Most Canadians are in questionable financial shape. Most of them are responsible for this. Almost none will admit it. This blog’s a fine example. There, I said it.
People come here who blame banks. There are anti-government gold nuts. The conspiracy theorists. Those who hate central banks. The posters who call realtors ‘realturds,’ and bankers ‘banksters.’ Vast numbers think financial markets are rigged, and stock markets are ponzis. There are those who call money ‘fiat’, plus all those America haters. Many believe the wealthy are probably criminals. Yesterday a guy accused me of running this blog for the rich – people with more than two hundred grand. It’s us and them – the elites, the overloads, the monarchs of money. In short, this site’s a toxic landfill of full-time, blameless victims.
So if this is you, stop reading. Go blow something up.
I’ve argued for several years now that 2008 will not happen again. Every month that statement becomes truer. I told you when the US economy was hollowed out and houses unloved not to bet against America. If you did, you lost. And at $1,900 an ounce I suggested taking profits on gold through rebalancing. That was $500 ago. I’ve argued against having too much net worth in real estate (the Rule of 90). Plus, I’ve consistently recommended having a balanced, diversified and liquid portfolio, with at least 40% in fixed income. If you did, last year you likely made 10%.
This pathetic blog has given reasons to own real estate investment trusts, preferred shares, various bonds and exchange-traded funds. I’ve cautioned against holding individual equity holdings, unless you have a seven-figure account, and nixed mutual funds, unless you’re having a juicy fling with TNL@TB.
All along the way, the haters, nutbars and victims have dissed this advice. And they’ve been wrong. Financial markets have gained 136% in the past four years, and a balanced portfolio has yielded 7% over the last nine, which included the 2008-9 meltdown. During this time, no Canadian bank has failed, and none will. The US gets stronger monthly. Europe continues to stabilize.
No matter how many Americans collect food stamps or Canadians go into default, the evidence is irrefutable. We are in a slow-mo recovery, not a lingering death. There will be no hyper-inflation, and real assets have performed miserably compared with financial ones. The reason this blog pounds away at residential real estate is simple. Owning it is not a financial strategy, even though your mom and the boys at work think so.
Soon, I imagine, stock markets will correct (the TSX already has). Then they’ll resume reflecting corporate profits and incremental economic growth. The bond market will, in time, deflate as rates edge higher. Real estate will fall, then flatline. Equities, preferreds, REITs, bonds, ETFs will all rise and recede like pistons in an engine. People who chase returns, buying stuff that goes up and selling what declines, will get nowhere. Investors with properly-weighted portfolios, who ignore them, will be fine.
As I said, most people are a mess and will stay that way. They’ll find potential danger in every asset class, and new excuses to do nothing. They need to be reminded. Money is not the goal. Rather, it’s what money gives. Freedom, and choices.
Rates of Return:
Year to Date +14.10%
One year +14.82
I year -11.4
1 year -23.5
Toronto real estate
1 year +4.3
Vancouver real estate
1 year – 3.9
Victoria real estate
1 year -3.2
Calgary real estate
1 year +3.03
Montreal real estate
1 year +1.0
Halifax real estate
1 year +0.3