Annus mirabilis

Birthdays are merely symbolic of how another
year has gone by and how little we've grown.
— Jerry Seinfeld

We started precisely one year ago, with double the postforce and ten times the financial expertise, with an initial grand plan and a statement of direction. Our accomplishments have been properly enumerated already. There is only one principle which we followed dependably: "We fully embrace capitalism on a good day in the markets, but tend to lean somewhat towards the other side on correction days." On chequebook-balancing days as well.

A one-year old is not too smart, but quite moody, irascible, and not yet potty trained. For the party, we decided a few anagrams will do. Tried this once or twice before and it calmed him down.

To start with, a few semiprofound caveats: the stock markets are a treacherous trek to smacks. Exchange-traded funds in general translate into one sexed, hand-crafted gun, though we weren't necessarily thinking of the leveraged variety. Dividend stocks anagram to odd dick invests. Not an endorsement...

A couple of things we were already aware of: mutual fund MER anagrams to fraudulent mum, while resource action (another way to be shown the door) anagrams to mild, cute coronaries. There is no other kind. Note that if we use the plural, as in a bit more massive layoffs, it gets cuter: resource actions anagram to coarse neurotics, which explains what my wise friend kindly calls the Losers' Forum — a necessary gathering place for a bit of venting and commiserating, frequented by those who are a bit on their way out. Generally speaking, reader discretion is advised here. We like peeking in such odd places, and recall a posting or two which made us chuckle. Someone determined he was due a higher severance, but was charitable: "The four weeks they stole from me will go to helping a needy executive." A comment to an article elsewhere but referenced in this forum, about a US kick-back scandal, suggests: "We should change the oath our elected officials take when entering office to the Miranda rights. It will save time in the long run."

Finally, we believe that there definitely must be some hidden truth in this anagramation method: a balanced portfolio is indeed cool and profitable, while ft, posting for one year is revealed as a stooping effrontery.

They say of me, and so they should,
It's doubtful if I come to good.
I see acquaintances and friends
Accumulating dividends,
And making enviable names
In science, art, and parlor games.
But I, despite expert advice,
Keep doing things I think are nice,
And though to good I never come -
Inseparable my nose and thumb!
— Dorothy Parker (who also published "Death
and Taxes", 1931), Neither Bloody Nor Bowed

Tears from a star

In Czesław Miłosz's Milosz's ABC's (transl. Madeline G. Levine) one of his musings starts like this:

ECONOMY. I don't understand a thing about it.

You would expect that from a poet (some will swear economists don't understand a thing about it either). However, that doesn't mean he can ignore it (as economists are not all able to ignore poetry either — POETRY. I don't know a formal model about it.):

I exaggerate my ignorance of economy, because earlier in my life I came to know it from an entirely nontheoretical side, as an insufficiency of money. Already as a twenty-year-old, I had discovered its ominous power, like the power of Fate, disposing of people's destinies despite their wishes and desires. The great American crisis of 1929 drove Polish immigrant laborers out of the mines and factories of France and into the streets, and I moved among crowds of them during my first visit there. In Germany, by depriving millions of people of work, the crisis prepared them to vote for Hitler.

His conclusion regarding the frail us and the fallible science-art of economics:

How fragile is the social organism; how easily its activity can be disrupted, I discovered in America, where at least since the sudden collapse of the market in 1929 people live as they do in California in relation to an earthquake: it could happen at any moment. There is no certainty that plans and intentions for the next year won't be suddenly thwarted. So it's no wonder that the science (or art?) of economics, which is based for the most part on attempts at foreseeing catastrophes, is highly valued, and that one can receive a Nobel Prize for it.

TOMORROW. I'm not certain of one thing about it.

Except, perhaps, that thing about an insufficiency of money.

WebBroken

Ashleigh Brilliant:

Inform all the troops that communications have completely broken down.

%^#$ing brilliant:

Many happy returns

First of all, if the weekend finds you at a point of no return, do not despair. You still have until midnight Friday, April 30 to correct this.

Second. We did our taxes early this calendar year, therefore we can now afford to have some (bittersweet) fun with the subject.

The Table Talk of Samuel Marchbanks is a collection of Robertson Davies's witty columns, signed with the pseudonym Marchbanks, in the Peterborough Examiner. The book was first published way back in 1949. The good ol' date attests to the enduring quality of everything that has to do with Canadian income taxes (though their appeal is universal), a temporary wartime measure introduced in 1917. Here's what Marchbanks proposes on the matter:

This is a time of year when I think sourly of Government expenditures. I reckon that my Income Tax pays the salary of one minor official, such as the censor of books. [..] Frankly I think it would be a good idea if every taxpayer were told what government stooge he maintained. Small taxpayers would then feel that they owned an eighth of a charwoman; modest taxpayers like myself would own petty officials; wealthy men, who pay a lot of taxes, would be allotted ten or twenty clerks, or a brace of deputy ministers. With this knowledge we could go to Ottawa from time to time and chivvy and nag our hirelings. Such a scheme would give a taxpayer some pride in his taxpaying and would greatly increase bureaucratic efficiency.

Third, while we were engaged in calculating the medical expenses (lines 330 and 331) for several family members, the portion we could claim for each receipt after deducting the insurance refund (if any), the different totals for the one ideal twelve-month period vs. each one's 3% of net income (line 236) or $2,011 (whichever is less) threshold, and the potential refundable medical expense supplement (line 452) for all of this, we were hardly surprised to discover that income taxes anagrams suitably, appositely, and not so subtly into toxic enemas.

AAPL of my i...

It goes like this
The fourth, the fifth
The minor fall, the major lift

Hallelujah.

Apple Inc. (AAPL), April 20, 2010.
Chart: NASDAQ.com

Relieve and let go

    I said breakdowns come
    And breakdowns go,
    So what are you going to do about it,
    That's what I'd like to know.
    — Paul Simon, Gumboots

The selection of blogs in the sidebar, which is the (slimmer) column on the left, is a list wisely constituted by our friend ml (who's casually reading more on the Web than Google's bot) at the start of this blogging enterprise. Blogs hosted by The Economist and the Financial Times (NB anything with a British accent is worth reading), The Wall Street Journal, and The Globe and Mail. Or Angst is the way, one of our favourites. And others. You are assured of that kind of quality writing (on a wide range of subjects) that you won't find in the (thicker) column on the right. (This is one instance where the left is emphatically better.)

Blogs come and blogs go (this one is, miraculously, still sort of hanging on), and we must replace the fallen. For instance, our recent addition of New Europe, "dispatches from Dow Jones writers across Eastern and Central Europe".

Another one, Laid Off and Looking, has been suddenly laid to rest last month, to the dismay of its readers. Outraged What's the Deal? poses the (implicit) question, then promptly provides the (explicit) answer in his or her comment:

"Here's the deal. Back when the recession started throwing workers into Dante's Inferno, being laid off and looking was very fashionable and, dare I say, chic. We were captivated by these exotic creatures (laid off white-collar workers). As the recession and economic fallout continued well over a year, there were just so many people that were laid off and looking. Somehow, the novelty wore off and, like all fads, the public and this newspaper lost interest. Still, if we exhume the casket, we find that people were buried alive. The problem has not been solved. People are still out of work."

(We'd like to remind readers that the nine circles of the Inferno include Limbo, Wrath and Sullenness, and Betrayal.)

The thing is, out of the 29 bloggers, twenty "have found full-time jobs, while several others are working on long-term consulting assignments." "Overall, it took these professionals a year on average to get back to working. These contributors, along with numerous career experts and guest writers, helped to create a dynamic discussion on the challenges of job hunting after a layoff in a down economy. They explored issues ranging from ways to network effectively and deal with unresponsive recruiters to how to stay upbeat after a long-search and what it feels like to finally get re-hired. [One] topic that sparked intense discussion was how age discrimination impacts the search."

The terminated blog (December 2008 - March 2010) is still out there in the internetic aether, in case you missed any dynamic posts. Or intense comments.

As replacement we chose, for now, a WSJ blog started shortly after the demise of the above. Hire Education is on a rather similar topic — the transition from the sweet life of university to the real, i.e., working, world. "We seek advice from recruiting and career-services professionals. And we go around the Web and around the world to bring you stories about getting a foot in the door."

We notice that there are no science or engineering students among the six bloggers. This might be either because these have a conspicuously easier time landing good jobs, or because they cannot are less inclined to write.

In all likelihood they're busy studying.

L'argent de poche

The last few days were somewhat hectic as we kept busy letting down the many visitors who presumably want to learn how to get rich and live happily (or who, on occasion, and content with just the happily part, searched for pot and were pointed to our experiments with Potash Corp. of Saskatchewan, POT.TO), dropping by from such faraway places with such beautiful names, many of which challenged our notions of geography: Pompton Lakes, Beaconsfield, Belleville, Beamsville, Saint-Eustache, Anchorage, Dhahran, Silla, Whitehorse, Red Deer, Port Alberni, Vernon, Quesnel, Belmopan, Glace Bay, Iqaluit, Garden River, Maple, La Malbaie, Courtenay, Sherwood Park, Torrance, Mountain View, White Rock, Moncton, Littleton, Albuquerque, Sturgeon Falls...

Now that things have finally returned to their subdued normalcy, we relaxed by indulging in a bit of art. In a good mood, and in an act of generosity, we're sharing here a rather unassuming objet from our own impermanent collection.

Life Savings, c. 15 April 2010. Detail. (From the
private collection in Notre Portefeuille, Toronto.)

Ars brevis, vita longa.

The wrong blog

Hi there, errant pilgrim of the Web!

You, too, from The G&M??

Must be a mistake somewhere. Not sure why you got directed here. You're in the wrong place. (And let's make it perfectly clear, we have no idea who that guy is.)

As a reader of The G&M you must have high standards. You won't find any here.

We know money doesn't grow on trees. (It grows in tall buildings — see at right.) Beyond that, it's anybody's guess. When we display a graph it's only because we have a thing for squiggly lines. From what we've observed so far, the markets are a thoroughly mad affair. Which only someone just as mad can make sense of:

Sometimes stocks or the whole market will go up or down for reasons that have nothing to do with the underlying prospects of actual companies. Sure, you’ll search for a legitimate answer — Was it the rising dollar? Maybe it was the spate of bad earnings reports? — and the media will offer a few as well. But there will come a point where you’ll have to admit, Cramer said, that the moves are "just nuts".

Though we did suggest, rather early in the current mess, that the eliminated workforce are busy spending their severances, so a recovery in the economy will evidently come from the very casualties of its slump. (A sizeable part of the aforementioned hadworkforce are passionately dedicated to trading on their own, and must be recognized for the adequate measure of volatility in the Canadian markets. A strong recovery and the consequent drop in jobless numbers are bound to have a negative impact.)

Financial blogs offer practical advice. Everybody offers advice. We don't. Just as an example, we were all giddy over this week's parity hit-and-run. But naively, just for parity's sake. Big Cajun Man kept his cool and listed promptly a few things you should rush and do while the loons are flying (courteously, and all the while mumbling Thank you!).

We have a low post count. (We'd much rather spend our precious time at The Duke of York, on the patio. Followed by Starbucks, or Aroma across the street, depending on the position of the sun. On the patio.) Plus, this blog doesn't even use real words sometimes. (Either that or it's replete with mispellings.) Bloglogog? Finarcical, shmanancial? Debrial / debriferous? Potashkewan? Hadworkforce??

The only thing we can recommend with a straight face is the sidebar (on your left). In part it points to others', very skilled, work: blogs, Web sites, books, quotes, the news; in part it is generated automatically by a computer: the archive and index.

Sorry. Good-bye. And, thank you!

Photo: First Canadian Place, BMO Toronto headquarters.
Source: Wikipedia Commons.

Irrational protuberance

Citigroup Inc. (C), April 8, 2010.
Chart: NASDAQ.com

Parity; disparity

It's happening. Again. Here's the fas ci nat ing, developing story from Yahoo! Finance:

We are giddy with excitement. However. In a characteristically modest Canadian fashion, our own Globe Investor is bringing us the same story in real time, but thus:

Which, let's face it, takes all the fun out of today. Open: 1.00. High: 1.00. Low: 1.00. Yeah, sure. All quiet on the northern front.

This approximations might have been, maybe, appropriate for the exchange rate of beaver pelts, which - as the Bank of Canada's A History of the Canadian Dollar, by James Powell, informs us - were the currency in the early 1600s:

In 1608, Samuel de Champlain founded the first colonial settlement at Quebec on the St. Lawrence River. The one universally accepted medium of exchange in the infant colony naturally became the beaver pelt, although wheat and moose skins were also employed as legal tender.

Maybe. But not for a day like today. Bummer.

QED

Phinancials and PhDs

Before the economy rebounds overwhelmingly and we forget, once again, all about crises, here's a reminder.  (a) Crises come in two flavours: 1. the garden-variety, or cyclical mild meltdown, and 2. the once-in-a-very_lengthy_stretch_of_time type of calamity;  (b) It's worth remembering that, while one pays a couple of limbs or so (in whatever currency is applicable) for education, education too pays:

Another useful piece of advice related to the above and from the same Piled Higher and Deeper site: it is never too late to get learnin'. Your portfolio already took a dive during the recent crisis, now a mind would be another terrible thing to waste...

As to the observation below, never mind. Though it should be noted that the mortal on the left is more adequately equipped, both money-wise and time-wise, to get wasted, more often:

Also, here's one for the careful consideration of the eventually-set-to-learn-and/or-get-married pricey offspring.

Finally, if this applies to you (it did to Norbert), a post in Canadian Capitalist mentions a cheaper way to convert currency, by buying stock in one currency account and selling it in another.

Thanks to ds for the pointer!

The thrill is back

The season situated straight ahead of summer, the one reckoned astronomically to extend from the March equinox to the June solstice, is in that mixture of invisible odorless tasteless gases - nitrogen, oxygen, argon, carbon dioxide - that surrounds the earth. Temperatures are high, the VIX is low, and the tax refund is on its way.

Winter left, and just as well.  Just before its departure we were reminded that fiddling with the numbers will get you nowhere in the long run.  Greece (as you may remember, its GDP has been known to include a manifestly productive prostitution and other underground activities) is now bankrupt, and Lehman Brothers (their accounting may have also been kinda creative) is no longer on the map.  Therefore we duly reported on our income tax return (specifically, Schedule 4 T1-2009, section II - Interest and other investment income) all of the $0.17 in interest earned in our account at Canada's largest bank.  (How does a bank get to be the largest??)

Also we read, in Canadian Capitalist, about the mortgage-free home insurance discount, which we have utilized ourselves.  Readers offered a few opinions as to why ("insurance companies have found that mortgage-free homeowners make lower claims", "they also checked out my credit score - it seems that insurance companies are willing to take into account just about anything that is correlated with claim risk", etc.). If we were to venture a guess, it would be that if something goes terribly wrong it's easier for the insurance company to kick around an already knocked down homeowner rather than a big bank.  (How does an insurance company get to be large??)

Spring is now here.  A friend found a job, one didn't lose his, another is still looking. We had an uncomfortable urge to clean the basement this week, which we resisted.  But we added a top picks summary and a pic from paradise in the sidebar.  Meanwhile, our friend ml feels rich.  He sent us a few links (Rio Abajo Rio, Palazzo delle Luce) and, as the general idea, Christie’s Great Estates.  We suspect he must have already received his refund.

A healthy vernal breeze is blowing from the south.  It's coming from the silence on the dock of the bay.  We feel ineffably musical:

The heart has got to open in a fundamental way.  Gaudeamus!  Spring is in the air.

Mr Sandman joined Local 113

All men whilst they are awake are in one common world;
but each of them, when he is asleep, is in a world of his own.
— Plutarch

Our own serene, almost sleepy, TTC has been all over the Web lately. Here's from Friday's Toronto Star:

TTC catnaps ignite rider fury amid higher transit fares

With the click of a camera and a tweet on the Internet, one sleeping TTC worker has unleashed a torrent of fresh anger over Toronto’s troubled transit system. What began as a funny photograph posted on Twitter quickly turned into a lightning rod for transit riders frustrated with the TTC.

[T]his isn't the first time a TTC employee has been caught dozing while on the clock. Since Wieler's photo began making the rounds, more pictures of sleepy TTC workers have come out of the woodwork.

[T]he majority of online commenters were bitter, sneering that just weeks after a controversial fare hike, unionized employees with good benefits couldn't bother to stay awake and make change for equally hard-working customers.

Then a bit of the ridiculous slipped in. Here's the indignity, from Sunday's Toronto Star:

Wake up to real issues, TTC sleeper tells public

The snoozing TTC fare collector who has become the poster boy for a struggling transit system and the Internet's latest viral sensation says people need to "wake up" to the fact that there are more important things going on in the world right now than his sleeping habits.

"When you knock Haiti off the front page you know something's wrong," said George Robitaille, a veteran TTC employee, referring to the Toronto Sun's Friday cover photo showing him dozing on the public dime with his mouth open, head back and arms folded over his belly. "You know, I think our priorities are a little mixed up here."

The story has been essentially put to bed by now (or so you'd think). There is no much glory in a collector's job (cf The King of Queens), and probably not much money, so a little nap now and then is not that big of a deal (the Japanese actually encourage this sort of things). But the guy next door, who likes to be informed, turned immediately to Ontario Ministry of Finance's Public Sector Salary Disclosure for 2008: Municipalities and Services.

Through the years, guy next door learned to accept the Toronto subway system, eminently backward when compared to public transit in large cities elsewhere, got used to the fare hikes, to the washroom-coloured wall tiles on his line, learned to stand where there is nothing ugly and menacing hanging from the ceiling while waiting for a train, and got familiar with the mice between the tracks of the Yonge & Bloor and Eglinton stations. He also became reasonably resigned to Toronto's nightmarish budget problems, service cuts, and increases to his property taxes. But, Haiti!...

He wasn't particularly happy with the salary report. TTC employees making above 100K, a world of their own, seem to be the largest group (548) among the various municipalities and service sectors. Twenty-one of them are — Station Collectors. It's not mentioned how many sleep on the job. One must hold a PhD in Tokens, as is making above 125K. There are also four Tower Controllers. Last we checked, the TTC had no planes: it'd be difficult to replace those with crowded shuttle buses when they fail.

But Haiti!...

Mothers all across the GTA admonish their sons, Why can't you be a TTC collector, like your cousin Ira?!

But, mom. Haiti...

The guy next door told us next about his mood, eternal flames and all. Dies irae. Day of a bit of wrath:

Now I can't go to sleep.

Thanks to ds for the pointers!
Painting: A Boor Asleep, Adriaen Brouwer, mid 1630s. Source: Wikimedia Commons.

In praise of value

I'm a value investor. As of this week, that is.

I own, for instance, Potash Corp. of Saskatchewan (POT.TO), the world's largest producer of this crop nutrient. A Canadian value to boot. I've traded this stock several times in the past year and made some quick and easy money each time. But I have not yet held it like this, as a  v a l u e  i n v e s t o r. (My good old friend gb used to promptly redefine those stocks which, once he bought them, were just as promptly taking a dive (as it happens, a frequent occurrence), as long-term, value investments.)

Potash prices have been going down, along with the potash miners on their way to work, for a long time now. Potash is the common name for various compounds containing potassium, which are used mainly as fertilizers. An eventual rebound is to be expected, as economies improve and soil fertilization, unlike the Canadian Parliament, can no longer be prorogued.

And if I'm really lucky, the rumoured potential acquisition by BHP Billiton will materialize, and provide a great opportunity to sell. Now that would be good value. (Like striking gold. Or potash.) (Agrium Inc. is still trying to buy reluctant CF Industries, which in its turn finally gave up — for now?! — trying to buy Terra Industries. All this fertilizer business smells a bit. Is anyone still doing any actual drilling out there?) Sir, would you like some potash with that? But I digress.

What really did it, what really whisked me over to the value camp, was the acquisition this week of the Mother of all value shares. No, not this one (BRK.A), this one (BRK.B, the class B common stock):

Which is close enough. And courtesy of a 50:1 Mother of all stock splits. As you know, Warren (I feel I can call him that now) is, still, the Mother of all value investors (or, perhaps, the Father of). When he buys one railroad company, all of them go up, as if everybody will all of a sudden rush to buy trains. So I'm very optimistic.

My experience with the maternal superlatives is mixed. I once had a dream of working for the Mother of all companies in my field. Once I was hired, I wanted to leave within the first few months. Things were far from what I expected. Then 'inertia' took over, and I hanged on in there (for too long). I had, along the way, the best of times and the worst of times. I hope for better results overall with Berkshire.

And with Potashkewan too.

Oh the dickens, what a week!

Charts: Globe Investor