Real men invest

ABS modified

Pathetic. The previous post was about Millennials, and how they’re screwed. Worse than their parents, in fact. Mostly because they’re wusses.

Eric summed this up nicely when he wrote me after reading the blog:

‘Risk on’ definitely resonated with me. I’m 29, university educated, big bank employee, no debt, no desire (or capabilility) to even kick the tires on real. My girlfriend (low income, big student loan) and I live in my sister’s basement.

RRSP – $15K conservatively invested in a low fee mutual fund and $5K just sitting in cash. TFSA – $32K that was sitting in a “high interest” saving account. I know. Delusional. I moved it to my brokerage account (TFSA), but sadly still sitting in cash.  Cash – $28K “high interest” saving account. Still delusional.

Net worth: About $80K

So, given the current pricy market and your comment: “Nothing goes up forever”, what should I do? My gut tells me that the TFSA should be the ‘Risk on’ growth vehicle. I am trying to be a do-it-yourself investor, but can’t make a decision. The excuses are numerous: my money is precious, the bull market is getting old now, a correction will come soon and so on.

See what living in your sister’s basement with an indebted woman does? Your manhood shrivels from lack of light, while constant dankness permeates your faculties. You awake one day amid the bugs, spores and rodents only to discover you’re impotent – incapable of making a decision or crawling out of the clingy womb of cash. Your net worth grows more stagnant than your hormones. Soon, it’s over. You take your tablet into the bathroom and Google ‘ING’.

Once again, it all comes down to financial illiteracy. Most people have no idea what inhabits the wide landscape between a savings account and high-flying stock markets. They accentuate risk, get their investment facts from the bank or doomer websites and usually end up buying real estate because mom endorses it. (Ironically, the US experience was that young homeowners were trounced in the housing correction far worse than their parents, thanks to their extreme leverage. In any correction here, expect the same.)

Millennials (and their parents) should understand the future will belong to those who are liquid. Nobody really needs to own a house. But everyone needs income. And burying your wealth in a ‘high-yield’ account or GIC paying less than inflation is a crime against nature. Does this mean opening an account at Waterhouse and diving into Tesla stock? Hardly.

There are but three things to remember when it comes to comfortable, low-volatility, non-cowboy investing that will still make women swoon. I’ve elaborated on these points previously, but you might not have been born then.

Balance. Having all your money in GICs or a savings account is unbalanced. So is owning only stocks (or a condo). The best way to build liquid net worth is to have multiple asset classes which don’t all react to events in the same way. That means they are not ‘correlated’ or even ‘negatively correlated.’

For example, when stock markets fall investors look for safety and often buy secure assets like bonds. So bond prices rise as equities dip. That’s negative correlation. By owning both safe stuff (called ‘fixed income’) and growth assets in the same portfolio, you mitigate against declines and create your own hedging effect. For example, in 2008 when the Dow crashed 55%, a portfolio with 40% fixed income in it declined only 20% and then rebounded in one year (it took the Dow seven years to recover).

Diversification. Incredibly, 70% of Canadians who own stocks only have Canadian ones. Others own just three or four individual equities. Or they buy a single mutual fund and put it in their TFSA and RRSP and non-registered account. Fail. It’s a volatile world. You need both balance and diversification.

Fixed income might include government bonds (3%), corporate bonds (5%), high-yield bonds (3%) and inflation-indexed bonds (6%), along with preferred shares (18%). If your portfolio’s large enough, buy the assets. If not, buy relevant ETFs. BTW, cash is okay, too. But max it at 5%.

Growth assets could include real estate investment trusts (5%), Canadian equities (large cap 8%, small cap 4%), US equities (10% large, 8% mid and small) plus international stocks (10% large cap, 8% emerging and small cap). Obviously, unless you have seven figures to invest, you need to use ETFs (not expensive mutual funds) to achieve this diversification through index investing.

Rebalancing. Most people buy what goes up and sell what goes down. Bad idea. Do the opposite, and do it regularly – like three or four times a year. This is called ‘rebalancing.’ For example, if you want to have 8% exposure to Canadian stocks and the TSX bloats, pushing it to 12%, then sell off 4% and use the money to buy something that’s dropped, like the small cap ETF or preferreds.

You may think you’re Zeus, but you probably have no idea where any of this stuff is headed, so best to own it all – but in sane proportions. Remember, the fixed income side of the portfolio will pay you continuously to own it in the form of interest and dividends, while the growth side yields mostly capital gains. Obviously, since interest is taxed the most, the assets producing it should be sheltered inside an RRSP. Best to earn dividends and cap gains in a non-registered account. And put the hot stuff (emerging markets, small caps) in the TFSA.

There’s more to learn. Like which of the thousands of ETFs, bonds or preferreds to buy. But there’s a start. If Eric was smart enough to get a degree and seduce a bank, he should be able to figure this out.

But will he have the guts? Stay tuned.

165 comments ↓

#1 Smoking Man on 03.31.14 at 6:22 pm

I love it… REAL MEN INVEST..

EXACTLY!!!!!!!!!!!

They also gamble, drink and have fun…

School teaches fear, conformity, avoid risk, safe hands as our pick pocket master teacher points out.

God gave you balls men. Use em…

Chop down a tree…. For starters

#2 OttawaguyRenting on 03.31.14 at 6:26 pm

ETFs are awesome. I piled my extra goodie$ into a great REIT that had one popping report last week.. nice little REIT paying down mortgage debt paying out to the holders.

Next stop find me a bond that is good yield for 10 year term.

3rd stop like the big man said..find something with a bit more risk in retail stock.

MIX it up like your drinks and ladies on a Saturday night..

What you get out of one…you may get a little more out of another. Life is like that. Portfolio is risk but making money is a long haul.

Patience like waiting on the fishbowl to go around.. get your keys..Saturday night

#3 Alberta Ed on 03.31.14 at 6:30 pm

Sounds as if Eric could benefit by finding a good financial advisor. And some balls.

#4 Max on 03.31.14 at 6:31 pm

Good points, as always, but I’m wary of the fact that the traditional relationship between bonds and equities appears to have broken down – or at least, be broken down at these ultra-low interest rates.

http://blogs.wsj.com/moneybeat/2013/07/25/why-arent-stocks-and-bonds-moving-in-opposite-direction/

If bonds and equities are positively correlated right now (rather than inversely, as they have traditionally been) are bonds really such a safe haven? And if they aren’t, what’s left out there that does have a reasonably significant negative correlation with equities?

#5 Calgarian on 03.31.14 at 6:32 pm

First!

#6 takla on 03.31.14 at 6:33 pm

garth what about the small,just starting out,or better yet the folks amoung us that have been wiped out by the property correction and and are just starting to put together 10,20,30 grand,where would they start over in this ify investment climate with limited funds?

#7 Happy Renting on 03.31.14 at 6:40 pm

Wonder if this post will calm down all the commenters who got worked into a tizzy yesterday. Garth, do you ever hear from Millennials who have it together? There must be some kids who learned well from their rich, investor parents…

#8 Don on 03.31.14 at 6:44 pm

Jesus Saves, Moses Invests

#9 likegreektome on 03.31.14 at 6:44 pm

So this is what I have been asking for, where to invest money. However I am reading your post and my eyes gloss over. Is there some good intro website or book or something you can recommend to get a handle on all these concepts at a very basic level?

I am definitely one of those people who knows nothing about finance and has all their money in a TFSA and rrsp’s. The thought of having to “reballance” 2 or 3 times a year nauseates me because I don’t know what I am doing, and my future is too important to blindly fuck around.

I love learning things, and after teaching myself to tear apart and put back together an engine, I am sure I can handle finance, with the proper guide.

Is there a guide for dummies somewhere that you can recommended which is a bit more in-depth than your post? When I bring these issues up with my wife, she goes pale as a ghost and says under no circumstances should i be gambling with our future. I understand that doing nothing, is in itself gambling, but I need some sort of guide, becuase when I talk to her and drop concepts, she can see right through that I don’t really know what I am saying.

thanks

#10 Wondering on 03.31.14 at 6:45 pm

So Garth,

What do you think about buying Berkshire B shares and letting the experts worry about it.

They have done well over time…….better than the stock markets.

#11 Mark on 03.31.14 at 6:47 pm

Had a young newly recruited TD account manager call me the other day. Offering me up a deal, if I were to deposit $25k into my TFSA, he’d give me 100 free trades.

Had to give the guy a bit of an ‘education’ on what exactly a TFSA is, and why I couldn’t possibly deposit $25k into an account that is already maxxed out.

d’oh!

But on that note, given that Canada’s been a significant stock market underperformer over the past few years, and given that Canada has been a leader in terms of economic growth, buying Canadian stocks might not be that bad of a deal these days. Agree with Garth not to get too carried away, but with the weak dollar (certain to strengthen), going significantly foreign may not be a good idea at this juncture.

#12 TJ on 03.31.14 at 6:49 pm

First ….. Love the blog

#13 Happy Renting on 03.31.14 at 6:49 pm

Oh, and I was going to start eating right and exercising, but now realize I just need to find the right fence. Pass the chips! :)

#14 joblo on 03.31.14 at 6:52 pm

Okay so now that the Central banks and Politicos have recapitalized their Wall, Bay St banks and bailed in GM and Chrysler ……
can we get on with infrastructure, energy, education, food and water management, etc. investments and get some real growth PLEEEZE.

#15 Scotty NB on 03.31.14 at 6:53 pm

Well done Mr. Turner! Great insight. Thanks for all that you do. Eric bud, you can’t time the market. Get an asset allocation you’re comfortable with and go with it. Man Up!!!!! Stop torturing yourself! I did the same thing, felt great afterward. Once decided upon and completed, “engage” the girlfriend in this pursuit of financial literacy/planning. If she balks, tread lightly going forward. Just saying.

#16 TurnerNation on 03.31.14 at 6:54 pm

It’s known as Molson Muscle.

#17 hohoho on 03.31.14 at 6:57 pm

> … total amount of money owed exceeds the total amount of currency in existence …

Skill testing question:

If A lends B one dollar, B then lends C one dollar, C then lends D one dollar …. Y then lends Z one dollar.

1. What is the total amount of money owed?
2. What is the minimum number of dollar bills required in this system to settle all of the debt?

#18 Dinty on 03.31.14 at 6:59 pm

What about those programs like BMO offers where they set up your investments in a program and when out of balance they send out a notification. Downside is I think you must have a minimum $100 k invested with them.

#19 Mrs Riverview on 03.31.14 at 7:14 pm

Thanks – this answers my question from last night re: why it is “gambling” and not “investing” to hold 25 different securities (prefs, REITS and large cap, dividend paying common shares, Canada and US issuers). Diversity.

I now see your point, Garth. Thank-you.

#20 I'm stupid on 03.31.14 at 7:15 pm

OMG
I agree with Smoking Man.

#21 Juan Refrito on 03.31.14 at 7:16 pm

But doesn’t Eric raise a valid point about market valuation? I get market timing is a fool’s game, especially in any sort of short term sense. But by most measures that mean anything in terms of correlating to more long term future returns (Schiller’s PE, etc) the market seems at a peak from which it can’t grow much farther. It may have a little more room to run, but for someone thinking about deploying a significant portion of their nest egg to stocks, I’d be wary about placing that bet right now too. I’m not saying don’t participate in the market, but it may be prudent to at least buy in over time. *Braces for wrath of Garth*

Stop equating US large cap markets with all markets. Amateur mistake. — Garth

#22 Happy Beacon on 03.31.14 at 7:21 pm

It’s a great time to invest because if the markets go up, then you make money, if they go down, you get to buy more investments at a cheaper price. Enjoy your opportunities everyone to invest in a strong and vibrant future!

#23 EIT on 03.31.14 at 7:25 pm

Hot stuff in TFSAs? How can I put a bitcoin in my TFSA? lol

#24 TheCatFoodLady on 03.31.14 at 7:30 pm

My oldest is a millennial – 27 years old & much smarter than his momma! He likes quality but when he buys something, he researches to death, buys the best he can afford for his needs than uses the item until it dies. He only just bought his first vehicle in the last few months – tons of pressure from family & friends to which he’d rightly answer: “I don’t need one.”

Heavy millennial values, a child of 9/11. He did the first two years of his degree, much of it on scholarships & money he earned in the Reserves. He then took a 2 year break & did a stint in Afghanistan; then finished school. He knew exactly what he wanted to do with his life in terms of career & waited. He’s in like Flynn now, nice federal government job in law enforcement. he’s good at it & loves it – it’s what he was born to do. If it hadn’t worked out, he had a Plan B, Plan C, Plan D…

He’s a saver & investor; has been since he first started working. RRSP & TFSAs maxed out. Lots of non-registered investments with good diversity. ETFs – he loves them. He also likes to play with a few individual stocks, just for fun.

He also lives life to the fullest – great girlfriend on the left coast & they fly back & forth to visit each other as often as they can. He’s travelled & plans more travel. He figures he may buy a house. Some day. If his career ever parks him in the right city/community at the right time.

Second one is more typical. A garbage degree when it comes to work. He’s got a so-so job that pays the bills & that’s about it. He’s still figuring out what he wants to fo in life – no hurry; he’s paying the bills & young.

I really enjoyed that article from The Atlantic yesterday – post #58 by chris Q. It was so bang on it was chilling. I rarely see kids just out hanging, figuring out how to amuse themselves. Heck, at 53 I still go out to ‘play’ when I find time. I only stopped climbing trees 2 years ago & very reluctantly at that. I still clamber over downed trees, scramble up & down steep slopes & ride my bike like a punk ass kid. Never mind second childhood, I refuse to leave the first behind me!

I see too many kids who were never left alone to figure things out for themselves still living that way. They have zero initiative. They’re not lazy – I refuse to insult an entire or much of a generation by calling them that – they simply were never provided opportunities to do much of anything on their own. They’re willing workers – if told what to do.

But they’re used to being TOLD what to do – used to ‘adult’ advice. Is it any wonder they fear investing? They’ve not been taught about money. Worse, they fear making mistakes. Three years ago 0, I knew diddly about money & investing. Not that it mattered, scraping by was the order of the day. Now I have to manage a small nest egg in trust. I learned. I made a few mistakes, took a few small individual losses but overall, I’m way ahead. The taxes can give me headaches but they’re doable & CRA is quite helpful & pleasant when you’re calling them in order to do things right & save them headaches.

Mistakes won’t kill you. Putting all your eggs in one basket & having the basket disintegrate will surely hurt though… so don’t do it.

There are tons of ways to diversify, to invest successfully. It’s like making cookies – tons of recipes for deliciousness. Nothing prevents anyone from getting a half dozen or so opinions. Smart money doesn’t expect overnight richness & it remains DIVERSIFIED. For those afraid to start because they have very little – you have to start with something & the majority of people start with very little.

Just… START!

Expect to make a few mistakes – as long as you learn from those mistakes, I wouldn’t call them a complete loss. I suspect Garth would be among the first to admit he’s made a few mistakes. We’re human – we err.

#25 Retired Boomer - WI on 03.31.14 at 7:31 pm

#9 likegreektome

They do publish a decent investment guide called “Investing for Dummies” decent read, I’ve read it.

#1 Smoking Man

For once I agree with your rant

#26 gladiator on 03.31.14 at 7:31 pm

God loves the poor and helps the rich.

Want to become rich? Do something to get there, and God will help. You’ll see.

#27 Freedom First on 03.31.14 at 7:32 pm

Very nice Garth. I like it all. I only have 2 minor variations involving only 5-10% of my net worth. Neither are “out there” on the risk scale.

After years of managing my $$$ I have found my comfort level. Comfort level for me took a little time and practice to find. Even just starting out a person can use Garth’s investing formula to great advantage, just don’t be overwhelmed with this information, and for me it means studying the makeups of the ETF’s, which makes it pretty simple to figure out how to get the small, mid, large cap, using the more diversified ETF’s which will also get all of the different asset classes. I have enough to purchase the individual fixed income assets Garth talks about, but today with the different ETF’s the indexes available fit the purpose. Also, personally, my Fixed Income assets and the ETF”s I operate with all must pay me interest/dividends. I want to get paid. I don’t and won’t buy individual stocks strictly to maintain my comfort level of being free of fear and greed, as both are as deadly as Garth regularly shows us on his graciously free Blog.

I like cash, minimum 8 diversified assets-preferably more, income streams, cash flow, balance, liquidity, and no debt. I would never, and didn’t, buy a property to live in until my net worth was more than the property price. If it takes a person who wants to buy until their late 20’s, early thirties, what’s the rush? Patience is Golden.

Managing one’s finances sanely is of extreme importance, and much more rewarding than feeding the peer pressure of the financially insane, who will not be there to bail you out when the SHTF in your whacky little nutzo fantasy Empire, financially humbling you. Better to start out humble.

#28 not as smart as you think you are Mark on 03.31.14 at 7:33 pm

Mark, did it occur to you that you could open a waterhouse account and MOVE the contents of your TFSA (transfer) and get the free trades?

looks like the jokes on you.
————————————————————–Had a young newly recruited TD account manager call me the other day. Offering me up a deal, if I were to deposit $25k into my TFSA, he’d give me 100 free trades.

Had to give the guy a bit of an ‘education’ on what exactly a TFSA is, and why I couldn’t possibly deposit $25k into an account that is already maxxed out.

d’oh!

#29 World According To Garth on 03.31.14 at 7:36 pm

Last reminder to listen to http://www.coasttocoastam.com tonight to hear Canadian PhD Dr Tim Ball – Doctor of Climate Science and hear why all you sheep are wrong about climate change.

Hopefully you will stop listening to the thousands of scientists with degrees in “Ammonia In Squid” who are so called experts in climate change.

#30 Mark on 03.31.14 at 7:43 pm

“And if they aren’t, what’s left out there that does have a reasonably significant negative correlation with equities?”

Gold and gold stocks. I know, put on your flame suit because Garth doesn’t like gold, but last year was a shining example of negative correlation.

#31 yeg_guy on 03.31.14 at 7:44 pm

Garth, wouldn’t rebalancing 3-4 times a year, eat away any benefit of investing in etfs? If you’re contributing regularly or rebalancing, wouldn’t index mutual funds be advantageous? I tend to believe in the “couch potato method, where etfs are for a more higher net worth investor.

Comment?

#32 RayofLight on 03.31.14 at 7:48 pm

Investing in the market is not about nerve or balls. If you think it is,you will crash. Investing is about knowledge, using both fundamental and technical analysis. I believe you have to know what the major economic trends are in play, and then search for the best companies Eg: TRN.N for “oil by rail”,MG & LNR.T for the auto rebound, IFP.A.T for the housing rebound (US) as some examples. Use “weekly” charts and regression analysis for the past 9-12 months.

#33 Mishuko on 03.31.14 at 7:50 pm

Garth, could you causally recommend one (or two if you’re feeling nice) ETF’s for the great murica? Please and thank you!

#34 Bob on 03.31.14 at 7:57 pm

I’m in the older half of the millenial’s….Got it together. Maxed out TFSA…should have the RRSP maxed out by the end of the year. Also scored a job with a DC pension plan a few years ago. Balanced diversified low cost ETF’s all the way. Didn’t learn it from my parents. Lots of good books at your local library. Rob Carrick at the Globe and Mail has lots of good articles and links. Keep your eyes on the business/finance section. Once I was able to save money I spent a few years in cash saving up a down payment…Then I realized RE is presently a PONZI SCHEME. Now I’m not interested in real estate. Never stayed put more than 3 years in one city….Always had to move to take the next job or promotion. So many of my cohort are fixated on housing…Bigger, Better, Granite etc. Many of them will not listen to reason even when it’s as simple as not having all your eggs in one basket.

You can frown at me all you want for renting….but I’m the one smiling all the way to the bank :)

PS The real estate market must be dead as I’ve been noticing a lot of trolls lately during the “busy” spring market.

#35 Smoking Man on 03.31.14 at 7:58 pm

#20 I’m stupid on 03.31.14 at 7:15

DELETED

#36 Cici on 03.31.14 at 8:02 pm

Aren’t we being just a little hard on Eric?

He may be young and inexperienced, but kudos to him: he’s working hard and saving harder, hasn’t touched real estate and is doing way better than most people his age.

It’s normal that he’s afraid…but he’ll get over it, and it least he is asking good questions and obviously has a keen interest in learning.

Eric take it at your pace; don’t feel pressured, you’ve got lots of time. Learn as much as you can on your own before setting out to find a trustworthy advisor who will make financial decisions that you can understand and live with. Go into the archives of this blog and read up more on asset allocations, registered and nonregistered accounts, diversification, preferred shares, ETFs, REITs, index investing and various types of bonds.

Good luck, and keep reading Garth’s blogs: you’ll have it down in no time ;-)

#37 Smoking Man on 03.31.14 at 8:09 pm

I’m in safe hands here..

Ha I love and hate at the same time..

#38 Cici on 03.31.14 at 8:13 pm

#6 takla

Low-cost index investing: TD e-series or ING streetwise portfolios.

After you’ve got at least $30,000, get into EFTs.

#39 Cici on 03.31.14 at 8:13 pm

#6 takla…oops, sorry for the type: I meant ETFs

#40 A Yank in BC on 03.31.14 at 8:24 pm

I liked cash when I was 29 too. Plain vanilla money-market accounts were paying right-around 16% interest at the time. Today they pay .01 %. Times change.

#41 Vernie on 03.31.14 at 8:26 pm

Garth,
Why sell? Can’t you achieve a balanced portfolio by being contraian and invest in the ETFs which are dogs ? By avoiding selling, you are avoiding the resulting tax implications.

Great blog btw.

#42 Ralph Cramdown on 03.31.14 at 8:26 pm

People buy equities because they go up more often than they go down. Why someone would then want to own something negatively correlated with equities is beyond me…

My idea of diversity is owning some things that pay me in January, April, July and October, some others that pay in February, May, August and November, some that pay on the 15th and some on the first of the month.

#43 not 1st on 03.31.14 at 8:34 pm

After the 60 minutes segment last night, I will only own equities that trade on the TSX from now on. Wall Street can go eat itself.

#44 Condo Chris on 03.31.14 at 8:36 pm

So this poor kid has saved 40 grand and your gonna tell him… “Don’t worry kid, throw it in a balanced portfolio and you’ll be rich!” ..lets throw out the highs and the lows (the old 18% “preferred” shares and the GIcs) and lets say he he earns a modest (decent?) 5-6% on his money.. What’s he made? 2 grand a year! What a joke. I met with a client who bought a condo 42 months ago for 250k, has enjoyed living there for almost 4 years and is going to sell it next week for 90k more than she bought.. And guess what? It’s gonna sell like hot cakes! .. That’s almost $2200 for every month she lived there. Imagine if she had taken your advice.. She’d have saved 10 grand and given the rest to a landlord…..

Business bad enough to drive you here? Sheesh. — Garth

#45 Condo Chris on 03.31.14 at 8:38 pm

Sorry, “you’re”… I should proof read my posts… :(

And learn math. — Garth

#46 Barry Lainof on 03.31.14 at 8:51 pm

Three or four times a year. : (

Seriously 3-4 times a year ?

“Rebalancing. Most people buy what goes up and sell what goes down. Bad idea. Do the opposite, and do it regularly – like three or four times a year. This is called ‘rebalancing.’ For example, if you want to have 8% exposure to Canadian stocks and the TSX bloats, pushing it to 12%, then sell off 4% and use the money to buy something that’s dropped, like the small cap ETF or preferreds.”

I guess the unwashed better hire an investment advisor.

Recent report sez – most people lose over $150,000 in fees and commissions over their investment life. 3-4 times a year of “rebalancing” or churning would definitely help all those investment advisors have a secure and comfortable retirement – not sure that would be the same for their clients. Sigh……..

A fee-based advisor charges nothing for rebalancings. It’s the job. — Garth

#47 Shawn on 03.31.14 at 8:52 pm

Advise for YOUNG Newbies

Takla number 6

garth what about the small,just starting out,or better yet the folks amoung us that have been wiped out by the property correction and and are just starting to put together 10,20,30 grand,where would they start over in this ify investment climate with limited funds?

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

At this stage what matters most, by far, is not return but how much you add to the pot yearly

Be a man (even if you are a woman) and go 100% equity ETFs and then pray for a market crash because that will benefit you greatly when just starting out, though it will feel awful.

#48 not 1st on 03.31.14 at 8:53 pm

I weep for the millenial generation. They have been shafted so hard and they don’t even know it. I don’t blame them for being disengaged in society.

– we have handed them a ton of debt that will probably never be paid off and lead to much greater carrying costs

– we have also held on to the juicy jobs way long than we should have until all thats left is contract and intern work for them

– we are going to stick them with a bunch of egotistical self centered entitled boomers who are going to swamp the system.

and lastly, charletons like Facebook and Google convinced this group to give up all their privacy and date to the alter of tech progress. So while you type away on your little devie, these companies are harvesting you right down to your every move.

#49 Ripped on 03.31.14 at 8:53 pm

#43 not 1st on 03.31.14 at 8:34 pm
After the 60 minutes segment last night, I will only own equities that trade on the TSX from now on. Wall Street can go eat itself.
…………………………………………………………………….

In another words your happy being a career minor league player.

#50 DaleFromCalgary on 03.31.14 at 8:54 pm

#17 – In the real world your skill-testing question would be:

If A deposits one dollar in Bank B, B then lends C ten dollars, C then buys stocks from Broker D on 50% margin, D then uses C’s account as collateral to buy mortgage-backed securities with 70% leverage …

That’s how it worked in 2008. The amount of fractional-reserve lending and leverage is now higher today.

#51 4 AM Sunrise on 03.31.14 at 9:09 pm

#11 Mark on 03.31.14 at 6:47 pm
Had a young newly recruited TD account manager call me the other day. Offering me up a deal, if I were to deposit $25k into my TFSA, he’d give me 100 free trades.

– and –

#28 not as smart as you think you are Mark on 03.31.14 at 7:33 pm
Mark, did it occur to you that you could open a waterhouse account and MOVE the contents of your TFSA (transfer) and get the free trades?

looks like the jokes on you.
————————————————-

No, the joke is on the rookie TD account manager who should have offered to reimburse Mark’s transfer fees AND give him 100 free trades.

#52 RiskMan on 03.31.14 at 9:11 pm

Interesting post! I am also interested in investing and spend a lot of hours on investopedia.com and various finance websites to education myself.

With interests about to rise, it seems like fixed assets such as bonds, preferred stocks and REITs are at risk of loosing value, while equities seem to be overvalued. This makes me wonder if it is better to wait for a market correction as well as the end of the quantitative easing.

At least Garth opened my eyes and showed me that there are other options than just buying a house!!

#53 OffshoreObserver on 03.31.14 at 9:17 pm

#9 likegreektome

1. “The Little Book of Common Sense Investing,”

John C. Bogle; and

2. “Millionaire Teacher: The Nine Rules of Wealth You Should Have Learned in School,”

Andrew Hallam

#54 Mr. Frugal on 03.31.14 at 9:17 pm

Eric: Start with a simple plan. Use a spreadsheet to track your budget and net worth. Read a few good books – anything by John Bogle is a good place to start. You won’t get there overnight. But, you will get there.

#55 4 AM Sunrise on 03.31.14 at 9:24 pm

#9 likegreektome on 03.31.14 at 6:44 pm

Women are naturally risk averse. It’s in our DNA. And it’s also too bad that she’s part of the cohort of women who were discouraged from learning about money.

If you’re a newbie, you’re probably going to spend 3-6 months reading and digesting the concepts. That’s okay; don’t rush yourself. The next step is to set up one of those dummy accounts with the $100,000 of play money, and implement those concepts. Then show her that you’re not “gambling”. Unfortunately, those dummy accounts don’t account for dividends, so figure something out around that.

#56 Bob Rice on 03.31.14 at 9:38 pm

# 6 Takla: “garth what about the small,just starting out,or better yet the folks amoung us that have been wiped out by the property correction and and are just starting to put together 10,20,30 grand,where would they start over in this ify investment climate with limited funds?”
_______________________________________________

Easy, my friend: TD e-Series

http://www.tdcanadatrust.com/products-services/investing/mutual-funds/td-eseries-funds.jsp

#57 sciencemonkey on 03.31.14 at 9:40 pm

My fiance also has big student loans, and trouble finding steady employment. RETIRE you damn boomers. :(

@47 Shawn,
I agree, I’m 30, investing 16% (helps to have 5% employer match) pretax income a year into my RRSP (I’m murican also so TFSA is a headache I avoid). Once a year I rebalance into:

ZDV 20%          CDN dividend equity
XRE 10%          CDN REIT
ZCN 20%          CDN equity                        
XEF 20%          Non-US Developed Equity       (not hedged)
XEC 10%          Emerging Markets Equity       (not hedged)
VUN 20%         US Equity                          (not hedged)

#58 quebec economist on 03.31.14 at 9:49 pm

ok, yes i believe I am Zeus

Most (not all) financial planners suck. My mom, brother and sister all have one and they all have horrible advice…guess its hard to compete with Zeus…80% of people with finance degrees get yields lower then the s&p 500 index. Financial planners are worst.

My TFSA is high risk, but I know what I am doing with venture business so my risk is not so bad. I should really get into some type of sharing/teaching business. I make easily more then 10% per annum over the last 10 years…this year I am well above 70% not luck, skill my friend.

Most will believe that I am a pathetic liar…
Others a lucky bastard…
Personally I am just having a good time, ‘playing’ the market, choosing carefully and with a cool head. I stick to my game plan…and lose some and win most!

Cheers

#59 quebec economist on 03.31.14 at 9:56 pm

#47 Shawn

Great advice
give regularly to TFSA, 100% equity ETF.
no way to loose over the long haul

#49

No need to go to US, plenty of rich opportunities to play here. In ETF I get US and world exposure, but for my ‘value investing’ individual stock The TSX-Venture has plenty of deals for me…going to US would cause information overload.

#60 Joe Schmoe on 03.31.14 at 9:57 pm

Eric,

Why are you afraid of markets, but not the GF who will surely suck more of your net worth than any market or advisor?

My question is not intended to be gender biased, but kids/spouse/divorce equals a huge financial risk. You just have to love the experience, learn from mistakes and don’t fear the risk.

Saving/investing feels like death of a thousand cuts, but with some discipline the money grows rather quickly.

You should see what kids do to your carefully collected crap. I think I am up to $4k in drywall and paint….this year….and the big one is only 4!

#61 tj on 03.31.14 at 10:00 pm

#24 TheCatFoodLady on 03.31.14 at 7:30 pm

Congratulations on raising such an intelligent and independent young man! His future certainly looks bright. It’s nice to read success stories about millenials. All I ever hear on the news is how badly most of them are doing – unemployed, underemployed, unpaid internship, living in basement etc. I truly hope the government would do something to help millenials get jobs such as job share with a boomer who is almost retiring. This way they can gain the job experience as well as valuable knowledge from the boomer.

#62 Republic_of_Western_Canada on 03.31.14 at 10:00 pm

#4 Max on 03.31.14 at 6:31 pm

Cool article. Right now though, IMHO, is the worst time to get into bonds if you look at the classic general % interest rates vs bond price relation. (With that, I don’t mean stock price vs bond price correlation, yet).

Barring simple market supply/demand forces, if general % interest rates are really low (like now), bond prices would be relatively high for a given coupon rate. That’s the worst place to be at the bottom of an interest rate cycle. Because if you lock into a given coupon rate, paying a high premium for the bond, when general % interest rates rise, the bond price will crater. Just like housing. That’s also the way perpetual preferred shares work, like bonds. Or like REITs worked in the last half of 2013.

Indexed preferred shares aren’t nearly as bad that way, as the price paid out increases as interest rates rise. Rate reset preferreds would have a little more risk that way though, but with their short-term to calls’ less, and long-term to calls’ more, I believe.

Now, as the article says, with rates near zero bond prices will increase as [large-cap?] stocks also increase. Or they will decrease together. Which is consistent as both are generally as bloated as Hogtown real estate, both arguably from the same heavy-handed artificial QE policy.

Perpetuals and rate-resets should be OK until/unless big interest rate increases manifest themselves. I doubt that will happen anytime soon because the fundamentals aren’t there yet. Governments can’t possibly finance their deficits at higher rates unless huge tax hits are levelled at private people and corporations. Which won’t happen until the 99% bring back the Guillotine. But governments sure want to stop the QE ‘money-printing’ (which ironically hold down rates by providing floods of unneeded capital) because it’s become so extensive and dangerous. Dangerous because it has unbalanced market forces so much (sort of like the Chinese central planners with all their empty cities).

Separately, emerging-market shares have dropped big-time over the last several months, as most people (institutions?) who were seeking higher perceived rates overseas have since yanked back their money from perceived substantial risk increases. That means from western Europe, and especially eastern Europe, China, Japan, Australia, and other pockets which I don’t follow much. When the smoke clears, those could have some nice low-price buying prospects, but until the Crimea is resolved, and European economics recover, and China deflates from it’s massive bloat, and Australian resource companies start exporting to China again, and Japan gets over it’s 17-year depression, and Syria and Turkey quieten down etc, I wouldn’t be in those right now.

So, picking individual company stocks in Canada & U.S. instead of generalizing too much, and leaning heavily into preferreds vs common shares (but keeping your eyes open on interest rates) will probably give the best return/risk ratio for awhile.

#63 not 1st on 03.31.14 at 10:11 pm

#49 Ripped on 03.31.14 at 8:53 pm

In another words your happy being a career minor league player.

—–

Sure if being retired at 40 means I am a minor league so be it. Got lots of other paying assets that I control 100% so I dont need to worry about server farms trading pennies with each other.

#64 nomad on 03.31.14 at 10:12 pm

My fellow programmer at work and I are stunned about the Toronto condo MLS postings with fees above 750$ for 900-1000 square feet. Somebody here PLEASE explain to me why fees are double those I paid in downtown Montreal. Is the Mafia taking a cut from contractors?

Shouldn’t it be cheaper to maintain condos in Toronto? More competition between contractors, more units per building (even in older buildings), cheaper to order broken stuff and industrial products (larger orders).

Something isn’t right. Educate me.

#65 Republic_of_Western_Canada on 03.31.14 at 10:12 pm

#10 Wondering on 03.31.14 at 6:45 pm

So Garth,

What do you think about buying Berkshire B shares and letting the experts worry about it.

They have done well over time…….better than the stock markets.

As Buffet illustrated in his most recent report to shareholders, his returns weren’t much different from the S&P500 index, just higher (and lower) at different times compared to the S&P. So, if you had deep pockets and could read the cycles in the general market, switching back and forth between his fund and the S&P 500 at the right times would have saved you from retrenchments in either. But if they were that great overall, billy-boy Gates would not have bought so much CN stock.

#66 Retired WI Curmudgeon on 03.31.14 at 10:16 pm

It must be the water. Everybody’s a snide comedian tonight. Well almost everybody.

Monday can get to the best of us, so why not you?

#67 Smoking Man on 03.31.14 at 10:17 pm

Garth send herb an email, see if he’s OK?

I miss the guy, but worried about him

#68 Republic_of_Western_Canada on 03.31.14 at 10:23 pm

#31 yeg_guy on 03.31.14 at 7:44 pm

Garth, wouldn’t rebalancing 3-4 times a year, eat away any benefit of investing in etfs? If you’re contributing regularly or rebalancing, wouldn’t index mutual funds be advantageous? I tend to believe in the “couch potato method, where etfs are for a more higher net worth investor.

Comment?

The biggest difference between ETFs and MFs, IMHO, is that the management fee structure on ETFs is way lower. So, more of any gains go into your own pocket instead of the fund manager’s Mercedes payments.

Rebalancing stocks or ETF’s is negligible at 9.99 a pop nowadays.

#69 Flamed out in Kitchener on 03.31.14 at 10:30 pm

Took me years to learn not to react to the gyrations and volatile cliff dives and spikes of the market. What finally did it was the realization that I wasn’t investing in ‘stocks’ , but real businesses, (Say it to yourself – I own this business!). So after decades of reacting to the ‘market’ , with the hard lessons of real $$ losses (tens of thousands), it finally clicked.

When 2009 came and the market bottomed, I sold nothing, in fact I bought some more of my best holdings … Now I live off of the cash flow of these businesses, and I could care less about their ups and downs (disclosure: mostly pipes, power, banks and REITS)

It takes a long time to get to this comfort level, but it’s worth it once you do. Buffet is right – concentrate on the business, not the paper.

#70 Chris on 03.31.14 at 10:32 pm

Wusses. Seriously? This from a guy goes to the hospital because he snapped his wee ankle?

#71 Basil Fawlty on 03.31.14 at 10:33 pm

This what lawyers for the Calgary Herald had to say about Tim Ball: “viewed as a paid promoter of the agenda of the oil and gas industry, rather than as a practicing scientist.”

He has no credibility.

#72 Role on 03.31.14 at 10:36 pm

Hey Garth! How come can save wehn stricklen, bit can no save more wehn un•stricklen?

#73 Snowboid on 03.31.14 at 10:47 pm

#56 nomad on 03.31.14 at 10:12 pm…

Try doing a google search on “falling glass condo toronto”, or for a wet coast explanation “leaky condo crisis”.

Condo fees are also going up in BC as the laws around depreciation reporting came into effect last December – ie. the reports outline deficiencies that will require future work – hence higher fees.

Immediate deficiencies are usually addressed with special assessments.

With the ridiculous pricing, fees, maintenance, taxes, etc – it all adds up to condos being a high-risk purchase.

Solution for the next few years if you really want to live in a condo, rent – it’s that easy!

#74 Republic_of_Western_Canada on 03.31.14 at 10:48 pm

#42 Ralph Cramdown on 03.31.14 at 8:26 pm

People buy equities because they go up more often than they go down. Why someone would then want to own something negatively correlated with equities is beyond me…

Writing covered calls at the high point in a cycle, and writing naked OOTM puts in a deep trough is a nice way to augment your beer money.

#75 Kreditanstalt on 03.31.14 at 10:51 pm

They call buying just about anything now – bar gold, maybe – “BTFATH”. For a good reason.

Your advice is out of date. Almost nothing is affordable now when you take risk into account. And every price, rate, value, index, wage and cost is manipulated, warped, mangled and boosted by a flood of artificial liquidity.

THIS GUY, with his cash and savings accounts and stuff might have the last laugh.

#76 Republic_of_Western_Canada on 03.31.14 at 10:53 pm

#64 nomad on 03.31.14 at 10:12 pm

Maybe established prices of labor/materials in Montreal is lower. From what I’m seeing here, Montreal RE in general is in a weaker state than Hogtown, with substantially less new development. Maybe that extrapolates into substantial differences in strata fees, due to lower demand and business costs.

#77 Arshes76 on 03.31.14 at 10:53 pm

@ #31 yeg_guyy
Correct me if I’m wrong but in the coach potato method of investing your supposed to re balance 2-4 times a year, aren’t you?

#78 bricklayer on 03.31.14 at 10:55 pm

hahahhahahahahahahah,

BEST PICTURE IN A LOOOOONG TIME.

#79 learningfromyou on 03.31.14 at 10:55 pm

Thank Garth for this amazing post
Outstanding!!

Take your pills, play with Bandit a bit and please finish the statement opened on the following paragraph.

>There’s more to learn. Like which of the thousands of >ETFs, bonds or preferreds to buy. But there’s a start.

>Stay tuned.

You are close to provide a balanced formula to those with low and average knowledge in asset locations (myself included).

#80 nnso on 03.31.14 at 11:11 pm

Millennials (and their parents) should understand the future will belong to those who are liquid. Nobody really needs to own a house. But everyone needs income.

having a house is a income. When the government bring 340K temporary workers while 1.4 million people out of work and thousands of students every year to Canadian university, every home owner become instant landlords. House is more secure than jobs, people need to own as many houses as possible. The more the house price go people learn to live in dense. We will have Cage houses as in Hongkong very soon. I know a person who has only a part time job bought a house for million in North Toronto. Renting the whole house as boarding rooms to students . Being landlord is a fastest growing profession in GTA.

#81 The_Iceman on 03.31.14 at 11:15 pm

On Global Vancouver suppertime (6:00 p.m.) news tonight.

…the stupidity continues…

http://globalnews.ca/news/1242635/vancouver-first-time-home-buyers-hoping-to-win-the-lottery-to-afford-first-home/

#82 T.O. Bubble Boy on 03.31.14 at 11:26 pm

@ #4 Max on 03.31.14 at 6:31 pm
Good points, as always, but I’m wary of the fact that the traditional relationship between bonds and equities appears to have broken down – or at least, be broken down at these ultra-low interest rates.

http://blogs.wsj.com/moneybeat/2013/07/25/why-arent-stocks-and-bonds-moving-in-opposite-direction/

If bonds and equities are positively correlated right now (rather than inversely, as they have traditionally been) are bonds really such a safe haven? And if they aren’t, what’s left out there that does have a reasonably significant negative correlation with equities?
————————

If you invest in different types of equities and fixed income (not just “stocks” or “bonds”), you’ll find less correlation.

For example, inflation-protected bonds (real return bonds) and emerging market debt do not move lockstep with traditional bonds. Also, commodities often move differently from other equities.

#83 research on 03.31.14 at 11:30 pm

I think you are missing 7% from the break down of your asset allocation; or is that intentional? Or… do i need more coffee?

#84 Skook on 03.31.14 at 11:47 pm

Hey Garth,

Here’s another example of doubling listing – this was a picked up by the individual behind “The Mash”. The address is 111 Glen Rd Toronto and has been listed by both Cityscape Real Estate Ltd (Mississauga) and Harvey Kalles Real Estate Ltd (Toronto). Listing ID C2846563 & C2819360. Here is the Mash post:

http://themashcanada.blogspot.ca/2014/03/price-drop-4-111-glen-road-rosedale.html

#85 HD on 03.31.14 at 11:54 pm

#77 Arshes76 on 03.31.14 at 10:53 pm

@ #31 yeg_guyy
Correct me if I’m wrong but in the coach potato method of investing your supposed to re balance 2-4 times a year, aren’t you?

———————————–

http://canadiancouchpotato.com/2011/02/24/how-often-should-you-rebalance/

Best,

HD

#86 airhead princess on 04.01.14 at 12:02 am

“But on that note, given that Canada’s been a significant stock market underperformer over the past few years, and given that Canada has been a leader in terms of economic growth, buying Canadian stocks might not be that bad of a deal these days. ”

Wrongo…….it is only the general index that has underperformed. Dozens of individual names have doubled and trebled . The stock market is not a place for the stupid, weepy, the meek and the half asleep to make money…….you need a government job for that. The market is a place for the nimble and well prepared…. educate yourself.

#87 onemillioncuts on 04.01.14 at 12:28 am

Garth,

Wanted to ask about moving money into the market. If starting from a reasonable sum of cash, do you recommend slowly growing positions over time or purchasing everything all at once and re-balancing at regular intervals from that point forward? For markets that constantly touch generational highs, it seems committing large sums all at once (even while diversified) vs. spreading across months/years is a large risk itself.

Cheers!

-omc

#88 Fed-up on 04.01.14 at 1:39 am

It’s all been said here before, but it’s still worth reading:

http://www.fool.ca/2014/03/21/3-reasons-canadas-real-estate-market-is-in-trouble/

#89 Keith in Calgary on 04.01.14 at 2:10 am

Only morons put their money in the stock market.

It is the biggest “rigged” casino in the world. Pumped up to oblivion…………….by the liars, cheats, and thieves that work for you know who.

Go ahead…..”invest”.

#90 Son of Ponzi on 04.01.14 at 2:22 am

#42 Ralph.
My idea of diversity is owning some things that pay me in January, April, July and October, some others that pay in February, May, August and November, some that pay on the 15th and some on the first of the month.
—————–
You sound like the mechanic on the old commercial:
“You can pay me now, or you can pay me later”.
No free ride,buddy!

#91 blobby on 04.01.14 at 2:33 am

Way things are kicking off in Russia/Korea/China/etc… Real men spend all their money and enjoy it.. As we’re all going to be vaporized soon anyhow…

Harper almost seems gleeful in that knowledge as he sits on the world stage, a complete maggot in world politics – but willing to put himself (and his country) out for bait while he goads on other countries.

#92 Ship on 04.01.14 at 3:34 am

Re
He also lives life to the fullest – great girlfriend on the left coast & they fly back & forth to visit each other as often as they can.

I think yr millinim is gay

P. s. this my fav pic too even though still gross

p s s.

R. I. P. health care died on Monday

Look it up

.

#93 World According To Garth on 04.01.14 at 3:56 am

Buffet says “Buy Insurance Companies”.

Why?

Easy…….unlike the climate change dupes who say worse weather….there has been NO WORSE WEATHER. Its just on the news more when there is.

Dr Tim Ball – PhD Climate Science

BUT…..insurance Scam Companies are charging “end of the world” insurance for much more money. This is fraud. But these guys believe in “Just Us” not justice so they will never go to jail.

Okay you “thousands of scientists (with degrees in Ammonia in Squid) people”. Let’s hear your argument…..

#94 Buy? Curious? on 04.01.14 at 4:27 am

What’s with all the biblical references these days? Cmon. How did religion, all of a sudden, sneak into common language? Stop it. Give your collective heads a shake. Let’s get back to business.

Why isn’t there a common formula for investing? Why couldn’t someone go online, invest in a specific fund (The Buy? Curious Hardware Tools Fund), make a single trade (a house in the Buy? Curious’ neighbourhood) or getting into dividend paying stock that pays out regularly (you’ll have to use your imagination for that one, ladies)? It’s because the system is openly rigged. Sure they say that the system is legal and transparent but why are people making billions and billions while others struggle? People scam the system and to try to figure it out by becoming “financially literate” is a bad joke.

If you’re happy working your 9-5 until the day you die, watch sports on Saturday, pray towards the East 5 times a day, and get a 24 every few weeks. Good on you. The money you waste, makes those guys (and it’s only old white guys) richer. THEY are richer than you think.

Hey! Quick question hotshots! What do you think the Real Estate Boards across Canada will say their numbers are?

https://www.youtube.com/watch?v=bbD-r7Pe0tQ

#95 gmc on 04.01.14 at 5:26 am

Gets some nuts go for gold, many cheap gold stocks and juniors on sale,
I got NVO.V resources, bought at 34 cents, claims to have the same as a wittwaterrans basin, but in Australia, up to $2 now, and maybe $100/share or more if they do have a new WIT. , and waiting for the truth machine for the drill results
and silver SOL.V , 77 million oz and waiting for an update to the 43-101,
juniors is where the TFSA is at,
I am up $250,000 and waiting for the inevitable gold and silver take off, then should be in the Million before retirement.
Why Not Canadian JUNIORS?
If you don’t like gold or silver junior stocks, how about an awesome Cdn junior medical that has cured cancer with cold laser…….TLT.V http://www.321gold.com/editorials/moriarty/moriarty030314.html
Good luck to all, financials , not any more time to get out, too bad all the pension funds , mutual fund are in deep with the New York Stock market,
the game could be up tomorrow, especialy if the USA pushed Putin to far, he has all the power to change the USA forever, ALL HE HAS TO DO IS SELL HIS OIL IN ANY OTHER CURRENCY, it doesn’t have to be in gold or silver, then the bottom will come out of the US dollar, it is on the edge now at .80 on the index, fell below 80 last week, if it goes to 78 then game over.
gmc

#96 Woke To The Sounds Of Horking on 04.01.14 at 6:53 am

#9 — likegreektome

Like you, 6 months ago I knew nothing about investing. I only knew that 1) my bank was screwing me with their so-called high-interest savings account (Orwellian translation: Pitiful Interest Savings Account); and 2) that my other money went offshore years ago, ignorantly, into a poorly performing pension fund that was being bled dry by high commissions and fees.

But then I read a bunch of beginner investor’s books and learned the basics. I wasn’t interested in day trading or other high risk activities. Just wanted to park my a$$ets in higher growth investments that have low commission/fee structures.

You might wanna read ‘The Elements of Investing’ by Malkiel and Ellis, and ‘Millionaire Teacher’ by Hallam (but ignore Chapter 9, which deals with picking individual stocks ‘for fun’).

Both these books are written for total beginners, in plain English, with very few technical terms. Both books advocate self-directed investing through ‘index’ investing and yearly rebalancing.

Be wary of dealing with wealth managers, financial planners and anyone else who wants to sell you an investment product. They make big fat commissions on product sales — unless you hire them strictly on a one-off, one-time-fee, basis.

Well. Everyone’s gotta earn a living I guess.

Best choice is a fee-based advisor who sells nothing, refuses commissions and builds/rebalances a portfolio on an active basis. Pay no more than 1%, tax-deductible. — Garth

#97 maxx on 04.01.14 at 7:15 am

#24 TheCatFoodLady on 03.31.14 at 7:30 pm

As usual, excellent post. Not surprised at all that you have such a smart lad….like mother, like son.

Start small….best advice for putting the first foot forward. It doesn’t hurt. Save a small amount every payday such that you don’t feel it. Soon, you realize that it’s growing significantly and the excitement of having a growing net worth catches fire. A few decades later, you call the shots with your life.

#98 liquidincalgary on 04.01.14 at 9:05 am

@ #17 hohoho

have a look at ‘fractional reserve lending’

then slap yer forehead for such an inane question

#99 liquidincalgary on 04.01.14 at 9:21 am

@ #23 EIT

recently, the IRS clarified bitcoins as property, not currency

#100 :):(Ying Yang on 04.01.14 at 9:22 am

#89 Keith in Calgary on 04.01.14 at 2:10 am
Only morons put their money in the stock market.
It is the biggest “rigged” casino in the world. Pumped up to oblivion…………….by the liars, cheats, and thieves that work for you know who.
Go ahead…..”invest”.

……………………………………………………………………….

Yes sure I will just put my money in to the bank! Great I receive 1% wow. Investing in real estate is risky too. Perhaps I should invest in Grow opps? I hear they have a great return. I do like your idea about the Casino though. Now that sounds like fun, I have a smoke and a drink, hot girls by my side, play for fun, win big. Oh crap that’s not my gig, Smoking Man jump in here please!

#101 balsamim on 04.01.14 at 9:23 am

Somebody else pointed this out as well, but has had no response. The math on the Growth Assets side does not add up to 60%, it’s at 53% – where’s the remaining 7%?

Garth – can you please comment?

#102 airhead princess on 04.01.14 at 9:28 am

Wow…talk about ‘the horns of a dilemma’. Since last fall the Canadian energy , materials and financial sectors have been pouring profits down on the smart money. But here we are…..April Fools Day……and facing down May……( sell in May and go away) into the weakest period of the year. The seasonal charts can either present opportunity or signal a time to sell. I’m thinking ‘take some money off the table’ and revisiting the market after October. I would suggest dollar cost averaging dividends across the worst of it as we cross June and July on the dips when we see the most summer volatility. Otherwise …..it’s been a banner year for Canadian stocks if you’ve been smart enough to pick the best and leave the rest to the ETF crowd.

#103 Linda Pearson on 04.01.14 at 9:41 am

#97 maxx on 04.01.14 at 7:15 am
#24 TheCatFoodLady on 03.31.14 at 7:30 pm

…Start small….best advice for putting the first foot forward. It doesn’t hurt. Save a small amount every payday such that you don’t feel it.

Confucius said: “It doesn’t matter how slow you go, as long as you do not stop.”

And to that I would add, better to start early too.

#104 :):(Ying Yang on 04.01.14 at 9:42 am

Island airport expansion will be ‘very close vote’ WTF are the tree huggers downtown afraid of? Noise? Holy Crap these idiots live in a large city downtown, what did they expect sunset vistas and quiet lush meadows with wispy flowers, meandering deer, trickling brooks, oh that’s Caledon you idiots! The airport will add jobs, make life easier when you tree hugging, highrise condo living artsy ding dongs need to fly to New York to check out the newest painting at the Guggenheim.

#105 T on 04.01.14 at 9:47 am

Interesting things are happening in my neighbourhood.

3 for sale signs have gone up on my street in the last week alone.

Weird.

#106 Shawn on 04.01.14 at 9:59 am

Debts may exceed currency and so what?

Number 17 says

Skill testing question:

If A lends B one dollar, B then lends C one dollar, C then lends D one dollar …. Y then lends Z one dollar.

1. What is the total amount of money owed?
2. What is the minimum number of dollar bills required in this system to settle all of the debt?

*****************************************
The answers are 1: $26 is owed and 2, if Z gets a $1 bill he can repay and all can repay so the answer is 1.

Now before we conclude anything is wrong here consider:

If each pays 10% interest, then Z pays the dime and it is passes along the chain to A.

So is this not a total of 10 cents net interest on $26 owed?

That sounds good?

But in reality B through Y have done nothing. They borrowed a dollar and then lent it out. If at same interest rate, why bother?

It is has been established that most money is bank deposits and most deposits are loaned out and one begats the other.

There is NOTHING nefarious or evil about standard banking.

You can borrow for 5 years against a house at 3% and people think banks are evil? Hilarious.

If you think banks make excessive profits buy their shares. I did.

#107 sheane wallace on 04.01.14 at 10:08 am

#96 Woke To The Sounds Of Horking
————————————-

My take on this: get an adviser to build you a balanced portfolio, pay one time fee for that and then just watch it.

No need to pay for active management/my opinion.

Don’t re-balance too often.

If you pick the correct bucket of low fee ETFs – sector and country you will be better off in long term with passive portfolio management.

I’ve never met a person who took ‘one-time’ advice and made it work on a consistent basis. Without recurrent rebalancing, you will suffer for being cheap. — Garth

#108 Holy Crap Wheres The Tylenol on 04.01.14 at 10:23 am

The “tech-savvy” boyfriend of a Liberal political staffer Peter Faist just coincidentally lost his job. The Liberal Party cancelled its contract with Peter Faist, the life partner of former Ontario Liberal deputy chief of staff Laura Miller, after an OPP warrant containing allegations of record destruction became public last week, he was identified in an OPP search warrant for the probe into deleted gas plant e-mails and was paid almost $160,000 by taxpayers over three years to provide IT services to the Liberal caucus. Oh this just gets better every day. So Ms. Wynne and your next move is?
Smoking Man you missed your calling in IT for the Liberals. $160G not bad for an part time IT monkey. Hell for $160G I could have deleted emails from the hard drive by dumping them into a downtown condo cement pile-ling. Oops that’s out, now they will know where Jimmy Hoffa is, Crap!

#109 Stickler on 04.01.14 at 10:24 am

@ #94 Buy? Curious? on 04.01.14 at 4:27 am

Why isn’t there a common formula for investing?

Why couldn’t someone go online, invest in a specific fund make a single trade or getting into dividend paying stock that pays out regularly

—————————————–

The answer -> there is, and there is.

Check out:

“VT” -> vanguard world stock ETF

“XTR” -> iShares Diversified Monthly Income ETF

XTR will invest in a portfolio that is a diversified representation of income-bearing asset classes, including, but not limited to, common equities, fixed income securities and real estate investment trusts.

The fund will generally rebalance to this allocation policy on a quarterly basis, but may also do so more frequently if market conditions warrant.

* A better question is how much time have you put into trying to answer your own questions?

If its less then the time you spent watching viral videos #FAIL

#110 Stickler on 04.01.14 at 10:27 am

@ #103 :):(Ying Yang on 04.01.14 at 9:42 am

Island airport expansion will be ‘very close vote’ WTF are the tree huggers downtown afraid of? Noise? Holy Crap these idiots live in a large city downtown, what did they expect sunset vistas and quiet lush meadows with wispy flowers, meandering deer, trickling brooks, oh that’s Caledon you idiots!

—————————————-

Maybe they don’t want even more terrible traffic & jet fuel fumes.

Ever lived near there? I’m guessing no.

#111 Dr. Wu on 04.01.14 at 10:33 am

@ Sawn
If you think banks make excessive profits buy their shares. I did.

There are two groups of people:
A) those who figured out that the banking system is fraudulent. It’s broken, worse, it’s private and should be demolished and replaced with something in the public interest.
B) those who declare ” how can it be fraudulent if I can by preferred shares in it”?

The banks make everyone is complicit in the fraud because we all have to use banks.
We are forced to use a fraudulent system but it is just a legislated lie. There are many examples of public lies that politicians swear allegiance to: politicians don’t believe the lies, they just salute them, and add a second lie by saying they believe the original lie. A legal argument is not the truth. A lie believed by everyone is not the truth. Even if you don’t discuss usury, one should consider what counterfeiting is. If we had a government that reaped the benefits of usury we would not need any taxation, it’s that lucrative. Finally, when you sign a contract for a mortgage or a loan, you are in fact giving the bank a loan.

Your life is better every day because of the Canadian banking system. — Garth

#112 Nemesis on 04.01.14 at 10:59 am

#NoWhereToRun? – [email protected] #TestTubeTales for ScientificSimians

Once upon a time… when CapEx was king and FinancialEngineering was an occupation restricted to TheMob’s accountants…

GlobeGirdlingEnterprises did it with… Soul:

http://youtu.be/17yfqxoSTFM

… small wonder then, that …

[UK Telegraph] – Classic cars and watches outperform global stock markets: Coutts found that so-called “passion investments” climbed 77pc since 2005.

…”Classic cars were the best- performing alternative investment, returning 257pc in the seven-and-a-half-year period, while the value of classic watches surged 176pc and jewellery jumped 146pc.

Coutts, which has created an Objects of Desire index, stripped out the impact of foreign exchange movements by calculating the return of investments in the currencies in which the assets are normally bought and sold.”…

http://www.telegraph.co.uk/finance/markets/10552291/Classic-cars-and-watches-outperform-global-stock-markets.html

#BonusRetroZen for ScienceMonkeys

http://youtu.be/EmG-4otZvC0

[NoteToCatFoodLady: BravoZulu]

#113 4 AM Sunrise on 04.01.14 at 10:59 am

All these low mortgage rates are turning this real estate market into an episode of Oprah:

“YOU get a house!
YOU get a house!
EVERYBODY gets a house!!!”

#114 Smoking Man on 04.01.14 at 11:04 am

So the libs are going to support entrepreneurs, teach it…

Bahahahaha…… Going to make Smoking Men? OTFLMAO

Good god, what a waste of money.

To succeed It involves turning every fiber of the liberal mind upside and reversed…

http://news.ontario.ca/medt/en/2014/03/supporting-young-entrepreneurs-in-windsor-and-across-ontario.html

#115 Kilby on 04.01.14 at 11:05 am

Bit off topic but the news highlights on Global Vancouver this morning were “Ferry fares up 4% today” “BC Hydro rates up 9%” And a banner running under the broadcast stating “Vancouver home buyers can no longer afford to finance their down payment” So sad, aren’t we supposed to save the down payment then finance the rest?

#116 Renter on 04.01.14 at 11:08 am

Happy greaprils fools day Gartholomew:-) Real estate sales have tumbled in March in Vancouver, why? Any ideas?

#117 Smoking Man on 04.01.14 at 11:12 am

#107 Holy Crap Wheres The Tylenol on 04.01.14 at 10:23 am

The “tech-savvy” boyfriend of a Liberal political staffer Peter Faist just coincidentally lost his job. The Liberal Party cancelled its contract with Peter Faist, the life partner of former Ontario Liberal deputy chief of staff Laura Miller, after an OPP warrant containing allegations of record destruction became public last week, he was identified in an OPP search warrant for the probe into deleted gas plant e-mails and was paid almost $160,000 by taxpayers over three years to provide IT services to the Liberal caucus. Oh this just gets better every day. So Ms. Wynne and your next move is?
Smoking Man you missed your calling in IT for the Liberals. $160G not bad for an part time IT monkey. Hell for $160G I could have deleted emails from the hard drive by dumping them into a downtown condo cement pile-ling. Oops that’s out, now they will know where Jimmy Hoffa is, Crap!

…………

Dude if I had that gig, I would have made copies of all the emails before I deleted them.

Worth a lot more than, 160k….

#118 shawn on 04.01.14 at 11:16 am

They Walk Among us…

Dr. Wu #110 and numerous other fractional reserve banking alarmists. (A little knowledge is a dangerous thing)

3% mortgages and 4% lines of credit or whatever and people speak of usury…

The year 30 Current Era called. It said you might fit in nicely as a zealot of those times. As a bonus you would not have to put up with a lot of banking in those days. Could live off the land.

Hey why not go off grid right not completely. Go live self sufficient off the land someplace. Good luck with it.

#119 Mixed Bag on 04.01.14 at 11:35 am

#26 gladiator on 03.31.14 at 7:31 pm

God loves the poor and helps the rich.

Want to become rich? Do something to get there, and God will help. You’ll see.

—————
Much like “God helps those who help themselves”.

Good luck Eric, use your brain and do.

#120 Mixed Bag on 04.01.14 at 11:40 am

#103 :):(Ying Yang on 04.01.14 at 9:42 am

Island airport expansion will be ‘very close vote’ WTF are the tree huggers downtown afraid of? Noise? Holy Crap these idiots live in a large city downtown, what did they expect sunset vistas and quiet lush meadows with wispy flowers, meandering deer, trickling brooks, oh that’s Caledon you idiots! The airport will add jobs, make life easier when you tree hugging, highrise condo living artsy ding dongs need to fly to New York to check out the newest painting at the Guggenheim.
————————-

I’m on the fence on this one. While the expansion would likely good for business and much more convenient for downtown travellers, what are the effects of having jets fly out of the island? Centre Island is a great place to take our young family, without having to spend an arm and a leg. It is beautiful there, and would be such a shame to see it negatively affected. Really, there is no place in the GTA like Centre Island.

#121 Aggregator on 04.01.14 at 11:46 am

This Montreal based hotel/apartment rental company just went bankrupt: Club Sommet

CCAA Records 500-11-046281-149

That's what happens when you market to club kids who spend their paychecks on VIP bottle service every weekend.

Next…

#122 not 1st on 04.01.14 at 11:49 am

A company called Virtu Investments will be going for full IPO shortly.

Whats so special about this company? Well, they trade stocks and they have only had one losing day over the past several years of trading. They use HFT front running as their business model and make no bones about it. Its legal and tacitly approved of.

I will stay in Canuck bucks thank you. The guy who exposed the whole thing was a Canadian from RBC. Nice humble guy who could have easily exploited it himself for millions but instead chose to even the field investigating it and exposing it for all investors.

Garth touts the USA but I can tell you things are much more corrupt and standards so much more lax down there than here in Canada.

#123 rosie "moving forward" in the knowledge that, "this won't end well" on 04.01.14 at 11:51 am

Looks like some “teachers” are good at finance. Maybe we should put them in the classroom. Nah, I like where they are now.

http://in.reuters.com/article/2014/04/01/ontarioteachers-results-idINL1N0MT0M820140401

#124 BCD on 04.01.14 at 11:55 am

I find Garth’s enthusiasm in the stock market a little odd when you consider how he condemns real estate and it has out preformed the stock market as long as this blog has been around.

All this talk by people about “never lose”, “I made a fortune” etc. etc. reminds me of people who visit Vegas. Everyone who visits Vegas brags about how much money they won–and yet the casinos and attractions keep getting bigger. . .so I ask you, who’s losses financed Vegas if EVERYONE wins? lol.

People remember the good and forget the bad–it’s human nature. it’s the same reason we buy one brand of car over another. I suspect Garth always found it easier to make money on stocks and likely got burned by real estate a few times. . .people need to take his advice with a grain of salt.

As to all this talk about re-balancing and diversification–honestly, do you really want to spend all that time figuring that stuff out? GIC’s may be brain dead but the 2.25% is real and GUARANTEED. If you know how to save (as our friend Eric) you don’t need the stock market.

Beyond the myriad of things to spend time and energy on in life, hobbies, travel, kids, etc, etc, is renting and investing in the global financial pyramid scheme really that appealing and prosperous to the masses? I think we already have our answer when we look at the run up of real estate prices–it’s not reality.

lol. . .com’on Gartho. . .life isn’t a financial vacuum and it’s not all about money.

(a) Returns on a balanced portfolio have exceeded real estate gains handily since this blog commenced. (b) I do not advocate holding individual stocks. (c) Life is not all about money until you don’t have enough. — Garth

#125 devore on 04.01.14 at 12:08 pm

#17 hohoho

2. What is the minimum number of dollar bills required in this system to settle all of the debt?

Dollar bills are reusable.

Next dumb question.

#126 :):(Ying Yang on 04.01.14 at 12:08 pm

#109 Stickler on 04.01.14 at 10:27 am
@ #103 :):(Ying Yang on 04.01.14 at 9:42 am
Island airport expansion will be ‘very close vote’ WTF are the tree huggers downtown afraid of? Noise? Holy Crap these idiots live in a large city downtown, what did they expect sunset vistas and quiet lush meadows with wispy flowers, meandering deer, trickling brooks, oh that’s Caledon you idiots!

—————————————-

Maybe they don’t want even more terrible traffic & jet fuel fumes.
Ever lived near there? I’m guessing no.
…………………………………………………………………..

Yes did the downtown thing, too much pollution, too much noise with cars, busses, sirens and just too dam hard to move around. Always busy. I live more uptown and west now, near the Airport supprisingly. Its a large city what do you expect?

#127 :):(Ying Yang on 04.01.14 at 12:11 pm

#113 Smoking Man on 04.01.14 at 11:04 am
So the libs are going to support entrepreneurs, teach it…
Bahahahaha…… Going to make Smoking Men? OTFLMAO
Good god, what a waste of money.
To succeed It involves turning every fiber of the liberal mind upside and reversed…
http://news.ontario.ca/medt/en/2014/03/supporting-young-entrepreneurs-in-windsor-and-across-ontario.html

……………………………………………………………………..

No, no you’ve got it wrong Smoking Man, just take them to a casino, buy them a drink, give them a cigarette and they will know right away “This is the life”. Roll big, roll hard!

#128 airhead princess on 04.01.14 at 12:14 pm

It’s not rocket science to sell your losers for tax loss offset against gains in dividend income at the end of every year. Even the best of the pro’s are wrong a third of the time. The trick is to be right more often than you’re wrong. I’m at 77%….not too bad. Most retail investors don’t understand this…true. Re-balancing winning positions that continue to gain value is not entirely logical…..in the case of many winning stocks, churning is a sure way to miss out on future gains. TD Bank for example….why would you ever want to sell a stock like this? Just the opposite….buy more…as often as you can. If anything…you should use increasing dividend income to ‘balance up’ and buy more stock to increase positions towards matching overweight positions rather than selling winning positions down. IMH opinion…one should try to never sell….only increase positions towards developing critical mass of constant dividend flow. The dividend tax credit is a better way to take profits than crystallizing capital gains. Increase your holdings to increase income payers and starve the tax beast. You only pay max tax when you sell.

#129 devore on 04.01.14 at 12:15 pm

#103 :):(Ying Yang

WTF are the tree huggers downtown afraid of? Noise? Holy Crap these idiots live in a large city downtown, what did they expect sunset vistas and quiet lush meadows with wispy flowers, meandering deer, trickling brooks, oh that’s Caledon you idiots!

That’s exactly what the idiots living downtown Vancouver expect. That’s why patios close at 9.

http://i.imgur.com/gcRZlFu.jpg

#130 Nemesis on 04.01.14 at 12:15 pm

#AprilsGreaterFools? #QualitativeMischief #FrothyQuotes

“The current valuation of the S&P 500 is lofty by almost any measure, both for the aggregate market as well as the median stock.” – Chief US Equity Strategist for Goldman Sachs, David J. Kostin

[CounterPunch] – “Frothy” Markets Climb Higher
Stock Buybacks and Margin Debt

http://www.counterpunch.org/2014/04/01/stock-buybacks-and-margin-debt/

“This is a good opportunity to develop our armed forces.” Mykhailo Koval, Acting Minister of Defense, Ukraine

[SydneyMorningHerald] – Ukraine agrees to host NATO war games

http://www.smh.com.au/world/ukraine-agrees-to-host-nato-war-games-20140401-zqpgs.html

“If we can get over some stumbling blocks it will be fun to do.” – Tom Cruise aka TacticalCallSign: “Maverick”

[UK Guardian] – Tom Cruise: Top Gun sequel on cards
Star of 1986 aerial warfare yarn keen to complete project despite death of original director Tony Scott

http://www.theguardian.com/film/2014/mar/31/top-gun-sequel-tom-cruise-tony-scott

#131 Andy on 04.01.14 at 12:19 pm

What’s wrong with buying a single mutual fund if the fund itself is diversified? Then I don’t have to worry about rebalancing cause the fund does it for me. My investment advisor friend said that he has some clients that have their entire savings of $400k in a single fund which is 60/40 equities/bonds. This sounds reasonable to me for someone who doesn’t enjoy being a min/maxer.

The mutual fund industry thanks you. — Garth

#132 Mark on 04.01.14 at 12:34 pm

” ALL HE HAS TO DO IS SELL HIS OIL IN ANY OTHER CURRENCY”

Oil is already sold in every currency around the world. Sure, quoted in US dollars, but any currency actually will do for payment.

#133 Pre-retiree on 04.01.14 at 12:38 pm

Thanks Garth,
I loved this last post. Thanks for the free advice.
But…where does real estate fit into this? Would it not be part of a balanced portfolio outside of REITs? I know from your previous posts that you own RE, so unless one buys at the high prices we are seeing today, are you really against buying real estate? Is it always a bad idea, in your opinion, to own a house if one bought it at a low price, with still money over for other investments? Or are you just saying that if a house/condo is the ONLY investment you can afford, you should stay away?

#134 pbrasseur on 04.01.14 at 12:38 pm

“For example, in 2008 when the Dow crashed 55%, a portfolio with 40% fixed income in it declined only 20% and then rebounded in one year (it took the Dow seven years to recover).” – Garth

True if you bought everything you owned at the top of the market in 2007. But who did that really? That’s the kind if semi-true statement bears love to make to scare people into buying their so called “safe” assets.

I’ve been 100% stocks all the way through this whole fiasco and I’m so much better off now it’s not even funny. Honestly, I’m still working but don’t really need to.

It is also misleading to mix-up stocks and actual indexes or ETFs. Those are not the same, for example if you owned great companies (yes Garth, carefully selected individual stocks, things like Disney or Berkshire) before the crash chanced are not only they didn’t crash as badly but thrived buying off competitors and getting financing for a song. But if you owned indexes in 2007 chances are you owned a lot of overleveraged crap. Plus all the while those great companies kept paying dividend, so unless you need the cash right away what’s the point of worrying and buy bonds that pay zip?

Because balance is what diminishes volatility. As I said: a balanced portfolio dropped 20% in the crisis while the stock index shed 55%. The balanced portfolio recovered in one year. The index took seven years. Fact. — Garth

#135 Aggregator on 04.01.14 at 12:43 pm

And just to add to post #120: Quebec's consumer proposals is rising quickly, up 16.2 pct yy in January Chart, mortgage arrears increased by 8.8 pct yy in December 2013 Chart, while QC's household debt per capita is growing at nearly three times the national average as more indebted francophones pay their mortgages with credit cards and LOCs until banks themselves get worried and start pulling the plug on credit lines. Chart

Why is this a problem? Because Quebec accounts for 19.7% of CMHC's high ratio loans, which may explain why the very secretive crown tried to strong-arm the Quebec Federation of Real Estate Boards last year to keep a lid on foreclosure data as shadow inventory piles up on their books.

So go on and keep taking the MSM headlines hook, line and sinker thinking everything is well under Harper's 'be transparent but hide important data' policy, as lenders and insurers' shadow inventory keeps piling up until it all implodes under this regime's face.

#136 SRV on 04.01.14 at 12:45 pm

The healthy financial system…

“That was the record until today, when just over an hour ago “The Fed” disclosed that as part of its most recent reverse repo operation, it had handed out to 93 dealer banks and other financial intermediaries, both foreign and domestic, some $242 billion in Treasurys in what is now the biggest reverse repo operation in history, a privilege for which the collateral-starved banks paid the Fed the king’s ransom of 0.05% in annual interest, i.e., nothing.”

So let’s see… On the last day of the quarter (in broad daylight) “The Fed” doles out $242 Billion to the (rock solid healthy) “mega banks” so they can pad their balance sheets in order to meet “THE Fed” imposed liquidity/collateral goals (yes this is the free market at work)!

Then the mainstream media “discovers” the HFT boys are scamming the market, and making profit 1287 out of 1288 trading days (nothing nefarious there)… 5 years, and hundreds of $Billion$ late!

Makes you want to just dive in head first doesn’t it! Of course a “balanced approach” will guarantee income (however modest)… until the music (read fraud and corruption) stops and the entire, corrupt mess finally implodes!

Seriously, even an over priced property (and a lying, cheating R/E salesman) looks good in comparison.

#137 Holy Crap Wheres The Tylenol on 04.01.14 at 12:52 pm

Makes me feel a little better when Kazakhstan blows 50 Billion on a oil project that doesn’t work.
How a Giant Kazakh Oil Project Went Awry Developed by Western Oil Companies, Giant Project Off Kazakhstan Is Years Late, More Than $30 Billion Over Budget. We only wasted 1.1 Billion on our plants here.

http://live.wsj.com/video/50-billion-kashagan-oil-development-isnt-working/30820524-F68F-46AA-B1BC-7C81849758BA.html#!30820524-F68F-46AA-B1BC-7C81849758BA

#138 Bottoms_Up on 04.01.14 at 12:52 pm

#130 Andy on 04.01.14 at 12:19 pm
_________________________________

The cost (to you!) of being in that fund is likely at least 2%. So if you don’t mind paying $20,000 per year to ‘be in that fund’, then it’s a great play if you have $400,000.

#139 Born_again on 04.01.14 at 12:54 pm

Damn! that’s some funny stuff you can write Garth, right up there with Tenacious D!

#140 Just some guy on 04.01.14 at 12:59 pm

I feel for these youngsters as they don’t seem to have had much chance to learn from the school of hard knocks. Collectively, I think they should either join the Armed Forces or take an Outward Bound course. See how the other half lives. Get banged up a bit.

I am really puzzled by the lack of consensus on when (not if) interest rates are going to rise. And by lack of consensus, I am looking within my own meagre information resources. About the best source I have is The Economist and a recent article there suggested that the Americans will start to let interest rates rise by about 2015 with an expectation of a two percent increase.

This is not huge but it could be enough to do two things: smite the ungodly hordes who have bought overpriced houses; provide slightly better returns to those who decide to invest rather than become house slaves. Ok, there may be a third effect. That special place in hell reserved for purveyors and sellers of houses may swell to unmanageable numbers but that is not my problem. I already have my own special place in hell for people who use too much punctuation or who write long, complex sentences. There, I will be right next to the serial comma killers whom I would gladly smite. Take that, that, AND that.

Having said this though, a portfolio return of between seven to eight percent is entirely possible and it has certainly been my experience for many years. To any youngsters still reading my boring missive, this is a key point: it takes many years.

For my part, I still think the solution is obvious: work with a fee-based advisor who is neutral as to choices, who pursues a balanced portfolio, and who commits to investing for me in accordance with my tolerance for risk (and puts up with my whining). It is a simple choice but one, that I freely admit, came after more than my fair share of hard knocks.

#141 Holy Crap Wheres The Tylenol on 04.01.14 at 1:03 pm

In baseball we call this a balk!
Fake trades?
“Welcome to the Machine”
The FBI has launched a wide-ranging investigation into high-speed trading with an eye on whether some firms are acting on fast-moving market information that isn’t available to other traders.

http://live.wsj.com/video/50-billion-kashagan-oil-development-isnt-working/30820524-F68F-46AA-B1BC-7C81849758BA.html#!EFAFC807-0E2E-405A-AFCD-85DF9CC9289E

#142 Steve on 04.01.14 at 1:03 pm

This just in from the front lines:

Nobody wants to hear it. Even my closer friends aren’t buying the “peak real estate insanity” scenario. They seem totally brainwashed. They will admit that the market is at it’s peak, but then they say it’s a good time to buy. That literally just came out of a long time friends mouth today. I tried to reason with him but no! He’s advising his financially reckless brother to buy a house with his recent inheritance. Right now. ASAP. When I asked my friend if it made sense to buy an average home for around four hundred thousand when it may plummet in value at anytime, he says “absolutely!” Is this normal? I mean have all you guys been getting this response? It’s like everyone has been brainwashed so deeply and conditioned so expertly that you cannot reason with them. It’s cuckoo. I’m seriously disturbed that I can’t reason with my friend because he is so apt to take the counter world view in everything else, it’s like real estate has this unearthly grip on people. Even people that side with the counter culture with all it’s attendant paranoia seem to rise to fight for the cause. It’s so zombie like. It’s like I’m surrounded by zombies staggering to the slaughter all dragging their bundle of liabilities on their broken backs. It scares me so.

#143 Blacksheep on 04.01.14 at 1:14 pm

Shawn # 105

“It is has been established that most money is bank deposits and most deposits are loaned out and one begats the other.”
———————————————
Let me help you clarify:

Moneys lent is ‘newly created deposits’ by the commercial bank, not money deposited by Mom and Pop.
———————————————
“Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits.”

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf
———————————————
I wish my business could create a digital / paper medium of exchange from nothing and lend for even a modest % rate. When I get paid back said principle medium just clears the obligation and disappears whence it came.

I get the Interest!

What a racket.

Like you say, buy the banks.

#144 bdy sktrn on 04.01.14 at 1:14 pm

nem – this guy could be garth’s evil reflection!

i “translated” it into the approproiate viewpoint for this blog :)
————————————————–

http://www.counterpunch.org/2014/04/01/stock-buybacks-and-margin-debt/

It means that homes are ridiculously overpriced, and the reason they’re overpriced is because the Fed has been juicing the market with easy money and monthly liquidity injections. Chief US RE Strategist for Goldman Sachs, David J. Kostin, was even more blunt than Hussman. He said, “The current valuation of the housing is lofty by almost any measure, both price to rent and imcome”

So by any measure, the RE is overvalued. That means that investors can expect either lower returns in the future or big losses. It’s going to be one or the other.

So what are the chances that houses will fall sharply in the next few months putting another dent in the pensions and life savings of the many of the new homebuyers who just got into the market in the last 12 months?

I don’t have the foggiest idea. But the outlook is pretty bleak.

But here we are again, mired in a euphoric environment in which some homes have risen in price beyond all reason, where caution seems radical and risk-taking the prudent course.

Can we say when it will end? No. Can we say that it will end? Yes. And when it ends and the trend reverses, here is what we can say for sure. Few will be ready. Few will be prepared.”

#145 not 1st on 04.01.14 at 1:20 pm

The only stocks I hold and will hold are a couple Canadian ETFs and some individual REIT stocks because they have broad based exposure to retail, offices, industrial and apartment rentals which all are underpinnings of the economy anyway.

I will never own an equity on the NYSE or NASDAQ ever because they have lost their collective minds over their. HFT and tech bubbles and artificial stimulus abound. Its not real anymore hence the reason the average joe has reduced holdings over the past decade. Never invest in anything you cannot understand and any layman that says they understand that system is a liar.

#146 Paul on 04.01.14 at 2:30 pm

#141 Steve on 04.01.14 at 1:03 pm

This just in from the front lines:

Nobody wants to hear it. Even my closer friends aren’t buying the “peak real estate insanity” scenario. They seem totally brainwashed. They will admit that the market is at it’s peak, but then they say it’s a good time to buy. That literally just came out of a long time friends mouth today. I tried to reason with him but no! He’s advising his financially reckless brother to buy a house with his recent inheritance. Right now. ASAP. When I asked my friend if it made sense to buy an average home for around four hundred thousand when it may plummet in value at anytime, he says “absolutely!” Is this normal? I mean have all you guys been getting this response? It’s like everyone has been brainwashed so deeply and conditioned so expertly that you cannot reason with them. It’s cuckoo. I’m seriously disturbed that I can’t reason with my friend because he is so apt to take the counter world view in everything else, it’s like real estate has this unearthly grip on people. Even people that side with the counter culture with all it’s attendant paranoia seem to rise to fight for the cause. It’s so zombie like. It’s like I’m surrounded by zombies staggering to the slaughter all dragging their bundle of liabilities on their broken backs. It scares me so
———————————————————-
Steve here is you buddy even the ad is perfect

http://www.youtube.com/watch?v=IcjSDZNbOs0

#147 Old Man on 04.01.14 at 2:32 pm

#141 Steve – there is nothing you can do, as its tantamount to someone glorifying the con reformist party under the leadership of Caesar. Hopefully by now we know that Caesar is a psychopath with delusions of grandeur surrounded by misfits and losers.

#148 dontcallmeshirley on 04.01.14 at 2:37 pm

#120 Aggregator,

Club Sommet’s largest creditor is Timbercreek Asset Management, run by TSX listed Timbercreek Mortgage Investment Corp.

Sommet’s CCAA filing leaves Timbercreek holding the bag on $67 million in debt.

What out for those MICs folks. Mortgage brokers love them.

#149 Waterloo Resident on 04.01.14 at 3:03 pm

Wow, did you know that on Saturday the Earth experiences a massive solar blast from the sun? If the blast was twice as large we would have had a massive country-wide blackout, similar to what we had back in 2003. The only problem is that we are still in winter now and we would have suffered greatly. So its good news we only experiences a small CME (coronal mass ejection).

http://news.discovery.com/space/powerful-solar-flare-causes-radio-blackout-140331.htm

‘COOL !’

#150 Republic_of_Western_Canada on 04.01.14 at 3:07 pm

#136 Holy Crap Wheres The Tylenol on 04.01.14 at 12:52 pm

Well, that’s certainly over-exaggerated. A pipeline transmission problem between production and processing doesn’t negate the validity and functionality of the rest of the plant(s).

It’s like saying an entire vehicle is a total waste if the fuel pump is flakey. (-so fix the fuel pump.)

#151 happity on 04.01.14 at 3:08 pm

Oh look at the sparks fly now that the cat is out of the bag and hft in stock markets has been plundering the masses.

Yup, give the banks your sweat and watch them bleed it away with a million cuts.

#152 Republic_of_Western_Canada on 04.01.14 at 3:15 pm

#135 SRV on 04.01.14 at 12:45 pm
[…]
misc. b.s. snipped…

Seriously, even an over priced property (and a lying, cheating R/E salesman) looks good in comparison.

No it doesn’t. Intelligent buying and holding of stock in a productive company with dependable profits renders HFT and alleged bank subsidies irrelevant. As in, no big deal.

But overpaying for some overpriced chipboard doghouse because of hysteria cooked up by a bunch of real estate shills will definitely assure financial collapse sooner or later.

#153 Holy Crap Wheres The Tylenol on 04.01.14 at 3:18 pm

#139 Just some guy on 04.01.14 at 12:59 pm

I feel for these youngsters as they don’t seem to have had much chance to learn from the school of hard knocks. Collectively, I think they should either join the Armed Forces or take an Outward Bound course. See how the other half lives. Get banged up a bit.
_______________________________________________

Agreed these kids could use some form of direction. When I was a youngster back in the late fifties I joined the Air Cadets as I wanted to be a pilot. Greatest form of discipline and instruction I could ever receive. Later our family moved to the USA, where after university I joined the USAF. I figured after graduation at least I could be a Captain or something like that flying a jet fighter. More discipline and some disappointment but needless to say I learned quite a lot about how the world works. I was thrown in with mostly draftees and you learn quite a lot out there in the mix!

#154 not 1st on 04.01.14 at 3:21 pm

Watch the cockroaches on Wall Street squirm today;

http://www.cnbc.com/id/101544772

#155 Sheane Wallace on 04.01.14 at 3:22 pm

https://ca.finance.yahoo.com/news/cheapest-house-vancouver-sale-today-listed-600k-143033476.html

#156 rosie "moving forward" in the knowledge that, "this won't end well" on 04.01.14 at 3:36 pm

Steve 141

Let me guess. All your friends are the trendy type. As we all know, the trend is your friend.

http://vreaa.wordpress.com/2012/01/12/vancouver-as-one-of-9-trendy-bubbles/

#157 Dave D on 04.01.14 at 3:42 pm

I spent some time and made a list of possible ETFs that could possible used to fulfil Garth’s suggested allocation. Would building a portfolio with these suggestions below be a step in the right direction?
I already hold about half the funds I listed below, although no where near the recommended allocation.

Fixed Income
============
Pref Shares 18% : CPD – iShares S&P/TSX Canadian Preferred Share Index Fund
Gov’t Bonds 3% : CLG – iShares 1-10 Year Laddered Government Bond Index Fund
Corp Bonds 5% : CBO – iShares 1-5 Year Laddered Corporate Bond Index Fund
High yld Bonds 3%: CHB – iShares Advantaged U.S. High Yield Bond Index ETF (CAD-Hedged)
Inflation idx Bonds 6%: HFR- Horizons Active Floating Rate Bond ETF or XRB – iShares Canadian Real Return Bond Index ETF

Growth
======
REITS 5%: XRE – iShares S&P/TSX Capped REIT Index ETF or VRE – vanguard FTSE Canadian Capped REIT Index ETF
CND Eq. Large Cap 8%: ZCN – BMO S&P/TSX Capped Composite Index ETF or XUI – iShares S&P/TSX 60 Index ETF
CND Eq. Small Cap 4%: XCS – iShares S&P/TSX Small Cap Index ETF

USA eq. Large Cap 10%: XSP – iShares S&P 500 Index ETF (CAD-Hedged) or CLU – US Fundamental Index Fund
USA eq. Mid/Small Cap 8%: IWM – iShares Russel 2000 Index fund (on NYSE) or XSU – iShares U.S. Small Cap Index ETF (CAD-Hedged)

Int Large Cap 10%: CIE – iShares International Fundamental Index Fund
Int Large Cap 8%: VEE – Vanguard Emerging Markets ETF or ZEM – BMO MSCI Emerging Markets Index ETF

#158 Holy Crap Wheres The Tylenol on 04.01.14 at 4:21 pm

#149 Republic_of_Western_Canada on 04.01.14 at 3:07 pm

#136 Holy Crap Wheres The Tylenol on 04.01.14 at 12:52 pm

Well, that’s certainly over-exaggerated. A pipeline transmission problem between production and processing doesn’t negate the validity and functionality of the rest of the plant(s).

It’s like saying an entire vehicle is a total waste if the fuel pump is flakey. (-so fix the fuel pump.)
______________________________________________

Not my words but theirs.
They can seem to fix it?

#159 rosie "moving forward" in the knowledge that, "this won't end well" on 04.01.14 at 4:21 pm

Forever blowing bubbles. Higher education addition. It all sounds really familiar.

http://higheredbubble.com/blog/economic-bubble-definition/

#160 Victor V on 04.01.14 at 4:34 pm

The close: S&P 500 ends at highest level ever

http://www.theglobeandmail.com/globe-investor/inside-the-market/market-updates/the-close-sp-500-ends-at-highest-level-ever/article17758919/

#161 Herb on 04.01.14 at 4:52 pm

#67 Smoking Man,

Dear Boy, I didn’t know you cared or missed the abuse I heap on you. Rest assured, I am as well as I have any right to be, and definitely not pushing up daisies.

I still check up on you now and then, but you have produced no new outrage that would require me to come out of my self-imposed exile from the flock.

#162 calgary rip off on 04.01.14 at 4:56 pm

http://www.calgaryherald.com/business/Calgary+housing+market+prices+reach+time+record+high/9685188/story.html

“All of these factors contribute to our current strength in the Calgary real estate market….”

Who exactly is benefitting from this? The mortgage owner? The person who wants to sell and the realtor? Seems only a couple people benefit from this craziness the realtor and the seller.

Rentals and buying are currently gone insane in Calgary.

Its amazing the continual bs of the sheeple.

#163 Steve on 04.01.14 at 5:11 pm

#145 Paul

Lol! Bizzaro buddy, yep

#164 Smoking Man on 04.01.14 at 6:32 pm

#160 Herb on 04.01.14 at 4:52 pmDear Boy, I didn’t know you cared or missed the abuse I heap on you. Rest assured, I am as well as I have any right to be, and definitely not pushing up daisies.

I still check up on you now and then, but you have produced no new outrage that would require me to come out of my self-imposed exile from the flock.
……..

You had me worried you old fart.

#165 chapter 9 on 04.01.14 at 6:38 pm

#148 Waterloo Resident
Well hopefully good old earth is not hit by a large CME cause we would pretty much be back in the stone age.
The lead time to replace a transformer is about two months if they are in stock and if they are ordered from the factory six months to two years. In the mean time society as we know it– total anarchy.