Let us prey

Sarah Palin’s not hot. She smokes. Hey, this mama’s so incendiary she might just crisp your mortgage.

The former Republican veep candidate and undeclared 2012 presidential frontrunner, who likes guns and fish guts and as Alaskan governor called her husband ‘The First Dude’, who has a reality TV show and a bestselling book, writes important stuff on her hand and is the spiritual leader of a political movement which just kicked the ass of a guy who was supposed to be a transformational USA commander-in-chief, is also a bond-licking babe.

In case you missed it, the big bruising thingy called the bond market cowered before the Palin effect, sold off a few billion dollars, and sent yields rocketing higher. It may not be long before five-year home loan rates here, which are set in the bond market, feel the effect,

But let’s back up a tad. Thanks to the US Congressional elections, in which the Repubs (in effect) won control of America due to the Palin/Tea Party influence over millions of people without jobs and whose homes are crashing in value, Barack Obama caved. This week he agreed to retain, for two years, tax cuts initiated by his evil twin, George Bush. At the same time Washington lopped 2% off the payroll taxes business pay and extended unemployment benefits for more than a year.

Yeah, so much for fighting the deficit. This adds more billions to the tab, at the same time the US central bank is spending extra billions to buy bonds in the hope of reflating America. It means a jobless recovery in which the government will throw money at anything, suffer a massive loss of revenue, subsidize business and purposefully try to shove asset values higher. The result: a bond sell-off. After all, why nibble on crappy low interest rates (even if they’re safe), when you can snorfle down greasy stock market carbs?

Is this some kind of signal for the next two years? Does Lady Gaga have exploding nipples? Duh.

I’ve said here since the doomer days of early 2009 that equities need to be in everyone’s portfolio (hopefully through a collection of ETFs, not individual securities). The reason is that deflation (caused by debt and the porno pushers at HGTV) will be followed by inflation (not hyper-inflation, just the usual stuff). Bonds love deflation. Stocks love inflation.

So as equity prices rise, bond yields will follow as bond prices drop and investors demand a greater return for holding debt.

Of course it’s confusing. But as far as real estate goes, it simply means this: higher mortgage rates (as bond yields elevate), and lower house prices (as affordability erodes). For those people smart enough to sell their property to the legions of idiots we share this country with, it means the potential of nice returns on your growth assets, while delighting in higher yields on your fixed income. In fact, preferreds are already plumping.

Oh, and don’t forget Europe, where bond yields have gone nuts already on the prospect of the continent being sold on eBay to some knockers from Guangdong. BTW, this is also krypton for gold, since US state-controlled inflation just throws more heat on Asia, where the Chinese have to raise interest rates, dampening demand for commodities. I hear the yellow stuff lost 2% of its value on Wednesday.

Anyway, when I think of Sarah and her Winchester I get so turned on I might just do a refresher piece here in a few days on how the bond market works and why lipstick matters again. Once I finish the pigs.

Let’s put this posting out of its misery with a note from Jonathan, who tells me he is a financial advisor in piteous North Vancouver:

“Hi Garth. I hope you’re actually reading this email.  I’ve been following your Blog for the past couple of months and do enjoy reading it, although don’t necessarily agree with everything you say, but you do hit a lot of hot buttons.

“The real estate market is out of control.  I own a house that was listed last summer for $1,215,000 and got offers.  Unfortunately, my wife was about to give birth to our third child as the offers came in, so we pulled it off the market.  My point is; the price of our home is STUPID, should never be worth that much.

“The purpose for my email.  I’m not sure if you’ve touched on this in the past but was hoping you might to shut-up some of your naysayers.  It is plain as day that people are up to their eye balls in debt, with much of that coming from owning real estate.  Let’s assume the real estate market continues to rise…..  Interest rates will also be rising, can’t stay low forever.  So the people who have large mortgages, LOC’s and other debt are going to be hit hard in the gut when rates rise.  I think it’s time people stop listening to their Real Estate agents and mortgage brokers who are making HUGE amount of commission and go to someone like ourselves to actually look at what will happen to debt levels, minimum payments, if/when interest rates start to rise.

“Keep on rockin Garth, I enjoy it and love seeing idiots challenge you who have no idea, other than listening to the real estate board and media who are GOD.”

God is good, Jonathan. Taketh not Sarah’s name in vain. She’s armed.

189 comments ↓

#1 Hovering on 12.08.10 at 11:41 pm

obama has played the “beware dbl dip recession” card to try to get wandering dems in line on the “deal” he’s worked with republicans

any thoughts Garth on what might happen if Obama and the republicans (tough to type that) are unsuccessful in extending the tax cuts ?

#2 S.B. on 12.08.10 at 11:41 pm

Lastest Remax Toronto condo update. Down 21% from Oct 2009?

http://tinyurl.com/28anty2

The trend discussed in last month’s commentary continued to play out. October sales on TREB were 6700 units, about 6% higher than in September. October is usually the highest sales month of the fall market. Last year, October sales increased just 3% from September! Still sales for October this year are down 21% from October of ’09. We are currently forecasting that November sales will come close to matching October sales and when you look at 2009, November sales actually declined 13% from October. Overall, the market is at a level that will support current prices and those looking for further price declines will be disappointed!

The condo market continued to outperform the overall market through the fall. Condo sales this October were down by 18% from October ’09. Downtown condo sales this October performed even better and were off by just 10% from a year ago. As we continue to stress, there are sufficient buyers for downtown but the supply of condos coming to market has reduced the sale-to-listing ratio from 78% a year ago (a tight market) to 32% this year (a balanced market) – not a fire sell market as the media would like to hype! Looking to the new condo market, developer sales even outpaced those of the resale market. Breaking the downtown market into three areas, sales in the core averaged almost $700/sf while downtown west was at $600 and the east side was just above $500/sf.

#3 Jsan on 12.08.10 at 11:43 pm

“God is good, Jonathan. Taketh not Sarah’s name in vain. She’s armed.”
——————————————————-

She’s armed with a pellet gun, most people outside of Toronto can probably figure that one out. It could be dangerous though, a shot from a pellet could scratch the skin and later get infected. It could than turn into flesh eating disease and I guess become fatal so yes, she is probably an armed threat with that gun.

#4 sutluc on 12.08.10 at 11:43 pm

I thought equity prices were influenced in large part by projected forward earnings, not merely by inflation.
In an inflationary environment, coupled with falling earnings, do stock prices still rise in real terms, equating to real gains?
Or are we just talking about losing less of your purchasing power?

Inflation is good for corporate earnings. Tax cuts are even better. — Garth

#5 Mtl RE Observations on 12.08.10 at 11:55 pm

This woman truly scares me.

#6 Priced Out in Toronto on 12.08.10 at 11:55 pm

I noticed the interest rates have started to go up on bonds, so their prices must be coming down simultaneously (this much I understand).
However, I just went cross eyed trying to understand the ramifications on stocks, China, gold, etc…
Please explain in really, really simple language for us financial ignoramuses…
Thank you.

#7 Spazmogen on 12.08.10 at 11:57 pm

Lets get this straight, Palin is no Thatcher.

Palin is stuck with the same behind the scenes power people the Republicans have had installed for a decade. Yeah, DubYa’s people.

Does either party in the USA have the balls to bring in a stiff austerity budget? It’s political suicide for 10 years, but its needed. The USA is in trouble. National Health Care in the USA is a pipedream., like “Freedom 55” up here.

Thatcher did it (tough budget), and was only saved by The Falklands War. Other wise, her government was dead in the polls. The USA has 2 wars on the go, no chance of winning either of them and the worst economy since 1932…so much for the Democrats.

The lessons about austerity that Thatcher’s government taught to other Conservative governments around the world was not lost on them. Mike Harris in Ontario for example. Will ‘F’ and the boys have the balls to do this as well? We’ll know soon enough. Political Suicide or another 4 tough years, then let the Liberals win, only to have it fall apart in their laps?

At least “Cariboo Barbie” is easy on the eyes for us old guys…and she is smart enough to use the “New Media” to her advantage; facebook, twitter, reality TV. President Elect Palin has her bases covered.

#8 T.O. Bubble Boy on 12.08.10 at 11:57 pm

Obama’s “cave” was simply a political stunt attempting to do 2 things:

1) Create the illusion that he can work together with Republicans.

2) Line up talking points for 2012… from what I can tell, democratic thinking these days is that the need for tax increases isn’t obvious enough to the general public, so they’ll make it 10x more obvious by piling on another $1T or so and making everything even less sustainable.

#9 T.O. Bubble Boy on 12.09.10 at 12:09 am

This is one of the more surprising stories of the day: RONA decides to start paying a dividend!

http://www.cbc.ca/money/story/2010/12/08/money-rona-dividend.html

I guess they read the “RE/Max news”, not the real news?

#10 Basil Fawlty on 12.09.10 at 12:10 am

Sarah Palin the front runner for the Republicans? How about a full on vacuous package with Tommy Lee for VP.
Like my Dad would have said, “if she a brain she’d be dangerous”.

#11 Habsfan on 12.09.10 at 12:16 am

Do you know where I can find exploding Gaga nipples???

Right here, brother. — Garth

#12 T.O. Bubble Boy on 12.09.10 at 12:16 am

Fresh off the debacle of the Olympic athlete’s village in Vancouver, Toronto starts on a path towards it’s own collosal failure:

http://www.yourhome.ca/homes/realestate/article/903228–dupuis-athletes-village-a-catalyst-for-waterfront-redevelopment

So, there are tens of thousands of new condos coming to Toronto over the next few years (in a market where 33%+ of new condos are flipped by investors), but these particular ones that will be built for 2015 will somehow be a huge success?

I’m all for developing that dumpy part of the Toronto waterfront, but I’m highly skeptical of any development plan that is centered on CONDOS — why not plan for some actual businesses or other destinations to join Corus Entertainment in moving over to the east side of downtown?

#13 bsallergy on 12.09.10 at 12:20 am

President Pornstar . . . such a nice distraction from a crappy world.

#14 Spiltbongwater on 12.09.10 at 12:20 am

Sarah Palin will be able to watch the 2018 World Cup from her house in Alaska.

#15 West Coast on 12.09.10 at 12:20 am

wtf:

“Latest statistics show huge increase in housing starts in Greater Vancouver in 2010” (60% over last year in Van???)

http://www.straight.com/article-363886/vancouver/latest-statistics-show-huge-increase-housing-starts-greater-vancouver-2010

#16 wetcoaster on 12.09.10 at 12:21 am

You know the end is nigh when you see Don Cherry pumping mortgages. Whose next ? Gordon Lightfoot or Anne Murray for The Mortgage Shop ? His last debacle with ColdFX and their scam sales/financials was a real doozy.

#17 Prof ANON on 12.09.10 at 12:26 am

She also can’t shoot worth sh**, she doesn’t carry her own weapon, and she can’t tell the difference between east and west.

Okay, so I’ve actually only ever shot two deer. But it only took two shots because I actually practiced before I went out.

http://www.independent.co.uk/news/world/americas/hunter-becomes-the-hunted-as-palin-critics-say-she-cant-shoot-2153973.html

#18 Dan in Victoria on 12.09.10 at 12:28 am

Idiot.
Finger inside the trigger guard, before the rifle is sighted on a target.
Wouldn’t last a second around me with that type of behavior.

#19 ReginaResident on 12.09.10 at 12:33 am

Jonathan, take your 1.2 Million. Take 300K and move to Regina, one of you can stay home with kids…the other can drive home for lunch to play with the kids. And when it gets cold…take a few weekends in Vegas!!!

Investing the rest in Garth’s model portfolio neither of you will have to work. Take it an run!!!

#20 Mark on 12.09.10 at 12:41 am

#19, no jobs in Regina though. Unless you’re a long-time civil servant, in which case, the government will pay you a fortune for doing nothing.

#21 JRH on 12.09.10 at 12:52 am

What’s wrong with smokers ?

#22 Debtisforever on 12.09.10 at 12:58 am

Agreed with Jonathan. I’m an accountant. See people’s financial records every day. A lot of people are in a lot of debt. Sure, they are ok today, but they will not be ok tomorrow, when rates are higher. Or when they lose a job. Or when people stop renovating their houses/buying houses/buying so much junk at the mall. Face it, this game is nearly over.

#23 Crash Callaway on 12.09.10 at 1:01 am

Yes Jonathan take that money and run.
Probably not many opportunities to sell high will come around again.

#24 sutluc on 12.09.10 at 1:04 am

Re. #4
My impression is that a bunch of job challenged, upside-down real estate “owning”, consumers, up to their asses in debt, with no money, are not good for earnings.

It’ll be interesting to see this play out.

#25 au on 12.09.10 at 1:06 am

BIG yawn …

#26 InvestorsFriend (Shawn Allen) on 12.09.10 at 1:12 am

How Banks Work

If anyone is interested, I wrote an article just over two years ago at around the time of the Lehman crisis that explains how banks work.

http://www.investorsfriend.com/September%2028%202008.htm

If you are looking for bank bashing or some scare mongering about fractional reserve banking, this is not it. Just an article on how banks work and why they are so highly leveraged by nature and a bit on why they can be risky.

And yes, they can be VERY risky and if large numbers of people stop making their payments the banks get into serious trouble very quickly. Why? Because it’s not their money they loan out it is their depositors money. (They only keep a fraction of the depositors money in the vault, of course, they lend the rest out, that is just how banking works. Get over it.)

Lending money is dangerous. That’s why we don’t often bypass the banks and just lend money among ourselves at work or even among our family. And it is why mortgages are insured, to lower the risk to the bank. (The lucky taxpayer gets the risk)

#27 Nonplused on 12.09.10 at 1:12 am

Gold is off hard the last 2 days, but from an all time high. All time highs are often followed by corrections.

As long as the Bernanke is printing money, the trend will be up. And yes QE is printing money. They buy the bonds, but all they do to buy them is create numbers electronically out of thin air.

#28 Timing is Everything on 12.09.10 at 1:13 am

#16 wetcoaster

Cherry is pumping a mortgage brokerage firm (not mortgages) He’s indirectly telling folks, to go to a mortgage broker if you need a mortgage, NOT the banks. Which is good advice, IMO. And it’s working already, because you brought it up on this blog.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/07/dominion-lending-signs-don-cherry.html

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/11/dlcs-new-don-cherry-commercials.html

http://dominionlending.ca/

#29 45north on 12.09.10 at 1:16 am

This week Barack Obama agreed to retain, for two years, tax cuts initiated by his evil twin, George Bush.

separated at birth

Aretha Franklin reported to have pancreatic cancer:
http://mcaf.ee/01afc

lets have a little respect
http://www.youtube.com/watch?v=z0XAI-PFQcA

#30 Patz on 12.09.10 at 1:17 am

At the same time Washington lopped 2% off the payroll taxes business pay and extended unemployment benefits for more than a year.–Garth

Oh, no they didn’t. They want you to believe that and once again the MSM is doing their bang up job of reporting and explaining stuff to the sheeple.

What was extended for 13 months was the framework whereby someone could collect up to 99 weeks of unemployment. For those who’ve used up their 99 weeks, well too bad dudes, maybe you could borrow a few bucks from the guys who got their tax cut extended to lend you a hand. The thing that kills about this is that UI extension was the quid in the quid pro quo on the tax cuts. Suckered again.

Here it is explained but once again, the UI benefits are not being extended past 99 weeks.
http://tiny.cc/1lde5

Speaking of MSM CTV Vancouver just dumped their 6 o’clock anchors Bill Good and Pamela Martin in favor of Tammara Taggart and Mike Killeen. Tammara is the bubbly blonde who giggles when she makes a boo boo and who make a name for herself as the intrepid community calender girl. Mike Killeen apparently has some reportorial background having been on the Olympic beat since 2006—whew!

Lest you lament their lack or journalistic cred just ask yourself, what could be better for fake news than fake anchors.

#31 Debt's Dark Embrace on 12.09.10 at 1:19 am

Yawn… Business as usual. Don’t hold your breath people, it’s gonna take a while yet. But the crash will be truly spectacular.

#32 Nostradamus Le Mad Vlad on 12.09.10 at 1:23 am


“. . . tax cuts initiated by his evil twin, George Bush.” — Tuesday night, there was a story that dubya is by far and away, the most hated and reviled president ever, yet he was elected twice (by false means).

Obama has spent more than dubya, and has gone from being a savior to being almost-as-hated dubya. Guess citizens have every right to be angry and feel betrayed.

Even Soros, Obama’s bankroller was annoyed that the Republocrats took back control.

“Bonds love deflation. Stocks love inflation.” — And hyperinflation is used purely for political purposes, which leaves stagflation. So who is running the economies of the west into the ground (other than changing cycles)?

The UK, Ireland and US are technically insolvent, as is most of the Eurozone, which leads to: “. . . investors demand a greater return for holding debt.”

If countries are so broke they cannot meet their debt, what then?
*
Comprehension US Fed style.

US Fed + JPM = Strange silver.

BoA WikiLeaks (not overly reliable) is targeting BoA soon. As BoA holds a pile of toxic mtgs., it might add a little spice to things.

China #1, US #2? Transition may happen a lot sooner than first thought.

0:21 clip Something is whizzing round the sun, but it’s not Planet X. Plus — Dark Jupiter These are the unknowns that no one, including the elite, can do anything about.

China buys up another US mining company, turning US debt holdings into hard assets.

al-Quaeda, or “The Toilet” was invented by this person for the CIA to use whenever the US needed someone to blame, thus creating another false war.

Mega Banks Some figures and factoids to go with yer Rolaids!

#33 tiger_baby on 12.09.10 at 1:26 am

Ref: yesterday’s discussion
Cookie, I believe your argument is what’s called a straw man argument …

Besides, remember “Give Me Control Of A Nation’s Money And I Care Not Who Makes The Laws.” Many would say that many of our problems exist because of too much capitalism, not too little of it. Big businesses often have the governments by the balls with this “jobs” string. As for the cronies, well, they are just doing what’s in their own best interest, right?

#34 Junius on 12.09.10 at 1:26 am

As the sovereign debt problem grows in Europe the chances that the bond vigilantes will strike will continue to increase. By the Spring we could see a world where the B of Canada rates are the same but the bond market has pushed the 5 year rates up beyond 4 or 5%. Or more. Could get very interesting.

Then China will melt down. 2011 could be a terrible year.

#35 $froma$ia on 12.09.10 at 1:33 am

Shes got a pellet gun in ther hands, c’mon garth your boots are more leathal.

#36 InvestorsFriend (Shawn Allen) on 12.09.10 at 1:41 am

Speaking of Prey…

Some politician in the U.S. was saying “Never let a crisis go to waste”. The same goes for stocks. How many people let the 2008 and early 2009 stock market crash (crisis) go to waste? In the Spring of 2009 I was suggesting that if there ever was a time to borrow to invest that was it. I also said of course that there were no guarantees. But man, was that an opportunity. Garth too was suggesting stocks at that time.

If you are young you should probably pray for another crisis like that. Pray for such prey.

And what is today’s opportunity? Quite possibly it is houses in the U.S. Especially desirable areas in Florida and other vacation home areas. They continue to be super cheap. That will not always be the case. Sure they may not be at bottom yet. He who insists on seeing the bottom probably never pulls the trigger. (Of coursre some bottoms provide better sight seeing than others, but that is another story).

The spoils do not go to the meek. Neither to the rash. The smart old buck bides his time, but then ACTS at the right time, and gets the doe. (dough?).

#37 Rick in Seattle on 12.09.10 at 1:59 am

Just curious… If stocks like inflation so much, why has the Shanghai Composite Index (SSE) dropped from a high of 6,000 2 years ago to 2,800 today with persistenly high single digit inflation.

#38 mab on 12.09.10 at 2:00 am

real life story of a friend trying to sell their house in MA (USA). Been on the market for $399k for a year but still nothing at all. We bought for $485k in ’07 and in ’06 it was on the market for $580k

#39 realityguy on 12.09.10 at 2:07 am

Yeah bug Palin all you want guys,

But If I was stuck in the war zone, who would you rather have as your wing man Obama or Palin

Enough said!

God for a mother of several kids, she sure maintains her body well! Nice photo Garth!

#40 realityguy on 12.09.10 at 2:18 am

Garth, how will China’s inflation and interest rates hike affect Canada?

#41 Taxpayer like everyone else on 12.09.10 at 2:51 am

Jonathan – forget Regina and Vegas – move to Courtenay and fly direct to Mexico

http://www.golfjets.com/westjet_flights_to_comox.htm

#42 Bill Grable on 12.09.10 at 3:12 am

Palin is working with the Bond Vigilantes, Mr. Turner!!!

OMG.

#43 Peter Pan on 12.09.10 at 3:20 am

I’d love to see a Republican nomination between Chris Christie and Sarah Palin… Christie would be one formidable presidential candidate… If only he can get past the nutjobs who control the Republican Party these days…

The Republicans will have a choice in 2012 of nominating an intellectual lightweight faux “celebrity” like Palin or a solid “no-nonsense” governor.

#44 Duke on 12.09.10 at 3:41 am

Ever hear of Photoshop: http://gawker.com/5046643/cnn-duped-by-palin-photoshop

#45 Your Mom on 12.09.10 at 3:48 am

Just wanted to let you know.. In New Brunswick..its different here: http://tinyurl.com/2d5fn3e

#46 O on 12.09.10 at 4:50 am

A different view —

I love bonds and GICs, they are safe and give a great return vs risk. I, like many, want (and will pay) to protect our capital savings. I can get 2.25% in a savings account at https://www.happysavings.ca/ or 2.7% – 3.45% in their GICs. BoC said “October core-CPI jumped to 1.8%” so inflation isn’t bad and bonds/GICs/savings accounts will keep up to that while we keep putting money away for a rainy day.

Sure, I’ll put a little into the stock market, say 20% market/80% fixed max. I don’t need more risk than that in my life, thanks.

FYI: As Garth suggested I started investing in Feb 2009 and thus far, we are DOWN on our oil stocks a bit even though the market is up since then. This shows putting money in the market is not always a “good thing”. Thus we made more money putting our savings into a savings account than in the stock market.

Food for thought as a coin always has two sides and both can be right.

P.S. Bonds are up in yield in the past 6 months and Garth is right, CDN mortgage rates will be affected.

If you are risk averse and love those moribund GICs, why do you have oil stocks? Nobody should buy individual stocks with a portfolio of less than a million. — Garth

#47 Hosehead on 12.09.10 at 5:07 am

Garth – if/when you do a post on the bond market, I would greatly appreciate if you can explain this to me:

The fixed mortgage rate is tied to the bond market. So does that mean that bonds (in the long term) are good investments right now, given that interest rates have only one direction to go? In other words, as interests rates rise, so do the value of bonds? If that is the case, seems like we should be stuffing a lot of money into them now.

Bond funds I own did amazing 6 months ago but are stinking at the moment – particularly global bonds. That seems to be the result of QE2 and Europe’s problems more than anything to do with interest rates.

I hope you can explain some of this. I may be getting lost in the logic of bonds. Thanks as always for your great posts.

#48 Devore on 12.09.10 at 5:38 am

#18 Dan in Victoria

Idiot.
Finger inside the trigger guard, before the rifle is sighted on a target.
Wouldn’t last a second around me with that type of behavior.

It’s a photoshop. Take a deep breath. Relax.

#49 Rob now in Nova Scotia on 12.09.10 at 6:14 am

That’s not a real picture. It is a photoshop job, the original picture is here:
http://www.flickr.com/photos/[email protected]/208036176

The story behind the photoshop job here:
http://urbanlegends.about.com/library/bl_sarah_palin_bikini_pic.htm

Hillary Clinton will be the next President of the USA.

The bond market sell off was rough and pulled everything down, even silver and gold.

#50 Alliston on 12.09.10 at 7:33 am

Now that’s hot! I could get behind any political candidate that looked like that, regardless of agenda. Nice muzzle control:)

#51 SafetyBear on 12.09.10 at 7:59 am

#7 Spazmogen You don’t appear to know the Iron Lady at all do you? She wasn’t about austerity. In fact the only austere thing about the alcoholic witch was her boat launching face. Thatcher presided over the biggest redistribution of money from poor to rich the UK had seen in a very long time. All under the same guises as the likes of Reagan. She sold off the jewels – funding tax cuts for Yuppies who needed it least with a privatisation spree meaning the UK is still suffering the cost of her frippery. Once an asset is gone, it’s gone. The woman was a disaster for the UK ending in a recession in 1991 just as she was packing her bags to make way for the ineffective John Major. I suspect the only time you’ve actually spent in the UK was watching Monty Python you seem so out of touch. People from Outside UK m ight admire her but there is a lot of emnity towards that woman from people who actually lived her reign.

#52 Oasis on 12.09.10 at 8:02 am

Yeah, so much for fighting the deficit. This adds more billions to the tab, at the same time the US central bank is spending extra billions to buy bonds in the hope of reflating America. It means a jobless recovery in which the government will throw money at anything, suffer a massive loss of revenue, subsidize business and purposefully try to shove asset values higher. The result: a bond sell-off.

______________________________________

you’re describing the 70’s Garth… the 70’s. deflation not possible. stagflation is the result. only it could get worse. america is in a much weaker position than 40 years ago…

all this is good for commodities, bad for bonds… really really bad for bonds.

#53 SafetyBear on 12.09.10 at 8:05 am

#7 Spazmogen One more thing. You are right Palin is no Thatcher. Thatcher was evil but she was principled at least. Palin is a demented gun toting redneck halfwit being used as a stalking horse by others. It’s them we should fear.

#54 Carioca Canuck on 12.09.10 at 8:44 am

#18 Dan in Victoria:

It’s a pellet gun, numb nut.

Put the BC bud filled bong down and give your head a shake.

#55 T.O. Bubble Boy on 12.09.10 at 8:59 am

35- and 40-year mortgage holders beware: bank #2 is pushing the idea of shorter amortizations. (first TD, now BMO)

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/12/people-open-to-shorter-amortizations-bmo.html

I’ll note that BMO doesn’t actually say “there shouldn’t be 35-yr amortizations” like Ed Clark from TD did, but they are hopping on the bandwagon with a ‘special offer’ 5-year fixed rate for those that choose the 25-year vs. the 35-year.

#56 David B on 12.09.10 at 9:03 am

First Spiless “Iggy”, oops sorry ment Obama!

Not so fast on that $900 Billion a cool $Trillion might be better:

Tax Plan Spurs Deal Making
The tax package gained new momentum toward passage in the Senate, setting off a scramble by lawmakers and lobbyists to get provisions into the bill
———————————

As far as Sexy Sahra is concerned, it stops there … good pub but the moment she puts her hat in ring … all the guns will be pointing the other way. Note the above, not only does it spell earmarks (big time) it goes against the foundation of everything tea party. Soon 2011 will arrive with 2500 new senior boomers per day … all this couched on population with guns in had (average american has three!) with 4 of 10 living on food stamps … “No jobs in sight” and billions of dollars still flowing to corrupt Karzi and some reall first dude in Iraq.
———————
Lets set the card straight, I know nothing! I am also not the sharpest tack in box! All the smart guys work on Wall Street and the biggest banks in world and just look at their record …. $Trillions lost overnight in sup prime loans …. $Trillions of jobs gonzo never to return all on top of supporting the hunt for WMD’s causing yet even more $Trillions to be spent and now multi millions jobs and lives gonzo. Here in Canada their top supported is King and top cat in polls and what does he want y’all to do? Borrow more money than you will ever do in your life and buy a house worth not much more than a very expensive car! Yup I am a dummy, sorry never happen and I will not avise my children or gandchildren to do the same ….
———————

Just how much money can G-20 countries print throw at the world before the real bubble burst?

STOP and think? USA is now -$13. 9 plus soon another $1 Trillion! that will be $15 Trillion by Spring 2011!

All with Tea Party and SS approval

And how and why is Canada buying more and more of the USA debt while others are selling?

#57 Norval on 12.09.10 at 9:21 am

Watching BNN “Market Call Tonight” last night only to hear some RE broker rant and rave at the host, without a question I might add,only to instill his thoughts that interest rates will not rise for twenty years. Boy I wouldn’t want this clown advising me or my family members on any major purchases at all, including a washing machine!

#58 Kaganovich on 12.09.10 at 9:25 am

For Cookie Monster:

http://www.correntewire.com/why_obama_tax_deal_republicans_insane

governments and the value of redistributing wealth

#59 bigrider on 12.09.10 at 9:25 am

Stocks on the rise next several years due to impending inflationary pressures but rising interest rates in China curtailing growth, maybe by 2% at best , terminates rise in gold prices???… unlikely.
Gold rises with inflation.

You are such a kidder. — Garth

#60 Scrooge on 12.09.10 at 9:27 am

Garth, you love putting your viewers on with photo-shopped pics, and they take the bait every time; she doesn’t scare me half as much as the boy president there now who’s doing everything he can to wreck the country.

#61 Sean on 12.09.10 at 9:38 am

Sarah Palin is an idiot. I hope she does not run for President as the thought of her even being considered for the job is scary.

She is such a phony. Just by watching 2 minutes of her dull dizzy show it is easy to tell she is not the adventurous, outdoorsy Alaskan she wants everyone to believe she is. That isn’t even a real gun she’s holding. It’s a pellet gun. Also, anyone who knows how to handle a gun knows you don’t put your finger on the trigger until you are ready to squeeze it. Greenhorn for sure.

Sorry, I know it’s off topic but she is such an idiot.

Seem to be a bunch of dudes on here who sound threatened. Relax. I’m sure you are more man than she is. — Garth

#62 Herb on 12.09.10 at 9:47 am

Didn’t the Amercans used to have stiff laws about desecrating the Stars and Bars?

#63 dd on 12.09.10 at 9:58 am

…The result: a bond sell-off. After all, why nibble on crappy low interest rates (even if they’re safe), when you can snorfle down greasy stock market carbs…

A while back you said money printing (QE) doesn’t effect the stock market. Are you changing your tune now?

QE alone is impotent. In combination, it has an effect. Mostly on bonds, which migrates cash into stocks. Gee, didn’t I just write that? — Garth

#64 Steven Rowlandson on 12.09.10 at 10:02 am

Garth this worshipping of Sarah Palin is unjustified.
She might look good but she needs to reject zionism and isreal and all manner of political correctness and get an education upgrade before she becomes respectable. Untill she does all that she is unqualified to be a leader. (The guns don’t bother me one bit.)
Then again the governments and the establishment in canada and america are unqualified to lead also. A look at their moral, monetary and fiscal policy absolutely proves their disqualification to rule.

Steven

#65 Carruthers on 12.09.10 at 10:06 am

Mtl RE Observations on 12.08.10 at 11:55 pm wrote:

“This woman (Palin) truly scares me.”

Dude. I’d be more scared about your next separatist premier scaring off foreign investment again and driving out the last vestiges of any sort of professional class from your once bountiful province…er..country..whatever.

#66 Bill ( Peterborough) on 12.09.10 at 10:08 am

Sarah Palin as next President. Any thing is possible with the sheeple.

How about this candidate for President:

http://www.youtube.com/watch?v=57fhOePVRFE&feature=related

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

The House and Senate could be filled with these canidates:

http://www.youtube.com/watch?v=u6psDUbKihc&feature=related

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

And when they retire we could put them all over here

http://www.youtube.com/watch?v=pSm7BcQHWXk&feature=fvw

#67 Robert James on 12.09.10 at 10:08 am

#39 realityguy LOL If you actually believed that was Sarah Palin you need a lot more than just a wingman..JMHO of course… LOL

#68 bullion.bunny on 12.09.10 at 10:14 am

The total outstanding debt of the U.S. including unfunded liabilities is 54 Trillion, do you think that will ever be paid back?

http://www.usdebtclock.org/

The U.S. must now print money in order to make the interest payments. The 30 year T-Bill is going to 8% maybe higher, along with gold and the U.S.

#69 El Rojo on 12.09.10 at 10:14 am

Sarah Palin is a breath of fresh air. A genuine God fearing down to earth American hero. Good luck Sarah in all your future endeavors. I wish you were Canadian, we could sure use you here.

#70 LH on 12.09.10 at 10:18 am

People, just assume every funny or interesting picture you see on the internet is a Photoshop.

#71 Carruthers on 12.09.10 at 10:23 am

For Aussie Roy

http://www.youtube.com/watch?feature=player_embedded&v=CroTAVVcr9k

#72 InvestorsFriend (Shawn Allen) on 12.09.10 at 10:24 am

Speaking of Prey and Investing at the Bottom…

If you are thinking of investing in U.S. houses at the bottom…

Remember, it may not pay to wait until the bottom presents itself trembling and ready and begging before you insert (your money).

Juicy (investment) opportunties do not necessarily present themselves like that. You may need to boldly go where other men fear to go. While the timid wait, the bold act and, sometimes at least, get rewarded.

And meanwhile there is a certain amount of fun in the chase for (investment) bottoms.

#73 David B on 12.09.10 at 10:27 am

#69 El Rojo on 12.09.10 at 10:14 am

We do! http://www.wildrosealliance.ca/

#74 HouseBuster on 12.09.10 at 10:31 am

American homes are worth $1.7 trillion less
http://finance.yahoo.com/news/American-homes-are-worth-17-cnnm-1002904414.html?x=0&sec=topStories&pos=5&asset=&ccode=

Coming soon to a theater near you.

#75 Prof ANON on 12.09.10 at 10:33 am

@ #39 Reality Guy

Her dad loads her rifle and he even ejects her shells. For your comparison, I would take Obama over Palin, but Palin’s dad over Obama.

#76 Moneta on 12.09.10 at 10:37 am

Just curious… If stocks like inflation so much, why has the Shanghai Composite Index (SSE) dropped from a high of 6,000 2 years ago to 2,800 today with persistenly high single digit inflation.
——-
If you look at the data you can see that in 1968 the S&P500 was at around 100 and by 1979 was still around 100. The market really took off in 1982 when CPI had clearly peaked. There was a lot of volatility during those 10 years of course but it is clear that equity markets only go up when CPI peaks and starts to recede and/or when inflation expecations start getting incorproated into business decisions.

So my gutt tells me that in the intial stages of inflation, when investors start to get a whiff of it, equity markets will shoot up because they will be following the “equity markets protects you from inlfation” meme.

Then as margins get compressed because inflation is currently in NO business decision, earnings will drop like a rock and investors will panic and sell everything.

#77 BrianT on 12.09.10 at 10:47 am

#56David-to answer your question-the funniest line is the one about the US and MEXICO having signed a “perimeter security deal” to guard against the you no what http://www.thestar.com/news/article/904094–canada-negotiating-perimeter-security-deal-with-u-s-reports?bn=1

#78 Ron Burgundy on 12.09.10 at 10:49 am

Garth, any comments on the latest release from CMHC:

Apartment vacancies down, rental rates up: CMHC

Explanations/Implications?

Irrelevant/Misleading? — Garth

#79 bullion.bunny on 12.09.10 at 10:51 am

Personally I really don’t mind Sarah Palin, she is easy on the eyes and she follows the Constitution. She is ambitious and has accomplished much with very little. I think she is a fine Governor of the frozen oil barrel called Alaska. That said she would be a complete disaster as a U.S. president….just what the movie idiocracy.

#80 Dodged-A-Bullit-in Alberta on 12.09.10 at 10:51 am

Greetings: Money need not be created in a healthy economy, just print more, but watch for the screw ups. Replace the US 100 dollar bill and all the “old” bills will become worthless after a period of time. Try spending an “old” Canadian 100. Think of the drug money etc. that will become worthless, as well as that stashed all over the world. Try to explain to the IRA how you came into posession of a suitcase full of bills as one attempts to exchange them for new editions. Should the Americans declare that in 5 years the existing 100 bill will no longer be accepted as legal tender, the stampede will begin. The right to print money-the ultimate power, especially without a gold backed currency.

http://www.nzherald.co.nz/business-editors-picks/news/article.cfm?c_id=1501981&objectid=10693180

#81 Bill ( Peterborough) on 12.09.10 at 11:02 am

Re # 58 Steven Rowlandson

Garth this worshipping of Sarah Palin is unjustified.
She might look good but she needs to reject zionism and isreal and all manner of political correctness and get an education upgrade before she becomes respectable. Untill she does all that she is unqualified to be a leader.

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

This will never happen. We are to far gone in the stench of it all. When we do finally realize what is happened we will , I believe be in the midst of another world war.

As in the following statement below:

“The individual is handicapped by coming face-to-face with a conspiracy so monstrous he cannot believe it exists.”

J. Edgar Hoover

#82 DiGiaciamo on 12.09.10 at 11:03 am

Cmhc rental stats – vacancy rate % year over year oct 09 to oct 10
Calgary 3.5 to 5.3
Wood buffalo (ft mcmurray) 5.5 to 9.9
Grand prairie 10.5 to 15.5
Red deer 7.5 to 9.2
stats are based on larger buildings as far as I’m aware. So individual rental condos aren’t included on either inventory or vacancy (correct me if I’m wrong)

#83 Bill ( Peterborough) on 12.09.10 at 11:07 am

Food for thought:

“CAPITALIST
TEN COMMANDMENTS

1. Do unto others before they do it unto you. Beggar thy neighbor and trade their employments without offset, tariff, or compensation to secure a bountiful profit from the greater slave. Engage the most authoritarian of regimes and let no morality, nor powers of the vast majority, interfere with the greater profits to be had from preserving disparities and all the powers of predation enjoyed by the rich.

2. In all things, see that your capital-defined Efficiency shall remain the only god, and let no morality, freedom nor ecological concern interfere with your divine right to profit and enclose for your benefit.

3. Thou shalt make money and power thy only god and pursuit, and not suffer any foolish idleness opening one to other occupations or dangerous revelations.

4. To secure thy power, thou shalt not let the people own or control their central banks – despite constitutional purse powers to the contrary – for debt money is the central power and motive force before which all others pale and remain impotent.

5. Thou shalt own and control all media and news dissemination agencies. Let not any editor be elected lest the people influence what they see, hear and read. Let all books, media, and education grow our values exclusively. Let not any fairness doctrine nor any notion of labor-capital “factor” balance interfere with this, our grand design.

6. In all things, thou shalt make Growth and per-capita ruin thy only gods, and defeat Balance at every turn. Thou shalt see that humanity endlessly multiplies. Let no balance of population arise which might serve to pass on the same quantum of freedom, earthly space, natural right and pleasure even to thine own children – as this would destroy our precious and profitable Growth.

7. In all things, thou shalt resist Balance, and both factor and gender equity for I, your male SkyGod, have told you so.

8. Let no freely communal or cooperative emerge, nor non-profit venture succeed – for such competition is to be feared and prohibited. Privative everything and control the reigns of power so the vast majority own no debt-free estate or may access any means with which they might secure their domestic freedom, independence, and democracy.

9. Let Nature’s realm be conquered and set to your profit purposes. Patent and own nature’s pharmacopeia. Change the nature of animals and humans alike to serve your ends. Render off limits those fertile lands and plants by which the masses might enjoy leisure, acquire natural freedom, secure refuge from our Free Market, or stumble upon revelations of a non-egoic, cooperative, and spiritual nature.

10. Let enclosure reign, for the landless and dependent are fodder for thy greater objectives. Let our Interdependency forever be mediated by the rich and powerful, and secured in the name of an Efficiency serving our ends alone. Seek to destroy any remnants of natural freedom, commonwealth, and domestic independence. Let our Free Market of neo-slavery prevail and thy will profit beyond one’s wildest dreams.”

#84 Justin on 12.09.10 at 11:24 am

To those who have not figured it out. The picture is PHOTOSHOPPED.

Google ” photoshopped palin pics “

#85 refinow on 12.09.10 at 11:30 am

Garth, I think i am having a hard time understanding the rising interest rate concept.

I totally agree with the reduction of of our precious equity. I have always said, we as a nation have been running with a 2 year lag, from our Big Brother, USA. So if I look at the Us, following their housing melt down, rates have not risen, not significantly. Wouldn’t raising rates further impead the abilitiy of climbing out of this recession. Squeeze what little is left in consumer confidence, drive housing prices and the Canadian economy further into the groud.

This is why the debate of fixed vs variable mortgage rate continues to grow.

There was not a snowball chance in hell that the BOC was going to rasie rates yesterday.

I know that the Bond markets are what determin fixed mortgage rates, but one has to believe there is still some means of Goverment intervention to stay in control of the Bond Market. Otherwise no-one is driving the bus and we are heading for a cliff.

#86 GregW, Oakville on 12.09.10 at 11:32 am

Hi Garth, fyi some may find this interesting? 7min video

Alex Calls FBI During Live Broadcast to Report Illegal Activities at Pentagon
http://www.infowars.com/alex-calls-fbi-during-live-broadcast-to-report-illegal-activities-at-pentagon/

#87 Helicopter Ben on 12.09.10 at 11:33 am

short & sweet . . .

“There is a feeling that the Fed doesn’t care about inflation – in fact, wants more of it – and that is certainly not in the interest of bondholders,” – Stephen Lewis, from Monument Securities

“if yields are rising because people think America’s fiscal situation is unsustainable, then its armaggedon,” – David Bloom, currency chief at HSBC

Global bond rout deepens on US fiscal worries
http://tinyurl.com/2dc3usj
Source: The Telegraph [ U.K. ]

#88 Aussie Roy on 12.09.10 at 11:35 am

Carruthers on 12.09.10 at 10:23 am

What a great video, luv the line “Its not economics its a religious belief” That sums its up perfectly….

Well its a slow RE day down here today so not much to report.

A little off topic here but after a few years of drought over a large area of inland Australia, tonight many places are under water. My thoughts are with those who have had their homes, businesses and farms destroyed and of course also the love ones of those who have lost their lives.

Many of these farmers had the best crops in years almost ready for harvest, many have lost everything. Thank goodness where I am located it is almost impossible to get flooded. I now hope this La’nina weather event doesnt continue through summer or even this area will be greatly effected when grape harvest arrives.

Sorry about the down beat comments tonight folks.

#89 Dan in Victoria on 12.09.10 at 11:37 am

carioca canuck @54
its a pellet gun numb nut.

Gee, its only an air nailer said the apprentice framer as the 3 inch spike shot into his knee cap.
Finger off the trigger.

#90 GregW, Oakville on 12.09.10 at 11:40 am

Hi Garth, fyi an article to think about. Fallow the money.

UN Climate Concern Morphs into Chemtrail Glee Club
http://www.infowars.com/un-climate-concern-morphs-into-chemtrail-glee-club/

“The US has not agreed to it. Citing profits,

the US further refuses to cut greenhouse gas emissions attributed to global warming, the purported concern of the United Nations. Instead, it seeks to expand its geoengineering projects for which hundreds of patents have already been filed. (See sampling below.)…”

#91 bigrider on 12.09.10 at 12:02 pm

#59 Garth response- “you are such a kidder”

Adjusting for inflation since 1980, gold would be at $3450 today. Oil appreciated 50% above it’s previous inflation adjusted peak before falling preciptously.

ETF’s have sure made it easy for investors to buy gold..previous choice coins and bars.

Gold and Gold related shares as a percentage of assets in 2009 <1% in 1981 26% in 1948 30% in 1932 20%

Chinese participation in US treasury auctions diminishing 5% in 2009 verse 45% in 2006 meanwhile Chinese central bank gold holdings increased 76% in Q2 2010, Russia 53% and India 56%

And you think a couple of percentage point interest raises in China derail gold appreciation?

Again, highly unlikely.

#92 SquareNinja on 12.09.10 at 12:06 pm

Is Jonathan a hypocrite and not that smart?

Why did you list your home for sale… only to find out that your wife was pregnant and pull the listing? It takes nine months to give birth to a child… did you not notice it was coming?

And if you’ve been following Garth’s blog for as long as you say you have; why are you keeping an over-priced asset for “the sake of the kids,” who really don’t care and won’t be affected by renting?

Are you sure you’re a financial advisor? Because you be givin’ yo’self the wrong financial advice, homie.

(Yeah, maybe you carry no mortgage and are a millionaire… but if that’s the case, I wonder why you do the daily grind? Correct me if I’m mistaken in this assumption.)

#93 Aussie Roy on 12.09.10 at 12:08 pm

Anyone interested in the Aussie floods..

http://www.sbs.com.au/news/article/1436916/latest-from-wire/

#94 Mr. Plow on 12.09.10 at 12:11 pm

Garth…

I would welcome some posts on the bond market and your thoughts on it.

To me that will be the greatest indicator of a real estate market collapse.

As I have said before, losses in the second half of 2010 in the real estate market just eroded gains from the first half I don’t see it at all as an indicator of where the market is at if anything it shows that it is unstable and unpredictable.

Once we see fixed term rate increases that will be the catalyst in my opinion.

Thanks.

#95 Basil Fawlty on 12.09.10 at 12:15 pm

“Yeah bug Palin all you want guys,

But If I was stuck in the war zone, who would you rather have as your wing man Obama or Palin”

I would just run into the jungle screaming.

#96 Got A Watch on 12.09.10 at 12:27 pm

Someone questioned about Canadian Banks having “zero reserve requirements” – yes, that’s right, they are required to keep a “reserve” of 0, that’s “zero” by Canadian law.

If you Google “reserve requirements” + “Canadian banks” you will see 14,800 links, a lot of which don’t detail it as they talk about other issues, but many that do as well. This Canadian Blog summarizes the sorry series of events:

“The revision to the “Bank of Canada Act” of 1992, was first passed by Parliament under Bill C-19 in 1991:

“(4) On the first day of the first month following the month this section comes into force, the primary reserve referred to in subsection (2) shall be reduced by 3 per cent, and thereafter on the first day of the first month of each of the next three succeeding six month periods, the primary reserve as modified by this subsection shall be reduced by 3 per cent, and on the first day of the twenty-fifth month following the month in which this section comes into force, the primary reserve referred to in subsection (1) shall be nil.”

and this Section was later removed entirely, under Bill C-84 in 1999, which revised “The Bank of Canada Act” by deleting ‘Section 457’. Thus today a reading of the BoC Act” will find it has no references to any “reserve requirements” at all, meaning there are none, nada, bupkis.

Canadian Banks are of course still subject to the international ‘Basel II’ and coming ‘Basel III’ banking standards, which do have reserve requirements, provisions for potential losses etc included. So technically we do have some “reserves”, just none set by our own Government. And the Basel agreements are subject to watering down by Bankster lobbyists and pro-Bankster politicians who will seek to lighten them at every opportunity.

As I said, the danger of our Banks going out of business is very low. But they are not as strong as Government and Bank propaganda would have you believe. The media has mislead Canadians and the world on our alleged “Bank strength” Ultimately, the bagholder of last resort will be the taxpayer of course, you and me, as Bankster CEOs and Boards of Directors would of course never be held responsible for their own gross incompetence and desperate risk taking.

btw, a hit tip to the Federal Liberals, who prevented our ‘Big Banksters’ from merging in Canada, back in the times when they were all lobbying strongly for that dubious “right”. We would have 1 or 2 mega-Banks left in Canada, probably taken over by larger and more reckless foreign “competition”, and find ourselves in exactly the same boat now as the USA, Ireland or Spain. In fact I am amazed that our scumbag PM, Stevie ‘The Economist’, has not allowed the Banks to merge, that would fit right in with his ‘pro-corporate in all cases’ and US loving agenda. Only the mentally disturbed would seek to emulate the US in anything these days. Which is why when I read today’s news about a “border security deal” with the US, I wonder how much of our sovereignty Stevie ‘The Scumbag’ will give away this week without any consideration of whether it is good for Canada. Stephen Harper, pro-US vermin, criminally incompetent moron, and traitor to Canada, in action, yet again. Vermin.

#97 John on 12.09.10 at 12:30 pm

Good posting tying world events together. Please do the refresher on the bond market. Bonds love deflation? Please explain.

#98 Chris no longer in England on 12.09.10 at 12:34 pm

So are the G&M readers telling porkies? In their online poll today, the G&M asked:

“How much credit card debt do you carry?”

I don’t use credit cards (3% 250 votes)

None, I pay my balance in full each month (75% 5460 votes)

Less than $1,000 (5% 398 votes)

More than $1,000 (16% 1167 votes)

I am one of the 75%, so before I poked my nose in that figure stood at 5,459 people who pay off their balance every month. So is it just the readers of all the other newspapers who are up to their eyeballs in debt?

#99 rosie on 12.09.10 at 12:47 pm

A local credit union has a product called a market secure G.I.C. that puts the investment into the S&P TSX 60 for a period of 5 years. The principle is secure and there are no fees attached. I was considering putting TFSA money into this. I will not need the money for a long period of time. Any comments.

If it’s like every other ‘market-linked’ GIC out there, it’s junk. Rosie, babe, you can’t suck and blow. — Garth

#100 april on 12.09.10 at 12:55 pm

Junius #34
You say “rates may be pushed up to 4% or 5%”. Rates on what? This dummy wants to know.

#101 PTDBD on 12.09.10 at 1:07 pm

Don’t ignore when Bank of Canada warns

#102 Brad in Cowtown on 12.09.10 at 1:14 pm

“Nobody should buy individual stocks with a portfolio of less than a million. — Garth ”

That is simply a ridiculous statement.
An individual investor can diversify properly with much less than a million.
I wish contrarians understood that they can get their points across without exaggerating.

Fools (without millions) buy stocks. Smarts buy ETFs. — Garth

#103 O on 12.09.10 at 1:24 pm

“If you are risk averse and love those moribund GICs, why do you have oil stocks? ” — Garth

Company oil stock buying plan adds diversification. But I do believe energy is important to own.

“Nobody should buy individual stocks with a portfolio of less than a million. “— Garth

I agree.

#104 Kelowna is ground zero on 12.09.10 at 1:29 pm

Hey Devils Advocate, would you please comment on this extremely disturbing post about the numbers in the Okangan and Kelowna being cooked?

http://vancouvercondo.info/

Thanks

#105 AG Sage on 12.09.10 at 1:32 pm

The photoshop job on the picture makes it more true. Like most celebrities, her image is a projection of her fans’ dreams of her. These are their dreams, so this is her power.

#106 Aaron on 12.09.10 at 1:33 pm

turns out you have it all wrong… look

http://www.chrisdavies.ca/2010/12/remax-2011-housing-outlook/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+chrisdavies%2FSZeK+%28Chris%27+Real+Estate+and+Property+Management+Blog%29&utm_content=Google+Reader

Graphs and everything!!!!

#107 AG Sage on 12.09.10 at 1:37 pm

#100 PTDBD on 12.09.10 at 1:07 pm
>Don’t ignore when Bank of Canada warns

Probably also not a good idea to ignore the Chinese State Media warning about bubble prices.

#108 Rust Belt Buster on 12.09.10 at 1:45 pm

Go figure. Funny news like this hits a rinky-dink rag like the Hamilton Spectator before it hits the nationals. News that nobody wants to hear I guess.

http://www.thespec.com/news/canada/article/299113–bank-of-canada-sounds-alarm-on-global-risks

#109 Rust Belt Buster on 12.09.10 at 1:49 pm

Chris no longer in England wrote “None, I pay my balance in full each month (75% 5460 votes)”

————————————————

I’d be willing to betcha that 75% of that 75% are lying through their teeth just voting for what they think they should be doing, not what they actually are doing.

Myself, being as undisciplined as I am, I’ve had to force myself to be in the no credit card category.

#110 ralph on 12.09.10 at 1:53 pm

Apartment vacancy rates down in Canada

Apartments most expensive in Vancouver, hardest to find in Winnipeg

Read more: http://www.cbc.ca/consumer/story/2010/12/09/con-apartments-cmhc.html#ixzz17dZ7Dw1r

#111 GregW, Oakville on 12.09.10 at 1:59 pm

Hi Garth, fyi Just something to think about.
Remember that yellow fringed flag you’ve seen in Parliament?

search ‘admiralty law flag Canada yellow fringed’
Here’s one thing that came up;
“I heard rumors that Canada & the USA went bankrupt in 1933 and became corporations under the same name. The gov’t created a comercial law system that suspended everyones natural common law rights because the court room became ships the were under the Law of Admirality then re-defined land as body of water to implement this in all our land Acts. Everytime someone enters the court room and see’s a flag with a gold or yellow fringe this is a warning that your natural god given human rights are suspsended and the judge is the supreme authority on the ship because he represents the captain who has final say based on the ships owner ( the gov’t).
This could explain why Americans who argue via the constitution always and i mean always lose because they entered a new jurisdiction separate from the law of the land where the constitution protects them.
This way the gov’t always get’s their way.

If you look up the definition of gold fringed flags on the internet or in military & legal dictionaries you will find this to be your conclusion.
Therefore why does American and Canadian Institutions continue to fly gold fringed flags. This mean they are at war with something and the law of the land has been suspended and the law of admirality is in effect. The Governor General and even the CCRA fly these flags.
What the stink is going on?”

#112 Rich Renter on 12.09.10 at 2:07 pm

Garth, Does Dorothy know about your fetish for Sarah?

#113 Junius on 12.09.10 at 2:08 pm

#99 April,

Rates on the 5 year mortgages.

#114 kitchener1 on 12.09.10 at 2:13 pm

RE Palin, the reason she is so popular in the US is because the population can relate to her. No ivy league school etc… Kind of like your everyday person. The average american probely wont know west from east either nor would your average canadian.

Bonds— the bond market is sometimes like 100 times bigger then equity markets, its were the action is.

Simple explanation:

Variable rate mortgages are based on prime plus x, they go up when the BoC raisies their rates.

5 year rates are set in the bond market, when they sell off and yields rise, so do the rates on 5 year paper.

Even though they serve the same function in regards to mortgages there rates are somewhat independant of each other.

The 5 year rate is the more important one to watch as with new CMHC rules, its the 5 year rate that you have to qualify at and not the variable.

The other canary in the coal mine is the spread between variable and fixed. As when you shop around for a NEW mortgage you have somewhat flexibility and can bargain- negoiate. When you want to lock in to a 5 year rate, its much less wiggle room.

#115 Jan Etter on 12.09.10 at 2:22 pm

#98 Chris

As the demographics of Globe readers skews to the upper income and educated segments of the population (compare the ads in front sections of the Globe to the Toronto Star’s to get a sense of it, and also check out http://www.publicitas.com/en/global/press-news/media-news/publicitas-media-news/?newsid=27986), the % of those paying balances in full are likely to exceed the Canadian average.

The average in 2006 is alleged to be 55% by this source: http://www.fcac-acfc.gc.ca/eng/publications/surveystudy/attbehav2006/attbehav2006_08-eng.asp

“◦45 percent reported having a credit card that carried a balance month-to-month, over the past year (especially residents of Ontario, Atlantic Provinces, northern Canada and those 35-44 years of age);”

#116 kitchener1 on 12.09.10 at 2:25 pm

some interesting quotes from

http://www.theglobeandmail.com/report-on-business/bank-of-canada-warns-risks-to-financial-system-rise-on-family-debt-euro-woe/article1831232/

At about 146 per cent, the debt-to-income ratio among Canadians constitutes what the central bank identified as the main domestic risk

is a slow and grinding global rebound from the worst global downturn since the Great Depression.

“The pace of the economic recovery in Canada and other advanced countries is projected to be more subdued than was expected last June,’’ the central bank said

Canada’s export-heavy economy is largely at the mercy of the pace and quality of growth in the United States and overseas

Households bear ultimate responsibility for ensuring that they will be able to service that debt in the future,

they also implied policy makers at the central bank and in the federal government are in close contact on the file and stand ready to act, if necessary, as the Finance Department did earlier this year in tightening rules for some mortgages.

All of the above is from the globe and mail article:

my take:
Largest systematic risk is Canadians desire to take on huge debt loads with cheap money.

Economic recovery-growth much weaker then originally forecast, continues to detoriate as even forecasts from 6 months ago seem to be too rosey

No US recovery means things will stagnate in Canada, dont expect a turnaround here unless the US starts to improve first.

Do not expect any sort of bailout or tax cuts when rates rise, households will be responsible for all debt they take on (including mortgages)

If Canadians continue to spend their brains out, expect further intervention in the market (financing).

Folks, these are some sobering words from the BoC.

The BoC along with F usually always view things with “rose coloured glasses” and if the recent statements from both are “optimistic” then we are in for a rough ride.

#117 GregW, Oakville on 12.09.10 at 2:27 pm

Hi Garth, fyi Have you ever read the book 1984?
Is the PM’s Canada he spock of far behind?
What kind of world do you want your family to try and live in?

Here is a link to 6-1/2min video with an interesting take on 1984 and our world today.
Wal-Mart Invasion Part of Larger DHS Takeover of America http://www.youtube.com/user/TheAlexJonesChannel

#118 S.B. on 12.09.10 at 2:29 pm

In the USA:

CHICAGO (MarketWatch) — Mortgage rates climbed this week with the average rate on the 30-year fixed-rate mortgage at its highest since the end of June, according to Freddie Mac’s weekly survey of conforming mortgages, released on Thursday.

Rates on the 30-year mortgage averaged 4.61% for the week ending Dec. 9, up from 4.46% last week. It’s the fourth week in a row that the mortgage rate rose; it averaged 4.81% a year ago.

http://www.marketwatch.com/story/mortgage-rates-jump-to-six-month-highs-2010-12-09

#119 Freaked in Vancouver on 12.09.10 at 2:35 pm

I always understood that inflation was bad for both stocks and bonds, and holding hard assets ( ie. real estate?) was the best strategy for inflationary times. Is that not so?

Also, I just skip over the really long blog postings. Can’t be bothered to wade through them. I’m betting a lot of other readers do, too. Maybe edit and keep it short?

#120 Paolo on 12.09.10 at 2:45 pm

Wow, after going to moneyville.ca today I’m really confused.

First everything is fine in the ‘land of milk and honey’ or at least Toronto where I live:

“GTA housing market to stay hot in 2011”

http://www.moneyville.ca/article/903412–gta-housing-market-to-stay-hot-in-2011

Hot! Hot! Hot!

But then some more somber news…

“Personal debt dangerously high, Bank warns”

http://www.moneyville.ca/article/904249–personal-debt-dangerously-high-bank-warns

And then this, which goes against ‘The Canadian Dream’

“GTA rental market getting tighter”

http://www.moneyville.ca/article/904248–gta-rental-market-getting-tighter?bn=1

My favourite part: “Apartment vacancy rates in the Greater Toronto Area are tightening as economic uncertainty means potential first-time buyers are staying with rental accommodation, according to a new report.”

Bring on the Bonds and Palin.

#121 echo on 12.09.10 at 2:53 pm

If you are risk averse and love those moribund GICs, why do you have oil stocks? Nobody should buy individual stocks with a portfolio of less than a million. — Garth

that’s funny..

#122 S.B. on 12.09.10 at 2:55 pm

#28 Timing is Everything

Don Cherry held a book signing at downtown Indigo book store a few days ago. A small but polite crowd drifted. Plenty of pictures and thumbs up.

#123 Bill ( Peterborough) on 12.09.10 at 2:56 pm

Ron Paul has 2 sides to him:

Here he is doing the 2 step shuffle

http://www.youtube.com/watch?v=NV_AML16tC8&feature=to him.

And a free mason to boot;

http://www.youtube.com/watch?v=JUVwsu55IHc&feature=related

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

Same game people, nothing changes, just the faces.

#124 dd on 12.09.10 at 3:00 pm

Interesting

Bonds down (interest rates up) but gold and silver up today. But it is not suppose to work this way according to Garth.

#125 BrianT on 12.09.10 at 3:01 pm

#96Got-not just that-if Stevie had been in power we would be firmly entrenched in Iraq right now also and the Canadian dead would be piling up weekly-not to mention how much further along the whole anti-human rights agenda would be.

#126 William on 12.09.10 at 3:07 pm

Garth, after seeing the media’s 101 articles based on the remax report and then seeing the NP quote the Central 1 Credit Union’s housing forecast (http://www.central1.com/publications/economics/pdf/ea/ea%202010_ont03.pdf) it got me thinking that everyone should be putting out press releases about their 2011 housing forecast. When is Garth Inc going to release their PDF of the 2011 housing market? William Inc is working on mine now. I just need more time to make up some numbers and then say general statements like “based on rise demand, low mortgage rates, and a growing economy housing prices will increase by 7.35% in 2011”.

William

#127 BrianT on 12.09.10 at 3:23 pm

Denninger sums up the public’s disgust with the Obama scam http://market-ticker.org/akcs-www?post=174471

#128 TheBestPlaceOnEarth on 12.09.10 at 3:26 pm

Gold 1500 bucks by Easter.

#129 garthfan on 12.09.10 at 3:39 pm

Anecdotal evidence in the Curious Case of Sarah Palin…

I was in Wasilla, AK in June 2008 listening to what regular folks had to say about politics. What I got was such an ear full on Ted Stevens’ corruption that it damned near clogged my neural tubes. Additionally, grumblings from almost every direction in agreement over their then current governess. It was the first time I’d heard of her…

Before I left the Supreme Bomb dropped.

I, too, felt the outrage of Alaskan’s as I remembered what the spill had been like and realized Exxon was going to be the largest single recipient of their own payout. When I returned home to hear she was the McV.P. choice , the surreality began and hasn’t stopped.

Since then, I heard her handling of “Spill, baby, Spill” and wondered wtf could she be thinking?

I call her Random White Female.

I wouldn’t leave her alone with puppies!

#130 GregW, Oakville on 12.09.10 at 3:39 pm

Hi Garth, fyi I feel safer already in the PM’s Canada, not!

Former integrity watchdog failed to do job, AG finds
http://www.ctv.ca/CTVNews/TopStories/20101209/ag-integrity-commissioner-101209/

#131 realpaul on 12.09.10 at 3:46 pm

The Chinese will raise rates again…..for the third time …soon, according to their myriad PR spokesman. They want to slow down the GDP that they do not count…we estimate it is rising at approx 10 to 13% p/a. The jet fuel in China is classic inflation……money flowing in torrents down main street. The GOC counts GDP differantly….it is a combination of energy use ( electricity consumption in fact) and loan applications. The fact is no one knows whats really happening in China…especially the Chinese government.

The current guestimate is that they will attempt to brake the economy by raising loan reserves….effectively squeezing the money supply…the GDP will still be north of 10% for 2011.

BTW..the GOC china has recently called for private citizens to own more gold and has opened a market mechanism for trading and retail. They have become the #1 buyers in less than a year…now surpassing India for top spot.

Meanwhile Central Banks and Soveriegn Wealth funds continue to buy tons….gold stands as a net gain…despite the volitility. So…how can it be that the stock market and gold prices are going up at the same time? Simple answer…wealth preservation against a depreciating currency. While all commodities are priced in USD they will continue to spiral upwards as the reserve currency loses value through quantitative easing and dilution….this is not ‘price inflation’…it is ‘equillibrium’.

Kryptonite for gold and commodities will be the turn in the dollar and rates rising towards positive returns. As it is the sheeple have had their heads turned away from the USD only temporarily by the kafuffle in EU and S Korea. In fact the US has a much larger fiscal monster looming than anything EU has…as soon as the headlines are less distracted by student demonstrations and soverign default we will get back to the USD. As it continues its slide in 2011 we will see that commodity prices, including gold will continue to reprice with a positive bias.

China raising rates again is just noise, this has been proven by the last three moves they’ve made. 10% ‘GDP’ in China is still huge by any standards…this is dangerous for the CDN dollar. Every time a Chinese peasent moves into an apartment they consume 42 pounds of copper. There are more peasents upgrading to the western consumer lifestyle than all the western consumers alive. Auto consumerism alone is dwarfing the west.

Premier Chou En Lai said “Its glorious to be rich” ….the Chinese would revolt if they were forced to go back to the farm just so the west can fix their fiscal problems. The genie is out of the bottle.

#132 Macrath on 12.09.10 at 4:11 pm

The situation explained by an Irishman.
Do you really want to know?
(*Caution Foul Language*)

http://www.youtube.com/watch?v=koY6kXhQDQo&feature=player_embedded

#133 Coho on 12.09.10 at 4:23 pm

#64 Steven Rowlandson,

Garth this worshipping of Sarah Palin is unjustified.
She might look good but she needs to reject zionism and isreal and all manner of political correctness and get an education upgrade before she becomes respectable. Untill she does all that she is unqualified to be a leader…

Point well made and well taken, however, “qualified leader” is a matter of perspective. From the peoples’ perspective the points you made about Palin is correct, but from the ruling elite’s perspective those very characteristics make her absolutely qualified!

With her appearing to be so indoctrinated and ignorant of world affairs they don’t even need blackmail material to threaten her with should she run afoul of her masters. Remember the overthrown Kevin Rudd? Conversley, remember Harper’s prime ministership being spared 3 years ago? You want power, you have to follow orders…

Palin has a useful role to play and she’s doing it well. And as you pointed out at the end of your post, there are few if any “qualified” (knowledgeable uncorrupted or compromised) leaders left in any powerful positions.

#134 David B on 12.09.10 at 4:26 pm

Just returned for our annual Christmas Bash and word scattered about was the shame people feel the way your government is treating our proud vets. On another front one ode vet mentioned he had visited his son in the 905 Area and his son mentioned housing is booming and his house has doubled in price and who knows they could hit $750K and I said: they just might fall to $350K or less … to whit he said yeah maybe never thought about that> When you are are always looking up you never know when you are about to bit in butt!

#135 AG Sage on 12.09.10 at 4:44 pm

#96 Got A Watch on 12.09.10 at 12:27 pm

Thank you, that was me. I have no response beyond that as I can’t yet wrap my brain around the notion.

#136 S.B. on 12.09.10 at 4:50 pm

This month’s Toronto Life print magazine contains an article about four couples who bought cheap properties in Florida (lowest was 65k for a condo).

#137 Pat on 12.09.10 at 5:08 pm

“Nobody should buy individual stocks with a portfolio of less than a million.” — Garth

I think the probability that this statement is correct is less than 0.1%. (a million is a random number here)

Actually it is quite true. The risk is overwhelming. But, go ahead and learn for yourself.– Garth

#138 carol on 12.09.10 at 5:09 pm

That pictures bodyshot is not Sarah. Her head is just superimposed on said model.I,ve not seen a picture of Sarah posed in a come hither ” I want to be every mans desire ” stance, say like the Kardasien sisters who will go down in history as the biggest a$$es in hollywood

#139 april on 12.09.10 at 5:17 pm

Thank you Junius.

Freaked in Van #118. I too skip over long posts.

#140 Dale in TO on 12.09.10 at 5:26 pm

Is this more cyber babble or am I missing something??

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/how-canada-avoided-housing-bubble-and-crash/article1831359/

#141 Extra on 12.09.10 at 5:29 pm

Garth, Sarah and her Winchester?

Yet again under closer analysis Palin doesn’t deliver. I think that’s a .177 Crosman Powermaster air rifle.

#142 David B on 12.09.10 at 5:30 pm

Breaking News:

Housing prices in the USA are down $1.7 Trillion in total over last years down! In Canada they booming up up and away eh?

#143 stepenharping on 12.09.10 at 5:38 pm

She can’t shoot and he can’t sing. http://www.youtube.com/watch?v=QRIV4eV_wU0
It’s like we are living in a circus, with all these clowns around.

#144 CTO on 12.09.10 at 5:39 pm

Garth

Now TD is sayin it, “HOME PRICES TO RISE NEXT YEAR”.

When will the insanity end. The bank of Canada is very concerned about debt, but they just keep buyin, buyin and buyin.

I know the time has come, my wife is going to demand a move-up house this spring…We have waited long enough (3yrs). We have enough money for 2/3 down…

Very, very few listing now.

I know it may very well be a loss leader but, as this bubble has outlasted my/our ability to wait, what are my chances of buying a house this summer without dealing with bidding wars?

What do you think Garth, people?

#145 GregW, Oakville on 12.09.10 at 5:57 pm

Hi Garth, fyi some may be interested artical/interview it’s a long one. I found it when look at some admiralty law flag yellow fringe extra link.
The interview speak about the population control issue including fluoride and BPH in plastic, climbate CO2…
http://www.gnosticliberationfront.com/dehumanisation_of_the_masses.htm

Here’s a few lines from the interview.

“Firstly let’s start with John P. Holdren, who was on December 20, 2008, appointed by US President Obama as Director of the White House Office of Science and Technology Policy, Assistant to the President for Science and Technology, and Co-Chair of the President’s Council of Advisors on Science and Technology. In the book “Ecoscience: Population, Resources and Environment,” last revised in 1977, which Holdren co-authored together with co-authors Paul and Anne Ehrlich, he advocates some rather extreme totalitarian measures to control the population. Some of the points in the book:
· Social pressures on both men and women to marry and have children must be removed. Page 786
· The population at large could be sterilized by infertility drugs intentionally put into the nation’s drinking water or in food. Pages 787 – 788
· Women could be forced to abort their pregnancies, whether they wanted to or not. Page 837
· People should be required by law to exercise reproductive responsibility. Page 838
· He seems to support what he refers to as a Planetary Regime to control the development, administration, conservation, and distribution of all natural resources, renewable or non-renewable. He hints at this Planetary Regime being given responsibility for determining the optimum population for the world and that the Regime should have power to enforce the agreed limits. Pages 942 – 943…”

#146 Mtl RE Observations on 12.09.10 at 6:07 pm

#65 Carruthers

Mtl RE Observations on 12.08.10 at 11:55 pm wrote:

“This woman (Palin) truly scares me.”

Dude. I’d be more scared about your next separatist premier scaring off foreign investment again and driving out the last vestiges of any sort of professional class from your once bountiful province…er..country..whatever.

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

I couldn’t agree with you more. That’s why I’m happy I no longer own property. I’ll bail if and when I need to. Oh, and I’m a dudette, not a dude.

#147 Mtl RE Observations on 12.09.10 at 6:12 pm

#70 LH

People, just assume every funny or interesting picture you see on the internet is a Photoshop.

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

Photoshop or no Photoshop. She still scares me.

#148 Brad in Cowtown on 12.09.10 at 6:42 pm

“Fools (without millions) buy stocks. Smarts buy ETFs. — Garth ”

No, people with a high tolerance for risk buy stocks.
Ordinary people can either live ordinary forever, or take some calculated risks.

No, gamblers buy stocks (who don’t have enough money for diversification). Like gold investors, only worse. — Garth

#149 BrianT on 12.09.10 at 6:44 pm

A lot of rioting in Europe-not much mention of it in our MSM http://www.businessinsider.com/check-out-photos-of-the-insane-student-riots-happening-in-london-2010-12#-1

#150 MikeT on 12.09.10 at 6:47 pm

GregW from Oakville is back to “artical”s.
We’re back to normal…

#151 echo on 12.09.10 at 6:52 pm

I agree with Brad in Cowtown, this statement is ridiculous: “Nobody should buy individual stocks with a portfolio of less than a million. — Garth ”

If you think financial advisers have more knowledge than the average Joe then you could easily research and narrow down the most common stocks held in top performing etf’s and/or mutual funds and purchase them yourself for as little as $6.99 a trade and never pay a dime in management fees.
Buy yourself a handful of great dividend paying companies that have a history of raising dividends and offer drips. I’m 45 and I basically live off my dividends and distributions from my stocks and Income trusts that I’ve accumulated over the years, and I started off with a lot less than a million dollars that’s for sure!

or you could gamble and buy Bank of Ireland and Allied Irish bank and keep your fingers crossed:)

What is your equity portfolio size, and how many stocks do you own? — Garth

#152 Devil's Advocate on 12.09.10 at 7:20 pm

Sherry Cooper’s Top Ten for 2011

http://www.bmonesbittburns.com/economics/bottomline/20101209/bottomline.pdf

#153 GregW, Oakville on 12.09.10 at 7:25 pm

Hi #148 Brad in Cowtown, re: stocks

I was ones told if buying individual stock to only use money you could afford to loose.
My personal experience is that it’s generally good advice. Now if I have a million dollars to play with…

Most people are saving for retirement or a rainy day so don’t have the option to chance losing it all.

Most of my money/wealth I’ve saved is in RRSP and I have an investment advisor to help me.
(And no it’s not Garth, yet)

#154 jess on 12.09.10 at 7:40 pm

world GDP for 2010 is around 62trillion

A staggering $9 trillion in home equity has been lost since the real estate market peaked in June 2006, Zillow reported today.

This year, U.S. homes are expected to lose more than $1.7 trillion in value, a 63 percent increase from the $1 trillion lost in 2009.

Zillow noted that the loss of equity is 12 times the cost of the war in Iraq, which has a price tag of $750.8 billion from 2001 through September 2010.

=
The foreign exchange market
According to the Bank for International Settlements
http://www.bis.org/publ/rpfx10.pdf
currency pair USD/CAD
daily averages April,in billions of us dollars and %’s
Table 4 page 16 of 27
amount %
1998 52 3
2001 54 4
2004 77 4
2007 126 4
2010 182 5

Global OTC interest rate derivatives market turnover by instrument
Average daily turnover in April, in billions of US dollars
Interest rate instruments
From
1998 2001 2004 2007 2010
265 , 489 , 1,025, 1,686 , 2,083

FRAs
74 129 233 258 601
Swaps
155 331 621 1,210 1,275
Options and other products
36 29 171 217 208
Memo:
Turnover at April 2010 exchange rates
310 640 1,085 1,680 2,083
Exchange-traded derivatives
1,381 2,188 4,524 6,099 8,142

1 Adjusted for local and cross-border inter-dealer double-counting (ie “net-net” basis). 2 Single currency interest rate contracts
only. 3 The category “other interest rate products” covers highly leveraged transactions and/or trades whose notional amount is
variable and where a decomposition into individual plain vanilla components was impractical or impossible. 4 Non-US dollar legs
of foreign currency transactions were converted into original currency amounts at average exchange rates for April of each survey
year and then reconverted into US dollar amounts at average April 2010 exchange rates. 5 Sources: FOW TRADEdata; Futures
Industry Association; various futures and options exchanges. Reported monthly data were converted into daily averages of 20.5
days in 1998, 19.5 days in 2001, 20.5 in 2004, 20 in 2007 and 20 in 2010.

http://www.bis.org/publ/rpfx10.pdf

#155 Brad in Cowtown on 12.09.10 at 7:59 pm

“No, gamblers buy stocks (who don’t have enough money for diversification). Like gold investors, only worse. — Garth”

Fair enough Mr. Turner – call them “gamblers” if you wish. Even that’s a stretch, but at least I’ve got you reducing your exaggeration level somewhat.
You called them “fools” earlier (based on an arbitrary million figure that is based on nothing, no evidence at all, just a number you picked out of the sky).

Ridiculous and unfair.

Statements like that help you lose credibility at a time when your credibility should be stronger than ever.

What you seem to ignore is that risk tolerance is different for everyone. Unique to everyone’s particular situation. One person’s diversification may not be adequate for his neighbour, regardless of how much they are working with. Your million dollar threshold assumes “all other things being equal” and they never are. You are a professional advisor for goodness sake – you’re supposed to treat everyone’s situation as unique.

Let me clarify for the cowboys: Anyone buying individual stocks with a portfolio of less than a million is a fool. — Garth

#156 dd on 12.09.10 at 8:13 pm

…Nobody should buy individual stocks with a portfolio of less than a million. — Garth

Wrong. Invest in what you know. If it is individual stocks then do it.

Bad advice. These days diversification is salvation. Time will show. — Garth

#157 goldenfox on 12.09.10 at 8:14 pm

A Second Mortgage Disaster On The Horizon?

http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml?tag=contentMain;contentBody

#158 Nostradamus Le Mad Vlad on 12.09.10 at 8:37 pm


#26 InvestorsFriend (Shawn Allen) — Interesting and good post.

#33 tiger_baby — Right on! As long as someone is controlling the money (economy) of a country or countries, they are free to do as they wish, and is why a lot of individuals / companies are presently going under.

Why did the Eurozone go to a single currency? Because it’s easier to control a group of govts. when they are all under one umbrella, so how long before the NAU / SPP is implemented here?

Controlling people is a different kettle of fish, however, as the masses will more often than not tell the head honchos to go take a flying f&*%k.

#61 Sean — “I hope she does not run for President as the thought of her even being considered for the job is scary.”

So is Clinton (Dems), McCain (Repubs.), Gore and Lieberman (Dems). They are all a bunch of mentally deficient T-Rexes, none of whom can match a dead flea for IQ levels.

#68 bullion.bunny — “. . . do you think that will ever be paid back?”

In a word, nein – non – nyet – no. There is a greater chance of Concorde flying again (the aircraft, not Sir Lancelot’s horse!).

#80 Dodged-A-Bullit-in Alberta — “The right to print money-the ultimate power, especially without a gold backed currency.”

Good post. It is well known that someone is controlling the currencies (economies) of the world (see #33 tiger_baby’s post), but who controls gold / silver/ platinum markets?

From #131 realpaul’s post, “. . . china has recently called for private citizens to own more gold and has opened a market mechanism for trading and retail.” How much is China buying, and are they tungsten-filled bars?

So, is it the same people, the money-changers in Euroland, the elite who hold the shiny yellow stuff? All will be revealed sooner than we think, and whether we like it or not!

#83 Bill (Peterborough) — Good post, but plenty of things are happening in today’s world. Change is one of the many constants there are here, and we ain’t seen nuthin’ yet!

#111 GregW, Oakville — Good post. That ‘rumor’ from 1933 may well be accurate, esp. since the NAU / SPP are still kicking around.

#159 timbo on 12.09.10 at 8:47 pm

Garth if you don’t want to post this no worries but I thought you might want to share this with the crowd. People are mad, and with the UofC punishing 2 students for standing up for free speech yet not lifting a finger against the prof. who issues death threats it has changed my mood.

this is all over the place ,so if you want to share it pass it on. Watch the U of C prof with the Canadian flag in the video….lol

Free Julian

Wikileaks: stop the crackdown

UofC prof

and finally the video that will make you laugh, watch for the bazooka! and remember that 2 students are being punished.

video

#160 jess on 12.09.10 at 8:54 pm

Stock market profit dialysis centers too big to care

Two corporate chains that dominate the dialysis-care system together making about $2 billion in operating profits a year.

We’re offering our patients a therapy we wouldn’t accept for ourselves,” said Dr. Tom F. Parker III, a Dallas nephrologist and national advocate for better care. More and more leaders in the field, he said, “are starting to say this isn’t sufficient.”

New Study Shows Higher Mortality Risk at in For-Profit Dialysis Chains
by Robin Fields
ProPublica, Dec. 9, 2010, 2:03 p.m.
http://onlinelibrary.wiley.com/doi/10.1111/j.1475-6773.2010.01219.x/abstract
Patients treated at dialysis clinics run by the largest U.S. for-profit chains have a higher risk of death than patients treated by the biggest nonprofit chain, a study released today [1] in the journal Health Services Research concludes.
Read the Leaked P.R. Plan to Spin Our Dialysis Investigation
ProPublica, Nov. 9, 2010, 11:02 a.m.
http://www.propublica.org/article/dialysis-pr-leak-the-plan-to-spin-our-investigation

#161 Edmontonian Guy Here on 12.09.10 at 9:00 pm

To #82 DiGiaciamo
Thanks for the STATS. One thing you have to remember is the CMHC stats are for RENTAL buildings in those area and DO NOT include Privately owned condo that are being rented out! If you look at Kijiji for the Privately owned houses and condo for rent it’s close to 50% of the advertised listings. In addition there are dozens of larger condo & towers here in Edmonton built in the last couple of years that are eaither 1/2 empty or only half sold. SO I would say it fair to assume the REAL vacancy rates would be at least 30%+ higher than what we get from the CMHC.

I’v lived in Edmonton all my life, now in my 40s I can say that rental rates are down at least 30% since the peak of the credit bubble in 2007.
Now, many better building Like some of the Midwest properties & main street average about 40% more than 10 years ago now. That’s why I can’t see the 200% increase in housing from the las 6 yrs being sustainable!

#162 GregW, Oakville on 12.09.10 at 9:05 pm

Hi #150 MikeT. What can I say, it’s a good thing some can spell well ;)

#163 Behavioral Finance on 12.09.10 at 9:14 pm

What is your equity portfolio size, and how many stocks do you own? — Garth

How does that make any difference? You really need to find one stock every couple years that will carry your portfolio. Of course that takes reasearch and plowing through financials, but it can be done.

I think 1 million dollar mark is just silly, you can start with much less and make the portfolio grow as long as you can stomach volatility.

It’s not about stomachs. It’s about being smart. — Garth

#164 Timing is Everything on 12.09.10 at 9:18 pm

#143 stepenharping

Sno-cone please.

#165 Behavioral Finance on 12.09.10 at 9:20 pm

Let me clarify for the cowboys: Anyone buying individual stocks with a portfolio of less than a million is a fool. — Garth

Sorry to say Garth, but that is pure ignorance. That is like saying anybody buying a house and taking a mortgage is a fool.

So buying EFTs when you have under a million makes you less of a fool than buying individual stocks?

I think you are sense of false of security with EFTs.

Risk = lack of diversity. Tattoo it somewhere. — Garth

#166 echo on 12.09.10 at 9:22 pm

What is your equity portfolio size, and how many stocks do you own? — Garth

Over the last 7 years I’ve invested probably about $350,000 (bits at a time, with a chunk about 18 months ago), I yield an average of about 7% holding stocks like Baytex, Westshore terminals , Vermillion Energy, Keyera, Crescent Point, Fortis, Trandscanada, TD, Enbridge, Interpipeline, BCE, Saputa, Atlantic Power etc..
In total I have about 25 well diversified stocks in my portfolio. My portfolio is now worth close to $600,000 and as well I receive roughly $2500 a month in dividends and distributions, a decent little extra income.

I think (my opinion) that even $30,000-$50,000 invested in 5 wisely chosen dividend paying companies and held long term can really pay off for the younger folks on your blog, especially if they drip.

ETFs will give at least an equal yield with far less risk. Stop being a fossil. — Garth

#167 crazed and a little confused on 12.09.10 at 9:25 pm

Brad in Cowtown 148 #

Fools (without millions) buy stocks. Smarts buy ETFs. — Garth ”…
No, gamblers buy stocks (who don’t have enough money for diversification). Like gold investors, only worse. — Garth

Again I believe Garth is being very general with his statement like before when he mentioned 20% reduction in Van and Toronto house prices

But in reality some will be more other less. Judging by some of the statements made here about investing. People buy on Hype or speculation w/o reading some basic finance like P/e , E/P , moving averages.

some just buy gold and only gold …on top of that there is good gold companies and others not so good…but the investors don’t read about it…they just buy it

through alot of reading and a few mistakes I learned there is no such thing as easy money…there is luck…But luck is not certainty. skill and knowledge will have u living well

Yeah I diversity I buy individual stocks but not before reading alot; however you should start small I ‘m not familar with ETF but once i resaerch it morethoroughly ii will some probbably for my RRSP contribution

I have done ok with stocks and I don’t have a million but everyone hjas to start somewhere…becauswe the economy is not getting better and the govt is just throwing away money…
( i think we need to build a condo and a fake lake beside it…it eill be good for the economy) :(

#168 Nostradamus Le Mad Vlad on 12.09.10 at 9:36 pm


Anti-Fed “This so-called “quantitative easing” will not stimulate the economy; it will only destroy the value of the dollar, and create massive inflation.” wrh.com.

3:49 clip The Killing Fields, a bonanza for Halliburton and their ilk.

Iceberg Y’all reddy for another JPM / BoA ‘uh-oh’ moment?

JPM “Rumor has it that J.P. Morgan has amassed a whopping short position in silver.…I.e., a lower silver price helps maintain the relative appeal of the US dollar…”

Paris with GW and a reality check.

Sustainable Food via Botox Bowels. Huh?

Gold as Money? Maybe, maybe not. Also — China buying more gold.

#169 GregW, Oakville on 12.09.10 at 9:41 pm

Hi #155 Nostradamus, re: #61 Sean — “I hope she does not run for President as the thought of her even being considered for the job is scary.”

Unfortunately it take lots of money to run for President or PM, so who is allowed to run is limited by who has the money. If she runs there is money coming form somewhere.

The USA has electronic voting machines now! So your guess is as good as mine.
These voting machines are corruptible, just look south!

Canada doesn’t have them yet, but Harper would like them!!!
If they came to Canada we are all screwed!

Only by staying with paper bloats counted by the hand of your neighbors can all our votes be protected and counted for sure! If someone tries to tells you that letting a machine count the votes is ok and safe they are not well informed and thinking, or lying.

#170 Behavioral Finance on 12.09.10 at 9:44 pm

Risk = lack of diversity. Tattoo it somewhere. — Garth

Now that is amusing. Maybe if you don’t understand the risk. Diversity in itself can be risky.

#171 april on 12.09.10 at 9:45 pm

If, as one blogger writes, the banks are saying house prices to rise in 2011[or at least one bank] and the Government is showing concern re Canadians being in too much dept what’s going on. These bank anouncements together with that Remax lot will surely only encourage the buying to continue. But who was it that said the same games were/are been played out in the US, Ireland etc to try to keep things rolling along and we all know how that ended.
My sources tell me that China, Australia, and Canada are the last bubbles to burst. Anyone else got a comment on this.

#172 Behavioral Finance on 12.09.10 at 9:46 pm

ETFs will give at least an equal yield with far less risk. Stop being a fossil. — Garth

Well there is plenty of them that did very little over the last couple years. They are definitely designed for rookies.

#173 Behavioral Finance on 12.09.10 at 9:48 pm

It’s not about stomachs. It’s about being smart. — Garth

Well throwing your cash in EFTs is not really being smart, its called being lazy.

#174 Behavioral Finance on 12.09.10 at 9:52 pm

Ok, so you can’t buy individual stocks if you have under 1 million fiat currency, but you can trade them right?

#175 InvestorsFriend (Shawn Allen) on 12.09.10 at 10:04 pm

Advice regarding Bottoms.

Choose your market carefully.

Then when you have chosen the right (market) that looks like it has a good bottom that is ripe to offer rewards, be careful then to choose your entry point with care.

And don’t forget to use “potection” (diverification or stop loss for example)

… And, perhaps most important, have an exit strategy…

#176 eaglebay on 12.09.10 at 10:11 pm

Bill (Peterborough)

You’re a sick puppy.

#177 echo on 12.09.10 at 10:12 pm

“ETFs will give at least an equal yield with far less risk. Stop being a fossil. — Garth”

whatever Garth, your statement about not buying individual stocks unless you have a million dollars is still ridiculous

With less than that you lack the ability to achieve adequate diversification if your growth component is through individual equities alone. But you’ll find that out. — Garth

#178 Timing is Everything on 12.09.10 at 10:15 pm

No, gamblers buy stocks (who don’t have enough money for diversification). Like gold investors, only worse. — Garth

Agreed. Or they might have some rich Uncle Zeke or other relative as a backstop, so if they lose, back to Uncle for more ‘play’ money. They can afford to gamble.

#179 eaglebay on 12.09.10 at 10:16 pm

GregW, Oakville

Canada is the least polluting country in the world.
Second largest country in the world with only 33 million people.
Now, stop your conspiracies.

#180 Taxpayer like everyone else on 12.09.10 at 10:17 pm

[email protected]

“Because it’s not their money they loan out it is their
depositors money.”

Psst….Shawn….look at the numbers in your example…….

Otherwise a fine job.

#181 echo on 12.09.10 at 10:19 pm

“Well there is plenty of them that did very little over the last couple years. They are definitely designed for rookies.”

Agreed!

“Well throwing your cash in EFTs is not really being smart, its called being lazy.”

Agreed!

#182 echo on 12.09.10 at 10:40 pm

“With less than that you lack the ability to achieve adequate diversification if your growth component is through individual equities alone. But you’ll find that out. — Garth”

All I’ve found out is if I was to sell my portfolio tomorrow I’d be up over $300,000 and have pocketed over $2000 a month in dividends for the past few years, and that’s with an initial investment of way under a million.

#183 GregW, Oakville on 12.09.10 at 10:50 pm

Hi Garth, fyi found a new Article Why are we still being told that it is good for you???
I’ve seem the science and have been convince forced water fluoridation need to stop for all the right reasons! Now that I am informed about fluorides toxic effect on my body, I DO NOT drink and cook with my towns water! FYI: brital (carbon) filters do not remove fluoride and boiling it make it more concentrate. Fluoride is an easy thing to reduce exposure to if they stopped forcing human beings to drink it! Yes there are also other chemicals we are being exposed to that are linked to poor health, so vigilance will still be required by the people.

Don’t take my word regarding fluoride, read the science yourself! It’s not rocket science.
Remaining uninformed is not in you and your families best interest.
Lots of good science based info and link to the papers can be found at
http://www.fluoridealert.org/

‘Your Toxic Tap Water’ (the articel- (sp) for MikeT ;) )
You’ll never look at tap water the same way again
http://www.infowars.com/your-toxic-tap-water/
“Connett describes how he initially thought people who opposed fluoridation were “a bunch of whackos,” before conducting his own research which found that sodium fluoride was a toxic substance that contributed to a wide array of health defects. Heavy industry is barred from dumping this toxic waste into the sea by international law, but being able to sell it enables them…”
“Connett provides a detail run down of the many health problems caused by fluoride consumption, including dental fluorosis, which the Centers For Disease Control just recently announced was a problem for 41 per cent of children aged 12-15 in the United States, clearly indicating that children are being over-exposed to fluoride and that this is affecting other tissues and organs in the body, including bone disorders, a problem also wreaking havoc amongst adults in the United States as one in three now suffer from arthritis, which again is being caused by a build-up of toxic fluoride in the body. Connett also points to fluoride’s connection with thyroid disorders.
There have now been over 100 studies involving animals which show that fluoride damages the brain, stresses Connett, which is a particular concern for newborn babies who are susceptible to fluoride build up because of their weak blood-brain barrier. Connett cites numerous studies which prove a link between moderate exposure to fluoride and lowered IQ in children.
Fluoride’s impact on the pineal gland, which is a piece of brain tissue that sits in-between the two hemispheres of the brain, is key because fluoride attracts to this gland like a magnet. Researchers have found through animal studies that fluoride lowers the ability of the pineal gland to produce the hormone melatonin, which in turn shortens the time it takes to reach puberty,…”

#184 dark sad person on 12.09.10 at 10:57 pm

#129 realpaul on 12.09.10 at 3:46 pm

While all commodities are priced in USD they will continue to spiral upwards as the reserve currency loses value through quantitative easing and dilution….this is not ‘price inflation’…it is ‘equillibrium’.

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

If that were to happen-it would only effect US Citizens because if the $ croaks-it would have to mean that most all other Currencies rise against it and therefore prices would not effect other Currency holders-in fact Commodities if they’re rising “because” of a crashing USD would likely become cheaper in those other Currencies-wouldn’t you think-
Need to keep in mind–Currencies float-

I don’t believe for a minute that is the reason why Commodities are rising-at least at this point-

eg:
The $ was at 74 cents in mid 2008-
Oil was at $145

6 months later Oil was at $40-
The $ was at 87 cents-

Oil fell 73%
The $ gained 15%

The $ is at 80 cents today-
Oil is at 80 dollars-

Oil has gained 100%
The $ has fallen 9%

http://finviz.com/futures_charts.ashx?t=DX&p=w1

http://finviz.com/futures_charts.ashx?t=CL&p=w1

You can see the same thing in most Commodities-
Prices fluctuate because of many reasons-
Weather-Supply/Demand-Speculation-Inflation/Deflation–Geopolitical events-

http://www.barchart.com/chart.php?sym=ZWH11&style=technical&p=MN&d=X&x=57&y=3&sd=&ed=&size=M&log=0&t=BAR&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

http://www.barchart.com/chart.php?sym=HGF11&style=technical&p=MN&d=X&x=46&y=14&sd=&ed=&size=M&log=0&t=BAR&v=1&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

I don’t see much correlation to USD strength or weakness at all-
There is obviously some-but-
There’s something else doing the bidding up in Commodities-imo

I think Speculators/Quants with free Stimulus Money to gamble with and China in an overheated Inflationary Blowoff mania-is likely the main reason-

Gold is a Currency and it competes with all Currencies and it just happens to be at this point-kicking ass in all of them-

The CHF is a strong Currency-it’s kicking ass too-
(they have lots of Gold though)

http://www.barchart.com/chart.php?sym=^USDCHF&style=technical&p=MO&d=X&x=54&y=11&sd=&ed=&size=M&log=0&t=BAR&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

The Eur/USD is trading at 1990 levels–

http://www.barchart.com/chart.php?sym=^EURUSD&style=technical&p=MO&d=X&x=34&y=8&sd=&ed=&size=M&log=0&t=BAR&v=0&g=1&evnt=1&late=1&o1=&o2=&o3=&sh=100&indicators=&addindicator=&submitted=1&fpage=&txtDate=#jump

So i don’t know why there’s so much talk about a crashing USD-when it simply is not crashing”when measured with other Fiat against Commodities”
They seem to all be weakening together-in a wide whippy trading range-
With the exception of PM’s and so far-only the CHF has been a constant winner over a long time frame-
Fiat and Commodities are all steadily weakening against the Gold-but the USD/POG/POO/POW can and does go up and down for many reasons–
I think USD strength is the least reason-

#185 dark sad person on 12.10.10 at 12:29 am

My sources tell me that China, Australia, and Canada are the last bubbles to burst. Anyone else got a comment on this

***********
Sure-i always have an opinion-but it’s only an opinion-

Canada and Australia are already in crash mode-
They/we have a popping RE market-at the same time-
China is having a RE/Manufacturing bubble but exports are dwindling and surplus/inventory is building up-

Canada is more vulnerable then OZ at this point-because they export more into China then we do and our exports to the US and in fact imports period into the US from anywhere-barring China-look ugly-

The largest Economy on the Planet–

http://research.stlouisfed.org/fred2/series/IMPCA

http://research.stlouisfed.org/fred2/series/BOPMGS

When China does pop the credit bubble-i think it’s gonna hammer Commodities hard and will hit both Canada and OZ just when Commodities are the only thing left holding them/us up-
I wonder what that might do to the CAD strength?
But-as long as China can keep Inflating it will lend some support to both Countries-after that-look out-

#186 ExEpat on 12.10.10 at 2:38 am

No reason for a photoshop phony photo of the Guv with a gun when real photos are available, as below. Besides, that photo makes it look like she went nuts in the Twinkie aisle.

http://thetruthaboutguns.com/2010/04/robert-farago/editorial-the-speech-sarah-palin-should-give-to-the-nra/

#187 Ghost of Tom Joad on 12.10.10 at 2:39 am

#96 Got a Watch
“when I read today’s news about a “border security deal” with the US, I wonder how much of our sovereignty Stevie ‘The Scumbag’ will give away this week without any consideration of whether it is good for Canada. Stephen Harper, pro-US vermin, criminally incompetent moron, and traitor to Canada, in action, yet again. Vermin.”

Your posts always rock! My thoughts exactly! PM Harper is a huge New World Order traitor to Canada — always yapping about how important globalism is — never looking out for Canada. These globalists have pretty much destroyed our nation — and yet nobody knows what the hell is going on because they’re too busy watching TV.

Folks, wake up with the great Alex Jones!
http://www.infowars.com

#188 John Davies on 12.10.10 at 10:41 am

Garth
From the bottom on my heart, I would like to thank you for the Great Public Service that this site provides.
Having seen the RE crash in the early 90’s, I thought that it was ordinary common sense that what has happened before may happen agian. Ten years ago at the age of 50, I had no money but since then having taken advantage of the Vancouver market by doing renovations and flipping , I will be able to retire well. The major hurdle that I faced was my wife, her postion was real estate never falls in Vancouver. It took me forever to convince her to sell with two attempts to get out which almost collapsed our marriage. Now we are renting and my poor landlord is going though serious real esate pain because he is leveraged so much, it will not end well. Most of my friends tolerate me warning them about real estate and really wonder why I drive a 10 year old car and have no toys. I had not found sites like yours while I was doing my RE risk assesment so my tools we very basic and I did not get out of RE fully until March 2010. Finally my wife approves, she came to see you talk. Your have credibilty with her but I do not, funny how life is.
What amazes me most is when I try to warm my friends about RE, they do not even go though the process of what if I was right. Unfortunately, there is going to be a lot of pain to go around.
Please keep up your good work because I beleive some people are listening.

#189 Pat on 12.10.10 at 12:15 pm

Re: million $ portfolio

Pat: “I think the probability that this statement is correct is less than 0.1%. (a million is a random number here)”

Garth: “Actually it is quite true. The risk is overwhelming. But, go ahead and learn for yourself.”

I even gave you a hint, you still missed the joke…