Making Money Minute with Ron Hiebert

Making Money Minute with Ron Hiebert - Busts & Booms In the dot-com boom of the late 1990’s, telecoms laid 130 million kilometres of fiber optic cable. In the following bust, 85% of this capacity went unused and bandwidth prices fell by 90%. While this drove telecoms like Global Crossing into bankruptcy, cheap access to fibre optic cable, fuelled the rise of early Internet adopters like Netflix and Facebook. Could we see a similar dynamic playing out today? Tech firms are investing an expected 7 trillion dollars building out AI infrastructure, yet no one has a clue how this will be profitable. If the boom goes bust, it will be interesting to see which companies will be able to profit from access to cheap AI, without having to risk the large capital outlays needed to develop it. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Markets & Tides One of the most important things investors need to understand, is how markets behave, both on the way up and on the way down. Probably the best way to visualize this, is to look at how the tide affects ships in a harbour. When the tide comes in, it raises all the ships, no matter how big or small they are. The same thing happens when the tide goes out. All boats sink. When the economy suffers through a recession and stocks enter a bear market, there are very few things that go up or even maintain their value. Even conservative investments like utilities and insurance companies can get hurt. The trick when markets get expensive, is to be more cautious and limit the downside. Cash is King. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Wars Neverendum According to Trump, the war with Iran should be wrapped up within a month or so. But this could be naive. A financial commentator from the UK wisecracked that the hardest part of a 4 week war is the first 6 to 7 years. The grim reality is, they usually become a neverendum. America was in Vietnam - 20+ years. Russia in Afghanistan - 10 years. America in Iraq - 20+ years. America in Afghanistan - 19 years, 10 months. Russia in Ukraine - 12 years and counting. We continually underestimate the economic damage and inflation these long term wars cause. And pathetically, when we spend a fortune to remove a bad guy, they often get replaced by someone even worse. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Fertilizer Squeeze People worry that high oil prices caused by the war in Iran will lead to rising inflation and interest rates. Very few pay attention to this conflicts impact on global fertilizer prices. Roughly 1/3 of all internationally traded fertilizer passes through the 40 km wide Strait of Hormuz just off Iran’s south west coast. This narrow bottleneck has been blocked with mines and drone attacks - grinding shipping to a halt. This couldn’t come at a worse time, as farmers in the Northern hemisphere gear up for the spring planting season. With lower fertilizer inputs, yields will drop and food prices go up. This might not show up at your grocery today. The big impact will hit in late summer and fall, when this years crops start appearing on store shelves. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - AI Makes Stuff Up When Artificial intelligence makes stuff up that isn’t true, and presents it with a such a high degree of confidence it seems believable - they call this AI Hallucinations. There are plenty of documented stories where AI has cited legal cases that never happened, quoted non-existent scientific studies, generated fake biographies, or misidentified objects in images, seemingly on purpose. The weird thing, is that often, experts are mystified as to why, and how this happens. If you are using AI to do financial research, it is important to fact check the data. AI has made enormous strides in the last 12 months, but its accuracy still needs work. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - The Integrated Oils Energy companies that focus strictly on finding and producing oil, have earnings that are pretty much held hostage by whatever the price of crude is at any given time. Those wanting a more defensive and less volatile way to invest in fossil fuels should look at the integrateds. These companies produce oil, refine it and also sell finished products. When crude prices are high, upstream assets that produce the stuff, generate big profits. When prices dip, downstream refining and fuel stations benefit from lower feedstock costs and steady consumer demand. This “natural hedge,” helps firms maintain their dividend and stock buyback programs, even during periods of market volatility. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Diversify Beyond the US After decades of dominance, the influence of the American dollar has begun to fade. Countries have increasingly looked at paying for imports and exports with other currencies like the Yuan, Euro or Yen. Central banks have steadily reduced their holding of greenbacks and replaced them with gold and other currencies. Investors have diversified exposure from US stocks, and added precious metals and foreign securities to their portfolios. Foreign attraction to the US dollar has slowly lessened and this looks to be a long term trend. If there was ever a time for Canadian investors to diversify their foreign holdings beyond the US - it is now. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - AI Reality Check For years the tech sector outperformed virtually everything else. Lately not so much. The change has come about, because investors have adopted much more realistic expectations about the future. They want proof that the trillions being spent on artificial intelligence, will produce consistent profits down the road. They also want a better understanding of how software companies will survive without having their lunch eaten by these new technologies. Having a dose of reality injected into these overly exuberant markets is always a good thing. It keeps bubbles from forming, and all the bad outcomes they bring. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Wars & Deficits Wars are expensive. America’s recent misadventures in Iran are expected to cost at least $100 billion and could go much higher if the battle drags on. These numbers don’t include the extra costs that business and consumers have to pay when the price of oil doubles and inflation rises. Nor, does it factor in the increases to America’s $37 trillion dollar federal debt, which amounts to more than $250,000 per household. The deceptive thing about wars is - they go much longer, cost much more, and end much worse, than the optimistic projections touted at their beginning. If this conflict tips the globe into recession, the financial costs will go much, much higher. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Alligator Investing I remember a tour we took down a croc infested river in East Africa. Our tour guide pointed out an enormous crocodile sunning itself on the bank, and said that if this predator ambushed a big animal like a wildebeest, it could go for 6 months without having to eat again. In the financial world, we call this type of investor an alligator. They sit and patiently wait, sometimes for years, for an opportunity that has crashed and burned. Only then, do they swoop in and purchase a huge position at a giveaway price. Currently, we mostly see day traders, scurrying in and out making small profits on lots of trades. People forget, that the alligators are the ones who usually score the big money. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - China’s Export Hustle While Canadians worry about protecting the home market, China is reaching out and conquering the world. A good example is electric vehicles. A decade ago they were barely a blip on the radar screen, but by building a quality product at a bargain price, and then globally doing the hard work of knocking on lots of foreign doors, they have achieved global dominance. Last year, China exported 2.6 million EV’s to 150 different countries and territories. The value of these exports was $70 billion - up 43% from the previous year. If Canada wants to improve global exports, there is lots we can learn from China’s example. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - China’s Nuclear Growth The 800 Ib gorilla in the nuclear space is China. Of the 74 reactors under construction in 15 countries, China represents over 50% of new builds. China currently has 38 reactors under construction, 43 planned, and 145 proposed. They can achieve their growth targets because of speedy development. It takes only 5-7 years to build a reactor in China versus 10-15 in the west. China, also has the ability to construct them 35% cheaper than the US and 50% cheaper than Europe. At this rate, China will overtake the US to have the largest nuclear reactor fleet by 2030. The lesson here is, unless the west can learn to build things on budget and on time, China will leave us in the proverbial dust. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - The Super Bowl Indicator The Super Bowl Indicator was developed by a sports journalist at the New York Times. It says that if a team from the National Football Conference wins the big game, stock markets will go up, whereas a win by an American Football Conference (AFC) team, signals a bear market. During the thirty year period between 1967 and 1997 it had a stellar success rate of 90%. Over the next 29 years, its predictive accuracy has been terrible, slumping to around 40%. Considering that the markets go up 2/3’s of the time and down a 1/3, your odds of winning are higher if you just buy and hold stocks rather than using the Super Bowl Indicator to predict when to get in or out of the market. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Iran’s Big Economic Risk President Trump has repeatedly said, that the military campaign in Iran is almost complete. Unfortunately, the Persian’s don’t seem to agree with that assessment. They mined the 40 km wide Strait of Hormuz, through which passes over 20% of the world’s daily oil supply and effectively brought tanker traffic to a standstill. If it remains closed for any length of time, their prediction that oil could hit $200 a barrel and send the global economy into a recession becomes a likely possibility. Trump doesn’t seem to understand, that when backed into a corner, countries will do desperate things that hurt themselves economically, but damage others even more. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - AI vs Software Software is a code or set of instructions, that tells a computer what to do and how to do it. For decades software companies have had the wind at their backs. As more and more sophisticated technology got developed, better software was needed for it to communicate with everything else out there. The threat to all this … is AI. Investors worry that artificial intelligence will make software companies redundant by doing their job much cheaper and faster. As a result, many software stocks have seen huge drops in price. Is this the time to jump in and go bargain hunting? That is a tough question, because opinions are all over the map. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Gold Backed Reserve Crypto One of the reasons gold has had such an incredible run, is the growing belief among financial types, that cryptocurrency backed by the yellow metal, could eventually replace the US dollar, as the world’s reserve currency. Its creation would be outside government control, allow borderless monetary transactions and importantly, would not be backed by any debt choked fiat currency. This is certainly not something that will happen tomorrow. But as the world becomes more and more sceptical about US foreign policy, and its rapidly deteriorating financial situation, the need to develop a financial infrastructure to eventually replace it, becomes more urgent. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - When Risk Gets Riskier Bull markets follow a predictable pattern. In their early stages, money flows into high quality investments. As they become overvalued, investors look at the next rung down for things that haven’t yet participated in the rise. These are usually lower quality and higher risk. This self reinforcing loop continues until even the most volatile, risky assets have been discovered and become fully valued. When the good times end, these risky, volatile assets, are the first to drop and also experience the biggest slide. As this bull market gets long in the tooth, it is important for investors to do an inventory of their holdings. Nobody wants to get caught being overexposed to risk … when markets tumble. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Valuing Bitcoin Bitcoin has traded between a high of $123,000 and a low of $63,000 over the last 12 months. The question is, how do you value whether it is cheap, and time to buy, or expensive, and time to sell. Bitcoin has no physical assets, no sales, no profits or patents. Nothing that gives us a set of metrics, or way to calculate its worth. Its value, is whatever the majority of buyers and sellers think it is at any given time, and that number can change dramatically over even short periods. This makes Bitcoin a very controversial investment. Because there is no conventional way to gauge its worth, your guess as to a fair price, is probably as good as anyone else’s. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Gold’s Golden Era These are very exciting times for holders of gold stocks. Four years ago, the spread between a gold miners production costs, and what they could sell their product for, left them with a profit of about $600 US per ounce. Today with gold around $5000, their profits have ballooned to $$3500 per ounce - almost 6 times higher. These are the biggest profit margins in modern history and leave gold miners with extra cash to raise dividends, buy back stock, pay down debt and grow production. All of which are shareholder friendly. For miners of the yellow metal, this is truly a golden era. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.

Making Money Minute with Ron Hiebert - Estate Sale Bargains Virtually every time I go shopping on Amazon or at a retail store, I came away with sticker shock, shaking my head in disbelief at how fast prices have climbed in the last few years. This unaffordability, has caused a resurgence in discount, next to new, and second hand transactions, as people look for ways to stretch their dollars. One area that shouldn’t be overlooked are estate sales. As boomers pass on or downsize, an enormous amount of items are coming up for sale. Boomers, or the kids who inherit this pile of stuff, just want to get rid of the clutter, and are incentivized to move it - often at bargain prices. For more information listen to our Making Money podcast with Ron Hiebert and Graham Hicks at letsmakemoney.ca or CFCW.com.