Comments on: This and That: The Greenback Effect and more… http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/ Helping you invest and prosper Sun, 12 Feb 2012 00:54:40 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Four Pillars http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198678 Four Pillars Sun, 23 Aug 2009 19:40:55 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198678 Thanks for the link. You are right about CARP's motto! :) Thanks for the link. You are right about CARP’s motto! :)

]]> By: Rob http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198613 Rob Sat, 22 Aug 2009 19:22:45 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198613 If our system requires a growing population to be sustainable, then our system is not sustainable in the long term. This seems pretty self-evident, and yet people seem to ignore it. If our system requires a growing population to be sustainable, then our system is not sustainable in the long term. This seems pretty self-evident, and yet people seem to ignore it.

]]> By: Preet http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198538 Preet Fri, 21 Aug 2009 23:15:30 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198538 Thanks for the link and have a great weekend! Thanks for the link and have a great weekend!

]]> By: Silicon Prairie http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198527 Silicon Prairie Fri, 21 Aug 2009 18:50:45 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198527 It seems increasingly likely (or at least somewhat reasonable) that we'll see more tax credits or even stronger incentives for having kids in the future. If they come soon enough and they're big enough to actually make it profitable, we could avert the demographic shift and help aging men's retirement plans :) (their wives might lobby against it though) Robillard: Another thing that favours investors who sell out is having liquid markets. I've heard this one a lot, but in theory there's nothing wrong with letting people sell their shares at or near the going price and giving everyone who holds on a bigger portion. In practice, does anything good happen when the managment of large companies get their hands on more cash than they know what to do with? It seems increasingly likely (or at least somewhat reasonable) that we’ll see more tax credits or even stronger incentives for having kids in the future. If they come soon enough and they’re big enough to actually make it profitable, we could avert the demographic shift and help aging men’s retirement plans :) (their wives might lobby against it though)

Robillard: Another thing that favours investors who sell out is having liquid markets. I’ve heard this one a lot, but in theory there’s nothing wrong with letting people sell their shares at or near the going price and giving everyone who holds on a bigger portion. In practice, does anything good happen when the managment of large companies get their hands on more cash than they know what to do with?

]]> By: MDJ http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198508 MDJ Fri, 21 Aug 2009 13:35:30 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198508 Thanks for the mention CC! Thanks for the mention CC!

]]> By: CanadianInvestor http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198492 CanadianInvestor Fri, 21 Aug 2009 08:57:34 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198492 Hi CC, thanks for the mention. Though I must say that when we had our three kids, we weren't thinking of our national duty! Hi CC, thanks for the mention. Though I must say that when we had our three kids, we weren’t thinking of our national duty!

]]> By: Robillard http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198482 Robillard Fri, 21 Aug 2009 04:37:29 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198482 Share repurchases are a perfectly legitimate way for corporations to return excess cash to shareholders. All things being equal, it is typically better for investors if corporations with excess cash pay it out as repurchases rather than simply sitting on the excess cash in a corporate bank account (a strategy that most certainly destroys value), or using it for profligate acquisitions. Unfortunately, share repurchases favour the investors that actually choose to sell at that moment. In theory, corporate share repurchases increase earnings per share, if EPS is held constant. This at least creates the illusion of increasing shareholder value. By comparison, a dividend increase has no effect on EPS. Whether it increases shareholder value or not depends on how one values their equity holdings. Share repurchases are a perfectly legitimate way for corporations to return excess cash to shareholders. All things being equal, it is typically better for investors if corporations with excess cash pay it out as repurchases rather than simply sitting on the excess cash in a corporate bank account (a strategy that most certainly destroys value), or using it for profligate acquisitions. Unfortunately, share repurchases favour the investors that actually choose to sell at that moment.

In theory, corporate share repurchases increase earnings per share, if EPS is held constant. This at least creates the illusion of increasing shareholder value. By comparison, a dividend increase has no effect on EPS. Whether it increases shareholder value or not depends on how one values their equity holdings.

]]> By: Michael James http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198478 Michael James Fri, 21 Aug 2009 03:47:01 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198478 Thanks for the mention. In the spirit of "Just give us more!", my earlier proposal that everyone named Michael be exempt from taxes doesn't seem to have been adopted yet. To show that I'm willing to compromise, I'm willing to couple this legislation with a pay raise for members of parliament. Thanks for the mention. In the spirit of “Just give us more!”, my earlier proposal that everyone named Michael be exempt from taxes doesn’t seem to have been adopted yet. To show that I’m willing to compromise, I’m willing to couple this legislation with a pay raise for members of parliament.

]]> By: Canadian Capitalist http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198470 Canadian Capitalist Fri, 21 Aug 2009 02:01:55 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198470 @Aleks: That's very funny. I've never player Railroad Tycoon 2 and who knows, maybe they teach this in MBA courses! @Phil: I don't know -- the US is our largest trading partner. If our goods get expensive, won't we suffer too? Won't we contract "Dutch Disease" where our strong currency be a handicap? Would the Canadian Government stand idly by and watch it happen? The last time our currency appreciated, strong commodity prices kept our economy robust despite the travails of the manufacturing sector. Would history repeat itself? I don't know and I don't have a view either way, so I assume the market is baking all this in the price. Of course, the markets could turn out to be wrong. @Aleks: That’s very funny. I’ve never player Railroad Tycoon 2 and who knows, maybe they teach this in MBA courses!

@Phil: I don’t know — the US is our largest trading partner. If our goods get expensive, won’t we suffer too? Won’t we contract “Dutch Disease” where our strong currency be a handicap? Would the Canadian Government stand idly by and watch it happen? The last time our currency appreciated, strong commodity prices kept our economy robust despite the travails of the manufacturing sector. Would history repeat itself? I don’t know and I don’t have a view either way, so I assume the market is baking all this in the price. Of course, the markets could turn out to be wrong.

]]> By: Phil S http://www.canadiancapitalist.com/this-and-that-the-greenback-effect-and-more/#comment-198468 Phil S Fri, 21 Aug 2009 01:06:28 +0000 http://www.canadiancapitalist.com/?p=2878#comment-198468 Well duh... It's a foregone conclusion that the greenback is set for a massive drop. The only thing is that the USA is the world's biggest customer (one of the few and by far the biggest net importer), their currency is the global standard currency by which all other currencies are measured and that countries like China, South Korea, Japan all need the USA to buy their exports so they continue to prop up the greenback by buying it in massive quantities. I would think that once the greenback plummets against all other currencies, then you definitely want to be in US stocks. US companies would be able to have the same cost competitive advantage that Canada had when our currency was a measly $ 0.62. A low currency is almost like an artificial trade barrier - Canadian companies were selling so much and Canadian consumers were importing (and traveling abroad) so little! Well duh… It’s a foregone conclusion that the greenback is set for a massive drop. The only thing is that the USA is the world’s biggest customer (one of the few and by far the biggest net importer), their currency is the global standard currency by which all other currencies are measured and that countries like China, South Korea, Japan all need the USA to buy their exports so they continue to prop up the greenback by buying it in massive quantities.

I would think that once the greenback plummets against all other currencies, then you definitely want to be in US stocks. US companies would be able to have the same cost competitive advantage that Canada had when our currency was a measly $ 0.62. A low currency is almost like an artificial trade barrier – Canadian companies were selling so much and Canadian consumers were importing (and traveling abroad) so little!

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