Contrarians

It won’t be rogue politicians, Greek degenerates, American debt or locusts which threaten your family’s financial security. Nope. It’ll be your own emotions. Most people generally suck when it comes to making reasonable decisions about money, which helps explain why they don’t have any. Of course, they possess stuff. Flat screen TVs, iPads, houses, SUVs and SS appliances. They’ve traded savings and long-term debt for things that depreciate.  Bummer.

Some folks believe paying down a mortgage is ‘investing’ in a house and view it as a forced savings plan. That’s a stretch when most mortgage payments are 90% interest, when rates can change, when you’re consolidating your net worth in a single asset which doesn’t pay interest or dividends, which costs you money to own and whose value you cannot control.

Others eschew risk, they think, by keeping money in GICs or savings accounts with [email protected] or in the orange guy’s shorts. Sadly, they fail. Savings rates will remain below inflation for years, and the entire proceeds (outside an RRSP or TFSA) are taxable. Not only are you losing value every day, but you’re courting the greatest danger of all (especially for women): running out of money.

Greed makes us buy houses in a rising market. Fear makes us shelter money in dead-end assets. Greed goads us into taking risks. Fear forces us to sell. Paper losses become real ones. With investing, emotions defeat logic. Unless you’re a contrarian. They you get horny just thinking about my rules:

  • Don’t invest for the present, but the future. Ignore what’s hot and trendy. Most investors have no idea what they’re doing.
  • There’s a lot to be said for contrarian investing. The majority of people notice trends long after they’ve started, pile in late and fail to clue in when the party’s ending. Real estate and gold are prime examples. Despite the abuse, bet against the herd. It always works in the long run.
  • Active management beats the pants off buy-and-hold. Incredibly, most people think current conditions will last indefinitely instead of being a bridge to the next phase of the cycle. They’ll be surprised.
  • So, asset allocation is critical. Divide what you have to invest among the three main asset classes (cash-type securities, fixed income and equity-based assets), and don’t get blown off course by a hot stock tip or a market swoon, like that which started four weeks ago. Just recall how many people missed cashing in at the top of the tech boom in 2000, or stampeded out at the bottom in 2009. Contrarians buy low and sell high. The losers buy high and sell low.
  • Never invest in anything without knowing how you`re going to pay tax on the proceeds – as income, capital gains or dividends. This can seriously alter how much you keep. Tax-smart investing is not even on the radar of most Canadian families. Earn every nickel of interest inside a TFSA or an RRSP, and shovel equity mutual funds out.
  • Understand economic and market cycles, or at least talk to somebody who does. Today timing is far more critical than in the past as we slog through a period of slow growth and range-bound markets. Remember that moments of maximum despair are usually those of greatest upward opportunity, while the times when society’s most confident and bullish are the days to reap profits and sit on the sidelines in cash.
  • Work back from your goal to set investing priorities. If you need $500,000 at age 60, and you’re starting from scratch twenty years earlier, then GICs and bonds won’t cut it. Find an asset allocation that does. Do not obsess about what little you have, but how much you will achieve.
  • Make the maximum use of tax avoidance, tax deferral and tax minimization. That means tax-deductible investment loans, a tax-deductible mortgage, RRSPs and RRIFs, strategies using the tax-free savings account (TFSA) and also registered education savings plans. Canada’s actually a tax avoider’s paradise.
  • Deduct your age from 100 to get equity exposure. Ninety minus your age gives the percentage of your total net worth a house should represent. Most Canadians have four-fifths of their wealth in one asset, their homes, making them undiversified and leveraging risk. Houses can turn illiquid in a hurry.
  • Learn and do as much as you can, but never risk your security by trying to do everything. Most investors don’t even come into contact with new bond offerings, structured products or hot preferreds. A fee-based advisor will design a portfolio, build it, monitor it, and worry about your returns and taxes for 1% of its value, while refusing to take commissions. You don’t need this to succeed, but it lets you get on with the rest of your life, and post here eleven times a day.

Realize that most people throw out advice just to support their own choices. Every day on this blog you get unvarnished examples from Vancouver real estate promoters, gold pumpers, stock humpers, GIC weenies or GTA condoholics.

But there is no silver bullet. No one thing that works for all. That’s emotional fiction. Get over it.

So when you’re aroused by advice in the comments section, just take a roll in the hay instead. Way more profitable.

134 comments ↓

#1 Nemesis on 09.11.11 at 9:02 pm

You’d be surprised how many ‘pigs’ you have to kiss before you find a ‘Muse’, GT.

Just pucker. — Garth

#2 One Thing You Missed on 09.11.11 at 9:11 pm

Great list Garth, but you missed one thing: reign in your spending! Mark Cuban says this offers the average investor the greatest ROI. Stop buying crap! Then you won’t be in the position where you’ve traded debt for “stuff”.

Cutting back on spending should be number one on your list. Once you’ve done this, you can then invest your savings.

#3 that little bugger.... on 09.11.11 at 9:24 pm

will give us all swine flu

#4 sebastian on 09.11.11 at 9:36 pm

just moved back to vancouver and it is unbelievable. talked to a local who thinks his 1000 sqft condo that is priced at 800 large is going to keep going up. He purchased the property in 08 for 400 large. Told him i just went to an open house down the street and it was reduced 80 grand, he told me that it was impossible that there was probably a structural problem with the building. I told him that the only structural problem was the cells in his brain. I guess i will enjoy my cash and keep renting. oh and keep buying those great little investment properties in south western ontario. Picked one up for 50 grand and it nets me 500 per month.
thanks garth

#5 Santa on 09.11.11 at 9:41 pm

Garth.
Love you.
Don’t tell my wife, hope we never meet :)

#6 Darkman on 09.11.11 at 9:42 pm

Time the markets! As if, 50% of the posters on this blog won’t buy a house unless you tell them it’s OK, the majority of the other half don’t know what ETFs are. Time the markets, that’s the funniest thing you’ve written all week!

I said: “Today timing is far more critical than in the past as we slog through a period of slow growth and range-bound markets. Remember that moments of maximum despair are usually those of greatest upward opportunity, while the times when society’s most confident and bullish are the days to reap profits and sit on the sidelines in cash.” I’m sorry about your reading disability. — Garth

#7 Robert Dudek on 09.11.11 at 9:43 pm

Garth, you forgot the most important rule of investing:

Be right and sit tight.

In other words, identify a bull market in its early stages, and have the discipline to maintain a core position until it is fully mature (you can buy the dips and sell the spikes with your non-core position).

This is the main technique Soros used to get rich.

#8 mississaugasold on 09.11.11 at 9:47 pm

This list is wonderful and continues to hammer home what you outlines in Money Road. Hopefully this will satisfy those who ask for “advice” on here.

Wonderful post as always :)

#9 MGTF on 09.11.11 at 9:49 pm

Thank you Garth for moving beyond the disaster awaiting in RE. Your check-list is working for me – I’m on the targets you suggest, except under invested at the moment, holding cash ’cause I sold out of equities last winter. With all the current panic, I’ve been getting back in.
Happy accident – I listened to the doomers and bailed out, accidentally near the peak. (Even a stopped clock …) Sometimes you get lemons, sometimes horseshoes.
I won’t try that dumb trick again.
PS – love the book!

#10 Montrealer on 09.11.11 at 9:54 pm

[email protected]”, I had to think for a few seconds on this one!

#11 The InvestorsFriend (Shawn Allen) on 09.11.11 at 9:56 pm

Good advice mostly in today’s article but I must take exception to one false claim.

Garth said above that:

“•Active management beats the pants off buy-and-hold.”

Well, yes Active CAN beat buy and hold for some investors but in order for that to be true some other ACTIVE investors HAVE to lose.

The logic is simple and inescapble. And was pointed out first I believe by professor William Sharpe of CAPM fame.

1. Investors as a population will have an average return (before trading costs) exactly equal to the index return. The index here is defined as the average return.

2. Buy and Hold investors are passive and by definition get the index return (before costs). (They ALL get the average not just some but ALL of them) With buy and hold and passive defined as investing in the index (or at least very widely diversified).

3. By subtraction the whole population of Active investors MUST also get the index return (before costs).

Now SOME active investors will win big as some other active investors lose and do worse than the index. But the math dictates that as a population the active investors average out to the index (before costs).

Passive and buy and hold investors have lower costs (due to less trading) and so after costs the average active investor MUST under-perform the passive and buy and hold investors, who all get the average. (It sucks to be average)

Now we all think we can do better than average and if so, go ahead and be active. Just rememeber you are trying to win a game at which the average player MUST lose. (Think lottery but with better odds).

But don’t take my word for it.

Warren buffett has explained it all in his 2005 annual letter (published early 2006) , see pages 18 and 19.

http://www.berkshirehathaway.com/letters/2005ltr.pdf

Sorry, Garth but it seems Buffett points out that it is impossible for the average active investor to do better than average.

(well diversified) Buy and Hold / passive investors give up any chance of beating the index and in return are guranteed to make an average return.

Active investors HOPE to beat the average but risk being below average. In aggregate and on average, after costs, this group trails the buy and hold crowd. The math is irrefutable.

P.S. Hey was that “stock humper” comment directed at me? I don’t think I ever “humped” a stock. Sounds interesting though. I may have gotten aroused by a stock or two but I stopped short of “humping” any.

#12 Two-thirds on 09.11.11 at 9:57 pm

Just anticipating the inevitable question:

[email protected] = the nice lady at the bank

:)

#13 walter safety on 09.11.11 at 9:58 pm

Just back from the best place on earth(BPOE), that would be PEI. More than two billion in debt with only 145,000 people.
Imagine the lifestyle over the last 25 years that the citizens haven’t had to fund with taxes. Government funded bathrooms,oil tanks,roads to nowhere, boats and cars for friends of the political class(i can explain if you don’t know how its done), Regis and Kathy,Elton this week ,deals to create jobs with business, more deals when the created jobs are uncreated.
As they say on the island in an election year “if it moves give it a job if it doesn’t -pave it ”
How well would you live where the average house is 161,000.? Hey , sounds high,lots of decent wood frame houses are under 100K with waterfront.
Should I mention EI Garth? You know ,pay your workers $1200 a week (they will dish back $400 in cash)so they can draw the max EI .
I’m calling first dibs on the debt never being repaid .How can the good citizens repay that amount-they can’t or won’t . At least not the ones now living.
All the benefits of living in Canada paid for by other people that’s what gets the votes.
$175 million in transfer payments came in the last 4 years and still the debt went up .
Thanks for the bridge too ,stainless and granite usually delivered within 48 hrs.
There are concerns however that all the windmills could cause the island to break loose from its moorings

#14 The InvestorsFriend (Shawn Allen) on 09.11.11 at 10:00 pm

P.S. about stock humping…

On reflection I did get scr**ed by a few stocks if that counts…

#15 Timing is Everything on 09.11.11 at 10:03 pm

Excellent post Garth. Thanks.

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

#16 Jane24 on 09.11.11 at 10:05 pm

Have to agree that the best investment is indeed to stop buying crap. Ask yourself ‘do I really NEED this?’ The answer is usually no.

I try every Sunday to send stuff to the charity shop or throw something away and as the junk around here goes down i feel so liberated. Plus of course you don’t have to maintain or insure it all either!!

#17 Onemorething on 09.11.11 at 10:10 pm

Good Sound Advice, 1 in 10,000 will execute. You might try and be one!

Buy and hold is dead as long as emotion rules us.

#18 Jackie on 09.11.11 at 10:20 pm

Thank you for the good advice again, I am glad I have your books already.

#19 Elmer on 09.11.11 at 10:28 pm

a single asset which doesn’t pay interest or dividends

it does if you let in a boarder.

#20 Tim on 09.11.11 at 10:29 pm

Actually, active management does not beat the pants of passive investing. Studies have shown that 75-80% of mutual funds have failed to be the index. Add to this the outrageous fees and you can see why it doesn’t make sense to pay these boobs who fail to deliver consistent returns and charge outrageous fees. If you average 10 percent a year and you have to pay 2.5 percent of that to these fund managers for the MER and trailer fees then you are giving away 25% of your profits. If you buy a blue chip dividend paying stock and hold it for ten years you pay almost nothing- $10 to buy it and $10 to sell it. IF you insist on active management and want to buy funds at least go with something with low fees like PH&N or Saxxon. Why pay the marketing people’s salaries to promote their funds?

You got that wrong. My statement was not about mutual funds, but rather the active management of low-cost EFTs. BTW, most people should have nothing to do with direct equity investing. — Garth

#21 Andrew on 09.11.11 at 10:39 pm

#11 great post.

Still think gold is the opposite of a bubble, though. Hardly anyone owns any of the stocks or the metal itself. Just goes to put into perspective how insanely undervalued it was 10 years ago.

#22 noworries on 09.11.11 at 10:43 pm

Overheard folks talking about housing in waterloo and said their friends have been trying to sell their house for a while. Have dropped their price quite a bit but no bites. I’m sure there is more to come as people are afraid. Slowly but surely

#23 T.O. Bubble Boy on 09.11.11 at 10:45 pm

So, let’s say you’re sitting on an extra $4M, and want to buy a nice home.

You could consider one of these amazing Vancouver options:
The complete tear-down
or
The already torn down, but not re-built
or even
The “remodeled” place that still has 80’s cabinets

Or, maybe turn your sights to the U.S…. say Las Vegas, where $3.9M gets you:
http://realestate.aol.com/blog/2011/09/07/house-of-the-day-almost-a-sure-thing-in-las-vegas/

#24 Aussie Roy on 09.11.11 at 10:49 pm

Aussie Update

With the number of properties in Melbourne at record highs and listings set to increase over the spring, agents throughout the city are telling growing numbers of vendors that they can keep the house and are walking away.

http://www.heraldsun.com.au/news/more-news/agents-dump-sellers-over-dream-2010-prices/story-fn7x8me2-1226133874621

The number of first-time buyers entering the market has fallen to its lowest level in seven years despite the 20 per cent discount becoming available about five months ago.

http://www.theage.com.au/victoria/duty-cut-fails-to-help-first-home-buyers-20110910-1k39g.html#ixzz1Xha3enyx

AUSTRALIA’S love affair with property is about to turn sour as an “economic tsunami” looks set to hit world markets

http://www.news.com.au/money/property/check-out-jennifer-hawkins-lavish-new-mansion-in-north-curl-curl/story-e6frfmd0-1226134187959#ixzz1XhaHwgKx

Of the 250,000 properties sold, 15,500 went for less than the owners paid. On average, they lost $52,000.

In Blacktown, 312 of 3050 properties sold at a loss.

http://www.dailytelegraph.com.au/news/city-lost-800m-on-houses-in-three-years/story-e6freuy9-1226133948781

We must protect our banks.

Government to insure deposit accounts

http://www.news.com.au/breaking-news/government-to-insure-deposit-accounts/story-e6frfku0-1226134203503

Australia, where home prices are falling at the fastest rate in more than two years, may have a glut of properties and be set for a U.S.-style crash.

http://www.bloomberg.com/news/2011-09-11/housing-bears-say-shortage-myth-means-australia-set-for-crash.html

FAKE FUNNY STORY re Aussie housing

During the PMs announcement of the Bonox stimulus she applauded Pinocciho Joye and HIA’s efforts to assist the RSPCA by building luxurious dog boxes on the outskirts on Australian cities and chicken coops within the city centres.

http://www.thespoof.com/news/spoof.cfm?headline=s3i99971

Now for some light relief.

AUSSIE beauty Scherri-Lee Biggs is caught in the middle of a drama-filled Miss Universe pageant.
The leggy 21-year-old has been told her satin evening gown is offensively “see-through” and her bikini way too sexy.

Ranked third in the US betting market at 14/1, Biggs is not the only contestant feeling the heat – organisers have put a blow torch on Miss Colombia, warning her: “Don’t forget your underwear.”

http://www.news.com.au/entertainment/fashion/sexy-miss-universe-australia-scherri-lee-biggs-told-to-cover-up/story-e6frfn7i-1226133852058#ixzz1Xhbz6TFK

#25 Nostradamus Le Mad Vlad on 09.11.11 at 10:55 pm


Gotta say, with this blog you’re Back On Boogie Street. Song is almost as good as the post!

Bummer Contrarians. Does that mean not buying lottery tickets, yet able to live comfortably? If yes, I’d take it in a heartbeat. Lottery tix are a tax on the poor.

“Of course, they possess stuff.” — Indeed, but contrarians only get what they need, not the material garbage which breaks down two months after the warranty has expired.

“Greed goads us [and] Fear forces us.” — Only if people let their emotions run their lives and, unfortunately, most do. When one learns how simple it is to run a life, without emotions cluttering things up, life turns into a dazzling adventure.

BTW, great investment advice.
*
Norway sues BoA. Just about everyone else is, anyway. Second link; Egypt’s stock market is down slightly, and Oil down. Smoking Man is onto something; Backing Garth’s post, this. Utilities are also shooting up, as well; China wanted stake in US banks, but didn’t get them; 4:08 clip FOX pumps the gold standard. Does the US have any? Who Runs The World? Charts, con. theories and other stuff; Source If a real news story is wanted, about Obama’s jobs plan, don’t go to the m$m.

UK Pensions See? Govts. can change the rules at any time, so don’t rule out the CPC killing RRSPs and just going with TFSAs; Snooping Obama will be able to do it in Jan., so how long Harper, plus Gutting SS prior to the election; China A guess is that these could all be connected in some way; Is he ever right on this, and because the US is in deep fiscal seagull shit, they have no reason to end the wars, so somebody or thing will have to stop them.

Food Scarcity Better yet, be relatively self-sufficient; Familiarity Breeds Contempt Does this sound different? Just the first few sentences says otherwise; Rick Perry’s Texas Sure glad I don’t live there; ??????
Re: 9-11 Remote control planes have been flying since 1917 (with breaks), and Civil Liberties A decade after 9-11; As if we didn’t know. Neither did Pakistan, Egypt or anyone else (except one country); Think the GoM spill was bad? Try the North Sea.
*
3:02 clip New video of ObL. He rebirthed as GW. Caution: It is funny, and may cause you to lose control of yourself.

#26 Calgary Illusion on 09.11.11 at 11:02 pm

Garth, when you invest a few hundred thousand with an advisor for 1% – what guarantee does a person have that they don’t run away with your money (i.e. Earl Jones) or the firm go bankrupt? Is there some kind of protection for customers against this?

Earl Jones was an imposter. Unregistered and unlicensed. Two minutes on Google would have revealed that. — Garth

#27 Bottoms_Up on 09.11.11 at 11:05 pm

Hi Garth,

Nice post, a couple quick questions:

1) when taking out an investment loan, can one expect a rate similar to mortgage rates (or will it be higher)?

2) how do you recommend paying the IL back? (i.e. make interest-only payments, or pay it back on a certain time frame such as over 5 or 10 years)?

Thanks!

Go for prime (3%), and interest-only payments. — Garth

#28 April on 09.11.11 at 11:09 pm

Re #6 – Dark man. “I’m sorry about your reading disability” – Garth.

Right on Garth. Love it!

#29 Joe on 09.11.11 at 11:09 pm

Great post tonight, Garth. Thanks!

#30 db.cooper on 09.11.11 at 11:09 pm

first

#31 Freedom 85 on 09.11.11 at 11:14 pm

Garth,

As a %-age of net worth:
House: 31%
Farm Land: 14%
RRSP’s: 30%
Toys, cars, stuff: 15%
Cash: 10%

Age:47

Total debt outstanding: Approx. $50K used for investment purposes.

I’ve been in gold and silver physical, stocks and PM mutuals and term deposits for the last 10 years and will continue to do so for the following reasons:

A) Gold and silver: As long as real rates of return are negative, gold, silver and solid gold and silver stock investments will provide superior rates of return. The stocks are on the launchpad, ready for take off. Soon, very soon.

B) Term deposits: Many investment managers diss this as an investment (probably because they is such nominal money to be made from transactions) however, some capital should be held risk free. In my view term deposits at 1-2% are better than stocks (at this time and always subject to change), bonds (although not true as of late due to monetary authority meddling such as QE1 and QE2, etc.), though I am accepting negative real returns (less perceived risk on the cash portion only). Thankfully the loonie has been holding up against most other currencies and our (CAD) prices have not really been rising that badly, save for some RE which is of no consequence to me as I am no longer in the (searching for property) market.

3) I am beginning to actively search out opportunities to spend my money and will do so over the next 2-3 years as I believe rapid depreciation of our currency over the forthcoming period of time will lead to it being better to buy stuff than hold cash.

This, to me, is the future over the next 5 year period and I am positioned with my money where my mouth is (though I will change at a moments notice should external factors change which falls in line with your active management concept somewhat).

The gold investments you so routinely diss (I look forward to a time when you are forced to capitulate and jump on the bandwagon for fear of a total credibility vacuum developing on this issue) have provided me with superlative returns and I believe will continue to do so until government policy changes to reflect stronger, not weaker currencies and productive policies not destructive ones. Alas, I doubt this will happen anytime soon as there is simply too much debt that has to be repudiated via inflation, deflation or a combination thereof.

With current woldwide government policies in place, you should see the following over the following decade:

1) Currency wars(already begun).
2) Trade wars/increasing protectionism (next).
3) REAL WAR.

It is my opinion that we currently fight in the middle east for control of the energy supply and maintaining the US dollar as the main oil trading currency. This is most certainly debatable but not something I am going to debate.

This comment is not a fear thing. It’s history and unless the governments of the world change things quickly, this will be the inevitable process………

#32 Fixed Income? on 09.11.11 at 11:17 pm

With 10 year bonds paying 2% right now, why would anyone want to have anything in fixed income? GiC’s pay more. What am I missing?

Knowledge. — Garth

#33 Utopia on 09.11.11 at 11:21 pm

Guess I did post eleven times.

It was actually over three days though to be fair. I do happen to agree that a fee based advisor is an excellent idea.

Investing is much more than just sticking bills in a sock drawer and hoping for the best in your old age these days. Actually, plain old fashioned saving is a damn good way to go broke in the long run and RRSP’s don’t cut it either where taxes are concerned. Too few can actively manage though and that is why the easy RRSP purchases are filling in and substituting for a lack of knowledge.

It is the Canadian version of buy and hold when you really have no idea what else to do. Just pick a plan from the book and pay into it until you retire.

Just no time in a day anymore.

You made a lot of good points above and what I am discovering lately is just how few people have the time to learn the basics of investing, never mind grasping all the pitfalls and hazards along the way.

There is just so little time in a day for most to engage with the opportunities as they present themselves and the investing world is now extremely volatile and under rapid change.

Going by your gut is not a good strategy.

A professional can help steer you away from some of the dangers that are just not obvious to most people and help devise a plan that actually makes money and is not crudely based on the neighbors lousy “Juniors” tips.

If one thing is clear after reading so many of the comments on this blog it is that the herd mentality is truly alive and well and a lot of people are going to go off the cliff if they are not more careful.

There are a few very savvy guys and gals who come here too but they are really in the minority and this just reflects the reality out there in the normal world where myth and hype still rule over common sense and facts. The gems are rare everywhere.

Looking forward to the next book, Garth. And now I need a new hobby. Will have to ration the posts a bit more…….maybe I will start building that greenhouse I have always wanted.

The tomatoes await.

#34 nonplused on 09.11.11 at 11:24 pm

God post today Garth, except it belongs on your “Money Road” website.

From yesterday:

#92 Junius

CERN has disproven global warming? OK, I am a CO2 based global warming sceptic, or at least I think such a trace element in the atmosphere can only be doing trace things even if it is contributing, but CERN? Do you even know what they are doing there? Sub-atomic high energy research has next to no bearing on what is essentially thermodynamics and the properties of regular matter.

#177 Cookie Monster and Garth in response:

You both disgust me. CM is right that any forced transfer of wealth is, well he didn’t say it but its slavery. On the other hand what Garth means is that there is a social contract we should all subscribe to. But Garth disgusts because he hasn’t ruled out coercion and CM disgusts because he won’t admit it has to be done.

Here is the rule: If the sheriff can’t raise a posse without bribing them, what the sheriff is trying to do is unjust.

But in Canada we do have a social contract (because we can afford it) that allows for shared health care and education, minimal support for retirees, and some support for the down and out. Most people don’t mind.

It’s true that the unions in health care and education have made the cost to the government of almost anything the do the most or near the most expensive of anywhere on the planet. But that is because we allow government employees to unionize, not because it shouldn’t be done.

The solution is simple: Ban government unions. Don’t ban all unions, heck GM’s employees can unionize all they want and I am sure most teachers have the skills to take a job on the assembly line if that is what they would rather do. But the only touch point you have for whether a civil servant is getting paid fairly for his job is whether or not he is willing to enter the private work force. Government jobs should be paid according to whether they can hire enough staff, not on union demands.

#35 meslippery on 09.11.11 at 11:35 pm

#13 Walter Safety
PEI in July and August yes but you got back just in time,
it could snow there any day now.
Unless you love winter ?
Windsor weather much better.

#36 pablo on 09.11.11 at 11:55 pm

That little guy has a bright future in animal husbandry or a mixed marriage in his future. But either way the parents just wont understand. nuk,nuk,nuk

#37 LH on 09.12.11 at 12:31 am

@ #2 One Thing You Missed

Agreed 100% ! or should I say 90%?
Since I graduated from college and started working 5 years ago, I have saved more than 90% of my after-tax income. This is the surest way to get rich in a deflationary (or at least disinflationary) environment.

LH

#38 BlorgDorg on 09.12.11 at 12:36 am

Just another little warning from south of the border. Coming soon to a neighbourhood near you!

http://www.sacbee.com/2011/08/29/3868485/generation-of-homeowners-stuck.html

#39 Thetruth on 09.12.11 at 12:42 am

Good post.

#40 BPOE on 09.12.11 at 12:49 am

Flatscreens, Iphones, Ipads, vacations are all good folks. Let’s face it you only go around this merry go round once. Junius might tell you otherwise but trust me this is a FACT. Had lucnh with a realtor the otehr day and is having trouble getting sales because his clients are getting outbidded! LOVE IT! But i digress. How best to enjoy your limited time? Vancouver! BPOE is only the beginning. Folks that bought the last few years are RICH and reaping the rewards of home ownership. Folks that bought stocks the last few years are sitting stuck in neutral. Folks, buy that house, get that credit line going and enjoy the good life. Your house is paid off in 25 years in a worst case scenario. You can rent a room or basement suite out. BPOE will always rise in value. You can get HUGE credit when you own a home as opposed to renting. Use this money to own the latest and greatest. Because folks your on a round trip ticket back to where you came from. AND THAT’S A FACT!

#41 Einsam Solo on 09.12.11 at 1:12 am

There’s a certain credit union here in BC whose slogan is “you don’t need to be a financial expert, you just need to know one.”

And what does their “expert” recommend? A 5-year term deposit (aka GIC) paying 2.40%.

Wow! Glad I didn’t do this financial planning thing on my own!

Never take advice from somebody with a product to sell. — Garth

#42 Hoof - Hearted on 09.12.11 at 1:25 am

Well………….at least Garth didn’t submit a “sell” on granite countertops…..

#43 rentin on 09.12.11 at 1:36 am

Despite the abuse, bet against the herd. It always works in the long run.

You could have bet against the Nortel herd after 2001.

#44 West Coast on 09.12.11 at 1:52 am

You’re not rich.

http://english.aljazeera.net/programmes/faultlines/2011/08/201181125338194522.html

#45 Jimbo on 09.12.11 at 2:04 am

Everyone I know owns real estate. But very few have gold. If they do, they have a Maple Leaf coin or two that they inherited from their grandfather or a couple thousand in “fun money” in junior penny stocks. Few would dream of loading up their RRSPs with junior gold producers and bullion ETFs because that would be… well… so CONTRARIAN.

#46 timo on 09.12.11 at 2:04 am

http://blip.tv/slowtv/on-debt-and-the-economy-how-do-we-pay-for-all-this-steve-keen-2834537

It seems there is a flight to safety going on. The US dollar has called NASA to launch a mission to the moon. Hopefully someone turns off the lights and smashes the emergency exit sign to stop this .

#47 Your Mom on 09.12.11 at 2:21 am

Lipstick in 100’s of flavours of fun for the kiddies too!

Well done post, perhaps the hint of a future template syllabus for Grade 12 financial management 301 classes coming soon from coast to coast to coast.

A consideration of contrarian investing: http://longharbourexploration.com/about_uranium/

#48 property bear on 09.12.11 at 3:15 am

http://www.whocrashedtheeconomy.com/blog/?p=1715

This graph shows Australian house prices as compared to US house prices. Would love to how Canadian house prices compare.

#49 Jay Currie on 09.12.11 at 3:25 am

As ever, sound advice for those able to hear it.

Your remark on market timing is causing a bit of a stir. I think you are right but I think people are betting the time horizon wrong as well as the asset class incorrect.

If you are an active investor in stocks, bank prefs, bonds, precious metals, energy ETFs and so on you may make a bit more return by buying when there is the proverbial “blood in the street”. When everyone has dumped the asset class is a brilliant time to buy. (See Naill Ferguson’s masterful history of the Rothchilds.)

But the cycles vary from asset class to asset class. I rent. I suspect I will rent for another couple of years and then have my company buy the house so it can take advantage of the depreciation. Because unlike energy stocks or Canadian banks, Canadian houses are poised for a long drop.

Things like resource stocks will go for a few years without any significant up movement but, when they pop, they will double your money. But a house at the end of a fifteen year buying jag which “costs” 800k has pretty much made all the gains it is going to. It might, in truly insane markets, add another 20% but it is certainly not going to double.

Timing the stock or bond market day to day is a game for fools – greater or lesser. However, looking for asset classes which are currently undervalued is not that tough. You will not get the shares at the very lowest point and you have to have pure dumb luck to sell at the market top. But the value is there if you are willing to dig around a bit.

#50 House on 09.12.11 at 3:48 am

You failed to mention, as was pointed out in either the G & M or The Star last week, that TFSA’s are not Registered and as such are only Tax Free for Canadian tax not other countries withholding taxes.

#51 timo on 09.12.11 at 3:54 am

http://www.reuters.com/article/2011/09/12/socgen-besson-idUSWEA387720110912

French Industry Minister Eric Besson said on Monday it was “totally premature” to talk about a partial nationalisation of French banks.

the world is speculating at the casino again. Forget about growth , its a matter about getting on a lifeboat now.

;)

#52 timo on 09.12.11 at 3:58 am

http://www.bloomberg.com/news/2011-09-11/europe-banks-at-post-lehman-lows-show-sovereign-risks-escalating.html

Politicians need to get their heads together and deal with the inevitable: a Greek default and recapitalization of some banks,” said Peter Thorne, a London-based analyst at Helvea Ltd. “You have to make the banks look financially stable and secure so that people are prepared to deposit money with them for more than 24 hours.”

Bank runs? cough…cough…. naw, just a small flight to safety.

#53 timo on 09.12.11 at 4:41 am

http://www.youtube.com/watch?v=WdgyP64x7fU

9/11: The 102 minutes that changed America

compiled video , very moving..very very sad.

#54 Steven Rowlandson on 09.12.11 at 5:48 am

DELETED

#55 Keeping the Faith on 09.12.11 at 7:12 am

#16 Jane24,
I couldn’t agree more, I’m making a trip to Goodwill today to drop off my excavating from the weekend and be ‘liberated’ from stuff I don’t need and should have never bought in the first place.

Once again, amazing post Garth. Please keep up the good work!

#56 Jas Girn on 09.12.11 at 7:48 am

Garth, if there are no losers who are willing to buy high, then how are we going to have winners? Answer please…

Relax. Plenty of losers left. — Garth

#57 Ronaldo on 09.12.11 at 7:58 am

#25 Nostradamus – “See? Govts. can change the rules at any time, so don’t rule out the CPC killing RRSPs and just going with TFSAs”

Agree totally on that. As more and more people start to realize how RSP’s can turn into a tax trap down the road and start switching to TFSA’s as they start dumping their RSP”s. At least with the TFSA, the government does not have to dish out tax refunds and deferring that income down the road since they need the cash right now more than ever. In a large percentage of cases, individuals should not be even buying RSP’s as it could result in a huge tax in the form of clawbacks and reduction of other benefits such as the GIS. This is particularly true with people with low incomes and a small amount of RSP’s and no pensions once they turn 65 and retire. Better to stuff the TFSA’s IMO.

#58 TurnerNation on 09.12.11 at 7:59 am

Exposion reported in French nuclear plant.

Likely another global event designed to take nuke power away from us, returning us to the stone age and solar/wind.

Make no mistake they want us back to the stone age: cars, out: due to “carbon” and tolls, car-free cities. Nuke power: out.

Hydro is set to rise 15-20% in BC, already, due to ineffecient and bloated public union utility companies.

We will become like a 2nd world country: only the rich use power, while the serfs get 1-2 hrs of power per day all they may afford.

#59 The Original Dave on 09.12.11 at 8:05 am

Umm, where the heck can you buy a $50,000 property in SW ontario that yields $500 a month

#60 Ronaldo on 09.12.11 at 8:18 am

#33 Utopia – agree totally. Most people are too busy planning their vacations instead of the rest of their lives. And I don’t see where this is going to change much going forward. So many people so ignorant of what is going on around them and believing everything they hear in the MSM. Garth is trying his damndest to reach out to these people but unfortunately, its only a very tiny percentage. Great post once again Garth. Love your blog.

#61 Sky on 09.12.11 at 8:22 am

@ BPOE (#40) :

So what you’re saying is that we are walking, talking meat machines soon to be snuffed forever out of existence and that our lives have no meaning beyond getting into debt up to our eyeballs, rampant consumerism, and hedonism.

That’s one hell of sales pitch. Do you get many takers?

#62 househornyhousewife on 09.12.11 at 8:35 am

Garth,

What do you think about these recent GLWB’s that insurance companies are now selling (in conjunction with financial investment companies) ?

Do you agree with the notion of “pensionizing” a percentage of your investments in order to insure a specific minimum payout at a certain age for the rest of your life ? and then to invest the remaining percentage in things that offer more long term growth potential ?

I may be in error but I figure that by pensionizing a percentage of my future income I am insuring at least a minimum payout for the rest of my life. Even if it is just to keep food on the table and clothes on my back. It also may give me the option of not having to withdraw my savings if the markets are not doing well (that is, the non RRSP savings since RRIF’s must inevitably result from these eventually).

I don’t like the idea of annuities until I am ready to start collecting a pension, since you essentially “lose” your investment if you die earlier than the day that you start to collect .. also, whenever you die, what is left is also lost and goes into the pot. However these Guaranteed Lifetime Withdrawal Benefit plans seem to be a wise investment with the downside being the high management fees (the price for perpetual security I guess).

Anyway, I would love to hear your opinion on these.

HHHW

Bad idea, as are annuities. Both play on fear. Give them a pass. — Garth

#63 Moneta on 09.12.11 at 8:49 am

I try every Sunday to send stuff to the charity shop or throw something away and as the junk around here goes down i feel so liberated. Plus of course you don’t have to maintain or insure it all either!!
——–
I’ve been doing the same but junk just keeps on piling back in. It just seems everybody is dojg that these days and they keep on pushing their junk on us… to the point we just take it and put it in the trash ourselves because if we don’t they’re insulted or just think we’re ungrateful.

People just can’t let go of their shackles. LOL!

#64 Moneta on 09.12.11 at 8:52 am

French Industry Minister Eric Besson said on Monday it was “totally premature” to talk about a partial nationalisation of French banks.
——
LOL! So it is coming, it’s still just too early.

#65 Smoking Man on 09.12.11 at 9:00 am

Far to early to be a Contrarian.

The open is going to be Ugly less off cource you’re short.

:)

#66 penpal on 09.12.11 at 9:10 am

@ # 24 Aussie Roy

A big hello to you and thanks you for your regular Aussie updates. They are painting a picture that I think Canada will duplicate and so are very informative.

Have you any info on the drop or level of mortgage applications / approvals being at the lowest since records were started in 1977 as of Aug 31, 2011.

I can’t find a story in the press here and I thought that it might be more present in the press there. I believe it is very worth noting and consistent with the weakness in your RE market which I believe will accelerate rapidly now in your country.

#67 disciple on 09.12.11 at 9:29 am

#25 Nostradamus…I checked your link on who runs the world (one of my curious distractions), and the 787 transnationals was also a curious number. It turns out to be a palindrome of course which initially raised my eyebrow but also a prime number, both Gaussian prime and Palindromic Wing prime. These super-men/women who rule us love to play around with numbers, like a type of magic, as the events of 9/11, 3/11, and 7/7 prove…

#68 disciple on 09.12.11 at 9:36 am

At least that kid in the picture is getting a good early taste of marriage…

#69 disciple on 09.12.11 at 9:54 am

Garth Vader – fyi, you missed an f-bomb in #99 Bob Copelands post from yesterday…no need to post this fyi…

#70 Newbie Investor on 09.12.11 at 10:08 am

Great post Garth! Thanks for the investing advice, would love to hear more! Sat down with someone from IG that want to set wifey and I up. Going today to buy your book, maybe it can clear some cobwebs!

#71 The American on 09.12.11 at 10:09 am

Vancouver is overvalued. The Economist recently has come on out with it. It is official Vancouver is IN A BUBBLE. Now, I get a real kick out of this drivel which could have been spoken by a person with an extra chromosome…

http://vreaa.wordpress.com/2011/09/11/“the-housing-bubble-in-canada-is-fictional-vancouver-is-affordable-if-you-want-to-live-in-one-of-the-worlds-most-densely-populated-areas-then-you-pay-the-price…”-we-disag/

http://www.vancouversun.com/business/Canada+bubble+about+burst+research+firm+argues/5028916/story.html

Vancouver is NO LONGER the best place on Earth, and it hasn’t been for over two years. Stop holding on to that stupid title, okay? Actually Vancouver’s quality of life index has FELL quite a bit in the global ranks according to Monocole, Forbes, The Economist, etc. in the past couple years.

There are now ONLY FOUR markets showing on a global scale as undervalued according to the Economist. To begin and to Garth’s point many times here on the blog: 1. The U.S. 2. Germany 3. Switzerland 4. Japan This means it is a great buying opportunity, giving you are structured properly.

BPOE needs to learn the difference between a fact and and opinion.

#72 Daisy Mae on 09.12.11 at 10:14 am

It is scary watching what people do. I know of women who have done the following:

– one has her money tied up in GICs earning zip (well, not much!)
– another one cashed out mutuals after a huge loss, bought a new Cadillac, the rest is in a savings account.
– another woman took matured GICs and paid down her mortgage.
– and one cashed out mutuals much to her investment advisors dismay and then renovated house, bought RV.

#73 bigrider on 09.12.11 at 10:19 am

Garth, why was my comment censored? around 8 this morning?

You are not in a position to comment on the viability of this blog. — Garth

#74 BrianT on 09.12.11 at 10:25 am

#23TO-But that is 3.9 list price-it is quite possible they would take a clean offer of 1.9 million.

#75 disciple on 09.12.11 at 10:32 am

Charles Darwin stated that the most peculiarly amazing observation he ever made was how clearly the human race resembled a domesticated species. Like cows on a farm. Like how we leverage the work of bees to get honey.

Yes, we are both commodities on a farm for our earthly rulers, and attractions in a zoo for our unearthly rulers. The relationship between the two factions is the subject of modern research and is not fully known…yet. Our farmers allow us certain liberties to increase our productivity. We are not even allowed to travel freely on God’s earth without “permission” from one farmer to another. The demarcation lines on a map are not countries, they are farms.

So when we talk about human rights, we must have this enlightened reference point. Just like in any corporate body, if our rulers expect more out of us, out of necessity, they will be required to provide more for us in order to achieve the higher level of output. Therefore, in non-modernized lands where there is certainly more personal freedom, the rulers of those lands are not obligated to provide universal health care. But in an advanced state of human livestock control such as the Corportocracy of Canada, universal health care is the highest evolution of the State.

Agreed, we in Canada, do not appreciate what we have. But always remember that the price extracted from your slavemasters is high. If you don’t like it, you have no choice but to leave.

What it is, is a thought prison. They can only continue to influence your behaviour by influencing your mind. That is why my message is consistent and piercing: GET OFF THE FARM. Jesus (one of the twins) often spoke in parables so as to code the message. It is the same message I am speaking of today. If you don’t understand the message, then it is not for you and/or you have not the sufficient life experience to understand and you will be doomed to another round of hell. God be with you.

#76 disciple on 09.12.11 at 10:41 am

#72 Daisy Mae…I know of a young lady who has 30K in cash sitting in a TD Waterhouse account earning 0% interest for the last three years because she is afraid to invest it. But losing 3% a year to inflation doesn’t seem to bother her…funny.

#77 Where's The Money Guido?? on 09.12.11 at 10:45 am

RE: #26 Calgary Illusion on 09.11.11 at 11:02 pm

Garth, when you invest a few hundred thousand with an advisor for 1% – what guarantee does a person have that they don’t run away with your money (i.e. Earl Jones) or the firm go bankrupt? Is there some kind of protection for customers against this?

Earl Jones was an imposter. Unregistered and unlicensed. Two minutes on Google would have revealed that. — Garth

When you have Ontario and Canada’s Securities Commissions run by former bank execs, nobody’s money is safe investing anywhere in Canada.
There are shows (Marketplace on CBC etc.) that spell it out that when you put your money in anything in Canada, make sure you know that person isn’t going to thieve it because he won’t get jail time (or even a criminal record if he quits the company) when he does take your hard earned money.
And it seems the more money they steal, the less of a slap they get.
Canada is the land of lawlessness when it comes to white-collar crime.

Actually, our financial services industry is intensely regulated. But that makes for bad TV. — Garth

#78 Daisy Mae on 09.12.11 at 10:48 am

Newbie Investor: “Sat down with someone from IG that want to set wifey and I up.”

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

Yikes!

#79 realitybytes on 09.12.11 at 10:49 am

Not a gold bug, don’t own an ounce or share. But as it is a comodity that GT likes to put in the bubble category, and given the genral call fro economic slow down and risk to comodities on this site… What is the theory on the buoyant price of oil??

Shouldn’t it be going down?
Time to face the reality that the economic drivers and financial issues discussed on this blog are all symptoms. There is nothing temporary about the weakness in the market. Debt is ultimately a function of collateral, and we’re running out of it.

#80 Abitibi Doug on 09.12.11 at 11:23 am

@Your Mom, post#47:
That’s actually a good idea, investing in uranium stocks like Cameco or ETF’s that invest in uranium. In the short term anything can happen, but it’s probably a good long term bet. You see? Contrarian investing isn’t really that difficult.

On the subject of contrarian investing it’s like the engine governor I described in earlier postings, which opens the throttle (to give more power and restore speed) when speed is too low and less throttle (less power) when the speed is too high. Again, it’s that simple.

#81 The American on 09.12.11 at 11:52 am

In other news, here’s what’s going on in NYC. Vancouver compared to Manhattan? REALLY? What a joke :-)

http://realestate.yahoo.com/promo/new-heights-of-penthouse-luxury.html

#82 City Slicker on 09.12.11 at 11:56 am

#72 Daisy Mae on 09.12.11 at 10:14 am It is scary watching what people do. I know of women who have done the following:

– one has her money tied up in GICs earning zip (well, not much!)
– another one cashed out mutuals after a huge loss, bought a new Cadillac, the rest is in a savings account.
– another woman took matured GICs and paid down her mortgage.
– and one cashed out mutuals much to her investment advisors dismay and then renovated house, bought RV.
———————————————————-
The Cadillac thing isn’t that suprising. After all don’t people buy when they are stressed or depressed. Taking a big loss on your investment can put you down in the dumps. Buying something is temporary stimulus for happiness, but then in the end you’re even worse off. In think it’s kinda the same as all the quanatative easing govs are doing around the world.

#83 jess on 09.12.11 at 12:01 pm

Luxury award winning branders, who most generously spread their affluenza virus, have been quarantined by those meddling do-righters ;^)

http://australianpropertyforum.com/topic/8748697/1/

http://smh.domain.com.au/real-estate-news/masters-of-the-universe-come-crashing-back-to-earth-20110602-1fizy.html

===========================
affluenza, n. a painful, contagious, socially transmitted condition of overload, debt, anxiety and waste resulting from the dogged pursuit of more.[1]

#84 BPOE on 09.12.11 at 12:05 pm

The Economist Magazine and their pal Shiller have made absolute fools of themselves saying Vancouver being in a bubble for years. Typical American can’t admit he would of been further ahead buying Vancouver in 2005 than buying in Seattle. Sad really. Never forget Shiller the “expert” who years ago stated Vancouver was in a bubble. Should be held liable from all renters that listened to such drivel. Do your homework Shiller

#71 The American on 09.12.11 at 10:09 am
Vancouver is overvalued. The Economist recently has come on out with it. It is official Vancouver is IN A BUBBLE. Now, I get a real kick out of this drivel which could have been spoken by a person with an extra chromosome…

#85 Beach Girl on 09.12.11 at 12:10 pm

yes, beach girl , why some go to be nurses for dictators

…or how about the church called the Phoenix Goddess Temple police seized evidence showing that “male and female ‘practitioners’ working at the Temple were performing sexual acts in exchange for monetary ‘donations,’ all on the pretense of providing ‘neo tantric’ healing therapies,” Phoenix police said.

______

Really have no idea what you are ranting about. Sexual hangups or fantasies. I think you are driving with only one headlight. I think Cadet Cleaners has more hangups than you.

#86 Carpe-Diem on 09.12.11 at 12:13 pm

G – Excellent post, just need to add my 2 cents.

“90% of your mortgage is interest payments”…

That’s correct for the first few years when you start your mortgage. The Sliding Scale calculations, thats why you kick as much additional funds at the beginning to lessen the blow of interest fees.

We have under 5 years remaining, and are paying almost 90% in principle – (reversal).
People have options, we did accelerated weekly (that alone takes years off your mortgage life) double up’s when possible and if our savings was on track, applied 10% of the outstanding balance every year.

That my friends is the art of beating the banks (or at least not paying through the nose). Our original mortgage based on the 25 year lifespan – now it is wittled down to 11 years –

A pat on my own back is in order, live within your means and is not complicated.

#87 Beach Girl on 09.12.11 at 12:15 pm

Revision, you have more hangups than Cadet Cleaners. What were you trying to convey to me. Really lost on this one.

I might actually be a Goddess, now you think of it. Off to the beach. Dream on that white boy.

#88 BPOE on 09.12.11 at 12:16 pm

LOL. I love this pro BPOE site. The panic styled writing of this renter is hilarious. Shoulda bought when you could buddy. I encourage all the longs of Vancouver to frequent this site to see just how right my predictions have been. Others who view this site as pro renting or pro bubble just don’t get it and probably never will. Folks one more thing – Vancouver is a LONG TERM investment – not some flavour of the year which the Economist touts!

http://vreaa.wordpress.com/2011/09/11/“the-housing-bubble-in-canada-is-fictional-vancouver-is-affordable-if-you-want-to-live-in-one-of-the-worlds-most-densely-populated-areas-then-you-pay-the-price…”-we-disag/

#89 jess on 09.12.11 at 12:17 pm

This “liquor” trickle effect seems to have quenched the thirst of the tricklers at the expense of the unquenched taxpayers.

“black liquor.” + Paper mills have been using this byproduct as a fuel since the 1930s.

“black liquor” earmarked for subsidies and federal tax refunds designed to spur the development of entirely new biofuels.

CEO compensation: $12.3 million
U.S. federal income taxes: $249 million refund

International Paper CEO John Faraci received a 75 percent pay hike in 2010. He pocketed $12.3 million.

http://www.ips-dc.org/blog/john_faraci_international_paper_corporate_tax_dodger

#90 OttawaMike on 09.12.11 at 12:32 pm

#88 jess on 09.12.11 at 12:17 pm
You have to click on the bloomberg link within the story to read about how the paper companies are burning additional diesel fuel to qualify for the subsidy. This has been going on for years now.

Same as the US self employed tax credit for vehicles over 6000lbs GVW. Why do you think F250 Harley trucks and Hummers sold so well down there?

http://en.wikipedia.org/wiki/Section_179_depreciation_deduction

#91 debtified on 09.12.11 at 12:35 pm

For those cleaning out their closets and going to Goodwill…

Please check your cupboards also. I am sure you have all sorts of stuff in them that you didn’t even know you have (and probably don’t need). The food bank could use them. I use to volunteer for Harvest Project in North Vancouver and I know first hand that there are lots of kids out there who need food.

While you are at it, you might as well clear out your bunker. We’re just flushing out the effects of our excesses – painful but necessary. It’s not going to be the end of the world.

Great post, Garth! Thanks.

#92 GPC on 09.12.11 at 12:38 pm

This was posted by the realtor who runsthe Edmonton real Estate Blog. It’s their September 9, weekly report:

“My week was certainly interesting in that I wrote an offer on a 530k home that had been for sale for almost 2months, 3 other similar homes sold recently at 495k, the sellers paid 500k for it in 2009 and they wouldn’t budge on the price. They didn’t even counter our 485k opening offer. Then I wrote on a home on the market since march at 510k and the most they would move is 7k off of list. Then I had an agent write an offer at 10k less on a listing I have at 255k. I can only describe things as interesting or out of sync. My sellers didn’t move much either. I usually have found September to be a great market for buyers but I’d have to say that this week has not shaped up that way at all”

The realtor seems to be genuinely confused by sellers who don’t want to lose money on the resale of their houses, (when it’s pretty obvious that they expected to make money when they sold).

The sellers will wait for the offer they want to magically appear and it is pretty obvious that it’s not going to happen. Sure the places will probably sell…eventually, but most likely for much less than the sellers expected.

All I can say is, much more to come, good luck!

#93 Hoof - Hearted on 09.12.11 at 1:34 pm

#13 walter safety

Just back from the best place on earth(BPOE), that would be PEI. More than two billion in debt with only 145,000 people.
Imagine the lifestyle over the last 25 years that the citizens haven’t had to fund with taxes. Government funded bathrooms,oil tanks,roads to nowhere, boats and cars for friends of the political class(i can explain if you don’t know how its done),

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

Yes, please explain, I am very curious.

My daughter(from BC) is at McGill and has to pay full tuition.

Apparently Locals do not, get a major discount.

Does this have something to do with transfer payments which WE pay THEM ?

#94 bigrider on 09.12.11 at 1:43 pm

#73- Garth to bigrider- “you are not in a position to comment on the viability of this blog”

Very well and point taken. I was not intending to be offensive in anyway. My apologies.

I will re-submit the second part of the censored comment.

So long as financial markets continue to whipsaw and repeatedly disappoint investors, then RE will be the investment of choice for Torontonians and Vancouverites for many years to come.

As a RE bear , I have frustratingly come to that realisation myself.

#95 spaceman on 09.12.11 at 1:49 pm

“when you’re consolidating your net worth in a single asset which doesn’t pay interest or dividends,

No doesn’t pay interest, but when interest hits 6%, do you really want to have a mortgage that you owe money on? therefore you save 2-5.35% on every dollar you put into your mortgage principal.

No dividends? Garth, you buy rental property? Doesn’t it pay a dividend? There are ways that a principal residence can pay a dividend, rental suite, homestay etc. And definately a rental property produces a dividend. The big question is what is your ROI, return on investment, and right now it is zip…

I live in a run down rental, and am waiting, maybe forever… my landlord and I talked, he said he will not sell right now, even he sees the market tanking and could get out. Why not sell I ask? “Because the cash flow I get from this property is good, it will fund my retirement.”

He paid $200,000 15 years ago, now worth $450.000 the rent collected is $2100 a month.

Good or bad you decide…

#96 Condo Sucker on 09.12.11 at 1:59 pm

An acquaintance of mine and her husband, no kids and not planning to have any, both in their late 30’s, just moved from North Toronto to Oshawa a few weeks ago. They used to live in a sizeable 2-bedroom apartment and both had a half hour commute to work, tops.

Now the husband rides the Go Train into Union Station every day, total door-to-door round trip commute time of 2.5 hours. Wife drives to 401&404 area, round trip commute time closer to 3 hours. Both now have to get up at 5:30 a.m. to make this work.

So I ask her how they’re managing to deal with this commuting and she admits to me that both absolutely hate it and feel burnt out at the end of the day. But, she says, at least now we’re “investing” our money rather than throwing it away on rent.

Oh, the horror.

#97 bigrider on 09.12.11 at 2:01 pm

Very bluntly, nobody is going to convince a largely uninformed and poorly educated public that saving money in financial assets is preferable to buying and maintaining a house/condo/home.

No way , no how in the GTA. Especially not with all these red tickers all over BNN today and the front page doom and gloom business news to follow tommorrow.

I for one will just continue to save more in financial assets and remain diversified simply because I am stubborn.

I may Martyr myself for you Garth, by purchasing a condo or two, in downtown T.O. Your prognostications on RE prices declining will then certainly come true for sure. All you have to do is ask.

I gave up on the ‘largely uninformed and poorly educated public’ long ago. Anyone who wants to listen to me is welcome to. The rest are the architects of their own futures. — Garth

#98 Smoking Man on 09.12.11 at 2:03 pm

Ba hahahahahahah

Greek Tax collectors are going on strike….

#99 TaxHaven on 09.12.11 at 2:09 pm

BASH that metal! PUMP that paper cash!

#100 Devore on 09.12.11 at 2:12 pm

Delusion in Canada:

…more than one in three Canadians aged 30-39 incorrectly responded that today’s rates were about average or relatively high.

This is what happens when people are financially illiterate.

#101 Cookie Monster on 09.12.11 at 2:19 pm

#34 nonplused on 09.11.11 at 11:24 pm
Why do I disgust you? When did I say suffering is acceptable? Just because I advocate a free market solution doesn’t automaticaly make me cold harted and uncaring. You know I’m came from a loving warm blooded family too, I am part of this society, last time I checked I’m not a sociopath.

Narrow minded comments and jumping to ridiculous conclusions by so many Canadians and idiots on this blog is what disgusts me. But it’s nothing new.

I’m right, Garth is wrong. I’m right for starters because for starters I’m not advocating any theft. What happens after that is open to debate, but I content free markets will work, they’re not going to be perfect for everyone but they will be close enough for most and the bonus is once we have a healthy economy and efficient free market healthcare system, where costs come down and services go up, then taking care of the infirm and unfortunate becomes much easier for charity to handle.

I’m quit sure there would be many wealthy doctors who would work pro-bono or paid by private charities, I’m sure there’s no shortage of bleeding harts in Canada that would voluntarily fund such necessary requirements, that I’m sure will exist.

See, I’m very considerate, this is part of the whole concept of FREEDOM. It makes for a beautiful society. The alternative is big government oppression and endless waste and boondoggles stagnation and incompetence. The only reason we’ve lasted this long is because we are a very rich nation, but just thing how much better everything would be if we had keep healthcare private since 1940. It really would be a healthcare utopia in Canada today. Low cost and high quality and selection. Competition and profit motives are good, it works in every other industry, it would and used to work in healthcare too. No thanks to that raving socialist Tommy Douglas! The greatest Canadian my ass! His policies have cause more waste and destruction to our standard of living than any other Canadian in history. Inefficient use of wealth sucked into our black hole healthcare system for all these years is wealth that was not available for other uses.

#102 Waterloo Resident on 09.12.11 at 2:32 pm

Wow, take a look at this chart: http://www.bloomberg.com/apps/quote?ticker=GGGB2YR:IND

It shows 2 year Greek Bonds hitting around 65 – 70% !

And now it looks as if Canada is the ONLY housing bubble left standing, here’s information about how the Australian housing market is set for a crash:

http://www.bloomberg.com/news/2011-09-11/housing-bears-say-shortage-myth-means-australia-set-for-crash.html

#103 Cookie Monster on 09.12.11 at 2:37 pm

#34 nonplused on 09.11.11 at 11:24 pm
PS, You’re right about public sector unions for two reasons, the taxpayer is not at the negotiating table as in a private sector union it’s company management negotiating with labour. In gov it’s public sector politicos negotiating with public sector labour. Not valid.

Second, private sector labour unions can destroy private sector businesses that must compete in a global market. Fine no biggy, but public sector unions will destroy the whole country and every business in it. Big problem.

#104 jess on 09.12.11 at 2:43 pm

Beach girl
I see by your response that i made you defensive since you seem to have thought i was writing about you . Sorry for that?

I was contrasting what “SOME” others are led to do. You said, “Poverty is almost impossible to overcome .” I agree with that . I was listening to Gaddafi’s nurse from the Ukraine and her explanation regarding the work situation in her country. It has been well documented that, “An estimated half million women are trafficked annually for the purpose of sexual slavery. ”
http://www.cbc.ca/documentaries/sexslaves.html
========================
Call yourself a “church” or a “religion” collect “donations” and what would the tax bill be on your revenue beach girl? Would you like this in your neighbourhood?

Franchises of the disenfranchised

The church advertised that it provided “neo-tantric healing therapies,” Phoenix police said. The alleged brothel, which was the target of frequent complaints by neighbors, was generating tens of thousands of dollars a month in revenue. The “church’s” website was also quite explicit in what it offered: “Sex is a holy, sacred and divine healing force at the core (of) our beings. Once we embrace this force instead of deny it, we become successful, happy and powerful manifestors.” Regardless, there were also unclothed women, listed as “Goddesses” living in several states, where other “churches’ were in operation. I do believe in the LAW so if that means I am missing a headlight, have you any suggestions as to how I might improve my sight?

arizona law
http://prostitution.procon.org/view.background-resource.php?resourceID=723
==========================
see church of the universe
http://en.wikipedia.org/wiki/Michael_Baldasaro

#105 HFT on 09.12.11 at 2:47 pm

http://www.nanex.net/research/MsgRates/EquityMessageRates.html

#106 Brad in Van on 09.12.11 at 3:18 pm

Hey BPOE!!! People who bought in most any market in the US in 2000 are still ahead today even after their real estate trending downward. What is your point? Anyone can make a claim that you made. You are a typical realtor idiot. You could be the dumbest person on the blog and I would tell anyone who reads your posts to understand they would be taking advise from an absolute idiot like you. People who have bought in Vancouver in the past five or six years are definitely going to regret it. Our market is turning even today and heading downward. The market here is showing huge signs of stress and inventory is sitting longer. We were behind the US curve but we will get there too. A bubble is a bubble is a bubble and we are in a huge bubble right now.

#107 realitybytes on 09.12.11 at 3:43 pm

Another risk of buying a house….neighbors.

http://nky.cincinnati.com/article/AB/20110911/NEWS0103/109110315/Solar-panels-cause-flap?odyssey=mod|mostcom

#108 Linda Pearson on 09.12.11 at 3:52 pm

#91debtified on 09.12.11 at 12:35 pm
For those cleaning out their closets and going to Goodwill…Please check your cupboards also. I am sure you have all sorts of stuff in them that you didn’t even know you have (and probably don’t need).

……………………………………………………………………………

Your post made me chuckle all over again at my own experience with downsizing. My husband and I downsized in slow stages, moving as we did twice in 7 years, first to a small semi and finally here to our townhouse.

I embraced downsizing with a vengeance, donating the duplicates of everything we owned, rarely used small appliances, wedding gifts from forty years ago that had never seen the light of day; all packed up and taken to the ‘opportunity shop’ that supports our local hospital.

The truly “down” side of all that occurred when I went back to the Opp Shop to purchase a few of my own things, the kitchen gadgets that come in handy once or twice a year or the enormous bowl for salad when company comes. Now we call it the in/out/back in shop.

The only hard and fast rule I am forced – by my husband – to live by is that, for every book I buy and bring home, another must be put in the donation box from my precious horde. I hate that.

#109 Herb on 09.12.11 at 4:32 pm

Kooky Monster @ #100 etc.,

for chrissake, stop proving that you must be heart-, brain- and clueless to be a “libertarian”.

You’re making “freedom” incompatible with civilization, and giving it a bad name.

#110 Bill Gable on 09.12.11 at 4:38 pm

How Bad is it in the US?

From CNN –
“Usually, you hear stories of people fleeing to America, not the other way around.
But the jittery state of the U.S. economy is driving an increasing number of its citizens to seek better prospects north of the border.
Americans are the latest economic refugees, and they’re heading to Canada.
As he prepares to campaign for re-election, U.S. President Barack Obama is expected to make a speech Thursday night that calls for immediate stimulus spending to create jobs and improve infrastructure.
But those reforms will be difficult to make. Republicans, who control the House of Representatives, have resisted any efforts to boost the economy through additional spending.
As life in the U.S. worsens, prospects in Canada seem all the brighter.
Canadian officials say the number of Americans applying for temporary work visas doubled between 2008 and 2010.”

> Just try working legally in the States if you are an “alien”. SURE – good luck!

Anyhow = Read more here. (*my, how times change)

http://tinyurl.com/5rsv7pg

#111 OttawaMike on 09.12.11 at 4:39 pm

#102 Cookie Monster on 09.12.11 at 2:37 pm
Yeah, yeah I get it the public sector is inefficient.

What a startling revelation.

What about the profit the private operator must earn on doing the same work? Don’t you think that is going to negate a big part of his efficiencies?

There even are a few success stories where the public sector comes in below the cost of a contractor, even allowing for the bloated public administration. Allowing fair bidding by both on certain work is a good way to maintain balance.

Just maybe certain necessities just belong in the public domain. Do you really want a private military, firehall, police, schools or water supply??

Don’t bother to answer that as I know from your musings that you subscribe to the polital spectrum just to the right of Attilla the Hun.

#112 OttawaMike on 09.12.11 at 4:51 pm

Cookie said:
…but they will be close enough for most and the bonus is once we have a healthy economy and efficient free market healthcare system, where costs come down and services go up, then taking care ..
__________________________________________

Oops, I think you were holding the graph upside down:

http://www.ritholtz.com/blog/wp-content/uploads/2010/12/4331500522_58bd56e335.jpg

I’m no huge fan of our sick care system but the US model sure isn’t working any better when it comes to costs.
My 70 YO Mom has had 3 critical illnesses in the past 3 years all dealt with in a timely and quality manner so in spite of our impressions of the system it still is working.

#113 BrianT on 09.12.11 at 4:54 pm

#94Big-IMO your point would be stronger if Canadians had previously invested in equities and were expected to switch to residential RE. That is definitely not the case. The overview is that Canadians as a whole simply do not have the money-what they do have is unprecedented access to credit which they eagerly devour. This is what has kept residential RE prices where they sit currently. Anyone bullish on RE needs to foresee a scenario whereby wages or access to credit increase materially. Personally I don’t foresee this at all.

#114 Robert Dudek on 09.12.11 at 5:00 pm

cookie monster,

You’ve swallowed so much “free” market propaganda in your lifetime, it is no wonder you are clueless.

The world of freedom you advocate only exists and only will ever exist in people’s pipe dreams.

Please get real.

#115 Einsam Solo on 09.12.11 at 5:12 pm

“Never take advice from somebody with a product to sell. — Garth”

Does that include your books?

LOL Just kidding!

Good thing. — Garth

#116 I'm stupid on 09.12.11 at 6:00 pm

This is why this country is bullshit.

I just went to court today for a minor speeding ticket. My trial date was 1 year from the date I was pulled over. I filed a section 11b cited supream court rulings that verified infringement of rights etc. I am not a lawyer or court agent, but had it drafted by my attorny to save costs etc. The judge refused to listen to it and also stated that the rulings made by the supream court have no baring on the case because they were 16 years old and things changed. I said since they have not been overturned they must still be valid.

He refused to take up the 11b as he knew that I was right, so rather than allowing me to get off he asked for a plea. At this point I know I lost I do not know how to defend myself outside what was given to me by my attorney.

I used my time to tell him why he is at the bottom of his profession and that if I greased the pocket of a court agent I would be walking out without a conviction.

I guess the law only works if you pay. I don’t call that justice it’s Just extortion.

But what do I know I’m stupid.

#117 I'm stupid on 09.12.11 at 6:04 pm

Oh spoke to lawyer afterwards, he told me it would cost around 500 to reopen and have him go to get it thrown out. So my options pay 40 fine or 500 and win on principle. B.S. I was at the circus today, the judge was the clown and I was the village idiot.

Be proud Canada be proud.

#118 DDCorkum on 09.12.11 at 6:18 pm

@ #79 realitybytes

“…[As GT] likes to put [gold] in the bubble category,… what is the theory on the buoyant price of oil?”

————

Gold should not be painted in the same stroke as oil. While the latter is consumed, the former is cherished for its alleged value.

#119 Derek R on 09.12.11 at 6:20 pm

Mmmm, bacon…

#120 Bill Gable on 09.12.11 at 6:25 pm

Well – you can lead a horse to water – but – here in Vancouver, the horse is probably mortgaged too.

I have pointed a single Mom (*that I am tied to through marriage and deep friendship)to this blog. Also I showed her Mr. Turner’s books, and pleaded, begged her to think about renting – not buying a townhouse that looks like it was built by me (*I couldn’t put Lego together) – and still, she did it – dropped 450 K on a joint that is just a piece of garbage.
I asked if she had placed conditions on sale like “competent inspection” – etc = NOPE.
Now she has about zero cash – a 5 and a 7 yr old – works shifts, as an ICU nurse – so needs day care and help – and she has no savings and not a dime in a TFSA. Nothing.
*This woman is a widow of one of my best friends, and I feel like I let him down.

I just couldn’t talk her out of this suicide mission.

Mr. Turner tries, I tried.

Sh said her children needed a home.

Instead she has a debtors prison.

I feel sick.

#121 timo on 09.12.11 at 6:27 pm

http://www.bloomberg.com/news/2011-09-12/u-s-money-funds-lending-cuts-to-french-banks-seen-forcing-sale-of-assets.html

U.S. funds are cutting their holdings in European banks on concern the financial institutions may face funding problems as the sovereign-debt crisis escalates.

http://www.nakedcapitalism.com/2011/09/the-financial-zoo-an-interview-with-satyajit-das-%E2%80%93-part-ii.html

That people were unable to consume at sufficient levels to keep the economy going and went into debt in order to do so is clearly the underlying cause of the crisis. But what do you make of the strange situation that’s resulted? I mean, all the economists are saying – and rightly for once, I think – that we have a serious problem with demand. People simply cannot afford to buy enough stuff to keep the economy growing at a reasonable pace. And since they’re all paying down debt they probably won’t be able to take on enough debt to consume at this level for some time (which is probably less than a bad thing).

#122 Cookie Monster on 09.12.11 at 6:36 pm

#111 OttawaMike on 09.12.11 at 4:39 pm
Military and police would remain public sector since they are national defense and public safety related, also both are closely tied to our legal systems, so they do belong in the public domain. Any waste in these sectors would have to be tolerated since they are not open to free market competition. They are properly monopolies.

Fire, water, education, healthcare, electricity, LCBO etc.. can all be run more effectively and efficiently in a competitive for profit private sector enviroment.

The US healthcare system is broken precisely because the government is already too involved and getting worse. Health insurance in the US is tied to one’s job, this is a problem, and it’s turned it into prepaid healthcare rather than insurance, like auto, house and life insurance.

#114 Robert Dudek on 09.12.11 at 5:00 pm
So on remembrance day I guess you won’t be wearing a poppy. By your logic we should all just give up. So if you were in Germany in 1939 Hitler could’ve counted on you. Ya yellow bellied cretin.

#123 Devore on 09.12.11 at 6:39 pm

#107 realitybytes

Not really a neighbor problem there, rather a NIMBY problem, a subject for another place.

But as an owner, you have the same control over your neighbors as a renter (whether it’s a condo or SFH), except there is less you can do about it. A renter can move easily. A bad neighbor can make it very difficult to sell your house for as much money as you’d like.

#124 Devore on 09.12.11 at 6:49 pm

#108 Linda Pearson

I have moved 3 times in 10 years, downsized each time, and it has been a great experience. Over time stuff accumulates. And after downsizing, you realize you get along fine with a fraction of what you thought was necessary. Eventually you figure it out, and just stop buying so much stuff.

#125 detalumis on 09.12.11 at 6:59 pm

#112 Ottawa Mike I’m sure your mother got fantastic care, most people over 65 seem to. My 45 year old friend just died of a heart attack in his sleep while the doctors waited for weeks to decide if he needed an angioplasty or not – guess he did eh. He would have had the procedure the same day in the U.S. if he had presented with the exact same symptoms.

#126 Nostradamus Le Mad Vlad on 09.12.11 at 8:19 pm


At a wedding reception recently someone yelled, “All the married men please stand next to the one person who has made your life worth living.”

The bartender was nearly crushed to death.
*
#57 Ronaldo — Yep. Less paperwork, less employees, less service. H-F are economists alright! But TFSAs are an excellent retirement vehicle, esp. buying very low and selling at a fair price. Unfortunately, most of the trades and ind. jobs have gone, so those workers are now at McJobs or MallWart.

#67 disciple — Math (numbers) are beyond me, but I get your gist. Playing with numbers (esp. electronic ones, just deleting them) is too much for me to comprehend!
*
Anyone remember Frank Burns or Bloopers? Well, Cramer’s an idiot, not much better than Burns. Cramer has called for Europe’s Lehman-style moment; BullTwits First para. is good, as is TROTS; 7:29 clip Funny, showing Ben Ber Nan-k uses JPM as a proxy in silver manipulation; Neoconomy Yes, Donald Rumsfeld, a.k.a. Dickhead Unlimited, is still around; Austerity was never intended to work. It’s a massive tax grab, that’s all; Dangerous Economy Ummm, yes, we know that; Germany If Greece defaults, other countries follow then Germany, which apparently has The Fourth Reich in place could replace the Eurozone entirely (possibly goes with the three weeks in Libya below).

Palestine Different tack; Erdogan Heading to Egypt, not sure if he is going on to Gaza; Libya Three weeks, or thereabouts. That goes into the first week of Oct.; US Double Standard “Egyptians protest against Mubarak? That’s democracy! Egyptians protest against Israel? That cannot be tolerated!” wrh.com.

#127 Beach Girl on 09.12.11 at 8:28 pm

Jess, still do no not have a clue what you are talking about. I sense some loneliness.

Don’t worry, your ship might come in. NEVER. I really don’t mean that. Sorry. Nite, nite, the Jack Russell and I are exhausted. Sleepy times.

#128 BrianT on 09.12.11 at 8:33 pm

#121Timo-??? You can’t simply expand debt FOREVER without an economic base which also expands at that rate. This is not only not strange, it is inevitable-that is mathematics, which is unknown to MSM economists.

#129 neo on 09.12.11 at 8:37 pm

At #102Waterloo Resident

You are forgetting the biggest housing bubble of them all….China.

#130 T.J. BONES on 09.12.11 at 8:43 pm

Sir Garth The Initiate Did you see it? The knock out kick to the head of the Harper Government. While Obama had harper in New York , Obama sent the people of Gander a THANK YOU directly. Bypassing protocol which is to send the feds the honour and let them pass it on. He even sent an high ranking U.S. embasey to give it directly. And had the mayor of Gander at the time of 911 brought to New York and gave him a greater honour than harper got. Obama delibertely bypassed harper to get the Thank You to the people of Gander. Obama acknowledges that harper would not have given it to Gander he would have taken the credit for the harper government not the people of Gander. Is it got to do with the fact that the people of Newfoundland And Labrador rejected his tyranny. To this I say THANK YOU President Obama for knowing the oppression we are suffering. At lest we are not unnoticed . Don’t give up the fight for America.

#131 Herb on 09.12.11 at 9:09 pm

#116 Stupid,

looks like the judge and you had a factual disagreement as to what constituted the “reasonable time” you had the right “to be tried within”. I can’t see a judge disagreeing with the Supreme Court on a matter of law.

If our justice system did not work or were not just, you would have wound up a much poorer or imprisoned man for offering such contempt of court.

#132 Habbit on 09.12.11 at 10:31 pm

There appears to be a concencus that many if not most people will make poor economic decisions. What would be the result if most or all peolpe made the right decisions? Is our system not geared to have winners and losers? Will it ever be different? Thanks for the great post Garth.

#133 jas girn on 09.13.11 at 4:27 am

You make my day Garth, especially when you reply to my posts.

#134 Smoking Man on 09.13.11 at 9:00 am

GTA Girl think you missed mikes joke, its about tin foil hats