You are a coward. And now you think you’re an investment guru on the top of the world in a high rise tower… I say this. Enjoy the drop. You know it’s coming one day. Thing is, you lack the credentials and fortitude you claim to have. You are not a contrarian, you’re an opportunist. And no, I don’t think I’m hurting your feelings. Just calling you out as the sack of shit you are…
This, of course, is one of the side benefits of having a blog. Every eight or nine minutes some brave, anonymous hater lashes out. Over the last two days I have deleted more messages like the one above (they add nothing to our conversation) than in the entire last year. It’s so comforting to, you know, matter.
Hate’s a fairly predictable thing when I get too positive. In the last two days I wrote about raging bank profits (Scotia and BMO), aggressive REITs (H&R and Dundee) and rebounding US house prices. It’s obviously been too much to bear for the gang who comes yearning for collapse. That includes the precious metalheads, the god-and-guns rightists, the America-haters and those who want widespread social meltdown so they can afford a house in Kits or Leslieville.
They yearn for the good old days of February, 2009, when the world was teetering, and I was providing daily commentary on an unraveling capitalism. But, too bad for them, things have evolved massively. Sure, we’re in deep debt, Europe’s a mess, Canadian housing is at risk and a lot of unemployed 50-somethings will never work again, but the path ahead is starting to clear. Central banks will allow no sovereign defaults. No hyperinflation will destroy money. No chartered banks will topple. The US will slowly recover. Smart people will have financial assets which adhere to my divine trinity: balance, diversification and liquidity.
Here are a few more things to piss off the doomers. Bill from BC write me last night after reading my take on the nascent American real estate renaissance:
I hate to admit this but I tend toward the negative when looking at the big picture. I mean if I ran my finances like the powers that be I would be bankrupt with zero sympathy from anyone. But, when I read your post today about US real estate it made me curious enough to email a friend I have that left Vancouver last year to take a promotion in Phoenix, AZ. This guy is no dummy and I wondered if his promotion was well timed.
Here is his “man on the scene” response to my question on how is real estate doing in Phoenix.
“I have 10 houses I have bought in the last 12 months. Everyone at (his company will remain unnamed) is buying in the Phoenix area. Ex-pats living in Canada included. My houses returned 12% ROI cash on cash (rent). Add 17% appreciation to that and it is all sweet nectar. 52% of the homes sold in the last 12 months in Phoenix were to investors. People a lot smarter than me are buying in volume.”
It’s true. Phoenix house prices have been rising more than 1% a month, just like in Miami. And while buying and owning is hardly as simple as Bill’s buddy makes it sound, there’s a ton of evidence Canadian and US prices will be going in opposite directions. If American real estate does stabilize and slowly starts appreciating in most regions, those who bet against the country, hoarding rocks and ammo, will regret it.
As for the banks, they’ve just showered investors with a $563-million windfall. That’s how much will be shoveled into the pockets of bank shareholders through dividend increases announced in the last three days. That’s not all the dividends paid out – just the extra added this week
RBC has scored the biggest quarterly profit in the history of rapacious Canadian bankers, making $2.2 billion in just 90 days. TD raked in $1.7 billion (a record for it) while CIBC saw a big profit surge, to almost $900 million. Together the Big Six earned $8.2 billion in three months, and unleashed a storm of dividend increases. This has never happened before, so you can easily tell who’s profited from the country’s lusty obsession with real estate. Even if house prices tank and new mortgage lending dries up, most of this cash flow carries on. After all, there’s $1.2 trillion worth of home loans already in place, which will still be there even if condos crash and equity burns.
This is why it makes more sense to own the bank than owe it. And it’s sure wiser to collect 5% from stable bank preferred shares or 4% from bank stock, than keeping your ‘house money’ in a high-interest savings account paying 1.5%. Besides, interest is taxed at the highest rate, and dividends at the lowest. How hard is this to figure out?
Well, I must be off now. The Amazonian protection detail is ready to escort me safely out of the blog. I’ve added a few extra sinewy babes, er, warriors since hearing an ambush is highly likely. We expect to be pelted with Depends. And depreciating yellow rocks.