What’s in your wallet?

kid

So major stock markets have reached their highest point in six years. We’re now at the levels of October, 2007, before the lights went out. Reassuringly, all the doomers and fearmongers reappeared to say we’ll die soon. Like Lassie, they always come back.

Are things too steamy to touch? Depends. People who buy only stocks, or things based on them (like equity mutual funds or index products), have finally recovered what they lost in the 2008-9 meltdown. (Remember, it was four years ago Saturday that stocks hit the bottom and selling hit the top.)

But those with a balanced portfolio (like 40% safe stuff and 60% growth assets) actually recovered from the crash of 2009 way back in 2010. Since then they’ve done just fine, with a three-year return about the same as the S&P – more than 8% annually. It’s a powerful lesson on two fronts. First, balance and diversification defeat volatility, which is the enemy. Second, people who buy stuff that’s rising and sell when it’s falling, get creamed. Always.

And there’s a third lesson: rebalance. Never buy one asset (like an index fund based on the S&P,  which jumped 12.5% last year, or gold, which has lost 17% in 18 months), and just sit on it. In a smart portfolio you determine in advance what the weightings should be within the fixed and growth areas (like 16% US equities, or 12% Canadian, or 8% corporate bond index, etc.), then stick with them. So if a surging American market takes that 16% and turns it into 21%, you sell off 5% and redistribute this among the other asset classes.

Why? Because that’s how you make money. It’s the raw difference between investing and gambling. And it certainly suggests that in March of 2013 – after fat gains for US equities, a dismal showing by commodities and Canadian stocks, and a nice advance by international companies – that some portfolio renovation is in order. So, rebalancing takes risk off the table, harvests gains, and invests in those under-performing assets that are cheap.

You don’t do this? Of course not. Almost nobody does who’s not a pro. That’s because people live their lives in extremes – evident every single day on this pathetic blog. People come here to pump gold when it’s on a roll, push houses in Unionville when prices are coursing, or convince you every financial market is falsely inflated by overlords out to enslave you and steal your lunch. Always extremes. Buy only bonds, or run screaming from them. Load up on dividend-payers or dump all stocks. Hide in GICs or gamble on silver.

Fear and greed dominate. If people were cars, they’d careen in destructive circles as the brake and gas were pounded together. Four years ago today (March 9th), the greatest wave of selling ever to hit stock markets occurred as prices cratered, then scraped bottom. Forty-eight months later people stupid enough to throw themselves off that cliff still live in fear. Their losses were palpable and in many cases unrecoverable, simply because they ended up earning 1.2% in some zombie bank account.

Many committed even worse crimes. They took the remainder of the nesteggs and bought houses in Vancouver, Toronto or Saskatoon as prices surged to all-time highs. The greatest buying orgy in national history took place exactly one year ago, as prices crested and the market turned into a giant, straining gasbag. So not only did they bail out of financial assets at the low point in the cycle, but they gushed into real assets at the very top. And soon many will find those houses turning illiquid.

It’s hard to see this as much other than financial suicide. Human nature drives us to ignoble and failed conclusions. We desire what others covet and fear what they reject. We’re lazy and gullible, taking information from trusted and easy sources, like you stock-picking genius plumber brother-in-law. We’re utterly without discipline, buying tops and selling lows. We overreach for home runs, when singles and doubles win the game. And we alight on one, simple solution – precious metals, GICs, junior mining stocks – when it’s diversification that protects us.

These days there are many reasons to believe financial markets will continue to gain strength. The US is truly rebuilding, Europe’s repairing and global growth rekindling. Corporate profits are real, central bankers are winning and productivity is surging. But, of course, there will be corrections. Often rattling. Stocks jumped in 2010, dumped 20% the next year, and have surged back. If you understood rebalancing, you made money.

People aren’t defeated by markets, whether equity or real estate. They get crushed by their own emotions. Hubris, arrogance, ignorance or stupidity all guide us to the same place.

Lately, that’s been here.

Chart of the week...

US HOUSE PRICES

200 comments ↓

#1 Texasboy on 03.08.13 at 9:33 pm

Seventeenth…

#2 TurnerNation on 03.08.13 at 9:33 pm

Argh, co worker buys a $650k east end semi near downtown Toronto. No parking is inlcuded, natch.
It’s finished throughout, some reno but nothing high end.
And which horrors luck behind those 100-year-old walls?

#3 AK on 03.08.13 at 9:37 pm

But those with a balanced portfolio (like 40% safe stuff and 60% growth assets) actually recovered from the crash of 2009 way back in 2010.
——————————————————————–
Totally agree. Except mine is 10% safe and 90% growth assets. Oh, and 0% Gold. :-)

#4 T.O. Bubble Boy on 03.08.13 at 9:44 pm

been selling into this crazy run from November 2012… 15%-20% gains in most U.S. equities have definitely put things out of balance.

#5 LH on 03.08.13 at 9:50 pm

Speaking of jamming both the gas and brake pedals….
Anyone with both a mortgage (negative fixed income) and any non-zero allocation to bond funds (fixed income) is a loser. Better go all in to vanguard or man up and pay off the debt.

#6 kreditanstalt on 03.08.13 at 9:51 pm

US GDP up by $2T since the beginning of the recession (2008).

Stimulus money printing up by $3T since then.

Recession not over. Just hidden. Wait…

#7 claudius emperor on 03.08.13 at 9:53 pm

In a smart portfolio you determine in advance what the weightings should be within the fixed and growth areas (like 16% US equities, or 12% Canadian, or 8% corporate bond index, etc.), then stick with them. So if a surging American market takes that 16% and turns it into 21%, you sell off 5% and redistribute this among the other asset classes.
—————————————-
time to sell equities and buy silver?

No. — Garth

#8 EIT on 03.08.13 at 9:53 pm

I know this doesn’t apply to anyone, but if you’re trying to maintain or build dynastic wealth to last generations, the formula is:

1/3 land
1/3 gold
1/3 fine arts

But anyways, whos got that dynastic wealth these days, (awkward chuckle)

You forgot the wenches. — Garth

#9 TurnerNation on 03.08.13 at 9:54 pm

FYI: the guy in the photo is planking.

http://en.wikipedia.org/wiki/Planking_(fad)

Ahead of his time.

#10 claudius emperor on 03.08.13 at 9:54 pm

0% Gold. :-)
————————-
you bought your wife platinum ring? smart move.

#11 ChickenLittle on 03.08.13 at 9:55 pm

Crazy chart!! Do one for Canada now!

Hey, Old Man! I hope your deal went through!

Spring is coming!! I can feel it! I saw my tulips sprouting in the garden…YAY!

#12 McLovin on 03.08.13 at 9:55 pm

Great Chart. I wish someone would do one for Canada. It is so hard to get people to understand that the one time gain in prices is behind them and short term in the long term. Regression to the mean is inevitable. I try so hard to make people understand that real estate cannot go up in excess of inflation over the long term unless people lived forever. Someone has to buy the house from the person who dies.

#13 Small Town Steve on 03.08.13 at 10:01 pm

I am sticking to 60/40 no matter what.

#14 ozy - stop telling people to buy stocks on 03.08.13 at 10:03 pm

stop telling people to buy stocks, isn’t there an honest way to make money, other than stupido capital gamble of fake north-amerika?

What part of ‘diversification’ don’t you understand? — Garth

#15 mortgagebrokeron on 03.08.13 at 10:11 pm

what about the Invesco intactive portfolios…They have some different asset classes in them… Yea or nay people!!!!??????

#16 DJB on 03.08.13 at 10:15 pm

They don’t call it the 1% ers for a reason. The other 99% have no clue.

#17 JSS on 03.08.13 at 10:19 pm

For the last 18 years, I’ve had 75% of my RRSP portfolio in the big-5 Canadian banks, and I’ve been very very happy with my success :)

who says you need diversification.

#18 AK on 03.08.13 at 10:23 pm

#10 claudius emperor on 03.08.13 at 9:54 pm

“you bought your wife platinum ring? smart move.”
—————————————————————-
That was not an investment. It was a waste of good money. :-)

#19 AK on 03.08.13 at 10:25 pm

#11 ChickenLittle on 03.08.13 at 9:55 pm

“Spring is coming!! I can feel it! I saw my tulips sprouting in the garden…YAY!”
——————————————————————-
You obviously don’t live in Toronto. All I see is 3 feet of snow.

#20 Anthony on 03.08.13 at 10:29 pm

I’d be curious to see a similar chart for Canada.

Buying a house simply protects your money from inflation, except it falls apart and needs further “investment”.

I can’t wait until the day buying a house is buying a place to live, not an investment that’s going to make you rich.

#21 Notta Sheeple on 03.08.13 at 10:30 pm

“…Fear and greed dominate…..”
==========================

… not to mention, Libor rate-fixing banks (Barclays), book-cooking executives (Enron, Nortel, et al), taxpayer bailouts (too big to fail banks & automakers), and government-induced housing pyramid schemes (F & BoC).

#22 GenXer on 03.08.13 at 10:34 pm

Sold our Toronto house last week….four offers and got $10K over asking. We’ll realize $600K in equity when we close. Now we’re free to move into the (expensive) downtown core of T.O. Looking at some solds and not pleased to see a number of bidding wars going $100K over ask (makes it harder for us to buy back in, too)

The very house hubby said he’d “love to live in” sold for $1.4M fully reno’ed and is being offered for rent, right now, for $4K. (why the buyer isn’t living in it I have no clue) We clearly don’t have the means to pay $1.4M but does it make sense to rent that puppy for a year and have some fun? (I think if I rented anything for less than $3500 it would be cramped, or in mediocre condition and we’d find ourselves itching to buy).

Man. Where is my spring deluge of supply … either desperate sellers needing to rent out for the cash flow or just sell so they can get out?

#23 Garth's Disciple on 03.08.13 at 10:39 pm

Not counting accrued dividends, the S&PTSX is up just 3.2% YTD while the S&P500 is 8.8%; All the sell-side ‘experts’ I know on Bay Street say they can’t GIVE Cdn equity paper away lately and everyone just wants US equity exposure….
Perfect timing for Garth’s rebalancing theme…which has the simple mechanical effect of taking the US equity exposure profits off the table and redeploys a part into unloved Cdn equities…good move!
Just like with real estate….in a few years when everyone hates real estate as a loser’s game….start buying secretly :)

#24 HogtownIndebted on 03.08.13 at 10:41 pm

….was wondering why Garth often seemed to be fairly hot and bothered about ETFs compared to stocks…….then I saw this article…….your secret’s safe, dude……

http://www.thestar.com/business/personal_finance/investing/2013/03/07/ishares_canada_head_mary_ann_wiley_a_bay_st_rarity.html

#25 Mocha on 03.08.13 at 10:41 pm

I’m torn. On one hand, I would like to be able to buy a house wihtout going into crushing debt.

On the other hand, I don’t want to see friends and relatives (or the economy in general) get hammered when it all falls apart.

Garth, have you ever wondered why so many “doomers” are attracted to your blog? Could it have anything to do with how you present your opinions on real estate?

#26 Shawn Allen on 03.08.13 at 10:43 pm

SELLING PEAKED MARCH 9, 2009?

Well I get that selling sentiment was high that day…

But I suspect every stock sold in the market that day was also bought and so selling was exactly equal to buying as it is everyday.

Price of course is what balances selling and buying sentiment each day.

Maybe there is a better way to describe it rather than the usual fiction that selling outpaced buying on a given day?

Ever heard of market makers? — Garth

#27 blok existentialist on 03.08.13 at 10:49 pm

Well, I’ll bite. It seems plain to me that she’s all ready to play house (note the suitcase — she wants to buy a treehouse NOW) and he’s loathe to stop renting that bench.

#28 Bill Gable on 03.08.13 at 10:53 pm

Gold bugs are jumping out of their Kias. If they start.
Doomers are depressed – they invested all their boodle in Lima Beans.
Fun times.

#29 Canadian Watchdog on 03.08.13 at 10:55 pm

That chart needs to be corrected for the 2008 crash. The mean line is too high and should be closer to 85-90.

#30 Smoking Man on 03.08.13 at 11:00 pm

My wallet, about 3300 came to woodbine with about 700

Dosent happen that often, one more wine I’m cabing home. Probably with 0 in wallet,. YOU ONLY LIVE ONCE

#31 Garth's Disciple on 03.08.13 at 11:04 pm

@Shawn Allen

How would you best describe it? Perhaps the negative sentiment or pressure of sellers overwhelmed buyers into a capitulative state? Correct that in aggregate trades, # shares sold = # shares bot…but stocks tanked and most sellers lost money net net
Just like in a bidding war for a High Park house listed at $790k: 1 seller, 8 buyers yet only one unit traded that day

#32 North Delta on 03.08.13 at 11:06 pm

Prices for Single Detached homes in North delta, BC up 25% in 2 years!!

What used to be $425,000 is now $565,000!

No stats needed. Analysis From the streets.

#33 Shawn Allen on 03.08.13 at 11:09 pm

Ever heard of market makers? — Garth (at number 25)

Hmmm well perhaps that is a good point. If you decided market makers were not part of the market AND if they built up large inventories on days when the masses wanted to sell and drew those down on days when the masses wanted to buy. I treat market makers as part of the market. I think they do by definition run an inventory up and down, but not to any great extent. If their inventory gets too large they let the price fall.

I think it is more the case that if one morning 100 people want to sell and 10 want to buy then the price adjusts downwards and the number of stocks sold is precisely equal to the number bought (counting market makers as part of the buyers and sellers).

But the financial media does indeed describe this as sellers outnumbering buyers.

I see it as sellers equal buyers but the price came down to equalize it. Same as any market supply equals demand and price adjusts to make it so.

#34 Old Man on 03.08.13 at 11:09 pm

Love that picture of a sweet young girl, as my heart beats into a humble mold with kindness to make them smile, as a child is nothing less than joy. I ask myself why is it when a young girl in a state of purity who becomes a woman in life turns bad? Yes, Mary am still looking for you, as you conned me out of 200K.

#35 Steve on 03.08.13 at 11:13 pm

This sounds good in theory and of course to date in practice but having watched the Japenese who were the first to zirp and bail outs still leaves me nervous. 20++ years later people are still paying mortgages on apartments that are now worth half in nominal terms that they were when they bought them. Dito Japanese stocks.
So if a smart Jap person balanced their portfolio say just after their crash where would they be today? If very lucky they may have the same as they started with but most probably much less

It isn’t Japan. — Garth

#36 S on 03.08.13 at 11:14 pm

Hm, know a couple of folks that locked into 5 year mortgages (from variable) a while ago on account of interest rates facing an imminent upward swing. They read about it here… Do we really want to advocate the markets with such contagious zeal and confidence?

How did you get smart friends? — Garth

#37 broadway skytrain on 03.08.13 at 11:16 pm

I ask myself why is it when a young girl in a state of purity who becomes a woman in life turns bad?

—————————-
your manner of speech could drive anyone over the edge.

#38 Shawn Allen on 03.08.13 at 11:21 pm

MARKET MAKERS?

Speaking of (stock) market makers, we seldom hear about them.

How big a part of the market are they? Do most buys get matched up with a sell order or does the market maker get involved on most trades. Or 50% of trades or what?

I have never seen any statistics or really even any discussion of this.

Who is the market maker for each stock. I know that the TSX appoints a market maker (or perhaps more than one) for each stock, but who are they for each stock. Who is the market maker for Canadian Tire for example.

Do some of them do a better job than others? How much money are they making? Do market makers speculate on stocks at all or are they just there to make sure the bid /ask spread does not get too wide?

I have never seen anything in the financial press about this and I have read either Report on Business or the Financial Post six days per week for the last 25 years or so.

When I studied Finance the market maker existed in the text book, but as an investor he has been the invisible man to me.

Sometimes when I sell a stock through TD, it says TD acted as principal (rather than agent) in the trade. Is that TD acting as market maker or is that TD just matching my order up to another TD customer who is selling?

Brokerages do it. — Garth

#39 MacDaddy on 03.08.13 at 11:23 pm

Stock market: “We’re now at the levels of October, 2007″

Nice so you have made exactly zero with your money in the stock market for the past 6 years. Actually you can go back to 1999 to get a zero return in the stock market.

I think I will take my 2% GIC.

I give up. This is a pointless waste of my time. — Garth

#40 MacDaddy on 03.08.13 at 11:28 pm

“Never buy one asset (like an index fund based on the S&P, which jumped 12.5% last year, or gold, which has lost 17% in 18 months)”

Gold was $639 an Oz in 2007. Now it is $1578 after the 17% decline. It could still drop in half tomorrow and you would still be way ahead of the returns from the stock market.

Buy a calculator. — Garth

#41 Smoking Man on 03.08.13 at 11:39 pm

No woman are bad, they are just with the wrong dude.

Old Man heading to south side johnny’s, 3200 in wallet drinks on me

#42 Lucky 3 on 03.08.13 at 11:41 pm

Kinda forgot about Realtor.ca for a while but I was wery surprised today when it look like an invasion of red dots spreding all over Hamilton map. Hundreds and hundreds of so called (houses) post ww2 era appearing like mushrooms after the rain. It looks like people are in a big rush to list and get the hell out of the market.
Never seen this before. Curious? Take a look your selfs
Another thing about that, prices!!!!! Oh they are sky high.
Really ? I am waiting, patiently.

#43 henry on 03.08.13 at 11:45 pm

If diversity is the key then I don’t know why you are against mining stocks and precious metals. Gold since the 70’s has outperformed the S&P 500 by 21%. Warren Buffet said “Buy when there’s blood in the streets, even if the blood is your own.” Right now gold is down 16% from last September and looks like it has hit bottom. Miners are down significantly, Barrick is down 45% since last September. Conversely, the S&P 500 is up 6% since then and 21% up from last June. Given that the S&P average gains is 10% and the market is up 11% right now, now is not a good time to get into the market (unless you are buying battered stocks like the miners). That is if your strategy is buy low sell high, which most people don’t do. If you aren’t in the market right now you missed the boat. All sectors experience downturns the key is to buy the beat up sectors and sit on them until the buying frenzy.

And yes I know Warren Buffet recently said don’t buy gold.

#44 espressobob on 03.08.13 at 11:54 pm

Thanks Garth for another great post.

Have to rebalance the portfolio…..again. Something to do with these steroid laden US & International ETF’s.

Decisions, decisions? If this keeps up I’m gonna end up like this guy,
http://www.youtube.com/watch?v=qaHLlGtOZbg

#45 Mister Obvious on 03.09.13 at 12:00 am

#25 Mocha

“Garth, have you ever wondered why so many “doomers” are attracted to your blog?
—————————–

Perhaps because this site gets serious traffic.

A doomer starting his own blog can look forward to six hits a month. From robots. In addition, he would have less opportunity to hide behind a cloak of anonymity.

Here, there’s an outside chance a doomer might troll up some sort of indignant response.

Make a big enough nuisance of yourself and even Garth might bark at you. Jackpot!

#46 henry on 03.09.13 at 12:02 am

@22 MacDaddy
You ever heard of dollar cost averaging. If every March you bought SPY (which tracks the S&P 500) say with you tax return you would have gained 20%. The beauty of dollar cost averaging if you aren’t into vulching then you get some shares low and some high but it all averages out.

#47 mike as in mike on 03.09.13 at 12:06 am

Interesting video about wealth inequality in America.
https://www.youtube.com/watch?feature=player_embedded&v=QPKKQnijnsM

Posted many times already. — Garth

#48 richard on 03.09.13 at 12:17 am

Unbelievable Toronto still having bidding wars. Maybe house market will flat and nothing else?

#49 Ralph Cramdown Ⓤ on 03.09.13 at 12:19 am

#43 henry — If diversity is the key then I don’t know why you are against mining stocks and precious metals.

Henry, if you ever have the time you should check out Cobalt Ontario. As you discover the history of the town, note the dividends paid by the silver mining companies. Some of them paid out dividends of tens of thousands of times par value.

Compare with the gold miners of today. I hear they’re going to spend the next year arguing about what exactly is meant by the term “all-in cash cost of production.” Barrick pays a puny dividend and is LOSING MONEY. I think somewhere along the way, metalheads have forgotten that the whole point of owning a gold mine is to MAKE LOTS OF MONEY, especially when gold prices are high. I don’t know what their secret is, but I want no part of it. The people in the oilpatch still get it — they send me money.

#50 Basil Fawlty on 03.09.13 at 12:23 am

“Consequences will come from the outrageous expansion of debt monetization called ‘quantitative easing.’
Jim Sinclair – Today

#51 bill on 03.09.13 at 12:27 am

the little girl has a ”well diversified portfolio” in her lunch box and she just smote the little boy who is a ”gold bug” a mighty smite on his noggin and he is now contemplating the error of his ways or will when he comes to…

#52 Dan from Calgary on 03.09.13 at 12:41 am

Gracias Garth! Like I said, appreciate your input!! Gladly refer your blog, and even debate calling for your advice…

:-)

#53 Ralph Cramdown Ⓤ on 03.09.13 at 12:44 am

#50 Basil Fawlty

Give it up. We’re on year five of QE. There’s no monetary theory of inflation that says a central bank can loudly and publicly print huge quantities of money and the inflation will only show up five or ten years later. So you can either admit that your theory doesn’t fit the facts as observed, and try to find better theories and shamans with more predictive powers, or you can keep your arm in the meat grinder and keep howling into the void.

#54 Notta Sheeple on 03.09.13 at 12:48 am

I give up. This is a pointless waste of my time. — Garth
=========================

Actually, no. I took your advice and emptied my ‘bonus 1.3% interest’ savings account and opened up a modest self-directed equity account through a local bankster. At $29.95 per trade, the initial ‘diversification’ was painful, but, after three months I’m already up 5.6% overall (some winners, some not-so-winners). And that’s above and beyond the initial trading fees.

Nervous as a whore in church, but so far so good.

#55 henry on 03.09.13 at 12:53 am

@Ralph Cramdown

I was just using Barrick as an example because they are big. I don’t really care for the company from what I have heard in passing they made some stupid purchases in Africa that are hurting their bottom line. The point is the whole sector is battered right now and it could be a good time to buy.

#56 Nostradamus Le Mad Vlad on 03.09.13 at 1:43 am

-
“They get crushed by their own emotions. It’s the raw difference between investing and gambling. We’re now at the levels of October, 2007, before the lights went out. Hubris, arrogance, ignorance or stupidity all guide us to the same place. Lately, that’s been here.” — I second that! Gambling is for Property Virgins. Better off playing the lottery or bingo.

Jobs Sooner or later, this will catch up with the WH, esp. with sequester job cuts happening, and here.
*
Kelowna sales in a death spiral; Furloughs take hold for customs workers; Austerity’s policy mistake; Bedroom Tax Ax the tax or naughty parts in between? Fatcat Fury It’s stories like this which gives banxters a bad name, and people lose faith; USPS, Canada Post and Royal Mail Smells like union busting to change workers pay rates; Christine Lagarde celebrates Ireland’s downfall by dropping in at a local pub; Sensors in the workplace tracking workers; Spending Cuts 173 air traffic towers close April; EUSSR New ‘Pay As You Throw’ garbage tax; 1:11 clip Polaris introducing flat proof and airless tires; Mondragon Giant co-op in Spain; Two Consequences of sequester; Cdn. Friday links; An Infinite amount of money; Congress, Derivatives and Bubbles; French have an attitude problem with layoffs; US$190 / brl. oil in a seven years? Bombardier’s new offerings; J&J loses lawsuit; ObombaCare taxes Double the original estimate; Email tax Only in California you say? Thank odG.
*
Cheney admits lying about 9-11. Most already know it was an inside job; The Incredible Edible Town Organic stuff, and Aspartame Yes, ants are smarter than humans; 3:43 clip Truck driver says underground city below US; Trolley Rage It’s a killer Another reason why most men are unclear on the concept; Lord crowned Villagers greet their new king; Space Weather “We have seen this before with the Maunder Minimum, which triggered the Little Ice Age. A quiet sun means more cosmic rays reach Earth, triggering cloud formation, which means more sunlight gets reflected back into space, cooling the Earth.” wrh.com. Bring in the new ice age as us boomers roll on to the other side! Better off with Gadaffi than Obomba? GMO Labeling Whole Foods says it will be on by 2018, but sheeple have short memory spans; Ferrari Supercar Over a thousand orders already; Paro Airport in the Himalayas. Only a few are qualified to land here; Art manifested from empty cans; Education Smoking Man is right; Farage and Murdoch Differing political ideologies, but civil to each other; Asian Scaffolding Might not work on the Wet Coast.

#57 Dan in Calgary on 03.09.13 at 1:59 am

29.95 per trade???

You’re being raped jailhouse! Questrade hombre, $4.95. Your setup makes marginal trades not worth your time.

#58 bcc on 03.09.13 at 2:01 am

Thanks again for the wisdom, Garth. After following the blog for three years, I’ve transformed from a guy paying minimum monthly payment on cc, to having a pretty diverse portfolio in a max out TFSA & more.

And from time to time I need to get an extra dose of fix from this blog after visiting mls.ca

And there’s one more question from me…
If I woke up (pacific time) one day, and it was like September 29, 2008, what am I supposed to do?

Thanks

#59 DreamingIntechnicolour on 03.09.13 at 2:15 am

What goes up always goes down. House market, Stock market, etc.

#60 Vandamncouver on 03.09.13 at 2:22 am

Great post today Garth, love that you talked about re-balancing.

#61 rp1 on 03.09.13 at 2:27 am

US house chart suggestions inflation is in order, with a low for interest rates and high for bonds. Not that well-managed bond portfolios can’t make money, they will, but the days of bonds beating equities might be over for a while.

#62 Retired Boomer - WI on 03.09.13 at 2:28 am

Wow…such stock market comments.
January 2012 $463,000 in my account. Didn’t add any money to it. Today $507,800 after I took out $23,000 to spend last year and $9600 so far this year. Real mixture of individual stocks, REITS, mutuals, including Bonds.

No commodities, no metals. I’m tired you do the math.

Over the years, I have re-balanced. At times I have been all stock, at others, like from May 2008 until March 2009 all bonds (and still lost 3%) then all stocks through most of 2009 then went 60/40 stocks & REITS/bonds. This year lightened up on Bonds 27% corporates short term & mid term they have no where to go but down as interest rates rise.

Am I worried? No PE ratios not wild like 1998-99. Could the market drop tomorrow? You bettcha. Will I sweat it?
Stay tuned!!

#63 Freebird on 03.09.13 at 2:41 am

@#24 Hogtownindebted

Yes, great article about a successful business person who started off at the bottom and with ambition and intelligence worked their way up to the top. While dealing with the challenge of being a divorced parent of two young kids – so add great role model to the CV. Kudos to Ms. Wiley.

@smokingman #41

Could also be wrong woman for HER. Based on past posts there are gay women who read this blog so just being inclusive.

#64 Freebird on 03.09.13 at 2:50 am

I give up. This is a pointless waste of my time. — Garth
=========================

I agree. Your blog led my guy to apply for his CPP early. First payment already arrived plus one month retroactive. Just hoping the ex won’t apply for their cut for a few years. A friend we told about your blog did the same and also just saw their first payment. Can’t say we agree with everything but most of us here are listening…like Frasier Crane fans. You have more hair though.

#65 Bailing in BC on 03.09.13 at 2:52 am

John Prine

“Excluded lots, acreages and recreational properties and the number came to 380 (as of today) Make sense?”

I also got 380 listings in Squamish today. This follows the data I have been recording on my spread sheet. I think your report of 436 listings may have been in error.

#66 Dave on 03.09.13 at 3:06 am

Diversification and rebalancing are both so critical for long-term investment success. Regular rebalancing is a strategy that guarantees you will buy low and sell high. Best advice you could ever give a do it your self investor.

It would be interesting to have the interest rate displayed on top of this chart.

#67 Tom from Mississauga on 03.09.13 at 3:28 am

So don’t sell the ZEO to buy even more ZSP? But it feels like the right thing to do!

#68 Quebec is Great on 03.09.13 at 3:35 am

#33, #38

Market Makers make very good money IMHO as do most Hedge Funds (and other funds termed as “commercials”). When looking over historical COT data (Commitment of Traders) link, you will find that commercials take up most contrarian positions against speculators, and commercials are usually right (whereas speculators are wrong). Much of the market makers volume comes from speculators; statistically knowing that speculators usually lose, you can see that being a market maker is usually a profitable business. Also, they make a bit of income from each trade fulfilment.
Regarding ups and downs… As more and more of the markets volume is comprised of large funds (rather than individual investors) it is more probable to me (in my opinion) that significant downturns (or upturns) will not happen unless the commercials want it to. Exceptions are computer trading systems malfunction and surprise news events of major significance – yes, I know these are not small exceptions either. Further to this, the very large commercials have media sway and have the ability to manipulate short term sentiment to their advantage. As an example, commercials can foster an environment that would make a speculator think the market is going to crash again, push down the S&P to an uncomfortable point and then buy up the sell orders from frightened speculators. Many may not believe it, but watch this (not so easy to find) old video from Cramer about hedge fund tricks here anyway.
In summary, my point is that during the last crash many hedge funds went bust but some of the luckier ones had massive short postions open or had their portfolios hedged with significant puts. For many of the commercials that “lost” money on the price drop, the smarter ones have cash on the side and probably were in the money within 6 months. As the price bottomed, I can only assume it was a legendary buying party for commercials who were picking up sales from panicked speculators for a song.
I am not in finance so take what I have stated above with a grain of salt. I dabble in Forex and a few equities and it is merely my personal perspective on the markets. Long term investing, scaled in/out positions and re-balancing avoid these volatile pitfalls and as such, are the optimal investment strategy for most people, most of the time.

#69 Jamie on 03.09.13 at 4:03 am

How often do you recommend re-balancing?

#70 vic on 03.09.13 at 4:10 am

not too sure we are out of woods. if everything is figured out so well, should fed stop qe next week? will stock market make new high without qe?hey Garth, i knew what you gonna say. u r pro wall street and big banks IMHO. I want to smoke whatever u had

#71 Richard and Zeus on 03.09.13 at 4:13 am

Prices for Single Detached homes in North delta, BC up 25% in 2 years!!

What used to be $425,000 is now $565,000!

No stats needed. Analysis From the streets.
—————————————————-

Its called money laundering….l.

#72 Small Town Steve on 03.09.13 at 6:18 am

#39 MacDaddy on 03.08.13 at 11:23 pm
Stock market: “We’re now at the levels of October, 2007″

Nice so you have made exactly zero with your money in the stock market for the past 6 years. Actually you can go back to 1999 to get a zero return in the stock market.

I think I will take my 2% GIC.

I give up. This is a pointless waste of my time. — Garth
——————————————————————-

Lol some people are like Slinkies.
Good for nothing but they bring a smile to your face when they take a tumble down the stairs.

#73 Morgan on 03.09.13 at 7:21 am

I give up. This is a pointless waste of my time. — Garth
As with Notta Sheeple, I also disagree that it’s pointless. It’s just that picking any time period of returns doesn’t show the whole picture when the spans of market volatility are long; long enough to have a huge impact on our limited lifetimes. MadDaddy is right – I’ve got funds in the market that are basically returning to their starting point 15 years later. I’m grateful I’m not trying to retire on them, although it’s poor reward for being an eager bunny and trying to start saving for retirement in my 20s. I didn’t buy high because I was caught in market frenzy, I bought because that was what there was to buy when I started saving money.
I do appreciate the concept of balance and re-balancing – which is why it makes sense to cash out your home – but I would love to see a similar chart for stocks since 1890, adjusted for inflation.

That’s what you get for owning mutual funds. The sales guy makes more than you. — Garth

#74 thinker on 03.09.13 at 7:43 am

Garth, why don’t you create your own ETF?

#75 EIT on 03.09.13 at 8:01 am

You forgot the wenches. — Garth

Silly Garth, wenches die off after a generation, what are you gonna do with that?

#76 AK on 03.09.13 at 8:50 am

#43 henry on 03.08.13 at 11:45 pm

“Gold since the 70′s has outperformed the S&P 500 by 21%.”
——————————————————————–
Hey Einstein, you forgot to factor in the dividends from the S&P 500 in your calculation.

#77 Raven on 03.09.13 at 8:58 am

Markets or Mortar

My grandfather used to say” Investment Capitol goes to the markets or into Mortar and rarely do they two meet if ever for very long”.

As our R.E. industry collapses funds will inevitably gravitate towards the TSX. This may explain some of the polarization of the Dow versus the TSX. As Canadian Capitol is still mostly vested in residential and commercial R.E.

If fear of loss is keeping the majority of your funds in cash or cash equivalents, you may feel you are on the right track, you still get run over if you just sit there!

The time to sell R.E. holdings is now as there is an immeasurable difference between late and too late!
Although as humans we buy high and sell low and on average we should remember our history, or face its enivitable repetition. “Surprising thing about young fools is how many survive to become old fools”

#78 AK on 03.09.13 at 9:10 am

#39 MacDaddy on 03.08.13 at 11:23 pm

“I think I will take my 2% GIC.”
——————————————————————–
Don’t spend it all in the same place. :-)

#79 Herethere on 03.09.13 at 9:28 am

Looking for Mary. How appropriate for this real estate forum . . . Mary, Mary have a lamb . . . Hope, that for his search to be fruitful, that she did time in “where is better than the Bahamas,” regardless of citizenship, she may have come back.

#80 claudius emperor on 03.09.13 at 9:59 am

#49Ralph Cramdown
——————————————–
PMs Mining companies are not making money. The cost to extract the ore and refine it is huge ang going up.
The known resources worth exploiting are almost depleted on world wide scale for certain key metals and minerals.
While their price is depressed.

Something that can’t go on will stop. I expect severe decline in the supply of key strategic commodities in the years to come that will drive prices up as to justify exploration of less rich in content sources.

Focusing purely on the industrial, non-monetary application of certain key metals and minerals I think there is great future in investing in them. Gold is not one of them.

#81 Deliverator on 03.09.13 at 10:06 am

Look at this chart, and ask yourself if it’s a good idea to buy the market now.

http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/03/20130307_ms4.jpg

#82 claudius emperor on 03.09.13 at 10:12 am

#53Ralph Cramdown
———————————–
Inflation is being exported and understated.
Real inflation is 6-8 % (I think there is a site – shadowstats.com) that reports the real inflation the way it was reported in the 80’s.

If you think there is no inflation buy gov. bonds.
I won’t touch them with a stick.

Inflation can manifest itself in very nasty way once people underastand what is hapenning. For now they still believe the official numbers and invest and save. Saving drives down the velocity of money. If it reverts to it’s normal we might see real inflation of 10+ %

#83 T.O. Bubble Boy on 03.09.13 at 10:15 am

@ #39 MacDaddy on 03.08.13 at 11:23 pm
Stock market: “We’re now at the levels of October, 2007″

Nice so you have made exactly zero with your money in the stock market for the past 6 years. Actually you can go back to 1999 to get a zero return in the stock market.

I think I will take my 2% GIC.

I give up. This is a pointless waste of my time. — Garth
————————–

The fixed income part of a balanced portfolio would have done pretty well since 2007… holding steady through the turbulence, and paying far more than that 2% GIC.

Bond ETFs are up a minimum of 10%, many up (plus paying 3%-4% the whole way)

REITs and Preferreds tanked in 2008, but have more than recovered (paying 5%+ the whole way in most cases)… and if you bought in 2008-2009 you’ve made a killing.

#84 andrew on 03.09.13 at 10:26 am

@ #54 Notta Sheeple

Making 5.6% on stocks when the market goes 9.36% up is not something to be proud of. It means 40% worst than the market performs. Applying this performance criteria, be prepared to see 60-70% of your portfolio vanishing in days like Sep 08, Sep ’02 or Nov ’87.

#85 live within your means on 03.09.13 at 10:49 am

#10 claudius emperor on 03.08.13 at 9:54 pm
0% Gold. :-)
————————-
you bought your wife platinum ring? smart move.
………………..

Couldn’t afford a wedding ring when we got married so I asked my Mom if I could have hers. I had bought it for her years before when hers wore out. Due to arthritis she could no longer wear it. It too wore out & I later picked up a wide gold and platinum band with tiny diamond embedded chips at a pawn shop for $90. Still wearing & loving it. Only jewelry I now wear tho I inherited several old beautiful pieces from my Mom & 1 of hubby’s grandmothers. They’re in a safe until I or hubby decide whose worthy of them.

#86 Canadians Maxed OUT on 03.09.13 at 10:59 am

Canada’s economy and housing market is in for some bad times. Many will go bankrupt and are going bankrupt in great numbers to the point CHMC has demanded realtors lie AND HIND THE FACTS THAT many people have gone BANKRUPT and their home is now a power of sale. it’s going to be a long way down. Sorry realtors who lie for money and don’t have an education beyond high school.

http://www.theglobeandmail.com/news/national/from-micro-to-macro-how-were-becoming-a-country-drowning-in-debt/article9562947/

#87 Ralph Cramdown Ⓤ on 03.09.13 at 11:17 am

#55 henry

I only talked about Barrick because you mentioned it. I don’t follow the sector, but of the ones that HAVE P/Es, they almost all seem to be in the mid teens with low dividends (What’s wrong with Newmont?). That’s only cheap if you believe management’s tale of woe about such-and-such project being late and over budget, but honest it won’t happen again and going forward we’re going to take a disciplined approach to project development. Whatever.

My idea of a cheap stock is VLKAY. Now THAT’S cheap.

#88 Basil Fawlty on 03.09.13 at 11:38 am

Ralph #53 “So you can either admit that your theory doesn’t fit the facts as observed, and try to find better theories and shamans with more predictive powers.”

The coiled spring winds tighter and tighter Ralphy Boy.
There is a reason the US bond market is at a 200 year high. The “shamans” I am following now are the central banks themselves, especially Russia and China, because they realize what you don’t.

#89 Daisy Mae on 03.09.13 at 11:52 am

#17 JSS: “who says you need diversification.”

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

The cliche ‘Don’t put all your eggs in one basket’ has stood the test of time. I’d put some stock in it.

#90 Daisy Mae on 03.09.13 at 11:53 am

Literally! LOL

#91 Freebird on 03.09.13 at 11:54 am

Any comment on the advantage (if any) to using a USD acct to invest in US ETFs? I’ve read about more Cdn brokerages starting to offer US accts in the last year or so. Garth, maybe you could do a post on using hedged vs unhedged dollars to invest in US funds? I’ve read various articles on it and it seems there is no real consensus.

#92 Freebird on 03.09.13 at 12:07 pm

@#69 Jamie
How often do you recommend re-balancing?
—————
I’m not sure Garth or anyone can answer that question and be specific. From what I’ve learned it depends on your situation (size of portfolio, age, goals etc) and can be anywhere from once annually to every quarter. If you’re a DIYer and have limited time or work with an advisor like Garth than once or twice a year as part of a portfolio review seems avg and makes sense. If you’re a more active investor it could be far more. There are lots of good articles on the web if you Google the topic.

#93 Ralph Cramdown Ⓤ on 03.09.13 at 12:33 pm

#88 Basil Fawlty — “[…] the central banks themselves, especially Russia and China, because they realize what you don’t.”

Is there a third eye in the middle of your forehead that allows you to see into the vaults of the central banks of Mother Russia and Red China? Or do you have two hotlines on your desk, one for each of their central bankers? INSANE IN THE BRAIN!

#94 Smoking Man on 03.09.13 at 12:37 pm

Vlad great link on school. was reading sun this week, some teachers are contemplating weather to do extra shit after school, then they are passing out envolpose for donations to parents.

Entitled arogant spoiled little brats.

Ronald Reagan every last one……

Ontario deficit fixed……

#95 Smoking Man on 03.09.13 at 12:41 pm

Im going to run for office on the platform.

Fire the teachers and put insurance industry CEO’s in jail for outrageous price fixing…….Do a witch hunt and get the goods on McGoofy, and cronnies and toss there ass in kingston.

Donations anyone……:)

#96 Dr. Hoof - Hearted on 03.09.13 at 12:48 pm

Excellent INTERVIEW

Guest: Dr. Jennifer Daniels, the author of Do You Have the Guts to Be Beautiful? talked about how the population is being farmed by the government and by the corporations. She talked about the healthcare system, the education system and how to stop being farmed

http://grizzom.blogspot.ca/2013/03/spingola-speaks-20130307.html

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

Interesting interview: Puts things in a proper perspective and ties up a lot of loose ends.

How we humans are letting “the various Farmer/s ” control our lives.

We are literally and figuratively playing out ANIMAL FARM.

#97 AK on 03.09.13 at 12:52 pm

#88 Basil Fawlty on 03.09.13 at 11:38 am
“There is a reason the US bond market is at a 200 year high. The “shamans” I am following now are the central banks themselves, especially Russia and China, because they realize what you don’t.”
——————————————————————
Okay, you got my attention. Care to share?

#98 TurnerNation on 03.09.13 at 1:15 pm

Globe and Mail’s front page is fretting about mortgage debt, today. As Smoking man says, The Machine! I never look past the front pages. It’s simply good for a laugh or counter-trade ideas.

Look to the South. Losses will be socialized (food stamps, military, medicare, bailouts) while profits move privately. Many USA corps book offshore and pay few taxes. Imported foreign workers is the next game in town.
Care ordering for a double-double in spanish?

The Harper Government [sic] has the Globalists’ playbook.

#99 Rob aka Captain and Mrs Slow on 03.09.13 at 1:22 pm

@ Freebird Dividend Ninja just had a post on that very question and is more complicated than one realise.

#100 Shawn Allen on 03.09.13 at 1:38 pm

TRUST CHARTS?

Deliverator at 81 aid:

Look at this chart, and ask yourself if it’s a good idea to buy the market now.

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

An interesting chart. It reminds of the saying that if you torture the data long enough it will confess to anything. Zerohedge searches the data to look for reasons for doom.

How much has listening to Zerohedge cost people?

Why not buy shares of solid corporations at decent prices rather than think about squiggles on a screen?

Why not think of market declines as times of opportunity rather than a reason to stay away from owning your share of those rapacious corporations?

#101 Waterloo Resident on 03.09.13 at 2:07 pm

Wow, nice chart! I just love to see graphical pictures of prices over time and how they relate to the past. To me it looks like U.S. house prices are still a little bit too high, they’ve got a bit further to fall given the fact that 100 million people still cannot find a job down there.

However, home prices in Canada are different, soon $500,000 houses are going to be selling for $5 Million each!

HOME PRICES WILL SOAR DUE TO HEDONISTIC WAGE RISES as boomers drop dead or retire in massive numbers, and employers will have to step up to the plate with 20% to 50% wage increases just to keep the valuable employees they’ve got.

( Damn, I’ve got to stop sniffing that GLUE! )

I don’t know what the neighbour here in Waterloo is smoking, but he’s 21, his wife is 19, and they just bought a $721,000 3-bedroom bungalow, 26 years old, close to RIM park. Frankly, I thought it would be around $220,000 not $721,000 , so I guess prices here are still shooting to the moon. By the way, he works in Best Buy as a sales clerk, and she works in Sobeys as a cashier. Both earning less than $30,000 per year each.

I met them yesterday, told them that they should invest in the Stock Market. They replied that the stock market is for LOSERS, that NO SANE MAN invests in a something as rigged as the stock market is.

I just paused and wondered about what he said because I have ALL of my money in the U.S. stock market, so I wondered if maybe I was a fool here and he was the smart one?

He seemed really happy, she’s going to have triplets soon! They told me that they are shopping now for a new Minivan (all on credit, of course) because with the kids coming the old Civic just isn’t big enough.

I wonder WHO THE HECK is loaning them all of that cash to buy all of that stuff, when they don’t have a penny to their name?

There are not 100 million unemployed Americans. The rest of your post sounds equally credible. — Garth

#102 Youth in Asia on 03.09.13 at 2:11 pm

#69 Jamie on 03.09.13 at 4:03 am

How often do you recommend re-balancing?
___________________________________________

Garth,

Although you may be a financial wizard, a lot of people aren’t! Here’s my advice, learn the stock market, learn that you may lose sometimes but win most times following my advice (if you think you’ll win all the time enjoy your 2% GIC):
1) Learn technical indicators, if you fail at doing this you will fail in the market
2) Learn 3-5 good stocks. Sometimes in the same industry (Banks, utility, etc.). I just trade Royal Bank, average 28% over the past 4 years, and short sold it in the Spring of 2008 (if you don’t know the market is going to crash, learn the 3-day candle chart of the S&P 500 and refer to lesson 1)
3) Don’t complicate this! Refer to lesson one, banks show great cycles and so do some utilities, some more than others, and you can play them like a fiddle. If you mess up, you get a better than average dividend.

There you have it, you’ll never time the bottom and never time the top (maybe sometimes if you’re lucky). Gold, O&G, ETF’s (no volume on TSX except for a few), American equities (forex costs), are frankly all a waste of time and you learn quickly that you’ve confused yourself and you give up. If you spent as much time on technical indicators regarding cyclical stocks instead of learning how to “diversify your portfolio” and “re-balance” you’d actually make money in the market instead of crying like a baby to Garth as to why your financial future sucks and that you need some help!

BTW, Garth is right about the Canadian real estate market. May I quote a little sentence about an article on deflation:

“There is less reason to expect deflation, aside from the collapse of speculative asset classes, under a fiat monetary system with low productivity growth.”

Older workers + game console playing dummies in their 9-5’s + housing market supply increase + CDN bank trying to keeping interest rates matched to the US because of the risk of a “Carry Trade” = DEFLATION

I believe our CPI was a “booming” 0.5% last month…

Keep up the great work Garth…we know your smart but for them, K.I.S.S.!

#103 Ralph Cramdown Ⓤ on 03.09.13 at 2:27 pm

#82 claudius emperor — “Inflation is being exported and understated. Real inflation is 6-8 % (I think there is a site – shadowstats.com) that reports the real inflation the way it was reported in the 80′s.”

While I agree with the theory behind shadowstats (viz. some CPI calculations for substitution and hedonic improvement may not correlate with realistic consumer desires), I have a hard time taking as credible a source which has published:

Hyperinflation 2012
…which is “fifth in a series of related writings going back to 2006. It updates and replaces the Hyperinflation Special Report (2011) [which] updated and replaced the Hyperinflation Special Report (2010 Update) [which] updated and replaced the Hyperinflation Special Report version of April 8, 2008 [which] updated and expanded upon the three-part Hyperinflation Series that began with the December 2006 SGS Newsletter.”

If you believe that inflation is too many dollars chasing too few goods, then you don’t need to wait for people to “realize what is happening.” The dollars and the goods are already in the system right now, and the hyperinflation which some have predicted is not.

#104 Old Man on 03.09.13 at 2:27 pm

There is one place in Florida that never took a hit, so guess where?

#105 Ralph Cramdown Ⓤ on 03.09.13 at 2:40 pm

The Magic Kingdom?

#106 Macrath on 03.09.13 at 2:54 pm

#91 Freebird
#99 Rob aka Captain and Mrs Slow
—————————————–
Good info thanks.

If you want exposure to Australia EWA (div 4.99%) or US large caps without financials DTN (div 4.57%) the US offers more choice and lower fees. I find I can target my goals and diversify better with a $US account.
And why hedge when the $CDN is the highest its been for decades ?

#107 brainsail on 03.09.13 at 3:09 pm

So far, zero comments about the Alberta budget fiasco. What’s going on?

#108 dosouth on 03.09.13 at 3:18 pm

The sunny Okanagan finally admits a bit slower market – BUT says the writer – “Price changes are most likely behind us and are projected to flatten for balance of year.”

MAWAHAHAHA!!

http://tinyurl.com/bbq38dv

#109 Stoopid Idiot on 03.09.13 at 3:22 pm

#104 Ralph Cramdown

Wrong Ralph… the money from the various bail out was used to re capitalize the balance sheets that the banks have used to buy Bonds, Stocks, and various other debt instruments… hang in their though…. It’s coming

#110 Ralph Cramdown Ⓤ on 03.09.13 at 3:33 pm

#108 brainsail — “So far, zero comments about the Alberta budget fiasco.”

A crafty but ultimately doomed attempt to keep Ontario from drinking Alberta’s milkshake via equalization payments? Just cut a deal with BC to build the damn pipelines already!

#111 T.O. Bubble Boy on 03.09.13 at 3:38 pm

Classic MSM propaganda:
http://business.financialpost.com/2013/03/08/canadian-home-building-rebounds-on-condos/?__lsa=987f-c077

Headline:
“Canadian home building rebounds on condos”

Actual article:
“The actual number of housing starts last month, without seasonal adjustments, was down year-to-year. There were 10,965 starts last month, down from 12,247 in February 2012.”

#112 Stoopid Idiot on 03.09.13 at 3:44 pm

Try This Ralph

Never Bet Against The U.S.

http://www.youtube.com/watch?feature=player_embedded&v=0Mex6PxVjM0

#113 Shawn Allen on 03.09.13 at 3:47 pm

THANKS BE TO GOD

Thank god for the irrationally exuberant for they will buy your stocks or your house at irrationally high prices.

Thanks too for the doomers for they will sell you their stocks and their houses and convince others to do the same at very cheap prices at the bottom of the market.

And thank you god, for all those people who trade based on technical analysis and momentum and who use stop losses for they believe in buy high and sell low. In order for some of us to buy low and sell high, others have to do the opposite. Thank you, one and all.

#114 AK on 03.09.13 at 3:52 pm

#107 Macrath on 03.09.13 at 2:54 pm
If you want exposure to Australia EWA (div 4.99%) or US large caps without financials DTN (div 4.57%) the US offers more choice and lower fees.
——————————————————————-
N.SDIV (div 8.01%) covers the entire World and pays monthly. N.KBWD(8.16%) covers the U.S. Financials and Real Estate.

#115 S on 03.09.13 at 3:53 pm

#36 S on 03.08.13 at 11:14 pm

“How did you get smart friends? — Garth”

Real nice. You know, I have to stop recommending your blog to people. The sarcastic – actually almost berating – tone you use towards people who take the time to read you yet choose to also do their own thinking gets tiresome. Individuals I mentioned actually pay more in interest now than they did with variable and there is no sign yet of the rates going up. As for the markets one might consider that there is a growing choir of highly respected investors and economists urging extreme caution. While your opinions are respected and writing entertaining a little humility would be a nice addition to your posts.

Your locked-in friends will be the winners. Being right beats humility, by the way. — Garth

#116 Old Man on 03.09.13 at 3:56 pm

#108 brainsail – Alberta is toast as this Province is a one horse town, and with the cost of spot oil the project called oilsands is not only expensive, but must discount bigtime bringing the net profit margins down that cannot even compete with a donut shop. Thus the Real Estate crash in Alberta is at hand, unless by the grace of god something changes. Caesar is a fool to fall in love with this illusion, so let him eat cake.

#117 Old Man on 03.09.13 at 4:38 pm

I see that nobody is taking my challenge about Florida, so will give you a hint or two. There are thousands of rooms: hotel, inns, and b&b, and if you think the Real Estate values are high in Toronto think again, as for $1 million you can’t buy anything of value. Ok it is the same old story of location, location, and the ambience of it all, and the cashflow is out of this world.

Well want to spend a month at a b&b during the low season in Florida to kick back a bit, and a modest room in a b&b will cost me over $7000, so the breakfast is included – what a deal, so where is this in Florida, as they never took a hit?

#118 Tom Vu on 03.09.13 at 4:55 pm

#105 Old Man on 03.09.13 at 2:27 pm

There is one place in Florida that never took a hit, so guess where?

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

My new boat

bwahahahahaha

#119 Ralph Cramdown Ⓤ on 03.09.13 at 5:05 pm

#113 Stoopid Idiot

You’ll have to explain it to me slowly, Stoopid. A country spends forty years transforming itself from one of the most insular, economically backward on the planet to being #1 in merchandise exports and #2 in merchandise imports in the world, a country whose trade to GDP ratio is twice that of the United States, then attempts a Hunt brothers style move to crash the economies of all its trading partners (and its own most of all, of course, for the reasons cited above)?

It sounds pretty stoopid to me, Stoopid.

#120 Dean Mason on 03.09.13 at 5:41 pm

hey, Mac Daddy #39, If you really want to buy a Gic you can get a better interest rate than 2.00%. Go to http://www.msn.com and there are a few 5 year Gic’s paying 2.85%. I saw a TFSA at 3.15% for 5 years.

#121 Macrath on 03.09.13 at 5:47 pm

#115 AK

SDIV (div 8.01%) interesting fund. I was investigating it the last time mentioned it. The Canada portion is 99% preferreds and quite an eclectic line up of global high div payers and lots of real estate. Beta = 1.05 and PE=13 not bad.

KBWD, U.S. Financials scare me as much as that clip from #113, but I`m in the market for some global or US REITs and I want them in my TFSA $cdn. Any suggestions ?

#122 jess on 03.09.13 at 6:03 pm

apartments go for nearly $12,000 per square foot.

http://www.vanityfair.com/online/daily/2013/03/one
-hyde-park-worlds-most-expensive-residential-development?mbid=social_retweet#

#123 Debtfree on 03.09.13 at 6:11 pm

@ 108 . There is no comment because they have not figured out how to twist their fantasies to fit with reality . Even if they started their fantasy pipelines tomorrow they are years from pumping anything . When Canada wanted a national energy policy . Their answer to Canada was . Let those eastern bastards freeze in the dark ! Now they will be getting transfer payments from Those generous eastern bastards . Your welcome Alberta. Hope the cash helps you get by . Good thing for you that the rest of the provinces have a sales taxes to help you in your time of need .

#124 Ralph Cramdown Ⓤ on 03.09.13 at 6:22 pm

#122 Macrath — “I`m in the market for some global or US REITs and I want them in my TFSA $cdn. Any suggestions ?”

Read up on US withholding taxes for REITs and MLPs, so you’re not surprised. Would 35% surprise you?

#125 Old Man on 03.09.13 at 6:36 pm

There are critical elements in buying Real Estate, as it is location and potential cashflow from the asset; not to mention a special ambience about the location. So in 2009 all went south and took a taxi as do often, and said well what a mess. He laughed at me, as his home was beside a major university, and said no crash for me, as my home is solid.

#126 Tom Vu on 03.09.13 at 6:48 pm

#118 Old Man on 03.09.13 at 4:38 pm

I see that nobody is taking my challenge about Florida, so will give you a hint or two.

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

I think I getting warm.

Is this your Florida neighbour ?

DELETED

#127 Devore on 03.09.13 at 6:54 pm

#26 Shawn Allen

Maybe there is a better way to describe it rather than the usual fiction that selling outpaced buying on a given day?

No fiction. At any given time, seller volume can easily outnumber buyers, which gives pressure to bid/ask, which falls until market clears. It’s just like real estate, except on a much shorter scale.

#128 Dean Mason on 03.09.13 at 6:56 pm

I have been looking for foreign bonds and I see Brazil 10 year bonds at yielding 9.51%. I am thinking of putting a 5% allocation as part of my foreign investments portion of my portfolio. I know there is foreign currency risk but the Canadian dollar is at pretty higher level than in the last 15 years.

It looks good for annual income from bonds versus Gic’s,high yield corporate bonds, C$ government bonds etc.
It’s just an idea.

#129 Westernman on 03.09.13 at 6:59 pm

Old Man @ # 34,
Got conned out of 200K by some gal, eh?
Aren’t you the same twit who thought Beach Girl was the greatest thing since sliced bread?
You suffer from a chronic preternatural case of fundamental error in judgement … go straight home and re-think your life…

#130 jess on 03.09.13 at 7:11 pm

Why There’s a Bull Market for Stocks And Bear Market for Workers
Tuesday, March 5, 2013
http://robertreich.org/post/44639598939

#131 Macrath on 03.09.13 at 7:20 pm

#125 Ralph Cramdown

That would be a 35% tax unrecoverable in a TFSA . So much for that idea. My next plan is to go Dundee International REIT (Germany focus) and some Dundee REIT (they own Garth`s lair) . I don`t like to go with individual trusts but not much choice in this situation. Does that tax apply to Dundee international as a Canadian company ?

#132 brainsail on 03.09.13 at 7:20 pm

#117 Old Man on 03.09.13 at 3:56 pm

It was 30 years ago almost to this day that I crossed the border for a job in my profession after the NEP thing. My wife had left me. I was working part time in a stereo store, a night watchman at a construction site and collecting welfare.

I remember that long drive in the middle of the night when I continuously talked to myself. “Why am I doing this”? “I don’t want to leave Canada or Alberta!”

After some time I came to my senses and realized that there was no economic diversity in Alberta, only construction jobs based on oil.

So, here we are years later living in Central Texas, in a city that has many diversified economic drivers. The semiconductor and computer manufacturing industry has taken several hits in the last several years but other industries maintained the economy. The unemployment rate is slightly higher than Alberta’s.

Never live in an economy that has only one leg!

#133 Rikky R. on 03.09.13 at 7:24 pm

Gee Garth for this not being a gold blog you sure are getting a lot of action on it even if much is negative and uninformed. How come there isn’t the same level of hostility directed towards Platinum? …Platinum is trading higher than Gold is….. Interesting…

#134 Morgan on 03.09.13 at 7:27 pm

That’s what you get for owning mutual funds. The sales guy makes more than you. — Garth

Did you not read your own advice circa 1995? I just re-read After the Boom, Garth. It took me way back.

Eighteen years ago there were no ETFs and many funds performed well. Do you still enjoy your 8-track and Tandy computer? Amazing. — Garth

#135 claudius emperor on 03.09.13 at 7:32 pm

104 Ralph Cramdown
————————————-
Agree, I have not read that site in details but there were places where less printing caused hyperinflation.

The fact that the US $ is reserve currency allows for export of inflation. I don’t beleive that hyperinflation will occur in US. Once the status of the dollar as reserve currency is diminished (it is a question of when not if) US would significantly reduce the printing effort to avoid hyperinflation.

When would that happen (dollar losing the status of reserve curreny)? Who knows? It is a complex system. Would it happen? Yes. Every system has a breaking point.

We might be in uncharted territories these days.
There are two marxist theories that are not very well known this days but might prove truth:
“Transformation of Quantitative Into Qualitative Changes ”
“The capitalism might destroy itself by debt and currency and credit crises”

#136 unbelieveable on 03.09.13 at 7:55 pm

Garth , I believe there are finally enough comments , that are so beyond “ignorant” that perhaps you can add place for the rest of us to vote on their value. Say “1” being garbage up to “5” being possible with a lot of imagination.
I do take my hat off to your patience and understanding.

#137 Dean Mason on 03.09.13 at 8:22 pm

I’m looking at other foreign bonds and India has 5 year bonds yielding 7.90%,10 year bonds at 7.84%, Mexico 10yr bonds at 4.96%, 20 year bonds at 5.72%.

Brazil has 8 year bonds at 9.42%, 5 year bonds at 9.23%.
Indonesia has 5 year bonds at 4.78%, 10 year bonds at 5.37%, 20 year bonds at 6.25%.

South Africa has 5 year bonds at 5.82%, 10 year 6.49%, 20 year bonds at 7.95%. I think that a 12% to 18% allocation in foreign government bonds is a good idea to boost yield in one’s portfolio.

This can boost the 3.00% to 4.00% bond yields available in Canada today.

And your risk. — Garth

#138 LP on 03.09.13 at 8:45 pm

#118Old Man on 03.09.13 at 4:38 pm
*****************************
Okay, I’ll try a guess…how about Palm Beach?

#139 LP on 03.09.13 at 9:03 pm

.#85live within your means on 03.09.13 at 10:49 am

…tho I inherited several old beautiful pieces from my Mom & 1 of hubby’s grandmothers. They’re in a safe until I or hubby decide whose worthy of them.
*******************************************
If you don’t mind a bit of advice – choose soon and give those girls/women the jewellry now. You’ll get to enjoy the pieces all over again seeing them being worn and enjoyed by someone you love. I’ve been doing this for a while and find it really satisfying. There’s just a very few rings and some real pearls that I still have because my grand-daughters are too young yet but everything else has been given away. What a kick when I see something on a young person who loves it as much as I did/do.

#140 Derek R on 03.09.13 at 9:18 pm

#136 claudius emperor on 03.09.13 at 7:32 pm wrote:
Agree, I have not read that site in details but there were places where less printing caused hyperinflation.

Hyperinflation generally occurs only in countries which need to import something but can only pay for it with their own currency beyond the point which the international currency market can absorb. So Germany in the 1920s flooded the market with Marks trying to buy enough gold to pay war reparations; Greece in the 1940s with drachma when exports collapsed because of WWII yet imports remained high to try and fight off the Nazis; Zimbabwe in the 1980s with Z-dollars trying to buy enough food to replace the production lost by inept land redistribution policies.

The trouble is that once a currency begins to lose value on the international exchanges, all imports for that currency become more expensive and that feeds through to the domestic economy. And while a country can choose not to import luxuries it must import necessities, no matter what the cost. So the country concerned has to spend even more of its currency on the foreign markets making things even worse. Hence hyperinflation.

#141 Smoking Man on 03.09.13 at 9:46 pm

As I sit here at senica betting max as I sip 18year Mc something.

I’m happy knowing I got to pay harpo 1.2 on my gamble long Samsung short apples….

Gartho says there is investing and gambling….

It’s all gambling………

Grow some balls basement dwellers, go with slow and steady Gartho, or the fast lane with Smoking Man.

I love life, waiting waiting for her call………

#142 Daisy Mae on 03.09.13 at 9:51 pm

#116 S: “While your opinions are respected and writing entertaining a little humility would be a nice addition to your posts.”

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

We want the facts…the truth. And that’s what we get. We don’t want/need Garth ‘pussy footing’ around. It’s not productive.

#143 Smoking Man on 03.09.13 at 9:54 pm

Nothing make me more crazy knowing that out of the 1.2 commission I ouw, some useless teachers will get a bit of it…..

Infuriating… I take the risk and they benift on the win, if it was a loss all mine…..

Hate them all.

#144 Cici on 03.09.13 at 10:04 pm

#55 henry

Buying low is a good idea if there is a chance the stocks will surge higher within a reasonable time period. But if the sector is risky, doesn’t offer interesting dividends, and could reasonably stay low for many years, you’d be better off and further ahead in the long run with 5% to 8% annual gains over that same period.

In short, Garth’s point is “don’t bet on sure losers when there are gains to be made.”

#145 claudius emperor on 03.09.13 at 10:39 pm

Is it true that the canadian money supply has increased from 250 bil in 2000 to 900 bil in 2013?

Can someone point me to a chart on the Ca money supply?

If it were true, your gold has collapsed. — Garth

#146 Lookoutbelow on 03.09.13 at 10:42 pm

Garth, please rein in your enthusiasm. Yes, US markets have done very well since the March 2009 bottom. But surely you do know that all markets, including stocks, real estate, bonds, commodities fluctuate, sometimes wildly.

The recent stock market ascent reminds me of the Vancouver housing market over the past few years.

The bears, and I am one of them at the moment, point to the cheap money inflating the markets, European crisis at best deferred (certainly not resolved and certainly no growth anytime soon), Sequester starting to kick in, S&P 500 earnings starting to deteriorate, China sitting on the mother of all housing bubbles and the slightest mention of dissent within the Federal Reserve Open Market Committee sends the market into a serious decline so that Bernanke has to come out promising Zero Interest rates for Ever. Need I go on?

Buying stocks now is like buying a house in Vancouver last Spring. Be afraid, very afraid. Cash will soon be King.

How can I write specifically about balance, rebalancing and diversification, and people still don’t get it? — Garth

#147 Tom Vu on 03.09.13 at 10:59 pm

I am getting weird vibes…

Maple Leafs seem to have a team that may threaten World Natural Order and make playoffs.

I have built a bunker next to Garths , one that can store a boat and …well you know…..

#148 Derek R on 03.09.13 at 11:16 pm

#140 LP on 03.09.13 at 9:03 pm wrote:
What a kick when I see something on a young person who loves it as much as I did/do.

Great attitude, LP. You are truly a good person.

#149 claudius emperor on 03.09.13 at 11:25 pm

But should I not be buying PMs if they are depressed according to the rebalancing strategy?

Or we should exclude PMs from being asset class? Just teasing you but it seems logical to me.

#150 Debtfree on 03.09.13 at 11:32 pm

@129 I admire your bravery . When I want to scare myself a little . I go to the central bank of Nigeria and have a look at their yield .

#151 Nostradamus Le Mad Vlad on 03.09.13 at 11:35 pm

-
Of a Woman (Geography One), and Of a Man (Geography Two)

-1-
Between 18 and 22, a woman is like Africa. Half discovered, half wild, fertile and naturally beautiful!

Between 23 and 30, a woman is like Europe. Well developed and open to trade, especially for someone of real value.

Between 31 and 35, a woman is like Spain , very hot, relaxed and convinced of her own beauty.

Between 36 and 40, a woman is like Greece, gently aging but still a warm and desirable place to visit.

Between 41 and 50, a woman is like Great Britain, with a glorious and all-conquering past.

Between 51 and 60, a woman is like Israel, has been through war, doesn’t make the same mistakes twice, takes care of business.

Between 61 and 70, a woman is like Canada, self-preserving, but open to meeting new people.

After 70, she becomes Tibet. Wildly beautiful, with a mysterious past and the wisdom of the ages, an adventurous spirit and a thirst for spiritual knowledge.

-2-
Between 1 and 80, a man is like North Korea, ruled by a pair of nuts.
*
#86 Canadians Maxed OUT — “it’s going to be a long way down.”,
#94 Smoking Man — “Ronald Reagan every last one……”,
#95 Smoking Man — “Im going to run for office on the platform.” (feds. or prov.?),
#96 Dr. Hoof – Hearted — “We are literally and figuratively playing out ANIMAL FARM.”,
#98 TurnerNation — “Losses will be socialized (food stamps, military, medicare, bailouts) while profits move privately.”,
#103 pinstripe — “As usual the sheeple will be led to be slaughtered.”,
#105 Old Man — “There is one place in Florida that never took a hit, so guess where?” (where the mass of sharks are now?)

Let the sharks loose! Time sheeple got their asses bitten, and a great white’s bite may wake some of them up to the simple fact of life that there is no such thing as a free lunch!
*
Ohh Kannaduhhh Is it as bad as this really says? Goes with preceding and Reserve Currencies? plus The US can’t afford a Chinese collapse (unless China brings in a gold-backed currency and the petro-dollar is cast aside); 25:12 clip The BdB’s — rulers of the planet; Parallels Rome and America; Wendy’s Closig 130 restaurants? Surging US oil imports; 1:21 clip Jamie Dimon — Arrogance Unlimited; Unemployment “In the month of February there were 1,395,000 new jobless claims filed.”; Brit. exit from EU would be disastrous; US Fed EZone is a basket case; Toxic Sludge that killed various economies is back; Polytix and Business Like oil and water, they don’t mix; Other places to retire than NAmerica.
*
Smoking Man – Cartoon strip on teachers; 3:13 clip Accidents in space, solar winds etc.; Venezuela If Obomba can trample the Constitution, so can Venezuela, and 4:34 clip Chavez — What the m$m is hiding; 2:40 clip Sandy Hook — Turning schools into prisons, and 4:57 clip Dianne Feinstein is mentally unstable; Govts. Outsourcing their work, like the private sector; Electric Granny on Electric Avenue? Gangsta Gardening In da ‘hood; Big Bang Theory is horsepoop, because This star is older than the big bang; Gorilla Thriller in Manila? Cardinals Fang and Biggles A growing divide; Control Freaks Further evidence of how a dictatorship starts; Science and Spirituality; Northern Chile Most powerful telescope starts next week; 26:15 clip US soldiers quitting (and the draft will replace them?); Stinging Session Killer bees attack in Florida; Egypt Parliament suspended.

#152 Smoking Man on 03.09.13 at 11:35 pm

DELETED

#153 Derek R on 03.09.13 at 11:40 pm

#141 Derek R on 03.09.13 at 9:18 pm wrote:
Zimbabwe in the 1980s with Z-dollars trying to buy enough food

Oops! Zimbabwe in the 2000s. Could have sworn it was the 1980s.

In any case the US is safe from hyperinflation because its currency is needed to buy essential commodities and intellectual property rights that the rest of the world needs and can’t easily get without US dollars.

Canada may be slightly less safe from hyperinflation but since we are self-sufficient (or could be without a lot of effort) in energy and food production, things would have to go badly wrong with our balance of trade before we were really at risk of hyperinflation. As Garth has pointed out previously deflation is a much bigger risk for us.

#154 saskguy on 03.09.13 at 11:58 pm

Rebalancing – not too often – best on percentages. Studies show general neglect may be best or wide percentage swings, if you can handle the volatility
http://seekingalpha.com/article/63576-rebalancing-can-be-hazardous-to-your-portfolio

http://www.caniretireyet.com/how-i-rebalanced-through-perilous-times/

#155 AK on 03.09.13 at 11:58 pm

#125 Ralph Cramdown Ⓤ on 03.09.13 at 6:22 pm
“#122 Macrath — “I`m in the market for some global or US REITs and I want them in my TFSA $cdn. Any suggestions ?”

Read up on US withholding taxes for REITs and MLPs, so you’re not surprised. Would 35% surprise you?
——————————————————————–
I hold “IRET”, a U.S. REIT in a non registered account and the withholding tax is 15%.

#156 T.O. Bubble Boy on 03.10.13 at 12:00 am

Eighteen years ago there were no ETFs and many funds performed well. Do you still enjoy your 8-track and Tandy computer? Amazing. — Garth

Not quite “no ETFs”… SPY was introduced in 1993:
http://en.wikipedia.org/wiki/Exchange-traded_fund

I tried trading this one on a Commodore 64, but the 5 1/4″ floppy drive couldn’t load the trading software. I just went back to playing Jumpman instead.

#157 AK on 03.10.13 at 12:05 am

#132 Macrath on 03.09.13 at 7:20 pm
“#125 Ralph Cramdown

That would be a 35% tax unrecoverable in a TFSA . So much for that idea. My next plan is to go Dundee International REIT (Germany focus) and some Dundee REIT (they own Garth`s lair) . I don`t like to go with individual trusts but not much choice in this situation. Does that tax apply to Dundee international as a Canadian company ?”
——————————————————————-
Have a look at T.GRT.UN. They own industrial properties in Canada, the United States, Mexico and Europe.

http://www.granitereit.com/

#158 FullOfFear on 03.10.13 at 12:08 am

Doomers invade your blog, Garth, because you’re a real estate doomer. But for some strange reason, you don’t see gloom and doom elsewhere. You can see the disastrous consequences of the government’s action (or Central Bank’s) in real estate, yet you don’t seem to see the same in the stock market. I’ve never seen you comment on quantitative easing and the bad effects of that (a bubble in stock prices). I’ve seen you comment many times on the effect of baby boomers selling their homes … but not the effect of them selling their stock (I’m talking about Americans here). If you weren’t such a selective doomer, then maybe the doomers would be less vocal on your blog.

Actually I love real estate, and bought more last week (and sold some). But any sane person can see many markets will correct, and some dramatically. As for financial assets, that’s exactly where money is migrating. If you do as I instructed, with a balanced, diversified and liquid portfolio which is routinely rebalanced, you will do well almost all the time. — Garth

#159 AK on 03.10.13 at 12:14 am

#146 claudius emperor on 03.09.13 at 10:39 pm
“Is it true that the canadian money supply has increased from 250 bil in 2000 to 900 bil in 2013?

Can someone point me to a chart on the Ca money supply?
——————————————————————–

http://www.tradingeconomics.com/canada/money-supply-m3

#160 Tom Vu on 03.10.13 at 12:16 am

I like thus Nostradamus Le Mad Vlad person(aka Garths in- law)

They have the diplomassy of Sun Tzu….the mock-ismo of John Baird…. and the fashion police mentality of Don Cherry.

A rare trifecta

#161 mark on 03.10.13 at 12:23 am

Lambs to the slaughter. Let’s hope that girl from Vancouver finds this place before it’s too late.

http://www.theglobeandmail.com/report-on-business/economy/housing/will-nervous-first-time-buyers-make-this-spring-housing-market-bloom/article9559776/?page=all

#162 HAWK on 03.10.13 at 12:47 am

#138 Dean Mason on 03.09.13 at 8:22 pm

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

I’d be cautious about all those foreign bond yields. They are most likely all denominated in their own currencies and most currencies in recent years have slid in value against the CAD $.

Foreign bond interest rates make sense if the currency holds firm or appreciates against one’s own. Your best bet would be the Aussies. They have higher interest rates than Canada, while the Aussie Dollar is still stronger than the CAD dollar.

#163 Ralph Cramdown Ⓤ on 03.10.13 at 12:49 am

#156 AK — I hold “IRET”, a U.S. REIT in a non registered account and the withholding tax is 15%

It looks like US mREITs’ distributions are taxed as regular income for US residents and at 35% for non residents. Regular US REITs (holding property rather than mortgages) are taxed similarly to in Canada for US residents but as dividends for non residents (at 15% under the Canada-US tax treaty).

And if you’ve got one of those cheap-but-sometimes-sloppy discount brokerage accounts, make sure they’ve got a US form W8BEN on file or you won’t get the benefit of the Canada US tax treaty rate. Sorry about the poor information earlier.

#164 Shawn Allen on 03.10.13 at 1:04 am

Devore at 128 responded to me:

No fiction. At any given time, seller volume can easily outnumber buyers, which gives pressure to bid/ask, which falls until market clears. It’s just like real estate, except on a much shorter scale.

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

Um, no. Seller volume is always precisely equal to buyer volume in any market be it stocks, houses or ice cream cones.

Do you see two volumes reported for any stock each day, the amount sold and the amount bought? No just one volume the same for each.

Only in the minds off the uninformed are more shares sold than bought on any given day, or hour or minute or week or month.

Yes there may be more people thinking of selling or willing to sell than willing to buy but as for actual sales. No sale occurs without a buyer. No shares after all are bought by “the market”.

Devore I think you know this since you mention the price drops until the market clears. The definition of the market clears is that a transaction takes place between a buyer and a seller.

It’s never really correct to say that sellers rushed to sell or buyers rushed to buy on any given day since the reality is that for every sale there was a buyer.

You can’t tar the population with buying at the peak since just as many shares were sold as bought on the peak day. Same for the market bottom of March 9, 2009.

#165 Uh Oh Canada on 03.10.13 at 1:10 am

Check this quote out from Canadian Mortgage Trends:

“All of us in the channel need to understand we are entering a down cycle in our business, end of story. Likely, it is going to get a fair bit worse before it gets better, and better may be seven years away. We can moan and cry and assign blame with a vengeance but smart business people just suck it up, change the way they operate and work harder.”

The closing of ING direct’s mortgage broker division says a lot- pop goes the bubble!

#166 Uh Oh Canada on 03.10.13 at 1:11 am

By the way, here is the link:

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/01/ing-direct-to-close-broker-channel.html

#167 hoser on 03.10.13 at 4:24 am

I know that you don’t believe HAM fuels our real estate market. But it is very apparent that China has invested significant money into Canada, ie CNOOC. If there is a Sino-Japan War, the US has already pledged support of Japan. How do you think Canada will respond and how will this affect the Global economy?

#168 Rural Rick on 03.10.13 at 4:34 am

If you held Pharmacia shares (formerly Monsanto) which in turn have become Pfizer shares
uh oh
bad time for this to come up just before bee poisoning season

#169 David McDonald on 03.10.13 at 7:10 am

Imagine if last year 70% of sales in Toronto were condos with an average price of $300000 and 30% were SFD with an average price of $800000. Globally this makes an average price of $450000. Now imagine this year 30% of sales were condos with an average price of 200000 and 70% were SFD with an average price of $700000. Globally the average price this year would be $550000.

This makes a yearly increase of the average price of $100000 when in fact prices have fallen by $100000 in each category. This mixing of apples and oranges is present in the statistics from the real estate industry. It’s a wonderful example of Simpson’s paradox.

#170 Tony on 03.10.13 at 7:17 am

Re: #131 jess on 03.09.13 at 7:11 pm

The writer is of the article is clearly a nut case devoid of rational thought.

#171 Morgan on 03.10.13 at 9:01 am

Eighteen years ago there were no ETFs and many funds performed well. Do you still enjoy your 8-track and Tandy computer? Amazing. — Garth

No, but they worked until they didn’t, and then you looked at your $3000 64 byte computer and realized it was now worth $100.
Same for funds. And saying after the fact “That’s what you get” doesn’t change the truth that only retroactive advice is perfect. I’ve still borne the losses and it doesn’t fit nicely into oversimplified mathematical models for saving money.
I’m bringing all this up in the context of why people like guaranteed results and are cautious about risk. If you really want to address risk, it has to address of why and how we take risks and manage it in our lives. Anyone with experience in investing knows this, often painfully. Several people who’ve tried selling and renting have stories about not being able to find a comparable residence, of bad landlords and housing instability, of having to move their kids around. Several more mention selling and waiting for prices to fall, and watch them rise instead for several years on end. These realities don’t affect the potential value of your advice. They are simply the risks involved in following it. More information about how to assess and implement the strategies would help people make the choices you are advocating.

Tell us, did you choose your own mutual funds in the past, or seek advice? Did you rebalance when they gave gains, or buy-and-hold? Did you have a mix of fixed income and equity products? Did you utilize those capital losses, or throw them away inside an RSP? A little disclosure please, then we’ll gauge your wisdom. — Garth

#172 EIT on 03.10.13 at 9:03 am

Debate: Greenpeace vs. Marin Katusa on pipeline

What do u think

http://www.youtube.com/watch?feature=player_embedded&v=OZJeW14fzZY#!

#173 TurnerNation on 03.10.13 at 10:06 am

Lots of vitriolic talk towards teachers here. And why not. From my public school ‘sentence’ – JK to Gr. 13 – I can count on two hands the good ones.

The remainder were immature, or mentally/emotionally unstable, or incompetent, or alcoholics. A few were known predators. Kids are quite canny.

I was talk to read by my parents before entering school. Thus in Gr. 1 I was given Gr. 3 and 4 books to read. Child’s play. School did nothing.

If I have kids I’ll sacrifice everything to get them into at least semi-private day schools. For the reasons of accountability and transparancy. And, maybe, smaller class sizes.

#174 TurnerNation on 03.10.13 at 10:14 am

Good news for Calgary’s basement dwellers. Dragon power.

W. Brett Wilson

I am taking the great City of Calgary – the only one in Canada not to take action – to task over the need to legalize and thus regulate and upgrade secondary suites – we have what I call the “sheltered homeless” stuck in grossly substandard living conditions – please read and share.

http://www.calgaryherald.com/opinion/op-ed/Wilson+Leadership+secondary+suites+long+overdue/8071444/story.html

#175 Canadian Watchdog on 03.10.13 at 11:26 am

#162 HAWK

I’d be cautious about all those foreign bond yields. They are most likely all denominated in their own currencies and most currencies in recent years have slid in value against the CAD $.

Precisely why select foreign bonds and currencies are a good buy. Hedge funds are slamming the CAD and will continue ahead of the BoC’s upcoming rate cut (Canada will see a 1.99% mortgage within two years). The only way the CAD will rise is if the Fed increases QE, which is likely to happen anytime this year.

As a side note: there is good value in Canadian Ags and select mining companies. On March 15, US CPI will post the highest m/m increase since 2011.

Inflation is back. That’s bullish for commodities.

Actually demand drives commodities. But nice try. — Garth

#176 AK on 03.10.13 at 11:32 am

#166 Uh Oh Canada on 03.10.13 at 1:10 am

“The closing of ING direct’s mortgage broker division says a lot- pop goes the bubble!”
——————————————————————-
ING was taken over by BNS last year. It sounds like a synergy move.

#177 Dr. Hoof - Hearted on 03.10.13 at 11:44 am

#174 TurnerNation on 03.10.13 at 10:06 am

listen to the the interview posted on my post #96 above.

You will see the social engineering that is occcurring

#178 DreamingIntechnicolour on 03.10.13 at 12:00 pm

You would have thought by now, decades after the Free Trade deal with the U.S. that the American banks would be offering 30 year fixed rate mortgages north of the 49th parallel. Why are they not here yet ?

The Bank Act. — Garth

#179 David on 03.10.13 at 12:03 pm

Hi Garth,

Enjoy your blog.

I’m hearing a few people talk about how the big jump in major stock markets is in nominal terms, not real terms.

Would be curious about your take on this — is it true that the increase is only in nominal terms? If so, does it matter?

The S&P made index investors 12.5% last year. Ask them. — Garth

#180 Canadian Watchdog on 03.10.13 at 12:12 pm

Actually demand drives commodities. But nice try. — Garth

Asia now accounts for the largest share in global food and oil consumption, while futures speculators and HTFs drive 30-60% of commodity prices.

You’re still stuck in 1980s Garth. Get with the facts.

#181 afraidit allmightend on 03.10.13 at 12:16 pm

Can’t pay your $1,000,000 mortgage…car lease, vacation, food, buy a cabin, ….and raise children…no problem…let your greedy aquisitive nature be unburdened by the taxpayer largesse.

http://www.vancouversun.com/life/parenting/Hundreds+turn+rally+childcare/8074813/story.html

Think of all the extra costs can be hung around the poor citizens neck by ramping up the number of elite union high wage and pension jobs and administrative fee’s that will go along with yet another white elephant social program.

Stupid just goes on forever in Canada doesn’t it. The elite create the problems and then create another tax to fix it….they’ve got the taxpayer chasing it’s tail.

#182 Fisc on 03.10.13 at 12:46 pm

Garth,

Montreal’s datas for february 2013 are very ugly :

http://communications.centris.ca/Tableaux/2013/Tableaux_Communiques_CIGM_2013M02_ENG.pdf

As forecast. Sales down 22% to 33%. — Garth

#183 Mister Obvious on 03.10.13 at 1:15 pm

#174 TurnerNation

“Lots of vitriolic talk towards teachers here. And why not. From my public school ‘sentence’ – JK to Gr. 13 – I can count on two hands the good ones.

The remainder were immature, or mentally/emotionally unstable, or incompetent, or alcoholics…”
—————————

That about sums my public school education as well. About 10% of my teachers were truly competent, patient and properly fit for their careers.

But that handful is all you really need.

The remaining low performers serve an important purpose too. They are prototypes of the characters that compose a society we all must learn to function within.

Private education does not usually offer that course.

#184 Old Man on 03.10.13 at 1:28 pm

One can get a take on the economy by noticing sudden changes in buying activity. I go to Shoppers Drugmart often and there are 4 cashiers in a smaller store with a high density population which amounts to about 20,000 within 5 minutes. Today there was just one and I was the first in line; nobody there to buy anything.

#185 Shawn Allen on 03.10.13 at 1:37 pm

MONEY MIGRATION MYTH?

It is true, of course, that some individuals will migrate their money from houses to stocks, or from bonds to stocks.

But it is a myth that this occurs for the population as a whole.

If I sell bonds to buy stocks, someone has to buy those bonds and someone has to sell those stocks. And for the exact same price that I receive or pay. In the net no money leaves the bond market. In the net no money enters the stock market. (I set aside here the primary issuance and redemption of bonds by corporations and governments and the issuance of stocks and buying back of stocks by corporations, I speak of the secondary markets, the trading markets)

When home prices fall or bond prices fall there is no net withdrawal of money by investors as a population. The total value of all the houses in the country or all the bonds there are simply declines. Wealth (or call it money) simply vaporizes.

If coincidently stocks go up, then wealth in stocks was created from thin air, it did not move migrate from the bond market or the housing market.

Few people understand this math but that does not make it any less true. The great rotation (or migration)is not only a myth but is an impossibility.

Consider, in 2008 the value of almost all asset classes declined at the same time. The wealth that was previously there did not get extracted by investors, or migrated to another asset class, it simply vaporized.

#186 Chris on 03.10.13 at 1:38 pm

Interesting piece from the UK newspaper, Guardian, talks about Russians, Arabs and Chinese “changing the face of Europe” by buying up real estate in large numbers.

http://www.guardian.co.uk/world/2013/mar/09/global-elites-change-face-of-europe

#187 Old Man on 03.10.13 at 1:53 pm

March 1st a dramatic shift took place out of nowhere, which fits into the demand/supply theory. The supply of goods and services are there, but the demand has changed which might be a lack of disposable income, or fear of something; time will tell. Most bills need to be paid during the first week of the month, but this never stopped people from buying until now. Just saying that I see something blowing in the wind, and it is not because the weather is bad.

#188 Dr. Hoof-Hearted on 03.10.13 at 2:50 pm

Lets recap….

Boomers…brainwashed into Feminism…unleash the shackle of oppressive institute called marriage.

Unleash the Pill as skirt lines go up…sheer coincidence.

Get out in the workforce. That means the family can pay off debts twice as fast? No actually prices went up.

To breed or not to breed. Oh…have to have it both ways…career and kids. Leave kids till later …once born…pawn them off to daycare.

whose your daddy? add “who’s yer mommy”???

Add in those new drugs and vaccines….geez this having child thing is getting tougher.

List = Higher education..student loans…career …car payments, mortgage for house… kids (?!?)…. daycare….REPEAT next generation.

That’s progress !!!

You are being farmed and harvested folks..a treadmill to oblivion …a minion of Big Brother

#189 Toronto_CA on 03.10.13 at 3:08 pm

I just rebalanced all my DC pension accounts; after the run up in US equities in 2013 it was time as Garth wisely counsels.

I’m probably still overweighted in US equities, but ah well, I have less faith in CDN equities in the future and the International options are all UK and Japan (rather than Asia or South America).

The majority of folks at work have their money in those “Target Date” mutual funds that are depended on age. They are overpriced relative to their underlying funds and have under-performed all the benchmark indexes. But people are not willing to learn the basics to do their own allocations. And because it’s in a DC plan with employer funds being added monthly, they can’t take it out and give it to an advisor to watch for them until they retire.

#190 John B. on 03.10.13 at 3:57 pm

Thanks for an interesting advice. You definitely know what you talk about. But its just for educated audience. Many people told me they are not interested in buying any assets, bonds or anything like that. They said they wanted something REAL. Like detached property in Western Vancouver. Monthly Market Report shows that we are far from any recovery. I pity the weak who bought last year.

#191 KommyKim on 03.10.13 at 4:03 pm

RE: #164 Ralph Cramdown Ⓤ on 03.10.13 at 12:49
And if you’ve got one of those cheap-but-sometimes-sloppy discount brokerage accounts, make sure they’ve got a US form W8BEN on file or you won’t get the benefit of the Canada US tax treaty rate.

Thanks for that. Is this form also necessary for US earnings within an RRSP?

#192 TurnerNation on 03.10.13 at 4:08 pm

#162 mark

Oh, my. That (f)article is chock full of Kanadian Mind Kontrol.

(whatever happened to that John guy.) And you don’t hear these phrases in the USA much, anymore.

“trade up”
“cash out”
“Buyers’ market”
“Balanced market”
“Given her modest annual pretax salary of $39,000.” Yikes!
“Ms Woodrow, has no doubts about what she wants”. What I want (and deserve).

“…from Winnipeg, she and partner Ryan Mayman, 28…” How nice, she’s collected a ‘partner’ along the way. Probably has a dog, too.

You’ve come a long way, Baby?

“outside of the area that we want to live in,” says Mr. Padley, 31.”.

Which area is this one? The one where people don’t know their neighbours’ names, where people spend 60-80hrs a week commuting and working? And 30 hrs watching TV and Xbox? Shoping at the same bix bog stores? Well played, Sir. Just a hunch.

Other themes:

“Getting into the market.”
“Hot Spring market.

Look forward, to these zingers in 2013-14:

“Negative equity”
“Callable HELOC”
“Special Assessment”.
“Closing costs”
“Land Transfer tax”.

Guy I know just got divorced. House forced into sale.
“We’ll never sell”?

#193 S on 03.10.13 at 4:27 pm

#143 Daisy Mae on 03.09.13 at 9:51 pm

Absolutely. That is also why I come here and have recommended this website to, I think, everyone I know.
In a sane and logical financial environment the author of this blog would have been right every time. Whether we live in such times is questionable.
Mr. Turner’s very logical predictions do materialize but often with a significant delays. Anyway, perhaps you just missed what I was actually objecting to.

#194 Dean Mason on 03.10.13 at 4:29 pm

Hey hawk #163 The Australian bonds are yielding as follows 5 year 3.145%,10 year 3.602%,15 year 3.98%.
the C$ is below the Australian dollar at 0.9496. The higher bond yields are probably the reason the C$ is weaker than the Australian dollar.

The bond yields are not that bad but I was talking about a mixture of different foreign government bonds of maximum of 18% one’s total portfolio. The Australian 5 year bond at 3.145% is not that attractive as I said to another blogger there is a CDIC insured until $100,000 5 year RRSP and TFSA, at 3.15% with no currency risk and currency exchange costs.You can see it at http://www.msn.com

#195 Macrath on 03.10.13 at 4:49 pm

Actually I love real estate, and bought more last week -Garth
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Cut stone, brick or cornflake board ?

Wood. — Garth

#196 Doug in London on 03.10.13 at 6:20 pm

@Shawn Allen, post #186:
Wealth doesn’t just vaporize unless a tangible asset is actually destroyed, like a house burning down. When the value of stocks drops it’s phantom wealth. An example is the recent drop in share price of Atlantic Power (ATP) when the dividend was cut. The share price dropped from $11 to $6 in a short time. Did $5 times the total number of shares outstanding represent wealth that just “vanished”? That amount was phantom wealth that never really existed in the first place. The only amount lost was capital losses of people who actually sold the shares at a loss. Where did that wealth go? It went into the pockets of the persons, or institutions who sold before the share price dropped, of course.

#197 TurnerNation on 03.10.13 at 8:33 pm

#189 Dr. Hoof-Hearted on . I did. It was good, about 1/2 is new info. I woke up personally on Sept 12th, 2001.

As Prince said: Party Like It’s 1999. Some say this was coded message. Nothing was ever the same. The 00s were hellish. Into 2012. A new order out of chaos. Almost done now.

#198 Harvard Grad on 03.11.13 at 10:01 am

What gives – I wrote a post that had no profanity, did not belittle anyone, gave an insight into the “other” homeowners who are acting responsible and my entire post gets zapped!! What kind of censorship is that – I guess this post will get zapped also –

Long live those who are Mortgage Free – our golden years are nicely set!

I did not censor your post. Try hitting the SEND key. — Garth

#199 Steven Rowlandson on 03.11.13 at 11:25 am

If you diddle the inflation numbers you can make up any story you like to justify the way things are.

Garbage in, garbage out!

#200 Edward on 03.11.13 at 12:24 pm

Great post, Garth! When people online like to point out a giant fail, they never like to mention rebalancing. Anyone who rebalanced properly with the 60/40% over the past few years has made out like a bandit.