Hail Mary

DOUG By Guest Blogger Doug Rowat

The Hail Mary: a long, desperation pass from a quarterback to win a football game that would otherwise be lost. It’s one of the most exciting plays in sports as its outcome is binary: the team throwing the Hail Mary either instantly wins it all or loses everything. Its chances of success are also extremely low (hence the term Hail Mary—a prayer). One of history’s most famous Hail Marys was Doug Flutie’s 65-yard heave during a 1984 college football game, which gave Boston College a win over the University of Miami in the final seconds. It immortalized Flutie mainly because the odds were so stacked against its success. Flutie connected, but the vast majority of Hail Marys end up on the scrap heap of history.

Investors often take the same gamble, but the consequences can be far more devastating than a lost football game. After experiencing a streak of losses that landed him in the hospital due to the stress, Montreal-based trader F.S. Comeau made an epic bet a few weeks ago that Apple would post weak quarterly results. Mr. Comeau took his life savings (about $250,000) and bought a series of put options positioned against Apple’s results. If Apple earnings disappointed he would net a few million; however, if they were strong…poof! bye-bye life savings. The pivotal price was US$128. If Apple shares hit this level post-results the trade would fail. Apple, unfortunately for Mr. Comeau, impressed the market and the shares closed the next day at US$128.75. Some are saying it was a hoax, but if not, I’m willing to bet he’s now back in the hospital.

You have to admire Mr. Comeau’s bravery, but trying to complete a Hail Mary with your life savings is about as prudent as wearing a live mic and walking on to an Access Hollywood bus with Donald Trump: it’ll be exciting at first, but it won’t end well (ask Billy Bush). However, these high-risk investor moon-shots occur constantly. It’s an incredibly strong human impulse to attempt to instantly make up for losses. It’s how gambling addictions develop and it’s how investors squander their hard-earned savings.

Whether they’re blinded by desperation or overconfidence, attempting to immediately reverse losses leads many investors to ignore baseline probabilities. With respect to the football Hail Mary, ESPN Stats & Info calculates the odds of a successful completion at only about 10%. For investor Hail Marys, the odds of success are usually just as dismal.

The only way to rapidly move your investments from the red to the black is to take on more risk, usually in the form of more leverage or more security concentration: fewer and riskier stock picks, for example.

Naturally, such strategies are unwise. To illustrate, take a look at some of JP Morgan’s number crunching. JP Morgan examined the price action for securities in the Russell 3000 Index, a broad-based index of US equities, and showed that, over time, the odds of any one position experiencing a catastrophic loss—a decline of 70% or more from the peak with minimal recovery—were 40% and in some riskier sectors, such as information technology, the odds rose to nearly 60% (see table).

If you held a portfolio of only, say, three or four stocks, essentially throwing your Hail Mary, imagine how devastating it would be to have even one of these positions plunge 70% let alone two? Even apparently safe, well-established companies find ways to self-destruct, which can devastate improperly diversified portfolios. And if you think that catastrophic losses don’t apply to the Canadian equity market consider our notable trail of tears: Nortel, BlackBerry (Research In Motion), Bombardier, Yellow Pages and Valeant Pharmaceuticals to name but a few. Let’s also mention our market’s countless junior oil & gas and mining companies that are now six-feet under (Bre-X—another beauty).

Flutie flung his Hail Mary pass because it was the only option available. As an investor, you have many choices and can recover losses with far better odds if you exercise patience and maintain a balanced and globally diversified portfolio.

And proof that a Hail Mary is essentially a gamble? Flutie wasn’t even initially aware of who caught his pass (it was historical-footnote receiver Gerard Phelan). Don’t risk delaying your retirement, or diminishing an existing retirement, by trying to throw up a prayer. Prayers are for churches, not portfolios.

Amen.

Doug Rowat,FCSI® is Portfolio Manager with Turner Investments and Senior Vice President, Private Client Group, Raymond James Ltd.

130 comments ↓

#1 paulo on 02.11.17 at 2:01 pm

If you like to gamble Throw $5 bucks at a lotto ticket
Like to be a winner every time- Throw the fiver into your TFSA than invest smart

#2 Keswicken on 02.11.17 at 2:08 pm

I threw up a Hail Mary with a couple Medical marijuana companies last winter. Turned a TFSA worth $18 grand into what is currently $106 grand. I am hopeful of more gains with the legalization of recreational weed. Every now and then there are times to throw up a Hail Mary. You just need to know when to be Tom Brady and Aaron Rogers.

#3 BobC on 02.11.17 at 2:38 pm

I think it was Garth that said individual stocks are for millionaires. If you have only etf’s in your balanced portfolio is it better to have say 20 etfs instead of 10? Does 20 make it safer?

#4 CANADA on 02.11.17 at 2:39 pm

http://video.dailymail.co.uk/video/mol/2017/02/10/2834289298395217766/1024x576_MP4_2834289298395217766.mp4

At the same time, there are now 66,719 vacant or temporarily occupied homes in the Vancouver area – more than double the numbers recorded in 2001, according to Simon Fraser University’s Andy Yan

Read more: http://www.dailymail.co.uk/news/article-4214814/Foreign-buyers-driving-home-prices-Vancouver.html#ixzz4YPJiDBf2
Follow us: @MailOnline on Twitter | DailyMail on Facebook

#5 Dirty socks on 02.11.17 at 2:46 pm

My Hail Mary pass – well, I’m sitting on cash (and yes to the dismay of Garth) and will sit until the day the Big Banks take a hit on the imploding housing bubble. Once the dust clears and bank stocks shake off the dust – I’ll simply step up, hold my breath and buy like I never bought before! Call me crazy, but something tells me the market as a whole will fall from grace and holding cash “may” look like a marvelous move!! Cheers to all and love the Blog Garth – G Man rocks.

We are embarking on a new frontier!

#6 For those about to flop... on 02.11.17 at 2:57 pm

Pink Snow falling in Vancouver.

These guys paid 5.85m for a hundred year old house last February and now are stuck trying to get the bulk of their money back.

They’ve had it on for 6.188 for 5 months with no luck ,but can’t lower the price anymore without taking a big hit as they are already pretty much at their brake even point.

With 20 % down the monthly payment is over 20k…

M42BC

https://www.zolo.ca/vancouver-real-estate/4164-pine-crescent

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMTU1TQ==

#7 Victoria BC getting emptier by the day on 02.11.17 at 2:58 pm

http://www.timescolonist.com/business/census-thousands-of-unoccupied-dwellings-in-victoria-1.9748692

#8 For those about to flop... on 02.11.17 at 3:00 pm

Brake ,should be break.

Give me a break…

M42BC

#9 Andrew Woburn on 02.11.17 at 3:01 pm

Thank you, Doug. If that doesn’t make the case for ETF’s, nothing will.

#10 Empty Houses on 02.11.17 at 3:09 pm

#4 CANADA on 02.11.17 at 2:39 pm
http://video.dailymail.co.uk/video/mol/2017/02/10/2834289298395217766/1024x576_MP4_2834289298395217766.mp4

At the same time, there are now 66,719 vacant or temporarily occupied homes in the Vancouver area – more than double the numbers recorded in 2001, according to Simon Fraser University’s Andy Yan

Read more: http://www.dailymail.co.uk/news/article-4214814/Foreign-buyers-driving-home-prices-Vancouver.html#ixzz4YPJiDBf2
Follow us: @MailOnline on Twitter | DailyMail on Facebook

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

Dont’ worry. They are all locals right?

#11 Jack Fortin on 02.11.17 at 3:12 pm

Back in 1998, at forty years old I realized my savings and investments were totally inadequate to meet my retirement needs. I threw a “hail Mary” in that I liquidated the shares held in my trading and RRSP accounts and went 100% into Canadian gold stocks. I did so against the “better” advice of both my financial planners. I was told that I could expect nothing more than to retire in poverty.

It was scary for a couple of years as most of the shares I bought initially went sideways or down. By 2002 however, I realized I was onto something good. By 2004 I was up over 500% and I realized my dream of opening a small business. By 2006 I took well over 10 times my my initial investment off the table and put it into my business which I understood by that time would be successful. I was still left with a sizable amount in both my RRSP and trading account.
I am not going to retire rich but I will be comfortable and able to do the things I love, God willing. A “hail Mary” thoughtfully executed and followed with resolve can save the day. I went from being a motorcycle salesman with a local dealership to owning a successful business with millions in revenue in less than five years.
I was used to think I was just lucky. Maybe I was but it seems the the harder I work at or study opportunities….the luckier I get.

#12 Euro observer on 02.11.17 at 3:13 pm

How about gambling on a sector?

Junior minors look pretty good to me at this point, I am actually thinking of buying some triple leveraged ETF/JNUG vs. options.

Looks like a lesser risk than buying a house these days in Toronto.

#13 ALFRED E. NEUMAN on 02.11.17 at 3:14 pm

Excellent post Doug ..!!

As you appear fond of history, thought I’d share with you the origins of the ‘Hail Mary” phrase, applicable to American football.

The term became widespread after a December 28, 1975 NFL playoff game between the Dallas Cowboys and the Minnesota Vikings, when Cowboys quarterback Roger Staubach (a Roman Catholic) said about his game-winning touchdown pass to wide receiver Drew Pearson, “I closed my eyes and said a Hail Mary.”

Cheers.

#14 IronMike on 02.11.17 at 3:16 pm

BoB C

Buying 20 ETFs does not make it safer. 10 different ETFs is probably too many as well. ETFs are made up of hundreds if not thousands of underlying holdings (either equities or bonds, depending on what index the ETF is replicating) Purchasing 20 ETFs would simply duplicate what can be accomplished with just a few well diversified ETFs

#15 Doug Rowat on 02.11.17 at 3:16 pm

#2 Keswicken on 02.11.17 at 2:08 pm

I threw up a Hail Mary with a couple Medical marijuana companies last winter. Every now and then there are times to throw up a Hail Mary. You just need to know when to be Tom Brady and Aaron Rogers.

If Aaron Rodgers is throwing your Hail Mary then by all means. I believe his completion rate is around 60%. And Tom Brady is Tom Brady. But most investors are neither. If they were, the world would run out of supermodels.

–Doug

#16 Fish on 02.11.17 at 3:21 pm

Time will tell,
Only 2 more sleeps, then the meet

#17 conan on 02.11.17 at 3:26 pm

I ran into a few Bre-x financial geniuses back in the day. They would not sell. Suspicious helicopter jumps, lack of mining sector oversight, did not matter. They were certified financial mega- brains because they owned Bre-x.

Besides why sell? It would trigger a huge tax bill, and financial brainiacs like them ,don’t trigger huge tax bills.

The Nortel crash was the worst IMHO. Bay street peeps were actively chasing down clients and getting them to double down on Nortel. An entire sector of advisers duped by the powers that be.

https://www.youtube.com/watch?v=-cXrEPNvRO8

#18 Jack Fortin on 02.11.17 at 3:47 pm

I don’t want to monopolize this board with excessively lengthy posts. There are three things I learned as the result of my “hail Mary” and subsequent establishing of a small business. I guess I could write an entire blog but I am not a gifted writer and I suspect the moderator may choose to censor this so just the points.

#1 The vast majority of financial planners, though licensed; are little more than mutual fund salespeople and the way they are paid is a huge conflict of interest.

#2 Small business succeeds in spite of the banks, not because of them.

#3 It is vital to have a portion of your SAVINGS “note emphasis on savings”, completely outside the financial sector, held preferably in specie (smaller gold and silver coins and bars)

I suppose most in the financial industry would not want me to elaborate on those points. I will leave it at that for now.

#19 Clean Sox on 02.11.17 at 3:56 pm

@dirty sox. My Hail Mary pass – well, I’m sitting on cash (and yes to the dismay of Garth) and will sit until the day the Big Banks take a hit on the imploding housing bubble. Once the dust clears and bank stocks shake off the dust – I’ll simply step up, hold my breath and buy like I never bought before!

tried the same a few years back and trust me it can take a lot longer than younthink, so be prepared to wait several years

BR Clean Sox

#20 Yeg_Guy on 02.11.17 at 4:11 pm

Oh, the wonderful Hail Mary. Funny how everyone raves about their fluke wins and not about the multiple interceptions that preceded. I’ll keep my boring passive couch potato strategy. Kinda like how Joe Montana used to pick apart defences, with short passes (West Coast Offence).

#21 Setting the Record Straight on 02.11.17 at 4:11 pm

@
#14 IronMike on 02.11.17 at 3:16 pm
BoB C

Buying 20 ETFs does not make it safer. 10 different ETFs is probably too many as well. ETFs are made up of hundreds if not thousands of underlying holdings (either equities or bonds, depending on what index the ETF is replicating) Purchasing 20 ETFs would simply duplicate what can be accomplished with just a few well diversified ETFs

&&&&&&&
Well this is an interesting topic.

If you buy a covered call Can bank etf does it make sense to buy at the same time the Straight bank ETF.

Of what. If you buy an actively managed ETF like HAZ are you reducing your risk if you also bought an index ETF in the same stock universe?

Or consider a cap weighted vs an equal weight etf. Do you Lowe your risk by buying both?

Just asking

#22 InvestorsFriend on 02.11.17 at 4:13 pm

Some Stocks Do go to zero

It’s been about a decade since I had any stock I owed go to zero. But I have had a few years ago. I keep them in my account at zero as a reminder.

Zero’s that I managed to invest in include:

VisionWall – High tech Edmonton glass “curtain wall” manufacturer that expanded too fast years ago and went broke. I believe they over-spent on a huge new factory.

Mount Real – I believe this was a pure scam based on Quebec. I smelled a rat but it was too late.

Stonepoint global brands – small beverage company on the Venture…

Sogo Capital (so gone…) a blind capital pool in Calgary I recall

Sureprint copy centers (a failed blind capital pool in Calgary)

Concert Industries – Toilet tissue etc. manufacturer in Quebec that expanded its plant too fast.

Also my very first investment Canadian Property Investors Trust. (A REIT before the name existed). Owned Alberta properties and went broke after the National Energy Program in the 1980’s. (There was a partial recovery on this one…)

Despite these losses I have done VERY well in the markets. None of these were for more than a couple thousand dollars. But I would have turned the total investments into probably an additional $100k if I had avoided these losses.

As a successful investor, I see no reason to hide from my mistakes.

One of the frustrating things about companies that get delisted is you never hear from them again. The receivers are not even required to let you know your investment is worthless.

#23 Setting the Record Straight on 02.11.17 at 4:18 pm

Another wrinkle on the number of ETFs.
In an RRSP OR TFSA a dollar of dividends is the same as a dollar of interest. Not so in a taxable account.

Now my understanding ( please correct me if I am wrong) that for covered call ETFs the CRA classifies their payouts as the same as interest for tax purposes.

So might you want to split your banking investment in two! Half in covered call etf for the rrsp. Half in the dividend payer in your cash acct?

#24 Rexx Rock on 02.11.17 at 4:19 pm

The great thing with all the vacant homes is you can strip the house of all the copper wiring and everything else in value and its a easy low cost start up business.Good times,cash and why work and some crappy job.

#25 Fscomeau on 02.11.17 at 4:26 pm

Dude. The fscomeau thing was fake. You could see the demo letter in his trading account during the live stream. You have been had.

#26 Jack Fortin on 02.11.17 at 4:30 pm

Dirtysox…. You haven’t made a dime until you sell. The unspoken truth about medical marihuana producers is that they need to get black market prices for their product to be profitable.
I haven’t bought pot in some years but I know a few people. The street price in many jurisdictions is down dramatically and if there is a relaxing of the criminal code, prices will drop considerably more.
If you can grow Canada thistle, you can grow pot. The reason it is expensive to produce is because it must be hidden.

#27 TurnerNation on 02.11.17 at 4:30 pm

Well I like to flap my gums but will put money where mouth is. Bikes(cars) babes and Balanced Portfolio.

My workplace RRSP plan is limited to horrible mutual funds. I manage it myself. Obviously I’m losing ~2% year in Mutual fund fees.
Which is why I don’t feel bad about this LT return:
5 + 2 = 7%…?

….

These rates of return show the net performance of your plan as of January 31, 2017.
Since October 17, 2008 * 5.0%

* Annual compound rate of return.

Real fun is doing 5-10 trades each week in Margin, RRSP and TSFA accounts – options on stocks & ETFs; short term leveraged ETFs, and sometimes penny stocks.
I plan, scheme, “plan the trade, trade the plan” then execute based on price levels. 20% of trades are losses – small – the rest are winners. Trade based on charts & gut feel. Never around earnings.

#28 jess on 02.11.17 at 4:30 pm

…and then there are the ones that knowingly throw the game

Panama Papers: Mossack Fonseca founders arrested over bribery scandal

Juergen Mossack and Ramon Fonseca taken into custody following probe into law firm’s role in creating companies linked to corruption in Brazil
==============
asperger flash trader what where’s my money!
https://www.bloomberg.com/news/features/2017-02-10/how-the-flash-crash-trader-s-50-million-fortune-vanished

EXPOSED: Belvedere Management’s massive criminal enterprise
March 17, 2015 by David Marchant
https://www.offshorealert.com/david-cosgrove-cobus-kellermann-kenneth-maillard-belvedere-management-fraud.aspx

#29 UH-OH on 02.11.17 at 4:30 pm

Great post today.

Back in 2012 I was disrespecting the measly $5000 per year for the TFSA. I turned $15000 into $5000 trading penny stocks with no earnings. So much for the Hail Mary.

Starting in 2013 I accepted my losses and realized the incredible power and potential of the TFSA. All subsequent stock picks have been rock solid blue chippers and finally my TFSA is worth $54000 on $52000 in contributions.

I made it all back thanks to a patient, sensible long term approach. The account should probably be worth $75000 if I invested it this way from the start.

#30 TurnerNation on 02.11.17 at 4:36 pm

Speaking of cars…I don’t own one (no need downtown) but if someone was going to spend 35-40k on something mundane like a pickup truck or Subaru…why not get one of these automotive gems instead?

Mercedes 500 series including AMG. Porsche 911. All under 40k. Oldies but goodies:

https://tinyurl.com/j5yhdbl

#31 Let It Ride on 02.11.17 at 4:38 pm

I agree with the point of your article. However, retirement portfolio aside, there is nothing wrong with having some throw away money in the markets and doing some gambling. It’s fun betting on penny stocks and taking some chances. No different than taking some disposable cash to the casino.

#32 Smudgekin on 02.11.17 at 4:42 pm

Hi Garth no more Leyland U-boats please. Thanks.

http://www.bbc.com/news/uk-38931663

#33 Darryl on 02.11.17 at 4:45 pm

#16 Fish on 02.11.17 at 3:21 pm
Time will tell,
Only 2 more sleeps, then the meet.
—————————————————————
What ? you actually think that T2 will tell Canadians the truth about how the meeting unfolded . No likely .

#34 Entrepreneur on 02.11.17 at 4:46 pm

Hail Mary…that use to be the saying when toasting a drink but not anymore.

#5 Dirty Socks…the youth around here are waiting too, the right price and the right time. Hope soon as it has been too long already.

Wonder if T2 will be saying Hail Mary on Monday visiting Trump but I think the agreement has all ready happened, just signing papers. My guess since we are not allowed behind the scenes.

#35 eddy on 02.11.17 at 4:48 pm

DELETED

#36 Long-Time Lurker on 02.11.17 at 4:50 pm

If this story is true, Comeau isn’t a trader: He’s an idiot who formerly had $250k. This guy is playing craps with his life savings.

#37 if we were all gifted as.. on 02.11.17 at 4:52 pm

as Warren Buffett

‘diversification is protection against ignorance.It makes little sense if you know what you are doing’

#38 Freedom First on 02.11.17 at 5:01 pm

Yes. Fear and greed. Extremely difficult to talk anyone out of either.

Someone mentioned lottery tickets. I hear of people buying 20+tickets on every draw. Idiot tax at its finest. For myself, when it comes to buying lottery tickets, I stop at nothing.

I am very conservative as I only engage in actions and decisions that support putting my Freedom First. I have to. I am a man.

#39 mitzerboy aka queencitykidd on 02.11.17 at 5:04 pm

the herb is for awakening and healing

only dopes smoke dope

#40 When Will They Raise Rates? on 02.11.17 at 5:18 pm

Good analogy, but I thought we were getting the “bull case” today… Been looking forward to it all week.

#41 Fish on 02.11.17 at 5:39 pm

RE:33 Darryl on 02.11.17 at 4:45 pm
#16 Fish on 02.11.17 at 3:21 pm
Time will tell,
Only 2 more sleeps, then the meet.
—————————————————————
What ? you actually think that T2 will tell Canadians the truth about how the meeting unfolded . No likely .*************
Thanks Darryl,

#42 InvestorsFriend on 02.11.17 at 5:40 pm

A Balanced portfolio for someone aged about 60 give or take…

One indication of balance would be that if your house value includes the “word” “point” and the word million, then your financial assets (and I would include the value of a solid DB pension here) sure as heck also better also include the words “point” and million. This may not be realistic for most people under the age of about 50 but anyone approaching or at retirement age with a million dollar house and meager financial assets is not in a balanced position.

Of course being unbalanced by owning financial assets that are some multiples of your house value is also quite acceptable indeed if you aged about 60 give or take.

#43 InvestorsFriend on 02.11.17 at 5:50 pm

MARGIN ACCOUNTS HAVE HIGHER TAX RATES THAN RRSP!!!

#23 Setting the Record Straight on 02.11.17 at 4:18 pm said:

Another wrinkle on the number of ETFs.
In an RRSP OR TFSA a dollar of dividends is the same as a dollar of interest. Not so in a taxable account.

Now my understanding ( please correct me if I am wrong) that for covered call ETFs the CRA classifies their payouts as the same as interest for tax purposes.

So might you want to split your banking investment in two! Half in covered call etf for the rrsp. Half in the dividend payer in your cash acct?

*******************************************
Your observation on the tax disadvanate of dividends in the RRSP is common but wrong.

It can be shown that an RRSP account will usually grow your net share of the account (net of the refund) at a rate which reflects NEGATIVE net taxes on the growth your share of the RRSP whether that be dividends, interest or capital gain. (i.e. put in $10,000, get $4000 refund and it grows 100% to $20,000, pay 30% tax (you are in a lower tax bracket in retirement) and net $14,000 and your net $6000 cost has grown 133% while the investments only grew 100% and your effective tax rate was NEGATIVE 33% (you got a $6000 tax free gain on the double in market value and an extra $2000 because the government took back only 30% of “your” RRSP despite funding 40% of it.

Please report if a careful reading of this results in anyone finally “getting” this.

#44 beyond the ticker on 02.11.17 at 5:50 pm

Plenty of ideologies, political, economic, etc. are Hail Mary with millions of subscribers. Some of them heavily invested and oversubscribed right now.

#45 Andrew Woburn on 02.11.17 at 5:56 pm

For those who dream of making a Hail Mary pass with penny stocks, let me explain how it works all too often. I have told this tale before but every investor needs to hear it.

I have been a director of several Vancouver penny stock companies. Many are legitimate but it is very difficult for the average investor to know this despite the commendable efforts of the BC Securities commission. One huge clue would be the presence of cash flow but even the squeakiest clean mining exploration startup cannot meet this test.

Sometime in the eighties, I was president of a Vancouver listed tech company. Things were not going well and the lead broker that ran our trading stock demanded that I meet with a “public relations” company to get the stock price up. The first wrong note came as we assembled in their boardroom. One of the “PR” principals cautioned us that they believed they were under RCMP surveillance (they were) and we should watch what we said.

They explained their “marketing” program in guarded terms. The PR boss mistook my pained expression for incomprehension and took me off to a small and presumably bug proof office. There he explained that they began by locking up the major part of the publicly traded stock so that it could not be traded. He confided that they had a three ring structure of brokers, mainly in the US, who were on standby to take the small float of available stock from them, mark it up, and sell it to their clients at a higher price. Level Two brokers bought from Level One driving the “market” price higher. By the time Level Three clients were jumping in, the promotion hype was maxing out, the “price ” was surging and the PR guys and insiders were unloading their stock.

My duty to my shareholders had limits. I spurned their kind offer and the stock went off the board. Eventually the PR guys wound up in court and received all too little punishment. The scheme was blatant and crude, even for the old Vancouver Stock Exchange, but if you think the same sort of games aren’t being played today with a great deal more sophistication, you’re dreaming. When the mournful president of a failed company tells you he feels your pain because he never sold a single (visible) share, he might forgetting about the multi-million shares his offshore trust sold into the promotion.

#46 Wrk.dover on 02.11.17 at 5:57 pm

#30 TurnerNation on 02.11.17 at 4:36 pm
Speaking of cars…I don’t own one (no need downtown) but if someone was going to spend 35-40k on something mundane like a pickup truck or Subaru…why not get one of these automotive gems instead?

Mercedes 500 series including AMG. Porsche 911. All under 40k. Oldies but goodies:

https://tinyurl.com/j5yhdbl

——————————————————-

Non mechanics should steer well clear of off warrantee German cars. Fact not opinion.

#47 South Etobicoke Trump White House Liaison Office on 02.11.17 at 5:59 pm

Doug, did you just refer to that Apple short play as “investing”?

It’s got nothing to do with investing, it’s a speculation. An investment is a thoroughly researched stake in a business which ensures safety of principle and a sound return.

#48 InvestorsFriend on 02.11.17 at 5:59 pm

Who needs a Taxable Investment Account?

With the RRSP limit at some 18% of earnings and a maximum $25,000 I can’t see how anyone earnings less than $140k and not having a pension would ever use up all that room.

Add in the TFSA and it should be unusual for anyone making under about $200k to have a cash taxable investment account unless they have a pension that takes up most of their RRSP room. (I mean saving $30k a year ought to be enough if you make under $200k, no?)

I would never advise having a taxable account while tax advantaged / tax free room exists.

Arguments about missing out on the dividend tax credit and lower tax on capital gains are simply wrong.

To my mind taxable investment accounts should be used ONLY after all tax advantaged accounts are fully maxed out. But hey, if you enjoy paying taxes go ahead.

#49 Brian Ripley on 02.11.17 at 6:12 pm

I added the 2016 census Non Resident Dwelling count and percent change since the 2011 census for the 6 biggest cities in Canada to my census page:
http://www.chpc.biz/census.html#NON

The number of Private Dwellings
LESS the number of Usual Resident Occupied Dwellings
EQUALS the number of Non Resident Dwellings

These dwellings are being used for transients (Airbnb etc) or are vacant and add to the problem of unaffordability.

Perhaps urban planners should consider increasing single family detached lot density to duplex and reduce street set-backs so owners don’t have to build “McMansions with “in-law” suites as they do now.

4 SFD lots with 8 families could arrange their foot print so they could share common resources.

#50 disappointed on 02.11.17 at 6:13 pm

And I though we were going to get a technical analysis write up this weekend. Another wasted post.

#51 David McDonald on 02.11.17 at 6:14 pm

Nicely written Doug!
Garth’s blog has convinced me that a balanced conservative portfolio is best for me. On the other hand I can’t shake the worry that investing with Trump in charge is a Hail Mary in itself.

#52 Doug Rowat on 02.11.17 at 6:19 pm

#11 Jack Fortin on 02.11.17 at 3:12 pm

Back in 1998, at forty years old I realized my savings and investments were totally inadequate to meet my retirement needs. I threw a “hail Mary” in that I liquidated the shares held in my trading and RRSP accounts and went 100% into Canadian gold stocks. I did so against the “better” advice of both my financial planners.

It was better advice from your advisors. For most 40 years olds there would have been an ample investment time horizon to produce an excellent nest egg for retirement without taking on so much risk. Success stories play better, but they don’t explain away concentration risk. And you weren’t going to tell me about the Internet stocks you bought in 2000, of course.

–Doug

#53 WUL on 02.11.17 at 6:21 pm

A Random Walk Down Franklin Avenue:

For the two or three dogs out there interested in the travails of Ft. Mac in its rebuild, some numbers:

8 months post blaze.

2000 structures destroyed – 2400 residences.

~ 400 permits issued to rebuild.

19 houses completed and ready for occupancy or lived in.

Some probs:

Wrangling with insurers.

Semi-detached with the folks on the other side uninsured/under-insured or have vamoosed and cannot be found.

Block after block where contractors removing rubble, contaminants, toxins and ash destroyed survey monuments and homeowners cannot locate their land. An expensive re-survey required.

A lot of Hurtin’ Albertans. I ain’t seen the likes.

M61AB

#54 Doug Rowat on 02.11.17 at 6:29 pm

#19 Clean Sox on 02.11.17 at 3:56 pm

@dirty sox. My Hail Mary pass – well, I’m sitting on cash (and yes to the dismay of Garth) and will sit until the day the Big Banks take a hit on the imploding housing bubble. Once the dust clears and bank stocks shake off the dust – I’ll simply step up, hold my breath and buy like I never bought before!

tried the same a few years back and trust me it can take a lot longer than younthink, so be prepared to wait several years

BR Clean Sox

Indeed. Sitting in cash is the equivalent of an intentional grounding. At least the Hail Mary has a chance.

–Doug

#55 Metaxa on 02.11.17 at 6:32 pm

If you can grow Canada thistle, you can grow pot. The reason it is expensive to produce is because it must be hidden.

You can also grow your own grain, harvest it, grind it and make your own flour. Raise chickens for your eggs. Harvest some wild yeast, dig a well for water and gather clay to make an oven and light a fire and make your own bread.

Fact of the matter is folks go to the store for a loaf of bread. Same with a bottle of wine despite that being easy to make at home as well.

Add to the above the fact that people will no longer have to buy from someone who may or may not adhere to their definition of citizen and you have every reason to conclude that legal sales will be a very busy sector in the near future.

Look to Washington, Oregon, Colorado, Maine and more.
Millions upon millions of new tax money flowing, small businesses erupting, minor issues being dealt with, every State has reported overall benefit…except for the fake news parts. Or as I call it, the lies.

http://imgur.com/gallery/Gt4Cwsy

#56 Doug Rowat on 02.11.17 at 6:35 pm

#25 Fscomeau on 02.11.17 at 4:26 pm

Dude. The fscomeau thing was fake. You could see the demo letter in his trading account during the live stream. You have been had.

“Dude”, that’s why I said some consider it a hoax. He claims it was to protect his privacy. Who cares. Focus on the point of the blog.

–Doug

#57 Alex on 02.11.17 at 7:27 pm

It’s interesting how people like to complicate things.
I’m sitting right now with 25% cash, 55% XAW and 20% VCN. I buy 50K of one these two ETFs every quarter.
Will gradually increase the XAW portion during the next year.
I don’t care if there is a repeat of 2008 this year or not, I will not sell anything and keep buying.
My annual brokerage fee cost is 9.99$x4 !
All studies suggest that you should not wait for the crash, unless your horizon is less than 10 years.

#58 Jack Fortin on 02.11.17 at 7:34 pm

Reply to Doug …. I never bought any internet shares. I missed a lot of other opportunities but I knew I was onto something good with unhedged Canadian gold producers. I kept my focus. The only junior I did good on was Goldcorp. The few other juniors I bought ultimately went to zero or diluted away into oblivion. I did however buy Kinross at junior level valuations. As things stand now, I will never buy another junior type share!!!

I did get lucky in that I needed the dough for my business and sold most my position by 2006. The only shares I kept were Agnico Eagle which I still add to in my TFSA. Liquidated my RRSP account last year.

Makes no sense to defer taxes knowing that our socialist multicultural paradise virtually guarantees higher taxes going forward. An RRSP also would complicate my retirement as I have a business with substantial retained earnings.

I still save in gold which has worked out really well since I have been doing so since 1982. Gold itself is not, nor should it be viewed as an investment except for sophisticated traders. As things stand now, it makes little sense to invest in someone else s’ business when I have my own. I did not draw a salary last year to reduce the tax burden from liquidating my RRSP. Now that I am paying myself again I may add a few dollars to my TFSA (which is probably the best investment vehicle Canadians have going for them) shares. I also learned that diversification ensures mediocrity in returns.

I am grateful to both of my former financial planners because they did get me thinking and acting on saving for retirement. The mutual funds I bought from them in the mid eighties grew and gave me a decent chunk of change to buy gold stocks with. Had I stayed with them though I would still be selling motorcycles and instructing for a living.

I am no financial genius. If you think I am full of sh*t, google my name. I am going to be expanding into another Alberta community in the not too distant future. I see so many opportunities and so few pursuing them.

#59 Bottoms_Up on 02.11.17 at 7:36 pm

#52 Doug Rowat on 02.11.17 at 6:19 pm
————————-
And more to the point of your blog entry, an anecdotal story of a successful hail mary in investing does not negate the actual risk that was taken. For every “1998 gold buyer” there were 100 hail mary losers buying other stuff.

#60 For those about to flop... on 02.11.17 at 7:36 pm

This one is a Saturday night special.

I will put it up on here because a couple of people on here the other day were talking about the movie Soylent Green.

It is included amongst a timeline of movies that at the time of release were way off in the future and now time is catching up to some of them.

Movie buffs will most likely enjoy.

It was wasted on me ,but that’s what I’m here for…

M42BC

https://m.imgur.com/gallery/bpMIk

#61 Don P on 02.11.17 at 7:40 pm

Interesting how many of the same posters here who tell others to have a diversified portfolio instead of, say, mining stocks (incidentally, the only Canadian sector where US investment banks play 2nd fiddle to Canadian banks) have most of their net worth tied up in real estate.

Yes, I became a millionaire due to my house. But I became a multi millionaire from two mining stocks, and my investment in gold and silver Chinese collectible coins (gold and silver pandas), which rose over 10x from 2000-present. $100k to well over $1m. I liquidated a big chunk by selling directly to dealers in China. I am not a coin dealer.

Now I am taking the same amount of capital as originally deployed in the house, two mining stocks, and Chinese coins, and investing in two main strategies to do it again. One holding I seed funded with friends at 2 cents (public company) last year and it’s a whopping 8 cents now, with volume. We have purchased a mothballed gold mine in South America and I think it will be great. I am not a geologist. We have already been offered a $60m drill program by one of the top tier investors in mining.

I know it ain’t for everyone. I know it ain’t diversified.But it works for moi.

#62 Timmy on 02.11.17 at 7:40 pm

Who would have been stupid enough to put more than 5% of their money in Nortel? It was a risky overvalued stock. If people simply buy several blue chips from the five main sectors of the economy and hold for the long haul they will do better than most people

#63 Reply to #11, #52 on 02.11.17 at 7:48 pm

“Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce — gold’s price as I write this [2012] — its value would be about $9.6 trillion. Call this cube pile A.

“Let’s now create a pile B costing an equal amount. For that, we could buy all U.S. cropland (400 million acres with output of about $200 billion annually), plus 16 Exxon Mobils (the world’s most profitable company, one earning more than $40 billion annually). After these purchases, we would have about $1 trillion left over for walking-around money (no sense feeling strapped after this buying binge). Can you imagine an investor with $9.6 trillion selecting pile A over pile B?”
— Warren Buffett

#64 Kick out the jams on 02.11.17 at 8:17 pm

Blog dogs, need some advice. I am in a bit of a quandary; a crossroads if you will. Do I take the big job in TO or move to Belgium to pursue my girl? The job is cushy and no doubt will help out the old portfolio, but if we want to talk about a hail mary…

#65 Tony on 02.11.17 at 8:19 pm

I bet quote everything on one stock that being Nvidia last year. Fact is that was the only long position I had all year as everything else was short sales. I still have only one long position that being AMD as I shifted everything from the sale of Nvidia into AMD last November. I was heavy long physical gold and just bought some rare coins and platinum certificates. Everything else is collectibles or short sales. I might go long U.TO if I can get it below the 4 dollar level which also will give me a short position on the Canadian dollar as its Canadian dollar hedged. Uranium has been mirroring oil. Oil looks destined to break down to the mid 40 dollar range U.S. in the next two months.

#66 Keith on 02.11.17 at 8:21 pm

It’s interesting to talk about Hail Mary’s. The great American personal finance writer Andrew Tobias argued that one of the reasons that the rich get richer is that they can “afford” more long shots.

Then there are the fortunes founded on long shots, like Canadian finance author Derek Foster, the “Idiot Millionaire” et al who made 400k in Phillip Morris tobacco futures at a young age. His books don’t mention his beginnings as they preach frugality and income investments.

Tobias wrote a fun book detailing his career in alternative investing, along with his staid and conservative foundation. An interesting chapter details his 25,000 dollar investment in the musical Nunsense, which in 1997 had returned him a cool thirtyfold return.

I have been tracking my net worth since the age of thirty, from a standing start at the age of 26. I have never earned a lot of money, but I followed the precepts of the Wealthy barber for many years. It’s interesting to note that my balanced approach still trades sideways for many months at a time, and lurches forward in double digit chunks in the short run. My investment portfolio, after 28 years of modest saving and investment with an advisor, was surpassed by the last two years appreciation in my Vancouver home. Money is fun.

http://www.nytimes.com/books/business/9711tobias-interview.html

#67 Tony on 02.11.17 at 8:28 pm

Re: #62 Timmy on 02.11.17 at 7:40 pm

I know a lot of people who had most of their money in Nortel. One of them sold at the very peak. Like golf stocks on the venture exchange or what was the Vancouver exchange almost all hi-tech Canadian stocks go to zero. Look back at the track record over the decades. Shorting hi-tech Canadian stocks is a very good percentage play. Shorting any golf stock on the Vancouver stock exchange was like stealing money.

#68 TurnerNation on 02.11.17 at 8:43 pm

Someone pointed out Trump met first with Japan as they now are largest creditor to USA?!
Miss Mary…full of grace.
Wonder when the bankers will bring us to our knees.

#69 Jack Fortin on 02.11.17 at 8:50 pm

Sorry….It has been a few years since I googled my name.

My business is Jaxville Gold & Silver Trading Ltd.

Something that always bugged me about my financial planners was that both of them were constantly urging me to liquidate my gold savings and buy more investments through them. I now understand why and it is also why I maintain that the way FP’s are paid is a huge conflict of interest.

The other thing was that neither of them had a clue about the workings of our credit based currency and fractional reserve banking. When I brought it up, “don’t worry about things like that” was the typical reply.

How on earth can someone be considered a financial professional when they don’t understand the units which the investments they are peddling will be valued in?

In fairness to them, there is a reason few people understand the workings of our credit based system ; which paradoxically, creates more debt than credit. There is no discourse in the media about it for the simple reason most people would identify it for the fraud it is. It is a system set up to garner wealth and power to a select few at the expense of everyone else in the nation.
That is a discussion for another day however…

#70 Andrew Woburn on 02.11.17 at 8:51 pm

#53 WUL on 02.11.17 at 6:21 pm

Semi-detached with the folks on the other side uninsured/under-insured or have vamoosed and cannot be found.
==================

Thanks for the update. That is scary about semi-detached properties. What can a responsible semi owner do to protect themselves?

Unless the Lord decides to rain fire and brimstone on the moisters of the GTA (i.e. as punishment for the false worship of Drake) there is unlikely to be a similar major problem there. However, in the event of a R/E meltdown, will stretched owners of bugspit semi’s scrimp on fire insurance? Can worried owners buy insurance against their careless neighbour’s deficiencies. We’ve already seen the disaster that struck one innocent semi owner when his neighbour’s structural reno collapsed and left his half uninhabitable.

From this perspective, semi’s look like a riskier investment than condo’s. Yes, semi’s have actual dirt under them, but condo associations have the mechanisms to insure the whole against the failures/misfortunes of one or a few.

#71 Figmund Sreud on 02.11.17 at 8:59 pm

#9 – … If that doesn’t make the case for ETF’s, nothing will.
________________________

Well, … sure. But, … but a rapidly growing buy-in into ETFs, coupled with their market-cap driven allocation policies, drive index component valuations up, up and away, and as a result, reduce their potentials – long-term. So I suspect, …

And so, … as the most promoted ETF constituent companies become overvalued [Hint!] , these funds returns decline, reducing investor appeal and increase a capital outflows. When capital flows reverse, ETFs returns will surely decline, reducing investor interest, further increasing capital outflows, … and so the cycle will go.

Think ETF bubble eventually, … no? [ … just musing out loud. ]

F.S. – Comox, BC.

#72 More Buffett Comedy Gold on 02.11.17 at 9:11 pm

“A century from now the 400 million acres of farmland will have produced staggering amounts of corn, wheat, cotton, and other crops — and will continue to produce that valuable bounty, whatever the currency may be. ExxonMobil will probably have delivered trillions of dollars in dividends to its owners and will also hold assets worth many more trillions (and, remember, you get 16 Exxons). The 170,000 tons of gold will be unchanged in size and still incapable of producing anything. You can fondle the cube, but it will not respond.

“Admittedly, when people a century from now are fearful, it’s likely many will still rush to gold. I’m confident, however, that the $9.6 trillion current valuation of pile A will compound over the century at a rate far inferior to that achieved by pile B.”
— Warren Buffett

#73 Rural Rick on 02.11.17 at 9:12 pm

Here is a Hail Mary for you.
https://techcrunch.com/2017/02/10/trump2cash-lets-you-invest-automatically-whenever-the-president-mentions-a-publicly-traded-company/
Just might work.

#74 Wrk.dover on 02.11.17 at 9:19 pm

#64 Kick out the jams on 02.11.17 at 8:17 pm
Blog dogs, need some advice. I am in a bit of a quandary; a crossroads if you will. Do I take the big job in TO or move to Belgium to pursue my girl? The job is cushy and no doubt will help out the old portfolio, but if we want to talk about a hail mary

———————————–

Go to Belgium or you will end up with a Toronto girl.

No offence intended Toronto girls, but your real estate of choice is not worth the price.

#75 mike from mtl on 02.11.17 at 9:22 pm

#67 Tony on 02.11.17 at 8:28 pmShorting hi-tech Canadian stocks is a very good percentage play.
/////////////////////////////////////////////////

Right, owning any non-resource based maple stock is for future gains is simply stupid nationalistic thinking in my opinion. We have a record amount of failures and personally I’d rather not waste my time with these government supported zombies.

As always the best SMB are not publicly listed.

#76 stage1dave on 02.11.17 at 9:41 pm

Well written Mr. Rowat, and I be likin’ the sports analogies…I’ve learned the hard way it’s better to spread yer risk around…for instance, a QB’s job is a whole bunch easier if there’s a Tony Gabriel waitin’ for the ball!

Or if there’s a Dave Cutler on the sidelines to bail yer ass outta trouble when things don’t work out…

#18 Jack Fortin;

#2 Small business succeeds in spite of the banks, not because of them.

Well said, and I’m one of ’em…although I’m not certain I would recommend this life path to anyone. Financially, would’ve been a lot better off (by now) if I’d finished that commerce degree and got a real job haha…

That would have been much less fun, however.

#77 Ponzius Pilatus on 02.11.17 at 9:49 pm

#5 Dirty socks on 02.11.17 at 2:46 pm
My Hail Mary pass – well, I’m sitting on cash (and yes to the dismay of Garth) and will sit until the day the Big Banks take a hit on the imploding housing bubble. Once the dust clears and bank stocks shake off the dust – I’ll simply step up, hold my breath and buy like I never bought before! Call me crazy, but something tells me the market as a whole will fall from grace and holding cash “may” look like a marvelous move!! Cheers to all and love the Blog Garth – G Man rocks.

We are embarking on a new frontier!
—————
Completely agree with you.
Cash is king.
Stash it in your mattress, and once the market crashes you will conquer like a king.

#78 Ace Goodheart on 02.11.17 at 10:17 pm

Interesting that the most stable stocks are, in order, utilities, banking and consumer staples, with the least stable being the three that everyone seems to want to own, telecommunications, information technology and energy.

I guess one way of dealing with this instability problem is just to attempt to purchase the index, through an ETF.

Another method (my method) is to purchase a lot of different stocks. For every $100,000.00 you should have 100 stocks (ie, 100 different companies) of $1000.00 each. These should be diversified over all the sectors.

This has a couple of advantages and a couple of disadvantages. The advantages are, you firstly own the companies directly so you know what you own, secondly, occasionally you get lucky and something goes really well. Disadvantages are that a bunch of your stuff could go belly up on you and you may pick the wrong companies. So it’s not for the faint of heart.

But I do it. Last year I made 20% on my two RRSPs and 15% on my TFSA doing this. I also have bonds (but they are all in ETFs as it is not possible to buy bonds directly unless you have a lot of money as the “buy ins” are quite high, so it is better to just own bond funds).

#79 Frank on 02.11.17 at 10:20 pm

Scary that advice like this has to exist.

#80 Long-Time Lurker on 02.11.17 at 10:33 pm

Pretty good comments tonight.

#45, Andrew Woburn

They just did the “pump and dump” before the Trump, in the U.S. stock market. Share buy-backs.

#81 Long Branch Deplorables on 02.11.17 at 10:33 pm

Bombardier, Yellow Pages…

LOL…. there was some drunken alien on these pages flogging those ones!!

#82 Lobster Man on 02.11.17 at 10:34 pm

#22 InvestorsFriend on 02.11.17 at 4:12 pm

Just a cautionary note for all:
If these stocks “that go to zero” were held in your registered accounts (TFSA/RRSP/RRIF etc.) expect to hear from the CRA. After the delisting, the stocks become “Non-qualified Investments” in your registered accounts. You owe tax/penalty if you continue to hold them in your accounts.

#83 TheUnhealthy on 02.11.17 at 10:42 pm

Great write-up today.
Thanks for taking the time to share.

#84 jay on 02.11.17 at 10:42 pm

Big change coming,maybe they’ll call Trump to save the day. https://www.bloomberg.com/news/articles/2017-02-10/payless-said-in-negotiation-with-lenders-to-close-1-000-stores

#85 WUL on 02.11.17 at 11:22 pm

Calgary City Council appointed my wife to a tribunal that makes quasi-judicial decisions to dispense with justice.

I mean dispense justice.

She is practicing this facial expression in the mirror. Old stone face.

https://www.google.ca/search?q=judge+judy+rolls+eyes+gif&ie=UTF-8&oe=UTF-8&hl=en-ca&client=safari#imgrc=SRthAE28hJ7gOMd:

#86 Spectacle on 02.12.17 at 12:12 am

Note to Turner Nation#30::

#30 TurnerNation on 02.11.17 at 4:36 pm
Speaking of cars………why not get one of these automotive….

Mercedes 500 series including AMG. Porsche 911. All under 40k. Oldies but goodies:
——————————————————-

Non mechanics should steer well clear of off warrantee German cars. Fact not opinion.
——————– I agree , big fact ——–
Was just getting SUV serviced. Guy points to a porsche Cayene blown engine top end, ( $8,000) client gave him the truck, same with another clients merc 6.3 sedan, Engine blown $60-$80 thousand for re re new one. His lot was littered with these walk away vehicles. Said he would never buy anything euro now, Japanese is way to go. Makes a living keeping it going! Stupid purchase , never an investment.

Re :

#87 Ronaldo on 02.12.17 at 12:52 am

#69 Jack Fortin

I have been to your place in a couple of times and my son several times. A very well run business and very competitive prices. Cheers to your success. Keep up the good work. You have a good name in the business. My son also threw a Hail Mary and is now a very successful businessman in your city.

#88 Pete from St. Cesaire on 02.12.17 at 2:28 am

#64 Kick out the jams on 02.11.17 at 8:17 pm
Blog dogs, need some advice. I am in a bit of a quandary; a crossroads if you will. Do I take the big job in TO or move to Belgium to pursue my girl? The job is cushy and no doubt will help out the old portfolio.
—————————————————
Follow the girl. It is well known that Toronto is perhaps the worst city in the world in which to land a good wife. Feminism has destroyed everything there. So, if you are onto a good thing, follow her.

#89 Stock Picker on 02.12.17 at 2:32 am

The example of the trader putting up a quarter mill of his own money is more rare than a Brontosaurus on Wall St. 99.9 % this is the behavior of an institutional betting clients money and collecting commissions whichever way the trade breaks. Hedge Fund managers blow huge clients dough all the time but still go home to multi million dollar condos in the sky. We have to assume Mr Comeau was off his medication .

I was saddened and humbled Friday when my picks failed to beat the .6% index move by .004%. That, for a pro is a bad day.

#90 the Awakened One on 02.12.17 at 2:47 am

Cool post Doug: a good reminder for us.

Learned my lesson losing a few grands on penny stocks & some mining start-ups. No lesson is free in life, and greed is eternal… I reckon.

#91 Stock Picker on 02.12.17 at 4:26 am

Come to think of it…a new strategy occurs to me…in over thirty years investing ….I have had owned stock in two companies that went to zero…..both with the name Canada in the title……Canadian Airlines ….and Clearly Canadian Beverages…..both times before the days of the internet while I was vacationing in HI. My new strategy is this….never invest in any stock with the name Canada…this strategy seems as justifiable as not picking any stocks at all and going full ostarich. My question to passive index investors is this “why are there only rich stock pockets and no rich passive investors?”

#92 squirrel on 02.12.17 at 6:09 am

“#64 Kick out the jams on 02.11.17 at 8:17 pm
Blog dogs, need some advice. I am in a bit of a quandary; a crossroads if you will. Do I take the big job in TO or move to Belgium to pursue my girl? The job is cushy and no doubt will help out the old portfolio, but if we want to talk about a hail mary…”
****
It’s only a hail mary if you are not sure you want to be with that person …. If you think she might be the one…do it.

Similar situation here…. left very comfy executive job and fully paid apartment to come to Canada and be with the one I love. But after 4 years of long distance relationship I was 90% sure. Now I cook for a living, have way less money to invest monthly but never been hapier. Don’t forget to live while you save for retirement ;)

#93 Reply to #18, #58, #59, #61, #65, #69 on 02.12.17 at 8:02 am

Here’s an article listing Warren Buffett’s top 7 quotes on gold investing:

http://commodityhq.com/education/top-seven-warren-buffett-quotes-on-gold-investing/

It’s well worth reading.

#94 Alex on 02.12.17 at 8:06 am

#91 My question to passive index investors is this “why are there only rich stock pockets and no rich passive investors?”

Well, I am one of those rich passive index investor. I think that a lot of passive investors do not have a lot of money to invest to start with. So they see index investing mainly as a cheap way to invest (low or no fee). Also, a lot are not investing in the very long term and selling at a loss when they should not be selling.
When you have a lot of dough, index investing will make you rich. Made 15K on paper just last week. MIght lose 15K next week or more ! I am not in any away against stock picking. It is just that I do not have the time to do it right now. My ideal strategy would be a mix of index (75%) and active investing (25%).

#95 Wrk.dover on 02.12.17 at 9:26 am

86 Spectacle on 02.12.17 at 12:12 am
Note to Turner Nation#30::

#30 TurnerNation on 02.11.17 at 4:36 pm
Speaking of cars………why not get one of these automotive….

Mercedes 500 series including AMG. Porsche 911. All under 40k. Oldies but goodies:
——————————————————-

Non mechanics should steer well clear of off warrantee German cars. Fact not opinion.
——————– I agree , big fact ——–
Was just getting SUV serviced. Guy points to a porsche Cayene blown engine top end, ( $8,000) client gave him the truck, same with another clients merc 6.3 sedan, Engine blown $60-$80 thousand for re re new one. His lot was littered with these walk away vehicles. Said he would never buy anything euro now, Japanese is way to go. Makes a living keeping it going! Stupid purchase , never an investment.

—————————————————–

The common thread these cars have is arrogant manufacturers suggesting 15,000 km oil change intervals because superior.

Contaminated oil is still contaminated oil, synthetic or not. When you are running an engine that costs as much as an econo-box car, how much are you saving if you change the oil every 5000km? Possibly tens of thousands of dollars, if you keep the car beyond warrantee is how much.

Good luck finding a high end used car that has had short interval oil changes. There aren’t any, so you need to buy these new, unless you are a mechanic.

Rule of thumb, if the gallery inside the oil fill hole does not gleam like your cutlery drawer, don’t buy the car. Even after hundreds of thousands of miles, a 5000km serviced engine still gleams inside. I know, I have some.

#96 Ace Goodheart on 02.12.17 at 9:27 am

RE: #94 Alex:

“Also, a lot are not investing in the very long term and selling at a loss when they should not be selling.”

I have found that most middle class investors are viewing investing as a lottery. This appears to be true whether they are buying houses or stocks or something else. There is always the primary goal of hitting it big and making a lot of money.

This seems to result in price swings. With housing, you get an upward movement that terminates at the top end of the “goldilocks” price zone where housing becomes unaffordable to the middle class. The prices then correct downwards, with the correction often lasting for a decade or more.

Stocks seem to be more dangerous in terms of middle class lottery playing, because it is possible to purchase them at wildly over valued prices, with very little money. So the triggering event for a stock market correction is not usually that people can no longer afford the stock (people can usually always afford the stock). With stock markets you get “internal triggering” with insiders usually commencing the activity that results in the decline, followed by negative reports on earnings from professional valuators, which then causes a market crash.

So if you are running the market either in housing or in stocks, you are looking for different things. In housing, you are just looking for an over priced market that is so expensive that no one can afford to buy a house anymore.

With stocks you are just digging into the companies, where you find really ridiculous over valuation based on people reading graphs and charts rather than actually determining what the company does, how much it costs them to do it, and how much they are selling their stuff for. Then you can predict earnings and insider behaviour before they happen.

#97 Randy on 02.12.17 at 9:55 am

Any ideas as to how big the underground sub-prime mortgage business is in the GTA and Vancouver ?

#98 zeeboffin on 02.12.17 at 10:08 am

Dougie,

Is seem geographical diversification is harder to achieve these days as moves in NY affect Tokyo. Europe, emerging markets…everything is interconected.

BTW I think Trudeau should lose the skateboard and take a few golf lessons before he gets mulched by Trump

#99 yorkville renter on 02.12.17 at 10:24 am

I had a hail mary moment… took almost $100k, bought options on Barrick Gold and 6 weeks later I was up to $170k. ofcourse, this was in high school with fake money for a National Stock Market competition held by Laurier, which we won (nationally). Ended up getting a trophy, newspaper articles, radio interviews and a small scholarship… ended up at Western.

That was about 25 years ago *gulp*

#100 traderJim on 02.12.17 at 10:32 am

#50 disappointed

I’ll give you the technical analysis you crave, applicable for anything, anytime:

“If it goes up to here, it’s going up. If it breaks through that level it’s going up higher. If it doesn’t go higher, then it’s going lower. Unless it stays the same, which is always possible. Vice versa for the downside.”

Hope that helps your ‘investing’.

#101 Ponzius Pilatus on 02.12.17 at 10:58 am

Stuck in snowed out Boston right now.
Looks like a nice place to visit, but right now just confined to the hotel.
Thank God, I have this blog and a good book to tie me over.
Habs are in Beantown. Go Habs Go.

#102 Keith on 02.12.17 at 11:03 am

Warren Buffet takes the long view.

http://www.businessinsider.com/how-rich-warren-buffett-was-at-your-age-2015-8

#103 Doug Rowat on 02.12.17 at 11:09 am

#71 Figmund Sreud on 02.11.17 at 8:59 pm
#9 – … If that doesn’t make the case for ETF’s, nothing will.
________________________

Well, … sure. But, … but a rapidly growing buy-in into ETFs, coupled with their market-cap driven allocation policies, drive index component valuations up, up and away, and as a result, reduce their potentials – long-term. So I suspect, …

And so, … as the most promoted ETF constituent companies become overvalued [Hint!] , these funds returns decline, reducing investor appeal and increase a capital outflows. When capital flows reverse, ETFs returns will surely decline, reducing investor interest, further increasing capital outflows, … and so the cycle will go.

Think ETF bubble eventually, … no?

You’re describing a potential valuation problem with the market, not with the ETF structure itself. Besides the US mutual fund industry is about 7x the size of the ETF space. Outflows from mutual funds have far greater impact.

–Doug

#104 Bottoms_Up on 02.12.17 at 11:23 am

#64 Kick out the jams on 02.11.17 at 8:17 pm
————————-
RE: the girl, my advice is to consider carefully the type of person she is, how she is likely to change, and your relationship (is it a friendship that will last)

#105 victoria boy on 02.12.17 at 11:29 am

Doug.

Just wanted to say that this was a very well written piece. Great intro, supporting evidence, logical reasoning, and a close that referenced the intro to bring you full circle.

The Padewan is learning quickly.

#106 InvestorsFriend on 02.12.17 at 11:49 am

Don’t Fear Our Monetary System

#69 Jack Fortin on 02.11.17 at 8:50 pm said:

The other thing was that neither of them had a clue about the workings of our credit based currency and fractional reserve banking. When I brought it up, “don’t worry about things like that” was the typical reply.

***************************************
Congratulations on your business and investment success.

I have read a great deal about how money is created and about fractional reserve banking. And I have written about it. Money that is not “backed” by metal and fractional reserve banking both date back many hundreds of years.

You have a certain negative view about money and fractional reserve banking. You are wrong but nevertheless your view serves you very well.

It is NOT a coincidence that the extraordinary explosion of per capita wealth over the past several centuries coincides with the universal adoption of credit based currency and fractional reserve banking. Those two things greatly facilitate the operation of the economy.

I did notice that you appear to value your wealth in units of credit based currency despite your disdain for same.

Gold is usually quoted as having a value of so many dollars or so many other credit based currency units. When the reverse becomes true and dollars are measured in terms of so many grains of gold, do let us know.

#107 Euro observer on 02.12.17 at 11:55 am

#97 Randy on 02.12.17 at 9:55 am
Any ideas as to how big the underground sub-prime mortgage business is in the GTA and Vancouver ?
—————————–
There is no underground sub-prime mortgage business in GTA and Vancouver or anywhere else.

Everything is legal, the lenders are the most prudent lenders in the world. They will check thoroughly your background and only give you mortgage you can easily afford. Max 3 times the income.

CMHC is the most prudent and regulated insurance business in the world with sound insurance and risk models.

The real state professional are example of transparency and professionalism, they will represent you fairly, give you tons of relevant information and
ensure your interest is protected.

The sunny boy watches from above the idyllic stress free everyday life of the regular Canadians (the middle class, all 5 of them) and works relentlessly to improve their well being.

In La la land.
Amen.

#108 crowdedelevatorfartz on 02.12.17 at 11:57 am

@#61 Dave the Outraged Politically Correct racist on 02/10/ 17

“On this blog people post about the Chinese Dudes Tax. Doesn’t anyone consider how offensive that is to Chinese in Canada?”
*******************************************

Ummm Dave?
“Chinese” is derogatory label for people of asian descent living in Canada.
Much like the pc correct crowd on Global tv that wont call an Indo Canadian gang member sought by the police either an East Indian person or an Indo Canadian . ( They prefer “of South East Asian origin”)

I would respectfully suggest that from now on you refrain from YOUR racist “labeling” and refer to descendants of China or Hong Kong (or anywhere else in asia for that matter.) as “of north east asian origin ” or if you are not sure of their status.
Just call them “househornygreaterfools”
Either way would be acceptable to the politically correct Blog Dogs that roll in the mud here.

#109 InvestorsFriend on 02.12.17 at 12:05 pm

The Warren Buffett quotes about gold…

Were published in February 2012 in his 2011 annual letter.

Warren’s advice that stocks were far better than gold in the long term was formulated and published at or near the very top of the market for gold.

http://www.macrotrends.net/1333/historical-gold-prices-100-year-chart

But back in late 1999 and again late in 2001 Buffett wrote two big articles in Fortune Magazine warning that stocks were priced to provide low returns in the next decade and would not the provide the double digit returns that investors were looking for. His warnings in 1999 were mostly ignored. Oops.

Rule Number 1: Always assume that Buffett is correct.

Rule Number 2: Don’t forget rule number 1.

#110 Euro observer on 02.12.17 at 12:11 pm

#106 InvestorsFriend on

Or you can read it differently, as it is:

1. The USD gold standard was abolished in 1974 by Nixon.
before that an USD was redeemable for specific amount of gold, on request.

It is not a problem of metal backing. It is the problem of discipline and deficit spending.

Unlimited credit has its benefits in certain cases but in long terms it is normally not a wise choice.

2. Credit is not capital. While money is. You are made to believe that credit is capital but it is strictly arbitrary instrument when not backed by something. (oil, land, gold, past work).

When you are given credit not backed by anything and then beaten up to return it with interest earned somehow with money that do not exist, then you are in trouble.

3. The boom in economy is due to the oil boom that freed many people from physical work, who can now perform intellectual work, not due to the credit boom as you are made to believe. Read about John Law bellow:

https://en.wikipedia.org/wiki/John_Law_(economist)

4. Unit of measure in arbitrary inflating currency makes some sense, enforced by governments (hence fiat), I am sure you enjoy capital gains taxes on your land, stocks, house driven by inflation of the arbitrary value they are measured in, with very little change or no change in their values.

#111 For those about to flop... on 02.12.17 at 12:29 pm

Pink snow falling in Vancouver.

These guys were playing the game when the music stopped,or at least slowed down.

They paid 6.2m for this 90y.o. house in April 2016 at the peak in the more prestigious part of town, but now Shaughnessy is the coldest suburb in Vancouver where buyers can get a more modern house for less and developers can get cheaper lots.

These guys don’t need a Hail Mary this morning,they need a Bloody Mary…

M42BC

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMTVLUg==

https://www.zolo.ca/vancouver-real-estate/4249-hudson-street

#112 InvestorsFriend on 02.12.17 at 12:46 pm

Money wealth and debt and currency

Under the monetary systems that have been universally adopted in the world is is basically true that money and debt are created at the same time. Central banks count any money they create as a debt of the central bank. Most money is created when loans are made by commercial banks. This sounds nefarious or magical but it is not and the commercial bank does not own the money so created. Initially the borrower owns the money created (and credited to a chequing account) but he or she soon transfers the created money to someone else in exchange for some other asset or service which was the purpose of taking out the loan.

In this system, units of money tend to equal units of debt. This sounds awful but it is not at all.

Actual wealth which includes goods and services and land and houses and roads and even gold and so much else exists somewhat independently of money and debt. But the money and debt system is the grease of the economy that causes humans to work hard and create more real wealth every day.

The total value of all real wealth in the world exceeds the total of all money and debt by orders of magnitude.

If you had all the money in the world including every kind of currency you would not have nearly enough to purchase all of the real wealth that exists and is measured in terms of currency.

Most wealth is not money. Money is an intangible thing that has value only because it can be used to obtain real wealth. It is a claim on real wealth.

In theory, the value of any currency could evaporate. In practice that simply will not happen to Canadian or U.S. dollars and is not something to worry about. In any case most of us hold a minority of our total wealth in the form of currency. We MEASURE all our wealth in units of currency. That is vastly different than having all our wealth in units of currency.

It’s a complicated matter.

Mostly the complications are irrelevant to a quest to build wealth. Go forth and make your wealth multiply.

#113 dosouth on 02.12.17 at 1:34 pm

#2 – Keswicken…wow even trolls on investment blogs…go figure.

Next he/she will be saying that there won’t be another .25 drop in the prime by summer time….

#114 Euro observer on 02.12.17 at 1:35 pm

#112 InvestorsFriend

There are few major flows in your logic.

1. Currencies are created in the process of lending by commercial banks, read BOE opinion on the topic.

On the Canadian banking system wikipedia page it was noted (few months ago, now this info is gone from the page) that 95 % of the CAD were created by loans from private banks.

2. Money lent are not always backed by past labour.

3. “In theory, the value of any currency could evaporate. ”
Last time I checked a roman solidus not just kept but increased its value. It now sells for 5-20 k on eBay.

4. “In practice that simply will not happen to Canadian or U.S. dollars and is not something to worry about”

Houston, we have a problem here.
With official target of inflation 2%, real inflation 5-6 % and house price inflation of 10-15 % it is hadr to make a statement about currencies maintaining their purchasing power.

For example 1 USD buys today 1/20000th of DOW /the economy while in 208 it bought 1/6500.
3 times less in terms of purchase of real capital. Similar for the CAD

So you are saying currencies that lost 65 % when measured in real productive capital and will lose another 30 % pretty soon with DOW going to 25-30 k
is worth keeping?

#115 Euro observer on 02.12.17 at 1:35 pm

major flaws

#116 TurnerNation on 02.12.17 at 1:36 pm

Wrked over totally agree on that. Spent from ages 15-25 working on my own cars as a hobby. From major to minor work. Got to know OBDII a bit too. Still have all my tools. Read a book on rebuilding air cooled 911s – must drop engine/transaxle out for many repairs.

Yorkville renter, apparently when downtown TO gets full of people – during day or sports games – the cell towers get congested and sometimes people end up pinging the ones westward, on Lakeshore/Gardiner.
Alternately, we both landed on one of these
https://en.wikipedia.org/wiki/Stingray_phone_tracker

#117 ANON on 02.12.17 at 1:44 pm

It’s a complicated matter.

I beg to differ. It is surprisingly simple:
Whatever the expansionary narrative (tulips, railroads, houses, stocks, going to Mars, the Galactic Empire or Federation) it requires a promise of more at a later time (besides energy for building the tiefighters, NCC-1701, powering the phasers and the laser swords). That promise is money. The second requirement is that the promise must not exist, or it would as be worthless as a rock. It is all psychological.

#118 Jack Fortin on 02.12.17 at 1:53 pm

Doug is right. My story is anecdotal and may encourage others to do something foolish with their investment funds and/or savings.

I did extremely well and although I made about 14 times my initial investment, over a third of the shares I bought went to zero or under performed. It was basically three companies that brought home the bacon.

I get the sense that those other successful “hail Mary’ plays documented here were more the result of focusing on a narrow sector rather than an individual stock. Putting all your investment funds in one company (unless it is your company) is excessively risky. You might get lucky, then again….

Where I really did get lucky was the timing of my sales. I needed the funds for my business and sold most of my shares at or very close to the top. That was nothing more than luck. Had I not needed those funds I would have rode all the shares down over 50% rather than just the few I kept and continue to hold.

Those of you who may have hit a home run or received a “hail Mary’, take some dough off the table and move it to your savings pile. Don’t wait for it to turn into a “please mother Mary, save us”.

BTW …. I did make money on Bre-X. After the company folded I bought I bought 50 share certificates from a company in Toronto. I bought some glass frames at Woolworths and sold the mounted certificates at the flea market.

There is no doubt in my mind that I probably would have bought Bre-X had they pulled their scam a few years later when I made my investment in the sector.

#119 beware Poloz on 02.12.17 at 2:14 pm

these are Canada’s job numbers for the last 6 months. multiply these by 10 to get US equivalent. no matter how you slice it, those are VERY strong gains… this averages ~42,000 a month… 420,000 US equivalent? WOW and the bank of Canada is keeping rates at 0.50%?? no way……

Employment rose by 48,000 (+0.3%) in January
Employment rose by 54,000 (+0.3%) in December,
employment was little changed in November (+11,000 or +0.1%).
Employment rose by 44,000 (+0.2%) in October
Employment rose by 67,000 (+0.4%) in September
employment edged up in August (+26,000 or +0.1%).

#120 Appraisals on 02.12.17 at 2:28 pm

When did real-estate agents abandon the income approach as a methodology for making real-estate appraisals, esp. in the GVRD and GTA? (Even the cost approach would be better than the sales comparison approach.)

#121 Euro observer on 02.12.17 at 3:22 pm

#119 beware Poloz

the guy is talking abut reducing rates. He is sold on the ‘benefits’ of negative interest rates.

#122 InvestorsFriend on 02.12.17 at 3:50 pm

Euro Observer on Flaws

#114 Euro observer on 02.12.17 at 1:35 pm responded to me:

#112 InvestorsFriend

There are few major flows in your logic.

1. Currencies are created in the process of lending by commercial banks, read BOE opinion on the topic.

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

Umm look again at my post at 12 that is EXACTLY how I said currencies (money) are/is created.

Look, you have your doomer view of currency and I can’t change that. I just try to explain things for people who have not already decided that money creation by banks is evil etc.

You even confuse rare out of circulation coins with money.

Read more. Think more. Doom less.

#123 Entrepreneur on 02.12.17 at 4:08 pm

#64 Kick out the jam…go for the cushy job that increases your portfolio, a good backup.

#112 Investors Friend…have trouble with the debt part increasing wealth. Debt was meant to be only short term but when dealing with long term entering fantasy zone. The odd person may get wealthy playing this game but don’t be the last person holding that debt. Debt does not help the economy or the community. Vancouver is a prime example.

Communities were built from people with spirit and taxes came later.

#124 alpha dog on 02.12.17 at 4:20 pm

Turns out even the alpha dog theory is fake.

http://www.businessinsider.com/alpha-dog-myth-mistreats-dogs-2017-2

#125 Jack Fortin on 02.12.17 at 4:40 pm

Replies….

#87 Thank you for the kind words Ronaldo

#93 (Buffet on gold) utter nonsense spoken by someone who ought to know better. I used to admire Buffet but now he is concerning himself with political power rather than creating wealth.

#106 The fact is one cannot take specie and trade it for most goods and services. You must convert your money to currency (do you know the difference?) in order to spend it. That is today’s’ reality.

True that my investments and business may be valued in today’s coin of the realm (dollars), my savings are primarily in troy ounces.

Fractional reserve banking creates more debt than currency. You claim to have studied the system but cannot grasp that main concept. You are also completely wrong about it being beneficial to society at large. I maintain it benefits a few at the expense of the many.

A quote form the horse’s mouth….”Those few who can understand the system (check book money and credit) will either be so interested in its profits, or so dependent on it favors, that there will be little opposition from that class, while on the other hand, the great body of people mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear it burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

The tremendous growth in standards of living we have witnessed are primarily the result in advances in technology.

There have been other Fiat currencies in our past. You can’t compare them to this current system which is drowning the world in debt slavery.

#126 Matt on 02.12.17 at 5:12 pm

Betting big on one stock or investment is way too risky. That’s like going to the casino. Diversification is the key, while keeping fees to a minimum. Fees of diversification through a mutual fund can really hurt your gains as well, check out the impact in this article:

http://www.freedomlifeplanning.com/index.php/2017/01/25/index-investing/

Diversifying in global indices is really the best way for your long term investment goals, no hail marys!

#127 Ronaldo on 02.12.17 at 5:24 pm

#118 Jack Fortin

”BTW …. I did make money on Bre-X. After the company folded I bought I bought 50 share certificates from a company in Toronto. I bought some glass frames at Woolworths and sold the mounted certificates at the flea market.”
—————————————————————–
I did as well Jack, only in a different way. A couple brothers in my town whose father had died and left them with a hoard of Canadian silver dollars that he’d stashed away over the years. This was not too long before BREX-X hit the skids. They needed money to invest in the stock so knowing that I might be interested offered me the works for twice face value. I gladly scooped them up. Still have them. A lot of them. Some worth much more as collector value. I expect my granddaughter will be benefiting from these some day.

#128 Jack Fortin on 02.12.17 at 7:43 pm

Wow …. Good score Ronaldo. The least I ever paid for 80% silver dollars was a little under four dollars. I could not afford that many because my income was very limited.

I have some gand daughters as well. I like to think that I am putting away a few more coins than I will need for retirement. Those surplus coins will one day make a big difference in their lives.

#129 [email protected] com on 02.13.17 at 8:11 am

you realize that aapl trade was a hoax?

#130 IronMike on 02.13.17 at 9:28 am

Setting the Record Straight

I am way late on this…but why on earth would you want to employ a covered call strategy? Why wouldn’t you buy an ETF that replicates the whole market? Seems like a far better idea than covered call ETF.