Balance

A day before Japan’s Big one hit, I wrote about bonds. Actually, my post was about balance. In a world where anything can happen, it said, there’s no single action investors can take more worthwhile than ensuring your wealth is safely balanced between assets.

Hours later that was again proven to be the case. The next few days could now bring a slew of volatility. And why not? Ten thousand people may be dead and the world’s third-biggest economy whacked. Nukes are on the verge of meltdown, with utterly unknown consequences. And Japan’s pretty much condemned to slide back into deflation, maybe depression, as Tokyo must borrow new billions to rescue its people.

The country owes $10 trillion already and borrows 50% of annual government spending. The national debt is double the size of the economy. Interest rates are zero and the Bank of Japan over the weekend had to give big bags of money to local banks so quake and tsunami survivors could get cash withdrawals. Consumer confidence in Japan was already at a 10-month low, and the economy contracted again in the last quarter. Now the government needs to inject giant amounts of liquidity into the financial system, while it closely monitors the stock market (which dropped 500 points or 5% at the opening last night) and tries to control the yen. Sunday night came news that $146 billion is on the table.

What does this mean in Regina?

Likely more short-term oil price declines. Which usually brings a lower TSX. Slower global growth. Maybe a Japanese debt crisis to match the one still festering in Europe. Mix in Libya’s civil war, a sputtering global recovery, worsening US housing mess and structural unemployment, and you’ve got the recipe for unpredictability.

It’s in this context – which I’d say will be with us for quite some time – that most investors are committing financial suicide. For example, way too many Canadians have the bulk of their net worth in a single asset – their houses. Most people with a TFSA (over 80%) have filled it with a dead-end savings account. Millions of families have billions of dollars in GICs which pay less than inflation. Too many have trusted equity mutual funds with killer fees, lousy managers and too much market risk.

And way too few of us have balance. Time to change that. At least if you want to grow your money and still sleep occasionally.

This was the logic behind my words on marketable bonds. Since so many readers asked for more – specifically on how to buy bonds – I will provide exactly that from time to time over the days to come. I’ll also ignore those irritating ankle-biters who claim bonds are bad since interest rates will be rising. They apparently have no idea this hardly matters when the world is seeking safety, and bond prices leap as yields fall.

As I tried to explain, every portfolio should have some bond exposure in it, since fixed income is (almost always) negatively correlated with stocks. That means when things hit the fan and equities are punished, bonds and other fixed-income assets get swamped with new money as investors run for safe havens. Conversely, when people sense stock markets are undervalued, money sloshes the other way, taking bond prices down and forcing yields up. By owning both major asset classes, you hedge.

Interestingly enough, when the world ended in the winter of 2008-9, the Dow lost about 55% of its value, while a balanced portfolio (40% fixed, 60% growth) declined just 20%. Within a year the balanced investor had broken even, and last year was ahead 15%. And every month, of course, a balanced portfolio with fixed income in it also gives you money.

Bonds pay interest. Preferred shares pay dividends. In fact, I’ll also give another primer here on preferreds. After all, why on earth would you put money into the GIC of a major bank and get 2% for locking it up when you can buy preferred shares in the same bank and get 5.5%, with total liquidity? Besides, because that yield’s in the form of a dividend (thanks to the dividend tax credit) it would be equal to a GIC paying about 6.5%.

See what I mean? Triple your return by investing in the same institution. Get a stable, predictable, day-in, day-out return on your investment instead of putting money in a GIC and having to pay tax on annual proceeds you don’t actually receive. And it all beats the pants off throwing money into the real estate casino where residential housing pays you nothing, costs you plenty, and has a major risk of capital loss.

Most people, of course, will ignore me. They’ll buy houses and invest in GICs. On one hand they will use extreme leverage to acquire an asset trading far above its moving average, courting risk. On the other, they’ll squirrel money away in non-performing assets, increasing the chances of running out. More risk.

There is another path. Through the twisted hopes, bent dreams and shattered expectations of those who surround us.

A trip to safety, in a world of hurt.

178 comments ↓

#1 Timing is Everything on 03.13.11 at 10:22 pm

#264 bridgepigeon

229 S.B.
deep breaths…

Utopia…Deeper breathes. You have compelled me to partake in a sno-cone.

#2 Big Al (New) on 03.13.11 at 10:25 pm

First.

#3 Ayn Rand on 03.13.11 at 10:29 pm

Many thanks for enlightening us on the facts of the Japanese economy – what a great excerpt of the issues we are not reading about in such a direct format.

That is why I keep coming back to this weblog – so educational. If you teach them, they will come.

ty GT

#4 T.O. Bubble Boy on 03.13.11 at 10:32 pm

Japan holds nearly $1T in U.S. debt… if they need cash to pay for the earthquake/tsunami/nuclear aftermath, could they dump these bonds?

People were making a big deal out of PIMCO dumping all U.S. treasury holdings, yet this could be 100x larger!

#5 Tom from Mississauga on 03.13.11 at 10:36 pm

There are fantastic selection of Corporate and Government Bond ETF’s available from BMO that have excellent monthly yield. The commission on individual bonds can be a little expensive. Found out the hard way.

#6 cool on 03.13.11 at 10:37 pm

what may be actually happening at Japanese nuclear reactors hit by the quake,

http://www.theoildrum.com/node/7638

#7 Tough Week on 03.13.11 at 10:37 pm

Gonna be a tough week for the TSX starting Monday…

#8 Elmer on 03.13.11 at 10:39 pm

Do I need to purchase actual bonds or is an ETF bond fund like XSB sufficient for the fixed income part of my portfolio?

#9 they will inflate their way out on 03.13.11 at 10:41 pm

Garth, don’t you think that no central banker will let deflation happen. I have a feeling they will inflate their way out of this hence higher commodities, assets and houses….. we have been waiting for a correction in house prices but it has not happened. GTA house prices yet set another record again in February. Bernanke is set not to let depression happen and it seems that a lot of foreign invesments find their way to Canada as a safe haven (commodity) therefore house prices will never fall. simply too much money around.

Care for more Kool-Aid? — Garth

#10 Tom from Mississauga on 03.13.11 at 10:42 pm

PS Garth
Thanks for your post a couple weeks ago about the 4th grade pile on occurring on in the TSX. After that I went from 90/10 stocks/bonds to 65/35 and avoided the correction last week, which looks like it is continuing this week, eh?

#11 Lawn Asians For Hire on 03.13.11 at 10:44 pm

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#12 Hope on 03.13.11 at 10:47 pm

No more oil scarcity … http://videos.tf1.fr/jt-20h/transformer-du-co2-en-petrole-c-est-pour-bientot-6250489.html

#13 Timing is Everything on 03.13.11 at 10:48 pm

Garth, Hypothetical here…Say a guy has a suitcase (virtual) full of 100’s…Say He’s lookin’ for a fee-based ‘adviser’? How would/should the fee be structured, typically? A general, in the ballpark answer is fine…just askin’ what the range would be etc.
————————————————
#2 Big Al (New)
Sorry about being first, I know it meant a lot to you.

Flat rate, no admin or set-up charges, trades at cost or better, a refusal to take commissions of any kind from the purchase of assets, full asset allocation plan, active management with constant review. 1% is fair. — Garth

#14 unbalanced on 03.13.11 at 10:52 pm

Tell us how one should go about purchasing preferred shares. Thanks in advance !

#15 wb on 03.13.11 at 10:58 pm

Garth, is there any way to ban the less intelligent among us who insist on wasting our time by posting “First”?

#16 Mark on 03.13.11 at 11:00 pm

Oil prices go down? Come on Garth, all the nuclear plants offline in Japan, plus the need to rebuild, will send oil demand through the roof. As well as demand for Canadian timber, coal, etc. BoJ actions to debase the currency should drive the TSX up as more people look towards gold. US T-bonds are at a high risk of being sold off.

I hope nobody lets you near their money. — Garth

#17 Utopia on 03.13.11 at 11:01 pm

I would add something useful but this wretched blog hates me today. Tomorrow is another story.

#18 Mr. Reality on 03.13.11 at 11:05 pm

Ahh the dreaded Black Swan event. The gears in Taleb’s head are spinning as we speak. Let the shorting begin!

Mr. R.

#19 Utopia on 03.13.11 at 11:05 pm

#267 Herb to #241 Utopia from yesterday,

“Forgive me for being blunt, but in which school of propaganda did you study your international relations?”

———————————————————

You are forgiven Herb. You have just shown you also have nothing of consequence to offer and so I can only assume you are also retarded.

Who taught you to type?

#20 Kevin in Winnipeg on 03.13.11 at 11:07 pm

I wonder why banks themselves never market their own preferred stocks instead of GICs to customers. Do banks get a commission on GICs like mutual funds?

#21 SafetyBear on 03.13.11 at 11:11 pm

“What does this mean in Regina?

Likely more oil price declines. ”

I thought we were heading for $200 a barrel though. Couldn’t this inadvertently give the bubble more time?

Don’t confuse short-term gyrations with long-term trends. –Garth

#22 squidly77 on 03.13.11 at 11:13 pm

#5 mark = Dumb as a sack of hammers.

#23 Dodged-A-Bullit-in Alberta on 03.13.11 at 11:13 pm

Greetings: I can anticipate a massive movement of softwood lumber, plywood, OSB, etc from port of Vancouver to Japan. This tragedy could be shot in the arm for our forestry industry and maybe coal also.

#24 squidly77 on 03.13.11 at 11:19 pm

Make that #16 mark = Dumb as a sack of hammers.

#25 Devore on 03.13.11 at 11:36 pm

#20 Kevin in Winnipeg

I wonder why banks themselves never market their own preferred stocks instead of GICs to customers. Do banks get a commission on GICs like mutual funds?

You give them a bunch of money for a fixed period of time with terrible yield. What more incentives do they need?

#26 Jon B on 03.13.11 at 11:38 pm

Enough of this bond talk. Let’s get an update on Chad.

#27 dd on 03.13.11 at 11:43 pm

…Millions of families have billions of dollars in GICs which pay less than inflation….

Most bonds today have a negative rate of return.

An absurd and incorrect statement. — Garth

#28 Tim on 03.13.11 at 11:45 pm

Never try to time the market. You should have an asset allocation and stick to it. With the rates near zero, most people are probably better off with dividend paying stocks, with yields 3.5-4% and a bit of cash, instead of bonds.

It’s not either/or. It’s both. — Garth

#29 Rock077 on 03.13.11 at 11:54 pm

Hey Garth, as an avid reader I would definitely be in favour of a primer on where/how to buy bonds. I purchased your book and read it cover to cover. Very informative, but when I began looking into the bond market I started to find it a bit overwhelming so I think it would be great to have some more direction.

#30 Victor on 03.13.11 at 11:56 pm

So tragic. Before and after pics from Japan:

http://www.abc.net.au/news/events/japan-quake-2011/beforeafter.htm

#31 BC Bring Cash on 03.13.11 at 11:58 pm

BC should send a trade delegation to Japan to flog our wood construction materials. What a great product. Apparently according to the BC forest products Gurus and Gordon Campbell wooden buildings are earthquake proof. Oh really? Most of the debris floating around in the videos from Japan’s tsunami looked very much like 2×4’s. Its good for business to rebuild with wood and have it washed away again to rebuild again with the same old garbage. Lets get BC’s economy become the envy of the world.

#32 Another Albertan on 03.14.11 at 12:09 am

#16/Mark –

I expect Asian deliveries of coal and LNG cargoes are going to become more expensive. The price of raw crude delivered to Japan probably won’t likely go up appreciably, but their internal pricing of derivatives like diesel, gasoline, and jet fuel will.

Prior to lumber going up, you’ll see a run on cement and steel first.

Everyone else’s mileage may vary.

#33 Nostradamus Le Mad Vlad on 03.14.11 at 12:12 am


Balance in a skewed world. “Tokyo must borrow new billions to rescue its people. The country owes $10 trillion . . .”

That is so out of whack it’s not even funny, but if Tokyo owes X trillion, the US owes X-more, the Eurozone is beyond help, what else can happen?

Sure cycles are in change mode regularly, but this is no more than sheer, wanton greed by banxters, as well as plenty of other power-hungry political zombies.

They can enjoy their ill-gotten gains for a moment’s temporary, fleeting pleasure but payback (karma) is a bitch, and she holds all the aces.
*
#3 Ayn Rand — “That is why I keep coming back to this weblog — so educational. If you teach them, they will come.”

Absolutely. I have also learned a ton from Garth’s missives. Keep them coming!
*
Nikkei crashes, plus Japan Bringing money home. “This will hammer the US stock market. It might even collapse. No doubt the Fed has their printing presses switched into warp drive preparing to shore up the market and the banks, but absent massive wealth confiscation from the American people to ‘balance the books’, this printing will only degrade the dollar further. DOW futures already headed down. “Black Monday?” wrh.com. 3:02 clip Money from nothing; US$ steadily devaluing.

One min. clip Foretaste of Yellowstone? The damage is caused when the rocks descend.

Top Ten Things I learned this week from avoiding the m$m.

2:10 clip Anonymous declares non-violent resistance (war) against globalists (banxsters).

Steroids Poverty levels in US equal to the dirty ’30s, and 1:41 clip Obama is JPM’s foot stool.

8:49 clip “Footnote: info gets riveting from 5.00 mins onwards… when he attacks the BBC and Western Media.” Libya.

Monster Aftershocks could happen in a few days.

Obama + Harper What are they good for? Nothing.

Constant Change This classroom of a planet is always in motion somewhere.

Trains Thrown around like toys.

#34 nonplused on 03.14.11 at 12:19 am

I have a funny feeling these nuclear power plant problems in Japan are going to end up following a similar path to the Gulf oil spill, only it’s nuclear instead of oil.

Let’s review a rough chronology of the oil spill.

The platform caught on fire. I said here at the time that is no small blow out but other comments suggested I should go away because it wasn’t news.

The platform sank, and I said that doesn’t happen very often even with a blowout, so this is big. I was told to please talk real estate or go away.

BP said it was just a small leak, 1000 bls/d max. I called bullshit and nobody bothered to respond.

Over time we realized that a large part of the Gulf was contaminated with oil, the amounts being released were way bigger than the government of BP would admit, it was out of control and new technology to cap it was months away, and it was eventually declared the biggest oil spill in US history.

Matt Simmons died just a few months after calling out the US government and declaring there to be clouds of entrained oil under the water based on government research vessel findings. But that was probably a coincidence. You never know when the heart goes, and it’s really bad if you are swimming at the time.

So what’s going to happen to these reactors? Well, I’m no nuclear scientist, I know a lot more about oil, but the containment building around one of them appears to have been completely blown away excepting some structural steel. That did not happen with Three Mile Island, so I think we may perhaps be looking at something worse.

But regardless of whether the nuclear catastrophe is contained or not, here is one prediction I can make: Japanese industrial production will be close to zero (at least for export, if they build anything it will be power plants and infrastructure repairs.) So if you are a big fan of Japanese dirt bikes like the WR250F, there will be no 2012 model year, and no more 2011’s will hit our shores either. Want a new Camery? Better hope it’s built in the US.

All of this might be good for GM, now we have to buy their junk, but it is not going to be good for the consumer. Japan will now be sucking up resources to rebuild, while not sending us any lovely new V-Stars. And they will be selling US bonds to pay for it. Did you think about that Garth? We needed to find the tipping point for interest rates, and I think we very well might have.

When the markets open in the US tomorrow, the Fed will be out in force. But I think the algorithms are going to be overwhelmed. I would not be surprised if we have another “flash crash” that does not miraculously recover by the close, but just fades down. Of course I would also not be surprised if nothing happens, but if so it will be Ben bailing water here.

PS, most major earthquakes have “aftershocks”. An 8.9 earthquake should on average produce a 6.9 aftershock as the largest. That’s about what New Zealand got hit with. It’s enough to cause another smaller tsunami.

It’s no time to think the news can’t get worse.

#35 Dont Tell Garth on 03.14.11 at 12:39 am

Anyone with a mortgage should thank God for all the little people who park their money in bank accounts and GICs at near-zero interest rates.

That is the money banks use to fund your low-interest rate mortgage.

#36 The InvestorsFriend (Shawn Allen) on 03.14.11 at 12:41 am

Will the market tank on Monday? I have no idea. But I won’t lose any sleep over it. If it’s down I will look to add new money. You know, buy low… sell high…

#37 Danforth on 03.14.11 at 12:57 am

Happy Birthday Garth!

#38 Jojo on 03.14.11 at 1:31 am

I can believe to CANADIAN CITIZEN information:

http://www.youtube.com/watch?v=0VX0JvpW5q0

#39 New Era on 03.14.11 at 1:39 am

If the people who bought in Richmond still think they are safe from Earthquake the techtonic plates off the shores of Juan de Fuca straight and also the Cascade mountain range.

I hope the Japan incident will open their eye on the risk they are taking.

#40 Adventures in Sea-Tac with Moneta on 03.14.11 at 2:03 am

270 Tiffa – an excellent point often lost on this blog. I too have benefitted from the wealth effect. Basically anybody in construction, hospitality, and retail has benfitted to some degree. And along with the “growing”
economy, finance and insurance sectors too.

#41 Munch on 03.14.11 at 2:07 am

First!!!!!!!!!!

PS: Why are you people so threatened by people who post “First”?

#42 Edmonton Guy in Alberta... on 03.14.11 at 2:24 am

I heard Toyota is shutting down all operations since they’ll have an electrical energy supply shortfall in Japan. This will bring productivity & production of the goods and services in Japan to a stand still! Ingagine the thousands of pounds of plastic they won’t need now, or the metals they won’t need now as production freezes for the rest of the year.
This is going to make investment in Canada possibly cool for a bit just as the 35 year mortgage is about to soon vaporize, and interest rates go up by the fall.
This blog is about the Housing market & investing. I say the housing market will be in the crapper deeply in a year, and oil & gas prices will be about the same as today to 10% higher.
What do you think?

#43 gmcccc on 03.14.11 at 2:34 am

The USA is broke (some estimate $430 000 per every man woman and child ) and needs someone to buy their bonds, they have purchased of their own bonds by 70 % with QE2, Printing money, like paying master card with the visa!!!
now we have a BLACK SWAN “Japan disaster”
What if Japan needs money to rebuild and dumps their US bonds, just like PIMCO started doing last week, then China will be next, what happens to our economy that is geared to trade with the USA economy by over 70 %, and their economy is based on a 70 % consumer spending, this isn’t going to end well,
TRUST YOU SAY!!
Have you ever heard of Blyth Master, she concocted the CDOs that all of the world purchased with the blessing of Moody rating agency (Think Warren Buffet) quarantining a Triple A rating, but meanwhile the fact is they were junk, and took the world down in 2008, nobody went to jail, and you want us to TRUST YOU WITH OUR SOVEREIGNTY, you know what everything is not OK, and the Harper clan wants us to et closer to The USA and allow them to patrol our boarders ….NO WAY……

#44 West Coast on 03.14.11 at 2:42 am

Just where does all that tax collected go?

http://www.youtube.com/watch?v=ZPWH5TlbloU&feature=player_embedded#at=1250

#45 Tiffa on 03.14.11 at 2:59 am

So, before I ask my question, let me preface it with the caveat that I am a completely inexperienced investor, and there is exactly zero snark or know-better attitude in what I’m about to say. It is one hundred percent genuine desire to understand.

But, you say that a balanced portfolio of the kind you recommend lost 20% when the poop hit the fan in 2008. Obviously, that is significantly better than 55% loss, but it is still pretty substantial. If you believe (and I believe) that the poop is on its way back around, what is different about such a portfolio this time? What would suggest that sort of loss won’t happen in the upcoming similar situation? Inflation wasn’t 20% over that time period, so my (statistically probably quite average) brain tells me that cash in a bank account performed better under those conditions. What would you change about your investing strategy *this time around* relative to that arguably comparable economic time period?

I apologize for the rudimentary explanation I’m requesting here, I know you’re busy and don’t owe anyone any specifics or explanations. I won’t take it personally if it’s outside the scope of the blog.

(bracing myself for a “so stick it in your mattress” response. eep.)

(a) There will probably not be a repetition of the 08-09 collapse. It was a worst-case scenario. (b) Nobody who didn’t sell took a loss. The balanced portfolio bounced back in months. (c) It continued to pay you income, unabated. (d) Most people can’t time the market so moving into cash is seldom a defence. — Garth

#46 ken s on 03.14.11 at 3:47 am

Monday March 14 12:18 am: Armageddon stories usually refer to war with Iran or the $US or similar.
The distance from the Chernobyl reactor to the farthest
“Confiscated/closed/forbidden access areas (2011)
is Appx 500 miles.
The distance from the currently melting Japanese reactor to Tokyo is about 250 miles. (Very Appx)

You can connect the dots. I hate to even say it.

#47 BrianT on 03.14.11 at 4:17 am

Looks like Michigan is finally going to totally pull the plug on Detroit after all this money wasted http://www.cbsnews.com/8301-503544_162-20042299-503544.html

#48 Not Fooled By Property Spruikers Hype on 03.14.11 at 4:42 am

Canada will shortly follow Perth & Australia only question is who will crash first … You guys seem to have a head start … But I have every confidence our stupidity is greater … Western Australia is supposed to be the BOOM STATE of Australia, however our housing performance is worse than any other state? … Sales Down / Prices falling etc etc … here are some examples across the whole range of Perth property where people have lost $30K – $60K -$160K & $900K speculating on Perth Property prices.

First Home Buyers / Middle Market & Million $ Plus

….http://nfbpsh.blogspot.com/2011/03/how-to-lose-money-buying-property-in.html

#49 Brian1 on 03.14.11 at 4:44 am

Lawn Asians: Great Joke, but I wish you had done it on Saturday. Now is not the time. We were not aware of the extent of Japan’s pain so I am hardly in the mood to make money after reading today’s blog. Is it a sad statement on my part that this is where I get my news.

Utopia: I know you sincerely feel for the Libyans and that is a good thing. I am going read your blogs again but I think that we should not be without genuine Muslim participation. I never read Herb but I’ll look today.

#50 Vlad De Mad on 03.14.11 at 5:03 am

Japan holds enormous American government debt (US$882.3 billion of Treasuries at the year-end) and will want those hundreds of billions of dollars back, right now, to begin rebuilding its infrastruc­ture and industry; that means America will have to substantia­lly increase interest rates to get foreigners to buy enough treasuries to pay out the Japanese, or face the equivalent of foreclosur­e. When those interest rates jump, so will U.S. loan and mortgage rates — something tens of millions of Americans with mortgages, credit card debt and other bills cannot afford to pay.

#51 reality guy on 03.14.11 at 5:29 am

You gotta love this one.
Bridal registry taps tough real estate market

http://www.montrealgazette.com/Bridal+registry+taps+tough+real+estate+market/4434366/story.html

#52 Mark on 03.14.11 at 5:34 am

Ain’t it funny how relators will only admit the discounts and suckiness of the market if they can add – ‘but the worst is over!’

http://tasmanianrealestatetrouble.blogspot.com/2011/03/dont-worry-it-already-happened.html

#53 reality guy on 03.14.11 at 5:44 am

MY predictions, US is broke, Japan is broke the UK is going in the same directions,

Pretty soon China’s exports are going to stockpile. With no body wanting to buy their cheap goods.

World Economy slows from a whirling spinning skinny girl, to a sluggish fat chick. Grinding ya to a slow comfortable halt.

Canadian Exports slows, soft wood, coal minerals exports goes down by at least 20%. Even Oil will slow down, but the price remains uncertain.

Unstable world, the Dollar remains high, meaning less tourism in BC resulting in cutbacks to jobs. Going to hit them hard especially when the tourism season is about to begin.

Also resulting to an increase in Unemployment.

You won’t see the numbers until late may.
Unless they ceate a new statistical method to seasonally calculate the results.

Heres a good one they should seasonally adjust inflation. but taking out the increase of gas cost, take out the transportation cost from food prices.
Seasonally adjust the rental cost for businesses to 1920 rates. And Seasonally adjust the HST tax out of the equation.

BTW Berkley should seasonally adjust dark matter out of the universal equation and the freakin universe will hold together somehow. Also Japan should seasonally adjust nuclear reaction formula and we wind out claiming its not a nuclear reaction just some smoke forming a mushroom cloud came out of that darn reactor. Nothing to worry about

As your skin starts to peel and your teeth forms out

#54 Jas Girn on 03.14.11 at 6:53 am

A very informative blog post. Thanks Garth! And for the idiots who keep bickering about mundane issues here, please get a life or go take a walk. It will be better for your health and for the healthcare system, especially if you are obese. Thank you and now zip your voracious mouths.

#55 Deliverator on 03.14.11 at 7:12 am

Cool:
The nightmare scenario at the Fukushima reactors described in your scenario would have already happened. There is not going to be a major airborne release of radioactivity from the Japanese reactors. Sleep well.

#56 Denis on 03.14.11 at 8:01 am

Question 1: if interest rates surge, won’t bonds, common shares, and preferred shares all get whacked?

Question 2: if the surge is caused by inflation, won’t bonds and preferred shares get whacked the worst?

1. No. 2. No. — Garth

#57 pbrasseur on 03.14.11 at 8:06 am

Bonds are not safe, they are predictable which is not the same thing.

Bonds are good not to make money but to to park money, useful essentially when you have piles of cash and dont need more. For those who don’t – that is 99% of us – don’t even think about it, “safer” bonds pay next to nothing and long term you will get buried by inflation, they are useless at best, most of us will never meet our retirement goals with bonds. Higher yield bond are too risky and you will be far better off buying good quality stocks.

Anyway in a world plagued with debt buying debt does not seem like a terrific idea…

Instead, invest for the long run in good quality companies. Dont treat stocks like casino tokens, treat them as shares of enterprises and be patient.

Forget bonds, they are for fools unless you are very rich.

Bonds are one component of a balanced portfolio, as capable of providing a capital gain as any stock. Why the hell do I waste my breath here? — Garth

#58 Herb on 03.14.11 at 8:10 am

Utopia,

you might find this useful. I certainly consider it “of consequence”.

http://thechronicleherald.ca/Opinion/1232914.html

Oh, a teacher in a Grade 9 typing class taught me how to type. The Ontario curriculum contained some useful things in the ’50s.

#59 SquareNinja on 03.14.11 at 8:11 am

#20Kevin: Bankers may not get direct commission from your purchase of GIC, but they certainly are closer to their “sales target” each month (i.e. a certain cash volume on which their performance is rated).

With you buying your own stocks via their discount brokerage, there’s nothing to be had for a banker there.

#60 Moneta on 03.14.11 at 8:18 am

In the G&M:

“The purely economic consequences will be modest: some reconstruction, some more government spending”

So using this logic, why aren’t we bombing every city in North America to stimulate growth for the next 20 years?

The reality is that we have not been maintaining our infrastructure for the last few decades. Furthermore, with population growth, we have been building complex systems in some of the most unstable regions on this planet. Thanks to cost cutting and a just-in-time philosophy, we have probaply concentrated too much of our production. Our system is an accident waiting to happen.

Over the next couple of decades, we’re probably going to be getting such an event every 3-5 years. That’s what entropy does.

#61 Rob on 03.14.11 at 8:37 am

I would love to hear comments on this.
According to my info average household income in Edmonton is a hair over $90 000. The average selling price 4 weeks in a row on MLS is $360 000 give or take a grand.
Is that 4 times income almost exactly? Our prices never rebounded back to the big highs of a few years ago. I know there is rampant speculation here by people,especially condos but are we not getting close to a reasonable affordability index if my numbers are right?

Not thinking of buying, only deciding on holding a primary residence or not. Thoughts? Different stats?

By the way we are in a very average priced home for Edmonton with some equity near light transit and walkable to the U of A and the hospital if that matters to opinion.

#62 dd on 03.14.11 at 8:54 am

#27 dd

..Millions of families have billions of dollars in GICs which pay less than inflation….Most bonds today have a negative rate of return. … An absurd and incorrect statement. — Garth

Ya. If you think inflation is less than the rate of a bond, sure. If you believe in government CPI numbers, sure. If you use actual inflation numbers it is not absurd and it is a correct statement.

#63 Live Within Your Means on 03.14.11 at 9:52 am

#37 Danforth on 03.14.11 at 12:57 am
Happy Birthday Garth!

Just checked Wiki – Happy Birthday Garth and best wishes for many more.

#64 dd on 03.14.11 at 10:03 am

.#57 Denis
Question 1: if interest rates surge, won’t bonds …

Denis, in general bonds can get hit very hard with a increase in inflation and interest rates. Also bonds are at their high point in life and have been in a bull market for 30 years. People should realize that they will buying at the top at the market here. If you are just after the interest payment … OK, but expect no capital gains.

#65 Ottawa S on 03.14.11 at 10:07 am

#19 Utopia on 03.13.11 at 11:05 pm

….so I can only assume you are also retarded.

Who taught you to type?

Asks the person who resorts to calling people “retarded.” Grow up.

#66 Brian1 on 03.14.11 at 10:18 am

I thought Ghadaffi was finished. It seems I’m in good company with Eric Margolis. I hope this doesn’t mean that Ghaddaffi thinks the Jean Dixon prophecies of overthrowing Israel are on again and that he is the chosen one.

#67 45north on 03.14.11 at 10:26 am

Ken S: The distance from the Chernobyl reactor to the farthest
“Confiscated/closed/forbidden access areas (2011)
is Appx 500 miles.
The distance from the currently melting Japanese reactor to Tokyo is about 250 miles. (Very Appx)

I have no idea what you are talking about

#68 James on 03.14.11 at 10:29 am

Managed futures will further diversify a portfolio and provide upside potential, particularly in times of severe turbulence and market volatility.

#69 Frank on 03.14.11 at 10:33 am

This too shall pass. Those who invest wisely during these unpredictable times will reap great rewards later. These are the times that create the next wave of rich people.

#70 BPOE on 03.14.11 at 10:37 am

Luxury homes surge. Americans, Europeans, Asians banging on the door to get in. THese prices won’t last for long.
http://www.vancouversun.com/business/Vancouver+luxury+home+sales+surge+largely+offshore+money/4434646/story.html

#71 torontorocks on 03.14.11 at 10:39 am

I have to say that Garth’s comments are absolutely hilarious in light of some of the knuckle draggers’s that post here. I don’t know if its to get a rise out of Garth or what! Like #58. how are bonds for the very rich? buying $1MM worth of bonds is as boneheaded as buying $1MM worth of a single stock. Buying a bunch of different stocks diversifies your EQUITY component of your portfolio. You need a fixed income component in there as well to provide you with some stability and a negative correlated asset to your EQUITY. Then you can keep some cash as well. Within your Equity basket, you can have REITS, you can have common stocks in various entities. Within your fixed income throw in some diversified global real return bond sector funds. Cash can be in high interest savings – usually keep about 5 – 10%.

Its not hard. Everything moves and undulates but the idea is that balance keeps the swings in check – markets may lose 55% but the negative correlation in your portfolio means you may lose 20% b/c one took off while the other tanked – if you had 90% in the one taking off then your return might be actually positive.

But keep the meatheadedness coming b/c Garth’s responses are hilarious.

#72 Tim on 03.14.11 at 10:44 am

BC Avg Home Sales Price up 18% in February
http://www.vancouversun.com/business/average+price+cent+February+BCREA/4435488/story.html

Are we still going to get that 20% correction for BC Garth? This will put us back to where prices were last month?

#73 SK on 03.14.11 at 10:48 am

What does that mean for Regina?

It means that we will refill the kool-aid jug and go in for a second helping.

Don’t believe me just ask anyone from Regina, we are untouchable and the world does not affect us, even though exports play a significant role in our economy.

Oh and there is so much snow here that there is a good chance that the cropping season will start really late and if winter arrives early, well….it doesn’t matter because we have potash. Damn SK is amazing.

Apparently no one from around here remembers that 90’s or early 2000’s. But hey, we have so much to offer, let me go through the list:

low crime – ?
low cost of living – ?
beautiful weather – ?
high paying jobs – ?
low taxes – ?

don’t get me, i really do like Regina, i just think superstore here makes too much money selling powdered sugar water, oh yeah don’t forget the secret ingredient – purple.

#74 BPOE on 03.14.11 at 10:49 am

One day The American will “Get It” if he can get over his ego
No mention here of credit card debt, that they have a job at Boeing or prices having gone up alot in the past decade. Just solid buying. Going much much higher folks. A few years back a million was a lot for a house on the West Side, now 2 million is becoming the norm with today 3 million being mentioned as very affordable. Could 2020 see 10 million as the average house price? Could be higher as more troubles brew around the world. Until space travel is available Vancouver is The Best Place period and that’s where all the money in the world is flowing. The old saying was never more true “Buy now or be Priced out of the market forever” Also known as being balanced
***************
Alice Zhang, who moved from Hangzhou, China, to Vancouver two years ago, now lives in one of six properties that she and her husband have purchased in Vancouver since moving here.

Zhang, who has two children, is waiting to move into a new home they’re constructing on a Shaughnessy lot that they bought for about $3.1 million. The house is expected to cost another $3 million, which Zhang believes is a good deal.

“We moved from the most beautiful city in China to Vancouver, which we consider more beautiful,” said Zhang, whose family owns hotels and a real estate development company in China.

“I think that compared to other Canadian cities, Vancouver is expensive. But, China is more expensive [than Vancouver].

“And the air is very fresh here and it’s very green. You feel like you’re in a garden.”

Scarrow cited another client who purchased a 2,600-square-foot condo in Coal Harbour for about $1,600 a square foot.

“[She and her family] has homes all around the world. In Knightsbridge, London, a flat was sold to her for $8,000 [Cdn] per square foot. Their flat in London was 3,000 square feet and they paid $24 million for it.”

She also has two homes in Hong Kong, one in Lake Tahoe, one in San Francisco, one in New York and one in Madrid, Spain, Scarrow said. “They all say their Vancouver property is their favourite home. They think it’s the best value.”

Read more: http://www.vancouversun.com/business/Vancouver+luxury+home+sales+surge+largely+influx+offshore+money/4434646/story.html#ixzz1GaHdnVON

#75 mackie on 03.14.11 at 10:51 am

Just sold some American stock to buy BC-based Western Forest Products (WEF) which specialize in exporting Cdn lumber including specialized beams to indo pacific countries. Gotta think there is a lot of rebuilding ahead of Japan and our lumber is going to play a major role in that rebuilding. Plus I don’t like the future of the US dollar…

#76 pbrasseur on 03.14.11 at 10:56 am

“Bonds are one component of a balanced portfolio, as capable of providing a capital gain as any stock. ” – Garth

For bonds (unlike stocks) capital gain (or loss) comes from variations in interest rates. That’s not investing, that’s speculation. Betting on that when interest rates are still at record low does not seem very wise to me.

Very different from a business whose intrinsic value really does increase with growth. Pick a group of companies who grow 10% a year, then look at the value of their stock over a long period, il has grown by the same amount, how shocking!

Balance is a good thing, but to me it means mostly spreading the risk by sector and geographically to limit the damage inflicted to local economies by imbecile local politicians who mismanage public finances (among other things). Just by buying great multinationals in various sectors you get better protection and much better long term chance of meeting you retirement objectives than by buying crappy debt.

#77 Live Within Your Means on 03.14.11 at 11:05 am

#52 reality guy on 03.14.11 at 5:29 am
You gotta love this one.
Bridal registry taps tough real estate market

………….

Beyond ridiculous. Why pay all those extra fees. Most weddings we’ve been to in the last 15+ yrs, invitees just write out a cheque as most of the couples have been living together for years. And even if some did not, let them decide what they want to put the money towards. Just my opinion.

#78 GregW, Oakville on 03.14.11 at 11:06 am

Hi #6 cool, Thanks for the link to that info.

#79 Edmonton Guy in Alberta... on 03.14.11 at 11:06 am

#62 Rob. The average HOUSEHOLD income in Edmonton peaked at $84,000 in 2008. It currently sits at about $73,000. In areas like downtown/Oliver where condo prices soared to close to $300 per sq ft, and are now about $220 per sq ft and crashing-the average household income was about $55,000 in 2008 and is about the same today.

#80 Dodged-A-Bullit-in Alberta on 03.14.11 at 11:18 am

Greetings: Just a few comments:

Japan was NOT a Black Swan, all events there were predictable, as is the same situation for the west coast of North America.

Too many people, including the MSM seem to think the quake and the tsumani are the same disaster, not.

Wooden framed houses are one of the safest residences in an earthquake. They will move, rattle, and shake, but if properly built, will not collapse. Put a wooden house on a reinforced concrete slab instead of a basement, and it will float even if the earth liquifies. As we have observed, with a tsumani, all bets are off.

I would think being in a modern steel framed tower during a quake would be terrifying, however a much safer place than the three or four story parkade where you left you car.

#81 Evangeline on 03.14.11 at 11:20 am

***a refusal to take commissions of any kind from the purchase of assets***

That’s a very good thing.

The bank FA’s are unapologetic about taking commissions even while charging their clients fees of 1.5% and up. In my view, the concepts of “conflict of interest”, “double dipping” and “ethically challenged” apply to their model.

#82 Brad in Van on 03.14.11 at 11:29 am

@ 75 BPOE…

You need to give it a rest. The American annihilated you yesterday on several levels. The only sump pump needed is one here in Vancouver. I checked the stats and Vancouver does have worse weather than Seattle, including more snow, more rain, more clouds, and less sun than Seattle.

BTW even though some may not see a link or correlation between GDP and RE prices it does actually exist. GDP supports consumer spending which obviously is extremely important to supporting real estate prices and transactions. Areas like Detroit and its GDP is not a great example as GDP there is artificially supported by government intervention. Areas left to their own are probably better for this kind of analysis. I think the point is that if GDP is significantly larger in one are over another’s and it has suffered a correction even though most other factors are very simliar (ie population, geography, etc.), then nothing is stopping it from happening in others where GDP may be much lower.

#83 Brad in Van on 03.14.11 at 11:36 am

Check out a chart that shows actual price reductions in the Village at False Creek (aka Olympic Village)

http://www.google.com/imgres?imgurl=http://www.vancouver-real-estate-direct.com/blog/images/village-false-creek-price.jpg&imgrefurl=http://www.vancouver-real-estate-direct.com/buzz/&usg=__UN6fVG_vUGNqUZkGltxuOLfJizE=&h=469&w=690&sz=110&hl=en&start=0&zoom=1&tbnid=qjwQsOMTnV7FwM:&tbnh=142&tbnw=209&ei=_zB-TY-vEJOisAPGqfSIAw&prev=/images%3Fq%3Dvancouver%2Breal%2Bestate%2Bfalse%26um%3D1%26hl%3Den%26biw%3D1056%26bih%3D651%26tbs%3Disch:1&um=1&itbs=1&iact=rc&dur=203&oei=_zB-TY-vEJOisAPGqfSIAw&page=1&ndsp=12&ved=1t:429,r:2,s:0&tx=60&ty=3

#84 Macrath on 03.14.11 at 11:42 am

#68 45north

There are at least 5 reactors in critical condition. Two have already exploded. This is possibly the worst global disaster ever, with the potential to turn Japan into a radioactive wasteland. I`m not a religious man but I`m praying for these people today.

#85 Daisy Mae on 03.14.11 at 11:48 am

WIKIPEDIA: In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. A bond is a formal contract to repay borrowed money with interest at fixed intervals. Thus a bond is like a loan.

(Maybe this helps us to understand…)

#86 canali on 03.14.11 at 11:49 am

nuts…offshore wealthy asians still driving upper prop market…
http://www.vancouversun.com/business/Vancouver+luxury+home+sales+surge+largely+offshore+money/4434646/story.html

#87 Another Albertan on 03.14.11 at 11:58 am

KenS:

In regard to the Chernobyl exclusion zone, you are likely confusing area versus radial distance.

The Zone of Alienation is a 30km radius, which is slightly over 700 square km or 283 square miles.

A 500km radius would mean that no one would be living in Kiev, Kharkiv, or Minsk. Vilnius would be the closest major city. This clearly isn’t true, as there are millions living within 500km of the reactor.

Everyone else’s mileage may vary.

#88 Ex-Cowtown on 03.14.11 at 11:58 am

Brain buster in the Financial Post today. Apparently, in their world, up means down. The headline proclaims Consumer Debt Easing”. But if you read the article, consumer debt actually grew, but it was slightly outpaced by a growth in net worth in Q4, due mainly to the strong stock market.

Hilarious…. the average Canadian owes more, but in the MSM world, that works out to less….

OUCH…. my head hurts think about it all…. Not quite as twisted as one of BPOE’s pathetic posts…. but close.

Someone pass the aspirin and JD.

#89 Montrealer on 03.14.11 at 12:00 pm

Happy Birthday Garth!

#90 Live Within Your Means on 03.14.11 at 12:01 pm

Bonds are one component of a balanced portfolio, as capable of providing a capital gain as any stock. Why the hell do I waste my breath here? — Garth

…………

Well, I and my husband are sure glad you have Garth.

Garth has been our advisor for the last few months.

We were in MF’s for 12 yrs and had parked our max. amounts in TFSA bank accounts for 2 years. We were not happy, to say the least, with our MF sales rep., but just did not know where to find a FA that we had confidence in and could trust.

Although we live on the east coast, we have received superb service from Garth and his colleagues. If I have a question, I know that it will be answered quickly and honestly. We believe our financial future is in safe hands thanks to Garth.

#91 Alex on 03.14.11 at 12:12 pm

BPOE, thanks so bloody much for posting that Vancouver Sun pump piece twice. Now I get to read it two times. Don’t you have some real estate to pimp?

Brian Morton, the “author” of that piece, is also the guy responsible for numerous other “flavored” real estate pieces in the last little while. Funny…I haven’t seen him comment on sinking values and rising listings in the eastern suburbs and across the rest of the province. I haven’t seen him interview any of the hundreds of thousands of “regular” greater Vancouverites who are systematically being crushed by the fact that EVERY DAMN THING here in the lower mainland costs more than it does elsewhere. I haven’t seen him interview people who read his crap and, despite living on a shoestring, truly believe they must too “buy now or be priced out forever.” I’ve written him asking why – without the anger I’m delivering right at this very moment – and he sure as hell doesn’t respond to me.

So screw him, screw the real estate-backed mainstream media that drives this bubble-topping mania and breaks families in the process, screw the unrelenting barrage of “news” that focuses only on one small part of the whole equation, screw the banks that somehow continue to find ways to lend gobs of cash to those who cannnot afford it, screw the CMHC for insuring this sh*t with OUR money, screw the tainted Chinese bucks flowing into a very small part of Vancouver right now, and screw you BPOE for trying to validate this BS when even you, in the dark recesses of your warped little soul, must know it’s pure unsustainable insanity.

That’s my Monday rant and I am OUT.

#92 X on 03.14.11 at 12:16 pm

re #16….ok I am with you for the Japan demand for coal now, with so many reactors offline, they will need energy.
But not with you on oil, as demand goes down, with the worlds #3 economy, the price of oil will go down, as will the tsx….

#93 Rob on 03.14.11 at 12:43 pm

#80 Edmonton guy,

Where are reliable and up to date stats available? I have been digging hard and I am no web research newbie. Most stats are sevral years old, especially stats-can, and the remainder are so varible it is hard to know who to believe.

Just trying to make a well researched decision. At the end of the day though, we are certianly no Vancouver. At an average family wage of $73 000 and consistant average home prices at $360 000 right now our index sits at 4.9

Noone moves here for the weather, but we do have a decent job market. I am by no means a housing bull and am worried about speculation, and 4.9 is still a little high, but it is not astronomical.

So Albertans (or anyone!) on here lets do a poll. Who thinks the average house price will drop to or below $255 500 in Edmonton? (That is $73 000 x 3.5, the traditional “revert to mean” support level)

This is a great way to get your prediction in writing and preserved forever for “Bragging Rights” later.

#94 Rob on 03.14.11 at 12:44 pm

PS.

Garth, you should vote too……

#95 wetcoaster on 03.14.11 at 12:49 pm

#73 Tim, that was year over year price, not from a month ago.

The Vancouver Sun once again fails to leave out the crucial info in the headline. Just like the other one this morning about Canadian household debt falling….. a whole effing dime ! Crack out the HELOC’s.

The Vancouver media is the equivalent of the US before the financial bomb dropped in 2008 and will be held accountable.

#96 Mr. Plow on 03.14.11 at 1:02 pm

#62 Rob

Excellent question. I have posed the same question before, but have not heard much of a response. Probably because it is an Edmonton question not a Vancouver or TO one… c’est la vie.

My thoughts, for what it is worth…

Edmonton prices have basically gone back to 2005-06 levels in my opinion, we haven’t had the surge the last couple of years that Van and TO have seen.

I think when prices drop ours won’t be as bad, but I would still expect to see some sort of drop simply due to supply and demand. Edmonton has too much product for what is being consumed.

#97 The Original Dave on 03.14.11 at 1:03 pm

radiation would have already leaked in Japan. Read a book called ‘Power To Save The World’ to get a better understanding on nuclear and nuclear energy. China and many other countries are going full steam ahead with nuclear energy.

That horrific earthquake didn’t cause a meltdown for those older plants. The biggest energy problem in the world is being dependant on an area of radicals that hold the majority of the world’s oil. Being dependent on Libya, Saudi Arabia, Iran, Iraq is something we don’t want to be.

#98 Mr. Plow on 03.14.11 at 1:07 pm

#62 Rob

One other thought…

Should employment improve and thus net-migration I would assume the supply would be able to be consumed keeping prices stable.

We will see I guess.

#99 Calgary Hat on 03.14.11 at 1:19 pm

#94 Rob “So Albertans (or anyone!) on here lets do a poll. Who thinks the average house price will drop to or below …the traditional “revert to mean” support level”

Like anything, there is a time to buy and a time to sell. For real estate, it’s the time to sell. Prices for RE will revert to the norm, but first they have to fall below the norm for a short time. A drop in RE is in everyone’s best long-term interest as it will reduce mortgage debt, increase spending money and allow folks to focus on more important things in life.

#100 Macrath on 03.14.11 at 1:20 pm

#88 Another Albertan

Any knowledge of plate tectonics ? Bloomberg reported that NASA scientists are predicting further large earthquakes within a year. Chile, New Zealand and its not over for Japan. Next ?

#101 Subversive on 03.14.11 at 1:25 pm

Further to #13 Timing is everything’s question. How much money does one need to have in this theoretical suitcase to find an adviser such as you recommended, Garth? Most of the ones I’ve been able to find online seem to only want high net worth clients. What about those of us who are just getting their act together? Is there a place in the fee based adviser world for us?

#102 Tkid on 03.14.11 at 1:27 pm

Saudi Arabia has walked into Bahrain, by invitation?

#103 Debtfree on 03.14.11 at 1:39 pm

@ the person that advocated buying uranium stocks a few months ago . HA !

#104 Tiffa on 03.14.11 at 1:45 pm

“(a) There will probably not be a repetition of the 08-09 collapse. It was a worst-case scenario. (b) Nobody who didn’t sell took a loss. The balanced portfolio bounced back in months. (c) It continued to pay you income, unabated. (d) Most people can’t time the market so moving into cash is seldom a defence. — Garth”

Thank you, Garth. A and C in particular I will think more on. And Happy Birthday!

#105 Scare Crow on 03.14.11 at 1:50 pm

So there you have it – we now see how the West Coast will come undone – as the reactor spew radiation into the atmosphere- and this cancer causing agent gets carried along the jet stream – [you know where this is heading] – yeap! The west coast from sunny mexico to alaska will be blanketed – sad really – if things are truly bad (and the japanese government has kept silent on the true impact) the west coast could turn out to be a 3 mile island thing – can’t give away your property …

My question to the Japanese government – the fault line runs along the East of Japan – but they built a few reactors right along the East coast – did they never realize that such a event was possible – but my only conclusion was – should an accident occur – and hopefully the trade winds take it out East into the pacific and eventually North America – guess who lives with this murderous fallout –

Thought affording a house will be the least of your troubles – I will be avoiding all food and water that comes anywhere near the west coast – or for that fact anywhere in the Pacific… (stock up on Tuna before I begin to question it within a month or two)

My heart goes out to the Japanese people but I am bitter that there government blindly (or wilfully) puts everyone else in danger –

#106 Max Jones - Edmonton on 03.14.11 at 1:53 pm

Just to add some balance to the outrageous real estate listings in Vancouver, it seems that not all house prices are out of control. Found this one on PEI, under $100,000 with an acre of land. Makes me want to rethink my plans of retiring to BC.

http://edmonton.kijiji.ca/c-housing-housing-for-sale-House-for-sale-on-PEI-W0QQAdIdZ265511258

#107 mailman on 03.14.11 at 1:53 pm

Hey Rob,
I will bite, and say yes to the 255,000 average price from today’s 360,000. Might not happen til 2012 or 13 but that will happen.

#108 tonguestump on 03.14.11 at 2:27 pm

Don’t particularly like you but this was a great post thanks

Did I need to know that? — Garth

#109 wetcoaster on 03.14.11 at 2:38 pm

Real estate reality TV star charged with extortion

Coming next: Big 5 and CMHC. ;)

http://news.nationalpost.com/2011/03/14/real-estate-reality-tv-star-charged-with-extortion/

#110 Industrial Guy on 03.14.11 at 2:42 pm

Balance is something this economy doesn’t have. It’s a crooked game of corporate greed. Ask for more like a real pension and your job is sent to a country where workers are paid 1/3 of your wages.
.
We have killed off our manufacturing sector and shipped it off shore. Somehow we’re gonna replace all these high wage jobs with what??? Serving coffee at a drive in? Oh yeah, The green economy is going to save us. We’re now seeing how much of a sham that is in Ontario. Sweetheart deals like the one with Samsung will double your hydro bills in a decade. Electricity generators in Ontario now receive direct subsidies because the market is awash with capacity and the wholesale price is below its production cost. Why? Because closed factories don’t use a lot of electricity. Look at the wholesale price of electricity in Ontario. Why are prices going up? http://www.ieso.ca/imoweb/siteShared/monthly_prices.asp?sid=ic Why are you paying 60 to 80 cents a Kilo Watt Hour for “Green Power” when other utilities only pay 12 cents? Just look at who is investing in Green Power and it all makes sense. It kinda reminds me of a Monty Python routine about a thief who steals from the poor and gives to the rich.

The news recently reported that a large number of small generators under the micro FIT program can’t connect with the grid because Ontario Power Generation can’t afford to string the wire. You can now buy a Government subsidized $40,000.00 electric car from GM. This is great news news to the millions of Americans who can’t get a mortgage for a $60,000.00 house. Or health insurance.

If Michael Moore’s comments in Madison, Wisc. are true …..and its seems they are.

http://www.politifact.com/wisconsin/statements/2011/mar/10/michael-moore/michael-moore-says-400-americans-have-more-wealth-/

Then the US economy has gone past the tipping point. How can 400 people control 1/2 the country’s wealth? No wonder they’re doing so poorly. You can’t abscond with 1/2 the country’s wealth and not have serious repercussions. You can sure buy a lot of politicians and media outlets with that kind of wealth too. It helps to get the, “we need lower taxes or business will leave” message out.

So, what has the last fifty years taught us? Communism doesn’t work and laissez-faire capitalism doesn’t seem to work either. The Russia economy collapsed to be replaced with a cadre of oligarchs supported by the Russian Mafia. The US banking sector collapsed to be bailed out with billions of tax payer dollars. The “too big to fail” banks are now even bigger and exerting more influence on the US economy.

Consumer driven markets like Real Estate are still falling. Any of the good news from the North American auto industry is based on slashed wages, eviscerated benefits and production sent to low wage countries. New hires in the auto industry get $12.00/hour. not $24.00. Manufacturing is no longer a Middle Class job. No more Middle Class taxes either. Structural deficits are the norm. Time to slash Government spending or raise taxes on the 400? It’s not like they can’t afford it.

#111 betamax on 03.14.11 at 2:53 pm

#98 The Original Dave: “radiation would have already leaked in Japan. Read a book…”

New explosion this morning and meltdown still possible. Read the news….

http://www.reuters.com/article/2011/03/14/japan-quake-rods-idUSTKB00733720110314

#112 jen on 03.14.11 at 3:10 pm

Here is the latest charming piece on housing (how to buy multiple properties and increase your already high leverage ratio by multiples) from the Financial Post.

http://www.financialpost.com/personal-finance/family/your+kids+house/4417397/story.html

#113 E-Town Save-down on 03.14.11 at 3:12 pm

Gotta love this blog Garth, nice work. I picked up on it at ‘Real men rent’. I’ve been trying to pound this sense into house-horny friends and co-workers for a few years now.. Rent and Save!! “You’re throwing your money away” is the most typical argument I hear and to that I say yes – yes I am! But how much? Is it even close to what people who 0down-5/35’d themselves into a corner throw away? After your mrtgage interest, prop tax, insurance and maintenance that you pay monthly, I’m fairly certain that the money you’ll never see again eclipses my rent… and guess what… I can move anytime I want. Rent gets high… I say BYE!!!
I’m not bashing home ownership though. I think it’s a great idea! I’d like to have my own slice of paradise too and that’s why I’m renting low, working my a$$ off and actually SAVING 50% for a down payment. People just don’t get it though… Saving? Blasphemy you say! In this day and age of “need it now”? Saving?
People saving up a sizable down payment is almost unheard of but I’m here to tell you that i’ll have my slice payed off before your interest/principal payments even out. I’m the guy taking your picture as you zip down the skyscreamer waterslide of housing value and into the kiddie pool of high interest rates you weren’t prepared for… and we all know what the kiddies do in there…
I rent a nice basement from one of said house-horny friends for 550$ all incluse/full run of the house! It seems the mortgage is a little bit much when you borrow more than you make… who woulda thought? I should get a tax write off for charitable renting… but I’ll settle for a good ol ‘I told you so’.
So renters… Tell your crazy house horny friends not to buy that mcmansion but if they do, just make sure the basement is nice ;o)

Thanks again for the good info everyday and keep it going… Somebody has to save those sheeples in Vancouver and GTA. It’s going to be a massacre!

#114 ken s on 03.14.11 at 3:24 pm

Isn’t Partial Meltdown similar to Partial Pregnancy?

#115 Babblemaster on 03.14.11 at 3:43 pm

The Globe reports that there will be no correction.

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/despite-stress-no-crash-seen-in-housing/article1941369/

#116 Live Within Your Means on 03.14.11 at 4:02 pm

#107 Max Jones – Edmonton on 03.14.11 at 1:53 pm
Just to add some balance to the outrageous real estate listings in Vancouver, it seems that not all house prices are out of control. Found this one on PEI, under $100,000 with an acre of land. Makes me want to rethink my plans of retiring to BC.

http://edmonton.kijiji.ca/c-housing-housing-for-sale-House-for-sale-on-PEI-W0QQAdIdZ265511258

…………….

IIRC there was a chap (RE guy?) on this blog about a year ago from out west who sold out and moved to PEI.

Next door neighbours (retired) now say they will sell this spring & move back to PEI as their son, DIL and grandchildren have moved there. Their daughter & grandkids live in Vic. Neighbours have large, older home. Most of the house never gets used. Will be interesting to see if they do, and what it goes for.

#117 Mike on 03.14.11 at 4:14 pm

Good article by the Financial Post. Jen not everyone that purchases a home is highly leveraged. Click your stilettos three times and say there is no place like home.

#118 pigeon patties on 03.14.11 at 4:17 pm

Government payouts—including Social Security, Medicare and unemployment insurance—make up more than a third of total wages and salaries of the U.S. population, a record figure that will only increase if action isn’t taken before the majority of Baby Boomers enter retirement.

Yep! That sounds like a country on the fast track to prosperity.NOT!

#119 pigeon patties on 03.14.11 at 4:36 pm

At the very least,the US can take solace in the fact that they’re not quite at the state welfare levels of Europe. In the U.K., social welfare benefits make up 44 percent of wages and salaries, according to TrimTabs’ Schnapp.

Ever wonder where the UK lost it’s drive? It’s easier to just live on handouts.

#120 George on 03.14.11 at 4:41 pm

Hi Garth,
You say that a balanced porfolio lost only 20% in the 2008/9 stock market decline.
However if you had been in U.S 30 year treasuries you would have made 40% not lost anything. if you had been in gold you would have made 8%.

I hear Maurice Richard hockey cards were also stable. The point of a diversified portfolio is to maintain an even keel in all markets. If you want to be a market timer and stay in one asset class, good luck to you. — Garth

#121 Soylent Green is People on 03.14.11 at 4:42 pm

Please boot the neocon fake Tory Steve Harper and his four foot f**k all Jim Flaherty out of office before the shiz really hits the fan… or is it too late?

…………..

For Voters: Cup of coffee for you, bottle of champagne for Cons

So the choice for voters will be the price of a cup of coffee, going to the party of their choice. A reward for casting their ballot.

Or the constant sound of corks popping off champagne bottles, as we continue to fund the Conservative Party’s re-election schemes, when we have no choice, and never get even a sip of the champagne.

The Canadian taxpayer has been funding this party for five years. It’s time to pull the plug. They clearly have no concept of the value of a hard earned dollar.

http://pushedleft.blogspot.com/2011/03/ending-voter-subsidy-will-not-whiff-of.html#comment-form

.
.
.
.

#122 BrianT on 03.14.11 at 4:58 pm

The earthquake geeks on the Net are calling for major North American quakes Mar 15 to Mar 19-I know Vancouver is in line-so we shall see what (if anything) rolls out.

#123 Irrational Exuberance on 03.14.11 at 4:59 pm

Hmmm…. So $3 million will no longer get you a “luxury home” in Vancouver due to the invasion. If that’s the case, then home owning in Vancouver doesn’t really make much sense anymore. At this point I’d say we should just walk and let them have the city. Sorta’ like being in a game of Texas Holdem’ and people are going all in and you’re sitting on Jack-9 off-suit. Time to fold, cash your chips in, and exit the casino via the side door. Frankly I wouldn’t want to live in Van West or Ditchmond if the neighborhood is saturated by “foreign interests” anyway. There are lots of other places to live in Canada where you just don’t have to bother with this rubbish.

Part of me thinks that fundamentals will reign supreme and things will revert back to some seblance of normalcy. But part of me thinks that these select neighborhoods may be premanently re-priced on the same paradigm as London, Madrid, New York, Sydney, etc.. As one of HAMers in the Sun article stated, “comparatively speaking, Vancouver looks like a bargain”. If this is in fact the predominant thinking of the HAM, then they can easily continue to bid this baby up to oblivion and beyond. And as they now create the market in these enclaves, who are we to say that 20x median income doesn’t make sense, when really our incomes have nothing to do with the demand side of the equation? In a funny way, I almost feel for the folks who reside in these hoods. They may be sitting on a house now worth a fortune, but will need to sell and relocate if they want anything resembling a traditional Canadian neighborhood.

Worst case scenario, Kits and Downtown are never more than a 30 min. drive/transit ride away from my bunker in Burnaby. So I guess I can always visit the “rich and not-so-famous” hoods’ on a day-pass.

#124 GTA Girl on 03.14.11 at 5:02 pm

Someone says that the average Vancouver price is near $2million may go to $3mill.. Now maybe someone can tell me how an economy will work if the average person cannot live in the city. How will all the rich people buy a latte in the morning if barristas cant afford to live anywhere near the place? Think many would just pack it in and leave. A thriving city needs balanced economy. Jeez people, Vancouver is NO New York City.

#125 Toni on 03.14.11 at 5:07 pm

Having followed your advise and sold my house, found a nicer place to rent for similar money, and found a financial advisor, I’m going to play with my kids.
Hope you have a very happy birthday Garth!

#126 Irrational Exuberance on 03.14.11 at 5:15 pm

#117 – GTA Girl

Good comments and for the most part I’d like to agree with you. However, one flaw in the logic is that you can still buy a latte in NY or London; someone who cannot afford to live there will still work in these jobs for min. wage. Even if Van becomes absurdly unaffordable, I suspect there will still be people on the fringes willing to work in these areas at marginal service jobs.

#127 Morry on 03.14.11 at 5:16 pm

@GTA Girl – where is the source that says average price is $2mill? FUD?

#128 Azza4 on 03.14.11 at 5:30 pm

//
#104 Debtfree on 03.14.11 at 1:39 pm
@ the person that advocated buying uranium stocks a few months ago . HA!
//

So you think they will shut down all 500 plants on this planet and stop building new ones that they invested billions into?
Green energy is 8 to 80 times more expensive right now and uses some toxic elements, that should be recycled in the future.
Demand for uranium is bigger than production and it’s getting worse, not better. Price for it will eventually increase as stock prices.
People who invest in uranium do so because they know their stuff, they are knowledgeable investors. One accident at old plant built in 70’s and on fault line will not affect industry in long run. Green Peace can protest all they want.

#129 MP on 03.14.11 at 5:36 pm

@ #124 – I was in the FL Keys in early – mid 2000’s. We had the first million dollar house trailer sold down in Key West while I was there (along with 6 hurricanes in two years…). The solution was to bus bar maids, construction workers and jet ski rental guys down from Miami and vicinity for Monday morning from 3 hours away, shove ’em into cheap dorm housing in rough parts of town for the work week, and bus ’em back to Miami on Friday.

#130 Alpha Bravo on 03.14.11 at 5:45 pm

Garth, a very happy birthday to you. May health and happiness be present for you always. I am grateful for this blog, the time you invest in its upkeep and the many contributors that post here. Thank you.

#131 BrianT on 03.14.11 at 5:50 pm

#119Pigeon-Yes the UK is a mess-OTOH the current level in the USA is 35% (a record) and the vast majority of all employment is in guv and pseudoguv sectors.

#132 Coho on 03.14.11 at 6:10 pm

The link below may be of interest to some of you. It is about what is happening to labour laws/unions in Wisconsin and in many other states like Washington, Montana, Arizona, Minnesota just to name a few. Yes, MSNBC is left wing and BOTH dems and repubs are like a tag team taking down the USA, but this link is a good expose of ulterior motives dressed up as responsible government. It is unsettling how these new anti labour laws are being rammed down the throat of people.

http://www.youtube.com/watch?v=MfGo3YzfEbQ

Misery loves company, and the American middle class has been decimated to the point where there are enough people out of work or have been forced to take low paying jobs to be resentful of those who still have the standard of living of yesteryear. It’s the government and media playing working people against one another. It is the old divide and conquer technique.

The unions issue is a sensitive subject to many. I have friends on both sides of the union equation. I think we can all agree that unions were formed to give working people a voice, decent working hours and conditions, and fair pay for a days labour. Everyone has a price. Unfortunately, like every other positive movement, it is always undermined by infiltrators or easily corruptible ones finding their way into the union or any other hierarchy. Selfish, lazy, and power hungry people are often attracted to unions and union jobs just like they are to politics.

#133 Carlyle on 03.14.11 at 6:39 pm

Happy bday Garth

#134 ballingsford on 03.14.11 at 6:50 pm

Happy Birthday you wise old timer! All the best in health and happiness in the year ahead!!!

#135 Victor on 03.14.11 at 7:06 pm

#58 pbrasseur on 03.14.11 at 8:06 am

Bonds are not safe, they are predictable which is not the same thing.

Bonds are good not to make money but to to park money, useful essentially when you have piles of cash and dont need more. For those who don’t – that is 99% of us – don’t even think about it, “safer” bonds pay next to nothing and long term you will get buried by inflation, they are useless at best, most of us will never meet our retirement goals with bonds. Higher yield bond are too risky and you will be far better off buying good quality stocks.

Anyway in a world plagued with debt buying debt does not seem like a terrific idea…

Instead, invest for the long run in good quality companies. Dont treat stocks like casino tokens, treat them as shares of enterprises and be patient.

Forget bonds, they are for fools unless you are very rich.

Bonds are one component of a balanced portfolio, as capable of providing a capital gain as any stock. Why the hell do I waste my breath here? — Garth

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

Garth, many out there know you’re right. Let others hold their dissenting opinions. Not everyone is going to follow an absolute path.

As to bonds, as I posted a couple of times before, I’ve done quite nicely since last month when Garth recommended picking some up. I prefer going the simpler ETF route, so XRB suited me just fine.

http://stockcharts.com/h-sc/ui?s=XRB.TO (note the bottom in Feb at $21 when Garth suggested entry into real return bonds; and then see what happened next)

#136 Brad in Van on 03.14.11 at 7:09 pm

Responding to #118

Pigeon Patties, how much of each Canadian dollar earned goes toward income taxes for government payouts in Canada? Why are taxes so much higher here than in the U.S.? Oh yes, it is to cover the IMMENSE AMOUNT of social benefits for Canadians. Sounds to me like it isn’t really any better here. Are you also saying Canada is not on the fast track to prosperity, because we pay much more than Americans.

#137 Nostradamus Le Mad Vlad on 03.14.11 at 7:18 pm


Happy Birthday Garth! Gotta trim your beard!
*
Al three plants are down now. Also Nuke roulette. 1:15 clip West coast may take a direct hit next week from the fallout. 3:17 clip Full core meltdown.

UK Why is the UK pushing for war with Libya? Libya Two.

If people mistrust their govts., why the hell do they keep electing them? Overthrow them — People Power!

The Role of Gold after the economic collapse (if or when it arrives), and Michigan Financial martial law imposed?

‘Quake Selloff Lost a little, and Anonymous and the BoA. No doubt more will follow.

WTO “The World Trade Organization has a long history of anti-American actions. They’ve just handed us another one, and in the process handed a big freebie to Chinese state capitalism.” Along with US Companies cash hoard grows.

Hard Landing Everything — The Full Monty — is taking a battering, not just RE.

EZ Money Goldman Barfs. Remember them?

You scratch my back, I’ll scratch yours.

#138 Brad in Van on 03.14.11 at 7:18 pm

Pigeon Patties, in case you didn’t already know, maybe you should read this:

http://www.marketwire.com/press-release/Fraser-Institute-Taxes-Average-Canadian-Family-Have-Increased-Faster-Rate-Than-Costs-1149484.htm

42% of every dollar earned goes to taxes in Canada.

#139 Oasis on 03.14.11 at 7:24 pm

after everything that has happened, civil war in Lybia, revolution in Egypt and Tunisia, protests in Yemen, Bahrian and Saudi Arabi, a monsterous earthquake and tsunami crippling Japan, Japanese central bank printing trillions more yen ….

what does the US dollar do??

continues to plummet……..

The US dollar-to-Euro ratio changed by .0001. Stop making things up. — Garth

#140 Kits on 03.14.11 at 7:27 pm

Vancouver’s luxury home sales surge, largely due to influx of offshore money

Mainland Chinese buyers a major factor, but European, U.S. purchasers also attracted to city

By Brian Morton, Vancouver Sun March 14, 2011

http://www.vancouversun.com/business/Vancouver+luxury+home+sales+surge+largely+offshore+money/4434646/story.html

According to MLS statistics provided by Macdonald Realty, a record 375 homes -including nearly 50 condos -sold for over $3 million in 2010, breaking the record of 209 set in 2009 and more than double the 167 sold in 2008.

#141 Fireangel on 03.14.11 at 7:46 pm

http://www.zerohedge.com/article/eric-sprott-debunks-gold-bubble-myth
Great article for you.
Enjoy.

#142 john m on 03.14.11 at 7:53 pm

HAPPY BIRTHDAY GARTH! and many more..thanks for your blog , your priceless advice and your honesty.

#143 jess on 03.14.11 at 7:54 pm

a little history tax lesson

http://michael-hudson.com/2011/01/why-america-had-a-90-income-tax/

#144 pigeon patties on 03.14.11 at 7:55 pm

#131 BrianT on 03.14.11 at 5:50 pm
#119Pigeon-Yes the UK is a mess-OTOH the current level in the USA is 35% (a record) and the vast majority of all employment is in guv and pseudoguv sectors.

136 Brad in Van
Are you also saying Canada is not on the fast track to prosperity, because we pay much more than Americans.

————————————
That’s the point, how can people say the US is in recovery, when 30% or more are on food stamps, or how can the UK find any motivation to innovate and grow when 44% of the countries income is from welfare taken from those that care to work.

Sorry brad, don’t know what you are talking about. 30% of Canada’s income does not come from welfare.

#145 Darl H on 03.14.11 at 7:59 pm

Does anyone have a link to a good self directed TFSA comparison site?

I’ve looked at the big 5 and ING, but haven’t seen a good comparison.

Cheers, (and much thanks GT – for the blog)

#146 Kits on 03.14.11 at 8:03 pm

sorry, just noticed that the link I posted had already been shared …. I guess I should start reading from the top!

#147 pigeon patties on 03.14.11 at 8:09 pm

138 Brad in Van on 03.14.11 at 7:18 pm
Pigeon Patties, in case you didn’t already know, maybe you should read this:

42% of every dollar earned goes to taxes in Canada.
———————————————————-

I never mentioned taxes. I wrote that one third of the country’s INCOME was from UI and welfare. If people have jobs, they pay taxes and the country spends them as they see fit. When people are on welfare or UI it means they haveNO job and aren’t paying taxes. That’s not a sign of recovery.

#148 Victor on 03.14.11 at 8:17 pm

Happy Birthday Garth!

#149 Coho on 03.14.11 at 8:23 pm

#111 Industrial Guy,

Excellent post.

What has the last 50 years taught us? We can probably go back much further, perhaps to the beginning of humanity or when evil made its first appearance. It is the problem of evil and the weak will of people which corrupts everything. No system will work for too long because the few end up with most of the wealth, and there are many who’ll sell out their own for a few shekels.

Almost everyone can be bought, threatened, coerced, enticed with promises of elevated social status to do the work of the elite. These are the tools of the elite. Add to that the ego often manifesting as a “herd mentality” in the masses driven by fear and greed and you have a controlled society.

There are power hungry ruthless people who always want more than their share. Much more — which spells trouble down the road. Being indebted slaves is the working man’s prison. Avarice and insatiable thirst for more wealth and power is the ruling class’s prison. There are no winners in this system. It is easy to imagine civilizations in other parts of creation which would view Earth as a warring, mercenary, backwards outpost that can’t get it right for the life of it, literally.

People will soon need to sell their homes and whatever income is generated from interest on he proceeds will be needed to help make ends meet. Retirement? Well, imo, it is going the way of real estate. It is a thing of yesterday. Old geezers and young alike will be pursuing the same jobs. Do boomers assume they’ll be able to keep or find employment in their 60’s, 70’s, or 80’s so they can live? Who is an employer going to hire — someone they view that’s past his/her best before date, or a 20 something?

As for governments, (“a necessary evil at its best and an intolerable one at its worst” as Thomas Paine put it) their role seems a very fine balance between keeping the money streaming to those at the top of the pyramid, and making sure the working people get just enough of a trickle so they don’t take to the streets. But, in these crazy times, even this line is starting to be crossed in the west. Look what is happening in the USA. And they have/had the Bill of Rights to protect the people from tyranny! As Moore puts it, there is a war against the middle class. But, up here its different, just like real estate. All we need to do is obsess about buying a house, collecting Royal Dalton China (for the newlyweds) and let’s not forget the granite and stainless.

Below is Michael Moore on the Rachel Maddow Show, re; Wisconsin.

http://www.youtube.com/watch?v=95251noVhRM

#150 The American on 03.14.11 at 8:28 pm

#144: Pigeon Patties, did you just make a claim that over 30% of Americans are on food stamps? First, I should tell you that there is a record number of Americans on food stamps due to the economic recession we are going through. That would make sense, I should hope. However, once again, are you just another Canadian pulling numbers from thin air to present a false argument? There are, as of today, 40.8MM Americans on food stamps. The U.S. population is 309,000,000 people. That is hardly the 30% you falsely claim. Instead, the true number is less than HALF of what you falsely claimed. The REAL percentage is 13.2% of Americans. Still, is this good? NOT AT ALL. But, it hardly the 30% you claimed. Not gonna let you get away with that one.

Can I ask when, not if, but when Canada does fall into its own economic recession (not the child’s play that you’ve experienced so far, but after the housing values collapse) how this will fare for Canadians when workers are released from their positions, home values fall, people are indebted more than Americans, and the country cannot compete with manufacturing and exports because its currency is valued much too high? It won’t fare well, and Canada will experience spikes within its own social welfare programs as well. So, please, don’t turn your nose up at the situation. We’re all in this together, whether you see it that way or not.

My point is this is not so much a matter of the tax basis the government is collecting (which is significantly less than what the Canadian government collects, might I point out to you), but more so it is a reflection of the economic times in which we live. We will indeed return to economic prosperity, regardless how you may see it. That’s a promise.

At #139: Oasis, the U.S. dollar has gained against the Canadian dollar for the past four days straight. In fact, it is now worth more today against the CAD than what it was on March 1st, two weeks ago. That’s what the USD has been doing.

http://www.exchangerate.com/currency-charts/USD/CAD/last-30-days

#151 Cory on 03.14.11 at 8:53 pm

Your way is not the only way Garth. It might work for you but my own trading (~17years) yields far more than your ~8% and I never buy an ETF to do it. I also never lost a penny in the crash since I moved to cash in July 08….so it beats your 20% loss by a mile. ETF’s are simply index tracking regardless of sector. Buy a good company and ride out far better gains than a basket of poo such as ETF’s provide. And bonds!!, bonds will lose out to inflation over time unless you are trading them over very short terms.

Anyway, while the news (negative by nature) and experts are fuelling fear today, just as last year at this time, and the year before, etc etc etc, I am willing to bet $20.00 right now, today to any one taker that by the end of the year the TSX will have hit a new high….or very close to it. I will eat crow if I am wrong, no problem, but the bet is the world is not crashing. Forget the US. The rest of the world is moving along just fine.

You need more bran flakes. — Garth

#152 Another Albertan on 03.14.11 at 8:58 pm

#101/Macrath:

I’m not sure what plate tectonics has to do with exclusionary zones from industrial sites.

Yes, I am well aware of the possible implications of building a nuclear power plant near a fault line or at the seaside.

Yes, I am aware what can happen when faults slip past each other.

Unfortunately the world is not made of Nerf. There are sharp edges that cause damage now and then.

On top of that, there is no evidence at this point to even suggest a remote equivalence in terms of impact due to radionuclide release to Chernobyl. The Russians, Koreans, and Chinese aren’t crying foul, as opposed to the Finns and Swedes 1500km away in 1986.

Even if the situations change radically for the worse in Japan, the die is already cast. I have no problem eating my words down the line.

In the interim, the people who need prayers are nameless Japanese guys in radiation suits who are likely going to have shortened lifespans due to “compromised health”.

Everyone else’s mileage may vary.

#153 Daisy Mae on 03.14.11 at 9:02 pm

“Garth has been our advisor for the last few months.

We were in MF’s for 12 yrs and had parked our max. amounts in TFSA bank accounts for 2 years. We were not happy, to say the least, with our MF sales rep., but just did not know where to find a FA that we had confidence in and could trust.”

My sentiments exactly….

#154 Daisy Mae on 03.14.11 at 9:05 pm

tonguestump on 03.14.11 at 2:27 pmDon’t particularly like you but this was a great post thanks

Did I need to know that? — Garth

That was plain mean.

#155 Abyss on 03.14.11 at 9:08 pm

Mr.Turner,

Are preffered shares almost like DRIPS?

Thanks.

No. A DRIP reinvests dividends into equity. Preferreds pay you cash. — Garth

#156 Tim on 03.14.11 at 9:14 pm

Re#96 Wetcoaster
The Vancouver media is the equivalent of the US before the financial bomb dropped in 2008 and will be held accountable.
———————–
Media being held accountable here? We’re talking about Can West! Talk about shoddy journalism. They’ve cut their payroll back so far that many good writers have left. Who will hold them accountable Christy Clark? lol! Half her campgain contributions came indirectly or directly from the real estate industry

#157 Daisy Mae on 03.14.11 at 9:17 pm

“Alpha Bravo on 03.14.11 at 5:45 pmGarth, a very happy birthday to you. May health and happiness be present for you always. I am grateful for this blog, the time you invest in its upkeep and the many contributors that post here. Thank you.”

Again…my sentiments exactly. Don’t you EVER quit on us! LOL

#158 BrianT on 03.14.11 at 9:28 pm

#150American-the stat is that US guv cheques going out to the public (not including guv employees) equals 35% of all guv and private sector wages being paid. This is an all time record-(from memory)-supposedly this number was 5% in 1961. The 35% stat includes social security, welfare, whatever. When you factor in record guv employment as a % of the workforce, it is a colossal mess.

#159 Oasis on 03.14.11 at 9:49 pm

The US dollar-to-Euro ratio changed by .0001. Stop making things up. — Garth
_______________________________

yet again you show you’ve got no clue how to read numbers. Friday the Euro closed at 1.3864, today it closed at 1.3974, that’s 1.1 cents Garth, or, the way you calculate it, .011 (or did you purposefully add a few zeros??). i don’t make things up. you do

#150 The American on 03.14.11 at 8:28 pm
At #139: Oasis, the U.S. dollar has gained against the Canadian dollar for the past four days straight
________________________________________

wow, i’m impressed … what incredible strenght. lol. and no, the USD has not been up 4 straight days. it was down against the loonie Friday.

are you two kidding me??

Loonie vs USD (http://charts.insidestocks.com/chart.asp?sym=D6M1&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=)

Euro vs USD (http://charts.insidestocks.com/chart.asp?sym=E6M1&data=A&jav=adv&vol=Y&divd=Y&evnt=adv&grid=Y&code=BSTK&org=stk&fix=)

since this “crisis” started in the middle east, the USD has tanked.

the USD was down OVER a full cent today against the EURO. …. ONE FULL CENT… not .0001 but .011

look it up.

#160 Karl Hungus on 03.14.11 at 9:56 pm

For those confused about Edmonton’s average household income, a simple google search solves that problem.

http://www.omaccanada.ca/en/market/edmonton/default.omac

Average HH income – $98,857
Average residential average as of March 2, 2011 – $312,840

Median Multiplier – 3.2

#161 Debtfree on 03.14.11 at 10:01 pm

@azza 4 the 4 plants that are melting down will never reopen . It will take 3 to 4 months to just cool them down ….. IF … they can cool them down using sea water . Where do you think the cooling sea water is going ? This thing could dwarf chernobyl and will change peoples opinion of nuclear energy for ever . Every thing nuclear and uranium mining is toast . Have a look at the market . And remember the old saying only a fool fights the market . Unlike the real estate market which is like watching paint dry . This will only take 3to4 months . Did you hear merkel today? What is the body count at the reactor as of today 23 ? 150 with over exposure ? I suspect the real numbers are much Higher . The industry is going to have to buy industrial size lipstick for this pig.

#162 BuBu on 03.14.11 at 10:06 pm

Karl, can you also show us the average house you can buy for $312k?

#163 Macrath on 03.14.11 at 10:10 pm

#88 Another Albertan

Reactor 3 is fueled with MOX.
If the MOX fuel vaporizes, because inhaling plutonium even in very small quantities is considered lethal this could be much worse than Chernobyl.

A geological study in Turkey demonstrated that earth quakes followed along the fault line in succession. Suggesting the possibility of more large quakes on the pacific rim in the near future. I was just wondering if you had knowledge of this phenomenon seeing as you most likely work with or know geologists.

#164 islander on 03.14.11 at 10:18 pm

If the average HH income in Edmonton is $98K I will eat my computer.

#165 Adventures in Sea-Tac with Moneta on 03.14.11 at 10:24 pm

83 Brad in Van

“BTW even though some may not see a link or correlation
between GDP and RE prices it does actually exist. GDP
supports consumer spending which obviously is
extremely important to supporting real estate prices and
transactions. Areas like Detroit and its GDP is not a great
example as GDP there is artificially supported by
government intervention”

It should make no difference whether GDP is from govt or not. Does it not translate to local income? Can you provide a reference to support your theory?

#166 Dodged-A-Bullit-in Alberta on 03.14.11 at 10:32 pm

Greetings: A very interesting story with Vancouver connections and possible importance for Canadian forestry industry.

http://www.nzherald.co.nz/rebuilding-christchurch-business/news/article.cfm?c_id=1503045&objectid=10712207

#167 Rob on 03.14.11 at 10:37 pm

I agree Karl, those numbers are way off, especially income.
Home price though if you factor in condos and apartments you are right. Condos at $230 000 and houses at $360 000.
A condemned knockdown across the street just sold for $275 000 just for the lot and it is not even that large or nice. Central University hood though.
Honestly though there are tons of homes for less than $300, they are just not houses.

#168 GTA (Garth Turner Area) on 03.14.11 at 10:41 pm

Happy Birthday Garth,

This year, in view of recent events, you will have to strike that fine “balance” between champagne, bunker babes, squirrel pate and earnest, meaningful prayer….

Best wishes

#169 S.B. on 03.14.11 at 10:51 pm

For all those become excited about the latest and greatest Middle East or Japan rumor or “fact”:

Can we trust the controlled Lame-stream Media, who now use twitter as legitimate source?

We have Repeaters, not reporters. NOT one fact is checked, it’s just repeated as the truth. They can tell us anything, and they do.

If it’s on Tee-vee then it’s true. Every single word of it. Not need to think, just listen in shock and awe.

#170 pigeon patties on 03.14.11 at 11:34 pm

150 The American on 03.14.11 at 8:28 pm
#144: Pigeon Patties, did you just make a claim that over 30% of Americans are on food stamps? First, I should tell you that there is a record number of Americans on food stamps due to the economic recession we are going through. That would make sense, I should hope. However, once again, are you just another Canadian pulling numbers from thin air to present a false argument?
—————————-

Typical angry American response. Read three words and start flailing in the wind. If you read what I originally posted,
you would have read that one third of US income is from Medicare, unemployment insurance, and social security. All drains on the economy and not adding to any recovery. Why jump into a conversation when you have no idea what the topic is? Sheesh, Americans!

#171 Another Albertan on 03.15.11 at 12:10 am

#153/Macrath –

I understand the science and engineering quite well. I did a basic investigation last fall of using small form-factor nuclear generation for oil sands application. I understand the MOX issue. I used to date a woman who was a teenager in Kiev when the 1986 incident occurred. I’ll ask the geologists tomorrow and will get back to you.

For a near-50-year-old reactor design (and anywhere from 35 to 40 in-service years), the physical elements have performed extremely well for dealing with an event that is multiple times the design basis. You have to remember that these reactors were designed with slide rules, basic calculators, and maybe a rudimentary computer. A tip of the hat to the engineers who are likely long since dead. This actually is a testament to their technical acuity.

The biggest issue here is almost certainly not technical, but is actually political. How timely are the releases of information to the public? What is being held back? Why?

Until the INES level is raised from 4 to 5, Fukushima still isn’t at the grade of Three Mile Island. Chernobyl is still two levels superior to that. Don’t get me wrong… it’s still possible to get there, but unsubstantiated Twitter feeds aren’t the appropriate way to ascertain things. If it’s series of outright lies, then there’ll probably be a resurgence of seppuku in the next while.

Maybe I’m wrong and it’s correct to sell on the rumour instead of on the news.

Everyone else’s mileage may vary.

#172 The American on 03.15.11 at 1:02 am

At #171: Call me what you will. I’m not angry here. I’m just not going to let you make something up. Did I call you a typical Canadian lemming? No, I didn’t. In your post in #145, you very clearly stated, “That’s the point, how can people say the US is in recovery, when 30% or more are on food stamps” Sheesh, delusional Canadians!

#173 The American on 03.15.11 at 1:07 am

Oasis, I already did provide you evidence of what I said. The USD has risen against the CAD for the past four days. Again, I will post the link again that demonstrates that. Perhaps you should read it? The USD is stronger today than what it was two weeks ago. Additionally, I should tell you currency projections are now the USD will continue rising in value through June. Watch and wait.

http://www.exchangerate.com/currency-charts/USD/CAD/last-30-days

#174 The American on 03.15.11 at 1:15 am

Also, just a tip for currency traders… USD is going to strengthen significantly against the CAD, Euro, and the British Pound over the next several months, starting nearing end of March/first of April and on through November. Trade it however you like, but you’ll thank me for it in the end if you just take that tip. And, for those who doubt me, I’ll just say “told you so” in advance so I don’t have to deal with you once I’ve written this.

Oasis, looks like the CAD fell again against the USD today. Took quite a hit today, in fact.

#175 betmax on 03.15.11 at 1:39 am

Happy Birthday Garth! Keep fighting the good fight!

#176 ted baxter on 03.15.11 at 10:47 am

WOW, talk about a misleading headline.

1. Canada’s realtors say the national average price for homes rose 8.8 per cent year-over-year to about $365,000 in February.

2.But the Canadian Real Estate Association says that includes a record number of multi-million dollar home sales in the Vancouver area that skewed the average price numbers.

3. Excluding Vancouver, the national average price actually dropped 3.4 per cent

http://ca.finance.yahoo.com/news/National-average-home-price-8-capress-1118385467.html?x=0

#177 wetcoaster on 03.15.11 at 2:35 pm

“But he said there’s an absence of clear data on the specifics of those buyers, whether it’s primarily immigrants or investor money from China.”

I would say there is a clear lack of data on how many are even in play here as it’s all anecdotal statements by salesmen.

The more I read this Chinese by the planeloads stuff, the more I say bullshit, they’ve been coming here for the last 4 decades and no one ever writes it up. Why do you think they call it Hongcouver for like forever ?

On top of that Hongcouver is completely overrated. It is a dank, ugly town most of the year and is so over crowded it takes you hours to go anywhere.

#178 brett on 03.15.11 at 3:43 pm

bond issuers can default, gold buried underground encased in concrete is safe.–oh but wait, the radio man this morning told me gold is risky now!!! better buy me some gubermint paper…..with rates below monetary inflation…..growth through safety! hahahaha.