financial tactics

Annus mirabilis

2010-04-29T00:49:00.019-04:00

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

2010-04-28T00:21:00.005-04:00

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

2010-04-26T14:18:00.014-04:00

Ashleigh Brilliant:

Inform all the troops that communications have completely broken down.

%^#$ing brilliant:

Many happy returns

2010-04-24T03:17:00.031-04:00

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...

2010-04-20T23:59:00.005-04:00

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

2010-04-17T19:56:00.027-04:00

    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

2010-04-15T11:00:00.021-04:00

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

2010-04-09T20:26:00.016-04:00

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

2010-04-08T19:58:00.009-04:00

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

Parity; disparity

2010-04-06T13:59:00.016-04:00

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

2010-04-01T13:04:00.003-04:00

Phinancials and PhDs

2010-03-29T14:19:00.035-04:00

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

2010-03-21T23:59:00.023-04:00

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

2010-01-26T18:16:00.021-05:00

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

2010-01-22T23:59:00.031-05:00

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

Rhapsody in fluffy white

2009-12-20T21:54:00.016-05:00

Not much seems to have been achieved in Copenhagen on the issue of climate change, but things appear to be working alright for now meteorologically. Here's Boston earlier today. Handsome and elegant in any weather, it's looking good in the coat of soft snow.

Meanwhile, in Toronto it was just cold.

Twenty years ago, Eastern Europe was welcoming a long-awaited spring. The Cold War was ending. How's that for a promising global warming!...

Season's greetings!

Photo by il.

Frugality forgone

2009-12-14T20:02:00.022-05:00

Frugality finality. It's so typical. The moment my proven lifestyle, sized on nolens volens and casually, seemed to have been finally and fashionably embraced by most — disappointment. Simon Houpt and Marina Strauss, in Frugality fatigue hits shoppers from this weekend's Globe and Mail, find strong evidence for the end of frugality.

We admit, we got excited. We envisioned the environmental benefits of spending less and saving more, and we recalled the moral benefits that had long ago prompted our patron saint Adam Smith to speak of frugality as a virtue.

We said you had changed your ways forever. You hit the malls in droves. Dare we say we were mistaken?

In some quarters, money is flowing again like water at Lourdes.

The Globe is "Canada's national newspaper", so they must know. Frugality, RIP.

That which Margaret Wente called the nouveau chic appears then to be already gone. Was this past year or so just a transitory, desultory bit of profligacy fatigue?

One positive outcome of frugality's ephemerality could be the auspicious demise of some of the many frugality-themed postings and entire blogs. The crowds are reading, with such an unfrugal extravagance, all possible and kooky advice out there, proffered with equal abundance. Many also came to this blog, only to leave utterly disappointed. Our quote at the time of that post was "Frugality is misery in disguise." (Publilius Syrus).

Frugality ethereality. I had my suspicions all along. As my friend ml said, What recession? The cafés and the restaurants were crowded all summer. The malls full. Renovation bins throughout the neighbourhood. The guy next door, while not at all surprised to see the streets so animated during what are otherwise working hours, was amazed by all the consumption going on.

The guy next door is unemployed. He knows. What frugality?

Frugality whimsicality. There are contradictory messages. The announcement for a talk on frugality (only £10.-) by Tim Harford this past Sunday, which ml brought to my attention, says:

Tim will preach a timely message about reducing waste, curbing indulgence, and suppressing the need for instant fiscal gratification in favour of simpler and more lasting sources of pleasure. He’ll argue for the rehabilitation of Ebenezer Scrooge, a self-denying hero unfairly maligned by the slanderous ghosts of Christmas.

By the end of Tim’s sermon, you will have learned [...] why frugality is not a miserly vice but the most noble of virtues.

Tim is an economist, so he must know. Long live frugality.

So — which is it? Are the British, as always, different? Are we different?

I don't know. Somehow, I feel lonely once again.

A stroke of luck

2009-11-28T19:13:00.014-05:00

This time of year here in Toronto the weather is gloom, boom, and doom. All that talk of green shoots is irrelevant by now. Summer was a blast, but mainly because it was so short.

Trust the business side of things to provide a ray of sunshine.

This is a snapshot of the Weather Network for Toronto. There are two ads on the right. The top invites you to the new Bacon Deluxe (just look what's in-between those buns), at the bottom there is mention of heart and stroke and odds of 1 in 3. "Best odds ever." You bet!...

Heck, we never really understood the world of advertising.

Ceci n'est pas un lawn

2009-11-24T00:38:00.016-05:00

Ceci was a lawn, as grassy and pristine as they come.

Doing the right thing for the environment sometimes means messing up a bit with it first. The alarming photos are of a geothermal heat pump installation. The good news from the trenches is that in the end it's all worth it (at least for a more rural kind of property): cheaper heating during the long winter and cooling during those couple of weeks of summer, and some hot water too. A FAQ also mentions cuts in your personal emissions (something we already avoid in social situations). Can't go wrong.

NextEnergy has a simple explanation of how this works and generally what's involved. Our friend rw indicates that the extent of the digging (for the underground pipes) is dictated by the size of the house to heat, and that it can also be done vertically (which is more expensive, unless of course you hit oil). Several federal and provincial grants make this enterprise somewhat more affordable.

Mind you, last year my front yard looked pretty much the same. Some guys painted Plumbers on their truck but couldn't find a sewer pipe if it dripped on them. Then recently NASA used a similar technique to ascertain there is water on the moon; luckily, NASA employs more competent people.

Back to the geothermal thing. It's also good for the environment. Just installing it should give one a warm feeling.

Photos by rw.

Ceci n'est pas un message

2009-11-21T00:00:00.005-05:00

This post intentionally left .

Tricks, no treats

2009-10-31T00:00:00.024-04:00

Want something scary? Dark pools (mucky waters for upstairs trades)! Bullet dodging, round-trip trading, churning! High-frequency trading! Flash orders!! And the list (we can only assume) goes on.

Some are too big to fail. We feel too small to succeed...

Something scarier? Try the US debt clock! (No daylight savings for this clock.)

If the US numbers are not doing it for you (and you're not afraid of heights), have a look at the big picture: the current global public debt! (If this is global debt, who's buying it? The martians??)

(Scared the living daylights out of you yet?)

B o o ! ! Happy Halloween!

The sure things in life — the guides

2009-10-29T10:37:00.040-04:00

• Updated December 3, 2009: reference the new, 2009-10 Tax Planning Guide

There aren't many certainties in life. A couple, maybe, come to mind, being always mentioned as they are. As luck would have it, CGA Ontario does an admirable job at writing about both clearly and concisely. And then some.

Less taxing taxes. Whether you do your own taxes or not (and unless you have a business or a complicated tax situation you should do them yourself, preferably aided by a computer program), Your Personal Tax Planning Guide is an excellent overview — both the big picture and useful details — of how taxes work in Canada.

The contents are pretty much those of the familiar Income Tax Return guides, but the simple fact that a different wording and shorter sentences are used may clarify lots of matters for the tax-language challenged among us.

The introduction stresses the need for continuous financial planning, and the need to be familiar with changes to the income tax legislation, in order to minimize or defer the payable taxes. This is actually the goal which drives the explanations in this guide.

The following sections cover the specifics:

major federal and provincial changes affecting individuals for the tax year
income and expenses - employment income and deductions, business and self-employment deductible expenses, investment income and expenses, personal deductions
tax planning issues - income splitting, deferred income plans: regular and spousal RRSP, TFSA
tax credits
Ontario provincial tax issues
several handy appendices - marginal tax rate tables, important tax planning and filling dates.

Tax tips are sprinkled throughout. For example:

A computer used by a professor to teach and create music was ruled to be a musical instrument and thus eligible for employment deductions.
You may include premiums paid for private health insurance in your medical-expense claim.
Fees for your child's extracurricular classes may also be eligible for the tuition credit if your child is at least 16, the classes are taken through a certified educational institution, and the program provides occupational skills. Dance or skating lessons are examples of classes that might qualify.

Updated every year, the new edition appears in December.

Where there is a will. Then there is the Executorship booklet. It's a guide to the various duties of the estate trustee, the one appointed to administer the will. These may include locating and examining the will, taking an inventory of the property and debts involved, and administering the estate: dealing with the assets (such as cash, investments, insurance policies, personal possessions) and settling the liabilities (such as taxes). The booklet's stated purpose is to make one aware of what is involved, either for deciding whom to choose for the task, or for accepting such an appointment. It can also be useful in organizing one's affairs and preparing a draft of the will.

Several government web sites are listed, and additional references are suggested. The glossary lists, among other terms, ademption, hotchpot, and per stirpes. This in itself makes it worth the price.

Good grief, more. Several other information booklets are available, such as:

Tax Tips for Students - tax information for Ontario post-secondary students; we also highly recommend CRA's own Students and Income Tax
ABCs of Accounting - definition of the more common accounting terms, like depletion, engagement, just-in-time, and ethics, some of which in accounting have a meaning different from what we knew; we couldn't locate creative accounting
Introductory Accounting for Not-For-Profit Organizations - describes a simple bookkeeping system developed by CGA Ontario for small organizations, and enumerates a series of items to deal with in running such an enterprise — sales tax and GST, workers' compensation insurance, employer health tax, incorporation and insurance, etc.
Resource Guide for Business Immigrants to Ontario - lots of useful contacts for anyone contemplating self-employment: professional and trade associations, programs of interest to new businesses — such as Small Business Enterprise centres, forms of business and registration — sole proprietorship / partnership / corporation, licenses, government assistance programs, sources of financing, labour laws, registration for regulated professions, certification, intellectual property, federal provincial and municipal taxes, available export and import assistance.

Free hard copies of all the guides can also be ordered. Most have smiling faces on the cover, including the Executorship one.

Finally, if you're young and looking for a career, and your parents have always been on your case pushing you to become an accountant, this site also provides the information on becoming a CGA.

Badadadada-dada Thanksgiving

2009-10-12T23:07:00.047-04:00

Earlier today, long weekend and whatnot, we spent some time talking to the guy next door. Turns out he's been laid off, for a while now.

After decades of hard labour and stress, he assures us he's having, at long last, a real great time.

Slow down, you move too fast,
You got to make the mornin' last.
Just kickin' down the cobblestones
Lookin' for fun and
Feelin' groovy...
Badadadada-dada feelin' groovy...

The slang is dated, the feelin' is current. He showed us an e-mail he sent to a previous co-worker:

I discovered I'm again enjoying the simpler stuff, even taking pleasure in, say, the occasional cleaning of old stacks of papers (or the basement), or doing the boring chores I've been dutifully postponing for years. I remember years ago (we were still in the old building), crossing the parking lot towards the bus station at the end of the day, I noticed a colleague walking ahead of me. She stopped, then stooped a bit to smell the flowers near the manufacturing building. [I was living in a cliché!] At the time I was sure she must have been a student (that age, when we are all romantic and everything). Now that I think about it, I'm inclined to reconsider — maybe she has also been laid off!?

Hello lampost
Whatcha knowin'?
I've come to watch your flowers growin'.
Ain'tcha got no rhymes for me?
Doo-it an' doo-doo,
Feelin' groovy...
Badadadada-dada feelin' groovy...

He worked (in and around the house) this entire Labour Day, last month. When everybody rested. Never having taken a real vacation in so many years of employment, or too many weekends for that matter (thanks to the on-line technology), he got into the habit of being a bit of the contrarian. And now that all that free time he's owed has been granted, in one big chunk, he allows himself the occasional transgression.

I've got no deeds to do,
No promises to keep.
I'm dappled and drowsy and ready to sleep.
Let the morningtime drop all its petals on me...
Life, I love you,
All is groovy...

Guy next door, not one to lay about, updated his skills scrupulously during this period. He's proficient now, for example, at catching fruit flies (mid-air), thanks to the garbage strike which provided Toronto with an abundance of these. He's having a riot every time he opens the credit card bill (the bills, sure enough, keep coming as if nothing changed — which, in a way, is reassuring), and reads the travel-protection inserts that seem to have started appearing the exact week he was, mercifully, let go. We are committed to offering you travel protection solutions that can keep you covered wherever you go. Does he need insurance for traveling around his own backyard? For dragging the garbage bins to the curb and back once a week?

He finds all the recent news about the end of the recession a bit alarming. If jobs reappear, and everybody gets working again, is miserable, and shops patriotically in support of the economy, will people's oh-that-poor-guy feelings of sympathy turn into plain oh-that-lazy-bum resentment?!...

For now, he's thankful. Doo-it an' doo-doo, Happy Thanksgiving!

Feelin' Groovy (The 59th Street Bridge Song): lyrics by Paul Simon. Simon & Garfunkel, Parsley, Sage, Rosemary and Thyme, 1966.

|| ||| | |||

2009-10-07T16:25:00.016-04:00

I will not be pushed, filed, stamped, indexed, briefed, debriefed, or numbered. — The Prisoner. Nor bar-coded?!

Google search's logo-replacement doodle (quite recently into UFOs, crop circles, and such) was today all in praise of the ubiquitous bar code, so we couldn't resist...

Ours was created by Barcodes Inc.'s free bar code generator (in Code 128B). Feel free to scan us.

Live entertainment

2009-09-29T22:13:00.020-04:00

Today we received in the mail what at first glance appeared to be an invitation to the open house of a new school. When we looked a bit closer, we decided it's for an upcoming Halloween party.

It's neither. To find out where all this fun is taking place, you also may need to take a closer look (e.g., click on the invitation, see address at the bottom).

Seeking guidance from Investopedia, we immediately unearthed defunct company, graveyard market (the investors can't get out of it, and the investors who aren't in it don't want to be — likely not even at the visitation centre), tombstone (which provides investors with bare bones information on a security), zombies (also known as the living dead), ghosting (a rather illegal practice), and witching hour (the heavy trading of the last hour — once in a while, happy hour in our experience). There are more...

Anyhoo... We are dead sure business must be good. If you're alive and fancy a defunct company, drop by.

Markets at dusk?

2009-09-21T14:19:00.005-04:00

In his book The Great Depression Ahead (Simon & Schuster, January 2009) Harry S. Dent, Jr. predicts the following:

The economy appears to recover from the subprime crisis and minor recession by mid-2009 — "the calm before the real storm."

Stock prices start to crash again between mid- and late 2009 into late 2010, and likely finally bottom around mid-2012 — between Dow 3,800 and 7,200.

This points to a sr. dent in the markets right ahead of us, or a jr. dent in soothsaying right behind us...

Image: Boston at dusk, view from the 13th floor. Photo by il.

Animal spirits, the movie

2009-09-20T18:46:00.005-04:00

At the end of the day, someone gets the money. Or the girl.

The remarkable writer and Financial Times journalist Gillian Tett, who also knows how to milk a goat (it is wise to have something to fall back on), introduced us to social anthropology through her research in a Tajik village. The action depicted in this post, presented to you courtesy of our friend Hannes Kruger from Leopard Hills Private Game Reserve, was captured in South Africa's Kruger National Park. Not on Wall Street, in spite of the similarities. There, at the closing bell the action is far from over...

Tears gas

2009-09-19T00:33:00.016-04:00

We already knew of real gas, ideal gas, perfect gas, and Boyle's Law. Noble gases. And a few others. Stomach gas too. We learned a lot recently, on a less fortuitous note, about natural gas (natgas in the lingo of experts burned by it).

In physics, a gas is a state of matter that consists of a collection of particles, without a definite shape or volume, that are in more or less random motion. So too in investments, it seems.

This week finally provided some relief, and the opportunity to dump some HNU, which when held in the wrong trend, at the wrong time, or for too long vaporizes through fissures such as daily rebalancing, contango, and the rollover of futures contacts.

No laughing gas this one. Not particularly natural either. We understand so much better now why that rotting cabbage smell...

Under-the-covers Economist

2009-09-18T21:16:00.002-04:00

Interesting developments are always taking place in the field of economics. After Bhutan, Costa Rica, and a recent French report, it's becoming inevitable:

Man does not live by GDP alone. A new report urges statisticians to capture what people do live by. [..]

In recent years economists have therefore been looking at other measures of well-being — even "happiness", a notion that it once seemed absurd to quantify.

We are scratching our heads trying to determine what would the stimulus package be in case the economy goes into a recession once the new GDH economic indicator is in effect. We speculate it would have something to do with either latex products, Viagra, or both. Which leads to our next dilemma.

Now, we here at financial tactics do not have the means to keep an undercover economist on staff. Not even a fictitious economist, of any sort. (Nor a more prolific writer, for that matter. Hence our low post count.) We therefore address our quandary to the real expert in the field. Virtually, of course.

Dear Economist,

We have a question, which has puzzled us for a while now, for the Undercover Economist in your employ.

Considering that sperm cell counts have fallen by 50 per cent worldwide since 1940, or so according to a Danish study, apparently due to an increase in pollutants such as petroleum by-products and polychlorinated biphenyls (though we strongly suspect this has more to do with the stressful overtime activity that the employed male of the species is forced to undertake), how would you advise (purely from an economic point of view) to handle a prophylactic full of LNG (Liquefied Nomadic Gametes): Carefully drop it into the recycle bin? Relegate it to the compost bin (towards the generation of somewhat fertile soil)?! Dispose of it in the rubbish bin (though what we have over here are mere garbage cans)?

financial tactics, Toronto

Milky Way? Astral plane? Knighting of the ghosts?

2009-09-18T12:30:00.002-04:00

As a matter of fact, none of the above. It's one of ft's editorial offices at night. More specifically, the lights of the modem, router, power suply, phone (unlike others, over here we do know how to access the phone mail), mouse, and keyboard.

How can someone make money out of this? It's a legitimate question. Let's see. Sell the office furniture and invest the proceeds in natural-gas futures?

As always, history may offer a better solution.

Professor Thomas F. X. Noble blends cultural, political, and economic topics in his course The Foundations of Western Civilization.

The period from 900 to 1300 was one of the longest eras of sustained growth in world history. Political Europe expanded physically as new states emerged, the European population grew as never before, the European economy achieved unprecedented levels of prosperity, while new technologies were introduced.

The correct answer, then. Do not sell the office furniture. Money is bound to follow. Eventually...

TECHNOLOGY IS THE WAY!

The pigs are pumping ship corrosion-free

2009-09-18T10:33:00.004-04:00

Some light is being shed on the copper quandary:

Pig farmers and other speculators may have amassed more than 50,000 metric tons [of copper], Jeremy Goldwyn, who oversees business development in Asia for London-based Sucden, wrote in an e-mailed report after a visit to China. That's about half the level of inventories tallied by the Shanghai Futures Exchange, which stood last week at a two-year high of 97,396 tons.

See China’s Pig Farmers Amass Copper, Nickel, Sucden Says.

Well, now we are wondering who bought all that sugar...

And no one knows why the wine is flowing...

2009-09-13T10:31:00.012-04:00

Good grief, time flies. Who would have thought!? A friend of mine became, just like that, a grandma. (A very young one, it should be noted, just to be on the safe side.) It all happened overnight. Yesterday worried about the upcoming geometry test, today grandma. QED... Hi there, baby. Howdy, grandma!

And Welcome, welcome cries a voice,
Let all my guests come in.

All this business of time flies babies et al. makes one ponder even deeper and wider. So, here it is. We should do our better best, so that the new babies of today and their babies of tomorrows will enjoy this planet as much as we still do. We are all party guests of these majestic green lands, and should pay our respects to the generous host. Time is running out. Let's not throw scraps beyond the garden wall...

Images: Greenland, photos by fs.

Economics in the Malaysian jungle

2009-08-25T12:53:00.012-04:00

Jeep for hanging jungle apparel out to dry — free. Provided courtesy of WWF.

Parang — MYR 30. Great for cutting through the dense foliage. Keep in mind that the rattan, with its thorny vines that cling and drag into your skin, may be too thick for the regular parang, at least in the hands of the less adept user.

Bathing with the elephants — priceless...

Thank you ds, teammates, WWF.

UofT book sales, a fall tradition

2009-08-24T19:13:00.009-04:00

It's once again the end of August. The good times are almost over. It's back to school. It's back to autumn. In Toronto, the kitschy Ex. And, of course, the book sales at UofT.

As second-hand bookstores in Toronto disappear one by one, these sales are a welcome reprieve. The selection is huge, the prices great. A visit to the St. George campus at this time of year is rewarding in its picturesque self.

The first day of each sale is characterized by admission charges (students with id usually excepted), big crowds, long line-ups (excellent opportunity to make a new friend, one who reads), and being able to spot book dealers hunting for bargains and rarities.

Some sales go 1/2 price or just lower on the last day or during the last hours. All accept credit cards.

Victoria College
24 - 28 September 2009
Alumni Hall & the Chapel, Old Vic — 91 Charles Street West (Museum subway station), 416-585-4585
Thursday, Sept 24, 4 pm - 9 pm ($3 admission)
Friday, Sept 25, 10 am - 8 pm
Saturday, Sept 26, 11 am - 6 pm
Sunday, Sept 27, 11 am - 6 pm
Monday, Sept 28, 10 am - 8 pm

University College
16 - 20 October 2009
15 King's College Circle (Museum subway station), 416-978-0372
Friday, Oct 16, noon - 8 pm ($3 admission)
Saturday, Oct 17, 10 am - 6 pm
Sunday, Oct 18, noon - 8 pm
Monday, Oct 19, noon - 8 pm
Tuesday, Oct 20, noon - 6 pm

Trinity College
23 - 27 October 2009
Seeley Hall — Trinity College, 6 Hoskin Avenue (Museum subway station), 416-978-6750
Friday, Oct 23, 4 pm - 9 pm ($5 admission);
Saturday, Oct 24, 10 am - 8 pm;
Sunday, Oct 25, noon - 8 pm;
Monday, Oct 26, 10 am - 8 pm
Tuesday, Oct 27, 10 am - 8 pm

St. Michael's College
27 - 31 October 2009
John M. Kelly Library (Reading Room) — 113 St. Joseph Street (Museum subway station)
Tuesday, Oct 27, 6 pm - 9:30 pm (preview and reception lecture, $20 admission)
Wednesday, Oct 28, 8:30 am - 8 pm ($3 admission)
Thursday, Oct 29, 8:30 am - 8 pm
Friday, Oct 30, 8:30 am - 8 pm
Saturday, Oct 31, 10 am - 2 pm.

Photo: Old Vic, Victoria College, University of Toronto. Source: Wikimedia Commons.

The heavenly motions of the markets

2009-08-03T23:38:00.005-04:00

It is always hard to argue against a bull market. And against science. And against the animal spirits.

Sir Isaac Newton, the genius of his age (science-wise, that is), lost extravagantly on South Sea stock by buying, selling, and then getting back into the market just before its collapse. His conclusion:

I can calculate the motions of the heavenly bodies, but not the madness of people.

James D. Stein states in his book How Math Explains the World:

The first and second laws of thermodynamics seem to appear in so many diverse environments that they have become part of our collective understanding of life: the first law says you can't win, and the second law says that it's not possible to break even.

And to put things in some perspective, a pertinent observation from, where else?, Barron's:

The rally of 2009 marches on. We're told it was the best five-month stretch for the Dow since 1938. For the Standard & Poor's 500, there hadn't been as spiffy a July performance since 1997. That is, until one checks where the S&P stood at the end of that July of '97: at 954, versus 987 today — just a 3% rise, after a 12-year slog.

With wit and very little money

2009-08-03T23:37:00.004-04:00

It's Simcoe Day / Civic Holiday in most of Canada, when the workers rest (thank you John Graves Simcoe! / thank you Civic!). So we decided to take it slowly (and not only because HNU could not be traded just when natural gas decided to go crazy) and did some quiet reading.

Here's what we learned from Niall Ferguson's The Cash Nexus: Economics And Politics From The Age Of Warfare Through The Age Of Welfare, 1700-2000.

Karl Marx wrote to his long-time comrade Friedrich Engels in June 1864:

The time has come again when, with wit and very little money, it's possible to make money in London.

According to a recent biographer, Karl may have been tempted to become a day-trader by the German socialist Ferdinand Lassalle, who had boasted of his stock market speculations.

A spectre is haunting the stock markets. What's the deal with all these socialists using tools of the decadent capitalism you may ask, with good (if a bit naive) reason. The key, which will surprise you not a little, may be found in a letter Karl wrote to Lion Philips, also in the summer of that year:

I have, which will surprise you not a little, been speculating — partly in American funds, but more especially in English stocks, which are springing up like mushrooms this year (in furtherance of every imaginable and unimaginable joint stock enterprise), are forced up to quite an unreasonable level and then, for the most part, collapse. In this way, I have made over £400 and, now that the complexity of the political situation affords greater scope, I shall begin all over again. It's a type of operation that makes demands on one's time, and it's worth while running some risk in order to relieve the enemy of his money.

The unbearable lightness of trading. And, of course, relieving the enemy of his money. If only he'd made a killing on the stock markets, history may have been different. Marx Financials Inc. could have been today too big to fail... But nothing of consequence happened.

Finally, we read in the Marx & Engels Internet Archive that Engels wrote Marx in 1852, in a hopeful (if a bit naive) spirit:

The minor panic in the money market appears to be over, consols and railway shares are again rising merrily, money is easier, speculation is still pretty evenly distributed over corn, cotton, steam boats, mining operations, etc., etc. But cotton has already become a very risky proposition; despite what is so far a very promising crop, prices are rising continuously, merely as a result of high consumption and the possibility of a brief cotton shortage before fresh imports can arrive. Anyway I don't believe that the crisis will this time be preceded by a regular rage for speculation; if circumstances are favourable in other respects, a few mails bringing bad news from India, a panic in New York, etc., will very soon prove that many a virtuous citizen has been up to all kinds of sharp practice on the quiet. And these crucial ill-tidings from overstocked markets must surely come soon. Massive shipments continue to leave for China and India, and yet the advices are nothing out of the ordinary; indeed, Calcutta is decidedly overstocked, and here and there native dealers are going bankrupt. I don't believe that prosperity will continue beyond October or November — even Peter Ermen is becoming worried.

Regretfully, no favourable circumstances yet. As we well know, just cyclical business as usual...

Family energy savings and the slow return to prosperity

2009-07-25T22:37:00.024-04:00

The world's foremost financial shaman started his latest post with:

Eh? What's going on? Why am I writing on a Saturday afternoon? Is there something wrong with me? No, dear reader, I'm just feeling a bit bored...

As for me, no, I'm not bored, though I am writing on a Saturday night. Instead, I'm poor again. Empty as a pocket with nothing to lose. The #%$* US dollars from my account vanished. For an illuminating cause, but just like that. Yeah baby, no more dance for you tonight.

I am poor again.

To compensate somewhat for this sorry state of affairs, save the day, and edge forward, I'm watching Le plus grande cabaret du monde on TV5.

On voudrait des sous pour acheter des frites, on voudrait des sous pour aller dancer...

The lyrics are emboldening, the dance phenomenal. Moreover, it seems that many more are looking for some kind of change.

At the same time, as someone raised for, and used to, multitasking activities, I'm reading with reasonable optimism through this interesting research paper, 'Smart Family' Opportunities for Energy Savings. It claims to allow families to save up to $10,000 per year per home in energy bills (emission abatement included), by using a range of simple technologies. [The practical Canadian home owner may want to refer to CMHC's Renovating for energy savings and, in Ontario, also to OPA's Every kilowatt counts.]

Who knows.

Sous by sous, one might become riche again...

Start small, grow rich

2009-07-19T22:13:00.019-04:00

Singapore, Taiwan, Austria: what do they have in common?

All these countries have extremely performant and export-oriented economies.

Singapore - iShares MSCI Singapore Index (EWS)

Singapore has an export-oriented economy, one of the most exposed to the global economy. This city-state does not expect to return to growth until the global economy shows its signs of recovery. Most notably, the full recovery will depend on the economic performances of overseas markets such as the US, China, and Japan. However, once the external trades start to pick up, Singapore's economy is likely to be among the first to rebound.

Taiwan - iShares MSCI Taiwan Index (EWT)

Another heavily trade-dependent economy, it will continue to suffer until global economic recovery takes place. Several economic indicators point to a slight easing of Taiwan's deep economic recession during the second quarter of 2009.

Six of the seven components of the index — export orders, average monthly overtime in industry and services, book-to-bill ratios in the semiconductor machinery industry, monetary aggregate M1B (currency in circulation, current-account and passbook deposits [M1A] plus passbook savings deposits), stock prices, and producers' inventory — showed positive movement. However, the barometer, which uses five colours to measure the health of the economy, continued to flash blue, indicating recession, for the ninth month in a row.

Austria - iShares MSCI Austria Investable Market Index (EWO)

The latest Purchasing Managers' Index (PMI) released by Bank Austria showed a slowing of the downturn in June, and points to a turnaround of Austria's industry most likely in the summer.

Decline in new orders, stocks of finished goods and output lose momentum. Layoffs remain at a high level. Industry poised for stabilization but a clear recovery is not anticipated.

Sources: Economist Intelligence Unit, Bank Austria

Special Drawing Rights

2009-07-19T20:42:00.017-04:00

The Special Drawing Right (SDR) is an international reserve asset created by the IMF in 1969 to supplement the official reserves of its member countries. Nowadays, its main function is to serve as the unit of account of the IMF and some other international organizations.

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold — which, at the time, was also equivalent to one US dollar. After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies, today consisting of the euro, Japanese yen, pound sterling, and US dollar.

The currency value of the SDR is calculated daily (in US dollars). The valuation basket is reviewed and adjusted every five years.

The SDR is neither a currency nor a claim on the IMF. It is a potential claim on the freely usable currencies of IMF members. Holders of SDRs can obtain these currencies in exchange for their SDRs in two ways: first, through the arrangement of voluntary exchanges between members; and second, by the IMF designating members with strong external positions to purchase SDRs from members with weak external positions.

Each IMF member country is assigned a quota, based on its relative size in the world economy. A member's quota, denominated in SDRs, determines its financial commitment to the IMF, its voting power, and access limits to financing from the IMF.

People’s Bank of China (PBOC), among other important emerging markets countries, has called at the beginning of this year for a new global reserve currency:

Special consideration should be given to giving the SDR a greater role. The SDR has the features and potential to act as a super-sovereign reserve currency. Moreover, an increase in SDR allocation would help the Fund address its resources problem and the difficulties in the voice and representation reform. Therefore, efforts should be made to push forward a SDR allocation.

The abundance of thrift

2009-07-07T19:05:00.031-04:00

There has been an explosion of frugal advice in the blogosphere, both individual posts and entire blogs dedicated to the subject. Given the crowded space, tightwads are, unavoidably, forced to read through profligate portions of excruciating cut-and-paste spam, and not of the thrifty, edible kind.

We find most suggestions rather impractical ("how to save money by dumpster diving"; "breast-feeding saves me a lot of money"; "brush your dog's teeth" or, more economical yet, "pass on pets" altogether), a few which are nothing new ("use condoms" and, possibly related, "look for inexpensive entertainment options"; and then, in the inauspicious case you skimped over the first piece of advice herein, "switch to cloth diapers" and "make your own baby food"), and several downright ludicrous ("make your own feminine products", "quit smoking", and "reduce alcohol"). We managed to uncover more usable information in Paul Simon's 50 Ways To Leave Your Lover.

For those who lived in Romania during the Golden Era, what with the daily Scînteia (The official organ of the Central Committee of the Romanian Communist Party) the toilet paper of necessity more often than not, it is difficult to find real value in North American blogs advocating frugality (oh yeah, "cut down on your visits to the spa"). Granted, this is a tough audience for such a topic, economic crisis or not. A reader of one of these blogs dismissed a long list of penny-wise tips with the comment, "In other words, become an Amish."

In the minimalist spirit of the time, here's a couple more pieces of frugal advice, courtesy of financial tactics. A friend of ours suggested once that rather than getting married, buying a house, etc., you'll be much better off in the long run living in a hotel, eating at restaurants, and frequenting a friendly professional. We won't be so extreme as to propose such a long-range commitment. And unlike the typical tip in the blogs of frugality, there isn't even the need to track down and print coupons, nor generally expend time and effort (quite the contrary, at which we excel). We equally refrain from swinging to the other extreme on the advice scale ("time is money, so blog less"). By the bye, if your printer is still of the dot matrix variety, you may have already given these a try.

Do not shave. Or, at the least, not as often. (Don't you ever watch House?)
Cut down on blades et al. If you are dedicated enough to go all the way, then once you don a sizeable beard you can, without anyone asking questions or dropping hints, take up painting or, if that's not thrifty enough for you (materials being pricey and all), get into philosophizing. Blogging, which comes free, is optional. A tub, preferably second-hand, is also something to consider.
Laughter is the best medicine. 'Nough said.

Ditch the health plan. Even signing up for a comedy channel may be cheaper. The best we could find in the above-mentioned blogs was the suggestion to downgrade the current medical insurance plan, which is clearly for the novice. We are aware of one instance where this fails (at the doctor, knife in the back, "Are you in great pain?" "Only when I laugh."), but it's statistically negligible.

Image: Mondrian, Composition with Yellow, Blue, and Red, 1937-42, oil on canvas, 72.5 x 69 cm, Tate Gallery, London. Source: wikipedia.org.
References: squawkfox.com/2008/09/02/50-ways-to-save-1000-a-year; thesimpledollar.com/2007/06/24/trimming-the-fat-forty-ways-to-reduce-your-monthly-required-spending; queercents.com/2008/05/26/how-to-save-money-by-dumpster-diving; frugalhacks.com/2008/11/10/cheerful-frugality-nurses-well

Another man's treasure

2009-06-29T11:57:00.032-04:00

Among the garbage and the flowers. Toronto streets have been getting unheralded summer detritus ornaments for a week now. And the sun pours down like honey. And it all spills onto the sidewalk.

Guy next door, as usual when details of the benefits of unionized gangs are disclosed in the news, offered no opinion other than to say "it stinks". Us Toronto taxpayers, mortals who effectively pay a handsome rent just to stay in our own homes, we prove to be a generous and stoic bunch. (And kudos to the folks in Windsor!) Notwithstanding the high taxes that go towards the many unions and the few services, this is not really much of an inconvenience.

Torontonians already spend a good time faithfully screening, sorting, bagging, dragging their oversized multi-coloured bins back and forth, and once in a while visiting the Drop-off Depot for special occasions. We know caulking tubes don't go in the Blue Bin but in the Gray One. Catheters are rinsed, double-bagged, and go into the Gray Bin. Oversized items are put 0.5 m away from the Garbage Bin, toilet tanks first removed from the bowl. Cheese paper, but not chewing gum, goes into the Kitchen Container and then is reassigned to the Green Bin. Kitty litter goes into the Green Bin, pet fur into the Gray Bin. Dead animals are not accepted by the City. (So to get rid of a pesky pet, doing away with it first will get you nowhere.) The circumference of our bundled brunches (no Bin here) never exceeds 0.6 cm. And we all know what to do in case there is excess Green Bin material.

The last step, hauling the accumulated rubble away to transfer stations and scuffling with the picketers, is a natural progression. I'm confident debris scientists are busy applying for government grants right now in their quest to discover new ways to torment us.

And she feeds you tea and oranges, that come all the way from China. With all this intensive debrial (debriferous?) activity and the odiferous litter piling up, I could not help pondering on the reasons there is so much garbage stuff in the first place.

It is, of course, because there is so much stuff. The Story of Stuff tells us as much. Of the stuff, by the stuff, and for the stuff.

Deliberately a bit rough, a bit too instructional (reminiscent of a high-school lecture, Annie Leonard the stern teacher; Will this be on the exam?), and not as in-your-face strong as The Corporation. But the documentary is a nice overview of a big problem, and it's not merely for those pure raucous sanctimonious souls who are trying, a bit too hard, to save the planet (as we all were once). It makes the fashionable frugal even cooler, and more pertinent.

This story of stuff (21 minutes long) is divided conveniently (as you cannot rewind) into seven parts: Intro, Extraction, Production, Distribution, Consumption, Disposal, and Another Way. You'll learn quite a few things along the way: shoe buffing (the Corporation is bigger than the Government), the need for more planets. Synthetic chemicals (100,000 of these), such as the BFRs in your pillow, and the need to find a better way to prevent our heads from catching fire at night. Breast is (still) best (but we kinda suspected that much). Whole communities getting wasted (sic). Low lower lowest prices at Big Box-Mart and externalized costs. Consumption as a way of life. Designed for the dump (planned obsolescence) and skinny heels (perceived obsolescence), as 99% of the stuff we buy is trashed within just six months. Working, shopping, and the national happiness. And, sure enough, garbage. Brought to you by the letter G.

But really, yes, stuff is bad. The System, it stinks. It is high time to switch to something else entirely.

The last words in

2009-06-25T01:53:00.012-04:00

The June 2009 edition of Oxford English Dictionary's online Quarterly update commentaries addresses, among others, two words pertinent to the current bleeding state of economic affairs.

John Simpson, Chief Editor, provides ample commentary on the revised entry for recession. Its recorded history, starting in 1606, exhibits various meanings such as a temporary suspension of an activity, physical receding, being recessed (especially in architectural design or artistic representation), a cavity or depression (as in a rock), and specialized meanings in astronomy, geography, dentistry and surgery, phonetics, and religion. The first encounter with an economic recession is found in an 1847 Guardian article, where it signifies a reduction in value or amount. Finally, its modern sense of 'a period of economic decline during which trade and industrial activity are reduced' well precedes the Great Depression:

For OED3 we have found the sense being used (in a regional American newspaper) in 1905, of the short, sharp recession of 1903, when (as we might recognize) "the bottom was knocked out of the speculative craze which had seized the country".

Graeme Diamond, Principal Editor of New Words, remarks on the newly-added bailout. The earliest quotation is from a Time article about $40 million in aid to, blimey, the tobacco industry, after a bad crop. (Considering how well this industry has been doing since, it appears the money was effective.) Amusingly, the underlying metaphor is either figurative water being bailed out of a 'sinking ship', or money being provided to 'get someone out of jail'. (I believe nowadays we've seen cases of bailouts followed by getting someone into jail.)

If you go on reading you'll also learn about turducken, the friendly merger of three birds, a real sweetheart deal.

OED is, of course, "The definitive record of the English language". Investopedia is "A Forbes Digital Company". Here's recession and bailout in the latter's dictionary. (No turducken in Investopedia, but the inquisitive mind will be somewhat edified by World Wide Words.)

One final word — you too can subscribe to OED News by e-mail.

[One finaler note — there is fascinating stuff in the online OED archive too.]

finarcical tactrics

2009-06-22T01:08:00.012-04:00

Financial shmanancial. Now it's summer for real. Long on days, short on nights. Lazy. Volumes are lower. Hazy. Uptick, downtick. Crazy. Time is not money — I've got the time. Anagram Genius twists financial tactics into A fantastic clinic. It certainly explains a few things...

tactics

tictacs

PS If you don't see a big clock under tictacs, then clocklink.com may be down. If you don't see the King Gambit chess game diagram under tactics, then you may need glasses.

Lazy, hazy, crazy days of summer

2009-06-15T19:20:00.028-04:00

To paraphrase Axel Munthe (The Story of San Michele), there is a Toronto qui s'amuse, but if you happen to belong to the Toronto qui travaille (loosely speaking here), it becomes another matter. A sizeable part of our editorial board is away. The other, left behind, is just green (which, in a different ecological context, and along with frugal, in the same contextual crisis, are the in mots du jour, at least for now).

We've always planned to post lifestyle articles in this blog. Many business magazines and their Web sites have such a section. It shows you what you can do with the money you made investing (while subliminally promoting that warm fuzzy feeling that anyone can make it, and big), or perhaps what you're missing because of the money you lost investing. Today, we're optimistic.

Here's a brief report put together from the latest generous dispatches from the field sent by the above-mentioned globe-trotting segment of our staff.

Viennese café on a tranquil Saturday morning

Remembrance of verses past:

  Now in Vienna there are ten pretty women...
  There's a lobby with nine hundred windows...
  There's a piece that was torn from the morning
  And it hangs in the Gallery of Frost.

  Take this waltz, take this waltz,
  take its broken waist in your hand.

Cappuccino for one cup and two mouths, €7

That's exactly what you do when you find yourself in Vienna's airport with five hours on your hands. You put up €16 (return ticket) for the CAT and in as many minutes you're in the heart of the city, on the Terrasse.

Bega Canal, Timişoara

Silviu Brucan is remembered for his 1990 contentious Nostradamic moment, when he asserted Romanians would need 20 years to become accustomed to democracy. Timişoara, for one, seems to be already there, when comparing it to even a couple of years ago: the city is clean (Bega Canal included) and full of flowers, government buildings underwent renovations, new construction shows taste, and everyone is busy working (On Corso, yours truly and the local retirees being the exception). And cars, only recently an impossible luxury, have become a necessity in the new capitalism.

Democracy is coming to Romania. The miners charter gave way to Vienna charter flights...

Crişcior, Hunedoara County

The green motif at its pastoral best. Outlasting the golden one, just as rich, of yesteryear. It brings to mind the opening lines of the ballad Mioriţa (here in the translation of W. D. Snodgrass):

  Near a low foothill
  At Heaven's doorsill,
  Where the trail's descending
  To the plain and ending...

The pristine air, the distant barking, the roosters' early-morning proclamations complete a picture that sends you back in time to an innocent, now seemingly unreal, childhood. "I sometimes stop and call to mind the customs and people there used to be in my part of the world at the time when I had, so to speak, just begun to put a foot over the threshold of boyhood." — Ion Creangă.

Cluj-Napoca from the distance

Back to business. One Canadian dollar buys you 2.6 Romanian lei (RON). An issue of Fortune magazine will set you back RON 33, so you may feel a bit richer with just Ziarul Financiar, or the new Forbes Romania. In a debate on B1 TV the consensus was that another 20 years and 500 billions (mainly for infrastructure) are still needed for Romania to reach the level of the Western world.

RON 600 in four days on restaurants, cigarettes, cabs, and books seem by all accounts money well spent.

Transilvaniei Boulevard, Alba Iulia

Oh well. Summertime. And the bloggin' is light...

Money, poetry on the way

2009-06-07T20:46:00.042-04:00

Not only the Industrial Revolution was British, but also a more contemporary, poetical revolution. London's Poems on the Underground program began in tube carriages (which are, in all probability, subway cars) in 1986:

Up in the morning's no for me,
Up in the morning early;
When a' the hills are covered wi' snaw,
I'm sure it's winter fairly.
— Robert Burns, Up in the Morning Early

When all the pre-market happens.

Like any brilliant idea, it spread in all directions. Once it got to the New York subway, as Poetry In Motion:

For the sword outwears its sheath,
And the soul wears out the breast,
And the heart must pause to breathe,
And love itself have rest.
— Lord Byron, So we'll go no more a-roving

Presumably about a slow day in the markets.

it was only a matter of when it will arrive in Toronto.

So if you happen to take the subway in Toronto¹, you must have noticed the occasional rush-hour verse or two. Poetry on the Way is how I discovered Pat Lowther:

Couldn't write then maybe
but how I could love —
When I said "Tree"
my skin grew rough as bark.
I almost remember how all the leaves
rushed shouting shimmering
out of my veins.

Even now
I can almost remember
how many hands I had
hooked in the sky.
— On Reading a Poem Written in Adolescence

On all that was once passion, and is today primarily technique...

Which leads naturally to another concept, long overdue, to wit money-management tips delivered to the captive, commuting populace in similarly small doses. I certainly could have used something like this.

Don't neglect your DC so-called pension plan: unless it's all in effectively-losing GICs, it's in the other definitely-losing small choice of funds.

Contribute to your RRSP: retirement may be a long way off, but you'll be able to withdraw funds soon, and pay only minimal taxes, when you get terminated.

Be careful about putting money in MER-hungry mutual funds: in a downturn, when care is needed most, the guys supposedly taking care of your money lose your said money faster than this train.

etc. etc.

As to a catchy name, I don't know. Money on the Way, devoid of specificity regarding the where (on the way up? down??), leaves you hanging-wanting-to-read-more alright, but also may scare the reader off. Money, by the Way lacks force. Money is the Way is already taken², sort of. Money, the Way it was is merely nostalgic, so of no much help. My Money, no Way! is not constructive.

Once the naming question is resolved and the project gets going, New York can have its turn copying Toronto. But with something called more in the American way: It's the money, stupid.

¹ This may occur either 1.- because your car broke down ("Oh, I do my part for this poor planet of ours whenever I can, you know!"), or 2.- because you cannot afford a real car ("I live downtown, so I don't really need a car!").

² One of the blogs listed on our sidebar (in the blogshelf? blograck? bloglog?! bloglogog??) is Money is the way, seldom about money as such, quite often pure poetry. And in motion, too. At times a bit jerky for the uninitiated, but always rich, colourful, and worth reading — once you get familiar with the usual inhabitants of Michael Fowke's landscape, such as the Master, the shamans, Big Herb, those children of the desert, and bien sûr episodic muse Gillian Tett.

The worst of the epidemic is over, but Mexico's economy is hit hard

2009-06-01T23:29:00.012-04:00

Mexico’s economy caught the flu rather badly, and has contracted 8.2% in the first quarter of 2009. Experts assess that it is likely to continue to sink further and faster than had been expected. Look for a recovery of the patient in the second quarter of 2010.

Mexico factsheet (data from the Economist Intelligence Unit):

Area 1,972,545 sq. km.
Population 104.9 million
Number of households 24.1 million
Fertility rate (per woman) 2.4
Adult literacy 91%
GDP US$677 billion
Agriculture 4.1%
Industry 26.4%, of which manufacturing 19.5%
Services 69.5%
Mobile phone subscribers per 100 pop. 36.6

In the meantime, your research for investment opportunities may start with the following Mexican funds and companies: iShares MSCI Mexico, Telefonos de Mexico, Cemex, Mexico Fund, Mexico Equity & Income Fund, Cimarex Energy, America Movil.

After which, look forward to the good times of tequila, the doffed sombrero, and the siesta...

CMDF, my own toxic asset

2009-05-31T12:09:00.030-04:00

• Updated February 4, 2010: add VenGrowth Advanced Life Sciences Fund's suspension of redemptions

LSIFs. If you're like me (poor cash drip, investment sense, et al.), years ago you loaded labour-sponsored investment funds (LSIFs) into your RRSP to claim some investment under your name via minimal actual money, and then maybe continued to do so even when the terms lost some of their appeal, and then perhaps even did a roll-over or two with whatever was left, in a futile attempt to come out ahead. Now you're probably getting out of them as soon as practically possible, moving that petty cash into something that doesn't merely recede.

But if you thought you could just mark February, future year(s) in your calendar as the expected day of Redemption (in more than one sense) and forget about it, forget it. Don't, that is.

Things are never easy with these funds. You'd think having invested in them is sufficient punishment. Keeping track of all the renamings and incestuous mergers & acquisitions makes it tough enough (what and how much can I dump this time around after the requisite 8 years?), with no need for added pain.

Festina lente. If you had CMDF (Canadian Medical Discoveries Fund — talk about discoveries...), and didn't yet know any better, you may have noticed in your portfolio its conversion last week to GrowthWorks Canadian Fund. That's all fine and dandy, you're used to this kind of thing, but come next/future February be very careful in your enthusiasm to sell. There is a heavy 35% penalty to pay if you withdraw more that 11.74% in the first, 15% in the second, and 20% in the third year following this felicitous merger. These figures are not cumulative.

This is also explained in a Morningstar article, from which I learned about the CMDF redemption freeze of last year, and that other funds are in a similar predicament. For instance, VALS (VenGrowth's Advanced Life Sciences Fund), which can no longer be redeemed, but will be wound down through annual distributions starting November 2010 and expected to last three to six years.

So I suspect, in case you own these things, that there is a good chance you were already peeved off...

Whither goest thou, inflation?

2009-05-30T22:24:00.002-04:00

There is an ongoing debate among economists and historians on whether inflation will ensue, and to what degree, following the humongous government stimulus packages and central banks' liquidity boosts, released all over the place in the prolonged attempts to remedy the financial imbroglio we're witnessing.

How economists can misunderstand the crisis
By Niall Ferguson
Published: May 29 2009

Yet a cat may look at a king, and sometimes a historian can challenge an economist.

A month ago Mr Krugman and I sat on a panel convened in New York to discuss the financial crisis. I made the point that "the running of massive fiscal deficits in excess of 12 per cent of gross domestic product this year, and the issuance therefore of vast quantities of freshly-minted bonds" was likely to push long-term interest rates up, at a time when the Federal Reserve aims at keeping them down. I predicted a "painful tug-of-war between our monetary policy and our fiscal policy, as the markets realise just what a vast quantity of bonds are going to have to be absorbed by the financial system this year".

© 2009 The Financial Times Ltd.

Read the article here.

Which leads us to the thought of the day: invest in commodities and oil.

An abundance of investment opportunities to feed the world

2009-05-30T18:20:00.013-04:00

A recent article in The Economist talks about outsourcing's third wave, identified to be the agricultural investment abroad. Although it can be argued that outsourcing traces its roots to thousands of years ago, on a global scale in modern history the manufacturing and services sectors may be deemed as the first and second wave of outsourcing.

An interesting paper signed by Joachim von Braun and Ruth Meinzen-Dick of IFPRI (International Food Policy Research Institute) provides more details about the new trend of global investments in farmland abroad.

Two companies that will benefit from this powerful, and potentially very fertile, global trend could be Deere & Co. and Monsanto.

Market history and investing in high supply-and-demand economies

2009-05-27T14:12:00.010-04:00

What drives supply and demand? High wages and cheap energy, asserts Professor Robert Allen in his enlightening book The British Industrial Revolution in Global Perspective. Published last month by Cambridge University Press, this is the first volume in the Economic History Society’s series New Approaches to Economic and Social History.

Why was the Industrial Revolution British?
Robert C. Allen © voxEU.org
15 May 2009

It is still not clear among economic historians why the Industrial Revolution actually took place in 18th century Britain. This column explains that it is the British Empire's success in international trade that created Britain's high wage, cheap energy economy, and it was the spring board for the Industrial Revolution.

Read the article here.

Came so far for beauty, left so much behind...

2009-05-24T19:38:00.006-04:00

In the interest of clarity, transparency, and full disclosure, here's an approximate but revealing summary of this blog so far. In the spirit of self-improvement, a matter we take very seriously, we undertake to broaden, extend, and expand our vocabulary, and in general lucubrate more. After we apply for some government stimulus.

My masterpiece unsigned

VIX and stocks run in opposite directions

2009-05-23T22:03:00.028-04:00

The VIX (CBOE Volatility Index^®), or "investor fear gauge", measures market expectation of near-term volatility, as conveyed by a range of S&P 500 index option prices (both calls and puts). It is, essentially, the price of buying options in order to protect stocks.

A high VIX value is seen as a greater degree of market uncertainty, while a low value reflects greater stability. As the graph below shows, when the VIX goes up, the stocks go down (S&P, Dow, NASDAQ). Conversely, when the VIX goes down, the stocks go up. Hence, an investment in iPath S&P 500 VIX Short-Term Futures exchange traded notes (which track VIX futures) can act as a bearish hedge.

Other volatility indexes: VXN tracks the NASDAQ 100, VXD tracks the Dow Jones Industrial Average, and MVX tracks option prices on the S&P/TSX 60 index ETF. Note that Vicks is another thing entirely.

A couple of questions arise:

Q: Are rising volatilities almost always a precursor to falling stock prices, as the market wizard stated in Steven Sears' Barron's article, or are falling stock prices the cause for rising volatilities?
A: Yes.
Q: What is the relationship between VIX and Viagra?
A: With all due respect, it seems that the markets do just fine without Viagra, in particular when the VIX comes down.

All we need is benefits

2009-05-23T17:40:00.015-04:00

I was glad to read in today's newspaper that Canadian taxpayers are forking out billions for GM pension aid. The article also quotes CAW President Ken Lewenza: "We have preserved our wages, we have preserved and secured our pension benefits, and we have protected most of our core benefits". As a taxpayer and strong believer in the right of everyone to live in decency after a life of hard work, I'm happy to oblige.

The guy next door, he's not so happy. And that's precisely because he shares my said strong belief — the everyone part in particular. He's already resigned himself to the fact that government employees (and Canadians are so blessed here, with three levels governing them with plenty of care) have indexed pensions and benefits, while he, having toiled for a private non-unionized very big Company, has effectively none of these. He was disturbed a few weeks ago to learn of the existence of a Viagra benefit that US GM pensioners enjoyed (literally), then had to give up (mostly), though the drugmaker came to the rescue ("for up to a year" or, as he — incorrectly — read it, "to up for a year").

Guy next door's not clear whether said medicine is also part of the aforementioned "core benefits" here in Canada. He is happy to have OHIP, but that plan won't even fork out the few bucks needed for a bottle of aspirin to subsidize Guy's own option, "Not tonight dear, I have a headache"...

Green shoots in the Garden of Canada!?

2009-05-22T10:12:00.017-04:00

Statistics Canada said today that Canadian retail sales rose for the third straight month in March, by 0.3 percent, on the strength of new motor vehicle sales. New cars, of all things...

The Canadian currency pushed as high as C$1.125 to the US dollar, or 88.88 US cents, its strongest level since October 9.

Toronto's main stock index rose at the open on Friday, bouncing from the previous session's 2.8 percent drop, as firmer commodity prices helped lift the resource-rich market.

Spring may be here.

In case you were waiting, the future's already here

2009-05-20T18:55:00.027-04:00

The present being as it is, we turn to the past for solutions in some areas, while the future is decidedly close at hand in others. WolframAlpha, the latest computational knowledge engine's goal is to make all the systematic knowledge immediately computable and accessible to all.

The quest to make knowledge computable has a long and distinguished history. Indeed, when computers were first imagined, it was almost taken for granted that they would eventually have the kinds of question-answering capabilities that we now begin to see in WolframAlpha.

Try a few queries yourself, e.g., in the area of money & finance. Surprisingly, the answer to deeper questions is not necessarily 42.

PS By the way, there are many other interesting things to see and read and play with from Wolfram Research, developers of Mathematica, available on the Web.

Still thinking of investing in banks? Think Canadian first

2009-05-20T17:17:00.031-04:00

A ranking based on the analysis of total assets and long-term credit quality ratings from Moody's Investor Service, Standard & Poor's, and Fitch, shows that out of the 500 largest banks in the world, Canadian banks are among the safest.

Source: Global Finance: World’s 50 Safest Banks, European Central Bank, Eurostat.

If clicking on the image to enlarge is not an option for you, here are the Canadian rankings: 10. Royal Bank, 14. Toronto Dominion, 23. Scotiabank, 32. Bank of Montreal, 42. CIBC. Top spot went to Germany's KfW.

Canadian inflation hits 14-year low - agricultural commodities gaining even more appeal

2009-05-20T13:07:00.020-04:00

Thomson Reuters published this morning a report on the latest inflation figures in Canada.

Canada's annual inflation rate in April dropped to a 14-year low of just 0.4 percent, a move analysts said meant the Bank of Canada would be in no rush to raise record-low interest rates.

The central bank last month cut its benchmark interest rate to 0.25 percent and promised to keep it there until mid-2010 as long as inflation remained tame.

The core annual inflation rate - closely watched by the Bank of Canada - dropped to 1.8 percent from 2.0 percent in March. The rate excludes the costs of volatile components such as fruit, vegetables, natural gas, fuel oil, and gasoline.

The fall in energy costs helped offset a rise in food prices, which have been steadily increasing since February 2008. Prices in April were 7.1 percent higher than a year earlier, slower than the 7.9 percent year-on-year increase in March.

The Canadian dollar firmed following the data and by 8:30 am was at C$1.1488, or 87.05 US cents, from around C$1.1553, or 86.56 US cents.

To oversimplify here, and joining the chorus of other bulls on the sector, I believe that agricultural commodities may be a safe place to deploy some money. The due diligence, as required before any investment, could start off with a close look at the two Canadians icons playing in the agricultural space, Agrium and Potash Corp of Saskatchewan.

Derivative real estate tactics in the economic downturn

2009-05-19T13:34:00.022-04:00

The slump, as severe and worldwide spread as the one of 2008-2009 is, poses a difficult challenge for those trying to move from one place to another. But life goes on, and people always find creative solutions to their problems.

With all the disadvantages and difficulties of trading over in today's stagnant global housing market, swapping, or permanent real estate exchange, is growing rapidly. A return to the primeval bartering of our ancestors?

From Lake Muskoka in Canada to the ensoleillé south of France, any kind of swap can be done. For reference, these sites

GoSwap.org

Easy House Exchange

contain a large variety of listings from a broad range of countries.

Carbon trading: world's next biggest market

2009-05-19T11:03:00.066-04:00

Almost two years ago, the New York Times ran a rather visionary article which quoted Louis Redshaw, head of environmental markets at Barclays Capital, claiming that "carbon will be the world's biggest commodity market, and it could become the world's biggest market overall."

Currently valued at over $60 billion, the carbon credit trading market is set to skyrocket to over $1 trillion as the price of carbon becomes more and more valuable, and the US joins the world in cap-and-trade regulation this year.

This is an institutional market, played by the large polluters, major financial institutions, and some hedge funds. For retail investors, the easiest way to benefit from this huge market is to invest in companies that gain from reduced emissions simply by the nature of their business. Companies that generate clean energy would benefit by selling both their power and the carbon credits they acquired while producing it. ETFs are bound to appear sooner or later.

The Montreal Climate Exchange (MCeX) - Trading Canada carbon dioxide equivalent (CO₂e) units. Each CO₂e unit is defined by the Government of Canada as an entitlement to emit one metric ton of carbon dioxide equivalent.

The system proposed by the Canadian government is based on the allocation of units to a company for exceeding its intensity-based greenhouse gas (GHG) emissions reduction targets.

GHG emissions (carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, sulphur hexafluoride, and perfluorocarbons) are calculated based on the equivalent quantity of CO₂ required to produce a similar warming effect.

The European Climate Exchange (ECX) - Trading European Union alowances (EUAs) and Certified Emission Reductions (CERs). Each EUA is an entitlement to emit one tonne of carbon dioxide equivalent gas. Trading on ECX began in April 2005.

The Chicago Climate Exchange (CCX) - Trading Carbon Financial Instrument (CFI) contracts, each of which represents 100 metric tons of CO₂ equivalent. CFI contracts are comprised of Exchange Allowances and Exchange Offsets.

The Chicago Climate Futures Exchange (CCFE) - A subsidiary of CCX, it's a derivatives exchange for futures and options contracts on emission allowances and other environmental products.

Romania hit but not down from financial crisis

2009-05-18T16:15:00.022-04:00

A relatively new member of the European Union, "Romania is one of the most beautiful, intriguing, and little-known countries in Europe," says the blurb on John Villiers's upcoming book.

International institutions have stepped up lately to help Romania weather the current financial crisis and revamp its ailing economy. The Executive Board of the IMF (International Monetary Fund) approved a 24-month SDR (Special Drawing Right) Stand-By Arrangement for Romania of 11.4 billion (about €12.9 billion, or US$17.1 billion). This aid will be combined with money from the European Union, the World Bank, the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the International Finance Corporation (IFC), for a total international support package of €19.9 billion (about US$26.4 billion) to address Romania's 2009-2010 financing gap.

Lots of wallets, for a sum that pales in comparison to what your typical failing large bank or car company in the States got used to receive...

Foreigners can invest and buy stocks in Romania through a stockbroker, though trading volume on the Bucharest Stock Exchange is small.

The tiger is happily roaring and the Indian stocks are surging

2009-05-18T10:43:00.020-04:00

There are numerous Indian stocks trading as ADRs (American depositary receipts) on the NYSE and NASDAQ. Worth taking a look at.

Following the Congress Party decisive victory in India's election, with the most seats since 1991 and no longer needing communist partners in the coalition, the Bombay Stock Exchange, founded in 1875, halted trading within seconds of the market’s opening at 9:55 am local time as shares surged. For the first time ever, after the trading resumed at 11:55 am stocks jumped further, triggering an automatic shutdown for the rest of the day.

India's economy quadrupled in size since 1991 as a result of free-market reforms. Asia's third-biggest economy expanded 5.3 percent in the quarter through Dec. 31, the slowest pace since 2003, while factory output in March shrank the most in 16 years.

Still, a caveat. Although India will benefit from a large amount of capital flowing into the country, Credit Suisse Group said in a report,

the rally may be halted by global markets, monetary and fiscal constraints, and data disappointment.

Who in your merry merry month of May?

2009-05-16T09:54:00.028-04:00

Rob Carrick's column in today's Globe and Mail is altogether Canadian, title allusion and all.

He draws attention to a few 'beautiful losers' (so called because they didn't rise as much as others in the recent rally), Canadian utility stocks that pay good reliable dividends (in the range of 3% - 6% as of the end of the week), are still reasonably priced, and may be worth adding to your portfolio. The list consists of several of the usual suspects: TransCanada, BCE, Fortis, Canadian Utilities, and Telus. And who shall I say is calling?

David Baskin, president of Baskin Financial Services, whom he interviewed, "is highlighting shares like this for conservative clients who are still wary of the markets and might otherwise put their money in bonds and treasury bills." Rob adds, "Share price appreciation is another reason to own stocks like these. Over the past five years, Fortis, Telus and Canadian Utilities have outperformed the S&P/TSX Composite on a cumulative basis." Who for his greed?

Of course, as a general rule (thank you, wise ml), seeing stock advice anywhere is not a prescription for prompt purchase. Check it out yourself first. Also, if the current market correction goes on for a while (or longer), the patient investor may be able to get their pick(s) here at an even better price. In Canada, sit on it over the long weekend. Timing and luck are of the essence... Who by accident?

Beer, Fries, and Globalization

2009-05-14T15:10:00.048-04:00

The day started with pouring rain in Toronto and bad unemployment numbers in the US. In the afternoon, the sun is out and North American markets are in the green again, which might offer a crumb or two of comfort.

I met an old friend for lunch today, and we discussed business and our kids' education. On the subway (instead of at Starbucks as usual), I enjoyed reading through Tim Harford's book The Undercover Economist.

The post's title above is the name of one of the chapters in this book. Some excerpts, for the benefit of my cognitive fog, follow:

Once upon a time there was a prosperous trading city called Bruges, nestling on the Zwin estuary in what is now Belgium. Bruges grew up around a castle built in late ninth century by the founder of the Duchy of Flanders.

[I]t was the center of gravity for the Hanseatic League of trading cities. But in the fifteenth century something strange began to happen. The Zwin began to silt up. The great ships could no longer reach the docks of Bruges. The Hanseatic League moved up the coast to Antwerp.

Antwerp, still connected to the world via the Scheldt River, took over from Bruges as the greatest economic power in Western Europe. The wealth of that time is clearly visible today. Antwerp remains an economic powerhouse. It is still the diamond capital of the world, and the mighty port on the Scheldt operates around the clock.

The contrasting stories of Bruges and Antwerp suggest a simple message: if you would like to be rich, then it is a good idea to forge close links with the rest of the world. If you prefer nothing to change, then it is best to have a harbor that silts up. If you would like to be rich and have nothing change, then you will be disappointed.

The last sentence, a veritable call to action, is thoroughly edifying...

Antwerp

Bruges - Venice of the North

Employment in the US ain't getting any better

2009-05-14T09:20:00.015-04:00

Highlights - initial claims for the week ended May 9, 2009

Initial claims for the week ended May 9 jumped to 637,000 from 605,000 in the prior week, while continuing claims through May 2 increased to another record high of 6.56 mln from 6.36 mln in the prior report.

The 4-week moving average for initial claims rose 5.3% to 630,500.

The 4-week moving average for continuing claims rose 3.2% to 6.34 mln.

CDSs between the haves and have-nots

2009-05-12T17:32:00.008-04:00

This sunny afternoon, while studying a bit what the Credit Default Swaps are all about, the idea came up of proposing a new financial instrument (an innovative financial tactic of sorts). Namely, a new application for CDSs.

Paul Krugman, winner of the Nobel Prize in Economics, in his book The Return of Depression Economics and the Crisis of 2008, answers the question "what is depression economics?" thus:

Essentially it means that for the first time in two generations, failures on the demand side of the economy - insufficient private spending to make use of the available productive capacity - have become the clear and present limitation on prosperity for a large part of the world.

Given that the demand side is always a problem during downturns in the economy, why not have contracts, CDSs, between the wealthy and the less fortunate that stipulate that once the wealth is diminishing at the Palace, the poor, harder hit by economic crises, receive a return based on the premium they previously paid. In this manner, during good times reserves are responsibly created for the eventual bad times. Not a social program, but unadulterated good old-fashion market action.

We leave the implementation to the sharper minds in the industry. The new sharper-and-regulated ones, given that the merely-sharp engaged only recently in what Gillian Tett describes so:

the [...] derivatives dream collided with the housing boom, and was perverted — through hubris, delusion, and sheer greed.

Though of course we volunteer to act as the Clearing House for the proposed instrument.

The Sound of Markets

2009-05-11T11:39:00.022-04:00

In an interview last week David Rosenberg, still of Merrill Lynch, offered his views about the current markets direction. He said:

Market likely to peak the end of the week [Friday]. Just as the clock is winding down on my tenure at Merrill Lynch, the equity market is winding up with an impressive near-40% rally in just nine weeks. For those that were still long the equity market back at the March 9 lows, a good 'devil’s advocate' exercise would be to ask yourself the question whether you would have taken the opportunity, if the offer had been presented, to have sold out your position with a 40% premium at the time. What do you think you would have said back then, as fears of financial Armageddon were setting in? We haven’t conducted a poll, but we are sure at least 90% of the longs at that point would have screamed "hit the bid!"

Buying opportunities - a view from Boston

2009-05-09T11:04:00.016-04:00

It was a very pleasant trip driving from Toronto to Boston on Eisenhower Interstate 90 on Friday morning. For someone who checks the markets diligently before investing, ideas may come from real life experiences such as shopping or travelling.

That said, buying Caterpillar and/or Wall-Mart at the moment, or after the markets pull back, may constitute a profitable investment for the future. Eisenhower Interstate 90 was full of CAT bulldozers (doing maintenance and improvement work to the highway) and Wall-Mart trucks (hauling merchandise for the masses).

An introduction to stocks

2009-05-08T19:56:00.090-04:00

Companies raise money by issuing stocks. This is a brief introduction to common stocks — ordinary shares with voting rights attached. A company may have more than one class of stock, with different voting rights and dividend payments for each, e.g., class A and class B.

When you purchase stocks (shares, equities), you essentially own a piece of that company (and can go around and brag about it). As a shareholder, you have a claim on its assets, earnings, and have a say in its management. Even though you may not own stocks directly (in your portfolio), you most probably do in mutual funds or your pension plan.

Stocks are riskier investments that savings accounts, GICs, and bonds, but with risk comes the potential for bigger gains.

Here is information about a stock representative of what you'll find on any investment site. This one is a snapshot from the Globe and Mail (where a new format for stock quotes is in Beta) of Royal Bank of Canada common stock (its symbol here is RY-T; Yahoo! Canada Finance uses RY.TO) during a trading day in Toronto. We'll go through its main bits of information.

C$ 43.990 — the current price at 1:43pm (the quotes outside trading platforms are usually delayed, here by 15 minutes), which represents a net gain of 52 cents (or +1.20%) over yesterday's closing price (which was 43.99 - 0.52 = $43.47); the Open price (at which Royal Bank shares first traded today), at $43.24, was therefore slightly lower than yesterday's close
High, Low — today's price fluctuation
Bid, Ask — information on the current bid - ask haggle on the trading floor
Volume — the number of shares traded so far today
52-wk High, 52-wk Low — the trading price range of the stock during the last year (see also the one-year chart later below); if you were smart & lucky you would have bought Royal Bank on February 24th of this year (02/24)
Mkt Cap — market capitalization (market cap): the total dollar market value of all of a company's outstanding shares, i.e., the number of all its shares multiplied by the current share price. This figure gives you a company's size, as opposed to its sales or total asset figures. RBC's $61B makes it a large-cap company
EPS (ttm) — earnings per share in the past twelve months
P/E — price/earnings per share. Generally speaking, a high ratio of the share price to the company's earnings per share (a more expensive stock) suggests that investors are expecting higher earnings growth in the future, in comparison to companies with a lower P/E (cheaper stocks)
Forward P/E — forward price/earnings
PEG — price/earnings to growth
Annual Div. — some companies are even more attractive to the long-term investor, as they also issue dividends (usually quarterly) - part of the company's earnings are returned directly to its shareholders. For each Royal Bank share an investor receives $2.00 annually, which works out to a Yield (based on yesterday's closing price) of 2/(43.99-0.52) = 4.6%. So if you buy shares at roughly this price you'll get a return of 4.6% (unless the company gets into cash-flow troubles and cuts the dividend in the future, unlikely in the case of a Canadian bank) plus whatever appreciation the share price achieves (capital gains). Both dividends and capital gains are taxed outside a registered plan such as an RRSP or TFSA, but at a lower rate that interest income.

The quote box described above relates directly to the intraday chart below. The red dashed line is previous day's closing price. The trading volume is also tracked.

And here is the one year chart:

On the same Web page you'll also find the latest headlines related to the company, its annual financial results, and earnings estimates.

Finally, this chart compares Royal Bank's stock to the S&P/TSX Composite index (whose symbol on Yahoo! Canada Finance is ^GSPTSE) since 1995:

The two small, black arrows indicate stock splits, detailed at the bottom of the chart. In a split a company's existing shares are divided into multiple shares. Although the number of shares outstanding increases by the specific multiple, the total dollar value of the shares remains the same, as no real value is added. In a 2:1 split, you receive one additional share for each share you hold. One reason for stock splits is that a company's share price has grown too high for many investors to buy in round lots (for instance, this one). Pre-split chart values are adjusted, to provide a consistent picture.

You may also want to check out:

OSC's Investor Education Fund: How does the stock market work? Is this stock a good investment for me? How much do stocks pay? How do I buy and sell stocks and bonds?

RBC Direct Investing's Education Centre: Equities 101

Investopedia's Stocks Basics.

ECB cuts main rate to 1%

2009-05-07T11:16:00.017-04:00

The ECB (European Central Bank) lowered its key interest rate by a quarter percentage point to 1 percent but kept the overnight deposit rate, which is acting as a floor for money markets, at 0.25 percent, narrowing the gap between its policy rates, rather than cutting the lowest of these to zero. The ECB has been lowering rates, from 4.25 percent, since last October.

"The Eurosystem will purchase euro-denominated covered bonds. [...] We expect to engage in a program which could be around 60 billion euros (US$80 billion)," ECB president Jean-Claude Trichet told a news conference after its monetary policy decision.

Longing for the next distraction

2009-05-06T09:49:00.011-04:00

I'm all strung out. All this non-stop talk about the stress test is stressing me out. My sweater is on backwards and inside out. Biovail cut its dividend. Oil is still rising. The reporters are shouting the news on Bloomberg TV. Less worse is the new good. And what's the deal with the metals?

I'm resetting this recalcitrant modem and heading off to the nearest SBUX. I may even bump into Alanis there...

Are we in for a correction?

2009-05-05T20:57:00.020-04:00

May 5 2009, S&P TSX closed at 9,880.72, S&P 500 closed at 903.80.

Bollinger Bands, which are curves drawn in and around the price structure, and define high and low on a relative basis, suggest a near term correction in the North American indices.

Free markets boost economies and raise global prosperity

2009-05-05T15:58:00.017-04:00

Globalization and prosperity are synonyms for the free movement of goods, people, and capital around the world. While this is something easy enough to understand, it's equally important to be aware of the downside effects when international imbalances take place. Although Cédric Tille's paper tackles the Swiss banks, it's an insightful tale about how global finance operates.

What are Switzerland’s vulnerabilities?
Cédric Tille © voxEU.org
12 March 2009

The biggest risk facing the Swiss economy is its large financial sector with substantial international exposure. Foreign currencies, mostly held by UBS and Credit Suisse, account for nearly two-thirds of banks’ balance sheets - an amount equivalent to four times annual GDP. This column suggests splitting the two large banks’ domestic and foreign operations, so that losses on the latter do not jeopardize the domestic financial system.

Read the article here.

Zeke the Greek the Mouthpiece in Toronto

2009-05-05T15:04:00.013-04:00

Larry King, the iconic figure of modern TV talk-show, will discuss his autobiography, My Remarkable Journey.

Friday, May 22, 2009, 7:00 pm, John Bassett Theatre - Metro Toronto Convention Centre, 255 Front Street West. Tickets available through Ticketmaster. Book signing to follow at Festival Hall, 142 John Street, (416)595-7349.

Gold outlook for the second half of 2009

2009-05-05T13:32:00.028-04:00

Royal Bank of Canada sees gold staging a near-term seasonal pullback of 10-15% from its April 1 value, suggesting a potential downside risk to US$750 - $800/oz this summer. According to their continued bullish longer-term outlook, gold may reclaim $900/oz later in the year, and perhaps retest $1,000/oz late this year or into 2010.

For an even more glittering view, see 2009 Gold Outlook on the Gold World Web site.

Money, money, money, and the financial markets

2009-05-05T12:16:00.022-04:00

This readable and meaningful book review of The Origins of Value: The Financial Innovations that Created Modern Capital Markets (edited by William M. Goetzmann and K. Geert Rouwenhorst, Oxford University Press, 2005), written by Stephen Fidler for the Financial Times, may shed some light on money and its usage. Loans bets and trades, or bonds stocks/options and commerce.

A globe-trotting history of modern finance
By Stephen Fidler

Published: December 27 2005. © The Financial Times Limited 2009

Loans, bets and trades. These three words, more or less, encapsulate all transactions in the world's financial markets. Raw computing power in the past 20 years has pushed modern finance to levels of sophistication that make it hard for laymen to grasp. But understand these building blocks and you understand, at root, what financial markets are about.

Read the article here.

Europe, and Lesser Europe

2009-05-05T11:35:00.005-04:00

As was to be expected, Europe's suburbs are in deeper, shall we say, crisis. A systemic response appears to be in order.

Collapse in Eastern Europe? The rationale for a European Financial Stability
Daniel Gros © voxEU.org
25 February 2009

The European periphery faces significant economic turmoil. This column argues that Eastern European woes threaten the core of Europe and necessitate a systemic response. It proposes a new, massive European Financial Stability Fund (involving about 5% of EU GDP) run through the European Investment Bank.

Read the article here.

The Jolly-Great Recession vs. the Great Depression

2009-05-05T11:25:00.016-04:00

We all knew, before the current crisis that is, that all the controls in place nowadays would prevent anything even remotely close to what happened during the Depression. Sure thing.

How similar is the current crisis to the Great Depression?
Thomas Helbling © voxEU.org
29 April 2009

Despite the stunning contraction of industrial production and trade across the globe, the global economy is still a far cry away from the calamities of the Great Depression. However, if the economic damage of the current global crisis may have been contained so far, worrisome parallels to the early 1930s remain and preventive policy actions must be kept up.

Read the article here.

What every investor ought to know

2009-05-03T11:02:00.011-04:00

... according to Marc Faber.

1. There is no investment rule that always works.

If there was one single rule, which always worked, everybody would in time follow it and, therefore, everybody would be rich. But the only constant in history is the shape of the wealth pyramid, with few rich people at the top and many poor at the bottom. Thus, even the best rules do change from time to time.

2. Stocks always go up in the long term.

This is a myth. Far more companies have failed than succeeded. Far more countries' stock markets went to zero than markets which have survived. Just think of Russia in 1918, all the Eastern European stock markets after 1945, Shanghai after 1949, and Egypt in 1954.

3. Real estate always goes up in the long term.

While it is true that real estate has a tendency to appreciate in the long run, partly because of population growth, there is a problem with ownership and property rights. Real estate in London was a good investment over the last 1000 years, but not for America's Red Indians, Mexico's Aztecs, Peru's Incas, and people living in countries which became communist in the 20th century. All these people lost their real estate and usually also their lives.

4. Buy low and sell high.

The problem with this rule is that we never know exactly what is low and what is high. Frequently what is low will go even lower and what is high will continue to rise.

5. Buy a basket of high quality stocks and hold.

Another highly dangerous rule! Today's leaders may not be tomorrow's leaders. Don't forget that Xerox, Polaroid, Memorex, Digital Equipment, Burroughs, Control Data were the leaders in 1973. Where are they today? Either out of business or their stocks far lower than in 1973!

6. Buy when there is blood on the street.

It is true that, very often, bad news provide an interesting entry point, at least as a trading opportunity, into a market. However, a better long term strategy may be to buy on bad news, which has been preceded by a long string of bad news. When then the market no longer declines, there is a chance that the really worst has been fully discounted.

7. Don't trust anyone!

Everybody is out to sell you something. Corporate executives either lie knowingly or because they don't know the true state of their business, and the entire investment community makes money on you buying or selling something.

8. The best investments are frequently the ones you did not make!

To make a really good investment, which will in time appreciate by 100 times or more, is like finding a needle in a haystack. Most 'hot tips' and 'must buy' or 'great opportunities' turn out to be disasters. Thus, only take very few investment decisions, which you have carefully analyzed and thought about in terms of risk and potential reward.

9. Invest where you have an edge!

If you live in a small town you may know the local real estate market, but little about Cisco, Yahoo, and Oracle. Stick with your investments in assets about which you may have a knowledge edge.

10. Invest in yourself!

Today's society is obsessed with money. But the best investments for you may be in your own education, in the quality of the time you spend with the ones you love, in your own job, and on books, which will open new ideas to you and let you see things from many different perspectives.

A brief history of Genoa

2009-05-03T09:57:00.026-04:00

As il mio amico ml discovered the other day, all the roads may have once led to Rome, but they certainly start from Genoa. Giuseppe Felloni, Guido Laura - Genova e la storia della finanza: una serie di primati? / Genoa and the history of finance: A series of firsts? is a fairly readable history of Genoa's innovations in the world of economics in ten chapters.

These apparently include public debt, government bonds, discount on state bond coupons, the clearing house, and double-entry accounting. At least, that is, based on the existing documentation in Genoa and lack thereof elsewhere.

You can read the first edition (2004) of this bilingual (Italian/English) book, in PDF format, on Giuseppe Felloni's site. Chapter 4 deals specifically with the history of the House and Bank of St. George (Genoa, 1407-1805), whose archives, the basis for this book, Felloni has catalogued for years.

If nothing else, you'll certainly enjoy the pictures.

The above illustration of Genoa, around 1490, is a woodcut from Hartmann Schedel’s Weltchronik (Nürnberg 1493), fol. lviii verso. Source: Wikimedia Commons.

The World Is Flat, and synchronized

2009-05-01T22:22:00.033-04:00

The randomly picked graphs below (for the week that passed) illustrate how we all cope together on this small planet Earth...

Together indeed. The big picture (looking at the fuzzy graphs on this page, before clicking on any one in particular) is clearly that we're all very much in sync. Investors of the world, unite!

Maximizing profits by timing the market

2009-05-01T10:06:00.018-04:00

CNBC posted this table on their Web page today:

And here's a thorough research by BeSpoke, from a couple of days ago:

TFSA, or tax-free profits for Canadians

2009-04-30T18:47:00.068-04:00

The government of this wonderful country of Canada has introduced the new Tax-Free Savings Account (TFSA). Starting in 2009, Canadians aged 18 and older can save up to $5,000 every year in a TFSA. Investment income (interest, dividends, capital gains) earned inside a TFSA account will not be taxed, not even when the funds are eventually withdrawn (though losses are not deductible either).

Canadiens, open a TFSA account with one of the soundest banks in the world:

While a primary consideration should be given to contributing to an RRSP (for the immediate tax relief), the TFSA has several attractive features. It doesn't have to be converted into anything else by age 71. It's effectively invisible (both its earned income and money withdrawn from it) in regards to federal income-sensitive benefits and credits, an important point for e.g., future recipients of OAS (Old Age Security) pension. Any amounts withdrawn can be put back in the following year(s), without affecting the regular contribution room available.

Almost everything you might want to know about TFSAs can be found on the CRA (Canada Revenue Agency) site. For instance, if you don't manage to open such an account this year, you will not lose this year's $5,000 contribution room: you can open a $10K account in 2010.

As earned income is not a prerequisite for contributing to a TFSA (unlike an RRSP), you can gift money to your spouse and/or adult children for their TFSAs. The earnings in these accounts are not attributed back to you for tax purposes.

Note that if you purchase dividend-paying US stocks (e.g., Microsoft) in your TFSA, a 15% non-resident withholding tax applies to the dividends (unlike inside an RRSP or RRIF, but like in a RESP), which cannot be recovered.

Financial Post's TFSA Centre has a few investment ideas.

Adam Smith (1723-1790), who studied moral philosophy and is being considered by many the father of modern economics, once told a learned society in Edinburgh, "Little else is requisite to carry a state to the highest degree of opulence but peace, easy taxes, and a tolerable administration of justice."

Canada's GDP likely fell 7.3% in the first 3 months of 2009

2009-04-30T10:10:00.012-04:00

On Thursday April 23, Canada's central bank said the GDP (Gross Domestic Product) likely fell 7.3 percent in the first three months of 2009, which would be the biggest contraction since comparable records began being kept in 1961.

The Bank of Canada cut its interest rate by a quarter point to 0.25 percent, and it will likely stay there through June 2010 according to the Bank.

NB While the 7.3% figure is just a projection, most Internet sources seen cited it as the actual shrinkage (something, we gather, like laundry) in 1Q Canadian GDP. Go figure...

FED rates unchanged at 0% - 0.25%

2009-04-29T14:17:00.016-04:00

On Wednesday April 29, the FED (Federal Reserve Bank) in the US stated that the economy has continued to contract, however the pace of contraction seems to be somewhat slower.

US GDP and consumer spending in the first quarter 2009

2009-04-29T08:53:00.013-04:00

The GDP (Gross Domestic Product) is a leading economic indicator. US GDP is a measure of the total goods and services output within the US borders. (NB Total here, like everything else, is relative, as we learned a while ago from the more diligent economists in Greece.)

The report from the Commerce Department this morning indicated a 6.1 percent annual rate drop in GDP for the first 3 months of 2009.

On the positive side, consumer spending - which accounts for over two-thirds of the economic activity, rose 2.2 percent.

What, another money blog?

2009-04-29T00:49:00.020-04:00

Given the lack of financial knowledge of most, as revealed in various recent surveys both in Canada and in the US (and by the stellar losses in our savings and pension plans), we believe that indeed there is room for another Web site dealing with money matters. While the blog was conceived as just a reference and place to exchange ideas for our own benefit, we decided that it may prove to be of help to others, and that we'll all learn from a more public forum. Financial survival (or, as your case may be, hobby) in today's world requires a certain degree of knowledge. As a rule, the realization that it's all in your own hands comes a bit late (retirement around the corner, permanently let go anyone?)...

There are several personalities, and different levels of experience and interests behind the pages of this blog. We fully embrace capitalism on a good day in the markets, but tend to lean somewhat towards the other side on correction days. But we always enjoy a good discussion, and share a passion for learning.

And, finally, a profound message. William Goetzmann and Geert Rouwenhorst write:

The word "finance" in English comes from Old French, and shares a common root with the word "finish." It was used in the fourteenth century to imply a final settlement, and used most colorfully in Chaucer's Lamentation of Mary Magdelene who proclaims: "dethe is my Finaunce," a metaphor suggesting that life itself is a loan from God and death is the completion, or repayment. This similarity between life's course and a financial contract was apparently more than just a poetic conceit in medieval times.