SharperDingaan

Talk to any snowbird - you don't have to live abroad. Just visit for 6 months less a day, to keep your healthcare ;) You don't need to own the place you're going to either. Most people simply rent a place over winter with friends, & go to a different place every year. This year a villa in Madeira or the Canary Islands, travelling to/from by cruise ship; next year a Raja's palace in India. The year after - time in Sydney & Wellington, or a safari in Africa. Lots of options. You aren't going to be spending anything remotely close to the numbers being thrown around on this thread. SD

In theory a pension shortfall is the same as any other liability, & should be part of the valuation. Dependent where the plan sponsor is located - the liability may also rank higher on the liquidation scale, materially affecting the coverage of senior debt holders. But theory is not reality ...... The more retirees relying on that sponsors pension, the more sponsors in similar deficit positions, and the more economies with the same issue (most of western europe) - the greater the certainty there will be a 'bail out'. And especially, since the global precedent of the 'crisis' bailout. 'Grey Power' keeps you elected, they are also your grandparents (if you're one of those policy makers), and the establishment has to keep them sweet - or risk having the radicals running the place (France). Usually the more hostages you have, the stronger your negotiating 'power'. But when the hostages have teeth, & the willingness to use them, you quickly discover that you're the guy wearing the milk bone undies. Pensioners have nothing to lose, & many have also survived various wars; threats just p*** them off - & make them fight harder. Most folks take a predatory approach. Bring it on. Analysts will include the pension deficit, creating liquidation valuations. Let the Wall Street machine trash both the company, & the industry - quietly buy in the stock dirt cheap, & wait for the bailout. Do you really think that GM, Chrysler, & Ford will be liquidated, & millions of people fired (including all the supplier employees), just because the pension plans are in deficit? Or is it far more likely that all those jobs are kept, plan assets are transferred to the government, & the government takes over the pension liability? SD

Yeast in a sugar solution eventually dies either from starvation (ran out of food) or toxicity (alcohol by-product). Infinity = dead ! SD

Always remember that these are marketing pieces, to increase assets under management at minimal/no additional cost. Get punters to save more, and get paid a quarterly fee on it; 10K of fees on every additional 1M paying a 1% fee. What is retirement? To many its stop work at 65, & never work again – for most that means getting packaged out between 55-65. To others there are actually 3 retirements; young (65-75), medium (75-85), and old (85+) – the ‘75’ is the new ‘65’. Hence it really comes down to what are you retiring to? When you’re working, you aren’t spending; even if you’re either working fewer hours a week, or working full time for just a few weeks/months per year. For most people, when you’re working - $in are > $out – so why do you need 8x existing income? If you’re making your own job, there’s also no ‘retirement’ age; it’s simply when you don’t feel like doing it any more – so why do you need so many years of 8x income? But more importantly, when you’re ‘old’ – staying ‘engaged’ is a life extender; better mental & physical health, better attitude, better everything. So you have terrific incentive to get it right … & have had 30-40 years of practice doing exactly that. Suddenly the marketing piece isn’t looking so good any more. The bummer is that it’s very hard (but not impossible) to take a tradeable position against the BS that these marketing pieces promote. Probably a good thing. SD

This is such a strange practice. Why would you sell something at a lower price? Last quarter I assess XYZ's prospects 6 months out as 30% higher, 50% no change, and 20% lower; net impact (30% positive - 20% negative) is +10% higher. This quarter I think its 40% higher, 40% no change, and 20% lower; net impact is +20% higher, trending +10%: hold. Instead I assess at 20% higher, 40% no change, and 40% lower; net impact is -20% lower, trending -30%; sell 50% & repurchase later (hedge). 3 months from now we reassess again; the net impact is now -10% lower, trending +10%; buy in the short. If we're right, we have our original position back + a short gain. As measurement periods are not fixed, & you need P(x) judgements; you pretty much have to do it in your head as well. SD

We do a very simple decision tree every quarter, on everything we own, over a 6 month horizon. Up, down, no change with a simple P(x) to each; no values, and trend over time. It makes you more aware of the volatility associated with your hold decision, and sets you up for hedging. See a significant decline since the last quarter? maybe its time to lighten up by 50%. SD

Never forget the $C is a petro-currency; relative to other currencies there will be repeating periods when the $C is very strong, especially when that other country is also having to import oil. Use it. Never forget that Canada is a highly desirable place, & so is the Canadian passport. Lots of space, opportunities, more open approach to the world, etc. - & for the most part protected from Europe's mass waves of refugees. Oceans to cross, & the US border, are quite some deterrents; mass immigration is highly desirable, but largely controllable. Hence, hard to see how most assets don't steadily appreciate over time. Trump nation. Canada is full of very smart global standard entrepreneurs, but plagued with small minded & not so smart industrial policy; the more protectionist US and global trade becomes, the more pressure to smarten up that unsustainable industrial policy - & unleash that talent. And all magnified if the best and brightest of the world can't enter the US because they have the wrong sounding name or skin color. Global warming. Like it or the not the North West Passage is opening, growing zones are moving northwards, northern hydro/mineral resources are increasingly becoming more accessable, and tar sands layers are increasingly becoming open to carbon sequesture - similar to Shell's North Sea 'Goldeneye' facility. The North West passage alone is akin to having both the Panama and the Suez Canals working for you - as there is little restriction on the size of the transiting ship. From the multi-generational viewpoint, the place is looking pretty damn good. All you have to do is transplant your new generation here; if they subsequently start a family - so much the better. SD

If you want shelter cheap (ie: price ONLY, determines it), don't expect a mansion. It just has to meet the attributes for the category. If another condo, in a different city, has the same attributes - the two houses are directly comparable. Differences in quality, location, etc. are taken up in the price. The condo in Oakville sells for 3x the price, in part because its in a better neighborhood & probably has higher end finishings - but functionally, it's the same condo. SD

Look at that raw data, & you get a very different story .... Most people in the major urban centers live in town houses or apartments - not mac mansions The Mar 2017 aggregate price for a townhouse was 429K. Toronto comes in a 541K; but a 75 minute commute to Hamilton will get you a condo for 421K - the national average. Most places come in at around 300-350K. Calgary (304K), Montreal (329K) Guelph (340K). Ottawa comes in at 223K - not a problem here, therefore its not a problem anywhere else in the land? The Mar 2017 aggregate price for a apartment is 373K. I'm sorry but in 2017, & in most cases - for two people sharing a townhouse/apartment in a major urban center, with a 25% down payment; this shouldn't be the stretch its been made out to be. This isn't lack of shelter; it's we don't like what it looks like - & we refuse to commute. A lifestyle choice. Agreed that for a new immigrant family, with lots of kids & one earner making minimum wage - this is very, very difficult. Similarly for the elderly on fixed incomes. However - there are many, and cheaper, ways of addressing it. In Mar-2017 a Vancouver townhouse will run you 685K, 622K in Oakville (35 minute rail commute to DT Toronto). They are both very nice places, and expensive to live in - but nobody is forcing you to live there, or to even visit the place. To do so is a lifestyle choice. If you are retired & like culture: Sell your Oakville place, & buy it's equivalent in Ottawa. French/English/Culture all in one place & 300K+ of change to help with your upkeep Or if you prefer the sea ... move to Halifax. Obviously, not a popular view. SD

In Portugal meritocracy comes upon admittance. Basically you take years 10 to 12 school year grades (which average with a national examination in each subject) and then the national examination of the specific disciplines important for the degree (like biology and chemistry for medicine or math and physics for engineering) average with that (usually 50-50). Then it happens by national contest: there are X slots in each university for Y degree (chosen in theory taking into account country needs and employment rates) and people choose the degree and university they wish to go to (the most wanted are filled quickly the least wanted sometimes stay empty). Slots are filled by grade. If you didn’t study enough (or if you couldn’t get an high enough grade even while studying) you don’t go to the pretend place (and can either try it or entry the contest one year later). After that people still have to finish their degrees. Government pays most of it, but there is still an yearly fee. Poor people can apply to scholarships (that might pay only the yearly fee or be a bit higher to help cover other expenses). Positives: if you need 1500 engineers a year the government only pays for 2000 (or less). If you take an useless degree (which shouldn’t happen) at least you won’t be indebted for life Negatives: there are still a lot of useless degrees (many people just want to have a degree and it would be unpopular not to allow that…) I grew up in Africa under a combination of the German system - high marks required for all your subjects, & Portugal's system of a very limited number of university slots. The African twist was that all results were based on a single UK exam, all exams were written within 2 weeks of each other, and if you failed you got drafted. I had all the sciences, maths, two languages, and commerce - & passed with enough academic muscle to force my way into almost all UK universities. Problem was, that at that time, I would have been an 'illegal' in the UK, & almost all of Europe & NA as well - which made all those results useless. An adventurous interlude, & I ended up in a Canadian university a few years later with a competitive entry engineering scholarship - but only after having to write a separate and purely domestic test in mathematics, my best exam subjects! Merit based sink or swim is undeniably a great system, but it also has a very high body count. Then add to it that it's highly disruptive, doesn't work well in most societies, & outliers aren't appreciated. Obviously, it's not for everyone. SD

+10 or so 8) I liked "Fooled by randomness". The rest of his books are just repetitions of the same idea, written with pompous prose. These were great books! ;) Their only crime is that they were disruptive, & revealed way too many secrets. His prose is just a satire on the academic community - by someone who 'did/does', versus 'preaches' SD

Universities typically differentiate themselves as either research or teaching. Research is the marquee draw; glamorous, prestigious, possibility of a noble prize, etc. It's also at the apex of the public funding triangle; that gives you an army of free graduate level labor, and quite the ego boost. Teaching got the sh1te, & systemic feedback loop(s), to keep it sh1te. Not a bad gig to be a researcher, a*** ****'s excepted; but dangerously disconnected from the people actually paying the freight. Look at a university today, & most of the growth in teaching is split between on-line and 'continuing studies'. It's adults coming back to school in their late 40's/early 50's, & again in their 60's in preparation for retirement; continuing studies (test if you can still do it), to on-line, to Masters, to Doctorate. The Masters isn't two years either, it's one year (or slightly more) net of credits for designations & work experience - which the university WILL give you, upon forced & blunt negotiation. Increasingly many of those continuing studies and on-line professors, are also professionals holding professional designations and 20+ years of industry experience in the field. It's a nice gig, a 'part-time' job that pays very well, it hedges your 'day job', gives ongoing access to a pool of 'known' graduates that you may need to hire from, & you can often do it in the evenings or on weekends - from home (on-line works both ways). Which is likely to be the better experience? a Bill Gates teaching an advanced tech course to adults (with lots of industry experience) in an on-line DBA/MBA course on Saturday morning - or that research professor teaching on a chalk board, 'in class', during the work day; who would rather be elsewhere? To date research PhD's have been protected, but it's ending. Those returning adults are also increasingly doing the more practically orientated DBA on-line; with tuition being paid for by guaranteed teaching gigs, & their employers giving them days off to both attend class (when required) & teach the guaranteed classes. I understand that culture clash is common, & its the theoretical faculty that usually loses. Black swans can be a bitch. Everybody eventually retires, even the opposition. But hit the tipping point, & those retirements are going to rapidly accelerate. SD

Most everywhere, making student loans available is seen as a good thing. There is just variance on the how/if the money gets paid back; we (society) create rules we think best suit our circumstance, & then live within them. As soon as there are rules, there is gaming of those rules. But just about everywhere, if you screw up you get your head handed to you; irrespective of whether you are a saint or sinner. Welcome to life, there is no 'undo'. Like it or not, in the first few years following graduation the degree substitutes for experience (it's why it's called a sheepskin); & it underpins the 'name value' of the school you went to. But after 3-5 years, you're hired on what you've done SINCE getting your degree. A literature graduate who founded a start-up is as 'useful' as an MBA, engineer, doctor, or nurse. What YOU did matters - not the school you went to. Sadly we don't value making babies the same way we value these other things we may have done. Mom (a literature graduate) who makes & raises 2 babies over 10 years (ie: makes life itself), gets punished for her entire life. Hence, hardly surprising that in western countries, birth rates have been in decline for decades. I paid a lot of $ to go to Harvard or MIT; I don't want to hear that most of its value has depreciated within 5 years. I suffered material 'opportunity loss' going to Harvard or MIT; I don't want to hear that it was entirely avoidable, had I done it on-line instead, & that millions of people do exactly that. Nobody likes being made an idiot. We reap what we sow .... but it doesn't mean that we cannot get on a plane & get our education elsewhere; it's why many parents try to ensure that their kids are dual-national. SD

Students can whine all they want, but no one forced them to take the loan. No one forced them to go to school X, or go with an in-class delivery - versus entirely on-line. Yes the student made a bad decision, welcome to the first of many; but there is no bail out for stupid. Millions of people make stupid decisions every day. Students are not special. Sure, schools are lying (often by omission)- so is almost every business in NA. We call it marketing licence. Cooley is just an extreme example, so is United Airlines. If the consumer will not do their DD, & its a buyer beware market (US) - what do we really expect? It's 'too hard', or it's unreasonable to expect this of a 'teenager/young adult', doesn't cut it. We just don't want to hear it. SD

Not sure I agree with either of these statements. An unemployed surgeon is more valuable than an unemployed ditch digger. Price does not equal value. Free education does not devalue the education. The price is just a transaction price. Look at the Chinese cities built upon free IP, they are in fact more valuable because they have removed the transaction cost. Most education and information is already out there to learn freely. Heck, I can download a med school's worth of textbooks and watch all the lectures online. That is not the reason we don't have a civilization filled with doctors, engineers, etc. Consequence matters Two students from similar backgrounds using student loans to pay for school (equal opportunity); one studies engineering, the other studies literature. On graduation both work as a barista, whilst looking for a job. But the engineer gets a conditional sweetener from an o/g company to work in a crap location (ie: Libya, Alaska, etc.) for 2 years, with a 10K sign-up loan repayment; the literature graduate remains a barista. The job offer, & sweetener, were made because the engineer had in-demand skills; which the literature graduate did not have - the literature skills had no commercial value. Think of the humble MBA. If the only place you can get one is an Ivy School, there would be very few MBA's, they would all come from the same families, and they would all get paid extremely well - including the idiots. Add a few loans, scholarships, & competitive entry; the supply rises, the pay remains good, but you can now at choose between candidates. Now make it free & remove the competitive entry (we're all 'equal'); everybody gets an MBA, & the pay plummets on the excess supply. We have just made an MBA - the new BComm, and the old BComm - essentially a college diploma. Credential devaluation. Theoretically a room full of PhD's is more valuable than a room full of ditch diggers; but if the PhD output is just research papers that go nowhere, the ditch diggers are actually more useful ('pushback' that academic 'experts' are now discovering). The PhD's don't actually become useful until they are married up with VC in an incubator - & collectively start producing new product or services. Obviously, not popular views. Let the markets signals do their thing, & the chips fall where they may SD

A student loan is simply a tool, that helps millions of people get an education. There are many who think that's a bad thing. That we would be collectively better off if student loans didn't exist; & there were fewer but higher quality doctors, lawyers, accountants - earning more. Others argue you can never have enough of those doctors, engineers, nurses, etc. Hence it would appear that for some professions, making student loans available is a good idea; but for others - not so much. Some people see student loans as just another form of predatory lending, no different to the teaser rate mortgage lending of the financial crises. It may well be; but the solution is bankruptcy - the same as it was for those mortgagees of the financial crises. Students are not special. Others suggest that education should be free, & in many places - it is. But to make something free is to devalue it, because now everyone has it. If I live in a forest of old growth trees I don't appreciate it - because every tree I look at is an old growth; even if that forest is the only remaining old growth forest of its type in the world. Institutions are simply responding to opportunity; their product is a student more educated than they were when they started. Education does not guarantee a job, it just makes it easier to get one - as every immigrant taxi driver learns very quickly. In our marketplace, 'worth' is demonstrated by what someone else is willing to pay for it. Arguably a employer hiring a new graduate, paying $X of student loan off upon hire - conditional upon the student staying with the employer for Y years. If the market will not pay, the education has zero value. We already have this, but prefer not to use it - as its a modern day form of slavery. We have what we deserve. We wouldn't make the choices required of us, and are now reaping the consequences. Doesn't mean that we have to continue to do so. SD

You might want to look a little more closely at oil/gas. Crude oil was originally a substitute for whale oil - & light to see by. It replaced whale oil because it was cheaper, burned brighter, and was available near everywhere. It was also the ONLY industrial use for the stuff. Electricity replaced burned oil, & essentially put oil out of business. It was saved through invention of the IC engine and the mass production of the car. As cars go electric & the need for electricity rises, the existing need for oil/gas will decline - driving down price. Low priced & cleaner burning gas displacing the coal. Nukes remain important, but not by as much as everyone would like to think. SD

Blackrock is simply being extremely smart here ... Assume the 80:20 rule applies to them as well, as it does to everywhere else. Those $ going into sector specific ETFs weren't making them much, after paying the bodies to hold their hands (ie: part of the 80%). So ... get rid of the bodies, cut the payroll, save on rental space, & lower the break-even. Most ETF's cannot be shorted. Except that if you created it, all you need do is mirror it with puts in a house account - creating a 100% short. But you would actually go 100%++, as you & every other house on the street, is concentrating the ETF on the same few names (nifty 50 effect). Everybody selling the same names, at the same time, making the house very very rich. Very limited risk. The names are core companies; if they get into trouble they will be bailed out to protect the jobs, and the more so if all the names in the industry sector are in trouble at the same time - with a little help from a collapsing ETF ;) A wise man would quietly put a short straddle on the more vulnerable sectors, & let Blackrock continue paying the freight. They take the blame, you take the profit, & little they can do about it. Karma's a bitch. SD

Your very last line "sell as quickly as you can and re-evaluate". Take whatever losses you have before they become too big and have a sober second look. Likely you can always but it back at reasonable price. I just had to do this with Seaspan (twice). If things look cleaner down the road, I will seriously entertain rebuying. Its very situational though. Wells Fargo was not one where I would sell just because they had the scandal. I was looking to buy on weakness but apparently so was everyone else. Buffett and his Dexter Shoe is just another example of Warren trying to be humble. He didn't lose 3.5 B, he lost the purchase cost minus whatever of the residual was left. Acting as if there was opportunity cost is disingenious. The whole debacle was a capital loss and entirely offset by gains that year from elsewhere. And I cant think of anyone else I know of who as made as few mistakes as Buffett. And that is critically important and what distinguishes him from neary everyone else. I dont see him holding Coke, WPO, or others as mistakes. Over the years we've typically found that if we're down 25% on XYZ, it's time to lighten up. In most cases our idea was right, but we were typically years too early. The better the quality of XYZ the less our loss tolerance; does not apply to cigar butts. As we also prefer to sell & repurchase later (at an even lower price), the sale is really a synthetic short - that also protects us from XYZ going bankrupt. Reinvest the entire sale proceeds at the lower price when the short gain equals the long loss. Risk management. Whiplash is always the risk when trading around a position. We suck as traders, we know it, and accept lengthier holding periods as our mitigant; and easy for us as we aren't OPM. Know yourself, and know your value proposition. SD

Think of value investment as a see-saw; one end is buy and wait for mean reversion (long term view), the other end as dollars back asap (short term payback view). Inherent in the long term view is the possibility of investment now, and more later (averaging down). The short term view is take the gains/dividends off the table as they occur. Hence, as a value investor, you are essentially bi-polar - long term bull, and short term bear. Obviously there is degree. If you think something is imploding you're dumping, & driving price lower; but give me a compelling reason to buy - & I'll do so (WEB's purchase of GS). If you think it's temporary (BP/Gulf of Mexico), you're a buyer at some point. At the extreme, you have a position entirely paid for with house money. If it pays a dividend you have a a ROI of infinity as the cost base is zero. If you sell it, welcome to a tax bill. So you margin against it instead, & use the proceeds to buy something else. Point is there's a lot more going on than meets the eye. SD

For us - most things are held with long horizons in mind, as we use time to diminish our risks. Either we average down & wait (forever) for things to turn - FBK, IRON; or we're trading cycles - PD; or we're deliberately going the buy & hold forever approach - SAN, property, etc. Our longest hold has probably been PD - across 3 cycles now. We used to do just the long side of the cycle, now we do the short side as well. If you can tolerate large negative swings, & have the patience, there is a lot to be said for it. Very few can actually do it though. SD

Basically describes the $VRX thread. Describes the various FFH threads as well. Lack of diversity of viewpoint, & pressure to conform to the group think. SD

Greed works great. Exchange the 'play money' in a monopoly set for 'real money' - and get out of the way. Years ago I did this with Zimbabwe Dollars so that nephews could 'feel the money'. $200 for passing 'Go' became 1 million, expressed as a bank note; and the winner was the first to 1 billion. It worked great, but my sister went ballistic; & Monopoly became a dirty word. For years! Neither nephew went into business; but they can both work numbers in their heads extremely quickly, and both are very good with money. Feel the money! SD

We have a version of this around some RRSP accounts. The original concept came from some friends in the construction industry. Imagine a family holding company, holding 95% ownerships in various separate ring fenced entities (local managers holding the rest). The manager keeps the place rented, repaired, etc. in return for 4-5% of the revenue, & a 1-2% equity stake. We now have an arms length person running a private real estate company that we're invested in, and the 'boots on the ground' ability to rent out a place almost anywhere in the world. Elegance. Agreed the TFSA isn't the most user friendly vehicle for investing in these entities, but 72 years (age 18 to death at 90) of totally tax free compounding is quite some prize. As most TFSA's also don't have much in them; the 10% threshold isn't a problem either. Not for everyone, but nothing wrong with being ambitious! SD

Can you please elaborate a bit? I think the original question (as well as my current one) is how do you actually place the rental property in the tfsa account. Assume a rental property owned by a partnership of X entities, collectively contributing equity. The equity being the down payment on the property, & the rent on the property paying all costs. Assume that annual rent less all costs of ownership nets out to a nominal 1K/yr before tax (simplification). Simplest is that the partnership creates a numbered company to buy the property, issues 100 shares, and each partner buys some of the shares of the numbered company. As long as the business of the numbered company qualifies, the TFSA is permitted to own shares in it; no different to owning the shares of a REIT (the numbered company is actually just a 'private' REIT). The rental property is sold, the numbered company wound up, and funds returned; the gain on the investment held in the TFSA is tax free. But if the controlling minds of the numbered company 'are in the business' (construction, agents, surveyors, wizards, etc.), it's highly unlikely it's going to lose money over the long haul.... If anything it's going to be used as a vehicle by which to train the next generation. All good. SD