Lemming Nation

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Expect more days like Tuesday. The stock markets Stateside hit new record highs. Commodity prices fell. Gold tanked, yanking Toronto stocks down. Things eased in Cyprus. Robust car sales in the US, and tumbling sales here.  Bidding wars in Denver, while in Victoria house prices fell 8%.

The pattern should be obvious. Trillions of dollars are moving back into equity markets after sitting, terrified and impotent, in cash and GICs for the past four years. Investor sentiment’s at the highest level in three years in the US. Almost 60% of people think this is a good time to invest, proving once again humans love buying stuff that’s going up, and run screaming from assets in decline. It’s why contrarians make money.

Every day comes a little more news to prove the US is ascending, while Canada isn’t. Cars and big orders for commercial aircraft were the latest. As more people get jobs and paycheques, American housing rises again. A John Hancock survey just found 65% of Americans think this is a great time to buy a house. The latest RBC poll found 86% of Canadians believe the opposite.

Big surprise. Canadian household debt keeps going up, while it steadily decreases to the south. Most people here have less disposable income, since houses cost twice as much and the home ownership rate’s 8% higher. Folks in this country have staked their ground, borrowed like pigs to get it, and are starting to reap the consequences.

So sales are weak, despite the fact it’s spring and you can get mortgages for 2.74%. The first major city to report this week is Victoria, where 15% fewer homes changed hands last month than during the same time last year. (Wednesday am update: Toronto numbers now in, realtors say sales tumble 17%, but actual number is 19.8%.) The realtors, of course, blame F’s murdering of 30-year mortgages last summer, and the ending of CMHC coverage for million-plus houses. But any market needing that extra stimulus was already headed for implosion

In this environment, most of your neighbours, relatives and work colleagues become lemmings, every day scuttling closer to the cliff. Seven in ten own houses, the majority don’t have pensions and four-tenths have no savings. Of those who do invest, two-thirds have 100% of their money in Canadian assets. Not so bright. So far this year the Dow is ahead 11% and the TSX has gained 2.1% – and there’s an excellent reason.

Over sixty per cent of our economy is comprised of consumer spending and almost a third of that is directly related to real estate, construction or housing finance. So guess what happens when there’s a 43% crash over two years in homebuilding in the GTA (as just occurred)? That’s right. Best Buy stores close and eight hundred people are sent home.

Yesterday a friend in the Lower Mainland made the wrenching decision to liquidate his multi-million-dollar, long-established construction company. “Due to lack of work volume, reduced tender opportunities, new NDP government in BC in May, I realized there is no time like the present to shut the doors. After more than 20 years, I’m calling it quits, instead of going broke trying to hang on for too long.”

The impact of small companies like this closing is inestimable. No wonder car sales are down, retail is struggling and real estate’s icy when it should be hot. So citizens of Lemming Nation, believing houses are risk-free, anything non-Canadian is inferior, America’s dangerous or junior Alberta resource stocks will make them rich, are in for some surprising years.

After skating through the worst of the post-2009 mess, letting the Euros fester and the Yanks get foreclosed on, people here won’t like what comes next. Stagnant economic growth, tepid markets, iffy commodity prices, structural unemployment and falling net worth seems inevitable. What looked so smart in 2010 could be a Nortel moment in 2015.

Of course, there’s a way out.

If you want, there’s still time to sell your house while prices are close to record levels. You can buy into the US renaissance on the next market correction (it probably won’t be too deep) with some smart ETFs. You can build a balanced, diversified and liquid portfolio, ensuring you have assets that pay you to own them (like preferreds, some corporate bonds or REITs) as well as stuff that grows (but no pricey mutual funds). You can shelter this in your TFSA, income split it with a spousal RRSP, or simply enjoy the tax miracle of dividends and cap gains.

Options abound. Clear thinking does not. And best keep this to yourself.

241 comments ↓

#1 Dr.Wanker on 04.02.13 at 8:52 pm

I am firrrrrrrrrrrstttttt!!!

#2 None on 04.02.13 at 8:53 pm

Yet another Canadian press RE shill trying to sound objective but just pounding real estate

http://www.moneysense.ca/2013/03/28/real-estate-vs-the-stock-market/

#3 TurnerNation on 04.02.13 at 8:57 pm

Torontonians fighting back against kandos.

http://www.saverestaurantrow.com/

#4 In the cold from Toronto on 04.02.13 at 8:58 pm

it is unfortunate that the Government decided to pump the RE market as a means to short term economic growth. I guess the Canadian miracle will be short lived…

#5 kabloona on 04.02.13 at 9:00 pm

“Due to lack of work volume, reduced tender opportunities, new NDP government in BC in May, I realized there is no time like the present to shut the doors. After more than 20 years, I’m calling it quits, instead of going broke trying to hang on for too long.”

Yeah, blame the NDP in BC for the bust….Dix hasn’t even won yet. Buddy probably voted for Harper and Flats….

#6 None on 04.02.13 at 9:01 pm

I have some cash that I’m sitting on to invest in US ETFs. Do you really think it’s worth waiting (hoping) for the US market to ‘trip’ and the Canadian dollar to bounce up a little?

Or just not bother trying to market time and get get in?

#7 AK on 04.02.13 at 9:05 pm

“Expect more days like Tuesday. The stock markets Stateside hit new record highs.”
——————————————————————–
I am loving it.

And companies like “JPM” and “MET” are still trading below their tangible book values.

#8 Alyce in Wonderland on 04.02.13 at 9:06 pm

My stock portfolio made good gains lately. Very good.
Almost scary.

However what I am not buying is the upbeat hype about the ‘recovery’. Knowing very well that we live in a finite world with huge competition for resources I would expect the commodities to do extremely well in the years to come.

Is it the opposite these days. It feels like someone is playing this ‘improvement in confidence’ manipulating the media and probably paying financial advisors to drive shills to slather while quietly buying important commodities at discounted prices. Oil down at pick oil time. Really?

I would be extremely happy to expect more days like today. But is that sustainable? It certainly smells very fishy.
I don’t want to be left holding the bag.

#9 AK on 04.02.13 at 9:06 pm

#1 Dr.Wanker on 04.02.13 at 8:52 pm
“I am firrrrrrrrrrrstttttt!!!”
———————————————————————

A$$hole…

#10 Arcs55 on 04.02.13 at 9:07 pm

Just became debt free! I’m 32, have been following this site for three years, rent (just got a new stove for free) and headed to Huatalco to celebrate. Life is good, and enjoy your mortgages while I start saving for my retirement. Thanks Garth, just have to keep the GF from getting house horny for the next few years.

#11 jwkimba on 04.02.13 at 9:07 pm

” Looks like people are selling condos and moving into whatever homes are selling between the 500K-1 million dollar range in Toronto…”

Quote from a couple of days ago. yup, that is what is happening. And what happens to homes in the 500-1M range when condos stop selling?

#12 Alyce in Wonderland on 04.02.13 at 9:09 pm

#6 None.

Maybe it is a better idea to buy international dividend achievers. US market is probably overbought at this time.

#13 Tom Vu on 04.02.13 at 9:11 pm

I am glad Dr Wayne donated his body to seance…. subject to.

#14 Old Man on 04.02.13 at 9:12 pm

I went to four retail outlets today for shopping that included one bank, and nobody was there except me with cash to make purchases, and fine for me, but it was not normal.

#15 Alyce in Wonderland on 04.02.13 at 9:12 pm

BTW I am closely watching the Canadian mining stocks. I hope they go down further so I could buy cheaper. Copper, Uranium, Minerals.

#16 Onemorething on 04.02.13 at 9:21 pm

Punchbowl Economics are here to stay!

What a great time to divest of those RE assets and right invest!

#17 Smoking Man on 04.02.13 at 9:21 pm

Of cource no bidding wars in long branch….Nothing is for sale.

#18 Realistic realtor GTA on 04.02.13 at 9:22 pm

I work in central Toronto and all I see are bidding wars and bully offers. And all of my colleagues saying it is different here. There is so much pent up demand for people to avoid commuting that I don’t see prices stabilizing. My clients all ask for advice and I have no idea what to tell them. Is this home worth it? I say the market says so now but who knows tomorrow, and then I send them to this blog.

#19 Ex-Cowtown on 04.02.13 at 9:24 pm

OK GT… US stock markets are hitting new highs, but volumes have dried up. Why is this different than the RE market in TO and VAN when people went nuts just before a blow off. I know that you say that profits are up, BUT, the volume #s say something else.

To me it looks like the equity market has topped and it’s time to lock in profits and go bonds. Or am I just being a contrarian (in a good way of course!)

#20 AK on 04.02.13 at 9:29 pm

#12 Alyce in Wonderland on 04.02.13 at 9:09 pm
“US market is probably overbought at this time.”
——————————————————————–
Do you see Warren Buffett selling?

#21 X on 04.02.13 at 9:31 pm

So with the US ecomony and confidence on the rise, any ideas as to when they will start to raise rates?

#22 AK on 04.02.13 at 9:36 pm

Another “Mirage” south of the Border. Right!!!!

Hiring in March could point to firming economy

http://finance.yahoo.com/news/hiring-march-could-point-firming-211016646.html

#23 Mr Reality on 04.02.13 at 9:42 pm

Remember 50% of the S&P 500 companies
Earnings come from oversees. 20% of US exports
go to Europe. If you are banking on markets to go
ever higher, you will be sorry. Sell at the top = now

#24 jd on 04.02.13 at 9:43 pm

Nanaimo–realtor’s kids were going door to door yesterday dropping off rack cards for dad. Must be desparate times.

#25 JustTryingToProtectEquity on 04.02.13 at 9:44 pm

#18 Realistic realtor GTA

Do you ever show your clients this?

https://docs.google.com/file/d/0ByrPFSoPLahJSE56TmxZN0RqdUE/edit?pli=1

#26 Maxed out! on 04.02.13 at 9:45 pm

Realistic realtor GTA #18

LOL you must be hurting real bad for sales? You must be on the brink of losing your own home s you haven’t made a sale in almost a year. How is the “in fighting” at the office? These hurting realtors wouldn’t be here or have the time to post if times were good. Times are really bad for realtors. Some realtors i heard had to get real jobs. LOL The housing crash is happening right now as for sale signs sit blowing in the wind as no one is buying.

#27 Broken Record on 04.02.13 at 9:46 pm

Sorry, I meant this years high will be next years low.

#28 Brian Ripley on 04.02.13 at 9:46 pm

Canadians are still shorting cash in favour of stuff according to the chart on Canadian Household debt compared to the U.S. and the U.K.

http://www.chpc.biz/2/post/2013/04/canadian-consumer-update.html

…but notice the 2nd chart included showing Global and Canadian GDP. Can the Canadian private sector (you) really turn this trend around at this point?

#29 AK on 04.02.13 at 9:47 pm

#19 Ex-Cowtown on 04.02.13 at 9:24 pm
“To me it looks like the equity market has topped and it’s time to lock in profits and go bonds.”
——————————————————————–
How did you arrive to this theory? Did some sign drop in front of you and told you that?

#30 Good Authority on 04.02.13 at 9:48 pm

If only we could print our own money endlessly. We too could enjoy the good life forever and ever.

#31 Julie on 04.02.13 at 9:50 pm

http://armstrongeconomics.com/2013/04/02/cyprus-phase-ii/

Europe is bailing, the runs on banks have started even though they are older, have better education, infrastructure, healthcare etc etc.

But this is Canada. Can’t happen here…….

It can. But it won’t. — Garth

#32 Alyce in Wonderland on 04.02.13 at 9:52 pm

20 AK

#12 Alyce in Wonderland on 04.02.13 at 9:09 pm
“US market is probably overbought at this time.”
——————————————————————–
Do you see Warren Buffett selling?
—————————-
No, but he certainly made me some very nice profits by buying my Heinz/20 % profit to be precise above the market price in a single day. Thank you Warren.

BTW Warren sold quite few stocks lately including J&J that skyrocketed and that I still hold. Wrooong, Warren!

#33 JSS on 04.02.13 at 9:54 pm

Anyone have experience with ZEB – (BMO Equal Weights Canadian Bank ETF)? The dividend is around 3.5% net of 0.6% MER. Any advice if this is a good product? Is the MER too high, or is it ok? Thinking about ZEB for the TFSA.

#34 SHOOTER MCGAVIN on 04.02.13 at 9:54 pm

Hey Gang!

Just wondering if this type of stuff is real or is there a catch or some sort?

http://calgary.kijiji.ca/c-real-estate-houses-for-sale-Foreclosure-in-SE-Calgary-Willow-Park-90-000-Below-Market-W0QQAdIdZ469324898QQfeaturedAdZtrue

#35 A Yank in BC on 04.02.13 at 10:02 pm

And if Obama says no to Keystone this summer, you likely would hear the other shoe dropping for Canada’s commodity driven bubble.

#36 Old Man on 04.02.13 at 10:04 pm

I saw the latest picture and laughed about the sign, but my best laugh in life was riding the city bus, as this young girl got on the bus with her puppy wearing sun glasses to go for a ride. The bus driver said no dogs allowed on the bus, and she said I paid my fare, and this is my seeing eye dog who needs to be with me at all times.

#37 45north on 04.02.13 at 10:06 pm

jwkimba: Quote from a couple of days ago. yup, that is what is happening. And what happens to homes in the 500-1M range when condos stop selling?

my feeling is that single family housing in the core will do very well. Someone with an income of $200,000 will pay $1 million for a house in the core. Conversely it will take an income of $1 million to buy in the core. Sort of like the Best Place on Earth on the shores of Lake Ontario.

#38 Nick on 04.02.13 at 10:06 pm

Maybe it’s just me but I’m seeing a lot of “house for sale” posts on my Facebook news feed lately. Last year it was “We just bough a house!!” followed by 75 likes and OMG’s in the comments. What a difference a year makes.

#39 The Affluent Boomer on 04.02.13 at 10:06 pm

Finally, at least one local newspaper gets it and is telling it like it is Here is a great article from Abbotsford Today. http://www.abbotsfordtoday.ca/what-you-are-not-being-told-about-housing-and-why-you-should-care/

#40 Dr. Hoof - Hearted on 04.02.13 at 10:11 pm

Re: realtors…..

Talked to a fellow who was a realtor..and still is….over 20 years ago.

Said that in his RE class of approx. 30…..only 2 were still practising.

Curious if anyone has updated “realtor turner-over ” numbers…..that’s a good parameter.

#41 Blair on 04.02.13 at 10:14 pm

Hilarious pic, Garth!

Keep them coming.

#42 HDJ on 04.02.13 at 10:14 pm

I’m not doing most of the things advocated by this blog, but everything’s rolling along smoothly. Pension, no mortgage, offspring established in careers, money to spend, security, good health. And in no way am I interested in putting my savings/investments directly or indirectly in the hands of those sharks swimming in the financial world – I don’t trust them. I’ve got better things to do each day than get obsessed by the stuff on these pages. Canadian, eh?

#43 Brad Lamb on 04.02.13 at 10:15 pm

Garth, Canadian assets offer the greatest tax efficiency.

And like my broker once told me, the U.S. is much more unregulated than Canada. I think he meant corrupt.

#44 Realistic realtor GTA on 04.02.13 at 10:16 pm

#25. Thanks for the link. Great resource.

#45 Freebird on 04.02.13 at 10:18 pm

@#11jwkimba

I know a couple who just purchased such a house, brand new build. Catch? They’re previous house worth, also new and custom, asking over 500 mil has been sitting on the market…almost a year now. It’s been relisted a few times and had a price drop. They were SURE it was going to be easy to sell and others who obviously who knew about as much supported them in that belief. I said nothing but after this blog predicted it would sit for a while but hoped I was wrong. I can’t even say they’re young and naive. Worse? They will sell and buy again within a few years. I’d tell them to read this blog but like many others it would fall on deaf ears, well eyes, so I wish them luck and move on.

#46 Realistic realtor GTA on 04.02.13 at 10:18 pm

#26. I’m just hurting for the buyers who are paying over $900k for a 1200 sq foot semi detached house that isn’t even fully renovated.

#47 Real Estate Tsunami on 04.02.13 at 10:19 pm

Just came back from a week long trip to the former GDR (east Germany).
Berlin is bustling, so is Dresden.
Unemployment at 6%.
Forget the States, Garth.
Start learning German.

#48 Freebird on 04.02.13 at 10:20 pm

Typos…sorry. Yes, I have an iPad and auto correct is a pain. Oh we’ll, ya’all get the drift.

#49 Home safe in Kelowna on 04.02.13 at 10:24 pm

#5 Kabloona – I can hardly believe that we will once again have an NDP government in BC. This will be 3rd time for me. They did such a great job of screwing up the province in the 70′s and 90′s. Oh well, once people come back to their senses someone else will get voted in and clean up yet another mess left by the NDP. Only in BC!

#50 Furio on 04.02.13 at 10:30 pm

Garth,

My friends and I in the Office are wondering why do you keep advocating the idea of getting a buyers’ agent.

You said it’s a myth that you could get a break working only with the seller’s agent, but my friend in the office got both a refund check and a bottle of wine by dealing only with the seller’s agent.

If you know what you want, you have a good inspector and a good lawyer, why the heck would you want a buyer’s agent?

Ever heard of conflict of interest? — Garth

#51 rosie "moving backwards" on 04.02.13 at 10:32 pm

Wall Street Journal guy seems on the ball. I wonder who he works for? Anyways all is well, nothing to see, move along. http://blogs.wsj.com/canadarealtime/2013/04/02/is-canadas-debt-mountain-really-that-high/?mod=wsj_streaming_latest-headlines

#52 Banker's Demon on 04.02.13 at 10:35 pm

Garth, I’ve followed for a while, here’s my first post.

Struggling to understand your meaning that Cyprus can’t happen here…. My understanding is that it already has. Canadians are just too blind to it.

Why does no one ever talk of the IMPP (Insured Mortgage Purchase Plan)? For the uninformed, between 2008-2010, the Canadian banks under no financial distress (read: Extreme Financial castration) dutch auctioned off $70 Billion of ‘Quality’ mortgages to the CMHC…. That is to say… Canadian tax payers bought $70 Billion of Mortgages that the banks wanted to get rid of to help with ‘liquidity’.

Practically overnight the Canadian debt clock jumped from $480 Bil. to $550 Bil., a 15% jump; and yet not 1 Canadian in 100 can tell you they ever heard of it.

(Don’t worry, 1 Canadian in 10,000 will also fight to the end discarding the painful truth that our banks ALSO recieved $25 Bil. in direct loans from the Canadian central bank and another $25 Bil. skimmed off the U.S. tarp program).

I’m a renter… which means that a portion of my taxes go to pay the servicing on this debt for houses that my government bought (in my name) and I’ll never get to live in. As if this wasn’t already the silent grand larceny of Canadian Gov’t in the last millennium…. at some point, all our taxes are going to have to rise to cover this ridiculous expenditure.

For anyone who’s read the white papers (and I highly suggest them if you need a good punchline during your next cocktail party), they (our idiot governors) justify this action by claiming that these were high quality mortgages that were insured by the CMHM… yes, they are saying that the houses that were bought by the CMHC are all ok…. because they are simultaneously insured by the CMHC….

….. And all of this took place so our gov’t, the CMHC, the banks… and yes the press could continue claiming to sheep Canadians that we have the best banks in the world, and they didn’t get one penny in bailouts.

…. All the while they publicly announced record profits and pocketed record compensation packages.

Cyprus is alive and well here Garth, Canada’s Pharroes just have a better PR machine.

BD.

#53 Bottoms_Up on 04.02.13 at 10:36 pm

#131 Brunette on 04.02.13 at 7:51 pm
——————————————–
Yes it is true that agents will ‘blacklist’ FSBO’s. Taking their clients to FSBO’s is like biting the hand that feeds them. It would be like you working at target but shopping at walmart. They do whatever they can to avoid bringing their clients to FSBO’s, thus that is why FSBO’s usually take longer to sell, and may not fetch actual market value for their property.

#54 baddog on 04.02.13 at 10:38 pm

I am writing from Winnipeg. Last summer I did something silly that I would like to share. I got caught up in real estate fever and decided to buy a rental using a down payment with the HELOC on my home (my 2nd. The first a few years back with 20% cash down.) After some reno’s had a great tenant move in. After signing the lease they told me that their father would not help them buy a house because he believed that the market would change drastically in the next year or so and would stay down for a long time. I did some research and came across this blog among others. At that time you were predicting a deep correction in the market across the country starting in the spring. I really don’t see values dropping dramatically here (you can still get a house for about a third of the cost in Toronto but not as many palm trees here) but I lost some sleep during the winter and became concerned enough about the market to sell one of my houses. I ended up selling it to another investor who promptly jacked the rent up a hundred bucks on the tenants. Gave the guy a good deal so I didn’t have to pay a realtor plus the tenants don’t have to move. There is bugger all to rent here for 3 bedroom houses in good areas. Landlords have their pick. I’m sleeping a lot better now and I would like to thank you Mr. Turner for helping me realize that now might not be the best time to have a ton of borrowed money in Canadian real estate. My remaining rental is in a good demand area and cash flows fairly well. It should be paid off in 15 years or so and I will be fine even if interest rates more than double (doubt it) in the next 5 years when I refinance. Not sure what the moral of the story is. Might not be the best time to buy but renting absolutely sucks. Just ask my former tenant.

#55 Bottoms_Up on 04.02.13 at 10:39 pm

#50 Furio on 04.02.13 at 10:30 pm
—————————————-
A buying agent (a good one) will give you advice and tell you the market value of the property so that you don’t over pay for it. A seller’s agent does not, and in fact can lie to you in order to close the deal.

#56 prairie person on 04.02.13 at 10:44 pm

From the BBC news site.

Property prices rose 50% between 2006 and their peak in 2009 – as the banks lent readily to home buyers, landlords and property developers – and have since fallen steadily.

This has had a predictably negative impact on activity and employment in the construction sector.

It has also affected confidence among mortgage borrowers, the ability of companies to borrow against property to finance investment, and the ability of property developers and speculators to repay their existing loans.

Construction activity has halved, from 12.8% of economy in 2007, to 6.1% last year. However, other property business – including landlords’ rents and the activity of estate agents – represents a surprisingly elevated 11.6% of the economy.

#57 Mick on 04.02.13 at 10:55 pm

The US is in a money printing induced “recovery” and it should not be confused with a genuine recovery. More jobs are the result of Obama care’s 30 hour minimum, causing companies to hire more 29 hour employees to avoid paying for health care.

More McJobs, less real jobs. This is the essence of the US recovery.

Myth. Obamacare not yet in force. — Garth

#58 Rob Smith on 04.02.13 at 11:07 pm

#17 Smoking Man on 04.02.13 at 9:21 pm

Of cource no bidding wars in long branch….Nothing is for sale.

——————————————

long beach is a dump, nobody in their right mind would buy there, hence why you’re living in the area.

hola @ yo boyyyy!!

#59 For the realistic realtor @44 #46 and #18 on 04.02.13 at 11:13 pm

Check these out

http://recharts.blogspot.ca/2013/03/toronto-bidding-wars-map.html

http://recharts.blogspot.ca/2013/03/toronto-sold-listings-price-heat-map.html

My data is showing a different reality
Also check the front page (recharts.blogspot.ca) there is a heat map with price changes

I will soon make time to make a map like this
http://recharts.blogspot.ca/2013/03/vancouver-condo-listings-density-heat.html
for Toronto so you can see better how many listings are in fact active in the central area.

#60 Abraxas on 04.02.13 at 11:20 pm

Garth, is it a good idea to buy some SPY put options to hedge my portfolio (a mix of US, Canadian and world equities) given how hot the stocks have been for the last few months?

#61 martin9999 on 04.02.13 at 11:21 pm

So far this year the Dow is ahead 11%–

not for too long dude. sell in may and go away. thats the trick. cheers

#62 Timbo on 04.02.13 at 11:24 pm

http://www.nytimes.com/interactive/business/global/european-debt-crisis-tracker.html?ref=global&_r=0

” The jobless rate reached 12 percent in both January and February, the highest since the creation of the euro in 1999″

Go austerity Go…spending power be damned!!

http://www.telegraph.co.uk/finance/jobs/9968124/Number-of-Britons-on-zero-hours-contracts-hits-record-high.html

” The number of workers in jobs without any guarantee of regular hours or pay nearly doubled during last year to reach 200,000, according to data from the Office for National Statistics.

The contracts – now used by almost a quarter of Britain’s major employers – legally allow firms to employ staff, often in low paid jobs, without any guarantee of actual work, or income. ”

On call to nowhere…desperate times indeed.

#63 Gunboat Denier on 04.02.13 at 11:25 pm

Latest VI stats. Snoozie

http://www.vireb.com/assets/uploads/03mar_13_sales_summary_5118.pdf

#64 Jon B on 04.02.13 at 11:28 pm

A nice overview of the current big picture. Don’t forget about the illegal industries that play a significant role in sky high RE prices in delusional city.

#65 Barry Lainof on 04.02.13 at 11:29 pm

Thank you Garth, for a “balanced” post. The last two paragraphs recognize that sometimes the “timing” has to be right.

#66 Steve on 04.02.13 at 11:29 pm

Good writing, especially about Canada. The US recovery seems very phony, with the labour force participation rate being the lowest since women started entering the workforce.

Plus you have total financial market of the federal government, state governments, households, business, financial institutions, and to foreigners now above 300% of GDP. Higher than its 1933 peak, and exclusively underpinned by the artificially low interest rates from the Federal Reserve.

Sounds a lot like a dead-cat bounce. Why buy bank shares, REITs and ETFs today? That ship has sailed. The balance sheets of many financials and REITs cannot withstand a higher interest rate environment. Neither can the private sector.

Junior, mid-tier and large cap resource stocks made you money if you bought at the 2008 lows and sold in 2011. Did you recommend them then?

#67 John Prine on 04.02.13 at 11:31 pm

Cars and big orders for commercial aircraft were the latest.
**********************************************

Unfortunately 60% of all new cars sold are financed for 72 months or more and nearly 40% of trade ins are worth less than trade in value….Auto bubble. Not a sign of financial success.

#68 Smoking Man on 04.02.13 at 11:33 pm

I bet against the jays cha ching, how ever bet against the usd vs gbp. Ouch is all I can say….. Leson in day trading forex on the way..

#69 Lemming Nation — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 04.02.13 at 11:36 pm

[...] Expect more days like Tuesday. The stock markets Stateside hit new record highs. Commodity prices fell. Gold tanked, yanking Toronto stocks down. Things eased in Cyprus. Robust car sales in the US, and tumbling sales here.  Bidding wars in Denver, while in Victoria house prices fell 8%. Continue reading → [...]

#70 RainCity on 04.02.13 at 11:36 pm

Sounds like the construction guy has the right idea. If the BC Fiberals are re-elected in May, I will be shocked. Everyone rails on the NDP but the current government has made a joke of this province and most seem to finally figured this out. Hopefully they will vote accordingly.

There are “For Sale” signs all over the Lower Mainland and all I hear from friends and coworkers is about their renos and plans to “upgrade” or invest in a vacation property or downtown condo for rental income – my husband and I think they are delusional. We rent in VanCity proper for a small fraction of what it would cost to buy and when something breaks, the landlord replaces it. Most of our friends have bought outside the city and commute or live in a tiny box. Until buying makes sense, we will continue to save, invest and enjoy our yearly vacations.

#71 Real Estate Tsunami on 04.02.13 at 11:37 pm

Garth,
Remember the Germans decide the faith of the Euro.
If the pull the plug, God help America.

#72 BC NDP Gov't 2013 on 04.02.13 at 11:38 pm

Not to worry:

We have plagiarized from Ontarios successful plan for solar cystem prosperity.

Those of you that earn more than $10,000 per year are bourgeois that must be punished for your excessive exploitation of the proletariat …..(unless..of course… you are a overly paid civil servant aka union dues are channeled into our coffers.

#73 Smoking Man on 04.02.13 at 11:39 pm

58 Rob Smith on 04.02.13 at 11:07 pm#17 Smoking Man on 04.02.13 at 9:21 pmOf cource no bidding wars in long branch….Nothing is for sale.——————————————long beach is a dump, nobody in their right mind would buy there, hence why you’re living in the area.hola @ yo boyyyy!!

………..

Low boardom tolerance, 15 min too the tax farm.. Plus I get my boat in the water in 10 min when I get home… Plus love the low life’s I’m friends with them

#74 Gran pabroon on 04.02.13 at 11:43 pm

http://video.theloop.ca/home/watch/whistler-real-estate-plummets-up-to-68-per-cent/2273064302001/

Nice little video from ctv-bc about real estate prices plummeting 68% in Whistler.

#75 Saskiboy on 04.02.13 at 11:46 pm

Realtor in stoon busted for pimping 17yr old girl. What a pothole ridden hellhole. Full of ice. Low wages. Crappy service anywhere you go. More alcoholics per capita than moscow. Yep. Paris of the Prairies. The Hips comin in july. Suicide will have to wait. Maybe i ll get all stabbed up outside sev. I guy can dream.

#76 Ex-Cowtown on 04.02.13 at 11:47 pm

#29 AK on 04.02.13 at 9:47 pm
#19 Ex-Cowtown on 04.02.13 at 9:24 pm
“To me it looks like the equity market has topped and it’s time to lock in profits and go bonds.”
——————————————————————–
How did you arrive to this theory? Did some sign drop in front of you and told you that?
+++++++++++++++++++++++++++++++++++

It’s all part of rebalancing the portfolio. Using MACD indicators etc as GT recommends it looks like the market is running out of juice. Low volumes etc. No magic signs, just looks weak.

#77 Smoking Man on 04.02.13 at 11:56 pm

Rod you have alot to learn about people……

Gartho is getting his Beauty sleep, its 11:50 and I have invited some vagrents into my house, help me kill a few bottles…

Just booted them out, only got 1/2 a bottle left… Its mine, ufo hunting in the back yard looped out of my mind..

I love life, I will show up tomorrow at the the tax farm at 6:30 am. For more drama.. I have a problem…

Cant quite put my finger on it…….But i would rather be in no other place.

Gartho a gifted writter, he posts black and white.

Me, I go beyond the spectrum…………Im an artist, some love my work, some hate it…….

Buety is in the eye of the beholder

#78 Bobbo on 04.02.13 at 11:57 pm

Why doesn’t our country invest in refineries?
Then sell that product to the highest bidder.

#79 Mike T. on 04.03.13 at 12:02 am

ha ha

great picture

it has made the rounds on the net with various captions on the sign

I liked the one about high school….

#80 Tim on 04.03.13 at 12:05 am

What about after you’ve maxed out the TSFA? If you don’t want your cash portfolio to be all Canadian equities then you’ll pay tax on the US dividends, so we are stuck in investing the cash portfolio in Canadian equities, which will under-perform the US market.

#81 Joe on 04.03.13 at 12:17 am

Realtor friend of mine who had sold her house last month bought right back into the market on the Vancouver Northshore convinced that the market has turned around?

#82 betamax on 04.03.13 at 12:28 am

Garth: “a friend in the Lower Mainland made the wrenching decision to liquidate his multi-million-dollar, long-established construction company. ”

My friend in construction (Vancouver) says the phones have stopped ringing. Contract tenders receive an avalanche of bids and are generally awarded to bids so low that whoever gets the contract can’t be making any money off the deal and might even take a loss — they’re literally buying a job to keep busy.

A lot of construction-related companies are going to be closing their doors in the next couple of years. Even if there’s not a crash, the boom is over.

#83 betamax on 04.03.13 at 12:30 am

Investing in the US can pay off, but remember to keep an eye on the exchange rate. In the past I’ve made nice profits on US investing only to have them leached away by a fluctuating exchange rate.

#84 The Man From Nantucket on 04.03.13 at 12:55 am

#60 Abraxas on 04.02.13 at 11:20 pm
Garth, is it a good idea to buy some SPY put options to hedge my portfolio………..

Always find myself just a little amused about questions like this, thrown out there in public without a real name, or any context.

I dunno….. if you can’t do some cold hard calculations, or at very least do some voodoo chart interpretation techniques, to come to an answer on your own……..well, my first bet is that you probably shouldn’t be trading at the big kid table….

Besides, if you actually read this thing, Garth doesn’t even recommend individual equities.

I have never noticed Garth discussing options trading of any kind on this blog.

I would actually love it if he wrote an entry about why it’s a capital dumb idea for all but the Smoking Men of this world!

#85 Patiently Waiting on 04.03.13 at 12:56 am

Combineds sales of “single family homes” for Vancouver Real Estate Board & Fraser Valley Real Estate Board for the month of March are still trending well below previous years including below 2009 following the financial crisis. Last 4 years are as follows:

Year Sales of SFH’s

2013 987
2012 2053 2013 sales 52% below this level
2011 2695 2013 sales 63% below this level
2010 2416 2013 sales 59% below this level
2009 1684 2013 sales 41% below this level

——————————————————————
SFH sales for White Rock in the month of March last 4 years are as follows:

2013 71
2012 121 2013 sales 41% below this level
2011 252 2013 sales 72% below this level
2010 134 2013 sales 47% below this level
2009 86 2013 sales 17% below this level

This is going to get ugly if this trend continues …

Cheers
pw

#86 geelemitti on 04.03.13 at 1:03 am

Hard to call this a “recovery” for markets maybe , for investors clearly but not for common man. But that fool doesnt count any way
http://www.zerohedge.com/news/2013-03-06/chart-day-minimum-wage-non-recovery

#87 NoName on 04.03.13 at 1:11 am

“The most recent update on repossessions from the Irish central bank shows that during the entire fourth quarter of 2012 only 38 houses were repossessed by court order. At a pace like that, it would take more than 620 years to get through the backlog of nearly 95,000 mortgage accounts that are at least 90 days behind on payments.”

http://m.theatlantic.com/business/archive/2013/04/welcome-to-ireland-where-mortgage-payments-are-optional-and-the-banks-are-a-mess/274566/

Interesting read,

#88 Andrew on 04.03.13 at 1:14 am

Few questions for you Garth, and thanks for keeping this humble corner of the internet alive and kicking.

1. I would appreciate it if you could briefly post about which accounts to hold what kinds of securities. Given that TFSA’s kick ass and contribution room is limited, you want to conserve that room for the best purpose – capital gains, mostly? What about dividend payers? I used to think that dividends should be held unregistered, but dividend taxation is higher than capital gains tax, so maybe I had it backward.

So far as I know you don’t want to hold US-listed dividend payers within a TFSA because the US won’t recognize it as a retirement account and will withhold tax – best to put those into an RRSP or hold unregistered. Finally, anything interest bearing (vs. dividend bearing) should definitely be TFSA because interest is taxed most punitively. …I think.

Anyway, I’ve gone about explaining it rather clumsily and I expect I’ve got a bit backwards – I think it would be good to dedicate a paragraph or two to this in a future post as I suspect it would help other readers.

2. Do you think there is any legitimacy to the idea that renewed gains in the US markets are due to expansion of money supply? I read your post from a few days ago about the signs of US economic improvement, but you didn’t touch on this.

3. I’m 26 and just now starting to have a few nickels to bang together to buy into the market (I have about $30k available right now). I wish I had the money in 2008 that I do now, because there were so many bargains. I knew it then but just couldn’t act on it. My parents bought Ford at $2.30 and it’s now hovering between $12.80 and $13.40 and this isn’t unusual for many stocks. Kills me, but getting the entry point now is all the more key. Stocks seem… expensive to me right now. Am I locked into 2008 mindset? Should I just accept that these are today’s prices and move on? *shrug* The good news is that I don’t need the money for anything, certainly not a house purchase.

4. Am I wrong to want to supplement ETFs with some individual stocks where warranted?

Thanks!

#89 Nick on 04.03.13 at 1:15 am

#61 martin9999 :

‘Sell in may and go away’ is both a cliché and a myth.

http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2012/08/31/sell-in-may-and-go-away-and-other-bad-advice

#90 Andrew on 04.03.13 at 1:19 am

I should add that from a retirement point of view I also have significant source deductions for a pension, and so I anticipate if I continue in this direction that my income in retirement may be large enough to render RRSP’s relatively useless, even setting aside the gamble of future tax rates. I think I’d rather pay the tax I know now rather than bet on lower taxes in the future (I don’t see lower taxes being mathematically possible given fewer productive workers per dependent senior).

#91 Julie on 04.03.13 at 1:54 am

….. And all of this took place so our gov’t, the CMHC, the banks… and yes the press could continue claiming to sheep Canadians that we have the best banks in the world, and they didn’t get one penny in bailouts.

…. All the while they publicly announced record profits and pocketed record compensation packages.

Cyprus is alive and well here Garth, Canada’s Pharroes just have a better PR machine.

BD.

……Crickets……..more crickets……..

#92 Julie on 04.03.13 at 2:01 am

49 Home safe in Kelowna on 04.02.13 at 10:24 pm

#5 Kabloona – I can hardly believe that we will once again have an NDP government in BC. This will be 3rd time for me. They did such a great job of screwing up the province in the 70′s and 90′s. Oh well, once people come back to their senses someone else will get voted in and clean up yet another mess left by the NDP. Only in BC!
——————————————————

My friend….the LIEberals lie and steal and the NDP spend and screw up……it does not matter in the province of Before Christ, Bring Cash, Bull Crap.

People here are either stoned, theives or overpaid union workers…….

BC is a place where you kill or be killed economically.

#93 Jane Matterton on 04.03.13 at 2:05 am

>>Cars and big orders for commercial aircraft were the latest.

http://www.zerohedge.com/news/2013-04-02/domestic-car-sales-decline-third-month-hurricane-sandy-replacement-cycle-fadesM

#94 broadway skytrain on 04.03.13 at 2:50 am

who is the best stock picker of all?

mr buffett. it seems.

why bother picking stks/etf/bonds/index funds etc – when warren does it for almost free. does 4 shares of brk.a constitute an adequately diversified nestegg(growth portion)

#95 Garthvader on 04.03.13 at 3:12 am

#59: great heatmaps! Can you do one for Montreal?

#96 Tony on 04.03.13 at 5:09 am

Re: #34 SHOOTER MCGAVIN on 04.02.13 at 9:54 pm

As Calgary real estate implodes the sad fact is the poor chap won’t even be able to “unload” his house well under perceived market value.

#97 The American on 04.03.13 at 5:15 am

At #57: Mick, Jeeeeeeeeeesus. Seriously… Another Canadian speaking authoritatively on subject matters you have ZERO clue about. Does it *ever* get old? Let me help you understand. Obamacare is not in force whatsoever at this time. When it does come to fruition, there ar harsh penalties in place for operations hat deliberately side skirt the “30 hour minimum.” Additionally, the cost of Obamacare is nothing of what companies originally thought. Take, for example, Wendy’s corporation, a Columbus, Ohio- based company and former owner of Tim Horton’s. Anticipated costs of Obamacare have been deeply slashed, costing only 20% of what original projections were. As for the money printing… It’s a great way to devalue currency to ensure a return to American manufacturing and exports, as well as repayment in USD to China, a country that for years has unfairly devalued its currency by over 40%. All is fair in love and war.

#98 Good Authority on 04.03.13 at 5:41 am

#2 none
Fun with figures article indeed!
I wonder if an article like this really is taken seriously.
If so, it is almost criminal.

#99 Stoopid Idiot on 04.03.13 at 6:10 am

Two sides to every story.. yields yield and yields… please consider

http://www.youtube.com/watch?feature=player_embedded&v=wzzoBVK3fyE#!

Another guy selling a newsletter. Sigh. — Garth

#100 Loopback on 04.03.13 at 6:22 am

“The Dow Jones and Standard & Poor’s 500 indexes reached record highs . . . inflated by an egregious flood of phony money from the Federal Reserve rather than real economic gains . . . the Federal Reserve have expanded their balance sheet sixfold (to $3.2 trillion from $500 billion) . . . family income growth has dropped 8 percent, and the number of full-time middle class jobs, 6 percent . . . net worth of the “bottom” 90 percent has dropped by one-fourth. The number of food stamp and disability aid recipients has more than doubled, to 59 million, about one in five Americans.”

Source: The Corruption of Capitalism in America
New York Times
http://tinyurl.com/crfzrf5

I hear it comes with a roll of Reynolds Wrap. — Garth

#101 Mike on 04.03.13 at 6:29 am

@84 “Besides, if you actually read this thing, Garth doesn’t even recommend individual equities.”

Don’t assume that he doesn’t know what he’s talking about. SPY is not an individual equity, it’s an index of the S&P500. Using put options to hedge a balanced portfolio against a market correction is a reasonable thing to do.

But it depends on your risk profile. Given the guy is globally diversified, if you’re “Paranoid”, I think this is a good strategy.

I wouldn’t do it personally, I think we’re entering a long period of U.S. resurgence.

But if you’re a retiree, maybe paranoia isn’t a bad thing.

#102 Danno on 04.03.13 at 6:59 am

Question… I’m in the process of rebuilding after a divorce and have small sums of money to invest (not the hundreds of thousands you usually manage). I know I’ve missed the boat on US investments so, should I look to Europe which has hit bottom and is bound to head upward? Not sure my measly thousands could purchase much US ETFs.

Save your money for Lavalife. — Garth

#103 For the realistic realtor @44 #46 and #18 on 04.03.13 at 7:08 am

Here is your promised Toronto Listings density map
http://recharts.blogspot.ca/2013/04/toronot-active-listings-desity-heat-map.html

As you can see there is tons of properties in the area you mentioned. Probably the properties you are talking about are properties sold at current price for the area but initially listed well below that. That attracts tons of low balls offers and it might look like a bidding war but people are not buying it any more. Next time post some examples if you want to be credible

#104 The real Kip on 04.03.13 at 7:33 am

“After skating through the worst of the post-2009 mess, letting the Euros fester and the Yanks get foreclosed on, people here won’t like what comes next.”

What comes next? How about a nation with far less debt than our southern neighbours and at least a plan by the federal government to reduce it to zero by the next election in 2015. The states has yet another government in Washington committed to juicing Wall St. with QE-3 money that Main St. USA has yet to repay.

Say I to Stephen for me at the next fundraiser. — Garth

#105 Dr. WAYNE on 04.03.13 at 7:35 am

Garth … CBC’s Neil Macdonald has reported that the recent budget by F has made sneaky, inconspicuous provisions for bailouts for our banks if they fail … bailouts that could involve similar scenarios that were attempted in Cyprus … scary sh++ …

http://www.cbc.ca/news/canada/story/2013/04/02/f-rfa-macdonald-canada-cyprus-banks.html

Then he’s as reliable as silver-pumping web sites. The feds clarified yesterday that no depositors would ever participate in a Canadian bank bail-in. How many times does this have to be repeated? — Garth

#106 Steven Rowlandson on 04.03.13 at 7:47 am

What good is a job and a pay check if it will never allow you to live in the country you work in?
What good is a paper or electronic asset investment if by fraud or short selling your investment is devalued or destroyed?
It is enough to make one pray for WW3 and an ice age.

#107 Timbo on 04.03.13 at 7:48 am

http://qz.com/50615/welcome-to-ireland-where-house-payments-are-optional-apparently/

“In the last few years, a staggering number of Irish homeowners have simply stopped making mortgage payments. The Irish central bank says that at the end of December 2012, 11.9% of Ireland’s mortgages were late by more than 90 days, up from September’s 11.5%.”

aghhh…..the charts are burning my eyes!!!

http://www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html

“The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.”

Learning from past mistakes are we?!

#108 DJG on 04.03.13 at 7:51 am

I don’t think Best Buy closing stores has anything to do with real estate. They are closing 50 stores in the US this year as well. It’s the impossibility of their model surviving against Amazon’s (not your kind of amazon) that is the issue.

People shop online for a price advantage, which matters due to stagnant incomes and high debt servicing costs. It has lots to do with real estate. — Garth

#109 Toni on 04.03.13 at 8:03 am

Garth,

If the U.S. is on the rise again won’t that create a rising tide for Canada and our economy?

It will help some sectors (such as commodity prices), but it’s unlikely residential real estate will bounce. — Garth

#110 Victor V on 04.03.13 at 8:14 am

Toronto home sales drop 17 per cent

http://www.theglobeandmail.com/report-on-business/economy/housing/toronto-home-sales-drop-17-per-cent/article10712624/

Sales of existing homes in the Greater Toronto Area in March were 17 per cent lower than a year ago, the local real estate board said Wednesday.

Market observers are eagerly watching housing data this season to see if the market will experience a spring rebound. Finance Minister Jim Flaherty scolded banks in March for cutting their mortgage rates, fearing that the low rates could cause the housing market to heat up again. The government has taken steps to cool the market because of fears that consumer debt levels and house prices are too high.

#111 Victor V on 04.03.13 at 8:17 am

Ottawa may further dampen mortgage market

http://www.thestar.com/business/economy/2013/04/02/ottawa_may_further_dampen_mortgage_market.html

The move is seen by some real-estate experts as the latest attempt by the federal government to cool an overheated Canadian housing market and address record household debt levels, most of it tied up in mortgages.

“It seems to me this is another attempt by the (federal) minister of finance to try to tighten up the mortgage market,” said John Andrew, a real estate expert at Queen’s University. “They’re kind of running out of ways to do this. Like the other four rounds of changes, this would also essentially increase the cost of a mortgage.”

#112 Furio on 04.03.13 at 8:35 am

#50 Furio on 04.02.13 at 10:30 pm
—————————————-
A buying agent (a good one) will give you advice and tell you the market value of the property so that you don’t over pay for it. A seller’s agent does not, and in fact can lie to you in order to close the deal.

————————————

Bottom’s_Up,

According to the IMF, Canada’s housing Market is overvalued 10%, according to the rating agencies it’s overvalued 20% and according to The Economist it’s overvalued 78%.

The idea of getting a buyers’agent so you don’t overpay seems to be working just fine.

http://business.financialpost.com/2013/01/23/canadas-housing-market-may-be-cooling-but-its-still-the-worlds-hottest/?__lsa=2cec-97ac

canadian-home-prices-overvalued-by-about-20-fitch

http://business.financialpost.com/2013/02/14/imf-says-canadas-housing-market-still-overvalued-warns-more-intervention-may-be-needed/?__lsa=2cec-97ac

#113 Joe Q on 04.03.13 at 8:47 am

Garth, is this true? It’s alledging that some homebuyers in Canada are financing the entire debt portion of a home purchase with a HELOC – interest only.

http://humblestudentofthemarkets.blogspot.ca/2013/04/a-time-bomb-in-canadian-financials.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+blogspot/SeoDJ+(Humble+Student+of+the+Markets)

You have to buy a house before you can get a HELOC. And under new guidelines an 80% interest-only borrowing is no longer possible. — Garth

#114 TEMPLE on 04.03.13 at 9:05 am

#33 JSS on 04.02.13 at 9:54 pm

Anyone have experience with ZEB – (BMO Equal Weights Canadian Bank ETF)? The dividend is around 3.5% net of 0.6% MER. Any advice if this is a good product? Is the MER too high, or is it ok? Thinking about ZEB for the TFSA.

Yes, the MER is too high. Pretty much all MERs are too high. I don’t know about ZEB specifically, but how many stocks could an equal weight Canadian bank ETF hold? Check the holdings, you might do a lot better on fees over the long run by buying each bank stock individually.

Also, try not to put that kind of stuff in your TFSA. Canadian dividends are almost free money in terms of tax so it doesn’t suck too badly to hold that kind of thing outside of a tax shelter. Put less tax efficient stuff in your TFSA. For example, you could put bonds in your TFSA if you are into self-flagelation.

The same goes for your RRSP, in my opinion. Garth disagrees with the value of an RRSP, but I think there are enough tax-efficient ways to collapse your RRSP in the future that it makes sense to max it out now. This is especially true given the current tax shelters the RRSP provides.

TEMPLE

#115 World Traveller on 04.03.13 at 9:07 am

Looks like it could happen here.

http://www.cbc.ca/news/politics/story/2013/04/02/f-rfa-macdonald-canada-cyprus-banks.html

No it won’t. He’s ill-informed. But then it’s the CBC. — Garth

#116 Stickler on 04.03.13 at 9:08 am

The price of copper, CAT & base metal miners suggest the fwd trend will be negative.

Just sayin.

#117 lord lucan on 04.03.13 at 9:10 am

“It’s why contrarians make money.”

So, isn’t now a good time to buy a little bit (not too much) gold ??

If you like losses. — Garth

#118 afraidit allmightend on 04.03.13 at 9:10 am

Ever wonder why taxes are so high? Why does Jim Chu , chief of police in Vancouver make a hundred thousand dollars more a year than the chief of police in New York?

http://www.vancouversun.com/business/Vancouver+Police+Chief+tops+municipal+police+salary+list/8186096/story.html

This madness is endemic throughout the Canadian civil service.

#119 Stickler on 04.03.13 at 9:13 am

…love to hear your take on the large amount of preferred shares that will likely be pulled in 2014. This would be a capital loss on those shares.

That can’t be good for preferred shares ETF’s can it? They are largely comprised of financial companies.

It seems these ETFs are slowly increasing the holdings of non financial preferred shares.

What will the impact be on preferred share ETFs?

Negligible, since holdings will be adjusted. People buy preferreds for tax-efficient income, and they deliver in spades. — Garth

#120 The real Kip on 04.03.13 at 9:18 am

Paul Martin was a lousy PM but a great finance minister who routinely had budget surpluses used to pay down our national debt.

Mr. Flaherty, with one eye on an election, has a shot at doing the same thing, clearing off our annual deficit and moving to a surplus by 2015 and holding our country out of recession. If he makes it he will have accomplished something that few if any other G-20 countries have managed.

To look at the debt mired US as a model for Canada would be a mistake. The best gift this generation can hand to the next is a nation free of debt. Steady as she goes Mr. Flaherty!

Mr. Flaherty inherited a surplus (as you attest), and turned it into the highest-ever deficit. There will be no budget surplus in 2015, and the national debt will be at least $250 billion higher by the end of the current Conservative rule than when it started. Go, F! – Garth

#121 Loopback on 04.03.13 at 9:19 am

#105: “The feds clarified yesterday that no depositors would ever participate in a Canadian bank bail-in.” — Garth

The finance minister went on TV and explained that there was absolutely no risk of a debt haircut and the loss of deposits. People believed them after all, this was Cyprus, not Greece.

Canada’s recently released budget, page 144 of Canada’s Economic Action Plan 2013 reads:

“The Government proposes to implement a – bail-in regime for systemically important banks. This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital.”

No bank here will fail. If it happened, no depositor would be taxed. This you can take to the bank. — Garth

#122 Ret on 04.03.13 at 9:26 am

Re: #112 Victor -quote from the Star link

“In fact, three-quarters of CMHC’s outstanding mortgage insurance is now on low-risk loans, an official with the agency confirmed Tuesday.” (Which means that 25% is on high risk loans already.)

We should all be dancing in the streets! In those CMHC LTV calculations, the use of current values in most cities would make those mortgages look to be low risk. How about stress testing those property values down by 15-20%.

How does that CMHC insured mortgage portfolio look now? What are the potential liabilities that taxpayers have assumed from CMHC?

Yeah, I was afraid of that.

#123 Weedeater on 04.03.13 at 9:28 am

#78 Bobbo
Because Big Oil Co. on this continent are US owned and they don’t want competition from Canada. Exxon et al know refining is where the money is. Klein wanted to build refineries 20+ years ago and it was nixed. Whenever you have a question about something that defies logic, follow the money.

#124 AK on 04.03.13 at 9:29 am

#88 Andrew on 04.03.13 at 1:14 am
“So far as I know you don’t want to hold US-listed dividend payers within a TFSA because the US won’t recognize it as a retirement account and will withhold tax – best to put those into an RRSP or hold unregistered. Finally, anything interest bearing (vs. dividend bearing) should definitely be TFSA because interest is taxed most punitively. …I think.”
——————————————————————-
Tell me this then.

If one already has topped out their TFSA and RRSP’s, and has an additional $500,000.00 to invest in a non-registered account. Are going to avoid investing in the U.S. just because they withhold 15% from dividends?

#125 Westcdn on 04.03.13 at 9:30 am

I have been catching rumours of trouble within the CMHC and problematic consumer loans in our banking system. I have not found anything substantive yet but this article may point in the right direction.
http://seekingalpha.com/article/1317011-a-time-bomb-in-the-canadian-financials
I don’t think the problem is as big as the author presents but it does show some Canadians are depending far too much on cheap debt. I don’t want to call Home Equity Lines of Credit subprime however lack standards might bite later. If the CMHC isn’t refinanced, we should see tightening mortgage approvals.
IMHO.

#126 JustTryingToProtectEquity on 04.03.13 at 9:35 am

#59 For the Realistic Realtor @#44, #46 & #18

The heat maps you provide are totally irresponsible representations of what is going on in the GTA. The Toronto Real Estate Board has said that house sales are down significantly year over year… and yet your heat maps would suggest that their is a raging fire of bidding wars and bully deals. The simple truth is this, house sales are down, prices in the outskirts are coming down and the city’s core, including the pricier areas, will be next. Have a good look at this:
https://docs.google.com/file/d/0ByrPFSoPLahJSE56TmxZN0RqdUE/edit?pli=1

#127 Richard in Kelowna on 04.03.13 at 9:55 am

126 AK on 04.03.13 at 9:29 am …..
…………………………………………………………………..

Hey Skoda guy…..You a stock broker?

#128 Penny Henny on 04.03.13 at 10:03 am

DELETED

#129 GenXer on 04.03.13 at 10:10 am

We sold, on March 3rd, and helped keep those March numbers from plunging lower. Instead of a young family / couple looking for their first SFH we got an older couple who appear to be downsizing from something bigger. Supply is still very restricted in Toronto. So yeah, you can still sell, for less than a 5% haircut from last year’s frenetic spring, if you do it now.

my big problem now is resisting the family’s urge to buy back in and to find a good rental in the same area the princess from last week was looking… but we’re willing to pay at least $500/month more ($3,000/month). If such a rental comes up.

#130 ReCharts on 04.03.13 at 10:34 am

@JustTryingToProtectEquity

I doubt that my charts are saying that go and read again. BTW I asked the author of that PDF to share it so I can download it and create the map but he did not cooperate . As the legend shows, my map renders as bidding wars just the RED dots/colours. It seems that I will have to redo that since people associate the temperature of the colour with the temperature of the market. Also note that if the property was relisted or listed low it looks like a bidding war but it is REA bullshit. In other words that is an optimistic picture.

#131 AK on 04.03.13 at 10:41 am

#129 Richard in Kelowna on 04.03.13 at 9:55 am

“You a stock broker?”
——————————————————————-
No. Are you ?

And WTF is a Skoda?

#132 The real Kip on 04.03.13 at 10:51 am

With the federal government fast approaching the half way point of its mandate and a federal deficit of 27-billion, the dirty work of this government is behind them.

Expect to see a bigger push to balance the budget before the next election and, with economies around the world mending as you attest, it’s entirely possible Mr Flaherty will balance the books. If he does, they will be in a good position to take on and beat heir apparent, Mr. Trudeau and his Liberals.

I think Mr. Flaherty will make it. 27-billion is not a huge stretch and he’s closer than you let on.

Annual deficits are additions to the accumulated debt. Each debt increase means more interest charges and less money for serving citizens. The Conservatives have added more debt than any previous administration in the same period. Don’t get too fuzzy on us. — Garth

#133 Tom Vu on 04.03.13 at 11:05 am

I hear it comes with a roll of Reynolds Wrap. — Garth
=================================

There will come a day, and that day approaches daily, that those that did not heed the prophecy to go to Aisle 7A ,…third shelf up, and stock up ….will be SOL.

They will stand out amongst the crowd with the sign of the Unwise and Unprepared…(unreflective heads) and still believing that Canada won’t haircut their deposits.

#134 Daisy Mae on 04.03.13 at 11:10 am

“Due to lack of work volume, reduced tender opportunities, new NDP government in BC in May….”

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

JIM NIELSEN — May I Interrupt?: “When we have had an NDP government in our province, things have not gone well. At one point, we became a ‘have-not’ province with the socialist NDP sinking our ship of state. The NDP are lousy managers. They have spent decades in opposition, opposing. Their natural tendency is to be negative. Many are controlled by the genetic mutations that make up a socialist personality and are not capable of stimulating common sense….”

(There is simply no party worthy of our vote this May)

#135 Realtor # 1 on 04.03.13 at 11:20 am

How much longer before prices start to fall?
Let me guess wait till next year!

Which market? — Garth

#136 not 1st on 04.03.13 at 11:21 am

Garth, there is only one statistic to look for to indicate a recovery in the U.S and that is food stamp participation. A decrease would means that real gains are filtering down to the little guy and his lot is improving.

Unfortunately, its still going the other way and has rose from 55 to 59 million people. Until that changes, your predictions of a U.S recovery are anecdotal at best.

#137 Daisy Mae on 04.03.13 at 11:35 am

#121 The Real Kip: “Steady as she goes Mr. Flaherty!”

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

This little twerp is all over the map. He doesn’t know WHAT he’s doing. But, we do!

#138 Westernman on 04.03.13 at 11:45 am

Saskiboy @ # 75,
What do you expect? Saskatoon and the entire province of Sask. is run by 1958 Era Style Communists that have everything owned by government and centrally planned.
Think Soviet Union 1958 with the same results – there… mystery solved…

#139 Suede on 04.03.13 at 11:46 am

White Rock, BC approves $250 fee if you have a 2nd suite and want to rent it out.

Deficit years…

http://www.thenownewspaper.com/news/City+council+approves+secondary+suite/8165292/story.html

#140 maxx on 04.03.13 at 11:46 am

#51 rosie “moving backwards” on 04.02.13 at 10:32 pm

“Take economists at the Royal Bank of Canada: They recently did a “snapshot” of household finances…”

Good point Rosie. Move along without noticing the elephantine conflict of interest is exactly what banks want people to do.

Good catch.

#141 Suede on 04.03.13 at 11:47 am

#133 AK

Skoda? Don’t you watch the Spengler Cup? It’s the car behind the corner of the boards

#142 Sean on 04.03.13 at 12:01 pm

Hey Garth,

Sales down but prices up. Any ideas on what the supply is looking like. Do they have those yoy numbers or even month to month? The stock available must be increasing with such drastic drops in price. Right?

#143 C on 04.03.13 at 12:02 pm

GTA monthly stats out for March 2013.

Last year the report said the average GTA price was $504,117. On today’s report it says the average price for March 2012 was lower at $500,875?

Of course knocking a few thousand off the average price a year ago helps the March 2103 number. TREB wouldn’t do a thing like that would they???

Keep the scheme going dudes you’re doing great.

#144 Derek R on 04.03.13 at 12:03 pm

#121 The real Kip on 04.03.13 at 9:18 am wrote
Paul Martin was a lousy PM but a great finance minister who routinely had budget surpluses used to pay down our national debt.

Mr. Flaherty, with one eye on an election, has a shot at doing the same thing, clearing off our annual deficit and moving to a surplus by 2015 and holding our country out of recession. If he makes it he will have accomplished something that few if any other G-20 countries have managed.

It’s straightforward and painless to pay down the public debt when your country has a big balance of trade surplus. So Paul Martin had it easy when he ran budget surpluses. Right time, right place, right thing to do.

However at the moment Canada is running a balance of trade deficit. In that situation running a budget surplus will guarantee a recession and cause a world of hurt for ordinary Canadians. So if Flaherty wants to win the next election, he’s going to have to spend, spend, spend.

To look at the debt mired US as a model for Canada would be a mistake. The best gift this generation can hand to the next is a nation free of debt.

Tell that to ordinary Canadians. They have so much debt that it makes the government’s debt look like loose change.

#145 Fed-up on 04.03.13 at 12:03 pm

@#52 Banker’s Demon
———————————————————————–

Bang on. Our banks are the biggest, BSing windbags on the face of the planet. Some say they received upwards of $111 billion during the WFC but had the audacity to claim that they received nothing. I have no confidence in them whatsoever.

#146 TS on 04.03.13 at 12:04 pm

GenXer on 04.03.13 at 10:10 am
We sold, on March 3rd, and helped keep those March numbers from plunging lower. Instead of a young family / couple looking for their first SFH we got an older couple who appear to be downsizing from something bigger. Supply is still very restricted in Toronto. So yeah, you can still sell, for less than a 5% haircut from last year’s frenetic spring, if you do it now.

my big problem now is resisting the family’s urge to buy back in and to find a good rental in the same area the princess from last week was looking… but we’re willing to pay at least $500/month more ($3,000/month). If such a rental comes up.

Wait and see this till next year or two, what is the impact on this.

#147 GTA Girl on 04.03.13 at 12:07 pm

Developers have tied balloons to all their A-frame signs in GTA….next? It will be free bbq’s in sales office parking lots…free first month no mortgage pymt, upgrades, then a chance for a car.

One builder is planning on offering a Tesla to win if you reserve a lot. All his condos/singles can have electric car chargers installed. He’s driving a sports version around town. wants to be known as a green builder…even despite himself living in a mega mansion and his other car is a super car. Hoping to jump on that green-build marketing craze…

10 years too late, buddy.

#148 wilbur on 04.03.13 at 12:09 pm

I am currently invested 57% Canadian 43% US
My US portfolio is made up of GE, Johnson and Johnson, JP Morgan Chase, McDonalds, Kimberly Clark, etc., which has served me well. What ETFS in the USA do you think people should invest in for 2013?

#149 Fed-up on 04.03.13 at 12:12 pm

@#78 Bobbo

—————————————————————————-

Because we are bush league. Trillions earned over the decades and not a dime invested in refineries. What 1st rate, oil producing nation ships its oil out for refining only to buy it back at the same inflated prices that even non-oil producing nations pay???

You guessed it, CANADA!!!

#150 Big Bear on 04.03.13 at 12:18 pm

Trying to keep up Garth… but this just won’t go away and now it’s going mainstream.

What do you know that we’re all missing?

http://www.cbc.ca/news/politics/story/2013/04/02/f-rfa-macdonald-canada-cyprus-banks.html

Great photo (as usual)

Nothing missing. It’s misinformed hyperbole. — Garth

#151 The real Kip on 04.03.13 at 12:20 pm

It’s good you understand accumulated deficits and annual deficits, after all you are an economist.

I’m not saying I would support Harper over (likely) Trudeau but just saying we have a good chance at eliminating the annual deficit and if I were Stephen Harper, also an economist (not a crane operator), that’s what I would do.

Everything they do now will focus on staying in power and a balanced budget will be a big stick for Mr. Harper. The Boomers will support it big time and put a fellow Boomer right back in office and, until Gen-X/Y figure out how to vote as a block, Boomers will dictate the next government. It’s in reach (balanced budget) and the best shot Harper/Flaherty have at it which is why I think they’ll do it.

As for Mr. Trudeau? I kind of like him but I think he jumped in too soon, not enough experience and time will tell if his party would still support him in opposition. Mr. Harper is a wily cat and may give the young lad a haircut.

The political landscape should be interesting for the next couple of years.

#152 Mike on 04.03.13 at 12:26 pm

Garth: “Cars and big orders for commercial aircraft were the latest.”
Well, sure … and how do all financially broken buy their cars ? …
http://www.cnbc.com/id/100612622
Rosy glasses Garth, I feel that you are much too positive on the outlook of the US economy and their beloved SP500 shooting to the moon :)

Sales are sales. Suck it up. — Garth

#153 Victoria -the Original on 04.03.13 at 12:28 pm

I have been reading your blog since day one and I love it. We are in Victoria and I wonder if there is still time to sell our house. It is a 4,000 sq. ft. house in a nice area called Broadmead. However it does need work and the roof will need to be done in a couple of years. It is a cedar shingled roof and that is going to cost. We have already done a fair bit to the house i.e. new kitchen, bathrooms and hardwood flooring.

Our monthly payments (including taxes and insurance) are about $3,000 a month. We would pay more for rent because we have 4 kids, 2 dogs and 4 cats.

I still think we should sell and move into two trailers. (one of the kids and hubby and one for me :-). Seriously I thought of house trailers. I could even start a blog about my days in the trailer park.

What do you think? Any advice would be greatly appreciated.

#154 Victoria -the Original on 04.03.13 at 12:32 pm

PS: I also keep saying “I told you so, you owe me, am I right, am I right ” to my best friend in Toronto.

She and her husband sold their amazing house in Leaside and are renting. I wish I would have followed my own advice (or Garth’s advice rather). I am so happy they sold.

#155 Timbo on 04.03.13 at 12:36 pm

http://www.reuters.com/article/2013/04/03/us-usa-qe3-subprimeauto-special-report-idUSBRE9320ES20130403

“Money was tight last year for the school-bus driver and neighborhood constable in Jasper, Alabama, a beaten-down town of 14,000 people. One car had already been repossessed. Medical bills were piling up.

And still, though Nelson’s credit history was an unhappy one, local car dealer Maloy Chrysler Dodge Jeep had no problem arranging a $10,294 loan from Wall Street-backed subprime lender Exeter Finance Corp so Nelson and his wife could buy a charcoal gray 2007 Suzuki Grand Vitara.

All the Nelsons had to do was cover the $1,000 down payment. For most of that amount, Maloy accepted Jeffrey’s 12-gauge Mossberg & Sons shotgun, valued at about $700 online.”

Where is the Face Palm button???

http://www.reuters.com/article/2013/04/03/eia-oil-inventories-idUSL2N0CQ0YE20130403

“U.S. crude stocks rose last week to the highest level since 1990 even as crude imports fell, government data from the Energy Information Administration showed on Wednesday.

Crude inventories rose by 2.71 million barrels to more than 388 million barrels in the week to March 29, compared with analysts’ expectations for a rise of 2.2 million barrels.”

Careful Alberta..this might be more than a hiccup.

#156 Missy on 04.03.13 at 12:39 pm

Eric Sprott on G7 banks…

http://sprott.com/markets-at-a-glance/caveat-depositor/

Sprott is a liar. Anything to sell a few more ounces. Sad. — Garth

#157 AprilNewwest on 04.03.13 at 12:51 pm

#70 Raincity. Hope you’ve introduced your friends and co-workers to Garth’s site, also Whispers from the Edge… and Vancouverpricedrop.

#158 Holy Crap Wheres The Tylenol on 04.03.13 at 12:51 pm

#134 The real Kip on 04.03.13 at 10:51 am
With the federal government fast approaching the half way point of its mandate and a federal deficit of 27-billion, the dirty work of this government is behind them.

Conservative, Liberal, NDP, Green Party, Communist Party, Tree Hugger Party or What Ever Party. They are all the same low life; scum-sucking carpetbaggers that bleed us dry and tax our derrières to the max. If Mr. Flaherty makes the budget great! If Son of Fuddle Duddle makes it God bless him, as the saying goes “he aint his father.” All I care about is leaving me alone by not taxing me any more to pay for all of the stupid social programs we currently have. Black holes! Why the last honest politician we had was err, hum, uhh, oh let me think about it? I was um what’s a Mc callit, oh I recall it now, nope! There never was one, it’s an oxymoron!

http://www.studentnewsdaily.com/conservative-vs-liberal-beliefs/

#159 Richard in Kelowna on 04.03.13 at 12:54 pm

AK….

#129 Richard in Kelowna on 04.03.13 at 9:55 am

“You a stock broker?”
——————————————————————-
No. Are you ?

And WTF is a Skoda?

……………………………………………………………..
Nope, not a stock broker….

Skoda ….courtesy YouTube:

http://www.youtube.com/watch?v=–LVpA5UdGM

Have a nice day…..

#160 invisible in calgary on 04.03.13 at 1:02 pm

“Every day comes a little more news to prove the US is ascending, while Canada isn’t.”

Right. The USA is OWNED by China. China likes trade with USA so the debt isnt called in. The USA is also a police state which likes to intimidate other nations and indoctrinate and police its own people and not provide basic services for taxes spent. Sound great?

I find it laughable when I hear Canadians talk about how they “vacation” in the third world dump that is the USA. I was born there and am disgusted with what I see coming from that country. So I voted and left, permanently. If a person wants to vacation someplace warm, try south america.

Ah the land of the free: No unions, two political party system, no health care, paranoia, guns, and rampant law enforcement. Sounds like paradise in the USA, doesnt it? I gave the finger to the student loan and the IRS let the other tax payers there foot the bill.

#161 Mike on 04.03.13 at 1:06 pm

Garth: “Cars and big orders for commercial aircraft were the latest.”
Well, sure … and how do all financially broken buy their cars ? …
http://www.cnbc.com/id/100612622
Rosy glasses Garth, I feel that you are much too positive on the outlook of the US economy and their beloved SP500 shooting to the moon :)

Sales are sales. Suck it up. — Garth
……………………………………………………………
Sales are sales until the customers all go bankrupt and can’t pay the bills.
Then it becomes a costly exercise to reposses and try to again sell all that crap.

Go worry about something that matters. — Garth

#162 Julie on 04.03.13 at 1:11 pm

I’ll be adding some gold to my balanced portfolio once it starts hitting 999……and silver 18 or lower…..

#163 Godth on 04.03.13 at 1:13 pm

Meanwhile…McDonald’s want ad demands bachelor’s degree, two-years experience for cashier
http://washingtonexaminer.com/mcdonalds-want-ad-demands-bachelors-degree-two-years-experience-for-cashier/article/2526145

I haven’t noticed you mention the latest moves from the BRICS nations, and OZ too. Bye-bye American pie…
http://investmentwatchblog.com/will-2013-be-fall-of-american-empire-the-five-brics-nations-account-for-42-of-world-population-and-nearly-all-of-current-growth-in-the-global-economy-push-for-a-new-world-bank-and-ditch-us-dollar/
Some renaissance, perhaps we’ll remember what all ancient cultures knew, that debt jubilees are necessary.

#164 Julie on 04.03.13 at 1:17 pm

I find it laughable when I hear Canadians talk about how they “vacation” in the third world dump that is the USA. I was born there and am disgusted with what I see coming from that country. So I voted and left, permanently. If a person wants to vacation someplace warm, try south america.

Ah the land of the free: No unions, two political party system, no health care, paranoia, guns, and rampant law enforcement. Sounds like paradise in the USA, doesnt it? I gave the finger to the student loan and the IRS let the other tax payers there foot the bill.
———————————————-

Its sad that you feel that way. I told my husband that if our business does well I would like a “used” X5 and he said NO FREAKING WAY. You know why? He said that if those Americans are going to be great enough to help us succeed by purchasing our products the least we can do is buy a nice new Grand Cherokee from them.

We love the USA. People are always so friendly and helpful. Much more than Canada. Don’t know why. Yes their system is MESSED UP and it may take a “soft revolution” to fix it. I hope they do…….its a very beautiful country. Ever since the TSA we have driven allot and you know know what you are missing till you start driving……

#165 Old Man on 04.03.13 at 1:17 pm

#163 invisible in calgary – in all fairness to USA there was a time in my youth that travelled this country extensively by car, as saw most of it. Each state was a separate adventure, and never met so many kind and interesting people in all of my life who went out of their way to welcome me. I agree that this might not be the case anymore.

#166 jess on 04.03.13 at 1:20 pm

dark pools and Market Structure http://tabbforum.com/opinions/canada-seeks-to-set-the-market-structure-standard
http://www.nytimes.com/2013/04/01/business/as-market-heats-up-trading-slips-into-shadows.html?_r=2&

Because most dark pools and internalizers are operated by banks, Finra, the industry-financed regulator, is also worried that the banks can provide a sneak peek of the trading their customers are doing to their own traders and selected customers. Last September, Finra began gathering information from 15 of the largest dark pools and is now trying to determine whether the banks have improperly shared information about the customers in their dark pools.

#167 all_we_need_is_mortgage on 04.03.13 at 1:20 pm

What exactly the reason for that recovery? Is that those phony money abundantly printed by the Fed? What happens when the Fed decides to extricate itself from quantitative easing?
Until there will be a prime rate increase the recovery will be an illusion, but that simply infeasible within the existing economic model. Bernanke is firmly committed to keeping the rates low: http://articles.washingtonpost.com/2013-03-25/business/37999977_1_central-banks-chairman-ben-bernanke-concerns-about-currency-wars

It was never in doubt the US economy would reignite and resume growth. — Garth

#168 StocksRHot2013 on 04.03.13 at 1:31 pm

Gold getting slaughtered…. Just like March home sales…party’s over

#169 World View on 04.03.13 at 1:32 pm

Hi Garth,

I respect your opinion about the Canadian Real Estate market. (Probably because I share the same view). But I dont buy the `recovery in US` story. There seems to be a contradiction when you say there is a real recovery. IT is the same policies in 2004 to 07 in US that caused the crisis in 08. So your belief that the Fed can manage the markets without adverse consequences this time around is a little naive at best. And is it not the same policies that are causing the Real Estate downturn in Canada which you have rightly spotted? So how can you endorse the policy down south, but point to the cheap credit as a cause for a slowdown in Canada. Sooner or later the same story is going to play out in US. Watch out for the credit growth in US as well.

#170 Tom Vu on 04.03.13 at 1:41 pm

Caught on video:

Toronto Maple Leafs fans and House Horny virgins in pre sale line-up.

Listen close and can hear Garth warning them all …mostly Leaf fans

http://www.youtube.com/watch?v=xMZlr5Gf9yY

#171 Blacksheep on 04.03.13 at 1:54 pm

“It’s misinformed hyperbole. — Garth”

I agree, being sovereign in control, no ones funds are truly at risk, unless said currency issuer, chooses to place them at risk.

The government anticipated the negative press risks associated with including the term “Bail-in” in official documents, regardless of when the language was first used as they know the world is watching.

The world (other sovereigns?) is watching! Testing, Testing 1,2,3 – Is this thing on?

Making every one whole, regardless of future events,
is clearly in their power, but is it in their mandate? An outsider with a rational mind, aware of this governments abilities, observing their language, would have to answer, no. Que…Mish.

Banks won’t fail here. This isn’t Cypress. Worry about yourself. Pass the tinfoil. Conspiracy theory. Gold bug. Doomer.

This is not a mistake. It has a purpose. What that purpose is, is the question no one has clearly defined, including you Garth, all due respect.

#172 Herb on 04.03.13 at 1:55 pm

Looks like May may be coming to the markets a little early this year.

#173 Mike on 04.03.13 at 1:56 pm

Garth: “Cars and big orders for commercial aircraft were the latest.”
Well, sure … and how do all financially broken buy their cars ? …
http://www.cnbc.com/id/100612622
Rosy glasses Garth, I feel that you are much too positive on the outlook of the US economy and their beloved SP500 shooting to the moon :)

Sales are sales. Suck it up. — Garth
……………………………………………………………
Sales are sales until the customers all go bankrupt and can’t pay the bills.
Then it becomes a costly exercise to reposses and try to again sell all that crap.

Go worry about something that matters. — Garth
………………………………………
OK, how about the 10 Year Bond crashing again, signalling deflation?
Do you worry about that or will the FED fix that? :)

#174 realtor on 04.03.13 at 1:56 pm

Some of you on this blog are realtor haters. Understandably so. In the few years, real estate in the Lower Mainland has gone up beyond justification and commissions have followed. Only a few realtors made the majority of the sales and raked in the dough; asian real estate agents who barely spoke english let alone have any real knowledge made millions, just because they had referrals from China, a few condo marketing companies, some “top” selling agents who got their company’s referrals. The rest of the agents work really hard in this commission only based industry, only to receive an modest income. You wouldn’t believe how involved I get in my client’s lives. Moving is one of the biggest changes in one’s life, and usually follows a significant event such as marriage, divorce, death, birth, etc. Realtors are also psychologists, teachers, best friends, tour guides, jack of all trades, etc. They also ensure that the entire transaction from beginning to end goes smoothly without worry for the buyer or seller. That in itself is a huge job. I agree that condo floggers who sell 100 units to suckers who line up overnight in tents do not really deserve such high compensation for practically nothing. I agree that agents who are top producers with many assistants cannot possibly look after their clients with the degree of care they deserve. However, I do not agree that all realtors are scum and not worthy of compensation. All my past clients are grateful of the work I have done for them and still stay in contact with me for years. Each and every deal has been memorable in a special way which usually ends up with the client saying “I’m glad I used a realtor.” I have been in the business for over 20 years. If you do need a realtor, do yourself a favor and do not hire the most popular agent with the most lawn signs. Instead, find one with the experience and care that deserves your pay.

#175 AK on 04.03.13 at 2:09 pm

#162 Richard in Kelowna on 04.03.13 at 12:54 pm
“Skoda ….courtesy YouTube:”
————————————————————–
LOL. I would say that one needs some work .

Just like Real Estate, some people consider old cars an investment. :-)

#176 jess on 04.03.13 at 2:09 pm

holy mockery

…Brad Bennett, Executive Vice President and Chief of Enforcement, said, “As a result of broad systemic failures, these firms failed to capture and retain emails from hundreds of representatives and other associated persons, and failed to take adequate steps to ensure that their principals were fulfilling their responsibilities to review emails. Email retention and review continues to be an important regulatory responsibility and an issue of concern for FINRA.”…
http://www.finra.org/Newsroom/NewsReleases/2013/P207604

#177 Julie on 04.03.13 at 2:10 pm

Eric Sprott on G7 banks…

http://sprott.com/markets-at-a-glance/caveat-depositor/

Sprott is a liar. Anything to sell a few more ounces. Sad. — Garth
————————————-
And anyone who buys his “overpriced fund” is a “Greater Fool”. If you must own gold…..buy gold…..don’t pay many percent “higher” than the gold price to own his fund to pay for Eric’s new Ferrari.

#178 Godth on 04.03.13 at 2:14 pm

@Blachsheep
“The government anticipated the negative press risks associated with including the term “Bail-in” in official documents, regardless of when the language was first used as they know the world is watching.”

Go back to Bank for International Settlements press releases from 2008 onwards. They always used the term “bail-in” from the get go.

#179 Shawn on 04.03.13 at 2:14 pm

Eric Sprott on G7 banks.

Not sure why Sprott has any issues with Cyprus. He said:

There was no transfer of risk from over-levered banks to the taxpayers. The risk was pushed back onto the banks. Their equity was wiped out. Their bondholders were wiped out. Their uninsured depositors saw their accounts raided for additional liquidity.

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

This is textbook practice for a failed bank. Shareholders and bond holders wiped out. Insured depositors protected. Unsecured depositors face losses.

In the U.S. I believe Wachovia and Washington Mutual and Country Wide shareholders were wiped out. Not sure how the bond investors fared. I don’t believe any depositors lost money but that may have been because the equity and debt covered the losses. Or maybe the government kicked in some money to prevent panic.

A large number of U.S. banks were loaned money. Some of it unwanted and un-needed as in the case of Goldman and Wells Fargo. Most of this has been paid back.

Risks to Canadian insured depositors are nil because the economy here is good, the banks here are strong and have a cushion of equity and debt investors that protects depositors and finally if SHTF we have a strong government that can borrow or even print money to meet its deposit insurance needs.

Uninsured bank depositors in Canada face very very low risk of default for the same reasons (except the last does not apply although the government might choose to help out).

For uninsured deposits it might be wise to avoid the very smallest of the Canadian banks, and there are a few tiny ones. But even there the risk is quite low.

If ya got hundreds of thousands or millions in cash, think government T-bills. That is what Buffett uses.

#180 Julie on 04.03.13 at 2:14 pm

“U.S. crude stocks rose last week to the highest level since 1990 even as crude imports fell, government data from the Energy Information Administration showed on Wednesday.

Crude inventories rose by 2.71 million barrels to more than 388 million barrels in the week to March 29, compared with analysts’ expectations for a rise of 2.2 million barrels.”

Careful Alberta..this might be more than a hiccup.
—————————————————-
Those numbers are a joke. TPTB are going out of their minds trying to keep oil at 90. There are 1000 ships at sea FULL of oil they are not allowing into port. Anyone can look it up and see it on satellite. There is so much oil we could all be driving hummers and pay 50 cents a liter. But govts like their taxes and corps like their profits. We shall see……

#181 Holy Crap Wheres The Tylenol on 04.03.13 at 2:24 pm

New Condo Property Discovered!

http://news.nationalpost.com/2013/04/02/archaeologists-find-gate-to-hell-in-turkey-emitting-noxious-gases/

#182 Mike on 04.03.13 at 2:25 pm

Unbelievably a Vancouver suburb newspaper actually tells readers the truth about the future of real estate?
I never thought this was going to happen :)
http://www.abbotsfordtoday.ca/what-you-are-not-being-told-about-housing-and-why-you-should-care/

#183 Bill Gable on 04.03.13 at 2:53 pm

Mr. Turner you have been sanguine about Cyprus – I thought it instructional to get a Contrarian view of what’s happening. Strap yourself in – Marc Faber is the Author of “The Gloom, Boom, Doom Report” – so consider the source – BUT:
“Growing wealth inequality means that the wealthy have nowhere to hide and that events like those in Cyprus will happen in more countries around the world, including developed nations, said Marc Faber, the contrarian investor and publisher of the Gloom, Boom & Doom Report.

“It will happen everywhere in the world, in Western democracies,” Faber said “Squawk on the Street” on Tuesday. “You have more people that vote for a living than work for a living. I think you have to be prepared to lose 20 to 30 percent. I think you’re lucky if you don’t lose your life.”

http://tinyurl.com/bvv4424

#184 happy renter on 04.03.13 at 2:57 pm

People who bought houses in Vancouver and Toronto a few years took the risk and it became a great investment.Time to move on and the USA is the place to be.Real estate was the place to be in Canada in early 2000s. and it was a no brainer.

#185 Old Man on 04.03.13 at 3:13 pm

#179 AK – do not knock old cars as have one with 32K on the dial, as can no longer afford to buy a new one, so spend a bit of money to save a lot. Why buy a new car as when you drive it out the door the depreciated value goes south?

#186 Tkid on 04.03.13 at 3:32 pm

I’ve seen a heap of trouble in my life, and most of it never came to pass. -Mark Twain

#187 jess on 04.03.13 at 3:33 pm

”Monsieur Propre”

France’s former budget minister,begged for ”forgiveness” after he admitted having an undeclared Swiss bank account for the past 20 years.

#188 Blacksheep on 04.03.13 at 3:43 pm

Godth 182,

Taken from your direct quote, of my post # 175.

“regardless of when the language was first used”

Did you actually read my post?

The date first used is irrelevant.

The relevant fact, is that it was used at all, by a
sovereign controlling it’s own currency, whom has
the power to cover any and all potential losses by
citizens or banks, if it so chooses.

Which of course was not the case in the Cypress.

This is not a mistake. It has a purpose. What that purpose is, is the question no one has clearly defined………..No one.

#189 Toronto_CA on 04.03.13 at 3:44 pm

#186 Mike on 04.03.13 at 2:25 pm

Wow. Amazing article. That editor has balls to speak out against the hand that feeds him like that. Refreshing to see something counter than Pig woman at the Toronto Star.

#190 Ralph Cramdown Ⓤ on 04.03.13 at 3:58 pm

#184 Julie — “Those numbers are a joke. TPTB are going out of their minds trying to keep oil at 90. There are 1000 ships at sea FULL of oil they are not allowing into port.”

Oh? Where?
http://www.marinetraffic.com/ais/datasheet.aspx?SHIPNAME=front&TYPE_SUMMARY=Tanker&orderby=TYPE_NAME&sort_order=ASC&menuid=&datasource=SHIPS_CURRENT&app=&mode=&B1=Search

http://www.bloomberg.com/news/2013-04-02/frontline-rejects-oil-cargoes-amid-rout-in-tanker-rates.html

#191 John Prine on 04.03.13 at 3:59 pm

Friend with no full time job just got a 5 year 2.89% mortgage amortized over 30 years…. What rules?

#192 John Prine on 04.03.13 at 4:09 pm

RainCity on 04.02.13 at 11:36 pm
Sounds like the construction guy has the right idea. If the BC Fiberals are re-elected in May, I will be shocked. Everyone rails on the NDP but the current government has made a joke of this province and most seem to finally figured this out. Hopefully they will vote accordingly.
********************************************
Can’t blame the NDP for Gordon Campbell and Christy Clark, when the Liberals need money in BC they just fire sale a few more bits off, if they got in again we will likely lose everything owned by the citizens of BC.

#193 Post Haste on 04.03.13 at 4:12 pm

My question – if everything is coming up roses in the States – how come the near Zero interest rate charge. The Feds must be looking long term and if things were that well stated, they would be inching up rates as we speak. They can be doing more harm by letting the economy bubble over by rapid inflation as everyone rushes out and spend,spend & spend!

Isn’t life great – take on a whack of debt, and with two easy shakes – you’re ready to do some more shopping on newly minted credit.

What gives!!

#194 Post Haste on 04.03.13 at 4:15 pm

One more added tibit – Scotia Bank Head office in Toronto just laid off over 30 workers in the investment side -

How’s that for the market returning to the grand olde days! Dow is on a tear and they layoff – there’s something funny in the air.

#195 Real Estate Savvy on 04.03.13 at 4:25 pm

You had your column right today, Garth.

A lot of Canadians just cannot stand the fact that the US is in recovery, and what is worse, is that Canada is currently in decline.

Even a number of comments today reflect this “Canada is superior in any area” which doesn’t hold up when the actual facts are examined. Which is what Garth mentioned today.

I don’t know whether this reflects an inferiority complex or a superiority complex from living in the shadow of the economic, military and political colossus to the south.

#196 blinded on 04.03.13 at 4:28 pm

S&P 500 tanked 1% today.

Automobile channel stuffing reaches new highs.

Chicago PMI, manufacturing ISM, ADP and now Non-manufacturing ISM all big misses.

ADP March Private Jobs Miss, Lowest Since October.

The greatest ascension is USA history is federal reserve debt, because everyone knows debt creates jobs, economic growth and a strong fundamental stock market.

Bitcoin zooms 50% in 48 hours – because it can’t be manipulated by paper markets like gold.

#197 Tony on 04.03.13 at 4:28 pm

Re: #166 Julie on 04.03.13 at 1:11 pm

Gold won’t end up as a quote currency of last reserve. The price could potentially fall all the way back down to two hundred dollars an ounce.

#198 Mike T. on 04.03.13 at 4:29 pm

#178 realtor

good post

#199 Joe Cocker on 04.03.13 at 4:30 pm

It was never in doubt the US economy would reignite and resume growth. — Garth
————————————
I had the greatest laugh ever after reading this.

Then I trust you bought in when I suggested it two years ago? Good. Now rebalance. — Garth

#200 shanks on 04.03.13 at 4:47 pm

Garth,
Are stocks on sale now?

#201 Tyrone Asauras on 04.03.13 at 5:02 pm

#115TEMPLE on 04.03.13 at 9:05 am
…………. but I think there are enough tax-efficient ways to collapse your RRSP in the future that it makes sense to max it out now. This is especially true given the current tax shelters the RRSP provides. …………

Garth has posted one method that works and won’t land me in tax prison.

Do you have others?

I’ve already bought my first home and can’t see myself drawing down for LLP anytime soon.

(Also, those don’t seem all that tax efficient – if I use them, I still have to use after-tax dollars to re-fill the stupid RRSP! )

#202 Who Cares on 04.03.13 at 5:03 pm

Does anybody have that Etrade baby’s number?

#203 Canadian Watchdog on 04.03.13 at 5:07 pm

Over a year ago I posted data regarding TREB's year-over-year revisions, that is currently distorting actual monthly sales. Some analysts are now picking up on it (yet still haven't noticed other data manipulations since TREB's new monthly report and how listings are purged at the end of the month to lower month-end active listings.)

But forget that. The biggest distortion now (and this applies to REBGV, CREB et al) is presales like this. This is a sale from a nonexistent building that will be ready in 2015, yet this sale and dollar volume is booked into current monthly stats. This is like amalgamating e-mini futures into the S&P500 Index. Is this where we're heading? TREBEX home futures market?

[for those who wish to read more on the origins of presales, read here in part I and part II, and why it's now being banned here.]

I can estimate that 4-6% of total dollar volume is added every month from these types of sales. Between the above revisions and presales added, every monthly report has a 5-10% margin of error.

So in a year or so when analysts begin admitting this type of chicanery has over-estimated sales and average prices — remember you heard it here first.

—–

For you technical analysts who understand the function of futures and backwardation, see this chart. We're heading for a complete disaster.

#204 Spiltbongwater on 04.03.13 at 5:16 pm

Religious people who create the laws and policies are holding us back.

#205 Timing is Everything on 04.03.13 at 5:19 pm

#154 Mike

But wait…There’s more…

‘Obama administration pushes banks to make home loans to people with weaker credit’

http://tinyurl.com/c9fuwqr

Commenter ld59 says…
“It’s too bad we don’t have any real life experience to determine how this may work out.

Oh. Wait.”

#206 Marnic on 04.03.13 at 5:23 pm

The feds clarified yesterday that no depositors would ever participate in a Canadian bank bail-in. How many times does this have to be repeated? — Garth

Yup, and we all believe everything politicians say..

That’s your problem. There will be no depositor bail-in. And no failures. — Garth

#207 Marnic on 04.03.13 at 5:24 pm

Interesting read from AEP today:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/9970294/Helicopter-QE-will-never-be-reversed.html

#208 espressobob on 04.03.13 at 5:28 pm

Only one thing to say about Sprott funds (canadian equity & hedge) OUCH!

http://sprott.com/prices-and-performance/prices/

#209 mark on 04.03.13 at 5:49 pm

Kia is doing a recall! Look out!

#210 Gurmej on 04.03.13 at 5:54 pm

Mr. Turner you are so right about Vancouver, and I say especially Vancouver because that is where people believe they are totally different. They all point to their huge lots and post world war two dumps and say their “building” equity?? I say they are ripe for negative equity as more and more people end up owing more than they own in their bank owned homes. The biggest joke real estate right now is South Vancouver, Fraserview, Capitol Hill, North Surrey, Whistler, basically any listing on MLS that says Vancouver is royally screwed!

#211 Jim on 04.03.13 at 5:54 pm

Lets hope this correction lasts for another month. I’ve been out of the market since 2006 and would like to get back in at lower prices. Thanks for your honesty about individual stocks, and for this site Garth !

#212 OttawaMike on 04.03.13 at 5:59 pm

Yea! Canada is #1.
Check out the Economist interactive video that charts our rising debt ratio:
http://www.economist.com/blogs/graphicdetail/2013/04/daily-chart-1?fsrc=scn/tw/te/dc/rockydebt

#213 TEMPLE on 04.03.13 at 6:11 pm

#205 Tyrone Asauras on 04.03.13 at 5:02 pm

Garth has posted one method that works and won’t land me in tax prison.

Do you have others?

Garth did a good post on that a while ago, which may have included one of the methods you are referring to.

Here is the link to his post:
http://www.greaterfool.ca/2012/01/16/dont-save/

Depending on your personal situation (e.g. when you plan to retire, what sources of income you have, if your spouse doesn’t work, etc.) there are variations on those methods, obviously.

Google around a bit, you’ll find lots of ways to collapse RRSPs efficiently. You definitely need to plan ahead, though. I’m at least 20 years from retirement and am already thinking about my RRSP collapse strategy.

TEMPLE

#214 Richard in Kelowna on 04.03.13 at 6:12 pm

TONY 201…

“Re: #166 Julie on 04.03.13 at 1:11 pm

Gold won’t end up as a quote currency of last reserve. The price could potentially fall all the way back down to two hundred dollars an ounce.”

………………………………………………………………..

When gold drops to ‘potentially’ 200 bucks an ounce there’ll be blue cows flying over your home…Get a grip man…you still smokin that wacky backy??

#215 Dr. Hoof - Hearted on 04.03.13 at 6:13 pm

#196 John Prine on 04.03.13 at 4:09 pm

RainCity on 04.02.13 at 11:36 pm
Sounds like the construction guy has the right idea. If the BC Fiberals are re-elected in May, I will be shocked. Everyone rails on the NDP but the current government has made a joke of this province and most seem to finally figured this out. Hopefully they will vote accordingly.
********************************************
Can’t blame the NDP for Gordon Campbell and Christy Clark, when the Liberals need money in BC they just fire sale a few more bits off, if they got in again we will likely lose everything owned by the citizens of BC.

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

Yeah…we used to have hope in BC….

The Neo – Con Liberals have basically sold us out…and will continue to indebt us with other obligations.

The NDP ?…. the best we could hope is they fill the space and not do much., but the temptation for them is always leftie- cronie payback.

#216 Godth on 04.03.13 at 6:22 pm

@Blacksheep 192

I read your post, I pointed you to the institution that creates policy for all western central banks – the BIS, it’s their language.
You keep repeating your sovereign mantra, that’s a quaint notion.

#217 eddy on 04.03.13 at 6:24 pm

A man walks into a bank
The Teller says: “Hands up, gimme all your money and nobody gets hurt”

#218 Smoking Man on 04.03.13 at 6:56 pm

Toronto, sales down prices up, nothing to see move along

#219 :):( Ying Yang on 04.03.13 at 6:58 pm

Where is the Smoking Man with Camel toes and Batwings? Look up in the air it’s a bird, it’s a plane no it’s Super Smoking Man he’s high on Forex man!
Super Smoking Man how did you do today?

#220 Ralph Cramdown Ⓤ on 04.03.13 at 6:59 pm

#212 espressobob — “Only one thing to say about Sprott funds (canadian equity & hedge) OUCH!”

Oh come on, everybody knows that you invest in the fund company, not the funds themselves. Get rich like Eric Sprott does. Hmm, maybe not.

#221 tkid on 04.03.13 at 7:03 pm

The price could potentially fall all the way back down to two hundred dollars an ounce.

If gold goes under $600 an ounce I’ll be buying one hell of a lot of it. That’s one of those financial lessons I’ve learnt the hard way; if the market is panic selling, start buying; if gold gets real damn cheap buy it.

#222 Blair on 04.03.13 at 7:18 pm

@#214, Couldn’t agree with you more. I’ve been living in East Vancouver for over 7 years. There is absolutely nothing special at all about this city. It is no different than Saskatoon. People have dreamt up this sort of sense of entitlement to perceived land values. That’s all. It’s all franken/made up numbers that dictate real world values. And that’s why Vancouver is also the steepest decline in sales volume and prices. No one on god’s green earth should be purchasing anywhere in Vancouver because no one knows in actuality where the bottom exists? Mean benchmark says $907,000 for an ordinary average bulldoze job? Yep, this market is headed for complete failure very soon. There is no chance in hell Vancouver homes / dumps are selling like hotcakes at that price range for years to come. It’s called major market collapse. And yes folks! It’s headed straight for Vancouver.

#223 Tom Vu on 04.03.13 at 7:31 pm

#223 :):( Ying Yang on 04.03.13 at 6:58 pm

Where is the Smoking Man with Camel toes and Batwings? Look up in the air it’s a bird, it’s a plane no it’s Super Smoking Man he’s high on Forex man!
Super Smoking Man how did you do today?

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

I think Smoking Old Man in bar ordering Camel Wings and Bat Toes.

#224 Smoking Man on 04.03.13 at 7:32 pm

Ying yang……..

Horrible, but my big mistake was yesterday, and I just made It worrce
Hopefully when I post my result, it will turn off a few un qualified smoking man Wana bees from doing this….

It’s dangerous and highly addictive…. I love it….

#225 InvestX on 04.03.13 at 7:40 pm

Sales in Toronto have been falling. Price decreases should follow, but has the rate of price increase slowed down yet?

#226 Alyce in Wonderland on 04.03.13 at 7:45 pm

Then I trust you bought in when I suggested it two years ago? Good. Now rebalance. — Garth

———–
yes I bought.
I also rebalanced recently.

#227 Alyce in Wonderland on 04.03.13 at 7:49 pm

The price could potentially fall all the way back down to two hundred dollars an ounce.
———————————–
Not a gold bug but looking forward to it. Considering that a silver ring of 4 grams at the bay is $ 60….

#228 I'm stupid on 04.03.13 at 7:51 pm

Hi Garth

Quick question, someone was trying to explain bitcoins to me today. My conclusion

Bitcoin= tulip craze in Amsterdam.

#229 Humpty Dumpty on 04.03.13 at 8:05 pm

#208 Spiltbongwater on 04.03.13 at 5:16 pm

Their going to do more than hold you back….

http://www.youtube.com/watch_popup?v=olJqg0_tdbQ&feature=youtu

#230 Tom Vu on 04.03.13 at 8:11 pm

Smoking Old Man:

Your skill to predict the past is Uncanny.
Creates much fear and constipation among the Elite.

#231 JustTryingToProtectEquity on 04.03.13 at 8:14 pm

Mr. Turner,

7th inning.

Keep up the good work.

And, thank you.

#232 Daisy Mae on 04.03.13 at 8:26 pm

#92 Julie: “I can hardly believe that we will once again have an NDP government in BC. This will be 3rd time for me. They did such a great job of screwing up the province in the 70′s and 90′….”

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

I was pinning my hopes on the provincial Conservatives….but they’re a dismal failure, as well. A disaster in the making. No hope in hell for BC….

#233 AK on 04.03.13 at 8:27 pm

Rent gone wrong.

Poor Guy..

http://forums.redflagdeals.com/rent-gone-wrong-1322579/

#234 good times on 04.03.13 at 8:33 pm

For entertainment it’s interesting to read TREB releases lol!

#235 Daisy Mae on 04.03.13 at 8:34 pm

#104 The Real Kip: “What comes next? How about a nation with far less debt than our southern neighbours and at least a plan by the federal government to reduce it to zero….”

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

Give it up.

#236 Daisy Mae on 04.03.13 at 8:46 pm

#146 Derek: “They have so much debt that it makes the government’s debt look like loose change.”

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

And, who encouraged this debt?

#237 Daisy Mae on 04.03.13 at 8:49 pm

#147 Derek: “It’s straightforward and painless to pay down the public debt when your country has a big balance of trade surplus.”

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

Times have changed. And the government has to change with it. This government didn’t.

#238 Daisy Mae on 04.03.13 at 9:08 pm

#181 Julie: “….don’t pay many percent “higher” than the gold price to own his fund to pay for Eric’s new Ferrari….”

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

“A fool and his money….”

#239 Gunboat Denier on 04.03.13 at 9:15 pm

124 Ret – lets throw some numbers at it. About $500B in CMHC mortgages. Assume 20% price drop. How many mortgages would this put in serious jeopardy. Lets go with 20% total failure. (I have no example to support that figure) So that would be $100B in mortgages. If we assume all those were 100% LTV, we would have $80B worth of RE to secure them. So the net payout would be $20B after liquidating the RE.

#240 Gunboat Denier on 04.03.13 at 9:32 pm

Further to above – this article would indicate that less than 10% of all mortgaged homes in the US have been
foreclosed since the GFC

http://www.nuwireinvestor.com/articles/us-foreclosure-rates-dropping-60055.aspx

#241 DDCorkum on 04.03.13 at 9:35 pm

#33 JSS on 04.02.13 at 9:54 pm

“Anyone have experience with ZEB – (BMO Equal Weights Canadian Bank ETF)? The dividend is around 3.5% net of 0.6% MER……”

————

If you want to invest an equal share into seven banks, then this is the way to do it. If you want the flexibility to pick one bank over another then it won’t work.

Regarding the MER, compare it to the commissions you would incur by buying the seven banks directly. If you are investing a small amount of money, the MER is also small. You only pay the commission once to buy the ETF. If you were to buy all seven bank stocks directly, you would pay the commission seven times. Odds are the MER is cheaper.

But if you are investing a large sum of money for a long time, then the balance tilts the other way. You only pay those trade fees once (and again whenever you sell or rebalance), but the MER keeps being charged. And the MER percentage is going against a larger amount of money, so the MER is bigger too.