The Good

The CSC is a large course filled with enough material to learn and memorize to make an elephant run in fear.  The way that I like to learn is by actually practicing the concepts.  CSC Check is great for that.  Every chapter in the CSC has a corresponding domain module in the CSC Check with several practice questions.  These are great to run through as you struggle to understand the concepts presented in the CSC.  This is the place where you can identify what you truly do understand and areas that you likely should re-read.  If you’re already taking the CSC, then these quizzes will look familiar – they are the built the same as the CSC quizzes.  They are timed, but there is no time limit.  The way that I studied was to take each domain quiz as I completed each chapter, I didn’t worry about the timer, and I used the CSC textbook as a reference.  So, in my case they really weren’t quizzes but more assignments for practice.

The next level of testing is the Knowledge Assessment Tool.  The CSC is divided into sections and further subdivided into chapters.  Where the Domain Quizzes test individual chapters, the Knowledge Assessment Tool tests an entire section.  Again, they are timed, but there is no time limit.  Again, I did not concern myself too much with the timer and it was still open book, but this time any question that required me to open the CSC was marked as something that I needed more practice on.

The third and final level is the Exam mode.  This time you get 100 questions covering one book of the entire course and two hours to complete it.  This is to simulate the exam and get you prepared – an excellent preparation for T day.  The CSC Check test bank contains a few hundred questions that are inserted pseudo-randomly, based upon the weighting of the CSC.  That is, the exam mode knows how many questions of each topic to include based upon how many will be on the real CSC exam, and then randomly selects enough of each domain.

The large test bank is what I valued the most as it allowed me far more practice than answering the exact same questions over and over.  It means that you don’t have a limited number of exams to practice on.  This is where I got the most practice and built my confidence.

The Bad

The questions generally provide you with some level of explanation of the answer and where references to where it can be found in the CSC.  However, I found that the explanations should be more in depth.  Pointing me to a chapter in the CSC is not good enough… I know what chapter the question is from and likely didn’t understand it well there.  I got the question wrong and I want to know why.  There is no discussion board (although, one might assume that you are likely enrolled in the CSC, so you could use that discussion board).

Although the test bank has several hundred questions they are randomly placed in the exam mode.  Therefore, after your first trial run you will run into questions that you have already completed.  That means the only real exam simulation is the first one that you write.  After that you will run into questions that you’ve just answered, which will allow you to go quicker than you would on the exam.

Another downside is that I’m quite sure that they reuse questions between the quizzes in the CSC and CSC Check.  They may change names or numbers but use the exact same wording.  While the practice is still valuable, the real exam is going to ask questions in a completely different way.

If you are writing the CSC using the paper and pencil method (they now offer computer-based testing) then the CSC Check will not be a completely realistic simulation.  Not a biggie, but something to keep in mind.

The biggest detraction is the price.  Looking it up now it appears to be $120!  Come on folks at CSI, you can buy massive GMAT test prep books with thousands of questions for $20-30, and each exam is completely different.

The Bottom Line

If you are shelling out to take the CSC then you want all the practice you can get.  The CSC Check is a great way to do that, and it is cheaper than the cost of an additional attempt at writing the real exam.  I think that it helped me out.  I’ll never know what I would have scored if I didn’t use the CSC Check, but I do know that I passed with honours by using it.

The CSI may occasionally offer some sort of a discount on the CSC Check, at least that’s why I bought it at the time.  Since my biggest objection with the course is the price, the discount certainly helped sway me to buy it.

Not sure about the Canadian Securities Course?  Check out my review on it, here

First are tax cuts.  The basic personal amount has gone up to $10320 and the thresholds for the 15% and and 22% tax brackets are now $40,726 and $81,452.  Note that the basic personal amount was already scheduled to have gone up to $10,100 this year (from $9,600 in 2008).  Whatever, it’s still less taxes that I have pay this year, right?  Yup.  By my calculation someone earning $81,452 or more will save $391.  According to data from StatsCan http://www40.statcan.ca/l01/cst01/media01-eng.htm the average person earns 41839.2 (the median is probably lower as the income of Canadians does not follow a normal distribution) so the average Gordon will save about $284.  Yay.  Can you hear the excitement in my voice?  Well, at least taxes didn’t go up.

Payroll taxes – I mean “EI premiums” – are going to be frozen this year.  Usually they go up every year, so this year I won’t have to pay more towards Employment Insurance.

“Action to Stimulate Housing” – haven’t we just exited the longest and most pronounced housing boom in decades?  In any case the big news here is a temporary Home Renovation Tax Credit.  This credit is only good for 2009, for projects between $1000 and $10,000.  Remember that credits are for the lowest bracket, or 15%.  So this means a savings of up to $1350.  And it means that I bought my new windows a few months too soon.   There are a few catches to consider:
* the credit is for costs above the $1000 threshold.  So if you install carpet for $1001 your credit is (1001 – 1000) x 15% = 15 cents.
* this credit is only for improvements that are deemed to be “enduring in nature” i.e., not appliances nor maintenance.

There are many other initiatives that are aimed at helping Canadians as whole, like infrastructure, etc.  But these appear to me to be the only things that individuals can take advantage of.

Expected value is statistical tool that economists may use to determine what outcome to expect.  It is sum of the probabilities multiplied by the outcomes – note that this is not the same thing as the probable outcome.  This concept can best be described with the use of an example.

Suppose that you and nine friends get together for a game of chance.  Each person bets one dollar and puts their name into a hat.  You draw one name out of the hat and the winner gets to keep all the proceeds.

10 people betting $1 apiece, only one winner. Your odds of winning 1 in 10 or 10% (conversely, your chance of losing is 90%).

Therefore, the probable outcome is that you will not win the draw and thus lose one dollar.

Your expected value is -$1*90% + 10*10% = $0.10 (90% chance of losing your $1 bet, 10% chance of winning $10).

This means that if you kept playing all night you could expect that, on average, you would earn ten cents for every dollar bet.  If you played ten times in a row, statistically speaking, every person should come out even.

When playing at the casino the house generally has the games set up so that the expected outcome results in proceeds to themselves.  For example, according to wikipedia, the game of roulette is set up so that the odds of winning is 1 in 38 and the payout is 35 to 1.

Expected Outcome = (-1$*37/38) + ($35*1/38) = -$0.0526.  Therefore, if I play once then the probability is that I will lose.  If I play all night then I can expect to lose, on average, five cents on every bet.  Thus the house earns five cents on every dollar bet.

Which is a better ‘investment’?  With the draw you expect to earn something every bet whereas with roulette you lose with every bet.

Modern Portfolio Theory uses this same idea to identify the expected value for the return your portfolio will see.

All of the jobs numbers from around the world are showing the same things, people are losing jobs.  Since Alberta was really driving Canada’s economy seeing that people are losing jobs and taking pay cuts there is the confirmation that we’ve been expecting.  None of this really comes as a surprise of course with oil worth less than a third of what it was a year or two ago.  My point is simply that the good times are over.  Canada’s manufacturing sector was lagging for a long time and the US housing market started to collapse a few years ago already.  But now that Alberta has finally succumbed the peak in the Canadian economy is over as well.

The other side of this is related to real estate.  Calgary real estate peaked about a year about already.  The absorption rate (the time is would take, statistically, to sell a house) is around 10 months, but prices have not fallen very much.  The key was that there were still low unemployment and many high-paying jobs.  In fact, one reason for the dramatic rise in real estate prices was the high income earners were looking to jump aboard the express train of high yielding real estate.  When prices stopping rocketing to the sky it didn’t matter because speculators were able to hold multiple properties, either by renting out the excess or being comfortable allowing their high wages to carry them through the rough patch.  Now that people are losing jobs it will be the time to really pay attention to house prices.

Mr Astle reflects on the lessons that he has learned from his coverage of NT over the span of 15 years.

Capital structure is key, he says, knowing how to generate cash and raise money.  He mentions that many successful competitors raised equity money when equity prices were high, not when they needed it (after equity prices dropped).  I would add in that knowing how not to squander cash is also important.  The example that comes to mind is the announcement to buy Clarify for US$2.1 Billion and the eventual sale for US$200 Million

First I’ll start by explaining  What ‘your number’ is; well it seems to be based off of Michael Mastersons’ Seven Years to Seven Figures‘ book (a decent book, by the way, I should really review it sometime) where you determine what level of lifestyle that you’d be comfortable with.  You then calculate how much that lifestyle will cost you annually and what date you would like to be financially free.  Once you know your financial freedom date and your annual lifestyle cost it is easy to determine how much money you will need to attain financial freedom.

That is Your Number (well, really it is two numbers;  how much and when).

ShareYourNumber is a social network where you go to publicly declare ‘your number.’  After you’ve shared your number the community is there to help you get there.  Forum discussions, blog posts different groups that you can join, etc.  Seems to me to be sort of similar to a personal finance blog directory.

The Good
The best part of the whole exercise is that it forces you to sit down and consider what your life’s purpose is.  From there it is a matter of setting one giant SMART goal, i.e., your number and when you will achieve it.

The second good point is that this is a community of like-minded individuals all located in the same place.  Everybody gets their own space, you can blog join discussions, etc.

The Bad
This site it confusing, in fact it is not really one site att all but a collection of sites.  While trying to find information I was redirected (from ShareYourNumber) to ning, kickapps, ShareYourNumber.org and several subdomains under ShareYourNumber.com.  I’m guessing this started as a ning community before  eveloving into a space of its own.

The Summary
This social network is a great idea to get people to publicly announce their goals – which I’ve read is the most important thing is setting the goal because then it becomes an accountability.  It is also a community so you can lean on others to help you along or provide your own advice.

If you are already a blogger on this subject then I’m not sure if this is the site for you (other than promoting your own space).  Bloggers tend to build their own communities plus they are generally the masters of their own domain.  There are plenty of ads on ShareYourNumber but, I’m sure, none belong to the members.

All in all, I love the idea but am lacklustre on the implementation.  If anyone has signed up and is using it then I would love to hear your comments.

Things have been cooling off in the last 18 months, or so, so I decided to take a look at the Calgary Real Estate Board’s December 2008 statistics package.  Side note: I have to hand it to CREB for keeping and publishing great stats, the best in Canada, in my opinion.

• Over the last year median sale price has dropped from 368,500 to 340,000, or 7.7%.
• They’ve had huge volume compared to sales for a long time now and the absorption rate is currently sitting at 10 months.  That means if you have a house to sell, you can expect it to take 10 months before it gets sold.

What isn’t in this report is the state of the local economy.  I have heard from friends that the job market is starting to look bleak.  People are starting to lose jobs.  Apparently, if you apply for a job and don’t list a Calgary address then the application ends in the garbage.  What this means is that inventory may increase and/ or prices will start to drop as people are forced to sell.

Today I came across something that did pique my interest – a Web Company that promises to mentor people in everything that you need to do in order to succeed with an online business. Online Profits dot Com.

Judging from their ad copy it looks like it is more than the run-of-the-mill e-book scam (a la the “$49 special where we teach you nothing that you need to know”).  They’ve divided a program up into multiple modules in a step by step approach.  Their list of mentors looks impressive, as well.

Is it worth it?  I have no idea.
Will I buy it? Doubtful.

However, I am submitting my name for a free draw at Daily Blog Tips .  I am also a sucker for free stuff.:)

Trading on the TSX has been halted, and according to Andrew Wahl Nortel will likely be de-listed completely from the TSX and NYSE.  From largest company in the index to de-listing in a decade.

I have always been personally interested in this company as I used to work for them.  I worked for them until I got frustrated and quit.  There were still many great people at the time of my departure.  Over the years they have slowly been leaving (one way or another).  My heart goes out to those that are still there.

What is interesting is that Nortel sucked it up and declared bankruptcy, after years of trying to recover from poor management.  While some other poorly run companies are getting bailed out.

Update: The TSX has resumed trading of NT.  The price has dropped 62.34%

By and large, however, the insurance industry works as it should.

• The premiums are based on risk and coverage.  An 18 year old male insuring a Ferrari is going to cost.. alot.  Short driving exprerience and statistical likelihood of an accident, and the value of the asset being insured.
• Deductables are there, IMHO, to prevent us from making frivolous claims.  Consider that a smashed windshield might cost 100$ to replace, but in total might cost $150 insurer once they pay administrative costs.
• The coverage can be somewhat sneaky, e.g., they may pay for floods but not sewer backups, and we never realize it until it is too late.  However, you do get the coverage that you pay for.

So whatever our feelings on insurance, it works as intended.  Usually.

Insurance works best when only a few of the many insured make claims.  When widespread catastrophe strikes it becomes very difficult for the insurer to cover all payments.  It’s not like an insurance company puts our premiums under their mattresses, they invest the money. They invest your premiums in the same market that has seen your savings and retirement plans lose 50% of their value in a few short months.

I’m not doomsaying, I’m not predicting that you won’t be able to get your car fixed after your recent fender bender.  I am merely pointing out that insurance is not a guarantee.  For more of a gloomy perspective check out this from Bankruptcy Law Network

Where I am going with this is how this relates to the Credit Default Swap (CDS) market and our current ‘credit crisis.’

CDS’s are similar to insurance, except that they insure against loan defaults.  Your bank will pay a premium for insurance against people not paying back their loans.  The good folks at places like Bear stearns will gladly accept premium payments at the risk of having to pay out the full amount in case of default.  Unfortunately, if a large number of these loans do default then the insurer may not be able to meet the payments.  Your bank paid their premiums for insurance but did not receive the benefit.

Consider this hypothetical example.

Balgonian International Group (BIG) commences a leveraged buyout of Louisiana Trust Insurance (LTI) for $2B.  It’s leveraged because they need a loan, which they get from Bull Steers Investment Bankers (BSC).  BSC implements a Credit Default Swap to remove the risk from their books, Frehman Sisters (FEH) accepts the swap.  FEH gladly accepts the premiums and invests them wisely in an up and coming insurance company called Louisiana Trust, whose shares have seen a dramatic increase lately (since the announcement of a buyout).

Unfortunately a bad hurricane season, and the fact that LTI only services Louisiana, has bankrupted LTI.
BIG has also been hit hard and they can not make the payments on their loan, they default.
BSC attempts to recoup their losses on the loan by asking their swap counterparty (FEH) to pay up.
FEH invested the premiums so they sell their stake in LTI.  Unfortunately, due to the bankruptcy of LTI, their stock has dropped 99%.
Everyone loses.