Juggling Dynamite

This is a theme I have been writing about for 15 years, and the problem is now of crisis proportions.  As computers have grown faster–transactions and markets more complex and opaque–cheating, tricking, skimming and stealing by hedge funds, insiders, politicians and other financial intermediaries has become widespread. As this group continues to rake in billions in ill-gotten gains, they have become more activist, emboldened and dominant of our capital markets. Meanwhile their profits are at the expense of legitimate would-be investors and has eroded confidence and stability in our markets and the global financial system on which we are all reliant and vulnerable.

While some make off like bandits, every one else is paying a heavy price.  From ETFs, fundcos and brokers selling their client order flow to skimmers and front-runners, to security exchanges selling unfair advantage to some players at the expense of the rest, to banks driving their employees to extract more and more fees from vulnerable customers, to revolving door regulators and politicians, and a legal system that lets criminals inside corporations get away with it all…

This discussion with Kolhatkar is far reaching and worthwhile.

Sheelah Kolhatkar, former hedge fund analyst and staff writer at the New Yorker, thinks hedge funds have enjoyed enormous unfair advantages for far too long.

In her recent book Black Edge: Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street, she details out how many hedge funds use financial engineering and accounting tricks — even illegal insider information — to fill their coffers at investor expense. And then they use those ill-gotten gains to influence politics.

In this podcast, Chris and Sheelah discuss the racket the hedge funds run, and as a case study, give close examination to the US government’s tortured (and ultimately, unsuccessful) efforts to convict hedge fund kingpin Steve Cohen of SAC Capital on insider trading charges. Given their vast resources and paid influence, these modern robber barons remain practically untouchable.Here is a direct video link.

For some reason Huffington Post does not provide embed codes for its videos, so I can’t post them here directly on JD, but they have done a few excellent big picture reports on the history of Canadian home prices. This one focuses on Toronto in particular (although boom-bust cycles play out simultaneously in varying degrees across most of the country).

Canada’s addiction to building houses “a loud alarm bell” https://t.co/icf51gGCs0 via @HuffPostCanada

— Danielle Park (@kdaniellepark) March 31, 2017

They point out that prices have fallen 37% of the time over the past 6 decades (23 of the past 63 years). Boom cycles end with high leverage, indiscriminate buying and rich valuations followed by a bust and years where prices remain lower than the prior cycle peak. This time is likely to be the same.

If we are owning real estate today in Canada, we should be comfortable holding it and paying all the associated costs and upkeep for the next decade. If that will not suit our finances, now is the time to consider any changes needed.

A new report Forecasting Failure: why investors should treat oil company forecasts with caution, looks at the way in which flawed forecasts from oil companies continue to mislead investors on future growth prospects.

Charlie Kronick is the Senior Programme Advisor for Greenpeace in the UK and the Global lead on finance and investment for the oil industry, he has focused for most of the last decade on energy and climate change related issues; and on the risks to capital markets from investment in high carbon infrastructure.  Here is a direct video link to part 1.

Here is part 2.

Here is a slide summary of the report:

Forecasting Failure: Why Investors Should Treat Oil Company Energy Forecasts With Caution from Oil Change International