Banks Holding, So Far

It is now the end of August and all the major Canadian banks have reported their quarterly results. This seems like a good time to revisit my take on bank stocks from just over two weeks ago (August 13).

At the time I was optimistic, figuring that most of them would hold above their 50-day moving averages. This was wrong - they pretty much all dipped below that line leading into this week. (I can treat the banks as a group since, despite their distinctness, their stocks do tend to behave alike with extraordinary regularity.)

Those dips in share price were accompanied by low volumes and (apparent) trepidation about earnings, so I chose to hold my existing position in one of those banks. The questions I did wonder about were:

• Are the low expectations for their results baked into the share price?
• Is the low volume instead due to late summer doldrums, as is generally true across the market just before Labour Day, rather than a drying up of selling?

Now the results are out, and while not great they seem to be above investors' expectations. I can now breathe a sigh of relief that, so far, I seem to have made the right decision. All the majors are now trading back above their 50 DMA lines. Let's see if this price appreciation continues in September.

Fussing Over Broadband Usage Caps

I do not understand the fuss and outrage over broadband usage caps that Comcast, 3G mobile networks, and perhaps soon Bell Canada are implementing. The cost of providing service does scale with the instantaneous peak traffic. It is much like the electrical power grid. Since these ISPs (correctly, I believe) are being increasing restricted by regulators to prevent their application-based throttling efforts, it is understandable they would take this step. That being said, I do have a problem with how they are going about it.

As much as we all love to criticize large, quasi-monopolistic corporations, they nevertheless have the right to expect a profit from each line of business. Users have no right to unlimited consumption and should not expect it. While usage caps were not an issue in the age of dial-up since, at 56 kbps, the traffic carriage costs were a managable percentage of the total cost of providing service, this is increasingly less true due to broadband.

If ISPs are forbidden by regulation to throttle applications or to charge for data usage, their increased variable costs will have to be accounted for elsewhere. This would most likely mean higher average prices to all users. Like with electricity consumption there is sense in increasing charges for users who create high traffic loads during peak hours. That's what Ottawa Hydro and the rest are planning, and it is a good policy. No one wants to pay the cost, financial and environmental, for new power generating stations, nor do we want brown-outs.

The puzzle over ISP usage charges is the indiscriminate caps, such as 250 GB/month Comcast plans. It would be far better, and more justifiable, to charge differentially in tune with overall traffic load by time of day and day of week. This is what is being planned with the smart meters the electricity providers are now deploying. It is even easier for ISPs to implement this scheme since it is a software upgrade rather than a wide-scale deployment of metering hardware. For example, my previous ISP, Magma, did this. Large downloaders were given free rein after midnight while the bulk of their customers slept.

So while I can concur with the broad objective of usage caps, I do not agree with how it is being done. Undiscriminating monthly caps reek of the old bugaboo of protecting their own media properties while giving the appearance of implementing a cost-justified data management protocol. It's getting better, but I still don't buy it.

News: Relevance

When I first introduced the subject of news I described how I rate each item by relevance, importance and timeliness. My aim is a repeatable method of measurement. A news item that is relevant, important and timely is the equivalent of news nirvana. Timeliness is objective, while importance and relevance are subjective; you and I would measure news against the subjective criteria from the perspective of our unique interests and needs.

Since that first article (and if this topic interests you, you may want to read it) I discussed timeliness in a two-part article. Now I would like to talk about relevance. I am discussing it before importance because I view relevance as a prerequisite to importance.

Achieving relevance is difficult because the producers, aggregators and distributors of news have a commercial need to reach a broad audience, yet each member of the audience has his or her own criteria for relevance. Every player has come up with numerous techniques to meet its needs, using a growing set of technological tools.

Producers:

• Tag each news item so that search engines and aggregators can help consumers find it;
• Choose a mix of content to be broadly appealling to a hypothetical average member of a selected demographic;
• Editorial selection for quality and best fit to demographic and tags;
• User feedback to help order items for popularity, as a proxy for relevance;
• Correlate news items with background material and with related news and data (e. g. stock charts).

Consumers:

• Bookmark sites or authors that have a high percentage of news items that meet a need or interest;
• Select sites that allow customization of news feeds by source, topic and tag;
• Subscribe to push delivery from relevant (filtered) and timely news feeds;
• Follow recommendations from trusted sources to locate other relevant news sources and items (e. g. blog roll).
  

The above is not a complete list. There is a tremendous amount of experimentation going on, mostly in the startup space, to create more sophisticated, and hopefully relevant, techniques to fit the news to every individual's specific needs.

Next I would like to discuss some of those techniques and what you need to consider as you attempt to locate timely and relevant news.

• Reputation Services: You see it in blogs and more traditional media, those icons from various reputation and sharing services like Digg, Reddit and many others where you, the reader, can recommend or vote on articles and authors. The broad intent is to help you find news that is highly rated. Other web sites use page views, time spent on a page, comment volume, and site-unique user feedback to rate articles. This is all fine, but do these services help you to find relevant news? I can only give a very qualified 'yes'. Most often highly-rated articles are more attuned to determining general interest and popularity, not relevance; lots of things are popular but of little value. Consider this article and this one recently published on Seeking Alpha. One makes extraordinary claims about oil prices and the other about bank stocks. Both attracted vociferous and negative comments from readers. That pushed them to the top of the popular articles list, which had the dual effect of wasting your time (they are, arguably, awful articles) and pushed potentially more relevant articles off the list. Do not trust popularity - it is not a measure of quality or relevance. Popularity is better for finding humour and for tracking celebrities, if that's your thing.
• Selection Bias: If you are like most people you will seek out articles, news sites and authors that you tend to agree with. If you stick with this strategy you are wasting time reading news that is not actionable since it will only confirm you in your already-chosen positions. I do tend to talk here about market-oriented news, but the same could be said for any topic. Perhaps you seek authors who always say nice things about the Sens, even when they're on a losing streak. Or you only read political articles that confirm your view that Stephen Harper is the perfect leader. Or you only read conspiracy articles that argue against evolution or the safety of the Large Hadron Collider. You might only read contrary articles because you (subconsciously) want to feel self-righteous anger, and may vent with a witty or abusive comment. If you do any of these things you are avoiding relevant news and analysis by practicing selection bias. You must seek out, read, and understand articles that challenge your deeply held beliefs. If you are convinced gold will go to $2,000 you need to read well-argued articles by professionals who conclude gold will first hit $400. You may continue to hold your original view, but you can feel more confident in your position if you can argue (rationally) against the contrary views. You might even change your mind, and perhaps thereby avoid a major loss. Seek out contrary views in all areas of news topics that are important to you - they are especially relevant. You aren't required to enjoy it, just do it.
• Thought Leaders: Do you think Jim Cramer is a buffoon? If you do, perhaps you ignore what he has to say about stocks, including ones you hold. This is a mistake. Regardless of what you think, people like him have a large and loyal audience. If Cramer says Sirius is a winner, you can bet the price will move, even if only for an hour. This is relevant to you if you hold or trade any stock or sector he opines about. Other market movers include Alan Greenspan, Barrons (trusted by many professionals), and even those discredited analysts who issue stock recommendations. There are more of these people and publications, and if you play the markets you need to listen to them if only to understand what others will do. Understanding that when they speak it is news and relevant, you can profit by playing with or against the crowd as you deem appropriate. First, however, you need to watch for timely news of these events.
• Popular Topics: If you follow a popular topic or stock you will be flooded with news articles. The latest Google or iPhone rumour? Expect to see hundreds of articles from reputable journals and bloggers. The same is true of celebrities, your favourite sports team, and popular politicians. You need to manually filter out the dross or ruthlessly prune your news feeds so that you don't waste valuable time reading uninformed or 'me too' articles. Stick to the experts with timely and insightful articles, whether the author or publication is top tier or a quirky blogger. That's how to stay with relevant news for popular topics.
• Aggregators: As mentioned above, there are many experimental news aggregator services appearing on the scene every week. Each has its own little innovation for helping you find relevant and timely news. Don't waste too much time searching them out, but do play with a new or recently improved one once a month or so. Try not to get stuck in a rut with any one aggregator. Some that I've looked at recently include Seeking Alpha, Newsflashr, Newscred and Streetread. I don't necessarily recommend any of these, but they are interesting in that they each take a different approach to finding and filtering news feeds to individual specifications. You should also never settle on any one aggregator or you will miss relevant news. Especially for stocks if you are in to it seriously, you should visit several aggregators each morning to find all the news relevant to stocks you hold or are watching. This is particularly true for Canadian stocks since most of these aggregators stick exclusively with US stocks and news feeds. Supplement these feeds with visits to Report on Business, the Financial Post and other Canadian sources of market news.
• Segregate: If you are like me you have many fields of interest. There are times when you do need to focus on one to the exclusion of others. Segregate your news feeds to avoid counter-productive distractions. You may have a deep personal interest in an ongoing debate in Parliament, but if you monitor and read news about it on the job it is irrelevant and potentially disruptive to your best interests. The same goes for market news. While it may be difficult to accomplish, you need to do some segregation of news that mirrors the compartmentalization of your time and your life. News can become addictive, and like many addictions can render you unproductive in every activity in which you participate, including the job that feeds your family. You can use several aggregators (or one aggregator, but multiple identities) to divide and direct news feeds to the appropriate time, place and appliance. Do this and you'll achieve greater relevance of news, and minimum distraction, as you proceed through your daily routine.

As you can see from these articles, I can pin down timeliness as a rigid technical requirement. This is not so of relevance and, as will be seen in my next article, it is even less so of importance. Despite a lack of rigidly objective criteria, relevance is a critical property of news. You determine the relevance, but you also have to understand how to select news appropriately so as to maximize the average relevance of the news you consume. It is even necessary to occasionally challenge yourself to dive into news that is unpleasant though entirely relevant; you don't have to like brussels sprouts to gain the benefit of eating them.

My next article in this series on news will be on importance, the final criterion in my list. No promise when I'll get to it considering how long it has been since I wrote on the first criterion, timeliness. This blog is my hobby.

My Blind Spot for US Politics

You have of course noticed the increasing amount of coverage in the media, especially traditional media, of the US presidential campaigns. Perhaps like many Canadians you are paying attention to it and find it interesting. I am not paying attention except insofar as I can't avoid it whenever I turn on the radio, click on a news site, or on the odd occasions I find myself in front of a television.

I don't pay attention because I consider it all quite unimportant. Certainly it is of importance to Americans, but I would argue it is unimportant to Canadians. Yes, it is entertaining, if that's the sort of thing that turns your crank. It can also be titillating, if you enjoy the questionable tactics often employed. But does it matter? I say that it does not.

To my way of viewing US politics, the only event in this campaign that matters is the election result. Everything up to that point is time-sucking noise. I am not a US voter so the campaigns help me not at all. Apparently it isn't even important to the large proportion of Americans who will not vote.

Even the result of the election is of only moderate importance to this Canadian. Regardless of who wins, the impact on trade and foreign relations won't differ a great deal. The forces underlying those themes, the only ones of particular interest to non-Americans, are greater than any president. The US administration will have some sway, mostly in the way of minor adjustments to the greater forces of the country's economic and political interests.

So if you do like to watch the electioneering, go ahead. Just don't deceive yourself that anything of great moment is occurring or that it will impact you to any degree. The US will continue to be broadly open to trade, with selected barriers due to security concerns and industry pressure groups. The US will find a way to get of Iraq, no matter which candidate wins. Petroleum policy and security will continue to be priorities if only because the entire country believes in their importance. There may be bigger internal changes, such as in their approach to health care, but that does not affect us. As usual we can learn from their policy experiments, both the successes and failures, and perhaps emulate or expunge them in our own institutions.

If there is a federal election of our own this fall, I will pay close attention. That, to me, is truly important since it affects my life and my country.

Perils of Timestamps on News

A while back in my series on internet news (still not complete!) I criticized using relative time stamps on news articles. Those are the type that tell you that news is from, say, 3 hours ago. I have since discovered another problem with this method of time-stamping news.

As I mentioned then, I use myYahoo for market-oriented news. On their home page, but not on pages specific to stock portfolios or individual stocks, they use these relative timestamps on all news, including those fed via RSS feeds. Their system has been misbehaving recently.

From the symptoms of the problem it appears that the time-stamp is not relative to the time the article was published. Instead it is relative to the time the article arrived via the feed. If the feed mechanism misbehaves the timestamps are wrong.

As examples, news articles for stocks and from RSS feeds are periodically disappearing. Okay, so problems do happen. The bigger problem is that when they fix the problem and the news is refreshed, the timestamp is relative to the time the news was refreshed! That's not good. I am seeing, for example, news for thinly-traded stocks (which tend to have few news articles) showing up as from 2 hours ago that were in fact published weeks ago. That ain't news.

One more reason these service should stick with clock times for time-stamps.

Elimination of Corporate Tax

The author of this Globe and Mail article, Neil Reynolds, asks an old question: would we be better off to eliminate all corporate income taxes? Without his being too explicit, he certainly leans toward saying yes, we would be better off. I also believe that is the right answer. However, the devil is, as always, in the details. Mr. Reynolds does describe some of the advantages to our economy of the zero-tax regime, but does not address how we can get from here to there without causing havoc. Fair enough, since that wasn't his intent. While I don't have all the answers I do have some thoughts on an implementation plan that would minimize the pain while accentuating the gain, and therefore might be politically feasible.

Before that I want to first make a point that is often lost in the noise of any discussion on this topic. Corporations are not people. It is true that the word itself comes from the Latin word for body, corpus, yet it is simply a legal fiction intended to erect a firewall between a business entity and its officers, directors and owners that, if they adhere to certain rules, protects their personal assets in the case of business failure and permits profiting from the business in a controlled, and taxable, fashion. It is not meaningful to talk of corporate profiteering since corporations don't run out and buy big houses, gamble and live hedonistic lifestyles. Pieces of paper don't do that.

So then, what happens if you eliminate corporate income tax? The immediate (first order) effect (assuming the corporation is profitable, which many are not!) is that the corporation will have more cash. Since cash is an asset the corporation's book value increases. That's it. The money did not vanish into thin air and did not end up in someone's pocket. On the larger stage there is a rebalancing occurring, since provincial and federal coffers will be lighter by the same amount. This is a concern since if you implement the tax elimination plan in one fell swoop there would be pain in the financing of our public institutions, which includes all government-sponsored programs. The solution is to not implement corporate tax cuts in this way.

Instead let's suppose we reduce corporate taxes a small amount so that profitable corporations have a little more cash in hand, and governments have a little bit less. A cynic might claim that greedy and unethical corporate actors will line their pockets with that extra cash. In some cases that may in fact happen. However, if it does it's because those same bad actors already do so. Corporate tax policy does not change this type of misbehaviour; corporate taxation is not an instrument of law enforcement or ethical policing. It is a matter of corporate governance and enforcement of existing laws and securities regulations. That can be done today as it entirely distinct from taxation. Therefore such an argument is a red herring.

If that concern is allayed, what is the likely impact of a padded corporate bank account? If kept in the bank, the company's value will increase by the same amount. Public companies will, on average, see their share prices rise. The amount of the rise is easy enough to calculate: divide the cash by the number of shares. If nothing more is done, your retirement plan (assuming you hold mutual funds or directly own stocks) increases in value proportionately. This includes the CPP which hold shares in Canadian corporations.

Companies are not inclined to hold onto excess cash since it does little work other than generate a small amount of interest and, if allowed to grow too far, can attract predatory and hostile takeovers from larger entities that want access to that ready cash. No, competent managers put the money to work to increase the company's value or distribute it to shareholders by increasing dividends (which, by the way, generate tax revenue for government) - this is a secondary effect of a tax cut. There are many ways for companies to put cash to work, some of which are listed below, along with tertiary effects.

• An increased asset base allow the corporation to take on more debt or make a secondary stock offering (or IPO it is not yet public) on attractive terms to fund expansion to research and new products and markets, thus ensuring future success and growth.
• Reduce prices to competitively bid on new business, while maintaining similar levels of profitability. The company will be able to grow its business, especially in foreign markets, thus growing the Canadian economy and increasing personal wealth. Governments benefit by a greater tax base due to economic growth, which can then better fund public institutions and social programs.
• Attract superior talent with higher salary and stock offers, which will increase the quality of products and services while also innovating on new markets and products. Other tertiary effects are the same as those in the previous point.

Now let me return to the idea of implementing change slowly. Doing it in small increments, especially initially, will allow everyone, politicians, businessmen and the overall population, to see benefits of each change. This can create confidence so that further incremental change is welcomed by all and, if all is done within a government's term in office, will reward the politicians that took on the risk.

I am also realistic is seeing that despite the positive potential the risk of failure must be faced. Perhaps the biggest risk is that a down tick in the economy due to exogenous factors could well be blamed on the initial tax reduction, even if a careful analysis shows that the tax reduction reduced the economic distress. There will also certainly be nay-saying from parties in opposition (just because they're the opposition!) that may get a sympathetic ear even if the overall experiment is working. These politicians would only have to highlight one or two examples of negative impacts on a group of people or companies that may, or may not, be directly attributable to the tax reduction. Politicians live by public perception so the pro and con forces will work hard to sway opinion, regardless of the success or failure of the experiment.

Okay, so this has been an interesting thought experiment, but can it actually be made to happen? Sure, but possibly not in our present political environment. There are politicians who would certainly be willing to act, even as a matter of principle or ideology. A competent politician, which is one who is in tune with the electorate, will not do it today since it is unlikely to be supported by the people. It is more likely to result in political death. Leadership is risky. Despite this situation I would still like to see one of the parties, at either level of government, start talking about it so that it can be seriously contemplated before many more years go by. The entire country could benefit from making our companies more globally competitive.

Diversification for Canadian Investors

Because I follow the markets, I am occasionally asked by those I know of my opinion on how or where to invest. Invariably I deflect those questions since I know enough to know that I am not qualified to give that sort of personal and critical financial advice. Also, my track record is modestly good but far from stellar. I know enough to know I don't know enough; at least when I trade for myself I am somewhat comforted that my mistakes affect the fewest possible people.

A common and often very good investment strategy is diversification. The idea here is to spread your investment dollars across a broad range of sectors (mining, financial, technology) and investment classes (equities, fixed income) so that you reduce volatility. This protects you on the down side when one sector drops precipitously, such as the recent financial meltdown or more recent fall in commodities, even though it also limits your near-term gains on the upside. If you are not an active investor and simply want to invest and forget, diversification is your friend, with the caveat that there can never be certainty of positive returns.

One technique for diversification that many use is to buy index funds or cross-sector mutual funds. It's simple and seems to meet the criteria for the casual investor. However, if you're a Canadian investor you should perhaps think again.

The Canadian economy is not diversified and neither are broadly-based investment vehicles that focus solely on Canadian markets. Many of you are likely familiar with the cliche that Canadians are "haulers of wood and drawers of water", yet some fail to take that into account in their investment choices. The TSX Composite index, as a prime example, is heavily skewed toward commodities and raw materials. While the numbers do fluctuate wildly, one estimate has the current index almost 50% basic materials and 18% manufactured goods, which is almost the reverse of the far more diversified US markets. We are also prone to bizarre situations like in 2000 when Nortel itself was about one-third of the total Canadian market capitalization.

The message here is that if you do want diversification, and you want to stick with Canadian investments, you will have to be more active with your investment. I do not mean you have to pick stocks, but you should at least select sector-specific mutual funds and take the trouble to rebalance your holdings every one or two calendar quarters. By doing this you avoid the heavy weighting inherent in the broader Canadian markets. With the loosening of foreign holdings in RRSPs you can of course diversify to US and other markets, but keep in mind that when you do that you are engaging in currency speculation. Since the loonie's value does tend to reflect the domestic economy's strength, which remains raw materials, this can run counter to any diversification strategy.

The Fine Line Between Marketing and Hyperbole

The greatest salesman I have ever had the pleasure to work with made an observation to me that I've always remembered. It was one of those little pearls of wisdom that sticks with you because it is so true. The original context was about selling telecommunications equipment, yet it is applicable throughout all aspects of business, politics and life in general. His message was this:

"The more you have to tell someone how great you are, the less they believe you."

It's a good rule that I try to follow, even though I don't always succeed. Despite my background in technology, many years of promoting products and ideas have moved my approach more towards sales and marketing where promotion is fundamental. The trick is in knowing where to draw the line between promotion and hyperbole, and also knowing when to stop it entirely.

The process is to use promotions to gain an audience. Once you have gotten in the door and you have an audience let your product (or service, concept, business proposition, or whatever you are pushing) do the talking for you. Once they're paying attention, stop marketing and start helping them benefit from the product. If it's any good to them they'll let you know. If you can't back up your promotion with a product that delivers value to the customer, or you have left a trail behind you of broken promises and unhappy customers, no amount of marketing can save you or your company.

Success comes when the customer tells you how great your product is and how they are able to benefit from it, whether by solving a problem better than their current solution or how they can do useful things they couldn't do before. Many of these customers will agree to be references. This will help you win over new customers, and also investors if you are a startup. This is the source of building a good reputation and credibility, and true commercial success.

There are corollaries to this rule. For example, do you like to name drop? That's when you try to impress someone by relating that you know important person 'X'. It is instead far more impressive when person 'X' knows you. Do you primp and preen before an important date, wash the car and pick an expensive restaurant? That's marketing, and there's nothing wrong with that provided you can back it up. It's what comes out of your mouth and in your casual behaviour that tells the truth about the product, you, not the packaging.

To close this off post I will note that my MP, John Baird, has started filling my mailbox with one-sheet flyers extolling his and his government's virtues and accomplishments, suitably simplified and inflated. There's nothing particularly wrong with that considering that an election is increasingly probable - it's marketing - if they can show they know where to draw that line between promotions and delivering the goods. My vote will depend on what I really believe he and they actually accomplished and what that indicates for the next term, and if they show wisdom in letting their record speak louder than the message.

To Google: All (or at least most) Is Forgiven

It was only a week ago I wrote a post haranguing Google about the delays in getting a more complete and unimpaired Android SDK released, and today they've done it. This blog obviously has tremendous influence - uh, right.

The enhancements to the telephony module seem to be just about what I was looking for, and there are associated additions that are particularly useful to the applications I have in mind. I can't go in to specifics about what I am up to, but telephony integration in Symbian doesn't meet my needs. I have not looked at LiMo or iPhone or Blackberry to the same level of detail so I can't comment on those.

I have only quickly skimmed the other changes in the 0.9 SDK beta, but what I've seen does indicate that that it is as advertised - close to production release.

Some things I want to do still require an actual Android phone, which I would have preferred to see in the emulator. I can live with that if the phone can be tested here, in Canada, on a actual network. I am less hopeful about that occuring anytime soon, though I'd be happy and relieved to be proved wrong.

I am feeling a bit more positive about selecting Android as a basis for prototyping mobile applications that require telephony integration. I haven't made an actual decision yet, but the new features and now firm schedule for Android appears likely to tip me in that direction.

Which Country Controls the Arctic Ocean?

This isn't the sort of topic I had intended to address in this blog, but after reading, first, an article in the Globe and Mail this weekend about our non-existent presence on the northern ocean and its implications to our claims in the area, and then a second in the New York Times decrying how the lack of US ice breakers is imperilling their own interests, I simply couldn't resist.

Our hand wringing over Arctic sovereignty usually focusses on the US. While they do have a massively larger navy and coast guard they are almost as badly off as Canada when it comes to navigating through ice. That surprised me.

It turns out that the real power in the Arctic is Russia; they have a large ice breaking fleet, an advantage which will continue for another decade at the very least. Considering the renewed tension between the Russia and the US (and us via NATO), rapid opening of the northwest passage, or at least an increase in open water, oil and gas exploration, and claim staking by all countries bordering the Arctic Ocean, there could be some incidents over the coming years.

Canada will be seriously challenged to defend its Arctic interests as our more powerful neighbours jockey for position. Our economic capacity to patrol and defend the Arctic, and our claims, pales in comparison, no matter what we do or what our politicians say.

Patents: Enabler of Investment and Startup Success

The writers at TechDirt have a lot to say about patents and patent reform, and I sympathize with many of their points. Here is a recent article of theirs on the topic that prompted me to write this post.

I have worked in technology startups and I have patents issued and pending. I would prefer to avoid the patent process entirely since it is time-consuming and expensive, with no certainty of bankable benefits. Yet they are still necessary; we live in an environment where it would be foolish to avoid the acquisition of patents. I have some thoughts about why they remain important for technology startups, regardless of my personal feelings on the matter.

Prospective investors treat patents, even those that are still pending, as company assets. They provide some assurance, though imperfect, of a company's ability to build a sustainable competitive advantage. Without that, they are primarily investing in the team's ability to execute in getting to market first and successfully. This is not a readily defensible strategy (e. g. Vonage) since others with the same idea could execute better. There is also the bitter reality that if the startup fails, whether by poor execution, market timing, or funding availability, and if the patents have enduring value, the investors have something of value left other than desks, chairs and keyboards. You need only look as far as domestic companies like MOSAID and Wi-LAN to see how investors can profit from patents rather than (failed) product-based businesses. This may be distasteful to some, but it is the current reality.

While you may not believe in the value or expense of patenting, that does not hold true of competitors. It is typical that two or more people people will think of the same innovation around the same time since the underlying thought process is often driven by evidence for the need from the surrounding society and economy. If you don't file a patent, it is likely someone else will. With the common failure of the patent office to properly notice and credit prior art, even if you were first your enterprise will be in jeopardy. If you end up in court be prepared to lose. Even if you do not intend to litigate if another company utilizes the claims in your patents, you must defend your company from those who would litigate against you.

Less concrete, yet still arguably valuable, the cost and effort of filing a patent application tests the entrepreneur's belief in, and viability of, an innovation. When you must spend hard effort to document in detail the workings of your innovation and then pay your own hard-earned cash to a patent agent and the patent office, you naturally question if this is merely a whim or an investment. That is, whether you realistically expect the patent filing to attract outside investors and create a competitive advantage contributing to the enterprise's eventual success. You must also believe you can execute quickly on the innovation since 18 months later your patent application will be public and therefore open to viewing by your competitors and customers.

Today's litigious environment in which entrepreneurs must play may change in the future. Now, however, it is not prudent for an entrepreneur to avoid the patent game, painful and uncertain as it is.

Finviz

The Finviz web site entered my bookmarks a week ago and it is now one of my favourite financial resources during the trading day. If you actively trade, or at least monitor the markets closely, you should check it out.

The home page alone is terrific eye candy. At a glance you have charts of the major US market indices, heat map, stocks hitting highs/lows and actionable technical indicators, top commodities and more. Dig further and you find stock screeners, news feeds, and charts already marked with trend and support/resistance lines.

I don't know anything more about the site or where they intend to take it, but I like what I see. One unfortunate point is that like many popular services it only covers US markets. This is somewhat compensated by the stock screener that makes it easy to filter on Canadian companies that trade on US exchanges. Despite this, you, too, may soon find Finviz on your favourites list.

News: If It Isn't Online and Accessible It Doesn't Exist

Earlier I started a series on internet news, then took a hiatus part way through. I will be getting back to that later. Today I want to write a brief opinion piece on news items on the internet, specifically on what is accessible. It's something I run into every day.

If your news is not on the internet or if it is but is behind a pay wall, or any type of wall, it doesn't exist.

Keep in mind I am talking about news, not other types of content. News is time-sensitive and quickly loses its value, except, perhaps, to some future historian. That's why I spent so much time talking about timeliness in previous posts. When you delay or otherwise impede my access to that news it rapidly descends to zero value. Let me explain by means of some methods many publications continue to use:

• Publish a teaser on the internet then direct readers to the full article in their print edition.
• Publish a teaser of headline on the internet then ask readers to pay for the chargable online edition.
• Delay publication to the internet site.

I got reminded of these tactics this morning when I scanned the online edition of the Ottawa Business Journal. The article I clicked used the first of the above tactics. This is particularly perplexing since the print version is free, provided you know where to find one and will travel there to get it. In my view the OBJ has several problems with their online property, of which this is only one.

Do they believe their truncated article will prompt me to leave my office and look for the print edition? That's asking a lot. They won't even profit if I do it. Further, I know the article is old, perhaps a week or more, since it had to go through the paper publication process. Their strategy fails to win me as a reader. Not only that, they are training me to believe they are unreliable as a source; why bother to check their articles when they may abruptly end in the middle. Annoyance, lack of timeliness and increased distribution friction are poor marketing strategies.

Returning to the larger issue of news, any publication that demands I rush out to buy the paper edition or pay to pass a pay wall is marginalizing themselves. Nowadays I can almost always get equal or better content on the internet, with links conveniently located alongside theirs. Competition is imperilling them. Like that old cliche, the internet routes around failure; if I click on your article and don't get what I want when I want, I click elsewhere. And I may never return to try again.

Others have said it better than I could, that publications must make their news available, in full, immediately and with wide internet distribution. They will have to adapt to their business models to the new medium. Many publications are working to make this happen, and are beginning to see some success. This is an exciting and interesting time for the consumers of news, even if we occasionally grow frustrated at the barriers we encounter.

Cloud Computing Failure

I had a good laugh this week reading about all the consternation about Gmail going down on Monday. If it were only the general public feeling this way I would be more sympathetic, but this is from technologists, geeks even. What's all the fuss about?

A common refrain is that Google is trusted and now that trust is stained. I say baloney. Nothing is certain, and certainly not perfection. One thing I've learned from decades in this business is certainty of availability of communications, computer resources and data is impossible. Sure a system can be made very reliable, which those of us in the business often term high availability, but fail-safe? Nope.

Think of all the things that can go wrong:

• Internet connection goes down or you are out of range of a connection
• ISP or upstream internet congestion or fault, whether caused by act of some god or human
• Server or computer failure, hardware and software
• Fault propagation, where one failure cascades through a network

There's much more. No, the problem isn't that failures occur it is that we are so often unprepared for them. It is far too easy to trust someone else to worry about it for us, even though they can't, and don't, guarantee perfection, and then to whine about it.

Do you keep backups? I know better, yet when I very nearly lost a hard drive recently my backups were not up to snuff. If your internet connection goes down, do you have a ready alternative? Dial-up or even a drive to the nearest Wi-Fi hot spot could serve. If your email is critical do you have a backup? You could auto-forward all email to a separate service, even Gmail, since email data is often difficult to backup and restore. If you use a CRM like that of Salesforce, is your data exportable into a standard format, and do you do so regularly? You should. Backup software inconvenient to use? Find a data buddy, network your computers and then you can conveniently dump your critical files to each other's computers. A USB memory stick also serves nicely.

Murphy's Law says that things will go wrong, especially when you're sure they can't. Services out there in the internet cloud are no exception. Take the trouble to have a disaster plan. Otherwise, the victims ought to do their complaining in front of a mirror.

Major Banks Sitting on 50-day EMA

All the major Canadian banks, which mostly move in sync, with this morning plunge are all sitting at their 50-day exponential moving average. It will be interesting to see if that holds, though it may take the rest of this week to find out.

My bet is that this line holds for at least the short term, or at least is held at this spring's lows. My expectation is that earnings releases in the second half of August will justify higher share prices. This, of course, is no assurance that the market will agree with me!

Wireless Competition Will Be Different This Time

I'm a little late to this story so if you have followed it I'm sure you've read one of more of the many articles about the coming of increased wireless competition in Canada. The reason I'm lagging is I didn't feel I had much to add, though now I see there is some confusion since the various commentators' conclusions span the range from: it'll be great to same old, same old, and everything in between. So just who is likely to win? Will it be consumers, the new entrants, the incumbents, the arms suppliers (equipment vendors), or perhaps everyone?

We know what happened last time. New entrants like Clearnet and Microcell were eventually acquired by the incumbents, which reduced the wireless competition to the former status quo. There were many reasons for this, though in the end it came down to a simple business decision: the companies' stockholders (or bond holders) decided their best financial outcome was to sell rather than remain independent. It was the right decision for them, notwithstanding the dismay of consumers who found their competitive options halved.

Without getting into gory details, I have come up with a list of things that are different this time around. Not necessarily good or bad, just different. I won't pretend the list is complete, and I am not going to even try to quantify the effects of each. Here it is:

• Number Portability: Reduces the friction of switching between service providers. We should expect to see a continuation of obstacles to smoothly-executed number moves, by both new entrants and the incumbents.
• More Than Telephony: Cell phones used to be all about telephony pricing plans and coverage. This time it'll be more than a price war over calling plans. Expect to see data, services and device promotions by the new entrants that will appeal to consumer and business users alike.
• Vendor Financing: This was very prevalent in the 90s by the major vendors, including Lucent, Ericsson and Nortel. That just won't happen this time. The new operators won't be able to share their capital-expenditure risk with this group of companies.
• Investor Financing: Expect to see the bulk of the capital raised coming from equity investors and high-interest bearing bonds. In combination with the lack of vendor financing, the cost of capital will be higher. One consequence is that the new entrants' senior management will be more accountable since those investors will have much greater control. In other words, management will have to perform or they'll be rapidly replaced.
• Crippled Competition: Incumbents like Rogers, Bell and Telus are not as cash rich from telephony (and cable TV) profits as before. Years of direct competition between cable and telcos have whittled margins, forcing them to cut costs. They are less able to sustain price wars than before. While this will fail to drive service prices more than a moderate amount, it will mean the new entrants will slow down the cash burn, and perhaps become cash flow positive in a few years.
• Walled Gardens: The incumbents' stranglehold on what services and devices users can access will be very evident to their users once the new entrants open their data networks and permit new and innovative devices. Expect to see more LiMo, Android and even Symbian devices (maybe even iPhone) available on these new networks, combined with unrestricted internet access and phone applications. Back in the 90s the new entrants used much the same set of phones as the incumbents, but they were higher cost since they could not order the same quantities from the manufacturers. The incumbents will likely be slow to change their service and device strategies, which will give a temporary advantage to the new operators.
• Bundling: The incumbents can bundle like they never have before - wired phone, wireless phone, broadband, TV and long distance. The new entrants have ... mobile wireless. This will increase friction of switching, and may make the new entrants' effective pricing more expensive. They need to find ways to co-market with other companies to at least partially restore the competitive balance. In the present environment good partners will be hard to find.
  

I don't know if an increased number of wireless competitors will be sustainable, which can be difficult in a market the size of Canada. All I know is that the competitive landscape will almost certainly evolve quite differently than it did in the 1990s because the environment is so different.

Gold Miners Feeling Pain

Not long ago I wrote about how gold miners appeared to be dropping more than the underlying commodity. As I saw it then in the charts, the divergence wasn't unusual. Now it is.

Pull up a chart of pretty much any major gold miner, compare it to the commodity, and you'll see what I mean. In the example here I am comparing the gold ETF with Kinross; be sure to use the US stock here to eliminate CAD:USD exchange rate effects.

The chart shows week end (August 8), and today the divergence is growing larger. I am seeing a lot of miners down 25% to 40% over the previous 6 months. Over the same period, gold is trading in a relatively narrow range of -10% to +10%.

Lots of commentators are talking about gold nowadays. One common conclusion they come to is that money is rotating from all commodities into other sectors. I don't know the answer but I am watching closely. I hold one gold miner and I need to decide what to do.

Google Android Delayed and Impaired

When I first wrote about mobile platforms that I was evaluating for business purposes, I concluded that Android might be a suitable first choice even though there are no phones at present and the platform's present incompleteness. I am less certain now.

Delays are to be expected, so even early 2009 for the first real phone is not a deal killer, and remains a target I can live with. Of greater concern is the lack of enthusiasm in the wider developer universe and gaps in the SDK and emulator. Enthusiasm is hard to measure, so let me put that and focus on the platform itself.

The SDK and IDE seem to work fine for me, at least in the very limited use I've made of them. The documentation and teaching material is rudimentary, occasionally incorrect, though generally servicable. There are however two big gaps for my particular purposes:

• Telephony package is incomplete: You can trap key telephony events but you cannot retrieve important data associated with incoming calls, and especially not calling number. The digging I've done indicates that it is coming, sometime, in a future release, though I have no way to know if or when.
• Simulation of calls: Seems to be a challenge to inject calls into the emulator to test telephony applications. I have no idea if this will ever appear in the SDK, or perhaps I must wait for the first phone and (locally) supporting network. This isn't good.

I read elsewhere that a Google marketing manager (Chu) described the Android OS as 80% complete. I hope he didn't mean this in the sense of the software 80/20 rule: that it takes 20% of the effort to complete the first 80%, and 80% of the effort to complete the remaining 20%! Considering the size of the project I am doubting they are serious about launching the first phone by year end.

I get the impression Google is primarily interested in enabling stand-alone apps (those not integrated with telephony) to compete with Apple, RIM and Microsoft, especially to increase distribution of their own apps. Even to accomplish that they have some way to go. I still hope they do succeed since I like the openness of the platform and their comparatively uninhibited approach to outside developers.

Update: From Venture Beat, in all its tedious detail. More waiting for the latest SDK.

49 Year Old Olympian

I don't pay much attention to the Olympics, though some of it does filter through to me regardless of my best intentions. One item that penetrated my wall of disinterest today was this item. It brings a smile to my face to think that a woman about my own age is able to not only compete in the Olympics but to do very well indeed. This was one tough cycling road race and she got close to making the final selection. That's truly impressive, and especially so for someone of a certain age.

This fits well with an earlier post where I suggested there is sense in taking more risks as we get older. Longo-Ciprelli is a good example. Of course it helps to have the genetic make-up to be a world-class athlete, so this particular goal isn't for everyone. Nevertheless I believe the idea is right on the mark, and we all have rewarding goals we can realistically strive for as we grow older. Her example is an encouragement for those of us gradually joining the gray-haired demographic.

Currency Effects Follow-up: Technical Analysis

In my previous post I talked about US currency exchange rate impacts on Canadian investors. I want to add to that by discussing a related issue - technical analysis of stocks that trade on both US and Canadian markets.

Some years back I became concerned when I first became aware that the US and Canadian quoted share prices diverge and converge with the exchange rate (see yesterday's charts). For those that trade in whole or in part on the basis of technical analysis (TA) rather than purely on fundamentals, there is a phenomenon to be aware of. What concerned me at that time is when CAD:USD is volatile the trend lines and support (resistance) levels differ for the stocks on the two markets. The lower the price volatility of the stock, the greater the effect.

Puzzled over how to deal with this I pestered one of the TA commentators on Jim Cramer's Real Money web site (I was a paying subscriber then, but not now). The answer I got did not satisfy me at the time. What it boiled down to was to continue applying the usual TA techniques without regard to exchange rate effects.

As I thought further about what he was telling me I began to better understand his message. TA is not a rigid framework for making money, although it does have value in selecting buy and sell points, whether you're a day trader or a long-term investor. The key to TA is holding to a discipline of buy and sell decision, based on TA indicators, as a superior method for money management. Money management is merely a fancy name for limiting losses from losing trades and protecting gains from winning trades.

On the basis of that understanding I saw that he might very well be right - focus on money management discipline and not on possibly superfluous influences, much as trader emotion is a superfluous, and frequently destructive, influence.

I still have some misgivings about the lesson since it offends something in me to discard information, yet it has not appeared to harm me to do so. You should come to your own conclusion on this lesson since it is your money at stake.

On a related note, it appears that today the CAD:USD rate dropped below support at ~0.94, coincident with commentators in the US noting that the USD has broken out to the upside (versus a basket of currencies, not solely versus CAD). This is good or bad depending on which side your bread is buttered.

Currency Effects on Canadian Investors

The financial world centres on the US dollar. This is of particular importance for those of us who invest in Canadian companies that operate in a global market. Here are some common examples of non-diversified investment vehicles that are impacted:

• Commodities and commodities-based stocks: This includes raw commodities (futures, other derivatives, ETFs) such as silver, zinc and potash, and a whole host of Canadian companies, including Pan American Silver, Lundin Mining, Agrium and Petro Canada.
• Stocks trading on both Canadian and US exchanges: Many companies list on multiple exchanges world-wide to access investors in financial centres where they have a substantial business or investor interest. These range from primarily Canada-focused businesses like Telus and Suncor to multi-nationals like Nortel and Canadian Pacific. There are also companies that started in Canada that list only in the US (Entrust) to those that have found the more onerous listing requirements in the US burdensome (Zarlink).
• Canadian companies reporting in USD: Just as English is increasingly the global language of business, the USD is the currency of choice for companies that operate globally, or aspire to do so. This can be a bit confusing since, while the companies key financial metrics (P/E, revenue, debt, etc.) are priced in USD, the basis of the exchange used for reporting can be obscure without some digging and it typically does not reflect the exchange rate when you buy and sell shares.
• Canadian companies primarily reliant on exports to the US or products priced in USD: This is not only true of all commodities companies but also heavy exporters like Bombardier and Magna. A stronger CAD:USD rate reduces CAD-reported revenue and earnings when the prices of products is maintained in USD.

Small moves in the CAD versus the USD not only matter, they can add up substantially over time. Let’s look at one company, Canadian Natural Resources, which trades on both the TSE and NYSE, reports in USD, and is largely priced on the basis of their primary product, crude oil, which is a commodity priced in USD.

Notice how the price of the two stocks diverge based on the CAD:USD rate. The CAD:USD exchange rate has moved wildly over the previous two years, impacting the prices of the company’s stock on the TSE and NYSE. It is true that the value of a share invested on either exchange remains about the same when measured in one currency (less currency conversion losses in both directions), yet even if you ignore the NYSE entirely the value of your CNQ share varies with CAD:USD.

If you hold an investment for any length of time you need to consider the effect of a trending exchange rate. Even if you're a day trader, the daily volatility in the exchange rate can effect returns; the share price of a dual-listed stock may go in opposite directions on the two exchanges on days when the CAD:USD rate moves significantly.

And, last, if you bought USD$1.00 when the CAD:USD rate was 0.66, that dollar bill has lost 1/3 of its value in CAD. The same goes for a share in a US stock that has the same USD quoted price then and now.

News: Timeliness (2 of 2)

Now that I'm back from the long weekend here is part 2 of my article on news timeliness. Part 1 is here.

For some years now I have used MyYahoo as my main navigation page for markets and stocks. It suits many of my needs despite some shortcomings. I supplement it with a wide variety of other news sources. Right now I'll focus on how MyYahoo meets my criteria for timeliness. If you use it you'll know that they have recently modified their home page design, which both improved and degraded its timeliness performance. That makes it an interesting study for this post. I'll also compare MyYahoo with a few others.

In regard to the market, I listed my priorities in part 1. Let's look at any one particular stock. What I want to know is, the price quote and volume (the basic metrics), what's new, what's recent, and any related news to is relevant to the stock but not about it specifically.

To track stock price and price movement and news I created a variety of portfolios. These are, variously, organized by business sector, how I am monitoring (current holding or with an intent to trade), broad market indices and sector indices (including ETFs and commodity futures).

In the morning, pre-market open in New York and Toronto (9:30 EST/EDT) I want to find any new articles about all the stocks and indices in my portfolios. In the previous version of MyYahoo there was a '*' placed next to each symbol if there was news in the previous 24 hours. This was very helpful. It is no longer there in the new version, much to my dismay. I am now required to touch every symbol or troll through every portfolio and figure it out myself.

When I do touch a symbol or a portfolio within the home page (not navigating to a stock or portfolio page) I am presented with some recent news items, timestamped with minutes, hours or days before present. However if you navigate to a stock page (example) or portfolio page, they continue to give you articles timestamps with the date and time. The latter is what I strongly prefer, and here's why.

Imagine that I touch/open a symbol and it tells me that a company I follow closely or even hold a position issued a press release saying they are pre-announcing upside earnings. This is urgent market-moving news. It then says the news is 15 hours old. This is insufficient. I need to know the exact time of the announcement so that I know: was this after the previous day's market close, during extended-trading hours, and how any price or volume action in response to the news. I now much mentally calculate the time myself or open the article to learn if it contains a better timestamp. For more recent news (where time-before-present is shown in minutes) I must find the base time Yahoo is using, which is elsewhere on the page, and mentally subtract those minutes from that time (not the present time).

At least Yahoo does show detailed timestamps on their stock- and portfolio-specific pages, and I fervently hope they do not change this. Google finance uses these relative timestamps for all their news, which is very inconvenient and one reason I make only limited of use Google finance. One good feature of the new MyYahoo home page is the ability to mouse over a stock to call up the daily price chart; that's nice, even without the volume data.

Stock and index prices are also news. There are 3 types of price: real-time, delayed, and extended hours. Yahoo supports all of them. Unfortunately their real-time and extended hours quotes have degraded to unreliability since they partners with a single quote service (BATS) a few months ago. The reason is that one service sees a fraction of trading activity, resulting in real-time and extended hours quotes that are often missing entirely or indeterminately late for stocks other than those with the highest volume. This is one place where Google surpasses Yahoo nicely, and I use it for that purpose. Unfortunately real-time quotes are only for US stocks; I do not know of any reliable and free real-time quoting services for TSE-listed stocks. If you are a day trader (I'm not) you'll want to subscribe to a good provider of Canadian and US real-time quotes - it is essential news and well worth it.

Let's call up that example Yahoo stock page again. Here we see the news items ordered by timestamp, which is how I like it since I can easily relate the items to price quotes. They also have a rich selection of news sources, including, importantly, common venues for company press releases and financial filings with market regulators. Many of their news feeds are, to my needs, worthless, so I am also happy I can customize them. Another downside of their many feeds is that popular stocks are overflowing with news, making it difficult at times to separate the wheat from the chaff.

Price quotes, which as I mentioned is also news, is continually updated while the page is loaded, both delayed and real-time quotes. Their recently-introduced scrolling stock ticker is useless to me since, like streaming media, I have to sit on my hands and wait for something of interest to appear, which I will not do. In comparison, Google provides a non-scrolling list of recently-quoted stocks on their finance home page, which is updated while the page is loaded.

One curiosity of Yahoo's news feeds is they now have a separate list for blogs. This betrays some confusion on their part as to what is news. It's gets more confusing since many of these blogs items also appear in the news list. Hopefully they'll figure this one out eventually.

Now let's briefly look at Google finance using the same example. As with all Google news properties they use the time before present timestamp method, which I criticized earlier. Their choice of news feeds is small, eschewing many important news items, making it unreliable for stock trading purposes. They do however include some feeds that Yahoo does not, which seems to be particularly better for stocks that trade on overseas markets. Neither Yahoo nor Google uses good Canadian news sources, which makes it dangerous to rely on either for Canadian stocks; we need to supplement both with sources such as Report on Business and the Financial Post, to name two mass media sources.

Google's stock page, like Yahoo's, includes real-time quotes for US markets. These quotes are far better, reflecting the volume and quality of their quotation sources. What they don't do is supply delayed quotes if real-time quotes are available. This is a minor issue since I like to compare real-time and delayed quotes since it gives me a quick indication of how the price is trending.

I have picked on Yahoo and Google since I am most familiar with them and they make suitable examples to illustrate my points about market-related news timeliness. There are many other choices out there, some of which I also use. One gap in my comparison is that I did not include Google's tools for personalizing my finance home page (similar to MyYahoo), though from what I've seen it offers little different from what I discussed above.

Seeking Alpha, which I monitor for stock and market news and analysis, includes some useful news articles and analysis from various blog writers, selected using a modest amount of editorial control. Their list of stocks is, regrettably, not ordered only by time, but also (from what I can glean) by popularity of the articles and of the authors, and the home page shows no timestamp at all. Their sector-specific pages do better in this regard. Market Currents on their home page (and available by RSS feed) and Wall Street Breakfast (also available by email) provide time-sensitive stock and market-moving news during the day and before market open, respectively. Seeking Alpha does include some news on Canadian stocks, from writers who follow Canadian markets, especially (these days) commodities.

Now let's briefly move on to more general news sources.

Even two (vaguely) similar sources of non-urgent, though hopefully important, technology news like Light Reading and Internet News use timestamps differently. On its home page, and on its newsfeeds page, every article has a date. This is not true of Internet News; even the dated box for "Latest News" that show today's date does not match the timestamp for the articles it contains. Before their latest redesign, Internet News did show dates on their home page; now I have no idea of the timeliness of any of their articles, making them a poor source of news.

Mainstream publications, especially the online properties of newspapers, do better. Look at the home pages of The Globe and Mail and the New York Times. At the least the top item in every category has a timestamp, often including time of day, and within categories articles are generally ordered by time. This expands in the same way when you navigate to a category like Report on Business. This is helpful. However, since their redesign (and removal of the annoying 'please pay us' pages) the Economist has eschewed timestamps entirely on their home page. This is disappointing, and certainly irritating. Just how old is their news? I can't tell within a lot of clicking around, which I will not do.

Closer to home there's the Ottawa Citizen. They opt for ordering by time within category (though not always), and their news feed on the right used the elapsed time before present format. Not ideal, but sufficient for a general source of local news. The CBC is an oddity. Especially for local news, apparently news doesn't happen when they're not in the office; you often have to wait until the following business day for news to appear, and even their RSS feed is severely delayed. CBC online is not a good source of timely news.

That's all I want to say about timeliness. When I next talk about news the subject will be relevance.

Sewage Spill Fines - A Better Resolution

Politicians do come up with more and interesting ways to take our money. If you're in Ottawa you know about this sewage spill, and that the city may face substantial fines. Keep in mind that the city's money is our money, raised through property and other taxes.

If the province successfully fines the city we end up paying three times over:

• A fine of several million will have to be recovered in taxes, probably property taxes, since that is a significant hit to a budget where every 0.1% change makes the headlines. Any legal costs incurred in first fighting the fines only add to the bill.
• Don't expect that our tax dollars that are collected by the province by means of fines to the city will be returned to us through income tax reductions or new infrastructure grants to the city. It goes into general revenue to help balance provincial accounts, and the provincial government will crow about being that many million dollars closer to break even.
  
• We need to spend tax dollars on infrastructure to prevent future spill occurrences, and avoid more fines and court cases.
  

None of this should please us; no matter the outcome you and I foot the bill. And remember that it doesn't matter which level of government pays what since there is just the one body of taxpayers.

If all our governments want to demonstrate how effectively they spend our money there are better ways than these tedious and expensive process where we lose and only one of them wins. Settle this quickly and without recourse to the courts. Assess a substantial fine, which the province should then pledge in full as a grant to the city to make the necessary improvements in our sewer system, which the city already indicates will be a priority in the 2009 budget.

This way every level of government can boast about a win, taxpayers get the best value for their money, and we can proceed to protect the environment sooner and most economically.