Emotional rescue

In a moment we’ll deal with Andrew, who thankfully admits he’s an idiot. First, what a difference sixty days can make. In August this site was crawling with survivalists and coonhounds, predicting the collapse of America, stock markets going to zero and gold soaring to five grand an ounce. If you ever needed proof fear is the greatest human motivator, just go back and read the comments.

And I sure took a lot of heat for saying this, as stocks in Toronto and New York plunged 400 points:

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

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

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

Two months later we still have problems, and always will. But the storm is largely over. And I’m hoping you were astute enough to take advantage, or at least not panic and sell. As you were told in August, the selling was both emotional and overdone. It was not 2008 all over again. The downgrade of US debt was meaningless. Recovery and advance was inevitable. Anyone losing their grip and turning a paper decline into a real loss suffered a self-inflicted wound.

Here are some questions I want you to ask the nimrods you work with later today: (a) how much have stock markets plunged so far in 2011? (b) How much did gold surge during this year’s financial crisis? (c) When were the two biggest weekly stock market rallies of the last twenty years?

The answers: (a) No plunge. The Dow is down 0.5% for the year. Yes, one half of one per cent. (b) No surge. The yellow stuff collapsed more than 16%, and is still down 13%. (c) Stocks took off in March of 2009, and again in the last seven days, climbing almost 10%.

The current realization among investors is (1) there will be no recession in the US. (2) The Euros will get their act together and contain that debt contagion. (3) Q3 corporate profits will show stocks are cheap and probably safe. And (4) the market shakeout we’ve just been through was a fine opportunity to take profits, wipe a lot of risk off the table, and leave the amateurs and doomers holding the bag.

So I hope you don’t come to this pathetic blog just for cheap thrills and a suggestive hug. Had you followed my perennial advice to get a balanced portfolio (of both fixed income – bonds and preferreds – plus growth assets – like EFTs and REITs), when markets were off 19%, you were down just 5%. Today that portfolio has all but recovered, and six months hence, you’ll probably gloat. We’ve just proved investors with balance can walk through the valley of death and fear not. Even when the apocalyptic losers rain down their best abuse.

Speaking of abuse, here’s Andrew. Let’s do him.

Hi Garth: I have been looking at pre-construction condos the past few months and there is one that has peaked my interest. It is located in Vancouver’s Mount Pleasant area, just east of the Olympic Village. I was considering a 2 bedroom, 815 sq ft suite for $496,000. The building is not slated to be complete until early 2014. I’m a property virgin, am in no rush to buy, can afford the 15% down payment they are asking, and by 2014 I should be able to save another 20% so that I’ll have a “reasonable” mortgage. In other words, I am not one a 5% down buyer. No I do not live at my parent’s home, but I do keep some stuff there.

I have been discussing real-estate with friends lately, and some have planted the seed of “market correction” in my head. After a night of googling “Vancouver condo market” and variations of that phrase, I came upon your blog. You state that prices should correct soon and this obviously worries me. Should I purchase now or later?

I would like your opinion as to whether this (or any) pre-construction condo is a wise purchase right now, especially with the state of the current market and the apparent saturation of condo units. A short answer will do, I can imagine that you are a busy man.

Moments later, he sent me another note:

After thinking about the email I wrote, I know what you probably think I’m an idiot. Obviously it is not wise to buy a pre-construction now. I think I just needed/wanted someone to say it to me.

OK, Andrew, I’ll say it. Yes, you were momentarily a flaming idiot. Buying a condo from plans, not to be completed for three long years is bad enough. This is not acquiring real estate, but playing the futures market. You’re buying something today for delivery 36 months later without having a clue what the market or the economy will be like, which will determine its actual value on the day of delivery. The only one who benefits from a firm deal is the developer – who may or may not even build the damn thing.

Second, Vancouver’s toxic. There are scads of questionable condos coming to a market which is overbuilt and choking on its own unmitigated hype. Citizens are already the most indebted in the country, forking over the bulk of what they earn to live in the most inflated real estate on the continent. BC’s economy is sputtering; more people are leaving than arriving; the construction business has collapsed; commodity prices have nailed forestry while tourism’s bled out since that sports thingy last year. There is no question what’s now happening in Victoria will take place in Vancouver, but with a lot more yelping.

Besides, 800 feet for half a million? And that’s your first home?

Glad you recovered, dude. That was close.

135 comments ↓

#1 gadzooks on 10.12.11 at 9:27 pm

I have to wonder where these people come from who still think that 500K for 800 sq ft in Mt Pls is OK? I hope they’re all dentists with no brains and money to burn. You would have to be living under a rock or have a broken cable hook up and can’t watch anything but Global if you still think that RE in Vancrapper is a good place to be. Oh and BTW……a woman still can’t ‘stroll’ to the corner store in Mt Pls…….its hooker central…who do you think lives in all those revenue pits and basement suites that line the streets? Parents have pits bulls to walk their kids to school in that neighbourhood.

#2 WI BOOMER on 10.12.11 at 9:31 pm

Mistakes not made are often better teachers, and less costly. IF you remember them. When you lose your rear for about 100 BIG Ones, or more on an idiot pre-build buy you will NEVER forget that one.

Glad you got away with both cheeks intact.

#3 vyw on 10.12.11 at 9:31 pm

Andrew:
it’s unwise to buy a condo
1. prices are going to fall within 3 years
2. your condo at $600 a sq ft is way over priced
3. some condos leak whne the warranty expires
4. maintenance fees + taxes + crazy board members + crazy neighbours

best to rent, invest in a ‘Garth’ portfolio and wait for a correction

if you must buy, maybe a townhome with a good/new roof in a decent neighbourhood near Skytrain ie. Collingwood

good luck!

#4 Geroy Simon on 10.12.11 at 9:32 pm

I’m sexy and I know it!!! first!

#5 Vulture Fun on 10.12.11 at 9:33 pm

The storm is almost over? I’m glad you’re enjoying the eye of the hurricane.

#6 Mister Sanity on 10.12.11 at 9:34 pm

(1) there will be no recession in the US.

Wrong. Check ECRI. They have never incorrectly called a recession, nor have they missed calling one. And they’ve called one a week ago. The worst is yet to come. The positive happy feelings in the market are temporary. Cash out, wait for another 10% drop, then start getting back in. It’s not over – mark my words – I’ll repost them when it happens.

#7 SquareNinja on 10.12.11 at 9:37 pm

“…and there is one that has peaked my interest…”

Dude, if you can’t even spell “piqued,” then you should not be considering any financial commitments…

#8 T.O. Bubble Boy on 10.12.11 at 9:39 pm

$600-$700/sqft is no worse than the crap the condo developers peddle in downtown Toronto these days

#9 SquareNinja on 10.12.11 at 9:41 pm

Oh, and Andrew, as Garth mentions scads of questionable condos coming onto the market… there’s already one development, called “Strathcona Edge” on the Southeastern periphery of Chinatown (right near the Olympic Village, on Gore Ave.)… that is a mid-rise development finished over two years ago, which has yet to have even sold one unit. Not one sold!

#10 GregW, Oakville on 10.12.11 at 9:43 pm

Hi Garth, re: “fear is the greatest human motivator”
I once heard that the three greatest motivators of man/women are fear, greed, and glory.

#11 Sean on 10.12.11 at 9:50 pm

I just rented a condo today north of Toronto. The owner was trying to sell it and rent it at the same time. I got a large 2 bdrm for $1650. He was trying to sell it for 340K. If the landlord is paying a mortgage of $1200/month plus $459 condo fees, he is subsidizing me for the property taxes, depreciation and the month of rent he paid the realtors to find him a tenant. In a flat market I think it makes sense to rent.

#12 Bogdan on 10.12.11 at 9:50 pm

(a) how much have stock markets plunged so far in 2011? (b) How much did gold surge during this year’s financial crisis?

The answers: (a) No plunge. The Dow is down 0.5% for the year. Yes, one half of one per cent. (b) No surge. The yellow stuff collapsed more than 16%, and is still down 13%.

Why don’t you compare apples to apples Garth?
e.g: How much is gold up from the beginning of the year compared to DOW, or, how much did gold surge during this year’s financial crisis (since the beginning of August), compared to DOW?

What percentages do you get in this cases?

#13 Jas Girn on 10.12.11 at 9:52 pm

As usual, Garth writes a lot of truth. And first btw!!!

#14 deaconmoss on 10.12.11 at 9:53 pm

Day after day you make my day Garth. Old boomer, but oh so much wiser after your book and advice, which I have taken so seriously. Seriously, you have saved my misdirected mind and put more money into my financial future than I could have believed a year ago. Hats off!

#15 TurnerNation on 10.12.11 at 9:54 pm

4th?

#16 mike on 10.12.11 at 9:55 pm

Congrats you are right again about the market and the world. How does this play into your theories on real estate? If we are emerging from this blip and the world is right again, why won’t this prompt another rise in the market. Your buddy and blog reader Carney has promised low interest rates for a while. Why won’t house horny couples go out there and scoop up houses.

You are the man when it comes to the market but have you lost your touch when it comes to real estate.

#17 Stevenson on 10.12.11 at 9:58 pm

With 15% down Andrew would carry an investment worth 85% more without even touching a mortgage payment until it’s fully built and saleable. Factor out the economy or whatever bubble there may be its a pretty good gig.

Just like any other investment it could go both ways, but with pre-construction Andrew is able to invest 85% more without the interest of borrowing. On top of that if it inflates it’s tax free. Therefore the developer is no the only one that benefits and it is an excellent investment instrument.

btw this regardless of the economy.

#18 -=jwkimba=- on 10.12.11 at 9:59 pm

Starting to see the allure of this FIRST thing.

#19 obert on 10.12.11 at 9:59 pm

Just to say hello

#20 Mr.Lee on 10.12.11 at 9:59 pm

I rest my case. With people such the one mentioned above, is it any surprise that people are over leveraged makeing debt service payments. Using credit as if it were a second income and paying an inflated price for an asset that is over supplied. And they say Europe has problems.

#21 martin on 10.12.11 at 10:00 pm

i agree with all the above garth.

but in addition i would say europe will not get their act together anytime soon. it will be hard for them to find a solution. sure, they aint gonna be insolvant but unless they do some new printing money there is no way they can get it together this quick.

#22 daystar on 10.12.11 at 10:04 pm

Ah yes, fear. Its the ferry to poor health, broken relationships, ruined fortunes and dark dreams unless we listen to the message of fear and understand its root, the fear of loss so address it. Not with a false security or home with stink piles of debt and illusions of grandeur but with the realization of what home or “security” is built on or one loses their compass, directionless, spiralling… lost in loss and in that world anything can happen, its just a shout away.

http://www.youtube.com/watch?v=rCrbziy20aU&feature=related

#23 InvestorsFriend (Shawn Allen) on 10.12.11 at 10:06 pm

STOCKS WERE TOO CHEAP TO BUY

As Garth alludes to, Stocks were cheap this Fall. But many people (especially those selling) figured they would get even cheaper, maybe even go to zero. So they would not Buy.

In part this was based on “Technical Analysis” which is a voodoo-science method of investing that basically espouses (believe it or not), Buy high, sell low. That’s right this method of stock analysis sees stocks as mere squiggles on a screen. It cares not a wit about the actual company or its earnings. It cares only if the price has been headed up or down. If up, it says buy, If down it says sell. (It it goes up a lot and surpasses a major “resistance level” it says back up the truck) (If it craters down through a major “support level”, it says SELL NOW). Kind of the total opposite of the old fashioned notion of Buy Low, Sell High. There is nothing Technical at all about “Technical Analysis” It’s pure voodoo. It exists to make astrology look like a science.

As a fundamental analyst I tend to buy stocks when they are cheap, and with a view to buy even more if they get cheaper. So far, so good.

To each his own.

Actually I should mention that it’s hard to beat the market with ANY type of analysis. Most people are probably better off to just buy a broad market index and go to sleep. But for those who want to try to beat the market I’d suggest fundamental analysis is the preferred approach.

#24 martin on 10.12.11 at 10:22 pm

Europe is in a worst shape then anybody thinks,
all this going on in European markets now is temporary and it will not last. as for the yunks !!!

welcome back America

as my father always says:

‘if you cant bet ’em : join ’em

#25 martin on 10.12.11 at 10:23 pm

sorry garth i really think you are wrong about europe !!

#26 not 1st on 10.12.11 at 10:27 pm

I guess today is a good day. The ETF i bought in early august after the initial plunge finally recovered back to par and I was able to sell my west kelowna condo to a greater fool.

#27 Smoking Man on 10.12.11 at 10:28 pm

Was having a coffee on Canal street, with wife on Monday morning, This homeless dude was hanging around up wind, did he ever stink like a swap.

Lady comes out of the coffee shop and hands him a bagel she just bough, the dude said no I want money. She was dressed in money,, she was in shock the guy refused the bagel.

She tells us she’s from Manhattan with a huge rock on her hand 5+ karat my wife’s best guess, I’m thinking she don’t have much value for her hand of finger walking around with Dat in this town.

She says “Can you believe that bum, I was being nice, he refused my generosity, I will never do that again…” And she went on and on………

See in all her elitism she wanted this bum to kiss her ass, propbaly 1 day or 2 went by with out lips on ass, it’s addictive for some people. People always suck up to wealthy people, they always mistakenly think they will get something out of it, reality is you are just prey being sized up. I do it to people all the time……

Now I get this little twinkle in my eye, wify picks up on it right away, rolls up her eyes, she knows what’s coming after all 30 years with same ass hole.

I got up, walked over and handed the bum twenty bucks and said now get out of here, you smell like shit you are contaminating my New Orleans experience.

The guy took off thanking me profusely. Tried to shake my hand and I said don’t touch me get the f out here…….Don’t come near me…..Your disgusting….

Manhattan madam says why did you do that, he is going to buy drugs and booze.

I said exactly, if you where him, would you not want to be zoned out from your reality. She said “ But you encourage him never to look for work by doing that, he will always bum money from people”

I said who really wants to work anyway, bumming in itself is a job, no more like a business. I have inspired many entrupenuters in my time. He is in reality a self employed entrupenuter who just made twenty bucks by making my trip a little better. Beats flipping burgers or making up bagels for self absorbed bitches from New York City………….Don’t ya think…………

She called me an ass hole and walked away.

It made my trip…………….

Who Dat……….Dat The Smoking Man………………………..

Well that sure added to the conversation. Here’s twenty bucks… — Garth

#28 AB Bust on 10.12.11 at 10:32 pm

I don’t care how much you make. $500k for 800sq ft??? seriously. Please tell me they’re taking some of those 50% discount signs from Kelowna.

#29 VicAppraiser on 10.12.11 at 10:38 pm

When buying a pre-construction condominium, you are paying a contract price not necessarily a market price. Typically, the developer will be marketing the suites at what they believe the price will be when the complex is completed. And since everyone in this future complex is dealing with only one seller, you’re are going to pay top price. You may find yourself in an awkward position three years from now, when you find out that the bank will lend on the property’s market value and not the contract price. And there goes your deposit.

#30 rower on 10.12.11 at 10:45 pm

#28 Smoking man

Oh my God, Garth, you crack me up.

Oh well, I needed to clean the laptop screen anyway.
Must not drink while reading comments……..

#31 Samson on 10.12.11 at 10:48 pm

“In a moment we’ll deal with Andrew, who thankfully admits he’s an idiot.”

Best blog post opener of all time.

#32 Makaya on 10.12.11 at 11:00 pm

Vancouver’s 20 cheapest houses. Starting at half a million dollar, buy while it lasts!

http://www.househunting.ca/vancouversun/homes/5540000/story.html?tab=PHOT&cid=hot_photo

#33 TurnerNation on 10.12.11 at 11:09 pm

Somone leaked the title short list for Garth’s next book:

1. The Wealthy Bunker

2. Housing Bandit: What my dog taught me about life, love, and real estate

3. Housing.com – This decade’s bubble

4. Bust, Boom, and Bust: a lost generation

5. Bunkernomics

6. The Zen of Bunker Repair

#34 Jim on 10.12.11 at 11:13 pm

nice job comparing apples to oranges.

Gold close on Dec 31, 2010: $1421.10
Gold today: $1679
Gain YTD: 18.15% gain for the year

How’s the DOW or TSX done so far this year? Dow’s gone no where and TSX down about 10%.

Gold could go down some more, or it could go up, or it could go side ways. We’ll see end of this year.

#35 T.O. Bubble Boy on 10.12.11 at 11:33 pm

PIMCO (largest fixed income fund in the world) betting that the US Government will finally start to fix the mortgage mess?

http://www.cnbc.com/id/44882118

#36 neo on 10.12.11 at 11:37 pm

Garth,

The problem with your stock market thesis is perspective. Yes, the Dow is only down 0.5% but it was never down more than 5% YTD at any point so far this year. Even when other global indexes were down two to four times that. There has never been a true capitulation in the U.S. indexes to indicate the TRUE panic selling that you speak off. Therefore, there was never a crash. There has just been violent moves up and down with equal velocity which is why after 2 months of “volatility” we are basically still flat for the year.

However, even with this “rally” the TSX is still off 2,000 from it’s highs in late April.

Enjoy the rally Garth but don’t be long…(-:

#37 Devore on 10.12.11 at 11:43 pm

#18 Stevenson

Just like any other investment it could go both ways, but with pre-construction Andrew is able to invest 85% more without the interest of borrowing. On top of that if it inflates it’s tax free. Therefore the developer is no the only one that benefits and it is an excellent investment instrument.

That might have been the case in the past, if you knew what you were doing, when presales sold at a discount. They no longer do. They now sell for a premium. This is completely backward, and a very risky investment that completely depends on prices going up.

#38 ottawa pete on 10.12.11 at 11:44 pm

Well that sure added to the conversation. Here’s twenty bucks… — Garth

Priceless…

#39 nonplused on 10.12.11 at 11:49 pm

Ok post today, but still fitting in with the trend that the big hits are earlier in the week. But your advice to Andrew was spot on and your response to Smoking Man made me giggle.

However, I am with the folks who disagree that the “all-clear” signal has gone off in Europe. They have some serious issues, and so far all they can come up with is a plan to make a plan to plan a plan. Not good. And I don’t think they can do any better, there are too many players all with different opinions. As the Germans keep pointing out, they can’t bail out Greece without bailing out everyone, and that would be outright money printing. They can’t just give Greece a 50% debt haircut, or everyone will want one. And they can’t transfer money from say Germany to Greece because the result would be revolution. So in short, it’s a total catch 22 and all they can do is kick the can down the road and hope for a miracle. In the end it will be every nation for itself. The Euro will survive, but the composition of the European Union will likely change. However, it will be a slow motion train wreck and won’t require a lot of our personal attention unless you happen to invest in Europe.

I also agree with some of the posters that it’s best to compare apples to apples time-wise when comparing asset classes. Gold was off 16% in September because it rose 16% in August. For the year gold is up. Not that it matters much either way, it should be 5 to 10% of a balance portfolio, and it’s better over all if gold isn’t up too much because who wants to live through an economic collapse??? If we have to start bartering with gold coins it will be sad days indeed. Better to save the electronic system and gold remains a store of value, even if there is inflation in the digital medium.

#40 Harlee on 10.12.11 at 11:57 pm

#28 Smoking Man
I’m Harlee.Your post: I’ll give you 50 cents for it.

#41 Nostradamus Le Mad Vlad on 10.13.11 at 12:03 am


“Speaking of abuse, here’s Andrew. Let’s do him. Emotional Rescue, who thankfully admits he’s an idiot.” A man who admits his shortcomings? Heavens to Murgatroyd!

“In August the amateurs and doomers holding the bag.” — Fortunately, neither of us play the game, DRIPs are flowing in nicely and if / when the money is there, I would have no hesitation in jumping right back in again.

“Yes, you were momentarily a flaming idiot. Glad you recovered, dude. That was close.” — So are most of us, which explains why we come here!
*
#146 Westernman — “A dollup of silicon sitting on a 500 lb. pile of whale blubber . . .”
— plus —
#153 Herb — “You let your hair grow, sit on a beach, and wait until a nymph jumps into your lap …”
— equals —
#164 Smoking Man — “. . . the rest of you dudes a chance.”

Which leaves me Confused. BTW, a rubber johnny is a.k.a. a condom! Also — See-saw.
*
Buffett Money in the bank, no questions asked; 6:16 clip OWS clips FOX behind the ear; Anti-Intellectualism Beyond me; QE7 3/4 US$ = Girl Guide Cookies; Occupy Vancouver Just what the city needs — more gridlock! David Cameron Another ‘Let them eat cake’ moment.

UK No more bailout money, as they’re too busy bailing themselves out; No Exit, no euro, no greenback;

WH “Fear is the foundation of most governments.” — John Adams, Pakistan first; 3:32 clip Yes indeed. Why would Iran want to assassinate a SArabian person? What is the motive? Not difficult to see this is a ploy; Wall St. convergence Incl. big banks, big profits and 9-11 truths; Type 2 Diabetes Induced; Winter in Chicago Glad I’m in the Frozenagan; Self-Reliance Expo Fall 2011, Salt Lake City; Proxy War Hell, it has to be called something.

NAU – SPP Is this how the US treats its friends and allies? Dilbert This is so nutty it borders on the insane. At least Dilbert is a cartoon character; Victor Bout Anyone heard of him? Newt Gingrich and John Kerry are both warhawks, so give them a rifle, basic equipment and sign them up for service right on the front; Nepotism or cronyism; Ozone Hole caused by Fukushima; Bermuda Triangle Along with HAARP, could explain all the nonsense down here. Anyway, we’re not normal (thank gawd); Like GW For Chocolate It beggars belief.

#42 Occupy Everything on 10.13.11 at 12:04 am

OK, here is what I don’t get about “Occupy Wall Street”:

I get that they are mad because the government bailed out the banks but not the economy.

I get that they resent the corruption inherent in the system.

I get that they all want a piece of the pie.

I get that most people are deeply disturbed that corporations can make political contributions.

I get that many people see the lobby system in the US as worse than the worst of the old Roman Empire in terms of corruption.

I get it that people are getting sick of “airport security”.

But I don’t get why they want to “Occupy Wall Street”.

Just pull all your money out of the banks. If everybody did that, the revolution would be over by next Friday. But if you keep your money in the bank, you are part of the system and have a vested interest in it surviving.

Disclaimer: I have a vested interest in the system surviving and have not pulled my money out, nor do I have plans to do so. But protesters please put your money where your mouth is. Especially the copy-cats planning to protest in Canada.

#43 dd on 10.13.11 at 12:18 am

Lets review:

The Dow is down 0.5% for the year – and nominal return of zero since 2000. Actually you lost in real terms.

The yellow stuff collapsed more than 16%, and is still down 13%… and up from $250 since 2000. Actually you gained in real terms.

#44 Aussie Roy on 10.13.11 at 12:50 am

Stevenson on 10.12.11 at 9:58 pm

With 15% down Andrew would carry an investment worth 85% more without even touching a mortgage payment until it’s fully built and saleable. Factor out the economy or whatever bubble there may be its a pretty good gig.

Just like any other investment it could go both ways, but with pre-construction Andrew is able to invest 85% more without the interest of borrowing. On top of that if it inflates it’s tax free. Therefore the developer is no the only one that benefits and it is an excellent investment instrument.

btw this regardless of the economy.

…………………………………………………………………….

Based on what?, prices can’t, won’t and never go down, its different here or HAM?.

You use the term “invest”, its not, just speculation on never ending price appreciation. You understand that this amplifies the gains or it could amplify the losses?.

Many here in Australia have been caught out doing just what you propose buying off plan with 5-10% down. Only for the property to be valued well below expectations of the developer when finished, buyers are then unable to get a loan the size they wanted on the property and lose their deposit if they cant stump up more cash.

#30 VicAppraiser on 10.12.11 at 10:38 pm

Great comment..

#45 Timing is Everything on 10.13.11 at 1:03 am

Be careful out there…

http://tinyurl.com/3my24z5

#46 BPOE on 10.13.11 at 1:26 am

Remember this guy, one of the original doom and gloomers. Must of bought and made out like a bandit
http://thetyee.ca/Mediacheck/2007/02/20/VHB/

America continues to falter. Canada will bail them out AS ALWAYS with out water and POWER
http://online.wsj.com/article/SB10001424053111904563904576587051263660990.html

#47 Van guy waiting on 10.13.11 at 1:44 am

Hi Garth!
I like that playhouse in the post above. I’ll pay 1.9 mil for that if it’s in kits. Wait! I’ll pay 2.3 so I make sure it’s mine!!!

The Greater Fool,

#48 TheTruth on 10.13.11 at 2:08 am

Car broke down in this town in California 9 years ago…had to wait 2 days to get a part…

Take a look at this chart…this is a bubble and crash caused by psychology only!

http://www.zillow.com/local-info/CA-Lamont-home-value/r_49205/#metric=mt%3D34%26dt%3D1%26tp%3D6%26rt%3D8%26r%3D49205%252C118856%26el%3D0

#49 Aaron - Melbourne on 10.13.11 at 2:26 am

“Well that sure added to the conversation. Here’s twenty bucks… — Garth”

zing!

#50 Victor on 10.13.11 at 2:33 am

hi Garth,

You said there won’t be any depression. Are you implying we can get away with depression by issuing more and more government bonds? what is the real reason?

Thanks

#51 munch on 10.13.11 at 2:42 am

Sorry Garth, but the storm’s a long, long way from over.

You’re a good man with great insight, but you definitely have a scotoma when it comes to stock markets.

Mind you, take this from where it comes

Regards, Munch

#52 Jody on 10.13.11 at 3:40 am

“But the storm is largely over.”

Another friend just lost their house, no the storm is not largely over.

“will be no recession in the US. (2) The Euros will get their act together and contain that debt contagion.”

1. you’re right, there will be no recession in the US, beccause they are in a depression, I travel down there at least once a month, it keeps getting worse, and I’m not talking about the anal probes by the TSA wankers.

2. The Euros get their act together, BAhahahhahahaha!!!!!!!!!!

October ain’t over yet.

For everyone’s reading pleasure, although I think the Euros are going to get very violent much sooner than the Yanks.

http://endoftheamericandream.com/archives/buckle-up-america-is-getting-very-angry-and-the-protests-are-going-to-become-much-more-frightening

#53 MarcFromOttawa on 10.13.11 at 5:54 am

#7

http://globaleconomicanalysis.blogspot.com/2011/09/ecri-calls-recession-based-on-contagion.html

#54 Robert Dudek on 10.13.11 at 6:43 am

re: 13
(a) how much have stock markets plunged so far in 2011? (b) How much did gold surge during this year’s financial crisis?

The answers: (a) No plunge. The Dow is down 0.5% for the year. Yes, one half of one per cent. (b) No surge. The yellow stuff collapsed more than 16%, and is still down 13%.

Why don’t you compare apples to apples Garth?
e.g: How much is gold up from the beginning of the year compared to DOW, or, how much did gold surge during this year’s financial crisis (since the beginning of August), compared to DOW?

What percentages do you get in this cases?

Well, Garth likes to select the numbers that make his thesis look good.

P.S. Can we just ban Smoking Man for his pointless drivel?

The answers to my questions are correct. Gold was no safe haven during the market mayhem, In fact, it was a sinking boat in the storm. — Garth

#55 bigrider on 10.13.11 at 7:33 am

Garth- ” when markets were off 19% you were down just 5% , today that portfolio has all but recovered”.

Shame on you for implying in your missive today that a balanced portfolio has ‘recovered’. Maybe it has but it is still down on the year. 40/60 would not have saved you this year from a small nick to your assets this year.

You are probably correct that 6 months from now investors will gloat.

The statement was correct. Balanced portfolios have largely recovered from the market turmoil which was the subject of my post. It is a far cry form the doomsday scenario being painted here two months ago by fearful souls, which included you. — Garth

#56 Moneta on 10.13.11 at 8:07 am

But the storm is largely over
——–
Maybe one battle but the war is not over.

Once Greece is dealt with, all the other piglets will be lining up to suck at the ECBs teet. So either they write down or print. Probably an elixir made up of both ingredients.

Anyway here are YTD results:

TSX = -10%
S&P = -2%
EAFE = -11%
DEX = 7%

Balanced = -2.5% with foreign
Cdn only 40% equity = 0.2%
Cdn only 60% equity = -3.2%

And now that yields are getting closer to 0%… how much longer can we keep on getting more than 6% on the DEX?

There is no one definition of ‘balanced.’ You should know better. — Garth

#57 Moneta on 10.13.11 at 8:15 am

There is no one definition of ‘balanced.’ You should know better. — Garth
——
Agreed. That’s why I put the numbers here. These are the typical balanced portfolios that employees are being offered in their DC plans.

Your balance is unconventional and you should explain why on your blog.

As a pension portfolio manager, you should explain consistently substandard performance. — Garth

#58 allister on 10.13.11 at 8:27 am

Talk about MSM putting lipstick on a pig – read this.

http://www.moneynews.com/FinanceNews/Earns-JPMorganChase/2011/10/13/id/414285

The headline says they beat street estimate – but that didn’t include the litigation reserve which is 25% of the profit.

I watch US bank and auto company stock prices to tell me where the economy is going, because they are the first to know.

#59 Moneta on 10.13.11 at 8:50 am

As a pension portfolio manager, you should explain consistently substandard performance. — Garth
—–
Garth,

Employees are on these investment platforms. This is what they are being offered and this is the definition of diversified/balanced that has been spoon fed to them.

Since you are going against the herd, you should explain the difference between your style and that of the big players. And it’s more than comparing your returns with those of the orange guy’s shorts.

By reading the comments here, I feel that a lot of readers are even more confused about what diversification truly is.

To a realtor diversification is having a condo, plus a house. To metalheads it’s silver, plus gold. You are right. — Garth

#60 bigrider on 10.13.11 at 9:05 am

#56 Garth to Bigrider “… which included you”

Did you wake up on wrong side of the bed this morning or something?
Not fearful at all am I, and if you check my posts last Monday you will see I advocated buying the most beat up sectors.

Really Garth, not becoming of you at all.

I’ll serenade you in Italian. — Garth

#61 disciple on 10.13.11 at 9:07 am

#43 Occupy Everything… I think I may have some answers for you. Ignore the face value of this movement, as appearances are almost always deceiving, especially when the bought and paid for media is describing it. Face values are a distraction, and the real story is usually found at the very beginning of the event or later on when the puzzle pieces don’t quite fit together.

As to your idea of taking money out of the banks, I don’t think these people have any significant amount to do that, unfortunately. It’s the banks and their criminal friends that are sitting on the bulk of the money which doesn’t even belong to them, and that doesn’t even exist but is really a promise that taxpayers will pay in the future, I might add, that is causing stagflation.

#62 El Rojo on 10.13.11 at 9:09 am

Re:#28 Smoking Man.

I can picture myself in the same situation on Canal St. Loved the way you put the Manhattan airhead in her place with her stupid bagel. Great post well worth the twenty bucks and Garth paid you back to boot.

#63 Young Old Fart on 10.13.11 at 9:23 am

Was having a coffee on Canal street, with wife on Monday morning, This homeless dude was hanging around up wind, did he ever stink like a swap.

Lady comes out of the coffee shop and hands him a bagel she just bough, the dude said no I want money. She was dressed in money,, she was in shock the guy refused the bagel.

She tells us she’s from Manhattan with a huge rock on her hand 5+ karat my wife’s best guess, I’m thinking she don’t have much value for her hand of finger walking around with Dat in this town.

She says “Can you believe that bum, I was being nice, he refused my generosity, I will never do that again…” And she went on and on………

See in all her elitism she wanted this bum to kiss her ass, propbaly 1 day or 2 went by with out lips on ass, it’s addictive for some people. People always suck up to wealthy people, they always mistakenly think they will get something out of it, reality is you are just prey being sized up. I do it to people all the time……

Now I get this little twinkle in my eye, wify picks up on it right away, rolls up her eyes, she knows what’s coming after all 30 years with same ass hole.

I got up, walked over and handed the bum twenty bucks and said now get out of here, you smell like shit you are contaminating my New Orleans experience.

The guy took off thanking me profusely. Tried to shake my hand and I said don’t touch me get the f out here…….Don’t come near me…..Your disgusting….

Manhattan madam says why did you do that, he is going to buy drugs and booze.

I said exactly, if you where him, would you not want to be zoned out from your reality. She said “ But you encourage him never to look for work by doing that, he will always bum money from people”

I said who really wants to work anyway, bumming in itself is a job, no more like a business. I have inspired many entrupenuters in my time. He is in reality a self employed entrupenuter who just made twenty bucks by making my trip a little better. Beats flipping burgers or making up bagels for self absorbed bitches from New York City………….Don’t ya think…………

She called me an ass hole and walked away.

It made my trip…………….

Who Dat……….Dat The Smoking Man………………………..

Well that sure added to the conversation. Here’s twenty bucks… — Garth
=====================================

Smoking Man, you continue to be my hero! I would have handled it the same way…..

See Disciple? Giving to the poor…… Happy now?

#64 shanks on 10.13.11 at 9:23 am

lol smoking man!

#65 David B on 10.13.11 at 9:25 am

Right on Garth ….. John Wayne is en route, the Calvary is coming to head the “R” off at the pass. Lucky them if only they could get their own house in order first eh.

Geithner to Press Europe to Move Faster on Crisis
By Ian Katz and Cheyenne Hopkins – Oct 13, 2011 1:00 AM AT

http://www.bloomberg.com/news/2011-10-13/geithner-in-paris-will-tell-european-counterparts-to-move-fast.html

#66 jocelan on 10.13.11 at 9:42 am

“That sports thingy”. Garth, you are hilarious!

#67 Axehead on 10.13.11 at 9:45 am

Today’s pic: Housing is an illusion, perhaps even a joke.

Yesterday’s pic: Boomers attempting to aquire things they don’t deserve, shouldn’t spend their money on, and really beyond their means and abilities to handle.

#68 bigrider on 10.13.11 at 9:48 am

#61 Garth to Bigrider- ” I’ll serenade you in Italian”

And lunch at the Olive Garden, right ?…LOL

#69 disciple on 10.13.11 at 9:50 am

Talking about emotional rescues, I needed one this week. I was shocked at how many friends, relatives, and acquaintances, and it seems, younger and younger, are being diagnosed with cancers of various stripes.

I am feeling a lot better today since I let them all go last night, but it was a struggle to contain my emotions for a few days while trying to analyze how emotions can lead to physical sickness in the body. Unresolved emotions. Our immune systems seem to respond to pure emotion. But on a deeper level, it is our DNA that translates into cancer.

DNA is a holographic molecule. The part is not only contained within the whole, the whole is contained in every part, only in lower resolution. Stay with me, this gets very interesting….

The helical structure of DNA is a holographic “projector” of the DNA code. The existential blueprint described by the spiral staircase of DNA is translated into a complex EM field that guides the molecular growth of the organism. We are electric entities, like the universe itself, but that’s a whole other story…

Anyway, back to cancer… we all know DNA malfunctions to produce cancer, but what the public is not told, is that it is possible to manipulate the holographic projections of cellular DNA through pure emotions. Unresolved emotions screw up DNA function.

Entanglement disproves Einstein? Of course it does. Like I’ve said before, the missing dimension in science is recognition of the consciousness fields which make possible all manner of magic, such as the emergence of the simplest form of life (DNA) out of the cosmic void, which even physics recognizes as having the appearance of a seething foam of infinite potential.

And now back to your regular programming…

#70 Hammer1 on 10.13.11 at 9:50 am

Garth, you’re just lulling your readers back to sleep..we are now in the middle of a calm in between two big storms.
nice try though. Just like you can pull up old posts to prove your point and say,see “I told ya”..many loyal bear readers will come back roaring in the near future, to remind you how wrong you’ve been in your analysis of the world economy.
still love your RE assessments as always . How can you be so insightful and correct in one area and totally off base in another?..baffles me. I know you’re trying to protect your peeps big daddy, but i dunno.

Smoking Man’s comments prove that he thinks he’s a somebody despite all of his social dysfunction (he even abandoned his family). That you can just dine on your fellow man..buy them off just to get them out of your face. so inhumane. I guess this is how this world is heading, less compassion, more ME ME ME ! People on this blog think this is funny.how sad really. Does anybody here agree with me? Will greed ultimately rule the day?

#71 Bobby on 10.13.11 at 9:54 am

For # 24 Investors Friend,

I remember when some supposed wise fundamental analyst recommended Nortel as a cheap buy at $85 a share.
Refresh my memory, didn’t it reach a low of 69 cents.
Of course, there’s always RIM.

#72 disciple on 10.13.11 at 9:59 am

#64 Old fart and Smoking Man… yes, very happy.

Actually, I agree with both of you on this one. When I give out money to people at intersections in Toronto who have lowered themselves to such depths to ask for crumbs from my feast table, knowing full well they will use the money on MIND-altering pharmacological agents, I always say to them, “Remember, you ARE money”. I wait for them to acknowledge my words, and I look in their eyes to see if it has sunk in (all while watching for the red light to turn green, mind you).

For the most part, I believe they will take to heart what I told them, if not at least remember it when it applies to their lives later on…

#73 bigrider on 10.13.11 at 10:00 am

#57 Moneta.

I would think that the results you quote -2.5 balanced, 0 and -3.2 60% equity etc. are a bit optimistic.

Are you sure you are looking at up to date numbers and not those at the end of August?

#74 Blacksheep on 10.13.11 at 10:32 am

Garth,

“(a) No plunge. The Dow is down 0.5% for the year. Yes, one half of one per cent.”

Then,

“(b) No surge. The yellow stuff collapsed more than 16%, and is still down 13%.”

Gold as of Jan/1/2011= $1400 US, Gold as of Oct/12/2011= $1675 US

The reference was to the performance of gold during the latest financial crisis. It bombed. — Garth

#75 David B on 10.13.11 at 10:37 am

More reading in support of Garth’s positive response.

Global growth generators: Moving beyond emerging markets and BRICs

Willem Buiter Ebrahim Rahbari
22 April 2011

http://www.voxeu.org/index.php?q=node/6374

It took until approx 1870 for the world to accumulate 1 billion people … at the end of this year we will have 7 billion people and the world will continue to grow in leaps and bounds. Yes there will be booms and busts but there will be continued growth in financial markets as demands for a host of new adventures increases.

As mentioned in this article no one knows just where and when a boom or bust may strike … so a balanced approach in life and finance in an ever changing world is an overall good plan.

#76 Grimbot on 10.13.11 at 11:14 am

Hi Garth….I usually agree with your musings….but I think you’re dreaming in technocolour when you say “Two months later we still have problems, and always will. But the storm is largely over.”

We have not even seen the real storm clouds yet. The breadth and depth of the sovereign debt crisis in Europe has not been fully revealed…. the US is mired in legislative gridlock and no relief is in site for the US unemployment problems and their teetering economy …the situation with municipal and state debt is getting increasingly perilous (the council of the city of Harrisburg PA voted to declare bankruptcy this week…many more to follow) ….corporations are flush with cash because senior leadership teams are scared shitless about the future…. all of this to me points to continued choppiness in the stock markets for 2011… and a very difficult 2012.

#77 Peakoilist on 10.13.11 at 11:37 am

#43 Occupy Everything on 10.13.11 at 12:04 am
Not a fair assessment of a true movement. A lot of your points are valid on a grand scale especially to folks who have job security and lots of money in the bank. You know as well as we all do that we are slaves to the banks. you can’t even pay a freakin bill or buy anything w/o a credit card. We are even slaves to the Oil co.s, the other day oil dropped $.43 a barrel and yet the next day gas was up $.03 a litre..wtf? It’s a really fair economic system we have here and many are feeling the pinch. Just to tell people to pull all that they’ve worked for out of the bank and disconnect from the system is unrealistic. I agree that it would be effective ,but the ramifications….We also know the savings rate is abysmal and people are in debt to their eyeballs, so how much money realistically will be withdrawn by protesters, who supposedly have hardly two nickels to rub together.

#78 Toon Town Boomer on 10.13.11 at 11:40 am

$496,000 for a 815sg ft condo.Ya, then Flaherty has the nerve to say there is no bubble in Canada. Then you get advertisements from Scotia Bank stating, “your richer then you think”. It’s like trying to argue black is white.

#79 SLN on 10.13.11 at 11:57 am

Smoking Man and Young Old Fart …. funny how your “successes” in life have made you both so jaded, bitter, and mean. What accounts for that I wonder?

#80 Van guy waiting on 10.13.11 at 12:12 pm

Anyone have thoughts on this stat?
Vancouver detached inventory at 1500 units, 2.7 moi. Is not going our way yet. There’s still a bunch of horny bastards out here.

#81 Robert Marshall on 10.13.11 at 12:17 pm

http://www.moneytalks.net/daily-updates/6007-canadian-real-estate-prices-rolling-over-vancouver-too.htm

Check out this graph

#82 Smoking Man on 10.13.11 at 12:23 pm

Ok here is a lesson kids

at 11:30 ish Slovakia ratified the bail out. now 12:22

Now this hit the news wires an hour ago, yet I am watching the sp500 slightly up tick then sink. TSE follows that index contrary to what headlines say.

This rally is feux

Watch and learn young ones :)

#83 Smoking Man on 10.13.11 at 12:28 pm

#80 SLN on 10.13.11 at 11:57 am

I’m not jaded. I’m insane, their is a difference

I have completely lost all forms of self control, it’s a magical liberating thing but history teaches me it will cost me big time in the long run.

So moat it be…………

#84 The InvestorsFriend on 10.13.11 at 12:31 pm

Bobby at 72 responds to me:

“I remember when some supposed wise fundamental analyst recommended Nortel as a cheap buy at $85 a share.”

***********

Bobby, ’tweren’t me but like I said beating the market is difficult no matter what type of analysis is used.

Investing is really for grown-ups willing to take responsibility for their own trades. If an analyst of any type recommends a stock, don’t buy unless the analysis makes sense to you.

To me, Technical Analysis NEVER makes sense, it’s not a rational basis to trade on while fundamental analysis CAN make sense.

In my view, Nortel was destroyed by idiot management. I don’t know why John Roth was never persecuted, much less prosecuted.

In late 1999 I rated Nortel a SELL at $137.50

http://www.investorsfriend.com/summary2000.html

Sadly I did later think it might be worth while as a Speculative Buy pick at $48.25 at start of 2001 end 2000

On October 19, 2001 I rated it SELL at $9.04

#85 Smoking Man on 10.13.11 at 12:32 pm

#73 disciple on 10.13.11 at 9:59 am

Their lost you can’t save them.

Drop them some booze or drug money so existence is less painful for them. It’s a very kind thing to do. Never give to organized charities.

#86 Waiting for the Sun on 10.13.11 at 12:41 pm

>> The yellow stuff collapsed more than 16%, and is still down 13%.

This is only true if measured in USD. If you live in CAD, and hold physical gold, it would be pointless to measure in USD.

The USD rose dramatically with the recent financial turmoil, so that would account for most of the “fall” in USD prices.

Gold fell about 5% in CAD prices.

#87 RL on 10.13.11 at 12:44 pm

Speaking of Condos, in the weekly rag for a community just west of Victoria the front page story yesterday was about a local water view condo complex that was “trumpeted” as the must have address in the Victoria region and is now bankrupt.

The trustees are now selling the “high end” units at deep discounts of 40 to 50%. One “expert’ was explaining that people “just don’t want the same quality finishing that we enjoyed in 2008” so that is why we are discounting units. Glad thats cleared up, I thought it was the million dollar price tag.

Three pages into the same paper, the Real Estate Board is speaking about how the price of Real Estate in Victoria is going to rise because Victoria enjoys steady employment and a stable economy and is the place where everyone wants to live.

The steady employment in this town is Government and Tourism and Government is cutting back and Tourists don’t buy houses.

This is laughable if it was not for the fact that people make decisions based on what these people say…

#88 Genghis on 10.13.11 at 12:45 pm

A theme touched upon by Garth on numerous occasions:

http://www.theglobeandmail.com/globe-investor/personal-finance/home-cents/retirement-bound-canadians-piling-on-debt/article2197318/

Apparently this is being driven mainly by real estate investments, but also by expenses such as vacations and expensive cars.

#89 Blacksheep on 10.13.11 at 1:05 pm

“The reference was to the performance of gold during the latest financial crisis. It bombed. — Garth”

I agree Garth, your reference did bomb.

take care,
Blacksheep

Childish. — Garth

#90 spaceman on 10.13.11 at 1:25 pm

React to market fluctuations, don’t speculate.

Rebalance when markets are up, (sell equitys) buy back when they go down. Ok with that?

I have added something else as well, for stocks, look at the 6month and 3 month stability. if both are flat or positive then buy in. A rule of many top investors… Never ever, buy down…

For overall market stability, wait at least 3 months. Yes short term markets are going up, only in the last week, next week or next month, who the heck knows? That is shear speculation, and I don’t do it. But I do agree there is far too much stimulus for the market to tank as bad as 2009. Its different this time….

#91 spaceman on 10.13.11 at 1:28 pm

PS housing market in Victoria, tanking. Open houses with noone showing up, inventory exploding, multiple price drops up to $80,000 in one instance…

Realtors quote “its a really tough market right now…”

#92 nonplused on 10.13.11 at 1:40 pm

Europe = slow fried toast

“Slovakia’s cry of defiance has not been entirely pointless. Richard Sulik – the speaker of parliament – has caught a mood of popular disgust that goes far beyond his own country.

His objections are unanswerable. How can there be any justification for a state of affairs where a poor but rule-abiding EMU state must bail out a serial violator with twice the per capita income, and triple the level of the pensions – a country which is in any case irretrievably bankrupt? How can it be that the no-bail clause of the Lisbon treaty has been ripped up?

But he also touched on the most neuralgic issue, reminding everybody that the EFSF is “mainly for saving foreign banks”. These are French, German, British, Dutch, and Belgian banks, of course.

Mr Sulik is right. The EU-IMF rescue loans have not helped Greece pull out of its downward spiral. They have pushed the country further into bankruptcy. Greek public debt will rise from around 120pc of GDP to 160pc under the rescue programme, and the IMF is pencilling in figures above 180pc.

The rescue loans have rotated into the hands of creditor banks, life insurers, pension funds, and even a few hedge funds. ECB bond purchases have allowed to investors to dump their holdings at reduced loss, shifting the risk to EMU taxpayers. It is a racket for financial elites. A pickpocketing of taxpayers, including poor Slovak taxpayers.

“I’d rather be a pariah in Brussels than have to feel ashamed before my children,” he said.”

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100012571/even-a-slovak-yes-will-make-no-difference/

#93 bigrider on 10.13.11 at 1:43 pm

Just had a nice lunch with a builder buddy of mine.

No condo bubble according to him.

The first of four condo buildings, that recently went for sale, to be built at Jane and Hwy7 where the subway is going, is completely sold out.

And the stock market hasn’t made any money in the past 12 years also according to him so it’s a ‘scam’

I changed the subject rather quickly at the first gap in his blathering.

#94 Moneta on 10.13.11 at 1:45 pm

Just pull all your money out of the banks. If everybody did that, the revolution would be over by next Friday. But if you keep your money in the bank, you are part of the system and have a vested interest in it surviving
——-
It’s called a run on the bank. The Fed will deal with this with more QE and printing.

#95 Marnic on 10.13.11 at 1:50 pm

#76 David B:

Buiter and Rahbari are full of it, sorry. Their rosy outlook can only be based on everything going right; things such as the world economy not being consumed by current and future unrepayable debt levels, and the immediate discovery and implementation of a suitable replacement for oil, to name but two.

#96 Bill Gable on 10.13.11 at 1:54 pm

Debt is the word.

All my goofy Boomer buddies are up to their ears – but when I mentioned that HELOCS are call enabled, the dining table got quiet.

One of the pals didn’t even know what that meant.

They all have 100k cars and live large.

They think I’m nuts, that I rent, have a Honda that is just great and no debt whatsoever.

One lady asked how we “managed”.

I just about gagged. Talk about snobs….but they own nothing and will be working on their million dollar mortgages for their entire life.

Who is buying in Vancouver? Kids come out of University in debt up the yang.

No wonder so many folks are having their 20 somethings living in the basement suite.

This is a mess, and it seems, at least to me, the seas are still pretty choppy.

#97 Moneta on 10.13.11 at 1:55 pm

bigrider on 10.13.11 at 10:00 am

———————
Here are some fund returns on a DC platform. You can modify the end date.

Don’t forget to subtract 1%+ for the fees.

http://www.inalco.com/english/group/savings/funds/performances/performances.jsp

#98 fancy_pants on 10.13.11 at 2:46 pm

you were talking about housing construction starts the other day…voila

http://ca.finance.yahoo.com/news/Strong-construction-September-capress-402037754.html

#99 LS on 10.13.11 at 2:46 pm

#83 – regarding Vancouver detached.

The attached shows for Vancouver West Side, 7.9 months of inventory for September:

http://www3.topproducerwebsite.com/users/41243/downloads/DetachedVWGraphs.pdf

I have been following the total number of listings for “houses” since end of August for Vancouver West. Source is Realty Link. (www.realtylink.org)

I am going to put the August 29th total number first and the October 13th total number next, and then the percent change. (Hopefully this works, as the comments area is not really set up to take tabs/formatting!)

Total Listings for SFH Aug 29 Oct 13 % change

West Side Under $2 mill 172 210 22.1%
West Side Over $2 mill 466 640 37.3%
West Side SFH Total 638 850 33.2%

If you break out the increase from 638 to 850 another way:

West Side Core * 254 389 53.1%
West Side Non-Core** 384 461 14.4%
West Side Total 638 850 33.2%

*I have defined West Side “Core” as the following areas and tracked them separately:
Kits Total Listings 37 51 37.8%
Arbutus Total Listings 45 59 31.1%
Point Grey Total Listings 47 79 68.1%
Dunbar Total Listings 50 87 74.0%
Mackenzie Heights 20 41 105.0%
Quilchena 16 31 93.8%
Kerrisdale 39 41 5.1%
Total “Core” West Side 254 389 53.1%

** I have defined West Side “Non Core” as the rest of Vancouver West, for example, Shaughnessey, Southlands, Marpole, Cambie, Fairview Oak, South Granville, Downtown, Yaletown etc. I didn’t track these separately. You might argue with my break down, but I did it because I am interested in the “core” hoods as I define them. It’s areas that I live/have lived/rented and would live.

So what do we see here?

– We see for single detached homes on the West side that listings above $2 million have grown by 37% versus listings under $2 million by 22%.

– We see that Vancouver “Core” listings (areas that were most desirable and have increased the most over the last 10 years) have increased by 53.1% versus 14.4% for the “non core” areas.

– When we look at the breakdown of the Vancouver Core areas we see that Point Grey and Dunbar are up over 68% and 74% respectively.

Can we draw a lot of conclusions based on a couple months of data. Likely not, but the trend certainly seems to me that the “core” desirable west side ‘hoods are showing a huge increase in listings relative to the rest of the west side. Same to be said for listing over $2 million versus under $2 million. It appears a correction is under way?

#100 fancy_pants on 10.13.11 at 2:52 pm

shhhh. RIM may be the next Nortel – a real berry dressed in black

#101 Trev16 on 10.13.11 at 2:58 pm

I think were all in agreement that real estate prices in a number of markets are overdue for a correction.

When will it come…..who knows? However, it might be sooner than we think….the Euro is in the process of collapsing….Obama with record low approval rating….Wall Street being called out for it’s criminal activity…..46 million Americans in poverty soup lines….oops I mean receiving food stamps and lastly White House caught selling guns to Mexican drug cartels (Fast & Furious).

What’s the only thing that will distract us from all this negativity? Apparently Israel has been given the green light to bomb Iran and this is suppose to take place in the next 2 weeks……Hello WWIII.

Insiders are now leaking out info as they know what is coming and they are concerned. Unfortunately you will never hear about it from mainstream media.

http://www.infowars.com/sources-us-gives-israel-green-light-for-iran-strike/

http://www.infowars.com/fbi-insider-obama-administration-likely-manufactured-dubious-terror-plot/

It’s all good Garth. Maybe we should buy some shares in companies who manufacture weapons. Perhaps you know a few companies that you would recommend?

Cheers,

Trev16

#102 Abitibi Doug on 10.13.11 at 2:59 pm

The first item, partly on my own initiative and partly Garth’s advice, is I’m glad to have purchases some stocks and funds during the recent correction. Some deja vu here, I’m again reminded of the governor I described earlier this year that responds to a speed drop (stock correction) by giving the engine more fuel (more buying) to compensate for the speed drop.

The second order of business is it appears Garth’s ideas are going mainstream. Last week there was an article in the Globe, Business Section, about how the IMF warns of the risk many Canadians have taken with excessive borrowing to buy expensive real estate. Another article by Rob Carrick, a regular article poster, warns of the fallout from the reverse wealth effect if house prices should drop significantly. Another article in the London Free Press this week mentions how many senior Canadians have borrowed heavily and have most of their investment in real estate. Sound familiar? Some interesting times are ahead. The good news is some great buying opportunities are ahead for housing or businesses that depend on housing if you are patient. Meanwhile I’ll load up on some cheap energy fund units.

#103 Moneta on 10.13.11 at 3:17 pm

Genghis on 10.13.11 at 12:45 pm
————

In 2001, when I felt US analysts were feeding me a load of BS built on a set of memes, I decided to go on a quest for the truth. One of the first reports I read was the Survey on Consumer Finances which can be found on the Fed’s website:

http://www.federalreserve.gov/econresdata/scf/scfindex.htm

As far back as in 2001, you could already see this phenomenon taking hold. Elderly increasing their indebtedness. And I knew it would be worsening and coming to Canada.

A couple of weeks ago, I read a book called There’s No Place Like Home written by an Ontario woman who explains what kind of treatment you get in long term care in Ontario today while we still have 5 workers per retiree.

Many Canadians think they will be able to make others foot the bill. Unfortunately, many will understand that the buck stops at the long term care facility. If it’s already failing now, imagine when we only have 2.5 workers per retiree.

If you are in debt, pray for good health or a quick death.

#104 Victoria on 10.13.11 at 3:28 pm

I heard the same thing from RE agent – steady employment – what steady employment? Coffee shops? Yoga? and of course the always famous “Healing”. As for government – the salaries are not going up and some of the highest paid people do not earn enough to keep property at this level.

So many of the “Rich Foreigners” that were moving here a few years ago are moving away. I think that was just a blip. Like Salt Spring. I remember our RE agent at the time when he would show us a house and we said it was too expensive or needed too much work “just got a call from a Rich Albertan, Rich German etc. etc.” and they want to pay cash and move here. When he was President of VREB he even used that line in an interview. He decided to start flipping houses. I don’t know how that went.

Well no Ameicans, Albertans and Germans seem to be coming and we don’t seem to have any HAM. The listing for high priced properties are huge and I see them coming on a couple times and day with nothing selling. I have the Private Client Listing Service.

Ha!

#105 SRV ES339 on 10.13.11 at 3:43 pm

“The answers: (a) No plunge. The Dow is down 0.5% for the year. Yes, one half of one per cent. (b) No surge. The yellow stuff collapsed more than 16%, and is still down 13%. (c) Stocks took off in March of 2009, and again in the last seven days, climbing almost 10%.”

Garth , Garth, Garth… Au surged to well over $1900 and was taken down over a few days (a review of the Comex COT following the raid provides the DNA evidence… massive bank short covering) by the banks… with a little help from some friends.

Now I know you didn’t miss this, but it does seem you forgot to mention Au is up over 20% (even with three major raids), while the DOW is down 0.5% YTD.

And, the S&P “taking off” from 666 had nothing to do with market fundamentals and everything to do with QE1, 2 (free money for Wall Street to prop it up)… and if there is no QE3 where do you think it goes from here (cashed the last of my non PM stocks last week)?

See you on Bay Street on the weekend… I’ll bring some R/E Agents to roast… gotta keep warm somehow!

#106 Pete in Barrie on 10.13.11 at 3:57 pm

Some really thought provoking arguments, but I am glad I didn’t panic in August and sold my investments.

On another note: it looks like I just closed on an investment/vacation property. I put on offer in for a 2 bdrm condo in Clearwater for $29,000 and after over three months the bank in Florida accepted the short sale offer. A little scary, but I think it is time to buy in the US and, of course, not buy in Canada. Any comments out there?

#107 OnlyTheBankersLaugh on 10.13.11 at 4:01 pm

Young Old Fart,
“Smoking Man, you continue to be my hero! I would have handled it the same way…..”

YO’Fart, So Smokin Man is your Sherpa life coach, sensei, fierce offbeat leader – hookers, strippers, alcoholic, insane actor, delusional with wild generalizing beliefs about all teachers because he couldn’t deal with one. Makes money with some financial programming, becomes a self proclaimed rock star investor and develops a God complex. Apparently does not give back to make a better society as he loves his expensive self absorbed lifestyle too much. Commenting on things he knows very little technical details about (insert universe and black holes here). Hey, he’s great comic relief here but his behaviour thru his admissions is much worse than the old lady possibly wanting someone to kiss her butt…. it’s not clear that the rich lady wanted the bum to kiss her butt and listen to her but we know good old SM’s motives is to have hookers / strippers kiss his butt for his $$$$ which SM will argue is somehow more noble with girls his son’s age because he’s more honest about his intentions. Let’s celebrate all that is Smokin Man, hopefully an alter ego fictional character (hookers, fast money, ego, great family man and awesome father) but is he a Sherpa life coach hero, come on.

Son, you lie, you steal and you cheat – you’ll make a great Vice President some day… quote credited to the Smokin Man

#108 Timing is Everything on 10.13.11 at 4:29 pm

#84 Smoking Man – I’m insane…

Your not insane…it’s just a delusion.

#109 Timing is Everything on 10.13.11 at 4:30 pm

#84 Smoking Man – I’m insane…

You’re not insane…it’s just a delusion.

#110 Timing is Everything on 10.13.11 at 4:32 pm

Sorry about that first one…

‘YOU’RE’ getting picky. ;)

#111 Ivan Rofski on 10.13.11 at 4:39 pm

soon you will surpass Robert Prechter as the biggest idiot
trying to make a living scaring people.

AAAAAAAAAASSSSSSSSSHHOOOOOOLLLLLLEEEEEE

#112 Stevenson on 10.13.11 at 5:02 pm

It looks like Americans are interested in finding a place in Canada now too. After all they do need a place to live while they work here.

http://www.theglobeandmail.com/report-on-business/economy/jobs/canada-new-magnet-for-us-job-hunters/article2199166/

#113 Westernman on 10.13.11 at 5:06 pm

Garth,
Your knowledge and insight into Real Estate is formidable but I have to tell you that this socio-economic shitstorm is just gathering steam. Forget what the Powers -that-be say… it’s all a king sized barrage of bullshit to keep the sheeple working away and paying their masters in Ottawa, D.C. or wherever. They don’t have a clue what to do so they are just stalling for time.
All one has to do is look around, open their eyes and be honest with themselves – it’s getting worse, not better. Albeit slowly but inexorably. And it’s going to get a LOT worse before it gets better.
Oh, and by the way… Smoking Man – are you on LSD? You are one wacked out pile of human junk, champ.

#114 Van guy waiting on 10.13.11 at 5:09 pm

Garth:

Do u see prices to decline before interest rates rise?

#115 Young Old Fart on 10.13.11 at 6:35 pm

Smoking Man and Young Old Fart …. funny how your “successes” in life have made you both so jaded, bitter, and mean. What accounts for that I wonder?

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

You are way off. I cannot speak for Ol Smoky but I am a rather jovial fellow. Mean? Nope, I just do not tolerate stupid. Bitter?? Not in the least. Jaded? Maybe a little, but that comes from learning life’s lessons the hard way.

For instance, Disciple prattles on this blog about cancer. I really want to jump on that, but will leave it. It would only give him the attention his narcassistic being craves.

Money and RE Señor Disciple….. Por favor….

#116 Marc L on 10.13.11 at 6:35 pm

What pisses me off the most are the government wonks who aren’t doing the right things and are actually contributing to the RE bubble. Once and a while Mark Carney and Jim Flaherty will release a statement asking Canadians to reduce their exposure to debt. Yet they turn around and set interest rates at historical lows and leave them there. In part to keep the debt charges on the 600B$ FED debt as low as possible. I wish that interest rates where left at free market conditions like fuel, booze, strip club lap dances, firewood, etc. Where is Ayn Rand when you need her. I know – she is 6 feet under.

#117 Karl on 10.13.11 at 6:39 pm

“All one has to do is look around, open their eyes and be honest with themselves – it’s getting worse, not better. Albeit slowly but inexorably. And it’s going to get a LOT worse before it gets better.”

Thank-you Westerman. I’m glad I’m not the only one who realizes this. If Garth thinks the world governments(the very pundits who caused these problems in the first place)are going to solve all these issues, then I’ve got a bridge for sale you might be interested in. Mark my words. When “it” happens, it’s going to be swift, sudden, shocking, and devastating. Be prepared.

Lots of tin foil today. — Garth

#118 Smoking Man on 10.13.11 at 6:59 pm

#108 OnlyTheBankersLaugh on 10.13.11 at 4:01 pm

I have one thing to say to you…………………………..about teachers.

Why don’t kids that graduate from High School know what BONDS are…………..

#119 Smoking Man on 10.13.11 at 7:29 pm

#114 Westernman on 10.13.11 at 5:06 pm

You’re just a typical western hick you said (“are you on LSD? You are one wacked out pile of human junk, champ.”)
Buy the way you spelt wached wrong, it’s Whacked
Had you come from a liberal enriched metropolis your statement might have sounded like this:

are you on LSD? You are a Paranoid schizophrenic who has false beliefs (delusions) that somebody or some people are plotting against them or members of their family. People like you as with most subtypes may also have auditory hallucinations – they hear things that are not real. The individual may also have delusions of personal grandeur – a false belief that they are much greater and more powerful and influential than they really are. Typically, a person with paranoid schizophrenia has fewer problems with memory, dulled emotions and concentration compared to individuals with other subtypes; usually allowing them to think and function more successfully. Nevertheless, paranoid schizophrenia is a chronic (long-term, lifelong) condition which may eventually lead to complications such as, Hookers, Drugs and Gambling. I feel for you Smoking Man.

Now stop sucking up to Garth Cowboy……..

#120 Westernman on 10.13.11 at 7:41 pm

Smoking Man:
Looks like I got right to the heart of your malfunction with one simple,uncluttered accurate statement, huh?

#121 Nostradamus Le Mad Vlad on 10.13.11 at 7:46 pm


#95 Moneta — “Just pull all your money out of the banks. If you are in debt, pray for good health or a quick death.” — BoA prevented US citizens from doing that last week, as they understand the panic it would cause.

It is probably the same up here. For the better half and myself, it is a very good reason to keep basics in savings / chequing accts. with the bulk in investments.

Re: death — life insurance (if owned) would pay creditors / banks off first, leaving the one left behind with little or nothing.
*
#102 Trev16 — “Apparently Israel has been given the green light to bomb Iran and this is suppose to take place in the next 2 weeks……Hello WWIII.”

Here is the link. Israel has never signed the NNPT, so America is supporting a rogue state, which explains why this — Busted! The only reason the Obomba regime used a ludicrous FF like this is to justify war with Iran. There is no reason for Iran to go to war with SArabia, but there is one reason why Obomba wants to go in, and y’all know what / who the reason is. Further — Propaganda USAF ‘surge’ planned (Iran);

Out here on the Loopy Left Coast, we’ll be mesmerized with a double-dose — Fukushima’s fallout and WW3. Brunch is served in one go and don’t ferget The Big One!
*
13:31 clip OWS — well stated; 5:51 clip Nigel Farage — this gent is smart, one of the very few smart politicos left in the world; Germany Take a look at public option banking; OWS Who wants them done away with? See the countries that want to bomb Iran — there is the answer; GS and BoA layoffs “Actually, we don’t have any sympathy for you fuckers; we’re just being polite.” wrh.com; Journalism There are but a few decent reporters left.

Dictatorship Louisiana Law; Occupy Canada Just in time for WW3 (dump the CPC into an acid vat, let the warmongers burn in hell) and Border Protests Is this why Harper is building new prisons? 1:38 clip Accurate predictions from 2007; 2:30 clip “Ofcom has finally decided to remove Press TV form the Sky Platform.”; 3:01 clip Charlie Sheen or DC: Whooja trust? (Sheen).

#122 mel in victoria on 10.13.11 at 7:53 pm

Garth, the NIMROD question you posed was very selective and not fair in my opinion and was too pathetic for this pathetic site..

Taking a longer interval than you did : Jan 31/2001 to today, Oct 13,2011:

SPX 1320 then 1200 today.

Dow 10900 then 11480 today

Naz 2250 then 2330 today

TSX 6710 then 11910 today

Gold 270 then 1670 today.

I’m no gold bug Garth but I will say, and I think most of your readers would agree, we all should have bought gold years ago. but esp. Silver. I don’t see you dissing silver..Yeah go ahead sell your gold now if you bought it at 300…(you’ll be sorry) ..what a windfall even after cap gains taxes. Add in all the dividends you want on your pathetic stocks,GOLD was the clear winner!!

By the way, forget about gold, it’ll do well but silver will be the humungus winner ……….

Let your readers in on a secret.Commericals COT silver hasn’t been this bullish in a decade.

I wrote about the recent financial storm, not the last decade. Sorry your PMs bombed and you had to change the parameters. — Garth

#123 RainBird on 10.13.11 at 7:56 pm

Interest rates will never rise. They will go to zero and stay there.

Why?

Because our previous manufacturing enterprises have been shipped to Asia. All we do is invest and consume – that’s why we have problems with debt now. We need to manufacture money since it is the only thing we can do.

#124 Uncle Joe Red Square Ciggy Puff on 10.13.11 at 8:05 pm

If you don’t believe Garth on buying on condo plans – just look at 1 Bloor in the GTA.

#125 Smoking Man on 10.13.11 at 8:11 pm

.#122 Nostradamus Le Mad Vlad on 10.13.11 at 7:46 pm

Things are certainly shaping for a WW3.

Terror laws being invoked by Harper in peace time, does he know something.

Fake (Car Salesmen and Mexican Hit Plot)

Getting Gilad Shalit out before the fire works fly.

Saudi Arabia and Bahrain, need cover to put down there own.

Sheeple here have woken, they know they got f-d, and are on the hunt for the ones that took their loot.

A WW3 will solve a lot for the ones that have a lot.

Keep the links coming

#126 TurnerNation on 10.13.11 at 8:17 pm

I get it…Rolling Stones (aging boomers) and their song title Emotional Rescue.

#127 Onemorething on 10.13.11 at 8:31 pm

Orchastrated Downturn! But Garth, there are too many holes in the boat, no dry powder etc.

Slow Melt with intermittent thunder showers for the next 10 years! Great Global Reset or Great Global Reballancing not sure.

Hey, we’re not living in HK are we at those Condo prices?

Anyhow, we know the AUS and CAN RE market is going to tank (slowly) but how will it change things globally? Blip on radar only.

NOW, the CHINA RE bubble that is another story. VIX and BALTIC DRY…keep your eyes on that!

For the Chinese Elite, the money is leaving! For the Chinese non-elite the money is coming home to save the family.

Not that the Chinese are a RE factor anyhow in Canuckville but the RE agents/Banks and MSM would have you think so!

#128 McLovin on 10.13.11 at 8:50 pm

This one is for you DA:

As you know the Okanagan is ground zero and sales and prices are way down. My buddy reads the OK Mainline report they put out every month but noticed they had omitted some price information this time around. (Obviously becuase its crashing) He sent them an email and here was their response:

My friend:

Each month I read your monthly statistics press release with great interest. In past press releases, you and your predecessor used to mention the price increase / decrease in percentage terms vis a vis the previous month as well as when compared to the same month last year. I notice this stat is now missing. Are there plans for you to incorporate these figures again in future months?

Their response:

“Thanks for your inquiry and your feedback. Yes in the past we have and sometimes we do and sometimes we don’t. One of the problems that we have faced with stating the average house price increase/decrease is the media sensationalizing the stat. For example a couple of months ago one of local media reported that “house prices were heading up”. They failed to leave out the fact average house prices were up and that the average may be skewed due to one or two expensive homes selling. They did however receive a lot of hits that day.”

What a joke. They love to “sensationalize” the stats when prices are going up but want to bury them when prices are going down. This is more information on why Realtors have no credability at all. Could you imagine the TSX only reporting quotes on days the stocks were going up?

#129 Hicksville Alberta on 10.13.11 at 9:14 pm

#100 LS

Interesting run you did on the 840 West Side houses listed for sale using the under $2 MN and over $2 MN as a breakpoint.

Swagging that it would appear that the lowest aggregate listing for these would be at least somewhere around $2 Billion which equates to about $ 4 Billion in pre tax income just to buy 840 houses out of the tens of thousands of houses in the lower mainland.

Wouldn’t take much to get into the trillions of dollars just in the lower mainland itself and that is just for residential housing.

If this is where everyone is getting their wealth effect from then it likely definitely is an illusion in spades.

In Hicksville there are at least 32 houses for sale and i bet somewhere around $3.2 Million or so would get most of them if not all.

At least around here there are some good paying jobs available for kids in the oilfields if they want to get some training and are prepared to work at it and with some hard work an a bit of discipline these types of purchases can be paid off in a few years, especially at these low interest rates.

#130 Tony on 10.13.11 at 9:30 pm

Should get a least one, one thousand point plus down day on both the DOW and the TSX next month (long overdue). Anyone who believes the malarkey coming out of Europe will get exactly what’s coming to them.

Absurd. — Garth

#131 Tony on 10.13.11 at 9:46 pm

#107 Pete in Barrie on 10.13.11 at 3:57 pm

It makes sense to buy American real estate because the U.S. dollar will likely strengthen in value over the next two years. Problem is with states in so much debt they make the mistake of raising property taxes to unrealistic levels meaning there may be a slight bounce and a flat lining in prices because of this.

#132 disciple on 10.13.11 at 10:54 pm

Cancer is the reason for my rebirth as disciple. The money involved with this issue will soon be hard to ignore and will make regular headlines in the coming years, methinks.

Chemo is a couple grand a pop at least. I think the looming cancer financial juggernaut will prove plenty prescient as it adds to debt loads of individuals, corporations, insurance firms, and governments. We have enough problems, we don’t also need the medical mafia adding to them pumping expensive “remedies” that do more harm than good.

If you did not take the time to internalize the shifting paradigm I touched upon in my post on cancer, it is indicative of a lazy, indifferent mind. You are what you think… what you think, you are.

#133 The thing in the basement on 10.13.11 at 11:50 pm

130 Hicksville

http://www.buyric.com/news/2011/01/british-columbia-assessments-surpass-1-trillion-for-the-first-time-2011-139/

#134 Young Old Fart on 10.14.11 at 6:42 am

Chemo is a couple grand a pop at least. I think the looming cancer financial juggernaut will prove plenty prescient as it adds to debt loads of individuals……

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

Health care costs??? Wait, are you from the USA? Because health care is “free” in Canada right?

#135 T.J. BONES on 10.14.11 at 7:17 pm

Garth Is it not true that there are more regulations and legal rules concerning buying a car (used) than there is in buying or selling r/e. Think about it. A car salesman or woman has to be totally truthful about the car. Then real estate salespeople look at the spin they do, and are protected from legal recourse. Why is that?