Balanced market

Seven months ago I toyed with buying a marina which makes most of its money from leasing a slew of docks and boathouses. Sit on a wharf. Suck on a drink with an umbrella in it. Be refreshed by a nubile young employee in a bikini. What’s not to like about a passive business in the boating biz?

But I passed. And yesterday the agent called me after all this time, hinting I might be able to buy it for half price.

This week I viewed a heritage commercial building in a GTA town less than an hour’s drive from King & Bay, part of a parcel of properties being liquidated by an estate. By the time I finished my session, I was offered the large brick building plus two houses – a 1920s arts-and-crafts bung and an 1892 Victorian two-storey – for less than $680,000.

Then I drove to my weekend place two hours southwest of The Big Smoke, through some of the best farmland in Ontario. My wife lost count after 50 miles when I asked her to make a note of every house we passed with a REDUCED or a NEW PRICE sticker. Dozens and dozens and dozens. By far, the majority of all For Sale signs had sprouted those fluorescent flourishes. Might as well have said DESPERATE.

The interesting thing about real estate is that, like ice cream on a scorching day, it melts from the edges. First the farms, cottages and recreational properties. Then small towns were buyers are thin at the best of times. After that, the village and semi-rural enclaves on the edges of urban areas. Then the burbs, where now live the majority of equityless people. Finally the cities, and lastly the demand neighbourhoods where arrogance and exclusivity often ward off sanity.

There’s no doubt we’re in the midst of this process. I see it around me. Hell, it’s so evident even the ‘experts’ can no longer blinker themselves. Like Warren Lovely, a CIBC economist who says real estate in Ontario is about to turn nasty. Blame sluggish economic growth (duh), he says, and expect property values across the province to decline about 11.6%.

And then there’s CREA, the industry cartel where poor Gregory Klump is allowed out of his high-security cage once a quarter or so to drop a stone tablet and retreat. He’s actually not a bad guy, but when you’re paid to say the same thing over and again, regardless of the actual economy, it’s kinda hard to be a chief economist.

“Housing demand and supply is stabilizing,” he said, as CREA slashed its housing sales forecast for next year. “That’s good news for home buyers, who will feel less hurried to make an offer than they did when transitory factors ignited housing demand in early 2010. It’s also good news for home sellers, who will feel more confident about price stability now that the housing market has become balanced.”

Ya think? Actually it sucks when you’re trying to sell a property and have to cut the price by a quarter or a third just to get showings, which is a definitely what’s happening in the hinterland. And now that the real estate industry itself is forecasting sales will drop about 10% by the end of next year, it only feeds the deflationary spiral. After all, if buyers know more choice and even more desperate sellers will come in six months, why buy now?

But, this just states the obvious. The latest job numbers are terrible (3,000 new positions in the entire country, and a whack of those are ‘self-employment’). Household debt is off the chart. Consumers are tapped out even before they start shopping for Xmas. The US economy is sagging and our rising dollar is toxic to exports. And next year will likely bring higher interest rates. I mean, what fool would be buying now?

This past week the Toronto real estate board reported another 20% monthly sales plunge, while in delusional Vancouver, there was a 36% crash. Since July, sales in virtually every major Canadian centre have declined 20% to 40% over year-ago levels, establishing a pattern which will only be accentuated by lousy weather and a worse economic situation.

Despite Gregory’s self-eviscerating words, there’s every reason to believe 2011 will be one of the worst years in memory to sell a house. Exceeded perhaps only by 2012. Hell, even blog dog and central bank dude Mark Carney knows that, telling the feds days ago a precipitous drop in housing is entirely possible.

So, against this background, the stock market achieves a two-year high and my 40% fixed income-60% growth portfolio is now ahead 12%, with predictability, security and a tax-efficient stream of income. As I have said often in recent months, it is time to get out of real estate into financial ones; to own stuff that pays you; to be balanced; avoid taxes; and stay liquid.

Speaking of liquid, I’m reconsidering the marina. Cigarette boat, babes, Margueritas, and sunlight glistening off the oil on my sixpack. Maybe I could invite all the hackers for a final ride…

217 comments ↓

#1 Nostradamus Le Mad Vlad on 11.05.10 at 6:53 pm


“. . . hinting I might be able to buy it for half price.” — Are we sinking nicely?!

“. . . demand neighbourhoods where arrogance and exclusivity often ward off sanity.”

You forgot to include stupidity in the sentence.

“Housing demand and supply is stabilizing,” — next to zero.

“. . . a worse economic situation. . . . a precipitous drop in housing is entirely possible.” — Compared to the IT lie, this time he is telling the truth, due mainly to external forces: E.G. QE2, major instability throughout the world, flare-ups between countries and numerous FFs.
*
3:16 clip Welcome back Heathrow Airport!

5:01 clip Headline says it all. We’re paying through the nose for this. Harper, dubya, Obama, Phony Tony Blair and a few others — all war mongerers, should be strung up by their balls in Death Valley and left to rot.

Censored Gulf News 90 day rations (maybe).

Now for dessert — “The interests behind the Bush Administration, such as the Council on Foreign Relations, The Trilateral Commission – founded by Brzezinski for David Rockefeller – and the Bilderberger Group, have prepared for and are now moving to implement open world dictatorship within the next five years.” – Dr. Johannes B. Koeppl, PhD(1)

Corporate water grab? It’s not all about money.

US Fed Bankrupt? Jim Rickards says it is a possibility. Plus — Biggest threat to the US? It’s Bankruptcy.

QE2 China takes a dim view. Plus — Dave’s Top 10 list.

Putback Time Bomb This is becoming quite daft!

Quantas #2 “Yesterday’s incident with the Airbus A380 also involved Rolls Royce engines, so there is either an issue with these engines or Qantas maintenance on them.” wrh.com.

Legal Junk “If AT&T has its way before the Supreme Court, any business that issues a contract to customers would be able to prevent them from joining class-action lawsuits, taking away arguably the most powerful legal tool available to the little guy.” Look for Ma Bell to follow suit if AT&T wins.

Grasping at straws The WH will do anything to pass the buck.

FF in US “This week, the last piece fell into place. . . . in case of a terrorist attack for the president to declare marshal law, disband congress and rule by executive decree. With the suspension of habeas corpus by the Military Commissions act . . .”

DSP — Hyperinflation may / may not happen, depending upon politics and what Soros instructs the US Fed and WH to do.

QE = Devaluation. But we already knew that. Plus — Madman Across The Water.

2:14 clip Remember Mr. Sulu of Star Trek? His attitude is spot on!

Nuts in Space Great pix!

NY homeless soars, just in time for winter. Plus — Sin City “But astonishingly, the 200 miles of flood tunnels are also home to 1,000 people who eke out a living in the strip’s dark underbelly.”

Timmy’s “The dollar is falling faster than the temperatures outside, down almost 3.5 percent since the G-20 meeting late last month, and yet Treasury Secretary Tim Geithner — the alleged supporter of a “strong dollar policy” — can’t be found.”

#2 Sue on 11.05.10 at 6:59 pm

Dang, I tried for the last 3 months to get bf to sell his house only to hear the “you gotta live somewhere” defence. All of his net worth is in the house…ugh. Easy come, easy go….

#3 Another Albertan on 11.05.10 at 7:07 pm

“…poor Gregory Klump is allowed out of his high-security cage once a quarter or so to drop a stone tablet and retreat.”

Gold. Pure gold. Literary, that is.

Everyone else’s mileage may vary.

#4 Fish Bait on 11.05.10 at 7:31 pm

Me thinks “Keith in Calgary” is really Devil’s Advocate trying to use another moniker. Herb Tarlik? DA is about 45-50. Herb is also pathetic. DA talks out both sides of his mouth at the same time.

#5 Oleksandr on 11.05.10 at 7:40 pm

There are millions of blogs out there nobody cares to read. let alone to hack.

Attack is just acknowledgment of your fame.

Congratulations!

#6 realpaul on 11.05.10 at 7:48 pm

Right about those succulent yields coming in Garth…with the captial gains kicker, being up early and awake, it’s shaping up to be a good quarter.

Let this spectacularily profitable quarter for investors be a lesson to all the fence sitters who parked all their cash in the orange guys shorts or GIC’s ( and may I vomit….CSB’s).

Agreed…. after the globally engineered meltdown in ’08, courtesy of our governments) on the heels of Flaherty murdering the trusts many seniors were made very afraid of the market. But being out of the market for this past few weeks has caused the loss of several years of conservative investing. First Flaherty kills intrest rates and screws the seniors to get them to liquidate their savings, then the G8 decide that ‘things ‘ have gotten too expensive and they kill the stock market hoping to ‘reset values’….then Flaherty moves in for the kill and murders the income trusts to make sure there is nowhere to hide for the seniors…his doppleganger ratchets down intrest rates to make sure that the savers are punished and drives millions into unsustainable debt.

Planning for these things isn’t easy…but you must…..just because you’re not paranoid, doesn’t mean they’re not after you…..diversify widely…..the government is a short term thinker…..these few years of zero return on savings are being taken back by market forces. As you’ve seen the governments lies could not hide the truth forever. When rates go back up…they will go up quickly..abruptly, like they did in the eighties. The intrest rate shock will be caused by the government finally borrowing more than they can pay back.

Had you not panicked and sold as the touts on TV were telling us all to do you would have got all your money back and then some. The one exception is the energy sector which hasn’t come back all the way as yet. Although there have been some double and triples in the uranium sector.

I believe that the energy sector generally, having underperformed every other this past year is this next quarters ‘dog of the dow’ rotation target. IMHO only. This analysts report has some lovely thoughts to ponder….for those with nothing else to do.

http://salmanpartners.com/lib/files/MetalsMorningNote/2010/October/261010.pdf

BTW that ZMT I offered up last week is up 12% in the five days I’ve owned it…….

#7 45north on 11.05.10 at 7:55 pm

Mayor-elect Jim Watson’s choice of Brian Guest and Brendan McGuinty as his key transition advisers reflects a lack of judgment

Read more: http://www.ottawacitizen.com/news/Watson+actions+advised/3774116/story.html#ixzz14STaTiyg

#8 Dan in Victoria on 11.05.10 at 8:24 pm

Boats. Rolls Eyes…..

Bring Out Another Thousand.
Boat Unit- One Thousand Dollars
Boat Buck- One Hundred Dollars
Don’t ask…..

#9 RickOShea on 11.05.10 at 8:47 pm

An economist predicts property values across the province to decline about 11.6%

The “.6” bit is priceless. Pollsters make claims about their accuracy like ‘+/- 5% 19 times out of 20’…

Economists? +/- 5% 1 time in 20 (not quite as good as the divining of chicken entrails)

#10 Cashman on 11.05.10 at 8:51 pm

Hey Garth, I really missed reading your blog over the past 2 days. I thought it was my computer, or the computer at the public library that I regularly use. Even Alex Jone’s site has been taken down on a number of occasions. I even thought you might have been killed (egad!) by a really PO’d real estate pumper. At any rate I am glad the site is up and running again! Hurray!!!!!

#11 ontheshoreline on 11.05.10 at 8:52 pm

I live in a Marina……wait a while….there’s a lot more downside. Can you say demographics?Boating is a Boomer thing like many other toys

there are Boathouses for sale on Used Victoria in marinas that were claiming 2 year waiting lists just last year.
Good thing is moorage rates are flat now or even declining.I have a million dollar view at $500/month

#12 gattaca on 11.05.10 at 8:53 pm

Nice to hear about your 12% gains. I’m comfortable taking on more risk thna 60/40 but with about 15% in cash this year, ~20% in my employer’s stock and the rest in plays tied to growth in emerging markets or decline of the American empire, I’m up 77.58% YTD as of Nov 5th.

That’s on the heels of a 55% gain in 2009 but then almost everyone captured those returns last year.

#13 Bill Gable on 11.05.10 at 8:57 pm

The latest Bernanke put and the tidal wave of negative, and rather, shall we say, knee jerk “chuck the works out” jingoism that nailed Mr. TelePrompTer – makes me wonder what shift in the wind is Mr. Carney signaling…and, Golly, Mr. Turner – Jim Prentice going to, er, Banking.

It has to be more than just the 145% debt to GDP…among the vast majority of the great unwashed.
Time to put a reef in the main.

#14 mel on 11.05.10 at 9:25 pm

It’s funny how people have forgotten so quickly that the only thing that keeps stocks going higher is ‘ Speculation’. Today’s higher oil prices, stock, etc. will be coming down sometime next year.

I expect Dow to come down in the next few years 4500-5000. Most of you might not agree with me, however, we all must make our own destiny with our cash.

The way I see things developing seem to hang on the premise that everything will turn around just fine. Well, it won’t. Nothing will be safe, your house, your job, your stocks, oil prices….Everything is overpriced!

The long term recovery is long way ahead of us. Only when everything becomes ‘ undervalued’ when I will see the begining of long term recovery. That is the time I will be buying everything of a long term value.

#15 JO on 11.05.10 at 9:27 pm

Our debt based, highly leveraged fractional reserve, fiat money system is now in its terminal stages. A overly technical term for what is essentially a massive society wide debt based Ponzi scheme, a large societal credit card so to speak with much of it underpinned by collateral such as residential RE, it requires the total amount of debt to increase at all times. Failure to do so results in a credit contraction – an era of collapsing asset values, high unemployment and social problems.

Once one understands the fundamental structure of the monetary system, the rationale for “policy decisions becomes clear: The massive balance on the societal credit card is held by banks, who also utlimately have ownership of the collateral (mostly RE) backing the entire charade. The use of monetary policy such as ZIRP and QE to influence (not control) rates to artificially low levels in conjunction with heavy gov’t intervention such as CMHC guarantees to permit speculators and weak hands to buy RE on highly subsidized terms is all focussed on ensuring, SUBJECT TO SUFFICIENT DEMAND FOR CREDIT, that the massive mountain of debt grows. Those who act prudently and save, and live within their means (avoiding the purchase of assets at inflated assets) are purposely victimized for not parting with their savings and not becoming debt slaves.

Given the remarkable demand for credit in the last 9-10 yrs, the rate of growth in credit and money has far exceeded the growth in GDP. This Ponzi scheme, which inflates GDP, asset values, and permits banks and gov’t to make artificially high claims against its citizens, brings to light how gov’t is beholden to banks: massive credit growth = GDP “Growth” = fast growing tax revenues.

In the terminal stages, the economy is left with an unaffordable debt load with banks having extremely elevated claims made against our incomes and assets. Now that the balance of the national LOC has stopped (or is about to) increasing, expect drastic actions to make it grow again and for bloated gov’ts to turn on their citizens and confiscate as much as possible via inflation, and taxes. It is tried and tested.

As for QE2, the “brilliant” Princes of Finance, armed with their “elite”degrees have nothing but another quasi Ponzi scheme to try and help save the main Ponzi scheme. Deflation and lower asset prices along with higher rates are the answer,not the problem. Kick and scream all you want Banana Ben,the economy will destroy the exessive debt that plagues the system. The faster we do it, the quicker we go into sustainable growth.

QE is great if you are: 1) a bank executive who sees large bonuses due to the short term asset inflation which helps your mutual fund and stock broker commissions/fees as well as the massive profits from your traders who sell the USD and buy Brazillian debt on 100-1 leverage, 2) large mulitnationals who earn most of their revenues outside of the US yet can produce most of their products for pennies on the dollar outside of the US, 3) the top 10-15 % of the population (the Elite) who own most of the assets in society.

For the rest of us QE2 will result in the following: 1) Higher food/energy prices. How does that help low-middle class or unemployed people ?, 2) Non US countries who earn a lot of their GDP by exporting a lot to the US. By March, the CAD could be at 1.30 or more. Can anyone say layoffs and plant closures ?3) These same countries will place tariffs and other protectionist measures as retaliation = less demand. 4) savers especially those most vulnerable such as retirees and disabled are severely hurt even more than they have been already. Should QE 2 continue to drive the USD down, it will ensure the next recession and resulting maive global deflation as trade wars and high energy prices combine to destroy global demand and lead to a global deflation scare.

Sorry Banana Ben,the world does not need lower rates or more borrowing. We have just come off the most incredible debt fuelled spending splurge ever. Where did that get us ? Our children are waking up homeless on the continent their fathers conquered.

Don’t like long posts, but need to let off some steam today !
JO

#16 Wise Guy on 11.05.10 at 9:28 pm

With regards to young naive buyers that are still flooding the condo market…

One of my best friends has had his condo/loft up for sale, 5 minutes west of downtown Toronto. Three years ago, he bought for $240,000. They had a buyer…a young buyer that offered $280,000.

A few days later, the deal fell through as the buyer did not have the proper financing and was NOT approved of a mortgage. Funny how someone can go real estate shopping without even getting pre-approved!

My friend is still confident that he will get $280,000…personally, I don’t think he will! In fact, now that the deal has fallen through, $280,000 is now the ceiling and no one will offer higher!

The problem is that he does not understand the market and what is happening here in Canada, because his next move after he sells this condo is to move up to a larger and more expensive one!

#17 Timing is Everything on 11.05.10 at 9:34 pm

#13 ontheshoreline and Garth

Ha!

http://www.youtube.com/watch?v=oozH6Veba-Q

#18 Behavioral Finance on 11.05.10 at 9:39 pm

How about those 80s Mutual Funds?

MSMLX – 37% YTD
FLATX – 15% YTD
FHKCX – 21% YTD
JDIAX – 19% YTD
FEMEX – 24% YTD
MPEGX – 27% YTD

#19 wetcoaster on 11.05.10 at 9:42 pm

Oil that is, black gold, Texas tea. Say no more. ;)

#20 Fritz on 11.05.10 at 9:42 pm

Yeah Nos the Mad Lad! Keep them coming!
There are all kinds of good deals on boats out here, whether you want a wooden hull or fibre glass or even metal. A lot have diesel engines in them with low hours too. Due to the economy and real estate prices a lot of people are now live-aboards. Floathomes and nice size converted trawlers can be had for a reasonable dollar. A lot of young people are gravitating towards this life style out here (Cowichan Bay, Vancouver Island)

#21 Dave in Victoria on 11.05.10 at 9:53 pm

I see the hinterland you speak of on Vancouver Island starting to nose dive. Price reduction after price reduction and very few sales. Same said for the gulf islands, where a home with an acre, that’s been on the market for over a year, recently sold for $295K, asking price was $350, down from $380K, after an original starting price of $500K plus.

#22 Dirt Dog on 11.05.10 at 9:57 pm

In North Vancouver, Tons, and I mean tons of new product under construction offered with HST included priced under the resale market. Completion in 2011. This will kick the pins under the resale market. Thus begins the slippery slide of prices.
Thank You Mr Greenspan for the wordwide epidemic.
Greece is in the highlight…guess who is # 3…

DD

#23 smw on 11.05.10 at 10:02 pm

Deja vu?

http://tinyurl.com/2bbygzq

#24 canali on 11.05.10 at 10:02 pm

Garth: why is BC’s lower mainland slower than most to be hit with what you think to be a correction?

…sure I live in gorgeous Vancouver…but you get economists and other RE analysts saying that our higher prices are also driven by things that can’t be cyclical whims of the marketplace: our land is limited to the west by ocean, to the north by mtns to the south by the US border) and then you go east to the Fraser Valley.

so it’s only natural (they say) that with great climate, lovely geography and limited developmental land that such rates can be sustained….sure they may go for a dip here and there, but overall the trend is upwards.

another factor to consider is with the number of immigrants (many with cash) who wish to come here in the lower BC mainland (among highest growth area of anywhere in Canada I’ve been reading).

I’m not a realtor, just some hardworking schmuck in my 40s who wants to have my own place one day (instead of renting forever and not building up equity) yet doesn’t want to pay for an overinflated property either and be mortgaged to the teeth like so many others….suggestions?

#25 Gord In Vancouver on 11.05.10 at 10:11 pm

Mayor says Vancouver taxpayers could take financial hit on Olympic Village

Read more: http://www.vancouversun.com/business/Mayor+says+Vancouver+taxpayers+could+take+financial+Olympic+Village/3784552/story.html#ixzz14T28Lm13

http://www.vancouversun.com/business/Mayor+says+Vancouver+taxpayers+could+take+financial+Olympic+Village/3784552/story.html

#26 Casanova on 11.05.10 at 10:17 pm

Garth, I figured you were in “the best place on earth” smoking our best stuff we prodly produce here, when you wrote this article.
Prices have reached an all time high here, there is very little good product on the market right now, list/sales above 70% this last month and you keep talking about desperation and crash. Wake up dude!
http://www.yattermatters.com/2010/11/vancouver-averager-price-mythical/?src=widget

#27 Dan on 11.05.10 at 10:22 pm

JO #17

It’s crazy what madman Ben is doing to the world economy. You are right JO the QE2 will make the economy worse. yes, the stockmarket will continue to explode but everyday people will see nothing but higher cost. Food/energy and soon to be higher priced goods. Printing money does nothing but make your money more worthless. For those clueless idiots who think inflation will inflate their debts away should ask were will they get the money? Pay raise? LOL The fact is their debts will be just as hard to pay off but now everything else costs more.

#28 ArgentumAurum on 11.05.10 at 10:37 pm

Good to see you back, Garth

AgAu

#29 pablo on 11.05.10 at 10:38 pm

Then the burbs, where now live the majority of equityless people. – garth.

OUCH- that one hurts Garth.

Considering that my property in the 905 hinterland would be worth at least double if not more in Leaside, the Beaches, or Swansea or Bloor West Village
So conversely aren’t the mortgages in those sought after 416 neighborhoods also at least as inflated.
In fact I can tell you from talking to people in some of those areas and a few bank lenders in those same areas; that the average mortgages are alot more than the yoke I carry.
Considering the shitstorm that’s coming I’d rather be where I am in the burbs. It’s a lot harder to make ends meet when you’ve got a 500k mortgage versus say 100k, and you’ve been laid off and can’t find anything paying anywhere close to your former salary. I think I’ll be able to weather the storm alot longer than the idiots in say Swansea that paid 700k – 800k with 5% down for a 1200sqft 80 yr old house with a moldy basement and crumbling mortar in one of the demand neighbourhoods where arrogance and exclusivity often ward off sanity.

And besides; I’ve got a headstart getting out of dodge when the rapture begins!

#30 T.O. Bubble Boy on 11.05.10 at 10:39 pm

CMHC press release on the GTA market:

http://pr-usa.net/index.php?option=com_content&task=view&id=529703&Itemid=29

Toronto’s housing market will remain stable next year as sales and prices gradually increase from current levels and housing starts hold steady, according to Shaun Hildebrand, CMHC’s Senior Market Analyst for the Greater Toronto Area. CMHC presented its latest forecast for the GTA today at the annual CMHC Toronto Housing Outlook Conference.

“Year-over-year comparisons to 2010 will mask an underlying growth trend that will gain momentum in the second half of next year. The worst of the correction from the run-up in activity in late 2009 and early 2010 is already behind us. Moving forward, homeownership demand will be supported by an improving labour market, a continuation of low borrowing costs and a quickly rising population,” said Shaun Hildebrand.

Thanks Shaun Hildebrand — we’ll all be quoting you for years to come!

‘The worst of the correction is behind us’… I still can’t get over that one.

#31 torontorocks on 11.05.10 at 10:46 pm

yet prices continue to stay the same or higher. maybe I’m a fool but perhaps sales will fall and prices stay relatively flat for a while then start their run up again?

#32 Prof ANON on 11.05.10 at 10:48 pm

Speaking to Garth’s point about the hinterland being the canary in the coal mine. A little while back I was publicly weighing a rent/buy decision. For those that care, we bought the structurally sound but ugly and disgustingly dirty bungalow for $86,000. The house is in a previously up and coming but now down and out prairie town.

Purchase price was 20% less than assessed tax value. Current rents for a comparable are a little over $1000 (previously, I had assumed rents for a comparable were about $1200, but I also previously assumed purchase price was $95,000+). In 2007, comparable houses in the same town were selling for $140,000(ish)

Our 20 year mortgage is about $450 a month. Now I just have to sand the cat pee out of the hard wood floor, burn the old photos of young men working on oil wells that were left behind, re-grout the bathroom, chainsaw the overgrown bushes, and start scraping and painting. Good thing I don’t watch TV.

#33 Leanne on 11.05.10 at 11:01 pm

I’m not sure the word nubile should be used on a blog about real estate and alternative investment strategies.

#34 Canadian but not for long on 11.05.10 at 11:16 pm

Holy sh*t, Canada didn’t even make the top 10 list for best qualities of life by the latest UN Report. The top 5 were Norway, the U.S., New Zealand, Australia, and Ireand This goes to prove what I’ve been suspecting for quite some time… Canada is NOT as great as we make it out to be. Canada is great to CANADIANS, and that’s about it. LOL We can badmouth and bash the U.S. all we want, but the truth remains we are followers – not leaders. And, this is only more proof in the pudding that the U.S. is a better way and better quality of life. One major difference between Canada and the U.S. is they clearly have more transparency to the things they do than we do in Canada. Also, they have better media and access to truly unbiased sources than we do in Canada. I can’t wait to get the f*ck out of here and move to San Francisco. This place S U C K S!!! Check out the link…

http://news.yahoo.com/s/afp/20101104/hl_afp/unhealthsocial_20101104145621

#35 Into The Sunset on 11.05.10 at 11:19 pm

#17 Don’t like long posts, but need to let off some steam today !
JO

You’re an oxymoron.

#36 EJ on 11.05.10 at 11:25 pm

So, 3000 new jobs? Is that adjusted in any way? For example, if 50000 people have graduated and are dumped into the “want-to-be-working” crowd, but only 3000 jobs were created, you now have 47000 people who are unemployed, but not technically “unemployed” and aren’t eligible for EI since they weren’t paying in. And on the other side of the equation, if 50000 people retired, does this affect the numbers as well?

That’s the worst thing about relying on a 3rd party for stats. You can’t see the detail you want, only what they provide you. In the case of industry provided stats, rest assured they will provide you only the data that supports their slant.

Good to hear the DNS issue wasn’t malicious. I’ve fat-fingered a few record updates in my time and had BIND refuse to load the entire zone as a result.. Oops.

#37 Crash Callaway on 11.05.10 at 11:25 pm

Garth should buy that Marina biz.
Sooner or later those Conquistadors with their basement full of shiny trinkets will make a run for it.

And if he does I think he should make a pact with the blog dawgs to leave their sorry gold worshiping asses in the water. Greed will overload their boats and sink them like stones.

#38 Utopia on 11.05.10 at 11:28 pm

Thank you to all who had suggestions for how I could keep my laptop virginal and clean and safe.

I still have my doubts though.

My computer guy swears that there is no such thing as total protection and you would be foolish to put all of your faith in any of the “virus protection” programs. He has lost data, been a victim of spyware, hacking and trojans despite using the industries best software.

So thanks for the tips but I will keep to my own firewall regimne as I have already outlined and keep two separate laptops.

A computer for personal work that does not ever interact with my internet machine and a computer for surfing the web that I can purge at a moments notice and never feel losses over. Who cares then right?

My system is a foolproof firewall that keeps all the crap out of my life and off of my computer (until I am foolish enough to break my own rules that is….)

So who need McAfee or Norton or a Mac with a system like this…..?

#39 Keith in Calgary on 11.05.10 at 11:35 pm

Garth said……….”sunlight glistening off the oil on my sixpack”

You shouldn’t carry your cans of beer with Coppertone still on your hands. You might drop the six pack.

My mid six figure foreign bond portfolio has been giving me 14% annually since 2006.

What is real estate all about again, and why should I buy any when I can rent the same thing for 1/3 to 1/2 the cost without any collateral risk ?

#40 InvestorsFriend (Shawn Allen) on 11.05.10 at 11:47 pm

Number 16 Mel, who said:

“the only thing that keeps stocks going higher is ‘ Speculation’. Today’s higher oil prices, stock, etc. will be coming down sometime next year”

Mel, my friend you show no understanding of what values the stock market. You are not alone in that, at least 90% of adults have no clue about the stock market. It’s not speculation it’s earnings that drive stock prices.

The first thing to figure out, Mel, is that owning a stock is owning a company. Companies make money for the most part Mel. They make it from their customers. Stock investors over the long term make money.

Take me for example. I had a good day in the market. (Thank You Wells Fargo) It’s taken me 22 years to do it, but as of tonight my cumulative gain in the stock markets is $502,000

The amount I invested a over 22 years totals $243,000 and the weighted average age of the investment is 8 years. The total portfolio value is $745,000.

It’s all in RRSPs and RESP where I can’t get at it… and in truth a good deal of tax will be payable when I take it out…in my dotage…

And maybe it will all melt away in a stock market crash. But I like my chances to keep making money owning shares of businesses.

#41 InvestorsFriend (Shawn Allen) on 11.05.10 at 11:51 pm

On top of the house price rot that has already set in… think about the impact of the dollar at parity.

Customers flocking to the States to buy their Christmas gifts…

Canadian manufacturers squeezed… if they sell to the U.S., it brings back only a Canadian dollar for a U.S. dollar whereas even recently it was $1.05 or $1.10 and not so long ago $1.30 even $1.50

If they are selling in Canada they face cheaper imports as competitors..

They lay people off…

More houses go up for sale…

Alberta may be spared with all the Oil and Gas. Ontario manufacturing will suffer greatly…

#42 Nostradamus Le Mad Vlad on 11.05.10 at 11:54 pm


#2 Sue — Suggestion: With or without telling him, find a top-notch, independent CFP or fee-based advisor, and set up an automatic withdrawal (e.g., $250 / paycheque) to go straight into a RRSP or non-registered plan, and take care of yourself first. Build up a nice nest-egg.

#17 JO — “. . . is held by banks, who also utlimately have ownership of the collateral (mostly RE) backing the entire charade.”

It will be curiously interesting over the next six – 12 months to see what happens with the US banks and, consequently, ours.

With the number of mtge. resets coming up and a large number of foreclosures in the offing, the remainder of this year and into next may well shape the way this continent is becoming.

#22 Fritz — “Yeah Nos the Mad Lad! Keep them coming!”

Indeed. Lotsa fun finding this kinda stuff out.
*
Links in. Re: the US Fed. Good questions posed; the Fed may be royally screwing itself.

Jon Stewart Last night’s link now goes further.

More Fraudgate with the newly created, thin-air bonds.

Possibly a reason for the Bank Holiday next week.

Debtees This is what the elite want, and it’s quite simple. Put sheeple and countries into perpetual debt, then they will be dependent on their masters (the elite) for crumbs falling off the table to survive, not live.

Wholesale food prices soar.

Nov. 6 (Sat.) — Possible FF in the US? Plus — Cern LHC Does anyone recall a Matchbox Action Vehicle called that?

More Cern stuff, with links in.

Obama no longer #1.

When China exports, everyone pays. Is this the reason behind the war of words between Beijing and Washington?

Obama’s fall from grace. How quickly did the love affair fizzle?

Nationalize the Banks “Sounds like a great idea … except for that part about letting the Federal Government run them. I mean, look how they screwed up the economy to start with. Not exactly a bright spot on the ol’ resume, is it?” wrh.com.

Black Hole Too small for Harper’s ego.

#43 dark sad person on 11.06.10 at 12:05 am

#119 Moneta on 11.05.10 at 5:34 pm

Not necessarily.

First of all, with inflation, we’ll be finding out the true cost of McMansion ownership.

Secondly, when inflation takes off it usally catches everyone off guard. Businesses have trouble pricing it in and margins contract. People will lose their jobs and won’t be able to make their mortgage payments. House prices will decline for a few years before inflation starts to be reflected in real estate values.

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

You said a lot and i agree with a lot of what you said-but-i think your mistaken about a what a reversal from tight credit to easy credit might look like-
Keep in mind-Credit expansion will be the first sign of Inflation-also-
Canada is only in the early stages of Credit contraction and this is why we see jumps in home sales/prices in some places and decreases in others-
Sentiment is still whippy–
The transition-from peak insanity to normalcy-is no smooth ride-
As Charles Mackay said-

. Men…think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.

Here’s what happened to US home prices when money/credit was force fed into the economy-in a downward housing spiral and how fast Sentiment shifted-

http://2.bp.blogspot.com/_pMscxxELHEg/S18VgUyXh8I/AAAAAAAAHVk/bF2mSSN397I/s1600-h/CSNovSeasonal.jpg

You can see the sharp reversal in prices when the Money Goose hit and i would expect to see something similar to happen again”if” we ever had a return to Inflation-
Inflation would first have to occur by even looser lending standards then before-
People would see/think it was all coming back and “see” the quick RE price increases (as they did in the US and mistakenly called it bottom)
So-with the availability of easy (fog a mirror) Credit again-it would turn on a dime-the same old Sub-prime Suzies would get that hormonal “feeling” again-instantly-

I expect this same type of price action to happen here-if/when Canada decides it needs to devalue and at the same time-make people in debt feel good for a awhile with their and our own Tax Dollars-

Main point being-the chart goes to show how fast Sentiment can shift-especially when easy money-
comes courting house lust-

#44 BrianT on 11.06.10 at 12:21 am

The webbot guys have moved up their start point to today-I am not selling their stuff-I mention it more as a curiousity-they have had some success to date http://halfpasthuman.com/nunums.html

#45 CREA Circle Jerk on 11.06.10 at 12:28 am

Good link the Nosty with Jim Rickards. That guy is super sharp and he’s dead-on with the scenario the Fed is painting themselves into. That analysis is spot on IMO.

I also think the Bill Fleckenstien audio interview is a must listen. I really can’t disagree with any of it. These views should be mainstream too bad 90% of the population doesn’t hear them (or don’t care) and thus won’t prepare for the eventual pandemonium to come. This doesn’t mean the world is going to end, but a change in the monetary system is coming, probably along with currency devaluation and or strategic sovereign defaults eventually (2-5 year timeline).

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/11/4_Bill_Fleckenstein.html

Whatever you do, don’t hold cash! Buy commodities or commodity backed derivatives (like PHYS); buy a business with strong cash flow and reinvest proceeds out of cash. Stocks and preferreds are OK too but won’t yield nearly as much as commodities. Real estate is not a good place to be.

#46 CREA Circle Jerk on 11.06.10 at 12:31 am

Denominate any cash holdings out of USD, Euros, Pounds and Yen.

#47 GTAInsider on 11.06.10 at 12:38 am

Garth, from the picture you took at “consequences”, I am clearing seeing a bunch of ASIANS trying to load up real estate and hope for a fast spin … I am sure the developer would offer them “NO Assignment fees” so, its great for Asian flippers who can go buy few and can spin it out to their friends and families by making a few thousands here, few thousands there…However, Asians (newbies) kind of stick to brick and mortar theory, they believe even prices went down to crap (60% price drop), they can still own a piece of the granite, a part of the hardwood floor and a part of a white “American Standard” toilet and bathtub…so it makes them very fulfilling… However, they tend to not like any liquid stuff…like stocks, preferreds or mutuals…but they love the offloaders to pay tons of legal fees, taxes to government while they can bank off capital gains..

#48 Marty on 11.06.10 at 12:40 am

In keeping with the melt analogy, here’s a list of classes computer money transfer systems in the USA that will fail, with general rankings in terms of probabilistic fitness for sustained US hyperinflation.

Highest on the list, predicted most immunity; lowest on the list subject to near immediate failure.

1. Handwritten cheques, they are essentially custom “single use” currency issues: scientific notation can save the day.
2. FOREX trading systems (both consumer and finance sector, cause: Yen and use of FOREX software in the developing world) — if an only if there is a continuous audit process in effect and debugging and codebase redesign possible out of country
3. n
4. n
5. n
6. Most online shopping cart systems that have no centralized code management or dynamically updatable API parameters or codebase
7. Most accounting and tax software that is specific to the US economy, where no Yen / etc … versions exist or where no FOREX orientation exists in the program
8. Cash registers at US fast food chains
9. Cash registers at US supermarket chains, universally said to be unfit
10. ABMs or ATMs as they are called in the US — unless the computer can get its software / firmware updated nightly, and even fit ABMs will fail if the overall software architecture and codebase is iffy or sub-par for general global use
11. Parking meters and parking systems, electronic EFT types
12. Coin based vending machines of any kind from Washer / Dryers to Cigarettes to who knows what. Coins become moot within the 1st year of hyperinflation as a general rule.

source: http://hireme.geek.nz/US-hyperinflation-finsec-risks.html

For entertainment only of course. :/

#49 BrianT on 11.06.10 at 12:47 am

You know the times they are a changin when the NY Times starts giving out squirrel recipes for the youngins http://parenting.blogs.nytimes.com/2010/10/19/preparing-kids-for-the-unknown/

#50 Patz on 11.06.10 at 12:53 am

Once this thing gathers some momentum the good deals people have been getting, well below original asking prices, will become millstones around their necks. Buying something for say $295K that’s headed for $195K is not a bargoon.

Check out this interview with economist and Denis Kucinich advisor Michael Hudson on QE2. It is getting serious pushback from countries around the world as they believe (with good reason) it is aimed at strip mining their assets.
http://tiny.cc/p8wiw

#51 Dan in Victoria on 11.06.10 at 1:15 am

“Drove fifty miles and lost count ”
Take a look down South.
Makes you wonder.
http://www.landwatch.com/Marion-County-Tennessee-Homesite-for-sale/pid/145003946

#52 Jeff Smith on 11.06.10 at 1:28 am

Higher prices coming to canada too, because we are joined at the hip with the yanks . They get it, we get it.

http://www.dailyfinance.com/story/fed-policy-sinks-dollar-commodity-prices-soar/19701878/?source=patrick.net#articleHeader

#53 Brynn on 11.06.10 at 3:46 am

oh yeah?
lets see how things really go. Fact is, us material obsessed whiteys are too delusional to see the error of our debt riddled ways, we will not forfeit our plasmas and every whim for our spoilied children. Emerging market immigrants who think the open space, stellar health care and bleeding heart politics of Canada are shangri la will keep propelling prices into the strasophere in the big cities and really, who wants to live anywhere else? there is no edging down, prices are up 3% overall. Vancouver and Toronto will remain strong and who cares if they go down 10% with the gains they have had overall – real estate remains a stellar investment providing you werent an idiot getting into it…

OH and Where are all these 50% off bucolic dumps you speak of? I know Grey Bruce for example is also rising faster then a teenagers weenie at grad. hmmm the mind wonders if you have been smoking BC bud?

#54 timbo on 11.06.10 at 4:27 am

The End of Free-Trade Globalization
William Greider | November 4, 2010

http://www.thenation.com/article/155848/end-free-trade-globalization

“For Americans the most ominous development is that trade deficits, after shrinking during the recession, are expanding rapidly again. That stands in the way of recovery and helps explain why the federal stimulus of 2009 had less punch than expected. The trap is illustrated by a few recent statistics: the US economy expanded in the second quarter of 2010 by an anemic annualized rate of 1.7 percent. During those same months, however, the nation’s trade deficit expanded by 3.5 percent. Do the arithmetic: the US economy would have grown at a much healthier rate if it weren’t for its dependence on products made elsewhere.”

we are at the end, and no matter how you look at it manufacturing offshore to import back and undercut domestic producers just does not work. There will be change and a somewhat balance restored but till that end Vancouver R/E is toast. No more rich asian’s to prop up the bubble.

canned goods,pickling and root-cellars are going to be the rage.
http://www.loghome.com/articles/2175

#55 p. on 11.06.10 at 5:16 am

The money powers prey upon the nation in times of peace, and conspire against it in times of adversity. It is more despotic than monarchy, more insolent than autocracy, more selfish than bureaucracy. I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption will follow and the money power of the country will endeavor and prolong its reign by working upon the prejudices of the people, until the wealth is aggregated into a few hands and the republic is destroyed. Abraham Lincoln, Nov. 21, 1864

#56 breezer1 on 11.06.10 at 6:23 am

nostradamus le mad vlad, thanks for the links, great stuff.

#57 C on 11.06.10 at 7:01 am

Oakville, Ontario October 2010 numbers were released recently and they are lookin sweet if you are a RE bear. October 2010 sales are down -34% vs October 2009, and average prices are down -8% in October 2010 vs October 2009. I live in neighbouring Burlington where I’m sure the numbers are similar. There are still tons of for sale signs up along Lakeshore Road as the “wounded dinosaurs” sit.

When I casually tell friends and others that my wife and I are renting waiting for the real estate market to weaken further, they look at me like a puzzled puppy would, you know with the tilted head. It really is a classic contrarian indicator. If joe six pack can’t understand why you would rent it may be the trade to make. I know real estate is not like trading a stock blah blah blah but investor psychology is all the same whether it’s real esate, stamps, or nortel. I imagine average prices will resume there move down from June’10 in November.

#58 bigrider on 11.06.10 at 7:12 am

I loved your comments today Garth and I have forwarded the link to this blog to many who seem to be waking up to the fact that RE as a religion may be a false God.

#59 Ottawahouse on 11.06.10 at 7:19 am

All my life I have believed in real estate, my father told me stories of his father (1930 era) said never buy real estate and sited the story of owning an apartment complex with 10 rental units that he could not sell for 10 years @ $5,000. So are we returning to this era?

For me when I look out my window and see all the snug little families doing the same things every day, its almost to hard to imagine the end to real estate.

I will move to Vancouver in 5 years and if my house drops by 50% or more. Am I any worst off now if the houses in Vancouver drop by 50% or as some suggest 75% or more?

Like my wife said, we do not have a mortgage so I would have to rent for 5 years @ 1,000 a month or $60,000. So if my house drops from $500,000 to $250,000, I only paid $ 250,000. But I would pay out $60,000 in rent. Plus my wife says she will never do laundry in the laundry room. But the house in Vancouver will drop in Value as well so I will switch homes?? Is there any gain or loss?

Yes your all going to say I could sell now at $500,000 and Invest and then pay the rent with the dividends, but …… How many of you are prepared to rent?

How many of you really can do this??? Maybe 5% of the bloggers here but the rest of us? Do we all really believe in the death of real estate? Are we going to follow America into the soup kitchen?

Lifestyle choice I guess.

My point, my hat is off to those who sell and Invest, I think the stock market is a gamble because 85% of us on this blog do not understand the stock market so its a gamble. And there is no assurance that you will gain 12% on your money in the market either. There is no guaranty of anything really is there?

For Garth if he can invest in a Marina then guess what he has far deeper pockets than the average Jane and Joe of this blog so his advice to sell and Invest is right for him but may not be appropriate for you.
We all have choices.

I am always hesitant of a millionaire giving advice to a person who is average Canadian, the shoe does not always fit.

Garth has good points but it might come down to I would be better off selling at the high and buying again at the low, but if I don’t ……I am no worst off than I am now?

Good luck I truly hope each of you make the right choice for yourselves

I answered your other post regarding your mother’s house. You seriously need some financial advice, dude. Your emotions are blinding you. — Garth

#60 Moneta on 11.06.10 at 7:47 am

In the last post someone asked why inflation has been so low for so long. Here is a look at the situation:

There is a confluence of factors. Let’s start in 1982 because that’s when interest rates peaked and started to come down and that’s when bonds and equities took off.

To understand why prices are the way they are you need to look at a typical company’s income statement. To get profits you calculate revenues minus expenses and net out taxes.

Revenues have been up for a few reasons:
– More workers with women flooding the market
– More workers with boomers coming of age
– In 1982 there was a lot of room to lever up. Boomers were just entering the market and their balance sheets were still spic and span.
– Interest rates were coming down after a decade of pain and stimulating consumer spending.

Expenses:
– COGS: the economy had just gone through a decade and adjusted to the new oil price. There was a glut of oil for 2 decades because of government investments triggered by the embargo. Oil traded in the range of 15-18$ for 2 decades! America was starting to export its jobs and production to emerging markets further reducing the prices. As more units are sold, fixed costs per unit drop.
– D&A: depends on type of business. Not much depreciation for services. In technology, you can depreciate over multiple years even if the product is obsolete in less than a year.
– Interest expense: going down because rates are coming down
– Taxes: came down with Reagan
– Write-offs: companies every few years, usually with a change in CEO, would do huge write-offs. Market would react negatively but because of easy money policy with falling rates, stock would recover. Asset bubble thanks to dropping rates permitted this.

As margins increase, you get more entrants and easy money has made it easy for this. As you can see nearly every variable in the incomes statement has been a positive contributor to keep a lid on prices.

Let’s look at the future:

Revenues:
– Boomers are ageing and will spend less. Households are in debt and in pay back mode. This will put a lid on number of units sold. This means emerging markets will need to take over… are they ready?
Expenses:
– COGS: less units means higher fixed costs per unit. 18$ oil has been consumed. We’re now burning the 40$ stuff. Export of jobs and external production is peaking… impact of lower costs from this variable is waning.
– D&A: Canada is in dire need of investment. Current overcapcity is probably needed to meet future demand. Needs of ageing population has not been addressed. This means that D&A costs will surely creep up over the next decade.
– Interest expense: it is bottoming. Large firms are refinancing a very low rates. Small firms will have a hard time entering markets. Large firms are going to squeeze out the competition. This will be inflationary. M&A will take out the capacity.
– Taxes: I don’t think the US can afford to further cut taxes. The impact of lower taxes is through.
– Write-offs: with rates at all-time lows, companies can not expect multiples expansions due to lower rates. The walking dead will not be spared like they have been. When write-offs occur, recapitalizations will be much harder. Companies will be forced into bankruptcy and M&A.

#61 Moneta on 11.06.10 at 7:53 am

D&A: Canada is in dire need of investment. Current overcapcity is probably needed to meet future demand. Needs of ageing population has not been addressed. This means that D&A costs will surely creep up over the next decade.
———
Correction…

Current overcapcity is probably in sectors we will not be needing in the future. There has been al lack of investment in sectors that will be in high demand. Examples: health sciences. Programs are still based on the old boys’ mentality. Cap number of students and overwork residents because that’s the way it has always been!

In Canada, health care is less than 1% of TSX. What a joke!

#62 Ottawahouse on 11.06.10 at 8:02 am

Let me give you a real life example to support the fact the average person cannot always win.

A year or more ago I started reading this blog and believe the end of real estate was near. So I persuaded my mother to sell her house. We listed at $300,000 and it sold for 350,000 the same day. Wow! we are out. I protected my mother.

Last week, the same house two streets away sold for $400,000 and was 4 days on the market.
hmmmmm

My mother invested the money very conservatively but we all remember last summer there was a mini crash.
Do not sell I said as the market will recover.
But as we know now we do not live in a perfect world.
On top of that she found an apartment that she pays $1,500 a month in rent.

So is she better off?
Your all going to say next year the house will be worth $200,000 and I ahead !
But do you really know what will happen next year????

My point is no one can predict with 100% certainty when ? my mother technically lost $50,000 by selling to soon, and then lost another $18,000 in rent, I will not say how much she lost in the market but I had to make up the difference.

People run on emotions, it is great to say do this this will happen but the basic facts we are average people trying to do the best we can. If you want to succeed in life, pay off all debt as soon as you can and save your pennies for retirement.
Because there is no dream ticket to richness.

And just for your information I do not blame Garth as I made a logical choice based on the facts as I believed.
But sometimes we all need to sit back and say can you predict with 100% certainty that something will happen and when will it happen?

First, you neglect to tell us the tax-free capital gain your mother received from selling. Likely it was the greatest amount she earned at one time in her life. Second, you cannot compare a house two streets away with the one she sold – there are significant factors which can affect properties in close proximity. Sounds like your greed kicked in. Third, if your mother had invested in a basket of dividend-yielding preferred shares her $350,000 would have earned enough money for her to live rent-free, and today would also have yielded a capital gain while 100% protecting her principal. Did you get some help in making the right choices? Finally, while we cannot foretell the future, we can be smart enough to harvest capital gains, invest with intelligence and try to strip emotion out of the process. If you cannot do that, well, suck it up. — Garth

#63 DARLENE on 11.06.10 at 8:07 am

Prof ANON on 11.05.10 at 10:48 pm

Congratulations on your home purchase! As an avid reader I was wondering if you actually went through with it. You were smarter then the average first time buyer and are well positioned for the storm.

Here’s a little advice when refinishing your pee stained floors. Neutralize the area to remove all trace of odor. No matter how much you sand, you will not be able to remove the discolouration. I found that special walnut stain matched the discolouration well. Stain around the effected area and try to blend it in so that the stain is not noticeable from a standing position. The only problem with this is now your floors have a more modern dark stain but dust shows up more then on a lighter floor.P.S if you had carpet there before you will need to put quarter round down to cover the gap left around the perimeter of the room.

Just in case you’re wondering I bought a similar type of home back in 2002. I have lots of experience with ugly but structurally sound homes.

Hopefully you took my advice and got a newer used fridge. You can use this handy link to figure out your energy costs.
http://michaelbluejay.com/electricity/howmuch.html
I know that you said that your frugal but I prefer the term cost effective.

#64 Moneta on 11.06.10 at 8:19 am

– real estate remains a stellar investment providing you werent an idiot getting into it…
———-

I tend to agree with this.

My criteria when buying a house a couple of years ago were:

1. Keep it under 350K. That’s the max a typical Cdn family can afford to still be able to put some money aside. When they wake up, demand will only be for the 350K and less.

2. Make sure you can walk to important amenities. With a crunch, many families might be forced to go to 1 car. Prices of houses in such locations will fare better.

3. Make sure all important structures of the house are well maintained. Choose materials that will give you the most longevity and least maintenance costs. If inflation takes off, it will be worth a pretty penny.

4. Choose a neighborhood where houses are well maintained and mostly paid off. You don’t want to be the only one living on your street and have to pay for the garbage truck on your own.

Now time will tell if my criteria were worth anything!

#65 David B on 11.06.10 at 8:23 am

A very interesting read wrt to some extra hard choices that those new impoved “Republicans” must make. Please understand …. we all live in a Global economy, and Canada lives beside the heart of that economy.
—————-

GOP to Use Debt Cap to Push Spending Cuts .

http://online.wsj.com/article/SB10001424052748704405704575596781566162158.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsSecond

————————

Take a good look at the faces of those two clowns who have told voters for months …. “Things wiil change”

They will be dead in the water before they even take office!

#66 Brian1 on 11.06.10 at 8:33 am

#40 EJ; 50,000 in plus 50,000 out = 0.
3,000 jobs created in October? 1 month?
50,000 in one year?
So 3,000 full time jobs created. 44,000 part time jobs lost. Everyone must now rush out and buy two houses now. The worst is behind us.
Are those 3,000 jobs house buying jobs?

#67 Potato on 11.06.10 at 8:38 am

“The interesting thing about real estate is that, like ice cream on a scorching day, it melts from the edges.”

That’s usually the case as I understand it from other sources as well… but this summer was interesting in Toronto, as it was the 416 that seemed to seize up and dropped ~15% in 3 months while the 905 had a more typical slow season.

#68 Moneta on 11.06.10 at 8:43 am

One more criteria:

5. Choose a smaller home. It will cost less to maintain.

Newer homes which are larger will depreciate faster than older big homes because materials wear out faster. On the other hand, big older homes will need more renovations.

World energy consumption was 15.8 TW in 2006. From about 10TW in 1980. The entropy in the system keeps on increasing. Our houses are bigger and our infrastructure keeps on expanding. This measnm we will need more oil than in the past to maintain AND to grow. On top of that, we’ve just gone through 2 decades of underinversting in infrastrucutre. Just ask our engineers who graduated in the 70s and had to go for their MBAs if they wanted a job.

A world struggle for energy is building up and owning a big house with a big mortgage in such an environment does not look like a good bet.

#69 OttawaMike on 11.06.10 at 8:48 am

Prof Anon,
Re:Cat pee
Full strength Hydrogen peroxide diluted to 50% to make about 4 litres, 1/2 cup dish soap, small box baking soda.
Scrub it in and let it stand several hours.
Beware of the off gasing, lots of ventilation. Vacate the premises.

You’ll need to sign a waiver declaring the use of the Hyd peroxide when you pick it up at the chemical supplier. Apparently it is a weapon of mass destruction.
Seriously.
Zinc based stain blocking paint primer for any painted surfaces like base boards. Oil based varnish to refinish floors. Good luck.
I’ve been there, done that.

#70 Mike in Etown on 11.06.10 at 8:54 am

I live in SW Edmonton. I have been watching these two houses as they are close to everything for us.

One started at $399K and the other was just over $400K about five or six weeks ago or so. I saw a price reduced sticker yesterday on one of them…. they dropped by $5K each once before. I wonder how much further they’ll go – I believe both are vacant.

http://www.realtor.ca/propertyDetails.aspx?propertyId=9815585&PidKey=671542744

http://www.realtor.ca/propertyDetails.aspx?propertyId=10021613&PidKey=-1398717371

They were probably going for $450K in 2007.

#71 Ben on 11.06.10 at 9:27 am

They stopped paying OT in Ontario, you get time off in lue of. Came up over a few brews last night, 3 guys in separate industries all said the same thing.

#72 dark sad person on 11.06.10 at 9:29 am

#44 InvestorsFriend (Shawn Allen) on 11.05.10 at 11:47 pm

Number 16 Mel, who said:

“the only thing that keeps stocks going higher is ‘ Speculation’. Today’s higher oil prices, stock, etc. will be coming down sometime next year”

Mel, my friend you show no understanding of what values the stock market. You are not alone in that, at least 90% of adults have no clue about the stock market. It’s not speculation it’s earnings that drive stock prices.

The amount I invested a over 22 years totals $243,000 and the weighted average age of the investment is 8 years. The total portfolio value is $745,000.

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

Amazing-especially for someone who’s an Investor-yet still doesn’t understand what drives stock prices–

Earnings do not drive stock prices-
News does not drive stock prices-

Sentiment is the “only” driver of stock prices-
Nothing else-

#73 bill on 11.06.10 at 9:32 am

prof anon
there is a product called ”terminodor”.
it is a enzyme based liquid that ‘eats’ organic material.
you may have smelled it it being used in urinals.
so there will be a familiar odour for a bit.
I have no doubt ottawa mikes’ formula will do the job.
but keep the peroxide off your skin.

#74 BrianT on 11.06.10 at 10:01 am

#55Patz-what Hudson says is clear as day to anyone willing to objectively look at the facts. If you go back to 2005, what Hudson is saying was termed “conspiracy theory” so things are definitely changing in that regard-meanwhile the MSM still spins the same nonsense(but less are listening every day).

#75 bullion.bunny on 11.06.10 at 10:18 am

Sentiment is the “only” driver of stock prices-
Nothing else-

and lots of easy credit……

#76 BrianT on 11.06.10 at 10:25 am

#30Dan-Yes-somehow many think the 1970s will someday return and higher costs will automatically mean pay raises. IMO the freezing of social security in the US was the canary in the coal mine in this regard-costs are rising rapidly yet the money just isn’t there to hand out more.

#77 eaglebay on 11.06.10 at 10:29 am

#38 Canadian but not for long

What a loser. Anybody that believes a UN report, has his head screwed on backwards.
I know a lot of well educated Canadians in the US and they can’t wait to get back to Canada.
What are you running away from?

#78 Potato on 11.06.10 at 10:29 am

@ #65,70 Ottawahouse:

The thing is, in some cities (esp. T & V) housing is so vastly overpriced that you don’t need to worry about the buying back after it’s lower part for the decision to sell and rent to make sense.

We’re not going to get the timing exactly right, and forecasting is difficult, even with all the data we do have to go through, and the example to the south of us. Maybe housing will continue to go up for a few more years. Maybe there won’t be a crash at all, and instead there will be a few decades of nominal stagnation while inflation corrects the real prices.

But the fact is that if rent costs you $1500/mo, and you can sell your house for $350k, it is absolutely the right decision to sell, take the tax-free gain, and invest. You only need to make about 5% on your money to pay the rent, which is not a high hurdle for a diversified portfolio. And even then, you had to pay out something like 2-3% of the house value as an owner for property taxes and maintenance, which means you only need to make a scant few percent on the investments to put you in the same spot you were before, which even the most conservative portfolios can manage.

The pursuit of perfection is often the undoing of achievements that could be good enough, so don’t second-guess yourself that maybe you could have got an extra dozen percent off the home sale if you had waited longer. At the time, with all the information you had, it was the right decision to make, and if faced with the same circumstances again in the future, you should do it again.

#79 Moneta on 11.06.10 at 10:30 am

A while back, someone asked how he/she could get past transactions in Montreal.

Here is a site:

http://lecarrefourimmobilier.com/

It is now at 2005 but it is still interesting to see the evolution!

#80 Ottawahouse on 11.06.10 at 10:32 am

I agree Garth its way to emotional
And harvesting gains and not looking back is correct way to think, as greed and should have, could have would have kicks in.

But it is so hard, One year from now I will tell the blog what decision I made in regards to my own house, hopefully we can learn. I admit I believe I am of the lucky minority.

I still believe you are correct harvest the gains and Invest, perhaps the most logical thought is if I am wrong I still made a gain.
I will think some more.

For those interested I received my statements today I am up 10% and my wife up 11.5% in the TFA
RRSP up 3%

Cheers

#81 Got A Watch on 11.06.10 at 10:41 am

Moneta – great responses. Thanks for the debate, I think I said before, we don’t really disagree on much, we just phrase it a bit differently. The guy who quoted to reply to you: that was my quote, and she replied to it, pay attention. I was referring to what NDP types say on TV there “we’ll just raise taxes on those (filthy) businesses” (to give our “union brothers” raises and more benefits, of course).

If you think “off-shoring” will work for business these days, you are about 10 years too late with that thought. We are entering an era of currency wars, trade wars and if it is not stopped, real wars. With that background, moving your production to China won’t help you much. Mal-Mart has been crushing the margins on their imports from “over there” for years, now they are switching out of China to “cheaper” locales like Vietnam or Bangladesh. After that, Africa maybe. China exists on razor thin margins, and “volume”, just like Crazy Eddie. And that model is under siege now.

With QE2 etc, the USA is declaring economic war on all of those “cheaper places”. And that is just starting. Not to mention rising oil prices (and other commodities) make manufacturing “over there” and importing it to “over here” much less profitable, no matter how “cheap” it is “over there”. Plus the “consumers” “over here” are tapped out, and won’t be buying as much anyway, at any price, from anywhere. The net effect will be to crush manufacturing “over there”, unless their own citizens can buy all those goods, which seems unlikely without large wage raises, making them more uncompetitive on exports…. good news for us, really.

You can see all those “exporters” (China, Japan etc ) are upset about QE2, they can see the handwriting on the wall, and it is not good for their “economic expansion”. Even Mr Carney remarked on it recently, we will have to move to “lower the CAD $” like everyone else – Canada will move to lower interest rates again before we ever raise them, as the US won’t be raising them for many years.

The only BRIC that might be able to stand on their own is Brazil, and even they sell a lot to China. If China slows, they all go down. But I have no sympathy for them, they are the architects of their own misfortune. Mr Wen of China can complain all he wants – the cure for his problem is to de-peg his currency from the US $. But then, the value of the Chinese currency would rise, making exports less competitive. Mr Wen, too bad for you, rock meet hard place, suffer massive inflation and loss of export sales, or de-peg and suffer loss of export sales.

The end game for “globalization” is approaching, from many causes. Eventually, manufacturing will return to America and Canada, to complete the cycle. It won’t be cost effective to import “finished goods” any more. Jeff Rubin (ex-CIBC economist) wrote a book about this a while back, he was early, but the concept still stands.

#82 eaglebay on 11.06.10 at 10:45 am

#44 InvestorsFriend (Shawn Allen)

Why a RRSP? You’ll be taxed on 100% of the whole amount.
In a self directed investment account, not in a RRSP, you’ll be taxed on only 50% of the capital gains. Duh.

#83 Moneta on 11.06.10 at 10:59 am

Moneta – great responses. Thanks for the debate, I think I said before, we don’t really disagree on much, we just phrase it a bit differently
—-
I’m pretty sure that if many of us were face to face, we’d agree more and understand each other more than we do on a blog.

Talking is so much more efficient than writing!

#84 jess on 11.06.10 at 11:01 am

Timbo

green stimulus
Dr. Chu said in a statement on Friday. “We can create millions of new, good-paying jobs that can’t be outsourced. Instead of relying on imports from other countries to meet our energy needs, we’ll rely on America’s innovation, America’s resources and America’s workers.”
http://green.blogs.nytimes.com/2009/03/20/energy-department-issues-first-renewable-energy-loan-guarantee/

However, Noah Berger for The New York Times updates that story.
Solyndra makes photovoltaic cells using a material called copper indium gallium selenide. robot-run factory /http://www.nytimes.com/2010/11/03/business/energy-environment/03solar.html
========
Innovalight executives license the patented ink technology the chinese and avoid having to raise hundreds of millions of dollars to build factories of their own.

Due to chinese subsidies, low-interest loans, cheap labor and the support of the chinese government . Therefore, Conrad Burke prefers to export their well-protected technology to China and create well-paying jobs in America.

#85 Al on 11.06.10 at 11:05 am

Friday’s Globe & Mail states; “Condo sales in the GTA broke upside records in September !” Who should we believe?

#86 Azza on 11.06.10 at 11:06 am

#17 JO

3) the top 10-15 % of the population (the Elite) who own most of the assets in society.

I think it’s too fat layer. 1-3% might be. I think my family is in top 5-10%. Our assets are up ~250% over last 3 years, but we are rare example in our neighbors / friends / colleagues pool. Also assets are assets, you cannot eat them and I’m very hesitant to sell assets to serve everyday needs. My credit cards purchases are double of what they used to be (nice tracking tools and cash back 3%) and I see 600$-1000$ statements it seems like every second month recently. I’m 30%-70% income/growth (Thank you, Garth!) and have ~2K$ in cash flow from dividends/cash distributions, but still feeling the pinch. I can only imagine of what is average families are going through feeding their house and car.

#87 Moneta on 11.06.10 at 11:07 am

Sentiment is the “only” driver of stock prices-
Nothing else-

and lots of easy credit……
———
Short term yes. On a long term basis, let’s take a lokk:

TSX TR index has gone from 2000 in 1982 to 37782 in 2010. This = 11.07% return annually.

Yields have gone from 14% (+3% credit spread) to 1% (+3% credit spread) during same range. This means a multiple expansion of 6X to 25X. This would imply around 6% out of 11.07% due to multiple expansion. Since rates are not going much lower further multiple expansion would only stem from QE.

Inflation represents about 3-4% of 11.07%.

So eps growth would represent about 1-2% of TSX TR since 1982.

#88 dark sad person on 11.06.10 at 11:08 am

#83 bullion.bunny on 11.06.10 at 10:18 am

Sentiment is the “only” driver of stock prices-
Nothing else-

and lots of easy credit……

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

Yes-but even credit needs bullish sentiment to make it become money-otherwise it’s nothing-if there’s no borrowers-it doesn’t exist-

#89 Ed on 11.06.10 at 11:09 am

Garth:

Please lock out the hackers!

It took me so long to get your blog site I’ve forgotten how I did it.

What will happen tomorrow?

Whack the Hackers.

#90 Arjo Soer on 11.06.10 at 11:20 am

To Utopia

You are absolutely right the current virus scanner only catch about 30% of all viruses, worms, malware that are out there. So relying on current virus scanner is just a feel good measure. It is not that the virus scanner want to filter a higher percentage like they used to but every month 10,000 new virus are released on the internet there are a total of 45 million virus signatures out there, there is no way they are able to filter everything. Another worrying trend in virus, worms, malware is that they are becoming more targeted towards a specific target and I can see Garth’s blog as being one of those targets.

To truly protect yourself you have to move to a white list setup, use a program that only allow you to run a certain set of programs that you trust, only allows you to access websites that you trust and only allow you to open attachments of people that you trust.

#91 Moneta on 11.06.10 at 11:20 am

You can see the sharp reversal in prices when the Money Goose hit and i would expect to see something similar to happen again”if” we ever had a return to Inflation-
Inflation would first have to occur by even looser lending standards then before
——-
I don’t see the same thing.

In the 70s and 80s, when inflation was roaring, boomers still had a lot of room for leverage. They still had many years of earning power. Their very large cohort was taking over real estate while their parents stayed in manageable 1300 square foot houses. Each retiree was being financed by 5 boomers.

Today, boomers are the leading owners of real estate. They are about to retire and be stuck on fixed income with limited earning power. Many have huge houses and many have not maintained them properly. On top of that we are going to 2 workers per retiree.

I really don’t think real estate will be a good investment in the early innings of inflation.

#92 McLovin on 11.06.10 at 11:21 am

Garth, obviously Vancouver isn’t different (as much as people here would like to believe it is) but it is behaving differently. While Toronto, Edmonton, Kelowna are all dropping fast Vancouver continues to make new highs on decent sell/lists. People have said, Underground drug economy, Rich Asian, etc. What’s your take?

#93 PTDBD on 11.06.10 at 11:22 am

Jo #17 summed it up. A Blog dog should read it again and decide which side of the dividing chasm they are on. This newly created paper is either coming into your bottom line or subtracting from it. If you are average like me, you are toast.

Money supply will be increased month after month. Debts will never be paid. Sustenance items will go up in price at an ever increasing pace. Those that are being fed by the counterfeit largess will continue their lifestyle as money is no object. Witness Obama and his lavish trip to India. Big money will take refuge in stocks and commodities as currency is devalued. The average Joe will fight increasing prices, high unemployment and stagnant pay.

Read JO’s post again and figure out what category you are in. Will you be buying a Marina or struggle to fill up your gas tank?

“QE is great if you are: 1) a bank executive who sees large bonuses due to the short term asset inflation which helps your mutual fund and stock broker commissions/fees as well as the massive profits from your traders who sell the USD and buy Brazillian debt on 100-1 leverage, 2) large mulitnationals who earn most of their revenues outside of the US yet can produce most of their products for pennies on the dollar outside of the US, 3) the top 10-15 % of the population (the Elite) who own most of the assets in society.”

#94 Canadian but not for long on 11.06.10 at 11:23 am

At #85: eaglebay, I’m not running away from anything. I’m moving TOWARD a better life with people who are, regardless of what you believe, more accepting and better educated than the delusional people like you. Funny how everyone on this blog loves to quote UN reports, but when one comes in favor of the U.S., then and only then should nobody believe it. Let’s face it, the countries listed in the report do indeed have a VERY high quality of life afforded to them. Funny thing about YOUR post is your friends living in the U.S. are STILL THERE! So, in typical Canadian fashion, they probably love to call you up and bitch about the U.S., but they haven’t left it because they have no intention of ever leaving the U.S. Hell, what’s stopping them already? Hmmmmmm, wonder why they haven’t left the U.S. to move back to Canada as you would want one believe. The top-tier talent in Canada (this would equal SMART people) typically LEAVE Canada for the U.S., MOST of whom ultimately apply for and receive U.S. citizenship. The U.S. has more people moving to its great nation and obtaining citizenship on any given year than all other countries COMBINED…. hmmmm I wonder why? Hmmmmmm, there’s a reason for this. 90% of the Canadian population live within 60 miles of the U.S. border. The U.S Dollar is STILL the world’s reserve currency and will most definitely stay that way, regardless of the wishful thinking of backwords thinking Canadians such as yourself. Face it, the U.S. rocks and LEADS…. WE FOLLOW every move they make because we have no brain of our own, yet we love to bitch grip and complain about any result of our own government’s doing, and then we most always point to the U.S. as the one to blame. We have ourselves to blame for our OWN DECISIONS we’ve made.

#95 Moneta on 11.06.10 at 11:25 am

I really don’t think real estate will be a good investment in the early innings of inflation.
——-
I also think there is an oversupply of homes. I think many boomers will be selling their second homes. I also think the number of people living under 1 roof will start to increase, emptying some houses.

Our obsession with independance is peaking. It is not sustainable.

#96 Moneta on 11.06.10 at 11:30 am

You can see all those “exporters” (China, Japan etc ) are upset about QE2, they can see the handwriting on the wall, and it is not good for their “economic expansion”.
——-
It’s all an act. Because if they don’t print, they’ll need to write off. If they write off, they lose their reserves.

Rock or hard place. All roads lead to Rome… or Athens?

#97 Dorf on 11.06.10 at 11:45 am

Webmaster, I sure like reading your writing. A rock solid explanation, very intelligently expressed. Nice to get a break from 3rd grade writing styles.

Garth, we need a new Premier out here in BC, one that can master finances.
What do you think of moving to the Wet Coast ?

Liberals are out, NDP are definitely not getting re-elected until the next generation becomes old enough to vote, and that leaves us the Greens, the Dope party, and a hatful of other little special interest actors who will definitely sink what’s left of the Province.

Help !

#98 BrianT on 11.06.10 at 12:06 pm

#89Got-Jeff Rubin wrote a book saying that but he either doesn’t understand the numbers or chose to ignore them. Long distance shipping by boat is by far the most fuel efficient means of transport-by the time that is no longer viable the rest of the economy will be long gone-how exactly are goods going to be trucked-what about air travel (just two examples). I almost forgot suburbia. Globalization and the offshoring of jobs will continue until something stops it, but it won’t be oil depletion.

#99 Live within your means on 11.06.10 at 12:09 pm

.#45 InvestorsFriend (Shawn Allen) on 11.05.10 at 11:51 pm

Yesterday I was talking to a gal at LL Bean about buying a goose down duvet & cover. No shipping costs to Canada, nor duty, and they only have 5% sales tax, as opposed to our 15% tax in NS. Our $ is almost at par. Haven’t made up my mind yet. Threw out my 20 yr one last year and really miss it. If I go for it, it’ll be my Xmas gift as I don’t need anything more.

I, and my 2 sisters, now find we have only 1 person to which we could leave some 100 Yr. dated sterling pieces (heirlooms) from the old country and she’s not really interested in that stuff. Maybe when she’s older she’ll appreciate them. I certainly hope so. We want them to stay in our immediate family. Maybe I’m old fashioned.

#100 Dorf on 11.06.10 at 12:11 pm

“My computer guy swears that there is no such thing as total protection and you would be foolish to put all of your faith in any of the “virus protection” programs. He has lost data, been a victim of spyware, hacking and trojans despite using the industries best software.”

Did he get an STD too, to round out the picture ?
Maybe he should find a job that he’s good at.
Thanks for the chuckle, though.

Free information is often disregarded, we are all used to it, it’s no big deal. If you had paid $85 for a house call, you would have stood on your head and peed yourself if he told you to, no matter how senseless it seemed.

Carry as many machines as you want, see if I care.

;-)

#101 LB on 11.06.10 at 12:30 pm

JO

You are correct in you analysis of what is taking place in global economies, but we must take your logic one step further to allow savers and the unindebted to regain control in order to initiate and facilitate the necessary correction which will only be achieved through a deflationary descent. To do so, the current interest rate environment dictates that savers must REMOVE their cash assets from the banking system altogether,rather than allowing these assets to continue to be manipulated by it. Continued participation in it only encourages continued credit expansion and inflation, and only exposes savers’ cash and unleveraged assets to further risk.

#102 dark sad person on 11.06.10 at 12:35 pm

#99 Moneta on 11.06.10 at 11:20 am

I really don’t think real estate will be a good investment in the early innings of inflation

********************
I think we’re talking about 2 different time frames here-
The chart i posted is of near term price action and how a return to free/easy money (at this point in time) in the US did rekindle exuberance-instantly-

What you talk about is farther out on the time frame- “after” we go through the deflation phase and after debtors have been taught a lesson–

Then yes-you’re correct-but only after discipline has been handed out by the market-
Then Inflation will come back-as it always does but when it does-people will not recognize it and will stay bearish on RE until almost the top again-

This all hinges on things “not happening” in the meantime-such things as war or a currency collapse and a hundred other nasty possibilities–

The normal cycle (in the Keynesian dream world) after the cycle of deflation-RE growth will be extremely slow-like you say0because of those variables you give-but it will be bottom and those who recognize that-will buy and win big-long term-

#103 Debtisslavery on 11.06.10 at 12:40 pm

I can’t believe how stupid people are.

OK, I got a bit nosy yesterday and checked the land registration office online for my province. One can find out if there is a mortgage on any property, for a small fee.

So I checked out about 10 properties of friends, acquaintances and relatives.

I couldn’t believe what I saw. Between the start of the housing boom and now, people have gone hog wild. People who you would not believe could do it, in fact, did it.

And no, I don’t believe these people had tax purposes and investment strategies in mind. Consumption is what they had in mind.

75 year-olds have taken a $70,000 mortgage on their modest semi-detached; 40-something high flying government employees mortgaged $400,000 for a house paid $350,000; a boomer mortgaged $150,000 on a townhouse she bought for $75,000 15 years ago; pre-boomers took a $125,000 mortgage on their modest detached house; a 60-something law professional signed for a half-million $ loan; a career-oriented, no-nonsense individual has now a $175,000 mortgage on a home bought for $160,000 with a $122,000 mortgage 5 years ago; a 40 something couple refinanced 3 times and could barely recoup anything if they had to sell now.

Real estate is the fastest way to impoverishment for a lot of people. Had these people sold their houses, took their equity and burned it, they would have been ahead. Tough times are coming. There is going to be a carnage in real estate. When interest rates rise and their payments double or triple at reset time, when municipal taxes, hydro, food, gas and the likes rise, people like them will be found in line at local food banks, salvation army and scavenging whatever they could find not only in recyclable bins but in back alley garbage cans. Declaring bankruptcy may be more difficult to do by then.

Eating a week-old half-hamburger found in a garbage can on a granite countertop is a good lesson in humiliation. Garth thinks there will be no great depression. So the 30’s were dirty? We ain’t see nothing yet. I agree with him on this though: This will not end well, especially for the squirrels.

#104 Prof ANON on 11.06.10 at 12:45 pm

@ #81 Bill

Thanks!

#105 Prof ANON on 11.06.10 at 12:49 pm

@ #77 Ottawa Mike

Thanks to you as well. I’ll start with the terminoder and move on to your chemistry if there is still a problem.

#106 Alex on 11.06.10 at 12:49 pm

There’s at least a half dozen posts today lamenting that housing prices have not yet dropped in the big city cores of Vancouver and Toronto, and asking questions such as “Who should we believe?” and “When is it going to happen?”

I suggest you re-read today’s blog entry. Garth points out that the melt happens from the outside. And as a guy who’s been watching the “outside” of the greater Vancouver market like a hawk for many months now, I gotta say that melt has been doing its thing for some time. I’ve keyed on spots like Langley and Abbotsford, where prices are already easing, listings are way up, and days on the market are steadily increasing. Of the 15 homes I’ve personally toured in those two municipalities over the course of the past couple months, NONE have sold. There have been four price reductions thus far, and several of the homes have already been on the market since early summer (!), yet none have sold. Indeed, I’m on a few realtors’ “hot sheets,” and yesterday alone there were a half dozen price reductions just in Langley – and that’s only within the $300,000 – $500,000 parameter I’ve set.

In Abbotsford, meanwhile, some asking prices have dropped by $50,000 and much more. You can now buy an upscale 20-year-old home on one of the hoity-toity mountains in the pretty east side of the city, with resplendent views of the farmland below and Mount Baker in the distance, for less than $400,000. And if you cruise the MLS site using “Map view,” where homes for sale are indicated by red circles, all of Abbotsford is one big red blotch. There’s so much freaking product out there that you could tour for weeks and not see everything.

The evidence is even more pronounced as you move further out. I drove up to the Okanagan this week, and the number of homes for sale and price reductions was truly startling. Today, you can buy a nice home overlooking Okanagan or Skaha Lake for less than $500,000. Granted, they still have a way to go price-wise, but a half-million dollar lake-view home was unheard of a year or two ago. To say that the streets are filled with For Sale signs is not overstating the fact.

Granted, there are forces (limited land, foreign investors, etc) that’ll keep places like Vancouver and Richmond and the North Shore out of reach for a while yet, but given the news we’ve seen recently (even the CREA now admits the market is softening – an amazing revelation in itself), the general unsustainability of current prices, and Canadian per capita debt loads, it won’t be long now ’til the cracks appear even in the centers of the storm.

IMO, those who are patient WILL be rewarded.

#107 Timing is Everything on 11.06.10 at 1:30 pm

#80 dark sad person said – “Sentiment is the “only” driver of”….

…just about everything that can be bought (sold)… legally or otherwise. Just ones opinion.

Most important is WHEN you ‘get sentiment’.

#108 Taxpayer like everyone else on 11.06.10 at 1:49 pm

109 LB – interesting concept. But how does the cash get removed? If I take my cash (or more correctly cash-like)
assets and purchase either financial or hard assets
my “cash” just winds up elsewhere in the system. There also seems to be a paradox. My “cash” is protection
against deflation. A large herd move to hard assets
would push prices up initially, then if defaltion hits I would lose.

#109 InvestorsFriend (Shawn Allen) on 11.06.10 at 1:53 pm

Number 90 eaglebay asks a good question of me

Why a RRSP? You’ll be taxed on 100% of the whole amount.
In a self directed investment account, not in a RRSP, you’ll be taxed on only 50% of the capital gains. Duh.

Actually when I contribute to an RRSP I get a tax refund. So a $1000 I contribute may only cost me $600 net. If my marginal tax rate is exactly the same when I withdraw as when I contribute, then what will happen is:

I will pay an amount of tax equal to paying back 100% of that original tax refund plus 100% of the rate of return growth that I made in the RRSP on that refund money. On the portion that I actually contributed to the RRSP (The contribution less the refund) I actually pay zero tax. That is the math.

Now in this case where the tax rate is the same on withdrawal as when I got the refund on the contribution, the RRSP works exactly like a Tax Free Savings Account. If the tax rate is lower on withdrawal then the RRSP is better than tax free savings account. But the RRSP tax on withdrawal might be higher than the tax rate I got the refund on (due to old age claw backs) so yes tsometinmes a non-registered account is better.

In my own case I am very confident that RRSP was my best option.

This is all explained in more detail in my article here:

http://www.investorsfriend.com/May%202%202010.htm

My friends, I have done the math. Take the time to read and understand my math. It is correct.

And Garth has explained there may even be ways to get money out of an RRSP without paying tax. One example. I retire before 65 and take out RRSP money to lie on at a low income level and delay my pension to 65. I will be in a low tax bracket.

#110 InvestorsFriend (Shawn Allen) on 11.06.10 at 2:06 pm

Nuber 80, Dark Sad Person says in response to me that:

Earnings do not drive stock prices-
News does not drive stock prices-

Sentiment is the “only” driver of stock prices-
Nothing else-

Dark Sad, that is your opinion. And it has some truth in the short term it is sentiment that drives stock prices.

But Wal Mart did not become one of the world’s most valuable companies on sentiment. It was earnings.

Basically you speak a different language than me. You appear to be a speculator investing in graphs, squiggles on a screen.

I invest in companies based on earnings and valuation. I never ever look at charts. I never ever use stop losses.

I will never understand technical trading and most of them will never understand me.

But I am sure glad technical traders exist.

I beat the market by a couple hundred percent over the past 10 years. The market average gave me about 40% growth in ten years. I grabbed another 200% or so by outsmarting people who invest irrationally. And a lot of them are technical traders. Thank You, Thank You, Thank You!! $502,000 Thank Yous (see my post number 44)

Mine is the way and mine is the light, Dark Sad. Follow me to to brightness and Joy.

#111 dark sad person on 11.06.10 at 2:06 pm

#99 Moneta on 11.06.10 at 11:20 am

I really don’t think real estate will be a good investment in the early innings of inflation.

*******************
2nd try-made a reply-it posted then dissapeared-
Hackers maybe–

I think we’re talking about different time frames-
The chart i posted about the fast shifts in Sentiment-is in the present-
What you’re talking about is-once we’ve gone through the complete cycle of Deflation and i agree with what you say-

If money/credit was force fed into the system “here” right now-like what happened in the US as shown on the chart-Sentiment would shift immediately and the “no money” people would be right back and sales and prices would both head north until the exuberance played itself out-like it did in the US-

“When” Inflation returns after deflation and the market has dealt out its discipline-then you are right-people will not recognized bottom and will be extremely hesitant to buy at first and sales will be slow-until almost the top again-

#112 eaglebay on 11.06.10 at 2:13 pm

#102 Canadian but not for long

Anybody can get into the US. Why do you think that they have over 10 millions illegals.
The Canadians that want to come back to Canada are restrained by contracts, houses and other obligations.
Sooner or later they’ll come back with their money and expertise.
I have 2 kids in the US and it’s for the money as Canada lacks funds to do research.
Canada’s demographics are different as you will find out. The majority of the US population is either Afro-American or Hispanic. So are the foreclosures.
Oops, politically incorrect.

#113 Moneta on 11.06.10 at 2:43 pm

Those who act prudently and save, and live within their means (avoiding the purchase of assets at inflated assets) are purposely victimized for not parting with their savings and not becoming debt slaves.
——–
Actually my parents were very frugal and benefitted from this asset bubble.

My father keeps on repeating this meme but I keep on reminding him that were it not for the spendthrifts, his net worth would not be what it is today.

Discipline is nearly always better than shooting from the hip. I don’t see this changing anytime soon.

#114 canali on 11.06.10 at 2:44 pm

then to add to confusion you get likes of ozzie jurock talking of a ‘return to normalcy’ as below (of course we know RE is ‘his product’ and yet from others he tries to offer a more fair assessment of the RE market…yet RE is still his thing so he’s normally biased towards it esp given he offers courses on investment etc).

…would love to hear from others (esp Garth) on this below..Ozzie appears as a regular guest on both Global TV and a local radio show, too.

http://www2.jurock.com/hotproperty/tips.asp

HOT PROPERTY October 30, 2010
Hot Tip Of The Week

Sales are sluggish … listings higher, prices OK

Ozzie Jurock is on Michael Campbell’s fantastic radio show ‘Money Talks’ (CKNW 980) Saturday mornings between 8:30 and 10 am.

PROPERTY OF THE WEEK:

No money down – new condo in Lower Mainland

BUT

1. Actors are buying Hawaii 50, hockey players are buying

2. In last two weeks one home at $6.6 million and one at $9.1 million were sold in West Vancouver

3. Jim Pattison plans massive three-tower project on Burrard St.

Why BC Real estate will continue to do well…

Values grow where people and jobs go…

1. RETAIL SALES HIGHER

2. INWARD MIGRATION LIKELY 70,000 THIS YEAR – same as last two years … means 35,000 families have to buy or rent

3. Exports up 11%, tonnage up 19% first 7 months

4. Sales of lumber to China are up … almost erasing US lumber sale deficit

5. Approved destination status means … maybe 50,000 visitors next year from China

6. We are third largest movie and TV production city in North America … $1.3 billion

7. BC has AAA credit rating

8. Vancouver global financial centre rated by London Global FC index as ahead of Dubai, Amsterdom, Montreal, Seoul

9. New housing starts first 8 months up, double the pace of 2009

VALUES GROW WHERE PEOPLE WANNA GO!

10/16/10

THE CANADIAN MARKETS

ACROSS CANADA SUMMARY

1. UNIT SALES DOWN 22% – 45%

2. PRICES EVEN TO AHEAD OVER LAST SEPTEMBER

3. LISTINGS UP 20% TO 40%

MORTGAGE MARKET MAY TIGHTEN –

BUT LIFETIME LOW INTEREST RATE THIS WEEK FOR 5 YEAR TERM

We discussed last week that TIGHTER MORTGAGE RULES COMING?

The federal government is once again looking at further tightening:

1. HAVE to qualify at posted rates, rather than discounted rates with CMHC mortgage insurance.

2. Lower amortizations period

3. Raise minimum down payment, it could impact the housing market.

BUT THIS WEEK….LIFE TIME LOW INTEREST RATES

5 YEARS TERM 3.33%!

BORROW $100,000 PAY ONLY $491

BORROW $300,000 – PAY ONLY $1,474!

Be safe: LOCK IN THESE LIFE TIME LOW INTEREST RATES

#115 betamax on 11.06.10 at 2:59 pm

#42 Utopia: “My system is a foolproof firewall that keeps all the crap out of my life and off of my computer….So who need McAfee or Norton or a Mac with a system like this…..?”

A computer that is never online is functionally crippled, but if it does what you want, then fine. We have several computers; all are used online, but we only use one laptop for online buying and banking. We don’t keep it off the internet entirely, but web use is limited to known sites, and it’s not on most of the time like the desktops.

On top of that, we have Norton on everything, including the Macs. My wife is a software developer — used to be a web developer — and she knows how vulnerable computers can be.

Yes, we know there are no known viruses on OSX, but it’s probably just a matter of time, and other attacks (malware, trojans) are possible. Norton runs seamlessly in the background and it’s cheap insurance, so why not? It also can assure you that you’re really logging into the correct site after being redirected, and not some hacked mockup.

Overkill? Who cares. If probability is low but the potential effects are catastrophic, it’s better to err on the side of caution. I don’t park on railway tracks while waiting at a red light either, even if I’m not expecting a train.

#116 VK on 11.06.10 at 3:10 pm

It’s funny how CREA and Re/Max in general claim to have any sort of ethics. They even allow convicted criminals to continue to work for them! Don’t worry about letting a criminal into your home and represent the biggest financial decision of your life, he’s thinking green! Smoke and mirrors folks. Outrageous!

http://www.torontosun.com/news/torontoandgta/2010/01/07/12374326-sun.html

http://www.ryancoyle.com/contact.php

#117 ontheshoreline on 11.06.10 at 3:22 pm

@107,re ordering from the states….be careful .The Canadian customs have hit some of my shipments with HST.Yeah no state tax or shipping but our feds are wanting their HST now.

It seems to be hit and miss now,some stuff has come in without the HST. GO figure.

#118 S.B. on 11.06.10 at 4:06 pm

I know of someone who listed a ~900k house in a city north of Toronto – no takers and it’s off the market until next year. I wonder how much ‘shadow’ inventory is out there…

#119 S.B. on 11.06.10 at 4:11 pm

A funny 2 min cartoon about QE2:

“buy more stocks”

http://www.youtube.com/watch?v=iAhayy1NGJ0&feature=player_embedded

#120 BrianT on 11.06.10 at 4:18 pm

Im all right Jack-let them eat cake http://www.dailymail.co.uk/news/article-1326962/Obamas-India-visit-security-erect-bomb-proof-tunnel-Gandhi-museum.html

#121 Spiltbongwater on 11.06.10 at 4:40 pm

Neighbour feeds the squirrels, and I have been thinking of giving them a bit extra, just in case the SHTF. I always read of people having to eat crow, anyone have recipes for those, as a couple crows fly around here as well. Thanks

#122 canali on 11.06.10 at 5:00 pm

excuse me if this has been put on before but upon seeing it caused me (and others) a chuckle:
Parody of Hitler losing his ‘mcmansion’ in a bubble that bursts on a speculator.
http://www.youtube.com/watch?v=bNmcf4Y3lGM

#123 Timing is Everything on 11.06.10 at 5:20 pm

#118 InvestorsFriend (Shawn Allen)

Hmmm…Traders (short(er) term)…Investors (long(er) term)

It always made sense to me to ‘invest’ in stuff you know well or find useful, longer term.

‘Traders’, not so much. Kinda like hockey cards. What’s hot NOW-ish?…Kinda stuff. They’re called ‘day traders’
not ‘day investors’ for a reason. There are many paths it seems, some riskier, but quicker….maybe.

Is length of time and risk the only distinction(s)?

#124 Crash Callaway on 11.06.10 at 5:21 pm

#127 S.B.

great video that illustrates the one dimensional pattern of stock buyers.
“stocks only go up… Ben’s covering my back… pole dancing to buy more stocks” priceless.

#125 Live within your means on 11.06.10 at 5:22 pm

@107,re ordering from the states….be careful .The Canadian customs have hit some of my shipments with HST.Yeah no state tax or shipping but our feds are wanting their HST now.

It seems to be hit and miss now,some stuff has come in without the HST. GO figure.

Thx for the comment ONTHESHORELINE. I’ve not made a decision yet. Usually January is ‘white sales’ month so I’ll likely wait and see. Retailers here may be suffering in Jan.

I’m not one who makes hasty decisions – sometimes to my detriment. Took me 2 yrs to select tiles, toilets, etc. for 2 bathroom renos. I wanted a look, but couldn’t justify spending the costs that I saw on HGTV renos. Afterall, our home is modest; we’d never recoop that kind of money if we chose to sell. Drove my hubby up the walls.

#126 april on 11.06.10 at 5:26 pm

Some people keep repeating that when % rates go up some people won’t be able to make their payments- true – but does anyone know when this % rise will happen. It could stay low for a long time, and as some think, encourage more people to buy homes slowing down price correction Then again the low % rate didn’t seem to stop the steady decline in the US and other countries so why would it be different here. I remember Garth saying % rates have no or little effect on RE once “sentiment” has changed which seems to be happening but more on the outskirts of the cities as far as I know. I think inner city home prices go up first and down last??? Vancouver will go down with the rest AS IT ALWAYS DID even it it’s the last place to see price reductions.
Drug money and the Asians didn’t save the US as we’ve been reminded many times here, so why would it save Van. Wishful thinking for some I think.
Some bloggers compare todays Canadian housing situation with the US situation which is in a more advanced stage of decline since they went into the decline earlier then us. We’re just beginning to see the bubble loose steam. There’s houses and condos all around where I live in New West BC and some have been sitting there since last April.

#127 Patz on 11.06.10 at 5:28 pm

#26 smw

“Deja vu?
http://tinyurl.com/2bbygzq

Excellent link smw. Peter Schiff vs. a Beverly Hills bimbo, er… realtor. She barely lets him get a word in but he’s telling truth to bullshit. One of my favorite lines is when she says, “I’m not going to bore you with numbers.” Oh, really go ahead bore me. But he’s making a very important point for people today, which is don’t get suckered by falling prices into thinking “now’s” the time to buy. This falling knife has been recently sharpened.

#27 canali
Garth and others here have answered your questions many times over. Pay attention, look out your window (at the beautiful–Ha!–weather) and ask yourself why all the “it’s different here” arguments have proven to be fatally flawed.

#78 Mike in Etown,
Mike if you’re interested in living in one of those homes which you say are vacant, why don’t you offer to rent one of them. You’re bound to rent cheaper than buying and then you can watch the price movement. They will fall and at some point it might look like a good buy with a motivated seller. ‘Course a falling knife is still what it is no matter how close to the floor it gets.

#128 bullion.bunny on 11.06.10 at 5:38 pm

Yes-but even credit needs bullish sentiment to make it become money-otherwise it’s nothing-if there’s no borrowers-it doesn’t exist-

True

#129 InvestorsFriend (Shawn Allen) on 11.06.10 at 6:05 pm

Dear Revenue Canada, I have very good news for you!

Remember back in 1989 when I put $2000 into an RRSP and you gave me that tax refund of around 40% or $800?

I loved that because I got $2000 in my RRSP and it only cost me $1200 net.

And guess what? That $2000 has grown at a compounded rate of 11.3% per year and is now worth $21,039.

I like to think of that as “my” retirement money. But as you know, you will grabbing back about 40% of it when I take that money out.

So, if I take it out now, your “cut” is $21,039 times 0.40 = $8,416 dollars and my after tax cut is $21,039 times 60 percent or $12,623.

So, you see, Revenue Canada, you gave me a $800 refund back in 1989 and in effect I invested it for you and got you a 10-bagger.

I did not really reaslise it until recently, but you were my silent partner in my RRSP all these years. By giving me that 40% refund back in 1989, you had in effect contributed 40% of that orginal $2000 and I put in the rest, $1200.

Well, I got us a 10-bagger. I see now that I owe you 40% of my RRSP in taxes.

But I also see that my original $1200 has in effect compounded up tax-free at 11.3% per year.

When I pay my $8,416 in taxes, I realise that all I am really doing is paying you back the original $800 refund with an “interst rate” exactly equal to what I earned on that RRSP.

I realise too that on my part of the RRSP which has grown from $1200 to $12,623, you are not going to charge me any tax at all. (This assumes my tax rate on withdrawal equals my tax rate at the time of the refund, 40% in both cases). The tax I will pay is simply your 40% share of my- make that our- RRSP.

I did not totally realise that I was in effect investing your $800 refund for you and that you would want it back plus all the growth.

I did not realise I was in effect your portfolio manager on that 1989 refund of $800

But fair, is fair, Revenue Canada. I did a ten bagger and I get to keep “my” 60% share of that which is all I contributed. You want “your” 40% and I don’t begrudge it to you. It was your money all along, even though I often thought of that as “my” RRSP. I now realise it was “our” RRSP.

Well, it’s a pleasure doing business with you in this way Revenue Canada. You gave me tax free compounding but simply asked me to throw in an additional 40% based on your refund and invest that for you as well.

By the way, Revenue Canada I plan to keep your money for probably another 22 years. If I can do another ten bagger, my ultimate tax bill on that original $800 you loaned me will grow another 10 times to around $80,000 and my $1200 will grow tax free to $120,000. If that happens I will gladly sign that cheque for your $80,000 Reveneu Canada. It will be my great pleasure.

Revenue Canada I know a lot of people took your refunds back in the day and are now crying about the tax. Those people either don’t understand the deal they signed on for or just don’t like to keep to their deals. Don’t let ’em bother you there Rev.

Those people want lower tax on RRSP capital gains, what they don’t understand is taht as long as the tax rate at the time of the RRSP refund is the same as the tax rate at the time of withdrawa, there simply is zero tax on the capital gains in my 60% share of the RRSP. So what those people really want is negative taxes. But you can’t tell them that. Most of them are too thick to understand the math.

Any yeah, admittedly some of them are hard done by, they may have contributed and got a 40% tax refund and now they face tax at 55% counting the clawback. But ever there is is just a clawback of old age pension. they are still paying zero tax on their share of the RRSP and 100% tax on your share of the RRSP.

Well, Revenue Canada talk to you again in a couple decades.

#130 Live within your means on 11.06.10 at 6:07 pm

129 Spiltbongwater on 11.06.10 at 4:40 pm
Neighbour feeds the squirrels, and I have been thinking of giving them a bit extra, just in case the SHTF. I always read of people having to eat crow, anyone have recipes for those, as a couple crows fly around here as well. Thanks
.

LOL. Our little red, ultra-territorial squirrels wouldn’t feed a baby whereas our crows are huge – could prolly eat a politican.

#131 SRV ES339 on 11.06.10 at 6:27 pm

Casanova #29… “wake up dude”

I believe that would be you “smokin’ that good stuff.” Average prices over the last few months are skewed… only the high priced stuff is moving. Take a look at sales volume over the last six months… not good!

#132 David B on 11.06.10 at 6:44 pm

Stop and think, just which economy is making money for USA big business?

By Peter Stein

New York City Mayor Michael Bloomberg, on a visit to Hong Kong and the neighboring city of Shenzhen, had some harsh criticism for his own fellow Americans: Stop blaming the Chinese for their problems.

—————

Case closed!

#133 Gboomer on 11.06.10 at 6:48 pm

Re: Fraser Valley real estate.

Looking to relocate (downsize) from northern BC to a townhouse between Mission and Agassiz. Have been following Chilliwack area listings for nearly a year and have our eye on two or three promising places. Anybody out there have any advice on where to look. We think we can find a decent place for less than 260K. Thoughts?

#134 ralph on 11.06.10 at 7:06 pm

#137

That’s why it’s called a tax deferral not tax deduction

#135 TheBestPlaceonEarth on 11.06.10 at 7:12 pm

Get out of all equities now. The crash coming is in equities. Investors continue to flee to gold and Vancouver
*****
As foreigners begin to balk at all of this nonsense, the U.S. government will either have to start paying higher interest rates on government debt in order to attract enough investors, or the Federal Reserve will just have to drop all pretense and permanently start buying up most of the debt. Either way, once faith has been lost in U.S. Treasuries the financial world will never, ever be the same.

If there comes a point when China and Japan realize that the game is up, they are going to start bailing out of U.S. Treasuries faster than you can say “panic”. That could create a crisis of unprecedented proportions. Of course the Federal Reserve could just keep whipping up increasingly large batches of dollars out of thin air to soak up all the excess debt flooding the market, but that kind of a Ponzi scheme would not work for long, and it would likely set off horrific inflation.
*****
At a November 8th, 2002 conference to honor Milton Friedman’s 90th birthday, Bernanke actually confessed that Milton Friedman and Anna J. Schwartz were right when they wrote that the Federal Reserve caused the Great Depression….

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.

So does that make you feel better?

#136 Canadian but not for long on 11.06.10 at 7:44 pm

#120: eaglebay, you misread my post (go figure). My post is very clear in stating these numbers reflect CITIZENSHIP, not illegal aliens. Illegal aliens would only add to the mix of people trying to enter the U.S.

Also, to YOUR POINT, Canada LACKS sufficient funds for research, which is to MY point that Canada SUCKS in general. Canada lacks these funds because it is a country that doesn’t quite get it and it doesn’t lead. It follows.

Additionally, you’re either mistaken in your politically incorrect statement of the demographics of the U.S. , or you’re lying. The majority of the American population is NOT either Afro-American or Hispanic. And for the record, diversity is a GOOD thing, you moron. Diversity is something we severely lack in Canada, and it goes to show people just don’t want to move here as much as they do to the U.S. Here’s the breakdown:

White 79.8%
Black 12.8%
Asian 4.5%
American Indian and Alaska Native 1.0%
Native Hawaiian and Pacific Islander 0.2%
Two or more races 1.7%
Hispanic (of any race) 15.4%

As for it being “easy” to get into the U.S. as you would put it, that is a farce. Anyone can illegally get into any country they choose. If we are talking about obtaining legal citizenship (which I AM), the U.S. is much tougher than Canada. In Canada, we allow ANYONE to enter who wants to show up with $500,000+ and we grant them citizenship. That is PATHETIC and only further proves my point that Canada does it ONLY for the money. Canada has absolutely no interest in creating citizenship for people would actually WANT to be here. Get real and study up, because you’re clearly losing this argument.

#137 Nostradamus Le Mad Vlad on 11.06.10 at 8:23 pm


2:20 clip Oohhhh Wot A Gay Day! Cloudy with sunny periods with a few showers this a.m., sharp as a crisp Okanagan apple; sunny with cloudy periods accompanied by infrequent showers. Ahhh, but life is good!
*
#51 CREA Circle Jerk — “Denominate any cash holdings out of USD, Euros, Pounds and Yen.”

Sage advice to avert a currency schmozzleball. I would simply follow Garth’s advice — 40% fixed, 60% dividend-income — and stay liquid that way. Also, long-term bank preferreds and bonds are better, as there will still be a good income coming in, no matter what the exterior circumstances are.

#60 timbo — “The End of Free-Trade Globalization”

Hooray! At long last! Implementation of a Fair Trade Policy between most nations would have been much more preferable but alas, it’s not gonna happen. At least for now, but get rid of NAFTA, for gawd’s sake.

#62 breezer1 — Any time!
*
4:13 clip Cheers for the US Fed. NOT!

dubya’s Sausage Rolls What more can be said?

German only “A rough estimate indicates that there is three times more magma than what was ejected by the Indonesian volcano Tambora in 1815 – the biggest eruption in the last 10,000 years, which led to a cooling of the climate globally.”

Mid-terms are just over and one Senator is pulling no punches. However, if the US does have a tete-a-tete with China, there will be retaliation of some sort.

Big Pharma Ladies take note.

New ways for bankers to spy on us, and fill our inboxes / mailboxes full of junk mail.

$23 Bread? Skyrocketing food inflation.

Real Reason for Obama’s trip away. FFs excepted.

Barmy Benny! The Clown of the Times Speaks (very, very slowly!). “In a major stock downturn, and despite their printing presses, the Fed could find themselves technically insolvent. That is why Ben, who has declared in a recent Op-Ed that he is accountable to nobody but the Fed, is declaring “Every Man For Himself” as his new economic policy.” wrh.com.

You’ve all heard of Apple Crumble (or Crisp)? This is Treasury Crumble!

Mini FF to set up something bigger and blame someone else?

Obama + Repubs. “A key element in the Obama administration’s campaign for “export-led” growth is to lower the wage levels of American workers so that American corporations can become more competitive in the world market.” However, they don’t realize that the cycles must also change, so they are shooting themselves in the foot. This is what Soros and the elite want.

Dead Coral Say BP without barfvomiting profusely.

BoA Tipping Point “Recall that in most cases, the repayment of TARP money was accomplished (purely for PR purposes) using more money from later bailouts.” wrh.com.

4ClosureGate and spiralling costs of gold / silver. No mention of food or basics.

Setup “Last week’s “toner cartridge of mass destruction” was a complete fraud and set up. This has nothing to do with the alleged “Al Qaeda in the Arabian Peninsula”, and everything to do with controlling the Gulf of Aden ahead of any potential attack against Iran.” wrh.com. Now we all know why there are 34 US Navy boats going with Obama.

Soros “This has nothing to do with the planet or the environment or global warming. This is a scam to grab more money to fund the push for a global government. ” wrh.com.

Speed “One cannot use the phrase “economic recovery” with a straight face, looking at numbers like this.” wrh.com.

FF setups “Memo to Mark Penn: sir, have you gone absolutely barking mad?!? Most thinking Americans, understanding the true stories of the OKC and 9/11 tragedies, and will no longer believe that such an event wasn’t an “inside job” at this point.” wrh.com.
Currency Wars, bank holidays etc.

#138 InvestorsFriend (Shawn Allen) on 11.06.10 at 8:31 pm

Number 142 Ralph

You did not quite get it. On MY portion of my 1989 RRSP contribution I will not expect to pay one cent of tax on any of the gains. It grows tax free. And is withdrawn tax free.

I will however pay a tax that equals 100% of the original tax refund I got PLUS 100% of the growth in that tax refund invested in the RRSP account all these years.

So its a complete tax free savings on MY part of the RRSp contribution (The contribution less the refund)

This assumes the tax rate at the time I got the refund and the time I pay taxes is exactly the same.

Garth this means you did not invent the Tax Free Savings Account. It was around in a more complicated form since about 1960.

People think they are paying tax on RRSP withdrawals and they sort of are but not really, In reality it is better thought os as a repayment of the original tax refund plus all the earnings ton that tax refund invested in the RRSp all those years. It is better thought of that the government always owned about 40% of your RRSp and they get that as their share when you withdraw. After all they paid 40% of the contribution via the tax refund. You would not want to stiff your partner would you? When your partner takes his share it is not a tax. Yes it is a tax in form, but not in substance.

If you understand this, you will have snatched the pebble of knowledge from my hand.

No one can can argue with the math… Not that is, if they understand it. (Which admittedly, few will)

#139 Dan in Victoria on 11.06.10 at 9:47 pm

Canadian but Not for long.
My dad was one of those smart persons that had an offer to go work in the USA.
Actually they tried twice to recruit him.
He thought long and hard about it, we moved back to Victoria a long time ago.
I think he was smarter than they thought.
Thank god I didn’t grow up in Texas.

We may not be perfect in Canada, but give me some one from the prarries to cover my back in the rough going.
Give me someone from the east coast when i’m down and out, I KNOW they will give you the shirt off their backs.
And out here on the soggy coast, well…. they all try.
Glad to see your leaving, you only have a few more personality traits to master to fit in.
I’m not one of those polite Canadians, so “F” off.
Bye.

#140 Burnaby Boy on 11.06.10 at 9:56 pm

122 canali The problem with all this inward migration to Vancouver is that all the farms in the Big Bend are now under concrete and even the ancient crow roost in NDP Burnaby is a friggen car dealership. As everyone says. “This ain’t going to end well.”

#141 Buyright on 11.06.10 at 9:58 pm

RE#129 Spiltbongwater
GREAT Receipe for Squirrel

http://www.chow.com/food-news/62148/how-to-cook-a-squirrel/

#142 S.B. on 11.06.10 at 10:21 pm

USA USA! ?

http://articles.cnn.com/2010-11-04/world/india.bikes_1_india-market-harley-davidsons-haryana?_s=PM:WORLD

Harley-Davidson, the iconic American motorcycle brand with a cult-like following, has announced it has chosen to build its second assembly plant ever outside the United States in India.

#143 dark sad person on 11.06.10 at 10:21 pm

#118 InvestorsFriend (Shawn Allen) on 11.06.10 at 2:06 pm

Dark Sad, that is your opinion. And it has some truth in the short term it is sentiment that drives stock prices.

But Wal Mart did not become one of the world’s most valuable companies on sentiment. It was earnings.

*************************
Wrong —
It might be my opinion-but–what about the force of 99.9% of others opinions on the valuation of stock prices?

“Earnings/Innovations/PR/Discovery’s will effect Sentiment neg. or pos.–like a dozen other indicators and from there-based on bullish/bearish “sentiment” stocks will rise or fall–

#144 InvestorsFriend (Shawn Allen) on 11.06.10 at 10:34 pm

151 Dark Sad…

You are beyond help but understand that Earnings are as a bouyancy force on stock prices.

It’s all explained here:

http://www.investorsfriend.com/price_increases.htm

It covers sentiment as well as earnings….

Warning, you might learn something if you open your mind.

#145 Jason on 11.06.10 at 10:40 pm

For all you REIN fans, here’s a good discussion going on (about Garth) – this Thomas Beyer guy is a real quack (a self-personifed know it all :) Enjoy.

http://www.myreinspace.com/forums/index.php?showtopic=19820&pid=96767&st=0&#entry96765

#146 S.B. on 11.06.10 at 10:42 pm

866k for an ancient Toronto semi?

http://life.nationalpost.com/2010/11/06/sold-multiple-offers-to-purchase-updated-semi/

Asking price: $749,000
Sold for: $866,000
Taxes: $4,228 (2010)
Bedrooms: 5
Bathrooms: 2
Time on the market: six days

#147 Utopia on 11.06.10 at 10:49 pm

From #98 Arjo Soer on 11.06.10 To Utopia:

“You are absolutely right the current virus scanners only catch about 30% of all viruses, worms, malware that are out there”.
———————————————————-

Thanks for that confirmation Arjo. I have been hearing quite a bit lately about invasive strategies employed by unknowns that can damage software and extract data etc.

Of even more concern though is how otherwise legitimate commercial interests are evolving to monitor our daily activities. They are not hiding their intentions either. They just ask us for our permission and it is commonly granted as part of new software registrations or surprise requests.

Seen this one lately? It has probably popped up on your machine already; it reads: “Google would like permission to know your location”.

Of course, they already know our location but they need an authorization and agreement from you to actually do something with any data they are collecting and to do so legally . When you agree you have given away a right. A small privacy right perhaps but a right nonetheless.

Remote software too is one of those tools that is becoming common and many people voluntarily install it on their machines. Storing E-mails and sensitive data on commercial sites is also becoming popular and common. Hell it does not cost most times,…so why worry.

Indeed.

Is the internets openess and accessibility becoming so much a part of our common thinking that by extension our personal computers and the content contained therein now deemed public property too?

#108 Dorf on 11.06.10

“Did he get an STD too, to round out the picture ?
Maybe he should find a job that he’s good at.
Thanks for the chuckle, though”.
——————————————————

Well, knowing my guy I would not be surprised if he got crabs online. But seriously, like any computer professsional he is deeply involved in his work. He beta-tests software, mixes it up with developers, trys programs the majority of us would never touch and every once in a while challenges his hacker community. So yes, he has a lot of experience and gets more than his fair share of attacks. It just goes with the territory. In his case he is adept enough to find solutions that the average user is totally unfamiliar with. When he tells me my data is at risk every single time I log on to the internet though, then I am all ears because he knows what he is talking about.

#123 betamax on 11.06.10 re: #42 Utopia:

“A computer that is never online is functionally crippled, but if it does what you want, then fine…….. Overkill? Who cares. If probability is low but the potential effects are catastrophic, it’s better to err on the side of caution. I don’t park on railway tracks while waiting at a red light either, even if I’m not expecting a train”.
——————————————————-

Thanks Betamax. Sounds like your wife knows the real hazards of data loss from personal experience. I know I cannot afford to lose all my work. Not even once. Like a lot of people I back-up data but it has happened that I got a virus once and then discovered (too late) that my backup was corrupted too.

Total disaster. Tons of lost stuff.

I have after many years of computing and too many near misses just come to the conclusion that personal writing, budgets, household info, bank data, letters, photos and everything personal should remain on a machine that never connects to the outside world.

It is the only absolute guarantee I have (other than loss or theft of my laptop) that my data cannot be intercepted, corrupted, read by strangers, monitored by Google, Microsoft, foreign invaders (I just said that for the conspiracy folk) or anyone else and will remain personal as it was always intended to be.

My solution sounds stone-age in a high tech world but it works for me and I never lose anything anymore nor have to worry about the latest rogue virus ruining my week and wasting all my time. I just boot up and it is all still there. Always.

It’s a nearly perfect system for a guy with a bad memory.

#148 45north on 11.06.10 at 11:31 pm

Dan in Victoria: commenting on the post by “Canadian but not for long” I’m not one of those polite Canadians

but I am and I don’t see anything wrong with saying

Canada LACKS sufficient funds for research, which is to MY point that Canada SUCKS in general. Canada lacks these funds because it is a country that doesn’t quite get it and it doesn’t lead. It follows.

I do know that Nortel was the pre-eminent technology company in Canada and invested heavily in research. Problem was that it was attacked and destroyed by its own management. One would suppose that management would protect the company it was paid to manage.

We see this again in some US banks such as Countrywide Financial where management attacked and destroyed its own company.

Here is a parable:
Then the steward said to himself, “Now that my master is taking the stewardship from me, what am I to do? Dig? I am not strong enough. Go begging? I should be too ashamed.
4 Ah, I know what I will do to make sure that when I am dismissed from office there will be some to welcome me into their homes.”
5 ‘Then he called his master’s debtors one by one. To the first he said, “How much do you owe my master?”
6 “One hundred measures of oil,” he said. The steward said, “Here, take your bond; sit down and quickly write fifty.”

http://www.catholic.org/bible/book.php?id=49&bible_chapter=16#6

#149 Utopia on 11.06.10 at 11:37 pm

#111 Debtisslavery wrote:

“OK, I got a bit nosy yesterday and checked the land registration office online for my province. One can find out if there is a mortgage on any property, for a small fee”.
———————————————————

You are an interesting person Debtisslavery. Good discovery you made too. By the way, I hear that squirrels are evolving. They have developed a taste for humans simmered in a salty peanut butter sauce.

Yum, yum!!!

(that is just the squirrel in my Neanderthal past talking)

#150 Utopia on 11.06.10 at 11:56 pm

#130 canali wrote:

“excuse me if this has been put on before but……”

http://www.youtube.com/watch?v=bNmcf4Y3lGM
———————————————————-

Oh my God! That was absolutely hysterical. I could not stop laughing. It must have been made by a Canadian or someone who reads this site….Too good!!

#151 Utopia on 11.07.10 at 12:02 am

@ #134 April said:…..
“Drug money and the Asians didn’t save the US”
——————————————————

You are correct April. It seems even the drug money is dumping R/E and buying Gold now while Asians are focussing on their own economy and better prospects overseas as they have have cottoned on to the fact that we in Canada are a bubble that is in a long slow deflation.

#152 Nostradamus Le Mad Vlad on 11.07.10 at 12:11 am


#147 Dan in Victoria — Bravo! Well said!
*
Another hmmm FF moment in time. This began yesterday and ends Wed. Similar to 9-11.

Link in. A look at what hyperinflation would look like in the US (and therefore us), and what the ramifications may be.

America’s two economies. One not too bad, the other almost flatlined.

Germany and China are now on the same page with Japan and others.

The ’30s all over again? We have roughly the same thing here with food banks.

Soros Yet another tool the elite are using to mess us up.

The UK is selling off some of its assets.

5:50 clip Hmmm. Hold on to the Republocrats.

China could, theoretically, have its own civil war, just like the US did.

More hypocritical BS from Agenda 21 (cutting pollution horseshit).

Links in. For your reading pleasure: “The book is Secrets of the Federal Reserve: The London Connection. “

Web Bots WW3 linked to War On Terrorism. No shit. That was dubya’s baby.

Links in. Tipping Point?

Here is one more C.T. to play with over breakfast at Timmy’s.

Canada has balls?

P.S.: Don’t forget Toba, Yellowstone, the SAF / New Madrid fault lines along with acid rain. Similar to sex, drugs and Geritol!

#153 NFN on 11.07.10 at 12:44 am

#111 Debtisslavery

OK, I got a bit nosy yesterday and checked the land registration office online for my province. One can find out if there is a mortgage on any property, for a small fee.

————————————————-

I’ve had to look up parcels of land to find out previous sale prices but I didn’t know you could get mortgage information? How would I go about doing this for Alberta?

It’s like Christmas in reverse.

#154 ralph on 11.07.10 at 1:47 am

#146

Still looks like tax deferral. Same if you deduct business expenses.

#155 Ghost of Tom Joad on 11.07.10 at 2:06 am

Caught In A Lie: Bernanke Promised Congress The Federal Reserve Would Not Monetize The Debt But Now That Is Exactly What Is Happening:
http://theeconomiccollapseblog.com/archives/caught-in-a-lie-bernanke-promised-congress-the-federal-reserve-would-not-monetize-the-debt-but-now-that-is-exactly-what-is-happening

Wake up and learn from our planet’s most important man, Alex Jones:
http://www.infowars.com

#156 Canadian but Not for long on 11.07.10 at 2:11 am

#147 Dan in Victoria, you may not be one of those polite Canadians, and I can respect that. But, perhaps you should go back to school and learn how to create a cohesive sentence that makes sense and stop being one of those STUPID Canadians. I couldn’t understand a damn word of what you were writing. LOL

#157 Pat on 11.07.10 at 2:44 am

@ Canadian but not for long,

Dude, you’re about to get a lot of hate mail :). People tend to take statements like yours personal.

But I agree with two points in you last post (#144). (1) Many places in Canada badly need diversity and new immigrants. (2) Immigrating to Canada and obtaining citizenship is easier than to the US. One of my graduate students just got Canadian permanent residency… based on his work experience as a teaching assistant.

#158 TheRaj on 11.07.10 at 5:44 am

anyone thinkin of buying a brand new house in Surrey BC better act quickly, or risk coughing up a few more bucks next month– yeah it really is different here– I guess,(newer is cheaper than older if that makes any sense)

#159 Ben on 11.07.10 at 7:09 am

Sold down the street, don’t know what it sold for but the asking price was $535,000. This little reno was the size of a dog house, never seen a house so skinny. The MLS picture makes it look wider then it is. LOL

http://www.realtor.ca/propertyDetails.aspx?propertyId=10024689&PidKey=1027354663

Oh … and the area? Trust me, it’s nothing.

#160 Moneta on 11.07.10 at 7:29 am

152 InvestorsFriend (Shawn Allen) says:
You are beyond help but understand that Earnings are as a bouyancy force on stock prices.

Warning, you might learn something if you open your mind.
———-
Obvioulsy you have not done the math:

TSX TR index has gone from 2000 in 1982 to 37782 in 2010. This = 11.07% return annually.

Yields have gone from 14% (+3% credit spread) to 1% (+3% credit spread) during same range. This means a multiple expansion of 6X to 25X. This would imply around 6% out of 11.07% due to multiple expansion. Since rates are not going much lower further multiple expansion would only stem from QE.

Inflation represents about 3-4% of 11.07%.

So eps growth would represent about 1-2% of TSX TR since 1982.

#161 bigrider on 11.07.10 at 7:49 am

TheRaj #167

Are you that RE clown Raj Toor on channel 63 pumping RE as an investment and pimping his list of RE mortgage brokers and RE lawyers ?

What a scumbag, braindead thief that guy is. Terrible advice he gives on topics unrelated to his “profession”

#162 Moneta on 11.07.10 at 7:51 am

Investors think eps are important but in reality eps rarely meet expectations. Nortel never had great eps! Investors thought it would but they kept on diluting them.

55% of TSX returns since 1982 can be explained by falling rates. 30% by inflation. 15% by eps.

Since yields and credit spreads are at all time lows, we can’t expect much further growth from multiple expansions unless we get QE.

This means that we will need inflation and eps growth. But corporate profits-to-GDP are at 50 year highs so further growth in eps is questionable.

Our leaders desperately need to prop up the market so all they have left is inflation and QE.

When yield is 10%, the market multiple is 10X. At 1% yield, the multiple is 100x. With zirp and QE, they are playing with fire because eps do not count; the multiple takes over.

#163 luketheduke on 11.07.10 at 8:40 am

Garth,theoretically your logic is sound,but your timing is way off maybe by a couple of years.With the Fed determined to keep rates low,the real estate bubble here will get some legs again….

It’s not rates that matter now, but jobs and incomes. — Garth

#164 InvestorFriends mom on 11.07.10 at 9:00 am

Shawny, mommy wants her dough, talking about your great investment strategy has not helped mommies account, in fact mommy realizes how you lost her money. Mommy is hungry and cold. Yes, mommy agrees with DSP, stock market movement has nothing to do with earnings, well, theoretically it does but in reality far from it, quit reading these books from 100 years ago, this is a new era run off pure speculation. Now get mommies money back!

#165 dark sad person on 11.07.10 at 9:41 am

#152 InvestorsFriend (Shawn Allen) on 11.06.10 at 10:34 pm

151 Dark Sad…

You are beyond help but understand that Earnings are as a bouyancy force on stock prices.

It’s all explained here:

http://www.investorsfriend.com/price_increases.htm

It covers sentiment as well as earnings….

Warning, you might learn something if you open your mind.

**********************
lol–so for proof-you post a link written by—-
Your friendly Investment Adviser–“You”

Here’s an example of how much “earnings” make a stock move-

Bre-X Mining moved from pennies to over $200 without 1 cent being made in “earnings”
They never produced or sold even 1 oz. of Gold-
They never posted any positive earnings “ever”

So-explain how that stock rose without posting positive earnings-

Also-maybe explain how the stock crashed-

Did they post some negative earnings?
*************

“Warning, you might learn something if you open your mind.

It’s all explained here:
****************
What you should have said is-
If you want to lose your mind–
read this-

#166 Moneta on 11.07.10 at 9:44 am

So where is the stock market going?

We know that corporate profits-to-GDP are at 50 year highs so we know they are most probably peaking.

But if you look at a chart, you will see that they never go to 0 in one shot. The curve follows a sinus function.

So over the next few quarters they’ll probably go from 95 currently, to 70, to 50, to 25. Markets usually tank only when earnings have been falling for a while and are close to 0.

So today the earnings are 95 and the market is trading at 1225. That means a multiple of 13X.

If we see QE, that is like pushing yields below 0. So if 10% yields = 10X nultiple. 1% yield = 100X. That means with QE we could go anywhere between 13X aqnd 100X.

So if earnings in a few quarters are 50 , the S&P500 could be anywhere between (13X50) 650 and (100X50) 5000. Play with the numbers and you’ll see that it goes all over the map. As yields go to 0, the mathematics backing financial models play wicked tricks.

Remember that most people are mathematically illiterate.

Over the next few quarters, market psychology is going to have a huge impact on valuations. If nothing gets written off, money will just be flowing from one asset to the other, irrespective of fundamentals.

But over the long term, fundamentals always take over.

#167 Debtisslavery on 11.07.10 at 9:45 am

NFN: “I’ve had to look up parcels of land to find out previous sale prices but I didn’t know you could get mortgage information? How would I go about doing this for Alberta”

Interesting isn’it? Now the people I checked are hard-working, no-nonsense, intelligent people. If people like them are dumb enough to put their future in jeopardy, imagine what common mortals can do. Oh no, this will not end well!!!

I started my search by finding the lot number. You can find that on the city’s website. Then go on your province’s land registration office. I am in Quebec and it used to be that you could go to the provincial government office, pay a small fee (5$) and consult binders, provided you had the lot number. Now, the registry is online and each search costs $1.00. It gives you the name or names of the owners, the amount of the mortgage, the date and the name of the banking institution. For another fee, you can view the whole legal documents.

http://www.mrn.gouv.qc.ca/english/land/register/index.jsp

I know such a registry exist for Ontario too. For Alberta, you may want to check this out:

http://www.servicealberta.gov.ab.ca/554.cfm#What_can

#168 dark sad person on 11.07.10 at 10:03 am

#171 Moneta on 11.07.10 at 7:51 am

Since yields and credit spreads are at all time lows, we can’t expect much further growth from multiple expansions unless we get QE.

***************
That will “appear” to work and it does gun the stock market-but always fizzles and then we go back to square 1–
Japan is a great example of how gazillions in QE failed and now-they’re gonna give it another shot-
So they’ll add to the already insane 200+% debt to GDP-
I keep watching for a QE announcement from F–

Buy the ticket-take the ride-just make sure your chute is packed properly and be ready to bail not long after takeoff-

http://static.businessinsider.com/image/4cd2bc80cadcbb5364010000/qe.png

http://static.businessinsider.com/image/4cd2bc884bd7c80272010000/qe.png

#169 rental monkey on 11.07.10 at 10:31 am

Long time renter and never an owner. Garth your site is greatt!! Was told about it and now I am addicted. Your writing style is awesome and I was having a minor meltdown of my own when I could access your blog the other day.

It will be very interesting to see how the Victoria market implodes (if in fact it will). I know a woman (26yrs)who is set to take her real estate exam and is very confident that she will be making tonnes of $. Victoria is always a great market, it never goes down (told to her by her tutor~who incidentally didn’t have a clue a few weeks ago as to who YOU were.) I think after Cameron Muir’s talk, she might kinda know now. Heee heeee….
Anyway thanks, and in case you hadn’t heard ‘ol Gordy desperately needs a new leader for the Lib’s.:) Whadda ya say?

#170 BrianT on 11.07.10 at 10:32 am

#164Ghost-that is similar to saying you promised your kids ice cream but you reneged-Congress can’t do anything to Bernanke no matter what he does-he is being polite just responding to their questions. Ron Paul is in the minority-it isn’t like the place is filled with guys like him-the vast majority see politics as a way to feather their own nest-the stupid public be damned.

#171 Brian1 on 11.07.10 at 10:39 am

Dear Mr.#156. You can still build plenty of equity while renting for next 10, even 20 years.

#172 Moneta on 11.07.10 at 10:41 am

Japan is a great example of how gazillions in QE failed and now-they’re gonna give it another shot
—–
I refuse to compare it to Japan. Japan was not the reserve currency and was always a net exporter through its entire ordeal. Had it been a net importer, its currency would have tanked.

#173 BrianT on 11.07.10 at 10:44 am

#159Utopia-hundreds of Hitler videos-here he has made the mistake of trusting Madoff http://www.youtube.com/watch?v=rTVEsEhLXAA

#174 S.B. on 11.07.10 at 10:46 am

I think Garth requires a backup blog for the times when this one is hacked. The name? Of course: graniteandstainless.ca

Our new rights: granite and stainless. Anything less is social failure. Your house guests may not say it out loud, but those pressboard countertops are not going to win you any friends ;)

#175 Moneta on 11.07.10 at 10:46 am

Also, Japan has benefitted from decades of producing quality products.

Now they are running out of buyers for their bonds, because the younger generation has no money and the older one can’t keep up with the printing.

Furthermore, emergin market product quality is catching up and Japan is starting to lose its edge.

The next decade for Japan will be very interesting to see.

#176 timbo on 11.07.10 at 10:51 am

http://www.calgaryherald.com/business/Softer+market+ahead+analyst/3787653/story.html
———–
“Despite the rebound in jobs, full-time positions have not recovered. From October 2008 when employment reached its peak, they have fallen by 102,000 to be replaced by 110,400 less stable and lower-paying part-time jobs.

Manufacturing jobs, highly valued for their better wages, have plunged by 213,700 over that stretch, continuing a trend that since 2002 has reduced the number of manufacturing jobs in this country by about 25 per cent.”
———-
Boy is the Canadian economy in for a wake-up call. Debt and the cost of living increases are going to really put the brakes on R/E.

Sell now or be undercut by a foreclosure next door!

#177 Brian1 on 11.07.10 at 10:53 am

Moneta; Corporations and pension funds are flush with cash and have management teams with nothing to do. To keep the stock market looking good they buy more shares of other companies in hopes to trick other investors and hire more people who will do nothing all in order to try to affect the unemployment rates. All managements are geared to keep going even when there is nowhere to go.

#178 Keith in Calgary on 11.07.10 at 10:56 am

I can’t believe that squidly’s girlfriend tried to rip away a client from me!
I thought we were partners.
Fishbait:
You are so immature. I am a renter as well. Selling RE is just another consumer good, a commidity to push.
No big deal bro.
Stop knocking realtors. I am regretting that now, trust me.

#179 Moneta on 11.07.10 at 11:05 am

That will “appear” to work and it does gun the stock market-but always fizzles and then we go back to square 1–
Japan is a great example of how gazillions in QE failed and now-they’re gonna give it another shot-
——–
That’s why I think there is going to be huge volatility in equity markets. Too much for people over 50 with investment portfolios of 500K or less.

Advisors keep on talking about equities for the long term because people are living longer but in real life it does not work like that. When you retire, you need an income stream and these cash flow withdrawals can be lumpy. With rates at 2-3%, that means you must withdraw capital. What if you are FORCED to take out when markets tank by 20%? Sure the market can go back up but your money will not be there to benefit!

Furthermore, most people 50+ will freak out after a 20% drop. Many will switch to safer investments at exactly the wrong time.

Ironically, advisors are telling people with small portfolios to increase their weight in equities but in practical terms, it’s the rich ones who don’t really need more money who can bear the coming volatility.

Nobody has the balls to tell their clients to lower their expectations and reduce their lifestyles­. THAT’s the elephant in the room, the biggest investor issue right now. And you can see it in house, car and trip lust.

#180 dark sad person on 11.07.10 at 11:46 am

#183 Moneta on 11.07.10 at 10:41 am

Japan is a great example of how gazillions in QE failed and now-they’re gonna give it another shot
—–
I refuse to compare it to Japan. Japan was not the reserve currency and was always a net exporter through its entire ordeal. Had it been a net importer, its currency would have tanked.

*****************
Japans currency went carry trade and demand caused it to rise with 0% IR and it was lucky for them-that the rest of the world was in Inflation and buying everything they produced-which kept their export/employment market positive-or they would have croaked-long ago-
Today-with trade collapsing and the Yen still high-export demand will decrease and personal savings have been depleted-
So now-Yen devaluation is all they can try to do-to regain export demand-
Rates are still at zero-
If you want to see a Bond market puke-or a Currency collapse watch Japan in the coming months/years-
I think-barring some sanity by our Governments hahaha
I think we will more or less mirror the Nikkei from about 1988 to present-

http://www.sharelynx.com/chartstemp/free/chartind1CRU.php?ticker=^N225

#181 dark sad person on 11.07.10 at 11:54 am

Oooops-posted wrong link for Nikkei-

http://4.bp.blogspot.com/_nSTO-vZpSgc/SQAN5Sk414I/AAAAAAAADm0/q8J0vQd_9CA/s1600-h/%24nikk-monthly.png

#182 Got A Watch on 11.07.10 at 12:02 pm

Brian T – Globalization has already occurred. We’ve been losing manufacturing for over a decade to China etc. In an era of currency and trade wars, the end is nearer than the beginning. Rubin’s thesis will work out one day, it is one part of the puzzle, not the only factor.

Everything turns around it time. Sometimes it takes longer than thought possible, but it does.

————————————————-

‘Investor’s Friend’ – so you are an “investment advisor” are you? LOL. Of course you are. I wondered, reading your past comments. I think you should become a Real Estate Broker, that industry would be a perfect fit for you. Better dial down the strength on that Kool-Aid. You set yourself up for a well deserved drubbing there.

—————————————————–
‘Canadian but not for long’ – don’t let the door hit you in the ass on the way out. Our country will be so much better off without you in it. Buh bye. If your friends think like you, take them with you. Enjoy California, hope you don’t mind paying ever-rising taxes to support illegal immigrants. Perfect for you, a match made in heaven. But 10 years too late at least.

Personally, I know a few Americans (relatives/friends) who have asked me if/how they can move to Canada. Telling. You’re about 5 years behind reality. They would not even have contemplated that concept even 2 years ago, and would have reacted angrily if I suggested it. Now they just come right out and ask.

#183 Brian1 on 11.07.10 at 12:09 pm

Moneta; What i’m trying to get at is that if entities flushed with cash cannot do anything what can QE possibly accomplish?

#184 Moneta on 11.07.10 at 12:17 pm

Moneta; Corporations and pension funds are flush with cash and have management teams with nothing to do.
———
I’ve worked for asset managers and a pension fund and from experience I can tell you that following markets and companies is more than a full time job whether you are good or not.

I’ve never met a PM who was focusing on reducing the unemployment rate. They want to beat their benchamrk to get their bonus.

Maybe companies are flush with cash because some will need it to stay cash flow positive and the other ones will need it to buy up the ones that are going under.

#185 DaBull on 11.07.10 at 12:20 pm

#179 “I got a bit nosy yesterday and checked the online land registration office for about 10 properties of friends, acquaintances and relatives.” | Vancouver Real Estate Anecdote Archive on 11.07.10 at 10:27 am

Dumbass, that’s the current value of the property, not the mortgage amount. Where do you think fair market value for calculating property taxes comes from. Idiot.

#186 Hiteclowtec on 11.07.10 at 12:25 pm

Garth, Recent research that might help you get your message across. from Cambridge University.

Can you read this?

Olny srmat poelpe can.

cdnuolt blveiee taht I cluod aulaclty uesdnatnrd waht I was rdanieg. The phaonmneal pweor of the hmuan mnid, aoccdrnig to a rscheearch at Cmabrigde Uinervtisy, it deosn’t mttaer in waht oredr the ltteers in a wrod are, the olny iprmoatnt tihng is taht the frist and lsat ltteer be in the rghit pclae. The rset can be a taotl mses and you can sitll raed it wouthit a porbelm. Tihs is bcuseae the huamn mnid deos not raed ervey lteter by istlef, but the wrod as a wlohe. Amzanig huh? yaeh and I awlyas tghuhot slpeling was ipmorantt!

http://www.youtube.com/watch?v=TbE4zV9Dvd8

#187 dark sad person on 11.07.10 at 12:30 pm

#188 Brian1 on 11.07.10 at 10:53 am

Moneta; Corporations and pension funds are flush with cash and have management teams with nothing to do.

********************
Corporations are not flush with cash-
They are flush with debt-that masquerades as cash-
Need to look deeper–

Corporate “Cash” – Cheering the Asset and Ignoring the Liability

Put simply, there is a lot of apparent “cash on the sidelines” because the government and many corporations have issued enormous quantities of new debt, often with short maturities, while other corporations have purchased it. It is an equilibrium. The assets that are held in the right hand represent debt that is owed by the left. You cannot call that pile of short-term marketable securities an asset without calling it a liability. The cash on the sidelines is evidence of debt incurred to fund economic activity that is already in the past. It will remain “on the sidelines” until the debt is retired. The government debt has been issued to finance deficit spending. At the same time, a great deal of corporate debt has been issued over the past year apparently as a pre-emptive measure against the possibility of the capital markets freezing up again.

What’s fascinating about the “corporate cash” argument is that few observers recognize that a great deal of this cash is not retained earnings but new debt issuance.

http://www.hussmanfunds.com/wmc/wmc100809.htm

#188 Timing is Everything on 11.07.10 at 12:55 pm

#114 Alex – “In Abbotsford, meanwhile,….”

http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20101027/bc_murder_city_101027/20101027?hub=BritishColumbiaHome

#189 GregW, Oakville on 11.07.10 at 1:04 pm

Hi #1 Nostradamus Le Mad Vlad,
re: the link you gave; Corporate water grab? It’s not all about money.

FYI: Have you seem this new book, you can read it for free on google books said one of the authers Dr. Pual Connett.

“The Case Against Fluoride
How Hazardous Waste Ended Up in Our Drinking Water and the Bad Science and Powerful Politics That Keep It There”
by Paul Connett, James Beck, Spedding Micklem
http://books.google.com/books?id=DEqDaoNTo2IC&printsec=frontcover&dq=The+Case+Against+Fluoride&hl=en&ei=2OTWTI28DpG0ngfOp92yCQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCsQ6AEwAA#v=onepage&q&f=false

#190 Wealthy Renter on 11.07.10 at 1:05 pm

Sold down the street, don’t know what it sold for but the asking price was $535,000. This little reno was the size of a dog house, never seen a house so skinny. The MLS picture makes it look wider then it is. LOL

Hi Ben,

I know that area fairly well. That little house is wonderful considering that 150 metres north of that home, there are 12 foot front, in-fill, three story townhomes that border right on the Gardiner Expressway and run upwards of 600K.

It is all kind of crazy.

#191 Kitchener1 on 11.07.10 at 1:17 pm

Immigration/foreign investment/investors etc.. Never, ever drove the RE market nor will they ever drive the RE market.

The only thing(s) that drive the RE market are:

Easy access to credit
Consumers willingness to take on debt

thats it.

Thats what blew the US/Spain/Ireland housing markets. If at anytime, these two conditons go into decline, RE prices drop.

Without cheap rates and lax mortgage standards prices would never have got to were they are, without consumers willing to take on debt.

Attitudes are changing in the US, credit is not cool anymore and people are actually paying down their debt.

im telling you folks, Carney has been very very vocal and straight about consumer credit and housing market in Canada. Consider that fair warning. Guys like him and F do not talk the way they are unless they have too, they are politicans. When this goes bad, it is their backdoor policy to say, we told you so.

#192 The Original Dave on 11.07.10 at 1:33 pm

For all you REIN fans, here’s a good discussion going on (about Garth) – this Thomas Beyer guy is a real quack (a self-personifed know it all :) Enjoy.

http://www.myreinspace.com/forums/index.php?showtopic=19820&pid=96767&st=0&#entry96765
——————————————-

that guy’s argument for Alberta and Saskatchewan’s rise because they have oil is a funny one. There’s lots of poverty in Saudi Arabia and there isn’t a country with better cheaper oil. Can you say 9 million barrels a day??? And that is the cheapest stuff you’ll find. Still, the money doesn’t trickle downwards.

It helps to have resources but that doesn’t mean home prices should be above 5 times household incomes. Home prices should rise with incomes. If the oil and gas sector is so great, then average incomes will rise. With rising average incomes comes higher home prices. Still the mathematics aren’t there though. Houses are too high for incomes.

#193 S.B. on 11.07.10 at 1:35 pm

#187 timbo – but the globalist Harper CONS stated they will keep immigration levels at least 250,000/year!

Even if they are skilled immigrants, they will compete with the 10-15% unemployed already present.

If they are unskilled then our welfare and health care rolls will swell. In fact their plan is likely to cripple the system, so they can say: see I told you, public health care is evil and you must now pay private corps. who will rates premiums 10-20% every year.

We see this plan unfolding now in Europe – hunker down, we are living in the Global War on Middle Class.

I heard that while still leader of the fringe Reform party, Harper was invited to the Bilderberger meetings way back when.

I think they were gooming their next man in power. He knows the global game plan. But this is just tinfoil nonsense, right? They’d never cut our sacred cows of health care and CPP in favor of more war-making?
To quote Trudeau (before my time) of how far he will go: “Just watch me”

#194 Debtisslavery on 11.07.10 at 1:40 pm

Dabull: It is indeed the MORTGAGE amount, small mind.

https://www.registrefoncier.gouv.qc.ca/Sirf/Script/14_06_01-02/pf_14_06_01_reglr.asp

Are you afraid somebody will look for your personal mortgage history information online?

#195 jimbo on 11.07.10 at 1:43 pm

Land Registry searches in Alberta will show the purchase price (not current value) and the registered amount of the mortgage. Increasingly banks are registering mortgages as security for lines of credit. The amount on title is the maximum amount secured and not necessarily the amount advanced or outstanding. Your neighbours may or may not owe the entire amount of the registered mortgage.

TD Bank has a product where they register a mortgage for 125% of the current value of the property. This does NOT mean they will lend 125% of the current value but means that, in the future, if values go up, they can lend additional funds to the borrower without having to register new mortgage security.

This is sold to the potential borrower as flexibility and a saving of registration costs in the future. Sort of like the bank giving you a larger credit card limit than you asked for; and we all know that borrowers never abuse the credit available to them, right?

#196 Devore on 11.07.10 at 1:46 pm

#146 InvestorsFriend (Shawn Allen)

If you understand this, you will have snatched the pebble of knowledge from my hand.

No one can can argue with the math… Not that is, if they understand it. (Which admittedly, few will)

Because you’re making it so damn complicated.

The equation is either pay <your tax rate today>, or pay <your tax rate after you retire>. Roughly, because there are other advantages to RRSPs over non-registered accounts, such as reinvesting income tax-free, whereas with a non-registered account you pay taxes on the income before being able to reinvest.

You’re calling it something else, in some convoluted train of thought, but that’s just all that is, deferred taxes. Except you get to do the work to grow this money, and taking all the risk, and if you lose money, you don’t get anything from the government. Taxes only go one way.

There are some loopholes you can use to draw down an RRSP in a low tax manner over time, but there is no guarantee this will be possible in 10, 20, 30 years, or greatly restricted. Also, if government finances get tight enough, RRSPs represent a huge pool of tax-deferred money (all those rich people avoiding paying their fair share!) for them to tap in all manner of creative ways, you know, for benefit of all.

#197 Debtisslavery on 11.07.10 at 1:52 pm

Anybody in Ontario can find out if their neighbors, friends, relatives or co-workers are mortgaged. Fees are higher than Quebec’s though.

http://www.bdc-canada.com/DOCUM/SERVICES/land_registry_search.htm

#198 Jsan33 on 11.07.10 at 1:53 pm

I’m not sure if this has been posted before. It is an interesting but scary scenario that is quite plausible in my opinion. Could interest rates jump 5-6% in one day?

http://www.youtube.com/watch?v=En-oJHyG-PY&feature=player_embedded#!

#199 BrianT on 11.07.10 at 1:54 pm

193Got-No-Jeff Rubin’s thesis-expensive energy will bring jobs back home and might work out better in the long run-is wrong. Expensive energy is a negative, never a positive. You can make money from it, but from a macro perspective it is a major problem for overall standard of living.

#200 Debt's Dark Embrace on 11.07.10 at 3:21 pm

#202 Kitchener1 on 11.07.10 at 1:17 pm

HUGE BINGO for you today! You get it.
………………………………………………………………………
Immigration/foreign investment/investors etc.. Never, ever drove the RE market nor will they ever drive the RE market.

The only thing(s) that drive the RE market are:

Easy access to credit
Consumers willingness to take on debt

thats it.

#201 DaBull on 11.07.10 at 3:28 pm

#205 Debtisslavery on 11.07.10 at 1:40 pm

I didn’t say you can’t look up mortgage amounts or if there are any liens on a property. I just said the figure that poster thought were mortgage amounts, wasn’t, it was actually the last known/sold property value.

#202 Debt's Dark Embrace on 11.07.10 at 3:37 pm

1 Debt’s Dark Embrace on 11.07.10 at 3:21 pm

#202 Kitchener1 on 11.07.10 at 1:17 pm

HUGE BINGO for you today! You get it.

And the governments love it. It gooses GDP and raises taxes and revenues. They WANT this bubble and will do ANYTHING t keep it inflated.
………………………………………………………………………
Immigration/foreign investment/investors etc.. Never, ever drove the RE market nor will they ever drive the RE market.

The only thing(s) that drive the RE market are:

Easy access to credit
Consumers willingness to take on debt

thats it.

#203 timbo on 11.07.10 at 3:47 pm

http://abcnews.go.com/ThisWeek/reagan-budget-director-mad-men-fed-control/story?id=12080028

“We’re now becoming the banana republic [of] finance, printing — the Fed, these mad men who are out of control at the Fed are printing — new money equal to 100% of the debt that we’re issuing each month. This will not end well,” Stockman said. “It’s going to end in a disaster.”

what a world when ABC and many other sites are predicting doom…or at the very least a 2nd great depression.

Very credible: former White House Republican exec commenting on White House Democratic incumbent. — Garth

#204 G.P.girl on 11.07.10 at 3:49 pm

#204 SB
Actually here’s what is unfolding in Europe lately, Germany specifically.
Angel Merkel has stated publicly that multiculturalism is an utter and abject failure in Germany. Link below is the written version there are videos out there as well.

http://www.huffingtonpost.com/2010/10/17/angela-merkel-germany-immigration-multicultural-society_n_765696.html

#205 G.P.girl on 11.07.10 at 3:51 pm

Oops, that should read Angela not Angel. Will that ever come here I wonder?

#206 Taxpayer like everyone else on 11.07.10 at 3:54 pm

“RRSPs represent a huge pool of tax-deferred money (all
those rich people avoiding paying their fair share!) ”

Devore – you’ve made the arguement the taxes are deferred, and now you are saying they are avoided.

206 Jimbo – correct in that the document will show the
registered amount of the mortgage and not the balance.

#207 goldenfox on 11.07.10 at 4:03 pm

InvestorsFriend (Shawn Allen) on 11.06.10 at 8:31 pm

You are 100% correct. When I have tried to explain this fact about rrsps, most people aquire a deer in the headlight look. My rrsp is a self-directed spousal rrsp, as my wife has no pension. That means she will pay 30% tax rate, while I recieved 40% tax rebate. I strongly recomend people do their own tax returns. Knowledge of how the tax system works is a valuable tool in paying less tax. Most people dont realize how much they miss in tax refunds due to ignorance of the tax system. Using your local tax form filer is no guarantee you will recieve all the tax credits you are entitled to.

#208 McLovin on 11.07.10 at 4:04 pm

Kelowna 30% off – And not FSBO

http://www.buysellhomesinternational.com/web/property_detail.php?home_id=1396

Once again, Kelowna is down 20-30% already and falling fast!

#209 InvestorsFriend (Shawn Allen) on 11.07.10 at 4:31 pm

#207 Devore…

An RRSP is much more than a tax deferral.

A Tax free Savings Plan is not a tax deferral, agreed? It allows gains to grow without ever paying tax on the gains, agreed?

Now what I showed is that the tax on an RRSP withdrawal is equal to paying back the original refund amount plus (or minus) an interest rate equal to to return the RRSP earned. This assumes the marginal tax rate on withdrawal is equal to the marginal tax rate when the money was contributed – which will not be exactly true but will be approximately true for many.

This puts me in the exact same position as if I had invested 60% of the money into a Tax Free Savings Account,rather than investing my 60% in the RRSP and taking the tax refund and investing another 40% which in effect became Revenue Canada’s share of my RRSP forever and a day until withdrawn. Assuming constant 40% marginal tax rates Revenue Canada always owns 40% of my RRSP.

As my example showed I will (if my marginal tax rates are unchanged) pay not one cent of tax on the growth of my share of the RRSP. That is not a tax deferral but a tax avoidance, The tax I will pay is just the repayment of the full amount of the original refund, with interest. No tax on the gains on my 60% share of the RRSP.

The math is irrefutable, but not widely understood.

I think it was Einstein who said things should be simplified as much as possible, but cannot be simplified anymore beyond that.

Now, try again and see if you can grab that pebble of knowledge that I offer. Who has snatched it? Post it and less us know if the penny has dropped for any of you.

#210 Devore on 11.07.10 at 4:47 pm

#217 Taxpayer like everyone else

Devore – you’ve made the arguement the taxes are deferred, and now you are saying they are avoided.

No I haven’t, don’t be daft, don’t put words in my mouth.

Taxes are deferred, yes, which means they are not being paid NOW, when they are needed.

#211 Drew from the peg on 11.07.10 at 4:54 pm

Did anyone else catch the Agenda “The Case Against Home Ownership”? I was surprised Garth wasn’t in that discussion, because pretty well all the points he made in greater fool were discussed.

The best part was the realtor struggling to justify buying a home. Each point he made was consistently contradicted with facts. It is a interesting watch.

http://www.tvo.org/cfmx/tvoorg/theagenda/index.cfm?page_id=7&bpn=779887&ts=2010-11-02%2020:00:00.0

#212 betamax on 11.07.10 at 5:04 pm

#147 Dan in Victoria: “We may not be perfect in Canada, but…[followed by meaningless platitudes].”

There’s good & bad people the world over, no need to stoop to empty generalizations about US vs Canada. Lots of nice folk and lots of losers in any country.

I’ve been to Texas and met many great people there. One Texan asked me why we Canadians were so prejudiced against native indians. He had worked in the oilfields in Alberta and was shocked at the blatant prejudice Canadian co-workers demonstrated toward natives. So don’t assume all Texans are bigots and all Canadians are saints.

Patriotism is fine, but jingoism is a maggot in your head.

#213 Devore on 11.07.10 at 5:19 pm

#220 InvestorsFriend (Shawn Allen)

I think it was Einstein who said things should be simplified as much as possible, but cannot be simplified anymore beyond that.

Now, try again and see if you can grab that pebble of knowledge that I offer. Who has snatched it? Post it and less us know if the penny has dropped for any of you.

I feel like I am speaking with a person who has an extremely rigid way of looking at the world in his own way, and refuses to see that things are actually much simpler than he is making them out to be. Makes sense to him makes no sense to anyone else.

Your choice with tax sheltered account is either to pay the tax up front, or pay the tax when you take the money out. Six of one, half dozen of the other.

Tax shelters are still preferred because,

a) your most productive years are when you are taxed the most
b) there are ways to reduce your tax load later in years, given sufficient time to plan and set things up
c) there are ways to melt down your RRSP and avoid paying many of the taxes altogether, ways which may not be there in the future.

But, even given this, it is never a good idea to put all your eggs in one basket (RRSP).

#214 Devore on 11.07.10 at 5:21 pm

#221 Devore

Taxes are deferred, yes, which means they are not being paid NOW, when they are needed.

In other words, imagine what would happen to tax revenues if everyone started maxing out their RRSP contributions.

God, I feel like DA now, scattered all over the place like a monkey on crack.

#215 betamax on 11.07.10 at 5:24 pm

As for the Vancouver bubble’s longevity, there was a time in 1981 in which Vancouver was the only city in Canada with appreciating prices; everywhere else was stalling & falling, and virtually everyone in Vancouver saw it as proof that Vancouver was immune to market forces experienced elsewhere.

Then the bottom fell out and Vancouver prices dropped 50% within 2-3 yrs.

An irrational market is like a drunk driver: he might avoid crashing for years, and he’ll refer to that accident-free record to justify continuing to drive drunk; but eventually there’s going to be a nasty crash, and anyone sober knows it’s just a matter of time.

#216 Debtisslavery on 11.07.10 at 5:40 pm

Dabull: For the last time, IT IS THE MORTGAGE AMOUNT.

Get it?

I even talked to somebody on the phone at the land register website because I had trouble navigating through it. When there is a T(followed by numbers) besides the mortgage amount, it is because the mortage has been radiated.

-OK?
OK!

#217 Moneta on 11.07.10 at 5:49 pm

Also, if government finances get tight enough, RRSPs represent a huge pool of tax-deferred money (all those rich people avoiding paying their fair share!) for them to tap in all manner of creative ways, you know, for benefit of all.
——-
Argentina did seize those private accounts.

US congress has brought it up regarding 401Ks. I wouln’t be surprised if they brainwashed Americans into loading up on treasuries.

What bothers me most in Canada is the tax brackets. If in 20 years, today’s 30K is 90K, we might just pay today’s 90K tax rate. That’s why I’m making sure I also have a non registered investment account.