Choices

Every so often on this pathetic blog I screw up. Yes, I know this is difficult. Have a drink and sit down. We can hug and hum in a moment. Sometimes I make wild predictions (like gold would flame out or Kelowna real estate tank – which both happened), and then suffer through 800 comments from people who refuse to believe me (because they own bullion or a house on Pandosy Street). Or, worse, I recommend a financial asset, like preferred shares, corporate bonds or ETFs. Then the ankle-biters emerge to dis anything [email protected] doesn’t tell them about.

If there’s one thing that motivates people around here, it’s fear.

So let’s try again. Today’s topic, class, is REITs, and why they beat the pants off buying real estate as an investment.

Here’s Lynn’s question, to kick things off:

“I’m sure you must be receive hundreds of emails but I have a quick question for you.  I notice that you recommend REIT’s as investments.  What do you think the outlook for REIT’s will be if we do experience a housing price downturn?  I know you have said that many U.S. malls experienced high vacancy rates after their housing crash.

“I am one of those people with most of my funds sitting in “safe” low return investments.  I want to diversify as you suggest but have to overcome my fears of venturing into investments that I have traditionally viewed as riskier than my interest-bearing investments.”

OK, Lynn, decent question. And you asked nicely, which earns you a long ride on a fast Harley. In the snow.

REITS are ‘real estate investment trusts’ which pool investors’ money and buy heaps of properties. The trusts then collect rents and distribute them on a regular basis to investors. Additionally, the trusts I like trade as securities on the stock market, so if the assets they own rise in value, they’re worth more and the unit prices reflect it. This means you can get ‘yield’ (what the REIT pays you as a distribution) as well as ‘capital return’ (the increase in value). The sum of those two is called ‘total return.’

And what kinds of numbers are we talking about?

Depends on the kind of REIT. Some buy apartment complexes, some shopping malls, some office towers, and some a mixture of properties. As a group, here are some recent total returns (as tabulated by Macquarie Research):

  • Apartments, 12.7%
  • Retail, 10.5%
  • Office, 8.4%
  • Diversified, 8.4%

As you can see, this ain’t too shabby when GICs are paying 3% and money in the Orange Guy’s shorts is moulding away at half that. And while the value of REITs can fluctuate along with everything else, because the underlying assets are income-producing malls, apartments or office buildings, there’s far more predictability than with shares in an energy or mining company where profits can swing wildly. Also, REITS are not ‘correlated’ with the stock market, which means the Dow or the TSX can tank, and your real estate trust will keep motoring on. That was exactly the case over the past four months. Once again this is due to the stability of the real estate cash flow.

Big REITs include Brookfield, Morguard, Extendicare, Retrocom RioCan H&R, Primaris, Chartwell, First Capital, Dundee and Allied, as well as Boardwalk and CAP (Canadian Apartment Properties).

The last two, by the way, just buy apartments. In a previous post I told you about a Macquarie study which tried to determine where an investor would profit the most – (a) buying a rental condo in Calgary or Toronto, or (b) buying one of those REITs. It factored in market rents for urban condos plus the appreciation in real estate values, minus carrying and financing costs. And the winners (by a giant margin) were the REITs.

Does this mean all those thousands of people snapping up GTA condos to hold them for future capital gains while letting the tenants pay most of the costs, are nuts?

Absolutely. They could make more with a REIT, make it more easily, and do it with less risk.

Also consider this: real estate income trusts are 100% liquid. You can buy or sell one in mere moments. Try that with a condo. They are tax-efficient, since the rent from a condo is added to your income and taxed as such while REIT appreciation is taxed less as a capital gain. There are no real estate transaction fees – no land transfer tax or commissions to pay. With a REIT you can own a slice of dozens or hundreds of properties, and therefore get the comfort of diversification. And there are no tenants to advertise for, tolerate, or kick out for peeing off the balcony.

As with everything, there is risk. Make sure you buy a solid REIT with an excellent track record, solid financials and good properties. Don’t make the mistake of chasing only yield. You can also buy a mess of REITs inside an exchange-traded fund (like XRE), which provides liquidity, a yield and the potential of capital gains.

Finally, ensure this is but one asset class you hold within a diversified portfolio which also has the right balance between fixed income and growth-oriented securities. That should include corporate, government, real return and high-yield bonds, perpetual preferred shares, as well as other trusts and sector and index exchange-traded funds.

Damn. Just did it again.

Here come the dogs.

 

169 comments ↓

#1 First Place on 12.07.11 at 10:05 pm

First!!!!! yes.

#2 Dorothy on 12.07.11 at 10:07 pm

Today’s Financial Post refers to an economist who suggests the best way to weather the pending Eurozone meltdown is to stock up on firearms and tinned (canned) goods! Not sure I want to invest in REIT’s or anything else in THAT kind of an environment! Could things REALLY get that bad?

No. A lame question. — Garth

#3 bgs906 on 12.07.11 at 10:11 pm

Hi Garth, it appears that the REIT’s are valued fairly high right now. Would you be leaning more to the Residential or the Commercial/Office REIT’s at this time.
p.s. still enjoying the blog since day one, keep on trucking…er..hogging !!

#4 Signpost in the bushes on 12.07.11 at 10:14 pm

A very clear and concise explanation; well written! REITS are an important core holding in all well diversified portfolios.

#5 Smoking Man on 12.07.11 at 10:14 pm

Choices how is this for Choices

Self – Esteem and Big coconuts:

Is what separates the successful from the losers…….it’s that simple….

Buddy of mine called me up and wanted to go for a beer he was very upset, He is coder (my grasshopper from years ago), who works for one of the big banks with traders. Actually I trained him a bit but he is awesome, twice three times my ability now but accepts ½ my rate like it’s great thing.

He is the Go to guy, he solves every problem that smacks him in the face effortlessly. If I get stuck, I call him answer in 2 min…………..Free of charge…

He is on contract, this (nameless) bank is forcing all contractors to take 10% cut on their hourly rates, this at a time when there are record profits…..Means one of two things , some upper boss is going to have one hell of a bounce. Or they see something very bad coming……

Who cares about that, I offered grasshopper a job at his current rate at the hedge fund I’m with part time, I keep trying to quit but they just keep throwing money at me. I want to take even more time off but need a good guy like that. This was perfect.

But he is not going to do it. He is going to be a lap dog and take it. He has friends their he says. F-en Idiot………….. His wife thinks where he works is prestigious…Give me a bucket to puke in please…..

This guy is married to an abusive wife, she sucked ever morsel of man hood out of him Hence she lives in poverty by my standards…..Cause she is a world class superficial be-otch. Every two minutes tonight she texts him when you coming home.

If it was Me, 10% haircut record profits, I would just get my coat and walk out the door say nothing……Where ever shit landed after that so be it….It’s called branding and adding value….

That is what a real man does…………..And I have played enough poker to know that if you’re hand is as good as my buddy’s , you play it right you double or triple your chips.
The boss wants to push all in. I’ll call .with his hand…..

What he did by accepting this is let the world, and his peers know that he is a worthless dog, and going forward that’s how he will be treated. F-en sad…..

Got to write a book one day.

Bubble Head when you wake up in the morning after you shower , look at your naked body in the mirror and say to yourself my shit don’t stink I’m the very best…….No one is better….
Do it everyday for a month and you would be mesmerized at how successful you become…….

#6 MARTIN on 12.07.11 at 10:15 pm

nice educative writing

#7 Signpost in the bushes on 12.07.11 at 10:15 pm

A very clear and concise explanation; well written! REITS are an important core holding in all well diversified portfolios. Woof!

#8 Crazy on 12.07.11 at 10:15 pm

Woof!

#9 Off the river on 12.07.11 at 10:16 pm

“OK, Lynn, decent question. And you asked nicely, which earns you a long ride on a fast Harley. In the snow.”

Hmm… I thought I asked you nicely too. OK bad question. Good post though. Learning lots from your blog Garth.

Garth what’s your outook for real estate in the “non bubble” –including farmland–areas of Canada? Will it also go down, or remain at a similar value?

#10 TaxHaven on 12.07.11 at 10:17 pm

Does make sense. I admit it.

But I can’t help wondering why – and for how long – REITs will remain uncorrelated with other asset classes.

(Despite the BMO slogan, there IS no such thing as risk-free investing.)

I still like gold better.

#11 McLovin on 12.07.11 at 10:18 pm

Garth you try so hard to educate people here about simple concepts like Pref shares, corp bonds, REITS that have worked through bull and bear markets and they reward you by saying things like the Royal Bank has pledged all their tier 1 capital to off book deals and is already insolvent. There are so many people here who take one line of your post and attack it trying to make themselves look smart.

Seriously, you should just delete stupid comments and not give them the chance to quote zero hedge and such.

#12 tb on 12.07.11 at 10:28 pm

In case anyone’s wondering what’s the downside of preferreds after yesterday’s posts:

From Wikipedia:
———————-
Some argue that a straight preferred stock, being a hybrid between a bond and a stock, bears the disadvantages of each of those types of securities without enjoying the advantages of either. Like a bond, a straight preferred does not participate in any future earnings and dividend growth of the company and any resulting growth of the price of the common. But the bond has greater security than the preferred and has a maturity date at which the principal is to be repaid. Like the common, the preferred has less security protection than the bond. But the potential of increases of market price of the common and its dividends paid from future growth of the company is lacking for the preferred. […]

Suppose that an investor paid par ($100) today for a typical straight preferred. Such an investment would give a current yield of just over 6%. Now suppose that in a few years 10-year Treasuries were to yield 13+% to maturity, as they did in 1981; these preferreds would yield at least 13%, which would knock their market price down to $46, for a 54% loss. The important difference between straight preferreds and Treasuries (or any investment-grade Federal agency or corporate bond) is that the bonds would move up to par as their maturity date is approached, whereas the straight preferred, having no maturity date, might remain at these $40 levels (or lower) for a very long time.
——————

So once you’ve committed your cash in perpetual preferreds, you’re “guaranteed” (the issuer may skip the payment, but as Garth mentioned it’s not likely to happen) a fixed income amount but your principal which is yielding the fixed income will go down if the interest rates rise (which is both Garth’s and my own belief).

It’s almost the same thing for bonds, but bonds have a maturity date, and if you hold them up to that point, you get your principal back, regardless of the rates. Not so with preferreds as they are perpetual.

Not saying it’s better or worse.
Risk vs. return. That’s why preferreds pay more.

Then again, I ain’t no expert. Garth, feel free to add/correct.

Bank preferreds have churned out a 5% yield all this year while not falling in value while the world churned and giving a dividend tax credit. Harp all you want. — Garth

#13 T.O. Bubble Boy on 12.07.11 at 10:30 pm

Extendicare got screwed earlier this year when changes to Medicare/Medicaid changed it’s nursing home business. The yield is still great, but the price has dropped over 50% from the highs.

All the more reason to just buy the ETF vs. Individual REITs.

#14 LJ on 12.07.11 at 10:32 pm

Gotta love those distributions…..

#15 Smoking Man on 12.07.11 at 10:40 pm

Nother Secrite to reveil…Drunck again

http://www.romspen.com/investor-information/fund-performance/fund-distributions–returns–unit-value.aspx

Easy Money, simple not complicated

#16 [email protected] on 12.07.11 at 10:42 pm

What about American REITs (VNQ) or international REITs (RWX)? The yield seems to be smaller than Canadian counterparts.

#17 OMG I'm so not first on 12.07.11 at 10:43 pm

What’s [email protected] stand for? Anyone?

#18 Walter Safety on 12.07.11 at 10:45 pm

That’s great Garth -convince people that an REIT is investing in real estate. Just like the mutual fund salesman that shows an Andex chart and convinces people their investing in the stock market.
Both Reits and Mutual funds are far removed from their underlying namesake .
In the case of Reits there is no uniform valuation method on the properties and it benefits the major shareholders and other insiders to keep the values inflated.
Like mutual funds you can show prior returns but they are not going to be the investors return.
The REIT industry exists for itself ,it’s not real estate ,it has two more words in it’s name.

See what I mean? Tin foil everywhere. — Garth

#19 Bellurol on 12.07.11 at 10:45 pm

I met a developer. I asked him about real estate. Hesaid have it for sure. He said if he was assured on 4-6% on all of his investments he would be happy. His advice buy REITS

#20 OttawaLive on 12.07.11 at 10:48 pm

It’s Economy or people have become smart?
http://www.cbc.ca/news/canada/ottawa/story/2011/12/07/ottawa-ikea-opens.html

#21 Aussie Roy on 12.07.11 at 10:53 pm

Aussie Update

RBA cuts rates, Aussie banks – silent.

THE standoff between the big banks and the Gillard government has intensified, with the government repeating its demands they pass on Tuesday’s interest rate cuts and the banks maintaining their deafening silence.

http://www.theage.com.au/business/canberra-powerless-as-banks-hold-out-20111207-1ojbb.html#ixzz1fuKVq5Vm

Australia’s big four commercial banks stood to reap an extra $5.6 million in pre-tax profit for each day they held off passing on this week’s interest rate cut to borrowers, according to one industry estimate.

http://www.theage.com.au/business/rate-delay-bolsters-bank-coffers-20111208-1ojy2.html#ixzz1fuKf5GwD

Prof says we love our house porn.

THERE’S a new obsession threatening to take over our airwaves: property porn and we can’t get enough.

Switch on free-to-air or pay television and you’ll find countless shows about real estate (not forgetting websites, sections in print media and apps). It doesn’t even matter if the program is set overseas, we’re eager to consume content centred on people’s efforts to build, secure, fix, invest in or off-load their homes.

From Escape to the Country to reruns of Hot Property; from Relocation, Relocation Australia to Selling Houses Australia and the British originals; from Grand Designs to Property Ladder, The Block and Restoration Home, we love to watch all things domicile.

http://www.couriermail.com.au/news/opinion/property-porn-satisfies-our-lust/story-e6frerdf-1226209628142

Weaker house prices and falling fixed interest rates have increased affordability in the housing market for the third straight quarter, according to a survey.

http://www.smh.com.au/business/property/housing-affordability-improves-as-prices-slip-20111208-1ok9i.html#ixzz1fuLFR54t

44% national auction clearance rate, this during our busy spring selling period. Wonder what is in store for us over the next 6 months?.

http://www.myrp.com.au//showNews.do?id=512

Australian jobless rate rises in November

http://www.news.com.au/business/australian-jobless-rate-rises-in-november/story-e6frfm1i-1226217091003

#22 T.O. Bubble Boy on 12.07.11 at 10:57 pm

Unrelated to REITs, but very disturbing for anyone living in the middle of the current Canadian Housing Bubble:

I’ve been reading Michael Lewis’ new book “boomerang”:
http://www.theglobeandmail.com/news/arts/books/boomerang-by-michael-lewis/article2194439/

There is a whole chapter on the Irish housing/credit bubble, and while not the same as what is going on in Canada right now, there are a high number of similarities:
– belief that foreign money / immigration would continue to supply buyers
– real estate / construction became a record percentage of GDP (25% in Ireland at the peak)
– all banks — even the worst offenders of dishing out ridiculous loans to property developers — were considered safe and secure right up until the financial crisis hit
– the government assumed responsibility for virtually all bad loans — just like CMHC already does here

#23 Tim on 12.07.11 at 11:05 pm

and if you want to lag in returns over the long haul, buy lots of bonds and preferreds

I said a balanced portfolio. You need them all. — Garth

#24 McLovin on 12.07.11 at 11:12 pm

#12 – tb – I rest my case.

Why don’t you do some research you won’t find on Wiki and see how many P-2 or better rated prefs have defaulted in Canada in the last 50 years? Or even missed a dividend payment?

I can tell you the list will be tiny but stupid posts like yours will keep good people (who don’t know better) away from an excellent safe asset class.

Get lost.

#25 Snowboid on 12.07.11 at 11:21 pm

#17 OMG I’m so not first on 12.07.11 at 10:43 pm…

Just guessing, but maybe: The nice lady @ the bank?

#26 Stevenson on 12.07.11 at 11:25 pm

Motivated by fear? You mean motivated by other’s fears is more like it.

Took the market a week and a half of bad news, lack of clarity or direction, and so called fear of another Lehman brothers type of financial crisis developing for the market to sell off close 8%. It took 2 days of rumors and ideas/plans to fix the dept problem in Europe for the market to recover. There is nothing to fear but the fear to take larger risks. No risk. No return. RE in Canada proved that in the past few years. Dare to take the step.

#27 Jan Etter on 12.07.11 at 11:27 pm

#17 OMG

You must be new around here. Here’s a quick legend for navigating this blog (I’ve obviously wasted too many hours of my life on this blog… for us regular dogs we all know):

[email protected] = The Nice Lady at The Bank
The Orange Guy’s Shorts = ING Direct savings account
F = Flaherty
H = Harper
C = Carney

Warning, this blog is deceptively addictive. Get out while you can…

#28 Anotherlowlyrenter on 12.07.11 at 11:28 pm

This is what happens when politicians do what’s right:

http://www.bloomberg.com/news/2011-12-07/singapore-imposes-additional-stamp-duty-tax-on-some-residential-properties.html

#29 TurnerNation on 12.07.11 at 11:35 pm

Speaking of payday loans…symbol CSF on the TSX (CASH STORE FINANCIAL SERVICES INC) is near its lows from a few years ago ($6.70).

Dividend is .48/yr, 7.32 % yield.

You’d think its stock would be doing better in this debtors environment.

(disclosure: no position)

#30 TurnerNation on 12.07.11 at 11:38 pm

Ugh…if you can stomach their gutter loan products. Can one also purchase kneecap insurance?

Products
Payday Loans

Cash Store Financial can arrange for short-term cash advances from $100 to $1,500, up to 50% of the customer’s take home pay, to help cover unexpected expenses. Customers must be 18 or older, have a source of income and a current bank account. Payday Loans are issued for a maximum of 18 days.

Signature Loans
Helping out Canadians living on fixed incomes, Cash Store Financial provides short-term loans to customers against their Child Tax, Disability, Old Age Pension, and Employment Insurance.

Cheque Cashing
Cash Store Financial offers the lowest cheque cashing rates in the industry. Money orders, government issued payments and employer pay cheques are cashed quickly and effortlessly helping customers get their money faster without any holds or hassles.

Title Loans
Cash Store Financial customers can borrow up to $10,000 against their vehicle for a 30-day period, after which the loan can then be refinanced or paid out.

#31 disciple on 12.07.11 at 11:40 pm

I was going to investigate tomorrow which REITs invest in residential RE so as to divest / avoid these, but perhaps you can save me some time, G? As you know, I am a very busy man…

Pray for guidance. — Garth

#32 NiceGuy on 12.07.11 at 11:42 pm

If real estate prices fall, as they will, won’t REIT’s prices follow?; you just mentioned that if the assets they own rise in value, they’re worth more and the unit prices reflect it.

REITs don’t buy houses. — Garth

#33 WI BOOMER on 12.07.11 at 11:43 pm

Lynn- Buy yourself a well diversified REIT. i own a basket of REIT’s that are just a smal part of my overall investments (I love the better dividend paying stocks for steady income and appreciation). I do like REIT’s too, but just haven’t seen a good enough price drop to buy in more…yet. My records here in the US have averaged about 8% for the last 3 years.

Good advice for growth, but don’t put too big a slice here maybe up to 20% tops assuming 100/K portfolio.
Best wishes!!

#34 tb on 12.07.11 at 11:46 pm

Bank preferreds have churned out a 5% yield all this year while not falling in value while the world churned and giving a dividend tax credit. Harp all you want. — Garth

——

And do you predict their values will remain so this year? I thought you were of the opinion that interest rates were going up…

Rising rates will not affect yield, and the modest rate hike ahead should minimally impact capital values. If demand for preferreds remains high, potentially no change even if the BoC moves. Obviously you do not own any. — Garth

#35 InvestorsFriend (Shawn Allen) on 12.07.11 at 11:51 pm

REITS…

Here’s my take on RIOCAN for what it is worth.

Invest (or not) at your own risk.

Link deleted. Buy an ad (which I won’t post). — Garth

#36 Snowboid on 12.07.11 at 11:58 pm

Forgot to mention the three day countdown to the full moon, beware: mild-mannered posters will sport fangs and excessive body hair!

Even Nosty has blown a fuse!!!

Smoking Man… will become more coherent, however.

#37 Smoking Man on 12.07.11 at 11:59 pm

Finaly talked the wife into a 3some
She said Old Spice guy….lol

Not what I was thinking

I love this woman

#38 Falling knives on 12.08.11 at 12:08 am

Been watching you for a while now but never made a comment until now… Agree with much of what you say on the fundamentals of residential real estate market. Significant price decreases will happen but may be a while yet.
However, not sure about this wide brush approval of REITS. The money flows into these funds, especially the apartment REITS, results in more competition for assets acquisition (they have to spend the money..), which pushes prices and yield compression. Yield compression leads to increased valuation on existing portfolios and higher capital returns (self-fulfilling prophecy). They are buying apartment buildings at cap rates of sub 5% – dangerous territory and not far from negative real income cash flows. When the music stops there could be casualties here.

Urban rental demand is rising. A real estate correction will only increase this. — Garth

#39 Gretzky4Life on 12.08.11 at 12:12 am

Smoking Man – I hear ya. For a month I will scream naked that my shit don’t stink. I’ll check back in to update.

#40 somecatchphrase on 12.08.11 at 12:12 am

TurnerNation –

Payday lenders are a great way to profit from rising interest rates, inflation in basic necessities, and the decline of the middle class. The current share price and dividend for CSF could be a very attractive entry point. The wild card is regulatory risk.

Incidentally, payday lenders are a good example of why liquidity is so important. Folks who are short on cash will pay any price. (usurious interest rates)

For those who would like to better understand the concept of “liquidity,” here is an excellent lecture for anyone that’s interested:

http://www.gresham.ac.uk/lectures-and-events/liquidity-finance-in-motion-or-evaporation

#41 Renters Revenge on 12.08.11 at 12:13 am

So…about those rock-solid Canadian banks?
http://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe

Misinformed commentary from a discredited source on this subject. — Garth

#42 Another GTAer on 12.08.11 at 12:17 am

I noticed a couple seniors real estate companies in Garth’s REIT list. Don’t seniors have to sell their homes to move into one of those? How would a residential real estate slowdown affect such seniors real estate companies?

#43 sluggo on 12.08.11 at 12:18 am

“like gold would flame out”

I wouldn’t consider being up 26% so far for 2011 priced in C$ a flame out or is that somehow a bad thing?

#44 Led on 12.08.11 at 12:27 am

Can we buy REITs in the states? I would be interested in taking that action – anyone with me?

#45 BMW Biker on 12.08.11 at 12:30 am

You had me until ‘…fast Harley…’.

#46 tb on 12.08.11 at 12:38 am

#24 McLovin

“Why don’t you do some research you won’t find on Wiki and see how many P-2 or better rated prefs have defaulted in Canada in the last 50 years? Or even missed a dividend payment?

I can tell you the list will be tiny but stupid posts like yours will keep good people (who don’t know better) away from an excellent safe asset class.

Get lost.”

———-

Please read my post again.

I never mentioned that there was a risk of default and I actually said that they’re not likely to miss any dividend payments either.

I simply pointed out how preferreds are different then bonds.

There are risks associated with any investment. The “good people” you mention should understand them.

And please, no need for personal attacks.

#47 Speculator on 12.08.11 at 12:47 am

REITS can give great returns now because they are leveraged with low interest rates, when the rates rise the distributions will fall as will the unit values. Many of these buildings defer capitol work to support the returns as well.
I looked at one once and I know my way around the basic
math, it didn’t add up. They may be a good short term position though.

#48 Doom on 12.08.11 at 12:47 am

“Every so often on this pathetic blog I screw up. Yes, I know this is difficult. Have a drink and sit down.”

You buying Garth? If so….Johnny Walker black…

#49 Canadian Watchdog on 12.08.11 at 12:54 am

Ahh yes, those REITS. Then you wonder who’s buying Toronto properties and with what money.

Exhibit A: http://i39.tinypic.com/10o4sxh.png

Exhibit B: http://phx.corporate-ir.net/phoenix.zhtml?c=124438&p=irol-newsArticle&ID=1616069&highlight=

Stick with senior housing REITS. Karen Kinsley is all over it.

#50 nonplused on 12.08.11 at 1:09 am

Nice post tonight Garth and good advice. However, I would like to take issue with 2 points you made:

One, Harleys are beautiful machines in every way, one might even say each one is a work of art. However, I wouldn’t generally refer to them as “fast”. Buells are fast but that’s a different brand and concept, and probably still can’t stay close enough to a Ducati to smell the exhaust.

Two, I think the reason the crazy people prefer condos to REITs is that they could, until recently, employ a lot more leverage. It wasn’t hard to buy a unit for $10,000 down with a 2 year wait time, which back in the day would provide explosive returns. It’s not happening anymore but hope springs eternal. Yes, I know REITs have built in leverage, but not like that!

#51 Soylent Green is People on 12.08.11 at 1:14 am

BANNED

#52 Soylent Green is People on 12.08.11 at 1:14 am

BANNED

#53 City Slicker on 12.08.11 at 1:28 am

Well it sounds like Americans have lost their rights, revolt coming soon! Thoughts:

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

#54 Nostradamus Le Mad Vlad on 12.08.11 at 1:45 am


Excellent last para. (Finally, ensure . . .), full of useful info. Easy to understand why RE is dying, expensive to maintain and move.

These aren’t the old days anymore, when selling a home was a month or two at most.

“Or, worse, I recommend a financial asset, like preferred shares, corporate bonds or ETFs.” — Yes, but that’s for the bozos of the world. They won’t read or listen, they’ll shrug their shoulders and buy more RE. Can’t comprehend reality.
*
#146 The thing in the basement on 12.07.11 at 10:24 pm — “Did you see the movie “green zone”?”

Hi TTITB. Haven’t watched movies for over a decade now, as I’m partially blind in both eyes (left worse than right).

Last film I tried watching was “Life Is Beautiful”, Italian lingo with Eng. subtitles. Impossible to read and watch both at the same time, I’m not a movie buff anyway.

I’ll check it out on the ‘net, tho. Cheers!

#36 Snowboid ” . . . mild-mannered posters will sport fangs and excessive body hair!” — Hey hey, I shaved a couple of eons ago, still good for another decade or two!
*
UK Eight hundred businesses a day went under; EU fearmongering “Fearmongering about ‘end of the world’ scenario disguises technocrat power grab”; UK – Euro British demands? EU Debt Not sure what the US can do, if anything; Corporate Solution Except it’s going east, not staying here; NATO That’s why all these wars are underway — all the western countries are broke; 17:47 clip 4closure high in 2013.

Brussels There it is, soon to be the head honcho of austerity and the EZ, but the Euro is screwing Europe up, and Britain is supporting it; Demand for Dollars, Euro Debt explosion but Europe is nuts, German fleas, Food Stamp usage 1969 – present, Income Inequality (can’t quite figure the chart out), EU fiscal union, For Sale — One timber co., hardly used, Ghostbusters Who does the ECB call? Deleveraging vs. the real economy.
*
#67 egoboy What about this then? Dog Years Is this a record? China Preparing for war; Ice Climbers in Canada; Brush Up! Piranha’s teeth; Pit Skull Weird rock formation; Stuxnet May have gone world-wide viral; Obomba and Clinton Curious to see if they take the stand; 2:32 clip Pakistan’s independence — no more AfPak; Asteroid Vesta Has planet-like similarities.

Japan Two giant waves formed tsunami; Is e-mail dying? The USPS is almost defunct; WW3 Russia and China seem to actively preparing themselves, but Obomba Why does he want sanctions on Iran eased? Who is pulling is strings? 9:26 clip Our species is amusing itself to death (Roger Waters, live); Hippies – Boomers Living the country life now.

#55 Chaddywack on 12.08.11 at 2:08 am

I’ve seen a new trend in some of the listings here in Vancouver in the last 30 days or so.

Price drops, but accompanied with realtor comments such as “Price Firm” and “Full Price Offer or NO Deal!”

I guess the sellers just won’t sell for a loss because real estate only ever goes up :)

#56 Robert Copeland on 12.08.11 at 2:19 am

Why? Why do you keep saying gold tanked? You must know it isn’t true. Gold right now is up $310.00 or 17.8% since 1-1-11. Why?

Do not be overweight gold. — Garth

#57 Expat on 12.08.11 at 2:36 am

Garth, I came across your blog a few weeks ago and have ben avidly reading it since. I left Canada about 5 years ago, and have recently been thinking about moving back. After doing a quick search on MLS, I was amazed at how expensive houses in Toronto have become!

What baffles me right now is how anyone can afford to carry a mortgage on some of these properties. From what I understand, salaries and overall incomes haven’t risen much in the last five years, but certain houses have more than doubled/tripled! I don’t think I can afford to move back!

Thanks again for the great insights.

#58 Boomer on 12.08.11 at 2:38 am

What’s the pay like to run and maintain a blog these days Garth? Must be making big bucks!!!

Uncountable. — Garth

#59 Okanagan Renter on 12.08.11 at 2:46 am

#27 Jan Etter said:

“Warning, this blog is deceptively addictive. Get out while you can…”

True that, but a little late for this smug renter.

Garth mentions Pandosy St. malcontents in Kelowna. A co-worker bought a house a few years ago just in front of the Kelowna General Hospital. With the eastward expansion of the hospital, the new wing now sits a few feet away from their kitchen, completely blocking any semblance of a view. For that privilege, they’ve had to endure months of endless construction noise and workers flicking cigarette butts into their yard.

So much for buying the dream house in K-town…

#60 Groovin123 on 12.08.11 at 4:03 am

Bullion flamed out?. The top-callers in gold have made me chuckle since $480/oz. Oh I know, I know, it’s off 10% from it’s highs so it’s cooked. When loose monetary policy stops and huge debts are curtailed, then the bull market in bullion is finished. All “austerity” measures are political banter until proven otherwise.

#61 BC Boy on 12.08.11 at 4:23 am

@ #27 Jan Etter

“Warning, this blog is deceptively addictive. Get out while you can…”

———————–

I completely agree with above statement. Why am I reading this blog eventhough I have a mjor final exam tomorrow at SFU!?????

#62 Onemorething on 12.08.11 at 6:08 am

5% Real Gold, 10% Silver, 30% Preferred Shares, 55% USD.

#63 Fear on 12.08.11 at 6:35 am

You are correct Garth, Fear causes inaction and inaction leads to poor decisions. I think I am in that camp.
The other thing is seeking Financial advice, it is not cheap.
But $25,000 earning 1% or
paying 1% for advice and earning 4%
Which is better?
Your Blogs lately have been for the better, truth is hard to swallow.
Cheers

#64 SaraBeth on 12.08.11 at 7:15 am

Garth ~ Thought you might find this interesting. From yesterday’s Hamilton Spectator.

http://www.thespec.com/news/business/article/635388–growth-on-horizon-for-hamilton-real-estate-re-max

I wonder why my neighbor can’t sell her house. Or why there are two others on my street for sale, sitting empty, and have been that way since last Spring.

#65 T.O. Bubble Boy on 12.08.11 at 8:24 am

One note about correlation between REITs and house prices – obviously, both can be sensitive to interest rate movements… So, even though Canadian REITs aren’t invested in SFHs, they would both move downwards if there were notable rate hikes (but REITs can be traded in a few seconds for just the $9.99 or less trade fee)

Disagree. The value of urban shopping malls or downtown office towers will not materially change with a 1% increase in the lending rate, nor will the cash flow diminish. — Garth

#66 Mr. Lahey on 12.08.11 at 8:55 am

Just got off the phone with the all knowing, all seeing, bearded sage that runs this blog. The calls are getting earlier and his voice is brimming with excitement over the FASTPGFBDCP(for the those just tuning in – First Annual Sunnyvale Trailer Park Greater Fool Blog Dog Christmas Party). He said he spent a couple of hours last night practising his jig dancing for the opening dance of the Sunnyvale Hoedown to the tunes of Don Messer. He has informed me that he needs a female blog dog to join him for this toe tapping lively dance. I suggested Beach Girl but she will have to confirm this. I can’t believe the near fever pitch the park is in in anticipation of all the blog dogs and the bearded oracle Garth coming to our lovely trailer park. Ricky has driven non stop (against my advice I might add) and is not far from Westernman’s farm. Westernman be ready for Ricky’s call and please tell him to rest a bit before he heads out with your tractor. Oh and remind him which was east is. There is still room for blog dogs at the big bash Dec. 17-18. Remember trailers have been made available for all guests. For those who are too young to remember Don Messer and his music here you go. See you all there!

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

#67 pbrasseur on 12.08.11 at 8:59 am

Contrary to Garth and although I agree with him that the canadian RE market is doomed, I think rates are bound to stay low or relatively low for a long time.

Why? Simply because western economies both public and private can’t afford higher rates and won’t be able to for a long time. Any hike in rates would cause a new recession and that would drive investors into fear, by now we all know what happens then, they flock to “safety” which drives rates down. If that doesn’t do it central banks, while they keep rates low, will buy bonds to keep rates lower.

All the while there will be inflation probably above what’s paid for US 10 year bonds, as is the case now. In other words lenders will get shafed. I you like you may see this as a hidden form of taxation for that’s exactly what this is.

In this context the smart ones will cease to lend money to governements and put their assets somewhere else.

Large multinational corporations are a good place to start. They represent a nice protection against inflation, pay you a nice (and growing) divident while giving you geographic diversity. Take this from a guy who bought Intel and IBM during the 2009 crash…

#68 Mr. Lahey on 12.08.11 at 9:01 am

#5 Smoking Man

You are in fine form Smoking Man and this is the very type of speech I want you to give at the big Sunnyvale bash. Fights almost broke out here in the park as to who will be picking you up at the airport. We finally had to draw straws and the winner was Bubbles. You will really get a kick out of Bubbles Smoking Man. Looking forward to your speech!

#69 MarcFromOttawa on 12.08.11 at 9:14 am

Damn.

The 1 month chart for XRE is much nicer than the 1 month chart for XIU.

#70 TurnerNation on 12.08.11 at 9:25 am

Makes ya go hmm:

From Bloomberg today –

“The European Central Bank cut interest rates for a second straight month and may delve even deeper into its toolbox today to stimulate bank lending and fight off a recession.

ECB policy makers meeting in Frankfurt lowered the benchmark interest rate by a quarter percentage point to 1 percent to match a record low, as expected by 55 of 58 economists in a Bloomberg News survey”

#71 R1200GS rider on 12.08.11 at 9:35 am

tip of the helmet to #45 BMW Biker and nonplused…..Harley’s are lots of things but fast isn’t the first thing that comes to mind.

but there’s room on the road for all of us :)

#72 Mr Buyer on 12.08.11 at 9:37 am

#58 Expat I do not think I can afford to move back either

#73 what did Soylent Green do? on 12.08.11 at 9:38 am

from the comments it looks like she/he just rickrolled a few of you….that fad was dead a couple of years ago, but it had a good run.

if that is what happened is it worth banning someone?

or did your PC’s get infected with some malware…..

in that case it’s time to hit the Apple Store :)

#74 TurnerNation on 12.08.11 at 9:38 am

Rats fleeing the ship? Or Little People panicing into 1% GICs (CDs in USA):

Pullout from U.S. Stock Funds Crosses $130B
December 8, 2011
Lee Barney and Tom Steinert-Threlkeld

Investors have now pulled more than $130 billion out of mutual funds that invest long term in United States stocks, since May 1.

In the week ending November 30, long-term mutual funds were hit with $9.24 billion in redemptions, the Investment Company Institute said.

That was nearly triple the $3.74 billion in outflows the previous week

Humans are consistent. They buy at the top and sell at the bottom. Read the comments on this blog, and do the opposite. — Garth

#75 live within your means on 12.08.11 at 9:43 am

Flaherty demands new banking powers for Ottawa

So F finally admits he bailed out the banks.

“Ultimately, it all leads to Ottawa doesn’t it?” he said. “If you look at what happened in 2008, we guaranteed the wholesale debts of the banks, we purchased insured mortgages from them. These were all decisions taken here by the government in co-operation with the Bank of Canada.”

And now “Mr. Flaherty spoke with reporters Wednesday following his first appearance before a Senate committee studying a new government bill that updates Canada’s banking laws. Bill S-5 includes a new provision that gives the finance minister – rather than the Office of the Superintendent of Financial Institutions (OSFI) – the final approval for large foreign acquisitions by Canadian banks.”

As I don’t trust F or this govt. can someone please tell me what are the ramifications of this new bill? S & F took credit on the world stage for our banking industry, yet when in opposition they wanted to deregulate the banks.

http://www.theglobeandmail.com/report-on-business/flaherty-demands-new-banking-powers-for-ottawa/article2263788/

#76 TurnerNation on 12.08.11 at 9:49 am

I live in a Morguard rental condo.

Boardwalk Reit: they’ve always owned a ton of apartments in Calgary and Edmonton. They are near a sure bet. Tighenting credit and overstressed/underwater home owners are a boon for rental companies.

#77 Ret on 12.08.11 at 10:09 am

#66 SaraBeth

That would be the Hamilton-Burlington Real Estate Board. One area is skyrocketing, the other not so much. The average price is not an accurate reflection of either area.

I had no idea that RE was so bad in Burlington. What was the name of that street with the vacant homes?

#78 live within your means on 12.08.11 at 10:11 am

#48 Doom on 12.08.11 at 12:47 am
“Every so often on this pathetic blog I screw up. Yes, I know this is difficult. Have a drink and sit down.”

You buying Garth? If so….Johnny Walker black…

…………………

If Garth’s buying, DH would like a Glenmorangie. :-)

I buy DH a bottle at Christmas and special occasions. Personally can’t stand most hard stuff, except for some liqueurs. Years ago at dinner parties, liqueurs were always served with coffee after dinner. No longer.

#79 Nemesis on 12.08.11 at 10:12 am

“…nor will the cash flow diminish.” — Hon. GT

That’s what the ‘Colonel’ thought about his REIT, too, GT.

Finger lickin’ good! [@ MotownSouth, TecumsehRoad, 2011.11.23]

http://tinyurl.com/bl7rczg

Where did I suggests US REITs? — Garth

#80 Nemesis on 12.08.11 at 10:36 am

Where did I suggests US REITs? — Hon. GT

Motown ‘South’ is actually Windsor, OldChap [a geographical anomaly, it’s the only place in God’sCountry where you look North to gaze upon the Land of the…]. ;)

My mistake. — Garth

#81 NCYer on 12.08.11 at 10:41 am

Garth,

Looking at REITs and their distributions and their tax implications. One would assume that REITs are best held in your TFSA for tax purposes. Can you confirm which account is best for these things?

Thanks,

Capital gains are tax-efficient. Distributions are income. — Garth

#82 gladiator on 12.08.11 at 10:45 am

sorry Garth, in terms of where the market is heading, I will go with Jeremy Grantham’s outlook. imho, if finance has a god, it’s him. The Bernank is his antipode, if you know what I mean ;)
http://www.zerohedge.com/news/jeremy-grantham-releases-scariest-market-forecast-yet

Enjoyed being scared. — Garth

#83 Aussie Roy on 12.08.11 at 10:53 am

Aussie Update

The 8 reasons why the US housing market imploded.

The global property markets are imploding, and fast. The strain that first found its footing in the U.S has now truly gone viral. From Dubai to Denmark, developers have been left reeling, while national exchequers struggle to hold ground. So, how did the housing market bring the greater world economy to its knees?

What could have possibly happened that real estate the world over saw $5.4 trillion in losses over the course of one single year alone (2008-2009)?

We here present a simple, 8-point lowdown on what really got that demolition ball rolling.

http://au.ibtimes.com/articles/262619/20111207/did-america-s-property-bubble-burst-8.htm

#84 The thing in the basement on 12.08.11 at 11:00 am

Urban rental demand is rising. A real estate correction will only increase this. — Garth

OK, but what effect does it have on rents? I recall you’ve called for rents to go down, along with RE prices.

Maybe if you have two rental condos are are in competition for tenants. Hardly if you run a 3,000-unit complex. What is it with this dare-I-eat-a-peach blog today? — Garth

#85 sue on 12.08.11 at 11:09 am

66 SaraBeth
My bf can’t sell his house either..in central Dundas walking distance to everything. A 20 grand price drop and….crickets. I warned him in 2010 but he didn’t believe me…sigh. Now, we just don’t talk about it…easier that way.

#86 City Slicker on 12.08.11 at 11:20 am

Just saw the breaking news on BNN this morning:
‘Canadian housing starts down 13%, more than expected”
Garths revelation is all coming true

Verily, I say unto you. — Garth

#87 Guan-Di on 12.08.11 at 11:37 am

#80:
“Years ago at dinner parties, liqueurs were always served with coffee after dinner.”

Yes, well sending dinner guests off to drive home drunk is frowned upon now, some things change for the better…

#88 dddd on 12.08.11 at 11:38 am

“One, Harleys are beautiful machines in every way, one might even say each one is a work of art. However, I wouldn’t generally refer to them as “fast”. Buells are fast but that’s a different brand and concept, and probably still can’t stay close enough to a Ducati to smell the exhaust.”
—————————————-
the fast ones
1. Suzuki Hayabusa 1300 GSX-R…….342km/h…without limiter…stock with [email protected]~(10000rpm).
2. Kawasaki ZX12-R………336km/h…stock with 192hp
3. Kawasaki ZX14-R………331km/h…stock with 197hp
4. Honda CBR 1100-XX Fireblade…….326km/h with 185hp.
5. Suzuki GSX-R 1000………………..323km/h with 184hp
than 6. Yamaha R1………………………….321km/h…with 180hp
7. Kawasaki ZX10-R…………………..321km/h……184hp
Your MV and Ducati is on 10th and 9th place.

Not a one of them capable of impressing chicks or breaking windows from 300 feet. Pansies. — Garth

#89 bill on 12.08.11 at 11:43 am

Mr. Lahey :
you like a bit of fiddle music?
here is a guy who was a contemporary of mr messer.
Andy Dejarlis! he was on dons show once or twice .

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

#90 Canadian Watchdog on 12.08.11 at 11:51 am

Not more then expected by CMHC. Understand that when you control the number of permits, you control the number of housing starts.

CMHC Forecast 2010 Q1http://i41.tinypic.com/s42teo.png

Today’s Data http://i39.tinypic.com/14c6x6q.png

#91 dddd on 12.08.11 at 11:54 am

Not a one of them capable of impressing chicks or breaking windows from 300 feet. Pansies. — Garth

the windows i will give you, it is a sweet rumble, but the harley chicks, are you serious? ewwwwwwww gross. i like gals who are not covered in tats and cig ashes and who were born after nixon.

#92 OMG I'm so not first on 12.08.11 at 11:58 am

#27 Jan Etter on 12.07.11 at 11:27 pm
#17 OMG

You must be new around here. Here’s a quick legend for navigating this blog (I’ve obviously wasted too many hours of my life on this blog… for us regular dogs we all know):

[email protected] = The Nice Lady at The Bank
The Orange Guy’s Shorts = ING Direct savings account
F = Flaherty
H = Harper
C = Carney

Warning, this blog is deceptively addictive. Get out while you can…

————–

I’m already hooked :) Been around for a few months, and figured out the other acronyms, but [email protected] was a new one – thanks! This blog is a bit of a dirty indulgence – Garth has interesting insights, but the real gold is the unfiltered social commentary. I could personally do without all the sidebars (eg ‘first’s, Smoking Man rants, etc.) but it does prove somewhat addicting. Like those trashy reality-tv shows – you know it’s awful but you just have to see what happens. I’m going to need to go into rehab if I let myself engage with some of the posters on here!

#93 MixedBag on 12.08.11 at 11:59 am

Thanks for the explanation of REIT’s. Maybe my advisor isn’t all bad, as she recommended an REIT-type fund.

Smoking Man, I like your post today. Your buddy sounds risk-averse, thinking his job-with-a-10%-pay-cut is safer. Still, with his talents, I’m surprised he’s not even tempted to leave, with the pay-cut their forcing. Switching jobs can be very difficult for some people, and I am unfortunately one of those. I wish I wasn’t, but I am.

#94 kilby on 12.08.11 at 11:59 am

If REITs don’t invest in houses, just commercial and rental units, how do all the closed and empty stores with”for lease” signs in the windows fit into the viability of these as investments? Thinking of places like Victoria and Penticton where there are dozens of empty stores and restaurants in their main downtown cores. Was in “Market Square” in Victoria the other day and half the stores are empty.

The REITs I mentioned do not buy convenience stores. — Garth

#95 kilby on 12.08.11 at 12:03 pm

#45 BMW Biker.

Don’t be so hard on Harleys, there are only three things they don’t do, they are go, stop and handle. As a lifestyle statement they are fine.

#96 bill on 12.08.11 at 12:17 pm

”Not a one of them capable of impressing chicks or breaking windows from 300 feet. Pansies. — Garth”

well I disagree garth [ surprise!]
the 125 5 cylinder 4 stroke honda gp bike from the 60’s is an easy contender for loudness.
breaks windows ,eardrums and still impresses the knowledgeable female and well over a 1/4 mile away while doing so.

could we add the bmw 1000 rr to that list of hot bikes?
A mate of mine raced one of those last year and it was dynoed at 215 hp. a pipe and the ecu was bypassed were the only mods.
they are currently checking out the z-10 kawasaki.havent heard much as yet from him

#97 Nick on 12.08.11 at 12:28 pm

OTTAWA – The Canada Mortgage and Housing Corporation says the seasonally adjusted annual rate of housing starts was 181,100 units in November, down from 208,800 in October.

Mathieu Laberge, deputy chief economist at CMHC’s market analysis centre, says the decrease was due to a moderation in the multiples segment.

Urban starts decreased 14.4 per cent to an annual rate of 158,900 units in November.

Urban single starts increased 3.5 per cent in November to 63,600 units, while multiple urban starts dropped 23.3 per cent to 95,300.

November’s seasonally adjusted annual rate of urban starts decreased 30.6 per cent in Ontario, 13.4 per cent in the Prairies and 3.6 per cent in British Columbia.

Urban starts increased 8.3 per cent in Atlantic Canada and 3.2 per cent in Quebec.

Rural starts were estimated at a seasonally adjusted annual rate of 22,200 units in November.

#98 TaxHaven on 12.08.11 at 12:36 pm

#96 Kilby, about Market Square being half empty…this is true just about everywhere else too. Talk about overcapacity.

But most people’s answer is to build MORE. Stoke demand, they say! “Beautify” city centers. Flower baskets will attract tourists. Everyone blabs on about the murals of Chemainus. More parking will attract more spenders. Throw a Christmas parade…force owners to clean up their sidewalks, awnings…the “build it and the tourists will come” approach”!

This is the municipal equivalent of Keynesian monetary stimulus and we know THAT doesn’t work…instead, why not try eliminating business licensing fees, cutting property taxes, laying off expensive city employees and removing zoning restrictions?

REAL demand, making economic sense, has to come first before you build.

Canadians remain in deep dreamland.

#99 Mr. Lahey on 12.08.11 at 12:47 pm

Bill

“Mr. Lahey : you like a bit of fiddle music?
here is a guy who was a contemporary of mr messer.
Andy Dejarlis! he was on dons show once or twice .”

Thank you for the link Bill! My late parents loved Don Messer’s Jubilee program years ago and it brings back many fond memories. I am particularly excited to see the fearless leader of this blog Captain Garth toe tapping to this music on the big Hoedown during the FASTPGFBDCParty. Hey Beach Girl, yesterday you asked me why you weren’t invited to the party and today you haven’t responded as to whether you will join the bearded oracle for this first dance at the Hoedown.

#100 Form Man on 12.08.11 at 12:48 pm

#92 Canadian Watchdog

CMHC may be guilty of a lot of things, but controlling building permits ?

I think you have a poor understanding of the Canadian building permit process. It is completely under the purview of local authorities ( municipalities, regional districts etc )

CMHC has nothing to do with permits

#101 Form Man on 12.08.11 at 12:50 pm

#100 Tax Haven

your post is complete idiocy.
If you want to see what happens when your theories are put into practice, take a look at California. They are broke now.

#102 disciple on 12.08.11 at 12:51 pm

#91 bill… great fiddlin’ link! Thanks. Inspires me to hang up my steel guitar for a while and find my dusty old violin at my dad’s place.

#103 kilby on 12.08.11 at 12:59 pm

#96 Kilby

The REITs I mentioned do not buy convenience stores. — Garth

Not one of the commercial spaces I was referring to are “convenience” stores, all are prominent downtown restaurants and stores on Yates St, Government St and in Market Square. Some of the most expensive real estate in Victoria, in the main tourist areas.

The REITs I mentioned do not buy restaurants. — Garth

#104 kilby on 12.08.11 at 1:06 pm

Alright, alright, some restaurants, most are retail spaces, the restaurants just enter into it as they are usually on the ground floor of commercial buildings and these happen to be in prominent areas of the city. Anybody from Victoria help on this one?

#105 TaxHaven on 12.08.11 at 1:10 pm

#103 Form Man…California? California??! The poster child for OVERspending?? What are you on about?

We’ve been in this “crisis of capitalism” (of central planning, actually!) for YEARS and the governments have learned nothing.

In an economy of no growth in terms of real product, there is no longer any possibility of bringing more demand forward via stimulus. All public – or private – spending has to FIRST make economic sense to be of any use.

If we can cut back the enormous, overpaid, coddled and protected public sector – and free up the strangled & expensive labour markets – perhaps a lot more economic activity WOULD begin to look profitable…

#106 SaraBeth on 12.08.11 at 1:19 pm

#79Ret – Upper Wellington, on the mountain.

#107 Observer on 12.08.11 at 1:28 pm

http://www.cbc.ca/news/business/story/2011/12/08/bank-canada-europe-debt-crisis.html

hmm, the BOC sounds a lot like GT here

#108 Canadian Watchdog on 12.08.11 at 1:32 pm

#102 Form Man

Do your homework before you speak. CMHC ‘is’ the Government and controls the entire housing market, directly and indirectly.

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CC8QFjAA&url=http%3A%2F%2Fwww.chba.ca%2Fuploads%2FPolicy%2520Archive%2F2011%2FGIC%2520Update%25202011.pdf&ei=PvPgTq-3JsjX0QGK8LCRBw&usg=AFQjCNHBu5gAYthzNgQ9K_qDDVe3BA0gUQ&sig2=Upjb4KHKczxDP2Xr3Holgw

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0CDcQFjAD&url=http%3A%2F%2Fwww.chba.ca%2Fuploads%2FPolicy%2520Archive%2F2011%2FFinley-Denis-Aug23-11.pdf&ei=J_TgTqD0Lof40gHZpPCJBw&usg=AFQjCNHlcifYPvgR14Z2v-P4RHu3DwCQLg&sig2=qsDAf37ImBAwpcImpwqPcA

#109 Harlee on 12.08.11 at 1:40 pm

Mr. Lahey
Don Messer died in 1973. Is he the ” Ghost of Christmas Past” at the party then? Sounds like things could get a bit supernatural at the trailer park….Now if you could convince Charlie Chamberlain to show up to sing some saucy Irish songs you’d really liven up the gathering!
I would really like to visit Nova Scotia and other Maritime provinces someday. Not now,but hopefully in the near future I’ll be able to explore the province and it’s history. Do you drink Screech there like they do in Newfoundland? Hope you take lots of pictures for those of us who can’t attend….:-)
#91 bill
Andy Dejarlis ! My dad was a fiddle fan,even played a bit when he was a boy. He never cared that much for Messer,although we all watched his show,but dad did have a few of Andy’s records. And Graham Townsend too. That was the “good old days” when there was a whole variety of music on TV.

#110 Form Man on 12.08.11 at 1:43 pm

#107 Taxhaven

California is the poster child for every thing that is wrong with your premise. Folks like you demand tax cuts, but refuse service cuts, causing their governments to go broke. As for de-regulation……we saw how that played out in the lead up to the financial crisis. Your theories have been tried, and thoroughly discredited. Do your research next time.

#137 westernman yesterday

oh dear, you have suffered a setback. after triumphantly getting yourself onto the road, you have veered hard into the ditch. All is not lost. You need to remember:
women are not the cause of your misfortune. your disastrous life is the fault of the man who stares back at you from the mirror.
set aside the anger and spite which is blinding you
you are an extremely sick little puppy, afraid and alone, but draw comfort from the fact that all of us here are pulling for you westernman.
drag yourself out of the sewage pit you are drowning in and try to be brave. women are not the terrifying monsters you imagine them to be……………
dry your tears and pull yourself together, you can do it !

#111 bradland on 12.08.11 at 1:55 pm

Garth,Last month the economist published this article ‘http://www.economist.com/node/21540231, claiming that Japanese real estate is undervalued by 36% compared to rents. What do you think of a Japanese REIT ETF, http://www.google.ca/finance?q=TYO:1345 ?

#112 Form Man on 12.08.11 at 1:58 pm

#110 Canadian Watchdog

I repeat, CMHC has absolutely nothing to do with local governments issuing building permits.

CMHC does insure mortgages, and track permits.

You have made some good points lately, but to suggest that CMHC is involved in some state conspiracy to control building permits undermines your validity. It is complete nonsense.

#113 City Slicker on 12.08.11 at 2:07 pm

#88 City Slicker on 12.08.11 at 11:20 am Just saw the breaking news on BNN this morning:
‘Canadian housing starts down 13%, more than expected”
Garths revelation is all coming true

Verily, I say unto you. — Garth
———————————————————-
Garth you’re like an Old Testement prophet. And soon the flood will be coming.

#114 poco on 12.08.11 at 2:29 pm

145-The Thing in the basement—from last post
Two things are key to RRSPs 1) tax free growth and 2) having a lower marginal rate when funds are withdrawn.

Poco – your friend cannot leave her RRSP to her kids. It is closed upon death and the estate pays taxes on the entire amount as if it’s income – potentially a huge OUCH.
At 62, your friend can forgo CPP and top up her teachers pension with RRSP withdrawals to no more than what her
working salary was, or to a level where the marignal rate starts to rise steeply ($72K-ish) so as not to reverse the desired effect from (2). She can then delay collecting CPP until the funds are depleted. If she waits until she is 71 she is required to withdraw a certain amount.
Hey, she’s a teacher and should have somebody from her pension plan explain this!
______________________________________________

yes, i know all that and explained it to her–how about “book smart” but “life dumb”
my point was many seniors don’t cash in RRSPs because of the GST/HST rebate and free medical when their income doesn’t exceed a certain level–in BC it is around 26k to 28k–i’m guessing at that, but it is quite low

on the other hand,there are many who don’t cash in RRSPs because they are in a higher tax bracket now ,than when they contributed to it –and yes the way you can do it has been discussed on here many times before –doesn’t work for me !!

#115 bill on 12.08.11 at 2:30 pm

guys
thank mr monkman… he is doing the good work

#116 TaxHaven on 12.08.11 at 2:40 pm

@#96 Form Man…how did you somehow conclude I don’t want gvernment service cuts?

Governments should be limited to sewerage, water and street-paving, all contracted out to the lowest bidder, and nothing else.

You make no sense. And don’t put words in my mouth…

#117 Beach Girl on 12.08.11 at 2:48 pm

Mr. Lahey

Hey Beach Girl, yesterday you asked me why you weren’t invited to the party and today you haven’t responded as to whether you will join the bearded oracle for this first dance at the Hoedown.

___

Sorry for being so late to RSVP. I am arranging transportation and finding a fetching outfit, to fit the festivities. I would do a jig with The GURU, but he is a married man. And the Amazons might be a bit larger than me, as well.

But I suggest, we have a contest for the best lines on this blog this year.

My personal favourite

You won’t be OCCUPYING a vagina any time soon.

Who was that clever quipster?

#118 bill on 12.08.11 at 2:55 pm

garths fast ride on a harley in the snow might be on this:

http://www.youtube.com/watch?v=mr7emyq9SZs

the beauty of the panhead is that if [when] it breaks down you can follow the oil drops home….

#119 poco on 12.08.11 at 2:58 pm

56 Chaddywack
I’ve seen a new trend in some of the listings here in Vancouver in the last 30 days or so.
Price drops, but accompanied with realtor comments such as “Price Firm” and “Full Price Offer or NO Deal!”
I guess the sellers just won’t sell for a loss because real estate only ever goes up :)
______________________________________________
yes—and the use of the “magic” bonus payable to the buyers agent is becoming more of the norm—certainly draws the realtors out of the woodwork
more and more “if sold by this date” full bonus to be paid –some of these bonuses are upwards of 20k–on top of commission –all in hot Vancouver

tri cities –still many price drops in all areas

#120 Mr. Lahey on 12.08.11 at 3:07 pm

#111 Harley

“Mr. Lahey, Don Messer died in 1973. Is he the ” Ghost of Christmas Past” at the party then…”

I told you it was going to be a Hoedown nobody would soon forget! Yes there will be some good ol screech at the party. It was one of the conditions for the bearded oracle who runs this blog in attending. He said he will take a swig of it before he starts his toe tapping jig. Sorry you can’t make it but yes pictures will be snapped!

#121 Lookinin on 12.08.11 at 3:33 pm

Thanks for the well-researched and well-thought out advice, Garth. I cannot find any other such resources (and believe me I’ve been looking) that give the working ‘schmo such info.
Cheers!
==================
p.s. is there a way to filter out the “First” boobs that don’t have anything concrete to offer other than revealing their true mental age?

#122 Realitybytes on 12.08.11 at 4:01 pm

132nd!!

#123 Foggy on 12.08.11 at 4:07 pm

@ 119 Beach Girl:
——————
“But I suggest, we have a contest for the best lines on this blog this year.
My personal favourite
You won’t be OCCUPYING a vagina any time soon.

Who was that clever quipster?
———-

Ahh that was me….sort of.
I stole that line from Triumph the Insult Dog, from his interviews of the Occupy Wall Street people. Some good comedic moments….

http://www.youtube.com/watch?v=O-253uBJap8

#124 BPOE on 12.08.11 at 4:08 pm

Economists start to rally around BPOE
Like I said folks interest rates NOT going up
***********************************
As a result, Shenfeld has drastically revised his outlook on when the Bank of Canada will resume raising interest rates, saying the central bank will now hold rates at the current one per cent for the next two years. The previous call was for rate hikes to resume in the second half of 2012, with two quarter-point increases through year end

Read more: http://www.vancouversun.com/Economist+warns+global+slowdown+will+Biblical+scale/5831205/story.html#ixzz1fyYQqzVA

#125 Form Man on 12.08.11 at 4:18 pm

#118 Tax haven

ok, let’s have a look. Some 70% of government expenditures are for health care. Which healthcare services are you willing to do without ?
Sewage system install, water services install , road work etc, are already given to the lowest bidder . I know, sometimes I bid on those contracts.( which planet have you been inhabiting ? )
or perhaps we should forgo clean drinking water and proper sewage systems ?

#126 XRE's price is high right now on 12.08.11 at 4:23 pm

Although REIT ETF’s like XRE might be a great idea, if you look at XRE prices in the last five years or so, you’re buying almost at peak prices right now…might want to watch the price for a while and buy when it dips again? :

http://www.google.ca/finance?client=ob&q=TSE:XRE#

Brad.

#127 Cato on 12.08.11 at 4:26 pm

Even if held in a favourable margin account a REIT will never provide same level of leverage as a mortgage. Its all psychological. Why take 100K and buy 150K worth of REIT stocks within a margin account when you could take that 100K and lever up into a 600K condo. Better yet don’t even take possession , just plunk down preconstruction deposits on 6 or 7 condos and flip the assignments before closing. If the underlying asset goes up by even a few percent the speculative fool sees a double digit rate of return.

Canadians don’t want investment advice, they want gambling advice. The banks, gov’t and RE industry have been more than happy to package gambling products as “investments” to ordinary Canadians. Thus far its worked out in their favour, though the trouble with leverage is a minor correction can wipe out a position completely. Canadians are holding so much debt we only need a small price correction to shift the pendulum and slaughter large portion of the population. These days the average joe on the street doesn’t understand even the most basic concept of risk and won’t look at an investment opportunity that doesn’t carry the potential of a 50% rate of return. A portfolio only returning single digit rates doesn’t have any appeal.

#128 Mr. Lahey on 12.08.11 at 4:29 pm

#119 Beach Girl

“Sorry for being so late to RSVP. I am arranging transportation and finding a fetching outfit, to fit the festivities. I would do a jig with The GURU, but he is a married man.”

We only wanted you to do a jig with the bearded oracle Beach Girl. A simple jig… I think Garth’s wife will understand a simple down east jig. Even Lawrence Welk did the occasional twirl with his female performers!

#129 Living in AB on 12.08.11 at 4:30 pm

For those of us who are no looking for fixed income, are there REITs which re-invest the distributions?

#130 Mr. Lahey on 12.08.11 at 4:32 pm

#119 Beach Girl

“But I suggest, we have a contest for the best lines on this blog this year.”

That is a great idea Beach Girl. Perhaps someone should take you up on this. The top ten lines of 2011 from the Greater Fool blog dogs…

#131 Mr. Lahey on 12.08.11 at 4:38 pm

#104 Disciple

#91″ bill… great fiddlin’ link! Thanks. Inspires me to hang up my steel guitar for a while and find my dusty old violin at my dad’s place.”

Now hold right on to that steel guitar there Disciple! Bring it along as well as your old violin to the Hoedown at the FASTPGFBDCParty.

#132 Grantmi on 12.08.11 at 4:39 pm

Garth, for us iPad or tablet users. And chance of adding a home link at the bottom of your main page?

Makes it easier to get back to the beginning then fingering up the screen.

Tanks

#133 VICTORIA TEA PARTY on 12.08.11 at 4:48 pm

#96 Kilby.

FROM BC’S PRETTIEST BACKWATER, A REPRISE OF HISTORY

At Victoria’s downtown Market Square small retail outlets always seems to be able to foretell economic problems in our city that never not sleeps. No self-respecting REIT would touch that joint with a ten-foot pole!

Customers, many of whom must be public sector employees, must be giving just about every retail outfit in town the cold shoulder these days, Market Square included.

Our provincial government presented very grim economic news, today, to wit: Too much outgo and not enough income to the amount of $3 billion, and not a prayer in balancing the budget anytime soon unless there are huge cuts to services.

In Victoria, that means only one thing: government jobs will disappear quicker than a busted real estate agent heading for Northern rural Saskatchewan on the next Swartz Bay ferry.

The REAL BOTTOM LINE here is that real estate, locally, is now totally screwed in terms of listings, prices and sales.

It will be a long, dank winter. For those of us who’ve lived here for at least the last three decades, we have seen this movie before. It is called a local recession and it will bite everyone’s behind good and hard.

At the end of it the local branch of the provincial civil service will be a lot skinnier and a lot of it will have long since been moved over to Vancouver, BC’s REAL seat of power. You’d be amazed at how much BC government ISN’T here anymore.

EURO-RATS

Meanwhile in Europe the cretinous creatures who brought us 2008 are busy manufacturing the new and even more dismal-to-come 2012.

The markets, judging by their furious discountings, are readying for something approaching trade-bloc Armageddon, as it seems obvious that NOTHING can be done short-term to rescue the Eurozone from itself.

Can’t be done. So it won’t be done.

In a nutshell the powers-that-be will extend more credit to the banks, which will then NOT offer cheaper loans to retail customers and small businesses because they are about to be hammered with more austerity and won’t be able to afford to buy ANYTHING.

All very Ducky; right?

#134 Westernman on 12.08.11 at 4:54 pm

Form Man,
You have once again demonstrated your complete stupidity in regards to TaxHaven’s post.
He has it exactly right and you, of course, are still pumping that high tax, high regulation, big government bullshit that has just about sunk us.
And for your information, the reason why California is a financial basket case is because of too much taxes, too many regulations and too much government. Productive people are leaving California by the truckload because they are tired of working their asses off and paying taxes out the ying yang so socialists (like you) can hand it out to lazy worthless slobs (like you).
Your complete ignorance on the basic economic drivers makes me doubt that you ever worked a day in your pathetic life. Concrete empire my rear end… probably spounged off your wife’s parents for the last 20 years…

#135 Seller on 12.08.11 at 5:01 pm

Garth,

You are a noble man, a hero to the Canadian economy for helping to protect those who are willing to learn about the housing bubble. But you are dead wrong on pref shares and REITs and one day you will live to regret this post. If you are familiar with the Vanity Fair “trend wheel,” residential real estate hit the top of the trend a few months ago and just began cycling down, while REITs are now just hitting the top. You will outperform the market for a few months with this strategy, but that’s it. Garth, you would be better off helping people figure out to preserve their capital in the coming storm than ecouraging them to believe they can have their cake and eat yield too.

A wholly misinformed comment. REITs are all about cash flow and there’s no reason to believe the well-established and well-managed companies will not continue to do well. As for bank and insurance company preferreds, you display even more ignorance and misunderstanding. These are exceptionally stable assets, provide excellent returns, take precedence over common stock payouts, have deep security and the issuers have never missed a dividend payment, even in the depths of the 08-09 crisis. Pure scaremongering. — Garth

#136 Nostradamus Le Mad Vlad on 12.08.11 at 5:22 pm


See if you can spot the politicos, neocons, lobbyists and banxters in this definition . . .

“Political correctness is a doctrine — fostered by a delusional, illogical majority and rapidly promoted by an unscrupulous mainstream media — which holds forth the proposition that it is entirely possible to pick up a piece of shit by the clean end.”
*
Today is the anniversary of the death of John Lennon. A few anecdotes.
*
Wall St. Hmmm. Do they know something we don’t? Fix was in, but the markets aren’t rigged; Dog has saved the oil cartel “It’s simple: Congressional representatives are simply “acquisitions” for these, and other companies.” wrh.com; Market Surge Yet people are pulling their money out. What gives? Bailouts Kill Take a high-interest VRM instead; Brain Drain Americans still leaving US in record numbers; 8:16 clip Global debt collapse? Highly unlikely, as debts are passed from one govt. to the next. Deficits are a different animal; Gold Backed Oil Bourse “To subdue the enemy without fighting is the acme of skill.” Sun Tzu (wrh.com).
*
Vaccines For disciple and Turnernation (plus anyone else who is interested); Naturally Maximize mental and physical health; China Sun and sun spots control CC cycles; 2:41 clip CC — hide the decline, or St. Gal of the Ore will smite you down! and Antarctic; Cherished Desire “One has to wonder if US/NATO interference with the Russia political process is well underway, as it was in Libya, and most likely in Syria as well.” wrh.com; Militarization Imagine how close H – F- C are to this; Interject Consp. Theory time-out.

Like Water From Mars There’s chocolate here, so it’s a good trade-off; CIA Prison “The horrible screams of innocent victims tortured all night long to extract information they never had about weapons of mass destruction that never existed sort of gave the place away.” wrh.com; US Military “But robotic drones carrying out unprovoked attacks and laying waste to homes and people in foreign countries that have never done anything to us is a “Necessary Preemptive Intervention Consistent With United States Law.” wrh.com; Russia – NATO Russia is the lesser of two evils; Putin – Clinton Let’s see her squirm her way out of this; E-mail re: “Army needing Civilian Camp Detainment personnel – Halliburton camp needs”.

#137 Form Man on 12.08.11 at 5:32 pm

#136 westernman

your ignorance is breathtaking

#138 Tony on 12.08.11 at 5:38 pm

Re: #137 Seller on 12.08.11 at 5:01 pm

Ditto

#139 neo on 12.08.11 at 5:56 pm

“This is a credit driven event that equity will be forced to acknowledge.”

Garth has been ignoring/oblivous to this for months now. Actually longer. Nice distraction piece on REITs.

Tempus Fugit…

You would know… — Garth

#140 The InvestorsFriend on 12.08.11 at 6:01 pm

RRSP TAX MATH

Number 116 POCO mentioned:

Two things are key to RRSPs 1) tax free growth and 2) having a lower marginal rate when funds are withdrawn.
********************************

Actually RRSPs can work out nicely even if your marginal tax rate is the same in retirement.

Here is the math.

Deposit $10k in RRSP. Get 40% tax break, so cost to you is $6k. Think of RRSP as 60% yours 40% funded by government.

Invest at say 8%. Aftter 30 years it is grown 10 times to $100k. Withdraw at same 40% tax and you have $60k. You put in $6k (net of tax refund) and you now net $60k. Good deal.

In effect you made the FULL 8% on YOUR $6000 completely tax free. Government loaned you the $4000 tax break and then got it back with 8% compounded interest as tax on withdrawal

There is NO need for you to be in a lower tax bracket. RRSPs are a great tax shelter over the long term even when you pay the tax at then end.

I have no desire to be in a lower tax bracket, none whatever.

I hope to pay a LOT of tax on my RRSPs at withdrawal . So far I am earning about 12% compounded per year on RRSPs.

I will need to re-pay the government every RRSP deduction I ever got plus in effect “interest ” at whatever rate I make on the RRSP.

In effect 40% of “my” RRSP belongs to the government, always has and always will.

That is the math. Few understand this. It’s math…

#141 there's an app for that on 12.08.11 at 6:29 pm

hello to #123 Lookinin on 12.08.11 at 3:33 pm who asks “is there a way to filter out the “First” boobs that don’t have anything concrete to offer other than revealing their true mental age?”

uh, yeah, you can DIY just head over to that little thing at the right of your browser window and click your way past the offending posts.

easypeasy

#142 SRV ES339 on 12.08.11 at 6:45 pm

Yes, by all means, sell your gold and buy bank preferreds…

But, you may want to check the fine print for the words Hypothecation or Re-hypothecation… and if you could (you can’t because they will not tell you) you may want to see some numbers on off balance sheet sovereign debt… just sayin’

#143 Westernman on 12.08.11 at 6:45 pm

Form Man,
I hit the nail right on the head again,didn’t I? Amazing how I can accurately assess you just from your posts isn’t it?

#144 a prairie dawg on 12.08.11 at 6:52 pm

Please, enough with the “any bike vs. Harley debate”

Touring bikes evolved into the style of GP road racing machines. Harley’s came from completely different roots. (dirt tracks, motocross) It’s like comparing Formula 1 to Nascar. ie: totally pointless

All that matters is the simple formula of power-to-weight. The power to weight ratio is what really determines how fast something is, not who’s brand name is pasted on it.

Disassemble it, machine it, clean it, reassemble it, and then make it run well. Then you’ll actually know what you’re talking about.

Now stop bitching about Harley’s and focus on the financial topic. lol

#145 Okanagan Renter on 12.08.11 at 7:14 pm

For one the G & M reports honestly on the teetering-on-the-edge-of-the-abyss condo “boom” circus in Hogtown. Fave excerpt:

“It’s also unclear who is buying the units – those in the industry often cite foreign demand, saying that investors from afar are racing to snap up units because the city is seen as a safe place to park money.

But there are no actual statistics. Canada doesn’t track foreign investment in its real estate market, leaving anyone with an anecdote licence to talk up the market.”

ReMax & co., the bell tolls for thee.

#146 Devore on 12.08.11 at 7:27 pm

#57 Robert Copeland

Why? Why do you keep saying gold tanked? You must know it isn’t true. Gold right now is up $310.00 or 17.8% since 1-1-11. Why?

It is still down from the peak couple months ago, and has gone nowhere. And it just tanked today. Is it up since the beginning of the day? Week? Month? Quarter? Why since beginning of year? Do you only buy gold on the first of the year? Anyone who bought gold mid-year is probably down on their purchase. Does gold pay them dividends? Is it free to store? Is it supported by economic growth?

I sold majority of my gold (including physical) when it was around $1800 (a crazy and fantastic price). Admittedly a tad early, but I’m still ahead of anyone who’s holding it today. The point is you need to look past your irrational love of the stuff, because if you’re sitting on a pile of it and not much else, you’re gambling even worse than the 0 down house horny virgins in Toronto.

#147 Sotiri on 12.08.11 at 7:30 pm

BoC is doing it now Garth has been doing it for three years now – they better listen to you Garth.

Euro crisis putting Canada under risk, BoC warns

“As it has in the past, but this time with more urgency, the bank report flagged record high consumer debt, warning that a shock such as falling house prices or a sharp rise in unemployment could push many Canadians to the point they can no longer make debt payments.

The bank conceded that the growth of mortgage debt has slowed, particularly after March’s clamp-down by Ottawa reducing top amortization periods from 35 to 30 years.

But it noted that credit accumulation is still rising faster than incomes, which have slowed, and that October saw a rebound in mortgage growth.

“The rising indebtedness of Canadian households in recent years has increased the possibility that a significant proportion of households would be unable to make debt payments in the event of an adverse economic shock,” it warns.

Recently, the International Monetary Fund warned Ottawa it may have to lean again on mortgage rules to slow down Canadians eager to buy while interest rates are at floor levels. The Bank of Canada doesn’t go as far, but possibly as far as it can in saying that “continued vigilance is warranted.”

Still, the expectation is for the housing market to cool and fresh data released Thursday morning appeared to back the bank’s bet. Canada Mortgage and Housing Corporation reported seasonally adjusted annual rate of housing starts plunged to 181,100 units in November from 208,800 the prior month. The new level was more in line with what analysts would consider sustainable.”

#148 Form Man on 12.08.11 at 7:33 pm

#145 westernman

sorry to disappoint you, but you are dead wrong. Come out to B.C., and I will show you what real builders do. ( not wannabe failed western separatists). In fact, let’s lay a little wager, it will be a pleasure to separate you from the few pennies you have left.
After you realize what a fool you have been, I will turn my wife on you. She doesn’t have a high regard for misogynists. You poor pathetic wretch……

#149 Devore on 12.08.11 at 7:36 pm

#87 sue

My bf can’t sell his house either..in central Dundas walking distance to everything.

One and only one reason for this: wrong price.

#150 Lianne on 12.08.11 at 7:37 pm

So…about those rock-solid Canadian banks?

http://www.zerohedge.com/news/why-uk-trail-mf-global-collapse-may-have-apocalyptic-consequences-eurozone-canadian-banks-jeffe

Misinformed commentary from a discredited source on this subject. — Garth

The zerohedge article was quoting this reuters article:

http://newsandinsight.thomsonreuters.com/Securities/Insight/2011/12_-_December/MF_Global_and_the_great_Wall_St_re-hypothecation_scandal/

Please tell us when the author Christopher Elias was discredited.
Thank you

#151 Evangeline on 12.08.11 at 7:39 pm

#131

((For those of us who are no looking for fixed income, are there REITs which re-invest the distributions?))

Just get your broker to register it in a DRIP program. (I have my Riocan REIT shares –rei.un–registered in a DRIP. ) (Before you buy, check that the REIT you are interested in is DRIP eligible.)

#152 Canadian Watchdog on 12.08.11 at 7:55 pm

#114 Form Man

CMHC is a quasi-government agency, therefore it acts privately in coordination with the government in the housing sector—if they want to limit permits, they can do so by advising amounts on Government Imposed Charges (GICs) that are issued by all levels of government. http://i44.tinypic.com/29f5cur.png

The effect is less investment and amount of properties a builder can develop.

Construction credit loan contraction can be seen here http://i42.tinypic.com/m82rg0.png

When you read through enough economic papers and comb through the fine details/model of Canada’s Action Plan, you can quantify it.

#153 Form Man on 12.08.11 at 7:55 pm

you see westernman,

I am the sort of person that makes your blood boil. I have a beautiful wife, I am self-made and successful, and I am a Liberal……..how unfair is that ?

there you are…..angry, no woman, no education, no hope, living in a country you despise…….(but, by god, you have a paid-for truck and trailer)……..now if you could just get past your childish temper-tantrums……

#154 betamax on 12.08.11 at 8:22 pm

#45 BMW Biker: “You had me until ‘…fast Harley…’.”

You had me until ‘BMW Biker’

#93 dddd: “harley chicks, are you serious?…i like gals who are not covered in tats and cig ashes and who were born after nixon.”

LOL. Exactly. Hot young women dig sportbikes.

#155 ballingsford on 12.08.11 at 8:31 pm

Beach Girl, you need to come to the Trailer Park’s Christmas and do the jig with Garth.

If Garth’s wife won’t let him come, I’m sure there will be lots of others that will jig with you!

Beach Girl, I sure hope you are not a male poster posting as a female.

It would be a great loss if you were. My heart would be broken!

#156 betamax on 12.08.11 at 8:33 pm

China update: my wife (hot, loves sportbikes) has been reading Chinese websites and apparently they’re full of reports that the mainland China housing market is collapsing like the house of cards we all knew it was. Stories of 30% price drops are increasingly common, and no one is pimping real estate as a safe investment any more.

I wonder how long it will be before the Western press picks up on this…probably not till 2nd quarter 2012. By that time, the crash will already be snowballing.

Vancouverites chanting “the Chinese will save us” will soon get a first-hand look at cascade failure.

#157 BOB on 12.08.11 at 8:54 pm

XRE some say that the fund management % is too high and better off buying the underlying REIT, is this correct?. If I was to buy XRE the transaction fees through TD is 29, anyway to lower this amount? How can one set up to buy on a monthly basis. Is a REIT better for an investor buying on a monthly basis and dollar cost averaging.

If the Condo market is going to go down won’t this impact the Apartment rental rates? as condo owners try and stay a float by renting out their units at a loss? How can REIT’s offer such a good return even in a down market for commercial and residential property?

#158 ballingsford on 12.08.11 at 8:57 pm

Beach Girl, further to my previous post, I should offer more explanation as to why I would be heart broken.

Once the bubble bursts, I wished that we would live together in one of many seriously reduced homes in the pristine Halifax Harbour area and be able to rent a basement apartment to Bubbles and his kitties. We could even renovate the basement to include a special shower room for the kitties.

Swims in the Hfx Harbour every morning would be a great way to cleanse our bodies! Our bodies would exude fresh smelling salt water and logs. Not tree logs though.

Bubbles would have to share our kitchen and bathroom though. That would be so nice to share the shower soap and kitchen utensils with him. He seems like such a caring gent!

With the money saved, we could build a shed for Bubbles to fix his shopping carts, and provide a little nook for Randy and Ricky to conduct their business.

Baby, let me know if this interests you when the bubble collapses!

#159 Stop buying and watch it crash on 12.08.11 at 9:35 pm

If Canadians were just a little smart they would stop buying for a few months and watch how fast the housing ponzi crashes. Realtors think Canadians are stupid and will believe any lie you tell them. It’s all a house of credit cards of cheap credit and stupid buyers. Take away either one and the game would be over fast. Get rid of CHMC and you would see 50% over night. Realtors are counting on stupid Canadians. Are you stupid?

#160 Real Estate Deal or No Deal on 12.08.11 at 9:40 pm

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/bank-of-canada-warns-condo-boom-could-be-ending/article2264763/

#161 Lianne on 12.08.11 at 9:47 pm

Garth – can’t we have an intelligent discussion about this? I’m going to assume that you saw that the original article was from zerohedge, and then you commented without reading it to find out that zerohedge had reposted a Reuters article.

That information about CIBC and the Royal Bank doesn’t worry you in the least?

I think it should bother all of us.

Not in the least. — Garth

#162 Oasis on 12.08.11 at 9:55 pm

you don’t seem to like it when someone points out how poor your investment recommendations have been compared to gold this last decade. what a shame you’re not honest enough to admit it.

I’ll admit anything, but I won’t post your personally insulting rant. Behave or blow off. — Garth

#163 neo on 12.09.11 at 12:22 am

You would know… — Garth

I do know. That is why I will be proven correct because I have a greater understanding of the credit markets than you express here at least, or wish to express here, and you choose to focus solely on equities and ignore that the credit markets are telling you they are overvalued.

Tempus Fugit…

#164 Steven Rowlandson on 12.09.11 at 7:53 am

The success of a REIT would be corelated to the ability of renters to meet their obligations. If the real economy tanks sufficiently there could be a problem.

Hardly. There will be no depression. What an inane comment. — Garth

#165 Devil's Advocate on 12.09.11 at 9:44 am

Tsk, tsk, tsk, children, children, children, all this ravenous bickering and preponderant appetite for want of gloom and doom. Nothing ever changes here does it? Whatever compelled me to attempt to convince you there was/is another side if only you’d open your eyes to see it?

Well you are doing a fine job recruiting more members to your camp, I’ll give you that. For even I have been somewhat influenced by your battle cry as I recently curtailed my budget electing to lease a new BMW 3 series rather than the more expensive 5 thus contributing to the downward spiral of our economy.

With a Knick-knack paddywhack, Give a dog a bone…

#166 betamax on 12.09.11 at 2:32 pm

#167 Devil’s Advocate: “I recently curtailed my budget electing to lease a new BMW 3 series rather than the more expensive 5”

Realtors can write off car lease payments up to $800/mth. No doubt the 5 exceeded that amount.

Regardless, anyone bragging about a car lease needs to give their head a shake.

#167 BMW Biker on 12.09.11 at 3:17 pm

Betamax and Harleys – Similar technology era!

#168 TurnerNation on 12.09.11 at 8:40 pm

disciple, Vlad, for almost one year I have showerhead and kitchen faucet filters which claim to remove both Chlorine and Flouride (both, deadly industrial chemicals).
But still exposed to it drinking water/coffee/juice at work and elsewhere.

For a scary read, read the first few chapters of The Secret History of the War on Cancer – written by a doctor.

All major industrial causes for cancer were well known by WW2. And we’ve since piled on many more sources.
Research attempts are stymied by witholding of funding.

All this fight for the cure stuff – where billionare banks and big phama host charity drives – is BS.

There is no cure. If I injest a ton of deadly industrial chemicals over a life time, nothing will help. It’s just common sense. Pureifcation would be better over injesting yet another toxic brew of “medicine”.
Yes I too believe in the state of dis-ease being a major factor behind most illnesses.

#169 disciple on 12.09.11 at 9:42 pm

#171…. TurnerNation… and there are so many preservatives in our processed food that our bodies should not ever decay :) …

Cancer, diabetes, and other major diseases have all but been eliminated in livestock by simple vitamin/mineral concoctions. Of course they could do the same for us, but where would be the profit?

If the medical cartels ever succeeded in preserving health, we wouldn’t need them, would we?