Tag: t_origContent

These posts could move into either bold or critical, but it would take too much time.
We can also keep this tag with a distinct meaning. It highlights and /chronicles/ my analytical and creative effort, even if not so worthwhile. I want to honor myself as I deserve it.

[24]ccy pair:use A/B^B/A #%%take

Posted on by tiger40490

In everyday conversations, we care about a handful of currency pairs that affect our lives. For some Singapore residents, relevant pairs include SGD/MYR, SGD/INR, SGD/JPY. For me, the relevant pairs include USD/SGD and SGD/RMB. Every “relevant” currency pair has two formats — XXX/YYY vs YYY/XXX.  A practical question is … “Which format should I adopt, and shall I stick to that choice all the time?”

Aha .. whenever folks talk about YYY being a bargain, or getting expensive, they implicitly treat YYY as asset.  They wish to see a price history of YYY not XXX as asset.

By default, I prefer the industry standard format, i.e. news media format (rather than the reverse format). The first currency is the asset currency.

eg: USD/SGD .. “USD is falling” or “USD cheaper now”
eg: SGD/RMB .. “SGD is rising”.

Price history is almost always in the standard format, not the nonstandard format. Price history is fundamental to the concept of cheaper/attractive/bargain.

However, there are special situations to “prefer” the nonstandard format.

Eg: when SGD is my home currency, and we have some fixed amount of RMB to convert. It is more natural to say “RMB getting expensive”. This is one of those moments of decision.

  • Do we become flexible and designate the more “natural” RMB as asset currency?
  • Or Do we decide to stick to the market format, but be flexible to adopt a new speaking habit like “SGD relative to RMB is getting cheap”

[23]BTC !!as solid as gold

Posted on by tiger40490

For every theoretical criticism of bccy, someone would challenge it with “How is gold any better?” This bpost is a biased view against bccy (in favor of gold). For simplicity, I will use BTC (or ETH) as a concrete example of bccy.

If a gold transaction happens electronically, the physical gold is still the same amount (not vanishing). Electronic audit trail of the transaction would be open, and disputes can be resolved in a court of law.

Multiple Nobel economists have said the intrinsic value of BTC is zero, but how about gold?

— Q: BTC has no future cashflow supporting its valuation, but how about gold or art collectibles?
A: I think BTC is similar to art collectibles or tulips. Gold has (no cashflow) some unique advantages as store_of_value, as discovered over centuries and widely documented.

It’s quite possible that BTC will enjoy growing demand despite its limitations, just as gold enjoys robust demand despite its limitations. (Some would see exact that scenario has materialized since the late 2010s.)

Q: Gold (and silver) is not the only rare metal in the world, and it has defeated all those competitors over centuries and emerged as the dominant physical store_of_value for (central) banks. Will BTC  follow the same path?
A: BTC has emerged dominant. A better bccy might emerge dominant later, like ETH. That may lead to a drop in demand for BTC and devaluation.
A: even if a real king of bccy emerges after some battles, it doesn’t imply acceptance by central banks as store_of_value.

— Q: BTC is not yet suitable as a medium_of_exchange, but how about gold?
A: silver (and copper) was a medium_of_exchange. Gold coin was also proven fairly effective as a medium_of_exchange. Many gold coins are issued by national banks.

— Q: Gold has a proven track record over millenniums. What if BTC also survives 50Y and earn our trust?
I think over 50Y we would see some end-use case. (Gold has end-use case like industrial and jewelry.)

50Y will witness the “inflation hedge“. (Gold is proven.)

— Q: what if central banks start to build up BTC positions within their OFR [official foreign reserve] or other national reserves?

See bccy as reserve currency@@ #volatile

Q4: what if half of all celebrities and big corporations start to build up BTC positions (comparable to gold)?
A: I doubt a sophisticated investor would allocate half her assets in BTC (or bccy in general), if she has kids or dependencies.

Q4b: what if many ibanks and big corporations take positions in BTC similar to the gold situation?
A: I doubt it could happen but if it does, then I think the key feature is central bank acceptance. So far only one central bank has accepted BTC, but I don’t want to digress.

Q: both gold and BTC has limited supply, and therefore provide store_of_value?
A: Any limit on issuing rate is hard to maintain. The case of gold is about the only proven case. For BTC, the hard limit on total supply is designed by people, implemented in software and can be scrapped given sufficient popular support. ETH has no max cap. ETH issuing rate is subject to change by the SWEs.

##pff protection: powerless against SOME swans[def]

Posted on by tiger40490

Q: Why do you think Singapore among many small countries keep building their national reserve, if the reserve are powerless against so many disasters?
Q: Why does the global insurance industry has grown over centuries, with ever wider coverage, and many policies lasting 50-100 years?
Q: Why do credit unions (and banks) even exist if long-term saving and lending is actually based on shaky ground?
Same Answer: The reality is , the world will not end in 100 years, so the consistent savers do build up /formidable/ resources.

We tend to exaggerate the likelihood of various headline disasters, and then reach un-calibrated, quick, sweeping conclusions that “financial protections are often close to useless”. Such protections including

  1. gold,
  2. insurance plans
  3. government health insurance
  4. bank deposits in a resilient currency

Financial protections can be more reliable than other protections like levees, military protection, self-defense…. See also reliable shield: burnRate^wellness habits. There are rather few disasters that financial protection can’t help at all.

  1. political upheavals [looting, revolutions] that seize assets of private families. This happened to my father’s family and my mother’s family, but I won’t say financial protections were completely useless. It also happened in Cambodia (Grandpa pointed out) and perhaps Eastern Europe. I discussed this with grandpa. He said this will not happen again in China.
    • rare: armed conflicts — somewhere in your country is still “manageable”, but if it hits your city, then I hope money can buy you some travel tickets or weapons. Such things never happen out of the blue, so you have years to prepare.
    • Defining feature: anarchy including government-sanctioned anarchy
  2. hospital overrun — at national level can still be manageable, but if your city hits hospital capacity and somehow you can’t seek treatment in another city, then money can’t help. I think this happened in Wuhan, Span, Italy, NYC. Thanks to lessons from covid19, this is less likely to happen.
  3. ==== For below items , financial reserve can provide partial /relief/ or at least buy some precious time
  4. stock market boom and bust, wiping out a big chunk of your wealth. One of the most frequent disasters.
  5. government financial reform hurts my cohort. I am confident that in well-managed systems like SG or U.S. we would be given sufficient advance notice/warning.
  6. burglary .. nowadays most people keep bulk of assets offsite.
  7. — For the items below, the threats appear to be approaching from a distance. The financial cushions you built can buy you some time + some real benefits relative to the unprotected larger population.
  8. rare: high inflation more than 50% a year
  9. severe currency devaluation short of hyper inflation .. imported inflation
  10. very rare: famine — hitting somewhere in your country is still “manageable”, but if famine hits your city then money can’t help. Luckily such things always develop over decades , never suddenly like a pandemic, so your money can help you prepare. Other rare natural disasters include earth-quake, tsunami, but they affect fewer people.
  11. population aging leading to ever more people drawing from (rather than contributing to) a dwindling pool
  12. peak oil
  13. global warming and sea level rise; climate change and desertification.
    • Note sudden global-scale natural disasters including cosmic collisions happen only in sci-fi.
  14. global protein shortage but short of famine

— “Black swan” the concept .. Most writers use this term for _financial_ events. By strict definition, black swan events are so rare and unpredictable that assessing the probability will be guesswork and not based on data.

Is it simply better to put aside this theory? Well, one can study the pattern of past black-swan events and try to learn something, but I don’t know how useful that is, given that predicting similar events are by definition nearly impossible. I find it fun to read history. It doesn’t always offer any actionable insights though.

SG economy has experienced many large shocks. (These shocks could be considered white swans.) I feel the PAP leaders understand the vulnerability inherent in this system. They try to turn the vulnerability into agility.

 

PPP, Int$ #Sgp^PEK

Posted on by tiger40490

k_PPP

This bpost is about PPP and cross-border comparison, based on https://en.wikipedia.org/wiki/Gross_domestic_product#Cross-border_comparison_and_purchasing_power_parity

Intuitively, we compare two countries’ GNI by converting both amounts to USD. This is the standard comparison but ignores regional price differences. For example,

  • SG is expensive for car owners than most countries.
  • U.S. medical and medical insurance (“services”) costs are higher than most countries.  Tristate rent is expensive. Suppose your basket is dominated by rent and medical, then using FX rate to compare U.S. vs SG incomes will ignore the high-cost of the U.S. Suppose your U.S. after-tax income of 120k is 20% higher than SG (S$133k=USD100k). The lightly (i.e. 20%) higher income in the U.S. looks like 20% higher quality_of_life.

There’s an alternative exchange rate .. the ppp-fx. Using ppp-fx, the slightly higher income in the U.S. may translate to lower quality_of_life than the S$133k in SG.

Specifically, if  someday ppp-fx of Int$/SGD becomes 1.0, then S$133k salary in Sgp has equal purchasing power to USD 133k in US. It would provide (or buy) you a richer quality_of_life than the USD 120k salary mentioned earlier.

( Naturally, we adjust our “basket” and avoid the locally-expensive products like cars in Sgp and medBx in US. )

Using ppp-fx, the same basket would cost the same amount of Int$ in any country. This sentence sounds concise but is unclear. If you observe real world prices and compute an aggregate “basket price” in local currency, then use ppp-fx to convert the basket price into Int$, then the Int$ basket-price would be identical across all countries. Note Int$ has parity with USD, for some theretocal reason.

https://en.wikipedia.org/wiki/International_dollar and https://data.worldbank.org/indicator/PA.NUS.PPP?locations=SG-US  tabulate the latest ppp-fx rate of every currency vs the Int$. Int$/USD = 1.0.

  • Int$/RMB = 3.64 meaning Rmb 3640 and USD 1k have equal purchasing power locally.
  • Int$/SGD = 0.8 meaning SGD 800 and USD 1k have equal purchasing power locally.
  • Int$/MYR= 1.54 meaning MYR 1540(=SGD470) and SGD 800 and USD 1k have equal purchasing power locally. Therefore, Singaporeans go to JB for shopping and entertainment.

PPP theory is all about normalizing regional price differences but PPP is inherently entangled with FX. That’s why I call it ppp-fx.

  • lower costs in Greece relative to Denmark (all in eurozone) can’t be resolved using ppp-fx. Similarly, cost difference between Shenzhen vs inland China is not resolved using ppp-fx. Instead, you need cost-of-living index.
  • PPP-fx is useful for cross-currency comparisons of two salaries.
  • PPP-fx is also useful for GNI comparison
  • Don’t use BeyondCompare as a main component of a ppp basket. Such a basket is likely to produce a ppp-fx similar to the FX rate.
  • The Big Mac exchange rate is one simple example of ppp-fx. You can find readable illustrations.

— Q: is cost level close between China and Sgp? Evidence suggests yes:

  • Int$/RMB = 3.64 meaning Rmb 3640 and USD 1k have equal purchasing power locally.
  • Int$/SGD = 0.8 meaning SGD 800 and USD 1k have equal purchasing power locally.

Therefore, SGD 800 and Rmb 3640 both have the purchasing power of USD1k (Rember Rule_1). If I convert SGD 800 to Rmb 4440 (2024 FX rate), I can buy “1.2 baskets” in China, since one basket cost Rmb 3640.

— Q: how does inflation affect ppp
A: inflation erodes purchasing power of every currency.
%%A: I think U.S. inflation doesn’t affect the Int$/USD ppp-fx. Suppose this inflation is stable. If China inlation far exceeds U.S. inflation, then Rmb purchasing power would progressively drop against USD

==== some fundamental but non-trivial concepts

Rule_1: “Purchasing power of 1000 units of a currency” is not a vague concept but a number, and always measured in local market.

It’s safe and realistic to assume a consumer has a USD denominated expense account.

Note the PPP-basket is an international standard basket, and distinct from each government’s CPI basket.

— personal quality_of_life (and national standards of living ) .. depends not only on your income but also the actual cost level. Abstract 🙁 Concrete example: Your after tax income, converted to USD, is identical between Sgp, Beijing, NY and Miami, but the same basket of “products” cost more in NY and less in Sgp. Therefore, your quality_of_life is higher in Sgp.

— Most products have location-specific prices. Beijing and Hebei are different locations.

Commodities like cude oil have no loction-specific prices. However, I’m more interested in consumer goods, which indirectly depend on commodity prices.

If your basket is mostly high-tech products like softwarer gadgets, then there’s no location-specific price. Indeed you can use FX  because iPhones, BeyondCompare etc are sold at the same USD price regardless of location.

However, in most people’s “basket”, high-tech products are a small portion. A big component of your basket can have a highly location-specific price.

Services as a type of “product” have location-specific prices. The BigMac is a famous example. Converted to USD, it is expensive in Switzerland and cheaper in SE.Asia.

overvalued@@: CDY,P/E,NGRY as acid tests

Posted on by tiger40490

After some asset (condo or a stock or a bccy) has experienced an exponential growth, someone would wonder how soon it would slow down. The math is compelling. If its valuation doubles every 3Y, then over 30Y the value of a unit would baloon to 1000 times.

Payout ratios are a good test “Is it overvalued now?” Note bccy and some tech stocks have zero payout and easily become overpriced without anyone noticing.

— P/E is more widely used. If a business generates exponential profit to maintain its P/E, then it’s not overpriced.
— CDY .. more reliable than P/E as the payout is physically paid out. The dividend safety is under scrutiny.
— realized net rental yield .. (for rEstate) is similar to CDY

bold^critiq^jolt^origContent^misPerception

Posted on by tiger40490
  • origContent .. is the “weakest” tag. By default, t_critiq and t_bold blogposts are also original contents.
  • t_critiq ..  critical, skeptical assessment of mainstream, conventional wisdom.
  • t_bold .. is the strongest, and most selective tag.
  • All 3 tags above are mutually exclusive.

t_jolt is often temporary for a few months to years.

CPIx-inflation]rEstate, my CPI basket #w1r3

Posted on by tiger40490

update post on CPI^prop inflation
I repeated my rental yield reservations to Susan

Susan said HDB flat is not only a form of rental property investment, but also a family residence. Renovation “investment” is more like burn rate rather than investment. Mortgage interest is definitely burn rate.

wife has concern about “hard to sell” in 20Y. Similarly, Susan said decades ago, HDB price level was considered very high and many ordinary Singaporeans were worried about buying at the peak, but I guess they had no choice.

Jolt: This “inflation” renders rental yield decline basically inevitable whenever we upgrade or even downgrade. As I said in another blogpost, rental inflation is slower than prop inflation ….

By excluding housing, CPI is massively understated – MacroBusiness

—- Let’s put on the “red hat” and examine inflation due to …. real estate
See also inflation applies to rent not property price

Granted, if you have no family and live in a shared or tiny room, then rental will be a small cost. From 1993 to 2005 I paid around s$300/month, sometimes below $300 in Yishun (Agilent/Spherion). It didn’t rise a lot. Even if it does rise to $600, it is easily affordable to me.

(In contrast, Americans renters often spend a sizeable portion of income on rental.)

As shown above, Singapore experienced mild CPI inflation across the board. However, in relative terms my net worth shrank relative to my peers who owned private properties, because our perception of richer or inferior is dominated by FOMO (peer comparison), not inflation affecting livelihood.

This paradox is probably more obvious in Beijing or Shanghai. Your rental won’t go up much, so you don’t feel that much inflation, but relative to your ex-classmates who now own multiple properties, your net worth shrinks significantly over 10Y to 30Y.

Therefore, for both owners and tenants, property appreciation is clearly felt, even if rent inflation is slower and delayed.

Q: If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities? This answer is the OER (Owner’s Equivalent Rent), included in CPI survey of homeowners. See https://www.bloomberg.com/opinion/articles/2021-05-13/april-cpi-housing-may-be-inflation-s-hidden-danger

Spending to purchase and improve[3] houses and other housing units is investment and not consumption. Home price inflation is not consumption, therefore not part of CPI. However, for most middle-class Chinese families I know, home price inflation is one of the biggest inflations they _feel_ in their wallet, on a monthly basis…. paradox ! Well, whether it’s home inflation or food inflation, at the core, a high inflation (like 11% p.a.) means that our savings are losing purchasing power by 11% a year, as measured by a (realistic) fixed basket of things-to-purchase.

We can also remove “fixed” — high inflation means our basket shrinks 11% from last year, for the same dollars spent.

By conventional wisdom, property, stocks, gold are assets with enduring value, not consumed. But imagine you need to buy silver jewelry every year, perhaps as gifts to many kids in the extended family, as a local tradition. Silver price inflation would hit your basket and contribute to everyday inflation.

[3] Consider property renovation. Suppose you own several commercial/residential properties so every year something would need upgrading. Renovation inflation would hit your basket and contribute to a clearly felt inflation. Renovation is investment… Paradox!

Therefore, in reality we don’t need to hang on to the investment^consumption theoretical dichotomy.

Now consider the middle-class Chinese families. Many [2] of them carry a heavy mortgage. Once the mortgage is halved, (family) free cash grows, and they would want to buy a better home, esp. in the Singapore context[3]. Not every year, but perhaps every decade. The home price inflation hits their basket real hard, because .. hold your breadth… because higher down-payment and higher monthly commitment dry up their free cash flow. As a result, the family has far less free cash to spend on vacations, dining, enrichment and other /discretionary/ spends. Their living standard suffers due to that expensive home. In Tier 1 Chinese cities, one expensive home could dry up the cashflow of 3 generations.

[3] The new home often offers about the same rental income and resale value as the old home. That translates to lower investment returns. I told my wife that

“If we spend additional $300k on a more comfortable home but consequently earn an inferior investment return, then we kiss goodbye to our carefree easy life, and cashflow high ground.”

Q: [2] Is this common behavior? Does it affect majority of the middle-class Chinese families? I would say yes.

Q: why do these families allocate such /disproportionate/ amount of (ultimately limited) resources to such luxury homes?
A: I can see it in my wife. The desire for better home seems insatiable.

In the U.S. we will experience the same “upgrading” process. Perhaps in most U.S. locations appreciation is not much more than CPI inflation.

— Paradox: Property price rises and falls more like stocks and gold, while rent and most CPI items experience slow and one-way movement i.e. inflation?

  • property, stocks, gold can be sold by individuals, so price fluctuation is higher than “supplied” goods and services.
  • Property, gold, stocks are driven by investor sentiment such as greed (hot money) and fear.

Q: When valuation drops 9% in a year, why does rent stay basically unchanged?
A: I feel most owners would rather leave the unit vacant than reducing the monthly rate. I am more “flexible” than them.

— home ownership is not a necessity, more like an investment, though the middle-class Chinese don’t feel that way.

Everyone needs housing as a basic need just as food, transport, entertainment, but not everyone needs to BUY a house, esp. in a volatile property market. Note a volatile market is usually too risky for consumers, and possibly more suitable for long-term investors.

In Beijing, the residential rental market is underutilized and only acceptable to the migrant workers. Most long-term residents prefer to buy, despite the volatile and extremely overpriced market.

Fundamentally, the middle-class Chinese sacrifices current spending in order to save/invest for the future, including future generations. Singapore government’s Past Reserve is the most institutionalized example. At the individual level, the most visible and significant save/invest item is home-purchase.

I think many consumers in western society spend more than the stereotypical middle-class Chinese, even at the same income. One of the biggest reasons is renting vs buying.  Suppose the westerner (renter) and the Chinese (buyer) live in two neighboring identical homes . I bet the renter’s housing outlay is much lower than the buyer’s, on a monthly basis.  If (a big if) both families have the same household outlay of $5000/M, then a bigger portion of that outlay goes towards housing for the Chinese than the renter. As a consequence, the Chinese family have less to spend on other things. Home price inflation shrinks their basket.

2FH: adaptable to%%financial needs

Posted on by tiger40490

Standard suburb home is a SFH. But consider buying a 2FH family home:

  1. In our conserver phase, we can rent out one unit. In a well-connected location, there would be low-income renters hoping to save commute cost and car cost.
  2. When we are more well-off, we can use both units. More privacy for me. We can merge the two units with an internal staircase.
  3. When kids grow up and move out we can rent out one unit.

— As renters, there are advantages in taking up a 2FH .. Many landlords much prefer dealing with a long-term single tenant so I can ask for a quantity discount like 15%, esp. if long term.

When I rent out I can select the tenant. I can also sublease individual rooms, but is delinquency more serious?

Shiller: live more like millionaires #Sgp economy

Posted on by tiger40490

On [[irrational exuberance]] P139 Shiller gave an illustration — Suppose most owners of some rising stocks are becoming multi millionaires on paper, but their current living standard is anything but. At some point, some owner would want to sell her shares to start living a little more like a multimillionaire. It’s only rational — we buy-n-hold investment assets not for the sake of holding, but to improve our existence on earth.

(On a related note, Rong.Zhu said, You don’t want to pass on with too much unspent money, but somehow I don’t worry about that… )

  • For my wife, “living like …” means better home — newer, higher floor, even if it means lower investment return.
  • For Deepak CM, “living like ..” means seeking then living the better life as immigrants. Perhaps it also means “spend freely without calculating, without economizing.”
  • For (half not all) my NY cohort, “living like ..” means Ivy league and school-district home (usually big sqft). In this sense, they are not forced to sacrifice for it. Instead, they willingly sacrifice other things for this important priority.
  • For me, the answer is in
    1. my answer to sis: G3 specific goals@investment effort
    2. best Spends@100k windfall

— Assuming Shiller’s stock keeps rising …
Q2: would you prefer AA) to grow your paper net worth by holding the appreciating stock, or BB) (cash-out) sacrifice that growth for a better current life (… Life is short)?
Note that AA satisfies the FOMO, exclub desire.

Market risk is a huge risk we have hitherto ignored, also the (arguably) biggest difference between a millionaire vs paper millionaire. Without market risk, this stock would present an arbitrage.

— Q1: what if Singtel stocks make most Singapore citizens paper millionaires (or half-millionaires)? Singaporean’s average wealth level would leapfrog to top of the league table. So what?
( Q1b: what if Nokia stock makes most Finnish citizens paper millionaires? )

A: In such a case I think Singapore rEstate would appreciate further, making our lives somewhat poorer just like in Hongkong. If Singaporeans must reside and consume/spend [2] only in Singapore and if without foreign labor[1], then they would find that many services become expensive although imported goods would remain affordable. That would be drive force for more automation, more self-service, but many retirees really prefer human service.

[1] In reality, Singapore relies heavily on foreign construction workers, foreign maids, service sector foreign workers (from SEAsia + China) to control labor cost. See SG reliance@low-wage foreign workers: maintain cost+competitive
[2] In reality, Singaporeans really like to spend their wealth overseas.

liquidity[def]: how I gauge ILLiquid products

Posted on by tiger40490

I define liquidity as the expected number (possibly zero) of waiting months to fully recover my capital [1]. If I must incur a financial cost to access my cash, I consider it inferior liquidity. It feels like mis-calculation and mis-planning.

As defined, liquidity is a top 3 consideration in my investment decision.  I often think of liquidity more than (the vague concept of) risk. Therefore, liquidity is a dominant feature of my risk appetite and risk profile.

[1] Here is a fake example to illustrate some fine points. Say you incrementally buy one share of BRK.A and wait for X months to get near BrE. Presently, you only need to access the earliest 22% of that amount, but you have to liquidate the whole share, at a 3% loss. Still a big loss. So at the current price, the investment is not yet “free”, not at ABE, i.e. not_yet_liquid. However, suppose I also bought one share same way as you. If I’m able to select which fractional lot to liquidate, and able to liquidate the first 22%, then I am at ABE, i.e. breakeven on that 22% of capital. In such a scenario, the investment is already-liquid. In this illustration, fractional sell improves liquidity.

  • term insurance? liquidity is moot. Not an investment.
  • annuity? liquidity is moot. Not an investment.
  • cash-like? most liquid and low-risk

— ABE = actionable breakeven = a situation where I can liquidate a given position to achieve breakeven. Whether this breakeven includes various costs (like commission, FX) is unspecified. I usually include all costs.

BrE = breakeven. Half the times, the BrE situation is theoretical not actionable.

— With risk capital investments (rEstate, equities, HY/PE, gold …) there’s a pdf bell curve. I might have to wait for 10 years to breakeven and be free to liquidate (partially) to access part of my initial capital, or the wait could be 2Y.

I am used to this type of risk-capital liquidity. I have learned to embraced this type of risk-capital investments.

Mufu …. is generally less liquid than holding equivalent stocks because the wait is lengthened by erosive expensive ratio + upfront fees

Note dividend payout often improves risk-capital liquidity. Some risk-capital investments have no dividend — gold; SIA;  growth stocks

— My common objection to endowment products is super-safe illiquidity. No matter how lucky things turn out to be, I am likely to wait a long time before I can break-even via policy surrender.

CPF-OA/SA features horrible super-safe illiquidity, so I only accept CPF involuntarily.

— How relevant are bid-ask spread, upfront fees, and depth@market? Relevant.
Large transaction costs hurt liquidity as I defined.