The advisor

Our little chat yesterday brought the usual invective down upon me that precious metals zealots love to hurl. There were many creative and helpful suggestions, for example (unpublished), as to what I could do with my various bodily openings. Many had never occurred to me. Thank you.

During this financial and carnal romp I was reminded how many people don’t know how to invest. And why should they? Nobody teaches this stuff in school. [email protected] tells you only GICs or mutual funds exist. And financial writers are forever pumping individual stocks, like this was a lottery or the season climax of So You Think You Can Dance.

Most folks, then, bounce from no-return, dead-meat-money, highly-taxed, no-risk bank deposits to high-wire, junior resource stocks that usually blow up in their faces. Many gold investors buy (at whatever price) and never sell, which means their ‘investments’ yield no interest, dividends or even capital gains. Others give their money to mutual fund salesguys and wonder 12 years later why it never grew.

So there are two points I’d like to cover in today’s pathetic entry. The first is rebalancing, which is a key action every serious investor should take, as required. Let’s go back to gold (may God help me). If you decide in a wonky world you feel better having some yellow metal to stroke and 5% of your portfolio should be in bullion, fine.

If you bought this gold at $1,200 an ounce a few years ago and have ten little wafers hidden in the plunger control mechanism of your downstairs toilet, then it’s a $12,000 throne. Now let’s say it’s late summer in 2011 and gold spikes to $1,900, while stock markets fall. Now the gold is worth $19,000. Instead of constituting 5% of your $240,000 portfolio, it’s jumped to 8%. So, a disciplined investor would sell about three ounces to restore the target weighting. A smart and brave investor would put the extra $7,000 into those parts of the portfolio (like equity ETFs) which had dropped in value while the yellow stuff advanced.

This is called rebalancing. If you don’t do it, you turn investing into gambling. This allows you to harvest a capital gain, turn paper profits into real ones, maintain diversification and strip out the emotion which makes people want stuff that’s rising and fear what’s falling. So when gold tanks, as it did early in 2012, taking the weighting below 5%, you sell off some winning assets and buy an ounce or two.

Of course, this takes time. You have to know when to move. It involves trades, and the confidence to do what most people are not. In fact, rebalancing is the ultimate contrarian move. It’s also the way to build wealth. And it’s damn hard to pull off when you have a spouse, a job, kids, a dog and a life.

So here’s the second point, as expressed by a poster here last night:

This is the frustrating problem that many investors have. How in heck do we find a good advisor? If we don’t have the knowledge to manage our own portfolio, we also probably don’t have the knowledge to evaluate the expertise of advisors. They all can do a good job of marketing their skills and selling themselves. Basically, we need to know the right questions to ask, and the proper answers to those questions. And most people don’t know either one. So they don’t have the ability to weed out the bad ones. And there are more bad than good. I totally agree with you, Garth, that most people need a good advisor. But they have no clue how to begin the process of finding one.

Yes, I do think anyone with six figures to invest should have professional help. Most people need it, since they lack basic knowledge — like how various asset classes are taxed, how the bond market functions or the real difference between a mutual fund and an exchange-traded one.

Advisors abound, but most are salespeople. The greatest number work for the banks, and sell bank products. No crime there, but you should also be offered preferred shares, real-return bonds or trusts like REITs. You’re best served, in my view, by having a diversified and balanced portfolio made up of various assets which you own individually, not as part of a pool with scores of other folks. Your advisor should manage this portfolio, not a manager in a tower in another city you’ll never meet. The advisor should also ask about, and care about, your kids, siblings and parents – since odds are they’ll all figure into your financial life at some point.

So ask any candidate advisor for references, if you don’t know him or her, or some written statements from existing clients. Review recent performance numbers, but realize that high returns pale in the face of capital preservation and consistency. Be wary of anybody with a Porsche. Harleys are fine, however.

There is no simple answer as to how to find the right person. But compensation is important. If the advisor is paid through commissions collected from products sold to you, the potential for conflicts of interest is large. If the person makes money on transactions, every time something is bought or sold, you might wonder if trading is excessive. A fee-only (by the hour) advisor will review your life, perhaps craft a plan, and give suggestions. But you still need someone to implement it, as well asconstruct, monitor and rebalance your portfolio.

A fee-based advisor charges you a small amount of what you invest (usually 1% a year), builds a portfolio and manages it for you, takes no commissions and sells nothing. The fee is tax-deductible, unlike those you must pay to own mutual funds.

When not being creamed by metalheads or reamed by realtors, this is what I do. Some may therefore view the words just written as self-serving, or think I guide people into liquid assets and away from other things for a personal reason. That’s cool. Believe what you wish. But I said and wrote these things for thirty years before ever having a client.

The world’s full of choices. Make good ones. And if you own gold, lighten the hell up.

165 comments ↓

#1 TurnerNation on 12.12.12 at 8:37 pm

Fed = Santa!

#2 PermaBear on 12.12.12 at 8:41 pm

Early post tonight…..12/12/12.

#3 Cash is King on 12.12.12 at 8:44 pm

So where do those of us who are making their way up the six figure ladder go?

#4 randman on 12.12.12 at 8:57 pm

Well Garth …it’s very simple

1)Financial advisers make no fee by recommending gold

2)And no one should be able to tell you what to do with your body openings!

TWO TRUTHS!

At least you’re half right. — Garth

#5 HD on 12.12.12 at 8:57 pm

Great post! Keep up the good work Garth!

I started very small but I grew my portfolio to 72K. Not bad for a 28 years old guy.

I use low cost ETFs (see CCP for some portfolio suggestions: http://canadiancouchpotato.com/model-portfolios/)

70% in equity
30% in Bonds

The plan is to poor in as much money as I can and rebalance once or twice a year. As simple as that.

Best,

HD

#6 randman on 12.12.12 at 8:59 pm

“f you bought this gold at $1,200 an ounce a few years ago and have ten little wafers hidden in the plunger control mechanism of your downstairs toilet, then it’s a $12,000 throne. Now let’s say it’s late summer in 2011 and gold spikes to $1,900, while stock market fall. Now the gold is worth $19,000. Instead of constituting 5% of your $240,000 portfolio, it’s jumped to 8%. So, a disciplined investor would sell about three ounces to restore the target weighting. A smart and brave investor would put the extra $7,000 into those parts of the portfolio (like equity ETFs) which had dropped in value while the yellow stuff advanced.

This is called rebalancing. If you don’t do it, you turn investing into gambling. This allows you to harvest a capital gain, turn paper profits into real ones, maintain diversification and strip out the emotion which makes people want stuff that’s rising and fear what’s falling. So when gold tanks, as it did early in 2012, taking the weighting below 5%, you sell off some winning assets and buy an ounce or two.”

This is excellent advice …..!!

#7 CrowdedElevatorfartz on 12.12.12 at 8:59 pm

Where’s Dr Wayne? I want him to be First !

#8 Brian on 12.12.12 at 9:06 pm

Well said. I work on Bay St, in the advanced tax and financial planning dept of a major bank, most of my day is spent feeding solutions to sales errr…financial advisors and quite often 5mins before their next meeting. Why? Because they are too stupid or lazy to do it themselves Yet! for some reason, clients, YOU give them money, maybe because they have a great golf swing, or their kids play hockey with yours, or you’ve known them since high school.

There are a handful of advisors I would trust with my grandma’s money, the rest could just as well be a car salesman.

It’s truly a shame since these persons give the industry a bad name, there is a tremendous value to financial planning and I often wonder myself, how can a client tell the good from the bad? Start with the basics folks, look for letters after their name like: CFA, CFP, CLU, CIM these are industry designations and it means your advisor at least for one moment, knew something. Stay away from, advisors with little or no education, and, or who spend more time talking about golf and weather than your financial needs. The biggest asset every successful sales person holds is charisma, stop hiring your friends, your hockey buddies, or cottage neighbour; the smartest people are usually behind the scenes and only seen by people in the know, by all accounts they are shitty sales people, they don’t want to sell you anything, and they probably don’t want to hang out, they like to solve problems, they like to help.

#9 David Coburn on 12.12.12 at 9:07 pm

Cash #3, here’s a review from the Globe about online brokers .

http://www.theglobeandmail.com/globe-investor/qtrade-keeps-its-lock-on-no-1-in-globes-annual-survey/article554611/

Fees have become pretty low these days. Research a few ETFs from the asset classes Garth has outlined many times before in earlier posts. The post ‘Non-Cowboy’ is quite helpful. Take particular note of today’s post, this is the essence of buy low sell high.

#10 ronthecivil on 12.12.12 at 9:09 pm

I don’t own gold itself but have a small percentage in gold producers and funny enough that’s what’s getting the rebalancing at the moment.

#11 ronthecivil on 12.12.12 at 9:12 pm

I would agree with HD that couchpotatoe has some very reasonable advice on how to get a well balanced portfolio. I personally like the dividend paying one.

Capital gains are awesome no doubt but I just love getting dividends. Besides, divedend paying stocks can still get capital gains. Just harder to sell them since those that do tend to be ones that increase their dividend as they go up in value!

#12 n1tro on 12.12.12 at 9:18 pm

Hopefully folks here know that you don’t have to ‘pour in’ money to rebalance. With the dividends from your preferred or reits, you can use that to buy gold or even better, a gold related stock that in turn pays dividends!

#13 Antoine on 12.12.12 at 9:21 pm

Seriously, you guys didn’t know about rebalancing? Sheesh!

You’re fighting the good fight Garth. This blog is worth more than gold (and paying dividends!).

#14 Ralph Cramdown on 12.12.12 at 9:34 pm

Wait, 5% of my PORTFOLIO? I thought it was supposed to be 5% of my BODY WEIGHT!

#15 LilyJoe on 12.12.12 at 9:36 pm

Great post tonight Garth! Thanks for the advice.

#16 Honus Wagner on 12.12.12 at 9:40 pm

Garth, are you familiar with William J. Bernstein’s writing? If you look at rebalancing purely from an academic point of view, it’s often not worth the trouble. You have to make some pretty agressive assumptions for it to pay off over the long haul. As a matter of risk reduction, it has merit. If one is still in the accumulation phase, the rational approach is to tilt towards buying what is beaten down, and not worry too much about strictly adhering to target allocations by selling down. To each his own on this front though; you need to be comfortable with what you’re doing.

#17 Mike on 12.12.12 at 9:42 pm

Nice post, much appreciated. It sucks to hear people get sucked into mutual funds by people who don’t know anything. I wish financial planning could become a profession where only those qualified carry such a job title, like doctors or lawyers.

#18 Inglorious Investor on 12.12.12 at 9:47 pm

Good post. Sound advice.

––––––––––––––––––––

Now, because it’s so important IMO, back to the Fed, if I may. Here is Jim Rickards’s soundbite assessment of the Fed’s latest policy announcement: “It’s smoke and mirrors.”

Find out why. Watch the Jim Rickards Capital Account interview here:
http://www.facebook.com/CapitalAccount/posts/261929353932487

#19 BC on 12.12.12 at 9:48 pm

Solid Advice. My adviser charges an annual fee of 1%. I have a few concerns.

1. Her incentive is to keep me fully invested. When I suggest taking a profit on something or realizing a loss early in the deterioration process, I sense resistance. Because her fee is going down? My imagination? Who knows.
2. With preferred dividends now in the 4% range paying an adviser 1% represents 25% of the total return. My view is that is just too large a proportion of the total return to pay the adviser. I think advisers are going to have to figure out how to live on lower income just like the rest of us.

#20 Smoking Man on 12.12.12 at 9:51 pm

For all else is gambling.

So if loot falls from the sky’s easy money take bigger risks.

If your dog and slave for your wages, own no slaves making you loot. Get an advisor start with a shrink.

Self employment is the only way

#21 AK on 12.12.12 at 9:55 pm

During 2011, On a weekly basis, Canadians watched an average of 28.5 hours of television, up from 28 hours in 2010, and listened to an average of 17.7 hours of radio, up from 17.6 hours the previous year.

I believe that the average Canadian can take about 2 hours away per week in order to educate themselves in the fundamentals of investing.

Doing it yourself is a far better option than hiring an “Advisor”.

#22 randman on 12.12.12 at 9:56 pm

Now on to the problems in the USSA ….

“Paul Craig Roberts was Assistant Treasury Secretary in the Reagan Administration, and he warns, “America is going to crash big time.” Dr. Roberts says, “The real problem is not the fiscal cliff.” The dollar is on very thin ice. Dr. Roberts says, “They can’t stop hemorrhaging the debt, and the way they cover that is to hemorrhage the dollar.” In this real time scenario, Dr. Roberts goes on to say, “When you have debt pouring out and dollars pouring out, the dollar can’t keep its value forever. At some point, people will run away from it, and it will start abroad.” Dr. Roberts thinks there is “an impending collapse of the exchange value,” and the U.S. dollar could unexpectedly plunge in buying power. Dr. Roberts contends, “All of a sudden, people walk into Walmart, as usual, and they think they’ve walked into Neiman Marcus.” Dr. Roberts says there are no quick fixes to the bulging debt because “there’s no way to close this deficit when corporations are moving the tax base off-shore.”

http://usawatchdog.com/america-is-going-to-crash-big-time-paul-craig-roberts/

Sorry…I know…I’m no fun at parties!

#23 Inglorious Investor on 12.12.12 at 10:02 pm

The Ontario Securities Commission is pushing to force financial advisors to become fiduciaries and true managers of risk, rather than just fund salespeople with a “know your client” risk declaration that’s intended more to protect them than you.

Sadly, even if your advisor/fund salesperson really wants to have your best interests at heart, the industry’s current bank-broker/mutual fund business model is anathema to such a change. This model is based on sales of arm’s length, derivative investment products, not risk management. Fee-based advisors are a step in the right direction.

#24 Ronaldo on 12.12.12 at 10:14 pm

#7 CrowdedElevatorFartz –

”Where’s Dr Wayne? I want him to be First !”

Would be interested to know just how old you guyz are. Would hate to think that you are in any position of authority. And if married, poor spouse.

#25 Canadian Watchdog on 12.12.12 at 10:14 pm

A smart and brave investor would put the extra $7,000 into those parts of the portfolio (like equity ETFs) which had dropped in value while the yellow stuff advanced.

I sure hope someone on this blog doesn't calculate the real value of that trade.

#26 Chickenlittle on 12.12.12 at 10:15 pm

YES!! THIS is what I have been waiting for! I’m going to bookmark this one!

TAKE THAT Suze Orman…

#27 Ralph Cramdown on 12.12.12 at 10:16 pm

#22 randman — “When you have debt pouring out and dollars pouring out, the dollar can’t keep its value forever. At some point, people will run away from it, and it will start abroad.”

Given an environment of low growth, high debt and high unemployment, can you name one major country or bloc whose government wouldn’t be THRILLED TO BITS if its currency dropped 10% overnight against a weighted basket of its trading partners’? Or whose trading partners wouldn’t immediately form a lynching party? Have you heard the USA berating China for keeping the Yuan low (i.e. the USD high)? Have you seen how hard Switzerland is working to keep it’s Franc from appreciating against the Euro?

#28 wes coast on 12.12.12 at 10:17 pm

Awesome post. Thank you.

#29 Roy on 12.12.12 at 10:26 pm

Love the pic…

Let’s see, the crybaby kids are the realty boards looking for their milk and honey that just got taken away by Santa the Feds….

Or maybe they’re just the spoiled Vancouverites now finding out their homes can only drop in value over the next 5 – 10 years. The papers are saying because of poor sales Vancouver sellers are now having a “pulling their homes from the market” tantrum.

#30 Nostradamus Le Mad Vlad on 12.12.12 at 10:32 pm


The happy family in the pic and this sentence — “. . . as to what I could do with my various bodily openings. Many had never occurred to me. Thank you.’ — jive together. Spontaneous combustible creativity! That’s what it’s all about, ain’t it?

Good post. Our CFP has made our lives significantly easier, so there are no complaints from here.
*
#165 Smoking Man — “Since when does a Tiger worry what sheep think.”

Tigers don’t worry. They just eat!

#209 TRT on 12.12.12 at 8:07 pm — “End result: Lower wages/benefits for workers eventually.”
— and —
#213 Oceanside on 12.12.12 at 8:32 pm — “. . . unions may not be the best for everybody but they did, and do maintain a middle class that uses their wages to buy goods and keeps the economy going.”

Precisely. If people are well paid for their skills from apprenticeships, they will spend a fair proportion of their wages buying stuff and hence, keeping the middle class stable.

But if people are divided into two camps — rich / poor — y’all know what the outcome will be. I was a tradesman for three decades, and it served me very well.
*
Deficit update Who, where or what is the US borrowing 46 cents from? Itself? The IMF? Plus United States of Austerity First para. should suffice; Llpyd Blankfein Friends in all the right places; California Don’t ask, and 2:06 clip The Gestapo is in California; Twinkies Fat cats get fatter; Detroit At least there’s something to aim for; Workers who voted for Obomba seeing work week cuts to less than 30 hrs.; France The rich are saying adieu.
*
SMan Education in NAmerica sux; Nuke tests Is the US preparing for something? Prison Planet (Infowars) Interesting; Legislation which doesn’t exist “There are also no raw milk licenses available in Wisconsin, which makes it impossible to comply with even a nonsensical mandate.”; 9:34 clip The time for Russia to act is now; Cassini Mini-Nile on Saturn, and Near Miss with us and EPA Polluting the underground water supply; Journalism Good journalists shouldn’t get prison time; 1:05:45 doc. David vs. Monsanto; NKorea satellite tumbling.

#31 blase on 12.12.12 at 10:38 pm

If you’ve had a good year and are feeling grateful, maybe think about watching an amazing concert and donate some Christmas cheer$ to the victims of Sandy.

http://www.spinner.com/2012/12/12/sandy-benefit-stream/

#32 Dr. WAYNE on 12.12.12 at 10:41 pm

“I totally agree with you, Garth, that most people need a good advisor. But they have no clue how to begin the process of finding one.”

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

The problem with ‘surfing’ for an advisor, using whatever means available, does not necessarily result in a favourable outcome. One error in selection, or several, could result in a significant financial loss.

Fortunately, I lucked out with an advisor who has been phenomenal. Yes there are fees, but reasonable. Into mutual funds, bonds, REITs … no metals. Corporate dividends are available, which is nice in terms reduced taxes on withdrawals from a holding company investment.

#33 S'toon accountant on 12.12.12 at 10:41 pm

Garth your Dutch auction is back on the market, but this time he listed it for $422,500. With the amount of snow that we have in the city right now, (2 1/2 feet), nothing is going to move until the spring.

MLS®: 447990
http://www.realtor.ca/PropertyDetails.aspx?PropertyID=12604768&PidKey=884538767

It was originally listed in October for $420,00
http://www.greaterfool.ca/2012/10/26/flatlanders/

#34 Dr. WAYNE on 12.12.12 at 10:51 pm

#7 CrowdedElevatorfartz on 12.12.12 at 8:59 pm

Where’s Dr Wayne? I want him to be First !

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

Hey Fartz … I don’t need the ‘high of a simple-mind experience’ … my highs are chemically induced …

AND … #24 Ronaldo on 12.12.12 at 10:14 pm

My responsibilities at one time … you wouldn’t believe me if I told you … and my wife, a babe, and certainly not poor by any stretch of ‘your’ imagination.

#35 AL on 12.12.12 at 11:03 pm

Garth, why not purchase a low cost target end date fund, some are costing 1% mer. Let them do the allocation/rebalance, and be done. No meetings with advisors, no headaches, no mess.

Al

#36 TurnerNation on 12.12.12 at 11:07 pm

Good to see, this weblog unabashedly adhering to its ‘Bike, Babes, and Balanced Portfolios’ realpolitik

#37 Hoof-Hearted on 12.12.12 at 11:11 pm

Dr. Wayne……

A legend in his own mime
A legume in his own meme

Whatever

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

#38 MC on 12.12.12 at 11:14 pm

Garth,

If a portfolio had lets say an american index etf and it was around september/october when the S&P hit its highs, what does a responsible portfolio manager do. Cash out the etf and buy an inverse etf to short the correction or put that money into a sold off asset class. Does that decision come from the investor’s risk profile or the manager’s discretion

#39 Brad in Cowtown on 12.12.12 at 11:14 pm

Solid advice on rebalancing. Absolutely. It makes perfect sense.

The only reason the “metalheads” come after you is because you cherry pick starting points for gold analysis to try to make it look like a weak investment. People who have been in the sector for awhile consider it mind boggling (and borderline deceitful) for a professional like yourself to engage in this, considering the 500% gain in gold over the past decade.

#40 Nodebt on 12.12.12 at 11:20 pm

#32 Dr. Wayne(aka dr.wiener)
What kind of deal did you make with
Ur advisor? Did you band his hemroids
For a years free fee charge?

#41 randman on 12.12.12 at 11:21 pm

Ralph #27

It is a race to the bottom…….

#42 Gary in Kelowna on 12.12.12 at 11:24 pm

Garth,
The management fee for an advisor/manager is only tax deductible for non registered investment accounts. Fees charged to manage an RRSP account are not.
Thanks.

Fees for registered accounts are paid as tax-free withdrawals. So an equivalent break. — Garth

#43 Oakvillian on 12.12.12 at 11:35 pm

http://www.leaderpost.com/homes/Housing+market+appears+have+achieved+soft+landing+Scotiabank+report/7682891/story.html

Covered yesterday. Try to keep up. — Garth

#44 Tony on 12.12.12 at 11:35 pm

I made a lot of money using the THE SARLOS & ZUKERMAN INVESTMENT FUND INC. The main premise was stock stock arbitrage and the likelihood of potential buyouts going through. Anyone who tells you to buy stocks is just more or less telling you flip a coin with 50/50 odds and hope to get lucky. As for gold we all know the last main country to accumulate gold was India at 1,200 U.S. an ounce. If that doesn’t tell you where gold is headed and will end up then you shouldn’t be buying or selling gold in the first place.

#45 Dr. WAYNE on 12.12.12 at 11:36 pm

#37 Hoof-Hearted on 12.12.12 at 11:11 pm

Dr. Wayne……

A legend in his own mime
A legume in his own meme

Whatever

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

Hey Goofy … “WHATEVER” ?? … come on, you can’t give up now … try again … I’m sure you will come up with something equally, or perhaps even ‘more’ brilliant.

#46 Form Man on 12.12.12 at 11:38 pm

#8 Brian

excellent post. your comments are valid, and provide a valuable roadmap to selecting advisors and consultants for any reason.

#47 not 1st on 12.12.12 at 11:39 pm

Garth, why on earth do central banks hold gold then? When they stop hoarding it, then maybe the average joe will too.

They hold more USD. — Garth

#48 Craig on 12.12.12 at 11:41 pm

I stumbled upon a pay-as-you-go FA and decided to see how he stacked up against my old “commission-free” guy I have been with since 2001. I decided to let the fee based FA invest my house proceeds, and kept the rest of my portfolio with my original guy. Both invest conservatively, but I had about twice as much money invested with my existing FA. Since January of this year, I am at less than 2% return with my original FA. My new fee-based guy….since April it’s up almost 8%. In my short experience with both types of advisors, I found the fee based advisor to be much more actively involved with my accounts…just my experience. Regardless, I’m moving everything to my fee based advisor in the new year. Thanks T&T!

#49 Thaya Nadarajah on 12.12.12 at 11:42 pm

Hi Garth,
We have been talking for the last many years of a possible housing collpase do you beleive would that even happen in the next 3-5 years. I doubt it because the fed would lie and person like Carney would still a be a hero for the next many years. I am a fed up buyer waiting patiently for the last five years.

#50 will on 12.12.12 at 11:44 pm

This just in from S’toon: Stonebridge sump pumps are working overtime. This from my plumber friend. Reason? Stonebridge is built on a f”’ing slough. I’m not making this up. I asked him if I could quote him on this he said go ahead. Sorry Stonebridge.

As for [email protected] and other advisors, for god’s sake do your own research. Take the CSC, read ben graham, get in the game. There are lots of great yield opportunities out there in good ol Canada.

One last thing, tomorrow night is the geminid meteor shower. may your skies be clear! enjoy!

#51 Smoking Man on 12.12.12 at 11:45 pm

Vlad Education should not be a sport, a competition.

It changes the focus from learning to getting marks, the brain runs less efficient. education should be fun, no mandatory home work ever. Optional only, and in areas that the kids pick and have an interest in.

Judging from authority figures should be outlawed. Hell authority figures should be outlawed.

The reason we have hate and violence is when a person, or are group is excluded. The Education money machine works off this principle.

Most here will not understand, 30 years ago, no internet, no Google. To learn, you paid and bought the books. No need anymore.

If we don’t don’t change fast, others will eat our young, and our country.

#52 kreditanstalt on 12.12.12 at 11:49 pm

There seems to be no room in your world for speculating. Especially in gold. Apparently the only things that count are “investments” that produce more dollars.

Now what will happen when the huge 30-year bond bubble pops? Bond prices will start falling, perhaps slowly but continuously, over the years to come…

What will that do to interest rates? The Fed and central bankers will lose control of them. Prices of financial assets will rise while yields fall ~ sort of like what has already started ~ and the returns from those now oh-so-expensive stocks, REITs, bonds and funds will continue to fall behind inflation in real goods prices.

THAT’S what we gold bugs are betting on. You only put money you don’t need to live on into speculative assets…no one “buys” gold with the intention of bailing out halfway and “selling”. The longer gold is held under present monetary policy the better it will do. Pass it on to your kids!

They don’t call it “portfolio insurance” for nothing.

***It’s YOU – the income investor – who better be praying fervently that central banking somehow defeats the free market and succeeds…

Sounds like a cult. — Garth

#53 cowpie on 12.12.12 at 11:55 pm

“Most folks, then, bounce from no-return, dead-meat-money, highly-taxed, no-risk bank deposits to high-wire, junior resource stocks that usually blow up in their faces. Many gold investors buy (at whatever price) and never sell, which means their ‘investments’ yield no interest, dividends or even capital gains. Others give their money to mutual fund salesguys and wonder 12 years later why it never grew.”__________________________________________

Garth, that sure is accurate! I felt that this describes me (AND MANY FELLOW CANADIANS) to a T. “Believe what you wish. But I said and wrote these things for thirty years before ever having a client.” Can I just say: Thanks for not being a social Darwinist – letting us all twist in the nooses we’ve become financially tangled in. For being willing to take the [email protected] on. Never mind the cranks & wingnuts (people are just crabby that there’s no hockey…)

#54 Irene on 12.12.12 at 11:55 pm

“A fee-only (by the hour) advisor will review your life, perhaps craft a plan, and give suggestions. But you still need someone to implement it, construct, monitor and rebalance your portfolio.

A fee-based advisor charges you a small amount of what you invest (usually 1% a year), builds a portfolio and manages it for you, takes no commissions and sells nothing.

… this is what I do. ”

Garth, do you offer advice by the hour, or only the full-service approach?

An hour with me, Irene, and you’ll beg for more. — Garth

#55 Ken R on 12.13.12 at 12:08 am

Once again a great post. I have fired three advisors over the years for putting their own interests ahead of my own. The last straw was a bank advisor who showed me a list of managed portfolios to consider. Each one had lost money in the previous quarter, but he was quick to explain that my risk was minimized buy the diversification and professional management involved. I had him pull up my accounts and look at the results the previous three months and six months; all up. He relented and told me to keep doing what I was doing. I keep in contact with this guy; he has helped me out on other banking matters and saved me some cash along the way.

Did he send you a calendar> — Garth

#56 Renting In The GTA on 12.13.12 at 12:12 am

Great post tonight!

I will be showing this to friends and colleagues that are in limbo on what to do with their stashed savings.

The general person understands that current GIC rates are a joke.

But at the same time really don`t know how to pick and put their absolute trust in an advisor.

This is their life savings after all….

#57 Back2Canada on 12.13.12 at 12:14 am

This is my first post to this blog. I have been following for a couple months now but only recently on a daily basis.

Thank you very much Garth and this blog community for the extremely insightful opinions. Your passion to help educate the average family to financial wisdom is inspiring.

My family have been living abroad on a fabulous IT work opportunity that surfaced 10 years ago, and the time has come to return back by end of year. I have been able to amass a fairly large amount of savings but always fell flat on any self directed or consulted investments. Your post is clearly giving me a bit of direction as to why..

Although I won’t have the need to carry a mortgage I will need to buy into the sfh market and this scares me knowing where the market is likely headed. But I can’t delay my family needs any further and will just need to do the best I can to price in.

In any case thanks for your ongoing insights!

#58 Smoking Man on 12.13.12 at 12:15 am

An hour with me, Irene, and you’ll beg for more. — Garth

Seriously, you don’t even know the move……..

You got the cowboy boots, and the Harley but I don’t know how good you will be with that girly voice of yours Garth.

Me, with my deep rough voice, even with the occasional hacking cough beats you hands down.

Just what chicks love. Old smokey, yellow-stained guys coughing on them. — Garth

#59 Big Ballin Player on 12.13.12 at 12:20 am

Garth gives outdated advice. His assertion that picking stocks is tantamount to gambling for the average person was true back in Garth’s day when you bought/sold stocks by phoning in your order, and had to pick up a newspaper to find out how your stocks are doing, but today thanks to the internet we have so much information at our disposal that anyone can make big bucks by doing their research on the stocks they buy. I have made a killing in junior miners. That’s because I can access more information about the stocks I buy with a few mouse clicks than a professional stock trader could ever dream of 20 years ago. At the rate I’m growing my portfolio, I’ll be ready to retire by 45 and spend the other half of my life in a tropical paradise.

You are a bug. Careful. — Garth

#60 Form Man on 12.13.12 at 12:23 am

#39 Brad in Cowtown

You are young my son. Calgary real estate and gold will not ‘always go up’.

Try selling a Calgary condo these days. Wasted. — Garth

#61 Mr Buyer on 12.13.12 at 12:24 am

Nigel certainly threw his two cents in last season on So You Think You Can Dance but I thought it was going to be the kiss of death for my favorite male dancer because Nigel supported him so vociferously (I mean come on the other guy was the best twitcher I every saw but he was totally outclassed by the ballet guy). The right female won as well. She was the first non-Asian that I could not take my eyes off in a long long time. That woman moved on many levels. Now I forget what the post was about, oh yeah re-balancing. There must be some way to educate ones self in regards to investing. While certainly complex I am guessing some great books, a few video courses and even reading the tax code I not beyond absolutely everyone in the world.

#62 Smoking Man on 12.13.12 at 12:24 am

Just what chicks love. Old smokey, yellow-stained guys coughing on them. — Garth

The move, they aint looking at you.

And are thinking of old spice man. Look at him Look at me.

And teeth whiteners do miracles.

Now if only some one invents something for wheezing. :)

#63 not 1st on 12.13.12 at 12:25 am

Garth, the truth is 99% of brokers out there simply tolerate their clients while they are actively looking around for the next big deal or IPO or merger that they can cash in and out on. They are brokers to get on the inside of the business, not to help other people get rich.

Where did I suggest a broker? – Garth

#64 Form Man on 12.13.12 at 12:26 am

Just what chicks love. Old smokey, yellow-stained guys coughing on them. — Garth

now that made me laugh !

thank you Garth for the everpresent humour ……..

#65 Mr Buyer on 12.13.12 at 12:31 am

Except cut and paste pinheads like myself that cannot proof read a post or spell to save their lives. I thought it would be a good idea to type in word and revise and then paste into the submit box but Frankenstein cutting and pasting of chunks of rants has proven to be less than elegant. I think I will hire a financial advisor. SYTYCD is great.

#66 Smoking Man on 12.13.12 at 12:36 am

#64 Form Man on 12.13.12 at 12:26 am
Just what chicks love. Old smokey, yellow-stained guys coughing on them. — Garth

now that made me laugh !

thank you Garth for the everpresent humour ……..
………………………………………………………………….

Please don’t tell me you too have a girly voice.

Did you belly laugh or giggle?

#67 Aussie Roy on 12.13.12 at 12:36 am

Aussie Update

Aussie central bank wakes up?…

“Central banks can provide liquidity to shore up financial stability and they can buy time for borrowers to adjust, but they cannot, in the end, put government finances on a sustainable course… They can’t shield people from the implications of having mis-assessed their own lifetime budget constraints and therefore having consumed too much.”

http://www.zerohedge.com/news/2012-12-12/first-hong-kong-now-aussie-central-bank-gets-ugly-case-truthiness

#68 Form Man on 12.13.12 at 12:48 am

#66 SM

it was a deep rumbling sort of growling belch…….

#69 DT76 on 12.13.12 at 1:04 am

Just for laughs :)

http://www.youtube.com/watch?v=k-COG4YTn6M

#70 mac on 12.13.12 at 1:05 am

I don’t like all these dogs and redheads. This blog has lost it’s edge.

#71 smartalox on 12.13.12 at 1:13 am

Great post tonight, Garth. After 3 years, I finally got the missus to see that the ‘advisor’ that she’d had for 15 years was just a mutual fund saleswoman with a downtown office, and generous trailing commissions.

Luckily a former client of hers is a high net-worth financial planner, and he recommended a fee-based, 1% financial advisor. We’re still evaluating options, but I look forward to seeing the plan that they’re preparing for us.

In other news, it was not widely reported in the local media, but the city of Vancouver passed a 2.8% property tax hike to make ends meet for its 2013 budget. I guess the city had better milk those inflated property values while they can! I expect that they’ll have to enact a land-transfer (title-transfer, for condo-buyers) tax for 2014, to compensate for falling property values.

Fortunately we’ve already agreed to terms with our landlord for our 2013 rent increase. Our $40/month rent increase won’t cover his tax increase though, that’s for sure.

#72 Ronaldo on 12.13.12 at 1:18 am

#51 Smoking Man – check this out. I believe you can relate to this from what you have been saying. There is a message here for the educational system.

http://www.youtube.com/watch?v=buaRqL11JXM

Just got word that they were one of three in North America that won. From Nanaimo, BC

#73 Austrian school on 12.13.12 at 1:25 am

Excellent read. Book can be found online.

http://online.wsj.com/article/SB10001424052970203513204576047730344593352.html

#74 lucyj on 12.13.12 at 1:27 am

Great writing, thanks for the open minded views. I am what you would call a simplistic invester, only buy shares that pay dividends and invest in companies that I understand what they do and what services they offer. Very simple but works well. Some of your recommendations of past are included. Thanks for your daily efforts.

#75 Boomer21 on 12.13.12 at 1:31 am

#51 Smoking Man—huh? WTF are you talking about? Go to bed man!

#76 Charlie on 12.13.12 at 1:32 am

Gold seems misunderstood. Central banks were selling the stuff when it was $300 or so a few years ago. Now they are buying it back when it is $1500+. Since the product of central banks is fiat currency, buying gold seems a odd thing to do, unless you don’t have total faith in your own product. If they don’t have faith in their own currencies, why should we? It’s now legal tender in Utah with other states to follow. It will soon become more commonplace to use in international trade as the world moves out of the liability of holding US dollars that are being increasingly devalued by a system that has no hope of ever paying off all it’s debt (unless, according to the IMF, it doubles all taxes).

#77 condopoor on 12.13.12 at 1:34 am

Mr. Turner,

Definitely one of the best posts in recent memory. This kind of advice is tangible, every-day useful and well explained. This is why I keep coming back.

Thank you.

#78 Joe on 12.13.12 at 1:50 am

Back2Canada. I’m sure Garth would recommend renting.

#79 GTARealEstateCorner on 12.13.12 at 1:50 am

To all the readers, new and old, I urge you on one thing. Please be nice and accepting of Smoking Man. He’s probably a good guy, but has never had a lucky break in his life. It’s kind of sad, but he has delusions of grandeur. This is a sign of impaired mental faculty. Please, no judgement, no harassment. Live and let live.

#80 Austrian school on 12.13.12 at 2:02 am

85 billion a month? X 12 months = 1.2 trillion.
1 trillion seconds ago is 32000 years. Seriously? These guys are smart,( the fed ) their only product is the dollar. Why are they trying to kill it? Only time will tell. The plot thickens, I’m glad I am alive.

#81 Nostradamus Le Mad Vlad on 12.13.12 at 2:03 am


#51 Smoking Man — “If we don’t don’t change fast, others will eat our young, and our country.”

Already under way. See link ‘Obomba’s Soviet Mistake’ below, and note the fast-growing far eastern influence on us. No matter — will be time for us to break on through shortly!
*
Leprechauns and Pixie Dust The pot of gold at the end of the rainbow has been found in Ireland; Softwood Lumber China is replacing US, and This is the end, my friend “The US is on the way out as a hegemonic power. “ Pay Differential Chart at the top shows difference between civil and private employee wages (US); Obomba’s soviet mistake; Passive Investing The movie.

Unchartered Waters Does Benny know what he’s doing? 2012 winners and losers; House Prices Demographics are poor predictors; 59:23 doc. 30 year plan to turn the US into a feudal society; Scratchmond Condos selling for 50% below assessed value? Bursting Bubble Central bank says so; GS BoE tentacle Mark Carney; Apple Most jobs will be done by robots, not people; 15 mln. jobs are missing from the private sector.
*
Secession or Dissolution? Latter may be a better choice; Betting pays off big (sometimes); Pedo Jimmy Savile 450 and counting; Suicide is Painless Encouraged the the education system; Violence US cities are getting bad; Eyes Close-up pix; Tower Fridge Blighty’s a bit chilly and Cold Age Pensioners; The Burrito Bomber Don’t go near him; Flatulence A kinder term than Smelly; Noddin’ Yahoo A different perspective, and Iran and Venezuela More hyperbole. Check the source; Hawaii’s Volcano is throwing up again; Andromeda and Quasars Massive black hole; 12-12-12 12 toys that didn’t make it past the 80s, and 12 Star Trek gadgets that now exist; 0:30 clip John McAfee in Miami.

#82 Mackie on 12.13.12 at 2:39 am

Good advice Garth: I think most people should do it your way.
But I don’t follow any of it. I invest only in stocks… a lot of Venture exchange ones too. I like to take chances. I read and educate myself about the market and investing constantly because it’s worth the time and effort. If I learned anything about using an FA it’s that I care about my money more than anyone else will. I win some and lose some but I expect to do better than most in the course of time. But, of course, time will tell.

#83 DonDWest on 12.13.12 at 3:03 am

#51 Smoking Man

True enough, school isn’t about education, if it were we wouldn’t have grades. I wish I realized that at a much younger age, but I had a set of parents in the education field that filled my head with toxic propaganda that may take a life time to cleanse.

It’s indeed a competition, it’s not about learning. The greatest example of that is college. Let’s just say the professors/instructors expect you to know so much in such a short order of time that it’s impossible for someone completely green to pass.

It’s seriously messed up, the colleges test you with advanced material as if you were the company CEO, but when you start out your job will most likely be doing data entry at a sixth grade level.

I’ve eventually learned the hard way that most college students are ringers (experts in the field pretending to be beginners). They have loved the subject matter since childhood and have been studying it ever since. Their parents may even be in the field and some kids may have even lent a helping hand in daddy’s or mommy’s business. They could probably do the job right now, but alas, the government and employers demand everyone must get this piece of paper. . .

If you plan on going to college, understand that it’s not the environment where you learn, but where you “tryout” in a given field. If you don’t already know the field going in, you’ll get burned, the marks are competitive curve grading. The actual learning part should be done by yourself well before you go to college. College is like a professional sports tryout, it’s assumed you’re already an expert and now you’re just trying to get drafted. I even if you do get drafted, understand your first few seasons may be mostly keeping the bench warm.

#84 Derek R on 12.13.12 at 3:22 am

You hit it out of the park today, Garth. And not just with the post. Some cracking responses to the comments too. Kudos!

#85 metal-nut#756 on 12.13.12 at 3:23 am

I just noticed my link above to Eric Janszen’s forum doesn’t work (Garth you need a preview button on this blog), so here’s three 2012 sample articles:

Janszen Theory, Update Two – Preamble: Theory of a Sudden Adjustment

Election as Forcing Function – Part I: On Track for a Bond Market Panic – Eric Janszen.

The Next Ten Years – Part I: There will be blood – Eric Janszen

#86 Derek R on 12.13.12 at 3:28 am

For anyone who’s wondering why average Single Family Home prices might not be dropping as fast in Calgary as they are in Vancouver or Toronto, here’s a possible cause. The new West C-Train line just opened early this week. This type of infrastructure project is notorious for raising the prices of houses close to it.

And it’s been doing just that over the last year or so in the west of Calgary as people anticipate its opening.

#87 the captain - hi snides on 12.13.12 at 4:30 am

yeah, but Garth, you know full well that you enjoy baiting the gold crowd. i’m a gold guy who enjoys reading the defensive reaction of the goldies to your taunting. if your words ever get me down, i go and spend a little time with the stack. it cheers me right up!

#88 Dr. WAYNE on 12.13.12 at 8:03 am

Smoking Man … You must live on Vancouver Island … that’s where we grow the ‘best’ BC Bud, and it sure sounds like you get a good price per bag … and smoke copious amount of the stuff. Take it easy … it addles the brain … oh, oh … I think you’re too late.

#89 EIT on 12.13.12 at 8:08 am

What do you think about this one Garth:

I filtered down to two advisors that I deemed fit to hold my money bags. I gave each 100 000$ and told them plainly that the better performing advisor will get the other advisor’s 100 000$ at the end of one year.

They seemed surprised.

Cheers

I’d throw you out. It’s not a beauty contest and investment returns are only one aspect of your financial life. — Garth

#90 EIT on 12.13.12 at 8:14 am

#88 Skeptical on 12.13.12 at 6:41 am
so, your advice is to sell off winning positions (securities that are rising), to buy losing positions (securities that are falling).
————————————————————
Wow… it’s called buy low sell high… who are you? lol

#91 maxx on 12.13.12 at 8:39 am

Good post Garth.
Especially the points about dd in selecting an investment professional.
I think investors should insist upon a legally-binding performance agreement before making any investment. Dead meat GICs have them. Why not other investment types, made by experts in their field, who are “trained and regulated”?

Because such an agreement would encourage an advisor to take risks to achieve hurdles which might not be in teh best interests of a client. Sometimes you just what to avoid trouble. — Garth

#92 EIT on 12.13.12 at 9:22 am

I’d throw you out.
-Really? Don’t you want to see what’s behind door number two?

It’s not a beauty contest
-It can be if I make it one.

Investment returns are only one aspect of your financial life.
– I’m getting privacy heebeegeebees.

#93 Ralph Cramdown on 12.13.12 at 9:26 am

Two economists of the Austrian school are walking along the sidewalk, and they spot a $100 bill. “Are you going to pick that up?” asks one. “Vhy bother?” the other says, “By my calculations, eet ees completely vorthless!”

Next comes Ben Bernanke. He sees the $100 bill, pulls out his wallet and carefully extracts a crisp, new $100 bill. Folding it, he carefully places it in a fold in the old $100, and moves the old $100 to shelter a bit out of the wind. “There, there,” he says. “I hope you’re back on your feet soon, and Best of the Season to you!” He whispers into his sleeve, and a helicopter soon lands and picks him up.

Two Modern Monetary Theorists happen by. One of them starts reaching for the $100 bills, but the other one knocks his arm away, hissing “It’s a trap! There’s a G Man hiding behind that mailbox across the street, and he’s going to TAX the first person who touches that money!” They walk away hurriedly and furtively.

#94 Jeff in Moose Jaw on 12.13.12 at 9:30 am

“Be wary of anybody with a Porsche. Harleys are fine, however”

LOL – That’s the truth!

#95 Devore on 12.13.12 at 9:53 am

#19 BC

1. Her incentive is to keep me fully invested. When I suggest taking a profit on something or realizing a loss early in the deterioration process, I sense resistance. Because her fee is going down?

Depends on how she’s paid. Assets under management include cash.

2. With preferred dividends now in the 4% range paying an adviser 1% represents 25% of the total return.

Your total return includes capital gains. If all you have is just a bunch of preferreds, why even have an adviser?

#96 Devore on 12.13.12 at 9:59 am

#25 Canadian Watchdog

I sure hope someone on this blog doesn’t calculate the real value of that trade.

You mean including the premium for gold bars you pay when you buy them and the discount you take when you sell them?

I think the story was meant to be allegorical in any case.

#97 20something on 12.13.12 at 10:07 am

What about those of us with less than 6 figures to invest? I don’t feel comfortable investing and managing my own portfolio (although I do have a trading TFSA through Questrade)—I feel in limbo as it seems advisors don’t want to waste time with me and yet I wouldn’t know where to begin with doing this on my own.

#98 Nuke on 12.13.12 at 10:12 am

http://www.forbes.com/sites/rickferri/2012/10/15/why-financial-advisers-lie/

Diversification is vital. In 1981, I did a research paper “Hedged Passive Investing” on passive asset allocation applying portfolio theory diversification. A simple annual rebalancing of indexes with no stock picking or active market timing smoothed out the troughs but still gave substantial returns during bull periods. Ran the back testing to the late 1890’s using best available data. Worked then, works now. Any portfolio manager will try to idiot proof their management by limiting %s in a specific security, industry, country etc. You push outside acceptable ratios you move from being an investor to being a gambler. Nothing wrong with some gambling, its all in the magnitude of the bet.

#99 martin9999 on 12.13.12 at 10:37 am

more qe but still gold and silver taking a hamer

weird i tell you

#100 TEMPLE on 12.13.12 at 10:55 am

A fee-based advisor charges you a small amount of what you invest (usually 1% a year)

Garth, I don’t know why you think a 1% annually recurring fee is a small amount. That is a serious drag on returns, and a fee structure that is biased in favour of the advisor. I agree with you in that most people should have a financial advisor, but lets be clear: advisors are very well compensated for the work they do.

This isn’t an attack on the financial planning industry, but I do think that 1% is a quick and cheap-sounding shorthand for what is actually a large fee in nominal terms.

TEMPLE

A 1% fee is less than half what people pay to own the typical mutual fund, and for that you get not only investment management but tax avoidance strategies. It is tax-deductible which drops it to 0.6% or 0.7% for most people. And if the advisor can achieve a consistent 7% (or so) return over a number of years, how is that a bad deal? If you think it’s too much, DIY. — Garth

#101 Canadian Watchdog on 12.13.12 at 11:12 am

#99 Devore

I meant the actual returns on rolling over $7000 in gold into equity ETFs. 0% ROI

#102 bill on 12.13.12 at 11:15 am

Great post Garth.
as things are about to get busy here I wish everyone a merry christmas and a happy new year in case I cant find the time later.

#103 Bottoms_Up on 12.13.12 at 11:20 am

#104 TEMPLE on 12.13.12 at 10:55 am
——————————————
You’re wrong. If one had $100,000 to invest, then $1000/yr, or $85/mo (or less, given the tax breaks on this money), is peanuts to know that the money is in good hands, it’s being preserved, maximized and optimally taxed.

If you have $100,000 to invest, and $85/mo is too much money in your eyes, then you are not seeing the forest for the trees.

#104 Devore on 12.13.12 at 11:28 am

Some news from BPoE:

http://www.cbc.ca/news/canada/british-columbia/story/2012/12/12/bc-debt-rating-lowered-moodys.html

Moody’s lowers BC’s outlook to negative from stable, retaining AAA rating as its debt moves from 65% of revenues to 82% in 4 years, and deficit goes 50% above forecast.

#105 NoOneOfConsequence on 12.13.12 at 11:56 am

Here’s a pretty good article for the goldbugs who are denting your ear…

http://www.zerohedge.com/news/2012-12-13/10-things-you-didnt-know-about-gold

#106 Smoking Man on 12.13.12 at 12:09 pm

#83 DonDWest.

Spectacular post. Going to copy paste on my Blog with your permission will give you credit for it.

Nice :)

#107 TEMPLE on 12.13.12 at 12:12 pm

#107 Bottoms_Up on 12.13.12 at 11:20 am

You’re wrong. If one had $100,000 to invest, then $1000/yr, or $85/mo (or less, given the tax breaks on this money), is peanuts to know that the money is in good hands, it’s being preserved, maximized and optimally taxed.

If you have $100,000 to invest, and $85/mo is too much money in your eyes, then you are not seeing the forest for the trees.

I’m not wrong. You are cherry-picking your example to make the fees sound minimal. What you are saying is not scalable. Sure, the fees sound reasonable on a low value portfolio when expressed monthly; however, try your example with a million. Or two million. Also take a look at fees versus returns. Anyone can preserve capital- the trick is to make money at a low cost, and a 1% fee for a 7% return is not cheap.

TEMPLE

For a high-income investor with a million to invest the fee is half of one per cent (it’s deductible from taxes). If you think spending 0.5% to make 7% is a bad deal, things must be hopping on your planet. — Garth

#108 Realtors in an all out PANIC! on 12.13.12 at 12:17 pm

Canada is nothing but a ponzi scheme built on cheap and easy credit. LOL we are worse then the US but no US style housing crash…..Yes very true. We will have a Canadian style housing crash that will be worse.

Canadians are carrying more debt than ever before

OTTAWA — New numbers from Statistic Canada show consumer debt levels hit an all-time high in the third quarter.

The debt-to-disposable-income ratio came in at 164.6% for the three months ended Sept. 30, up from 163.3% in the second quarter.

While the ratio continues to grow, it was a smaller increase than seen in the previous quarter.

Records levels of consumer debt have prompted numerous warnings from Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney that money will not remain cheap forever.

Driven by ultra-low borrowing costs, Canadians have racked up record levels of debt since the recession.

Canada’s debt-to-income ratio is higher than what the U.S. faced just prior to its mortgage crisis that sparked the so-called “Great Recession.” Still, experts have said they don’t anticipate a U.S.-style housing market crash in Canada
http://business.financialpost.com/2012/12/13/canadians-are-carrying-more-debt-than-ever-before/

#109 Old School on 12.13.12 at 12:35 pm

#51 Smoking Man on 12.12.12 at 11:45 pm
Vlad Education should not be a sport, a competition.

Most here will not understand, 30 years ago, no internet, no Google. To learn, you paid and bought the books. No need anymore.

It sounds as if this Smoking man only made grade 12 and rolled snake eyes on any further education. Street smart but not well versed in the attributes of a post-secondary education. I would agree with some of his points but on the whole if you do not study and do your homework you will get burned.

For example I would surmise before you make an investment you study it and do your homework! If not then you my friend are rolling the dice as an uneducated investor. So homework is a necessary evil of any learning process! Therefore Smoking Man you are using the system that has been in use for millennia. Oh wow you are part of the system!

As for the Internet, well lets just say anyone including you or me can post just about anything true, false or misleading. How many Internet hoaxes have we all seen? When I do go to the Internet for information I always verify the validity via other means. These other means are usually fibrous bound cellulose blocks encompassed with in a structured volume of predetermined thinner cellulose cut sheets impregnated with dye compounds……………………. THEY ARE CALLED BOOKS! WHERE DO YOU GET THEM? At libraries! Again part of the system.

Lets just say for example we let our children learn at their own pace, no structure, no testing, pick what interests you,,,,,Hummmm, that would be most of Africa, the Middle East, Southeast Asia. Wow, boy have they all done well with that system!

China on the other hand embraced education; well need I say more about them?

Don’t trash the education system it may not be for you but it is a good system!

#110 Canadian Watchdog on 12.13.12 at 12:37 pm

TD Economics: U.S. Economy Ready to Take Off, but Fiscal Uncertainty Is Blocking the Runway

#111 joe on 12.13.12 at 12:42 pm

Today on the radio on the way to work in Calgary. An ad for new townhouse they are offering a ‘gift’ down payment of 5%. So bump the price by 5% then give a 5% cash back upon signing. The pumpers found a way around the new rules, I wonder if private listers are going to get as creative.

#112 Ronaldo on 12.13.12 at 12:46 pm

#76 Charlie – re: gold

”It will soon become more commonplace to use in international trade as the world moves out of the liability of holding US dollars that are being increasingly devalued by a system that has no hope of ever paying off all it’s debt”

I don’t think so Charlie, there just isn’t enough of the stuff around and the amount only increases by 2% or less per year. The 8200 tonnes that the U.S. supposedly holds in reserves, the highest of any country only represents about 25% of their annual deficit. The price would have to rise much higher IMO to make that a possibility. One of the reasons Nixon shut down gold was because DeGaulle, being concerned about the devaluation of the U.S. currency, asked to be paid in gold and sent his ships out to load up. I suspect that if Nixon had not done that, the U.S. supply of gold would have soon been depleted. Just my take on it,.

#113 AK on 12.13.12 at 1:03 pm

#76 Charlie on 12.13.12 at 1:32 am
“Gold seems misunderstood. It will soon become more commonplace to use in international trade as the world moves out of the liability of holding US dollars that are being increasingly devalued by a system that has no hope of ever paying off all it’s debt.”

LOL, Charlie. You will be walking around with benjamins, loonies, twonies and other paper money in your pocket for a long, long time yet. :)

#114 Devore on 12.13.12 at 1:11 pm

#111 TEMPLE

What you are saying is not scalable. Sure, the fees sound reasonable on a low value portfolio when expressed monthly; however, try your example with a million. Or two million. Also take a look at fees versus returns. Anyone can preserve capital- the trick is to make money at a low cost, and a 1% fee for a 7% return is not cheap.

Maybe a 2/20 hedge fund fee structure is more your speed then?

People deserve to be compensated for their expertise and time. If this is too much money for you, you can try to do it yourself, or turn to cheaper alternatives, no one is forcing you to hire a Garth. Anything beating risk-free returns will cost you, either in terms of risk or money.

#115 Smoking Man on 12.13.12 at 1:15 pm

#113 a massive rebuttal shortly. Put a hellmet on

#116 Devore on 12.13.12 at 1:17 pm

#105 Canadian Watchdog

Point taken. But it was still a) an example, and b) simplified. You’re comparing a single specific asset to the entire market. Rebalancing is not just between broad asset classes, but also individual industries, such as large cap financial, utilities, tech services, small cap miners, etc, all of which perform differently from the equities market as a while

Also, I would not have used GTU.UN, which as a closed-end fund trades at a sometimes eye-popping discount/premium to GLD or gold spot price.

#117 TEMPLE on 12.13.12 at 1:44 pm

For a high-income investor with a million to invest the fee is half of one per cent (it’s deductible from taxes). If you think spending 0.5% to make 7% is a bad deal, things must be hopping on your planet. — Garth

That is not the correct analysis. Assuming that 7% is regularly achievable by an advisor, you have to weigh that against what is achievable by an investor on their own. Four percent is easy, so a client is paying 1% (tax deductible) of their total assets for a chance at a 3% (before tax) premium, while assuming all the risk. Again, I am not discounting the value of a financial advisor, but a recurring fee based on total assets is not the best structure for client.

A 0.5% fee is an improvement. One thing I am not clear about is this: when you put a client into an EFT, do you discount the annual fee they pay for that EFT against your management fee?

And, why did you delete my other response specifically to you? There were no ad hominem attacks or anything inappropriate in that post.

My planet is just fine, thanks!

TEMPLE

So don’t do it. If you want to DIY, knock yourself out. But most people don’t try to save money fixing their own hard drive or their teeth. They have lives, and are happy to have things professionally managed. — Garth

#118 Timing is Everything on 12.13.12 at 1:51 pm

#81 Nosty – Secession or Dissolution?

http://tinyurl.com/bghegd6

http://tinyurl.com/byvrb39

http://senseable.mit.edu/csa/

It’s never too late to make a better decision.

#119 Daisy Mae on 12.13.12 at 2:01 pm

CBC, December 13th:

“The prominent credit rating agency Moody’s Investors Service has downgraded B.C.’s financial outlook, lowering the province’s debt rating from stable to negative.

Moody’s says the downgrade reflects B.C.’s worsening financial situation.”

#120 Old Man on 12.13.12 at 2:22 pm

I will never understand why paying 1% for a financial fee based advisor is expensive when it can be deducted from taxation, and eliminate in most cases, excess trading commissions. The 1% fee must be looked upon as an investment to acquire tax savings information, and in effect, achieve a much higher after tax yield that you would not have obtained otherwise. Thus it becomes an investment to achieve higher results with an adjusting weighted balance on occassion to maintain an integrity of asset value; higher net yields; and stable cashflows. An investment of 1% will become the greatest dividend that one could ever receive on a portfolio if properly managed.

#121 Kevin on 12.13.12 at 2:36 pm

For a high-income investor with a million to invest the fee is half of one per cent

Huh. You never mentioned that in your blog post. Seems like that might be important, no? Maybe if you’d made that clear, I wouldn’t have come on so harshly in my last comment that it apparently warranted deletion.

At any rate, why should the fee be a percentage based on the amount invested anyway? Why not a flat fee? Does the advisor have to work any hard to rebalance a $500,000 than an $800,000? Why not simply log the hours they spend working on your portfolio, and charge a reasonable hourly rate dictated by the market?

I said fees were tax-deductible. Pay attention. — Garth

#122 Smoking Man on 12.13.12 at 2:51 pm

Old School  the current education system SUCKS

You are so correct in your assumption re Grade 12, and it was 50’s across all the subjects. I can’t tell you how many times my teachers centred me out, marked me for mobbing by my peers, making my write OPPORTUNITY on the black board thousands of times. 

To this day that little red squiggly line appears under that word. I still  can’t spell it but I sure as hell know what it means.I Can’t say the same for those that tout honour degrees in fields like  MBA’s and CFA’s. Would anyone of them consider taken a few clients and setting up shop themselves.

You obviously make a living in education, I don’t like to throw shit at people as you end up smelling just as bad.  But you are completely brain washed void of any useful brain matter what so ever. We are all born with street smarts, but your employer washes it out. It’s aim is churn out obedient, financially illiterate dumb ass, non questioning garnet loving consumers and debt slave. Real Estate prices in Canada are outrageous, so why am I a Real Estate Bull? I bet on stupidity, stupidity in mass always wins.

Right now Universities are just money gobbling useless machines,  churning out worthless pieces of paper  with the promise of a great job while great jobs all slowly flowing to the cheapest labour market.

Now you made a statement that my proposed better method is what’s in 3rd world countries. I beg to differ; this is how I did it, I see the obvious, that others can’t  cause my head was never filled with unnecessary shit, I still thrive with lower levels of B12 do to drinking.

My CV with no university

Bus boy
Rivet bucker
Retailer-door to door sales
Manufacturer-business ran on software I developed (no books no info at time)
Import Export Business ran on software I developed  (no books no info at time)
Distribution Business ran on software I developed  (no books no info at time)
Retired
Pro-Code Smith with Bell Labs in USAPro-Code Smith with Bank of America 
Pro-Code Smith with RBC-Cap MarketsPro-Code Smith with -Wachovia USARetired.
Prolific Day and Trend Trader
Free Lance Code Smith,  Hedge Funds and Financial Services, Part Time Day and Trend Trader.  BEST IN THE WORLD IN MY AREA OF INTEREST
Part time blog writer
Future——-A published author of a best seller.

All with not one fking  stinking ounce of school cuddies.
So watch your mouth………….

#123 Tyrell Pronghorn on 12.13.12 at 2:52 pm

#113 Old School on 12.13.12 at 12:35 pm

Fail.

#124 Old Man on 12.13.12 at 2:52 pm

Here is a good example of being hooped at the bank which a fee based financial advisor would probably never allow to happen; he is the guy who charges 1%, and some of you say too much! Ok this old lady has 100K in a savings account as is advised she can get a better rate of return by rolling it over into a non-cashable GIC for a year, or more.

Bank xyz signs her up a contract, and her gross income is about $50,000 a year with other stuff. Now she walks away happy, as is getting a bit more; she on an after tax basis makes nothing, and is losing capital, as interest earned is fully taxable. Bank xyz has a series of Preferred Shares that will pay a fixed coupon rate with a dividend tax credit for a return of about 5%.

Now putting this all into context the significance of a modest fee of just 1% with a fee based financial advisor, has paid this old lady one hell of a dividend with his knowledge and advice, as her investment with bank xyz has lost her money, but now she is making cashflow. The 1% fee becomes a gift from heaven as it becomes a free ride.

#125 Form Man on 12.13.12 at 2:55 pm

Globe and Mail reports today that the spread between Brent oil prices and Western Canada select is now at $50 per barrel. Alberta needs to ship oil to eastern Canada to correct this, but currently the pipelines mostly run to the U.S.

If the NEP were not cancelled, it is likely Alberta today would be shipping oil to eastern Canada, and realizing an extra $50 per barrel. Of course, in an immature fit of anger at Trudeau, they chose to ‘ let the eastern bastards freeze in the dark’ back in the 1980’s.

sorry, I can’t help poking a sharp stick at the neocons once in a while……..

http://www.theglobeandmail.com/report-on-business/top-business-stories/key-consumer-debt-to-income-level-swells-to-almost-165/article6299559/

#126 Charlie on 12.13.12 at 2:56 pm

#116 Ronaldo

Interesting points. It’s already happening though; countries are already trading in gold, the only question is whether it increases. The quantity of gold is irrelevant – it’s the price that will be adjusted.

#127 maxx on 12.13.12 at 3:41 pm

#93 maxx on 12.13.12 at 8:39 am

“Sometimes you just want to avoid trouble”.

With a PA, it wouldn’t be a problem for the investor.

#128 Chris on 12.13.12 at 3:46 pm

Hi Garth,
What resources (books, blogs, etc) would you recommend to a novice in personal finance?
(I am 25 and still a student, but I am trying to put in place a savings system)

I am also curious as to what sources you like to check on a regular basis.

To my fellow readers, I am also interested in what sites you would recommend for daily reading material.

Thanks for all of your work Garth, I really appreciate the expertise you are sharing.

Chris

#129 goldnsilver on 12.13.12 at 3:58 pm

Try to separate the MS media reporting and the true facts. The world economy including the USA, is not going to recover just yet. Nor too soon. Do your own DD and try to make your decisions based on the true facts as best you can.

http://www.shtfplan.com/headline-news/standstill-the-charts-that-prove-the-global-economy-is-in-serious-trouble_12122012?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+SHTFplan+%28SHTF+Plan+-+When+It+Hits+The+Fan%2C+Don%27t+Say+We+Didn%27t+Warn+You%29

#130 Canadian Watchdog on 12.13.12 at 3:58 pm

#120 Devore

Rebalancing a fixed weighted portfolio is for multimillion dollar managers that don’t want to get sued. Good luck to them and their clients going forward as gains diminish.

Cross-asset trading and spread management is where it’s at.

#131 martin9999 on 12.13.12 at 3:59 pm

#83DonDWest on 12.13.12 at 3:03 am
—-

Jeezalu, good one

#132 Old Man on 12.13.12 at 4:06 pm

#126 Smoking Man – he has made a few good points, as there was a time that an education was the ticket to open up doors. The world has changed somewhat, as the diploma of higher learning no longer guarantees job employment; there are exceptions. Today it is imperative for kids to look at supply and demand for employment security within context; there is always big money in sales, but few can become top sale peeps in this world, and there is business start ups.

The context is all about demographics for kids that will never go to university, as with 2, 3, or 4 year courses in technical training with target areas can easily earn a good living making 50K to 75K per year with a demand for these skills, and that might be enough. University degrees today might not be the answer anymore for some, as there are other options that need to be looked at.

#133 Guy1 on 12.13.12 at 4:09 pm

Have a look at this… what crap:

http://ca.news.yahoo.com/canada-home-prices-rise-again-october-134336458–business.html

My apoligies… I don’t usually use foul language as person of certain spiritual inclinations! But, what propaganda…

#134 GTARealEstateCorner on 12.13.12 at 4:12 pm

Please be nice and accepting of Smoking Man. He’s probably a good guy, but has never had a lucky break in his life. It’s kind of sad, but he has delusions of grandeur. This is a sign of impaired mental faculty. Please, no judgement, no harassment. Live and let live.

#135 Bottoms_Up on 12.13.12 at 4:47 pm

#132 Chris on 12.13.12 at 3:46 pm
————————————
Buy Garth’s ‘Money Road’. In it he outlines sources that he keeps his eyes on.

#136 Old School on 12.13.12 at 4:50 pm

#126 Smoking Man on 12.13.12 at 2:51 pm

Hello again,
FYI not in education for a living but educated!

If you must know it was McGill and MIT (Massachusetts Institute of Technology). Street smarts come with age as well young man! As far as employers go I am the employer! I run a successful business in High Tech Robotics. No, not what you are thinking not Robbie the toy Robot. The class of technology I created with my education helps people all over the world. With the aid of computer programs the robotic manipulators are used in surgical rooms and laboratory’s including nuclear applications. It took years to learn and with the help of other educated staff (including people with street smarts) my teams have been very successful. My educated staff is drawing in a minimum of six figures on average for their wages. Profit sharing encourages creativity as they are helping the corporation and themselves to profit. So I would beg to differ that they all have worthless pieces of paper on their walls.

Your comment “Right now Universities are just money gobbling useless machines, churning out worthless pieces of paper with the promise of a great job while great jobs all slowly flowing to the cheapest labour market.”
It is hard to clearly define a great job. The ones that are going overseas most likely are not great. The greatest job is one that you enjoy! Some of my employees are quite frankly geniuses and I acknowledge that within the corporation. They enjoy what they do!
As for your comment about the Education system sucking, I would beg to differ. It is what you make of it. Perhaps it was just not a good experience for you personally. If you have goals you can achieve within the school system then it is for you! Please don’t condemn the entire system based on your own experience. I would also add that there is nothing wrong with self-starters whom work outside the system. If you must also know I did not ever use a unconstructive or melancholy word in my reply to you.

Grandescunt aucta labore

#137 gladiator on 12.13.12 at 4:58 pm

IMO, one of the biggest confusions of today’s civilization is that schooling is confused for education. Being a math whiz does not mean you’re well educated – it means you know math well.

Education is what you remember after you forget what you’ve been schooled.

#138 Bill Gable on 12.13.12 at 5:05 pm

Mr. Turner – what do you make of this?

“Despite the 6.5% stock market rally over the last three months, a handful of billionaires are quietly dumping their American stocks . . . and fast.

Warren Buffett, who has been a cheerleader for U.S. stocks for quite some time, is dumping shares at an alarming rate. He recently complained of “disappointing performance” in dyed-in-the-wool American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods.

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

With 70% of the U.S. economy dependent on consumer spending, Buffett’s apparent lack of faith in these companies’ future prospects is worrisome.

Unfortunately Buffett isn’t alone.

Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.

Finally, billionaire George Soros recently sold nearly all of his bank stocks, including shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Between the three banks, Soros sold more than a million shares.

So why are these billionaires dumping their shares of U.S. companies?

After all, the stock market is still in the midst of its historic rally. Real estate prices have finally leveled off, and for the first time in five years are actually rising in many locations. And the unemployment rate seems to have stabilized.

It’s very likely that these professional investors are aware of specific research that points toward a massive market correction, as much as 90%.

One such person publishing this research is Robert Wiedemer, an esteemed economist and author of the New York Times best-selling book Aftershock.

Link: http://tinyurl.com/bkwhpyj

Not credible. More important, not going to happen. — Garth

#139 TEMPLE on 12.13.12 at 5:15 pm

#118 Devore on 12.13.12 at 1:11 pm

Maybe a 2/20 hedge fund fee structure is more your speed then?

Yes, obviously. Since I am hassling Garth about 1%, a 2/20 would be much more desirable.

I didn’t say that Garth and other advisors shouldn’t be compensated, only that a 1% annual fee is too high, especially as total assets increase. But, people pay it, so I guess that I am wrong. I do just fine on my own for about a 0.05% annual cost, though.

Anything beating risk-free returns will cost you, either in terms of risk or money.

With an annual recurring fee, you incur both risk and cost, especially because that same fee also applies to assets under management that are low risk. In effect, that means your riskier assets are actually carrying an outsized management cost relative to their return. This effect is exacerbated when returns are lower than expected or the portfolio is weighted to more stable assets.

TEMPLE

#140 2centsCdn on 12.13.12 at 5:21 pm

I believe it’s fact that 98% of financial advisers don’t beat the market? (net of fee’s). And half of the 2% that do can’t do it two years in a row. So keep your expectations reasonable when picking one.

What market? US equity? Canadian bond? Blended? Are you happy with a portfolio that fluctuates with stocks, or would you like a more predictable return? Many people like knowing where they will be in a decade. — Garth

#141 Bigrider on 12.13.12 at 5:39 pm

#107 bottoms up.

It is you that are not seeing the forest from the trees. Perhaps 1% on a $100,000 portfolio or 85 bucks a month is not a lot to pay for portfolio advice but 1% on a million or 850 a month certainly is, for relatively the same amount of work.

Now make the porfolio 2 million in size and so on.

I fully expect a deletion on this post.

Not worth deleting. Too parochial. — Garth

#142 Bigrider on 12.13.12 at 5:49 pm

Oops made my last post before I read comments past 107. Should have known better. Please ignore delete previous post.

Anyway, Kevin at # 125 I believe a fixed pay model or menu of some sort for portfolio/tax advice will develop somewhere in the future, as the fixed percentage model is flawed for obvious reasons. The most glaring is it creates a scramble for “asset gathering”and bigger individual accounts by fee based advisors then simply a flat fee or hourly based menu of services.

#143 Marie on 12.13.12 at 6:17 pm

@chickenlittle…um, Suze Orman has been giving similar advice and warnings about trusting and finding good advisor for a while now. Her advice on housing since 2008 and recently has also been in line with Garth. She has commented more than once that she has changed her advice since 2008 on a few issues including real estate. Good professionals do this as factors change. She responds to critics with an educated, detailed answer to back up her view versus personal short jabs. She’s not perfect, neither is Garth. Take what makes sense and ignore the rest.

#144 Ralph Cramdown on 12.13.12 at 7:11 pm

I’m going to go out on a limb and say the $85/month guy doesn’t have much money, or at least could have had a lot more. There’s no quicker way to make yourself poor and me rich (dividends) than to think about money in terms of “about the price of a cup of coffee a day.”

The quickest way to make a difference in your finances is to look at all your recurring monthly expenses and figure out how to eliminate or minimize them, perhaps not permanently, but at least for a few years when you’re young. The time value of money that you don’t piss away in your 20s and 30s, if well invested, is gargantuan.

TEMPLE – great comments on fees. There’s few perfect ways to align incentives. Commission based guys churn, fee based guys spend hours doing pretty charts, and % of assets types stick your junk in the model portfolio and rebalance it once a year.

Here’s some thoughts: Think fees are too high? Get on the other side of that trade. Have to be careful with the mutfund companies, as the masses might start listening to Garth et al. But the big ETF players do well. Also, you can invest in the big Canadian family controlled conglomerates, the public ones. Their interests will then be aligned with yours and all you have to worry about are succession issues (e.g. Edgar Bronfman, Jr. in the classic “Shirtsleeves to shirtsleeves in three generations” play)

#145 Old Man on 12.13.12 at 7:47 pm

Smoking Man, now hush, as my cook and housekeeper is a young Amish girl from KW. Now have booked 5 days in Vegas at the Excalibur, and she has a passport too, so wants to come too, as she wants to watch over me, as knows all the women in USA are bad, and might lead me astray as my flight leaves on the 26th, so what should I do?

#146 Hoof - Hearted on 12.13.12 at 8:07 pm

Agenda 21 For Dummies

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

about 10 minutes long…..but listen to the discussion about EDUCATION at about the 5:43 mark

QUOTE: ” Generally, more highly educated people, who have higher incomes, consume more resources than poorly educated people,who tend to have lower income .In this case more education increases the threat to sustainability ”

I am not buying into “Higher Education “saves us, simply submitting the marxist agenda of the school system .

#147 Hoof - Hearted on 12.13.12 at 8:10 pm

#140 Old School on 12.13.12 at 4:50 pm

How’s this project going….

http://archives.cnn.com/2000/NATURE/07/21/carnivorous.robot.reut/

#148 live within your means on 12.13.12 at 8:14 pm

#128 Old Man on 12.13.12 at 2:52 pm

You didn’t say how much money she has to invest. Most fee based advisers won’t touch anyone who has less than $200K or more to invest.

I know so many people who are into GIC’s, take the advice from the [email protected], etc. I refrain from saying anything to them as it’s a wasted cause & I know it would just cause friction in our relationship.

#149 Nostradamus Le Mad Vlad on 12.13.12 at 8:29 pm


#122 Timing is Everything — Hi TiE, and thanks for the links. As no one knows what will happen in the future, one possibility is that several states may quit the US altogether, the four western provinces may join them along with Alaska, then the USC (Cascadia) is born! Toss in Hawaii just for the hell of it.

Right now, BC’s finances resemble a sloppy wet fart and I’m not too sure anyone would want us (maybe China). It will be intriguing to see this play out. Cheers!
*
ECB Wonder if Carney is involved in this? Baltic Dry Index Supporting the world while being crushed in the process, so Let’s Have another Boston Tea Party; Runs about three mins. Benny speaks of QE 8 2/3, and Guess Who QE5 benefits? Iran – Iraq Those sanctions are working well!
*
Now Chinese General threatens WW3 to protect Iran; 10:09 clip The Grope Report. Yes indeed, the TSA has finally caught one! Diana’s Death The chickens have come home to roost. Karma is a bitch and it must be paid in full (An eye for an eye, a tooth for a tooth), such as this person; Coffee It’s a health drink; CBS and leaking oil Interview canceled; Phoney Baloney from Ssshhh . . . U-Know-Who; 526,421 Family Farms now threatened by Monster-anto.
*
Smoking Man Your points on education stand up.

Jess — Digging a liitle deeper into the dirt on Jersey. “Sting Ray’s comment: FYI, the child abuse and coverup Ms. McGrath was investigating concerned events at the same Jersey child home reputedly frequented by the notorious Jimmy Savile – BBC program host, serial pedophile and friend and marriage counselor to Royalty.” (See link to Diana’s Death.)

#150 espressobob on 12.13.12 at 8:30 pm

Pm,s how to play? If you like gold and invest to make profit why not consider breaking up your 5% allocation into say ZCP (gold & silver) & XGD (miners) for a diversified approach and skim profit (rebalancing) as required? Simple right? And people tell me I drink too much.

#151 live within your means on 12.13.12 at 8:35 pm

#148 Ralph Cramdown on 12.13.12 at 7:11 pm
I’m going to go out on a limb and say the $85/month guy doesn’t have much money, or at least could have had a lot more. There’s no quicker way to make yourself poor and me rich (dividends) than to think about money in terms of “about the price of a cup of coffee a day.”

The quickest way to make a difference in your finances is to look at all your recurring monthly expenses and figure out how to eliminate or minimize them, perhaps not permanently, but at least for a few years when you’re young. The time value of money that you don’t piss away in your 20s and 30s, if well invested, is gargantuan.
……………..

I was having too much fun in my 20’S & early 30’s & pissed away lots of money – travelling, etc. I have no regrets. But, in my mid-30’s I smartened up, paid off any debt I owed (minuscule in comparison to people today) & never bought something I couldn’t fully pay off at the end of the month.

#152 TRT on 12.13.12 at 8:37 pm

Comment worth a read (regarding todays Oil takeover)

“A 49.9% deal struck just days after Harper spoke. And are we supposed to think that the Chinese and Encana didn’t have a heads up?

Nice to know that Corporations and Communists get informed before Canadians.”

0.2% owned by Canadians in Richmond BC.

#153 CrowdedElevatorfartz on 12.13.12 at 9:09 pm

@#24 Ronaldork

DELETED

#154 a prairie dawg on 12.13.12 at 9:25 pm

#1 TurnerNation

Fed = Santa

– — –

That reminds me, ‘Church Lady’ taught us that Santa was just an anagram for Satan.

http://www.youtube.com/watch?v=62Qfbrc1jdo

So Fed = Santa = Satan

Ergo, Fed = Satan

#155 Hoof-Hearted on 12.13.12 at 9:26 pm

California Dreamin’

http://www.bloomberg.com/news/2012-12-11/-822-000-worker-shows-california-leads-u-s-pay-giveaway.html

Nine years ago, California Democrat Gray Davis became the first U.S. governor in 82 years to be recalled by voters. The state’s 20 million taxpayers still bear the cost of his four years and 10 months on the job.

Davis escalated salaries and benefits for 164,000 state workers, including a 34 percent raise for prison guards, the first of a series of steps in which he and successors saddled California with a legacy of dysfunction. Today, the state’s highest-paid employees make far more than comparable workers elsewhere in almost all job and wage categories, from public safety to health care, base pay to overtime.
====================================

Across the U.S., such compensation policies have contributed to state budget shortfalls of $500 billion in the past four years and prompted some governors, including Republican Scott Walker of Wisconsin, to strip most government employees of collective-bargaining rights and take other steps to limit payroll spending.

In California, Governor Jerry Brown hasn’t curbed overtime expenses that lead the 12 largest states or limited payments for accumulated vacation time that allowed one employee to collect $609,000 at retirement in 2011.
===================================

Psychiatrists were among the highest-paid employees in Pennsylvania, Ohio, Michigan and New Jersey, with total compensation $270,000 to $327,000 for top earners.

State police officers in Pennsylvania collected checks as big as $190,000 for unused vacation and personal leave as they retired young enough to start second careers, while Virginia paid active officers as much as $109,000 in overtime alone, the data show.

The numbers are even larger in California, where a state psychiatrist was paid $822,000, a highway patrol officer collected $484,000 in pay and pension benefits and 17 employees got checks of more than $200,000 for unused vacation and leave. The best-paid staff in other states earned far less for the same work, according to the data.

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

Yep……no such problems here in U.S.’ s 51st state

#156 Mr Buyer on 12.13.12 at 9:28 pm

#83 DonDWest on 12.13.12 at 3:03 am
The actual learning part should be done by yourself well before you go to college.
………………………………………………………………….
Such will be the case for my kids. They will already know the material inside and out and exam preperation will consist of spending a good deal of office hours with the prof gleaning the prof’s slant on things to secure the extra 3 or 4% at the top end of the bell curve. Learn always and especially before you lay down tons of cash and develop a permanent post secondary record. I should say that if a person finds themselves euchred the first year all is not lost. Take tons of courses and get the average up high enough for master’s studies. The master’s is the new bachelors and running the gauntlet of undergrad has one well prepared for the course based requirements and the beginning of research and truly self directed learning is exhilarating to say the least. Turning the insights gained into money in your pocket do not have to be mutually exclusive endeavors but beware of theft of your ideas. Keep the really great ideas to yourself until you are sure you can trust your supervisor. The free exchange of ideas is the best way to go but unfortunately that often means thanks for exchanging your ideas with me, now they are mine to profit from exclusively. Academia is another place that falls well short of the ideal in that it is rife with functionaries praying upon the insights of juniors and subordinates and passing the insights off as their own. Ideas appear to be both easy to come up with and thus of no consequence and at the same time absolutely essential in nature (just ask any burnt out researcher at their wits end trying to crack a nut that has frustrated them for more than a few seasons). Researchers work hard at developing their insights and understandings and thus feel more than justified in commandeering a different slant presented by a junior researcher with a perceived less sophisticated understanding. Many times preconceived notions in the form of an evolved understanding becoming limiting factors in and of themselves. In any event the prime directive of the education system is to create good citizens not researchers and entrepreneurs. The education system fulfills that mandate quite well in that it teaches us to get up in the morning and get dressed go outside and go to a place some like and other despise, stay there until the late afternoon and then return home. That and learning to read, write, listen, speak, add and subtract gets most people as prepared as they need to be to function as a working adult.

#157 Old Man on 12.13.12 at 9:29 pm

#152 live within your means – pay attention as on $100k she is making nothing, but still had a gross income of $50,000 a year, so figure out the rest of her investment portfolio.

#158 Boomer21 on 12.13.12 at 9:39 pm

#149 Old Man, what you should do is stop using “as would”, “as whatever!” and learn to write and speak without the “as” everything. Who talks or writes like that? How old are you anyway?

#159 Mr Buyer on 12.13.12 at 9:40 pm

I have found many times in my life when I thought something was broken or really messed up and it seemed obvious to me thus why not everyone else and how could the thing possibly be allowed to continue that the mistake was my preconceived notion of how that thing was supposed to function and what its purpose was. Once I started assuming the perspective that things were working as intended it just for me to discern the actual intention a larger awareness befell me rather quickly. Sometimes misinformed and sometimes a revelation.

#160 Devore on 12.13.12 at 10:01 pm

#143 TEMPLE

I’m trying to figure out what your point is, seeing as you’ve yet to make one, besides complaining professionals are too expensive. What price or compensation scheme do you suggest then, and how many clients/assets would such a manager need to handle to feed his family?

You sound suspiciously like our DonD… any relation?

#161 Mr Buyer on 12.13.12 at 10:01 pm

I read somewhere that ideas were the only thing of any real intrinsic value and while I have a few exceptions to that (apples, heat, dentists and others) I would say that I whole heatedly agree with the spirit of the assertion. The free exchange of ideas can cultivate explosive levels of creativity and innovation. The chilling effect of certain aspects of our economies have slowed innovation to a crawl on many fronts. There must be ways to remediate the negative impacts that private enterprise, competition and profit taking have upon research development and implementation. Competition is a doubled edged sword in that innovation must be kept in house for best advantage while the most innovative and thus competitive entities often try to minimize the negative aspects of competition among team members.

#162 John Prine on 12.13.12 at 10:11 pm

“A 49.9% deal struck just days after Harper spoke. And are we supposed to think that the Chinese and Encana didn’t have a heads up?

Nice to know that Corporations and Communists get informed before Canadians.”

0.2% owned by Canadians in Richmond BC.

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#%&*@#%$(&%$#%?*&…Is how we feel about this.

#163 new canadian on 12.14.12 at 12:00 am

I get 0.8% interest on my gold account. Who says that you don’t? Yeah, not in Canada, here you can’t even open a gold account.

#164 Soylent Green is People on 12.14.12 at 2:40 am

I can,t find this anywhere on google gt

……..

In discussing the upcoming move of Mark Carney from head of the Bank of Canada to boss at the Bank of England, a leading UK money mag had this to say: “Forget about the idea that Carney is coming over here to save us. Quite the contrary. He’s escaping from Canada just in time.”

.

P.s. lololol

#165 The Bear on 12.14.12 at 12:58 pm

Great entry Garth!

Don’t worry about the PM bugs, they’ve just been fear mongered into going all in.

Always best to balance your portfolio and adjust when needed.

________

Buy when there’s fear, sell when there’s greed.

Regards,

The Bear