SharperDingaan

The folks who cannot get the names right are not the ones implementing block chain; they just wished they understood it :D Like it or not, Bitcoin and Bitcoin protocol is here to stay, but its value really depends upon both your purpose and where you live. Central Bank Digital Currency (CBDC) is a much more practical payment system, and already exists (eKrone). It'll probably be a very interesting conversation, not that dissimilar to what it might have been like talking to a Steve Jobs at the dawn of Apple. Back when people thought a 'mouse' was a rodent! SD

Capital used to concentrate in the nifty 50; if you were a 'name' you got a higher multiple than the other guy - simply for being in the index. Then, as now, shorting those likely to drop out and buying those likely to replace; was a profitable trade. But even during crashes, the multiples in the nifty 50 remained higher than for the other guy. Everyones share price declined, but the deeper the markets liquidity pool, the better the share price held up. Todays index fund is essentially yesterdays nifty 50. Dogma preaches that a MMFund can never ' break a buck'; and that an index run can never happen. Experience shows that periodically 'dogma' is wrong, and that markets react violently when it occurrs. Derivatives have given us the tools to exploit it. So what? At some point there will be a breakdown, and for most it will be debilitating. But the bigger players will not really be affected; because the scenario is part of the annual stress test. Just a different POV. SD

Not a problem for those companies not in the index, other than undervaluation for long periods...I'm buying those like hamburgers at half price. It will be a problem for the broad market included in the indices at some point, and could create a panic. Cheers! I must be missing something, but I don’t see a lot of stock being 50% off, just because they are not in an index. Besides, isn’t almost any stock in some kind of passive index, like the various Russel indexes? The only inefficiency I can see is that with the float being weighed rather than market cap, owner operators are systematically underrepresented. In todays world we have derivatives, and 'aligned' incentives Much of the loss on the underlying shares in the index would be offset by index gains on leveraged index puts. There might be a modest index net loss, but there isn't going to be anything major. 'Cause if a material portion of your firms revenue is from index investors ... you will see to it that they do not experience any major loss. SD

30% off would not tempt me if Corbyn looked likely to take power. Doesn't do much for us either. But if the utility currently paying a 9.75% cash yield, suffered a 35% price decline - we would suddenly be earning 15%; for life. And reducing the amount of capital we need to fund a UK retirement by 35%. If the pound also devalued, we'd have some other opportunities as well. It's essentially a long straddle on Brexit uncertainty. Crash out of the EU and we win, per the above. Stay in the EU and we also win, albeit not as much. Do nothing, and we eat non-cash opportunity cost. SD

You might want to include leverage in your asset mix ;) (T-Bills, Margin, etc) If your retirement draw-down is 4%/year, and the market has just tanked 35%, are you really going to continue seling down your equity at those depressed prices? Or is the plan to temporarily fund that 4% draw-down from your cash position + dividend/interest inflow? or margin borrowing + dividend/interest inflow? Ultimately, it's a calculation ..... SD

We've just let our Gilts mature, and let the money sit in an ordinary savings account. The biggest hassle is putting up with the bank calling every 2-weeks, with offers to help us 'invest' it. Hard to see how the UK economy does not take at least a few very hard hits around this fiasco, We expect that as the tide goes out, there will be some spectacular failures; significantly depressing multiples accross the board. Once there is a hard outcome, it'll be shopping time. Whatever the new regime; people still have to eat/drink, and use utilities (electric, gas, water, sewage, etc) If you can ultimately buy at 25-35% off, it's pretty low risk. In the meantime, tune out the drama. SD

Always keep in the back of your head, that you're dealing with the tongs/triads. You might be able to do a short, but you're not getting your profit out. SD

I don't understand these drivers complaining about money. I mean, I have never seen Uber advertised as a full-time job. Commercials always show it as additional income when you have a few hours to spare. I drove for them while in college and some nights when my wife worked 3rd shift as a nurse. I was quite happy to have some "beer" money in college. If anything these people should be thankful Uber exists. It facilitates everything for them and gives them a platform to make some extra income. Nobody is forcing them to drive for Uber and they could go out and start their own private taxi service if they really wanted (my neighbor used to do with for a local Judge...made out pretty good). Society needs to stop trying to push these supplemental income jobs as careers. Bagging groceries, flipping burgers and driving for Uber isn't a career. We need to hold firm to this conviction, because out of necessity comes change. People will learn this and adapt if needed. Fun fact: also paid for the entirety of my honeymoon by donating plasma in college. But that's a story for another time. I agree, it makes no sense to take an on demand job with a contractor and then demand benefits. It’s also off base, because Uber right now loses money, so one could make the argument they it subsidizes the riders , but also the drivers. If some has a reason to complain, it would be taxi drivers since they get more unregulated competition. Uber is just a tech solution looking for a sustainable market, and is discovering that it isn't as big as thought. The protests evidence that labour wants benefits as part of the gigs pay; yet Uber apparently cannot accommodate what is a simple change (lower future pay + benefits = existing higher pay)? 'Cause MAYBE Uber is actually a very brittle business?, and this effectively destroys the business model? Labour laws typically require a minimum pay rate for a minimum shift length (ie: $10/hr for a minimum 3 hour shift), and exist to prevent abuse. Those labour laws also specify tests to determine if you're an employee, under the labour law, or not. Uber's model ASSUMES the driver is contracted PER RIDE, for which Uber will pay a variable rate based on various factors. If you did 5 rides for Uber over a continuous 3 hour period, were you ACTUALLY a contractor or an employee?, and did you receive AT LEAST the minimum pay as required by law? The protests imply that in many cases, Uber is actually underpaying, and it is widespread. So what? We have a tech solution that ONLY works in either a 'right to work' state, or for 'illegal' employment. And how many of the states where the bulk of Uber business is done, are 'right to work' states? Maybe folks overpaid for this IPO? SD

Could you expand on this a little? Liquidity is coming almost entirely from the underwriting group, the issues are being priced at slightly below market (to evidence a marketing bump on issue), and underwriters are focused on volume (fees) - not quality. Get as much out the door as possible before the opportunity closes, and dump the inventory as quietly as possible. SD

Yes, I think I saw this article too. I'm not saying SaaS companies are fairly valued, I'm just saying that part of the increase in P/S is due to increase in net margins which have been trending upward for the S&P500 for the last 10 or 20 years. That being said on the monopoly matter, there is evidence that companies are becoming more monopolistic over time. The increasing margins is one piece of evidence. The other is the rise of tech companies which have some upfront cost but most of there moat comes from intangibles like network effects, switching costs, high initial marketing spend, which didn't use to be the case (back in the manufacturing days, actual physical capital was the moat which meant companies were started a lot slower and also that most only earned their cost of capital). That being said I agree that companies are choosing ways to fleece investors like using stock compensation, or the Amazon argument ("we are in a land grab so pay no attention to our bottom line"). However, IMO there are good companies (at good valuations) that are mixed in with the bad in the tech bubble, its just not going to be as simple as P/E < 10. Not to rub this in ...but remember Nortel? Employees were amongst some of their biggest cheerleaders; via the employee pension fund, and software engineers dabbling in call options. If you questioned the crowd 'wisdom' you were a heretic, and out the door within months of losing 'faith'. Every generation has its 'cool' thing, and no matter what - you aren't going to change that. Then, as most likely now, the 'right' strategy was continuous roll-over of long out-of-the-money puts; on tech coy's other than the one you work in. Just be mindful that when you eventually reap that 'funny money', and everyone around you is going bankrupt; you will very likely be one of the most hated people on the planet. In a zero-sum game, nobody loves the out-sized winner. I'm told that it makes the workplace an incredibly miserable place to be; and that to preserve their sanity, most people will voluntarily quit their job within a year. SD

Time has also run out for them .... We're going into the 2019 'summer' fire season, and global warming remains alive and well. If you're the 'saviour'; you'll either want a guarantee that any 2019 fire season 'surprises' do NOT land on you, or to delay the discussion until after the 2019 fire season is done. No matter what, there will be ANOTHER hair-cut on whatever the current asset valuation is. SD

Few things to add to this. The more historic the data the less valuable it is for predictive purposes. Simply because todays economy is very different to what it was even 20 years ago, and we are not comparing apples to apples. Agreed central bank currency inflation is highly likely to continue; but asset inflation and 'growth' is a real crap shoot. Mathematically, the bigger you are the harder it is to get incremental growth; and most would suggest that for the forseeable future - the bulk of global growth will be in Asia, and not in NA or Europe. Most would also expect a run-off of NA/European assets in favour of a build-up of Asian ones. So what? The forecast for NA/Europe is essentially currency inflation +/- (asset inflation+growth); 2-3%+ nominal growth on a good day, or 0-?% after inflation. Charming. Sniff test. Aging NA boomers are now taking money retirement money OUT of their savings/retirement accounts; their net investments, houses, toys, etc. are now selling down, NOT being built up. So .... if the forecast bias is for ASIAN assets, and NA assets are persistently in a GROWING net sale position, NA asset prices must fall, and deflate. To avoid that deflation, NA central banks must print currency faster, & target higher inflation. Maybe 3% nominal growth, 0% after inflation, and never ending QE? Point? We may well see CYCLICAL equity returns of 12% plus; but we're compounding year-over-year at maybe 2-3%/yr nominal, and 0-1% real. SD

We've been through a decade? of deliberately artificially low interest rates, & extreme quantitative easing to avoid the next great recession. So ... if we include that history as a predictor of future events, are we not saying that we expect these historic conditions to continue? If we 'forecast' the future as just a series of short-term events, this might even essentially be true. Whitehouse pressure today to ease rates in response to economic slowdown; repeated tomorrow, and the next day, and the next. If we 'forecast' that over a period of time we should get back to historic rates, it might be true in the 'long-run'; but we're all dead! The short-term momentum (technical analysis) view versus the long-term value (fundamental analysis) view. So what? If would seem that if your investment horizon is very long; one should be betting on mean reversion via leveraged derivatives, and on the party continuing via long positions. Graham went broke waiting for the market to turn his way; we don't have to - we have derivatives that Graham DIDN'T have. If rates go up, only cash wins. BOTH equity multiples AND bond values go down But there is no reason that cash can't actually be a bar-bell allocation of cash + derivatives, al la Taleb ;) SD

The economic argument is to just sit on cash until there is a resolution. We have no idea which way this will go, or by how much when it does eventually go. You're also earning a risk premium on your cash, by AVOIDING the loss from the event itself; were bonds or equities to react negatively (ie: that 100 pound equity becoming worth only 95 pounds on the day of the announcement). Not what the trading folks want to hear. SD

The reality is that the MAJORITY of British citizens voted to LEAVE, and that it will affect individual citizens very differently. If an individual feels strongly enough; nothing prevents him/her from simply emigrating from the UK to the EU - and the younger that citizen, the easier it will be for them to do so. This is nothing new for the UK. Our own view is leave, and see where it goes. No matter what, 30 years on it will be a different conversation with the EU, and the EU will be a different place to what it is now. As a young person with only modest prospects, my future depends on disruption; and if I don't have the ability to emigrate, this is very likely one of my best opportunities. Additionally, there is nothing to prevent simply 'joining' the EU at a later date; it doesn't have to be done now. Of course, if you work around Canary Wharf - this is heresy! Just a different POV. SD

It's too early for the education decisions yet. A great many 'science' people end up doing an MBA to broaden their skills base. That MBA will include the accounting, finance, human resource, and strategic management skills that you currently lack; and it will also benefit you in your day job. The obvious 'investment' designation is the CFA. But it's a lot of work - and you don't have to know how to build a calculator, if you just want to use it. As with the dentist, or doctor; just buy the skill-set when you need it. You need to find out first if this is something you actually like, and whether you're any good at it, before putting any more time into it. If it wotks out well you've made the right decision, if it doesn't you've cut bait early and saved a fortune in tuition fees. Now get out of the way and let me at it! SD

Referendums are very dangerous things. If the MAJORITY decision doesn't go your way, you're trapped in an outcome that you don't want to do; and there is no 'un-do' button. There are no 2nd, or 3rd referenda, until you get the decision you want. In most places, the existing government falls, and there's a general election; where the deciding issue is the referenda question. In the UK case, if the winning party is for an exit, a brexit will take place. If the winning party is for remaining in the EU, there will not be a brexit. The MAJORITY decision prevails, and the issue is resolved upon election of the new government. Most people would think that by mid-summer, this will be resolved. And by the folks who have to live with it. Different POV. SD

Couple of add ons ... Almost every investment decision we make, has a political element to it. On any given day elected representatives can change the business/regulatory environment we're investing in, and the amount of tax we will pay if we're correct. It cannot be 'sterilized', and kept is a bottle; we learn how to live with it. An ignore button is a reasonable saw-off, but it's not perfect - nothing is. The alternative is a paid membership 'no-politics' board; and COBF suddenly becomes a 'private' club, no different to the thousands of other private clubs out there - and an echo chamber. It's much more valuable, when there's blunt but polite (Canadian board) discussion, from as many smelly armpits and feet as possible! Different POV. SD

A few things to add to the great advice given. 90% to value funds, 10% to you to invest. But .. invest that 10% in the industry you work in. You have experience in the industry, you know how it works, and your 100 hours 'researching'- will help in BOTH your 'investing' AND your day job. You are developing 'circle of competence', & right now - you know very little. It's why the 90% is in value funds. 2nd ANNUAL income, at least equal to the 10% you're investing. If you screw up (& you will), you recover your loss within a year. If you just tread water, you've doubled your 10% capital allocation. You are learning risk management, and it will allow you to remain mentally supple when the investment is not going your way. Accumulate in tax free, tax deferred accounts; then use the proceeds for a house down-payment. Your first two 'investments' should be securing the roof over your head, and finding your lifetime partner. Your 'portfolio' is your family; thereafter, 'investing' is just how you manage the family cheque-book/net worth. Net-worth isn't just financial. Something that a great many people totally miss. Good luck! SD

Keep in mind that opportunity costs are not cash costs. The RRSP mortgages are also unique. The CRA gave you a tax refund when you put the money into the RRSP, it's an interest free loan from yourself (the RRSP) to yourself (as borrower), and if you dont repay - the non repayment is treated as a taxable withdrawal from your RRSP. Of course, as a 1st time house buyer this should be part of your due-diligence. But how many 1st time buyers do you know, that actually did it? SD

That doesn't say what you said. It only says that under 120k household income you have access to the gov't taking a 5 or 10% equity stake in your house. Doesn't say anything about getting "118K (25%) of a 480K house, at 0% financing" like you wrote. Excuse me, .... you need to learn how to read. It was very clearly disclosed. 118K (25%) of a 480K house, at 0% financing - 70K (35K each x 2) of interest free financing from their RRSP - 48K (10% partiicipation loan) of interest free financing from CMHC Have a good day. SD

Introducing the First-Time Home Buyer Incentive https://www.budget.gc.ca/2019/docs/plan/chap-01-en.html Few things to add to this. The private mortgage will have been stress tested at 200-300bp above the current floating rate, and will typically INCLUDE the favourable impact of NOT paying back your RRSP mortgage. The bank WANTS to lend you the money. So if you can't pass the stess test, despite the RRSP mortgage, AND minimal principal repayment every month; you must be a truly sh1te credit. It would be better for everyone if you weren't in the market at all, and without the bank mortgage you will not be; No means no, not 'maybe'. If you really want a house - look at something cheaper. You can have a down-payment as low as 5%; if you can afford it. But this is Canada, not the US, & it's a recourse mortgage; if there's a shortfall on foreclosure you're on the hook for it. Don't like it, don't buy here, it's that simple. The folks whining, are those who have been turned away by the banks (the sh1te credits); and those whose living depends upon a robust real-estate market (agents, house stagers, marketers, sched B & C banks, pawn brokers, etc). All vested interests, complaining because Daddy wouldn't give the real-estate gamblers what they wanted .... bwaaaaah! Yet when you look at the government incentive programs already in place .... It's pretty hard to argue that for a 1st time buyer, they are not already very generous. Just a different POV SD

Read the CMHC material for definition of gross income. You want to play, this is what it is; they could care less if you agree or not. Don't like it, go somewhere else. You don't have the money (TFSA's, RRSP's) you cant buy a 480K house; that simple. No pay, no play, get over it. Rent, or buy someplace else, where you CAN actually afford it. And the balances in those TFSA's/RRSP's? You had the same opportunities as every other Canadian; how much you saved, for how long, and keeping it saved, is entirely to you. Yes it isn't easy, but many others before you have done it, and the result reflects your own efforts. Blunt actuals, not shoulda's, woulda's, coulda's, etc. And rude! Not what the real-estate market wants the punters to hear SD

Complete insanity and totally irresponsible IMO. Pretty bonkers. Clearly one of those desperate electoral moves. I don't know. What's interesting about the loan is that there is a price to income cap of 4, which is less than what many first time buyers are paying now. One effect could be to convince first time buyers to buy cheaper houses to qualify for the loan. In effect, the are being incentivized to buy less house and take on less debt. It's a bit like your dad offering to contribute $1,000 to the cost of your first car, but only if you buy used. This is a lot more accurate than you might initially think. Ken & Barbie, 1st time buyers, are not in a position to whine .... With their combined 120K/yr gross income (high for 80%+ of everyone in Canada) they have the following ... 118K (25%) of a 480K house, at 0% financing - 70K (35K each x 2) of interest free financing from their RRSP - 48K (10% partiicipation loan) of interest free financing from CMHC 127K (26%) of savings to buy that 480K house, on which no tax was paid on the investment income earned - Cummulative to date 63.5K/person TFSA limit (63.5k x 2 = 127K) They have one of the larger combined gross incomes in Canada, they were able to accumlate a 26% downpayment without having to pay tax on the investment income, 1/3 (118K) of their 362K total mortgage is interest free, and they have the ability to stop repaying their 70K RRSP mortgage at any time, without triggering a default. And all courtesy of the government of the land. Pretty generous? I don't like the house 480K could buy, and I don't like paying tax on my RRSP non-payment, is a life-style choice. You want more, you pay for it; if you haven't got the money - get a 2nd job, get a renter, or get another co-owner. Millions of other people accross Canada routinely do this, there is no reason you cannot; you just don't want to. You're not special. SD

AI algorithms actually are just an application of technical analysis, but in a diiferent context. 'History can predict future events'; in tech speak, make the machine calculate all possible correlations in a data set - & it WILL find some that are 'somewhat' predictive (middling R-square values). As it applies these correlations, we call it 'learning'. Of course, the 'machine' is only as 'smart' as the R-square of the correlation, and it's stability in an out-of-sample application; introduce it to a market-discontinuity, and it goes beserk :) One of the theoretical arguments around HFT is that if your holding period is very small (nano-seconds), almost all your price gain will be attributable to market drift; and we can calculate the amount of that drift, using the Brownian Motion equations. Applied to AI, the more you can apply the Brownian Motion equations to an AI algorithm, the more accurate and stable it becomes. All things coming out of the 'investment' silo, and making the jump into other places. SD ??? I find the above comments quite interesting. I've been using voice recognition software for quite some time and the technology relies on deep learning and machine learning, both subsets of artificial intelligence. Through recognition of voice patterns, the software reproduces written text and, over time, gets better at it. But the technology remains quite poor concerning certain aspects that require basic common sense (when I use a new word, a word in a different language, someone else speaks) and the "machine" does not recognize an obvious mistake with very potentially consequential impact on the substance of the underlying message. Proofreading has become markedly different as the software (even if amazingly efficient at certain tasks) can produce very stupid results. neil9327's point, I think, was that we would hope to integrate and or understand the underlying "behavior" that led to the subsequent price action in order to improve prediction capabilities. The best short-term predictive ability of where a stock will go is what it did in the short-term past and this has been captured by simple linear regression models assuming markets function linearly most of the times (with some predictable variation) and this is where correlation coefficients and R-squared values come into play. The idea (and the hope at this point) of machine learning and higher artificial neural networks for better prediction capabilities relies on improved pattern classification and ability to recognize patterns on its own in order to determine non-linear extrapolations. In a way, this is nothing new as Thomas Bayes described the foundation of machine learning in 1763. Pattern recognition can be improved but the underlying principles that rest on past behavior can lead one astray (such as when using the VaR concepts) especially when transitions occur between calm and chaos or vice-versa. Artificial intelligence will need to integrate behavioral aspects and IMHO we're not quite there yet on many levels. One of the biggest risks may be missing the forest for the trees (bigger picture, perspective etc) because the complexity of the model and the huge amount of data used may result in an illusory sense of precision. I would say pattern recognition has value but is only a starting Brownian point for deep and independent thinking. Potential bias: "Investment is most intelligent when it is most businesslike." Good points. The other issue with AI is that while development is happening in many different places, there's a lot of contagion as the many groups jump off each others innovations. While inherent to the scientific discovery, and agile project management, process; it produces 'dogma', along with discovery. "We invented it, this is how you do it, don't presume to tell me otherwise". At one time, we were also 'sure', that the earth was at the centre of the universe. For AI to work commercially, it needs you and I to permit it 'free' access to large amounts of 'our' transaction data. Whether at the granular, or meta-data level; that data is an asset - and you will be chaged to use it. All learning has an ongoing 'tuition cost'. To avoid spurious results, the data also has to be be complete - and accurate. Ever looked at historic data? It's full of inaccuracies, Ever looked at blockchain data? Every transaction record is perfect and 2nd party verified - but you dont get it unless the Oracle makes it available to the public (distrubted/private ledgers). Oracles are the toll-booth trolls, and you WILL pay them to access their 'golden data'. Blockchain/AI are opposit sides of the same coin ... but blockchain is the 'control' side of the coin. Something that AI has been reluctant to recognize. SD