SharperDingaan

Just a brief 'thank you' to any of you who may have suggested this course to a colleague. The course will be repeated every other month, and we will be doing a developer 'meet-up' once per quarter to put people in touch with each other. There will also be a on-line version of the course in the near future, available to all. SD

The source is very good, very smart, and well known for what he does. The reporter however, could use some work. He is quoting out of context to make a particular story - a 'planted' story. True: For public reporting, Canada and the US use different accounting standards Cherry Picking: Every accountant can find instances where US GAAP is more 'flexible' than IFRS, and vice-versa. 'Flexible' does not automatically mean 'fair' either. False: Generally IFRS is 'fairer' than US GAAP; US GAAP is well known for material and significant shortcomings in a great many places. So much so, that a great many US Fortune 500 would be either technically bankrupt (or very close to) were they to use IFRS. Goodwill gets annually means tested under IFRS, not so under US GAAP. To some folks of course this is fair-play; news is 'entertainment', investors should not be making decisions based on a news story, and a reporter should not be subject to the requirements of the Investment Act of 1940. Problem is the 'Act' applies to everybody, reporters are not exempt, and its equally fair-play 'entertainment' to watch a reporter prosecuted and destroyed in court - it also sells way more papers if the reporter can be 'driven' into drug abuse, or off the top of a tall building. We all follow the law, and play nice for a reason. The reality is that most of the world uses IFRS for global comparability purposes; it is not perfect, and it is often not applied evenly everywhere, but it is clearly where the world is going. We're special, because we're the US; doesn't really cut it. SD

Those of you in the Toronto/Golden Horseshoe area with an interest in blockchain, may wish to look at the University Of Toronto Summer Innovation Series of courses; Course 3389 – Blockchain: How Do I Implement It. The 2 day course costs $495, and takes the audience from the genesis Nakamoto paper, through Bitcoin, through to the R3 Consortium Corda ledger. You might even know who is presenting it ;) http://learn.utoronto.ca/courses-programs/business-professionals/summer-innovation-series Attend, tell your employers, tell you colleagues! If numbers warrant, the university will very likely run the course multiple times; and it will be particularly useful to a wide range of audience. Kudos to Parsad for allowing such a shameless promotion on the board :D Day 1 of the 2 day course speaks to what a block chain application is, the Input-Process-Output impact, the database/distributed ledger decision, clear versus colored token, corporate social responsibility impacts, and use of a Balanced Score Card by which to assess whether a proposed blockchain application should be undertaken or not. Day 2 of the course walks the audience through the practical use of the Balanced Score Card. We assess whether a clear token charity fund raising blockchain application, and a colored token bond fund raising application should be undertaken. We conclude the day with a compare and contrast of clear versus colored token applications. If you're thinking of addressing a particular problem, via a blockchain solution - this may well be the cheapest $500 of due diligence that you'll ever do. SD

Bitcoin is just one of many token designed for anonymous reliable transacting in a zero-trust environment. It offers greatest value add to all those who need to transfer value in an anonymous way - the drug merchants, arms dealers, money launderers, etc. High security, easy use, and total anonymity - as long as the miners don't consolidate into a group with > 50% of the CPU power. The main weakness isn't the scaling limitation, it's the vulnerability to miner extortion; as a majority group (>50%) has the CPU power to 'double-spend' all the token issued to date. While they can get rich in token, to cash out - they need someone to lend them cash against token. So far it hasn't happened in any quantity. It's highly likely that we will have a hybrid of the Bitcoin model for very high net worth clients, but with 'vetted' miners, and a consortium of central banks acting as cash/token exchange facility. Wealth transfers out of banks into cyberspace, with the real protection being no way to get the cash out - unless you go through a bank (where it's traceable). If the consortium maintains a fixed FX rate, there will be zero valuation effect. SD

Withdraw some capital & buy a house mortgage free ;) The portfolio will have some margin, you have incentive to use your CF to wipe it out asap, and you get paid while you're waiting (no interest on the margin you've paid off). The 'Itch' now becomes an asset. SD

Now an enterprising lad would do a little research; pull copies of those stats, add some of the date rape stats, and have a discussion with a reporter - early/mid way through recruiting season. Select the target, let the process suck him in, and advise that a 'non disclosure' scholarship for around 10K should about do it. Of course they will go incandescent - but they WILL give him want he wants :D More importantly they will do everything they can to get rid of him; great references in return for the 'scholarship' - but only if they can get him to go someplace else. It's just playing poker for a handy tail-wind. Eventually our lad will find an 'acceptable' school. If you're his/her business school classmate, you'll probably learn a thing or two; you'll probably also discover that there are more than one of these people in your 'year'. Win-win. Of course we're all better off when we live in a clean ship; but if you have to work with a dirty one - it's gloves off, rough hockey. Fun for maybe a game or two, but a short term proposition. Bonus, if some good comes of it ;) SD

This has been common practice in most guilds, since almost day 1. The lawyers just aren’t very good at it. We want many to pursue, but > 50% to fail to get; they become the low paid technical workforce for the professionals to hire, and were persuaded to pay for their technical training themselves (a neat trick). The better trick is that they were then sold at professional billing rates to the client, but paid not much more than minimum wage (net of hours eaten). Sucks when you’re peon, but it’s great when you’re king – so don’t rock the boat; pass your professional exams, & become king (partner) instead. As soon as possible. Every now & then there are new twists. Everyone needs to be a CFA (because the king made it the ‘screen’ for the industry sector). The guild ensures that every CFA anywhere in the world gets the same technical training, and games the series of 3 exams to bleed out just the number required each year for global net replacement/expansion. The stats on successive 1st time passes on all 3 exams is generally <5%; but 90-100% of the population believes it’ll be them. Better still, the NA population of very smart people - doesn’t realise that I’m going to hire from Asia first where this (now globally standardized) skill set can be bought for roughly 50% less. Smart kings. It’s a great system, but deans are little more than goats staked out to feed leopards; most have teeth, but they are essentially insurance policies against disruptive change. A wise person applying for schools, tries for offers – and then ‘negotiates’, often culminating in an ‘anointment’ meeting with the dean. If you’ve done well - it’ll all be very civilized but you’ll feel a knife at either your back, or throat; while you have your own knife at his/her cohunes, and whisper sweet nothings in his/her ear. The gracious offer is then used to persuade a more civilized school that plays nice. Brooklyn meets Princeton. Not everyone is going to be a lawyer, or make a living at it. If society really wanted to stop the illusion, it would have pulled the curtain away a long time ago. SD

Do what tech CANNOT DO. Be entrepreneurial; use the tech to run your own business - and not be someones employee. Learn to sell. Face to face premium selling, not Peer-2-Peer robot selling. Sell Unique Product+Physical Experience+Story; what tech cannot do. Engage in long straddles to capture volatility. Change pays. Learn to code. Your IP, your benefits. As long as you are flexible and not set in your ways; tech, and the disruption it causes is your friend - which most young people inherently know, but perhaps cannot articulate. But life is not going to be the same as it was for mom/dad, hence you cannot have the same expectations. Bend to the wind, or get run-over - it is entirely to you. SD

This part was too opaque for me. Can you add some detail? How would someone short in a business like you're describing? I assume "walks" means "survives"? The commission goes to...the surviving members? Much of the power to these things is in their brevity - imagination does the talking for you. Were this a public market, the regulator would let the whistle-blower short the company - before he/she gave the dirt to the press. The expectation being that ultimately the whistle-blowers name will get out - but he/she will be so rich that they will never need to work again; the prospective profit on the short (and coming severance) being well above whatever bribe might be offered to remain quiet. The market solution to a market problem. In their business - agreement that you will be your bosses replacement, there will be a blind eye for a period, following which you will retire with a monthly pension; and enjoy the organizations protection, while your children go to the best schools (Harvard, etc.). The other guys sleep with the fishes. Pretty clear message. 10% collection fee to whoever returns the money. The organization would like it back, and the more you steal - the harder it becomes to keep it. Whether it's by hacking an account, or a little more old fashioned; no questions asked. I had the impression that it works very well. SD

Long time ago I had this conversation with a long retired consiglieri over a glass of Chianti. As it’s an inherent problem in their business, how did they deal with it? When you see it, it’s not isolated – there’s a supporting culture. Nothing particularly wrong in that; but remind everyone who they work for. The fishes; there’s variation in how it’s applied, but the messages are clear. Ultimately there’s a bounty, and a ‘permitted’ short position. When it’s over both the target and the whistle-blower are no longer part of the organization, and the whistle-blower walks as an example. 10% commission. Reinterpreted as re-possession being nine tenths of the law. The man died peacefully in his sleep at 94. SD

The experience to date suggests that cryptocurrency is not inflationary. Given that very little cryptocurrency is actually accepted for payment purposes, & those that are (ie: Bitcoin) don’t transact very much – that’s not unreasonable. The broader problem is the inflation metric itself – quantity of money/goods available, usually measured as an ‘M’ number, divided by GDP. Where’s everything (flight, hotel, meals, etc.) you bought using loyalty points? (ie Visa, Aeroplan, Airmiles, Car Rentals, Travelocity, Uber, airBnB, etc.) – all of which is just another type of cryptocurrency. If the ‘M’ isn’t capturing it, the official inflation rate may well be understating by a good 25-35bp. Central banks are heavily involved in cryptocurrency, and it will ultimately be regulated by central banks – with everything linked to the internet of things (IoT). Anything not on the IoT essentially being unusable for most purposes - because it doesn’t have a blockchain history. SD Had some interesting discussions around this … Assume you draw $1000 from your bank account to buy a plane ride + ability to earn travel points. Were travel points not part of the deal you would only have paid $909. Hence buying those points created 10% inflation (1000/909) at the time you bought the plane ticket …. & offsetting deflation at the time you used the points to pay for your next plane ride. So long as more points are created than are redeemed we inflate – hence the expectation that cryptocurrency is inflationary. But if we generally collectively redeem points when we aren’t flush (ie: in a down-turn) – they are deflationary, and it’s on top of the down-turn related asset deflation. All else equal, we end up with higher highs and lower lows. So .. we really don’t know what happens - but it’s highly likely that it adds to volatility. Not about to test a central banker on it! SD

The experience to date suggests that cryptocurrency is not inflationary. Given that very little cryptocurrency is actually accepted for payment purposes, & those that are (ie: Bitcoin) don’t transact very much – that’s not unreasonable. The broader problem is the inflation metric itself – quantity of money/goods available, usually measured as an ‘M’ number, divided by GDP. Where’s everything (flight, hotel, meals, etc.) you bought using loyalty points? (ie Visa, Aeroplan, Airmiles, Car Rentals, Travelocity, Uber, airBnB, etc.) – all of which is just another type of cryptocurrency. If the ‘M’ isn’t capturing it, the official inflation rate may well be understating by a good 25-35bp. Central banks are heavily involved in cryptocurrency, and it will ultimately be regulated by central banks – with everything linked to the internet of things (IoT). Anything not on the IoT essentially being unusable for most purposes - because it doesn’t have a blockchain history. SD

We live and learn every day ... http://www.ibtimes.com/wannacry-ransomware-attack-hackers-raised-50000-bitcoins-now-what-2539199 Yet by Monday morning, the London-based bitcoin tracking experts at Elliptic Enterprises Ltd. found only about $50,000 worth of bitcoin ransoms were paid, Bloomberg reported. SD

Lawyers are safe? whut WHUT????? Most people who (try) to become a lawyer will end up on a pathway to poverty... I can vouch for this as I, and a lot of family, are attorneys/judges. There are two MAIN things wrong with the legal profession: A). The cost of a legal education is just silly. Most law skewls cost $50k+ a year now. Sometimes law students even have undergraduate debt! I work with attorneys who have well over $100k in student loan debt, some have $200k+ a few even have $300k+ B). A lot of attorneys make $40k a year or LESS. Sure, the top 10% or 15% of the profession make big money...then you've got another 10% or so that make pretty decent money...then another 10% or 15% that make a living...then 60% to 70% that are really scraping by. This is called the "bi-modal" salary distribution. A lot of skewls don't want to admit...but their grads simply don't get jobs. If they do get jobs, they pay very little. Law firms simply aren't interested in graduates from the bottom 100+ law skewls. That is why you have had so many lawsuits against the skewls and the swindlers that run/work in them. Finally, a lot of legal "grunt" work is RAPIDLY becoming automated...I know this as I work on these projects from time to time. The high end work & oddball work is probably safe...but low level work? It is becoming heavily automated.... There is no safety for 85% of attorneys... https://legaltalknetwork.com/podcasts/legal-toolkit/2016/06/smart-contracts-bitcoin-blockchain-technology/ The view is that self-executing contracts using code will reduce billable hours, but not obviate the need for legal services; and those lower costs will improve small business access to justice by reducing costs. Those attorneys at 40K/year are going to be taking a significant pay cut. A 40K/yr lawyer working 37.5 hrs/week, 48 weeks/year (2 weeks vacation + 10 days stat holidays) will put in roughly 1800 hours/yr - about $22.22/hour. If the technology cuts that wage by even just 25% (10K) - that lawyers pay is going to be 16.67/hr at best. Not a lot of difference between the waiter/waitress serving you, & the lawyer doing your one-off legal work. SD

Mixers disguise who paid you, but you're still the recipient of the coin - & your public key is visible to all. If it rises rapidly, & you sell (for security) - nothing prevents you buying it back later (at hopefully a lot less). Interesting piece from Quartz attached. Note the links between Etherium and Bitcoin https://qz.com/981814/the-strange-mix-of-reasons-why-bitcoin-has-soared-to-all-time-records/?utm_source=YPL&yptr=yahoo SD

If you are holding Bitcoin - you may want to exit in the next few days. https://www.yahoo.com/tech/hackers-exploit-stolen-u-spy-agency-tool-launch-000320843--finance.html What isn't being stated in this story is that the payment is to be made in Bitcoin, & that the corrective software patch was released by Microsoft almost 6 months ago. Russian hackers that want to live, don't shit where they sleep. Payment in Bitcoin indicates the attack was not meant to succeed. To collect the payment the payer has to know the public key to pay to - & the seller cannot rely on intimidation to keep the keys quiet as they don't know which networks will get hit. The transparency of Bitcoin also makes tracking very easy. But what does happen is a spike in the price and liquidity of Bitcoin as folks rush to purchase the coin - enabling bulk sale of existing coin. In the securities world its called 'working the box'. To use the spike you must already have the coin, & in quantity; there are few possibilities. Buyer beware. SD

It's more useful to think of blockchain technology as the start of another industrial revolution; over time the technologies don't go away, they just get subsumed by something better. But each time the revolution starts - it is a material improvement on what went before it. Blockchain is evolving; some suggest that we're even currently entering Blockchain 4.0. Each version takes us to a fork. SD

Most wealth isn’t visible; it’s the intangibles such as ‘reputation’, ’organization’, ’attitude’, ‘work ethic’, ‘ingenuity’, ‘social space’ and ‘mobility’, etc. Almost everywhere; when lots of people are crowded into either a small physical or social space, there is almost zero upward mobility. To keep the peace, you’re kept in your place, and rebellion crushed at every opportunity. Tall poppies get cut down - & kept down. But transplant those poppies into frontier land …. & they thrive like weeds. America’s social space. American genius is ability to aggressively think ‘big’, think ‘out of the box’, think ‘good enough’, think ‘us vs them’, and piss on the ‘naysayers’. Various cultures are good at different things, but very few do it this well. Thriving tall poppies do not react well to attempts to put them in check. But it’s temporary, for wealth to work we have to permit change. You cannot protect a lead until the end of the game… because this game doesn’t have an end. Your only defence is to score more goals, and raise your game faster than the opposition is. There is no ‘coasting’ – as everyone is getting better. America has been pretty much ‘coasting’ ever since the Marshall Plan rebuilt Europe following the end of WWII. It has become used to sloth; & needs a shake-up, along with a spell in the gym. Change. We live in interesting times. SD

The reality is that the world is a messy place, people will do whatever makes sense to them in any given situation. Because the range of people goes from sociopath through to Mother Teresa - there's a variety of opinion. The same person can also be both saint and sinner, multiple times per day. In medieval times, the moralist was usually the priest. Local chiefs simply cut their heads off if they didn't like the sermon; leaving remaining priests with incentive to change the message. If it started a war, it was opportunity; as in the times of the day, rape and pillage were respectable occupations. In today's age we would call it 'stimulating the economy'. We're really trying to predict actions, and use it to control groups; control enough groups and you can seize power - to create the utopia you have in mind. It's a well worn route to dictatorship. Instead we have messy. Many contenders for power, but only one can win - the rest end up dead; and Darwinism determining how long the winner can stay in power. In democracies we use votes; in other places we use skulls - really, just another type of voting. And the messier .... the 'safer'. SD

The great thing about machine learning is the substitution of brute force for brains, ultimately driving the brains (& the ability to react to change) out of the algo altogether. We put people & technology together - for a reason. Imagine I float some great ideas - the algo picks them up & pays me for each of them. I do this a few times - & enjoy the proceeds via a two week vacation in the islands somewhere. The beach is boring .. so I build a cloud of variables, that I am pretty sure the algo will pick up (it used my ideas) I am also pretty sure I know how the algo will react to these variables; so set up accordingly, & release the cloud into the market. To the algo the cloud is toxic - it goes nuts; and pushes my set-ups deep into the money. Sell. I have just done a mugging, & have gotten away with it ... simply because I was bored, & the algo had lax human control. .... and I am one of the more ethical ones! SD

Bitcoin is an 'Oracle' with a token called 'Bitcoin'. Because other people will accept 'Bitcoin' as payment for goods or services, 'Bitcoin' functions as money. Because it uses cryptography we call it 'cryptocurrency', & assign magical properties to it. Long time ago we assigned similar properties to anything ended '.com' - & it didn't go so well. Bitcoin owes its popularity to first mover advantage, and the blockchain technology that runs it. As it features prominently in a number of textbooks, it is probably never going to go away. And with more people reading those textbooks, demand is likely to increase - driving price and volatility changes. Mougayar (2016) The Business Blockchain. Nothing wrong in any of this, but at least recognize the drivers. The underlying blockchain technology is the killer app, and it is operating in 'blue sky' - on just about everything it touches. New monopolies are being created almost quarterly, and are in the process of scaling up; once complete they will make the old Standard Oil Trust look like kiddies play. The potential impact has started to register with the public, but it is being articulated as 'Bitcoin'; ie: the wrong words are being used. Just as many people thought a 'mouse' was a rodent - when the first computers came out. SD

You need to be very clear why you are in these things, and what your thesis is. You also need to mindful that the distributed security of Bitcoin isn't really working as claimed anymore, as >50% of miners are under the same 'controlling mind'. SD

This takes some real doing, does it not? Short of decapitating entire rows of tulips with a weed-whacker while riding a bicycle through Amsterdam, I can't even imagine... It was actually Oostende, Belgium (pop 68,000); but my 'friends' were dutch. I got ejected for 'no visa', & unfortunately they weren't about to give me one. At the time I was traveling on a South African passport during the apartheid era; and Belgium was one of those countries imposing sanctions. I was well treated because Belgium used to have a colony in Central Africa, and was one of the armorers in my home country. None the less, I still felt pretty special for managing to get myself informally deported! The UK at the time was interesting, as my home country was the 'rebel' colony under sanctions. Legal arbitrage was something of a sport, and gave rise to some exceptionally gifted sanctions breakers; some of whom taught me my first lessons in business. The downside was growing up in a shooting war, with ambushes and IED's a routine experience; many of my friends were either dead or maimed before I left, and we had all been ambushed at least 2-3 times. Punk rockers, riots, and the odd deportation were no big deal; & oddly not unlike the experiences of most others who have also had to run at some point. I cannot recommend it as a career path, but it's a hell of a ride. Unfortunately way too exotic for Western Europe & North America, so it has to be tamed down a lot. Such a bummer! SD

You cant do anything without luck. Skill is important, but without the luck to get that first opportunity - there is not a lot that you can do. When punk rock was first becoming a fashion statement in London (UK) everybody was dead scared of them; they walked around in groups & supposedly would beat you up for next to no offence. While on a visit, my uncle & I encountered our first punk rockers - & I killed myself laughing at the hairdos, even throwing out a few parrot references before the joke had been invented. Shortly after I was making friends, and asking where I could get one; my uncle was certain we were dead, & could not believe our luck. Some years later I encountered this same rocker again in a full-up riot; complete with teargas, water cannon, and baton charges. I pulled him out of a tight spot, following which we climbed up a lamppost to watch the entertainment; with the show over we went for a pint with a couple of the police. My unusual friend could not believe our luck in escaping a mugging in some alley. A few months later, I got ejected from Holland - but not before having to kill some time in a dockside police station before being put back on a ferry. Thier being ever gracious, & very dutch - we spent the wait in a bar of my choice; & since none of these folks were little - I looked for an interesting place. 4 hours later I was put back on the ship & treated like royalty all the way home; nobody could believe our luck in not getting our heads broken. Yes there was luck, but in all cases we made it ourselves; and once the opportunity opened - we knew how to use it. Of course a little chutzpah does not hurt either! SD

Couple of different spins .... Time. We're really talking about contribution margin/hour of 'freedom'. When you are working you don't have much free time; so to give it up - you need to get paid very well. But when you are 'retired' you have a lot more free time; so to give up some of it - you need to get paid less. So what? ...in retirement; even working for just a few hours/week as a Walmart 'greeter' (for the people contact) may be as valuable to you, per hour of 'freedom' - as your previous job was. Optimization. Do the things with the highest CM/Hour first; pretty obvious, but very few actually do it - it's also the whole idea behind the 3 'retirements'/'bucket list approach. The quality of your hour of 'freedom', is a wasting asset depreciating at an accelerating rate over time - so some things have to get done first. Small is beautiful. Craft industries (brewing/distilling/cheese/baking) are great little 'cottage' business, & almost ideal for retirement - because they are all about small volume, and NOT GROWING the business. 2-3 partners, plus 2-3 staff = a pretty relaxed largely break-even business - paying an hourly rate a lot better than Walmart. For the time that you do work, do something that you like doing. .... & what does this say about 'investment' ??? The 'stash' is there to generate a cash flow that you will start to use in your 2nd & 3rd retirements, the only real restriction is that a small portion of the stash needs to be readily liquid (quality bonds) in case of emergency - but that's really about it. The time honored tradition in most parts of the world, is that the bulk of the stash is in paid off real estate collecting rents; you live on the rents, & if/when you need the money - mortgage against the property. Not exactly what your financial adviser is telling you? Think for yourself. SD