Outlook

RYAN  By Guest Blogger Ryan Lewenza

Last week my partner Doug Rowat (aka Robaxacet), summarized some of our key 2017 market calls (thankfully more hits than misses) and briefly outlined our cautiously optimistic outlook for 2018. Today I’m going to build on this, providing our assessment of the economic, fundamental and technical factors that are likely to drive the equity markets in 2018. In short, we maintain our constructive view of the global economy and equity markets, but will be monitoring conditions closely for any deterioration of these factors throughout the year.

Starting first with our economic outlook, we are very encouraged by what we are seeing around the world presently with most key regions and countries experiencing a pick-up in economic activity. The economic recovery since the Financial Crisis has been muted with below-trend economic growth and rolling mini crises from the European debt crisis, Brexit, the global oil rout, concerns of a China hard landing, etc. Last year we started to see a cessation of these one-off events and for the first time in some years witnessed a synchronized economic expansion. Nothing in our analysis and reading of the tea leaves points to an end of this positive momentum, and more importantly, the start of a global recession.

Let’s quickly review some key economic indicators and trends. Manufacturing around the world continues to pick up, with global PMIs (Purchasing Manager Indices) near or at multi-year highs. The labour markets globally continue to improve with US, Canada and European unemployment rates at historically low levels of 4.1%, 5.7%, and 8.8%, respectively, to cite just a few. Despite protectionist and anti-globalization rhetoric from President Trump and others, global trade rose at 4.2% in 2017, twice that of 2016, according to the IMF. Finally, numerous confidence indices (consumer, CEO, small business, etc.) are at the highest levels in over a decade.

Given this positive momentum and outlook, economists are forecasting the global economy to grow at 3.7% Y/Y in 2018, the strongest reading since 2011. From an economic perspective things look just fine from our vantage point

Global Growth Outlook

Source: Bloomberg, Turner Investments

Moving on to the fundamentals, and probably the most important aspect of our bullish view, is that we see corporate profits improving materially in 2018. And we can give a tip of the hat to President Trump and his Republican colleagues for a portion of this expected strong earnings growth.

As is so often the case with financial analysts, their earnings growth expectations may be overly optimistic for 2018 with analysts expecting S&P 500 earnings to rise 23% Y/Y to US$148/share. Based on our more conservative S&P 500 earnings estimate of US$140/share, we see earnings potentially rising 17% Y/Y.

For you financial nerds I derived this earnings estimate through two methods. First, based on my econometric model of US GDP growth and S&P 500 sales, and an estimate for profit margins, I come up with a forecast of US$130/share. Now where Trump and the Republicans come in is their major tax reform plan which reduced the US corporate tax rate from a high 35% to 21%. Based on this policy change, I calculate that this will add roughly US$10/share in additional earnings in 2018, thus pushing full-year S&P 500 earnings up to US$140/share.

My second model for forecasting earnings has a more cynical bent, where I just adjust the consensus estimate (US$148/share) down by the typical overestimate by analysts. Historically, the analyst community has overestimated yearly earnings by 12%. So, multiplying US$148/share by (1 – .12), and then adding in that US$10/share bonus from lower tax rate I get the same US$140/share.

If this forecast is realized, this should help to drive stocks up this year and keep the bull market in-tact for 2018.

S&P 500 Earnings Outlook

Source: Bloomberg, Turner Investments

Now it’s not all roses, and there are a number of things we are monitoring that could put this economic expansion and bull market at risk. In no particular order, we see high equity valuations, length of this economic expansion and bull market, central bank tightening, a flattening of the yield curve and political risks as factors that could disrupt this bull market. Moreover, we’ve gone the longest period in history without a 3% correction so we are due for a pullback in the coming months.

The most significant risk to the bull market, in our view, is the potential for inflation to pick up (in response to the low unemployment rate and potential stimulus from the US tax reform plan), which would then likely cause the Fed and other central banks to speed up their rate hikes and interest rate normalization policies. Our base case view is that inflation will rise moderately and that the Fed will hike rates three times in 2018. If correct, this slow and gradual rate tightening is unlikely to derail the economy and stock market in 2018.

Inflation and Fed Rate Hikes

Source: Bloomberg, Turner Investments

Lastly, I couldn’t finish my outlook without quick a comment on my favourite analytical tool – the technicals. Boy, they look at good at present. Below is a simple long-term chart of the S&P 500. The quick and dirty on this chart is that: 1) the S&P 500 continues to make higher highs and higher lows; 2) the S&P 500 is above its rising 200-day moving average; and 3) the S&P 500 remains in a beautiful long-term upward channel, as captured by the dotted lines.

As one well-respected strategist I follow, Ned Davis, recently stated, “My main philosophy for investing in the stock market is Don’t Fight the Tape or the Fed.” Well I agree wholeheartedly and I’m sticking with this simple premise for now.

S&P 500 Technicals Remain Bullish

Source: Stockcharts.com, Turner Investments

So there you have it! We’re bullish based on our positive assessment of the macro, fundamental and technical factors. When these things change, then we’ll consider changing our long-held bullish view, and maybe (if you’re lucky) we’ll share those thoughts in this blog. For now, stay calm and carry on.

Ryan Lewenza, CFA,CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Vice President, Private Client Group, of Raymond James Ltd.

 

121 comments ↓

#1 Screwed Canadian Millenial on 01.06.18 at 2:51 pm

Alberta hasn’t suffered for raising the minimum wage
https://www.theglobeandmail.com/opinion/alberta-hasnt-suffered-for-raising-the-minimum-wage/article37517324/

Predictions:

In 2015, the Canadian Federation of Independent Businesses (CFIB) claimed that the minimum-wage increase would cost the province “between 53,500 and 195,000 jobs.” In other words, the CFIB believed that more than half of the almost 300,000 Alberta workers making less than $15 an hour could lose their jobs.

What actually happened:

The problem for critics of minimum-wage increases is that history doesn’t back up their sky-is-falling claims.

In the year preceding November, 2017 (the latest available data), Alberta’s service sector added 12,400 jobs as part of our province’s economic recovery. In 2016, while Alberta’s economy was still in recession, our service sector added 26,500 jobs.

These jobs were created despite Alberta’s minimum wage increasing 33 per cent in 2015-17.

#2 technical analysis? on 01.06.18 at 2:52 pm

Interest rates are going HIGHER.. a LOT higher.

Poloz and the FED are so far behind the curve it’s not funny. they will raise 1% in 2018 and another 1% in 2019. and STILL be short of the mark.

inflation pressures have been compressed since the mid-90’s. you’re about to see an explosion upwards this coming decade.

#3 Jungle on 01.06.18 at 2:53 pm

Thanks for your analysis , I always look forward to these posts and market outlook. Excellent again!

#4 TurnerNation on 01.06.18 at 2:54 pm

C’mon Blog Dogs let’s Starve the Beast. This week’s grocery spend: 70% to billionaire family duolopists; 30% to family-owned bakery and a local mart. Better last week. Try it.

Profit from T-rump’s new wall keeping dim-witted Americans inside: http://www.nasdaq.com/symbol/uscr/competitors

Unfortunately T2 govt just declared this weblog’s comments section a ‘Zone of Privilege’ and subject it thusly to a Diversity Tax, a Gendertivity Tax, and a new Inclusivity tax. :-(

#5 technical analysis? on 01.06.18 at 2:58 pm

wasn’t it Marty Zweig who first coined that phrase? “don’t fight the fed/tape?

#6 Ryan Lewenza on 01.06.18 at 3:25 pm

technical analysis “wasn’t it Marty Zweig who first coined that phrase? “don’t fight the fed/tape?”

Yes I believe you are correct. He, more then others, understood just how important the Fed and their policies were to the stock market. I learned a lot from his Winning on Wall Street Book. – Ryan L

#7 JSS on 01.06.18 at 3:36 pm

Ryan, would you like to share your prediction for 2018 TSX?

#8 Whole Wheat Bagels and Organic Butter on 01.06.18 at 3:42 pm

I’m paying over 15% on groceries because of the min. wage hike in Ontario. I’m also paying a 22% increase in teas and coffees at a certain hipster coffee shop in downtown Toronto.

If Poloz claims next week that he sees no inflation, I’ll label him a currency manipulator and complain to Donald Trump so that he can advise Poloz that inflation exists in Ontario.

I don’t care if Screwed Canadian Millennial or April Brockman complains that higher interest rates will affect Moisters overbidding on dog houses at Belfountain General Store.

#9 Mark on 01.06.18 at 3:48 pm

“Now where Trump and the Republicans come in is their major tax reform plan which reduced the US corporate tax rate from a high 35% to 21%. Based on this policy change, I calculate that this will add roughly US$10/share in additional earnings in 2018, thus pushing full-year S&P 500 earnings up to US$140/share.”

Effective tax rates are already quite lower than the official tax rates, so might the S&P500’s earnings rising due to the tax changes be a bit of an exaggeration? For leveraged corporations (which is a good chunk of them out there these days), the tax changes, including changes to interest deductibility, may have a more prominent impact to the bottom line than merely lowering the headline tax rate which, through a litany of loopholes and offshore transfer pricing schemas, wasn’t even anywhere near the actual tax rate anyways.

Additionally, the incremental deficits and resulting incremental debt resulting from the “tax cuts” may very well systemically increase the cost of capital for business.

I’m not convinced personally that the tax cuts will do much of anything, which leaves the S&P500 currently priced in nosebleed territory relative to earnings growth that is likely not to materialize. Last month’s job numbers tell us that there is no major push towards expansion in the US economy. Inflation, as it accelerates in the US (and decelerates in Canada), will mostly be a function of USD-weakness.

would you like to share your prediction for 2018 TSX?

The TSX looks freakin’ awesome these days. The commodities producers are finally back on track. Cashflows have almost never been greater in that sector. The oil and gas producers, having shed large numbers of workers, and severely chopped compensation on those who remain, are churning out cash even at lower oil prices. The railways are running into capacity limits so severe at this point that passenger trains are literally being delayed by over a day each, and have enormous pricing power. The banks have, as I have been predicting for years, been able to take advantage of the falling housing market through expansion of spreads while the BoC keeps rates low in response to deflationary trends and high unemployment. Trudeau, much to our surprise, has done an excellent job at keeping the deficits under control at or below levels typical of the Harper government while ramping up social spending in selected high priority areas. The TSX could be 20k at some point this year as the stars align, and catch up with the Dow and even exceed such significantly within the next decade.

#10 ALFRED E. NEUMAN on 01.06.18 at 3:50 pm

Ryan,

thanks for this encouraging post with its several positive predictions for 2018.

I always enjoy your analyses. And sometimes those charts look even better when turned 90 degrees.

So, a question for you, good sir:

where DID you predict the price of oil to be by the end of 2017, and what price did it ACTUALLY hit?

Happy New Year to you and your cohorts at TI ..!!

#11 akashic record on 01.06.18 at 3:55 pm

He, more then others, understood just how important the Fed and their policies were to the stock market.

This sounds really funny if we put in the same sentence what the Fed is:

He, more then (sic!) others, understood just how important the private institution whose shareholders are commercial banks and their policies were to the stock market.

#12 Canadian Twisted Millenial on 01.06.18 at 4:23 pm

If the universal basic income happens, it seems to me not working should be paid the same amount as working the same number of hours because equality.

I predict complaints about job loss will occur. However reality is that if not-working is paid high enough, by making low not-working pay illegal, then all companies will have enough customers, with money, to assure companies can afford to pay the new minimum wage.

#13 Stan Brooks on 01.06.18 at 4:25 pm

#8 Whole Wheat Bagels and Organic Butter on 01.06.18

You believe in Poloz?
I don’t trust a single word that comes out of his mouth.
This is why I do not hold CAD denominated assets no matter the ‘attractiveness’ and I urge you to do the same.

Inflation in GTA, including housing has been at least 5-6 % in the last 5-10 years.

His job is to hide it to benefit of governments, as many payments are CPI indexed.

Not that CPI, that excludes food and energy has anything to do with real inflation.

So his job is to lie and as he is afraid to be blamed, he is stating that the credit and housing bubble is not his responsibility.

CAD in terms of purchasing power compared to USD and Euro is at least 30-40 % overpriced.
It beats me why idiots would use it for anything, but hey, we live in strange times, see bitcoin.

The bottom line is that we have inflation, asset appreciation/bubble and relatively strong currency at the same time with no real economy!

Use the opportunity to diversify in assets out of Canada, it may not last long.

#14 Stan Brooks on 01.06.18 at 4:32 pm

Ryan,

Good post and I appreciate it that you take a broader view of the world economy and focus on the tax revolution in US, there is so little positive to see in this ruled by (corrupted criminal uber rich elitist small business killing) liberals (brain-frozen carbon taxed land) called Canadastan.

I share your view on the stock market but I firmly believe that DOW 35 k is in sight, looking also for European and Asian equities to go much higher.

My focus is alcohol companies and tobacco, water, pharmaceuticals.

What is your view on commodities and agriculture – oil, metals, gold in short and mid to long term?

Thanks,

#15 Ryan Lewenza on 01.06.18 at 4:39 pm

JSS “Ryan, would you like to share your prediction for 2018 TSX?”

Higher. We’re bullish on commodities and see oil, copper, gold etc. moving up in 2018 which should bode well for TSX. I was surprised by how much the TSX lagged behind the S&P 500 last year. I think it could outperform this year given our commodity outlook, solid earnings, and cheaper valuations. – Ryan L

#16 Ryan Lewenza on 01.06.18 at 4:44 pm

Mark “Effective tax rates are already quite lower than the official tax rates, so might the S&P500’s earnings rising due to the tax changes be a bit of an exaggeration?”

I agree with this. Effective rates are closer to mid to high 20s. Hence why I only see a $10/share boost, which is much lower than what other analysts are predicting. See my earlier comment for TSX outlook. I agree with you, “the TSX looks freakin good these days”. – Ryan L

#17 Ryan Lewenza on 01.06.18 at 4:55 pm

ALFRED E. NEUMAN “So, a question for you, good sir: where DID you predict the price of oil to be by the end of 2017, and what price did it ACTUALLY hit?”

I wrote a blog post on that but I forget when. But here’s our 2017 outlook report http://www.turnerinvestments.ca/pdfs/2016%20In%20Review%20JAN2017–Final.pdf
and on page 5 I wrote “So, putting it all together, we believe oil prices could firm up a bit in 2017 and are targeting US$60/bbl by year-end.” It closed at $60.42. Not a bad call. – Ryan L

#18 Stan Brooks on 01.06.18 at 4:58 pm

#15 Ryan Lewenza on 01.06.18 at 4:39 pm
JSS “Ryan, would you like to share your prediction for 2018 TSX?”

Higher. We’re bullish on commodities and see oil, copper, gold etc. moving up in 2018 which should bode well for TSX. I was surprised by how much the TSX lagged behind the S&P 500 last year. I think it could outperform this year given our commodity outlook, solid earnings, and cheaper valuations. – Ryan L

———————————-
Ryan,
Thanks for your outlook on commodities.

TSX lags due to:

1. Lack of investment interest by foreign investors who see the economy for what it is can’t be duped by liberals lies.

2. Canadians lacking money due to massive over-indebtedness.

3. Lack of trust in the currency.

Consider the above when you purchase Canadian stocks, people are not buying them for a reason.
If look at technical Russian stocks look much more attractive at P/E of 5 for Gazprom, Luckiol and yet nobody is buying them!

Commodities can change/the TSX performance that but if your outlook on commodities is correct, I prefer targeted ETFs, not the overall TSX.

#19 Danny on 01.06.18 at 5:03 pm

My question always come up….With such a rosy picture will the urge to cash in over power the urge to stay calm and carry on.
Is having money tied up an infinite reality?
History says at some point you have to cash in unless dividends are enough?

Also at some point the reality that Government and personal debt is way beyond the limit and such an unbalance will result in a loss.

History also shows that this wave is always a quick slap in the face with very little warning for most…..like a severe push to your back.

And then there are the one’s that plan for failure to weed out the weak and then to reap the benefits of low prices later on.

Call me a pessimist but sharing wealth at the top is not a common spirit but a fierce competition……and instinct in human nature. That’s why the word greed is in the dictionary.

I may be wrong in the short run…..but right in the long run. All roads have a fork…….sometimes to a cliff.
Usually a negative forecast always happens after the fact when it is too late.

Still you have reported some good facts here and I hope that when change happens it is slow and not instant as the last time which we call ‘the financial crisis’

Remember the Republicans were in charge then too!

#20 Stan Brooks on 01.06.18 at 5:16 pm

Ah, and I keep forgetting:

Canadians will have less and less money to invest due to (in addition to over indebtedness):

1. theft/taxation by lieberal thieves – personal and carbon taxes.

2. increased CPP contributions.

3. assault on small Business by lieberals

4. reduction in TFSA rooms.

The deficit money form the budget flows to their rich friends from the oligopolies who rule this place.

Considering the above, I would not be surprised for TSX to continue under-performing despite a commodity boom, US and international commodity ETFs look a better bet to me.

#21 Penny Henny on 01.06.18 at 5:22 pm

#129 Blackdog on 01.06.18 at 10:40 am
I understand this is your blog Garth and you can (and do) do as you please. As a late Gen Xer, I am not commenting with regards to SMC’s viewpoints, but I fail to see the need to allow others to post rude, bullying comments directed towards SCM while SCM’s comments show up as “DELETED”. If you don’t want SCM here, then why not delete his/her comments without making a big show of it? And please consider deleting the comments of other posters who continue to deride him/her. To do otherwise makes you look like the lead bully in the schoolyard. Just sayin….

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

I was going to plus one this but I see that SCM is back.
Good for you Garth.
Coming from the dork that I am that’s a big compliment.

#22 Andrew Woburn on 01.06.18 at 5:37 pm

In case you’ve decided to bet on Bitcoin instead –

– The four glaring flaws dulling Bitcoin’s shine

https://www.theglobeandmail.com/globe-investor/the-limitations-of-bitcoin-are-becoming-abundantly-clear/article37516285/

#23 Penny Henny on 01.06.18 at 5:40 pm

Given this positive momentum and outlook, economists are forecasting the global economy to grow at 3.7% Y/Y in 2018, the strongest reading since 2011. From an economic perspective things look just fine from our vantage point-Ryan

It’s always calmest before the storm.

#24 TRUMP on 01.06.18 at 5:42 pm

Pathetic CANADIANS….

SO LET I GET THIS STRAIGHT.

YOUR GOVERNMENT WONT APPROVE THE BUILD OF NEW PIPELINES TO EFFICIENTLY GET OIL AND GAS MOVING OUT THE COUNTRY.

But oh yeah…… Not stopping Trudeau gettin the whole Country High as a kite this summer.

Smoke weed everyday…. What a Joke!!!!

#25 Raincouver on 01.06.18 at 5:44 pm

WAKE UP CANADA:
https://www.economist.com/news/business/21734034-identity-checks-obtain-library-card-are-more-onerous-those-form-private

#26 Loonie Doctor on 01.06.18 at 5:44 pm

Ryan,

Thanks for your insights and sharing you predictions.

I admittedly stayed overweight US, Europe, and EM last year. Much of that was due to not wanting to mess with my CCPC accounts with the impending tax changes looming and those areas doing well. I keep getting disappointed by the TSX despite the lagging valuations, promising technicals, and commodities finally showing some signs of life (I am talking about over the past decade of investing). It has to change for the better at some point. I plan on rebalancing by building up my TSX position in my wife’s taxable account this year – at least the dividends get favourable tax treatment (for now) and I have allowed myself to drift underweight.

I think the biggest shift that we need to watch for this year is when the market may start shifting warranting a slight shift towards fixed income. I do hope that we will be lucky enough to have you share your insights when you see that happening. It is generous of you, as a professional who makes a living off of portfolio management, to give us these free blog postings.

#27 Penny Henny on 01.06.18 at 5:46 pm

Hello Ryan,
I thought I read somewhere that tax cuts for tech companies are already at rates lower than 35%. If this is accurate do your calculations take this into account?
Thank You.

#28 Chaddywack on 01.06.18 at 5:58 pm

And all the times recently that real estate was cheaper in Vancouver (e.g. mid 90s to about 2002) I notice rates went up…….interesting correlation….why doesn’t the media pick up on this…

However this time it’s apparently different because of unlimited Chinese money!

#29 Lost...but not leased on 01.06.18 at 6:00 pm

Re: Alberta Minimum wage…

It ain’t at $15/hour yet(not till Oct. 2018)..so current increases likely minimal effect.

If the job growth in service sector, does this perhaps indicate job losses in higher paying sectors ? We had a lead up since Sept. increase to Xmas season…now is the time SHTF in economy. Not that I am against such a wage increase…but the devil is always in the details.

PS: Funny how “$15/HOUR” minimum wage mantra resonates throughout North America(ie Canada and USA)……

#30 Ryan Lewenza on 01.06.18 at 6:04 pm

Penny Henny “I thought I read somewhere that tax cuts for tech companies are already at rates lower than 35%. If this is accurate do your calculations take this into account?”

My $10 estimate for an increase in S&P 500 is for the entire index and therefore all 11 GIC sectors. Some companies/sectors will benefit more/less than others from tax cuts. – Ryan L

#31 InvestorsFriend on 01.06.18 at 6:04 pm

How an RRSP can be Tax free

#147 LivinLarge on 01.06.18 at 12:48 pm responded to me saying:

there’s a “Friendly” with a DB pension promoting the fallacies of RSP over TFSA, I figured I would inject some sanity here. BTW, Fearless Leader outlined this issue in the last week or two so what I am about to illustrate is in reality, redundant.

**************************************
I won’t disagree with your math the way you did it with an equal RRSP and TFsSA investment and then the RRSP refund invested. (But try it with the RRSP refund invested in TFSA and see where you get)

Nor do I disagree that TFSA could be far better for those that will be hit with old age clawback.

But consider the following math that shows that an RRSP can actually grow money tax free given certain assumptions. Bear with me.

You put $10,000 into RRSP and get say a 40% $4000 refund. Your net cost is only $6000.

Say you only had $6000 to invest but could borrow $4000. Your choice here is $6000 in TFSA or $10,000 in RRSP with $4000 borrowed and then paid back with the refund. Your net cost is $6000 in each case. (I have ignored the small amount of interest on the short-term $4000 loan)

At the same rate of return, the $10,000 RRSP will always have 66.7% more money in it for the same net cost of $6000 but if it is eventually taxed at the same 40% it will grow after tax to the exact same dollar amount as the TFSA. If it equals the TFSA which is tax free then guess what? There was zero tax on the growth of your net cost $6000 in the RRSP.

That is the math and I think it is instructive.

Never think of the refund as adding to your net worth or free money. Think of the refund as the government funding a portion of “your” RRSP.

In my example the government funds 40% of “your” RRSP and gets back 40% at withdrawal. Your 60% share grew tax free.

People who spend their RRSP refund on a vacation are effectively spending money that represents the taxman’s share of “their” RRSP.

Now you are absolutely correct that if marginal tax rate is higher at retirement given old age clawback and other income, the TFSA would be better.

I think we both agree, maximise both TFSA and RRSP
if you can.

Importantly I think the math of both RRSP and TFSA should be understood and in general the math of the RRSP is not understood.

People who resent the tax on “thier” RRSP mostly forget the government effectively funded say 40% of the RRSP through the refund. Viewed that way the RRSP was only ever 60% yours. In accounting statements assets should always be valued after tax. Personal financial planners fail to tell people that an RRSP is worth maybe 60 cents on the dollar. But it also only costs about 60 cents net of refund on the dollar so all is well if the math is understood.

I just hope the penny can drop here for at least a person or two. I have done the math and I like to share the results.

#32 Lost...but not leased on 01.06.18 at 6:18 pm

# 24 Trump

Re: Pipeline…I’ve looked at the issue and unless we are refining(ie added- value) the raw resource( as opposed to simply shipping the raw resource aka thick -sludge bitumen), the issue smacks of desperation by Alberta.

Re: Weed…again..a very inconsistent debate = DANGER!!!
IMHO, Turdeau simply wanted to cater to the rather naive younger vote(and old hippies)just like his olde man T1. Local police forces seem to be gearing up to add DUI offences via Weed in addition to alcohol…aka what Turdeau legalizes does NOT imply immunity at lower law enforcement levels…again DANGER !!!

I’ve maintained that in the end what will occur is legalized weed (probably GMO’d for consistency, etc)will be sold at large chains, not Ma and Pa shops.

Careful what you wish for….morseo in the balkan provinces of Canuckistan.

#33 n1tro on 01.06.18 at 6:31 pm

#22 Andrew Woburn on 01.06.18 at 5:37 pm
In case you’ve decided to bet on Bitcoin instead –

– The four glaring flaws dulling Bitcoin’s shine

https://www.theglobeandmail.com/globe-investor/the-limitations-of-bitcoin-are-becoming-abundantly-clear/article37516285/
————————-
Enlightenment me since I don’t have a subscription to the globe and mail, do they have articles warning about the limitations of say Tesla or Amazon given its stock price or is this altruistic article only for Bitcoin which is over $17,000USD right now?

#34 Blackdog on 01.06.18 at 6:33 pm

@Penny Henny #21
re: “I was going to plus one this but I see that SCM is back.
Good for you Garth. Coming from the dork that I am that’s a big compliment. ”

Glad you liked my comment. I half expected to be spanked for it, so was relieved to receive the opposite from a fellow dog!

But before you get too excited praising an apparent change of heart by the gracious host of this “pathetic blog”, please keep in mind that today’s entry is not his.

But I am still in control. Watch it. – Garth

#35 jess on 01.06.18 at 6:36 pm

22 Andrew Woburn on 01.06.18 at 5:37 pm

store your bitcoin offline?
https://qz.com/1103310/photos-the-secret-swiss-mountain-bunker-where-millionaires-stash-their-bitcoins/

======
…”in the long run, corporations expect to benefit from lower rates.

But the switch has led many companies to revalue deferred tax assets, which are tied to deductions for past losses and can be used to reduce future tax payments.
Morgan Stanley to Take $1.25 Billion Hit for U.S. Tax Revamp (5 Jan 2018)
https://www.bloomberg.com/news/articles/2018-01-05/morgan-stanley-sets-aside-1-25-billion-for-u-s-tax-revamp
Deutsche Bank to take €1.5bn US tax hit (5 Jan 2018)
EU’s new tax evasion rules become effective (5 Jan 2018)

====
Coca-Cola to sell smaller bottles at higher prices in response to sugar tax

#36 InvestorsFriend on 01.06.18 at 6:37 pm

S&P 500 Earnings Forecast

Ryan, do you have any comments on GAAP forecast versus operating earnings.

From an S&P 500 file linked here I have the following:

http://ca.spindices.com/documents/additional-material/sp-500-eps-est.xlsx

2017 GAAP as reported earnings forecast $114.45

2017 operating earnings forecast $124.99

2018 as reported (GAAP) forecast $ 136.75

2018 operating earnings forecast $145.79

Now, given 500 companies why not use the GAAP forecast on the basis that EVERY year on 500 companies there are some unusual non-operating losses so they are not unusual?

And does the historic P/E of the S&P 500 that others use refer to historic GAAP earnings or operating?

Either way the forecast is clearly for big earnings growth in 2018 and that is on top of fairly epic around 20% earnings growth in 2017.

But at 2743 we are at 24 times 2017 reported GAAP earnings (assuming forecast is correct as we are near year end). Operating 2017 P/E at 21.9. So we are pricing in a lot of earnings growth and or interest rates staying low?

I like to use GAAP earnings to be conservative and because the historic P/E going way back on GAAP earnings is around 16. I also use achieved rather than forecast earnings and historic P/Es tend to be on achieved earnings.

At end of 1999 GAAP S&P 500 PE was 30.5 and operating P/E was 28.4. Did not work out well.

At end of 2007 we had GAAP P/E at 22.4 operating at 17.8. Different situation but it did not work out well to buy S&P 500 at end of 2007.

This time is different?

#37 Loonie Doctor on 01.06.18 at 6:37 pm

#31 Investor’s Friend

I totally agree with you about counting RRSPs at a discount in your networth. That is what I do. Same with my house – I think of it in terms of after commissions etc and I actually don’t count it in my networth since it costs rather than generates money (in general) and is relatively illiquid. I track this way to have a sense of where I sit if I had to liquidate everything in a hurry to live off of it. It is probably an underestimation since there are ways to melt down your RRSP and decrease the tax burden. However, it serves the purpose.

I also track networth as the post-tax value accessing my accounts at my planned retirement draw rate. This seems to me the best way to get a sense of where I stand on my road to financial independence at my desired lifestyle income. This is the one I care about.

If the purpose is to shut up some obnoxious braggert trying to impress with their networth or to feel rich, then the more commonly used method of pre-tax, including your home equity is best to maximize the impressiveness of your financial schlong. I have never revealed this ine in public, by the way. I usually just get chuckle out of people who do that. People who see or know me would have a hard time guessing this value. Stealth wealth is the way to go. Only my wife has seen it. We are happily married.

Lot’s of ways to look at net worth depending on your goals. I really enjoyed your exchanges yesterday/today. I steered clear of commenting due to all of the mud flying around on other threads.

Cheers
-LD

#38 InvestorsFriend on 01.06.18 at 7:03 pm

#34 Loonie Doctor on 01.06.18 at 6:37 pm responded kindly to me

Loonie Doctor is clearly a smart fellow especially in showing his financial schlong to his wife only.

#39 Seamus on 01.06.18 at 7:28 pm

HNY
That’s certainly an optimistic outlook for 2018, Ryan. Is that Irish ? Would your mother be Rosie O’Donnell from Galway by any chance? I don’t think she’d approve of you wearing the face off Trump, truth be told. Imagine the poor people at the White House having to work for a boss who raves like a lunatic on the internet. Can you not find some honest work over there?

#40 Loonie Doctor on 01.06.18 at 7:29 pm

#38

Not so sure about that. If we got divorced, I could income split with her more readily again ;)

#41 mike from mtl on 01.06.18 at 7:35 pm

#31 InvestorsFriend on 01.06.18 at 6:04 pm
How an RRSP can be Tax free
//////////////////////////////////////////////////////////////////////////////////////////////

Agreed as always, it’s complicated.

Whilst an RRSP can be viewed as a double tax; for those who’s tax bracket isn’t far from the lowest it actually is. Making less than say 50k, don’t ever open an RRSP, only TFSA then non-reg IMHO. However there are reasons for example IRS no withholding at source and generally high contributions.

In my case best to use all three, tfsa non-reg and rrsp. Whilst tfsa is amazing it’s laughably small, rrsp gets favourable treatments plus rebates. Then non-reg the simplest in terms of taxation cap-gains and dividends are pretty efficient and can be as large as you’ve got, six figures, seven, no problem. Melting down RRSP > RIF is over complex and not tax-efficient (income from already after tax cash).

It’s no wonder offshore is so widespread.

#42 For those about to flop... on 01.06.18 at 7:38 pm

Last week my partner Doug Rowat (aka Robaxacet)-Ryan.

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

Hey Ryan,have you started calling Doug Robax around the office yet?

I knew you would come around to my way of thinking.

Since we have just started a new year, are you ready to forgive me for my infamous doctors office joke?

I don’t mean no harm,just like when I call you InfLewenza.

I get called Flop and now I’m all insecure and have stocked up on Viagra.

I once or twice took some blowback for your nickname but I did check with your boss off blog if you were o.k with it and he said yeah.

Anyway ,I don’t really have anything new to support your post but maybe if you would like to have a quick look at a howmuch article that I ran the other day.

Back in Vancouver and missing that bright thing in the sky already…

M43BC

https://howmuch.net/articles/stocks-prices-2017-bitcoin

#43 ShawnDesman on 01.06.18 at 7:43 pm

Has Ryan Lewenza ever been bearish the stock market? Yes, I get it – *the trend is your friend*, well until it isn’t.

But these Ryan Lewenza types – their livelihood depends on an upward trending stock market. Do they ever change their bullish tune? I think most of these types were likely screaming buy the dip all the way down during the past times when the bubbles burst (2001 and 2007).

A safer metric one can use to buy stocks is when the 10-12 year forward horizon returns aren’t 0 to negative. In other words when valuations are screaming buy.

#44 For those about to flop... on 01.06.18 at 7:43 pm

Ryan , I forgot to mention that I call your boss Thor Turner.

Not because people are constantly confusing him with Chris Hemsworth because of his good looks,but because when he feels necessary he drops the hammer on people…

M43BC

#45 Ryan Lewenza on 01.06.18 at 7:43 pm

InvestorsFriend “Ryan, do you have any comments on GAAP forecast versus operating earnings.”

I prefer GAAP earnings and agree with you that with 500 companies in the index that companies from time to time will have unusual items so why not just use GAAP. But the reality is that the industry uses operating so for consistency I just use operating. No benefit from citing GAAP earning and valuations when everyone else is using operating. The historical average P/E of 16x is based on trailing operating earnings. Any way you slice it stocks are expensive. But two key pushbacks. First is that the low interest rate and inflation environment can justify a higher P/E. Second, valuations alone should not be used to determine strategy/outlook. That’s why I incorporate technical analysis into my investment approach. If you just relied on PEs you’ve missed an incredible ride and have sit out the that last 1000 points on the S&P 500. – Ryan L

#46 Ryan Lewenza on 01.06.18 at 7:47 pm

For those about to flop “Hey Ryan, have you started calling Doug Robax around the office yet? I knew you would come around to my way of thinking. Since we have just started a new year, are you ready to forgive me for my infamous doctors office joke?”

I don’t take myself too seriously so I didn’t mind the influenza crack. And I’ve heard it before so no worries. You and I are just fine. As long as you believe in every market call and viewpoint I provide. – Ryan L

#47 T on 01.06.18 at 7:49 pm

#1 Screwed Canadian Millenial on 01.06.18 at 2:51 pm

The opinion piece you reference does not account for are the jobs that would have been created had the minimum wage not increased.

Here is something for you to read over.

https://www.fraserinstitute.org/sites/default/files/raising-the-minimum-wage-misguided-policy-unintended-consequences.pdf

#48 Hypatia on 01.06.18 at 7:53 pm

HNY Ryan,
What do you think the unprecedented increase in debt worldwide portends for our future? I’ve recently been analyzing the boom/bust cycles since the Sumerians went off the clay standard and it seems were overdue for a reckoning.

When the dust settles on all the IOU’s outstanding, the granaries on the Rhine will barely contain enough to sustain the newcomers. The Greek’s till has been empty for a long while, and the Roman’s bills are past a reasonable due date. Even the boomers are living on borrowed time.

The New World peaked 50 years ago, and the Guardians of the Idiocracy are huddled on the Potomac, wondering what to do next. Is this really a good time to invest?

#49 dakkie on 01.06.18 at 7:53 pm

Housing Begins to Crash – Australia – New Zealand – London
http://investmentwatchblog.com/housing-begins-to-crash-australia-new-zealand-london/

#50 akashic record on 01.06.18 at 7:53 pm

But I am still in control. Watch it. – Garth

Censorship is the petty weakness of believing that one can control and make disappear the energy of a thought.

It never worked, it will never work.

Practicing it amplifies the very energy that you intend to make non-existent, whether your excuse is ownership, political power, perceived moral high-ground or anything else.

Only the energy of a thought can interact with the energy of an other thought. If you have one.

There are enough polluted pools on the web. I have no interest in creating another. You are free to leave. – Garth

#51 LivinLarge on 01.06.18 at 8:15 pm

“You put $10,000 into RRSP and get say a 40% $4000 refund. Your net cost is only $6000.”…oh hell, why no go all in an debate gnomes and fairies.

Such a small proportion of Canadians drop $10K into an RSP we might as well talk about Bigfoot as well while we’re at it. On top of contribution limits for RSPs being governed by income, not many folks have $10K free cashflow even with the requisite gross revenue.

So…once upon a time in an enchanted forest.

Let’s just stick to the reality network.

#52 akashic record on 01.06.18 at 8:22 pm

There are enough polluted pools on the web. I have no interest in creating another. You are free to leave. – Garth

You create your own thoughts – and you are responsible for your own thoughts. Like every other human being.

Since you can not prevent what an other person thinks, you are not responsible for it.

I’m responsible for this site which carries my name. You are free to leave. You are not free to lie in the weeds and moralize. – Garth

#53 OttawaMike on 01.06.18 at 8:48 pm

Ryan,
Where does the ticking time bomb–as Turner coined him,Trump come into all these prognostications?

After all he us a very stable genius who is like very smart.

#54 Tony on 01.06.18 at 8:58 pm

Re: #1 Screwed Canadian Millenial on 01.06.18 at 2:51 pm

Things will be quite different in Ontario as Albertans won’t work any job that pays under 20 dollars an hour. Most would rather collect welfare as the cost of living is basically free in Alberta compared to Ontario. Jobs losses and more job losses will be seen in 2018 in Ontario. Hundreds of thousands of jobs will be lost in Ontario due to the rise in the minimum wage.

#55 ImGonnaBeSick on 01.06.18 at 9:37 pm

#51 LivinLarge – maybe you should try not livin’ so large, try savin’ large instead.

#56 InvestorsFriend on 01.06.18 at 9:45 pm

S&P 500 earnins and P/E ratio

#45 Ryan Lewenza on 01.06.18 at 7:43 pm responded to me:

InvestorsFriend “Ryan, do you have any comments on GAAP forecast versus operating earnings.”

I prefer GAAP earnings and agree with you that with 500 companies in the index that companies from time to time will have unusual items so why not just use GAAP. But the reality is that the industry uses operating so for consistency I just use operating. No benefit from citing GAAP earning and valuations when everyone else is using operating. The historical average P/E of 16x is based on trailing operating earnings.

*************************************
Thank you for the friendly and detailed response.

So you also like GAAP earnings for the S&P 500.

It certainly makes sense that analysts using operating earnings should compare that to historic P/Es based on operating. I always thought most of the historic figures that float around were based on historic trailing GAAP P/Es.

My own S&P 500 data goes back to 1949 and shows GAAP P/E average at 17.6. But I collected the older data 15 years ago or more and I am not 100% sure it was GAAP.

My Dow data I got from Dow Jones years ago (and then I updated later years) goes back to 1929. When I exclude a couple of very high outliers due to earnings very low, the average is 15.7 and that I am pretty sure is all GAAP.

But you would have access I am sure to better data.

P/Es have been relatively high going back to 1980 or so and especially high most years since about 1990.

Well, I guess I will have to wait and see if Buffett decides the S&P 500 P/E is too high at some point. You are in agreement with Buffett when you say that low interest rates drive high P/Es.

#57 InvestorsFriend on 01.06.18 at 9:54 pm

Wither Competition??

People seem to believe that companies have no trouble passing along cost increases to customers to keep profitability ratios relatively stable.

Why has there been almost no mention that competition will force corporations to pass some of the income tax savings along to customers? Surely a good portion of the S&P 500 companies face competition. In my experience almost every company claims it operates “in a highly competitive environment”. Do they in fact face almost no competition such that they can just pocket the income tax savings? No competitor will lower prices due to this lower cost? Forcing others to do so to remain competitive. If so, we really do need a reset to our capitalist system.

If we have reached the point of the S&P 500 oligopolists and monopolists then we need to break up the large companies. Anti-trust as was done in the past.

#58 Phylis on 01.06.18 at 10:06 pm

#51 the enchanted forest is a good place to be. The journey from reality to enchantment is possible. Believe.

#59 Big Daddy on 01.06.18 at 10:47 pm

Don’t believe the Stats Can jobs numbers for a second…..all phony. At a time when Trudeaus pols are plumetting and NDP fighting for seats both sets if pols are higher civil servants from pools of Bloc voters. These are new debt jobs not GDP jobs.

#60 InvestorsFriend on 01.06.18 at 10:53 pm

Be Enlightened

#58 Phylis on 01.06.18 at 10:06 pm said:
#51 the enchanted forest is a good place to be. The journey from reality to enchantment is possible. Believe.

***************************************
Indeed so. And the journey from misinformed to enlightened is also possible. But it is surely a road less traveled for ’tis easier to cling to incorrect but comfortable views.

#61 Lost...but not leased on 01.06.18 at 11:05 pm

My olde neighbourhood….

I previously mentioned I was Executor for my Dads’ estate…

The neighborhood has an OCP for multi – family development.Area was a real sleeper as a developer bought 7 properties in 2015 for $X each on average . We had a great realtor, did our homework and sold in 2017 to another developer for approx. $2X.

Recently another realtor got some listings and asking price is $2.5 X.

A few doors down our realtor has another estate sale at approx. $2.2 X. However, unless they can assemble 3 lots minimum no developer is interested. One owner(
….who I know, is elderly and both they and their spouse have serious health issues..) in the potential assembly won’t sell for that…seems to think its worth $2.5 X.

IMHO, if they got 3 properties as an assembly , they could get maybe $2.1 X each. The RE market IS tanking, speculation is over….only sharp pencils and falling knives in the forecast.

#62 Lost...but not leased on 01.06.18 at 11:47 pm

Flop….

FYI …Just came across this party named “CorruptGregor”…they are on Twitter…but regardless a wealth of information on flip attempts in Metro Vancouver..

…..lists names as well as original purchase price(majority in 2017) and current asking price.

#63 Crazyfox on 01.07.18 at 12:14 am

The problem as I see it with your assessment Ryan, is in believing that the Trump administration is good for the market place. Its just my opinion here, but here’s my logic. While low corporate tax rates are pro growth without question, a big part of how these rates are paid for comes from 4 sources:

1) 13 million people thrown off healthcare and the end to coverage for pre-existing conditions biting into disposable income for the majority of Americans. Health insurance, already high by world standards, is expected to go up 10% annually, possibly more.

2) Federal spending shifts from Fed to state/local in key areas, putting more strain on State and municipal budgets. The consequence is more state/municipal debt, potentially higher bond yield pressure.

3) Increased federal debt. Tax cuts to corps and the rich, even with cuts to medicare and shifting fed spending to state/local will add 1.5 trillion (150 billion annually) to the deficit. The consequence is a cheaper dollar and higher interest rates, adding to inflation.

4) Hard times. Most of Trump’s policies are good financially for the short term, bad for the long term. Major cuts to the state department, deregulation of environmental protection, banking, healthcare, well, read the link:

https://www.brookings.edu/interactives/tracking-deregulation-in-the-trump-era/

These are all pro growth in the short term but these regs existed prior for a reason. Short term gain, long term pain as they say, to end them. Its not just regs, its the general tone internationally that the U.S. has now in trade. The U.S. invented globalization. Now protectionism, deregulation, anti green energy, anti immigration and inflationary tax cuts to corps and the rich is the way to go? For the Koch bros maybe as corp tax cuts, oil burning and a cheaper dollar works for them but who else does this really work for? This old breed of Republicans under Trump is going back in time with energy, it will lead to a cheaper dollar, inflation, higher interest rates, higher health insurance and quickened environmental degradation all of which lead to less disposable income spelling hard times in the long run for North America. It might be good for a few years… maybe but bad for the long term and I haven’t touched on the biggest risk of all that the Trump administration poses on the markets. Its Trump himself.

This Russian investigation is for real. When Muller first looked at the file on Trump/Russia, on the first day he hired the nation’s top U.S. attorney. Then he hired 16 more, all with backgrounds on money laundering. Of key interest is a $ 300 mil loan from Deutschebank to Trump when no other institution would touch him and its been rumored that the loan was backed by a state Russian controlled bank. The link speaks for itself.

https://www.yahoo.com/news/much-trump-worth-mueller-apos-104002588.html

So here’s what I think will go down. Attorney general Jeff Sessions who has recused himself from Muller’s Russia investigation will get fired sometime over the next 60 days. This will pave the way for Trump to replace him with someone like Scott Pruitt who will end the Muller investigation. From there… it is best to watch the movie “Mark Felt, the man who brought down the white house.” Its a bit dry to watch, but a good historical account on what took down Nixon. It wasn’t the investigation, it was the leaks:

https://en.wikipedia.org/wiki/Mark_Felt:_The_Man_Who_Brought_Down_the_White_House

How “safe” are the markets if it can be proven that the Trump campaign conspired with the Russian government in a DNC hack and propaganda campaign to get Trump elected and that obstruction of justice is the least of his worries? What kind of correction is possible…. 20%… 30… 40% at these bubbly valuations?

So there we have it, Ryan. You are calm, predicting a conservative 17% year from the S & P. Me… I’m calm for the next 8 weeks or so in this market place and jumpy from there, looking for a short or two in the spring and then waiting it out, looking for the S & P to end the year down 30% give or take, courtesy of a market bubble coupled with our made for Hollywood Trump administration epic in real time. Conflicting views and time tells all, just remember to bring popcorn!

#64 For those about to flop... on 01.07.18 at 1:18 am

Pink Snow falling in Vancouver.

Featured these guys a couple of times last year.

They celebrated the New Year by taking this house off the market and taking yet another 200k off and are now down to the axles at 4.58.

As you can see by my notes from before its an old house and they are on the hook for 4.5 million ,the hit on expenses and opportunities lost could be close to 350k but that is only if they could get close to ask in a deteriorating market.

Originally chasing 5.38 then 4.98 the 4.78 now 4.58

I don’t see it happening for these guys.
If you have that type of money to throw around ,you would be better to buy the one on Waterloo,vacant,better location,park then water in front of your property.

Ahh, who am I kidding they’re both probably hooped.

Trying to be more positive this year ,but all the evidence I uncovered last year suggests that 2017 was only Act One ,Scene One…

M43BC

$$$$$$$$$$$$$$$$$$$$$$$$$$

They paid 4.5 for this land with a 95y.o house ,were asking 4.78, now 4.58

3811 14th Ave Vancouver

Mar 1:$5,380,000
Mar 9: $4,980,000
Change: – 400000.00 -7%

https://www.zolo.ca/index.php?sarea=3811%20W%2014th%20Avenue,%20Vancouver&ptype_condo=1&ptype_house=1&filter=1

https://evaluebc.bcassessment.ca/Property.aspx?_oa=QTAwMDAwMDM2MQ==

&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

1650 Waterloo Street, Vancouver paid 5.39 ass4.74 now asking 5.19

Jan 12:$5,900,000
Jun 20: $5,698,000

Change: – 202000.00 -3%

https://www.zolo.ca/vancouver-real-estate/1650-waterloo-street

https://www.bcassessment.ca/Property/Info/QTAwMDAwMDVEWA==

#65 barelybear on 01.07.18 at 2:01 am

I have yet to see an advisor or analyst correctly predict a bear market or a major market downturn. It scares off clients. Just sayin!

#66 Smoking Man on 01.07.18 at 2:04 am

Ryan your thoughts on Wynee and T2 who have never owned a biz giving lectures to small biz.

Teachers who have zero risk life experience. You don’t have to comment. I totally understand the witch hunt that’s going on out there.

My gut says you got alot to say. But you have a brain and will keep quite till your grand kids experance a real life Venezuela moment.

I hate teachers with no balls.

God bless Jordan Patterson and Lindsay Shepard. Elephant nuts when ever I think of them.

Daniel Dale. A smiley dangling snot goo.

Make a stand or give me the page in two weeks.

#67 Bankish on 01.07.18 at 3:06 am

#51 LivinLarge on 01.06.18 at 8:15 pm
“You put $10,000 into RRSP and get say a 40% $4000 refund. Your net cost is only $6000.”…oh hell, why no go all in an debate gnomes and fairies.

Serious people who wish to get ahead in life plan for a future of being debt free and asset rich to the best of their ability and circumstances.
I always put my full contribution amount(limited as it was because I had a pension) into a spousal RRSP until my last 6 working years. That was when I decided I was going take the pension buyout and saw I needed room to hide the cash portion of the settlement from taxation.
As a single wage family I never had extra cash flow but I still did it with the help of a lot of overtime and us living within our means.
The trick to it all is to invest your money for the long term. In my case blue chip dividend stocks have always been my favorite and for the last 17 years Canadian bank stocks only. It seems to have paid off as I am still living the same life style(plus lots of trips) as when I was working and my net worth is growing quite fast.
Your future is what you make it.

#68 Under the radar on 01.07.18 at 5:53 am

Loonie Doctor et al,
Agree completely about excluding primary residence and using post tax values to give a true sense of net worth.

#69 earthboundmisfit on 01.07.18 at 6:00 am

Ignore the geopolitical risk at your own peril.

#70 Gravy Train on 01.07.18 at 6:40 am

#56 InvestorsFriend on 01.06.18 at 9:45 pm
“Well, I guess I will have to wait and see if Buffett decides the S&P 500 P/E is too high at some point.”

He already has! Buffett wrote an article for Fortune back in 2001 in which he first described what’s now become known as the Buffett Indicator.
http://archive.fortune.com/magazines/fortune/fortune_archive/2001/12/10/314691/index.htm

He wrote, “… If the percentage relationship [between the total market cap and GNP] falls to the 70% or 80% area, buying stocks is likely to work very well for you. If the ratio approaches 200%—as it did in 1999 and a part of 2000—you are playing with fire.”

According to the Federal Reserve Bank of St. Louis, as of 2017 Q2, this ratio is 152%. (Note: GDP is now more widely used than GNP.)
https://fred.stlouisfed.org/graph/?g=qLC#0

According to the latest (2017 Q3) Berkshire Hathaway financials, Buffett’s asset mix is 54% stocks, 38% cash, and 8% bonds.
http://www.berkshirehathaway.com/qtrly/3rdqtr17.pdf

For comparative purposes, his asset mix (as of 1997 Q3) was 77% stocks, 22% bonds, and 1% cash.
http://www.berkshirehathaway.com/qtrly/3rdqtr97.html

I think that speaks volumes, don’t you?

#71 att on 01.07.18 at 6:51 am

Thanks for the predictions based on market momentum. Whatever the market has done in the past will continue in the future. It is nice to hear you are encouraged by what you are seeing around the world. Can’t wait to beat the market based on these predictions!. Thanks again bro

#72 NoName on 01.07.18 at 8:52 am

who is stealing googles bike, homles not…

http://www.siliconbeat.com/2018/01/06/google-loses-up-to-250-bikes-a-week-oracle-worker-even-helps-herself-to-them-report/

Ensuring that only company workers are riding the “Gbikes” is not particularly straightforward: some Googlers don’t exactly fit the stereotype of the Silicon Valley techie. Company transportation executive Jeral Poskey told the paper he once took action when he saw what appeared to be a homeless woman on a commandeered Google bike.

“If I could describe her, you would agree with me,” Poskey said. “She looked all panicked, and then she showed me her Google badge.”

#73 I’m stupid on 01.07.18 at 8:58 am

Stan Brooks

Inflation is like recessions, very personal. If you lose your job during a recession it feels like a depression. If you remain employed you don’t notice except for the constant crying by those that lost their job. Inflation works the same way, your personal consumption determines the actual inflation rate. One person can experience 4-5-6% inflation while another person is experiencing deflation. With that said I’m not disagreeing with you regarding the CPI, I think more goods should be included in its calculations.

#74 When Will They Raise Rates? on 01.07.18 at 9:02 am

BULLISH!!!

*disclaimer*

Now it’s not all roses, and there are a number of things we are monitoring that could put this economic expansion and bull market at risk. In no particular order, we see high equity valuations, length of this economic expansion and bull market, central bank tightening, a flattening of the yield curve and political risks as factors that could disrupt this bull market. Moreover, we’ve gone the longest period in history without a 3% correction so we are due for a pullback in the coming months.

https://memegenerator.net/img/images/600×600/16188185/sweating-pepe.jpg

#75 Big Daddy on 01.07.18 at 9:03 am

Yeah…..I called bullshit on Stats Can (Trudeau propaganda) jobs numbers…..and see my old friend BNN has issued the same statement. ‘The numbers seems rather skewed’…..says the chief economist interviewed…..a nice economist way of saying ‘you effing liars’. Hiring for the civil service in voting blocs is not jobs it’s pandering. I’m obsessed with the truth……why aren’t you?

#76 FLHTK on 01.07.18 at 9:07 am

Good article, one of your better ones! I’m glad to see your excited about another good year of investing!

#77 Stop Making Sense on 01.07.18 at 9:08 am

#63 Crazyfox on 01.07.18 at 12:14 am
The U.S. invented globalization.
————

Agree with everything else, but actually it was the Phoenicians (1500 BC) who invented globalization. They did a booming business in the Med. until 539 BC when the Persian (rug) King, “Cyrus the Great” grabbed power. Makes ya think, eh?

#78 Ryan Lewenza on 01.07.18 at 9:14 am

Hypatia “What do you think the unprecedented increase in debt worldwide portends for our future? I’ve recently been analyzing the boom/bust cycles since the Sumerians went off the clay standard and it seems were overdue for a reckoning.”

Well I don’t much about the Sumerians and them going off the clay standard, but my take on the large increase in debt is 1) economic growth will be lower relative to the last few decades, and 2) longer term we could potentially see some type of global debt write down or major cuts to government pensions like social security. Either way I don’t have a doomsday view of the large global debt problem and believe we will figure it out. Yes there will be some challenges (eg Greece) as we deal with it but it won’t impact our day to day living that much nor stop human progress. – Ryan L

#79 Ryan Lewenza on 01.07.18 at 9:22 am

OttawaMike “Ryan, Where does the ticking time bomb–as Turner coined him,Trump come into all these prognostications?”

Trump is one of the “political risks” I referenced that could impact/derail this bull market. I’m very concerned about Trump’s erratic behaviour and the ongoing Mueller investigation. I believe more is going to come out which at a minimum will impact Trump’s ability to govern and advance his agenda and at worst lead to impeachment (possible but low probability given Republican control). This is partly why we’ve reduced our US exposure in recent months. He is a big wildcard right now. But any weakness that may come out from Trump investigation will likely be a buying opportunity. – Ryan L

#80 NoName on 01.07.18 at 9:30 am

read

https://news.vice.com/en_us/article/8xvm93/a-crypto-currency-based-on-a-dog-meme-is-now-worth-over-dollar1-billion

#81 Ryan Lewenza on 01.07.18 at 9:31 am

Crazyfox “The problem as I see it with your assessment Ryan, is in believing that the Trump administration is good for the market place. Its just my opinion here, but here’s my logic. While low corporate tax rates are pro growth without question, a big part of how these rates are paid for comes from 4 sources”

I agree with many of your points and covered some of those in a recent blog where I provided my opinion on aspects of the tax plan. http://www.greaterfool.ca/2017/11/11/death-taxes/. But our outlook is for this year where I think we get a boost from the tax plan. – Ryan L

#82 Words o' the Day on 01.07.18 at 9:32 am

complacency vs complicity

Ryan, maybe Google those words lest you start espousing on Hitler’s good points.

“It’s not enough that we do our best; sometimes we have to do what’s required.”
Sir Winston Churchill

“My Twitter has become so powerful that I can actually make my enemies tell the truth.”
Mr. Edward Smallhands

#83 Ryan, u were way too early on 01.07.18 at 9:35 am

decreasing USA exposure and increasing Canadian exposure

and for 2018, the S&P will trump (no pun intended!) the TSX yet again

#84 crowdedelevatorfartz on 01.07.18 at 9:43 am

@# 50 akashic skipping record

The gaseous emanations from the rear end of a gnat would hold more value that your plagarized quotes.

Let me guess, your $60 k university debt for a bachelor of Art ( minoring in Psychology) was all for not?

#85 Momma Said on 01.07.18 at 9:55 am

#52 akashic record on 01.06.18 at 8:22 pm

You create your own thoughts – and you are responsible for your own thoughts. Like every other human being.
——
I’m responsible for this site which carries my name. You are free to leave. You are not free to lie in the weeds and moralize. – Garth

********
My momma always said “Keep your thoughts to yourself.” If you don’t like it here, immigrate to Alaska. That’s why it’s there, ya crazy-a$$ed nihilist.

#86 Gravy Train on 01.07.18 at 10:03 am

#44 For those about to flop… on 01.06.18 at 7:43 pm
“Ryan, … I call your boss Thor Turner … because when he feels [it’s] necessary he drops the hammer on people….”

Garth just refuses to suffer fools gladly—especially greater fools! :)

#87 Made to Last on 01.07.18 at 10:35 am

Made to Last

My issue with Stats Can and all the other fableists is how inflation measures ignore the real “actual” costs of goods. Appliances cost about the same, but their lifespan is less than half what they were before. Who can afford to keep a car past the warranty period? Second-hand story, but apparently an actual “job” at a now-defunct CDN bearing company was to ensure wheel bearings lasted just past the warranty period. Fortunately, they just supplied the Big Three.

Houses are ticking time bombs as well. A lad in the trades, whose veracity is unquestionable as he is entrusted with my daughter’s chastity, reports that the only tools on-site are staple guns and cigarette papers.
Don’t get me going on footwear, and I hear the price of Maryjane is going up too. Only Rex Murphy is actually cheaper to buy than he once was.

#88 Bytor the Snow Dog on 01.07.18 at 10:42 am

Stock market! Who cares about the stock market?

Let’s talk about something important. The title pic. I see a dog on the right, but what in Dog’s name is that thing on the left? If that is a “dog” then we’ve truly lost our way!

#89 Rooster on 01.07.18 at 10:50 am

What has become of the Millenial Falcon? He used to strut around here like he rented the place. Did the landlord post “No pussy cats allowed” ?

#90 technical analysis? on 01.07.18 at 11:18 am

Trump is one of the “political risks” I referenced that could impact/derail this bull market. -Ryan
_________________________________________

this bull market is based on negative real rates, and central bank money printing. Trump could be impeached, assassinated, brought down by any type of scandal and the market would carry on.

Trump is irrelevant.

i wouldn’t worry about this bull market until the fed jacks up rates to much much higher levels.

#91 Russ on 01.07.18 at 11:27 am

Bytor the Snow Dog on 01.07.18 at 10:42 am

Let’s talk about something important. The title pic. I see a dog on the right, but what in Dog’s name is that thing on the left? If that is a “dog” then we’ve truly lost our way!
=============================

Hey Bytor,

Try hedgehog. Cute eh.

A hedgehog is any of the spiny mammals of the subfamily Erinaceinae, in the eulipotyphlan family Erinaceidae.

#92 LivinLarge on 01.07.18 at 11:38 am

Bankish “Serious people who wish to get ahead in life plan for a future of being debt free and asset rich to the best of their ability and circumstances.” yea but that isn’t what the reality is for the majority of Canadians living little more than month to month. I agree that long term planning is required to facilitate long term success but such a small % of Canadians plan beyond next year’s vacation. Sad but t also real.

I agree with the bank/dividend focus, you can never, over a 5 year period at least, go wrong buying and holding bank shares and Driping the divs. And if 2018 markets move as many are expecting then expect a split at at least two of the five this year.

#93 For those about to flop... on 01.07.18 at 11:40 am

#62 Lost…but not leased on 01.06.18 at 11:47 pm
Flop….

FYI …Just came across this party named “CorruptGregor”…they are on Twitter…but regardless a wealth of information on flip attempts in Metro Vancouver..

…..lists names as well as original purchase price(majority in 2017) and current asking price.

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

Hey Lost , I checked it out.

Some of the cases I have presented here and others I have not.I will write the absent ones down so we can see what happens with them.

As far as presenting peoples names ,particularly Chinese ,I have no interest in that. I was always more interested in showing the market trend rather than who was buying the property.

As I have disclosed here before, I have had a front row seat on luxury housing in Vancouver the last decade and a half and all the developers no matter the ethnicity , and all the buyers either local or foreign are as guilty or as innocent as each other depending on your view of things.

I add a bit of colour commentary to the listings for two main reasons.One ,to try not to bore the pants off everyone, although I can tell some people would prefer if I just coughed up the information and racked off.

Secondly,I probably did somewhere in between 1000/2000 post last year…not real sure,still waiting for someone to put up the Blowhard Billboard but I have to have a little fun with it too or else it begins to feel a bit like work.

There is normally a pun of two in each post but I normally refer to the owners as “these guys ” ,not really interested in calling them morons or idiots or whatever as it is unnecessary,just like putting up there name if it sounds like they weren’t born in Canada ,no real value to that.

It is undeniable that a lot of people have made a lot of money out of real estate in Vancouver this century ,but if the media is going to sit on its hands for the next chapter then expect more people like myself to do amateur reporting.

I will not be doing anything on any social media platform, I don’t even have any accounts.
My focus will be to continue to try and contribute and give back to this blog exclusively until the people that want us to sign in with Facebook win Garth over and then I will just be a distant memory…

M43BC

#94 LivinLarge on 01.07.18 at 11:48 am

“51 LivinLarge – maybe you should try not livin’ so large, try savin’ large instead.”…yea, I’ll take that under advisement for sure.

How do you think I got to the point of living so large? Yea, I saved it, oh and I avoided saving it in a way that would be taxed more when I spent it than when I earned it.

#95 crowdedelevatorfartz on 01.07.18 at 11:53 am

@#88 Bytor.
Google “Hedgehog”
A picture of a small, ugly mammal will pop up Or…..
its Screwed Canadian Millenial’s personal website selfie….
either way…you’re gold

#96 Hypatia on 01.07.18 at 12:07 pm

#78 Ryan Lewenza on 01.07.18 at 9:14 am
Well I don’t much about the Sumerians and them going off the clay standard, ……. but it won’t impact our day to day living that much nor stop human progress. – Ryan L
_———-
Ryan ,
Sorry, I though the History of Money would be Day 1 at Bizzy School. Cassius Clay posted something on here a few days ago…..
Agree that day-to-day we might be OK, but more worried about my kids getting through the Stark Ages.

“The farther backward you can look, the farther forward you are likely to see.” Churchill

“What separates the winners from the losers is how a person reacts to each new twist of fate.” Trump

#97 akashic record on 01.07.18 at 12:16 pm

#52 akashic record

I’m responsible for this site which carries my name. You are free to leave. You are not free to lie in the weeds and moralize. – Garth

The moral of the story is that when it comes to the weed, there are laws governing these areas, it’s not left to be the duty of individual’s assessment.

#84 crowdedelevatorfartz

I spent 3 decades in a country with iron fist enforced state sanctioned censorship. What’s your experience in this field which is more solid than your gas-based classy arguments?

I am also quote certain that I can match your lifetime achievement here financially or by any other benchmarks you pick – expect the gas. You are the undisputed king of that, I admit.

#98 akashic record on 01.07.18 at 12:22 pm

– “except”, that is.

#99 Gravy Train on 01.07.18 at 12:25 pm

#70 Gravy Train on 01.07.18 at 6:40 am
“According to the Federal Reserve Bank of St. Louis, as of 2017 Q2, this ratio is 152%. (Note: GDP is now more widely used than GNP.)”

Correction: Please disregard my above remark (I misinterpreted a FRED chart.)

According to an article by Jill Mislinski dated Sept. 6, 2017, and updated Jan. 3, 2018, the Buffett Indicator is currently 132.2%, up from 129.1% from the previous quarter. (See her charts in the attached link.)
https://www.advisorperspectives.com/dshort/updates/2017/09/06/market-cap-to-gdp-an-updated-look-at-the-buffett-valuation-indicator

Hey, Floppy, before you tell me I screwed up, let me just say this: I thought I made a mistake once, but I was mistaken. :)

#100 Judgment at Vicksburg on 01.07.18 at 12:28 pm

Act 2, Scene 3:
{Richard Widmark motions to Jarhead Hinerich}

“So, you were just following odours?”

#101 akashic record on 01.07.18 at 12:39 pm

#85 Momma Said on 01.07.18 at 9:55 am

#52 akashic record on 01.06.18 at 8:22 pm

You create your own thoughts – and you are responsible for your own thoughts. Like every other human being.
——
I’m responsible for this site which carries my name. You are free to leave. You are not free to lie in the weeds and moralize. – Garth

********
My momma always said “Keep your thoughts to yourself.” If you don’t like it here, immigrate to Alaska. That’s why it’s there, ya crazy-a$$ed nihilist.

===

Your momma was wrong.

I immigrated enough already in this lifetime to learn my lesson, but thanks for the kind, wise advice.

#102 For those about to flop... on 01.07.18 at 12:47 pm

Gravy Train on 01.07.18

Hey, Floppy, before you tell me I screwed up, let me just say this: I thought I made a mistake once, but I was mistaken. :)

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

I normally stay out of that as I am one of the worst offenders,look at my post at #93 ,it is riddled with errors but the main message is there.

I thought one of The Train Brothers (Gravy Train/Eyestrain) might have had a go at Crowdie when he wrote “all for not”

I thought the saying was”all for naught ” as in all for nothing.

Maybe that is just down in Tasmania, where we let too many apples hit us on the head…

M43BC

#103 NoName on 01.07.18 at 12:50 pm

I only post interesting reads, and yeas I am 42 adolescent from Ontario.

wheel vs camel

I gues how wheel broke camels back, as of few days ago 5% in SA… but this artice is not about tax, its about wheel kind of.

http://archive.aramcoworld.com/issue/197303/why.they.lost.the.wheel.htm

#104 NoName on 01.07.18 at 12:50 pm

as of few days ago 5% VAT in SA…

#105 Bytor the Snow Dog on 01.07.18 at 12:54 pm

@Russ, @crowded,

Hedgehog! That’s what I thought it was. That said, my point still stands. If we have hedgehogs for pets we have truly lost our way!

#106 Ace Goodheart on 01.07.18 at 1:05 pm

Big question right now if you happen to be invested in anything involving Canadian financials is how badly exposed are our chartered banks to the ridiculousness that used to be the big three housing markets (Toronto, Vancouver and Calgary). Ie how much money did [email protected] give out to people who had the puppy dog look in their eyes, the drive and determination of a drowning kitten and the actual ability to pay of a Skellig Michael Porg (they’re just puffins!)?

Do we get a US style “too big to fail” bank bailout situation, when it turns out that all of these million dollar mortgages are attached to assets whose value is rapidly decreasing? Or do we just lose a bunch of sub-primers that we were better off without anyway?

In other news, looks like the mainstream financial media is starting to notice things about TSLA that I pointed out last year (ie, they make beautiful cars, but it costs them about a million dollars US to build each model 3 right now, and the model 3 is a very simple car).

Watch for them to try to tap capital markets in the next few months. They don’t have enough money to make it through 2018 at their current cash burn rate. Question is, will they ever be able to run a mass production line that can build a $35,000 US electric car at a profit?

#107 Leo Trollstoy on 01.07.18 at 1:10 pm

The problem for critics of minimum-wage increases is that history doesn’t back up their sky-is-falling claims.

Proponents of increasing the minimum wage should sleep easy then. The minimum wage has increased. Reap the benefits!

#108 Momma Said on 01.07.18 at 1:10 pm

#101 akashic record on 01.07.18 at 12:39 pm
#85 Momma Said on 01.07.18 at 9:55 am
#52 akashic record on 01.06.18 at 8:22 pm
—. You are free to leave. You are not free to lie in the weeds and moralize. – Garth
********
My momma always said “Keep your thoughts to yourself.” If you don’t like it here, immigrate to Alaska. That’s why it’s there, ya crazy-a$$ed nihilist.
===
Your momma was wrong.

I immigrated enough already in this lifetime to learn my lesson, but thanks for the kind, wise advice.
********
My DB plan’s Gr. 2 Class is a spectrum of hues and they all get along. Maybe because they and you have not yet crossed paths?

#109 Crazyfox on 01.07.18 at 1:14 pm

#81 Ryan Lewenza on 01.07.18 at 9:31 am

Hi Ryan. I read your link. Can’t say I share your optimism with trillions coming home to the U.S. . The reason why that money is overseas is because of tax evasion. 35%… 21%… it won’t make much difference, the main motive is still tax evasion. Now if yields in the U.S. move up significantly, greed would motivate overseas wealth to think again and come home but think for a moment what that would do the debt laden western world and its influence on world currencies…. its a dual edged sword. It depends on yields and timing but to think that trillions will come home, even hundreds of billions will come home because of tax reform at this point is, I think, a pipe dream mainly because we are looking at a shift in governmental power late in the year in the U.S. and early next year and with it, more changes to the tax code in late 2019. I would think that its the timing of rates and future changes to the tax code by the Dems that will decide this outcome but I’m not optimistic of a major homecoming of cash. Not yet anyway.

All the signs point to change. Polling, which base is more likely to show up on election day coupled with the fact that Trump is becoming more and more toxic with each and every day and Republicans continuing to defend him while watching their brand tank, it all indicates change. Its reminiscent somewhat, of Mulroney getting caught with brown bags of cash and we all know what happened in the next election, the fed PC’s won, what, 2 seats and remained powerless for 12 years, but I digress.

The only hope the Republicans have of holding congress at this point, I believe, is a rigged election with Russian help and I wouldn’t put it past them at this point. The Republicans have 3 choices. They can defend Trump and lose congress and possibly the senate, likely both and later face dual presidential impeachment next year from the emboldened Dems, or they can impeach Trump themselves and try to preserve what’s left of their brand for future elections. Or, they can try to rig the next election with more Russian help and we watch the end of the U.S. democratic Republic if they succeed. Considering how much control the Koch brothers have over the Republican party as a whole and considering their past history… anything is still possible but the odds are stacked up against them in holding power, at least legally and with it, the chances of this tax bill remaining in its current form for longer than 2 tax years.

The markets know it or think they know it. The markets are fickle, oscillating between greed and fear on the drop of a dime and because of it, the market is somewhat blind and overtly reactionary. So we price in our risk accordingly. What is the risk of markets in a bubble? What is the global risk, the risk of supply/demand, recession, of inflation, of interest rates rising, the risks within public, corp and household debt to income, war etc. and of all the risks out there, the biggest risk of all that I see in the near term, potentially within months, (a market bubble is a strong #2) from what I can best opine, is a corrupt Republican government going down in flames, ironically, that same risk the markets currently see as an asset.

Do you see the problem?

#110 Eyestrain on 01.07.18 at 1:20 pm

#102 For those about to flop… on 01.07.18 at 12:47 pm
Gravy Train on 01.07.18
I thought one of The Train Brothers (Gravy Train/Eyestrain) might have had a go at Crowdie when he wrote “all for not”

********
Don’t blame me I’ve been on lunch break.
I just finished an unusual bowl of Campbell’s Tomato soup – I missed the small print: “25% less calories.”
It seems the modern food alchemists replaced 25% of the tomatoes with an equal amount of water. Tastes Great! Never, never, never again.

#111 InvestorsFriend on 01.07.18 at 1:22 pm

The Buffett Rule

#70 Gravy Train on 01.07.18 at 6:40 am responded to me as follows:

#56 InvestorsFriend on 01.06.18 at 9:45 pm
“Well, I guess I will have to wait and see if Buffett decides the S&P 500 P/E is too high at some point.”

He already has! Buffett wrote an article for Fortune back in 2001 in which he first described what’s now become known as the Buffett Indicator.

See the rest of his post at 70 and at 99.

*****************************************
Thank you. You are wise to study that Buffett article from 2001 and also a predecessor article from late 1999. I have read both several times starting in 2001. Here’s what I remember.

The articles focused a lot on the fact that stocks should return something like the dividend yield plus the growth in real GDP per capita plus inflation which would he thought sum to maybe 6 or 7%. Over and above the 6 to 7% return there would be a return caused by changes in the P/E ratio.

The P/E could justifiably be higher with low interest rates and lower at high rates.

In 1999 and 2001 Buffett was warning that expected double digit stock returns for the following 10 years were WAY too high. Results turned out even worse than the 6 or 7% he talked about but in fairness he said returns seemed more likely to be lower than 6 or 7% versus higher.

I did not think the ratio to GNP and market cap was the main gist of the article and for whatever reason I failed to watch that ratio over the years. Does the GNP indicator account for low interest rates.

Lately, what Buffett has said is if interest rates stay low stocks are still good value. And he says most people can’t pick stocks so just by the S&P 500 (for Americans)

I will review that article later today. Thank you.

Another Buffett rule:

Always assume that Buffett is correct.

#112 jess on 01.07.18 at 1:22 pm

city can protect its citizens round one

On Thursday, the Oregon Court of Appeals allowed the city of Portland, Oregon to move forward with a local law that bans all new fossil fuel infrastructure such as new port facilities for shipping coal and holding tanks for oil and natural gas. The law had been blocked by a Land Use Board of Appeals that declared the law to be unconstitutional. Advocates now say that the Oregon Appeals Court’s decision to allow the law banning fossil fuels infrastructure to be implemented will allow other local governments to pursue similar policies that combat climate change.

Joining me to talk about this important decision is Nicholas Caleb. Nicholas joins us from Klamath Falls, Oregon. He is a staff attorney with The Center for a Sustainable Economy, which was a party to this lawsuit. Thanks for joining us today, Nicholas.

NICHOLAS CALEB: Thanks for having me.

G. WILPERT: First, tell us a little bit about what this Portland law is all about. Tell us more about what it intended to do and what its significance is.

NICHOLAS CALEB: In Portland and many port cities around the country, there are dangers of fossil fuel infrastructure from explosions, and spills, and air pollution, and you name it. The city of Portland decided that it wanted to be very proactive and stop adding to this risk. We had seen proposals for new propane export terminals in Portland that were rejected by activists. Instead of fighting these battles one by one, the city actually wanted to take a stand and say, “We’re just not gonna do this type of development anymore. It’s not good for Portland, and it’s not good for the climate.”

http://therealnews.com/t2/story:20856:Oregon-Court%3A-Banning-Fossil-Fuel-Facilities-is-Constitutional

G. WILPERT: First, tell us a little bit about what this Portland law is all about. Tell us more about what it intended to do and what its significance is.

NICHOLAS CALEB: In Portland and many port cities around the country, there are dangers of fossil fuel infrastructure from explosions, and spills, and air pollution, and you name it. The city of Portland decided that it wanted to be very proactive and stop adding to this risk. We had seen proposals for new propane export terminals in Portland that were rejected by activists. Instead of fighting these battles one by one, the city actually wanted to take a stand and say, “We’re just not gonna do this type of development anymore. It’s not good for Portland, and it’s not good for the climate.”

Over a period of about two years, the city passed resolutions and entered into a land use planning process that resulted in an ordinance called the Fossil Fuel Terminal Zoning Amendments. The Fossil Fuel Terminal Zoning Amendments did very much what you said in the introduction. They stopped the construction of large-scale fossil fuel infrastructure for storage and transport, which is a de facto ban on fossil fuel infrastructure. Immediately, big business interests at the Portland Business Alliance, which is basically the local chamber of commerce in Portland, and the oil industry at the Western States Petroleum Association sued us in land use court, and we lost that case originally.

G. WILPERT: Just tell us a little bit about why did you lose it. I mean what was the argument that it was unconstitutional? I mean sounds like I’m talking about a zoning issue that seems to be within the purview of city governments.

NICHOLAS CALEB: Yes, which is why we appealed it, of course. The argument was that because this was stopping an industry from adding new facilities, that it was discriminating against interstate commerce, basically, that a lot of the facilities that would have been sited would be energy for export because, in the Northwest, we’re not a fossil-fuel-producing region, but we are seeing a lot of so-called pass-through fossil fuels that are going to Southeast Asian markets.

When you tally the amount of projects that were proposed to go through Oregon, Washington over the last five or six years, it would have been sort of apocalyptic levels of carbon pollution going through or region. Portland was the first community to try to battle this from the position of a municipal ordinance. We developed the ordinance to be resilient to legal challenge, and so when we lost that original case, we were very disappointed but also confident going into appeal.

G. WILPERT: Now the Oregon Appeals Court has overturned the Land Use Board’s decision. What were the arguments on the side of the … I mean your arguments and also the ones of the side of the court when it ruled in your favor?

NICHOLAS CALEB: Our argument was that local governments have very high power to protect the health and safety of their residents, and the fossil fuel industry and fossil fuel infrastructure poses health hazards in the form of spills, and explosions, and air quality like I mentioned before. But also, in the Northwest, we’re often at enhanced danger because we have liquefaction zones where most of our fossil fuel infrastructure sits. In this big earthquake that we all expect to happen in the next 50 years, it’ll be 9.0 or above, all of our critical energy infrastructure is sitting in liquefaction zones, and it’ll be a disaster. It magnifies the disasters by many, many times. That was the basis for the ordinance, that we have the power to protect the health and safety of the residents of the community. In addition, we think that this is strong climate action at the same time. The court agreed that both of those were legitimate concerns that the city of Portland had.

#113 Fortune Teller on 01.07.18 at 1:23 pm

I predict that by 2020, this part of Ontario will become transformed into 65 to 85 story condos because of real estate demand from Moisters:
https://www.google.ca/maps/@44.2027607,-79.2572188,3a,75y,356.05h,89.05t/data=!3m7!1e1!3m5!1sNaq3tvo4kW3X-RUT70QaSQ!2e0!6s%2F%2Fgeo2.ggpht.com%2Fcbk%3Fpanoid%3DNaq3tvo4kW3X-RUT70QaSQ%26output%3Dthumbnail%26cb_client%3Dsearch.TACTILE.gps%26thumb%3D2%26w%3D96%26h%3D64%26yaw%3D323.04846%26pitch%3D0%26thumbfov%3D100!7i13312!8i6656

#114 conan on 01.07.18 at 1:28 pm

“reports that the only tools on-site are staple guns and cigarette papers.” -Made to last

When I was young I worked on a large condominium site like this. One of the heating and ventilation contractors must have had a crazy charge back. One of their guys was peeing into paper coffee cups, and then leaving them on the top part of the unit’s interior heating and cooling unit. Within weeks the building became a bio hazmat issue and no one could find the source.

This guy shut down the whole site. Yes, they were Timmie’s cups, XL.

#115 InvestorsFriend on 01.07.18 at 1:34 pm

To clarify Bufffett thought earnings would grow about 4 to 5% and the dividend add 2% and the P/E would at best stay steady but could fall. That was 1999 / 2001.

I suspect about the same applies now, P/E likely to fall. Earnings cannot for any long period grow faster than GDP. Probably No way the stocks can deliver double digit returns going forward this next ten years from here. Think 5% but it still beats bonds.

#116 Damifino on 01.07.18 at 1:46 pm

I have some background in microprocessors and been reading a lot about the recently discovered ‘Meltdown’ and ‘Spectre’ hardware bugs that have the potential to compromise the security of practically every computing device on the planet. It’s not a software issue, it’s a very ugly bug way down in the silicon itself.

Turns out that for most users like us, it’s not as dire as it looks on the surface but it will become a major hassle for CPU manufacturers going forward. It stands as prime example of why we are diversified and don’t put all our money in, say, Intel.

Here’s a link to the best summary of the issue I’ve found

http://uproxx.com/technology/what-are-meltdown-spectre-computer-bugs-explained/

#117 Victor V on 01.07.18 at 2:02 pm

#106 Ace Goodheart on 01.07.18 at 1:05 pm

Big question right now if you happen to be invested in anything involving Canadian financials is how badly exposed are our chartered banks to the ridiculousness that used to be the big three housing markets (Toronto, Vancouver and Calgary). Ie how much money did [email protected] give out to people who had the puppy dog look in their eyes, the drive and determination of a drowning kitten and the actual ability to pay of a Skellig Michael Porg (they’re just puffins!)?

Do we get a US style “too big to fail” bank bailout situation, when it turns out that all of these million dollar mortgages are attached to assets whose value is rapidly decreasing? Or do we just lose a bunch of sub-primers that we were better off without anyway?

In other news, looks like the mainstream financial media is starting to notice things about TSLA that I pointed out last year (ie, they make beautiful cars, but it costs them about a million dollars US to build each model 3 right now, and the model 3 is a very simple car).

Watch for them to try to tap capital markets in the next few months. They don’t have enough money to make it through 2018 at their current cash burn rate. Question is, will they ever be able to run a mass production line that can build a $35,000 US electric car at a profit?

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

http://business.financialpost.com/opinion/lawrence-solomon-how-teslas-elon-musk-became-the-master-of-fake-business

Today’s fake-industry leader is Tesla, the electric car developed by subsidy entrepreneur Elon Musk, who also heads SolarCity and SpaceX, other government darlings. Musk’s genius is primarily in the subsidy-seeking realm — by 2015, U.S. governments alone had given his companies US$5 billion through direct grants, tax breaks, cut-rate loans, cashable environmental credits, tax credits and rebates to buyers of his products. Counting subsidies from Canada and Europe, the government bankroll could be double that. Counting indirect subsidies — such as electric-vehicle-friendly infrastructure — the subsidies soar ever higher.

#118 Russ on 01.07.18 at 2:36 pm

Good Gravy!

@ #99 Gravy Train

Thanks for the info.
I especially like the last chart.
Doesn’t that Buffet indicator look like a good guide to buy S&P 500 on the dips?
It kinda acts like an amplifier.

https://www.advisorperspectives.com/images/content_image/data/f7/f71c3d72b138357b11c0e8794ad90097.png

#119 Russ on 01.07.18 at 2:53 pm

jess on 01.07.18 at 1:22 pm

city can protect its citizens round one

On Thursday, the Oregon Court of Appeals allowed the city of Portland, Oregon to move forward with a local law that bans all new fossil fuel infrastructure such as new port facilities for shipping coal and holding tanks for oil and natural gas.
==================

Too bad a Canadian firm didn’t pursue building infrastructure there. A law like that is illegal under NAFTA. The city could be sued by one of our corporations, similar to what the Americans do to us.

#120 crowdedelevatorfartz on 01.07.18 at 4:48 pm

@#92 Akashic Recording

“I am also quote certain that I can match your lifetime achievement here financially or by any other benchmarks you pick ”
++++

So, You’re comparing Garths “editing” to a Totalitarian State ?
Yeesh.
Hell hath no fury like a thinned skinned ex communist refugee.

As for “Benchmark” challenges….. I think you meant “quite certain” not “quote certain”…..but I got the jist of what you were sayin’
As for “financial achievements”…..
I’m assuming you’re a ex patriot oligarch with billions of rubles in the Bank of the Caymans?
Or at least his tax lawyer Da?

#121 Q on 01.10.18 at 11:29 am

To compensate for the analyst overestimate of 12% you need to multiply by (1/1.12) not by (1 – .12)