Choices

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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:

Dow Jones
Year to Date     +14.10%
One year    +14.82

S&P
YTD        +12.74
1-year        +16.24

TSX
YTD        +1.21
1-year        +4.2

DAX (Germany)
YTD        +3.96
1-year        +17.05

FTSE (London)
YTD        +11.32
1-year        +16.21

Nikkei (Tokyo)
YTD        +33.73
1-year        +50.34

Gold
YTD        -12.0
I year        -11.4

Silver
YTD        -20.02
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

223 comments ↓

#1 James Bond on 05.01.13 at 8:05 pm

I won’t say it but think I am first!

Then don’t. — Garth

#2 Randy on 05.01.13 at 8:07 pm

F and Dwight Duncan taught me finance and budgeting…I’m up to my neck in debt….

#3 Jim Flaherty on 05.01.13 at 8:07 pm

Garth, how much do you think the stock market both TSX and NYSE will correct? Better to sell real estate and invest in stocks?

#4 TurnerNation on 05.01.13 at 8:08 pm

Great pic ;)

#5 CrowdedElevatorfartz on 05.01.13 at 8:16 pm

Unfortunately Garth, you’re talking to the “great unwashed” which means, No matter how much you try, they still will refuse to believe.
Hopefully they are the vocal minority.
Im still listening, in my weird “ofaculatorial challenged” way…….
Keep up the good work.

New Book in the works?

#6 RayofLight on 05.01.13 at 8:16 pm

Garth, Thank you for this blog. You are sanity and a compass.

#7 Scott in Gibsons on 05.01.13 at 8:16 pm

“Europe continues the stabilize”. Un-flipping-believable. You are truly clueless Garth.

Just the counter-argument I expected. — Garth

#8 Smoking Man on 05.01.13 at 8:21 pm

90 precent of Canadians are frightened of risk… Blame others cause they didn’t act when the little voice inside his head said go all in.

Mom, dad, teacher said buy a house it’s safe, becomes a self fulfilling prophecy……

Go leafs Go

#9 West Vanner on 05.01.13 at 8:22 pm

Greetings from Maui, the joys of a balanced financial life. We are renting a condo for our vacation while our rented apartment in West Van sits empty for two weeks. The investments are growing in the meantime while we sip Pina Colada on the beach, at a conservative ~7%. What you all doin?

#10 Screwed on 05.01.13 at 8:23 pm

Garth, no offense but the civil service royalty will get their share of misery too. When it all goes in the crapper, how do you think this largesse in government spending we have created should be supported?

Demand is way down. Latest economic indicators are all pointing to another recession. Care to look at those?

Stock market is bought by central banks as buyers of last resort. They need players like yourself desperately. Don’t be shy, buy more.

This entire system is interconnected. If one domino falls, then they will all fall. Real estate is in bad shape. Prices are kept artificially high with the help of adjusters and banks, insurance companies and pension funds who cannot afford to the hit to their portfolios.

It’s all bad out there. You don’t have THE patent on how to survive the coming collapse which will take all institutions that are supposedly “save” down in its wake.

We are in completely uncharted territory because of QE. The guys at CBC ran a good piece this week including a visit to a couple Cdn expats in Cyprus. They were interviewed on how things were since the bank runs and bank shutdowns. They were discussing where to put the money these days and their best advise was to keep the money in the mattress.

Their bank is probably Tempurpedic. Sealy seems more trusting than the big six in Canada which are up to their eyeballs levered 25:1. Maybe I’m being generous.

When the music (QE) stops and everyone is looking for life boats, who cares how big the mortgage and other debt is that Canadians are holding privately? The Dutch have a personal debt/income ratio of 250%!!

My advise is to go out, take on debt and buy a nice piece of property. Don’t sweat paying it off because nobody can and will pay these huge mortgages ever. The banks will have much bigger worries when SHTF than trying to collect from Joe Sixpack.

#11 penny dreadful on 05.01.13 at 8:25 pm

Hi garth,

First time writing.
I was wondering if theirs a minimal holding time on holding securities in your TFSA or can i just trade freely and withdraw the money any time?

thx for the words

#12 TurnerNation on 05.01.13 at 8:25 pm

Yeah Smoking man I didn’t see you at Csis’s table. About your dossier…

#13 marnic on 05.01.13 at 8:25 pm

Garth, for you to be lamenting the amount of name-calling on this blog is monumentally ironic, and particularly so when it occurs just a few lines above the spot where you dismiss your readership as inhabitants of a toxic landfill.

#14 Toronto bidding wars debunked -April 1 update on 05.01.13 at 8:26 pm

http://recharts.blogspot.ca/2013/05/toronto-bidding-wars-debunked-may-1.html

I am preparing an all in one GTA heat map (Toronto excluded) I hope to post it this evening (my computer is still crunching the numbers)

#15 Nemesis on 05.01.13 at 8:29 pm

Well, that’s one scenario. But if it’s going to be a decade or more of StagFlation going forward… Couldn’t we at least have disco again?

I think have just the tonic for you, OldPol:

http://youtu.be/6wed5SCzkTU

PS – please don’t encourage angry people to buy PressureCookers.

#16 GoldIsForDummies on 05.01.13 at 8:30 pm

The stock markets have been artificially raised by central banks and primary dealers even though the economy has seen slw growth. In fact the real economy is sliding but the only reason there is growth is because of the artificial one. Basics of supply and demand point to a correction coming. Since 1982 supply side ecomics has been on the forefront and this cycle will come to an end.

#17 AK on 05.01.13 at 8:31 pm

And U.S. companies continue to report higher earnings. But more than likely their earnings are rigged. LOL :-)

CBS profit gains on advertising, cable revenue

CBS profit gains

#18 al on 05.01.13 at 8:35 pm

re #7

http://www.bbc.co.uk/news/business-22353726

how’s that a “continuing to stabilize?”

and the markets are rigged – at least 60% of all trades a computerized high frequency trades, executed by institutional speculators, how’s that not rigged??

http://www.cbsnews.com/video/watch/?id=7368460n

no need to be a gold nut or a conspiracy theorist, it’s all in the open mainstream media

#19 AK on 05.01.13 at 8:35 pm

“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.”
——————————————————————–
Indeed. They are called the “Internet Tough Guys”.

#20 Not 1st on 05.01.13 at 8:38 pm

Garth do you really believe that people just randomly distrust the equity markets? Just about everyone has either a personal experience where some advisor told them they were going to get rich and then the thing cratered and bailouts and recession ensued. Twice burned.

ETFs have only been around for a few years. What was there before? Oh yeah mutual funds. Those worked out real good. In 2004 I took 25k in RRSPs out and leveraged a loan on a home and 640 acres of land. That little move made me more than 1 million gain in 5 years and retired me at 40. Lets see your little 5% dividends compare with that return.

#21 PermaBear on 05.01.13 at 8:39 pm

The Leafs are in trouble.

#22 sluggo8 on 05.01.13 at 8:43 pm

Policy decisions of 2007/2008 about to rip Conservatives a new one.

Now that asset prices(house prices) have reached their zenith, the search is on for collateral and their isn’t any.

The IMPP is about to be exposed for what it really was-an exercise in extreme moral hazard, gifting equity of Canada to the people so banks could lend more to bail out the ABCP market at the behest of the central planners.

http://www.zerohedge.com/news/2013-05-01/desperately-seeking-112-trillion-collateral-or-how-modern-money-really-works

#23 Hal on 05.01.13 at 8:43 pm

#9 penny dreadful – there is no holding period.. you can withdraw cash any time you want but a typical bank discount broker will charge you $125.. You might want to verify that with your Broker..

#24 Long Time Reader on 05.01.13 at 8:49 pm

>We are in a slow-mo recovery, not a lingering death.

citation needed.

#25 hardassi on 05.01.13 at 8:51 pm

Thanks Garth,
The only problem with your investment advice is that it is boring. Total value of the balanced portfolio just keeps going up. Only problem is tax on RRSP withdrawals. Wish I’d never loaded them up back in the 20th.
All the best.

#26 Lily joe on 05.01.13 at 8:52 pm

Usually when things go wrong for me, I take it as a learning opportunity not a blame game.

Thanks for keeping us off the koolaid Garth! ;)

#27 Smoking Man on 05.01.13 at 8:53 pm

#10 TurnerNation on 05.01.13 at 8:25 pm

Yeah Smoking man I didn’t see you at Csis’s table. About your dossier…
…………
Ha, it’s okay they’re a bit out alphad when it comes to me, they only know how to play two dementional chess. I play 5 simultaneously games of 3 dementional chess…

#28 DaleFromCalgary on 05.01.13 at 8:57 pm

The validity of your statistics are obviously dependent on what time series you choose. It’s a different result for those who bought houses or gold before the Panic of 2008, and who are winners. Those who bought stocks before the Panic are lucky if they have broken even. And you can’t rebalance when the computer system is frozen during a sudden correction or the broker’s phone is a continuous busy signal.

#29 Tom Vu on 05.01.13 at 8:57 pm

Bilderbergs, CIA and CFR want Tobacco Neanderthal …

PS: What’s the Postal code to Bullsh*tville ?

#30 marnic on 05.01.13 at 8:58 pm

“Financial markets have gained 136% in the past four years…” And about 11% in the past five. Less than 1% in the past six. They’ve lost 1% in the last 24 hours. Your point?

You are it. — Garth

#31 Boomer21 on 05.01.13 at 9:00 pm

Geez Garth, don’t tell anyone to blow things up, CISIS may come after you! Moderation Dude! Love the blog

#32 Yellow Rox Rock on 05.01.13 at 9:04 pm

You pretty much described me perfectly, except that I don’t use “realturd” or hate America. I do hate banks , LOVE the term “bankster”, love gold (of course), and think the markets are rigged.

…And yet I love your blog. I wonder why that might be. Maybe you just can’t accept that water seeks it’s own level. To a certain degree, you are one of us Garth.

#33 Victor V on 05.01.13 at 9:05 pm

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/home-buying/the-real-cost-of-home-ownership/article11668113/

The sucker’s analysis of whether it’s affordable to buy a first home is to compare the cost of rent and a mortgage payment.

Any veteran homeowner can tell you that mortgage payments are only a portion of what it costs to own a home. First-time buyers may be familiar with additional costs such as property taxes, but there’s a whole range of other expenses that are sporadic and thus hard to quantify.

#34 economictsunami on 05.01.13 at 9:09 pm

Personal financial responsibility (should to a lesser extent) must also be shared, as many in the flock are less sophisticated to true asset valuation and risk manipulation.

The same can be said for those that believe they are more sophisticated then they truly are and find themselves defrocked of their standing…

#35 DreamingInTechnicolour on 05.01.13 at 9:10 pm

YIKES !!!

http://moneymorning.com/ob-article/schiff-us-will-win-currency-war.php?code=3243

#36 Shawn on 05.01.13 at 9:18 pm

They say, A little Knowledge is a Dangerous Thing.

If so an awful lot of people are very dangerous indeed. But mostly they are a danger only to their own financial future.

Doomers cannot change their stripes. Having missed out on 150% gains in stocks since the lows of 2009 they can’t jump on the bandwagon now. To do so would be to admit they were wrong. And no one likes to that.

#37 AK on 05.01.13 at 9:21 pm

#16 GoldIsForDummies on 05.01.13 at 8:30 pm
“The stock markets have been artificially raised by central banks and primary dealers even though the economy has seen slw growth. In fact the real economy is sliding but the only reason there is growth is because of the artificial one. Basics of supply and demand point to a correction coming. Since 1982 supply side ecomics has been on the forefront and this cycle will come to an end.
——————————————————————–

The S&P 500 is trading at a forward PE of 14X. How is that artificially raised?

The earnings for the S&P 500 companies are real. Deal with it..

#38 Smoking Man on 05.01.13 at 9:21 pm

Responsibility = Fear of risk…..

One life to live dogs, if it ain’t a rush, it ain’t fun…..

#39 Robert on 05.01.13 at 9:25 pm

Garth,
I was wondering what are your thoughts on CBC’s Neil MacDonald articles on quantitative easing
http://www.cbc.ca/news/world/story/2013/04/26/f-rfa-macdonald-power-shift-savers.html
Personally I own no real estate (except for a couple of plots in a cemetery) so I am not worried about this asset class. All my money is in ETF’s, Bonds and yes some mutual funds but they’ve been good to me plus I will also have a pension at the age of 55.
My question is, do you think that based on the info given in these CBC articles that we could see a huge market correction?

No. — Garth

#40 shane on 05.01.13 at 9:25 pm

Garth, well said, I love your post!!

#41 Meco on 05.01.13 at 9:25 pm

Refreshing real estate agent; reports price adjustments with comments: http://robertcaruso.topproducerwebsite.com/vaughanmarketwatch.asp?Preview=true

#42 None on 05.01.13 at 9:26 pm

SO take a limited stake in America now in case you’re wrong or just wait for the S&P correction?

#43 wallflower on 05.01.13 at 9:27 pm

Long Time Reader – this is Garth’s blog; he can say what he wants; no citations required

#44 blase on 05.01.13 at 9:28 pm

A couple years ago I was discussing stocks with a fellow ex-pat teacher in Korea. He’s American and has bought a couple of investment properties in the Philadelphia area which he rents out.

I mentioned to him that Berkshire Hathaway (Brk.A) was selling at under book value, at the time about $97,000/share, and that Warren Buffett was buying back shares. After extolling the virtues of the shares, he asked if I owned any. I said no, since my wife and I planned to move back to Canada soon and wanted our capital safe to buy a house. But, after thinking about what he said, I decided to “get off the pot” so to speak, and I began investing in April of 2012.

I started with Brk.B at $80 (today $106), Wal-Mart at $57 (right after the Mexican bribery mini-scandal which had driven down the price of the shares nicely, today $75), McDonalds at $94 (today $101), Norfolk Southern at $65 (today $75), and GM at $24 (today over $30).

I cashed out Wal-Mart when it hit $75, and bought some others (AIG at .55 book)

I’ve found that when you like to read about investing, like I do, that having some skin in the game is a great motivation to learning.

I’ve made some rookie mistakes, but I’m in the market, as opposed to being a Monday morning quarterback.

One thing I always wonder about people, is how they think they are smarter than Warren Buffett. I still look back at berkshire hathaway, trading at book value, with Buffett saying he’s all in on the stock market, and people stashing their money in GICs or bank accounts. I figure, these guys didn’t get filthy rich by accident, so maybe I can learn from their collective wisdom.

#45 economictsunami on 05.01.13 at 9:31 pm

“The US gets stronger monthly. Europe continues to stabilize.”

Garth: If you’re trying to sell me a car, I’m not buying it.

Take off that Don Cherry coat, quit hedging your words to describe wimpy growth; considering extraordinary CB accommodative policies…

#46 David W on 05.01.13 at 9:35 pm

Garth, well said. Do you think it’s a good time to start getting into resource stocks on the tsx?

#47 AK on 05.01.13 at 9:36 pm

#35 DreamingInTechnicolour on 05.01.13 at 9:10 pm
YIKES !!!

http://moneymorning.com/ob-article/schiff-us-will-win-currency-war.php?code=3243
——————————————————————–
Another reason why people do not succeed with investing.

Instead on listening to Warren Buffett, they choose to listen to loud mouths like Schiff, Roubini and Faber.
Geez…

#48 Happity on 05.01.13 at 9:43 pm

You can ride the balanced portfolio approach, but the markets are goosed admittedly by the central banks. These are the same institutions that propped up the housing bubble, and Big Ben said everything was fine, trust him. And then real estate collapsed.

Central banks will not tell the little guy when they pull out of stocks, you can trust them on that too.

#49 AK on 05.01.13 at 9:43 pm

#18 al on 05.01.13 at 8:35 pm
and the markets are rigged – at least 60% of all trades a computerized high frequency trades, executed by institutional speculators, how’s that not rigged??

——————————————————————–
So what do you do with your money?

#50 happy renter on 05.01.13 at 9:44 pm

Buy a house for under $ 280 000 in Calgary with a 2 bed inlaw suite and rent the upstairs and downstairsWith a downpayment of $50 000 and a cash flow of over $800 net including all expenses,your making more than a 5 year 2.5% GIC.A no brainer if you ask me.No need to gamble in the rigged stock market.

#51 Jenn on 05.01.13 at 9:44 pm

Now what?? This process did take a bit of time but I
have followed your advise – not with leaps and bounds but baby steps. Sold rental property, had a firm offer on the family home before the tulips lost their petals last year -tried to rent but no one would have me, at least
any of the houses that I could comfortably live in – there are real dumps for rent in the GVA – so stuck to the rule and bought a small house close to the loved ones job, therefore saving bridge charges, gas costs
car upkeep etc. After this I found ‘a guy’ who works for a fee to balance that portfolio – I gave him the criteria and now the dividends and interest are flowing on the first of the month. Now my question,
my t’3′s and 5′s are going to be showing me a healthy income. How do I AVOID the tax man.
Thanks Garth – things are going well.

#52 Happity on 05.01.13 at 9:44 pm

If precious metals are such a bad investment right now, why is there unprecedented physical purchases on a global basis while the talking heads and majority of the population shuns everything that glitters?

Because gold nuts are nuts. — Garth

#53 Spiltbongwater on 05.01.13 at 9:47 pm

Vancouver Real Estate is – 3.6% in the last year. Does this change Garths prediction of the 15% national RE correction or are we still on schedule?

Ask me about Richmond. — Garth

#54 nelsonfineart on 05.01.13 at 9:51 pm

” The bond market will, in time, deflate as rates edge higher. Real estate will fall, then flatline. ”

how does this hold for the US, then? Will their bond market be excused.. or their RE market?

Bonds are bonds, and their housing already dove. — Garth

#55 Canadian Watchdog on 05.01.13 at 9:51 pm

TO homes sold csv data for April can be copied here.

Remember TREB's data only shows what's below the line.

2012/10 C2492444 100 PEMBERTON AVE $1,980,000
2012/11 C2492444 100 PEMBERTON AVE $1,790,000
2012/11 C2514751 100 PEMBERTON AVE $1,768,000
—————————————————————————-

2013/02 C2549222 100 PEMBERTON AVE $1,750,000
2013/02 C2549222 100 PEMBERTON AVE $1,680,000
2013/04 C2549222 100 PEMBERTON AVE $1,588,000 Sold

#56 Vandamncouver on 05.01.13 at 9:57 pm

Garth, can you please tell me what “TNL@TB” means???

#57 Happity on 05.01.13 at 9:59 pm

Because gold nuts are nuts. — Garth

Ha, what about the synthetic derivative paper nuts?

#58 Timbo on 05.01.13 at 10:03 pm

Great post tonight Garth,

http://www.cnbc.com/id/100697502

China’s factory-sector growth eased in April as new export orders fell for the first time this year, a private survey showed on Thursday, suggesting the euro zone recession and sluggish U.S. demand may be reining in China’s economic recovery.

Ponzi scheme is slowing…….

http://www.globaltimes.cn/content/778742.shtml#.UYHI88qQNIE

“US crude inventories increased by 6.7 million barrels, to 395. 3 million barrels in the week ending April 26, the highest level since 1931, the Energy Information Administration reported.”

1931 ..now that should shake up Alberta R/E…..

#59 GoldisForDummies on 05.01.13 at 10:07 pm

Yo AK #37, funny you mentioned about S&P 500′s forward earnings. Without 0 percent interest rates and American corporate tax cuts, the earnings would be about over 20. Do your Math AK and research before you argue….

#60 Choices — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate | The Affluent Boomer™ on 05.01.13 at 10:07 pm

[...] 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. Continue reading → [...]

#61 Retired WI Curmudgeon on 05.01.13 at 10:07 pm

Garth, nice honest tell-it-like-it-is blog. Now I more understand the man, the teacher, the patient guy. No wonder you got voted out of office. No politician I have ever talked with could be that frank, and honest. The voters would never understand truth, and reality.

You are correct, and as a retired guy now, who has done OK by US standards (I do not know how this would translate in the Canadian view).

Home paid. Investments now nearing $700K. Wife set to retire this year at 62. No bills. Our diversified investments have been going CRAZY the last few years. No precious metals, some foreign, some US stock, Bonds, and REITS in US INDEX funds. Annual fees about .10 to .14 % per year.

I like dividend paying stocks and have some of those, too (about 15% of the investments).

All started with a mere at work. 10% into my Tax deferred 401K with the Bosses 4% match. Later we started our ROTH accounts (no tax on withdrawals later). Now, shifting 401K money into the ROTH’s and paying the government their taxes. Moving it slowly, as I have 10 years before any mandatory withdrawals I can shift it while paying only 15% tax rate. Then, NO more taxes!!

Enjoy a small pension from the former employer which include health care at group rates. Plan to live off the wife’s old age pension at 62 for her, letting mine “age” at a benefit increase at 6% a year til 66 my normal retirement age then if don’t use it, it will “age” at a growth rate of 8% until I am 70.

Who said planning for retirement HAD to be impossible?
This is 2 people married for 40 years, mere high school grads, who have a work ethic, and blame no one, but ourselves for the happy circumstance we now find ourselves.

Thanks, for telling it straight!

#62 AK on 05.01.13 at 10:09 pm

#48 Happity on 05.01.13 at 9:43 pm
You can ride the balanced portfolio approach, but the markets are goosed admittedly by the central banks. These are the same institutions that propped up the housing bubble, and Big Ben said everything was fine, trust him. And then real estate collapsed.

Central banks will not tell the little guy when they pull out of stocks, you can trust them on that too.
——————————————————————–

Try following the Warren Buffett model.

It works…

#63 Dean Mason on 05.01.13 at 10:09 pm

# 40 happy renter

You will get nowhere financially with that buy real estate and rent it out philosophy.Show me all the revenue,rent coming in and expenses going out.What about the risk of falling real estate prices and all the expenses you have buying and selling the house of at least 10% to 12% of the house’s value.

Even if you look at $800*12=$9,600/$280,000=3.42%. You are taking a great deal of risk and not being rewarded.you can get 3.50% to 3.60% on provincial bonds with any of the risks,hassles and extra taxes,fees,costs of owing physical real estate.

#64 Freedom85 on 05.01.13 at 10:11 pm

Garth,

I would appreciate seeing the annualized rates of return the last 10 years to get a true idea of wealth creation over a decade.

Happity #42

Precious metals are being gobbled up because emerging nation investors are speaking with their wallets. Physical is in, while the western nations are pushing paper….beware of this.

Bail-ins in Cyprus are official and here is what are Federal Reserve Board member had to say about it happening in the US (Canada by default):

http://www.zerohedge.com/print/473062

Hey, you can deny, deny, deny, all you want, yet I observe the actions. The actions of officials are to lie to you but do whatever will keep them in control of the printing press. Wake up people. The system is breaking at an accelerating rate, that’s why the printing press is full on. It can’t end or so will end our standard of living.

The stock market is rising for one reason and one reason only. Massive amount of newly created money is continually pushed into the system every day through POMO activity at the Federal Reserve. It is likely to continue for the foreseeable future…who knows, so enjoy your stock gains.

#65 Up, up, and away... on 05.01.13 at 10:12 pm

We’ve never seen stock market ramp in the past 30+ years. Not in the 1980s, 1990s, or in 2000s. This is truly an unprecedented ramp…

#66 bill on 05.01.13 at 10:13 pm

18 al on 05.01.13 at 8:35 pm : how’s that not rigged??
stock market seems to work great for me.
follow garth’s advice. it may seem boring to collect money through dividends but its fine by me.
and any excitement I need trading stock the venture exchange provides.
its fun to collect money from either one.

didnt get to adjust my investments during this recent ‘selloff’ as they didnt go down far enough to warrant buying some more….
oh well maybe next time.
”more tt vicar?”
http://www.youtube.com/watch?v=e0UoSBIunZw

#67 Andrewski on 05.01.13 at 10:13 pm

Re #56 Vandamncouver

TNL@TB = The Nice Lady @ The Bank

#68 Shawn on 05.01.13 at 10:13 pm

Blase at 44.

About your success with Berkshire and Walmart and others and your learning.

Great post. I also had strong gains on Berkshire and Walmart buying around the same time as you.

But not everyone can think this (smart) way, and after all we who think this way do need someone to beat in the market. To those who sold their Berkshire to you and me below book value and their Walmart to you and me at cheap prices. Thank You!!

#69 Gamblor on 05.01.13 at 10:22 pm

The TSX Venture is hovering around 2003-2004 levels? See any opportunities there?

#70 Nick_L on 05.01.13 at 10:22 pm

#11 – penny dreadful: Useful faq on tfsa usage.

http://www.moneysense.ca/2010/10/04/tfsa-truth-rumours/

#71 blase on 05.01.13 at 10:23 pm

TNL@TB:

The Nice Lady at The Bank

#72 Patz on 05.01.13 at 10:32 pm

Story in Hufpo “shorting Canadian banks” but whadda they know? Right?
“A hedge fund in California is going “all in” against Canada’s economy, The Globe and Mail reports. San Francisco-based Hyphen Partners LP is putting 95 per cent of its clients’ assets into bets against Canada’s housing market and banks.”
http://tiny.cc/ylqfww

#73 Frustrated Kiwi on 05.01.13 at 10:33 pm

Good post as usual and agree with it all except “Europe continues to stabilize.” Here’s what I’m reading:
http://www.macrobusiness.com.au/2013/05/europes-depression-worsens/
Certainly not looking good for the Dutch:
http://www.macrobusiness.com.au/2013/05/dutch-economic-crisis-worsens/
Or the Spanish:
http://www.bbc.co.uk/news/business-22305953
A Google search on Europe stabalize didn’t bring up any good news stories that I could see. Am I missing some obvious data?

#74 Really? on 05.01.13 at 10:36 pm

Garth’s delusions: …”The US gets stronger monthly.Europe continues to stabilize.”…
In today’s news:
http://www.reuters.com/article/2013/05/01/us-markets-global-idUSBRE88901C20130501

David Stockman, is the author of “The Great Deformation: The Corruption of Capitalism in America,
He says:The U.S. economy is in a bubble inflated by “phony money” from the Federal Reserve and will burst within a few years, warned David Stockman, who was budget director for President Ronald Reagan.
Stockman wrote that the Fed’s quantitative easing policies following the credit crisis have flooded stock markets with cash even while the “Main Street economy” remains weak. The combination, he wrote, is “unsustainable.”“When it bursts, there will be no new round of bailouts like the ones the banks got in 2008,” wrote Stockman, a former senior managing director at Blackstone Group LP (BX) and a former Republican congressman from Michigan. “Instead, America will descend into an era of zero-sum austerity and virulent political conflict, extinguishing even today’s feeble remnants of economic growth.”

http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=all
http://www.bloomberg.com/news/2013-03-31/stockman-warns-of-crash-of-fed-fueled-bubble-economy.html
http://moneymorning.com/2013/04/30/david-stockman-thanks-to-the-fed-were-in-monetary-fantasyland/
http://www.youtube.com/watch?feature=player_embedded&v=uF9UJh8bU70
http://www.youtube.com/watch?NR=1&v=Zi1g_PmtQHA&feature=endscreen

Fear sells. Looks like you’re buying. Good luck. — Garth

#75 meslippery on 05.01.13 at 10:37 pm

# 27 Smoking Man
A game of chess perhaps ?
chess.com
Play as many at the same time as you want.

#76 Gg on 05.01.13 at 10:40 pm

Actually the Japan stock market and yen in gold are at par.

#77 Top Dog on 05.01.13 at 10:45 pm

#27 Smoking Man on 05.01.13 at 8:53 pm
#10 TurnerNation on 05.01.13 at 8:25 pm

Yeah Smoking man I didn’t see you at Csis’s table. About your dossier…
…………
Ha, it’s okay they’re a bit out alphad when it comes to me, they only know how to play two dementional chess. I play 5 simultaneously games of 3 dementional chess…

LOL Smoking man, it is comments that like that make me Ctrl-F “smoking man”

Is there anything SM can’t do? Personally, I’d like to see Smoking man play Kasparov and wipe the floor with him!

#78 al on 05.01.13 at 10:46 pm

#67 bill: guess some investors get lucky, as for
“..didnt get to adjust my investments during this recent ‘selloff’ as they didnt go down far enough to warrant buying some more….” – the pros would never ever double down on sell off – simply there is no way to predict what the stock is going to do.
the pros would set the limit and dump everything not based on some gut feeling but, as an example, maybe on 3% drop
yet again, as mentioned, up to 70% of the trades are run on the algorithms developed for the folks who play with 100s of millions every day.
if anybody thinks they can compete, analyze, predict etc the stock behaviour under those conditions, it’s their choice.

#79 Top Dog on 05.01.13 at 10:48 pm

#11 – penny dreadful: Useful faq on tfsa usage.

http://www.moneysense.ca/2010/10/04/tfsa-truth-rumours/

People need to read up more on finance and spend a little less time following the leafs…

#80 Shawn on 05.01.13 at 10:51 pm

Gold is for Dummies at 60 said:

Without 0 percent interest rates and American corporate tax cuts, the earnings would be about over 20.

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

I think there is some truth to the low interest rate having boosted profits. But also ultra low interest rates mean that a P/E 20 would not be that unreasonable.

As to corporate tax cuts. We had a LOT of that in Canada. Not so much in the U.S. of A. Corporate taxes there are far higher than Canada.

Doom at your own risk.

#81 Notta Sheeple on 05.01.13 at 10:51 pm

Of course the game is rigged.

Here we have a supposedly ‘free market’ government which Harpocritically props up the incomes of agricultural marketing boards, while simultaneously crushing middle class incomes with temporary foreign workers at 15 percent less than market value, an arsonist finance minister soaking the housing market in gasoline and then showing later as a hero with a Super-Soaker, a central banker dealing out crack cocaine of easy credit, then sprinkle in a few Frank Dunn’s, Jeoffrey Skilling’s, Conrad Black’s, Chris Mazza’s, and other teflon characters of ill repute.

Does the average Joe have a right to be cynical and jaded?

Absolutely.

#82 Top Dog on 05.01.13 at 10:51 pm

#55 Canadian Watchdog on 05.01.13 at 9:51 pm
TO homes sold csv data for April can be copied here.

Remember TREB’s data only shows what’s below the line.

2012/10 C2492444 100 PEMBERTON AVE $1,980,000
2012/11 C2492444 100 PEMBERTON AVE $1,790,000
2012/11 C2514751 100 PEMBERTON AVE $1,768,000
—————————————————————————-

2013/02 C2549222 100 PEMBERTON AVE $1,750,000
2013/02 C2549222 100 PEMBERTON AVE $1,680,000
2013/04 C2549222 100 PEMBERTON AVE $1,588,000 Sold

I love you man. I hate to ask for your secret sauce, but how do you find links to all that TREB data?

#83 Nebbio on 05.01.13 at 10:53 pm

People with more than 200K are rich…..what?

#84 AK on 05.01.13 at 11:00 pm

#60 GoldisForDummies on 05.01.13 at 10:07 pm
“Yo AK #37, funny you mentioned about S&P 500′s forward earnings. Without 0 percent interest rates and American corporate tax cuts, the earnings would be about over 20. Do your Math AK and research before you argue….”
——————————————————————–
Moote point, Dude.

Once interest rates start to rise, there will be other businesses that will do well in that environment.

#85 Uh Oh Canada on 05.01.13 at 11:00 pm

Not a doomer and neither do I have my head in the sand. Anyone who’s studied world history knows that history repeats itself.

#86 AK on 05.01.13 at 11:04 pm

#66 Up, up, and away… on 05.01.13 at 10:12 pm
“We’ve never seen stock market ramp in the past 30+ years. Not in the 1980s, 1990s, or in 2000s. This is truly an unprecedented ramp…”
——————————————————————–
WTF? Where have you been.

Try checking between 1991 and 2000.

#87 Tony from Calgary on 05.01.13 at 11:14 pm

“Vast numbers think financial markets are rigged, and stock markets are ponzis.”

Probably because they are:

http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425

The fact you would deny it is as disingenuous as the lies coming from the house pumpers you so zealously criticize.

Rolling Stone? Yes, I get all my best investment advice there. — Garth

#88 happy renter on 05.01.13 at 11:17 pm

For $50,000 I’ll get $800+ per month net and in 15-20 years the house will be paid off. So tell me what is wrong with that?

#89 espressobob on 05.01.13 at 11:21 pm

Maybe the moral of this story is simply the younger gen will sign for debt beyond their ability to service.

Somehow us boomers set a bad example.

Lets hope that education in all its forms stems this tide!

#90 Wondering on the Island on 05.01.13 at 11:29 pm

Having watched the insanity of the Vancouver Market from a safe distance, I’m in agreement with your outlook on housing. However I’m struggling with the concept of the American economy reviving.

What do you see as the driver? The dot com, then the real estate bubbles seem to have been the things keeping the middle class afloat in a world of no wage increases before the GFC. Currently the Finance, Insurance, Real Estate model seems pretty iffy, although some real estate (then renos, etc) is coming back, but the banking and finance to have a pretty tough outlook for the minions. It appears that non military manufacturing is going, either offshore or to robotics, and the sequester cuts appear ready to cut back on the military machine. And anybody who’s job can be done on a computer is also at risk of outsourcing.

If most of the jobs for the masses are retail and service, where is the money coming from to pay down their debts and trigger the revival of the consumer economy?

#91 neo on 05.01.13 at 11:32 pm

“Europe continues the stabilize”. Un-flipping-believable. You are truly clueless Garth.

Just the counter-argument I expected. — Garth

So if they actually do cut rates as many expect because things aren’t stable, then what?

Only 40% of S&P 500 saw revenue growth. A “recovery” would be showing up there. Clueless is harsh. That said, continually using Japan and Europe to support your robust recovery thesis is flawed and a reach.

#92 Tom Vu on 05.01.13 at 11:33 pm

Tip:

Nudge Nudge wink wink say no more…..Goldman Sachs High frequency trading computer says buy stocks with vowels ( No…. you can’t buy a letter ).

#93 Spiltbongwater on 05.01.13 at 11:36 pm

The people who ask what does TNL@TB mean, are nearly as bad as the people who post first. If this is Vandamncouvers first visit here and possibly first time using the interwebs s/he is excused if not,
http://lmgtfy.com/?q=tnl%40tb

#94 Inglorious Investor on 05.01.13 at 11:37 pm

Garth, I agree with much of what you say. However, you seem to ignore the evidence that refutes many of your claims.

I have no agenda. I am not a gold bug, or a hater of central banks, or a conspiracy theorist. I am asset agnostic. I invest in stocks, bonds, ETFs, gold, etc. I only go by what I learn through my own research.

Financial markets ARE rigged and/or corrupt. LIBOR. ISDAfix. HFT’s. Abacus (Goldman Sachs). Money laundering by banks (e.g. HSBC). Bail ins (e.g. Cyprus). The retroactive repeal of Glass-Steagall for the benefit of Citi Bank). Just to name a few. I can go on.

The blowhard on Mad Money admitted that he and other hedge fund managers manipulate the markets for short-term gains. I also know someone at CIBC Capital Markets who admitted their head prop traders manipulate stock prices regularly. Can they actually direct markets over the long-term? The small fry, no. But when the world’s largest banks collude to manipulate the very price of money (e.g. LIBOR) that does have “global” consequences.

Central banks play an important role, but they were created primarily to serve the big banks and the short-term interests of politicians, not “we the people.” Consequently, we have an insane monetary system in which banks “print” their own profits through monetary inflation and we have to pay them back with the proceeds of real assets. In short, it’s a wealth transfer scam akin to an old-fashioned casino skim.

Loans do not come from deposits; they come out of thin air from reserves created by the Fed. The Fed even says so. Here is a quote from their own document, Modern Money Mechanics: “Of course, they [banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created.”

Our money may not be technically ‘fiat’ because it is actually debt. And look where that’s got us. A system that needs every expanding debt. But when the debt-carrying capacity runs out, they fill the void by stealing the wealth of the people, either via inflation, or actual confiscation. Did it before. They are doing it again.

You may not like gold, but it has a history as money and a store of value that goes back thousands of years. Even today, when people lose faith in governments (or their currencies), they turn to gold. While paper gold declines, bullion sales are skyrocketing. Spot is anything but spot-on right now. You were right to sell your gold at $1,900 if you held it as a trade. As insurance against government stupidity, you hold it. Those who deride Schiff should go back and check his predictions on the US economy and the housing market. People said he was nuts. No, he was right. Not a fan, just observing.

Governments are increasingly going after our wealth, and our freedoms. Obama’s record is clear for those who choose to look beyond the charm. They have eviscerated the US Constitution and are shutting all doors on economic freedoms as the IRS goes global beyond US borders to claw at whatever they can find. They manipulate CPI to make inflation look lower than it really is. Now they are playing with GDP to inflate economic growth figures.

Many wealthy people ARE criminals, but perhaps no more so than people in any other socio-economic group. Only the crimes of the super wealthy usually carry far greater consequences. David Siegel of Westgate Resorts admitted that he fixed the 2000 election in Florida for W., saying that what he did was not “entirely legal.” No wonder W. declared before the election,”…you can write it [victory in Florida] down.”

As for stock market returns, you can always pick and choose time frames to make returns look good or bad. How has the S&P down over the last, say five years? Ten years? Since its peak in 2000? What are the annual returns from these points? Inflation adjusted?

So, yeah, you were right about some things. You’ve also been wrong about some things. Whatever. All I say is, for the sake of your readers, many of whom worship your every word, just be objective and honest about what’s going on. Or state your biases and agenda up front and deal with them honestly. Your readers deserve that much.

#95 OlderbutWiser on 05.01.13 at 11:55 pm

#65 – Freedom85 wrote: “The stock market is rising for one reason and one reason only. Massive amount of newly created money is continually pushed into the system every day through POMO activity at the Federal Reserve. It is likely to continue for the foreseeable future…who knows, so enjoy your stock gains.
*****************************

Freedom, I noticed that you are a fellow reader of Zerohedge. I find that they are an excellent resource for news on the global economy but you need to be aware that they have a serious doom and gloom bent. To be successful, investors need to be aware of their own personal bias – if you are a doom and gloomer (D&G), then you will be drawn to read and agree with everything that has a D&G bias. You will subconsiously dismiss most everything that does meet your D&G perspective. As a result, you will make statements like the one above. It is what agrees with your own personal bias. You will also likely fail as an investor because you will avoid the stock market.

Garth is clearly not a D&G. Instead of dismissing him, perhaps you should spend some time trying to understand why he has a different perspective. Perhaps there ARE other reasons for the stock market to climb. Perhaps if you had a look at the financial statements of those stocks that are climbing, oh…I don’t know…maybe earnings, free cash flow, dividends, interest coverage, debt to equity, payout ratios etc…you may be able to accept that the D&G perspective is not the only possible scenario.

I believe that failure to understand your own personal bias is what makes most people fail at investing. It took me a long time to both recognize my own and then to do something about it.

#96 Brian P on 05.02.13 at 12:04 am

Garth,
Your dedication to educate people on logical investing is greatly appreciated because this era of defined contribution pensions replacing defined benefit pensions is the hidden time bomb that can destroy the generation that are just starting their working careers. Yes real estate is the greatest short term risk to net worth but when you buy the next more expensive house its reduction in price generally exceeds the loss on the one you are selling.
Unfortunately your message is lost on them because you are viewed to attack the most important thing they have that defines success which is to have their own house. They also do not appreciate your advice on investment because that is far down the “to do” list they have for their lives.
You need a better approach to get your message to this younger generation so maybe a book on how to own your own home and secure your financial future would work better.
PS Still collecting data but I believe your opinion to not own individual securities is better even if you have 7 figures to invest.

#97 T.O. Bubble Boy on 05.02.13 at 12:22 am

A race to the bottom is definitely on in the Canadian mortgage industry… first the 2.99% rates, and now the battle of the cash backs (which were supposed to be eliminated):

CIBC — new promotions for 3%: https://www.cibc.com/ca/focus/spring-13/mortgage-offer.html

(but still offer 5% cash back apparently):
https://www.cibc.com/ca/mortgages/cash-back-mortgage.html

TD — 5%:
http://www.tdcanadatrust.com/products-services/banking/mortgages/view-all-our-mortgages/5-cashback.jsp

RBC — up to 7% (max of $20,000):
http://www.rbcroyalbank.com/mortgages/cash-back-mortgage.html

Scotia — still says up to 5% cash back:
http://www.scotiabank.com/ca/en/0,,216,00.html

… but wait, weren’t these “zero down” (5% cash back on 5% down payment) mortgages supposed to go away?

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2012/09/banks-to-end-cashback-down-payments.html

#98 Freedom First on 05.02.13 at 12:22 am

Nice article Garth! I remain amazed at how kind you are in pointing out the character flaws/ignorance/insane thinking of some of the posters on your free blog.

As I have said before, the unhealthy thinking that leads to ruin in every area of ones life includes: self-pity, blame, criticism, assuming, and judgementalism over what one cannot control. Best advice ever given to me about all of the above: avoid negative people as there is no arguing with insanity. Waste of time.

#99 Mithan on 05.02.13 at 12:24 am

Lol. Since I was 13 I have know what money meant:
Freedom

It is somewhat funny to see Garth say that. Everybody in my life tends to disagree with that when I say it.

#100 Tom Vu on 05.02.13 at 12:27 am

Also:

One of my clients Mr. S.A.TAN wondering about Maple Leafs.

I tell him not to worry…..sell off refrigeration and air conditioning stock or get stuck.

#101 Vangrrl on 05.02.13 at 12:54 am

#9 West Vanner

Gearing up for a hot and sunny weekend (mid 20s predicted)- you’re from Van and you go to Maui in May of all months??
Well, enjoy!

#102 Gary M on 05.02.13 at 1:06 am

A central banker orders a pizza. Guy asks if he wants it cut into 6 or 8 slices. Central banker says, ’8 please. I’m very hungry today.’

#103 Agio on 05.02.13 at 1:17 am

Not 1st @ 20
In 1987 I bought a bankrupt bar for 56k and in late 1989 sold it for 740k. You made a move pre-boom , scored and ‘retired’ at 40. Here’s a cookie. Your good fortune or as you may see it, financial accumen has dick to do with Turner’s post, your average person and their investments or lack thereof. Keep the epeen in your virtual pants and go make another quick million.

#104 VIVE LA FRANCE on 05.02.13 at 1:21 am

After living here in France for the last 18 month, I am still baffled how unfazed this country is by all the turmoil.

Crisis all around it, even within the country and yet the people shrug as if it does not apply to their daily lives.
Maybe we listen to too much bad news and not enough good news. I don’t know.

But yes, Europe keeps marching on. Merkel leads, the rest (has to) follow.

#105 Dorf on 05.02.13 at 1:29 am

Garth, tell me a story…..

Me and mine are young urban mansion owners with kids. We bought a $600,000 home, which is 4x our annual income. We put 5% down.

Disregarding property taxes, maintenance, repairs, paint and wallpaper, please tell me about our future at 15 years into a 25 year mortgage, with the following variables:

- R/E in our area drops only 20% in the next five years, stays there for 8 years, then it increases 5% in year 14 and stays there for the remainder of the 25 years.
- interest rates remain at 4% for the next five years, then they rise to 5% in year six and then 6% in year 7, and stay at 6% through the duration of the 25 year period.
- in year 14, I suddenly get laid off from my job and for the next year, I am getting only 55% of my usual income before finding another job for the same income as I had in my previous job (my partner and I make exactly the same income).

Where are we now, and what of the next ten years ?

Will we own our house at year 25, and how much will we have paid for it in total, just based on the information provided ?

#106 T.O. Bubble Boy on 05.02.13 at 1:30 am

Is stock-pumper central (CNBC) suddenly becoming “balanced”?
http://www.cnbc.com/id/100697773

“…analysts now say the best strategy may be to keep hold of both types of assets (stocks and bonds) given mixed signals for the world economy…”

(ya think?)

#107 Tony on 05.02.13 at 1:57 am

Re: #17 AK on 05.01.13 at 8:31 pm

It’s to their advantage to lie because most CEO’s have stock options. This is the only way they can unload their worthless shares.

Companies give shares to execs for the same reason they give them to workers. Work hard, profit. — Garth

#108 m on 05.02.13 at 2:02 am

The Pic: reminded me of the Thomas Hardy story. The lord of the manor drained the pond and there they were, the missing guests, in a young lovers’ embrace at the bottom of the pond. Well, at least they are together. It could be worse. They could be forced to listen to the BC election debate. Good god, that was bad…except for the Green Party candidate Sterk (no hope of election) and Cummins (who is homophobic and also no hope of election). At least those two were responsive as opposed to “stick to the message” robotic spew factories. They must really think we are stupid….end of rant.

#109 Victor Y on 05.02.13 at 2:20 am

the wall st is greedy bunch just like most of us.
hence the equity market is pertty a ponzy game.
The real question is when it might blow up.

#110 Bubu on 05.02.13 at 2:20 am

Don’t like the tinfoil hat sites?
Look at this site; it (almost) always makes me happy.
http://www.humansofnewyork.com/

Quote from one of todays featured people:
““The wasted wealth in this city is unbelievable. You have people living on the streets, while other people renovate multi-million dollar townhouses that they only live in for a few weeks out of the year.”

“So what do you want in life?”

“A farm in Ireland, a place in New York, and a house in Alabama with a big front porch.”

“Isn’t that what you were just criticizing?”

“I said it was wrong! I didn’t say I wasn’t envious!”

#111 daystar on 05.02.13 at 2:22 am

Lol, ok ok OK! I admit it Garth! I don’t like banks! They have CEO’s that lie to folks about not shipping jobs over seas when they do just that and then CEO’s like Gordon Nixon make apologies that are fitting only to the shareholder when caught, shareholders namely being themselves. I find our banking leaders to be quite greedy and have ran up household debt like no other while incomes have remained flat making themselves fat while leaving middle class Canadians prone to any meaningful rise in rates.

To me, that’s bad business. Household debt has risen from 115% debt to GDP in early 06′ (since Harper began his stint as PM) to 165%, a 50% increase in just 7 short years while incomes have risen just over 8% since that time. How does one spell overextension and over indebtedness? And what do banks do about it? Reduce incomes they pay to their employees by shipping jobs overseas. These greedy lying banksters did it not for you or me or anyone else, they did it for their greedy selves.

So ok… I have an angst with banksters and I believe in that light, so should we all. Is it enough to blow things up? I wouldn’t think so Garth except for this dreadful feeling that there is something on the way and its not good for any economies world wide. Its not related to fiat, government, currencies, gold, stock markets, grubbin’ money hoarders, criminals wealthy or poor… no, its darker than this because its related to populations and consumer market share. Check it out:

http://www.forbes.com/sites/scottgottlieb/2013/04/30/were-not-prepared-for-chinas-deadly-bird-flu/

http://www.reuters.com/article/2013/05/01/us-birdflu-threat-idUSBRE94011D20130501

http://www.bbc.co.uk/news/health-22364628

http://www.bloomberg.com/news/2013-04-30/scientists-infect-chicks-in-race-to-halt-bird-flu-spread.html

Do a web search on it. Every single major news outlet is reporting this story. Its either another controlled propaganda spin for HMO’s and pharmas… or its real. I don’t like this one Garth. Not one bit. It could take 2 or 3 years to literally go viral, but keep your eye on the ball as this one mutates quickly. The Spanish flu has been proven to originate with birds and killed between 10 to 20% of those it came in contact with, wiping out between 3 and 5% of the population within 2 short years.

http://en.wikipedia.org/wiki/1918_flu_pandemic

http://www.independent.ie/world-news/asia-pacific/deadly-birdflu-virus-in-china-could-lead-to-a-global-pandemic-29236988.html

A clip from the above link:

“The virus has infected people of all age groups, from two to 81, suggesting that humans have no natural immunity to it.

So far, 20pc of victims have died, 20pc are recovering and the rest remain ill. In fatal cases, the virus has triggered sepsis leading to multiple organ failure.

Leading British expert Professor Peter Openshaw, director of the Centre for Respiratory Infection at Imperial College London, said: “This is a very, very serious disease in those who have been infected. So if this were to become more widespread it would be an extraordinarily devastating outbreak.

“It’s very unusual to see more than 100 new cases in a very short time period. I think it’s definitely something we need to be concerned about.”

#112 Stoopid Idiot on 05.02.13 at 2:41 am

Our system is so stinkin’ corrupt that we owe Sodom and Gomorrah an apology.

–Dan Norcini, 2009

#113 angel on 05.02.13 at 2:41 am

The US imports much more than it exports. If the value of the dollar goes down it hurts the economy more than it helps. In 2010, U.S. exports amounted to $1.3 trillion and imports amounted to $1.9 trillion. Trade deficit was around $600 billion. A weaker dollar means that $1.3 trillion part of your economy can do a bit better but that a bigger $1.9 part of your economy suffers. This is not a win.

However, the world reserve currency can win by printing money, for awhile. If the US prints another $1 trillion dollars they get $1 trillion dollars. Now existing dollars and bonds everywhere will lose about the same total value. But half of the dollars and bonds are outside the US. So the people inside the US lose $500 billion and gain $1 trillion, for a net win of $500 billion. The people outside the US lose $500 billion. In effect the US is able to collect an inflation tax from the rest of the world. At some point the rest of the world will no longer put up with this and so will stop holding so many dollars.
The numbers dont lie
just want to know if this is conspiracy or realist

#114 Buy? Curious? on 05.02.13 at 2:51 am

4.3% Woohoo! Toronto Rocks! For just living in an asset? Right on! Add that to my BP stocks and I’m laughing! Laughing all the way to the bank!

Go Leafs Go!

http://www.youtube.com/watch?v=bCW3vL6tNKs

#115 Humpty Dumpty on 05.02.13 at 3:35 am

This choice, might just abolish their freedoms….

PENTAGON TAPS ANTI-CHRISTIAN EXTREMIST FOR RELIGIOUS TOLERANCE POLICY

Weinstein is the head of the Military Religious Freedom Foundation, and says Christians–including chaplains–sharing the gospel of Jesus Christ in the military are guilty of “treason,” and of committing an act of “spiritual rape” as serious a crime as “sexual assault.” He also asserted that Christians sharing their faith in the military are “enemies of the Constitution.”

Under federal law, the penalty for treason is death. And the Obama administration is sitting down to talk with this man to craft new policies for “religious tolerance” in our military.

http://www.nowtheendbegins.com/blog/?p=13866

Tin foil hats may not apply… White pointy hoods only…

#116 BoomerangGuy on 05.02.13 at 5:38 am

Money is not ‘made’ in the financial markets – it is transferred from losers to (mostly) market makers.

Price charts show how much money you could have made… in hind sight

ETF’s are as risky as any other market that’s handled by market makers.

A balanced portfolio only works if some lose some gain, or all gain. If all lose, it’s a major losing proposition…

Garth, you are selling hope to the masses just as do run-of-the-mill brokers. Shameful.

Sad to hear people like you, and so many others, articulate your ignorance. Value is added every single day as companies are created or grow, and equity markets reflect that. A balanced portfolio typically has fixed income (Bonds, preferreds, for example) and growth assets (equity-based, REITs, for example). Many are negatively correlated, which is precisely the point of balance. Growth assets and safe assets. What a scary thought! — Garth

#117 William Bydon on 05.02.13 at 6:28 am

Perhaps you could explain why you think that your ‘analysis’ of the world economy is so much more accurate than Goldman Sachs’:

http://www.zerohedge.com/news/2013-05-01/goldman-confirms-global-slowdown-deepening

My portfolio has done extremely well for years. I speak from experience, not vapours. And you? — Garth

#118 Ronaldo on 05.02.13 at 7:15 am

#83 Nebbio – ”People with more than 200K are rich…..what?”

Well, yes, according to the link below. Apparently only 8% of the adult world pop. or 373 million, have assets exceeding $100,000 U.S. dollars. Amazing isn’t it?

https://infocus.credit-suisse.com/app/article/index.cfm?fuseaction=OpenArticle&aoid=368968&coid=118&lang=EN

#119 Raven on 05.02.13 at 7:26 am

The herd instinct among forecasters make sheep look like independent thinkers!

This is the herd! Moooooooo…….!

#120 Tony Right on 05.02.13 at 7:29 am

Any comments about the 1.9% mortgage rate that is apparently in the pipeline, as per Canadian Business?

A writer made that up. Gullible much? — Garth

#121 GTA bidding wars debunked -all in one map May 1 on 05.02.13 at 7:29 am

Now you have an all in one map, you do not need to wait any more for the day when the map for your specific area is released. It will be released daily together with the Toronto map.

http://recharts.blogspot.ca/2013/05/gta-burbs-all-in-one-may-1.html

PS: sorry but a GTA burbs + Toronto it is not technically possible for me yet (investigating this)

#122 Craig on 05.02.13 at 8:01 am

For 3 months we’ve been looking into selling and then renting a place and investing that cash in a balanced portfolio.

We’ve looked at the cost of selling, moving and renting. The monthly rent payments vs not paying property taxes, maintenance, etc.

We crunched the numbers on the net sale of the house at 7% investment return and from that subtracted the rent (-minus property taxes)

Surprisingly, there was not much difference between our net savings, if we rent.

Maybe I’m missing something here so here are my numbers;

Net $600K for the house after everything.

Rent $2000 a month at least.

We will not move to a dump or lower our standards to save a few bucks. Otherwise what’s the point. We have to compare apples to apples, therefore to do a fair comparison our quality of life must be equal in the environment we own in versus the one we might rent in.

Property taxes $4,400.

Use Garths 7% annual return

Now the fun begins where you have to make certain assumptions;

What % will housing drop?

Lets use 20% – over the next 5 years – reasonable no? (I’m talking GTA)

So my net drops to $480, meaning I would lose $120K if I hold onto the house.

Make sense so far?

So 7% return on $600K is Gross $42K, after Capital gains it’s around $32K

So I net $32K and my Rent is $24K, minus my property taxes = $20K ( a bit lower but easier to use round figures)

So I Net $12K a year renting

I win….but…what if I don’t make 7% on my investments…what if the markets crash….what if my house doesn’t drop 20% but only 10%?

This is the risk I’m struggling with. Am I totally out to lunch here?

Did I screw up the numbers somewhere?

Any opinions / direction would be appreciated.

By assuming your rent will be paid by your new investment stream you neglect the income currently paying your housing costs, which will presumably be added to your portfolio. Also consider no growth in real estate for a decade or so. Do you have enough liquid assets to build a retirement nest egg? Educate your kids? The key is not necessarily to dump the house, but to diversify. You might accomplish part of that by removing a portion of the house equity and spreading it over financial assets. — Garth

#123 HogtownIndebted on 05.02.13 at 8:11 am

What’s this? Realtors getting so frustrated with sales dropping they are playing the homophobia card?

http://www.thestar.com/news/gta/2013/05/02/real_estate_agent_under_fire_for_antigay_brochure.html

Yep, the gays must be responsible for the bubble deflating….and the Leafs….and Rob Ford getting elected….and global warming……….and……….

#124 Small Town Steve on 05.02.13 at 8:12 am

Oh snap, my portfolio lost .15% today. So I bought some more “stuff” at a discount when everyone was selling. When it jumps back up I will “rebalance” a bit by buying some more bond ETF’s. I’ve been looking at rounding out with some XRB but it keeps dropping which leads me to believe we are in a deflationary situation.(as Garth has pointed out we are headed that way). So for now I am looking for another bond fund to add to the mix(maybe CBO.TO)

Hey on a global diversification aside has anyone a rational opinion on DPJP? To me it is looking better than DXJ. To err on the side of caution I am considering 5% of my global allocation going to this ETF.

#125 Small Town Steve on 05.02.13 at 8:26 am

I know I just posted but upon further reading of all the negativity towards “banksters” and all this talk of greed and the markets being Ponzi schemes . There is a nice place in this world were almost every one shares your views. It is called North Korea. Go live there. You will be treated equally and your views will be admired! Pay no attention to the fact that you will be equally starving, equally oppressed and subject to possible torture just for the possibility that you might THINK a dissenting thought. Or thinking at all…

#126 TurnerNation on 05.02.13 at 8:27 am

A new high (low): Leslieville, ancient skinny rowhouse with facile reno goes for 701,000.

http://themashcanada.blogspot.ca/2013/04/sold-81-hiltz-avenue-leslieville.html

#127 Castaway on 05.02.13 at 8:27 am

Great article. You should do one on the developing bubble in Canadian farmland. Prices off the charts and as with residential RE bubble it is going to end badly for lot of people.

#128 squidly77 on 05.02.13 at 8:30 am

#95Inglorious Investor on 05.01.13 at 11:37 pm

just be objective and honest about what’s going on. Or state your biases and agenda up front and deal with them honestly.

Not quite sure what your problem is buddy, obviously your not a happy camper, but tell me this, please provide us with one reason why the author of this blog should satisfy your needs. If I were him I’d tell you to bog off and don’t bother reading this free site again.

You sir are responsible for the financial mess that you are very obviously in, please, I implore you, go bankrupt quietly and look in the mirror, your the one to blame, don’t blame other people for your emotional bad choices. Idiot!

Why didn’t the metal bugs sell there gold at $1,900, or there silver at $42? Emotions. Love, emotion, lust and greed will cost you dearly.

#129 Joe Bloggs on 05.02.13 at 8:30 am

“The conspiracy theorists.”

- what the hell is that? Sounds incoherent, could you elaborate Mr. Smart. Just curious…

#130 Craig on 05.02.13 at 8:31 am

By assuming your rent will be paid by your new investment stream you neglect the income currently paying your housing costs, which will presumably be added to your portfolio. Also consider no growth in real estate for a decade or so. Do you have enough liquid assets to build a retirement nest egg? Educate your kids? The key is not necessarily to dump the house, but to diversify. You might accomplish part of that by removing a portion of the house equity and spreading it over financial assets. — Garth

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

Thanks Garth for taking the time to respond, much appreciated.

” retirement nest egg?” – I have a company pension that I will receive. Is that what you mean? We have some investments but not much.

Kids have graduated University, are working and are out of the house.

” removing a portion of the house equity and spreading it over financial assets”

Does that mean borrow at todays low interest rates using some of the equity in the house?

What term would be good…3 years…5 years….longer?

If so, I like that idea….

Sounds like the bulk of your net worth is in real estate. Bad idea. Will your company pension replace at least 70% of your earned income? Is it a taxable RPP? Are you within 7 years of retirement? An equity loan is not for everyone, since borrowing always accentuates risk. But if you can get money at 3%, make the interest tax-deductible, and earn 7% on it, this is a strategy worth considering. First, get some professional advice. — Garth

#131 squidly77 on 05.02.13 at 8:38 am

With all the scandal surrounding SNC Lavilin, who coodhavvvhavknownn that their earnings would miss by 34%? I did. Shall I tell you what will happen to face book in the coming months?

#132 AK on 05.02.13 at 9:03 am

#131 squidly77 on 05.02.13 at 8:30 am
#95Inglorious Investor on 05.01.13 at 11:37 pm

Why didn’t the metal bugs sell there gold at $1,900, or there silver at $42? Emotions. Love, emotion, lust and greed will cost you dearly.
——————————————————————-
It’s because they listen to loud mouth Touts like Schiff, Faber and Roubini.

Hold on to your hats, Gold is going to $5,000.00. :-)

#133 Retired WI Boomer on 05.02.13 at 9:03 am

# 119 Ronaldo

I guess i’m one of the 8% in the world? That’s a hoot!

If we could not, 2 high school grads, only serious about debt & savings for the last 25-26 years, and we only had ONE year where our incomes -combined- went over $100K then any blooming idiot can do it. Get off your ass!

First, you need to pay off your existing credit debts, except house. Then you can really save quite a lot.

We started “saving” at the wrong time according to most finance guys. Still had consumer debts to pay off. The smart money would have been to pay that off first.

Today, everybody wants instant solutions.

Today, everybody listens to conspiracy nonsense on the internet. There is NO Bogie Man -but you!!

Today, everyone is an expert! They have all the answers, just ask them.

Today, I’ll just sit back, warm, secure, and smile at the nonsense.

#134 Craig on 05.02.13 at 9:09 am

” Sounds like the bulk of your net worth is in real estate. Bad idea. ”

Yes which is scary I know and we need to change that situation

“Will your company pension replace at least 70% of your earned income? ”

Closer to 60%

“Is it a taxable RPP? ”

Yes

” Are you within 7 years of retirement? ”

This year but my plan is to collect my pension and start my own business, which will hopefully offset the difference in income.

An equity loan is not for everyone, since borrowing always accentuates risk. But if you can get money at 3%, make the interest tax-deductible, and earn 7% on it, this is a strategy worth considering. First, get some professional advice. — Garth

#135 AK on 05.02.13 at 9:10 am

#131 squidly77 on 05.02.13 at 8:30 am
#95Inglorious Investor on 05.01.13 at 11:37 pm

Why didn’t the metal bugs sell there gold at $1,900, or there silver at $42? Emotions. Love, emotion, lust and greed will cost you dearly.
——————————————————————–
I forgot to mention that Eric Sprott continues to sell Silver.

Gee. I wonder why?

Eric Sprott sells big chunk of Silver

#136 Editor on 05.02.13 at 9:12 am

#116 Humpty Dumpty This choice, might just abolish their freedoms….PENTAGON TAPS ANTI-CHRISTIAN EXTREMIST FOR RELIGIOUS TOLERANCE POLICY

Actually, Humpt, the end-times Rapture website you posted reinforces in vivid terms why the Pentagon is looking to uphold the U.S. Constitution’s Establishment clause (written to keep religious influence out of government) and reduce the damage done by messianic Christian extremists in the military — not to mention their documented bigotry against members of other religious groups. That “muscular” evangelism has been, to say the least, counter-productive for military and its reputation overseas. Still, nice of these folks to share their concern with Fox News, ever a bastion of tolerance.

Also that posting has nothing to do with Canadian housing and sound financial management.

#137 AK on 05.02.13 at 9:16 am

Warren Buffett calls for America’s men to boost women in business

It’s about time

#138 economictsunami on 05.02.13 at 9:25 am

The unelected are driving the bus & yelling to the kids in the back to shut up.

As we keep on asking: “Recovery? Are we there yet?”

Soon, it will become more abundantly apparent, the global levitating illusion has reached it’s point of exhaustion.

Remember the lifeboat protocol. Bankers and politicians first…

#139 gotthardbahn on 05.02.13 at 9:27 am

A stock salesman saying everybody should buy stocks. How come that doesn’t surprise me?

It shouldn’t. But I don’t sell anything, and don’t buy stocks. — Garth

#140 VICTORIA TEA PARTY on 05.02.13 at 9:36 am

THE NEXT BIG THING…

…is how the US Fed will begin stepping down their QE pogrom (not program!) and its effects.

This is some of the key chatter to be seen on financial TV nets these days.

I believe that Fed chair Bernanke will step down this year and hand this task off to someone else.

The onset of the GFC in 2007-08 has resulted in money printing on a vast, vast scale; trillions of bucks flying all over the place and very little of it sticking to the lower levels of our societies to where it was supposedly intended to go but didn’t.

In the result, we have sluggish so-called growth and QE taking place in ALL industrialized countries in one form or another, including Canada.

I’m not damning or praising Mr. Ben.

History will decide, not me.

The only way I see QE being ended “harmlessly” is through some kind of “co-ordination” amongst the money printers themselves.

However, a wrench was thrown in the works this date with the Eurozone announcing an interest rate reduction, according to Zero Hedge:

“ECB Cuts Refinancing And Marginal Lending Rates By 25 bps And 50 bps, Respectively

1.The interest rate on the main refinancing operations…will be decreased by 25 basis points to 0.50%…

2.The interest rate on the marginal lending facility will be decreased by 50 basis points to 1.00%…

3.The interest rate on the deposit facility will remain unchanged at 0.00%.”

Bottom line here is to jazz up the still-floundering EU economy especially the now-flagging Germany.
This is just another form of QE!

In August, Ben will be absent from the Jackson Hole conflab in Wyoming, where the world’s central bankers go to chat for a few days, every year.

Big Ben says he has scheduling problems.

Fine.

MEANWHILE

Yes, the stock markets are back on track today and I’m in those institutions like many others. And will be for the duration.

Meanwhile, nothing wrong with holding a few gold and silver coins, though, sort of hobby because the coins look so nice!

As for the rich. I think they’ve been taxed enough. Sure, not all rich are created equally. Some make it on their own, others steal it and many more inherit the loot.

So what? Rich people generally have a larger economic footprints, creating more local jobs and wealth along the way. and they pay more taxes at the municipal levels for those extra houses they own!

You know we’re all in deep trouble (thanks QE) when governments, which fail to curb spending, yield to the whining grasping “poor” and go that last redistributive mile to whack the rich.

Remember, government: there are always going to be fewer rich that poor folks and one day EVERYONE would be poor.

Check out the history of the former Soviet Union. Redistribution caused untold suffering. It was the poor who got whacked the worst. The rich got merely killed.

Socialism. Terrific.

#141 fancy_pants on 05.02.13 at 9:43 am

#10 Screwed on 05.01.13 at 8:23 pm

On some level I get this completely. Land (aka supply) is a fixed constant. Money (aka demand) is a continuously growing variable (wee! its QE). Basic economics reveals that growing demand for a fixed supply = higher price.

I guess the flip side is when the growing demand is simply growing credit/debt, you get the bubble effect.

blah. so many variables, players and manipulators at the table to know how his giant global economic engine responds anymore.

#142 thiscountryis going down the toilet on 05.02.13 at 9:49 am

And something from the flipside.

“ECB Rate Cut

Well, if the Europeans were really out of the woods, demand would be growing again and birds would be chirping and green shoots would…Aw, forget it. Ain’t happening, as any damn fool (me) can see. So as a result, the European Central Bank this morning has cut interest rates to a measly one-half of one percent.

In case you’ve been Rip Van Winkled-out for the past 12 years, please try to remember I started telling you back in 2001 (with the collapse of the Internet Bubble which was distractified out of existence with the 9/11 sideshow) that we are in the Second Great Depression.

Since then, a series of ringmasters at the Federal Reserve Circus have been papering over everything in sight believing that if we can just print enough money, everything will work out.

Wrong. It was a bad idea then and it’s a bad idea now. It was a bad idea when the Housing bubblemeister St. Greenspan led the orchestra and it was a bad idea when current Fed czar Bernanke’s latest FOMC meeting notes included this Wednesday:

“To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative. The Committee will closely monitor incoming information on economic and financial developments in coming months. ”

Do you have any clue what this means?

Let me walk you through it. It means the Fed is going to make-up $1-trillion a year. With an economy sucking along at under $16-trillion in GDP we can see that 6% is being made up.

At some point this all ends badly…my bet is (if there’s no global coastal event this month) that we will sell in May and go away, have a summer rally so the returning fat cats can make a bundle selling short when the big market crash comes in the fall.

But all that’s obvious, so even if Elaine and I do want to move back to the Pacific Northwest to be near grandchild and our kids up thataway, I expect we’ll find a much cheaper home in 2014. For now, being on a self-sufficient spread, however humble, seems like a good thing. ”

This from George Ure over at Urban Survival

#143 Herb on 05.02.13 at 9:55 am

#27 SM,

“I play 5 simultaneously games of 3 dementional chess…”

You are being too modest! You forgot to add that you play your 5 simultaneous games of three-dimensional demented chess blindfolded.

#144 Pounding sand in Peachland on 05.02.13 at 9:55 am

you lost me @ ‘this blogs a fine example’

#145 Canadian Watchdog on 05.02.13 at 10:04 am

New Bank of Canada Governor may be announced today at 4pm.

Let’s go Ed Clark, lets go…

#146 Trapped in Vancouver on 05.02.13 at 10:11 am

I hate Vancouver and I wish I could move to Toronto.

But I just want to say that Vancouver has been enjoying some beautiful weather over the past few weeks. Blue sky, hardly any clouds, SUN!, warm temps but not too hot. It’s been perfect. It’s supposed to cloud over a bit today, but it will be back to summer weather by the weekend, with even warmer temps (especially in the inland suburbs of Surrey and Coquitlam).

Vancouver sucks the big one but when the weather is nice it does almost seem like one of the best places on Earth.

Remember last year? We had nonstop rain and cold temperatures right through to mid-July. We only had about 2 months of summer, from mid-July to mid-September. But this year it seems like summer started in April.

#147 Dlog Relis on 05.02.13 at 10:15 am

Garth if I left a Gold Bar on your front porch, would you take it inside & stash it? Or give it to your neighbour & wish them luck with it?? Lol.

Looking forward to this post being DELETED, lol.

#148 Canadian Watchdog on 05.02.13 at 10:18 am

Bloomberg: Canadian governments, at both the national and provincial levels, are courting skilled workers such as plumbers, pipefitters, electricians and others from the U.S. and elsewhere. Link

#149 I am in C on 05.02.13 at 10:26 am

http://www.thestar.com/business/real_estate/2013/05/02/wet_cold_month_leaves_homesellers_looking_for_ray_of_sunshine.html

According to Susan Pigg , housing sales are down this spring due to the bad weather! Ah, but don’t worry, when the weather improves, people “while out on their bike ” (yes , she actually wrote that!!) will be overwhelmed by those decks, patios, pools and back yards. We all know how pools and decks add so much to the selling price of a home !

#150 45north on 05.02.13 at 10:30 am

OlderButWiser: To be successful, investors need to be aware of their own personal bias

I do agree. Personal bias is re-enforced by lack of travel. Especially if you live in Gibsons BC.

#151 T.C. on 05.02.13 at 10:37 am

Please don’t tell them to blow something up.

Because there are nutbars that actually read your blog and might take that advice to heart.

Otherwise the advice is sound.

I was thinking of something inflatable. — Garth

#152 Jeff in Moose Jaw on 05.02.13 at 10:42 am

Todays post reminds me of that Buffalo Springfield song – for what its worth…
“There’s somethin’ happenin’ here
What it is ain’t exactly clear
There’s a man with a gun over there
Tellin’ me, I got to beware
I think it’s time we stop, children, what’s that sound?
Everybody look what’s going down
There’s battle lines being drawn
Nobody’s right if everybody’s wrong
Young people speakin’ their minds
Gettin’ so much resistance from behind
I think it’s time we stop, hey, what’s that sound?
Everybody look what’s going down
What a field day for the heat
(Hmm, hmm, hmm)
A thousand people in the street
(Hmm, hmm, hmm)
Singing songs and carrying signs
(Hmm, hmm, hmm)
Mostly say, hooray for our side
(Hmm, hmm, hmm)
It’s time we stop, hey, what’s that sound?
Everybody look what’s going down
Paranoia strikes deep
Into your life it will creep
It starts when you’re always afraid
You step out of line, the man come and take you away…”

Man, are you ever old. — Garth

#153 Aussie Roy on 05.02.13 at 10:42 am

Aussie Update

The house investors favorite ‘tax break’. Negative gearing goes under the spot light.

Comments from Bank of America economist, Australian Saul Eslake saying “I have to translate the words ‘negative gearing’ to people overseas because it just sounds crazy to have a system that rewards people for losing money.”

According to the Australian tax office, Australia had 1,811,174 property investors in 2010-11. Of those, 1,213,597 made losses totalling $13.285 billion.

http://www.theage.com.au/opinion/political-news/negative-gearing-losses-a-key-drain-on-revenues-20130430-2ir6h.html

Some of the comments on this story are also worth reading.

MSM

Dr Nigel Stapledon remarks, “Well Australia has been pretty lucky on the housing front in recent years. In the US we saw a major correction downwards in house prices, Australia missed out that, and a lot of it’s to do with the resources boom.”

“So if you go back in the early 2000’s house prices in Australia were probably, at least as over valued than they were in the U.S., where the correction in the U.S. happened by a sharp correction in prices, here it has actually happened by a significant up trend in rents, so that has corrected the sort of misalignment in the house price, and that significant rise in rents very much aligns with the resources boom.”

“And as we know the Treasurer is having trouble balancing the books because with the resources boom coming off, revenues are getting a bit tighter and the same things are going to start to happen to household incomes and hence also a slowing also in rental growth.”

We will let you decide if there has been a “significant up trend in rents” and if this will save us? But most of what Dr Stapledon says is good information and the video is worth a watch. He uses the word ‘lucky’ to describe our situation, dismisses the notion that inflation will reduce the value of your debt, and warns against borrowing to the hilt and with the idea that house prices will double in 7 to 10 years.

http://www.whocrashedtheeconomy.com/blog/2013/04/dr-nigel-stapledon-on-australian-housing-abc24/

#154 Shawn on 05.02.13 at 10:51 am

117 BoomerangGuy said:

Money is not ‘made’ in the financial markets – it is transferred from losers to (mostly) market makers.

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

Garth responded, in part, Value is added every single day as companies are created or grow, and equity markets reflect that.

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

There is truth to both statements. Trading in equity markets does transfer wealth from losers (mostly technical traders and day traders) to winners. But I would argue that the winners are often smart (mostly value oriented and fundamental oriented) investors rather than market makers.

The companies themselves make money so long term money left in the market over decades WILL grow.

Basically ALL passive investors holding the market ETF index will make money over the decades.

Half the active traders will lose and half will win.

Almost ALL stock market attention is focused on trading when the surest money is in passive buy and hold. No matter what anyone tells you.

If buy and hold for decades did not work it would be madness to buy stocks since in that case the only way to win would be to sell to a greater fool.

I view the markets as a sort of lazy river flowing towards prosperity. Yes it has some rapids and some eddy currents that go backwards and it has its wide flat areas where it stalls out. But ultimately it flows toward your sea of wealth. Upon that river are different boats (companies). Some will sink but most are going towards wealth. It is possible to accelerate the journey by jumping from boat to boat but also dangerous. Only the skilled win at that game. For most people put a bit of money in each of 30 boats (the market index) and go to sleep.

#155 Freedom85 on 05.02.13 at 11:02 am

#96
Older but wiser

Thank you for your comment. In the way you framed your post, doom and gloom is a judgment, just as over optimism is a judgment. An emotion. My rates of return over the past 10 years have been fabulous. No concern for me.
I operate in the reality and understanding that not everything occurs this year as your financial planners try to box you into. I don’t judge my returns on the basis of one year at a time. Positions are taken with eyes wide open fully aware that I am contrarian. If you wish to have smoke blown up the nether regions, be my guest. As I said, enjoy your stock returns…..

#156 Mike on 05.02.13 at 11:02 am

“Europe continues the stabilize”. Un-flipping-believable. You are truly clueless Garth.

Just the counter-argument I expected. — Garth
———————————————————-

I used to think the same way; worried about every problem in the economy and letting it influence my opinion on market direction. I thought that after 2008 there would be a quick bounce and continued decline. When I didn’t see a decline, I thought I was right, but others were buying into a bubble. Then as it continued upwards, I thought the system was rigged. When I did research, I realized 2008 was a once in a life time opportunity to buy for the long-term and short-term. There are always problems in the economy, that will never change. 2008 happened mostly because of uncertainty about bond quality, not because housing fell in the U.S.

#157 Alex Shtin on 05.02.13 at 11:03 am

Sorry Garth, but I doubt your optimism in the situation when we have another market bubble that is due to burst any time now.
If it happens, what is your take?

Worry about asteroids. More prevalent. — Garth

#158 gladiator on 05.02.13 at 11:04 am

Garth, recovery is when employment is growing (steadily, but growing), when rates are not at emergency levels, when new businesses pop up everywhere, when debt levels are decreasing, when sales of discretionary items are at least not falling, when food banks are going out of business, when kids don’t know what hunger is, when salaries grow faster than the price of bread, milk and eggs, when central banks have no business injecting wads of money into the economy, when people are optimistic about their and their kids’ future, and so on and on and on.
Do you see such recovery? I don’t. Maybe I am looking in the wrong place? Please enlighten.

#159 tony bologny on 05.02.13 at 11:07 am

Bank Of Ireland Doubles Mortgage Rates, Homeowners Fear More To Come
http://www.zerohedge.com/news/2013-05-02/bank-ireland-doubles-mortgage-rates-homeowners-fear-more-come

#160 Mike on 05.02.13 at 11:14 am

By assuming your rent will be paid by your new investment stream you neglect the income currently paying your housing costs, which will presumably be added to your portfolio. Also consider no growth in real estate for a decade or so. Do you have enough liquid assets to build a retirement nest egg? Educate your kids? The key is not necessarily to dump the house, but to diversify. You might accomplish part of that by removing a portion of the house equity and spreading it over financial assets. — Garth

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

Thanks Garth for taking the time to respond, much appreciated.

” retirement nest egg?” – I have a company pension that I will receive. Is that what you mean? We have some investments but not much.

Kids have graduated University, are working and are out of the house.

” removing a portion of the house equity and spreading it over financial assets”

Does that mean borrow at todays low interest rates using some of the equity in the house?

What term would be good…3 years…5 years….longer?

If so, I like that idea….

Sounds like the bulk of your net worth is in real estate. Bad idea. Will your company pension replace at least 70% of your earned income? Is it a taxable RPP? Are you within 7 years of retirement? An equity loan is not for everyone, since borrowing always accentuates risk. But if you can get money at 3%, make the interest tax-deductible, and earn 7% on it, this is a strategy worth considering. First, get some professional advice. — Garth
———————————————————

add the cost of the mortgage, taxes, maintenance and insurance on the house, then subtract the amount (on average) that goes towards principle. From this amount, subtract the amount of rent you will pay. This is the amount you will save from renting. A positive number here tells you you’re making a good financial decision. Add this amount to the amount of after-tax earnings on investments to find the total increase in cash flow. Since housing will be flat for 10 years, 10 years is a good time horizon. Or, the amount saved can be added to your portfolio to compound.

As for earning the right return…..diversify, and do it cheap. Use etf’s, and contact a professional (as Garth said) to reduce taxes and guide you. If you diversify globally and among stocks and bonds, then over 10 years, you are virtually guaranteed at least 5% return. Don’t use leverage (borrow money) if you’re retiring soon, it will increase risk. That strategy is geared for younger people.

#161 Post Haste on 05.02.13 at 11:14 am

Garth – but isn’t that human nature – everyone who has ever been stuck in traffic will instinctively blame the guy in front – we never stop and say we are part of the problem.

But I gotta disagree with you Garth on the blame game – there is some truth in the system being rigged. Appleby College (Oakville’s prestigious school) – well, at one time – with limited available room, those selected were son’s of prominant members of the community – kid’s were dumb as wood but got into a school in which you could write your own ticket with that piece of paper.

There is a class that looks after itself – Justin Trudeau is a prime example – those who think this world is fair and equitable is in for a world of hurt! My grandfather always said – human nature – it’s not what you know – it’s who you know that alter’s man future.

#162 Timbo on 05.02.13 at 11:16 am

http://www.cnbc.com/id/100700113

“Obviously, home prices are up, so did you miss an opportunity? Yes, you’d have been better off buying a year ago than today, but we think for the most part we are in the third inning of this housing recovery,” said Rob Bloemker, Five Ten’s CEO.

Unlike the “flippers” of the last decade, today’s investors in single family homes have a longer-term strategy. They buy largely with cash and seem intent on growing their portfolios, rather than recycling them. While some credit these bulk buyers with saving the housing market, they seem uneasy with that characterization. ”

3rd inning and storm clouds are brewing……

http://www.guardian.co.uk/business/2013/may/02/eurozone-crisis-european-central-bank-rates

“We can’t just throw money out of helicoptors. We have to go via the banking system.”

lol…..not for long…..

#163 Jeff in Moose Jaw on 05.02.13 at 11:16 am

Man, are you ever old. — Garth

LOL You’re right.

#164 aggie on 05.02.13 at 11:19 am

As of May 1, I am out of debt and on the ‘Money Road’!

Selling the condo with a shortfall has been well worth it. Now that it’s no longer sucking me dry as its value shrinks, I’ve begun to believe I won’t end up a bag lady.

I love the tiny studio suite that I rent, in a beautiful setting near work. I’m learning to live small and am feeling very fortunate and liberated.

Exactly as someone on this blog had predicted, since I started to take control of my financial and personal life, I more and more often catch myself feeling better about my work and capabilities, and my work/life balance has been gradually improving.

For all of that, I say thank you and bless you, Garth Turner.

#165 Derek R on 05.02.13 at 11:27 am

#124 Craig on 05.02.13 at 8:01 am wrote
So 7% return on $600K is Gross $42K, after Capital gains it’s around $32K

So I net $32K and my Rent is $24K, minus my property taxes = $20K ( a bit lower but easier to use round figures)

So I Net $12K a year renting

You forgot a few costs of ownership. Maintenance, repairs, renovation and insurance to name but four. The only one of those you need to pay when renting is insurance and even that is drastically reduced.

Sure, as an owner you can decide not to do maintenance, repairs and renovation but that will have a direct effect on whether you can sell the house and on the price you will get, so you’re nuts if you don’t do them.

New furnaces, roofs, floors, kitchens, windows, etc. ain’t cheap so you can budget another $1K a month minimum for them. Hence you’re more likely to net $24K per year renting than $12K.

#166 Alex N Calgary on 05.02.13 at 11:41 am

Hey Garth I appreciate what you’re saying. But you can understand that people look at real estate as a much safer investment when you see so much reporting of instability in the market. Also if, like me, you’re someone who comes to this site regularly, you know that a clever fella like yourself isn’t doing this blog for his health, you give investment advice, and healthy positivity towards market investment vs real estate is what you do, I’d like to believe 7% is possible without too much risk, but it seems hard to believe.

You do tend to tell people who don’t have massive savings (200k or more) by age 30ish as being screwed. Average family incomes as they are, saving that kind of money is pretty difficult, a lot of the people who have that kind of money are people who had real estate and sold at the right time *shrug*

It doesn’t make me feel great about myself not having 100,000$ + in the bank when you tell us that we’re screwed at mid 30′s without this, despite having good jobs, but I don’t blame you for flogging investment’s as thats your job, we’re all grateful for your time on this blog, but just as one must decide what in media is true and false, one must not always take the word of gospel on this blog as well.

Now that housing is starting to have real trouble things have been interesting, keep up the good work! someday I might have money to invest…after I buy a house at the right time and sell 15yrs later at the right time! irony eh?

#167 H. Caron on 05.02.13 at 11:50 am

You say: “Financial markets have gained 136% in the past four years …”

Are we producing that much more steel, cement, cars, railway locomotives, oil, gas, wheat, or any other real goods or materials?

#168 Craig on 05.02.13 at 11:50 am

I was thinking of something inflatable. — Garth

With arms and legs

#169 Frank le skank on 05.02.13 at 11:54 am

I have to commend Garth on this posting and others that challenge the extremists, paranoid, doomers and the world is ending crowd. I find it very hypocritical that these groups try to use fear to scare people into believing their ideology because that’s the same tactic used by the people they lament. Its very entertaining and at the same time educational to see Garth’s rebuttals which are well formulated, to the point and factual.

#170 Smoking Man's Old Man on 05.02.13 at 12:14 pm

Garth, why would you expect “unbalanced people” to have “balanced portfolios”?

#171 I am in C on 05.02.13 at 12:30 pm

151 Dlog Relis
If you left a gold bar on my front porch, I would take it to the nearest gold dealer, sell it, and pocket the cash

#172 Sparky55 on 05.02.13 at 12:38 pm

Seller, who is listed as a licensed Real Estate agent must be expecting the worst
- Price drop from $449,900 to $347,500 today

http://www.viewpoint.ca/property/cutsheet/40357469?no-nav=1&no-footer=1

#173 al on 05.02.13 at 12:52 pm

#158 Shawn “..the surest money is in passive buy and hold. No matter what anyone tells you..”

kinda old school thinking, look at Nortel.

folks bought in, and when it started tanking from $124, all the analysts and other gurus kept telling them to hold.

hold when it was a 100, then 80, then 60, when it hit $45 most folks probably lost everything.

look at the charts – Dow took 2 years to recover after 2008, it is a bit higher since 2010 levels.

NASDAQ hit 5000 during dot com bubble, never recovered almost 15 years later.

whats happening to the folks who bought BBRY for $80 in 2010 and where told to hold.

it’s a free market though, no doubt

#174 OlderbutWiser on 05.02.13 at 12:58 pm

#158 Shawn – you nailed it.

Creating wealth from investing in the markets is a long term proposition. That is why you have to start early. Trying to get rich quick is for suckers. It is purely gambling.

I started slow by investing in companies that made things I understood and that paid me a part of the profits of the business – blue-chip dividend growth equities. Companies like MCD, JNJ, PG, KO, PEP, Canadian banks, REITs (I own Artis) the list goes on. I hope to never have to sell my stocks and will be able to live off of the dividends. I started by saving only a couple of thousand dollars a year, and believe me it was HARD. I had to make serious choices. But now my portfolio is close to $3 million. Time is either your friend or your enemy. As Garth says, your choice.

#175 Humpty Dumpty on 05.02.13 at 1:04 pm

Hey look, all the tin foil heads and nut bars in one room..

Nigel Farage on “wholesale, violent revolution” in Europe

http://www.youtube.com/watch?v=UZap5n3zGZ8

Ron Paul + Jim Rogers on the government: “They’ll use force and they’ll use intimidation…”

http://www.youtube.com/watch?v=CmqIerOV3EM

#176 OlderbutWiser on 05.02.13 at 1:10 pm

Al #178 – it’s interesting that you mention Nortel. When it was flying high I had a look at it’s F/S. Did you know that Nortel NEVER made a bottom line profit? Oh yeah…MSM always exclaimed that Nortel had “earnings from operations”…what a load of bunk. Don’t make your investing decisions based on what the media has to say. Find out at the facts for yourself. And no…I never did buy shares in Nortel.

#177 Old Man on 05.02.13 at 1:13 pm

#176 pinstripe – I know you spelled the name wrong, so spend 25 hours researching his background with a buddy who has special knowledge for a meeting of the minds leaving no stone unturned. Guess what will take place? Nothing makes sense; nothing adds up; and something is wrong, but we know how to remove a mask to ascertain a hidden reality.

#178 AndrewAB on 05.02.13 at 1:20 pm

Here’s the link to M.Carney press conference yesterday at U of A:

http://www.bankofcanada.ca/media-room/webcasts/

#179 Humpty Dumpty on 05.02.13 at 1:23 pm

140 Editor on 05.02.13 at 9:12 am

Sir, following the rabbi’s theme is the objective to posting current events.

2. • Respectful, wide-ranging discussion on the topic of the posting is encouraged, and will not be censored.

3. Ya the link is different, but it cuts right to the point.
If you prefer to read the long winded side, here you go.

http://www.washingtonpost.com/national/on-faith/us-military-should-put-religious-freedom-at-the-front/2013/04/26/c1befcea-ade2-11e2-8bf6-e70cb6ae066e_story.html

http://radio.foxnews.com/toddstarnes/top-stories/pentagon-religious-proselytizing-is-not-permitted.html

http://www.breitbart.com/Big-Peace/2013/05/01/Breaking-Pentagon-Confirms-Will-Court-Martial-Soldiers-Who-Share-Christian-Faith

You can put your white pointy hood back on now Sir…

#180 Dr. Hoof - Hearted on 05.02.13 at 1:29 pm

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.

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

What about the premise that these ” paper assets ” are no different than real estate?

To maintain value they have to have a buyer..as the last and future buyer determine the price.

If we have an upcoming generation addicted to debt….the last thing they may buy , or be able to afford, is another paper asset.

#181 thiscountryis going down the toilet on 05.02.13 at 1:34 pm

#150..Trapped….Vancouver sucks no matter what the weather is doing. But thanks by making me laugh with your barking seal regurgitation that ‘it’s the best place on earth’………I see the propaganda machine is still vomiting bliss down your throat….keep up the comedy.

#182 bill on 05.02.13 at 1:35 pm

”the pros would never ever double down on sell off”
first I very, very seldom ‘double down’.[canplats would be the one I did do that on]
I took Garths advice and shifted my portfolio from almost all pm stock on the venture exchange to resemble[sort of] what he recommends.ie lots of solid preferred shares and etfs.
I have some pm but somewhat less than what Garth recommends as I dont see any ‘deals’
what little money I have invested ,is in preferred stocks and etf’s was made almost entirely from pm penny stocks . I do not advise anyone to do it this way.at all.
please bear in mind, under the lash of hunger I once worked in the old VSE .consequently I do have an idea as to who the bad guys are and who the good guys are. however ,in my opinion most of the investors in the venture exchange dont have a clue.so dont do it.
listen to Garth. I did and have no regrets.

#183 Craig on 05.02.13 at 1:35 pm

Thanks Garth, Derek and Mike – good feedback much appreciated.

Next step, create a spreadsheet with everything on it and start to seriously crunch real numbers and see what the Net is after rent.

I’m making arrangements right now for an Investment Advisor to come to the house next Tuesday.

Edward Jones – any good? Any experience with them?

Any other recommendations?

Thanks again guys

Craig

#184 Ted on 05.02.13 at 1:44 pm

Wow Garth you are so smart, your parents must be so proud of their son? It must be amazing to have such a fine brain such as yours, you should rent it out, you know, be a consultant on all things complicated, you could really help the world with your brain, I guess you didn’t notice humanity is heading for self-extinction, do you know what that is? a really, really stupid animal pollutes its own home to the point that animal can no longer survive, not to smart that animal, is he????

Evidently. — Garth

#185 Old Man on 05.02.13 at 1:45 pm

Nortel: made a lot of money on that ride, and sold; then went back in with a modest amount of capital for a small flip, but got caught. The officers running that company should have been indicted, but got off, and are laughing. I received papers from an attorney in USA involving a class action suit, but wanted too much personal and private information, so threw it in the garbage, and wrote it off. A once great company was trashed by those in control, and they are now living big, and such is life.

#186 Ralph Cramdown on 05.02.13 at 1:50 pm

#162 gladiator — “Garth, recovery is when employment is growing (steadily, but growing), when rates are not at emergency levels, when new businesses pop up everywhere, when debt levels are decreasing, when sales of discretionary items are at least not falling, when food banks are going out of business, when kids don’t know what hunger is, when salaries grow faster than the price of bread, milk and eggs, when central banks have no business injecting wads of money into the economy, when people are optimistic about their and their kids’ future, and so on and on and on.”

I can’t believe that you forgot unicorns that poop Skittles in your otherwise comprehensive list. If it all comes to pass, I’ll be selling all my stocks and buying bonds.

#187 Ralph Cramdown on 05.02.13 at 1:52 pm

Sing along everyone. If you don’t know the words, just follow the bouncing ball.

Ohhhhh…. Ben Ber-nank and the Bund-des-bank
Are going to be put-ting gas in my tank!

#188 prairie person on 05.02.13 at 2:08 pm

http://www.thestar.com/business/real_estate/2013/05/02/wet_cold_month_leaves_homesellers_looking_for_ray_of_sunshine.html

There you have it. Sales are slow because of the weather. Once the sun comes out, all will be well.

#189 Tony from Calgary on 05.02.13 at 2:24 pm

“Rolling Stone? Yes, I get all my best investment advice there. — Garth”

Nothing about investment advice in the article, nor did I suggest it.
But there is a little something called journalistic integrity, which we don’t see much of these days.

#190 mike on 05.02.13 at 2:25 pm

Thanks Garth, Derek and Mike – good feedback much appreciated.

Next step, create a spreadsheet with everything on it and start to seriously crunch real numbers and see what the Net is after rent.

I’m making arrangements right now for an Investment Advisor to come to the house next Tuesday.

Edward Jones – any good? Any experience with them?

Any other recommendations?

Thanks again guys

Craig
——————————————————–
I’ve heard good things about them, but have never used an adviser. If you want help choosing, ask family and friends who they’ve used, if they’ve used such a service. Referrals are better indicators than a commercial or hearsay.

#191 Shawn on 05.02.13 at 2:27 pm

al at 178 responded to me:

#158 Shawn “..the surest money is in passive buy and hold. No matter what anyone tells you..”

kinda old school thinking, look at Nortel.

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

Al those are good points.

Buy and Hold is for broad indexes like the S&P 500 and the DOW. Even the TSX index is a bit too concentrated for buy and hold.

Buy and Hold works well on excellent profitable companies that can be reasonably expected to remain profitable in the long term and that can be bought at reasonable prices. (Reasonable P/E ratio). Walmart was a recent example. But Walmart was unreasonably expensive in year 2000.

It does not apply to the likes of Nortel which was in fact reporting massive losses even at the time it was at record highs. (Only its pro-forma or ex-items earnings were positive)

It requires some diversification as RIM may have looked solid only to crash.

Buy and Hold must be done intelligently. It is not a cure for stupidity.

As to old school, old is often wise.

#192 Shawn on 05.02.13 at 2:32 pm

OlderButWiser… at 179 and 181

Yes you are… I posted my comment on Nortel losses before I saw your wise comments.

#193 my thoughts on 05.02.13 at 2:34 pm

#189 Ted… whats with all the angry people on the blog lately gunning for Garth? A sign of change? Unhappy people perhaps because Garth is right? Can’t wait for those treb numbers.

#194 Old Man on 05.02.13 at 2:35 pm

#189 Ted aka Caesar – and does not Caesar have better things to do in life? Caesar how about getting real and just resign, and ride into the sunset for the betterment of Canada, or wait it out a bit, as the masses are waking up, and could be become a bit of a nasty situation, as we will not take it anymore.

#195 Canadian Watchdog on 05.02.13 at 2:46 pm

Canadian banks prefer a regulator with fewer ‘prescriptive’ rules

In other words, Canadian banks prefer to keep running the show at OSFI and regulating themselves to avoid mark-to-market on bad assets.

Maurice Dorman
Senior Supervisor at OSFI
LinkedIn Page
Past Jobs: Team Lead, Fixed Income Operations at Bank of Montreal Senior Manager, Treasury & Investments at Capital & Credit Merchant Bank

David Maxwell
Senior Capital Markets Analyst at OSFI
LinkedIn Page
Past Jobs: Consulting Analyst at TD Securities

Winnie LoBaker
Senior Manager at OSFI
LinkedIn Page
Past Jobs: Head of Collection Analytics at HSBC Financial

Renée Chen
CA, CFA, Director at OSFI
LinkedIn Page
Past Jobs: Manager, Derivative Reporting at RBC

Dave Oakden
Managing Director at OSFI
LinkedIn Page
Past Jobs: Senior Vice President at Zurich Canada

Tom Belyk
Manager OSFI
LinkedIn Page
Past Jobs: Director Canadian Commercial Credit at Scotiabank

Leslaw Skoczylas*
Senior Supervisor at Office of the Superintendent of Financial Institutions of Canada
LinkedIn Page
Past Jobs: Research Analyst at Bank for International Settlements

—–

In other news, gross sale per credit card issued by the Big Five expanded by 8% in 2012 compared to 2011, the highest jump since 1982. It's all good.

#196 Ralph Cramdown on 05.02.13 at 2:49 pm

#188 Craig — “Edward Jones – any good? Any experience with them?”

It’ll depend on the individual advisor. One of them put elderly relatives of mine into some nice investment grade bonds paying 5 and 6 back when that was still possible. Then he left to sell cruises and his replacement sold the bonds and put them into a completely inappropriate Manulife fund with a 2.5% MER and a 6% DSC. Their compliance department didn’t have any problem with that so, on second thought, the whole company is shit.

#197 bill on 05.02.13 at 2:52 pm

#190 Old Man on 05.02.13 at 1:45 pm
”but got caught.”
I know that feeling….not on nortel though.pex
not to mention a couple of close calls.
smr was a bit of a close call.barely made a profit on that one. in a word : greed.had I just sat tight instead of trying to skin a few bucks off my fellow pew holders I would have done better.

#198 Old Man on 05.02.13 at 3:00 pm

Well looks like today is the day when the next puppet will be named to head up the Bank of Canada which must be approved by Caesar which he will deny, as F is his frontman. Now this will be one hell of a position to accept, as someone is going to become the patsy for the mess done by the Reformists to take the heat.

The sad thing about Canada moving forward is that all the great men in this country have been pushed aside, out of the political three ring circus, as they do not fit into the new agenda that is afoot. Mr. Garth Turner is one, and am sure there are many more; this is a sad day for Canada that the clowns in life are running the show, and I for one will not buy a ticket.

#199 Tom Vu on 05.02.13 at 3:11 pm

#189 Ted on 05.02.13 at 1:44 pm

Wow Garth you are so smart, your parents must be so proud of their son? It must be amazing to have such a fine brain such as yours, you should rent it out, you know, be a consultant on all things complicated,

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

OK Garth…times up….return ASAP….or I charge you late fees.

#200 Jeannie on 05.02.13 at 3:14 pm

Garth, I love your certainty that the world as we know it is not going to hell in a basket…sure gives me confidence!

Admit it now, it’s understandable that others don’t see the future as you do, we’re constantly being bombarded with the gloom and doom messages from ‘those in the know’.
Reading some of the web blogs is enough to make one run for the hills and join the ‘Preppers” not.
There’s a slew of “Buy my financial mag. and all will be revealed”
Continue being the voice of reason, and your advice is free, look forward to your new book.

#201 bill on 05.02.13 at 3:16 pm

#181 OlderbutWiser on 05.02.13 at 1:10 pm
I never understood the buying frenzy for the dot com stocks.
couldnt figure them out for the life of me. didnt buy any of those stocks…no regrets there.
stayed with what I understood and made a modest profit.
after my ‘smr’ experience I payed much more attention to what Garth had to say about precious metals.
no regrets from that sound advice either.
now if you want a bit of excitement: invest in some mexican silver explorers….or some ‘ kurdistan oil’
otherwise follow Garth’s advice. I love risking ‘it’ but there is a point when you should be careful..ya know?
More TT vicar?
http://www.youtube.com/watch?v=p7KlmCthT68

#202 The Prophet Elijah on 05.02.13 at 3:17 pm

You don’t think securitizing toxic mortgages, selling them around the world claiming it’s AAA rated, then shorting it when it all fell apart (Goldman Sachs), is not rigged?!!? My God.
LIBOR was not rigged?!!
You gotta kidding us today Garth.

#203 Derek R on 05.02.13 at 3:34 pm

#188 Craig on 05.02.13 at 1:35 pm wrote
Thanks Garth, Derek and Mike – good feedback much appreciated.

You’re welcome!

Next step, create a spreadsheet with everything on it and start to seriously crunch real numbers and see what the Net is after rent.

Good plan. I’d like to make a suggestion though. Add in your commuting costs. In a sense that’s part of your housing cost since the closer you live to your employer, the less you have to spend. You know what you’re spending just now (fuel, repairs, maintenance, etc.). See what effect moving closer to work can have. You may find that you have to pay a higher rent (or rent a smaller house) but you will lower your commuting cost. With care you can gain on the deal. Particularly if you can move close enough so that you don’t need a car. But you won’t know until you do the sums.

I’m making arrangements right now for an Investment Advisor to come to the house next Tuesday.

Edward Jones – any good? Any experience with them?

Any other recommendations?

1) Go to the local library and ask for a copy of Garth’s book, “Money Road”. I would have said buy it but it’s out of print and can be a bit difficult to get hold of second-hand. Read it before you do anything else.

2) Google “Mr Money Mustache” and take a look at his blog. He has some seriously good ideas on becoming financially independent by not spending money. Even if some of them are too extreme for most of us, there are still some which everyone should be thinking about. Great food for thought.

Cheers!

#204 Canadian Watchdog on 05.02.13 at 3:38 pm

Flaherty to Make Statement at 4 P.M. in Ottawa

#205 Canadian Watchdog on 05.02.13 at 3:42 pm

My top two picks for next BoC Governor.

1. Ed Clark

2. Kevin G. Lynch

#206 Dr. Hoof - Hearted on 05.02.13 at 3:46 pm

I laugh like hell when people discuss commodity prices…

The middle men set the world price.

Way back I can recall the Hibernia oil field…..and how worried they were it wasn’t viable if Oil was less than $10 barrel. Gee whats Oil at now ?

Many commodities have very low costs to bring to market…the rest is simply a price fixing scam.

#207 Old Man on 05.02.13 at 3:53 pm

I was 17 years old when I threw my hat into politics in highschool, as told my parents was off at night as once again was going to the party headquarters, and my mom said this is bogus as must be with a girl, and my dad said maybe. Nope was with a campaign manager about 30 years old with no job doing the grunt work.

I told my parents omg we won the election, and the guy with no job was hired immediately with a posting in the media business. There was going to be a huge celebration party at the home of the winner, so I was invited and said can I invite my parents too, and was told no problem, as they can come too.

This home was an estate between Pointe Claire and Dorval on no less than 50 acres of land with this long driveway to a mansion overlooking the lake. What a party that was with the best of food being served and the booze was flowing with hundreds of people there, and my parents were amazed by this all, as the top people in Montreal were there.

The lesson I learned in life at a very young age is that politics has rewards to be attained by working the machine as Smoking Man would say, and did this all for many years as such is true in life, as the connections that can be made are priceless to advance a career in life’s walk, as if you commit will be rewarded, and the doors will open – so get involved.

#208 Derek R on 05.02.13 at 3:55 pm

#168 aggie on 05.02.13 at 11:19 am wrote
As of May 1, I am out of debt and on the ‘Money Road’!

Selling the condo with a shortfall has been well worth it. Now that it’s no longer sucking me dry as its value shrinks, I’ve begun to believe I won’t end up a bag lady.

Congratulations, Aggie! Very glad to hear that it’s all working out as planned. I love that you have taken charge and made it happen!

For those newer readers who might not be familiar with Aggie’s story, read Garth’s post about her situation

She was sensible enough to take his advice and so far it has worked well for her.

#209 gladiator on 05.02.13 at 3:58 pm

@191 RalphCramdown:
I gave but a small list of what happens when a recovery is underway and what I wish to see in my lifetime.
If your definition of recovery is Skittles-pooping unicorns – I am only happy for you having such a rich imagination. Hope you’re enjoying it.

#210 Canadian Watchdog on 05.02.13 at 4:05 pm

BREAKING: Stephen Poloz named as Bank of Canada chief, replaces Carney

#211 Ralph Cramdown on 05.02.13 at 4:05 pm

Flaherty: “Can you keep your mouth shut?”
Poloz: ….
Flaherty: “OK, it’s yours.”

#212 Ralph Cramdown on 05.02.13 at 4:22 pm

#209 The Prophet Elijah — “You don’t think securitizing toxic mortgages, selling them around the world claiming it’s AAA rated, then shorting it when it all fell apart (Goldman Sachs), is not rigged?!!? My God.”

So buy GS. It’s trading at a P/E below 10. Complaining that vast markets are being profitably fixed by a publicly traded entity that anyone can buy by picking up the phone or clicking the mouse makes far less sense than blaming it on the Bilderbergs, gnomes of Zurich or Venusian sexpots…

#213 bill on 05.02.13 at 4:28 pm

#209 The Prophet Elijah on 05.02.13 at 3:17 pm
do you think the entire system is rigged because a few miscreants are trying to fleece the unsuspecting?
people trying to take advantage of other people has been with us since there has been people.its not a new thing.
its something one has to watch out for.
due diligence I reckon..

#214 bill on 05.02.13 at 4:31 pm

#198 Shawn on 05.02.13 at 2:27 pm
”As to old school, old is often wise.”
As the late richard prior once said in an ‘eulogy’:
‘you dont get to be old being a fool.’

#215 Dorf on 05.02.13 at 5:28 pm

#207 – Jeannie

Buy every teenager a copy of Money Road and call your job done.

Garth provided exactly what I had wanted. An in-depth lesson of how to run your finances to make good, sensible, reasonable decisions in life.

I bought three more copies, all at the request of friends who are all 65+ and demanded a copy.

It’s an excellent book.

#216 Dorf on 05.02.13 at 5:29 pm

…and at $20 bux a copy, I’m sure Garth is getting filthy rich off of it…not. Barely pays for the production, let alone all the time put into writing it. It’s a gift.

#217 Robert on 05.02.13 at 8:34 pm

130 Castaway

Farmland bubble? How can it be a bubble when no one even knows about it? Do you know anyone that owns farmland?

#218 Willy2 on 05.02.13 at 9:46 pm

“Slo-Mo Recovery” ??

No way !! when one goes through all the posts one Mr. Turner has written then it’s obvious that there’s absolutely no chance of an economic recovery in the near future. All those posts refute the notion of a “slo-mo” recovery.

#219 Steven on 05.02.13 at 10:38 pm

DELETED

#220 Choices — Greater Fool – Authored by Garth Turner – The Troubled Future of Real Estate – The Affluent Boomer on 05.03.13 at 1:40 am

[...] 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. Continue reading → [...]

#221 Bob the Imp. on 05.03.13 at 2:57 am

Garth, you should watch the 2013 Economic Summit on YouTube. Looks like you may be experiencing cognitive dissident. There is a difference between artificial and fundamental markets. You should know that!

#222 EIT on 05.03.13 at 7:25 am

Slovenia to be the sixth Euro country to be bailed out.

#223 cash0 on 05.03.13 at 6:41 pm

There’s too many nutcases on here. STFU about being first.

Garth – I read your posts and agree with much of your analysis.