Matt is a friend of mine that is an expert poker player and pilot. He also spends time in his car probably driving faster than his airplane (OK, maybe faster than a dinky Cessna). He explains another example why the media only gives the public a superficial view of the aviation world. If you ever wanted to know what some of the differences between the pilot and co-pilot are, give his article a read.
Hurricane trading season has started off with a whimper. The contract on Ernesto was whether the hurricane would make landfall at category 2. There was little liquidity available on the Ernesto contracts, although I did manage to capture a small fraction of Florida short at 30% when it was visibly clear to myself that it would not be making striking the state due to its interactions with Cuba. So this means I am up $15 so far on hurricanes so far, minus 20 cents of transaction fees.
I have generally been disappointed with the liquidity of the market so far, as I would have desired a more significant position at the time I have traded. My original order was for double what I actually received and I would have refreshed my order had it actually been filled all the way.
Let me just say I am absolutely SHOCKED, just SHOCKED at this news. Storyeum is financially insolvent!
I remember when they opened that they had a free viewing day for residents of the city (or it was deeply discounted, I can’t remember) and although I didn’t go, everybody that I talked to said that while it was interesting in some places, they wouldn’t pay $xx that it would otherwise cost to get into.
Although Gastown is the most touristy district in Vancouver (and shockingly close to the downtown eastside gallery of homeless people), placing a museum right in the middle of this is a horrible location. The first reason is because it’s a pain in the ass to get to if you’re not already staying downtown. The second reason is because the lease rate of such a location must be costing them a fortune. Finally, museums are not the type of venue where people walking down the street spontaneously say to themselves “Hey, I think I’ll waste the rest of the afternoon looking at this”, which is unfortunately what the operators wanted people to think.
I think the final comment in the article, is particularly amusing:
The new cash is most needed for marketing to attract more customers.
Even if you spent ten million strictly on marketing, it won’t be solving their fundamental issues.
One should ask themselves why Science World or the UBC Museum of Anthropology are successful before blowing a massive amount of capital in a downtown museum project. It’s too bad Storyeum isn’t publicly traded since I would have been curious to see exactly how much cash they spent into the project.
The presentation on Prediction Markets – Putting Money Where the Future Is can be found here (250kB Powerpoint). Please note that these slides are very rough, as I intended most of the delivery payload (other than the charts) to be delivered by voice. The entry on Wikipedia on prediction markets also adds some perspective.
(August 28, 2006: A note on the powerpoint presentation: It turns out that Grey’s Anatomy, which the prediction markets had priced to win the Emmy at 67% didn’t actually win. It was the show “24″ which won the Emmy, and they were at around 17%.)
I presented in the 10:30am time slot. Thank you for participating! It’s always significantly more uplifting when you see the seats filled in front of you. If you have any further questions about my presentation, I can be easily reached.
I would like to extend my thanks to the many organizers (scroll down half-way) that made this event possible. It was well organized, well executed, and well attended by a right mix of people with different interests. Also a specific thanks to John Ounpuu – he presented before I did, and he let me borrow his laptop for my presentation.
I finally got to meet Richard, who’s weblog I’ve been reading for ages, and also a variety of other individuals that I may have casually read about over the past couple years. It’s cool and kind of surreal since I still remember the times (10 years ago) where you were really weird to meet people you’ve corresponded with via electronic communications.
Being in a narcissistic mood, I looked for some pictures that some photographers took. When entering the building on Friday, I noticed that Roland was taking some pictures. One of those pictures was myself. Also he has an opening video on his weblog of Friday’s official opening, which is quite handy in remembering who you talked to.
On Saturday, Cathy took a photograph of myself before I went on to deliver the presentation. Thanks to both photographers with their awesome-looking SLR cameras.
On Saturday, Bryan Zug took videos of various presentations, and he managed to catch the second half of mine. If you’re going to download it, please use the attachment here (54MB Quicktime Video) and save the guy some bandwidth.
Barcamp Vancouver is coming this weekend.
I will be giving a presentation sometime on Saturday (very likely in the morning, perhaps as early as 10:00am) on the topic of Putting Money Where The Future Is. It will be a quick rundown on what prediction markets are, accuracy of them, and using the last UBC ESM election as an example of how one works. I will be sticking around until just after lunch, where I have another appointment to make.
Yesterday there was a motorcyclist that crashed on the Pattullo Bridge at 6am. He died and this resulted in the bridge being shut down for five hours, which caused massive traffic problems on that part of the Lower Mainland. Unusual for the bridge, this was a solo accident, but typical accidents involve both directions of traffic.
There have been calls to put back photo radar by the NDP, but this is a garbage solution since everybody knows that photo radar was instituted as a revenue measure, but politically sold as a safety measure. One of Gordon Campbell’s first executive orders was to get rid of this hypocritical mechanism of traffic control. Every driver that goes regularily to an area also knows where the photo radar van will sit and this does nothing but slow down the traffic in the 50 meter stretch that the van is located in. It’s just about as futile as the Vancouver police sending officers to Knight street to collect revenues from every motorist that speeds when they try to ramp up the hill on the north side of the bridge.
I think the general issue of speed enforcement on the bridge is a lost cause – unless if you plan on keeping police on the bridge every single rush hour, you will always get idiots that will decide that 100 km/h is the optimal crossing speed and there isn’t a heck of a lot you can do about that. The fundamental issue is that we’re unwilling to take bad drivers off the street and I doubt we will ever have the collective backbone to revoke drivers’ licenses of these people. Instead, the politically correct solution is to target people that speed which solves nothing.
The Pattullo Bridge was well designed for the 1920’s (when it was built) but by modern highway standards, it suffers from two large deficiencies. One is that the lanes are narrower than modern standards (think of what the Lion’s Gate Bridge was before it got upgraded). Two is that there is a really nasty curve on the eastern side of the bridge and this is where most accidents happen – a minority of people take the curve far too quickly and ram against either the elevated sidewalk and correct their course into oncoming traffic, where they proceed to smash into vehicles.
The other cry by people has been to institute a barrier in the middle of the bridge. While dividing the highway is a great idea in theory, in practice because the Pattullo bridge is so narrow, it would require signifciant engineering work to place a median and this requires money.
People will always claim that “no amount of money can equal a saved life” and the politicians will always say this. However, would the public want 30 million dollars spent on a median which would potentially save one life a year, or would they want that 30 million spent on schools to educate 3000 kids, or on mammogram devices to detect 300 breast cancer cases a year before it becomes terminal? Or for the more fiscally conservative people, a $7 one-time reduction in taxes if you don’t spend the money? Trade-offs between money and lives occur all the time – just that when they’re politicized like this decision, politicians always go towards the more expensive (and safer) option because of optics. When the cameras are off, they’re usually a little more pragmatic about things.
The fundamental issue is that the bridge is old – applying band-aids such as medians and implementing speeding measures are just trying to correct symptoms of the main issue – the bridge itself is obsolete. Unfortunately, I doubt the province will cough up the half-billion it would take to put in a new bridge, especially as the new Port Mann bridge construction is on-deck. As such, I don’t think sticking with “status quo” on the Pattullo is all that bad of a decision – despite its reputation as the “most dangerous bridge in the Lower Mainland” it still manages to send 60,000 cars a day across its deck and does it well. Just slow down when approaching that nasty curve on the eastern side.
The latest entity to come up with a claim of “free energy” is Steorn, based in Ireland. They talk about some magnetic field mumbo-jumbo and claim that you will end up with more energy than you began with.
All of this, of course, is complete hogwash. But it’s good for a laugh – take a look at their very well polished website and keep in mind this is how every sucker gets scammed in these sorts of investments in “alternative energy sources”.
My guess is that this is some sort of cruel social experiment.
The ultimate goal of any investment is to get more cash out of it than what you put in. You do it both in the form of a capital gain (i.e. selling something for more than you paid for it) or by receiving income (i.e. interest or dividends).
From a tax perspective, capital gains are desirable because they are only taxed at half your gain (e.g. make $1000 capital gains, you pay taxes as if you earned $500 income). Dividends from Canadian sources receive a tax deduction, while dividends from foreign sources and interest income are fully taxed.
As investments inside an RRSP is tax-sheltered, this is why it’s generally a good rule to keep interest-bearing and foreign dividend-bearing investments inside an RRSP, while keeping investments that are focused around Canadian dividends and capital gains outside the RRSP.
In the event of investing in a guaranteed investment certificate (GIC), you receive exactly the same amount of money you put in, so there is no capital gain. However, over the period of the investment you receive money in interest. For example, a 1-year GIC investment at ING Direct would yield 4.1%, so that would be $41 on a $1000 investment over a year. This $41 dollars you receive is compensation for the bank using your $1000 investment – they can usually earn a much higher return on that money. For example, the bank could turn it around and use that capital for somebody’s mortgage at a rate of 5.2% – the bank would be earning a 1.1% spread and make $11 per $1000 they can turn around. While this doesn’t sound like a lot, when you do this in volumes of billions of dollars, it adds up.
If you think your bank is making a fortune on mortgages (or any other type of investment they can make with your money), then consider an investment in the bank. For example, if you look at the stock of the Bank of Montreal, over the past four quarters it has returned $2.13/share in dividends to shareholders. Assuming the present price ($65.59/share), that would be equal to about a 3.25% yield on investment.
There are also investments out there that give out returns that are roughly equal to one-year GIC rates. For example, if you look at Kinder Morgan (the company that took over Terasen Gas), they give out a $3.50/year dividend yield. A few months ago, you could have bought their shares for $85 and that worked out to a 4.1% yield. What is the difference between investing in a company that gives out a yield comparable to a GIC vs. investing in a GIC itself?
One reason is risk – the company has to be able to operationally perform its operations at a profit to give out that much money. So if demand for natural gas infrastructure suddenly took a nose dive, you would probably lose money on the investment over the period of time where the market for natural gas infrastructure was depressed. The company has a bit of debt ($13 billion) and if interest rates started to rise, it could cut into the profits of their operation.
Another reason is duration – a GIC matures over a time, while a stock investment can go on forever (until the company winds up or goes bankrupt). You know exactly how much money you will be receiving with a GIC, while with a stock investment, things are variable. Over the long run, assuming that the natural gas market doesn’t completely plummet (e.g. somebody invents sustainable cold fusion), the stock should do probably better than the GIC.
There is also the inflation factor – a GIC is not inflation protected, while stocks of companies that own assets usually are more protected during periods of inflation. Finally, there is a possibility of the company raising its dividend rates over time, which would increase the yield of the investment.
These are not the only considerations, but some of the considerations when choosing to invest in shares vs. investing in GIC’s. One critical consideration is whether the company is fairly valued with respect to its ability to generate profits, both now and in the future. It’s not an easy question to answer and this is why many people have jobs to figure this out (and not a lot of those people get it correct, either).
All things considered, over a longer period of time, you will probably end up making more money by investing in companies rather than GIC’s, which is why GIC’s should be considered a temporary investment only. The goal is always to make more than the risk-free return – right now the 10-year Canadian government bond is yielding 4.22%. If you purchase shares in a company that is in an industry which will be around in 10 years, and also at the right price, you should be able to easily exceed 4.22%.
A few days ago, I was playing golf (or rather Pitch and Putt at Central Park in Burnaby, which isn’t exactly “real” golf) with a friend. We started at 7:00pm and this was considered twilight time and I discovered why. Unfortunately the people that were in front of us were rather slow, so by the time we got to the 10th hole the light had dimmed considerably. This actually didn’t decrease my performance any as I birdied the 12th hole and I had gone ahead a stroke of my friend, who was leading in the first 9 holes by one.
Unfortunately by the 14th hole, it was 9:00pm and it was very difficult to see anything shot off the tee. I managed to shoot my first shot off a tree in front of us, and I had no idea where the ball landed. My friend shot somewhere, and we had no idea where his shot went either. Finally, I took a second shot off the tee, and that landed… somewhere.
Since we were the only people left on the course, we could take the time and actually find out where we shot. My friend’s shot actually landed a little past the green and was a respectable shot. My second shot landed just outside the fence although the distance was fine. This left my first shot which went off the tree, and that too was out of bounds on the left hand side, near the sidewalk. I was forced to concede defeat and forfeit the rest of the match as my friend chipped and putted for a 4 in the darkness!
I was naturally not happy since I thought I was looking really good in the back nine. So I was forced to search for glow-in-the-dark golf balls, and I found this on Ebay. I am really curious to see whether these work and will be challenging my friend eventually for a round of twilight golf, with the intention of playing a few holes at night!
Both XM Satellite Radio and Sirius Satellite have been getting ripped to shreds in the stock market. An article linked to Drudge mentioned that there should be a merger between the two entities, but this isn’t going to happen. The reason is because both entities have a lot of debt and in the event of a change of control, typically the people holding the debt get the option of redeeming their bonds at face value. Both companies don’t have enough cash to pay off their debtholders, thus there will be no merger.
Even if they could, they would still be wildly unprofitable. I’ve also looked at their financial statements and they are in a capital-intense business (launching and keeping satellites up in orbit is not a cheap task) and also need to spend a huge boatload of money on marketing. As a result, they won’t be making money anytime soon especially as the revenue curve moderates from the growth phase.
I doubt the market would be elastic enough to allow for a significant price increase in the event there is a single sole provider of satellite radio.
I’ve used satellite radio and its chief benefit is that you can listen to a multitude of radio stations without commercials (for now) in the middle of nowhere. If you look at the expanse of roads in remote areas, there is a good market for such products. In the urban areas, it’s probably a tougher sell. Most radio stations are garbage, so this would increase the appeal of satellite radio.
Either way, as an investment, I’d look elsewhere.