I haven’t logged into their site for quite some time, but it appears that they can’t even figure out how to calculate whether GDP drops 10% correctly, but continue to list economic contracts that imply this. See how they screwed up the calculation?
Another reason why anybody that has over a couple hundred bucks in that site is nuts.
The last few days have been very busy, and the next couple should also be quite busy, so I have been falling behind on my readings, including reading Budget 2009.
Generally speaking, the country has gone down a course where musings of fiscal restraint have gone out the window – this started in the 1999-2000 fiscal year, and has not stopped. The spend-happy people should be happy, but they will never be happy, because whatever gets spent will never be enough. I guess they don’t pay taxes since the rest of us that actually contribute to the economy will be paying for this largess, unless if the government is very, very, very good at choosing where to invest and can do it efficiently. Not two things governments are good at.
More later.
I have finally conducted 21 training sessions over the past two months, so I am up to the 30 minutes of running mark; remarkably this year it seems to be going easier than the last year, but there have been some challenges. Despite this, I have learned some fairly valuable information that seems to help make the training go smoother.
1. Cooling is important. On a treadmill, if you have the opportunity to direct a fan towards your body, I highly suggest doing so. Personally, I notice a great performance increase when there is an amount of wind to increase the cooling. It also helps reduce sweating, but I tend to sweat like Niagra Falls with any amount of physical exertion, but it is less when there is enough cooling.
2. Watching something interesting on television also helps. I prefer the Food Channel, but lately I’ve noticed this show called Mantracker on OLN that I would love to be on. Of course, during the actual Sun Run, this option will not be available. I still do not find the Ipod/audio to help, as I find it very difficult to wear earphones and run at the same time, while keeping them in my ear.
3. Getting a good amount of sleep increases energy output. I don’t know whether it’s sleep itself, or when you choose to run depending on what time in your sleep cycle you are in, but either way, I’ve noticed a high correlation between ease of running and the amount of sleep you got the previous night (or even napping in the afternoon/evening before running!).
I’m about a month ahead of the official training schedule, and feel like I’m in good shape, so over the next few weeks I will attempt to concentrate on gaining more speed and endurance. Assuming I can keep up my usual 6.8 mile per hour run throughout the race, I should be finishing the run in about 55 minutes and 9 seconds. Last year I did 56:05, so my goal is 56 minutes and 4 seconds, or better.
CIBC and the rest of the Canadian majors have been raising money through preferred share offerings lately. The terms are for a perpetual preferred offering, initially at 6.5%, but resetting to 4.47% plus the 5-year Canadian treasury note rate every five years. What this means is if the 5-year note is trading at a yield of 4% by April 2014, then the preferred shares will yield 8.47% after.
Since most preferred issues have call option features by the issuer, if CIBC’s credit situation improves by 2014, chances are they will just call out the preferred shares since they can then get a cheaper loan if necessary by issuing debt at that time.
The point of this post, however, is that if Canadian banks considered themselves ’strong’, they would not have to be raising capital like this – and it is expensive capital since one would think investing in banks would be a sure thing, but the markets have told them that they’ll have to pay 4.5% above the risk-free government bond in order to get that capital. So this is very expensive money that they are raising, which suggests that they see further downside in the future.
I think Gannon hit it perfectly on the head with this article on the stimulus. Basically the balance sheets of consumers and businesses are shot to hell, so spending a bunch of public money is not going to help matters any.
Apparently three people in Ontario won the $43 million (now $44 million) top prize, so they will share about $15 million a piece. I blew 2 bucks on this one, to no avail. I did get one number correct, however, which is a 12.2% probability occurrence.
I just did my corporate income taxes yesterday and the government will be getting a healthy amount on a cheque I just sent in the mail today.
The government changed the rules very recently for some small Canadian corporations – before they had to hand in their corporate taxes at the end of February, but this year they allow a one month payment extension – the end of March.
Individuals paying income taxes have to pay by the end of April.
I could have just put the money that I gave the government into a term deposit for 60 days but the interest rate is depressingly low so I just got it over with today.
Gannon suggests that Microsoft is cheap, citing that Windows is secure (it is, sort of) and that it is trading at 10 times future earnings.
I would contend that Microsoft is at fair value. The company is in incredibly strong financial position (cash on the balance sheet is huge, 21 billion with no debt), but the underlying issue is that Microsoft has an army of people working against it (the “open source” movement) that will be providing a slow but steady erosion on anything that it sells.
Microsoft Windows will still be around as the primary desktop client in the next 5 years, but their ability to price will be hampered by free solutions (mainly Linux, and OpenOffice). It won’t matter how good Windows 7 is, or how good future versions of Office are – Microsoft’s day in the sun has long since past.
Your investment in Microsoft will still be there tomorrow, however, so as a store of value, equity in Microsoft isn’t necessarily a bad option – and at current prices they’ll give you a 3% dividend yield. Their management was prone to making some stupid value-destroying decisions, however – their equity stake in Facebook, and them potentially taking over Yahoo was another.
I would contend that a company like Intel would provide better competitive protection since their only real competition, AMD, is about financially fade off the planet. It is an easier bet (for me, anyway) that it is likelier that people will be running systems with Intel chips than Windows operating systems in 20 years. The issue is that while it is possible to develop new software to compete against Microsoft, it is nearly impossible to come up with the capital (in the order of billions) required to properly compete with the likes of Intel. Ever since Apple standardized on Intel, this sealed the deal.
Intel’s financial position is also solid – cash (12 billion) far exceeding debt (2 billion) on their balance sheet, and Intel will continue to generate cash in the far future. They give off a 4.5% dividend yield at current prices.
I will agree with the general theme, however, that for the first time in recent memory, stocks relating to the manufacturing and sale of personal computers finally look relatively inexpensive. One could do a lot worse than picking Microsoft or Intel.
While I rarely talk about the lottery being a source of expected value, an exception can be made for the upcoming Saturday Lotto 6/49 draw, which apparently has an expected top prize of 43 million dollars.
Doing a simple expected value calculation would suggest that there is significant value to be had by purchasing a $2 ticket – approximately $1.48 extra value over the purchase price can be realized (as my expected value calculation is approximately $3.48 per ticket). If the first prize is split two ways, the expected value goes down to $1.94 per ticket, which is still much better odds than a single hand of blackjack at Vegas. A 3-way split of the top prize would result in a $1.43 expected value, which is getting into the lottery-type expected value range.
So instead of putting in a few bucks gambling that Nortel is going to make a comeback from the dead, perhaps spending a few bucks on this lottery will be more economically prudent.
Believe it or not, the lottery does have a weak game theory element – your goal as a lottery player (other than the obvious – choosing the right numbers) is to choose numbers that other people do not pick. You might be better off choosing six random numbers, or use some “common sense” approaches to determine numbers that people will not choose.
Declan has a classic post, which I suggest everybody reads.
I have a few comments to this.
1. Population growth in the developed countries (e.g. Japan, Western Europe) has already gone negative when one factors out net immigration. Economics and sociological factors have made it more expensive to have children, and thus I would claim our population has already peaked.
2. The point about energy is absolutely correct – even assuming that we had some way of using energy directly from matter-antimatter conversion, we would eventually consume the universe. In other words, the party has to stop sometime unless if we can stop the second law of thermodynamics. This is akin to pouring some cream into a mug of tea, and then finding some easy way to separate the cream out of the tea again. In the meantime, in the absence of a better energy source, the price of energy is likely to increase unless if technological innovation can bail us out once again.
3. Would suggest that the impact on the financial markets with respect to this issue would suggest that the only gains to be made in North America would be realizations of efficiencies, rather than due to the increase of consumption. Most of this has already occurred with electronic technology. This has matured, however, so future gains will be much more incremental than the quantum leap that happened in the 80’s and 90’s.