Bad advice (II)

I don’t know Kelley Keehn, but I guess she’s on the move. TV show on W. Writes financial books for ladies and kids. Auditioned for HGTV. Gives talks. You know the drill. An achiever with a sultry self-image.

A few blog dogs mentioned a column in the Globe yesterday in which a husband and wife from troubled Calgary moaned at each other over owning real estate. They’d sold a townhouse for $150,000 to move closer to a school for their problem kid. She wanted to keep renting and not spend their nestegg on a house. He wanted to be Cowboy Big and buy s $400,000 place cuz real estate’s going to the moon.

To show how sophisticated they are, they asked for financial advice from a newspaper. And that’s where Kelley came in, as the ‘financial expert.’ Did I mention she’s smokin’? In a fiscal way?

This couple is aged 50. Mom’s an unemployed exec. Hubs is a 70K-a-year apprenticing plumber. Total assets amount to $200,000 in GICs and $40,000 in an RRSP. He has no pension. She has a tiny one payable in a decade. And they have two kids about to start university, but no RESP.

And what’s the advice? “You should get back into the market,” says expert Kelley. But buy a cheap house, like for $300,000. Use a hundred grand of your savings as a down.

Now, this might be the right thing to say to save a marriage and land a fat gig on House Hunters, but let’s think for a minute.  These people have scant net worth for a couple their age. They’ve saved nothing to help their kids through school – and university now can cost $100,000 for four years. They’ve virtually no pension income to look forward to. She’s been out of work for five years. They make 40% less than the average Calgary family. And they should buy a house?

Let’s figure it out.

The lady biz whiz’s logic is this couple can own a home for about what they pay in rent now ($1,600 monthly), so they should (no actual financial reason is given). We’ll talk about the merits of buying a house in Cowtown (or anywhere) in a minute.

Hubs says he’s tired of “throwing money away” on rent. Apparently he’d rather throw it away on other stuff. In fact, buying a house – even for $300,000 – could end up costing these guys a bundle simply in cash flow, let alone the potential of a capital loss.

For example, buying at three hundred with $100,000 down will mean about $6,000 in closing costs and a $206,000 mortgage. At 4.35% for three years (going VRM with rates about to rise is a gamble) and a 25-year am, the monthly is $1,123. Add in insurance, property tax and an annual pittance for repairs, and that rises to $1,523 – virtually identical to the $1,600 in rent.

So, the HGTV expert would tell you, of course it makes sense to own! And build equity instead of paying someone’s mortgage!

Actually, no.

At $1,523 a month, this couple will pay $54,828 in occupancy costs over three years. Of that, $14,400 goes for insurance, maintenance and property taxes they would not have faced as renters. And another $25,741 is interest to the bank. That totals $40,141 in cash flow sucked off for no capital benefit. So over three years, they spend $54,828 and add only $14,687 to their net worth in the form of equity (assuming the house maintains its value, and excluding selling costs, which would reduce this to zero).

Had they stayed renters, the $100,000 downpayment, if invested in a balanced portfolio of 40% fixed income and 60% growth (no individual stocks, no equity mutual funds) yielding 8% would throw off $25,971 in growth. Meanwhile they’d have the same occupancy costs for shelter, but end up with $11,000 more in net worth.

Therefore, renting beats owning – at least if the goal is building financial wealth. And as renters, this couple would have liquid assets of $265,000 after three years, while as owners that liquidity would be just $140,000. In this crazy world, nothing trumps being liquid. Finally, as I mentioned above, if they sold the house after three years and paid 5% to do so, assuming no loss in value, the whole exercise would result in a net loss.

So tell us again, expert Kelley, why is this a genius move? Especially for a couple that puts house horniness before educating their kids, or their own retirement? Grasshopper? Ant?

Of course, the house could go up in value. But I don’t know why. Or it could go down. Which is a helluva lot more likely.

By the way, did you catch the latest news from USA land? New home sales just plunged 17% – the worst number in 50 years. The median price of a new home fell another 14%, which means it’s the same price as in December, 2003.

Japan. Libya. Rates. Debt. Inflation. Delusion. It’s a world of risk.

Unless you’re ambitious hot.

197 comments ↓

#1 pete on 03.23.11 at 9:34 pm

first

#2 overseas on 03.23.11 at 9:36 pm

First!

So glad I didn’t get sucked into the house debt spiral when I was living in Canada.

I didn’t know why houses prices went up so quickly…thanks for telling the truth Garth.
Overseas

#3 The InvestorsFriend (Shawn Allen) on 03.23.11 at 9:38 pm

LET’S TALK TAX CUTS AND TAX BREAKS…

If you really want a tax cut you have to identify a spending cut. So go ahead… I’ll wait a minute….

Now if what you want is a tax break but you have not identified a spending cut then all you really want is to pay less share of the tax burden. Without the spending cut someone else will have to pay more to make up for your tax break.

If you want a tax break and have no spending cut to suggest then who would you like to see pay more tax? Think about it. Post your answer.

And really if spending can be cut we could do that without giving you a tax break and we could just cut the general tax rate.

So really every single tax break. Every “we need to incent this and that” Every single tax break for one person has to be made up with higher taxes for someone else.

It’s real easy to ask for lower taxes for yourself. But will you look me in the eye and tell me why my tax is higher in order to cover your tax break?

Come on people. Let’s stop the madness and get something close to a flat tax rate. We can have maybe a tax free zone for low income. But how about a flat 20% or whatever for every dollar over $20,000?

And no tax breaks. None.

Imagine all the Country living for themselves, with the government not in their financial affairs. (Trudeau already established they should stay out our bedroom affairs)

Imagine no tax breaks for religions. Imagine you pay for your own chartible donations – no tax break. No break for polictical contributions. Scrap the RESP, the RRSP, the TFSA and the deduction for pension contributions and for EI.

Forget any renovation tax break/ Get rid of the kids fitness tax break and the bus pass tax break.

Forget a tax break for daycare too.

It’s like cleaning out the Garage after 20 years we must be ruthless here. Scrap all the tax breaks. All of them. ALL.

All of these things sound good in theory until you remember SOMEONE else has to pay for every one of these.

Why have a 40% tax rate and tons of complicated deductions? A 20% tax rate for every dollar over say $20,000 is far more fair. And far more efficient.

The goverment has no business in the bedrooms of the nation nor in its nesteggs, nor its child care. Nor…

Well what do you think?

#4 T.O. Bubble Boy on 03.23.11 at 9:39 pm

Post City Magazine arrived at my door today… with the latest “Real Estate Roundtable” (i.e. Garth vs. the RE Pumpers):

http://www.postcity.com/Post-City-Magazines/April-2011/Real-Estate-Issue-2011-Roundtable/

#5 Spazmogen on 03.23.11 at 9:41 pm

Typo alert!
It’s Kelley Keehn, not Kelley Kehn.

And pearls are for the 50+ crowd, regardless of how rich you are.

#6 kilby on 03.23.11 at 9:48 pm

I don’t know what is going to transpire over the next 12-18 months but our house sale finalizes next Thursday, we came down $100k from our asking price (which was 22K under professional market appraisal, not by a realtor) Ours was the only one of 15 similar listings to sell last year. We are renting a condo in Vancouver owned by people in China. We will own another house because we like being homeowners….but it is going to be nice to take a break and watch the changes. The town on central Vancouver Island where we want to move to has a market that is totally stagnant, same listings from last summer are all showing up again and just small price reductions $10k to $20K…..same as last year. I’m sure when the sellers realize these small reductions will not sell there homes that much larger ones will follow.

#7 MarcFromOttawa on 03.23.11 at 9:50 pm

Numero Uno

#8 jim on 03.23.11 at 9:53 pm

she not hot

#9 KingBubbles on 03.23.11 at 9:54 pm

Smokin …

#10 BrianT on 03.23.11 at 9:56 pm

The worst thing about this chick’s advice is that she does not clearly explain to the couple or the reader that this decision is entirely dependent on what happens to the value of Calgary RE going forward. A home can only benefit the purchaser financially if it rises in value-as Garth points out, simply holding its value doesn’t cut it.

#11 BrianT on 03.23.11 at 9:59 pm

#3Investor-It doesn’t matter-your proposal has as much chance flying politically as Mammolitti’s HOOKER ISLAND.

#12 Cellar Dwellar on 03.23.11 at 10:11 pm

That stare she’s giving the camera is scarier than yesterdays Polar bear….

#13 Cellar Dwellar on 03.23.11 at 10:12 pm

“…..she wore a pearl necklace !”

#14 HouseBuster on 03.23.11 at 10:18 pm

@13 Cellar Dwellar – was gonna say… maybe she wants another one…LOL

#15 Xindai Shan on 03.23.11 at 10:18 pm

I have to stop reading this blog. These cases drive me nuts! :)

Job titles can be pompous and deceiving, so I guess it is difficult to judge these people, but mom presumably worked over 15-20 years in a high end job, and they have almost NOTHING! Much of the money they have, according to the article, came from the sale of the previous house.

The numbers just don’t compute. Even if they were stuffing money in the “Orange guy’s shorts”, a former ad executive and a tradesman with a modest former townhome and well past mid life should have a couple of hundred grand in RRSPs MINIMUM plus proceeds from the sale?

Or am I that clueless? Before buying a house, the expert needs to ask them where the money went. Why is that question never asked?

Forget the kid, they sold the original house because their expenses were out of control.

#16 Publius Enigma on 03.23.11 at 10:19 pm

What stands out here?

If you are 50 years old with a net worth of $240k, you are done. Sorry.

I agree that purchasing a home is a terrible idea for this couple. However their situation, in the long term, is not fixable.

#17 S.B. on 03.23.11 at 10:21 pm

Possible titles of Garth’s next book:

– You are poorer than you realize.
– Banking can be this uncomfortable.
– The Orange Guy’s Shorts (and other Financial Pitfalls).
– GreaterTool – how you are a tool of the bankers.
– Granite & Stainless: the un-making of Boomers’ retirements.

#18 Maxamillion on 03.23.11 at 10:23 pm

They could have found better financial advice in a public washroom.

#19 cash is king on 03.23.11 at 10:33 pm

I’m sorry but if she’s hot then I need to find my old crack pipe.

The plus 50 crowd is going to wreck havoc with our unimpressive, elected poor excuses for leaders.

We want, we want we want…

#20 Hoof-Hearted on 03.23.11 at 10:33 pm

On Vancouver Global:

The ex Traffic Reporter is now a realtor.
She was interviewed……noted 3 sales…..(2) were condos below list the other one of those North Burnaby SF homes with a view which sold over list.

Simply a dog and pony act….pumpers.

Funny, they didn’t report 500 SHAW employees were laid off.

#21 dave in calgary on 03.23.11 at 10:36 pm

Update in Calgary: My neighbours have been trying to sell their Sunnyside home (10 minute walk to downtown) for the past 6 months. Asking $575,000 then $549,000. They’re going to rent it to me for $1500/month. Should I ask Kelley if I should just offer to buy it instead? Lol….

#22 onthesidelines on 03.23.11 at 10:37 pm

There are times when renting makes more sense than buying, for sure. Mainly the advantage of renting is that it offers flexibility to move elsewhere for whatever reason. So, I am not in disagreement with you. But, to harp on about how one can be earning an 8% return on a mix of stocks and bonds, etc, puts you in the same category as the house pumpers methinks. Stocks go up and down and are as much affected by geopolitical situations as is housing though, granted, housing at the moment in Canada does seem terribly overpriced.

I believe, a fairly honest number for low risk returns is probably around the 4% figure…this includes very safe crown backed bonds. You need not overexaggerate your case by claiming a sure and safe 8%.

Stay honest, man, and people will trust your opinion more.

I specifically said no individual stocks, no equity mutual funds. As for returns (and as I seem to have to state this daily) you can get 5.3% in dividend income from a bank preferred – as worthy as a GIC in the same bank. That’s equivalent to a 6.5% GIC. Mixing in some energy, health care or BRIC ETFs and a few REITs gets you to an 8% level with little exertion. Get educated. Then I’d value your comments more. — Garth

#23 radio free OJ on 03.23.11 at 10:37 pm

@3: flat tax would be brilliant. just like you propose would be perfect. it wont fly though. tax breaks make people feel good and they are too dumb to realize that they are ultimately being bribed with their own $$.
on the other topic…. yup…..this couple is screwed

#24 TS on 03.23.11 at 10:43 pm

Mainstream media catching on?
http://www2.macleans.ca/2011/03/23/a-mortgage-monster/
H and F must be getting very upset with you Garth.

Love this quote from CMHC.

The CMHC argues such concerns are overblown. It points out that the Canadian mortgage system is fundamentally different than in the U.S. That’s because mortgage interest is not tax-deductible, a relatively small number of mortgages are securitized, and lenders can generally go after homeowners who don’t make their payments. The CMHC also points to Canada’s low rate of mortgage arrears, currently less than one per cent. Finally, the industry never got swept up in the subprime lending trend, the CMHC says. “We don’t have those products in Canada,” says Pierre Serré, the CMHC’s vice-president of insurance product and business development. “And if we did, CMHC certainly did not insure them.” Lending weight to the CMHC’s claims, a 2009 IMF report called Canada’s residential mortgage markets “boring but effective.”

#25 bsallergy on 03.23.11 at 10:44 pm

We should start a bank commercial spoof on this site . . . a la ScotiaBank . . . You’re poorer than you think.

Splat! Friggin windshields in Canada! Hate feeling my asshole go through my brain.

#26 Soylent Green is People on 03.23.11 at 10:46 pm

I am normally very upset with our so-called media which is nothing but five white billionaire men who distort and manipulate the media and feed it to us like paplum. But I just saw this article below and it’s making me happy for a few minutes:

……………………………….

Reality check: Did opposition parties read the budget?

Toronto Star: Joanna Smith and Susan Delacourt

The claim from our Prime Minister today: “I am disappointed that they (opposition parties) did not take the time to read the budget before rushing to their conclusions,” Prime Minister Stephen Harper said Wednesday.

The facts: The Conservative government arranged briefings for each of the opposition parties on budget day, where the leaders, senior MPs and staff spent part of the afternoon reading the documents and reaching their conclusions.

Liberals: Deputy leader Ralph Goodale, finance critic Scott Brison and transport critic John McCallum along with the party policy team reviewed the budget in a private room at the Government Conference Centre from 1 p.m. to 3 p.m. The Liberal team went to Michael Ignatieff’s office to brief him at 3 p.m.

NDP: Deputy leader and finance critic Thomas Mulcair and deputy finance critic Chris Charlton reviewed the budget along with policy and communications staff from 1 p.m. to 2 p.m. in a private room in the Promenade Building on Sparks St. NDP Leader Jack Layton arrived at 2 p.m. and spent the next two hours reading the budget and being briefed by his staff in order to make his final decision. Layton did not speak to the media until Finance Minister Jim Flaherty had delivered his entire speech and tabled the document to the House of Commons, noted Kathleen Monk, director of communications for Layton.

Verdict: False

http://www.thestar.com/news/canada/politics/article/959695–reality-check-did-opposition-parties-read-the-budget#cdnpoli

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#27 mf on 03.23.11 at 10:53 pm

She is hot.

#28 somecatchphrase on 03.23.11 at 10:54 pm

Homeownership is for suckers –

“Why I Am Never Going to Own a Home Again“

E) You’re trapped. Lets spell out very clearly why the myth of homeownership became religion in the United States. Its because corporations didn’t want their employees to have many job choices. So they encouraged them to own homes. So they can’t move away and get new jobs. Job salaries is a function of supply and demand. If you can’t move, then your supply of jobs is low. You can’t argue the reverse, since new adults are always competing with you.

Source: http://www.jamesaltucher.com/2011/03/why-i-am-never-going-to-own-a-home-again/

___________________________________

BTW- A “sucker” is defined as a victim of corporate/government/banker propaganda, normally called one of the “sheeple” here on this blog.

#29 Wise Guy on 03.23.11 at 10:56 pm

So at my monthly poker game tonight, the point was brought up that a particular councillor Mammoliti in Toronto is all gung ho for a Casino on the waterfront here in Toronto right where Ontario Place currently sits.

Two or three of the guys, whom own condos at Bathurst and Front st area started celebrating, stating, “Wow that’s going to be great for the value of our condos, they’re going to shoot way up”!

I’m not sure exactly what their mentality is, but I think these guys truly believe that they are going to strike it rich owning a downtown Toronto condo….

#30 Jon B on 03.23.11 at 10:57 pm

There it is again. Over and over. 8% return on investments. Please give me the precise investment descriptors that will yield this magical 8% return? Holy assumptions Batman.

Asked and answered. Do some research. — Garth

#31 kibbles n bits on 03.23.11 at 11:02 pm

Hello Garth I have only been following this blog for a couple of months…is it true you’ve been a bear for many years?
At which point will you concede defeat? A serious question and not tongue and cheek.

#32 Bubble Butt on 03.23.11 at 11:07 pm

This couple mentioned in the article is already screwed. You mean to tell me at that age with NO guaranteed pension they have managed to save that little?!

Some people are lazy and just don’t want to contribute by working 40 hours a week. How many years was he dragging his butt before he was a plumber, and what was she doing her whole life?

Sad. . .

#33 Another Albertan on 03.23.11 at 11:11 pm

#109/OttawaMike from Wednesday –

That’s precisely what I described in various other posts over the course of the last week.

Unfortunately, it isn’t just plug-and-play. It’s mostly plug-and-pray.

Everyone else’s mileage may vary.

#34 nonplused on 03.23.11 at 11:12 pm

Well, if she was writing for the Globe, what else could she say? Garth, once the editors over there got through with your post it would say “buy a house” too.

You’ve always got to remember what side of the toast the butter is on.

By “no equity mutual funds”, I presume you don’t mean “no index funds”? Are they still ok?

#35 Patz on 03.23.11 at 11:13 pm

#14 HouseBuster

What’s funny is not what you said but that you slipped it by the censor—or maybe you didn’t.

#36 jimboyyc on 03.23.11 at 11:13 pm

No subprime for CMHC/Canadian Banks?

Canadian Press is reporting that Bruce Carson, Harper’s disgraced aide, has a past history of two bankrupties. While still making payments on his second consumer proposal, and actually failing to make all the payments, he purchased a home for $484,000 with a mortgage from CIBC for $446,000. Less than 10% down so CMHC insured. He went on to buy two more houses with two different woman over the next two years.

The Canadian banks will give a loan to anyone as long as it’s CMHC insured and the taxpayer will shoulder the loss. What is equally worrying is that CMHC does NOT do any appraisal of any of the properties they insure thus leaving the possibility of mortgage fraud wide open.

#37 Karla on 03.23.11 at 11:22 pm

How much money have you allocated for maintenance costs? My own home (valued somewhere around $500,000), in a small BC town, costs about 4,000 a year for insurance and taxes.

#38 AG Sage on 03.23.11 at 11:22 pm

>#16 Publius Enigma on 03.23.11 at 10:19 pm

If she found employment again and they had stayed put in the townhouse, got lucky with major repairs, made the kids work or borrow their own way through college, and they banked/invested half of their earnings over the next fifteen years, they might eke out a passable existence after “retirement.”

#39 Devore on 03.23.11 at 11:29 pm

They’re 50, how will they pay their mortgage when they’re 75? (Assuming, unlikely, a 25 year amortization?)

#40 Don on 03.23.11 at 11:32 pm

RBC is now advertising a “THE RBC $25,000 Downpayment Giveaway”

The Law of Gravity doesn’t apply to BC. It’s waaay different here. Were in our own bubble a delusional bubble. Ignorance is Bliss.

#41 TaxHaven on 03.23.11 at 11:38 pm

“…university now can cost $100,000 for four years.”

Actually, it probably WON’T. No one will be able to afford it. They’ll lose their customers.

Either costs will come down ~ universities doing away with expensive unionized staff and tenured instructors & ceasing their constant construction projects ~ or university will only be available to the truly RICH.

With so many of us unable to cope with such fees, post-secondary education as it is structured today is not a viable business model. They’re dinosaurs.

#42 Tony on 03.23.11 at 11:48 pm

Homes are overpriced in the major cities in Canada, some more than others. Alberta is seeing large property tax increases the other provinces aren’t while property values fall. Oil is rising in price, the same short sellers of natural gas are now buyers. This is a push-pull situation with positives and negatives. If revenues increase Alberta will likely cut their huge increase in property taxes down. Most probable outcome is the world will deflate and the second recession will be upon us. Commodity prices will fall off a cliff. Advice is don’t buy a house in Alberta.

#43 Grooby on 03.23.11 at 11:59 pm

#3 The InvestorsFriend,

That’s about a simplistic view as one can have. Unfortunately, it falls apart in the face of reality.

A flat tax rate is a regressive tax. User fees and other limited one-off charges (i.e. optometry visits) that used to be covered mean a flat tax rate benefits upper-income earners exclusively.
But I’m sure the Frasier Institute is right on your side on this.

#44 Al on 03.24.11 at 12:11 am

House buying orgy continues in the GTA this Spring

#45 BCing You on 03.24.11 at 12:16 am

Yes, university can cost $100,000 over 4 years. That probably means that the student is not living at home. The average annual tuition fees at most Canadian universities is close to $5000 dollars a year. So, if you live within commuting distance of a university, 4 years will cost about $20,000 maybe a little more for some degrees like an engineering degree. Of course, there are costs with living at home but most parent pick-up that cost.

#46 BrianT on 03.24.11 at 12:18 am

#16Pub-My guesstimate would be that about 80% of the USA population would be, by your criteria, “done”.

#47 canuckfilly on 03.24.11 at 12:21 am

Well Just got back from a holiday throught the province of BC and noticed in Kelowna that there were lots of SOLD signs on properties that were adjacent to the highway. In Beaverdell things were still normal, the whole village is for sale I think, no sold signs there. Prices in the city are still up, lots are 150K no house on them though. Maybe you think the prices will adjust but the folks in Kelowna definately don’t think so and neither do the speculator builders. Still many pre sales going on and people jumping at them.

#48 Another Calgarian on 03.24.11 at 12:22 am

Very surprised by all the people thinking 8% is an unreasonable return. There must be a lot of people with some terrible money managers on this blog. I’ve averaged ~10%/year since taking over investing for myself 5 years ago and that includes the carnage of 2008. My portfolio is very similar to what Garth recommends with only slightly more risk.

My advice would be to get rid of your GICs and ‘safe’ mutual funds run by lazy managers that only care about collecting their fees. Educate yourself and invest for yourself.

#49 onthesidelines on 03.24.11 at 12:24 am

Another piece of advice for you, Mr. Turner, out of my own good will, as I am not in the business of selling books on financial advice: Insults do not make good arguments.

At the risk of further showing my ignoance, I dare say even a dividend of bank preferred ( do you mean shares?) of 6.5% will still need those BRic ETFs and REITS to return something in the 9% range to average out one`s total investment at 8%. Show me where you see safe ETF`s and REIT`s paying in that range please, and tell me what is going to happen to these BRIC ETF@s and especialy the REIT`s when Canada`s housing and economy starts tanking or, worse, if there is a double dip recession which drags the BRIC`s down. You`re sellng snake oil just like the rest of the assholes.

Face the reality folks, there is no sure thing out there right now that will give you 8% returns. Bite the bullet, and hang in there with safer 4% returns until interest rates start going up…. not super dooper- feel no pain- advice like Garth`s but fairly realistic in today`s very uncertain investment climate.

And, no, I don`t make any money writing books on this shit…..just not ejucated enuf.

It’s hard to believe the investing ignorance in open display daily on this sad blog. REITs last year gave 20%. The Russell Small Cap did almost 30%. Corporates provided yields of 4.5%. Bank preferreds gave 6% dividend income. Broad index ETFs were close to double digits. There’s a myriad of investments that, in combination and using tax-efficient income and available shelters, can give such a yield with wholly acceptable risk. I will copy and paste this comment as necessary. — Garth

#50 Thetruth on 03.24.11 at 12:37 am

30 year amortizations now…

Is the market imploding??

Before it was the financial crisis, 2 years behind the US, 5% down, 35 year amortizations, changes in how rental income is used, 85% LTV, Heloc changes…..the list goes on!!!

Until people realize how many people are coming into the country on a daily basis, they will never get it! It is well over 1000 per day! Demand is very high. Take a walk around Surrey, Richmond, Brampton, Richmond Hill,…Can you say immigrants??

The only way lower house prices in Vancouver and Toronto will happen is when immigration is reduced and a simulataneous economic shock happens. Melting ice cubes and being overly politically correct aren’t going to do anything but sell hot air.

#51 Dmitry on 03.24.11 at 12:39 am

Garth,

While I agree with your conclusion, I’d like to point out one important consideration that you omitted. If you are comparing renting a house to buying a house than everything holds, give or take few hundreds here and there on maintenance that are very hard to predict. However, if you are contrasting renting an apartment (or, for that matter, a condo) to buying house you need to consider utility costs that are usually included in rent. I don’t know about Calgary, but in Toronto very few apartment buildings are submetered (each tenant has an individual hydro meter and pays rent plus hydro) and no apartment building renter pays for water and heating separately. The story is the same with condos. Not many have separate hydro metering and non have separate metering for heating and water because they are included on pro-rata basis in condo fees.

I calculated break-even points for many condos in Toronto and found that a landlord needs to pay from 50% to 70% of mortgage down just to break even (to equate going market rents with mortgage interest, property tax, condo fees and hyrdo); that is to break even by income, not by cash flow (meaning – the landlord has to pay down the principal and be cash flow negative).

Enjoy your blog :-)
D.

#52 Robert Dudek on 03.24.11 at 12:41 am

@#3 Shawn Allen

Though I agree that many of the tax rules are counterproductive, I would not endorse your idea at all.

Part of the function of a modern social market economy is to encourage certain activity and discourage other activity that we, as a society, have decided is the right thing to do.

These are called Pigouvian taxes. Examples of which are extra taxes on alcohol, cigarettes and gasoline.

We also use them to give breaks for worthwhile activities because we don’t necessarily trust the market to create the result we want. Examples of this might be support for the arts, income support for the poor, recreation facilities for children.

I don’t want to live in the libertarian “paradise” you espouse.

#53 Skeptic on 03.24.11 at 12:48 am

OK, let’s say 8% is a mortal lock.
In a world with TAXES, even the lower-income bracket would knock $6K off the renters’ investment return and the highest bracket – depending on province – would nearly wipe out their advantage entirely.
Just come out and admit that you’re a market shill. You’re losing credibility among the non-dupes.

It’s hard to believe the investing ignorance in open display daily on this sad blog. REITs last year gave 20%. The Russell Small Cap did almost 30%. Corporates provided yields of 4.5%. Bank preferreds gave 6% dividend income. Broad index ETFs were close to double digits. There’s a myriad of investments that, in combination and using tax-efficient income and available shelters, can give such a yield with wholly acceptable risk. I will copy and paste this comment as necessary. — Garth

#54 Nostradamus Le Mad Vlad on 03.24.11 at 12:53 am

-
The pic is akin to a cross between The Village People and The Full Monty. Then again, I’m post-50 and have nothing left between my ears to be of any use. Clueless in Kelowna!

“An achiever with a sultry self-image. Did I mention she’s smokin’? Use a hundred grand of your savings as a down.”

More like a smokin’ clown. BTW, what is she smokin’? Oh dear — In this case, no one has to let hubs make a fool of himself. He’s doing a fine job all by himself, and as usual, the better half will have to work whether she wants to or not to support his lifestyle of choice. No mention of what she would like.

“Hubs says he’s tired of “throwing money away” on rent.” — As compared to paying rising property taxes, increased energy and food bills, no guarantee the trade he is apprenticing for will last (figure young’uns joining the workforce who have far more energy and a zest for life) — he will be lucky to get a decade’s worth of work from his papers.
*
#3 The InvestorsFriend (Shawn Allen) — I wholeheartedly agree. Now find some good politicos who will abide by those yardsticks.

#18 Maxamillion — That’s about right. Kilroy was here!
*
China This is what China is doing with the US debt holdings it has. Better than fiat money, it gives them an edge.

72,000 Times Hiroshima radiation (latest).

Western Aggression First few paras. are very clear and good in their summation. Napoleon, Hitler, etc. all over again.

The Puppet Masters Soros and others Causing Rifts worldwide for their benefit, plus SEIU “The plan is designed to destroy JP Morgan, nuke the stock market, and weaken Wall Street’s grip on power, thus creating the conditions necessary for a redistribution of wealth and a change in government.” Bad Times a’comin’.

Death By a thousand cuts — PIIGS and others. 4:25 clip on how clued out sheeple are.

HAARP Who is gonna come clean about it? Sheeple probably wouldn’t care, one way or the other.

#55 Marc on 03.24.11 at 1:14 am

I’d hit it.

#56 Mackie on 03.24.11 at 1:28 am

That couple is screwed. My suggestion: simple. Rent something cheaper. Invest the difference. That is your only hope.
I disagree with Garth. He’s too conservative. You’ve got to have some guts in this market. Do your research, take some intelligent risks. I just got a 50 per cent return on a quick trade with western forest products. 8 per cent, as Garth says is easy. Go for 10-20 percent while the going is good.
In saying that. The market seems high. Sell some good performers and get ready for a pullback. Just my 2cents.

#57 eyelissen on 03.24.11 at 1:29 am

For the myopic, lazy fools that won’t even go to any chartered bank and query an advisor vis-a-vis the ‘preferred share’ thing Garth speaks of (which can net 8ish points per annum) guess what?……….I listened to him, went to RB, signed up in August and have thus far received a return of 11%/annum for a very safe investment. My not so safe ones have returned much more.

Anyone that thinks this girl is hot has
real low standards. I think the late, great Rodney Dangerfield could describe her best as a double bagger. “A bag for your own head in case the one on her’s breaks”.

While I’m at it, I’m thinking that the freakoids that have to put ‘first’ on a blog must have appendages under 5″.

#58 Peter Pan on 03.24.11 at 1:49 am

25 year mortgage when you’re 50… sure… Makes lots of sense… Explains why there are so many 70 year olds working at Walmart. Sure… They’re working there to stay “social”… Yeah, I believe that one.

Then again, Garth… I have to take exception to you 8% yielding “miracle investments”… BTW, Greek Corporate High Yield Bonds don’t count.

Don’t know what you’re definition of “yielding” is… but it sure ain’t mine. I call BS…

It’s hard to believe the investing ignorance in open display daily on this sad blog. REITs last year gave 20%. The Russell Small Cap did almost 30%. Corporates provided yields of 4.5%. Bank preferreds gave 6% dividend income. Broad index ETFs were close to double digits. There;s a myriad of investments that, in combination and using tax-efficient income and available shelters, can give such a yield with wholly acceptable risk. I will copy and paste this comment as necessary. — Garth

#59 The Original Dave on 03.24.11 at 1:54 am

Hello Garth I have only been following this blog for a couple of months…is it true you’ve been a bear for many years?
At which point will you concede defeat? A serious question and not tongue and cheek.
————————————————

go ask people in Kelowna if Garth’s defeated. Kelowna is in Canada (the country that so many of you assume is immune to a real estate downturn). That town, which had a nice surge in real estate values the past decade is taking a beating…behind the woodshed style. It’s only going to get worse in the spring and summer months and will continue for several years.

The rest of the country will experience the same. I’m sure many places already are.

#60 Peter Pan on 03.24.11 at 1:55 am

#30… I think Jon B has a reasonable question (even thought it may have been phrased incorrectly)… “Yield” implies cash flow from an investment. Unless there is a huge return of capital component, a 8% yield is pie-in-the-sky.

Even CALPERS, a pension plan using a 7.75% implied rate of return is being criticized vociferously these days…

#61 Bilbo Bloggins on 03.24.11 at 2:04 am

Garth, it’s obvious by now that every piece of “sound”
advice from financial thinkwads are based on one
seriously flawed assumption: rising home prices
Forget about flat home prices. In fact, they require
about an 5 to 8% annual increase to make their calculations fly. Pigs do fly, don’t they?

#62 Adventures in Sea-Tac with Moneta on 03.24.11 at 2:18 am

3 Shawn – how about a guaranteed minimum income for
everybody with that flat tax rate. You could stagger it by
age and have it max by 18 yo. All money you make on top
of that is taxed at 40%. But it eliminates welfare,
CPP/OAP, EI (and with it the need to pay into CPP/EI). And eliminate RRSP etc. as suggested. Most people would work to support themselves and their families, but we would lose some workers due to the inefficiency
created.

#63 earlymidlifecrisis on 03.24.11 at 2:24 am

So am I in denial here? Ive sold high in Van (hopefully high) and am considering buying again out of town. It’s a buyers market there; stagnant bordering on dead. I can then live mortage free, with cash left over, in a place i love, with a lovely non-urban quality of life. I know that it will likely drop even further, but i dont want to take a chance of this house getting away. Is it that bad to buy low? I have to live somewhere. I’m estimating my monthly housing costs will be 160$ p/m excluding repairs and food. (large lot=large garden) I love it, it’s exactly what i want. Help . . . can’t hold . . . on much longer . .

#64 Groundhogday on 03.24.11 at 2:25 am

Anybody who took the advice to rent over the last two decades is broke and poor; just like this couple.

They were owners. — Garth

#65 Jj196 on 03.24.11 at 2:28 am

I’ve been following this blog for a couple Years now. It does give me some reassurance that I am actuly one of the ‘sane’ citizens in this crazy town called Vancouver. However, the longer this crazy house craze lasts, the longer I question my own judgement on being a bear. Perhaps I am the ‘greater fool’ in the market. Getting married later this year, so it’s coming down to D day. Should I rent, or buy. With interest rates remaining low for the forseeable future, I don’t see a correction coming along soon. Garth – you predicted a 15% drop for the end of 2009. That didn’t occur. Questioning my own faith at this point if time.

Is she beating on you for a house? Funny what that can do to faith. — Garth

#66 Jj196 on 03.24.11 at 2:31 am

*sorry, meant year 2010 above, in regards to Garths housing decline prediction

#67 Pat on 03.24.11 at 2:35 am

Garth, your rent versus buy analysis is not accurate. I’m sure a pro like you will quickly identify and correct the omission.
(You are welcome.)

#68 Jody on 03.24.11 at 3:03 am

“#118 Mr. Plow on 03.23.11 at 1:47 pm
#50 Jody

Yeah if you could sue gov’t good luck finding anyone wanting to run. Then would you still have democracy?”

First, we don’t live in a democracy, we live in a constitutional monarchy, second I don’t want to live in a democracy – democracy is two wolves and a sheep voting who’s for dinner, liberty is a well armed lamb contesting the vote. Thirdly – if nobody would run for government, amen to that, that would be great, we don’t need a federal government, they provide me with nothing in my daily life except red tape and regulations designed to protect big business from competition, crap mobile phone service, crap health care (I’ve gone to the US and India for operations because I’m wasn’t willing to wait 2 to 4 years on a waiting list), crap TV, crap internet, crap, crap, crap. Of course the feds also made the CMHC which is going to kill us financially. If you think government “services” are bad now wait until you as a taxpayer are told you have to pay the defaults of all the 0 down crowd. Oh and of course we are “freeing” Libyians, whatever. Governments have killed more people throughout history than all the natural disasters, famines, and plagues combined.

As for Keehn, what a joke, Global is nothing more than a shill for the real estate industry. Teachers are being cut in Cowtown, the new hospital in the SE has no money to open and operate but yet people don’t seem to be getting what is actually happening or they are in outright denial, perhaps they see the piano about to crush them but don’t want to acknowledge it. And its all thanks to governments.

#69 MB on 03.24.11 at 3:11 am

Dear Garth,

So I guess what you’re saying is: Buying a house is a bad financial investment. And if you’re lucky enough to find a house that you like that someone is willing to rent to you then go ahead and make them pay for their stupid financial decision.

Is that correct Garth?

And I guess a corollary of that advice is: Buy a house if you want to plant roots and own a home for non-financial reasons ONLY like:

1. It’s good shelter,
2. It’s close to family and friends,
3. It’s a ‘good’ neighbourhood,
4. It’s a nice place to raise a family,
5. It’s a great place to grow old,
6. …

Is that what you are saying Garth?

Please advise.

Sincerely,
MB

I said this was bad advice. — Garth

#70 BOB on 03.24.11 at 3:42 am

There will be no crash people!

#71 Utopia on 03.24.11 at 4:00 am

I might still be under the weather at my house but I could not let this zinger of Michael Ignatieff go by without comment.

In his own words to Parliament he stated “…this is an unprecedented cascade of abuse. The issue here is one of trust, how can Canadians remain trusting of a government guilty of such flagrant abuse of power?”

He was of course referring to the actions of Libya’s despotic leader Mr Muammar Gadaffi right……..right?

I thought it was just me who could not help but try to superimpose those extreme comments in reference to Mr Harper against the backdrop of a true tyrant when considering the complaints leveled against the Conservative government by the Liberal leader.

Fortunately I was not alone with that thought. This morning I read a terrific article by Margaret Wente that made the same point nicely without going to the extreme of adding “let’s try to keep some perspective here Michael”.

Here is Margaret and her article from this morning:

http://www.theglobeandmail.com/news/opinions/opinion/a-plum-pox-on-all-the-leaders-houses/article1954126/

#72 arctic char on 03.24.11 at 4:01 am

Bubble Butt – Judge much?

Fact is, this is where they’re at now. Not a good place, no doubt.

But the bitter judgment reeking out of your post makes me throw up in my mouth a bit.

Maybe they had devastating things happen in their lives that you are not privy to. Sickness or injury; mental health issues; kids requiring expensive care; failed entrepreneurial ventures that held initial promise; elderly parents or siblings that desperately needed their help; unusual acts of charity or charity work. And on and on. Fact is, you have no idea. Also, it’s entirely their business. Who made working 40 hours a week mandatory? What are we – slaves?

Unbelievable snivelly little poster. Lazy thinking and quick judging make for the type of person this country can do without.

#73 Cato on 03.24.11 at 4:40 am

How does one become a “Financial Expert” like Kelley Keehn, EPC – she has to be an expert otherwise it wouldn’t be on her website, right? and of course the EPC designation must be an important credential for one to use it so prominently every time their name is mentioned. EPC must refer to the educational achievement any “Financial Expert” has surely acquired before dolling out advice to the masses. Who needs a masters in finance, or lowly doctorate when you can take a 4 DAY COURSE and become an ELDER PLANNING COUNSELOR (EPC).

Speaking of well deserved, yet another lottery winner in lotusland:

http://news.vanpeople.com/?action-viewnews-itemid-124685

1.99 million asking,18 offers, sold 2.8 million

John Paulson (who unlike Kelley is only a lowly harvard MBA with 12.5B in the bank) made a few billion shorting the ugly american cousins of CMHC ( Fannie & Freddie ) when the US got to this level of insanity. Of course its going to be different up here, the hedge fund boogeymen can;t short-sell the CMHC – taxpayers obviously have nothing to worry about.

#74 R on 03.24.11 at 7:14 am

Investing in Calgary might not be such a bad idea.Any of the pararie cities might not be a bad idea. I have to wonder if an earthquake hits Vancouver and Vancouver Island where will the refugees go.If they survive it. Canada has never had to face a natural disaster of this magtitude. To be honest I dont think they would have a clue of how to deal with it or rebuild it. The survivors will have to go someplace. I dont think any will opt to stick around here. How short term our memories have become. Think about what just happened in Japan, Haiti, Christchurch. I hope and pray it never happens here. The experts tell us it will. I will continue to look at real estate on the Prairies. No more potheads and gangs for me.

#75 David B on 03.24.11 at 7:35 am

Hey Garth ….. Portugal and Germany are not doing well these days either. And soon very soon America will need to borrow $1.6 Trillion coupled to the fact Japan may have to sell some of America’s debt they own which will put pressure on interest rates …. Libya has already eaten up those so called savings those Tea Party clowns made! (not good new eh)

Here we just might save a few bucks having King Steve and Family stay home and watching “The Wedding” on TV…

#76 McSteve on 03.24.11 at 7:47 am

My advice to these folks is to not buy a house, work like slaves until 65, save/invest every penny and move to a cheaper part of the country like Newfoundland or Cape Breton when they retire.

Or live in poverty / work until you die in Calgary.

#77 bigrider on 03.24.11 at 7:51 am

The reason people like this women give advice to purchase a house so automatically is because they have a deeply seeded notion that RE always goes up. The thought of prices declining don’t even factor in.

By the way Garth, I’m sure these 50 year olds could invest in a divirsified basket of mutual funds and do equally as well.

Stop being so hard on mutuals. Sprott profitablitity might suffer. Did you look at there reported earnings results ?

#78 8% on 03.24.11 at 8:02 am

Actually I thought 8% was hard in this environment but I have made 10% this year in the first 3 months. Very conservative stuff.

Why do you all ask Garth for the hot tips? why are you so lazy that you cannot read and do research. Hint ETF and Hot market, like i said a few days ago how many of you bought when the market drop 300 plus points?

It really surprises me how many people are to lazy to read on investing, but read this sad blog every day looking for hot advice and free tips.

here is a stat that will make you wish you had sum guts. All the wealth in the next 10 years will be created by companies that either you never heard of or do not exist today. Think back ten years RIM?
You have nanotechnology, biotechnology, go for it.
what are you waiting for?

Okay sad bloggers you need a pick me up…
not skin clad girls but you should understand the meaning especially if your a boomer
http://joshspector.com/2011/02/13/now-this-is-a-great-commercial/

#79 Moneta on 03.24.11 at 8:12 am

Meanwhile they’d have the same occupancy costs for shelter, but end up with $11,000 more in net worth.

———-
Theoretically yes.

I think they should rent but I also know there is also something called compensation. You can’t live against your wishes and dreams for a long time without finding gratification somewhere else. Most people will spend that extra 11K in activities or stuff to get out of the apartment/situation they loath.

Most people make ends meet. This means that they inherently know they will be living a boring life for a long time. People don’t want boring and average and society sure does not value it either. Because of this, they will look to compensate because that’s what people do. And if bankers make it easy to take cheap money, they will take it. Why not? Their lives were going to be boring and financially tight anyway. You’d have to be nuts not to jump on the bandwagon if you were going to be left on the sidelines no matter what.

The top 20% want their bank and income producing securities to give them the good life so they’ve got to make sure someone out there is paying and keeping the revenues pouring in and buying inot this ponzi.

#80 Moneta on 03.24.11 at 8:17 am

Come on people. Let’s stop the madness and get something close to a flat tax rate. We can have maybe a tax free zone for low income. But how about a flat 20% or whatever for every dollar over $20,000?

And no tax breaks. None.
———
Why do I think that this flat tax rate would essentially make YOU pay less taxes?

LOL!

#81 Kevin on 03.24.11 at 8:17 am

By this logic, no one should EVER buy a home. They should ALWAYS rent.

This entire argument hinges on the premise that the market’s rate of return will always be higher than the going rate for a fixed mortgage. Can you guarantee that, Garth? Can anyone?

One need only look at the past decade and do the math to realize that the old industry axiom of “8%” is a fairy tale passed down from our Boomer parents. Gen X is going to have to make it work with 5%. And 5% actually IS pretty close to my mortgage rate.

I can pay down my mortgage and get a GUARANTEED effective return of 5.35% (my mortgage rate), or gamble with my life savings and HOPE I get an average return that beats 5.35%.

Well Garth, I’ve tried that for the past decade, and it turns out I would’ve been better off taking the sure thing and putting that cash into my mortgage. My average rate of return on the index funds in my RRSP over the past decade pretty much mirrors inflation. So my current strategy is to throw every extra penny at my mortgage and get that guaranteed 5.35% return until it’s paid off. THEN I’ll resume sending cash to Bay Street (while sleeping soundly in a paid-for home).

(a) You do not understand amortization. Obviously you’re not getting 5.35% by paying down your mortgage. (b) Having index funds in an RRSP means you don’t understand the tax system. No wonder you’re pissed. — Garth

#82 Moneta on 03.24.11 at 8:18 am

And pearls are for the 50+ crowd, regardless of how rich you are.
—–
You obvioulsy have not worked in finance. It’s a staple there.

#83 Taipan on 03.24.11 at 8:39 am

So do you reckon she would be prepared to become second wife in a BC marriage?

(I know Garth after a glass of malt scotch you will pick my humour LOL LOL LOL )

#84 AM on 03.24.11 at 8:42 am

#3 The InvestorsFriend (Shawn Allen) on 03.23.11 at 9:38 pm

“LET’S TALK TAX CUTS AND TAX BREAKS…”
______________________________________

I’m really tired of Harper trying to sell “tax breaks” as “tax cuts”. It’s like the friggin rebate on my new computer, I had to spend the money in order to be eligible for the refund. Now a “tax cut” would be similar to a discount when the purchase is made.

Harper…why don’t you just call it a rebate program.

#85 Taipan on 03.24.11 at 8:43 am

Oh and BTW.

Its simple. Rent money with significant downside risk of capital loss or rent property with no downside risk.

Australia is a bubble, Canada is a bubble, USA is plunging lower and Vancouver is insane. Im sure ill tell my grand children of the insanity of shepple!

#86 S.B. on 03.24.11 at 8:51 am

How about some alliteration for new book titles?

House-Horny Homeowners Haven’t a Hope in H-ll.
(Dedicated to H)

Or:
Turner’s Tax Tips for Tumultuous Times

#87 S.B. on 03.24.11 at 9:00 am

From yesterday’s link http://www.postcity.com/Post-City-Magazines/April-2011/Real-Estate-Issue-2011-Roundtable/

Interesting quote from have-another-sherry cooper:

“However, prices more than doubled (113 per cent) in the decade to late 2007 and grew twice as fast as incomes from 2002 to 2007 — largely due to the dramatic decline in mortgage interest rates and the easing in credit conditions by the Canada Mortgage and Housing Corporation (CMHC). ”

So, now that CMHC rules have TIGHTENED (bye-bye 35 and 40 yr amorts), and interest rate can go no lower and are set to rise, this means house prices will come down, right?? Noboby but Garth has the guts to state this fact in public. :x

And Mr. Conehead in the bunch is foisting $600/sq foot rat-box condos upon first time buyers in Toronto.

#88 Carruthers on 03.24.11 at 9:19 am

26 Soylent Green is People:

Let’s check the tally. From todays posting, and several in the past, we can deduce that you dislike/hate: white males, Israel and Conservatives.

You are a bigoted little woman aren’t you? Oh ya, and boring.

I’m going to assume your obsessive prejudices are not just due to dogma or orthodoxy.

#89 Fred on 03.24.11 at 9:37 am

#5 It’s Kelley Keehn, not Kelley Kehn.
And pearls are for the 50+ crowd, regardless of how rich you are.

In the Victorian Era one string of pearls was code for unmarried/available, two strings was married, three for grandmother and four meant great grandmother

#90 Herb on 03.24.11 at 9:58 am

#3 The InvestorsFriend (Shawn Allen),

I readily agree with what you on tax breaks and cuts. The only problem is that we would have to turn the political system upside down to fix the tax system.

The Income Tax Act and Regulations (might as well add The Excise Tax Act) are so complicated and voluminous because they have grown like Topsy, in whichever direction they were pulled in response to effective advocacy. To eliminate tax twists, turns and injustices, we would have to negate the influence self-serving interests can bring to bear on self-serving politicians.

In other words, we would need politicians and governments dedicated to serving the common good instead of their elevation to or preservation in power, and the interests of particular groups that might be useful – to politicians. Is this what we should have? Of course. Are we ever going to see it? Not until we penetrate the smokescreens of pseudo-democracy, insist on truth in power, and make it happen.

Pinch me – I’m dreaming.

#91 Sean on 03.24.11 at 10:05 am

Sound familiar?

“During the housing boom, Florida was among the hottest real estate markets in the nation. Homes were snapped up by the state’s growing population as well as hordes of investors confident that prices would continue to soar.”

On Thursday, the Census Bureau revealed that 18% — or 1.6 million — of the Sunshine State’s homes are sitting vacant.

http://money.cnn.com/2011/03/18/real_estate/florida_vacant_homes/index.htm

#92 Gordeaux on 03.24.11 at 10:07 am

#74 – R

Here in balmy Winnipeg, I can assure you we’ve got our fair share of both potheads and gang members. Everywhere will, as long as we continue to pursue a failed policy like prohibition. It didn’t work for booze (see Al Capone, St. Valentines Day Massacre, etc.) and it won’t work for pot. You can’t protect people from themselves.
If the whole thing bothers you so much, lobby your MP to legalize it.

#93 GregW, Oakville on 03.24.11 at 10:13 am

Hi Garth, Next time you pass a magazine rack take a look at the latest April 2011 Scientific American magazine, letters to editor on page 8. Mine made it into print with only a few adjustments! (They don’t seem to put these letters onto there web site.)

#94 onthesidelines on 03.24.11 at 10:30 am

“REITs last year gave 20%. The Russell Small Cap did almost 30%.”

Whoopie-do, we can all quit our day jobs and become savy investors. No doubt the house flippers who did egually well if not better, think the same way. Doesn’t mean it will continue. I ask you again, what do you think is gonna happen to REITs when the housing market starts tanking for real and takes the economy and the Russell Small Cap with it?
Can you really stand by your advice for an audience of mom&pop retiring sheeple and excitable newbies who feel entitled to be able to make a pile of easy money?

If there`s anything Bernie Madoff taught everyone, it’s that when it sounds too good to be true, it usually is.

Incredible. REITs have nothing to do with the housing market, but pass through cash flow from income-producing properties, typically Class-A office buildings and those managed by the largest property development companies. The small cap index referenced is made up of US companies, which also are divorced from the Canadian economy. With each successive post you reveal more of yourself and provide a useful example of why most people fail. — Garth

#95 SK on 03.24.11 at 10:36 am

Dear R,

“No more pot heads and gangs for me”

Moving to the prairies eh? Might want to read this article: http://www.macleans.ca/article.jsp?content=20070115_139375_139375

Scumb per acre, Regina stacks up against any city in Canada. While Mr. Fiasco came out and said no problems here, he is largely delusional. As mayor you have to say that, but to say that crime and gangs are not rampant here is delusional.

I guess all those women getting robbed adn beat down at Superstore (in the nice part of town) lately are not getting robbed by hood rats from Regina, but by those BC gangsters. Good to know, i thought we had a problem here. Oh well, housing will spike 200% next month on this news. Yeeeehaawwwww!!!!!!!

#96 Herb on 03.24.11 at 10:39 am

#88 Carruthers,

typical trollspeak!

Please identify the comments where Soylent Green has indicated unfounded “dislike/hate” of white males and Israel.

As to Conservatives, someone who dislikes these Conservatives can’t be all bad.

#97 kilby on 03.24.11 at 10:59 am

Global BC actually reported on Olympic condos at Whistler being torn apart as mould is all through the building, they showed some pictures of the Olympic Village in Vancouver as well along with some shattered purchasers. With all the information out there about the problems with these and other very poorly built condos it’s a wonder ANYBODY would invest in them either for an investment or a home. After the warranties have expired these technically complicated buildings are going to have astronomically high strata charges.

#98 debtified on 03.24.11 at 11:14 am

Question to all:

What will inflation do the the price of RE in the future?

Specifically, will inflation cause the price of RE to go up or down (or no effect at all)?

Just set aside, for a moment, all other factors that affect the price of a piece of RE (i.e. unemployment, H, F, C, etc…) and simply focusing on this just one factor: inflation.

Here’s the reason why I am asking the question:

Conventional wisdom tells me that with inflation, prices of most things go up because the value of money goes down. This includes prices of RE. If this is right (correct me if this is wrong), does it make sense to conclude then that because of inflation (and without all the other factors), real estate prices could stay at their elevated levels (or even go up, God forbid!).

I am a RE bear so please do not misconstrue my question as supporting the RE bulls.

Thanks.

#99 The Original Dave on 03.24.11 at 11:16 am

Hi Garth, Next time you pass a magazine rack take a look at the latest April 2011 Scientific American magazine, letters to editor on page 8. Mine made it into print with only a few adjustments! (They don’t seem to put these letters onto there web site.)
—————————————————

I was reading ‘Scientific American’ Magazine, and read a comment that sounded familiar. Went something like ” Hi………hi…….fyi artical, fyi artical”.

Was scratching my head thinking there were two GregW’s in the world. Impossible though.

#100 The Original Dave on 03.24.11 at 11:20 am

With each successive post you reveal more of yourself and provide a useful example of why most people fail. — Garth

———————————-

hahhahaa! You’d think the guy would start by asking questions.

#101 DaBull on 03.24.11 at 11:21 am

Making money in Calgary

Quick Flip

I don’t know the background details of this story, but I noticed it as I was doing the Repeat Sales History for the Sales of the Day. It seems that opportunities exist for quick-acting investors if you keep your eyes open.

A vacant McKenzie Towne townhome was listed for $219,900 on March 5th and sold on March 7th for $219,000.

One week later the townhome was listed for $254,900 and sold for $250,000 on March 23rd, just 8 days after that.

http://calgaryrealestatereview.com/2011/03/18/calgary-real-estate-mid-month-update-rule-changes-impacting-market/#comments

Now who says real estate is a bad investment… LOL

#102 Fred on 03.24.11 at 11:27 am

Garth, if I have money within my RRSP, and I change it into a self directed RRSP in order to be able to buy bank preferreds instead of GICs, am I still going to get the benefits you speak of? Would I be better off putting the preferreds in my TFSA if I could?

Why would you hold preferreds inside a tax shelter? The benefit of the dividend tax credit is lost. — Garth

#103 Ottawa S on 03.24.11 at 11:29 am

#26 Soylent Green is People

Are you seriously posting that joke of an article on here? The fact is that the opposition parties made up their minds weeks ago, so what Harper said is absolutely true. Except maybe the NDP was on the fence for a while. But their minds were also made up before Budget Day. Verdict is definitely true – they rushed to conclusions before having read it. I don’t care for any of the parties, but I really hate the pathetic excuse for journalism known as the Toronto Star.

#104 Enlightened on 03.24.11 at 11:29 am

#78 8%
Thanks……I needed that.

#105 Ottawa S on 03.24.11 at 11:35 am

#81 Kevin on 03.24.11 at 8:17 am

By this logic, no one should EVER buy a home. They should ALWAYS rent.

When the cost of ownership far exceeds the cost of renting, yes.

When home prices go down again like they did in the states, then home ownership makes more financial sense again. When the market bottoms out, that’s the time to gobble up real estate. You bet I’ll be investing in a bunch of income properties by then! Then you can actually have positive cash flow from those again. Right now, you’d lose money if you bought a rental property.

#106 eaglebay on 03.24.11 at 11:39 am

The Conservatives may not be our first choice but they are our only choice.
Layton, Duceppe or Ignatief? Wow…

I’m 67 years old, still working, with no pension and up to 2 years ago, only savings of $28,000.
I studied the market for awhile and decided to go all in. My net worth is now $212,000 and I should be around the $400,000 before the end of this year. Everything is possible.
I’m also a renter. Love the freedom and good living.
I guess this is much better than 8%.
Thanks gold, copper, silver and oil.

#107 Nemesis on 03.24.11 at 12:00 pm

“Are we ever going to see it?” – Hon. GT

The ninety and nine are with dreams, content
but the hope of the world made new,
is the hundredth man
who is grimly bent
on making those dreams
come true.

Edgar Allan Poe

#108 tonguestump on 03.24.11 at 12:00 pm

can I get this straight Garth, if you are “ambitious hot” then everything will be just fine? Because I would much rather place my investment dollars into Botox and Breast Augmentation then you’re boring recommendations. And I’m a guy.

Not for long. — Garth

#109 Cellar Dwellar on 03.24.11 at 12:05 pm

@#97 Kilby
and did Global mention that 70 of the original Owe-Limp-ick Village buyers are now starting a class action lawsuit against Vancouver City or that the senior city manager Penny Ballem was a member of VANOC while also negotiating as a City of Van rep? Or That ALL records pertaining to the Owe_limp-ick village,VANOC and the City of Van are “sealed” until 2025?

So much for “open” govt eh Vancouver? Civic Election in Oct ….too bad the opposition are even crazier than a barrel of monkeys rolling down a hill. “Vision Vancouver” will get reelected. Time to move.

#110 Gord In Vancouver on 03.24.11 at 12:08 pm

Garth – thanks for the great post and by using actual numbers, not just cheer-leading, to validate your statement.

#111 Devore on 03.24.11 at 12:08 pm

#79 Moneta

I think they should rent but I also know there is also something called compensation. You can’t live against your wishes and dreams for a long time without finding gratification somewhere else. Most people will spend that extra 11K in activities or stuff to get out of the apartment/situation they loath.

Sorry, but no great mystery here. People like to spend money. You don’t have to hate your life, or even hate renting, to spend every penny you make.

#112 Carruthers on 03.24.11 at 12:30 pm

#96 Herb on 03.24.11 at 10:39 am

“Please identify the comments where Soylent Green has indicated unfounded “dislike/hate” of white males and Israel.”

How about today “white billionaire men”. Why mention their race and gender if you don’t have a problem with it?

As for Israel? You obviously haven’t spent much time here have you Herb? I believe the quote was “I HATE ISRAEL, I HATE IT, I HATE IT” or some reasonable facimile thereof…

Careful of flinging insult about trolls Herb…

#113 Live Within Your Means on 03.24.11 at 12:38 pm

#4 T.O. Bubble Boy on 03.23.11 at 9:39 pm
Post City Magazine arrived at my door today… with the latest “Real Estate Roundtable” (i.e. Garth vs. the RE Pumpers):

http://www.postcity.com/Post-City-Magazines/April-2011/Real-Estate-Issue-2011-Roundtable/

………………

Thanks for the link. I noted that most of the comments were pro Garth. And, yeah, most of the panelists were involved in the RE industry so what can one expect from them than pumping it up.

#114 mackie on 03.24.11 at 12:41 pm

Eaglebay: Nice job. Gold, silver and oil helped my bottom line over the last two years too… Don’t get too greedy though… it can all be taken away as quickly as you got it. Might be time to take some profits and diversify a little. I like to sell 1/3 when I double or feel the market is just a little over the top. Then buy back in on the corrections… Way to go though… you must be doing something right.

#115 mackie on 03.24.11 at 12:43 pm

Oh Eaglebay, here is one you might want to look at… Westfire oil WFE. Got lots of upside… not like real estate.

#116 Devore on 03.24.11 at 12:45 pm

#101 DaBull

A vacant McKenzie Towne townhome was listed for $219,900 on March 5th and sold on March 7th for $219,000.

One week later the townhome was listed for $254,900 and sold for $250,000 on March 23rd, just 8 days after that.

After realtor fees and transaction costs, less than 5% profit is left? With less than 20% down, mortgage insurance was also required. And if it didn’t sell, that’s a lot of risk to carry on such high leverage. Then, taxman will come to take his share too.

Most flippers hardly make any money. When the market softens on them, none of them make money. I can think of safer things to invest in, like Greek junk bonds.

#117 AG Sage on 03.24.11 at 12:48 pm

>#29 Wise Guy on 03.23.11 at 10:56 pm

Yikes. Since when does a casino constitute a good neighbor?

>#75 David B on 03.24.11 at 7:35 am
>Hey Garth ….. Portugal and Germany

Germany’s manufacturing has been going gangbusters. True they are in public debt up beyond their feathered caps, but I think the U.S. or Canada would love to trade places with them on exports. It’s hardly all dark there.

#118 AG Sage on 03.24.11 at 12:55 pm

#111 Devore on 03.24.11 at 12:08 pm
#79 Moneta

I think they should rent but I also know there is also something called compensation. You can’t live against your wishes and dreams for a long time without finding gratification somewhere else. Most people will spend that extra 11K in activities or stuff to get out of the apartment/situation they loath.

Sorry, but no great mystery here. People like to spend money. You don’t have to hate your life, or even hate renting, to spend every penny you make.

And if these people in question are incapable of saving, why in the world would you entrust them with 20:1 leverage on the largest “investment” decision of their lives?

(Or worse with 0% down. Is that infinite leverage? I actually don’t know how to quantify that fairly. Maybe 200:1 leverage if we use the first payment divided into the principal, since the monthly outlay was the prime qualifier.)

#119 onthesidelines on 03.24.11 at 12:57 pm

” With each successive post you reveal more of yourself and provide a useful example of why most people fail. — Garth”

Touche. My hat`s off to you sir…that`s some decent reasoning.

Class A office tower REITs were the darlings of the private banking crowd here in Tokyo for a few years until, of course, they crashed last year and were brought back from certain death by the Japanese own version of QE which involved buying REITS….but, hey, Canada is different…maybe. Maybe there will be no price pressure on Class A rents even with Class B buildings going begging for tenants when the housing market starts taking the economy down.

As for the small cap index being divorced from the Canadian economy…I’m not so sure it is necessarily such a positive point. I know the old saying is ” never bet against the US”, but if there ever was a time to test that, surely it is now.

Only time will tell of course, who is right. In the meantime, I should say that I do enjoy your blog and apart from the earning projections you make tend to agree with your take on the housing market.

And to answer you # 100 Original Dave :
“hahhahaa! You’d think the guy would start by asking questions.”

Free financial advice from strangers on the internet is worth what you pay for it. There really should be a big sign somewhere at the top….”for entertainment purposes only. “…LOL

We appreciate you providing that entertainment. — Garth

#120 Ret on 03.24.11 at 12:57 pm

#3 Tax beaks and cuts.
Someone 2-3 budgets ago figured out that if you checked off every deduction, ie child care, moving expenses, safe deposit box etc., that your tax form would be 89 pages long. We have probably broken 95 pages by now.

We all love to think that our neighbour should be helping us to pay for our new energy efficient furnace and our kid’s figure skating lessons. It is soo Canadian to vote for governments that will get other Canadians to pay for your “entitlements.” Tax deductions pander to the most basic human frailty -Greed!

A flat tax, without all the violin and hockey league deductions would instantly let the sheeple know their taxes due on earned income. The government would never want that level of transparency.

#121 MikhailC on 03.24.11 at 1:03 pm

Is it possible to buy a house ( SFH) for $ 300.00 in Calgary?!

#122 Mickey on 03.24.11 at 1:13 pm

Our tax code is idiotic, unproductive and uber costly to administer. Billions of dollars are spent on lawyers and accountants who themselves can’t collectively agree on the interpretation. Why don’t these assholes in Ottawa get to work and fix the system rather than piss more money away on a useless election.

#123 John on 03.24.11 at 1:17 pm

1 in 4 people work for the government in Canada. Three people emptying their wallets for every fourth worker. This is why all the high paying jobs have gone to BRIC companies.

#124 daystar on 03.24.11 at 1:22 pm

#3 The InvestorsFriend (Shawn Allen)

Sounds to me that while scrapping our much more complex tax system makes it far easier to prepare taxes and seems fairer, you have said it best Shawn.
“All of these things sound good in theory until you remember SOMEONE else has to pay for every one of these.” – Shawn Allen.

Who pays the greatest percentage of taxes under our current system? (outside of investors, 50% taxed capital gains is quite the advantage over the rest) The rich, Shawn. The rich pay the most in taxes. As income rises, the tax rate rises. So if or when a flat tax ever comes, who gets to pay less tax? The rich! And who has to pay more to cover it? The middle class. Is the middle class our go to as it teeters on the edge of a housing bubble collapse?

I would like to add as well that the government is so dependent on taxation as bailing them out of their spending addictions that our government currently cannot afford to lose the revenues generated from the rich. How much more did the feds spend in terms of percentages than they took in… 20%? Higher? $55.6 Billion dollar deficit above and beyond what… $200 – $210 Billion in tax revenue? (forgive me for my guesses, access to information has become a privilege instead of a right these days) The sad part is that the feds encouraged the provinces and municipalities to borrow to spend the same way to “stimulate” the economy. How much of it was a bridge to nowhere?

We have major problems in this nation. A social sense of entitlement that leaves the next generation paying for it. A weak federal government consisting of weak leaders with no real vision other than those that self serve. A clear lack of general understanding towards the perils of public/household/corporate debtloads that eat into tax revenues, household spending and corporate revenues if left unchecked and not asking the obvious question as to who benefits from debt if it is allowed to rise too high by borrowers and institutions alike…

I can easily argue that its unpatriotic and in some respects outright treasonous to allow debt to soar unsustainably, as debt has the power to bankrupt nations, never mind assaulting spending on “essential” services but thats for another time other than to say that proof is in the pudding. Debt has soared in this nation under the Harper government and one has to ask why our government did everything in its power that it could to make it happen from mortgage debt growing from less than $575 million to more than a trillion in this nation in 5 short years ballooning household debt with incomes flatlined to $55.9 billion dollar annual federal record deficits. Why under this nations government did Canadians become so beholden to our banks/international bond investors?

By all means, take a pause if you would please to find an answer to that one.

#125 Two-thirds on 03.24.11 at 1:24 pm

#26 Soylent Green is People

Your posts are most often disconnected from the day’s subject. Not only that, but it seems there is substantial straw-grasping in them as well.

The text you posted suggests that opposition leaders spent 2 hrs “reading” the budget.

The document is 352 pages long.

2 hrs = 120 minutes = 7200 seconds.

7200 seconds/352 pages = 20.45 seconds per page

Is this the kind of attention to detail that those who have been entrusted with the governing of our country must have, according to you?

20.45 seconds per page on average? Is that your point?

Speed reading, charitably. Responsible consideration of a fundamentally important document that affects 30+ million Canadians? Categorically NO.

I respectfully suggest you stop posting propaganda and instead contribute material germane to the daily topic, if you are able. Many readers here have little time and appetite for the fare you repeatedly and obsessively serve.

#126 Hoof-Hearted on 03.24.11 at 1:33 pm

The CMHC: Canada’s mortgage monster
The CMHC is a driving force in the housing market. But critics warn its policies could fuel a U.S.-style meltdown.

http://www2.macleans.ca/2011/03/23/a-mortgage-monster/

#127 Young Old Fart on 03.24.11 at 1:46 pm

Stay honest, man, and people will trust your opinion more.
——————————————————
I specifically said no individual stocks, no equity mutual funds. As for returns (and as I seem to have to state this daily) you can get 5.3% in dividend income from a bank preferred – as worthy as a GIC in the same bank. That’s equivalent to a 6.5% GIC. Mixing in some energy, health care or BRIC ETFs and a few REITs gets you to an 8% level with little exertion. Get educated. Then I’d value your comments more. — Garth

=====================================

Ah Garth you are a patient fellow……

You people that scoff at anything over 4%????

Here’s what a few of my Canadian stocks are returning to me in dividends:
8.98% (transportation), 6.14%(oil), 7.01%(gas) , 5.76%(gas) , 4.47%(Bank), 5.44%(financials)

My overseas portfolio has been double digits for years.

and so you know, I started investing in 1989 with $500.00. What was my secret? Reading, reading, reading……

The end result? Retired at 48 and loving it. The only work now is reading, reading and more reading….. oh, and fishing, golfing…… ;o)

Like Garth said….get educated.

#128 dave in calgary on 03.24.11 at 1:47 pm

@ 122 MikhailC “Is it possible to buy a house ( SFH) for $ 300.00 in Calgary?!”

Not for $300 but there are 278 listings in Calgary for SFH under $300,000. The majority in the N.E. and the odd POS in Bowness

#129 Hoof-Hearted on 03.24.11 at 1:51 pm

#123 Mickey

Our tax code is idiotic, unproductive and uber costly to administer. Billions of dollars are spent on lawyers and accountants who themselves can’t collectively agree on the interpretation. Why don’t these assholes in Ottawa get to work and fix the system rather than piss more money away on a useless election.

========

Simple:
Create a law = create a job
Dogma trumps Pragmatism

#130 Industrial Guy on 03.24.11 at 1:55 pm

Don’t you love it when the first item on the “Must Reads” list at the Toronto Star web site is:
“Condos on the market”. http://www.thestar.com/living/article/959579–condos-on-the-market

Yes, it’s just an advertisement masquerading as news. I guess real news doesn’t pay the bills anymore.

#131 Dan on 03.24.11 at 1:59 pm

Anyone who understands economics knows Canada housing PONZI is due to one reason and that reason is CMHC . If you take it out CMHC, housing would crash 50% over night. Banks would NEVER lend money to those who have no money . In fact Banks have lent out less then 1% of mortgages which are not CMHC backed. Realtors and mortgage brokers all know this and fear the government would take away the punch bowl since Canadian RE is overvalued by at least 50% .

http://www2.macleans.ca/2011/03/23/a-mortgage-monster/

#132 Young Old Fart on 03.24.11 at 2:01 pm

#78 8% on 03.24.11 at 8:02 am

Why do you all ask Garth for the hot tips? why are you so lazy that you cannot read and do research. ….

It really surprises me how many people are to lazy to read on investing, but read this sad blog every day looking for hot advice and free tips.

====================================

EXACTLY MY POINT!! Nailed it!

#133 BrianT on 03.24.11 at 2:06 pm

#108Tongue-The first thing you need to understand is that the financial industry is a SALES industry first and foremost. She could literally be an economic illiterate and do very very well.

#134 Hoof-Hearted on 03.24.11 at 2:08 pm

Quote

Even worse, the public knows next to nothing about what lurks inside the CMHC’s books, aside from the smattering of details it releases in its annual report.

And, unlike every other major insurance provider in the country, the CMHC doesn’t answer to Canada’s top financial services regulator. It falls under an amalgam of government acts and departments, including Finance and Human Resources, while also working with the Bank of Canada.

Yet on specific decisions that dramatically loosened mortgage lending rules last decade, CMHC officials have testified they did so on their own with the approval and oversight of the CMHC’s board of directors—a board that includes a political consultant, real estate developers, a small-town lawyer and even the owner of a plumbing company—though not one single economist or recognizable financial services professional.

======

Garth…did you use that plumber to build your bunker ?

#135 Young Old Fart on 03.24.11 at 2:09 pm

Gee…. do you think you would make 8% average with this in your portfolio?:

% returns 12 mo 3yr

iShares MSCI Brazil Index Fund (EWZ) 77.15 57.05

#136 BrianT on 03.24.11 at 2:13 pm

#98Debt-I guess the MSM is pretty skilled at misinforming the public on inflation. Look-it is very simple-if the people who want to buy your house have more money in the future than today, your house value will rise-less money it will drop. The other variable is interest rates. Higher energy and food costs, along with increased taxation cannot and will not magically rasie the value of residential RE unless whoever wants your place is tapping into taxpayer money. Inflation fuelled RE in the 1970s-unions were securing wage increases as high as 14% PER YEAR. If you think that can happen again then check the debt numbers for the guv.

#137 Timing is Everything on 03.24.11 at 2:14 pm

#126 Two-thirds

It’s called a scroll wheel….middle of your mouse.

#138 dd on 03.24.11 at 2:19 pm

Calgary Herald … she started off by saying that no one could predict if housing boom was about to occur.

She didn’t even give probabilities … BS.

#139 BrianT on 03.24.11 at 2:21 pm

#79Moneta-You seem like an intelligent person-do you actually believe what you typed? This blog is relatively anonymous-you don’t need to be politically correct here. The percentage of men that are “gratified” by buying an expensive house is very low. What do you think the residential RE market would look like if the only buyers were single males?

#140 eaglebay on 03.24.11 at 2:24 pm

#115 mackie

Let me return the favour.
VMS.V VMS Ventures. Nice copper play in Manitoba.
We will all retire one way or another.

#141 Bankrupt in Brampton on 03.24.11 at 2:27 pm

More power of sales are hitting the market as people continue to lose their homes since many can’t afford the increased costs of owning. Taxs up , food up , gas up , hydro up , water up and every else we need to live is going higher and higher while home prices are going lower. Realtors are true scumbag who continue to lie about the housing market. People would not lose their homes if prices only go up. Sales are way down in Canada and prices seem to be following. You realtors on this blog can lie all you like but the sales numbers don’t lie. Realtors are criminals and the law needs to catch up to these people. Karma will get them.

#142 TorontoMarc on 03.24.11 at 2:36 pm

Another hot post-op!! What is this Tranny week? I see an adam’s apple!

#143 Scare Crow on 03.24.11 at 2:40 pm

Garth, almost gagged when I saw the pic – Yikes! That will haunt me for the next few days…

So Harper played his cards perfectly, he needed to force an election just before the roof caved in – and guess who looks like the donkey’s a$$ – the opposition parties – beautiful ploy Harper..

I got into a heated conversation with BIL – he wants Harper out – yeah – and then what – what leader of the other parties can cut the mustard – I am no Harper fan, but of the 3 (true parties) which of the 3 nim-whits would you chose – a socialist – an ex-pat American who on camera kicked Canada in the balls – or helmet hair Harper who at least can move us along…

Lets get this over with -

#144 Devore on 03.24.11 at 3:10 pm

#144 Scare Crow

Where’s my ‘none of the above’ option?

#145 daystar on 03.24.11 at 3:24 pm

#126 Two-thirds

I’ve got the time for SG’s rants. Granted, they can be improved upon and better tied into the theme on this blog which is anything financial, economical and especially so, having to do with RE. On that note, does any federal government regardless of stripe have major influence if not outright control of the environments to which our financials, economy and real estate swim? Of course they do and its major!

Consider if you would please (feeling quite polite these days, must have flipped a leaf), the influences CMHC regs have on real estate. By all indulgences please ask yourselves what changes from 25 year 10% down regs to 40 year nothing down have on payments toward debt, how future RE valuations price in these changes and what changes to the risk of those taking on higher and higher household debt means to the future stability and economy of this nation as a whole?

Ask yourselves what influences any governing party in federal politics has on just who does sit in as the governor of the bank of Canada, and who decides the variable rates of interest from our central bank in this nation? (Carney was an F pic) Ask yourselves what future effects intergovernmental deficits have on the bond markets and debt service via interest rates chewing into future spending and yes, most especially real estate!!!

In short (if I ever could), all of our federal leaders lack vision but its not about who has the least in my mind, its about who can create the most/least damage in this nation and while some debate on and on about who is the best or worst of leaders or how bad they all are, all this while over the last 5 years Canadians and governments have taken on unprecidented levels of debt, debt that was in every way shape and form encouraged and outright CREATED by our federal government. This to me alone is a record of dismal failure, yet to be realized by the generations that will have to deal with these debt burdens so its not hard for me to be anybody but Harper. At least, save Duceppe, they have the nations best interest in mind (when they have a mind).

#146 jess on 03.24.11 at 3:36 pm

Supreme Court: Federal Reserve Must Disclose Wall Street Lending Details – Thursday, March 24, 2011

detroit -ten years 25% of the population left maybe they should hire some american PR guys! like Bahrain.

http://www.allgov.com/US_and_the_World/ViewNews/Two_PR_Firms_Pitch_Bahrain_Dictator_to_US_Public_110324

#147 Nostradamus Le Mad Vlad on 03.24.11 at 3:50 pm

-
#98 debtified — “What will inflation do the the price of RE in the future?”

My guess is new sales will fly to zero, and resales not much more, as inflation puts other things (and RE higher). But that is JMO.

“We appreciate you providing that entertainment. Pinch me — I’m dreaming. — Garth” — We’re all only here for a short and good time, so it’s our pleasure to provide laughs galore!

#64 Groundhogday and #121 Coin — Suggest reading #106 eaglebay’s (nice work!), #114 and #115 mackie’s posts, plus #128 Young Old Fart’s

RE — if owned outright — and with RSPs, non-registered accounts and TFSAs can be worthwhile, but RE is not the be all and end all of everything. It makes up a small percentage of assets.

#148 Whistle punk on 03.24.11 at 3:54 pm

The more info I read on this website more I laugh at all the Baby Boomer Fools that have spent all their life savings on realestate thinking they are going to strike it rich.

Even the Silent Generation group are being foolish and sinking themselves deep into debt.

Do I own a house “NO” will I ever afford to own a house where I live “NO” any property I will ever end up with will be inherited. The employment in the area is falling off fast with no realestate sales no new construction no work.

I’am a Gen X er late 70s and looking forward to years of dealing with the mess the baby boomer generation has created. Over priced property, high cost of living, no employment.

#149 Joe Larue on 03.24.11 at 4:01 pm

Here’s the deal…..
Finally decided to cash in my chips. My investment condo has more than doubled since I bought it in 1999.

Gave the rental property tenants notice that i’m selling the 2-bedroom condo (downtown T.O.).

Listing next weekend (with a realtor as I have no expertise or time).

It was a tough decision, but I don’t think I’ll have any regrets once I get the “big cheque” (minus fees, capital gains tax etc…) and start diversifying my investments while minimizing my taxes.

#150 AG Sage on 03.24.11 at 4:09 pm

>#140 BrianT on 03.24.11 at 2:21 pm
>#79Moneta-You seem like an intelligent person-do you … What do you think the residential RE market would look like if the only buyers were single males?

If we are going the sexist route. How many women are the same with cars? Which depreciates faster? Even at the top of a housing bubble?

I’ve chided way more male friends for buying new cars they had to finance for 5-6 years than I’ve had to chide female friends for buying houses. One female friend needed to sell as the bubble was bursting and I said: drop the price 15k a week or you are screwed. She did that and sold it that week. I’ve never gotten a male friend to see sense about a car. You might as well spray mating hormones in a guy’s face at the dealership.

#151 David on 03.24.11 at 4:12 pm

#127 Hoof Hearted. So…Maclean’s is actually awake now! Wow, that only took 3 extra years of thinking about it since the U.S. crisis began. That’s some sort of record, I’d say. Of course, for a full year of that, the empty suits in Ottawa were on TV a lot reassuring us all that there were no subprime loans in Canada….so that was it, discussion averted. We certainly don’t want reporters here who think cycnically, or suspiciously, or pessimistically about our government. After all, we are Canadian.

There’s an old saying in finance and investing circles…by the time the media starts to start talking about something, that’s a very telling sign that it’s over. Get ready, this is going to sting a little bit….

#152 jess on 03.24.11 at 4:13 pm

self serving hypocrites …

The Arizona senator, McCain, was out front in recent weeks as one of the biggest proponents of a war with Libya, and is now calling for a wider mission, including arming the rebels…
======================
John McCain. In August 2009 he led a delegation of senators, including fellow hawks Lindsey Graham and Joe Lieberman, on a trip to visit the Libyan leader in Tripoli. Discussed during the visit was delivery of — get this — American military equipment to Gadhafi ….

http://www.salon.com/news/politics/war_room/2011/03/22/mccain_gadhafi_wikileaks
=======================
Divorce as a loophole?

http://www.guatemala-times.com/opinion/editorial/2143-illegality-and-immorality-of-guatemalaas-election-process.html
With the Guatemala constitution forbidding the president’s relatives from seeking the office, de Colon filed for divorce on March 11—three days after putting in her papers for the next presidential election.

==
imagine trying to figure out to vote for here
Illegality and immorality of Guatemala´s election process

Since last year there have been constant violations of the constitutional laws of Guatemalan by the political parties. All parties have violated the law in several ways, illegalities and disrespect for the law has been the main signature of the election year so far. It is feared it will only get worse. There are no “innocent” politicians in this election year.

The gravest violation of the laws have been:

1. Promoting anti- constitutional candidates, or promoting changes to the constitution to change the laws stipulating the presidential candidate’s requirements, which is a crime according to the Guatemalan constitution.

2. Election propaganda before the commencement of the legally established election period (May 2011).

3. Refusal of political parties to disclose their financial records.

Monday, 21 March 2011 16:49 Barbara Schieber

#153 Timing is Everything on 03.24.11 at 4:21 pm

#140 BrianT – said “What do you think the residential RE market would look like if the only buyers were single males?”

Language warning…

http://www.youtube.com/watch?v=etkarB72RbE

#154 Timing is Everything on 03.24.11 at 4:54 pm

It coulda been you Garth….but you don’t have the legs for it.

http://tinyurl.com/4jlr7nn

#155 45north on 03.24.11 at 4:55 pm

By the way, did you catch the latest news from USA land? New home sales just plunged 17% – the worst number in 50 years.

Charles Hugh Smith: writing about the US:
Way back in August 2006, near the top of the housing bubble, I suggested declines would occur in sharp downlegs

http://www.oftwominds.com/blogmar11/phase-shift-housing3-11.html

The situation in Canada will be similar. (Similar not the same.) Notice the difference in the way the numbers are reported? In Canada we are talking about a year-over-year drop in sales by about 16% whereas in the US they are talking about a month-over-month decline of 16%.

Bankrupt in Brampton: More power of sales are hitting the market

Tony and I used to play soccer but we drifted apart and for some reason he bought in Brampton. Tony, you should have sold last year!

Unless somebody hacks Garth’s site again, the comments on this blog are going to stay here forever.

#156 Herb on 03.24.11 at 5:00 pm

#112 Carruthers,

that’s pretty thin gruel you’re cooking up. Implying that Soylent Green is People was incensed by the media being distorted/manipulated by “five white billionaire men” rather than five females or whatever of any other colour or financial state is a bit of a stretch, but you’re reaching for it. Innocently?

Please direct me to the source of the “’I HATE ISRAEL, I HATE IT, I HATE IT’ or some reasonable facimile thereof…”. I do spend some time here but missed that one and would like to see the words and context.

It’s still typical trollspeak, now backed by spurious reasoning. I will confirm that Soylent detests “Conservatives” (“hate” has become debased in political discourse). So do I, and precisely for the Baird-like mendacity and malevolence you are showing.

#157 simkev on 03.24.11 at 5:23 pm

Garth
A Story for you. My dear sister who lives in the quaint town of Warman SK about 15 min north of Saskatoon is seperated and going through a divirce that is going to be nasty. Luckily :) she and her soon to be ex-husband owned a couple of homes. Now she has one of them and it is suspose to be worth about $280k (and falling).
However there is but a small mortgage of $80k. My sister, though a professional is not making alot of coin these days due to government cutbacks affecting her job and cashflow. I suggested that she sell her home, take some cash for the impending divorce proceedings and invest the rest in a balanced portfolio and rent. She was aghast, arguing with me that she could not sell her “investment” and that she could never raise her boys in a “rental” never mind she is currently paying an “interest only” payment as the house does not have a mortgage but a line of credit, which the bank could call in at any moment … or could ask for priciple to be paid, or could increase her costs when interest rates go up …did I mention it was also a bit of a fixer – upper!!!!!!
Now my point:
– People have been brainwashed to believe that a home is an “investment” not shelter and it will always provide “security”
– Renting is not about shelter, it is about your “status” in society.
– Even my smart, well-educated sister is a victim of house porn …and she goes to church on a regular basis.

Just thought I’d share. And weep!

#158 BrianT on 03.24.11 at 5:57 pm

#154Timing-Yep-that looks like it. Good video-I loved Ricky’s Christmas sermon.

#159 45north on 03.24.11 at 6:02 pm

simkev: she is currently paying an “interest only” payment as the house does not have a mortgage but a line of credit, which the bank could call in at any moment

good point

10 years ago or so, a colleague sold in Washington DC and moved to Saskatoon because he thought that the DC prices were too rich for his blood.

#160 HouseBuster on 03.24.11 at 6:03 pm

Looks like people are having a hard time unloading their overpriced pieces of crap houses.

The crash has begun.

#161 Mikey the Realtor on 03.24.11 at 6:11 pm

#81 Kevin on 03.24.11 at 8:17 am

Absolutely, a paid off mortgage is the only guarantee. As for the 8%, I must of missed that because 10% was the rate being thrown around not too long ago.

#162 Peter Pan on 03.24.11 at 6:11 pm

“Return” is not the same thing as “Yield”. Use the right terminology… It’s your ignorance which is being revealed…

This is the correct definition of “yield” according to Investopedia…

“The income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investment’s cost, its current market value or its face value.”

I write for comprehension. See? Even you understood. — Garth

#163 Mickey on 03.24.11 at 6:17 pm

Yes I agree with the comment that create a new law means create a new job. Unfortunately Wisconsin lawmakers found that out the hard way.

#164 Joe on 03.24.11 at 6:18 pm

#150 Joe Larue: Good for you, realizing the profits of the real estate boom.

#121 Coin: You don’t have a cousin named BPOE by any chance, do you? So one anecdote of poor renters and we’re all f***ed eh? Just like the anecdotes of one or two 20-something secretaries buying downtown Van condos they can’t afford, guess everyone who buys a downtown condo can’t afford it and will end up foreclosed, too. Anecdotes are useless other than for voyeuristic entertainment.

#98 debtified: I think your question about inflation can be answered with Garth’s theory of asset deflation and price inflation. “Assets” include cars, houses, lawn furniture, computers, etc. If you think about it they’re not really assets at all (I think assets are things that put money in your pocket), but that’s what Garth calls them.

The inflation part applies to all the necessary stuff that we need – groceries, heat, water, gasoline – prices of those are going to go up, up, up. Hence, simply keeping food on the table and gas in the car jacks up our day to day expenses so much that we can no longer afford to buy fancy clothes, new car every three years, furniture for an “outdoor living space,” granite and stainless. At least I think this is the general consensus on here of how it’s going to all play out.

#165 Moneta on 03.24.11 at 6:22 pm

And if these people in question are incapable of saving, why in the world would you entrust them with 20:1 leverage on the largest “investment” decision of their lives?

—–
I answered that in my 2nd paragraph… to keep the ponzi going so those who save can keep on getting dividends on their bank shares.

#166 Dorf on 03.24.11 at 6:24 pm

Wow, ten minutes of staring into those hot, she-devil eyes and I’m sure I’d be making a bad decision too.

It’s funny I had exactly this debate with a couple friends of mine just last night.

They are looking for a place to buy right away, because they are just throwing their money away on rent right now. I convinced them otherwise.

Now, they are going to look only, but wait a couple years to see where the market goes. It can’t go any higher, people are reaching the end of their leash, they are tapped out. It can only go down.

#167 Moneta on 03.24.11 at 6:31 pm

BrianT on 03.24.11 at 2:21 pm
——
I do believe what I wrote. I also believe that many things that I believe are wrong but I’ll only see it sometime in the future and maybe never. That’s why I challenge ideas.

On that note, should I question my husband’s virility every time I must do somersaults to convince him that our house is large and good enough?

#168 Hoof-Hearted on 03.24.11 at 6:31 pm

#152 David

The following is an open letter addressed to The Globe and Mail‘s editor-in-chief, John Stackhouse, and its publisher, Phillip Crawley, regarding the serious financial crisis the newspaper is apparently currently weathering.

http://ninoricci.com/news/open-letter-to-globe-mail

===============

I guess the MSM is on life support…..this letter is quite interesting.

#169 Nostradamus Le Mad Vlad on 03.24.11 at 6:32 pm

-
Bloodbath in Bahrain Scheduled for tomorrow. This world is like an out-of-control drunk driver rampaging thru humans like pinballs.

Link in. The planet is readjusting itself, so more of the known unknowns to come (see above), plus this.

4:22 clip PNW is a waking bear having a scratch. Chaos – Numerology plus aerial pix of Malibu. The PNW is still rumbling — is this a marriage made in hell? We’re next on the list, plus they have yellow rain falling, just like Chernobyl.

Rethuglocrats New way to starve people — cut off food stamps, along with Pic of Politicos They get paid for doing this? No wonder our economies suck.

2:07 clip I can understand why Bernanke said yesterday the US is on the brink of insolvency. This backs him up, plus Dallas Fed. President.

4:12 clip Science. Michio Kaku — “You’re probably a terrorist if you oppose the NWO.”

What do Egypt and the UK have in common? ‘Owzaboud an uprising?

#170 Moneta on 03.24.11 at 6:36 pm

What do you think the residential RE market would look like if the only buyers were single males?
———
I think Vancouver would be like Hong Kong… the sea front would have been pushed out with the richest perpetually building higher and higher highrise so they could get the best oceanfront view condo to get the ladies.

#171 VICTORIA TEA PARTY on 03.24.11 at 6:37 pm

#144 Scare Crow

AN ELECTION THAT IS NOT NEEDED…AND OTHER ANNOYANCES

I also agree that Mr. Harper, and his troupe, are the only real world choice should the writ be dropped tomorrow. There’s also the off-chance that one of the Opposition ninnie-leaders could fold at the last minute and thus avoid a truly unnecessary $300-million election gab-fest. There will be plenty of time for one later.

As for the roof falling in on Canada’s economy, we can’t pin a date of that, just that the matter is in process. But we can observe that Toyota will shutter overseas operations, including Canada’s, because of the “situation” in Japan. This will be some Black Swan. Believe it! Will Honda, Nissan, etc., be next?

MICE THAT ROAR…

Now for a look at Portugal, and its imminent bankruptcy (coming as a zero surprise). Will it be the “mouse” that brought down the great Euro currency/sovereignty experiment? Likely not, though it should.

I expect an EU bail-out, of course, and more erosion of a currency that fitfully competes with the world’s two other most erosive of currencies, the Yen and the Greenback.

BTW, more than 30 Spanish banks have sustained credit downgrades.

Oh what a merry economy miasma in which we now dwell.

WAR? OOPS. NOT THAT WORD. PLEASE!

Elsewhere in our universe, our glorious leaders, fresh from advancing continuing economic/political failures, are now not even capable of running a war (Libya) for crying out loud!

Or even knowing what “word” should be used to call bombing downtown Libya and creating a “no-fly zone.”

Instead of “war”, the denizens of the White House are calling the event a more sanitary “kinetic military action.” That is something that not even Mr. Obama wants to conduct. So, the US wants to leave the theatre, and Britain wants NATO to take over the job. Meanwhile a gaggle of Eurocrats is determining if someone else should take command; them.

Spinelessness on a big scale is what this all looks like.
And with that in mind, how will the folks in those parts of the world, who don’t like the West, respond to this gutlessness?

Unless the West gets it’s Libyan act back together, and quickly, I think the “revolutionaries” will lose, and Gadaffi will win. That should spur his dictator “brothers,” elsewhere in the Mid East and North Africa, to simply pound this nascent so-called revolution back into the sands of time, so to speak. And after that? I’d keep my eyes on Iran.

BACK TO THE ECONOMY

The Dow closed up today 86 points because of good corporate profits, according to Bloomberg.

However, in their chronic short sightedness investors ignored the following grim US stats: Americans are 23 per cent poorer than they were two years ago; jobless claims remain basically unchanged; new orders for manufactured durable goods are down.

And Canadians will countenance a federal election AT THIS TIME? Are we Nuts?

#172 Moneta on 03.24.11 at 6:42 pm

I think Vancouver would be like Hong Kong… the sea front would have been pushed out with the richest perpetually building higher and higher highrise so they could get the best oceanfront view condo to get the ladies.
———-
Oh… and I forgot about the trailer parks for those who don’t play the game.

#173 Two-thirds on 03.24.11 at 6:54 pm

#138 Timing is Everything on 03.24.11 at 2:14 pm

” #126 Two-thirds

It’s called a scroll wheel….middle of your mouse.”

So… it is do as you say, but not as you do?

#174 Future Expatriate on 03.24.11 at 6:56 pm

Pic of the year for sure. No, not the blond.

#175 b on 03.24.11 at 7:16 pm

About Our Readers:
Source: http://www.postcity.com/Post-City-Magazines/Advertise/About-Our-Readers/

“…74% of our readers own their own home…”

and

“…These local residents, some of Canada’s most affluent and well-educated readers (lol), look forward to receiving their copy of the Post (with roundtables like this I’m sure they do), which is filled with local news and information not available anywhere else…”

#176 Say_What on 03.24.11 at 7:16 pm

Mixing in some energy, health care or BRIC ETFs and a few REITs gets you to an 8% level with little exertion
If those are giving 10% return to produce an 8% average, then why not just do the 10% across the board?

#177 Say_What on 03.24.11 at 7:20 pm

#34 nonplused – he’s getting at the miserable costs of any mutual funds vs more efficiently priced ETFs.

#178 Nostradamus Le Mad Vlad on 03.24.11 at 7:50 pm

-
2:13 clip A very revealing interview. The US has long since planned to take seven countries in the ME out. Why? Oil + water. If the US is not in control of its’ own foreign policy, who is? Here is the answer!

Bunkers This is up your alley, Garth plus 2:22 clip US home prices hit nine-year low. Rhode Island Mall to close for good. Household Wealth Down Wonder if all these wars have anything to do with it?

Just like Iraq and AfPak, the US has no best buy date for leaving Libya. The US is beyond broke, so may as well continue ’til the next full moon. More fiscal wisdom, if it can be called that.

Ten ex-WH economists issue debt warning. Not to put too fine a point on it, they may be onto something. Economic recovery well underway, because the US is trying to get the world involved in its wars.

Vaccinations Avoid them, severe side effects, plus Another scam raising opposition.

Utah Possible Constitutional standoff over solid vs. fiat currency.

Extinction This is correct because, in the lower psychic regions, everything and one goes through cycles — birth, life and death. orthodox religions will, sooner or later, finish their cycles.

0:21 clip Interesting. Switzerland has promised to help rebuild Gaza.

UK retirement age – 80. In other words, work ’til you drop, then have a tea break! Violent Brussels Sprouts “Further down the page you will see a story where EU officials were caught in a sting accepting bribes to loosen banking regulations in the EU, to do to the people of Europe what Wall Street did to Americans starting with the repeal of Glass-Steagal in 1999.

“Only the Europeans watched what Wall Street did to Americans and unlike Americans, are angry enough to try to stop it.” wrh.com.

#179 DaBull on 03.24.11 at 8:15 pm

#116 Devore on 03.24.11 at 12:45 pm

After realtor fees and transaction costs, less than 5% profit is left? With less than 20% down, mortgage insurance was also required. And if it didn’t sell, that’s a lot of risk to carry on such high leverage. Then, taxman will come to take his share too.

First some assumptions.

The person who flipped this knows what they are doing. The second buyer paid on the day of purchase.

Second some facts.

The person who flipped this didn’t take out mortgage, the time period is to short to have the mortgage documents processed. So they either used a line of credit or cash and paid in full, thus no mortgage insurance.

So now lets break down the numbers.

Bought for $219,000
Realtor fees = none.
Closing costs = $1000 – This is on the high side
Total cost = $220,000

Sold for $250,000
Realtor Seller – Uses a discount realtor $1,500 + Buyer agent – (3.5%+1.5%)= $5,750
Total Realtor = $7,250
Closing Costs = $1000 – This is on the high side
Total cost = $8,250 + GST = $8,662.5

Gross Profit $250,000 – $220,000 = $30,000
Minus expenses = $30,000 – $8,662.5 = $21,337.5
Profit pre-tax = $21,337.5 on $220,000 is 9.7% over 16 days or 221% annualized.
Profit after-tax (Captial gains using 35% nominal rate) = $17,603.5 on $220,000 is 8% over 16 days or 182% annualized.

At little better than your 5%, wouldn’t ya say.

#180 van bear on 03.24.11 at 8:21 pm

Hey Garth, isn’t it time that you have a voting (up or down) system for your website?

#181 X on 03.24.11 at 8:38 pm

re 108 – if your idea of investing is as Gordon Gekko portrays in Wall Street, perhaps you should watch the movie to the end.

Boring is better.

#182 rosebery on 03.24.11 at 8:41 pm

The reality is that Canadian real estate is immune from economic forces. Simply stated, “It’s different here”.

http://www.zerohedge.com/article/guest-post-phase-shift-next-leg-down-house-prices

#183 X on 03.24.11 at 8:42 pm

re 178 – Say What

‘Mixing in some energy, health care or BRIC ETFs and a few REITs gets you to an 8% level with little exertion
If those are giving 10% return to produce an 8% average, then why not just do the 10% across the board?’

Its about a balanced portfolio. Otherwise just chase the highest yield you can find and put all of your money into it. Let us know how that works out.

#184 Joe on 03.24.11 at 8:47 pm

#181 DaBull: What about Land Transfer Tax and CMHC insurance?

2.75% CMHC on 95% mortgage, $209,000 = $5,747
2% LTT = $5,000 on the sale

You’re down to a profit of $6,856. But assuming it was 5% down, so $11,000 was your initial investment, that’s a good return, isn’t it?

How did someone up with a 5% return? They held the property less than a week, so not like they made any mortgage payments or anything…

#185 X on 03.24.11 at 8:47 pm

It’s hard to believe the investing ignorance in open display daily on this sad blog. REITs last year gave 20%. The Russell Small Cap did almost 30%. Corporates provided yields of 4.5%. Bank preferreds gave 6% dividend income. Broad index ETFs were close to double digits. There’s a myriad of investments that, in combination and using tax-efficient income and available shelters, can give such a yield with wholly acceptable risk. I will copy and paste this comment as necessary. — Garth

Honestly, so much of this has been explained over and over on this site.

Some of us do appreciate your knowledge, time and patience with everyone on your blog.

#186 Snowman on 03.24.11 at 9:03 pm

8%, the magic number. Madoff used 10%, turned out it was not his lucky number. Why is it 8 again? Oh yeah, because last year was a good year. Now that’s a detailed and insightful analysis, so where do I sign up?

Last year was 14.89%. And Bernie used 12%. You’re zero-for-two. — Garth

#187 HouseBuster on 03.24.11 at 9:32 pm

Let me tell you something right now you delusional fools. Canada will not escape the real estate crash and you can take that to the bank!

#188 S.B. on 03.24.11 at 9:35 pm

93 GregW, Oakville on 03.24.11 at 10:13 am

Is your letter about Flouride??

#189 DaBull on 03.24.11 at 10:04 pm

#186 Joe on 03.24.11 at 8:47 pm

What about Land Transfer Tax and CMHC insurance?

2.75% CMHC on 95% mortgage, $209,000 = $5,747
2% LTT = $5,000 on the sale

Calgary is in Alberta, there is no land transfer tax. If you pay cash or put 20+% down on a property there is no CMHC insurance.

#190 Devore on 03.24.11 at 10:20 pm

#181 DaBull

You mean people who know what they are doing can make money anywhere anytime? Shocking.

#191 GregW, Oakville on 03.25.11 at 1:17 am

Hi #190 S.B., How did you guess? lol

#192 Kevin on 03.25.11 at 10:45 am

Wow, I’m really impressed with all the investing geniuses on this site. Thanks for pointing out that obscure Brazilian fund that’s averaging 77%. I should be a millionaire in no time, just like the rest of you stock-picking gurus, right?

Kind of makes me wonder – why wouldn’t EVERYONE just find a mutual fund that returns 77%, and invest their life savings in it? Who are these idiots buying 2% GICs and 4% “Balanced” funds? Why not just go all-in with gold or oil or whatever pick-of-the-week fund made 50% last year (and is surely going to keep repeating that performance indefinitely, after I get my money in)?

I didn’t realize so many millionaires read this blog. Makes me wonder why the mutual fund industry has such an utterly terrible long-term record of beating the market average, when it’s just so easy. I mean, they have the education, experience, training, cutting-edge high tech tools, oodles of liquid capital at their disposal, up to the second-quotes and instantly executed trades, yet they STILL consistenly trail the market averages, after fees are factored in. Don’t they know how easy it is?

Meh, it’s probably better to not dwell on such questions too much though, eh?

#193 DaBull on 03.25.11 at 11:47 am

#192 Devore on 03.24.11 at 10:20 pm

You mean people who know what they are doing can make money anywhere anytime? Shocking

Why is that shocking? And anyway your theory isn’t quite true. When it comes to the equity markets I know what I’m doing but I don’t make money of every stock I buy. My portfolio overall makes money, but on a few individual stocks I don’t. Guess that throws your “those that know” theory out the window. I would bet the same happens with your portfolio, if you even have one. It’s called “RISK” and you can’t be right all the time. The game is to hope your smart (or lucky) enough to be right most of the time.

#194 Omar Ibrahim on 03.25.11 at 12:53 pm

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#195 Sarah on 03.25.11 at 4:07 pm

Regarding Julie’s post:
I have to agree with her. I have just recently tuned into your blog and look forward to it everyday. You are a very intelligent, interesting man with a lot of needed advice, however, your choice of words might not suite everyone who could use your expertise. The world has turned crass and we are, too conveniently, getting use to it. No need to turn into a prude but a little class goes a long way.

#196 Granny from Skatch on 03.25.11 at 5:19 pm

Garth: The pictures are great! They illustrate very clearly many of the important pithy points that you make in your missives to the masses. You make being a numbers geek fun. Keep up the good work – full speed ahead. I look forward to more excellent illustrations and erudite verbosity. As for Julie…. I’m sure her 20 something nephew could teach her a thing or two.

#197 GTA (Garth Turner Area) on 03.25.11 at 6:34 pm

Hi Garth,

I appreciate your unique commentary each day, and I really don’t mind the blog pics, but lately, the site has become NSFW, especially when the skin tones bombard my monitor at the office.

I would humbly suggest opening a parallel site to satisfy the dawgs in heat…”Greater Fool: After Dark.”

(Blog dawgs must also enter their age in a drop-down menu calendar before entering)

Granted that, in a world of fools, seeking advice seems like illicit activity, but it doesn’t have to be. It does however, have far reaching consequences as well…..

Best wishes, as always