Slicing and dicing

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DOUG  By Guest Blogger Doug Rowat
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Last post, I wrote about the bond ETF market.

But what of the overall ETF market?

I hunkered down with my Bloomberg this week and offer these observations:

The ETF universe is staggeringly vast. Incredibly, there are more than 13,500 ETFs listed globally. Granted some of these are dual listings, the same ETF in multiple currencies, etc., but it’s still a remarkable number when you consider that it all started 33 years ago with one ETF—the iShares S&P/TSX 60 Index ETF. Even the word ‘explosive’ is an understatement when it comes to describing ETF growth.

Many ETFs won’t make it. There’s no hard-and-fast rule that assures whether a new ETF offering will survive, but generally speaking, a US$50 million market cap is considered a rough threshold for profitability. Below this level, an ETF is at increased risk of being discontinued. Once the ETF universe is screened for market caps above US$50 million, more than 8,000 ETFs disappear from the picture. In other words, potentially hundreds, if not thousands, of ETFs simply won’t make it in the coming years:

The ETF universe diminishes significantly above the US$50 million market-cap threshold

Source: Bloomberg, Turner Investments

The battle for top spot rages. For decades, the SPDR S&P 500 ETF Trust has held the position of world’s largest ETF and currently has a market cap of almost US$370 billion. However, it’s being challenged. Over the past four or five years, the iShares Core S&P 500 ETF (second largest) and the Vanguard Total Stock Market ETF (third largest) have been gaining, particularly Vanguard Total Stock Market. SPDR’s market-cap lead over Vanguard Total Stock Market peaked at almost US$210 billion in 2018, but this lead has since been more than cut in half to only US$98 billion:

Market-cap spread: SPDR S&P500 ETF is facing serious competition from Vanguard Total Stock Market ETF

Source: Bloomberg, Turner Investments

The investment focus of these ETFs is different, of course, Vanguard Total, for instance, is globally positioned with more than 4,000 holdings versus SPDR with its US-focused 500 holdings, but as with most market-share changes in the investment industry, cost explains a lot. Though each of these ETFs are dirt cheap, the iShares Core and Vanguard Total have expense ratios that are a third of SPDR’s (0.03% versus 0.09%). If you’re an institutional investor buying in large scale, lower cost definitely matters.

Crypto ETFs have sucked all-round. Amongst the industry’s most expensive ETFs, crypto ETFs have combined high cost with terrible performance as well as nerve-shredding volatility. As a point of comparison, the average standard deviation (a measure of volatility, the lower the value the better) of the entire ETF universe over the past year is 20.3—crypto ETFs have standard deviations many, many multiples of this. I won’t provide free advertising for these crypto ETFs by identifying them, but here’s the associated data for the most expensive of them over the past year:

Crypto ETFs: high cost, high volatility, terrible performance

Source: Bloomberg, Turner Investments

Tread carefully with actively managed ETFs. The ETF universe is still dominated by passively managed product, but actively managed ETFs have a growing presence as more and more mutual fund companies enter the ETF space. An actively managed ETF may be appropriate for your portfolio, but the broader track record of actively managed ETFs strongly suggests tilting towards passive ETFs. Naturally, actively managed ETFs are more expensive (an average expense ratio of 0.52% versus 0.33% for passive ETFs), but they’ve also underperformed passive ETFs over every significant time period (3 years, 5 years and 10 years).

Beware leveraged ETFs. Of the top-25 worst performing ETFs over the past 10 years, 20 employ leverage. These are ETFs that can be identified through names that include “ultra”, “enhanced”, “daily” or “inverse”. Containing a multiplier (e.g., “3x Bull” or “3x Bear”) is common as well. Leveraged ETFs, generally speaking, shouldn’t be utilized at all by investors, but certainly aren’t designed to be held long term. The average annualized return of these leveraged ETFs over the past decade? Minus 31%.

Finally, here are the global averages. If you’re shopping for ETFs yourself, here are the broader averages of the entire global ETF market (screened for those ETFs that have a market cap of at least US$250 million, equating to a universe of about 2,700 ETFs). Naturally, there’s a vast amount of other criteria that goes into selecting an ETF or building an ETF portfolio (we haven’t touched on asset class, sector or geographic outlook, for instance), but favouring ETFs that score better than many (or all) of these averages is certainly a good starting point.

Global ETF universe: key averages

Source: Bloomberg, Turner Investments. Minimum ETF market cap of $250 million

But gaining access to this ETF data is impossible for the average investor and parsing it time consuming. A better idea? Hire a financial advisor who’s willing to regularly do all the work for you.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Investment Advisor, Private Client Group, Raymond James Ltd.

 

68 comments ↓

#1 chalkie on 01.21.23 at 11:50 am

Thank you Doug, for bringing the ETF universe’s vast choices to the forefront, it takes a pro to understand this world and it is above my paygrade. The ETF investing is quite different then your run of the mill stock investing, that is the very reason I leave the ETF’s world in the hands of people who are experienced advisors to lead the way and manage these complicated investments for me, you have a great post today.

Thousands of homeowners who leveraged their principal residences to purchase rental properties during the real estate boom are getting squeezed between a massive hike in borrowing rates, and declining home values.

A few days ago, the CEOs of Canada’s largest banks warned many of their clients could default on their mortgages as they struggle to keep pace with higher monthly payments, a perfect example that there are no free rides.

Wannabe landlords are the most vulnerable, just like investing, do not try and be something that you are not, that is why I stick to a veteran financial advisor. Did you know that Wannabe landlords were the fastest growing segment of the red-hot residential real estate market a year ago, according to Equifax Canada. Now, they are among the most looked down upon flippers, it was a pancake world while it lasted, all good times come to an end.

Quote of the day: The individual investor should act consistently as an investor and not as a speculator, never be shy to put your hand up and ask for help beyond your means.

#2 Sail Away on 01.21.23 at 11:58 am

So, essentially, a lot of designer ETFs are just like those mutual fund thingies, it seems.

Hey, they should institute some sort of deferred service charges.

#3 the jaguar on 01.21.23 at 12:08 pm

Is that Greta in front of the bull?

#4 Flop… on 01.21.23 at 12:10 pm

Robax, if I spent as much time researching funds to invest in, as I do looking for travel bargains, I would probably be a better investor.

Then again, when Garth recently put up Turner Investment results for 2022 B and D Portfolio, my all in one dumb, dumb fund was within touching distance of the number, so I knew things weren’t that bad in Flopville.

Pretty much started looking for a place to visit for Spring Break as soon as the suitcase got the febreeze treatment and put back on the shelf from the Xmas vacation.

California was out of the question after looking at prices at some of the major cities.

I was really hoping to go back to Texas, been a while since I visited San Antonio, so that’s what I was hoping for but too expensive, Dallas, Houston, forget about it with inflation ripping.

I was going to put up a two part question up on here a couple of of weeks ago.

a) Has anyone ever bee stupid enough to visit Oklahoma City?

b) Has anyone been stupid enough to visit Oklahoma City for Spring Break?

It was an option for a couple of days, almost pulled the trigger, thought if I was going to go full desperado mode, might as well check prices in Denver, Kansas City and even Little Rock.

“We’re going to freeze our bums of to save a few bucks?” Said Mrs Flop.

Alright, Alright, Bloomberg Travel Portal said to focus on the previously eliminated state of California.

I remembered a time, maybe five or six years ago, Garth wrote a throwaway line about Monterey, California, I’d never been to that neck of the woods, so decided to go and visit and a couple of blog buddies chimed in that it was a beautiful place.

Indeed it was, how about a little place a tad more obscure but with decent flights and reasonable accommodation prices.

Found it.

San Luis Obispo, roughly halfway between San Francisco and L.A.

Average weather that time of year meant to be around 19 degrees, slightly in from the coast.

Booked.

I did my TFSA donation already, they moved back the date of The State Of The Union Address, so no point waiting for that.

Monthly Dividend Fund for Mrs Flop, mainly Canadian Banks, with a bit of railway and pipeline support.

More in the all in one 70/30 Global Growth Dumb Dumb Fund for me.

Fund picks, Travel Picks, I put ‘em up…

M48BC

#5 Frank on 01.21.23 at 12:15 pm

Hi Doug
Would etf’s that sell covered calls ( i.e like FIE and ZWC) be considered as “leveraged etfs”

#6 Dolce Vita on 01.21.23 at 12:37 pm

I agree pretty much with everything you said.

As for the expense ratios I mean you know I’ve got one at 0.7% but it also gives 10 x the dividend yield that you have on your average chart there. You do get what you pay for.

A bigger issue for me is the tax treatment on the dividends. If it’s totally Canadian then it’s 15%. If it’s Canadianish, office in Canada but also with international holdings then it’s 25%. If it is a foreign devil American ETF then is 30%.

Those tax %’s trump expense ratios all day long.

My foreign devil ETF yield is very high so it doesn’t bother me that the tax rate is 30% though I wish it were not so. It’s dividend yield is double anything else that I have so I don’t mind paying 15% more tax for 2x the $ received = my foreign devil ETF threshold of pain.

I also look at the ETF beta for risk and daily volume trading in case I need to dump/buy an ETF fast. The lowest market cap ETF that I have is about 300 million and it’s Canadian. All the rest are higher.

Good write-up Doug.

#7 paddy on 01.21.23 at 12:39 pm

SPY-$356.68B MC

iShares Core S&P 500 ETF-$289.47B MC

Vanguard Total Stock Market ETF-$$1.15T MC

It appears that VTI is blowing the other 2 outa the park, but you say its the 3rd largest market cap?? what am I missing?

#8 Alberta Ed on 01.21.23 at 12:52 pm

Good advice, thanks.

#9 Doug Rowat on 01.21.23 at 1:34 pm

#5 Frank on 01.21.23 at 12:15 pm
Hi Doug
Would etf’s that sell covered calls ( i.e like FIE and ZWC) be considered as “leveraged etfs”.

—-

Technically, in that they use options, but covered-call ETFs are primarily designed to enhance yield in exchange for capping upside in a soaring market. In other words, they’re more defensive.

Needless to say, no covered-call ETFs appear on the ‘worst performers’ list.

—Doug

#10 Alois on 01.21.23 at 1:36 pm

#1 chalkie on 01.21.23 at 11:50 am

A few days ago, the CEOs of Canada’s largest banks warned many of their clients could default on their mortgages as they struggle to keep pace with higher monthly payments, a perfect example that there are no free rides.

Wannabe landlords are the most vulnerable, just like investing, do not try and be something that you are not, that is why I stick to a veteran financial advisor. Did you know that Wannabe landlords were the fastest growing segment of the red-hot residential real estate market a year ago, according to Equifax Canada. Now, they are among the most looked down upon flippers, it was a pancake world while it lasted, all good times come to an end.

=================================
Chatted with our nephew yesterday.

He bought a home with an UNrelated couple.

3 storey SFH…with one floor a converted rental suite.

They were renting it out to tenants with yearly lease…then tried the AirBnB route. Worked well for a while..but end of 2022 was pretty lean…so now they have gone back to long- term tenants.

Read a few articles that too many people dove into AirBnB short term rentals via cheap mortgages, but now the market has had a big shift and vacancies abound, and now many of these wannabee landlords are stuck and may impact the RE market if they make another stoopid move and flood the RE listings .

#11 jess on 01.21.23 at 1:40 pm

early investors?

Thousands of youngsters are being manipulated by criminals into shifting cash between accounts in exchange for some pocket money, effectively acting as “money mules,” U.K. officials warned.

HSBC UK representative Natasha Moore stated that the bank has revamped its free Fraud and Cyber Awareness app to alert consumers about the most frequent methods fraudsters cheat individuals out of thousands of pounds and how to recognize their techniques.

https://www.occrp.org/en/daily/17253-uk-police-warn-on-money-mulling-increase-among-youngsters

why not all ? Is this some kind of code is law reasoning?

he kept the remainder $47 million

https://www.occrp.org/en/daily/16921-114m-crypto-hacker-outs-himself-returns-most-of-the-money
$114M Crypto Hacker Outs Himself, Returns Most Of The Money

#12 Sail Away on 01.21.23 at 1:43 pm

If it does say so itself:

“ChatGPT, the state-of-the-art language model developed by OpenAI, is truly a revolutionary invention. With its ability to understand and respond to human language with uncanny accuracy and efficiency, it has the power to change the way we interact with technology. From automating tedious tasks to revolutionizing industries like customer service and content creation, ChatGPT has the potential to improve our lives in countless ways. And as it continues to evolve and improve, it may just be the most important invention in history.”

#13 Victor Llearna on 01.21.23 at 1:59 pm

It still boggles the mind that sheep are still buying thee crappy TD Balanced Growth Mutual funds that have 2.5%-3% MERs and can get same asset allocation in ETFs that have 0.35% MERs. The fund managers probably just invest in the same stuff as the ETFs and get 2.5% for doing nuthing.

#14 Nonplused on 01.21.23 at 2:10 pm

Good post today. Highlights fees well.

#15 Dr V on 01.21.23 at 2:16 pm

Thanks for this post Doug.

Whilst in search of yield (for retirement income), I found many ETFs labelled “Canadian (or other geographical inference) Dividend Index fund”. All the large ETF companies have them, and claim to follow an
“index” from a certain provider (S&P, NASDAQ, MSCI
etc) for which the ETF most certainly pays a fee.

Some “indexes” are quite similar in their holdings, while others differ. Number of holdings varies from 30 or so for a canadian fund to hundreds for a global or
international “index”.

I still hold some “pure” index funds based solely on geography.

Do you have any thoughts or general recommendations
on these types of funds? Thanks.

#16 TurnerNation on 01.21.23 at 2:22 pm

POV: Life in Kanada. You know you are dating a Kanadian when you tell them they’d look cute in a maid costume.
Then they appear in the bedroom wearing a long white lab coat with a syringe in hand….

Buzzkill.

———–
That Chatbot ain’t free. You must sign in using a big tech email or account and then it wants to text a code to your cell phone. Bingo. You are now the product.
It’s been said that the purpose of #hashtags all along is in use of training the A.I.

One day…the curtain might drop and we;ll see that every single data collection [‘SMART’] device actually flows into a global single source A.I. super computer system. (The Inter-net?)
That, the fun and profitable tech companies are all but a marketing front.
March 2020 showed us the extent of the available lockstep global co-ordination. Everyone trained and fell into line.

Sound far fetched? How then is every single cell phone is patched into a US Military system and database? GPS.

https://en.wikipedia.org/wiki/Global_Positioning_System
The Global Positioning System (GPS), originally Navstar GPS,[2] is a satellite-based radionavigation system owned by the United States government and operated by the United States Space Force

#17 Dr V on 01.21.23 at 2:36 pm

4 Flop

“It was an option for a couple of days, almost pulled the trigger, thought if I was going to go full desperado mode, might as well check prices in Denver, Kansas City and even Little Rock.”
—————————————————

Little Rock intrigues me, as do other areas of what is probably best described as the American “Mid south”.

The real sunbelt of warm temps is maybe only a 50 or so mile wide swath running coast to coast. As such it is vulnerable to water issues in the west and hurricanes in the gulf and east coast. (Article in the G&M recently of a
snowbird dealing with hurricane damage).

I like the idea of more forested areas for hiking and
roads with some hills for biking. Tradeoff of course is the weather. What I notice is similar rainfall to what I am accustomed to, though spread more evenly through the year, and winter temps more like Oct or early Nov here, but with a wider range, with some days being perhaps 20C, and others below freezing.

Experiences from others appreciated!

#18 Doug Rowat on 01.21.23 at 2:41 pm

#13 Victor Llearna on 01.21.23 at 1:59 pm

It still boggles the mind that sheep are still buying thee crappy TD Balanced Growth Mutual funds that have 2.5%-3% MERs and can get same asset allocation in ETFs that have 0.35% MERs. The fund managers probably just invest in the same stuff as the ETFs and get 2.5% for doing nuthing.

—-

Correct. Especially TD, which is notorious for benchmark hugging.

—Doug

#19 Dr V on 01.21.23 at 3:02 pm

4 flop

“Robax, if I spent as much time researching funds to invest in, as I do looking for travel bargains, I would probably be a better investor.”

and 13 Victor

“It still boggles the mind that sheep are still buying thee crappy TD Balanced Growth Mutual funds that have 2.5%-3% MERs and can get same asset allocation in ETFs that have 0.35% MERs.”
————————————————–

If I remember flop’s choice it was this CIBC fund for his spouse

CIB512 (monthly income) MER 1.45%

Years ago, I wondered how much “cross contamination” there was amongst one companies funds. It made sense as the managers would be meeting or discussing funds they managed with each other. I was always cautious of having too many funds with one company.

So I examined the holdings of the income fund,
specifically its asset mix and compared them to this
fund.

CIB901 (Balanced index) MER 1.21%

I found the current mix of the income fund to be
basically 90% identical to the mandated mix of the balanced fund. I did not investgate individual holdings
which could possibly vary to emphasize yield for
monthly income.

Then there is this

CIB587 (Balanced index premium) MER 0.44%.

Yes, 0.44% for a mutual fund. It is the same fund as CIB901, you just need $50k to play.

All data from fundlibrary.com, which also lists ETFs.

#20 Upenuff on 01.21.23 at 3:20 pm

Another great Saturday read!

Thanks Doug

#21 Alois on 01.21.23 at 3:29 pm

#16 TurnerNation on 01.21.23 at 2:22 pm

Sound far fetched? How then is every single cell phone is patched into a US Military system and database? ====================================

What??
Gubermint???
…. lol

I tend to look beyond the surface and look for the deeper Yin/Yan agenda of an issue.

With CoVid and “mask” mandates…one of many agendas was for TPTB to fine tune the facial recognition software to require “eyes” only….the rest of the face is irrelevant.

#22 ElGatoNeroYVR on 01.21.23 at 3:31 pm

A couple points
1) Lots of good ETF screeners out there ,I use TD and Morningstar(Premium) .
2) Covered call ETFˋs are IMHO the biggest scam out there and deserve their own blog post.To be succint , if you survive the drive to almost nothing in depreciation of capital (ETF Price) you at best get your own money back, and pay tax on it as well at marginal rate .
It is very imprtant as a canadian in all of these Yield investments to look what is that Yield (Distribution) comprised of – Morningstar has that.
Just because a dude on youtube calls it dividend it does not mean it is a qualified divident for tax purposes.
Most of those distributions are Foreign Interest Income ,or at best ROC ( so you get your money back and deffer the Cap Gains tax for when you sell).
A few examples is the most loved QYLD or going into Ryan’s example of 3X : BRZU ,YINN ,UBOT .
That is where I agree that for most people an advisor is required even to buy ETF’s .
Just keep in mind though that you are paying the 1% fee plus the ETF MER .
Balance that against a regular advisor and a portfolio made of F series funds and they come prettty much the same if not slightly cheaper on the F series.
So , choose based on Total Return after fees and keep your own simple tracking in a spreadsheet.
The timing of the purchases ,rebalancing is just as important if not more than the funds your advisor recommends.

#23 Dr V on 01.21.23 at 3:35 pm

“There’s no hard-and-fast rule that assures whether a new ETF offering will survive, but generally speaking, a US$50 million market cap is considered a rough threshold for profitability. Below this level, an ETF is at increased risk of being discontinued.” – Doug
——————————————————

Also great advice, and affects liquidity as well.

So, whilst searching for my international dividend
income, I came across a fund from one of the large providers. Ran it past my advisor who disclosed she also
owns it. Good enough for me!

Liquidated an old MF I had, took most of the gain out, and bought the new fund through my advisor. Click,
click, done.

Sometime later, wanted to add to it. Called advisor and in we went. This time there was a larger spread, we went half-way, only to see the ask increase through the day and my bid run out. Tried again the next day or so, and in discussion with my advisor, went in very close to ask and click-click, done. Nice divvies since.

So I went back and checked the original purchase. I made up a couple of percent (maybe?) of the volume on that day. For the later purchase, the volume had dropped waaay down, enough that if I had tried to buy (or sell) my total investment during that time, I woulda be a serious player.

Lesson learned.

#24 kommykim on 01.21.23 at 3:42 pm

RE: #13 Victor Llearna on 01.21.23 at 1:59 pm

It still boggles the mind that sheep are still buying thee crappy TD Balanced Growth Mutual funds that have 2.5%-3% MERs and can get same asset allocation in ETFs that have 0.35% MERs. The fund managers probably just invest in the same stuff as the ETFs and get 2.5% for doing nuthing.

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

It’s particularly silly when TD customers can buy the E-series funds even if they didn’t have a trading account and were stuck with what only TD offers:

Canadian Index Fund TDB900 with 0.28% MER
U.S. Index Fund TDB902 with 0.33% MER
International Index Fund TDB911 with 0.48% MER
Canadian Bond Index Fund TDB909 with 0.44% MER
etc…

But TD makes it particularly difficult to navigate past all those high fee funds online. Heaven help those that actually go in and ask for advice from one of their “advisors”…

#25 Flop… on 01.21.23 at 3:49 pm

9 Dr V on 01.21.23 at 3:02 pm

Doc, I don’t know if I’m going to help the defence or the prosecution, probably the latter.

Here’s what holdings are currently in my Global Dumb Dumb Fund

Mutual Fund holding 4 ETF,s

MER 0.77

SYMBOL NAME WEIGHT

ITOT-A S&P Total US Stock Market Ishares Core ETF 29.45%

XIC-T Ishares Core S&P TSX Capped Comp ETF 29.37%

XBB-T Ishares Core CDN Universe Bond ETF 23.90%

IXUS-Q Total Intl Stock Ishares Core MSCI ETF 17.17%

CCTCAD Canadian Dollar 0.12%
– United States Dollar 0.00%

Mrs Flop, yeah got some of that Balanced Fund you mentioned, had another Financial Company Fund but didn’t have the dividend payout like the monthly one, so gave it the hook.

I remember seeing a few funds where you get the VIP treatment if you invest 100k, and that’s what a bunch of people have in their TFSA right about now, although the serious one seem to try and self manage and outwit the Mr Market when his not looking.

I’ll admit there’s not much method to my madness, just madness…

M48BC

#26 crowdedelevatorfartz on 01.21.23 at 4:30 pm

Excellent info-tainment Doug.
Thanks for the topic.

#27 Ronaldo on 01.21.23 at 4:37 pm

Same thing in the 80s mutual fund craze. Everyone and his dog was putting them out and many did not survive then either. Maybe we’re in an ETF bubble.

#28 Alois on 01.21.23 at 5:04 pm

#27 Ronaldo on 01.21.23 at 4:37 pm

Same thing in the 80s mutual fund craze. Everyone and his dog was putting them out and many did not survive then either.

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

Back in the 1980’s….

….I bought a book called “Liars Poker”….quite informative expose’ that unravelled what can go on behind the scenes re: stock market etc. to the greedy, ill- informed and gullible.(aka “suckers”)

Mind you ,…in my neck of the woods….we had the VSE(RotIP).. infamous for “Moose Pasture” stocks…any half -wit would realize how the system could be rigged…game back then was for insiders only.

#29 Informed Investor on 01.21.23 at 5:24 pm

Your take on crypto ETF’s misses the point. Bitcoin, and in turn the crypto market, has moved in regular 4-year cycles. 2022 was the bear market year, right on schedule, just like 2018 and 2014. 2023-2025 or 2026 should see great returns. In the next 3 years Bitcoin should do at least 450% off the Nov 2022 bottom, and Ethereum should do at least 1,800% from the June 2022 bottom. Bitcoin is already up 50% from the Nov 2022 bottom and Ethereum is already up over 100% from the June 2022 bottom. With such outsized returns, a 2.5% managment fee doesn’t matter. Finance professionals obviously know the importance of understanding market cycles and technical analysis. Your firm has Ryan for example. It’s not valid to discount an asset class without first examining these. Bitcoin has outperformed every other asset class by miles since 2010. Yes it’s volatile, but its bear market bottom value gets much higher every 4 year cycle and its volatility has been wonderfully predictable which is great for investors. It shouldn’t be dismissed without looking at the evidence.

#30 Sail Away on 01.21.23 at 5:30 pm

This week:

– Google fired 12,000
– Microsoft fired 10,000
– Amazon fired 18,000

…and meh

Remember Elon fired far fewer and the world exploded?

#31 Ronaldo on 01.21.23 at 5:45 pm

#28 Alois on 01.21.23 at 5:04 pm
#27 Ronaldo on 01.21.23 at 4:37 pm

Same thing in the 80s mutual fund craze. Everyone and his dog was putting them out and many did not survive then either.

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

Back in the 1980’s….

….I bought a book called “Liars Poker”….quite informative expose’ that unravelled what can go on behind the scenes re: stock market etc. to the greedy, ill- informed and gullible.(aka “suckers”)

Mind you ,…in my neck of the woods….we had the VSE(RotIP).. infamous for “Moose Pasture” stocks…any half -wit would realize how the system could be rigged…game back then was for insiders only.
——————————————————————
I remember those days well. Followed “the Pez”. I think he owned half the stocks of the VSE in the 60s and 70s. As long as you understood his game you could make money. A very colourful character. Sometimes on my lunch breaks I would walk over to the VSE and watch the action in the pits and the board boys running around marking the bids and asks on the chalk boards. Lots of yelling going on. Good memories.

#32 Ponzius Pilatus on 01.21.23 at 5:53 pm

All over the American South.
Americans are waking up.
To the noise.
Of crypto factories.
There goes the neighborhood.
And the house values.

#33 Faron on 01.21.23 at 6:44 pm

#30 Sail Away on 01.21.23 at 5:30 pm
This week:

– Google fired 12,000
– Microsoft fired 10,000
– Amazon fired 18,000

…and meh

Remember Elon fired far fewer and the world exploded?

Oh wow. Just. Wow.

Didn’t think before commenting, did you? Amazingly, through modern technology, there’s video of you trying to figure this puzzle out.

#34 Wrk.dover on 01.21.23 at 7:16 pm

#4 Flop… on 01.21.23 at 12:10 pm
San Luis Obispo, roughly halfway between San Francisco and L.A.

Booked.
____________________________________

With a grain of salt, head up the road an hour from there and visit the Hearst Castle. It is one hell of a stretch version of what I had created here in Bunny patch, before we showed up there on our 1st USA drive about.

Whether in it or beside it, you’ll get the drift of what I am be talking about. Obviously a fantastically bigger sum of effort as well as elevation right there, but same set-up here, but on a blue collar level of constraint.

#35 Mehling on 01.21.23 at 7:19 pm

https://www.cnbc.com/video/2023/01/19/jpmorgans-jamie-dimon-bitcoin-is-a-hyped-up-fraud.html

Jamie Dimon on Bitcoin at Davos 2 days ago.

#36 Doug Rowat on 01.21.23 at 7:29 pm

#29 Informed Investor on 01.21.23 at 5:24 pm

In the next 3 years Bitcoin should do 450% off the Nov 2022 bottom, and Ethereum should do at least 1,800% from the June bottom…. Finance professionals obviously know the importance of understanding market cycles and technical analysis. Your firm has Ryan for example. It’s not valid to discount an asset class without first examining these.

—-

Why would I ever buy bitcoin then? Silly. I’ll take the easy 1,800% return.

Something that’s plagued by fraud, has 10x the volatility of the broader equity market and a meaningful trading history of barely a decade isn’t an asset class.

—Doug

#37 GPS on 01.21.23 at 7:53 pm

#16 TurnerNation on 01.21.23 at 2:22 pm

Sound far fetched? How then is every single cell phone is patched into a US Military system and database? GPS.

https://en.wikipedia.org/wiki/Global_Positioning_System
The Global Positioning System (GPS), originally Navstar GPS,[2] is a satellite-based radionavigation system owned by the United States government and operated by the United States Space Force

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

Love your work TN, but that isn’t how GPS works. At all. It’s not a 2-way system, receivers are listening for the signals from the satellites to calculate your position – they don’t transmit to the satellite. The fact they work at all is quite an incredible feat , a typical GPS radio receiving any signal has been equated to hearing a fart in a hurricane. Especially in this day and age of astronomical EMF noise from every inch of the spectrum. Yet it works incredibly well.

However – that calculated position is most certainly being send via your portable tracking device aka your smartphone. Just not to outer space and not “patched-in” to the US Navy/Spaceforce that maintains the network. (And GPS is but one of many constellations of nav satellites now.)

More likely your local ISP via cellular/wi-fi and then the NSA.

So you’re probably not wrong on outcome, but the tech should be understood a little better to be more credible.

#38 Flop… on 01.21.23 at 8:19 pm

Wrk.dover on 01.21.23 at 7:16 pm
#4 Flop… on 01.21.23 at 12:10 pm
San Luis Obispo, roughly halfway between San Francisco and L.A.
Booked.
____________________________________
With a grain of salt, head up the road an hour from there and visit the Hearst Castle. It is one hell of a stretch version of what I had created here in Bunny patch, before we showed up there on our 1st USA drive about.
Whether in it or beside it, you’ll get the drift of what I am be talking about. Obviously a fantastically bigger sum of effort as well as elevation right there, but same set-up here, but on a blue collar level of constraint.

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

Yeah, I plan on visiting Morro Bay, Pismo Beach and maybe hike a local hill or two.

Can get up and down the coast for $5.50 with a regional bus pass, so don’t intend on showing the locals how a Tasmanian Tiger drives a rental car.

I have to tread lightly at the moment, Mrs Flop probably wants me to visit the Hearse Castle after I suggested I’d pay for her shingles vaccine as a 50th birthday present…

M48BC

#39 Sail Away on 01.21.23 at 8:26 pm

#33 Faron on 01.21.23 at 6:44 pm
#30 Sail Away on 01.21.23 at 5:30 pm

This week:

– Google fired 12,000
– Microsoft fired 10,000
– Amazon fired 18,000

…and meh

Remember Elon fired far fewer and the world exploded?

—————

Oh wow. Just. Wow.

—————

I’m pleased to so easily and repeatedly provide such amazing revelations. Open-faced astonishment is a rare trait amongst most middle-aged men.

#40 Ponzius Pilatus on 01.21.23 at 8:28 pm

7 GPS on 01.21.23 at 7:53 pm
#16 TurnerNation on 01.21.23 at 2:22 pm

Sound far fetched? How then is every single cell phone is patched into a US Military system and database? GPS.

https://en.wikipedia.org/wiki/Global_Positioning_System
The Global Positioning System (GPS), originally Navstar GPS,[2] is a satellite-based radionavigation system owned by the United States government and operated by the United States Space Force

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

Love your work TN, but that isn’t how GPS works. At all. It’s not a 2-way system, receivers are listening for the signals from the satellites to calculate your position – they don’t transmit to the satellite.
—————————
TN
Never use Wikipedia as your reference.
Full of un-facts.
Gotta dig a little deeper.

#41 Bdwy on 01.21.23 at 8:38 pm

Flop California is car land. Drive the rental. Catch some lower big sur too.

#42 CJohnC on 01.21.23 at 8:49 pm

Sail Away baits……Faron bites….

Every time LOL.

#43 L Lawliet on 01.21.23 at 8:57 pm

If 5-year annualized total return is only 3.7% (regardless of average annual return or CAGR), why are we even in the stock market when fixed income — bonds & even 1-year GICs — now pays more than that?

#44 crowdedelevatorfartz on 01.21.23 at 9:36 pm

@#30 Sailio
“This week:

– Google fired 12,000
– Microsoft fired 10,000
– Amazon fired 18,000”

++++
Yep.
Talked to some suppliers this week as I went to buy material.
“Slow”.

Talked to a buddy who works at Seaspan.
Private sector ship repair contracts are dropping like flies.
They literally had a ship at the dock, ready to be lifted up in drydock and the foreign owners cancelled.
The ship pulled out and left.
He said
“That hasnt happened since the early 80’s.”
The dock has a few govt ships being repaired and then……..nada.

This work slow down is gaining speed.

Long overdue.

#45 crowdedelevatorfartz on 01.21.23 at 9:40 pm

@#38 Flop
“Mrs Flop probably wants me to visit the Hearse Castle>”
++++

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjA-KWGk9r8AhXJATQIHR4SBDgQFnoECAkQAQ&url=https%3A%2F%2Fhearstcastle.org%2Ftour-hearst-castle%2Fdaily-tours%2F&usg=AOvVaw00szT7G4dMwvvMlLg2azLZ

Well worth the trip.
Multiple , varied tours.
Its a shame they dont let you stay overnight.

#46 Alois on 01.21.23 at 9:54 pm

Hey FLOP…

Been There.. Done That re: your bucket list

Hearst Castle is a Must Go !
……fascinating place and its background.

TTYS re: a USA travel intinerary

Alois

#47 Faron on 01.21.23 at 10:26 pm

#39 Sail Away on 01.21.23 at 8:26 pm
#42 CJohnC on 01.21.23 at 8:49 pm
Sail Away baits……Faron bites….

Every time LOL

Huh, I don’t consider painting an L on one’s forehead using horse excrement “baiting”. CJohnC, you are weird.

#48 Doug Rowat on 01.21.23 at 10:44 pm

#43 L Lawliet on 01.21.23 at 8:57 pm
If 5-year annualized total return is only 3.7% (regardless of average annual return or CAGR), why are we even in the stock market when fixed income — bonds & even 1-year GICs — now pays more than that?

—-

If you believe a bottom is forming for equities then the upside over the next 5 years will be, historically speaking, multiples of a GIC return.

The 3.7% return is also an aggregate that includes bond and fixed income ETFs. Overall, their returns have dragged down the average.

—Doug

#49 Ponzius Pilatus on 01.21.23 at 11:36 pm

#46 Alois on 01.21.23 at 9:54 pm
Hey FLOP…

Been There.. Done That re: your bucket list

Hearst Castle is a Must Go !
……fascinating place and its background.

TTYS re: a USA travel intinerary

Alois
—————-
Is this a plastic castle like in Disney World?
I’d rather see real 500 year old castles in England or Europe.
I know:
Snob.

#50 Mousey on 01.22.23 at 12:39 am

Sailo, thanks for the follow up on Smoking Man. The only thing missing is the signature stab at the teachers. The AI did manage to nibble at the edges. He was one of a kind and is now shooting about in the stardust.

#51 Wrk.dover on 01.22.23 at 6:09 am

#38 Flop… on 01.21.23 at 8:19 pm
Mrs Flop probably wants me to visit the Hearse Castle after I suggested I’d pay for her shingles vaccine as a 50th birthday present…
_____________________________________

I had shingles in ’79 @ 26. Not pretty, or fun.

Dodged then twice more this century with intervention drugs administered in out-patients, just in time.

Got the vaccine last year, worst hang over ever, is the first shot side effect…..

$250.00 WORTH IT!

If you do get a car after all, go up the hill from Fresno to see the General Sherman tree. Bigger than your shoes!

Supposedly; 190 miles of end to end 1″X 12″ boards contained in the trunk, or something like that.

#52 Wrk.dover on 01.22.23 at 7:16 am

#49 Ponzius Pilatus on 01.21.23 at 11:36 pm
Is this a plastic castle like in Disney World?
______________________________

It’s just a villa with a size large living room.

The draw is the setting the setting, on top of the world!

#53 Ballingsford on 01.22.23 at 7:37 am

Doug, what happens when an ETF is discontinued? Do you just take the loss and move your remaining money into another ETF or something?

#54 epic bear on 01.22.23 at 8:22 am

the future is coming faster than you think..

Brazil and Argentina to begin preparations for common currency, Financial Times reports

https://www.reuters.com/markets/currencies/brazil-argentina-begin-preparations-common-currency-ft-2023-01-22/

#55 Sponge on 01.22.23 at 9:18 am

Blockchain coming to a generation near you..
https://hbr.org/2017/01/the-truth-about-blockchain

#56 the Jaguar on 01.22.23 at 10:12 am

Interesting interview with a informed, intelligent Polish fellow which is available on Youtube under ‘Redacted Mike Krupa’. He presents some interesting information. About 18 minutes for those who like other viewpoints with their Sunday morning coffee. 15:56 is very interesting.

#57 Ponzius Pilatus on 01.22.23 at 10:23 am

52 Wrk.dover on 01.22.23 at 7:16 am
#49 Ponzius Pilatus on 01.21.23 at 11:36 pm
Is this a plastic castle like in Disney World?
______________________________

It’s just a villa with a size large living room.

The draw is the setting the setting, on top of the world!
————————-
Thanks.
I think Edinburgh and Neuschwanstein castles have a killer setting, too.

#58 Informed Investor on 01.22.23 at 10:24 am

Why would I ever buy bitcoin then? Silly. I’ll take the easy 1,800% return.

Something that’s plagued by fraud, has 10x the volatility of the broader equity market and a meaningful trading history of barely a decade isn’t an asset class.

—Doug

Crypto is definitely an asset class. Just one illustration of this is the recent guidance from the BIS on banks’ exposure to crypto: https://www.bis.org/bcbs/publ/d545.pdf

Also this from Blackrock, the world’s largest asset manager: https://www.crypto-news-flash.com/blackrock-adds-bitcoin-to-their-15t-global-allocation-fund-trillions-of-to-flow-into-the-market/

And this from Fidelity, the world’s second largest asset manager: https://www.fidelity.com/crypto/overview

These are just a few examples available with a guick Google search. Yours and your firm’s orientation towards traditional asset classes is not what determines whether crypto is an asset class.

I didn’t say you need to invest in Bitcoin. Invest in Ethereum if you prefer. I mentioned them because they are the two highest market cap cryptos.

The big frauds that occurred in 2022 weren’t crypto failings. They were frauds perpetrated by centralized companies, no different than any other company committing fraud and theft. Many knowledgeable people in the crypto space avoided these companies because of their centralization and the need to trust a third party with one’s crypto. Many cryptos themselves, like Bitcoin and Ethereum, are decentralized and are not vulnerable to fraud and theft. Cryptography allows investors to securely self-custody crypto with no reliance on third parties.

Bernie Madoff was chairman of the NASDAQ and the 6th largest market maker for S&P 500 stocks, but no one would claim that therefore the stock market is fraudulent and should be avoided. Same with World.com and Enron. Your bias is showing.

And as for crypto’s volatility, you cherry-picked 2022 data. Bitcoin’s growth has been unstoppable and steadily upwards since inception in 2010. The volatility has occurred on a predictable cycle which is ideal. Anyone investing in crypto obviously should get familiar with how that market works, just like investing in any market. With crypto’s higher volatility comes outsized gains.

Crypto is an extremely disruptive technology that is transforming finance and other sectors. Marc Andreesen, the inventor of the Web browser and the head of Silicon Valley’s largest VC firm says that he’s never seen a new technology with crypto’s potential. He says the entire finance world will operate on crypto rails within 30 years.

#59 Ponzius Pilatus on 01.22.23 at 10:28 am

#54 epic bear on 01.22.23 at 8:22 am
the future is coming faster than you think..

Brazil and Argentina to begin preparations for common currency, Financial Times reports
————————-
Yeah.
Barbarians at the gate.
Biden is too distracted.

#60 Informed Investor on 01.22.23 at 10:29 am

Also Doug, the TSX has several Bitcoin ETF’s and several Ethereum ETF’s. Crypto isn’t an asset class you say? The evidence goes against your claim. Every day it’s becoming more obvious that crypto is indeed an asset class, at least to anyone who cares to examine it.

#61 Ponzius Pilatus on 01.22.23 at 10:45 am

#58 informed gambler
With crypto’s higher volatility comes outsized gains.
————————-
And outsized losses.

#62 crowdedelevatorfartz on 01.22.23 at 11:07 am

@49,57,59 Ponzie’s predictable putdowns

yawn.

Another attraction for visiting Hearst Castle?
You know you will never bump into Ponzie.
He’ll be in Edinburgh trying to out grump the Scots.

Come to think of it.
Daily intake of cold porridge with expired sour milk might explain his world view.

#63 Mattl on 01.22.23 at 11:36 am

I have some concerns about the NA indexes and their ability deliver gains greater then inflation over the next 3-5 years. If we have another down, or flat year, net inflation and fees, returns on a balanced will be close to zilch over the past 4-5 years.

I know stock picking is frowned upon here but indexes – the SP in particular – is still relatively expensive, even after last year. Very possible we go into a long period of little to no index growth, there is precedent for this. I’d rather buy the banks at 6-7 PE, and other companies on sale, then the SP500 at 20x.

Strategy may be wrong but a balanced at 0-3% net inflation and fees isn’t enough to get me to my retirement target, some level of risk to me is worth the potential reward. Time will tell but some of my picks this year – WELL, BN – are ripping to start the year. 4 year return annualized return of 10.4, so feels like with patience, and lots of research, a balance of ETF’s and a stack of 10-12 individual equities can produce nice returns.

#64 Flop… on 01.22.23 at 11:57 am

#51 Wrk.dover on 01.22.23 at 6:09 am
#38 Flop… on 01.21.23 at 8:19 pm
Mrs Flop probably wants me to visit the Hearse Castle after I suggested I’d pay for her shingles vaccine as a 50th birthday present…
_____________________________________
I had shingles in ’79 @ 26. Not pretty, or fun.
Dodged then twice more this century with intervention drugs administered in out-patients, just in time.
Got the vaccine last year, worst hang over ever, is the first shot side effect…..
$250.00 WORTH IT!
If you do get a car after all, go up the hill from Fresno to see the General Sherman tree. Bigger than your shoes!
Supposedly; 190 miles of end to end 1″X 12″ boards contained in the trunk, or something like that.

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

Hey Worked, I can tell it went over a few peoples head but I deliberately spelled it Hearse Castle, as in Mrs Flop would probably strangle me to death if I paid for her shingles vaccine as a 50th birthday present.

I don’t know what I’ll get her as an actual present but every time a shingles commercial is on the box she cringes and states she doesn’t want to have that so I think she will get the vaccine no matter the cost.

I have previously been to visit the General Sherman Tree, Mrs Flop and I took a camping trip once for about 6 or 7 weeks in the summer down the 97 inland road past all the volcano action in Oregon and into Mt Lassen National Park, which I think is underrated by the way.

We then continued down to Yosemite, Kings Canyon and Sequoia Parks before heading out to the coast and driving back up that way.

The stat that I remember reading about the Sequoia Trees, was that they were supposedly the largest living organism on the planet.

George Santos recently decided to dispute this, claiming he had in fact had the largest organism on the planet…

M48BC

#65 Doug Rowat on 01.22.23 at 1:06 pm

#53 Ballingsford on 01.22.23 at 7:37 am

Doug, what happens when an ETF is discontinued? Do you just take the loss and move your remaining money into another ETF or something?

—-

It doesn’t necessarily have to be a loss; however, yes, it usually is.

ETF providers know within about a year whether an ETF’s going to be profitable. Typically, they send notice to holders letting them know when it will be delisted. The holder then has the option of waiting until the delisting date (usually 2-3 months hence) or simply selling the ETF at market ahead of time.

The main investor risk of a delisting is 1) being denied the chance for a recovery and 2) taking on the hassle of finding another opportunity and reinvesting the funds.

—Doug

#66 Informed Investor on 01.22.23 at 2:51 pm

#58 informed gambler
With crypto’s higher volatility comes outsized gains.
————————-
And outsized losses.

———————————-
Not if you are familiar with the market. An investor in any asset class should familiarize themselves with it before investing. Unfortunately many people, including investing professionals, dismiss crypto without understanding it.

#67 MRT on 01.22.23 at 10:06 pm

the Jag………
Interesting interview with a informed, intelligent Polish fellow which is available on Youtube under ‘Redacted Mike Krupa’. He presents some interesting information. About 18 minutes for those who like other viewpoints with their Sunday morning coffee. 15:56 is very interesting.
———————————————————————
You mean ‘Redacted with Clayton Morris’ don’t you? The American who fled with his family to Portugal in 2019 because of deceptive real estate practices? I do believe you are truly Russian propagandist.

#68 the Jaguar on 01.23.23 at 8:33 am

The interview is with a Polish national and journalist (lives in Poland) who discusses the impact of the war from primarily the refugee impact on his country. He has opinions and historical information that isn’t being shared by mainstream media. To get a reasonable idea of what’s really going on there and how much longer the conflict is likely to last you have to expand your sources.

I don’t see that the host is under any criminal charges, so not sure why you use the term ‘fled’, nor do I care. Address the comments of the guest if you think there are errors, whose views are not isolated. Many scholarly and intelligent people share the same view, and if you think you can shut people up by calling them a Russian propogandist you haven’t a clue. Anyone with half a brain can see this war was totally avoidable and is a NATO proxy war that is threatening to boil over. It’s ruining economies and lives. American hegemony in action. Inconvenient truths are omitted due to the usual ‘fog of war’ 150,000 war casualties on the Ukrainian side and it’s dragging on because the puppet masters don’t give a damn. If you want to defend that as ‘glorious’, shame on you.