By Tom Bradley

Below are some observations and musings on the week that was.

The Next Wall Street? – I’m desperately trying to come up with an investing analogy for the LeBron James signing with the Miami Heat, but I’m just too mad to think straight.  Three of the best players in the NBA go to one team so they have the highest chance of winning championships “for multiple years”. If we’re looking for the next area of unabashed excess to be shaken out (after Wall Street), perhaps we need look no further than pro sports.

Complexity gone wild – PricewaterhouseCoopers did a report on the risk management problems at Quebec’s Caisse du depot. In the ROB today came the following quote: “...the investment vehicles became so complex that the fund’s risk management group couldn’t (keep up with) them.” We often talk about the four types of risk that fuel investment returns – interest rate, credit, liquidity and equity risk. Unfortunately, a fifth type has emerged that adds cost, not return, to a portfolio – COMPLEXITY.

Bad Math –The Canada Revenue Agency (CRA) is going to review 70,000 TFSAs (Tax-Free Savings Accounts) on a ‘case by case’ basis if there has been over-contribution penalties assessed. Think about the economics of that. It will cost more to crack open the file than the government could ever hope to collect in penalties.  Why don’t the Feds admit they screwed up, clarify the rules and wipe the slate clean...and then put the savings in a TFSA of their own.

A Snowflake in Hell – For the first time I can ever remember, real estate companies are actually predicting lower house prices for the year ahead.  In its latest survey, Royal LePage is calling for a softening in some areas and is warning that there will be fewer situations with multiple offers.  If they are predicting weakness, does this mean the outlook for real estate is REALLY scary?

Procrastination is good...sometimes – As I head off to enjoy the summer heat, Neil gave me a book to look at – ‘The Upside of Irrationality’ by Dan Ariely. I had asked him about it (he’s the source on these types of books) because I saw the following quote from the author, “If you are doing something you hate, like working on your tax return, then it’s better to work straight through without taking breaks, and the opposite for something you like doing. We found that anticipation, savouring the experience and the joy from memory are as strong as the experience itself.” Why is it that we always do it the wrong way?

It's all good – It looks like the summer heat has arrived in most parts of the country, we got a cool new Governor General this week and I only have to mis-pronounce the word vuvuzela for two more days. Enjoy.