What the rich know

MAD1

Notice how the rich are getting richer? When energy giant Encana this week punted 20% of its employees, workers gasped and investors cheered. The stock went up. People who owned it made money – which was exactly the point. The guys who run Encana were, as they say on Bay Street, ‘adding shareholder value.’

Moral: working is harder than investing.

In the next few days expect a lot of numbers showing the US economy is growing measurably (but not seriously) weaker. Job creation’s expected to fall. The impact of the 16-day government shutdown on consumer spending and mortgage applications has already been negative. It’s even likely to be a lousy Christmas.

But at the same time over 70% of the biggest US companies now reporting third-quarter profits have exceeded analysts’ expectations. Profits, in fact, are expected to surge 4% in the final three months of the year, which is more than impressive.

Why? Easy. A struggling economy brings sustained low interest rates and cheap corporate loans. Besides, companies are getting more ‘productive’, which means they’re busy replacing expensive employees with network architecture. More money falls to the bottom line. Bigger profits. Higher stock.

In fact, the result of this growing chasm between the economy and investors is dramatic. So far this year the Dow is up 22.7% while the S&P 500 has gained 26.4%. Even the laggard TSX in Toronto has now swollen by 10.45% since January, despite a recent dive in the price of oil and a 30% dump in the value of gold.

Of course, not everyone likes to load up on stocks and hope for the best, which is why a balanced and diversified portfolio makes sense. For example, if you had 60% exposure to growth assets (Canadian, US and international stocks, as well as REITs, all owned through diversified ETFs) and 40% safe stuff (various bonds and preferreds) you’re ahead about 9% this year. That portfolio of course has far less volatility to it, and is performing well despite a mid-summer slump for assets that were hit by rising interest rates (like those REITs).

The point is this: After Rogers Communications announced layoffs this week (who needs journalists when you have blogs?), the stock went up. Duh.

A lousy economy even has the Bank of Canada throwing in the towel. Its latest tablet from the mount dropped a long-standing reference to the next interest rate move being up. What the new boss there isn’t worried about any more is inflation and a too-high dollar. Now he’s sweating over the ‘output gap’ as factories gear down, along with a limping loonie and the spectre of deflation.

The central bankers also worry about condos. And mortgages. And the fact house sales in Toronto were 15% higher last month than the year before. The same cheap money that’s goosed corporate profits and bloated the portfolios of the wealthy has sucked the masses into a debt vortex. As an inestimable number of boring articles on this pathetic blog have documented, most people don’t have much of a retirement pot to pee in these days. Savings have withered as more net worth migrates into real estate. Half the people within a few years of retirement freely admit they’ll probably run out of money, while cheapo interest rates have raped and pillaged the yield on our fav national asset, the beaver-certified GIC.

As mentioned here yesterday, Boomers are encouraging a new generation of housoholics, and we know that half of the people with TFSAs have no funds there, and 80% of the rest have resorted to savings accounts. In short, it’s no wonder money’s flowing up the food chain to the folks with liquid portfolios, while debt is trickling down to enslave the rest. That may be a tad simplistic, but nobody’s house is increasing at 9% annually any more, nor will that be happening again (if it ever did).

The masses love real estate because they have to live somewhere, houses can be bought with extreme leverage, and your mom made money owning one. Most folks have no idea what a REIT or an ETF is, nor where to get one. But everyone has a comatose savings account and a mortgage. Millions of us shovel billions into bank GICs paying 1% when the same bank’s preferreds pay 5.1% with a dividend tax credit boosting it past six per cent. As I have said here in the past, the world is dividing. Wealthy people own assets. The rest hold debt.

Soon this could be the most divisive feature of our society.  Choose your side with care.

203 comments ↓

#1 T.O. Bubble Boy on 11.06.13 at 9:57 pm

TFSA just passed $10,000 in tax-free gains this week! ($35,500)

Can’t wait for Harper & F to lie about balancing the budget so the annual contribution room doubles!

#2 Pulp Faction on 11.06.13 at 10:00 pm

A divisive “valley of a gap” between rich and poor is not good for anyone.

Any good plan for anything in life, includes the word “balance”.

#3 jan on 11.06.13 at 10:06 pm

Check out this semi in New York
Its like a third the price of one in Toronto……Unbelievable

https://www.google.com/url?q=http://www.zillow.com/homedetails/1571-E-49th-St-Brooklyn-NY-11234/30763048_zpid/&sa=U&ei=4O56UvP4FMHQrgGG8YDIDQ&ved=0CA4QFjAD&client=internal-uds-cse&usg=AFQjCNHT_mTnH0AizliThkw7Q62lyFHNQw

#4 blase on 11.06.13 at 10:07 pm

Hate time changes, it throws my blog reading schedule off kilter.

Canadian gold producers on sale at fire sale prices. What’s your take Gartho?

#5 Mrs Riverview in WPG on 11.06.13 at 10:08 pm

You are right, but is this anything new? I ask with respect.

Western Canada was settled by people who came here because they could own land, which back then was a productive asset, because they were creating working farms. The farm was their livelihood. There were people who lived in cities, working class folk who had no assets, they worked for very wealthy people, under horrible conditions. Why those folks didn’t go and get their own farms, I have no idea…

The crazy thing is, now, it is remarkably easy to buy productive assets. You can go online, open an account and buy all the assists you write about. You just have to put aside some cash to do it with and that is the stumbling block. It is so easy, in fact, it is hard to believe people do not own these assets, especially after seeing all the stuff these same folks buy when they post photos on Facebook.

#6 Izzo on 11.06.13 at 10:15 pm

No wiser words have ever been spoken. The chasm in society is growing at an extreme pace and its so obvious here in Toronto with the explosion of fancy cars that seem to be flooding the streets. However, most of us dont see the oppressed underclass that is being wiped out.

By the way for anyone that wants to get a better glimpse at the real estate market I suggest you take a look at http://www.univs.ca, it actually shows price drops and listing dates even though its not shown on the MLS. Its not perfect and it doesnt have some listings but its quite an interesting site with a wealth of info.

Thanks Garth for all your work. Thanks to your advice I have loaded up on preferred & Reit ETF’s, muni bond cef’s, and MLP refinery stocks all after they have been beaten up quite badly so I am hoping I got in at the right time but the yield is quite high and the target date is 40 years out so plenty of time to ride the roller coaster.

#7 broadway skytrain on 11.06.13 at 10:19 pm

late tonite – maybe Garth is out west doing HAM surveys.

smoky did you hear about the teachers here…http://www.ctvnews.ca/canada/new-no-touch-policy-introduced-at-b-c-elementary-school-1.1528691

now that’s messed up as well as girly!

#8 Onthesidelines on 11.06.13 at 10:19 pm

” Choose your side with care. ”

Indeed. I do think you’re missing the bigger picture which is that as much as an economy can not be sustained on the debt of consumers, neither can corporate profits.

The irony of the investor class is that they themselves are in collusion with corporations in the ugly process of destroying the essential balanace in wealth distribution within their society that is ultimately necessary fo their own survival.

Ultimately both sides will lose. There are not two sides. That’s the part the the investor class seems to lose sight of.

Cheering that profits will go up when a corporation destroys labour is like cheering that your end of the boat just went up when the other end is taking on water and sinking.

#9 John on 11.06.13 at 10:21 pm

As much as I wish you were right Garth, you are ignoring a couple of big points that support high prices for houses. It is very expensive for the builders to build new houses in GTA due to high government fees and limited supply of the land further constrained greenbelt. BILD association is already screaming about it. Also, baby boomers love their houses as no other generation, hence I doubt they will abandon their houses in huge numbers to finance retirement; instead, they can just pull out an equity from property through reverse mortgage. Also, rental market is not that appealing after all. Out of thousands new units built recently dedicated apartment buildings make up only a small fraction. Condos are de facto where most of the rental units are coming from. And believe it or not there is a competition to get good units. Unlike with old apartment buildings, condo rental fees are not regulated, so landowners can increase fees as they like, which puts off a lot of tenants.

Sales of new-build SFHs are at the lowest level in a decade, and now form a small part of the market. As for Boomers leaving homes, reverse mortgages will be a poor option as interest rates rise. Surveys show about 30% plan to bail – more than enough to tip the market. — Garth

#10 Ripped on 11.06.13 at 10:22 pm

6 o’clock news

Sales up 19% since sometime
Year over year prices up 7.5%

Raw Raw the Real estate market

LOL

#11 Smoking Man on 11.06.13 at 10:27 pm

What the Rich Know?

Simple big loot is made by buying and Selling. Period

An olive branch to all those that I took extreme pleasure in offending the last few days, it was a riot.

For all you minions that are now skipping this post, move along.

For you young Mans Man, Girly Men, One eyed cyclops types. And those lovely ladies that chirp but secretly want meet the great one.

Here is my gift

Start and import export company, buy low from china, sell high here.

Enjoy shopping.

http://www.alibaba.com/

People that trade time for wages are losers.

#12 Macrath on 11.06.13 at 10:28 pm

The [email protected] planted an RFID chip in my debit card without informing me or even asking me if I wanted to be tracked like a criminal under surveillance. I realized I had been chiped from one of the blogdog posts the other day.

Complained and said “I want a non rfid Debit Card to access my personal private bank account.”
The [email protected] said “no way Jose ! Its an industry wide surveillance initiative and its not possible
to issue a simple Debit Card without an RFID Debt Slave tracking device.”

Since I didn`t owe the [email protected] any money and now knew that she could no longer be trusted, I
decided to seek an alternative.

Turns out that the first credit union I entered offered me a non rfid Debit Card ,no problem, no account fees, and more interest. That’s who I’ll be banking with from now on.

#13 Valleyboy on 11.06.13 at 10:38 pm

Today a branch manager was liking his lips at me like I was a rib eye steak. I went into the branch for card issues and all of a sudden the branch manager after pulling up my history starts buttering me up how fortunate I am to instantly qualify for 20 g. Being a guy with a young family I had a good chuckle. Just what I need mr banker more debt.

Smoking man
I agree with your comment about people who play sports like hockey of football have tougher skin. I played way to much competitive sports and really do feel like my tolerance and understanding of others is high and I don’t get bothered by insults or other people’s word. You get yelled at by your coach , team mates , and other team if you actually took it to heart you would just quit and cry in a corner. I’m not saying the sports player perspective is the right one , but seeing people cry over useless stuff sure makes a guy laugh who grew up where you either delt with it and adapted and learned from it or gave up. This part of society frustrates me but of course we have to adapt to the weak and sensitive or else were the bad guys.

#14 I'm stupid on 11.06.13 at 10:41 pm

But Garth… If I buy a home for a million dollars all my friends will think I’m rich. So what if my mortgage is 900k and I eat drywall and particle board. All I want is to appear to be wealthy because I have a job with a fancy title that really pays nothing.

#15 John on 11.06.13 at 10:41 pm

Hope you are right, I’m young, listening to you and holding on for now… Interesting point you made yesterday about large numbers of parents giving money to their kids. I grew up in one of the former soviet union republics, where it was a very common practice. Rich parents would even buy kids a condo as a present for a wedding, and kids would accept it without a blink. Very disturbing to see that now happening here. In Vaughan for example 75 per cent of 20- to 29-year-olds are still living with their parents. If that continues, you know what is next? 3 generations leaving under the same roof…

#16 Ripped on 11.06.13 at 10:41 pm

#11 Smoking Man

“Start and import export company, buy low from china, sell high here.”

What are you going to import that Walmart doesn’t already import a million more times of.

Idiot.

#17 X on 11.06.13 at 10:43 pm

‘The central bankers also worry about condos. And mortgages. And the fact house sales in Toronto were 15% higher last month than the year before. The same cheap money that’s goosed corporate profits and bloated the portfolios of the wealthy has sucked the masses into a debt vortex.’

What do you think is F’s plan in regards to the RE market? Poloz has to keep rates low for at least another year.

#18 David on 11.06.13 at 10:44 pm

Love your blog but still wonder why you deny the Chinese corrupt money that is adding tinder to some of our RE markets. Until we ask offshore buyers where they got their money, we will have the crooks and thieves shipping money here, and houses are a lot less conspicuous than big bank accounts.

http://qz.com/143017/beijing-goes-hunting-for-overseas-real-estate-by-corrupt-officials/

I don’t deny there are as many crooked Chinese as there are Canadians. But there’s no evidence they have moved house prices here in any meaningful way. Worry about things that matter. — Garth

#19 not 1st on 11.06.13 at 10:45 pm

Garth is right. Whenever corporate america or wherever flirts with a recession, they come back leaner everytime. They invest in plant and machine and equipment and automation and efficiency, not usually more people.

I feel for the next generation because a lot of the jobs out there will be gone, and all that will remain is low paying, low skill ones.

Instead of investing in the stock market, invest in lifelong business for yourself.

#20 4 AM Sunrise on 11.06.13 at 10:45 pm

I’m reminded of Bill Gross’s latest newsletter where he talks about how he’s essentially profiting from people getting laid off and ending up in the food bank lines:

http://www.pimco.com/EN/Insights/Pages/Scrooge-McDucks.aspx

#21 DonDWest on 11.06.13 at 10:46 pm

“Moral: working is harder than investing.”

Leave it to a fellow rich psychopath to defend the destruction of society.

Yes Garth, let’s all become day traders, nobody has to work. That’s the solution! If only us suckers stopped working/producing and we spent all of our days huddled up by the computer looking at graphs on questrade.com

I’ll leave you a moment to ponder why we all can’t simply become an “investor class”. . . If throwing away jobs for short term profit is such a wonderful idea, why not eliminate ALL of the jobs while we’re at it?!

Where did I mention day trading? Extremes weaken your argument. — Garth

#22 Saskatoon-Living on 11.06.13 at 10:48 pm

Agree with your RE view but your continuous preaching of ETF’s is misleading the readers of your blog. If you have no clue of the market, are 50+, conservative, and can’t be bothered with a little research, then ETF’s are fine. If you’re younger and have time to do some research, you can have a diversified portfolio with individual stocks, and have a far greater return than 9% a year. You know I’m right Garth.

It has nothing to do with age or style. ETFs reduce volatility and add diversification. If you don’t know the value of those two elements, you should not be investing. — Garth

#23 living_in_surrey on 11.06.13 at 10:54 pm

Does anyone know whether this listing is sold or just taken off the mls? MLS#: F1319855

#24 John on 11.06.13 at 10:55 pm

So what would be an asset allocation for a young family currently saving for a house and a good moment to buy within next few years?

#25 not 1st on 11.06.13 at 10:56 pm

One single technology is waiting in the wings to deliver a massive blow to the working world.

What is it? 3D printing. They have already learned how to print out various alloys and metals now. Soon there will be only a few things you can’t make yourself. Imagine how many people out of work after that technology takes hold.

They are even experimenting with a 3D house printer, so soon these particle board shacks will be worthless and framers begging on the street.

#26 Smoking Man on 11.06.13 at 10:57 pm

What I love about this pathetic blog is I learn so much.

The finance, investing, betting, due it my sleep. crazy returns.

I have spent almost 5 years writing my book that is almost finished. I had no idea that using words like Girly Man, and Feminized male would be so insulting to woman. I’m not lying honest. I didn’t know.

Had I published it I would have eliminated 80% of the potential market. Cause I got tones of it in the book.

A quick Find and Replace with emasculated male should do the trick.

Deep in the archives of my blog, I have a theory on how words are invented.

I think I should take that one out too….

Enough on this topic. — Garth

#27 Mr. Reality on 11.06.13 at 10:57 pm

Garth, you are talking about earnings that have been revised down consistently across the board for months. Its pretty easy to beat when the bar is set so low.

Its like saying prices of homes are up 20% compared to last year, except last years numbers were the worst in a decade.

The stock market is a nothing but a casino and not a bell weather for anything any more. You can thank the central banks for that.

Mr. R

Actually you are quite wrong. But I sense that’s irrelevant. — Garth

#28 Entrepreneur on 11.06.13 at 11:01 pm

It is almost like a big pimple ready to pop.

The debt herd are geared into one direction…make money to pay the debt with interest on a monthly basis, everything is last. May have dire consequences on important issues like earth, healthy food, stress, etc. Could earth’s weather pattern end all this nonsense of mankind…earth does not need mankind.

My father-in-law did say if their is a heaven and hell this is it. I lived for my country, I worked for my country but I can see we are heading in the wrong direction…another topic, another day.

#29 Randy Macho Man Savage on 11.06.13 at 11:04 pm

MJ’s mansion is up for auction at $20M+

http://www.youtube.com/watch?v=3lf_w0olusA

The only reason people have 50k+ square foot house is because they can.

#30 Retired Boomer - WI on 11.06.13 at 11:06 pm

Balance my friends balance. Sort of like going to church, but enjoying a few cocktails with your friends.
So should your savings be savings (cash) and your investments be productive!. Want a few bonds ok 20% or so I say, but remember that increases your losses when the markets take their inevitable dump. Can’t stomach that, then increase your bonds. (Bonds = bonds & preferrers, and convertibles in my world).
As for equities, I like Index Funds, and ETF’s. Managed funds need not apply.
I guess I’m well diversified as I’m closer to 23% YTD not that 9% Garth mentioned in tonights blog.
It’s my money, and I’ll fly if I want to, fly if I want to.
(…with apologies to Lesley Gore)

#31 Goldie on 11.06.13 at 11:07 pm

Depressing post tonight. So many people losing their jobs while the top eats cake. Worrisome.

Not exactly. The wealthy also represent a pool of capital that finances businesses and creates jobs. That’s what stocks do. They transfer risk onto those who accept it for potential return. Be glad enough of these people exist. — Garth

#32 Dr. Bunsen Honeydew on 11.06.13 at 11:07 pm

— his·tri·on·ic
Pronunciation: \ˌhis-trē-ˈä-nik\
Function: adjective
Etymology: Late Latin histrionicus, from Latin histrion-, histrio actor
Date: 1648

1 : deliberately affected : theatrical
2 : of or relating to actors, acting, or the theater
3 : comments on greaterfool.ca by DonDWest

— his·tri·on·i·cal·ly \-ni-k(ə-)lē\ adverb

#33 Smoking Man on 11.06.13 at 11:07 pm

#16 Ripped on 11.06.13 at 10:41 pm
#11 Smoking Man

“Start and import export company, buy low from china, sell high here.”

What are you going to import that Walmart doesn’t already import a million more times of.

Idiot.
……………………………………….

Hilarious,

My son is selling my software for crazy loot, and maintance fees, better stuff is available on line for free.

Doesn’t stop us. It’s all about the pitch, the sales script and the close.

All sales are emotional.

Anyone with 1/2 a brain a low IQ and a bit of an imagination could become a millionaire in a year with that link I provide.

Your the Idiot…..

#34 Country Girl on 11.06.13 at 11:08 pm

#11 Smoking Man “Start and import export company, buy low from china, sell high here.”
#16 Ripped on 11.06.13 at 10:41 pm – What are you going to import that Walmart doesn’t already import a million more times of?

Crack?

#35 ILoveCharts on 11.06.13 at 11:10 pm

From yesterday’s thread:
HAM = Hot Asian Money. As in “Asia”, which (when I last checked) was offshore. HAM is an offensive term when you apply it to anyone who lives in your hood with equal citizenship who happens to be yellow. — Garth

#216 Devore on 11.06.13 at 9:42 pm
So if offshore is 3% of the purchases, and HAM is a subset of offshore, what is the problem exactly? A handful of sales a year?

Let’s revisit the analysis:
http://www.greaterfool.ca/2013/07/23/aliens/
“Turns out the Vancouver board does the same thing. Currently 88% of all real estate buys in the region are being made by people who live there. About 6% come from elsewhere in Canada, and only 6% don’t live in the country. Seriously.”

A few things:
1) HAM applies to the money, not the person. I’m not talking about people so quit turning it into that. I’m trying to have a conversation about dollar bills.

2) You can’t tell us to not trust the board 99% of the time but to take their stats as gospel on the one occasion that it supports your point of view. We’ve already established that stats from the board are garbage. As far as we can tell, it’s very easy for the buyer to list any local address (their lawyer, friend, etc.) for convenience and to give them more bargaining power.

3) I think it should go without saying that having 6% of all purchases made by people who don’t even live in Canada is pretty high – especially when those purchases are concentrated on a few small segments of the market and a handful of communities. If sales drop 6% next month, surely people will claim that the bubble is starting to burst! Or is 6% now “not a big deal”?

4) If you look beyond the stats and understand how the purchases are made, you will see that the real HAM numbers are likely much higher.
Example: Someone arrives on a student visa and moves into student residence for the first year. In year two, Mom and Dad in China wire them money and they buy a place. Using the above stats, that’s a local purchase but the money is clearly HAM.

Go worry about something that actually matters. This is boring. — Garth

#36 Smoking Man on 11.06.13 at 11:13 pm

Enough on this topic. — Garth

Your right, happens every time I stay sober, hitting the couch, reclining the seat and cracking open a bottle.

My fingers are sore over the last few days.

Cheers dogs…

#37 Son of Ponzi on 11.06.13 at 11:14 pm

Garth,
Every time a company announces layoffs, their share price goes up.
That’s how sick the shareholders are.
No concern for people, only greed.

Shareholders have little to do with it. — Garth

#38 DonDWest on 11.06.13 at 11:17 pm

Where did I mention day trading? Extremes weaken your argument. — Garth

I’ve seen you continuously banter on how the rich are all so clever and we’re suckers for actually having to work. We get it, the rich are lining their pockets through the stock market by destroying jobs. There seems to be no outrage on your part as to how unsustainable this whole process will become.

Yes, you want us to throw cash in a “balanced portfolio” in the belief this will somehow allow us to compete with the rich. It won’t – the stock market is a rich man’s poker game.

You need a lot of money in order to make a lot of money. A talented investor that doubles his profits with just $500 to his name will only make $500 at the end of the year. Meanwhile, a not so talented rich person who makes 5% profit yields a year, yet has five million to his name, just made $250,000 a year. It’s a game that heavily favours the rich. Asking the working class to fork over a bit of their income towards ETFs and REITs won’t even make a dent in the huge disparity between the two.

Long story short, the disparity isn’t caused because the poor are “too stupid to invest,” the disparity is caused because the poor have nothing meaningful to invest with.

#39 Bob Rice on 11.06.13 at 11:20 pm

On investing in preferreds, is this a type of vehicle that you buy and hold (more of a long term investment) or can they be purchased with a short term window in mind (1 to 2 years?)

Thanks

Either. Fully liquid. — Garth

#40 Nosty in LLardbutt Land on 11.06.13 at 11:22 pm

#172 Smoking Man on 11.06.13 at 4:06 pm — “And my fave posters Vladimir and Beach Girl”

Hi SMan. For the latest political lying doublespeak, remember dubya’s War on Terror mantra? Read the first para. and know that it was, and remains a complete hoax, which proves that 9-11 was clearly an inside job. It is almost identical to what happened in 1933. dubya’s gang needed an excuse (shock and awe) to terrify sheeple to become submissive slaves. Some are finally waking up to the simple fact they’ve been duped for over a dozen years, but there are plenty that still believe the govt.’s lies.

It has led to predominantly western govts. launching new spy networks on their citizens — Spying 101 Would have been curiously interesting to be a fly on the wall during the 16-day shutdown, to see what the WH / Pentagon / CIA are planning next (these are the prime terrorists world wide). Never let a good crisis go to waste!

#41 DonDWest on 11.06.13 at 11:26 pm

#33 Smoking Man

Who exactly is buying your products when the rich are gutting all of our jobs? The middle class is now dead – doesn’t leave much of a customer base to sell anything. I would find it hard to believe the rich are buying from a door to door salesman.

#42 Carpe Diem on 11.06.13 at 11:36 pm

SM .. such a lovely post.

My company was in talks with the alibaba in terms in helping them.

Alas, I resigned from a company that had Alibaba in the funnel! From the site, I see some signatures of me …

Alas, I’m now just an IT consultant doing good cash to solve huge problems … That is my niche …

I need a smoking man type adviser ….

#43 Kaganovich on 11.06.13 at 11:42 pm

#8

Good comment! There can only be so many collecting economic rent (unearned income like profits, dividend, capital gains). We are already dealing with the exhaustion of creative ways to fluff demand in a population that is essentially loaned up. It is plainly evident that those at the head of the cheap money river would rather engage in financial speculation than invest in a long-term business in the real economy with equipment and employees. Progressive fiscal policy and less monetary ‘fixes’ may turn this around.

http://thinkprogress.org/economy/2013/06/07/2123831/rich-entrepreneur-the-wealthy-arent-job-creators-middle-class-workers-are/

Did I just wander into an NDP convention? — Garth

#44 Mister Obvious on 11.06.13 at 11:49 pm

#25 not 1st

One day in the near future we’ll all be able to 3D print our own baloney sandwiches.

#45 Shawn on 11.06.13 at 11:53 pm

WHAT THE RICH KNOW… ABOUT LOW TAXES FOR THEM

What are the ways that the rich can save taxes? Let me count the ways (and I don’t know the full list by any means)

1. NO taxes on unrealized capital gains. Have a stock that’s gone up 100% or 1000% over the years? No tax is due until you sell. (Meanwhile if a middle income earner buys a bond that pays interest only at maturity they must still pay the tax every year as if they received the interest).

2. Pension and RRSP contributions are tax deductible. It’s usually people with the bigger incomes say $70k to $140k that benefit most from this. Well maybe these are not the rich but they are not the poor, especially if there are two incomes like this in the marriage.

3. Tax deferred growth within pension and RRSP plans.

4. RESP plans to get help subsidize junior(s)’ education.

5. Tax free capital gains on the sale of primary residence even if its a castle or mansion.

6. 50% off the normal tax rate for capital gains

7. Lower taxes on dividend income

8. The ability to run at least some personal expenses through a business. (The rich often have a business of some kind)

9. Pension income splitting. A nice perk for those that have pension income.

10. Tax Free Savings Accounts.

Now most of these are in theory available to the poor and lower middle class as well. But gee, strangely enough, most of them don’t have the $5,500 for the TSFA, the $2500 per kid for RESP, The 18% of earned income for RRSP (assuming no pension). It’s seldom acknowledged but on top of all the tax breaks listed, personal tax rates are lower than they were some years ago.

Oh yes, and Corporate tax rates are dramatically lower than they were 20 years. I am talking drops from about 47% for corporations down to about 27%. HUGE drops.

YEAH, it’s good to be rich and know how to influence politicians to coddle you like this.

I know, I benefit from 9 out of 10 of the above items (no pension splitting just yet).

Bill Gross just came out and suggested higher taxes for the rich, I agree. But no I am not going to pay it voluntarily and that’s a silly retort, if anyone was thinking that.

#46 Nemesis on 11.06.13 at 11:56 pm

@Mr.Reality/#27

…”The stock market is a nothing but a casino…”…

SillyRabbit, RealCasinos have rules – just ask Homme de Fumer…

:)

#47 Tiger on 11.06.13 at 11:58 pm

DELETED

#48 Shawn on 11.07.13 at 12:01 am

STOCK MARKET IS CASINO?

If so, it is showing everyone 3 cherry’s these last five years!

Actually Casino is a zero sum game. Negative sum game after the croupier’s take.

Stocks are a positive sum game as money flows in from customers of businesses listed on the stock exchange. Stock trading is a zero sum game. Stock holding is a positive sum game.

#49 whatever!! on 11.07.13 at 12:01 am

I hope the gaps between the Ultra rich and the poor gets bigger. Teaches the poor asses a lesson for being stupid.

I don’t feel sorry for people who loses out on pyramid scheme, and get con bet the preditors. It pays to learn and educate yourself on how the system works

#50 Smoking Man on 11.07.13 at 12:04 am

#41 DonDWest on 11.06.13 at 11:26 pm#33
Smoking ManWho exactly is buying your products when the rich are gutting all of our jobs? The middle class is now dead – doesn’t leave much of a customer base to sell anything. I would find it hard to believe the rich are buying from a door to door salesman.

…….
Damn I promise myself not to post no more tonight.
Hence having an addictive personality I can’t help myself.

Rich is having imagination and balls.

Loot is just gambling chips.

#51 GenXer on 11.07.13 at 12:10 am

I don’t deny there are as many crooked Chinese as there are Canadians. But there’s no evidence they have moved house prices here in any meaningful way. Worry about things that matter. — Garth

Multiply the same percentage of crooked folks and that is one heck of a lot of dollars to throw at a real estate market the size of Canada’s. 3 houses on my street have been bought cash in the past year by Chinese retirees. All 3 now sit empty – no owners, no occupants. I know that 3 houses isn’t a statistical certainty, but something doesn’t add up.

#52 Jas Girn on 11.07.13 at 12:11 am

What a depressing post. I would rather have a society where there is concern for the livelihood of everyone, and not a dog-eat-dog system.

Very depressing….

#53 Cici on 11.07.13 at 12:14 am

Garth can you please publish some new books soon, like by December?

I have Christmas gifts to purchase and don’t necessarily feel like starting a bidding war for “The Money Road” ;-)

And what about those pan-Canadian conferences you give? Seems like its been a while and you never come to Quebec (or at least not publicly)?

#54 Devore on 11.07.13 at 12:19 am

#43 Kaganovich

There can only be so many collecting economic rent (unearned income like profits, dividend, capital gains).

Wow, economic rent. Profits is unearned income? Profit is the difference between the cost of a product/service and the price buyers are willing to pay. It is the result of hard work of many people. Dividends are profits flowing through to investors, who risk their capital into continual financing of the business. Capital gains is the increase in value of the business, through rising profits, research, innovation and productivity gains that it successfully brings about vs its competitors. This is a direct manifestation of wealth creation, whether the business is a mom & pop small enterprise, or a multinational giant.

It is plainly evident that those at the head of the cheap money river would rather engage in financial speculation than invest in a long-term business in the real economy with equipment and employees.

Are you saying Rogers and Encana are not long term businesses, in the real economy, who have equipment and employees?

#55 John Smith on 11.07.13 at 12:26 am

My gf called me and I said, “Is this about real estate?”

It was. She wanted to tell me the house was eyeing on mls which I wasn’t interested in was sold. For good measure, she added that another house in another neighbourhood I didn’t buy in just sold for x amount of dollars.

So I told her like this. “I don’t wanna hear about real estate for another at least another year/ year and a half, period. The market is inflated. That’s my position. If you wanna buy real estate now, I suggest you use your own money.”

She called me later and told me, “You’re right” and that it was better after all if she rented for awhile and saved some more money.

That’s how you do it, girly men.

#56 Bob Rice on 11.07.13 at 12:27 am

On investing in preferreds, is this a type of vehicle that you buy and hold (more of a long term investment) or can they be purchased with a short term window in mind (1 to 2 years?)

Thanks

Either. Fully liquid. — Garth

So I’m thinking blue chip preferrers, like banks and the like?

#57 omg on 11.07.13 at 12:33 am

REAL ESTATE BOARDs WILL BE BETWEEN A ROCK AND HARD PLACE WHEN THE BOTTOM DROPS OUT

ONE THE ONE HAND – the RE Boards will be asking for government to help prop-up the housing market as the bubble deflates over the coming years.

ON THE OTHER HAND – they will be working their statistical black boxes overtime to show how markets are stable and not in free fall, in order to keep suckering-in buyers.

It will be hard for RE boards to ask F for better mortgage policy or ask provincial and local governments for incentives for RE buyers without an RE market in decline.

#58 Tiger on 11.07.13 at 12:34 am

iagree they always defeat themselfs cause thats there mind set can’t undo the sheeple effect (endemic) pandemic)
Did ya know re is falling in cndaaha
Yup dopers keep it up makes life way mor prof for non ddopers and we can buy mor re
Thanks

#59 Rexx Rock on 11.07.13 at 12:38 am

With qe on its 5th year the stock market is making new highs.I’ll bet there is no taper and they increase qe to over 100 billion.They can’t taper or raise rates,we all know that.This will end badly someday even Garth must see the writing on the wall.

#60 Andrew Woburn on 11.07.13 at 12:39 am

The world is waking up to the issue. From the Economist:

“All around the world, labour is losing out to capital”

http://www.economist.com/news/finance-and-economics/21588900-all-around-world-labour-losing-out-capital-labour-pains

From the MIT Technology Review:”How Technology Is Destroying Jobs”

http://www.technologyreview.com/featuredstory/515926/how-technology-is-destroying-jobs/

From Paul Krugman: “The Rise of the Robots”

http://krugman.blogs.nytimes.com/2012/12/08/rise-of-the-robots/?_r=0

Even Garth is in trouble. From the Investment News, a magazine for investment advisors:

“Does the rise of online platforms actually threaten to make traditional advisers extinct?”

http://www.investmentnews.com/article/20131103/REG/131109987?issuedate=20131106&sid=TECH&utm_source=tech-20131106&utm_medium=in-newsletter&utm_campaign=investmentnews&utm_term=text

We’ve all been sleeping on the railroad tracks but the train is coming faster and faster. Can’t happen here you say, who’d buy all the stuff the robots make? Well there are lots of people buying shiny stuff in China, India, Brazil and Mexico even though the average income is squat and millions are not even in the official economy. You can still have an economy even if half or more of the people can’t play. We might head off anarchy with some form of guaranteed annual income but the social implications of making millions of people literally unemployable are horrendous. Maybe Rob Ford is showing us the way to the future. Remind me again, why we were worried about global warming.

#61 Smoking Man on 11.07.13 at 12:44 am

#52 Jas Girn on 11.07.13 at 12:11 am
What a depressing post. I would rather have a society where there is concern for the livelihood of everyone, and not a dog-eat-dog system.Very depressing…

You ignorant human, teachers did a number on you.

Do you think the lion cares about fairness, fair play, nope it wants to eat.

Humans are no different. Well just a bit, a good teacher will make you a tasty meal.

Sorry for the reality.

#62 jim on 11.07.13 at 12:44 am

“The impact of the 16-day government shutdown on consumer spending and mortgage applications has already been negative.“

I think the rise in mortgage rates is what killed mortgage applications here in the US. Take a look at a mortgage rate graph over the last 12 months. Political grandstanding is not the null hypothesis.

#63 jim on 11.07.13 at 12:52 am

54:

You sound like someone who learned economics from a textbook. That`s great. The models that they use in both macro and micro are simplifications, as are all models. However, they have some particularly dodgy choices in both camps. (e.g., using rational agents to model the behaviour of human beings is just a bad idea. It makes things tractable at the cost of correspondence).

One of the problems is that the real world doesn`t meet the assumptions of many economic models. In the case of your argument, there are many ways for people to earn wealth without earning a profit in the sense you describe. Theft, inheritance, counterfeiting, etc.

One of those ways is to have governments hand you nice fat juicy contracts, subsidizing your existence no matter how poorly you perform. Not all purchases are made in a market, as anyone familiar with government procurement knows.

Consider CGI, the Courtyard Group or any other large systems integrator that works for government. Their contracts are usually obtained from political connections, not from market mechanisms. Because governments care nothing for the public`s money, the engagements become a long death march with little value for the purchaser. Hence the gun registry turning into a billion dollar system, when it was probably a 30 million dollar project.

Many corporations (e.g., the banks, bombardier, CGI) suckle from the government teat in this manner. Their `success`is not through R+D, process optimization or delivering value, but rather being politically connected and exempt from any sort of feedback on the quality of their `work`. Unlike a haircut or dinner, the taxpayer cannot challenge them on the basis of contract or consumer protection law.

So a good swath of the economy doesn`t have to care about such things as delivering value, innovation and the like. It is particularly bad in Canada, given that many `services`(e.g., banks, telecom, cable) are delivered by cartels.

#64 HDJ on 11.07.13 at 1:02 am

“Notice how the rich are getting richer? When energy giant Encana this week punted 20% of its employees, workers gasped and investors cheered. The stock went up. People who owned it made money – which was exactly the point. The guys who run Encana were, as they say on Bay Street, ‘adding shareholder value.’

Punted employees and cheering investors? The point was to make money? What a cold-blooded outlook on life.

#65 Son of Ponzi on 11.07.13 at 1:03 am

Garth,
Every time a company announces layoffs, their share price goes up.
That’s how sick the shareholders are.
No concern for people, only greed.

Shareholders have little to do with it. — Garth

I thought the Shareholders are taking the risk, and are holding management responsible at the Annual meetings.
Oh silly me, it’s the CEOs with their golden parachutes who are calling the shots.

#66 Son of Ponzi on 11.07.13 at 1:06 am

Why does Bill Gates need 72 billion?

#67 drydock on 11.07.13 at 1:09 am

Is there a full moon tonight?

#68 takla on 11.07.13 at 1:12 am

wow,seems like more than a few of tonights blog dogs are throwin in the towel.Sure,the economic outlook sucks ,riseing unemployement ,tanking u.s/euro economy and housing deflation can tick one off especially when we have been enduring this for the last 5 yrs.Of course the rich and connected get richer,they always have,
,but now the middle class are being squeezed like never before. Garth ,you should have two separate blogs…one for the rich 5% {who can afford to follow your investment advice}and one for the rest of us.

#69 Bullseye on 11.07.13 at 1:17 am

#38 DonDWest

Long story short, the disparity isn’t caused because the poor are “too stupid to invest,” the disparity is caused because the poor have nothing meaningful to invest with.

——

best post ever on the history of this blog

thank you Don

#70 AB Boxer on 11.07.13 at 1:22 am

DonDWest,

#38
I fully agree with your sentiments on the stock market and how much easier it is to make money if you have it.

While I agree with Garth’s blog that real estate prices are fueled by artificially low rates, and with many other factors including irrational buying behavior, boomer’s funding their kids and offshore money, he seems to think that investing in this balanced portfolio (whether through ETF’s, REIT’s, Trusts, Mutual Funds, Preferred Shares, Dividend Producing Common Shares) the common thread is that they are traded through or directly related to equity markets and the markets have been driven to highs because of the same low rates, irrational behavior, and that little issue of quantitative easing in the US.

The equity markets are as big a bubble and gamble as the real estate market for many of the same reasons.

Why Garth suggests staying out of one bubble, but supports actively being in another is not sensible.

You have much to learn about asset classes. — Garth

#71 Jason on 11.07.13 at 1:44 am

Hi Garth,

Whatever happen to you writing about Fortress? I was all excited to read about it, so was my wife.

Jason

#72 Kaganovich on 11.07.13 at 1:52 am

Devore

Thanks for responding. While your reply makes sense in theory, and it reminds me of my microeconomic courses we took in university studying the firm or something like that, I take it as more prescriptive in nature rather than an accurate portrayal of the concrete situation we are in today.

The clincher here is ‘what buyers are willing to pay’…as if there didn’t exist oligopolies and price setting with regards to most essentials that people need (Garth writes about this daily). Debt pyramiding, tides of easy credit explain the majority of capital gains. You are explaining the inflation of all asset classes across the board as a result of research, innovation and the like? (Brings to mind a quip Volker made about the only worthwhile innovation in the financial industry being the ATM!!! The rest apparently was a swindle, control fraud and so on.) Would a capital gain realized by the sale of a house that appreciated fourfold over a decade be classified as the result of research, innovation and productivity? Or in a more general sense, will our grandchildren look back to the massive housing bubble we blew, replete with capital gains all around, until it crashes, and say “Wow, that was an excellent way of creating wealth.” I doubt it, but maybe they will.

As for profits, I understand them as drag on the economy after say, 6 or 7 percent. Maybe even that is too high. What is a profit? I always understood a profit to be the remainder of a business’s surplus after all the innovators, managers, workers, building maintenance and operation expenses etc. are covered. Note I didn’t include many of the externalities that have fed the extreme uptick in corporate profitability as of late (namely the ongoing destruction of our physical habitat combined with the future expenses of climate change blowback presently unaccounted for by most firms), but that isn’t even on the radar for most. So this remainder, the profit portion, gets divided amongst the investors, the ones who risked their own capital right? I agree with you, that is indeed what happens, but this risk of capital you claim is the justification of dividends, where is it lately? Through the multiple bailouts and easings most of us have been (un)fortunate enough to live through thus far, the world has just witnessed the largest socialization of losses by bond and shareholders ever. This happening was in large part a result of these same investor reaping their biggest ‘capital gain’ by investing in the political system rather than nuts and bolts businesses in their own countries (I think there is fairly extensive research done about the investment theory of politics). Besides, how does the hoarding of wealth by a thin sliver of the population help the economy? The rich only spend a small portion of their wealth on goods and most services outside of finance. In fact, I would hazard a guess that there is strong connection between this claim and the existence of tax havens. The last time we saw the degree of wealth disparity we have now was in 1927. The majority of job gains in the US during the recovery so far have been part-time service sector employment, hardly known as a paragon of expanding the limits of human creativity.

As for Encana, I may not understand what you are getting at. Do you mean to say that they laid off twenty percent of their workforce because of productivity gains, thus explaining why their share price rose? Or did their share price rise because they were able to extract more work from less people? Some may call this productive I guess, but the flipside of this type of productivity is ugly. For example, many of my neighbours and friends are, or were, employed by a major western canadian oil company that also underwent a fairly significant restructuring where many were laid off. Those that hung on were faced with double and triple the workload for no extra remuneration and already, a few short months later, they are buckling. Their domestic life gets more stressful as they are unable to devote as much time to the family as they once did. Some subsequently quit, leaving certain divisions of their former firm in the lurch. And we call this productive? Perhaps the shareholders did alright, I don’t know. The social bill will eventually get picked up by taxpayers I guess.

Garth, if that is what you think gets discussed at an NDP convention, you would be sorely dissappointed!

#73 KommyKim on 11.07.13 at 2:00 am

RE: #25 not 1st on 11.06.13 at 10:56 pm
One single technology is waiting in the wings to deliver a massive blow to the working world.
What is it? 3D printing.

Yes, but think of how much the new “material” cartridges will cost for your 3D printer. LOL!

#74 Suede on 11.07.13 at 2:28 am

Smoking Man stop giving people all the good websites! How am i supposed to sell dirt cheap granite to husbands of horny housewives!

I hear Rob Ford is getting a second crack at being Mayor.

bahahahaha, that was bad.

#75 Tony on 11.07.13 at 2:29 am

Re: #48 Shawn on 11.07.13 at 12:01 am

The present day stock market is the same as the casino with the players long about to crap out. The people today are buying into a pyramid or ponzi scheme and we know how those always end.

#76 JR on 11.07.13 at 2:30 am

“Not exactly. The wealthy also represent a pool of capital that finances businesses and creates jobs. That’s what stocks do. They transfer risk onto those who accept it for potential return. Be glad enough of these people exist. — Garth”
Garth this TED talks has an opposing view that Rich create jobs.. Could you share your thoughts on this, as i tend to agree somewhat with the speaker in this presentation.
http://www.youtube.com/watch?v=bBx2Y5HhplI#t=32

#77 Mike on 11.07.13 at 2:34 am

#6 Izzo

Thanks for that link. Even with some missing info and old listings it is still a fantastic source of info!

#78 Notta Sheeple on 11.07.13 at 3:01 am

#8 Onthesidelines on 11.06.13 at 10:19 pm
========================

Probably the most intelligent post of the evening.

I guess those 20% laid off Encana employees now have lots of time on their hands to invest in balanced and diversified portfolios (insert sarcasm).

#79 Freedom First on 11.07.13 at 3:09 am

Garth, I like the Moral you gave in your 2nd paragraph.

I refined it for the average Canadian:

“Working to pay debt is harder than working to invest.”

As well as being diversified, balanced, and liquid, not paying interest on anything: credit card, LOC, heloc, bank loan, mortgage, student loan, payday loan, or paying any fees on anything you don’t have to, is an excellent way to go. Takes patience, creative thinking, work, and ignoring your co-workers, MIL, relatives, friends, really, any debt paying slaves who follow our societies/government/bankers brainwashing. No exceptions.

#80 Vamanos pest on 11.07.13 at 3:10 am

Facts (yes FACTS, not opinions) for all the whiners posting above:

Almost 70% of Canadian millionaires are self made (so how can there be some “rigged system” favouring the rich, when the rich are people that used to be middle-class or worse?)

The layoffs at Encana left a healthier company. Amongst the beneficiaries of this are 80% of workers that DIDN’T get let go. (If a company fails, 100% are let go.)

The NYSE is 221 years old, while the practice of trading securities is over 600 years old. DonDWest (#38) called this practice unsustainable. So, I’m not surprised he doesn’t get it.

#81 nancy on 11.07.13 at 3:13 am

I think in order to get Garth to finally see the truth about foreign corrupt money affecting the price of real estate in Canada we need to :
1. Tie him up, gag him, bag over the head
2. kidnap him and take him to Richmond, BC (aka HAMsville)
3. force him to spend his days at the chinese malls where corrupt officials like to buy expensive jewelry and gold, dine at chinese restaurants during the weekdays where corrupt officials like to order lobster, crab, and sharks fin soup for breakfast, stroll through Richmond Costco where corrupt officials like the novelty of spending copius amounts of money on everything…..then if that doesn’t do it, Mercedes, Lexus, Porsche dealerships where corrupt officials like to buy one of each.
4. Finally, show him the names of all the realtors selling multi-million dollar homes in West Vancouver, some names sell multiple homes in a single day. I assume corrupt officials like to buy more than 1 house.

After this, we will release Garth back into his world and he will see the errors of his ways.
“I’m so sorry Nemesis, that I ever doubted you.” as his lips trembled still haunted the experience.

I get it. You don’t like Chinese people. — Garth

#82 ValleyBoy on 11.07.13 at 3:18 am

# 49 Whatever

Well you sound bitter for some ironic reason or you just want a reaction. But yes to prosper in the system were in you essentially need to research more have a bit of luck or a good sales pitch drop your morals a wee bit or alot. If there were no corporations running our oil patch we be um like the Netherlands 1 trillion surplus and no idea what to do with it. There is more than enough cash to go around why a small amount of people continue to hoard it is just immoral. I feel I have benefited from the system, but the way it is ran to benefits the corrupt “or smart buisness men” is so wrong. Maybe in the near future when you see the poor actually start a revolution (not in Canada we still have it pretty good) maybe your thought would change.
Food stamps lower there handout like 15 percent this month in the us.
Corporations profits are up
Fed are starting to talk about how they want lower unemployment from 7percent to 6p ( which there unemployment is way higher). I believe if your out of the working force a month you don’t count as unemployed anymore anyway look it up “equals more QE” and I could name a bunch more false flags.

It should be about everyone working together to benefit the human race as a whole, unfortunately its the human race benefiting a small amount.

#83 Vivian on 11.07.13 at 3:21 am

so many people clicked our website from this site. why?
http://univs.ca

#84 Mark on 11.07.13 at 3:21 am

ILoveCharts, if “Asian Money” was a factor, then we would see a reduction in systemic leverage in the Canadian economy as more purchases are made in cash. When in fact, we’re seeing a rise in leverage, indebtedness, etc., because the housing market is being driven by domestic borrowing, not giant suitcases of money (or the proverbial electronic equivalent) washing ashore from Asia.

Rich people investing internationally in RE have existed since the dawn of international travel. There is no evidence that the trend has accelerated in Canada.

#85 Errol on 11.07.13 at 4:28 am

Garth Turner is Wrong!
Mr. Turner is wrong. Investing is like going to a nightclub and dating, sequentially of course, all the beautiful ladies at the club, and conquering them in turn. Think beautiful redheads, blondes, and raven haired beauties. How can you date an ETF, an average?

The proper methodology: dream of your ‘date’, make plans for the conquest, schedule an assignation, bed your gorgeous babe. It isn’t important what lines you use. Oldies but goodies such as ‘would you like to come to my room to view my etchings’ are perfectly acceptable. It is success that counts. Both during and after the affair it is important to take good notes. Unfortunately in the wake of the affair comes ennui until a new love blooms.
As I mentioned keeping records of your affairs is very important. This might include screenshots of the stock at very important moments(think hot camera angles and lingerie), technical charts with RSI, MACD, and Stochastics. Of course your ‘black book’ will have the intimate details of your latest hot date. This would include P/E, dividend yield, 5, 10 and 15 year average dividend increases, EBITDA and etc.
It is of course of the highest importance and discretion that your ‘black book’ not leave your possession so the intimate details of your affairs could become common gossip.
I am not one to brag about my successes but in 2012 I bagged TRI and BMO, plus had minor flings with RDS.b and and CPG, This year TD, GRT.UN, UL, ECA. Now I am working on RCI.b
So little time and so many ‘hot women’ at the disco! How could one ever date an average?

#86 Ahmed is as sheikh Ahmed on 11.07.13 at 4:36 am

#2 Pulp Faction
Bravely spoken.
#16 Ripped
Shame on you! Stepping all over his delusions of grandeur like that! LOL

#87 poor in raincouver on 11.07.13 at 5:18 am

Did blackberry shares go up after the recent lay offs?

#88 Toon Town Boomer on 11.07.13 at 6:46 am

Lot’s of folks just trying to make ends meet. With housing & renting cost eating most of their HARD earned money, and let’s not forget about the increasing cost of food. People have to eat & live some where indeed.
What about that choice?
It’s GREED that puts hardships on people.Very Sad to see & watch how families fall apart , children get hurt,and seniors struggle. We can’t keep going in this direction as this will become an ugly society that we all created. TAKE THAT TO THE BANK!

#89 economictsunami on 11.07.13 at 7:18 am

Sure companies can continue to shed workers (or replace them with cheaper foreign temp/contract workers; or robots) take on new cheap debt and pass this on in the form of divies or stock buy backs but that’s more about bottom-line savings not top-line growth.

Weak demand/ overcapacity is a secular not cyclical problem that even Japan has failed to continually come to grips with.

Economy’s supposed slow recovery is really a ‘secular stagnation’…

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/economys-supposed-slow-recovery-is-really-a-secular-stagnation/article15249940/

Even in a game of musical chairs, everyone believes they have the edge; until the music stops..

#90 Buy? Curious? on 11.07.13 at 7:35 am

“Not exactly. The wealthy also represent a pool of capital that finances businesses and creates jobs. That’s what stocks do. They transfer risk onto those who accept it for potential return. Be glad enough of these people exist. — Garth”

Is this like the Trickle Down arguement that conned a generation? We know it’s a lie. Rich people are able to send their kids to private schools where they meet other rich kids. They get into the best universities then get the best jobs. Please don’t say that that if I work hard I could be where they are. There’s no way I’m wasting my life on that tredmill. Gawddamnit, Smoking Man’s posts seem to be getting more intuitive everyday.

http://www.youtube.com/watch?v=e3Gao_3PfvQ

Not a class warfare blog, dude. I’m not here to justify an inability to succeed. — Garth

#91 jerry on 11.07.13 at 8:24 am

Equities to out perform bonds in 2014. Why?

#92 maxx on 11.07.13 at 8:31 am

#8 Onthesidelines on 11.06.13 at 10:19 pm

” Choose your side with care. ”

Best post ever.

#93 Ripped on 11.07.13 at 8:31 am

#33 Smoking Man

My son is selling my software for crazy loot, and maintance fees, better stuff is available on line for free.

Nothing unique, he’s no different then any other geek online or mega computer store selling software, circuit boards, chips, power converters, anything for a computer or the computer itself. It’s all made in China.

#94 jess on 11.07.13 at 8:47 am

This study reveals that tax haven use is ubiquitous among the largest 100 publicly traded companies as measured by revenue.

82 of the top 100 publicly traded U.S. companies operate subsidiaries in tax haven jurisdictions, as of 2012.

◦All told, these 82 companies maintain 2,686 tax haven subsidiaries.
◦The 15 companies with the most money held offshore collectively operate 1,897 tax haven subsidiaries. read more @

http://www.uspirg.org/reports/usp/offshore-shell-games

#95 Smoking Man on 11.07.13 at 8:52 am

Boom Euro rate cut. 25

Ha trouble in paradise…….

BOC next

take that to the bank…..

#96 Kaganovich on 11.07.13 at 9:05 am

Shawn, the investors friend

Here is a piece that dovetails nicely with your candid admission of the need for increased taxes on the rich:

http://faireconomy.org/sites/default/files/BornOnThirdBase_2012.pdf

#97 maxx on 11.07.13 at 9:14 am

#12 Macrath on 11.06.13 at 10:28 pm

Bravo!
Recently cancelled a credit card for that very reason. When I want a “flash pay” feature, I’ll bloody well ask for it.

#98 miketheengineer on 11.07.13 at 9:19 am

Garth et al:

I didn’t quite believe it when you discussed that people were “refinancing” to survive in these conditions….well here is my recent experience.

Talked with my neighbour on the left…he had to refinance his home, (purchase new car, resolve credit card debt, and school loans)…told me he was like starting from day 1, but was actually saving money, cause he now only has one bill to pay, instead of 3 and it is lower….oh and no equity in his home.

Then a few months later I talked to the guy on the right of me….and he told me that he had to re-finance (ie death of relative 25k, roof 5k, car expenses etc)…and he said it was like living in the home for 10 years and not paying off anything….

Everyone is under the squeeze now…..

#99 Smoking Man on 11.07.13 at 9:31 am

Oh to be a fly on the wall in Harpos office right now.

I’ll. Bet he’s got two phones going, flipping out at European Officials who have just given themselves a huge massive trade advantage now that we have a free trade deal with them.

On the other line is Prozac, Harpo saying fix this now.

While Prozac is texting his buddies export development.

It’s on boys,

Currency Wars.

#100 TurnerNation on 11.07.13 at 9:36 am

I’ve mentioned the idea of a ‘Scientific Dictatorship’; whereby scientists, numbers and government become god-like. The end of this always lies in eugenics.

(A man with a white lab coat; computer simulations. We’ll believe it as gospel. When there’s money to be made. Moral and social hygiene, we’re told)
Some of yesterday’s posters proved this.

(This is why corporate-communist regimes always first take out the arts, artists, religious leaders, professors, labour leaders. It’s why they stood by and let Iraq’s history and museum be looted. Not by any accident.)

#101 recharts on 11.07.13 at 9:48 am

Record low condo sales for GTA the last two days
Around 60 condos each day. Just think about it…again this is for both 416+905

#102 Smoking Man on 11.07.13 at 9:49 am

Not one of you guys realized what just happened in Europe, Maybe Turner Nation.

I will save you a thousand word essay.

BUY REAL EASTAE, BUY EQUITUES, BUY BONDS,

Anyone who owns grass in 416 your house just jumped 20k

#103 calgaryPhantom on 11.07.13 at 10:14 am

Higher home ownership % = Higher unemployment.

http://money.cnn.com/2013/11/07/news/economy/homeownership-unemployment/index.html?iid=HP_LN

#104 4 AM Sunrise on 11.07.13 at 10:19 am

Y’know what was moving house prices? (because I won’t let this topic die just yet) When I worked at a bank, I came across a nice lower-middle class Filipino immigrant family who’d bought a million-dollar house in Richmond with 5% down and some obvious CMHC magic.

Asian, yes, but definitely not HAM.

#105 Penny Henny on 11.07.13 at 10:21 am

Whats even better is Smoking Man is a fiction character who’s author has writers block, and is stuck getting his fix in the Gartho twilight zone. An author with extremely limited vocabulary, and dyslexia that can get a rise out of anyone.

That’s a story with in itself.
——————————————————-
Smoking Man. Really? Get a life, a real one. Away from the computer .

#106 Not 1st on 11.07.13 at 10:27 am

#73 KommyKim on 11.07.13 at 2:00 am
RE: #25 not 1st on 11.06.13 at 10:56 pm
One single technology is waiting in the wings to deliver a massive blow to the working world.
What is it? 3D printing.

Yes, but think of how much the new “material” cartridges will cost for your 3D printer. LOL!
———

Remember how crazy plasma tabs were about 10 yrs ago. Some were $25k. Now look at them. 250 bucks. Always count on tech to obsolete itself which always eventually makes it cheap enough for Joe Sixpack to afford.

#107 amazon girl on 11.07.13 at 10:29 am

Garth, best post of the week so far…
I am on your side..
Thanks

#108 renter on 11.07.13 at 10:32 am

Hello Garth
I read you blog from here in Québec City. Good thing you aren’t up here, where the prices are ridiculously high, c’mon what futur is there for Québec city. Toronto, Montreal and Vancover at least have growth potentiel (from business viewpoint). Quebec gov is drowning in debt, once they decide to cut gov employement the real estate here will tank…yet everyone drools about owning a house…a compare my friends as Zoombies

Do you have any ETF suggestions. Top two for a well balanced portfolio…

#109 Ralph Cramdown on 11.07.13 at 11:08 am

Some posters have recently been displaying a curious attitude toward labour. Here’s the truth:

It is an unstated goal of nearly every commercial organization to pay its employees the minimum it can, consistent with the good ones not leaving to work elsewhere. Further, it is always the goal to employ the minimum number of people that will get the job done, and to find ways of making those people more productive, that is, to do more with less. This is how it has been since the beginning of the industrial revolution. Some companies are successful and grow, while others shrink or fail. This is also true of whole industries.

Globally, our standard of living is high and rising as a direct result of that. In the last two decades alone, over a billion people have been lifted out of illiteracy, abject poverty and subsistence farming.

3D printing is going to deliver the same type of ‘blow’ to the working world that the screw-cutting lathe and the power loom did.

#110 Nemesis on 11.07.13 at 11:10 am

What do the rich know?…

Well, in LotusLand this morning… I think we can safely say that they’ve definitely mastered the concept of ‘PayToPlay’…

[G&M] – ‘Sacrosanct’ Agricultural Land Commission eyed for breakup

…”British Columbia’s “sacrosanct” Agricultural Land Commission will be effectively dismantled and the B.C. Oil and Gas Commission will assume new responsibilities for land use decisions if a proposal prepared for cabinet is adopted, according to confidential government documents.

Information obtained by The Globe and Mail shows that B.C. Agriculture Minister Pat Pimm is preparing to ask cabinet to endorse a plan to “modernize” the ALC, an independent Crown agency, which has overseen and protected about four million hectares of farmland for 40 years. Under the plan, the ALC – long a thorn in the side of developers who want to free up farmland – would move within the Ministry of Agriculture, apparently ending its autonomy from government…

…The move appears designed to allow the government to ease the way for resource development in the northeast, where oil and gas development has increasingly been in conflict with farmers and ranchers.

Mr. Pimm spent 25 years working in the oil and gas industry before being elected to the provincial legislature. His appointment by Premier Christy Clark as Agriculture Minister was seen as an early sign the Liberal government didn’t want the ALC to hinder energy resource development.”…

http://www.theglobeandmail.com/news/british-columbia/sacrosanct-agricultural-land-commission-eyed-for-breakup/article15306864/

[NoteToSelf: Might be a good time to GoLong gardening supplies.]

#111 Ralph Cramdown on 11.07.13 at 11:24 am

#108 renter — “Do you have any ETF suggestions. Top two for a well balanced portfolio…”

I can only pick two? I’ll let others opine on the optimal two ETF portfolio using Canadian ETFs, here’s a couple of US ones, which would expose you to currency risk.

https://personal.vanguard.com/us/funds/snapshot?FundId=3141&FundIntExt=INT
http://www.pimcoetfs.com/Funds/Pages/BOND.aspx

#112 broadway skytrain on 11.07.13 at 11:25 am

3d printing – not a game changer

want to pay 50$ for a spoon which is too weak to eat pie and has rough uneven edges – get a 3d printer

i have used 3d parts for 7 yrs – great for prototyping but useless for real parts .

and when you need that unique widget are you going to acquire an extensive CAD program and learn to use it to tell the printer what to do?

#113 Just Some Guy on 11.07.13 at 11:32 am

To the Smoking Man: I find your perspective and insight interesting although I may not always agree with you. As a writer though, you have at least one very good quality and it is this: you have a very distinct voice. If I may suggest, you would do yourself a favour if you would get yourself an editor, one who can help you substantively. I use that word deliberately – a substantive edit would help you to organize your text as well as to make sure that your message is clear and cogent. It is hard work but you and your readers will benefit. Contact the Editors Association of Canada (www.editors.ca).

Regarding the comments about decreasing gains to the rank and file despite rising productivity, I think the writing has been on the wall since the early 80s and perhaps even earlier. I remember when I was at Ryerson, in engineering, taking courses that dealt with manufacturing there were some interesting developments that were going to happen: you could set up automated equipment anywhere; it was going to be capital-intensive; unskilled labour was going to get its ass kicked, repeatedly and hard.

In an increasingly complex world that places more and more stress on people and introduces greater and greater change at a breakneck pace, I believe a lot of people have just retreated into believing in the semblance of things rather than seeing things for what they are. Yeah, houses made sense as a hedge against inflation years ago but now, without a serious, flexible, and comprehensive financial plan tailored to the individual (forget about what your neighbours and family say), people are in trouble.

I don’t think we as a society are going to recover from this.

Screw it – I am going to go out and buy a Road King.

#114 pissed on 11.07.13 at 11:42 am

thirsty undies…. says it all !

#115 not 1st on 11.07.13 at 11:43 am

The 99% have no reason to hate on the 1%. They can freely buy into the same asset classes, but instead of contributing a few hundred bucks a month into their TFSA, they blow it on smokes, lotto tix and PPV sports. I have little sympathy.

#116 pissed on 11.07.13 at 11:49 am

3D printing can and will use materials beyond plastics.. and mixed materials….

revolutionary once it goes cheap

#117 Saskatoon-Living on 11.07.13 at 11:50 am

It has nothing to do with age or style. ETFs reduce volatility and add diversification. If you don’t know the value of those two elements, you should not be investing.

-Garth

Agree on style, as there are many different strategies to use, none right or wrong, as long as they make you a profit. As far as age goes, I guess it’s more of a personal view of mine. The older you get, the less aggressive you should be in the market. ie: in your 30’s have a weighting of 25%-30% in fixed assets and as you get older bump up that % to preserve your nest egg. Each to their own though.

It is possible to have a basket of individual stocks and be diversified, and you definitely don’t need 7 figures (although that makes it easier). Stay diversified and don’t be afraid of volatility, it brings opportunity.

#118 Mister Obvious on 11.07.13 at 11:55 am

#52 Jas Girn

“I would rather have a society where there is concern for the livelihood of everyone”
———————–

The USSR tried it. It didn’t end well.

#119 Macrath on 11.07.13 at 11:57 am

#98 miketheengineer

I believe the re-finance your way to prosperity mantra is what has been fueling the RE market for many years. You need a house to get the `line-o-credit’ to finance what you know you can`t afford.

The nieghbours are impressed with the illusion of success next door which is actually a mountain of debt.

When the equity shrinks to reality it gets real ugly . As our southern neighbours recently discouvered.

#120 broadway skytrain on 11.07.13 at 12:00 pm

twitter up 90% – wow

#121 Holy Crap Wheres The Tylenol on 11.07.13 at 12:28 pm

Holy Crap, “Twitter” now there’s a winner! My investment friends and I just discussed this one last week. I had reservations about getting in on it. Up 75% in a few hours. I wonder how it will land after a day on crack cocaine.

http://www.marketwatch.com/investing/stock/twtr
http://money.msn.com/technology-investment/news.aspx?feed=AP&date=20131107&id=17082720

#122 broadway skytrain on 11.07.13 at 12:28 pm

and on the other side of a bubble tesla down 25% in 2 days

#123 Shocked but not surprised on 11.07.13 at 12:35 pm

Finally! Some incredibly insightful posts on the present and future predicament we find ourselves in… I am pleasantly surprised that some people on this blog are not myopic profit pigs…

#60 Andrew Woburn, you’ve got it down very neatly; that, greater efficiency leads to loss of jobs, and that the status quo of 50 years ago based on employment at minimum wage, is the wrong economic model to continue to uphold. The problem is that our government (that’s us) just don’t get it, and is not adapting to the new global reality because of greed, robbing the next generations of future prosperity.

#63 jim… exactly! Corporatists and their government-employed lackeys on this blog love to stick it to the “tax farm slaves” but somehow inexplicably forget all the socialization of losses disguised as “regulation” that makes it possible to do so. It isn’t a dog-eat-dog economy, it is a dog-eat-handout economy, and tilted towards the corporatists…

#72 Kaganovich…that was a clinical dissection of Devore’s circular definition of “profit”… Well done! Although profits and gains are very real in any economy, only the hopelessly clueless would define this in monetary terms when that profit should be more clearly defined as the progress of civilization.

Looking forward to more “enlightened” posts… Shocked and even more surprised… but in a good way today.

#124 Network Admin on 11.07.13 at 12:36 pm

#118 Mister Obvious on 11.07.13 at 11:55 am

“I would rather have a society where there is concern for the livelihood of everyone”
———————–

The USSR tried it. It didn’t end well.
———————–
Well, it ended well for some.
http://www.forbes.com/sites/ricardogeromel/2013/03/14/forbes-top-10-billionaire-cities-moscow-beats-new-york-again/
This is the fourth time in the past five years that Russia’s capital stays ahead of New York on top of list of billionaire haunts

#125 :):( Yin Yang on 11.07.13 at 12:40 pm

#113 Just Some Guy on 11.07.13 at 11:32 am
o the Smoking Man: I find your perspective and insight interesting although I may not always agree with you. As a writer though, you have at least one very good quality and it is this: you have a very distinct voice. If I may suggest, you would do yourself a favour if you would get yourself an editor, one who can help you substantively. I use that word deliberately – a substantive edit would help you to organize your text as well as to make sure that your message is clear and cogent. It is hard work but you and your readers will benefit. Contact the Editors Association of Canada (www.editors.ca).
……………………………………………………………………….

Smoking Man I agree with Just Some Guy, If you want to write creatively and or get your thoughts conveyed into script then get an editor to assist you. I know you are anti Teachers and anti schooling but some of my university profs were the best. They didn’t teach us what to think but rather how to unlock the thought process and come up with abstract ideas that were fresh. We very quickly learned that there was nothing wrong a counterculture thought process.
BTW there is nothing wrong with turning on your spell-check, it helps us farm slaves understand your Intergalactic Language from the Long Branch area.

#126 not 1st on 11.07.13 at 12:46 pm

#112 broadway skytrain on 11.07.13 at 11:25 am

3d printing – not a game changer
____

Already there is a machine that “prints” concrete and food. Sounds game changey to me.

#127 TnT on 11.07.13 at 12:47 pm

Suffering through want….

This is a huge saying in our house.

If you don’t have it and don’t want it then you don’t feel bad.

I spent a lot of time with old people growing up and none of them were millionaires but they were all happy with their local surroundings. In those day all you needed was your health, a roof over your head and food and that has not changed one bit today.

Today’s poorer generation still have a better life than the richest generation of the last century. Cops, Hospitals, Parks and Community Centers on every corner, 100’s of cheap authentic ethnic foods everywhere. How much money does one really need to enjoy life in this day and age?

Live within your means, save a bit for the future, enjoy today and suffer no more….

#128 not 1st on 11.07.13 at 12:49 pm

TOTALLY a bubble in tech. Seriously, 1999 all over again.

#129 Michael on 11.07.13 at 12:51 pm

#118 Mister Obvious

The US tried it in the 1950s, 60s and 70s. It was never a better time for the middle class.

I also disagree with Garth that the wealth gap is caused by companies “replacing expensive employees with network architecture”. Productivity gains have been relatively constant for the last 200 years (about 2%/year).

Income inequality is mostly coming from the gross imbalance between capital and labour. In countries where labour still has some clout (Scandinavia, Germany) income inequality is much lower than the US or Canada — even though they have just as much access to technology.

#130 not 1st on 11.07.13 at 12:58 pm

Here is a scary calculation. College is a waste of time.

Many people are shelling out $100k in tuition and living expenses for a 4 or 5 year degree. When they get out, they have uncertain job prospects and might make 40 or 50K then taxes at 35% marginal rate. Some get a HELOC gift from their parents as well.

Now do the same calculation this way, take 100k gift, invest 25k to TFSA, 75k to ETFs and drip them hard. By the time you are in your 40s you have 1.5 million in weathly still paying dividends to you. Makes more sense to take a menial job for 20 years and invest than it does to get a big education. Funny Garth hasn’t done this opportunity loss calculation yet.

#131 ozy - SELL all an buy a nice house on 11.07.13 at 12:58 pm

ozy – SELL all RRSP TSFA RESP and buy a nice house cash

they went 20% up or 15% in most good areas

mine went up $75000 (10 percent) but if we add the renovations level it would sell for another 75000, so 20% in 1.5 years fellas. And spring hasn’t hit

I WILL SELL ALL RRSP, RESP (ALREADY GOT RID OF TSFA) ADN PREPAY ANOHTER 24000 PER YEAR IN THE MORTGAGE, AND HOPE TO BE MORTGAGE FREE IN 5-10 YEARS, current balance 209000 or so

#132 Smoking Man on 11.07.13 at 1:12 pm

#113 Just Some Guy on 11.07.13 at 11:32 am

Thank you for that info. But I disagree with people are in trouble, well maybe a bit.

Put yourself on the bridge of the starship machine, you have control.

How do you fix this. Poor getting poor, Rich getting richer.

The Rich hording cash, won’t spend. Poor are in debt.

To bring back balance, print money like crazy, QE9

The cash loses its value, inflation moves up wages and the ability to service that debt and take it down is easier

Yet the unconnected, the inflexible minds refuse to even consider this is taking place.

Those Holding debt that is connected to Re or a balanced portfolio will win.

Those with cash under the matris are going to lose big.

#133 KommyKim on 11.07.13 at 1:20 pm

RE: #91 jerry on 11.07.13 at 8:24 am
Equities to out perform bonds in 2014. Why?

Because bonds suck more than equities in a rising interest rate environment.

Rates are declining again. — Garth

#134 ponerology on 11.07.13 at 1:44 pm

@127: I’m not really sure about that. Depends on who you are talking about. I think some of the 19th century royalty had a much better life than the (1st world) poor of this century :)

As for the “evils of corportations”. In Canada Banks/Telecoms and others operate like Cartels. Most people don’t have the power to change that. However if they are going to make their money in a less than popular way there’s nothing to stop most people from getting a piece of that through buying owership (shares) and taking their cut (dividends). Well other than the “family compact” owned ones anyway..

#135 AfterTheHouseSold on 11.07.13 at 1:48 pm

#38 DonDWest
“you want us to throw cash in a “balanced portfolio” in the belief this will somehow allow us to compete with the rich”.
“the disparity is caused because the poor have nothing meaningful to invest with”.
#68 takla
“two separate blogs…one for the rich 5%(who can afford to follow your investment advice) and one for the rest of us”.

Are we reading the same blog?!!! The investment advice generously given here has never been about competing with the rich. Quite the opposite. It is about how to improve our own personal circumstances. It is about meeting us where we are now and guiding us down the path to a better financial future.
This is advice for most everyone. One hundred dollars is enough to get you started in the on line TD e-series.
Think of this as your portfolio with training wheels, take it out for a spin, find your balance. Regular contributions, time and compound interest will grow your portfolio. When you have $50,000. switch to ETFs and away you go!

The best time to grow an oak tree was twenty years ago. The next best time is now!

#136 Son of Ponzi on 11.07.13 at 1:53 pm

#110, Nem

I’ll booby trap my backyard garden.
LNG Pimmps not welcome.

#137 JustTryingToProtectEquity on 11.07.13 at 1:54 pm

What The Rich Know…

An interesting title.

Having no debt whatsoever, and owning a large and paid for piece of property, and an investment “portfolio” (I hate that word) of over $3 million…

Some would consider me rich.

Unlike Smoking Man, I can assure you, I don’t know anything!

I still have the same worries as the next guy. I worry about my kids, I hope for good health, for my wife and friends, my loved ones.

But… I don’t “know” anything.

While I have made a killing on the markets in the last 5 years… I can’t help but think all of western society is on
crack.

#138 Spiltbongwater on 11.07.13 at 1:56 pm

Rob, I never do drugs except when I do drugs, Ford = lol

#139 Ralph Cramdown on 11.07.13 at 2:06 pm

#123 Shocked but not surprised — “[…] greater efficiency leads to loss of jobs […]”

The mind boggles. In the span of a few hundred years, we’ve gone from a mainly agrarian society with high mortality and low quality of life to an advanced post-industrial society with far fewer man-hours, globally, devoted to food and clothing production, and even industrial production, and more devoted to research, scientific enquiry, the creation of arts and entertainments, travel and leisure, even blogging.

And you sit in front of a keyboard typing a thought so foolish and inane that it has been disproved for centuries, since the invention of such notable labour saving devices as the printing press, power loom, steam engine, automobile, assembly line, washing machine, dishwasher, vacuum cleaner… it’s hopeless even to think about all of it.

And yet nearly everyone can afford food, clothing and shelter, and nearly everyone who wants a job has one. How can this be?

#140 IamRenter on 11.07.13 at 2:17 pm

ECB just cut rates. BOC next. QE is staying for a very very long time.

Done with renting. I am buying one or two SFH 416. It’s a no brainer.

#141 KommyKim on 11.07.13 at 2:19 pm

RE: #136 Son of Ponzi on 11.07.13 at 1:53 pm
#110, Nem
I’ll booby trap my backyard garden.
LNG Pimmps not welcome.

No need for boobies, just buy both the mineral & surface rights to the property if you plan to buy outside of city limits.

RE:Rates are declining again. — Garth

Yes, but this won’t go on forever, as you well know.

#142 TnT on 11.07.13 at 2:21 pm

@127: I’m not really sure about that. Depends on who you are talking about. I think some of the 19th century royalty had a much better life than the (1st world) poor of this century :)

****

I will take poor in this century and city (Toronto) than any royalty of the 19th century.

http://www.rense.com/general70/100yrs.htm

We’ve got it good… no sense living the illusion and stress that will be rich some day when were already are rich today.

#143 gladiator on 11.07.13 at 2:41 pm

Re: 3D printers:
there are now such printers that create 3D “matrices” of internal organs, which then are injected with stem cells from organ receiver’s body and placed in liquids with nutrients, so that the cells multiply and fill the matrix with live ones. The goal is to create organs that are not rejected by the receiver’s body after being implanted.
3D printing has a huge future.

#144 Buy? Curious? on 11.07.13 at 2:45 pm

Garth, honestly, with the utmost of respect, and as a loyal follower of this blog from March 2008, I beg to differ.

“Not a class warfare blog, dude. I’m not here to justify an inability to succeed. — Garth”

Almost all of the people who post here are from the have nots. You’re dishing financial advice to those who know next to nothing about investment schemes. They look to you as some kind of saviour, while mocking them for poor investment decisions. Your advice is great, if you have money. But if you’re only option is to sign your life away for a boat load of money so that your family can prosper, what are people to do? Did I mention where house prices have risen to since 2008? Spain, Ireland, UK, and Merica have had property values recover since then. Is Canada going to crash now while other countries are recovering?

You suggest that people sell their homes “at the top of the market”or “get a fee based advisor” when they’re only about 200 in all of Canada, and invest in vehicles that no one has clue how they operate? C’mon. Not everyone devotes their lives to understanding financial products. Canadians like to go fishing and snowmobiling. Immigration is the saviour to the Canadian way of life. Embrace it. I say open the borders but ban religion.

Rob Ford 2014! Smoking Man as Top Advisor.

http://www.youtube.com/watch?v=oyB1PmIQRVM

#145 TS on 11.07.13 at 2:58 pm

RE: #91 jerry on 11.07.13 at 8:24 am
Equities to out perform bonds in 2014. Why?

Because bonds suck more than equities in a rising interest rate environment.

Rates are declining again. — Garth

From CBC:
Joblessness seen falling to 6.2% without causing inflation.

CREA report is wrong?

#146 Louis on 11.07.13 at 2:59 pm

If the governement really wants inflation, they could do something like the social credit approach. Print money and give it directly to people. Don’t pretend you will ever pay it back, just inflate away.

It would probably be more efficient at jumpstarting the economy than any QE scheme. But even if you do something like this, you still end up with idiots spending money on stupid stuff and smart people actually investing.

#147 KommyKim on 11.07.13 at 3:00 pm

RE: #142 gladiator on 11.07.13 at 2:41 pm
3D printing has a huge future.

Yes, like computers in the 80’s had a huge future. They did not turn out to be job killers though. Neither will 3D printers. We will simply trade old jobs for new ones.

#148 Stickler on 11.07.13 at 3:07 pm

#115 not 1st on 11.07.13 at 11:43 am

The 99% have no reason to hate on the 1%. They can freely buy into the same asset classes, but instead of contributing a few hundred bucks a month into their TFSA, they blow it on smokes, lotto tix and PPV sports. I have little sympathy.
—————–
…big scarfs, over priced clothes, new iphones & i-junk, eating out, leased cars they could not afford to buy…on and on.

(but that wont get them in the 1%…only the 20%)

#149 Victor V on 11.07.13 at 3:13 pm

Jim Flaherty says interest rates are heading higher regardless of central bank actions http://natpo.st/1iPJYzk

#150 jess on 11.07.13 at 3:15 pm

wallet pipelines
http://www.reuters.com/article/2013/11/06/us-chesapeake-michigan-probe-idUSBRE9A51AS20131106

http://www.desmogblog.com/2013/08/21/ousted-chesapeake-energy-ceo-aubrey-mcclendon-beginning-ohio-land-grab

#151 recharts on 11.07.13 at 3:23 pm

Stellar RE sales, yet “ONTARIO SAYS IT MAY MISS BUDGET TARGETS IF REVENUE FALLS MORE”

https://twitter.com/zerohedge/status/398524567943000064

Who is lying here ?

#152 thoughts on 11.07.13 at 3:24 pm

Ok, so according to the Mississauga news, the real estate market according to TREB is super hot. So everyone should be buying homes. Yet I hear that everyone is strapped for cash? Weird world we live in. I guess it’s time to check back in a year and see how things stand then. The fundamentals just don’t make sense yet the market continues to contradict. Everyone is house rich and cash poor.

#153 Son of Ponzi on 11.07.13 at 3:37 pm

SM,
You and your “Let them eat cake” attitude.
Remember how that one ended.
The peasants are sharpening their pitch forks.

#154 happity on 11.07.13 at 3:42 pm

100% invested in digital vapour admittedly manipulated by the largest banks in the world who are paying billions in fines is what the rich do?

If you can’t sleep at night, don’t worry, the bail in plan should put all your fears to rest.

#155 TurnerNation on 11.07.13 at 3:56 pm

Speaking of corporate-communist regimes, you’ll never again hear H feign interest in ‘China’s human rights record’.

Did you know designers, like Kenneth Cole, Tommy Hillfiger, produce from Vietnam? Labelled.

Vietnam is, natch a communist country. That “War of Communism”, recall?
I hear they jailed a few bloggers recently. Must be bad for business.
And you think the elites will spare us this? You think we are special? Kissinger practically wrote China.

#156 recharts on 11.07.13 at 4:06 pm

Buy a new condo and get screwed:
http://tinyurl.com/kellkkg

This is priceless:

I find that when you sit down with the salespeople at any new development, they act like everything is peachy-keen. You know in war movies when the soldier who got shot lays on the ground dying while his friend holds him and says “You’re gonna be fine; you’re gonna make it,” even though everybody knows he’s gonna die? Well, I find pre-construction salespeople to be just like that……and I’m sorry for the miserable analogy but it was just too good to pass up!

interesting thread, read it all the way to the end

#157 broadway skytrain on 11.07.13 at 4:13 pm

new ford video – he is def not one bit drunk, notice the water bottle, where’s the booze?
scary.
i think he’s done now.

#158 45north on 11.07.13 at 4:21 pm

new video of Rob Ford:

No one is” going to “f… around with me” and when it comes to he and his “brothers

http://www.ottawasun.com/2013/11/07/i-need-f—in-10-minutes-to-make-sure-hes-dead-new-rob-ford-video-surfaces

when it comes to him and his brothers

#159 Bo Bo Ka on 11.07.13 at 4:25 pm

So laying off people is good for stocks…?
Sad…very sad.

#160 Son of Ponzi on 11.07.13 at 4:43 pm

#139, Ralf,
I think we’re coming to the point of diminishing returns.
Also, you forget the cost environmental degradation.
Should be treated like a depreciating asset and amortized.

#161 Bo Bo Ka on 11.07.13 at 4:44 pm

Garth said:

“Not exactly. The wealthy also represent a pool of capital that finances businesses and creates jobs. That’s what stocks do. They transfer risk onto those who accept it for potential return. Be glad enough of these people exist. — Garth”

The trickle down effect. That sure is working

See what happens without it. — Garth

#162 Ralph Cramdown on 11.07.13 at 5:05 pm

#153 Son of Ponzi — “The peasants are sharpening their pitch forks.”

Nope. The peasants are working 40+ hours per week to pay the mortgage, fuel, phone and cable or Netflix bills. I don’t know if you’ve noticed, but the apparatus of an advanced police state has been built right before our very eyes, and the peasants couldn’t care less. How’d the Occupy movement work out? Marginalized in the eyes of the majority as a small group of smelly homeless people camped out in the park. Your revolution is over, Son. Condolences. The bums lost.

#163 Smoking Man on 11.07.13 at 5:09 pm

#153 Son of Ponzi on 11.07.13 at 3:37 pm

SM,You and your “Let them eat cake” attitude.Remember how that one ended.The peasants are sharpening their pitch forks

……………..

If you said the lesbians were sharpening, I would be scared. Very Scared…

But Canadian Men, seriously.. We covered that last two days. Not going there…..

I just Fords rampage video, hallarious he definitely will get my vote next time around.

The star….. Unreal the bashing the are giving him.
I hope he stays strong…

#164 AfterTheHouseSold on 11.07.13 at 5:31 pm

#44 Buy? Curious?
“You’re dishing financial advice to those who know next to nothing about investment schemes”.
“Your advice is great, if you have money”.

Your use of the word “scheme” is derogatory. Many come to this blog to learn, as do I. We are grateful for the information. You can start a portfolio with as little as one hundred dollars.
Mr. Turner lays out a methodical way to grow your money. It takes time. Perhaps that is the problem with yourself, DonDWest and takla: looking for a get rich quick SCHEME. The instant gratification generation has not learned the virtue of patience.
If you’re not getting anything out of this blog perhaps your needs would be better met on a “woe is me” site.

“You can lead a horse to water but you can’t make him drink”.

#165 Mister Obvious on 11.07.13 at 5:35 pm

#149 Victor V

Speaking of the finance minister, I heard F this morning on a CBC radio sound bite. He was asked to comment on the Rob Ford fiasco. (Apparently, he is close to the family. Who knew? Man, they don’t tell ya nothin’ out here in the west).

F actually had to take a few moments to compose himself. Apparently, he is genuinely upset about the Toronto Mayor’s endless racking in the media.

In all honestly, I am not critical of F for empathizing with a man (friend?) who has been exposed as a rageaholic with a severe substance abuse problem and for whom a merciless press is leaving no stone unturned to shame him from his office.

But… where was F when the founder of this blog was railroaded out of the Conservative caucus by a bully PM for no more a crime that putting his constituents first?

#166 Mike T on 11.07.13 at 5:36 pm

#81 nancy

some advice…..move.

solve your own problems (not that they are really problems)

or type angry comments anonymously on a blog

up to you…..

#167 TurnerNation on 11.07.13 at 5:36 pm

For the 95 percent? Smoking man’s gritty blog!

#168 JuliaS on 11.07.13 at 5:40 pm

#25

3D printing is not new and it is not revolutionary. It’s one of many fabrication methods that has benefits and limitations. It’s idea for rapid prototyping, but not for mass production.

If you are an engineer who needs to manufacture injection mold dummies, portable and cheap fab stations mean a lot to you. If you’re an average Joe consumer you will not benefit from a desktop printer due to the fact that special purpose assembly lines will always pump out cheaper product at a faster rate, utilizing less energy.

Manufacturing started off de-centralized and migrated towards centralization because it is the most economically viable model, much like with electrical generation, sanitation, water distribution and pretty much all services.

3D printing revolution is nothing but hype – it is completely misrepresented.

#169 Johnny D on 11.07.13 at 5:52 pm

Lots of talk about interest rates these days. Getting obvious that rates won’t get touched until a loaf of bread is $20 at the supermarket.

We’re all poorer than we think.

#170 jess on 11.07.13 at 6:07 pm

By: Dr. Jeff Masters, 4:41 PM GMT on November 07, 2013 +53
Super Typhoon Haiyan is one of the most intense tropical cyclones in world history, with sustained winds an incredible 190 mph, gusting to 230 mph, said the Joint Typhoon Warning Center in their 15 UTC (10 am EST) November 7, 2013 advisory.

http://www.wunderground.com/blog/JeffMasters/comment.html?entrynum=2572

#171 jess on 11.07.13 at 6:09 pm

155 TurnerNation
containment
http://history.state.gov/milestones/1945-1952/kennan

#172 Smoking Man on 11.07.13 at 6:22 pm

#149 Victor V on 11.07.13 at 3:13 pm
Jim Flaherty says interest rates are heading higherregardless of central bank actions http://natpo.st/1iPJYzk
………….

Who you going to believe, F trying to talk down the market, or little old Smoky…..

Currency war on…. European threw the first punch.

Guess the bet is dose Prozac surprise us on Dec 4 or the next meeting.

Bet accordingly dogs…

#173 JuliaS on 11.07.13 at 6:38 pm

#143 gladiator

Organ and prosthetics printing is revolutionary indeed. Though such applications are unlikely to enter households. Big business will be able to manufacture custom-fit human parts and sell them, maybe for 1/10th of what they used to cost in hand fabrication days… meanwhile the average patient will be able to afford 100 times less than he used to.

#174 not 1st on 11.07.13 at 6:59 pm

The energy savings come from nothaving to drive to the store to buy an item, not having to ship it around the country and not moving raw resources to China so a finished product can come back here cheaply. You need to dig in a little deeper.

#175 Beth on 11.07.13 at 7:05 pm

I started following your advice this year, taking my money out of low-performing, expensive funds and put it all into 40% fixed income and 60% equity, diversified. After reading today’s blog I checked and, indeed, I’m sitting at a net rate of return of 9.3%. Thanks for helping keep more money in my pocket and less in the bank’s pockets!

#176 Mark on 11.07.13 at 7:09 pm

“The energy savings come from nothaving to drive to the store to buy an item, not having to ship it around the country and not moving raw resources to China so a finished product can come back here cheaply. You need to dig in a little deeper.”

Well you still have to drive to the store to purchase the supplies to make the 3D printer run, right? And still have to run to the store to procure maintenance items for the 3D printer. Its a godsend for people needing to manufacture one-off items or rapid prototyping, but its not going to replace Wal-Mart and imported Chinese stuff by any stretch of the imagination as the other poster stated.

#177 broadway skytrain on 11.07.13 at 7:20 pm

The energy savings come from nothaving to drive to the store to buy an item
———————————-
name one single item in your house. there isn’t one that would be cheaper to print.

and re printing food??? you gonna grind up a carrot, mix in the right additives, write and download the 3d file, then print out a carrot?

#178 jess on 11.07.13 at 7:34 pm

Offshore finance
Danish bank exposed for advising clients to stash money offshore
By Søren KristensenThursday, November 7, 2013 – 10:15am
A documentary by the Danish Broadcasting Corporation used hidden camera footage to reveal a leading bank advising clients to hide money in offshore tax havens.

#179 Rexx Rock on 11.07.13 at 7:38 pm

The housing market made lots of Canadians millionares,and bitcoin will do the same.Max Keiser said to buy Bitcoin at $5 now its $300.Nice gain,get in while its under a $1000.Buy on the dips if there is one.I’m upset because I watched it when it was $45 during the cypress crissis.Garth should we all buy Bitcoin even at $300 or wait for a nice pullback?

#180 Penny Henny on 11.07.13 at 7:39 pm

First a thank you to Garth.
Next to the many of you who are active participants.
I just finished reading Millionaire Teacher and although I didn’t learn too much new it did re-enforce what I have been reading and my phil-os-so-fee going forward.
I took the plunge and set up a TD Webbroker account on the account I wasn’t making any money before that. Everyone else be careful cause now I’m in the market it is certain to go down, sale prices for U.
That’s it for now. As you can tell I was very innebriated when I penned this post.

#181 espressobob on 11.07.13 at 8:22 pm

#85 Errol

Good call there Eroll? Maybe you could enlighten us on your future stock picks? Somehow doubt that!

Those individual ‘sweethearts’ can turn into ‘heartbreakers’ faster than you realize its time to dump them. For what its worth, been there done that!

Global diversification across many asset classes is far better for investors. Speculators do what they do! Usually heartbroken.

#182 happity on 11.07.13 at 8:30 pm

Yup, the government is responsible for USA economic performance. But earlier it was said the taper would have no affect.

So what does rob ford think?

#183 Butch on 11.07.13 at 8:38 pm

Did you ever think 3 or 4 years ago that we’d be sitting here, close to 2014, with rates going down further?

Sure, rates might finally tick up a quarter point in 2025, after our savings have been inflated to meaninglessness and relative hard asset prices are sky-high.

What’s next? Negative interest rates?

Disaster.

Worry about deflation, not inflation. — Garth

#184 Cici on 11.07.13 at 8:43 pm

Not all is bleak…

http://ca.finance.yahoo.com/news/us-economy-surprisingly-grows-2-8-per-cent-133152904.html

Unfortunately a lot of that growth was the result of rising inventories. — Garth

#185 Daisy Mae on 11.07.13 at 8:45 pm

#37 Son of Ponzi: “That’s how sick the shareholders are. No concern for people, only greed.”

Shareholders have little to do with it. — Garth

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

Hmmm….., good point! Garth is right. The shareholders aren’t CAUSING anything — they’re only reaping the benefits. ;-)

#186 Cici on 11.07.13 at 8:50 pm

#180 Penny Henny

Good for you girl, way to go.

And I couldn’t tell that you were “innebriated.”

Relax and hang in there, I’m sure you know more than you think you know, and I’m sure you’ll do well.

Just remember what Garth always says: diversify, rebalance and hang in for the ride (don’t panic). And remember, he’s warned us that there will be ups and downs over the next few years (use it to your advantage).

#187 Daisy Mae on 11.07.13 at 8:58 pm

#52 Jas Girn: “What a depressing post. I would rather have a society where there is concern for the livelihood of everyone, and not a dog-eat-dog system. Very depressing….”

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

It’s always been a ‘dog eat dog’ world. Nothing has, or will, ever change — it’s always ‘Survival of the fittest’.

#188 Observer on 11.07.13 at 8:58 pm

One wonders what the effect is on other consumption in the greater economy with all this money being funnelled into mortgages. Not to mention the possible impact on family formation in Canada…and interest rates haven’t begun to rise yet…

#189 gladiator on 11.07.13 at 9:03 pm

Garth, whether we worry about deflation or not, it will not change what’s going to happen to our economy. Meanwhile, my license plate sticker price went from 62 $ last year to 90 $ this year. So I am sorry, but I will worry about inflation because it affects directly my pocket.

#190 Daisy Mae on 11.07.13 at 9:09 pm

69 Bullseye: “#38 DonDWest. Long story short, the disparity isn’t caused because the poor are “too stupid to invest,” the disparity is caused because the poor have nothing meaningful to invest with.
——
best post ever on the history of this blog thank you Don

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

And who do we blame for that? Ourselves.

#191 TurnerNation on 11.07.13 at 9:13 pm

“Gartho” must be out bozzing ha.

#192 Smoking Man on 11.07.13 at 9:15 pm

#180 Penny Henny on 11.07.13 at 7:39 pm

After you get the hang of it. TD Water house.

Switch to Interactive brokers.

Trust me on that.

#193 Butch on 11.07.13 at 9:17 pm

Worry about deflation, not inflation. — Garth

Isn’t deflation going to knock down the ETF prices that half my savings are invested in?

Your house, maybe. Your financial assets, hardly. — Garth

#194 TurnerNation on 11.07.13 at 9:23 pm

Smoking man, no I don’t know nothing about Economics. Sure I took 2 in undergrad a decade ago…but…
I just buy and sell. All simple like. Price disco is all what matters.
Signed up for grad Econ in Jan tho., as my next course.
Obed. Cert.

#195 Daisy Mae on 11.07.13 at 9:27 pm

#115 not 1st: “The 99% have no reason to hate on the 1%. They can freely buy into the same asset classes, but instead of contributing a few hundred bucks a month into their TFSA, they blow it on smokes, lotto tix and PPV sports. I have little sympathy.”

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

Exactly. There are winners. And there are losers. It’s all about choices.

#196 Daisy Mae on 11.07.13 at 9:32 pm

#141 KommyKin: “RE:Rates are declining again. — Garth

Yes, but this won’t go on forever, as you well know.

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

Nothing ever does….

#197 Daisy Mae on 11.07.13 at 9:38 pm

#182 happity: “Yup, the government is responsible for USA economic performance. But earlier it was said the taper would have no affect. So what does rob ford think?”

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

Does anyone care?

#198 live within your means on 11.08.13 at 3:55 am

#97 maxx on 11.07.13 at 9:14 am
#12 Macrath on 11.06.13 at 10:28 pm

Bravo!
Recently cancelled a credit card for that very reason. When I want a “flash pay” feature, I’ll bloody well ask for it.
……………….
I’ve never heard of this term. When we received our new TD debit/visa cards we immediately called the head office & cancelled the feature that allows us to ‘scan’ the card w/o having to enter our PIN #. Is this the same as “flash pay”. I think this is ridiculous. If one loses their card, anyone who finds it can use it. Also, although my access card says visa on it, it’s not a traditional credit card. Rather, anything charged automatically comes out of your bank acct. We rarely use visa but our Mac passes for the bridge tolls are automatically charged to my visa acct. I have to go to the branch today and get a new visa card tho I was told by the branch to call the head office to get a new one. Head office asked me all kinds of questions to confirm my identity. Lady I spoke to said she couldn’t issue one & I’d have to go to my branch. She checked w/her supervisor. I’ve been dealing with TD for 30+ yrs. & pay off my visa every month. TD Lady apologized profusely. She put a note on my file so my branch can issue me a card. We’ll see. If I encounter more problems I’ll threaten to move our accounts to another bank. The lady at the branch concurred w/me that the new card was misleading.

#199 live within your means on 11.08.13 at 4:12 am

#176 Mark on 11.07.13 at 7:09 pm
“The energy savings come from nothaving to drive to the store to buy an item, not having to ship it around the country and not moving raw resources to China so a finished product can come back here cheaply. You need to dig in a little deeper.”

Well you still have to drive to the store to purchase the supplies to make the 3D printer run, right? And still have to run to the store to procure maintenance items for the 3D printer. Its a godsend for people needing to manufacture one-off items or rapid prototyping, but its not going to replace Wal-Mart and imported Chinese stuff by any stretch of the imagination as the other poster stated.
………………

Not sure if anyone saw this:

3D printer by Sask. man gets record crowdsourced cash
Innovator creates affordable device using sound and lasers

http://www.cbc.ca/news/canada/saskatchewan/3d-printer-by-sask-man-gets-record-crowdsourced-cash-1.2417416

#200 Nick on 11.08.13 at 11:51 am

http://www.theguardian.com/commentisfree/2013/nov/01/how-economic-growth-has-become-anti-life

#201 Stoopid Idiot on 11.08.13 at 5:46 pm

# 66 Son Of Ponzi

Why does Bill Gates need 72 billion?

When you get to 7200.00… consider giving half of it away…. The only reason I say this is when you post at 1:00 A.M. you could use some of Bill’s help or a job

#202 Son of Ponzi on 11.08.13 at 8:19 pm

# 201
it’s “stupid#

#203 Son of Ponzi on 11.08.13 at 8:37 pm

#201
Timbuktu time is 10 hours ahead of TO.
Garth’s blog is very popular here.