Quebec, Canada, Federalism, and Separatism: Questions Abound

This train of thought began boarding the station as a result of an aside in the commentariat discussion of one of Paul Kedrosky's blog posts.

Thinking the Unthinkable: U.S. Default

Although the market for such insurance is relatively illiquid, the price suggests the market believes the US government is more likely to default on its obligations than some other industrialised countries. “The USA is now ‘riskier’ than Norway, Germany, Netherlands, Sweden, Finland, Austria, France, Denmark, Quebec and Japan,” said Tim Backshall, chief strategist at Credit Derivatives Research.
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"Andrew": I was surprised to see Quebec on the list of "other industrialised countries." I must have forgotten about Quebec's breaking away from Canada. Je me souviens? Apparently not.
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"Bassfisher": It's about default and the cost of insurance, not defederation. Even if Que left the dominion of canada, they are able to pay their way. Quebec arranged its own credit rating with canada's blessing, same as my wife has her own a/cs.

If Quebec separated, I'm genuinely curious how well they would be able to service their debt issues once they no longer received Government of Canada largess and Provincial transfer payments, not to mention using a currency of their own devising and not the Loonie. Arranging their own credit rating while still being underwritten by the Canadian Government is a whole other kettle of fish from maintaining their rating while being economically independent, whether self-sufficient or otherwise.

If I'm off base, or completely ignorant, feel free to enlighten me.

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Fundamental Advice About Playing The Market

For reasons that entirely elude me, I am sometimes asked for advice about investing.* Generally, I dodge that bullet, and turn the conversation back so that the questioner ends up talking about themselves, which most people love to do.

Still, I have a few brief principles, some I've learned from my errors, and some that I've learned from the errors of others. If even one person who reads this acts like less of an idiot afterwards, then my good deed for the day is done.

1. Some peope like to brag that they have a great appetite for risk. What they mean to say is that they “have a great appetite for returns” and those are not the same. The reason a Canada Savings Bond pays 2.8% interest is because it’s guaranteed. The reason 00 on the roulette wheel pays 35-1 is because you’ve only got a 2.8% chance of your bet paying off. If you had a $100K in your pocket, and you were standing in front of the roulette table, would you still have that avowed appetite for risk?


2. I thought that internet bulletin boards devoted to weightlifting, bodybuilding, and other strength sports were full of kooks and oddballs, until I browsed a few "investing" web boards. I needed all of five minutes to recognize a surplus of noise, and an absence of information.
3. 
   “Investment Clubs” that meet in person are no better than investing boards on the internet. In fact they may be worse, because in person charm, guile, and persuasion can be more effective to fleece the unwary. Google for "High Yield Investment Programs" and "Prime Bank Instruments" and read about how those schemes always play out. Surprise surprise, there is always someone at these clubs promoting those schemes. There’s two type of people involved in “clubs” and internet stock boards: Eloi and Morlocks. I don’t think that I need to elaborate, do I?


4. Anybody who tells you anything that sounds like an "inside scoop" is playing a deeper game than just acting out of an altruistic desire to help you make money. Many people seem to have trouble grasping that.
   
5. Running money is like masturbating. It is a solitary, private activity. You don’t do it for the aclaimation of others, and how you do it is no one else’s concern. Anybody who insists on telling you at social functions how they do it is creepy and weird, and you should avoid them.
   
6. Most people don’t understand the distinction between “investing” and “trading”
7. I don’t have a lot of truck for financial advisors. You’re paying someone to do your thinking for you. If you own your own business, do you trust someone else to make your decisions for you there? It's your money, if you don't trust yourself to run it, you probably shouldn't trust anybody else either.


8. Now consider that the majority of fund managers can’t consistently deliver a return above the market indexes. Why pay fees so some schlub can underperform, when you could buy Index ETFs that would keep up with the sectors you play, and park your liquid cash in a high-interest, low fee savings account like ING or Royal Bank offer, until you see something you like? Advice that you need to be “fully invested” and that “cash is trash” is advice given by advisers who want more of your money.
9. Just like at the casino, the need for action, to make a trade, any trade, is a negative behavior. Only go “in” when all the signs point to "yes," not because you have the fever. This is probably a tall order for most people.

**The content contained in this blog represents the opinions of Mr. Distad. This commentary may contain forward looking statements and definetely contains sarcasm and rude sentiments. This commentary in no way constitutes a solicitation of business or investment advice. If you're looking for stock picks from me, look somewhere else. Really, what were you thinking? If you came here because you were trolling Google looking for someone to help you get rich in only twenty minutes a month, you need to seriously re-evaluate your worldview. This blog is intended solely for the entertainment of the reader, and the author, and not neccessarily in that order.

*I really, really hate that term and how it is used by people.

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