medianet

Thursday, March 18, 2021

Why Canadians Think the USA is Terrific



We know a lot of Canadians who winter in the USA and/or visit a lot.  They love America - the weather, shopping, entertainment, restaurants, roads, etc etc.  "It's a great place, why is Canada so far behind?" they lament.  Having lived in the USA for 20 years recently and in Canada for about 40 years, I was a little puzzled by this absolute affection.

Well, I figured it out.  When you visit from Canada or spend 4 months in Florida during the winter, what do you do?  You shop, go to the beach, entertain yourself, eat out, drive around on the nice big roads...  These are all things that America does better than Canada.  What don't you do?  You don't interact with the government, you don't use the medical system, you don't go to blighted areas, you don't deal with natural disasters, you don't deal with insurance companies, you don't buy medicine, you don't deal with the justice system, etc.

These are the Achilles heels (both feet) of America:

  1. Governments at all levels are starved of cash and cannot provide adequate services.  Try lining up at the Social Service bureau, try getting a license at the DMV, try to get help on your taxes from the IRS.  Trust me, it is almost always a nightmare, and you feel sorry for the poor civil servants, who look like all they can afford for clothes is the bargain section at Walmart.
  2. Some areas of town are so blighted that you never go there at night and you keep your car doors locked if you go during the day.  Your American neighbors will advise you to get a gun for personal protection, in spite of the fact that these guns are almost exclusively used for suicides and family violence.
  3. The rules for health insurance and Medicare are almost undecipherable.  Did you get COBRA when you were laid off?  Did you turn 65 and stay on COBRA?  If yes, you will pay a penalty for Medicare for the rest of your life because you saved the government money.  And good luck if you get a bill from the hospital, it will be pages long, and show that you owe a lot even if you have insurance, and you will spend hours on the phone trying to whittle it down to something like your insurance deductible.
  4. Many areas of the USA like Texas routinely experience major natural disasters like tornados, hurricanes, and flash floods.  Yet the building codes do not mandate much in the way of protection.  If you get hit, your home will be featured on the 6 oclock news as they show the pieces floating down the street.  Your insurance company will then tell you that you are not covered for floods so tough luck.
  5. If you get an exotic disease or condition, your drugs may bankrupt you, in spite of whatever government or private drug insurance you bought.  In the USA, there are typically over 30 drug plans for the elderly on Medicare and you get to choose one a year and it may not cover your particular condition.  Better luck next year!
  6. Don't get involved in the justice system!  The conviction rate is over 99%.  So if you drive drunk, get into a fight, decide to make extra money selling drugs to friends, get into a family fight, you will go to jail for years and years if you get caught.  You will also get convicted even if you are innocent.  The prosecutor will offer you a deal: "plead guilty to this charge and you will get 2 years or go to court and the maximum sentence is 15 years and we will demand this punishment."  Unless you have the best lawyers, lots of money, and lots of luck, you will plead guilty even if you are innocent.
So yes, America is better than Canada in many ways, but it has a dark side that you never experience as a visitor.

Tuesday, November 17, 2020

I Deserve a Medal


 

We know that this pandemic requires us to limit our activity, limit our contact with people, wash our hands, and wear a mask.

I am a lazy introverted retired person who has followed these instructions to the letter and I deserve a medal for my efforts.

I try not to do anything other than watch TV, play around on the computer, eat and sleep.  Today, I watched the live feeds of the Northern Ireland Snooker championship and a Darts tournament on DAZN.  Other heroic deeds are my subscriptions to many paid streaming channels and watching the complete Borat 2 movie on Amazon Prime.  I  can also verify that the firmware is up to date on every electronic device that I own.

As an introvert, my interactions with people are usually brief.  I was never one for the hugs, small talk, and hanging around chatting.  In the last week, the only person in close proximity to me is my wife.  However, due to my regular intake of Metamucil and its gaseous effects, she may move out soon leaving me totally alone.

My new Apple Watch times my hand washings, which are frequent and at least 20 seconds long.  It does bug me a bit that my watch knows what I am doing with my hands at all times.

I wear a mask when indoors with people other than my wife.  I also contribute to mask wearing by glaring viciously at anyone not wearing a mask properly.  

I will be writing to the Governor General proposing a medal for all of us couch potatoes who are sacrificing during this pandemic.  Something like the "Award in Recognition of Heroic Feats of Laziness and Inactivity During the Pandemic".  The medal should feature a couch, a TV, a bag of chips, and a remote control along with the requisite Canadian symbols like the Maple Leaf.  No beavers allowed on this medal as it sends the wrong message.

Wednesday, November 4, 2020

America What Happened?



In the '60s, growing up in Montreal Canada, I thought the US was a great place.  They had the best TV, bicycles, toys, food, and music.  We had 5 channels, and three were from the USA (ABC, NBC, CBS).  I would watch Captain Kangaroo and Walt Disney with envy as they advertised a kid's American dream (a Schwinn bike).  I thought "wouldn't it be great to live in America?"

In the '70s and '80s, going to Canadian universities, I continued to think the US was great.  Look at those universities with their campuses, football teams, parties, and academic credentials.  Same thoughts as before.

In the '80s and '90s, working in Canada, I longed to go to the US to advance my career.  The US had world-leading companies in computers, telecom, aerospace.  I was stuck in Canada, doing my best but not getting far up the corporate ladder and certainly not feeling fulfilled.

So in the '90s, I had a chance to move to the USA and work, and boy, was it great.  Promotions, competing on a worldwide scale, high pay, low taxes, nice cars, a big house with a pool.  For 20 years I worked in the USA and it was exciting and financially rewarding.

But towards the end of my time there, I realized that the poor were badly treated and had no way to escape poverty due to the lousy public schools, low wages, and lack of health care.  I started seeing people openly carry handguns in restaurants.  We saw illegal immigrants scraping by and afraid of the border patrol.  I heard Obama called by the N-word.   I saw the justice system for what it was: a guaranteed conviction if you were charged due to the laws and scant legal aid.  I saw how I could get out of traffic tickets by just being a white male (stopped three times, no tickets).  I guess these things were always there but I was blind to them.  I hoped things would get better but we had to return to Canada for family reasons.

Now, after two presidential elections, I have lost faith in the USA.  The greed, lack of compassion, racism, divisiveness, lies, and contempt for democracy are clearly on display.  Biden may end up winning, but it is clear that about half of the USA believes that a man like Trump, doing what he does, is a good leader.  That means America is lost and probably gone forever in my opinion.


Thursday, May 21, 2020

Sell Stocks Now


I own and track the Vanguard Total Stock ETF, VTI.  It invests in all the stocks in the US markets: small, medium, large cap.  It is a great way to invest in all US economic activity.

Right now, the price of VTI is approximately the same as it was in May 2019.  
  • In May 2019, unemployment was about 3.5%.  In 2019, GDP grew 3%.  There were no major global crises and all major industries worldwide were operating successfully.
  • In May 2020, unemployment is over 15%.  A global pandemic is happening and over 60,000 people have died in the US.  Oil prices went negative a few weeks ago and the world is overstocked with oil.  The global travel industry (hotels, airlines, cruises, rental cars..) is not operating.  JC Penney, J Crew, and Neiman Marcus just went bankrupt.  The FED is printing money, buying securities and the US government is blowing money on people, corporations, and healthcare.  You cannot eat in a restaurant in over half of North America.
Why is the price of VTI the same as it was in May 2019?  I don't know.

Maybe Aliens are controlling our minds, Bigfoot has taken over the Fed, Elvis has left the building, and everyone is drinking Lysol and will be fine, but I don't like this situation.

Disclaimer: this is not professional investment or retirement advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.

Thursday, May 14, 2020

What is The Real Issue with Reopening?

There is a lot of disagreement about "reopening", lockdown, quarantine.  Armed protesters in state capitols, the President playing both sides against the middle, threats against epidemiologists, and a lot of misinformation.

But what is the real issue?  I will say it because few reporters and NO politicians will say it.

The issue is the death rate.  How many people should die from COVID?

When generals plan a battle or campaign, they look at the value of objectives versus casualties.  Is it worth it to conduct the D Day invasion if we lose 10,000 men in the first day?  The answer was yes.  If the expected casualties were 100,000, the answer would likely be no, and the plan revised.

It is the same with COVID.  We know that if we stop most economic activity, casualties will be low, but the long term standard of living will suffer badly, so we cannot lockdown forever.  We also know that having no restrictions on activity, "normal activity", will likely result in the loss of 1 to 4% of the world's population, as almost everyone will get COVID and 2 to 8% of people will die.

So the questions are:
  1. What is an acceptable death rate?  Is it OK if 200,000 Americans die over the next 2 years, primarily 60+ and infirm?  If not, what level of death is acceptable?
  2. Once you determine the death rate, you can ask expert professionals (health, business, law) to craft a plan that maximizes economic output while staying under this death rate.
Alternately, you can do what the USA is doing now, fumble along, do different things in different places, get people to fight, and then see what happens.  If this is written up as a disaster by historians (e.g Vietnam war), then you got it wrong.  If this is written up as a triumph in spite of the losses (WW2), then you got it right.  But I like the generals' approach to battles better than the current mess.

P.S. I once stayed at a Holiday Inn

Tuesday, April 14, 2020

Take Advantage of Volatility - The Limit Order

There are lots of different views on the economy and the stock market right now due to COVID.  I am quite pessimistic about the economy in the short to medium term due to:

  • Shutdowns for COVID: massive unemployment, supply chain disruptions, psychological impact
  • Globalism and free trade: Trump, China, and COVID have dealt a big defeat to these concepts and the economies of many countries
  • Lack of productivity: why are companies worth so much in the first place
  • Central Bank and government actions on COVID: these have never been tried before and we don't know the effects on employment, inflation, businesses
  • Psychological effect: it will be hard to get people to work again after this fatal threat
But others are not so pessimistic and the stock market is recovering, but not smoothly.  One day, the market is up by 4%, another day down by 4%. Bond ETFs are less volatile, but were down about 12% at one point and then quickly rebounded.

I personally want to keep at least 2 years spending in cash just in case, so I need to sell ETFs (bonds or stocks) or stocks.  I also want to maintain my asset allocation targets.

What is the best approach?  I could just put in a market order to sell when I feel really pessimistic and probably get a low sale price.  I could watch the ups and downs and try to pick a day when the market is up.  What I ended up doing was putting in a limit sell order at a price that I thought was high, but not so high as to be unattainable.  For example, Vanguard Total Stock ETF has been as high as $160 and as low as $115 in the last month or so.  I put in a limit sell order at $142 when it was around $120.  Today, the order went through.

So my idea is to use limit orders to take advantage of volatility in the markets.

Disclaimer: this is not professional investment or retirement advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.


Monday, April 6, 2020

Take Advantage of the Lousy Market

Like me, you probably lost a lot in the past few months in the stock market, after making big gains last year.  Those big gains, and rebalancing my portfolio, caused me to have a higher income in 2019 due to capital gains, and pay more tax.

Is there any way to deal with this?  Yes there is.

You can sell your losers today, and get a capital loss in 2020.  Then, according to the Canada Revenue Agency (CRA), you can use these losses to get back some of the tax you paid in 2019.  Here is an excerpt from the CRA website:


So there is some relief.  By the way, don't just sell and then quickly buy back the same stock or fund, that is called a "superficial loss" in Canada (wash sale in USA).  You will not get credit for your loss if you sell and buy within 30 days.  Better to look at what needs rebalancing, sell the losers in the overweight category, then buy appropriate investments in the category that needs more weight.  For example, selling a Canadian mutual fund and buying an international fund to get more international exposure.

Disclaimer: this is not professional investment or retirement advice and should be used at your own risk. The author is not a licensed financial advisor. You should not believe everything on the Internet including this blog and should check multiple sources possibly including a professional financial advisor before making decisions.