SharperDingaan

ALL degrees have 'value'; it's just not always a commercial value. Few would argue that attending the Julliard School is of little value if you want a career in the performing arts. But while we may think that attendance is not worth the cost (NPV < zero), a successful graduation from Julliard WILL very likely improve your odds of success. https://www.juilliard.edu/admissions It is well known that if something is 'free', we attach little value to it. Even if we need it to live (ie: clean air and water). Hence the reality is that a 'sheepskin' needs to cost you something to obtain. But If you dont have the confidence to invest some of your own dollars in your own future - why should anyone invest dollars in you? (making financing available). There needs to be debt upon graduation, and it needs to be large enough to spur positive behaviour. ie. Work like a dog, to pay it off as soon as possible (and get your career off the ground at the same time). How much is too much, is different for everyone. But there will always be losses to predation - its part of life. However, the bigger &/or more mature/smarter the prey, the harder it is to predate. Cut the apron strings, pop the bubble-wrap, & let the kids swim. SD

Just back from vacation ..... Whatever we may think as to whether student debt should be forgiven or not, the major problem with it that it cannot be done without distorting inter-generational parity. The practical reality is that you cant give 'X' dollars to just one generation - and NOT DO THE SAME for every other living generation that has passed through the same institution. Shouldn't the current student in the institution not get the same benefit? Shouldn't the 'older than millenial' generations that graduated earlier - not get the same benefit? Families with kids typically share the family resources equally amongst their kids, they don't systematically just give one kid more at the expense of the others. But ... I'm a millenial, I'm the 'chosen one!' Sorry, but we're just not that into you! Millenials are those born between 1981-1991; at the end of 2019, those aged 28-38. They're young, middle-aged geezers today! That 19 year going through University/College today has a very different attitude and is a lot more pragmatic; much as the children of those born in the depression years of the 1920s never forgot the lessons of the depression. And quite a few are now graduating debt free, and with 2 years+ of paid co-op experience (business, engineering, computer science, trades, etc.), through sheer hard work. Point is, moral hazard works; and its effect is very evident in the generation currently going through university/college. All desirable. Student debt either gets paid off, or written off; but nothing prevents anyone from 'earning' a write-off for societal services performed; looking after aging grand parents, performing admin/legal work in hospices, foodbanks, etc. But at the end of the day, you 'wear' your mistakes, and moral hazard ALWAYS gets paid! Sure it's not what people want to hear, but neither is getting old! You want to change the world? CHANGE IT, don't whine :) SD

But then .... what does that guy need you for? You just bring money; he has already has it, and the proven ability to generate a lot more ...... Best you can do is offer maybe a 2/20 arrangement, in return for ongoing 'reporting' ... to someone who really doesn't need it. There are a great many extremely good investors who work in private partnerships, and who do so primarily because they just enjoy each others company. Often with some sort of an endowment fund tie-in, that covers the costs of an operating company doing something socially 'useful'. And a lot of those people outperform the relevant indexes, a great deal of the time. SD

"A blockchain is nothing more than a database configuration. The secret sauce is that this database is permissionless and anyone can enter and leave the network. What everyone on the outside don't understand is that in order for this network not to be sybilled/DDOS/attacked into oblivion it must be "secure" and you only achieve that by having "value". " Just to add context around this ... 'Permissionless' can be achieved TWO ways. (1) Via distributed ledger, and transaction level third party 'miner verification' (internet); or (2) within a 'permissioned' private network (intranet). Private network (intranet) solutions are much faster, more efficient, more scaleable, and less power hungry. Blockchain will run on either a distributed ledger or a private network, and just allows us to reliably automate the transactional consequence. Expand a 'permissioned' private network (intranet), to include an entire country's ciitizenry, central bank, and social/commercial entities; and you have the basis for a nationwide permissionless payment/digital record distribution system. Digital versus paper currency, AND almost any kind of digital record. Existing examples of which are eKrone, R3 Consortium securities settlement, and government intranet digi-record exchange (digital hospitals). Expand a 'permissioned' private network (intranet), to include a globe's on-line shopping transactors, and you have the basis for an entirely unregulated global permissionless payment/digital record distribution system. Facebooks Libra coin as currency, and its AI use of our digital footprints every time we do something. ApplePay, GooglePay, etc are similar examples. So when this pioneer is having lunch with yoda ..... It's probably going to be an entirely different kind of conversation. Yoda's too old .... but his friends will more than 'get it'. SD

"Fiscal policy is impossible: German taxpayers are not going to pay Greek pensions. " This is an example of CB capture ... Germans paying greek pensions executes as monetary policy, not fiscal policy. Were it to execute as fiscal policy; Germans would fund the build and lease-back of greek airports/seaports/toll highways/etc - collect the annual lease payments, and let Greek workers pay into their pension plans. Germans would receive real (state-of-the-art, & earning) assets as collateral, as well as a reduction in the Greek pension fund liability (Greek workers paid some more $ in). And all in addition to less Greek default risk, as better Greek infrastructure facilities increases tourism and related cashflow. Yet, despite lots of very smart people in both Germany, and Greece - this just doesn't happen? Our own thoughts are that it doesn't happen in a Germany, because there are aren't enough trades workers. Fiscal policy would cause wage and CPI inflation, but the resultant rise in interest rates would cause asset deflation - and the value of risk weighted banking assets to collapse. Fewer banks, lots of unemployable workers (not trades) on the streets, and most of the 'trades' new wealth being remitted home versus kept in the country. Not great for social stability either. Instead, we get interesting times. SD

You might want to step back and look at this a little differently ...... What is the practical limit to monetary policy? Most would argue when sovereign debt (no credit risk) trades at a 0% YTM - simply because 'they', have to pay 'you' to hold their bond. But in Europe, there are multiple sovereigns within the EU, of different credit quality; and none of those sovereigns will get to 0%, because we will cut the price of each sovereigns bond first (ie: Greek vs German bond). So ... track the the price difference on benchmark Greek vs German sovereign bonds, and look for when it sudddenly starts widening. Why is there no fiscal policy response? We know that borrowed money can be either helicoptered into circulation (monetary policy), or spent on public works. Yet apparently there is no infrastructure (around the world) worthy of rebuilding?, and no insurance/pension funds (around the world) looking to earn more on the fixed income portfolios - than that currently available on sovereign debt? Because if we think there are projects, this lack of a fiscal response must be because the monetary to fiscal policy transfer mechanisms are either frozen(CB's), or broken. If they are not working, why not? We would suggest CB capture .... and that it can be exploited. SD

The better opportunities are in private/community co-generation, and they don't need outside funds (or the reporting requirements). Example: Gravity storage using the vertical hoist/air shafts of mined out mines. The shaft is allready dug, is typically fairly wide (allows bigger lift mass), and is often hundreds of meters deep; modification is straight-forward, and doesn't require new technology. The electricty generated is typically purchased by the nearby mining hamlet/town, and used as a very cheap (& more reliable) alternative to standby diesel generators - for which the fuel must be trucked in. As the locations are typically remote, the electricity to lift the mass is typically wind, versus solar powered, and from multiple small turbines that are extremely robust. Look at Canada's northern communities, and the greenhouses growing fresh veggies hydrophonically in converted containers. Gravity storage sometimes augments the electricity used to run the grow lights through the winter. A (not too fresh) single head of lettuce typically goes for CAD 3.99-6.99 at the Northern Store in Nunavut; and for a whole more in the smaller communities served from there. Pretty simple business case. https://www.huffingtonpost.ca/margaret-whitley/food-prices-canada-north_a_23552084/ SD

Just to add some things here ... It is assumed that lower NIM can be offset with higher fee income. Not really practical. The advent of CBDC (eKrone), and social media platform currencies (Libra), means fee income has significant low-cost competion. Less fee income. The mass displacement of large numbers of people in banking is also a social problem. More regulatory management. ....... unusual times, and for quite some time. It is much harder to change fundamental business practices in Europe/Japan, than it is in the US/Canada. Ability to change. And if future earnings rely on product innovation in changing times? Lower P/E multiples in Europe/Japan vs US/Canada. ....... 'controlled' bubbles in Europe/Japan as the norm, NOT the exception. And then there's the UK .... A Brexit will force widespread and broad change in business practices throughout the UK; unfortunately as a gale clearing out the cobwebs, versus anything 'controlled'. Change that Europe can't do, producing a competitive advantage as innovation is allowed to proceed. Great for the young, not so much for the old. Average UK P/E multiples should improve over time, but not evenly. High for the new tech firms selling into the UK/Europe, low for the old tech firms stuck with legacy platforms. Betting on old tech firms having innovation failures (the norm) adds additional layers of opportunity. Great for employment, as 7 in 10 'future' jobs don't exist today. And the rest of Europe ? .... Betting against 'moral hazard' is a pretty safe bet, just about everywhere. There will be well-publicized regular temporary failures accross Europe, but the institution will not be allowed to fail - as too many people depend on its continuation. Over 10yrs+ of wide-spread continual CB interference, Europe has become an addict. Take away the drug, and there are withdrawal reactions. Trading opportunities. SD

This is the same argument that the drunk makes at the bar. “I was drinking [young and dumb], and you [society] knew I wasn’t making rational decisions [not mature enough]. You should never have lent me the money to continue - this is all YOUR fault, not mine!!” Money was made available to finance an education, and yes it came with strings; that’s life. No different to the mortgage that millions of people pay every day. But we can foreclose on a house, whereas that stupid educational decision has to be worn. By both the drunk AND society. If the drunk can’t repay, society gives the drunk the ability to earn debt forgiveness. If the drunk’s program does not qualify [art history], nothing prevents the drunk from returning to school, and doing something that DOES qualify. The drunk just doesn’t want to. The only issue here is whether the money should have been made available. Most would say yes, but not until the following morning when the drunk is sober [student is mature]. With greater responsibility on the part of the student, comes a reduction in the educational abuses. But until then it just comes across as spoilt brats, refusing to grow up. SD

I beg to differ on the long dated call. the ECB will not let a larger bank fail, but they will have no problem to make the equity a zero and run it as a state old bank or put it into the fold of an existing bank. In Europe, having the government own and run a bank doesn’t have the same stigma. If the German government would have to take over DB, nobody in Germany would give much of a hoot about it. If we do get European style interest rates here, the US banks all will suffer greatly from reduced profitability, as will pension funds and insurance companies. It's really just a variant of a vega trade, there's no intent to own for any significant length of time. Simply buy when uncertainty/volatility is high, & the financial press is daily making the case that XYZ bank is about to collapse. Sell when the CB announces it support, and uncertainty/volatility declines. The more financial press/political machinery involved, the better it works. Granted there's always the possibility of outright nationalization, but it's usually telegraphed, and still a 'dead cat' bounce. High maintenance, but relatively low risk SD

Lots of possibilities here ... Monte Paschi evidences that the impact of a European CB put on a DSIB (Domestic Systemically Important Bank); is much, much higher than most would expect. The DB, or a Monte Paschi, that suffers a market crises of confidence is not going to be allowed to fail - no matter what. So when the sh1te seriously hits the fan, use the opportunity to buy a longer dated call at a low strike, on said bank ;) In most places only a domestic citizen, can buy domestic RE using a domestic mortgage; however it is not particularly onerous to get around the restriction if you hold 'dual' (EU/UK) citizenship. Put up the equity on that Danish property, let the property appreciate 20%, remortgage to pay yourself back, and let the bank pay down your mortgage at 0.49%/yr ;) ... and if it were a Danish bank that got into trouble, much of that equity you put up would be profit! SD

Over the long-term, CB's will do everything thet can to ensure that the nominal value of housing does NOT decline. If only because municipal taxes are an annual % of value, & DIY/Construction/Hard Goods etc. rely on the nominal value of property continually rising. At the macro level, for housing to fall in real terms; inflation would have to continuously exceed targeted growth in money supply (2% in most cases). Very unlikely, and for quite some time. The reality of course is that the higher property values go, the less a conventional mortgage works. In todays environment, cashflow for debt service is static (or declining, re the 'gig' economy); under conventioal mortgages, higher property values, can only be financed if rates are lower. Solutions to date, have been to change the physical asset (size, location, shared ownership, etc.); not the method of financing. A conventional mortgage with a negative rate, means the banker pays you to borrow! Not going to happen. The solution of course is to seperate the land and dwelling values; the bank buys the land and leases it to you for the useful life of the dwelling, you just buy the dweling to live in. At end of land lease the dwelling is demolished, and replaced with new build of highest & best use at the time. Essentially a version of the existing UK approach, but where pension funds ultimately own the land, you live in the most up-to-date dwelling practical, and we all benefit from systemic baked-in economic growth/recycling. People just need an affordable place to live & raise families; they don't need to own the land that the dwelling stands on. SD

Granted, on day 1 the student may have been conned. But if he/she kept coming back every year, and added new borrowings to finance it, he/she became complicit. Most professors are not tenured, and a course will not run unless there are a minimum number of students. If the course is an elective, it will fill primarily according to the average grade, and amount of work required – not subject matter. Students game to maximize GPA, professors’ game to maximize student count … but it would not occur were it not demanded. Not every student is there for an education; for many it’s for visa purposes, and to wind down the clock on residency requirements. Depending on location and type of school, this may exceed 30%+ of the total student population. Money that school, all other students, researchers and professors benefit from. No student participation, no fire. No free pass. My own view is that debt write-offs should be tied to community service, and used as ‘top-up’ compensation. Work in an NGO, in a remote, rural, or underserved community – and receive a formula driven loan write-off along with your low pay. The social worker in a nursing home, getting the same loan repayment opportunity as the star. An FDR type, ‘new deal’. SD

Buying bitcoin is like going long human greed, stupidity and short crappy currencies. If you think about this, it seems like a winning strategy :o. The above is pulled from twitter, but I forgot the source. Quite agree. Snake oil pushers of sh1te coin to raise the boats of all crypto ... and leveraged comex Bitcoin futures and options to help yourself to the panics ;) SD

"They play the "sound and responsible fiduciary" card, but as a money manager, your job is to make money, not be a fiduciary. A good money manager is fine waiting for things, but also needs to be able to see what is working and what is not and how to capitalize on what is working. " Like it or not, a money manager IS a fiduciary; forget that, and you will have a very short professional life. A PM is restricted by the funds investment policy, and has little say; some policies WILL allow crypto up to X% of the portfolio, but restrict it only to Bitcoin and related derivatives, so that the PM can profit from both long AND short positions. SD

The moral hazard isn't going away. You screw up, you pay; mommy/daddy might bail you out, but it's not going to be you or I. https://economictimes.indiatimes.com/definition/moral-hazard?from=mdr Example: You have not insured your house from any future damages. It implies that a loss will be completely borne by you at the time of a mishappening like fire or burglary. Hence you will show extra care and attentiveness. You will install high tech burglar alarms and hire watchmen to avoid any unforeseen event. But if your house is insured for its full value, then if anything happens you do not really lose anything. Therefore, you have less incentive to protect against any mishappening. In this case, the insurance firm bears the losses and the problem of moral hazard arises. SD

The problem with this reasoning is that you can: A. Attach it to anything B. It has no upper or lower bounds. Which is how speculative bubbles start and end. Under this reasoning, there’s almost no upper limit to pay for bitcoin - and no way to even determine a price that makes sense or not. It’s easy to say “the upside is infinite and the downside is capped”, but the truth is you’re picking statistics at random. Why should there be a 50% chance of 1000-1 odds on bitcoin? How do you know it’s not a 1% chance of 10-1 odds - how would you do this in a rigorous way? It seems too easy to fool yourself with these number games. As we're the idiots on probalility, and have material expertise in blockchain; a few comments. Ultimately investor X is forecasting an expected value, at time X, over a range of possibilites, and acting on it. If the forecast for XYZ is $7.50, after Q2 earnings are released, and investor X can buy XYZ today for $6.00; investor X should buy XYZ today and sell on the Q2 earnings release in expectation of a $1.50/share profit. Investor X could actually make more/less on the day, but expects to make $1.50. The coin flip is just a simplification of the same thing; 50% x $1payoff +50% x $1loss = $0.00 EMV = unbiased coinflip. It doesn't matter how many times one flips the coin, to make a profit - we just need a payoff>cost. We just differ on how it might be achieved - tossing bones works for us ;) The premise of the Bitcoin/Gold equivalency is that Bitcoin displaces a % of the existing gold market interested in store of value. Take the $ displaced, divide by the max possible 21M Bitcoin, and there's your value. Maybe this is valid 80 years from now, but TODAY, if you need to run from your homeland - are you putting your money primarily in gold, or Bitcoin? History has repeatedly demonstrated the utility of gold, Bitcoin ... not so much. SD

Highly amusing thread so far .... Pick ANY crypto-currency that is NOT Bitcoin, or a CBDC (E-Krone). Apparently it's way BETTER than holding USD, Euro's etc ? - and at paying for transactions than either a debit/credit card? Cause that smart money guy says so (insert talking head). He did ....'XYZ' IPO, made repeated killings, & therefore must know his stuff. Indeed he does! ... how to get idiots to take the junk off his hands at higher prices. It's quite the skill ;D Most of this crypto is SOLELY backed by the full faith and credit of the issuer. US Fed if you're using USD ... then down from there. The credit 'backing' your shiny new crypto is JUNIOR to an unsecured debenture issued by a CCC credit. Yet even that unsecured debenture has an indenture agreement, and a stated interest coupon. The crypto? .... incurs MORE risk .... has no agreement ... and the holder doesn't even get an interest payment for it. No wonder the smart money IPO guy has a jump in his/her step! Why not Bitcoin? Because you can short Bitcoin on the Comex via futures and options. Profit today, not years from today. Oops, doesn't your shiny new crypto have that? ..... End of public service announcement! SD

YTD the 2019 low was in early Feb around $3390 You might want to consider that the 2018 value of $3200, is actually a hodler who bought at 19K+ ... and ain't never giving it up, if it means selling at a loss! Nothing to do with any kind of increase in inherent value. SD

The reality is that looking at financials is only going to catch the bad or incompetent, the visible part of the iceberg. Think about how business is actually done in most places in the world; where's the line on the P&L entitled 'bribes'? And have you ever seen an account entitled 'bribes', in a general ledger? We simply call bribes something else - making 'covering up' an every-day part of business. The deciding factor is a judgement call, subject to incentivization. SD

Almost always these things are the result of an ill-conceived change in an accounting standard; in this case, the standards around securitization. At the time the entire profit on a 20 year securitization deal, could be booked as profit on day-1; today you can only book profit as you earn it. Of course an accountant has to find the anomoly, an analyst has to call it, and it is in neither parties interest; until there is more to be made on the way down, versus the way up. Hence it is a rigged game; and it is to you (the investor) to both realize that, and realize that it cannot be pumped without promotion. These companies are 'market darlings' for a reason. Point is, that unless you are a forensic accountant, you are not going to detect them. SD

Two "jammed" owners of comparable property should buy each other's property (swap) at a low (or at least realistic) valuation. Or would that be unlawful? I was thinking the same exact thing. I would highly doubt there would be a loophole that obvious. Couldn't you also just sell it to a friend for a low price and then buy it back for the same low price? There will not be a problem if it is a sale and lease-back; even if there is a conditional option to repurchase > N years, or a specific event. The substance is a 3rd party market transaction, and the seller is not obliged to repuchase. SD

Takes me back to my light post and tear gas riot days! https://www.cbc.ca/news/canada/toronto-raptors-fans-thousands-1.5175150 SD

Just to add to this ... Almost all retirees will tell you that retirement is 3 stages; 'go-go' years, 'go-slow' years, and 'no-go' (god's waiting room) years. Look up an actuarial table, determine when you're supposed to 'croak', and work back to today. 90 - maybe 3-5 'no-go' - maybe 5-8 'go-slow' - 65 (age at retirement); suggests 12-17 years of 'go go' retirement at best - that's it. Your real investment 'capital' is that time, and it's to you to get the most out of it. Lots of ways you can do this, but it really helps to have a 'plan' first. SD

Might not be what you want to hear, but it might well save you a small fortune .... At 59, you're too old. It will take at least 3-5 years of intense reading, the cost of at least a university/college course or two, and tuition (losses while learning); you will be approaching 64 by the time you know anything. Assuming no major 'senior moments' until 75-80; there will be maybe 10-15 years of runway at best. Is picking stocks really what you want to be doing in retirement? Index funds, not individual stocks/bonds Tuition/learning time is a lot shorter, and your decisions are limited to just recognizing when to enter/exit specific sectors. As every boat rises/falls with the tide; all you need do is be able to recognize when the tide is going in/out, and know what a sturdy boat looks like. Look at starting/buying into a business, not investing. For most retirees the issue is what are going to do with your time. For business people it is often better to buy a minority stake in an existing business, and treat it as a 'working hobby'. Typical businesses are breweries, patisseries, inn keeping, etc.; the skill-sets, work load and financial risk is spread over multiple partners, and you're in the business primarily for 'fun' versus profit maximization. The long-term pay-off is increased longevity, better health, and better quality of life - by keeping both mind/body active. Good luck! SD