Closet indexing

RYAN By Guest Blogger Ryan Lewenza

Readers of the blog know that we are no fans of mutual funds and instead only use low-cost exchange traded funds (ETFs) when constructing portfolios for clients. Can you blame us?! Look at the performance results below of all actively managed mutual funds in Canada. The S&P Dow Jones puts out an annual report called the SPIVA Canada Scorecard, which compares the performance of all actively managed mutual funds versus their respective benchmarks and it shows that the odds of active portfolio managers outperforming their benchmark are about as high as the odds of Country House winning in last week’s Kentucky Derby!

For example, last year 76.92% of all actively managed Canadian equity funds underperformed the TSX. Over a longer 10-year period, 91.01% of active managers underperformed the TSX. It’s the same for US and international equity funds with 97.41% and 95.24%, respectively, of managers underperforming their benchmark over a 10-year period. I’ve personally managed stock portfolios before and I’ll fully admit that consistently beating the TSX or the S&P 500 is darn difficult. Given this, I’m “all-in” for ETF investing and it’s easy to understand why so many investors are heading to the exits for actively managed mutual funds and moving to low-cost ETFs.

Percentage of Canadian Funds Underperforming their Benchmark

Source: S&P Dow Jones, Fundata

In addition to the poor performance and high fees with mutual funds there is another reason why “I’d rather stick needles in my eyes” (great Jack Nicholson line) than invest in a mutual fund – “closet indexing.”

Investopedia defines closet indexing as “a strategy used to describe funds that claim to actively purchase investments but wind up with a portfolio not much different from the benchmark.” Essentially, the portfolio manager of the mutual fund “hugs” the index by purchasing many of the same securities and with similar weights of the individual holdings within the index. For example, a Canadian equity portfolio manager will hold the same stocks with similar weights as are found in the TSX.

This has been a major beef of mine over the years and interestingly this is starting to get the attention of other investors and regulators.

There was a huge development on this recently with the asset managers of two large Canadian banks being sued in a class action lawsuit for this very thing. According to a recent Globe and Mail article, “Two of Canada’s largest investment managers are being threatened with a class-action lawsuit that claims investors were overcharged for actively managed mutual funds that did little more than mimic their benchmark indexes.” They go on to say, “The proposed class actions allege that excessive fees paid to RBC and TD over many years have significantly reduced the returns of investors.”

‘Overcharged for funds mimicking indexes’

Source: Globe and Mail

After reading this my curiosity was piqued so I examined the holdings one of these mutual funds in question and compared it to TSX holdings. Below are the results and you can see just how similar the mutual fund is to the TSX.

This class action lawsuit it pretty big news for the mutual fund industry and while it may be difficult to prove and win this lawsuit, I still think it’s good that this issue has come to the surface as some investors will now dig a bit deeper and ask the important question of whether the portfolio manager is earning their high mutual fund fee or if they’re just “hugging the index”, in which case the investor would be better off just buying a low-cost ETF that tracks an index.

Top Holdings of TD Canadian Equity Fund & the TSX

Source: Morningstar, Sedar, Bloomberg

One metric to analyze whether a mutual fund manager is actually making calls and not “hugging the index” is Active Share. Active Share quantifies how differently a fund invests compared to the benchmark. A high Active Share means the portfolio manager is actually making bets and is truly being active. This concept was popularized by finance professors Martijn Cremers and Antti Petajisto and was based on an exhaustive study examining 2,650 funds, which found that the highest ranking active funds (funds with Active Share of 80% or higher) beat their benchmark indexes by 2-2.71% before fees and by 1.49-1.59% after fees.

Now it doesn’t mean that all mutual funds with a high Active Share will provide great returns and outperform the benchmark, as you could have high Active Share but be a bad stock and bond picker. But for those investors who do want to invest in mutual funds they should be concentrating on those funds and fund companies that generally provide higher Active Share.

Or you could just save yourself all that trouble and time and just purchase a low-cost ETF that tracks the index, since as the data above shows, it’s a mug’s game trying to outperform the market. After years of trying to do this myself, I have finally seen the light and we recommend you do the same.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

77 comments ↓

#1 Flop... on 05.11.19 at 2:24 pm

Anyone out there got some spare cash?

I think one of the mentioned companies is perfect for some of the guys in the comments section.

Snap-on Tools…

M44BC

“How Much You Have to Invest to Open One of the Top 20 Franchises

There are an estimated three quarters of a million franchises in the U.S. alone. While most people think of franchising in terms of fast-food restaurants, the U.S. Census Bureau notes that a number of other industries including fitness, beauty, and automobiles also rely on a franchise model to generate business. Our latest visualization illustrates how much it would cost to open one of the top 20 U.S. franchises based on initial investment requirements.

This data for this visualization comes from Entrepreneur’s 40th annual Franchise 500® list. The methodology behind the ranking includes five main factors: costs & fees, size & growth, support, brand strength, and financial strength & stability. The final results were determined based on information provided by 1,094 franchisees nationwide. We used the investment information collected by Entrepreneur to map out the low-end investment cost and the high-end investment cost for the top 20 franchises.

Initial Investment Costs for the Top 10 Franchises

1. McDonald’s – $1,058,000 to $2,230,000
2. Dunkin’ – $228,621 to $1,717,103
3. Sonic Drive-In – $865,000 to $3,641,300
4. Taco Bell – $525,100 to $2,622,400
5. The UPS Store – $168,885 to $398,323
6. Culver’s – $2,043,000 to $4,652,000
7. Planet Fitness – $969,600 to $4,242,500
8. Great Clips – $136,900 to $258,250
9. Jersey Mike’s Subs – $178,523 to $746,342
10. 7-Eleven – $47,050 to $1,165,400

Most of the franchises on the top 10 list are in the food and beverage industry, with Great Clips, The UPS Store, and Planet Fitness being the notable outliers. Among the franchises in the top 20, Culver’s has the largest spread, with a $2.6 million difference between the lower end of investment and the higher end. By contrast, Kumon Math & Reading Centers had the smallest spread, with only a $79,382 difference. Within the top 20, Culver’s has the most expensive investment costs at both the low end ($2,043,000) and the high end ($4,652,000). At $40,000, REMAX has the lowest potential investment cost on this list. Keep in mind, these numbers do not take into account operating costs or ongoing royalty fees, so the total cost of owning a franchise will be much higher.”

Visualization

https://howmuch.net/articles/how-much-to-invest-to-start-a-top-20-franchise

#2 Anonymous on 05.11.19 at 2:41 pm

This is really a comparison of active vs. passive managed, not of the mutual fund vs. the ETF structure.

You can have passive, index-following mutual funds (for example TD e-series funds), and you also have actively managed ETFs (HPR for example) .

#3 Paddy on 05.11.19 at 2:42 pm

Another great article Ryan.
Those greasy mutual fund managers eh?! Selling a product with a 2% MER when it only costs about .06% to replicate.

#4 Lost...but not leased on 05.11.19 at 2:45 pm

Phyrrrzt !

(Invest in RE..it never goes down)

#5 Alessio on 05.11.19 at 2:52 pm

Insights on how many Canadians are actually investing and the average amounts would be great. Your investment insights are good but I feel like this only impacts small % of Canadians.

#6 NosFera Two on 05.11.19 at 3:28 pm

great article thanks – 2 minor point of feedback

1. As anonymous said, this is ‘actively managed” v/s “passive” as both Mutual Funds and ETFS can be one or the other.

2. Jack’s comment sounds icky but the eyeball actually has no nerves so ‘needles in the eye’ sounds a hella lot worse than it would probably feel. No of course I haven’t tried it myself but I trust what the medical community tells me.

#7 Blacksheep on 05.11.19 at 3:38 pm

May 10 and its 30 degrees in the lower mainland, no need to trek to Okanagan for the warm temps.

But won’t there be more forest fires?

Yes of course, you can’t expect a rain forest to thrive with a lack of rain. The climate is changing, just like it always has and always will.

Losing your shit over this, like we can now alter the globes climate it is comical. A better pursuit might be to consider the impact of these unstoppable changes to your current living location now and whether relocating to ‘an alternate location’ would be a prudent, proactive move before the public gets wise and rushes for the exits.

I’m thinking the migration, out of the OK, has just begun.

#8 CharlieDontSurf on 05.11.19 at 4:01 pm

Awesome Ryan thankyou. I am currently in the process of dumping mutual funds in the kids RESP for DI ETFs. It is going to take me 3 trips to the bank of two hours each to get this done…green guys.

#9 young & foolish on 05.11.19 at 4:10 pm

OK, so just keep buying the indexes, re-balance for 60/40 annually, and tune out all the noise. Check!

I like that advice …. good for saving and keeping a step ahead of inflation. However, in a lopsided market (think FANGS), or in a slow growth economy (Japanification coming up?), you are just treading water. Which may be fine, but just saying ….

#10 Lost...but not leased on 05.11.19 at 4:11 pm

#1 Flop

RE: franchises…

WHY would anyone want to p*ss away mucho $$ on franchises…hell….start your own.

Aren’t most markets beyond saturated ?

SUBWAY CLOSED 1,100 RESTAURANTS LAST YEAR
The company has fewer than 25,000 locations in the U.S., the lowest level since 2011.

https://www.restaurantbusinessonline.com/financing/subway-closed-1100-restaurants-last-year
==========================

http://fortune.com/2015/04/22/mcdonalds-restaurants-closing/
====================

Etc. etc.

In our town…they tried (2) McDonald’s Expresses..both shut down after a year or two.

We were in the Southern US last month…one does NOT find many chain restaurants etc within many City limits… they tend to be on the outskirts with gas stations.

MOST of these chains are becoming indistinguishable from each other…becoming cheap copiers or hybrids of each other…ie Tim Hortons in our area no longer serve donuts…this industry is ripe for the dreaded ” rationalization “.

#11 Lost...but not leased on 05.11.19 at 4:23 pm

Global Warming ?!?!

***for morons***

Interview with Professor William Happer

https://www.youtube.com/watch?v=zcsSn7ehZ1g

================

Confessions of a Greenpeace Dropout – Dr Patrick Moore

https://www.youtube.com/watch?v=dCrkqLaYjnc

===========

D. Suzuki? nothing but a shill and a hypocrite (Canada’s answer to Al Gore )

Suzuki has a Ph.D in Zoology and was a UBC professor for more than 40 years. He’s written 52 books, hosted TV series seen in 50 countries, won the Order of Canada plus a UN medal for environmentalism. Now tell us about you. – Garth

#12 Reindeer on 05.11.19 at 4:29 pm

Great article Ryan, thanks as always.
Quick question, diversified portfolios are expected to generate 6-7% returns each year. Since most of the etfs or reits dont have a dividend payment of 6-7%, does that implicitly mean cashing out part of the portfolio each year to generate the target cash flow?
Thanks!

#13 Shawn Allen on 05.11.19 at 4:43 pm

Mutual Fund MERs are all bad?

A 2% MER might consist of 1% for the active management, which in a few cases will beat the market but which on average across all funds is a dead certainty to add no value and just be a cost.

The other 1% or so goes to the advisor and includes pay for hand holding, for taking calls, for meeting with clients, including house calls in some cases, and for encouraging people to invest in the first place. This portion should never be advertised as paying to beat the market. This is paying for hand holding and advice and including tax advice and asset allocation advice.

To my mind the trailer fee might often be well earned and provide good value. A lot of people need hand holding.

Yet it is the trailer fee that gets most of the bad press and calls to ban it!

I have no dog in this race I have never collected a trailer fee and essentially almost never paid one.

I just feel that the the investment advisers that collect such fees are not all bad and some are providing good service for clients. No?

#14 Vampire Studies (post grad) on 05.11.19 at 4:58 pm

I read of closet indexing decades ago. In a Canadian equity fund, it can be difficult not to due to the relatively low number of holdings. in the example given, please note that the “difference’ shown is not correct. for example, BNS is in fact overweighted by the active manager by more than 50%. BMO is underweighted by 55%. And the top 10 holdings are much more concentrated. (51% v 38%)

But most of my holdings continue to be indexes. I believe they are also most effective for international and EM holdings as active funds tend to carry high MERs in those categories.

Funds should clearly state their mandate and this should not read “searching the market for good deals”.

I am working with a fee-based FA who complimented
me on my portfolio because of it’s “excellent” asset
allocation and low cost. (Mrs V tells me I have a great “ass”et) What I am lacking though is good advice. She was very honest in saying that I will actually pay more for that than what I am now. I am fine with that as long as it is unbiased.

#15 Shawn Allen on 05.11.19 at 5:06 pm

In our strange world most investment advisors are legally licensed to sell mutual funds but are not allowed to sell ETFs or put clients into ETFs. These advisors take the flack for high mutual fund MERs but do to rules that pre-date ETFs, they are barred from selling ETFs.

And of course if an advisor is allowed to put you into an ETF with no trailer fee, he still needs to be paid! Otherwise, do it yourself.

#16 Remembrancer on 05.11.19 at 5:11 pm

#9 Lost…but not leased on 05.11.19 at 4:11 pm
#1 Flop

RE: franchises…
———————-
And the economics for many is equivalent to you buying yourself a job with a standard salary and larger headaches. Now maybe a payday loan franchise, if you can look yourself in the mirror every morning, is worth looking at…

#17 Vampire Studies (post grad) on 05.11.19 at 5:14 pm

12 shawn – you know the answer to this, and Garth continually mentions the problem. As long as the fee paid to the advisor is commission-based, there is a conflict. Yes the advisor could still give good, even un-biased advice, but you will never know for sure.

When I queried about TFSAs at the big five bank I do my day-to-day banking with, I was told they can only offer me in-house products. How is that unbiased? But for a non-reg, they can get investments elsewhere. Bizarre!

#18 Lost...but not leased on 05.11.19 at 5:28 pm

DELETED

#19 Edwardo on 05.11.19 at 5:32 pm

Theres a big difference between running a mutual fund & trying to beat the TSX as opposed to a private investor beating the TSX like a red headed step child.

#20 DON on 05.11.19 at 5:43 pm

#127 crowdedelevatorfartz on 05.11.19 at 2:16 pm

@#126 DON
“No substantial rain yet this Spring…Dry out there.
Not looking good for the summer.”

++++++

Yep,
And then just to add fuel (literally) to the forest fires.
We have a native species of undergrowth in BC’s forests mysteriously dying?

https://www.cheknews.ca/experts-say-drought-and-cold-could-be-responsible-for-salal-die-off-559734/

Climate change?
Naaah , couldnt be.
***************

Yah…saw the Salal issue. Yikes is right!

#21 Jeff on 05.11.19 at 5:45 pm

Suzuki has a Ph.D in Zoology and was a UBC professor for more than 40 years. He’s written 52 books, hosted TV series seen in 50 countries, won the Order of Canada plus a UN medal for environmentalism. Now tell us about you. – Garth

Other than his 58 year old zoology degree and his time as a legit professor…isn’t the rest just part of the shill?

Disgusting comment. – Garth

#22 Re-Cowtown on 05.11.19 at 5:48 pm

Off topic but funny:

The State of Illinois is thinking about a $1000/yr fee to register your electric car. The rationale? Electric cars don’t pay the gasoline tax which goes to…. drumroll…

Road maintenance….

Naturally EV owners are freaked, but I think it’s OK poor people don’t buy electric cars, so the tax hits the 1%ers right between the eyes.

It actually also makes sense in that the poor are presently subsidizing the wealthy by paying for the roads that the wealthy drive on.

And we haven’t even touched on the issue of electric grid infrastructure costs yet. In a very real way electric cars mooch off of established utilities and infrastructure. EV’s are the equivalent of the 30 year old kid livin’ in basement for free and raiding the fridge whenever he/she/zee/zir feels like it.

#23 Lenticular on 05.11.19 at 6:10 pm

One fund family whos mutual funds consistently beat the market (after expenses) is Mawer. They are no load funds, no trailers and cheap MERS.

#24 Coastal Zapper on 05.11.19 at 6:17 pm

#1 Flop

I believe 60 Minutes did an expose on Snap on Tools. They make it so the franchisee can’t make a living by making his area smaller and smaller.

Overpriced Tools

Thanks for another great article Doug

#25 Flop... on 05.11.19 at 6:20 pm

#21 Re-Cowtown on 05.11.19 at 5:48 pm
Off topic but funny:

The State of Illinois is thinking about a $1000/yr fee to register your electric car. The rationale? Electric cars don’t pay the gasoline tax which goes to…. drumroll…

/////////////////////////

Nah, nope, no, not gonna happen.

I am the king of off topic posts.

I have to defend my territory.

I see your off topic comment.

And I raise your off topic comment…

M44BC

“How Much Can You Save By Driving an Electric Vehicle?

Spurred by new technology, concerns about the environment, and the rise of industry giants such as Tesla, electric vehicles (EVs) are making a big comeback as an alternative to traditional gasoline-powered cars. EVs can be friendlier for your wallet, too. Gasoline prices are measured as price per gallon. To compare prices for electric vehicles, the Department of Energy uses a metric called the “electric gallon,” or “eGallon,” which represents the cost of driving an electric vehicle the same distance a gasoline-powered vehicle could travel on one gallon of gasoline.

According to the U.S. Department of Energy’s Saving on Fuel and Vehicle Costs report, while fuel powered by electricity saves an average of 56.87% nationwide compared to fuel powered by gasoline, the cost savings differ from state to state. Our latest visualization uses data from this report to see which states benefit the most from electricity-powered fuel. Some gallon prices are estimated based on a multi-state average price by the U.S. Energy Information Administration (EIA). For national averages, the cost of a gallon of gasoline is $2.62 and the cost of an eGallon is $1.13.

Top 10 States With the Highest Cost Savings From Choosing Electricity Over Gasoline

1. Washington – 71.28% ($2.96 gasoline vs. $0.85 eGallon)
2. Oklahoma – 68.75% ($2.56 gasoline vs. $0.80 eGallon)
3. North Dakota – 67.58% ($2.56 gasoline vs. $0.83 eGallon)
4. Missouri – 67.19% ($2.56 gasoline vs. $0.84 eGallon)
5. Louisiana – 66.39% ($2.38 gasoline vs. $0.80 eGallon)
6. Nebraska – 66.02% ($2.56 gasoline vs. $0.87 eGallon)
7. Oregon – 65.96% ($2.85 gasoline vs. $0.97 eGallon)
8. West Virginia – 64.80% ($2.50 gasoline vs. $0.88 eGallon)
9. Arkansas – 64.29% ($2.38 gasoline vs. $0.85 eGallon)
10. Kentucky – 63.67% ($2.56 gasoline vs. $0.93 eGallon)

Most of the states with the highest cost savings are located in the South or Midwest, rather than on the coasts. By contrast, eGallons have the lowest cost savings in states in the Northeast. In 18 states, the cost of one eGallon is less than $1, while in 3 states, the cost of one eGallon is more than $2. Hawaii is the only state in which eGallons ($2.92) are more expensive than gasoline ($2.85).

Although EVs are usually more expensive to purchase at the outset, the fuel costs are substantially lower. Fortunately, there are also government tax credits and other incentives to encourage the use of EVs and reduce the initial cost.”

Visualization

https://howmuch.net/articles/comparing-fuel-prices-gasoline-vs-electricity

#26 SoggyShorts on 05.11.19 at 6:25 pm

My DIY portfolio is pretty much a rip off of VGRO.TO with REITs instead of bonds and 30% USD versions of ETFs

XIU 10%
XRE 10%
XUU/VOO 30%
VGG/VIG 30%
XEF/VEA 13%
VEE/VWO 7%

Up 12.55%

VGRO up about 11%

What I want to know is when will we get RoboAdvisors that will make us a custom made ETF?

It’s not a lot of work to update my spreadsheet and rebalance things but it seems like something that should exist.

#27 Lost...but not leased on 05.11.19 at 6:34 pm

#15 Remembrancer on 05.11.19 at 5:11 pm
#9 Lost…but not leased on 05.11.19 at 4:11 pm
#1 Flop

RE: franchises…
———————-
And the economics for many is equivalent to you buying yourself a job with a standard salary and larger headaches. Now maybe a payday loan franchise, if you can look yourself in the mirror every morning, is worth looking at…

=========================

Re: PayDay loans

On a flight a while back…I struck up a conversation with a fella who told me he owns one of those payday loans stores, and I don’t recall it being a franchise. He said he was looking to open another one.

As he explained it…the business model is simple….(not much different than being a drug pusher???)….one simply extends just enough funds, credit etc. to the clients knowing they will never be able to get out of the vicious cycle…and they are literally perpetual repeat clients.

We are not talking about thousands of dollars per average client… maybe in the mid 3 – figure range.

#28 Stone on 05.11.19 at 6:42 pm

I know this is off topic from today’s post but thought this was interesting.

https://www.cbc.ca/news/canada/british-columbia/bc-money-laundering-unexplained-wealth-order-1.5132202

The BC gouvernment might consider UWOs (unexplained wealth orders) to seize assets such as real estate purchased via laundered money and owner would need to prove source of funds to purchase it were legitimate. Controversial but simple. I actually like it and it bypasses the court system which is a farce considering the case backlog and how cases drag out over long periods of time allowing the money launderers time to sell it and disappear. The BC gouvernment should implement this without delay. Then, gouvernment can sell the property, retain the proceeds, and the house goes back into the legitimate pool of purchasers. Win win.

#29 Ponzius Pilatus on 05.11.19 at 6:53 pm

#10 Lost…but not leased on 05.11.19 at 4:23 pm
Global Warming ?!?!

***for morons***

Interview with Professor William Happer

https://www.youtube.com/watch?v=zcsSn7ehZ1g

================

Confessions of a Greenpeace Dropout – Dr Patrick Moore

https://www.youtube.com/watch?v=dCrkqLaYjnc

===========

D. Suzuki? nothing but a shill and a hypocrite (Canada’s answer to Al Gore )

Suzuki has a Ph.D in Zoology and was a UBC professor for more than 40 years. He’s written 52 books, hosted TV series seen in 50 countries, won the Order of Canada plus a UN medal for environmentalism. Now tell us about you. – Garth
———-
Thanks Garth.
The guy is simply a genius.
But, sadly, we will have to say: he was, soon.
No one here to fill his shoes.
The Nature of Things should be mandatory viewing for all school children grade 7 and up.

#30 Bing Miao on 05.11.19 at 7:23 pm

https://www.youtube.com/watch?v=yoIZdEBf9Wk

Margaret Thatcher – Capitalism and a Free Society

“Figure out what works and do it.” Lee Kuan Yew

#31 Pfft on 05.11.19 at 7:30 pm

@#10 Lost…but not leased on 05.11.19 at 4:11 pm
#1 Flop

RE: franchises…

WHY would anyone want to p*ss away mucho $$ on franchises…hell….start your own.

Aren’t most markets beyond saturated ?

SUBWAY CLOSED 1,100 RESTAURANTS LAST YEAR
The company has fewer than 25,000 locations in the U.S., the lowest level since 2011.

https://www.restaurantbusinessonline.com/financing/subway-closed-1100-restaurants-last-year
==========================

http://fortune.com/2015/04/22/mcdonalds-restaurants-closing/
====================

Etc. etc.

In our town…they tried (2) McDonald’s Expresses..both shut down after a year or two.

We were in the Southern US last month…one does NOT find many chain restaurants etc within many City limits… they tend to be on the outskirts with gas stations.

MOST of these chains are becoming indistinguishable from each other…becoming cheap copiers or hybrids of each other…ie Tim Hortons in our area no longer serve donuts…this industry is ripe for the dreaded ” rationalization “.
__________________

Popeyes is the only QSR with growth year over year.

#32 oh bouy on 05.11.19 at 7:34 pm

@#11 Lost…but not leased on 05.11.19 at 4:23 pm
Global Warming ?!?!

***for morons***

Interview with Professor William Happer

https://www.youtube.com/watch?v=zcsSn7ehZ1g

================

Confessions of a Greenpeace Dropout – Dr Patrick Moore

https://www.youtube.com/watch?v=dCrkqLaYjnc

===========

D. Suzuki? nothing but a shill and a hypocrite (Canada’s answer to Al Gore )

Suzuki has a Ph.D in Zoology and was a UBC professor for more than 40 years. He’s written 52 books, hosted TV series seen in 50 countries, won the Order of Canada plus a UN medal for environmentalism. Now tell us about you. – Garth
____________________________________

resident troll/basement dweller about sums him up.
loser at life may fit as well.

#33 The Real Mark on 05.11.19 at 7:52 pm

When too many people have piled into indexes (ie: the ‘trusts’ of the 1920s, the “Nifty Fifty” of the late 1960s/early 1970s), thinking that such are no-brainer investments, its often time to get out.

Incidentally, the precious metals mining sector, after the collapse of both the trust bubble, and the Nifty Fifty bubble, went on to perform extremely well.

Currently the ^XAU gold miners index is sitting around 67. Beneath where it started in 1977 (at 100). Beneath the levels of the 2009 collapse. And only minorly above the extremities recorded in the early 2000s just prior to the dot-com collapse, and of course, the freak-out in 2015.

Strong gains assured? Of course not. But the odds really, really favour outsized growth of the gold miners relative to the rest of the stock market.

#34 espressobob on 05.11.19 at 7:55 pm

Good post Ryan.

Index investing has proven superior over mutual funds hands down regardless of the high mers fund managers charge for underperformance and tax inefficiency these dinos produce. Yuk! Like shanking one into the trees.

ETFs also allow customization depending on ones requirements.

Made the change a long time ago and never looked back. Now back to the golf channel and some smooth bourbon.

#35 mike from mtl on 05.11.19 at 7:57 pm

#12 Reindeer on 05.11.19 at 4:29 pm
Great article Ryan, thanks as always.
Quick question, diversified portfolios are expected to generate 6-7% returns each year.
////////////////////////////////////////////////////////////////////

That is one of those ‘true’ but misleading lines. Returns is ‘total return’, as in capital appreciation plus dividends. The misleading bit is that normally it should be understood as a average yearly compound return over a decent amount of time, say 10 years.

You’d be mistaken to think you’re getting guaranteed +6% a year, every year. More like up some down others, awesome years or crap ones like recently 2018. It all evens out most of the time, eventually, and (hopefully).

#36 NoName on 05.11.19 at 8:01 pm

@#25 Flop… on 05.11.19 at 6:20 pm

Spurred by new technology, concerns about the environment, and the rise of industry giants such as Tesla, electric vehicles (EVs) are making a big comeback as an alternative to traditional gasoline-powered cars.

—-

Dont know who is writing those articles but some of them are they are bit funnyer than others, above paragraph is just funny… it eter not reserched enough or readership is very un informed. Electric cars are not making comback, and ill get to tesla in a minute.

Lets start with facts in EU all car to be sold by 2030 are to be electric. China as bigest car market now days will be selling 50% of new cars as electric and ice in passiger wehicles will probably be fazed out soon after.

Jus for this year alone china will bring online enough power generation to be equial what us have, and that is just for this year. Only question what kind of power generation will be, coal hydro or nuc.

Big 3 in NA made plans to transition to electric car known years back so if we lag few yrs after eu and china in no big deal, we have lots of oil here, but what we dont have is enough power generation, plus our enviroment is in much better shape that other car markets. It would be stupid to push for more electric cars at this time, just for that reason alone.

If class 5 self driving cars are ariving in 10-20 yrs, “modular” type cars will be only cars sold, forget about public transport, and taki “uber/taxy” to unsafe part of city, poor people will be poorer and oportunity for them will decrice dramaticly. I hope that i am wrong on this one but iam not.

and tesla, audi is coming with 3 models 2020, mercedes 2, vw 2, porche 1, bmw 15 buy 2025. All this time tesla enjoyed no competition, but competition is coming. If they think that they will line up models S3XY and look smart and boost sales, i recomend more weed for their leadership…

If tesla didnt become iphone of electric wehicle by now. They might clinge on a few patents that they didnt made public ( i know what i am talking about ) and try the route of the wright brothers suing their way out of the dodge, but they should be wery worrid because GERMANS are coming!

https://www.pocket-lint.com/cars/news/140845-future-cars-and-upcoming-electronic-cars-of-the-future-coming-soon

#37 NoName on 05.11.19 at 8:06 pm

@ Ponzius Pilatus

What is you carbon foot print? do tell, plz.

#38 Remembrancer on 05.11.19 at 8:20 pm

#27 Lost…but not leased on 05.11.19 at 6:34 pm
Re: PayDay loans
On a flight a while back…I struck up a conversation with a fella who told me he owns one of those payday loans stores, and I don’t recall it being a franchise.
———–
https://www.theglobeandmail.com/report-on-business/small-business/payday-lenders-squeezed-by-new-regulations/article37361268/

#39 Remembrancer on 05.11.19 at 8:28 pm

#22 Re-Cowtown on 05.11.19 at 5:48 pm
And we haven’t even touched on the issue of electric grid infrastructure costs yet. In a very real way electric cars mooch off of established utilities and infrastructure. EV’s are the equivalent of the 30 year old kid livin’ in basement for free and raiding the fridge whenever he/she/zee/zir feels like it.
————————–
You should have saved that zinger for when you were actually making a useful point. Who do you think pays for those electrons flowing into the car battery? Or should electricity for a car cost differently then electricity going into your 30 year old beer fridge in the garage? Like the gas tax pays 100% for the roads, jeez…

#40 IHCTD9 on 05.11.19 at 8:32 pm

“…I still think it’s good that this issue has come to the surface as some investors will now dig a bit deeper and ask the important question of whether the portfolio manager is earning their high mutual fund fee…”
————-

I for one, can confidently say NO they were not.

Thanks goes to Mr T and team for getting us to start thinking about what we were actually getting for our 2.4% (ie. a lighter wallet and not much else).

#41 Frank N Beans on 05.11.19 at 8:50 pm

Completely agree w today’s topic. It took three ignorant tries with TD Waterhouse, Hollis Wealth and Investors Group to learn my lesson :/ now I am just doing ETFs and not watching my investment $ get sucked up by fees. I was foolish enough to buy my first property w my RRSP and got nailed w deferred sales charges (Hollis Wealth). I tried to argue my way out of the charge but lost. My financial advisor lost me as a client as a result, and have transferred my investments out, but will never forget how bitter that made me. I was 25 years old at the time and just blindly followed the advice of my father ;who had a much bigger account w the same advisor), so things were awkward. Long story short, I’ve gone rogue and have watched my elders continue to dump their hard earned money into poorly performing mutuals. They just won’t listen to me, and even worse, they won’t take the time to read this darn blog.
Respect.

#42 Ryan Lewenza on 05.11.19 at 8:51 pm

Reindeer “Great article Ryan, thanks as always.
Quick question, diversified portfolios are expected to generate 6-7% returns each year. Since most of the etfs or reits dont have a dividend payment of 6-7%, does that implicitly mean cashing out part of the portfolio each year to generate the target cash flow?”

No that doesn’t entail selling some of the portfolio. We estimate stocks will return roughly 9% over the long run. This is broken up into 2-3% dividend yields (depending on the index) and long-term price appreciation of 7%. For bonds we estimate a 3-4% long-term returns. So based on a 60/40 portfolio and smart rebalancing we get 6-7% returns. – Ryan L

#43 tccontrarian on 05.11.19 at 9:15 pm

“…last year 76.92% of all actively managed Canadian equity funds underperformed the TSX. Over a longer 10-year period, 91.01% of active managers underperformed the TSX. It’s the same for US and international equity funds with 97.41% and 95.24%, respectively, of managers underperforming their benchmark over a 10-year period.”
—————-

This tells me that there are probably 2-3% of money-managers that consistently beat the index. Now that’s what I’m interested in knowing, but I don’t think they’re necessarily interested in sharing. That would give away their advantage, and I don’t blame them.

TCC

#44 reynolds531 on 05.11.19 at 9:49 pm

Ryan any comments on front running the index? Ie buying or selling stocks before they are added or dropped from the index to benefit from the big indexers buying or selling?

For the record I buy index etfs.

#45 The Real Mark on 05.11.19 at 10:12 pm

“any comments on front running the index? Ie buying or selling stocks before they are added or dropped from the index to benefit from the big indexers buying or selling?”

I believe index licensees receive advance notice of additions or deletions, do they not? If you look carefully in the financials of most of the index funds, they’re paying a fee to the index provider, whether it be S&P, or Morgan Stanley (for the S&P and MSCI indices respectively). Tracking error of the big ETFs tends to be very low, so it logically follows that there’s probably not a big windfall to be made trying to front-run deletions or additions. Of course, deletions tend to be very poorly performing companies, and additions tend to be very well performing companies, so if there is a gain due to theoretically figuring out additions/deletions, it would be due to the poor or good performance of the underlying, not of the mere fact that such is slated for addition or deletion from an index.

Over the longer term, though, it is rather concerning that a company could achieve a dramatically lower cost of (equity) capital by merely being part of an index. Such has negative macro effects, ie: capital may be misallocated towards poorer investments based on backwards-looking assessments of performance. And negative macro effects, ie: individual investor performance may suffer because of the selection of structurally more expensive investments.

IMHO, indexing works great while one can be a ‘free rider’ on the efforts of others to effect price discovery. But when indexing becomes such an overwhelming part of the market is when its likely that there can be outsized returns by buying investments that are explicitly not part of index funds.

#46 NoName on 05.11.19 at 10:16 pm

Addendum to my electric car rant, to comperabe cars

Cheapest models
tesla 3 47k +tax -gov rebate. -25-50% range on winter and summer (cheapest tesla 3 range 150km)
Civic 18k +tax -7% range on winter and summer (cheapest civic range 47L gast thank @ combined gas 8/100km +- 600km gas thank)

25k can buy lots of gas and vacations over wehicles life time, and no tesla is built good as Honda!

Ponzi what is youn foot print carbon, why you so quiet?

#47 Nonplused on 05.11.19 at 11:55 pm

#86 Smartalox (yesterday)

Your points are valid, but I take issue with them.

Why would BC think it’s better to buy fuel from Washington rather than have diverse fuel sources that can compete? And why do they need an investigation into high gas prices if the Washington refinery is shut down for maintenance?

The Vancouver transit tax is their own doing and an investigation into the affect of that is not required.

Why would anybody build a refinery in Vancouver without Trans Mountain? Where would they get the oil to refine? From Saudi Arabia by boat? But I thought boats with oil on them were bad?

#48 Ponzius Pilatus on 05.12.19 at 12:00 am

Off topic.
But just found this:
20 biggest harbours for tankers:
3 in Europe, 1 in the US.
10 in China.
Vancouver, where are though?
https://m.spiegel.de/fotostrecke/groesste-haefen-der-welt-fotostrecke-168594-20.html

#49 The Great Gordonski on 05.12.19 at 12:00 am

Couldn’t help but slip this past the climate phonies.

https://www.climatedepot.com/2019/05/10/superstar-rapper-drake-who-rails-against-climate-change-buys-massive-private-jet/

#50 Re-Cowtown on 05.12.19 at 12:13 am

#25 Flop… on 05.11.19 at 6:20 pm
#21 Re-Cowtown on 05.11.19 at 5:48 pm
Off topic but funny:

The State of Illinois is thinking about a $1000/yr fee to register your electric car. The rationale? Electric cars don’t pay the gasoline tax which goes to…. drumroll…

/////////////////////////

Nah, nope, no, not gonna happen.

I am the king of off topic posts.

+++++++++++++++++++++++++++++++++

You made my point. Thanks. EV’s are a massive sponge, sucking up tax dollars and using infrastructure paid for by poor people.

#51 Ponzius Pilatus on 05.12.19 at 12:14 am

#37 NoName on 05.11.19 at 8:06 pm
@ Ponzius Pilatus

What is you carbon foot print? do tell, plz.
———
My carbon foot print is just big enough to kick your sorry ass.

#52 not 1st on 05.12.19 at 12:30 am

Ryan time to reboot your narrative because if the US and China really go toe to toe, the TSX will get shredded like toilet paper. So much for the buy it and forget it mantra. These are defensive times. Lots of money is leaving for bonds and treasuries.

#53 Marlene from Victoria on 05.12.19 at 7:18 am

52 – Flop (from yesterday)

30 degrees in Greater Vancouver.

Why are we talking about anything else…

M44BC
——————————————–

Very sadly, yes, there is more to say about this.

https://www.ctvnews.ca/canada/child-dies-after-being-found-in-hot-car-in-b-c-1.4417498

Everyone, please, stop being so self-absorbed and thinking you can “multi-task” when it comes to taking care of your precious children (and pets in cars, too, suffer such fates all too often).

I have a feeling we’ll see many more of these in BC and elsewhere as everything warms up.

This should never, ever happen.

#54 NoName on 05.12.19 at 9:46 am

interesting read

https://www.theatlantic.com/magazine/archive/2019/06/how-to-predict-the-future/588040/

#55 jess on 05.12.19 at 10:05 am

Vanguard Patented a Way to Avoid Taxes on Mutual Funds
By Zachary R. Mider, Annie Massa and Christopher Cannon
May 1, 2019

“Vanguard attaches a more tax-efficient ETF to an existing mutual fund. Then the ETF siphons appreciated stocks out of the mutual fund without incurring taxes, often using heartbeat trades.”

https://www.bloomberg.com/graphics/2019-vanguard-mutual-fund-tax-dodge/

======
MMT regarding employer of last resort rather than lender of last resort

http://www.cfeps.org/pubs/wp/wp9.html

#56 Ryan Lewenza on 05.12.19 at 10:05 am

not 1st “Ryan time to reboot your narrative because if the US and China really go toe to toe, the TSX will get shredded like toilet paper. So much for the buy it and forget it mantra. These are defensive times. Lots of money is leaving for bonds and treasuries.”

There’s some ifs in that statement and we don’t invest around ifs. I believe a deal will ultimately get done but it’s going to be a bumpy ride. Additionally all equity markets will get hit hard if the US and China can’t get a deal done so I’m not sure why your just focusing on the TSX. – Ryan L

#57 Ryan Lewenza on 05.12.19 at 10:16 am

reynolds531 “Ryan any comments on front running the index? Ie buying or selling stocks before they are added or dropped from the index to benefit from the big indexers buying or selling?”

This has been a fairly common trading strategy for large investors and traders. I have a trader friend who does this occasionally. Sure there might be the occasional large move in a stock as it gets added/deleted but I doubt it’s a very prosperous long-term trading strategy. If it was everyone would do it. – Ryan L

#58 millmech on 05.12.19 at 10:37 am

#28 Stone
Your sure they will not abuse it like what happened to a landlord in Ontario who had his house seized because one of his tenants payed his rent from money from proceeds of crime. The governments logic was that the house was now bought with proceeds of crime and free for the taking and they took it and he spent his life savings to get his house back.
Remember that anyone can make a claim about anybody else being a criminal or engaging in illegal activities, it could be a spiteful co worker, bad neighbor, ex spouse, spiteful kid who can make an accusation and now you lose everything and have to fight to get it back.
You see how that new drinking and driving law is being used now, they are setting up road blocks to nail old infirm ladies leaving the liquor store after buying a mickey of booze, and with their medical conditions that make them unable to pass the roadside test they are arrested and cars are seized without trial, automatic conviction. That now criminal senior went to the hospital after the police station and has proven through medical evidence that she is was not impaired, innocent but the system does not care.
How about in High River Alberta where the RCMP illegally entered homes without search warrants and seized weapons and refused at first to return them to their legal owners. It took a public uproar before the RCMP returned the guns and no one was disciplined for that. Best part of that story was that the RCMP was already under orders to keep High River secure, so if it was secure why break into certain homes looking for weapons.
Lots of opportunity for abuses to occur and no real recourse if your on the receiving end of it.

#59 Sam on 05.12.19 at 10:40 am

Stock picking is a skill set . Not a ‘mugs game ‘. Such rubbish is bellowed by those that tried and were unsuccessful

Own both etfs and mutual funds (f series,) in my portfolio . Many ways to skin a cat

#60 crowdedelevatorfartz on 05.12.19 at 11:05 am

@#51 Ponzie Pilot
“My carbon foot print is just big enough to kick your sorry ass.”
******

Before or after you take off Mom’s high heels?

(Sorry but I had to get a Mother’s Day reference in there somehow….)

#61 millmech on 05.12.19 at 11:24 am

#28 Stone
You also realize that all that FINTRAC reporting was reported, just nothing was done with it, all the paperwork sits their with no one to look into it, no one lol.
Canada has no one from the RCMP to even look into money laundering on the West Coast and everyone is surprised that it has gotten this big, really?

#62 Ryan Lewenza on 05.12.19 at 11:49 am

Sam “Stock picking is a skill set . Not a ‘mugs game ‘. Such rubbish is bellowed by those that tried and were unsuccessful.”

I specifically said it’s a mugs game to outperform the index, which is supported by the fact that 91% of professional investors underperform the TSX. If your one of the 9% that can outperform the index then maybe you have a calling as a portfolio manager. I hear Warren Buffett is looking for a replacement. – Ryan L

#63 Ponzius Pilatus on 05.12.19 at 12:00 pm

#60 crowdedelevatorfartz on 05.12.19 at 11:05 am
@#51 Ponzie Pilot
“My carbon foot print is just big enough to kick your sorry ass.”
******

Before or after you take off Mom’s high heels?

(Sorry but I had to get a Mother’s Day reference in there somehow….)
————-
Thanks for reminding the basement dwellers that it’s Mother’s day.
Bums, get up and make your mom breakfast!

#64 Blacksheep on 05.12.19 at 12:04 pm

Stone # 28,

“I know this is off topic from today’s post but thought this was interesting.

https://www.cbc.ca/news/canada/british-columbia/bc-money-laundering-unexplained-wealth-order-1.5132202

The BC gouvernment might consider UWOs (unexplained wealth orders) to seize assets such as real estate purchased via laundered money and owner would need to prove source of funds to purchase it were legitimate. Controversial but simple. I actually like it and it bypasses the court system which is a farce considering the case backlog and how cases drag out over long periods of time allowing the money launderers time to sell it and disappear. The BC gouvernment should implement this without delay. Then, gouvernment can sell the property, retain the proceeds, and the house goes back into the legitimate pool of purchasers. Win win.”
——————————
I think this is a realllly bad idea.

What the hell happened to your day in court?

This action would make parties guilty, until proven innocent. We are becoming a nanny state with government overreach. All this will do is chase very large sums of $, out the province to find friendlier districts. People that think we won’t economically feel the billions being pulled from the local economy annually, are just kidding themselves.

I would suggest a flat tax (2-5%?) on undocumented funds to let society reap some benefit, with out lopping the head off the golden goose.

Rational:

Undocumented $’s coming out China are likely fleeing an oppressive communist government, meaning no official paper trail. So if these parties buy something in BC, they need to be seriously worried about full out confiscation, based solely on the judgement of a government in dire need of revenues?

Utterly ridiculous.

#65 Al on 05.12.19 at 12:17 pm

“..found that the highest ranking active funds (funds with Active Share of 80% or higher) beat their benchmark indexes by 2-2.71% before fees and by 1.49-1.59% after fees.”

Step 1: create etf comprised of the with funds with active share of 80% or higher

Step 2: Profit (at approx alpha plus 1.49%)

#66 Al on 05.12.19 at 1:19 pm

“Cheapest models
tesla 3 47k +tax -gov rebate. -25-50% range on winter and summer (cheapest tesla 3 range 150km)
Civic 18k +tax -7% range on winter and summer (cheapest civic range 47L gast thank @ combined gas 8/100km +- 600km gas thank). 25k can buy lots of gas and vacations over wehicles life time, and no tesla is built good as Honda!”

The cheapest comparable ( in terms of options, not performance, you’d need a TypeR for that, @ $43 476) Civic would be about 28k ( Civic ex sedan with 18″ wheels and remote start) before tax on their website. No autopilot is available for Civic.

Assuming average mileage (24k/year) and Ontario overnight kWh rate of 6.5 cents, gas @1.28/liter, your about 4 K ahead with this cheap Civic after five years and 2.6K behind after 10 excluding maintenance (which is less on EV, Honda no matter). A win for a 28k Civic vs a model 3 Standard range plus (55k) after five years, but not ten!

This comparison is obviously insincere since the performance of these cars are not anywhere comparable, yet the model 3 still wins in the long run. Civic EX is a 158HP car. Model 3 SR+ is over 300 HP and 300lbs torque. Might as well compare a Nissan Micra to the model 3. The only comparable Civic in performance is the type R.

They type R as you can guess gets killed. It’s 10.1K more expensive after just 5 years and a whopping 22.5 k more expensive after 10. As you see performance matters, not just because of the upfront cost and insurance, but because higher performing cars have much poorer fuel consumption.

This is for Ontario. Add 5K and 8K in BC and QC in favor of the EV. Compare the lowly 28K Civic EX to a Leaf Plus or Bolt and add another 10k in favor of the EV after 10 years.

If you pick a Bolt or Leaf plus over a 28k Civic in QC and BC, you can buy another new car after ten years with the savings.

There’s no financial reason to buy similar gas car over an EV. It’s not even close.

The Bolt and Leaf Plus even beat the cheapest new car you can buy, a bare bones Nissan Micra (at 12.2K before tax) in QC and BC after ten years lol.

#67 Andy Dietrich on 05.12.19 at 1:34 pm

It is worse time in history to have money saved and have money in general. The bottom line is it will get worse and not rewarding saving will be the last straw that snapped the camel’s back. You guys know what I am talking about.

#68 Pat on 05.12.19 at 1:49 pm

How many (if any) of the actively managed funds compared to indexes carry bonds or other non-index investments? When I used RBC they had active funds that lagged the index, but a mix of say 90/10 canadian index/canadian bonds by definition will lag the index. In other words, how much of active fund underperformance is because of asset choice and how much is because of a fundamental failure in meeting the market?

#69 oh bouy on 05.12.19 at 2:09 pm

@#67 Andy Dietrich on 05.12.19 at 1:34 pm
It is worse time in history to have money saved and have money in general. The bottom line is it will get worse and not rewarding saving will be the last straw that snapped the camel’s back. You guys know what I am talking about.
————————————–

LOL

#70 Remembrancer on 05.12.19 at 2:23 pm

#66 Al on 05.12.19 at 1:19 pm

Hey, got no horse in this race from a philosophical extremist POV either way, and its certainly appealing for a 0-100km in 3 sec e-performance engine, but with an arbitrary 10 year use you are leaving out maintenance – what’s it cost to maintain (including battery)?

#71 Stone on 05.12.19 at 2:38 pm

#64 Blacksheep on 05.12.19 at 12:04 pm
Stone # 28,

“I know this is off topic from today’s post but thought this was interesting.

https://www.cbc.ca/news/canada/british-columbia/bc-money-laundering-unexplained-wealth-order-1.5132202

The BC gouvernment might consider UWOs (unexplained wealth orders) to seize assets such as real estate purchased via laundered money and owner would need to prove source of funds to purchase it were legitimate. Controversial but simple. I actually like it and it bypasses the court system which is a farce considering the case backlog and how cases drag out over long periods of time allowing the money launderers time to sell it and disappear. The BC gouvernment should implement this without delay. Then, gouvernment can sell the property, retain the proceeds, and the house goes back into the legitimate pool of purchasers. Win win.”
——————————
I think this is a realllly bad idea.

What the hell happened to your day in court?

This action would make parties guilty, until proven innocent. We are becoming a nanny state with government overreach. All this will do is chase very large sums of $, out the province to find friendlier districts. People that think we won’t economically feel the billions being pulled from the local economy annually, are just kidding themselves.

I would suggest a flat tax (2-5%?) on undocumented funds to let society reap some benefit, with out lopping the head off the golden goose.

Rational:

Undocumented $’s coming out China are likely fleeing an oppressive communist government, meaning no official paper trail. So if these parties buy something in BC, they need to be seriously worried about full out confiscation, based solely on the judgement of a government in dire need of revenues?

Utterly ridiculous.

———

I have no interest in a golden goose derived from elicit funds. The money won’t flee if this is implemented. Instead, the gouvernment will seize the assets and redistribute them. Any new elicit funds will make a u-turn thinking to come here and our society will stabilize asa result. A society that believes that elicit funds are a golden goose is a pretty sad one. You solidify my argument why this needs to happen. Those who can show the flow of funds to acquire those assets have nothing to be concerned about. For the rest, well, I really don’t give a shit.

#72 Stone on 05.12.19 at 2:42 pm

#64 blacksheep

As for your day in court, don’t be naive. Everyone is guilty until proven innocent, if you can even get your day in court or have funds to pay for your day in court. You need to stop drinking the kool-aid.

#73 Lost...but not leased on 05.12.19 at 2:50 pm

Re Electric cars…GET THEM WHILE THEY ARE HOT???….COLD??

I previously posted record UNsold vehicles.

Near-record inventories pinch dealers

https://www.autonews.com/sales/near-record-inventories-pinch-dealers

Automakers and their dealers have millions of reasons to be concerned about weakening U.S. new-vehicle sales — nearly 4.2 million reasons, to be more precise.

TESLA ???

Cybersleuth Claims To Uncover Over 10,000 Unsold Tesla Model 3s in US Inventory

https://www.zerohedge.com/news/2019-02-19/cybersleuth-claims-uncover-over-10000-unsold-tesla-model-3s-us-inventory

#74 Lost...but not leased on 05.12.19 at 2:55 pm

Met a fella charging up his EV (in BC)…asked him a bunch of questions…

He said that charging stations are free..they don’t yet have the approved devices to actually charge $$ for the “charge”.

Just saying…

Regardless he loves his car.

#75 Lost...but not leased on 05.12.19 at 3:04 pm

#28 Stone on 05.11.19 at 6:42 pm
I know this is off topic from today’s post but thought this was interesting.

https://www.cbc.ca/news/canada/british-columbia/bc-money-laundering-unexplained-wealth-order-1.5132202

The BC gouvernment might consider UWOs (unexplained wealth orders) to seize assets such as real estate purchased via laundered money and owner would need to prove source of funds to purchase it were legitimate.
==================

In US….
police can seize and KEEP assets regardless of guilt

These states let police take and keep your stuff even if you haven’t committed a crime
The policy that allows this is known as “civil forfeiture” — and it’s totally legal in most states.

https://www.vox.com/2015/7/8/8909133/civil-forfeiture-states-map

QUOTE:

Most states in America let police take and keep your stuff without convicting you of a crime.

These states fully allow what’s known as “civil forfeiture”: Police officers can seize someone’s property without proving the person was guilty of a crime; they just need probable cause to believe the assets are being used as part of criminal activity, typically drug trafficking.

Police can then absorb the value of this property — be it cash, cars, guns, or something else — as profit, either through state programs or under a federal program known as Equitable Sharing, which lets local and state police get up to 80 percent of the value of what they seize as money for their departments.

========================

https://pulitzercenter.org/reporting/no-drugs-no-crime-and-just-pennies-school-how-police-use-civil-asset-forfeiture

QUOTE:

In the past two decades, the federal government took in $36.5 billion in assets police seized from people on America’s roads and in its poorer neighborhoods, many of whom never were charged with a crime or shown to have drugs.

Most of the money seized by this civil asset-forfeiture process returns to the law-enforcement agencies that seized it, providing funds for a variety of law-enforcement needs and desires, including exercise equipment, squad cars, jails, military equipment and even a margarita maker.

#76 NoName on 05.12.19 at 3:51 pm

#66 Al on 05.12.19 at 1:19 pm

I stopped reading after no auto pilot on civic. We have this joke on my language “pilot ho’s maraka?” It makes no sensein English but its funny. Only auto pilot in your car you should trust most of the time is the one between your ears.

My cars is class 2, as any oher tesla, but my car can not do some thing that tesla does, but its a same class 2. Tesla auto pilot is just driving aid nothing else.

You can go on and on which car is more powerful and government rebates, type r, ex dx acceleration and this and that, but lets not forget car is deprishiating “asset”, any way you slice it. Ans on a side note haveig to rev any honda angine to the whopping 7k rpm is just an experience in it self, vs buzzing epoxy glue holding magnets step motor on tesla.

From utility and basic financial point now days electric vs ice cars wins it wont be like this for two long but now ice beats electric.

Prive difference between cheap civic and cheap tesla that accounts for 25k that you dident spend on auto pilot amortized over 10yrs @7% is 50k in tfsa or 42k in cash acc.

And god help you if ever end up in fender bender with tesla. Just remember GERMANS are coming, then gonna be JAPANESE BIG and KOREANS. Tesla is like ts like brex of car companies. With 160hp or something like that.

Read

http://www.valuewalk.com/2017/04/tesla-tsla-short-vilas/?all=1

https://www.google.com/search?q=tesla+stock+chart&oq=tesla+stock&aqs=chrome.1.69i57j0l3.5454j0j7&client=ms-android-google&sourceid=chrome-mobile&ie=UTF-8

#77 Tammy Simms on 05.13.19 at 9:17 am

They are really LOL now in Venezuela, Oh Buoy. This is what happens when they want something for nothing.