The Paper & Coffee

Opinion: I Think This is Important to Watch

Published on September 14, 2016 in Blog by Olivia

I’d like to make it clear that my intention for this site is to write unbiased articles, even when it comes to politics. However, when it comes to the 2016 US presidential election, I can’t help but feel strongly biased for the simple fact that the US has one candidate who is strongly experienced and suited for the role of president and one who is not based on everything I have read in what I consider to be intelligent publications, including both the Wall Street Journal and the New York Times. It is unfathomable to me that someone like Donald Trump, and to be clear, just because I believe he would make an utterly disastrous buffoon of a president does not mean that I don’t like him – I just don’t like him for this job, is being held to the same standard as her in terms of presidential potential.

I’ve been a Hillary fan for years and as I’ve shared publicly before, spent my 26th birthday on March 5th at a speech she gave here in Vancouver. I didn’t know anybody else who would willingly purchase a ticket to attend the event and so went on my own, and it was a marvellous evening. Hillary is without a doubt one of the most fascinating people I have ever had the pleasure of listening to. And seeing her in person, listening to her be surprisingly frank and candid about her experiences as Secretary of State and her thoughts on various global leaders was incredibly endearing. But as with many things, you had to be there to understand what I am talking about. This Vox video, from Ezra Klein speaks directly to this.

I am not saying Hillary is perfect. She has certainly screwed up as a politician (hello private server debacle), and humans do and as a proponent of hers, I readily admit this. But let’s be rational in our criticism, those who have claimed the White House as theirs for a term or two (or less), have all screwed up, and for the most part, far, far worse. My bottom line here is while I do not get to partake in the election, I do believe she would, and will, make a fantastic president. And one of my favourite publications, Wired, boldly feels the same way.

Lastly, I find this June 12th read from Michael Arnovitz to be very worthwhile, as is his lengthy and well written (IMHO), June 30th follow up piece (because if you write a piece about HRC, you gonna get some unreasonable hate, and boy, his first piece sure did).

Thoughts? What do you think?

National Bank of Canada: “Healthy” Price Corrections for Vancouver Housing Market

Published on September 13, 2016 in Investing by Olivia

Today in New York Bloomberg held a Canadian Fixed Income Conference where Stefane Marion, a Montreal-based economist and strategist at National Bank of Canada commented on the future of the Vancouver housing market. According to Marion, “Vancouver’s housing market may enter a correction with price declines of 10 per cent,” going on to call it a “healthy correction.” Keep Reading

Q&A: The TFSA and How Best to Use It

Published on September 12, 2016 in Investing by Olivia

What is the TFSA?

The Tax Free Savings Account is a savings and investment tool that was designed to help encourage savings by way of tax-free capital gains. The name can be somewhat misleading in that when you deposit money into your TFSA, these contributions are not deductible against your income tax the way that an RRSP is. Instead, the TFSA is beneficially used as an investment vehicle where you purchase and sell investments such as mutual funds, ETFs or stocks, (learn more about mutual fund and ETFs here), because the capital gains you make on those investments are tax-free within the TFSA.

Hang on, what is capital gains tax and how much of my investment gains does it take if I don’t use a TFSA??

In Canada, capital gains tax is applied to half of your capital gains, at your marginal (highest) tax rate. This means that say for example if I make a capital gain of $20,000 CAD on investments, then $10,000 of those gains are taxed at my marginal tax rate. If I earn 75k per year, then my marginal tax rate is 20.5% (find your tax rates here), and thus $10,000 of my gains are taxed at 20.5%, equalling $2,050 due in taxes. Alternatively, if it’s simpler, you may also view it as the full capital gains being taxed at half your marginal rate: $20,000 x 10.25% = $2,050 due in taxes. Different equation, same result. With a TFSA, no capital gains tax apply.

Is a TFSA like an RRSP?

Both are savings accounts, but unlike an RRSP (registered retirement savings plan), where taxes do apply once money is withdrawn (with certain exceptions like purchasing your first home), when money is withdrawn from your TFSA, taxes are not applied. The idea with an RRSP, and the reason that it has the word “retirement” in it, is that you contribute savings during your working life, receive tax deductions against your current income tax (much higher now than at retirement), and then when the money is withdrawn as a retired senior, you pay only a minimal amount of tax on withdrawals. These withdrawals are treated as retirement income and come with a rate significantly less than your tax rate as a working citizen. This is the government’s way of incentivizing Canadians to save for retirement = less financial burden on the government.

Can I put as much money as I want into my TFSA?

Unfortunately, no. The government regulates each year the level of contributions eligible for your TFSA, and it varies greatly depending on the government and their federal budget. In 2015 the Conservative government raised the maximum annual contribution to $10,000 CAD – which was great news for Canadians. This year, the new Liberal government has reduced the maximum annual contribution to only $5,500 CAD.

What does annual contribution mean?

It means that each year you are allowed to contribute a maximum amount of money into your TFSA.

If I deposit money and then withdraw, how does that affect my limit?

Regardless of whether or not you deposit and then withdraw money, every contribution counts towards your maximum, or limit. So if I deposit $2,000 in March, and then $1500 in July, but then need some of that cash for a trip and withdraw $2500, I have contributed $3,500 of my $5,500 annual contribution. Even though I withdrew some of my money, the contribution still counts and I only have $2,000 in contribution space left.

What happens if I only contribute some of my limit one year?

Then, kindly, the space you had left is rolled over to the next year. Using that last example, if I didn’t use up that $2,000 in contribution space, I could roll it over, or carry it forward, to the next year and I would now have $7,500 in contribution room (Year 2016 leftover contribution space $2,000 + Year 2017 annual contribution $5,500 = Year 2017 total contribution space $7,500).

How do I use it?

Rather simply. First of all, you can set up a TFSA pretty much anywhere, and you can have many of them. If you have a broker who invests for you, he or she can set up your investment in a TFSA at their brokerage. If you have a financial advisor at your bank, they can also set one up for you and this is where they will purchase investments on your behalf like an ETF so that any gains made are subject to zero capital gains tax, as explained above. You may also hold cash in your TFSA, though the interest rates are not particularly different than a regular savings account and TFSA cash savings are not eligible for any special treatment so it’s not doing much for you.

Feature image via Pinterest.

US to Allow Victims of Terror to Sue Foreign Governments?

Published on September 9, 2016 in Investing by Olivia

Today, 15 years after the terrorist attacks of 9/11, the US House of Representatives (here is a chart that explains where the House sits in US government), has passed a bill that would allow victims of terrorist attacks to sue other countries for their alleged involvement. The bill stems from families of 9/11 victims wanting to sue Saudi Arabia on the basis that 15 of the 19 hijackers were Saudi.

Historically, the US has barred lawsuits against foreign governments, and for good reason. According to the various documentaries out there, we can’t be certain who is in fact responsible for the terrorist attacks of 9/11, and certainly allowing US citizens to sue other nations would open up the floodgates for other countries to sue the United States for their significant and often fatal involvement in international conflicts.

While the bill does have broad bipartisan support from both sides of the House, Obama has said he will veto the bill. Then Congress has said they will veto his veto, or look to override it with the needed support from two-thirds of the lawmakers in the House, as well as in the Senate.

Read the original article by Kristina Peterson, published in The Wall Street Journal on September 9, 2016.

Feature image of the US House of Representatives via thinkinghighways.com

A Timeline: The Many Republicans Who Won’t Support Their Nominee

Published on September 9, 2016 in Investing by Olivia

Editor’s note: this article may border on an op-ed as there may be some personal opinions present…

On Sunday The New York Times published a timeline of all the outrageous, mean, stupid, even stupider, and plain ignorant things that good ‘ol Trump has said. Out loud. On tv and at conventions. The whole thing is unbelievable. Last summer a former colleague and I were in San Francisco watching the initial republican candidate debates and couldn’t believe that Trump had actually put himself in the race. We concluded that it was most certainly a stunt and that he likely had a new tv show premiering and was interested in ratings. Funny enough, yesterday I was listening to Hillary Clinton’s podcast and she said that she had had the exact same thoughts about Trump. But sweet jesus, no, this is a not a drill, I repeat, this is not a drill. This is real life and it is kind of terrifying that there are people want such a crazed, lying, loon for president, even if they don’t like Clinton. Clearly I am biased here. There have been and are many republican leaders I had felt support for and admired, but this guy deserves neither for all of the same reasons that we wouldn’t like a human in real life – there’s not much to respect. But, I digress.

This timeline is very important because it not only highlights a ton of stupidity, it also shows you at what point the republicans started abandoning The Donald in favour of my girl Hillary. It’s also the first time in history that a party has so publicly denounced its own candidate, as well as the first time that prominent republicans are choosing to vote for the democratic candidate. Without further ado, here is the timeline and all of the GOP people who say No, Trump, just no, sit down (or f*ck off).

Feature image via Salon.com

The Long & Short of It

Published on September 9, 2016 in Investing by Olivia

The stock market allows us to speculate, based on sentiment and pertinent information, about the market value of a company and its shares. More often than not investors pick stocks based on their assumptions that the prices will increase, but also sometimes because they believe that the stock will lose value, a much riskier venture. Keep Reading

Book Club: September

Published on September 9, 2016 in Blog by Olivia

There are many great books out there for the reader with an interest in finance or politics, and here are my favourites, as well as the ones that are sitting on the bedside table just waiting to be cracked:

Recommendations, in no particular order:

Street Freak, by Jared Dillian

What it’s about: A Lehman Brothers trader who falls into the crazed Wall Street lifestyle of complete obnoxiousness: money, hookers and drugs, before the bank defaults and collapses. This is Dillian’s real life story and he tells it well. Perfect for the finance newbie.

My rating: Five stars. This is one of the first things I ever read that piqued my interest in finance.

The Wolf of Wall Street, by Jordan Belfort

What it’s about: You already know the story so you don’t need me to explain it, but the book is worth a read even if you’ve seen the movie. It’s also a great introduction to what life is was like on Wall Street and in brokerages – and you won’t be able to help becoming a fan of Belfort.

My rating: Five stars, it’s sensational and ridiculous and a fantastic ride.

Makers and Takers, by Rana Foroohar

What it’s about: “Eight years on from the biggest market meltdown since the Great Depression, the key lessons of the crisis of 2008 still remain unlearned—and our financial system is just as vulnerable as ever.” Foroohar is a sharp writer who highlights the utter financialization of the American economy. Also find her work in Time Magazine, and find her on Twitter here.

My rating: Four stars, still reading.

More Money Than God, by Sebastian Mallaby

What it’s about: “Splendid…the definitive history of the hedge fund, a compelling narrative full of larger-than-life characters and dramatic tales.” – The Washington Post

My rating: Two and a half stars. Interesting, but challenging to follow.

Blockchain Revolution, by Don & Alex Tapscott

What it’s about: “The technology likely to have the greatest impact on the future of the world economy has arrived, and it’s not self-driving cars, solar energy, or artificial intelligence. It’s called the blockchain.”

My rating: Four stars so far, still reading.

An Unfinished Life, John F. Kennedy 1917 – 1963, by Robert Dallek

What it’s about: The book brings “to light new revelations about JFK’s health, his love affairs, his brothers and father, and the path JFK would have taken in the Vietnam entanglement if he had survived. A blockbuster bestseller, the book was embraced by critics and readers as a landmark assessment of [America’s] 35^th president.”

My rating: five fantastic stars, despite his womanizing, you will fall in love with JFK, his wit, and his charm.

Soon to be read:

Flash Boys, by Michael Lewis

What it’s about: “Flash Boys is about a small group of Wall Street guys who figure out that the U.S. stock market has been rigged for the benefit of insiders and that, post–financial crisis, the markets have become not more free but less, and more controlled by the big Wall Street banks. Working at different firms, they come to this realization separately; but after they discover one another, the flash boys band together and set out to reform the financial markets. This they do by creating an exchange in which high-frequency trading—source of the most intractable problems—will have no advantage whatsoever.”

The Big Short, by Michael Lewis

What it’s about: You know the story, you saw the movie. It’s suuuucchh a good movie, perfectly cast in my opinion. Anyway, I haven’t read the book but I imagine if the movie was that good, then the book is likely to be even better – though definitely filled with a lot more detail around the financial industry and likely not as easy to follow as the movie was. Amazon says: “The real story of the crash began in bizarre feeder markets where the sun doesn’t shine and the SEC doesn’t dare, or bother, to tread: the bond and real estate derivative markets where geeks invent impenetrable securities to profit from the misery of lower- and middle-class Americans who can’t pay their debts.”

Reagan, The Life, by H. W. Brands

What it’s about: “Reagan conveys with sweep and vigor how the confident force of Reagan’s personality and the unwavering nature of his beliefs enabled him to engineer a conservative revolution in American politics and play a crucial role in ending communism in the Soviet Union. Reagan shut down the age of liberalism and ushered in the age of Reagan, whose defining principles are still powerfully felt today.”

Titan, by Ron Chernow

What it’s about: “John D. Rockefeller, Sr. – history’s first billionaire and the patriarch of America’s most famous dynasty – is an icon whose true nature has eluded three generations of historians. Born the son of a flamboyant, bigamous snake-oil salesman and a pious, straitlaced mother, Rockefeller rose from rustic origins to become the world’s richest man by creating America’s most powerful and feared monopoly, Standard Oil.”

Sacred Economics : Money, Gift, and Society in the Age of Transition, by Charles Eisenstein

What it’s about: Sacred Economics traces the history of money from ancient gift economies to modern capitalism, revealing how the money system has contributed to alienation, competition, and scarcity, destroyed community, and necessitated endless growth. Today, these trends have reached their extreme—but in the wake of their collapse, we may find great opportunity to transition to a more connected, ecological, and sustainable way of being.

The Kennedy Half-Century, by Larry J. Sabato

What it’s about: Sabato reexamines JFK’s assassination using heretofore unseen information to which he has had unique access, then documents the extraordinary effect the assassination has had on Americans of every modern generation through the most extensive survey ever undertaken on the public’s view of a historical figure.

Jacqueline Bouvier Kennedy Onassis, by Barbara Leaming

What its about: Leaming’s extraordinary and deeply sensitive biography is the first book to document Jacqueline Kennedy Onassis’ brutal, lonely and valiant thirty-one year struggle with post-traumatic stress disorder (PTSD) that followed JFK’s assassination. Here is the woman as she has never been seen before. In heartrending detail, we witness a struggle that unfolded at times before our own eyes, but which we failed to understand.

Feature image taken by me, and posted to Instagram just before taking off to Whistler for the weekend.

WTF: Millennials and Our Sad Relationship with News

Published on September 8, 2016 in Blog by Olivia

Editor’s note: see this post published on the Huffington Post, Sept. 13 2016.

Yesterday an article was published in the New York Times about Buzzfeed’s announcement that it is formally dividing its news and entertainment divisions. This news drives speculation that there could be a selloff of the news division, though Buzzfeed denies this, saying instead that the split encourages better focus on video creation where its biggest advertising dollars come from.

“The move also reflects a broader shift at media companies that are increasingly turning to video and entertainment news to lure a younger generation and attract online advertising dollars.”

What is happening here? Why is news not important to digital audiences? Keep Reading

ETFs vs. Mutual Funds

Published on September 7, 2016 in Investing by Olivia

The summary, up front: (like dessert before dinner)

They both allow you exposure to many different investment opportunities and therefor, diversity in your portfolio. An ETF tracks a basket of shares or an index, trades on the stock market and is purchased as all other shares are, typically via a broker and you pay your broker’s fee and the trade fee. A mutual fund is professionally managed, takes a large sum of money made up from many different investors and uses that money to buy into various different investments that make up the fund. Keep Reading

Q&A: Why Do Interest Rates Move?

Published on September 7, 2016 in Investing by Olivia

The Bank of Canada decided today at their September meeting to keep rates as is, at 0.5%.

What is this interest rate, what’s it about, what does it mean?

This rate actually only applies directly to banks. The Bank of Canada sets this rate as the amount of interest banks may charge when they loan each other money. The banks then add a couple percentage points to that and call it the consumer rate = a 2.5% lending rate. This extra 2% is added because there are regulations in place for our big banks that stipulate how much capital, or money reserves, a bank must have at all times based on how much it is loaning out. This ensures that the bank can cover any defaulting loans and also means that our Canadian banking system is pretty air tight, particularly in comparison to that of our southern neighbour – though their regulators have asked the banks to carry more cash after that 2008 fiasco, likely not enough though to ensure protection…)

Why does it change though? Keep Reading