Bad advice

At 78 she was forgetting her kids’ names, using a walker, and almost microwaved the cat. So the family decided it was time to sell mom’s house and stick her in a nice retirement home. The trouble with that: mom had no income save the public pension plan pittance, and the new digs cost three grand a month.

But once the house deal closed, there was $400,000 to play with. And that’s when armed conflict broke out. Mother wanted to stick it in GICs because that’s what [email protected] had told her. And she’d always listened to her in the past. But four hundred large invested in a five-year GIC paying 2.3% would give just $760 a month. Actually, it would return nothing at all until maturity, meaning the kids would have to upfront things. Nix that.

One of the sons pushed for mutual funds (he sells them), but everybody else figured out pretty fast his trailer fee might be bigger each year than mom’s cash flow. Screw that.

Then a daughter hooked up with an insurance guy who proposed a sweet deal. Give me the $400,000, he said, and I will guarantee you (did you hear that word, ‘guarantee’?) monthly payments of $3,500 every four weeks for the next ten years. Best of all, he continued, there will be no tax payable on this income stream, which means the old lady gets taken care of, with enough cash left to have Jack Daniels visit regularly.

And that’s what they did. They took the annuity. Nobody could imagine, after all, that she’d live more than the ten years.

This is a small but fine example of how people get skanked. The insurance company, of course, just took the money and then agreed to hand it back in 120 installments. Those $3,500 monthly payments add up to $420,000 over a decade – which is a 1% return on $400,000 (the exact amount is $418,140). Meanwhile, you can be sure they gave out the four hundred as a loan or mortgage at four times the rate.

Why would anyone possibly agree to hand their money over so it can be handed back? Because it seems safe. It’s predictable. It’s guaranteed. And most people are fools.

This, of course, is also why we buy guaranteed investment certificates and put our TFSA money into ‘high-yield’ savings accounts paying less than inflation. Let’s face it. Most Canadians haven’t a clue about investing, which is why they’re road kill for mutual fund salesguys and ravenous bank employees.

A few days ago I gave you a small primer on bonds. I showed you how they not only pay regular interest and guarantee your principal, but are capable of coughing up a nice capital gain – like during this past week. More on that soon. You should also know about preferred shares. I’ve written about these things here often in the past, but it’s time for a review. That is, if you’re interested in making 300% more than with a GIC, at low levels of risk, while paying 80% less tax.

Preferred shares are more like bonds than stocks. Companies issue them to raise capital (same as bonds) and then pay the owners a regular stream of income so long as they own the preferreds. With bonds, the stream is called interest. All the interest you earn – 100% of it – is taxable (as with a GIC). But preferred shares pay you in the form of dividends, which are taxed far less. Point one.

Companies also issue common stocks, which we call ‘equities’, trading on places like Bay Street and Wall Street. Corporations like to keep shareholders happy by giving them a share of the profits. But these dividends can fluctuate significantly depending on the business cycle and the profitability of the company. Not so with preferred shares. Their dividends must be paid before any money goes to common shareholders. Better still, the dividend does not fluctuate. It’s fixed. Point two.

The preferred shares I like the most are the ones issued by the bedrocks of the financial system – Canadian banks and insurers (regulated companies like utilities are also cool). So it’s ironic that you can go and give a major bank your life savings and the GIC they place it in will yield 2%, and be illiquid until the day it matures. Or you can buy preferred shares in the same bank, and collect a dividend of 5.35%, which is paid to you regularly, while the shares themselves are 100% liquid – they can be sold in minutes. Point three.

By the way, if you’re in the middle federal tax bracket and earn $5,000, your tax bill is $1,100 if the income comes as interest, but just $217.50 if as dividends from preferreds. This means a dividend paying you 5.35% would be roughly equivalent to a GIC yielding 6.5%. And have you seen any of those lately? That are cashable?

What are the downsides? If interest rates rise then the price of preferreds (as with bonds) declines. But, of course, the income stream continues – so most people don’t get too fussed about that, especially when rate increases are likely to be gentle. And if we have another financial meltdown, then preferred values will also decline along with everything else – but the income will carry on. We had a chance to witness this in 2008-9, and bank preferreds bounced back in price quickly. By the way, not a single bank missed a single dividend payment. Investors who counted on income, not capital gains, never noticed a thing.

So, if mom’s $400,000 had been put into the preferreds of a few banks, she’d pay for her digs ($36,000 a year) and still have $200,000 left a decade later.

This is why children are so overrated.

195 comments ↓

#1 JJ on 03.18.11 at 10:04 pm

Garth, interesting play, but the banks are not solvent and preferred shares could be gone in a heartbeat. Our banks and insurers are involved in the Credit Default Swap ponzi scheme of 600 trillion in off balance sheet debts. They also secretly hold bad debts since the implosion of Lehmen and others and are tied to some of the biggest criminal banking cartels still operating in the U.S. Maybe you could suggest preferred shares in another industry, but I wouldn’t touch any banks shares.

If the banks do not pay preferred dividends, then common shares will go to zero and there won’t be enough deposit insurance in Canada to pay ten cents on the dollar for GICs. In other words, it won’t happen. Comments like this are unfounded scaremongering. You’d earn more respect if you just posted ‘First!!’. — Garth

#2 Purp on 03.18.11 at 10:14 pm

Garth, wondering what your thoughts are on preferred share ETF’s? Good buy or stick with individual shares?

#3 Andy In Vancouver on 03.18.11 at 10:15 pm

Long time reader, first time poster of a long, rambling story…

Banks do believe there’s a real estate bubble in Canada and tough times are ahead … here’s the proof:

I got a nasty and threatening letter from Scotia yesterday saying they were reducing my personal line of credit because I had missed a payment. (Note: This was a mistake … I paid the wrong bill and rectified the situation within 2 weeks). As it turns out, there’s something weird on my credit report, which I am investigating. This was the first payment I have missed in the 2 years of history they keep.

Meanwhile, I am paying it down and have many (like 200+) times the amount owed in stock trading RRSP and TFSA accounts with them, and give them hundreds (thousands) of bucks in commissions per year.

I know, stop bragging.

My point is, if they are kicking their best customers in the teeth and squeezing credit facilities like this … are they worried about the mortgages on their balance sheets?

Garth, feel free to change the institution’s name if you like.

#4 Andy In Vancouver on 03.18.11 at 10:17 pm

Correction to above posting. The amount held with them is actually 20x + . Sorry, bad fact-checking.

#5 jas on 03.18.11 at 10:20 pm

Garth,
Good advice. But how have you arrived at the numbers in the end? I assume you include approx 21k of dividend income/yr and withdrawing of approx 20k/yr of invested amount.
If so, then we can’t be sure of 200,000 at end, because in a year when the stocks are down you have to liquadate more of your preferred stock to makeup 20k and that will also impact future dividend income stream. So there is some risk there.
But overall, not a bad strategy

#6 Another Albertan on 03.18.11 at 10:24 pm

[email protected] Hilarious.

Everyone else’s mileage may vary.

#7 R1200C on 03.18.11 at 10:25 pm

So… with the impending melting of Real Estate in places like Deadmonton… Is there any sort of a legal and tax advantageous “play” to be had with transferring ownership with a parent’s piece of real estate now – while its value is still relatively high (like $350,000) and take a “loss” later?

Only if you sell it. Mom can backpack thru Europe. — Garth

#8 Jsan on 03.18.11 at 10:27 pm

Talk about bad advice, I watched for the first time one of the shows that seems to be mentioned periodically on this blog, that would be “Property Virgins”. Is it any wonder why so many new home buyers are willing to pay so much more than they ever should for their house when they get the kind of “professional” advice that is dished out by the Real Estate “Experts”?

This couple from Toronto had qualified for 440K on their first house. 418K loan from the bank and their huge 22K down payment. The conversation went like this:

Realtor: Are you comfortable spending the 440K?

Buyer: I’m thinking about 400K, maybe 400K plus but not 440K.

Realtor: Why?

Buyer: Because 440K is a BIG number.

Realtor: It is and your focusing on the wrong number, you should be focusing on what you pay every month.

There you go, more abysmal advice from the Real Estate “expert” broadcast to new home virgins across the country. Don’t focus on the entire amount, only focus on the monthly payment after all, interest rates never go up, people never lose their jobs, inflation never increases driving costs of everything from fuel, utilities, food, etc. up, NO, only worry about what you can afford this month!!!

#9 bah on 03.18.11 at 10:31 pm

How does one go about picking preferred shares when there can be many listed for some companies such as some big banks? Should I look for companies with just a few preferreds listed or a certain type of preferred (retractables used to be popular)?

I like perpetuals. No retractables. — Garth

#10 Calculon The Mighty on 03.18.11 at 10:32 pm

hey g-man, doesn’t 1% per annum over ten years on 400,000 come out to 41-odd grand?

Not with an annuity. — Garth

#11 Scalgary on 03.18.11 at 10:34 pm

Garth,

Great post as usual…!

Do you think I can buy bankpreferreds right now, I mean tomorrow, even if interest rate is set to go up…?

Thanks in advance.

#12 Dr. WAYNE on 03.18.11 at 10:35 pm

“This is why children are so overrated.”

This statement is 100% guaranteed … now let’s wait and see how your prognostications come out …

#13 Suburban Guy on 03.18.11 at 10:35 pm

“Common shares going to zero?”
I don’t think they’d go to zero if if a dividend payment (or a few) were missed. Bank (common share) dividends are vulnerable if our housing sector tanks.
Linking deposit insurance and common share prices doesn’t make sense either.
I think you replied a little too quickly.

Actually not. In his scenario banks would have to default on deposits. CDIC does not have the capital to bail out a single bank’s customers. — Garth

#14 Men on 03.18.11 at 10:40 pm

Second…

#15 walter safety on 03.18.11 at 10:42 pm

I’ll second JJ . Bank preferreds will only be good as long as the Gov can borrow from future generations (since you mention kids) and can confiscate what the current generation can’t hide like TFSA’s . It is however much harder for a government to deal with your illiquid house should they choose to take it . Scaremongering?Not unless you think Yugoslavia in 1991 is ancient history.

It is. — Garth

#16 wicked as it seems on 03.18.11 at 10:48 pm

What about preferred ETF,s ? Do they work on the same principle of guaranteed income stream.

In general, yes. But they are derivatives. — Garth

#17 David on 03.18.11 at 10:48 pm

“If interest rates rise then the price of preferreds (as with bonds) declines.” It’s hard to imagine interest rates going down, so isn’t this a bad time to buy preferreds? I mean as compared bank or utility equities.

You don’t buy them for capital gains, but income, as well as the stability that fixed-income brings to a balanced portfolio. — Garth

#18 inglishmagor on 03.18.11 at 10:54 pm

Very informative post, thank you. As an interested outsider to preferred shares, do long term companies like Honda or Coka-Cola issue preferred shares? Are they available any time someone wants, or are they issued at various times? How would you purchase a preferred shares, would you have to set up a trading account or do it through an advisor?

The dividend tax credit applies only to Canadian companies. Some preferreds are available to retail investors, more to professionals. — Garth

#19 The InvestorsFriend (Shawn Allen) on 03.18.11 at 10:55 pm

Garth says most people are fools…

JJ our number one poster tonight then unwittingly helps to prove Garth’s point.

Thank you JJ.

Oh well, JJ will get his revenge on me in December 2012 when the world ends, righ JJ?

#20 Tony on 03.18.11 at 11:00 pm

Your advice is akin to someone who keeps doubling up at the roulette wheel on red or black or odd or even. In the end you’ll lose all your money. Safest bet right now is cash and 5 year gic’s are paying 3.5 percent.

Cash is losing value daily. And 5-year GICs at the banks are 2.1 – 2.3%. — Garth

#21 Popeye the sailor man on 03.18.11 at 11:02 pm

When is the new book coming out?
I was hoping I could get a copy before I go to sea again.

#22 bashful renter on 03.18.11 at 11:04 pm

Hi Garth,

Another fun Friday evening watching property dorks with my salivating girlfriend.

Thanks for this article. I like the way you laid it out with small, digestible paragraphs that start with the basics and look forward to more info on bonds and preffereds.

I have just moved a small portion of what my girlfriend thinks is our condo down payment into a TFSA and RRSP account. 10k in each. Are certain investments (bonds, preffereds, common shares etc) better suited for each of those accounts?

Thank-you

#23 phil on 03.18.11 at 11:05 pm

another good explanation of preferred risk/rewards..

http://www.edwardjones.com/groups/ejw_content/@ejw/@ca/@graphics/documents/web_content/web222463.pdf

Actually that is a poor piece of work. You’d almost think Edward Jones likes selling mutual funds more than preferreds… — Garth

#24 Dave on 03.18.11 at 11:05 pm

Keep it coming. Having a contrary position and actually contributing to the debate in the place of parroting the same message is quite engaging.

#25 i.am.first on 03.18.11 at 11:09 pm

…woot

#26 Renting in Milton on 03.18.11 at 11:13 pm

I put $400/month into Mutuals (RRSP), and whatever savings I have left I shove into my tax free savings account which consists of low risk investments. I can’t even max that out each year. I can’t imagine having any money left for those preferred shares. How much is needed to invest in these? I’ll never have a huge lump sum to invest and can only do small monthly contributions. Maybe these aren’t for me. Can you be more specific about the amount of cash needed for all these types of investments… Thanks

#27 Shoggy on 03.18.11 at 11:14 pm

Garth, nice primer on preferred. Preferreds should be part of a diversified portfolio. When are you going to get into the subject of buying bonds like you promised? Like I said in a previous comment, the costs to an individual to by individual bonds can be very high especially given the coupon rate. But bonds also give people security because correct me if I am wrong, but bonds are higher on the debt structure than preferred shares. You made fun of my comment the other day when I cautioned about buying long bonds. Can you get to the information on how individuals who do not have a high net worth go about buying bonds which will provide both income and security in a manner wherein they don’t pay the high commissions and fees which can then make the bonds a loosing investment. This is also assuming the person keeps the bonds in a registered account (RRSP not TFSA unless the person is a senior) where the they are not taxed After all bonds should be part of a persons well diversified portfolio. Cheers

#28 DMB on 03.18.11 at 11:28 pm

Ditto what Renting in Milton asks – Can you be more specific about the amount of cash needed for all these types of investments… Thanks
Also Garth, now that I’m learning about money, I detest your search which has nothing to do with what I’m specifically wanting in terms of investments etc.

#29 infernalmachine on 03.18.11 at 11:37 pm

hey Garth – I just resent you my email asking for a good financial advisor – hopefully you can shoot me a recommendation! i hate to admit it – but i’m stuffing the orange dude’s shorts at the moment.

He’s definitely not man enough. My email is [email protected]. — Garth

#30 CalgaryRocks on 03.18.11 at 11:41 pm

My point is, if they are kicking their best customers in the teeth and squeezing credit facilities like this … are they worried about the mortgages on their balance sheets?

I’m with Scotia and my personal banker calls me once in a while just to chat. When I wrote a big check she called me to make sure it was legit.

I call her once a year so she can rebate our yearly fee from our gold cards. We travel a lot with it since it covers rental car insurance but don’t carry a balance.

You should get to know your banker. They’ll treat you a lot better when you’re not just a number.

#31 JJ on 03.18.11 at 11:41 pm

Just watch what happens to canadian banks the next time a a major U.S. bank fails, and it will happen. Garth may claim to know the real estate market, but I know for a fact the hidden liabilities that are out there in the shadow banking system that will come back to roost. Its in the 100s of trillions. Even the U.S. has almost 200 trillion in unfunded liabilites. The major U.S. banks are holding trillions themselves. About 6 or so major countries are essentially insolvent, U.S. included.

Pass the tinfoil. — Garth

#32 pedobear on 03.18.11 at 11:51 pm

Garth:

Is there anyway to research which canadian banks hold the most american mortgages?

#33 Shoggy on 03.18.11 at 11:53 pm

To: #18 inglishmagor
you can always buy a preferred ETF which trades on the exchange like a stock and is well diversified holding preferreds in various companies thereby further reducing the risks from any one company or sector defaulting on their debt obligations. And the ETFs are open to individual investors.

#34 Matthew on 03.19.11 at 12:02 am

Garth,

I enjoyed reading your primer on preferred shares. Having those babies compound every three months is fun to watch!

I do however have a question for you – why is the dividend tax credit not a refundable credit? As it stands, for lower income folk, we don’t see much of the benefit.

Matthew

#35 Min in Mission on 03.19.11 at 12:03 am

” Most Canadians haven’t a clue about investing,”

Knew that I would fit in somewhere!!

#36 Timing is Everything on 03.19.11 at 12:06 am

#3 Andy In Vancouver

Garth said – “The preferred shares I like the most are the ones issued by the bedrocks of the financial system – Canadian banks and insurers (regulated companies like utilities are also cool).”

Good…I say stick it to ya…
Scotia Preferreds for ya all! NOW the bloggers swoon over the greedy banks…Ha! What’s the name of the game…

Don’t be poor and don’t get sick. ‘Serve Yourself’ you buggers….

http://www.milkandcookies.com/link/135309/detail/

Damn good sno-cone tonight Garth. Just thought I’d mention it.

#37 Alberta Ed on 03.19.11 at 12:15 am

Looking forward to your next book. When will it be out?

#38 Kuwaiti on 03.19.11 at 12:20 am

ahhaa that episode is going on right now. Sigh

#39 Morry on 03.19.11 at 12:23 am

good post. learned a fair bit.

just last week I put 80K into BLK S&P/TSX Composite Index Seg Fund.

good move?

#40 Guy_in_Regina on 03.19.11 at 12:34 am

Western North America’s turn next?

This geologist is predicting a major quake off the north west coast March 19th! He successfully predicted the “world series quake” in ’89, and a different one in ’86. Fox news clip c/o ebaumsworld.

http://www.ebaumsworld.com/video/watch/81380209/

I feel like Vlad Mad here!

#41 MP on 03.19.11 at 12:35 am

“It will take about eight years just to put the vacancy numbers back into the single digits,” said DeKaser.

The inventory overhang has sent home prices plunging. The median price for homes sold in January was just $122,000, according to the Florida Association of Realtors. That was down 7% from 12 months earlier and less than half the price at the peak of the market.

Winzer thinks prices in Florida will drop even more, another 5% in 2011 and 3% in 2012. “Even after that, they’re not going to rebound, they’ll just sit on the bottom,” he said.

http://money.cnn.com/2011/03/18/real_estate/florida_vacant_homes/index.htm?source=cnn_bin&hpt=Sbin

#42 Ghost of Tom Joad on 03.19.11 at 12:46 am

John Smith started the day early having set his alarm clock (MADE IN JAPAN) for 6 a.m.

While his coffeepot (MADE IN CHINA) was perking, he shaved with his electric razor (MADE IN PHILIPPINES) .

He put on a dress shirt (MADE IN SRI LANKA), designer jeans (MADE IN SINGAPORE) and tennis shoes (MADE IN VIETNAM). After cooking his breakfast in his new electric skillet (MADE IN INDIA), then he sat down with his calculator (MADE IN MEXICO) to see how much he could spend today.

After setting his watch (MADE IN TAIWAN) to the radio (MADE IN INDIA), he got in his car (MADE IN GERMANY) filled it with GAS (from Saudi Arabia) and continued his search for a good paying AMERICAN JOB.

At the end of yet another discouraging and fruitless day checking his computer (MADE IN MALAYSIA), John decided to relax for a while. He put on his sandals (MADE IN BRAZIL) poured himself a glass of wine (MADE IN FRANCE) and turned on his TV (MADE IN KOREA), and then wondered why he can’t find a good paying job in AMERICA.

AND NOW HE’S HOPING HE CAN GET HELP FROM HIS PRESIDENT (MADE IN KENYA)!

http://www.infowars.com

#43 nonplused on 03.19.11 at 12:46 am

Ya, I know, I am still posting on the wrong blog.

The Fukushima reactor problems are a black swan event. Nobody believed a light water BWR reactor could go Chernobyl, and probably it won’t. No carbon graphite to catch fire and a negative coefficient of something I didn’t quite understand but I think it meant Chernobyl became more reactive as it burned while Fukushima will become less so.

Cooling was supposed to be the backup. Cooling is easy and routine. Pumps and generators, that’s all you need. The black swan here is no cooling, indeed no water except seawater which has its own risks due to the chlorine it introduces to the steel vessels. Also I think there must be a reason that very pure water is always the choice for cooling systems in a nuclear reactor. How does the sodium and chlorine react to radiation? I have no idea but I bet somebody does which is why they don’t use sea water normally.

But the main concern is not the reactor cores, which are in containment structures and probably well melted down after a whole week with no water. The main concern is the spent fuel rods in the cooling ponds that were, in my opinion, stupidly located right in the same building, but with little containment and what containment they had has been turned to dust and twisted steel.

Watching plant 3 explode to me was a harrowing experience. The driver of the explosion was almost certainly hydrogen (want to put that in your car now?) but to me the shocking revelation was that these daemons we’ve created and then constrained and isolated have the power to generate so much hydrogen so quickly. The beast wanted out, and it looks like it’s gotten out.

What I don’t understand is why the international community didn’t send generators more quickly (actually nobody has yet). The US sent an aircraft carrier, but no generators. We have lots of them even in Alberta. Every rig drilling for oil and gas (currently, not always) has up to 3 self contained truckable 2500 hp generators right there. Is the power required too different? Why didn’t we ship a couple of genplants on our otherwise useless C130 cargo planes???? Why aren’t we helping???? We are helping in Iraq, which is a war of aggression, with no point, so why can’t we help here, when it matters??? Is the electricity required (voltage, phase) so different??? Why can’t Canada step up and fucking airlift them 20 fucking generators????

Well, we won’t and we don’t because we don’t fucking care. But we will. The winds normally blow this way.

If our military actually has a purpose, or wants to find one, we should be in Japan right now, helping in any way possible. Food, water, hygiene, health, rescue, and medical. And air dropping generators and fuel. But instead we spend all our time trying to figure our how we can use our near useless F-18’s to bomb Libya.

And Garth, you are still talking about things that no longer matter.

#44 Nostradamus Le Mad Vlad on 03.19.11 at 12:48 am


“. . . there was $400,000 to play with.” — That is the most annoying part for me — my ship still refuses to come in!

Our CFP reads your posts, and knows that if we were to come into $500K, he would do exactly as you say and we would have a steady income stream flowing in — not a lot, but a nice amount.

So I keep calling to our ship, but so far, no response! Maybe it’s a Ship Of Fools, a Fool’s Paradise!

That’s the one thing about letting different family members, who usually don’t know Jack, advise on what to do because ultimately, they’re in it for themselves. It helps to do some pre-planning, getting a will drawn up then signed off, as that is a legal document and should not be challenged.

Better to do one’s homework, spell everything out to the kiddies and then tell them if they don’t like it to stuff it. It is not their property or cash — yet.
*
Rense’s headline says “G7 will support massive inflation in Japan”. Japan has had deflation for two decades or so, so it must be time for a change, plus this.

RE in Ireland — not good, and US banks solvent (from funny money).

2:26 clip Nukes get worse, and Sound (and pix) of what it was like.

Tokyo Ghost town, and Radiation prevents workers from getting there. The water drops had little effect. One million kiloton bomb, or 31,250 combined Hiroshima – Nagasaki’s. Disinfo. campaign This is where the m$m has no equal — they are the masters of lies.

Good on Germany for not taking part in this Libyan fiasco. It’s caused by greed, plus Libya One and Libya Two. Global elites at work.

Indonesia They have a few volcanoes, as well.

Cdn. and Oz dollar vs. crude.

Forex Meltdown caused by Fukushima meltdown.

Rumors (with links) Why Soros has sent Obama south. Don’t spread this rumor!

Chaos — Japan’s ‘quake and the Mayan Calendar. Keep in mind that cycles are changing, and the Mayan Age ends Dec. 24, 2011. The year of most interest is 2014, but a lot of us may have moved back into the other worlds by then.

#45 Alex on 03.19.11 at 12:56 am

#8 Jsan: Indeed. Sandra Rinomata is evidence that Satan has taken terrestrial form. She is the very pinnacle of evil.

#46 Cato on 03.19.11 at 12:58 am

Bank preferreds are winners – demand for the spring ’09 issues were through the roof which goes to the quality of the investment. When financial world was crashing down investors on all levels were clamouring to put money into preferreds of Canadian banks. At the time had to beg to get a piece of the action.

To anyone mistakenly concerned about canadian banks in coming housing collapse, don’t be. The reason our banks were being hit hard a few years ago was the perceived counter party risks the banks were exposed to internationally (in particular the US). In other words risk from foreign governments, not risk here at home. Domestic risk is something the Canadian government controls regardless if the housing market falls apart. The risk is to the taxpayer, not the bank. Canadian banks are even better connected politically then their US counterparts and both the government and the banks realize the full implications of a dividend cut. The taxpayer will swoop in long before dividend cut is even considered, regardless which political party is in power.

Cash lost its status as a safe haven the moment central banks sat down and decided to turn on the printing press. Witness the latest response to Japanese crisis – see a pattern? Each financial crisis brings the same predictable knee jerk reaction, its so predictable you can trade on it if you have the stomach for it. Like Nixon said – we are all keynesians now. Keynesian economics slaughter savers playing it safe sitting on sidelines – sometimes the greater risk is not taking a risk in the firstplace.

#47 Mr Big Balls on 03.19.11 at 12:59 am

Who cares what numbered post i AM, im chilled and Will always fill my size12 shoe with that sweet Canadian pure Stud the sun god graced me with.

I AM so gratefull to the fathers who Genesized me That i love m’y women beyond word ‘s ;) and cherry’~h m’y SON of Gun U.S. corporations.lol

I Will host m’y mother till her fall, than burn her remains, grapefully to the horizon of sanity, where numbers dont matter mimbwit to the dumbbrite twit.

#48 Karla on 03.19.11 at 1:02 am

I posted earlier about wondering what to do with 100,000 left over from the sale of a property and needing to be invested. After a fair amount of research – six books and much web searching, my plan is as follows:

Canadian equity 12% Claymore Canadian Fundamental (CRQ)
Canadian small cap equity (8%) iShares Small Cap Index (XCS)
US equity (5%) Power Shares FTSE RAFI US 1000 (PRF)
US value equity (5%) Vanguard Value (VTV)
US small-cap equity (5%) Vanguard Small Cap (VB)
International equity (5%) Vanguard MSCI EAFE (VEA)
International value equity (5%) iShares MSCI EAFE Value (EFV)
International Small Cap equity (5%) Vanguard All-World ex-US Small Cap (VSS)
Japan (5%) iShares Japan (EWJ)
Emerging Markets (5%) Vanguard Emerging Markets (VW0)
Real Estate (10%) Vanguard (VNQ) and Canadian BMO (ZRE)
Short Term Bond (15%) iShares DEX Short Term Bond (XSB)
Preferred Shares (10%) Claymore S&P/TSX (CPD)

I welcome any advice regarding this pick. Am I overlapping anything or forgetting anything? Are there better choices? Would I be better off buying the preferred shares from a single bank?

#49 Karla on 03.19.11 at 1:04 am

oops, I meant to write (20%) for the short term bond fund. That gets me to 100%

#50 City Slicker on 03.19.11 at 1:08 am

Sounds like a major storm of sorts is heading for the California coast. I haven’t heard this anywhere else so I don’t know how legit the source is. I guess its important to add its coming from the direction of Japan so you know what its likely carrying. Thoughts?

http://www.infowars.com/massive-japanese-storm-headed-for-u-s-west-coast/

#51 The InvestorsFriend (Shawn Allen) on 03.19.11 at 1:11 am

If you forget to make your payment on a line of credit, some banks may phone you within two weeks…

Hey maybe if you get to know the computers at the bank they will realise they should not hassel you for the occasional skipped payment, not when your credit is otherwise excellent.

Meanwhile if you pay your line of credit by first withdrwaing cash from that same line of credit and then redepositing the same money the bank (its computers) will treat that as a valid payment.

As long as you are under your credit limit I believe you could do that indefinitely.

Talk about Greater Fools…

If you pay your MasterCard every month faithfully by taking a cash withdrawal on your Visa and vice versa, both credit card companies are likly to raise your credit limits.

#52 Tim on 03.19.11 at 1:16 am

You are now saying that the interest rate rises will be gentle. Yet, you previously stated that the inevitable rise in rates will dramatically increase mortgage rates. If the rise in rates is very gentle, then how much will it impact the housing market, except for the fools that bought in the last few years with 10% down?

Where did I say ‘dramatic’? Rates will normalize, but the expected increase this year is 1% (as I posted). — Garth

#53 The InvestorsFriend (Shawn Allen) on 03.19.11 at 1:21 am

HOW TO BEAT THE BANK AT ITS OWN GAME…

Say you have a mortgage free house…

Borrow $200k at a low floating rate.

Invest that $200k in the preferred shares of the same bank…

Your pref earnings will more than cover the low floating rate interest costs.

Voila, you have borrowed low and lent high. You have beaten the bank at its own game.

Just one problem…

Your wife will quite righly realise that this is not totally without risk, and will never allow it…

Note to self: Next house or next wife, she is not allowed to be on the title of the house…

The whole strategy may be hardly worth it for say $100k, but if you can do $500k you can probably make say $15k per year… And this is not $15k on YOUR $500k, this is $15k on the bank’s $500k… your net investment is zero. (loan minus prefs = zero).

There is some risk here though if interest rates rise…

I have not bothered with this myself because I prefer to be totally debt free… A friend did it quite successfully…

#54 SallyT on 03.19.11 at 1:46 am

Can you buy preferred shares in a Credit Union?

#55 City Slicker on 03.19.11 at 1:47 am

This 2000 mile wide storm that just formed in the pacific looks more like its headed to the BC coast. If this is real I’m glad I didn’t buy a 1.1 million home in Vancouver:

http://www.youtube.com/watch?v=kesP0IZggww&feature=player_embedded#at=202

#56 Soylent Green is People on 03.19.11 at 2:42 am

Re I call her once a year so she can rebate our yearly fee from our gold cards. We travel a lot with it since it covers rental car insurance but don’t carry a balance.

WHAT WHAT WHAT YOU CAN DO THIS… DAMN

#57 Jody on 03.19.11 at 3:35 am

I’m trying to figure out if giving an organization like the Red Cross shares from a non-RRSP/TFSA account would get me a bigger tax advantage than putting those shares into an RRSP. Am I right to assume it’s better to put them into an RRSP? I hate RRSP’s, with my kick ass government pension I’ll be getting RRSP’s will do nothing but kill me.

Questrade has some great online tutorials

http://www.questrade.com/learn/overview.aspx

I’m trying to find an independent financial advisor in the Calgary area, anyone have any suggestions?

#58 Question on 03.19.11 at 4:10 am

Ok, so Garth (long long time reader) I wrote about my very good experience with flow throughs about two weeks ago. I asked for the reason that they are poor investments as I had heard this before. You responded, by saying that they were really poor investments but you did not give a reason. Is it too common of knowledge for you to explain further or can I ask why you think that they are so poor an investment?

#59 McLovin on 03.19.11 at 5:16 am

Garth please bar JJ from posting.

He’s still bitter that he got stopped out of his Royal at $35 (on the way to $0 of course) but before it rebounded to $60 (don’t forget the dividends)

Idiots like him that claim to have inside information only to confuse and scare regular readers. The banks in Canada are rock solid and jerk offs like him should just beat it!

PS- He know’s for “a fact that the hidden liabilities are out there in the shadow banking system will come back to roost” that said no one else does.

Get a life lose! Save your $65 and spend it at Canadian Tire. US Financial’s like Citigroup, Wells, & Goldman will make the brave investor a lot of money. If you don’t have the guts buy EWJ or another ETF.

Seriously, losers like him add nothing. They just scare the everyday reader.

JJ join Devil’s Advocate in hell!

#60 Financial Insights on 03.19.11 at 7:34 am

Garth,

I think a mention of timeline might be important here. You know that many of your readers are renters looking to purchase a home in a few years. Do you advocate holding preferreds in a “house” account with a timeline of only a few years?

With regards to financial preferreds, if we do in fact get a housing correction, unsecured debt exposure would take a hit. While they would very likely not miss a dividend payment, it would still be enough to cause jittery investors to dump their shares leading to a (temporary) loss of capital.

It’s a different story in an investment account with a longer time horizon where a temporary loss of capital is not a big deal, but it would certainly suck for someone looking to ‘vulch’ a home in the aftermath of a correction as the share value of the preferreds would certainly drop.

Thoughts?

There are certainly no insights in that financial information. — Garth

#61 bigrider on 03.19.11 at 7:45 am

Garth you really have it in for mutual funds. That Edward Jones article made no mention of them(mutual funds).

Seems you are painting all of them with a broad brush while quite a few have demonstrated a consistent outperformance of relevant benchmarks.

I’m sure glad I have owned the few that I do that’s for sure. Not to mention the hedge funds that I also have invested in. More than glad to have paid those exorbitant fees as well.

#62 dissin on 03.19.11 at 7:46 am

We get 6.5% interest p.a here in Australia. Ordinary online savings account too. Zero fees or requirements

#63 dissin on 03.19.11 at 7:46 am

http://WWW.ubank.com.au

#64 Getting old on 03.19.11 at 8:04 am

Hey Garth you missed a few points, which is of course my limited experience with old people.
First old people I know; they only way they were leaving their home is feet first.
Point two old people love GIC’s.
Point three old people do not trust the boomers as the boomers are broke ha ha.

Here is the question of the day, how many bought on the 350 point drop last week, and how many thought the sky was falling? better still how many people are buying Iodine?

I do not worry about government debt anymore, governments are going to inflate it away. They have to or default.

#65 T.O. Bubble Boy on 03.19.11 at 8:25 am

@ #26 Renting in Milton

How much is needed to invest in these? I’ll never have a huge lump sum to invest and can only do small monthly contributions. Maybe these aren’t for me. Can you be more specific about the amount of cash needed for all these types of investments… Thanks

Almost all Preferreds in Canada are priced at $25/share at the initial offering, and the majority of them in Canada trade in a range between $22 and $28. You could buy 1, 5, 10, or thousands of these shares, so the amount you have to invest isn’t really a barrier here.

They are purchased just like any other stock, so the trading fee could be a bit high if you’re only buying a few hundred dollars worth.

You could consider one of the 2-3 Preferred Shares ETFs that are out there, but these may not have the same tax advantage on the dividend distributions that you get with owning Preferreds yourself.

Also – the Dividend Tax advantage of Preferreds only makes sense in a standard (non-RRSP/non-TSFA) trading account. Otherwise, say if these are in a RRSP, you still get a nice yield (5%+ on many of them), but that gain will be taxed as income once you eventually withdraw from the RRSP.

#66 T.O. Bubble Boy on 03.19.11 at 8:31 am

Garth – what is your main reason for not liking non-bank preferreds?

For example: Loblaws and Weston both offer preferreds, as do most Brookfield companies, Bombardier, and many energy companies like AltaGas/TransCanada/Enbridge/etc….

Is the risk simply that these companies are more cyclical?

Credit risk. — Garth

#67 Purrfect on 03.19.11 at 8:58 am

Garth
I thought the perpetual preferred shares, which you recommend, are the most vulnerable to rising interest rates. Aren’t the reset preferred shares more desirable?

#68 TaxHaven on 03.19.11 at 8:59 am

“If interest rates rise then the price of preferreds (as with bonds) declines. But, of course, the income stream continues…”

PROBABLY will work okay IF the issuer remains in business, IF food/energy etc. price inflation doesn’t eat you alive, IF interest rates don’t soar heavenward, IF the stock market doesn’t catch fire & leave you in the dust, IF taxes don’t soar, IF the Cdn.$ doesn’t droop & send all prices screwy, IF you keep your day job and IF Granny’s rent doesn’t rise. Probably as safe as anything but no guarantees.

I realise most people are risk-averse and ill-prepared anyways, but what they SHOULD be doing with 25% of that money is playing the stock market, individually, and watching it daily, hourly. One decent trade a month would easily make more than the GIC pays…

Why? Because, in a world of 2% returns stretching as far as the eye can see, all investors have morphed into speculators at best and gamblers at worst. The world’s pensions, annuities and insurers are STILL betting on historical returns in the 8% range. They will be getting increasingly worried as time passes.

Better get used to RISK.

I used to think you knew what you were talking about… — Garth

#69 TaxHaven on 03.19.11 at 9:07 am

I’m curious. Why would these erstwhile blue-chip Canadian corporate titans and banks be prepared to pay so much more than the going GIC rate for money?

Would they be borrowing short (for now!) & lending (optimistically) long, expecting the cost of money to rise sharply in future? Or expecting a buoyant mortgage market in five years’ time?

Are they funding ill-advised M&A activity now with your money?

Are they in fact in not-so-good financial health themselves?

Who knows…

Perhaps you should ask why GIC rates are so low? Investor ignorance? — Garth

#70 Nemesis on 03.19.11 at 9:29 am

As ever, generally sage financial advice – if not, perhaps, as much fun as discussing Chad’s love life… Speaking of which, Chad denouement???

#71 john m on 03.19.11 at 9:31 am

In reply to a comment by#216 AACI-Okanagan on 03.18.11 at 10:32 pm

@ #198 john m on 03.18.11 at 7:21 pm

Dream on? 3% on 600 billion is?? do you actually believe that everybody will default on their CMHC insured mortgage? This is not the first market crash that CMHC has been through <<<……………i know exactly how much 3% of 600 billion is (18 billion) and now you do also :) . And no i don't think they will all default but if they suffer a paltry 3% loss they have lost all their income(and they have to honor those mortgages for 35 years) and no this is not the first market crash but it has the possibility of being the worst…and CMHC used to have a ceiling of 150 billion insured now thanks to "H" and his cronies they have over 600 billion insured. Sure seems like bad management to me!

#72 Utopia on 03.19.11 at 10:02 am

#6 Another Albertan on 03.18.11

[email protected] Hilarious.
———————————————–

I have no idea what that means. TNL? TB?

#73 Nomis Ralpmet on 03.19.11 at 10:07 am

Re: Jsan’s comment. Aaaaah! I remember watching this particular episode and having my blood boil!

My greatest fear is that that the western world seems to have gone off the rails when it comes to ethics and morality:

– bankers who seem to take a greater share of the wealth generated by the financial sector
– realtors who are blatently biased towards their interests gains then their clients’
– politicians who will say anything to get in or stay in power

Its gotta be tough for the young and inexperienced to know what to do.

Where will we be 20yrs from now?

#74 Jwkim on 03.19.11 at 10:22 am

Re #155 Martin yesterday.
Your friend made a great return on Property bout 6 years agO. To get the same return the buyer has to sell for 680k in 2016. Do you think a 1bed condo in midtown Toronto will be worth 680k in 2016? No? Higher? It’s not your friend that has a problem – he cashed out as Garth has advised-it’s the fool that bought it that has the problem…

#75 S.B. on 03.19.11 at 10:59 am

With so many “first!!” comments I was seriously considering ending my subscription to this site.
(At least that what I figure the monthly charges from “GT Enterprises” are, on my credit card bill. :P

#76 Financial Insights on 03.19.11 at 11:30 am

“There are certainly no insights in that financial information.”

Care to elaborate beyond the jab? The question was respectfully posed, and I think it merits an explanation.

To clarify, are you suggesting that someone who is saving for a home in a few years would be advised to hold a large segment of their savings in preferred shares which you yourself have noted will fall (temporarily) with rising interest rates and which could potentially fall more than a token amount if investors get spooked at the potential of significant bank write-offs on unsecured debt? This is far from an unrealistic scenario.

I completely agree that they should be bought for their cash flow, but that brings me back to my original point. If held with a long time horizon, they are a great investment. If held for only a couple years, the return of capital is FAR from assured. Perhaps an explanation about matching investments to time horizons might be appropriate for the inexperienced investors who look to you for advice.

Best,
Ben

(a) The post had nothing to do with people saving for houses. (b) Nowhere did I say everyone should have a ‘large’ amount in any one asset class, let alone preferreds (the retired woman was obviously an example of income-generation). (c) Rate increase will be gentle, since otherwise the economy would careen. (d) If more volatility erupts, the values of all fixed income assets – including preferreds – will rise, giving a capital gain as well as excellent income. (d) There is absolutely no reason to believe there will be ‘significant’ bank write-offs on unsecured Canadian debt. That is fiction, and I am surprised someone with your qualifications would indulge in it. (e) If you are so afraid of risk over the next two years, visit your bank. They love folks like you. — Garth

#77 S.B. on 03.19.11 at 11:39 am

Ha, look what I just found:

http://www.cbc.ca/news/business/story/2011/03/18/f-marketplace-erica-johnson-green.html

Peeling back misleading green labels
Why government needs to police those ‘green’ claims

Not according to the environmental marketing company Terrachoice. It found that not only have the number of products making green claims increased by almost 75 per cent since 2009, but 95 per cent were guilty of greenwashing, either by making claims that were vague, irrelevant, unproven or just patently false.

#78 dd on 03.19.11 at 11:41 am

I see gold was front page news on Garths blog the other day. He stated that Gold had fallen $20.
On his follow up he forgot to mention gold has risen $30 in two days and the USX is at a 365 day low.

It was buried news. The context was worried money flowed into US Treasuries, not bullion. And it always will. — Garth

#79 Mr. Reality on 03.19.11 at 11:45 am

Garth

Would this be the same thing as entering a D.R.I.P?

Dividend Reinvesting Program?

Mr. R.

No. — Mr. G

#80 Jonathan on 03.19.11 at 11:53 am

Garth, since the tax benefits of preferred shares aren’t applicable within a TFSA, what would you recommend for these accounts to fulfill a similar niche? I’m looking for something that pays better income than bonds, with less volatility than the TSX. I’m thinking a corporate bond ETF since the interest payments are tax-free. Any thoughts or glib response?

TFSAs are for growth, not bonds. — Garth

#81 Industrial Guy on 03.19.11 at 11:53 am

March 18th has passed …… The only way the minister of Finance can overt the coming real estate train wreck is to bring in some form of mortgage interest deduction to the tax code. Turn that huge whopper of a mortgage into a goldmine. This would re-inflate the housing bubble and give them their Holy Grail ….. a majority Government. The national debt would soar but, who cares when there’s brushed stainless appliances and polished granite counters to be had.

Anyway, Government debt is a mythical creature like unicorns. You know what it looks like but, can you take the family on a summer vacation to see the National Debt in Ottawa? …. and just like snow in winter. It will always be there.

Honestly, did you wake in a cold sweat this morning thinking …”how will I pay my part of the National Debt today?” I think not. Your Government knows this. They count on it.

Come on, we have oil wells ….. uranium, copper, nickel and gold mines. Coal!!! (sorry about the language, Garth). Endless forests. 1/2 of the World’s supply of drinking water. As the World goes to Hell. We profit.

Well some of us do.

#82 Adventures in Sea-Tac with Moneta on 03.19.11 at 12:02 pm

72 Utopia – the nice lady at the bank.

#83 Tim on 03.19.11 at 12:05 pm

Avoid preferreds they are too expensive now. Instead buy blue chip dividend paying stocks, a small amount of well capitalized income trusts, and, if you must buy bonds, keep them to short term, buy a bond index fund.

Short term bond fund? I’m so glad you are not an advisor. — Garth

#84 LS on 03.19.11 at 12:33 pm

Been looking for preferred shares of the banks. Lots of options, but where are the perpetuals? So far every series I’ve seen has some redemption date, and most of them are on a 5 year cycle.

#85 Another Albertan on 03.19.11 at 12:58 pm

#72/Utopia –

The Nice Lady at The Bank.

#43/nonplused –

Japan’s grid is split into south+west and north+east. The SW is 60Hz while the NE is 50Hz. They are connected by a small number of DC and frequency converter stations. Fukushima is in the NE sector. Anything we have to offer “here” is practically useless there, as North America is a 60Hz system.

What we are witnessing is more of a communications, management, and political fiasco. Technical work is being hampered by the site conditions. Your perception of things is being hampered by the C, M, and P conditions. I will bet dollars to donuts that when the investigation is released years down the line, the technical faux pas will be completely overshadowed by the higher level ball-dropping that has occurred in the last week.

Sea water is bad because stainless steel does not play well with it. It’s called corrosion. Additionally, if you use sea water as opposed to demineralized water, when you flash sea water, you are going to be left with highly concentrated depositions. You want to avoid these deposits, especially on fuel bundles because it will lead to hot spots and will enhance the possibility of failure on individual tubes.

Also, it’s unclear the state of affairs on support infrastructure at the plant. We don’t know anything about the integrity of the piping and pumps in the primary, secondary, and tertiary cooling systems. We don’t know the status of the motor control centres. We don’t know the status of substations and their control buildings.

The gear at the plant is in really close proximity. The devil’s in the details.

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/von%20havenstein/japan_earthquaketsu_fukushima_daiichi_march18_2011_dg.jpg

Everyone else’s mileage may vary.

#86 Alister on 03.19.11 at 1:02 pm

Most people I know are very risk averse. They will not put their money in anything that has any chnace of a downside risk. Of course they don’t get any upside ride either by going the safe route.

Funny thing is that the very same people will buy cars, furniture, clothes,vacations and so on. Those things have 100% guarantee of a total loss.

They just don’t see the irony of their actions.

#87 Herb on 03.19.11 at 1:03 pm

#41 Ghost of Tom Joad,

the Specter of Capitalism wants to know why you are looking for a job at all.

Surely you own shares of the widely-held American corportions manufacturing in those overseas countries, and are living well off the profits and dividends.

Doesn’t everybody?

#88 Herb on 03.19.11 at 1:14 pm

#51 The InvestorsFriend (Shawn Allen),

the computer at My Bank is ignoring my attempts to establish a close personal relationship, and I don’t have the several $100K on deposit that would get me a personal banker.

Am I screwed?

#89 Young Old Fart on 03.19.11 at 1:22 pm

#39 Morry on 03.19.11 at 12:23 am

good post. learned a fair bit.

just last week I put 80K into BLK S&P/TSX Composite Index Seg Fund.

good move?

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

That question is answered easily…what is it worth a week later?

#90 Devore on 03.19.11 at 1:26 pm

The dividend tax credit applies only to Canadian companies. Some preferreds are available to retail investors, more to professionals. — Garth

Don’t all preferred shared trade on the open market? In which case everyone has equal access (unless you’re concerned about split second execution).

Only case would be for new issues, but those are available to major brokers in their IPO section as well.

#91 S.B. on 03.19.11 at 1:39 pm

dd, why would we talk about a 1.5% swing ($30-40) in the price of gold? 1.5%!! Now, 15% would be a number of interest. Go back to licking your bullion: that cyclical, volitile, commodity.
It is as volitile and cyclical as the gas in your car’s tank. nothing more, nothing less.

#92 DCOg on 03.19.11 at 1:52 pm

Speaking of kids – I have started the process of securing my children’s future (I hope) by having them make regular monthly contributions. I can’t decide what to get them into & the monthly contribution is not going to be more that $100/month. Any suggestions from the good people of this blog.

Garth – I have been a faithful reader of this blog for 2 years now – it has changed my life – thank you for all your effort. We need more people like you.

#93 pigeon patties on 03.19.11 at 2:17 pm

#43 nonplused on 03.19.11 at 12:46 am

The black swan here is no cooling, indeed no water except seawater which has its own risks due to the chlorine it introduces to the steel vessels. Also I think there must be a reason that very pure water is always the choice for cooling systems in a nuclear reactor.
——————————–

A big problem in using seawater is just old fashioned corrosion. Purified water doesn’t conduct electricity. also boiling it would leave large salt deposits inside the chamber.

They brought in a generator last week to get the pumps running, but it was reported that they had the wrong electrical connectors and couldn’t connect. More likely it was from the east side of the island and it was the wrong frequency? East side is 60Hz and West/North side is 50Hz.

A friend in Skatch told me proudly he had bought a new generator that could run his whole house when he needed.
First power outage, he discovered that it also needed to be wired into his house first, plus 2k worth of automatic switchgear.

No, he’s not Japanese, but he could fit in at the reactor site based on how well he prepared for emergency.

#94 Timing is Everything on 03.19.11 at 2:21 pm

#81 Industrial Guy – said “Come on, we have oil wells ….. uranium, copper, nickel and gold mines. Coal!!!”

Abusive, obscene or disrespectful commenters will not be published, and are subject to banning from this forum. – Garth

Garth, That’s twice in two days about the obscenities. ;)
———————————————————-
#87 Herb

Haaaa!

Does anybody actually ‘work’ for a living anymore? You know, do you actually have any useful ‘skills’ that regular folks would pay you real money to provide…
Or do you all ‘invest’ in front of a computer all day?
Or maybe shuffle paper for one of our many levels of government…between trades? Just askin’?

#95 Oasis on 03.19.11 at 2:25 pm

It was buried news. The context was worried money flowed into US Treasuries, not bullion. And it always will. — Garth
_______________________________________

LOL.. sure, money will flow into a bankrupt nation that is printing billions of dollars daily to pay you back. what a great place to put your money…

the USD continues to plummet, and there will come a point very soon, where the US bond market, will also collapse. in the mean time, your “save haven” currency isn’t doing very well.

troops in Bahrain, UN bombing Lybia, nuclear disaster in Japan…. and the USD STILL GOES DOWN…

#96 Financial Insights on 03.19.11 at 2:26 pm

“The post had nothing to do with people saving for houses.”

That’s precisely my point Garth. You have to realize that there are many people reading your blog who are in vastly different life situations and who have different time frames for their investments. I’m simply suggesting that perhaps it might be in their best interest to discuss how different investments can be used to achieve different investment goals. A ‘vulture fund’ to be used for a home purchase in a couple years should have a very different asset allocation than a retirement portfolio for a 25 year old. Get my drift?

“If more volatility erupts, the values of all fixed income assets – including preferreds – will rise, giving a capital gain as well as excellent income.”

That statement is highly suspect and does not reflect past reality.

“There is absolutely no reason to believe there will be ‘significant’ bank write-offs on unsecured Canadian debt. That is fiction”

Which forms of debt people default on first, Garth? Few people default on a recourse mortgage before first defaulting on their credit cards or unsecured lines of credit. History bears this out. If the economy does detereorate and there is a rise in defaults, it will be felt first in the unsecured debt, of which our banks have up to $350 billion in exposure.

Again, the banks will likely not miss a dividend payment, but the preferred share price will not go unscathed.

“If you are so afraid of risk over the next two years, visit your bank. They love folks like you.”

I’m not afraid of risk at all Garth. But unlike some people, I understand that the ability to assume financial risk is partially dictated by timeline. This is financial planning 101. It’s why I could care less what happens to my stock-heavy retirement portfolio over the next couple years, but I’m not willing to subject my capital to undue risk when I am counting on it to be fully intact in two to three years. Again, this is basic financial planning.

So let me suggest that perhaps you might consider outlining a sample ‘house’ portfolio for someone hoping to take advantage of a market correction in two to three years and then contrast that with a retirement portfolio for a 25 year old and 55 year old. Surely we agree that they should all look different……right? This is something that it seems that you assume your readers understand. I’m suggesting that perhaps it may be a worthwhile excercise to educate them in this.

Best,
Ben

Suggestion noted. However I’m not Mother Goose. I point. I do not coddle. — Garth

#97 The InvestorsFriend (Shawn Allen) on 03.19.11 at 2:32 pm

Herb at number 88 asked me

the computer at My Bank is ignoring my attempts to establish a close personal relationship, and I don’t have the several $100K on deposit that would get me a personal banker.

Am I screwed?

You are Herb until you learn that in this world you must look after your self if you wish to be a sucess financially.

A personal banker will offer low risk advice (complete with low returns) and make a nice fee for doing it.

Bank computers are “useful idiots”… Many Canadians understand this and they sucessfully borrow new money to pay old loans and the computers spits out a credit increase. Such stupidity can riun you and cause a loss for the bank. Or it can be used to advantage to borrow to invest in the likes of bank preferred shares.

Fools and idiots always become useful under certain circumstances… such as if you are a Condo salesman in Toronto.

God bless fools and idiots.

#98 guava.ca on 03.19.11 at 2:34 pm

As of the March 19th low rates, 100k buys an 80 year old single female $955 per month for life.
No guarantee for the kids if she passes early.

http://www.canadianbusiness.com/my_money/rates/annuity_single_life_female_no_guarantee/index.jsp

$400k gets her $3,820 per month for life, most of it treated as return of capital tax free.

On top of that, mom would still be getting whatever CPP she has, full OAS of $500 and maybe even $300 of GIS (guessing half would be clawed back).

“Return of capital tax-free,” means you hand your money over as a lump sum and the insurer gives it back to you in monthly chunks. Same money. The only mystery is why anyone does this. — Garth

#99 Kurt on 03.19.11 at 2:36 pm

#43 Nonplused

Positive void coefficient of reactivity. Both the BWR and the RBMK are “thermal” reactors – they take advantage of the radically increasing neutron capture cross-section of U235 with decrease neutron energy (speed.) So how do you slow them down? You bounce them off of other stuff, water in the BWR, graphite in RBMK and heavy water in CANDU. Graphite is a better moderator than plain water, so when spectacularly inept operation combined with really shitty reactor design at Chernobyl to great large steam voids, thing got much worse real fast. CANDU actually has a positive void coefficient as well because it uses plain water for cooling, but this is countered with engineering measures – automatic injection of borated water into the moderator to kill the reaction. I understand that this is triggered by conditions in the primary coolant and happens *very* fast. Regardless, Fukishima I-1 through I-3 had gone on trips when the earth began to shake and had been down and safely cooling when the shit hit the fan so the void coefficient is irrelevant to this series of accidents.

Any closed-circuit steam plant (coal, solar, gas, oil, nuke) uses exquisitely pure water. The reason is that any mineral content ends up stuck to the hot surface (boiler tube, fuel cladding) and impairs heat transfer. The lifetime of these beasties is such that it is economic to use the purest water available and to keep re-purifying it while in use! I cringed when I read that they were pumping seawater into Fukishima I-1 because that meant the reactor was written-off – it would never run again. As for sodium and chlorine and the radiation environment, it’s not really relevant. We’ve seen reactors cooled with liquid sodium (LMFB), helium, water, flouride salt, lead or lead-bismuth eutectic, air and god knows what else.

The spent fuel ponds are supposed to be tempory storage. When the fuel comes out of the reactor, the decay heat output is so great that you can’t practically transport it anywhere, so you put it in the spent fuel pod for a while to cool off before transporting it elsewhere for long-term storage. There are rumors that the spent fuel pond on Fukishima I-4 where over-loaded leading to the problems we see now.

Hydrogen: The fuel elements are actually sealed hollow tubes of zirconium alloy. They contain uranium oxide or mixed uranium-plutonium oxide pellets. Zirconium is used because it is relatively resistant to neutron damage (the pellets themselves swell and distort quite significantly in operation.) The tubes also contain a substantial empty space. When the uranium or plutonium atoms split, some of the chunks are either gasses or decay to gasses and fill the empty space. This is all well and good as long as the tube doesn’t get too hot. If it gets really hot and there is water around, the zironium reacts with the water (steam actually) to produce zirconium hydroxide or zirconium dioxide and hydrogen. From an engineering standpoint, hydrogen is a pain in the ass. The molecules are teeny tiny and go all kinds places other stuff won’t go, leading to hydrogen embrittlement of metals, leaks where you wouldn’t expect them and other such stuff. And of course, it’s odorless and colorless and flamable across a wide range of concentrations in air. Yeah, I don’t think we’ll ever see it used as a general transportation fuel.

All of this stuff is in wikipedia, but it takes patience (lots of it) to dig it out.

As for the international community’s response, Japan is a sovereign industrialized nation. You don’t send your military to help out unless explicitly asked to do so – to do otherwise is an act of war with all it’s attendant consequences. We aren’t helicoptering in gensets because we haven’t been asked to. The reasons why we haven’t been asked to will no doubt be revealed in the coming months. In the mean time, the consequences of the Fukishima Dai-ichi mess are dwarfed by the devastation of the tsunami itself.

#100 VanLarry on 03.19.11 at 2:41 pm

Retirement homes ain’t cheap. I heard some of them go up to around 5k a month, assuming you’re not independent.

#101 Morry on 03.19.11 at 2:41 pm

@young old fart

That question is answered easily…what is it worth a week later?

i assume you are a bit too young…. what does one week show? nothing. Past performance is good… just hard to divine the future prospects

#102 March of the Pigs on 03.19.11 at 2:43 pm

not to be overly alarmist or cynical but what exactly are they planning on hooking this power to exactly? The shells of buildings that look like they were hit by a nuclear bomb? Right it was hydrogen explosion, that makes it so much better…

http://img140.imageshack.us/i/49657371.mp4/

#103 guava.ca on 03.19.11 at 2:49 pm

Because the insurance company will keep paying the chunks for as long as you live even if you end up getting 300 chunks.

The people who only live to get 10 chunks are letting their capital get returned to the long livers.

#104 Another Albertan on 03.19.11 at 3:06 pm

#99/Kurt –

An excellent explanation.

Everyone else’s mileage may vary.

#105 March of the Pigs on 03.19.11 at 3:08 pm

on a brighter note:

http://www.huffingtonpost.com/kelly-rigg/battleproof-wind-farms-su_b_837172.html

#106 Macrath on 03.19.11 at 3:14 pm

#72 Utopia

The nice lady at the bank. [email protected]

#107 Timing is Everything on 03.19.11 at 3:21 pm

Suggestion noted. However I’m not Mother Goose. I point. I do not coddle. — Garth

And we know what a coddle should cost us give or take…You answered that for us a few posts ago when I asked.
Thanks. Much appreciated.

“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

#108 UnagiDon on 03.19.11 at 3:47 pm

Only in Japan could you find a cartoon explanation of a nuclear meltdown that draws an analogy to stinky diapers.

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

#109 Edmonton Man on 03.19.11 at 3:48 pm

Dear GArth,

Can’t thank you enough for your books and getting me out of the real estate market! You’re the best. The latest estimate on my 4 bedroom House that I sold is $340,000, I sold it for $400,000 3 yrs ago just as the bubble correction was getting ready to take place here in Deadmonton!
Now Is see even during the 1st two weeks of March, when prices are supposed to have a last & final uptick as fools rush in to get the 35 YR prices are softening already here. Condos done 1% in just the last week.
Next spring investors betting on a possible upturn with be taking a blood bath for sure. Hundreds of new condos will be on the market at close to 2005 prices whose going to want to buy at 2010 or 2007 prices ?

#110 Rick in Japan on 03.19.11 at 4:00 pm

Nosty,
A particular poor choice of ‘journalism’ that you posted (I already took Bob Nichol’s at the Veterans to task for his fluff piece of ‘journalism’) -also you misquoted (I can see where you surmised, but it was a misquote) your first article. A bit disappointing coming from you.

#111 Timing is Everything on 03.19.11 at 4:03 pm

Slightly off topic…or is it?

Bombs away….Oh ya, regular gas up in Victoria to $1.29

http://www.voanews.com/english/news/Libyan-Forces-Take-Aim-on-Benghazi-as-World-Leaders-Convene–118293224.html

#112 Valyrian_Steel on 03.19.11 at 4:23 pm

Amidst all of the GIC bashing (deservedly so), I feel like I’ve gotten away with something… I’m getting 4.25 and 5.25 percent on the last two years of a 3 year GIC.

If it is not sheltered, your real return is 0.5% and 1.5%. Are you happy with that? — Garth

#113 Dodged-A-Bullit-in Alberta on 03.19.11 at 4:30 pm

Greetings: #93[ pigeon patties]

“purified water doesn’t conduct electricity”

Suppose we fill your acrylic bathtub with purified water, immerse you, and drop in a live electric hair dryer! Right!!!

#114 Brian C on 03.19.11 at 4:49 pm

Sold my dream home as it became a nightmare, Took me almost a year, Timberframe on 5 acres in Nova Scotia, lost 30 . Moved to Vancouver Island where you can actually take your family out to a meal that isen’t deep fried. Living on my sailboat , waiting for things to wisen up , banking my income.
I stop and wonder sometimes why the hell I still want a house.
29,900 for my boat
150 a month for my slip including internet, power, water, and showers.
58 a month for my Koodoo bill
Thats it other than insurance.
O ya Im on Ocean front with moutian views and the best neighbour hood I have ever lived in.
Thanks Garth
Take care
Brian
PS I do miss my Norton but its safe and warm ( =

#115 Beaker on 03.19.11 at 4:50 pm

How do you buy bank preferred shares?

Here’s one way in a nutshell on your own (without using a financial advisor):

Most major banks will have an online discount brokerage service that can be tied into your online banking. The procedure is kind of like opening up a new bank account. Fill in an application, read and sign the papers and submit them to your local bank branch. This same procedure can be used to open a brokerage TFSA account. You can open up 2 accounts, one a TFSA and another just a normal brokerage account. Take your time to read and understand everything in the application and ask/research any questions. There may be an option for DRIP (dividend reinvestment plan) which is kind of works like a compound savings account. The cash you receive from a dividend payment can go back to purchasing full unit of the shares (there shouldn’t be additional brokerage fees for this service), which will add to the next dividend payment.

The brokerage firm may have a practice account that you can use to learn how it works before using real money.

Once you have opened the brokerage account, log into your online banking and select your brokerage account in your account list. You have a whole bunch of new menu options and lots of new tools, such as buying/selling, research, technical analysis etc.

Depending on the banking institution the fees will vary. There will be a fee to buy and sell stock, anywhere from $10-30 (and depending on how much $ you transfer into the brokerage account, fees will change, the application form will have all that information). Do a stock search for your bank name. There will be a common stock and preferred shares. There will be many preferred shares “series”. I.E. BANK.PR.A BANK.PR.B etc. Do a quote on all of them and look at the dividend %. You typically want to buy the one with the higher %, but they usually are all about the same. The Ex-dividend date is the date where you need to own the shares before this date to qualify for the dividend payment. These are paid quarterly, or once every 3 months, and you’ll receive the dividend payment approximately 1 month after the Ex-dividend date. All that information will be in the press release.

Once you have decided on a preferred share, you need to do a bit of calculation to figure out how many shares to buy. Example, you have $2530. Say the share price is $25 and the quarterly dividend is 0.35 per share. You can buy 100 shares + approximately $30 for the commission. $25 * 100 shares + commission is $2530. When placing a buy order always use a limit price. As you will see by the chart the price fluctuates slightly during the day. You do not want the transaction to go over the amount of cash you have in your brokerage account. The limit price will only execute the buy order if the price is at or below the stock price you type in. If the limit price you put in is $25, and the stock price goes to $24.90, it will take. If the stock price is above $25, it will not take until it drops to $25 or until the end of the trading day that you set the duration for. There will be no brokerage fees if the order expires, but confirm this with the terms and conditions.

When it comes time for the dividend payment and you have enough shares to take advantage of DRIP (if you have it enabled on your account) here’s what happens: You have 100 shares and the dividend payment is 0.35 per share. You will receive 100 * 0.35 = $35 for the quarterly dividend payment. If the share price is still $25, you will automatically have 1 share added to your 100 for a total of 101 shares. The remainder $10 just stays in your brokerage cash account. This will happen 4 times a year.

If the account is just a regular brokerage account (not a TFSA), come tax time, around February, you will get a T5 form and a summary of dispositions (stocks that you have sold) mailed from your bank or brokerage institution for tax purposes. So in that 1 year, on the $2500 investment, you will see a T5 form of approximately $140. (DRIP would be approximately $142.10). Try getting that kind of return from the orange guy’s shorts ($2500 @ 2% would yield approximately $50). And as discussed, interest payments are taxed at 100% rate added to your income (+$50) versus a dividend payment taxed at 20% (20% of $140 is $28).

Whenever you sell your shares, you’ll have to figure out capital gains if you sold the shares for more than the price you bought them at, or a capital loss if you received less than you bought them for. You do not get tax $ back for capital loss, it accumulates. If you have more capital gains than losses you will pay taxes on the difference, but at 50%. So you bought the preferreds for $2530 above, and sold them for $2660 (say -$30 commission for $2630), you will have made a capital gain of $100. You will be taxed on 50% of that, so $50 goes towards your income. If this is done within a TFSA… throw all this out the window!

Ater writing this, now I see why so many people are kind of scared at doing this, sticking with stuffing the orange guy’s shorts, because it is simple. My old folks barely know how to check their e-mail. There are quite a few steps involved I’ve learned this on my own over the years, and reading blogs like this one for tax strategies. Thanks Garth!

Now walk us through hernia surgery. Hey, anybody can do this! Bend over!– Garth

#116 BrianT on 03.19.11 at 5:14 pm

#98Guava-IMHO anyone that has 400 grand at the age of 80 yrs old should be using that cash to enjoy their life to the fullest that month or year-this obsession with being in the finest nursing home is ridiculous. OTOH that does look like an awfully lucrative business to be in.

#117 dd on 03.19.11 at 5:34 pm

#78 dd

..It was buried news. The context was worried money flowed into US Treasuries, not bullion. And it always will. — Garth…

Always expect the unexpected.

#118 Derek on 03.19.11 at 5:35 pm

Stunningly good talk from Australian economist, Steve Keen, to the Mortgage Finance Association of Australia about the relationships between mortgage debt, house prices and employment. His graphs are based on Australian data but it could be Canadian data. If you want to know why Canada didn’t crash when the US did, and why it certainly will soon without the right government action, set aside 40 minutes, look, listen and learn.

#119 Timing is Everything on 03.19.11 at 5:36 pm

Will this end well? (Oil well that is)

Obama Finally Has His Own War…

http://www.spiegel.de/international/world/0,1518,751982,00.html

http://www.germnews.de/dn/

#120 moloko on 03.19.11 at 5:41 pm

Tim:
“Avoid preferreds they are too expensive now. Instead buy blue chip dividend paying stocks, a small amount of well capitalized income trusts, and, if you must buy bonds, keep them to short term, buy a bond index fund.”

I agree with you Tim!

#121 S.B. on 03.19.11 at 5:47 pm

Looking at the bigger picture, for those who doubt this “New World Order” thingy:

Europe fell to the EU (accomplishing for the bankers what was not accomplished during their first attempt in 1940), and look how they are suffering into bankruptcy now.
Poland’s entire command structure was taken out, and replaced, by one plane crash.

The bankers also collapsed Iceland and Ireland, formerly homogeneous middle class societies.

The middle east is being taken out one country at a time: Iraq, Afghanistan, now Libya.
They want into Yemen and Egypt badly, our “news” feeds us a non-stop sell job to fan the flames of chaos and war. Our news has but one purpose: to sell war and the corporate agenda.

I’ve seen a map online of the vast under-ocean oil field discoveries near Israel and Gaza. Guess what they are fighting for…

Japan is being weakened now. Some say, the plan calls for EU, AU (Asian union), and NAU (North American Union)

Hell no we won’t go? You bet we will! What’s more powerful: a bomb, or a week without food?
You know the answer. We will be weakened and softened-up in time. Heck, we’ve already written a blank 50 billion cheque to the globalists under the auspices of our government this year: 1.5b for G20, 35b for new jets, and 9b for new prisons and now the cost of the Libya invasion.
What if this Libya invasion sends the price of fuel to unattainable levels? Our food is all delivered by truck…what was I just saying about a week without food??

USA is already making in-roads into Mexico all under the guise of the “war on drugs” (how’s that working out since Nancy Regan said this in the 1980s?)
USA is flying drones (unarmed, for now…) into Mexican airspace, I’ve read. We’ve signed away our border soverienty (did we ever own it)? During any emergency, US troops are allowed in our cities to “help”” us. Yeah, I can’t wait. Do do you Iraq much?

It coming, one “online revolution” (or similar BS) at a time.

We are living through WW3 now, a re-shaping of the world like in WW2 which spawned Israel and decades of commuism in Europe. We all know that Sept 11 (no, muslims did not gain from it) was the “Pearl Harbour” event that was necessarily required to engage the world in this mess.

#122 WesternCanadian on 03.19.11 at 5:58 pm

#48 Karla:

Depening on how old you are and the security of capital you need, I would highly recommend you throw 10k-15k in STP. Southern Pacific Resources, oil sands play, trades on the TSX. Currently producting ~4,000 boe/day. Currently developping their big project which should triplle their production in the next couple years.

Its not without risk, but this stock should tripple in the next 3-5 years, and will be a major takeover candidate.

Karla. Ignore him. — Garth

#123 S.B. on 03.19.11 at 6:08 pm

http://www.zerohedge.com/article/former-goldman-sachs-analyst-joins-marc-faber-and-gerald-celente-predicting-major-war

“I noted in 2009:

The claim that America would launch more wars to the help the economy is outrageous, right?

Certainly.

But leading economist Marc Faber has repeatedly said that the American government will start new wars in response to the economic crisis:

•”The next thing the government will do to distract the attention of the people on bad economic conditions is they’ll start a war somewhere.”
•“If the global economy doesn’t recover, usually people go to war.”
Is Faber crazy?

Maybe. But top trend forecaster Gerald Calente agrees.

As Antiwar’s Justin Raimondo writes:

#124 pigeon patties on 03.19.11 at 6:23 pm

#113 Dodged-A-Bullit-in Alberta on 03.19.11 at 4:30 pm
Greetings: #93[ pigeon patties]

“purified water doesn’t conduct electricity”

Suppose we fill your acrylic bathtub with purified water, immerse you, and drop in a live electric hair dryer! Right!!!
———————–

basic high school experiment, two wires with 120volts submersed in distilled water with a light bulb in the circuit and a voltmeter. There will be NO voltage or light until you begin adding salt. as you contaminate the water more, voltage increases and the light gets brighter. You should spend more time researching and less time blowing off steam. Turn off the reality shows and experience life.

#125 Pat on 03.19.11 at 6:31 pm

“Now walk us through hernia surgery. Hey, anybody can do this! Bend over!– Garth”

financial advisor = surgeon ?

amateur investor = gambler? — Garth

#126 BrianT on 03.19.11 at 6:33 pm

#121SB-I wouldn’t worry about it-the average person is about as dumb as a rock-it could be raining cats and dogs and if the authority figure told them it was sunny they would make sure they had their Ray-bans on.

#127 JJ on 03.19.11 at 6:35 pm

Obviously the people on this blog still think its 1986 or 1998 or something. U.S. is insolvent, period. If they try to cut their spending, they sacrifice close to 1 million jobs and their tiny debt fueled GDP. If they continue printing, the debt becomes wildly out of control. Their economy has already defaulted, the people just don’t know it yet. Reserve currency will be gone, and the the impact will come here. I like how that Vancouver real estate bubble is real according to everyone here, but the size of the world debt is just fiction. Do some research and find out yourself.

#128 Pat on 03.19.11 at 6:48 pm

#83 Tim:
“… if you must buy bonds, keep them to short term, buy a bond index fund.”

” Short term bond fund? I’m so glad you are not an advisor. — Garth”

Financial advisor and author of excellent books Bill Bernstein agrees with Tim:
http://www.morningstar.com/cover/videocenter.aspx?id=355635

He also makes a good case for short-term (5 year) over long-term bonds is his books.

So buy them. I wouldn’t. — Garth

#129 getting tire on 03.19.11 at 7:06 pm

houses around me are sold, all of them….I did not make 140k because I started reading this blog…..

#130 mailman on 03.19.11 at 7:27 pm

It was buried news. The context was worried money flowed into US Treasuries, not bullion. And it always will. — Garth

But the USD index is under 76 now, Japan made weaker to the US, but US is now weaker than the basket over the last week. You can’t make bullion with a printing press, that is the only reason you get the temporary ‘lift’ of US treasuries

#131 mackie on 03.19.11 at 7:29 pm

Suggesting people go long on bonds is not the kind of advice I want. I don’t like bonds at all, but if I were to buy them they would definitely be short. But then again I like gold and silver too. Time will tell who made the best bet.

#132 The InvestorsFriend (Shawn Allen) on 03.19.11 at 7:52 pm

Well, number 129 , why then did you make $140k?

#133 moloko on 03.19.11 at 7:55 pm

Wow Garth, bit rude, he was just trying to explain to peeps how to buy preferred shares through a discount brokerage account.

“Now walk us through hernia surgery. Hey, anybody can do this! Bend over!– Garth”

Rude or not, I am trying to save people from themselves. — Garth

#134 S.B. on 03.19.11 at 7:59 pm

“Pastor” Garth, there has been backsliding amongst your flock. The previously saved 20-something soul, who opted out of a new 369k (!) townhouse (!!) in Whitby (!!!), gave into tempation and bought a 2 bedroom condo in Markham for about 270k…

I heard 30k downpayment, so including all the fees – land tranfer tax, CMHC, closing – I figure at least 250k in mortgage for these debt sinners.

Monthly condo fee is $550, and the worst part is: no granite or stainless!! Truly this is a vision of h-ll on earth.

We eagerly await your next book of revelations.

#135 pathrik M on 03.19.11 at 8:02 pm

While I agree it may be fear mongering to talk of a complete financial meltdown in our banking system (a Canadian Minsky moment if you will), I don’t think concerns about the ongoing profitability of our banks are illegitimate.

There are plenty of smart people taking warning shots at the impenetrability of Canadian banks. Some are even shorting the Canadian banks (like Eric Sprott) – obviously though that’s too risky a risky bet for John Doe investor.

Fact is our banks are over leveraged and hey could very well enter into a long term bear trend. So there is a reasonable argument to steer clear of preferred shares in the banks until the smoke clears from the bubble.

See link: http://www.huffingtonpost.com/simon-johnson/the-canadian-banking-fall_b_512810.html

http://www.theglobeandmail.com/globe-investor/investment-ideas/shorting-banks-risky-crazy-bet-or-prescient-move/article1605596/

cheers,

#136 WINNIPEGER on 03.19.11 at 8:03 pm

http://money.ca.msn.com/video/?cp-documentid=3801dca1-2b03-4d13-ac00-80e320f584b2

New mortage rules—- its all good (per a mortgage broker) surprise!

#137 Coho on 03.19.11 at 8:09 pm

Well, this didn’t take long. Yet another war! And it looks like the USA has been suckered into fighting it…yet again!!

#138 helga on 03.19.11 at 8:14 pm

#115 Beaker:
Awesome and thank you

#139 Macrath on 03.19.11 at 8:15 pm

#48 Karla

Load up one of those practice accounts that [email protected] has with 200k of pretend money. Calculate your losses then e-mail [email protected]

I`m not sure if pretend losses have the same impact as real ones. The DIY financial webring forum has been awful quiet since 2008. They had a real life lesson in self induced financial pain.

#140 Daisy Mae on 03.19.11 at 8:25 pm

“106 Macrath on 03.19.11 at 3:14 pm#72 Utopia

The nice lady at the bank. [email protected]

Oh, good grief! I had the damndest time figuring that out myself. LOL

Unfortunately, far too many people deal with [email protected]…..

#141 Daisy Mae on 03.19.11 at 8:31 pm

“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

Yep! Very impressed with the honesty and the integrity. Such a refreshing change….

#142 Another Albertan on 03.19.11 at 8:35 pm

#124/pigeon:

You don’t run electricity through water at any thermal generation facility. The hydrogen build-up (and subsequent explosions) is not due to someone running an electrolysis process in the reactor tank.

You convert water into steam through the injection of heat and you drive a turbine. In the case of Fukushima, the powerhouses are completely separate from the reactors, save for the requisite steam piping. The turbine halls are closer to the water’s edge (east) in any satellite photos you look at.

Thermal generation facilities are really water treatment plants that have electricity as a byproduct. Same goes for SAGD oil sands facilities, except their output is diluted bitumen.

Everyone else’s mileage may vary.

#143 Behavioral Finance on 03.19.11 at 8:39 pm

I guess the missed this mutual fund

PRPFX

#144 S.B. on 03.19.11 at 8:55 pm

A tinfoiler writes a letter to the CFTC about “weather weapons” and the weather futures contracts:

http://i397.photobucket.com/albums/pp58/dudewithaview/earthquake-nwo-insurance.gif

You know, like the Tsunami that wiped out a muslim stronghold in Indonesia, forcing the remaining muslim fighters into surrending, vs. starving (or so I’ve heard)?
Say, what every happened to the billions in donations we sent over there? Not so much a peep in our media, nor on “America’s Most Trusted News Source”.
Why, you’d almost think it was a hush-hush military operation or someting like that.

Or the one that hit Myanmar (Burma), the rice basket of the world, where the US Navy stationed ships and desperately tried to gain access into the country. Oh how our media told us about the brutal regime inside. No dice. Not a peep these days. I wonder why.

Or the latest one that crippled Japan and is leading to the shut down of nuclear plants worldwide (nobody’s ever considered an earthquake in the past 60 years of nuclear tecnology??).

Or that earthquake which destroyed Haiti, leading to a USA military occupation of the country – a leading outpost in the businesses of drug and human trafficking – but this same earthquake left the other side of the same island – the Dominican Republic – miraclously unscathed?

I don’t have the answers, just throwing it out there. NO not every event is man made. But we have weaponized every square inch of Earth, and space, using technology whose existance we cannot even imagine.

#145 S.B. on 03.19.11 at 8:59 pm

Don’t forget the 2nd last Olympics: the world was in an uproar over the brutal Chinese regime and its tactics (our best trading partner these days?), and protestors dogged the Olympic torch relays. The world watched in earnest.

THEN, suddenly an earthquake hit China and all was forgotten. We then heard heartwarming stories of the Chinese goverment’s response to the quake.
Problem solved. just another Orwellian day.

#146 S.B. on 03.19.11 at 9:03 pm

The online driver behind the middle eastern “online revolution”. We forment chaos:

The discovery that the US military is developing false online personalities – known to users of social media as “sock puppets” – could also encourage other governments, private companies and non-government organisations to do the same.

The Centcom contract stipulates that each fake online persona must have a convincing background, history and supporting details, and that up to 50 US-based controllers should be able to operate false identities from their workstations “without fear of being discovered by sophisticated adversaries”.

Centcom spokesman Commander Bill Speaks said: “The technology supports classified blogging activities on foreign-language websites to enable Centcom to counter violent extremist and enemy propaganda outside the US.”

He said none of the interventions would be in English, as it would be unlawful to “address US audiences” with such technology, and any English-language use of social media by Centcom was always clearly attributed. The languages in which the interventions are conducted include Arabic, Farsi, Urdu and Pashto.

Once developed, the software could allow US service personnel, working around the clock in one location, to respond to emerging online conversations with any number of co-ordinated Facebook messages, blogposts, tweets, retweets, chatroom posts and other interventions. Details of the contract suggest this location would be MacDill air force base near Tampa, Florida, home of US Special Operations Command.

Centcom’s contract requires for each controller the provision of one “virtual private server” located in the United States and others appearing to be outside the US to give the impression the fake personas are real people located in different parts of the world.

It also calls for “traffic mixing”, blending the persona controllers’ internet usage with the usage of people outside Centcom in a manner that must offer “excellent cover and powerful deniability”.

The multiple persona contract is thought to have been awarded as part of a programme called Operation Earnest Voice (OEV), which was first developed in Iraq as a psychological warfare weapon against the online presence of al-Qaida supporters and others ranged against coalition forces. Since then, OEV is reported to have expanded into a $200m programme and is thought to have been used against jihadists across Pakistan, Afghanistan and the Middle East.

OEV is seen by senior US commanders as a vital counter-terrorism and counter-radicalisation programme. In evidence to the US Senate’s armed services committee last year, General David Petraeus, then commander of Centcom, described the operation as an effort to “counter extremist ideology and propaganda and to ensure that credible voices in the region are heard”. He said the US military’s objective was to be “first with the truth”.

This month Petraeus’s successor, General James Mattis, told the same committee that OEV “supports all activities associated with degrading the enemy narrative, including web engagement and web-based product distribution capabilities”.

Centcom confirmed that the $2.76m contract was awarded to Ntrepid, a newly formed corporation registered in Los Angeles. It would not disclose whether the multiple persona project is already in operation or discuss any related contracts.

#147 The American on 03.19.11 at 9:10 pm

For Canadians to watch and listen to. Please, if you do ANYTHING in the following week to come, I ask you watch the following four links. This gentleman, Khan, puts complex situations into easily understandable terms. He is an American sensation, but the following links have a lot of truth for Canada as well. This explains why and how the U.S. housing bubble came to fruition and why it ultimately imploded. You’ll probably find yourself wanting to listen to more of Mr. Khan and his other learning tutorials when you have time. He is terrific.

You will find remarkable similarities from what each of our country’s Banking systems have done and why it ended the way it did. Garth is tremendous in trying to get out his message, but for those who wish not to believe, let’s put it on a chalk board…

http://www.khanacademy.org/video/the-housing-price-conundrum?playlist=Finance

http://www.khanacademy.org/video/housing-price-conundrum–part-2?playlist=Finance

http://www.khanacademy.org/video/housing-price-conundrum–part-3?playlist=Finance

http://www.khanacademy.org/video/housing-conundrum–part-4?playlist=Finance

#148 The American on 03.19.11 at 9:28 pm

From my previous post, you’ll find Mr. Khan’s video’s demonstrate the following… housing prices do NOT “always go up.”:

1. Minimum down payment standards required less and less in the U.S. – Canada? CHECK!
2. Financing got easier, and standards became more and more lax, creating an artificial demand in the U.S. – Canada? CHECK!
3. This allowed more people to bid on the same houses, bidding up prices in the U.S. – Canada? CHECK!
4. Banks and lenders creating collateralized debt obligations and selling on the secondary market in the U.S. – Canada? CHECK! (CMHC)
5. Ratings agencies rating the debt packages too aggressively (aka AAA ratings), and returns remained consistent…. for a time in the U.S. – Canada? CHECK!
6. Most states are non-recourse in the U.S., but it is immaterial. Look at the states that are recourse, and it still makes no difference in the outcome. If a person loses his/her job, he/she cannot make the payments on the large debt (can’t squeeze blood from a turnip, regardless if it is recourse or non-recourse). The entire recourse/non-recourse argument is a ridiculous notion.
7. Defaults created more defaults, creating more and more ridiculous loan programs (much like what we see now with VanCity). VanCity’s loan program is TESTAMENT the market is not nearly as healthy as the CREA or any realturd is portraying.

#149 Tiffa on 03.19.11 at 9:30 pm

#113 Dodged-A-Bullit-in Alberta on 03.19.11 at 4:30 pm
Greetings: #93[ pigeon patties]

“purified water doesn’t conduct electricity”

Suppose we fill your acrylic bathtub with purified water, immerse you, and drop in a live electric hair dryer! Right!!!

____

Take a high school science class and you’ll find that pigeon patties is quite correct. The point isn’t bathtubs and hair driers, it’s hydrogen ions. Fun.

#150 45north on 03.19.11 at 9:39 pm

S.B. for those who doubt this “New World Order”

Rocheleau said he was influenced by the other accomplice, who believed he was being targeted by “the New World Order” and convinced Rocheleau that microchips had been implanted in his sister’s unborn baby.

http://mcaf.ee/ac043

loser

#151 BrianT on 03.19.11 at 9:41 pm

#145SB-The vast majority of people do not respond to logical arguments-they respond to emotional arguments as they are driven by fear (mostly) and anger. As I type this they are happily tooling down the 401 at 120 km/hr, chattering away on the cell phone, checking out the makeup in the rear view and worrying about radiation from Japan getting them.

#152 Utopia on 03.19.11 at 9:46 pm

The Nice lady at the bank! Got it.

Thank you all. Is that Tweeter lingo or something? How did you smart ones all know what that meant anyway?

#153 Pat on 03.19.11 at 10:00 pm

“amateur investor = gambler? — Garth”

In some cases, absolutely!

And in some cases,
financial advisor = amateur investor – commission

Show me. — Garth

#154 AD on 03.19.11 at 10:17 pm

Re Tony 20

Garth you continuously understate the rates on available 5 yr GICs.

Brokerage houses such as BMO and RBC are showing CDIC insured 5 YR GICs at 3.35% as of Friday.

Earlier in the week there were several major banks posting rates as high as 3.4% with these brokers. There is no fee to buy them.

While your arguments make general sense, you lose a lot of credibility by consistently understating the available rates.

As for prefereds, new issue prefereds from major banks such as BMO this month were at 3.91%. To get 5%+ you have to buy an existing preferred at a premium to the original $25 price. And that 5% does not represent the true yield to reset rate which you conveniently forget to mention ….

Bank GICs are currently 2.1-2.3% for 5-year terms, like this. As for preferred share yields, you should come shopping with me. — Garth

#155 Another Albertan on 03.19.11 at 10:44 pm

Enough of this discussion about the conductivity of water.

Pure distilled water is _practically_ non-conductive, not absolutely non-conductive.

Google conductivity. There are some excellent write-ups.

It’s asymptotic. You can never get to zero, but you can get practically close. Don’t forget about dissolved gases.

Could, in a completely controlled experiment, you avoid a shock at 120VAC with a high-quality GFCI that would not disrupt brain waves or that would induce tissue burns or fibrillation? Absolutely. Practically, with the ham-and-egger population out there? Not a chance. Any contaminant on any surface and you’re a hurting unit.

Unfortunately, life can’t always be reduced to a binary state via Occam’s Razor using high school logic or an experiment on Mythbusters. Sometimes you need a few more years of study in the hard sciences or engineering.

It’s Saturday night. I’m going drinking and will hopefully pick up some new real estate anecdotes. Fun. Over and out.

Everyone else’s mileage may vary.

#156 BrianT on 03.19.11 at 10:52 pm

#15045-Hard to tell if you are serious or just doing a parody of FOX news or Bill O’Reilly. You forgot to mention the faked moon landing or the Yeti.

#157 they will inflate their way out on 03.19.11 at 11:39 pm

Garth, wouldn’t hedge funds be a better bet for investments? some of these firms make 30-40% annually. minimum investments between 5k-25k.
the returns are superior to preferred shares. in addition, by investing in a few hedge funds, risk is properly managed.

#158 nonplused on 03.19.11 at 11:58 pm

I have apparently found a few other people who are a little more worried about Fukushima than whether they are getting 3 versus 6%. To many to name in the time I have to respond, but here are my follow up points/questions.

On the 50 v 60 Hz question, I am not an electrical engineer, but wouldn’t a 50 hertz motor just try and run 20% faster if presented with 60 hertz, until it burned out? I realize this might be quite a problem normally, but they needed those motors to turn. They could try and limit the voltage/amperage to not overpower the pumps. I am thinking that in an A/C motor, the only difference between 50 and 60 Hz is the relative size of the impellor compared to the motor and the speed of rotation, neglecting optimization of power consumption.

Airlifting gensets to Japan without being asked might be an act of war, but I don’t think that’s how it would be interpreted at this point. And I was wrong, the gensets used in the oil patch are generally 500 hp per unit, but they still fit on a tractor trailer or 2 at a time in a C130, with the tractor trailer. Another C130 can carry the bulldozers to get to the site.

The fact of the matter is that TEPCO did not go “all in” on this situation for the same reason our banks are so careless about mortgages. The power companies would not do nuclear until laws were passed that indemnified them against liability. No matter how much radiation now comes from Fukushima, or any other nuclear plant, TEPCO will pay not one penny in damages. They know the plant is a write off, and they are not going to spend any money beyond public relations on fixing it. The governments of the western world forced the utilities into nuclear to get plutonium, the companies didn’t want to do it. They have their guarantees. It’s not their problem if the plant melts down. The whole of the nuclear power industry was always at best marginally economic, we were building these plants when coal and gas was still way more economic, but the government wanted plutonium. And now we are seeing how unsafe they are.

#159 Timing is Everything on 03.20.11 at 12:11 am

Coalition of the Willing II. Or is it III or IV even? Lost count. Ha!

http://tinyurl.com/4d3zgmx

“It’s déjà vu all over again.” Yogi Berra
——————————————————-
And I thought Spain was broke. Thunderchickens are go! Ha!

http://tinyurl.com/4ojzu2b
——————————————————-
#146 S.B.
“Nineteen Eighty-Four”. Been a while, but I’ll give it another read…Timing just feels right…

O’Brien held up the fingers of his left hand, with the thumb concealed.
‘There are five fingers there. Do you see five fingers?’
‘Yes.’

http://en.wikipedia.org/wiki/Ministry_of_Peace
———————————————————–
Tequila sno-cone tonite.

#160 gmcccc on 03.20.11 at 12:18 am

Garth where is your logic that the US dollar is safe and all will continue to support it, from all the reading that is out there it seems obvious that the term bankster is real and Wall street is a racket, the following link that I have attached talks about PIMCO dumping treasuries, Japan needs to stop buying and start selling, they have $880 billion so far and will need to sell in order to rebuild, the three biggest buyers, #1 FEDs, #2 China #3 Japan…. oops can you say BLACK SWAN… the US dollar 75.57 check Jim Sinclair’s web page for a daily update.
The other issue is GE nuke plants, there is talk of a lot of possible design flaws, is the big US GE going to be liable?? for instance Why did they not have steam driven cooling pumps like the new nukes have as a back up ??? From the reading on the net I understand that this could never happen to out CANADIAN CANDU this would never happen. Maybe they are more expensive to build for a reason, and probably why China loves our Candu and wants more, why is our government not promoting it?
The GE plants in Japan are the first generation design and at the end of their life cycle, is that why they didn’t not invest in improving the safety systems to improve this flawed design??? there is lot of unanswered questions. http://theeconomiccollapseblog.com/archives/debt-problem-who-in-the-world-is-going-to-buy-the-billions-of-dollars-of-debt-the-u-s-government-is-constantly-pumping-out-now/comment-page-1#comment-39223

#161 Burnt Norton on 03.20.11 at 12:42 am

Too funny re: hernia surgery.

You lot who cry foul – the point is that financial systems are complex, like biological systems.

As much as people think that they can doctor themselves by looking stuff up on the internet, there is no substitute for the intuition and expert judgment of an experienced physician. Same with financial planning.

Can’t help but picture the resident apocalypse predictors here each biting down on a gold maple leaf as they attempt a self-hemorriodectomy using a bunch of mirrors, a scalpel and Google. Think of the movie ‘127 hours’ but with that Automatic Earth chick under a big ball of tinfoil.

#162 TaxHaven on 03.20.11 at 12:55 am

“…worried money flowed into US Treasuries, not bullion. And it always will. — Garth”

And, in your opinion, what will it take to change that?

#163 daystar on 03.20.11 at 1:00 am

# 99 Kurt

Highly informative. Thanks for connecting the dots and taking the time to post ;)

#164 jess on 03.20.11 at 1:07 am

The American
check !
…so when the market tanks we can look forward to new schemes of desperation from these “colludites”

■Analysis of available law enforcement and industry data indicates the top states for mortgage fraud during 2009 were California, Florida, Illinois, Michigan, Arizona, Georgia, New York, Ohio, Texas, the District of Columbia, Maryland, Colorado, New Jersey, Nevada, Minnesota, Oregon, Pennsylvania, Rhode Island, Utah, and Virginia.
■Prevalent mortgage fraud schemes reported by law enforcement and industry in FY 2009 included loan origination, foreclosure rescue, builder bailout, equity skimming, short sale, home equity line of credit (HELOC), illegal property flipping, reverse mortgage fraud (currently the FHA’s Home Equity Conversion Mortgage [HECM] and the primary reverse mortgage loan product being offered by lenders and targeted by fraudsters), credit enhancement, and schemes associated with loan modifications.
■Emerging mortgage fraud schemes and trends reported by law enforcement and industry in FY 2009 included schemes associated with various economic stimulus plans/programs, commercial real estate loan fraud, short sale flops, condo conversion, property theft/fraudulent leasing of foreclosed properties, and tax-related fraud. Law enforcement sources also reported increases in gang members, organized criminal groups, and domestic extremists perpetrating mortgage fraud, and the resurgence of debt elimination/redemption schemes….

Several mortgage fraud schemes, especially foreclosure rescue schemes, have the potential to spread if the current distressed economic trends and associated implications continue through and beyond 2010, as expected. Increases in defaults and foreclosures, declining housing prices, and decreased housing demand place pressure on lenders, builders, and home sellers to maintain the productivity and profitability they enjoyed during the boom years. These and other market participants are perpetuating and modifying old schemes, including property flipping, builder bailouts, short sales, debt eliminations, and foreclosure rescues.

Additionally, they are facilitating new schemes, including credit enhancements, property thefts, and loan modifications in response to tighter lending practices. Consequently, mortgage fraud perpetrators are continuing to take advantage of the opportunities provided in a distressed housing market. When the market is down and lending is tight, perpetrators gravitate to loan origination schemes involving fraudulent/manufactured documents. When the market is up they gravitate to inflating appraisals and equity skimming schemes. According to MARI reporting, “Collusion among insiders, employees, and consumers is highly effective in times of recession because everyone has something to gain in times of desperation.”11

http://www.fbi.gov/stats-services/publications/mortgage-fraud-2009/2009-mortgage-fraud-report

#165 tran, Calgary on 03.20.11 at 2:39 am

A recent National Public Radio (NPR) piece explains that the half-life of plutonium-239, a component of MOX, is an astounding 24,000 years. The same piece explains that if even a small amount of this potent substance escapes from the plant in a smoke plume, the particles will travel with the wind and contaminate soil for tens of thousands of years (http://www.npr.org/2011/03/16/13460…).

Learn more: http://www.naturalnews.com/031736_plutonium_enriched_uranium.html#ixzz1H7ON9RPq

http://www.naturalnews.com/031736_plutonium_enriched_uranium.html

#166 Not a Centcom Sockpuppet on 03.20.11 at 4:20 am

S.B. – surely you realize that they now know who you are, and they’re coming for you with their earthquake weapon. Your only hope is to abandon everything and ride the rails as a hobo till the revolution begins.

Leave now. Best of luck.

#167 detalumis on 03.20.11 at 9:24 am

In Ontario in my community the two public nursing homes (6 month waiting) list charge a copayment fee that is affordable for anyone with only basic OAS and GIS. My rich uncle and aunt (who has Alzheimers) moved into one of the chi-chi marble lobby places in town paying 3 times as much and he hated it there. He moved into the so-called nasty government place and loves it, it is well run, has lots of volunteers and he can walk to downtown and such and he even says the food is better.

These horror stories of needing huge amounts to pay for “the home” are highly overated and could be dependent on where you live in the country, but in my community they are nicer than the expensive places as well as cheap. Whether this stays in place for the boomers is another story (fiscally unstainable) but the boomer parents here in town sure are getting a bargain.

#168 Renter-X on 03.20.11 at 9:56 am

Hi – regular reader, first post.

Article on Yahoo for your interest: “First Person: Losing Big – $65,000 Big – On Our First Home”

http://finance.yahoo.com/news/First-Person-Losing-Big-65-ac-2690070448.html?x=0

#169 Kitchener1 on 03.20.11 at 10:30 am

#115 Beaker

You are correct, it really is not that hard to day trade on your own accord. Not much too it, but thats if you are financially litereate and actually understand the market.

Its the same way when wrenching on cars and motorcycles etc.. nothing really to it if you know what your doing, but if you dont, you can do a lot more damage then good.

I can say with experience that for the majority of the population, its better left to the pro’s unless its a hobby that you enjoy.

My first rule of investing has always been if you can;t afford to lose it all, then dont invest any money. If thats your sole source of income, dont invest.

#170 Young Old Fart on 03.20.11 at 10:36 am

#101 Morry on 03.19.11 at 2:41 pm

@young old fart

That question is answered easily…what is it worth a week later?

i assume you are a bit too young…. what does one week show? nothing. Past performance is good… just hard to divine the future prospects

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

I was being facetious, and referring to the last weeks performance only….

You assume correctly, I am young… 48.

I am also retired and living my winters in Mexico….at 48! Do not worry, I am well aware of “past performances…. ;o)

#171 eddy on 03.20.11 at 10:49 am

an interesting article about the personal manufacturing revolution

Alternative Economics
Part One: Paradigm Shifts & Open Source Hardware

By Tony Cartalucci

http://landdestroyer.blogspot.com/2011/01/alternative-economics.html

#172 Blizkrieg on 03.20.11 at 11:01 am

To the preferreds vs GIC debate,

Being in the industry for a number of years I typically offer my clients another option of investing tax sheltered within a life insurance policy.

A client can actually get 4.2% guaranteed, tax sheltered (absolutely no tax is payable at any moment) , the policy could be set up on YRT basis with a 10 year declining benefit to minimize costs of insurance and maximize investment values.

For clients with a higher risk appetite, BMO actually allows to put ETF’s with MER’s much lower than mutuals into a life policy allowing for tax free investing

I only recommend this strategy to low-mid networth clientelle as with higher affluency a the possibility of constructing a well balanced and monitored portfolio actually become viable.

Cheers

#173 Blizkrieg on 03.20.11 at 11:02 am

Sorry for typos, its the BB :)

#174 moloko on 03.20.11 at 11:10 am

GIC Rates updated daily

http://www.redflagdeals.com/deals/main.php/financial/gicannual/

2.1%-2.3% is the lowest available but there a lots of banks offering between 3-3.5%

#175 moloko on 03.20.11 at 11:17 am

not that I’m advocating buying GIC’s, I just wanted to point out that the rates right now are a fair bit higher than 2.1%-2.3%.

As well, if this is her only form of income her taxes on it will be minimal if any at all.

#176 pigeon patties on 03.20.11 at 11:36 am

#155 Another Albertan on 03.19.11 at 10:44 pm
Enough of this discussion about the conductivity of water.

Pure distilled water is _practically_ non-conductive, not absolutely non-conductive.
—————–
Oh brother! I never intended to start a physics class. My comment was simply the they don’t cool with saltwater because of corrosion. I never asked to be thrown in a bathtub with a hairdryer.
As soon as you introduce a human body and a hair dryer to purified water, it’s not pure anymore, so you could get a shock.

Let go of your underwear man, you’re giving yourself a weggie.

158 nonplused on 03.19.11 at 11:58 pm
On the 50 v 60 Hz question, I am not an electrical engineer, but wouldn’t a 50 hertz motor just try and run 20% faster if presented with 60 hertz, until it burned out?

——————————-

Using diesel generators, it is only some minor adjustments including slowing the engine down to output 50Hz. Many gensets are designed as switchable. I don’t understand why replacing the failed generators is so difficult. Maybe some other complication?

#177 Herb on 03.20.11 at 11:53 am

Three questions on our budding war in Libya:

1. Is this war more than the continuation of oil policy by other means?

Supplementaries:

a. Where was the “duty to protect” in Somalia, Congo, Darfur etc.?

b. If the protection of civilians in war or internal conflict is such a concern, what happened in Iraq and Afghanistan?

2. Can anyone name the Arab countries that will supply more than the fig leaf of “regional support” to the operations of the allied coalition?

Supplementaries:

a. Why is Saudi Arabia intervening on the side of the monarchy/government in Bahrain, and the allied coalition on the side of the rebels in Libya?

b. Who is going to intervene on which side in Yemen? Or the Emirates, Jordan, Syria, or any other non-democratic country should the population try to rebel against its government?

c. How do we pick our sides?

3. Gaddafi will be ousted quite handily, but then what? Democratic ballots – especially stuffed ones – will end neither poverty nor oppression in the Middle East. See Afghanistan.

#178 WesternCanadian on 03.20.11 at 12:20 pm

“Karla. Ignore him. — Garth”

Pretty arrogant response from a guy who has been calling for a housing melt for 3+ years… still waiting. I’m in Calgary here, and I’m also waiting for the “explosion” in listings you said WOULD happen. Not the one you said, “will probably” happen, or ” I predict will happen”.. that’s not your style. No I’m talking about the massive increase in listings you said “WOULD” happen.

If you live in Calgary, you know I was correct in forecasting a price decline. BTW, what has that to do with you pumping a resource stock to an inexperienced investor, cowboy? — Garth

#179 moloko on 03.20.11 at 12:54 pm

wow Garth, everybody but you is always wrong, I can’t remember one time that you have admitted on this blog that you might be wrong, or at least admitted that someone might have a better idea. You pounce on anyone questioning you with childish retort. All kind of funny figuring that in actuality the whole premise of your blog has actually been wrong (for the most part) for the last 3 years.
I believe housing is stupid expensive right now and thought that it would have come down in price years ago as well, but at least I admit my timing was way off.
—————————————————————-
“Karla. Ignore him. — Garth”

Pretty arrogant response from a guy who has been calling for a housing melt for 3+ years… still waiting. I’m in Calgary here, and I’m also waiting for the “explosion” in listings you said WOULD happen. Not the one you said, “will probably” happen, or ” I predict will happen”.. that’s not your style. No I’m talking about the massive increase in listings you said “WOULD” happen.

If you live in Calgary, you know I was correct in forecasting a price decline. BTW, what has that to do with you pumping a resource stock to an inexperienced investor, cowboy? — Garth

The question was about Calgary year estate, which has performed as I thought it would. I can fabricate a mistake to make you feel less threatened, if you’d like. Hug? — Garth

#180 Timing is Everything on 03.20.11 at 1:11 pm

WRT Libya – Now is that ‘moral duty’ or ‘more oil duty’

Now what about Kingdom of Bahrain, Kingdom of Saudi Arabia and Yeman? Its all ‘good’ in those countries. Ha! I love the smell of hypocrisy in the morning. It smells like… ‘victory’.

Oh, what of most of the African countries. Run mostly by dictators. Oh ya… not enough OIL to make it worth while. Ha!

Regular gas in Vancouver $1.33

Get ready for $1.60 or more by August.

I usually don’t have a sno-cone in the morning. Oh (oil)
well.

As they say, oil will save the day.

#181 45north on 03.20.11 at 1:14 pm

Kurt: We’ve seen reactors cooled with liquid sodium (LMFB), helium, water, flouride salt, lead or lead-bismuth eutectic, air and god knows what else.

so Kurt what do you think of Liquid Fluoride Thorium Reactors – they sound like a good idea?

Renter-X: Once I gave in to my wife’s home ownership dreams

pretty funny

Not a Centcom Sock Puppet: me neither

#182 Another Albertan on 03.20.11 at 2:17 pm

I don’t want any of you guys near my industrial facilities. Kurt might get an exception.

You don’t just “adjust” a diesel engine to get 50 Hz instead of 60. Your diesel is probably running at 1200 or 1800 rpm. It needs to go through gearing before being attached to the generator.

Prime mover -> gears -> generator

The generators are specifically designed for 50 or 60 Hz output. When you’re talking about needing 1MW+ units, they sure as hell aren’t “frequency switchable”, whatever that even means. Your $500 Honda might have some ability to be frequency tuned, but I doubt it. A Cat 3516 diesel with an SR4 generator sure isn’t. They also better be prime or continuous rated. Standby units aren’t going to cut it.

If you have a number of them, you better have a paralleling synchronizer so that their individual phases and frequencies align, lest you have some very nasty side effects.

You also just don’t connect power directly to the pumps. You need a motor control centre, which is at least a small building in size. The MCC is going to have contents that, if compromised or damaged, could be lethal multiple times over. One electric arc flash event might make someone wish they’d volunteered to work in the reactor containment area instead. That’s no joke.

How big are the pumps? Are the pumps ok? What’s the status of the piping? Are the pump motors ok? How are they started? FVNR contactors? Soft-start? An auto-transformer? Is it a variable frequency drive? What’s the locked rotor current? This applies to each component. Are there interlocks? Are the control cables damaged? What’s the starting order (you don’t want to trip the generator offline and black yourself out because you overloaded it)?

Sure, it’s possible to rig up multiple hacks, but it’s also possible that those hacks have side effects that actually make the situation worse. What happens if you start blowing over-current fusing and you can’t fix the motor and you need to physically remove a 1000lb motor using flashlights and with no overhead crane in a room with no HVAC, high humidity and you’re wearing constrictive clothing and are only allowed to be in there for 20 minutes at a time? What happens if your hack overdrives a motor and the pump cavitates like crazy and the sum of the vibrations destroys the pump and the motor bearings?

We have a situation where a number of people are putting their lives on the line in a highly compromised situation where a wrong move could cost their own life, never mind a large numbers of others. And then we have armchair quarterbacking from 16 timezones away from people without up-to-date, detailed information from the site and who have little to no industrial knowledge or experience on top of it.

Everyone else’s mileage may vary.

#183 Oasis on 03.20.11 at 2:42 pm

#176 Herb on 03.20.11 at 11:53 am
__________________________________________

Herb, those are all excellent and valid points. Well done. It should also be added that Quadaffi enjoys 85% support by his citizens. so, what exaclty are we doing ???

#184 S.B. on 03.20.11 at 3:14 pm

Timing is Everything on 03.20.11 at 1:11 pm

FYI I found an article about the dangers of flouride in sno-cones…here it is…

;)

I am so glad we have a life-affirming, kind, Prime Minister/liberator who just told us, in effect: “Hey, ya gotta break a few eggs to make an omlette”.

By ‘eggs’ he means people like you and I (let’s dehumanize them a little bit by calling them ‘civillians’), and by ‘omlette’ he means massive terror strikes of raining missiles and WMD onto people err I mean civillians).

Gaddafi was invited to train in the UK at the Royal Military Academy in Sandhurst back in the day. He is hand picked and trained by the West.

Let’s tally-up the list of countries who have fallen to the bankers within the past few years:
G8
The PIGS
Ireland
Iceland
Iraq
Libya (new!)
Japan (new!)
Afghanistan
Haiti
Australia
Soon: Iran, Yemen, Egypt

Of course, Israel’s economy always remains unscathed…

#185 Coho on 03.20.11 at 3:23 pm

#176 Herb,

Good post.

Governments are no longer principled, few ever were, I’d guess. It is not about the people or what is right and just. Hypocracy and double standards abound. It is not about serving the people, it is all about self service and bowing to the dictates of the power behind world affairs.

Herb, as you know, the other countries you mentioned (why their people aren’t being “liberated’) is because their leadership is “in the fold”. They are playing ball with the power behind the scenes. But, it sounds like Gadaffi wasn’t a “team player” (probably one good thing about him) and/or the timing is right for his ouster. This rebellion is a good opportunity (and well timed) to remove him.

The “liberation of the people” is a lie and pretext for invading and grabbing the territory of sovereign nations. I hope more people are beginning to realize this.

And do we the people get a say? Aren’t we basically at war without a peep from the citizens? Nor has there been a declaration of war from the clowns in Ottawa.

And what about the Americans? Did anyone vote for this — yet another war? The USA is being weakened by the day, financially and morally by these wars. “Beware of enemies from without and within”. Wasn’t this a warning from the founding fathers? The people and congress have been by-passed completely. It is a UN Security Council resolution that has “approved” this war. Welcome to the New World Order, folks. And it is NOT about liberating anyone. It is about taking over territory and installing puppet regimes.

#186 cool on 03.20.11 at 5:17 pm

181, Another Albertan,

Very well said.
Are u an Engineer?

#187 Cellar Dwellar on 03.20.11 at 5:34 pm

@#47 Mr BigBalls
Quickly find a psychoanalyist that will prescribe the proper meds……Your testosterone levels are rotting your brain.

#188 Cellar Dwellar on 03.20.11 at 5:44 pm

@114 Brian….I stop and wonder sometimes why the hell I still want a house……

Enjoy the boat when the overdue earthquake hits the West coast. Seen any Youtube Tsunami videos lately ?

#189 Cellar Dwellar on 03.20.11 at 6:02 pm

@ #183 S.B.

You forgot to mention the secret mind control moon base on the dark side of the moon. The chinese have been trying to penetrate it’s security systems for years but the albinos that live there have superior brains due to the lack of sunlight. No sunlight thwarts ALL mind readers. Think about it. Why do the swiss have ALL the good chocolate? BECAUSE they have albinos inside the ALPS. Geez man. Its all so obvious, why cant you see it?

#190 Nostradamus Le Mad Vlad on 03.20.11 at 6:11 pm


Been too busy exploring and flying around The Dark Side of The Supermoon, so I haven’t read all the posts but #176 Herb, #183 S.B. and #184 Coho — Well said. You might be interested in the following — 4:39 clip “It’ll be the first thing that I do. I’ll get our troops home, and bring an end to this war.” — Barack Obama, Oct. 27, 2007 — The Great White Liar from Kenya.

Link in. Map of the new Middle East is in the link, and DoubleSpeak “The President does not have power under the Constitution to unilaterally authorize a military attack in a situation that does not involve stopping an actual or imminent threat to the nation.” — Sen. Barack Obama, 12/20/2007.

Libya dubya’s false claim against Iraq having WMD is the reason the US has destroyed that country. But one of the main causes could be the kingdoms of the Middle East were about to dump the US$, which is why Sadaam is still alive and kicking in Russia today, but no longer rules Iraq.

Peak-ish Oil Another tale from the Blarneystone. With most of the west at war, there is enough oil for the rest of these times.

Insolvent “If they started writing off their second-lien mortgages, they would have no capital left. They would all be insolvent.”

27 Reasons “28. President Obama is reassuring us all that we are safe from radiation, while he and his family are in South America.” wrh.com.

Stuxnet Virus The US and Israel created and designed the Stuxnet virus to stop Iran. It also sent Japan’s reactors down. Translation further down, and Nuke Environment “I wonder if President {Pussy (now safely on South America) chose this moment to start WW3 in Libya and Congress (now also on vacation who knows where) let him do it because they needed a distraction from this radioactive hell unleashed on us all by Japan/GE/Stuxnet!” wrh.com.

m$m Hit Looks nice — Rupert Murdoch with a deteriorating media.
*
Chaos — As you are mentioned (Ages In Chaos) at the very end, I thought you might like to have a sneak peek, and this. Evil will not be wiped away, as the Spiritual Law of Polarity covers the lower psychic regions.

It means that nothing can exist except in the case of it’s opposite, e.g., war – peace, heaven – hell, male – female, love – hate, yin – yang etc. However, this also includes pole shifts. Try living upside down in the south – north hemisphere!

#191 sotiri on 03.20.11 at 6:27 pm

#184 Coho
Apparently it’s OK with you to just seat and watch while Gadaffi kills all his people?
Seriously you need an appointment with you psychologist.

#192 Kurt on 03.20.11 at 6:54 pm

# 185 45North

Many’s a slip twixt the cup and the lip. LIFTR is a pretty damn cool idea, but the other guys have a 50-year head start, and when you develop a new technology from scratch, you always find surprises, surprises that can kill your program and write-off the entire investment. I think we’ll have to get a lot further down the road of resource depletion and environmental degradation before there’s any movement to seriously investigate LIFTR, simply because of the comercial risks involved. When it is properly investigated (along with other speculative fuel cycles and reactor systems), it will be at the behest of, if not outright owned by, a government. No comercial entity on earth will put the required sum of money at that kind of risk. Kinda like the origins of every power reactor system in service today (at least the ones I’m familiar with…) My guess is that we are looking at a least a couple of (human) generations before the political environment is ripe for further development. But, damn, LIFTR is cool!

#193 Herb on 03.20.11 at 7:06 pm

#190 sotiri,

you need a reality check more than Coho a psychologist.

#194 pigeon patties on 03.20.11 at 7:06 pm

#181 Another Albertan Armchair quarterback on 03.20.11 at 2:17 pm

———————–

Unlike you, I believe that engineers who can run a nuclear power plant, can hook up a generator correctly.

This is not an engineering blog so we try to word our posts so all can understand. And yes I build generators, containerize them, and rent them. So I have been through emergency hookups before.

I’m done, no more comments on this subject.

#195 BrianT on 03.20.11 at 9:16 pm

#188Cellar-You are right-Gaddafi is a very bad guy-we just supported him for decades because we didn’t know he was a bad guy-we just found out last week (better late than never). Like Jimmy Swaggart said-If God didn’t want them sheared, he wouldn’t have made them sheep.