Emotion

Emotion may make you sweat, heave, tingle and squirt, but when it comes to investing, stay dressed. Your two enemies are the evil twins, fear and greed. Yesterday I related how greed made a lot of people throw their money away on Facebook stock. This unfortunate blog’s also shown too many times how horny has led people into bedding real estate they should have ignored.

Last year greed and fear made a rare joint appearance. As stock markets corrected and the media wept, gold and silver popped higher on pure emotion. Sell, I said. Take your capital gain and run. Today gold is down 20% and silver’s crashed 40%. Last October, when I walked through downtown Toronto’s Scotia Plaza, past the area to buy precious metals, it was packed. Silver was fifty bucks an ounce. On Monday I passed through there again. Not a single buyer. Silver is twenty-eight.

The same human weirdness plays out with stocks, ETFs, index investments, even bonds, REITs and preferred shares. When stuff goes down, people think it will go down forever and run screaming. They’d prefer to buy when prices are frothing higher – when risk is at its highest level, instead of when it’s low. This is also why the greatest wave of selling during the GFC came on March 9th, 2009. On that day equity markets hit bottom. It was the moment most retail investors chose to flee, generating the biggest loss. Of course, this was the day to buy.

By the way, that night this comment (typical of many then) appeared on this blog from the renowned and famous authors of the site, The Automatic Earth:

Neither of us would touch equities with a bargepole right now. Neither of us sees a light at the end of the tunnel either, although I do think a major sucker rally is coming that could last several months. I fully expect people to think the worst is over by some time this summer, just in time for the light at the end of the tunnel to be revealed as an on-coming train. …I would also say that depression is a given during that time, and a depression worse than the last one at that. Right now we’re still much closer to a top than to a lasting bottom.

We now know it was the trough. Those who sold maximized their loss. No wonder some people are still so pissy. Those who bought made 50% on their money in less than a year. Kinda makes you wonder about now, when the doomers are at it again claiming a nation of Greek tax evaders will bring down the world. Retail investors – the little people (as opposed to the pros) – have been bailing for months now. Trading volumes are down and prices have corrected, after a 30% advance from last autumn. Fear’s in vogue.

Of course, two-thirds of companies just beat earnings estimates and folks with bonds are making out like bandits. Meanwhile millions of people stuff billions into the orange guy’s shorts for no return, or chose “risk-free” investing by flipping Calgary condos and buying high-leverage rental townhouses in Mississauga. The lack of judgment is arresting. The financial illiteracy profound. I feel sad for them in advance.

This brings me to two points, one from yesterday’s blog when I posted the letter of a guy who walked from his California home after its value collapsed. Many people berated him for gaming the system plus outright thievery for abandoning his financial obligation and stiffing the bank. It was an interesting all-beaver Canadian moment.

He responds:

I don’t blame people for being angry.  We were rather angry ourselves for quite a long time.  Angry at the pushy real estate agent who sold us the house (insert “buy now or forever be priced out” story here), angry at the banks, angry at the politicians, angry at all those pesky Americans not “living up to their promises” (-I’m paraphrasing Kevin here-) and ruining the housing market and overall economy.  We were angry at our neighbours, the ones who disappeared in the middle of the night, bringing down the property values of our very neighbourhood.  Angry at ourselves.   We were very very angry.

And we weren’t the only ones, obviously.  Our neighbours were angry.  Our friends were angry.  Our colleagues were angry.  It was one big old angry mob.

I’m betting that if you had polled Americans a decade ago, most would have agreed that walking away from your house would be unthinkable (perhaps even “immoral”). I’m betting that if you did same poll today, a good percentage of Americans would view it as a viable option; a purely financial decision.  (I would estimate that about 30% of the homeowners we knew personally in California ended up losing their homes, by one means or another.)

The Canadian mob is out there.  It will get angry.  It may not react exactly like the US mob, since the laws are a little different, but it will react.  It will be ugly.

Actually I agree with this.

Greed and lust make us ignore risk. Fear brings danger into focus. People react in extremes. Then they go bitter.

There’s still time to avoid the outcome so many will be walking into. You know my rules. Love liquidity. Keep real estate exposure low. Strive for balance and diversification. Buy things that pay to own them. Never take advice from your mom. Get help.

And when you get emotional, just come here.

173 comments ↓

#1 jose on 05.28.12 at 9:03 pm

numero uno?

#2 East Van on 05.28.12 at 9:04 pm

They could have used a voice of reason on this show. I guess Garth wasn’t available.

http://www.cbc.ca/thecurrent/popupaudio.html?clipIds=2240029783

#3 Derek R on 05.28.12 at 9:06 pm

Yup, a lot of anger yesterday. With luck a night’s sleep has made all the difference.

#4 jose on 05.28.12 at 9:07 pm

thanks for another great post: that’s exactly how markets work, a tug-of-war between greed and fear. God help us tax-payers when fear sets in and CMHC goes bankrupt

#5 Toronto news on 05.28.12 at 9:09 pm

Greater Toronto new home sales link http://www.bildgta.ca/media_releases_2012_detail.asp?id=880

#6 Montrealer on 05.28.12 at 9:09 pm

ahah good way to propose!

#7 Jamaican_Gal on 05.28.12 at 9:10 pm

I am first. No bells or whistles.

#8 Smoking Man on 05.28.12 at 9:10 pm

House Hold Debt

We hear a constant echo from Ottawa, Muppet’s get your debt in order., cause you know rates are going up. Sure,Sure when and not if Greece folds just watch rates go back down.

I make a shit load of loot, I work for free consulting in a field I love, all my consulting income 100% goes to pay an outrageous disproportionate amount of tax.

But even I have noticed just how nuts things have become, Insurance, Housing, Gas, Food, etc.For the average Joe.

Canadians are in debt up to there eyeballs cause the architects of our economy have made it easy for corps to rake in huge loot, while getting tax payer funded grants, while at the same time crushing any threat whereby the Muppet’s might get a raise to even the keep the head above water. I declined my offer to go to Chantilly, Virginia. I lobbied like crazy, finally got the invite, now that I got it fk em.

Most of you know I got a knack for picking markets and trends, almost down to the minute of major trend reversals, as demonstrated here over and over. The elite that have been picking my brain since 2000 rewarding me unbelievably well have lost it .

I have maintained a very low profile through out and only have a select dozen people I work with. And I am in the process of slowly backing away from those relationships.

They don’t get it, and they don’t like what I say about were things are going and what needs to be done to fix it before it’s to late. They think they know the Herd and they do to an extent, but a starving dog, no matter how well trained has no loyalty.

I’m right about 99.9% of the time now they think I’m wrong.

When I told’em two years ago I was going to fake poverty for my kids, they thought I was nuts. I faked poverty so my kids would worry about life a bit and get of the sofa and experience the trill of climbing a mountain, falling down and getting up, and it worked on 2 out of three. Number 3, well I got a hit man at my disposal.

I guess I have gone Colonel Kurtz

Was in the Muskoka this week end, boring,best behaviour, plastic on, on some big boats. I just wanted to get back to my Gazebo and get shit faced by myself listing to Floyd. and scanning the skies for UFO’s..

#9 T.O. Bubble Boy on 05.28.12 at 9:12 pm

How about REITs these days? Many are at or near all-time highs… time to hold steady?

Oh – and the Financial Post was the first MSM site to come to their senses and post a rebuttal of sorts to the Muclair “11 mortgages” smear:

http://business.financialpost.com/2012/05/28/maybe-mulcair-had-it-right/

#10 workingpoor on 05.28.12 at 9:14 pm

hard times head for labour

http://www.cbc.ca/news/politics/story/2012/05/28/pol-canadian-pacific-rail-legislation.html

#11 TurnerNation on 05.28.12 at 9:17 pm

Best way to search MLS: find your area of interest, record # of red dots, and when you bookmark the link include # of red dots in bookmark’s title area, as a future comparison point.

#12 Josef on 05.28.12 at 9:18 pm

DELETED

#13 DJB on 05.28.12 at 9:19 pm

Garth, here are a couple of covered call ETF’s for those who want to limit the market downside.

BMO Covered call utilities ETF current yield 8.52%! (ZWU)

8.53% monthly cash flow is better than private mortgage lending.

The BMO covered call Canadian banks is yielding 7.51% (ZWB) but a little more volatile than the utilities.

#14 shanks on 05.28.12 at 9:21 pm

what no comments? do i dare…. maybe get banned forever?

FIRST!!

#15 BPOE$$$$ on 05.28.12 at 9:25 pm

Having been a social pariah renter enduring the snickers and dropped jaws of incredulity experienced at dinner parties lo these past 4 years in the BPOE. It was especially satisfying to share my stories of shopping for a supercar this weekend andwhether to but the Aventador or the Italia… decisions, decisions…. with my circle of “friends” this weekend who are watching, waiting and yes sweating their “equity” nosedive, listings skyrocket and [email protected] asking for the HELOC back. Payback is a bitch.
Priceless

#16 Westsider on 05.28.12 at 9:27 pm

Thought this was an interesting quote.

“The world will soon wake up to the reality that everyone is broke and can collect nothing from the bankrupt, who are owed unlimited amounts by the insolvent, who are attempting to make late payments on a bank holiday in the wrong country, with an unacceptable currency, against defaulted collateral, of which nobody is sure who holds the title” anonymous

I’d be anonymous, too. — Garth

#17 Rob now in Nova Scotia on 05.28.12 at 9:27 pm

Garth continues to be 100% spot on about RE but WAY off on precious metals. Yes, they have been hammered lower but what do you expect when paper silver is shorted? Google silver take down for fun. The retail investor will be herded into silver and gold the same way they were herded in Facebook so now is great time to buy even more silver not dis the metal. Remember, central banks are still creating vast amounts of money out of thin air and that is what causes inflation. The market is deleveraging now, which is causing falling prices but don’t worry, inflation is in pipeline. No emotion here, just foresight…

I’m sorry for your loss. — Garth

#18 TaxHaven on 05.28.12 at 9:28 pm

So when something – like gold, or unloved Kinross or forgotten junior miners (or American housing) – has sunk to ridiculous and unjustifiable depths, we should be buying?

It HAS, and I am. You should too. Timing is never easy, but there IS a time…

Either speculate nimbly in stocks, which most of us are not good at, or buy what is fundamentally cheap and hold it until the herd realizes that.

#19 ak_forty_seven on 05.28.12 at 9:28 pm

1st

Not even close. — Garth

#20 Fisc on 05.28.12 at 9:30 pm

http://business.financialpost.com/2012/05/28/canada-recovery-still-fragile-vulnerable-to-global-internal-shocks-flaherty/

#21 Realtors and mortgage broker's in a panic on 05.28.12 at 9:31 pm

You can see the fear from these low life uneducated parasites who post everyday and night trying to think of any lies to convince anyone to buy before the housing crash becomes to obvious. The crash is 100% going to happen and prices are set to fall 40-50%. Keep talking about HAM or the other HAM or some other rich people that want to buy into a bubble. The crash is happening and will continue to get worse. The angry red dots are starting to grow

#22 JohnG on 05.28.12 at 9:31 pm

If we took fear&greed (emotions) out of our decision making the entire world would be a different place. It’s not just real estate, it’s how many people navigate through life. Dealing in facts, logic, and rational thinking are our key tools yet we so often toss them aside. We muddy our own perception of the world…

A big-up to Garth for cutting out the “firsts”. I watch my children play that game enough, and they have no idea why they do it either!

#23 Michael on 05.28.12 at 9:31 pm

I guess living on the Atlantic coast has a benefiting didn’t, appreciate until I started reading this blog…..no boom but no bust either (for most)…… I lookforward for each post..thanks

#24 workingpoor on 05.28.12 at 9:33 pm

The bottom line for me is that my wage hasn’t moved in 10 years, they want to role back my wage and pension ( wallmart comes to mind ) and yet Real estate has gone up 130% , gas has doubled , hydro has doubled, food keeps going up. I can see red flags and warning bells all over this situation, some thing has to give.

http://www.burnabynow.com/homes/House+cards+will+implode/6677183/story.html

#25 JohnG on 05.28.12 at 9:36 pm

Smoking MAN – I have a suggestion for you. It is the term “Meat Puppets”.

J

#26 JSS on 05.28.12 at 9:36 pm

Garth –
Tons of negative comments about RBC’s common stock dropping to around $50. Some say it will drop further to $38.

Is this B.S?

Remember what happened after it dropped the last time? — Garth

#27 Keswickian on 05.28.12 at 9:39 pm

http://www.cbc.ca/video/#/Radio/The_Current/Full_Episodes/2185449222/ID=2240029783

 

CBC- radio this morning Sherry Cooper, Jim Murphy  the CEO of the association for mortgage brokers  and an Ottawa realtor weigh in on the housing market, the new OFSI rules, the condo market, HELOC’s and interest rates.

 

It was interesting to hear how much they were all against the OFSI regulation for the need of a borrower to requalify at the end of their term. The fear was this regulation would cause a “death spiral” of house prices. They all said it would be unfair for home owners who are making payments to be forced from their house.

 

The propaganda has started with them threatening the possibility of Canadians losing their homes due to this regulation. I don’t see how the Harper government can let one person lose their home b/c they have to bring money to the table to requalify. It would be front page news with all the economists’ realtors and mortgage brokers saying how bad it is for every home owner.

#28 J.I.M. on 05.28.12 at 9:43 pm

The Canadian mob is out there. It will get angry. It may not react exactly like the US mob, since the laws are a little different, but it will react. It will be ugly.

Am I the only one who found this statement very, very frightening? Especially since Garth agreed with it!

#29 Poorboy on 05.28.12 at 9:45 pm

Here in the BPOE, a friend of mine was just advised by credit counsellors to declare bankruptcy. She has a mortgage that is about 3.5x gross income and a $15,000 HELOC which she maxed out. She was hit recently by a $13,000 special assessment on the apartment and strata fees going up significantly. She’s a single mother making approximately the Canadian average salary but does have child support coming in. Credit score probably isn’t great with missed payments, etc. She was already in a spiral of death before the special assessment and‌ increased strata fees, but it’s added a certain suddenness to the situation.

Apartment was listed in February. No bites and even if she received asking (which is over market valule) she would still be left with significant debt when all closing costs are accounted for. Irrelevant though since there is no hope that she will get anything remotely close to market value. With a major housing expense reduction she’d be able to eventually repay her debts living in a basement out in the boonies with a brutal daily commute.

But she’s going to walk – it makes sense for her. Her options are either sacrifice quality of life for the next 10-25 years to spare the taxpayer (mortgage) and the bank (HELOC) or walk away and start over, be able to go out once in a while again, etc.

+1 to the bankruptcy/default statistic and interest rates haven’t even gone up yet. Taxpayers can expect more people who don’t need to declare bankruptcy choosing it as the lesser of two evils.

#30 Market Bull on 05.28.12 at 9:55 pm

Canadians getting serious about debt repayment?

http://www.newswire.ca/en/story/981395/cibc-debt-poll-72-per-cent-of-canadians-are-in-debt-but-many-are-making-extra-payments-to-bring-down-balances

#31 Heinz Skitzvelvett on 05.28.12 at 9:59 pm

“Tons of negative comments about RBC’s common stock dropping to around $50. Some say it will drop further to $38. ”

– just looked at the RY chart…for those who believe in technicals, that appears to be a well-defined triple top.

#32 Smoking Man on 05.28.12 at 10:00 pm

You guys know as soon as we get some good volume of red dots appear on mls

The MSM will stop talking bubble.

#33 McLovin on 05.28.12 at 10:06 pm

Low rates aren’t going away
http://business.financialpost.com/2012/05/28/is-another-round-of-mortgage-wars-on-the-way/

Irrelevant. — Garth

#34 bubble head on 05.28.12 at 10:33 pm

as corporations struggle to increase profits y/y they will reduce their work force. You know will are closer to the pop when the banks and telecoms start to layoff – RIM soon RBC , etc.,

so it begins

#35 Harlee on 05.28.12 at 10:35 pm

Jamaican Girl: Sorry…you’re a Lucky 7. Bring out the bells and whistles !
shanks : Nope,not…uh…”Numer One”.Just a pimply “14”.Better luck next time.

#36 I'm stupid on 05.28.12 at 10:35 pm

The art of backwards thinking.

I was talking to a friend last night about TO Realestate. He was telling me how he wants to buy a larger home in the next two years to accommodate a growing family. I said be careful as prices are due to correct. His response was typical, “if they correct i will not sell”. I explained to him he should buy if homes correct. He had a puzzled look on his face so I explained that if 50% correction occurred (not that I think it will go that far but just for simplicity I used 50%) his 600k home would be worth 300k if he wanted a 1mil home it would cost 500k. He would fare better because land transfer tax would be less mortgage would be less and realtor fees would be less.

My question is how can people not do such simple calculations? I’m not a genius, people think I am for some strange reason. All I do is ask simple obvious questions before I form an opinion. I think society lacks common sense and that’s the reason for group think and dumb decisions. I will tell you me prediction for facebook in the next couple of months. Earnings will exceed estimates (as estimates were reduced to pump the ipo) the stock will pop at some point. It won’t pop because of any fundamentals but because retail investors will jump on the band wagon. I will short not because I’m smart but because others are dumb.

#37 Bottoms_Up on 05.28.12 at 10:42 pm

#206 Devore
————————————————-
Thanks for that. From your link it sounds like only rent (and not what the average house might cost, or a 25 yr mortgage on that average) is included in the calculation of CPI. Sure that’s great if you’re a renter in Canada (30% of the population) and always want to be a renter, but not so great if you’re a worker trying to get a decent raise every year and at least stay ‘even’ with respect to your ability to afford to buy the average house.

I found the following link from your link, you can see that yes rents have only gone up a few percent since 2005, and this is captured in the CPI, but what has the price of the average house done since 2005???

http://www.statcan.gc.ca/pub/62-001-x/2011012/t019-eng.htm

#38 Harry Palms on 05.28.12 at 10:49 pm

Heinz Skitzvelvett on 05.28.12 at 9:59 pm
“………. just looked at the RY chart…for those who believe in technicals, that appears to be a well-defined triple top.”

Head and shoulders for certain.

Now, if anyone believes in the ability of a rear-view mirror to predict the future, the recent downward slide appears to be flattening out…….

Is this a good point of entry? or is this one better? :)

#39 Helicopter Ben on 05.28.12 at 10:51 pm

The Federal Reserve is the only thing holding up the stock market, they are smashing all commodities so they can roll in their QE3 too make things look rosey for the coming elections, when commodities, currency and precious metals seem to go up and down in unison with central planned governments and banks you know you arent in a free market, never have been in our life time. time to drop some more money ben.

#40 Harlee on 05.28.12 at 10:52 pm

I really don’t know what’s gotten into Garth these days. Really, it’s all just sex and money with him… Money and sex…There are other important things in life to consider you know !
For instance,like ….uh…..well,there’s… ….I mean, like…um…hmmm…I’ll have to get back on this to you at a later post !

#41 Harry Palms on 05.28.12 at 10:53 pm

“this one” being

http://www.youtube.com/watch?v=qLwzh2q8e4g

G-man apparently won’t let us hyperlink text in a post.

Cheers, all, Rock Hard, and Ride Free!

#42 Bob on 05.28.12 at 10:54 pm

what happened to my comment? i posted way before 9:03

#43 Jon B on 05.28.12 at 10:57 pm

Of course there’s plenty of anger when the roll of a dice goes wrong. The guy in CA lost his RE gamble – he’s mad. The folks who lapped up FB shares last week are probably still fuming about their gamble. The unfair and biased infrastructure that is the “investment” industry ensures many more angry clients.
The commonality among these gambles is that they all boast big returns. Suckers wanted. Big corporations will always win in the end.
What happened to the concept of doing work to earn a living and then spending the fruits of your labour within your means to earn it? Must be the greed factor that messes things up.

#44 Balmuto on 05.28.12 at 10:58 pm

RE: this OFSI regulation for the need of a borrower to requalify at the end of their term. This is really the opposite scenario of the guy who walked away from his California home, isn’t it? The borrower wants to keep paying the mortgage, even though it’s underwater, but the bank can’t roll over the mortgage because some OSFI regulation says it’s not sufficiently collateralized. Correct me if I’m wrong, but aren’t the banks already under no obligation to roll over mortgages if they choose not to? If they don’t want to refinance your loan, and you can’t refinance elsewhere, the balance of your mortgage becomes due, and if you can’t pay, you’re in default and they foreclose. But this hardly ever happens – why? The banks are in the lending business, not the real estate business. They’re not going to turf out a good customer that’s been making all their payments. Even if someone is in a precarious employment situation, what purpose does it serve to force them to walk away from the loan, if they’re still making payments? They owe you the money one way or the other, why force them into default? Not a big fan of this regulation.

#45 Pr on 05.28.12 at 10:59 pm

..Fear’s in vogue.. Com-on!(usa) Mortgage fraud, robot signing and now…the banks seize full paid house! The money of 3 generations, in real estate, completely wiped out. You are right, fears in vogue. Rightfully so!

#46 Toronto news on 05.28.12 at 10:59 pm

Many realtors use the words ” the market is
balanced” . Record debt levels in Canadian
Real Estate holdings . I would say Canadian
Real estate prices are over weight and have
busted the scale. lol balanced…….bahahahaha….

#47 1RichDaddy on 05.28.12 at 11:07 pm

So what is a father of 4 bright and ambitious young Canadians to do in order to aid them in both their financial wherewithal and strategic forward thinking? And, yes, I did note your, “…don’t listen to your parents…get help!”

Help…!

#48 VICTORIA TEA PARTY on 05.28.12 at 11:09 pm

ON THE RAMPARTS OF OBLIVION: STANDING ON GUARD FOR ME!

Your trusted agent of record in the city of hubris gone nuts — Victoria — has discovered another flock of canaries!

So many canaries, only one mineshaft, of the economic bent!

It has come heaving into my view that some of the more financially-etherial income brackets in these parts may be having a bit of money trouble, a sticky wicket of sorts!

Your trusted representative has been told by someone in the know that some of the higher class local pre-school establishments are trolling for students!

Normally parents are subjected to every form of verbal abuse as they try to enroll their little ones, such as: “You can sign up your two-year-old for a place at the end of the next millennium, or you can splitsville!”

This particular person, seeking to find a spot for a little child, has been contacted out of the blue by one outfit, and invited in directly by two others! Oh my, what has this gated community come to anyway?

Economic degradation occurs at only two “speeds”: slow, like right now in Canada, or fast, as in literally overnight in the former Soviet Union in late 1991.

Canary stew anyone? And how about some thin gruel with which to wash it all down! We out of whine.

#49 CrabsInMyPants on 05.28.12 at 11:12 pm

Smoking Mad,

Why did the MSM in the USA and Spain, and the UK and Ireland and Dubai not think of the same thing dorkius?

Come on man, get liquored up tonight and share some logic with us sheeple.

#50 MissPriss on 05.28.12 at 11:14 pm

http://www.thestar.com/iphone/news/world/article/1191897–why-home-auctions-are-on-a-roll-in-las-vegas

Halfway through the article it talks about the buyer mentality prior to the bubble popping…eerily identical to TO and other major cities in Canada. This article refers to the 80/20 mortgage and how frenzied ppl were to get into the market. How they were buying multiple properties and had realtors competing for buyer affection, multiple bids selling for way over asking…etc. we have heard it all before and well – it’s not going to be any different here. It’s just a matter of time.

#51 disciple on 05.28.12 at 11:16 pm

I’m getting spam emails for condos daily:
—————————————
Hi Real Estate Investor,

My client purchased a Hotel unit in Trump Toronto for over $800,000 in 2006. Unfortunately, this client doesn’t have the ability to close on the unit, so they are now interested in assigning (IE selling) the unit for a loss. Asking $779,900 (No HST sales tax). The developer is currently selling similar units for over $1,000,000 + HST.

This is an income property ready for occupany that’s meant for investors but can also be used as a temporary pied a terre (IE second home) by the investor. The bank will require 35% down because it is a hotel/income producing unit.

This is an assignment and the seller will pay all assignment fees. Inquiries on this opportunity can be made here.

Trump Toronto Hotel Amenities:

– 24-hour personal concierge, valet and room service
– Personal Trump Attaché™ Service
– Daily housekeeping and laundry services
– In-room dining and catering services
– Five-star gourmet restaurant on the 30th floor
– Suave ground-floor lobby bar
– Direct Connection to Toronto’s PATH: miles of underground pathways that connect you to over 1,000 shops and services

#52 Investx on 05.28.12 at 11:19 pm

McLovin:
Low rates aren’t going away

http://business.financialpost.com/2012/05/28/is-another-round-of-mortgage-wars-on-the-way/

———————————————

Well, well, well…

#53 Mr Buyer on 05.28.12 at 11:22 pm

This post today speaks great truths but I have the same problem with it as I had with similar messages in the past. There is a potential for some to think that with this new knowledge people en masse will not sell low but rather wait until the trough passes and sell at normalized prices (that is inflated bubble prices which people may think of as normal now). I am certain this is not the message being communicated but it could be the message being heard by some itching to take the plunge in real estate. These prices are not normal. They are the result of a bubble created by design but there is no blue print or design for the end of a bubble. Bubbles simply CRASH. When you are filled with panic wanting to sell your home at lowering prices it will be because prices will not be returning to these horrendous levels again (at least not during the functional life time of your house) and you can bank on that. It will not be shrewd to buy in at the or near the top and wait out a trough. This is not a normal real estate cycle (macro or micro), this is a national disaster. BUYER BEWARE. NOW IS NOT THE TIME TO BUY A HOUSE. THE BUBBLE HAS TOPPED. SALES ARE FALLING ACROSS CANADA.

#54 DD on 05.28.12 at 11:34 pm

Ya and predicted a us turn around. Not so good on that one.

#55 Rainbow Island on 05.28.12 at 11:37 pm

The ultimate rule: Buy LOW Sell HIGH; Unfortunately, Human are so emotional and they ALWAYS do the opposite, and they are afraid Buy Low Sell High, and that’s why lots of people lost money like the states…

#56 Smoking mans smarter coousin on 05.28.12 at 11:41 pm

This is..the…Indux..I … ewes… 4..my investment port folio-owe

Sex industry battered by economic storm

http://www.athensnews.gr/portal/9/55822

Pepulz east of Porkage and Main….need a translaturd

#57 Helicopter Ben on 05.28.12 at 11:44 pm

#43 Jon B Have you ever heard of Stefan Molynuex? he is a canadian who has the largest philosophy website/podcast in the world. Any ways he explains how we have to invest in todays world cause if we dont we will lose it all due to inflation and fraudulent fiat currency (not money). How he puts it is either they take it all from you via inflation or you can put it on red or black on the roulette wheel in their casino. its a suckers game. with deflation your money under your mattress actually gains value something most people cant fathom and if that was the case you would never invest. the U.S. federal reserve policy affects your life more then you know, they cause all bubbles, cause other nations to devaluate their currencies to help out their exports, cause famine around the world as people who live off a few dollars a day to starve due to rising food prices. as Jim Rickards says the U.S. exports their inflation while China exports their cheap labor deflation hence energy , food , gas and everything you need to live goes up as chinese exports electronics etc go down. massive bubbles are still yet to come as trillions more will be created by a click of a mouse to offset deflation, if you can guess where that money will go you can quit your day job.

#58 Adrian on 05.28.12 at 11:44 pm

Silver and gold.. perfect time to buy…

#59 Harlee on 05.28.12 at 11:51 pm

I’m still pondering the question I posted at #40: What’s more important then S & M. Or M & S if you prefer. Smoking Man would say : Muppets. And U.F.O. s. I remember watching the Muppet show but I’ve never seen an U.F.O. . Disciple – do you have the answer ? Has any philosopher from way back- Hobbes,Descarte,Camus or any of them dead smart guys been able to answer such a question ? Nostra ! – You’re my one last hope for an answer ! Come up with a link. Please ! What’s more important than Sex & Money…?

#60 Mark on 05.28.12 at 11:53 pm

“Even if someone is in a precarious employment situation, what purpose does it serve to force them to walk away from the loan, if they’re still making payments?”

With the money they get from the CMHC (or the default), they can use it to invest elsewhere. Housing isn’t the only investment choice available to banks.

#61 timbo on 05.28.12 at 11:56 pm

http://www.arabianmoney.net/gcc-economics/2012/05/29/does-the-emaar-off-plan-sell-out-in-one-day-signal-a-new-dubai-real-estate-boom/

“However, ArabianMoney did hear some reports of buyers last weekend immediately selling their units for a 10 per cent premium. That meant a 100 per cent profit on the 10 per cent deposit in a matter of hours, and that sounds like a return of speculation. It is of course what you would expect to see in a real estate boom.”

good times are back, r/e prices to the moon…….

http://www.marketwatch.com/story/investors-may-be-headed-toward-fiscal-cliff-2012-05-25

“Along with a debt-ceiling debate, cue up one “fiscal cliff”—a recession-driving combination of tax increases and spending cuts, according to the CBO, that would slash the federal budget deficit by $607 billion, or 4% of gross domestic product.”

tax increases and spending cuts are good !?

#62 TurnerNation on 05.28.12 at 11:56 pm

Our forum host was in Scotia Plaza? Must keep a look out for him, then. Always figured he was more of a 905er.

#63 Carpe Diem on 05.29.12 at 12:22 am

I believe if you invest in something with credit and then walk away “being angry” without being bankrupt and truly hurt, [email protected]% off. You deserve a lot less. I have friends in the US. They are are hurting but at least they are honorable. Unlike buddy boy, who comes back to Canada after being a [email protected]% up .. running home to mommy?

Canada has plenty of f#@% ups – we don’t need more of those.

I beleive is you are an idiot, you deserve to be a slave.

You can’t cure stupid.

#64 Nostradamus Le Mad Vlad on 05.29.12 at 12:35 am


Excellent post — beats RE by a country mile.

“Those who sold maximized their loss. Those who bought made 50% on their money in less than a year. The same human weirdness plays out with stocks, ETFs, index investments, even bonds, REITs and preferred shares. Fear’s in vogue. I feel sad for them in advance.” — Justin Bieber fans?

“Greed and lust make us ignore risk. Fear brings danger into focus. And when you get emotional, come here.” — For grief counseling, after realizing we’ve poured $500K into brix and mortar instead of a balanced portfolio paying us $40K a year? Yep, that seems about right!
*
#8 Smoking Man — “They think they know the Herd and they do to an extent, but a starving dog, no matter how well trained has no loyalty.” — True. No one knows the herd, and a starving dog is loyal only to his stomach.
— plus —
#16 Westsider and #24 workingpoor — Goes (somewhat) with SMan’s post re: the herd. They will be the starving dogs, and “The Canadian mob is out there. It will get angry. It may not react exactly like the US mob, since the laws are a little different, but it will react. It will be ugly.” — Hmmmm. The writing on the wall?

#48 VICTORIA TEA PARTY — “Canary stew anyone?” — With coal dust and whine, preferably vintage black!

#224 Harlee on 05.28.12 at 9:50 pm — “That and ‘Stampede Wrestling’.I don’t know which was the phoneist….” — To the best of my understanding, wrestling (the WWE and Stampede kind) is a noble profession, the other an ongoing pantomime / soap opera designed to fleece the flock!
*
#34 bubble head — “. . . they will reduce their work force.” — Such as here — Media Group axes papers and staff; EUSSR imposed economic collapse for Spain. Ireland, Greece and Spain don’t have a penny between them, and the UK isn’t much better and EUSSR to control banks? One world currency and one world govt.; Economic and Religious Cults Both as bad as each other; Teachers Same in BC. Other provinces, not sure. Mass coordinated anti-union movement going on thruout the west;
Mass Protests affecting Build A Buddy Burgers, so they’re meeting in the US for GMO Corn Dogs; Die Street, not High Street in London; You’ve Got Mail? No, you’ve got money (maybe); Bad Customer Service? Guaranteed to lose customers; The Smart Money is exiting from southern Europe; Shell leaving Libya so soon? Iran bypasses SWIFT; Whistler RE at 65% off? BPOE and Mikey the Realtor, this one’s 4 U.

US jobs data and Europe Somewhat confusing; JPM Investing in China; Refresh this article for a week or so; Light My Fire; SocGen A safe haven? GS and Greece; Margin Calls Me no comprende; German Slackers vs. Greek Toilers; Barry Ritzholt interview; Credit Card Fast; Spain Recapitalizing with funny money, and Spain Spiraling outta control.
*
Shallow M6.2 ‘quake off Norway, which leads to Pose Shifts “. . . the magnetic north pole is moving faster than at any time in human history, . .”; Hackers Earlier, there was a thread which told of sites being taken down, and this expands — seems there is quite a lot going on now; Mitt Romney Depends if he gets in; 1:23 clip Billary admits US created al Kayda; Russia Tightening border security; Phoney Tony Protestor has it right; Pakistan – US relations continue to dwindle; Muslim Brotherhood Just like Tunisia, Libya, etc.; Candid Cop Interview.
*
disciple — Second para. is interesting.

#65 ShockednAwed on 05.29.12 at 12:58 am

Smokin’ man, you have been annoying me for months but your first post tonight struck a chord and now I am going to finish reading your ramblings. I may have been missing your message.

#66 The Real Jimbo on 05.29.12 at 1:03 am

Garth is right. Last year, gold and gold stocks were prized by the masses. It was a time to take profits.

But in the last 8 months gold stocks, especially, have been sold off. It’s been 8 months of declines ending in the freefall of early May, where even the highest quality, profitable, dividend-paying companies with loads of cash in the bank and no debt were being indiscriminately dumped. It ended on May 15th with a particularly brutal bloodbath. Fear was at an apex.

The ratio of gold price to gold stock price is at a record high. Nobody likes gold stocks. Everyone wants out.

So if mid 2011 was a time to take profits, has the last month been a time to buy?

#67 Van guy on 05.29.12 at 1:06 am

#27 Keswickian on 05.28.12 at 9:39 pm

The OSFI ain’t gonna make these changes. Of course the RE market will tank completely and crumble to the ground if they adopt this rule. Basically everyone that bought in the last 4-5 years will lose their home. It’s a bunch of bullshit that won’t be passed.

#68 Michelle on 05.29.12 at 1:07 am

@# 147- Kieth here… (from yesterday’s post)

“Check out some of the stats on how much doctors make. The average salary for all doctors is ~$400k, and for some specialties the average is closer to $700k. A family doctor in Ontario makes 70% more than in the US. Doesn’t take many months of work at those salaries to fund a bidding war on a sweet little spot on west queen west.”

Sigh…. Actually Kieth, those aren’t real statistics. Those are numbers that our Ontario Health minister seems to have made up from God knows where…we haven’t been able to figure out where she got those numbers from and when we ask her office, they can’t tell us either. It’s part of the propaganda war that’s going on in the media.

We doctors don’t earn salaries. We’re self employed and have to pay all our overhead costs out of what we bill (office rent+staff, insurance, professional dues etc…). No sick pay, no unemployment insurance, no health plans and no retirement plans. Training for a family doctor takes 10 years on average and then you still have to pay off school debts.

I’ve never made anywhere near the numbers that are stated above, even when I worked long hours in rural medicine. I’m not complaining, as I’m grateful to have a secure job and the chance to do meaningful work for decent pay. I just hate for people to think I drive a Lexus when I drive a Toyota Yaris :P

I’ve posted this link before but I’ll do it one last time if people are truly curious about what doctors earn:

http://www.canadianhealthcarenetwork.ca/physicians/magazines/the-medical-post/february-28-2012/are-all-doctors-rich-21212

#69 apostrophe catastrophe on 05.29.12 at 1:16 am

@ #21

You used an apostrophe before an “s” on a word that isn’t possesive. Then you go on to talk about uneducated people. Click the link below and take a free lesson courtesy of the internet.

http://grammar.about.com/od/punctuationandmechanics/tp/GuideApostrophe.htm

Back to investing….

#70 WPG_Savant_Syndrome on 05.29.12 at 1:17 am

@ DJB

You don’t have any idea how this stuff works an btw you didn’t post any links.

here ya go (down side protection…..pffffft)

http://www.etfs.bmo.com/ETFConsumer/controller/image?image=covered_call_informative_pdf&lang=en

http://www.theglobeandmail.com/globe-investor/investment-ideas/portfolio-strategy/covered-call-etfs-approach-with-caution/article2046613/

@ Garth

hey nice pic with that GAS BAG Sherry Cooper

http://www.postcity.com/Post-City-Magazines/April-2011/Real-Estate-Issue-2011-Roundtable/

#71 tundra pete on 05.29.12 at 1:26 am

Well put Garth,
It’s just like when the guy comes from the bone crunchers office with the sore neck and the bone cruncher tells him to hold his neck and keep looking up.
So the guy, holding his neck, just keeps looking up like the cruncher told him to do. He’s not far down the street and all of the sudden he looks about and there is a crowd around him and they are all looking up. (maybe they think the condo gods are going to spew 20% annual assignment returns on them or something……..who knows, but they are all still looking up).
So the guy with the sore neck decides to have a break in the small park on the street. He sees a nice bench, so he decides to rest a while, but he notices something before he sits down. It’s a sign and it says wet paint. Just then another fellow walks up and the sore neck guy tells him: Did you know there is 400 trillion stars in the universe? The guy says wow that’s a lot of stars isn’t it? Then the sore neck guy tells him not to sit down as the paint on the bench is wet. The guy has no response but reaches down and touches the wet paint!
Could anything be more clear? How the herd mentality reigns from simple to much more complicated and emotional actually intrigues me. You see it time and time again. When will they learn?

#72 Skip Breakfast on 05.29.12 at 1:28 am

Garth quotes a comment from someone at Automatic Earth in 2009: “Neither of us would touch equities with a bargepole right now. Neither of us sees a light at the end of the tunnel either, although I do think a major sucker rally is coming that could last several months. I fully expect people to think the worst is over by some time this summer, just in time for the light at the end of the tunnel to be revealed as an on-coming train. …I would also say that depression is a given during that time, and a depression worse than the last one at that. Right now we’re still much closer to a top than to a lasting bottom.” To which Garth writes above, “We now know it was the trough. Those who sold maximized their loss.”

I know Garth is bright, so I’m not sure why he’s deliberately missing the point here. Note that the comment from Automatic Earth doesn’t say SELL anywhere in it. In fact, it says that they fully expect a sucker’s rally. We got just that. Anyone who perfectly timed that 2009 low has presumably made good money. But that still does nothing to refute the possibility that the markets were and are closer to a top than a bottom. Automatic Earth isn’t about day-trading. It’s looking at major economic cycles, and is convinced that the markets are in a bear-market cycle which will ultimately end up lower and lower, despite persistent aggressive rallies along the way. They’ve never presumed to argue otherwise. They just advise that ordinary folks should not be playing that game. And of course, the 2012 tops in the DOW have still not returned to their lofty 2007 heights. This is again suggestive of a long-term bear market cycle. Garth might be very good at buying bottoms and selling tops. I know very few people who are though.

#73 Tony from Calgary on 05.29.12 at 1:46 am

Garth,
Doomers aren’t blaming tax-avoiding Greeks per se, but pointing to the Greeks as the first domino in a chain of European periphery defaults.

Defaults are deflationary in nature, and unless we see some severe inflationary money printing and/or debt creation one would think it would be bad for equities.

Doomers may also point out the frailty of the entire global financial system in relation to derivatives – “weapons of mass financial destruction” I believe the Oracle of Omaha called them. Greek, Spanish, etc. defaults may set off a cascade of insolvencies in some of the world’s largest financial institutions – bets that can’t be covered and were never intended to be covered.

Not only are Deflationary Doomers like the Automatic Earth recognizing these risks, so too are gold bug inflationistas who flock to ZeroHedge. Many intelligent folks like Chris Martenson, Richard Heinbeg, Jeff Rubin, Steve Keen and others also raise flags to the risks we face due to Peak Energy and financial contagion. Others write about the moral rot that has infected our political system so that crony capitalism is the status quo as we blindly enjoy our modern day Bread and Circuses.

Doomers may be wrong in their timing, but I would suggest to you and the Blog Dogs ignore their warnings at your own peril. Rome is burning and we’ve all got front row seats.

Besides, one can only beat the dead horse of housing market collapse for so long – China and Australia are already capitulating and Canada is about to get a cold dose of reality. After that, I’m not sure how interesting housing will be to anyone as it will be obvious to everyone that its a bubble gone bust.

Perhaps it would be wise to consider what comes after said housing bubble burst – collapsing equities markets, debt markets, pension plans, health care, and any of the other unsustainable promises our delusional Baby Boomer friends think will be honoured.

That which is not sustainable will not be sustained. Yep, fun times ahead.

#74 tundra pete on 05.29.12 at 2:06 am

Wow,
Looking about cyberspace (MLS), it does appear the red dot guy has just puked…everywhere!!

#75 bbrodriguez on 05.29.12 at 2:47 am

Is Smoking Man, like, a spoof on an arrogant baby boomer fantasy? If so, it’s awesome and hilarious. I’m thinking it’s gotta be a satire thing, like, in the spirit of a novel by maybe Will Ferguson or Carl Hiassen?

Anybody else thinking the same? I know it’s way off topic, but man, the dude needs an agent and a decent book contract. He’s wasting his talents here.

#76 YagginHT on 05.29.12 at 2:53 am

Demand and supply is showing that the RE market in the GTA is balanced. Don’t be jelly.

#77 Aaron - Melbourne on 05.29.12 at 3:09 am

Here’s more proof that Government intervention in the form of housing stimulus only serves to distort the market on the way up AND on the way down.

The withdrawl of the First Home Owners Boost (in addition to the FHO Grant) has only pulled future demand into the present. We know what comes next. Crickets.

So i did chortle to hear this classic quote from the video “Expect this trend to continue!”

http://www.theage.com.au/business/property/victorian-first-home-buyers-drive-up-sales-20120529-1zg7g.html

#78 Aussie Roy on 05.29.12 at 4:32 am

Aussie Headlines

Home owners and agents will find little to cheer about following another weak performance for the auction market yesterday. The Real Estate Institute of Victoria said the clearance rate was 59 per cent for the 569 results reported to the group. The outcome of another 87 scheduled sales is still unknown.

The market’s performance has slipped slightly compared with the past four weeks, defying hopes the big interest rate cut early in the month would deliver improved conditions for vendors.

http://theage.domain.com.au/real-estate-news/buyers-go-missing-20120526-1zbw2.html

Australian private sector debt story over the past 35 years. Since Q4-1976, private sector debt has risen from a touch over 40 per cent of nominal GDP. It peaked with the onset of the Great Recession at around 155 per cent and is currently a touch over 140 per cent.

http://www.macrobusiness.com.au/2012/05/the-rise-of-unproductive-debt/

Buyers in the box seat as property glut limits vendors

Across Victoria there are 71,190 properties for sale.

That is 36 per cent more homes than at the same time last year. In late 2011, the number of listings was even higher, but since late November we have seen listing numbers reduce by about 6 per cent across Melbourne and by a smaller 2 per cent across the state.

The large number of property listings isn’t confined to Victoria. Every state and territory apart from Western Australia and the Northern Territory are recording more properties for sale than at the same time last year.

http://www.theage.com.au/business/property/buyers-in-the-box-seat-as-property-glut-limits-vendors-20120527-1zcxw.html#ixzz1w6hY62K2

#79 eddy on 05.29.12 at 5:53 am

I agree with #44 Balmuto

All business wants steady paying customers= don’t be late with a payment and a mortgage renewal will come in the mail.

when the PTB do someting there is always a reason ( which is different from the reason presented to the public). The idea of re-qualifying for a loan at the end of a term is a new level of abuse. They are trying to scare borderline people from entering the market, but everyone knows that if you have nothing you have nothing to lose. The problem is with CMHC, it should be abolished. The problem is not the value of the loan colateral or job securtiy. I give Flaherty an F- for this one.

#80 Rob now in Nova Scotia on 05.29.12 at 5:55 am

Hi Garth,

I don’t normally comment to your comments, but just to clarify, I bought most of my silver years ago when it was $12-15 an ounce so no losses at all. Foresight. In fact, I doubled my money should I decide to sell now. Silver may dip some more in July and then I will buy again and sit back and watch my money double again. Beats the 6% returns that a diversified portfolio would bring me.

You get zero ‘returns’ until you sell. — Garth

#81 Deb on 05.29.12 at 6:04 am

For those of us who have a brain, very few have taken the time to read the owners manual. An understanding of the basic principles of human psychology is really a prerequisite to learning and participating in all areas of personal financial planning and activity. If this is not done, the ultimate risk comes into play, which is becoming your own worst enemy. That is why Socrates was not fooling around when he said “Know thyself”.

#82 Kip on 05.29.12 at 7:01 am

” I’m betting that if you did same poll today, a good percentage of Americans would view it as a viable option; a purely financial decision.”

I watched a 60-minutes segment some time ago claiming that there were 11 million American houses under water, owing more than the house was worth. They may be the idiots in your opinion for believing in their own signature and that it is worth something.

Most Canadians and Americans understand the commitment and few would agree with your comment above.

#83 Kip on 05.29.12 at 7:18 am

Sorry about my last post. I see it was a comment by Kevin but few people would agree with it none-the-less.

#84 Linda Pearson on 05.29.12 at 7:19 am

#76bbrodriguez on 05.29.12 at 2:47 am
I’m thinking it’s gotta be a satire thing, like, in the spirit of a novel by maybe Will Ferguson or Carl Hiassen?

Anybody else thinking the same?

Boy, you and I couldn’t be farther apart in our opinions of Smoking Man. Personally, I let my imagination dwell on what Skink would do to S M given the opportunity. Now, THAT would be hilarious!

When it comes to Smoking Man, I’m reminded of the old punchline about burying the bragging Texan…give him an enema and put him in a shoebox.

#85 House on 05.29.12 at 7:32 am

Since you boasted about them, have you locked in your capital gains on bonds and preferreds or let them slip away?

Those silly investors in 2009 didn’t know who owned governments and how much money the governments would create to help their owners. A lesson learned.

Smart investors always rebalance to maintain asset weightings. As for preferreds, they are a long-term, stable hold which churn out 5%+ in cash flow, and provide a dividend tax credit. Why sell? — Garth

#86 fancy_pants on 05.29.12 at 7:41 am

word on the street…

Quarterly measure of home affordability deteriorates in first quarter: RBC

http://ca.finance.yahoo.com/news/quarterly-measure-home-affordability-deteriorates-110128784.html

#87 andrew toronto on 05.29.12 at 8:08 am

when this markets blows up it’ll really blow..unreal

Toronto’s gravity-defying condo market continues to set records. Over 6,000 freshly built condos were sold in Toronto in the first quarter of 2012, the highest number for the January-to-March quarter ever, according to the latest stats from Urbanation. On average, condos are getting smaller and more expensive (makes urban living sound delightful, doesn’t it?), and Toronto had 338 active projects in the first quarter, compared to 284 for the same period last year. Stephen Diamond, CEO of developer Diamondcorp, told the Globe and Mail that he’s so confident about the market he’s raised $130 million for more condo construction.

http://www.torontolife.com/daily/informer/to-market-to-market/2012/05/08/toronto-condo-market-breaks-records/

#88 Balmuto on 05.29.12 at 8:36 am

#60 Mark:
“With the money they get from the CMHC (or the default), they can use it to invest elsewhere. Housing isn’t the only investment choice available to banks.”

True, but housing isn’t a liquid investment that you can get out of quickly like stocks or bonds. The whole foreclosure + CMHC claim process costs the bank time and money. Not to mention the loss of goodwill. If the bank wants to reduce its mortgage book, it can simply cut back on originations. There’s no need to force steady-paying customers into default.

#89 canadian housing market set to crash on 05.29.12 at 8:44 am

Poorboy #29

Tens of thousands will walk away and I am 100% certain this will happen. It’s easy to buy a home you Can’t afford and its easy to live off your HELOC and other credit options but its much harder to pay it back. The longer the government allows no money to spend spend spend the more people will eventually go bankrupt. As credit gets harder to get more will hit their limit and go bankrupt.

#90 mortgage brokers in a PANIC! on 05.29.12 at 8:59 am

Look at mortgage brokers post all over the internet and even day and night on Garths blog about OFSI. Mortgage brokers are afraid their Financial crimes will come to light and many will face jail time. A broker buddy tells me many in the industry more then bent the rules to qualify people and he even used the word fraud. You have good and bad brokers but the mortgage industry does not want the fraud come to light which would happen with OFSI rules.

#91 bbrodriguez on 05.29.12 at 9:21 am

#85 Linda Pearson

Heh, oh, I totally agree with you – if one assumes he’s “totally on the level”. Nobody teaches a lesson like Skink!

But I was just sorta… assuming that he couldn’t be on the level… But I’ll freely admit (with something like horror) that I could be wrong.

#92 Ralph Cramdown on 05.29.12 at 9:27 am

The idea of re-qualifying for a loan at the end of a term is a new level of abuse. They are trying to scare borderline people from entering the market

Au contraire. The idea of lending someone a large sum of money again, based solely on their payment history on the prior loan and not on a reexamination of their Capacity, Credit, Collateral and Character is a relatively new kind of stupid.

And borderline people are reading about this proposed requalification rule where, exactly? Your average borderline buyer is often surprised by closing fees, never mind possible future rule changes.

#93 luc on 05.29.12 at 9:30 am

More baby boomers are living longer !

Here are the numbers from STATS CAN report:

“In 2011, there were 4,870 women and 955 men aged 100 or more — the second fastest growing age group with a 25.7 per cent rate of expansion. By 2031, Statscan projects the number of centenarians will reach 17,000, rising to close to 80,000 by 2061 as the bulk of the remaining baby boomers moves into the triple digits.”

If I live to be 100 years old, how much money will I need yearly to pay my expenses if I retire at 60?

#94 Mr Buyer on 05.29.12 at 9:36 am

#32 Smoking Man on 05.28.12 at 10:00 pm
You guys know as soon as we get some good volume of red dots appear on mls

The MSM will stop talking bubble.
…………………………………………………………………
The MSM talking bubble or not talking bubble is not going to change our final destination in the slightest (which is a massive CRASH in Real Estate). Do not disappoint me and turn out to be a victim of your own preconceived notions. While herding and contempt for the livestock are all very high end attitudes there comes a time when it is no longer the herd but rather the beast (think stampede). The MSM as powerful as it is will impact only the time line and to a lesser and lesser degree as the CRASH unfolds. While I made the mistake of challenging your knack for stating the obvious I will do so again (of course the propagandists will propagandize but to what effect). I like your talent for making the easy things look difficult. It inflates your value. Nice salesmanship, really.

#95 Gypsy Kid on 05.29.12 at 9:42 am

Smoking man is the proverbial “lunatic-sage”…keep posting!

I know people who literally made “millions” in ’09. Mind, they were already filthy rich to begin with. It was kinda creepy how happy they were.

#96 cramar on 05.29.12 at 9:47 am

#59 Harlee on 05.28.12 at 11:51 pm

I’m still pondering the question I posted at #40: What’s more important then S & M. Or M & S if you prefer. … Please ! What’s more important than Sex & Money…?

————-
And Satan answered the LORD, and said, “Skin for skin, yea, all that a man has will he give for his life.”
– Job 2:4

#97 Keith here... on 05.29.12 at 9:52 am

Michelle

—-
“Sigh…. Actually Kieth, those aren’t real statistics. Those are numbers that our Ontario Health minister seems to have made up from God knows where…we haven’t been able to figure out where she got those numbers from and when we ask her office, they can’t tell us either. It’s part of the propaganda war that’s going on in the media.”
—-

Look on CIHI, or OHIP, or a provincial ministry of health, or whatever source you consider reliable. You may not be making that kind of money – and I totally respect rural medicine, I have in-laws who do it and it’s definitely noble work – but it is far from uncommon. CIHI has very similar numbers.

Yes I get the distinction between fee-for-service and the other payment methods. You say no retirement plan, no unemployment. I say look at the US where you might pay $100k a year in malpractice insurance, and the private insurer might stiff you on a decent proportion of your payments. The absolute worst case scenario here for an MD is no y-o-y increase, which rarely if ever happens, and the government ALWAYS pays in full.

The point isn’t about doctor compensation. The point is there are boatloads of doctors in the GTA, far more than anywhere else in the country given the density of hospitals, universities, etc and you can bet they are passing that money straight to their hipster offspring to buy shabby-chic Dundas West “cute” houses that will stay sky-high no matter what happens with rates, the national economy, Greece, inflation, etc. I wish it weren’t true, believe me.

Real estate is hyper-local, unfortunately if you live in a nice walkable neighborhood with transit access and nightlife nothing is going to change, because most people aren’t dependent on their immediate jobs to make it work anyway. Between drug money, offshore money and daddy’s-a-doctor money, some neighborhoods can stay afloat for decades.

#98 First to last on 05.29.12 at 9:52 am

Someone explain to me again why OSFI making people qualify for their mortgages is such a terrible thing. Didn’t they have to qualify for the mortgage in the first place?

#99 eddy on 05.29.12 at 9:56 am

Making people re-qualify for a government insured mortgage is another way of calling in the loan, which is just a transfer of money from taxpayers to banks. The governmennt’s job should be to protect consumers against this. It’s clear- we don’t have a governmennt, we have bank employees

#100 jess on 05.29.12 at 10:08 am

greed and lust
Call in a techie the testosterone ON switch is stuck.
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2789942/?tool=pmcentrez

#101 jess on 05.29.12 at 10:21 am

Flame,’ a cyberweapon that makes Stuxnet look cheap … – Skywiper/Flame
Flame went undiscovered for 5 years : Bernie madoff 20

Flame can gather data files, remotely change settings on computers, turn on PC microphones to record conversations, take screen shots and log instant messaging chats.
=================
Does that mean the auto hop feature would remove campaign ads?

May 25, 2012 | By Mitch Stoltz
TV Networks Say You’re Breaking The Law When You Skip Commercials

“Hopper” DVR and its “Auto Hop” feature, which automatically skips over commercials.
https://www.eff.org/deeplinks/2012/05/good-citizenship-online-service-providers-lets-not-let-dailykos-takedown-be

#102 Steven Rowlandson on 05.29.12 at 10:27 am

$50 an ounce for silver is nothing in the grand scheme of things. That isn’t a wild boast or hype, it is reality.
Was there a price bubble in gold and silver last year?
Not with less than one percent of the public owning the stuff and not with a short side manipulation of the paper price. A bubble in anything is a mass movement of the public into an asset class like real estate and there is extreme price inflation.
In the days of the roman republic the silver denarius was a 4.3 gram silver coin and a days pay for a worker or soldier. A troy ounce of silver would be roughly 7 days pay and that was when it was used as a circulating medium of exchange. If an ounce of silver was 7 days pay today what would the exchange rate be?

What do soldiers and union workers get paid for 7 days work today? It is more than $28 to $50 per 7 days of work isn’t it? Would you work for 4.3 grams of silver per day or 4 to 7 dollars a day right now with out a collapse of the price of everything else? I think not!
Think of an ounce of silver as a wealth asset for 3.5 to 14 people and ask the question what is the wealth of 3.5 to 14 people in this world?

No matter how you cut it the price of gold and silver is too low and these metals should be purchased and kept out of the banking system to diminish physical supplies available for short selling and other market hanky panky. Don’t buy paper silver.

Like I said recent market prices are nothing and there was no bubble. Just greedy special interests suppressing metal prices to make a bankrupt system and currency look good…. Even Ted Butler has given up on the regulators who won’t do their jobs. He is now calling for their resignations.

#103 Pat in Edmonton on 05.29.12 at 10:29 am

pot calling kettle black?

I have been reading this blog for at least a couple of years. I am one of those gold bugs that Garth makes fun of so often. I think it is funny that Garth is railing so hard against PM’s when that is what a lot of other blog sites and have been doing to Garth for years.
All the fundamentals point to real estate falling. Only government debt at CHMC and previous bailouts have kept it going as well as ZIRP. These things are the same things that will cause PM’s to pop eventually.
Garth can pick on PM buyers for being wrong on timing just like others picked on Garth for being wrong on timing, but eventually it will happen. The toy has been wound up so far it is clicking and when it lets go………watch out!
This whole Facebook IPO fiasco only serves to further alienate the average investor from taking part in the equity ponzi. The data is out there to be seen. The equity markets are controlled by High Frequency Trading Systems that guarantee the large banks profits and the little guy losses. The big banks have so many shady tools at their disposal, you cannot compete.
What I am saying is Garth should have a little more patience. I do wonder if Garth’s own financial interests colour his opinion of equities just a little?

I guess that ad hominem stuff means you didn’t take your profits. Too bad. — Garth

#104 CP on 05.29.12 at 10:41 am

Smooth sailing guys!! lol

http://www.thegridto.com/life/real-estate/when-should-you-put-your-home-on-the-market/

#105 Dean on 05.29.12 at 10:59 am

Notice the RBC affordability study is using “one storey detatched house” and PRE-tax income.

Not sure about the rest of the country but in Alberta, that measure would exclude almost any detached home built in the last 20 (maybe 30) years.

And pre-tax income. Why not add in $30,000 pre-you-got-a-big-raise income as well and make it look even more affordable?

#106 truth hammer on 05.29.12 at 11:22 am

Hyperinflation here to stay as interest rates will NOT be going up any time soon.

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/bank-of-canada-looks-trapped-on-interest-rate/article2446350/

What never fails to surprise me is the number of people who fail to observe the only marker that matters for market particapants……the macro.

While it looks exciting on TV…the action in the stock market is nothing of the kind…..forget about fundamentals driving the macro and you’ll be a loser every time.

If I had a nickel for every time some ‘expert’ was screaming ‘sell’ when the macro was screaming ‘buy’ I’d be even better off than I already am.

Question…..if food , energy, transpo, fee’s taxes, housing and all consumables have tripled in the past ten years…then how is a 5% dividend feed you in twenty years?

Answer from the BOC……eat less…or better…substitute

#107 new-era on 05.29.12 at 11:34 am

Low rates aren’t going away
http://business.financialpost.com/2012/05/28/is-another-round-of-mortgage-wars-on-the-way/

Irrelevant. — Garth
======================================

Yeah right, just look at spain and greece. Two high debt countries. (Interest rates are 5.1% higher than Canada’s rate).There will be a threshold when no-one want to buy our Debt at no-return-interest rates..

Remember the higher the risk the higher the expected returns.

When the US starts to stabilize, watch out, people will flock to the US currency and dump the Canadian dollar

#108 Doug in London on 05.29.12 at 11:40 am

I still don’t get it. I’ve seen people lining up in the cold weather before stores open on Boxing Day (on TV of course, as I was still asleep when it actually happened) to get at those great bargains but have observed there isn’t the same frantic buying spree when stocks or other investments are on sale. Obviously not everything that happens is logical.

#109 Steven Rowlandson on 05.29.12 at 11:56 am

They just crapped on the price of silver and gold.
It is as if a routine kicks in everytime some one says something nice about gold or silver the commodity traders make an extraordinary effort to trash the price.

#110 John on 05.29.12 at 11:58 am

( the below was erroneously posted under the previous article…meant to be posted here. Thanks)

Real estate. Timing. Greed. Fear. The market. Options. Market dynamics. Really great topics for opening up the minds of many.

So why not do that? It’s now way beyond talk of “precious metals” and “doomers”. That’s 2009 talk. Built on bailout money and continued “belief in the system.”

Believing in a real estate hoax is one thing, but uncovering the dynamics and suggesting a movement around the casino tables with “better judgment” is oh so 2010. It might fly for the first half of June 2012. Maybe all the way to September. But some stuff is coming up to quiet down the “Real estate-gold-financial analyst” talk.

1. Phony presidential elections
2. Foreign “dynamics” as power brokers square off
3. Exposure of non-sovereign governments

Anyone can fill in the other 20 items. It’s all obvious, and none are included in the analysis. Hmmmmm. Uh…why not?

I suppose one could get drawn into some kind of JOHO argument and point out the obvious reason for precious metals being low in price. There is no free market…at all. It’s yet another false front. Precious metals wouldn’t save your wealth or your butt in the casino. Value does.

What’s value in a community? Ah…not relevant eh? Back to the casino then. But knowingly? If one isn’t virtually in insulin shock from derivatives glucose, thinking about casino play really should be a mortal sin. Perhaps of the forgiveable kind. Nonetheless, what the hell man.

Looks like “best case” for casino playing planning is 3 months to 3 years of continued delusion, and then as “events” happen, they can be catalogued as “game-changers”, and all bets will be off.

Sound about right?

Your comment is awaiting moderation.

#111 Canadian on 05.29.12 at 11:59 am

Tony in Calgary #74,
I agree with you……this is unsustainable.
Insurance is bought for the chance of an untoward occurance. We should have some insurance for the present burning of Rome, though the fire may be hotter in some places than others. I just hope this collapse is not as ugly for us in Canada as it may be for others. As economist Danielle Park says “the collapse has already occured.” It is just now playing out.

#112 Darlene on 05.29.12 at 11:59 am

.#87 fancy_pants on 05.29.12 at 7:41 am

I got a kick out of this from your link:

“The report tracks how much of a home owner’s income would be required to pay typical costs associated with owning a standard one-storey detached house.”

How many bungalows are there? Certainly not as many as the Mcmansions they’ve been building. What does it tell you when you can’t afford a crack shack or tear down? Yet people are still buying the real estate kool aid. Yet those of us with the slightest common sense are going WTF. Kind of makes my head spin.

#113 Keith here... on 05.29.12 at 12:05 pm

oh and they will never raise rates, it’s called “jawboning” the economics jargon, you just pretend you’re going to do something and supposedly it will have the intended effect.

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/bank-of-canada-looks-trapped-on-interest-rate/article2446350/

“David Madani, Canada economist for Capital Economics, expects that the Bank will be more negative about global economic growth, and the challenges it presents to Canada, than it was in its previous statement.

‘Officials are probably already regretting raising the possibility of an eventual withdrawal of policy stimulus in the last statement released only six weeks ago. We doubt that rate hike hint will be dropped from next week’s statement, but the language could be softened.’ he wrote in a report.”

Click over from there to the “community bloggers” section of the globe where self-employed guys with kids look to buy $800k east side bungalows. This isn’t changing for a while, unfortunately…

#114 Jim Lahey, FASTPGFBDCParty Organizer on 05.29.12 at 12:22 pm

#73 Skip Breakfast

“It’s looking at major economic cycles(The Automatic Earth), and is convinced that the markets are in a bear-market cycle which will ultimately end up lower and lower.”

Ah yes Stoneleigh and Ilargi who predicted in 2008 that real estate in Canada would fall 90% and 80% respectively. Great forecasters they are!

#115 Nathan on 05.29.12 at 12:27 pm

Love liquidity, best concept any one individual can use.

#116 Bond junkie on 05.29.12 at 12:34 pm

SM you turned the bergs away?? C’mon… not even you have that kind of discipline. I’d kill to know the agenda that gets discussed behind those doors. Anyhoo, funny coincidence. Was out with the boys Sat night for a friend’s stag. The 30 somethings are all only now starting to get interested in picking my brain about what I am personally invested in. I told them to relax and wait for the election, then the onset of the next REAL leg down. Get some fresh capital ready for 2017, after all the sov defaults have run their course. Beginning of the grand relevering. Deleveraging has not even come close to running its course yet, printing press running at full bore etc. I mentioned the Berg meetings in Virginia, outlining timetables, tayloring the agenda, EU already dissolved now just trying to figure out how to part ways in an orderly fashion. Anybody ever seen a ‘clean’ divorce? LOL. Everyone looked at me like I had two heads. Responded with the usual track 6 type denial, weren’t even aware of the BBs. “You’re crazy, too close to the action you’ve become disillusioned, how can markets be fixed, the Fed isn’t owned by a consortium of U.S banks, how would anyone ever allow that? impossible, China is funding the U.S not the fed, what’s QE?… And so on and so forth. It’s useless to try and educate the masses, they are too dependant on their belief in the system. To sacrifice that belief is to admit living a lie. And that admission on its own is too painful to accept hence they continue to gobble up the MSM nonsense and bubble away.

#117 timbo on 05.29.12 at 12:36 pm

http://www.nasdaq.com/symbol/fb/real-time
http://www.forbes.com/sites/ericsavitz/2012/05/29/facebook-hits-new-low-shares-still-a-sell-says-sp-capital-iq/

“S&P Capital IQ analyst Scott Kessler this morning reported his Sell rating on Facebook shares, amid a flurry of reports about the company’s plans to strengthen its position in the mobile sector.”

Tech bubbles are fun are they not?…..

#118 zeeman1 on 05.29.12 at 12:37 pm

#51 Disciple.

The Trump Condo’s have been a disaster, even with the multi-bankrupt and toupee wearing prince of shill coming into town last month to prop a dead duck with his name on it.

There are quite a few very rich and very stupid people very angry at this whole development who are now looking to unload, as I understand it.

I can’t believe they still have the gall to ask almost as much as they paid, though.

They must figure there are a few more greater fools.

#119 Mightymouse on 05.29.12 at 12:58 pm

Calgary newspapers seem to not see a bubble. I entered Canada housing on Google News and I get some negative articles.about debt or bubbles or market cooling. I Google News Calgary housing and it’s positive m/m growth, average sfh price close to 2007 peak, Calgary leading nation on growth etc and all seems normal.

#120 wes coast on 05.29.12 at 12:59 pm

Corporate profits are being driven by artificially low interest rate. Its hard not to profit when you have free money and a pool of slave labour in China. We can’t possibly think that this manipualtion of the free market isn’t going to have a consequence. In Vancouver free money is creating malinvestment in RE where it could have been used for innovative industry which is the only true engine of sustained prosperity. I presume this is a Canada wide issue as F and Carney have lost sleep over it and said so publicly.

While I agree that there is money to be made in Equities the market manipulation has taken away the ability of the retail investor to guage value and participate.

The old days of buy and hold and reap the rewards of real growth are done (for now). Todays game is for professional investors that can get in and out quick playing the inefficiencies created by all the market manipulation. Sure Mar 2009 could have been a buy anything and hold and win but that’s in the past. The market is just going to bob along sideways for some time now with volatility creating those inefficiencies the big guys can cash in on.

That’s my 2 cents (invest it wisely)

#121 zeeman1 on 05.29.12 at 1:02 pm

#100 Eddy.

You’re kidding, right?

If the government actually cared about citizens they would abolish the CMHC and lower taxes as they get their fiscal house in order.

#122 Smoking Man on 05.29.12 at 1:04 pm

Bond Junkie. Time you and I went for a few beers

#123 Stoopid on 05.29.12 at 1:06 pm

Low rates aren’t going away
http://business.financialpost.com/2012/05/28/is-another-round-of-mortgage-wars-on-the-way/

Irrelevant. — Garth
======================================

Yeah right, just look at spain and greece. Two high debt countries. (Interest rates are 5.1% higher than Canada’s rate).There will be a threshold when no-one want to buy our Debt at no-return-interest rates..

Remember the higher the risk the higher the expected returns.

When the US starts to stabilize, watch out, people will flock to the US currency and dump the Canadian dollar
======================

When people realize the U.S. is in worse shape than Greece they will run to Gold & Lead

Who said “when people have nothing to loose they loose it”

#124 Sid on 05.29.12 at 1:43 pm

Housing situation likely to worsen says Royal Bank says

http://www.montrealgazette.com/business/Housing+situation+said+likely+worsen/6695897/story.html

#125 stickler on 05.29.12 at 1:59 pm

@100 eddy
“The governmennt’s job should be to protect consumers against this. It’s clear- we don’t have a governmennt, we have bank employees”

>>duh The banks rule the world…and have for a long time.

#126 stickler on 05.29.12 at 2:18 pm

@ #118 Bond junkie
I know lots of smart educated people who have no clue either…they are too busy working (trying to keep their jobs), and raise their kids…they have no time to even stop and look around…and think about whats going on. I think some of them are doomed.

I tried to talk to one recently…and he got rather hostile when I suggested it was possible his GTA home might go down in value. His attitude was that he didn’t know of anyone who lost money on real estate. End of conversation!

Guess what…like many, the bulk of his net worth is in his house. And unfortunate for him…his manufacturing company is not doing well, and he is expecting to go on work sharing, or get laid off…the second time in 3 years.

#127 Canadian Watchdog on 05.29.12 at 2:33 pm

Not to my surprise, we find again that CBA is revising mortgage in arrears stats. http://i47.tinypic.com/2ugc2v4.png There was ninety-six thousand arrears added in Jan compared to their last report, which of course, makes the current arrears stats look lower.

Need higher statistical figures? Then revise previous numbers lower. Need lower statistical figures? Then revise previous data higher.

#128 Gainsaywhodare on 05.29.12 at 2:35 pm

Shareholders approve Homeq takeover.

Canada has higher proportion of seniors than ever before.

What did you say again? Oh, yes. This will not end well.

#129 TRT on 05.29.12 at 2:43 pm

Eloquent prose aside…, the numbers are telling a story.

10 year Can gov bond yields are at historic lows once again… What does this mean?

possibly:

– low interest rates are here to stay even if USA raises theirs. They will let our currency suffer. Domestic demand and consumption will be supported both by temporary and permanent immigration.

Do you understand how ignorant that sounds? — Garth

#130 Toronto_CA on 05.29.12 at 3:00 pm

Ugh. Watched the Suze Orman show from the weekend online, and with one caller Suze was saying house prices were going no where for 10 years and still had room to drop and with another she said a woman was throwing money away by if she continued to rent for 30 years and would have “nothing to show for it” if she didn’t put her 20% downpayment to use by buying a house.

I wanted to grab her and yell at her, why not tell the woman to invest the money she has saved for her downpayment??? Why would that not be an asset worth millions in 30 years? What about the maintenance, insurance and property tax that she would owe (not to mention real estate fees and closing costs from buying) if she bought in a downwards market?

Ugh. I normally like Suze, but today I wanted to punch her.

#131 Steven Rowlandson on 05.29.12 at 3:17 pm

Can any of you paper lovers out there define the absolute value of a canadian dollar and what that value is based on and what a dollar is supposed to be?
If you are getting paid interest on dollars on deposit in dollars what is the value of the dollars paid in interest?
It was said an asset that pays nothing is worth nothing.
If you are getting paid some thing that is merely a piece of paper / plastic backed by nothing or worse backed by debt backed by un backed paper/plastic currency you are getting paid equal to or less than nothing. The illusion of value does seem real to alot of people these days.

Silver and gold is not a promise to pay nothing, it is the payment and its own source of value. That is why politicians and banksters hate it. It require work to get it and they can’t print it although they can print paper gold or silver without backing in metal.

Once apon a time in Canada before 1967 a Canadian Dollar was a unit of measure of silver because a Dollar coin contained 6/10ths of an ounce of silver. Therefore the dollar coin had value in and of itself and was payment in full. It had no debt and no counterparty risk. The price of silver per ounce based on those silver dollars was $1.666 canadian silver dollars per troy ounce. We currently don’t have dollars backed by or composed of gold or silver as an official circulating medium of exchange. What there is of silver and gold coinage is either a wealth asset/ investment or has been melted. Supply is limited and is private property.

These days we have paper/plastic and electronic currency backed by debt or the will of government and nothing else. Therefore the potential price of gold or silver in those currency units now called dollars is up to infinity per ounce. M3 /zero ounces=?
Even the idea that a dollar is worth the goods and services it can buy is rather nebulous since no absolute value or equity is represented by the unit of currency.
Which means a stick of chewing gum could theoretically cost the entire official currency supply. It is an extreme example of what can happen when you debase the so called money supply. Can you say financial terrorism on steroids?
After this is posted I expect a further drop in the price of gold and silver.

Currency is backed by the power to tax. Gold is a commodity. Your argument is specious. — Garth

#132 vic_guy on 05.29.12 at 3:34 pm

@ #98 Keith here…

I see : $ 288,549 average, $340,916 for specialists from CIHI. Still sounds good to me (not a doctor), but substantially lower than your numbers. Do you have other CIHI sources that you looked at ? This is from Dec 2011, I couldn’t find any newer numbers.

https://secure.cihi.ca/estore/productFamily.htm?locale=en&pf=PFC1678

Summary from the link : “Canadian physicians received an average of 288,549 (gross) in fee-for-service payments in 2009-2010. For family physicians, average gross payments were $238,764, compared to $340,916 for specialists.”

It sounds like whatever Ontario doctors are earning won’t be going up anytime soon :
http://www.globaltoronto.com/no+pay+raise+for+ont+doctors+as+the+liberals+tries+to+balance+the+books/6442587166/story.html

#133 refinow on 05.29.12 at 3:46 pm

#91 you are such a lunatic…..

Client buys a house using legitimate acceptable lending policies, but if it goes down in value, it was the fraudulent actions of the mortgage broker who is fault.

I told you before mortgage agents have no authority to approve mortgages, that is up to the banks and CMHC…Period.

All mortgage brokers do is package up a client’s application and send it to the lender who is willing to approve the deal first, and second seek out the lender with the best rate for the client.

I don’t know what scuzzy mortgage brokers you have been hanging out with???

#134 Bond junkie on 05.29.12 at 3:51 pm

SM definitely agree… this week is a bit insane but a Thursday in the near future would suit quite nicely.

#135 Quantumsparkplug on 05.29.12 at 3:53 pm

Gold and silver are tracing the deflationary expectations of some investors, including Mr.Turner. And, in fact, credit sensitive ‘items’, like real estate, will take a beating, regardless of interest rates.

However, though the govt megaphone still blasts the message that interest rates will rise, they won’t pull that trigger. It’s complete nonsense to suggest otherwise.

We will continue to see a pattern of increasing food and energy prices against a backdrop of falling house prices. Classic bi-flation! Watch that new economic term. You’ll be seeing a lot more of it, alongside articles about the steadily escalating gold prices. Silver is an unknown.

#136 Canadian Watchdog on 05.29.12 at 3:56 pm

Sorry clarification on my post #129. 96k mortgages added.

#137 piccolo on 05.29.12 at 4:16 pm

We are living in very confusing times. Read Globe and Mail and they are predicting interes will stay low for the next two years. Others think interest will go up. 50% think home prices going up, 50% of people think going down. Difficult to know who to believe.

The Globe is not saying that. — Garth

#138 stickler on 05.29.12 at 4:20 pm

@134 vic_guy
“Canadian physicians received an average of 288,549 (gross) in fee-for-service payments in 2009-2010. For family physicians, average gross payments were $238,764, compared to $340,916 for specialists.”

>>Gross is not net…net may be gross though ;)

Dr’s have to pay out for pesky things like office space, medical assistants, receptionists, equipment, etc. don’t they?

#139 Foggy on 05.29.12 at 4:26 pm

Facebook trading in the $28’s today. Just getting hammered. Makes an interesting case study on market psychology. With all it’s bad press it’s a lame duck to be shorted again and again. And people will do this, not because they understand how risky it’s revenue stream is (ads), but I think it’s even a reaction to it’s CEO. An arrogant under 30 who built an amusing social media site into something it’s not. A valid corporation with a real infrastructure, business plan and bankable future profitabilty.

http://money.cnn.com/quote/quote.html?symb=FB&iid=HP_LN

I told ya to stay clear! — Garth

#140 Mark on 05.29.12 at 4:50 pm

“With the money they get from the CMHC (or the default), they can use it to invest elsewhere. Housing isn’t the only investment choice available to banks.”

True, but housing isn’t a liquid investment that you can get out of quickly like stocks or bonds. The whole foreclosure + CMHC claim process costs the bank time and money. Not to mention the loss of goodwill. If the bank wants to reduce its mortgage book, it can simply cut back on originations. There’s no need to force steady-paying customers into default.

Housing loans aren’t liquid either. If the bank can take its money and find something more liquid with it that pays better interest, why wouldn’t they avail themselves of the opportunity? Do you really think banks will keep writing loans against some illiquid asset class that is declining in value when there’s better collateral out there to lend against?

#141 Timing is Everything on 05.29.12 at 4:55 pm

Meanwhile back in Langford (Excuse me, Toronto. It’s not all about you…but you’re still doomed.)

Sold! Stack ’em in deep. Phase 2 of ? coming ‘on line’ soon. A buddies sister and BIL are ‘squeezing’ in on July 1. What will this “master planned community” look like in 10 or 15 years?

http://tinyurl.com/744jxjy
http://tinyurl.com/6vhduz3

#142 Bond junkie on 05.29.12 at 5:03 pm

@ #118 Bond junkie
I know lots of smart educated people who have no clue either…they are too busy working (trying to keep their jobs), and raise their kids…they have no time to even stop and look around…and think about whats going on. I think some of them are doomed.

Stickler… that is the real tragedy in all this. I’m paid to be (and stay) fairly well informed, but otherwise most are doomed to continue to adhere to the status quo and maybe feel good about themselves if they are one or two steps ahead of friends/neighbours. The big picture is completely lost on them.

#143 Karie on 05.29.12 at 5:10 pm

Above poster Deb said it best: Socrates – “Know Thyself”. Garth, Suze Orman, friends and relatives are all operating on what they feel is right based on their own knowledge and or past experience. Suze deals with hundreds of clients and she has probably realized that people tend not to invest their down payment but rather spend it!

Not all people seeking financial freedom are going to take the same path. I liked real estate because one poster worked out that it has made me about 10% over the last 15 years. I started investing in around 2000 or so into mutual funds mainly equities and I haven’t really made much in the last 12 years. Now I’m trying various index funds.

Garth did introduce me to the benefits of variable rate mortgages and strip bonds and that has been great for me.

People have different perspectives. All that can be done is educate yourself as much as possible and then do whatever blows YOUR hair back!

Mightymouse – I enjoyed your post from yesterday. I feel like in the future I am going to feel pressure to assist my kids because all my kids’ friends are going to be helping theirs- I can just see the signs already. I will have to think about how I will handle that.

#144 I'm stupid on 05.29.12 at 5:15 pm

Funniest thing i read all day.
If Facebook buys Rim it would be like throwing an anchor to a drowning man.

#145 Keith here... on 05.29.12 at 5:19 pm

vic_guy

The report says that fee-for-service payments are only 73% of payments made to physicians made for clinical services. It says in Ontario that 48% of GPs received “alternative clinical payments.”

There are many many ways of the government paying doctors, like incentives for rural practice, extra money for being on call, emergency room premiums, and the fact that doctors earn money in other parts of their professional lives (med school teaching for example). Even better many own a practice where the income is business revenue and therefore not subject to income tax!

Anyway the point is about rich parents passing on money. If they “only” make 6x the average salary instead of 8x I’m not sure it makes that much difference to my argument…?

PS keep it up Canadian Watchdog I love your links.

#146 bill on 05.29.12 at 5:29 pm

More TT Vicar?

#147 Freedom85 on 05.29.12 at 5:38 pm

Garth,

The time for re-investment in the gold and silver market is getting closer. As a matter of fact, it’s time to be nibbling, planning and finding all the cash you can to pounce on the screaming deals in the gold and silver stock sector. We will soon find out if a bottom is in place, if not this month in the late summer/early fall.

Real assets (gold, silver, art, debt free real estate) are the place to be going forward or stocks that represent real assets.

We are very short on time now. The piper will soon be paid.

You said this at $1,900 an ounce. Yawn. — Garth

#148 timbo on 05.29.12 at 5:55 pm

http://www.reuters.com/article/2012/03/20/us-usa-foreclosures-investors-idUSBRE82J12M20120320

http://blogs.reuters.com/unstructuredfinance/2012/05/29/wall-street-gold-rush-in-foreclosed-homes-heads-north/

“Some of the high-profile institutional investors who are committing money to buying foreclosed homes – or seriously considering jumping in – include private equity firm TPG Capital, investment firm Oaktree Capital Management, Warren Buffett’s Berkshire Hathaway Inc., Starwood Capital, Och-Ziff Capital Management and bond fund manager TCW, say people familiar with the fast-growing market.”

buying up all the foreclosures in blocks…what can go wrong?…….

#149 LargoWinch on 05.29.12 at 5:57 pm

Garth, you lost ALL credibility with me and your blog bullshit by refusing to post my comments. You are an idiot. Period.

Ah, poor little jilted gold bug. — Garth

#150 2centsCdn on 05.29.12 at 6:17 pm

#132 Toronto_CA
I’m not sure if the caller you refer to was from the US or Canada. But it IS cheaper (and smarter) to buy in the US than rent in the US. They are at (or near) an all time low in their market. I bought a 2 bedroom condo in Boca Florida ( to use in the winter) that I could rent today for $1200/mo. ….. it only cost $90,000. A condo in Toronto that would rent for $1200/mo. would cost you $275K to $300K+

Buying in the US does makes more sense than renting now. (even though the prices probably won’t appreciate in the next 5-10 years). It didn’t make sense to buy in the US 4 years ago … but it does today. Renting in Toronto now makes more sense than buying in Toronto now.

Every market has a price that makes sense. FB stock wasn’t a good buy at $38 a share … but it would likely be at $5 or $10 a share. Everything has it’s “get-in” price range and it’s “get-out” price range. Unlike stocks and bonds …. we NEED a place to live (food, water and shelter are still the “must have’s”) ….. but when home prices are at knee buckling carrying costs and with odds of fast and long depreciation …… the math supports the option of renting. Real estate in Canada is not a smart thing to get into right now ….. but there will be a day when it is. Garth and his clam will let you know when that is.

#151 2centsCdn on 05.29.12 at 6:30 pm

Ohhh … one more thing …. in reference to my 3150 reply to a question #132 was asking.

The $90,000 Florida condo with 10 or 20% Down (heck with nothing down). Would carry for a lot less than the $1200/mo it would cost to rent a similar unit. With good odds that it would appreciate down the road (even if 5-10 years down the road).

A Toronto condo that cost say … $300+K, would cost way more to carry (with a similar down payment) than the $1200/mo you could rent it for, with very good odds it will depreciate 20-30%+ in 1-2 years and stay at that price for 5+ years.

#152 Stephen on 05.29.12 at 6:39 pm

I do respect most of your observations on this blog, but declaring that March 9 was ‘the day to buy’ is silly. You make that comment as though it was common knowledge at the time that the market would not go any lower. It is certain easy to make that statement 3 years later.

I bought that week. — Garth

#153 Country Girl on 05.29.12 at 6:42 pm

Has anyone seen my foot?

#154 Helicopter Ben on 05.29.12 at 6:46 pm

Garth how can investing in any paper asset valued in american dollars seem safe , biggest bond bubble in world history is happening right now from the largest debter nation ever with low interest rates. if they keep the interest rates low they will destroy their economy and blow up all fiat currencies around the world, in the last 10 years the u.s. has devalued their currency by 50 % !. any gains in the last 10 years in the stock market which there was none as a whole have lost 50% in real terms. in a deflation event stocks will lose 90 percent value as it did in the great depression and in greece right now . in high inflation times they will destroy the currency whiping out any gain made with a net loss. this is why people hold gold and silver as its a hedge against inflation and in deflation you lossed a lot less then the average joe with increased purchasing power. all paper assets are valued in U.S. currency, to diversify in paper is to be all in on the U.S. dollar, and you can see how well they are centrally planning that country.

#155 brainsail on 05.29.12 at 6:53 pm

#146 I’m stupid

“Funniest thing i read all day.
If Facebook buys Rim it would be like throwing an anchor to a drowning man.”

I made that silly comment because the whole FB thing baffles me. Their present revenue stream is based on selling advertising spots, but the ads only pop-up on desk tops and notebooks. The ads do not appear on smartphones or tablets.

The computer landscape has changed alot recently because now we are finding out that a large majority of computer users only need a computer thingy to browse and not compute and as as result the sales of smart phones and tablets are compromising the profits of companies like Dell and HP.

I do not know what the technical reasons are why the ads do not pop-up on mobiles. It might be possible that FB might be trying to cross this technical barrier by developing their own proprietary smartphone that would result in a revenue sream across all devices.

I’m just guessing at all of this because now they have all this cash and what are they going to next? Judging by the closing bell today there are alot of mixed signals about FB.

#156 Nostradamus Le Mad Vlad on 05.29.12 at 6:55 pm


#59 Harlee — “Nostra ! – You’re my one last hope for an answer !”

Then I shall call upon my superlative powers of deduction to see what I can find! ‘Tho it should be obvious that, for men, beer and potato chips come first, and do not forget my mentor, Sherlock Holmes — “Eliminate all other factors, and the one which remains must be the truth.” So . . .

Here, here, here and here.

A few words of wisdom from my forbears, Ethel the Dread, Lizzie Borden, Nostradamus Jr. (daddy), Oprah, Caligula, Montezuma’s Revenge among others: “Don’t drink and drive, smoke shit and fly!” and plenty of other quotes. Toss in the NFL, CFL, hockey, baseball, soccer, Xmas Pudding and Custard in the Dog Days of August, conspiracy theories, Monty Python (along with tons of other comedy shows), Dr. Phil, music, tapioca and rice pudding — none of these will ever argue with you! Trust this helps a little!

#122 wes coast — “Its hard not to profit when you have free money and a pool of slave labour in China.” — Main reason why the west is gasping for breath, and Soros et al are setting up for ChIndia, BRICS etc. to take over when mfg. is fully transferred. Good post.
*
Bank Runs and forcible FX conversion of savings; For The Love Of Money Is The Root Of All Evil Not quite. Money is simply a tool, but the concentration of wealth in the hands of a few is what makes it appears so; Uh Oh “Dewey & LeBoeuf is set to become the biggest law firm to collapse in the US.”; 6:18 clip Top five places not to be in a dollar collapse; Unemployed Losing Benefits because U-know-who needs the money; GS role in Greece a real scandal; FB Phone doesn’t stand a chance; Fukushima and the west’s economy Using one to hide the other? 3:59 clip Another distraction created by the FBI; BoA Why? Cheap labor overseas; EZone In the middle of a freak-out.
*
Regime Change in Syria Neither Russia nor China support it; 2:04 clip Where is all the CO2? 5:06 clip Liquid Fluoride Thorium Reactors in five minutes; ‘Net stuff “When you send your manufacturing to other countries and then shout insults at them, you should expect this sort of thing to come back at you!” wrh.com; UN ‘Net Takeover supported by Obomba and congress; Factory Farms “Factory farms produce 100 times more waste than every single person in the United States combined.”; Flame and Stuxnet Two peas in a pod; JPM, Iraq and Phoney Tony The truth is starting to come out; Consumer Revolt Farm bill and Ethanol fuel; Propaganda BS “Again, why would Assad, desperate to avoid being invaded, commit such an obvious overt act that hands the invaders a justification for the invasion?” wrh.com; Egypt rioting again.

#157 First to last on 05.29.12 at 7:02 pm

Looks like someone put their foot down:
http://www.theglobeandmail.com/news/politics/ottawa-notebook/human-foot-delivered-to-tory-headquarters/article2446647/

#158 brainsail on 05.29.12 at 7:08 pm

#146 I’m stupid

I didn’t realize how timely your statement was until I read this…

“But Tuesday’s long-winded “business update” indicated the company is formally considering big moves, under the guidance of two banking giants. Shares of RIM (RIMM) were halted in after-hours trading on the news. They fell 13% when trading resumed.”

http://money.cnn.com/2012/05/29/technology/rim-hires-bankers/index.htm?iid=Lead

#159 Bill Gable on 05.29.12 at 7:29 pm

#125
That quote comes from Gerald Celente.

Looking at gun and ammo sales in the States recently, I sure hope Mr. Celente is wrong.

#160 Balmuto on 05.29.12 at 7:53 pm

“Housing loans aren’t liquid either. If the bank can take its money and find something more liquid with it that pays better interest, why wouldn’t they avail themselves of the opportunity? Do you really think banks will keep writing loans against some illiquid asset class that is declining in value when there’s better collateral out there to lend against?”

What makes you think a more liquid investment will pay better interest than an illiquid one? Liquidity is a double-edged sword: there’s a premium to be paid for liquidity, in the form of a lower yield. Take mortgage-backed securities, for instance. More liquid than the underlying mortgages, but you have to pay for the mortgage servicing costs and the benefits of diversification and liquidity, in the form of a lower coupon than what the underlying mortgages carry. But maybe you were thinking of stocks and bonds? No collateral in stocks, not even fixed cashflows in the case of common stocks. Preferreds are not secured. Even bonds are typically not secured by any assets, but even when they are, you don’t know what you’ll get on a fire sale of the assets in the event of a bankruptcy. And guess what, you get a lower yield on a secured bonds than unsecured bonds (all else equal). There’s no free lunch.

Anyway, if the bank really wants the mortgage off their books they can have it packaged into an MBS pool to be sold off to other investors. The caveat to to this is that the rolled-over mortgage must CMHC insured. If CMHC refuses to insure the rolled over mortgage, the bank may decide that they will call in the loan unless you can pony up cash to bring your mortgage to below 80% LTV. In reality, they would probably just fudge the appraisal number like they do with HELOCs and charge you a higher rate of interest. They don’t want to have to foreclose on you, they really don’t. Especially in a down market, they’ll have enough inventory of foreclosed homes from non-performing mortgages to worry about, they’re not going to want to add to that inventory if they don’t have to.

#161 Toronto_CA on 05.29.12 at 8:01 pm

@ 2cents Cdn – you’re right, there is a stronger case to buy in some parts of the USA than most of Canada, especially versus renting. But this caller didn’t feel comfortable buying and ridding herself of all her savings, stated that houses in her area continue to lose value, and Suze still bullied her with the old “you’re throwing away money if you rent and in 30 years you won’t have anything if you rent but if you buy you’ll have no housing costs at all” which is what made me mad. I agree, lots of the areas in the States are good places to buy instead of rent right now, no question. I just got mad because Suze made renting seem like the devil and that she’d be penniless in 30 years if she didn’t use her nest egg to buy a house TODAY.

I would have told the caller to continue to save and rent and when houses hit a bottom then jump in with a locked in 30 year fixed low interestest tax deductible mortgage. But if she wanted to rent, I’d say just invest the money too in something besides the Orange guy’s pants. Suze just irked me today!

#162 In GARTH Almighty not God we Trust on 05.29.12 at 8:13 pm

#154 Stephen

“You make that comment as though it was common knowledge at the time that the market would not go any lower. It is certain easy to make that statement 3 years later.”

It was not common knowledge Stephen but how long have you been reading this pathetic blog (the oracle’s words not mine)? The bearded mystic oracle, all knowing, all wise, all seeing financial prognosticator without equal, former minister of all revenues in this land, right honourable denouncer and opponent of all parliamentarian peckerheads, lone prophetic voice of reason crying out in the financial wilderness of Canada and all round jolly good fellow, understood that 2009 was the low and bought. That is why he is the gifted oracle that he is and our fearless leader. Sheeesh, get with the program!

#163 I'm stupid on 05.29.12 at 8:20 pm

#160 BrainSail

Funny isn’t it?

#164 Onemorething on 05.29.12 at 8:23 pm

The difference between our Cali buddy and those posting negative comments is that he’s learned his lesson and the monkey’s off his back.

The difference is Canadians are going to be worse off simply by the recourse nature of our RE loans.

Read the fine print! If the GOV steps in with a program to ease your Chapter 11, it wont feel like it.

#165 John on 05.29.12 at 8:30 pm

Freedom 85 wrote:

“The time for re-investment in the gold and silver market is getting closer. As a matter of fact, it’s time to be nibbling, planning and finding all the cash you can to pounce on the screaming deals in the gold and silver stock sector. We will soon find out if a bottom is in place, if not this month in the late summer/early fall.

Real assets (gold, silver, art, debt free real estate) are the place to be going forward or stocks that represent real assets.”

I’d say your prediction is very uncertain. You’re talking about “bottoms and tops” in the old paradigm. The wheels came off the wagon for the retail, normal everyday Joe.

I’m not sure how your perception of the “market” could be so contained. So myopic. Where are you getting the idea that the current “boom bust” or “cyclical” economy is still in effect?

Would it not be fair to say that this kind of economy can’t be in place now? If so, how relevant is your scenario?

Gold and silver as “hedges” are totally uncertain. Real value, in an actual scenario…based on reality…will be what people focus on.

The next 20 years will be nothing like the last 20 years, and that idea has zero to do with “boom, bust and cycles”.

I’m not getting how this isn’t obvious.

#166 Daisy Mae on 05.29.12 at 8:45 pm

155Country Girl on 05.29.12 at 6:42 pm
“Has anyone seen my foot?”

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

Oh, no! Did you put it in your mouth? OMG….

#167 Jim on 05.29.12 at 9:27 pm

“Currency is backed by the power to tax. Gold is a commodity. Your argument is specious. — Garth”

Perhaps the argument was specious, but your first sentence seems a little quick.

Did the government in Weimar germany have the power to tax? How about 90’s argentina?

Would you rather have held on to a handfull of bills at the time, or commodities? If you had buried 100 dollars in a time capsule back in 1913, as well as the same amount in gold, which would be worth more?

From the power to tax, it does not follow that a currency is stable, trustworthy or non-depreciating.

#168 Quantumsparkplug on 05.29.12 at 9:32 pm

Garth dear,

You are obviously enraging some posters here by refusing to post some rebuttals to your point of view about gold. I have read you somewhat faithfully for several years and went to see you speak in Victoria, B.C. This tears it, though.

I appreciate your observations about real estate, but realize after seeing you speak that there is a conflict of interest here. Tell me, do you hold the same opinion about gold miners represented on the TSX as you do about gold bullion? Something tells me you likely don’t, as commissions can be made on shares. Hmmmmm??? Yawn indeed!

Wouldn’t know. I don’t sell shares. And I own gold. — Garth

#169 Common Plains Ape on 05.29.12 at 10:19 pm

Those governments printed currency until it was worthless. What good is tax, then? Those governments printed away their power to tax and their fiat currencies failed. What’s your point? That it wouldn’t have happened under a commodity currency? Here’s the thing:

From the fact that a commodity exists and has use, it does not follow that its price is stable, trustworthy or non-depreciating.

As if you can’t denature gold with lead just like you can denature money with more money. Maybe that’s why Garth called your argument specious?

#170 Harlee on 05.29.12 at 10:41 pm

Jim @ 170
If I had put some gold in a time capsule back in 1913 and then dug it up today I would be waaaayyy over a hundred years old and would probably not give a damn about the worth of some nice shiny metal. What a stupid arguement that is. Nothing wrong with someone having some gold stocks (or even a bar of gold) but I don’t think they should hold it for a hundred years. Talk about poor investing habits…… LOL

#171 Randy on 05.30.12 at 8:59 am

http://www.businessinsider.com/another-housing-collapse-is-coming-soon-2012-5

#172 Ed from TO on 05.30.12 at 10:58 am

I do respect most of your observations on this blog, but declaring that March 9 was ‘the day to buy’ is silly. You make that comment as though it was common knowledge at the time that the market would not go any lower. It is certain easy to make that statement 3 years later.

I bought that week. — Garth
—————————————————
Hey Garth,
I’m amazed you can time the stock market but your timing on the housing market sucks. You’ve been calling for a crash 4EVER

Guess you don’t live in Vancouver, Muskoka, Victoria, SW Ont, the Okanagan or most of E Canada. Once it hits your neighborhood, it’s too late. — Garth

#173 Bottoms_Up on 05.30.12 at 3:37 pm

For the great unwashed of this board:

“Are vaccines safe?
Answer:
Yes. Vaccines are among the safest tools of modern medicine. Serious side effects are rare. For example, severe allergic reactions can occur, but they very rarely do. In Canada, this kind of reaction has occurred less than once in every 1 million doses of vaccine, and there are effective treatments for this condition. The dangers of vaccine-preventable diseases are many times greater than the risks of a serious adverse reaction to the vaccine.”

http://www.phac-aspc.gc.ca/im/vs-sv/vs-faq03-eng.php