Was just at Canadian Tire and saw all the back-to-school stuff out for sale, and realized that this is the first time I won’t be going back to school in September! :(
Some Prius owners sell their used cars for a profit, hopefully putting to rest for good the belief that hybrids are somehow doomed to face higher depreciation.
Michael James comments on cap-weighting vs. fundamental weighting. I wonder not only if fundamental indexing can provide enough return to cover the costs, but also if they’re not trading one problem for another. One example of the problems with cap weighting is that when you get big bubbly stocks like Nortel back in the day, those stocks end up taking up huge proportions of a cap-weighted index, and the more over-valued those companies get, the bigger their share in the index! But that problem of lack of diversification doesn’t seem to be fixed by fundamental weighting from a 1-minute look at the two indexes: instead of having giant stocks, now we have giant sectors, with the fundamental index putting a 45% weight on financials, when the cap-weighted index was already a pretty hefty 30%.
Scott Adams puts out some quasi-serious ways for the US to get out of its budget crisis. For the carpool lane one, that’s actually a pretty good idea. Thanks to an experiment with hybrid cars, we know that being able to travel solo in carpool lanes is actually a valuable feature some people are willing to pay money for. You see, at one point LA (among other cities) gave a special sticker to hybrids to allow them to use the carpool lanes, as an incentive to get people to drive cleaner cars. Then, the quota for that program was hit and they stopped giving out the stickers. But the stickers were good for a few years and most importantly transferable, so what you saw happen is that cars with HOV stickers went for a premium over comparable cars — a few thousand dollars, perhaps as much as $4k. And that’s just for a few years of HOV access. So maybe there’s a group of people out there willing to pay on the neighbourhood of $1k/year to get solo HOV access, let’s ballpark it at 1% of a metro area’s population. Across a few major cities, that could hit a billion in tax revenue. Yes, a drop in the bucket for the problems facing the US budget, but a start. [And also, perhaps at the wrong level of government]
One of the Ford annoyances in Toronto commented on closing libraries, saying “And my constituents, it wouldn’t bother them because they have another library two miles one way and two miles the other way.” I’m all for eliminating waste in the city budget, but I’ve got a soft spot for libraries (and not only because Wayfare’s a librarian). Being no more than “two miles” (3.2 km) is about right — his ward is only about 6 km across, so assuming there are at least two libraries in it, that’s not far off. But 3 km is a long way to be from a library. Remember that the biggest users of libraries are not driving: the poor, the young, and I guess the cheap. Toronto has 99 libraries. Is that too many? It’s tough to say, but Toronto has 625 elementary schools (public, catholic, french catholic — not counting other private ones) and 135 high schools. Approximately one library branch per high school sounds about right to me. I’ll also just quickly say that the branches are more than just a place to check out books, so they are important to maintain, and maintain throughout the city.
I heard again recently the bit of reassuring spin from CMHC that they’re totally cool because the average equity of their mortgage portfolio is 45%. And note that that includes equity gained by price appreciation. To me, that average is nearly meaningless because it doesn’t break it down regionally, or bin it by equity. The defaults occur at the margin, and if the distribution of equity/LTV is large, then there will be plenty of people put underwater by even a modest correction that trouble will follow. Just for a point of comparison I tried to look up what a similar figure from the US would have been and found that in 2007, Fannie Mae’s average equity of the mortgage portfolio was 41%. That does not make me feel reassured that things are that much better here in the great white north, land of the conservative banks. I’d do a post on the “Canadian Moral Hazard Corporation” except it’s been done (with that exact title in several places). Maybe I’ll dig into Genworth later in the summer if I find some time (that one I can at least short if it comes up particularly spotty).
“Environment Canada now even has media officers in Ottawa tape-recording the interviews scientists are allowed to give.” Oh! I think I found where we can cut back on the budget!
Corning reported results and it was pretty much what I expected: display glass is facing troubles, but the company is expanding its other business lines to (partially) compensate. Given the price it looks like the display issues may be priced in, and allow for some upside if/when the other business lines grow enough to be meaningful. Still no position, but with it under $16 I’m becoming more interested, and have put in a bid at $15; let’s see what happens.