Trust

Like a wail in the wilderness, this blog has exhorted you to be liquid, when all about you crave bricks. Time will show which was the better path. But I have no doubt. That’s why I have Dick-‘n-Jane’d you about corporate bonds, exchange-traded funds, preferred shares, tax shelters, real estate trusts, technical analysis, income-splitting and how to cure house horny.

Most folks will never listen. A lot of them will fail. In fact when it comes to planning finances and investing, the bulk of people share three traits. They’re cheap and think buying stocks is like learning to change the oil in the lawnmower. They don’t trust. In fact, you’d be amazed at the number of couples I meet who would rather mingle fluids than share bank accounts. And people are insanely risk averse. Sure, they’ll buy a house in a bidding war during a recession when they’re unemployed with 5% down, but freak at the thought of any investment not ‘guaranteed.’

This is why I’ve given up on humanity. But not on you.

I’ve been asked many times in past weeks to give some thoughts on how to find an advisor and not end up with Bernie Madoff. So I will. Most people have no idea what to ask, where to look, or how to slice through the financial propaganda. This is probably why so many of them end up in the clutches of [email protected], or the suffocating arms of mutual funds and insurance salesguys. Here are some points and guidelines. Then I have a shocking confession.

Advisors advise. Salesguys sell. If you need a Jeep, go to Chrysler dealership. If you want a mutual fund, then walk into the bank branch or your local Investor’s Group den. That’s what they do. The people who work there, called advisors, sell financial products which are pre-packaged (like Jeeps) and managed by folks you will never meet. The advisors might be talented, smart and well-trained, as well as caring and hip, but they sell stuff. Is that what you came for?

You might be happier with a fee-based advisor, who works for a percentage of what you invest, who sells nothing and collects no commission. A fair deal is 1% per year of your portfolio. More that than and he should also come over and cut your grass.

Some mutual funds are great. A lot suck. The point is not about the products, but rather the person who’s laying them on you. In most cases this sales agent is being compensated by the products being sold. In other words, the mutual fund company (or the labour fund promoter etc.) is paying the advisor a commission which normally goes on for as long as you remain invested. If you believe this might be a conflict of interest leading the advisor to sell you things that are not exactly in your best interests, or keep you in them too long, then speak up. Find out how the person is paid. See if you feel comfortable with that.

Be careful about advisors who promise fat double-digit returns. Hell, it’s a low-yield world so the promises you get must be realistic. In fact, any advisor you choose only on the basis of returns is probably the wrong choice. By stressing performance you may end up in assets too risky for your blood pressure, as the advisor strives to meet your target. After all, that’s what you asked for, and it’s not his money.

In fact, a good advisor considers his overriding job to be protecting money. Like last year, when the TSX plopped  by 11%. If your portfolio dropped by the same amount, your advisor’s no better than an index fund or a bag of hammers. Only by preserving your capital in crappy years can the gains in good years be meaningful in helping you achieve your goal. Just don’t make it a Porsche.

Instead, interview a potential advisor on a much broader scale. How would this person accommodate your uniqueness? Cut you tax load? Help ease your fears and insecurities? How would they improve your current situation and investments, specifically? If the advisor doesn’t ask about your parents, your house, your kids, your health, background, desires and how long you’ve been married, then move on.

Taxes are key. Who cares what you make if you have half of it’s sucked off by the CRA? A good advisor will know how to do asset allocation, portfolio management, technical and fundamental analysis and create boffo coloured pie charts, but can she up your cash flow? It’s critical this person look at your entire financial life, then move things around to avoid taxation – like shifting bonds into shelters and dividend-producers into a non-registered account. TFSAs, LIRAs, RRSPs, RESPs, RDSPs – these are tools just as important as the stuff which goes inside.

Good returns and low taxes flow from active management. Does this advisor you’re interviewing do that? Hope so. You need the ability to speak to the actual dude who builds, maintains and rebalances your portfolio, not a guy who sold you a thing some manager in Calgary runs. If your circumstances change, or the world scares you, or your spouse runs off with a Brazilian stud, then your advisor should help you adapt. It goes without saying, this person should also return your calls or emails in hours, not days or weeks.

Finally, it all means nothing without confidence and trust. The advisor you choose requires education and experience, of course, but also the ability to know you deeply, anticipate needs and truly care. You won’t find empathy on a regulatory web site. You must talk at length. And not just about money. Find somebody with life experience, not merely a title. Ask how many clients he or she has. Do you really want to be one of thousands?

So here’s the confession. After three decades of listening to people ask me to take care of them, instead of just writing books, lecturing, doing media and messing up Ottawa, I started a financial advisory practice a couple of years ago. True to my writings and core beliefs, it’s fee-based, no commissions, nothing to sell and practices active management. If you want an equity mutual fund, or a Jeep, go away.

It’s important that I disclose this and, as with everything else on this pathetic blog, feel free to ignore it. Never hire a biker advisor. Did I mention that?

 

212 comments ↓

#1 T.O. Bubble Boy on 01.24.12 at 9:41 pm

Off topic for today’s post, but I discovered what Garth’s favourite tube-top wearing / property virgin scamming realtor (Sandra Rinomato) is up to:

http://www.realtor.ca/PropertyDetails.aspx?PropertyID=11494757&PidKey=978711295

#2 Josef on 01.24.12 at 9:45 pm

First !!! OH Yeah !!!!! BABY Do I make YOU HORNY!!!

Close. You make me cringe. — Garth

#3 Duncan on 01.24.12 at 9:47 pm

Meanwhile, in Australia,

http://www.news.com.au/money/property/cut-price-homes-on-the-market-in-australia-as-receivers-order-fire-sales/story-e6frfmd0-1226252424356

#4 T.O. Bubble Boy on 01.24.12 at 9:47 pm

On the topic of taxes and the CRA — Garth, do Canada’s Top 1% (those with approx. $200k+ in annual income) pay 14% tax like Mitt Romney?

They pay 46% if they don’t have a smart tax guy. — Garth

#5 Andreas on 01.24.12 at 9:57 pm

Garth you are spot on the housing market.
The opportunity for soft landing for the Canadian housing market was lost in 2008 now its too late.

Regarding being liquid people need to educate themselves on the financial markets and look after their own investments.
Every one is risk averse to some degree and most people do no like to be contrarians as it is difficult and socially reprehensible.
People need to remember that contrarians are usually right and do succeed in stock and ETF picks more often than the rest of the investors

#6 Jack Lemming on 01.24.12 at 9:57 pm

too

#7 Dan T on 01.24.12 at 10:13 pm

Any guidelines as to how much capital one should have before having an FA makes sense? 10K, 100K or just showup and smash open the piggy-bank open on their desk to find out what the working capital is?

Cheers.

#8 Axehead on 01.24.12 at 10:14 pm

What about biker advisors who wear cowboy boots?

#9 Deb on 01.24.12 at 10:19 pm

It’s been about 10 years now since I left a brokerage firm I worked at as an assistant. I was only there for a few years, long enough to learn I didn’t care for the industry. I actually really enjoyed the work and the people were fun; I just thought that they should make money along with their clients – and not at the expense of their clients.

Soon after I starting working there I took the CSC (Canadian Securities Course) and passed. I was disappointed as I was only a few percentages from getting honours – and yet everyone was congratulating that I had passed as apparently it wasn’t common for many of the brokers to pass the first time, and some took more than a few times to pass — eye-opening.

I was an assistant for a few brokers, and then the branch manager hired a friend, a former real estate broker and I got the short straw. I wanted to warn the clients to run. That broker didn’t last long. That’s when I realized it’s nothing but a sales business — again — eye-opening.

Another assistant, who knew I wasn’t happy there, confessed to me that there was only one broker in the entire office (of about 20) who he would trust with his money. That spoke volumes. I left.

Before I left I completed all the CFP courses; but since then I’ve only looked after our own investments. I agree that you want to have someone with a lot of ‘good’ experience under their belt. I really feel like it’s tough right now for the majority of people to find really good advisors.

#10 Smoking Man on 01.24.12 at 10:22 pm

Garth one day I just might play myself show up at your office and pay for some advice.

The crap you preach is good, and safe. If I lose my nerve, or my mind and want safe, I will be droping by

But right now the edge is fun.

#11 East Van on 01.24.12 at 10:27 pm

Here is what George Soros says about investing and the economy today:

“I am not here to cheer you up. The situation is about as serious and difficult as I’ve experienced in my career,” Soros tells Newsweek. “We are facing an extremely difficult time, comparable in many ways to the 1930s, the Great Depression. We are facing now a general retrenchment in the developed world, which threatens to put us in a decade of more stagnation, or worse. The best-case scenario is a deflationary environment. The worst-case scenario is a collapse of the financial system.”

“The collapse of the Soviet system was a pretty extraordinary event, and we are currently experiencing something similar in the developed world, without fully realizing what’s happening.” To Soros, the spectacular debunking of the credo of efficient markets—the notion that markets are rational and can regulate themselves to avert disaster—“is comparable to the collapse of Marxism as a political system.

#12 Westernman on 01.24.12 at 10:28 pm

third?

#13 Walter Safety on 01.24.12 at 10:28 pm

You didn’t mention that unless the client brings twice the average size investment portfolio, a fee for service advisor can’t keep the doors open .
So the middle class and lower are left with the Investors guy or [email protected]
Or people could look at the performance of the last twenty years of professionally managed money at say the pension funds or whatever approved funnel their in and conclude the obvious – if i keep doing this I’m screwed.
Find your own investments, take it away from all of them.

#14 Canadian on 01.24.12 at 10:35 pm

I discovered this helpful blog about a week ago, and wish to learn from intelligent comments as well, but enough with the Fiiiiirst, Phiiirst, furssst crap and other wasted comments.

#15 RetiredBoomer2 on 01.24.12 at 10:36 pm

today Globe&M showed affordability chart.. not good for most of the country near large cities.

#16 Mr. Market's Psychologist on 01.24.12 at 10:42 pm

Garth (or anyone else, for that matter),

Do you consider investment in S&P/TSX index funds risky due to the lack of diversity in the index (too many financial and resource companies and not enough of everything else), as opposed to, say, the S&P500, which is more evenly spread among diferent sectors; current valuations of each index aside? Or does having some money in each index provide sufficient diversification? If so, what should the percentage split be between the two?

#17 Tim on 01.24.12 at 10:43 pm

Given that no one can beat the market consistently, why pay an advisor? Why not just determine and appropriate asset allocation between fixed income and equity and buy divendend-paying blue chips or etfs? Pay a few hundred a year for a respected investment newsletter instead of paying an advisor almost 300 a month, which is what you would pay if you had 300k in assets

#18 John Prine on 01.24.12 at 10:44 pm

Off subject but Obama has just really dissed China and it’s trade practices….Should be interesting news tomorrow.

#19 Lord Humungus on 01.24.12 at 10:46 pm

@#2 Josef
You dont even make Alex Tsakumis horny

#20 Behavioral Finance on 01.24.12 at 10:51 pm

Why Certificate of Deposit is a worthless investment?

Simple Answer: Pretty much zero upside potential.

#21 rosie on 01.24.12 at 10:53 pm

Beware anything built by Chrysler, especially jeeps.

#22 Peter Goesinya on 01.24.12 at 10:53 pm

#14 Canadian on 01.24.12 at 10:35 pm

you forgot “First?”

#23 TaxHaven on 01.24.12 at 10:54 pm

If you have no discernable income you don’t have to worry about CRA. Then RRSPs, GICs, TFSAs and all that other game-playing tax-jigging chicanery become worthless…

Hint: forget about working or keeping your day job. Speculate…under the table.

#24 Uh Oh Canada on 01.24.12 at 10:54 pm

Thanks for this post, Garth.

I’ve learned a lot and had an epiphany- the perfect financial advisor (as per this post) is a rare find indeed.

#25 not 1st on 01.24.12 at 10:54 pm

Garth have you never heard of the churn before? Thats a broker who doesn’t sell you anything but gladly gets you in and out of stuff on a weekly basis just so he can collect his $100 per trade commission. These guys can turn little fish into regular income without doing anything.

The ideal person you describe to handle money doesn’t exist because he would be either too successful and have already cashed himself out of the business, or he would be too honest and moral to stand by and watch people’s life saving being sucked away.

#26 Smoking Man on 01.24.12 at 11:14 pm

#14 Canadian on 01.24.12 at 10:35 pm

One week huh

Wait ah ahahahahhaha till you discover the epic post from mowhaaaa

#27 Gary in Kelowna on 01.24.12 at 11:15 pm

Garth, You are talking about discretionary portfolio management to get a 1% management fee. Companies that offer this service generally require the portfolio to be at least $250K if not $500K. This is not reality for the average investor.
So people are left with [email protected] or Investors Group or the like. Or a basket of ETFs they look after themselves. Something you do not advocate.
What is your minimum portfolio amount to provide financial managment for 1%?

#28 Devil's Advocate on 01.24.12 at 11:17 pm

Watching the State of the Union Speech, I’d say the U.S. is BACK.

That and THIS!

http://tinyurl.com/6pqp6j9

You tell me Garth… There’s some serious politicking coming up that is going to kick ass… and probably with a most level head on their shoulders. It’s time for the old boys to move over – they who are coming see what’s going on and are hell bent on fixing it.

#29 Smoking Man on 01.24.12 at 11:17 pm

#25 not 1st on 01.24.12 at 10:54 pm
The ideal person you describe to handle money doesn’t exist because he would be either too successful and have already cashed himself out of the business, or he would be too honest and moral to stand by and watch people’s life saving being sucked away.

…………………………

why don’t you become that person and buy a big ass boat, what are you waiting for, oh ya teacher (master) told you you to be hounest , not take advangae of dumb people.

I have so much to teach
Can’t help everyone

#30 Smoking Man on 01.24.12 at 11:22 pm

#18 John Prine on 01.24.12 at 10:44 pm
Obama is a puppit actor so is everyone in that room, they serve the machine (money), they are all lyers cheats and creaps. They live a good life.

I say get with program. learn to lie cheat and scam..

The abandance of schooled idiots is ripe for explotation has never been higher.

#31 Smoking Man on 01.24.12 at 11:24 pm

#16 Mr. Market’s Psychologist on 01.24.12 at 10:42 pm
You go to Starbucks don’t you

#32 Phoeey on 01.24.12 at 11:31 pm

Nice article Garth, but before I comment further on it let me get out the way all this business about posting the first comment. Yes, it is true that I achieved the first comment on an earlier post (http://www.greaterfool.ca/2012/01/22/endangered-species). To all the readers wondering how it felt to be first – it felt fantastic! To all those wondering if I will be trying to achieve that honour again – probably not. Once you’ve reached the number 1 position it is all down from there.
Sure, I might unintentionally be the first to comment, but I won’t be going out of my way to do so, and probably will not even allude to the possibility in my comment.

Getting back to the article: If I was compiling a short reading list for someone trying to select a financial advisor, then this article would certainly be on the list.

#33 Devil's Advocate on 01.24.12 at 11:31 pm

No doubt some Negative Nellies with self serving interests will board the wagon of that Republican response.

#34 young & foolish on 01.24.12 at 11:36 pm

People willing to learn seem to find good help ….

#35 John Gotti on 01.24.12 at 11:36 pm

I should have listened to Garth..

Y’now REITs etc.

Now I’m” down here ” shining Trudeau’s pirouette slippers

#36 City Slicker on 01.24.12 at 11:46 pm

#18 John Prine on 01.24.12 at 10:44 pm

Off subject but Obama has just really dissed China and it’s trade practices….Should be interesting news tomorrow.
———————————————————
It started subtly but a fleet of countries are moving away from the dollar as a means to purchase oil. Gold being one of them:

In the most profound financial change in recent Middle East history, Gulf Arabs are planning – along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

http://www.independent.co.uk/news/business/news/the-demise-of-the-dollar-1798175.html

#37 John G. Young on 01.24.12 at 11:57 pm

Smoking Man,

Have you ever considered that your desire to exploit (i.e. contempt for others) and your substance abuse (i.e. contempt for self) might be related?
Addictions are becoming more common as the gap between the rich and poor is widening, and I think the two are connected.

#38 Jack Lemming on 01.24.12 at 11:58 pm

Financial advisors, RE agents, lawyers, car salesmen, politicians, all vultures!

And what do you do? — Garth

#39 Off-Gridder on 01.24.12 at 11:59 pm

@ #14 Canadian

Might as well get used to them. They don’t listen. And think of how deeply gratifying it must be for them to be first.

#40 Canadian Watchdog on 01.24.12 at 11:59 pm

Why buy REITs now when you can buy them for pennies on the dollar soon?

REIT’s are 80-90% correlated to stocks so anyone who believes they won’t tank with the market should explain to all non-traders how REIT’s will [somehow] hold up when it’s a traders market.

REITs During 2008 Crises http://i39.tinypic.com/fun9ft.png
REITs During US Downgrade (Aug 2011) http://i41.tinypic.com/357mt20.png

More groundless fear-mongering. REITs are nicely non-correlated with equities. Do a comparison that matters – the REIT index and the TSX during 2011. — Garth

#41 Devil's Advocate on 01.25.12 at 12:00 am

The question is; will the American people see past the Republican self-serving political bickering that they can and will hold their president accountable for his promises.

If I were a US citizen I am sure I would be a Republican thinking the Democrats made a whole lot more sense in this State of the Union Address.

#42 Smoking Man on 01.25.12 at 12:04 am

DELETED

#43 John G. Young on 01.25.12 at 12:08 am

#25 not 1st on 01.24.12 at 10:54 pm

I’ve had the same financial advisor for over 30 years. We met when she was first starting out in the industry. She has all of the qualities that Garth recommends. She has saved me from myself many times. She makes good money while making sure that my investments do the same, which allows me to focus on the things in life that interest me.
I think that’s a very moral thing.

#44 Stinky the Fish on 01.25.12 at 12:08 am

Garth – you are a machine. I have a hard time keeping up to date with this blog. Just an update, I’m still eating chunky soup & still waiting to pounce on an unsuspected housing bubble victim,

I am hoping to play this video in the unsuspected victim’s house when I take it over – http://www.youtube.com/watch?v=8fvTxv46ano

#45 Canadian Watchdog on 01.25.12 at 12:10 am

More groundless fear-mongering. REITs are nicely non-correlated with equities. Do a comparison that matters – the REIT index and the TSX during 2011. — Garth

That levitation starting in April 2011 was direct foreign investment that will flee faster then it came in. Fix your index with FDI adjustments and you’ll be able to parse capital flight from organic growth.

REITs will plunge as we’ve seen before again and again.

http://i43.tinypic.com/s47zt1.png

Chart looks pretty good to me, Mr. Fear. — Garth

#46 Min in Mission on 01.25.12 at 12:11 am

Does it really matter if [email protected] is a real Amazon?

But, the first thing she tried was selling mutual funds.

#47 Keith on 01.25.12 at 12:14 am

#4 The 46% rate mentioned by Garth is the marginal tax rate, not the average tax rate. A couple of months ago the Globe and Mail profiled the finances of a person who earned 218K and paid about 70K for income tax. The overall tax rate was about 33%. Media commentators consistently omit the word marginal when discussing tax rates, because they like to make average people believe that high income earners pay half their income in tax.

It all depends on the form of income. — Garth

#48 disciple on 01.25.12 at 12:15 am

#11 East Van… don’t pay no mind to Soros. The CIA is on his tail and thus resigned to his approaching fate, he’s gone raving mad like a dog that needs to be put down. He won’t go quietly. He also still hasn’t been forgiven by the Bank of England with that stunt he pulled. Wouldn’t want to be in his shoes right now. What goes around comes around, don’t let him or his words scare you.

#49 Elmer on 01.25.12 at 12:16 am

A whole percent of my portfolio just for making a few mouse clicks a few times a year? Thanks, but I think I’ll pass on this “great” deal and manage my money myself.

It’s simple: Just put 10% of your money in a telecom, a bank, a pipeline, a railroad, a utility, and a reit. That covers your Canadian allocation. Take the other 40% and split it halfway between something like VTI/VIG and XEM. That covers your US allocation and emerging markets. Rebalance once a year. Now why would I pay someone thousands of dollars a year to do that?

#50 DUI on Money Road on 01.25.12 at 12:17 am

#36 City Slicker on 01.24.12 at 11:46 pm
—————————————–
Your article is from 2 years ago…anything more recent?

And for those wanting Garth’s help, he’s more than happy to give advice, but if you want him as your FA you gotta have assets (I know, I tried to hire him!) LOL

#51 Marcel on 01.25.12 at 12:18 am

Garth, what do you think of the couch potato investing style? It preaches ETF’s and looking at your investments on a yearly basis and next to no commisions.

#52 Jeff in Victoria on 01.25.12 at 12:19 am

I left the IG den about a year ago, even paid the ‘ransom’ (the deferred sales charges) to get my ‘own money’ back and am now with a fee based advisor, best move I ever made. I was in mutual funds way longer than I should have been. With my new advisor, I made the DSC charges back within a month.
Among the many things I like about ‘fee based’, his level of remuneration from me is based on how well my portfolio that he is managing is doing, he is well worth his 1%.
One other thing, when I was with Mutual Fund guy, he was very much focussed on my own home as a very integral part of the growth of my ‘net worth’ which in retrospect was very self serving for him in that as my funds ‘tanked’, the Victoria RE market kept my net worth looking not so bad. Boy was I naive.
During the 2008/09 ‘crisis’ my Mutual Funds followed the market down almost exactly. During this past year, my portfolio did much better than the markets due to the diversification.
My fee based advisor doesn’t even mention my home, nor do I, the house is merely the shelter we live in, my advisor and I are focussed on growing my ‘liquid’ net worth and since leaving the IG world that is happening quite nicely.
I think mutual funds do serve a purpose specifically for someone just starting out with very little money to invest. When putting away a little bit every month, mutual funds better lend themselves to those regular and perhaps smaller contributions. Stay away from any ‘front end load’ or ‘deferred sales charge’ Mutual Fund sellers. It chews away at that ‘liquid’ net worth.
Once that amount builds up seek out a ‘fee based advisor’.
Of course someone will say how can I even put a little away each month, the mortgage is killing me, well maybe home ownership and a 95% mortgage should not be a first priority for someone just starting out in this day and age given how the wage to house price ratio has gone. 35 years ago when about 2 1/2 years of one salary bought me a house in Victoria it made sense, it has too far out of whack to make sense now, work on the ‘liquid’ net worth first and get a ‘fee based advisor’ as soon as possible.

#53 Canadian Watchdog on 01.25.12 at 12:21 am

Chart looks pretty good to me, Mr. Fear. — Garth

I’m not debating the returns, rather buying in now. Soon you’ll see REIT’s killing their NAV with POs to finance themselves—it’s already happening.

#54 Alan on 01.25.12 at 12:30 am

Think real estate is expensive in Vancouver, try one of the $100 hot dogs. Now you got something to talk about!

http://www.vancouversun.com/cognac+infused+sale+streets+Vancouver/6043865/story.html

#55 cj on 01.25.12 at 12:33 am

This blog is frustrating tonight. Good post, Garth but the comments are all over the map. Point is, we need to invest for our financial security. Many of us don’t know where to put our money and often take the advice of these financial sales people.
It is one thing to get a diversified portfolio and another to know when to rebalance it when necessary. The global economic market is too sophisticated and ever changing for many of us on this blog. We need to find professional and honest advice for our individual portfolios – whether we have $200 dollars to spare or $100 ,000.
If you opened up the can of worms, Garth, I think you need to have possibilites for people at all finiancial levels. Otherwise why begin this discussion and frustrate many bloggers

#56 disciple on 01.25.12 at 12:34 am

Trust is so hard to achieve… even among TV co-anchors:

http://www.youtube.com/watch?feature=endscreen&NR=1&v=j8Bc7eRTdWY

I wonder what he did to her to deserve that!

#57 Jon B on 01.25.12 at 12:41 am

Forget about working with a financial advisor, it’s a waste of time if winning big on your investments is the goal. The way to do it right is to get insider information. You know, the way guys like Mitt Romney do it. That guy pulled in 45 million dollars in “investment” income in the last two years. Gee, I guess he’s got a good advisor. Nosense. He knows people. He gets the inside scoop on public companies run by his buddies. What’s this about expecting slim returns in this current economic climate? Don’t tell Mitt that. Investing with non-public priveledged and confidential information that can influence the value of a publically traded asset is so easy to do for those that have the proper connections and so hard to police by those that are charged with keeping the investment industry fair for all. Geez, in tonights State of the Union address the President practically admitted that members of Congress engage in insider trading! Mitt and Martha are two glaring examples of why so many of us are unwilling to “trust” the financial system. Mitt’s tax return suggests insider trading is hugely profitable and Martha got caught in the act. I think a lot of people would like to play the market, do the research and work with a wise advisor to maximize returns on investment. But when the playing field is tilted in favour of a few, it’s a rigged game and I’m staying out.

Dude. This is Canada. — Garth

#58 nonplused on 01.25.12 at 12:58 am

So what is the minimum amount of capital required to sign up for the ultimate GarthPlan(tm)? Most of the advisors I have been interested in want a million bucks. I’ve got it, but it’s too many eggs for one basket for me.

#59 BMW Rider on 01.25.12 at 1:02 am

30 grand and 30 miles doesn’t make you a Biker!

#60 Canadian Watchdog on 01.25.12 at 1:04 am

Interactive Household Saving Rates by Country 1992-2011 (Canada)

http://www.gfmag.com/tools/global-database/economic-data/10396-household-saving-rates.html#axzz1kRX2cO4e

#61 Nostradamus Le Mad Vlad on 01.25.12 at 1:20 am


“Most folks will never listen. A lot of them will fail. This is why I’ve given up on humanity. In fact, you’d be amazed at the number of couples I meet who would rather mingle fluids than share bank accounts. But I have no doubt.”

Good in-yer-face post, and it shows why an awful lotta couples will be swimming with the piranhas soon.
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#167 Cookie Monster burnin’ Kus on 01.24.12 at 8:46 pm — “On what basis?”

Hi Cookie Monster. A few years ago, a retired scientist who had been studying CC for a little over half a century said that (from his research), the sun and sun spots (or lack of them) were responsible for the changes in the cycles of warming to cooling. The cycles are presently changing back to warming.

So shifts will always take place. CC, and the discussions for / against will be here long after we’ve gone. It’s us who are here for a short (and good) time. A few links — Here, here, here, here, here and here. Bear in mind that trees absorb a huge amount of CO2, and return oxygen which we use to breathe.
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No more Volts NAmerica prefers oil; Stealing is becoming an epidemic; Japan downgrades growth; Rare Opportunity with rare earth bonds; Euro Zone break up Will / won’t it? IMF Global recovery stalls, but Unemployment falls in most states, so what to believe? ECB Best to avoid it; UK Debt Over a trillion.

Financial Markets Barter economy? Where has all the money gone? Follow the money; 13 Years What have we learnt; Credit Unions Worth a look; Deleveraging and how to get out of it; Japan; Greece; Ginger Gingrich; Lessons; Difference of Opinion That’s what blogs are for.
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Jeb Bush Kissinger told the Chinese last week that Bush will be the next prez; Preparing always helps; Phony Tony Still doing his tricks; Tokyo ‘Quake prediction; Stem Cells Curing blindness?

#62 chubster on 01.25.12 at 1:29 am

fee-based ok but not % of assets since advisor does not have the same risk profile. i think getting someone local is important. you need to at least occasionally meet face to face, know where they work, where they live. accountability. btw, this is also why a strong federal govt is undesirable. all that said, think about what this poor dude need accomplish, especially if one is financially incompetent. they need to divine the markets, keep up on law changes, attend to client-specific needs, and babysit neophytes. such a combination is a near impossibility. ultimately, financial matters are a question of resource allocation. it is highly personal. if you want it done right, you will need to do it yourself. you can seek help any which way. but, you cannot ask another, even if capable and benevolent, to assume that responsibility.

#63 Dodged-A-Bullit-In-Alberta on 01.25.12 at 1:34 am

Greetings: #50 DUI on Money Road

Agreed! In my case 15,000 to invest was not enough to acquire a financial advisor. I guess I am not enough a “High Roller”

#64 S on 01.25.12 at 1:40 am

“You might be happier with a fee-based advisor, who works for a percentage of what you invest, who sells nothing and collects no commission.”

How about an advisor who works for a percentage of what a client earns as the result of the advice. Wouldn’t that be revolutionary.

Bad idea, and not new. It’s the principle behind most hedge fund compensation, which is why many managers take undue risks. — Garth

#65 mad vancouver on 01.25.12 at 1:41 am

Pathetic…
http://www.cbc.ca/video/#/News/Canada/BC/1258521056/ID=2189970569

#66 DML on 01.25.12 at 3:06 am

Excellent post,on a lighter note…

http://www.dilbert.com/2012-01-20/

#67 Chris scott on 01.25.12 at 3:49 am

@#1 TO BubbleBoy Like A Book Title, Each Word In That Listing You Posted Is So Precious, It Had To Be Capitalized.

Brilliant.

#68 Corban on 01.25.12 at 4:14 am

The weird thing about the comments today is that Garth has already laid out a basic financial strategy for free if you read his blog on a daily basis. For those who don’t have much to invest, you don’t need much more than that; just make sure to do some homework.

#69 martin9999 on 01.25.12 at 4:39 am

In fact, you’d be amazed at the number of couples I meet who would rather mingle fluids than share bank accounts”’

–thats’ how you know, you are hitting the right joint

#70 D on 01.25.12 at 5:11 am

Now, how do you get an advisor like Garth suggests when you are a non-resident of Canada filling out NR4 forms?

#71 Onemorething on 01.25.12 at 5:35 am

#3 Duncan on 01.24.12 at 9:47 pm

Meanwhile, in Australia,

http://www.news.com.au/money/property/cut-price-homes-on-the-market-in-australia-as-receivers-order-fire-sales/story-e6frfmd0-1226252424356

YUP! Was staying on Sunshine Beach and up to Noosa over the Christmas Holidays. Lots of FOR SALE SIGNS in High End Properties for sure.

My Bro In Law in Brisbane says his 1.6M AUD Queenslander cant fetch 1.3M. Told him to price right get out and sideline himself in a rental for 2-4 years.

But it’s different in Canada!

I have a property in mind on Sunshine Beach and have already contacted the owner. It’s valued last year at 2.2M, I’ve got a bet with the owner for AUD 100 he will sell it for less than 1.4M to me!

#72 Onemorething on 01.25.12 at 5:46 am

I think what I like most about this property bubble is the insanity on the way will only help us with the vulching on the way down.

It results in RE owners lowering expectations to such a low level matched with so many of us sitting on the sidelines so long to make these properties the deal of the century.

Even if a property changes hands in the process the new (dillusional) owners who though they got a deal will get hammered as they watch even their deposit go south and bank come a knockin’.

Perfect Storm only for few!

#73 Tony on 01.25.12 at 6:26 am

Re: #16 Mr. Market’s Psychologist on 01.24.12 at 10:42 pm

All you have to know is stocks presently are more overvalued than ever on record including both the crash of ’29 and ’87. At the very least play a few stocks long against the market indexes short.

#74 Tony on 01.25.12 at 6:39 am

Re: #53 Canadian Watchdog on 01.25.12 at 12:21 am

The percentage play is still long American REITs and short Canadian REITs. Canadian REITs are a train wreck just waiting to happen. Like i said before many of them will go to zero or zilch.

#75 Westcoaster on 01.25.12 at 6:43 am

#55 CJ – Very well put – I agree. A totally appropriate challenge for Mr. Turner (one I am confident he’s up to, by the way).

This blog is not for everyone. Surprised you’re surprised. — Garth

#76 About Time on 01.25.12 at 7:05 am

Garth,

Very good to see that you finally disclosed this to all readers. I’d love to see an overall disclosure statement permanently linked on the site as well.

Your blog is great and has a ton of useful info and value.

Nonetheless, everyone reading should know how you make your money and where your interests lie. It’s only fair.

Once again, thanks for doing this.

My disclosure has been on this site daily. Here. — Garth

#77 Cow Man on 01.25.12 at 8:12 am

Garth: Thank you for all that you do, and are available to do. “You can lead a horse to water……”

#78 GregW, Oakville on 01.25.12 at 8:18 am

Hi Garth, re: messing up Ottawa.
Don’t worry it already was. It seems most just didn’t/don’t know it is. Thanks for at least trying to make it better. It was a good try anyway. If we are all really lucky someone else will now try.

And re: Never hire a biker advisor.
…?

#79 househornyhousewife on 01.25.12 at 8:46 am

Garth,

This is an excellent post about what a personal financial advisor should do. However, many people end up going with larger companies that “sell” investment packages simply because they do not trust a single individual with their money. They want some sort of control that will keep a financial advisor in check. I suppose that you can always keep an eye on your investments by checking your accounts on the internet, especially at the beginning, when you are first dealing with this person but an advisor is a human being and entrusting all of your wealth to the caretaking of one individual seems risky to most.

This is actually the issue you need to address. Banks and insurance companies cannot pack up and leave town overnight but a single individual certainly can. What we investors need is some sort of professional accreditation for financial advisors, not like an SEC course but more like doctors and other professionals, which requires advisors to hold malpractice insurance and abide by certain professional codes of conduct or risk loosing their license to practice their livelihood. Until something like this exists, many will not trust, myself included.

HHHW

You do not understand the regulatory environment. A fully licensed advisor must work with a regulated institution. — Garth

#80 Bigrider on 01.25.12 at 8:58 am

Advisors are worth it, whether they collect a management fee or a trailer fee, if they can accomplish one specific goal and that is , protecting people from themselves.

The best financial advisors are well honed in the understanding of human psychology and how to best thwart the “lizard brain” that all of us have.

The financial product/allocation decisions are easy.

Look for your advisor to have a degree in psychology first, economics second.

#81 Sunshine on 01.25.12 at 9:11 am

I get it now! That’s why all the hype about selling your house! Financial Adviser wants a share of untapped resource – your equity in a house, not a pitty cash in your saving accounts! No other way to bring in a sizable asset to the FA’s table.

My views on the dangers of real estate lust, and the wisdom of balanced investing, are matters of public record and were so long before this blog was created to publish your epiphany. — Garth

#82 Kevin on 01.25.12 at 9:12 am

Great overview, Garth. I admit, it’s a little bit at odds with my own outlook on investing. Per Burton Malkiel and John Bogle’s writings, I believe the market is efficient, and on aggregate, active-management will always underperform passively-managed index funds.

That said, I do have one question for you. You obviously believe that a personable, local, fee-based active manager can beat the market, but you deride the distant, faceless guy managing a mutual fund for a bank. What makes you think a guy who must also spend time meeting and getting to know clients can still beat the market, while a guy who sits in a bank tower and spends all day focusing entirely on his mutual fund cannot?

I said a portfolio should be tailored to the individual’s character, situation and needs. It is not just about performance. — Garth

#83 OttawaRenter on 01.25.12 at 9:19 am

Funny story about [email protected]: I went into RBC a few years to apply for a credit card. [email protected] tried to get me to open all kinds of accounts, including a TFSA. Being new to canada, I asked her to explain to me what a TFSA was, as I hadn’t yet heard of it. She said it was a savings account where the interest was tax free, but you could only put $5000 per year in the account. I said, so what, interest rates are like 1% tops for savings account, is $100 less on my income really going to make a difference? But, I thought what the heck, I have the money already in savings, and she assured me I could withdraw from the TFSA at anytime, why not move it to a TSFA and save $3-4 a year in taxes?

So, I open the account, and she hands me the obligatory papers to sign. I read them (I always do before I sign anything), and see that I am signing a waver for an investment. I ask [email protected] why am I signing an investment waver for a savings account? Is this an investment account? I was under the impression it was a savings account. Does this mean I can lose my capital? No, she asures me, its is a savings account. So why am I signing an investment waver I repeat. She says its a formality. This argument proceeded for about 1/2 an hour, where she could not explain to me what I was really signing, or why. Stupid me, I opened the account amyways.

BTW, she works for RBC, and teaches Finance at Algonquin College. (I couldn’t make this up if I tried)

Another note about RBC. One day I go into the bank to withdraw money. The teller tells me before I can leave, I need to sign some paper work regarding my account. She hands me a print out. I proceed to read it (god, does that ever piss them off), only to see she is asking me to sign that I have recieved a notice that my account has changed status. I ask her for the ‘notice’ I am supposed to have recieved. She tells me that I recieved it when I opened my account. So I ask why I have to re-sign, if I am not getting a new notice. She inform me its just a ‘formality.’ I refuse to sign until I see the notice. She seemed completely surprised at my actions. As if I had asked her to take off her shirt. (How DARE I demand to see that notice I am signing to have recieved) “Well,” she sighs with a great huff, “I’ll have to go get an account manger, because I don’t have the notices.” (You think she would have a stack if she is required to make people sign that they have recieved them) I think she expected me to say “well never mind, I don’t want to bother you.” Instead, I just stared at her blankly until she went in an agry huff to get someone who could get the notice. (again–couldn’t make up this sort of stupidity)

What I’m getting at, Garth, is your blog is going to be a lifesaver. Thanks for today’s post.

#84 Victor on 01.25.12 at 9:25 am

Sears Canada cuts 400 employees, many in the Toronto, in the second downsizing in months

Published On Wed Jan 25 2012

Sears Canada has laid off 400 staff across the country, the majority in Ontario, the second downsizing in two months as the struggling retailer tries to cuts costs.

“These are never easy decisions. These people gave their heart to Sears,” said Sears spokesman Vince Power, who said most of the affected employees were in “non-core” areas, including food services, administration and IT. At some stores, cafeterias will be closed down, Power said.

Power said the cutbacks were the result of a company-wide review which began six months ago, a month after new CEO Calvin McDonald joined the firm.

A source familiar with the layoffs said many of the affected employees worked at Sears’ Toronto headquarters.

In November, the retailer laid off 70 other employees from its headquarters, mostly in administrative and support positions.

Sears has 30,000 employees and 122 stores across Canada. Roughly a third of Sears’ stores, 46, are in Ontario. There are about 2,000 employees in the Toronto headquarters.

Sears Canada is the second high profile company to lay off a group of Toronto-area employees in recent weeks. Earlier this month, Bell Mobility cut loose 500 employees from its Creekside call centre in Mississauga.

Retailers across the country are struggling with a slump in consumer spending, according to Sal Guatieri, senior economist at BMO Capital Markets.

“Consumers aren’t buying as much. They’re becoming more cautious about their debt levels, and what they’re spending,” said Guatieri.

http://www.thestar.com/business/article/1120765–sears-canada-cuts-400-employees-many-in-the-toronto-in-the-second-downsizing-in-months

#85 Last (but do I care) on 01.25.12 at 9:30 am

Been waiting for the right moment to post this, but here is a super simple very low risk portfolio which anyone can do, best part is a record beating 10 % long term average!!!!!!

Page. 5 BTSX beats the index again

https://www.canadianmoneysaver.ca/article_retrieve.aspx?edition_id=142

How is getting individual stock tips from a magazine low risk? — Garth

#86 Kaganovich on 01.25.12 at 9:32 am

Eaglebay-Parksville

Here is a well thought out discussion of the situation in China that may temper your bullishness on their prospects:

http://www.creditwritedowns.com/2012/01/on-building-debt.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+creditwritedowns+%28Credit+Writedowns%29

#87 TurnerNation on 01.25.12 at 9:47 am

On my annual Manulife RRSP statement they use a 3.5%rate of return when calculating my expected retirement income (if current contribution rate is met going forward). Shades of [email protected]

Heck, I can think of one mutual fund that yields 7-8% range: Acuity High Income fund. Trading at ~$11.50 with .08/month payout.

#88 Fred on 01.25.12 at 10:00 am

Here’s what I would like to ask a financial advisor, except I don’t think I’d get a straight answer:

What is the average return your clients get, considering in particular clients with 200k-500k net worth? What’s the one year average, three year, five year and ten year?

That’s something I don’t think we will ever find out. But maybe you have some thoughts Garth?

thanks

The answer would be simple if there was one portfolio, but each client is unique. The portfolio I refer to here often – 40% fixed and 60% growth – gained 15% in 2010 and yielded 0% in 2011 (when the TSX was down 11%), for a two-year average of 7.4%. — Garth

#89 Daisy Mae on 01.25.12 at 10:25 am

Canadian on 01.24.12 at 10:35 pm
“I discovered this helpful blog about a week ago, and wish to learn from intelligent comments as well, but enough with the Fiiiiirst, Phiiirst, furssst crap and other wasted comments.”

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

Maybe if we ignore them, they’ll go away….

#90 Junius on 01.25.12 at 10:27 am

#86 Kaganovich,

Thanks for posting this. I read it this am and was thinking the same thing as you. It is a very balanced article on the issues.

The point is that China’s massive infrastucture building has created a tremendous amount of white elephant projects, debt and waste. It was fuelled by easy credit and much of it was not driven by actual demand.

We rightly worry about cost overruns and corruption on our own infrastructure projects but they are nothing compared to what has gone on in China. No soft landing coming. This is going to hurt us all.

#91 Daisy Mae on 01.25.12 at 10:33 am

“I started a financial advisory practice a couple of years ago.”

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

I can vouch for Garth. He’s been MY salvation after having been screwed around by Investors Group.

I trust him — he’s honest, fair, knowledgeable, accessible, thorough. And I feel safe.

#92 sue on 01.25.12 at 10:40 am

I’m glad that Clark Kent finally took off his glasses and revealed Superman. It was time. People need to have access to a real advisor because even reading this blog regularly, I doubt many could actually pull off following your advice..at least, I couldn’t. Still sleeping like a baby with a diversified portfolio over here. :) Thanks Garth!

#93 Cookie Monster burnin' Kus on 01.25.12 at 10:42 am

Nostradamus #61
Regardless of the sun and it’s obvious effects which are indisputable, my reasons for taking CC serious are very simple too. The composition of the earths atmosphere of rising Co2 levels increases the undisputed greenhouse effect and the destruction of forests globally also contributes significantly to the rising Co2 since less is absorbed by plant life/growth. Absorption by the oceans works to reduce the C02 levels but not as fast as they are rising and it’s raising the acidity of our oceans and causing a whole host of new problems for them.

So regardless of what the sun is doing, CC is real. Sun activity is a separate issue not man made and completely out of our control. All things equal CC is real because the greenhouse effect is real and undisputed.

#94 Bigrider on 01.25.12 at 10:42 am

Garth in #82-” I said a portfolio should be tailored to the individual’s character, situation and needs. It is not just about performance”.

An individual’s portfolio should be tailored to their character …, situation and need bears little importance as market fluctuations will change such ‘situation’ and ‘need’ in a real hurry. Once such character is determined, such portfolio should be allocated with even greater conservatism than advisor determines is fit, error on the side of caution and assume the ‘lizard brain’ for the investing individual regardless of his/her intelligence or investing acumen.

It is rarely about performance.

#95 T.O. Bubble Boy on 01.25.12 at 10:45 am

Here’s what a Business Professor at Cal-Berkeley is recommending to help the U.S. Housing Market: having the Government guarantee your down payment!

http://www.nytimes.com/2012/01/25/opinion/down-payment-insurance-for-homebuyers.html

Wasn’t having the Government (Fannie and Freddie) guarantee mortgages part of the problem??? I guess the logic is: if you tell people they can buy insurance to cover themselves if house prices go down, then they’ll get back to believing that house prices only go up?

#96 McFurnish on 01.25.12 at 10:46 am

@TurnerNation #87

‘Acuity High Income’:

7.75% yield-to-maturity with a 2.40% management fee. Payout is primarily in the form of interest and distributions with only a small amount in dividends – so income from it is almost fully taxable (assuming it’s held in a non-registered account).

Devil is in the details.

#97 Cookie Monster burnin' Kus on 01.25.12 at 10:50 am

Nostradamus, your science friend’s argument against global warming is akin to a person adding layers of clothing and wrapping themselves in blankets and then blaming the thermostat for his rise in temperature. Whether the thermostat is increased or decreased is not the issue, the fact that the person is heavily insulated has shifted his temperature up relative to ambient.

#98 eaglebay - Parksville on 01.25.12 at 11:05 am

#84 Victor on 01.25.12 at 9:25 am
“Sears Canada cuts 400 employees, many in the Toronto, in the second downsizing in months”

It’s OK. Walmart and McDonalds are hiring.
So is Suncor, Canadian Natural, Shell and so on.

#99 CHANGES on 01.25.12 at 11:08 am

How do we stop a real estate bubble ?
What can the government do?
Someone needs to set up a petition or something

#100 eaglebay - Parksville on 01.25.12 at 11:15 am

#86 Kaganovich on 01.25.12 at 9:32 am

The Chinese are great savers.
China has the money.
China learns from its mistakes. It’s a developing country.
Just watch.

http://www.freeworldacademy.com/globalleader/china.htm

#101 Canadian Watchdog on 01.25.12 at 11:24 am

Time to start dumping REITs and load up on HIF. Great buying opportunity as the next quarter earnings is expected to headline negative across the board. http://i41.tinypic.com/ofowfb.png

#84 Victor

Sears is a RioCan tenant and has the lowest lease expiry date (3.1 years). Good luck to RioCan trying to rent out those mega-properties.

#102 Wage Slave on 01.25.12 at 11:30 am

37 John G. Young on 01.24.12 at 11:57 pm
Have you ever considered that your desire to exploit (i.e. contempt for others) and your substance abuse (i.e. contempt for self) might be related?

This is perceptive. Wait until you find the posts where he’s put in the doghouse by his wife and vows to quit drinking, then in the next breath he propositions Beach Girl.

The Pink Cloud lasted for about a month. High-larious!

#103 Chaddywack on 01.25.12 at 11:33 am

Watch out…..the Year of the Dragon is going to pump BC’s hot housing market

http://www.cbc.ca/news/canada/british-columbia/story/2012/01/24/bc-year-of-dragon-real-estate.html

Gotta love CBC….

#104 Rooprict on 01.25.12 at 11:36 am

Record sale in Calgary
http://www.calgaryherald.com/touch/story.html?id=6048602&cid=megadrop_story

#105 Bobby on 01.25.12 at 11:42 am

I don’t have the aversion to mutual funds like many on this blog. Unfortunately, many supposed financial advisers are really just salespersons. I could never understand why anyone would pay a portion of their capital to put their money in a fund, front end load. Or worse yet, have to leave their monies in a money losing fund for a defined number of years to avoid a penalty, deferred sales fee.
I stuck with fund companies with a higher minimum such as PHN. Their bond fund is rated one of the best in Canada with an MER of only .59%. Yes, I could do better with an ETF, but I don’t work for nothing so I don’t expect the people who manage my funds to do either.
The key I have found is to do lots of reading and ask a lot of questions. I once asked an adviser at Dominion Securities, after a lengthy meeting at no charge to me, how he made his money. After a lengthy diatribe he admitted the trailer fees which prompted my concern of whose interest he was really looking after.
It is your money, you have to look after it.

#106 Canadian Watchdog on 01.25.12 at 11:56 am

#103 Chaddywack

I’ve noticed CBC is on a home buying propaganda streak.

#104 Rooprict

That should boost the average selling price by $5,000.

#107 Mixed Bag on 01.25.12 at 12:00 pm

Here’s something interesting. I’ve got an “advisor”, who at our last meeting moved some of my money into an REIT-based fund (she showed me the five companies that made it up at the time, don’t remember it now). She knows very well our working situations, kids, house, family, parents, and has come to our place on a number of occasions, when we couldn’t make it to the office. Half of my open funds are dividend funds. When the markets tanked, I lost most of my gains, but not my initial investment plus DRIPs.

Thing is, she’s with IG. I started out with another gentleman years earlier, who has since passed away, and inherited her. I started with this gentleman after a friend and I noticed that a mutual friend, with less school and less salary, was doing rather well for himself, and he credited his I.G. advisor at the time. Both friends have since left I.G.

At this point in my investment life, I wonder, have I outgrown I.G.? Fair to ask. Sure I could go to a fee-based advisor, since I’ve built up some savings. But when you’re starting with little, who do you go to when you’re young and not financially astute? (As we’ve been trained to give our money to the professionals and focus on other things). When you are building your savings by investing after every paycheque, does going the route of buying REIT’s, for example, and incurring the trading fee every two weeks, make sense? For this type of situation, where someone is starting out small and building steadily over time, what investing options are available to them?

#108 househornyhousewife on 01.25.12 at 12:01 pm

Garth,

Thanks for addressing my (and perhaps others’) concerns regarding financial advisors. However, I still think that there is not enough uniform legislation across Canada in order to protect investors.

From what I understand, it is the industry that has put together a code of conduct that essentially states that advisors should know their client and advise accordingly.

Indeed advisors need to be registered in order to trade securities etc.. and this is regulated by each province under their respective laws. But, correct me if I’m wrong, there is still no legislated code of conduct to protect investors nor is there regular monitoring of said (as yet non existent) code.

If I gave $1,000,000.00 to a financial advisor today and instead of investing it in the stock market, he (or she) decided to run off to Africa with this (and others’) money or to invest it unscrupulously, there is no organization that I can go to for protection in order to get my money back. I would have to sue him (if I can find him, that is) in court and if I won, hope that he can pay the damages.

On the other hand, if I entrusted a physician to take out my tonsils and he (or she) did not follow the proper medical code of conduct resulting in my being injured (or even dying), I (or my relatives) would be recompensated by that physician’s malpractice insurance or by the hospital. Yes this might also go to court, but since there is a clear code of professional conduct, it may be easier to prove wrong doing AND damages, should they be defined by the court as being payable, would definitely be able to be paid.

If I am completely misunderstanding the situation with financial advisors as they pertain to consumer protection, please do clarify. This is what keeps most people from approaching a financial advisor. Most of us are under the impression that practically anyone can hang up a shingle and start doing business. Proper uniform accreditation and a uniform legislated and monitored code of conduct are not apparent.

Your clarification would be appreciated by many on this blog, I’m sure.

HHHW

You are wrong. Fully licensed advisors must be attached to host companies which are regulated federally and provincially, and subject to IIROC control. Do some research here. — Garth

#109 patiently waiting on 01.25.12 at 12:01 pm

Apparently, Calgarians have not read the recent reports from the big banks predicting a real estate correction . . . is this more real estate pumping? Is the sale real? or an inside deal with some of Ledcores buddies? I worked for developers earlier in my career . . . when times were tough, sales were generated from close business associates, sometimes developers even bought each others units, employees were coercerced into buying, subtrades, and some sales were even fabricated to make things look better than they really were . . . Time will tell . . .

“CALGARY — Calgary condo sales have reached new heights after a luxury unit fetched a record $8.3 million, before construction has begun.

The 5,260-square-foot condo will cover the entire 12th floor of the 15-storey development called The River, located along the Elbow River, which flows through the southern portion of the city.

Already, more than $30 million in real estate has been spoken for in the project, which includes 38 residences — 27 units in the tower and 11 town houses.

Anne Clarke, director of sales for The River, said eight sales have been completed and three deals are pending.

“These (buyers) are business leaders. They are leaders in not only business, but in our community,” Clarke said.

Other sales in The River have included units for $5.7 million and $5.5 million.

The top-floor tower unit is listed at $9 million.

“It signifies we really do have a need for this type of product,” Clarke said.

The buyer of the $8.3-million condo was not identified, but is described as a longtime Calgary oil and gas executive.

Construction is expected to start by April, with completion in early 2014, said Chris Bourassa, chief operating officer of Ledcor Properties Inc. The River is being developed by 26th Avenue River Investments Inc., an affiliate of Ledcor.

The Calgary Real Estate Board recorded 422 single-family sales of more than $1 million in 2011, up from 346 in 2010.

Twenty-six condos last year sold for more than $1 million, up from 21 in 2010.

Read more: http://www.canada.com/business/Calgary+condo+unit+fetches+million/6049026/story.html#ixzz1kUAWpOUf

#110 PG on 01.25.12 at 12:17 pm

#4 Tax Question:

Assuming an individual makes that $200K as taxable income (the highest taxed form in Canada), and assuming no deductions, that individual would pay roughly $77K or 38.5% in taxes if he/she lived in Ontario. Of course, each of the provincial rates vary therefore it would change depending on where the person lives. (e.g. They would pay a higher rate if they live in Quebec lower if they live in Alberta).

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

The overall tax rate would be 36.4%, and the marginal rate (applied to every subsequent dollar) is 46.41%. — Garth

#111 45north on 01.25.12 at 12:20 pm

on Obama’s mortgage bailout plan:

Let’s never forget: Millions of Americans who work hard and play by the rules every day” will be royally screwed by Obama’s proposition in the form of higher taxes down the road.

http://mcaf.ee/bri6w

#112 Doug in Victoria on 01.25.12 at 12:32 pm

Canada’s employment quality declines: CIBC

Tal said that in the last three months of 2011, Canada had the weakest job market on record in any non-recessionary time.

Read more:
http://www.canada.com/business/Canada+employment+quality+declines+CIBC/6048956/story.html#ixzz1kUKqdfrj

#113 Sunshine on 01.25.12 at 12:34 pm

My views on the dangers of real estate lust, and the wisdom of balanced investing, are matters of public record and were so long before this blog was created to publish your epiphany. — Garth

They are “views with benefits” at this point :)

The truth is there is no one fits all solution. There is a case for not getting into the RE market, and there is a case for staying put. But I am yet to see you to encourage someone to stay put if conditions are right. In fact, it would be interesting to explore what are these conditions, even when the RE exposure is above your recommended 30% of a net worth. I would include here such factors as prime location in a city with positive in migration, high household income, manageable debt level or no debt, long time before retirement or other retirement income sources… Similarly to your post a while back on how to buy a house, what would be the influencing factors to keep your existing RE holdings through current market conditions? That would make your RE views balanced in my opinion.

You must have missed a few days. Done and done. — Garth

#114 Bob on 01.25.12 at 12:34 pm

A little off topic today but here goes nonetheless…let’s talk about the biggest of all financial decisions for most Canadians…the purchase of a home.

Well, the house search around the fringe of the GTA continues. Have been looking hard in the Hamilton/Stoney Creek/Niagara/Halton Hills area for two months now via the MLS listings route. Currently reside in the GTA but trying to get out…and am currently renting after selling the condo late last year (hooray!!).

Recently, when my wife and I see a place we like but before we put an offer on the table we go home and debate the pros and cons, the budget, the travel time to work, the taxes, etc….all the good stuff one is supposed to do when making such a huge investment (e.g. house purchase). However, a number of times already we have been told a day or two later that the property has been sold out from under us, and of course, our friendly realtors are telling us that the market is “heating” up again with the new financing regimes coming on-line (e.g. BMO, TD, etc.).

One thing is clear from an anecdotal point of view and personal experience, houses are being sold at a very steady clip in and around the GTA and there is no slow down that I can see other then the seasonal timeframe. Quite the reverse is true…people can’t seem to buy SFH’s fast enough. I just do not see any housing slowdown in this corner of the country from my corner of the fish bowl.

It seems our routine practice of sober second thought before we sign on the dotted line has worked against us in some cases in this new year…better luck next time.

One thing that baffles both my wife and myself is how fast SFH’s are being sold and where the money is coming from (I know, I know…debt financing). How do people sleep at night? Is it any wonder home prices are increasing when they keep getting snapped up so quickly?

The search continues.

#115 Macrath on 01.25.12 at 12:37 pm

#101 Canadian Watchdog

Danielle Park coined a phrase the other day which I like.
“strategic cash” as opposed to stuffing the orange guys shorts.
Soros mainly, holding strategic cash.
http://www.thedailybeast.com/newsweek/2012/01/22/george-soros-on-the-coming-u-s-class-war.print.html

No tears for Sears. They are getting their just deserts.

#116 Mister Obvious on 01.25.12 at 12:48 pm

#99 Changes
“How do we stop a real estate bubble ?
What can the government do? Someone needs to set up a petition or something”

—————————

Or… you could just post a “call for action” on a blog.

Here’s what you need to do: get some financial education that helps you recognize when a particular market has gone insane. (Reading Garth Turner is a pretty good start).

Then take your profits and get your ass out of there. Its far better to do that two years early than one day too late.

Good rule of thumb: The greater the atmosphere of denial, the bigger and more precarious the bubble.

Another good rule: Don’t buy promises and fluff that you clearly can’t afford in the long run.

There. I did something.

#117 SmartRenter on 01.25.12 at 12:48 pm

People constantly ask me why I don’t buy a place to live, and I try to explain and they just go all glass eyed when the numbers come out. So now I send them to this site which shows the daily ridiculousness of Toronto’s RE marketplace listings: http://fmlistings.tumblr.com/

#118 disciple on 01.25.12 at 12:49 pm

#111 45 north… you and/or Mish Shedlock are misrepresenting what Obama said:

Sure enough, the very next paragraph contained a massive bailout proposal and in more ways than is readily apparent at first glance. For starters “responsible homeowners” don’t need mortgage relief.{Huh? What about the millions of victims caught in the downward spiraling market}

Secondly, $300 a month is a lot of dough so I would like to see an accounting. {Really? What does this have to do with anything?}

Finally, and most importantly, every loan that is refinanced will be paid off in full. {Huh? Of course, loans have to be paid in full, more useless fluff to fill up space no doubt, he had nothing else to write today?}

Thus, any bank, hedge fund, mortgage provider, or GSE that is paid off on a nonperforming loan will be immediately made whole. {What are you smoking? Unless there is a specific gov’t guarantee, how is a loan immediately made whole?}

This is a massive backdoor bailout of banks, mortgage companies, hedge funds, foreign banks, and anyone else holding mortgage related garbage. {Hardly, unless there is something you are not telling us, Mr. Shedlock, or whatever your real identity is}.

45north, do you even read the links you post?

#119 Regan on 01.25.12 at 12:57 pm

I hesitate to step into financial investments because I’ve noticed, like many people I think, that the best way to make money in stocks is to become a stockbroker, the best way to get good financial advice is to become a financial planner and so on (1-2% of portfolio/year is what I see! Geez, can’t they just charge an hourly cost?). In the end, I only see people who want to separate me from my money. And really, you have to begin with educating yourself anyway, otherwise you’ll give any professional you hire bad direction. If you’re too emotional, stubborn or uneducated to listen to their advice, you’re wasting your money. As for the argument that a planners don’t want me to lose money because they will earn less… that doesn’t add up. If I have 100,000 and an advisor gets 1,000 a year for being diligent, versus making $500 that year for doing nothing and letting my life savings tank… there are plenty who’d opt to do nothing and spend the time finding new clients to fleece. I try to remind myself that expecting ‘my money to make money’ is the same as wanting money for nothing and that’s just not realistic. Securing my future depends on some degree of diligence to figure out the stepping stones in my life.

#120 Van guy on 01.25.12 at 12:58 pm

Many more headline news now are warning to keep your pants on. Just like the Toronto Maple Leafs, they bubbled to the top, and are slowly correcting to where they should be, at the bottom. Playoff hopes are lost again. Sorry Garth, maybe next decade.

#121 sam.i.am on 01.25.12 at 1:00 pm

“the marginal rate (applied to every subsequent dollar) is 46.41”

This is a punitive level of taxation. Why would any high income earner tolerate it?

#122 Tiny Bottoms on 01.25.12 at 1:25 pm

Home Price Index Slips in November

http://ca.finance.yahoo.com/news/home-price-index-slips-november-141843021.html

#123 Canadian Watchdog on 01.25.12 at 1:27 pm

#114 Macrath

If you’re holding cash then allocating a portion into RMB Term Deposits is a good idea. http://www.bankofchina.ca/portal/Info?id=633&lang=1&

It’s been off many investor’s radar screen since most believe the RMB is pegged to the USD—but that all changed in 2011. http://i39.tinypic.com/2m4x7x1.png

By this strategy you have an opportunity to earn interest plus gains from a rising currency. It’s all about purchasing power.

#124 Tiny Bottoms on 01.25.12 at 1:28 pm

A report from the CIBC says the quality of jobs in Canada worsened last year as more people turned to lower paying positions or became self employed.

The report also found that real disposable income was unchanged in the first three quarters of 2011, which makes it the worst showing in 15 years.

http://www.cbc.ca/news/business/story/2012/01/25/jobs-cibc-quality.html

#125 househornyhousewife on 01.25.12 at 2:05 pm

Garth,

Thanks for the info on IIROC. I assume that any and all financial advisors who operate in Canada must be members ? At any rate, an investor can always ensure membership in this organization which does have consumer protection insurance, clear codes of conduct etc..

I would still like to see a more government regulated system though. IIROC seems to be more like the CICA for Chartered Accountants, an industry that regulates itself. That being said, it is still better than what I originally had in mind about financial advisors.

Thanks for clarifying this about your profession and pardon my ignorance.

HHHW

#126 45north on 01.25.12 at 2:10 pm

Disciple: do you even read the links you post?

I pulled the quote directly from the link. Which is what is meant by “self evident”.

Aside: meant is like learnt. Thanks to Homer.

#127 cj on 01.25.12 at 2:16 pm

#85 Last
Thanks for the resource Canadian Money Saver newsletter. It covers many topics for investing

#128 Victor on 01.25.12 at 2:17 pm

#101 Canadian Watchdog

Time to start dumping REITs and load up on HIF. Great buying opportunity as the next quarter earnings is expected to headline negative across the board. http://i41.tinypic.com/ofowfb.png

#84 Victor

Sears is a RioCan tenant and has the lowest lease expiry date (3.1 years). Good luck to RioCan trying to rent out those mega-properties.

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

http://www.theglobeandmail.com/globe-investor/sears-canada-cuts-400-more-jobs/article2313535/

But, while Sears struggles to bolster its performance, its real estate remains valuable with low rents, giving landlords the incentive to try to find a stronger retailer, such as Nordstrom, to pick up some of the space now occupied by Sears.

“The developers would love to get their hands back on some of the [Sears’] real estate and make more money on it,” Ms. Evans said. Sears spokesman Vincent Power said he wasn’t aware of any talks with Nordstrom and, in any case, couldn’t comment on such matters.

======

Interesting counter-argument provided the G&M piece.

I’ve noticed many of your posts on this blog are meant to bash REITs. I guess you are being ‘helpful’ right? Trying to ‘help’ the fellow blog dogs…get them to “dump REITs” and buy the stocks you are ‘recommend’.

So ‘nice’ of you.

#129 reasonfirst on 01.25.12 at 2:18 pm

.#100 eaglebay – Parksville

Sorry – but you kill a lot of your cred when you post stuff that is 7 years old.

#130 Bond junkie on 01.25.12 at 2:21 pm

Overheard at Davos…

Carney: but Ben, household debt levels in Canada are at record highs!

*Whack*

BB: quiet you, on hold till 2015, deal with it.

#131 John saccy on 01.25.12 at 2:36 pm

Wow.. soon FED will sales ZIRP till 2050.. War on savers!

#132 Ogopogo on 01.25.12 at 2:47 pm

#76 About Time
Garth,

Very good to see that you finally disclosed this to all readers. I’d love to see an overall disclosure statement permanently linked on the site as well.

Nonetheless, everyone reading should know how you make your money and where your interests lie. It’s only fair.

My disclosure has been on this site daily. Here. — Garth

Ouch. The least you could do now About Time is apologize to our host.

Not to get sanctimonious, but there is a life lesson here somewhere. The first thing I did before “committing” to this blog was to look at Garth’s credentials and other “about” items. Needless to say, I was and continue to be impressed and above all grateful for his helping me avoid making the biggest financial mistake of my life, even if I disagree with him at times.

Bottom line, never take anyone’s word (esp. in MSM) without looking at the underlying agenda.

#133 YetAnotherInvestor on 01.25.12 at 2:50 pm

Another great post Garth.

re: #91 Daisy Mae, I do agree Garth’s FA team rocks, but best not to reccomend them, I’ve gotten used to the fast response time and personalized service and great returns Garth’s team provides. If too many people flock to his FA services, I’m afraid I wont get the same great service I do now!

#134 TheRealTruth on 01.25.12 at 3:08 pm

It’s official. NO INTEREST RATE hike until at least 2015 in the USA. We will follow by leaving ours alone and after 2015 we will let out currency suffer.

Ahem, Garth. Where you going to send my forecasting prize?

No bubble popping anytime soon. Maybe 3-5 years out.

#135 Kip on 01.25.12 at 3:10 pm

“Sure, they’ll buy a house in a bidding war during a recession”

Recession? Our country is not in a recession, look it up!

#136 Blacksheep on 01.25.12 at 3:10 pm

Dogs,
Scary blog titles as of late: Bad ideas, The illusion, Don’t save, Endangered species, Doomed and today’s touchy feely, Trust.

From today’s,
“Finally, it all means nothing without confidence and trust. The advisor you choose requires education and experience, of course, but also the ability to know you deeply, anticipate needs and truly care. You won’t find empathy on a regulatory web site. You must talk at length.”

In my opinion, there’s been a little button pushing, lately. The fact Garth felt the need to “disclose” these details, when the info was already on his site makes It clear to me, our Host has a potential interest, in the financial decisions you make. I’m a full on Capitalist, so it’s all good. Just realize what’s taking place.

take care,
Blacksheep

#137 John G. Young on 01.25.12 at 3:18 pm

#102 Wage Slave

After I posted I felt badly because I thought it sounded condescending (and I suspect Smoking Man may have thought so too, because I noticed his subsequent post was deleted). I didn’t mean it to be — I’m in long-term recovery myself and I wanted to provide some food for thought.
I now work in the addiction field and I’m struck by how people with addictions generally have no understanding of, or respect for, money, and how they think about and use money in an addictive fashion. Learning about finance is, in both my personal and professional experience, a huge part of recovery — and surprisingly, one that isn’t written about.
Smoking Man doesn’t seem to be the only person on this blog who has substance issues. I find his posts more sad than funny and hope he gets the help he needs — and maybe this blog is a start.

#138 Vigilante on 01.25.12 at 3:24 pm

Garth, If you choose a financial advisor, how do you verify that its not a PONZI scheme ?

You mean like buying a house? — Garth

#139 Junius on 01.25.12 at 3:31 pm

#133 TRT,

You said, “No bubble popping anytime soon. Maybe 3-5 years out.”

Interest rates are but one factor. As you will learn.

#140 eaglebay - Parksville on 01.25.12 at 3:37 pm

#108 househornyhousewife on 01.25.12 at 12:01 pm

Lack of knowledge is a financial killer.

I want the government to guarantee my funds and my investments. I want the government to regulate my life and protect me from all the crooks. Everybody is out to get me. I want more rules, regulations and laws.
I cannot take care of myself. Let the government tell me what to do, think and organize my behaviors.
I cannot make my own decisions and cannot decide for myself what’s right. I don’t understand and cannot acquire knowledge and what’s this about common sense.
I’m afraid and I need big brother.

#141 Smoking Man on 01.25.12 at 3:41 pm

#137 John G. Young on 01.25.12 at 3:18 pm

I don’t think my deleted post was targeting you, I was so wasted I have no idea what I typed.

As far as felling sory for me, pa-lease

John

a sane man in a lonnie bin, is the village nut in that community, I feel sory for you

#142 eaglebay - Parksville on 01.25.12 at 3:42 pm

#114 Bob on 01.25.12 at 12:34 pm

Hurry up or you’ll be searching for a new wife.

#143 Vigilante on 01.25.12 at 3:46 pm

You mean like buying a house? — Garth

You are comparing a home on one hand and nothing on the other hand in a PONZI scheme ?

Now tell me , how to make sure that its not a Madoff scheme, where I wake up and my balanced portfolio is empty ?

Because he’s in jail. — Garth

#144 Van guy on 01.25.12 at 3:47 pm

Vigilante,

Are u still going around low balling with no intention of even buying? How’s that working there For you dude?

#145 Wage Slave on 01.25.12 at 3:52 pm

137 John G. Young on 01.25.12 at 3:18 pm

Congratulations on your continuing recovery and thank you for the measured and thoughtful response.

The tone of this blog is typically snarky (and I play into this dynamic no doubt) so it’s good to be reminded that showing empathy is usually the more effective way of communicating.

Looking forward to more of your posts.

#146 eaglebay - Parksville on 01.25.12 at 3:53 pm

#119 Regan on 01.25.12 at 12:57 pm
” (1-2% of portfolio/year is what I see! Geez, can’t they just charge an hourly cost?). In the end, I only see people who want to separate me from my money. And really, you have to begin”
———-
Where do these people come from?
An “hourly cost” may cost you much more than 1%.
How many hours do you think that a fee based FA puts in on your account in one year?
Stay poor, it’s your choice. I bet you have a big mortgage. Renting from the bank are we.

#147 MrHulot on 01.25.12 at 4:02 pm

Interest rates won’t be going up till 2014. Golds on a tear. Real estate is still on a tear. WTF am I doing here?

#148 John saccy on 01.25.12 at 4:09 pm

Game on. Bernanke vapourizing middle class with zero rates, one year at a time.

Asset Delfation, Price Inflation.

Where have I heard that one before, Garth? ;)

#149 Smoking Man on 01.25.12 at 4:10 pm

So Mark Carney is taking measures to cool the real estate fire, hum. The Globe and Mail and National Post are running stories about falling prices in Canada.

Bubble heads it’s to pre-mature to light that bubble head basement dweller bond fire just yet.

As I have tried to show you before, the media is like the dogs of a farmer trying to get his herd going in a direction.

Re works on a yearly cycle, prices start climbing in Jan to late spring, then sinks to about Dec, this has happened for the last 10 years,

Now if you look at seasonal prices, in any given month in the current year is less than last year, then the happy dance is on.

Anyone check out the red dots on mls in your hood lately, I have and not very many, we are heading into prime time RE with fixed rate mortgages at their lowest levels ever, and the last thing the Gov’t and the BOC want to have happen this season is a surge in prices.

Their goal with the use of the dogs is to get a lot more red dots out their, but not to many.

#150 Two-thirds on 01.25.12 at 4:17 pm

And perhaps the way to riches is the carry-trade, courtesy of Mr. Bernanke:

“Fed extends low-rate vow in bid to help economy

By Pedro da Costa and Mark Felsenthal

WASHINGTON (Reuters) – The Federal Reserve on Wednesday pushed back the likely timing of an eventual interest rate hike until late 2014, much later than it had previously said, as it nurses a still-sluggish economic recovery.

In a historic step that it has touted as an effort toward greater transparency, the Fed announced an official inflation target of 2 percent, and for the first time published individual policymakers’ forecasts for the federal funds rate.

These showed quite a wide range of views, including three of 17 policymakers who expect rates will need to rise this year and two others who do not see any increase until 2016.

Still, the biggest concentration of estimates was around 2014. The assurance that rates would remain near zero for at least some 18 months longer than previously believed was enough to drive a steep rally in U.S. government bonds and push stocks into positive territory.

The Fed, after a two-day policy meeting, repeated its view that the economy faces “significant downside risks” but it offered little to suggest it was close to launching another round of bond-buying to prop up growth.

Its forecasts pointed to somewhat weaker economic growth this year and next, compared with Fed estimates published in November.

It did say, however, that it would maintain a “highly accommodative” monetary policy stance. Economic conditions “are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014,” the central bank said in a statement.

Many investors had expected the Fed to push its expectations for the first rate hike into 2014, but few had thought it would be late in the year. After every previous policy meeting dating back to August, the Fed had said rates were not likely to rise until mid-2013.

The central bank also appeared more sanguine on the inflation outlook, suggesting prices were now rising at a pace consistent with policymakers’ goals. The statement also dropped a reference saying the Fed was monitoring inflation and inflation expectations.

Aside from the 2014 rate pledge, the Fed’s statement hewed closely to its last policy pronouncement in mid-December.

It described the unemployment rate as still elevated and said it expects inflation to remain at levels consistent with stable prices. In a slight shift, it acknowledged signs that business investment has slowed.

“I think what they are seeing is that the rate of growth is not sufficient to bring down the unemployment rate,” said Brian Dolan, chief strategist at FOREX.com in Bedminster, New Jersey.

Richmond Federal Reserve Bank President Jeffrey Lacker, an inflation hawk who rotated into a voting seat this year, dissented against the decision. He preferred to omit the description of the time period for ultra-low rates.

In response to the deepest recession in generations, the Fed slashed the overnight federal funds rate to near zero in December 2008. It has also more than tripled the size of its balance sheet to around $2.9 trillion through two separate bond purchase programs.

The policy is credited with having prevented an even more devastating downturn, but it has been insufficient to bring unemployment down to levels considered normal during good economic times.

In December, the U.S. jobless rate stood at 8.5 percent, and some 13 million Americans were still actively looking for work but could not find it.

While forecasters expect the U.S. economy grew at a 3 percent annual rate in the last three months of 2011, they look for growth of just around 2 percent this year.

Fed officials appear likely to bide their time in determining whether more monetary stimulus is needed. Many economists expect they will eventually decide on another spurt of Fed bond buying – probably one focused on mortgage debt.

(Editing by Tim Ahmann and Andrea Ricci)”

Canada will likely keep rates low for as long as our main market does.

Unsurprising.

#151 Canadian Watchdog on 01.25.12 at 4:22 pm

#128 Victor

I stated my views on Sears in earlier posts and believe they will go bankrupt sometime soon. I actually own a few REITs but have been selling-off since December. I believe the market has some headwinds in the near term and would rather wait to buy quality REITs at much cheaper prices (fair value).

This is a suckers market unless you’re inversed or in stocks/assets that will decouple from a downturn. If you can’t make money on the downside, your profits are limited. There’s a reason why they invented short selling—so use it.

#152 BPOE on 01.25.12 at 4:29 pm

Interest rates to stay low forever. Every year you wait you could of been another year closer to being a winner

http://money.cnn.com/2012/01/25/news/economy/fed_rates_bernanke/index.htm?hpt=hp_t3

#153 Onthesidelines on 01.25.12 at 4:30 pm

How is getting individual stock tips from a magazine low risk? — Garth

How is it any higher risk than getting them from here?

And, by the way, have your been running your biz long enough to go back to pre-crash…say five years out? Would be interesting if in that time frame you beat out my no drama 3.5% annual average bond portfolio.

You don’t get stock tips here. And never will. Second question – yes. — Garth

#154 zeeman1 on 01.25.12 at 4:36 pm

#93 Cookie Monster Burnin Cus

The science is not settled and may be an outright fabrication, but that doesn’t matter to people like you, does it?

#155 Macrath on 01.25.12 at 4:48 pm

#123 Canadian Watchdog

A strategy commonly referred to as picking up nickels in front of a steamroller.
I had to sign a ‘no-suicide pact’ as part of my discount brokerage contract.

#156 Steven Rowlandson on 01.25.12 at 4:54 pm

Yes ,paper currency is good for something!
An extreme case perhaps but it keeps his overpriced house warm.

http://uk.finance.yahoo.com/news/irishman-makes-billion-euro-home-101914871.html

#157 Kris on 01.25.12 at 4:57 pm

#138 Vigilante.
Garth, it’s a question you may have answered before, but merits repetition to calm people’s fears and/or misconceptions. You will recall the advisor Earl Jones swindled many of their life savings. What steps can the avg Joe take to protect themselves?

Earl Jones was not an advisor. He was an imposter. He was not employed by any regulated company. — Garth

#158 Blacksheep on 01.25.12 at 5:03 pm

The Bernanke has spoken.

Rates never to rise again.

Gold to the moon.

Need to find a risky/lucrative use for this free money.

Dollar/Real, carry?

Smok’in Dude, anyone, Ideas?

take care,
Blacksheep

#159 abraxas on 01.25.12 at 5:13 pm

Why employ a financial advisor and pay him 1% of your wealth every year for the dubious privilege of having him play with your money on Wall St/Bay St?

It has been shown time and again that simple passive index strategies outperform nearly all active managers thanks to lower fees.

As for tax efficient allocation between registered and non-registered accounts? Hardly rocket science.

Yes, most people are financially illiterate but then those people usually don’t have any investments anyway.

So why bother with a wealth manager/money manager at all?

Just pick your flavor of an indexing porfolio, be it a bogle head or a permanent portfolio or a couch potato or whatever. Just don’t get suckered into thinking you can beat the system. Ivest in broad indexes, diversify asset classes and keep the tax inefficient securities in your registered accounts. No rocket science there.

#160 Alan on 01.25.12 at 5:18 pm

Bernank says party on dude!

#161 Cato on 01.25.12 at 5:36 pm

I’ve certainly done my share of adviser shopping from small independents to wealth management teams. I’m self managed as I haven’t found a good fit with financial advisers who are primarily baby boomers. The reality for most in my age group is they will need to take an active role in managing investments at some point so they may as well hit the books and start learning now. Good advisers are primarily baby boomers and will shift into retirement mode at some point. I don’t see many quality people rising through the ranks so the risk for younger clients like myself is being handed off to inexperienced managers when the time comes. The industry is geared towards boomers so if your in that age group you should take advantage of the services. Here’s my experience in shopping around..

Quality advisers can be found within the ranks of the big banks but they typically reside within the wealth management groups. Good people tend to get poached quickly from from the lower ranks which leaves a talent vacuum. When I met with most of these groups requirements were a net worth of 5M+ but this has likely changed in last few years to smaller amounts. The calibre of resources these groups can bring to the table is impressive but you pay a premium in fees.

Working with a team might be ideal scenerio but there are plenty of good independent financial advisers who have much more modest client requirements and are more approachable. It takes effort to find them, I’ve found the best method is often by word of mouth from an existing, satisfied client.

Most independent advisers need to maintain a social persona, it how they advertise themselves and its just the nature of the business. You need to watch out for the social butterflies, these are the types who tend to be good at selling themselves but lack substance or ability. They are typically easy to spot by a higher than average client churn rate. They put alot of effort into trying to be your friend but lack substance in their efforts.

The good advisers usually have a defensible philosophy when it comes to financial strategy. A bit of healthy debate is a good way to separate those who have truly put effort into forming their own opinions and don’t rely on what they hear in the financial media. They should be willing to discuss reasoning behind any decision and be able to defend logic behind their actions.

Clients need to be realistic regarding performance. Avoid anyone who promises above average rates of return for little to no risk. In this environment capital preservation, not growth, is key. Anyone bragging about high rate of return is often taking unacceptable risk to do so. Thats not investing, its gambling and like in Vegas at some point luck will change and result in severe losses.

Many good financial advisers will usually agree to manage smaller amount for a potential new client. Just remember their income is based on management fee, the less they have to manage the less time they can devote to the client. Its nothing personal, if you like their services during trial period be prepared to move more money over otherwise close the account and find someone else. Don’t be non-committal.

There are numerous protections in place to prevent financial advisers from running away with their clients money but you still need to use your common sense. If something doesn’t smell right ask questions. If voice inside your head says something isn’t right move the account and don’t let anyone persuade you otherwise.

#162 rosie on 01.25.12 at 5:43 pm

BEWARE the FED. Q.E. 111 is in the books.

#163 NoName on 01.25.12 at 5:53 pm

#110

http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2011-Personal-Tax

easy way to see and compare income tax rates… that thing from gc website to convoluted

#164 sam.i.am on 01.25.12 at 6:03 pm

Advisors offer an invaluable service – they take the emotion out of portfolio management. How many self-directed sold out at the bottom in 08-09 because they couldn’t sleep and haven’t recovered yet? How many bought a stock because cramer or some other talking head recommended it without doing any homework, and then were surprised when the stock tanked? I’m actually a surprised the fees are so low.

#165 Bigrider on 01.25.12 at 6:14 pm

Vigilante – only ponzi scheme in Canada is the housing market currently floating on a sea of debt. Prices have doubled on average over past 7 years while mortgage debt has quadrupled. Nuff said.

Kris- just because someone rips someone off and the newspapers call him an advisor, does not make it so if said person is not registered with OSC.
Let me ask you, are all swindlers advisors or just swindlers. If a real Estate salesperson tells you to buy a property because it’s a ” good investment” is he a RE salesman or an investment advisor? What if property is on sinking sand? Will the news papers say that he was an investment advisor who swindled his client or an RE agent.
My guess is advisor

#166 Smoking Man on 01.25.12 at 6:20 pm

158. Black Sheep. With ur cheap money. 40 persent short bonds 40 present long equities. 20 persent. Hokkers and crack

#167 Coho on 01.25.12 at 6:29 pm

Watching the State of the Union Speech, I’d say the U.S. is BACK.

Back from what? Did I miss something? Have the ‘Patriot Acts’ and the ‘NDAA’ been repealed and I didn’t hear about it?

I can’t believe people still buy into this left-right paradigm while their country goes down the crapper. They always bring up divisive issues like gay marriage and abortion to distract away from the fact that America is no longer America. Lady Liberty’s enemies are happy to see that the seat of the American President has become one where a dictator sits. Not just Obama, but presidents past and future. But, since people vote, they think they still have a voice. This is a misconception.

Fear is so rampant in ‘the land of the free’ and ‘home of the brave’ that babies and old men and ladies get searched at airports because you just never know who the next ‘terrorist’ will be. Everyone is a suspect, even governors and senators. The NDAA will prove to be a useful tool to round up patriots (ones, albeit few, who have the stones to speak out and stand up for the ideals and principles on which the country was founded) when the time is right.

Governments are very good at usurping power from the people and in particular the last two administrations have usurped the constitution and bill of rights which were the law of the land. These unalienable God given rights were written into the constitution to protect the people from future rogue governments which would dare usurp the law of the land and institute themselves as the ‘guardians’ of America and its people. This is ironic because the constitution and bill of rights was written to protect the people of any such government.

Here’s a business idea: Start a family function security company. Yes, families can hire out your bouncers (unemployed welders and financial advisors) for Christmas parties, birthdays and bar mitzvahs because you just never know who will be a threat at your party. Grandma, little 3 year old Johnny, Uncle Bob who uses a cane. Everyone is guilty until proven innocent.

#168 Onthesidelines on 01.25.12 at 6:38 pm

You don’t get stock tips here. And never will. Second question – yes. — Garth

Though technically not “stock” tips, your mention of specific REITs and preferreds does qualify as tips. My point is how does the level of risk in following your “tips” here differ from following the tips of another financial professional in print?

Second point, would be nice to see a breakdown of how you did on an annual basis for the five year period. I’m curious to know how much better than my no-brainer 3.5% annual folks like yourself with balanced portfolios have done overall if you include the crash.

I do not give tips. Often I will provide examples of asset classes, but they are never proffered as one-size-fits-all strategies like for-profit mags and newsletters. The risk in making unsuitable investments is extreme for the DIY set, of which you seem to be a member. — Garth

#169 pjwlk on 01.25.12 at 6:41 pm

#79 househornyhousewife

“…but an advisor is a human being and entrusting all of your wealth to the caretaking of one individual seems risky to most. This is actually the issue you need to address…”
~~~~~~~~~~~~~
I could agree with you more! It took me over two years to find myself comfortable enough to allow someone else to look after my life time of savings. This blog helped me tremendously.

~~~~~~~~~~~~~

You do not understand the regulatory environment. A fully licensed advisor must work with a regulated institution. — Garth
~~~~~~~~~~~~~

Perception is reality to most people Garth whether they understand things or not. I think HHHW has an excellent point. Most advisers are not outwardly addressing the issue that is stopping people from investing with them.

#170 live within your means on 01.25.12 at 6:46 pm

#133 YetAnotherInvestor on 01.25.12 at 2:50 pm
Another great post Garth.

re: #91 Daisy Mae, I do agree Garth’s FA team rocks, but best not to reccomend them, I’ve gotten used to the fast response time and personalized service and great returns Garth’s team provides. If too many people flock to his FA services, I’m afraid I wont get the same great service I do now!

……………….

That’s silly logic. If they have more clients, they’ll add more staff as they already did.

#171 Canadian Watchdog on 01.25.12 at 6:57 pm

#155 Macrath

“A strategy commonly referred to as picking up nickels in front of a steamroller.”

Too bad a Canadian nickle is not made of nickel anymore, rather steel which has less intrinsic value, and proves how broke/desperate this government is. Why hold assets or trade in a falling currency? Be assured, Carney will devalue along side with the Fed—he has to—it’s been stated over and over again.

China’s economy will take time to flourish while the western world deals with its debt. What matters is China’s direction, not where its been, and with a new government coming online soon, they will be sure to set the stage this year as a high-potential candidate for the next World Reserve Currency.

What you’re reading on China is western propaganda, when in reality, our system is impoverishing more people everyday, while the exact opposite is true for China. I often read “Where are Asians getting the money to buy these homes in Canada?” Ahhh duh, every item you’ve been buying on your credit card for the past ten years is MADE IN CHINA. They got the surplus, we got the debt.

Be ready for BIG changes.

#172 sam.i.am on 01.25.12 at 7:27 pm

>> a high-potential candidate for the next World Reserve Currency.

Yeah right.

#173 Brad in Calgary on 01.25.12 at 7:34 pm

“You might be happier with a fee-based advisor, who works for a percentage of what you invest, who sells nothing and collects no commission.”

How about an advisor who works for a percentage of what a client earns as the result of the advice. Wouldn’t that be revolutionary.

Bad idea, and not new. It’s the principle behind most hedge fund compensation, which is why many managers take undue risks. — Garth

Not a bad idea in the slightest.
Clients would gladly pay a significant % of their overall gains, if it meant the advisor took ZERO fees and ZERO commissions in years with losses (as he/she should)

Pure lunacy when you think about it… Who takes a commission to advise someone on how to lose money in a year?!

Actually competent advisors prevent losses in adverse times. But you’ll never know, I guess. — Garth

#174 TurnerNation on 01.25.12 at 7:45 pm

Retirees priced out of their homes:

http://www.cbc.ca/news/canada/prince-edward-island/story/2012/01/25/pei-property-tax-increase-seniors-584.html?cmp=rss

CBC News
Posted: Jan 25, 2012 7:28 AM AT

Last Updated: Jan 25, 2012 8:52 AM AT
Read 37 comments37

Bob DesRoches doesn’t know where the money will come from to pay the higher taxes on his Charlottetown home. (Brendan Elliott/CBC)
A senior couple living in Charlottetown is wondering where they will get the money to pay a property tax increase this year.

Homeowners across the Island are facing increased costs for municipal services in May, both on the tax bill — up 2.9 per cent — and in the charge for garbage collection from Island Waste Management — up 2.5 per cent.

“It makes me feel really disgusted,” 64-year-old Donna DesRoches told CBC News Tuesday.

She and her 75-year-old husband Bob DesRoches live on seniors’ pensions. The couple lives in their own home on a combined income of about $21,000 a year.

Bob DesRoches doesn’t know where he’ll find the extra cash.

#175 TurnerNation on 01.25.12 at 7:45 pm

Oh dear :(

DJ Fed Signals Near-Zero Rates At Least Through Late 2014

By Luca Di Leo and Tom Barkley
Of DOW JONES NEWSWIRES

WASHINGTON (Dow Jones)–Federal Reserve officials Wednesday said they expect short-term interest rates to stay close to zero “at least through late 2014,” even longer than previously indicated, a move that could aid the U.S. economy’s slow path to recovery.
Ahead of the rollout of their new communication strategy, officials projected that rates could stay at a record low for another three years as unemployment comes down only slowly and inflation moderates. Since August, the Fed had been saying that its lending rate would remain close to zero “at least through mid-2013.”
The central bank will release more details about

#176 neo on 01.25.12 at 7:46 pm

Let’s try this again.

What is the asset class with the highest return so far this year…

In the last 22 days? Who cares? — Garth

#177 Cookie Monster BSc. Blue Peace Activist on 01.25.12 at 7:49 pm

#154 zeeman1 on 01.25.12 at 4:36 pm

#93 Cookie Monster Burnin Cus

The science is not settled and may be an outright fabrication, but that doesn’t matter to people like you, does it?
—–
Yes of course it matters to people like me (handsome)!
That’s what my posts were about, the science.

Let’s list the scientific facts:

A) The composition of the atmosphere affects the greenhouse effect of planets. See Venus.

B) CO2 is a greenhouse gas, as is H20 and CH4.

C) The CO2 levels of the earths atmosphere today are 380ppm versus 250ppm 100 years ago.

D) The rise in Cp2 levels is due to burning of fossil fuels and destruction of forests globally.

Conclusion:
Global warming is real and man made.

That’s science. Easy science. Please refute. Destroy my line of reasoning and save the world! Future generations and countless species are counting on you.

#178 Blacksheep on 01.25.12 at 7:50 pm

Sound advice S.M. thanks.

Blacksheep

#179 disciple on 01.25.12 at 7:51 pm

45north… no offense intended. But much of M-ish is rubb-ish.

The MSM has been fibbing for so long, it’s hard sometimes to see fluff pieces through the hyperbole. Let me give you an example: Chris Thompson was gunned down yesterday at the barber shop where he worked. He had been working there 17 years, although he was convicted of two robberies in the ’90s.

Part of the police message to the media was this: “he was defenseless and he didn’t have a chance to defend himself, and he had no chance of escape”.

Now, a statement like this may appear to be a natural response, but not to disciple. It is very strange that a police spokesperson would utter these words even before knowing anything about the suspect or the motive. Think about it. These words were only spoken and aired for one specific purpose.

#180 Devore on 01.25.12 at 7:54 pm

#136 Blacksheep

The fact Garth felt the need to “disclose” these details, when the info was already on his site makes It clear to me, our Host has a potential interest, in the financial decisions you make.

Oh noez! someone trying to sell you something on the internets? Why, there oughtta be a law! Everyone has potential interest in the financial decisions you make. Shocking!

Garth has “disclosed” things before. Don’t take things so literally, or seriously.

#181 Devore on 01.25.12 at 7:59 pm

#143 Vigilante

Do you require certainty in everything in your life? What if you wake up one day to find your wife gone, along with your valuables, kids, car, bank account, and your man cave trashed? I mean, how did you know she wasn’t a sociopath when you married her? Wouldn’t you rather go for the sure thing and stay single and alone?

There are certifications, professional associations, licenses, rules and regulation, and your own personal due diligence. For everything else, there is the legal system. That’s more than you’ll get from your wife.

#182 Behavioral Finance on 01.25.12 at 8:04 pm

So an adviser should be a shrink?

#183 Nostradamus Le Mad Vlad on 01.25.12 at 8:06 pm


Fried bacon, fried sausages, fried spam, fried mushrooms, fried tomatoes, fried eggs and fried bread, the bread absorbing all the fat before it’s fried. Topped with a couple of processed Cheez Whiz squares, guzzled down with Gordon’s (Gin), Jack (Daniels), Johnnie (Walker), Jim (Beam), Wild (Rose), Pina (Colada), Vodka, Kahlua and cream — what an absolutely splendid way to begin one’s day with! 100% nutrition filled, can’t go wrong!

Now on to shings of a more sedentary, silly, slothfulness or sheeple-type nature . . .
*
Little Johnny is taking a shower with his mother and says,

“Mom, what are those things on your chest?”

Unsure of how to reply, she tells Johnny to ask his dad at breakfast tomorrow, quite certain the matter would be forgotten.

Johnny didn’t forget. The following morning he asked his father the same question. His father, always quick with the answers, says,

“Why Johnny, those are balloons. When your mommy dies, we can blow them up and she’ll float to heaven.”

Little Johnny thinks that’s neat and asks no more questions.

A few weeks later, Johnny’s dad comes home from work a few hours early. Johnny runs out of the house crying hysterically,

“Daddy! Daddy! Mommy’s dying!!”

His father says, “Calm down son! Why do you think Mommy’s dying?”

“Uncle Harry is blowing up Mommy’s balloons and she’s screaming, “Oh God, I’m coming!”
*
30% Oil prices up, says IMF, Europe – Iran at war and Iran’s foreign trade rises, despite sanctions; Citigroup “As they should, the fraudulent bastards…”; Warning Signs; Printing Presses “The reason Ben sends that newly created money (which lowers the worth of the money you have in your pocket) is to keep buying back all those fraudulent mortgage-backed securities Wall Street suckered the Europeans into buying. Now they are demanding either refunds or jail for the crooks, and Bernanke is perfectly willing to crash the dollar through over-printing to keep his buddies out of prison.” wrh.com.
*
NAU – SPP and map of FEMA camps; 0:43 clip Nancy Pelosi ‘knows’ that Gingrich will never be US pres. (Jeb Bush will); False Flag Option one to divert people’s attention away from Iran, and those who would try to invade; 2:11 clip Proof Iowa was rigged; Regime Change Truth of Libya and Syria; 1:04 clip Kissinger in 2009 saying regime change in Iran will happen; Facebook How to permanently delete an account; ACTA (Europe) is worse than SOPA or PIPA, and 6:32 clip What is ACTA? NATO “Have a think about the amount of jet fuel used in these sorties when people preach about carbon taxes and global warming.” wrh.com and CC “So … when it is cold enough to need the heat, leave the heat off because the world is getting warmer. I hope this idiot is not allowed to operate motor vehicles.” wrh.com; Treating your own water.

#184 Waterloo Resident on 01.25.12 at 8:07 pm

WOW !
with the FED pledging to keep rates low until 2015, our Canadian rates will soon plunge to ZERO !

EVERYBODY: i’ve told you time and time again; that $800,000 house will soon be selling for $2 Million. And that $400,000 house will soon be in a bidding war selling for over $800,000. There’s just no denying it.

#185 Bill Gable on 01.25.12 at 8:08 pm

Bernanke can pledge the US Buck right into a carry trade Currency at ZIRP and protest all he likes.
The market will push rates, sorry, “Helicopter Ben”.
– and Geithner knows he is history.

This is high drama time. Politics trying to run an economic disaster.

If you think the Eurozone is fun.

Watch the RMB and the U$D.

#186 Macrath on 01.25.12 at 8:10 pm

#171 Canadian Watchdog

I have exposer through Asia pacific bonds and Australian equities and soon some Emerging market funds as Garth has mentioned as a good diversifier.
I also have a rare Made In China cast iron Wok.

Its just that Forex is risky and thats where the saying comes from.
http://en.wikipedia.org/wiki/1997_Asian_financial_crisis

#187 OnlyTheBankersLaugh on 01.25.12 at 8:18 pm

As strange as it seems, I think banks and Flaherty have pitched another slo-pitch beachball for young kids to hit out of the park in real estate debt mountain this spring in Vancouver, Toronto and other big cities. With these 5 & 10 year rates so low and the media frothing at the mouth about real estate, we might have yet another year for sentiment to turn despite all of the obvious signs of a bubble. The market will remain delusional much, much longer than the fundamentals say it should. Flaherty might even have something in his back pocket for early next year as well. Fifty year mortgages at low rates. Hey, why not? 40 years worked fairly well. Insanity!

#188 Macrath on 01.25.12 at 8:37 pm

Thats exposure.

By the way is their such a thing as over diversified ?

#189 CHANGES on 01.25.12 at 9:14 pm

You guys know what really scares the
horny Chinese speculators the BC NDP
maybe consider voting NDP

#190 down and out on 01.25.12 at 9:15 pm

Food for thought ,I tell seller too much ,she says she can wait for fool because no hurry to put money in bank at todays low rates have to make even more on sale . I say bye.

#191 The Ocean and CO2 on 01.25.12 at 9:29 pm

#177 Cookie Monster

C) The CO2 levels of the earths atmosphere today are 380ppm versus 250ppm 100 years ago.

The largest contributor of CO2 to the atmosphere is the ocean.

Just because B follows A…doesn’t mean A causes B.

Science is philosophy; philosophy is logic; and, your logic is over-simplified and flawed.

Dumb-dumb.

#192 jess on 01.25.12 at 9:30 pm

Rakoff outrage
…and watch out for those so called “independent” asset or collateral managers who stuffed and puffed up those cdo’s
=
Advice Columns
http://gwynnedyer.com/2012/agony-aunt-passes-judgement/

#193 neo on 01.25.12 at 9:31 pm

Neo:

Let’s try this again.

What is the asset class with the highest return so far this year…

In the last 22 days? Who cares? — Garth

And you think that given a ZIRP policy for the next 1,000 or so days that will impair a healthy return in what way?

You’ve miscalculated/misrepresented the debt problem globally Garth. Central Banks will never WILLINGLY raise rates, including Canada. Therefore, 2014 will turn to 2015 and 2016…

Tempus Fugit…

#194 Spiltbongwater on 01.25.12 at 9:34 pm

Garth, you do offer stock tips. I have made about 15% from HEQ in the 2 months since you recommended it in one of your blogs.

There was no recommendation, but I’m happy for you. — Garth

#195 CrowdedElevatorfartz on 01.25.12 at 9:48 pm

@ #152 BPOE
You LUSTY little cherub! I TOLD you I would fix the rip in your Batman suit. I had our tailor install a velcro “rip away” bottom because its sooooooo much easier dont you think?
Either way, stop pouting and meet me behind Richmond Elevators headquarters where we can plan our next tryst.

#196 Kalergie on 01.25.12 at 9:49 pm

Garth,
Is there a minimum $ value of assets someone should have before he goes to an avisor? I am asking because I believe it would be worth while for everyone to use the services of an advisor but many may be worried they need a million bucks before an advisor even looks at you. Would you say that you advise everybody?

Caring advisors may have a minimum amount required to invest in order to look after you, but they will always have time for guiding words. — Garth

#197 Canadian Watchdog on 01.25.12 at 9:50 pm

#193 neo

2012 YTD Performance (Stocks, Bonds, Currencies, Commodities)

1) Orange Juice +24.9%
2) Silver +18.4%
3) Cocoa +15.6%

#198 Daisy Mae on 01.25.12 at 10:07 pm

YetAnotherInvestor on 01.25.12 at 2:50 pm
Another great post Garth.

re: #91 Daisy Mae, “I do agree Garth’s FA team rocks, but best not to reccomend them, I’ve gotten used to the fast response time and personalized service and great returns Garth’s team provides. If too many people flock to his FA services, I’m afraid I wont get the same great service I do now!”

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

He always goes above and beyond. He’d never let us down! LOL

#199 The Thing in the Basement on 01.25.12 at 10:41 pm

177 Cookie – I’ll party agree with ocean 191 and say your logic is over-simplified, icomplete and therefore your conculsion is not proven. But I still think it wise to reduce emissions.

#200 Stupesing in Cabbagetown on 01.25.12 at 11:17 pm

#37 John G. Young on 01.24.12 at 11:57 pm

“Have you ever considered that your desire to exploit (i.e. contempt for others) and your substance abuse (i.e. contempt for self) might be related?”

Those qualities, including the self-medicating, also describe the classic sociopath.

#201 Canadian Watchdog on 01.25.12 at 11:18 pm

Since everyone is so dependent on The Globe & Mail for information, let’s revisit some articles they posted prior to the 2008 crises.

25 Jan 2008 – Cold outside, but no chill in sales

“More signs point to a robust spring market ahead: Bidding wars are common, buyers are outnumbering sellers, and this week the Bank of Canada lowered a key lending rate by one-quarter point.”

http://www.theglobeandmail.com/life/home-and-garden/real-estate/article662962.ece

May. 30, 2008 – On the hunt for an affordable detached home

“Even in these uncertain economic times, there is still an enormous demand for condo suites in Toronto and a huge volume of high-rise units constantly coming on the market in response. Condos appeal to a broad swath of the market — first-time buyers, new Canadians, empty-nesters and down-sizers, investor buyers and people who simply can’t afford a traditional house.”

—Let me repeat that last line “people who simply can’t afford a traditional house.”

http://www.theglobeandmail.com/life/home-and-garden/real-estate/article688730.ece

July 11, 2008 – Canada’s housing bond market holding up just fine

“This isn’t likely to happen, of course, because the U.S. government will be forced to step in to avoid a housing apocalypse.”

—How is the US housing doing?

http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/canadas-housing-bond-market-holding-up-just-fine/article696678/

Sep. 25, 2008 – Making sense of Toronto real estate

“For the first time in more than a decade, the average house price in Toronto has declined. The relentless upward trajectory in prices reversed course last month, making dwellings cheaper than they were in August, 2007.”

—Acceptance.

http://www.theglobeandmail.com/life/home-and-garden/real-estate/article710551.ece

And so on until the the spring of 2009 came and everything started to go wrong. It is important to understand that the only factor that stopped home prices from falling further was a $1 trillion dollar global stimulus fund allocated by G20 leaders in response to the 2008 financial crises. This was the only reason why economies (or confidence) recovered from what could have been an outright economic collapse. Thus, today, there is no willingness amongst world leaders to stimulate further—economies of the world now face a self-battle to deal with a recessionary downturn alone, the result of which will be volatility/capital flight en masse.

Go ahead, ignore or deny it, call me a fear-monger, then check back later this year.

#202 Reece's on 01.25.12 at 11:22 pm

Garth on two of our computers, but not on my IPhone, a website pops up asking me to enter a security code and other information before allowing access to your blog. It looks suspiciously like a phishing site. Should I be concerned??

Yes. Leave your house immediately. It’s not me. — Garth

#203 Ronaldo on 01.25.12 at 11:31 pm

#55 – CJ

“This blog is frustrating tonight. Good post, Garth but the comments are all over the map. Point is, we need to invest for our financial security. Many of us don’t know where to put our money and often take the advice of these financial sales people.”

CJ, I totally understand where you are coming from. I too was in the same position as you about 26 years ago when I had finally reached a point in my life when I had sufficient income to consider investing in other than my mortgage.

Making a better than average salary at the time and looking at ways to cut taxes I decided that RRSPs may be the way to go and as such I contacted a represenative with a financial institution in Vancouver and opened both a registered and unregistered account for my spouse and I.

The reason we chose this particular firm was on the advice of one of the senior managers with the firm I worked for. The company had been around since 1964 and managed funds not only for individuals but for large pension funds in Canada.

What I liked the most is that you were assigned a reprentative to oversee and assist with your accounts. They had a very nice mix of different products that you could choose to build a portfolio depending on what your risk tolerance was and investment goals.

Their MER’s were one of the lowest in the industry and still are today. Over the years they have won many awards in particular for their bond funds management and they are one of the best in this area in the industry.

For example, had you put an equal amount of dollars in 4 of their bond funds over the past 10 years, you would have averaged around 6.3% per year without a single losing year. And, had you included their Inflation Linked Bond fund in the past two years you would have averaged 6.6% per year. This latest addition to their fund family returned 10.7% in 2010 and 17.1% in 2011.

In 2011 the company, at the Lipper Awards, received an award for Best Overal Fund Group, Best Bond Fund Family and awards for two other bond funds and an Equity fund. The average MER for the 6 bond funds is around .6%. The other funds average around 1.2.

Looking back over the years and knowing what I know today, I now understand what an older gentleman once said to me when I was telling him about some high risk tax shelters that I was going to invest in to cut my taxes. He said, “Ronaldo, one thing I have learned over the years is, slow and steady wins the race”. Boy, was he right on. My bond example proves that theory quite well since the return on just the 4 funds would have returned 83% over the past 10 years and avoided the 50 to 85% point swings in the markets over that time period. I am not saying that this is the only type of investment you should invest in and that you should not follow Garth’s advice, but that this is what has worked for me.

#204 TurnerNation on 01.25.12 at 11:43 pm

109patiently waiting on 01.25.12 at 12:01 pm

Albertans are famously stupid in their buying of expensive items at market peak.

Condos, depreciators – Ford F350s, quads, skidoos – land, and oil stocks & companies. All for impressing their friends and business associates. Kind of a modern day fancy 10 gallon hat. Calgary new money is gauche.

Why, they even have a bumper sticker: god please give us another oil boom and this time I won’t piss it away.

#205 Ozy - Poor vs Rich vs Middle on 01.25.12 at 11:51 pm

Old rich guy flushed with cash, once told a collegue and people present he is not “stupid” to let other people manage his money (the entreprenour type).
Poor guy in debt could not follow my one-step plan to save money on a big purchase (of course, he’s an expert finding irrational reasons to justify stupidity).

One’s mind is independent, other’s is prone to disturbances and influence (marketing).

So, assess yourself dudes, and see where you stand, better hand it to someone who know the stuff – you will ever never ever have the competency. The problem is, do you have the competency of event finding an advisor? This article should help, save it and read it more.

But if you are smart, have logical, analytical, social, business intelligence skills – and a bit of humbleness (no yielding to greadiness)- you would have make 25% easy in 2011 (without investing much time, proven, and only taking limited risk).

Some people are good at dancing, lying, telling stories, deceiving, parasiting others, just go and do what makes you happy, don’t get attached to the $$$ if you don’t have it in your blood.

#206 sam.i.am on 01.26.12 at 7:57 am

#202 re Phishing

Is it cloudflare.com? If so it’s legit and probably flagging your IP for excessive hits. Could happen if you go through a proxy or reload 10000x to be ‘first’.

#207 Red on 01.26.12 at 10:28 am

Hi everyone, long time reader but first time poster – It’s my first time (tee hee) so please excuse me for being a little off topic but I received an email yesterday about a corporate memo circulated at BMO. The source claims it was the last day for the 2.99% BMO special rate and the 5 year fixed is back at 3.49% as of today… interesting… that didn’t last long.

#208 Incubus on 01.26.12 at 10:32 am

“Maybe I was wrong. This could be worse than anticipated. Even the bankers are covering their butts.”

Do you still believe that a national decline of only 15%?

#209 VicHomeOwner on 01.26.12 at 10:51 am

great post, Garth.

Are you planning on doing a post addressing those who have company RRSP matching plans (with too small a portfolio to hire a fee based advisor) and the best way to invest that?

#210 Regan on 01.26.12 at 11:10 am

@ #146 eaglebay

An “hourly cost” may cost you much more than 1%.
How many hours do you think that a fee based FA puts in on your account in one year?
Stay poor, it’s your choice. I bet you have a big mortgage. Renting from the bank are we.

Actually, I’m a couple of months away from paying of my mortgage and now, having settled all my debts, needing to focus on other investments. My wife has a company-sponsored pension plan stocked with mutual funds and 3% MERs that do poorly in good years and get drained in bad years, and no, I have no idea how much time their advisors spends arranging this debacle. I expect hourly charges to be high up front and minimal in following years -there are only so many math formulas that make sense once you’ve arranged all the parameters. I found a couple of hourly fee advisors on couchpotato.ca – check it out for others who are interested. Garth doesn’t say if he charges a flat fee or percentage.

It is the implementation, monitoring and rebalancing of a portfolio which an hourly guy will not do for you that is quite pivotal. Akin to paying someone to explain hernia surgery, then leaving with a scalpel. — Garth

#211 YetAnotherInvestor on 01.26.12 at 2:41 pm

re: #170 live within your means

I guess you’re still learning how to read and decipher messages left on this blog. Good luck with your self-improvement.

#212 TurnerNation on 01.26.12 at 8:47 pm

#197Canadian Watchdog on 01.25.12 at 9:50 pm

I saw some recent analysis showing Cocoa prices tend to rise during recessions when people comfort/stimulate themselves with chocolate.