Eye candy

About the only thing 2011 lacks so far is a plague of locusts. But it’s only April. So far we’ve had revolution and unrest across the Arab world, quakes and floods in Japan, surging oil prices, nuclear disaster,  a plunging US housing market, two more European bankrupts, American government shutdown and a brand new war. Real estate sales are down, mortgage rules tighter, gas is $1.40 a litre and the latest jobs numbers suck. So how can my investment portfolio be up so far by 11% annualized?

Two reasons. One, it’s balanced. It holds both growth assets and fixed income. When stocks fall, bonds rise. That’s called negative correlation, and it’s better than KY Jelly. It also makes money through a variety of assets, from those REITs I told you about (up 22% last year) to US small cap ETFs (equally impressive) to emerging markets (now on sale). Anyone who thinks diversification is a bad idea needs to think about Reason Two.

Here it is: this is a dangerous time. People with the bulk of their net worth in one asset, like real estate or equity mutual funds, will seriously regret it. There’s a very good chance oil is going to $120, triggering more European debt crises and screwing up global growth. Dramatically higher energy costs (I almost regret owning a Hummer) are causing food to explode in price and leading to inflation high enough that rising interest rates are an inevitability. Meanwhile the crap has only started to fly in Syria, Yemen and (probably) Saudi Arabia.

Stock markets are ahead of themselves and the government stimulus helping to support them will end. Just look at the catfight in Washington. Obama’s in trouble. The Tea Party yahoos would happily see Wall Street cratered, and a survival-of-the-fittest austerity era commence, replete with protectionism and chastity belts. Meanwhile in China, interest rates are rocketing higher as the country tries to fight deflationary poverty and inflationary urbanity at the same time. Maybe it’s time to wonder what happens if Japan and China stop buying US bonds.

This is exactly why 70% of my net worth is in liquid financial assets. And this is why you’d be wise to emulate. If America and Europe are any model (and why wouldn’t they be), the greatest threat the middle class faces is a drop in real estate values. This grows more likely with each tick higher in oil prices, each new American misery and every additional dollar a Canadian family borrows.

There’s only one reason why the real estate market continues to seduce and enthral. House lust, which is what greed has evolved into. It is overwhelmingly powerful, and inherently trite. In a hail of Tweets, it can be gone.

So, don’t get distracted by eye candy. Don’t heed the nutbars who rush here to lure you astray.

Be a manly man, like John:

In 2006 my wife and I left university with negative net worth and a combined income that has climbed to around $85k.  In 2008 we put 10% down on a 40yr $285k VRM for an adult-oriented condo — and then started reading your blog as the markets sagged.  That year we paid off our debts and knocked about $1500/month off the mortgage principle.

With a baby on the way now, we have sold the condo (on the first day to a Chinese buyer) and will rent a townhouse until we know how long we can stay in Victoria.  We have ~31k in TFSAs, $10k elsewhere, and we will clear another $75k from the sale. Our net worth has gone from 0 to $115k in 5 years, which is comforting.  Last month our real estate liability represented 250% of our net worth (did I do that right?), and this week it represents 0.

I have two observations:

1) To buy, carry, and sell the condo over 3 years cost us an average of $1100/month.  That includes no transfer tax (first time buyers), a VRM below 2% much of the way, and a small capital gain.  Our new, larger, rental goes for $950/month and I don’t have to worry about the roof.

2) The transaction costs on the condo are what made it more expensive than renting.  (Carrying costs are about $750 right now).  Worse, our bank has stopped offering open mortgages for the next time we buy.  I wonder how many first time buyers know what city they will be working in or how many children they will have five years from now.  I know two guys who commute over 50 km from houses that are too small, but who can’t afford to break their mortgages.

See? Not everyone in Victoria suffers from mould. And not all young couples are house horny. Some actually think.

In a world of risk and temptation, remember my family motto: Keepeth It Zipped.

213 comments ↓

#1 Siddelly on 04.08.11 at 10:06 pm

I was remembering how your two hosts were pumping the gold stocks at your talk in Vancouver a few months ago and thinking that it sounded a little risky that they were 95% exposed. But today I looked at my B2 Gold and my First Majestic positions and I’m thinking if it payed off for me, they must be clicking their heels. Perhaps they will use some of their profits to have you back to the wild west!

Keep the great posts coming, It fortifies me against my wifes complaints about living in the sisters basement for the last two years waiting for the crash.

You live in a basement and buy gold? I’d complain, too. — Garth

#2 T.O. Bubble Boy on 04.08.11 at 10:08 pm

So the moral of the story is: sell your condo to a Chinese buyer?

#3 T.O. Bubble Boy on 04.08.11 at 10:16 pm

uh oh – it looks like someone in Australia read “Greater Fool”, and stole the cover picture for their article!!!

http://www.theaustralian.com.au/business/pursuit-of-property-is-it-a-losers-game-returns-may-fail-to-live-up-to-investors-overly-optimistic-expectations/story-e6frg8zx-1226036173358

(for comparison)
http://www.greaterfool.ca/wp-content/uploads/2008/02/g-fool.jpg

#4 Rob on 04.08.11 at 10:17 pm

Regarding the post yesterday of the womans educated dentist calling a new boom in Edmonton, I am finding the same thing. Friends accountant, business owners I speak with, builders, professionals of all kinds are talking about it non stop!

The bears or the bulls will be proven very, very wrong. My bet is still a continuing correction (prices are already down a fair bit here) and stagnation after that.

Here are this weeks stats:
http://edmontonrealestateblog.com/

Blip or start of a trend? The bears say trend, the bulls pray blip!

#5 Whattodo on 04.08.11 at 10:18 pm

Me first…..yeeeahhh!

#6 Carp on 04.08.11 at 10:36 pm

Good timing.

All our kid’s friends at school have big homes, big cars and big everything … I actually asked my wife this week – so what’s our problem? She laughed and told me to stay the course.

Since we sold our big home with pool in December, I have an old car – like 1999, and all my wealth is either in my personal company or invested with a fee-base adviser.

Of course being debt free has allowed me to not work full time, enjoy my young kids, and get some interesting business deals going …. in the long run probably better than having to bring in the cash with whatever contract available. Oh yeah, the wife also stays home cooking and taking care of the family.

+ I am renting a farm for cheap and got plenty of fun projects this summer.

I was starting to feel I was a loser in this rented home/farm but hey, I’m sure my kid’s friends parents are feeling lots of pain both having to go to work in the morning and probably being way over their heads in debt.

Thanks Garth for this … I’m staying the course.

#7 BigAl (Original) on 04.08.11 at 10:41 pm

Isn’t the stock market following the same self-delusional path as real estate?

Here’s a typical example. Today’s headline for the closing of the Asian stocks was: “Asia Ends Higher, Shrugs Off Japan Quake”. And this is what gets me. The market today seems to just shrug off everything negative. It makes me wonder how much creative accounting is going on in companies today. The business world sounds more and more like CREA, TREB, and Anne Rohmer, only even more opaque than the real estate cartels.

Something’s rotten in stock markets.

#8 MikeT on 04.08.11 at 10:53 pm

I will respond to #144 A couple of comments and to #161 Sonya from the last post.
144: your comments sounded genuine, so I will take my words back – actually there are some Canadians (=born and raised in Canada) who welcome immigrants’ skills. You know, being from Europe, and knowing Europeans’ attitude towards immigrants, I don’t expect much love for us immigrants, so even if Canadians’ words about immigrants sound good – I discount them, because I would hate foreigners who come to my country and take the jobs that I and my buddies could get. I am happy to admit that I was wrong. Canada is different – even if one in thousands says that he/she welcomes skills that contribute to the Canadian economy.

#161: first, I am half Ukrainian. Zdoroven’ki buly! I just described the perspective of immigrants to Canada. Of course, US, Australia, New Zealand, etc. also opened their doors to immigration and people immigrate there too. I limited my post to Canada because I chose to be here. Now, surely many immigrants don’t find it easy here. Do you know that about 25-30% of immigrants leave Canada after they get the Canadian citizenship? When the war broke in Lebanon there were tens of thousands of “Canadians” screaming that Canada MUST help them get out of Lebanon. Those were the ones who don’t care about Canada and conveniently got the Canadian citizenship to reap the rewards that it offers. I would retrieve the citizenship from them in a heartbeat – those were the people who opportunistically wanted to use the system and did not contribute anything to it. I would have left them there. But Canadian govt could not allow this – it is obliged to “save” Canadians all over the world, so my and your tax dollars went so save those leeches’ arses.

I was lucky to have graduate education from the US (my wife too). We both have master’s degrees, and while my wife gave birth to 2 new Canadians, I had an amazing rise in my career in just 3 years since coming to TO. I still invest in myself, and will do anything possible to reach heights I never dreamed of. I am the immigrant who chose to be here and to make a life in Canada. My kids speak English better than my native tongue. And we prepare for my wife to open her own business here, which will benefit the Canadian economy. Not doing this for the country – we’re doing it for ourselves, it’s just that the country will benefit from this through taxes. Things are done rationally here!
Peace to all!

#9 BrianT on 04.08.11 at 11:16 pm

Buried on the back pages-March 2011 the coldest March globally since 1994-good thing Al Gore’s Goldman scam has already put cash in his pocket http://www.accuweather.com/blogs/climatechange/story/48140/coolest-march-since-1994.asp

#10 Chaos on 04.08.11 at 11:23 pm

Vlad…sorry, took the day off. (It’s a big job running the universe.)

Apparently this brawn dwarf comes for a visit every 3600 years and may drag an asteroid cloud along with it.

It won’t take too many asteroid hits to chill out the home buying fever.

What I think is that it now comes down to math.

If it’s out there, when can we expect it to be here?

Hopefully not until after the Canucks win the Cup.

#11 brent on 04.08.11 at 11:27 pm

Oh hey, as you predicted, Vancouverites are now getting shafted for the Olympic Village:

http://www.inews880.com/News/National/Article.aspx?id=274083

#12 Mojo on 04.08.11 at 11:27 pm

Hey Garth, you should really consider opening a separate website to sell your investment advice to newbs like me. There’s a lot of people out there that would prefer to have access to good advice, unlike most “advisors” at major banks who are full of crap and try to shove lame GICs and mutual funds onto people. I’m learning a lot just reading your blog, and appreciate your investment advice. Btw, what’s your opinion on commodities? Is it a bubble, or a hedge against stealth depreciation of the US dollar?

#13 Abitibidoug on 04.08.11 at 11:28 pm

in response to posting#7 by Big Al: The quantitative easing by the U.S. Fed has driven interest rates down and is flooding the investment market with cheap money. This cheap money fuels bubbles, some in real estate (at least in Canada and China), some in stocks, and has likely contributed to high commodity prices. It’s not out of the question that stocks could correct, even more likely if there is no more quantitative easing and interest rates come back to a more normal range.

#14 not 1st on 04.08.11 at 11:51 pm

Anyone riding the “bull” market will deserve whats coming to them soon. Can’t wait to see that carnage. The only reason its going up is because corporations are holding on to bailout money and pushing it right to their balance sheets and bonuses. There isn’t more economic activity than there was at the 2008 crash, but the market has doubled in 2 years… right. Once the QE party stops, watch for the 5,000 point haircut.

#15 Lurker in Kelowna on 04.08.11 at 11:51 pm

I’ve been watching and reading on the sidelines for years and thought I would post. There is a definite gradual slide in Kelowna pricing. So much supply for a city this size. Rents are coming down as I negotiated a rent from $2400 to $1600 a month. This is a gorgeous exec. home , 5 years old 3700 sq. feet. It was empty! My friend,who lives in Calgary, told me today that he clinched a renter for his investment condo for $1000 a month. The interesting part is that it is illiquid and virtually unsellable without a crushing price cut.As well, in his first year of renting he received $1400 then $1200 and now at $1000 he just breaks even. Houses sit along time. The market here at best is precarious.

#16 Devore on 04.09.11 at 12:19 am

Maybe it’s time to wonder what happens if Japan and China stop buying US bonds.

Well, the Tea Party “yahoos” have been wondering for years.

#17 Al on 04.09.11 at 12:30 am

Two homes just sold in the Thornhill area of the GTA with multiple offers and $65,000 to $105,000 above asking price !! The stage was set by the RE Agents with “all offers to be presented April 7th”. I seriously thought that they would regret doing this, but I was wrong.

#18 Kuwaiti on 04.09.11 at 12:30 am

@ #8 MikeT

I hate those Lebanese ‘Canadians’ gives immigrants like us a bad rep! Good to see this country is treating you well! :)

We should make the citizenship test wayyyyyyy harder, and whats with all these lil lebanese and tamil kids that are born in Canada but still identify themselves with the ‘motherland’… they have’nt even been there! Sigh

#19 Tim on 04.09.11 at 12:32 am

melons, drizzled with honey…love this blog!

#20 Kate on 04.09.11 at 12:35 am

“hi, my name is kate and i’m a recovering real estate addict. I used to spend afternoons searching for the perfect home in my pre-approved budget. Then i started watching home and garden. I hit rock bottom when i started scheduling viewings for houses we couldn’t afford.

Luckily my husband stepped held a real estate intervention before things got bad. We live in a beautiful million dollar rental, and pay 2200 a month. I sometimes feel like i want to own, thanks to pregnancy hormones. But i’m happy, debt free, and i don’t have to pay an 800 a month strata fee.

Reading this blog gets me through the hard nights when i want to pull up mls and buy a house in vancouver. Thank-you garth for saving us lots of money.

Now if you could only write an anti-designer hand bag blog my husband would really owe you.

Thanks again.

#21 Nostradamus Le Mad Vlad on 04.09.11 at 12:44 am


“American government shutdown” — Has supposedly been canceled due to a lack of arguments. It can be resurrected, ‘tho.

“. . . this is a dangerous time.” — In more ways than one.

“. . . to wonder what happens if Japan and China stop buying US bonds.” — Or cashing them in, esp. Japan to rebuild and China to pay for more food, rare earth companies and RE in North America.

If they do it in unison, Bernanke doesn’t have enough presses to cover QE2 / 3 / 4, etc.
*
Seems Obama and Congress have come to play Let’s Make A Deal. Inflation is like pixie dust. Now you see it, now you don’t.

To mess things up further . . . “Could Donald Trump expose Soros’ and Obama’s most recent Systematic Corruption to Americans?” Distractions Methinks there is far more to a possible US govt. shutdown than is being let on. Possible the NMF could be targeted by HAARP.

15:15 clip Interesting clip. Speaks of the real time US$ tanking, silver (better than gold) and a host of other stuff. 5:15 clip Update on Florida RE.

Silver Q&A. At one time, it was US$4.75; today it ended around US$41. Nice gain!

UK debt per family. Bloody madness. Ireland and Greece are bailed out and, in turn these two must bail out Portugal. Who wins? Subsequently, the EU raises rates.

Radioactive Ocean Seems China and Russia are peeved, but what can they do? Easy to understand why China now has its own HAARP. Cooperation This may help.

Iran has always been the target, so it doesn’t take a high IQ to figure out who is behind this.

Bullion Bank Trading and Single World Currency?

Health Supplements “According to SOS Canada, “Health Canada will have quietly eliminated 75% of Natural Health Products by 12/2011”. The SOS motto is “Suspend and Review”.

53:01 clip Rich boomers and 5:22 clip The Rain In Spain falls mainly down sinkholes.

#22 Cato on 04.09.11 at 12:46 am

We’ve crossed the rubicon, no-one is getting out of this unscathed. At some point the sword falls and everybody cries.

The political circus going on in Washington is just a prelude to the main event yet to come. Spending cuts being proposed are a pittance of what is required to quell the unease building in the bond markets. Austerity isn’t really going to be a choice, one way or another its coming.

Can’t fight human nature, things could have gone down differently but after all the excess the darwinian outcome might be all thats left. Good reason for 30 somethings to be liquid and not tied to a house. The ability to move to a stronger career, stronger city or even stronger country might be difference between financial death or survival.

Tea party aren’t all yahoos but most of em a pretty rough around the edges. Its less a political movement and more a grass roots revolt. “The spirit of resistance to government is so valuable on certain occasions, that I wish it to be always kept alive. It will often be exercised when wrong, but better so than not to be exercised at all.” Thomas Jefferson

A little revolution now and then isn’t a bad thing.

http://www.youtube.com/watch?v=OLD6VChcWCE

#23 Brock on 04.09.11 at 12:50 am

Harper Conservatives are on a spending spree! when the world economy tanks again how will Canada handle all these Harper election promises that are to take effect in 5 years time!

Garth is a fan of REIT’s and they sound good but they don’t have Leverage. So you make 15% a year on them but how much money are you investing in terms of capital? With a house you can have huge leverage at a low interest rate. Even if your house/condo only goes up 8% that is a lot of money on 400,000 or more vs. 15% on 20,000 & monthly payments. Naturally, you don’t want to buy real estate before the bubble, but real estate has the advantage of LEVERAGE at a low interest rate and principal resident tax free advantage. If you could get the same leverage with stocks/reit’s/etf’s then I would say they were the way to go but you can’t.

If you buy relatively low and hold your real estate investment. I would think that real estate is the BEST investment you can make.

#24 Mr. Reality on 04.09.11 at 12:56 am

Funny thing Garth. Me and few buddies just talked about April 6th feeling like a TSX and S&P 500 top and shorted accordingly…….The data pointing towards a broad global economic correction in the near future is too solid to argue. Bring on the change.

Mr. R.

#25 nonplused on 04.09.11 at 12:58 am

Well my portfolio isn’t nearly as diversified as Garth’s, but it was once. Now all I have left is cash, energy stocks, and an uncomfortably large amount of gold related equities. It didn’t start out that way, but I’d bought a slightly overweight position (a little over 10%) back when it was less than $800. My weighted purchase price is probably around $600. It grew outsized on it’s own and I am thinking of lightening up by half so the remainder doesn’t owe me anything.

I don’t think I have done 11% so far this year but not far behind.

Sooner or later I will have to redeploy the funds, but everything looks expensive right now. I am not sure inflation or hyperinflation will be sustained presently, because even though Ben’s flying the helicopter, all the money drops seem to be landing in China or the Middle East. Other than inflating the stock market, it isn’t doing $hite here. If China or Japan decides to sell US bonds and buy tangible assets, that only means more stock market hyperbole, not necessarily wage increases in North American.

Friends just sold their house, so they are still moving. Had to back off a little over 10% from list to get it done though.

I think the next big trade is same as the last one. Oil at these prices causes a pull back in consumer spending and debt servicing, and then the banking system implodes again. Only this time rates can’t really be lowered and the bailouts have already been done. What should happen (not saying it will) is a mother of a deflationary event in asset values while rates go crazy up to deal with the inflation in commodities. That’s what should happen, not necessarily what will. The central banksters are going to try for new highs in stocks (to create a “wealth effect”), and couldn’t care less if commodities continue to run. But this is the second time they have tried to gun stocks past the 2000 highs. I don’t think they will go through. Rising commodity prices have the habit of taking the fun out of everything.

We’ve already had a “double top”, and it’s a decade long chart formation. This is where technical analysis comes in handy. The “dead cat bounce” we are currently in was, in hindsight, pretty predictable. It happens after every crash and it was over sold. But the next time the S&P is anywhere near the 2000 or 2008 highs, anyone who still has stocks and is 10 years or less from retirement is going to be selling on mass. They won’t all get through the doors at the same time. This time the sell off will be more gradual, it won’t look like a crash just a long painful decline, and there won’t be a “bounce” afterwards.

#26 JB on 04.09.11 at 1:01 am

Have always been curious Garth, never ask though for fear of thinking less of you…. Please tell me is the Hummer is at least an H1..

Love the pic, kinda reminds me of my lady friend… You try telling ‘those’ “hold on hun, these prices can not be sustained”….

#27 tmg on 04.09.11 at 1:24 am

So, my daughter and I were sitting in a Tim Hortin’s in Vancouver this week. At the table next to us are three Asian kids, around 20 years old, and they’re talking about their Beemers and how they get a new one every 3 years. Then they started laughingabout the Canadian kids who drove “crappy” cars because their parents had stupid jobs like teaching and nursing, so couldn’t afford the Beemer. Then they went on about how good they were at cheating on exams and papers at UBC…really disgusting. My parents are immigrants…but not that kind. Welcome to Vancouver.

#28 T.O. Bubble Boy on 04.09.11 at 1:52 am

Hey Garth, I wouldn’t advertise that 11% return. In the current environment the only people who are going to drool over that are people who stuff money under their beds.

Just sayin.

#29 dd on 04.09.11 at 2:01 am

There’s a very good chance oil is going to $120,…

It is already there on the Brent.

#30 dd on 04.09.11 at 2:06 am

…and the government stimulus helping to support them will end…

It might stop for a couple months, maybe six, and then it will restart. But if you predict it will end you will be dead wrong. $1.6 trillion deficit … who is going to buy it. Hell even Rosenberg caved on this 10 days ago and said the fed will be THE buyer.

Q: What is inflation? It is not higer prices. This is the result of it.

#31 dd on 04.09.11 at 2:08 am

….the greatest threat the middle class faces is a drop in real estate values….

AND price inflation.

#32 dd on 04.09.11 at 2:11 am

Gold is about debt. Period.

#33 betamax on 04.09.11 at 3:47 am

That kid’s expression is hilarious. You just know he’s praying for a wardrobe malfunction.

#34 Moneta on 04.09.11 at 7:31 am

I was starting to feel I was a loser in this rented home/farm but hey, I’m sure my kid’s friends parents are feeling lots of pain both having to go to work in the morning and probably being way over their heads in debt.
——–
When my husband and I bought our first house, at all time referendum lows in 1995, we had a *gasp* 100K mortgage at 8.45% and had trouble making ends meet (we were saving at least 10% in RRSPs) yet we had very good paying jobs. Every few months something would break and empty our slush fund, then we had kids. Every house we visited seemed to be break ups. Couples 5 year older than us who bought circa 1990. I felt like a vulture and just plain lucky to have turned 25 at the trough in the real estate market.

Today, when I bike or jog, I go through these new McMansion neighborhoods (400K+) all I see are 35 year old mothers pushing strollers and I get a knot in the pit of my stomach just thinking about their bedtime conversations. I really feel bad for the young.

Or maybe they are completely oblivious and they just don’t worry like I do.

#35 T.O. Bubble Boy on 04.09.11 at 8:06 am

#28 T.O. Bubble Boy is TROLLING AGAIN
(from the original)

#36 Cow Man on 04.09.11 at 8:07 am

From our view, Canada does not have a “conservative” political party, just different levels of party promoted socialism. All funded by debt! If our budgets were surpluses, liberalism would be wonderful. All we are doing is piling debt onto our children not yet born.

#37 Moneta on 04.09.11 at 8:14 am

It’s not out of the question that stocks could correct, even more likely if there is no more quantitative easing and interest rates come back to a more normal range
————–
I’m convinced there will be another crash. This upswing is unprecented in history. I have never seen such big and quick price moves without some profit taking or retracement.

When the market tanks agian, our leaders will go all out because events will give them the permission to do it.

And by the way, there are a few ways of getting money into the system. It’s not because they say QE is finished that they are not printing. Deficits imply money printing.

#38 realist on 04.09.11 at 8:24 am

If the real estate market “corrects” by 15% and mortgage rates rise by 50%, how is it possible to be further ahead by waiting to buy?

Less debt. I thought you were smart enough to figure that one out. — Garth

#39 Herb on 04.09.11 at 8:35 am

How about an easy, verifiable saw-off between current Left and Right ideologies?

Is this fact or fiction?
http://www.truthdig.com/report/item/this_is_what_resistance_looks_like_20110403/

#40 Moneta on 04.09.11 at 8:41 am

Let’s look at some back of the envelope numbers:

MLS listings (I tried to get a snapshot of the metro areas):

Montreal:
20,100 listings. Population 3.5M.
1.6% of households have a sign in front of their house.

Toronto:
11,700 listings. Population 5.5M
0.6% of hh have a sign.

Calgary:
6,600 listings. Population 1M
1.85% of hh have a sign.

Ottawa:
4,500 listings. Population 1M
1.26% of hh have a sign.

Vancouver:
15,000 listings. Population 600K
7% of households have a sign.

#41 Moneta on 04.09.11 at 8:44 am

Vancouver:
15,000 listings. Population 600K
7% of households have a sign.
———-
If China is taking over, at 7%, that means in 10 years there won’t be any natives left.

LOL!

#42 confessions of a real estate bear on 04.09.11 at 8:51 am

Hi i am a bear whao got a great deal in 93 on a farm and am now waiting patiently in cash to buy a cottage in southern ontario. I have been reading blogs on real estate and investment for a few years. I am starting to think the real long term problem with our economy is that we simply arent productive enough. People seem content with owning other peoples productive capacity and not concerned with producing something tangible themselves. I think that we are expecting to little production to support to much ownership.

#43 Barry in Pickering on 04.09.11 at 9:05 am

11% “annualized” return? That means your up what, 2.7% for the year? Many stocks move more than that in 5 minutes.

I need more crayons on this blog. I do not invest in stocks, because of market risk. I do not buy equity mutual funds, because of lacklustre performance and excessive cost. The goal is a steady, predicable return in a portfolio which has growth with a paucity of volatility. Of course a stock can move 3% in a day – up or down. For most people, being invested for a year-after-year return of 9-11% is a worthy goal, doubling your assets every few years. If it can be done without worrying about what the TSX did on Friday, bonus. — Garth

#44 Jas on 04.09.11 at 9:12 am

@ #18

I am an immigrant myself and I really despise those immigrants who come to exploit the system and not integrate themselves in this country. They are the greatest of all fools. And those Tamil kids that associate with “the motherland” should go live in their motherland then. What a bunch of morons. Seriously. Do not delete this Garth. Lol.

#45 Moneta on 04.09.11 at 9:13 am

MikeT on 04.08.11 at 10:53 pm
—–
Some thoughts on getting an edge.

I don’t believe in the self made person. I believe luck has more to do with it than anything else. I don’t think life is only about survival of the fittest as much as being at the right place at the right time with the right package for the times. Just like one bug gets sprayed while the other one, out of harm’s way, gets to reproduce.

Enough weird things have happened in my life to make me realize that split second decisions and events out of one’s control could change the course of one’s life. But with humans, especially in the Western world, this does not fly. We want to believe we are in control. And when things get out of control, it can’t be us, we find scapegoats and keep our delusions of grandeur.

When I was in my 20s, I read an article that explained that the higher a person’s net worth, the more this person thought luck had nothing to do with their success. The lower the net worth, the more people believed in bad luck.

Not long ago, I read an article on depression. For a long time it has been thought that depressed people undestimate their capabilities when the opposite has been shown. Depressed people tend to be bang on.

Happy and rich people are deluded!

#46 Love this Blog on 04.09.11 at 9:17 am

Here is a first hand account of things in “rosy Sask”

Many of us here, look around us at people 10 years younger than us, working at jobs that pay less than us and living FAR more lavishly than us, and wonder “what is going on?”

Well, I had some confirmation the tide is turning yesterday. My Father runs a document serving business. He went a few days ago to serve someone, but the house was abandoned. My Dad phoned the Law Firm the documents were being served for, and got chatting with a lady there. She said , in 40 years of working at the Law firm,
she had NEVER seen foreclosures at the rate she is seeing now, and that it is accelerating! She said the Law firm has had to hire extra help to assist her on foreclosures alone! She has seen pictures the Lawyers have taken, where people seemed to vanish off the face of the earth….their homes are as if they walked out for lunch, and never came back. Dishes in the cupboards, furniture, clothing. They just walked away. Left anything that may remind them of the bad memories and their folly, I suppose. It hasn’t been easy being responsible and trying to live debt free. But watching the “look at me, how much I have, and how well I am doing” crowd fall on their face is going to make me feel VERY good indeed.

So, take heart my money conscious, responsible friends. The bargains may be just around the corner.

#47 Ralph Cramdown on 04.09.11 at 9:29 am

Garth is a fan of REIT’s and they sound good but they don’t have Leverage.

If you read their balance sheets and they have something called “long term debt” then they have leverage. If you fund 30% of the purchase price with cash and borrow the other 70% from your broker then you have leverage. If you borrow the 30% from a bank or put it on your credit card then you have super-maximum-extreme leverage. You can get as much leverage as you think you need.

#48 Dr. WAYNE on 04.09.11 at 9:44 am

They say that owning a Hummer is tantamount to sprinting full speed into a brick wall with an erection and only breaking your nose.

#49 SMOKING MAN on 04.09.11 at 9:53 am

Garth let me school you, your statement

“Dramatically higher energy costs (I almost regret owning a Hummer) are causing food to explode in price and leading to inflation high enough that rising interest rates are an inevitability.”

Is Dead Wrong.

Central banks don’t give a flying hoot about price inflation, their eye is always on wage inflation. You only get wage inflation when the labour pool shrinks, in other words unless there is a massive new jobs created, rates anit going no where.

Been following this pattern since the days of John Crow. If you build a chart and add three lines, Interst Rates, Price Inflation, and Jobs, you will magically discover that rates raise and fall trailing the JOB numbers and not price inflation.

Jeez O

Is dead wrong. Rising input costs breed wage and price inflation, destroy fiscal policy initiatives and lead to inflation expectation, even with a 7.7% jobless rate. Rates will rise over the coming months. — Garth

#50 realist on 04.09.11 at 10:09 am

Here’s a staggering statistic from RealNet. The number of new homes sold in the GTA in February was 21% of the number of new homes sold in the entire U.S.A. !

#51 not 1st on 04.09.11 at 10:14 am

If you are in the U.S. stock market, you are in for a world of hurt. Here is the breakdown of our southern neighbors finances as analyzed like a company. As I said before, they are beyond insolvent.

http://www.businessinsider.com/why-the-us-is-screwed-2011-2

But, ironically, no federal US debt will default and no insolvency take place. — Garth

#52 Neo on 04.09.11 at 10:16 am

I would pay more attention to the labour participation rate and long term unemployed numbers more than the official 8.8% being thrown out as a barometer of the health of the labour market. Participation levels are the worse they have been in 30-40 years. Meaning the headline number is being manipulated errrr falling due to that. Workers leaving the workforce is great for the the U3 unemployment number but not good for the overall economic recovery. The long term unemployed just shows how structural the unemployment levels are. If Obama can just discourage another 5 million more workers we will be right back to 5-6% unemployment. *sarcasm*.I’m not even going to get into the birth death model being the sham that it is.

#53 Utopia on 04.09.11 at 10:23 am

The origin of the term “Eye Candy”

I created it in 1976. I am not making this up. Right around that time there was another term in popular use in Vancouver and it was of course Nose-Candy (you can guess).

Anyway, I called a Vancouver radio station with comments about some song album or another (we actually used to do that in the old days) and I talked to the host on-air and coined Eye-candy on the spot to describe a singer. It caught on right away.

I think the radio host was Sterling Faux actually. He used to host CFOX radio in those days. The FOX man!

And that is where the term came from (you don’t have to believe one single word of this if you don’t want to but it is a true story if only a miniscule claim to fame)

#54 Moneta on 04.09.11 at 10:24 am

Is dead wrong. Rising input costs breed wage and price inflation, destroy fiscal policy initiatives and lead to inflation expectation, even with a 7.7% jobless rate. Rates will rise over the coming months. — Garth
——
History has shown that you can get price inflation without wage inflation. It’s called a drop in living standards.

Just look to South America for such examples.

#55 Moneta on 04.09.11 at 10:26 am

As I said before, they are beyond insolvent.

——
Only if you can’t imagine inflation pushing up GDP.

#56 Nemesis on 04.09.11 at 10:29 am

“About the only thing 2011 lacks so far is a plague of locusts.”… Hon. GT

Locusts are so ‘last year’, GT…

[SundayTimes] – Australia faces huge locust plague

“Farmers across the Australian Outback have been warned of a potential explosion of locusts in the coming months, after a plague of millions of the grasshopper-like insects swept across four states earlier this month.”…

http://tinyurl.com/y64z7ay

En fait, les Rats énormes sont en cours…

[BBCAsiaPacific] – Australian Rats Scurry to Desert En Masse

”Some of them get up to about 30cm [12in] long – fair lump of a rat,” livestock manager Chris Giles said. “They will run around and hide under a little bit of shrub there, and you can get pretty close to them,” Mr Giles, a stockman on the Northern Territory’s Lake Nash Station, told Australia’s ABC News…

Peter McDonald, acting scientist with Northern Territory Biodiversity Conservation, also pointed out that they were unlikely to stay put in the country’s “Red Centre”… “It’s not really ideal for them,” he said. “The chances are they are just moving through and they won’t set up camp or be too much of a nuisance.” …

http://tinyurl.com/3zs9bl8

#57 Moneta on 04.09.11 at 10:33 am

As I said before, they are beyond insolvent.
——
Only if you can’t imagine inflation pushing up GDP
====================
Over th next decade, my bet is that there will be many crashes.

In periods of calm, they will talk of austerity but every now and then there will be a shock which will give our leaders permission to print.

The Shock Doctrice as Naomi Klein called it, probaby too early and now forgotten.

#58 Solitario on 04.09.11 at 10:36 am

While Garth is bragging about his 11% portfolio gain,
the gas price for his Hummer is up by 40%.
And John is screwed. He’s got $115k in cash. That was good for 3000 barrels of oil 3 years ago. Worth about 1000 barrels today. And quite a bit less a year from now. The chinese buyer understood. Garth and John just aren’t getting it…

My Hummer runs on spit. Slightly modified. — Garth

#59 SRV ES339 on 04.09.11 at 10:38 am

Garth, you’ve been bashing gold & silver for years now, and they haven’t stopped out-performing just about every investment known to man… intransigence can get you seriously stuck in the mud (even gas guzzling Hummer fans).

Of course I’m ‘all in’ on your R/E position… had a chance to give my local PC candidate an ear full on that subject this week in a door to door… I’m thinkin’ they won’t be back this way soon…lol!

Of course I have not bashed PMs. Read my books – they advocate a position. The fools are those who are grossly overweight (just like RE). — Garth

#60 realist on 04.09.11 at 10:54 am

“Less debt. I thought you were smart enough to figure that one out.” — Garth

You are assuming that people are debt averse, when in fact they are primarily concerned with monthly payments. Besides, if less debt takes just as long to pay off as more debt, there is little practical difference.

Didn’t your mom teach you about amortization? — Garth

#61 S.B. on 04.09.11 at 11:04 am

There is some chatter about a surprise FED interest rake hike afterhours soon. Greenspan pulled this trick in the past, on a Sunday night if I recall.

#62 CalgaryRocks on 04.09.11 at 11:07 am

#45 Moneta on 04.09.11 at 9:13 am
MikeT on 04.08.11 at 10:53 pm
—–
Some thoughts on getting an edge.

I don’t believe in the self made person. I believe luck has more to do with it than anything else.

Moneta. Luck is when PREPARATION meets OPPORTUNITY. A cliche sure, but yet so true.

Yes things change and bad luck happens but really all we can do is make a somewhat smart plan based on the information we have now, manage it as new information comes in and hope that everything else lines up.

Everyone has tons of great ideas but most don’t believe in them strong enough to act (PREPARATION) and therefore never encounter the ‘luck’ (OPPORTUNITY)

What else are we supposed to do? Give up on life and sit home, in fear of a car accident, a disease or some other horrible thing that we have no control over?

No offense but the stuff you’ve been reading kinda sounds like bullshit for people that want to justify why they are too lazy to try anything new.

A good thing people like Lance Armstrong wasn’t reading this stuff.

#63 Utopia on 04.09.11 at 11:13 am

#45 Moneta

“Not long ago, I read an article on depression. For a long time it has been thought that depressed people undestimated their capabilities when the opposite has been shown [to be true]. Depressed people tend to be bang on.

Happy and rich people are deluded”!
———————————————————-

An interesting post Moneta. I think we see this in action almost every day too. All of us know the person who fluffs up his/her feathers and brags about how much net worth they have from real estate investment. From the so-called brilliant decisions they have made. They are so proud too!!!

They see themselves as successful because of skill.

It was not skill though that brought prices cresting higher over the past few years. Actually it was not even luck in most cases.

Decisions made by government, cheap interest rates and easy-money policy from our Central banks that resulted in fast appreciation of property values meant that even a moron could profit in this environment.

Granted, some people caught the trend and made some fabulous profits before cashing out. That was brains and not luck though and that group is a credit the human race.

Most others continue to believe their good luck was a result of good decision making processes and planning though which is a big lark really. They merely had the wind at their backs at the right time and bragging just makes them sound stupid in retrospect.

Everyone who bought at a certain time made money. A squirrel with a brain the size of a pea could have made money by dropping a nut on a map and then buying in that place.

The real genius is to get out before it all comes tumbling down (which is an inevitability). Timing is a bitch though. Maybe people who are depressed just have better insights into the end-game and they are depressed for a really good reason.

#64 kc on 04.09.11 at 11:13 am

6 Carp on 04.08.11 at 10:36 pm

“+ I am renting a farm for cheap and got plenty of fun projects this summer.

I was starting to feel I was a loser in this rented home/farm but hey, I’m sure my kid’s friends parents are feeling lots of pain…”

Good on ya! we are in the same boat with renting a farm (40 acres) and have free reign to build/do as please.

I hope your plans are including gardens and fruits. We have rebuilt the greenhouse, planted 25 berry plants (there are 20 mature fruit trees on the property) staked out 1.5 acres for veggy gardens, and plan on getting some slaughter livestock. Fresh eggs everyday too.

There is no way you should be feeling as a (Loser) if you can be self sufficient. Cheers

#65 dd on 04.09.11 at 11:14 am

#51

…But, ironically, no federal US debt will default and no insolvency take place. — Garth…

Sure i will buy that. However there is only ONE way for the US to pay its debt. It is called QE. Inflation. Period.

Bill Gross of Pimco ran the numbers the other day. The US owes $75 Trillion (unfunded liabilities included). Run the numbers: GDP – debt, growth, higher interest rates, etc and the conclusion is the same.

#66 S.B. on 04.09.11 at 11:15 am

New “Victory” condos at 478 KING ST W, TORONTO, the building is not yet completed, but there are 14 red dots on MLS already.

http://www.victorycondos.ca/

#67 Utopia on 04.09.11 at 11:17 am

#59 S.B.

“There is some chatter about a surprise FED interest rake hike afterhours soon. Greenspan pulled this trick in the past, on a Sunday night if I recall”
——————————————————-

Get outa here! Is that true? Where did you see that? Curious minds need to know (quickly).

#68 Form Man on 04.09.11 at 11:25 am

#52 NEO

One way the unemployment numbers are manipulated : In Canada, after one has exhausted one’s EI benefits, it is possible to get another year’s extension. This program ‘teaches’ the long term unemployed how to become self-employed. While still receiving benefits, these folks are not counted as unemployed anymore. They are classed as ‘self employed’. When you read that more folks are becoming self employed fulltime, be sure a large number of them are in this category. I won’t get into the irony of presuming the ‘long term’ unemployed are good candidates for self employment…….

#69 Moneta on 04.09.11 at 11:25 am

No offense but the stuff you’ve been reading kinda sounds like bullshit for people that want to justify why they are too lazy to try anything new.

———-
I don’t agree.

I think I’be been very lucky. But I’m blessed with a lot of energy and will keep on being active because that’s my temperament.

#70 Adventures in Sea-Tac with Moneta on 04.09.11 at 11:32 am

Moneta 40/41

From this source Greater Van has about 13100 residential listings. Greater Van has pop about 2.2M.
Gives maybe 1.8% of hh listed – comparable to your figure for Calgary.

http://www.vancouverhomes2buy.com/marketnews.htm

#71 Mr. Plow on 04.09.11 at 11:32 am

#1 Siddelly

Bwhahahah I hope that was a joke, if not all I have to say is typical of those cheering on a crash.

You live with your wife in her sister’s basement while you await a crash. Wow.

#72 Mr. Plow on 04.09.11 at 11:35 am

#27 tmg

Not welcome to Vancouver, welcome to the world. People are like that everywhere. Not just chinese immigrants, and not just people in Van.

#73 Mr. Plow on 04.09.11 at 11:38 am

Less debt. I thought you were smart enough to figure that one out. — Garth

Yes less debt, but in terms of debt servicing no less likely for a lot of people to buy. i.e., poster number one who is waiting for a crash. He better wait for a US style crash with low prices and low rates otherwise he will be no better off in terms of his monthly costs, it would likely still make sense to rent.

Debt servicing costs rise and fall. Debt does not. Keep your eye on the ball. — Garth

#74 Junius on 04.09.11 at 11:40 am

#9 BrianT,

Don’t confuse a cold March with the fact that overall the world’s climate is warming. Every scientist who studies the phenomenon says that patterns will change abruptly and will not warm gradually. This includes cold spells like we had in March.

In other words, a coldest March on record is consistent with climate change because these changes will be too extremes.

Fortunately most recent polls show you deniers are moving further and further to the minority of opinion.

#75 Mr. Plow on 04.09.11 at 11:42 am

#46 Love this Blog

Please check back in with us in 6 months on how your wait is going.

I prefer real stats to stories about some lady your Dad talked to, and last I checked Alberta led the country in foreclosures and it was less than one percent. The US is someting like 11 percent.

#76 Brad in Van on 04.09.11 at 12:01 pm

At #27: Ohhhhhhhhh yes, TMG. I know exactly what you’re referring to. When my wife and I lived in Seattle, we had run into that kind of mentality all the time, particularly with the younger Chinese in the U.S. They seemed always to feel they were better than those around them who may have less material possessions. And yes, there is a tremendous emphasis within the community with equivilating one’s self-worth with high-dollar material goods. Truth be told, though, it is a defining sign of new money the or nouveau riche, and it is ridiculously tacky and unwarranted.

Your posting strikes close to home in a situation that I had witnessed. It is too funny because my wife and I were sitting in a freaking Tully’s Coffee in Medina (where Bill Gates lives), and this too became a point of discussion between a group of three young Chinese men. However, not only were they discussing their Porsches, Range Rovers, Ferraris and Aston Martins, the little youngsters also were discussing how they were able to cheat the state system and obtain college tuition grants totaling over $170,000 between the three of them. It was simply infuriating to have to listen to this bullshit.

Finally, an East Indian-American overhearing this nonsense got up from his table and approached the little cockroaches. He said the following with an amazing confidence and no apology whatsoever, “Hello there. I’m an executive, working for Microsoft and I am also an American for 13 years who was born 47 years ago in Southern India. I couldn’t help but overhear your discussion as you’re being very rude and speaking loudly. With respect to all your “stupid-American” comments, I would like to point out the following: It is a known fact that anyone with anything to his name is leaving China and coming to the U.S. to become part of a society that allows you conduct your business openly. Perhaps that is why you are here too. Additionally, these “stupid” Americans, as you call them, are over 6 times more productive than the Chinese. I cannot call that stupid on any level. May I ask what YOU’VE done to afford your leisurely lifestyle, nice cars, and ability to do nothing but complain, or is it all money from your mommies and daddies? Or have you become masters of milking our government from OUR money. Speaking of cars, I’ve also taken note of the vehicles you drove in and I’ve recorded your license plates (the cars were pulled directly in front of his window). I will be reporting you to the State, letting them know I personally overheard your discussion about how you defrauded the state and tax payers of tuition funds. They can deal with you. The only thing funny here today is the stupidity you’ve demonstrated in front of the hands of those who have been so good to you. There will be consequences for you to pay. Now, please leave. One last thing – if you don’t like being here with all of us “stupid Americans,” you can leave the U.S. too. We certainly won’t miss your laziness, thievery and lies. You are only bringing us down.”

The kids (I say kids, but they were probably early twenties) immediately got up and walked out without saying a single word! Everyone in Tully’s started laughing at them as they were walking out. It was one of the better moments in my life to have witnessed such immediate justice and scolding for such ill behavior.

#77 realist on 04.09.11 at 12:06 pm

Didn’t your mom teach you about amortization? — Garth
_____________________________________________

Amortization is exactly what I was talking about.

A $300,000 mortgage @ 3% has about the same monthly payments as a $245,000 mortgage @ 5%; and they both take 25 years to pay off.

There is very little ‘practical’ difference. People who wait two years to buy will be in exactly the same financial position as not waiting, if not worse, for they will have squandered two years off their amortization schedule.

You missed it again. Sigh. I thought you were a worthy opponent. — Garth

#78 Sue on 04.09.11 at 12:12 pm

Living in a basement apartment and saving o’tonne’o’dough while awaiting a crash is very smart in my opinion. Some basement apts are friggen nice…have you seen Income Property? :)

#79 xyz on 04.09.11 at 12:19 pm

Can’t wait till we start bidding the prices on these puppies up into the stratosphere… A city with thousands of empty condos and houses… And we are putting our poor into Tuna cans… Great planning!

http://m.theglobeandmail.com/news/national/british-columbia/vancouver-mulls-container-based-housing/article1964250/?service=mobile

#80 TheFirstRick on 04.09.11 at 12:20 pm

#6 Carp on 04.08.11 at 10:36 pm

^^^^^^^^^

Grow-op

#81 MikeT on 04.09.11 at 12:25 pm

@45 Moneta:
Thanks for your opinion, Moneta. Appreciate your posts and duly noted your response to my post above.
First of all, I do not consider myself rich. I am debt-free, own RE (a condo – paid off), which is half my net worth and the other half is invested in real businesses.
Second, in 2005 I came to TO with a suitcase of clothes and an MBA in finance. That was all I had. Oh yeah, I also had about 8k USD in debt because my wife was preparing her couture collection for her graduation fashion show (she has an MSc in fashion design). No money from parents or other sources… I started not from zero, but from negative net worth. This dire situation kept my eyes and ears open to any opportunities coming my way. I doubled my salary in 2 years of being here and changed 5 jobs. I had bouts of depression and desperation when I was not able to find a job back in 2005 when I arrived here, so I kinda know what “bitter” means. Not that I expected someone to hand me a job offer on a silver platter, but I wasn’t feeling that comfortable when I was applying to kitchen-help jobs in restaurants in Toronto, having an MBA with a 4.0 GPA and experience as a hedge fund trader under my belt. Yes, I fell that low, but I am back up and higher than ever and keep going up. If this looks like luck to you, then sorry, we may think differently.
Third, I am the luckiest guy in the world because I have a wife who I love and who loves me back and because I have 2 wonderful kids. Just that is enough to make me lucky. So yes, I feel lucky, but not because of “stuff”, but because of love.
Ok, off I go to prepare for my CFA exam. Cheers!

#82 Love this Blog on 04.09.11 at 12:34 pm

#75 Mr. Plow,
Is there a way I could keep everyone posted, BUT you? That would suit me better.

#83 BrianT on 04.09.11 at 12:46 pm

#55-Moneta-recent analysis has shown that 100% of the growth in US GDP over the last few yrs is from guv spending. This is why tax revenue is a problem-the actual economy is shrinking, not growing. The inflation method of growing GDP just continues this trend to the ultimate conclusion-Detroit is the worst case scenario.

#84 Barry in Pickering on 04.09.11 at 12:52 pm

Be careful with REITS. Current average cash yield on multi-res (apartment) REITS is 4.5% – extremely low. If rates rise, REITS will fall hard, remember that they have risen 70% in the last 2 years, and could just as easily fall that far if interest rates rise (independent of a RE collapse).
You are buying something with the risk profile of a long term bond.

Hardly. Cash flow is constant and yields do not fall as rates rise. Additionally, talking about REITs as if all were the same is like saying all stocks are identical. A trite generalization. — Garth

#85 The American on 04.09.11 at 12:54 pm

At #40: Moneta, I like your stats. Stats make me a happy man. With respect to your Vancouver listings stats, you are correct at about 15,000 listings for Vancouver metro area. So, it would actually include the entire surrounding population, or 2,116,600 people, not just the 600,000 Vancouver proper. Of course, this doesn’t include the developer inventory hold back that hasn’t been placed on the market yet, often accounting for another 40% of what isn’t seen in way of listings.

Putting that into perspective, though. Seattle metro has 3,407,900 residents, currently with only about 5,000 (not even that many) listings on the market. So, Seattle metroplex is 62% larger than Vancouver, yet Seattle has only 33% of the total inventory of Vancouver. This already isn’t spelling good things. At the end of the day, supply/demand and rate environment are the fundamentals that returns a market to the mean – not emotions. This is proven time and time again.

Once the numbers are crunched ,this demonstrates that Vancouver has 483% of the inventory currently on the market over Seattle as a percentage of the population, not including any developer hold back. That’s nearly five times that of Seattle. That’s quite a hefty load of inventory needing to be moved/sold for Vancouver for such a “healthy” market LOL. I smell a rat… Statistical data being fed to Canadians from the CREA is bullshit, and the NAR are backing this notion (actually, its already been proven the CREA is significantly skewing data and cherry picking numbers, misguiding and lying to consumers) Oh yes, I understand that Chinese are moving to Vancouver and buying up property, but more people immigrate to Seattle every year than to Vancouver, so that argument of population influx into Vancouver to snatch up excess inventory goes right out the window.

This is horrible news. As they say, Vancouver will be the Miami of Canada. Numbers don’t lie – only the CREA and media.

#86 BrianT on 04.09.11 at 12:58 pm

#45Moneta-IMHO that article on depressed persons is way off the mark. The thing is, depressed persons often have zero insight into human life on planet earth-most of them have no idea how many other humans would literally do anything to trade places with them. You take any “depressed” 25 yr old Canadian-all they have to do is walk into any nursing home and tell the inmates how depressed they are-the inmates (the ones that have a functioning mind) will shout at them-WTF??? I would trade places with you in a heartbeat.

#87 BrianT on 04.09.11 at 1:04 pm

#81Mike-Make sure you keep us all informed of your daily triumphs-it is very important to us.

#88 April on 04.09.11 at 1:21 pm

CKNW am news april 9. Several city owned properties in Van and one in Toronto, one condo tower, have lost value “under water”.

Michael Campbell CKNW this morning, criticism of Globe and Mail editorial describing “Liberals” as ” prudent and pragmatic” when their not even discussing the real issues that are in our face now. Gullible media not reporting the reality of Canadian economy . Garth has written many times on the shoddy media reporting so most bloggers here will not be surprised.

#89 S.B. on 04.09.11 at 1:21 pm

This way of life is coming to Canada, too.
Our crazed field marshalls and Glorious Leaders of the Motherland are sending all our money into overseas war projects. War is a business and business is good.

Militarized Economy Cannot Balance the Budget
By John Perkins

April 08, 2011 “Information Clearing House” — While we send our love and support to those so horribly impacted by the earthquake and tsunami, we must not allow this shock to divert us from the tsunami headed our way. Our business and political leaders will try to use this terrible catastrophe as a diversion to hoodwink us into budgetary reductions that will fatten their wallets and leave us and our children devastated.

It does not matter on what side of the political fence you sit during the current budget debates. The fact is that if our leaders are not willing to take into account our over-dependence on a militarized economy and change it, we will never balance the budget. Our progeny will face an endless struggle to clean up the debris.

Each year the Department of Defense’s tidal wave grows more menacing. We witness countless billions allocated for weapons research and development; nuclear warheads; and the secret and often illegal activities of the CIA, NSA, FBI, Homeland Security, and other “intelligence” agencies. We watch countries that are caught up in natural disasters and political upheavals and see how this “crisis elixir” attracts and profits predatory capitalists. Turmoil in foreign lands encourages U.S. hawks to party on at their military orgies. They stagger out to launch campaigns into new areas of conflict.

And they have the gall to do this under the guise of promoting democracy.

It is time for us to tell them that they are exposed, that we comprehend that what they are really doing is reaping huge profits and making other nations their financial servants for generations to come. Meanwhile, at home, we face severe cutbacks in social services, transportation, health care, the environmental and educational sectors, and other civil services.

#90 T.O. Bubble Boy on 04.09.11 at 1:36 pm

@ #77 realist:

A $300,000 mortgage @ 3% has about the same monthly payments as a $245,000 mortgage @ 5%; and they both take 25 years to pay off.

The point is, unless you have a 25-year term, this is meaningless. With the typical Canadian mortgage resetting every 5 years, a calculation spanning 25 is inaccurate.

The point Garth is making: that $300,000 mortgage would take just about 7 years @ 3% to become a $245,000 mortgage… after 7 years @ 5%, the $245k mortgage is down around $200,000. So, you’re still $45,000 behind.

Also, since the mortgage would be renewed probably at the 5 year mark, you will already on that higher 5% rate. Any argument that says “if you wait 2 years, you’ll be on a higher mortgage rate” is ignoring that in 5 years, virtually everyone will be on that same rate.

#91 realist on 04.09.11 at 1:38 pm

You missed it again. Sigh. I thought you were a worthy opponent. — Garth
_____________________________________________

While debt service fluctuates over time with prevailing interest rates, it will likely be within a much higher bandwidth than the historical lows that we are currently experiencing.

Market timing is a tricky business. What if prices merely flatline, or (gasp!) continue to rise despite interest rate hikes – as we’ve recently experienced in the GTA?

P.S. Almost being a worthy opponent of the ‘Great Garth’ is high praise and I shall choose, for the sake of ego, to take it as a compliment.

#92 S.B. on 04.09.11 at 1:46 pm

#67 Utopia on 04.09.11 at 11:17 am

I’ve followed an online trading forum for many years now, and there is one trader & very savvy businessman (construction, housing, properties) in the USA with 40-50 years experience in both. He also worked as a risk manager for a huge financial firm at one time and he maintains many contacts in the industry and with other traders. When he says something I take note. He is quite connected and experienced, kind of like our own G-man up here, and not prone to any hyperbole at all.

I notice bonds (such as TLT, a 20-yr bond ETF in the States), continued to sell off , even more sharply within the past 3 days, so perhaps someone is indeed expecting a rate hike? Or would short term bonds experience a greater move in this situation? Not sure. I guess this is why bond investing is best done in professional hands. :)

Much money is moving from the bond market to equities to chase returns. Hence, bond prices fall and yields rise. Don’t read much more into it than that. — Garth

#93 Barry in Pickering on 04.09.11 at 2:04 pm

Garth said: [REITS] Cash flow is constant and yields do not fall as rates rise.
===============
Of course, but the share price that the REIT is selling at will fall dramatically.

For example, a typical $10 Canadian appartment REIT yields 4.5%, for a $.45 annual dividend. Wonderful. But let interest rates rise 2.5% and new buyers will not pay $10 for a 4.5% dividend. They will want a yield of about 4.5+2.5=7% to take that REIT off your hands.
Since, (as you have stated above) the REIT cash flow is CONSTANT, the new buyer will only pay $6.43 to get a 7% yield (7% x 6.43 = $.45). You’ve just suffered a HUGE (albeit unrealized) capital loss. And there’s no “wait until maturity and I’ll be even”. You’re just the chump who bought a REIT before rates started to rise.

REITS share prices are ** inversely ** correlated with interest rates – just like a long-term bond.

– Rates Up –> REITS share price down.
– Rates Down —> REITS share price up (we’ve seen this over the last few years)

#94 not asian on 04.09.11 at 2:19 pm

#27 – I have also witnessed many chinese students cheating on exams, etc. The score at C- during regular term, then coming back with an A after an online course.

It makes me sick. Are these our future doctors?

#95 Devore on 04.09.11 at 2:40 pm

#39 Herb

How about an easy, verifiable saw-off between current Left and Right ideologies?

Both the left and right ideologies are a joke. Keep cheering on your team though, maybe you’ll get some scraps.

#96 wetcoaster on 04.09.11 at 2:44 pm

#88 April,

I wouldn’t mention Michael Campbell here in the same context of criticizing media honesty on Garth’s blog. Michael Campbell doesn’t allow Garth on his show to speak the honest reality of the Canadian real estate world so who the f–k is he (pardon my francois) for complaining about dishonest media ? He has his head stuck so far up his ass his eyes can see his vocal chords flapping his latest Ozzie Jurrock hot deal. Biggest hypocrite on the airwaves bar none.

#97 TheBigLebowski on 04.09.11 at 2:47 pm

phase two of this 11 year secular bull market is now entering a new stage. Inflation is rearing its head and about to push bond yields higher hence prices lower. Money will flow from bonds into inflation protection assets. As in the 70’s money flows from bonds towards precious metals and commodities. The bond market is 10x larger than the equity market so its like trying to jet a fire hose through the eye of a needle. As interest rates rises ,gold/silver rise along with it. As long as inflation outpaces interest rates, there is a negative return to holding cash so bonds fall. It will be years before interest rates catch inflation so this bull market is far from over. Study history and a person will know where they should be invested . But the average person won’t take notice until stage 3 of this 4 or 5 stage bull market takes hold.

#98 not 1st on 04.09.11 at 2:47 pm

But, ironically, no federal US debt will default and no insolvency take place. — Garth

_____________

There are many ways to default on the debt. Hyperinflation is one way, debasing the dollar is another, raising the federal debt ceiling in May constitutes the same thing.

Like I said before, nobody can pay back 100+ trillion in debt without some serious pain that our american friends are not willing to take. Yes thats 100 trillion, see the U.S. debt clock for proof:

http://www.usdebtclock.org/

#99 MikeT on 04.09.11 at 3:17 pm

@87 BrianT:
I just explained my point to a blog reader that I highly respect. I may have given too many details, but at least I did it without being a prick ;)

#100 Mr. Plow on 04.09.11 at 3:36 pm

Debt servicing costs rise and fall. Debt does not. Keep your eye on the ball. — Garth

Thanks for patronizing me Garth, but all I was getting at was that folks like poster number 1 are going to be waiting regardless.

God forbid someone disagree.

You patronize easily. — Garth

#101 Mr. Plow on 04.09.11 at 3:42 pm

#82 Love this Blog

I just think some story from a lady that your Dad ran into doesn’t constitute hard facts. Maybe her cats were bringing her down when your Dad spoke to her, or maybe she was bitter that coach Ken can’t win the big game, or maybe her boss just reamed her out for being lazy, maybe she likes to take 2 hour lunches and 2 smoke breaks a day and is not that productive.

Or just maybe, foreclosures were so non-existent to begin with that any increase will cause her to have to work harder and thus complain. That doesn’t mean the sky is falling out in Regina. It just means more people are foreclosing, doesn’t make it a trend. People foreclose all of the time, it is not always related to market conditions.

But like I said, keep the updates coming I have no problem admitting when I am wrong.

#102 Icedpee on 04.09.11 at 4:44 pm

REITs have provided poor returns YTD compared to other assets (well, except when compared to cash).

Poor renters holding REITs.

That is a false statement. — Garth

#103 Neo on 04.09.11 at 4:57 pm

#68 Form Man on 04.09.11 at 11:25 am
#52 NEO

One way the unemployment numbers are manipulated : In Canada, after one has exhausted one’s EI benefits, it is possible to get another year’s extension. This program ‘teaches’ the long term unemployed how to become self-employed. While still receiving benefits, these folks are not counted as unemployed anymore. They are classed as ‘self employed’. When you read that more folks are becoming self employed fulltime, be sure a large number of them are in this category. I won’t get into the irony of presuming the ‘long term’ unemployed are good candidates for self employment…….

********************************************

I would even take things a step further. I will believe the U.S. has “recovered” when there government assisted Food Stamp program gets back to 2007 levels. ie. 23 million. What is it now? 44 million and climbing. I would even like to see it reverse back to even 30 million. Neither are happening anytime soon. Also, don’t kid yourself about Canada. Our food bank participation levels are at all time highs as well and for the first time working class and lower middle class families are reaching out for help in larger numbers.

#104 April on 04.09.11 at 5:02 pm

westcoaster #96.

I agree re M. Campbell. I used to listen to his show some yrs ago but not so much anymore. Today I happen to catch a bit of it while changing stations. I just thought it was interesting re city of Van owned property under water. Also he is right re politicians not dealing with the important issues facing Canadians re health care and aging pop. which Garth reminds us of often.

#105 dd on 04.09.11 at 5:31 pm

…China, interest rates are rocketing higher as the country tries to fight deflationary poverty and inflationary urbanity…

Rising interest rates will do nothing. To flight inflation, which is cause from they peg to the US dollar, they have to let their currency rise.

#106 dd on 04.09.11 at 5:36 pm

….Maybe it’s time to wonder what happens if Japan and China stop buying US bonds….

We already know what happens and it has been going on since 2000. It is called QE or money printing. And THIS IS THE CAUSE OF INFLATION!

So there is no guess work here. Higher oil, gold, silver, copper, food etc etc etc … Fixed bonds will be crushed.

#107 dd on 04.09.11 at 5:50 pm

#92 S.B.
..I notice bonds (such as TLT, a 20-yr bond ETF in the States), continued to sell off , even more sharply within the past 3 days, so perhaps someone is indeed expecting a rate hike?….

Much money is moving from the bond market to equities to chase returns. Hence, bond prices fall and yields rise. Don’t read much more into it than that. — Garth
……………………………………………………………………

SB, read into it. Long bonds are being dumped. Most of the bonds being issued at very short. Investors know interest rate will have to increase alot over the next x years.

#108 Timing is Everthing on 04.09.11 at 5:59 pm

#45 Moneta said – “Happy and rich people are deluded!”

Does not compute. What is your point/argument? Can happy and poor folk not be equally deluded?

Also, I’m pretty sure ‘depression’ doesn’t give a crap about one’s net worth. However, if you are poor the odds are more likely you will be depressed….

http://www.gallup.com/poll/123821/one-six-americans-report-history-depression.aspx

You seem to be mashing-up depression/happiness/rich/poor/delusions/luck. For a minute there, I thought you were going to conclude with…
‘Happy and rich people are depressed’… Ha! Ministry of Truth stuff.

The Dawgs will comment on your post more on what they read into it rather than what you stated, imo.

#109 Moneta on 04.09.11 at 6:00 pm

The American on 04.09.11 at 12:54 pm
——–
As for Vancouver population, I stand corrected. The area I scanned is obviously larger than 600K. Should have had more coffee.

I guess I really wanted to see a large percentage so it made sense at the time. LOL!!!

#110 Timing is Everything on 04.09.11 at 6:04 pm

#105 Timing is Everthing (Everything)

Looks like rich, married, Asian, men are pretty happy…

http://www.gallup.com/poll/123821/one-six-americans-report-history-depression.aspx

#111 S.B. on 04.09.11 at 6:06 pm

Funny you mentiond it: Just this week I was talking a colleague, who has a Masters from a good USA university, and he stated he saw “some” Chinese visiting students cheating during exam-time. I incredulously asked but what if they’re caught, they will be sent home in shame? He said yes, but they’d still list the education on their resumes…

#112 S.B. on 04.09.11 at 6:07 pm

#107 dd on 04.09.11 at 5:50 pm

The source of the Fed rate hike chatter was from this old trader I mentioned, and I simply observed TLT myself because it’s on my watchlist.

#113 Moneta on 04.09.11 at 6:13 pm

MikeT on 04.09.11 at 12:25 pm
———
There’s good luck and bad luck.

My point is that we humans think we have too much control.

I was blessed with health, know how and all kind of other characteristics that have helped me get ahead. Were I born disabled, life would not be the same no matter how hard I tried.

I’ve had bad things happen but I fight back. But it’s my temperament. I don’t have to try, it’s just in me.

It’s not because people “look” normal that they have access to the same opportunities. They are all wired differently and have experienced different things that could help or hinder their decision making.

That’s my view of the world. It was not always like this. It changed when my son was born with a disability.

#114 Devore on 04.09.11 at 6:13 pm

It all makes sense when you realize Moneta does not believe in free will.

#115 Thetruth on 04.09.11 at 6:29 pm

#113 Moneta

+1

#116 Patz on 04.09.11 at 6:48 pm

Moneta @ 40
Vancouver:
15,000 listings. Population 600K
7% of households have a sign.

Moneta I wondered about your figures so took a look for myself:
Population of Greater Vancouver 2,110,00 as of 2006 so probably higher now. You gave the pop for the *city* also as of 2006 correctly at 600K.
Listings in *Greater* Vancouver as of March 2011 = 13,110.

There are according to the 2006 census 2.6 persons per household. So my math tells me there are approximately 1.6% of homes in GV with signs. [13,110/(2,110,00/2.6)]*100] =~1.6
Disagree?

#117 Utopia on 04.09.11 at 8:00 pm

#92 S.B.

“He is quite connected and experienced, kind of like our own G-man up here, and not prone to any hyperbole at all”
——————————————————–

Thanks S.B. ~~ it is always nice to know a few people who are connected to what is happening behind the scenes. I will be watching and waiting. If what you heard is true it will definately blow my mind. But who knows eh, with the US dollar taking such a beating maybe that is now the talk and strategy to stabilize the buck.

#118 hey MikeT on 04.09.11 at 8:09 pm

I was the poster who rose to your defense but now I’m getting the sense that you’re a bit aggro and also a blowhard after reading some more of your stuff.

You probably think that if people don’t like you it’s because you’re an immigrant. In fact it’s probably just because you’re kind of hard to take.

We don’t really care that you’ve worked your way up through 5 jobs and have doubled your income etc.

Yawn.

#119 T.O. Bubble Boy on 04.09.11 at 8:18 pm

@ #102 Icedpee

REITs have provided poor returns YTD compared to other assets (well, except when compared to cash).

Poor renters holding REITs.

YTD, the TSX is up 5.7%

YTD, the BMO REIT ETF is up 8.9%
http://www.google.ca/finance?q=TSE%3AZRE

And, a few REITs have exploded far more than 8.9% this year… like Extendicare: http://www.google.ca/finance?q=TSE:EXE.UN
(YTD up 44% and current yield of 6.5%… much higher yield if you bought before the run up)

#120 Moneta on 04.09.11 at 9:39 pm

Devore on 04.09.11 at 6:13 pm
It all makes sense when you realize Moneta does not believe in free will.
———–
It all depends on the definition of free will and whether or not one thinks the conscious or non-conscious brain makes the decisions.

I think the non-conscious brain works out the statistics (with all kinds of heuristics) and pushes the decisions to the conscious brain.

So I would tend to believe that the non-conscious brain has more free will than the conscious brain. But I also tend to believe that the non-conscious brain’s decision making is based more on determinism than free will.

But I’ve only started to scratch the surface on this stuff and still have a lot more reading and thinking to do.

#121 Enlightened on 04.09.11 at 9:39 pm

check out these condos in coquitlam…with large red print of BLOWOUT SALE/FIRM PRICE on the 1st picture

http://www.realtor.ca/propertyDetails.aspx?propertyId=10423121&PidKey=-1009332495

http://www.realtor.ca/propertyDetails.aspx?propertyId=10408500&PidKey=-1411162065

This is the description for one of them:
10 reasons to buy this unit: 1. THE CHEAPEST unit over 1,100 SQFT and less than 2 year old in the area. 2. Built by BOSA (the best name in concrete building). 3. SUB PENTHOUSE UNIT. 4. Facing one of the most desirable directions in (-> South East). 5. Two balconies (128 SQFT). 6. Upgraded Hardwood floor, granite countertop & top of the line appliances 7. Close to all amenities: Gym, Pool, Library, Coquitlam Shopping Centre, Douglas College, Coquitlam main bus hub and west coast express 8. No rental restriction (great for investors) 9. Best amenities: including guest suite, luxury exercise room, … 10. Seller has originally paid over $618,000 for this unit (documents are available). ***FIRM PRICE***.

Good luck with the FIRM PRICE. And for whoever interested, don’t miss that the maintenance fee is at a high $342 Monthly already when it’s brand new :)

#122 Moneta on 04.09.11 at 9:51 pm

The Dawgs will comment on your post more on what they read into it rather than what you stated, imo
——–
People can read what they want into it. If my thoughts can trigger better ideas, well that’s a plus.

All I know is that no matter how big or small, we all have an impact on eachother. And we can never truly understand eachother because no one walks in our shoes. Sometimes I find it amazing that we can actually connect at all!

#123 Moneta on 04.09.11 at 10:03 pm

Kevin on 04.09.11 at 7:36 pm
If you believe that the chemical reactions in your body are governed by the laws of physics then there is no room for free will.
———–
I believe the laws of physics control the body so I’m skeptical of free will.

But I also believe we still have a lot to learn scientifically speaking so there can still be a lot to learn… and we could be surprised.

#124 Jody on 04.09.11 at 10:09 pm

I’m glad some people on here understand that inflation is not a rise in prices but an increase in the supply of money. Inflation is the most insidious tax of all, governments use it to really

DELETED – language.

#125 Ronaldo on 04.09.11 at 10:12 pm

#98 Not First – Here’s another way that the U.S. can pay off their debt. Allow the price of gold to go to $430, 378.00 per oz and sell off the 8133 tonnes they have in Fort Knox. That would do it.

#126 Nostradamus Le Mad Vlad on 04.09.11 at 10:14 pm


#10 Chaos — “Vlad…sorry, took the day off. (It’s a big job running the universe.)”

No trouble, Chaos. See — the pointy-haired boss escaped, but was recaptured a day or two later! Don’t fret — we will handle the small details down here! Chaos — Take a chill pill and freak out! This is one of the unfortunate aspects of not knowing what one is doing!
*
Fukushima “Well, if chlorine-38 was detected [according to TEPCO], and that can only mean “recriticality”. …

Aspartame Not a nice, sweet substitute. Stevia is much better, either liquid or powder.

Pakistan Last week, Pakistan switched allegiances from the US to China. How many more countries does the US have to annoy before they have no friends left? US troops With the individual states fighting to avoid ObamaCare (It’s way too costly), one wonders where these troops will end up.

Libya “It has always been about gaining control of the central banking system in Libya. Oil is just a profitable side issue like every other state asset that is waiting in Libya to be privatized and sold off to multinational corporations like Bechtel, GE, and Goldman Sachs.”

My My, What a Surprise Dare The initials CIA be mentioned? Three Meltdowns Spot the correlation!

Monsanto + Iowa “One has to wonder just how many of the Iowa legislators Monsanto has “acquired” to get this bill even presented for consideration, let alone passage of such a bill.” wrh.com. BP Any chance that Monsanto, big oil and big pharma can be joined at the hip, then blasted off to a few galaxies away?

US Banks “28 closed banks this year, and it’s only April?!?!? This administration cannot use the words “economy recovery” with numbers like this so soon into 2011.” wrh.com.

Hypocrisy, thy name is Obama. “And yet this same man refuses to open his mouth about the violence in Bahrain, courtesy of its government, and hired Saudi mercenaries.” wrh.com.

Silver Vampires Or something like that.

CIA + Mossad = Stuxnet virus. Russia too. “Apparently, reactors in Russia are experiencing a series of strange malfunctions as well! In their haste to wreck Iran’s nuclear power station, did US and Israeli government hackers unleash a radioactive hell across the face of the Earth?” wrh.com.

Safety Deposit Boxes Interesting POV.

‘Net Freedom The US? No. Guess.

RE in US “Home construction in the United States is all but coming to a halt.” Golly Gosh! They may be on to something here!

#127 KingBubbles on 04.09.11 at 10:32 pm

Sorry, npthing to add tonight.

I can’t focus past the titties and beer

:-)

#128 Utopia on 04.09.11 at 10:39 pm

#123 Moneta

Amen, Moneta.

#129 hoa on 04.09.11 at 10:50 pm

Update on Toronto RE market

Out of the ten homes in my area none have sold and three were taken off the market and three homes had dropped their prices. Many new prices signs are popping up in the GTA. Looks like another bad month of sales .

#130 squidly77 on 04.09.11 at 11:10 pm

Mr Plow is your favorite realtor from Calgary.

#131 45north on 04.09.11 at 11:17 pm

S.B. Turmoil in foreign lands encourages U.S. hawks to party on at their military orgies. They stagger out to launch campaigns into new areas of conflict.

the argument that profit is the sole motivation for war

however it was never so

in the American Civil War there were also ideals: preservation of the Union and abolition of slavery

in the First World War there was the ideal of sovereignty of nations threatened by German invasion

in the Second World War again there was the ideal of sovereignty of nations threatened by German invasion. As it ended it became apparent that the War was also about basic human rights such as the right of Jews to exist. Also the right of Chinese to exist.

during the campaign against Serbia it was about the rights of Muslims in Kosovo.

We have fought for our ideals. These are the ideals which you claim: sovereignty of nations, freedom from slavery, the right of peoples to exist. Yet you renounce all the wars fought in their defence.

Always we see conflicting motivations. Your judgement reveals more about you than your subjects.

#132 Calgary renter on 04.09.11 at 11:19 pm

Off topic, but I need an answer.
Why is it that a provincial party (PQ) is allowed to run in federal politics?
From a democracy standpoint, does it make sense?
Thanks

#133 Thetruth on 04.09.11 at 11:20 pm

#124 Moneta

Stephen Hawkings last book is basically asking the question of whether free will exists. He thinks not.

Every atomic (or subatomic if you like) particle’s future interactions are driven by the basic laws of known Physics. Thus, it is possible to ‘see’ and accurately predict the future if the all the interactions in the universe were simultaneously studied. In this view, the future is predetermined. In other words, what will happen has already been written.

True free will is where the laws of Physics are changed (God?) and the the future is altered by will. This is not the same as believing you have free will (because this could just be the predicted future state of the interacting particles).

Back to real estate…lol

#134 The American on 04.09.11 at 11:38 pm

At #109: Moneta, no worries whatsoever! I truly enjoy reading your posts. I totally understand from where you’re coming. What I should point out, however, is that that is STILL a TREMENDOUS amount of inventory to have on the books for any city. So, you were definitely moving in the right direction. The percentages may SOUND small, but it is quite significant, especially when force-ranked against similar cities. This is why I specifically used Seattle (if you can call it “similar.” Seattle, as you know, has significantly more infrastructure and GDP than Vancouver) as a comparison as it is in a similar geographical location and similarly sized as a city proper. It looks like you and I are clearly on the same page as we both understand that Vancouver’s inventory is out of control right now, regardless of what CREA may report. I was able to prove it has nearly 5 times, or nearly 500% of the inventory of Seattle. That’s not going to be an easy gap to fill. I guess what I’m saying is Vancouver is screwed beyond belief and people are continuing to stick their heads in the sand and ignore statistical data that clearly supports a forthcoming correction of mass proportions.

I could use the “rich Russians” argument if I CHOOSE to do so in order to make others assured that the Seattle market is completely healthy, but as we’ve seen, there is no compensating for the laws of economics. Supply and demand is what it is all about.

#135 “Hi, my name is Kate and i’m a recovering real estate addict…” | Vancouver Real Estate Anecdote Archive on 04.09.11 at 11:40 pm

[…] Kate at greaterfool.ca 9 Apr 2011 12:35am – “Hi, my name is Kate and i’m a recovering real estate addict. I used to spend afternoons searching for the perfect home on my pre-approved budget. Then i started watching home and garden. I hit rock bottom when i started scheduling viewings for houses we couldn’t afford. Luckily my husband stepped [in and] held a real estate intervention before things got bad. We live in a beautiful million dollar rental, and pay 2200 a month. I sometimes feel like i want to own, thanks to pregnancy hormones. But i’m happy, debt free, and i don’t have to pay an 800 a month strata fee. Reading this blog gets me through the hard nights when i want to pull up mls and buy a house in Vancouver. Thank-you garth [Garth Turner, at greaterfool.ca] for saving us lots of money. Now if you could only write an anti-designer hand bag blog my husband would really owe you. Thanks again.” […]

#136 Pat on 04.09.11 at 11:44 pm

Kevin:
“If you believe that the chemical reactions in your body are governed by the laws of physics then there is no room for free will.”

Moneta:
“I believe the laws of physics control the body so I’m skeptical of free will.”

—-

Will I be correct if I guess that neither of you knows much about the laws of physics? Perhaps Newton’s laws at most?

#137 Nostradamus Le Mad Vlad on 04.10.11 at 12:55 am


Anyone in BC seen this? m$m hasn’t said anything at all (typical).

Bribes HAARP is good for stealing money as well as volcanoes and ‘quakes, too.

IMF (Rothschilds, Rockefellers, NWO etc.) are turning the screws on Iceland again. Billionaires Pay less taxes! Be a billionaire!

Globalists Neocon plan presently being executed by Obama. Soros “Globalist George Soros: America Should Be Replaced By a World Government With a Global Currency Under UN Rule.” UN – NATO – WHO = NWO.

UK MPs exempt from new tax avoidance law. Soros and Rogoff, and Bretton Woods history.

Mamma Mia! The mother of all meltdowns.

50K Tons of radioactive water, and WA state nuke plant.

Turning The Screw on Europe, and Iceland.

Exporting Jobs and importing students.

Stirring the Shit Curious POV. Maybe right or wrong.

3D Art Takes creativity to a new high!

#138 Worried about rates on 04.10.11 at 1:20 am

I’m really worried about rates as any increase will make it impossible to pay the monthly payments for my mortgage. Right now I have a 5 year fixed at 3.85% and $400K 30 year mortgage , so it’s about $ 1,870 a month payment which we just get by just a little. I’ve been hearing from a friend who works at a bank that rates are heading much higher. I asked if rates could goto 5% in five years and he laughed. He hears rates will go back to normal by then. I asked what is normal? He tells me it’s 7%. That is crazy as I know many people who have trouble with 3.5-4% . My monthly payments at 5% would be $2135 and at 7% would be $2635. We wouldn’t make it at 5% let alone 7%. Who would buy my house at those rates? Will I own a house for only 5 years?

#139 BrianT on 04.10.11 at 1:30 am

Another stat you won’t see in the MSM (whose job appears to be confusing the sheeple)-the USA debt increased 54 billion in the EIGHT DAYS preceding the much ballyhooed cutting of 38 billion http://www.cnsnews.com/news/article/debt-jumped-54-billion-8-days-preceding

#140 Timing is Everything on 04.10.11 at 1:35 am

It all makes sense when you realize Moneta does not believe in free will.

Well, all I can say is…

http://www.youtube.com/watch?v=6mEzgc_ne60

#141 dd on 04.10.11 at 2:27 am

Soros … bank rates do nothing. China should let currency float. This would be more effective against price inflation.

http://www.zerohedge.com/article/soros-speaks

#142 OttawaMike on 04.10.11 at 2:40 am

Moneta,
Thought provoking posts and I agree with a lot of what you said today. I had already been thinking a lot about luck, free will & plain old science, so it is timely.

On depressives being realists, this came up in a lecture I attended this past winter. A pair of top international research psychiatrists spoke of how a healthy brain tends to make most issues seem better than they are. It was explained that this is a primal trait to protect the person for important tasks like defense and food gathering. Depressed people see situations more clearly but then suffer brain synapse firing overload from it all.

#143 John on 04.10.11 at 3:17 am

Please do not get scared with oil at $120.

Oil price WILL reach $150 in the next 3 months or by July 8, 2011.

You heard it from me first. No Jokes.

#144 reality guy on 04.10.11 at 4:56 am

#122 enlightment

That was an interesting read, I remember those condo’s going up.

If you buy one of those, Instead of paying the landlord you will now be paying 3 PIMPS,
1.) the strata at 342 +++ any additional upgrades
2.) the BANKS. (once they can’t make money selling mortages, I’m sure their going to drain you dry with higher interest rates (got to keep their quota)
3.) oh yeah the government taxes at 4% next year. Not a problem for millionaire canadians

Man

#145 sue on 04.10.11 at 8:03 am

@139-worried about rates.
Sell your house yesterday.

#146 Moneta on 04.10.11 at 8:14 am

The American on 04.09.11 at 11:38 pm
——
I’m still laughing at myself… my mistake is a perfect example of heuristics at play!

I have not done much inventory comparison so I can’t really say if the inventory is high or low. I just wanted to get a preliminary idea of how the numbers differed across the major cities and the % of households on the move.

#147 Moneta on 04.10.11 at 8:17 am

Pat on 04.09.11 at 11:44 pm
—-
I have a math degree. I chose math because I could not pick between between the different scientific fields.

Another reason is that I am not a lab rat but more of an armchair scientist.

#148 Moneta on 04.10.11 at 8:29 am

Thetruth on 04.09.11 at 11:20 pm
——-
Those are my thoughts but just like anything else in science, we have to take the scientists’ word for it. Everything has gotten so specialized that we can’t reproduce most experiments ourselves. That’s probably why we’ve entered the era of pseudo science and mathiness. Most people don’t have the knowledge to differentiate what makes sense from what does not.

The reason why I bring up this free will or lack thereof is to get people thinking.

North Americans especially have been brain washed (intentionally or not) into thinking that more is better, that they can control everything and if they fail it’s their fault. Nothing is systemic, it’s all about me, myself and I.

I noticed there is a lot of anger out there. If you believe in limited free will, you automatically become more compassionate. With compassion comes collaboration. I think we need it to survive what is coming.

#149 Junius on 04.10.11 at 8:30 am

#139 worried about rates,

You said, “I asked what is normal? He tells me it’s 7%. That is crazy as I know many people who have trouble with 3.5-4%.”

This has been a central theme of this Blog since it started. You need to assume that rates will return to normal (6-8% range) at some point soon and will average them over the term of a 25 year or more mortgage.

This is why Garth and many others have been so much against the changes to the CMHC and the banks predatory lending. As rates rise over the next few years we will see many cases of negative equity emerge across Canada. We know how this ends and how much damage it will to to households and to our economy.

Of course, H and F knew or should have known as well. However that didn’t stop them.

Wanna know why we are having an election? This is it. Over the next few years we will clearly see that our genius leaders “saved” our economy with a Ponzi scheme destined to wreak havoc for years.

#150 Junius on 04.10.11 at 8:35 am

#135 The American,

I agree with your comparison between Seattle and Vancouver and also agree that Seattle has much more going for it economically. When people here in Vancouver don’t see that I just can’t believe it.

The talk in Vancouver is always that the magic number that melts the market is 20,000 listings. I don’t understand why except it seems like a nice, big round number. In any event we are on course to reach that number over the next few months. We will see what happens then.

#151 Oasis on 04.10.11 at 8:39 am

#247 Utopia on 03.27.11 at 12:48 pm

That means the dollar is about to bounce exactly as I predicted and that the Euro will soon fall (starting pretty much any day now).

So how is that working for you smart ass?
_____________________________________________

i’d guess if markest were open today, you’d be wrong yet again.

lol

any day now?

lol

#152 Oasis on 04.10.11 at 8:42 am

#144 John on 04.10.11 at 3:17 am

Please do not get scared with oil at $120.

Oil price WILL reach $150 in the next 3 months or by July 8, 2011.

You heard it from me first. No Jokes.
______________________________________

i know someone who’s an economist at CMHC. literally telling me that oil is worth $20/bbl. not a penny more.
CMHC hires only the dumbest sack of nails it can find.

#153 Canadian Asian on 04.10.11 at 9:30 am

Whoa whoa…. fellow Canucks, what is with all the anti-Chinese anecdotal stories here? I prefer to consider myself as Canadian as the next guy (being born here and all). The last thing I want is to walk into some coffee shop and be judged by the colour of my skin…. where are we, in 1950’s deep-south USA? In professional school, I was witness to a cheating “ring” that involved 2 Arab students, 1 Chinese, 3 white, and 1 East Indian.

Please do not tell me you have never heard any other young 20-30 somethings who aren’t Chinese dishing out about their BMW’s or cool new gadgets. Just the other day I was given the “reality” of business in Canada by a colleague and it went like this:

“No matter how hard you work in the corporate world, you won’t ever get higher than that “guy” who curls/golfs at the same country club as the boss. He just joined and he’s now our team leader and he knows d*ck-all about engineering.”

My point is this… the level of cheating, lying, stealing, etc in the business world cuts across all racial backgrounds. It is easy to assign fault based on race. For example… ton’s of East Indians buy up multiple homes, doing shoddy reno’s, and then “flip” them to some gullible buyer. It’s easy to say, “those East Indians are so bad”…. but what about the multitude of other shoddy reno’s that are shown on Holmes on Holmes done by “white” people? Nobody ever says “those white renovators are so bad!”.

There are scum everywhere… doesn’t matter what your race is. Being “Canadian” doesn’t = you are caucasian. Some of the best patriotic Canadian’s I know are of a multitude of backgrounds.

Let’s show some class here and get our heads out of the racism undertone.

#154 T.O. Bubble Boy on 04.10.11 at 10:09 am

Front page of the Toronto Star this weekend: seniors cannot afford to pay property taxes on their houses.

(a.k.a. the “Demographic Time Bomb” Garth often refers to)

http://www.moneyville.ca/article/972359–the-high-cost-of-rising-home-values

“Donia said she doesn’t understand why she paid $1,219 in tax in 1998, and then had to pay $3,156 in 2010 for a house that is less than 14 feet wide, with virtually no renovations since she’s owned it.”

I can’t see any other options here besides:
A) Sell — doesn’t want to move
B) Rent out rooms — unlikely
C) Take out equity via some over-priced program like the CHIP home income plan

#155 Moneta on 04.10.11 at 10:32 am

Wanna know why we are having an election? This is it
——–
Quebeckers are not very fond of Harper. In fact, I’ve been hearing the word fascism a lot lately.

I can’t help but think that separatists are the only ones who can save us from the worldwide Neocon putsch movement.

If we’re lucky, real estate will tank, Quebeckers will be pissed and socialism will take off even stronger…

But it’s hard to tell. France itself with Sarkozy has embraced Neocon light, and the population has gotten older since 1980 and 1995. Older people are more conservative, especially when they have money. But if all their equity evaporates, we might be in for a surprise.

In the end, it’s all about the Law of Unintended Consequences…

#156 Jarry Steet on 04.10.11 at 11:14 am

@Kuwaiti,

At 75 percent pass mark and 3 judges the citizenship test is already hard enough. Plus at 200 dollars a pop its a money making scam. I am born and raised here and I took a look at the exam and found that if the gave the same type of citizenship in High School canadian History your failure rate would double.

Its hard enough already and don’t try to overcompensate your immigration inferiority complex. the more you behave like an ass kisser the worst society in general will treat you.

#157 Dark Sad Monster Bunny on 04.10.11 at 11:30 am

My girl Moneta is wandering a little OT lately, so I’ve decided to leave Sea-Tac and return to my previous blog name…..

135 American – I guess another comparison would be with Portland Ore. Just about identical in size to Van, but we never seem to hear much about it – overshadowed by
Seattle I guess.

138 Mad Vlad – thanks again for your continued daily
work supplying links. Regarding Billionaire tax rates,
the “Millionaire Next Door” compares the amount of tax
people pay as a percentage of their net worth. Very
interesting. Garth also recommends many of the same
strategies.

#158 edmonton mortgage broker on 04.10.11 at 11:43 am

#27 tmg on 04.09.11 at 1:24 am

so I was sitting at a Tims here in Edmonton when in struts a trio of white boys in their 20s. pulled up in their lifted F350s each with two sleds in the back. you know, cause sleds look better on the sled decks in pairs. They continued to talk loudly about dropping 10k in upgrades to their sleds and how good they were at high marking in the mountains. oh yeah, taking a couple weeks off to hit up revelstoke cause daddy’s not around at the shop, and when the boss is out, the dogs come out to play.

These dudes don’t seem like recent immigrants to me, yet they’re showy and tacky. true story? maybe, maybe not.

point is, when telling stories like these, the storyteller is proving only one thing, that they are a racist.

#159 S.B. on 04.10.11 at 11:44 am

Austeriey on its way to Toronto? But taxes rise 3-4% every year, land transfer tax was added; to where is the money going?
The streets and sewers are crumbling, the subway system is ancient, and the last new road is now a private for-profit toll road (Hwy 407), and user fees were added to all community programs. At least one library branch is closing this year. This city is an embarassment

To where is the money going???? My guess is into gold-plated TTC and Police salaries, pensions, benefits, and cop toys. My advice to anyone in Toronto: try and retire slightly early and then get the heck out!

According to former Mayor John Sewell, in a local newpaper column, police respond to only one call on average during every shift. Yet they demand more and more money each year. They do not even respond or investigate small petty property crimes, the crimes that most afffect us. Who cares about the murder stats: you have an approx. 80/3,000,000+ chance of being murdered in Toronto anyway, with most occuring between people who know each other or drug deals gone bad.

http://www.thestar.com/news/article/972325–thousands-rally-against-ford-policies

Several thousand people converged on Yonge-Dundas Square and marched to City Hall Saturday to rally against privatization and cuts to public services.

The demonstration, dubbed the “Rally for Respect,” was organized by a coalition of unions, community activists, environmental, and student groups that called on Mayor Rob Ford to halt any plans to privatize city services and public transit, sell off public housing, and impose user fees at recreation centre facilities.

#160 Cowboy on 04.10.11 at 11:51 am

Calgary Rocks,

Most of what Moneta says will go over your head,
She is seriously WAY too clever for you.

Debating with her would be like George W. arguing with Maggie Thatcher, you wouldn’t last 2 minutes….

#161 Cowboy on 04.10.11 at 12:00 pm

Canadian Asian,

Do you think it would be OK to say most young Asian men have the same haircut-spiked?
Or is that too racist?
How about the terrible driving observation?
Too generalistic?
I have witnessed plenty of races making ignorant comments about whites, and I am sure you have too.
It goes both ways you know…
If you really are Asian then you should be honest and say, yes, there are a lot of Asian parents that give their kids Beemers and designer gear instead of getting all aggrieved that it is somehow so offensive.
Just saying…

#162 Ex-Cowtown on 04.10.11 at 12:19 pm

John on 04.10.11 at 3:17 am
Please do not get scared with oil at $120.

Oil price WILL reach $150 in the next 3 months or by July 8, 2011.

You heard it from me first. No Jokes.

+++++++++++++++++++++++++++++++++++

I agree with you, but I’ll add that then it will crash again as demand destruction takes solid hold. China has raised the internal price of energy twice. Even they can’t afford these prices.

The question is when to start shorting oil.

July 2008 replay.

#163 Utopia on 04.10.11 at 12:22 pm

#152 Oasis to #247 Utopia

“i’d guess if markest were open today, you’d be wrong yet again”
———————————————————-

Oh Lord, here we go again.

And this coming from a guy who thinks the price of his salad is highly inflationary and a big worry. Perhaps we should all run for cover.

He does not seem to realize that as home values drop in Canada by even a meager 5% that the inflation effects on Cheeto’s and cucumbers is absolutely irrelevant next to the devastation caused by having net worth itself destroyed.

That is what a true deflation looks like Oasis. It is the negative economic effects brought on by declining asset values like homes and the concurrent reduction in domestic consumption which effectively drives down the prices of many goods and most services. It can also result in falling real wages where a long term decline in equity wealth cannot be stemmed.

Perspective does not seem to be your strong suit though.

Needless to say, there is no arguing that the US Dollar is under pressure right now and so I will not make that case for today. It is what it is. You of little confidence do not seem to understand the basics of markets, charts or technicals and are completely wrong to assume the recent dollar decline is the end of the buck as we know it. A poor conclusion.

That is just rubbish and poppycock my friend.

#164 T.O. Bubble Boy on 04.10.11 at 12:28 pm

What happens when you have 5%-10% inflation in China, QE2 drives commodities higher, and China still doesn’t adjust its peg to the USD?

China Reports First Quarterly Trade Deficit in Seven Years

(although, March did have a surplus)

#165 Cowboy on 04.10.11 at 12:28 pm

Brad from Van: # 76

Brilliant!!
I would have loved to have been there!
I wish this kind of thing happened more…
It makes me so mad when people actually brag about thieving from tax payers and waste money on such stupid things. More people should report this.
Hopefully the wasteful government would actually care to do something about this instead of turning a blind eye. I know of a Mexican family that have received childcare benefits for 18 yrs and have never lived here long term. It would be pretty easy to check this out, I think there is a lot of laziness in the Benefits/Government department because too many get away with it.
Yet they sure watch we pay our taxes, they never make a mistake about that do they?!

#166 X on 04.10.11 at 12:29 pm

102 – you have no clue about REIT’s. Do yourself a favour and brush up on your investment knowledge.

77 – You just don’t get it. Hey, why don’t you just stretch your monthly payments out as long as possible. Then you will be 70 when you pay off your house, and perhaps can end up paying out twice as much as the purchase price over the long, very long, run.

#167 Utopia on 04.10.11 at 12:42 pm

#157 Jarry Steet @ Kuwaiti,

At 75 percent pass mark…the citizenship test is already hard enough. I am born and raised here and I took a look at the exam and found that if given the same type of citizenship [test] in High School Canadian History, your failure rate would double.
———————————————————-

That’s funny. I think I mentioned here once before that there is reportedly a professor at the University of Saskatchewan who gives the exam to all his students as part a study session. Most Canadian-born Canadians apparently do not pass and are quite surprised by the difficulty of the test.

So if you really want to know something about your country, forget wiki and google….just ask a new immigrant. They know the answers by heart.

#168 pjwlk on 04.10.11 at 1:02 pm

#94 not asian said: “#27 – I have also witnessed many chinese students cheating on exams”

There are many things the Chinese can do if they know the right people. Buying a driver’s license without ever writing an exam or doing the practical is another example. Their community is very tight and they work together as a community to better themselves as a whole — unlike the “round eye”. Despicable in some ways, yet commendable in others.

#169 Cellar Dwellar on 04.10.11 at 1:11 pm

@ #100 Mr Plow

“….Thanks for patronizing me Garth, but all I was getting at was that folks like poster number 1 are going to be waiting regardless.

God forbid someone disagree……”

How IRONIC ! You sir are the MOST PATRONIZING person on this blog. If you want to dish out sarcasm, expect it back in spades.

Hugs and Kisses ;)

#170 Moneta on 04.10.11 at 1:20 pm

My girl Moneta is wandering a little OT lately
——-
LOL! Had to find the line.

http://www.bing.com/videos/search?q=i+walk+the+line&docid=510472881515&mid=DB1C81687342034F9687DB1C81687342034F9687&FORM=LKVR6#

;)

#171 Pat on 04.10.11 at 1:24 pm

#148 Moneta wrote:
“I have a math degree.”


That is just a prerequisite for understanding the laws of physics. BTW, Einstein was an armchair scientist.

#172 BrianT on 04.10.11 at 1:56 pm

#160SB-Pretty well-TO can no longer be managed. It is incredible that the subway system could have been built when Toronto was a fairly small town compared to today-now nothing can be afforded. The overall quality of life has declined quite a bit in the last 25 yrs IMO.

#173 BrianT on 04.10.11 at 1:59 pm

#155TO-Here is a 76 yr old woman with apparently no debt and probably a $600000 house. She has all kinds of options-what she really wants is more government money-meanwhile you have a large population of kids in this city using food banks.

#174 BrianT on 04.10.11 at 2:04 pm

#154Can-Yes, but there is a flip side to that “if you ain’t cheating you ain’t trying” mentality. If it reaches the point where the average person succumbs to this toxin the whole society falls apart. In terms of the % of the population grifting for a living, there is absolutely no comparison between today and 50 yrs ago. A lot of the societal niceties we enjoy today are because this wasn’t a grifter society 50 yrs ago and still hasn’t totally rolled over.

#175 S.B. on 04.10.11 at 2:05 pm

Sooo, how that “democracy” coming along in Egypt.
There is no democracy anywhere in the world. There never was.

http://cnews.canoe.ca/CNEWS/World/2011/04/09/17933656.html
Egypt army aims to crack down on protesters

By REUTERS

CAIRO – Egypt’s ruling military council said on Saturday it would clear protesters from a central Cairo square with “firmness and force””to allow life to return to normal.

#176 vreaa on 04.10.11 at 2:08 pm

Raw Video Exclusive: Line-Up For Burnaby ‘Chancellor’ Condos Commences In Rain, At Night, 6 Days Before Sales

http://wp.me/pcq1o-26M

#177 CalgaryRocks on 04.10.11 at 2:12 pm

#161 Cowboy on 04.10.11 at 11:51 am
Calgary Rocks,

Most of what Moneta says will go over your head,
She is seriously WAY too clever for you.

LOL. It may sound clever to a simpletons like you. A product of our Canadian public education (or is it, special education) system .

Those of us that have other experiences, have already seen the disastrous consequences of what Moneta is talking about.

#178 S.B. on 04.10.11 at 2:30 pm

#132 45north on 04.09.11 at 11:17 pm

Do you often revise history? China and Vietnam are 100% communist countries now. Laos and Vietnam still suffer the effects of agent orange and unexploded bombs. The war on asia was purely an economic war, to pacify them into the low-cost production regimes they are today.

WW2 set the stage for decades of brutal communism in Europe for which we lifed not a finger in aid. Also WW2 was used to create the illigitmate state of Israel – how’s their “peace process” coming along? We never hear of that joke any longer.

Germany in WW2 was financed by american corporations: Standard Oil, Ethyl Corp, Union Bank, et al. There is no “us and them” ,there never was. Blacks in USA had no rights until the 1960s. Tell me how the civil war aided that effort? Europe today is occupied under 100% banker control (first attempted in 1939) and look they are bankrupt now.

Human beings only fight over two issues: sex and money. Or anything that hampers one’s effort of obtaining the same. See: bar fights.

In WW1 armies fought armies. In WW2 the target was changed to focus on civillians (wholesale bombing and WMD dropped onto mon-military targets such as Japan, London UK, and the firebombing of Dresden Germany. No nation was spared from these senseless distruction.)

In the current WW3 the target is wholly civillians: witness the countless WMD dropped onto civillians in afghan, iraq, libya. There are no armies, everyone is branded as a “rebel/insurgent”. But we don’t have to apologize!! A human life is worthless these days, anyway. We are in the business of vanquishing the locals by way of violence, and securing the area for international control and development. And business is good.

Wait, I take back: A human life only has value in their economic production to corportations. We are valued with a figure and expected to produce monthly output to the cartels, each month:

Insurance cartel (AIG anyone?)
Oil cartel (need I say more)
Communications (cell, internet monthly costs) cartels
Banking Cartel (pay your usary interest monthly)
Auto Cartels (cars are made to break down and be obsolete)
Pharma and Medical cartels (who never actually cure diseases)
Education cartel (for basic, rote, canned, 101, university classes, their cost has risen 1000’s of % over the past few decaces)
Hydro cartel (e.g. Enron)

Can you think of someone who does not adhere to their monthly output quotas? I can. A homeless person.
Now you know why the homeless are constantly harassed and targeted by the police (agents of the corporate state). Homeless people do not feed the cartels!

#179 Patz on 04.10.11 at 2:43 pm

@154 Canadian Asian = Excellent post!

Free will chemistry and physics. We are all constrained by our biology, culture, class and historical time and place. Beyond that or more accurately within that there are for any particular decision so many variables at play that it would be computationally impossible to isolate what tilted a decision one way or the other.

I have in my family, sadly, intimate knowledge of someone who has limited ‘free will’ by virtue of having a mood disorder. A chemical imbalance in the brain that distorts so–called rational decision making.

I think the argument as to whether we have free will or not is somewhat puerile. Whatever answer there is lies within evolutionary biology. I.e. the more we understand about our DNA, evolution and what we’re hard wired for the better we’ll be able to make rational decisions both individually and as a society. It is neither ‘free’ nor pre–determined.

#180 K on 04.10.11 at 2:46 pm

#139

Sell. Interest rates can’t stay this artificially low forever. Who indeed would buy your house? Especially when there are so many people in the same boat as you. It is a frightening thing to think about and very sad. However, it is the reality. Best of luck.

#181 Dorf on 04.10.11 at 3:26 pm

I would just like to say that I appreciate your undying honesty, Garth.

Ever since I started reading your blog, my rectal cancer is healing up as a result of not having any more smoke blown up my ass.

#182 Moneta on 04.10.11 at 3:32 pm

Pat on 04.10.11 at 1:24 pm
CalgaryRocks on 04.10.11 at 2:12 pm
#161 Cowboy on 04.10.11 at 11:51 am
——–
Why does someone always have to lose and eye?

It’s Sunday… enjoy the spring!

#183 realpaul on 04.10.11 at 3:42 pm

Is this article the first shot across the bow in the PR campaign of what is surely to come? Are we being softened up by this ‘trial balloon’……that’s usually the way it works…….Someone has to start the conversation….but Benjamin Tal????? That in itself is telling !

http://www.financialpost.com/personal-finance/Underwater+mortgages+When+just+walk+away/4576374/story.html

It’s obvious to every wag and fruitcake that all is not what the banks, media lackey’s and government stooges would have us believe. The fact is that many in the industry know full well that a growing number of new mortgages are falling underwater almost as soon as the ink is dry on the ‘death grip’ aka mortgage.

We see factual evidence that this is a growing segment of the homeowners who have purchased in the past two years….the gap is widening. It’s been blamed on many things including unemployment….because no one has had the guts to report that prices overall are actually falling. The phony math of the real tard pimps has glossed over the sensible house horny retards who are still falling for the bullshit of ‘averages’ and ‘statistics’ still being pumped out by the fraudster media.

When the big goons from the big banks are trying to ease themselves out of the room you know that they have greased the doorway with plenty of “I told you so ” goo. Expect to hear the ballyhoo decry the pimps and how they’ve outdone themselves by forewarning the leesser lights.

#184 Scare Crow on 04.10.11 at 4:15 pm

Garth, I like the discussions about the stock market over our housing bubble – I am a strong believer that once the stock market tanks – so goes the housing market. Just within my circle I have buddies who have new BMW’s parked in a new home in Oakville that cost a cool $750K – each one has a kid or two and most of their wives (not trying to sterotype) but they married trophy wives and the plastic blows holes in their finances. What keeps this all going – A) – the market gives them the illusion that they are wealthy and can afford that over priced house. B) – prices of homes have steadily increased, but that is based on the wave of strength attributed to the stock market – one feeds the other – and when the stock market crashes – the reverse will happen surely with the housing market – that my friends will end the housing bubble once and for all – I just hope my buddies have something to cling too – cause the wife is gonna be gone once things become challenging –

I totally agree with a above mentioned poster – G-Man why not start a new blog (a fee based site) that deals with the invesments that should be looked at. A fee would stop those who just want to talk the loudest and ruin what we try to accomplish (just look at this blog – some just want to be goof’s – I enjoy reading each other’s point of view – but not the retarts who just want to be heard) –

A fee based investment site – sign me up!!

Lastly, in my first year of Univesity – my economic’s teacher who was someone who lived in the trenches (Bay Street) and one dicussion that has stayed with me –

When Japan meets natures rath, the whole world will take notice and a new downward cycle will begin – I am just so shocked that most seem to take the news with shock and 24hours later – move on and the markets shoots up … what gives. I was a stock broker in the early 90’s and news actually played into the actual value of the stock – stocks priced 6 months into the future – BS – I am glad I left that racket – stress level of pitching garbage to a 70 year old couple was beyond my conscience –

Each morning I would arrive to work and the managers sign above his door – Churn and burn em, yeap – that was the motto that we worked by – you had a family to support and you did what you had to do to put food on the table. (thats why real estate brokers lie through their teeth – gotta put food on the table at any cost).

#185 The American on 04.10.11 at 4:30 pm

And so it begins for China. There is no stopping the train. How will this affect Vancouver in the long-term? Well, probably not too great. It is, in all effects, an admission that China’s economy is not as healthy as they’d like it to appear. Keep in mind this news comes from the Chinese government, which probably means its at least three times as bad as is being stated…

http://www.bloomberg.com/news/2011-04-10/china-posts-unexpected-140-million-trade-surplus-in-march-as-exports-rise.html

#186 John Saccys on 04.10.11 at 4:39 pm

Garth.. I truly believe what you said – Asset Deflation , Price Inflation a.k.a Stagflation..

Precursor to stagflation is Britain.

Asset being – real estate, automobiles
Price being – commodities including energy.

I think you will need to change your view on gold and silver. These PMs should be at least 10% or higher in anyone’s portfolio currently. The only rational outlook for the next 6 months to 18 months is that price of Gold, Silver and Crude Oil is going to WAYYY higher than it is now.

There bigger forces out there, other than demand and supply.

#187 Patz on 04.10.11 at 4:40 pm

Again on free will. Moneta as a mathematician I’m sure you have at least a basic understanding of chaos theory. (I am not a mathematician and have only an educated layman’s understanding.) I think you would agree that a human being fits the description of a dynamic system and that chaos theory would apply to the concept we know as “free will.”

As we know primarily from Lorenz’s work weather can be predicted at best only a week ahead. This is explained in chaos theory as a divergence from initial conditions–think ‘butterfly effect.’ Similarly initial conditions for a human suggest a certain trajectory over a lifetime but any number of random factors may interrupt that and cause a significant change in direction. Thus in order to examine an individual’s free will one would have to pick a specific point in that person’s lifetime and attempt to compute all the factors affecting decision making (which is the operator in free will). Considerably more than a daunting task–dontcha think?

Another complicating aspect of the problem is that our mind including our emotions are both the effector and and the affected in the exercise of free will. And in the most significant decisions the complications rise exponentially. E.g. it may be not much more than a Pavlovian response to hunger to go into MacDs and (freely) order a cheeseburger but it’s much more involved to decide to sell one’s house, change jobs or marry the boss’s daughter.

#188 Snowman on 04.10.11 at 4:58 pm

#139 Worried about rates

Banks never had a posted rate of 3.85%, if you got that when the posted rate was 5.5%, then you can guesstimate how much rate you can get when the posted is going to be 7%.

As for you not being able to afford the house @ 5.0% mortgage rate, look at the bright side: you have 5 years to fix this. Go to school, get some education and a real job, there are lots of opportunities out there for people who look to succeed in life. You don’t want to end up like the rest of guys on this blog, watch life pass you by from a little basement window.

#189 Timing is Everything on 04.10.11 at 5:42 pm

#185 Scare Crow

This free, fun and entertaining blog is hosted by Garth, of his own ‘free will’. For some reason he is ‘determined’ to keep it up. Thanks again Garth.

Just go with it Scarey. It won’t last forever. If you don’t like it… Shove off. It’s a big internet. You’ll find something, I’m sure.

I think Garth is OK with folks emailing him about personal financial advise/guidance (fee based or otherwise). So email him.

BTW, seems like your friends have big egos and (not trying to stereotype)….’little’ else.

Churn and burn. Ha! How many 70 year olds did you ‘help’? At least you realized what you were doing and got out of the ‘racket’.

Sno-cones on a Sunday…Lord have mercy.

#190 Mikey the Realtor on 04.10.11 at 5:47 pm

#155 T.O. Bubble Boy

That oldie complaining about paying $3100 prop taxes on a house worth a mil plus is just a whiner, I don’t ever recall seeing her in the paper complaining when her house was going up 20%yoy in the last decade.

The moral of the story is, its ok for her house to increase 10 fold but when she has to pay a little more on prop taxes she is in turmoil. A pure joke if you ask me. $3100 prop taxes on that house is peanuts, she should be calling them and thanking them on how low it is, never mind crying about it. And that goes for any whiner is Toronto.

#191 Kuwaiti on 04.10.11 at 5:57 pm

@ 157 Jared

It took me exactly 4 minutes to pass the test. It was a bit alarming to see everyone around have english as a 2nd or 3rd language.

This is not ass kissing, this is just showing concern for the changing demograph of the country. Citizenship should not be obtained so easily, the only country that got it right on immigration exams is the Swiss.

I’ve been here for a long time and identify as a Canadian… I just used ‘kuwaiti’ to see if anyone here has been there (elicit responses)

Multiculturalism has been deemed a failure in Europe, somehow we’re supposed to close our eyes to it’s flaws overhere in the name of political correctness and ‘tolerance’ while resorting to name calling when someone dares speak against it.

How ‘tolerant’ of you.

#192 “A definite gradual slide in Kelowna pricing. Houses sit a long time. The market here at best is precarious.” | Vancouver Real Estate Anecdote Archive on 04.10.11 at 6:02 pm

[…] Lurker in Kelowna at greaterfool.ca 8 Apr 2011 at 11:51 pm- “I’ve been watching and reading on the sidelines for years and thought I would post. There is a definite gradual slide in Kelowna pricing. So much supply for a city this size. Rents are coming down as I negotiated a rent from $2400 to $1600 a month. This is a gorgeous exec. home , 5 years old 3700 sq. feet. It was empty! My friend,who lives in Calgary, told me today that he clinched a renter for his investment condo for $1000 a month. The interesting part is that it is illiquid and virtually unsellable without a crushing price cut. As well, in his first year of renting he received $1400 then $1200 and now at $1000 he just breaks even. Houses sit a long time. The market here at best is precarious.” […]

#193 Mr. Plow on 04.10.11 at 6:03 pm

#170 Cellar Dwellar

Should I take that as a compliment, equating my sarcasm with Garth’s?

Since you come here and chirp and chirp and Garth throws you a worm once in awhile?

Sunshine and lollipops. ;)

#194 Scare Crow on 04.10.11 at 6:12 pm

Re: Timing is everything #190 —

You just proved my point – useless noise! If you actually read my post – if Garth , as others have made a side comment – would start a website, so those who have a specific concern or comment on specific stocks / bonds can converse, there can be discussions on trends, charts, technical and fundamental analysis – and Garth can charge a nominal fee – you on the otherhand are obviously a cheap bugger – no doubt – why don’t you take your ass and go plow farts somewhere else –

And you are truly remarkable – you can take a few sentences and come to the determination what my friends are – your a pure genius – if you actually read my post – I am stating that of course they are living beyond their means – but the hype of the stock market is fanning the flames of over-extension – geez, if you want to make remarks – try “actually reading”what someone writes before sticking your foot so far up your a$$ its coming out your ear –

See Garth – open a site with serious discussion on serious topics with a fee and guys like Timing is Everything will be left reading dinner menu’s – ‘[Again I lost 5 minutes of my life responding to a complete idiot] –

#195 Moneta on 04.10.11 at 6:50 pm

Patz on 04.10.11 at 4:40 pm
———
You might find this interesting…

http://www.wired.com/science/discoveries/news/2008/04/mind_decision

Anyway, for some reason some kind of 6th sense is telling me to get off the topic!

;)

#196 jess on 04.10.11 at 6:57 pm

facilitators

WASHINGTON – The United States is seeking an order from a federal court in San Francisco authorizing the Internal Revenue Service (IRS) to request information from HSBC Bank USA, N.A. about U.S. residents who may be using accounts at The Hong Kong and Shanghai Banking Corporation in India (HSBC India) to evade federal income taxes, the Justice Department announced today.

The government filed a petition with the court to allow the IRS to serve what is known as a “John Doe” summons on the bank. The IRS uses a John Doe summons to obtain information about possible tax fraud by people whose identities are unknown. If approved, the John Doe summons would direct HSBC USA to produce records identifying U.S. taxpayers with accounts at HSBC India, many of whom are believed by the government to have hidden their accounts from the IRS.

According to documents filed with the government’s petition, on Jan. 26, 2011, a grand jury in Newark, N.J., indicted Vaibhav Dahake of Somerset, N.J., charging him with conspiracy to defraud the United States by using undeclared accounts in the British Virgin Islands and at HSBC India to evade his income taxes. According to those documents, employees of HSBC Holdings plc and its affiliates operating in the United States assured Dahake that accounts maintained in India would not be reported to the IRS.

The government alleges that, according to HSBC’s website, in 2002 HSBC India opened a “representative office” at an HSBC USA office in New York City to enable “Non-Resident Indians” (NRIs) living in the United States to open accounts in India. In 2007, HSBC India allegedly opened a second representative office at an HSBC USA office in Fremont, Calif., purportedly “to make banking transactions more convenient for the NRI community based in California.” Although HSBC India closed those offices in June 2010, the government alleges that NRI clients may still access their accounts at HSBC India from the United States. According to the petition documents, NRI clients have told IRS investigators that NRI representatives in the United States assured the clients that they could invest in accounts at HSBC India without paying U.S. income tax on interest earned on the accounts and that HSBC would not report the income earned on the HSBC India accounts to the IRS…”
http://www.justice.gov/tax/txdv11439.htm

http://www.guardian.co.uk/commentisfree/2011/apr/07/icelandic-citizenship-golden-geese

#197 Utopia on 04.10.11 at 7:01 pm

#187 John Saccys

“I think you will need to change your view on gold and silver [Garth]. These PMs should be at least 10% or higher in anyone’s portfolio currently. The only rational outlook for the next 6 months to 18 months is that price of Gold, Silver and Crude Oil is going to go WAYYY higher than it is now”
———————————————————-

I would not bank on that John,

On the contrary I anticipate a positive reversal of the US dollar trade. There are quite a number of good reasons for this to happen too, the prime one being that the Euro will suffer it’s own downward correction.

Should the dollar rebound (and it will) then one of the outcomes will be that the wind will get knocked out of the commodities and precious metals gas-bag that is building pressure right now.

It would be a welcome relief to be honest.

Those asset classes have risen too high and too fast. Some even predict a commodities bubble as an outcome. I would not worry about that for now however. The pressure of the current boom needs to be blown off though, and quickly, before our nascent recovery hits a very deep pothole.

For in fact, with the sharp price rise in crude and many other critical supplies the entire recovery envisioned to materialize under a regime of Quantitative Easing in the US and elsewhere will be derailed thus sending us straight back into a recessionary purgatory.

This is in fact my best argument for why the dollar will gain some traction. It is absolutely in everyones interest for such a thing to happen right now. It is the prescription indeed over a short period of time to reduce the negative impacts of the resource trade and in particular, excess speculation in oil markets.

The doomsayers may gloat over their precious metals hauls all they like and kiss up the Golden Gods but there are compelling reasons arising for why the dollar should see some recovery.

Rising rates in China and other parts of Asia are meant to tap the brakes on growth and quell inflation pressures there as one example and we may see something of a slowdown in commodity consumption shortly. They are pretty much stocked up on everything already anyway.

European austerity meanwhile is having a big effect on investments, savings, growth and consumption at this time. Many of the economies remain in recessionary territory and while I favour austerity where debts are paid down they may be going at it a bit too fast.

Problems are anticipated as a result and the added drag on those economies will push the Euro back down. Portugal for example is now pleading for its own bailout while Ireland and Greece are effectively bankrupt.

There are other forces on the horizon however just the few mentioned are enough to reverse the dollar trend and shock the gold crowd back to their senses for awhile.

The long term picture is a different kettle of fish though.

#198 BPOE on 04.10.11 at 7:17 pm

You or no one else can stop the money flow from China, Europe and America to BPOE. There is so many rich people in the world who have cash to spare. I know this is hard for you and others on this board to understand. Not everyone in the world has a huge mortgage or Visa payments. Some people actually are wealthy. This is who Vancouver caters. Doesn’t matter where you are from, if your rich Vancouver draws you in like a magnet. It’s the BEST. Post all the negative China articles you want , makes no difference to what is and will happen here.
___________________________________
186 The American on 04.10.11 at 4:30 pm
And so it begins for China. There is no stopping the train. How will this affect Vancouver in the long-term? Well, probably not too great. It is, in all effects, an admission that China’s economy is not as healthy as they’d like it to appear. Keep in mind this news comes from the Chinese government, which probably means its at least three times as bad as is being stated…

http://www.bloomberg.com/news/2011-04-10/china-posts-unexpected-140-million-trade-surplus-in-march-as-exports-rise.html
.

#199 jess on 04.10.11 at 7:24 pm

..”The claims on Iceland are huge, considering the size of its population – £3.5bn equals a claim on the British taxpayer of £700bn. The claim is contested; it has a doubtful legal basis, and an even more doubtful moral basis.

In a similar vein, the people of Ireland, Greece, Portugal and other EU nations have had to accept a total guarantee of all loans made by commercial lenders, thus leaving both financial institutions and bondholders free of all responsibility. Why is this? Has this been discussed properly? Is the idea that taxpayers should necessarily guarantee private lenders a commonly accepted proposition? Is reckless lending supposed to be without consequence?”…

http://www.guardian.co.uk/commentisfree/2011/apr/08/iceland-referendum-conspiracy-financiers

#200 BPOE on 04.10.11 at 7:25 pm

Economics have nothing to do with Vancouver. This is what The American and others on this board don’t understand. They state interest rates, job creation, debt levels etc. The people buying here couldn’t care less about how much debt a Canadian has or how a Canadian is going to carry a mortgage. The world wants Vancouver not Seattle. Vancouver is World Class period. Seattle is a poor second cousin. Nice to visit once and awhile but you don’t want to hang around too long.
Seattle has been on a downward slide since it peaked in the early 60’s______________________
Junius on 04.10.11 at 8:35 am
#135 The American,

I agree with your comparison between Seattle and Vancouver and also agree that Seattle has much more going for it economically. When people here in Vancouver don’t see that I just can’t believe it.

#201 jess on 04.10.11 at 7:45 pm

male bonding

Scientists and academics have always been interested in the question of how quickly perfectly normal people can turn into killing machines. The material Neitzel and Welzer uncovered for their book suggests that the answer is simple: very quickly indeed.

04/08/2011
Rape, Murder and Genocide
Nazi War Crimes as Described by German Soldiers
By Jan Fleischhauer

#202 realpaul on 04.10.11 at 7:49 pm

OK, so you’re one of the millions that realize that changing the date of a national debate and perhaps the fate of the nation to better serve the hockey crowd in Montreal makes the entire country look like an insipid pool of knuckleheads and dipshits….congratulations.

It’s embarrassing……isn’t it…to think that a fucking hockey game can’t be rescheduled but a national election can. Boy….does this ever make us look stupid……and imbecilic…….in spades.

Other than that heres some excellent thoughts on the hyperinflation/deflation debate.

http://gonzalolira.blogspot.com/2011/04/relying-on-gods-from-machinery-weird.html#more

PS…. I hear the new Canadian passport has a curly cord attached and comes with optional bunny ears. The old adage ‘you deserve the government you vote for’ is so apropo in our case. I’ve rarely been embarrassed to show my CDN passport….except……….now.

#203 Cellar Dwellar on 04.10.11 at 7:50 pm

@ #194 Mr Plow
LOL
Sure I will rank some of your comments up there with the “garthsters”
You have your lucid flashes of brilliance occasionally.

So does the “sunshine and lollipops” come with “rainbows”? Cause God only knows after the fricken rain we’re been having out here on the Wet Coast, We need a few rainbows( and I aint talkin the parade in the West End)

#204 Nostradamus Le Mad Vlad on 04.10.11 at 7:54 pm


#158 Dark Sad Monster Bunny — No trouble! BTW, another meltdown of immense proportions is presently underway. How many more of these can the planet take? CC, RE, financials, wars — all meltdowns, all have almost finished their cycles!

A possible new title for Garth’s site: “Bay Street: Dumber than a Tapeworm!”
*
17,500 Japanese are turning against nuke plants, with more to come.

4:54 clip Libya pays for embarrassing the US. Yet the US has the largest oil reserves in the world, so why are they continually taking others’? Is this a case of ‘Do as I say, not as I do?’, plus 17:29 clip Guess who is funding the Saudi Wahabis causing trouble in Bahrain.

Un-reserve dollar and Soros US$ no longer reserve currency.

4:51 clip “This information is directly from the EPA. Please send this alert to everyone you know.” There is also a fair amount of radiation over the western provinces.

Libya Regime change, which puts the US at odds with Israel, as they want Gadaffi to stay put.

Gas Prices The reason why prices keep going up. Someone has to pay for all these wars!

JPM CEO “Editor’s Note: Our bailout tax dollars at work. Long live the too-big-to-fail cartels. Death to democracy!” Plus Regime Change continued. How to spend taxpayers’ money and make greedy people / companies richer.

Long Term food storage basics and packaging.

Fukukishina — PDF File “Breaking: This report was leaked to the German newspaper Der Tagespiegel, and kept leaking…”, plus Three Mile Island Fukushima is way past that.

10:37 clip “Bob Chapman — JPM and HSBC Silver Contract Default.” Recall JPM took an 80% play in London’s PMs recently?

China “For all the money spent to keep the Wall Street crooks out of jail, the USA could have had a Thorium cycle reactor in every major US city! Does this sound like wise government to you?” wrh.com, and Obama “So Israeli agents provocateurs fire a few bottle rockets over the fence, and Obama, President of a nation that cannot even feed all its own people, pours more tax money all over Israel. Does this sound like wise government to you?” wrh.com.

Fluoride Poisoning “German and Austrian scientists knew in the early 1930s that an overactive thyroid (hyperthyroidism) could be successfully treated by bathing patients in water containing minute amounts of fluoride.”

1:26:09 movie Vaccines — The Full Monty.

#205 dd on 04.10.11 at 8:06 pm

#163 Ex-Cowtown

…The question is when to start shorting oil. July 2008 replay.

………………………………………………………………………
It may not work out like that. Oil and all other commodities are increaseing. Why? Mainly the fload of US dollars. The US dollar is near a key point (72). If it falls below that it is all price decovery. The US central bank is trying to trash the dollar – make exports cheaper. Some say the gov / bank is trying to slowly depreciate it another 50% compared to all other currencies.

#206 dd on 04.10.11 at 8:11 pm

#198 Utopia

…On the contrary
…………………………………………………………………….
Short term only.
It is all about debt. US will be running $1.6Trillion in 2011. By 2020 they say $650B. Ya right.

Bush said in 2000 the debt would be zero by 2012. the US is now at $14trillion. A little overshoot.

Wake up.

#207 Cory on 04.10.11 at 8:14 pm

Garth you really have to stop pushing your way as the be all end all to investing. Sure it works, for you…and maybe some others. But it’s not the only way. A good financial advisor would adapt to each individual vs. pushing their own style as absolute.

But if I am allowed to annualize too then I am up 120% so far this year. Not bad for not buying one stinking ETF.

The key is predictability – growth with as little volatility as possible. You do not get that with a single-asset portfolio, especially in times like these. How hard is this to understand? — Garth

#208 45north on 04.10.11 at 8:26 pm

Brad in Van: Finally, an East Indian-American overhearing this nonsense got up from his table and approached the little cockroaches.

the East Indian-American said: One last thing – if you don’t like being here with all of us “stupid Americans,” you can leave the U.S. too.

my bet is they didn’t

#209 xindai shan on 04.10.11 at 8:30 pm

A VERY blunt article about the housing bubble in Canada. Garth has talked a lot about housing investment and its impact on GDP, but the author outlines clear breaking points, which have already happened.

Globe and Mail Article

#210 CalgaryBoy on 04.10.11 at 8:45 pm

To #27

Go get a life! I’ve heard many “caucasians” cheating on their significant others. Does that make them any better? Next time, mind your own business and quit listening to other people’s conversations. You are no better! Set a good example for your daughter from now on, ok?

#211 John Saccys on 04.10.11 at 8:58 pm

Will the USD have short term bounce … Definitely.

But the underlying fundamentals have not changed. There is so much credit flowing from the central banks all over the world. Debt is sucking the tax payers high and dry. US has a $ 14 Trillion debt excluding any personal, municipal and corporate obligations. band Aids do not work. The republicans and the democrats have failed the country miserably, pandering to the elite class only. The tea party are no saviors and will wither away.

The only truth is that there are no solutions that will appeal to anyone. No one wants to take the bitter pill. The US dollar will devalue for the good of the US economy (exports) and for the bad of the US citizens (stagflation, higher interest rates).

#212 Junius on 04.10.11 at 9:43 pm

#201 BPOE,

I have just spent 10 days in the South of France – Nice, Monaco and Cannes. That is world class. I checked out the prices in Cannes and Nice which are cheaper than Vancouver. Better weather, better food and more sophisticated.

A clear sign that Vancouver is WAY over priced and that you should be wearing a rubber suit.

#213 CalgaryBoy on 04.10.11 at 9:53 pm

http://www.calgaryherald.com/business/real-estate/March+housing+starts+decline+Calgary+region/4585232/story.html

Calgary takes a big hit!!!