Juggling Dynamite

As forensic accountant Harry Markopulous explained in this interview from November, fraud has become rampant over the past decade enabled by lax regulation, complicit accounting firms and financial advisors and investors who are keen for gains but remiss in due diligence.  These factors all played a role in this recent Canadian story and thousands of others.

It was one of the biggest financial frauds in Canadian history. Millions of dollars were stolen from pensioners and every-day investors, some who lost their life savings. A judge convicted three Montreal men, including the founder of the once high-profile Quebec animation company Cinar. But while the perpetrators were sent to jail, a question persisted: Where was the missing money? Mark Kelley takes viewers on a journey searching for the missing millions, a story that includes secret accounts, exotic tax havens and even the Mafia. “The missing millions” airs on CBC Television on February 25.

Here is a direct video link.

A worthwhile hour-long discussion on our historic market bubble.

Jeremy Grantham is the Long-Term Investment Strategist and Co-Founder at GMO. We cover the three key signs of a bubble, why Jeremy believes we are in a bubble right now and how it’s being led by retail rather than institutional investors:

“This bubble is more impressive even than 2000, which was the champion. About 80% of the value measures have this one higher. We’ll be rather lucky to have this bubble last until May.”

Here is a direct audio link.

Business Insider published 16 worthwhile quotes from the interview here.

Meanwhile, in the real economy, where companies with fewer than 100 employees are the largest economic driver, employing two-thirds of Canada’s private labour force, survival prospects are getting worse.  See Small businesses rack up loans to survive:

The Canadian Federation of Independent Business (CFIB) estimates that, based on a recent survey of its members, about seven in 10 small businesses have taken on new debt because of the pandemic, with an average debt of almost $170,000 each.

But there is a huge disparity between industries: Businesses such as restaurants and gyms, which have faced more operating restrictions to stop the spread of COVID-19, have taken on much more debt than those whose work can more easily be done from home. About nine in 10 businesses in the hospitality and recreation sectors said they incurred debt related to the pandemic, with average debt loads of more than $200,000.

“This doesn’t look like there’s going to be a quick recovery based on the amount of debt that businesses have taken on,” said Laura Jones, executive vice-president at CFIB. “Even if sales come back in the summer, they’re still worried about outrunning their debt.”