The ride

After surging 6,000 points over the past year, the Dow bled 600 on Friday. This week the market lopped off 3%, the first time that’s happened in more than 400 days.

Why? Well, nothing goes up forever and corrections are like diets. Healthy. We’re overdue. After a 30% advance in 12 months, a pullback of 10% or 15% would be reasonable. But there’s more to chew on. Friday’s jobs report in the States was great (200,000 last month) and wages have taken the biggest jump since the credit crisis.

This has investors expecting more inflation, the beginning of a wage-price spiral and – for sure – higher interest rates. For the first time in years the yield on a 30-year bond popped through 3%, and Canadian bond yields are surging, too. Just look at what five-year Government of Canada debt has been doing lately:

So, looks like the Fed will raise rates thrice this year (starting next month), and our guys will follow with two or three of their own. Stocks sell off, in part, when investors can collect decent interest on bonds without taking any risk owning stocks. The strong jobs report hands the central bankers another reason to do what they want – end the days of cheap money that have so distorted asset values.

Like, of course, Canadian houses.

Bonds have posted their biggest monthly move since the Trumpster burst into our lives. Prices have plopped and yields popped. Inflation is back, supported in Canada by ever-higher federal taxes, government over-spending, historic debt, $15 minimum wages and silly real estate values. US rates have risen four times in a year, and Canadian ones have popped three times in little more than six months. Mortgage rates have risen and are now poised to plump further.

Five-year Canada bonds help determine five-year fixed mortgage rates, which now sit above 3.3% at the chartered banks. It’s no stretch to think they could be 4% by the end of the year (or sooner). Add in the stress test premium dictated by the federal B20 rules, and borrowers (plus renewers who switch lenders) must qualify at the 6% level. Yes, that’s three times the cost of a mortgage back in the halcyon, bubblicious, FOMO, houses-always-go-up days of your youth – 10 months ago.

In case you were wondering, this is a potential disaster for Canadian real estate.

Between 42% and 47% of outstanding mortgages (depending whose numbers you believe) come up for renewal in 2018.  Almost all of them will be refinancing at a higher rate, putting pressure on owners in a land where household debt is off the charts. You can bet that many will try to bail out and take their profits at the same time the pool of available buyers is shrunk by rates and regs.

Then there are the lines of credit, discussed here yesterday. That $220 billion ocean of debt is almost all at floating interest rates, so the cost of servicing it will rise with each Bank of Canada decision pushing up bank prime. Already (as stated) 40% of borrowers are paying nothing and another fifth merely cover the monthly interest charges. More stress on family finances.

If you’d like a preview of what happens when bubble meets prick, consider Bitcoin. The cryptocurrency that this paleo blog warned you about last year (made up of man buns and faerie poop) has crashed from $20,000 to $8,000, losing almost 60% of its value. All those poor moisters who bought this junk on their credit cards, thinking ‘it’s different this time’ just learned it never is.

The same goes for houses in Vancouver or Toronto that have jumped 50% in value in a few years. Buyers have used extreme leverage to get into everything from newbie urban condos to suburban trophy homes. The cheapest money to ever exist was not used to extinguish debt, but to run it to the sun. How this turns out is unknown, but no economist a year ago was predicting bond yields would swell like a horny blowfish.

Stocks may well erode further, but the jobs, growth and profits that fuelled them remain. Real estate, on the other hand, is having its sole crutch – cheap money – kicked out. The ride begins.

213 comments ↓

#1 chuck guild on 02.02.18 at 5:01 pm

Thanks Garth for keeping us informed– if you are out of Puppy pictures I have a great on where do I send it

#2 chuck guild on 02.02.18 at 5:01 pm

one

#3 Crutch on 02.02.18 at 5:02 pm

RE has two crutches:
– cheap money
– human nesting instinct

I know you can nest in a rented home, but humans are far from rational.

#4 Stan Brooks on 02.02.18 at 5:04 pm

Not sure how rates can be raised meaningfully.

We might see a year of rising rates, stock market decline and then rate cut/Japan is already doing it capping their bonds at 0.11 % (!).

So short term bonds could be a good place to hide when this thingy unravels with the ultimate outcome of:
– reversal of interest rate increase to another series of rate cuts, negative interest rates and QE.
– explosion of stock market and particularly gold
– appreciation of bonds (!) due to capital ‘gains’ on negative interest baring instruments! (i.e. ‘return’)

So stay calm, diversified with readiness to overweight stocks, particularly gold stocks (uplift could be 10 fold),

If you ride it well it could be your only chance of retirement.

Hey, CPI will still be sub 2 %, But real inflation 10-15.

#5 For those about to flop... on 02.02.18 at 5:05 pm

Weekend Rewind.

This weeks howmuch articles.

I was going to do this post tomorrow but thanks to Linda commenting on the Medicaid one I realized that I forgot to put the link up…

M43BC

Mapping the World’s Most Valuable Brands in 2018

https://howmuch.net/articles/most-valuable-brands-2018

Every State Medicaid Spending, in One Map.

https://howmuch.net/articles/medicaid-spending-by-state

Visualizing The Meteoric Rise Of Cryptocurrency in the Past 5 Years

https://howmuch.net/articles/top-10-cryptos-past-5-years

#6 ThisIsTheEnd on 02.02.18 at 5:07 pm

Nice post Garth.

Bitcoin is down as expected. waiting same of housing here.
I came to know few sales in GTA 100K low from asking price.

It is very hard to get mortgage approval.
on 100k salary, putting 350k down. I can only buy house max 750k. how many can put a down of 350k?

#7 MF on 02.02.18 at 5:11 pm

About time the market shed some gains. It was getting comical.

Not as comical as Bitcoin though. Hope it continues to collapse. Don’t think it will though.

MF

#8 Andrewski on 02.02.18 at 5:11 pm

Re Bitcoin, caveat emptor:

https://m.wealthprofessional.ca/business-news/cra-to-come-after-bitcoin-investors-237123.aspx

#9 Johnny D on 02.02.18 at 5:12 pm

Between real estate taking a crap in Canada, and the impending death of our energy industry due to too many roadblocks thrown at any new projects, it looks like Canada is toast. This will be proven when this week’s correction turns around everywhere except the TSX.

Also. I think you meant 42-47% of mortgage renewals are coming up in 2018, not 2017.

#10 Jay on 02.02.18 at 5:12 pm

https://www.thestar.com/business/real_estate/2018/01/29/how-a-softer-housing-market-has-crushed-pre-construction-home-buyers-dreams.html

#11 Prairieboy43 on 02.02.18 at 5:15 pm

Bring on Inflation. Let’s get this ball rolling. Is that young Trump pushing a DemoKat.
PB43

#12 Beso on 02.02.18 at 5:16 pm

Couldn’t resist being the first one to comment, so here it goes.

It feels so f awesome when you are right :-)

Cheers

#13 Robert B on 02.02.18 at 5:17 pm

What a day….This is where we separate the men from the boys….

We should be shopping as the market drops.
Dividend stock yields are getting more attractive.

Bonds seems to be losing today as well .

Everyone finally figures out that rates are going up.

Glad I can sleep well tonight..

#14 Gil on 02.02.18 at 5:21 pm

TREB report will be interesting. How many folks decided to list and how many will try to sit it out with their investment properties

#15 chopstix on 02.02.18 at 5:21 pm

still can’t see how condos in Scamcouver or TO will suffer….don’t get me wrong, the prices are nuts esp in Scamcouver.
a friend gloats and regularly sends clips of any 1bdrm (530sq ft) in the new Telus gardens HQ (seymour/robson) that is now asking $820k…just nuts!

#16 chopstix on 02.02.18 at 5:22 pm

here you go…
https://www.rew.ca/buildings/8822/telus-garden-vancouver-bc

#17 Starving Bear on 02.02.18 at 5:22 pm

“the days of cheap money that have so distorted asset values.

Like, of course, Canadian houses.”

— what about equities??

People do not use 20x leverage to buy stocks. – Garth

#18 chopstix on 02.02.18 at 5:23 pm

sorry meant to add it into initial post, but here is an example:
$820k Telus Gardens 570′
https://www.rew.ca/buildings/8822/telus-garden-vancouver-bc

#19 Smartalox on 02.02.18 at 5:23 pm

You know what I like about renting?

In spite of rising interest rates, my payments just stay the same.

No interest rate volatility associated with a floating mortgage, and certaine of the volatility of a HELOC interest rate.

Portfolio’s down a bit though; about 1%. The divvies will kick it back up though. Balanced, diversified, re-balanced.

Life is good!

#20 MM on 02.02.18 at 5:25 pm

“Between 42% and 47% of outstanding mortgages (depending whose numbers you believe) come up for renewal in 2017.”

Correction to “2018” instead of “2017”?

#21 Eyestrain on 02.02.18 at 5:26 pm

come up for renewal in 2018 ?

I know a good optometrist or geriatrician – whatever you need bud.

#22 Infidel on 02.02.18 at 5:27 pm

“a pullback of 10% or 15% would be reasonable”

Great. Someone who’s got $500,000 in a ‘balanced’ portfolio now may be facing $50K loss.
Any reason why the cash position would not better under the circumstances? One good reason please.

Because rational people don’t sell. – Garth

#23 EmmEmm on 02.02.18 at 5:27 pm

FIRST!! for the first time ever !!

#24 conan on 02.02.18 at 5:29 pm

Markets could be choppy on Monday.
It is going to take a certain type of discipline.

https://youtu.be/WVLGwTggO8U?t=108

#25 Ex Pat Canuck on 02.02.18 at 5:30 pm

The ride begins, indeed!

#26 I’m stupid on 02.02.18 at 5:31 pm

Why do people act in such a predictable way? How could 400 years pass since tulipmania and humans act the same way? It doesn’t matter if we’re talking about crypto, weed or Vancouver specials, any rational person can see that an asset that produces no income is not an investment. It’s a gamble that usually ends badly.

I’m stupid but not that stupid!

#27 Iconoclast on 02.02.18 at 5:32 pm

Dow closed down 666? Oh my…

It might get interesting Monday. (or is the world 24/7 now?)

#28 HowDeepThePain? on 02.02.18 at 5:37 pm

Most new Home buyers take 5 year mortgages. I’m told (by a mortgage professional) that 60% of them refinance before the 5 years are up.

Yikes!

#29 2 Large on 02.02.18 at 5:40 pm

Finally hit 2 Large net worth at the end of Jan. Much thanks to GT’s advice over 10 years. Guess I lost a bit today. Can I get a refund. Lol.

#30 smartalox on 02.02.18 at 5:43 pm

REBGV stats released today.

http://www.rebgv.org/sites/default/files/REBGV-Stats-Pkg-January-2018.pdf%20

Some highlights:
– There were 3,796 detached, attached and apartment properties newly listed for sale on the
Multiple Listing Service® (MLS®) in Metro Vancouver in January 2018. This represents a 100.7 per cent
increase compared to December 2017 when 1,891 homes were listed.

That’s right: since Jan 1, 2018 the number of listings in greater Vancouver has DOUBLED.

…the sales to listings ratio for detached homes is 11.6 per cent…
One detached property sells for every 11 properties that are listed.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below
the 12 per cent mark for a sustained period

Of course, this should come as no surprise for regular readers. Flop’s pink posts have demonstrated that if you want to make a sale in the detached market, you best be pricing at 20% BELOW ASSESSMENT.

Good luck!

And with only one property in 11 selling, and with the number of listings doubling in the space of a month, I feel obligated to say

“May the odds be forever in your favour!”

#31 Balanced? on 02.02.18 at 5:43 pm

Wow. Seems like a correction is occurring.

How much has the balanced portfolio gone down after today’s rout? I just want some comparison to all of the other investments you mentioned.

Thanks

Depends. Likely 0.8%. Did you ask me how much it went up last month? – Garth

#32 For those about to flop... on 02.02.18 at 5:44 pm

This relatively affordable option in Vancouver just got removed after battling the market headwinds for a year ,and we will have to wait to see what their next move is.

The market is fine.

I suspect it is because Turner Street doesn’t have the same name recognition as Trump Tower…

M43BC

3509 Turner Street, Vancouver paid 1.4 ass1.39

Mar 10:$1,599,000
May 31: $1,399,000
Change: – 200000.00 -13%

3509 Turner Street, Vancouver, BC, V5K 2J1
2017-03-10 : $1,599,000
2017-04-10 : $1,449,000
2017-05-31 : $1,399,000
2017-06-20 : $1,499,000

https://www.zolo.ca/vancouver-real-estate/3509-turner-street

https://evaluebc.bcassessment.ca/property.aspx?_oa=QTAwMDAwMlJVVw==

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

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#33 Hiding On the Backstreets on 02.02.18 at 5:46 pm

The cheapest money to ever exist. Well said. Free markets, freedom. Let people sink or swim.
Just had to have the big house? The new pickup? The granite counter? You’re on your own.

If only. Cue the socialist tax attack. Don’t worry Canadian debt slaves. The Libs are coming to save you from yourselves.

#34 The Great Gazoo on 02.02.18 at 5:50 pm

Let the games begin

“Thompson, a bus driver, bought her two-storey, detached house as a nest to share with her husband, her children and grandchildren.

She says she paid $955,000 for a 2,749-sq.-ft. detached house. Last month Mattamy began selling the same model on a similar lot for about $859,000 in Queen’s Common Phase 2.”

https://www.thestar.com/business/real_estate/2018/01/29/how-a-softer-housing-market-has-crushed-pre-construction-home-buyers-dreams.html

#35 dakkie on 02.02.18 at 5:54 pm

Reality Checking Canada’s Central Bank and the Economy

http://investmentwatchblog.com/reality-checking-canadas-central-bank-and-the-economy/

#36 Guy in Calgary on 02.02.18 at 5:57 pm

#6 ThisIsTheEnd on 02.02.18 at 5:07 pm

Go to a credit union then. No stress test on conventional mortgages.

#37 nick on 02.02.18 at 6:04 pm

Where is the TREB January report???????????

TREB scared?

#38 Willy H on 02.02.18 at 6:05 pm

“Yes, that’s three times the cost of a mortgage back in the halcyon, bubblicious, FOMO, houses-always-go-up days of your youth – 10 months ago.”

Ahh yes, the good ole days, when a man was a man and the women were double-breasted, those were the days ….

http://www.cbc.ca/news/canada/toronto/real-estate-offers-1.3974147

#39 Blacksheep on 02.02.18 at 6:07 pm

Blacksheep #229,

“Please challenge my rational, not just keep repeating the same line. Thanks for the reasonable discussion.”

“My portfolio pays me dividends, interest and regular cap gains. Your house costs you financing, property tax, maintenance and insurance. You pay to live there. My investments pay me. – Garth”
—————————————–
Now we are getting somewhere.

On OUR 475K investments, you state 8% annual returns of $38K.

1) No mortgage = no financing costs.
If your investment carries no debt, neither does mine.

2) I have to insure my possessions, regardless if I own or rent.

3) Benefit: + annual rent $ 33.0 K
Cost: – Property tax: $ 3.0 K
Cost: – Maintenance: $ 1.5 K
Cost: – Building insurance:$0.5 K
—————————————
Total annual value on RE investment $ 28K

So you got me Garth, you are reaping 10K a year, or 40K over 4 years more than I.

Now lets discuss the gorilla in the room I’ve been gracefully avoiding.

The market value of my RE, as of today is between 900 to 1000K since my initial investment, 4 years ago.

I’m to lazy to do the math but I’m sure even when you reinvest and compound the 8% your getting, you are nowhere near the valuation gains of my investment. I can tolerate a significant correction and still kick your portfolios ass when we both liquidate our holdings to compare size.

I Have total control to sell or not, never get a rent increase and never get evicted.

Please critique….Thanks again for the civility.

#40 RentYVR on 02.02.18 at 6:15 pm

All this talk about raising rates by Fed is completely irresponsible. Core inflation continues to be lower than expected and I don’t see anything but noise when looking at wages or the other indicators cited.

Thankfully the Bank of Canada appears to understand this and has repeatedly expressed caution with respect to rate hikes. If we are going to have central body set rates it should be mandated to be data-driven only and not attempt to “pre-empt” inflation or deflation.

Ah, our bank raised them three weeks ago. – Garth

#41 El Joko on 02.02.18 at 6:17 pm

Here’s a question for the financial wise guys on this blog:

Over the long run, how much can a broad stock market index outperform the economy?

#42 some panic today on 02.02.18 at 6:19 pm

Some nervous Nellies crashing the bid positions on some real decent REITs today. Saw some titles bleeding up to 12 %. Got back up towards the end of the session. Whoever bought the lows probably steals candy from kids as well.

Some good bargains out there already.
Time to start nibbling again.

#43 TheDood on 02.02.18 at 6:20 pm

#15 chopstix on 02.02.18 at 5:21 pm
still can’t see how condos in Scamcouver or TO will suffer….don’t get me wrong, the prices are nuts esp in Scamcouver……….
__________________________

If there are dummies willing to spend 800 K+ on a 2 bedroom condo, then let them………..lots of stupidos in YVR so you could be right, prices may continue run up.

Eventually condos / attached will crash too – dummies have no more access to cheap money.

#44 Re., balanced portfolio on 02.02.18 at 6:22 pm

Unless you were over weight USA and rest of the world it’s on the red ytd — TSX just broke another support level .

#45 Sebastien on 02.02.18 at 6:22 pm

What if all the doom and gloom on this blog is overblown? I could see the Federal gov’t (and /or provinces) passing a moratorium on foreclosures and capping the difference in interest a the time of renewal. Example: new mortgage rate = old one + 2%.

#46 Paul on 02.02.18 at 6:24 pm

#37 nick on 02.02.18 at 6:04 pm
Where is the TREB January report???????????

TREB scared?
————————————————————————————————The numbers come out on 6th of the month or so,
I’ll give you a heads up sales are down. Lol

#47 New West on 02.02.18 at 6:24 pm

OK, now that it is becoming evident that real estate can (gasp!) go down in price, can we stop using the annoying phrase “(thing/place) is on fire!”?

It looks like the “crushing home-buyers dreams” meme will soon be replacing it anyway, so might as well start now.

#48 Doug t on 02.02.18 at 6:25 pm

Attention Kmart shoppers we’ve got a blue light special coming in aisle 4 on real estate so sit tight and keep your powder dry
And as an extra bonus we have a gender fender bender in the national anthem lol OH canada what have u become

RATM

#49 Penny Henny on 02.02.18 at 6:25 pm

#220 bonds and stocks on 02.02.18 at 4:20 pm
not acting inversely….that’s not good
//////////

nor did it for most of the 2009-2016 recovery

#50 RentYVR on 02.02.18 at 6:26 pm

“Ah, our bank raised them three weeks ago. – Garth”

Right, but their messaging indicated that they are cautious of going too far. I think it’s clear from anyone who looks at the data that the risk is now to the upside on rates given the continued low inflation we’ve seen. Bottom line is that there is no need to set such an aggressive rate hike plan when there is zero pressure to do so.

#51 Penny Henny on 02.02.18 at 6:28 pm

#229 Blacksheep on 02.02.18 at 4:51 pm
Blacksheep # 217,

“Only if you sell and crystallize the gain, Until then, it’s just man talk. – Garth”
————————————————-
Ditto.

I acknowledged you get 8%, on your $’s invested.

I get a proportional $ value, in home accommodations.

Neither of us gets our principle investment back until WE, liquidate said investments.

Please challenge my rational, not just keep repeating the same line. Thanks for the reasonable discussion.

My portfolio pays me dividends, interest and regular cap gains. Your house costs you financing, property tax, maintenance and insurance. You pay to live there. My investments pay me. – Garth

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

You pay to live there? Same as saying your dividends pay the rent.
As far as the capital gains goes there is none until you sell. Once again, no difference

#52 bond yields on 02.02.18 at 6:29 pm

as they continue to rise, portfolios for many to change. Increasing yield less need for equities. Times are a changing.keep raising rates please

Surprised by the day for bonds- a brutal day for equities yet bonds drop. Not good for a balanced portfolio

Not exactly. Great for prefs. – Garth

#53 old gringo on 02.02.18 at 6:30 pm

Garth, as part of your investment strategy, do you ever encourage investments in international short term bonds?
I’m only asking because its easy to get 7.5-8.5% in Mexican pesos (while the peso is low), locked in for 30-365 days.
Or other countries?

No. – Garth

#54 InvestorsFriend on 02.02.18 at 6:30 pm

Rhetorical Question?

#41 El Joko on 02.02.18 at 6:17 pm
Here’s a question for the financial wise guys on this blog:

Over the long run, how much can a broad stock market index outperform the economy?

**********************************
In the long run a Board stark market index cannot grow faster than the economy.

However, keep in mind that GDP growth is almost always stated in real terms. The index can grow about as fast as the economy grows in nominal terms. So add inflation to real GDP.

And keep in mind that dividends are spit out and need to be added to the index growth to get the total return.

A reasonable expectation for a broad stock market index over the long term might be something like 2 to 3% for real GDP, 2% for inflation and 2 to 3% for dividends.

A long-term point estimate around 7% total return from equities might be reasonable.

The U.S. has several broad equity indexes to choose from. It’s not clear that Canada has a representative index.

Historic nominal returns were higher due to higher GDP growth and higher inflation.

#55 Waiverless on 02.02.18 at 6:31 pm

#39 Blacksheep

The market value of my RE, as of today is between 900 to 1000K since my initial investment, 4 years ago.

You’re basing your argument on a 4 year window in a low interest rate portion of a real estate cycle? There is no gorilla in the room. There were plenty of people in 1990 Toronto who were making the same argument as you. 20 years of tears later they were back on top – so guess it depends on your investment horizon – the comparison should never be 4 years.

#56 dan on 02.02.18 at 6:31 pm

Mortgage renews will be brutal for most. If you stay with the bank you won’t need to to worry about the stress test but you’ll have to eat rate they quote. You jump to another bank, that will trigger a stress test and you’ll have to make up the difference. And if there is a LOC involved, jumping ship may be an issue.

#57 InvestorsFriend on 02.02.18 at 6:40 pm

Compounding Wealth

If you can get 7% long-term return and if inflation is 2%, that would be a 5% real return.

In a tax free account that doubles wealth in 15 years.

So your year zero dollars go to $2 in 15 years $4 in 30 years, and $8 in 45 years. Starting in year 46 you could spend 8 times your initial year savings. This is real dollars. You can repeat every year for 45 years at which point you have no money left if my math is right.

So, save say $6000 per year in today’s money starting age 25. Start spending $48,000 in today’s dollars per year at age 70 through age 115.

Obviously no one will do exactly this in reality but it illustrates the possibilities.

#58 Clean your undies on 02.02.18 at 6:41 pm

Built this online investor risk calculator a few weeks ago in my 25th hour of the day. I even added a crypto bonus question for the ladies.

https://www.imfingo.com/calculators/investor-risk-calculator

#59 Chump on a Stump on 02.02.18 at 6:42 pm

I made the mistake of looking up RE in Hamilton. An asbestos shack sitting on a street in a questionable part of Hamilton mountain is now mid $400,000. Mind-blowing.
A couple of months ago the RAHB took away the Days-on-the-Market feature of their system, so no clue how long it has been for sale.

#60 AK on 02.02.18 at 6:52 pm

#27 Iconoclast on 02.02.18 at 5:32 pm
“Dow closed down 666? Oh my…
It might get interesting Monday. (or is the world 24/7 now?)”
——————————————————————-

It closed down 665.75

#61 The Technical Analyst, CSTA, CPD on 02.02.18 at 6:53 pm

With the S&P/DOW closing down 2.1-2.5%, the TSX closing down 1.61% you should be looking at this as a BUYING opportunity, not a run for the hills one.

Strong USA, EEM, Global and even (somewhat strong) Canadian economy shows there is no fear of a recession/depression on hand.

As I said over a month ago, there will be a dip from January to mid-February. You now have an edge.

Who said you can’t time the markets.

#62 Penny Henny on 02.02.18 at 6:53 pm

#22 Infidel on 02.02.18 at 5:27 pm
“a pullback of 10% or 15% would be reasonable”

Great. Someone who’s got $500,000 in a ‘balanced’ portfolio now may be facing $50K loss.
Any reason why the cash position would not better under the circumstances? One good reason please.
///////

Time will tell if I was right or wrong but at the end of December I went 60% to cash.
1.5% at RBC.
The 200 point gains in the Dow were going on a bit too long, and too fast.
Also it also worked out well as the CAD had good gains in Jan

#63 Paul on 02.02.18 at 6:56 pm

P M O deputy operations director, is out.

#64 Paul on 02.02.18 at 6:57 pm

They waited longer than I thought they would,

Friday night. Courageous. – Garth

#65 ottawamike on 02.02.18 at 7:04 pm

Apparently Vanguard has come out with the one stop Greaterfool single balanced portfolio ETF.MER 0.22%
This could make balanced index investing easier. And no more need for advisors, roboadvisors, blogs, dogs… no, wait. I like dogs.
http://www.moneysense.ca/save/investing/etfs/finally-everything-an-investor-needs-in-a-single-etf/

Put all your money in a single asset? Good luck with that. – Garth

#66 ottawamike on 02.02.18 at 7:12 pm

Garth
It is not a single asset. It is a diversified asset. Isn’t the VBAL doing exactly what you are recommending in this blog?

It is one asset. Period. – Garth

#67 Terry on 02.02.18 at 7:13 pm

“All those poor moisters who bought this junk on their credit cards, thinking ‘it’s different this time’ just learned it never is.”

It’s funny how human nature repeats itself. Every new generation thinks it’s always different this time and that they know everything and never listen to us old folks. What’s in your wallets now moisters?

#68 crowdedelevatorfartz on 02.02.18 at 7:19 pm

“…….would swell like a horny blowfish.”

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

My week is complete.

#69 Zapstrap on 02.02.18 at 7:19 pm

Just sitting here waiting for my 17:00 robocall from CIBC out here on the Pacific. Don’t know what they are trying to sell me as I never let them get that far. At least it’s a real person on the line who I asked last night to remove me from their calling list. They said OK … but it may take up to 2 weeks to kick in. Wish I had a button on my phone to send a few volts down the line to the other end. Is there an app for that?

#70 Dead Cat Bounce on 02.02.18 at 7:21 pm

It’s going to get really interesting in the next couple weeks ! Maybe Horgan will save us in BC hahahahaha

Nice cat picture today !

M54BC

#71 MPAC on 02.02.18 at 7:24 pm

Spoke to my mortgage specialist today at one of the big 5 banks. of course, I asked him how’s business and if he’s seeing any trends. He said the stress test is having an impact on business, but he said he’s more concerned that his bank has been tightening their underwriting requirements for the following folks:
-Mortgages for self employed
-increase down payment requirements for properties over 1 million
– foreign buyers
-not using income to qualify for residential properties with legal suites

Not to mention, he said folks that purchased condos 1 or 2 years ago, and never expected to close, aren’t finding buyers and they’re are not able to qualify for a mortgage.

the list goes on and on…

#72 steph on 02.02.18 at 7:25 pm

Unicorn poop is going back to it’s original value.
Zero, since it does not exists.

But people who sold you this wild dream that you could become a zillionaire with investing a few bucks are laughing their way to the bank. Maybe to prison a bit later if they were not prudent enough…

What a mess. But it’s enlightening to watch.

#73 SimplyPut7 on 02.02.18 at 7:29 pm

How this turns out is unknown, but no economist a year ago was predicting bond yields would swell like a horny blowfish.

——————————

National Bank’s Chief Economist and Strategist, Stefane Marion knew and told us on BNN in 2017.

At 6:15 min:

https://www.bnn.ca/economics/video/housing-remains-canada-s-great-white-elephant-national-bank-s-marion~1142509

He also told us (confidently) that rates were going up twice in 2017.

At 5:00 min:

https://www.bnn.ca/economics/video/poloz-is-ready-for-two-rate-hikes-in-2017-national-bank-s-marion~1157871

I heard nothing about a blowfish. – Garth

#74 Garth is Enbridge oversold? on 02.02.18 at 7:31 pm

I’m in at 49 earlier this year…. 43 seems like a gift right now or do I wait a bit?

#75 Smoking Man on 02.02.18 at 7:37 pm

SCM
You envious little noodle. My deleted posts are usually due to me pushing the limits of our ridiculous anti free speech laws. Other times im so plastered that my comments may look something like this.

Jduh3ibd kjdvvhw

I don’t put links up to scanky photos.

I’ve been here a lot longer than you and James. There is history here. Like my amazing market calls. Political calls coming true years after my predictions. In 2014 I called the end of the bull market in Toronto for the spring of 2017. I called a Trump win the day he came down the escalator. And many many more.

You are not in the same league as me. So don’t expect the same treatment for the God of dogs.

Dr Smoking Man
PhD Herdonomics

#76 mark on 02.02.18 at 7:38 pm

#65 ottawamike on 02.02.18 at 7:04 pm

At 22 basis points it puts advisors at a big disadvantage.
This is a great product with thousands of stocks and bonds in portfolio, perfect diversification.

There is no diversification when you hold only one security and are exposed to the risk that inherently represents . Be careful. – Garth

#77 I thinks I know something on 02.02.18 at 7:40 pm

“All those poor moisters who bought this junk on their credit cards, thinking ‘it’s different this time’ just learned it never is.” – Garth

———————————————

An acquaintance of mine has invested heavily in Bitcoin. Since way back to middle of last year. And even more so recently. Not sure if he’s ahead, or behind, or how leveraged he is. But definitely used leverage. He may well be way behind, but not a big deal. If he’s in serious trouble, he’ll go bankrupt. He’s done it before. All was forgiven (except for some CRA debt). There’s no debtor’s prison in Canada.

#78 Hugh Janus on 02.02.18 at 7:41 pm

The fake news channels have all been saying at the start of the year how prices will go up up up. B20 wont effect anything and it should be another record year for house prices shooting up.

Moving ahead 4 weeks and there tune has changed. More dumb asses complaining they payed too much and were under pressure so they bought on a whim. How dumb. Looks good on them. Now they are going to get a lesson from the school of hard knocks on simple economics.

#79 OttawaMike on 02.02.18 at 7:51 pm

#65 #66 ottawamike on 02.02.18 at 7:04

Not me in those posts but interesting subject nonetheless.

I can suggest some alternate user names for you if you lack imagination like most of Ottawa’s citizens.

#80 InvestorsFriend on 02.02.18 at 7:56 pm

Blacksheep, congratulations on your big real estate gain that you described. He said:

“My initial RE investment (personal res) circa Jan/2014 of $ 425K has now officially gone ballistic.

My neighbor two doors down is selling his place, (same lot size as mine) now subdivided into two lots for $ 599K, PER lot.”

********************************
It may have been mostly luck but in any case you did very well.

It might be very wise to subdivide and crystallize some of the gain. Either way it seems extremely unlikely that you will ever regret that purchase. Well done.

He may regret gains not taken. His rodomontade is unappealing. – Garth

#81 Nagraj on 02.02.18 at 7:56 pm

Golly gee willikers! Another interesting day in the mkts! Will a blue Monday and a black Tuesday follow?

#82 OttawaMike on 02.02.18 at 7:59 pm

Smoking Man
What’s your call on fair market value for the Dow?

I figured with taking average historical earnings into account and the current inflation rate 25k Dow is fair value.

#83 Yitzhak Rabin on 02.02.18 at 7:59 pm

Quote: “For the first time in years the yield on a 30-year bond popped through 3%”

To the extent that the “markets” believe in the fed’s stated balance sheet reduction pathway, it is a free invitation to front run their selling. Just as QE was to front run their buying both here, in Europe and Japan.

The over leveraged, indebted economy cannot afford higher interest rates at all without triggered a larger repeat of the 2008 financial crisis. Not to mention the dramatically worsened fiscal situation for governments.

Spiking long term interest rates are unaffordable without massive write-offs and defaults. If central banks artifically hike rates at the short end they could quickly invert the yield curve and choke off the banks and credit growth.

There are no good options.

The markets anticipated this brief spell of rising interest rates since late 2013 and priced in a rising $USD. A return to QE4 was completely ruled out.

Now at the margin some are realizing the current dilema and beginning to price in the possibility of QE4. It is showing up in the $USD off to its worst start since 1987, rising oil prices, gold & silver rallying and blips in other commodity prices and foreign currencies.

QE4 could tank the $USD terminally into the fiat currency graveyard.

Dramatically raising rates to defend the $USD in that situation ensures another, larger financial crisis.

#84 Asterix1 on 02.02.18 at 8:00 pm

Go Richmond Hill! Man, its a massacre there!

I love the stats for the average 3 bedroom single detached.

Period: Dec 31 – Jan 28 (Year-over-year change)
* New listings: +89%
* Sold listings: -78%
*Active listings: +520%

Scary part (for some), hilarious (for others) its just the start…..

#85 Happy Housing Crash Everyone! on 02.02.18 at 8:05 pm

You dirty stupid lying scumbag SHYSTERS are going to feel financial pain worse than homeowners on the verge of going bankrupt. You dirty selfish lying scumbags will make NO MONEY. You will lose your cars and YES!!!!!! Homes. The chickens are coming home to roost you disgusting POGarbage. RE is CRASHING HARD!

HAPPY Happy Housing Crash Everyone! :-)

#86 did you read the link? on 02.02.18 at 8:06 pm

Garth?

Put all your money in a single asset? Good luck with that. – Garth

http://www.moneysense.ca/save/investing/etfs/finally-everything-an-investor-needs-in-a-single-etf/

its NOT one single asset– it’s a globally balanced etf that they rebalance. No different than a global equity balanced MF or a tactically balanced etf portfolio like yours. Cmon

What do you not understand about a one-asset strategy? What happens if liquidity dries up for an untested security? ETFs are products. – Garth

#87 akashic record on 02.02.18 at 8:06 pm

Democrats diversified investment plan grabbing power by the Russian pussycats turned out to be the biggest political shithole bubble. Some will lose their shirts and pants.

#88 Deplorable dude on 02.02.18 at 8:07 pm

So for those note paying attention the US House Intelligence Committee initial memo dropped today.

Cliff notes……FBI deliberately misled Judges to get Fisa surveillance warrant on Carter Page….and by extension the Trump campaign even after the election….using a discredited dossier.

Or in a nutshell Sedition/treason.

Libs on full meltdown discredit mode…

This is just the start….a slow motion nuclear explosion….

…..next to drop is the IG report next month….

This is just the start.

#89 re., 49 on 02.02.18 at 8:08 pm

#220 bonds and stocks on 02.02.18 at 4:20 pm
not acting inversely….that’s not good
//////////

nor did it for most of the 2009-2016 recovery

………..

that wasi in an equity revovery and a bull bond market. Rates are rising and the bond bull market is done with. An equity sell off and bonds sell off as well? clearly, we are in different times

#90 Tony on 02.02.18 at 8:09 pm

Re: #37 nick on 02.02.18 at 6:04 pm

It comes out this Thursday and the jobs report for Canada which must be worst than abysmal comes out Friday not Tuesday so they can blame everything on the housing report.

#91 M*A*S*H* on 02.02.18 at 8:10 pm

Changed my username; it’s a new year!

What a great day to pick up less expensive stocks, dividends, ka-ching.

Garth, great post as always, nice to see you finally post a pic of that high flyer “FELIX”, not looking like it is enjoying itself! :)

A device is yet to be invented that will measure my indifference to this remark. — Hawkeye

#92 Cottingham a bargain on 02.02.18 at 8:11 pm

If 5 year rates move to 4% by the end of the year or sooner so too will the stress test go the way of the dodo bird.

No way any government will want to live in an environment of crashing RE values and a voting of public
Religiously devoted to bricks and mortar .

Start looking to buy homes ,with dirt, soon.

#93 Linda on 02.02.18 at 8:12 pm

So, when does the mass panic & run for the exits begin? Now? The next market correction? The next time the posted rates increase in Canada? All these elements will eventually build enough pressure to begin the fall…..

#94 Honey Dripper on 02.02.18 at 8:12 pm

3% is squat
Buy the dips and sell the rips!

#95 What's next? on 02.02.18 at 8:14 pm

Here is your next article.

Multi billion dollar industry, aka Ponzi scheme, on the verge of collapse.

Syndicate mortgages getting their licenses revoked.

http://business.financialpost.com/real-estate/mortgages/update-1-ontario-regulator-revokes-mortgage-broker-bdmc-license-after-probe

#96 45north on 02.02.18 at 8:15 pm

Blacksheep:

The market value of my RE, as of today is between 900 to 1000K since my initial investment, 4 years ago.

you posted yesterday, gloating about the apparent windfall increase in your property value. Here’s a bit of what you said:

My neighbour two doors down is selling his place, (same lot size as mine) now subdivided into two lots for $ 599K, PER lot.

key phrase “is selling” means that he has not sold. He has some control. But not a lot.

I have total control to sell or not, never get a rent increase and never get evicted.

it’s February 2. Report back on March 2 (another Friday) on your neighbour’s efforts to sell . Let the market guide you.

#97 Cottingham a bargain on 02.02.18 at 8:16 pm

#84 Asterix1 on 02.02.18 at 8:00 pm
Go Richmond Hill! Man, its a massacre there!

I love the stats for the average 3 bedroom single detached.

Period: Dec 31 – Jan 28 (Year-over-year change)
* New listings: +89%
* Sold listings: -78%
*Active listings: +520%

Scary part (for some), hilarious (for others) its just the start…..
—————

I see no greater price reduction in Richmond hill than I do anywhere else and RH was one of the areas that gained the most since 2016.

Anyone who bought two of more years ago is still sitting pretty .. so far anyway.

Quite sure anyone who buys during this pause dies well 5 years out too

#98 Tony on 02.02.18 at 8:17 pm

He’d bee ahead, the smart money is rotating out of Bitcoin into the lesser known cryptocurrencies.

The smart money never went into BTC. – Garth

#99 PGer on 02.02.18 at 8:23 pm

Listening to the environuts shrilly squealing at the PM today in Nanaimo about the Kinder Morgan Pipeline expansion. LOL – it’s absolutely hillariousy how brainwashed (and brainless) these people are.

Then I later looked at a Vancouver Sun poll that had 86% not in favour of the Dippers proposed (and unconstitutional) ban of increased transport of dilbit through BC. Just shows how unattached the BC NDP are – and beholden to their environut base and the whole 3 greenies proping up this bunch. It won’t be long until the Green Dips “government” collapses in BC. Thankfully. But, in the meantime, watching the 2 NDP governments tear each others throats out is certainly entertaining (where is pretty boy Jagmeet – MIA?)

(And thankfully, and more importantly, I’ve been loading up on RR Preferreds lately).

#100 TheSecretCode on 02.02.18 at 8:23 pm

Foreclosures are being covered up in BC as we speak… right now.

Realtors are back for Feb. and I am going to be paying close attention to the inventory number.

I have already acknowledged where the highest second mortgage growth is in all of Canada: Kelowna, BC.

And guess what: foreclosed properties are hitting the market right now in Kelowna (no it is not the end of the world) but his is not being made public. Just like what was happening in Calgary.

This is a stage of last resort which I have verified families are living in these properties going down…drowned in debt…horrible situation.

And the kicker – bank valuations are showing 80K less than comparable properties….and 40-50k less than BC Assessed values.

A little secret…that initial bank price can be negotiated down even more as the banks want it off the books.

#101 Danny on 02.02.18 at 8:27 pm

Garth you are right
“Well, nothing goes up forever and corrections are like diets. ”

So when the DOW bubble bursts….will the Trump supporters blame Trump?

#102 Asterix1 on 02.02.18 at 8:31 pm

#34 The Great Gazoo on 02.02.18 at 5:50 pm
Let the games begin

“Thompson, a bus driver, bought her two-storey, detached house as a nest to share with her husband, her children and grandchildren.

She says she paid $955,000 for a 2,749-sq.-ft. detached house. Last month Mattamy began selling the same model on a similar lot for about $859,000 in Queen’s Common Phase 2.”
____________________________________________

That builder needs to drop its prices by another 10%! (at least)

Zolo mentions a 20% price drop since highs for detached homes there.

#103 TheSecretCode on 02.02.18 at 8:40 pm

Crypto has crashed. In the books. Neck and neck with TO RE. Can’t fight the Fed. Artisans of the cash money run the globe.

Crashing crypto is not good for Van RE. It goes hand-in-hand.

#104 Yuus bin Haad on 02.02.18 at 8:41 pm

Mr. Market got wind of those anecdotal stories about Millennials jumping in to stocks figuring He had “insulated” the thing.

#105 TheSecretCode on 02.02.18 at 8:44 pm

Replace crypto with Bitcoin as crashing…some of the alt coins still substantially up on the y/y….but grandma and grandpa talk has turned cold on crypto.

#106 Where's The Money Guido? on 02.02.18 at 8:44 pm

Re: #143 Rooster on 02.02.18 at 8:20 am
#61 Nonplused on 02.01.18 at 7:47 pm

My favorite “squeeze” is the new carbon taxes from the Nutley government here is right wing Alberta (how did that happen?). Last month I paid $75 for the commodity (natural gas) to heat my house and $42 in carbon taxes.
**************

Info on the carbon tax scam:
https://quadrant.org.au/opinion/doomed-
planet/2015/12/discovering-maurice-strong/
Jesse Ventura Global Warming FRAUD Maurice Strong Carbon Dioxide Tax Cap and Trade System NWO:
https://www.youtube.com/watch?v=tMkqozFqT0g

Died in China while hiding from fraud charges in Canada.

#107 tccontrarian on 02.02.18 at 8:44 pm

Garth, you say this:

“The strong jobs report hands the central bankers another reason to do what they want – end the days of cheap money that have so distorted asset values.
Like, of course, Canadian houses.”

Yet you follow it up with this:

“Stocks may well erode further, but the jobs, growth and profits that fuelled them remain.”

A number of well-respected analysts would argue that those ‘distorted asset values’ includes stocks. Stocks, after all, are also an asset class in itself.
Why treat them as if they’re different?

Being positioned now at >25% short, the last couple days have been…sublime! I love seeing the fear in people who basically laughed at my assertion that the US markets were frothy and subject to huge losses.
Just the beginning, methinks…

Carefull out there folks!

TCC

Stocks rise when the companies behind them make money. Houses rise with the hormone level of buyers. They are not to be directly compared. Cheap money may help corporations enhance profitability, but is the chief driver of real estate. – Garth

#108 Stone on 02.02.18 at 8:45 pm

#76 mark on 02.02.18 at 7:38 pm
#65 ottawamike on 02.02.18 at 7:04 pm

At 22 basis points it puts advisors at a big disadvantage.
This is a great product with thousands of stocks and bonds in portfolio, perfect diversification.

There is no diversification when you hold only one security and are exposed to the risk that inherently represents . Be careful. – Garth

——-

So, I went and plugged in each of the individual Vanguard ETFs that make up the VBAL portfolio. To get a YTD return, I used Dec 27, 2017 closing price as the starting point. This puppy is in negative territory as of end of day today. Not good. Even with this week that has gone by, I’m still positive at 1.21% YTD on a 50/50 portfolio mix of equities/fixed income.

Here’s my critique of VBAL:
1 – Too much aggregate bond fund. In a rising interest rate environment, that’s suicide.
2 – Too much US aggregate bond fund. Are they not aware the Fed is raising rates?
3 – No rate reset pref share ETF in the mix. They have no counterbalance to what’s happening right now with rates rising. I get they don’t offer it as part of their ETF suite but maybe they should reconsider that.
4 – They pick when to do a rebalance, not when you think it’s suitable. A little alpha is a good thing to have and you lose that by locking yourself in to this.

Overall, I think this VBAL portfolio mix is going to lag for at least the next 1-2 years primarily due to the bond mix. Feels like they based themselves on how the markets have done from 2009-2016 and thought it would just continue as it had. Things have changed a bit since then. Better to sticking to individual ETFs that you can shuffle/rebalance somewhat as circumstances dictate.

On the plus side, 22 basis points MER is nice but the return still needs to come in. Not seeing it happen here.

#109 Two-thirds on 02.02.18 at 8:46 pm

Speaking of staying invested and other lessons needed to succeed financially:

https://www.msn.com/en-ca/money/savingandinvesting/14-money-lessons-rich-parents-teach-their-kids/ar-BBIi3UY

From the article, some pearls everyone ought to remember:

– Success isn’t free

Wealth and success take work.

“Becoming financially independent will be the fight of your life. You’ll have to be willing to sacrifice your time, sleep and leisure to build something great,” writes Siebold. “It’s not glamorous or pretty. While your friends are out having fun, you’ll be working.”

– Get rich solving problems

The top earners know that money flows from ideas and problem solving. “If you want to be rich, solve a problem,” writes Siebold. “If you want to be very wealthy, solve a bigger problem.”

While “the masses solve small problems for their employers,” he says, “the rich solve significant problems and get compensated accordingly.”

– Invest

“The rich are investors, not spenders,” says Siebold. “They invest their money today, so they’ll have more tomorrow.”

To be a successful investor, stick to what you know or what you’re interested in: “If you like to play guitars, you might study the vintage guitar market. If you’re a baseball fan, look into investing in rare baseball cards. If you like dissecting stocks, you could study the stock market.”

– Spend smart

No matter how big your paycheck is, you won’t be rich unless you’re disciplined enough to keep what you make. “Excessive spending can ruin you,” warns Siebold. “It happens every day to people with millions of dollars at their disposal.”

That’s not to say you should never spend: “Just make sure you don’t overextend yourself in the process because that will put you on a treadmill of having and not having money.”

– Choose prosperity over entertainment

The rich use their time differently than the average person, says Siebold: “The masses spend their time, while the rich invest in it.

“Spend your time basking in entertainment, and you will struggle your entire life financially. Invest your time creating solutions to people’s problems, and you’ll never lose a minutes sleep worrying about how to pay the mortgage.”

Tragically, the last one really resonates with contemporary Canadian culture. People seem to know everything there is to know about sports, celebrities, music, and media, but we lack the knowledge to fix stuff, let alone, make stuff, especially stuff that solves many people’s problems.

Posting on pathetic blogs aside, that is!

#110 Blacksheep on 02.02.18 at 8:48 pm

Waiverless # 55,

Blacksheep:

“The market value of my RE, as of today is between 900 to 1000K since my initial investment, 4 years ago.

“You’re basing your argument on a 4 year window in a low interest rate portion of a real estate cycle? There is no gorilla in the room. There were plenty of people in 1990 Toronto who were making the same argument as you. 20 years of tears later they were back on top – so guess it depends on your investment horizon – the comparison should never be 4 years”.
——————————-
I’ve already factored in a potential “significant correction” on my RE and still come out smiling $ wise when compared to the “balanced portfolio” scenario.

I quoted math from my current real life situation and Garth’s returns, not speculation if the stars align in my favour.

If you want to play magic timeline, compare RE / Index values from: 1929, 1972, 1981, 1987 or 2008, all dates carried significant economic shocks, but were proven temporary as the FED’s target of 2% annual inflation rises all boats, indexes and RE included.

Thanks for the response.

#111 Asterix1 on 02.02.18 at 8:48 pm

Anyone who bought two of more years ago is still sitting pretty .. so far anyway.
_________________________________________

Average single detached price in Richmond Hill:
January 2016 = 1,363,000
December 2017 = 1,365,000

Oh yeah, they are sitting pretty! They made 2,000$ profit in 2 years.

– They also paid massive interest of that debt.
– Their down payment is wasted, cant invest it.
– Property tax, around 4KX2 = 8,000$ total.

http://torontorealestatecharts.com/2018/01/04/december-2017-detached-richmond-hill/

#112 TheSecretCode on 02.02.18 at 8:50 pm

Yellen to start Monday at Brookings Institution.

Champagne popping this weekend for somebody. That is what you call getting out clean.

#113 M*A*S*H* on 02.02.18 at 8:52 pm

Interesting!

http://business.financialpost.com/technology/blockchain/if-you-sold-or-used-bitcoin-last-year-the-cra-needs-to-collect-its-due

Let us hear from the knowledgeable one’s (if you please) regarding this. I am a firm believer of Block-chain tech, but do not care to get involved in Bitcoin, personal reasons, the tech behind all this is the future!

It would be interesting to hear from other’s that are knowledgeable in this field as to where there thoughts are on this, much appreciated!

If we don’t go crazy once in a while, we’ll all go crazy. — Hawkeye

#114 Dan.t on 02.02.18 at 8:54 pm

Summer of 2018 will be a crypto orgy…or maybe not, but Canadians and average investors are predictable…

I don’t care if it is BTC- don’t friggen buy at 20k (however..now is not looking so bad),

-I don’t care if it is Pot stocks- don’t friggen buy when ACB is 15$

– I don’t care if it is Canada RE, don’t buy a 895k 1 bedroom apartment in YVR, a 1.2 Million POS tear down in Milton, a 1.78 Million Langley special and expect to make money.

If you have money to lose…knock yourself out.

Housing is funny subject…if it wasnt for outright gov intervention, it would never have gotten so stupid…but like BTC and Pot stocks what goes up, often comes back down hard…oh, wait. the public still believes CBC, The Province, The SUN, the hamster poop limited edition special report…just let them get what they deserve…and no, you don’t know everything. Love the blog but after watching housing puke to new and new and new and new insane levels…..just watch crypto soon. or not.

#115 Stone on 02.02.18 at 8:56 pm

Also, will they close up VBAL and the other 2 portfolios if they don’t get the volume of buyers they’re looking for within a certain time frame. New ETFs come up all the time and they also shut down when there is no demand.

#116 paulo on 02.02.18 at 9:04 pm

Possible buying opportunity on Monday: ignore the whistle stop, discounts to be had!

#117 common sense on 02.02.18 at 9:05 pm

About freaking time.

And where the hell were the algos and PPT teams today..

These markets, interest rates have been 96% BS the past 3-4 years…

Maybe just maybe we can get back to reality again, face and deal with the party aftermath and get to normal.

#118 Yanniel on 02.02.18 at 9:09 pm

“Apparently Vanguard has come out with the one stop Greaterfool single balanced portfolio ETF.MER 0.22%
This could make balanced index investing easier. And no more need for advisors, roboadvisors, blogs, dogs… no, wait. I like dogs.
http://www.moneysense.ca/save/investing/etfs/finally-everything-an-investor-needs-in-a-single-etf/

Put all your money in a single asset? Good luck with that. – Garth”

A single asset? I thought an ETF was a basket of securities.

An ETF is a single security – one product created by a company – which derives its market value from underlying assets. It is not a basket of stuff you own. – Garth

#119 Reality is stark on 02.02.18 at 9:12 pm

Have a buddy who was hounded to buy a home in Richmond Hill by his stay at home wife. Cost him 1.6 million, now worth 1.1 million. I told him not to buy.
He just locked in to a fixed rate mortgage at double his old variable rate. He told his wife they wouldn’t be socializing as much anymore as times have changed and any equity they had is now gone.
She just filed for divorce. Welcome to North America.

#120 Dan.t on 02.02.18 at 9:13 pm

#77 I thinks I know something on 02.02.18 at 7:40 pm

sums up Canadian mentality perfect.

#121 Yanniel on 02.02.18 at 9:14 pm

Ok Garth, I got your point about potential poor liquidity of the untested ETF.

#122 For those about to flop... on 02.02.18 at 9:15 pm

#96 45north on 02.02.18 at 8:15 pm

February 2. Report back on March 2 (another Friday) on your neighbour’s efforts to sell . Let the market guide you.

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

Hey Northie.

Didn’t notice too many blocks out there in that range.

Some been on for over six months.

These ones are candidates…

M43BC

https://www.zolo.ca/abbotsford-real-estate/2007-majestic-crescent

https://www.zolo.ca/abbotsford-real-estate/2015-majestic-crescent

#123 Blacksheep on 02.02.18 at 9:20 pm

Investor # 80,

“It may have been mostly luck but in any case you did very well.”
——————————–
Thanks Shawn.

Agreed. Got lucky with the rezoning.

But independent thinking was required to ignore the groupthink I took part in for the previous 5 Years (renting / my fault) on this blog and realize all I needed to do was align my investments, with those of the system.

I learned the hard way, to watch what they actually do, while ignoring what they seem to be say.

#124 Smoking Man on 02.02.18 at 9:23 pm

#82 OttawaMike on 02.02.18 at 7:59 pm
Smoking Man
What’s your call on fair market value for the Dow?

I figured with taking average historical earnings into account and the current inflation rate 25k Dow is fair value.
……..

Not sharing with public. Why should I help traders who dident have my back when I need them.

Plus I signed a doc that forbids me from talking about this stuff.

Twitter. Chat there

#125 I believe everything on television on 02.02.18 at 9:24 pm

simple economics?
the re market was whacked
by the banks, via their faithful servants, T2 , M etc.
pump and dump
simple economics?
finance a house mortgage of 1 million over a 25 yr amortization and You pay 2 million
simple economics? the interest is 100%

#126 I Thinks I know something on 02.02.18 at 9:26 pm

“The same goes for houses in Vancouver or Toronto that have jumped 50% in value in a few years. Buyers have used extreme leverage to get into everything from newbie urban condos to suburban trophy homes. The cheapest money to ever exist was not used to extinguish debt, but to run it to the sun. How this turns out is unknown, but no economist a year ago was predicting bond yields would swell like a horny blowfish. – Garth

————————————————-

I’ve said it many times before. Even though Garth only occasionally post my prognosticating comments. In 10 years time GTA RE will be worth 50 to 100% more than it is today. Why? Reasons are; continued CMHC meddling in the free market, continued government meddling in the free market, continued unrelenting bankster fraud, continued massive immigration to TO, continued and possibly reinvigorated ZIRP, etc.

#127 Yorkville Renter on 02.02.18 at 9:27 pm

#104 – Hey Blacksheep – take some of that money you earned and take a well-deserved vacation… oh? wait a minute- none of that ‘investment income’ can buy even a bag of chips? why not?

and before discounting the diss… I own RE (mixed use) I just don’t live in it… now, wait a minute while I deposit this dividend cheque

#128 Stupid masses on 02.02.18 at 9:30 pm

The masses are stupid and then they cry when they lose. Cheap and easy credit should never have happened in the first place.
https://www.thestar.com/business/real_estate/2018/01/29/how-a-softer-housing-market-has-crushed-pre-construction-home-buyers-dreams.html

#129 Yanniel on 02.02.18 at 9:32 pm

@Balanced?

“Wow. Seems like a correction is occurring.

How much has the balanced portfolio gone down after today’s rout? I just want some comparison to all of the other investments you mentioned.

Thanks

Depends. Likely 0.8%. Did you ask me how much it went up last month? – Garth”

That’s about right. My balanced portfolio, that follows the allocation spelled out in this blog many times, lost 0.875% today.

#130 Brendan on 02.02.18 at 9:36 pm

#119 Reality is stark on 02.02.18 at 9:12 pm
Have a buddy who was hounded to buy a home in Richmond Hill by his stay at home wife. Cost him 1.6 million, now worth 1.1 million. I told him not to buy.
He just locked in to a fixed rate mortgage at double his old variable rate. He told his wife they wouldn’t be socializing as much anymore as times have changed and any equity they had is now gone.
She just filed for divorce. Welcome to North America.

Does it make me a bad person that this gave me a huge sh*t eating grin?

#131 Blacksheep on 02.02.18 at 9:42 pm

north # 96,

“It’s February 2. Report back on March 2 (another Friday) on your neighbour’s efforts to sell . Let the market guide you.”
—————————————–
The house / lots for sale (subdivided zoning) has a piece of crap unrenovated rental house on it with no out building. My home is a 1960 quality split, 90% renos done when I bought. My 3 bay 880 sq/ft shop out back was built in 2010.

I have a view of the Valley, they don’t and this makes it an awesome holding property until being rezoned.

So I think at $ 599, the neighbour may be kidding themselves and that’s why I hedged my home valuation at 900 to 1000K. Short of an earthquake or a full on economic collapse, I’m laughing all the way to the bank when I finally decide to liquidate my res.

Yes, I got lucky when I bought.

#132 Lee on 02.02.18 at 9:44 pm

#22 Infidel,

The smart money buys more on a 10-15% pullback.

#133 Blacksheep on 02.02.18 at 9:44 pm

Oh ya…I got earthquake insurance too, so bring it.

#134 islander on 02.02.18 at 9:51 pm

“The cheapest money to ever exist was not used to extinguish debt, but to run it to the sun.”
Thanks, Garth……….you say it best!

#135 oops, copy write, my bad.. on 02.02.18 at 9:57 pm

The market is weird. Every time one guy sells, another one buys, and they both think they’re smart.

#136 When Will They Raise Rates? on 02.02.18 at 10:03 pm

#113 M*A*S*H* on 02.02.18 at 8:52 pm

Interesting!

http://business.financialpost.com/technology/blockchain/if-you-sold-or-used-bitcoin-last-year-the-cra-needs-to-collect-its-due

Let us hear from the knowledgeable one’s (if you please) regarding this. I am a firm believer of Block-chain tech, but do not care to get involved in Bitcoin, personal reasons, the tech behind all this is the future!

It would be interesting to hear from other’s that are knowledgeable in this field as to where there thoughts are on this, much appreciated!

If we don’t go crazy once in a while, we’ll all go crazy. — Hawkeye

————

Decentralized crytpto exchanges will facilitate buying and selling crypto’s (ie selling bitcoin to buy etherium – a taxable event), while decentralized marketplaces will facilitate bitcoin for products and services (barter – a taxable event).

All outsuse of the government’s reach.

^ The CRA and all other parasitic entities will be powerless to collect their “fair due”.

Welcome to the blockchain revolution.

You dream. All income arising from transactions will be subject to tax. – Garth

#137 Loonie Doctor on 02.02.18 at 10:07 pm

DOW down 666. The number of the beast. Cue the Iron Maiden music and four horsemen.

#138 Bitcoinnaire on 02.02.18 at 10:13 pm

60% is a healthy correction, so there’s genuine buying opportunities now in the various crypto projects.

A 3% sell-off in the legacy assets isn’t even worth looking at. When the inflated equity prices bleed 40% or more of their absurd valuations, I’ll consider buying in. There’s no value in the market indices at this time.

#139 Lifexprt on 02.02.18 at 10:13 pm

March 9, 2009 S&P hit an all time low at 666

Today the Dow drops by 666 points

I’m getting a funny feeling this over extended bull run has come to pass

That was deep. – Garth

#140 InvestorsFriend on 02.02.18 at 10:20 pm

What is Sold is Bought and Vice Versa

#135 oops, copy write, my bad.. on 02.02.18 at 9:57 pm said:

The market is weird. Every time one guy sells, another one buys, and they both think they’re smart.

***********************************
The fact that every share sold is also bought is often forgotten as talking heads weirdly say “the market sold off today” rather than “investors bid down the price of stocks today”.

And the talking heads pretend money rotates out of stocks on a day like today when in fact some money changed hands and a lot of wealth simply disappeared into thin air and did not reappear anywhere else. Barring a few share buy backs, every share that was owned yesterday was still owned by someone today. No net money escaped from the stock market (except for those few share buybacks probably offset by the exercise of stock options or new share issuances)

Your post is a reminder of this truth.

#141 jane24 on 02.02.18 at 10:21 pm

The Great Gazoo on 02.02.18 at 5:50 pm

Let the games begin

“Thompson, a bus driver, bought her two-storey, detached house as a nest to share with her husband, her children and grandchildren.

She says she paid $955,000 for a 2,749-sq.-ft. detached house. Last month Mattamy began selling the same model on a similar lot for about $859,000 in Queen’s Common Phase 2.”

https://www.thestar.com/business/
______________________________

This says it all doesn’t it? A bus driver spent one million on a home with 3 hours of due consideration. What a fool. I bet she spent more time considering and shopping for her last pair of shoes. Her excuse is that it would make a three year old happy. Then the article goes on to say that this bus driver has at least two other homes which surprise surprise are not worth what she hoped and the gains probably taxable.

The new home price point will drop a few more times and then when she actually has the house to move into she will have to accept a new lower bank appraisal and come up with the missing funds some how, some way. All that stress for a cardboard house in a dump like Milton. And she is obviously looking for sympathy from the general public who may not have multiple houses like she does.

I think that the actual news is that the Toronto Star, the biggest house pumper on the planet, has actually published this story. It indicates that this problem is actually huge but mostly hidden since the Star is financially supported by new home advertising. Another sign of bad times coming in TO RE. Too late to get out.

This is the canary in the coal pit. This is the shoeshine boy. There will be a lot more articles like this.

#142 45north on 02.02.18 at 10:28 pm

For those about to flop: Some been on for over six months.
These ones are candidates…

thanks

can you report back on March 2. Please.

#143 Chico on 02.02.18 at 10:30 pm

#75 Smoking Man on 02.02.18 at 7:37 pm

I don’t put links up to scanky photos.

—————————————————–

What about that photo of you and Garth at the ice cream store…how would you describe that? Maybe it’s just me but my head starts to hurt just thinking about it. You were skraggy not skanky, or was it skanky skragg, it’s so hard to tell.

#144 Entrepreneur on 02.02.18 at 10:34 pm

Know someone who sold an mobile home, bought a house but had to get financing from someone else as the banks would not approve the loan. Now, she wants to sell in the spring as the interest rate went up three times. She looked worried and how many others are like her?

Yeah right, #99PGer, the NDP/Greens will not collapse, just the opposite, will get stronger. And the anger will develop more after the Nanaimo/Trudeau episode. Like how Trudeau defended himself and smooth-talked about the pipeline at election time. And Notley on P&P sounded like a dictator. And no mention from either about transitions to green energy. All about oil.

We all know the no “world class response” is going to save the sea life and the ocean ecosystem. And Quebec said no to the Eastern pipeline so why not B.C.

TGF, and the fight is on!

#145 tccontrarian on 02.02.18 at 10:34 pm

“Stocks rise when the companies behind them make money. Houses rise with the hormone level of buyers. They are not to be directly compared. Cheap money may help corporations enhance profitability, but is the chief driver of real estate.” – Garth
——————————-

Wrong! Stocks rise when buyers bid up the price because there is a perception that the companies’ profits are rising. What, you mean to tell me the Dow decline this week was caused by component companies all becoming unprofitable, suddenly? Of course not! The profitability profile hasn’t changed – but sentiment has!
Buying beggets buying – and selling beggets selling; the psychology in the RE market not too dissimilar to other markets (or Bitcoin, even).

TCC

Daily trends are meaningless. Y comment stands. – Garth

#146 NoName on 02.02.18 at 10:54 pm

didn’t take that long…

https://blog.positive.com/predicting-random-numbers-in-ethereum-smart-contracts-e5358c6b8620

Conclusion
Secure PRNG implementation in the Ethereum blockchain remains a challenge. As our research suggests, developers tend to use their own implementations due to the lack of ready-made solutions. But when creating these implementations, it is easy to make a mistake because the blockchain has limited sources of entropy. When designing a PRNG, developers should be sure to first understand each party’s incentive and only then choose an appropriate approach.

#147 Bungalow Jack on 02.02.18 at 10:54 pm

@75 Smoking Man
SCM
You envious little noodle. My deleted posts are usually due to me pushing the limits of our ridiculous anti free speech laws. Other times im so plastered that my comments may look something like this.
Jduh3ibd kjdvvhw
I don’t put links up to scanky photos.
I’ve been here a lot longer than you and James. There is history here. Like my amazing market calls. Political calls coming true years after my predictions. In 2014 I called the end of the bull market in Toronto for the spring of 2017. I called a Trump win the day he came down the escalator. And many many more.
You are not in the same league as me. So don’t expect the same treatment for the God of dogs.
——————————————————————
Now, that was merited. And contained some actual truth…Ruff!
————————————————————————————————————————————
@80 Garth
Rodomontade— Arigatou sensei.
————————————————————————————————————————————
@98 Tony
He’d bee ahead, the smart money is rotating out of Bitcoin into the lesser known cryptocurrencies.
The smart money never went into BTC. – Garth
————————————————————————————————————————————

Tony’s “Smart Money” idea this time of year 2017 was to exit NVDA. Caution advised whenever he dispenses smart money thoughts.

————————————————————————————————————————————

#148 Royal City Dweller on 02.02.18 at 10:58 pm

My portfolio GAINED 0.5% today.
GT = Black Magic.
No idea how he’s doing this, but , I’m in good hands.

#149 When Will They Raise Rates? on 02.02.18 at 11:03 pm

You dream. All income arising from transactions will be subject to tax. – Garth

Go ahead and try to tax Monero transactions… Can’t tax what you can’t see. Can’t shut down decentralized exchanges without shutting down the Internet. Game, set and match.

#150 Lost...but not leased on 02.02.18 at 11:04 pm

Like Flops posts on RE…I will keep people updated on things as they unfold so other can hopefully benefit from .

I mentioned my Executor role for my Dads estate, which is winding down.

I also posted previously on the nasty legal concept “COMMITTEESHIP”. My sibling and a cabal of a lawyer and financial advisor pulled some slimey legal tricks(redundant) to take 100% control of my Mothers affairs.

My parents were divorced…just got the word my Mother passed away last night.

I’ll keep you posted as to how this unfolds as COMMITTEESHIP apparently expires upon death…*******as people need to be aware of this dirty trick*****…as my sibling now has to face me.

#151 ANON on 02.02.18 at 11:07 pm

This Paleo Blog.

Does this mean we get to swap squirrel recipes again?

#152 renter in Surrey on 02.02.18 at 11:07 pm

I wonder how many US bus drivers live in $1,000,000 homes…

#153 M on 02.02.18 at 11:09 pm

666 points to be more exact.
And is the beginning of the end for the western money system. They’ll jump to stop the blaze and put a floor below the everything bubble (yes Gartho bay…that was bonds too).
…this will last maybe till the second half of the year (June by my interest rate calculations including the reversal of the interest curve).
Unless machines are scared crapless and start massive selling.
Mr market took over the fate of gov bonds and there is nothing those half educated morons at the fed can do about.
They’ll eventually print and send the money bombers…in which case the good ol’ dollar goes into the basement and bread get 100$.

That is for the ones thinking they are soooo special.

Piper gets to be paid…eventually.

#154 conan on 02.02.18 at 11:19 pm

Nunes memo is really weak. Makes Trump look more like a dufus, if possible.

#155 Ian on 02.02.18 at 11:20 pm

US 10 year yield going parabolic, and will pass 3% next week my dogs.

This is major news.

#156 Ace Goodheart on 02.02.18 at 11:25 pm

Some serious buying opportunities in Canadian telecoms right now.

Mr. Market has apparently decided that BCE, for example, is worthless and should be sold off at any cost.

This is why I am able to make so much money although I really do not have much of an investing method. I just buy what everyone else is selling.

So y’all can sell me more of your BCE shares and the like? I am able to pay less than they’re worth. Much less. Sound good? Awesome.

RE: #138 Bitcoinnaire on 02.02.18 at 10:13 pm
“60% is a healthy correction, so there’s genuine buying opportunities now in the various crypto projects.

A 3% sell-off in the legacy assets isn’t even worth looking at. When the inflated equity prices bleed 40% or more of their absurd valuations, I’ll consider buying in. There’s no value in the market indices at this time.”

I’m sorry. I laughed at that post for about eight minutes. I am still chuckling a bit as I write this. Thank you for that.

#157 NoName on 02.03.18 at 12:02 am

interesting
6wks and its spring, press play.

https://www.youtube.com/watch?v=qj49rSEoY-8

#158 Newcomer on 02.03.18 at 12:14 am

#69 Zapstrap on 02.02.18 at 7:19 pm
…Wish I had a button on my phone to send a few volts down the line to the other end. Is there an app for that?
—–
Most modern phones let you block callers. Just hold down and press the caller ID, or click on the “more” arrow the block caller option should be there.

#159 El Joko on 02.03.18 at 12:20 am

#54 InvestorsFriend on 02.02.18 at 6:30 pm

Not a rhetorical question. Thank you so much for your answer.

#160 My Wife Loves Garth on 02.03.18 at 12:24 am

I have several business associates that are big boys at Fortress. There’s going to be a lot of incoming client calls this week!

Syndicated Mortgage Alert!

http://business.financialpost.com/real-estate/mortgages/update-1-ontario-regulator-revokes-mortgage-broker-bdmc-license-after-probe

#161 shorty oshea on 02.03.18 at 12:36 am

Garth
“After a 30% advance in 12 months, a pullback of 10% or 15% would be reasonable.”

Are you saying this is a good time to short the market?

#162 Bob Dog on 02.03.18 at 12:37 am

On Solar Powered Hydro Dams

How do you think the water got up there?

Washington and BC are 100% solar power when it comes to electricity. No nuclear reactors and no Kleen Coal.

#163 Blacksheep on 02.03.18 at 12:38 am

Renter # 127,

“Hey Blacksheep – take some of that money you earned and take a well-deserved vacation… oh? wait a minute- none of that ‘investment income’ can buy even a bag of chips? why not?”

“and before discounting the diss… I own RE (mixed use) I just don’t live in it… now, wait a minute while I deposit this dividend cheque”
———————————–
Renter,

It’s always wise to maintain multiple streams of revenue and not need to cannibalize ones investment returns.

Hey, Ironically I just got back from Playa del Carmen on the 24 of Jan. That’s in Mexico. It’s on the Caribbean side where the aquamarine ocean is 26 degrees. In january.

Riu Palace Riviera Maya. Beach front. 5 star only.

Ask for Carlos, he is the man.

Divi’s, yes…

Better get that pittance they give you in the bank and pay your landlord before he evicts your ass!

Remember, If your in Van, there is a dozen other parties lined up to rent your place, assuming it not a dive and your not getting screwed on your rental rate.

#164 Midnights on 02.03.18 at 12:43 am

BINGO…
RBlame the ‘Trudeau Effect’ for why Canadian stocks are doing worse than the rest

http://business.financialpost.com/opinion/blame-the-trudeau-effect-for-why-canadian-stocks-are-doing-worse-than-the-rest

#165 maya on 02.03.18 at 12:55 am

I love renting. I have always rented and saved tons. All of our registed accounts such as RESP, RRSP, TFSA are maxed. But things are looking different. I have been paying 950 dollrs per month with 2.5 increament every year for a two bedroom apartment since 2014 in surrey BC. Now the rent around this area for similar space is going for 1500. The landlord is not renewing our contract. I guess he is evecting us and raising rent to the on-going price. So, I am thinking, rather than paying 1500 pre month, may be I should I buy now. Not happy to buy in the peak market. I want to wait out until next two years. Want to see what the provencial gov. will be doing to curb the housing issue on Feb 8 Budget announcemnt.
If i buy a town house in today’s price, I wont be able to save as much and live a descent lifesytle working 28 hours a week and maxing all the registed portfolio.
Am in delimma.

#166 Blacksheep on 02.03.18 at 1:10 am

“He may regret gains not taken. His rodomontade is unappealing. – Garth”
——————————
I rented for 5.5 years and that was before the rental market and prices went nuts with 0.0 % vacancy rates.

No friggin thanks.

Only way to bail is to change markets and business is just to good right now to throw in the towel.

Had to google rod-o-mon-tade Garth, thanks for the compliment.

I learned a long time ago, If I don’t believe my own bullshit, nobody else will.

Hey, why am I telling you this…

#167 ANON on 02.03.18 at 1:19 am

A bus driver spent one million on a home with 3 hours of due consideration. What a fool. I bet she spent more time considering and shopping for her last pair of shoes.

With all due respect, the fine article mentions it was not the bus driver. On top of that, the person actually spent less time than 3 days deciding, she had to decide on the spot>/b> if she should overpay 300k or 400k for some leftovers.This is a very stressful situation, not experienced in day to day shoe shopping. On top of “on top of that”, she overspent only by 80%, showing a lot of restraint in managing not to double her original target price. Take that, shoe shopping!
Any and all talk of bubbles and irrational behavior are definitely vastly overblown. There is no such thing. All is fine.
/s

#168 morrey on 02.03.18 at 1:33 am

are these folks blowing smoke
published jan 8, 2018:

Canada’s real estate is actually balanced
According to Robert Hogue, senior economist with RBC Economics, there is “limited downside risks to prices in the near term in Canada” as the majority of housing markets, including Toronto, are “in balance.”

Based on the sales-to-new listings ratio—where 50% is a balanced market—the overall Canadian market appears to be balanced, according to RBC Economics December Monthly Housing Market report. Toronto and Calgary are also in balanced territory while Montreal and Vancouver are still leaning towards a seller’s market.

#169 Smoking Man on 02.03.18 at 2:00 am

DELETED

#170 Evangeline on 02.03.18 at 3:00 am

Keep calm and enjoy the ride!

https://www.youtube.com/watch?v=tLt5rBfNucc

#171 maxx on 02.03.18 at 7:41 am

Most people need to re-frame the meaning of what money actually represents in their lives:

The 60% drop in the “value” of a single bitcoin is 12K CAD. With that 12K, you could, for example, buy loaves of overpriced bread at $4 each or 2 liters of milk (staples many buy to live). That’s 3000 loaves or 6000 liters of leche. Enough for over 8 years for one person, at 1 loaf or 2 liters per day. Get them on special and you might cover two people. People don’t live like this, but gambling very often makes the basics of life harder to provide for. Sometimes impossible.

Think bread, re-frame your spending, and refuse to line someone else’s pockets.

12K is a lot of toast to toast.

#172 LivinLarge on 02.03.18 at 7:58 am

“Are you saying this is a good time to short the market?”…seriously, you read the entire post and came away with “the market is going to fall”?

“The market is expected to make periodic corrections bit the broad market is fundamentally solid for the near term at least”…that’s what I took away so, buy the dips,

#173 LivinLarge on 02.03.18 at 8:03 am

“Can’t tax what you can’t see.”…oh hell, sure you can and we do. It’s called a “notional assesment” and I did almost nothing else for 3 years at CRA.

#174 crowdedelevatorfartz on 02.03.18 at 8:26 am

@#162 Bob Dog
“Washington and BC are 100% solar power when it comes to electricity. No nuclear reactors and no Kleen Coal.”
++++++

ya might wanna rethink that.

The two largest generating plants they have are Coal and Nuclear.
The rest are hydro , natural gas, wind and solar.( in that order.

BC has biomass and diesel generating plants but, by far, Hydro is King in BC.

https://www.google.ca/url?url=https://en.wikipedia.org/wiki/List_of_generating_stations_in_British_Columbia&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwjzo_KS7InZAhVY5WMKHceFDI8QFggUMAA&usg=AOvVaw2GrzsRuUCaXe-H0Qv6ZMKM

#175 TurnerNation on 02.03.18 at 8:35 am

Have people lost their minds. $1 million for a cheap house in rural ON (Whitby, Milton). There’s no excuse. Anyone in their 30s, 40 should know that a million is a TON of money.
Even if you had an extra $1000/mo and saved it, this would require 83 (!) years to reach a Stick.
Forget earning interest. Each year I see 10-30% jump in food prices and other necessisites, especially after the ongoing minimum wage hikes.
“Your interest is no good here sir”

We are a tax farm nanny state. To even earn minimum wges you reauire 18 years of “education”: JK to Gr. 12 then 4 years post secondary.
Corporate HR Depts and Govt are your new parents: HR will haul you in for saying a BadWord or potential ThoughCrimes, and make you write lines (sign a letter). If your gut instinctualy (you know, Instinct – which has ensured human survival all these) recoils at unnatural or abhorrent behavior, the Government tsk-tsks you to be more Tolerant and Inclusive. Tut tut.

PAY YOUR FAIR SHARE – they want 100% of your after tax income.

#176 TurnerNation on 02.03.18 at 8:42 am

– HR makes you sign a confession of crimes in order you keep your job.

Hey are Kanadians broke? Dollarama stock at highs but fast casual food chains – Pizza Pizza and The Keg (post merger) even A&W Burgers (AW.UN)- saw their stock prices heavily slide this week.
(Huge yields tho).

#177 OttawaMike on 02.03.18 at 8:47 am

have several business associates that are big boys at Fortress. There’s going to be a lot of incoming client calls this week!

Syndicated Mortgage Alert!

http://business.financialpost.com/real-estate/mortgages/update-1-ontario-regulator-revokes-mortgage-broker-bdmc-license-after-probe
_______________________

90% of investors into those syndicates have lost or are about to lose their money.
The scammers get fined 1.1 million dollars. Only in Ontario. That fine is like a permit to steal. Same as RECO fines. Dirty agents just consider the fines a minor business expense.

#178 OttawaMike on 02.03.18 at 8:51 am

Hey Vancouverites:

Hope you submitted your empty house declaration papers to the Politbureau by yesterday. 1% per month house value fine per month for late filers.

#179 crowdedelevatorfartz on 02.03.18 at 8:55 am

Well Garth I know Douglas Todd Vancouver Sun articles get Deleted from your blog.

How about Sam Cooper?

http://www.google.ca/url?url=http://vancouversun.com/news/national/huge-b-c-money-laundering-investigation-pivots-to-drugs-and-guns&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwis5-au8onZAhUSxGMKHZTRAT8QqQIIKzAH&usg=AOvVaw1xNBCIMZ7Gmbi-zhXp15dL

The corruption and rot out here is mind boggling.

#180 under the radar on 02.03.18 at 9:01 am

Seduced by the size of the debt they could take on, the herd became obese and slothful ignoring the predatory debt trap. Ominous warning for years, fell on deaf ears as the herd frolicked in consumer paradise, fearing loneliness in the Instagram FOMO wilderness. Now, as rates rise , and the climate for debt becomes inhospitable, fear and panic begins to show itself in higher minimums and less in the cupboard . The spoils of an illusory lifestyle become irrelevant as rising rates and lower values become the norm.

#181 Glasnost on 02.03.18 at 9:04 am

The KGB, the FBI, and the CIA are all trying to prove they are the best at catching criminals. The Secretary General of the UN decides to set them a test. He releases a rabbit into a forest, and each of them has to catch it. The CIA people go in. They place animal informants throughout the forest. They question all plant and mineral witnesses. After three months of extensive investigations, they conclude that the rabbit does not exist. The FBI goes in. After two weeks with no leads they burn the forest, killing everything in it, including the rabbit, and make no apologies: the rabbit had it coming. The KGB goes in. They come out two hours later with a badly beaten bear. The bear is yelling: “Okay! Okay! I’m a rabbit! I’m a rabbit!”

#182 Trevor on 02.03.18 at 9:04 am

Garth, Thanks as always for the insight into financial markets, and the overall economy, you are spot on as usual!

For those who bought btc at 20k they deserve to lose money. this retracement was predictable. It will likely challenge just under 10k again before double bouncing around the 7s (not financial advice). however, if anyone thinks btc is dead, they are simply ignorant. Regulation is a good thing, anyone can start there coin on the ethereum network, unfortunately the governments will need to step in to protect fools from themselves but that does not change the fact that it is a useful technology. Remember the market is in its infancy, it is just finding itself. Always practice risk:reward, and know the difference in investing, and educated gambling. Based on fibonacci extrapolation btc could be 30k by 2019 (this is a best guess, not a prediction) but if it does it will be interesting to see what Garth says then!
“Bulls and Bears make money, but the sheep and pigs get slaughtered.”

#183 Ace Goodheart on 02.03.18 at 9:08 am

Not sure if anyone’s seen the Star this morning. Lots more bad news regarding Ontario Real Estate and pre sales. Looks like the collapse has begun (finally). For certain if you bought a detached house last May, basically anywhere in Ontario, you have as of today’s date lost between 20% and 30% of your equity. For many that is actually more than their down payment, which means many folks are now underwater.

#184 Ian on 02.03.18 at 9:10 am

Check out this interview with David Stockman, Reagan’s budget director:

https://youtu.be/jcQDkumwer0

his book The Great Deformation is incredible by the way.

#185 Capt. Serious on 02.03.18 at 9:43 am

#66 ottawamike on 02.02.18 at 7:12 pm
Garth
It is not a single asset. It is a diversified asset. Isn’t the VBAL doing exactly what you are recommending in this blog?

It is one asset. Period. – Garth

It is one security. Saying it is one asset isn’t correct. The liquidity point is a good one, especially because NAV premium/discount and trading spreads can be large for a new ETF. As long as the underlying securities are liquid, there is 0 chance you cannot liquidate your position because there are market makers.
The other thing to keep in mind with a single ETF is you are beholden to the rebalancing performed within the ETF. Personally I slice and dice so I can control rebalancing.

Nope. The underlying assets of any ETF have nothing to do with its liquidity. That is determined by the float, the market and the issuer. The fundamental misunderstanding of what exchange-traded funds are is surprising. – Garth

#186 Rooster on 02.03.18 at 9:46 am

Q. What’s the difference between Trump and Stalin?

http://www.independent.co.uk/news/world/americas/us-politics/donald-trump-josef-stalin-republican-senator-meda-fake-news-attacks-cnn-jeff-flake-a8161311.html

A. Stalin had a weird moustache.

#187 Too Big to Babysit? on 02.03.18 at 9:57 am

Janet was yellin at Wells Fargo yesterday for being too greedy!

Could this finally be the end-game for Capitalism, comrades ?

#188 Steven Rowlandson on 02.03.18 at 10:00 am

This drop from $20,000 to $8,000 may not be over by any means. Bitcoin could go to zero because there really is no value floor under it. It should serve as a warning for all crypto currency, official currency and any other paper, electronic or non PM real asset investors. If there is no value floor under it, if it’s value is based on confidence and debt it can go to zero or close to it….. Real assets includes real estate by the way.

#189 luc on 02.03.18 at 10:34 am

Was this article written by Garth Turner? https://www.opendemocracy.net/neweconomics/time-call-housing-crisis-really-largest-transfer-wealth-living-memory/

#190 NoName on 02.03.18 at 11:21 am

#144 Entrepreneur on 02.02.18 at 10:34 pm
Know someone who sold an mobile home, bought a house but had to get financing from someone else as the banks would not approve the loan. Now, she wants to sell in the spring as the interest rate went up three times. She looked worried and how many others are like her?

Yeah right, #99PGer, the NDP/Greens will not collapse, just the opposite, will get stronger. And the anger will develop more after the Nanaimo/Trudeau episode. Like how Trudeau defended himself and smooth-talked about the pipeline at election time. And Notley on P&P sounded like a dictator. And no mention from either about transitions to green energy. All about oil.

We all know the no “world class response” is going to save the sea life and the ocean ecosystem. And Quebec said no to the Eastern pipeline so why not B.C.

TGF, and the fight is on!

It is all about oil, where do you think money for carbon tax will come from, wind and solar producers, not.

#191 Yorkville Renter on 02.03.18 at 11:24 am

#163 – my pathetic divs come from a portfolio that earns and pays income… just like my RE investments, cash flowing in every month- you know, to pay bills like rent or vacations.

you avoided my point on purpose- your residence paid $0 toward your vacation.

and my landlord is corporate- cant get kicked out- when you remove condo fees + property tax, they might get $1000 for expenses / profit. hardly a home run… I also live in one of most expensive areas of Toronto.

another win for “renting and investing” vs. “home ownership investing”

#192 Damifino on 02.03.18 at 11:44 am

#186 luc

If Garth had written the article he’d have gone a step further and suggested those who own significant phantom wealth make it real (while greater fools are still operating in their area), then invest the proceeds into assets that are backed by actual productivity, not vapour.

#193 -=jwk=- on 02.03.18 at 11:52 am

Please critique….Thanks again for the civility

what part of ‘You got extremely lucky’ do you not understand? You bought an asset that doubled in value in 4 years. good for you. When people fail to understand the difference between an investment that has been consistent for 50 years and an investent that just happened to have massive increases in the last few years we are really in trouble….

You think the bus drivers $969,000 home will be worth 2M in two years? You honestly, really really think she is smart for buying it over renting?

If you had bought bitcoin last spring, then sold it in december you would have made a 10,000% return. But we don’t advocate taking that kind of risk, do we?

When people willfully ignore risk, and cant even grasp the concept itself, we are due – no overdue – for a correction.

#194 For those about to flop... on 02.03.18 at 11:54 am

Lost…but not leased on 02.02.18 at 11:04 pm
Like Flops posts on RE…I will keep people updated on things as they unfold so other can hopefully benefit from .

I mentioned my Executor role for my Dads estate, which is winding down.

I also posted previously on the nasty legal concept “COMMITTEESHIP”. My sibling and a cabal of a lawyer and financial advisor pulled some slimey legal tricks(redundant) to take 100% control of my Mothers affairs.

My parents were divorced…just got the word my Mother passed away last night.

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

Hey Lost,sorry to hear about your mum.

Hopefully not to much suffering involved.

I have some stuff going on in my family that I am not looking forward to dealing with the next couple of years.

I don’t think my parents have that much money but whatever they leave behind my brother can have…

M43BC

#195 Old Ron the Realtor on 02.03.18 at 11:54 am

@ 183 ACE GOODHEART

Actually the Toronto Star story about Mattamy Homes slashing their new home prices was covered last week by the intrepid G. Turner on this blog.

#196 Screwed Canadian Millenial on 02.03.18 at 12:07 pm

#184 Ian on 02.03.18 at 9:10 am

I’ve been watching all of David Stockman and Peter Schiff’s stuff lately. Stockman is great. He doesn’t do interviews that often but he just did a round last week on Fox Business and Bloomberg. I love when he dispels all the old Reagan myths. He was there! I think he’s right on point for what’s coming. Haven’t read the book.

#197 For those about to flop... on 02.03.18 at 12:26 pm

#142 45north on 02.02.18 at 10:28 pm
For those about to flop: Some been on for over six months.
These ones are candidates…

thanks

can you report back on March 2. Please.

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

Hey Northie,I will keep an eye on this one too.

The listing states that they want to sell to get away from a grumpy neighbor who won’t shut up about potential gains down the road…

M43BC

https://www.zolo.ca/abbotsford-real-estate/34265-fraser-street

#198 Howard on 02.03.18 at 12:28 pm

A bus driver buys a million dollar home and says “it can only go up”.

If that isn’t a Joe Kennedy shoeshine boy scenario I don’t know what is.

Maybe we have to wait for an Uber driver to buy 15 Rebecca St for 100k over ask?

#199 Smoking Man on 02.03.18 at 12:39 pm

DELETED

#200 Lost...but not leased on 02.03.18 at 12:47 pm

Bitcoin….

I wonder how many took the final plunge(to buy…unfortunately at the peak)..and were about to

Its a good cautionary tale. I had the vaguest of ideas how it worked…which may have been a blessing.

(Many seemed to be quite well- informed…but that may have been the fatal flaw…can’t see the big picture and classic irrefutable historical precedents re: bubbles based on zero- backing…aka always revert back to zero value )

My cursory knowledge lead me to information re players….most of Bitcoin was controlled by a few…Its biggest promoters set up a massive hi tech BitCoin warehouse in ICELAND…cost of transfer peaked at around $50(now around $8)… and a major run of greater fools either lured in or FOMO…end result is the same.

The biggest seemed to be Gov’ts had enough and were going to hunt Bitcoiners .That creates negative ripples….

All the warning signs that the “Wrath of the Gods of Fundamentals” was coming.

#201 mark on 02.03.18 at 12:48 pm

All etfs are one asset.
So why the knock on the vanguard new fund.
Looks like a great fund and low cost, any advisor would construct a portfolio the same way.
Regardless if its one etf, or 7 the knock against them are the same.
At 22 basis points and all that diversification its a steal.

No knock. Just a caution that putting all your money into one single, untested security is, well, extreme. But go ahead. BTW, the asset mix sucks. – Garth

#202 Lost...but not leased on 02.03.18 at 1:10 pm

#179 crowdedelevatorfartz.

Yeah, that stuff coming out from Vancouver Sun is off -the -charts. Its to the point one is becoming a bit shell- shocked how widespread and deeply entrenched it has become.

IMHO, the matter is so entrenched that investigations could easily lead to civil forfeiture on a massive scale, which would send a ripple through the BC economy. Once they(Gov’t, RCMP etc.) start…I don’t think they can stop even if they wanted to.

The case Cooper points out is in the qausi-fiction realm, worthy of a movie. What may happen is the parties being investigated may start ratting out their superiors…wait and see.

#203 Blacksheep on 02.03.18 at 1:18 pm

Renter #191,

“you avoided my point on purpose- your residence paid $0 toward your vacation.
———————————-
Did you not read this? Here it is, a second time:

“It’s always wise to maintain multiple streams of revenue and not need to cannibalize ones investment returns.”

So clearly, it’s not about what the source of your income is (should have multiple) but that you are getting decent return on all your $’s invested.

Just had an exchange with Garth to this end. He gets 8% on his taxable portfolio gains and I get rent free accommodation along tax free capital appreciation (or loss?)

My “rodomontade” (Just learned it means boastful in Italian) occurred do the realization I bought my current RE 4 years ago to the day and was quite happy about how things worked out this time.

The reason I say ‘this time’ is I did the exact opposite (sold RE / my call) not much after this blog first started, rented for 5+ years expecting a market crash and well, we all know how that turned out.

So ya, I gloated some cause I ignored what Garth and 98% of this blog (on line peers) was saying circa 2014 and rolled the dice. I coulda went down in flames, just like everybody here is sure is about to happen this spring and it just might, only time will tell.

Either way, it’s my life, my choice and I will deal with the outcome, good or bad.

If your happy with with your choices, good for you.

#204 Lifexprt on 02.03.18 at 1:22 pm

Deep or not deep, its an observation

Being well read into the global elite, numerology, etc. I used that 666 in 2009 as a buy signal, made out like a bandit.

The thought of yesterday’s clearly manipulated drop, producing such a precise number makes me think another signal has just been sent.

Time will tell, food for thought, thread carefully

What ‘manipulation’? – Garth

#205 Lost...but not leased on 02.03.18 at 1:36 pm

#194 Flop

RE: My Mother passing(age 82)
A lot of strange Karma….almost Twilight Zone..

We were out of town…she died day after our Anniversary. She had been having some issues re eating (lack of appetite…kidney issues, etc relegated from a walker to wheelchair…her passing was apparently peaceful(died shortly after midnite…a bit of surprise but somewhat expected in the near future given her symptoms)

As noted, my Sibling acquired COMMITTEESHIP….which I saw as a means for her, my moms financial advisor and a lawyer to effectively take 100% control over her(powers that FAR exceed power of attorney). I took care of my ailing father…and when he passed(2015) they must have feared I would upset their gig with my mother after I said I would now become more involved.

Things got so ugly they came after me and forced me to get a “Peace Bond”….stay a minimum 100 meters away for her, her lawyer and my mother last nursing home for one year.

Karma?
—-My sibling sold my mother home..possession date Jan. 31.
—–Our Anniversary was Feb.1
—- My Mother died Feb.2
—–My Peace Bond expires Feb. 3

My sibling has already set a funeral date….and meets with the funeral director on Monday. She is so stoopid she hasn’t mentioned me by name in a year,she thinks that’s illegal..she refers to me as “that person I can’t name” WTF????

Anyway…doing some homework..her COMMTTEESHIP powers effectively expire upon my Mother passing. After today (Feb.3)there are no limits on me being in her presence.

If she tries to pull any stunts like taking 100% control of the funeral..not happening. She effectively ruined my mother remaining years and long overdue Karma is going into overdrive.

Flop..hope all goes well in your family situation
….the thing is learn from what happened to me and have all the ducks lined up with your family on the same page. Its amazing how things can go South so fast when SHTF… I never ever thought what happened to me was even remotely possible.

#206 Overhearyou on 02.03.18 at 2:23 pm

#86 did you read the link? on 02.02.18 at 8:06 pm
Garth?

Put all your money in a single asset? Good luck with that. – Garth

http://www.moneysense.ca/save/investing/etfs/finally-everything-an-investor-needs-in-a-single-etf/

its NOT one single asset– it’s a globally balanced etf that they rebalance. No different than a global equity balanced MF or a tactically balanced etf portfolio like yours. Cmon

What do you not understand about a one-asset strategy? What happens if liquidity dries up for an untested security? ETFs are products. – Garth

—–

It’s like talking to a wall

#207 Newcomer on 02.03.18 at 3:02 pm

#165 maya on 02.03.18 at 12:55 am
…The landlord is not renewing our contract. I guess he is evecting us and raising rent to the on-going price.
———

Landlords do not have that option in BC. At the end of the lease period, the lease becomes month-to-month and cannot be terminated just because they want to rent it at a higher rate.

https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy

#208 45north on 02.03.18 at 3:16 pm

F18

David Pugliese:

Companies interested in the Liberal government’s planned purchase of new fighter jets have been told not to talk to journalists despite claims by federal officials the process will be open and transparent.

http://ottawacitizen.com/news/politics/dont-talk-to-journalists-canadian-government-warns-companies-interested-in-jet-contract/wcm/7047a86c-7f12-4e68-bd44-a499026ac0b9

40 years in the Federal Public Service did give me experience with government procurement policies. The present Liberal Government is tying the civil service and the RCAF in knots – making both ineffective. The governments policy is nothing but a series of contradictions: it wants the best jet fighter but refuses to consider the best jet fighter ( F35 ). It promises an open and competitive competition but keeps everything secret. It has forced 235 military personnel and civil servants to sign a gag order preventing them from ever talking about it. My experience with adding requirements to the civil service is they become performance criteria – someone who is otherwise wholly incompetent is able to keep a secret so in some way meets expectations.

The Liberal government has decided to subvert national defence and the civil service. There is no new fighter jet. The RCAF and the civil service are demoralized. It would be a lot simpler if Justin Trudeau would just say I made a mistake.

#209 crowdedelevatorfartz on 02.03.18 at 4:27 pm

@#205 Lost but not Leased

Crazy!
The old saying, “You can choose your friends, but not family” seems to apply.
Karma indeed.
Let the games begin.

#210 tccontrarian on 02.03.18 at 6:28 pm

“Daily trends are meaningless. My comment stands.” – Garth

Sure, I agree that daily fluctuations are meaningless. But what happened this past week could be the beginning of a larger trend that lasts 2+ years.
After one of the longest bull runs in history, I’d say the odds are we’re headed down, in a significant way.

Some even think that it will make 2008-9 seem like a walk in the park! I’d say there’s at least an 80% chance they’re right.

Let’s see where things are at in a few months. We both can’t be wrong (or right)!

TCC

We agree. You’re wrong. – Garth

#211 sadsodad on 02.04.18 at 8:56 am

Ok, let’s see, I can live in a -30 degree frozen bunghole nanny state with 50% taxes, lousy food, unfriendly large oversized women, poor future economic prospects, or I could go to Brazil…..sorry the Seasonal Affective Disorder is kicking in big time

#212 Angus on 02.04.18 at 8:58 am

In 2015, Canadian Prime Minister Justin Trudeau while defining Canadian values declared his country to be the world’s first postnational state.

We’ll soon see how this will unfold in the provinces!

https://www.washingtonpost.com/news/global-opinions/wp/2017/06/29/who-gets-to-decide-canadas-identity/?utm_term=.397ec2d835d8

#213 Midnights on 02.04.18 at 1:27 pm

If you sold or used Bitcoin last year, the CRA needs to collect its due
https://ca.finance.yahoo.com/news/sold-used-bitcoin-last-cra-150004538.html