Double Blind

I’ve been having a rash of phone message spam on my SMS contact page. It doesn’t cost me anything except two seconds to delete the message on my phone, but this is still rather annoying. I attempted to modify the PHP script that’s behind the SMS message form (which send an email to my phone’s email gateway address) but unfortunately I ended up screwing up things more.

I’m now trying a more generic solution in a plugin called Bad Behaviour which fundamentally stops spammers by the way that their bots operate over the web. We’ll see if it works or not.

I have also installed a comment preview utility at the request of a previous commenter (you know who you are!).

Right now Aeroplan income trust units are trading at 16.35 a pop. They recently increased their distributions from 0.75/unit to 0.84/unit yearly because they have been able to keep their income stream growing at a pretty clip.

If you do the math, however, this translates into a 5.1% yield. At a 5.1% yield, there is triple-A corporate debt that you could purchase with a better yield. Although with income trust units you can participate in an increase in distributions, when you get to the size of Aeroplan, increasing your current income from $168M/year to something higher is going to be extraordinarily difficult.

Investors would be doing well to take money out of Aeroplan and redistribute it somewhere else. Even the overvalued Telus and Bell Canada income trusts would yield more and would represent a far safer use of capital.

I’ve removed my profile from LinkedIn, primarily for the same reasons that I don’t have my profile in any other social networking site (I used to have one on Friendster).

I was also getting mildly concerned with respect to the signal-to-noise ratio on the site – due to the minority game effect, such sites will become increasingly less effective as the majority flock toward the service. Although the network effect will improve the quality of the social networking aspect, the original intent, a superior job placement service, will be totally lost in the noise just like how applying for positions on Monster.com is a totally futile exercise. Eventually they’ll have to deviate from their original business purpose and start spamming people to buy profiles that will enable them to see extra job information of candidates, etc. I refuse to be part of it, so I’m getting my profile removed from the system.

This weblog and being able to find my name #1 on a Google search is my social networking tool. Nothing else is needed other than to tell people to “find my name on Google”. In fact I’m even on the first page of search matches if you type in Sacha, nearly behind the awesomely funny comic, Sacha Baron Cohen.

Via the Langley Politics blog, which said the National Newswatch reported that Garth Turner is going to join the Green party.

It is too bad there isn’t a prediction market on this happening since I would be actively betting against such an event. Garth might be a maverick, but he isn’t stupid since he knows he stands less of a chance of getting re-elected as a Green party member than an independent MP. Anybody like to lay some reasonable odds?

It’s too bad for the Green party since people of Garth Turner’s calibre are desperately needed – he’s environmentally leaning and he’s economically literate. The thing plaguing the Green party (in both the Federal and Provincial scene) is that the economically literate Greens get drowned out in the name of social activist environmentalists. Jim Harris (previous Green party leader) was of the economic type in the last Federal election and a majority of his own party basically stayed at home because his style of environmental policy was too far to the right.

What happens is that the rest of the people typically join the Liberal or NDP fold, and the economic-leaning environmentalists join the Conservatives, leaving the Green party with nobody but the fringe radicals which do an excellent job of enforcing the notion the party is full of protesters-types.

I’ve still been trying to deploy some cash into the RRSP, but I just end up with short term GIC’s as being the rational choice for the moment. The short term ones (the ones you can cash in at any time) give you 3.8% at the moment; this was as high as 4% a few months ago.

The problem is anything that is fitting into my stock screens, criteria being USA-based midcap companies with acceptable debt ratios, giving dividend yields of 2.5% or greater and in a sector that isn’t “hot”, is already priced to the point where there’s no point in buying.

I have already been overweight with telecom companies for the past year and I refuse to have a single sector be more than half my portfolio. Telecom will continue to perform well over the next few years no matter which part you invest in – the data haulers (Level 3) or the end-providers (AT&T, Verizon, etc.). Each area of telecom has such a high barrier to entry that these companies will be entrenched in the near future. When you add government regulation of the internet, this favours incumbants so I expect telecommunications to continue performing well.

The only general sector that has really felt it in terms of declining prices has been the financials – specifically banks and certain types of insurance, but these types of companies are incredibly difficult to analyze since the key feature is how much exposure each of these institutions have with the real estate market. In the case of insurance, it’s a matter of knowing how the liabilities are structured inside their books and this makes shopping for insurance and financial firms to be a very, very, very time consuming process. It’s not as easy as looking at the income statement and balance sheet.

Most of the gas and electricity utilities on paper look attractive, but they are trading at fair value and not under fair value. A few of them are on my watchlist, but none of them are tripping any of my price targets. For example, Aqua America has to decrease in price to about $13/share before I will even look at them. One of my favourite utilities, Scana Corp, has to depreciate 20% in price before I would look at them.

Finally there is the healthcare industry, but only a precious few of those companies give out a stable stream of dividends and most of them are big pharma firms, which are far too large for me to invest in.

I had a Starbucks Maple Macchiato. It was pretty good, although I thought the milk flavour would have more maple embedded within itself, but it wasn’t. If they did this (and I have a sweet tooth) then it would be a killer drink. But the problem is once you suck up all the maple syrup they put on top of the drink, then it tastes like a regular latte. It’s not too different from their caramel macchiato.

In terms of pricing, it was about 20 cents more expensive than the caramel for all sizes, but then again, people that go to Starbucks are probably the most price insensitive shoppers in the first place, so does it really matter? Probably not. If you’re just in it for the caffeine, just best to get a double shot of espresso and get it over with.

Look at my Gmail statistics – I have crossed the 2000 spam threshold! I don’t purge my spam folder at all and since it automatically removes itself every 30 days, it means that I have received over 66 spam a day, which translates into nearly three an hour.

I would estimate I process about 10 valid inbound emails each day, which leads me to believe that my spam ratio is frighteningly high.

There could be two reasons for this which are not mutually exclusive. One is that my email address is being distributed to more spammers. Two is that spammers are sending out more spam.

I find it amazing that there is enough capacity in the servers and network pipelines to put up with all this crap. I also wonder when the entire system starts choking like a congested freeway due to spam and web spiders overloading the infrastructure – it will happen, it’s just a matter of time when the exponential curve hits the upper limit of the system.

I saw an ad on television advertising Canada Savings Bonds. When I looked on the internet to see the interest rate they were offering, it was three percent.

Somebody would have to be insane to invest in these. I am surprised they are offering this product at all considering that anybody buying them would is effectively loaning money to the government far below the prevailing market rate.

In terms of alternatives, my first thought would be purchasing a GIC which yields 4.25% at ING Direct.

My second thought would be to buy bonds directly from the open market. You can see the benchmark rates from the Bank of Canada – a 2 year bond yields 4.05%, and a 1-year bond will yield something similar.

The only problem with interest income is that it is fully taxable at your marginal rate. If you wish to make a more tax-efficient investment, you could buy preferred shares of the Bank of Montreal, yielding about 5.5% at present.

Going up the risk curve a little more, we have income trusts and other types of investments, but that’s going away from the original purpose of generating the best “risk-free” return possible.

But investing money in Canada Savings Bonds is just insane.

Garth Turner‘s weblog has always been on my reading list, simply because he writes interesting content and keeps a good drudge-like news page. I don’t always agree with him (for example, I don’t think he’s correct on global warming), but I always respected his ability to take a stand despite the huge pressure that he would be facing internally within his own party.

The Conservatives finally had enough of his public rantings (rantings which probably most of the MP’s have internally but would never get out in public) and suspended him from the party. This means he will be sitting as an independent MP until such a time (if) he is reinstated.

The excuse that he was leaking confidential information with respect to the budget on his weblog I suspect is Soviet-style evidence, instead meaning “you should have kept your mouth shut, buddy”. It wouldn’t have taken a rocket scientist to figure out that the next Conservative budget would have finished off the GST cut, and introduced new tax measures and Garth Turner was simply stating the obvious.

The conclusion that one can take from this is that by being a government MP, having a weblog and posting any real content (i.e. something that could possibly be contrary to the executive wing’s beliefs) is quite dangerous to one’s career. It’s a pretty sad statement on the political system considering that Garth was probably better than any of the other 307 elected members of parliament at generating public debate on various issues instead of trying to spin doctor the agenda through with rose coloured glasses.

The real interesting question will be with respect to what happens to Turner’s Conservative party nomination that he recently won – since the next election will likely be next year, will he be the Conservative candidate, or will the national council find a way to kick him out officially (instead of suspending him)? I suspect Halton (riding which Turner is running in) won’t stand a chance of electing a Conservative MP without him, and I would have serious doubts Garth Turner would be able to successfully win as an independent.

Update: His statement.

Aeroplan recently announced three changes to their program. One is that they will be expiring points 7 years after you earn them. Two is that if you don’t do anything in your accounts within 12 months, your account will be closed. Three is that they have introduced a new tier of reward tickets that now cost much more than before to get a single round trip ticket anywhere. The “classic” awards still exist, up to 8% of a flight’s capacity, but as anybody knows, trying to get availability on this is nearly impossible during most of the spring and summer.

I previously did an analysis on aeroplan and I am still utterly convinced that spending miles on gas coupons is a superior action since almost everybody has to spend money on gasoline (at least if you own a car). Currently $100 of gas at Esso will cost you 13,000 miles, or a conversion rate of 0.77 cents per mile. You can also buy $50 cards for 6,500 miles, so there is no economy of scale if you wish to purchase gas cards in smaller amounts.

In theory, if you purchase airfare using your miles, you will be saving a significant amount of money. For example, a trip from Vancouver to Toronto will cost 25,000 air miles. Right now you can get such a trip for $354 round, but you would also have to pay $111.70 in taxes on that flight. So the total flight using air miles would be 25,000 miles plus $111.70 in taxes. This would make the miles worth about 1.4 cents a piece, which isn’t exactly a premium considering that you’re already paying a quarter of the flight’s value in taxes and fees.

This is also subject to getting the flight date and time you actually want, which is nearly impossible to do using the standard (25,000 mile) reward system. If you want to be able to use a date and time of your own preference, you will need to spend 40,000 miles for the same privilege and this works out to slightly better than the cents-per-mile ratio that you’d get if you just redeemed your miles for gas money. You still have to pay airport fees and taxes for your “free” ticket!

I have been putting my money where my mouth is and I have been slowly liquidating my aeroplan miles for gas cards over the past half year. So far I have saved nearly $500 in gasoline by cashing in aeroplan miles and this is capital I would have never seen saved if I had used it on airline tickets instead.

It is pretty clear that anybody keeping miles in their aeroplan account “for a rainy day” is getting what they deserved right now. The only way I would factor in aeroplan into my flight purchase decisions is the fact that you can directly convert miles into cash. For example, a trip from Vancouver to London Heathrow is 9420 miles. This is effectively worth $72.46 in gasoline and can effectively be subtracted from the ticket price. The sad thing is that this money is already part of the ticket price.

As I already suggested before, “loyalty” cards and marketing costs everybody money, and Aeroplan is one part of a bigger problem.