The warning

“My entire family,” she said, “thinks we’re freaks.”

She made the word “entire” into three fat syllables. I could just imagine a long, groaning holiday dinner table packed with siblings, nieces, uncles and inlaws, staring in abject disbelief as Wen and Patrick made the announcement. “We sold our house.” Big pause. “We’re gonna rent.”

They all live in a distant Toronto car-clogged suburb where there’s a 92% home ownership rate, the average sold price last month was $860,632, and 38% of the population is of Chinese heritage (27% are Caucasian). In other words, this is the gold standard of house horniness, where real estate means wealth. The bigger the digs, the better. The more fluted columns, imported tile, ensuite bedrooms, bathroom granite and knobs on the stove, the more fortune loves you.

Right now, says Wen, they’re fighting the numbers. “We started at eight-fifty and gave up once we got to more than a million,” she says. “It made us sick to our stomachs to think of paying that much for the crap people are trying to sell. We’re done. It’s too stupid.”

But while that might be a perfectly logical conclusion to reach, since house prices have disconnected from both incomes and the economy, it’s not what everybody in Markham believes. They watch the news. They read the paper. They talk to the neighbours. Housing is hot. Everybody knows that.

Priming the pump, of course, is the realtor class. Toronto Real Estate Board spokesguy Jason Mercer says a 11% price jump in the past year for detached houses, “makes sense given the fact that competition between buyers increased last month.” And why have bidding wars come back? One big reason is a 12% drop in the number of listings – a lack of inventory which, along with sustained low rates and an endless appetite for debt, has pushed prices beyond stupid.

So the theme of our pathetic blog this week is risk. It’s on. And growing. Risk to most people means losing half your RRSP in another 2008-style stock crash. But the odds of that are miniscule, and the fear irrational. Besides, a balanced portfolio bounced back entirely within one year. Today most people should worry about 1991.  That’s when Toronto real estate, coming off a bull market with rising prices and falling listings, plunged by up to a third, before taking more than 20 years to recover.

By the way, less than 15% of people have stocks. More than 70% have real estate. Imagine the consequences of the next housing correction.

Former realtor-turned consultant, gadfly and official CREA bug-up-the-butt, Ross Kay, is out with a new warning. Never in the past 20 years, he says, has there been this much risk in having the bulk of your net worth in a home. In fact he’s plotted what he feels is the Toronto market’s relative vulnerability over the past quarter century. The bad news? It’s starting to feel a lot like that time you used to sing along with Milli Vanilli and Maxi Priest, and worried about zits.

Kay’s formula for risk assessment is to take current market values and subtract what he calls ‘sustainable valuation’ – a reasonable appreciation based on “replacement costs, historically normalized appreciation expectations, inflationary factors and comparable rent costs, that all are relevant to the location the real estate is located in.” If current values exceed sustainable ones, Kay says, risk is created. “The financial risk in purchasing real estate can be measured by the surplus valuation.  The higher the amount of surplus valuation the more risk is associated with the purchase.”

The peak moment for risk was in 1989, when his index topped 40%. It took seven years for a correction to turn into a crash, with houses trading at a deep discount giving “arguably the best acquisition window in the history of GTA real estate.” The next correction started in 2007, but was whacked by government intervention. And today, adds Kay, we have “the highest risk exposure in 20 years.”

Only the rear view mirror can verify this. History alone will show if Wen and Patrick were geniuses to bank their down payment and avoid an asset plop everyone should have seen coming, or freaks who missed buying the trend, and bitterly disappointed their moms.

That’s the thing about the obvious. Never is.

174 comments ↓

#1 TurnerNation on 12.05.13 at 9:13 pm

Pic must be Bandit’s nemesis, Blackie.

#2 TurnerNation on 12.05.13 at 9:14 pm

No moral hazard here folks.
Paved with gold. Spoon in, brain off.
….
Bank of Canada deputy governor leaving for U of T post

Toronto Star – 1 hour ago

Tiff Macklem, senior deputy governor of the Bank of Canada, is stepping down from his post in May to join the University of Toronto’s Rotman School of Management as its new dean.

#3 T.O. Bubble Boy on 12.05.13 at 9:15 pm

Markham also believes that they should build a NHL-sized arena (if you build it, they will come), and that they are still a “technology hub” (how long ago were ATI video cards, Tandem Computers, and Lotus Notes a big deal?)

#4 T.O. Bubble Boy on 12.05.13 at 9:16 pm

but, at least the mayor of Markham hasn’t been caught smoking crack with gang members… yet.

#5 Karen Limacher on 12.05.13 at 9:17 pm

Wondering if the market is hot north of Toronto on the lake front in Orillia.

#6 NuiscnceBear on 12.05.13 at 9:17 pm

First (10 exclamation points) lol

#7 luvubud on 12.05.13 at 9:17 pm

what happens if polzie lowers rates near to zero?

#8 Ripped on 12.05.13 at 9:27 pm

Not a real estate pumper but that SOS chart looks like were only half way there if you want to compare.

#9 TurnerNation on 12.05.13 at 9:31 pm

Today’s anecdote would never occur at bigarider’s family gatherings!! No vow(el) of home-poverty.

Say what to name the Markham NHL team?
Markham Hammers? The Hambonis ?

#10 Nemesis on 12.05.13 at 9:32 pm

LeaderIllustration… “Wow.”

That’s what WalterK would have said, in muted tones…

For amplified effect.

Never bring your pooch to DivorceCourt.

#11 Blase on 12.05.13 at 9:33 pm

Garth,

Explain this to me please. Someone who buys a mutual fund ( not an index) for diversification, gets slammed in the 2008 crash, hadn’t seen their money recover. Please explain why a MF doesnt have this ability to recover like an index has. I think I know the answer, but I want to hear what the bearded one has to say.

Depends on the fund. If it was Canadian equity, for example, you got slammed. No balance there. — Garth

#12 Robert on 12.05.13 at 9:33 pm

A friend of mine is try to sell his mil+ home in Calgary for a year now. My question to him was where is the upside for his potential buyer,no answer. Then I asked him would he pay the price if he was looking at his own home for purchase, no answer. Great post tonight Garth.

#13 recharts on 12.05.13 at 9:36 pm

They all live in a distant Toronto car-clogged suburb where there’s a 92% home ownership rate, the average sold price last month was $860,632, and 38% of the population is of Chinese heritage (27% are Caucasian). In other words, this is the gold standard of house horniness, where real estate means wealth. The bigger the digs, the better. The more fluted columns, imported tile, ensuite bedrooms, bathroom granite and knobs on the stove, the more fortune loves you.

When I said the above you called me racist.

#14 Smoking Man on 12.05.13 at 9:37 pm

That’s the thing about the obvious. Never is.-Garth

It is to me. RE will peak in 2014. Then LOOK OUT!!

People can handle mortgages, Is the huge taxes on the way that will kill the market.

Rant!!!!

The audacity, the arrogance for the scum sucking thieving liberals at Queens Park and city hall.
.
The minister of energy comes out and says ah, the gas plants nothing a cup of coffee for 20 years for everyone that can fog a mirror. Huh. WHAT nothing!!!!!!!!!!!!!!!!!

Remember when they said HST will create 1000000 of jobs. Ha They just say anything.

When Wynn gets up to the microphone all she has to do is imitate a teacher. Talk in a calm yet authoritative voice the schooled go into a blissful unquestioning trance,

They have been trained since the age of 4 to react this way. Never questioning, and when they go hey, wait a minute, that’s not right. They change there minds;

“Never mind I remember what happened to the Fat kid in grade 7 who farted in class.”

Today I read the Federal NDP leader wants to get cap and trade going for Carbon in spite of all the failed attempts and disasters in countries that have done this.

Young Canadian’s are tapped out. Pay the highest prices for everything. The average Ontario citizen is pushed to the limit.

And the Pinko’s don’t see it or get it.

Business in Ontario have had enough and leaving.

I will personally be shooting off fire works from my bunker in Long Branch in the not to distant future when the Toronto Red Star goes belly up. And they will.

And today with school teacher charm all the thieving Pinko’s at the park and city hall are asking Ford to quit yet again.

Ford gets it, he talks to the peasants everyday, when does Wynn?

I could care less if Ford screws black sheep, wears high hells and a dress to bed or watches bestiality porn.

He’s real, and protects my wallet.

He’s getting 5 votes from this household.

Knock it off. — Garth

#15 Cici on 12.05.13 at 9:39 pm

#2 TurnerNation

Saw that too…I think it’s pretty telling. What do you think about the bank stock splits?

#16 Smoking Man on 12.05.13 at 9:45 pm

#14 Cici on 12.05.13 at 9:39 pm
#2 TurnerNation

Saw that too…I think it’s pretty telling. What do you think about the bank stock splits?
………………………….

Sure ask TN I never get anything write.

But I will tell you anyway. think of a pond with lots of fish with a slow natural leak of the water.

Then think of Pinko politicians using a balling bucket filling up the water jugs for them them and there freinds.

Then think what is a poor fish to do.

That about sums it up.

Your welcome…

#17 Julia on 12.05.13 at 9:47 pm

What scares me the most is the blissful unquestioning trance of the heard who think exactly like Smoking Man

#18 Retired Boomer - WI on 12.05.13 at 9:49 pm

After breakfast today got a call from my buddy in the Capital City. He’s a retired computer programmer, and no investment genius. He has no debt (so no dummy either).
Called to get advice on rolling over his saving plan from work (401-K). Has several 100K there, a pension from his 35 yr employer plus social insecurity. Wife retired gets a state pension & social insecurity. Currently, they bank his social security check each month about $1800.
They life well with no debt.
Surprisingly, I learn he has all this 401K money sitting in a ‘stable value’ fund where it earns like 2.4% a year. Think GIC here.
He doesn’t want to manage it, or invest it himself. So the self-directed houses are out.

The question:

In this sea of shingles hanging out there who will charge from 1% to 3% a year to manage one’s money for them, where do you send a dear friend? What questions should he ask in an interview? What credentials matter? They all have a long BS line.

Looking for input here. Different country, but similar problems, similar goals.

Thanks dogs!

#19 X on 12.05.13 at 9:52 pm

It would be interesting if the BoC put out warning levels for the amount of household debt they are comfortable with…

#20 Babblemaster on 12.05.13 at 9:57 pm

That S.O.S. chart indicates that there is more appreciation to be had. Currently it’s only at the high 20′s while in 1989 it was in the low 40′s. Ergo, nothing to worry about. Let the good times roll for speckers.

Really, it’s an interesting index, but essentially meaningless because the sustainability factor in the equation does not factor the extremely low interest rates. The sustainability factor is based on historical norms, but the ground has shifted permanently because low interest rates are here to stay for a long, long time. The older historical prices were based on much higher rates.

My understanding is that has been factored in. Of course. — Garth

#21 Nemesis on 12.05.13 at 10:00 pm

@TurnerNation/CiCi…

‘Rodents’. Ship. ‘CheeseTrolley’.

http://youtu.be/KQUpZqshj7M

#22 takla on 12.05.13 at 10:01 pm

there seems to be an ever increasing level of risk daily,after dow J. reaching new altime hi last week we are getting a substantial pull back,all this while the media reports improving stats comeing from the states,less ui claims,improved home sales ,ect ect.Money is just getting to dam hard to make in this enviroment and people are reaching for yield and putting their necks out way too far.look out below!!

#23 John in Mtl on 12.05.13 at 10:03 pm

Uh-o… Mark Carney turning against his new bosses!!

“…Carney’s tough new attitude could seriously obstruct the British government’s strategy for re-election. How would the government react if faced by such obstruction from a “turbulent” central banker? Murder is no longer the instrument of policy that it was in the days of Thomas a’Becket, but governments still have ways of making life very uncomfortable for turbulent officials — and maybe Carney could be persuaded to return to Canada before the end of his five-year term.”

http://blogs.reuters.com/anatole-kaletsky/2013/12/05/british-economic-governance-encounters-turbulence/

#24 Smoking Man on 12.05.13 at 10:03 pm

#2 TurnerNation on 12.05.13 at 9:14 pm

BOC dude leaving, 3 CEO’s of the big bank’s retiring.

Harpo thinking of spliting, calling it a day.

What do you think the see threw those binoculars.

I’m thinking LaugningCon will get laid next year.

Be one happy camper…..he will be.

Sure as hell hope he did just by a condo……….

#25 Yuus bin Haad on 12.05.13 at 10:05 pm

#14

Right on SM; Right Hon. Garth.

#26 LH on 12.05.13 at 10:11 pm

I voted for Ford and will do again.
Paying more than 40k total property tax and it isn’t going lower. What we need is proposition 13!

LH

#27 John in Mtl on 12.05.13 at 10:11 pm

I should have explained that my previous post regarding Mark Carney has to do with the UK gov’ts plans to reinflate the RE bubble, of which Carney was in agrement originally. What he didn’t know was that it was also to serve a very different purpose than what he was told… so he “rebelled” a bit :)

#28 raisemyrent on 12.05.13 at 10:11 pm

Smoking Man, I thought you had your own blog… all joking aside, it’s hard to follow your posts and they’re rarely related. I think most of us end up scrolling right through them.

I found your blog on the interwebs and noticed you like Pink Floyd, so I’m not having a go at you anymore hehe

#29 John in Mtl on 12.05.13 at 10:16 pm

“Risk to most people means losing half your RRSP in another 2008-style stock crash. But the odds of that are miniscule, and the fear irrational. – Garth”

As much as I respect you for your generosity in sharing your knowledge of $ and RE, I really wish you would elaborate a bit on why you seem so certain there won’t be a kind of crash or a severe, even if only momentary, downturn and reversal of fortunes.

Thanking you in advance for any insight you may share with us all.

John

Done. — Garth

#30 John in Mtl on 12.05.13 at 10:18 pm

@ #24 raisemyrent on 12.05.13 at 10:11 pm (to Smoking Man):

“…noticed you like Pink Floyd…”

Some of the greatest music ever written and performed on this planet :)

#31 Ronaldo on 12.05.13 at 10:29 pm

#7 luvubud on 12.05.13 at 9:17 pm

”what happens if polzie lowers rates near to zero?”

Those with VRM’s will be laughing all the way to the bank.

#32 Smoking Man on 12.05.13 at 10:30 pm

#30 John in Mtl on 12.05.13 at 10:18 pm
@ #24 raisemyrent on 12.05.13 at 10:11 pm (to Smoking Man):

“…noticed you like Pink Floyd…”

Some of the greatest music ever written and performed on this planet :)
…………………………………..

What person in there right mind would argue with that.

Might I suggest Ca Ira waters magic…….Ahhhhhhhhh

It’s opra though.

#33 Nemesis on 12.05.13 at 10:30 pm

heehehehhheeehe….

http://youtu.be/2qFYmsuC01c

StrictlySpeaking, Joel Grey & LizaM had a handle on that, too:

http://youtu.be/rkRIbUT6u7Q

[NoteToGT: I can't help it. I LOVE ShowTunes. What will SmokingMan think?]

#34 Babblemaster on 12.05.13 at 10:32 pm

Garth, since you’re taking requests for future posts, why not do one that elaborates on how to balance a portfolio if most of the capital has to go into an unregistered account (due to lack of room in an RRSP or TFSA). I make this request because you state that unregistered accounts should contain dividend ETFs but also that dividend ETFs should only be about 20% of a balanced portfolio.

#35 T.O. Bubble Boy on 12.05.13 at 10:32 pm

Wow – Bitcoin down 14% today:
http://data.cnbc.com/quotes/MTGOXUSD

I haven’t seen anything this volatile since 1989-era Toronto condos!

#36 raisemyrent on 12.05.13 at 10:42 pm

heehehehhheeehe….

http://youtu.be/2qFYmsuC01c

StrictlySpeaking, Joel Grey & LizaM had a handle on that, too:

http://youtu.be/rkRIbUT6u7Q

[NoteToGT: I can't help it. I LOVE ShowTunes. What will SmokingMan think?]

haha
I’m playing Great Gig on piano right now; have to present it in an hour or so (including all vocals played with my right hand)

back to RE: buddy at work got married young, got a mortgage, coupé, truck, snowmobile, you name it. Then it all blew up in his face. Ex took him to the cleaners. They “lost” money on their townhouse too… guy takes the SkyTrain to work every day and hitches a ride when possible.

Yet, all he can obsess about these days is cheap credit and buying a new car and “owning” again.

#37 Internal Auditor on 12.05.13 at 10:43 pm

Bank stock splits are done for psychological reasons not because the economy is going to fall apart. The fact that 3 CEO’s are retiring has more to do with strategic succession planning and not getting out before the crash. One of the CEOs had two heart attacks, bottom line is they’ve been grooming successors for the past 5yrs, think about it. Would a board really approve a hasty replacement?

Also, all banks saw lower earnings over the past fiscal year. Canadians are mostly likely tapped out but let’s face it, it’s hard to make money with shrinking spreads. This is the reality of a low interest environment. The market needs some volatility for us to see bank margins to go up. Also the cost of capital and compliance is extremely high.

I wouldn’t be making comments about banisters skipping town because of a challenging year.

#38 Smoking Man on 12.05.13 at 10:44 pm

#17 Julia on 12.05.13 at 9:47 pm
What scares me the most is the blissful unquestioning trance of the heard who think exactly like Smoking Man
……………………………

You spelt Herd wrong

#39 John on 12.05.13 at 10:51 pm

OMG!!! Smoking Man is now telling someone they ‘spelt’ a word wrong.
Am I in the twilight zone?

#40 Tiger on 12.05.13 at 10:53 pm

29# smoking man! Good by!
Cert BC, fallers, think you are a joker , hash head,…. Up
Cert,s save lives! Wood all round you, goof !
How’s sales going for ya, I’ve got an app for that, you really don’t want to know!
Thanks for posting this!
If every person thought like, smoking man! This world, would be doomed!
Your comment is awaiting moderation.
If every man thought like smoking man

#41 Bob Copeland on 12.05.13 at 10:55 pm

Listen to Mr. turner. I’m American. I lost $600,000. In real cash down payment on my home and another $450,000. In real down payment on a commercial property. Then the fair weather wife left causing another $100,000. It happens with a snap of the fingers! Being a “free” American I can’t hire Mr. Turner to advise me on my comeback. Nothing is as it seems. I have no idea why Mr. Turner does what he does but your a fool if you ignore his advise. I wish I had run to Canada in 1969 when I wanted to but I got drafted to save president Johnson from being embarrassed in Nam. Oh well….
Listen to a 64 year old that has been through it all. SELL and rent. It happens quick.

#42 recharts on 12.05.13 at 10:55 pm

#35 T.O. Bubble Boy on 12.05.13 at 10:32 pm
Wow – Bitcoin down 14% today:
http://data.cnbc.com/quotes/MTGOXUSD

I haven’t seen anything this volatile since 1989-era Toronto condos!
*********************
You did not look enough ☺

http://www.zerohedge.com/news/2013-12-05/citi-bitcoin-could-look-attractive-reserve-managers-complement-gold

#43 Smudgekin on 12.05.13 at 10:56 pm

Ron Burgundy called peg the Paris of Canada. Guess that makes mark Tokyo?

#44 not 1st on 12.05.13 at 10:59 pm

The more fluted columns, imported tile, ensuite bedrooms, bathroom granite and knobs on the stove, the more fortune loves you.

—–

Don’t forget the stone dragon statues. They ward off bad fortune like recessions and rate hikes.

#45 not 1st on 12.05.13 at 11:00 pm

I wish someone would let that dog loose right in the offices of F & H.

#46 Observer on 12.05.13 at 11:01 pm

I think you might be right Garth…

http://money.cnn.com/2013/12/05/real_estate/mortgage-rate-rise/index.html?hpt=hp_t2

#47 John in Mtl on 12.05.13 at 11:02 pm

@ #36 raisemyrent on 12.05.13 at 10:42 pm

…”I’m playing Great Gig on piano right now; have to present it in an hour or so (including all vocals played with my right hand)”

Funny you say that, I was going over to my Kurz PC3X to continue leraning this very song, which I just also finished listening to. :)

PS; I hope Garth doesn’t mind this exchange since it has nothing to do with RE or $ but has a lot to do with enjoying life, which he does enjoy I’m sure ;) Ah, liquid, diversified and great music. Beats an overpriced house any day!

#48 Tiger on 12.05.13 at 11:03 pm

I don’t think smoking man is real!
Just a fake! Not real! A prop!
Call it on you!
Who could be that stupid, after all??
I’m just saying , crack

#49 Rob on 12.05.13 at 11:07 pm

(Smoking Man:) “You spelt Herd wrong”
Boy, a typical “kettle black” comment if I ever heard one! :-)

#50 not 1st on 12.05.13 at 11:10 pm

So someone here on my street in Regina thought it would be cool to build a $4 million dollar house. It backs a swampy creek known for summer infestations of mosquitoes.

Tonight it is minus 41 degrees with the wind chill. If you had $4 million wouldn’t you build on a beautiful ocean front in Miami or Cali? There has to be something else to this that is not evident. I think its modern money laundering.

#51 Steve French on 12.05.13 at 11:12 pm

****** DELETED *******

Wot?

Now Smoking Man is deleting my posts?

What will they think of next.

https://www.youtube.com/watch?v=LuE_Jrohnbc

#52 Smoking Man on 12.05.13 at 11:24 pm

#48 Rob on 12.05.13 at 11:07 pm
(Smoking Man:) “You spelt Herd wrong”
Boy, a typical “kettle black” comment if I ever heard one! :-)
……………………………………….

I could have typed spelled. “spelt”, what fun is that.

I’m building a brand, selling a book. come on use your head.

And all you shits will buy it, why? Your hooked…

#53 Peter on 12.05.13 at 11:32 pm

Garth – what do you think the impact of a lower CDN, especially with other markets improving and falling rates here, will have on the markets? Do you see an exodus of capital from Canada, which will bring the kiss of death to this bubble?

#54 Smoking Man on 12.05.13 at 11:32 pm

#48 Tiger on 12.05.13 at 11:03 pm
I don’t think smoking man is real!
Just a fake! Not real! A prop!
Call it on you!
Who could be that stupid, after all??
I’m just saying , crack
………………………………….

If you’re going to chirp, put more thought and effort into it.

Last 6 years or so on here, I have been chirped huge. You are so amateur at it compared to others.

The quality of your insults suck.

If you wana give it to me. Give it to me.

You are not even worthy of a response with your lame chirps.

#55 Obvious Truth on 12.05.13 at 11:38 pm

Is anyone else singing blame it on the rain? Painful.

We lost a great one today. Nobody inspired and cared for people more. Life doesn’t need to get more complicated than that.

Congrats Wen and Patrick. You’ve made things less complicated in your own way.

#56 chapter 9 on 12.05.13 at 11:48 pm

Right now the federal reserve is printing 0.29 cents of every dollar the U.S. government spends add that to long term debt and unfunded liabilities!! $205 TRILLION Alot of very worried people out there. Go to “The InformAct.Org”

#57 johnny d on 12.05.13 at 11:50 pm

Regina’s a hole. GO RIDERS!!!!!!!

#58 Cici on 12.05.13 at 11:52 pm

Thank you Smoking Man :-)

Although, I wasn’t thinking of jumping into that little bond.
I was more thinking about the reasoning behind the decisions (e.g., is it just because the stocks are valued to high, so the time is ripe for a split, or is there other stuff going on…like maybe some of the air is coming out of their mortgage portfolios so they are looking to try to get more little guys in at enticing prices to make up for the difference and hence keep the profits up). Blah, blah, blah.
Want your guys’ opinion because I know nothing about stock splits.
So since you are feeling so generous tonight, have any more advice to offer? Investment advice, preferably. Or will have to buy you drinks for that…Nothing is free these days now is it, LOL!

#59 Cici on 12.05.13 at 11:53 pm

Oops, meant little “pond” (but not bonds right now either)

#60 Cici on 12.05.13 at 11:54 pm

Oops…and stocks valued “too” high.

I’m “too” tired…gonna go to bed and catch up on the comments tomorrow night.

#61 Mr. Frugal on 12.05.13 at 11:57 pm

I find it interesting that it’s socially acceptable to flaunt expensive houses and cars. But, it’s considered inappropriate to discuss your finances – even amongst your closest friends. It would not be considered rude to show off your $1M corn-flake palace. But it you even mentioned the fact that you scored 25% on your VTI ETFs this past year your guests would think you were obnoxious. Boy, are people hypocritical.

#62 Carpe Diem on 12.06.13 at 12:03 am

to #17 Julia

Babe, SM is a lone wolf. He is no sheep.

His choice of Mayor might be in question. Personally, I think some who like to party is fine but crack and heroin is pushing the boundaries.

But if 30% of the people can elect a mayor, so be it. Maybe our system is wrong and it requires 50%+1. Then it should apply to all levels of government. So H & F wouldn’t be screwing with our future economy!

There is a theory that humans are becoming more stupid because we allow stupid people to multiple. I believe this theory. People were smarter 5000+ years ago since they had to survive and we are here today.

Seeing stupid people running the show because they can talk and sound better than the guy who saves their ass when they talk shit make me laugh.

I know, I save public servants’ ass all the time – that’s why I make lots more then them!

#63 Peter on 12.06.13 at 12:08 am

Hi Garth ,

Didn’t Ross Kay state that May, 19th, 2013 was the day real estate “died” , he was using his 100% full proof real estate system , compiling his own data , and forecast in his 60-90 day time line using the same information? The future may be harder to predict than before, I agree with some of the posters, the graph does not spell doom to me. I agree with smoking man , it will be taxes (direct and indirect) that will derail this economy , but it will affect more than just the FIRE industries. Hope not

#64 Kate on 12.06.13 at 12:30 am

Garth, this was a surprising statistic for me:
“By the way, less than 15% of people have stocks.”

- are you referring to just actual stocks? Or also ETFs that track the indexes, mutual funds etc?

#65 Shawn on 12.06.13 at 12:35 am

FAKE GROWTH?

U.S. GDP grew at 3.6% rate in Q3.

But as all doomers know this was fake!

It was only caused by fake things like people making products and providing services and getting paid to do so. By companies exporting and importing. By farmers growing food. By people buying all manner of things including new houses. By 93% of the people who want a job bad enough to go look for one finding one and being employed. By companies borrowing money and investing it. By people borrowing money and buying things. And, most fake of all, by governments borrowing money from willing lenders and spending that money. Look around most of the big U.S. cities and people are bustling around doing business and buying things and eating in restaurants. Fake, Fake, Fake.

Do you see the problem?, all fake, right?

I mean how can all of that be real when I read on the internet that the U.S. is broke and that the total amount of derivatives is 100 times the real economy.

It seems, this will not end. Ever.

#66 Observation Post: GTA on 12.06.13 at 12:46 am

#18 Your friend can roll over the money into Vanguard’s family of low-cost ETFs and at a certain level they may provide a little no-cost guidance (though check the expenses on what they recommend). Vanguard is tops for low-cost funds and transparency. There’s lots of information on their website, too. Why would he need anything fancy? He can join the Bogleheads forum, too. It’s really not hard and if he’s as conservative as he seems to be, he’d lose as much as he’s gaining now by paying someone to manage investing in a few funds. That advisor might stray too far afield.

#67 Observation Post: GTA on 12.06.13 at 12:51 am

#26 I voted for Ford and will do again.
Paying more than 40k total property tax and it isn’t going lower. What we need is proposition 13!


Prop 13 helped to destroy the California economy. What you need is a housing correction. You want big gains on your house value, you take your tax lumps with it.

#68 Ralph Cramdown on 12.06.13 at 1:00 am

Stock splits:

Perfectly meaningless, except for the meaning retail investors attach to them. In the old days, it was considered bad form to buy shares except in ’round lots,’ usually 100. So the theory was that if your stock traded at $90 and the average punter couldn’t afford to put $9,000 into it, you’d better split 2:1 so he’d only need $4,500.

Google figures it’s an advantage not to split, because it discourages penny-ante players who might not be in for the long pull, and the volatility they bring. Warren Buffett is religious about not splitting; his shares now trade North of $100k each.

Shares that get too cheap are trouble, too. Below $5 and there’s reduced ability to borrow against stock, along with a distinct whiff of disrespectability, so companies sometimes do reverse splits (perhaps one new share for five old ones) to get the share price back to respectability.

#69 As Is Old Man on 12.06.13 at 1:14 am

Carpe Diem – I think we live in the same ‘hood. Lots of Hondas and rocks on the front lawns…I back out onto the woods.

#70 not 1st on 12.06.13 at 1:15 am

#64 Kate on 12.06.13 at 12:30 am

Garth, this was a surprising statistic for me:
“By the way, less than 15% of people have stocks.”

Its low in Canada because we don’t have something equivalent to a 401K like in the U.S which forces investment in stocks. Still only about 25% of Americans hold stocks.

People have been burned before in stocks so many are wary and bash a house all you want, but at least you can live in it.

#71 not 1st on 12.06.13 at 1:18 am

#61 Mr. Frugal on 12.05.13 at 11:57 pm

But, it’s considered inappropriate to discuss your finances.

Maybe instead of a luxury car in the drive we could put up a neon stock ticker like the NYSE showing our daily gains and net holdings.

#72 wallflower on 12.06.13 at 1:57 am

Markham – the abyss of culture – anti-pedestrian, anti-cycling (the showcase Enterprise Road has a cycling path that terminates midway with zero options for cyclists other than to back track), car-clogged is an understatement, shopping requires driving from 95% of residences, zilch for adolescents to do, shockingly little live performance for the scale of the place, … baffling why the RE values are moving so high, but, for every non Chinese homeowner moving out, Chinese moving in (my observations and what six other long-time residents have observed on their streets) so the Chinese love it. I live within 2 minutes walk of “downtown” Unionville which is nothing more than a handful of ho hum restaurants, a clutch of realtor offices and a few touristy shops: nothing useful or everyday like basic services. Vast sums of money being spent on highway 7 east/west corridor but the traffic congestion is north/south corridors: all of them. My north/south street is a parking lot 6 hours each day: three in the morning and three in the late afternoon/evening. Ghastly. Really weird place. What are the planners thinking funneling all those resources into an east/west transit corridor?
Outta here sometime 2014. Yeah!!!!!!!!! Never coming back. It’s a soulless, destitute suburb gone big box. Looking forward to the $350 annual decrease on my car insurance as well; very expensive ‘hood badly rated for collisions. Nobody knows how to drive around here, I see stupid collisions at low speeds almost every day. I saw one couple, middle age, drive their vehicle into a meridian into a pole and blow out their BMW airbags. From their behaviour after they got out of their vehicle, it was pretty clear neither was drunk. No 24/7 grocery stores for miles around here. Deadsville. It’s not a pleasant suburban place and it is a dreadful urban place. I guess, if I were to visit the origins of the mainlanders arriving by the hordes, perhaps Markham might look good in comparison. But without that comparison, I am quite simply astonished at the RE value of so many of these ‘cookie cutter’ houses and the crap-condos. I have noticed that the large condos at 610 Bullock (2000 sq ft) are sitting on the market for months and months and months at around $650K. Maybe this indicates a tipping point…

#73 John on 12.06.13 at 2:08 am

To the financially astute [or hoping to be] readers of this blog.
Have you had charges go through on an expired credit card? This has happened to me twice in as many weeks. Here’s the deal. I had purchased a BCAA membership for my son each year for the past few years. Due to a job change, the membership was no longer required. The credit card used to make this purchase was due to expire two months before the annual payment was due so I expected the usual “Please update your credit card information” which, I would simply ignore, ending the agreement. Or so I thought. The payment went through two months after the card expired. I contacted BCAA and had the charge reversed. All was well. Just a glitch, right? No. This morning I received another charge on the same expired card. This time for a subscription to consumer reports. Oh, the irony. I call them up, only to be told that all operators are busy so try later. I never thought I’d prefer being put on hold but….
Next, I call up the richer than you think institute. I am basically told that the credit card issued by their bank really isn’t any of their business. I ask how these charges can go through on an expired card and get some gobbly gook which amounts to; That’s the way it is. Expired card. No problem.
This whole deal is simply wrong and smells really bad. I finally get through to Consumer Reports and got a promise of a reversal of the charge. I talk to a human who agrees that a charge going through on an expired card is bogus and seemed surprised that it was even possible. Keep an eye out for this crap.

#74 Freedom First on 12.06.13 at 2:28 am

Wen and Patrick. Congratulations! Few people have the ability to take the money and run when the price of anything is at record highs. This is why the “rich” are the minority. I have recently re-balanced myself. Fundamentals and gut instinct. Profits, income streams, high %savings rate, inflation protection(not precious metals), and being balanced and diversified, as well as debt free keeps a person ready to pounce with the really good deals that are coming. what I mean to say is that I like this quote from WB: “I don’t have to swing at every pitch, as I have no time limit I am able to wait for the perfect pitch.” Wen and Patrick, when the panic has people ready to sell their RE and it is cheaper to buy than rent, you will be ready, and you will know when it is time. Warning, Wen and Patrick, people will hate you. Jealousy and envy of people who do well financially is harsh. Try to avoid it, stay under the radar. Good luck. Also, people, about Smoking Man making the herd correction, you entirely missed his point.

#75 juno on 12.06.13 at 4:57 am

50 not 1st on 12.05.13 at 11:10 pm
====================

Completely right. WTF living in the prairies in the winter is like living in a prison colony in Siberia. Then the freakin summer , try sun bathing at night, the critters will suck ever drop of blood out of your body.

I’m sure your buddy is california dreaming right now

#76 ILoveCharts on 12.06.13 at 5:58 am

BREAKING NEWS: MAYOR ROBERTSON ACKNOWLEDGES HAM AND CONSIDERS IMPLEMENTING A NEW FOREIGN OWNERSHIP TAX

#77 Rob on 12.06.13 at 6:37 am

Rarely comment but I totally understand the feeling. Quite a few years ago a family member got talked into selling the place, use equity to pay debt off, buy new TV blah blah blah. In the meantime house prices doubled, rent went up massively (good 1/3rd more than the mortgage was) etc.

Of course in hindsite they said selling was the worse mistake they made.

This is why people pressure you to buy.

BTW other family member, got out of debt, saved up a big downpayment bought a really nice place (not in TO) and are hoping to have it paid off in 5 years!

That’s how you buy a place

#78 Besch Girl on 12.06.13 at 7:48 am

Wallflower

I lived in Unionville from 1985 to 1995. What a hellhole. Everyone thought they were superior and unique. Sure the town was quaint. Bored the crap out of me. Now, it just hell. Go back, once in a while, as the Chinese grocery stores are interesting. Other than that, the place sucks. Can’t imagine what the taxes are now on that 3,600 clapboard house. Had to move, as my two young sons could not compete intellectually with kids who go home after school and play the violin. We were outnumbered. Granted my boys were stupid, but really. Not even a fighting chance. Major of the day Carol Bell puts her foot in her mouth and says the Chinese are taking over. Glad they swarmed the place, made it easier to get out. I have nothing against Asian people. Don’t care. My neighbours had 16 people living in the place. Makes sense to me. Easier to pay the taxes. I think we got jealous. Was married then, that sucked too.

#79 Beach Girl on 12.06.13 at 7:49 am

Great SPELT my name wrong. I blame it on Smokin Man.

#80 Just play dumb on 12.06.13 at 8:08 am

@#62 Carpe Diem

There is a theory that humans are becoming more stupid because we allow stupid people to multiple. I believe this theory.

+++

in the last century, russians and nazis had lists of smart people: intelligentsia, successful business people, doctors professors , land owners etc, they were targeted and eliminated. They were eliminating the present and future resistance to the regime. Same game plan, from the same mind

#81 Ralph Cramdown on 12.06.13 at 8:50 am

#71 not 1st — “Maybe instead of a luxury car in the drive we could put up a neon stock ticker like the NYSE showing our daily gains and net holdings.”

I’ve thought that a sign on every house (in neon, as you suggest) showing the owners’ percent equity might dampen the animal spirits a bit. Then again, it might further serve to normalize the culture of debt and cash flow.

#82 T.O. Bubble Boy on 12.06.13 at 9:23 am

@ #61 Mr. Frugal on 12.05.13 at 11:57 pm
I find it interesting that it’s socially acceptable to flaunt expensive houses and cars. But, it’s considered inappropriate to discuss your finances – even amongst your closest friends. It would not be considered rude to show off your $1M corn-flake palace. But it you even mentioned the fact that you scored 25% on your VTI ETFs this past year your guests would think you were obnoxious. Boy, are people hypocritical.
————————————

I wear a VTI ticker on my shirt (I knew there was some reason for wearable computers).

VTI up 26.77% + USD 7.31% vs. CAD = +36% YTD in CAD terms.

#83 maxx on 12.06.13 at 9:31 am

“Only the rear view mirror can verify this……

That’s the thing about the obvious. Never is.”

Even if it were, many would ignore it. Most are being consumed by FIRE and debt. In fact, most are.

The days of TPTB feeling smug that they could “finesse” a return to healthy economic conditions are almost certainly over. They have overshot by diddling about for far too long and the damage grows daily.

#84 Don on 12.06.13 at 9:39 am

A true story of the 1990 craze and peak.I own a farm not too far from Garth’s old Caledon bunker. My farm got sold three times from 86 to 90. The price,s 200 the 280 then a staggering 575000 in 1990. I was renting a farm during all this time and my wife and I said privately to each other I guess we will never own our own farm. I waited and ended up buying this place for 232500 in 1993. It took a year of negotiating and the market was so cold that I had absolutely no fear of missing out on the place. When the tide turns it is incredible too watch. I am not saying I am smart, I might have taken the plunge if credit were as readily available, just lucky.

#85 maxx on 12.06.13 at 9:56 am

#9 TurnerNation on 12.05.13 at 9:31 pm

Say what to name the Markham NHL team?
Markham Hammers? The Hambonis ?

How about the “Mark to Market Porkies”, or “Markhamdown Hamsters”

#86 Steven on 12.06.13 at 10:03 am

Always sell your horse before it dies.
Now the real question is can Wen and Patrick invest the proceeds and gain enough to pay the rent and other expenses after the taxes on investment income?

#87 Okotokian on 12.06.13 at 10:11 am

#38

SM, ‘spelt’ is a type of grain you untermensch.

#88 recharts on 12.06.13 at 10:24 am

#76 ILoveCharts on 12.06.13 at 5:58 am
BREAKING NEWS: MAYOR ROBERTSON ACKNOWLEDGES HAM AND CONSIDERS IMPLEMENTING A NEW FOREIGN OWNERSHIP TAX

Source? The only thing that I could find about Robertson was that he was pushing to make mental sanity in Vancouver a high priority on his agenda.♫♫

#89 in Germany on 12.06.13 at 10:29 am

@#2

“Tiff Macklem, senior deputy governor of the Bank of Canada, is stepping down from his post in May to join the University of Toronto’s Rotman School of Management as its new dean.”

Genius, moving to education as a dean. Great place to weather an economic storm.

#90 Franco on 12.06.13 at 10:30 am

The only way RE is going to tank is if interest rates are going to go up significantly or there is massive unemployment, neither seems to be likely anytime soon. The worst that will happen is that prices will stagnate.

#91 NoName on 12.06.13 at 10:31 am

http://goo.gl/CV2LWT

MUST READ!!!

It could far fetch and crazy but belief that RE always goes up could be programed in dna.

“Crazy” scientists of Emory University conducted a study on maice an concluded that “memories” are “transfered” on to next generation.

“The experiences of a parent, even before conceiving, markedly influence both structure and function in the nervous system of subsequent generations,” the report concluded.

#92 jess on 12.06.13 at 10:44 am

From the other day

Alison wrote:
“The important point I am making is that 1990 was also considered to be a “bubble” in Toronto.”
=============
History of Member Institution Failures
http://www.cdic.ca/WhereInsured/FailureHistory/Pages/default.aspx

Security Home Mortgage Corporation 1996
NAL Mortgage Company 1995
North American Trust Company 1995
Income Trust Company 1995
Monarch Trust Company 1994
Confederation Trust Company 1994
Prenor Trust Company of Canada 1993
Dominion Trust Company 1993
First City Mortgage Company 1992
First City Trust Company 1992
Central Guaranty Trust Company 1992
Central Guaranty Mortgage Corporation 1992
Shoppers Trust Company 1992
Standard Trust Company 1991
Standard Loan Company 1991
Saskatchewan Trust Company 1991
Bank of Credit and Commerce Canada 1991
Settlers Savings and Mortgage Corporation 1990
Financial Trust Company 1988
Principal Savings & Trust Company 1987
North West Trust Company 1987
Columbia Trust Company 1986
Bank of British Columbia Mortgage Corporation 1986
Bank of British Columbia 1986
Western Capital Trust Company 1985
Pioneer Trust Company 1985
Northland Bank 1985
London Loan Limited 1985
Continental Trust Company 1985
Canadian Commercial Bank 1985
CCB Mortgage Investment Corporation 1985
Northguard Mortgage Corporation 1984
Seaway Trust Company 1983
Seaway Mortgage Corporation 1983
Greymac Trust Company 1983
Greymac Mortgage Corporation 1983
Fidelity Trust Company 1983
Crown Trust Company 1983
AMIC Mortgage Investment Corporation 1983
District Trust Company 1982

#93 Penny Henny on 12.06.13 at 10:47 am

To-#63 Peter on 12.06.13 at 12:08 am
Hi Garth ,

Didn’t Ross Kay state that May, 19th, 2013 was the day real estate “died” , he was using his 100% full proof real estate system , compiling his own data , and forecast in his 60-90 day time line using the same information?
——————————————————-
Yes Peter, it was May 19th the beginning of the end as we know it. Precisely 12.24pm I believe.
Another thing. Why do people always chirp “this will not end well”.
What is the end? when to we determine the end is here? do they mean the end of the world?
Too many are happy to be bootlickers. Can’t think for themselves. But on the bright side you can say they were trained well!
Penny Henny

#94 December Avg price for TO Condos -screwed on 12.06.13 at 10:51 am

http://tinyurl.com/l7n4tma

The Hazelton Hotel/Condo Combo+5 Star Services. One Of Only 16 Luxurious Suites Atop Small Chic Hotel And Legendary Mark Mcewan Restaurant. Approx 5000 Sq Ft Interior + 1000 Sf Terrace. Stunning 102 Ft South Expanded Juliette Balconies. 2 Mbr Ensuite Baths, 2 Dress Rms, 10 Ft Ceilings, Hardwood Thru-Out, Custom Fp’s, Family Room, Library, Walls Of Glass – A Jewel! Incredible Value! **** EXTRAS **** Excl For Condo Owners, 24 Hr Hotel Dining, Health Club& Spa, Concierge, Valet Pking, 2 Storey Infinity Pool,26 Seat PrivateTheatre Screening Rm. Steps To World Class Shops, Galleries, Museums & Restaurants, Right In The Heart Of Yorkville

Sold 5.5M
Area: Annex
Last asking 5.95M
Initial asking 6.75M
taxes :45716.62/2013 92
Main Fee $6,203.67
DOM 162

Sold for -19% under asking

Now the question is who the heck paid that money.

#95 ozy - i also support FORD no matter what he does on 12.06.13 at 10:52 am

I also support FORD no matter what he does

Enough talkers at the city hall, we need do-ers.

Councillors needs to grow some balls and follow the lead of the single tough-on-crime mayor we’ve got in last 15 years in TO. I am taking about over-taxation and wasteful-spending CRIME which is at RECORD HIGHS in TO

#96 Sebee on 12.06.13 at 10:56 am

What’s next? Yellow helicopters invade US headline?

http://money.cnn.com/2013/12/04/real_estate/chinese-homebuyers/index.html?iid=HP_River

#97 Ozy to Smoking man - Mars to Jupiter on 12.06.13 at 11:00 am

the TO market will not peak in 2014, but u are on the good track

some markets in TO peaked already in 2012, some more in 2014 some more in 2015 and some in 2017. It’s how hot it is.

Play you bets carefully.

hope u agree

#98 December Avg price for TO Condos -screwed on 12.06.13 at 11:03 am

You should see the spike on my charts for condos ☺☺
This is going to be an orgasm for media and F is going to wet his pants again. Actually I think that in that sense he is a little bit ahead:

Pattie Lovett-Reid ‏@PattieCTV 25m

@JimFlaherty says he regrets CMHC getting so large and would tighten mortgage rules again if needed.

#99 Daisy Mae on 12.06.13 at 11:04 am

“2007 through 2009- A market Correction began but was quickly stalled by Government intervention quickly adding additional Risk to the market.”

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

“quickly adding additional risk”. Hmmm…some very poor Conservative ‘governing’.

#100 heineken on 12.06.13 at 11:09 am

WWWWWHHHHHHHOOOOOOOOOSSSSSSSSSSSSSSSSHHHHHHHHHHH!!!!!!!!!!!!!!!
Does anybody hear that?
WWWWWWHHHHHHHHHOOOOOOOOOOOssssssssssHHHHHHHHHHHHHH!!!!!!!!!!!

It’s getting louder every day.
Can’t be my ex-wife, she was never that good (too me).
WWWWWWWWWWWHHHHHHHHHHHOOOOOOOOOOOOOOSSSSSSSSSSSSSSSSHHHHHHHHHHHH!!!
That GIANT sucking sound are the jobs that are leaving this country every day to Mexico and China.
Lets review the gov’t propaganda and its machines at work; Those manufacturing jobs are dirty. Bad for the environment. Very low impact on society. Nobody wants these repetitive task oriented jobs. Let’s give them away and replace them with high level, environmentally friendly , high education , safe jobs. We can all become accountants, and lawyers and physicians and if god has mercy on anyone, you can get a job with the federal/provincial gov’t coloring your fingernails and toenails during your lunch-break.
Isn’t it great—we now have beautiful environmental high thinking clean jobs replacing all the tough dirty jobs.
The plan is working for the new world order, and if you want to see what happens – just take a look at the United States of Amerika. Loss of MANUFACTURING JOBS means no middle class . NO more jobs means no taxes paid to the gov’t. No jobs means a decrease in consumer spending. No jobs means an increase in welfare and ui recipients. It goes on and on and on…………………….
Yeah, you come across all sorts of interesting things these days. Truth is popping up its head in the most unexpected places. We’ve got a strange dichotomy at work. It appears to me that insanity is going exponential. The most amazing thing to me is that those who are insane and there’s no other word that more accurately describes them, are unaware that they are insane. Yeah, I already posted something about this a couple of weeks ago but it deserves second mention because we are in the observation booth of the rising of the ridiculous. And our elected gov’t officials ( the only government leader worthy of his pay is rob ford) are leading the sheep.
For a lot more than 10 years I have been saying that the greatest danger to society is political correctness and the government lies and propanganda.

#101 2CntsCdn on 12.06.13 at 11:12 am

Beach Girl #78 and #79
Too funny … dam those violin playin Asian kids. The sound of all those violins echoing through the streets at night is enough to make one go batty : ) …. no wonder the white kids can’t study : )

Real estate love’s “keeping up with the Jones” …….. and between the subdivision after subdivision of landscaped-less, soulless, multi-gen homes, the crowded outdoor malls (heck … the crowded indoor malls) and roads clogged with BMW’s, Merc’s and Range Rovers all day …. Markham is the perfect example of masses trying to keep up with their neighbor. Great as an economy stimulator …. but look inside and see the sad forces driving it all. “Success” has just become “more”.

#102 Holy Crap Wheres The Tylenol on 12.06.13 at 11:23 am

Smoking Man I didn’t know you were such a big Pink Floyd fan? I only saw them three times but the first time was the best as my buddy from the air force was related to Mary Ann Lindsey & Phyllis Lindsey. They were sisters doing backup for the Great gig in the sky during the concert tour for Dark Side of the Moon. We got back stage passes for the March 1973 concert at Maple Leaf Gardens. Still recall meeting them all. David Gilmour, Roger Waters, Nick Mason & Richard Wright,
Dick Parry and of course the back ground singers Black Grass (Nawasa Crowder, Mary Ann Lindsey & Phyllis Lindsey) My buddies connection with Mary Ann and Phyllis was the one and only time I ever got to meet a group. I can tell you David Gilmour was the nicest of all of them, he offered drinks and spent time talking to us. Roger didn’t talk much, was playing with his bass guitar most of the time deep in thought. Nick and Richard were proper gentlemen, very English.
Oh yes here’s a thought for inflation the going rate for most tickets to the show were 4.50! Yes that’s four dollars and fifty cents.

#103 Shawn on 12.06.13 at 11:32 am

Show Me Yours, please

Mr. Frugal at 61 said:

it’s considered inappropriate to discuss your finances – even amongst your closest friends.

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

True, and with very rare exception even financial advisors will never show you their own personal returns let alone wealth.

Why is that?

All these gurus what has been their personal returns from investing. They never seem to say.

Garth is an exception, and (I believe) has stated from time to time what his personal returns in thge market have been.

#104 Ralph Cramdown on 12.06.13 at 11:41 am

#83 maxx — “The days of TPTB feeling smug that they could “finesse” a return to healthy economic conditions are almost certainly over. They have overshot by diddling about for far too long and the damage grows daily.”

My definition of “the powers that be” would be billionaires. And they are doing just fine year-over-year as a visit to Forbes or Canadian Business will show you.

The agenda of many of them shows up quite clearly in the output of US right-wing think tanks. What do they want? Low inflation, a strong dollar, higher yields on government bonds, less government spending and no tax increases for the wealthy. In the current macroeconomic environment, that’s the opposite of an agenda for growth. But it makes for healthy economic conditions for TPTB.

#105 Derek R on 12.06.13 at 11:48 am

#67 Observation Post: GTA on 12.06.13 at 12:51 am wrote
Prop 13 helped to destroy the California economy. What you need is a housing correction. You want big gains on your house value, you take your tax lumps with it.

That is worth repeating until it sinks in. “Prop 13 helped to destroy the California economy”. If you want to see an example of the law of unintended consequences in action, look no further.

#106 erebus on 12.06.13 at 12:06 pm

It’s a tragedy for me
To see the dream is over
And I never will forget the day we met
Girl I’m gonna miss you

#107 Bottoms_Up on 12.06.13 at 12:19 pm

Someone mentioned the wealthy barber yesterday. Let’s recap the advice:

1) Save 10% of what you make, and invest in mutual funds earning 15% per year (vs. 5% in a bank account).

2) Take out a loan, buy a house and rent it out. No accounting for realtor costs, or property tax. But I do have to hand it to him, he did account for maintenance and the fact that it’s possible prices *could* go down. But that was quickly followed with ‘most often prices always go up’.

Methinks that advice isn’t so sage nowadays. Yes paying oneself 10% first is always important, but at a 5-7% rate of return we likely need to put away 20% to make the ‘millionaire’ mark.

#108 Bottoms_Up on 12.06.13 at 12:30 pm

#73 John on 12.06.13 at 2:08 am
————————————-
That’s nutz. My big beef a few years ago was the rules that the CC companies lobbied for. They are now allowed to ‘sell’ you money at low interest rates (i.e., through those paper cheques you sometimes receive in the mail), but then when you make a payment to your CC, it is applied proportionally to the various interest rate debts (instead of wholly toward the highest debt first–effectively trapping you into being charged higher interest). This is an outrage, and I’m quite surprised this was never picked up on in the media. For this reason, I ditched most of my CCs and will never fall for these tactics again.

#109 ponerology on 12.06.13 at 12:32 pm

“Risk to most people means losing half your RRSP in another 2008-style stock crash. But the odds of that are miniscule, and the fear irrational. – Garth”

In the short term I agree. If you are in your 20s buying stocks for your RRSP chances actually fairly good that you’ll experience something like that at least once before you are 67 assuming you never sell the equities. Although it’s probably not a big deal unless it happens within 3-4 years of retirement hence the advice from many financial advisers to reduce your exposure to equities as you get closer to retirement.

I do not recommend owning individual equities, unless you have seven figures to invest. — Garth

#110 frank le skank on 12.06.13 at 12:36 pm

#78 Beach Girl on 12.06.13 at 7:48 am
Granted my boys were stupid, but really
———————

LOL.. I love the honesty!!!

#111 Son of Ponzi on 12.06.13 at 12:41 pm

Don’t have any stocks.
But lots of stockings.
Always hang them on the fire place mantle at Christmas.

#112 Son of Ponzi on 12.06.13 at 12:47 pm

This is the link to the Gregor Robertson property tax on foreigners story.
http://www.cknw.com/2013/12/05/real-estate-expert-says/

#113 Bailing in BC on 12.06.13 at 12:55 pm

Real Estate Crash in China

http://gizmodo.com/5304233/entire-new-13+story-building-tips-over-in-shanghai/

#114 Smoking Man on 12.06.13 at 1:02 pm

“more”.#102 Holy Crap Wheres The Tylenol on 12.06.13 at 11:23 am

Lucky you, I would give up my left nut to spend an hour talking waters.

He was the artist, doesn’t surprise me one bit he was a loner in the corner. When your creating need to tune world out.

My smart phone loaded with Floyd, I must have some kind of autism, every Friday night after I blow 500 bucks, at Seneca, I go to the centre bar. Put my head phones on and listen to only Floyd.

Then I type shit on here.

Some of my best and worse posts in the corner of the bar by myself.

#115 Nemesis on 12.06.13 at 1:04 pm

Depending on your ‘Zone’, SaltyDogz this could be either LuncheonZen or BreakFastZen… [unless you're BunkerHunkering and all of your clocks are programmed UTC, in which case - it's just ZenZen]…

FirstUP; NoViolins for JoyMo et al as EveningStandard refugee and SCMP EmbeddedForeignCorrespondent Ian Young continues to ‘StirItUp’ with HongCouver dispatches… [AsideToDogz: "Don'tShootMePlease, I'mJustThePianoPlayer"]

[SCMP] – Born in China, Joy Mo blames rich mainlanders for Vancouver’s housing woes

…“Most immigrants who came here before 2008 or 2007 were mostly independent immigrants who came here with certain technical backgrounds. They tried to find a job, settle themselves here. But after that, all of a sudden, there are a whole bunch of investor-category immigrants,” Mo says. “Those are the ones that have a lot of money. They are generally not working and they don’t really care about finding a job because they have a business back in China.”

Mo is referring to the thousands of millionaire investor-class migrants who have been allowed to simply buy their way into Canada by handing over C$800,000 in cash to the provincial government (the loan is returned, without interest, after five years). More mainland Chinese enter Canada under the controversial scheme than all other nationalities combined. In the past eight years, 24,265 out of a total 36,892 investor migrants who settled in BC were mainland Chinese.

Mo says she became aware of the extent of the problem as she mingled with fellow alumni of Shanghai Maritime University who had recently moved to Vancouver. “I went to their new homes and we talked about purchasing houses. I was shocked that they didn’t have to pay anything extra as international buyers. And they thought that the prices of these houses were quite cheap,” she said, referring to homes ranging up to C$2.4 million…

…Mo, a Canadian citizen, says she struggles to restrain negative feelings to her rich mainland friends. “When I face them, I can’t say much,” she says. “But afterwards, I keep thinking, why do we allow them to do these things? Why not ask them to pay more property tax? It’s not a big deal for them.”…

http://www.scmp.com/comment/blogs/article/1372813/born-china-joy-mo-blames-rich-mainlanders-vancouvers-housing-woes

Still, there are worse things than SittingOutTheBubble in PortMoody while your contemporaries flaunt their WestSide ViolinPalaces… for example, you could have deposited your BitCoins in a DigitalWallet @ SheepMarketPlace [#YouCan'tMakeThisS**tUp]… Oops!

[NewStatesman] – There’s a £60m Bitcoin heist going down right now, and you can watch in real-time: Sheep Marketplace closed down over the weekend after someone got away with 96,000 bitcoins – and angry users are chasing him around the internet.

http://www.newstatesman.com/future-proof/2013/12/theres-%C2%A360m-bitcoin-heist-going-down-right-now-and-you-can-watch-real-time

…or… Worse, plowed your BitCoinWinnings into a CharmingEeenglish SeasideCottage… EpicFail:

[UK Telegraph] – Houses Disappear into the Sea as Tides Surge

http://www.telegraph.co.uk/topics/weather/10500157/UK-weather-thousands-unable-to-return-home-after-houses-ruined-by-floods.html

Oh my. Well, never mind… ‘cuz, as it happens, leading British HighCourt Judge Sir Paul Coleridge has some timely relationship advice for all you MarriedTypes experiencing a SpotOfBother… [SaltyDogz will especially appreciate the LeaderIllustration, a rare and shocking glimpse of SmokingMan at his best]….

[UK Guardian] – How to stay monogamous, in six easy steps: A high court judge is anxious to prevent break-ups. This short course of study could save him a lot time

http://www.theguardian.com/commentisfree/2013/dec/06/six-secrets-happy-marriages

Well. There it is.

FridayBonusZenForBoyzOnly! ['TheTwins' are prominently featured at 02:20]

http://youtu.be/OVAEbMcQ-t8

#116 Kaganovich on 12.06.13 at 1:17 pm

#65 Shawn

Your post, like most of your other posts, is a paean to the status quo that is chock full of vagaries and obfuscation.

I think that most people who doubt the veracity, or maybe the worth, of the GDP numbers don’t think it is fake; rather, they think they are unsustainable given the conditions they arose from. How many dollars of debt is required to produce a dollar of ‘product’?http://www.macrotrends.net/1381/debt-to-gdp-ratio-historical-chart
And you think borrowing will continue to rise? I think the Fed has been redoubling its efforts to push on a string that seems to be growing more recalcitrant by the day. This can also be seen in the dwindling velocity of money/credit. http://research.stlouisfed.org/fred2/series/M2V?cid=32242

Yes, ‘people’ are still making products in the USA, but let’s be clear, the number of genuine manufacturing jobs has declined dramatically in the past three decades. Has there been a marked recovery in higher paying work? Not really. http://blogs.wsj.com/economics/2013/08/24/number-of-the-week-manufacturing-nowhere-near-regaining-lost-jobs/
The official unemployment rate has been hovering around seven or eight percent due to a historically high rate of attrition combined with a massive student loan credit bubble that keeps most our younger in a standing reserve army of labour (many with costly, but still worthless credentials) that is not officially counted as unemployed. Perhaps there will be a renaissance in manufacturing, but it maybe done mostly by robots, not people. Are service sector jobs comprising the lion’s share of employment growth in the US? Yes, but look at the wages paid to these part-timers. http://www.theguardian.com/world/2013/oct/15/fast-food-low-wages-high-cost-taxpayers
Hardly enough for them to be robust participants in the consumer driven economy. Are they the ones eating in the restaurants many find themselves employed by? Not likely, but they are definitely using SNAP as a veiled subsidy to their employers. Let them eat corn byproducts. http://www.bloomberg.com/news/2013-11-13/how-mcdonald-s-and-wal-mart-became-welfare-queens.html

Do farmers still grow ‘food’? Are North American farmers exporting a desirable product? Depends on who you ask. http://www.dailymail.co.uk/news/article-2333381/GM-wheat-crops-America-facing-wheat-export-crisis-Europe-Japan-lead-way-rejecting-genetically-modified-crops.htm
Are people still buying houses? Sure, but lets add a couple more details to this assertion, shall we? A fair number of house sales in the USA has been by large scale investor entities like Blackstone. Wall street is now abuzz with a new round of derivatives being offered to begin gambling on the newly expanded rental markets across the nation.
http://truth-out.org/opinion/item/20378-the-banksters-are-now-setting-up-the-crash-of-2016
Does the buying and selling of these derivatives/bets contribute to the hallowed GDP? Most likely. Is it a good idea? Probably not. http://dollarsandsense.org/archives/2013/0313bondgraham.html

Are companies borrowing money and investing it? How? Are the rebounds in stock markets a reflection of companies borrowing funds to invest via capex? Not really. Has there been alot of financial engineering behind the run-up in stocks? Definitely.
http://www.pimco.com/EN/Insights/Pages/Scrooge-McDucks.aspx
http://www.zerohedge.com/news/2013-05-28/presenting-full-impact-stock-buybacks-sp-500-earnings
http://www.zerohedge.com/news/2012-11-21/where-levered-corporate-cash-sidelines-truly-going
http://www.zerohedge.com/news/2012-11-21/where-levered-corporate-cash-sidelines-truly-going

Is what is going on fake? No, I think it is entirely real, but is it a sustainable path, let alone the right one? No, not in my opinion. Hegel summed up your worldview a couple hundred years ago Shawn, hellish as it sounds ‘All that is real is rational; all that is rational is real’.

#117 jess on 12.06.13 at 1:18 pm

“The market needs some volatility for us to see bank margins to go up.
Also the cost of capital and compliance is extremely high.”
===========
What about those risky rogues seeking reciprocity in the chat rooms?
http://www.pbgc.gov/documents/2013-annual-report.pdf#page=31
http://www.pbgc.gov/res/laws-and-regulations/reducing-regulatory-burden.html
http://www.pbgc.gov/documents/2013-annual-report.pdf#page=31
VI I . INVESTMENT ACTIVITIES page 47

#118 omg on 12.06.13 at 1:19 pm

The long slow correction as in Kay’s graph of the 1990′s is the best case scenario for Canada.

Too fast of correction will be everywhere in the media. Just imagine all the new stories about people losing their houses and plumbers who once made $150K/yr now at the food bank. This would scare the crap out of people and they will stop spending.

Of course even a slow correction is going to be a drag on the economy, especially TO and Van. But people will not notice a slow grinding multi-year correction it as much, and life (and spending) will go on as usual for most of the population.

Plus it may give those over their head in debt to make some changes.

#119 T.O. Bubble Boy on 12.06.13 at 1:35 pm

@ #42 recharts on 12.05.13 at 10:55 pm
#35 T.O. Bubble Boy on 12.05.13 at 10:32 pm
Wow – Bitcoin down 14% today:
http://data.cnbc.com/quotes/MTGOXUSD

I haven’t seen anything this volatile since 1989-era Toronto condos!
*********************
You did not look enough ☺

http://www.zerohedge.com/news/2013-12-05/citi-bitcoin-could-look-attractive-reserve-managers-complement-gold
—————————————-

uh huh – shocking that Zero Hedge would promote bitcoin… formerly gold bug central, now turning into bitcoin fan zone?

In case you missed it, bitcoin down another 5%-10% today: http://data.cnbc.com/quotes/MTGOXUSD

#120 TnT on 12.06.13 at 1:39 pm

Markham is growing and they are shedding their “olde towne” image and replacing it with a new city image.

They made an attempt to purchase a house over a million before they were out bid by deeper pockets.

Now they are priced out of their own market and with this new global migration of money they have little chance of being an owner in that neighborhood again.

If they park their cash in this stock market it has a greater short term risk than their house had.

Most likely they will rent and watch their neighborhood slowly slip away beyond their reach then panic once they start a family.

On the flip side you can never go broke taking a profit so congrats to the happy couple.

#121 TorontoForNow on 12.06.13 at 1:56 pm

Can’t wait for the annual Christmas dinner with the in-laws when they all look down at us in dismay that we are “still renting” in Toronto while we have little debt and a liquid diversified portfolio that grew 7%+ over the last several years. Meanwhile they are dealing with heavy debt, multiple mortgages, a vacant rental unit and a small mutual fund portfolio – but keep pretending all is well by taking several winter vacations every year!

#122 Enthalpy on 12.06.13 at 1:57 pm

Swat came into my home. Disrespected my whole family!

#123 not 1st on 12.06.13 at 2:01 pm

I opened up my news site today to see a touching tribute to Mandela. Really he was one of the last of his kind. True sacrifice for his nation and beliefs.

Then I looked a bit lower on the page and saw articles about Rob Ford, Duffy and Brazeau and promptly threw up.

There is nobody I can even think of in the world today that would set aside self interest for the greater good. I hope somebody tears up this system one day and creates something better in its place.

#124 Retired Boomer - WI on 12.06.13 at 2:24 pm

#66 Observation Post: GTA

Thanks for the advice on Vanguard. That’s where I have the bulk of my investments, and have had since the early 1990′s. Low Cost, mutual ownership, good service whenever I’ve needed any.

The “trick part” is to get my best friend off his duff to properly diversify his money from a GIC type investment that returns nothing.

Vanguard would be a great solution, but he wants nothing to do with the management of his investments.

Some people, maybe, just are not designed to win??

#125 Tiger on 12.06.13 at 2:26 pm

54 smoking man! Y did you respond then, cause your a dinosaur, fur shure , 6 years working at something, a blog means shit to me,guess what you mean to me!
Is that milk on your cheek old or new, or just the norm!
6 years is a long time bra, it will be 12 and you still won’t know jack! by by big want to be !
your just smoking to much? Brain can’t function , on that shit!ive only been here for 6 months , magin 6 years later, won’t happen, I’m just playing with you see how easey it is to play with a looser, yup !

#126 2CntsCdn on 12.06.13 at 2:29 pm

#120 TnT

“Most likely they will rent and watch their neighborhood slowly slip away beyond their reach then panic once they start a family.”

No they aren’t …. they are just moving north to Aurora (a little cheaper) and starting a new Markham.

#127 World Traveller on 12.06.13 at 2:29 pm

I was more of a Judas Priest man myself.

Anyhoo, in the chinese culture here in Canada I’m sure renting is frowned upon. Some of my friends in High School were chinese, in some cases their parents expectations were unreasonable high. So renting may not meet that expectation.

#128 Ralph Cramdown on 12.06.13 at 2:32 pm

#116 Kaganovich — “I think that most people who doubt the veracity, or maybe the worth, of the GDP numbers don’t think it is fake; rather, they think they are unsustainable given the conditions they arose from. [...] Is what is going on fake? No, I think it is entirely real, but is it a sustainable path, let alone the right one? No, not in my opinion. “

The global economy is a very dynamic system, and isn’t ever really on a sustainable path, in the sense that there’s always various growing imbalances which aren’t indefinitely sustainable.

Financial engineering? Yes, corporations have sold bonds and bought their stock, since many investors would rather own bonds right now at stupid-low coupons than own stock. So those of us left over end up owning more of the company, stock dividends become a smaller fraction of GDP and bond coupons a greater one.

The worst time to invest in stocks is when everybody can see clear skies and growth for miles. At that point all those “new paradigm, “permanently high plateau” “great moderation” predictions are baked in.

There are definite worries. For me, the big ones would be China and Southern Europe, same as last year. Unsustainable debt in the USA? Not a major worry for me.

#129 Holy Crap Wheres The Tylenol on 12.06.13 at 2:37 pm

Smoking Man I don’t do Casinos except a few once when I went to Las Vegas, however I have a very fine collection of albums, yes I said albums. The vinyl type of music from the 1960s and 1970s. Most of it I played once or twice then taped on my reel to reel. I don’t know if you even know what I am talking about as it really dates my age. I’m a graduate from the 1960′s so there. I flip on the headphones and sit back every weekend here overlooking Lake Ontario in Oakville listening to old classic rock. It is very soothing and sets me up for the wicked week ahead running a business. So I get your thing my friend! Sit at the bar, home, car or wherever music is relaxing. Making money is not relaxing but it rocks too!

#130 Godth on 12.06.13 at 2:41 pm

#123 not 1st

Mother nature is on the job. This level of alienation can’t last, it’s too discordant; unnatural.

#131 GsAmazon on 12.06.13 at 2:52 pm

(#34 Babblemaster on 12.05.13 at 10:32 pm)
The non-reg account gives you the opportunity to make a strategy for claiming your cap losses/gains that is tailored to your circumstances – and the CRA gives you a window of time that allows you to plot out a rough three(?)-year plan for maximum tax avoidance (sweet!) based on your needs…esp. income-splittin’ or wildly fluctuating employment income from year to year or whatever.

(#73 John)
Um, kinda…had charges pop up on a card that was both expired and cancelled, but the little guy in the blue suit and bowler hat treated it like a cause for concern and it was the security dept ppl who sorted it – don’t know why/how it happened – secretive bunch – i think they can’t tell you certain things, but they sure do ask about 10,000 questions of their own…

(#102 Holy Crap Wheres The Tylenol)
I am not worthy!!! I’ve been singing ‘money’ all morning! *sosorryeveryoneinearshot thanks for sharing, tho – wish I’d been born to ‘invest’ my $4.50 right…

(#43 Smudgekin on 12.05.13 at 10:56 pm) People with ‘Chinese heritage’ usually come from China…

#132 WesternThinking on 12.06.13 at 2:56 pm

Are you saying that NOBODY (average) can afford a house or mortgage because SOMEBODY bought a similar house for an exorbitant amount?

Let’s take a look at this.

It is just like the stock market is it not? When prices go up, nobody complains that they can’t afford to buy a new stock. They celebrate that the last person who bought (and sold!) set the price for the asset they own. It does not mean they need to rebuy their existing stock at that price (nor that they’ll sell).

If we go with the idea that ownership stifles mobility, it only reinforces the fact that most of the people in the country bought their house prior to the rising prices. Just because the new entrant has to pay the high price, doesn’t mean Joe Schmoe who bought in 2003 does.

For instance:
Joe buys in 2003 for $250k with 10% down – Mortgage of $225k, equity $25k

Jeff buys his neighbors house in 2013 for $850k with 5% down

If the status quo was maintained, and Joe’s house was exactly valued like Jeff, Joe would have a mortgage of ~150k and equity of 700k. His mortgage payment/affordability would NOT be affected by the price increase. In reality, the vast majority of Canada is in Joe’s position. It is only the new homeowners that are affected.

How then do we always rate the country’s affordability based on Jeff? I think the Vancouver #’s are a hyperbole based on fact, but as usual, distorted in their dissemination.

#133 Rabbit One on 12.06.13 at 3:11 pm

>Holy Crap Wheres The Tylenol

Good for you!
I am also avid Vinyl collector of ’60′s and 70′s.
My favourite musicians are Zappa, Art Bears, Faust….
Lots of limited edition, German press, Japanese premium press, etc.

Just doing this for many years as hobby and enjoying so much.
Noticed inventory seems very limited these days.

I think I should add what to do with my collection in my Will soon.
(not 50 cents per piece at throft shops kind of thing, at least to me, my spouse, daughter would not understand…)

#134 recharts on 12.06.13 at 3:11 pm

uh huh – shocking that Zero Hedge would promote bitcoin… formerly gold bug central, now turning into bitcoin fan zone?

In case you missed it, bitcoin down another 5%-10% today: http://data.cnbc.com/quotes/MTGOXUSD

I did not miss anything
I am not invested in and I do not own bitcoins
If someone is blind enough not to see the potential that this technology has then I have nothing to discuss with that person.
It will be gradually adopted by the large mass of persons and countries. In the worst case scenario it will remain a facilitator for barter.
You are pointing me to days of the life of this currency ..I am pointing you to the years to come.

#135 happity on 12.06.13 at 3:15 pm

“Besides, a balanced portfolio bounced back entirely within one year. ”

Due to bailouts and unprecedented money printing, not fundamentals. Get your facts straight, the snp500 didn’t pass the 2007 high until 2013.

You have no idea what a balanced portfolio is, do you? — Garth

#136 JSS on 12.06.13 at 3:23 pm

#127 World Traveller on 12.06.13 at 2:29 pm
I was more of a Judas Priest man myself.

————
Dude I’ve been a Priest fan since 1986.

#137 Ripped on 12.06.13 at 3:38 pm

#114 Smoking Compost

Then I type shit on here.

…………………………………………………………………..

Yup

#138 Macrath on 12.06.13 at 3:40 pm

“Imagine the consequences of the next housing correction.”
—————————————————————-
lets hope it isn`t anything as severe as the American plight.

Capitalism A Love Story— Michael Moore documentary

https://www.youtube.com/watch?v=yLDIoO_ug2c

#139 :):(Ying Yang on 12.06.13 at 3:57 pm

#127 World Traveller on 12.06.13 at 2:29 pm

I was more of a Judas Priest man myself.

Anyhoo, in the chinese culture here in Canada I’m sure renting is frowned upon. Some of my friends in High School were chinese, in some cases their parents expectations were unreasonable high. So renting may not meet that expectation.

…………………………………………………………………….

I am Asian decent born overseas but raised here and you are 100% correct we purchase land! We only rent is we are poor. Most Asians back east can not afford to purchase land. It is in our blood to own our land. Land is power! Power is wealth. Wealth is respected!
As far as parents expectations its in their blood to raise their children to be the best that they can be and beyond that again. Hard to explain the insanity of Asian parents, but it is expected that you become something better than them. Thank god my parents were not Brain Surgeons or Astrophysicist’s, I would have been in trouble.

#140 Victor V on 12.06.13 at 4:03 pm

http://business.financialpost.com/2013/12/06/flaherty-cmhc-mortgages/

Finance Minister Jim Flaherty said Friday he regrets that Canada’s housing agency has grown as large as it has and promised to take additional measures if a reduction in the amount of government insurance on mortgages is needed.

The value of home loans insured by Canada Mortgage & Housing Corp., which is backed by the federal government, has almost doubled since the end of 2006, saddling taxpayers with a growing liability as policy makers warn that gains in house prices may be unsustainable.

“Regrettably, CMHC became something rather more grand I think than it was intended to be,” Flaherty told reporters today in Markham, Ontario, near Toronto. “We’ll see over time what that role should be.”

#141 :):(Ying Yang on 12.06.13 at 4:11 pm

Smoking Man my brother fly’s out to Vancouver tomorrow. We when to Seneca on Thursday night. Had a blast, no girlfriend, just my brother and a couple of good friends. Had drinks at Club 101, after playing slots for one and a half hours some girl working at the casino comes up to me and says you have 52 points on your card. You can come to the Chairman’s Lounge for drinks or some food. I thought is was a scam. How the hell did she know how I put on 52 points in 1.5 hours. Then my brother says you idiot they know everything about you on that card. Your ramp rate told them to hook you in quick as a potential whale. So we went inside to some quite little bar with some school style cafeteria food. That sucked so we beat it out of there and went to their Steakhouse and had a great meal. Going to Vancouver next week for Christmas so will only be checking in on your ventures. No trips to Seneca for a few weeks. Have a good one!

Oh yes the moral of this story is, Shit the Man is watching you even in the Casino, especially in the Casino. They know everything about our habits, I’m dumping the stupid card.

#142 johnny d on 12.06.13 at 4:14 pm

TnT

How do you get your head so far up there?
You know where I mean.

#143 Tony on 12.06.13 at 4:35 pm

Re: #3 T.O. Bubble Boy on 12.05.13 at 9:15 pm

That got shot down.

#144 happity on 12.06.13 at 4:41 pm

“You have no idea what a balanced portfolio is, do you? — Garth

And there’s the rub, garth, you have never posted time stamped statements to back any of your claims. It’s like the fish that got away.

So, that’s a ‘no’. — Garth

#145 TnT on 12.06.13 at 4:42 pm

#142 johnny d

TnT

How do you get your head so far up there?
You know where I mean.

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

Markham is growing

They sold in a rising market

They tried to buy a million dollar house and got out bid by deeper pockets

They now can’t afford the neighborhood they wanted

Stock market has more short term risk than the house they just sold

Why is your head in the sand?
Can’t handle the truth?

#146 Bgreene on 12.06.13 at 5:00 pm

@ #18 Retired Boomer – WI,

If your friend doesn’t rely on the money from his 401(k) for income, then 65% in VTI, 35% in VXUS; rebalance once a year. Simple as that. Even a retired American programmer can do it.

#147 Herb on 12.06.13 at 5:05 pm

#125 Tiger,

re SM’s claim (at #54) that he’s been “6 years or so on here”, he’s just bragging again. Make that a hair over two.

My mission in life is to try and make an honest man out of him, so I know. Wish me luck.

#148 sciencemonkey on 12.06.13 at 5:06 pm

I thought downtown Unionville was worth one nice date, but I could see it getting old fast. Also, although Jake’s has plenty of waitress eye candy, their nachos are terrible.

LOL, it’s fitting for this post that Flaherty gave that speech from Mark-Hamsterdam.

@132 WesternThinking
It’s a good point, but things of course changed around 2005, so realistically most people under 33 years old don’t fall under that paradigm. Eventually this younger cohort will make up a larger and larger proportion of Canadian adults, at which point we will either a) see prices fall to match incomes, or b) what I expect, which is that we can finally conclude that low-interest rates and high immigration have made housing permanently unaffordable.

#149 Of Mice and Men Brains on 12.06.13 at 5:19 pm

#91 No Name http://goo.gl/CV2LWT
“Crazy” scientists of Emory University conducted a study on mice an concluded that “memories” are “transfered” on to next generation.


In the context of rat lab, this means simply that exposure during pregnancy to an anxiety-provoking stimulus (IE something threatening to your average rat), which turns into a “memory,” defined as “something learned about that stimulus,” can result in progeny exhibiting signs of fearfulness (anxiety, if you will – we don’t actually know that rats get anxious as we think of it) when exposed to that stimulus.

As rats don’t have language to articulate their feelings, it’s hard to say whether mommy rats who live through a real-estate crash would pass their expressed fears about buying condos down to their little rat pups. Or conversely, that the Brad Lamb strain of rat (heh, heh) would pass its confidence that the market will always go up down to his offspring by an equally confident female rat.

It’s an amusing coincidence and thanks for thinking of it – but the cultural explanation is right there in front of our faces. It’s a social and group phenomenon, not a biological and individual one.

#150 Ralph Cramdown on 12.06.13 at 5:26 pm

#134 recharts — “If someone is blind enough not to see the potential that [bitcoin] technology has then I have nothing to discuss with that person. It will be gradually adopted by the large mass of persons and countries.”

The potential of the technology isn’t the issue. The value of the strings of bits is the issue. Here’s a restatement of a point I made a few days ago, with typical understated British wit for emphasis:

“While the makers of Bitcoin seem to have gone to a lot of trouble to make it look like gold, finite supply and increasing marginal cost of production. The difficulty is that a clever chap can go out and create ‘Nitcoin’ with similar increasing costs of production and finite supply, and someone else can create ‘Gitcoin’. So there is an infinite supply of Gold-like Bitcoins, each with finite supply and increasing production costs, but together with infinite supply and very leisurely increasing production costs.” — http://ftalphaville.ft.com/2013/12/06/1715892/the-hubble-bubble-theory-of-the-continuous-expansion-of-the-financial-universe/

#151 Of Mice and Men Brains on 12.06.13 at 5:27 pm

#124
Thanks for the advice on Vanguard.
–You’re welcome.

Vanguard would be a great solution, but he wants nothing to do with the management of his investments.

– Nothing? I mean, like, not even signing papers or looking at quarterly (or even annual) statements?

This sounds like a deeper issue. It’s his money, he earned it, he has to think about it, decide about it and look at it! No one else will care about it as much as he does. Maybe he needs someone to talk to (financial planner/counselor) for a couple of 2-hour sessions who can set him straight about this, draw up an easy-peezy plan, charge a flat fee and let him go. But otherwise, he’s acting like a busy celebrity who can’t be bothered with such trivialities — until he or she discovers the manager made off with all the money.

Good luck to him. Some people just think it’s harder than it is, and then they don’t want to touch it. But not to touch it at all is to take the real risk.

#152 Canadian Watchdog on 12.06.13 at 5:38 pm

#140 Victor V

“Regrettably, CMHC became something rather more grand I think than it was intended to be,”

That's right. Because while the public and MSM reporters kept believing or repeating F's lie regarding taxpayer risk being scaled down, the complete opposite as happened. Alas, as of Q3 2013, total taxpayer-backed mortgage and consumer debt liabilities held by CMHC and Genworth reached a whopping $1,268,450,000,000 trillion dollars, That's a staggering 68% of GDP.

Not much to say about that other then good luck Canada!

#153 Shawn on 12.06.13 at 5:45 pm

Western Thinking (at 132)

…is good thinking.

#154 45north on 12.06.13 at 5:50 pm

That’s the thing about the obvious. Never is.

great line!

Babblemaster: That S.O.S. chart indicates that there is more appreciation to be had.

my thought exactly For the last 5 years I thought that the correction would be tomorrow. It wasn’t. I still think it will be tomorrow.

Bob Copeland: I wish I had run to Canada in 1969 when I wanted to but I got drafted to save president Johnson from being embarrassed in Nam.

well he was embarrassed, I read that when George Bush was at Richard Nixon’s inauguration he was keenly aware of how Johnson was diminished and vowed to avoid a similar fate

#155 recharts on 12.06.13 at 5:56 pm

Ralph, nobody said Bitcoins is perfect
Unfortunately Garth censored one of my posts where I was pointing to zerohedge article speaking about efforts to create a gold backed bitcoin currency

To your point, for movies they print money, pretty much like the FEDs, just that nobody cares about them.
This is not about the option to create money, this is about the consensus that $ or CAD or Bitcoins shall be used from now on.
The Americans might reach the point when they will release their own UScoins. I doubt that anybody will adopt that. That is the whole point with Chinese and Germans supporting the technology. Potentially this is a way out of the USD hegemony and it is a way that will not favour the YEN or the EUR. If the two powerhouses(China and UE) agree and the adoption is wide spread then this will be the silver bullet for USD!
There might be a point when these countries might decide to backup the currency. See… the whole point is that is is so easy to deploy and to adopt that will be almost an instant dead for the USD ☺♫♫
I♥it!

#147 Ralph Cramdown on 12.06.13 at 5:26 pm
#134 recharts — “If someone is blind enough not to see the potential that [bitcoin] technology has then I have nothing to discuss with that person. It will be gradually adopted by the large mass of persons and countries.”

The potential of the technology isn’t the issue. The value of the strings of bits is the issue. Here’s a restatement of a point I made a few days ago, with typical understated British wit for emphasis:

“While the makers of Bitcoin seem to have gone to a lot of trouble to make it look like gold, finite supply and increasing marginal cost of production. The difficulty is that a clever chap can go out and create ‘Nitcoin’ with similar increasing costs of production and finite supply, and someone else can create ‘Gitcoin’. So there is an infinite supply of Gold-like Bitcoins, each with finite supply and increasing production costs, but together with infinite supply and very leisurely increasing production costs.” — http://ftalphaville.ft.com/2013/12/06/1715892/the-hubble-bubble-theory-of-the-continuous-expansion-of-the-financial-universe/#147 Ralph Cramdown on 12.06.13 at 5:26 pm
#134 recharts — “If someone is blind enough not to see the potential that [bitcoin] technology has then I have nothing to discuss with that person. It will be gradually adopted by the large mass of persons and countries.”

The potential of the technology isn’t the issue. The value of the strings of bits is the issue. Here’s a restatement of a point I made a few days ago, with typical understated British wit for emphasis:

“While the makers of Bitcoin seem to have gone to a lot of trouble to make it look like gold, finite supply and increasing marginal cost of production. The difficulty is that a clever chap can go out and create ‘Nitcoin’ with similar increasing costs of production and finite supply, and someone else can create ‘Gitcoin’. So there is an infinite supply of Gold-like Bitcoins, each with finite supply and increasing production costs, but together with infinite supply and very leisurely increasing production costs.” — http://ftalphaville.ft.com/2013/12/06/1715892/the-hubble-bubble-theory-of-the-continuous-expansion-of-the-financial-universe/

#156 recharts on 12.06.13 at 6:00 pm

Damn, I apologize for the many mistakes in my previous message. If I don’t review my posts you get the mess like above. Some of my mistakes could have been avoided. I have the comments section with no editor and no option to edit when you make mistakes.

For four bitcoins I will add pretend editing. — Garth

#157 Smoking Man on 12.06.13 at 6:00 pm

Ying Yang only need 20 points for chairman club.

800 points in 6
Months free rooms, free golf free booze, free food, free shows.

Way cheaper than a cottage.

Cycle 170 bucks per point. So you cycled about 8500,

#158 Ralph Cramdown on 12.06.13 at 6:38 pm

#132 WesternThinking — “Are you saying that NOBODY (average) can afford a house or mortgage because SOMEBODY bought a similar house for an exorbitant amount?

Let’s take a look at this.

It is just like the stock market is it not? When prices go up, nobody complains that they can’t afford to buy a new stock. They celebrate that the last person who bought (and sold!) set the price for the asset they own. It does not mean they need to rebuy their existing stock at that price (nor that they’ll sell).”

If you read the strategies of some of the best investors, they sell when prices are high, and look for stuff whose prices are low. They get grumpy when nothing’s cheap.

Getting back to housing… In an efficient market with low transaction costs, every house would be owned by the family that valued it most. In our inefficient market with high frictions and sentimentality, it is not at all unusual for a $1mm three bedroom in a prime location to be occupied by a widow getting OAS+GIS due to low income and complaining about her escalating property tax (and maybe deferring it) while those who’d value that house more commute in from two municipalities away.

“If we go with the idea that ownership stifles mobility, it only reinforces the fact that most of the people in the country bought their house prior to the rising prices. Just because the new entrant has to pay the high price, doesn’t mean Joe Schmoe who bought in 2003 does.”

That’s not how the argument goes. If you rent, you can be out of there in 30-60 days guaranteed with only an email, fax or letter to the landlord and a call to a mover. If you own, you’re out transaction costs (commission, land transfer tax and mortgage break fees, maybe 5-7% or more), and you’ve often no certainty of a quick sale or closing, which hampers buying at your destination. Plus the wifey is all teary-eyed at selling the place where you’ve made memories in a way she perhaps wouldn’t be about a rental.

#159 JSBertram on 12.06.13 at 7:17 pm

Love the blog, been reading for a while.

With Bubble-nomics, it always comes down to what should be a simple question:
Which is better … To look like an idiot before the Bubble bursts? or afterwards?

#160 T.O. Bubble Boy on 12.06.13 at 7:19 pm

@ #134 recharts on 12.06.13 at 3:11 pm
uh huh – shocking that Zero Hedge would promote bitcoin… formerly gold bug central, now turning into bitcoin fan zone?

In case you missed it, bitcoin down another 5%-10% today: http://data.cnbc.com/quotes/MTGOXUSD

I did not miss anything
I am not invested in and I do not own bitcoins
If someone is blind enough not to see the potential that this technology has then I have nothing to discuss with that person.
It will be gradually adopted by the large mass of persons and countries. In the worst case scenario it will remain a facilitator for barter.
You are pointing me to days of the life of this currency ..I am pointing you to the years to come.
———————————-

Sure – I can see that something other than $USD will be base currency for all kind of commerce… however, I’m very skeptical that Bitcoin (in it’s current form) is the solution.

As with every technology, a few iterations of the idea will be needed to make it ok for the mass market.

For now, it is a way for criminals and gold bugs to convert/launder money.

#161 maxx on 12.06.13 at 7:20 pm

#104 Ralph Cramdown on 12.06.13 at 11:41 am

We can slice and dice ’till the cows come home RC, but disproportionate influence and wealth in too few hands does not work and is not resulting in a healthy economy.

#162 T.O. Bubble Boy on 12.06.13 at 7:20 pm

(oh – and BitCoins fell 15% by the end of the day… 30% gone in 2 days)

#163 Randy Macho Man Savage on 12.06.13 at 7:44 pm

Bitcoin down 18% today.

Smoking man, hopefully you didn’t buy any yet…

#164 Smoking Man on 12.06.13 at 8:21 pm

#147 Herb on 12.06.13 at 5:05 pm#125 Tiger,re

SM’s claim (at #54) that he’s been “6 years or so on here”, he’s just bragging again. Make that a hair over two.My mission in life is to try and make an honest man out of him, so I know. Wish me luck.
…….

Herb you know I love ya.. Ain’t going to happen, I got far in life of on bull shit and pure alpha ego.

If it ain’t broke is all I’m saying…

The biggest irony in life. People love teachers, the most destructive force to creativity and prosperity.

Only the insane see it.

#165 Daisy Mae on 12.06.13 at 8:30 pm

#11 Blasé: “….gets slammed in the 2008 crash, hadn’t seen their money recover. Please explain why a MF doesnt have this ability to recover….”

“Depends on the fund. If it was Canadian equity, for example, you got slammed. No balance there. — Garth”

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

Been wondering about this for a long time, as well.
Canadian mutual funds monitored by Investors Group? Lost and gone forever…..damn!

Well, I’m in excellent hands now!

#166 Smoking Man on 12.06.13 at 8:36 pm

#163 Randy Macho Man Savage on 12.06.13 at 7:44 pmBitcoin down 18% today.Smoking man, hopefully you didn’t buy any yet….

Not yet, been to busy being a slave, and killing the forex market.

#167 Dual Citizen in Canada on 12.06.13 at 8:55 pm

Why aren’t the police being proactive and checking that dancing crossing guard for using crack? Please do, so the focus can be off Rob Ford and Dalton McGinty.
And back on earth, I’ve been renting for 3 years now since returning from an 11 year stint in Tampa. The best decision I’ve made and continue to make. This blog has been the sane and logic in all the chaos.

#168 Observer on 12.06.13 at 9:00 pm

@ #140 Victor

Garth has been talking about that for so long that I can’t even read an article like that without smiling and thinking about this blog.

#169 Daisy Mae on 12.06.13 at 9:02 pm

#41 Bob Copeland: “I have no idea why Mr. Turner does what he does but your a fool if you ignore his advise…”

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

Garth has been correct all along –way ahead of other economists in his predictions. Why anyone would question his wisdom is beyond me. We’re very lucky to have him…and I sure appreciate his patience!

#170 TurnerNation on 12.06.13 at 9:13 pm

#21 Nemesis we need a rat inspector…

http://www.youtube.com/watch?v=K_q4S7lZeik

#171 45north on 12.06.13 at 9:17 pm

not 1st: So someone here on my street in Regina thought it would be cool to build a $4 million dollar house.

There has to be something else to this that is not evident. I think its modern money laundering.

I’m thinking a successful business man has taken out a mortgage. The bank thinks he is good for it.

Obvious Truth: Congrats Wen and Patrick. You’ve made things less complicated in your own way.

make a straight path for the Lord

wallflower: talking about Markham Ontario: It’s a soulless, destitute suburb gone big box.

I notice an absence of commitment, when I grew up your neighbourhood was your neighbourhood. I talked to a man at our community association. He didn’t like his neighbourhood and was ready to bail.

Freedom first: Wen and Patrick. Congratulations! Few people have the ability to take the money and run when the price of anything is at record highs.

right!

Ralph Cramdown: I’ve thought that a sign on every house (in neon, as you suggest) showing the owners’ percent equity might dampen the animal spirits a bit.

the time is coming. If you could see a map of percentage equity then you would buy where the numbers were high. Even the Royal Bank doesn’t have enough data to make a good map, but it seems to me that by pooling their data the 6 big banks could come up with a really good map. Cost would be low and results high. Hmmm maybe they already have?

Okotokian: ‘spelt’ is a type of grain
http://en.wikipedia.org/wiki/Spelt

heineken: Those manufacturing jobs are dirty. Bad for the environment.

A long time ago I worked at Glidden’s Paint factory on Wallace Avenue. They’re building condos on it now.

the only government leader worthy of his pay is rob ford being Homer Simpson does seem attractive but there is no Springfield USA or Canada for that matter.

http://en.wikipedia.org/wiki/Springfield_(The_Simpsons)

CBC did a documentary “The Condo Game”
http://www.cbc.ca/doczone/episodes/the-condo-game

the central issue is the quality, durability and livability of the massive condo construction in the City of Toronto. This issue is absolutely vital. One of the issues raised in the documentary is the role of the Ontario Municipal Board which contradicts the elected Council. Homer Simpson is just not good enough!

#172 Daisy Mae on 12.06.13 at 9:35 pm

#106 erebus :I”t’s a tragedy for me
To see the dream is over
And I never will forget the day we met
Girl I’m gonna miss you”

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

Does this have anything to do with anything?

#173 Smoking Man on 12.07.13 at 11:27 pm

Canceling Xmas dinner with wife clan.

I don’t want hang with people that I’m forced to conceal my insanity, I’m nuts, I know it. I love it.

Talked my wife and kids to serve soup at a homeless centre.

Just got to find one.

I will be in a room with like minded people.

The plastic of Xmas, no thanks. Smoking with people with a real story is the best gift I can ever have.

#174 live within your means on 12.08.13 at 1:59 pm

Hubby as showing me how to do a voice search on Google. He said ‘Garth Turner’. Google interpreted it as ‘Damnit’. LOL Hubby said it’s due to his accent. But I tried it on other search words – spoke clearly – & it obviously doesn’t work well. We had a great laugh.

A real busy day for both of us as hubby is preparing to go to France to see his Dad, 83, whose days are numbered. His Mom, 81, is not well either. Pleased he’ll get to see them & the rest of the family, plus cousins from the south.