Double Blind

Justin will make a good motivational speaker one day.

I tend to take the opposite approach – when young, it’s more important to find out what you don’t like, so that way you don’t have to waste any more time pursuing it. Eventually though the process of elimination you can at least find things that are tolerable and, heaven forbid, might find something you love.

Please do not get confused: The same line of reasoning doesn’t apply to finding someone!

Courtesy of Langley Politics, here is a rather amusing video of cars trying to go down an icy slope in Portland.

It really helps to pay attention to your neighbourhood and know how many degrees of angle it takes before your car goes into an uncontrollable slide. The angle of attack isn’t all that great – anything more than 10 degrees on ice and you’ll be lucky to stop.

My only experience in driving in these types of conditions in Portland was back in December 2005, just the week before Christmas. For no reason me and the significant other traveled down there and spend a couple nights in the area (Beaverton, specifically). It was a good opportunity to chill out and also to get some tax-free shopping done. Anyhow, on the day that we were supposed to come back to Vancouver, we visited some nature park in the area which was mildly interesting. But what happened was that as we were half-way through our walk, the weather suddenly started to get windy and snowing. Reading the tea leaves, we decided to get out of dodge.

By the time we got to the parking lot there was already about half a centimeter of snow that had stuck onto the concrete and I was knew what was going to happen – traffic hell. It took about 30 minutes to get into the freeway. Once we were on it, it was completely gridlocked.

For those that don’t know, the freeway coming out of Beaverton going east and connecting to the I-405 involves a significant downhill slope – essentially since the roads were frozen, cars were slipping and sliding (not as bad as the video, but the risk factor was very high). The fun part was crossing the bridges since the highest quantity of ice was on the decks.

It took a couple hours just to get out of Oregon, and when we got to Vancouver (Washington) we decided to make a pit stop at a local McDonalds and eat some apple pies before making the rest of the trip. Fortunately the storm system was only localized to the Portland/Vancouver area and the drive up further north was relatively easy and routine.

Locally, there are more opportunities for driving on ice. Just last month when we had the first major snowstorm of the year, Highway 1 was completely iced from the 264th street exit and eastbound. This made for very interesting driving conditions and it is never a good sign when you see big-rigs and vehicles larger than your own ditched to both sides of the road.

When I read articles like this, it becomes increasingly obvious that the Liberals will force the next election. Dion and every politician says they don’t want an election but in secret they do. The Liberals are itching to get back into government and when you see the latest polling results, one might conclude they are on their way to doing so.

The Liberals can potentially gain a minority government if they win. The Conservatives have a shot at a majority, albeit unlikely. The Bloc probably wants to get the election over with before the Quebec provincial election, and the NDP are guaranteed to not want an election (their 29 seat performance is as good as it gets for them).

The political calculus works like this – it depends on the budget. The real issue for the NDP is that they really don’t want an election, but they will have to vote against the budget if it doesn’t contain enough left wing elements. Currently, NDP and Conservative support is sufficient to pass legislation in Parliament – the two independent MP’s in parliament do not matter right now.

My guess at this moment is the budget will not be left-wing enough for all the other parties and the government will fall. The next budget will be a balancing act of constructing a budget that will appeal to swing voters in suburban ridings as this is where the next government will be formed. Generally, the Conservatives already rule Alberta and the rural areas. The Liberals own the urban cores and the battle is going to be about suburbia.

From the standpoint of the Conservatives, there probably won’t be a better time for another election other than now. The economy is still doing good and they have demonstrated an ability to get their election agenda through without suffering too much of a credibility loss (except for the bungled income trust legislation). The Liberals will likely get stronger if they keep on waiting, so the Conservative head offices would probably be wise to make sure that the budget is a little too right-wing for the NDP’s taste.

Continuing on with my series, I asked BMO Investorline the standard questions. Considering I have my RRSP account from them, I should have asked earlier, but here is their response. Note that I did not ask about the mandatory conversion of US funds into Canadian when doing RRSP transactions (sales of US shares) considering that BMO is the subject of a pending lawsuit and I don’t want a lawyer answering the email.

Dear Mr. Peter,

Thank you for writing to us.

Please note that any foreign exchange rate applied to your trades will
be based on the closing exchange rates of the date of your trade and the
amount of the trade in US dollars. The spreads are currently as follows
and can change at any time without prior notice:

Amount in US$ Spread against the spot rate at the time

$0 – $24,999.99 100 basis points for trades
$25,000 – $74,999.99 80 basis points for trades
$75,000.00 and above 65 basis points for trades

We trust that you will find the above information helpful. If you have
any other questions, please do not hesitate to contact us.

Regards,

Audrey
BMO InvestorLine

So a 100bp spread is not bad in the grand scheme of things – ETrade is “competitive” (likely 125bp or higher), Questrade is 125bp. I’m normally used to paying about 5bp’s at Interactive Brokers. An example is if you bought CAD$10,000 worth of US stock. If the exchange rate is 0.85, then at 5bp, you would have to pay CAD$11,772 for the transaction. At 100bp’s, the transaction would cost $11,905. The difference is $133! So let’s pretend you were flipping around US shares like pancakes and one brokerage firm charged you a 5bp spread and a $50 commission while the other charged you a 100bp spread but a “free commission”. I’d still take the $50 commission.

Two hidden costs of trading that almost nobody considers is the cost of carry (i.e. how much of that capital could have been invested in a risk-free account) and costs of currency conversions (if any). It can add up after a considerable period of time which is why in an RRSP account if you intend on holding US shares, you better keep your trading frequency very, very low.

I believe because of the lawsuit I linked to above that most RRSP providers will allow for US cash positions, but until then it’s best to keep flipping at a minimum.

Posting will be light until likely this weekend.

WordPress Version 2.0.7 is released. This goes to show that even while the best tested software is robust, there can always be unforeseen security leaks that require quick patching. WordPress’ code base is about 600 kilobytes zipped, how would you feel about maintaining the code base of something like Microsoft Windows? Something I wouldn’t envy at all.

The standard calculator that comes with Microsoft Windows is only marginally adequate. However, for those that like RPN notation, the best calculator is Tom Boldt’s RPN Calculator.

On a side note, RPN is vastly superior to the typical algebraic input in a conventional calculator. If you get over the first half-hour of an instinctive “what the heck am I doing?” feeling, you’ll never look back and be able to use a calculator twice as quick as a normal one.

This post by Andrew Coyne was rather lacklustre, but the most interesting comment I have read in a long time was this:

If the NDP really wanted to improvethe plight of all workers vis-a-vis their pay packet they should support providing all workers with the signal greatest achievement of the union movement:

They should campaign that all T-4s in Canada be made public information.

The most empowering thing for employees is knowing what their co-workers and those who work in similar jobs earn.

Just ask Gordie Howe.

For those that don’t know, the T4 is a slip that you receive at the beginning of each year by anybody that has paid you as an employee. It lists how much income you earned from that employer for the previous year and how much income tax, EI and CPP has been deducted, along with other items.

Effectively what this commenter is suggesting is that by making people’s salaries transparent that it will serve some purpose of flattening the income distribution.

The way that he suggests it is prone to some problems (for example, you don’t know how many hours somebody worked by looking at the T4, and the T4 slip doesn’t cover self-employed people), but it is an interesting idea just from the theoretical construct of having full visibility on everybody’s income stream.

I haven’t come to any conclusions on whether this will be a good or bad idea. There are obvious privacy concerns that would have to be addressed. If enacted, however, one obvious conclusion is that it would increase the cost of labour as everybody would claim they deserve an “above average salary”. I draw this from the pool of evidence that resulted from the decision to force publicly traded companies to list their five top paid executives.

This is kind of interesting, pictures of food portions that contain 200 calories.

I sent an identical email to ETrade Canada, and got the following response:

Dear Sacha Peter:

Thank you for choosing E*TRADE Canada.

We will cover your transfer fee upto $125 if you transfer over that
amount. We do not us dollar in rsp account. So everytime you buy or sell
US stocks you will need to convert to CDN. The spread we use is industry
standard and competitive. And it depends on the volume of money you are
converting. The money money you convert the less spread you pay.

Sincerely,
Mohammad Rafique
Investment Representative
E*TRADE Canada

It’s funny they say “thank you for choosing” when I haven’t chosen anything yet. I’m asking questions that will (from their perspective) hopefully procure my business to them.

When reading the email (which I posted verbatim), one quick conclusion is that people at ETrade don’t know how to use spell check or even read what they write when they hit the “send” button. This is actually quite concerning since if their support staff appear not to have even the most rudimentary English skills, what makes one think that the rest of their business operations will be any better? It’s also a sign that they’re just willing to get you out of the way without any regard to accurately responding to your inquiries, so if you actually had money with them and a problem occurred, it makes you think that you’ll be given a generic answer without specific regard for your situation.

The other issue is the “industry standard and competitive” spread for currency conversion. These two phrases are contradictory! I don’t want an industry standard spread, I want something superior. It’s also up to me, the customer, to determine what “competitive” is, and I can only find out by knowing the actual spread. I asked for a numerical value and didn’t receive anything. As far as I know, they could charge 2% and consider themselves “competitive” because credit card companies charge 2.9%. In my non-RRSP account, I pay about 0.06% to change currencies, and I consider that to be the ultimate competitive rate.

My impressions of ETrade Canada from this email exchange is fairly negative. It probably isn’t worth having them pay the $100 transfer fee to join them since I’m lead to believe that I’ll end up paying more once my money is with them through currency spreads and support costs.