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by ghariton
08 Jan 2012 21:34
Forum: Financial News, Policy and Economics
Topic: Europe
Replies: 78
Views: 7940

Re: Europe

Anyone paying attention to Hungary? Hungary’s unofficial ambassador to the IMF,Tamás Fellegi, is reportedly facing a “terrible atmosphere” after his arrival in Washington on an exploratory mission whose objective is to open up communication about a new financial lifeline for the country. Frankly, given the recent record of relations between the two institutions involved it isn’t hard to understand why. Leaving aside the long list of recent grievances, it was Hungary who decided to walk away from the IMF in the first place, suggesting it could manage quite well on its own, thank you very much, so the Washington based lender is now hardly likely to welcome the country back as some sort of long lost prodigal son. To make matters worse, the co...
by ghariton
07 Jan 2012 01:12
Forum: Financial News, Policy and Economics
Topic: Recovery or dead cat bounce?
Replies: 26
Views: 3582

Re: Recovery or dead cat bounce?

Shakes, thanks for bumping this thread.

I guess pessimism is nothing new.

On the other hand, my middle name is Pollyanna. :wink:

George
by ghariton
06 Jan 2012 23:10
Forum: Retirement, Pensions and Peace of Mind
Topic: Public vs Private Pension - Envy and Debate
Replies: 906
Views: 66766

Re: Public vs Private Pension - Envy and Debate

kombat wrote:I understand the long-term unsustainability of it all, I guess my anger comes from the misfortune of being in the generation that's getting stuck with the bill.
I notice that you live in Ottawa. Perhaps it's not too late for you to join the federal public service and enroll in its DB plan. My bet is that, when pension reform comes to the federal government, they will grandfather DB enrollees, not just as to past service, but as to future service as well.

George
by ghariton
05 Jan 2012 12:41
Forum: Financial News, Policy and Economics
Topic: Clippings 2012
Replies: 308
Views: 46022

Clippings 2012

The large U.S. banks have all paid back their TARP bailouts . Some small and medium-sized banks still have TARP money outstanding, but the U.S. Treasury is asking them how they intend to pay it back. The stick is that, in a couple of years, they will have to start paying Treasury 9% on any remaining bailout funds: The letter cited recoveries so far of $258 billion, out of $245 billion it originally awarded through both the CPP and special bailout packages to top money-center banks. Meanwhile, commercial banks that hold on to their investments more than five years after the initial TARP issuances will see their dividend rate increase four percentage points to 9%. So, as far as the large banks are concerned at least, the U.S. taxpayer is on ...
by ghariton
04 Jan 2012 18:36
Forum: Retirement, Pensions and Peace of Mind
Topic: Public vs Private Pension - Envy and Debate
Replies: 906
Views: 66766

Re: Public vs Private Pension - Envy and Debate

at least the government should point out to the public service that, not only do they have DB plans when others are losing theirs, but also they have government printing presses to back up their DB plans. By contrast private sector employees have nothing more than the credit-worthiness of their employers to back their plans. As Nortel et al pensioners have found out, the latter may not be worth much. I generally agree with your post. However, two points: First, Nortel pensioners are getting at least 70% of their pensions. They might get more when the bankruptcy is settled. Informed opinions suggest about 85%. While a 15% haircut is unpleasant, it's a lot better than not being worth much. By contrast, public servants in countries like Greec...
by ghariton
03 Jan 2012 23:45
Forum: Financial News, Policy and Economics
Topic: Oil
Replies: 1564
Views: 224750

Re: Oil

I read tidal as saying (and I apologize, tidal, if I get this wrong) that the problem is not on the supply side but on the demand side. In other words, it matters not that we might have carbon-based energy coming out of our ears. The reality will be that we will not use this energy because of its (further) contribution to global warming. But I am still unclear on the mechanisms that will prevent us from using this energy. Remember that this will be a free rider problem, with particularly strong incentives to free ride. (You control your emissions. I will continue and my lower costs will enable me to capture world markets, as well as to keep my domestic users happy.) Perhaps pressure to cut or eliminate emissions will come from the young. Ti...
by ghariton
02 Jan 2012 15:28
Forum: Financial News, Policy and Economics
Topic: Oil
Replies: 1564
Views: 224750

Re: Oil

newguy wrote:There has been a large drop in the percent of 16 and 18 year olds with licences. They blame facebook.
Shouldn't it be: They credit facebook?

This is yet another manifestation of the trend that Tyler Cowen flags in his book, The Great Stagnation. One of the reasons for slower growth in GDP is that increasing numbers of people are spending time on-line, visiting facebook, playing games, downloading porn, or just browsing.

Beats joy-riding.

George
by ghariton
02 Jan 2012 00:36
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Portfolio Gain/Loss by year end 2011. TSX down 11%
Replies: 71
Views: 4207

Re: Portfolio Gain/Loss by year end 2011. TSX down 11%

Thank you for the spreadsheet showing your returns.

I was mildly surprised that RRBs outperformed nominal bonds in six out of nine years (and that doesn't count intangibles such as protection against unexpected inflation).

I was quite surprised at how well your REITs have done.

George
by ghariton
01 Jan 2012 18:22
Forum: Financial Planning and Building Portfolios
Topic: Enough to live on [2012]
Replies: 6
Views: 855

Re: Enough to live on [2012]

Flights of Fancy wrote:Hmmmm. Average retirement age in Canada is (apparently) 62. (I will dig out the stats for Canada if asked, I guess; I sourced them from two news articles which cited StatsCan).
Maybe the Conference Board?
The Conference Board notes that from 1976 to 2000, the average retirement age in Canada has slid from 65 years to 61.5 years, but the trend was reversed in 2010, when the average age rose above 62 again.
George
by ghariton
01 Jan 2012 18:18
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Daytrading Tips
Replies: 6
Views: 1736

Re: Daytrading Tips

You could add:

4. Momentum day traders

When a stock starts going up, e.g. after a big announcement, buy in the expectation that the upward movement is not yet exhausted. Sell after a reasonable gain, e.g. 5%, or at the end of the day, whichever comes first. I've done that, many years ago, when I was young and foolish, trying to exploit John Campbell's findings of short-term momentum effects.

4a. CNN day trader

Follow the news on CNN in real time, place trades within seconds of a news announcement. Sell within minutes. I've known one or two of those. (These days, big traders can beat you, no matter how fast you are.)

George
by ghariton
01 Jan 2012 17:50
Forum: Financial News, Policy and Economics
Topic: Europe
Replies: 78
Views: 7940

Re: Europe

Unfortunate timing for Mr. Black.

George
by ghariton
01 Jan 2012 17:40
Forum: Financial News, Policy and Economics
Topic: Europe
Replies: 78
Views: 7940

Re: Europe

Meanwhile in Hungary : Rising bond yields and a weakening forint has forced the country's Fidesz government to swallow its pride and request a "precautionary" credit from both the International Monetary Fund and Europe, reportedly of €4bn (£3.4bn). The growing likelihood that Hungary's debt will be downgraded has accelerated capital flight, causing two-year debt yields to jump from 5.5pc to 7.5pc since September. "Hungary is a warning sign," said Neil Shearing from Capital Economics. "It is the country where the risks are most acute in the region, so this is where you would expect to trouble to start. We fear this may spread to Ukraine and the Balkans. Eastern Europe has enormous external financing needs for the ba...
by ghariton
01 Jan 2012 17:21
Forum: Financial News, Policy and Economics
Topic: Greece
Replies: 397
Views: 43167

Re: Greece

Greek PM's new year message : The next few months will decide the country’s fate for decades to come, Prime Minister Lucas Papademos told Greeks in his New Year’s message. “The next three months will be especially crucial,” said Papademos. “The decisions that will be taken will decide Greece’s course for the next decades.” <snip> Papademos’s comments came as IMF sources warned that the 50 percent haircut being negotiated by the interim government would not be enough. Sources at the Washington-based fund told Sunday’s Kathimerini that a number of alternatives, including a bigger writedown, are being examined. Other options include a purchase by the European Central Bank of Greek bonds on the secondary market or better terms on eurozone loan...
by ghariton
01 Jan 2012 16:56
Forum: Financial News, Policy and Economics
Topic: Update: The Incredible Shrinking Market
Replies: 3
Views: 718

Re: Update: The Incredible Shrinking Market

As further comments in the column indicate, it depends on why companies disappear from organized stock exchanges. In some cases, it's because they go private or are wound up. But in other cases, it's because they merge or otherwise consolidate. As Rick says, a more interesting number would be the percentage of GDP produced by publicly traded companies. Unfortunately, that number is hard to find. I would add that, even if a company is publicly traded, that does not mean that all of its shares are "available" to the public. In a country like Canada, often an institution or a family hold a large control block of shares that do not trade. One would have to factor in changes in the percentage of such shares. Finally, suppose that the a...
by ghariton
01 Jan 2012 11:55
Forum: Financial Planning and Building Portfolios
Topic: Avoiding losing too much for highly leveraged portfolio
Replies: 65
Views: 6003

Re: Avoiding losing too much for highly leveraged portfolio

The big difference between the two is - that in the first view instead of a bet against the other side of the bet, I am investing my capital in a productive process, one that produces some good that the public wants and thus earns a profit. In the second case one is speculating that you can outguess (or outsmart?) somebody else at the poker table? I agree with the first sentence. The second sentence is more complicated. It is true that, by the nature of options, they are a zero sum game if you just look at the option, narrowly. But if you look at the uses to which options can be put, they range all the way from speculation (increasing one's risk) to insurance (decreasing one's risk) and all the points in between. The speculation is easy to...
by ghariton
31 Dec 2011 17:13
Forum: Financial Planning and Building Portfolios
Topic: 2500 a month - 23 years old...where to invest?
Replies: 28
Views: 2589

Re: 2500 a month - 23 years old...where to invest?

Taggart wrote:After inflation, I wasn't impressed.
Yes. But most people blissfully ignore inflation. They look at gains in nominal terms.

George
by ghariton
31 Dec 2011 03:12
Forum: Taxing Situations
Topic: How do you think income tax rates will change?
Replies: 42
Views: 3213

Re: How do you think income tax rates will change?

westinvest wrote:An interesting question. I had wondered during the "Occupy....." movement where the cutoff was to be a 1 percenter. Blonde would know, I guess...
Well, 1.6% of individual Canadians and 8.2% of "economic families" in Canada made over $150,000 in 2009. Maybe that should be the cut-off. (If so, there are a lot of rich public servants in Ottawa.)

George
by ghariton
30 Dec 2011 22:33
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: Portfolio Gain/Loss by year end 2011. TSX down 11%
Replies: 71
Views: 4207

Re: Portfolio Gain/Loss by year end 2011. TSX down 11%

Up about 5%, net of inflation of 3%, and not counting new money. (I've heard about the Beardstown ladies.) My RRBs saved me. And to think I'm holding them for capital preservation, not gains. :shock:

George
by ghariton
30 Dec 2011 22:24
Forum: Financial News, Policy and Economics
Topic: Buy this book
Replies: 18
Views: 1981

Re: Buy this book

Shakespeare wrote:If you are a serious investor, buy this book. It is far more comprehensible to the layman than Reinhart and Rogoff.
I've gone through Reinhart and Rogoff's book twice. (I agree that very few people would get through it once.) In your opinion, is there any reason why I should read Mauldin in addition?

George
by ghariton
30 Dec 2011 18:58
Forum: Taxing Situations
Topic: How do you think income tax rates will change?
Replies: 42
Views: 3213

Re: How do you think income tax rates will change?

Going back to some comments made by Buffett this year, I believe there is room to increase taxes to the "ultra rich". Of course, the ultra rich have both the biggest incentives and the best means to avoid tax. The incentives are obvious. As to the means, they hire the best and most creative tax advice, which includes lobbying of consultation with CRA/Finance officials and favourable interpretation on some very "innovative" tactics. In extreme cases, it involves establishing residence in places like the Bahamas or the British Virgin Islands. I'm afraid that, if a government expects some serious money from tax increases (and not merely pleasing symbolism), it has to go after the "ordinary rich" and especially th...
by ghariton
30 Dec 2011 18:41
Forum: Taxing Situations
Topic: Canadians will see less take-home pay starting Jan. 1
Replies: 21
Views: 1568

Re: Canadians will see less take-home pay starting Jan. 1

I agree that payroll taxes are harmful, as they are a tax on labour. Corporate income taxes are just as harmful, as they are taxes on capital. Both these taxes lead to distortions in our economy. The right way to go, if more revenues are needed, is a mix of personal income taxes, excise taxes, and consumption taxes. Given our present situation, the least harmful tax increase would be on consumption -- raise the GST/HST. Curiously, however, I see absolutely nobody advocating that. I'm not sure whether that is because of widespread economic illiteracy, or because everyone is trying to pass off tax increases onto someone else, or is otherwise pursuing a narrow self-interest. As to Canadians seeing less take-home pay starting January 1, I can't...
by ghariton
30 Dec 2011 13:11
Forum: Financial News, Policy and Economics
Topic: Oil
Replies: 1564
Views: 224750

Re: Oil

My bet is that most of the reserves will get left in the ground. That would require international cooperation and coordination with enforcement "teeth". Otherwise we are in the classic free rider problem, it seems to me. Given the current fractious nature of our politicians -- who can't even agree long enough to pass a budget or create a sovereign bailout fund -- what mechanisms do you see that could be developed in time? The owners of the existing reserves will be in a mad scramble to both (a) avoid any limits on their extraction and (b) get theirs out before their competitors do. I think that we are already seeing the beginnings of that. A glut -- whether caused by demand or supply factors -- is already beginning to develop. Ge...
by ghariton
30 Dec 2011 11:30
Forum: Financial News, Policy and Economics
Topic: Oil
Replies: 1564
Views: 224750

Re: Oil

Maybe that's why XL Keystone is in danger of never getting built. Maybe, if it is delayed long enough, other sources of cheaper oil, let alone other cheap energy such as natural gas, will come on-stream and make oil sands oil uneconomical.

Peak oil may become trough oil.

George
by ghariton
29 Dec 2011 23:52
Forum: Financial News, Policy and Economics
Topic: Clippings 2012
Replies: 308
Views: 46022

Re: Clippings 2011

Opacity in the banking system is not a bug, it's a feature : Finance has always been complex. More precisely it has always been opaque, and complexity is a means of rationalizing opacity in societies that pretend to transparency. Opacity is absolutely essential to modern finance. It is a feature not a bug until we radically change the way we mobilize economic risk-bearing. The core purpose of status quo finance is to coax people into accepting risks that they would not, if fully informed, consent to bear. Financial systems help us overcome a collective action problem. In a world of investment projects whose costs and risks are perfectly transparent, most individuals would be frightened. Real enterprise is very risky. Further, the probabili...
by ghariton
29 Dec 2011 21:40
Forum: Stocks, Bonds, ETFs, Funds, REITS and More
Topic: A 2012 FWF Hedge Fund Contest
Replies: 59
Views: 6107

Re: A 2012 FWF Hedge Fund Contest

Okay, I'll go first.

Long:
VRSN
DV

Short:
AFL
LNC

Name:
The Titanic

George