The pivot

Here we go…

The yield on a five-year Government of Canada bond is popping this week as financial markets get ready for the inevitable next Wednesday. The Fed will move its key rate higher on the 15th in the first of what’s now expected to be three increases in 2017. In anticipation, US Treasury prices have been tumbling – the most in five years – the American dollar rising and the loonie falling (down to barely 74 cents now). It’s all a little preview of what you should expect for the rest of the year.

Here’s the bond thing. See for yourself what’s going on with yields…

So what? You don’t own any government bonds?

Well, this is where fixed-rate mortgage costs are set. When American interest rates are jacked by the Fed, the bond market responds, since debt has no real nationality. Canadian bond prices fall in tandem and yields rise in sympathy. Mortgages follow. It has nothing to do with the Bank of Canada, which sits on the sidelines chewing its lip.

A string of rate increases became more likely on Wednesday with the latest employment news south of the border. Wow. Crushed it. Private payroll data indicated companies last month added the greatest number of workers in three years  – almost 300,000. That’s way above the estimate of 187,000, and beyond the 190,000 the government’s expected to report Friday. At the same time, claims for unemployment benefits have crashed to a 44-year low, an indication that fired-up companies are hanging on to employees.

Meanwhile corporate profits have rebounded in the latest quarter, with some analysts forecasting an astonishing 19% increase in overall profitability this year. If anything remotely like that happens, stocks will suddenly look cheap again. And this is even before the Trumpster takes any action to slash corporate tax rates, which will swell the bottom line of corporate America and lead to even more labour market expansion. Already, at 4.8%, the States is considered by many to be at ‘full employment.’

This is why rates will jump. Conversely, our dollar will fall while inflation rises and borrowing costs increase. At the moment none of this looks like conjecture, so you can write it down and start making plans. Load up on cauliflower futures? Check. Place your order for the new HD Road King? Check. Ensure your portfolio has a 20% US$ weighting? Check. Increase weighing in corporate bonds over government ones? Check. Get fully invested and trash cash? Check. Lock in that 2.5% five-year home loan rate? Check. Sell your insanely-bloated house in a wild bidding war to a couple of horny Millennial suckers with a Bank of Mom deposit and an epic mortgage? Yeah, baby.

This year much will pivot. Rates and inflation up. The US economy erupts. The weird populism that culminated in Trump will start to fade as incomes, jobs and opportunities rise. The Toronto housing market will see its delusional zenith. And the debt zombies will start walking around town.

Hopefully, myths will be replaced with facts. Houses do not go up forever. No asset does. Mortgages could double in cost within a few years. No, the whole world doesn’t really want to live in Etobicoke. Or Surrey. There’s zero shame (and real wisdom) in renting. The government isn’t going to save the real estate market or forgive your loans. It’s not different this time (or ever). The greatest risk we all face is running out of cash flow, not living under a bridge.  And over the sweep of decades, financial assets will always outperform real estate, as they always have.

Over the past few posts we’ve covered recency bias. The lessons Isaac Newton had to teach us about human nature. The great 1989-2002 real estate melt. The theme: when you invest with your pants, you lose.

Can I even say that on International Women’s Day?

179 comments ↓

#1 Randy on 03.08.17 at 5:43 pm

DELETED

#2 calgaryPhantom on 03.08.17 at 5:49 pm

Recency Bias ALERT!!!!!!

US stocks have been going up up and away for almost a decade now.

#3 ummm on 03.08.17 at 6:01 pm

BoC interest rates are no longer affected by America’s the same way they used to be. The two countries have diverged in all policies more than ever as Canada moves in the exact opposite direction to that of the USA’s. Therefore interest rates in the US will go up while ours goes down. All of Canada’s political parties will continue to bury their heads in the sand while our economy withers away (like they have been doing with all the trade deals since the 90s, corporate welfare cheques etc.).

Canada will feel “The Trump Shock” in the near future. “The Trump Shock” will be the reason why Poloz will keep interest rates the same for the next little while. Interest rates will go down again next year followed by a major recession. There is nothing to celebrate in Canada’s economy these days.

If Trump has proven anything in politics, it’s “you can work for the people and you can make change happen fast.” I was never a Trump supporter but I’ve crossed the fence to the other side. The image the MSM has painted of him has backfired. In fact his statements and claims have been right the whole time. I am a new believer.

#4 UFO in Caledon on 03.08.17 at 6:01 pm

Garth, did you ever find out what that was in the picture you posted on twitter?

UFO?

#5 Victor V on 03.08.17 at 6:04 pm

Umm, just in time for International Women’s Day? I guess this Toronto penthouse is being marketed to that oh-so-desirable urban misogynist troll market:

https://vimeo.com/207113477

#6 Rates vs Capital on 03.08.17 at 6:05 pm

This will be a pivotal year for understanding the true drivers of the Canadian RE market.

Are the recent massive spikes in prices in areas like GTA, Vancouver, Victoria, etc linked to foreign capital or cheap money with low interest rates.

If rates rise, and the much prophecized correction or crash does not materialize, there will be no hiding the true driver of prices.

All it took was two rate cuts in 2015 to apparently push prices up 15-25% in many communities – 3 rate increases should really crush those increases, no?

In one year we will see what the driver is and I think many people will be ‘shocked’ when prices do not decline amidst rate increases…

#7 Stone on 03.08.17 at 6:14 pm

With rates rising, seems strange that canadian rate reset preferred shares are not reacting and instead are limp. You would think they would be spiking up at this point.

#8 Goldie on 03.08.17 at 6:14 pm

“The weird populism that culminated in Trump will start to fade as incomes, jobs and opportunities rise…”

It was social issues -as much as financial issues- that drove Trump to power, and those have shown no signs of changing thus far. Every new brainless riot increases Trump’s support.

#9 mark on 03.08.17 at 6:20 pm

Does a person have exposure to US dollar etc if there etf trades in canadian dollars but holds US market?
The etf VUN for example.

I know many wonder this!
Thanks Garth.

#10 Common sense on 03.08.17 at 6:23 pm

Many people who have overmortgaged themselves have the philosophy that when rates go up, and they can’t afford the home, then they can just put the house up for sale and take their profits. Except, so will others do the same. This will create a surplus of homes on the market, a buyers market and prices will go down. If enough people do this, it could be quite a drop.
As well, investers that may be renting out properties, may see prices going down and bail out as well.( take their profits and run) More inventory of the market.
Thus the downward spiral. How fast it goes, no one knows. The herd effect may be significant.

#11 Jetfixer on 03.08.17 at 6:27 pm

If you have bought recently, you have to be in a precarious situation. Every day I feel like I missed the boat but if you start adding up the numbers, there is alot of risk. I could see the FED raising a 1/4 point per quarter for the next little while as the fiscal stimulus picks up steam. If the overnight rate is 1.5-2.0% next year then people are screwed either way I figure. Either it will be by inflation if the BoC does not act, or it will be by interest rates if they do act. Just a 1% increase is enough to add a few hundred a month to these crazy mortgages. If it is true about these reports and surveys of people being on the margin and not being able to absorb an extra 2-300$/mth of extra costs, then look out! The real question is, how many outstanding mortages are on a variable rate? How many are on a fixed and how many reset when? If you have to re-up in 1-2 years, things might be interesting… Keep your chin down.

#12 zee on 03.08.17 at 6:32 pm

Hey Garth

Could it be possible that Fed raises rates but the Bond market does not react. Bond rates don’t go up much more from here.

And where do you think the fixed rate 5 year mortgage will be here in Canada if Fed raises 3 times?

#13 Freedom First on 03.08.17 at 6:36 pm

The theme: when you invest with your pants, you lose.
-Garth.

Truer words were never spoken.

#1
Freedom First
Master of Freedomonics

#14 Pierre on 03.08.17 at 6:38 pm

“Conversely, our dollar will fall while inflation rises and borrowing costs increase.”

It’s agreed that we will see a 0.60 U.S. Loonie in the year.

Poloz…and the troll on here who is Poloz himself, will disagree with the Inflation bit. Poloz measures his Inflation ratio which excludes vegetables and most food, citing it as “volatile”.

Low interest rates allowed PM Justin Trudeau to fund almost 1 billion Canadian Loonies today for the benefit of Overpaid Canadian Paper Pushers working in .gov, on Int’l Women’s Day while thousands of people are homeless on the streets of “world class” Toronto and Native Aboriginals are living in 3rd world conditions up North.

Why did I state tat it’s only the overpaid, feminist Canadian paper pushers who are to benefit from Trudeau’s charitable cause, rather than poor women in 3rd world countries whose abortion risk is life or death? Ask Hillary Clinton where all of that money went which was supposed to assist the earthquake victims in Haiti.

Low interest rates are also a genderized conspiracy too. Who else would TD Bank ask to sign up for slavery to purchase the latest Dolce&Gabbana or Hermes handbag in Bloor Toronto?

Why are female professionals in Toronto spending that $$$$ to dress up in a Dolce&Gabbana outfit only to complain that “sexist men are leering at me, gross”, but she wouldn’t complain if some 5-year-old tot is interested in learning about “Gender Fluid” from the 2015 Sexual Education curriculum.

I wouldn’t purchase an overpriced property in Toronto because I’m neither Poloz or a 5-year-old who will learn about penis, vulva and vagina from my teacher, who is 80% chance a female teacher who comes to class dressed in the latest luxury European fashion while complaining about a “Wage Gap” when she skins open her frock to learn about “Vulva”.

Poloz, you need to stop tinkering with the Loonie and promoting this Asset Bubble, including the “Beta Provider” bubble!

#15 Rob on 03.08.17 at 6:40 pm

Canada sucks.

The US is roaring.

Can’t believe I got stuck in this hellhole of a country.

I think I’m going to move to the US as an illegal and take my chances in California

#16 HoweStreet.com on 03.08.17 at 6:42 pm

Ross Kay on HoweStreet.com Radio:
Listing to Appraised Ratio.
Do you really need to know who owns the home you’re buying?

http://www.howestreet.com/2017/03/06/listing-to-appraised-ratio/

#17 Barb on 03.08.17 at 6:46 pm

Gawd today’s picture is so very sad.

#18 Cici on 03.08.17 at 6:49 pm

So cute, that photo. I luv elephants!

#19 Frank on 03.08.17 at 6:50 pm

So 1996 was a great time to buy a house in Toronto. How do we see when the next 1996 is?k

Keep reading. — Garth

#20 Hana on 03.08.17 at 6:52 pm

In rising rate environment would you still recomend reits and what percentage. Thanks!

#21 greyhound on 03.08.17 at 6:52 pm

“Houses do not go up forever. No asset does.”

And would that include US stocks after an 8 year bull market and bonds after a 35 year bull?

Corrections are routine in equity markets. — Garth

#22 Smartalox on 03.08.17 at 7:01 pm

I predict that this won’t bode well for inequality.

People complain about ‘income inequality’ but what they should really be concerned about is ‘wealth inequality’, which moves in two directions:

Increasing incomes may be a factor, but debt increases at multiples of interest rates, increasing wealth gaps through forces debtors can never hope to control.

Even low-income earners wind up on the ‘good side’ of wealth inequality, compared to debtors, if they remain debt free. They’re the new middle class.

The wealthy, meanwhile, pull ahead exponentially.

As always, high income earners, with high debts, are never wealthy.

#23 Amateurstockboy on 03.08.17 at 7:01 pm

I looked at my stock portfolio on February 24, I looked at it last nite, I’m up 2.62% in that short time. All my stocks pay dividends and will outlive my children’s children. I don’t understand why Garth says not to buy stocks? I’m not buying junk. Is cn or cp gonna go bankrupt ever? Is McDonald’s gonna quit selling cheese burgers? I do understand good quality stocks also go down but I’m in for the long haul

#24 Balmuto on 03.08.17 at 7:02 pm

“#3 calgaryPhantom on 03.08.17 at 5:49 pm
Recency Bias ALERT!!!!!!

US stocks have been going up up and away for almost a decade now.”

Yep, and so have bonds. Stocks and bonds had a party and they both got drunk. The Fed’s pulling away the punchbowl and they’re both going to have a wicked hangover.

#25 Canadian bank bombshell on 03.08.17 at 7:03 pm

The table below summarizes the early warning indicators for domestic banking risks produced by the BIS, with data up to Q3 2016 for most countries. But what is most surprising is which country has triggered 3 of the four “financial crisis early earning indicators”, and is on the verge of tripping the fourth one as well: as we said above it’s neither China, nor Greece, nor Italy or Germany, but, drumroll, Canada.

Regular readers are well-aware that Canada is very touchy when anyone suggests that its banks may not be… in pristine shape. Good luck brushing it off, however, when the source is none other than the central banks’ central bank.

http://www.zerohedge.com/news/2017-03-08/whose-banks-are-riskiest-surprising-answer-bis

And banks have 40% weight on TSX?

#26 jay on 03.08.17 at 7:11 pm

http://www.france24.com/en/20170309-oil-prices-fall-2017-low-us-petroleum-supply-surges http://vancouver.gasbuddy.com/ If you’re a working person don’t move to Vancouver ,look at gas price today $1.37 average .

#27 Furnaceman on 03.08.17 at 7:18 pm

Hi Garth, when you recommend 20% US exposure, would that be US stock etf, rate reset preferred, a Reit. I know in the past you have stated rate reset preferred will do well under rising interest rates. Would this still hold true on both sides of the border?

#28 crowdedelevatorfartz on 03.08.17 at 7:19 pm

@#1 Randy
DELETED
********************************************
1st and obnoxious.
A new low in BlogDumb
Well done!

#29 AJ on 03.08.17 at 7:19 pm

Garth- you’re great (mandatory) but why the IWD dig? Women get paid 87% for every dollar a man does. In Canada. See today’s headlines. And we’re the second best country in the world to live in. So, yah. Women are complaining. When there’s smoke there’s fire. Enough already. Everyone has a mom. Treat women how you’d want your mom to be treated. Don’t rip her off or take digs at her.

#30 AToTheIzzo on 03.08.17 at 7:24 pm

Houses seem to be going up as long as people keep believing real estate boards. Vancouver’s just said there was a “shortage of inventory” and prices started moving up again. The “shortage of inventory” is actually a more inventory than last year. :/

https://betterdwelling.com/city/vancouver/vancouver-sees-higher-prices-but-more-inventory-in-february/

#31 TRT on 03.08.17 at 7:26 pm

Happy International Women’s Day!

In Canada, women of Indian background (whether born in Canada or immigrants) have no right to family assets (money/real estate). It’s all goes to the sons.

They daughters are coerced into signing a waiver because it’s the accepted cultural practice amongst Indo-Canadians.

Where is the outrage? Where is the government in making laws to persecute this type of discrimination?

And you call Canada a progressive nation??

#32 TRT on 03.08.17 at 7:29 pm

Adding to the above post, I know of a family who owns 2 houses but have 3 adult kids (2 sons and 1 daughter). Guess who the 2 homes are going to?

The daughter has become estranged because of this issue. The family is not budging because that’s “the Indian way”.

The mothers are openly discriminating against their daughters.

#33 cd on 03.08.17 at 7:33 pm

Has anyone seen this one?

http://www.huffingtonpost.ca/2017/03/08/toronto-housing-goldmine_n_15241874.html

2.7M? Really? The mls listing doesn’t even have pictures of the inside… and its has some bad grammar and typos as well…

#34 Dave on 03.08.17 at 7:33 pm

Over the sweep of decades, financial assets will always outperform real estate, as they always have.

Sure. And you’re not biased, of course.

Prove me wrong. — Garth

#35 AR on 03.08.17 at 7:40 pm

The weird populism that culminated in Trump will start to fade as incomes, jobs and opportunities rise.
____________________________________________
Of all your predilections, I am most hopeful for this one.
Why did bonds and stocks go down today with this good economic news?
Gwynne Dyer wrote a good book about the geopolitical fall out of climate change. We are in uncharted territory. Populism rests on fear – no shortage of that these days. Any thoughts?

US stocks moved little today. Canadian equities tanked with oil. — Garth

#36 rjrt81 on 03.08.17 at 7:42 pm

#116 MF on 03.08.17 at 7:38 am
#103 rjrt81 on 03.08.17 at 1:13 am

“its like your trying to win an imaginary contest of lamest comment. your doing a good job of it if you are.”

Haha. Nice “edgy” comment.

You are right. We should have given away even more billions of taxpayer money to the corrupt UN with no oversight and no public input. What was our government thinking? All that matters is we get a seat at the useless and corrupt UN so our delusional trust fund wannabe JFK PM can pretend that it means something to his non existent “legacy”.

On top of that, when someone speaks out against it, let’s make sure we attack THEM on an internet forum and ignore the issue.

Classy.

MF
——————————————————————–

lol. you thought that was an attempt at edginess? you literally personify the color beige. sad.

#37 For those about to flop... on 03.08.17 at 7:42 pm

#12 Barb on 03.08.17 at 6:46 pm
Gawd today’s picture is so very sad.

#13 Cici on 03.08.17 at 6:49 pm
So cute, that photo. I luv elephants

//////////////////////////

Well,at least I’m batting 500…

M42BC

#38 AR on 03.08.17 at 7:42 pm

oops predictions. :)

#39 Nonplused on 03.08.17 at 7:50 pm

2 things to watch that don’t look quite so optimistic.

First, miles driven in the US has plunged. This is usually a sign of recession. But it could reflect long anticipated changes in how people work as well. For example my wife works from home most days now because her team is spread out across Canada and there is no one in the office to see, they do everything online. She’s in meetings half the day but it’s all on some sort of Skype thing. When I work in the states I don’t drive because the hotel is only 2 pleasant blocks from the office. It’s pretty sweet actually. So there could be other trends at work but miles driven has in the past been a pretty good barometer of the economy.

The second one to watch is heavy equipment orders. Caterpillar and others are not exactly moving their equipment at a brisk pace. This usually means the construction and mining industries aren’t doing well either. Hopefully Trump’s infrastructure plan will give this sector a boost.

But GDP did go up, although not robustly, along with jobs. So maybe we are seeing some fundamental changes occurring that aren’t all bad. Still, we’ll need years of this kind of job growth to return “not in the labor force” to more normal rates.

I know some people disagree because they think “not in the workforce” is a bunch of retirees and stay at home moms, which is partly true because that’s where those people end up. But it is also the slush account for the long term unemployed. With so many people having saved nothing for retirement, many would go back to work if they could find jobs. Also many stay at home moms are doing so because they can’t find work that covers the cost of child care. Students stay in school longer because they can get student loans to live off but can’t find jobs. So as long as “not in the workforce” stays at generational highs, there is still a lot of work for Trump to do before the US economy is firing on all cylinders.

My guess is what will happen is that the unemployment rate will stabilize at what an economist would call “full employment” because what will happen is that as additional jobs are created you’ll gradually see the workforce participation numbers improve. But the potential amount of future employees in that category right now is at generational highs, so it will take some time to work off back to more historical numbers.

This, of course, means the Fed will have the option of being pretty modest when it comes to raising rates. Sure, they will go up and have too. But they won’t have to worry about the unemployment rate crashing to zero and rampant wage inflation for quite some time.

I myself am a good example of this. I am not counted as unemployed because it’s been a long time since I had a full time job. I get by doing project work as a contractor. But if a full time job came up, I’d take it. There are a lot of people I know hiding off the “unemployment” statistics in a similar way. And as I said I have worked in the US quite a bit over the last several years and have met a large number of people doing the same thing I am. I guess none of us are “unemployed”, but “under-employed” would be a fit description. However we fall through the statistics just because of how they are measured. I guess no statistic is perfect, and you look at the trend not the number, but the trend that needs to be watched is the labor participation rate at this point. It should start to improve if the job growth numbers stay strong.

#40 Tom S on 03.08.17 at 7:50 pm

Hi Garth,

Is it possible that the fixed rate mortgages go up but the variable rates continue to stay low due to their relationship with the overnight rate? Won’t this simply just push more people into variable mortgages which will continue to remain cheap? Just curious whether we need to see a change in the overnight rate before we see an impact in the market.

#41 45north on 03.08.17 at 7:58 pm

Place your order for the new HD Road King? Check.

http://www.harley-davidson.com/en_CA/Motorcycles/road-king.html

common sense: people who have overmortgaged themselves say when they can’t afford the home, they can just put the house up for sale and take their profits.

my story: reminds me of the story of the man caught out in the forest during a rain storm. He went under a tree to stay out of the rain. Someone asked him what he was going to do when the rain dripped through the tree. He said “I’ll go to the next tree”.

http://www.greaterfool.ca/2016/04/11/cruel-april/#comment-443886

Canadian Bank Bombshell: But what is most surprising is which country has triggered three of the four “financial crisis early earning indicators”, and is on the verge of tripping the fourth one as well: as we said above it’s neither China, nor Greece, nor Italy or Germany, but, drumroll, Canada.

that got my attention

AJ: Don’t rip her off or take digs at her.

he didn’t

#42 oh dear.. on 03.08.17 at 7:59 pm

more short term predictions? helps to kill time, i guess

#43 Are you kidding me? on 03.08.17 at 8:04 pm

Please remind me of the last time housing went down while employment went up.

#44 Long-Time Lurker on 03.08.17 at 8:04 pm

Thanks, Garth.

…always insightful.

#25 Canadian Banking Bombshell

Thanks for the data.

#45 just leave on 03.08.17 at 8:05 pm

Canada sucks.

The US is roaring.

Can’t believe I got stuck in this hellhole of a country.

I think I’m going to move to the US as an illegal and take my chances in California

…………….

be brave and get lost.

#46 TrumpForTheAges on 03.08.17 at 8:06 pm

Yup…everything is firing on all cylinders! The only fly in the ointment is that the US GDP growth for Q1 was just downgraded to an annualized rate of 1.2%.

And Canada is forecasted at 2.4%? So what gives? A strong US dollar will also increase trade imbalance and create headwinds for the economy? So how can the US sustain 3 rate increases if not 4 this year with a GDP growth rate of 1.2%?

#47 Andrew Woburn on 03.08.17 at 8:07 pm

#31 TRT on 03.08.17 at 7:26 pm
Happy International Women’s Day!

In Canada, women of Indian background (whether born in Canada or immigrants) have no right to family assets (money/real estate). It’s all goes to the sons.
===================

If these women have been fully educated in Canada, how much more should the government have to do for them? Can they not consult lawyers, refuse to marry in their culture, etc.

I agree that it is unfair but there are many cultural practices that are repulsive to many other Canadians. Unless they involve physical harm to minors such as FGM, should the government be any more involved in trying to legislate interpersonal relationships than it already is? The Trump overreaction is partly against the innate liberal belief system that laws should be passed against anything they don’t like.

#48 common sense on 03.08.17 at 8:10 pm

1 and done March 15.

US stock market explodes downward at least 25%.

Major military action by fall…

Hold on tight…Flopper any room at your pad in B.C.?

#49 common sense on 03.08.17 at 8:12 pm

#10 Common sense.

Who are you?

Please get a new name..I’ve had this over 2 years.

Thank you

#50 Andrew Woburn on 03.08.17 at 8:19 pm

Right-wingers love to fantasize about billionaire George Soros and how he is secretly funding the New World Order. Now lefties have their own Soros-like bete noir, Robert Mercer.

“Another couple of clicks and I discover that it [mainstream media] receives a large bulk of its funding – more than $10m in the past decade – from a single source, the hedge fund billionaire Robert Mercer. If you follow US politics you may recognise the name. Robert Mercer is the money behind Donald Trump. But then, I will come to learn, Robert Mercer is the money behind an awful lot of things. He was Trump’s single biggest donor. Mercer started backing Ted Cruz, but when he fell out of the presidential race he threw his money – $13.5m of it – behind the Trump campaign.”

– Robert Mercer: the big data billionaire waging war on mainstream media

https://www.theguardian.com/politics/2017/feb/26/robert-mercer-breitbart-war-on-media-steve-bannon-donald-trump-nigel-farage

#51 Cottingham a bargain on 03.08.17 at 8:21 pm

I do get the opportunity to speak with a lot of Asians, some relatively new to the country and some here for quite a while.

The common theme is that property prices in Beijing and Hong Kong are far higher and that property prices in the GTA are by comparison cheap.

Perhaps the meme and bleating on of this blog that property prices in the GTA and Vancouver are over priced really have missed the mark .

After all, it is entirely possible that these two cities have been far too cheap for too long and are now just catching up , albeit rather parabolically.

Beijing, 21.5 million. Toronto, 5.9 million. Vancouver, 2.4 million. Sure thing. — Garth

#52 oncebittwiceshy on 03.08.17 at 8:24 pm

zee on 03.08.17 at 6:32 pm
Hey Garth

Could it be possible that Fed raises rates but the Bond market does not react. Bond rates don’t go up much more from here.

Nope! That’s why it’s called a bond “market”. Bond traders (vigilantes … lol) typically go wherever the best return is and every country needs to finance their various projects. Countries attract that financing through the market.

When the bond price drops(as a result of the Fed rate increases) the yield goes up to attract buyers. There is no chance that the bond yields don’t pop in the U.S. or here. Can’t afford to lose those investors, you know. Infrastructure and walls to build, right?

People are being delusional if they think bond yields here won’t rise in response to the rate raises in the States.

Why do they think they have such cheap mortgages? It wasn’t the BOC dropping rates so much as hundreds of billions of dollars being invested in Canada bonds during the GFC….driving yields down. The yields that typically determine mortgage rates.

Those same “invested” dollars will go begging for better returns and if they leave en-mass you’ll see a spike in mortgage rates that would make 1981 look like a side show. So … yes our mortgage rates will go up, as they have minimally so far. Trudeau has his wish list too, you know and he can’t do it without the bond market.

Forewarned in forearmed.

#53 Inflation President on 03.08.17 at 8:59 pm

What about real return maple bonds though? Prices are down ahead of hike, but decent to hold given inflation set to climb?

#54 Pete in St. Cesaire on 03.08.17 at 9:03 pm

That’s why it’s called a bond “market”. Bond traders (vigilantes … lol) typically go wherever the best return is and every country needs to finance their various projects. Countries attract that financing through the market.
———————————————————
Sad, isn’t it. Every country in the whole world beholden to the same corrupt money-creation system; not being allowed to issue their own money to service their growth. Nope, they have to ‘borrow’ it from those who have granted themselves a monopoly creating money out of thin air.
Have a listen to Bruce Cockburn’s song ‘Call it democracy’. The only song ever written about the International Monetary Fund.

The system is not corrupt. It works. Please don’t ask anyone to choose between the bond market and Bruce Cockburn. — Garth

#55 Former BC Guy Now NS Guy on 03.08.17 at 9:03 pm

Hey Garth, I disagree with almost everything you said above.

” claims for unemployment benefits have crashed to a 44-year low”

Sure, government stats. They mislead. So many people have given up looking for work, they don’t qualify for unemployment benefits. USA at full employment? Bullshit. You live in a bubble, Garth. You are a Bubble Boy. The majority of “jobs” are minimum wage, no benefits, no security, no pension, often part-time.

Once the USA debt ceiling debate erupts next week, there ain’t gonna be any more $ for a massive corporate tax cut. Trump wants to increase spending on military, border wall, infrastructure projects, etc etc. at the same time as cutting taxes across the board. Yeah, right. I’ll believe it when I see it.

Time to load up on stocks? When they are at their all-time highs, and everyone is talking about when the crash is coming? No thanks.

There are so many triggers for a crash this year: Brexit, Greek default, USA default. All these governments are effectively bankrupt by any rational standard. The USA owes 20 trillion plus all the upcoming entitlements for govt workers – well over $100 trillion. They can’t pay. Never gonna pay it back. Never.

You scold those house-horny fool’s who rush to take on a million dollar mortgage which they can’t afford, meanwhile you give a free pass to all the governments around the world who take on similar amounts of debt with no end in sight, and as far as you’re concerned, everything is hunky-dory. As I said, you live in a bubble, and one day it’s gonna burst.

Any argument that starts with ‘the government is lying about statistics’ is unworthy of reading. — Garth

#56 Leo Trollstoy on 03.08.17 at 9:08 pm

The US economy is BOOOOOOMING baby!

http://mobile.reuters.com/article/idUSKBN16F1M8

#57 Dobermanduke on 03.08.17 at 9:09 pm

#15 Rob
Canada sucks.
The US is roaring.
Can’t believe I got stuck in this hellhole of a country.
I think I’m going to move to the US as an illegal and take my chances in California

Put your money where your mouth is and don’t let the door hit you in the ass on the way out!

#58 For those about to flop... on 03.08.17 at 9:14 pm

The system is not corrupt. It works. Please don’t ask anyone to choose between the bond market and Bruce Cockburn. — Garth

/////////////////////////////

This is why I come here everyday.

Where else are you going to read about Cockburn on International Women’s Day…

M42BC

#59 When Will They Raise Rates? on 03.08.17 at 9:35 pm

I still hear the RE bulls claim “rates aren’t going anywhere”.

This is gonna be fun to watch!

#60 IHCTD9 on 03.08.17 at 9:39 pm

#29 AJ on 03.08.17 at 7:19 pm
——-

What a useless post.

There’s not a single woman in the entire Western World getting paid less just because she’s a woman.

#61 Londoner on 03.08.17 at 9:52 pm

BoC will move lower. Bond yields will drop. Invest defensively and you won’t have anything to worry about.

#62 Smoking Man on 03.08.17 at 10:21 pm

DELETED

#63 Yitzhak Rabin on 03.08.17 at 10:24 pm

“Over the sweep of decades, financial assets will always outperform real estate, as they always have.”

Sure. And you’re not biased, of course.

Prove me wrong. — Garth

Look at a 30 year chart of Japan’s Nikkei 225. Your bearded Japanese blogger equivalent would have a tough time making the same case.

#64 knowoneshome on 03.08.17 at 10:30 pm

I read somewhere on Facebook that International Women’s Day was supposed to be held one day earlier, but they unexpectedly were not ready in time.

#65 IHCTD9 on 03.08.17 at 10:31 pm

#33 TRT on 03.08.17 at 7:29 pm
Adding to the above post, I know of a family who owns 2 houses but have 3 adult kids (2 sons and 1 daughter). Guess who the 2 homes are going to?

The daughter has become estranged because of this issue. The family is not budging because that’s “the Indian way”.

The mothers are openly discriminating against their daughters.

——

I know a guy from some country in Africa, he told me he couldn’t pass his assets back home along AT ALL unless he had a son. Guy had 12 daughters – no joke, 12 in a row. Yes, 12 consecutive freaking daughters. His poor wife must be in pretty rough shape. They kept at it though and finally, #13 was a boy. He paraded him around the office like a trophy! We all slapped him on the back, and shook his hand. It was a huge deal to him, he probably had more sex than 10 men for 20 years straight, trying to get that son. No one turned into a blubbering progressive douchebag about it, and he wouldn’t have had the faintest clue what the issue was if someone did. Frankly, this guys cultural norms would make a Western feminazi burn themselves alive, and every last misogynist bit of it was exactly the way things should be everywhere as far as he was concerned.

IMHO, if you don’t like it, that’s too freaking bad. That’s their culture, and we wanted them to move here. I’ll bet my ass they did not sign any deal agreeing to live in accordance with Western cultural norms. In fact, I’m sure many progressive folks couldn’t wait to inform them that their cultural identity and practices are most welcome.

How do your Indian friends like our grade 1 sex Ed curriculum in Ontario? Bet they don’t. Are they raising hell over it? Maybe you’d best just live and let live.

#66 Smoking Man on 03.08.17 at 10:33 pm

DELETED

#67 nobody on 03.08.17 at 10:41 pm

@mark yes.
VUN owns us stocks, these are priced in USD. When you buy VUN in CDN$ you are simply buying US property.
So when the US$ rises the value (or at least the price) of VUN in CDN$ goes up.

Owning US stocks you win twice,when they US market does well the value of the stocks go up but also the value of the USD goes up as people rush to trade with it.

#68 Alex on 03.08.17 at 10:46 pm

‘Stocks are at an all time high’ means absolutely nothing in the long run since the ‘high’ of today is always the ‘low’ of tomorrow (10years+ horizon).
Do not fear the level of today and embrace the level of tomorrow.
So invest, invest !

#69 Paul on 03.08.17 at 10:50 pm

Ok I just want to mark my calendar does anyone know the date for the international MENS day ? ?

#70 IHCTD9 on 03.08.17 at 11:02 pm

#58 Dobermanduke on 03.08.17 at 9:09 pm
#15 Rob
Canada sucks.
The US is roaring.
Can’t believe I got stuck in this hellhole of a country.
I think I’m going to move to the US as an illegal and take my chances in California

Put your money where your mouth is and don’t let the door hit you in the ass on the way out!

——-

Good Grief, I wish I had a dollar for every time a lefty got mad because someone said they’re going to leave the country.

#71 burnaby guy on 03.08.17 at 11:09 pm

Over the sweep of decades, financial assets will always outperform real estate, as they always have.

Sure. And you’re not biased, of course.

Prove me wrong. — Garth

With no leverage that’s true. With leverage RE wins.

#72 Smoking Man on 03.08.17 at 11:12 pm

International woman’s day.

https://www.youtube.com/shared?ci=qBrIoqoR-cI

Soory I’m not sis gender I’m normal,

#73 Self Directed on 03.08.17 at 11:17 pm

#8 Stone on 03.08.17 at 6:14 pm

With rates rising, seems strange that canadian rate reset preferred shares are not reacting and instead are limp. You would think they would be spiking up at this point.
……………………
Great point. Garth, I own ZPR. Should I cash it in and get some ZUP instead?

BMO US PREFERRED SHARE INDEX ETF
(TSE:ZUP)

This is a brand new ETF from BMO as of Feb 9, 2017.

Anyone know if this thing going to the moon?

#74 Snowboid on 03.08.17 at 11:18 pm

Question for the esteemed professor and blog dawgs…

Back in the land of ice and snow, after selling our US home – with about $200K USD sitting in our local US account. We are thinking to keep an eye on the CAD during March and waiting until it hits .68 then cash in.

Thoughts? Predictions? Nectonite wisdom?

#75 Ponzius Pilatus on 03.08.17 at 11:29 pm

The picture of the two elephants looks kinda sad.
Being shipped into extinction?

#76 steerage steward on 03.08.17 at 11:35 pm

Heading down to San Fran for a week of fun and profit.

Sure the CAD is no good, but it helps when your rent hasn’t gone up in 11 years.

No matter where you are, what the “markets” are doing, always help out your neighbors and your land lord.

Not sure I can fit enough “make BC great again” hats in my luggage, and enough documents to explain what that means. Probably easier just to wear the make America great hat, everyone knows what that means right?

#77 Self Directed on 03.08.17 at 11:39 pm

I’m tired of hearing Vancouver and Toronto being called ‘world class’ cities and that is why housing prices are sky-rocketing. Why all of a sudden now, of all points in time? If they are so ‘world-class’ why did everyone just show up now?

I don’t care who you are or how much money you have invested in your house… it is the middle class and our wobbly economy keeping this stack of cards standing.

It only takes a couple of ‘knock-on’ events (recession, rising rates, confidence) to bring it down.

#78 paulo on 03.08.17 at 11:59 pm

#75 Snowboid:
I Would hold off on the March deadline, given the economic situation in Canada, ever increasing interest rate
spreads btw can/us, a looming real estate correction in parts of Canada, Geo political situations that could significantly effect Canada negatively , the “Trump Card” for instance,plus poorly conceived and onerous tax grabs on the people in country that, Create Jobs,Export Goods Etc, giving them a reason to leave, The outlook for the loonie is rather dim to say the least. a bit of patience may reward you here, i think that given the headwinds in addition to the above, you may have the opportunity to do the exchange later this year with the doa loonie around 60 to the usd or possibly even lower.

#79 BS on 03.09.17 at 12:46 am

#32 TRT on 03.08.17 at 7:26 pm
Happy International Women’s Day!

In Canada, women of Indian background (whether born in Canada or immigrants) have no right to family assets (money/real estate). It’s all goes to the sons.

They daughters are coerced into signing a waiver because it’s the accepted cultural practice amongst Indo-Canadians.

Where is the outrage? Where is the government in making laws to persecute this type of discrimination?

And you call Canada a progressive nation??

In Canada people have the right to leave their assets to whomever they choose. If your parents are not going to leave you anything that is between you and your parents. Nothing to do with Canada. If there is no will, women have equal rights as men. It is spouse first, then all children split evenly.

Also note if you are “coerced” into signing a waiver, the waiver is invalid. That is already the law. Get a lawyer now before your parents pass if you were coerced into signing one.

#80 burnaby guy on 03.09.17 at 1:15 am

Just to follow up with my #72 post with some numbers –

Paid $20000 down for a $200000 house 30 years ago. Assume house gained just 4% every year. House worths $648679 and paid off.
Paid $20000 for a portfolio 30 years ago and it’s gone up 6% every year. Portfolio worths $114870.
Huge difference.
I know there are mortgage payments, maintenance, taxes etc for a house but the portfolio guy has to pay rent for 30 years too. Probably many moving costs as well.
You live in the house so it tax free gain. Portfolio would be taxed 50%. You do the math. No contest ( I know Garth would say it’s not a contest).
Percentage wise portfolio wins. Dollar wise house wins. I’ll take the $ anytime.

#81 Entrepreneur on 03.09.17 at 1:16 am

#32 TRT…it is up to the family and lawyer not the government. We all had to fight for rights here in Canada at one time, get with it.

International Woman’s Day…like the pictures taken with their partner, holding hands. Sorry, that does not hold water for me.

Time is changing, times are tough, times will get tougher. And we will never be prepared for it.

#82 Slippery cricket on 03.09.17 at 1:32 am

Seems a little late to go into 20% U.S. $ at this point. We had the opportunity when we were over par. I did invest but no where near 20%. Hind sight hurts. Another miss, and lesson learned.

#83 Karma on 03.09.17 at 1:33 am

#32 TRT on 03.08.17 at 7:26 pm
“Happy International Women’s Day!

In Canada, women of Indian background (whether born in Canada or immigrants) have no right to family assets (money/real estate). It’s all goes to the sons.

They daughters are coerced into signing a waiver because it’s the accepted cultural practice amongst Indo-Canadians.

Where is the outrage? Where is the government in making laws to persecute this type of discrimination?

And you call Canada a progressive nation??”

It’s called a double-standard, which is common practice among left/progressive types. It’s also known as the “Regressive Left”.

Take a look at this video by Dave Rubin:
https://www.youtube.com/watch?v=Tq86Beh3T70

#84 Leo Trollstoy on 03.09.17 at 1:46 am

Ok I just want to mark my calendar does anyone know the date for the international MENS day ? ?

That’s every other day

#85 Doug in Hokitika, NZ (not London) on 03.09.17 at 2:31 am

Invest with your pants you say? The only time I would invest with my pants is if I were wearing them and sitting on a governor cabinet. As I’ve said numerous times before, invest like a governor that gives the engine more fuel/air when the speed is low and less (or none at all) when the speed is high. Seems so idiot no brainer easy to me.

Also, I like the picture here. it looks a lot like something I would have seen last year in India.

#86 Eurovision on 03.09.17 at 4:12 am

Time to refill the leaky punch bowl.

#87 Greg Simpson on 03.09.17 at 6:48 am

To Frank

1996 was a great time to buy government strip bonds or zero coupon bonds.

They were as high as 8.5% after compounding 35.19% a year until 2026.

There is also none of these painful costs, expenses, taxes to pay which are maintenance, repairs, property taxes, property insurance, CMHC insurance, electricity, heating, H.S.T on all these applicable, water bills and other household bills plus no real estate commissions, lawyer fees and land transfer taxes as well.

#88 Millenial on 03.09.17 at 6:55 am

#8 Stone on 03.08.17 at 6:14 pm
With rates rising, seems strange that canadian rate reset preferred shares are not reacting and instead are limp. You would think they would be spiking up at this point.

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

The only people that truly understand preferred shares are the lawyers that write them up. Truth is that it’s an extremely complicated financial product dreamed up by a banker to fleece people. Put a bunch of different preferred shares together into an ETF, and it becomes EVEN MORE COMPLICATED with liquidity issues, another group of people on the take, and bots/high-frequency traders buying and selling in a rigged stock market. If you don’t understand how this product is valued then aren’t you like the guy at a poker table wondering who the worst player is?

Anyhow, to conclude, i don’t think it’s strange at all that canadian preferred shares are limp.

What a world we live in.

#89 Dobermanduke on 03.09.17 at 7:42 am

#71 IHCTD9

I have no problem with Rob or anyone else leaving the country, to each their own. However I am a proud Canadian so I do have a problem with the way he said it.

#90 Kool Aid on 03.09.17 at 7:50 am

Rising interest rates will change everything…

Interest rate increases resulting in popular 5year fixed mortgages lifted to 5 or 6% would really be something, this might be our Canadian fate before the decade is up, effectively a doubling of mortgage interest.

Seriously, most folks are NOT prepared for a rising mortgage rate environment.

#91 Wrk.dover on 03.09.17 at 8:02 am

#75 Snowboid on 03.08.17 at 11:18 pm
Question for the esteemed professor and blog dawgs…

Back in the land of ice and snow, after selling our US home – with about $200K USD sitting in our local US account. We are thinking to keep an eye on the CAD during March and waiting until it hits .68 then cash in.

Thoughts? Predictions? Nectonite wisdom?

———————–

If you would like a side order of Federal Deposit Insurance on that amount, you will have to have it in two accounts.

If you recall how fast ‘it’ happened at Thanksgiving in ’08, you will get the cash into two accounts this week.

If you don’t, you won’t.

Bank failure is not at a probability of 0%, the number is way small, but not absolute 0 in this Goldman stacked era. (or why would there even be FDIC ?)You are not shipshape until all risks are mitigated. Two accounts, for that amount.

#92 technical analysis? on 03.09.17 at 8:12 am

the solution is very simple. anyone that has some kind of equity in their homes can take out a line of credit, use it to buy fixed and floating rate preferred shares to hedge both the higher interest rates and the potential drop in home prices. no need to move, no need to uproot the family.
higher dividend payments will cover higher interest rates and capital gains is the preferred shares will offset the losses in housing values.

#93 OMERS on 03.09.17 at 8:12 am

Who are you people kidding! If the Fed raises rates, people will be sunk, I can already envision the pile of house keys at the bank doors! The Gov did this to themselves, there is no way rates are rising next wednesday or whenever, the economy isn’t ready for that.
As far as the New HD road king goes….come on everyone knows to buy used it’s the smart thing to do.

I myself just set up through web broker a few ETF’s to invest in through my TFSA….I want that dream of 1.2 mill in the bank invested in a diversified portfolio…living on a coast mortgage free with 6k a month coming in tax free like that lady and her husband did following their boy to the east coast in Garth’s previous blog… sounds great to me!

#94 traderJim on 03.09.17 at 8:16 am

#66 IHCTD9

I think you’re wrong about feminazis getting pissed at the misogyny in other cultures.

If they are not Western, white cultures, they cannot be criticized, didn’t you know?

One of the organizers of the Women’s march (Linda Sarsour) actually stated that women have more rights in Saudi Arabia than in the USA.

It only makes sense that today’s ‘progressives’ think Sharia law is good for women. About as logical as most of their ideas.

#95 crowdedelevatorfartz on 03.09.17 at 8:19 am

@#19 Cici
“So cute, that photo. I luv elephants!’
********************************************

I have to agree with Barb.
A sad commentary on how humans treat wild animals.
Captured, enslaved, mistreated and destined to years of misery ….possibly alone, never to see another elephant.
Hence the two elephants randomly meeting on a highway somewhere and touching each other for possbly the last time……..
Depressed yet?

#96 dumpster fire on 03.09.17 at 8:21 am

#81 burnaby guy on 03.09.17 at 1:15 am
* * *

Holy cherry-picking, Batman! The interest and upkeep costs for the mortgage are significant over the 30 years so they should be accounted for, and you ignored the difference between the mortgage and rent that would have been invested in the portfolio…

~ breathe deep

#97 IHCTD9 on 03.09.17 at 8:24 am

#81 burnaby guy on 03.09.17 at 1:15 am
Just to follow up with my #72 post with some numbers –

Paid $20000 down for a $200000 house 30 years ago. Assume house gained just 4% every year. House worths $648679 and paid off.
Paid $20000 for a portfolio 30 years ago and it’s gone up 6% every year. Portfolio worths $114870.
Huge difference.
I know there are mortgage payments, maintenance, taxes etc for a house but the portfolio guy has to pay rent for 30 years too. Probably many moving costs as well.
You live in the house so it tax free gain. Portfolio would be taxed 50%. You do the math. No contest ( I know Garth would say it’s not a contest).
Percentage wise portfolio wins. Dollar wise house wins. I’ll take the $ anytime.
___________________________________

Price of house – 200K
25 years of interest – 200K
30 years of taxes – 81K
30 years of insurance – 60K
30 years of maintenance – 75K

Total dollars in – 616K
Market value – 649K
Profit after 30 years – 33K

20K invested into a TFSA/RRSP, plus 5.5K per year added for 30 years:
Total dollars in after 30 years – 200K
Market value at 6% – 605K
Profit over 30 years – 405K minimal/zero tax depending on how you structured it.

IMHO, your 20K invested over 30 did put more actual money in your pocket than your house ever will (house costs more the longer you live in it).

If emphasis was put on investing and you slid in 20K and popped 1K/mo on top for 30 years at 6%, you’d be sitting on a 1.1 million dollar pile providing a 60K/ann. income without ever taking a dime out of the 1.1M.

Your house won’t do that.

Plus the dollars you shoveled out to get to 1.1M would be 380K – less than just the principal and interest alone on the house.

IMHO – it takes buying RE cash in at least a semi bubbly market to even dream of making a worthwhile profit on a long term primary residence. If a guy is honest about all the costs, they are just too many over too long to make it better than even just feebly tossing your cash into a mutual fund via [email protected]

#98 yup on 03.09.17 at 8:35 am

‘The common theme is that property prices in Beijing and Hong Kong are far higher and that property prices in the GTA are by comparison cheap’

spot on. Same with London, same with New York.

Newmarket has literally become all Asian. Asians love property– for them its symbolic of wealth. They ain’t selling. They are buying.

in 1989 there was a housing correction, which is NORMAL for any asset class. We see it in the markets all the time. The Nasdaq dotcom bubble took how long to repair? well over a decade. Those that bought houses in Toronto 1989? If they didn’t panic and sell , how are they today? :)

of course it is unfortunate the affordable housing is no longer in Toronto. Even a 30% drop will leave the average detached priced over $1,000,000. Game over in TO!!

#99 jerry on 03.09.17 at 8:40 am

BOND Confusion

Why are Corporate bonds and Bond funds a better choice than government bonds?

Corporate bonds (investment grade) pay three times the yield of governments (high-yield pay about six times more). They’re also credit-spread products, benefiting proportionately in yield as central bank rates rise. Buy them for volatility protection and in the knowledge capital values will fall as yields increase, but that may reverse when equity markets correct. Bond funds provide a way of participating in bond issuances that retail investors could never otherwise afford to access. But there are many variations. Be careful. — Garth

#100 A Reply to #40 Nonplused on 03.09.17 at 8:52 am

As at Jan. 2017, of the 95.4 million persons who were not in the U.S. labour force, 89.4 million (93.7%) did not want a job. Here’s the link:

https://www.bls.gov/web/empsit/cpseea38.htm

As at Jan. 2017, the Bureau of Labor Statistics has reported that the official unemployment rate was 4.8%; it calls this measure U-3, but it has 5 other measures of unemployment (U-1 to U-6). All 6 measures have fallen since Jan. 2016. Here’s the link:

https://www.bls.gov/news.release/empsit.t15.htm

“People who are jobless, looking for a job, and available for work are unemployed. People who are neither employed nor unemployed are not in the labor force.” Here’s the link:

https://www.bls.gov/cps/cps_htgm.htm#concepts

“After rising steadily for more than three decades, the overall labor force participation rate peaked at 67.3 percent in early 2000 and subsequently fell to 62.7 percent by mid-2016. In recent years, the movement of the baby-boom population into age groups that generally exhibit low labor force participation has placed downward pressure on the overall participation rate.” — Monthly Labor Review, Sept. 2016

https://www.bls.gov/opub/mlr/2016/article/labor-force-participation-what-has-happened-since-the-peak.htm

Here’s the civilian labour force participation rate:

https://www.bls.gov/emp/ep_table_303.htm

“Get your facts first, and then you can distort them as much as you please.” ― Mark Twain

#101 John on 03.09.17 at 9:06 am

Has anyone seen the US jobs report being reported in any Canadian MSM? Strange I haven’t. First read about it here

#102 D.D. Corkum on 03.09.17 at 9:11 am

#8 Stone on 03.08.17 at 6:14 pm

“With rates rising, seems strange that canadian rate reset preferred shares are not reacting…”

Some bank rate resets have already risen 10% in the last 90 days, while others are well north of par value. If they are moving more gently today, it might just be a case of the news being priced in already.

Now if the Fed really does three rate increases this year, then the fireworks might just be getting started.

#103 99 on 03.09.17 at 9:16 am

Did you include the Rent you need to pay in your analysis ? You can’t live in your tfsa . Be fair .

Also , if the home owner rents the basement for $1200/Month

Rent a month $2000. $24,000 per year . $240,000 per decade ( more than that , kept price static for simplicity )

Now redo your math and give us the numbers

#104 common sense on 03.09.17 at 9:18 am

Europe holds rates….still think it’s a 100% lock USA will raise their rate .25?

They will be out in a tiny island compared to the rest of the world….

#105 TRT on 03.09.17 at 9:30 am

#75 Snowboid on 03.08.17 at 11:18 pm
Question for the esteemed professor and blog dawgs…

Back in the land of ice and snow, after selling our US home – with about $200K USD sitting in our local US account. We are thinking to keep an eye on the CAD during March and waiting until it hits .68 then cash in.

Thoughts? Predictions? Nectonite wisdom?

——

Ride these legs down until the market forces Poloz’s hand. When he raises rates a token 25 bp to stop the currency’s decimation, then ride the CDN up for a while. Rinse and repeat.

#106 Alex G. on 03.09.17 at 9:42 am

#64 Yitzhak Rabin on 03.08.17 at 10:24 pm

Sure, the Nikkei hasn’t done that great but then compare it to the Japanese housing market… Nikkei still wins. See for yourself: https://www.google.ca/search?q=japan+house+prices+chart&espv=2&source=lnms&tbm=isch&sa=X&ved=0ahUKEwjz1Kfq08nSAhWG4IMKHaINAzAQ_AUIBigB&biw=1422&bih=1004#imgrc=080B8zUr-NYewM:

#107 unfortunately.. on 03.09.17 at 9:58 am

real estate is largely becoming unaffordable for a greater % of Ontarians

check out house price surges in Burlington, Milton, Georgetown, Cambridge..etc Crazy.

of course with the current hysteria people will now make irrational statements about real estate, good and bad. End of the day its an asset class that appreciates over time, you can generate monies from it, and you LIVE in it. Cant beat that trifecta

#108 IHCTD9 on 03.09.17 at 9:59 am

#96 traderJim on 03.09.17 at 8:16 am
____________________________________________

Yep, this is were PC goes off the rails. A PC paradox of sorts. The Cultures and identities need to be respected, but they disrespect their women!

I have zero time for Western Feminists and their “problems”. I have found unexpected agreement among new Canadians who quite frankly, can’t believe some of the shit that is going on over here. Pretty much every immigrant I know that isn’t Muslim loves Trump.

These folks are my kind of people, and I think we need more – especially from India. Happily, I know Trudeau will oblige – and even better, they’ll all end up in the GTA – just where we need them.

#109 Stock picker on 03.09.17 at 10:02 am

Forget all our worries. Trudeau will make that little hearty sign and millennials will swoon. Justin will lead the economy from the heart….and unicorn poop still doesn’t stink….and darn it why didn’t Sophie sing. Again when she said Justin embodied woman’s day better than any of these grrrrrr women. Show us your feminine side Justy…….who needs a dirty old job anyway. We’ll do what Poloz suggests?. Move back home and volunteer till we’re fifty.

#110 Vit on 03.09.17 at 10:09 am

Interest rate and immigration has nothing to do with Toronto RE price increase . Look at Montreal same conditions and zero price gain for the lust 2 years . So speculation is a main reason price goes up . I guess time to sell now and put all $$$ in the US account . Since rice of US dollar will offset any further price increase . Please prove me wrong .

#111 Eurovision on 03.09.17 at 10:12 am

The only winners are the ones currently cashing out of Toronto. All others will be in gridlock for many years.

#112 TurnerNation on 03.09.17 at 10:42 am

Hello I am a non-binary Blog Dog.

#113 alex g on 03.09.17 at 10:43 am

did you account for rent ?

real estate appreciation vs nikkei PLUS rent

you cant live in the nikkei, :)

#114 SomeGuy on 03.09.17 at 10:47 am

@99 #105

Rent and pay capital gains in the percentage of the house.
Rent 50% (basement) of floor space, pay cap gains on 50%.

Or, try to dodge CRA and hope that no renter ever uses the house address in their tax filings.

If homeowner address = renter address, then cap gains taxed.

http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/rprtng-ncm/lns101-170/127/cmpltng/rlstt/x1_pf-eng.html

#115 For those about to flop... on 03.09.17 at 10:51 am

#106 common sense on 03.09.17 at 9:18 am
Europe holds rates….still think it’s a 100% lock USA will raise their rate .25?

They will be out in a tiny island compared to the rest of the world….

////////////////////////////////

Central
Bank
Rates

JPY -0.10%
CHF -0.75%
EUR 0.00%
USD 0.75%
CAD 0.50%
AUD 1.50%
NZD 1.75%
GBP 0.25%

You mean like Tasmania?…

M42BC

#116 real estate on 03.09.17 at 10:53 am

there is no better;

the asset appreciates over time (FACT)
can be a source of income (rent the basement)
and you live in it

im sorry.

#117 John of Grant on 03.09.17 at 11:00 am

#10 Mark

Does a person have exposure to US dollar etc if there etf trades in canadian dollars but holds US market?
The etf VUN for example.

I know many wonder this!
Thanks Garth.
————————————-

VUN is unhedged, you get the benefit of USD appreciation (and the loss if CAD appreciates). VUS is the fx hedged version.

#118 CL on 03.09.17 at 11:05 am

Canada won’t be able to let the loonie weaken much. Wilbur Ross will make sure of that.

a stack of lies and broken promises
PM encouraging illegal immigration to Canada a slap to dead soldiers and all Canadians past and present
M103 voted on March 21,
Fed Budget Mar22 (+++taxes and deficits)
By-Elections April3.

will be interesting to see what the results are of those by-elections.

#119 common sense on 03.09.17 at 11:09 am

#104 D.D.

If they raise them twice in 2017, the world explodes…

KABANG!

#120 IHCTD9 on 03.09.17 at 11:13 am

#105 99 on 03.09.17 at 9:16 am

Did you include the Rent you need to pay in your analysis ? You can’t live in your tfsa . Be fair .

Also , if the home owner rents the basement for $1200/Month

Rent a month $2000. $24,000 per year . $240,000 per decade ( more than that , kept price static for simplicity )

Now redo your math and give us the numbers

____________________________________________

The OP I responded to did not rent, he/she both owned a home and invested. (investments won)

Renting out the basement is not ROI – it’s a job. Rent is income, and is taxable at your marginal rate as income. Totally separate discussion from a primary residence as an “investment”.

If I were to compare a renter with a homeowner who rents out the basement I would have to be fair to both situations.

The renter would bias his income towards investing at the same level as the homeowner biases his spending towards home ownership – and I mean ALL of it, not just the mortgage payment.

I would need to correct the ROI for what will probably be a 75% Capital Gains inclusion rate upon the sale of the home. Since the homeowner turned his house into a rental business, taxes on any appreciation will be due upon sale. Taxes would be paid at his marginal rate which essentially means near half of any gain goes to Trudeau.

Still want me to do the math?

#121 Burnaby Guy on 03.09.17 at 11:17 am

Reply to #98 dumpster fire and #99 IHCTD9 –
You people are not comparing apple to apple. You are comparing apple to orange. I was just doing a simple comparison with the original $20000. In that case house wins. I know you can add more money to the portfolio over the years but that’s comparing apple to orange. You can come up with many different scenarios over 30 years but in order to be fair the comparison has to be between the original $20000.

#122 When the whip comes down on 03.09.17 at 11:27 am

81 Burnaby guy – if you are in a perpetually rising re market you are quite correct. When things turn down leverage will be your undoing. It is not your friend as i am sure your math proves out.

#123 Smoking Man on 03.09.17 at 11:56 am

Question for the esteemed professor and blog dawgs…

Back in the land of ice and snow, after selling our US home – with about $200K USD sitting in our local US account. We are thinking to keep an eye on the CAD during March and waiting until it hits .68 then cash in.

Thoughts? Predictions? Nectonite wisdom?

Can’t help you. My bets for the last 6 months. Bad.Brutal
I’m almost broke.

Funny enough, I’m still happy. Got a few ideas . You know get rich quick again schemas.

#124 Capt. Serious on 03.09.17 at 12:01 pm

#94
the solution is very simple. anyone that has some kind of equity in their homes can take out a line of credit, use it to buy fixed and floating rate preferred shares to hedge both the higher interest rates and the potential drop in home prices. no need to move, no need to uproot the family.

Well, assuming there is sufficient equity in the home. A lot of people are up their eyeballs in debt and will have no equity at all if there is much of a price correction. Then good luck getting that next mortgage renewal on favorable terms.

#125 Burnaby Guy on 03.09.17 at 12:34 pm

Reply to #124 When the whip comes down –

My comparison is based on Garth’s comment “Over the sweep of decades, financial assets will always outperform real estate, as they always have.”

Over many decades RE always goes up so does the stock market. Based on the scenario and the original $20000 investment, house wins. No doubt. I did the math. I know.

By the way It’s Garth that started the comparison. He also said a few times before it’s not a contest.

#126 Ole Doberman on 03.09.17 at 12:41 pm

Oil looking like it’s making another leg down – Trump must be fracking like mad.

#127 dumpster fire on 03.09.17 at 12:57 pm

#123 Burnaby Guy on 03.09.17 at 11:17 am
Reply to #98 dumpster fire and #99 IHCTD9 –
You people are not comparing apple to apple.

***

If you want to compare apples-to-apples in your example you have to either only count the portion of the gain attributed to the downpayment, or else compare the full gain on the house to a portfolio that was leveraged in the same way.

Comparing a situation where you have to make mortgage for payments for the next 25 years to 20k invested once and not touched for 30 years is anything but apples-to-apples.

~ breathe deep

#128 IHCTD9 on 03.09.17 at 12:59 pm

Wow, SGT says something positive about men and is getting her eyes clawed out by the lunatic fringe feminazi airhead 3rd wavers on social media. Well, I guess I’m not really surprised – but she might have been the only woman in the world that could have ever gotten away with it.

“It” being promoting unity between men and women to a colony of guano spewing vampire bats jacked up on estrogen.

Guess Justin learned a little bit about feminism today.

http://www.cbc.ca/news/politics/sophie-gregoire-social-media-post-1.4016457

#129 Burnaby Guy on 03.09.17 at 1:12 pm

Reply to #131 dumpster fire

1st point- You can buy a house with 10% down (my scenario). you can’t buy a portfolio with 10% down. Also don’t forget I didn’t start the comparison first. It was Garth.
2nd point – house needs mortgage payment. Portfolio guys with no house has to pay rent. Mortgage payments over decades would get paid off. Rent is forever.

#130 TurnerNation on 03.09.17 at 1:16 pm

Say goodbye to over 1/2 billion of our money offshore. Roads and schools and hospitals are not to be. Not for us.

This cash will go to shadowy NGOs and corrupted governments and to sell the products of for profit health care companies.

http://www.cbc.ca/beta/news/politics/trudeau-women-reproductive-rights-1.4014841

#131 jess on 03.09.17 at 1:18 pm

lessons learned ?
http://www.pbs.org/wgbh/pages/frontline/shows/regulation/lessons/
“Let me just get this straight. How much would you say investors have lost through corporate restatements?

If you go back and look over the last half-dozen years, give or take a year, up to the point of about a year ago, investors had lost probably close to a $100 billion — suffered those type of losses from these situations like Cendant, Waste Management, Sunbeam, Microstrategies, Rite Aid, Lucent, Xerox — a litany of them. Investors had already suffered losses that they were looking at in terms of a $100 billion.

Then along comes Enron. The loss on the market cap of Enron, just for the common stockholders, was around $63 billion. The total loss when you add in the debt and all is gonna be twice the losses that this country suffered on 9/11. Phenomenal. Six times the losses from the hurricane damage to Florida on Hurricane Andrew. This is a phenomenal number.

And we add on now every day. Global Crossing and others have come to the forefront. Investors are now looking at losses probably coming close to $200 billion. This is the magnitude of what this country lost when taxpayers had to bail out the savings and loan industry — again, where the numbers weren’t right.
http://www.pbs.org/wgbh/pages/frontline/shows/regulation/interviews/turner.html

==================
June 5, 2002
Paulsen:”We have codified these in a statement of Investment Research Principles. We have also appointed an
Ombudsman, who is available to promptly address any conflicts which may arise, and instituted
new oversight responsibilities for the audit and compensation committees of our board of
directors”

ongoing
https://www.sec.gov/spotlight/enf-actions-fc.shtml
SEC Enforcement Actions Addressing Misconduct That Led to or Arose From the Financial Crisis
Key Statistics (through Oct. 7, 2016)

#132 The Technical Analyst, CSTA, CPD on 03.09.17 at 1:39 pm

Did a trade today into my balanced portfolio (ATB203/ATB204) as we now have entered oversold conditions and I like buying on dips.

#133 Belka on 03.09.17 at 1:49 pm

How do the U.S. estate laws relate to having more than $60,000 portfolio dollars in U.S.?

#134 Tony on 03.09.17 at 1:53 pm

Re: #107 TRT on 03.09.17 at 9:30 am

My guess is the Canadian dollar will bottom or form a long term bottom at 53 cents U.S.

#135 Koolaid on 03.09.17 at 1:53 pm

#105 99 on 03.09.17 at 9:16 am

Exactly.. you have to considered the cost of renting a place to live. And also the amount of taxes you have to pay from your capital gain.

And no such a thing as guaranteed 6% return annually, but everyone need a place to crash, either if your house gained in value or not.

#136 IHCTD9 on 03.09.17 at 1:57 pm

#123 Burnaby Guy on 03.09.17 at 11:17 am
Reply to #98 dumpster fire and #99 IHCTD9 –
You people are not comparing apple to apple. You are comparing apple to orange. I was just doing a simple comparison with the original $20000. In that case house wins. I know you can add more money to the portfolio over the years but that’s comparing apple to orange. You can come up with many different scenarios over 30 years but in order to be fair the comparison has to be between the original $20000.
_____________________________

What is fair, is a dollar for dollar comparison. If the home owner dumps 1700.00 into housing costs every month – then the market investor gets to dump the same amount into his portfolio every month.

Check in on them in 30 years and see who wins.

#137 gotitnowza on 03.09.17 at 2:01 pm

Ok Garth, channel your inner Joe Cocker
There is a storm a coming
https://ca.finance.yahoo.com/news/is-canada-on-the-brink-of-a-financial-crisis-122542360.html
Help deliver your people from ignorance to wisdom my friend

#138 traderJim on 03.09.17 at 2:01 pm

My call for a lower loonie based on rate hikes in the US (not matched here) and more importantly, NAFTA re-negotiated and not so favourable to us Canucks is looking good.

Just wish I hadn’t panicked a while back when Trump was talking down the mighty buck and covered nearly half my short.

Coulda shoulda woulda…

#139 Snowboid on 03.09.17 at 2:03 pm

Thanks all for the advice, think we will hold on longer.

#140 Waiverless on 03.09.17 at 2:05 pm

#32 TRT on 03.08.17 at 7:26 pm

Wow Thanks for the education on the “Indian Way”. I need to find that waiver asap. I’m sure my old man can convince my sister to sign it right away and she’ll happily oblige.

This is what Trumponics has brought us… fear of “The Other” and ignorance… while were at it let’s assume all Chinese people eat dogs and when a Christian bride says “love, cherish, and to OBEY” she’s agreeing to slavery.

I’m East Indian – my old man has 2 houses, 2 sons and 1 daughter. He would skin me alive if I suggested we disinherit her. This concept is true for my whole extended family. So though I’m sure some people do disinherit daughters regardless of creed or culture – using your anecdote to paint a whole culture is the same fear based agenda that propelled Trump into power. Keep that out of Canada please.

Let me know when you find that waiver…

#141 traderJim on 03.09.17 at 2:06 pm

I should clarify, I think Trump will continue to talk down the dollar, as he seems to think a strong dollar is a bad thing (Trump’s a good businessman/negotiator, but not so hot on economics).

So I don’t think we will see a 60 cent loonie. In fact, we’ll probably see a little rebound soon, maybe up a cent and a half from here.

I will use that opportunity to increase my short again.

Looking for around 70 cents to cover, and I would even go long loonies somewhere in the sixties, IF it gets there.

#142 Cheap Houses on 03.09.17 at 2:29 pm

#128 Euro Observer on 03.09.17 at 12:06 pm
I can easily see an average can of beer at $ 7 at LCBO in just few years.

German imported beer cost – 0.60 CAD
Ontario alcohol tax – 2.25 CAD
Distribution and delivery charge – 0.70 CAD
Health care surcharge – 0.35 CAD
Carbon tax (it has carbon dioxide!) – 0.55 CAD
Stocking charge – 0.15 CAD
Infrastructure improvement/road charges – 0.25
eco tax – 0.15 CAD
debt retirement charge – 0.55 CAD
community feel good charge – 0.17 CAD
community hockey arena charges – 0.05
Poloz’s verbal diaria distress releive charges (it works as medication to help erase memories of the latest press conference of the guy) – 0.03
…………………….
(the list goes on)
———————
plus HST on top of it

But hey, the beer only costs you 0.60 CAD! the rest is just ‘convenience’and ‘consumption’ taxes.

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

We buy all our consumables in the USA and will continue to do this as long as we are let down by Canada. The last score was 3 cases of 24 for 17 bucks a case. Awesome IPA. Gas 88 cents Cdn, cheese, milk the list goes on. Sure we were on an overnight trip for the big beer score but customs looks the other way for 12 beers for 2 people under 8 bucks for our regular once a week trip.

Sucks to be a Canadian consumer. Its getting impossible to live here.

#143 Daveyboy on 03.09.17 at 2:37 pm

Feel sorry for all those over leveraged families. Grew up in the early 90s in Ontario. My dad had to start over again from being an electrician. He was out of work for over 6 years. Went from making 29 dollars an hour to 12. I can see it happening again for many families.

#144 NoName on 03.09.17 at 2:51 pm

you gotta to love business oriented democrat all equality (not equity) we are all same California.

Ala carte, pay-to-stay jail.


“Instead, Wurtzel found a better option: For $100 a night, he was permitted by the court to avoid county jail entirely. He did his time in Seal Beach’s small city jail, with amenities that included flat-screen TVs, a computer room and new beds. He served six months, at a cost of $18,250, according to jail records.”

http://www.latimes.com/projects/la-me-pay-to-stay-jails/

#145 Ace Goodheart on 03.09.17 at 3:23 pm

We’ve actually right now got something approaching the “perfect storm” in the GTA detached and semi detached home markets.

-Low interest rates, meaning people can borrow a lot more than usual

-Heavily indebted Federal and Provincial governments, combined with weak economic growth and crappy employment numbers, making the likelihood of an interest rate increase negligible (not gonna happen)

-The United States is going to increase its benchmark rate. It will happen multiple times this year, likely. This will sewer the Canadian dollar, making our housing more affordable to foreign investors.

-BC has a 15% foreigner tax. Toronto has nothing.

-A ton of people moving to the GTA each year, from all over the world. estimated 100,000 so far this year, and we’re in March. They all need housing. We have rental bidding wars.

So, currency devaluation, rock bottom rates, way way way more people who want to purchase, than there will ever be houses available, and the market is in the process of locking up as no one who owns a house, wants to sell (they may never be able to get back in again).

All of the spare parts are coming together in perfect order on this one.

We may end up becoming a nation of “have nots” and the GTA anyway might end up similar to other internationally known cities, where only the ultra wealthy own houses.

#146 me again on 03.09.17 at 3:23 pm

#149 Euro Observer on 03.09.17 at 2:42 pm
here is the link:

http://www.theglobeandmail.com/news/politics/ottawa-announces-650-million-for-sexual-and-reproductive-health/article34237503/

I’d be pro abortion in the case of Maggie T.
That would be one less idiot in Canada.

#147 Burnaby Guy on 03.09.17 at 3:33 pm

#140 IHCTD9

The reality is people would come up with $1700 mortgage payment every months for 25-30 years.

Finds me a person that has the money and discipline to add $1700 to a portfolio on top of rent payment for 25-30 years.

House gets paid off. Rent is forever.

By the way I have a property in Burnaby and a portfolio.

#148 Wrk.dover on 03.09.17 at 4:09 pm

#99 IHCTD9 on 03.09.17 at 8:24 am

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

Your glaring error in the comparison is that your portfolio guy doesn’t show the rent he paid for thirty years in this comparison.

Admit it.

#149 Ace Goodheart on 03.09.17 at 4:10 pm

#155 Euro Observer on 03.09.17 at 3:41 pm

“GTA is a giant labour camp”

Yeah it’s odd. I wouldn’t live outside of Toronto for anything. Canadian small towns and suburban areas are not liveable. Basically they are run like competitions. The idea is to “look rich” and have better stuff than your neighbours. And everyone complains about what everyone else does. It gets stupid really fast.

No idea why Toronto is set up how it is. The “soul” of the city, as you point out, is the “labour camp” mentality, meaning everything in Toronto is designed around getting to and from work, and working.

Someone, someday will have to explain to me why it is so important for people to work literally every waking hour of their days.

Or why vacation is such a dirty word.

I have lived in Europe so I know the difference.

I think people tolerate Toronto because the wages are good there. But again you are in Canada, so you start at $12.00 per hour and go up as you “know” people.

#150 136, tech analyst on 03.09.17 at 4:13 pm

‘Did a trade today into my balanced portfolio (ATB203/ATB204) as we now have entered oversold conditions and I like buying on dips.’

………

a retail investor can’t buy the O series, and no D series available. Terrific product

how r you buying the O-series?

thanks

#151 Freedom First on 03.09.17 at 4:14 pm

#70

Paul. All I know is that every day is My Freedom First day.

#1
Freedom First
Master of Freedomonics

#152 Lee on 03.09.17 at 4:15 pm

#152, Ace

What is your source for 400,000 people moving to GTA this year? Give me a link.

#153 TnT on 03.09.17 at 4:27 pm

#154 Burnaby Guy on 03.09.17 at 3:33 pm

Finds me a person that has the money and discipline to add $1700 to a portfolio on top of rent payment for 25-30 years.

Who has 2 thumbs, pays rent and saves all year? (me)

Who pays off a house and never spends money on maintenance, taxes and renovations (kitchens and bathrooms) windows, landscaping etc…

PLUS have extra money for living an upgraded quality of life etc….

PLUS have extra time for living instead of “house care” etc…

Since selling my 3rd house and renting I have taken up camping, kayaking, biking, skiing. I have so much time on my hands it comical. No more landscaping, repairs, upgrades – have not seen a Home Depot in 2 years and funny how my bank keeps growing for a change.

hahaha…

#154 BREAKING NEWS - Possible Foreign Buyer Tax!! on 03.09.17 at 4:40 pm

Wynne needs votes dammit !!!

http://toronto.ctvnews.ca/ontario-reconsidering-foreign-buyers-tax-to-cool-gta-housing-market-1.3318424

#155 dr. talc on 03.09.17 at 4:43 pm

#149 Euro Observer on 03.09.17 at 2:42 pm
here is the link:

http://www.theglobeandmail.com/news/politics/ottawa-announces-650-million-for-sexual-and-reproductive-health/article34237503/

disturbing. it’s a blasphemous, racist, depopulation agenda wrapped up in the guise of ‘women’s rights’
As Neil Postman would say
‘just what is the problem that this is supposed to be the solution to?’

on thing for sure it has nothing to do with Canadians

#156 Boots on the Ground in Ptown on 03.09.17 at 5:06 pm

#75 Snowboid
#79 Paulo
————————————————-
RE: projection for CAD. I have the opposite problem. House closing in BC in 6 days.

http://chamberlainpropertygroup.ca/real-estate-listings?view=property&layout=&id=493

We’re currently located in US. (not the owners, but invested in the project) No idea as it stands if we move back to Canada in future. For now another year here, barring any of the possible foreseen and unforeseen disasters out there. What would you (or any other dogs here) do if you were us?

1. Keep the $ in CAD. (we have no RRSPs, no TFSA’s)

2. Wire to states asap to avoid an even lower loonie in a year or so. Take the exchange hit and possibly get into the markets in the next year, depending ….

There was some talk here of speculation of peso being at parity with USD under Trump and whether or not this could be possible with the loonie. Does he even have any say in currency valuations ultimately? Was the speculation due to possible changes with NAFTA or? Thoughts from any of you wiser and older ones?

#157 Hotdogs from Heaven on 03.09.17 at 5:13 pm

#93 Wrk.dover on 03.09.17 at 8:02 am

If you would like a side order of Federal Deposit Insurance on that amount, you will have to have it in two accounts.

If you recall how fast ‘it’ happened at Thanksgiving in ’08, you will get the cash into two accounts this week.

If you don’t, you won’t.

Bank failure is not at a probability of 0%, the number is way small, but not absolute 0 in this Goldman stacked era. (or why would there even be FDIC ?)You are not shipshape until all risks are mitigated. Two accounts, for that amount.

——————————————————-

WRONG.

FDIC in the states is up to $250,000 U.S.

It’s Canada’s lowly CDIC that only insures up to $100,000.

#158 Boots on the Ground in Ptown on 03.09.17 at 5:29 pm

#157 Ace Goodheart on 03.09.17 at 4:10 pm

#155 Euro Observer on 03.09.17 at 3:41 pm

“GTA is a giant labour camp”

Yeah it’s odd. I wouldn’t live outside of Toronto for anything. Canadian small towns and suburban areas are not liveable. Basically they are run like competitions. The idea is to “look rich” and have better stuff than your neighbours. And everyone complains about what everyone else does. It gets stupid really fast.

No idea why Toronto is set up how it is. The “soul” of the city, as you point out, is the “labour camp” mentality, meaning everything in Toronto is designed around getting to and from work, and working.

Someone, someday will have to explain to me why it is so important for people to work literally every waking hour of their days.

Or why vacation is such a dirty word.

I have lived in Europe so I know the difference.

I think people tolerate Toronto because the wages are good there. But again you are in Canada, so you start at $12.00 per hour and go up as you “know” people.
—————————————————————-

Agreed with you Ace. My Canadian born hubby who split his time between Canada and Finland in his 20’s is pretty sure he’s “sold his soul to the devil” since our unforeseen move to the States. Your words “Someone, someday will have to explain to me why it is so important for people to work literally every waking hour of their days.

Or why vacation is such a dirty word.

I have lived in Europe so I know the difference.”

Could have come straight out of his mouth and for all intents and purposes they do, every day that we’re here.

That being said, variety, more “freedom” and “opportunity” and “cheaper prices” do abound in the US of A. But so much of it is illusory as he’s taught me to see or comes at the cost of working minimum 50 hours weeks. (Or at the cost of 25mm daily rain here turning the brain to mush) No exaggeration about 50+ hour weeks. In our age cohort here, this (50 hrs) is normal and actually expected and/or mandatory by some of the big construction employers in the area. For all intents and purposes to be able to afford any healthcare at all a person had better be working 50+ hours if they’ve got no employer insurance. Which is more common than you want to know.

Here’s someone making good use of opportunity:
http://www.financialsamurai.com/abolish-welfare-mentality-six-figure-bart-janitor/

and the link I presented to hub the other day with “at least while you have the chance, make good of it while we’re here to maybe get ahead ” which of course got us into the usual debate of the merits of either of these systems (US vs CAN). Problem is, is there really any motivation to do as this janitor did, in Canada anymore? Not from what it sounds like with death by taxation. I can see the “why bother in Canada” mindset very easily. I’m sure the link will provoke some good commentary here, enjoy-and while I’m at it thanks all for the platinum comments section here. I tried to swear off this blog as NoName did recently but I too lasted maximum of 3 days, blast it.

#159 common sense on 03.09.17 at 5:49 pm

#157 Ace

Well said….Luckily at the age of 27 I left the Big Smoke when driving up the Don Valley one morning against people driving in, I thought ‘What a bunch of lemmings..”

For those who can, cash out and leave..there IS a world out there…for those deep in debt, watch out for cliffs.

#160 IHCTD9 on 03.09.17 at 5:50 pm

#156 Wrk.dover on 03.09.17 at 4:09 pm
#99 IHCTD9 on 03.09.17 at 8:24 am

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

Your glaring error in the comparison is that your portfolio guy doesn’t show the rent he paid for thirty years in this comparison.

Admit it.

The song would remain the same. Go ahead and take 600k off the 1.7 mil the market investor has after 30 years of 1700/month averaging 6% and he’s still got a lot more than the 33k pocketed by the house guy. Just do the math. It’s not even close.

In reality, the rent guy could both buy the house and invest the money and have both if he decides to live somewhere other than the GTA. 1700 a month is not a back breaker.

I’m one of those guys, I own a paid for house, and a decent stack of cash. The house will have cost me money by the time I sell it at 3x what I originally paid for it. My portfolio kicks my houses azz up and down the street.

#161 IHCTD9 on 03.09.17 at 5:56 pm

#154 Burnaby Guy on 03.09.17 at 3:33 pm
#140 IHCTD9

The reality is people would come up with $1700 mortgage payment every months for 25-30 years.

Finds me a person that has the money and discipline to add $1700 to a portfolio on top of rent payment for 25-30 years.

House gets paid off. Rent is forever.

By the way I have a property in Burnaby and a portfolio.
——-

A lot of that equation is where you decided to live. Our family income is 115k so I’m far from rich, but I paid 123k for my house, and my last few years of mortgage payment were 550 or so a month.

Saving to invest was easy for us. GTA and YVR folks would have a much harder time with it though…

#162 Wrk.dover on 03.09.17 at 6:13 pm

#99 IHCTD9 on 03.09.17 at 8:24 am

——————————–

Buddy’s bank is in Canada, read his post more carefully…

#163 Wrk.dover on 03.09.17 at 6:14 pm

#168 Hotdogs from Heaven on 03.09.17 at 5:13 pm

The above post was for you

#164 Ace Goodheart on 03.09.17 at 6:51 pm

#170 Boots on the Ground in Ptown on 03.09.17 at 5:29 pm:

Janitor Zang’s after tax income in Canadian dollars:

$271,000 US = $366,097 CDN dollars

Entered into the Ontario tax calculator:

Total income tax payable: $159,781

After tax income: $206,316

Sure makes you want to work all that overtime….

#165 IHCTD9 on 03.09.17 at 7:01 pm

I’m East Indian – my old man has 2 houses, 2 sons and 1 daughter. He would skin me alive if I suggested we disinherit her.
——

“Someone gonna geta hurt real bad!!”

#166 IHCTD9 on 03.09.17 at 7:30 pm

#155 Euro Observer on 03.09.17 at 3:41 pm

Not really. No person in his/her right mind will live in GTA given the curcumstances – cost of living vs, earning power, even Calgary is more attractive at this point.
———-

The GTA has two important things, big immigrant enclaves, and jobs. That’s it.

The proof of this is sprawled around many a small town waterfront and precisely targeted housing developments. That is where you find the GTA escapees, nearly homogeneous. They came out here to retire and partake of the finer things in life, and spend their considerable bank. These are the things these folks discovered are not on offer in the GTA, so they moved to where they were. There is an entire mini economy out here to service pretty much their every need.

#167 Darth Vader on 03.10.17 at 2:10 pm

Give me da money me no workee…..a leach is to a frog as a flea is to a……dog…..human….other peoples money….LOL
What does a flea-mutual fund manager and lamprey have in common…They all suck!