Irony

It was also a Monday. This one in October. I sauntered through the newsroom in my usual boots and leather vest, hit my office and ripped the latest ribbon of paper off the Dow Jones machine. Bad news, the market was tanking. Plunging. In fact, crashing. By the time four o’clock rolled around, you could almost see the blood flowing past the newspaper offices from Bay Street, ten blocks away.

In one day the Dow had lost 22.6% of its value. The worst single-session mashup in history. And there seemed to be no floor ahead of us – just a yawning, gaping, economic chasm leading surely to a rerun of the Thirties. So I wrote a piece for the morning’s editions, walked the length of the building to the library and ordered up all the pictures they had of the Depression. The next morning a photo of homeless, hungry men lined up outside a mission on Yonge Street accompanied my column.

Yeah, that was 1987. And guess what? I knew squat.

So did a lot of other people. A cadre of economists predicted, “the next few years could be the most troubled since the 1930s.” But the Dow finished positive for the year and regained its pre-crash high two years later.

Real estate wasn’t so lucky. Within six months the bubble market in major centres like Toronto started to unravel. Prices peaked on lower sales about a year later (1989), and then the drought hit. House prices plunged by a fifth in the early 1990s, and it would be 14 long years before the average house price regained its former level. People who bought houses following the October 19th, 1987 stock rout were creamed. And not the good kind.

I’ve often looked back and regretted running that Depression pic. Of course, every other major media outlet did the same. But I now know it catered to the lowest common denominator – fear – and publishing it was as irresponsible as it was juvenile. History went on to prove so.

Yesterday the Dow gave back 5.5% of its value, while the Toronto market fell 4% and the S&P 500 – the broadest measure of market sentiment – fell 6.6%. It was an all-round lousy day, made far worse when Barack Obama started yapping a few hours before the closing bell. The man had nothing to add, and suddenly the US president looked adrift. No reason to stop selling.

To date, markets are down between 13% and 15% from recent highs, which were themselves 55% above the lows we plumbed in the late winter of 2009. At the same time investors were bailing out of stocks (with much of the selling computer-generated), billions were pouring into US government bonds. Yes, the same bonds that were downgraded Friday night by the yahoos at S&P. This drove bond yields lower by more than a fifth of a percentage point (that’s huge) and drove prices higher. So, bond investors made out like teenagers.

No shortage of irony here.

American debt gets downgraded, so skittish investors immediately panic and sell good equities so they can huddle in the security of US debt. And secure it is – the safest haven on the planet.

At the same time this herd was driving bond yields down, they were forsaking companies that are doing better than ever. Corporate earnings are at an historic high. Stocks trade at about 10 times earnings (that’s Walmart cheap). Corporate earnings per share are 18% higher than a year ago. Almost 80% of publicly-traded companies reported higher profits this year, and an incredible 70% of them beat expectations.

Corporations are sitting on a mountain of money – almost $1 trillion in cash, or about 60% more than they had back in 2007 before anyone had even heard of a credit crisis. More than 160 major US companies pay dividends to investors far higher than government bond yields , have bigger cash reserves and have never made as much money, usually on global operations.

See what I mean? Irony. Why would people drop their pants over a 5.5% market decline, rushing to turn paper losses into real ones, buying bonds yielding next to nothing, just so they can make less than they were before and pay a higher tax rate on it?

Because they’re fearful. They do not see a floor in front of them, just a yawning, gaping, economic chasm leading surely to a rerun of the Thirties. But there’s none. This is not a systemic financial collapse. It’s no Stockageddon. America’s not insolvent when the world rushes under its skirts for safety. No depression coming. Hold the locusts and the plague.

It was just a crappy day, likely followed by some more. And then it gets better – because companies are profitable, the economy’s expanding, emerging markets still emerge, technology is rampant, nations are woven in response and every politician alive just got cuffed on the side of the head.

Not to say danger’s gone. Far from it.

If you’re lusty to buy a house, back off.

If the media assaults you, shoot back.

 

 

161 comments ↓

#1 OttawaMike on 08.08.11 at 10:08 pm

You still backing up the truck and buying equities like you were last week Garth??

Buying amid such volatility is a poor idea. Buying when the dust settles isn’t. And make that ETFs. — Garth

#2 Rainforest_Whisperer on 08.08.11 at 10:09 pm

You mention that the market has gained back 55% of it’s value since 2009.

Didn’t the stock market crash of 1929 result in a recovery of about 60% by 1932 as everyone thought the recession was over and recovery was on it’s way?

Would you like a job as a reporter? You’re perfect. — Garth

#3 Jas Girn on 08.08.11 at 10:12 pm

3rd!!!!! Lol.

#4 peacekeepa on 08.08.11 at 10:12 pm

So what I would like to know, and I’m sure opinions are as varied as the colour of panties on this site, is will the market continue to decline another day, another two, another week? With the smell of blood in the air, shouldn’t the prudent investor be buying now, even if averaging down? With 499 of the S&P’s 500 companies taking a loss, there should be quite a few op’s out there, whether ETF’s or individual stocks…

#5 Snowman on 08.08.11 at 10:13 pm

Memba this?

http://archives.cbc.ca/economy_business/the_media/clips/16740/

#6 Wise Guy on 08.08.11 at 10:18 pm

In addition to earnings being what they are and in fact higher this year. Many of the companies are priced in with Oil at $120/barrel…..right now Oil is hovering in the low $80/barrel. As a result down the road earnings could be that much better when the time comes….but that’s just my 2 cents worth….it’s still scary out there!

#7 Rainforest_Whisperer on 08.08.11 at 10:18 pm

“Would you like a job as a reporter? You’re perfect. — Garth”

I’m just not sure it’s fear mongering if we don’t buy the premise that ‘this time it’s different’.

#8 Timing is Everything on 08.08.11 at 10:21 pm

#2 Rainforest_Whisperer

http://www.financialinvestmentplanner.com/UserFiles/1929crash.jpg

#9 newbie11 on 08.08.11 at 10:25 pm

Garth, not a mention of gold in your post?… also a safe haven. This economy is volatile, I’m glad I’m not a home owner. I was and was lucky I sold in 2009 for a small profit. Great blog, love reading it daily!

#10 tigerbaby on 08.08.11 at 10:26 pm

http://www.theglobeandmail.com/report-on-business/international-news/global-exchange/international-roundup/as-gold-prices-climb-indian-buyers-hold-back/article2122982/

looks like not too many people benefited from all the “money printing” and most are in fact quite short of “fiat toilet papers” …

#11 randman on 08.08.11 at 10:27 pm

Mish….

“The housing boom in Australia is now an escalating bust. Many Australian homeowners put every cent they had into their homes and they needed double incomes to just scrape by. Unfortunately, those jobs are disappearing in a construction and commercial real estate bust.

I warned about this event for years, but in Australia, like everywhere else “It’s Different Here” until it’s not.”

BTW… Rainforest…you are right as rain

doesn’t mean it will happen the same way…but Garth

errors in making light of it

#12 WI Boomer on 08.08.11 at 10:31 pm

OK, we have a little more blood on the tracks today.
Might be some more tomorrow, too. No one can tell.

As for me, I’ll research those companies with good fundamentals, and look to buy, after all they’re on SALE this week.

Emerging markets Index off double digits
Tech Index off double digits
Mid-Caps bloodied down double digits
Heck, even convertibles got chomped.

Bond funds did decently from all the chicken money
running into those “safe” US Treasuries

Time to think of dumping that gold stash, it’s had a hell of a run…sales never last too long. Best wait a few days to see where this case of the panicky “investors”
takes us. No one should trust the trading programs used today. Happy Investing!!

#13 Best place on meth on 08.08.11 at 10:33 pm

#4

“will the market continue to decline another day, another two, another week? ”

Another 15 months or so and we should hit bottom.

Care for a Depends? — Garth

#14 MasterBootLicker on 08.08.11 at 10:35 pm

Right on cue, Canada falls in line with global QE
http://www.theglobeandmail.com/report-on-business/economy/interest-rates/market-mayhem-puts-canadian-rate-hike-on-back-burner/article2123265/

And people still think this stuff is random and unpredictable

Monetary policy is never random. But it is predictable. — Garth

#15 Qazmer on 08.08.11 at 10:35 pm

Days like today are great, stocks got cheaper and safer to buy then the day before(that being Friday).

All this doom and gloom to me sounds like a sale. I got my pocket book out and I am waiting to see what the rest of the week brings

#16 Best place on meth on 08.08.11 at 10:36 pm

#9

“Garth, not a mention of gold in your post?”

Ixnay on the oldgay, you’re not allowed to mention it here.

Ever.

#17 The InvestorsFriend (Shawn Allen) on 08.08.11 at 10:37 pm

NOT THE END OF THE WORLD

I echo Garth’s sentiment. The stock market is cheap. It may get cheaper but it is cheap.

Long-term U.S. government bond’s are at nosebleed highs and shot higher today. That won’t last forever.

The real wealth of North America consists of an installed infrastructure and systems and educated people that create a wonderful standard of living for most of us.

I mean how can four people living in a nice 2000 square foot house of newer construction, with three bathrooms and with two cars in the yard complain? These are people with the idle time available to moan on-line. If things were really so tough they would be out there making a few more dollars rather than idling away the day online.

The economy is not perfect and in the U.S. the official unemployment rate is around 9%. Unofficial may be closer to 20%. Meaning 80 to 91% of the people who want to work are working.

The real wealth also includes our entire stock of houses, roads, bridges, rail roads, stores, power utilities, gas utilities and on and on. You have only to look around the typical suburb to see we live in a land-o-plenty. Check out the vechicles leaving Costco and Walmart and all those grocery stores fairly groaning with bounty.

To suggest that any huge percentage of this has been paid for by borrowing from the Chinese is nonsense.

Most of America’s debt is owed to Americans. They have borrowed among themselves. ALL of the unfunded entitlements are “owed” to Americans.

I frankly don’t get this worry about unfunded liabilities anyhow. Any 20 year old faces a lifetime of costs and these are unfunded. But lo and behold most of them manage to make it on a pay-as-you go basis. In fact most actually take on huge debt while young and pay that back later. So they have debt plus unfunded liabilities. Sound familiar? Why don’t they panic? Because they can pay as they go, that’s why. Just like the United States always did until someone invented the term unfunded liability. I think it was a guy named Chicken Little.

Yes there are some issues to be dealt with. But no, this is not the end of human progress.

I predict great progress ahead especially in the field of medicine. Boomers will fight growing old and dieing every inch of the way. They will pay up for drugs and treatments to stay healthy. Science and corporations will deliver huge benefits in that area.

Abandon equity investments at your own peril.

Life is good. Now get out there and earn a piece of the action for yourself.

#18 Smoking Man on 08.08.11 at 10:38 pm

Funny a pic of a dead bird, I’m I phycic or what

This morning standing between the Go station and the Subway at Union having a smoke I observed something amazing, about nature, and humans. The Schooled, you know the Memorize and Regurgitate crowd rushing to their diploma decorated cubs, walked obliviously right by the event. They missed out on something cool.
There was Pigeon, it could not make the turn smashed into the fence and was on the ground dazed. The other pigeons seeing it in distress started Peking it with there beaks….
They were mobbing it, each taking turns trying to hurt it even more. I watched in amazement.
The Pigeon should have grown some fangs and lashed back, they would have backed off.
When we humans are down, no one will help you, misery has no friends, the sharks will come out and try and get what ever is left…….Cash Converters, Money Mart, they are the Attacking Pigeons, No one steps in to help the downed bird……..These sharks try to finish him off………Natures way off cleaning up birds that can’t fly.

Moral of the story, if you miss the turn and hit the fence and go down, grow some fangs and bight back hard.

Response from yesterday stuff……
#35 LH on 08.08.11 at 12:04 am “Where do I sign up? “Just keep reading my posts on Garths blog
#42 Nostradamus Le Mad Vlad on 08.08.11 at 12:18 am
Yours are good too

#48 WI Boomer on 08.08.11 at 12:45 am
Works for me.

#79 Lucy on 08.08.11 at 6:34 am
“Smoking Man…..news flash for you……your wife has a boyfriend.”
It would not bother me one bit, just hopes she picks someone like the old spice dude, heck I might do him……………

#85 bigrider on 08.08.11 at 7:38 am
I was wrong about YLO took a beating, got out at around 2 bucks. Bought it at 3, heard a take over rumor….O well…… Never really pumped gold….It’s good but when the market goes against it……Zero bids as you watch the red line free fall.. Kind of like being at the edge of the falls with no motor or paddle. Enjoy the gold ride, just get off before you get to close the falls…….

#90 Beach Girl on 08.08.11 at 8:29 am
“I personally would not want him”
O you would if you really knew how good I was, but think I made my point on the last post…..It’s not about stay, its about go away…….
#114 mousey on 08.08.11 at 10:58 am
Is Smoking Man really a woman?
Ha If I was I could not type here, my hands would be too busy…..

#125 gladiator on 08.08.11 at 11:33 am
Books?
Garths are Good, his timing is just bad, you can’t fault him for that, he is not me.? plus u have Google Dude…
Finance? learn Renko Charts That’s all you need to know..$$$

#129 45north on 08.08.11 at 11:46 am
Wow He really does look like Bruce Willis……

#19 Coho on 08.08.11 at 10:39 pm

Banking and banksters aside, most products are now being manufactured in cheap labour markets overseas, which must be a main reason why corporate profits are big. We are losing good jobs for cheap clothes and gadgetry. Meanwhile energy, food and other daily essentials are becoming more expensive.

I guess those with several hundred G’s minimum invested have reason to cheer for rising corporate profits. On the other hand, those whose jobs have been outsourced probably aren’t doing somersaults and waving around pom poms.

As I’ve mentioned before, there are job bulletin boards on the internet populated mostly by US based companies, with a few also from Canada, the UK, Australia, 98% of which seek $2 to $7 per hour labour from technologists and engineers. Some of these greedsters even have the nerve and audacity to pay less than one dollar per hour while asking for everything except the first born from job applicants for a chance at these peanuts. It’s disgusting, the greed and exploitation of cheap labour markets from companies that could very well afford to pay more and keep local people employed.

#20 Joe on 08.08.11 at 10:40 pm

Who cares about RE right now. The stock market, bond market, etc are so much more interesting right now. Finally something to distract from the prices of Vancouver dirt. Great blog post tonight, Garth.

#21 T.O. Bubble Boy on 08.08.11 at 10:41 pm

ya… it was bad… but, what was the *seasonally adjusted* loss on the S&P 500 today?

#22 Smoking Man on 08.08.11 at 10:41 pm

Bubble heads do you all remember back a few weeks ago when I said the media, the banks, BOC are all in cahoots. And they will work together to keep the real estate market stable, will not let it crash or push to high……….They will work to keep it on an even keel. Bubble heads are no match for the machine…

Well 2 year bench mark bond yield is now at .80, that’s lower than the BOC overnight rate wow!!!!!!.

In April it was above 1.8 and why have fixed rate mortgages not gone down. answer is simple the real estate market is still to hot…(CAHOOTS) .once the machine cools it, then you will get reductions.

I want people to like me so I will not tell you what I have made on my bonds and shorts on equities. YES!!!!!!!!!!!!!!!!!

Ok!!! you caught me in a lie, you are right I could care less what you think. Truth is I Just don’t want to jinks my hand right now………..And that’s the truth

Digging up some old posts,

GARTH REMEMBER THIS ONE
#80 SMOKING MAN on 06.21.11 at 6:34 am
Garth said:
Not if you believe stock prices are most influenced by corporate profits. The latest survey (Bloomberg) shows US companies expect to earn 18% more this year than in 2010 – which means stocks are cheap. How cheap at these levels? The lowest price-earnings ratio in 26 years.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
So true, so then why am I short?… Batman showed his ugly ears on a five year chart. However I will reverse my postions when I get confermation of a trend turn.
Ps FEMA camps do exist. My cuz has a contract with them.

This from may 29h
#199 SMOKING MAN on 05.29.11 at 2:41 pm
Look at the BOND yeilds free falling. Can you say in a few months 5 Year fixed rate mortgages at record lows…I can……

THIS IS WHEN I STARTED to BUY BONDS AND SHORTED THE MARKET
15 smoking man on 05.27.11 at 9:04 pm
Greece is going to defalt. Usa keeps going into debt china turning us capital into hard assets.
Pause. Just won 2k on a slot at woodbine. Wo hoo
Money is going to our safe bonds. Are dollar will surge BOC rate is going to drop in the fall
Not go up because the high dollar will kill jobs. And the BOC only moves on wage inflation

AND TO MY FRIEND UNBALANCED HAVE I MADE A BEILIVER OUT OF YOU YET>>>>>>>>Said you never learned a thing grass hopper.
#80 unbalanced on 06.25.11 at 8:18 am
To # 29 Smoking Man. I have to apologize to you now. I come here to learn and read. Maybe I’m not as smart as you. Who cares! There are alot of great contributors here. Sorry , you are and will never be one. When ever I see Devil’s Advocate, BPOE or Smoking man I will just hastily scroll past your names. I wish other readers would do the same. Oh well Goodbye and good luck.

#23 GooderFool on 08.08.11 at 10:44 pm

“Yesterday the Dow gave back 5.5% of its value…”

Yesterday? It is 10:44PM here! You must still think that you are writing for a newspaper (unless you are in Newfoundland)!

This is the new journalism. Most readers will come here Tuesday. Clarity matters. — Garth

#24 Sasquatch on 08.08.11 at 10:45 pm

Buy low, sell high.

DUH!

I guessing this was a time to sell some bonds and buy some stock?

#25 Steve on 08.08.11 at 10:47 pm

Korea is a (the) leader. It led us
on the way up and it is leading
us on the way down.
Side note : It’s interesting watching
the oil speculators kill each other
trying to get to the exit

#26 Jody on 08.08.11 at 10:48 pm

The lady in that picture is more my style, hello!

Things seem to be going off the rails in the UK, it seems to be spreading. My guess is the military will come in, shoot someone and then it will really kick off. Good updates over at the Daily Torygraph

http://www.telegraph.co.uk/news/uknews/crime/8687177/London-riots-live.html

They also have a good article on gold,

http://www.telegraph.co.uk/finance/markets/8688428/The-bull-case-for-gold.html

I just think things are gotta get really tough for us. No more going to the store for an impulse buy, our wallets are going to be mighty low for the next decade.

#27 CREA Circle Jerk on 08.08.11 at 10:49 pm

Garth Said:

“And then it gets better – because companies are profitable, the economy’s expanding, emerging markets still emerge, technology is rampant, nations are woven in response and every politician alive just got cuffed on the side of the head.”

Well, I see the parallels you’re trying to make about today’s panic selling and the panic selling of 1987, but the differences are pretty massive. There will be little REAL ORGANIC growth in Westernized economies for a long, long time until the restructuring takes place. Also, rampant technology is also part of the problem with the economy as technology is replacing the need for workers in many industries and keeping wage growth low. This of course is balanced by the productivity gains corporations are realizing but it’s not helping the long term jobs picture very much. Expect the slow-motion replacement of some WHITE COLLAR jobs in the future as technology encroaches further. I believe Wired magazine estimates that by 2030, 30% of all jobs in a cornucopia of industries will be replaced by robots and artificial intelligence. There’s a very long term structural employment issue at play here.

Anyway, I’m sure QE3 & beyond will provide a floor & lift stock prices towards highs in the medium term. The world is flooding into US bonds because its the lesser of evils not because they are a flight to quality.

#28 CREA Circle Jerk on 08.08.11 at 10:51 pm

FYI as of this writing Dow Futures are down 318 Pts! and gold is up another $25 dollars to $1742. Wow, talk about major dislocations in the market.

#29 Marnic on 08.08.11 at 10:52 pm

I wouldn’t read too much into corporate earnings; they are backward-looking. Stock markets tend to look forward, and right now they clearly don’t like what they see.

#30 xindai shan on 08.08.11 at 10:52 pm

Corporations are sitting on a mountain of money – almost $1 trillion in cash, or about 60% more than they had back in 2007 before anyone had even heard of a credit crisis. More than 160 major US companies pay dividends to investors far higher than government bond yields , have bigger cash reserves and have never made as much money, usually on global operations.

Garth is probably 100% right from an investor’s perspective. Companies like Merck are making billions and are still slashing their payrolls.

Merck Article at Yahoo

You don’t have to be doomer to ask the question, “How long can global companies continue to profit while North America and Europe slumps?”

#31 NotAGreaterFool on 08.08.11 at 10:55 pm

Over seas markets now open, and going down, fast….

http://www.bbc.co.uk/news/business-14454406

#32 CoB on 08.08.11 at 10:57 pm

74% price drop for a Vancouver single detached house… and your own island: http://priceypads.com/13280/vancouvers-exclusive-private-island-14900000/

Or, own a private island in Lake Erie for the cost of a 2 bedroom condo in Vancouver: http://www.windsorstar.com/technology/Sale+island+your/5215337/story.html

#33 CREA Circle Jerk on 08.08.11 at 10:57 pm

Another FYI:

China CPI Comes Hotter Than Expected At 6.5%: Highest Since June 2008

This is spooking the Futures market into continuing free fall since it’s certain the Chinese won’t be coming to the rescue of the world economy this time around like 2008. “Cheap” Chinese goods are getting more expensive as the are essentially exporting import costs overseas and tightening credit domestically.

With the Shanghai Stock Market in official bear territory, and with the BOC slamming on the brakes of credit growth domestically to reign-in inflation, I just cannot see how out housing market can continue it’s advance in light of the horrible fundamentals abroad (PUBLIC finances NOT CORPORATE finances)

#34 Bottoms_Up on 08.08.11 at 11:00 pm

Irony indeed.

Isn’t ironic how there are so many doomers with respect to the future of the USA, but the USA is where everyone flocks to to protect their cash?

#35 HouseBuster on 08.08.11 at 11:00 pm

Garth, If you were drooling over equities last week, what are you doing now? I don’t think I want to know the answer to that.

#36 randman on 08.08.11 at 11:02 pm

A new view of Prez Obummer

“And for the first time in a while, there was a feeling that the US government has lost its bearings and its ability to respond effectively even in the face of a common cause and emergency, and it was expressed dramatically.

Obama came on television to speak. And after he said his piece, the losses in the equity markets doubled. Why is this?

Because the President may be many good things, and have many good qualities, but he is most surely not a leader, and does not possess an overweening moral principle or vision which he can communicate and achieve. What does he stand for, and who or what does he really support? The best way to be thrown under the bus is to be one of his supporters and constituents.

He is the very profile of a modern corporate manager, heavily laced with the moral timidity of a professional bureaucrat. He could not carry Franklin Roosevelt’s leg braces. I would not hold him to this higher standard if he had not chosen to pursue the leadership of the Presidency in times of crisis. But he did. And he sold out faster than a hooker when the fleet comes in.”

http://jessescrossroadscafe.blogspot.com/

#37 Bottoms_Up on 08.08.11 at 11:05 pm

#17 The InvestorsFriend (Shawn Allen) on 08.08.11 at 10:37
—————————————-
Every time I have to throw food out, I think about how good we have it.

How is it that I can throw out 2 dollars worth of yogourt or vegetables when there are many, many human beings starving in this world?

We do live amid plenty, and are damn lucky we won the ‘birth lottery’.

#38 Bottoms_Up on 08.08.11 at 11:08 pm

#6 Wise Guy on 08.08.11 at 10:18 pm
————————————–
Not true for SU (Suncor). They’re a screaming buy.

#39 Best place on meth on 08.08.11 at 11:10 pm

This market crash was long overdue, should have happened last August (and it was) but QE2 reversed the natural course of the markets.

Now with the end of government intervention and the realization that western economies are grinding to a halt this violent shakeout should surprise no one.

Also there’s no point imploring people not to sell their stocks as ordinary folks are not the ones selling, at least not voluntarily and certainly not the ones who have been receiving nice, ever-increasing dividends for a long time.

You have stop-losses being triggered, margin calls and forced liquidations being made, mutual fund managers who already had the lowest cash balances in years now need to raise money to fund redemptions and hedge funds are selling off lest they completely blow up and disappear from the face of the earth.

Selling will beget more selling on many fronts so let this run it’s natural course without anymore government meddling so the markets can finally find their natural level.

When the dust settles there will be buying opportunities.

#40 Bottoms_Up on 08.08.11 at 11:10 pm

#4 peacekeepa on 08.08.11 at 10:12 pm
—————————————–
I’d be buying now if I had the money to do so.

I’d probably implement the 1/3rd rule. Spend 1/3 now, 1/3 in 1 month, and 1/3 in 2 months.

#41 Your Mom on 08.08.11 at 11:14 pm

Blackadder: Baldrick, have you no idea what irony is?

Baldrick: Yes, it’s like goldy and bronzy only it’s made out of iron!

#42 Calgary Illusion on 08.08.11 at 11:15 pm

#34 randman

Paulson, Summers, Bernanke, and Geitner pretty much ended Obama’s career before it ever got started

#43 The InvestorsFriend (Shawn Allen) on 08.08.11 at 11:17 pm

Get out of or stay in equities at your own peril. Either way, sty in or get out, you pays your money and you takes your chances.

Investing is not a children’s game. It’s for grown-ups. People who can take responsibility for their own results.

#44 JB on 08.08.11 at 11:18 pm

This is what my day consisted of…. 1st. Opened a trading account for my lovely fiance, what a dear she is… She’ll be making money on oversold quality companies this fall while she sits in class….

We’re not out of the woods yet, but once we have some stability and the minions quit turning aforementioned paper losses into real ones it’ll be time to buy buy buy!!

After that I went and pulled weeds all day, didn’t turn on bloomberg, bnn or msnbc once!!! Let the crap hit the fan and wait for my next buying opportunity.

#45 randman on 08.08.11 at 11:26 pm

Oh man! too funny…

http://brokershandsontheirfacesblog.tumblr.com/

#46 McSteve on 08.08.11 at 11:27 pm

Looking at some screaming deals. Suncor down 35% from the summer highs, Banks approaching 20%, gold equities barely budging with $1740+ gold. There is a buying opportunity here. All this amongst some decent profits. I hope everything loses another 10% and I’ll load up the truck. Heck, I might just buy the whole TSX 60.

#47 librarykaren on 08.08.11 at 11:28 pm

“And then it gets better – because companies are profitable…”
…after they have been propped up by governments, funded by, um, us?
My problem of confidence in the markets is not a failure to recognize that “emerging markets still emerge, technology is rampant.”
The game is rigged, and we are just pawns. You are an Alpha when it comes to understanding this, but the rest of us, mere Omegas.

#48 cata on 08.08.11 at 11:29 pm

when are you going to accept you were wrong regarding RE? Prices are hero to stay unfortunately.

#49 disciple on 08.08.11 at 11:31 pm

The Obama that spoke today is a simulacrum. The following link is reserved only for the bravest of minds, for the realization of the info here will tear yours apart if not prepared. Firstly, you will realize that you are not your body. …You have been warned:

http://www.bibliotecapleyades.net/ciencia/ciencia_artificialhumans01.htm

#50 Garth Vader on 08.08.11 at 11:33 pm

Heh – go figure, GICs are beating balanced portfolios by 10% over the last two days. Care to annualize that spread?

#51 domain on 08.08.11 at 11:35 pm

I don’t see anything wrong with fleeing the stock market, and diving into Treasurys. As long as it is part of a strategy, it makes nothing but complete sense if the intent is to buy back into the market when it is even cheaper. Couple that with hedging against our CDN dollar, it could pay off handsomely. Herd mentality is fantastic when you use it to your advantage.

With Gold, it seems that this little spook has shown that there is a little more interest in Gold as a safe-haven now than in 2009 crisis. However, some of its strengths are also due to the competitive currency debasement that every nation is participating in. Gold is expensive, but appears to be sharing a little more of the safe-haven status with US Treasuries than it did back then.

Although I like gold, I wouldn’t be comfortable holding more than the traditional 10% in my portfolio.

#52 nonplused on 08.08.11 at 11:38 pm

Well I didn’t sel any stocks or buy any bonds today, so don’t look at me!

How come every time the price drops, “people are selling”? For every seller there is a buyer. For stocks anyway, with bonds the government is always printing new ones.

Algorithmic trading programs might be behind the drop, as with the “flash crash”. Either way, the bid was poor.

#53 MasterBootLicker on 08.08.11 at 11:39 pm

Don’t anyone even whisper the best investment over the last 10 years. We hear only talk about investments the banks can short, game , manipulate or print. Those are the only investments of any value.

#54 not 1st on 08.08.11 at 11:48 pm

Irony is right.. that the safest haven for your money on the planet is a country that needs to borrow 40 cents on every dollar to pay its bills and then uses that some of that money to run 6 wars. Thats like putting your phone bill on your credit card every money. Yeah nice model economy there. sheesh is the mainstream ever brainwashed.

On top of it, Garth totally suspends all logic when it comes to the equity market even though there are warning signs flashing all around it. When vancouver real estate falls, thats a correction thats long time overdue, when equity markets stumble, thats a sale.

Or like when its bad that CMHC carries 600 billion in secured debt against canadian housing, but its ok for the U.S. to have 15 or 20 trillion in debt or more.

#55 randman on 08.09.11 at 12:08 am

OH OH! Harper says “don’t panic!”

It’s time to panic!!!!

#56 John on 08.09.11 at 12:19 am

No QE3 tomorrow or latest by August 26, 2011?

Japan here we come. Only Bernanke can save the equity/stock market and not stock valuations or corporate profits. Markets have been high on steriods given the last 2 years.

Take this to the bank if you have doubts.

#57 Utopia on 08.09.11 at 12:23 am

“At the same time this herd was driving bond yields down, they were forsaking companies that are doing better than ever. Corporate earnings are at an historic high. Stocks trade at about 10 times earnings (that’s Walmart cheap). Corporate earnings per share are 18% higher than a year ago. Almost 80% of publicly-traded companies reported higher profits this year, and an incredible 70% of them beat expectations.” ~~ Garth
————————————————

So well said that there is little or nothing to add. Thanks for a terrific post today Garth. Good on you for admitting weakening in the face of fear so many years ago too. Few others would be so honest about their own writing from the archives. I am feeling really optimistic at the moment. Some good quality stocks are a bargain right now and there are more good choices than you can shake a stick at. Best part; it will improve over the coming days and weeks and I fear not to tread where others flee. As I have tried to point out before….falling commodity prices will now deliver outstanding earnings results for many companies over the next few quarters. Good entry points like this are rare for that special selection of well capitalized and cash heavy corporates with a global reach and good name brand recognition. It is up to individuals to figure out who the best-of-pack are but they do exist and it is my contention that is where you need to be to simultaneously take advantage of both future stock value growth and dividend income.

Let the Doomer’s take Prozac. I want opportunity, ownership of healthy, quality global companies and a decent quarterly return.

#58 martin on 08.09.11 at 12:25 am

quite of an economist you are

#59 HDJ on 08.09.11 at 12:28 am

Garth, May I ask a silly question? On a day like today, when it appears that everyone’s fearfully selling stocks and driving down the DOW, who’s doing all the buying?

#60 kitchener1 on 08.09.11 at 12:30 am

markets are down hard in pre trading.

Some seriously oversold stocks out there right now.

Some very serious support levels breached to the downside.

looking bad.

BUT
this will in time turnaround just as fast and there will be 500 point up days in the DOW to come.

Stay cool and calm out there.

#61 City Slicker on 08.09.11 at 12:36 am

$1770 gold tonight. People must be asking for delivery of physical gold the Comex doesn’t have.
#hit might be hitting the fan soon!

#62 Nostradamus Le Mad Vlad on 08.09.11 at 12:40 am


Some Benny Goodman jazz to swing along with the stock markets? 4:27 clip Except these are Japanese students having a blast! The Sun is the cause of GW (humor from The Onion).
*
“. . . and every politician alive just got cuffed on the side of the head.” — That line gives a very clear picture that, as long as we are held hostage to vote these numbnutz in, then the more things change, the more they will stay the same.

That’s what the UK has just figured out.
*
Dortmund, Germany Now taxes hookers to make up budget shortfall (?). “Rome used prostitutes to raise revenues for their treasury … just before it all collapsed.” wrh.com; Currency Wars To go along with regular wars; Link in Well, Soros did put Obama in the hotseat, so was this his thank you? Link in “. . . from the Deep Capture archives,with metals going though the roof…by the way,the report is 16 months old.Looks spot on to me” (Price manipulation)

Barackalypse and Greecealypse; Hyperinflation Hmmm; Many moons ago (09 or 10, I think), a link stated that when the markets were riding high, the elite (Soros et al) would pull the rug out from under people’s feet (we’re just roadkill, after all). This seems to be an opportune time for them; 10:30 clip “Did you noticed how uncomfortable Soros was when he was saying the term ‘New World Order’?”, and this; China with Rothschild’s help; Interest Yet, Islam prohibits Muslim banks from charging interest. That’s why what’s going on now in the ME is Crusades #4.

London Martial law; Woman jumps from burning building in London; The US is pushing it’s luck right over a cliff; Syria – Libya Similar to what is happening in the UK; US Army Preps Do they know something the public doesn’t?

#63 JohnnyBravo on 08.09.11 at 12:42 am

Garth’s excellent blog entry puts some much needed perspective on market volatility. The 1987 crash was surely the largest single-day stock market event in history. A loss of 22.6% on the DOW makes today’s downturn look downright petulant.

While most people tend to also regard the 1929 crash as a single event, known as Black Tuesday, the truth is, the crash of ’29 was a multi-day event–– and only if you don’t include the warnings that started with a major single day decline in March of that year.

Most have forgotten Black Thursday, October 24, when the market tumbled, and there was panic in the streets until Wall Street bankers stepped in and very publicly started buying stocks at inflated prices in deus ex machina fashion in order to restore confidence. It worked. For about a day.

On Black Monday, October 28, the DOW dropped 13%. On Black Tuesday the DOW fell another 12%. After rallying into April 1930, the DOW would eventually lose over 89% of its value, finally hitting bottom in July 1932.

The crash of 2008-2009 was also not a single-day event. Again, most people remember the Monday after Lehman died. All hell broke loose. The financial system almost seized and collapsed amid a massive electronic bank run. The market dropped into November, bounced, and finally hit bottom in March ’09.

But again, this crash did not start in September 2008, it arguably started in July 2007 with the blowing up a couple of Bear Stearns sub-prime hedge funds. After swooning into August, the Fed stepped in to support the markets with interest rate cuts. After a correction in January 2008, the markets were again off the races, topping out in June, or thereabouts, depending on the index. I remember distinctly, because I redeemed a bunch of mutual funds the day the TSX hit its all-time peak. The crash of ’08 was coming, but the TSX would lose about 15% of its value before the fateful Lehman event.

Stock market crashes don’t come out of the blue like most people think. They are events that, like earthquakes or volcanic eruptions, send out warning signals long before the earth splits open and the bottom falls out. (One of the ways some market watchers detected the tremors before the crash of ’87 was via the huge spread between the Fed’s target rate and the actual interbank lending rate.)

We are now in another market correction. When did this one begin? Well, the S&P most recently peaked in late April. It has since dropped about 18% into today’s close. And the losses continued to mount after hours.

Will the markets rally? Of course they will. Perhaps huge. Will they outright crash? I don’t know. But despite the apparent fear, there seems to be a lot of optimism among the small retail trader. Because stocks are cheap and technically oversold, many complacent little bulls have been in the arena charging headlong into this correction, buying “quality” companies.

And that worries me.

#64 flip flop on 08.09.11 at 12:54 am

which one is it? 14 million unemployed in the U.S. –> continuing recession; or the economy’s expanding?

toss a coin!

#65 reality guy on 08.09.11 at 12:59 am

Poor Ass Chinese guys

Hey heng seng falling like a rock another 6 percent for properties and

average 5 to 6 percent through most indexes.

Man, imagine the lost of wealth in just a few weeks. I guess alot of the chinese guys must feel pretty poor now.

I predict, any time now the China property bubble will start to burst.

#66 waterloo Resident on 08.09.11 at 12:59 am

It’s a debt bubble explosion, this is what happens when a debt bubble bursts and usually it isn’t pretty. I think we’ll have a ‘dead cat bounce’ tomorrow, and then more selling for the rest of the week. Best time to buy might be on Friday around noon.

#67 Aussie Roy on 08.09.11 at 1:15 am

Aussie Update

Could it get any worse for Brisbane?.
Stock on market at record highs, sales at record lows.

But wait, it’s all good.

More than 2000 new apartments will be built in Brisbane’s inner-city within the next two years, but analysts and agents have no concerns of a glut.

REALLY?…..They are that dumb…

http://www.brisbanetimes.com.au/business/property/two-thousand-new-apartments-but-no-glut-20110808-1iit9.html#ixzz1UVNQk6QD

Uncertainty over the local and international economic climate is clouding what is currently a bright outlook.

Could it be that prices are just too expensive?..

http://www.brisbanetimes.com.au/business/outlook-bright-but-worldwide-turmoil-clouds-housing-market-20110807-1ihhe.html#ixzz1UVOMIE1F

The clouds of economic gloom gathering over the US and Europe could have a silver lining for Australian borrowers – a double rate cut is now predicted for next month.

A move of that size would lop the official cash rate from 4.75 per cent down to 4.25 per cent and save the holder of a $300,000 mortgage about $93 a month if passed on in full by the commercial lenders.

Times have changed, attitude towards debt is different now, even a rate cut can’t and won’t stop the bubble from imploding.

http://www.brisbanetimes.com.au/business/double-rate-cut-tipped-for-september-20110808-1ii9g.html#ixzz1UVOktzX2

#68 Onemorething on 08.09.11 at 1:33 am

okay so back to Van today from the Okanogan. Looked at a place where 4 years ago the Calgarians were eating up this waterfront resort style setup like nuts.

This one owner appears to have bought at 1M but appears to be asking just under 800K. Maybe that loan is coming due on the Mastercraft skiboat and Ferrari he was driving. Maybe he knows the pain is coming along with deflation AGAIN and a drop in oil.

Maybe it’s just all the deals in the USA on sweet vacation property and foreclosed boats and cars!!!

Again I’m scoping RE kids but it will be a slow melt so I can take my time.

#69 ruraldude on 08.09.11 at 1:44 am

My Fellow Comrades!
No doubt most of you have may have thought you were experiencing hardships over the past 30 months or so. When the media tells you that unofficially the unemployment rate is 18-20 percent or that the housing market has been on a downward trajectory for the last 3 years, or that record amounts of banks have closed and businesses are failing.This can be a cause for some worry. True there has been a slight uptick in unemployment and a few homes foreclosed on. There have been a few under performing banks that have closed and of coarse there is always some businesses that fail through bad timing or unforeseen market trends. Let me assure you this is perfectly normal in a vibrant society.
The real problem we have is our enemy, they are trying to wear us down with misinformation about the state of our economy. No doubt you have heard through media of the comparisons to past civilizations that have failed.
Things are different now! we have over 500 military bases around the world with the best trained army the world has ever seen. We have technology that didn’t exist 2000 years ago. In short I’d like to say that the United States is the biggest military machine and the biggest economy the world has ever seen.
However having said all that we are experiencing a bit of a soft patch lately. We are prepared to bring in QE3, QE4,QE5, or as many stimulus programs as needed to get us through to the next election.
I am keeping in constant contact with Ben and he has assured me that we have the most up to date and fasted printing presses available.
In closing I’d like to say we are prepared to do whatever it takes to maintaining our dominance and be an example of freedom to the rest of the world. We are to big to fail.
Goodnight and God bless America

#70 Two-thirds on 08.09.11 at 1:46 am

“Corporations are sitting on a mountain of money – almost $1 trillion in cash, or about 60% more than they had back in 2007 before anyone had even heard of a credit crisis.”

Perhaps they are expecting a crisis 60% more now than they did in 2007.

I had made this point some weeks ago and I reiterate it today:

Corporations hoarding cash can be seen as a bad sign: why sit on mountains of money if the future outlook is rosy and growth is expected?

A few reasons to not spend on expansion and re-invest that mountanous capital are:

– Uncertainty ahead
– Access to credit is anticipated to drop
– Economic contraction is expected

To balance things out, could someone please point some positive reasons for corporations to sit on tons of cash in an environment like 2011?

The $1M question here is: why sit on so much $$$ if the future outlook is not doom and gloom?

#71 DML on 08.09.11 at 2:26 am

NYSE Monday:

52 week highs-3

52 week lows-1292

#72 Tony on 08.09.11 at 2:26 am

In a bear market stocks usually fall to book value. That would put the DOW around the 4,700 mark. If you remember stocks were manipulated to absurd levels. What you’re seeing now is the manipulators selling stocks instead of buying them. The indexes will magically go up in September and probably in October. The market should get hammered in 2012. What the people don’t realize is these swines most of the time trade month to month meaning all the selling will abate around the 25th this month.

You define paranoia. — Garth

#73 Tony on 08.09.11 at 2:33 am

#39 Best place on meth

They were going to take the market down in March this year until the jobs report came out at the start of the month. Of course now they’re going to come out with all the revised job figures for the previous months just like the revised GDP figures.

#74 dave in Victoria on 08.09.11 at 2:40 am

Not sure that because something is cheap it’s therefore good. Walmart sells alot of cheap stuff, and most of it is crap.

It seems like human decision making capacity has lost pace with technology. Can we recover? An interesting documentary called “singularity” seems to think not.

I have faith though, in an entirely non-biblical sense.

#75 RG on 08.09.11 at 2:50 am

If I see one more picture if some floor trader somewhere with his hand over his mouth in shock I am going to scream.

Anyone with half a brain could have seen that stocks were overvalued. Now they are undervalued!

My portfolio, split between equity index and bond funds, has exactly the same total value it had a week ago.

The powers that be in big media must be having a blast, scooping up bargain stocks. When I rebalance at the end of this lunacy, I’ll do the same.

#76 NormallySilentJeff on 08.09.11 at 2:55 am

Ok, here is the deal Garth :)… my wife and I are recently retired. 55 and 56 years old. We stuck at crappy jobs through a lot of **** to get our pensions. We’re there. We have approx 400k in various savings accounts and gic’s , each cashable and each under the CDIC limits. How’s that for paranoia? We have never owned a home, but would like to. We have studied the stock market at some length and have decided the last few years were too much of a gamble.

We know too much to buy a house under these economic conditions, so we are waiting.

I’m sure you have heard the story many times. We saved and scrimpted to get a house and then the bubble hit, destroying our chance to own a home. certainly the stock rally since the march 09 lows has been tremendous, but the similarities to the 1930’s are very apparent also.
In the 30’s stimulus was added to the economy by the governments, just as was done recently, then the money/will to stimulate, disappeared. That was late 1931/early 1932…..that lead to a long downward trend, at the end of which those that were bullish on stocks would have said “I’d never invest in the stock market again…EVER!”. Finally the bottom was reached and it was a good time to invest.

That may not be a perfect description of what happened, but it suits the purpose of explaining a certain reticence to invest in markets at the moment.

Anyway, keep up the good work, Garth! I love your blog and we read it daily :)….here’s hoping that better times are coming…. :)

#77 Peter B on 08.09.11 at 4:22 am

People need to stop freaking out and governments need to get real.

Europe you will never get your money back from the countries you should not have lent it to in the first place. So forgive those debts and learn from your mistakes.

America your taxes need to go up so dump those tea party nut jobs into the Boston harbour and get on with the job.

Stock market investors relax. Panic is not a good investment strategy. Stocks are on sale so buy more.

#78 westopia on 08.09.11 at 4:22 am

This is a must see. Greenspan admits on live TV that the US can print its way out of debt. Check out the dude in the yellow tie (Current Chairman of the President’s Council of Economic Advisers, Austan Goolsbee) when Greenspan says it. His face says it all; “OMG, I can’t believe Al said that!”

Holy Zimbabwe Batman!

http://www.youtube.com/watch?v=-_N0Cwg5iN4&feature=player_embedded

#79 BigAl (Original) on 08.09.11 at 5:57 am

Isn’t is more likely that all this alleged success of U.S. companies is more likely due to an embracing of Enron math in their books – especially banks?

Rather than fixing shady practices and addressing real issues (accounting, transparency, etc), the corporate world and Wall Street are third-worlding themselves toward denial, corruption, and looting.

How credible are their numbers?

#80 timo on 08.09.11 at 6:30 am

http://business.financialpost.com/2011/08/05/only-a-matter-of-time-before-canadian-banks-charge-for-deposits/

buy r/e because saving it in a bank will cost you.

#81 Live Under Your Means on 08.09.11 at 7:24 am

http://thechronicleherald.ca/brucemackinnon/mackinnon-cartoon-2011-08-08

#82 thinktank on 08.09.11 at 7:28 am

S&P futures up 16 at the time of this post. Whether this will hold is anyones guess. BUt I agree with Garth – there are some absolutely MONSTER buying opportunities. When this thing decides to bounce (when is anyones guess) we could see a 500-1000 point rally in 1-3 days of trading and the market leaders will surge higher. It will probably be short lived, but who cares … make your profit, sell and as Garth says … let the dust settle as a market bottom forms and then look to begin rebuilding your portfolio for a longer term (you define what longer term means to yourself – everyones different). Until then TRADE the swings (if you can)
good luck and stay disciplined – buy and hold at your own peril – that just doesnt work anymore on ANY level and I think we all know this.

#83 biil c on 08.09.11 at 7:48 am

This is why we should all be buying real estate. It never goes down. Sell everything and buy real estate. I have 2 homes in 905 which I can give you for a deal. You will make a fortune. Ill even give you financing.
Its a sure thing. Real estate is better than gold. And if you by both my properties Ill throw in a Florida Condo for free. It was originally valued at $400K.

#84 Nemesis on 08.09.11 at 7:54 am

Hmmm… Dead turkeys & Debutantes. That’s a curious and fitting parable for the strange times in which we find ourselves, GT. The trick, of course, lays in knowing which is which.

#85 MasterBootLicker on 08.09.11 at 8:09 am

Economists are talking about a double dip recession in the U.S. I don’t think they ever crawled out of the first one but that is semantics at this point. The point being made using manipulated government numbers is. Unemployment is over 9% and interest rates are at 0%. These are usually numbers seen at the depths of a recession not the beginning. For people still convinced a recovery is on the way, all I can tell you is learn to love your servitude . The rest who are interested in listening. QE3 is here and now. Real unemployment is 22%. The Fed will soon have to up its buying of Treasuries from 80% to 100%. The Dow will re-test 6600 in the spring of 2012. QE will go global and inflation will rage. Major wars will break out around the world and civil unrest will be the norm. Interest rates on a single family dwelling is the least of your worries. Prepare your investments accordingly. This will entail studying other times in history where these conditions existed. Start with the 70′ and 30’s for starters.

You forgot the radioactive bed bug global infestation. — Garth

#86 daystar on 08.09.11 at 8:12 am

Wasn’t this blog inferring a commodity route mere weeks ago? Yes… I believe it was :)

Y’know… it just wouldn’t surprise me to see Ventures at 1300 and a TSX below 10,000 but thats just me. Wups, busy again, y’all have a great day!

#87 Heart of the World on 08.09.11 at 8:32 am

I am serenely watching the markets this morning. The reason is I that have no (paper) financial assets outside of GICs, which is a bit heretical here. Feels good at the moment though.

So here is something that doesn’t usually come up here: and that is ways to hedge against currency moves. I note that the Loonie is down six cents in as many days, and dipped below parity this morning.

Over the last while I have been putting some housing bubble profits into oldgay and ilversay. I have dollar cost averaged my purchases, and picked up the pace lately with the Loonie trading near historic highs. In terms of US $ values this has worked out pretty well. But a lot of the thinking behind this has been to hedge against the day when, as Garth has so often and ably pointed out, our housing market goes the US road, and the Loonie corrects back to more historically normative levels — say US 90 cents. When housing corrects back here and the Canadian government is left holding the bag I expect that to have significant Canadian dollar ramifications.

A GIC investor playing in forex? I hope you’re wearing protection. — Garth

#88 timo on 08.09.11 at 8:55 am

http://www.bloomberg.com/news/2011-08-09/productivity-in-u-s-probably-decreased-labor-costs-climbed.html

ouch!

good video
http://www.youtube.com/watch?v=ed2FWNWwE3I

#89 Bottoms_Up on 08.09.11 at 9:35 am

#59 HDJ on 08.09.11 at 12:28 am
————————————-
Answer: The smart people.

#90 The American on 08.09.11 at 9:39 am

Yooooohoooo…. Oh BPOE! Where are you? I have something for you :-)

http://www.theglobeandmail.com/report-on-business/economy/interest-rates/market-mayhem-puts-canadian-rate-hike-on-back-burner/article2123265/

#91 Kevin in Winnipeg on 08.09.11 at 10:16 am

City’s resale-homes market red-hot in July
http://www.winnipegfreepress.com/business/citys-resale-homes-market-red-hot-in-july-127292373.html

My favorite excerpt….
————————————-
“Peter Squire, the association’s residential market analyst, said the recent stock-market meltdown could throw even more fuel on the fire.

“It’s got to make you think, ‘Where can I place my money that’s a safer haven?’ ” he said, and for some, real estate might be the answer.”
————————————-
Talk about irresponsible.

#92 MoneyMyHoney on 08.09.11 at 10:18 am

Garth, a few months back, in response to a readers comment, you mentioned that the Canadian rates are definitely going to go up after mid year. There were readers arguing against it. Where do you stand now? Do you think Mark Carney has the balls to increase it before the end of 2011 even by 25 basis points?
Or do you now agree that Mark Carneys balls are made of marshmallows?

#93 Moneta on 08.09.11 at 10:19 am

People need to stop freaking out and governments need to get real.
——-
Wishful thinking.

#94 Pr on 08.09.11 at 10:25 am

The desperate economic and financial positions of Americans worsen as a result of these actions. Despair reigns as fellow Americans lose jobs, vehicles and homes only to move in with relatives or descend to living under a bridge.

#95 househunter on 08.09.11 at 10:38 am

Garth and company, what’s your take on this from Black Swan Capital:

https://www.mcssl.com/content/166063/Reports/072211_china_danger_red_dragon.pdf

It appears to be contrarian thought but an interesting read. If its even partially true, this could have more of an impact than what we are currently experiencing.

#96 ORouleau on 08.09.11 at 11:04 am

Unrelated to the post but hmmm… house porn. Might as well go all in…

http://www.realtor.ca/propertyDetails.aspx?propertyId=10746025&PidKey=-143088252

#97 Financial Adviser on 08.09.11 at 11:09 am

As Garth states, balance is key. Diversification is irreplaceable, while purchasing individual equities is equivalent of gambling. Equity and bond ETFs are the way to invest, buy and hold does no longer function. Optimal investment strategies require constant review, iron discipline, set numerical goals and necessary liquidity.

#98 thinktank on 08.09.11 at 11:21 am

For all those shorter term traders, be careful of this bounce … 72 BILLION of new debt will be auctioned this week of which 32 billion will be auctioned today – primary dealers will try and flog that out and they need clients with capital to buy them … it is not uncommon to see these dealers “re-allocate” funds from equities to purchase this new issues.(got to keep their friends at the treasury happy) That alone could weaken todays shaky rally. Add that to a VERY volaltile market and this rally may fade. One last thing .. FOMC meeting this afternoon … another wild card. I closed out some short term trades for decent profit into todays rally .. nothing spectacular but profit none the less (everythings relative) … better to be safe than sorry in this market…

be careful on trying to time any bounce and if you do … your best friend will be an INTRADAY STOP … not over night stop… yeeesh … you could wake up with the futures down -25 again in a heartbeat in this market environment. NEVER EVER risk more than -1% of your trading capital on a single trade EVER!!!!!!

#99 Kilby on 08.09.11 at 11:26 am

BC Real Estate.
Penticton, last 30 days. 758 active residential listings. 85 sales.

Kelowna, last 30 days (North and South) 439 active listings. 38 sales.

Parksville and Qualicum Beach, last 30 days (not outlying areas) 590 active listings. 71 sales.

#100 bill on 08.09.11 at 11:30 am

”You forgot the radioactive bed bug global infestation.”

good one Garth.
nearly spewed coffee on the keyboard.
apparently its not a secular infestation?

#101 Kilby on 08.09.11 at 11:33 am

#97 My post.

After the last post I thought that I must have made a mistake with the Penticton numbers but taking out “mobiles” there are still over 700 active residential listings. This is a town with huge municipal debt, lots of retired people and a popular summer beach town. I think the population is only around 33,000

#102 jess on 08.09.11 at 11:36 am

Bravo you never mentioned the yen carry trade

#103 Harvard Grad on 08.09.11 at 12:48 pm

Not claiming this is my post – just thought it was worth restating from yesterday’s late posting..VW…good job!

Just came across these numbers – so funny it hurts!

U.S. income: $2,170,000,000,000
Federal budget: $3,820,000,000,000
New debt: $ 1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cut: $ 38,500,000,000

Mind boggling numbers, to be sure.
But remove eight zeros and look at them as
a family budget.

Total annual income for the Jones family: $21,700
Amount of money the Jones family spent: $38,200
Amount of new debt added to the credit card: $16,500
Outstanding balance on the credit card: $142,710
Amount cut from the budget: $385

Puts things nicely in prospective.

* G, only wish this was 1987 – I just started started grade school that prepared me for Harvard – and a shout out to GTA girl!!… your comments are sensual!

#104 VW on 08.09.11 at 12:51 pm

Harvard – you are a brilliant individual…we all would learn something from your infinate wisdom.

#105 Stampede Sam on 08.09.11 at 1:27 pm

A GIC investor playing in forex? I hope you’re wearing protection. — Garth
+++++++++++++++++++++++++++++++++++++
Amen to that. I once briefly dabbled in forex until I realized I’d be better off taking my money to the casino.

#106 Tommy on 08.09.11 at 1:40 pm

DELETED

#107 canali on 08.09.11 at 1:50 pm

garth, as always i enjoy your columns when i can.

for those of us who aren’t investment savvy, and wish to earn money in vehicles other than RE, are there any online clubs or links you suggest to investigate further to a/become more up to speed with knowing the various instruments and how to best utilize them under different market regulations and b/which institutions to open up some ‘trading’ acct which doesn’t hose you, once you are more savvy (of course reading your own books helps too).

#108 BPOE on 08.09.11 at 1:50 pm

Thanks for the link. I knew about this well in advance. The breaking news coming by the end of September is not the interest rate freeze but the lowering of the interest rate. Stay tuned
**************************************
.#90 The American on 08.09.11 at 9:39 am
Yooooohoooo…. Oh BPOE! Where are you? I have something for you :-)

http://www.theglobeandmail.com/report-on-business/economy/interest-rates/market-mayhem-puts-canadian-rate-hike-on-back-burner/article2123265/
.

#109 Nostradamus Le Mad Vlad on 08.09.11 at 1:52 pm


Wotta lotta gobbledeegook in the world today. I may jest have to go and lie down again!
*
Behind The Scenes The real news, not the concocted drivel of the m$m; Four Old Cartoons which partly explain the state of the world today; 4:38 clip JPM getting rich off foodstamps, now at an all-time high; Debt Deal, not S&P caused the markets to swoon; BoA + JPM “Now Bank of America is on death watch, as bankruptcy rumors are starting to circulate. Here’s why:”; Outta Gas? Go west, young man! Riots caused by economic conditions, so EAT THE RICH! One Person’s Opinion The US$; S&P, Moody’s etc. “Cue the music from Jaws”.

GM Crops and the decline of bees; Toronto Guess we can expect riots here soon. The noose is tightening. “A group of international citizens has therefore undertaken to privately fund and cause these independent hearings to take place. Because of the global ramifications of the events of 9/11, . . .”; Look At World Pyramids As the world is currently enslaved by a large pyramid scheme, here is where it all started! Is this why Harper wants to build more prisons?

#110 fancy_pants on 08.09.11 at 1:54 pm

just got back from 2 week vacation from BC. lots of RE sale signs along the highway, especially penticton – kelowna

#111 BPOE on 08.09.11 at 1:56 pm

CIBC chief portfolio strategist following BPOE lead claiming interest rates will fall. Folks this is what I have been pounding the table about. You think Vancouver housing is going down after this last market shakeup? You think its going down with 1 billion banging at the door? You think its going down with dirty money arriving daily? You think its going down with LOWER interest rates coming by the end of September. Welcome folks to the BEST PLACE ON EARTH> Vancouver the CROWN JEWEL of the world. Meanwhile renters continue to throw money out the window while owners build equity. NO INTEREST RATE HIKES of any significance til the baby boomers are all gone. Were talking decades folks. This allows for owners to borrow cheaply on their homes for a long long time. There will be NO SELLING of any significance EVER.
++++++++++++++++++++++++++++++++

I think it’s clear that there are a lot of serious problems still in the world and it’s more likely that we’re setting the stage for a sustainably low level of interest rates for a very long time – and that the initial tightening by the Bank of Canada [last fall] was unnecessary,” said Peter Gibson, chief portfolio strategist at CIBC World Markets.
In fact, Mr. Gibson added, the possibility of rates being lowered is now more realistic than before.

#112 disciple on 08.09.11 at 2:08 pm

By definition, 1/3rd of the S&P/TSX index is Materials and about half of the Materials sector is Gold stuff. Canadian investors will participate in the gold story… either way … whether they like it or not. If China ever forced a gold standard to US debt, an ounce would be 9000, but I doubt this will ever happen. Anyways, gold is priced in US Dollars which is attached to the hip with the Canadian dollar, so I’m not convinced that PHYS is a good investment for Canadians.

I wish AAPL and QCOM would go lower…I’m not much interested in diversification going forward, I want more, I deserve more, and so do you…demand it from Carney, contact your local MP…oh sorry, wrong universe…

#113 doctore on 08.09.11 at 2:22 pm

Who are all these nutbar, doomer, gold nutz, that come on here. All the crapola they spew is enough to make shake your head. It is intersting to listen and read their end of the days rants and apocolyptic websites. Without them, this site would loose its interesting spin, and off course Garth’s whitty insults to these people.

#114 jussupow on 08.09.11 at 2:31 pm

mua-hahahahahahaha ha ha
so much for interest rates moving just in one direction. ha ha ha. ha. ha.

#115 JohnnyBravo on 08.09.11 at 2:35 pm

RE: FOMC statement

For anyone who had any doubts, the Fed has just proclaimed, “Yes, we are Japan.”

#116 jess on 08.09.11 at 2:35 pm

socratic Incongruity

Opening Statement of Senator Carl Levin,U. S. Senate Permanent Subcommittee on Investigations Hearing, Wall Street and the Financial Crisis: The Role of Credit Rating Agencies
Friday, April 23, 2010
http://levin.senate.gov/newsroom/press/release/?id=58efc3ee-722a-4783-bb6e-9c0f93c8309f

#117 fancy_pants on 08.09.11 at 2:38 pm

ok. we can put this to bed now. Out interest rates ain’t going up anytime soon. time to buy that dreamhome. bastards.

http://www.cbc.ca/news/business/story/2011/08/09/federal-reserve-fomc-meeting.html

#118 CREA Circle Jerk on 08.09.11 at 2:49 pm

Does it look more and more like the U.S. is turning Japaneser? No QE3 was announced (like many expected) but the Fed pledged to keep interest rates near zero until mid 2013! Of course, this is likely to extend as the moribund economy continues for a long long time to come.

It’s looking more and more like interest rates are staying put for awhile longer (at least short term rates). Of course, mortgage rates could still rise but I doubt it since the bond market is pricing in a deflationary outcome for at least the mid term. If housing declines, it won’t be because variable rates are going higher in the short to mid term.

#119 CREA Circle Jerk on 08.09.11 at 2:53 pm

I guess we’ll have to wait until Jackson’s hole in 3 weeks for QE3 to be announced. Market bottom probably won’t be in until closer to that time when the insiders get wind of it. I’m sure the amount of stimulus injected will be a doozie; it has to be to have any effectiveness whatsoever.

#120 CREA Circle Jerk on 08.09.11 at 2:54 pm

Get out your “Dow 10,000” hats everyone! (haven’t we seen this movie before?)

#121 thinktank on 08.09.11 at 3:11 pm

as a trader … all I can say is wow … these volatile moves can rip you a new one if you dont know what youre doing … equities, bonds … these spikes are insane … and I agree with the most recent posters … interest rates have been whacked down the food chain as far as important factors as to whether to buy a house. Garth posted about 4-6 weeks ago … smart move is to grab equity (if you have any) out of your property and build a portfolio with it. Balanced portfolio or a diversified options portfolio (my choice hands down) either way – these rates have created your own carry trade using your house as your ATM. Not to spend it … but to invest it to generate returns !

#122 Snowboid on 08.09.11 at 3:21 pm

#111 BPOE…

You may be right in the short term, despite your ‘Billy Mays’ (RIP) impression.

However, this is still NOT the right time to buy real estate, especially in Vancouver.

Most renters I know (including my son and daughter-in-law) are happy to have their units subsidized by landlords with steep strata fees, maintenance and taxes (or even more for those landlords with big mortgages). We are also happy with the same situation in the Okanagan.

When the RE correction comes, the more you have gambled on mortgages, the more tragic your fall will be.

I talked to an Albertan yesterday – all excited because near the condo they own here, townhouses are now selling at ‘fire-sale’ pricing.

Unfortunately the fact they now can’t sell their condo for what they paid (to buy the bigger townhouse) escaping their thinking.

Sad, sad, sad – these aren’t stupid people, just caught up in the infomercial style of RE sales right now.

#123 Smoking Man on 08.09.11 at 3:24 pm

Batman head showed up again upside down, well defined at around 2 42 to 244

Unloaded all my shorts, buying back in with 20% capital
See what gives tommorow, might miss a big gap up, but will go all in if things look good….

2 year at .8 div’s on blue chip CDN companies at 5%

Can’t risist

#124 Moneta on 08.09.11 at 3:39 pm

and I agree with the most recent posters … interest rates have been whacked down the food chain as far as important factors as to whether to buy a house. Garth posted about 4-6 weeks ago …
————-
A game of whack-a-mole is guaranteed. If the US got downgraded, expect a lot more, corporates included.

And with each new downgrade, yields will go up. Central banks might keep rates at zero, however credit spreads will determine future rates.

#125 RoninBC on 08.09.11 at 3:41 pm

# 111 BPOE …. You are right on! Where are the ever increasing interest rate hikes Garth was warning us about?? Also, Vancouver RE prices will always be unaffordable.

Renters are simply the fools that sold too quickly in that market or failed to get in by holding off, waiting for the huge correction. Big mistake.

#126 BrianT on 08.09.11 at 4:10 pm

#112BP-Do have the faintest idea what the track record of CIBC World Markets is?

#127 Steven Rowlandson on 08.09.11 at 4:20 pm

In world where markets are managed (manipulated) you can cover a lot of rot and corruption with propaganda and optimism. However this does not correct the underlying problems.
I think sunshine blowers will soon see interesting times.

#128 BrianT on 08.09.11 at 4:21 pm

#114Doc-Don’t worry-they are still a minority here. Most of the posts are from the sheep.

#129 arctodus on 08.09.11 at 4:32 pm

It is so funny watching the sage wise heads try to justify that “everything is ok”, just another blip in the market, time to “buy the dips”, stay the course….or my personal favorite….buy US bonds…..yeah right.

All the while the “energy aquisition machine” that is world society claws at the unclimbable wall of low EROEI.

Riots in middle east as the price of foodstuffs triple, riots in Britain as the dispossessed start to realize how screwed they are, flash robs erupting through out North America……no problem, just the usual ripples in the world of humanity…….

NOT

The cycle of energy price spikes and falls are quickening while the respective fiat currency prices paid are lessening with each spike…anyone notice?

The stairstep decline is underway and it will not stop. The price of oil will drop steadily now down into perhaps the 20.00-30.00/per barrel WTI range now as demand destruction picks up pace (hows that for you dudes up at McMurray eh?)

This is the result of rapid draw back of the human economic engines…..give it a year or so now…then the rapid price rise starts again…but it only takes say $90.00 WTI to crash the system the third time…all the while the economies of the world grind down…..

Doomer, schmoomer….ya’ll need a bit more common sense and a little less pump and dump in your mantra…..

#130 bigrider on 08.09.11 at 4:35 pm

Disciple at #113. “not sure PHYS is a good investment for Canadians..attached at the hip to the U.S dollar”

Could you explain your position on this further abit further?. Not sure I catch your drift on that comment.

#131 BPOE on 08.09.11 at 4:37 pm

Bernake now following the BPOE lead. Folks you know what this means for Canadian Real Estate. Not INTEREST RATE HIKES. Folks, watch your mailboxes as cheap money floods big time from the banks and credit cards. Folks this is all unfolding as I envisioned
****************************************
Stocks at first dipped after the Federal Reserve said during the afternoon that it plans to keep interest rates “exceptionally low” until at least mid-2013 in response to a recent slowdown in the U.S. recovery.

#132 BigAl (Original) on 08.09.11 at 4:46 pm

Listening to news media, I’d swear I was listening to a late-night infomercial selling success tapes, like Tony Robbins.
“Just THINK success, and it will come to you. Your realities don’t matter”.

Market crashes are called “drawdowns”. Markets rallying are called “surges”.

Something stinks.

#133 Victoria Tea Party on 08.09.11 at 5:59 pm

#’s 119 – 120 – 121 – 122 Circle Jerk

I think the Fed ALREADY announced QE 3, of a sort, today.

In its stated plan to keep interest rates at current low levels into 2013 (because economic growth will suck for years to come in the US), they have cleared the way for manic public borrowings and thus eventual INFLATION (as an antidote)!

Instead of printing up mad-amounts of money the Fed/Treasury will lay that job on a very stupid public.

How?

Easy: for the investor and consumer, he or she has never seen a better time to respond to those old investment maxims: return “OF” capital (bond markets’ low yields) and return “ON” capital (the stock market).

That’s the nub of the whole deal barfed up by Ben & Friends this date.

Investors can now borrow their little hearts out and place other peoples’ money in their TFSAs, RRSPs, cash accounts, whatever. Stock and bond markets will flourish, for now.

As consumers these same investors can ALSO arrange more HELOCs (for granite and stainless), car leases, bank loans and even more real estate!

Why? Because low interest rates are here to stay for another couple of years anyway. By the time 2013 rolls around who knows WHAT money will cost? And who the hell cares? It’s all good! Live for NOW!

Where will the money come from? Why bank investors/customers and, in the US, ALSO from those TBTF banks which have been hoarding that “free” money from the US Treasury since 2008.

At last they’ve found a new sucker-base to lend to! “Thanks Ben! We owe you one! Dinner on Saturday? OK, Boy!”

Those guys will be able to lend that loot out for low rates to start. Then as inflation starts to heat up, those rates will increase!

Even US government debts will now be paid off, to gipped lenders, through degraded, inflation-infected US dollars!

Inflation, HOWEVER, is cruel. Because left unchecked it could create the next Weimar Republic!

The pols and gnomes in DC couldn’t light a candle to save their souls.

So, a word to the wise; travel carefully through life while those idiots remain in charge.

QE 3 is not REALLY what it seems to be: investor/consumer nirvana.

More like Hell on Wheels down that long, lonesome road!

#134 Blacksheep on 08.09.11 at 6:28 pm

NO interest rate hike for TWO YEARS, guaranteed by the Bernanke.

New three step plan,

1] Stay 95 % invested in Bullion PMs [held with Sprott]
2] Get the biggest frig-gen ZERO DOWN mortgage I can
and join the fray in Van.
3] LET HER RIDE!

What could go wrong?

take care
Blacksheep

#135 InvestX on 08.09.11 at 6:36 pm

WEll, well, well… low rates are expected to remain in the US until 2013. I had asked here a few years ago why prolonged low rates couldn’t be a possibble like in Japan. I was told it was different, that competition in the world bond market would prevent that. (But strangely that didn’t apply to Japan?)

Hmmm… from today’s news:

“The U.S. Federal Reserve concluded is meeting on interest rates with the announcement that it was keeping interest rates near zero. And the central bank added that it expects to keep rates low through mid-2013. The Fed had previously only said that it would keep rates low for “an extended period.””

http://money.ca.msn.com/investing/news/business-news/tsx-up-fed-commits-to-low-rates-to-2013-3

#136 b on 08.09.11 at 7:10 pm

“America’s not insolvent when the world rushes under its skirts for safety.”

More like America is the best looking horse in the glue factory.

“No depression coming.”

What is USA in right now with roughly 50 million on food stamps, over 9% unemployed (using older definitions over 20%), and price inflation tearing a new hole in socks?

In the meantime holders of gold sleep well and don’t worry about pontificating on the volatility of the stock market…

#137 b on 08.09.11 at 7:16 pm

“See what I mean? Irony.”

The irony is you missed the bigger picture about the USA and government machinations.

It wasn’t about the debt ceiling, it was about the formation of a super congress which some lawmakers are saying it gives a select appointed few more power than the German government gave itself during WW2.

#138 Smoking Man on 08.09.11 at 7:39 pm

http://www.topyields.nl/Top-dividend-yields-of-TSX60.php

Bubble Heads I killed my shorts, took 20% of my equity money and bought back in…If tommorow looks good the rest goes in.

Look at the link TSE60 best yield Div Stocks Like today will be buying all but YLO & telecoms.. Going to keep my bonds for a while more.

Making Money is so easy………

#139 Utopia on 08.09.11 at 7:47 pm

Told you there would be no QE3.

That means commodities will continue to decline. Oil could easily fall to 70 dollars. It was after all oil, corn, sugar, copper, wheat and a host of others resources increasing dramatically in price that returned us to the brink of recession and killed off any possibility of growth in the West.

Low commodity prices are a form of stimulus in fact and the Fed has now recognized this. As a result you will see much more money flowing into equities (as we witnessed today with it’s frantic last minute buying on yesterdays dip.

I do not for a moment think the correction is over yet though so take care out there. While many picked up bargains today I still believe another opportunity will arrive soon. There are still a great many headwinds facing us and volatility should be dramatic right through fall.

The FOMC statements on interest rates are another matter. By all rights rates would normally rise on a credit downgrade. We will have to watch and see how Fitch and Moody’s respond in the coming months.

My expectation is they will take no action.

#140 Two-thirds on 08.09.11 at 7:50 pm

On the Canadian RE front, an interesting MSM article:

“How long can the housing market hold up?

The housing market and the Canadian economy as a whole are more susceptible to an economic downturn than they were at the outset of the 2008-2009 recession, said Diana Petramala, an economist with TD Bank.

“Households aren’t starting in a position where they have a strong ability to take on more debt (and) continue spending despite the economic downturn and help drive a recovery,” Petramala said.

“I think at this point . . . households would start to ease on their rate of borrowing and probably cut back on purchases.”

Any continuation of stock market volatility could weaken consumer and business confidence, meaning that households may hold back on big ticket purchases like home buying and developers could be jittery about new builds, she added.

“Home prices in Canada are 10 to 15 per cent overvalued, particularly in Toronto and Vancouver,” she said. “That certainly leaves the market susceptible to any potential economic downturn.”

TD Economics has predicted that home prices will contract by about 16 per cent in 2011-2012, but Petramala said that could now happen sooner than expected.”

http://money.ca.msn.com/investing/news/business-news/how-long-can-the-housing-market-hold-up-2

#141 Killer Chicken or Imploding Boomer? on 08.09.11 at 7:55 pm

101 Kilby – It certainly does look like Penticton has a lot of debt

http://www.penticton.ca/accounting/documents/CoP%202010%20Financial%20Statements.pdf

It nets out at about $42M in the hole, so over $1K per resident. Checked a few other towns – Nanaimo had some
easy to understand statements. Looks like they are in the
black.

I believe some American cities are several times that amount in debt.

#142 Buford Wilson on 08.09.11 at 8:02 pm

Don’t worry about the US.

It’ll be back stronger than ever.

#143 Oasis on 08.09.11 at 8:05 pm

what an absolute STUNNING COLLAPSE of the USD today.
STUNNING absolutely STUNNING collapse against the Swiss Franc. anyone surprised?

#144 TurnerNation on 08.09.11 at 8:09 pm

Ripple effect in USA!

DTCC Unit Making Extra Margin Calls
August 9, 2011 Chris Kentouris

The Depository Trust & Clearing Corp. on Tuesday said that its equities clearinghouse is responding to market volatility and reducing counterparty risk for its members through extra “intra-day” margin calls.

The margin calls are being carried out by the National Securities Clearing Corporation (NSCC), a subsidiary of the securities industry utility that provides clearing, settlement, risk management, and central counterparty services for broker-to-broker trades.

The extra margin calls started the day before the downgrading of U.S. government debt by Standard & Poor’s. The extra calls will continue until markets settle down, the DTCC subsidiary said.

On Sunday, the Depository Trust & Clearing Corp. said it would not reduce the valuations it placed on collateral used by its members in securities transactions it handles. This, even though U.S. Treasuries are often used as collateral and S&P downgraded the rating of U.S. government securities.

On Monday, S&P downgraded its triple-A rating on DTCC’s subsidiaries Depository Trust Company, Fixed Income Clearing Corp and National Securities Clearing Corp. to double A+, the same as U.S. government debt.

The three organizations are critical to the U.S. financial market: DTC is the U.S. central depository system which settles U.S. equity and fixed income transactions while FICC and NSCC clear those transactions.

In a statement issued on Monday morning, DTCC downplayed the impact of S&P’s downgrade. “We do not anticipate any changes in our operations as a result of this revision of our credit rating,” said DTCC. Prior to the downgrade today, DTC and NSCC had received S&P’s Triple A rating for nine consecutive years and FICC for six.

#145 Diana on 08.09.11 at 8:21 pm

@91 Kevin in Winnipeg

Thanks for the link, I’d missed this article earlier today. The pandering is sickening, but unsurprising. Here’s some fun numbers that they aren’t sharing with us in the round up;

Average dwelling price down 4.75% from last month (June 2011)

Lowest average price since February 2011.

Sold 270 units less than June 2011. (Didn’t manage to match May’s numbers either)

As a side note, Winnipeg’s most expensive property is back on the market.

http://www.realtor.ca/propertyDetails.aspx?propertyId=10718790&PidKey=-1590622876

Note the 5.9M price tag. When they listed it in May of 2010, it was for 7.45M. Think they’ll have any better luck this time?

#146 Oasis on 08.09.11 at 8:22 pm

Bernanke has guaranteed a dollar collapse and commodity price increases with his policy statement. We’re about to see prices skyrocket like we’ve not seen in most of our lifetimes. Well done.

Rubbish. — Garth

#147 Ex-Cowtown on 08.09.11 at 8:26 pm

Bernanke guaranteed a royal pooch screwing this time. By signaling ZIRP for the next two years the hangover when the party stops will be far worse than it should have been.

Nothing like handing more crack over to the crack-heads. When the “Super-committee” fails to reach an agreement, look for more downgrades.

Nothing like showing your creditors that your plan to deal with your debt problem is to get a few more credit cards.

#148 unbalanced on 08.09.11 at 8:27 pm

To the Smoking Man. When did we become friends? I had to stop reading your rants and raves. Oh by the way. I’m retired at 53. Don’t work unless I want to. See Ya !

#149 T.O. Bubble Boy on 08.09.11 at 8:49 pm

ok – how much more obvious can the gas price-fixing be?

Oil prices dive below $80 today (closing just above that), and suddenly some maintenance and upgrades at a few different refineries take “longer than expected”???

http://www.theglobeandmail.com/news/national/toronto/shortage-at-some-shell-gas-pumps-after-delay-at-refinery/article2124353/

#150 ballingsford on 08.09.11 at 8:55 pm

Today’s market rise was a mystery to me, but it’ll go down again like it did the last time a couple of years ago.

Things are not as apparent as they seem. Today’s advice from all the financial gurus was to buy the bargain stocks from yesterday’s sell off. And so it happened. Good advice or not, I do not know.

I was contemplating after my child asked me to do something for him this evening. I thought, what was the most challenging part of my experience so far about raising my almost 4 yr old son? I now realize the biggest challenge so far is trying to figure out how to turn one of those transformer toys into a vehicle and vice versa. Took me about a half an hour to figure it out.

No wonder I can’t figure out what causing these crazy stock market swings! The mystery remains and I know I’m not the sharpest tool in the shed to figure it out.

#151 Kevin in Winnipeg on 08.09.11 at 9:10 pm

#146 Diana

Not a problem. What data were you using for the decrease of 4.75%?

I have noticed less and less information in Winnipeg Real Estate Board reports lately. Shady little creatures.

#152 Smoking Man on 08.09.11 at 9:19 pm

#149 unbalanced on 08.09.11 at 8:27 pm

Dude I am famous on here, I just elevated you from obscurity, you are now known, thanks to me. Come on I wana here it, “thank you smoking man” and yes I will accept you as a friend…….un-conditionaly un-balanced :)

Re retirement I had you beat by about 10 years. Maybe even 15

I had a promising carrier as a rivet bucker at de havilland aircraft till I went on strike, went begging for a job at a company that made aluminum doors, owner liked me, gave me a catolog and some free stock and said go sell it door to door.

In a month I made a years salary as a rivet bucker……..rest is history… But we evolve, go on to bigger and better things………But the one thing I have never done in my business life is kissed butt…..I’m a prick

But analyzing your few posts…..I don’t sense that you have had that same freedom.

Happy retirement…. Dude

#153 maxx on 08.09.11 at 9:30 pm

#70 Two-thirds on 08.09.11 at 1:46 am

“why sit on so much $$$ if the future outlook is not doom and gloom?”

Excellent question. So are many individuals….perhaps more than a little concerned about inevitable black swan events, lack of conviction that substantial employment and economic improvement will return anytime soon, more unexpected “irrational” market behaviour, increasing demographic demand on social programs, profligate consumer spending and indebtedness spreading like wildfire….in a word, uncertainty.

IMHO, money is spread so badly amongst humanity that I’m more than a little convinced that we are collectively heading to a sociologically very unhealthy destination. Queue increased spending by all on security.

Money is accelerating into fewer and fewer hands and an increasing number of our confrères are feeling marginalized and unable to get traction to a life of full participation. What this will mean to all of us in 5, 10, 20 years doesn’t take much imagination to envision.

I firmly believe that all of our economy’s engines need to be employed; not just the stock markets and highly complex mechanisms of wealth generation, but a return to balance which includes healthy returns on fixed income investments- even GIC’s. Money needs to moderate to a less Darwinian formula for its accumulation and distribution. Not sexy du tout, but perhaps this would work better for many, many more.

#154 mid-Ontario on 08.09.11 at 9:39 pm

“American debt gets downgraded, so skittish investors immediately panic and sell good equities so they can huddle in the security of US debt. And secure it is – the safest haven on the planet.” -Garth

Nothing more than group think hiding under a tree in a thunderstorm. No lightning strike this time but more storms are coming. Only a matter of time before the group is wiped out.

The US will never be the same. The sun is going down on the greediest nation in history(the last 40 years), not counting Britain, France and Spain in their heyday and maybe Mesopotania (still under study). On yes; can’t forget Rome.

#155 eaglebay - Red Deer on 08.09.11 at 9:41 pm

#130 arctodus

You’re the doomer. Oil will never go back to $30.00.
Do you know how much it cost to get the oil, after peak oil, out of the ground?
Dream on. Oil will never get below $80.00.
The higher price of oil is good for our economy. More things will have to be made in North America. It’s happening now. Shipping can be a killer.
North America is doing great and it can only get better.
Necessities have to be provided to the people.
The stock market is where to be now.
Do your due diligence and with the fundamentals how can you go wrong.

#156 mike on 08.09.11 at 9:50 pm

My theory is the US is driving down the price of the dollar to decrease the amount of Chinese holdings.

Discuss….

#157 disciple on 08.09.11 at 10:10 pm

bigrider…I’m making a bunch of assumptions but my opinion is that if physical gold or ETFs are inversely correlated with the US dollar while at the same time is priced in US dollars, and if the CAD follows the USD into toilet paper territory (it’s a big IF, I know), as a physical gold investor in Canada, you will have to accept that toilet paper to realize any gains, which of course, is illogical.

#158 An Cat Dubh on 08.09.11 at 10:23 pm

Penticton can’t be in the hole financially. I see many municipal employees driving large pickups and flatbeds going to flowerbeds and walkways pulling weeds.
;)

As far as the huge amount of listings for a relatively small city, Garth was right that prices are sticky on the way down. Some seem to be stuck with crazy glue.

#159 Diana on 08.09.11 at 10:34 pm

@ Kevin in Winnipeg

If you go to http://www.realestatemanitoba.com there’s a link to the statistics page at the bottom. Its got general information on number of units sold, average price etc for the last 10 years or so by month. The July numbers aren’t posted yet, but the news report you linked has some of the numbers in the sidebar. Average house price was total sold divided by number of units.

#160 arctodus on 08.10.11 at 8:50 am

156

I am a doomer….you are correct…

We have passed peak of oil production….that is correct

What you fail to understand is how demand destruction works in a global agroindustrial militarized economy.

Oil WILL crash in price just like it did in 2009…it will rapidly rise up again but it will crash again….the economies of the world are in hard contraction…the “extremities” of the worlds economies are dying now…..and the blood (oil) is not being delivered there.

In Canada our great mistake (and conceit) is that we fail to understand this dynamic….

I do understand fundamentals…to my great dismay….

#161 Jake T. on 08.10.11 at 10:36 am

the Dow Jones is down 428 points it should be down 4280 points.Ha!Ha!Ha!Ha! The Japanese malaise is coming.