SharperDingaan

For most people; it's either buy an index (ie: o/g) - or buy the individual equities. Both are just trading vehicles. Most times the index is by far the more attractive of the two - if only because its more o/g companies, and more liquid. I care only about lowest cost (<1%/yr), and hold it purely to trade the index cycle; the fund manager is of minimal value-add to me, as I have no intent to 'buy and hold forever'. I buy equities because I expect to be there a long time; either by intent, or because I screwed up - and now need to 'work it out'. I'm there as the garbage man; buying the hated when they stink, and selling for gold later when the smell ain't so bad anymore. Like the garbage man I'm paid to put up with the stink, and process sh1t into compost. The 'money in muck'. Nobody wants the garbage man at their cocktail party; if you want adoration, don't buy sh1t - buy quality business. Sound familiar? The garbage men or women dressed in Armani or Dior don't smell :D Hence what value-add is your fund really offering you? I could easily replicate the 'promise' of more money by simply buying a wad of lottery tickets every month, & get better odds. There are of course a great many people who are very good at what they do; many of whom post on this board. But if your expectations are not realistic, nobody can help you. SD

Welcome home, we missed you ;) SD

You may want to look at this a little differently. What if the 6% is in the last 2% of the 'bell curve' of returns? and the mean is actually closer to 4.5% (but unknown)? Pay 1.5%, and most of the time you will be giving up 33.33% (1.5/4.5) of your annual return. For what? And if the portfolio is 1M (500K equity + 500K margin), that 1.5% is now also 15K and not 7.5K. For what? If you did nothing more than annually commission an advisor to review your position and write you a report, a 2-5K fee would be very generous . Thereafter it's simply a low-cost self-directed execution of the reports recommendations, that you could easily do yourself. So what additional value-add are you getting for your 1.5%? and is it enough for what you are paying? Different strokes, but questions that have to be answered. You're the person paying the bill. SD

Think of a share price as an intersection; the positive of higher earnings from improving business conditions, versus the negative PV arising from higher interest rates. The higher the P/E multiple, the stronger the PV discount as we’re discounting more years. If the discount rate is already high, the PV of the additional years doesn’t matter much; different story when the discount rate is small. Then add in that earning effects take a while to materialise, whereas discount effects are immediate. A central banker increasing the discount rate is confirmation of an improving economy, and higher earnings – all good. But if the earnings promise was over-hyped before the rate increase, it’s a negative for earnings growth. Given that Trump was over-hyping, and hasn’t been delivering – most would expect a neutral/negative earnings impact. As interest rates are at historic lows, and P/E’s are high (pre-paying for more years of current earnings), the negative PV effect is also currently exaggerated. Pretty hard to see how prices go much higher, until Trump actually meets his economic promises. So far it’s been zero, in how many times out? Given that central bankers in NA have been raising discount rates, and that most would expect them to continue doing so – the medium term economic position looks pretty good. Just not so much in the short-term. SD

I think it's a bit of both. I think there's a cyclical part to it. Part of it is the end of a long bubble, sort of you had your fun with it but you took it way too far and now we're gonna step in before you break any more things. The other cyclical thing is that the regulator probably wanted to step in for a while but they weren't sure if the economy could take it. You don't want to pop a housing bubble on top of an oil crash. But now maybe they feel that the economy is in better shape and they went for it. But a big part is the cultural thing that you just weren't aware of. Why is it this way? Tradition has a lot to do with it. It's always been thus and it's worked pretty well in the past. The government/regulators are very powerful (when I was at RBC in London we were kinda worried about the FSA but terrified of OSFI) and they care about the stability of the system. From a stability perspective it's easier and more elegant to do it this way as opposed to naming names and triggering bank runs. Yes, you and I can't make the profits on our shorts that we want. Then there's gonna be dumb investors that put money into these guys and are gonna loose a lot. But our gov't can be pretty ruthless that way in the name of stability of the system. HCG is a case study. They were made an example of. The regulators (mainly OSFI) were probably all over these guys for a while (Canadian style) to clean up their act. But most likely due to hubris and/or stupidity they didn't listen or cooperate. So they had a regulator, in this case the OSC, drop a bomb on them. Now if this was in the US and the SEC issued the letter you would had maybe a 5% stock drop and nobody would have cared much. But over here on that action you're done, cause it's not just an OSC letter. Yea, it's murky, and you, I or the next guy may not like it. But it's just the way things work here. Each Big-5 has its own unique 'Charter' and operates at 'the pleasure of her majesty' - a historic quirk that literally goes back to Canada's founding years; OSFI is essentially her majesty's representative. Add in that early Canadian bankers were primarily Scots, that grew up in the 'clan' system; & you get today's banking system. Canada's modern day version of banking is very effective, and retains the 'help yourself' underlying nature of the clan system - ensuring that it is generally market responsive. Totally counter to the American approach, hence the dissonance. Can't game principles, can't fragment authority over multiple regulators, can't bully because they're smaller than you, can't steal their best people - because you're just too small. They don't do democracy either, and you will do as you're told - when you're told. It's not a discussion. While stability is prized, complacency isn't; so new innovations are permitted to root, & demonstrate the business case. They enjoy time-limited 'protection' until they abuse the privilege. No different to the drug, oil, or arms trades - just a lot better run. Typical Scots. SD

The course ran on July 14 and 15 - so it is no longer listed on the link. As it was very successful, it is highly likely that it will be run again in August, on either a Thursday/Friday or a Monday/Tuesday so that folks flying in can make a weekend in Toronto out of it as well (it's Canada's 150, and the 'Invictus' games are also in Toronto this year). We're having the discussion, Monday next week. For those who cannot travel to Toronto we will also have a 4-5 week on-line course, with the first run being either early September or October. Alumni of both courses will also have the option of participating in an underlying 'meet-up' group of Business Analysts, Coders, Others, etc. swapping contact information. The idea being that the more folks who pass through the course; the bigger the 'meet-up' group becomes, and the more valuable to anyone looking to do some preliminary due diligence. We also do a 1-day off-site version in client offices, and are currently in one of Canada's big-5 banks. The target market is senior management; with one per bi-annual rotation period, and one per quarter making the most sense. We would like to broaden this, so if it is of interest - either PM me, or contact UoT directly. It is not restricted to just FI's. As the UoT also offers a short course in AI, and some other very useful innovative courses; the possibility of a bundled road-show of multiple courses is also on the table - i.e.: travel to City X for 2-4 days, with 1-2 days 'on-site', and 1-2 days in client offices. The first road-show most likely being this Fall. There are a few other things as well, but I only have 2 hands. SD

We just invest the same small amount every quarter, and try to be opportunistic along the way; sometimes we're right, other times not so much. Ideally the weighted average realizable value of our token doubles along the way, we sell 1/2 to recover our investment, and let the rest ride. Bitcoin isn't the best at what it does; but like it or not it's the benchmark standard against which others are compared - if only because its the most liquid and best known. They have first mover advantage, much as RIM had at one time with the Blackberry. If it turns out to be the next Apple, we look like Forest Gump. If not, no big deal - as long as we've recovered our original investment. SD

The $50,000 bitcoin? http://fortune.com/2014/02/18/could-there-be-a-50000-bitcoin/ The article speaks to a back-of-the-envelope valuation approach that is just one of many; but you may want to just go back to the very basic supply/demand model, and think of it as the price set by supply/demand as at a point in time. At any one point in time the supply is essentially fixed. As new coin is added only by the mining process, at a insignificant rate that is not a function of price - the supply curve is vertical at any point in time. However, over time - the supply will increase from today's 7M to the maximum 21M per the design specs. Hence almost all the price change, reflects demand change; find new ways to raise demand for bitcoin, and the price must rise. Could be by a virus demanding bitcoin as ransom, could be via textbooks citing bitcoin - as the technology is rolled out and the masses buy some to play with, could be by treating bitcoin as an asset class - no different to a stock, and it could be by creating credit swaps with bitcoin and cash as different legs of the swap. Lots of ways - all increasing demand for the coin - and thereby its price. All technology rides a 'S' curve, and crypto-currency is in its very early days still. As the technology begins to ride the neck of the 'S', a $50,000/coin exchange rate at some point is not unrealistic. Nothing says you have to buy a whole bitcoin at 50K to participate, just as nothing says you have to buy a full BRK share at a few hundred thousand; baby B's are widely available. Sometimes, the simpler the better. SD

Just to encourage further interest, a couple of snippets from the course .... Were a charity to use a blockchain application for fund raising purposes, it might expect to save approximately $206,000 per $1,000,000 raised by eliminating transaction fees and uncollectable pledges. Furthermore, it could expect to raise an additional $989,000 through donor leveraging and network expansion. The current effort to raise $1,000,000 would raise approximately $2,195,000 instead; a 120% increase in productivity. Were the public sector to use a blockchain application for fund raising purposes, it might expect to save approximately 40bp/year; through elimination of sales commissions, reduced cost of borrowing, and lower labor and office space requirements. It becomes economic to offer self liquidating state-backed interest bearing overnight bonds, as an alternative to non-interest bearing bank deposits. Needless to say ... Fundamental changes to the 'plumbing' of industry. SD

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