This week's interesting finds

Jason’s corner

To give readers a deeper look at our investment approach, Jason will provide insights we’ve learned from our active involvement in operating Cymbria’s private businesses. It’s a collection of pieces that include commentaries from Cymbria Annuals and other thoughts throughout the year.

Jason’s corner can be accessed from the dropdown menu under the Insights tab or from the Cymbria homepage.

S&P 500 Index vs. MSCI World ex- USA Index growth attribution

S&P 600 Index vs MSCI US Index – relative trailing P/E

Russell 2000 ETF flows

S&P 500 Index vs. discretionary sector – historical relative performance

OECD country income disparity

Crude energy index vs. S&P 500 Index

High-yield bonds vs. leverage loans – maturities

Mortgage rates

Toronto condo starts

Greater Toronto-Hamilton Area – Number of completed and unsold condo apartments

Canada vs. U.S. REITs - capitalization

The Condo Crash

Tajdin is one of thousands of Canadians who have been caught in the fallout of the country’s collapsing condo market. Many are middle-class buyers who fell victim to the relentless real estate hype machine. They were told that big-city condos were a surefire place to park their money—and they were the biggest losers when the floor dropped out of the market. Since peaking in 2022, condo values in Toronto have plunged by 16.5 per cent and in Vancouver by nine per cent. Those averages mask the much larger losses experienced by would-be investors like Tajdin. Now, many buyers are on the hook for mortgages they can’t secure. Others own condos they can no longer sell, sinking deeper into the red every month as their carrying costs exceed what they can charge in rent. And a growing number are finding themselves on the wrong end of legal action as developers seek to recoup losses by taking legal action against buyers who back out of presale agreements. 

Those developers, meanwhile, are unable to sell enough pre-construction units to finance new buildings. Many are entering receivership, postponing new construction and exacerbating an already painful housing shortage. Some are sitting on thousands of completed but seemingly unsellable units, built first and foremost as financial assets rather than functional housing.

The implosion has been most acute in Toronto and Vancouver where, over the past two decades, the condo boom reshaped skylines and transformed the very idea of housing. It was in these cities that condos evolved into something both more and less than homes: the ultimate financial asset, favoured first by rich investors and later by middle-class Canadians who plowed increasingly enormous amounts of personal wealth into them.

Real estate, especially in Canada’s most expensive cities, has for decades been considered a sure bet. For a long time, it was: since the 1990s, Canadian housing prices have gone steadily up, with only the briefest interruptions, even as naysayers and market pessimists came and went. Buyers became more deeply leveraged, and debt loads grew, but so did windfall profits and eye-popping flips. 

And so for years, more and more investors piled in, building their nest eggs in the sky. When the market nosedived, it was those same investors who shouldered the worst of the collapse, exposing the fundamental flaws in our housing system: rampant speculation, the pursuit of short-term profit over long-term sustainability, and a laissez-faire attitude from policymakers who allowed everything to spiral out of control.

This week’s fun finds

What It’s Like to Fly Bark Air, the First-in-Class Airline for Dogs (and Their People)

Bark Air launched in May 2024 as an offshoot of Bark; that publicly traded corporation that began its life as BarkBox, a subscription service for treats and toys that has since expanded into nearly all parameters of canine life. Really, pretty much all: They are slowly introducing a dedicated concierge arm of the company, Bark Air president Mike Novotny told me on a call this July, that will offer everything from road-trip itineraries and (truly) pet-friendly hotel recommendations to groomer advice and grief counselors. (Intriguing off-record plans are also afoot to partner with upscale hotels and travel agencies to help provide pet-friendly experiences and itineraries for guests on the go.)

Given that, post-pandemic, more and more people have been unleashed from regular office requirements—and have, in turn, chosen to prioritize both personal travel and the pets they now spend most of their time with—an airline that catered specifically to dog-doting global nomads felt like a hole Bark was built to fill. Their customer base was a demographic for whom the overhead compartment or the terrors of the cargo hold—where dogs have not infrequently, and as recently as 2023, died in transit—wasn’t going to cut it. Last year Bark founder and CEO Matt Meeker made a video of himself flying in a large dog crate between South Florida and New York to prove the misery of such conditions. “This really does suck,” he says as his crate is loaded into the belly of the plane. Later, in the dark of the cargo hold, jostled by turbulence: “No seat belts, no airbags—I don’t know why any person would choose to do this to their dog. It’s an absolute horror show back here.” Now, for around $6,000 and up one way, they don’t have to.

The price tag, which is almost the same per route as a seat on a shared private-jet charter like Aero, is about as low as it can be while keeping the operation afloat: The planes are chartered by Bark, not owned by them, and each seats an average of 10 or so guests. Each ticket is for one human and one dog, and it flies a limited schedule (i.e., four round trips from Van Nuys to Teterboro and back a month) between private airports in Los Angeles and San Francisco to New York, and from New York to London, Lisbon, Paris, and Madrid. (They will also, perhaps most notably, help you with all of the required paperwork for international travel with a pet—avoiding quarantine!—as part of their services.) Unlike other semiprivate charters, there are absolutely no size or breed limitations for dogs. Also, unlike other flight providers, everyone you speak to just really loves dogs.

Once I booked our flights, I was contacted by a concierge who asked about Hugo: his personality traits, his likes and dislikes, his vaccination records, his play style, his preferred music, and whether he likes the car windows up or down on the ride to the airport—which, in one of the many brilliant moments of minimizing pain points for the pet-toting traveler, they will also arrange. On travel day, we were picked up by a chauffeur (sign reading “Hugo,” radio playing the Beach Boys) and arrived at the treat-filled terminal in Van Nuys for check-in, where it was immediately clear where to go based on the wagging tails.

Inside the terminal a certified dog trainer kept an eye out, observing the attitudes and interactions of all the four-legged passengers in order to decide where they should be situated on the plane (dogs that show signs of overexcitement or aggression are separated, for example) and foster a seamless travel experience. “I take this flight twice a year, to take my dog to our place in Long Island and back,” one of my fellow passengers, an older gentleman with a small poodly type dog tells me, “and it’s the best, because everyone is so nice.” He waved his hands expansively. “You know, it’s all dog people.” I do know: There’s a certain camaraderie among the openly canine obsessed. You can really relax when you’re not worried your dog might rub up against someone who doesn’t want it or, ahem, drool on their leg while they’re eating their chicken Caesar wrap on board (not that Hugo or I know anything about such behavior).

Prior to boarding, passengers are given Bark Puppy Passports, preprinted with their dogs’ photos, and a handwritten ticket that has the order in which they will board the plane. We formed a merry parade of wiggling tails across the tarmac, pausing for a photo opportunity by the plane’s steps before a quick climb on board. All dogs are harnessed and seat-belted to their owners’ chairs for takeoff and landing, but if there is a nervous or snappy pup on board, one of the Bark concierges tells me, they have an array of fixes: calming treats, noise-cancelling ear muffs, a snoodlike pullover called a happy hoodie, and, in more extreme cases, gentle muzzles. Several of my fellow travelers (a mix of summer vacationers and those making more long-term relocations to the East Coast and beyond) confess that they have doped their dogs with a sedative, and we all discuss the merits of Gabapentin (lighter) versus the far more effective Trazodone. (Hugo, by nature mellow to a fault, has not taken any drugs, but happily accepts some melatonin calming chews during takeoff, likely because they are meat flavored.) A drugged shih-tzu-looking mix stares hazily into the middle distance between his owner and my seats for the next five hours straight, including for a photo opp in which he is adorned with a small blue captain’s hat.

This week's interesting finds

This week in charts

Small-cap stock returns

U.S. equity returns following Liberation Day

Markets reactions to the Great Financial Crisis

Valuation metrics across regions

Valuation range by country

Price performance – small-cap vs. large-cap

Price performance – growth vs. value

European index sales exposure

Domestic and foreign ownership of equities

European defence companies

This conversation is being recorded — and so is everything else you do in San Francisco

A crop of startups is selling stealthy AI-powered recording devices and software that’s becoming increasingly popular across Silicon Valley. Regardless of whether you’re in a contentious work meeting, having coffee on a first date, or enjoying the wild abandon of a house party, there’s a growing likelihood that someone is listening.

Some of these devices are wearables masquerading as fashionable pendants, like those made by Limitless, or discreet lapel pins, like those by Plaud. Bee has a device that resembles a Fitbit. Others are apps that run quietly in the background of phones and laptops, like Cluely, Granola, and OpenAI’s new ChatGPT Record feature.

It can be hard to know when one is being used. Some devices flash or light up when they’re recording; others glow when they’re switched off. Most automatically generate AI transcripts and audio recordings of everything with which their owner interacts.

Why would anyone voluntarily wear these roving surveillance devices? It’s not necessarily to catch people saying things they’ll regret. Enthusiasts report that the recorders help them stay “present” in meetings, outsource busywork, and act as a perpetually available collaborator.

But many who work in offices where the devices are becoming the norm report that they have begun to self-censor, worried about every offhand comment being etched into an AI-generated transcript. Meanwhile, lawyers warn that it’s only a matter of time before these nonconsensual records and audio files become liabilities in court.

The always-listening crowd

For many in the tech industry, AI recording tools have become a way of life.

But some users acknowledge that Silicon Valley’s newfound recording culture has them on edge. Even a confidential chat in the back of a coffee shop may not be safe.

Is this even legal?

The rules around recording permission differ by state. California’s wiretapping law requires everyone in a confidential conversation to give explicit consent before being recorded in situations where there’s a “reasonable expectation of privacy.”

For now, the responsibility for getting appropriate consent has largely fallen on users, with companies distancing themselves from legal liability. An OpenAI spokesperson told The Standard that users must get consent and obey local laws; the company encourages this by placing a grayed-out reminder — “ask before recording others” — beneath its red “record” button.

This week’s fun finds

Visiting from Montreal, relationship manager Raphaelle hosted a special moai where we could celebrate not only great food but the sense of family that makes us who we are. A culture that’s dear to her heart, she sees the same family spirit at EdgePoint that she does with her Italian family.

“Siamo una famiglia, sempre pronti ad accogliere chiunque voglia farne parte”.

“We are family, welcoming anyone who wants to be part of it”.

A Glowing Inflatable Canyon by ENESS Squeezes Inside Melbourne’s Prahran Square

Although it appears that thousands of tons of boulders have been dropped into Prahran Square in Melbourne, the enormous rocks are actually as light as air. Art and technology studio ENESS (previously) has installed its inflatable “Iwagumi Air Scape” in the park, creating an immersive canyon for visitors to wander through.

While the 16 massive stones have a grainy, granite-like texture during the day, at night, they glow in otherworldly pinks and yellows, creating a surreal landscape that illuminates the urban environment. Audio of flora and fauna accompanies the work, so that when viewers squeeze through what would be a treacherous pass between real boulders, the soft inflatables and mountain sounds wrap them in a natural embrace.

This week's interesting finds

This week in charts

S&P 500 Index price-to-earnings valuations

Weight of the largest stock in S&P 500 Index since 1981 

S&P 500 Index revenue per employee, by sector – 1991 vs. 2025

U.S. equity market – YTD returns, by sector

Capex growth – tech vs. sectors 

Magnificent Six costs – asset intensity vs. innovation

Technology, media and telecommunication sectors becoming more asset intensive

Capex growers relative performance

U.S. corporate buybacks

Investment-grade and high-yield bond fund flows

Youth Is Losing to Experience in This Job Market

There are plenty of signs that AI is making the job market tougher for young college graduates, but for the 22 million people with jobs that are categorized as professional and business services, wage growth has actually accelerated over the past year to levels solidly above pre-pandemic rates. This suggests that the state of the labor market for white-collar workers is best described as bifurcated — one where there are both winners and losers rather than one where most workers are worse off.

Despite the overall unemployment rate being a solid 4.2%, conditions for young workers are soft. Only 65.3% of 20- to 24-year-olds were employed last month, nearly three percentage points lower than the post-pandemic peak in January 2024, and roughly the same proportion as we saw in December 2008 following Lehman Brothers Holdings Inc.’s collapse. For the millions of college graduates in the 22 to 29 age group, the unemployment rate stood at 3.7% in the first six months of the year, compared with 2.8% in 2019, according to Current Population Survey data.

Such numbers are backed up by numerous news reports as well as comments from corporate executives on how they see AI transforming labor needs. Internship postings this spring were down. A recent Wall Street Journal report noted that the share of entry-level hires relative to all new hires has slumped by 50% since 2019 among the biggest technology companies, while another pointed to consultancy firm McKinsey putting together smaller but more experienced teams as it adds AI to the mix.

It’s also becoming more common for CEOs to talk about AI eventually leading to significant layoffs. At Meta Platforms Inc., Alphabet Inc. and Microsoft Corp., employee headcount grew 64% between 2019 and 2022 but just 3% over the past three years. This comes at a time when the three tech juggernauts collectively plan more than $250 billion in capital expenditures over the next 12 months, suggesting that there’s a tradeoff between investing in AI and hiring workers.

While the number of jobs in the professional and business services’ category of the non-farm payrolls data shrank slightly over the past year, wage growth accelerated to just above 5% in July. Compare that with 2019, when employment growth averaged 1.3% while wages rose 3.7%.

One explanation for this is that there are composition effects at work. If companies aren’t hiring young workers, who tend to be lower paid, we’re going to get lower employment growth in professional and business services along with increasing average compensation levels, which could overstate the extent to which older, more experienced workers are getting raises.

But there are reasons to believe some workers really are gaining from this phase of the AI boom. There’s the pro athlete-type offers being made to the select few engineers building new AI models. Outside the tech sector, there’s the experience of companies such as McKinsey, where “mediocre expertise” is going away while specialized expertise becomes more valuable in combination with AI agents. That dovetails with Nvidia Corp. CEO Jensen Huang’s prediction that workers who use AI will be fine in this transition.

It’s reasonable for all workers to be uncomfortable with a technological innovation that hasn’t disrupted most workers yet but where the ultimate outcome is so uncertain. There’s no guarantee that the next generation of AI models won’t come after workers with more advanced skills. It’s also a far cry from the technology boom of the late 1990s, which was accompanied by broad-based employment, compensation and consumption growth.

This week’s fun find

Photos of surfing dogs hanging ten in annual competition

The annual World Dog Surfing Championships took place near San Francisco on Saturday. Thousands of spectators flocked to Pacifica State Beach to watch pooches ride the waves solo, in pairs or with human companions. The dogs were judged on balance, time on the board and any tricks they performed.

This week's interesting finds

This week in charts

Trading composition

10-yr U.S. Government bond returns

S&P 500 Index valuations

Labour intensive sectors

U.S. Civilian labour force

U.S. Labour force participation

Foreign sales exposed to retaliatory tariffs

Government investment by region

MSCI World Cyclicals vs. MSCI World Defensives

Fund flows - U.S. large cap vs. U.S. small cap

Private equity firms flip assets to themselves in record numbers

Buyout groups used so-called continuation funds — in which a private equity group sells assets from one of the funds they manage to a fresher fund also managed by the firm — to exit $41bn of investments in the first six months of 2025, according to a report by investment bank Jefferies.

That was equal to a record 19 per cent of all sales by the industry, and 60 per cent higher than a year ago.

Private equity groups sit on more than $3tn in unsold deals and are nearing four consecutive years in which they have returned only about half the cash investors traditionally expect.

Continuation funds give investors the choice to roll over their investment or to cash out. For their private equity sponsors, they allow the firm to keep portfolio companies beyond the typical 10-year life of a fund, and to crystallise performance fees on the assets sold while collecting a steady stream of management fees from the new fund buying the investments.

In the first half of the year, PE groups such as Vista Equity Partners, New Mountain Capital and Inflexion used multibillion dollar continuation funds to sell down some of their largest investments.

Vista raised a record $5.6bn continuation fund to sell a large existing stake in IT firm Cloud Software Group to a newer fund it manages, while Inflexion sold stakes in four deals, including industrial company Aspen Pumps and Rosemont Pharmaceuticals, a UK pharma business, for £2.3bn. Both deals locked in large gains for investors choosing to sell their stakes.

The report from Jefferies found that the secondary market, where both buyout firms and their institutional investors can trade stakes in existing assets, exploded in the first half of this year.

More than $100bn of sales took place, an increase of almost 50 per cent from the same period last year. Slightly more than half of that came from fund investors — known as limited partners — selling their holdings.

Continuation funds have drawn concern from some investors as a tactic for recycling capital, even as their popularity has surged, with an increasing number of institutional investors opting out of them.

But a recent report from Bain & Co, considered an authority in the industry, still showed that almost two-thirds of investors in private equity funds would prefer groups sell down investments the conventional way through sales to companies or initial public offerings. Just one-sixth of investors said they preferred continuation funds.

This week’s fun finds

Investment intern, Zane Balkissoon, treated the team to Japanese rice bowls and cake from a couple of his favourite local spots. It was comforting, packed with flavour and the perfect choice to kick off the long-weekend. Definitely a crowd pleaser. Thanks for all your hard work Zane, job well done!

Dennis Lehtonen Documents a Pair of Immense Icebergs Paying a Visit to a Small Greenland Village

From rocky outcrops overlooking modest, brightly painted houses, photographer Dennis Lehtonen captures an astonishing nordic phenomenon. Innaarsuit, Greenland, which sits more than 430 miles north of the Arctic Circle, sets the stage for a series of images highlighting dramatic visitors to the area’s waterways.