How not to invest

Recent things I’ve warned you about are cresting house prices, a double top for gold, not being diversified, and deflation. They’re all connected, of course. I hope you paid some heed.

This past week stock markets tanked, losing the most in three years. Gold fell an astonishing $100 on Friday, and shed 9.3% in two days. Silver crashed. Oil gave up more ground. Showings of properties in countless neighbourhoods all but vanished, as realtor phones went silent. Global growth is fading and political leaders are decrying a lack of leadership. But not theirs.

This is the scenario I painted for you a year ago – asset deflation amid price inflation. These are the days when your savings account gives you 1% and yet the cost of living is rising by 3.1%. Average wages and salaries haven’t increased a penny and the value of things we own is declining. Yet the price of food, energy and services marches higher. Assets will continue to fall. Soon you will have more sympathy for Americans, caught in the same squeeze, whose houses have given up 32% of their value in the past sixty months.

With deflation, money grows more valuable (the opposite of inflation). That means money substitutes, like gold, take a hit as investors move back into cash. Slowing growth brings less demand for commodities, like oil, and the prospect of lower profits, hurting stocks. People flock to the safety of bonds and paper money – driving bond prices up and yields down. Without a quick recovery (and there will be none), consumers get into the act, curtailing their borrowing and spending. That’s the death knell for housing.

All this should come as no surprise since it’s happened before – in the crisis of 2008. But unlike then, governments today are not able to prime the pump by dropping interest and mortgage rates. They’re already at emergency levels. Nor can we expect more billions and trillions to be spend on stimulus programs. The last ones created a public debt disaster.

One conclusion is that this winter may feel like that of 2008-9, but next year sure won’t feel like 2010. This time the economy could slide into a deflationary inflation that sucks net worth out of those who foolishly ignored this pathetic blog. Houses will fall in value as sales slide and buyers demand price cuts. Household income will fester. Gold investors will wonder what the hell got into them. Stocks will likely drift sideways in a range-bound market. Savers will get diddly – in fact, a negative return after inflation and taxes. Everything at Best Buy will be 30% cheaper. And people with lots of cash will make out like bandits.

Some people can see this already. Like Krista, 35, who wrote me this as a brutal week ended:

I lost my life savings in the tech crash (had invested 50% of every paycheque I’d earned since the age of 12); and a few years later lost about eight grand in an ill-advised mutual fund.

I have no debt. No house and no other non-cash assets or investments. I’m self-employed. No dependents. Over the last six months I’ve grossed about $70K and have handed it over to the Orange brigade and their erroneously dubbed ‘high interest’ account. Largely because I can’t see how investing in a broken system is going to yield anything but more disappointment.

Clearly, doing what we’re told – investing for retirement and living within our means – has not worked for me.

I’m at a loss. My daily rate is now less than what I charged 10 years ago and the cost of everything has gone up. Each year I consume less and less, yet have less and less to show for it.

This is the lament of people who succumb to greed (tech stocks) and then fear (orange guy). When that doesn’t work, they blame others (“a broken system”). That pattern has been repeated lately, as we’ve collectively binged on real estate (greed) while plowing money into savings accounts and gold (fear). The outcome will be the same – loss of wealth and a diminished future.

Finally, I’ve said on this reb blog there can be widespread loss at the same time lots of people do quite well. And I’ve told you how. There is no silver bullet – no one asset you can buy which will soar when all others sink. Real estate won’t save you, nor stock-fat mutual funds or a garage full of silver bars.

The salvation for what lies ahead – years of uneven and halting markets, falling asset values, narrowing household budgets and a retirement crisis – is to own a lot of things, in small amounts, at the same time.

Some months a few will rise while others fall. In fearful times bonds will go up and equities down. When news is better, the reverse. You need exposure to disparate countries, many markets, multiple asset classes. REITs, preferreds, small caps, precious metals, public and private bonds, emergers, commodities and more. Cash and real estate included.

Diversification and balance aren’t sexy. Until days like these.

Now they rock.

227 comments ↓

#1 i.am.fiiirst. on 09.23.11 at 8:58 pm

ha!

#2 vatoDETH on 09.23.11 at 8:59 pm

Good read!

#3 HouseBuster on 09.23.11 at 9:03 pm

How about staying in cash until the whole thing implodes?

As far as 2008-09 is concerned, I thought you were of the opinion that the situation wasn’t that bad this time.

I said this is not 2008. How bad it is depends on you. — Garth

#4 Peter on 09.23.11 at 9:15 pm

My BCE and RCI.B have survived quite nicely so far…
they pay dividends too..
Some one said..”i have no idea what handset someone will be using in 5 years but I know they will be on one of the networks

#5 Christine on 09.23.11 at 9:17 pm

The thing that bugs me about a balanced portfolio these days…one asset’s loss wipes out the other asset’s gain.

Lots of people would be happy with that right now. — Garth

#6 the Phantom on 09.23.11 at 9:19 pm

Alas…the long predicted meltdown may well have begun. I wonder though, Garth, if the cerebral folk that control the monetary systems in the world will not succumb to the mantra “Inflate or Die”…

Have to see what Monday brings

the Phantom

#7 mike on 09.23.11 at 9:30 pm

Hey Garth,

Why don’t you think it is as bad as 2008. It seems that there is danger everywhere whereas 2008 appeared more local to the US banking system. I would love to hear your thoughts.

Then you weren’t paying attention three years ago. It was global. Today corporate profits are record, rates are flat, lots of liquidity, no credit freeze. Serious, but different. — Garth

#8 Tim on 09.23.11 at 9:37 pm

Garth,
after four and a half years, you are finally right, housing is beginning to tank…

This blog started three years ago, actually. And housing faltered long before this. — Garth

#9 Owl on 09.23.11 at 9:47 pm

“Then you weren’t paying attention three years ago. It was global. Today corporate profits are record, rates are flat, lots of liquidity, no credit freeze. Serious, but different. — Garth”

Completely clueless. Three years ago was mostly US, now it’s US and Europe. Real corporate profits stink without questionable accounting rules and firing employees. Rates are flat if you only count what the central banks are saying, but I’m sure Greece, Spain, Italy, etc would love if their rates were flat. Today low rates = not lending much because you can’t cover the risk premium. No credit freeze and lots of liquidity? Same was true in late 07. Serious, worse, and not different. Nothing was fixed from 08.

One word for you. LIBOR. — Garth

#10 steve on 09.23.11 at 9:50 pm

“I lost my life savings in the tech crash (had invested 50% of every paycheque I’d earned since the age of 12); and a few years later lost about eight grand in an ill-advised mutual fund.”

Krista you put all your hard earned money in asset markets that are essentially zero sum games and ponzi’s.

The markets are fine. Krista chose poorly. — Garth

#11 Sean on 09.23.11 at 9:55 pm

Garth, Garth, Garth…
Love the blog. An investment guru you are… savvy on gold you ain’t. Gold will hit $2000, then $5000, then $50,000… it is trending towards infinity. Which, by the way, is more about the US$ than it is about gold.

Now… whether this eventuality / certainty takes five years or fifty remains to be seen. You give me a Paul Volcker with a Fed funds rate at 15% and it may well be fifty. You give me Simple Ben, with his promise of zero, and even five years may be conservative.

Gold remains the ultimate asset, and the ultimate collateral… and in an age of debt collapse, perhaps we will once again remember what collateral means.

Also, blog readers would be well advised to diversify internationally… while we focus on the headline numbers of the Dow, gold, oil, etc, let’s not forget our poor little loonie fell to 96 and change today.

See what I mean? — Garth

#12 Jon B on 09.23.11 at 9:55 pm

Krista was burned by investing her wealth. Now she’s taking a small loss by holding cash rather than a big loss following the “advice” of the investment community. Krista’s story is a good response to yesterday’s posting about investing and why droves of people are fed up with the greedy money manipulators that are the financial products industry.

Krista was burned by chasing profits without being diversified or balanced. Now she’s losing with a negative yield, through fear. — Garth

#13 gladiator on 09.23.11 at 9:56 pm

Sorry to rain on your parade, Garth, but gold and silver are down because the insiders KNEW FOR SURE that CME will hike margins – see this: http://www.zerohedge.com/news/case-closed-cme-hikes-gold-silver-copper-margins

Now, this means 2 things:
1. there are “players” who can get away with making a killing illegally (using insider information to make profits) and will not be brought to justice – like it happened with the ones who caused the 2008 crisis
2. the little Joe Shmoe – investor is the greater fool because he is left to hold the bag after the well-informed boys with the right connections creamed the so-called “market” and left it like a squeezed lemon.

As George Carlin said: “the game is rigged”…

Yes, somebody else’s fault. — Garth

#14 The Emperor's Clothes on 09.23.11 at 9:56 pm

I’ve always invested but im sitting on my cash for a few more months to let the bears eat on Wall St. Too much turmoil these past few weeks.
Euro meltdown coming in the next 6 months?

#15 Tre on 09.23.11 at 10:01 pm

Clearly the warning signs will not be heeded.

#16 Patrick on 09.23.11 at 10:08 pm

If you haven’t seen house prices dropping in Vancouver you haven’t been paying attention. My realtor is flooding my email with new listings and price reductions for Vancouver East.

I’m reading a few forecasts that 2008 is about to be repeated with Greece being in the position that Lehman Bros. was in. If we get into a financial double dip next month it will be much worse than 2008. Interest rate in 2008 for my high interest savings account was 4.25% now it is 1.25%. The Fed has used up it’s biggest bullet to stimulate the economy. Pray that Greece doesn’t fold around mid-Oct. when they officially run out of money or idiotic doomsday predictions for Oct. 21, 2011 may come true to world finances.

#17 Dr.NickRiviera on 09.23.11 at 10:13 pm

Garth – don’t worry about gold. As you said yesterday, these things tend to recover so there no point in panicking and selling it off during this brief correction.

“This mistake also leads investors to think that falling stock markets (or oil, or copper, or bond yields) will continue to fall into the future. That convinces them small losses will inevitably get bigger. That hard times will turn into desperate ones.”

You forgot to add gold and silver to your list :)

However, you DID warn of the double top and if you hold PMs it would have been wise to sell about a month ago. I guess I should have heeded your advice. Oops!

#18 sebastian on 09.23.11 at 10:13 pm

just buy and diversify the big multinationals, undervalued, sitting on trillions, in 5 yrs you will be fine. Best time to invest in the market is when the herd panics and starts selling.

ie General Mills, been around for 118 yrs pays a nice 4% dividend and unless a meteor hits the planet is not going anywhere anytime soon, even during a downturn people don’t stop eating.

how about the amlp etf energy fund, pays a great divi and makes money on the flow of energy through its pipes so its not affected by the price of the commodity

So many to list, you just need to open your eyes and look.
Turn off global news and start doing your homework, we have never lived in better times.

thanks again Garth got out of all my Vancouver Real-estate back in 2009

#19 the_apocalyptic_one on 09.23.11 at 10:17 pm

I’d hold off on writing epitaphs for gold just yet. For 5000+ plus years it has been the last man left standing, and this time it will be no different. According to Garth this was never, not ever, going to be as bad as 2008; I for once agree with him. It will not be as bad, it will be much much much worse…it would be much safer to write epitaphs for paper currencies than for gold.

Gold is the only thing that is MONEY, everything else is credit – John Pierpont Morgan

#20 Dave on 09.23.11 at 10:20 pm

Another good post! Glad we sold our house and cashed out a few of months ago. Now we wait and rent. Realtors here in Calgary are still calling for a 10% increase in house prices next year! Hahaha what a joke!

#21 Cookie Monster on 09.23.11 at 10:23 pm

This time the economy could slide into a deflationary inflation that sucks net worth out

Ok, we’ve now entered the realm of quantum physics and negative dualities to explain the future of economics in this time warped world beyond the speed of light. We can now eat and lose weight at the same time, our portfolios can simultaneously be up and down 100% in the 21st century understanding of quantum Garthesian economics. I think it’s about to get really weird here, and there too.

#22 JohnnyBravo on 09.23.11 at 10:28 pm

“a broken system”

The system is not broken. It is corrupt.

The markets are corrupt. Governments are corrupt. The financial system is corrupt. The entire economy is corrupt.

Whenever you put money and humans together, you get corruption. It has always been this way. As the character Danny Dalton in the movie Syriana said, “Corruption is why we win.”

It is, indeed, a corrupt system. And we are all a part of it to some degree. We are all its victims; and we are all its beneficiaries.

You cannot escape the corruption in the orange guy’s shorts. Or in gold bullion. Or in real estate. Even the cash you hide under your mattress has been corrupted, not just morally, but physically, materially.

Our system is corrupt in ways most people would not be able to accept. For example, the average person would probably vehemently deny that they benefit somehow from slave labour. How dare you? Don’t you know they have rightfully earned everything they have? Some others with open minds and honest hearts would get physically ill if they knew of the corruptions that are the norm and how they have gained from it.

But if corruption is the norm, is the system really corrupt, or is corruption the excuse we invented to deny the truth?

So you play the game, oblivious that the system is corrupt. Or you are aware of it, but confident that you can beat the system, even though deep down you know that the system is stacked against people who “invest” all their savings in tech stocks or YLO without a clue as to what they are doing.

Or maybe you “invest” in real estate, not realizing that tax deductible mortgage interest is just an agreement between the banks and government to funnel would-be taxes into interest payments. Or you buy gold and pray that the government doesn’t confiscate it, or tax it to oblivion, or that the CME won’t change the margin rules and force panic liquidations. Or maybe you day trade, not realizing that the biggest reason the stock market exists is so brokerages can siphon off your wealth one trade at a time. You even heed the words of the sell-side guys who, for some strange reason, are willing to tell you of all people––for free––which stocks to buy today.

So you play the game. If you win it’s because you are smart. Lucky too, but mostly smart. If you lose, the system must be broken. Yeah, it broke right after you joined in.

#23 T.O. Bubble Boy on 09.23.11 at 10:33 pm

Horizon BetaPro Comex Silver ETF only down 30% today:
http://ca.finance.yahoo.com/q?s=HZU.TO

Hope none of you gold/silver bugs were holding this one.

#24 @crazyfasteddy on 09.23.11 at 10:38 pm

I’m thinking this is worse than 2008… after QE1 and QE2, TARP, & emergency rates, we are in the same place we were back then.. still no recovery and no jobs… record corporate profits and commodities prices were artificially buoyed by endless QE bucks… mostly used to cut jobs and other expenditures to prop up their corporate numbers not because business was good… just like how cdn real estate is staying afloat now…

#25 C K on 09.23.11 at 10:42 pm

Hey Garth,

Not sure if you saw tonight’s Global 6 o’clock news TO edition. Their Consumer SOS segment had a different perspective on how to invest during the market turmoil experienced this week, and the pending global downturn.

Given it’s Global, it’s no surprise that they implied one sure place to invest in this environment is…. (do you even have to guess)…real estate.

I thought I was watching a sitcom when they included an interview with a mortgage broker. I love it, a safe way to invest is to take on more debt, and invest into a an asset that is deflating. Do the producers over there even know the definition of “invest”? I think I may have to send them a copy of the Oxford Dictionary.

#26 Corban on 09.23.11 at 10:42 pm

So if this is 2008 all over again at what point does Brother Carney brother Carney pull the rug out from the house horney with the VRMs and raise interest rates. I would have hoped it was the end of this year but I guess the pressure would be to follow the US and keep the rates as they are for the foreseeable future.

#27 Waterloo Resident on 09.23.11 at 10:44 pm

At first I said to myself “THANK GOD I’M NOT IN A SILVER STOCK LIKE HZU.TO because it just LOST 30% of its value. ( http://stockcharts.com/h-sc/ui?s=HZU.TO&p=D&yr=0&mn=6&dy=0&id=p75452416731 )

Then I thought to myself; ‘Hey, it HZU went down, maybe I should have invested into the opposite, invested into HZD.TO ( http://stockcharts.com/h-sc/ui?s=HZD.TO&p=D&yr=0&mn=6&dy=0&id=p53917317748 )

Thats when I noticed something funny: HZU went down 30% but HZD only went up 24%, somewhere there is 6% missing. No, that’s 6% straight into the pockets of the company who issues these ETFs, only they seem to be getting rich off all of this volatility. That makes me feel rather disgusted because the rich are getting richer while us little folk just get more poor. it sucks.

Thank God I’ve been in cash for the past few weeks.

#28 Cookie Monster on 09.23.11 at 10:51 pm

#13 gladiator on 09.23.11 at 9:56 pm
Yes, that does add weight to the recent down draft, but on the bright side, it makes of a better buying opportunity for those who are not levered, and so it’s the outsiders who are now levered that will get hurt bad next week trying to de-lever, so it should fall more next week until the leverage is cleared, then a strong recovery and steady pace up.

#29 spaceman on 09.23.11 at 11:01 pm

I too invested in the tech crash, but I learned from it, so should Krista. Read some books, start with Money Road, The Wealthy barber… etc.

#30 i.am.fiiirst. on 09.23.11 at 11:03 pm

Krista got burned chasing tech stocks touted by greedy shills shouting “the old fundamentals are out the window. welcome to the new economy. burn rate is what matters.exponential growth”.

She got burned again from shills pushing mutual fund diversification for the up-front fees and commissions.

#31 not 1st on 09.23.11 at 11:08 pm

Stocks can and do go to zero all the time. Real estate never does. Should have bought a rental property when you were 12, now it would be paid off with lots of positive cash flow and a big fat tax free capital gain to go along with it.

#32 Saskaboom on 09.23.11 at 11:12 pm

Business as usual in Saskaboom.

#33 U-The Man on 09.23.11 at 11:18 pm

We are living in difficult times. The best advise is to stay out of debt, keep your job even though you may hate it and keep buying high yield dividend paying blue chip companies. Such companies as BCE, suncor,fortis and trans canada and bank shares. Averaging your purchases. As the years go by you will be rewarded.

#34 Waterloo Resident on 09.23.11 at 11:20 pm

Libor; here’s a good 3-year chart of that:

http://stockcharts.com/h-sc/ui?s=$LIBOR&p=D&yr=3&mn=0&dy=0&id=p47064055453

As you can see, Garth is correct, the LIBOR rate is a LOT lower now than it was back in 2008.

of course, I’m not sure if that makes much difference if Greece defaults, and each weeks seems to bring it closer and closer.

#35 BrianT on 09.23.11 at 11:21 pm

#13Glad-The transparent arrogance at this point is wild-not only is there no desire to hide the crime, it is done right out in the open for everyone but Mr. Magoo to witness.

#36 Truth seeker on 09.23.11 at 11:26 pm

Balanced portfolios is the ultimate statement that you have no idea what’s happening. It is like buying and shorting the same stock.

#37 Best place on meth on 09.23.11 at 11:29 pm

“Recent things I’ve warned you about are cresting house prices, a double top for gold, not being diversified, and deflation. ”

It appears that Garth has called a top in gold.

Sorry everyone, no $2000 for you.

#38 Onthesidelines on 09.23.11 at 11:30 pm

This could go a lot of different ways, though the general picture you paint ( asset deflation combined with price inflation) is probably as good a guess as anyone’s, especially when not if China starts inflating.

Really the worst possible scenario.

#39 Best place on meth on 09.23.11 at 11:38 pm

As you can see by this chart, gold is doomed. Topped out. Finished.

http://www.kitco.com/charts/popup/au1825nyb.html

/s

#40 mackie on 09.23.11 at 11:54 pm

Garth you may be right on gold and silver, but I don’t think their collapse is in the near future or even the next few years. I’m thinking gold and silver will return to its previous highs within a month or two. Tempted to buy more but I think I’ll watch from the sidelines and see where this takes us.

#41 WI BOOMER on 09.24.11 at 12:01 am

Hi Garth-

Checked on my ROTH IRA accounts at Vanguard tonight.
A ROTH is the TAX-FREE when you pull it out investment vehicle here in the US. One funds it with after tax dollars. I’m quite certain Canada has a similar animal.

Bonds up 20.05% for the year, and yields 5.6%

Emerging Markets Down 23%

REIT down 4.4%

Vanguard Wellesley Mutual Fund up 3.65%

overall mix is roughly 50/50%% equity vs Bonds
OK…Diversity works. I am down about 4.5% overall this year on the entire portfolio, which really isn’t bad.
Last year was up in the low teens overall. Am I ahead? You Betcha!! FLASH – Despite rumors to the contrary, MY world is NOT coming to an end!

Thanks to you, and others that try to get us dummies to limit debt, save for purchases, retirement, and be diversified we are doing quite well, Thanks!!

#42 timo on 09.24.11 at 12:06 am

http://www.usedregina.com/classified-ad/Time-Travel-Research-Assistant_14174595

If your interested on re-doing some of the trades you made over the last year I found some transport. Love the ad.

hat tip Nemo at calculated risk

hat tip Calculated risk,

#43 Concessionman on 09.24.11 at 12:37 am

Deflation Rocks!

I just got a 47″ 1080P 120Hz LCD TV for $499! Woohoo!

“Those with cash will make out like bandits…”

Yea baby….dustin off the vulch hat…

#44 Beach Girl on 09.24.11 at 12:37 am

Sitting quiet here. Might be stupid, probably am, but I am holding the course. I didn’t bail in 2008. Even though that was a shocker. All my investments came back. Was not expecting that.

As you probably know, I run a house for single unwed fathers, who pay $500 a month. We are all platonic friends. They are young and do not own anything. But, actually work quite hard. Worrying about money ages you.

I also run a house for single divorced mothers. Don’t want to live there. HAHA.

I have decided not to get stressed over this, as there is nothing I can do.

I have not had a drink in week, but tonight the Jack Russell said Mommy have a glass of wine.

When the shit really hits, I make an awesome Beef and Barley soup. Could be on the horizon.

Good night friends, I am getting soft.

#45 Vulture Fun on 09.24.11 at 12:38 am

Looks like you beat me to it, Gladiator. Thanks for linking to the ZH article. All the meat puppets on various infotainment business networks seem to be ignoring this fact: a 21% hike in margins on gold, leaked in advance to the big boys. Other contributing factors may include options expiry coming up next week, and liquidation by the hedgies (Paulson in particular). They did the same thing to silver, hitting it with 5 margin hikes over a short period of time. I suppose we can expect the same with gold. Fraud watchers may also be interested in how gold was killed five minutes before the Swissie was pegged to the Euro. No matter, at some point the manipulation will hit the wall. Sorry, Garth, I know this is NOT a precious metals blog, but you keep bringing it up.

#46 stealth on 09.24.11 at 12:38 am

Garth,

Based on your quotation:
“Everything at Best Buy will be 30% cheaper. And people with lots of cash will make out like bandits.”

How can the people with cash make out like bandits, legally of course?

Thanks

#47 pablo on 09.24.11 at 12:39 am

Like the pic shows; one thing u can always count on is your dog by your side, no matter what is coming down the pipe, and if it get really, really bad, well he’ll taste good with the right seasoning! nuk, nuk, nuk.

#48 Nostradamus Le Mad Vlad on 09.24.11 at 12:48 am


How Not To Invest — On a wing and a prayer, Orange Guy’s knickerbockers, GIC’s, CSBs, savings and chequing accounts. Not a bad time for a bump, sort out the weenies from the fearless. If it declines further, then better for those who listen to and follow your advice.

“. . . as realtor phones went silent.” — What of putting realtors back to work by letting them run economies, and get rid of bafflegabs like F? Just a thought.

“Yet the price of food, energy and services marches higher.” — Prices are going berserk, and this is why fixed incomes like CPP – OAS – GIS are continuing their loss of purchasing power. Need to have far more diversified portfolios to increase one’s income substantially. The rest are then add-ons.

“The last ones created a public debt disaster.” — From what I understand- debts do not need to be repaid, as they are debts passed on to citizens, so can be passed from govt. to govt., but deficits must be paid back. Do I have that the right (or wrong) way around?
*
#162 Sky on 09.23.11 at 8:46 pm — Hello Sky, never heard of him before, so I did a little research.

Quite an interesting person. The term OBE’s (out of body experiences) is much more accurate than NDE’s, as it’s only these clay temples which run their course, but life does on in the other worlds beyond.

Only the lower psychic regions / heavens can be physically described, not the higher spiritual ones — they can only be spiritually experienced.

Thanks for the info.!
*
Sprott Money runs outta silver (but not lead); 2:32 clip Makiki (Hawaii) Farmer’s Market. Locals have turned away from Monsanto’s poisonous garbage; Eight Greek banks downgraded; Sexy September leads to Black October; Cheap Immigrants While a significant number of Americans are unemployed, a lot of new jobs in Texas go to immigrants; Credulity Problem There does seem to be a problem on this planet, so export it to the sun; Tulip mania all over again in China; Mfg. jobs Leaving America for here.

17:00 clip Live in fear, die in debt (that’s what TPTB want); 7:30 clip CA going ahead with state bank; 7:11 clip Keith Olbermann on why the m$m stays silent about the Wall St. shenanigans; Euro default, Twist and Shout and My Big Fat Greek Austerity; Sticky Fingers Fiddling, but not with a violin.

Palestine on fast track; Spontaneous Combustion Yes, it exists; Activist Post deleted from Google. I wonder why; Pix of the GoM and Gulf Coast; 1:19 clip Truth at the UN; Six CME’s in 24 hours. The sun is a little upset with us.

Frankenfoods Further reasons to grow your own fruit and veggies; 6:49 clip Newer version of the (bareback) Horse Whisperer; Libya How the m$m distorts truth; New info. on breast cancer; Fundamentalists This will mess up the 6,000 history of the world bunk.

#49 new-era on 09.24.11 at 12:51 am

Garth your right and your wrong, its all about timing.

You know Greece will eventually default and the US will not pass the BILL. The country is run by politicians with their own interest. In the next few months investor will be heading for cover in a serious way.

Seeing what up ahead, you can taste the fear coming to your front door in the next few months. If you heavy into cash, wait until the bottom falls, then there will be a great opportunity to buy some defensive “DEPRESSION” stocks for a good price.

Government programs will come to a halt, and construction will take a hit. But as the dusk settles, and unemployment hits new high. Government will probably have road , dam or infrastructure jobs to keep people working (HOVER DAM).

Eventually will go back into a free market and companies will rebuild and grow.

Just look back at the 80’s and every time this happened.

Not the end of the world but a new beginning.

#50 Beach Girl on 09.24.11 at 1:11 am

Clear revelation regarding last nights posts

Disciple is SHELDON. Big Bang Theory. Listening to you is why I don’t Internet date.

SMOKING MAN should be on COME DINE WITH ME.

I should not have drank a bottle of wine, but this place makes me laugh. Going to bed, laughing.

Probably won’t get posted. But I am entitled to some fun.

#51 OV Renter on 09.24.11 at 1:16 am

Hmmm where is BPOE? I think he is licking his wounds… chatter from Van City RE agents is “things are slow”, the only guys who are busy are the RE sign post installers they are swamped!

Happy Fall Folks!

#52 Marco from the bestest place on the smallest part of earth on 09.24.11 at 1:17 am

Garth,

Do you believe a well diversified portfolio with inversely correlated assets made up by preferrers, pub/priv bonds and non leveraged ETF’s has more upsidet in a range bound market than losing 2.5% YoY (1% Gic-like income – .5% tax and 3% inflation) on cash? Eg worthwhile remaining invested vs. Cash considering the risk/reward?

MftBPOE

Duh. — Garth

#53 Dyugle on 09.24.11 at 1:19 am

2008 saw the financial world freeze up completely. Bulk transportation all but stopped as companies operating capital disappeared since they invested it in questionable financial instruments. Money was also tightened up before the crash causing the yield curve to invert for almost a full year. That was a good sign to get out of the markets. Corporate profits were declining for almost a year before October 2008. Another warning and don’t forget the Goldilocks economy or that sub-prime was contained meaning that nobody was taking it seriously. All of these were signs of the top and we have few if any of them now.
Yes Europe is a mess but corporations have not invested their all of their operating capital in Greek debt or for that matter any European countries debt. There is no talk about this being contained and actually everyone involved is taking this very seriously. Actually corporations are holding a record amount of cash on the balance sheet as they do not trust the financial system with their operating capital anymore. Since 2008 was only U.S what happened when the largest economy in the world grinds to a stop as happened in 2008?
The answer is in the stock charts of the worlds exchanges with China actually doing the worst but they all got slammed far worse than today. Preferred shares sold off as did junk bonds but today they are holding their own.
The biggest difference today compared to 2008 is that most large companies are better prepared and have been de-leveraging since 2008 and building up a capital cushion. The reckless behavior of placing your operating capital in a leveraged sub-prime fund because it is AAA rated and it yields 1% more than a safe investment is so 2008.

#54 Romeo Jordan on 09.24.11 at 1:22 am

I bought lots of blue chip dividend payers this week, and gold stocks today. Balance of many things.

If it goes lower next week, I’ll scrape the bottom of my change drawer and buy more.

If it falls more and more, then I’ll eke out some more dough and buy more.

Why not?

#55 Josh L on 09.24.11 at 1:22 am

Read a piece of investing advice one time. It went something like this:
“some people put all their money in the markets and hope they don’t crash. I wait for things to crash and then put all my money in the market.”

It’s still as simple as buy low and sell high. Look at it this way … If you went to the mall and something you wanted was 20% off you’d buy it right? Why not the same with stock?

#56 David Oliver-Godric on 09.24.11 at 1:29 am

Dear Garth, Oh for cryin’ out loud! It was a blatant insider trade this afternoon in gold and silver ahead of the announcement of the COMEX margin hikes. The timing of those hikes, after the close on friday, guarantees a smash on monday. Someone is getting very rich on blatant market manipulation. I’m mostly in REITs. I get my 10% in distributions, and if the share price tanks, I’m getting a higher yield off my DRIPS. Then,when this blows over, the share price goes up 20-40% and I go buy more gold and silver miners that are reporting income based on 30-40 dollar silver and 2000+ gold. Think about it. So where are the market regulators? How much more blatant does it have to get? Where is the media. Do they not have two brain cells to rub together? Or ……..
BTW: I hate conspiracy theories, but Jees…..

#57 Ronaldo on 09.24.11 at 1:30 am

The long awaited correction finally arrived right on schedule. On tuesday before the Fed meetings, I liquidated my holdings in my TFSA and captured a 66% gain (and tax free to boot). Thanks to banks, energy and precious metals. Had I not let greed take over and sold when the TSX hit over 14000 in Feb/March I could have captured a 146% gain. Ces’t la vie. Sitting back and enjoying the fireworks and over the next few months will be looking for the next bargains to stuff in the TFSA. This has to be the best thing since canned milk. Never thought retirement could be this much fun.

#58 nonplused on 09.24.11 at 1:43 am

Relax Garth, gold is still higher than it was August 1st. It was way over extended, leaping in August way beyond the 50 and 200 day moving averages. Where it settled today it will still be pulling the 200 day moving average higher. In fact, a print as low as $1500 an ounce wouldn’t violate the trend line, so lets let the mini bubble deflate and move on, ok? Rumours that the CME was going to raise margin (which they did) and that a nameless European central bank was selling to get dollars (can’t confirm) also contributed. These things happen. But the 2 bars on a monthly chart that touch the high 1800’s might indicate yet another inflection point where the uptrend slope increases, like 2008. Could it indicate an end of the trend? Not on your life. Bennie and the Boys have no choice but to print, print, print and that’s just what they’ll do. They have to add a zero to everything over the 20 years starting in 2008 to get out of this mess, and that’s just what they will do.

I “lost” a lot of money in the last 2 days. But it was all “heaven money”, so I am not too worried. I didn’t have that money August 1st, and then it appeared in my Mark to Market from heaven as gold got silly. Now it has returned to heaven, as I knew it would. I could have sold, and then waited for this inevitable correction, but I don’t want to be out when Greece defaults, which they will. They have to.

I agree with you that many assets will decline for a while before Ben gets the inflation going. But gold isn’t an asset, its money. It’s the only thing that’s ever been money, and the only thing that ever will be. Everything else, including the dollar, is a derivative. And those derivatives depend on the solvency and liquidity of the issuers to remain valuable, because the contract terms evaporate upon bankruptcy, or in the case of the dollar over-issue.

You can beat on gold all you want, but it’s the reason my GarthPlan ™ is doing so much better than yours. I bought 10% of my portfolio in around 2004, and since then it has been doing all the heavy lifting. I should sell it back down to 10% at some point, but you have to dance with the girl who brought you. I am looking to sell at between $4000 and $8000. Somewhere in there the zero has been added, interest rates will rise, it’ll be the 80’s all over, and life will go on.

PS, you are right on your deflation call. Just about everything is deflating against money, which is gold. But that doesn’t exclude that some derivatives (US dollars) might appreciate against others (Euros) and all kinds of other noise when comparing one derivative with another. These are difficult times. You can’t argue Garth. The “gold bugs” have been right for 10 years, and they’ll be right 10 more. Then the debt will be 10% of GDP, and the cycle can start again.

One asset can save you when currency dies: gold. True, never bet the bank, currency doesn’t die every day and the US dollar is not going to zero. But there is only one way to pay off the current debt, and it isn’t economy killing higher taxes. It’s sustained inflation of the 7% per year variety. We will get it. Ben isn’t stupid, he knows how to run a printing press.

This current pause is just politics. Obama’s one term presidency is in the process of being ended by a GOP that won’t raise taxes and a Democratic party that insists on spending increases. So the debt limit distraction behind us, now we find that the appropriations bill still won’t get through and this time it’s the democrats killing it, government shutdown Sept 30. But something will be passed is my guess before then.

I hope you did as I suggested, and took your profits. But it sounds like you’d rather write long posts justifying your greed. — Garth

#59 Math is Fun on 09.24.11 at 1:54 am

Garth,
Great blog – I’m a big fan (here comes the but):

But, are you suggesting central banks will get religion this time? That politicians will tell the truth and admit goverment can’t help? That people need to lose their consumer economy jobs (and their houses) to correct the imbalances created over the past 30 yrs?

Or is it more likely countries like Canada, Australia and the EU will lower rates once again, killing savers and giving loser borrowers a little more rope?

If the Dow breaks 10,000 (again), helicopter Ben will launch…this time with the G7 in tow. I forsee a shock and awe, co-ordinated stimulus “aka money printing” in our not too distant future. In addition, Greece will fail forcing the ECB to recapitilize the banks…let’s hope they have enough ink.

The Dow is only 700 points away.

Bad news for cash and fiat backed assets. Soo, honestly..which is more likely?

#60 Deliverator on 09.24.11 at 1:56 am

When asked about the action in gold [Nigel] Farage stated, “Yeah, we’ve had a setback, a little bit of a settling of the gold price after what was a meteoric rise. I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine. Gold is in an uptrend and professional traders should be buying the dips.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/9/23_Nigel_Farage_-_Financial_Cataclysm_%26_Gold_Unimaginably_Higher.html

#61 Jax on 09.24.11 at 2:47 am

“You need exposure to disparate countries, many markets, multiple asset classes. REITs, preferreds, small caps, precious metals, public and private bonds, emergers, commodities and more. Cash and real estate included.”

What kind of net worth do you need to have a portfolio this balanced? For 20-30-somethings with less than $100k, it’s tough to do. For me, a high savings rate and developing career skills are most important. With my scant net worth, I’d rather slip my cash into Bert’s shorts than spend my time worrying about maintaining a balanced portfolio.

#62 Dom_Now_in_Zürich on 09.24.11 at 4:11 am

When I said gold would be at 1350 again by the time Peter cashed his bullion seems a little to conservative now…

I personally believe that the people making money are the one’s trading daily and the one’s picking up beautiful equities at firesale prices that they will hold for 10 years..(CSCO, T, WFC..etc)

Gold is done….slow decline coming for the next year as people realise a little bar of yellow stuff is exactly that. You can’t eat it either….might be a nice hedge to have a small position but I would much rather be short than long on gold these days…

Garth is so right when he says that the nuts that think gold is going to 5K are exactly that..nuts. Those freaks do not realise that if that ever happens the couple of K they have in gold will do little to help them…..

#63 T.J. BONES on 09.24.11 at 5:52 am

Sir GARTH the Initiate (Teacher) I have read your books, three so far. I am amazed by in them you mention Kitchener, Ontario. I am a lifelong resident of here, and gratified that we would be mentioned by someone of your stature. You even said that you rode in the area, maybe you could stop for a book signing or a town hall meeting setting. I and others would be thrilled to see radical you in person maybe a pic too. There are others that share this. Thumbs up and eyes on the road.

#64 Robert Dudek on 09.24.11 at 6:33 am

Garth, you are peddling the deflation bugaboo again.

Ain’t gonna happen. The central bankers will make sure by providing all the cash necessary to stave it off.

The sell-off in PMs is just a temporary liquidation and rush into bonds. Once people stop being little fraidy cats, they will realize that with negative real interest rates, there are other investments that are a better idea, like dividend paying stocks and the miners.

Why do you only mention gold in your blog when there is a correction?

#65 Mississauga Renter on 09.24.11 at 6:39 am

Garth, I want to diversify my portfolio by buying REIT’s but don’t know how the coming residential real estate crash will affect them, so I haven’t bought any yet since i don’t understand how they work. Do REIT’s buy and sell properties or do they just collect rent, or both? I’d like to buy a broad REIT index, but would it be negatively impacted by the coming crash? I don’t want to buy at the top before a large drop. Much appreciated.

I have already dealt with this subject. REITs will be unaffected. — Garth

#66 bigrider on 09.24.11 at 7:07 am

Bascially Garth what you are saying is that a ‘real return’ on your money after inflation is virtually impossible in the coming years, we should be concerned with a retrun of your money only, inflation adjusted.

Maintain purchasing power with your porfolio only, right?

#67 bigrider on 09.24.11 at 7:08 am

By the way, your post today rattled my cage…most dire and frightening of them all.

#68 David B on 09.24.11 at 7:11 am

There is no fun in saying I/we told you so… so I will not. Here in Canada a few short years ago we had billions in the bank and a few in a emergency fund and mortgages had to be worked for in advance … Then greed set in fueled by an easy life and it spread coast to coast to coast. A few decided to continue with a good ode plan that believes : Less is more, the more things change the more they remain the same. Soon the dust will settle (world wide) as the new world order takes a firm footing and the working class falls into line.

Good luck~!

#69 john grant on 09.24.11 at 7:12 am

Hey Garth,

Great site. The decline in Canadian commercial and residential real estate values is now a foregone conclusion. Say both decline about 25% over 5 years, how does that affect private and public residential rental Reits?

#70 bigrider on 09.24.11 at 7:28 am

Garth a few days ago I asked you if you had omnipotent powers what you would do to fix the worlds ills and you did not respond. Thats fine. Maybe no one has the answers.

Do you think Bernanke is even close to being on the right track?

#71 neo on 09.24.11 at 7:40 am

Garth,

You are getting more and more bearish on the macroeconomy by the week. In every economic cycle there are places to nimbly make good returns. That is something I’m not arguing about. But for you to suggest that what we are witnessing isn’t a continuation of the trigger point of 2008 is disingenuous. We never had a recession followed by a recovery, followed by a relapse now. This is just a continuation of a bigger trend. The U.S., at least, is in a Depression. You seem to think that just because they didn’t go in a continuous line down from Sept 2008 it doesn’t make it so. Guess what, from 1929 to 1933 there were several mini rallies on the way down that investors could have profited from. From 1933-1937 the U.S. got out of the “recession” and had a furious rally and growth, only to stall again from 1938-1939. So even in the Great Depression there were stock rallies and economic recoveries and expansions out of the “recession”. However, those were all false starts and underlying unemployment was still a sticky U6 16% for most of the decade much like it is now and will be for some time. Deflation was still a problem for a decade much like it will be now. De-leveraging still needed to take place and could not be papered over with more debt or stimulus much like now. Political rangling and deadlock was also an issue in the 30’s. European countries going bankrupt/under stress in the mid 30’s (Austria/England) made the Depression worse and global, like it is about to now. The big difference now is social security and the welfare state came out of the 30’s so before that people were very self sufficient and lived on farms and could make things without having to shop for it. Our society simply isn’t equipped for self sacrifice and lacks the discipline to handle a Depression with the dignity of the 1930’s where men wore three piece suits to sporting events.

We are in a secular bear market not a bull market as you’ve said.

1966-1982 bear
1982-2000 bull
2000-2018? 2019? bear

Can profit be made. Yes. If you have plenty of cash and are not overleveraged with debt as you said, same now, same applied in 1929.

#72 BrianT on 09.24.11 at 8:04 am

#71Neo-True, but if Canada and the USA are going to eventually grow out of this situation it will have to be accomplished with far lower energy resources in e.g. 2019. The whole debt based economic model needs actual economic growth to function-the real economy is not growing.

#73 BrianT on 09.24.11 at 8:09 am

#70Big-Ben Bernanke isn’t employed by and doesn’t work for you, Garth or the American sheeple. He is the current head of the Federal reserve Bank-that is who he works for. The guy has shifted a record amount of wealth from the actual economy to the connected financial sector-what else is he supposed to have done? He isn’t Houdini-he can’t create unlimited wealth out of thin air-what he can do is shift it from one pocket to another.

#74 Cow Man on 09.24.11 at 8:13 am

Amigos:

Give me a break on the gold doom. Over the past 18 months we took 38% profit from BMG on three separate sales. Gold will have to drop below $1200 to put us in a loss position. Actually even as of today we are still positive. Just don’t get greedy and use it like an ATM.

#75 BrianT on 09.24.11 at 8:16 am

#62Dom-Sure-maybe beautiful CSCO will be worth more in 2021 than it was in 1998 (23 yrs earlier) but right now it doesn’t look like it will. Oh well, like you say stocks are for the long run-buy and hold just like Ben Graham.

#76 BrianT on 09.24.11 at 8:36 am

#22Johnny-You are only partially correct on this corruption issue. What you are missing is the actual real economy, which is not at all running on a corruption base. You go buy food, you buy a condo or a house, you buy a car or a TV. If the financial market model you are referring to was handling all those sectors, most of the food would be total garbage-they would spend the money on buying the food inspectors. The condo would last maybe a year-they would spend the money on buying the condo inspectors and politicos, etc.etc. When people talk about corruption they forget to mention that our entire society is not nearly as corrupted as the financial sector-if it was, we would be like Mexico, literally. That is the long run result when your entire economy gets infected by this.

I would not want to be you. — Garth

#77 T.O. Bubble Boy on 09.24.11 at 8:42 am

I’d like to buy a broad REIT index, but would it be negatively impacted by the coming crash? I don’t want to buy at the top before a large drop. Much appreciated.

I have already dealt with this subject. REITs will be unaffected. — Garth

“unaffected” as much as any business in a recession… if business is slowing, and unemployment is rising, occupancy rates (and many commercial property values) will still drop.

However, with many REIT yields at 8%-10% or higher, who the hell cares about a few fluctuations during the business cycle?

#78 TurnerNation on 09.24.11 at 8:43 am

This product reminds me of Smoking man’s “Basterd Rumor” algo:

(By the way if you read their financials, they’ve laid off all Canadian staff and outsourced to India…)

http://www.titantrading.com/in-the-news/110413-penson-goes-after-social-media-algos.html

“The Titan TickAnalyst offers users recommendations based on its database of extensive historical information and 10 algos that search for trading recommendations. It added a social media sentiment-aggregating component to its functionality in March. It gets social media data from third party market data provider MarketPsych, which draws it from Twitter. Coulter said the firms sees social media monitoring technology gaining critical mass and capable of giving a more complete picture of the potential movement of a stock.”

#79 T.O. Bubble Boy on 09.24.11 at 8:58 am

It sounds like some fresh HAM (Hot Asian Money) will be coming to Vancouver soon:
Subprime crisis sweeps Wenzhou as bankrupt bosses flee

hmmm…. owners of businesses take multi-million dollar loans and dissapear. I wonder if those dollars still count towards GDP calculations?

This is becoming as predictable as accounting fraud.

#80 Anotherlowlyrenter on 09.24.11 at 9:14 am

Can you run for office again? Between renters, savers and retirees who are disadvantaged by the government policies, you’ll have many appreciative supporters.

#81 Bob Copeland on 09.24.11 at 9:14 am

January 1st, 2011
Gold $1322.00
DOW 11,578

Just saying……….

#82 Conflicted Pumper on 09.24.11 at 9:29 am

#10 steve is spot on, addressing the lament of #5 Christine and Krista:

Financial assets are a zero sum game. For everyone that gains, someone else loses. Your balanced portfolio robs Peter to pay Paul. You invest your hard earned money in these financial instruments so that the profits may be skimmed and commissions collected by those that run the game.

After each collapse in financial markets, those that run the game spend the next few years convincing individuals to “get back in”, collecting profits and commission the entire time. When the shoe shine boys are finally sucked, they reverse the bets to collect big on the downside. This is usually swift and intentional so they can claim “who could have known?”. Then they pretend they are broke, collect their bailout, and begin the cycle again.

As an individual, your only guaranteed return is with the interest you save not carrying debt. Everything else is a gamble.

Garth is now critical of people that invested in the dot-com bubble era. But do a search on Garth and Nortel stock and you will see him recommending that you buy the dips most of the way to zero.

I really like the real estate and “eschew debt” material you write Garth, but convincing unsophisticated investors to put their life savings into financial assets they know nothing about is doing them a disservice. Some may win, but most will be no better off than if they had just conservatively saved their way to retirement. And then there are those who will lose big because they just didn’t have the means to know any better.

Financial assets or real estate assets, or precious metals. They share far more than you realize. — Garth

#83 TurnerNation on 09.24.11 at 9:30 am

It would be neat if this wretched weblog supported logged in user names with a lifetime rating system (e.g. click 1-5 stars for a post, adding to a user’s overall rating).
Of equal interest would be a seperate rating system whereby our Forum Host rates certain posts from 1-5.
(I know I know, “In Soviet Russia, blog rate YOU!”).

Kind of a duelling banjos type of idea.

#84 cliffard on 09.24.11 at 9:51 am

I guess peter didn’t like the nuggets

#85 Daisy Mae on 09.24.11 at 10:05 am

In the Okanagan I’ve noticed, for awhile now, an increase in realtor advertising on the radio.

Now, they’re simply advertising their services….sounding extremely desperate.

A real ‘dog eat dog’ business.

#86 not 1st on 09.24.11 at 10:19 am

This diversification recommendation is absolute bunk. When applied you get something akin to a mutual fund which no one buys anymore because there was always a few sectors that crash while the others tread water giving you nice juicy returns of 1 or 2%, but sometimes negative too. ETFs may be a slight improvement. I never got ahead until I focused my efforts and energy into one place. Thats the secret to success and the most successful people in the world will tell you the same thing.

Bunk. The greatest risk in this environment is thinking one asset will save you. — Garth

#87 Ronaldo on 09.24.11 at 10:31 am

#82 Conflicted Pumper –

“Financial assets or real estate assets, or precious metals. They share far more than you realize. — Garth”

RISK? There is also risk in doing NOTHING, like giving your money to the guy in the orange shorts.

#88 Steven Rowlandson on 09.24.11 at 10:43 am

Gold and silver have not yet been in a bubble by virtue of the almost complete lack of mass public participation and also the price of the metals is no where near total world currency supply divided by ounces of coin and bullion.
Hence no bubble, no mass movement into the metals.
If anything gold and silver are still under the same bear market that existed for decades. The only thing that is happened is a depletion of silver supplies, investment in paper silver with out demonstrable evidence that there is backing ,a small minority of the public have some physical squirreled away and bankers and short sellers are still shorting the hell out of the precious metals. This is not a raging bull market. It is a bullish micro countertrend in a raging anti gold and silver bear market. You might hear of some dealers complaining that the public are not selling.
Well the reason for that is that a very small minority are wise to the situation and the bulk of the public have nothing or nothing worth selling.
Garth when the majority are bragging about their gold and silver investments and an ounce or two of silver buys a very nice house in Toronto or Vancouver please advise us gold and silver bugs to use some of our holdings to take a profit and move up in the world. Until then there is no bubble only a manipulated uber bear market.

What a stupid argument. Oil hit $147 a barrel before crashing to $30. The public was not buying. Another metalhead myth. — Garth

#89 Ultraman on 09.24.11 at 10:46 am

Conflicted Pumper,
You are absolutely correct sir. Eleven years in the banking business convinced me so. What Garth is proposing is to set your emotions aside when comes to investment decision. It’s the same message given by every Financial Advisor and Mutual Fund reps and it’s wrong because you can’t fight emotions and emotional people. You need to invest in consideration or your emotions, not fight them.

#90 scytale on 09.24.11 at 10:55 am

On the positive side, the satellite didn’t kill anyone when it crashed.
PS. still think you should become an MP, and Finance Minister

#91 eaglebay - Parksville on 09.24.11 at 11:12 am

#53 Dyugle on 09.24.11 at 1:19 am

“Actually corporations are holding a record amount of cash on the balance sheet as they do not trust the financial system with their operating capital anymore.”

All corporate cash is mostly deposited in bank accounts and some invested. This cash is available to be used by anybody. Do you think that corporations are putting their cash under their mattresses?

#92 TaxHaven on 09.24.11 at 11:18 am

“…money substitutes, like gold…”

You have it backwards, as time will tell. But you’re missing the long picture – capital destruction.

I bought gold at US$680-900 per ounce; I’m quite happy with even $1100 an ounce. After four years that return would beat any other.

I just wish I’d converted even more DOLLARS to MONEY!

Gold is a high-risk, speculative asset which is no more money than is a barrel of oil. If you bought low, you are a fool not to take profits. — Garth

#93 Abitibi Doug on 09.24.11 at 11:24 am

@Josh L, post #55:
That’s what I thought. I wonder why many people will line up outside in cold weather for the Boxing Day sales, but not want to take advantage of Boxing Week sales going on right now in the stock market.

#94 Sky on 09.24.11 at 11:25 am

So, are we headed here – Japan, After the Bubble ?

http://www.time.com/time/specials/packages/article/0,28804,1902809_1902810_1905192,00.html

Or, perhaps here?

I live downtown, that’s your home address,
You live downtown when your life’s a mess
You live downtown where depression’s just status quo
Down on Skid Row…..

http://www.youtube.com/watch?v=z0kSBiu1IGk&feature=channel_video_title

#95 Daystar on 09.24.11 at 11:27 am

#53Dyugle on 09.24.11 at 1:19 am

I’m inclined to agree. Its not 08′ all over again. Whats happening to Europe isn’t happening here. North North America is better prepared for this than people think. Commodities, truth be told, needed a reset and now they’ve got one. In fact, I’m thinking the bottom in commodities (at least for the next 6 to 8 weeks, a U.S. recession could cause another selloff run) hits the markets by the end of the month and for those who buy into timing, like myself, going “all in” is not a bad gamble to take.

The flight to gold and silver has been too distracting on the economy as a whole. Gold and Silver are not commodities that the world needs to survive. A good number of talented people end up spending their energies, sometimes their very lives developing and trading deposits that the world would have benefited far more from if such energies were spent elsewhere, investors included.

I never really enjoyed researching gold/silver stocks the same way as researching the rest even though, looking back, it held the most monetary potential (Aurellian/Ventana). I know this sounds strange, but the periodic table is one that I find quite facinating in all its respects but gold/silver never did it for me. Its the deposits the world truly needs that interest me whether its copper, iron, nickel, zinc/lead or something more specialized such as tungsten, chromium, magnesium or rare earth. The world needs these kinds of deposits developed far more than PM’s and the valuations of PM have distracted us from where the greater potential lies, it truly has.

Canada has some excellent world class deposits right here at home, it truly does and Canadians should be aware of where they are as well as the potential they hold. We think for example out west, that mining for Tar in Northern Alberta is the miners best play and in some ways, it has its advantages but to think that the Chromite deposits in the ring of fire, the aluminium deposits in the clays of southern Quebec, the iron deposits in Northern Quebec/Labrador, the potash/uranium deposits in Saskatchewan, Rare earth deposits in Northern Quebec, Mactungsten in the Yukon, Zinc/lead in Alaska/N.W.T., elephant sized world class deposits, my God, Canadians should at some point quit pissing around with gold and silver and start realizing we aren’t a one hit tar sands wonder, that there is far more to us than oil and gold so here it is, advice for the investor and I’ll get right to it.

Ignorance is what breaks us. Ignorance is what makes us sell when stuff is low and makes us buy when stuff is high. We let our emotions rule us, we let our pride blind us and we let our laziness get the better of us. (I’ll pick on the fat, slow and stupid another time) Whats stopping us from knowing where Canada’s jewels lay? Whats keeping us from discovering where the wind blows hardest to generate power, or where the tides unleash the most power potential, where the geothermal sights are most suitable to run steam turbines, where the world class deposits are for those who like to dig, right in our own home? Is there not value in knowing this? Does it not inspire national unity in knowing that ALL of Canada’s regions of this great nation can pull its own weight? What stops us from seeking this knowledge? Hear yea, hear yea, you who has nothing but hands to work and feet to get you there, hear yea.

Is there not value in knowing what makes market caps swell, because I assure you all, its far more than supply/demand. Do we all not yet know that the greatest potential lies in the fulfillment of potential itself? Wise speculation on potential alone is what makes thousandaires turn into millionaires. Luck, yes, timing, yes, but wisdom is what we seek for it takes wisdom to spot luck and timing when it comes. Its what brings you to the end of the page so… what is the potential in a smile, the birth of a child, a gift of love, a benevolent random act of kindness? We can’t live on these things but we live FOR them so… remember Garths kind words of diversification. Don’t end up a one hit wonder and you will be blessed, I assure you all.

#96 OH YAH on 09.24.11 at 11:30 am

You also said stocks would go up too, Garth.

I didn’t, actually. But they will. It all depends if you’re invested for next month, or the rest of your life. — Garth

#97 Elmer on 09.24.11 at 11:33 am

At least someone who owns a house can keep living in it regardless of if that house decreases in value or not, and their expenses will remain the same or even fall (if the house loses value, the property taxes will decrease accordingly). Anyone selling their (primary) residence now in order to rent is the greatest fool of all.

#98 JohnnyBravo on 09.24.11 at 11:46 am

#76 BrianT on 09.24.11 at 8:36 am

Don’t be naive. Remember what Cassius said to Brutus.

#99 Snowboid on 09.24.11 at 12:02 pm

Interesting short piece on fools’ gold in G&M – http://tinyurl.com/3zh79mf

Only PMs we have are some small nuggets and medals, our other investments have balanced out okay in last few days. Still have about 90K in RRSPs that mature next Mar – so will decide with our advisor what to do when we return from the Valley of the Sun.

The only disappointment was CAD, didn’t put enough in our USD account.

Of course I’ve been high on codeine for the last few days after ‘dental surgery from hell’ so who knows, may actually be broke.

Anyone know how much a couple of big gold crowns are worth?

#100 Waterloo Resident on 09.24.11 at 12:19 pm

I talked to my rental neighbors next door and I told them about Garth Turner’s blog about real estate and of how its way too over valued to make sense for anyone right now. This is what ‘Don’ told me ( Don is 54 y.o, a part-time small engine mechanic.):

((( “ Garth doesn’t know what he’s talking about, with today’s ultra-low interest rates the banks are practically GIVING AWAY mortgages to anyone who asks for them. Heck, just 6 years ago there would be no way I would ever be able to buy the type of home I’m buying next week, never !!! Don’t tell me buying a house is a bad decision, I don’t know what sort of lies that Garth fellow is trying to sow but I know his type and they are always up to no good, only trying to rock the boat and ruin everyone’s party. Now why is it that YOU are not buying a house like we are doing, what’s holding YOU up? “ )))

I didn’t have an answer for Don other than the fact that I’m going back to school for re-training and I don’t know where I will be having to relocate to in 3 years time when its time for me to search for work, so I want to be free to be able to move to where the jobs are at a moment’s notice. He agreed with me on that was a good reason and that for me, a student, its best just to rent for now until I’m settled in a good high-paying job.

I asked Don what does he consider a ‘high-paying’ job? He said that everyone who has 5 to 10 years experience in their line of expertise are easily commanding $70,000 to $90,000 per year so if a guy earns $100.000 per year then that’s good, that’s comfortable. He told me to try to get a job with the TTC in Toronto, those jobs pay a king’s salary. I’m thinking about it, maybe he’s right.

#101 JohnnyBravo on 09.24.11 at 12:20 pm

#86 not 1st on 09.24.11 at 10:19 am

Throwing all of your investment “eggs” into one basket can make you huge returns––if you pick the right basket. If you pick the wrong basket, you can lose everything.

A fundamental aspect of investing is properly managing risk. Executives at large corporations (e.g. Chief Risk Officers) get paid good money to do exactly that. Without it you are merely speculating, or worse, gambling.

Now, if you are talking about running your own business, that’s a different matter.

I would never invest everything in one asset, but if you can do it successfully, good for you. BTW, if you can name some of those “most successful people” you mentioned, I would love to know who they are.

As for mutual funds, in my experience the average fund investor has no clue whether or not they are getting a decent return. It’s far likelier that people put more money into RE, consumption, debt service or retirement (if anyone has actual data on this I’d love to see it).

And by the way, between 1999 and mid-2008, I held shares in a virtual plethora of equity and fixed income mutual funds. Average annual return (including the tech wreck and the swoon of the summer of ’07; net of fees): 6.25%.

#102 Westernman on 09.24.11 at 12:23 pm

Concessionman @ # 43
Had to laugh at your T.V. purchase. You can now volantarily continue to brainwash yourself with mainstream media bullshit, lies and propaganda. Such wonderful venues that are now available to you are things like dancing with the stars, mindless idiotic irrelevant sporting contests, managed information masquarading as ” news ” endless advertising telling you to buy 6000 lbs. of Dodge Hemi and you’ll be the king Redneck of the neighborhood etc. etc. etc. Enjoy your brainwashing…

#103 Waterloo Resident on 09.24.11 at 12:25 pm

#20 Dave: ( “Another good post! Glad we sold our house and cashed out a few of months ago. Now we wait and rent. Realtors here in Calgary are still calling for a 10% increase in house prices next year! Hahaha what a joke! ” )

= But what happens if a whole flood of unemployed Canadians comes to your city searching for work and there is a BUYING FRENZY ? Then home prices can shoot up 50% in just a month or two. Guess who’s going to be laughing then? Not you, that’s for sure.

#104 An Cat Dubh on 09.24.11 at 12:25 pm

Good post Garth. When I get settled in my new job and start accumulating more $$$. I will definately follow alot of what you said. I do have a very small amount of precious metals. Even though it dropped in the last week, it still is substantialy higher than one year ago. The US should have never gotten rid of the Glass-Steagal act which was meant to prevent another depression.

#105 The thing in the basement on 09.24.11 at 12:31 pm

“the price of the metals is no where near total world currency supply divided by ounces of coin and bullion.”

88 Steven – an interesting link for you:

http://www.financialsensearchive.com/fsu/editorials/dollardaze/2009/0126.html

Ronaldo/Tax haven/eaglebay – good to hear from the island crowd

#106 Sky on 09.24.11 at 12:35 pm

@Snowboid – ” dental surgery from hell.” Ouch! Who was your dentist? Steve Martin?

http://www.youtube.com/watch?v=bOtMizMQ6oM&feature=channel_video_title

Sorry. I couldn’t resist.

#107 timo on 09.24.11 at 12:36 pm

Goldbugs,

You do realize that the Fed cannot run QE3 until congress agrees on a new debt ceiling and that will not happen until they get rid of the anti-fed ,anti-bank fever. Without congress no QE3 and as such no stimulus spending. Mr market now realizes that QE3 is in limbo and is reflecting that change.

Mr market also knows that if Greece votes on Tuesday to not accept austerity measures then a huge rush to safety will take place. That vote is not guaranteed because of public pressure. If there is a default banks will have to take the loss and they will need hard currency. Metals and commodities will be sold to cover and the US dollar will rise. When all this is over and cleaned off the books then it will be gold’s turn to shine.

A very basic view full of holes but shows that money is not chasing investment anymore, it is chasing safety.

#108 Victor on 09.24.11 at 12:37 pm

And only 52 years old…RIP.

http://www.thestar.com/news/article/1058632

Stephen Dupuis, the CEO of the Building Industry and Land Development Association, the Toronto arm of the provincial home builders association, died Friday.

#109 timo on 09.24.11 at 12:46 pm

http://news.yahoo.com/loan-bailout-delay-costing-greece-dearly-142727341.html

To make the country’s huge debt viable in the long-term, a second EU rescue worth 159 billion euros was set up in July.

Part of it involves Greece’s private bank creditors accepting a 21 percent “haircut” or reduction in value of the debt they hold, to lower Athens’s interest costs.

But Athens’ continued trouble has led to speculation that a 50-percent haircut will now be required to make a difference.

this is not going to end well.

#110 bromance on 09.24.11 at 1:18 pm

#53

You are aware most of that ‘cash cushion’ is borrowed? And thus comes with debt servicing costs? And a good portion was wasted on stock buybacks at much higher prices? Its the same ol same ol as there has very little deleveraging anywhere, and people are now ramping up their credit cards. Its almost like people and corporations have said ‘screw it’ , doubled down, and are determined to go out in a blaze of debt soaked glory. Must be that moral hazard thing. I knew it was around here some place.

#111 Surrey on 09.24.11 at 1:28 pm

Local surrey paper had 3 pages of tax sales (all types of homes including many in the million dollar range). What are your thoughts on this Garth. Is this normal?

#112 Daystar on 09.24.11 at 2:32 pm

#58nonplused on 09.24.11 at 1:43 am

For what its worth, I can relate to your long posts :) and! I like for the most part what you have to say. (not always though, apologies, we aren’t deities and as such, to err is human as I know you understand ;).

You’ve always managed to be yourself somehow since frequenting this site, y’know, sincere… even when it exposes the odd outwardly percieved personal flaw. Some would consider it a weakness, but I admire that strength and have always considered criticisms although unsolicited, often constructive and what flushes these criticisms out more than sincerity itself in all of its raw forms? Readers hesitate to wade in for the reprecussions of “feedback” but that feedback can be quite valuable.

Offering an example, when one is “comfortable” with their market successes, its a emotion that reminds us its time to sell or seriously consider selling and one would be wise to not take it any other way. Be mindful of history when it comes to gold for there was a time in the 70’s that gold breached a thousand an ounce before plummetting to $300 or less for more than 2 decades and the same influences that brought gold then to $1,000 an ounce are the same influences we see today. A U.S. recession, rising public, household & corporate debt, trade deficits, high inflation caused by a tumbling currency… what has changed? What will change when the U.S. lands on its feet again?

I will lather, rinse and repeat. The U.S. has approached 100% fed/state public debt to GDP ratios but what of their balance sheet? What of the 3.5 billion the U.S. feds invested in bonds (MBS’s, treasuries), do they not have value and make for a full quarter of what was borrowed? Its true that the U.S. is headed for a bond crisis at some point but how far away is it? When do Bush’s bonds for war and tax cuts to the rich and Obama’s bonds for bailouts mature, do you know the answer to that one, are you so young and patient that you are willing to wait and see golds reaction?

The checks and balances of falling currencies brought on by swelling debtloads bring the edge back to manufacturing, you know this right, so where do you think the future bubble where grow as the subject of treasury bonds finally becomes mainstream? As inflation eats away at cash value, will corporations rest on their money piles? The best chess players anticipate counter moves 7 or more plays ahead. Winning board variations are limited, predictable but not ultimate as anything can happen when one looks at the long game and wanders out of book into the unknown. Is successful investing not the same?

At the risk of sounding analogous, Garth is suggesting as all wise players do, to use all the pieces on the board. Not just real estate (castles) or Queen (wife/career pick ’em) or bishops and knights (stocks, bonds, commodities) but the pawns (fixed income, seeds of talent) too! Yes, those lowly pawns that somehow seem to continue to generate fixed incomes when times are bad. Luck, timing, you take what your opponent gives you, sack pieces to make your remaining pieces stronger and run with it to the finish I say and the classiest players will always take the time to teach you how to become a better opponent in all walks, including how to best handle victory and defeat so… listen to the feedback, take your own advice and scale back to 10% with shiny things or risk going from Sméagol to Gollum:

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

Take stock, that date you are dancing with has no pulse so don’t fall for a date that can never love you back. Take the profit and the criticisms, anticipate the moves and countermoves and above all, diversify as Garth preaches by using ALL 32 pieces on the board (if I dare risk sounding analogous, doubling down with unsolicited advice once again but thats me bud, can’t/won’t help it, its what I do).

#113 Moneta on 09.24.11 at 2:39 pm

You do realize that the Fed cannot run QE3 until congress agrees on a new debt ceiling and that will not happen until they get rid of the anti-fed ,anti-bank fever
——–
Dry powder. They’ll probably wait for markets to tank before going with QE3. No need to prop it up after a dismal 20% weakness.

Anyway, with all this austerity talk, I’m sure our leaders are going to look to cut all sorts of entitlements and pensions before propping up the markets. My guess is that huge money printing will only come after major cuts have been made.

#114 jess on 09.24.11 at 2:46 pm

Lack of Trust in F.I.R.E Industry

Greedy tax shelter abuse

Son of Boss was an abusive transaction aggressively marketed in the late 1990s and 2000 primarily to wealthy individuals.
http://www.irs.gov/newsroom/article/0,,id=137095,00.html
========

from about 1992 to about 2005,
On September 1, 2011, in Charlotte, N.C., Duane Hamelink and his wife, Eileen Hamelink, formerly of Mooresville, N.C., were sentenced to 27 months and 21 months in prison respectively, to be followed by three years of supervised release for each. In addition, the Hamelinks were ordered to pay $1,086,815 in restitution to the Internal Revenue Service (IRS). According to court documents and statements made during court proceedings, from about 1992 to about 2005, Duane and Eileen Hamelink owned and operated a trim carpentry business. The Hamelinks failed to file income tax returns despite earning substantial income and they took numerous steps to conceal their income and assets from the IRS. For example, the Hamelinks obtained several sham trusts and related nominee bank accounts to conceal their ownership of their trim carpentry business. In addition, the Hamelinks used a sham trust to obtain a foreign bank account in Cyprus and transferred approximately $285,327 of income into the account over a three year time period. The Hamelinks also concealed approximately $654,344 derived from the sale of their home using a series of false liens, bogus trusts, and a foreign bank account. Chris Hughes, of Charlotte, N.C., was also sentenced today to six months in prison and six months of home confinement for obstructing and impeding the IRS criminal investigation of Duane and Eileen Hamelink. According to court records, in 2005, Hughes engaged in a real estate transaction with the Hamelinks and directed the proceeds of the transaction, approximately $655,100, to an offshore bank account at First Curacao International Bank. Hughes provided false statements to IRS special agents conducting a criminal investigation of Duane and Eileen Hamlink’s tax evasion scheme concerning facts related to the real estate transaction.
Examples of Abusive Tax Schemes – Fiscal Year 2011
http://www.irs.gov/compliance/enforcement/article/0,,id=228082,00.html
=

How widespread is late trading in mutul funds?

e.g. According to an academic paper entitled “How Widespread Was Late Trading In Mutual Funds?” (American Economic Review, 2006) by Economics Professor Eric Zitzewitz, )

—-

#115 Moneta on 09.24.11 at 2:46 pm

My guess is that huge money printing will only come after major cuts have been made.
———-
Fire more public servants. Cut pensions. Make real estate tank.

Then print more money so vulture bankers and friends can come in and scoop up 500K bargains in Toronto. Essentally robbing paul to pay peter.

That’s my forecast. If there’s a revolution all bets are off. LOL!

#116 InvestorsFriend (Shawn Allen) on 09.24.11 at 2:49 pm

OUT OF THE ASHES?

Oh Gloom, oh doom, oh unfair world. Reports of the financial gloom and doom abound.

BUT WAIT. What’s this? A new report shows that for Americans, credit card delinquencies are not only half what the were two years ago. They are at RECORD lows.

Oh apparently someone forgot to tell that not insignificant group of Americans that have credit cards that they are totally maxed out, unemployed, underwater etc. Somehow this group on average has managed to to do a better job paying their credit card bills than EVER before. EVER!

To my mind this is stunning news and is completely at odds with all the talk of gloom and doom.

It does not mean that we have no problems. But it does suggest we are working through them. Reports of the death of the middle class and the very economy and all that are greatly exaggerated.

See for yourself:

http://finance.yahoo.com/news/Delinquencies-hit-new-low-apf-1454074022.html?x=0&.v=1

#117 Blacksheep on 09.24.11 at 2:49 pm

“Gold is a high-risk, speculative asset which is no more money than is a barrel of oil. If you bought low, you are a fool not to take profits. — Garth”
———————————————————
Ok Garth, so I sell and harvest my gains in PMs.

What then? Go to cash? RE? Bonds? ETFs?

This is the problem, I see NO asset class I would rather be in right now. Gov’s will try austerity first until growth stalls, then will print, as no politician wants to pay the piper on there watch.

Reading today’s comments confirms my belief that the bulk of the dog’s here, get what’s going on. They see the old system is dying.

I don’t know what comes next, but I agree with
Chris Martenson:
“The next twenty years are going to look very different from the last twenty’

take care
Blacksheep

#118 T.O. Bubble Boy on 09.24.11 at 3:00 pm

Has anyone seen that great new romantic comedy “How to lose a Euro member in 6 weeks”?

http://www.guardian.co.uk/business/2011/sep/24/eu-six-weeks-greek-default

#119 jess on 09.24.11 at 3:15 pm

Los Angeles Lawyer Sentenced for Tax Evasion and Passport Fraud in Connection with Quellos Tax Shelter Scheme
On June 10, 2011, in Seattle, Wash., Matthew G. Krane, of Los Angeles, California, was sentenced to 32 months in prison and two years of supervised release for tax evasion and false statement in a passport application. Krane has also agreed to forfeit approximately $23.1 million to the U.S. Treasury and return approximately $17.9 million in illegal fees to his former client, Haim Saban. In June 2009, Krane was indicted along with the former Chief Executive Officer of Quellos Group L.L.C., Jeffrey I. Greenstein, and an attorney and principal of the investment firm, Charles H. Wilk, in connection with a fraudulent tax shelter scheme. Krane pleaded guilty in December 2009 and agreed to cooperate with the government in its prosecution of Greenstein and Wilk. Subsequently, in January 2011, Wilk and Greenstein pleaded guilty, paid $7 million in penalties to the IRS, and were each sentenced to 50 months in prison. According to court documents, Greenstein and Wilk agreed to secretly split Quellos’ fees with Krane in exchange for Krane’s assistance in enrolling a wealthy client in the tax shelter scheme. The client, Haim Saban, had more than $1 billion in capital gains in 2001, and Greenstein and Wilk promised Krane a cut of the fees if Saban purchased the tax shelter scheme. Saban was never informed of the fee arrangement, or illegal nature of the scheme. Between March 2001 and October 2001, the men drafted false fee agreements that made it appear that Saban was paying $46 million to Quellos to participate in the tax shelter strategy. In fact, nearly $36 million of that fee was actually diverted by Wilk and Greenstein to an offshore account controlled by Krane. Krane failed to pay taxes on the income. In addition, when Krane learned of the criminal investigation of Quellos in February 2008, he applied for a passport in a false name, using a false social security number and California drivers’ license number (irs)

======================
Huh?
NEW YORK, JUNE 26, 2007 – BlackRock, Inc. (NYSE:BLK) and Quellos Group, LLC today
announced that they have entered into a definitive agreement under which BlackRock will
acquire the fund of funds business of Quellos for up to $1.7 billion.

#120 Cookie Monster on 09.24.11 at 3:30 pm

#86 not 1st on 09.24.11 at 10:19 am

This diversification recommendation is absolute bunk. When applied you get something akin to a mutual fund which no one buys anymore because there was always a few sectors that crash while the others tread water giving you nice juicy returns of 1 or 2%, but sometimes negative too. ETFs may be a slight improvement. I never got ahead until I focused my efforts and energy into one place. Thats the secret to success and the most successful people in the world will tell you the same thing.

Bunk. The greatest risk in this environment is thinking one asset will save you. — Garth
——-
That’s why I would never by debt. I borrow debt. I’m the guy people lend money to. I’m the guy who has ideas to use the money. People who buy debt have no idea what to use money for except consumption. So they are smart for saving but have no good use, so they lend their money at interest to people like me.

So, I own businesses and I use capital. I have debt and I have no savings in cash or bonds. I own equity and I have productive assets, inventory and finished goods. I have people working for me (In my exchange traded companies).

So with this in mind, I can’t understand how anyone things lending money to government is a good investment. Sure they can print and you’ll get you captial back, but when did government ever invest money wisley and generate a productive return. NEVER. They only consume. It’s like lending money to your friend the counterfeiter to buy a boat. Not smart.

Lending money to business is smart, lending to government is dumb. It’s good to keep this in big picture in perspective as to what debt is. Especially right now.

#121 fancy_pants on 09.24.11 at 3:32 pm

All is well folks. We have a couple tools running the greased machine… I prefer to refer to them as the two ronnies.

http://ca.news.yahoo.com/carney-says-canada-tools-deal-recession-145631634.html

#122 JohnnyBravo on 09.24.11 at 3:36 pm

#88 Steven Rowlandson on 09.24.11 at 10:43 am

IMO, the fundamentals for gold seem strong (negative real interest rates, declining US dollar, currency wars (the Swiss just charred their francs), China and the Chinese reportedly hoarding up, systemic risk, and rumblings that the US is planning a return to some kind of gold standard (I know, I know. Rumblings. Right).

But anyway, based on the info I’ve seen, I can see the case for gold, at least under the current conditions. I don’t agree with it (you can’t use it as currency barring extreme conditions; you can’t eat it; it doesn’t do anything productive; as a backing for money it never works for long, etc.), but who am I to say?

That said, the Beard at the Fed can always throw the markets for a twist and loop everyone back into the dollar if necessary. (French bank runs might help, too.)

As for signs of a bubble, don’t look for people lining up at your local gold dealer. These days, I’d bet most North American retail gold bugs are buying the paper, not the physical. Even if you buy bullion you can buy it online at ScotiaMocatta. So I would look there instead to gauge demand. Today, even gold is virtual.

#123 Cookie Monster on 09.24.11 at 3:52 pm

Gold is a high-risk, speculative asset which is no more money than is a barrel of oil. If you bought low, you are a fool not to take profits. — Garth
——
It’s not the same.
I’ll sell my products today to anyone in the world in exchange for gold, you give me close to the right weight of gold at today’s US$ prices per ounce and I’ll ship product to you, but I don’t take oil nor credit cards either. Sorry, no sale.

#124 Bill Gable on 09.24.11 at 3:55 pm

In response to #111 – the welter of tax sales are but a precursor.
Mr. Turner can explain why, and has been for two years.
My friend – this is a new era.
Pay attention, and turn off Ozzie, CKNW, Global and the rest of the “vested interest crowd” -and get smart.
Wow – there are some pretty whack charts, but most are telling me – be nimble and ready.

#125 Junius on 09.24.11 at 4:02 pm

#103 Waterloo Resident,

How could a flood of unemployed people come into a market and push prices up 50%? Are you for real? Just Realtor nonsense.

Unemployed people don’t buy houses when they move to a new city. They rent or shack up with friends or relatives for a long time while they get on their feet.

Besides, there is no part of the country with the exception of perhaps Fort McMurray that has the ability to give enough people jobs to impact their housing market.

#126 Junius on 09.24.11 at 4:07 pm

#100 Waterloo Resident,

I call B.S. on your conversation with your so-called neighbour Don.

Here is my favourite part: “I don’t know what sort of lies that Garth fellow is trying to sow but I know his type and they are always up to no good, only trying to rock the boat and ruin everyone’s party.”

This is Realtor speak for don’t warn the Greaterfools. The party is being “ruined” by the debt crisis. Tell your neighbour Don he needs to smarten up. Or is that you?

#127 Live Under Your Means on 09.24.11 at 4:08 pm

#106 Sky on 09.24.11 at 12:35 pm
@Snowboid – ” dental surgery from hell.” Ouch! Who was your dentist? Steve Martin?

………

Funny. But on a serious note, told DH to have the gold in my mouth (crowns, bridges, etc.) removed before I’m cremated. Mom’s gold fillings done overseas in her 20’s were all gold. Back in the early ? 40’s – IIRC, she had to have her teeth removed and Dad was with her – teeth were flying every which way. Not good dental care or good dentists back then. I’ve had Dentists remove the wrong tooth, etc., etc.

#128 Ronaldo on 09.24.11 at 4:38 pm

#55 Josh L – quoted the following:

“some people put all their money in the markets and hope they don’t crash. I wait for things to crash and then put all my money in the market.”

Exactly. That would apply to silver right now with a 39% drop from its 1980 high. There will be many more bargains in the months to come. The world is not going to come to an end. Wish Rukeyser was still with us. Loved his show.

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

#129 wtf????? on 09.24.11 at 4:51 pm

I disagree that anything ‘crashed’ last week. We have been suffering from the same lack of confidence all year….and since 2008. Introducing conclusions of a double top ( which by the way is a TA term meaning nothing ( zero) to money managers) is acceptance that the media has something to say about finance.

Nothing has changed the macro. The rate of consumption is growing…not falling…..cheap anything is no longer to be found. We saw the effects of a short term down turn in the financial markets in ’08 produce huge shortages in supply. and another unprecedented period of price increases and M&A…IOW’s there is a supply problem….a confidence problem…but there is no problem with the macro.

The ‘hair on fire de jour’ is going to be solved with more tax dollars being printed. I published that latest stats a couple of days ago to show how more paper was flooding the markets unabated….what do you think is going to happen?

The austerity measures that will follow the Euro Zone bailout are a politicians nightmare…which is why they’ve been fighting like hell. Cutting spending is the last thing a politician wants to do. However…..it will be done and taxes, inflation and the value of all commodities will increase exponentially into the bargain.

Unless you haven’t noticed gold is always cut off at the knees before every G8, G20 and EU meeting. The $100 drop was expected….the buying has already begun in Asia as we sleep and gold as an investment is still up 30% on the year…..considerably better than the preferreds and bonds often touted as safe. Look……..if you saw the stats on the paper money being printed showing an increase of 28% YTD then you can make the leap and understand that inflation ( money supply) is running at 28%…not the 1.9 Carney stated. Acknowledging inflation is rampant is not political expediant…..doesn’t mean it isn’t so.

When the government prints 28% more paper every year it is in effect devaluing your savings and everything you own by the same amount. Sure….your house price went up….really???? did it…..or did the unit of exchange go down and you’re havin to use more of them to achieve the same outcome? Bananna’s at $5 each? coming to a supermarket near you……and then will you feel good about your ‘million dollar home? Only if you’re an idiot and really bad at math.

#130 Math is Fun on 09.24.11 at 5:03 pm

This just in: http://winnipeg.ctv.ca/servlet/an/local/CTVNews/20110924/economy-crisis-G20-flaherty-110924/20110924/?hub=WinnipegHome

“F pushes Europe to ‘overwhelm’ debt crisis. This problem in Europe needs to be overwhelmed as the Americans overwhelmed their problem,” F said on Friday, referring to the almost trillion-dollar bailout of U.S. banks in 2008″

“The IMF’s policy-setting group, which is in favor of bailing out Greece, Portugal and Ireland, said it’s encouraging that the Euro’s 17 members are willing to act in concert”

Sound like a coordinated shock and awe global money print coming to a central bank near you?? Ref to #59.

#131 maxx on 09.24.11 at 5:17 pm

#43 Concessionman on 09.24.11 at 12:37 am

Well done! Guerilla consumers rock. Greed-fuelled, idiotic prices- not.
Canadians pay far too much for the same goods compared to U.S. consumers.
Prices generally need a serious kick in the cojones.

#132 neo on 09.24.11 at 6:14 pm

#116InvestorsFriend (Shawn Allen)

It’s easy to pay off your credit card when you no longer have to pay your mortgage every month, which is the case for millions of Americans currently squatting in their own homes. Now that mortgage deliquencies have picked up in August to the tune of 33% we will be seeing foreclosures spiking again shortly and their goes your sunshine. Besides, the long term debt:income ratio since World War II is 75%. Although the U.S. has cut it down substantially since the housing crash. It still sits at around 130%. In other words, the de-leveraging of household balance sheets is still on the front nine so to speak. Also, keep in mind 40% of parents used the appreciation of their homes the past decade to fund their children’s University costs. That is now gone and many Americans are finding it very difficult to now do that without the home ATM. They are now being forced to save more which will furthur impaire consumer spending and is something not discussed very often. Especially given the cost of a college education.

#133 Waiting for the sun on 09.24.11 at 6:39 pm

Typical balanced fund ( stocks and bonds) is down 5% YTD. That’s the mix suggested on this blog.

The cash holders (GIC etc.) beat that handily.

None of this is surprising in times of deflation like this.

Balanced portfolio 2010, up 15%. GIC, 2%. Two year average, balanced portfolio beats GIC by over 7%. — Garth

#134 simkev on 09.24.11 at 6:44 pm

#121 Cookie Monster
I am not a big fan of government, however to say that lending government money is a bad investment …. you drive on roads, right? Went to school, hopefully! Went to the hospital, most probably! Well that is because the government borrowed money. All good uses and all of them consumed by you.
Big picture !!

#135 Beach Girl on 09.24.11 at 6:49 pm

Hi, no not high, but not to well

Out of context.

When I was young and stupider, I went on all inclusive holidays (other word for married).

Which is stupid, because I live at the beach. And my life is all inclusive. Other story.

But does anyone know what is going on in these industries. Personally, it would be too much effort to get by trim ass on any flight. To head off to some third world country (Oh, is that us). Much too lazy for that.

No, seriously. I read the Nat Post and Star every weekend. Yes, I backpacked the world when I was even younger 5 times.

But am curious, are these poor bastards dead in the water. Drinks are watered down, the mystery meat? Well I am not to fussy considering the two retards I dumped.

Miss Daisy the Jack Russell said, OKAY Mom, only one more glass of wine. She is right.

#136 bill c on 09.24.11 at 6:49 pm

Of course its worse than 2008. We threw billions of dollars at it, but this time there is no more money in the kitty. This has to play out and thats what many of you dont understand. This is world wide and Canadians will feel it the most. Personal debt is higher here than any where in the world. Get ready for a Canadian crash never before seen. Its going to be a BLOODBATH.

#137 Pat on 09.24.11 at 6:52 pm

@ #128 Live Under Your Means,

Speaking about dentists, there is one particularly bad dentist in Halifax. Her office is in Clayton Park. First name starts with “J” and ends with “enine.” Had the misfortune to be brought to her as a teenager. Now every time I visit Halifax, I think about stopping by at her office and telling her what a disgrace to the medical procession she is. So be aware :)

#138 Marnic on 09.24.11 at 6:52 pm

Latest I hear from the G20 meeting is a scheme to magic up a couple of trillion euros out of thin air to recapitalize the banks, and allow Greece to default and inflict a 50% haircut, yet still remain a part of the Eurozone. Desperation stuff. Maybe a bounce in the markets early next week, then the realization that 17 separate governments have to ratify this will set in and it’ll be a return to panic as usual. Not bailing on US Treasuries just yet.

#139 Soylent Green is People on 09.24.11 at 6:54 pm

Let’s repeat b/c it’s very important:

Krista was burned by chasing profits without being diversified or balanced.

Now she’s losing with a negative yield, through fear. — Garth

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#140 Ronaldo on 09.24.11 at 7:13 pm

#119 Conflicted Pumper –

“Please qualify and quantify the risk you say exists by doing nothing. I am talking specifically about the unsophisticated investor who does not understand all the rules of the game when it comes to financial assets. Those are the people who get sucked in and have their hard earned money confiscated.

I am sure many who come to read this blog are in that category.”

I totally agree with your statement and also believe that the majority of people ( I would say 95%) are totally illiterate in managing their finances and the reason we are in the state we are in today.

So, rather than blaming the system for their financial blunders and losses they should look into the mirror for the causes.

There is risk in absolutely everything you do in life. Hell, its risky getting married when you consider that 1 in 2 marriages fail and anyone with that experience knows what that can do to your financial well being. But we still do it.

When I said there is risk in doing NOTHING, I also meant that people can cut down the risk by educating themselves in managing their finances rather than just giving their money to the [email protected] or the guy in the orange shorts.

Problem is, most people nowadays spend more time planning their next vacation than they do the rest of their lives then bitch and complain when they suffer losses with their investments. At least the people who come to this blog are at least doing something about it.
They are learning. They are doing SOMETHING. Thanks to Garth for providing us with this opportunity to learn.

#141 Snowboid on 09.24.11 at 7:34 pm

#106 Sky on 09.24.11 at 12:35 pm…

Thanks for the lighter side, strange though, from my perspecitve that’s exactly what happened in the chair – except the screams were an octave lower!!

If I had known the post-op care would have been so liquid, I would have bought shares in Ensure.

#142 Nostradamus Le Mad Vlad on 09.24.11 at 8:39 pm


Banana Meringue Chocolate Curdled Lemon Cream SPAM The rogue asteroid trading space junk narrowly missed my head, landing in a backyard for a nice bbq and other goodies.

Today is a grand day. Almost nap time!
*
Wall St. The peasants have not dissipated and Live feed; 7:49 clip LA too; Eurozone Multi-trillion dollar bail out because of this; then, Derivatives Time Bomb; Honest Money is a pipe-dream and SScientific Money Slightly better than Honest Money; Necessity is the mother of invention; Europe About time they got off their sorry butts; 25:57 clip and article. Russia for sale.

Euro Doom Who is responsible? Ohio Selling prisons;

alCIAquada The truth about 9-11, and the training simulations before, keep gushing out like the GoM oil spill; Sayonara, international law; TEPCO starts paying out; Bahrain US about-face, as per normal but not Yemen; Don’t forget Pakistan; Philippines More protests, but of a diff’rent kind.

Cop speaks out about what happened after 9-11; Obomba is not a leader, but a dictatorial tyrant; Islamophobia FBI’s training materials loaded with this BS; Proof the m$m doesn’t know what it’s talking about, just making stuff up (such as CC); Link in Iran’s military capability; ‘Net Censorship picking up speed; David Cameron Didn’t Stalin, Pinochet, Hitler, Ceaucescu etc. also have iron fists? Putin He’s baaaaaack!
*
#58 nonplused — “. . . government shutdown Sept 30.” — Interesting view. See following — Sept. 27 — Dick Cheney repeated Note the date — Sept. 26. Sept. 27 is when the terror drills start. Similar to 9-11 — history rhymes and repeats, and 0:50 clip More on Denver.

#143 Rural Rick on 09.24.11 at 8:57 pm

Can you field this question Big Guy?
If capitalism is viable it really should stand on it’s own and not need need periodic CPR. How cum we stagger from one bailout to another?
Comments please

#144 AACI Home-Dog on 09.24.11 at 9:21 pm

#144 Rick…
If capitalism is viable it really should stand on it’s own and not need need periodic CPR. How cum we stagger from one bailout to another?

I say it is because capitalism, like democracy, is not perfect, like anything else in this world. And, where we are (Canada, US) consider us lucky… it is what all the poorer countries are striving for, so don’t look for an improvement soon.

#145 InvestorsFriend (Shawn Allen) on 09.24.11 at 9:24 pm

CAPITALISM NEEDS CPR?

Well consider this:

Democracy is one vote per person.

Capitalism is one vote per dollar.

Capitalism is survival of the fittest.

Democracy takes from the successful to give to the unsuccessful.

It may be Democracy that is the real problem here.

But we need democracy…

If governments can keep out of the way capitalism will continue to work.

It’s governments that can’t stomach failure. Capitalism did not rescue failed banks, that was democracy or government.

#146 jess on 09.24.11 at 9:33 pm

“FHFA lawsuits against 17 banks in America been launched, and it was stated that Goldman Sachs were employing property valuers or appraisers who would overstate the value of the land that they were lending against”
http://www.earthsharing.org.au/renegade-economists/

http://michael-hudson.com/2011/09/russian-ripoff/
=================

Yves smith asks:
Sunday, September 18, 2011
Are Private Investigators Being Used to Intimidate New York Attorney General Schneiderman’s Staff?

Saturday, September 24, 2011
How the Banks Take Down Politicians

Politico include AT&T, Altria (ie. Phillip Morris), Boeing, Lockheed, Time Warner, and Verizon, all of whom are putting in money through yet another front group, RATE (Reduce America’s Taxes Equitably).

#147 Peter B on 09.24.11 at 9:37 pm

The economies of the world are in need of adult supervision.

Europe needs to realize that the PIGGS are never going to pay back the money they borrowed. That is what happens when you lend your money to countries or people that can’t pay it back. Time to have a realistic restructuring of these sovereign debts.

Anyone holding US dollars or bonds has to realize that their value is going to decline drastically and they will loss lots of purchasing power.

China has to realize that it can’t run trade surpluses forever and that the US probably going monetize their debt (print more money to pay off creditors).

Canada has to realize that the world is in trouble and our consumers better start deleveraging or they will be in for a world of hurt.

Garth why your advice is great for people who have money to invest. Unfortunately, a lot a Canadians are too deep in debt to invest in anything. For those Canadians I have the following advice.

Pay your high interest debts first and fastest while making the minimum payments on lower interest debt. Once you pay off the high interest debts you then pay off the next highest interest loan and repeat. Of course to do this you have to spend less then you earn so start coming up with ways to reduce your expenditures and increase your income. If you don’t do this now you are going to have a miserable old age.

#148 Joseph [Original] on 09.24.11 at 9:41 pm

STIMULUS II IS COMING! Just finished watching the news and both Mark Carney and Jim Flaherty stated unequivocally that a second round of stimulus will be forthcoming if the global economy tanks. This they said will insulate Canada from the worst of the downward spiral. This confirms what alot of bloggers have been saying on this post, namely, that whenever Canada looks like it will decline economically (which ultimately will directly affect Canadian nreal estate values), the Feds will intervene. Unlike many of our western counterparts, we have the capcity to do it.

#149 Waterloo Resident on 09.24.11 at 10:28 pm

I’m a renter and my neighbor Don is a renter too, he moved in about a year ago, but now he’s moving out and buying a house. I TOTALLY think that its the WRONG time now to buy any form of real estate, but then again I might be wrong so who am I to say.

What I DON’T like is how he bashed Garth, I didn’t like that at all. Garth is here trying to help us with his insight but Don just shows how the small -brained people think; they are like lemming and they follow the pack.
That’s all.

#150 JohnnyBravo on 09.24.11 at 10:31 pm

#149 Joseph [Original] on 09.24.11 at 9:41 pm

Government “stimulus”, if it actually works at all, only works when the economy has the ability to grow fast enough to more than pay for the stimulus and its attached interest charges. (Hard to do when the largest credit bubble in history is deflating.) Otherwise, all you get is a (very) temporary boost followed by more debt, higher taxes and a currency that is worth less so stuff will cost more. Since 2008 the gov has been throwing everything but the kitchen sink at the economy and the banks. What’s next? The sink?

#151 timo on 09.24.11 at 11:31 pm

http://www.economonitor.com/rebeccawilder/2011/09/24/linking-sovereign-risk-to-corporate-credit-spreads-in-europe/?utm_source=rss&utm_medium=rss&utm_campaign=linking-sovereign-risk-to-corporate-credit-spreads-in-europe

Financial firms in Europe and the US are hitting crisis mode, as illustrated by relative borrowing costs, spreads, to comparable government bonds

http://www.telegraph.co.uk/finance/financialcrisis/8785706/Europe-has-six-weeks-to-find-debt-crisis-solution-warns-Chancellor-George-Osborne.html

You have 6 weeks!

#152 Smoking Man on 09.24.11 at 11:35 pm

To wasted to post cohen ya…………………………..

#153 Smoking Man on 09.24.11 at 11:36 pm

Next topic
The log it’s a mirical

#154 Andrew on 09.24.11 at 11:54 pm

Garth, I feel I have to point out the contradiction when you say that precious metals will collapse, but in the list of assets you said that people should hold, you mentioned PMs. I would expect someone who thinks they know what they’re talking about to at least take a position and be consistent about it.

I’m a modest investor, just a small time computer programmer in my 20s, but yesterday I put in an order for about $2,400 worth of Canadian silver coins, pre-1967. I’m a huge gold and silver fan, and contrary to popular opinion, I’m not crying over the 25% fall in silver in 2 days. I’m ecstatic. I just increased my silver holdings by about 50%, and I did it at $30.50 an ounce, the lowest price I’ve ever paid for the metal.

I also disagree with your notion that stimulus is going to end due to unpopularity. Politicians will not allow themselves to be perceived as standing by and doing nothing while banks collapse and interest rates shoot above the real inflation rate, which they have to at some point. An economy where money in the bank doesn’t keep pace with inflation is the exception, not the norm, and it is unsustainable.

I did not say PMs would collapse. But this is a speculative, risk-laden investment. An appropriate holding now would be 5% of a portfolio. – Garth

#155 Observer on 09.24.11 at 11:56 pm

@ Joseph

I believe that Canadian real estate is overdue to tank in locations where price-to-rent is way out of whack. No “stimulus” will help that.

#156 Nostradamus Le Mad Vlad on 09.24.11 at 11:59 pm


Ghost stories for your bedtime reading!
*
Shorting the S&P in October; Eccentric The Brits love to make a song and dance about nothing at all; Praying for a miracle. Hardly anything else is working; Copper Forget gold — copper is queen. JPM took 80% of the copper in London some time ago; The Red Zone Not the NFL’s, the markets; Timmy Numbnutz Anything to shift attention away from problems at home.

Link in Goes with #58 nonplused post “. . . US govt. shutdown Sept. 30”. Seems there’s more to this than meets the eye; NATO butchery and starvation continues; Austerity Double standards; 1:01 clip Delusions of grandeur (EU); Further evidence the US is a dictatorship run by communist czars; USS San Francisco Goes back to Boxing Day ’04, the ‘quake and tsunami. Scroll up to top; Obese outnumber the starving; The Terminator Cyborgs becoming reality; 2:13 clip How war profiteers steal a nation’s wealth (links in).

#157 NWO on 09.25.11 at 12:10 am

at the end of the day the Internation Banks will take it all for pennies on the dollar.

That is their plan, and I think your 3 moves away from check mate

#158 debtified on 09.25.11 at 12:55 am

Garth, can you please hook all the single people making several comments a day, consistently, on this blog up with each other? I have a feeling it’ll have a more positive impact on their lives than a balanced portfolio.

For starters, since Beach Girl is starting to sound like Smokin’ Man, you can hook her up with him. I know he’s still married but I think he’ll entertain the idea of a booty call. I don’t think she want to be with living with a anyone anyway. I’d like to read a comment from them shortly after a booty call.

Thank you.

#159 Nadia on 09.25.11 at 1:36 am

Is it always “greed” when people try to make good investments, and then “blaming” when they criticize a system? There’s plenty of things wrong with many systems and trying to make wise choices in everything from real estate to stocks — i.e. trying to make a profit, not a loss — strikes me as prudent, not necessarily greedy.

#160 Deliverator on 09.25.11 at 2:15 am

#22Johnny-You are only partially correct on this corruption issue. What you are missing is the actual real economy, which is not at all running on a corruption base. You go buy food, you buy a condo or a house, you buy a car or a TV. If the financial market model you are referring to was handling all those sectors, most of the food would be total garbage-they would spend the money on buying the food inspectors. The condo would last maybe a year-they would spend the money on buying the condo inspectors and politicos, etc.etc. When people talk about corruption they forget to mention that our entire society is not nearly as corrupted as the financial sector-if it was, we would be like Mexico, literally. That is the long run result when your entire economy gets infected by this.

I would not want to be you. — Garth

Actually, what in what he says isn’t true? Take the condo situation, for example. If the politicos weren’t bought off, would the leaky condo situation in Vancouver even exist?

#161 Mike on 09.25.11 at 2:56 am

re: 119 “…the risk you say exists by doing nothing.”

There is no such thing as doing nothing. Unless you mean investing in cash and debt CAD and holding Canadian real-estate.

#162 timo on 09.25.11 at 3:52 am

http://www.caseyresearch.com/gsd/critical-read/cme-raises-gold-silver-copper-margin-requirements

This takes effect at the close of business on Monday…and is just one more way of beating the last leveraged longs out of their positions so that the bullion banks can cover more short positions. This is as criminal as it gets.

If there are that many leveraged long positions still left, this will negatively impact the prices of these commodities during the Monday trading day as these longs toss in the towel as well.

Gold is going for a ride

#163 timo on 09.25.11 at 3:58 am

http://www.publications.parliament.uk/pa/cm201012/cmselect/cmtreasy/uc1505/uc150501.htm

“Q10 Jesse Norman: Just to be clear, you have said some incredibly interesting things. We are talking about a situation in which there is political and economic threat to the markets; there is an effect from sheer complexity; there is an effect from cheating and non-transparency on the rules; and there is a bank contagion route and a corporate contagion route. That seems remarkably helpful and interesting. ”

fascinating read into the euro crisis.

#164 betamax on 09.25.11 at 4:34 am

Everyone here talks like buying the dips is foolproof, but there’s a lot of people who lost fortunes buying all the way down.

Sure, dip-buying has worked well in general since the ’07 bust — thanks in no small measure to federal bailouts that kept markets pumped — but the feds are running out of bullets. I don’t care what C or F claim about Stim2 insulation — if the rest of the world is in recession, our commodity econ will tank.

#165 penpal on 09.25.11 at 7:09 am

Garth

You mention that realtors phones went silent this week, etc.

Were there some statististics to show this published this week? , or;

Was it anecdotal? , or

Is this reliable feedback received from experienced realtors who you feel are credible?

I ask this because someone I know well with a lot of experience in mortgage ‘remedy’ (read POS and ‘foreclosure’ proceedings) has told me that their listings of ‘foreclosed’ homes that are being sold under POS has slowed markedly recently.

Also, I feel that this could be “the canary in the coal mine”.

#166 penpal on 09.25.11 at 7:18 am

@ 149 Joseph

I think you are about to see the ECB or EU shock the world when they announce a multi trillion (yes that is trillion with a ‘t’) euro “solution” to the EU problems.

They are desperate and know that they need to “ringfence” the major econmies of Portugal, Spain and Italy and they will do it “undemocratically”, that is, without the consent of the general populace.

I can’t determine the unintended consequences as I am simply not that wise, but I presume it will have an effect on the price of everything, including gold. (it would also explain to some extent the recent drubbing of the gold price, IMHO).

#167 miketheengineer on 09.25.11 at 8:21 am

Garth et al:

Nostradamus le mad “dude”

Here is a link for you…more of the same Doom and Gloom.

Shape Report #12 was released last week:

http://truthfrequencynews.com/?p=13622

You might have already seen it. It talks about in great detail about the coming food shortage in the USA, amongst other things of interest, like the economy and what to expect in the next 12 to 18 months….once again USA based info.

The report is some 50 pages in length….good luck reading it. These guys are not 100% accurate, but then again the future is full of uncertainty .

#168 Moneta on 09.25.11 at 8:29 am

They are desperate and know that they need to “ringfence” the major econmies of Portugal, Spain and Italy and they will do it “undemocratically”, that is, without the consent of the general populace.
——–
For me it does not make sense for France and Germany to deal with this situation in an American style printing bailout until the countries have truly imploded in the Greek style. Too many puppets to control anyway unlike in the US where we had Paulson ex-leader of Goldman forcing his way.

I think there might be some weird form of Marshall plan coming out somewhere down the road which might get financed by the US or China. But you usually have to wait until the place is truly devastated and the lender can squeeze the terms it wants. Think Europe anfter the war. Not there yet.

Everyone thinks the US is too weak but the reality is that the US is leading us into our dire situations, China and India are still not ready to pick up the baton, and the US still has a lot of clout and resources.

#169 Moneta on 09.25.11 at 9:03 am

I think there might be some weird form of Marshall plan coming out somewhere down the road which might get financed by the US or China. But you usually have to wait until the place is truly devastated and the lender can squeeze the terms it wants. Think Europe anfter the war. Not there yet.
————-
My prediction is more of the same, empty words, until all PIIGS end up like Greece..

#170 Moneta on 09.25.11 at 9:15 am

So if they do a US style bailout, that means the PIIGS take a little longer to croak or does it accelerate the process…

It just seems to me that too many cooks spoil the broth.

#171 Markey on 09.25.11 at 9:31 am

#97 Elmer – how many People actually own their homes? Most are just renting from the mortgage lender (i.e. Bank) Selling merely means exchanging one landlord for a less expensive one.

#172 BDG-YYC on 09.25.11 at 9:57 am

Hmmmmm …

DBRS Places BMO’s Non-Cumulative Perpetual Class B Preferred Shares, Series 10 Under Review – Neg. Aug 17, 2011
DBRS Places CIBC’s Non-Cum. Class A Preferred Shares, Series 26, 27 and 29, Under Review – Negative Aug 17, 2011
DBRS Places RBC’s Non-Cumulative First Preferred Shares, Series W Under Review – Negative Aug 17, 2011
DBRS Places TD’s Non-Cumulative Class A 1st Preferred Shares, Series M and Series N, Under Review with Negative Implications Aug 17, 2011

DBRS has today placed the Non-Cumulative Perpetual Class B Preferred Shares, Series 10 (the Convertible Preferred Security) rating of Bank of Montreal (BMO or the Bank) Under Review with Negative Implications. The Convertible Preferred Security is convertible to common equity at the issuer’s option. Today’s action applies only to the Convertible Preferred Security that DBRS rates; all other preferred share ratings of the Bank are unaffected.

You’ve just proven either your profound ignorance, or your attempt to mislead. The issues above are ‘convertible’ which means the preferreds can be converted into common equity of the bank, at the issuer’s whim. Obviously this is not the kind of preferreds I have been recommending to people which are non-convertible and perpetual. Be honest, or be gone. The DBRS release is below. — Garth

The rating action follows the revision of how DBRS views the elevated risk of conversion in an environment where the Office of the Superintendent of Financial Institutions Canada (OSFI) is encouraging Canadian banks to put in place resolution mechanisms, including the release of the OSFI Advisory on Non-Viability Contingent Capital, issued August 16, 2011 (NVCC Advisory), and the regulator’s ongoing push toward loss absorption from capital instruments, including convertible preferred securities, to generate common equity prior to the declaration of non-viability by OSFI. On conversion, there is the potential for the holder of this instrument to incur losses.

#173 T.O. Bubble Boy on 09.25.11 at 9:58 am

The Suburbs: now the #1 place where the poor people live (at least in the U.S.).

http://www.theatlanticcities.com/jobs-and-economy/2011/09/rapid-growth-suburban-poor/190/

Notice on the map in this article that Florida (multiple areas), Phoenix, and Vegas are all in the highest category, with greater than 100% growth in suburban poor from 2000-2010. And, Texas (with the Rick Perry “miracle”) also has 2 cities – Dallas and Austin – in the > 100% group… as well as Houston in the second-worst bracket for growth of suburban poverty.

#174 Echo on 09.25.11 at 10:11 am

#116 Investorsfriend:

The MSM (mainstream media) has managed to manipulate people by twisting the information yet again. You have been conned Shawn. Garth points out all of the time how they do this with real estate stats and this is what they have done here, just with a different subject.

Credit card debt stats are low now because the debts of
the decimated crowd no longer exist on the balance sheet. Cardholders remaining are people with higher ratings, better credit, maintain low balances because they hate debt, and didn’t suffer much over the past 5 yrs in any regard. Mostly the 3 facets of the upper class, or the top tier of the middle. They usually pay in full
each month, or carry a small balance at most. (the way to do it people).

That article had no shame. The writer actually intentionally discussed the write-offs to manipulate readers even more, i.e. saying how w/o’s had decreased. Of course they have…. each year post Armageddon down there the allocation in that category for the books decreases (they spread the carnage out a bit to maximize the tax benefit).

So, the devastated lower and mid middle class aren’t getting back on their feet with credit (they’ll have to
wait years to get another card due to foreclosures (and bankruptcy in most cases), Americans aren’t all of a
sudden paying off their debts (all written off via those bankruptcies or the creditors just gave up), and the people that were unaffected in the first place are making the numbers look good. It’s a perfect opportunity to write a manipulative article such as that one.

The USA is a frightening mess unfortunately, jobs are scarce, houses are vacant in mind-blowing numbers, all over, and credit cards are for the ones who didn’t lose their homes or their jobs. A minority, and the numbers today are nice and tidy at the Banks. Oh, and tighter qualifying rules are in place of course, mission accomplished. No more “deadbeats”, majority wise, there will always be rich deadbeats who don’t pay their bills, trust me. ; ) A drop in the bucket to the Banks now, plus they NEED the write-offs.

#175 penpal on 09.25.11 at 10:13 am

@ # 163 timo

see my post at # 167 as to possible reasoning for this “beat down” in gold

they need to control the message that gold is sending or rather atempting to send – “shooting the messenger” as it were

#176 Echo on 09.25.11 at 10:19 am

#117 Blacksheep:

You don’t know how to spread your risk. That makes you a crappy investor, sorry.

Some people just can’t be educated. Not even when they’re painted a blood red picture of how the wealthy ACTUALLY do it.

C’est la vie. : )

#177 Dan on 09.25.11 at 10:37 am

The G7 or G20 or who ever you wat to call it can have all the meetings and talks they like. In the end they will offer empty words and band-aids that will work for a few weeks or months. Looks at greece with the first bailout (which should of ended it) failed to work. They solved the greek problem in the summer with the bailout 2…ooops No that’s not working……now we wait for a anoher Fake SOLUTION OF EMPTEY WORDS. We need countries to fail and banks to drop and let the FREE MARKETS which every leader seems to hate do what has to be done. Interest rates need to increase to normal 7-8% and all those who go bankrupt…. to bad. We need wages to drop so we can compete with the world and we can’t do that with high housing prices. How are we going to compete with the US for jobs when people can work at micky D’s in some parts of the US and still afford a 3 bed 2 bathroom 2000sq house while some Canadians would need $30 an hour plus jobs just to get by living in a 500sq shoe box. Canada is going to be in a world of hurt. My worry is millions of immigrants will walk from Canada leaving their debts to distory those who remain.

#178 Mr. Boxall on 09.25.11 at 10:39 am

Thank you for the post U-The-Man #33

#179 Junius on 09.25.11 at 10:50 am

#149 Joseph [Original],

The Feds may provide more stimulus but they are running out of bullets. At this point the most they could probably do is provide spending on infrastructure projects. This will have some positive impact although it will add to the deficits.

The main problem remains that you have an over indebted consumer in an economy that relies on consumer consumption to drive it. With interest rates already as low as they can go there is little they can do to stimulate spending.

Eventually the Canadian economy needs to de-leverage just like all the others. Extend and pretend just buys you time and more debt.

#180 Moneta on 09.25.11 at 10:52 am

Credit card debt stats are low now because the debts of
the decimated crowd no longer exist on the balance sheet. Cardholders remaining are people with higher ratings, better credit, maintain low balances because they hate debt, and didn’t suffer much over the past 5 yrs in any regard.
==========
Go to the iShares. http://ca.ishares.com/product_info/fund/holdings/XCB.htm

Look at the XCB iShares which copies the corporate bond DEX index.

You will notice stuff like :

CARDS II TRUST
GLACIER CREDIT CARD TRUST
EAGLE CREDIT CARD TRUST

Even the names are scary.

#181 MM on 09.25.11 at 10:55 am

slightly annoyed with the “renting from the bank” phrase – you acquire two things when you buy a house with a mortgage: (1) a property, (2) a bunch of debt – the house doesn’t care how you paid for it, and the debt doesn’t care why you got it, they are separate entities, and you need to make sure you can deal properly with both.

#182 TurnerNation on 09.25.11 at 10:57 am

If you want a Depression-era portfolio try these Canadian stocks:

– LIQ – Liquor Stores trust, payout .09/mo.
– RUM – Penny stock, they own liquor outlets in AB.
– RUM.DB – 7.75% Debentures for the above.
– BRB – Brick brewing
– BR – Big Rock, .60/yr dividend.

Hard times call for…hard liquor?? ;
Roll up the Rum to win?

#183 penpal on 09.25.11 at 11:04 am

@ # 139 Marnic

read the latest Telegraph article – they will NOT have to ratify this obscene bailout with 17 nations NOR THEIR ELECTORATE, just the way they like it – no opposition.

#184 Tony on 09.25.11 at 11:16 am

#4 Peter on 09.23.11 at 9:15 pm

BCE is a house of cards. Once this housing market implodes BCE will drop back to the high teens. A company with no foresight whatsoever a company model only built on price increases. Dsl over copper VDSL and bonded VDSL (which will never take place) are all the same end of the line dsl. At least sell BCE and move into a cable operator that has a future or even sell BCE and buy Bell Aliant which has true fiber to the home.

#185 penpal on 09.25.11 at 11:18 am

@ # 169 Moneta

I am sorry that I do not know how to attach an article to this post, bu I draw your attention to the most recent Telegraph article that discusses the 2.5 TRILLION euro package under contemplation by Germany, France, et al. dated today Sunday 25, 2011.

hope it works!

http://www.telegraph.co.uk/finance/financialcrisis/8786665/Multi-trillion-plan-to-save-the-eurozone-being-prepared.html

#186 penpal on 09.25.11 at 11:21 am

@ # 169 Moneta

I hope that it works.

Meaning I hope the link posted works.

This is slated to occur in 6 weeks.

Let us know what you think please.

#187 Junius on 09.25.11 at 11:47 am

#182 MM,

I believe the phrase “renting from the bank” is used to remind people that rental payments and interest payments are really the same in that you are paying a third party to live in a property.

The only difference is the equity in the home and the equitable rights that come with a mortgage. However in these times this equity can now turn negative as opposed to the past few decades where it always increased.

The point is that the phrase is used to counter the assumption that house prices always rise.

#188 Westernman on 09.25.11 at 11:56 am

# 36 – Beach Girl
Your posts were always silly in the extreme but you are pushing the envelope today… your post is completely incoherent… maybe you should lay off the booze for a while.

#189 BDG-YYC on 09.25.11 at 12:09 pm

Sir, @ #173 … you responded …

You’ve just proven either your profound ignorance, or your attempt to mislead. The issues above are ‘convertible’ which means the preferreds can be converted into common equity of the bank, at the issuer’s whim. Obviously this is not the kind of preferreds I have been recommending to people which are non-convertible and perpetual. Be honest, or be gone. The DBRS release is below. — Garth

………………..

Hardly an appropriate response however your commentary is constructive.

What the hell ? Who pissed in your cornflakes this morning?

#190 The thing in the basement on 09.25.11 at 12:14 pm

172 Markey – from 2006 census:

12.2M Canadian households
8.4M owner occupied
3.5M without mortgage.

I’m looking forward to the new stats.

#191 TurnerNation on 09.25.11 at 12:36 pm

Our fearless leader on internet radio again:

http://talkdigitalnetwork.com/2011/09/week-money-34/

Ffwd to 31 min:

■Harry Dent – The Great Crash Ahead.
■Mike Mish Shedlock – Operation Twist & the looming global recession.
■Garth Turner – The mood out there.

#192 The Duke on 09.25.11 at 1:22 pm

Garth why aren’t you telling people to buy short etfs? My portfolio is up 5% since the beginning of the year. 50% gov bonds, 25% precious metals and 25% short positions. I didn’t load the truck on the metals and keep them for insurance in case of sovereign debt default. Tell the Greeks, Italians and Spanish to shun gold when they fear then end of the Euro.

Short positions are good to hedge against the gold and silver positions. While gold did go up during the great depression gold WAS money back then. It is not today. I think owning 10-30% of your net worth in metals is good I just avoid the stocks because they can be more easily manipulated.

HEDGE People! Garth is right!

Time will tell! Until then, Party on!

#193 michael on 09.25.11 at 1:51 pm

I find what you share with anyone who listens timely and significant for small time investors.

#194 Beach Girl on 09.25.11 at 2:25 pm

#189 Westernman (as in Brokeback Mountain)

What got your knickers in a twist. Was not a woman.

Your posts were always silly in the extreme but you are pushing the envelope today… your post is completely incoherent… maybe you should lay off the booze for a while.

Garth, can you please hook all the single people making several comments a day, consistently, on this blog up with each other? I have a feeling it’ll have a more positive impact on their lives than a balanced portfolio.

____

I bet you are going broke. Get it. HAHA.

#159 Debtified

For starters, since Beach Girl is starting to sound like Smokin’ Man, you can hook her up with him. I know he’s still married but I think he’ll entertain the idea of a booty call. I don’t think she want to be with living with a anyone anyway. I’d like to read a comment from them shortly after a booty call.

___

WOW, am totally impressed by both of your anger to this woman. I could probably can imagine the poor lives of the women you live with, if you have any.

By the way my houses are mortgage free. Do not need the support of some moron. Oh, is that you?

And of course I think SMOKING MAN is cool. You two however are not.

And if Garth says I can stay here. NANANA.

#195 Moneta on 09.25.11 at 2:32 pm

187penpal on 09.25.11 at 11:21 am
——
I’ve read a few articles. My first take is that it’s 6 weeks away. A LOT can happen in 6 weeks.

My second take is that there are a LOT of people with BIG egos implicated in these negotiations… with opposing goals on top of that. In the US, when the bailouts got done, there were only a few people holding the reins. Not so in Europe. In Europe, retirement policies, unemployment benefits and whole lot of other policies are different from one country to the next. Getting everyone on the same page will be something else. Even if they actually get a bailout done, things will still explode anyway… If you just paper over the entire thing all you get is:
1. major inflation
2. players reverting to their old tricks with Germany exporting and Greece consuming too much… but it won’t work!

I’m thinking they are just trying to soothe the markets for as long as possible… You know, it gives those in the know some time to pack up the kids and fly off to their private island.

Or maybe they actually believe they can get something done but will they really get every member’s approval within 6 weeks?

I have to sleep on it.

#196 Ben on 09.25.11 at 2:36 pm

The stock markets are headed further down. There is volatility which is heaven for trading opportunities but date those trades, don’t marry them.

http://leavittbrothers.com/blog/?p=4883

#197 Moneta on 09.25.11 at 2:51 pm

If I understand correctly, this deal would require a change in the German constitution. A referendum would have to be held and Merkel would lose her job.

Of course, anything is possible. History books are full of examples of leaders who crushed their people. That’s how we got the rise in the SS movement in the first place… but we’re not allowed to use it as an example.

But interestingly, everyone is tiptoeing around Germany because of its past which we are not allowed to bring up. LOL!

BTW, the Americans were the ones who called for restitution after WW1.

#198 Westernman on 09.25.11 at 3:15 pm

Beach Girl,
You are borderline retarted aren’t you?

#199 Comrade on 09.25.11 at 3:51 pm

“Savers will get diddly – in fact, a negative return after inflation and taxes. Everything at Best Buy will be 30% cheaper. And people with lots of cash will make out like bandits.” -GT

I am missing a point here. How can you lose on inflation, and gain on deflation at the same time? Not sure how cash gains in value, and saving accounts devalue.

Money earns less and buys more. — Garth

#200 OttawaMike on 09.25.11 at 3:55 pm

Moneta/Penpal

One of the scenarios that i heard about was Germany leaving the euro so that they can then devalue the currency to reflect the position of the PIIGS.

Traveling around the Balkans this week, I have ran into a couple of Germans and asked them their opinions. They both didn’t like playing the money source for the indebted sections of Europe but as they put it to me: Germany needs all of these countries to buy her goods, mostly the cars and they will continue to fund the whole scheme.

In both Romania and Serbia I see the EU funding signs and flags at every road construction project and even mountain hiking trails and bike paths. On top of this there are separate funding announcements from the German govt. at most locations.

To me it looks like the classic Chinese buying US debt scheme. These symbiotic relationships need to keep going so everybody stays afloat. But it’s not a Ponzi scheme, let’s be clear about that…

#201 OttawaMike on 09.25.11 at 3:56 pm

Forgot to add, the Germans were of the opinion that Germany would never leave the euro.

#202 Beach Girl on 09.25.11 at 4:01 pm

#189 Westernman (as in Brokeback Mountain)

What got your knickers in a twist. Was not a woman.

Your posts were always silly in the extreme but you are pushing the envelope today… your post is completely incoherent… maybe you should lay off the booze for a while.

Garth, can you please hook all the single people making several comments a day, consistently, on this blog up with each other? I have a feeling it’ll have a more positive impact on their lives than a balanced portfolio.

____

#189 Westernman (as in Brokeback Mountain)

Hey twit, how do you know that single people are on this site daily?

Maybe they have money and are not LOSERS like you. I can afford my little luxuries in life, and this is one of them. Get a job. I don’t have to.

Where does pinhead here, decide what kind of lifestyle I deserve. A more positive lifestyle. RETARD.

BLOW THIS. Balanced portfolio, means he knows nothing.

Am I not worthy of this website. Does he know that I volunteer and take cancer patients to hospital. And volunteer for mental heath issues. I guaranteed that I am richer than this moron. (had a better adjective). Rhymes with SO.

And if someone actually lives with this moron good luck to you.

So sorry, and I only drink on the weekends.

Anyway I am volunteering for Breaking Down Barriers against mental illness.

If you say anything about that, you are a complete utter MORON.

No I have no known mental illness, only responding to you.

This pointless conversation is over. Both of you go back to your finger painting. — Garth

#203 Beach Girl on 09.25.11 at 4:13 pm

Well, not cranked now. But what is going on in the tourist industry. Like a canary in a coal mine. Just curious.

#204 Ben on 09.25.11 at 4:18 pm

Come on bubbleheads, you think Canada can keep the bubble mania going when the rest of the world is teetering. Just look at the TSX, it’s been on a slide since April. That’s tomorrows reality in a export commodity reliant economy like Canada.
Check the price of copper for example, it’s on a dive. Look at any commodity, the downward trend is intact.

#205 jess on 09.25.11 at 4:38 pm

recruiting centers of a different kind?

Newspaper Editor Files Suit Against Philadelphia Police for Constitutional Violations
.

..”In August 2008, the Army opened the AEC, a 14,500 square foot “virtual educational facility” with dozens of video games. The Center, deliberately located near an indoor skateboard park, replaced five more traditional recruiting offices, and was designated as a two-year pilot program. The initial cost was $12 million.

Army recruiters could not actively recruit children under 17, but could talk with the teens and answer any of their questions about the Army. Among the virtual games was one in which children as young as 13 could ride a stationary Humvee and shoot a simulated M-16 rifle at life-like video images of Muslims and terrorists.

Because of the emphasis upon war, and a requirement that all persons had to sign in at the center, thus allowing the recruiters to follow-up as much as four or five years later, peace activists began speaking out against the AEC.”

http://blog.buzzflash.com/node/13035

#206 Get real on 09.25.11 at 4:42 pm

# 150 Waterloo Resident
I’m a renter and my neighbor Don is a renter too, he moved in about a year ago, but now he’s moving out and buying a house. I TOTALLY think that its the WRONG time now to buy any form of real estate, but then again I might be wrong so who am I to say.

What I DON’T like is how he bashed Garth, I didn’t like that at all. Garth is here trying to help us with his insight but Don just shows how the small -brained people think; they are like lemming and they follow the pack.
That’s all.

——————————————————————————————————————–
Do you have mental health issues??

#207 Nostradamus Le Mad Vlad on 09.25.11 at 4:53 pm

#168 miketheengineer — G’day Mike, and thanks for the link.

Had already seen it, not read it as it’s too long, so I did the basics with your link.

It’s not so much going to be a food shortage, but rather a people shortage. With what is going on at present, parts of Africa in a state of famine, wars being started all over the place, more people in the west are obese, outnumbering regular folk, the whole set-up down here has to be removed, shaken out thoroughly then it will settle down a little.

So whatever happens here is fine, as then isn’t one single thing I can do about it. All I can do is to look after myself and, if I have the resources, help a few others out — that’s it.

Cheers!
*
I had a new supply of lead- and tungsten-filled tin foil helmets arrive yesterday, so there should be enough to protect what little (if any) I have left of The Old Grey Whistle Test.

But today’s is too convoluted for me. I need to get out and get some radiated air flowing through, to give me a good kickstart for the week.

#208 Keeping the Faith on 09.25.11 at 5:13 pm

Once again Garth, wonderful post.
I come to your site for your posts and everytime I find something interesting and usually a new way to look at financials.
Reading the comments and making my own sometimes now is fun too.
Why is it that for every 1 intelligent comment there are 5 idiots using the keyboard?
Seriously!?!?!
Debating about any single asset class or stock is idiotic, I don’t care if it’s gold or real estate.
And the posters that have started coming out of the woodwork proclaiming that their Warren Buffets?!!? common?!?!
… especially on this last posting! do you find it necessary to say “I’m soooooo happy I’m in cash now and I got out at 0.005% of the peak of the market in March” … these are the same hot air bags that at a party or work function need to tell you: a) about their brothers ‘friends son’ who is an NHL superstar or about b) how their neighbours niece is dating Celine Dions nephew or c) their buddy that sent in those emails from Microsoft to get the $5000 Bill Gates was promising to everyone …. GET OVER YOURSELF, You’re Idiots!

If you come to this blog, come armed. Armed with knowledge and a willingness to learn more, to challenge your intellectual curiosity.
Be a builder of knowledge, not a WindBag
Otherwise, I suggest you start declaring yourselves as what you are, Windbag #1, Windbag #2 … etc.
Better yet, use the common nomenclature “First WindBag!”

My frustration with the idiot posters on this site has reached a bubble point, I guess I should have sold at the peak.

#209 MasterBootLicker on 09.25.11 at 5:14 pm

Everyone needs to learn the term “Central Bank Intervention”. The rigging of all markets 24/7 is the new normal. We live in a planned society and a Corporatist/Fascist economy so what do you expect. Even professionals refuse to participate in the stock markets of today because there no longer is fundamental valuations involved, its just a continuous rigging and manipulating by the plunge protection team.

#210 Stevie Why ?? on 09.25.11 at 5:21 pm

and Garth said “Now They Rock” and “both of you go back to your finger painting” ………hmmmmmmm ….. lets expand on those thoughts for a moment. How about a little body painting and body rocking ?

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

Are you in Beach Girl?

#211 debtified on 09.25.11 at 5:27 pm

Hi Beach Girl,

I was just playing around. Obviously, you’re the wrong person to be playful with. I don’t know you. We’re all just a bunch of characters here. Please don’t take it personal. I’ll make it a point to leave your character alone from now on. I am sorry if I hurt your feelings. That was not my intention.

I wonder if Smokin’ Man had a chuckle at least. :)

#212 debtified on 09.25.11 at 5:54 pm

Here are some articles on China from the Globe & Mail.

China’s economy shows signs of losing steam:
http://tgam.ca/Cv2V 

Can China save the world again?:
http://tgam.ca/Cvir

#213 Ben on 09.25.11 at 6:01 pm

#209 Keeping the Faith

I guess that post was directed at my #205 because I used the word bubble.

Seriously though, what makes Canada so expensive?

There is no reason what so ever we should be paying the kind of money we are for a box to live in. Absoutely sweet dick all and you know it.

We don’t make twice the incomes of the rest of the world, were not running out of land, were not a climatic wanna be place, there’s nothing that induces the prices we pay !

Zip!

#214 Ben on 09.25.11 at 6:08 pm

Oh and also Keeping the Faith don’t give me the job speel because that’s a pile of crap. I’m from Canada and work in the States because there’s no work in my profession in Canada. I’m in Texas paying a whopping $750 a month to live in a box with all the fixings and making $130,000 a year!
Something don’t add up there does it?

#215 Victoria on 09.25.11 at 6:22 pm

Ben,

You are so right. A friend works for Boeing. He pays $80 a month for amazing health care.

I don’t the US health care system is very good (the actual health care is great it is the system that does not work) but Canada is terrible. I know too many people who had to go to the US for surgery – the waiting list was too long or they didn’t do it here.

I lived in France and it was pretty awsome. Almost too awsome as far as I was concerned.

#216 Habbit on 09.25.11 at 6:49 pm

Good day all. Thanks again Garth. For the little guy like myself who does’nt know much about how things really work keep ready this blog. A bit of advice for folks like me from our experience.
-Budget and stick with it. Organize your finances so you have $ left over to save and invest.
-pay down high interest debt first and as quickly as you can.
-keep paying down debt.
-don’t buy things you don’t need until you can really afford it.
-buy things you NEED when they are at a real discount and you know it. Keep doing it but watch out for those expiry dates. This applies to almost everything we need. Patience. For fun keep track of what you’ve saved and what you do with the savings.
-if you buy a house buy what you can afford. Not what the bank says you can. Be realistic. If you have 2 kids 1000 sq/ft bungalow is plenty of room. Don’t get caught in the Jones triangle. Ya don’t need 3 washrooms and 2800 sq/ft.
-recognize that working for a living and raising a familly in this great country is truly a blessing. Don’t worry about living on top of the hill. Just by being in this country you ARE there already.
-with your first savings create your own rainy day fund for emergencies like loosing a job. Make sure it’s liquid so you can get to it fast. If you haven’t used TFSA yet that may be a good place to put it for the short term until your situation gets better and you use the vehicle for other purposes explained on this blog many times.
-save for children’s education as soon as they are born and learn about RESP and if they work for your situation. WE did not and it did cost….
-learn from other peoples mistakes including parents.
-don’t assume your job is safe. Keep ahead of changes in your industry even if say you’re a tradesperson.
-Don’t be jealous or envious of others successes. Being a risk taker and entrepreneur is not for everyone. Be thankfull some people are as they help create employment.
-educate yourself as much as you can about bonds stocks ETF’s and all the rest of it. Have fun with it.
If you are like me seek fee based advise. I’ve dealt with the nice lady at the bank and others who did not have my families best interest as the objective. I’m still loking for that person but at least I’m on the money road now.

With regards to selling your paid for house investing and renting do be carefull. We are in Regina and there is very little of decent quality available. A garden home is $1,500 + utilities. Don’t take too much risk with the proceeds cause ya likely won’t be able to do it again. A small HELOC in some saer investments talked about on this blog I think is likelly best at least in our situation.
-Oh yea. When the house is paid for rent the cottage for a month and invest and save the balance with your eye on the retirement date.
Remember being happy and living modestly within your means is just fine.

#217 Beach Girl on 09.25.11 at 6:52 pm

#212 Debtified

Hi Beach Girl,

I was just playing around. Obviously, you’re the wrong person to be playful with. I don’t know you. We’re all just a bunch of characters here. Please don’t take it personal. I’ll make it a point to leave your character alone from now on. I am sorry if I hurt your feelings. That was not my intention.

I wonder if Smokin’ Man had a chuckle at least. :)

__ Ah shit. I have heard worse. You can diss me all you want. Because I am better looking, and that counts.

Really, it is so much fun being here. I might not be as smart as most of you. I am truly trying to learn stuff.

Yes, I am single. I intend to stay that way. Should be no issue to anyone.

And Garth will defend me. Bully. But I am OKAY with you. Hate being nice. Truly sucks.

#218 Ben on 09.25.11 at 6:58 pm

#216 Victoria

I got in an accident in Alabama a few years back, wrote off my SUV and was my fault.
I went to the hospital a couple days later because my foot was swollen up bad and I thought it might be broken.
I went right in, did the paper work, was under the x-ray within the hour.. not broken
I never paid a dime, not a penny… don’t ask me how I pulled that off but that’s the truth.

#219 Habbit on 09.25.11 at 7:07 pm

OOPS forgot a few things. (and likelly more!)
-save on your taxes legally whenever you can
-get hold of the FED’s and find out what your CPP will be paying when you do retire. Do it early. It helps with your plan. And don’t forget about the OAS and GIS.

#220 Beach Girl on 09.25.11 at 7:18 pm

DELETED

#221 Herb on 09.25.11 at 7:50 pm

#216 Victoria,

there is something to be said for European health care. Just imagine physicians making emergency housecalls in France (and Austria, and Germany, for instance). With blue-light-equipped vehicles no less. No wonder those countries have fiscal problems. See what socialised medicine does for you!

#222 Hurr on 09.25.11 at 7:50 pm

Love the image today.

Beach Girl sounds like she is getting a case of early-onset dementia. Random scattered thoughts with no coherence.

#223 Nostradamus Le Mad Vlad on 09.25.11 at 8:09 pm


This should put the US Fed, BoC and others in their place (garbage can) — wrh.com:

Thought For The Day
“The government should create, issue, and circulate all the currency and credit needed to satisfy the spending power of the government and the buying power of consumers. The privilege of creating and issuing money is not only the supreme prerogative of government, but it is the government’s greatest creative opportunity. The financing of all public enterprise, and the conduct of the treasury will become matters of practical administration. Money will cease to be master and will then become servant of humanity.” — Abraham Lincoln

BTW, TV (m$m) viewing is now at an all-time low, ‘net stuff soaring. The truth is here!
*
Typical bloated govt. bureaucracy; Govts. all over the west are probably crapping in their pants, as they realize sheeple are finally waking up to what’s being done to them; Various clips and text Curious why govt. would surround the protestors with chemical and biological response unit; Predictions No one can predict when a revolution starts; Eavesdropping on the US Fed; Obummer “This makes Solyndra look like petty cash…”; 7:14 clip This has something to do with financials, I think.

The Elite (TPTB) “The rich aren’t scared that we hate them, they are scared that we don’t hate each other.”; Ron Paul is like Vince McMahon of the WWE. People love to hate him, yet he still fills arenas.

Texas “EPA has no jurisdiction in the Republic of Texas. No more Rolling Black Outs.”; Venezuela Chavez endorses Palestinian sovereignty and what if the US abstains? 1:51 clip “Looks like one of the NATO ammo dumps exploded.” wrh.com; 13:32 clip NATO dropped made in America humanitarian bombs on a hospital. “That’ll teach ’em to refuse a private central; bank issuing the public currency as a loan at interest! ” — Official White Horse Souse (see quote at the top); NATO Rebels Without A Clue; 12:47 clip Turkey has frozen ties with Israel; Iran “Has Iran just been unlucky? Probably not.”; 9-11 fabricated Govts. are desperate to hide the truth.

Satellite “NASA: Never A Straight Answer.” Could be it was loaded with nuke material; Lemonade Raids? This is beyond stoopid; People’s Protest in Africa against NATO; GW The Guilty Men.

Operation Mountain Guardian “The type of scenarios that are simulated in these large scale terrorism drills simply DO NOT happen in real life without the help of the government.”

#224 TurnerNation on 09.25.11 at 8:10 pm

“Expectorating rubbies”? Is this a Dickens-era weblog?

;-)

#225 TurnerNation on 09.25.11 at 8:13 pm

#208 Nostradamus Le Mad Vlad on 09.25.11 at 4:53 pm

No Nostra, the African famine today is man made. For years we’ve been sold the joys of Clinton et al selling cheap AIDS drugs to Africa, when all along they simply require FOOD.

Unlike in the late 80s there will no Live Aid concerts nor billlionaries on TV begging for our donations.

This time the genocide is final. It’s in the plan.

#226 Ronaldo on 09.25.11 at 8:20 pm

http://www.youtube.com/watch?v=wV1lZMTCqf8&feature=player_embedded

Entertaining video with George Carlin and his views on the system…..warning: some foul language but funny

#227 Westernman on 09.25.11 at 8:32 pm

debtified:

Don’t be a white knight and give validation to the self – entitement princess known here as beach girl… you only make things worse for men everywhere. Get a pair and be a man for christsake!