Friday, November 25, 2022

This week's interesting finds

Adam Young and Sydney Campbell – Partners since 2019 and 2020 (Yonge-Dundas Square – Toronto, ON) 

Our holiday gift guide – 2022 edition 

For those fearing winter (and those looking forward to it), we have a new list of gift recommendations tested by EdgePointers. As always, they’re as varied as the partners who recommended them. From digital to analog, there are things for the home and even something in outer space. We hope they help inspire your presents for those closest to you these holidays. Just like last year, we’re also featuring some items made by some of our Portfolio companies (although this isn’t a recommendation to by a company’s securities). 

EdgePointer of the Month 

The latest EdgePointer of the Month is Nataliya Goreva, head of Trading Operations. 

Read more about our multilingual, world traveler Nataliya.  

This week in charts 

Returns by asset class since 2011 

Home owners with variable-rate mortgages face difficult squeeze as interest rates rise, house prices drop, Bank of Canada warns. 

About 670,000 variable-rate mortgages have been issued since the start of the pandemic, according to the Bank of Canada. Variable-rate mortgages accounted for around 50 per cent of all mortgages issued since mid-2021, compared to an average of 20 per cent in the years before the pandemic. 
Borrowers have sought the variable-rate products because borrowing costs have typically been cheaper 
Financial markets expect the bank’s benchmark interest rate to reach 4.25 per cent by early 2023, up from 3.75 per cent today. 

“This is not a large share of households, but it is larger than it would have been based on historical trends,” [Bank of Canada Senior Deputy Governor Carolyn] Rogers said. 

than fixed-rate mortgages. Part of the motivation was that federal banking rules require borrowers to prove they can make their monthly mortgage payments at an interest rate at least two percentage points higher than their actual mortgage contract. 

Problems in the mortgage market can infect the broader financial system if borrowers default on payments. Ms. Rogers said Canada’s banking system is in a good position to handle potential shocks, thanks to reforms following the 2008-09 financial crisis that increased capital and liquidity requirements for lenders and bolstered mortgage stress tests. 

Moreover, the central bank is “not expecting a severe economic downturn with the kind of large job losses typical of past recessions,” she said. 

But tens of thousands of homeowners will be pinched as interest rates continue to rise. The Bank of Canada is widely expected to raise interest rates again on Dec. 7, either by a quarter-point or half-point. 

What Really Matters? (Howard Marks memo)

“What really matters is the performance of your holdings over the next five or ten years (or more) and how the value at the end of the period compares to the amount you invested and to your needs. Some people say the long run is a series of short runs, and if you get those right, you’ll enjoy success in the long run. They might think the route to success consists of trading often in order to capitalize on relative value assessments, predictions regarding swings in popularity, and forecasts of macro events. I obviously do not. 

“I think most people would be more successful if they focused less on the short run or macro trends and instead worked hard to gain superior insight concerning the outlook for fundamentals over multi-year periods in the future. They should:

• “study companies and securities, assessing things such as their earnings potential; 
• “buy the ones that can be purchased at attractive prices relative to their potential; 
• “hold onto them as long as the company’s earnings outlook and the attractiveness of the price remain intact; and 
• “make changes only when those things can’t be reconfirmed, or when something better comes along. 

This week’s fun finds 

Walk this number of steps each day to cut your risk of dementia 

People between the ages of 40 and 79 who took 9,826 steps per day were 50% less likely to develop dementia within seven years, the study found. Furthermore, people who walked with “purpose” – at a pace over 40 steps a minute – were able to cut their risk of dementia by 57% with just 6,315 steps a day.

“It is a brisk walking activity, like a power walk,” said study coauthor Borja del Pozo Cruz, an adjunct associate professor at the University of Southern Denmark in Odense, Denmark, and senior researcher in health sciences for the University of Cadiz in Spain. 
Even people who walked approximately 3,800 steps a day at any speed cut their risk of dementia by 25%, the study found. 

The largest reduction in dementia risk – 62% – was achieved by people who walked at a very brisk pace of 112 steps per minute for 30 minutes a day, the study found. Prior research has labeled 100 steps a minute (2.7 miles per hour) as a “brisk” or moderate level of intensity. 

The editorial argued that individuals looking to reduce their risk of dementia focus on their walking pace over their walked distance. 

Coffee vs. tea smackdown 

Do you start your mornings with a potent dose of caffeine from a freshly brewed cup of Joe? Or do you prefer a slightly less caffeinated nudge from a warm and gentle cup of tea? 

Whatever your preference, scientists have found that regularly drinking coffee or tea can provide a variety of health benefits. But how do coffee and tea compare in a head-to-head matchup? We took a look at the research, and here’s what we found. 

Meet Pearl, a local Halifax mascot who has garnered worldwide attention online. 

Pearl is the mascot of the Halifax Oyster Festival — a giant oyster with over a dozen eyes, luscious lips and long legs. 

The Coast, a digital-first news outlet in Halifax, puts on the Halifax Oyster Festival every year. They created Pearl six years ago to represent the festival. 

Note: OysterFest is this weekend, November 25 and 26.

Friday, November 18, 2022

This week's interesting finds

Juan Gomez – Partner since 2016 (Peace Love Austin Mural – Austin, TX)

This week in charts 

Food and Agricultural Organization of the United Nations food price index first YoY drop in two years

Bear markets usually mean new market darlings

Japan Weighs Raising Taxes On EVs With "Higher Output Motors"

The country's internal affairs ministry is reportedly weighing whether or not to raise taxes on electric vehicles in order to make up for a shortfall in income from taxes on traditional gas powered cars, Bloomberg reported Thursday morning.

Currently, electric vehicle owners pay a flat fee of 25,000 yen per year to local governments, but the ministry is interested in potentially altering this framework for vehicles that have "higher output motors", the report says.

The ministry will reportedly ask the ruling coalition to "consider the change" for inclusion in the 2023 tax code, Bloomberg reports. Even then, the change could take several years to come into effect.

Recall, we wrote back on November 5 that UK chancellor Jeremy Hunt is expected to put an electric vehicle excise tax in place by 2025-2026.

This month's Autumn Statement will include the measures, according to FT, who said people familiar with the road tax is part of a larger plan to address a fall in motoring tax revenues caused by the shift to EVs, which leave out fuel-related taxes. Fuel duty raises about £35bn, but the Treasury has warned that a growing number of EVs on the road could cause this number to plunge by £2.1bn by 2026-27. Ergo, a new excise duty on EVs could take place by 2025-2026.

This week’s fun finds

Mapping The Most Used Words On Every Country and U.S. State's Wikipedia Page

Can You Get a Full-Body Workout in 20 Minutes?

Maillard Howell, head of fitness at Reebok and co-owner of Dean CrossFit in Brooklyn, said the key to getting an effective workout in a short amount of time is focusing on compound exercises.

A compound exercise is one that uses multiple muscle groups at the same time to perform a movement — like squats, push-ups or deadlifts. Isolation exercises, like bicep curls or calf raises, won’t raise your heart rate as quickly as compound exercises and primarily work one muscle group at a time.

If you’re short on time, “you want big movements that use big muscles,” Mr. Howell said.

[Cardiovascular physiologist Dr. Stephen J. Carter] recommended a three- to five-minute warm-up with the goal of increasing your circulation. “I keep it dynamic. I just want to start moving, and I’m a big fan of raising your body temperature before a workout,” Mr. Howell said.

Once you’ve completed the workout — and caught your breath — Mr. Howell suggested a three- to four-minute cool down. He recommended static floor stretches, like the pigeon pose — with one leg stretched out straight behind you, and the other leg bent in front with the side of your calf resting on the ground. You can rest your calf up on a bench to make it easier, or just go through any stretches that feel good.

Life in the Slow Lane

I was being a snob. Slow cookers are useful for all sorts of people, but particularly for a specific kind of cook: the person who wants to do things from scratch, but lacks the time, culinary knowledge, or confidence to do so on the hob or in the oven. It is a sympathetic tool, unlikely either to burn your food or leave your meat undercooked. Your timings can be out by hours with little impact on the end result. It’s economical, too — first in its ability to make the most of cheap cuts of meat and tough vegetables, second in its small energy footprint (it costs about the same to run as an energy-saving lightbulb).

The common thread within the slow cooker community is convenience. The slow cooker is inherently domestic: Chefs have no interest in leaving their pots unattended, and the prospect of having to keep a lid clamped on them and leave them untasted and unadjusted is anathema. It’s not a terribly glamorous piece of kit. “They’re not sexy!” Megan Allen, another slow cooker fan tells me, laughing. It’s not aspirational. It might be prosaic, but the slow cooker is a purely functional device: it gets the job done.

Friday, November 11, 2022

This week's interesting finds

Sarah Ford – EdgePoint Partner since 2008 (Duckworth St. – St. John’s, NL) 

Photo by one of our advisor partners: Jim Mason 

Wondering why you’re seeing this? Click here to find out more about our beliefs at EdgePoint and why our internal partners are proud to stand behind (or in this case beneath) them.   

This week in charts 

Institute of Supply Management (ISM)’s Services Purchasing Managers Index (PMI) Prices Paid Index vs. CPI 

Note: The Services PMI report are the opinions of purchasing managers in non-manufacturing industries about business conditions, with 50 as the midpoint. The higher the number, the better they think things are.

Venture capital has been patient   

An inverse relationship   

This week’s fun finds 

No such thing as too many cooks in the kitchen for the Operations team 

As a team building exercise, Operations had an after-work social where they made then ate their dinner. The department was split into teams of two and challenged to make one dish (a soup, appetizer, main or dessert). I think everyone won this one. 

Compliments to the chefs!   

EdgePoint hot sauce review crew 

Because there are so many saucy individuals at EdgePoint, we’ve offered up our services to review hot sauces on behalf of our external partners. 

First up, Ass Kicking Whoop Ass Ghost Pepper Sauce

Heat: 7.2 (out of 10) 

Flavour: 6 (out of 10) 

Just enough flavor that I wasn’t regretting the pain from the heat. An ideal match for someone who prefers hot sauce with pizza instead of garlic dip. 

• Got a bit of that vinegar and spice. But a little goes a long way to be able to actually enjoy the flavour. The heat gets progressively hotter, which is why I am giving it a high rating. 

• This hot sauce has a nice heat but light in flavour. Good for those who are looking to just add heat but not one for those looking to add heat and enhance a dish. 

A face only a mother could love: Terrifying photo shows what an ant looks like close up 

It's an award-winning close-up photo of ... an ant. 

The eye-popping photo is one of 57 Images of Distinction in Nikon's Small World Photomicrography Competition.  The terrifying portrait was captured by Eugenijus Kavaliauskas, a Lithuanian photographer.

Friday, November 4, 2022

This week's interesting finds

Jinhyung Kwon – EdgePoint Partner Since 2020 (Toronto, ON – Financial District)

Science or tobacco (Go West) - Geoff MacDonald talks about how fossil fuels have become the "new tobacco" in the media.

Note – Due to technical issues, we’re giving our readers another chance to read Geoff’s commentary.

This week in charts

Inflation was supposed to be done by now…

Maybe two years from now? 

Where Canadian workers went

Nuclear Shutdowns Have Already Harmed the Planet

In total, since 2012, the carbon costs of nuclear phaseout policies in developed countries add up to about 800 million tons of CO2. To place that number into context, that’s enough CO2 emissions to melt 2400 km2 of Arctic summer sea ice, plus or minus another 240 km2. It equates to a full two years of nationwide fossil CO2 emissions from a medium-sized country like Turkey, Australia, or the United Kingdom, or more than 0.1 parts per million of the 416 parts per million of carbon dioxide in the planet’s atmosphere.

These totally unnecessary carbon emissions will continue to grow over the coming decades, with one academic paper estimating that added global emissions from Germany’s nuclear phaseout alone will total 1100 Mt of CO2 by 2035. With each additional year, the consequences of reactor shutdown decisions made years ago continue to accumulate around the world.

Why do shutdowns of nuclear power plants increase a country's fossil carbon emissions? This effect occurs because to date, low-carbon electricity formerly generated by decommissioned nuclear power plants in the wealthy world has largely been replaced by fossil fuels, causing added carbon emissions as a direct result of nuclear phaseout policies.

But even to the small degree that falling nuclear electricity generation has been replaced by renewable power, this represents “treadmill decarbonization” where low-carbon energy is simply replacing other low-carbon energy sources instead of reducing overall fossil fuel consumption. At a time when governments should be seeking to maximize the pace of clean energy deployment and taking fossil fuel power off the grid, treadmill decarbonization counterproductively expends resources swapping out clean nuclear energy for renewables while letting fossil fuel plants continue to run. 

UBS Global Real Estate Bubble Index 2022

Real house price levels in Vancouver and Toronto have more than tripled in the last 25 years. An urban housing shortage amid strong population growth and falling mortgage rates are typically seen as the two main culprits of the long-term property bonanza in both Canadian cities. High investment demand has also added significantly to the price increases. The index has been flashing warning signals in the last couple of years.

The housing boom has become more of a countrywide phenomenon and is therefore hardly driven by a shortage of construction. In such overheated markets, with already very stretched housing affordability, the recent rate hikes by the Bank of Canada could be the last straw that broke the camel’s back. New buyers and owners during mortgage renegotiations not only need to pay higher interest rates but are also required to provide more income to qualify for a mortgage. Price correction is already in the making.

This week’s fun finds

Halloween – EdgePoint’s favourite holiday

Not just because it’s associated with orange, but because our fun-sized partners (and a few full-sized ones) get to dress up. A few even came into the Toronto office to trick-or-treat.

Edge-ucation camp

For “Take Our Kids to Work” day, we were able to bring back Edge-ucation camp, our financial literacy camp for teenagers. We talked about compounding, inflation and other basics.

Larry Bird remembers when players that later went bankrupt made fun of him for saving his money - "They'd just laugh and make jokes about me stashing my money away"

"Some of the guys who made far less than me bought the $700,000 homes, and the Rolex watches, and the big luxury cars. I used to tell them, "You're crazy, you should be saving your money." They'd just laugh and make jokes about me stashing my money away. But I could see what they were doing. They were throwing away their future. So many of them were living for today and not even stopping for a minute to think about ten years down the road when their playing careers were over and the money stopped pouring in. And by the time they realized what I was telling them was true, it was too late.I can't tell you how many ex-teammates have asked me for money. It's heartbreaking for me to say no, but I do because I warned them. I told them to save."