Be Careful What You Believe


Sherlock Holmes has pointed out it is a capital mistake to reach conclusions before examining all the evidence.

It is a more significant error to hold on to an old idea in the face of new evidence. As Keynes has said, “When I find new information, I change my mind. What do you do?”

Consider those ideas concerning Covid-19

An early September article reported on the findings of a supercomputer analysis of the genetic effects of the virus. A supercomputer’s analysis  We find the disease is two-part. The damage towards the end of its run, which may kill you, is an autoimmune response. I think “Bradykinin storm” may become more prominent in our discussions.

That is in stage 2. The virus causes our body to produce a response that harms us. There are ways to deal with that. What about stage 1?

Understand what tests mean

Knowing the testbed and the population you have studied is a necessity before assessing outcomes.

On 6 September, the National Post published a piece that pointed out that serious studies exist about Hydroxychloroquine and its effects. They showed the substance has no curative properties. It similarly kicked some other drugs to the curb. According to the Post, this is a mistake.  Authorities misinterpreting COVID 19 trial data with disastrous results, Canadian researchers say

Why a mistake?

The drug Hydroxychloroquine works only in the early days of the disease or even as a preventative. That happens before the Bradykinin storm autoimmune effect occurs. The tests examined only the impact on late-disease patients. Tests did not address the disease in the form the drugs could cure. Not hard to see how the scientists may have reached wrong conclusions. We cannot merely dismiss drugs that are effective in the early stages of the disease.

Statistical assessment of meaning requires more careful analysis than we see here in the hydroxychloroquine studies.

Confirmation Bias hurts us all

We live in a complex and changing world. If you hold your beliefs too closely, they will eventually harm you. People must continuously look for both validation and contradiction of their ideas. Especially contradiction.

As George Orwell pointed out, “Right-thinking will be rewarded; wrong thinking punished.”

Holding wrong beliefs prevents solutions. When you know nothing, you can still be right by accident. Keeping discredited ideas is wrong thinking. Pay attention to Keynes.

Attacking the right problem is always better.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Stock Prices Can Mislead


When is a penny stock a good buy?

Some people think it is easier for a 20 cent stock to double than it is for a $200 stock. When you think about it, even a little, you recognize the thought is misleading.

When you buy stock

Buying stock is not like buying carrots. You can take a carrot from the farm where it grew, but you cannot sever a share from its company.

If I have a carrot it is possible I could get double for mine while all other carrots stayed as they were. No such luck for stockholders.

If my 20-cent stock is to double all the 20-cent shares must double. The value of the entire company must double for that to happen. If there are a billion shares at 20 cents, the company value is the same as if there are a million shares at $200 each.

The question, “is a double possible?” relies on the structure and prospects of the business. It is not easier to double a cheap stock

Yogi Berra.

A waiter once asked Yogi if he wanted his pizza cut in six pieces or eight. Yogi replied, “Better cut it in six, I’m not hungry enough to eat eight.”

It’s the same with stock.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Old Truth Is Nonetheless Still Truth


Charles Edward Garman was a professor of Philosophy at Amherst College. One of his students became president of the United States, Calvin Coolidge. We can learn from their thinking.

Coolidge was a highly ethical human who grew up believing hard work was a cure for many problems, that personal responsibility was a necessity, that frugality was virtuous, that negotiation was often a better choice than conflict, and that people managed their personal affairs better than governments could.

These are values that have become less in vogue over the years.

Consider Coolidge’s reminisence of Garman:

“In ethics he taught us that there is a standard of righteousness. That might does not make right, that the end does not justify the means and that expediency as a working principle is bound to fail. The only hope of perfecting human relationship is in accordance with the law of service under which men are not so solicitous about what they shall get as they are about what they shall give. Yet people are entitled to the rewards of their industry. What they earn is theirs, no matter how small or how great. But the possession of property carries the obligation to use it in a larger service. For a man not to recognize the truth, not to be obedient to the law, not to render allegiance to the State, is for him to be at war with his own nature, to commit suicide. That is why ‘the wages of sin is death.’ Unless we live rationally we perish, physically, mentally, spiritually.”

From Calvin Coolidge – The Man From Vermont, by Claude M Fuess

How many of the thoughts persist in politics and life today?

  • “There is a standard of righteousness.” There might be but it seems more variable today.
  • “Might does not make right.” Power for power’s sake seems to be important to many.
  • “The end does not justify the means.” The exact opposite seems to be the way things work now.
  • “Expediency as a working principle is bound to fail” Most responses from our leaders are expedient rather than thoughtful.
  • “The only hope of perfecting human relationship is in accordance with the law of service under which men are not so solicitous about what they shall get as they are about what they shall give.” That is pretty much how capitalism works. Contributing more to society equals earning more. Denying capitalism as a way to provide resources that enrich us all is irrational.
  • “People are entitled to the rewards of their industry” Coolidge made massive tax cuts in his term. People making less than $5,000 went from paying 5% of all the taxes collected to paying less than one half of one percent.
  • “The possession of property carries the obligation to use it in a larger service” We seem to not notice how many wealthy people use their wealth to further things in society they believe require some assistance. Some people understand duty.
  • “For a man not to recognize the truth, not to be obedient to the law, not to render allegiance to the State, is for him to be at war with his own nature,” That is unquestionable when the state is working for the betterment of its citizens. There may come a time when allegiance to the state is not rational.
  • “Unless we live rationally we perish, physically, mentally, spiritually.” Many of us are uncomfortable with how the world is progressing in the West. Perhaps in the East too, but I don’t know enough to have an opinion.

The moral of it all.

We need to think about longer time frames than the election cycle. We need to notice that government power can be and is abused. We should notice that taking from others ourselves, or under the auspices of government, is wrong.

We must use the resources we have to make better the world we live in. By educating children, helping those we can, and remaining rational in the face of irrational behaviour around us.

Most of all, we must not remain silent while people of good intention and little ability try to change what has previously worked.

“Much of the social history of the Western world, over the past three decades, has been a history of replacing what worked with what sounded good.” Thomas Sowell.

Not an ideal legacy.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Somethings To Think About


I found a podcast the other day Uncommon Knowledge. It is offered by the Hoover Institution. I was attracted to it because one of the people I have a lot of time for is Thomas Sowell and he is in some of their presentations.

I found Thomas Sowell to be concise, well-prpared, well-organized and essentially based in common sense. You may too.

The more recent of his many chats:

Tom Sowell on Charter Schools

Tom Sowell On the Origins of Economic Disparities

The Myths of Economic Disparity

You can see a library of Hoover Institution talks here. Uncommon Knowledge on castbox


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Simple Wrong Answers Hurt Us


Some people think there is a simple solution to every problem. They are wrong. Bjorn Lomborg of The Copenhagen Consensus Center telss their government clients, “Within complex issues, we can’t expect to be right, but we will try to be less wrong.”

Events and Processes

Problems may be dealt with by a single action or by a series of actions. The problem may arise or be noticed suddenly or it may develop gradually. Suddenly noticed and solved with a single action are event problems. My son accidently hit  a baseball through the window in the kitchen. New glass, some putty and we’re done. More  likely phoned a contractor and paid money.

Slow developing and impossible to solve with a single action problems are more challenging. Losing weight by dieting. Learning to run a half marathon. Becoming an engineer. There is no event that will create the result. We require other methods.

The other methods are not so easy to implement because they all require judgement and persisitence. Persistence requires discipline and motivation.

We all like event problems better and we try to condense process problems into the event paradigm. We can easily become confused when the single action seems not to work. Learn to recognize situations that can be solved with processes and recognize the time scale and the trail markers that should appear. Event solutions are more rare than we think.

Things like financial planning, estate planning, and global warming are examples of process problems.

Global warming may be the challenge some think it is

I may doubt the CO2 cause as being unique and powerful in the extreme. I may believe there are other causes that are not so controllable. I may be wrong. In all of those cases the approach is the same.

As an event problem.

If Global warming is an existential crisis and we do nothing about it there would be outcomes similar to those provided us by the most shrill. The problem with the shrill approach is it assumes there is an event solution. Like Reduce CO2 to net zero.

We could, of course, do that but not while we sustain our standard of living and allow others to improve theirs. So, there is some push back and the shrill become even more animated. Divisiveness seldom contains a solution.

“For every complex problem there is an answer that is clear, simple, and wrong.” – H. L. Mencken

Suppose instead we think of it as a process problem.

That offers more options.

  1. Do we need to get to carbon neutral at all, or can we adapt? Would oceans arising drown many people or merely force them to move. It is hard to imagine someone staying in their home and drowning while the ocean engulfs them. Over 50 years. Impossible. The ida that  187,000,000 people will be lost to oceans is for emotional effect. It is an image not a fact.
  2. Will technolgies become available as people do research? Maybe 20 years from now there will be a breakthrough. If some from 1920 had a vision of 2020, they would not beleive it possible. It did not appear sudenly. We have no better methods of anticipating 2120.
  3. Will people change their attitudes to the problem. All long developing processes work like that. Anyone who explores race relations in 1960 will notice that the overt problem is much better. Thus the ones who will benefit by having the problem need to make it more subtle and unmeasurable. You can’t measure systemic racism: whatever that means.
  4. People need to notice gradual change. When I got our of university I bought an MGB. (Dumb I know) It weighed 1600 pounds, had a 1.6 liter 4-cylinder engine and on the highway got almost 30 miles to the gallon of gas. I now have a 4,500 pound vehicle with a 4.2 liter engine that gets more MPG on the highway. Problem mitigation is thing we don’t notice well enough. We never project its effects.
  5. Will we find some benefits that we can enjoy. CO2 is plant food. It might make sense to develop varieties that thrive with higher concentrations of CO2. That would offset the decline in production that arises from higher temperatures. Do you think farmers would not adapt to new weather patterns. Planting corn in the last week of May might have to change to the last week of April. Farmers aren’t going to stand still like the 187,000,000 drowning victims.
  6. Are there simple possibilities not previously explored. Craig Ventnor has suggested massive algae fields in the oceans that convert atmospheric CO2 and sunlight into oil. Then harvest them. Technology still to come.
  7. Notice that most new things fail. Many solutions applied oer time will result in a few that solve the probem. Putting all your resources into narrow channels minimizes the opportunity for success.

Event solutions like solar panels don’t provide a solution presently and may never because the sun is not avilable to a given panel 24 hours a day. Massive storage capability must exist before solar is viable as a significant energy provider. Same story with wind. Ontario is likely one of the greenest electricity providers in the world. Just 4% of power is generated using oil and gas. None with coal. Of the 96% remaining, wind and solar account for about 7% despite massive spending to get to there. Possibly a little patience while recognizing a process problem would have been more economical.

Economical matters.

The money you waste now for a poor solution would be better spent on research and better solutions in the future. But, you can’t get elected on a slow evolving problem with a slow evolving solution. That’s not how politics works. The approach there is, ” The world is about to end and I can save you if elected.” The unexpressed connected thought is, “Ideally the costs will not begin to appear until after I retire.”

The takeaway

We are being taken by people who think only event solutions matter. Maybe because they think they are the only ones we understand. They could be right. Realistically though, you have to ignore the history of humanity to believe we will not adapt and flourish. We should notice the problems we have and recognize their potential. Then spend our money and time resources adapting and minimizing.

The key is directional accuracy. Process problems only solve with processes. We must learn to measure and assess and adapt as we learn more. No single action today will fix climate change or build your retirement fund. If you are saving some money and learning to invest, learning to manage debt, spending, and taxes, you’ll be okay.

Process management requires recognition, vigilance, assessment, and adaptation. It is seldom advanced by emotional skreeds from people who can benefit from your activity. Beware prophets who profit.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Interest Rates Do Not Convey The Whole Message


Strange things happen when you think the price of money affects how much of it anyone would like to have.

For this purpose the price of money is interest. The amount charged or the amount people will willingly pay. It works differently than it does for the price of hamburger. For most families if the price of hamburger falls, we buy a little more. If it raises, a little less. Demand fluctuates with the price.

Money doesn’t work exactly like that.

Monetary policy.

Historically you could increase the demand for money by reducing the interest rate. The idea being people would borrow and invest or consume more if the price was lower. Like hamburger. Turns out that is not what happens at all.

This article by Joachim Klement will give you important information. The essence is beyond a point, lowering the price has no effect or even negative effect on the quantity used. The Evidence Is Mounting

As he points out, since the early 90s interest rates in Japan have been very low, yet people borrow little and hold cash. Not intuitive. Could the same thing happen here?

The problem

Borrowing at a given interest rate does not exactly parallel the theoretical idea of the price of money. Why? Because you must pay the interest AND you must pay the principal too. If people do not have the confidence in their ability to pay both, they won’t borrow. The issue of supply and demand around money must involve the price of money and the confidence the borrower has to repay the entire obligation.

For example: Suppose the interest rate on a first mortgage is 0% and you estimate the price of houses will fall 3% a year and there is a 10% chance you will be out of work for more than 6 months in the next 3 years. How much would you borrow? Probably not much, if any, and you might hold on to your cash for emergency spending or to take advantage of lower prices in the future. Like Japan.

That means “monetary policy” will be less effective than it has been in the past.

The way to think.

You can be caught up in a poor situation if you only look at the price. Like everything the value you are trying to get is much more than the price and what you give up is more than money. In the mortgage a long committment and the confidence to believe you can sustain the obligation.

Money is about utility. If the utility you get from borrowing is more costly than you can certainly pay, you might want to give those cheap loans a pass.

Where it leads.

Governments mostly don’t care about borrowing money. They never have to repay it, at least in theory, so the price is the only variable that matters and it only slightly. They will borrow and consume until the price becomes uncomfortable. When they slow down or stop their spending what will happen then?

  • Inflation maybe. Certainly inflation is valuable for them. Spending $1.00 now and repaying the debt in 20 years with 40 cent dollars makes borrowing nearly mandatory.
  • Economic stagnation perhaps. If the economy requires huge cash injections to continue, when the injections stop some sectors will stop with them. Durable goods need easy money to sell in vast quantities.
  • Attitude change to borrowing. What percentage of now cars are leased or financed with cheap rates? Easily over 50%. Leases alone are over 30%. If people adopt the old fashioned idea of paying cash, what happens to the car business? Or home improvements, or appliances, or education, or ???
  • Jobs and especially jobs with pension plans will dry up. Freelance work and contract work will prevail because businesses aren’t going to like committments either.

What to do

Anticipation is the key to getting a good future to happen. If you can estimate the future you can fit in and flourish. If you cannot you must have two things going for you:

  1. The ability to adapt quickly
  2. Flexibility. The possession of useful resources and the ability to apply them in different ways.

People who cannot cope with change and/or who lack the resources to allow them to change, will have problems. Don’t be someone who authors your own problem.

Do not let a simple variable like interest rates be the only factor in your decision process.

There is always more.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

You Need A Vision


Always begin your plans with their raison d’etre. Motivation lives in your vision of the outcome.

Gapingvoid is good for useful ideas from time to time. You might want to subscribe. Gaping Void Blog

Risk and Caution


Have you noticed wild animals are cautious? Have you thought about why? There is a simple reason. An injury, even a simple one, could be life threatening.

If you break your leg, it will be uncomfortable and inconvenient for a while, but that’s about it. If a fox breaks his leg he will be unable to get enough food. It might not heal at all. So the fox is cautious.

Birds are even more cautious. They are more fragile.

Risk is something you can analyze

When you understand it, you can assess the level of caution that would be appropriate. Ideally, you could find risk minimizing techniques that allow you to proceed. So risk is about its objective nature and about your ability to manage it. Everything ahs some risk. Caution is on you. Risk and caution should be one package.

Assessing risk

There are several components. Some are quite difficult to assess while others are fairly smple.

Objective probability of an adverse event. Life is much more difficult than a game. The odds of drawing one card to an inside straight is about 11 to 1 against. The odds of the stock market being up 10% this year are vastly more difficult to assess. So you get a range when you think about the stock market. Hope for +10%, be okay with 0%, and be prepared to defend agaisnt -10%. All life risks appear in a range of probability. You should have a clear understanding of what is possible. Better still you should know what you would do if the event occured suddenly. Best of all, what you would do when it appeared the event was about to happen.
If you could have seen the February – March stock market results in December 2019, what would you have done?

Exposure. You can easily change the effect of the adverse risk by not participating. You can minimize it by diversifying. Easy enough with the stock market, harder with the risk of disability or death.

Capacity. Some losses are trivial and should be treated as part of life. How scrupulous are you to avoid leaving your sunglasses in a restaurant? Inconvenient, but tolerable. Other losses are too big to ignore. Dying too young is one that comes up regularly. Loss of income by illness or injury. House burns down. Employer goes bankrupt and your pension goes with it. Each of us has a list.
Not everyone is affected the same way by a given event. A $100,000 loss for many of us would be a tragic event. For others, it is not even the roundoff. It is not wise to expose yourself to losses that exceed your capacity to absorb them. Warren Buffett has summed it up well in respect to Long Term Capital Management partners. “They risked money they had and needed, to acquire money they did not have and did not need.”

Serial effects. Some losses exist only on paper and could go away over time. Over 20 years the stock market is reasonably rpedictable. Over 20 minutes it is not. There is a signal and noise problem. In the short run all you see is noise and you cannot manage that. In the long run, the signal wins out. If you understand noise and signal, you will be able to deal with the variability of the market without losing much sleep. The problem is emotional. The general rule is “There is such a thing as a paper profit, but we see all losses as real.”

Managing Risk

All risks have environmental factors. You don’t store gasoline in your kitchen. You don’t walk on a tight rope over Niagara Falls. You do eat well and exercise. You don’t drink and drive. You manage stress. You don’t buy stocks based on tips. The low hanging fruit is in the area of reducing the expectation or effect of an adverse event.

Some adversity is insurable. You should use that option when your capacity to absorb the loss is not great enough. Insurance falls into four quadrants and you can get good value in only one of them.

  • Small loss with either high or low probability should be accepted as uneconomic to insure. Like the sunglasses. Use deductibles to minimize premiums for car insurance, house insurance, and medical insurance.
  • Large loss with high probability can be ignored because no one will insure it.
  • The only valuable insurance is in the large loss – low probability quadrant. Like life insurance. If you are young and your career is worth $2,000,000, you could probably insure that for less than $100 per month. That is for a standard risk. If you have serious medical problems you fall into the large loss, high probability quadrant and will be turned down. That’s why you manage the easy factors when you can.

The takeaway.

Managing risk is not so hard if you understand the range of possibilities, know your ability to tolerate a loss, know the factors that contribute to the odds of an event, and know ways to minimize the loss or transfer it to others. That’s what caution is about.

You cannot avoid all risks so you must learn caution.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

Multiple Viewing Points Often Add Value


“Invert! Always Invert.” Carl Jakobi.

Jakobi was a mathematician who found solutions to hard problems by looking at the inverse of the problem. It works quite often. Example: Suppose you want to know the probability of two people from a group of 25 sharing a birthday. Not easy to solve directly, but if you work at what is the probability that none match, you can easily discover the odds of a match are 1 minus the odds of no match. In this case, 57% of the time there will be a match.

Inverting is an example of framing

Sometimes problems look different depending on how you look at them. If I find someone with a million dollar tax issue in the event of death and they discover they can solve the problem with a $30,000 life insurance premium, I will have framed the solution in relation to the problem’s dimension. $30,000 to deal with a million is not distressing. If I start with the premium, it is $30,000 versus zero which is the premium paid now. $30,000 proposed doesn’t compare favourably to $0 now.

Be aware of how the solution should appear in the context of the problem and only secondarily in terms of other solutions.

All situations have an inverse if you look

In society today, suppose we look at the police killing people problem. In that frame, they are seriously defective and we should vigorously work at fixing the problem. Worse still, the frame is only police shooting of Black people. So we have a frame with no context. Do police shoot White people too? Yes. Many more if you look.

Suppose, we look at another frame. People who are resisting arrest or threatening police get shot more often than those who do not. Are we seeing examples of police shooting people at random. Not many, if any.

By inverting we find there are two approaches to the problem:

  1. Defund or massively retrain police officers. That could easily create other serious problems.
  2. Teach people to not resist arrest. I would have thought that solution was known to everyone, but apparently not. Maybe we should have a national public interest ad program

Takeaway

In your life look at problems from more than one viewing point. It is surprising how often you will see a new possibility hidden inside the inverse. Like keeping a stock is exactly the same decision as buying it at that price. Either way you have the choice of the money or the stock. Only the order of events is different. Sometimes seeing it as buying looks risky while doing nothing does not.

Invert. Always invert. Like Charlie Munger.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

How Do You Solve Systemic Problems?


Many of the problems facing society today are the result of old mistakes. Just like you, things you find wrong in your life today are often the result of mistaken decisions from the past. Many of those mistakes have created systemic problems because patches have been applied ot minimize the effects without actually assessing the root of the problem.

There two ways to deal with problems and opportunities.

Process. You can create processes that, while not directly addressing the situation, lead to solutions. For example, if you want to be healthy you cannot achieve that with a single decision. Months of proper diet and exercise will lead you to where you want to be. There is no pill you take.

Event. Somehting you do to address and solve a problem. Like take the healthy pill. Systemic problems do not resolve themselves with event solutions. The risk is when the ehalthy pill does not work or creates a side effect some new and different pill is taken to voercome the side effect and get you back on track. That doesn’t work either. Eventually you have to wean yourself off the medication and go back to sound diet and regualr exercise.

Event solutions don’t solve process problems and by the same token, process don’t solve event problems. If a mountain lion leaps out of a treee at you, careful pruning of vegetation and building paths is not the solution.

Event problems need event solutions and process problems need process solutions.

Problems get worse when you mix up the problem and its solution

  1. Bureaucracies tend to apply processes to events and thus create massive overhead to solve problems that may not recur. When Ross Perot was on the board at GM, he railed against the creation of Snake Committees. “I come from an environment where if you see a snake, you kill it. At GM, if you see a snake, the first thing you do is hire a snake consultant. Then you get a committee on snakes and discuss it for a couple of years”
    Most government departments work like GM.
  2. The opposite occurs too. If you have a process problem, the tendency is to want to do something. At a minimum be seen to be doing something. Just like the diet pill, throwing money at a problem, or creating new services, or building a bureaucracy, tend to perpetuate the problem and often make it worse. At the very elast they will use resources that could have been sued elsewhere.
  3. When you have process problems, systemic if you prefer, you will need systemic solutions. Contrary to political and activist wishes, thse don’t solve the problem instantly. Not even slowly. If a systemic problem has take several generations to form, it will take decades to go away. You must tear down the patches, you must show people new ways to think about it, you must be willing to make mistakes and correct them. There are no quick fixes and trying to implement one will make it worse.

Seth Godin.

You might enjoy this brief article. Systemic problems.

Be sure you know the fabric of your problem before deciding on a solution.


I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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