Double Blind

I will be adding myself onto the Google list of search terms when somebody types of “miserable failure” since my effort this year seems to have translated into that.

My finish time was around 58 minutes and 50 seconds, give or take a few seconds (update: final time was 58:53). My goal this year was to beat 56 minutes and 5 seconds (my last year’s time), but I got nowhere close.

There were a few problems this year, solely attributable to myself. One is that I got sick once in February and twice in March, and this really ruined my training rhythm as all three instances really cut a week out of my training schedule (despite the fact that I started training in November).

The second problem was I just ran out of energy. Around the 20 minute mark, I felt like I was already running out of gas, and my “second wind” never kicked in after the Burrard Street Bridge, which is where previously I made up a lot of time. I recall making it to the 4km mark at around 22 minutes and 30 seconds, but just didn’t feel good at all when climbing up the hill to get on the Burrard.

Finally, while on top of the Burrard Street Bridge, I had a feeling that I’ve never encountered in training – nausea! I felt like I had to puke around the 7km mark. I’m guessing this may be attributable to losing too much energy. When I looked at the stopwatch around this time, there was no way that I could have beat my previous time even if I had renounced my citizenship and became a Kenyan.

I’m not sure what caused this loss of energy – I got a decent night’s sleep, and I had pasta for dinner the previous night. I’m just guessing that my big problem was the training regimen and also just I might have gotten up from the wrong side of the bed.

Finally, a word on crowd control – there were more people starting from the “Green” bib zone than I recall last year. Dealing with the volume of people is part of the race and I’ve come to accept that.

Politicians lie. People expect this, but when you’ve been fed too many talking points like John McCallum and forget what work-life reality is for most people in this country (let alone what car you really drive vs. what is politically correct to say), it’s time to retire and get some fresh blood into the political system.

I just checked out the term deposit rates in my business account:

So when making a capital decision, either I keep it in the bank and earn a rate that is less than inflation (and pay taxes on the small amount!) or I have to find a project or investment to put the capital into that will hopefully make more 1%.

The worst feeling in the financial world is when you know you are right with something, and you don’t get a fill of what you want, and the following happens:

A 21% rise in a day. Yuck! Just the day before I had an order set for “34.05″ and the low of the day was “34.10″.

I have noticed that a lot of the debt market has been goosed up like this, I am guessing investors like myself and institutions are realizing that there’s no point in keep money in short term instruments since they are earning returns that are underneath true inflation rates. My $5.50 in the bank today might buy a dinner at McDonalds, but one year from now, a 1.7% increase on my $5.50 is not going to buy that same meal.

This is a good test to see whether your financial adviser knows their taxes.

1. What is the tax impact of making a capital gain outside an RRSP?

The answer should be “One half of the capital gain is considered taxable.”

2. What is the tax impact of making a capital loss outside an RRSP?

The answer should be “You can apply this loss to other capital gains you made in the past three years and obtain a tax refund; otherwise there is no immediate tax income – you can use these losses in the future and offset future capital gains.”

So these two questions are easy. Most people should know them. However, the next two will really tell whether people know what they’re talking about.

3. What is the tax impact of making a capital gain inside an RRSP?

The answer should be “No impact. However, upon withdrawal, the capital gain is effectively considered to be all income.”

4. What is the tax impact of making a capital loss inside an RRSP?

This is where most people screw up their answer. They will say “You cannot deduct losses inside an RRSP, so no impact.”

While this is true, a capital loss inside an RRSP is better than a capital loss outside an RRSP. The reason is because when it is time to withdraw the principle, you effectively have taken a full income deduction on the total capital loss.

Taking large capital risks ideally should be done inside the RRSP, as if the risk “pays off”, one is then given a very important tax planning tool with respect to smoothing out income in future years. For example, if you woke up tomorrow with a million dollars in your RRSP, it would be foolish to pull it all out in a single year (paying $418,000 in taxes), but perhaps you might wish stop working and pull it out in $40,000 yearly chunks and pay $153,000 in taxes over 25 years? Even $100,000 a year for 10 years would incur $258,000 in taxes.

If the risk doesn’t pay off, you’ve effectively written off the income you put into the RRSP in the first place.

Note the risk-reward mechanics of the TFSA are completely different – a TFSA should be designed for risk minimization.

I’ve been trying to move more of my networth into corporate debt of oil and gas companies that have debts trading significantly below par and will mature around the 2012-2013 time range. The companies I’ve chosen have a reasonable chance of paying the debt back at par and are not overly leveraged with the debt senior to the tradable debt.

This shift has been significant since the spare cash lying in ING Direct has been earning 1.7%, and it is very difficult to not try to take advantage of current conditions by taking more risk elsewhere. The trick is not to invest too much short term cash since the worst case scenario is that you’ll need it later and would be forced to liquidate investments at an inopportune time.

The intent of the trades are not necessarily to increase income in the portfolio (although it certainly is a side benefit when you pour capital into something that will give a 15% return instead of 1.7%), but rather to go for a huge appreciation of capital when the bonds eventually mature. This implicitly assumes that the oil and gas markets will resume demand later on, which I fully expect to happen – there will be some supply shocks eventually which will spike prices higher in addition to increasing global consumption.

Unfortunately I have been finding it very difficult to get fills in for the trades I have been looking at – typically the market would come within half a point of reaching my bid price but then bounce back up again. It looks like that I’m getting front-runned. This has been very frustrating since right now I have only the fraction of the position I really want.

This follows up on Nelson’s comments about “I told you so“, and I think I beat him on the Ebay and Skype acquisition by about a year when I wrote in March of 2006 how bad it was, about six months after they did the transaction.

So now apparently Ebay has hired Goldman Sachs to IPO off Skype. This will be interesting to see what market valuation they can fetch for it.

Skype is a great product, but monetizing it is going to be incredibly difficult. The most natural acquirer for the company would have been Google, but they obviously passed up on it since Ebay would have logically tried to sell it to Google or Microsoft first.

This analysis of Goldman Sachs’ last quarter, and how “not so great” it was despite the media sensationalizing it as being a great quarter is spot on and I couldn’t have said it better myself.

Goldman subsequently managed to sucker $5 billion of capital into investing in its common stock, at $123 a share. It traded down to about $115. There are two alarming facts here for investors:

1. That Goldman needed to raise $5 billion instead of just “earning it” (they said they needed it to repay TARP loans).
2. Goldman didn’t float a bond or convertible debt; it took the shareholders to the cleaners.

There are multiple instances in the financial world of institutions trying to goose up their first quarter results to give the perception of a recovery (which may or may not be happening); Wells Fargo wrote down Wachovia when they acquired it, only to write-up the assets in the first quarter. I’m not sure how reliable the results from financial companies are going to be, which is why I’ve been avoiding them and sticking to firms that can produce economic profits instead of financial ones.

Here are the 2008 consolidated financial statements for the South Coast British Columbia Transportation Authority – for future reference in case if I want to discuss something related to how much money Translink receives.

This is the beginning of the spammification of Twitter.

Here’s a hint: Trust only people you know, and if they sell themselves out to these spam services, you’ll know not to trust them.

The most effective advertising is that which you don’t know is advertising. Keep your skeptic cap on at all times. It’s tough.