About 60% in equities, with a slant toward small-cap value stocks (a la Fama/French research). Got hammered last Oct to March, but seem to have bounced right back.

Remaining 40% in cash. Cash still feels like a pretty comfortable hedge to me, because I’m anticipating significant deflation in house prices over 5 years. If I’m wrong about house prices, I’ll shift the cash over to bonds.

Not too sexy, but it’s edging me ever closer to financial independence. I am not persuaded by arguments which insist on home ownership as a necessary condition of financial independence, so I agree with the mood of many posters here.

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Hi Jim,

The most obvious indicator is the spread between the proposed transaction price and the market price. The larger the spread, the bigger the risk (on average!).

I try to think about the transaction. Does it make sense to everyone involved? The BCE deal is a clear-cut case where it made no sense to the buyers or to the lenders. That eliminated BCE from my purchase criteria.

You certainly have to take on risk with merger arbitrage. There are so many things that could go wrong, although each is very unlikely, taken together, there is serious risk. So I don’t recommend it to anyone, but of course I do lots of stupid(?) things that I wouldn’t recommend to someone else.

Some risk can be contained by spreading your bets around, risking a smallish proportion of one’s money or by selling before the deal is consummated. I don’t risk money that I could not afford to lose.

I don’t use web sites, although I know they are out there for US plays that make targets easier to find. Scotiabank I hear gives advise for these things through their full service broker, but I am do-it-yourself guy.

-VB

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Rents are falling.

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If you can read that sentence — well, you’re lucky. A recent study by the Canadian Council on Learning found that 41 per cent of Vancouver-area residents aged 16 and older have the capacity to deal only with simple, clear material involving uncomplicated tasks. And more than one-third of Metro Vancouver adults don’t possess the literacy skills to understand a public bus schedule, read directions on a pill bottle or keep up with technological advances in the workplace.

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http://www.federalreserve.gov/.....90923a.htm

How can anyone read this and not laugh?

This is either the over view of a new financial paradigm or a hint that when they pull back on the spending you better be ready to stand on your own two feet.

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http://www.bctc.com/about_bctc.....return.htm

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I agree:

Condo buyers will likely be the most vulnerable in a downturn for a number of reasons. One of them is that they are on the cusp of affordability for most buyers.

Condos that have not had an engineering report tp determine the degree of leaking ( Note: ALL condos leak to some degree) should be avoided.

The best condo buys re: value are those that have gone through a proper restoration with a building envelope specialist , other than those that were built correctly to start.

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Hi Jim,

Merger arbitrage is most easily explained with an example. Say Company X offers to buy Company Y at 10 bucks with the transaction expected to close in late November. Company Y agrees to the purchase. Company Y might trade for 9.80. The idea is to buy Company Y stock now, and collect 10bucks in November.

It is a measly 2 percent, but do that a few times a year, and you have serious returns. Also, with some luck you might see a deal “sweetened”, ie, the offer price increased. When that happens, it is very sweet indeed!

You have to exercise a lot of caution, since if a deal falls through you might lose your shirt.

Academic studies on merger arbitrage are all over the place in terms of how successful it is. All I can say is it isn’t for everyone, but so far it has worked well for me and I have been able to avoid the failed transactions (eg, BCE).

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Got gold?

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Rents are not falling.

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http://www.theglobeandmail.com.....le1297679/

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http://kunstler.com/blog/2009/......html#more

It was also ironic, tragically so, that during this same period Wall Street began to seek some new way to make real money beyond stock and bond markets, which didn’t seem to produce wealth at all for more than a decade when inflation was factored in. By a fortuitous coincidence, the revolution in computers enabled Wall Street bankers to concoct abstruse new species of tradable paper securities based on bundles of debt that seemed to produce miraculous earnings. It had the added advantage of being inscrutable to both investors and financial regulators. Due diligence became impossible and moral hazard spread like ringworm in a dormitory. The bulk of the securitized debt originated in home mortgages and the larger result was a gigantic racket ramped up between Wall Street and the US government to conceal all the structural weaknesses of a de-industrialized US economy behind a hyperbolic commerce in the very thing that the American public cherished most: their houses, which, understandably, everybody had come to call “homes.” Wall Street might as easily have commoditized mother and apple pie – if you could sell each one for half a million dollars.
The banking fiasco still underway is at once a proxy for the larger failure of the American economy and the greatest fissure in it. Put as simply possible: we can’t service our debt, we can’t generate more debt, and the notional “capital” we thought we possessed is dissolving into nothingness. The federal government and Wall Street remain committed to supporting all the rackets associated with a suburban sprawl economy that has entered its own zone of remorseless failure. It is failing as a capital investment first, and is secondarily failing as a practical living arrangement. The two failures will continue in a close race toward terminal entropy.
The dirty secret all along was that by 2005 there was no economy left in the USA beyond the suburban sprawl economy with its so-called “consumer” nexus — largely devoted to the outfitting of suburbia. More mortgage debt (and credit card and car loan debt) will go bad and the investment paper that represents it will go bad and it will eventually destroy our current system for accumulating, valuing, and deploying wealth. It will not destroy the function of capital — no matter how many angry intellectuals inveigh against the straw man of capital-ism, as if it were merely a belief system – but it will be a long long time before anything sturdy or credible in the way of banking will be reconstructed out of the wreckage.

==========

Kunstler makes good points re the growth in suburbia after WW II…

It was the worthlessness of the tradable securitized debt associated with all those overpriced (and overvalued) chipboard and vinyl houses, smeared recklessly over the American landscape, that started all the trouble in the first place. And it is our inability to come to grips with that underlying catastrophe that prolongs the resolution of the still-florid banking crisis — since the federal government is doing everything possible to prop up the failed capital equation of terminal suburbia, and to deny the obsolescence of that version of the American Dream and all the mechanisms for delivering it.

The suburban project was not a conspiracy by the likes of Robert Moses, Walt Disney, Frank Lloyd Wright, and President Eisenhower to produce a living arrangement with no future. It was the emergent, self-organizing result of special circumstances in a particular time and place: post World War Two America, with an immense supply of cheap oil, cheap land, and the industrial capacity to churn out all the necessary components for a car-dependent development pattern. Suburbia was spawned out of a couple of persistent themes in American cultural history: 1.) that cities and city life were no good; 2.) and that the romance of settling the wilderness could be reenacted, at great profit, in all that space beyond the towns and cities. It would be silly to deny the appeal of this arrangement at its inception. By the end of WW II, city life in the popular imagination was reduced to one potently awful image: Ralph Kramden’s apartment in “The Honeymooners” TV show.

=====
IMHO….Wall Street found and exploited its last bulk load greater fools. The SHTF sooner than later.

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So how can the Dow be flirting with 10,000 when consumers, who make up 70 percent of the economy, have had to cut way back on buying because they have no money? Jobs continue to disappear. One out of six Americans is either unemployed or underemployed. Homes can no longer function as piggy banks because they’re worth almost a third less than they were two years ago. And for the first time in more than a decade, Americans are now having to pay down their debts and start to save.

Even more curious, how can the Dow be so far up when every business and Wall Street executive I come across tells me government is crushing the economy with its huge deficits, and its supposed “takeover” of health care, autos, housing, energy, and finance? Their anguished cries of “socialism” are almost drowning out all their cheering over the surging Dow.

The explanation is simple. The great consumer retreat from the market is being offset by government’s advance into the market. Consumer debt is way down from its peak in 2006; government debt is way up. Consumer spending is down, government spending is up. Why have new housing starts begun? Because the Fed is buying up Fannie and Freddie’s paper, and government-owned Fannie and Freddie are now just about the only mortgage games remaining in play.

Why are health care stocks booming? Because the government is about to expand coverage to tens of millions more Americans, and the White House has assured Big Pharma and health insurers that their profits will soar. Why are auto sales up? Because the cash-for-clunkers program has been subsidizing new car sales. Why is the financial sector surging? Because the Fed is keeping interest rates near zero, and the rest of the government is still guaranteeing any bank too big to fail will be bailed out. Why are federal contractors doing so well? Because the stimulus has kicked in.
===

Gov’t is the people, yet Gov’t has decoupled and worked against the people.

Gov’t is that phantom investor.

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I agree, and I fail to see why the Gov’t wants to stick its nose in.
Stratas are supposedly a democracy, and many of them may be forced to change their bylaws to allow renters , or all it would take is a majority of non -residents to change the bylaw.

As you allude to and I agree with your point, it’s probably a lifeline, but I don’t think it will limit the supply, only encourage more, but that the Gov’t would even consider it is a cause for concern .

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face it supraboy you’re a tosser.
—————-

Fixed it for you.

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Ummm Superlittleboy, the markets went down today. How’s that decline working for all you bulls.

Another day of last minute flash trading by institutions – you know, the ones “loading up”! Lol – too funny

Stay away from investment advice superlittleboy, and stick to dungeons and dragons in your “shared” house with your family.

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Superlittleboy, nobody wants investment advice from someone that plays the imaginary stock market. Nor does anyone want advice from someone who gets it from their mommy and daddy, all the while waiting for them to pass on, so you can switch from “sharing” your parents home to “owning it.”

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