Flip this

Tom has a question. Says he’s been reading this blog for a while. It’s helped him understand what’s probably coming, but he also complains my words kept him from scoring. Now he sounds pissed.

“About a year and a half ago, a couple of friends bought a detached house north of Toronto while in development. They closed this January. The price was around 440k. Similar houses in the area are selling for over 500k now with some asking as high as 580k. At the time I told him it wasn’t a good idea based on what I read here. Now he’s going to split about 100k profit with our mutual friend.”

You can tell where this is going…

“So, I followed the advice and lost out on an opportunity. The question is: You Garth are now saying the correction begins this summer. You gave bad advice then and why is it good advice now and how do you know this correction will begin soon? From what I can tell, alot of people are kicking themselves for not flipping a house and taking advantage of this opportunity based on your advice and now who knows when that will come along again.”

Well, Tommy the reluctant flipper, let’s start with the math. A $440,000 house bought on spec with, say, $40,000 down would actually cost about $460,000 with closing costs, including LTT and CMHC. If your friends really scored, and sold it for $540,000 (an improbable 23% gain in 18 months), than after realtor commission, the net would be $517,000. Gain: $57,000. Of course, that’s 100% subject to capital gains tax, which brings it down to $45,000. And the lost earnings on the $40,000 over 18 months (at a modest market level of 8%) would be $5,000, reducing it to $40,000. Divided between two friends, that’s $ 20,000.

But, hey, twenty grand is twenty grand. Almost enough to buy a KIA sport wagon, or two Game 7 tickets with special post-hockey entertainment, but not enough for Katie Michaels (the Las Vegas call girl says she costs $30,000).

However, this ain’t the point. Tom moans if he hadn’t listened to me and actually had the cajones to buy a spec house in the GTA in 2009, he’d have more money today. It sounds like he’s right. And, of course, I don’t care.

First, this pitiable blog does not exist to help anyone make or lose cash. It’s a cheap and tawdry daily dishing-out of opinions, observations and conclusions about the stuff that surrounds us. You are supposed to read this drivel, Tommy, and throw it into the hopper of your brain, then come up with your own opinion. It’s called, um, thinking.

Second, speckers and flippers should probably be castrated. Or, if women, forced to learn how to roof. This is gambling and as with all idiots who buy lottery tickets or visit a casino, it’s motivated entirely by greed. However, specking on a house also means risking (in this case) hundreds of thousands of dollars, which is a tad more serious than throwing your money away on $2 lotto junk. The risk’s extreme and if there’s one thing you should have learned from this sumbitch site, it’s the wisdom of mitigating danger in a volatile world.

Third, I presume you were drawn here, moth-like, after realizing real estate prices were ridiculous and a saner, contrarian view to lemming love must exist. So what changed you. Tommy boy? How did you turn from a common sense crusader into a greed-is-good capitalist pillager? Don’t you understand it’s cravings and urgings like yours that have unleashed house lust, and jacked up prices? You just proved every point I have clumsily made.

For every dollar of unearned profit a flipper makes, real estate gets more unaffordable, and an end user is probably more indebted. When it comes time to haul your moldy butt out of that basement rental and buy your family a home, well, you’ll see what I mean. Guys like you helped indenture the country.

So, moaner Tom, no apology here. No sympathy. No pity. Flip this.

And get new friends.

202 comments ↓

#1 1st is ruined on 06.16.11 at 9:36 pm

Ruined.

#2 noworries on 06.16.11 at 9:37 pm

With RIM laying off folks soon. I wonder what the effects will be with housing in the Waterloo region?

#3 b on 06.16.11 at 9:37 pm

first, please

#4 tanned34 on 06.16.11 at 9:41 pm

well i understand what he means. ive watched my family invest for years in condos and read this blog waiting for doom. I finally invested in a condo last year petrified and reading the blog. I’ve just sold it and made a nice profit. It was pretty easy and renting sucks. The next door neighbor moved in last year and now has to move again as the landlord is selling. I fell I have lost thousands of dollars by not acting earlier. Its not as bad as the doomsayers say it is. Not that its different here, and there is still a lot of opportunity to make money. Fear makes people poor. The rich get richer…and those on the sidelines…well…

#5 ottawan on 06.16.11 at 9:44 pm

Garth is right. It’s just like the top of a stock market. When everyone wants to buy … don’t. If you want to check your market, go to your area on mls and RECORD what is happening. I have been keeping records for a couple of months. In MY area (relatively small district in Ottawa, and I do not include condaminiums) there were usually between 21 and 27 listings. Between June 4 and June 7, 6 owners decided to lower their prices. Not one of these owners who lowered the price have sold yet. I noticed that nothing was moving for about a month before this. Today there were 32 listings, another 5 added yesterday. I know it is different in Toronto, but it WILL go back to the mean, just as stock markets do. Keeping track has helped me know that we are doing the right thing by waiting.

#6 Jeff on 06.16.11 at 9:45 pm

How modest is an 8 % return (going to be) in 2011?

Ever heard of negative correlation and asset allocation? Didn’t think so. — Garth

#7 TurnerNation on 06.16.11 at 9:46 pm

Of the riotous youth you saw last night, all were raised by…BOOMERS! :-P

(“Talking ’bout our g-g-g-generation. My generation!”)

#8 Chaos on 06.16.11 at 9:46 pm

Quack

#9 radio free oj on 06.16.11 at 9:49 pm

as soon as guys start bragging about the 100k they made flipping during a backyard BBQ, the party must be almost over

#10 DM in C on 06.16.11 at 9:51 pm

Well said, Garth. Too many people trying to blame their decisions on others. Critical thinking is a skill that we are losing.

#11 Mikey the Realtor on 06.16.11 at 9:54 pm

That a’ boy, Garth. Way to whip the pups and poodles into shape.

The tongue lashing you are dishing the pups is free advertising for us realtors

Call me Tommy, I love flippers.

#12 JohnnyBGood on 06.16.11 at 9:55 pm

Satisfaction is based on not what one has, but what one has compared to others.

Or…
Nothing stings more than a friend’s greater success.

Or…
Missing the boat is OK if no one else caught it either.

Or…
Success is like a fart. Only your own smells nice.

Maybe Tom needs to pass some gas.

#13 Get Real on 06.16.11 at 9:57 pm

Go Canucks..
Oops.

Hopefully RE will follow

#14 Corban on 06.16.11 at 9:58 pm

Furst!

#15 Hovering on 06.16.11 at 10:02 pm

oops

today in vancouver i observed people signing plywood window coverings with sharpies.

pro canada statements. pro vancouver statements. some sang O Canada

it was worse than the riot

#16 Bottoms_Up on 06.16.11 at 10:05 pm

Tom, my friend, Garth cannot be your scapegoat. You have a mind of your own, and make decisions for yourself.
In this circumstance you chose not to buy. That was your choice and your choice alone.

I would like to thank Garth for the public service he has and is providing. His blog (and many of the posters to this blog) have taught me a lot about real estate (among other things), and served as a good ‘check’ for when I bought my first house.

I realize that my decision to buy is no fault of anyone else.

#17 Tim on 06.16.11 at 10:06 pm

It is all a house of cards, things will tank. People paid far more than houses are worth, just like the Dipstick Canucks paid far too much for Luongo. By the way for the inbred idiots that make stupid generalizations about Vancouverites, based on less than one tenth of one percent of the population who cause trouble probably have the same IQ

#18 Hovering on 06.16.11 at 10:07 pm

http://vreaa.wordpress.com/2011/06/16/the-coming-housing-prices-crashed-because-of-the-2011-riots-meme/

#19 Hoof - Hearted on 06.16.11 at 10:08 pm

11111rrrrssszzztttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttttt!

#20 Holding on on 06.16.11 at 10:10 pm

Horrah, Uno

#21 Chuck D on 06.16.11 at 10:13 pm

No apology from Garth (naturally) but also no explanation why its going to happen this summer when the blood in the streets called for this spring (or last fall…) never materialized. All I see are higher and higher prices to the point where it has grown absurd.

#22 Mark on 06.16.11 at 10:13 pm

Plenty of “$800k” (a few years ago) condos in Calgary are lucky to even fetch $500k these days, if even. And we’re just getting started on the housing collapse in Calgary.

A 50,000 TSX and housing at half of current levels in Canada ought is where I think things will end up in the next 5-7 years.

#23 mid-Ontario on 06.16.11 at 10:17 pm

We will never be happy until our friends have lost significant money, are full of fear for their future and the Canadian economy is clearly following the road to ruin as is that of the USA.

On the other hand, perhaps we will not be happy then, just more respectful of Garth’s opinion.

The world turns in 6 weeks when the debt ceiling standoff is back front and center in the news. The stock market knows what is coming as it sinks daily .

Our RE market is toast today. Just a few fools keeping it afloat. Sales and prices continue to drop in central Ontario. Watch the data as it is released this summer.
The melt has begun.

Greece riots, Iceland and Ireland revolt in other ways.
The great Ponzi scheme is about to end. When it ends, the howling in RE will be brutal.

#24 American Werewolf on 06.16.11 at 10:23 pm

You went too easy on that jackass

Epic

#25 squidly77 on 06.16.11 at 10:31 pm

Poor Tommy, the poor lad doesn’t have the balls for risk then whines when he loses. Well Tommy here’s your chance at redemption, if you got the nuts for risk here’s a deal for ya.

Go buy $800,000 worth of Greek bonds, the rewards would be succulent if it works out, on the other hand, the pain would be harsh and fast if it didn’t.

So there you go Tommy boy, there’s your second chance at some free and easy money. Got the Nuts lad ?

Or you could go buy some RIMM, BAC or JPM there are millions of opportunities everyday. The higher the risk, the greater the reward.

Its unbelievable how people believe that there’s a ton of money in flipping homes.

Equities are the way to go and here’s an example. SIRI has gone up 600% since 2009.

#26 Cato on 06.16.11 at 10:34 pm

Flippers = Gamblers. Like the whales of vegas they all like to talk about their big wins but their losses never come out of the closet. They are the personality types that typically exaggerate and lead others down the poisonous path. We all know vegas wasn’t built on winners and in the RE industry the flippers are the little fish making the bigger fish rich.

Tom, the simple fact of the matter is markets aren’t that hard to predict – its human emotion thats the wild card. The canadian housing market is now running purely on emotion and emotional investing is gambling. Markets may remain irrational longer than any sane investor can remain solvent but at some point the bubble always ends badly. Gamblers will always follow the herd, real investors stay one step ahead and blaze their own trail.

#27 garrulous squirrel on 06.16.11 at 10:34 pm

Dude, for one thing….no one…I mean not a single soul…is paying capital gains tax on the property they have flipped. The CRA doesn’t track it…or track the sales contracts……it is not claimed as income…..the property registration office and the CRA don’t communicate…the government has turned an obviously blind eye to the subject of immigrant scams and dope dealing….. ..taxes on flips are considered untouchable………as they ( and dope dealing) have formulated a politically correct base for new immigrant wealth building. Unless you are self reporting…Bwahahahahahahaha on that score …it’s free money.

In your dreams. — Garth

#28 Vancouver_Bear on 06.16.11 at 10:38 pm

Vancouver is the Detroit of Canada – http://www.theoaklandpress.com/articles/2011/06/16/entertainment/doc4dfa821043bf7765274553.txt

You heard it here first. BPOE your $0rry a$$.

#29 squidly77 on 06.16.11 at 10:41 pm

I should add that you gotta know when to hold em, and know when to fold them when equities are involved.

My beloved SIRI for example has been pounded by massive gravity hammers lately, but I hold stead fast and spit in the face of temporary losses.

#30 doc on 06.16.11 at 10:46 pm

Requiem. I was in Vancouver for the last few days visiting old friends in my old neighborhood of Dunbar. The house I sold a year ago is up about 500K. The riot was a watershed moment. I could weep for the city I love. Excess and greed are going to destroy lives and neighborhoods. The hooligans have demonstrated they have no connection to the values that built a beautiful city. They obviously have no dignity or self respect either. Shame. Shame. I am glad to have moved. How would these cretins from the lower end of the gene pool behave in a real civic emergency? How many now feel they have no skin in the game? How many will feel they have nothing to lose if they lose it? The average citizen must have reasonable expectations of housing that is affordable from a job that pays enough to live with dignity. For the average citizen this is not possible in the beautiful city of Vancouver. It is not the best place on earth and now the whole world knows it. We know what comes next. Did you hear the bubble burst?

#31 Burnt Norton on 06.16.11 at 10:49 pm

3 comments

1 comment on-topic:

It seems that many scoff at the notion of earning an honest dollar these days. Viz, from ZH:

Recently Liu Chuanzhi, the Chairman of Lenovo and the iconic figure of Chinese manufacturing, faced a serious dilemma while asked why of Lenovo Group’s profit in 2009 60% came from asset investment and only 40% came from manufacturing. He said “when the typhoons come, even a pig can fly in the sky. Everybody is profiteering from this. Why can’t we?” The typhoons refers to the property frenzy and the easy ways to make money

http://www.zerohedge.com/article/guest-post-why-wheels-are-falling-chinas-boom

At the end of the day (except for psychopaths) a person’s conscience will determine the emotional value of any money earned. Pride vs shame. Which will you choose?

1 comment sort of on-topic:

Of course I had to Google Image Katie Michaels. $30,000?? Uh, is she getting marketing tips from Vancouver realtors? I’m sorry honey but you’re gonna havta knock a couple of zeros off the end of that asking price.

1 comment totally off-topic:

As much as I try to skip the completely off-topic comments, there are a couple from yesterday that really cannot be ignored.

Let me make it plain and simple for some of you.

Anti-vaccination propaganda = child abuse.

#32 Jsan on 06.16.11 at 10:52 pm

Garth, good luck trying to reason with gambling fools. That is all they are. They are financially illiterate, fiscally reckless, herd followers.

I have mentioned this before but a friend back in 2007 got the bright idea that he was going to do a flip here in Edmonton. After all, the media was giving non stop airtime to the real estate crack dealers better known as realtors who were giddy with excitement as the Alberta housing bubble reached soaring peaks. The mantra of “Buy Now Or Be Priced Out Forever” was on the lips of every Real Estate shyster and my co-worker who didn’t have even an ounce of investing experience let alone a penny to his name decided that he was going to flip and make some quick easy money.

Long story short, he sold his flipper place not to long afterwards and after all of the fees and the drop in housing prices, he took around a 90K loss.

When you post stories such as the one above, it just reinforces what we all know. This is clearly a speculative, gambling driven bubble that will no doubt end very badly, just as the US speculative Bubble ended. The only people I feel sorry for are those who have jumped in to purchase a place they actually want to live in, not flip but unfortunately also are very naive and do not understand or recognize a bubble when it is smacking them squarely in the face.

#33 Jon B on 06.16.11 at 10:58 pm

Some serious smack bottom there GT. Nice work. How about running another pathetic blog to explain how an 8% return can be had by the average investor? You often refer to this elusive figure and I’m sure there are a few of us that would like some specifics rather than the generalized “balanced portfolio” explanation. I sure hope you don’t keep it under wraps like the Colonels secret recipe.

#34 Jan Etter on 06.16.11 at 11:04 pm

Back as far as the early 2000’s my friends used to comment on how it was “easy money” buying off plans with maximum leverage (i.e. more house than you need), closing once the houses were built, living there long enough to claim principal residence exemption and then selling as soon as the capital gain was tax-free, then starting the process all over again. And they were right.

If you had the cojones to flip in the GTA in the past 14 years you’ve made, in the words of Mark Knopfler, Money for Nothing. Meanwhile, those of us who bought within our means and with substantial down payments (i.e. little leverage) watched as others reaped huge tax free capital gains and acquired properties that in normal times would be beyond their means.

From that perspective, I understand how Tom feels to a certain extent. At the end of the day, though, I have no regrets. I have to be able to sleep at night and I sleep better if I’m not leveraged 80%. If you’re the type that can’t sleep because others are making easy money, then hey, by all means take a risk but do so with the knowledge and wisdom imparted on this site that the odds are growing against you.

#35 NorthOf49 on 06.16.11 at 11:04 pm

Awesome post Garth, one of your best yet.

#36 Medic on 06.16.11 at 11:05 pm

People like Tom are going to get fleeced over and over again throughout their lifetime. So much uncertainty about themselves – perfect target for anyone with a good story.

#37 The InvestorsFriend (Shawn Allen) on 06.16.11 at 11:06 pm

GOOD DECISION VERSUS GOOD OUTCOME

As to those who claim it was bad advice to not buy a house last year…

There is a big difference between a good decision and a good outcome.

Here are some extreme example to illustrat this:

One man is very drunk but decides to drive to a store and buy a lottery ticket. He wins $1 million. He made a very bad decision but he got away with it. He got a VERY good outcome. But it was still a poor decision.

Another very drunk man decides to sleep it off on his couch. But in a freak accident a plane flies into his house and he is killed. He made a good decision but had a terrible outcome.

So, just because you won at Vegas does not mean it was a good decision to go there.

Just because someone who spends $100 per month on a lottery tickets beats the incredible od1s and wins does not mean it ws a good decision to spend all that money, it was just luck, a good outcome.

(For every such peron that eventuallly wins there are at least thousands if not many tens of thousands who spend that $100 per month and will never win big . Never!)

And… buying a house in 2010, especially on speculation of higher prices was not a good decision based on the facts at heand. But it may have turned out great (for now…)

Comprehende?

#38 Noname on 06.16.11 at 11:08 pm

#23
According to TREB, sales for may are up by 6% compared to May 2010

As expected. Sales started to worsen a year ago. — Garth

#39 The InvestorsFriend (Shawn Allen) on 06.16.11 at 11:10 pm

SPEAKING OF GREECE AND ITS IMPENDING DEFAULT!

“Keep on lendin’, in the free world”

“Keep on lendin’, in the free world”

No country need default as long as it is loaned money endlessly to pay its debt.

This is called a debt roll-over. And it’s highly impolite to point out the similarities of a debt roll-over to a Ponzi scheme.

“Keep on lendin’, in the free world”

seriously, ya gotta love credit, it truely is the grease of the economy. But as with all good things it is best used with some moderation.

Although there are those who say that “too much of a good thing can be … well… fantastic!”

#40 poco on 06.16.11 at 11:10 pm

NO FUN VANCOUVER—lets just keep the facts straight—

here are the first few sentences of your post #261 from Carnivorous directed at me
Your the idiot because you cannot read. No where did I say there were no injuries nor did I say that nothing was thrown at the Police. You just read what you want to read etc etc etc……..now you’ve got that straight in your head have you????
______________________________________________
now lets read what you wrote in post #166 shall we:

This was not a riot. It was select group of a few individuals that caused looting and burning of cars.

These are the facts:

1. No one was killed;
2. No police were injured;
3. Minor injuries at hospitals none life threatening
most were for the treatment of tear gas;
4. The Police used tear gas mainly to get the crowd to
go home;
5. No rocks or fire were thrown at police;
6. The majority of the pedestrians were peaceful.

i do believe there are a few descrepancies from one post to the other–idiot is back on you!!!!

PS: put down the bottle when you post–you won’t forget so much

#41 jas on 06.16.11 at 11:14 pm

Years ago, in the UK, flipping was illegal. Perhaps it still is.
Why can’t it be made so here?
When housing is truned into gambling, the govt. has to take action.
WTF is the govt of Canada doing???

#42 Elmer on 06.16.11 at 11:14 pm

And the lost earnings on the $40,000 over 18 months (at a modest market level of 8%)…

Have you SEEN what the markets have been doing lately? My portfolio is down YTD. Maybe you meant to type -8%.

Then it’s a bad portfolio, and you did not heed my words a year ago. — Garth

#43 nonplused on 06.16.11 at 11:21 pm

The thing about a speculative bubble is that towards the end prices continue up even once there are only speculators in the market using borrowed money to buy. It’s a great scam. You buy a tulip with credit, seel it six months later and pocket a grand. Then, you buy the same tulip back at a higher price and the other speculator pockets a grand. Lather, rinse, and repeat until the banker stops lending ever larger amounts of money against the same tulip. Then give the tulip to the bank.

#44 Jimmy on 06.16.11 at 11:22 pm

Put Your Hands Up For Vancouver

#45 Skeptic on 06.16.11 at 11:24 pm

You are supposed to read this drivel, Tommy, and throw it into the hopper of your brain, then come up with your own opinion. It’s called, um, thinking.

The problem is that you have presented your speculations as absolute fact, moving only recently from “wills” to “mights” and “coulds;” and you still treat anyone who dares present an even slightly differing opinion as absolute fools worthy only of contempt. Your blog might have had a bigger and earlier impact if you hadn’t been so belligerent.

#46 Boycott on 06.16.11 at 11:27 pm

Corrupt Officials Took $124 Billion Out of China

http://www.cnbc.com/id/43434622

Boycott Now
http://www.facebook.com/#!/pages/Canada-home-buyers-boycott-now/203937936304340

#47 squidly77 on 06.16.11 at 11:31 pm

Tommy boy, I grimace when my wife shops at Victoria’s Secret, I want to see her out of them not in them.

Tommy, you sound like the type of guy that shops at Victoria’s Secret, for yourself.

#48 Utopia on 06.16.11 at 11:33 pm

Go Rioters!

Oops, I meant Go Riders! This is Saskatchewan after all. Real peaceful.

Go Riders! Yaaay.

#49 Hovering on 06.16.11 at 11:38 pm

hey squirrely !

keep flipping man

no province would ever think of keeping track of that sort of thing

telling the tax man

getting the paper trail from the real estate agents

and cooking your ass in a gumbo

#50 Nostradamus Le Mad Vlad on 06.16.11 at 11:39 pm


Re: the pic. Is everyone buckled up and ready for a hard thud (landing)? Chances are it will be long and painful.

“. . . Katie Michaels (the Las Vegas call girl says she costs $30,000).” — Better value than RE, that’s fer sure!

“And, of course, I don’t care. It’s called, um, thinking. . . . it’s the wisdom of mitigating danger in a volatile world. . . have unleashed house lust, and jacked up prices? You just proved every point I have clumsily made.”

Good point, as you have touched on the psyche of people who become entranced by something material, then let their emotions run themselves instead of common sense, which doesn’t include emotions.

Of course, critical thinking doesn’t exist for these sheeples.
*
#285 Live Under Your Means on 06.16.11 at 8:07 pm — Noted. I’ve had one flu shot in a little over two decades (didn’t particularly want it, but the doc said I had to).

No flu, just three or four moderate colds per year.

#289 1milcrackshacksonfire on 06.16.11 at 8:33 pm — bpoe may be one of the robo-signers in the US, posting here to get a rise out of us. Better off ignored.
*
4:11 clip Every Debt You Create to the tune of Every Breath You Take. Nice tune.

4Closures Lots in Hawaii; OPEC Gives greater understanding as to why the US is instigating all sorts of wars there; Germany All of the Eurozone is responsible for Greece; speaking of Greece One and Greece Two, plus Exec. pay rises, China goes back to buying US debt; Interesting Whether true or not remains to be seen.

Nuke Flood and Fukushima Scientists say govt. hiding the reality.

US looking for more wars. When do they run out of people? Figures Costs of the Af’stan – Iraq wars, compared to the homeless in the US. Sunspots Where did they go? and Ice Age Is it coming or going? Don’t worry, be happy! Birth Of A Star in Centaurus A. Not sure if this incl. Fort Calhoun which, evidently is not in the greatest of shapes. About 20 miles outside Omaha.

3:26 clip Chaos — FYI. Nibiru, Elenin etc. and blacked out part of sky.

#51 Vancouver_Bear on 06.16.11 at 11:40 pm

Riots, new name for the city (Detroit of Canada) and adding insult to the injury CBC’s documentary realeased today about gangs of Vancouver – http://www.cbc.ca/documentaries/doczone/video.html?ID=1856375371

Stay away from this hell hole.

#52 Hovering on 06.16.11 at 11:44 pm

like this guy

http://vreaa.wordpress.com/2011/02/02/spot-the-speculator-26-vancouver-doctor-and-condo-flipper-convicted-of-tax-evasion/

thanks Patriotz / VCI

#53 Seeker on 06.16.11 at 11:53 pm

For every dollar of unearned profit a flipper makes, real estate gets more unaffordable, and an end user is probably more indebted. When it comes time to haul your moldy butt out of that basement rental and buy your family a home, well, you’ll see what I mean. Guys like you helped indenture the country…Thanks for this Garth. Flippers are making prices unaffordable, for those who want a house for a home. Higher prices are making owning a home unaffordable. People are indebted, can’t save, and do not have a lifestyle because they are now housepoor. Can’t Tom think of making an honest living… Let’s just call it what it is …GREED!

#54 Nemesis on 06.16.11 at 11:57 pm

…”a cheap and tawdry daily dishing-out of opinions, observations and conclusions about the stuff that surrounds us.”… Hon. GT

Cheap? Certainly. But, “Tawdry”!??…

Never. ;)

#55 Devore on 06.16.11 at 11:59 pm

The balls some people have to complain about free information, advice, and analysis. If you want someone to predict both the event and the exact time, there are investment and fund managers out there who will gladly tell you, for a fee of course. Stop looking for hot stock tips. If you think Garth is wrong, well, there’s still plenty of people willing to take the other side of that trade.

Identify trends, identify opportunities, stay ahead of the lemmings, and man up. Or pay someone to do it for you.

http://www.youtube.com/watch?v=MKhUZ5kOagk

#56 poco on 06.17.11 at 12:02 am

#21 Chuck D
No apology from Garth (naturally) but also no explanation why its going to happen this summer when the blood in the streets called for this spring (or last fall…) never materialized. All I see are higher and higher prices to the point where it has grown absurd.
______________________________________________
come on, with so many posters telling us of the price drops in their neighbourhoods, you can’t really believe it hasn’t started long ago….check these out

mls v880373–1506-600 Nootka pt moody—bought in Sept 09 –568.9k listed Sept 10–629.8k–ya this flipper (probable pre-sale) thought he was going to make a quick buck too—now listed at 578.8k and has been for a couple of months——oh he’s not quite underwater yet you say—–look at the comparables in the same building
the above #1506 has 1150 Sq.ft
neighbour–#1503 has 1225 Sq. ft.–present asking price of 549k
#306 1150 sq. ft. more of a comparable to #1506–presently listed at 518k
so our flipper friend here is presently f_ _ked –can we see foreclosure in the future

mlsv880639–2002-2959 Glen Dr Coquitlam–bought Sept 09–699.9 (another flipper?)-now listed for a few months at 679k

mlsv883813–1902- 2982 Burlington, Coquitlam–bought July 09–540k probably a pre sale–listed Mar 10 for 529k–already lesss than closing date–now at 489.9k

the market is still dropping in the tri cities–what’s going to turn it around–low interest rates???? many new listings (condo)close to under water here

so Tommy, you might want to contact these owners to see if they think fipping property is a good idea in this environment

do your own comparables in your neighbourhood–see what the condo market is doing–the downward trend always starts there

CREA may lie to you and me but i have my doubts they lie to Carney–he knows the bubble has popped in many areas and the market is going down and low interest rates won’t stop it

#57 SafetyBear on 06.17.11 at 12:10 am

“Now he’s going to split about 100k profit with our mutual friend”

Of course, these two friends could very well be in for the mother of nasty surprises when they try to sell. The difference between a profit and a loss? Timing. Knowing you’re not on the hook for 50% of this madness? priceless.

#58 The Phantom on 06.17.11 at 12:11 am

Evening All: Back after a rest on the sidelines. I thought that I’d offer my two cents worth here and state that regardless of who has made money in RE, currently that would be an investment I would avoid given the run up in prices over the last number of years. As an aside to that, Garth, I would have thought that the first $100,000 that one made in RE or stocks would have been tax-free…perhaps I missed something somewhere; I’m not an authority in this area by any stretch. I’ll close here by remarking on this fellow’s friends: Figures never lie but liars use figures…if Tom was to search the land transfer title records or look through previous RE sales in the region he could possibly verify or refute the actual selling price of his friends’ home that they bought and sold…the truth might (1) be surprising and (2) release some of that angst he is experiencing currently…

the phantom

#59 Bobby on 06.17.11 at 12:14 am

Poor Tommy,
It’s always someone else’s fault. I read an interesting article in USA Today the other day about the housing collapse in Las Vegas. Many people bought homes on a certain street from $370-399k. One was a realtor who supposedly was to know the market. Those prices were the peak and have all fallen significantly. The latest sold for $125 k.
The gist of the story was whether it was better to declare bankruptcy like many had done and walk away. Or, for a few to keep paying on a depreciating asset.
In the interview, each said that they believed prices would continue to rise.
I have always believed the one that guesses right is the expert.
Watch Tommy buy now and then owe more than it is worth. Who will he blame the, probably the government.

#60 Tom on 06.17.11 at 12:21 am

I fully expected the condescending response having read your blog for some time. What I didn’t get is an answer to why you think the correction will begin this summer. It almost seems like you’re saying that what you post isn’t worth the space it takes up on the net and that it’s just an opinion, that you are passing the time. Don’t take it seriously. I disagree. I’ve learned a few things reading it such as 4 times your household income should equal your max purchase price and I read here first, before Carney came out and said it, that Canadians are way too deep in debt. What is it now, over a buck fifty in debt for every dollar coming in? You’ve been invited to real estate round tables where you urge caution and talk about a coming correction while the other participants laugh it off and give their opinions to the contrary. People are still making money and you admit you’re wrong but don’t care and brush it off. Makes me want to re-think why I’m asking you about yet another prediction but I’ll ask again anyway. Got an answer this time?

Actually I don’t remember telling anyone what would happen this summer. Good luck growing up. — Garth

#61 daystar on 06.17.11 at 12:44 am

Dearest Tom:

I owe you the deepest of apologies. I should have swayed potential real estate investors to buy and sell real estate solely on speculation to make lots of money because greed is at times, our friend (fickle as friends can be). After all, how selfish it would be of me to not take the full blame for your problems, the surest way to help you avoid being responsible for one’s self, yes, how selfish of me to interupt a good thing.

But still, I behooves me to note that daily, not just from the likes of the Mark Carney’s of the world who say, in plain banker talk, that certain housing markets (Vancouver, Toronto, heck pick a city) are doomed and as housing goes, so goes the Canadian economy… oh, the humanity. So much fear out there in the exchanges these days… Money is being sucked out of commodities and for good reason. Japanese earthquake woes, U.S. housing woes, Chinese real estate woes, European debt woes, 2nd and third world shortages of oil and soon to be food woes… did I miss anyone?

http://money.ca.msn.com/video/?cp-documentid=1833853d-69b5-44ab-bc2b-7bcf32c73f81

http://www.cbc.ca/news/business/story/2011/06/15/carney-banks.html

http://www.ctv.ca/CTVNews/TopStories/20110615/flaherty-and-carney-fear-household-debt-impact-110615/

I have just one question for you Tom, if you could just… reach out with the olive branch and forgive. Is F wearing a toupe’?

#62 P Letcher on 06.17.11 at 12:49 am

Disgusted Hockey Fan.

After watching the aftermath of the Vancouver City Riots following the Stanley Cup Final, it’s abundantly apparent the police were unprepared for what was to come. This was likely due to the fact that during the finals the established fun zones were for the most part attended by happy and contented fans, leading to a false sense of security and a lower level of preparedness.
However, once the outcome of the final game produced the negative reaction in the massed crowd, certain elements in the crowd used the occasion to fulfill their desire for rioting.
Hindsight being 20/20, had there been made available one or two fire fighting water bucket equipped helicopters on standby, with special permits for low level flight, immediate access to the various fires could have been attained by effectively dousing the perpetrators, drenching and perhaps sobering them up somewhat, with minimum collateral damage to onlookers.
The effectiveness of the immediate onslaught from above with the shock of cold water on the rioters should have quenched the riot before it had become out of control, thus saving considerable extra expenditure on additional policing, danger to firefighters and ambulance personnel on the ground: Not to mention the several million dollars in property damage caused by subsequent vandalism and looting.
Had this preventative measure been taken, the probable cost of several tens of thousands of dollars for the helicopters would have been easily offset by the savings in extra policing and property damage, etc.

#63 John on 06.17.11 at 1:13 am

How modest is an 8 % return (going to be) in 2011?

Ever heard of negative correlation and asset allocation? Didn’t think so. — Garth

I think Jeff makes a good point, your response however was juvenile as usual.

Jeff had no point, because he focused only on equity markets. Investors who understand negative correlation and the ability to reap cap gains in bonds as stocks wobble, or enjoy diverse asset classes, can easily have consistent gains, even at times like this. — Garth

#64 Nick on 06.17.11 at 1:25 am

Garth is right. When you include renovations, taxes, notary, agents, taxes, new fence, taxes… You get the point. Flipping is a lot less straightforward that people like to brag about. And what do you do with the profits? Buy a bigger house. Every adult American thought it was a great idea back in 2005…

#65 tran, Calgary on 06.17.11 at 1:59 am

http://www.marketwatch.com/story/china-central-bank-finds-officials-stole-billions-2011-06-17?link=MW_latest_news

Corrupt Chinese officials and employees of state-owned companies have absconded with about 800 billion yuan ($123.7 billion) of public money over 15 years through 2008, much of it making its way to the U.S., Canada, Australia and the Netherlands, according to Chinese news reports citing a central bank study.

#66 goldfinch on 06.17.11 at 2:46 am

There are a couple of key elements missing from the story:
How much did dude’s friend spend over and above what he would have paid in equivalent rent? Know what I mean – if he could have rented that house for $1500/month but it cost him $3000/month in mortgage+taxes+insurance+renos that’s an extra $18K he failed to count.
Just because the friend sold at an alleged profit does not mean your correspondent would have done so. He might have held on, hoping for an ever larger gain, and ridden the market down (eventually).
It’s easy to data-mine and moan about lost hypothetical profits. Tougher to actually act.

#67 Flip McMoney on 06.17.11 at 3:31 am

I do feel bad for Tom and I can understand where he is coming from. But, Garth is right, there are more to the numbers than just Bought for X, sold for X.

That’s the problem with HOUSESALESMEN(R), they only tell you 1/4 of the story. HOUSESALESMEN(R) do not tell you all the costs inbetween of Bought for X, sold for X and it is in THEIR best interest NOT to TELL YOU. No matter what the prices are doing (up or down) and no matter how much you made or lost, HOUSESALESMEN(R) get paid commish on YOUR money.

That’s the real game, you don’t matter, it’s just your money that matters and HOUSESALESMEN(R) want it.

So before you go thinking flipping, look at all the numbers, not just what the HOUSESALESMEN(R) tell you.

#68 TomOfMilton on 06.17.11 at 5:05 am

Waaaaah waaaaaah somebody call the waaambulance. And on the way I’d like to stop for some French Cries *sniff* and a waaaambuger!

I this sometimes people start to push blame on others. Their parents, their friends…and the forest-gump-running-oracle Garth. Soon I imagine people will be experiencing large losses…then it will be the
governments fault, girlfriend, spouse…take your pick. Make your choices with integrity. Be the creature given free will. It’s a wonderful feeling and even the mistakes are more bearable.

#69 Flash on 06.17.11 at 6:19 am

“With RIM laying off folks soon. I wonder what the effects will be with housing in the Waterloo region?”

Canadians who have bought Apple’s products instead of RIM’s should realize their role in RIM’s downfall. 1000 employees may be gone in the next 2 months with many more jobs at risk in the community.

#70 Chris L. on 06.17.11 at 6:37 am

You have never spelled it out better Garth. And also I lost $15 bet on a 15% decline year over year from April-April for Guelph real estate. Obviously I bet on the correction that never happened while still holding onto my positive cashflow properties.

I don’t blame you, at the time I agreed with you and (shared) the call. It’s pretty easy to be upset when people who tell you want to do are wrong, huh. Too bad life doesn’t reward followers as much as leaders.

Maybe Tommy should have started a blog on dissing real estate and started helping people diversify while investing….

#71 T.O. Bubble Boy on 06.17.11 at 6:58 am

Anything can seem like a great idea on a short enough time horizon.

RIM went up 50%+ from September 2010 to February 2011, only to come crashing back to where it is today (over -50% from the mid-February peak).

So, was buying RIM a good idea? Yes – if you sold it by February.

Too bad houses take a lot more time (and cost a lot more) to sell than stocks.

#72 Pr on 06.17.11 at 7:03 am

Tommy the reluctant flipper, just stop and wait. One day soon, this madness will be stop. I want to say bravo to the swiss police and some member of the swiss government who was servicing a warrant for the arrest of one of the member of the BILDERBERG group. This same group who are probably involved in this hellish situation that we are living right now, in the real estate. Get inform, now! It can save your financial future.

#73 MrC on 06.17.11 at 7:06 am

To Tommy
There are many opinions out there. If this blog is your only source of information on housing than you got what you deserve.

Just because Garth writes an entertaining blog and provides his opinion it does not mean he will be correct 100% of the time. No one is and no one can time the markets everytime. You should be getting information from multiple sources (that provide both bullish and bearish arguements and then make your own decision).

#74 T.O. Bubble Boy on 06.17.11 at 7:10 am

Current CBC.ca survey:

“Can you afford to buy a home at the current prices?”

Current results (613 respondents):
Yes = 20%
No = 68%
I’ll buy, but not in this City = 10%
Other = 2%

#75 fancy_pants on 06.17.11 at 7:11 am

#213 lawyer gal on 06.16.11 at 1:59 pm
wow alot of complaining on this site about salaries. you all should have gone to school more if you dont like your salary. I just started my new job straight from law school. 200,000+ and i haven’t even passed the bar yet.

Crystal Harris makes more than you without an education. although she rides the bar. she was also a virgin to her profession when she started. ah well, each to their own, we can’t all wear suits to work.

#76 Tri State Pat on 06.17.11 at 7:12 am

#5 Ottawan.

Have been doing the same darn thing with a west west island area in Montreal. 25% increase in listings in the last 12 months (typically looking at about 250 houses for sale). Curiously it kinda compares with what the Greater Montreal real estate Board has been publishing, except they don’t make it exactly easy to get the data (have to drill down a little bit…). In addition the board has made some recent comments that seem to support what I have noticed personally; they seem to be calling a spade a spade.

Selers are still putting (in my opinion) a 20 to 30% premium on prices, and the houses do seem to sit; also the same ones come up again and again. What we don’t know is how much these houses are actually selling for. It used to be the offers were 97 to 98% of the asking price (i’m speaking locally here), but now I’m suspecting it’s more in the 92 to 94% sale price and they are going. La Presse also has a roudup of what people are asking and what they are getting, there is some filtering there a little bit but there is a trend, and that is the actual selling price is getting lower and lower with respect to the asking price.
Here where I am located (midwest) houses have been losing another 6% this year, just like last year…People don’t talk about it; they just pay the mortgage, but thay don’t talk about vacations much or buying a Harley or a boat…

#77 househornyhousewife on 06.17.11 at 7:24 am

Garth,

Your response is exactly what I was thinking as I read your reader’s comments. I think a lot of people who read this blog are missing the point that you are trying to make and that is that real estate has become a risky business and not something to bank your life savings on. If you have a spare $500,000.00 that you can afford to loose then sure go for it. People absolutely have to realize that “flipping” real estate is not like flipping any other commodity. It is a long, complicated and risky transaction which involves a heck of a lot of money. However, Garth, I have to say that you underestimate the sheer greed of the majority of the general public (or perhaps you don’t and you like a challenge). No matter what you say or how you say it, you will always have people who think they can score big money without having to take any risk or having to work hard for it. They think they are entitled to make it big just because they are who they are (which is nothing but an average joe like the rest of us). This is also why people buy lottery tickets. They don’t see that they have more chance of getting hit by lightning than of winning but the idea of getting money for nothing is just too appealing. As you said though, risking a couple of bucks buying a lottery ticket is not the same as risking hundreds of thousands. Oh and you may want to tell your reader that if he wants to speculate on real estate, he shouldn’t do it in Quebec. Over here we have the infamous “hidden vice” law that holds sellers responsible for any kind of construction weakness (ie. structural, foundation etc..) even if it is NOT visible through an inspection. Once required to repair such a weakness, a seller is supposed to go back to their own seller and so on down the line until the original builder or owner is found and held responsible (usually the original builders have been dead for decades so someone usually gets left holding the bag). You want risk, THAT’S risk. I still think there is nothing wrong with wanting to buy a house for yourself to live in but speculating on real estate is definitely not for the faint of heart and especially not for someone who’s net worth makes such a transaction an ever riskier business than it already is.

#78 bigrider on 06.17.11 at 7:28 am

#42 Elmer- Garth replies “then it’s a bad portfolio, you did not heed my advice”

Garth your porfolio is down YTD as well. I have checked preferred’s of all major large caps. Stop pretending otherwise. Bonds are relatively flat on the year.

If you subtract your YTD dividend earnings from the value ,at the start of the year, on most large cap preferred’s and common stock your account balance is less than it was at the start.

Seriously, this whole notion you have, of buying assets that pay you to own them ,but ignoring the underlying value of the asset in calculating your YTD returns is flawed.

Making 5.5% on a BMO preferred for example YTD, only to have that BMO preferred share down 7% on the year(only a hypothetical example) means I am down 7-5.5/2 YTD or approximately 4.25%.

Sorry you are down. I’m not. — Garth

#79 bigrider on 06.17.11 at 7:32 am

#34 Jan Etter-

Very fairly written. I feel pretty much the same way.

Somehow the rewards over the past decade have gone to those who have been less informed ,less prudent and overall less intellligent then those who have acted in an informed, logical and well read manner.

This has been my biggest frustration with this whole RE humping mania.

#80 AG Sage on 06.17.11 at 7:35 am

Garth mentioned opportunity cost of the money, but not the financing costs of the whole outlay. The first few years of a mortgage are brutal. Even at 4% interest the first 12 months add up to $16,000 in rent to the bank for the money.

#81 $froma$ia-(Money does come from trees!) on 06.17.11 at 7:44 am

Oh look Greece is in trouble, here goes the forestry sector, Going green is out the window.

Can’t we just send them our Canadian Tire money to use a currency there?

$

#82 45north on 06.17.11 at 7:44 am

poco: CREA may lie to you and me congratulations on the correct form of the pronoun!

you know I am struck by the disconnect between the Canadian and US housing markets. It is stark. And I don’t know how long the Canadian market can defy gravity.

#83 bigrider on 06.17.11 at 7:44 am

Diversification of assets is extremely important but too much diversification and too much negative coorelation means you may end up with no returns at all minus the cost of your ETF’s and management fee to advisor.

Betting every number on the board at a roulette wheel as well as both red and black and everything in between means I might not lose much but house vigorish(above examle fees) would still apply grinding me down every so slowly.

A perfect negative correlation would be to go long TSX and short at the same time, for example, surely no one would do that.

At the end of the day, investing is about taking some calculated risks, assessing potential downside and placing your “bets” accordingly.

#84 TurnerNation on 06.17.11 at 7:52 am

#4 tanned34 on 06.16.11 at 9:41 pm

As even this local Toronto condo realtor admits, pre-construction condos are now priced at same levels as resale codos. There is no money to be made here:

http://torontorealtyblog.com/2011/03/18/pre-construction-condos-and-cake/#more-3452

#85 BrianT on 06.17.11 at 8:20 am

#30Doc-I am surprised more people haven’t noted that anyone attacked by that mob would certainly not be protected in any way by the extremely highly paid police force. When the LA riots were raging a lot of Korean store owners had their lives and property protected not by the LA police (who had abandoned them) but by their own firepower they used.

#86 Jessica6 on 06.17.11 at 8:28 am

Part of me is looking forward to a real good correction if only it will knock some sense into people – all to many of whom have this lazy, lottery-jackpot mentality.

I think why some ‘doomers’ seem to want a form of financial armageddon is because it seems that the only way for people to find solid values again, like they had after the Depression and The War was after a couple of decades of severe hardship.

I’d hate for it to come to that but it doesn’t seem that the current economic system rewards the old-fashioned values of thrift, hard work, community, helping others, honesty and patience any more, just everyone out for a quick buck off anyone they can no matter how.

#87 bigrider on 06.17.11 at 8:38 am

#78 Garths reply to Bigrider- ” sorry you are down , I’m not”

Eric Sprott, Norm Lamarche, Frank Mersch ,Rohit Sehgal ,John Embry, David Taylor thank you for your sentiments as well.

#88 Kat on 06.17.11 at 8:54 am

Blame, blame, blame…
why can’t people take responsibility for their decisions!?

#69 Flash – “Canadians who have bought Apple’s products instead of RIM’s should realize their role in RIM’s downfall.”

Just like anything, people will support the product that they like better. If a company is failing, BLAMING the competition AND the people who support them is a weak argument.

Grow up!

#89 Friendly Fire on 06.17.11 at 8:56 am

Time to renew mortgage:

To lock in or roll the dice and go variable at Prime minus .75%

#90 Kaganovich on 06.17.11 at 9:00 am

Attention Dawgies!

Steve Keen presents an excellent analysis of positive and negative debt feedback loops in elucidating the current state of our economy.

http://www.debtdeflation.com/blogs/wp-content/uploads/2011/06/DudeWheresMyRecovery.pdf

#91 Analyst Analyzer on 06.17.11 at 9:06 am

Great post but I don’t agree with 8% being moderate. Try 2.5%. With balanced portfolio of equity, cash, and bonds, that’s where people are probably at YTD

You’re joking, right? — Garth

#92 Kaganovich on 06.17.11 at 9:30 am

Provocative article alert:

“Economics, as we have pointed out above, is today taught to citizens – through the universities and schools, but also through the media – in order to guide them in their actions. This is especially true of those citizens who go on to wield power over others and direct the institutions that govern our societies. So, why not cut out the metaphysics and the morals altogether and simply teach people what the levers of economic power in our societies actually are and how they can be used?

Economics was moving in this direction after Keynes had founded macroeconomics as a discipline. To a large extent after Keynes economics came to be seen in operational rather than moral/metaphysical terms. All that seemed to change when Milton Friedman – channelling the Austrian School, who explicitly founded their ‘theories’ on moral judgments – tried to re-establish macroeconomics as catering to a certain moral and metaphysical view of the world. Larry Summers once wrote that although Friedman is seen by academics as an ‘innovator’ of monetary policy, one of his most important contributions lay “in convincing people of the importance of allowing free markets to operate”. Summers got it.

Friedman snuck the metaphysics back into the discipline through the back door and the results have been regressive, both intellectually and socially. Economics has become, once again, a metaphysical doctrine boiled down to a few crass moralisms that are spoon-fed to the educated public. Its proponents, in true moral and metaphysical style, claim to be championing ‘freedom’, but any reasonably detached observer should clearly be able to see that this is the ‘freedom’ handed down by a preacher to his congregation. It is really a subtle way of telling people what to do and assuring them that such authority is founded on some sort of Natural or Divine Law.”

Read more http://www.nakedcapitalism.com/2011/06/philip-pilkington-economics-as-metaphysics-and-morals.html

All hail the market!

#93 RentinginRosedale on 06.17.11 at 9:30 am

#69 Flash on 06.17.11 at 6:19 am…

“Canadians who have bought Apple’s products instead of RIM’s should realize their role in RIM’s downfall”

Flash, you’re displaying similar thinking to Ben Bernanke… i.e. If sales & prices are falling, you and Ben would waste money in a vain attempt to combat market forces and re-inflate.

Canadians can’t (and shouldn’t) waste money trying to help RIM. RIM is deservedly in serious jeopardy. It needs innovation to beat Apple. So far, RIM has unfortunately been wasting time, playing a losing game of catch-up, which seems destined to continue

#94 Linda on 06.17.11 at 9:31 am

I don’t blame “flippers”…Even realtors are flipping!
The real culprit “coupable” is the Federal Governement who encouraged that kind of speculation (wich one indebt family).
In 2006 they liberalized lending rules…Canada Mortgage & Housing Corporation also help to create a “speculation” market…allowing interest-only mortgage payment for up to 10 years..etc..etc…on the false idea it will be easier to be home ownership, more affordable (??????) and accessible!!! And gain tax free!!!! So…who start the “Bal”? I would have flipped too if I could!
I would have flip too

#95 Kim on 06.17.11 at 9:35 am

For all those who are b’ching about Vancouver Riots….
Simple … when you put up public TV screens and shut streets down for crowds on Granville (tatoo/punk shop street) for a sports event, you get : Testosterone and Alcohol.
What did you think the result would be … please…. grow up and shut it.

#96 Ben on 06.17.11 at 9:36 am

Fri Jun 17, 2011

China says 18,000 corrupt officials flee with $120 billion

Corrupt Chinese officials siphoned more than $120 billion out of the country in less than two decades, the central bank has said in a study highlighting the widespread scourge of government graft.

Between 16,000 and 18,000 government officials and executives of state-owned firms have fled China or simply vanished with up to 800 billion yuan ($123.7 billion) in illegal gains, according to the study.

Higher-ranking officials carrying larger sums of money mostly fled to developed nations such as the United States, Canada and Australia, while others tended to choose nations closer to home such as Russia and Thailand, it said

http://english.alarabiya.net/articles/2011/06/17/153645.html

http://www.kivitv.com/Global/story.asp?S=14927074

LMAO.. Washing dirty money in Vancouver real estate

#97 Kim on 06.17.11 at 9:45 am

PS…. Katie Micheals… I thought she would look hotter.

#98 xyz on 06.17.11 at 9:45 am

#213 lawyer gal on 06.16.11 at 1:59 pm

Is completely full of crap. No Graduating Law Student is making $200K a year right out of school. They are lucky to be pulling in 50K…. I used to work at a very prominent law firm that regularly hired students right out of school.

I can also say that myself, working in IT and having self taught myself my profession with very little formalized education was making MORE that 100% of these fresh off the boat Lawyers.

There is an Education Bubble right now too. I sure hope it pops before my kids leave high school!

#99 Kaganovich on 06.17.11 at 9:46 am

For those dawgs interested in what is happening in China:

http://www.mcclatchydc.com/2011/06/16/115944/claims-of-injustice-spur-wave.html

http://monthlyreview.org/2011/06/01/the-rise-of-the-working-class-and-the-future-of-the-chinese-revolution

#100 Jessica6 on 06.17.11 at 9:47 am

@#60 Tom

First, did your friends actually SELL their place yet? That isn’t clear in the post. No money is made until a place has sold and just because similar places list for a certain amount doesn’t guarantee a price for the one they are sellling.

Second, when it come to money, people LIE. Or at least exaggerate. Even friends. It might not be intentional deception, but some lie even to themselves just to make themselves feel better.

I have a friend who bragged about a condo he flipped who ‘made’ 50K. However, after real estate commissions, taxes, carrying costs for the period he and his buddy did hold it for it was closer to $10K.

If you think you’ll make money still in Real Estate, then go for it. But I can tell from your post that you don’t want risk, you want certainty. You want someone to tell you exactly when something will happen so you can place your bets accordingly.
Well it won’t because nobody is perfect with their timing and the most people can come up with are guestimates.

Look at ‘legendary hedge fund investor’ John Paulson who famously shorted housing and netted a $4Billion dollar payday (according to media hype). This past quarter he lost his shirt and is down 20%.

The trap smart people like Garth fall into is that smart people have trouble predicting just how stupid people are and how many of them are out there. And what lengths the government will go to to artificially prop up sectors of the economy that should have been allowed to deflate on their own years ago.

And if you really want to show off to your friends buy a condo in South Florida or Arizona for cheap off one of the clowns doing what your friends were doing four years ago there.

#101 Fuzzy on 06.17.11 at 9:48 am

I have a 40%- income / 60%-equities portfolio. As of today, the equities portion are about flat YTD and the income portion is about +2% YTD.

Unless you are an active day-trader, I find it hard for someone to be +8% YTD with a similar 40/60 portfolio. It wouldn’t surprise me that the portfolio goes negative by the end of the summer as equities tank south big time … ala 2008.

BUT I DON’T FRET NONE, why?

I’ve been building cash and allowing space to grow in my TFSA. A lot of the energy, emerging market & mining ETFs have corrected over 10%. I’ll just wait for it to turn around on technicals (jump over 200-day moving average) and buy at a discount.

#102 Kaganovich on 06.17.11 at 9:51 am

Utopia

In response to your reply from awhile ago, I do indeed believe in such a thing as society. I just didn’t know if you did. Also, Vancouver is hardly my city, in fact I am one of those people you spoke of earlier, small town Saskatchewan resident who values solitude over the hustle bustle of city life. It truly is better out here.

#103 eddy on 06.17.11 at 9:57 am

info about Greek artificial debt from Max Kaiser:

http://socioecohistory.wordpress.com/

http://stopspeculators.gr/

#104 MikeT on 06.17.11 at 10:00 am

@69 Flash:
yeah, let’s buy an inferior product just because it’s from our country.
Blackberries have their place in corporate sector. However, surveys showed that users will gladly switch to iPhones if they provided the same security and reliability that Blackberries have. iPhones are much more fun to use and there are so many apps developed for Apple products.

#105 Mr. Plow on 06.17.11 at 10:13 am

Flippers, speculators whatever you want to call them are bad for any market.

I have said it before and I will say it again, they artificially create demand and artificially inflate prices.

When they disappear what is left is a huge inventory of homes and inevitable price drops that hurt everyone.

Everyone other person in Edmonton was a real estate “investor” or “expert” in 2006-2007. I know some who bought many properties during that time, sold and made over a million dollars in about two years.

Others who got caught holding the bag when things turned and had to sell multiple properties at a loss.

My neighbor of my primary residence has renovated, rented, landscaped (he just painted for a 2nd time) and has still not sold his house it is empty.

He is an idiot trying to sell at a 2008 price (Edmonton has dropped since then, not gone up like TO and Van) but I would imagine he has lost a lot of $$.

Like Garth said, it is not investing, it is gambling.

#106 Hoof - Hearted on 06.17.11 at 10:16 am

Max Keiser on Alex Jones re the Greece crisis

http://www.youtube.com/watch?v=0gIe_us6fQg

Max not until 1:06:50

Greece -sell off

It appears the IMF /Banks are carving up Greece assets to pay off debt it never incuured internally, but Greek leaders in bed with banksters and sold out country

Deutsche bank …. gets state gambling monopoly

Credite Suisse— gets state lottery

BNP France and Greek Bank ….gets Airport…..

Rothschilds.and Barclays .gets road concessions

Price Waterhouse Cooper—gets railway

Lazar—gets Greek trust and loan funds

.

#107 Soylent Green is People on 06.17.11 at 10:17 am

Some interesting links re Van 2011 riots below. I believe the problems are much more sinister than we can honestly imagine.

……………………..

Re 2011 Van riots: Bob Whitelaw, independent investigator of the 1994 Stanley Cup riot in Vancouver is incredulous his exhaustive recommendations and warnings were ignored by Vancouver Police Dept.

http://youtu.be/MFeGUZpeC0E

……………………..

“Once the incidents began to start, the police, in my opinion, many of them just stood to the side waiting for the next order.”

http://www.cbc.ca/news/canada/british-columbia/story/2011/06/16/bc-vancouver-riot-whitelaw-1994-report.html

……………………..

One month before the Van. 2011 riots, Bob Whitelaw told The Sun in an interview he was concerned about a repeat of the 1994 riot.

http://www.vancouversun.com/sports/2011+Stanley+riot+worse+than+1994/4959547/story.html#ixzz1PX6WHisq

…………………..

In other words, POLICE expectations of a uniformly violent group acted as a self-fulfilling prophecy because of the effect of their subsequent strategy and tactics on fans’ social identity.

http://www.liv.ac.uk/Psychology/cpd/Stott,_C.J.,_Adang,_O.M.,_Livingstone,_A.,_%26_Schreiber,_M._(.pdf
This link may not hot link so copy and paste it instead:

TACKLING FOOTBALL HOOLIGANISM
A Quantitative Study of Public Order, Policing and Crowd Psychology

Additionally, in the attempts to control incidents of football crowd disorder, laws have been created that arguably undermine fundamental civil liberties and human rights.

…………………..

The wrong questions will inevitably get asked in the wake of all this, and the wrong solutions applied.

Expect “tougher policing”, and a ramped up culture of intolerance in a city that already turns a blind-eye to a tsunami of social ills.

http://www.straight.com/article-399635/vancouver/vancouver-hockey-riot-symptom-larger-problem#comments_here

…………………..

An investigator who examined the 1994 riots in Vancouver says key recommendations went unheeded by local police. Bob Whitelaw told CTV News that many of the 100 recommendations he helped draft were blatantly disregarded.

Those suggestions include a no-parking zone in the downtown core, something that could have prevented frustrated people from taking their aggression out on parked cars. Whitelaw also recommended that fans should have been quickly dispersed and reminded they have to get out of the downtown zone.

“The police, in many ways, as they did in ’94, seemed to be standing around, not taking any pro-action,” he said.

http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20110616/bc_police_fire_riot_update_110616/20110616/?hub=BritishColumbiaHome

.
.
.
♥♥♥

#108 Mr. Plow on 06.17.11 at 10:20 am

#15 Hovering

HAHA I love it!

Exactly what I was thinking.

Cheesy and lame.

#109 TS on 06.17.11 at 10:45 am

Guess these immoral characters want to screw the metals market up now….
When is criminal charges going to be laid?

Officials at Coca-Cola and elsewhere are complaining loudly about the undue influence Goldman Sachs, JP Morgan, and other investment banks now have on metals markets and the availability (and price) of, for example, aluminum.

http://timiacono.com/index.php/2011/06/17/more-tarnish-on-the-goldman-shine-part-63/

#110 Daisy Mae on 06.17.11 at 10:50 am

Kim on 06.17.11 at 9:35 am

“For all those who are b’ching about Vancouver Riots….
Simple … when you put up public TV screens and shut streets down for crowds on Granville (tatoo/punk shop street) for a sports event, you get : Testosterone and Alcohol.
What did you think the result would be … please…. grow up and shut it.”

Exactly. Vancouver got what it asked for.

#111 panopticon singularity on 06.17.11 at 10:57 am

#69 Flash—“Canadians who have bought Apple’s products instead of RIM’s should realize their role in RIM’s downfall. 1000 employees may be gone in the next 2 months with many more jobs at risk in the community.”—

you’re kidding right? we’re supposed to subsidize your sub par RIM product because it will cost a few jobs?

i have about a dozen friends who work there, in the last 12 years i have had 8 mechanical engineering jobs in our wonderful manufacturing sector, half of those companies went out of business and i make the same as i made 5 years ago and am happy to even have a job.

In the same time my RIM friends all of whom have no post secondary education get 3 weeks vacation to start plus between 5-12% raises per year (whats a raise?) they all make more than i do (some of them are over 100k/yr) not to mention the “perks” (free concerts phones etc) and we’re supposed to feel bad for you?

you want sympathy? go join the posties on strike, they are about the only ones i can think of with the same level of entitlement.

#112 cecilhenry on 06.17.11 at 11:07 am

You have to pay capital gains on the sale of a house?

I thought the sale of your home was always capital gains free? When did this change??

When you never live in it. — Garth

#113 BrianT on 06.17.11 at 11:07 am

#106Hoof-Yes-people should realize that there is nothing special about Greece-it is being gutted because it is guttable. If these guys can gut Canada we will be gutted.

#114 Ben on 06.17.11 at 11:08 am

June 17th

BEIJING (AP) – Thousands of corrupt Chinese officials have stolen more than $120 billion and fled overseas since the mid-1990s – and the U.S. was a top destination, according to a report released by the country’s central bank.

The report, released this week by the People’s Bank of China, says between 16,000 to 18,000 government officials and executives at state-owned enterprises smuggled about 800 billion yuan ($123 billion) out of China between the mid-’90s and 2008.

The study says the officials smuggled money into the U.S., Australia, Canada and Holland, using offshore bank accounts or investments such as real estate or collectibles. Officials masked the thefts as business transactions by setting up private companies to receive the money transfers, according to the report.

China has launched numerous efforts in recent years to curb graft, which is often a focal point of protests by ordinary Chinese and is seen as a major threat to political stability. But corruption among Communist Party officials is still common.

The report warned that the corruption was serious enough to threaten China’s economic and political stability.

It said that aside from punishing guilty officials, China should improve monitoring of asset transfers and revise methods of payment overseas.

Chinese prosecutors have made some high-profile takedowns in hopes of deterring graft among the rank and file. In China’s largest recent corruption scandal, the powerful party boss of Shanghai, Chen Liangyu, was sentenced in 2008 to 18 years in prison.

http://www.kivitv.com/Global/story.asp?S=14927074

#115 BrianT on 06.17.11 at 11:12 am

#100Jessica-The MSM downplays the fact that Paulson worked with Goldman Sachs to design garbage securities which would then be sold to pension fund managers entrusted to take care of the hard earned wages of schmucks. He heavily shorted this crap he had designed. Somehow the MSM and the USA legal system feels allowing this open fraudulent behaviour on such a gigantic scale is useful.

#116 Evangeline on 06.17.11 at 11:14 am

((If you subtract your YTD dividend earnings from the value ,at the start of the year, on most large cap preferred’s and common stock your account balance is less than it was at the start.))

why on earth would you do that? pretending dividend or coupon income doesn’t exist isn’t any more realistic in calculating a portfolio’s returns than ignoring the current market value of the asset. But so what if something is down? there’s a big difference between an asset being down and a crystalized loss.

#117 vreaa on 06.17.11 at 11:16 am

The Disinvested – A Few Disparate Thoughts On The Vancouver Riots

Froogle Scott at VREAA:
http://wp.me/pcq1o-2xw

#118 Chaos on 06.17.11 at 11:16 am

Vlad…

What is the space station’s purpose? I mean really…

Is it to put hairless apes into space? or…

Is it the modern version of the Ark?

Why would so much money be spent on a temporary structure?

Why would incredibly dangerous vehicles long past their service dates with outmoded technology be continually rushed into earth orbit?

Just for the hell of it? Just because we can? For R&D?

No, the future is now. The future is tracking our little blue ball as we drink our coffee.

Vlad, would the hairless ape population continue in the mindless quest of more stuff and wasted time if it was common knowledge that our binary twin was coming calling? or….

Would we all go to the beach, drink beer and eat hotdogs?

I’m betting that most hairless apes would take a long vacation, give a passing thought to their mortality and then when the time was nigh…

Lose their minds, riot and loot the Bay for a new handbag or some awesome cosmetics for the last wild ride.

You wanna look good when you get to where you’re goin’.

Anyhoo, as hairless apes our biggest asset is our creativity and our biggest liability is our creativity.

Be responsible for what you create.

Take charge of what you want to create.

Do not let someone else create your future.

#119 disciple on 06.17.11 at 11:25 am

Ha ha, “Flip This” – I love it!

Garth, you’re scaring me, man…this blog post today is packed with so much piercing logic I am speechless… (choking back tears)…I didn’t know you cared that much about this great country and its people…I promise I will study today’s post more carefully…your point that the flippers and specs who are making out like bandits with tens of thousands of pre-capital gains BUT are actually digging their own grave in the future is absolutely the most sage piece of wisdom anyone on this blog has shared to date since I logged on a couple of months ago…

It’s too bad that most of the commenters didn’t catch this and are too busy with their own individual greed with regards to continuing to consider flipping houses or to gamble in equities to realize what they have collectively done not only to their posterity but also to their friends, neighbours, family and themselves in the near short term.

Contrary to popular misconception among naked capitalists, it is NOT GREED that is the incentive to patiently and prudently build industrial output for a nation, it is pride in your work and faith in your fellow man. This is what is severely missing today. Pride. Confidence. Courage. Truth.

We have been divided, and now your real rulers are set for the conquering. I remain optimistic that they can be stopped. Garth will lead us…

#120 OnlyTheBankersLaugh on 06.17.11 at 11:43 am

Reply to Skeptic on 06.16.11 at 11:24 pm
Garth: “You are supposed to read this drivel, Tommy, and throw it into the hopper of your brain, then come up with your own opinion. It’s called, um, thinking.”

Skeptic: “The problem is that you have presented your speculations as absolute fact.”

Well, if Garth would lay off the Grecian formula and get photo shoots immersed in the fluffy clouds with some togas, grapes and hot babes, I would definitely think of his advice as God given. However, since we’re probably all growed up, we have to accept responsibility for doing our own thinking. Garth is a great point of view to throw on the pile but if it’s your only view and you have thought it out and accepted your decision not to buy, you’re now responsible for it. Consider yourself lucky if you “lost” only a simple year in real estate growth. I thought that real estate insanity was here in 2005 and sold one of my properties at that point as wage increases (being a manager of 15 people) even pre-recession were not keeping up with house prices. Sounds like you are young so lots and lots of time to recover and use advice wisely. I missed a huge run in that property which I kick myself for but it’s not Garth’s fault. I find Garth’s advice to be prudent and rational. Unfortunately, governments and herds are not due to the power and greed/fear motivations. Perhaps, the desparation in society to make a career and a buck has led to this massive risk taking but you really got to keep your head on straight at times like this and not throw away your financial future. There is definitely more downside than up so be careful in this one asset class right now and get yourself a bunch of other smart opinions who are as unbiased as possible.

#121 Victoria on 06.17.11 at 11:44 am

#15,

Oh God! Pathetic. Worse than the riot! You are so right. I lived in Europe for 15 years and when I would see Canadians walking around covered with the Maple Leaf I just wanted to die. Everyone used to laugh. I don’t know what it is about Canada that can be so embarassing.

I am Canadian btw.

#122 An Cat Dubh on 06.17.11 at 11:55 am

Interesting how global tv doesn’t cover the stolen money from China finding it’s way to Canada and other countries and invested in real estate. Lots of for sale signs around the Okanagan with reduced signs on them. Buy now or be priced out forever.

#123 robert james on 06.17.11 at 12:06 pm

Regarding the Vancouver police and the riots,,, apparently,, according to local CBC radio this morning ,, the new approach to crowds is to “meet and greet” as opposed to “whack `em and stack `em”… LOL

#124 Sunny on 06.17.11 at 12:34 pm

ya Garth is like the only person that can make 8% a year, even in this crappy year, he’s outperformed even the best portfolio managers…..ya right Garth, I don’t believe you for a second.

And I don’t care. — Garth

#125 vyw on 06.17.11 at 12:36 pm

Vancouver SFH prices are up 10% YOY, in May 2010 they were up 19% YOY, in May 2009 they were down 12% YOY. Someone who sold their detached home in May 2009 has seen that property increase by 30% on average.

I think Garth has made the right call looking at the national picture. Almost every market in Canada is flat with the exception of Toronto and Vancouver. Some markets – Vancouver and Toronto SFH – IMHO – have another leg up before it corrects (and correct it will, it always has).

Then again, one of the indicators of a price top is when a number of realtors become speculators and greed take over.

#126 mf on 06.17.11 at 12:36 pm

# 33 Jon B. Just go through the blog in the past few months, or better yet, buy the 20$ book, you find lots of info. There is no secret, I’ve done it.

#127 Abitibidoug on 06.17.11 at 12:50 pm

Between what Garth said and comments from some posters, it all makes sense now. In most markets, the inevitable correction has begun while prices still go up in Toronto and Vancouver. Why? These markets are being fueled by spectators. That’s eventually going to end, and it will end badly.

Recently sky watchers in Europe, Asia, and Africa were treated to a beautiful total lunar eclipse. It reminds me of being outside on a cold night on or around January 21, 2000 watching an eclipse. While that was happening, tech stocks were going up, up, and up and the NASDAQ (later the Nauseate-daq) was at or past 4000. To anyone who actually pays attention to what’s going on, it was obvious by then that it was a bubble. The only thing that wasn’t obvious was how high it would go or when. Between the eclipse and markets then and now, it’s a case of double deja vu.

#128 Hoof - Hearted on 06.17.11 at 12:51 pm

# 115 BrianT

Insider Trading Rules That Don’t Apply To Congress

http://blogs.forbes.com/kylesmith/2011/06/01/insider-trading-rules-that-dont-apply-to-congress/

QUOTE:
…”Except that one thing you can do as a member is study pending legislation and regulatory changes, call up your broker and instruct him to trade on that nonpublic information. Do this as often as you want; you will suffer no penalty. There is no limit to how much money you can earn on insider trading in the House or Senate. Lawmakers and their staffers are specifically exempted.”

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

Wall Street and Banksters get a free NEVER GO TO JAIL pass…gee wonder why..

which came first ……the crooked politician or the Wall Street/Banksters..or never separated at birth?

#129 Businesss Unusual on 06.17.11 at 12:57 pm

I, like Garth, am a perma-bear but I also feel like I’ve missed out because I didn’t clue into the fact that Vancouver is MAGIC…

Screw real-estate…I’m putting all my money into Unicorn Farms! It’s going to be huge.

Who wants in?!

#130 not asian on 06.17.11 at 1:12 pm

Did the $440K include HST? Since it was bought in development, should you not add 12%?

#131 Hoof - Hearted on 06.17.11 at 1:14 pm

Flippers?

There is a diiference between a
–” Home”
—Investment
—Flipping/Specuvestors.

What we have to be concerned about is Gov’t doesn’t play us for fools and then go ” OK we will tax everybody ..even capital gains on primary residences”.

Its like assholes who get caught doing something by officialdom and its “laws” …get pissed off…….then rat out others out of spite… ….and the Gov’t laughs its ass off via divide conquer and milk the middle.

Speculation/Flipping can be traced to CMHC and loosey goosey rules (or lack thereof )that allowed HAM and other offshore money flow in with little if any restrictions.

Gov’t “cure” may be worse than the original problem GOV”T allowed and created.

#132 Rae on 06.17.11 at 1:16 pm

In Vancouver
Bought Building in van for $315,000 2003
mortgage at 4.9% payment $1100.00 month
property tax $400.00
Assessment currently at $750,000 2011, 230 some % increase in assessment as taxable value
mortgage at 3.5% doubled payment $1100.00month
property tax now at $1100.00
24% a yer increase in property tax’s over last 5 years
compounding that over 20 year total…well see if it works.
All real cash value I put in my property is destroyed by the property tax increase’s..even doubling my payments
Garths …well right, and well I’m left.
funny both thinking bear right now..

Garth knew Grant N. during King Loughheeds Reign in alberta.
Anyone could run this mess of a country and do a better job than the Larry, Curly, and Mo ….syndicate we have now
Figuring out now how to help financial starve the beast..
Hmmm …$300,000.00 ish a year tax money to be a police cheif in Vancouver. Money well spent I see.
Rae

#133 Daisy Mae on 06.17.11 at 1:19 pm

Capital News – Opinion – Editors ‘Our View’ – June 17th (excerpts)

“As the campaign for voters’ hearts and minds in the provincial HST refendum reaches its final stage, most of us seem to have heavy hearts….Finance Minister Kevin Falcon wonders where the money will come from to “fix the $3 billion hole extinguishing the HST would create” — possibly forgetting that, for taxpayers, this begs the question of who actually dug the hole…..in the current believability stakes, the BC Liberals come off about as popular as a teen who — not content with taking the family car without permission and wrapping it around a tree — now presents us with the repair bill and a sanctimonious lecture on vehicle maintenance…while business may be getting a break with the HST, how many have actually passed savings on to the public? They can’t survive on tax breaks alone — the key to business success must be consumers with enough disposable income to buy their goods.”

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

HST may drop from 12% to 10%…but for how long? The HST covers so much more — household moving, barbers, vitamins, movie tickets, golf memberships, bicycles, RE commissions, massage therapy, taxis, camping sites, dry cleaning, snack food, first aid kits, smoke detectors, manicures, accounting services, cigarettes, hockey — the list is absolutely ENDLESS. So much of which was NOT taxed under the PST/GST is now taxed HST.

And the feds take control of collecting this tax. BC will no longer have any input on the collecting or the dispersing of the money.

#134 clem on 06.17.11 at 1:20 pm

#23
According to TREB, sales for may are up by 6% compared to May 2010

As expected. Sales started to worsen a year ago. — Garth

this was the second best may on record under current treb service area

#135 Billy C on 06.17.11 at 1:31 pm

GTA real estate Inventory beginning to rise.
Remax and Royal Lepage have both noted their Inventory has risen within past 2 week cycle. Number of days on market has also inched up. Its funny how this comes in line with stock market decline. Market are down 10%.
This will reflect a 10% instant drop in real estate. May price on treb $485K. June so far $477K. You will see this at $435K within 60 days.

#136 Robins on 06.17.11 at 1:34 pm

Report says up to 18,000 Chinese officials stole more than $120B, left country since mid-’90s
http://ca.news.yahoo.com/report-says-18-000-chinese-officials-stole-more-090347514.html

Back in 2004 – 2006, Chinese media estimated around >3000 to >6000 such corrupt officials living in Metro Vancouver then. The number must have multiplied since.

One of the latest rumored to be hiding with his family in Best Place on E-laundry is:
http://www.google.ca/webhp?hl=en#hl=en&q=%E4%B8%AD%E7%A7%BB%E5%8A%A8%E9%AB%98%E7%AE%A1%E6%9D%8E%E5%90%91%E4%B8%9C%E5%A4%96%E9%80%83%E5%8D%B7%E6%AC%BE%E6%95%B0%E4%BA%BF&aq=&aqi=&aql=&oq=&gs_rfai=&fp=1&bav=on.2,or.r_gc.r_pw.&cad=b

#137 bigrider on 06.17.11 at 1:36 pm

#116 Evangeline.

I think we are saying the same thing. I do not ignore coupon or dividend payments nor do I ignore the underlying value of the asset at a given time.

For example, hypothetically, 4000 shares of BMO preferreds purchased on Jan1st at $25 a share= $100,000. June 30th investor has received a 5.5 /2 % dividend stream so $2750. Hypothetically shares now trading at $20 lets say.

I say client portfolio now valued at $80,000 plus $2750 for a total of $82750. Garth, I believe ,says he is up 2.75%(dividend yield only as he believes value of preferreds irrelevant)

Is that not how you view it? If not then same logic has to apply to all holdings common stock or otherwise.

People still holding nortel shares, hey, you have lost nothing because you have not sold any yet so your good to go..LOL

#138 MadMan on 06.17.11 at 1:39 pm

RE: #107 Soylent Green is People on 06.17.11 at 10:17 am

Yes, the Vancouver Riot was the fault of the police. How incredibly astute of you to draw that conclusion! Clearly the vandalizing 20-somethings were almost coerced by the police to behave that way.

Seems to me that the moral bankruptcy of Vancouver extends outside of just its RE market

#139 Cookie Monster on 06.17.11 at 1:42 pm

#102 Kaganovich on 06.17.11 at 9:51 am

Ah Ha! A Marxist living in the birthplace of socialism in Canada visa vi Tommy Douglas, how apropos!

There is no such ‘thing’ as society, society is a ‘collection’ of ‘things’, individuals. Ayn Rand elucidates this misnomer and the problems it creates in her book “The Virtue of Selfishness” . Check it out comrades!

#140 bigrider on 06.17.11 at 1:45 pm

#116 Evangeline.

With all due respect, with reference to your difference between an” asset being down or a crystallized loss”
I certainly would not want to be holding shares of Nortel that I purchased 10 years ago that I have not “crystallized” my loss on yet thats for sure.

A loss is a loss, regardless, it affects your net worth statement at a point in time when a asset and liability statement is created or looked at.

Everyone’s net worth was dropping during the 2008 /2009 meltdown regardless of whether they were selling to crystallize losses or not.

#141 spaceman on 06.17.11 at 1:57 pm

4 tanned34

Good for you, you got lucky, that is not the point of this blog, you are still enforcing, everything that Garth is tryin to spew. If people believe believe something will go up, then it will go up. Vancouver is a great example of that, yes anyone that bought in the last year, and sells… RIGHT NOW… will make money. No contest there. Anyone that is buying right now… that is another story. But they will, and are, because of near sighted speculation. Study Risk management, maybe buy a book. Investing is a long term approach… not 1 year.

#142 SticksAndStones on 06.17.11 at 1:57 pm

The bottom line is that owning real estate has been a boon and not owning real estate has been a bust. Thankfully I’m an owner!

#143 Cookie Monster on 06.17.11 at 1:59 pm

#105 Mr. Plow on 06.17.11 at 10:13 am
Flippers, speculators whatever you want to call them are bad for any market.

I have said it before and I will say it again, they artificially create demand and artificially inflate prices.
———-
Not true, remember even speculators have to unwind their positions at some point, so if the price is too low and a speculator thinks he sees an opportunity to buy, he first has to be right, so that’s a risk, and second he has to eventually sell to get his profit. When he’s correct, the speculator supports the lows and moderates the highs and provides liquidity and rational to non-liquid or irrational traders. When he’s wrong, the speculator is buying a falling dog or is shorting a rising star, so the speculator loses.

Every single person in the market looking for capital appreciation or depreciation is a speculator to some degree, at least in their outlook for the future prospects of some business or commodity. So don’t believe the hype the politicos are selling and want you to believe who just want to get their mitts on more control over what were once FREE markets. Ex. Socialist France.

#144 bigrider on 06.17.11 at 2:01 pm

Nothing mentioned here yet on what this house humping mania is doing to our streets here in the GTA.

Every left turn it seems requires waiting three light changes before you get to the intersection. Forget about Yonge st anywhere from Newmarket down to the city on a weekend, a total parking lot.

The 400, 404 and 401 is so unbelievably bad at all hours of the day that it threatens to bring commerce to a complete halt.

Stop building all these boxes I say.

#145 spaceman on 06.17.11 at 2:05 pm

#101 Fuzzy

Balance is the key, and you get it, think about this…

If the market tanks 50%, and you have 50% in Stocks and 50% in bonds, you will only be down about 20%.

Why? Your bonds will increase in value, your stocks are only 1/2 your portfolio. A 20% drop during a recession, is not bad.. don’t you think? then you have bond money to rebalance at the bottom and take advantage of the next recovery.

PS we are heading into the next Recession… down turn, correction… what ever.

#146 Nostradamus Le Mad Vlad on 06.17.11 at 2:07 pm

#118 Chaos — “Take charge of what you want to create. Do not let someone else create your future.”

Interestingly enough, a few other posters today used the term “. . . blame others . . .” or “. . . pass the buck . . .”, and that is what is so prevalent in today’s western moneyandstuff drivel-based society.

Sure, money and stuff is nice, not too much but just enough to pay one’s own way in life, not to be reliant on anyone else.

I do not regret a single thing I have ever done, no matter how pathetically stupid it is / was. As you say, I have created my own life through my own choices, and I have to live with the consequences of my choices, but no one else’s.

Guess that what ticks the banxters off — we chose (a long time ago) to live a debt-free life, and are thoroughly enjoying the fruits of our labors!

Cherries and other fruits will be ready in a few weeks, so enjoy!

#147 Cookie Monster on 06.17.11 at 2:07 pm

#105 Mr. Plow on 06.17.11 at 10:13 am
With regard to housing, yes speculators are currently driving up already overvalued prices and eventually will get stuck holding the bag. Many are too stupid to see what’s happening, which is all due to government financing. There are too many well financed buyers. In a sound money system, with market determined interest rates this bubble never could have got this big and the mentality so wrong. So yes, speculators are currently WRONG and driving up prices, they will pay, or should I say CMHC/Banks/Government/Taxpayers will pay.

Remember the three G’s Guns, Gold and a Getaway plan, or maybe it should be four G’s if we also include Garth!

#148 debtified on 06.17.11 at 2:09 pm

It is different here. Thank you H, F and C.

Mumbai-to-Melbourne Home Boom Stalls as Tightenings Put Brakes on Prices

http://bloom.bg/lMKAYr

#149 garrulous squirrel on 06.17.11 at 2:17 pm

#46 Boycott….Thanks for the post. I have offered the same info for years and I get called all sorts of names for ‘outing’ the Chinese nationals flooding out of that country and coming to Canada…tax free and criminal prosecution free courtesy of our own government. I guess calling someone a racist is a one way street with the PC douchebags.

I know that the CNBC report of the CHINA INTERNAL REPORT is a lowball and figures are far higher than 123 billion worldwide. How else does anyone justify the Chinese nationals flooding Vancouver with the ability to pay literally any amount for real estate……it’s ALL STOLEN MONEY THAT CORRUPT CHINESE ARE SQUIRRELING OUT OF THE COUNTRY !!!!!!!! As the article points out…the facts are clearly known inside China….but they are so corrupt that no one wants to clean up before they get ‘theirs’ out of the country first.

Our government should be ashamed of itself for allowing the free flow of stolen capital into our country. I see they are very vigilant at the airport against you and I tasking out any amount of money. Canadians are subjected to sniffing dogs and rude interrogating police…why not the Chinese? Could it be that the PC trained seals are afraid to call it what it is….CRIME?

#150 robert james on 06.17.11 at 2:25 pm

#135 Robbins And here I thought all this HAM that was brought to Canada was by legit business people like sweatshop moguls,,drug dealers,, human smugglers,,pimps etc… Little did I know that they were Chinese officials that just stole money and left the country.. Vancouver has welcomed these people with open arms as long as they buy a house or two or a few condo pre sales..

#151 vic_guy on 06.17.11 at 2:31 pm

Less HAM in Vancouver than speculated by BPOF(ire) ?
More mortgages and less ca$h deals ?

On the ground numbers say “Therefore: More than 80% of buyers are locals.”

http://vreaa.wordpress.com/2011/06/17/information-about-buyers/

#152 Billy C on 06.17.11 at 2:36 pm

I noticed Marc Carney Used the word “Froth” in his speech on Canadian real estate on Wednesday.

This is the last time I read about “froth” :

Greenspan Is Concerned About ‘Froth’ in Housing
May 21, 2005

#153 SMOKING MAN on 06.17.11 at 2:48 pm

O bubble heads. More bad news for u. On my bloomberg terminal. Italy just got downgraded

Translation. Canadian bond yeils are at the lowest level in two years. That rating down grade make make them drop even lower

Fixed rate mortgages are about to free fall

Sorry no crash. No slowdown. Price will take off again

#154 not asian on 06.17.11 at 2:48 pm

Sold in 2002. Rented a home at the time worth $300K for $1200/mo. Now our rental is worth approx $900K. My husband and I keep telling each other that if we did own, we would have been drawn into using our home as an ATM machine when times did get tough over the years (and did they ever!) But instead, we were forced to live within our means. Green with jealousy over our friends and relatives living a life of luxury that we know they cannot really afford. Even still, I wish I did get into the property market instead of renting at the time, but hindsight is 20/20. Even if values did go down by 26%, it seems that the owners are still way ahead. Sigh

#155 MM on 06.17.11 at 2:49 pm

#142 Cookie Monster

Speculators provides additional demand and supply, in an artificial and unpredictable way – which means other participants in the market (the actual suppliers and consumers) are unable to plan and likely to waste resources. How is that good for the economy?

Most people just want stability. Those who favour volatility and chaos go by many names …

#156 SMOKING MAN on 06.17.11 at 2:54 pm

And on gambeling. If you don’t do it you fall behind. I 30 years ago you could punch a clock have 5 kids stay at home honey and have a house and cottage. Unless you make bets making greater than 3 present you are screwed

#157 Hoof - Hearted on 06.17.11 at 2:58 pm

Greek citizens have had enough are not going to take it anymore…

Papandreou may be forced to resign in the next few days.

Greek lawyers are even looking at subpoenaing Goldman Sachs John Paulsen and Lloyd Blankfein and putting them in jail

Max Keiser: Mass Rioting In Greece As Economists Warn Of Global ‘Armageddon Scenarios

http://maxkeiser.com/2011/06/17/colonel-papandreou-the-people-love-me-those-who-are-causing-all-the-trouble-are-terrorists/

Max’s blog also noted on Huff Post Harrisburg Pennsylvania(State Capital) is so broke they are considering selling of parking meter concession

http://www.huffingtonpost.com/2011/06/15/harrisburg-parking-privatization_n_877568.html
NEW YORK — The finances of Harrisburg, Pa., are so desperate that local officials are considering a deal they fear will ultimately make the city more miserable.

A state-appointed panel, charged with crafting a financial recovery plan for the city, announced this week that Harrisburg must pursue the sale of public assets to help resolve its fiscal crisis. The nearly-bankrupt state capital, weighed down by debt more than four times the size of its budget, “is not in control of its own destiny,” the state team said in a report.

Three years ago, confronted with a similar budget shortfall, the city considered leasing parking garages and meters in exchange for quick infusion of cash, but that deal was never approved. Last month, the offer resurfaced when New York-based developer LambdaStar expressed renewed interest. Some city leaders harbor a growing fear that Harrisburg will be forced into a deal that will bleed its coffers over the course of decades, after it surrenders valuable assets to a profit-driven company with the power to raise rates on a captive base of customers.

But those misgivings may not matter, as a budget crisis chokes Harrisburg into submission.

“This is a situation where Wall Street will get paid, and the little guys on Main Street, taxpayers, are going to get stuck holding the bag,” Harrisburg City Council Member Brad Koplinski said.

#158 Bill Gable on 06.17.11 at 2:59 pm

Vancouver has become a cesspool –

http://tinyurl.com/3gbmmum

Drug Gangs, thugs, and gun violence is the norm.

Abbotsford, in the Fraser Valley it is the murder Capital of Canada.

Why would anyone move here?

Vancouver and the Lower Mainland is finished.

#159 Hoof - Hearted on 06.17.11 at 3:01 pm

#137 MadMan

don’t laugh…..

evidence exists that police forces undercover agents instigate riots .

………all the worlds a stage…depends on the script, actors , producer, director , sugar daddy and Agenda/PLOT

#160 Evangeline on 06.17.11 at 3:26 pm

((People still holding nortel shares, hey, you have lost nothing because you have not sold any yet so your good to go..LOL))

not crystallizing your losses doesn’t mean investors should not take their lumps and unload the investments that aren’t doing well for them. I’d hate to own Rim today.

But if investors are going to panic and sell every time the value of their shares goes down, I don’t think they’ll do very well. I think the key to success in the markets is to think long term. The smart money did not sell off at the bottom in 2008, unfortunately the dunce managing my portfolio at the time was not too smart.

#161 Dorothy on 06.17.11 at 3:43 pm

There is no doubt in my mind that the “housing bubble” has already burst in many areas, and that in some areas it never existed in the first place. I also believe that it is only a matter of time before the bubbles in places such as Toronto and Vancouver begin to deflate. But the sad part is that all you hear are the vultures cackling with glee over how the speckers and flippers who caused this mess in the first place will now get their just desserts. There is no mention of the hundreds of thousands of ordinary Canadians will be hurt by this real estate collapse. And in my mind, that makes these cackling vultures just as bad as the speckers and flippers.
In fact, based on some of their comments, I’m willing to bet many of them will become the speckers and flippers of the future, who will one day reinflate the bubble. But unfortunately not before many ordinary Canadians have already been financially damaged, possibly never to recover. Particularly the more senior ones who were hoping for some gains out of their home to help them through their old age.
The current uncertainty of investing in the stock market, coupled with the drop in real estate prices, and low interest rate returns on investment, are going to put many of our seniors (current and future) at great financial risk. And while there are those who seem to get great glee out of the prospect of the “baby boomers” struggling to get by, given that they still form such a large part of the population how can it be good for the economy to have so many citizens struggling financially?
Having so many baby boomers living on cans of Tuna from Walmart is going to hurt EVERYONE (except possibly Walmart).

#162 Mister Obvious on 06.17.11 at 3:58 pm

#143 bigrider

“The 400, 404 and 401 is so unbelievably bad at all hours of the day that it threatens to bring commerce to a complete halt.”
———————-

At least you’ve got some freeways in Toronto. In Vancouver, every road is residential or commercial. Its a frustrating maze on any day of the week. Even the alleys are gridlocked.

But I admit, Sunday mornings between about 2:00 AM and 8:00 AM are nice. Then, the traffic is like it was everywhere in Vancouver about 35 or 40 years ago. Other times of day… best to stay home. Useful, eh?

#163 Ronaldo on 06.17.11 at 3:58 pm

#159 – Evangeline – are you saying that the dunce managing your portfolio sold you out of your positions at the bottom in March of 09? If he/she did, that would have been opposite of what most FP’s would have suggested from what I understand happened. Those that held on would probably have recovered most of their losses by end of 2010 or first quarter of 2011. Unfortunately now, they have a new challenge on their hands don’t they? What do we do now? I know what I’ve done.

#164 UVZ on 06.17.11 at 4:07 pm

#155 SMOKING MAN

“…30 years ago you could punch a clock have 5 kids stay at home honey and have a house and cottage…”

And the noose is tightening exponentially.

The Canadian population’s financial stats show it. If you don’t know the stats there is a faster way to ‘get it’: Look for the Money Mart (or other yellow outlet) on every corner. That’s the only stat you need.

This is the natural result of the debt-based, fractional reserve money system.

At this rate there is only one end-game. And it’s not a happy scenario.

#165 Cookie Monster on 06.17.11 at 4:07 pm

#154 MM on 06.17.11 at 2:49 pm
Speculators provides additional demand and supply, in an artificial and unpredictable way – which means other participants in the market (the actual suppliers and consumers) are unable to plan and likely to waste resources. How is that good for the economy?

Most people just want stability. Those who favour volatility and chaos go by many names …
————
Look at it this way, let’s say you, being a Speculator, think that futures sunflower seed contracts are currently too cheap and that sunflower seed farmers are locking in their futures supply contracts at say $100/bushel, so you take the other side of their trade and buy those contracts with no intention of holding them til the end because you ‘believe or speculate’ that the future price will be higher before the contract comes due and you will sell the contracts to Crisco at a higher price to make sunflower oil.

Now, if you were right and made money, you helped the farmer by being a buyer months earlier so that he could plant his crop with confidence and not change crops, and secondly you’ve also helped Crisco by ensuring supply for their corn oil. Had you not had the foresight to see the opportunity, there would have been less supply to meet demand, prices rose.

Now if you’re wrong, you helped the farmer and Crisco by loosing money for a crop that is over supplied and falling in price.

When 1000’s of investors, producers, consumers play this game independently, you have a market. Government involvement in something so complex would only cause huge problems. Markets work, speculators included.

#166 Jeff on 06.17.11 at 4:10 pm

@squidly77: Sirius Radio (SIRI) , are you kidding me?

P/E ratio is 200x , A penny EPS. No dividend.

At least junior miners have a chance of breaking out.

If you’ve made money by buying early, I’d sell. This one’s close to circling the drain.

#167 Jed on 06.17.11 at 4:18 pm

# 121
Canadians, as a group (“mob”) are immature with a huge inferiority complex. Just scratch the surface in the “world’s best city” and you’ll see our true colors. Or try Alberta (read “Siberia”) with the up and coming hooligans driving giant pick-ups with their oil money (and oil always goes up right?). Just below the surface is a childish anti-American, hockey idol fevor (great scam for the NHL btw; not as if it is a NPO). I too am Canadian btw, but am embarrased, living overseas, at the collective lack of maturity. No wonder most other countries are not that interested in us (except corrupt Chinese officials, Russian Mafia etc. who want somewhere to park their stolen goods)…

#168 Brian Donaldson on 06.17.11 at 4:37 pm

I love how Garth Breaks down the numbers. $20,000 for all that work. That’s why flipping is dangerous, once the music stops your holding the bag. I want some income so I can free from a job.

#169 BrianT on 06.17.11 at 4:56 pm

Some good news: according to these researchers, things are looking up http://www.washingtontimes.com/news/2011/jun/14/economy-of-sex-its-cheap-these-days/

#170 ucatzoduro on 06.17.11 at 5:01 pm

Seems that young house horny people are only in it for
a quick buck.
But in reality its the realtors,lawyers,motgage brokers and the government(yes the scum of this earth) who are really making a killing off of flippers.

#171 rockin'ronny on 06.17.11 at 5:18 pm

Dammit, even on greater fool i can’t get away from any sort of discussion of the Canucks.One should always take responsibility in their actions. I have no idea how anybody can blame anybody else for making bad decisions especially when they are given FREE advice.

#172 doc on 06.17.11 at 5:20 pm

BrianT Re 85, 113 and 185 I said to a friend as we watched tv coverage of the riots: Imagine how they would behave if they were hungry! She looked frightened and said “I didn’t need to hear that” We watched the smoke rise over downtown Vancouver from her west side home. Of course we are safe here, for the moment, I thought. Sometimes it isn’t paranoia. It’s perception. No one wants to hear the sky is falling. It scares us. We want to trust in the decency of our fellow citizens. I see how naive I’ve been and want to warn my friend but I’m sorry I scared her. Sometimes as in Garth’s case, the messenger is resented. Lots of evidence for that on this blog. The ill winds are blowing. Some preparation is prudent.

#173 eaglebay on 06.17.11 at 5:28 pm

There’s nothing wrong with insider trading.

http://www.caseyresearch.com/cwc/doug-casey-insider-trading

#174 Mr Buyer on 06.17.11 at 5:38 pm

141 Sticks and Stones…The bottom line regarding house purchasing and ownership at this time…It is not a good idea to finance hundreds of thousands of dollars on a house right now simply because there is little value for the money presently. Too little house for too much money (or way to much house for even more money). It is better to rent right now. In Japan house prices (actually land prices) have continued to fall even with low interest rates. A developer built two houses (of 4 planned) in our neighborhood two years ago and each sold for 280k. A new sign was just put up offering the last two houses to be built at 170k each. In this country houses are assets that depreciate like cars do (as they should). Reality is not as ‘carved in stone’ as I once thought. House prices have reached extremes that could ultimately change the reality of houses (for the better in my estimation, if we do something about what caused the present bubble).

#175 poco on 06.17.11 at 5:47 pm

#5 Ottawan
If you want to check your market, go to your area on mls and RECORD what is happening
______________________________________________Exactly—really don’t know how some of the posters can make statements like they do without any research.
I use to get about 100+ e-mails a day from various realtors concerning new listings, sales, and price drops. It became to much work keeping track of all the info i was getting
After a couple of months it was easy to see the trend of where the market was headed–no where but down here in the tri cities since last spring
i now do like you do –follow smaller areas on mls (much easier and less time consuming)–areas i would be interested in buying into again–still have a lot of paper work but easier to manage
if a property disappears or a new one appears from the mls listings, a quick call to one of my realtors tells me everything
everyone should try it–and if they did no one would be buying anytime soon!!!!!!

#176 Kaganovich on 06.17.11 at 5:55 pm

138 Cookie Monster

I am not really simply a Marxist, but it is hard for most to deny that his works have had a significant impact on twentieth century thought and history, some of it negative and some of it positive. I am astonished that you actually responded to affirm such an obvious falsehood, despite the fact it garnered Thatcher some political traction back in her day. Individuals are but fragments of the societies they are formed in, walking, talking manifestations of the values and cultural milieu that they were ‘thrown’ into from birth. As for Marx, his writing will continue to influence generations long after we are both gone cookie, hell, even the contradictions in his work are fecund. As for Rand, not so much IMO.

#177 Aaron - Melbourne on 06.17.11 at 5:55 pm

I come the land down under….where bankers lend out cash asunder…can you hear the thunder? YOU BETTER RUN, BETTER TAKE COVER!

http://www.theage.com.au/business/trouble-looms-on-home-front-20110617-1g7z6.html

http://media.theage.com.au/property/investment-guide/back-an-investment-property-winner-2354418.html?exc_from=strap

Just love how investing is likened to backing a horse race!

#178 VICTORIA TEA PARTY on 06.17.11 at 6:10 pm

BETTY FOX

News today, of the death of Betty Fox, causes all of us to pause and remember this heroic family.

Terry, who so bravely attempted a cancer awareness run across Canada only to be fatally stricken by cancer.

His Mom who then picked up his “torch” of hope and “ran” with it for such a huge distance.

The Terry Fox Foundation has, thanks in huge measure to the efforts of Mrs. Fox, raised hundreds of millions of research dollars. This family saga of sadness, tremendous sacrifice, and triumph of the will only re-enforce the grit in those facing similar travails.

This intensely personal family story brought the rest of us into its hearth and heart. How could we resist? Because we didn’t want to. We couldn’t. We simply felt privileged to live at the same time that Mother and Son did.

The Fox family will be in our Canadian hearts absolutely and forever.

Betty and Terry are together in Heaven now. Rest in peace. We will miss them, always.

Meeting them both, at different times, left a lasting impression on me. Could use a few heroes about now. — Garth

#179 eddy on 06.17.11 at 6:16 pm

(Update 5) Revolution Succeeds In Greece!!! Protestors Overthrow Government. New Government To Be Formed.

http://blog.alexanderhiggins.com/2011/06/15/revolution-succeeds-greece-protestors-overthrow-government-government-formed-27911/

#180 garrulous squirrel on 06.17.11 at 6:21 pm

#158…..B Gable……Why does anyone move here?

For one thing the Canadian government has decided it is politically incorrect to ask….”But where did you come by this money?…….Or how about……”Do you have documentation and registration with your own federal government that you are bringing this amount of money to Canada.?” ……………………or………”We will verify the origins of this cash with your government before we allow you to bring it into Canada.”

Isn’t it kind of insulting for our government to sanction open and blatant money laundering when there is full knowledge that the government of China does not allow these amounts of currency to be exported without license?

Thes Chinese criminal move here so that they can safeguard their stolenn money and their families from prosecution….thats why.

#181 Live Under Your Means on 06.17.11 at 6:38 pm

#178 VICTORIA TEA PARTY on 06.17.11 at 6:10 pm
BETTY FOX

Wonderful post. My heart goes out to their family and friends.

#182 MM on 06.17.11 at 6:40 pm

#165 Cookie Monster

I’m sure that works great at a certain scale/balance, but what happens when a few big hedge funds get involved, and massively influence demand and price? It’s easy to start buying a different kind of paper, but not as simple for producers or consumers of a given asset to switch.

#183 betamax on 06.17.11 at 6:40 pm

#79 bigrider: “Somehow the rewards over the past decade have gone to those who have been less informed ,less prudent and overall less intellligent then those who have acted in an informed, logical and well read manner.”

In an irrational market, irrational traders generally make the most money. And when the market changes, they lose it all — and more with leverage. Millions of examples in the US, and many to come here.

Lucky gamblers invariably give it all back, that’s why the house comps them a room in Vegas.

I’m in it for the long haul. Over a lifetime, a rational approach gives you the best odds of not just making money but keeping it.

I see a bunch of people who have either blown their gains or just bought a bigger house with more debt than ever before. They’re going to be eating cat food in retirement.

#184 poco on 06.17.11 at 6:46 pm

141-SticksAndStones
The bottom line is that owning real estate has been a boon and not owning real estate has been a bust. Thankfully I’m an owner!
______________________________________________

please read post #56—-and feel lucky (so far) that you’re not an owner of any of those
no cherry picking here –there’s many, many owners in the tri cities nearing the same fate

#185 Mister Obvious on 06.17.11 at 6:52 pm

#161 Dorothy

“There is no mention of the hundreds of thousands of ordinary Canadians will be hurt by this real estate collapse. And in my mind, that makes these cackling vultures just as bad as the speckers and flippers.”
——————

I am unclear on how ‘ordinary Canadians’ who did not speculate on real estate or borrow against unrealized equity will be hurt. If their homes composed no more than 30% of their net worth (as Garth suggests), I don’t see how they are subject to great pain in a downturn. A real esate vulture preys on the stupid and greedy, not the patient and sensible.

#186 Evangeline on 06.17.11 at 7:01 pm

Ronaldo

((#159 – Evangeline – are you saying that the dunce managing your portfolio sold you out of your positions at the bottom in March of 09? If he/she did, that would have been opposite of what most FP’s would have suggested from what I understand happened.))

I was the greater dunce for hiring him. He invested in a bunch of commodity, mostly oil stocks, at the height of the bubble in 2008. After the crash, in December 2008, when the stocks were worth less than half of what he had paid for them, he talked me into doing a tax loss sell off of a large number of them which in retrospect was a huge mistake. By March I had parted ways with him.

((Those that held on would probably have recovered most of their losses by end of 2010 or first quarter of 2011. Unfortunately now, they have a new challenge on their hands don’t they? What do we do now? I know what I’ve done.))

I know that I’m not going for a replay of 2008 and I am totally not into timing markets.

#187 poco on 06.17.11 at 7:06 pm

City of Vancouver attempting to save money on policing costs chttp://www.vancouversun.com/sports/Vancouver+police+they+knew+trouble+brewing+downtown+during/4964607/story.htmlosts —

#188 Cookie Monster on 06.17.11 at 7:18 pm

Individuals are but fragments of the societies they are formed in, walking, talking manifestations of the values and cultural milieu that they were ‘thrown’ into from birth

So that would be the definition used for an ‘individual’ as per the US constitution, a fragment of a milieu? Haha.

#189 Live Under Your Means on 06.17.11 at 7:21 pm

This may sound maudlin, but today I was doing some clean up in a bedroom. Came across a shoe box filled with cards and letters that I and my DH had exchanged before he moved here in ’86. His English was nada & my written French was not the greatest. But the California Dreaming cards said it all. Today, I wrote some loving words in a new card and placed it on top of the pile.

#190 Nostradamus Le Mad Vlad on 06.17.11 at 7:23 pm


#147 debtified — “Mumbai-to-Melbourne Home Boom Stalls as Tightenings Put Brakes on Prices”

So the elite have chosen to withdraw more money from circulation, to strangle us into submission. Well, good luck to them.

Nothing that a good-sized asteroid landing in the middle of the Pacific, Atlantic or Indian Oceans can’t handle.

#178 VICTORIA TEA PARTY — Good post. We used to live in Port Coquitlam, where they were. Never met them, but he esp. had a huge influence there.
*
The Masses Riot Global armageddon? IMF Curious that the IMF is the bank of last resort, yet tells Europe it (not the IMF) has to deal with Greece; IMF + US; The US Fed’s stranglehold on the US; and IMF + US (2); SEC “I’ll believe it when I see it…” — Wasn’t the SEC part of the original problem, by letting all of this get out of hand in the first place? IMF – Germany “”Acting IMF chief threatens to trigger sovereign default if Berlin fails to come to rescue of irresponsible banks who lent to Greece”, but “Don’t forget that a bailout of Greece doesn’t bailout the people – It is a bailout of the irresponsible banks who lent to the Greek government.” Could go with a possible terror attack on June 26 in Berlin.

2:38 clip Robert Reich on Connect The Dots; Woody Allen Everything You Wanted To Know About The Bilderberg Group (But Were Afraid To Ask), and The Rockefeller World Order Continuing hot and steamy Bilderberg romances; Greenspan and double dip; The real prices of things.

5:37 clip FF BS, leading to more wars. The Toilet “This whole Al Qaeda thing is a hoax to trick us into wars of conquest. After all, the real Osama Bin Laden worked for CIA during the USSR’s invasion of Afghanistan, and his older brother Salem Bin Laden was business partners with George W. Bush in a company called Arbusto Energy. The real Bin Laden died of natural causes in 2001 and even FOX News reported it once before it was realized that a live supervillain is much more useful for manufacturing wars than a dead one.” wrh.com. The Toilet needs to be flushed and cleaned.

Fukushima or Fort Calhoun — One or the other, maybe both combined; China “Record flooding comes from record snow. You know, the stuff the Carbonazis said was a thing of the past?” wrh.com;

Globalization = Global governance; Minnesota “Seriously; start preparing to live your lives as if the government is never coming back.” wrh.com; (;37 clip US vs. China, using the ME as their battleground.

#191 TSX willContinue CRASHING!!! on 06.17.11 at 7:29 pm

The TSX will continue to CRASH as QE2 ends. Make no mistake about it alot of QE2 money found it’s way into the TSX. You will see a 11500-11800 over the summer. The rest of the crash will continue much like 2008. People have maxed out on credit and are spending less as more and more deals/discounts start popping up. RE in Canada will now have a US style crash. You will see more companies report poor earnings . Instead of a big bank failure we could see a country or two fail. I would love to see a HARDCORE deflation take hold. I don’t care what you say garth. Deflation = good and inflation = bad. My money worth more with deflation or my money worthless with inflation? Gee I don’t know garth i would rather have my money worth more. It’s coming 2008 in 2011 but only this time the government CAN’T do anything to stop it. I want people to go bankrupt and companies to go under. I want to see FREE MARKETS and DEMOCRACY punish the evil doers.

#192 Cookie Monster on 06.17.11 at 7:36 pm

#182 MM on 06.17.11 at 6:40 pm
Those papers that funds trade do represent physical assets such as commodities or shares in a company. And true, if too many money managers all have the same idea at the same time they can drive the market price of some asset far higher in the short term than it should be and that will impact actual end users and consumers of the commodity, but remember eventually the speculators have to unwind their purchases by selling them back into the market, they surely don’t want the barrels of crude oil in their office! So over the long run the prices will find there correct mean values.

A speculator who pays $150/barrel of oil is paying this money to an actual producer or a spec seller, the producer is thrilled but the refinery must deal with the speculators/market price, but a smart refinery will have inventory and wait it out if they know it’s too high, else they will only buy small orders at a time and pass on the high prices at the pump. Eventually the price will correct or production will zoom and the price will fall, but the speculator who bought at the top of $150 will be forced to sell lower to hit the bid.

Stupid speculators who make too many mistakes will eventually go broke and smart speculators help support the lows and moderate the highs. Smart speculator sell to a dumb speculator at $150/barrel.

#193 Hoof - Hearted on 06.17.11 at 7:55 pm

TRUTH re Vancouver riots

http://alexgtsakumis.com/2011/06/17/breaking-news-the-police-were-badly-outnumbered-gregor-robertsons-stanley-cup-riot-christy-clarks-facilitation-jim-chus-unprepardeness-and-penny-ballem-must-be-fired/

QUOTE:
The shameful riot that took place the other night didn’t start in the afternoon or even morning of that day. It began several weeks earlier when the Vancouver Police Department were rejected by the Vision Vancouver lot infesting City Hall as, IN NO UNCERTAIN TERMS, the VPD expressed serious concerns to both City Manager Penny Ballem and Mayor Robertson that the amount of people at the live site would certainly be overwhelming. But to fit the Mayor’s political agenda of a ‘Funcouver’: Open drug use–including open drug dealing, fighting, drunk and disorderly conduct and general public mischief, Ballem ignored the warnings on the specific instructions of the Mayor’s people. The notion that there would only be about 10,000 people in attendance was proved out during the various games in each series: a progressive mosh-pit mentality with a higher number of arrests with each game. This was communicated to the Mayor’s people–still nothing.

#194 E-Town on 06.17.11 at 8:04 pm

I’ve got a question and forgive my ignorance (I’m still learning basics here) but do you foresee some kind of bubble related to fixed income funds, dividend yields and bond markets looming? I’ve been educating myself ( or attempting to lol ) on the status of this crazy economy and ways to start out investing at this time in preferred shares(energy, bank) also the security of Bonds to anchor this fledgling plan I’ve set my mind to. In part to my firrrssst question… I suppose I’m curious as to whether at this stage I should jump into a balanced/fixed income fund scenario until I’ve farmed the 50k to dodge insane broker fees or eat the fees, stick with the plan and look further down the money road… we’re only talking 15k right now but I worked my a$$ off for it. Just trying to get my feet wet… not in over my head lol.
I’m reading your book Money road and so far insightful, thanx Garth.

#195 tedbaxter on 06.17.11 at 8:43 pm

China in riots.

Migrants take the streets

http://www.cnn.com/2011/WORLD/asiapcf/06/17/china.riot.town.yoon/index.html?hpt=hp_c1

#196 45north on 06.17.11 at 8:56 pm

bigrider: The 400, 404 and 401 is so unbelievably bad at all hours of the day

Toronto has two parts: one where the 400, 401 and 404 dominate and the other where the subway dominates. The 400, 401 and 404 part will drop the soonest and hardest like the outer parts of Los Angeles. The rising price of gasoline will put the squeeze on the 400, 401 and 404 part. There are vast tracts of land filled with closely spaced houses , each house having two cars.

I remember the summer of 1967. The 401 was widened from 4 lanes to 12. I could stand on the Weston Road bridge and see construction and earth moving machines as far as the eye could see.

#197 Devore on 06.17.11 at 9:43 pm

#173 eaglebay

It’s not that there is nothing wrong with insider trading, it’s that Doug Casey is opposed on principle to confusing, unenforceable laws, which will always be applied opportunistically and selectively, never punishing those breaking them on a massive scale (who are well connected and have good lawyers), and require a massive bureaucracy to administer. It’s just a waste of everyone’s time.

Unenforceable laws, even if they mean well, are just plain bad.

#198 Devore on 06.17.11 at 9:46 pm

#187 poco

City of Vancouver attempting to save money on policing costs

Still no shortage of money for bike lanes.

#199 Kaganovich on 06.17.11 at 10:34 pm

188 Cookie Monster

Now cookie, I don’t know if Franklin or Jefferson would have nearly as much trouble recognizing the existence of society as you or Rand does. Society (whether it is 19th century German or 21st century Japan) is inextricable from the development of the individuals from which it is composed. It provides meaning for, and is constantly modified by, those same individuals (now, these changes throughout history could be by great men like Rand claims, or they maybe more anonymous). The men that drafted the declaration were from a particular milieu (and circumstances) and entertained a specific set of beliefs that enabled them to pursue political and economic independence and so forth. I am confident that some individuals from 8th century China would not have been able to pen a text like the DOI since it would have required a whole ‘world’ of ideas and the corresponding worldview prevalent in 18th century American society to do it. Likewise, I am also fairly confident that even Edmund Burke, were he around today, would not dispute the existence of society.

#200 rental monkey on 06.18.11 at 2:13 am

@ Victoria Tea Party: Lovely post, they are a family we all know by name and spirit. Thanks for the nice reminder ( even if you don’t like chips ;) )

Godspeed to Betty & the subtle reminder that…really….none of us are getting out alive anyway.

#201 Agio on 06.18.11 at 7:27 am

I’d imagine you’ve been motivated by greed on occasion Mr. Turner, especially in your youth but it’s the best entry you’ve written in some time.

#202 Cookie Monster on 06.18.11 at 10:01 am

#199 Kaganovich
Yes right, the DOI, We the People, We the fragments of the Milieu.

Marx was a bright guy but he was absolutely wrong. His Manifest was the most socially destructive book ever written outside any religious text. Rand was a brilliant woman and correct. Rand never wrote a book that led to massive slaughter, oppression, poverty and destruction of a nation or nations by ruthless dictators. Rand’s idea are of freedom and recognition of the best among us and the good for being the good. Yes there are many individual who are far superior or more dedicated to a cause than the rest of us, people who are greatly responsible for our standard of living today. Great industrialists and scientists.