Things to worry about

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schmuck
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Re: Things to worry about

Post by schmuck » 24 Jun 2016 13:04

deaddog wrote:Great opportunity for dividend investors.
I'm one of those guys sitting on a pile of cash, especially after my big Zag Bank withdrawal, and I haven't been able to find those opportunities yet. Utilities and REITs are actually up on the day as any potential rate hike by the FED has now pretty much evaporated.
Out of my 20 or so stink bids, I got nothing yet. :(
It sounds like this whole thing could take weeks to find a bottom and for the implications sink in, and I'm still hoping to pick up a few Canadian banks at a considerable discount.

On a less selfish note, it's a sad day, and the odds of loosing Scotland and N. Ireland look more likely now than any dreams of restoring the old empire.

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Re: Things to worry about

Post by adrian2 » 24 Jun 2016 15:17

gsp_ wrote:
gsp_ wrote:FTSE 100 futures down 10%.
FTSE now down under 2%. I'm bored, didn't buy anything. Going back to bed.
An hour before the close:
US markets down 3 to 4%
FTSE down 3%
VGK (Vanguard Europe) down 11%
EFA (iShares EAFE) down 8%
XIN (iShares EAFE hedged) down close to 7%

I did buy some Europe, but kept some powder dry for next week.
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like_to_retire
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Re: Things to worry about

Post by like_to_retire » 24 Jun 2016 15:55

Yeah, on days like this, I tend to not look at the dollar amount my spreadsheets tell me I'm down (which seems like a lot of loot), and rather concentrate on the percentages instead.

As of about 4PM my portfolio is down today about 0.82%.

Back to my gardening. Meh...

ltr

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Re: Things to worry about

Post by slim » 25 Jun 2016 01:09

In 2008, yes a few days of large drops.....but it kept dropping for over a year. What are we in for :shock:

And it seems, this may be the first of many brexists to come.....

cash out??

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Re: Things to worry about

Post by ukridge » 26 Jun 2016 06:55

like_to_retire wrote:Yeah, on days like this, I tend to not look at the dollar amount my spreadsheets tell me I'm down (which seems like a lot of loot), and rather concentrate on the percentages instead.

As of about 4PM my portfolio is down today about 0.82%.

Back to my gardening. Meh...

ltr
I could not resist the temptation to look. My portfolio was down less than a percent a well. That puzzled me a bit. I then realized that I was looking everything in CAD terms; I have decent dose of USD ETFs; and the USD's gain against CAD offset some of my losses. That, and gains in the bonds. I didn't do a detailed analysis.

I read an article from the Economist that thinks the effects on economic activity will last a couple of years. I was thinking it may be longer if Scotland persists in clamoring to join the EU, and the other countries start considering exit as well. In portfolio terms, it may be a painful time, but not totally a bad things for fols in the accumulation stage. I'm not changing my asset mix.

- ukridge.

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Re: Things to worry about

Post by Descartes » 27 Jun 2016 13:12

The Dow has now lost nearly 950 points since the “Brexit” vote outcome, setting it up for the worst two-day decline since August 2015.
http://www.theglobeandmail.com/globe-in ... e30624060/
I'm hardpressed to remember any particular event that happened in August 2015.
Some report on Chinese growth weakness? Oversupply of oil? US Employment figures?
Does anyone remember?

I'm also hardpressed to understand any meaningful correlation between the TSX and Brexit.
..But I'm happy to take advantage of it if it continues.
The most frustrating thing for me since Thursday is the time it takes to move cash from savings to broker.
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Re: Things to worry about

Post by like_to_retire » 27 Jun 2016 14:29

Descartes wrote:The most frustrating thing for me since Thursday is the time it takes to move cash from savings to broker.
Don't you just click and it's done?

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Re: Things to worry about

Post by Descartes » 27 Jun 2016 15:28

like_to_retire wrote:
Descartes wrote:The most frustrating thing for me since Thursday is the time it takes to move cash from savings to broker.
Don't you just click and it's done?
On my part certainly. On Tangerine's part it appears to be carried on the backs of tortoises to the offices of BMOIL.
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Re: Things to worry about

Post by CROCKD » 28 Jun 2016 16:50

I have (had?) been considering PWF for my TFSA.

Just noticed this item re Brexit.
The top 20 Canadian companies exposed to the British pound

No.2 on the list is Great-West Lifeco. one of PWF holdings.
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Re: Things to worry about

Post by Flaccidsteele » 29 Jun 2016 00:35

Descartes wrote:The most frustrating thing for me since Thursday is the time it takes to move cash from savings to broker.
I've observed that if the market recovers within the short period of time it takes to move cash from savings to brokerage, then the downturn isn't significant enough anyway.
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Re: Things to worry about

Post by Descartes » 29 Jun 2016 08:43

Yes, but hindsight is rarely useful.
..Anyway an unwarranted 4% dip is still a 4% gain once people recover their senses.
I managed to catch the tail end of some bank dips yesterday morning.

I truly did not expect a Leave vote in the referendum and so was not proactive like some here.

Regarding CDN stocks that have more exposure to the UK than the banks: it is just my opinion, but I get the feeling that even the Leave camp wants everyone's nerves to settle before any further movement towards article 50 and only then does the two year countdown begin. A year down the road, will the typically myopic investor even remember this little blip?
Last edited by Descartes on 29 Jun 2016 10:01, edited 1 time in total.
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Re: Things to worry about

Post by SQRT » 29 Jun 2016 08:59

Descartes wrote:Yes, but hindsight is rarely useful.


A year down the road, will the typically myoptic investor even remember this little blip?
Actually, I think hindsight is very useful here. It suggests your second statement will be true, and not just for myopic investors. I believe worrying is way over rated. Causes many investors to make suboptimal decisions.

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Re: Things to worry about

Post by gobsmack » 29 Jun 2016 11:35

I am curious to see how the leave campaigners will steer this boat now. The two main points of their campaign were closing the borders and stopping sending money to Brussels. If they want to have any sort of access to the EU market though, they will have to backtrack on those promises. The concept that they will be able to negotiate a better deal then Norway is ludicrous.

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Re: Things to worry about

Post by BRIAN5000 » 29 Jun 2016 13:07

CROCKD wrote:I have (had?) been considering PWF for my TFSA.

Just noticed this item re Brexit.
The top 20 Canadian companies exposed to the British pound

No.2 on the list is Great-West Lifeco. one of PWF holdings.
Although this seems to have been a dog for years, right now out of the stocks I follow it has the highest dividend yield with the lowest cost over 52-wk low (not that that means squat) so I bought a little to go with the other shares I have at $29.01 the other day. Way too early on MG maybe I'll get this one right.
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Re: Things to worry about

Post by Wallace » 29 Jun 2016 16:39

gobsmack wrote: The concept that they will be able to negotiate a better deal then Norway is ludicrous.
I don't see why. Canada is negotiating a trade deal with the EU right now but as far as I know CETA does not require us to "donate" 350 million a week to help run the European government. Nor does it require us to allow free (without passports) movement of people. The "four freedoms" will not apply to Canada. The EU thinks it can bully Britain like it can bully Norway, but when the Brits dig in their heels they can't be moved. The EU sells more stuff to Britain than Britain sells to the EU. And now Britain can trade with the rest of the world as well.

And the problems in the poor countries of the EU have not gone away. Greece, Portugal, Italy, Spain have far bigger problems than they did two years ago. And the EU plans to build an army next year. Just what we need - another army in the world! Without major reform the EU is going to crumble, and when it does, the Brits will be very glad they got out when they did.
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Re: Things to worry about

Post by AltaRed » 29 Jun 2016 17:57

Wallace, while I agree with you for the most part, 'free trade' or more appropriately 'expedited trade' is not quite the same as 'integrated trade' that EU nations have with each other. There will be barriers regardless of what status the UK has with the EU, just as Canada will. Maybe it will make no difference, but just maybe it will. The EU may restrict UK agricultural products as an example, not unlike annoying barriers in NAFTA such as the softwood issue or Buy America legislation.
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Re: Things to worry about

Post by ghariton » 29 Jun 2016 18:24

Wallace wrote:[Canada is negotiating a trade deal with the EU right now
An interesting example. The deal has been years in the negotiating, is still not ratified, and perhaps will never be ratified. Such are the perils of negotiating trade deals. I sure hope that's not a precedent for UK -- EU.

In any case, I expect UK -- EU negotiations to be very tough indeed. The French have always bee jealous of all the financial functions being carried out in London. They have already started trying to move all financial clearing -- the "plumbing" of the system -- to Paris, with a few sops to the Germans. Expect lots more opportunism from the French, who never wanted the Brits in Europe anyway, and from other members.

Now the UK will not be dragged down by the problems of the Euro. But then it never was. So poverty in other EU member countries would not have been that much of a problem for the UK anyway.

All in all, I think that the UK will have to try to orient as much of its foreign trade as possible elsewhere, rather than Europe. But where? The best new opportunity is the TPP -- except that (1) it doesn't seem to be going anywhere, and (2) the UK isn't a candidate anyway. Maybe a deal with China, or perhaps India? Both of those are extremely tough negotiators, tougher than the Europeans.

Maybe the UK can apply to join NAFTA. Unfortunately, the timing is bad. Both Clinton and Trump are suggesting its dismantling, rather than its enlargement.

Reconstitute the Commonwealth? I don't think that the young even know what the Commonwealth is (or was).

I think that this is a very tough time to be looking for new trade deals. Protectionism around the world is surging.

So maybe the UK can go it alone. It is a gamble, but probably the best option the British have left.

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Re: Things to worry about

Post by Shakespeare » 29 Jun 2016 18:27

So maybe the UK can go it alone
Or apply to be a province of Canada. :wink:
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Re: Things to worry about

Post by Wallace » 29 Jun 2016 21:12

Prof Patrick Minford before the Foreign services committee on trade agreements, free trade, and the EU. It begins getting interesting around the 6-7 minute mark with the importance of being unimportant
The EU customs Union sells to us at inflated prices and we sell to them at inflated prices. The result is the protection of inefficient industry
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Re: Things to worry about

Post by Flaccidsteele » 29 Jun 2016 23:13

Good video. Pro free-trade, Brexit-is-positive, the EU needs the UK to sign a trade agreement, etc. but I'm not sure why Minford keeps mentioning "7 billion people" when the vast majority of those 7 billion people have absolutely no wealth. It's likely a bit of hyperbole in order to make his point that the UK is "smallish" more clear.
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Re: Things to worry about

Post by ghariton » 30 Jun 2016 12:00

Short term crisis seems to be over..
The U.K.’s largest banks are coming through the immediate fallout from the nation’s vote to leave the European Union. Now they have to find a way to operate within the ensuing political vacuum that threatens to cause a business standstill.

On Tuesday, Barclays Plc disbanded an emergency committee of senior managers that was monitoring the impact from Brexit, Steve Cooper, the British lender’s chief executive for personal banking, said at a conference in London on Wednesday. Executives from Royal Bank of Scotland Group Plc, HSBC Holdings Plc and Banco Santander SA also told the conference they would turn from crisis response to managing through a period of uncertainty amid a potential economic slowdown.

“We had a crisis leadership structure in place -- we stood that down yesterday, so no issues there,” Cooper said on a panel at the British Bankers Association’s retail banking conference in London. “Nothing is going to happen in the short term, there’s obviously some political uncertainty, but I’m sure that’ll work it’s way through.”
The medium and long term may be quite another matter.

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Re: Things to worry about

Post by Wallace » 04 Jul 2016 15:48

Help! I need an economics interpreter!

I'm reading through an article here/ titled "Brexit and the Derivatives Time Bomb". I've always been worried about the increasing debt piling up in the poorer countries of the EU and I can't for the life of me see how the Euro and the EU can survive. This article talks about the debt of the EU and the dwindling options the Union has to deal with it.
[G]lobal leverage has exploded to record highs, with the sovereign bond bubble now a staggering $100 trillion in size. To top it off, over $10 trillion of this is sporting negative yields in nominal terms. . . .

Globally, over $500 trillion in derivatives trade [is] based on bond yields.
I really don't understand the derivatives market, or how it is related to sovereign debt, but it sounds ominous. Is this another financial "black box" or is someone able to explain what $500 trillion in derivatives actually represents?
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Re: Things to worry about

Post by j831robert » 04 Jul 2016 21:51

Wallace, I'm with you - I cannot see any serious attempt on the part of the poorer members of the union to improve/correct their financial situations and suspect it is not politically possible, so England and the UK may be well out of it .

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Re: Things to worry about

Post by newguy » 04 Jul 2016 22:41

Wallace wrote:I really don't understand the derivatives market, or how it is related to sovereign debt, but it sounds ominous. Is this another financial "black box" or is someone able to explain what $500 trillion in derivatives actually represents?
First of all, I seriously doubt the $100 trillion sovereign debt number.

A derivative is usually an option, future or swap. The $500 trillion number is called notional value. I assume you understand options so assume you have a government bond and you'd like to buy downside insurance in the form of a put option. You pay a tiny percentage for the option but it's recorded in notional value as that of the bond. There are very many valid uses that are mainly intended to reduce or transfer risk.

You've probably heard of the LIBOR scandal and it's such a big deal since all corporate finance is based off that number. The 3 month futures for that are called eurodollar futures and the notional is $2.5 million per contract. All it represents is the interest on $2.5 million USD for 3 months. So if your business needs to hedge it's interest rate exposure some time in the future, you buy or sell some of these contracts. The margin(good faith deposit actually) you need in your account to buy or sell one of these contracts is just a few hundred dollars. The open interest(open contracts) times the notional for just these at the CME is ~$25 trillion.

Note that good faith deposit. Essentially if the position moves against you, the other party is guaranteed to get paid from the clearing firm. The clearing firm will make sure your broker puts up enough cash to cover any losses. The broker will call you to deposit more money if the position loses too much money. That amount is called maintenance margin. Brokers are keen on keeping up with this so they don't go bankrupt.

The problem arises when large banks make these sort of arrangements over the counter (OTC). Essentially a guy at Bear Sterns calls a Goldman guy and arranges some sort of custom hedge, say trading long term interest rates for short term, called a swap. It's understood that these are all stand up guys and they'll be able to cover any losses so they don't deal with a clearing firm or put up any money for good faith. Now rumours start that Bear is running low on capital and Goldman calls and says you have to set aside some money for these positions. Bear goes bankrupt, world collapses.

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Re: Things to worry about

Post by Wallace » 05 Jul 2016 00:35

Thanks, newguy, for taking the time to explain. I guess I'm trying to imagine where the chips would fall if Italy (for example) decided to default on it's debt or force the EU to renegotiate, something the ECB and the IMF has been resisting for years but can't avoid forever. The article I linked to seemed to suggest that even if the central banks wiped the QE debt from their books, the fallout from the derivatives would still be devastating.

I suppose the financial institutions of the world are so intertwined that it really doesn't matter. If world confidence can be shaken by the bankruptcy of Bear Stearns, the fallout from a large number of banks exposed directly or indirectly to the bonds of a defaulting EU country would be a significant event.

Which is certainly something to worry about....
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