason we don't see dust-bowls is because of continuous QE, and ongoing TBTF bailouts. 2) We're aging, we don't buy as much anymore, and we increasingly buy experience vs stuff. Less demand, and more of it on things we don't make. 3) AI/automation/robotics. When we don't hire labor, how are they supposed to buy anything, or service their debt? When everyone has capital, capital is worth squat, and interest rates (cost of capital) go to zero. When nobody has labor, labor should be worth a lot. Except when nobody needs labor, because we're using automation instead. Just a different POV SD

You're hired to get the work done, and it comes down to you the worker, to manage your own productivity and 'brand'. A foreign concept to many of the middle-aged and older; but as basic as breathing to a millennial or younger. On those days you need an isolation box to get the work done, stay at home. On those days when it is less critical, go to the office and both work and socialize (with or without headphones). Face time and socialization, is both part of your brand, and your 'future' insurance. When the cuts come, the first guy/gal we fire is the one we don't see very often - as few will notice. It's only old people who whine about the commute (time, cost, etc.), young people just do. No car, take the much cheaper and greener bus instead. Max 1 hour transit time to a community hive versus the downtown 'office', and cheaper street eats. Minimal investment in office attire; and travel to the 'office' as a typically once/week investment in face-time and socialization (ie: dress down Friday). Much easier to weave in kids/school demands, and just much smarter overall. Office layout is much less a physical thing, and much more a generational gap. Old 'geezers' insisting on 'tweaks' to yesterdays office design, who just don't get it. Obviously we don't wrap today's fish and chips, in yesterdays chip paper; but apparently some folks didn't get the message. SD

Office layout follows the 80/20 rule; 80% of your staff really don't need a permanent office, only 20% do. There are very practical reasons why the C suite doesn't work in an open space, or an open conference room. We also don't have 'one' office in a major city, we have many; that 80% of staff work from home &/or shared 'hives' in their local neighbourhood, not one central location. Staff turns over quickly, they are hungry for experience, and there's constant fresh blood hired at the lower end of the payscale. You're not there for a career, you're there for the gig - both you, AND the company. Obviously, there's an opportunity cost to this - the HR side of the business; but it's not an accounting cost, and therefore does not show up on the P&L. We may have mocked WeWork, but their office space was going into shared 'hives', and they were SUCCESSFULLY renting a lot of it out. Derision doesn't trump results. SD

Some things to keep in mind: This is China. Asian culture. We may think it out of place in this situation, but 'face saving' will be a material factor. Building a 1,000 bed hospital in a week, really means a big cluster of multiple tents and MASH units, in one place. Behind closed tent, isolation wards and morgues in one big city. Where are the rest of them? and where are the pictures of the 'cured' people walking out of them? Canceling new year, clamping down on chunyun, quaranteing 30M people in major cities, is not a minor response. It is what was typically done in Europe, during plague and cholera outbreaks. Medicine, and our response to outbreaks is a lot better today, but there are still a lot of bodies. Limits ability to contain panic. A published, and fully decoded viral gene sequence within days is unusual. Could be just serendipity and hard work, but it could also be something already known, that escaped a lab somewhere. We will never know, but assume the worst. The Asian Development Bank looked at the economic impact of SARS in a number of East and Southeast Asian economies, and explored the short-term economic impact of SARS as well as the channels through which the Impact of SARS was felt. Page 2 of the report; The impact of SARS critically depends on (i) the seriousness of SARS, (ii) the duration of SARS, and (iii) the structure of an economy, particularly the importance of service industries in GDP. https://www.adb.org/publications/sars-economic-impacts-and-implications In 2020, we are probably looking at LESS of an economic impact. Nervousness spread by internet, just makes it look scarier. Yet according to some markets ... the Chinese economy is about to fall apart because of this? Opportunity is knocking? SD