Choices

SHAVED

The cost of your corn flakes can rise while the factory making them goes out of business. This is the world in which we live. Stock markets hit new highs and investors reap capital gains, while corporations downsize and the economy stalls. Wages fall at the same time prices rise. Phones and cars cost less while data and gas go up. Houses make more money in a year than the people who own them. And were it not for cheap rates, debt and government largesse, this could be the new 1930s.

Nobody knows exactly where we’re headed, but it’s a safe bet thinking 2014 will be a lot sportier than this one. Expect a stock market correction, rising bond yields, more workers punted, wobbly real estate and some rare opportunities. But no crash. No crisis. No collapse.

Instead, it appears we’re entering an age of contradictions most people just won’t get. This blog reflects that. I talk about the undercurrents of deflation, but all many people see inflation is their rising cable bill. It’s time to understand the cost of living may well rise, but your ability to afford it will drop, along with the value of your home. Deflation is when the economy stops being efficient, there’s more production than demand, companies take a profit hit, and the pain’s passed on to workers. Eventually spending falls, prices follow, and things get worse.

So, what should you do to protect your wealth, even make it grow, in such times?

Before we get to the list of 7 actions, try not to think in extremes. We’re not going into a Depression any more than we’ll have hyperinflation. No banks will fail. Nobody’s nationalizing your savings account and you don’t need to stockpile Cottonelle.

But by the same token, for your idiot BIL who is about to close on a McMansion with a 90% mortgage, no savings, and twins on the way, this might as well be December of 1928.

Consider this:

(1) When the economy shrinks, own fixed income. A corporate bond paying 4% which looked ugly when inflation was 2%, for example, suddenly looks sexy when (as now) the rate tumbles to 0.7%. That’s a 3.3% yield, guaranteed, with full payout at maturity, and it’s 100% liquid. Better than that stupid GIC.

(2) Even hotter are preferred shares these days. Remember, preferreds are not common stock and don’t behave in as volatile a fashion. Buy perpetual preferreds with fixed dividends in top-quality companies like banks or insurers. Or, go for an ETF of perpetual fixed preferreds, now paying about 5.5%. Plus if these are Canadian securities, you score the dividend tax credit which can mean as much as $54,000 income without tax. No inflation and a yield of more than 5%? Why would you not do this?

(3) Ditto for real estate investment trusts (REITs), which typically own large portfolios of major income-producing properties, like office towers and shopping malls. A slow economy has brought little in the way of new building in this sector, so occupancy rates are in the high-90% range and good properties are always full. Barring an economic crumble (not gonna happen), this will continue. A basket of REITs is now paying 5.18%, and can give you that as a taxless return of capital.

(4) Cash is defensive. Unlike gold, it gets more valuable as prices decrease and inflation wilts. The purchasing power of cash rises, so there’s nothing wrong with maintaining a small allocation (5% would be fine) in an account paying you 2%. But don’t sit on a pile of the stuff because you’re paralyzed with the vapours. Go back and read the three points above.

(5) If you can’t get it up to invest in fixed income, at least use cash to pay off debt. When inflation, incomes, asset values and jobs deflate, debt gets harder and harder to pay. A 3% mortgage that was a gift when inflation was 2.5% two years ago is no fun now.  If you’re the least bit worried about the security of your employment income, do what you need to in order to pay debt down.

(6) Shun real estate. As I’ve been trying to explain for a long time, in the future an income stream will be far more important than a house. Canada is not special. You’re not special. Our properties and economy aren’t special.  In deflating times, real estate always craps out. Rent, don’t own. Let the landlords bleed through their eyes.

(7) Build a balanced portfolio. You should always own bonds, preferreds and REITs as well as having equity exposure through market-based ETFs. There’s no reason to exit any asset class, since you nor anyone else has a true fix on what the future will bring. Amateurs try to time markets based on some pathetic blog’s predictions, while experienced investors know if stocks fall, bonds will rise and they still they collect dividends. Just learn what rebalancing means, and do it as often as you change your furnace filter.

One more point. If you have a job, keep it.

That’s about all most people need to know. If anyone tells you to short equities, buy a quarter section in Saskatchewan, load up on bullion, leap into dividend-paying stocks, get an apartment building in Hamilton or try a currency play, just come back here for a slap and a hug. In that order.

270 comments ↓

#1 NuisanceBear on 12.13.13 at 7:00 pm

I am FIRST!

Stop it. — Garth

#2 ApplePi on 12.13.13 at 7:13 pm

Fantastic article. Cash is king. Some feel we’re heading towards a 20 year deflationary period… like Japan. However, they forget that Japan had a culture of hard work, credit averse citizens and a healthy manufacturing sector.

Canada has none of those.

#3 Tri-Guy on 12.13.13 at 7:13 pm

I was thinking more along the lines of grow-ops. Get caught? Slap on the wrist.

#4 Dual Citizen in Canada on 12.13.13 at 7:24 pm

Last week I reallocated all my RRSP into 40% fixed, 30% Intl Equity, 20% CDN equity and 10% US Equity. I plan to ride out the rest of the year and the beginning of the next with these allocations and will re-balance once I get a grip on how low US Equities will go, then buy a boat load. So far up 25% this year in my portfolio. This is by no means advise to do the same for yours.

#5 World According To Garth on 12.13.13 at 7:43 pm

More Climate Change on the way this weekend:

http://www.accuweather.com/en/weather-news/snowstorm-to-impact-more-than/20912668

#6 mark on 12.13.13 at 7:54 pm

And do your best to fight the impulses your mind throws off!

http://www.idiottax.net/2013/12/speculation-investor-behaviour.html

#7 Freedom First on 12.13.13 at 7:58 pm

Thank you for the reassurance Garth. Excellent advice. Even though I am debt free, balanced, diversified and liquid, hearing good advice from trustworthy sources like yourself, and the very few people I know who think the same, I believe I need to keep my thinking sane by hearing this good advice on a regular basis to constantly keep my defense up, as there is so much insanity pushed daily by others, like relatives, acquaintances, the media, cartels:RE and others. For me, re-balancing, always staying tuned with what is going on has 2 great advantages, 1- being staying in balance, and 2- this really helps me in seeing my net worth rising regularly/consistently over the years and raises my confidence by being able to see clearly that I am on the right path. When I was starting out, I started with nothing, and though I always had your way of thinking Garth, it was extremely difficult to shut out the voices of the financially insane who were doing everything you say not to do, which is the majority of people. However, today, I know that your way works Garth, and I am extremely grateful I have followed the path of the financially wise, and I, in my own small way, try to help others avoid/get out of the financial pitfalls so many gravitate towards, as it takes patience and discipline to achieve financial freedom. Your blog has helped me stay on an even keel in a great way Garth, and taught me a lot, and not just about finances. Freedom First.

#8 jan on 12.13.13 at 7:58 pm

I was thinking more along the lines of grow-ops. Get caught? Slap on the wrist.

Amen brother !

#9 Sean on 12.13.13 at 8:06 pm

The advice concerning preferred shares makes me nervous. When interest rates advance these assets get hammered, you may get a healthy dividend but your principal gets whacked. I would think that shorter term corporate bonds would be the better bet.

Rates will creep at best, so your fears are largely unfounded. Besides, if you buy them for a consistent and generous yield, why fret over temporary declines in capital values? You are losing perspective. This is like having your house appraised daily. — Garth

#10 LH on 12.13.13 at 8:07 pm

The governor-general academic medal in the hands of a smoking man: watch out world!

LH

#11 Tony from Calgary on 12.13.13 at 8:17 pm

“If you can’t get it up to invest in fixed income, at least use cash to pay off debt. When inflation, incomes, asset values and jobs deflate, debt gets harder and harder to pay. A 3% mortgage that was a gift when inflation was 2.5% two years ago is no fun now. If you’re the least bit worried about the security of your employment income, do what you need to in order to pay debt down.”

Well, I completely agree with this at least.
I would suggest that if you’re really serious about helping the unwashed masses, Garth, you use your witty/whimsical words of wisdom to hammer this point home as much as possible. 4% on a corporate bond ain’t gonna do much for those who are getting monkey-hammered by the costs of carrying debt during a deflation.

Paradoxically however, the more you encourage people to pay off their debts (and the more people do pay off or default on their debt), the worse deflation will get as our entire financial system is based on debt. Total Credit Market Debt, to be exact.

http://chartistfriendfrompittsburgh.blogspot.ca/2013/08/if-cash-is-king-then-credit-is-god.html?m=1

(Careful with the above… Its usually NSFW)

Its all a race to the bottom. Crashing markets are inevitable.

Cheers,
TFC

#12 T.O. Bubble Boy on 12.13.13 at 8:19 pm

Garth – what about U.S. Preferred Shares? I know you don’t get the Dividend Tax Credit, but many top US Banks are yielding 6%-7%+, and other preferreds are 8%+!!!

For example, Wells Fargo:
http://www.google.com/finance?q=NYSE%3AWFC-O

Huh? Top Canadian preferreds pay 5.7%, and the tax credit boosts the effective yield way over 6%. Don’t be a yield pig as the additional risk ain’t worth it. — Garth

#13 mike in kelowna on 12.13.13 at 8:20 pm

Not visited your site for a while but thought I’d check in again to see what the great guru had to say.

For a guy who hates gold so much, why do you seem so preoccupied with it? just asking ol’ fella..

I don’t hate it. Just feel bad for those who love it. — Garth

#14 Joe Average from Vancouver on 12.13.13 at 8:28 pm

“If you have a job, keep it.” – well, that’s for me today. I’ve been looking for a new job for since Sep.2013 while holding on to current one. Not much to talk about, just need to “keep on trucking”, the job market sucks already. What can I say, without Garth’s blog I’d hold nothing but a GIC in RRSP. Being liquid and diversified rocks !!!

#15 Bob Loblaw on 12.13.13 at 8:30 pm

You’re preaching to the choir, but thanks for the affirmation.

#16 mike in kelowna on 12.13.13 at 8:32 pm

‘Not visited your site for a while but thought I’d check in again to see what the great guru had to say.

For a guy who hates gold so much, why do you seem so preoccupied with it? just asking ol’ fella..

I don’t hate it. Just feel bad for those who love it. —’Garth’

That’s an ok answer. I’m not a gold ‘bug’, but do you know why the metals have been beaten down the past 18 months? You’re a bright guy and I’m sure you know the answer..

#17 conan on 12.13.13 at 8:47 pm

Thanks for this article Garth.

#18 Innumeracy Chick No More on 12.13.13 at 8:50 pm

I need some help with my BMO investorline account I am not sure how to purchase corporate bonds? There are so many options to input when searching for bonds that I don’t know what I should look for. Does anyone have this account that could explain it to me.

#19 broadway skytrain on 12.13.13 at 9:03 pm

guy in the pic missed an eyebrow.;)

#20 blase on 12.13.13 at 9:04 pm

For anyone tempted to keep posting “cash is king”, please google Buffett on the subject. It’s lost 87% of it’s value in the last 40 years. It is not king. Cash will pay you minus including inflation.

#21 blase on 12.13.13 at 9:06 pm

Great Gartho,

Have to ask: You think the risk is greater on buying a preferred for Wells Fargo than for a Big-5? Is it truly different here?

#22 Brian Ripley on 12.13.13 at 9:12 pm

Re: Garth’s “One more point. If you have a job, keep it.”

When I saw the Reuter’s note about Canadians reaching new debt levels in Q3 I took a look at 4 metrics to see if the additional credit creation (both business and household) has helped Canada’s ability to produce, compete, add value:
http://www.chpc.biz/2/post/2013/12/credit-growth-vs-4-metrics.html

Nope. Since the blowout in 2009 the current account is about to go into the 6th year of negativity. Productivity and New Orders are below 2009 crash levels while labour costs are back to 2006 levels. Employers want specific skills. So add to the list: take any opportunity to increase skill levels so they match what employers want.

#23 Retired Boomer - WI on 12.13.13 at 9:13 pm

Sounds like good advice, Garth.

I’ll take a look at an ETF of preferreds to see what they might yield. Have about 118K coming over to my retirement account shortly. Might help me goose up my balances which currently are a wee bit equity laden. (See a good year can set you off-balance if you don’t watch things).

The Better half retires in 10 days, and will then begin collecting her ss of $919 a month. Mine will sit and grow at 6.25% for a few more years, don’t need the dough just now so, why not?

DEFLATION, eh? We shall see. Need to get that account more near a 50/50 equity vs REIT/Bond/preferred balance after I roll over the Better’s 401K. That won’t be for a few more months, as the company pays a bonus match based on year end numbers which usually aren’t known til March.

See my limit order to buy KMB at a lower price was executed. Hmm, that I was NOT expecting! Good news.

Don’t you just love a market break?

Well, let us hope people strive to cut their debts first, before making investments in a deflationary time. Though I have never seen deflationary times, I can see where the debt will be far more onerous to pay with deflated value of money. OUCH! Balanced investments should perform OK.

#24 Smoking Man on 12.13.13 at 9:15 pm

#10 LH on 12.13.13 at 8:07 pm

The governor-general academic medal in the hands of a smoking man: watch out world!

LH
…………

Who won it, the prize.

Memorize Regurgitate Obey.

More of an insult if you ask me.

#25 Suede on 12.13.13 at 9:15 pm

Just had some drinks with the crew at the Christmas Party lunch. 60% of the conversation was about Real Estate, Italians, Chinese buying and building, etc etc

They want to upgrade their homes in Vancouver, Burnaby and even take out HELOC’s because rates are cheap, interest is tax-deductible and “that’s the way to make money”

It wasn’t my place to be a vocal contrarian. Then we all turned and talked about the weather and Luongo.

REWL – Real Estate, Weather and Luongo is what you need to know about to live in Vancouver, old sport

That’s how it goes over here on the wet coast!!

:)

#26 JSBertram on 12.13.13 at 9:17 pm

Methinks someone lost a Movember challenge.

This reminds me of my university dorm roomie who woke up after a night of heavy partying with only the right half of his precious moustache he’d be nurturing since September.

#27 T.O. Bubble Boy on 12.13.13 at 9:17 pm

#21 blase on 12.13.13 at 9:06 pm
Great Gartho,

Have to ask: You think the risk is greater on buying a preferred for Wells Fargo than for a Big-5? Is it truly different here?
——————————–

Ya – that was my thought as well.

You’ve got a giant bank (backed by Buffett!), with Preferreds trading at 80% of par value ($20 vs. $25 par value), and paying 6.5% in USD. Yes, you pay twice as much tax (unless they are in a RRSP), but there seems to be a lot more “pros” than “cons”.

But – I know very little about U.S. Preferreds, which is why I raised the question.

#28 DR on 12.13.13 at 9:17 pm

That’s a weird pic

You cant buy a McMansion though with a 90 % mortgage. CMHC wont cover it.

#29 MP on 12.13.13 at 9:22 pm

Hey garth, the hon and I and looking for a trailer to plop on the property while we renos to our old cottage on G Bay. So…I got lookin om Kijiji for trailers,…crazy!…brand new 26 ft trailers goin for $10000. THESE UNITS ARE 300 SQ FT AND HAVE ALL THE AMENITIES AND LUXURY (GRANIT AND S-S) OF A $300000 CONDO HAS IN PARKDALE WITH THE HIPPEES. One is on wheels and you can take it anywhere and the othe….?

#30 Canadian Watchdog on 12.13.13 at 9:24 pm

The deflation heads still don't get it. Rising rates and a lower CAD is inflationary, not deflationary. Canada's GDP as a share of global GDP is only 1.1%, meaning, our declining consumption will have no affect on global prices. The US is 19.5%, China 14.7% and BRICS together make up 26.9%.

BRICS nations will be bidding on global goods and commodities, keeping prices high while Canadians get taxed to death by governments scrambling to pay debt and rising gas/rent prices. Oh but that only happens in third world countries. Does it now?

Mississauga passes 6.1% city tax hike, takes on more debt

Mississauga council passed a 6.1 per cent increase on the city’s portion of the 2014 tax bill Wednesday, as councillors fretted about the city no longer being debt-free, projects going unfunded, and a growing infrastructure deficit.

Brampton raises city taxes by 2.9%, but mayor keeps her SUV

Council approved a 2.9 per cent increase to the city’s portion of the 2014 property tax bill, which will have to be amended later to find $44 million for long-overdue road widening. That sum will need to be covered, over the next two years, by taking on debt or reallocating money from the proposed capital budget.

Hike gas tax to pay for new Toronto transit, panel recommends

Option A calls for a three-cent rise per litre in the gas tax, rising by a penny a year to a total of 10 cents per litre (at that point raising $1.4-billion annually in the Toronto area), along with a 0.5-per-cent rise in the corporate tax rate (generating $189-million) and the redirection of the HST on gas taxes to transit ($80-million)

Condo rents hit new high amid ‘seemingly insatiable’ demand

Some 52 per cent were in the epicentre of the boom, the City of Toronto, where almost 3,370 condo leases were signed, up 79 per cent year over year, says Urbanation.

Close to 600 were concentrated in west-end Liberty Village, where a rash of new completions were quickly snapped up by young professionals happy for rents slightly less than in the core but within eyesight of the CN Tower.

A distant second was North York, where rental volumes were up 10 per cent, to 1,273 suites, mostly around the towering North York City Centre area.

Mississauga saw an increase of 25 per cent from 634 new condo rentals.

Oh yes. This isn't your grandfather's recession. Because this time, there are bigger players on the global map who matter more then the west. Luckily we won't see high inflation as other countries (namely Japan) are expected to monetize debt faster then the west, keeping upward pressure on our dollar. But don't be fooled. Inflation is already higher then 2%. It's just not showing up in StatsCan and the BLS's CP-Lie Index yet. Chart

#31 screwed on 12.13.13 at 9:27 pm

RBC Economics says Canada’s economy growing 2.7% in 2014.
http://www.ctvnews.ca/business/canada-to-benefit-from-strengthening-u-s-economy-in-2014-rbc-economics-1.1586417

Doesn’t sound deflationary to me. If we’re growing due to a US recovery, then we won’t have to worry about our debt loads at guaranteed low rates for the foreseeable future.

I don’t think RBC is getting your message.

#32 Victor V on 12.13.13 at 9:33 pm

#12

I converted about 20% of my CAD into USD earlier this year and have built a portfolio including 3 positions in US preferreds as below:

ENBRIDGE INC 4% SER-1 PFD ENB.PR.V
ENBRIDGE INC 4% CUM-L PFD ENB.PF.U
ALTAGAS LTD-C 4.4% U$ PFD ALA.PR.U

Garth is correct about the tax credit, but if you have a large enough portfolio and want the US exposure, in my view it’s worth looking into.

Between the yield and the forex gain this past year, I certainly am not complaining.

#33 Smoking Man on 12.13.13 at 9:35 pm

DELETED

#34 Dwilly on 12.13.13 at 9:43 pm

Hey Garth. Without advising anyone on a specific product, could you suggest which Canadian preferred ETF you feel is best and why? CPD, XPF, ZPR…?

#35 Julia on 12.13.13 at 9:43 pm

Speaking of deflation, we just got a letter from the city of Toronto letting us know that due to lower property taxes for our building we can pay .58% less in rent as of Dec 31. All we need to do is calculate the lower rent amount and present the letter. With a wee tiny .8% increase allowed for 2014 and a .6% decrease we’re looking at pretty much no rent increase next year! Gotta love renting!

#36 Dave on 12.13.13 at 9:49 pm

That last paragraph I found to be alarming. I’m actually strongly considering purchasing an apartment building in Hamilton and I’m surprised you would advise against that.

Your 1st strategy is to ‘own fixed income’. Wouldn’t a cash-cow apartment building with a 7.4% cap rate fit into this criteria?

Buying an apartment building is essentially acquiring a very steady flow of income.

Curious to hear why you would advise against acquiring an apartment building? Especially since you also suggest owning REIT’s.

#37 Smoking Man on 12.13.13 at 9:50 pm

Anyone ever try and untangle head phone wires after 4 shots of magialian 18 year old scotch, and 4 wines.

Took me about 20 min.

Gartho, thinking tonight will be one where my archive of deletes grows a bit more.

Be a sport and don’t let me make an ass of myself.

Delete button ready. Thoughts going threw my head as the scotch is kicking in.

Darn look at how good my spelling is.

What is going on.

#38 Victor V on 12.13.13 at 9:53 pm

#18

Don’t bother with individual bonds unless you’re an expert. BMO Investorline has a great tool for research ETFs.

Click on “Research” in the horizontal navigation of the site, then click on the “ETFs” section. Spend a couple of hours researching and make your choices from there.

#39 Party On Garth on 12.13.13 at 9:58 pm

Garth what are your thoughts on shorting the 20+year treasury in a small amount as a hedge against rising rates?

#40 Bob Rice on 12.13.13 at 10:00 pm

Garth, should I go short term with a corporate bond? I would like a 3 year maturity.

Thoughts?

Thanks

#41 TurnerNation on 12.13.13 at 10:00 pm

Ball of string?

Just saw this in my news feed. Makes ya go hmm.

http://shsservicesmanagement.ca

“Sears Canada home installer affiliate in receivership

SHS Services Management Inc., an installation services organization company that is an independent third party provider of home-installed products and services licensed under Sears Canada Inc.’s Sears Home Services banner, is in receivership.

Effective immediately, all offers of services provided by SHS are ceasing, and Sears is working with the receiver, PricewaterhouseCoopers Inc., on a viable business option for the future for the home services “

#42 Canadian Watchdog on 12.13.13 at 10:01 pm

No more open-outcry bidding wars for Ontario. Sorry Realtors. Now your friends can't make fake fraudulant offers on behalf of you as any buyer is now legally obliged to be handed all written offers on request.

Bill to Strengthen Consumer Protection Passes Final Vote

Bill 55, Stronger Protection for Ontario Consumers Act, 2013

Schedule 3
Real Estate and Business Brokers Act, 2002

1.  The Real Estate and Business Brokers Act, 2002 is amended by adding the following section:

Offers to purchase real estate

35.1  (1)  No registrant shall,
(a)  while acting on behalf of a purchaser, present an offer to purchase real estate except if the offer is in writing;
(b)  represent to any person that a written offer to purchase real estate exists except if the offer is in writing.

Records

(2)  A brokerage acting on behalf of a seller shall retain, for the period of time prescribed, copies of all written offers that it receives to purchase real estate or copies of all other prescribed documents related to those offers.

Request for inquiry by registrar

(3)  A person who has made a written offer to purchase real estate or a registrant acting on behalf of such a person may request that the registrar make an inquiry to determine the number of written offers that the brokerage acting for a seller has received to purchase the real estate.

(4)  On receiving a request under subsection (3), the registrar may make an inquiry of the brokerage and the brokerage shall,
(a)  respond within a reasonable period of time, or within the time that is prescribed; and
(b)  at the request of the registrar, provide the registrar with copies of the written offers or other documents that it is required to retain under subsection (2).

Disclosure by registrar

(5)  The registrar shall determine the number of written offers that the brokerage has received to purchase the real estate and shall disclose the number of the offers as soon as practicable, or within the period of time that is prescribed, to the person who requested the inquiry under subsection (3), but shall not disclose the substance of any of the offers or the identity of the person making any of the offers.

#43 Mark on 12.13.13 at 10:01 pm

What’s wrong with owning US dividend stocks right now?

#44 Paul on 12.13.13 at 10:11 pm

28 DR on 12.13.13 at 9:17 pm

That’s a weird pic

You cant buy a McMansion though with a 90 % mortgage. CMHC wont cover it
————————————————————
Sure you can, Like the old days 10% down 80% bank advance 10% Vendor take back second mortgage.

#45 Mister Obvious on 12.13.13 at 10:16 pm

Re: Amanda Lang’s Tax Opinions (yesterday)
—————————————–

Our government chooses to grant tax incentives to those who invest in Canadian corporations through dividend tax credits and a limit of 50% exposure to capital gains.

Ottawa has chosen to incentivize investments in our economy because those investments have actual associated risk (unlike principle residences which of course always go up and all gains are 100% tax free when realized).

If you are a wage earner who is unwilling to take any risk with your hard earned money, then yes, I suppose you do get ‘boned’ on payday.

If you invest only in risk-free interest producing things like government bonds, GIC’s and the Orange Guy’s shorts then yes, you do pay the full freight in taxes.

I was deeply invested during the dot com bust and also during the GFC. I lost money and had no guarantee that it was ever coming back. I don’t recall much sympathy from people who played it safe. It was more like this: “You gambled and you lost buddy”.

But somehow, when you win the standard flips. “Why should you get a tax break just for risking money in your country’s economy”.

#46 Smoking Man on 12.13.13 at 10:29 pm

DELETED

#47 Muttley O'Toole on 12.13.13 at 10:30 pm

Bonds. For what it’s worth, a true story.
Back in 1981 I came across a truck load (well, a huge bundle) of physical bearer bonds that were in the process of being destroyed.
They were issued by Brown Bros. Harriman, London bankers, on behalf of, and guaranteed, by the Czar & Czarina of Russia, to finance the building of the Siberian Railway.
Denominations were $1,$5,$10,$50,$100,$1000 (my computer doesn’t have the British Pound sign)(redeemable in gold equivalent?), and with interest coupons attached.
There would have been several hundreds of thousands of pounds worth of scrip.
I have forgotten the date of issue, around 1910 I think, and the interest rate, about 2% or thereabouts.
Of course the Guarantee was worthless when the Communist Party took over in 1917 and repudiated all debts.
Someone ,somewhere had taken a huge financial hiding.
I was very tempted to snaffle a few but didn’t.
Years later, around the late ’80s I remember reading where old ornate scrip had a collectors’ value in New York.
Then, in the 1990’s with the fall of Soviet communism, Russia wanted access to the world money markets.Not on your sweet Nellie said the London bankers unless you redeem all outstanding loans and bonds.
After a bit of argie-bargie Russia agreed. Why? Because hardly any had survived and they were not up for sackfuls of money.
So the moral to this story?

1) Never throw anything of even dubious value away.
2)On your journey through life trust your instinct.
3)Never say never.Russia would have been one of the 4 or 5 most powerful countries in the world around 1910 and you would have copped a lot of ridicule if you had said at the time the guarantee was worthless.

On my mothers grave, a true story.

#48 economictsunami on 12.13.13 at 10:31 pm

Many would confidently state that housing in Canada would never end up at all like the American fiasco.

We don’t have a large subprime nor ARMs but what they fail to remember was, the above was merely the 1st phase; the 2nd downdraft was invariably due to growing unemployment.

In fact, the largest segment of homes lost was due mainly to job loss.

With the household debt ratio presently @ 167.7%, we are also lead to simultaneously become placated by the fact that national net worth increased to $7.50 trillion?

National net = wealth effect and the small print disclaimer should read:

National net does not necessarily equate to safety net…

Manufacturing’s Decline A Bigger Problem Than Housing Bubble: BMO…

http://www.huffingtonpost.ca/2013/12/13/manufacturing-canada-bmo_n_4440840.html?utm_hp_ref=canada-business

#49 Paul on 12.13.13 at 10:36 pm

42 Canadian Watchdog
————————————————————-

A day late and a buck short

#50 John on 12.13.13 at 10:52 pm

Great find Canadian Watchdog #42 . When did this take in effect? You can bet the fake bidding wars….oops I mean the bidding wars are going to drop like a rock. Criminal realtors must be crying.

#51 TheCatFoodLady on 12.13.13 at 10:52 pm

#32 – Dave: Don’t know how many units are in the building you’re thinking about buying or what mix of bedrooms/sizes/styles.

Don’t be insulted by what I’m about to write – I’m simply working on an assumption that you’ve not been an owner/landlord, yet. If you have, you’ll know most or all of this already.

Overheads are high. If you’re looking at a building large enough for resident managers, you have the employee costs to look at. Yes, under Ontario labour law, resident managers ate an exempt occupation but there are still costs. Pay too little & you attract lousy staff. You’ll also need a part timer to cover days off \7 holidays.

Mortgage costs, taxes, utilities – you can predict those. What you can’t predict are repair/replacement costs. Some issues by law, have to be fixed as quickly as possible – government doesn’t care if you have to pay double overtime. You can only go so far with tenant screening & ‘professional problem tenants’ are very good at bamboozling landlords when trying to get into a building.

Getting a tenant out can be a nightmare & when you finally succeed with a legal eviction, expect them to trash the place. You need to be up on federal/provincial law – Human Rights, Residential Tenancies Act, Fire codes, Health & Safety laws, municipal code covering minimum/maximum temperatures for common spaces, security, garbage, vermin & many other things.

If you’re always full with clean, quiet tenants who always pay in fall, on time, you can do okay. I don’t know a building fitting those conditions. 10% of tenants you never see – they fit the above description. 10% are chronic bitchers about stupid things. 5% are chronic deadbeats or running a meth lab, an escort service or various other fun stuff.

If your building went up before 1991, it comes under rent control – the provincial government will tell you the maximum yearly rent increase. You can apply to have certain capitol expenses add to rent hikes – it takes a fairly long time. An empty unit – you’re free to charge what the market will bear.

In 2011, the average rent for a 2 bedroom in Hamilton was $886 & in 2012, the average vacancy rate was 3.5% – not bad.

A well managed building with few problems can make for decent cash flow but don’t count on capital appreciation in the near future, especially with smaller buildings. Small buildings – after HST came in, owners started unloading – they were losing propositions.

#52 sam stall on 12.13.13 at 10:54 pm

Canada household debt-to-income ratio hits record high

http://ca.finance.yahoo.com/news/canada-household-debt-income-ratio-hits-record-high-134258102–sector.html

#53 Smoking Man on 12.13.13 at 10:55 pm

DELETED

#54 Ayn Rand Army on 12.13.13 at 10:55 pm

Garth, if deflation is the future, as you say, then shouldn’t the biggest debtors in society, the federal and provincial governments, be paying off their debts too?

Which we all know is impossible. So i would suggest there will not be any deflation and only more inflation to benefit of debtors and wipe out bond holders (bag holders). Since central banks are the ones who posses the powers of unlimited money supply. You don’t think they’re gonna use it? Just like the fed?

Do you not realize that all central banks are working together to and inflating currency in unison? They’re all in huge debt and all benefit from inflation.

print print print….

#55 sam stall on 12.13.13 at 10:57 pm

US household wealth reaches high of $77 trillion

http://news.ca.msn.com/money/us-household-wealth-reaches-high-of-dollar77-trillion

US’s gold is worth 320 bln $ or 1/240 of the total wealth of US.

All the investment silver in the world is worth 20 bln $ or 1/3500 of the total wealth of US.

#56 Devore on 12.13.13 at 10:57 pm

#3 Tri-Guy

I was thinking more along the lines of grow-ops. Get caught? Slap on the wrist.

A drug conviction on your criminal record is hardly a slap on the wrist. No more shopping trips in the US for you either. And there is that whole thing about having to deal with the shady criminal underground, I don’t think they believe in wrist slapping.

#57 Tiggertoo on 12.13.13 at 10:58 pm

Hi Garth – Preferds can be rate resetting, usually every 5 yrs. In a slow interest rate rising environment – would these be the favored option?

Nope. — Garth

#58 Innumeracy Chick No More on 12.13.13 at 11:01 pm

@ Victor V

Thanks for the help. I think your right I should just stay with the ETF’s. I did some research just now and I like CLF and CBO ETF’s I already have XBB. I think I’m doing okay. I have CPD, PFF, IWV and EFA. I am going to sell some IWV and EFA and buy more bonds and preferred shares as these have gone up and the others have gone down. I don’t know what to do with my ZLB and XIC I guess just hold and wait and buy more if they go down.

#59 sam stall on 12.13.13 at 11:03 pm

national net worth increased to $7.50 trillion?

Sure. at 0 percents interest. How much would it be at 8-10?
1/4 of that amount.

#60 Innumeracy Chick No More on 12.13.13 at 11:06 pm

One more question CPD pays interest in my RRSP account. I thought it would say Dividend? I’m confused? I am just starting an investment account non-rrsp and want to buy these. Why does it say interest and not dividend? So does XIC and ZLB? I wanted to buy some in my TFSA. Can someone clarify

#61 ole Doberman on 12.13.13 at 11:08 pm

Garth you’re to pesimistic. Cisco is coming to Ontario and making thousands of jobs. That would be inflationary no?

Fewer new Cisco jobs in six years than Ont lost this month. Don’t get too juiced. — Garth

#62 Ed on 12.13.13 at 11:15 pm

Can anyone give me samples of theses “perpetual fixed preferreds ETF” that the Great Bearded One speaks of??

#63 HD on 12.13.13 at 11:20 pm

#38 Victor V on 12.13.13 at 9:53 pm

You beat to it.

That’s exactly what I was going to suggest.

Best,

HD

#64 will on 12.13.13 at 11:21 pm

Thanx Garth. Just keep saying it over and over and over and over. It’s a long process. It’s all very obvious to most of us who read here. But beyond that it takes time for it to even seep into our conversations and to take effect. Why, just last night at our Christmas party I talked to a couple of Saskatoon parents about RE. They were both pretty much in la la land. I briefly introduced the idea that surely the real estate rise is over. Alas, it was like I was speaking a different language.

And I always thought I was a good communicator.

#65 TheCatFoodLady on 12.13.13 at 11:25 pm

Novartis shutting it’s Mississauga plant – 300 jobs gone:

http://www.cbc.ca/news/canada/toronto/novartis-ag-shutting-down-plant-in-mississauga-1.2463329

#66 Victor V on 12.13.13 at 11:25 pm

http://www.thestar.com/news/atkinsonseries/2013/12/13/the_incredible_disappearing_middle_class.html

In the first six months after being restructured, he sent out about 100 resumés and got three interviews, none of which led to anything. By August 2009, he had run out of money and needed financial help from his parents. He realized at the same time he was going to have to take whatever job he could find and not wait for something commensurate with his skills and experience.

Within a week he had a job at a Tim Hortons outlet a five-minute walk from his house in Alliston, just north of Toronto. When his friends and neighbours came in, “I could see the click in their eyes when they recognized me, and then they moved on pretty quickly.”

In addition to standing for an eight-hour shift taking orders, Schuppert had to move boxes around. He has a bad back. The work gave him constant pain. He lasted a month and then quit.

The local McDonald’s offered him a job. He asked if there was a chance to move into management, was told yes, and was then assigned to be the overnight cleaner starting at midnight. He declined.

At this point he started to cut off his social connections.

He went to work for Swiss Chalet, again asking for an opportunity to move into management. He was told yes. He worked for nine months, was given periodic management training but never got beyond minimum wage.

He then went to Harvey’s, where he was actually offered a management position. He asked the owner for $16 an hour but never was paid more than the minimum wage of $10.25. Meanwhile, he had to put his house up for sale because he could no longer afford the mortgage payments.

#67 FTP - First Time Poster on 12.13.13 at 11:36 pm

The puzzled expression of readers to this fine blog Garth is that you keep insisting on Deflation, when what we really have is STAGflation – increasing cost of living with decreasing cost of luxury items (RE included).

It’s hard to follow your advice to shun RE here in YEG as vacancy rates across the region are at a stunning 1.4% and the mortgage on our 1100sq ft house is the same as renting a 2BR apartment. Of course, we bought before the boom, not during, so we’re sitting with more choices.

Regardless, another quality posting that earns you yet another gold star!

#68 Troy on 12.13.13 at 11:46 pm

If there is a correction in 2014, what’s wrong with “leaping into dividend-paying stocks” given the dividend tax credit and increased yields?

#69 Ralph Cramdown on 12.13.13 at 11:47 pm

#45 Mister Obvious — “If you are a wage earner who is unwilling to take any risk with your hard earned money, then yes, I suppose you do get ‘boned’ on payday. If you invest only in risk-free interest producing things like government bonds, GIC’s and the Orange Guy’s shorts then yes, you do pay the full freight in taxes.”

My point wasn’t so much what wage earners pay in isolation, rather that people who have enough money and intestinal fortitude to live from dividends pay so little. A single person can receive over $50k in dividends in a year and pay no income tax, a couple over $100k likewise, and even if they earn $200k they pay very little (<10%?). These numbers go up if they're over 65 and eligible for the age credit. In Ontario, the top marginal combined rate on dividends is 34%, and that kicks in north of $500k/year. Not quite Mitt Romney's 15% rate on 'carried interest,' but very generous nonetheless.

#70 Victor V on 12.13.13 at 11:55 pm

#60

I would not worry about that. The actual categorization of the distributions will be provided to the broker (and then to you) at tax time (T5 slips) by the issuing companies.

Categorizing them as ‘dividends’ or ‘interest’ is merely a need to say something; Every discount broker does a number of things differently. I am with both BMO Investorline and TD Waterhouse, and there are considerable differences. Each has its strengths and weaknesses.

In your case, you can rest assured that CPD is providing you with dividend income and the distributions will therefore be eligible for the dividend tax credit.

#71 Tri-Guy on 12.14.13 at 12:00 am

Devore sounds like you’ve been slapped on the wrist.
Tops is overrated anyways

#72 LH on 12.14.13 at 12:01 am

Maybe you’re right smoking man. Time will tell. Next month I get the trading book and my first direct report. Need to focus for once at the wage farm. No more blog dogging for me! My self imposed hiatus starts today.

LH

#73 Smoking Man on 12.14.13 at 12:06 am

DELETED

#74 OlderbutWiser on 12.14.13 at 12:36 am

The reason why the top marginal tax rate in Canada on dividends is less than the rate on interest income is because the earnings to pay the dividends has already been subject to corporate income tax. Dividends are not deductible to a corporation. Interest expense is. In reality, dividends are way overtaxed when you consider that large corporations already paid around 25% tax on the earnings.

#75 Spectacle on 12.14.13 at 12:37 am

Thank You Garth.

Re: #36 Dave on 12.13.13 at 9:49 pm
“………..actually strongly considering purchasing an apartment building……..I’m surprised you would advise against that.” “Buying an apartment building is essentially acquiring a very steady flow of income.”

Someone jump on me for this one if you have input!

I’m involved with this property/construction, and with the excellent blog entries tonight, had to put in my thoughts with all respect as follows.

If you had the $ to buy a building go do it if it’s what you know. Know it. Why even read Garth’s blog if you are “thinking of buying an apartment building” .

Such a property will do predictable things for the next 20?? Years ( think of Japans real estates drop) . Life is going to rip people like this guy a new one, and big time.

The amount of money to :
1) keep a building up physically
2) to legally continue to rent and financially manage/administer a building
……….Is materially significant .

It is not the same as a REIT , which buys into a cash income and does not depend on the zig-zag upon which the Real Estate Investment Trust is based.

Even larger professional property management/ finance companies have a multi level purpose to their investment strategy. It’s based on purchase , rent, and Re-Development of same properties , then sales of them. It gets complicated, and complex.

Garth has suggested several avenues as well as bloggers tonight in how to invest in REITs etc on here, as you’ve read. Not my point here.

Makes much better sense to invest in a balanced portfolio …. In addition , keep your job, etc etc. .

Apology for my blog within a blog post….

Regards

#76 willworkforpickles on 12.14.13 at 12:48 am

market folly…..step this way for a slap and a hug.
http://www.marketfolly.com/
Monday, August 9, 2010
Best Investments During Deflation

You posted a 1,000-word article. Next time use a link. — Garth

#77 Cici on 12.14.13 at 12:58 am

@27 T.O. Bubble Boy

I think you have to take the currency factor into consideration. Too much downside risk for Canadians, especially in deflationary times. In other words, you pay more to own those US REITs, and then you get less after conversion when it comes time to sell or rebalance.

#78 recharts on 12.14.13 at 12:59 am

I must admit that I am reading this blog just for information like this. I am less interested in our host’s opinions as I believe they are biased as RE agents are biased in opinions about their business

Thanks Canadian Watchdog for this!
Would this apply retroactively ? I doubt it but…I am asking just in case.

#42 Canadian Watchdog on 12.13.13 at 10:01 pm
No more open-outcry bidding wars for Ontario. Sorry Realtors. Now your friends can’t make fake fraudulant offers on behalf of you as any buyer is now legally obliged to be handed all written offers on request.

Bill to Strengthen Consumer Protection Passes Final Vote

Bill 55, Stronger Protection for Ontario Consumers Act, 2013

Schedule 3
Real Estate and Business Brokers Act, 2002

1. The Real Estate and Business Brokers Act, 2002 is amended by adding the following section:

Offers to purchase real estate

35.1 (1) No registrant shall,
(a) while acting on behalf of a purchaser, present an offer to purchase real estate except if the offer is in writing;
(b) represent to any person that a written offer to purchase real estate exists except if the offer is in writing.

Records

(2) A brokerage acting on behalf of a seller shall retain, for the period of time prescribed, copies of all written offers that it receives to purchase real estate or copies of all other prescribed documents related to those offers.

Request for inquiry by registrar

(3) A person who has made a written offer to purchase real estate or a registrant acting on behalf of such a person may request that the registrar make an inquiry to determine the number of written offers that the brokerage acting for a seller has received to purchase the real estate.

(4) On receiving a request under subsection (3), the registrar may make an inquiry of the brokerage and the brokerage shall,
(a) respond within a reasonable period of time, or within the time that is prescribed; and
(b) at the request of the registrar, provide the registrar with copies of the written offers or other documents that it is required to retain under subsection (2).

Disclosure by registrar

(5) The registrar shall determine the number of written offers that the brokerage has received to purchase the real estate and shall disclose the number of the offers as soon as practicable, or within the period of time that is prescribed, to the person who requested the inquiry under subsection (3), but shall not disclose the substance of any of the offers or the identity of the person making any of the offers.

#79 Smoking Man on 12.14.13 at 1:14 am

DELETED

#80 Vamanos Pest on 12.14.13 at 1:18 am

Just a great blog today.

That is all.

#81 Jeremy on 12.14.13 at 1:38 am

Garth, you write about stocks and bonds like they have no risk. Stocks and bonds have inherent risks. Owning REITs is like owning real estate. XRE (TSX REIT index ETF) is down 12% from 12 months ago.

Now why would you not want to buy great, income-producing assets when they’re on sale? Classic mistake. — Garth

#82 Derek R on 12.14.13 at 1:58 am

#47 Muttley O’Toole on 12.13.13 at 10:30 pm wrote

It does, Muttley. You just have to know the secret combination. £1, £5, £10, £50, £100, £1000.

“What is it?” you ask. Just hold down the alt key and press 0163 using the number keypad on the right then let go of the alt key.

#83 willworkforpickles on 12.14.13 at 2:05 am

#51-Catfood.L…as I once said here before …. learn to not give out rent receipts for the 1st year or so to any tenant…. (their only proof of tenancy) or until they have clearly demonstrated what kind of person/s they really are.

#84 Jon on 12.14.13 at 2:11 am

Dual citizen, maybe a good call but i wouldnt drop us equity so low in your portfolio just yet, it is doing great and just sit until it really rolls over. I would definitely have more than 10% in the usa until a major correction starts you are missing out on easy gains…

#85 West Vanner on 12.14.13 at 3:04 am

Got it, pretty much what I thought you would say except for the bonds, decreased my % on those a while ago, although I have to say that the balanced funds that [email protected] sold me seem to be doing well, likely because they have a high % of bond content. Sure wish I had bought into AC and AIF a year or more ago though.

#86 Smartalox on 12.14.13 at 3:05 am

@ Victor V (#66),

I read that article about the poor fellow who learned the difference between the economics of a public sector employer (where profitability is not a primary goal) and the profit driven motives of the private sector.

But he failed to recognize was that in the public sector, he was working for himself (I’m sure that those who are convinced that public servants are all “corrupt”, would agree) compared to the private sector where he’s working for somebody else.

What would have been profits paid to an ‘owner’ in the public sector was distributed to employees in the form of wages and benefits.

By comparison, the proprietors of small-town, small-business fast-food restaurant franchisees, where the smaller the profits, the more an employee will be viewed as a cost to be minimized instead of as a means to add value. Believe me, if Tim Horton’s could have hired him as a temporary foreign worker to save a buck, they would have.

The fellow in the article might have done better as an owner himself – perhaps starting his own catering business – taking profits somewhat equivalent to what he made in his public sector job.

At the risk of sounding like the Smoking Man, the problem here is that this fellow had no experience ‘earning’ his keep: instead of working to improve and aggressively market the skills and experience he’d earned managing complex operations at his old job, relying instead on things like union mandates to advance his career.

When he was removed from that cocoon, that support system of the public sector, it’s not that the skills he had were lost, it’s that the ability to sell those skills was never properly developed.

#87 Freedom First on 12.14.13 at 3:44 am

#53 Smoking Man

I know you are having difficulty in writing the book you want to write, but, and this is merely a suggestion, in the meantime why don’t you just publish a book titled: “Smoking Man’s “R-Rated” Deleted Posts”. Seriously, I think many people would like to read them.

#88 Tom from Mississauga on 12.14.13 at 3:58 am

#18 Innumeracy Chick No More
“BMO investorline account I am not sure how to purchase corporate bonds?”
I use Investorline as well. The brokerage fee is huge on bond purchase and sale. Better to go with BMO ETF’s. I own ticker ZCM. ZCS is also good.

#89 raider on 12.14.13 at 4:02 am

I just saw “The Postman” with Kevin Costner, which made me think of this blog, Garth, and his audience here… :)

#90 Tom from Mississauga on 12.14.13 at 4:08 am

#18 Innumeracy Chick No More
To find the BMO ETF lineup go to the Research tab and click BMO ETFs. Scroll down and read. There is also a preferred share ETF ticker ZPR that I have for a non-registered acc’t.

#91 Tony on 12.14.13 at 4:21 am

Re: #2 ApplePi on 12.13.13 at 7:13 pm

The low birth rate also killed Japan. Presently the worldwide birth rate is in decline.

#92 Tom from Mississauga on 12.14.13 at 4:21 am

#60 Innumeracy Chick No More
BMO will send a T5 statement at the end of January that will list what was eligible dividend and what was interest income. It’s really easy to fill it into a tax package. If you pay more for your tax package as a result you can deduct the expense.

#93 Tony on 12.14.13 at 4:34 am

Re: #45 Mister Obvious on 12.13.13 at 10:16 pm

Part of the problem with GIC’s is the Canadian deposit insurance is only 100 grand apiece. If you have a lot of money it puts you into a position where you have to buy GIC’s through credit unions and the highest rates are quote guaranteed by the Deposit Guarantee Corporation of Manitoba with no limit. Implicity financial with one branch doesn’t look like a smart move as yes banks and credit unions do go under. The Deposit Guarantee Corporation of Manitoba might guarantee a million or so dollars when they need to cover. So if you have 50 or 100 million in GIC’s you basically lose everything if the credit unions put a hold on everything and you’re not out before then.

#94 Andrew Woburn on 12.14.13 at 4:37 am

Two comments re matters raised on yesterday’s blog.

Tax rate on investment income –

The idea of taxing all income at the same rate is not new. The overhaul to the Canadian income tax regime which resulted in the current act in 1972 was carried out by the Carter Commission. One of their principal recommendations was “a buck is a buck” whether it is earned from capital gains, investment income or business profits. Prior to this, capital gains were tax-free. The government of the day was savaged by special interests and compromised resulting in our present system.

Canadian bank bail-ins –

All developed countries have agreed to bail-in provisions as part of the Basel III accords which are aimed at harmonizing policy re failing banks as well as forcing major banks to hold more capital. Roughly speaking, important banks are going to be required to hold equity to asset ratios of 7.5% of which 5% is base capital and 2.5% is a contingency reserve. Individual countries may also require another 2.5% contingency on top of the 7.5%. At the time of the GFC, some banks were running as low as 2% capital which explains why they got into trouble so quickly and why they had to be bailed out fast.

None of this is intended to result in a Cyprus-style depositor haircut. The point is to make banks responsible for their own messes and not the taxpayer.
The policy reduces bank profitability and may well be impacting the current availability of bank credit for less credit-worthy businesses and so slows the recovery.

No one has suggested that bail-ins would apply to cash covered by deposit insurance. Any Canadian bank that touched depositor money would be instantly finished as would any government that ordered it. Anyone who is actually worried about bail-ins should spread their cash between banks to stay under insurance limits. Note that federal insurance does not cover USD deposits. However if you were following Garth’s rules, you wouldn’t have enough cash on deposit to have to worry about it.

#95 Tony on 12.14.13 at 4:38 am

Re: #68 Troy on 12.13.13 at 11:46 pm

With most stock exchanges around the world trading as pyramid or ponzi schemes today in the likely event of a crash they’ll be no rebound at all meaning most of your principle amount is lost forever.

#96 Tony on 12.14.13 at 4:42 am

Re: #4 Dual Citizen in Canada on 12.13.13 at 7:24 pm

Judging by history and it has always been the same the U.S. markets will bring down all the major stock markets around the world except for Hong Kong and Japan.

#97 Tony on 12.14.13 at 5:03 am

Re: #27 T.O. Bubble Boy on 12.13.13 at 9:17 pm

Auto loan losses is apparently the next bubble in America which will adversely affect the banks.

#98 Buy? Curious? on 12.14.13 at 5:17 am

@3 Tri Guy I was thinking more along the lines of grow-ops. Get caught? Slap on the wrist.

You don’t need to convert your entire house into a grow-op. A typical plant yields about 4-6 ounces every 3-4 months. Now that marijuana is becoming more acceptable, (Uraguay, I applaude your bravery and will see you next Spring!) you can get a nice, respectable clientle that will move about 5 ounces a week. 5x $250 apprx. x 52 wks (smoking pot doesn’t take a vacation) is $13k tax free. So I hear.

Rob Ford 2014!

http://www.youtube.com/watch?v=OzXoeTnWvb0

#99 groovin_123 on 12.14.13 at 6:41 am

#30 “Canadian Watchdog” gets it.

What the hell do I know, I only trade markets for a living.

There is always solid advice for peeps who can’t afford (be bothered?) to keep their eyes peeled on a few screens.

Stay diversified. Liquid, liquid, liquid…. when the opportunity arises you’ll see it.

#100 Mak the investor on 12.14.13 at 8:24 am

Great advice.

I understand that Corp bonds, Preferreds and REITs are good investment in the coming days, but could not comprehend your 7th point.
If i am starting to build my portfolio why whould I buy equity based etfs right now when the market seems to be purged on the cliff ready to plunge. Ofcourse no one has a crystal ball to predict what’s going to happen. Yet still, would’nt it be prudent to wait for some time to get the equity exposure. Or did you mean, don’t sell your equity exposure if you already have one?

Thanks again. As always enjoyed this post and found it informative.

#101 Joe on 12.14.13 at 8:45 am

Great snap.
Hair today gone tomorrow.

#102 willworkforpickles on 12.14.13 at 9:00 am

In response to your response re: # 76 ….try this link instead.
http://www.marketfolly.com/2010/08/best-investments-during-deflation. …..click on the – Monday august 9 2010 article-…. And the next time you remove a 1000 word article posted by me and replace it with a link, try posting the right link at least.

I did not link. That’s your job. Respect the real estate on this blog. — Garth

#103 T.O. Bubble Boy on 12.14.13 at 9:05 am

@ #77 Cici on 12.14.13 at 12:58 am
@27 T.O. Bubble Boy

I think you have to take the currency factor into consideration. Too much downside risk for Canadians, especially in deflationary times. In other words, you pay more to own those US REITs, and then you get less after conversion when it comes time to sell or rebalance.
——————————————-

Are you saying that the $CDN is likely to rise against the $USD?

Every other forecast has been saying the opposite: $CDN to fall to $0.88 or lower. If you look at the layoffs across Canada, many are with US Companies (Heinz, Kellogg) who can’t “afford” to do business in Canada anymore. Our dollar will fall until Canadian goods/services are cheap enough for businesses to invest here again.

#104 Bob Rice on 12.14.13 at 9:06 am

It ain’t gonna make you rich, but I parked some good amount of cash into a TFSA account that pays 3% at Peoples Trust (a Vancouver-based CDIC company)… We need guarantees as this money will be needed within 3 years.. I’m reading here about 4% returns… I’d rather have the security of the 3% that I have access to at any time without penalty… If you’re in our position, check them out.

Pathetic waste of a tax shelter. — Garth

#105 Tony from Calgary on 12.14.13 at 9:11 am

@Canadian Watchdog #30

“The deflation heads still don’t get it. Rising rates and a lower CAD is inflationary, not deflationary”

Uhhh, no. You don’t get it. What’s deflationary is when all our jobs and wages start disappearing and we have to default on our debts. Debt will be destroyed through bankruptcy (default) faster than Poloz, Bernanke, Yellen, Dragi, etc. can print money, and less money (or credit) in the system is deflation by definition.

Inflation/deflation are MONETARY events (changes to the amount of money within the system) – price changes are just symptoms. Price changes can (and do, and will continue to) happen every day regardless of inflationary or deflationary forces.

#106 T.O. Bubble Boy on 12.14.13 at 9:12 am

(I’m waiting for the $CDN to fall to $0.90 or lower, and will then use Norbit’s Gambit to convert some $USD cash/investments)

#107 The Dividend Guy (not a blogger) on 12.14.13 at 9:15 am

Great advice, but for those retired great advice, but for those of us saving (10 years to go) Dividend Growth Stocks (DGS) are much better. For example I just checked Emera had the stock for 10 years has almost doubled it’s dividend.

More importantly many good quality stocks offer a DRIP program so even 50 bucks a month can be invested at almost no cost.

Simply google DRIP stocks Canada

#108 Jonh on 12.14.13 at 9:15 am

78 recharts on 12.14.13 at 12:59 am

I must admit that I am reading this blog just for information like this. I am less interested in our host’s opinions as I believe they are biased as RE agents are biased in opinions about their business

Thanks Canadian Watchdog for this!
Would this apply retroactively ? I doubt it but…I am asking just in case.
——————————————————-
Retroactively??
For sure back at least 10 years
You should see the back rooms of all the real estate offices old offers stack to the ceiling.

#109 Innumeracy Chick No More on 12.14.13 at 9:58 am

@Tom from Mississauga:

Thank you for the advice on the ETF’s. :) I just started reading this blog just under a year ago. Its great I have learned so much. BTW, I live in Mississauga too.

#110 PJ on 12.14.13 at 10:05 am

Talking a little more about the real estate in the Ottawa region would be nice.

#111 Castaway on 12.14.13 at 10:08 am

#81 Jeremy on 12.14.13 at 1:38 am
Garth, you write about stocks and bonds like they have no risk. Stocks and bonds have inherent risks.

Garth always talks about stocks and bonds like they have no risk.

“(1) When the economy shrinks, own fixed income. A corporate bond paying 4% which looked ugly when inflation was 2%, for example, suddenly looks sexy when (as now) the rate tumbles to 0.7%. That’s a 3.3% yield, guaranteed, with full payout at maturity, and it’s 100% liquid. Better than that stupid GIC.”

I beg to differ. Right now you can get 3.25% in a GIC 100% guaranteed by the Gov’t therefore really risk free. Not only is the interest payment on the corporarate bond not as you say guaranteed but nor is the principle. And to say it is 100% liquid is laughable, even more so given your statement that “Deflation is when the economy stops being efficient, there’s more production than demand, companies take a profit hit”.

So in otherword Garth you are suggesting people take on all that extra risk for the paltry 75bps. Oh, and can you give us the list of risk free investment grade corporate bonds that pay that 4% for 5 years or less to maturity.

Still love you Gartho, but you need better balance in your balanced portfolio and for my some of my fixed income I will take real risk free on these terms all day long.

Those whom fear of risk blinds are emotion’s victims. It’s always sad to witness. BTW, you are wrong. — Garth

#112 heineken on 12.14.13 at 10:41 am

re #66 Victor V on 12.13.13 at 11:25 pm

excellent information

#66 Victor V on 12.13.13 at 11:25 pm
Wage action is going to be part of the landscape moving forward.

He better get some skills: electrical work, tiling a bathroom, painting, cleaning, cooking, washing windows on a high ladder, ……

if you have skills , you will get ahead in this world.
don’t let school get in the way of your education.

#113 Mr. Frugal on 12.14.13 at 10:46 am

Personally, I would wait until after the dreaded taper talk is over before purchasing any REITs or preferred shares. Everytime there is talk of an interest rate hike, these get hammered. Also, I would be very carefuly of REIT ETFs – specifically Vanguard VRE. I made the mistake of buying this earlier in the year. I’m not so upset that it went down in value. My concern is that the dividends don’t flow through. VRE holds REITs which yield about 5.5% as Garth indicates. But for some reason unknown to me VRE yields less than 2%. I spoke to Vanguard and got some BS response about cash flow this and cash flow that. Bottom line, stay away from VRE and but ZRE or ZRE instead.

#114 Zeeman1 on 12.14.13 at 10:52 am

#2 ApplePi.

Don’t forget japan is a traditionally xenophobic nation with massive import duties to protect the locals from competition.

#115 Ralph Cramdown on 12.14.13 at 11:05 am

#107 The Dividend Guy (not a blogger) — “Great advice, but for those retired great advice, but for those of us saving (10 years to go) Dividend Growth Stocks (DGS) are much better.”

It’s always nice to get a dividend increase, but I wonder if the whole Dividend Growth Stock strategy hasn’t been overdone. It’s a very popular strategy among dividend investors, but it strikes me as chasing performance. Yes, Emera’s dividend is up 65% in ten years (NOT almost doubled), and its yield hasn’t moved much, so the price is up 69%. But what makes you think Emera can keep growing its dividend at that rate? Dividend Growth, as popularly practiced, seems to me like little more than a momentum play.

Now Emera currently pays 4.9%, and that’s pretty juicy. But earlier this year it was paying less than 4%. Big difference. If I’m holding a stock yielding 4.9%, I’m OK (not thrilled, but OK) with it just paying that, with enough growth to cover inflation. Below 4%, I’m disappointed if it isn’t growing (or I would be, if I fished at that end of the pool). Point is, I see a lot of people talking about stocks that pay 2 and 3% as dividend growers, and I see a lot of risk there. Even if they keep growing at historical rates, you’re relying on the market only demanding 2-3% yield ten years down the road in order to keep the price growing, and current and future CEOs to keep executing to keep the dividend growing. Two big ifs.

Over the last year, I’ve wondered why I keep seeing Google AdSense ads for P&G. Why would one of the premier consumer product companies need to pay Google to entice me to invest, right beside the “become a millionaire with penny stocks!” ads? Then a few months ago, I found out. P&G has granted management stock options equivalent to over 10% of the float. For a company of that size in that business, I’d consider that akin to looting. Thus the ads telling me about its historical status as a dividend grower.

It takes all kinds to make a market, but I focus more on current profitability and payout rather than extrapolating past growth forward.

#116 Mr. Frugal on 12.14.13 at 11:07 am

#113 Mr. Frugal
=========================

Mean to say ZRE or XRE. Either of these are better than VRE. Stay away from VRE because they only pay 2% and there is no reason to believe that this will change any time soon.

For preferred shares CPD is a pretty good choice – pays 5% annually.

#117 AK on 12.14.13 at 11:10 am

#38 Victor V on 12.13.13 at 9:53 pm
#18

Don’t bother with individual bonds unless you’re an expert. BMO Investorline has a great tool for research ETFs.

Click on “Research” in the horizontal navigation of the site, then click on the “ETFs” section. Spend a couple of hours researching and make your choices from there.
====================================

XHY – iShares U.S. High Yield Bond Index Fund (CAD-Hedged)

#118 Stickler on 12.14.13 at 11:12 am

Corp bonds, Preferreds and REITs…add into that utilities.

When a taper in the US was discussed (not even scheduled yet) lets revisit what happened to these Canadian holdings in less then 2 months:

CBO – Claymore 1-5 Yr Laddered Corporation Bond dropped over 2% (and has an expected YTM of 2.17%)

CPD – Preferreds dropped over 5.5% (set to yield ~5% over 1 year)

XRE – REITS dropped over 12% (set to yield ~5% over 1 year)

XUT – Utilities dropped over 8.5% (set to yield ~5% over 1 year)

Conventional wisdom & all the BNN guests say once the taper happens (assuming it does) all these assets will be slammed even harder.

Would it not be prudent to hold off on these until more clarity regarding the taper comes?

#119 Money talks on 12.14.13 at 11:21 am

“Dettman said there’s also been an influx in recent years of immigrants from higher-priced markets such as China. They tend to view Winnipeg house prices as a relative bargain, so they have no qualms about forking out big bucks for a property they like.”

http://www.winnipegfreepress.com/business/record-for-1-m-home-sales-235841761.html

#120 Waterloo Resident on 12.14.13 at 11:28 am

When you have a massive increase in the number of jobs disappearing, like we have been seeing the past 6 months, then that is almost always a sign that we are entering a NEW RECESSION.

My advice to people: DON’T SPEND ! Save your cash as if your life depended on it, because it does. This next recession is going to last much longer than normal and be much deeper than normal because we don’t have the typical mechanism to pull the economy out of recessions anymore (we cannot lower interest rates, they already are close to zero.)

#121 G on 12.14.13 at 11:30 am

So where do I get a 2% savings account?

#122 TheCatFoodLady on 12.14.13 at 11:30 am

#83 – Willworkforpickles

Witholding rent receipts in Ontario is illegal. Under the Residential Tenancies Act, a landlord must provide them upon request as well as up to & including 12 months after the end of a tenancy. Can’t charge a fee for receipts either. Many tenants need rent receipts if they’re claiming Ontario’s monthly Trillium Benefit for low income tax filers.

http://www.ltb.gov.on.ca/en/Key_Information/STEL02_111677.html

Landlords can’t ask for security deposits in Ontario – first & last month only.

The first year or two as a landlord offers a pretty steep learning curve. There are fantastic tenants out there; people who simply want a clean, safe, decent place to call home & once they find it, are happy to stay as long as their life circumstances permit. The trick is finding them.

Call ALL references & use the net to do reverse directory checks on numbers. It’s surprising how often landlines & cells come back to the same address. “Uncle Morty” is sometimes the employment reference, the financial reference, etc. It pays to check everything you can. The current landlord will often say anything to get rid of a deadbeat. Ask for references for the last couple of places & call former landlords where the tenant is no longer in residence. They’ll be honest – no skin off their nose at that point.

Legalities – references have to be careful they don’t say anything actionable. A good question to ask that won’t get you in trouble is: “Would you rent to that former tenant again?”

#123 Daisy Mae on 12.14.13 at 11:31 am

#19 broadway skytrain: “guy in the pic missed an eyebrow.;)”

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

It’s a sure bet everyone scrolls up to check that out. LOL

#124 The Propeht Elijah on 12.14.13 at 11:43 am

Garth I know you don’t like gold but now that it’s corrected do you feel it’s time to back up the track as a value buy? At least some of the dividend paying miners.

#125 Daisy Mae on 12.14.13 at 11:46 am

#36 Dave: “Curious to hear why you would advise against acquiring an apartment building? Especially since you also suggest owning REIT’s.”

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

I believe Garth said in one of his previous blogs, it has to be the right apartment building in the right area….and Hamilton isn’t it.

#126 heineken on 12.14.13 at 11:53 am

I’m wondering if people believe in deflation, or is this
belief in deflation as a result of garths message?

I believe there is deflation on a more global environment . that is the American banks and their puppet countries are contracting because of all the derivatives and phoney banking products created.

They are really trying hard for everyone to buy into this message. we know that the gov’t is the biggest liar and crook every created yet garth and his disciples believe everything that is printed.

Will Rogers – ” Invest in inflation. its the only thing that grows.”

one more thing, the americans/imf are at this very moment working FOR the banks to remove all FDIC insurance when “bail-in’s” take place. its happening right under our nose’s.

YOUR money becomes THEIR money when you deposit it into their banks. Good luck buying all those financial assets.

it appears that a lot of people , who are just NOT PAYING ATTENTION!

#127 Stickler on 12.14.13 at 12:05 pm

@ #115 Ralph Cramdown on 12.14.13 at 11:05 am

#107 The Dividend Guy (not a blogger) — “Great advice, but for those retired great advice, but for those of us saving (10 years to go) Dividend Growth Stocks (DGS) are much better.”

” Now Emera currently pays 4.9%, and that’s pretty juicy. But earlier this year it was paying less than 4%. Big difference. If I’m holding a stock yielding 4.9%, I’m OK (not thrilled, but OK) with it just paying that, with enough growth to cover inflation. Below 4%, I’m disappointed if it isn’t growing ”

—————————
Just wanted to comment on this as I think a lot of people wont understand it.

It didn’t used to pay 4%, but now pays 4.9% -> it paid the same in both cases….$1.45 per year.

Today it trades @ $29.69 per share so:
$1.45/$29.69 = 4.88%

It traded @ $37.00 per share earlier in the year so:
$1.45 / $37.00 = 3.92%

-> people were willing to pay more to get the $1.45 dividend earlier in the year, where as now they are less willing to pay up for the exact same dividend.

-> you can see the price of the stock fell 20%, but the yield is only 1% lower.

-> So think about that when bond rates go up 1/2 a %…these types of shares can drop significantly in value.

Not picking on Emera at all…in fact I bought some the other day.

This is representative of the entire “high dividend” payers.

Tip:

An important statistic for any dividend paying company is it’s payout ratio.

This will tell you how much a % of a company’s earnings are being paid out as a dividend.

If it is over 100% then the company is taking on debt to pay its dividend. Not a trend that can continue indefinitely.

#128 recharts on 12.14.13 at 12:10 pm

My mistake. I was referring to the current year.

#108 Jonh on 12.14.13 at 9:15 am
78 recharts on 12.14.13 at 12:59 am

I must admit that I am reading this blog just for information like this. I am less interested in our host’s opinions as I believe they are biased as RE agents are biased in opinions about their business

Thanks Canadian Watchdog for this!
Would this apply retroactively ? I doubt it but…I am asking just in case.
——————————————————-
Retroactively??
For sure back at least 10 years
You should see the back rooms of all the real estate offices old offers stack to the ceiling.

#129 Yitzhak Rabin on 12.14.13 at 12:48 pm

REITs are very vulnerable to asset write-downs similar to what mining companies have faced over the last 2 years. It’s not unreasonable to expect large non-cash impairment charges in the coming years ahead. This will no doubt tank their stock prices, and while the cash flows may be there all along it makes a lot more sense to get in when everybody hates this asset class than pile in now.

#130 Paul W on 12.14.13 at 12:54 pm

Another excellent blog Garth…

#131 amazon girl on 12.14.13 at 1:03 pm

GARTH
Just come back here for a slap and a hug
In that order.
Is it to much to ask for a kiss?

#132 jess on 12.14.13 at 1:11 pm

“Choice”
but if the label says tumbled adulterated chicken why would i pay for a process that adds extra unnecessary water weight
—————
How does a $1,000 loan turn into a $40,000 debt?

Read Jesse Eisinger ongoing investigation @

http://www.propublica.org/article/when-lenders-sue-quick-cash-can-turn-into-a-lifetime-of-debt

#133 Mister Obvious on 12.14.13 at 1:16 pm

Wowie Zowie!!

Jim Flaherty nearly had a ‘girl fight’ with Jason Kenney over that dreamboat Rob Ford in question period. It brings back such poignant adolescent memories.

http://tinyurl.com/ldfo4of

These days, Vancouver is being seriously outclassed in the buffoonery department.

#134 economictsunami on 12.14.13 at 1:21 pm

#105 Tony from Calgary:

Spot on comments.

Inflation by partial definition is increase in the money supply. For sustainable inflation you also need steady wage increases across the board. (Good luck Japan)

Continued sectoral over capacity and labour slack is keeping wages suppressed. More discretionary household income will be diverted to energy (fuel/utilities) food and for now at least shelter. (Also possibly savings, debt pay down.)

W/O velocity, due mainly to the deleveraging phenomenon and credit destruction bankruptcy etc sustainable inflation cannot gain true traction.

Call it stagflation, biflation or disinflation; we just don’t want to deal with an extended and persistent multi generational bout of deflation…

#135 DML on 12.14.13 at 1:31 pm

Fewer new Cisco jobs in six years than Ont lost this month. Don’t get too juiced. — Garth

Yeah,and we’ll be paying them $190 M for the honour.In 10 years they’ll probably pull out citing “cost concerns”

#136 Thinker on 12.14.13 at 1:40 pm

Deflation should bleed out lower wages…best way to think about it is

Rent’s represent incomes (lower incomes, lower rents)
House Prices represent (lower rates, higher house prices)

In Canada this is out whack, so we get deflation, it will further continue to be as such if rates stay low…

They are so disconnected due whatever reason, deflation won’t change that..

#137 Macrath on 12.14.13 at 1:44 pm

#118 Stickler
When a taper in the US was discussed (not even scheduled yet) lets revisit what happened to these Canadian holdings in less then 2 months:
————————————————————-
Commodity countries are taking a beating,
along with currencies and emerging markets around the globe. Makes you wonder what the hell is going on. Are Bennie and Yellen running a global ponzi market with a taper schizophrenia smoke screen ? This on top of all the other TBTF corruption.

Playing in the traffic is not mandatory.

#138 not 1st on 12.14.13 at 1:48 pm

…it has to be the right apartment building in the right area….and Hamilton isn’t it.

—-

Garth has something for Lethbridge it seems.

#139 recharts on 12.14.13 at 2:03 pm

%^##[email protected]^# racists!

http://www.youtube.com/watch?v=5FFRoYhTJQQ

#140 Mister Obvious on 12.14.13 at 2:14 pm

#47 Muttley O’Toole

Thanks for the interesting post on those old Russian bonds. Myself, I’m still holding on to 5 of these babies issued free to every British Columbian by the provincial government in 1979:

http://en.wikipedia.org/wiki/British_Columbia_Resources_Investment_Corporation

Up until Jun 30, 2007 they were worth less than the cost of energy it would take to burn them.

From that point on they were worth $0.00.

#141 Nemesis on 12.14.13 at 2:35 pm

“Choices.”

Such a small word, SaltyDogz… and yet – paradoxically – so expansive. If you don’t think so, just ask the intellectual heirs of the Stoics, Chrysippus or Hume.

Yep. The Dilemma of Determinism. Or as Nem would put it, are the best ‘jokes’ preordained… or do we ‘write’ them for ourselves?…

You decide SaltyDogz…

#142 Nemesis on 12.14.13 at 2:48 pm

TruncationCont…

SillySaturday DeterministicGeopolitical MatineeZen:

[FT] – US naval near-miss in South China Sea adds to tensions

…”The US Pacific fleet said that the Cowpens had been “lawfully operating in international waters” when the near collision took place. “This incident underscores the need to ensure the highest standards of professional seamanship, including communications between vessels, to mitigate the risk of an unintended incident or mishap,” it said in a statement.”…

http://www.ft.com/intl/cms/s/0/32fd63fe-644c-11e3-98e2-00144feabdc0.html?siteedition=intl

… Funny thing about ‘mishaps’… how often they arise from a fundamental lack of SituationalAwareness’…

http://youtu.be/yeZ-RFYlMao

Never mind all that though, SaltyDogz… just remember that when it comes to InternationalRelations – yesterday’s adversaries are frequently today’s BestFriends. Heck, just ask Clint & Karl-Otto:

http://youtu.be/Csv1wXOr5tY

#143 kabloona on 12.14.13 at 3:01 pm

#121 G:

People’s Trust high-interest savings account currently pays 1.8%….

#144 Ronaldo on 12.14.13 at 3:17 pm

#139 Mister Obvous –

”Up until Jun 30, 2007 they were worth less than the cost of energy it would take to burn them.

From that point on they were worth $0.00.”

Not to Jimmy P. they weren’t. Check out the history of Westshore Terminals Coal Port which was part of BRIC group and now part of the Jimmy Pattison Group. Those that bought the units of WTE back in 94 have made a bundle over the years including myself. Jimmy turned them into black gold.

#145 T.O. Bubble Boy on 12.14.13 at 3:19 pm

@ #121 G on 12.14.13 at 11:30 am
So where do I get a 2% savings account?
————————

1.50% looks like the highest for a standard (non-registered) account:
http://www.ratesupermarket.ca/savings_accounts/compare_savings_accounts_results/?province=ON&min_amount=100000&account_type=Savings&submit1=Update&submit=Compare+Rates

Implicity (an online Manitoba Credit Union) gives 1.90%, but not CDIC-insured.

#146 D.D. Corkum on 12.14.13 at 3:22 pm

#69 Ralph Cramdown on 12.13.13 at 11:47 pm

(summary) “A person receiving 50K dividends a year pays no tax”

That’s not true. The companies pay tax before anything gets distributed to shareholders. The dividend tax credit is intended to offset the consequences of corporate taxes.

Otherwise, without the credit, investors would effectively be paying taxes twice. Once when the company declared its income, and again when they collected some of that income through dividends.

#147 Edmontonian Guy on 12.14.13 at 3:36 pm

Thanks for the great arrticle again Garth! I’m going to get my butt in gear and try to be more forward thinking with my investments.

Is there anyone you recommend here in Edmonton?

AS far as the housing here in EDMONTON, we are really below prices 6 years later… Today an average condo sells for about 13% less then it did an 2007, and a House about 11% less, or $50,000 LESS. And, back in the peak around June or July 2007 people were selling their housing with NO upgrades or even appliances. Now a lot of the places being sold have had the granite countertops added, and houses have new roofs, furnaces and new appliances added to make it sellable! You NEVER hear “aplliances not included” anymore! Crazy! And prices look like they may be softening again…

#148 T.O. Bubble Boy on 12.14.13 at 3:38 pm

By the way – in the U.S., savings accts are even worse. 0.90% looks like the highest option:

http://www.bankrate.com/funnel/savings/savings-results.aspx?local=false&IRA=false&prods=33&ic_id=CR_searchMMASavingsRates_checking_SeeallMMASavingsproducts

#149 jess on 12.14.13 at 3:44 pm

Know your customer duh !

Friday, December 13, 2013
Links Dec 13
http://www.cnn.com/2012/05/09/world/africa/ibori-mpa

London, England (CNN) — The arrest of a Nigerian politician who deposited millions of dollars of stolen money in UK accounts has raised questions about the role of British banks in corruption.

As governor of the oil-rich Delta state in Nigeria, James Ibori’s salary was only $6000 a year, yet he managed to afford luxury properties, fleets of Rolls Royces, a Bentley and a Maybach, first class travel, private boarding school fees and a private jet worth $20 million.

In April, accused of money laundering, Ibori pleaded guilty to stealing $80 million, although investigators believe he may have stolen three times as much. He was sentenced to 13 years.

Prior to entering politics, Ibori had lived in London, England with his wife Theresa. In 1990, the pair were convicted of stealing from a hardware store where Ibori worked as a cashier. The next year, he was convicted of handling a stolen credit card. By the end of the decade, having lied about his criminal record, Ibori was governor of Delta State, and was reelected for a four year term in 2003

Mentor adds to Nigeria president’s woes amid missing $50bn Financial Times (paywall)
See also: Nigeria Is Missing $50 Billion In Oil Money Business Insider

#150 Onthesidelines on 12.14.13 at 4:14 pm

#111 Castaway on 12.14.13 at 10:08 am

” Right now you can get 3.25% in a GIC 100% guaranteed by the Gov’t therefore really risk free.”

Curious. Where does one get one of those GIC’s and what’s the maturity?

Savers get a maximum of $100,000 coverage under CDIC for interest-bearing assets. Investors receive a maximum of $1,000,000 coverage under CIPF for all financial assets (and another million for registered accounts). — Garth

#151 experienced.optimist on 12.14.13 at 4:16 pm

Dividends are “sacrosanct”

Dec 3 (Reuters)“ Potash Corp of Saskatchewan Chief Executive Bill Doyle said on Tuesday that the fertilizer company’s dividend is “sacrosanct” and the company also sees no immediate change to its share buyback program.

The Saskatoon, Saskatchewan-based company said earlier in the day that it would cut more than 1,000 jobs in Canada, the United States and Trinidad, or about 18 percent of its workforce, as it struggles with slumping demand.”

Quote from the “The Motley Fool” website:
Regardless of the quarterly fluctuations in earnings that occur due to economic cycles, product success or failure, management brilliance or incompetence, and many other reasons, companies generally treat dividends as sacrosanct and are reluctant to reduce them for fear of signaling to the market that they are having cash-flow problems. Investors regard businesses that steadily increase their dividends from year to year as stable investments and are typically willing to pay more for their shares.

http://www.leaderpost.com/business/Share+pain+wall+tells/9254047/story.html

http://saskatoon.ctvnews.ca/potashcorp-defends-job-cuts-in-face-criticism-from-wall-1.1577409

Since the topic has moved somewhat into dividends and dividend growth I thought I would add my 3 cents worth. Most people here are obviously aware of the benefits of dividend stocks, payments drips etc. But with upsides to a benefit there are also costs involved as the two links above will illustrate. Some of the statements that came from PCS earlier in the year seem to be at odds with what is happening now.

I should keep the cynic in me at bay more, but I cannot wonder if the layoffs at PCS just before the end of the year had a lot to do with goosing the fourth quarter results. The people I know were all sent home that morning. I know there will be two months wages paid or some kind of severance, but those could easily be moved to a new quarter on their books.

On the deflation front, this chart shows centuries of inflation/deflation cycles in the US. Some of these may have been crashes and others I suppose just a long slow climb/decline.

http://en.wikipedia.org/wiki/File:US_Historical_Inflation_Ancient.svg

#152 Dan on 12.14.13 at 4:28 pm

Hey, it would be nice to see an article of some suggestions you may have for the elfin deity to tighten rules on mortgages further than he has, or to slow growth in mortgage and real estate secured debt. Also, do you think that he actually should tighten rules for mortgages to cool the housing market, or is it already cooled? I would like if there was a way to do it that raises tax revenue while slowing down the increase in debt. I would really like if it raised interest rates on any home debt while increasing tax revenue.

One thing I saw recently which touches only Toronto real estate was a big increase in development fees for new houses and condos. It seems like that will help to cool down even further new condo developments. It raises tax revenue while doing a good deed in possibly stabilizing the housing market.

The extra Toronto land transfer tax from a few years ago seems smart too, even if it doesn`t seem to have done much to slow Toronto housing down.

#153 experienced.optimist on 12.14.13 at 4:41 pm

Just an add on for those interested in following the Potash Corp of Saskatchewan story.

http://www.leaderpost.com/business/MANDRYK+Wall+right+PotashCorp+profits/9266919/story.html

#154 Entrepreneur on 12.14.13 at 4:46 pm

#66 Victor V on extracting incomes and wealth from one subset of society (the masses) to benefit a different subset(the governing elite).

I agree, totally. The governing elite seem to be in a different world…they say words at election time to get in power but soon turn coat and follow the gravy train mentallity. Our MP said that he would lower the pension plan…that is how he got in but reversed his decision when in power. Said he had a family to support. So much for the people who elected him.

That is not how a government should be operating. MP Michael Chong is doing the right thing by changing some of the rules for our elected officials.

#86 Smartalox: Good reply to #66 Victor V.
When working in the public sector then thrown to the private sector one has to know how to function.
In the private sector one does not usually have same type of job for life, one has to learn to adapt oneself and expect nothing to be handed to you. Expectations have to be lowered and have to be strong.

Must look at other options like opening up your own business. Try to do something that does not require a lot of capital at the beginning. Schuppert said that he likes working with people…open up a coffee/tea shop, or wants outside, look into landscaping (different levels), painting houses, gutter cleaning, ect. Paperwork goes along with it plus legal issues but that is part of it.

#155 Shawn on 12.14.13 at 5:34 pm

Dividends and Double Taxation

It would be interesting if dividends paid out were a deduction from income tax, for the corporation, just like interest. Then the dividend could be fully taxable in to the recipient.

This would get something like the Income Trust Model but without some of the problems of that model. (Problems included a requirement to distribute 100% of income, as I recall, and a bigger problem was that there was that there was often an underlying corporate entity that was kept from being taxable by loading it up with high cost debt to the Trust parent in a contrived fashion. This left some very weak operating company balance sheets.)

The current system of (low) dividend taxation may leave the government short on taxes?

Some dividends are paid out of earnings from the U.S. yet are “eligible”, why?

Some dividends are paid out despite the company paying a very low tax rate. It may have accounting income but little or no taxable income. (I believe there are limits on paying eligible dividends in that situation, but I believe it happens to some extent.) The government is not always getting a full measure of taxes.

In Ontario if the total taxable income is between $0 and $40,000 then any dollar of that that is eligible dividends apparently has a marginal tax rate of NEGATIVE 7%, if I read the following correctly.

http://www.taxtips.ca/taxrates/on.htm

The reason may be that the corporation was assumed to have paid about 27% and this negative 7% gets the total back down to the 20% that applies on the first $40k of personal taxable income.

It all seems a bit bizarre.

#156 Nemesis on 12.14.13 at 5:38 pm

Cold&Bleak doth the WindsHowl as Ogopogo slumbers abyssal. A perfect afternoon for SaltyDogz to grab a DogEared copy of anything by John le Carré and CurlUp in a BlazingInglenook… favourite libations well to hand.

Unless, that is… you’d prefer to indulge in some…

Cue Sinister VoiceOver: “StrangerThanFiction”… [REVERB]…

TipTopConspiratorial BonusZen:

…”Mr. Silverman had met Mr. Salahuddin in 2002 when he went to Tehran to profile him for The New Yorker. The fugitive viewed many Iranian officials as corrupt, and Mr. Silverman believed he might be willing to share information. He particularly disdained a former Iranian president, Ali Akbar Hashemi Rafsanjani, privately claiming he had stolen millions in oil revenues and secretly invested it in Canadian real estate and other assets.”…

[NYT] – A Disappearing Spy, and a Scandal at the C.I.A.

http://www.nytimes.com/2013/12/14/world/middleeast/a-disappearing-american-spy-and-the-cia.html?hp&_r=0&pagewanted=all

#157 Canadian Watchdog on 12.14.13 at 5:49 pm

GTA CONDO-EX Futures Mercantile Exchange 2014 Contract Launches

1. Garrison Point
2. TEN93 Queen West
3. One Park Place South Tower
4. The Taylor
5. 1 Yorkville
6. Brookdale on Avenue Road
7. Biyu Condos
8. Waterview Condominiums
9. Paradigm Condos
10. Charisma Condos
11. Solstice II
12. MINT Condos
13. MAZE Condos
14. Tempo Condos
15. Vogue Condos
16. Blue Diamond On The Hill
17. Montgomery Square
18. Riva del Lago
19. 90 Niagara
20. The Harlowe
21. West Queen West Condos
22. Canary Park Condos
23. 170 Spadina
24. Gloss Condos
25. 4 The Kingsway
26. River City Phase 3
27. Core Condos
28. King & Parliament
29. Totem Condos
30. Cumberland Tower at Yorkville Plaza
31. Soul Condos
32. The Met
33. The 228 Condominiums and Towns
34. Bayview & Sheppard
35. Beacon 5200 Yonge
36. Jazz Condos
37. 150 Main Street West
38. 101 Locke Condos
39. Bridgewater Residences on the Lake
40. The Berkeley Condominiums
41. Yonge and Grenville

#158 Smoking Man on 12.14.13 at 6:05 pm

#72 LH on 12.14.13 at 12:01 am
Maybe you’re right smoking man. Time will tell. Next month I get the trading book and my first direct report. Need to focus for once at the wage farm. No more blog dogging for me! My self imposed hiatus starts today.

LH
…………………………….
Good luck Wish you the best.

Go get them :)

#159 Smoking Man on 12.14.13 at 6:08 pm

#87 Freedom First on 12.14.13 at 3:44 am
#53 Smoking Man

I know you are having difficulty in writing the book you want to write, but, and this is merely a suggestion, in the meantime why don’t you just publish a book titled: “Smoking Man’s “R-Rated” Deleted Posts”. Seriously, I think many people would like to read them.
…………………………

Great idea problem is I don’t remember them.

Just think If run for office Garth will so own me. LOL

#160 Porsche on 12.14.13 at 6:17 pm

Have to start calling him Deleted Man

LOL… Love it !

#161 economictsunami on 12.14.13 at 6:21 pm

Kawa: Why The Party’s Over For Canada’s Condo Market:

https://businessincanada.com/2013/12/13/why-the-partys-over-for-canadas-condo-market/

#162 Shawn on 12.14.13 at 6:27 pm

GTA CONDO FUTURES CONTRACT

Canadian Watchdog is this a joke or a lie, or what? Google search turns up nothing on this. (Though impressively, great fool blog does turn up at the top of the search.)

Imagine such a futures contract. One could lose or make money on GTA condos without buying one.

Imagine how angry those who sold this contract would get if the prices refused to move down.

#163 jess on 12.14.13 at 6:27 pm

collusion and price fixing for years property management /leasehold

For the first time, the full story of Cirrus’s collusion to rig prices can now be told. The tale starts in 2009, when Marina Golding, the daughter of an …

http://www.theguardian.com/money/2013/dec/14/cirrus-ripping-off-elderly

google peverel
=================

#164 Ralph Cramdown on 12.14.13 at 6:33 pm

#146 D.D. Corkum — “That’s not true. The companies pay tax before anything gets distributed to shareholders. The dividend tax credit is intended to offset the consequences of corporate taxes.”

Fair enough. It looked a lot less bizarre when bonds were paying 6% and dividend stocks were paying 4%. The tax credit made ’em a bit more equal. Now that dividends are 5% and bonds at 3% it looks a bit off. One must keep a longer term perspective.

#165 jess on 12.14.13 at 6:35 pm

Hacking a statue stone

Wasn’t Latvia used as a model for capitalists?

=========
Inge Springe is the founder and director of the Baltic Center for Investigative Journalism. Her stories for the center, which is also known as Re:Baltica, have resulted in action against public officials and helped bring about changes in Latvian economic and tax policy.

Your work in Latvia explored topics including organized crime and corruption. What were some of the most significant stories that you discovered?

In autumn 2011, together with colleagues from Balkan countries, Russia and the Ukraine, we published a project called The Proxy Platform. Re:Baltica, the center which I direct, worked on a part of the project related to a Latvian bank’s involvement in money laundering schemes and murky business offshore.

The Proxy Platform project was divided into several parts. Colleagues from OCCRP discovered that several Latvian banks were used as hubs to channel stolen taxpayer money from Russia and the Ukraine. We took a deeper look at a company called Tormex’s bank account in one of Latvia’s banks – Baltic International Bank. As the investigation showed, this company was used to channel “dirty” money from all around the world. Even Mexico’s Sinaloa drug cartel used this account.

http://www.icij.org/blog/2013/12/everyone-can-be-investigative-journalist-everyone?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+GlobalMuckraker+%28The+Global+Muckraker%29

#166 Nemesis on 12.14.13 at 6:55 pm

@WatchDog/#157

“We don’t need to see them. Just pick the good ones.”

TeeHee!

#167 kam on 12.14.13 at 7:22 pm

New rules for real estate fees in Ontario

Posted: 14 Dec 2013 12:14 PM PST

Public Advisory Published by the
Real Estate Council of Ontario

The rules for real estate fees have changed: what home buyers and sellers need to know

December 13, 2013 (TORONTO) – The Government of Ontario has changed the rules to give consumers and real estate brokerages more options and flexibility regarding how real estate services are paid for.

What has changed

Previously, real estate brokerages could charge consumers a flat fee or a percentage of the sale price, but not a combination of the two. The restriction has been removed, so brokerages now have the option to make fee arrangements that could include a blend of a flat fee and a percentage of the sale price.

These changes, brought in by the Stronger Protection for Ontario Consumers Act, 2013, are effective as of December 12, 2013.

What it means

With greater flexibility in how to charge for their services, real estate brokerages now have more options to differentiate their business from their competitors. How this will play out in the marketplace remains to be seen, but the bottom line is that competition and market forces can now play a greater role in how real estate service fees are structured.

While choice and flexibility are good for consumers, it remains crucial for home buyers and sellers to educate themselves, and to understand what services their brokerage will provide and how they are priced.

Home buyers and sellers have a wealth of choices when they choose a real estate professional. They should consider their options and ensure the person they choose will provide the services they’ll need with a price structure they can work with. Prices and service levels are negotiable, and communicating clearly ahead of time and getting everything in writing can help avoid problems later on.

About RECO:

RECO regulates the real estate profession in Ontario. RECO is responsible for administering the Real Estate and Business Brokers Act, 2002 (REBBA 2002) and associated regulations on behalf of the provincial government. In order to trade in real estate in Ontario, brokers and salespersons must be registered under REBBA 2002. RECO’s mission is excellence in the delivery of regulatory services that protect the public interest and enhance consumer confidence in the real estate profession. For more information, visit http://www.reco.on.ca

#168 Castaway on 12.14.13 at 7:37 pm

#150 Onthesidelines on 12.14.13 at 4:14 pm
#111 Castaway on 12.14.13 at 10:08 am

” Right now you can get 3.25% in a GIC 100% guaranteed by the Gov’t therefore really risk free.”

Curious. Where does one get one of those GIC’s and what’s the maturity?

Go to Ratesupermarket .ca for most all available rates. They have pulled back recently but you can still find some 5 year above 3%. You will quickly see that the big 4 banks have poorest rates. Never buy from your bank!

Make sure any one you choose is covered by CDIC so it really is risk free. Here is link to CDIC website http://cdic.ca/Pages/Members.aspx#HH

Not a big advocate of GICs but they can serve a purpose and be a small part of a balanced portfolio. Especially when spread on them versus risky bonds is too small. Oh and buy in small incremenents in case you ned to access some cash in short term. There are no transaction costs.

#169 Doug in Toronto, usually in London on 12.14.13 at 7:39 pm

REITs and preferred shares (or preferred share ETFs) you say? Makes sense to me, as these kinds of assets are still on sale!

#170 Victoria Tea Party on 12.14.13 at 7:47 pm

A “PEOPLE-LESS RECOVERY”

American iconic singer Bob Dylan had it right in his 1989 epic “Everything is Broken” hit:

“Broken lines broken strings
Broken threads broken springs
Broken idols broken heads
People sleeping in broken beds
Ain’t no use jiving
Ain’t no use joking
Everything is broken…”

NO KIDDING BATMAN

In 1989 investors were still crawling out from under the 1987 stock market crash; the Soviet Union was beginning it’s inevitable implosion; the Berlin Wall came down; it was the “End of History.”

Like Hell it was!

Whadda we got today?

Why, more history! Lots and lots of history, enough the choke on.

OUR LATEST COHORT OF HISTORY BEGAN in the latter part of 2007.

That’s when stock, bond, commodity and various derivatives markets began their graceful Black Swan-like dives off the high board into that empty swimming pool of overwhelming debts, cancerous crony capitalism, government ennuie, and consumer greed.

It all seemed quite good until then didn’t it?

BUT THEN SOMETHING HAPPENED after 2008.

Mr. and Mrs Every Day were showing up “at the races”, but there were no more races (no more jobs, no more houses, no more hope — “everything was broken”).

Added to that awfulness was more consumer inflation, crazy house prices (Canada), food stamps (US), and NOW Obamacare (US), this latter item a stark reminder that overweaning goverment is really, really bad for you. It could kill you!

ST GARTH OF “WHAT LIES AHEAD”

Garth’s latest post is another in a long list of his signals that we can only speculate on what’s next.

On the one hand Garth attempts to reassure investors, but on the other hand there’s little succor for recent real estate acquirers. Either way, little comfort.

A PEOPLE-LESS RECOVERY MEANS that “businesses” can function without hiring as many people as they used to do, before the GFC.

And Governments are still stomping around in the not-wanted-workers scenario, to wit: Canada Post’s huge upcoming layoffs.

The now irrelevant theory that as technology “improves” our so-called lives do and we get back to “normal”. Just when will this “something new” come along to save us as has happened so many times in the past? It’s not.

MEANWHILE, AS ONE US BLOG NOTES,

the American shopping seasons are being bailed out, in some measure, by an emerging $2-trillion “underground economy” that deals with cash, barter of various valuables, and other tax-avoidance scams.

That may sound cool, but it’s wickedly not.

WHY?

Because it undermines moral fibre and morale. It is a desperation move with too many unintended consequences.

This is doubly-dangerous, especially now, with China’s empirical ambitions getting louder by the day while the American Empire keeps skidding into pure irrelevance.

After all “they” are harrassing US warships in the East China Sea (spoiling for a territorial dust-up) AND “they” have just landed a man-made gadget on the moon.

Isn’t that what the Yanks USED TO DO?!

Man, this is interesting, namely in how one empire is gradually being replaced by another one. This will not be pretty.

I’m getting a little tired of living in “interesting times” that old Chines curse.

Where’s that old normal? At Wal-Mart? Or on ET Tonight?

Where?

#171 Castaway on 12.14.13 at 7:48 pm

#111 Castaway on 12.14.13 at 10:08 am
#81 Jeremy on 12.14.13 at 1:38 am
Garth, you write about stocks and bonds like they have no risk. Stocks and bonds have inherent risks.

Garth always talks about stocks and bonds like they have no risk.

“(1) When the economy shrinks, own fixed income. A corporate bond paying 4% which looked ugly when inflation was 2%, for example, suddenly looks sexy when (as now) the rate tumbles to 0.7%. That’s a 3.3% yield, guaranteed, with full payout at maturity, and it’s 100% liquid. Better than that stupid GIC.”

I beg to differ………

Those whom fear of risk blinds are emotion’s victims. It’s always sad to witness. BTW, you are wrong. — Garth

Seriously. That is the best you can do? So you feel that small incremental return justifies the added risk(s). Fear has nothing to do with it. But some of us like to make sure we get a adequate return for assuming that risk.

#172 Waterloo Resident on 12.14.13 at 7:52 pm

Everyone is talking about 2% yearly returns. Believe me, that is nothing. If one learns to time the market correctly one can easily earn 49% return in only 6 months by buying and selling UPRO at the right times. UPRO is 3-times the S&P.

(BTW, I sold UPRO a few days ago just as it started falling, then it spiked up for 2 days, now it’s crashing again. Don’t touch it for the next few weeks at least.)

I use wave pattern analysis to time UPRO, an art that no one else seems to even know about. It’s strange but it works wonders.

#173 Al on 12.14.13 at 8:00 pm

In the Globe Business Section today(Saturday)the Financial Facelift article is about a 27 year old medical intern who will start earning $400,000 as soon as his finishes his internship and starts work as a specialist in Ontario! These obscene salaries are paid for by us taxpayers thanks to McGoofy who tried to bring health care costs under control with the Drummond report in hand and then propmptly gavi in to even higher salaries with an election looming.

#174 live within your means on 12.14.13 at 8:14 pm

This afternoon fell into a deep sleep on the sofa. Had a bizarre & worrisome dream – don’t want to talk about it. Many years ago, while living with a younger sister, I had a dream. We had bkfast & told her I had dreamed our elder sis, who was out in VRC w/her bf, had a major fight in a hotel room. I described lots of details. Why would I dream that. That eve. elder sis called us from VCR asking if I could pick her up at the airport in Mtl. as she had a major fight with ber B/F, with whom she had lived with a few years. Sis later confirmed all the small details I saw in my dream. I’m not a physic, just a bit worried.

#175 T.O. Bubble Boy on 12.14.13 at 8:15 pm

#150 Onthesidelines on 12.14.13 at 4:14 pm
#111 Castaway on 12.14.13 at 10:08 am

” Right now you can get 3.25% in a GIC 100% guaranteed by the Gov’t therefore really risk free.”

Curious. Where does one get one of those GIC’s and what’s the maturity?
—————————–
5-yr seems to max out around 3%:
http://www.ratesupermarket.ca/gic_rates/compare_gic_rates_results/?province=5&min_amount=100000&tax_indicator=N&term_length=5&submit1=Update&submit=

But, I do see 3.20% for 7-yr and 3.35% for 10-yr:
http://www.ratesupermarket.ca/best_gic_rates/

You should be able to buy many of these from your financial institution (in an investment account), or from the provider.

#176 Nemesis on 12.14.13 at 8:20 pm

Spontaneous SynapticLeaps don’t always synchronize with our MagnanimousHost’s scribblings… or, much like the SmokedMan’s DELETED’s, they somehow contrive to elude you the ‘morning after’…

This should have debuted with GT’s 2013.11.19 “Disorderly”:

SaturdayNightSoundTrack:

“You’ll never get me up in one of these again… ‘Cuz, what goes up… must come down.” – [I’m Mandy… Fly Me! – 10CC; Live @ Wembley – 1982]

http://youtu.be/z6Jb9m1N67g

…I saw her walking on the water
As the sharks were comin’ for me
I felt Mandy pull me up give me the kiss of life
Just like the girl in Dr. No No No No…

#177 Daisy Mae on 12.14.13 at 8:26 pm

“Savers get a maximum of $100,000 coverage under CDIC for interest-bearing assets. Investors receive a maximum of $1,000,000 coverage under CIPF for all financial assets (and another million for registered accounts). — Garth”

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

…and posters question and contradict?

#178 Bottoms_Up on 12.14.13 at 8:46 pm

#5 World According To Garth on 12.13.13 at 7:43 pm
——————————————————-
People of your ilk are so thick. Don’t you realize that with climate change comes more and bigger storms (as well as colder and hotter temperatures)?

So in trying to be underhanded about your comment, your post is actually quite supportive of the fact that we are in the midst of witnessing anthropogenic climate change. i.e. GTA’s biggest storm of the year….and it’s been unusually cold too…….

#179 Canadian Watchdog on 12.14.13 at 8:49 pm

#162 Shawn

A presale is a forward contract for future delivery. Therefore presale markets are de facto futures markets. If you want to know how the market really works, Google and find the following papers:

Do The Forward Sales Of Real Estate Stabilize Spot Prices?
Transaction Volume And Price Dispersion In The Presale And Spot Real Estate Markets
Pricing of Presale Properties With Asymmetric Information

I don't think people really understand what's going on. When that realtor from CBC's condo documentary said condos are being sold like commodities on the international market, he wasn't kidding.

The entire market structure has changed. Many of those developments listed above are being listed on international RE agency websites like this one. And they're selling too.

#180 Bottoms_Up on 12.14.13 at 9:03 pm

#147 Edmontonian Guy on 12.14.13 at 3:36 pm
————————————————–
Who needs a local guy when Garth’s only a phone call or video chat away?!

#181 Bottoms_Up on 12.14.13 at 9:19 pm

#135 DML on 12.14.13 at 1:31 pm
—————————————–
Don’t be so short-sighted. $111,000 per job for 10 years is $11,100 per job per year.

Let’s put the average job salary at $65,000 — and on this salary, total income taxes might be in the range of $20,000. Thus, already a net benefit. Then add the fact that wages will equal money flow through the economy, sales taxes paid (HST) etc., and you can see that this will likely have a net benefit.

#182 Smoking Man on 12.14.13 at 9:19 pm

Was going through the archives looking for something holly crap I’m probably the number one poster in terms of quantity.

You would think I was getting paid.

I come across of my calls. Dead on.

Go to the April 2011 read my call on carney and F at the time, 99% of the world thought rates were going up.

What happened to deciple, did he go to blog rehab.

For being a bit of an odd ball, my calls are amazing.

Got to be some kind of rain man autism thing.

#183 World According To Garth on 12.14.13 at 9:27 pm

Im thick? I think you need to understand something. I don’t disbelieve in climate change. climate changes all the time. I disapprove of Govt “making shit up” so they can pay their minions their 91,000 dollar salaries and million dollar pensions. They are doing that with phony carbon taxes and BS global warming climate change crap. This is a hunt for money by desperate govt worldwide. Open your eyes.

$$$$$$$$$$$€€€€€€€€€€€€€£££££££££££££¥¥¥¥¥¥¥¥

#178 Bottoms_Up on 12.14.13 at 8:46 pm
#5 World According To Garth on 12.13.13 at 7:43 pm
——————————————————-
People of your ilk are so thick. Don’t you realize that with climate change comes more and bigger storms (as well as colder and hotter temperatures)?

So in trying to be underhanded about your comment, your post is actually quite supportive of the fact that we are in the midst of witnessing anthropogenic climate change. i.e. GTA’s biggest storm of the year….and it’s been unusually cold too…….

#184 wallflower on 12.14.13 at 9:51 pm

NEMESIS – go blow it out on another blog
Sick of the skim-past, scroll-down extra work.

#185 Obvious Truth on 12.14.13 at 9:53 pm

Great post Garth.

Super info on factors for inflation and deflation.

Garth mentions inflation on goods while deflation in assets. It’s possible to have cost push of a lower dollar and then have capital flight from assets because of low dollar.

How many here speak of owning US stocks. A natural hedge on the C$. If there are overseas investors in RE they won’t stick around and be devalued.

All investments are priced based on greenbacks.

The way to change this would be to raise rates. Sort of like EM situation this past summer.

The boc and govt seems to be expecting everything that hasn’t gone its way to fall into place soon. In the meantime investors on this blog and elsewhere are speaking with their wallets. I wish they could give us something proactive and concrete.

Agree with a previous poster on gold. Up on week with markets selling off and heavy taper talk. Tax loss selling talk and higher rates forever but no lower low. My botttom fishing trend change senses are on alert. Will all the reasons it stunk turn into reasons it’s now good?

Will be fun to watch. Who doesn’t love a good comeback story. And we get all the metal heads back on the blog.

#186 Ralph Cramdown on 12.14.13 at 9:54 pm

#173 Al — ” 27 year old medical intern who will start earning $400,000 as soon as his finishes his internship and starts work as a specialist in Ontario! These obscene salaries are paid for by us taxpayers thanks to McGoofy who tried to bring health care costs under control with the Drummond report in hand and then propmptly gavi in to even higher salaries with an election looming.”

There are few skillsets more portable than an english speaking doctor or nurse credentialed by a decent North American school. Unless you want to underwrite their education in exchange for golden handcuffs, pay market salaries or watch all the decent ones leave for places that do.

#187 Snowboid on 12.14.13 at 10:02 pm

The latest from the Kelowna RE dynamic duo:

http://wolfhomes.com/blog/

http://www.kanadaimmobilienrealestateremax.de/aboutkelowna.php

Looking for that HGM (hot German money)!

Frohe Weihnachten und ein glückliches neues Jahr…

#188 economictsunami on 12.14.13 at 10:15 pm

You can push liquidity out but where it goes, nobody knows.

Why QE Isn’t Working: Bridgewater Explains…

http://tinyurl.com/myvkcak

#189 45north on 12.14.13 at 10:27 pm

Canadian Watchdog: No more open-outcry bidding wars for Ontario. Sorry Realtors. Now your friends can’t make fraudulent offers on your behalf as any buyer is now legally obligated to be handed all written offers on request.

especially if refusal to produce them would jeopardize the sale!

CatFoodLady: Getting a tenant out can be a nightmare & when you finally succeed with a legal eviction, expect them to trash the place. You need to be up on federal/provincial law – Human Rights, Residential Tenancies Act, Fire codes, Health & Safety laws, municipal code covering minimum/maximum temperatures for common spaces, security, garbage, vermin & many other things.

so why would anyone in his right mind be a landlord?

Victor V: from your link: Eric Schuppert’s realization that he had left the middle class did not occur until the fear came to him that he would never be back to where he had been

you know there doesn’t seem to be a working class anymore. Working class used to be people that worked in factories. That was usual. Not anymore.

Cramdown: Then a few months ago, I found out. P&G has granted management stock options equivalent to over 10% of the float. For a company of that size in that business, I’d consider that akin to looting.

10% of the float – I don’t understand. Could you explain please.

Waterloo Resident: When you have a massive increase in the number of jobs disappearing, like we have been seeing the past 6 months, then that is almost always a sign that we are entering a new recession.

well it doesn’t look good

recharts: Scottish accent in the elevator. Pretty funny!

#190 recharts on 12.14.13 at 10:34 pm

#179 Canadian Watchdog on 12.14.13 at 8:49 pm
………….

The entire market structure has changed. Many of those developments listed above are being listed on international RE agency websites like this one. And they’re selling too.
—————

So Watchdog, what would YOU do if you were a chinese buyer? Would you buy a condo here?

#191 pbrasseur on 12.14.13 at 10:54 pm

Garth you missed the most important advice for investing during tough economic times: rule number 1, buy quality assets.

And yes, Wells Fargo is a better quality asset than any of the big 5!

#192 Knockerbickers Knosty on 12.14.13 at 11:00 pm

#170 Victoria Tea Party on 12.14.13 at 7:47 pm — “Added to that awfulness was more consumer inflation, crazy house prices (Canada), food stamps (US), and NOW Obamacare (US), this latter item a stark reminder that overweaning goverment is really, really bad for you. It could kill you!”

Indeed. Govt.-dependent sheeple, getting constant cheap handouts (our own money), then being made to feel guilty because we live in the land of the free, home of the brave!

Horsefeathers — Obama’sCare Ah yes, our American friends are waiting for with bated breath. Not!

#182 Smoking Man on 12.14.13 at 9:19 pm — “Got to be some kind of rain man autism thing.” — Autism? Ssshhhh! You’re talking about the divil, aka big pharma’s evils! Not allowed! Besides, the calls you have made are reasonably accurate. Don’t push the machine!

#193 piazzi on 12.14.13 at 11:07 pm

if you need to hold cash

maybe investigate a HISA that your broker carries no-load

there is a table here

http://www.canadiancapitalist.com/high-interest-savings-accounts-at-discount-brokers/

#194 Ebenezer Haarper on 12.14.13 at 11:09 pm

Fewer new Cisco jobs in six years than Ont lost this month. Don’t get too juiced. — Garth

________

Are there no Call Centers? Are there no Walmarts?

#195 Smoking Man on 12.14.13 at 11:13 pm

Vlad, I can’t help myself, I push the machine, I push the powers at the tax farm right here at GF.

They don’t know what to do with me. Keep in mind I’m several steps ahead of them.

I know what they are going to do before they do.

This blog is going to get very interesting after Jan 30.

Ha I’m pure evil.

#196 Ralph Cramdown on 12.14.13 at 11:14 pm

#189 45north

The “float” is the number of shares of a company held by its investors, not including those held by a controlling shareholder if there is one (because those usually don’t get traded).

Senior corporate management is often issued stock options, ostensibly to align management’s interest with shareholders. But this is transferring part of the shareholders’ ownership to management. A small fraction is probably good, but a larger fraction is just giving the company away.

http://business.financialpost.com/2013/10/18/heres-how-much-employees-of-20-top-u-s-companies-are-expected-to-make-from-stock-options/

P&G is a famous large company which should have no trouble attracting top management talent without offering to give 10% of itself away to them. When investors calculate the earnings and cash flow they’re buying when they buy shares, consideration has to be given to the amount that management is planning on helping itself to.

http://finance.zacks.com/stock-options-dilute-5318.html

#197 Andrew Woburn on 12.14.13 at 11:30 pm

#188 economictsunami on 12.14.13 at 10:15 pm

Why QE Isn’t Working: Bridgewater Explains…

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

Maybe it is working, just not the way we think it should. An in-depth 2012 Bloomberg piece explained “financial repression” as practiced by governments.

Key extracts –

Throughout history, debt-to-GDP ratios have been reduced in five ways: economic growth, substantive fiscal adjustment or austerity plans, explicit default or restructuring of private and/or public debt, a surprise burst in inflation, and a steady dose of financial repression that is accompanied by an equally steady dose of inflation.

and

One of the main goals of financial repression is to keep nominal interest rates lower than would otherwise prevail. This effect, other things being equal, reduces governments’ interest expenses for a given stock of debt and contributes to deficit reduction. However, when financial repression produces negative real interest rates and reduces or liquidates existing debts, it is a transfer from creditors (savers) to borrowers and, in some cases, governments.

This amounts to a tax that has interesting political- economy properties. Unlike income, consumption or sales taxes, the “repression” tax rate is determined by factors such as financial regulations and inflation performance, which are opaque — if not invisible — to the highly politicized realm of fiscal policy. Given that deficit reduction usually involves highly unpopular spending cuts and/or tax increases, the “stealthier” financial-repression tax may be a more politically palatable alternative.

http://www.bloomberg.com/news/2012-03-11/financial-repression-has-come-back-to-stay-carmen-m-reinhart.html

#198 Ralph Cramdown on 12.14.13 at 11:30 pm

#188 economictsunami — “Why QE Isn’t Working: Bridgewater Explains…”

Classic strawman. Is QE doing what the Fed said it would do? Everyone seems to agree that it is “suppressing” medium term interest rates . Did the Fed promise it would do more?

I see a country that is creating 100-200k jobs every month in the teeth of job, spending and transfer payment cuts by all levels of government. To say QE isn’t working you have to articulate what you think the economy would look like without it.

#199 Obvious Truth on 12.14.13 at 11:56 pm

#174 Al

I think you may be riding on the wrong gurney. Most specialists I know work gruelling hours and are loyal to their patients and profession to a fault. The responsibility they carry with them daily is unmatched.

I thank them. And give to advance the work they do. I know they earn their keep and then some. I feel lucky to be a part of this country because I have them. For an income comparison give them a low 5x your average grohe installer and do the math. They are easily worth double. Travel time and material not included.

There are many other non productive drains on good folks hard earned income you could be upset about. Most of them aren’t tradespeople.

#200 Bottoms_Up on 12.15.13 at 12:01 am

#183 World According To Garth on 12.14.13 at 9:27 pm
——————————————————-
Who is making stuff up? We are talking about thousands of world-renowned scientists that all (amazingly) agree that humans are having a significant impact on our climate.

And for the record, government employees (let’s name some….urban planners, by-law officers, librarians, teachers, liquor store employees, police, fire fighters, mailmen, food inspectors, product regulators, border agents etc.) pay taxes too, and also pay very heavily into their pensions (~10% of their net pay). So your $91,000 salaried individual takes home a biweekly paycheque of around $2100, enough to rent a flat, gas up their beater and put food on the table. They are hardly living the high life….and most do a great job, and are proud to work on behalf of tax payers. Even whining tax payers such as yourself. If it’s such a sweet ride, what’s stopping you from joining? Or….I just thought…you could be a CON-BOT troll, actually pulling in double that salary on behalf of the taxpayer?

#201 not 1st on 12.15.13 at 12:12 am

Regarding the new term climate change is simply a catch all phrase invented to cover every weather scenario out there and then apply it back to human activity.

Thats not what the scientists were pushing 20 years ago. They specifically used the term GLOBAL WARMING and the impacts were only going to be rising sea levels and droughts. Now they can’t get the data to match their models so that tells you that complex systems cannot be modeled accurately.

Should we keep polluting burning fossil fuels? Absolutely not, we should always be looking for cleaner and more efficient alternatives. But that doesn’t mean I am going to be on a guilt trip turning my gas up this winter or driving my car to get a gallon of milk or allow some half cooked carbon credit scheme to affect my standard of living.

And if warming is eventually in the cards, I am still not convinced its a bad thing.

#202 willworkforpickles on 12.15.13 at 12:37 am

In the next 5 years we get deflation halving the current worth of the dollar. Meanwhile, the Chinese will be setting up shop like a huge collection agency readying to collect on a huge debt. At that point the national debt will have become totally unmanageable and hyperinflation will finish the dollar over the course of another 5 years time driving it down by 90% of today’s current worth. States and Provinces will then be confiscating peoples homes and property and handing them over to the Chinese to pay the interest on the national debt. And you will be paying them rent to stay in the home you no longer own. Those who don’t pay will be made instantly homeless and a nice Chinese family newly arrived, will be given your home to rent from the (all new) North American Chinese Rental Authority.
Europe at that time will be up in arms over the expansionist power the Chinese will be gaining on the world stage and nuclear holocaust and World War III will loom on the horizon.
…………..but well……………
……………………. you already knew that.

#203 Canadian Watchdog on 12.15.13 at 12:58 am

Every person has different ends and different means to achieve it. For me to suggest if I would buy a condo as a Chinese would be meaningless because value is subjective, not objective.

From what I've read and learned, most Chinese value our democracy (whatever that is at this point) and are willing to pay to send their children abroad or live here themselves. I believe what is of concern is their confidence in real estate and how much cash savings (remember China has a 30% personal savings rate) they are willing to splurge into one asset. Currently there are other financial opportunities in China that locals take for granted. The PRC and China's big four banks have been promoting and trying to sell more financial investments, but ever since China eased its homeownership laws, it's all about real estate. Hands down.

This confidence in RE may have been bolstered from the PRC's intervention (in fear of social unrest) to keep home prices rising since the AFC in 1997. However, for those (speaking about all immigrants now) who do come abroad, I'm not sure if many understand how things work on this side of the world, and that protesting and smashing developers' offices because condo prices fell will result in jail time.

I'm not saying they'll all go smashing windows, but I do believe there will some kind of social resentment towards government or our democratic system if things go wrong. We are miles apart when it comes to the rule of law. That's for sure.

I never make suggestions to buy or not to buy RE. It's a personal choice depending on one's needs. But don't go buying a home and expect to consume it and profit at the same time. My only advice is to understand what the definition of a non-speculator is: that is someone who is willing to consume an asset with the acceptance of a gain or loss. Anything beyond that and you're a speculator like the rest. Even if you're waiting.

#204 Bill Gable on 12.15.13 at 1:58 am

Mr. Turner has been trying to warn us – Here you go –

“Real estate prices in Canada are the most overvalued in the world, according to a new study from Deutsche Bank, which estimates homes in the country are valued 60 per cent too high. (*NB – HOLY COW)

Some economists here have crunched their own numbers and come up with results similar to those of the German bank.
“It’s true, housing does look very overvalued in Canada, particularly here in Toronto and in other major cities like Vancouver for example,” said David Madani of Capital Economics.

Madani urges caution for any potential buyers, warning the “red flags” are up.”

Link: http://tinyurl.com/m84d2t6

#205 broadway skytrain on 12.15.13 at 3:24 am

#183 World According To Garth on 12.14.13 at 9:27 pm
… I disapprove of Govt “making shit up” so they can pay their minions their 91,000 dollar salaries and million dollar pensions. They are doing that with phony carbon taxes and *****BS global warming climate change crap*****. This is a hunt for money by desperate govt worldwide.

—————————————
well said.

back when the same bandwagon jumping ‘scientists’ said FOR SURE the temp was going only one way , up, waaay up, i was really looking forward to shorter winters and lower heating costs. but now i have to split/chop/burn more wood because it’s getting colder, not warmer.
the science was garbage, it did not predict squat. it will continue to be wrong (they forgot about the sun in the models , whoops)
CO2 = plant food = life / yet is called pollution????

here is what blows me away that nobody else seems to see… the ‘climate sceintists’ did not much exist back before gore – the real scientists have always been busy solving problems like curing cancer, making your tv thinner and your internet faster, feeding the masses, making boobs bigger etc. , you know, important stuff.

these guys who are ‘climate scientists’ would likely be accounts payable clerks or amway reps if not for rev gore.

climate science pays way, way better and you can be wrong more than 50% and still keep your job.

*Of course they are going to produce the results that keep them getting paid as long as possible* for [email protected] over the system. we have wasted 10’s of BILLIONS on co2 bullshit – enough to have gone a very long way to cleaning up much of the real pollution.

Jerusalem had 50 cm of snow , Egypt is white, but snow was supposed to be gone???… “According to Dr David Viner, a senior research scientist at the climatic research unit (CRU) of the University of East Anglia,within a few years winter snowfall will become “a very rare and exciting event”.
“Children just aren’t going to know what snow is,” he said.”

what a retarded thing to say, yet the followers ate it up like candy.

#206 kitchener on 12.15.13 at 5:37 am

Garth, I totally get what you are saying about dividends. But how do you choose them? Should we stick only to banks?

Here is why I ask…I started looking into this and happened upon this, extracted from a motley fool article from July 2013 entitled 5 Great Canadian Dividend Stocks:
“…Penn West Exploration (TSX:PWT)
Not only is Penn West one of the largest conventional oil and gas producers in Canada, it also offers investors a very large dividend. The dividend produced by Penn West’s oil and gas properties is so good that it’s currently yielding around 10%. While the dividend might look questionably high, it’s pretty sustainable as the company has an industry average payout ratio while also being fairly well hedged to support the payment. Finally, Penn West has a lot of visible growth opportunities ahead and it’s spending about $900 million this year to capture these opportunities. Penn West has all the qualities you look for in a solid dividend paying stock….”

Okay, so then I take a look at the price chart for Penn West, and nearly have a heart attack.

http://ca.finance.yahoo.com/echarts?s=PWT.TO#symbol=pwt.to;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;

So I get it that I am supposed to be happy that I am getting a dividend, but this thing has collapsed from a price of $28 less than three years ago to under $10 now (and from an all time high of more than 45, so someone buying at the top has lost 80% of their money, less dividends of course).

And of course, you could argue that now is the time to buy it (it’s on sale), but then I would be buying for future stock price appreciation and not for the dividend necessarily. Do you see the dilemma? So it’s not so easy as you make it sound.

#207 Jeremy on 12.15.13 at 6:12 am

Garth, you don’t like real estate or dividend-paying stocks (last paragraph), yet you like REITs. It has not been lost on anyone that the business of REITs is real estate and they are dividend-paying stocks. Explain your paradox.

REITs invest in income=producing commercial real estate, not capital-gains-producing (sometimes) residential property. A world of difference. And REITs are not stocks, but trusts, best purchased in baskets. Nor do they pay dividends. Suggest you learn more, then type. — Garth

#208 David McDonald on 12.15.13 at 9:04 am

I have followed your advice on buying REITS and Preferreds when they are on sale consequently the advice in today’s post was reassuring. I am having trouble with the word deflation. My biggest worry is the inflation of prices I see at Costco. I agree with FTP-first time poster and Economictsunami that a better word is stagflation.

#209 economictsunami on 12.15.13 at 9:13 am

No matter who performs this song, I always hear Porky…

(Original B&W) Blue Christmas:

http://tinyurl.com/b9gjnfw

#210 Just some guy on 12.15.13 at 9:13 am

As always, Garth, I appreciate your insights, recommendations, and the interesting way that you tell a story. You are a good writer.

I am fortunate in that my advisor has already done what you suggest. I know this makes for the most boring post ever but many people would be well advised to either have you review their portfolio or at least check with their own advisors (of the fee-based only variety).

#211 economictsunami on 12.15.13 at 9:37 am

Posting a link does not necessarily reflect an endorsement of an opinion.

My opinion is:

Does QE work? Yes

Is it effective for the real economy? That’s debatable.

The average number of jobs created, U3 rate nor GDP are virtually useless in determining whether QE is either working or effective…

Here is another link (which I may or may not totally agree with but will nevertheless pass on) because it may be interesting to others:

The Long Short Run…

“We are all Japan in the early 1990’s, looking ahead to 2 or more decades of lost economic growth”

http://tinyurl.com/nzxrug2

#212 recharts on 12.15.13 at 10:06 am

#203 Canadian Watchdog on 12.15.13 at 12:58 am
Every person has different ends and different means to achieve it. For me to suggest if I would buy a condo as a Chinese would be meaningless because value is subjective, not objective.
…..

I never make suggestions to buy or not to buy RE. It’s a personal choice depending on one’s needs. But don’t go buying a home and expect to consume it and profit at the same time. My only advice is to understand what the definition of a non-speculator is: that is someone who is willing to consume an asset with the acceptance of a gain or loss. Anything beyond that and you’re a speculator like the rest. Even if you’re waiting.
—————–
OK thanks for your opinions
I read behind the lines that you, if you were chinese investor, would not buy. That is how I read your message. And this is what they do. New home sales (including condos) are down big time this year so, we cannot say that advertising those condos on chinese sites it is going to solve the surplus problem and the condo market.
I don’ think that they are that naive in regards to laws and what they can expect here.

#213 rosie "moving forward" in the knowledge that, "this won't end well" on 12.15.13 at 10:27 am

But, but it’s not fair.

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/10516732/My-Cyprus-mortgage-repayments-went-up-by-166pc.html

#214 Daisy Mae on 12.15.13 at 10:36 am

#152 Dan: “The extra Toronto land transfer tax from a few years ago seems smart too, even if it doesn`t seem to have done much to slow Toronto housing down.”

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

Smart? Just an act of greed. Reread: “…even if it doesn’t seem to have done much to slow Toronto…”

#215 2CentsCdn on 12.15.13 at 10:51 am

#179 Canadian Watchdog
#162 Shawn
“Forward Condo contracts for future delivery and being sold and pumped in other countries as a low risk investment gamble”

That is very interesting …… so a Cdn condo collapse may not hurt Canadians as much as we think …. it may hurt spending power in other countries (Chinese, Russian, Middle Eastern investors (gamblers). Now my question is …. how easy is is for someone 4,000 mikes away with a different passport who has no intention of ever living in Canada to walk away from their condo deal if it goes stinky? I’m thinking it would near impossible to economically go after that buyer. Sure the condo developer would get to keep deposits …. maybe a fire sale plus the deposit would still allow the developers survive a crash.

#216 rosie "moving forward" in the knowledge that, "this won't end well" on 12.15.13 at 11:00 am

Real estate values diverge. Can’t happen here, we’re different.

http://www.dailymail.co.uk/news/article-2524053/Great-housing-divide-widens-prices-London-soar-40-cent-homes-tumble-20-cent.html

#217 TurnerNation on 12.15.13 at 11:03 am

#132 jess

See isn’t it great, in our culture we protect the vunerable women and children; unlike those, those, those people overseas (whom we drop WMD on) who sit there twiddling their beards, vowing We will get ze americans. Right? Our glorious way of life: Respectful and fair?
Anyway, dis onnance is over.

This winter, Kanadians with electric heat will be turned down with shivers. But our Party elites and Party Faithful – hydro Crown and quasi-crown corp. managers and unionistas earning total comp in the 250k-500k range – will live as kings and queens. Which recession again?

H will not muddy his hands with this one; it’s left to local, low-level unelected block captains and prefecture managers. The perfect pyramid.

We are headed towards 2nd world rickshaw and scooter status. Who but the party elites may afford road tolls, carbon tax, fuel tax, environmental levys, recycling tax, AC tax, tire tax, licence tax, insurance and gas? They will roll by in the grand luxury cars. Cigars a-chomp. You might think I’m joking.

#218 jess on 12.15.13 at 11:25 am

Cisco is coming to Ontario
research tax credits
http://www.cra-arc.gc.ca/txcrdt/sred-rsde/prv-crdts-eng.html#ntr
http://www.cra-arc.gc.ca/txcrdt/sred-rsde/prv-eng.html

#219 Serge on 12.15.13 at 11:40 am

A good documentary . it focuses on the housing sector and debt trap caused by pumping house prices
http://topdocumentaryfilms.com/debt-good-bad-ugly/

#220 Smoking Man on 12.15.13 at 11:42 am

Novartis announces its pharmaceutical plant in Mississauga will shut down, taking 300 jobs

Another feather for Wynn’s hat.
Way to go lady, watch what happens when you hit companies with new pension and blue box taxes.

This is just the beginning.

http://www.huffingtonpost.ca/2013/12/13/manufacturing-canada-bmo_n_4440840.html

#221 Oceanside on 12.15.13 at 12:17 pm

#200 Bottoms Up
For the record, government employees (let’s name some….urban planners, by-law officers, librarians, teachers, liquor store employees, police, fire fighters, mailmen, food inspectors, product regulators, border agents etc.) pay taxes too, and also pay very heavily into their pensions (~10% of their net pay). So your $91,000 salaried individual takes home a biweekly paycheque of around $2100, enough to rent a flat, gas up their beater and put food on the table.
*******************************************
Well said, I was a government employee for 30 years and made about $59,000, my bi-weekly take home was about $1,600 and it took most to live and raise two children, no expenses to claim either . The pension isn’t that great. Teachers and liquor store workers are not in that $90,000 category unless they are managers. So many that haven’t worked for the government seem to think that all public employees make 100K, that just isn’t so.

#222 Musty Basement Dweller on 12.15.13 at 12:27 pm

Much continues to be said about Asian money fueling the Vancouver real estate market. The extent of the phenomenon appears highly debatable.

But in terms of a debate on future price corrections in Vancouver does it really matter?

It seems to me that most Asian investment money is from smart people that, when things go south, will pull out just as fast as the condo flippers who are pulling out of the new condo market in droves.

In fact I think this “HAM”.,in Vancouver, to whatever extent it exists, will make for a much harder landing in the end?

Comments anyone?

#223 Ret on 12.15.13 at 12:29 pm

Re: #175

“But, I do see 3.20% for 7-yr and 3.35% for 10-yr:
http://www.ratesupermarket.ca/best_gic_rates/

CDIC insurance only on products 5 years or less at CDIC participating institutions. Here’s a link:

http://www.cdic.ca/ForMI/ProtectingDeposits/Pages/default.aspx

#224 Godth on 12.15.13 at 12:31 pm

#200 Bottoms_Up

So it’s safe to assume that you have triple windows in your 2 by 6 constructed house with a high efficiency furnace and you drive a diesel car, right?

We are what we are.
http://www.youtube.com/watch?v=nJxmlNyu4sE

Keep in mind that the solar system is moving through space. We, as in no one, understands what that means. Particularly if the universe is electric. We still don’t understand magnetic forces.
http://www.youtube.com/watch?v=HtMX_0jDsrw
http://www.youtube.com/watch?v=MO0r930Sn_8

#225 Infused with Opiates on 12.15.13 at 12:59 pm

199 OT 186 Ralph – agreed.

203 Watchdog – there are many things we speculate in. We speculate our spouse is the right partner for life.
Quite a few of us get that wrong and switch. We
speculate our education and career will provide a good
life for us. Not always, and we re-train and switch
careers, speculating once again.

194 Ebeneezer – Ha!! Good one!

#226 Canadian Watchdog on 12.15.13 at 1:03 pm

#212 recharts

The other side of this market that people aren't seeing are numerous communities of realtors selling properties through their global network and conventions abroad on how to buy RE in Canada. As I've learned, their operations are more prevalent and extensive then I thought. Many of them offer property management services to foreigners who wish to buy property in Canada without living here, whereas the realtor or broker purchases a property through a company based in Canada, and then arrange payment agreements locally through lawyers or whatever. From there owners can choose if they wish to sell or rent their property. From what I've read on forums, many foreigners have dual lives, so they come to Canada on a short term basis and then try to rent their property when they leave.

Are they naive? I don't know. You'd have to search and read about it. Although plenty of the information given is as honest as the sales pitch below.

Real Estate in Toronto directly from Moscow. (Translated)

The process of purchasing a new in Toronto (from the builder)

1) Picking the appropriate item and selecting the desired set of apartment layouts, floor and direction of windows, you enter into a contract with the builder

2) At the time of the contract, to confirm the seriousness, the buyer makes a deposit of 5-10% of the object.

3) Next, usually over a period of 180 – 360 days, the buyer gradually introduces additional payment 2-3 and thereby bring its contribution to 35% percent. The remaining amount is paid only after the property is transferred to your property

4) Construction of a detached house lasts 6-18 months and construction of multi-storey building takes 18-36 months. All this time the deposit is fully secure in the account at the lawyer, not the builder. This, even if the builder had problems, your money safely

5) What does the buyer is building yet? Since Canada apartment or house from the builder means for a fully equipped property, including the highest quality repairs, decoration and even installed kitchen appliances, the buyer can only flipping magazine options and choose

6) At the time of completion of the buyer shall transfer the remaining amount to the builder and receives the keys

7) Then walk, champagne, dancing …

#227 Mister Obvious on 12.15.13 at 1:16 pm

#194 Ebenezer Haarper

“Are there no Call Centers? Are there no Walmarts?
——————————

Very clever.

#228 jess on 12.15.13 at 1:37 pm

…”To keep tax money in Russia, Putin proposed companies that wish to register offshore will still be subject to Russian state taxes, and won’t receive any government funding. They also will be barred from participation in bidding at state auctions, like that of Rosneft.

“If you want to go offshore, be my guest, but the money stays here,” Putin said.
http://rt.com/business/offshore-tax-budget-russia-119/

#229 Ralph Cramdown on 12.15.13 at 1:58 pm

#220 Smoking Man — “Novartis announces its pharmaceutical plant in Mississauga will shut down, taking 300 jobs. Another feather for Wynn’s hat. Way to go lady, watch what happens when you hit companies with new pension and blue box taxes.”

Meanwhile, elsewhere in the first world, Novartis is announcing the opening of a new research facility at a presser with local politicians presenting a giant novelty cheque, across town Cisco is closing down a development lab, and a local Smoking Man-type ranter is going out of character and blaming it on government tax policies.

#230 JimmyAAA on 12.15.13 at 1:59 pm

#183 World According To Garth on 12.14.13 at 9:27 pm
Im thick? I think you need to understand something. I don’t disbelieve in climate change. climate changes all the time. I disapprove of Govt “making shit up” so they can pay their minions their 91,000 dollar salaries and million dollar pensions. They are doing that with phony carbon taxes and BS global warming climate change crap. This is a hunt for money by desperate govt worldwide. Open your eyes.

$$$$$$$$$$$€€€€€€€€€€€€€£££££££££££££¥¥¥¥¥¥¥¥

#178 Bottoms_Up on 12.14.13 at 8:46 pm
#5 World According To Garth on 12.13.13 at 7:43 pm
——————————————————-
People of your ilk are so thick. Don’t you realize that with climate change comes more and bigger storms (as well as colder and hotter temperatures)?

So in trying to be underhanded about your comment, your post is actually quite supportive of the fact that we are in the midst of witnessing anthropogenic climate change. i.e. GTA’s biggest storm of the year….and it’s been unusually cold too…….

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

People who give a shit about this, because it costs them real money, disagree with you.

http://www.theglobeandmail.com/report-on-business/rob-magazine/an-industry-that-has-woken-up-to-climate-change-no-deniers-at-global-resinsurance-giant/article15635331/#dashboard/follows/

Maybe the government solution is the wrong way. But you seem to advocate that we do nothing until we can do it perfectly.

BC’s has had a carbon tax for several years now. It has actually been quite effective. What is your solution? Or are you just a crank who hates taxes?

#231 willworkforpickles on 12.15.13 at 2:09 pm

Would the government ever take your land and rent back to you your home and even have you evicted for non payment?
That’s like asking….will the government ever default on its debt to overseas creditors.
Indeed they will.
With deflationary times coming that will drive the dollar down, alongside the course were on (Can & US) with the debt time bomb ticking,….. drastic measures beyond the quantitative easing farce to pay the debt will be implemented in North America.

#232 Shawn on 12.15.13 at 2:13 pm

NO FUTURES MARKET IN CONDOS

#179 Canadian Watchdog
#162 Shawn
“Forward Condo contracts for future delivery and being sold and pumped in other countries as a low risk investment gamble”

Canadian Watchdog at 157 posted an “untruth” stating:

GTA CONDO-EX Futures Mercantile Exchange 2014 Contract Launches

He later explained that pre-build condo contracts were futures contracts.

Okay agreed and I believe Garth has said before that small down payments on condos to be built in future are futures contracts.

That is a WORLD of difference from an exchange traded futures contract.

Developers selling future condos consists of both parties hedging. Well, the buyers are speculators if they plan to flip. The builder is surely hedging away the risk of price declines? And needs to hedge, to get financing.

An exchange traded condo contract on the mercantile exchange which Canadian Watchdog implied has been announced is would be a vehicle for speculation mostly. One could go long or short condos. The Volume would far exceed real condos. (And why not? a condo could take four years to build and meanwhile could be sold monthly or more often on an exchange.)

No such exchange exists nor has any evidence been posted here that it will exist.

It would certainly be a great vehicle to enrich some folks at the expense of others. A sort of natural selection for who gets to lose money and who gets to accumulate money in our society.

In olden times money flowed to those who worked hardest and those who invested for the future and built businesses. Still true to an extent, but mostly money flows to those who work and trade smartest.

Your task therefore is to work and trade smartly.

#233 Canadian Watchdog on 12.15.13 at 2:19 pm

#215 2CentsCdn

Now my question is …. how easy is is for someone 4,000 mikes away with a different passport who has no intention of ever living in Canada to walk away from their condo deal if it goes stinky?

That's a good question. And it's not limited to smaller investors. Take for example a company like Empire Communities whose operations and sales is directed towards investors in the UAE region.

Empire Prestige (UAE, Dubai)

The Canadian real estate market presents excellent opportunities for investors and home owners, and by opening an office in Dubai, we have demonstrated our long term commitment to the GCC region. Canada's balanced real estate market has long attracted investments from around the world, and Empire Communities portfolio comprises of over 21,000 planned units, with 5,000 homes and 3,200 condominium already completed and sold across successful master planned communities in the Greater Toronto Area (GTA) and Southern Ontario…

Whether building condominiums or master-planned communities, Empire always delivers on its promises. Our company is not in and out of a project for the “quick sell – we are in it for the long haul and we proudly stand behind our products.

I don't know how this investment strategry plays out, but I do know that if Empire loses them Arab boys' money, they might be in for a little more then walk-away investors the next time they step foot on UAE grounds.

#234 Ralph Cramdown on 12.15.13 at 2:54 pm

#233 Canadian Watchdog — “Empire Communities portfolio comprises of over 21,000 planned units, with 5,000 homes and 3,200 condominium already completed and sold across successful master planned communities in the Greater Toronto Area (GTA) and Southern Ontario”

Nice catch on them not even pretending the condos are homes. Inadvertent on their part, I suppose.

The sales numbers sound like a fabrication. — Garth

#235 rosie "moving forward" in the knowledge that, "this won't end well" on 12.15.13 at 3:18 pm

Looks like more bargains coming for all you snow bird types.

http://usatoday30.usatoday.com/USCP/PNI/Features/2013-12-15-PNI-re-marketwatch-1215_ST_U.htm

#236 Blacksheep on 12.15.13 at 3:19 pm

“Vlad, I can’t help myself, I push the machine, I push the powers at the tax farm right here at GF.

They don’t know what to do with me. Keep in mind I’m several steps ahead of them.

I know what they are going to do before they do.

This blog is going to get very interesting after Jan 30.

Ha I’m pure evil.
————————————–
Bet you even cut the line at the voting booth!

https://www.youtube.com/watch?v=HeMGqTwWA6U

#237 live within your means on 12.15.13 at 3:20 pm

Major winter storm here in the M’times. Home alone but in contact daily w/hubby in France. No worries as I have fab. neighbours who will take care of this old bag. Was invited to Xmas dinner by several neighbours & friends. Will be spending Xmas at my elder sis’s home. Neighbour just popped in to see if I was OK. He shoveled a path to my door. Love he & his wife. He often drops in to see me.

#238 Old Man on 12.15.13 at 3:45 pm

The title is most appropriate as there are times in one’s life that nothing goes right as planned, and beware of Friday the 13th. This was the day that had phone calls coming out of my ears from one to another when call transfers would not work. Was phoned back all day long, so we all sat back as adults cracking jokes about a nightmare on the phone; never get angry as they love a customer with a sense of humor to make them smile.

I would say now what are we going to do about this mess, and they would laugh; well we will transfer to someone else so hold on to your hat. It was done and she was laughing as heard about it all, and we had a talk wanting to know what I wanted for Christmas, and said all bets are off for now; she said we know, and so sorry; said no problem as there will be another day.

Now had calls at night from another party wanting to know my position and said have no idea what was going on, as must be a mistake because have no clue about this all, as will pay the bill in full on Sunday, and last night got a call from Bell that was recorded saying have a nice day. The moral of this story is take one day at a time, and just laugh about it all with those on the phone, as they appreciate a customer being cool with a sense of humor.

#239 Bottoms_Up on 12.15.13 at 3:50 pm

#205 broadway skytrain on 12.15.13 at 3:24 am
—————————————————–
Wrong, climate scientists have been around for decades. And guess what? They also discovered acid rain and the ozone hole….and guess what? The work they did lead to real change, and those anthropogenically-caused climate issues have largely been reversed.

And ps., overall the temperature IS warming, but some places will get colder with changing weather patterns due to climate change.

#240 Smoking Man on 12.15.13 at 4:19 pm

Official book launch Feb 1

#241 World According to Garth on 12.15.13 at 4:40 pm

First of all. Govt Employees do NOT pay taxes. You can’t pay taxes on a salary that comes from taxes. The elimination of “taking taxes off of govt employees cheques would save millions alone I bet.

Second………all the cherry picked jobs you mentioned make up less than 10% of govt employees. Most are useless paper pushers or duplicate jobs (fed/prov) or useless ministries (Indian Affairs, Culture BS, Health Canada (MASS duplication from what the provinces do)). Mailmen? Useless and they are thieves. You never hear about the millions in STOLEN MAIL/PACKAGES from Canada post every year. Ever hear of email or direct deposit? Its almost 2014 Jack. Yeah cops….shoot first, shoot again and if anyone moves after that shoot them too. Then we question the guy with the wooden spoon that “endangered” the doughnut eating spare tire cops we have today. So get your facts straight.

Pensions FIFTY PERCENT. HALF of GOVT EMPLOYEE PENSIONS are paid for by working poor people making less than 15 bucks an hour while these useless parasites make 50 bucks an hour.

DISGUSTING but don’t just listen to me……look at the numbers. This is completely unsustainable and King David…….I mean Harper knows it. And he’s quaking in his boots. More than 500 BILLION is owed in pensions alone. Read a book why don’t you.
———————————————————-

And for the record, government employees (let’s name some….urban planners, by-law officers, librarians, teachers, liquor store employees, police, fire fighters, mailmen, food inspectors, product regulators, border agents etc.) pay taxes too, and also pay very heavily into their pensions (~10% of their net pay).

#242 KommyKim on 12.15.13 at 4:41 pm

RE: #205 broadway skytrain on 12.15.13 at 3:24 am
what a retarded thing to say, yet the followers ate it up like candy.

Same thing goes for your entire post.

#243 World According to Garth on 12.15.13 at 4:49 pm

#239 Bottoms_Up on 12.15.13 at 3:50 pm

#205 broadway skytrain on 12.15.13 at 3:24 am
—————————————————–
Wrong, climate scientists have been around for decades.

OH……..You mean like THIS GUY? A Climate Scientist with PHD in Climatology who is ignored by the Govt?

http://www.climatescienceinternational.org/index.php?option=com_content&id=524

——————————————————

And guess what? They also discovered acid rain and the ozone hole….and guess what? The work they did lead to real change, and those anthropogenically-caused climate issues have largely been reversed.

And ps., overall the temperature IS warming, but some places will get colder with changing weather patterns due to climate change.

——————————————————–

Oh give it a rest…….cuz the GOVT SCIENTISTS say the earth is warming it must be true right? Because if it is its the only thing in the history of Human Kind that the govt has said publicly that was not a flat out lie.

#244 not 1st on 12.15.13 at 4:52 pm

how easy is is for someone 4,000 mikes away with a different passport who has no intention of ever living in Canada to walk away from their condo deal if it goes stinky?

—–

Suing someone from outside the country is a very costly and difficult task I was told when my U.S. based renter skipped out on about $6,000 owing. He just crossed the border, wen to his primary residence in Cali and left me with the bill.

Going to be the same for a lot of these developers as well.

And here we all thought you were so smart. — Garth

#245 broadway skytrain on 12.15.13 at 5:11 pm

#242 KommyKim on 12.15.13 at 4:41 pm
RE: #205 broadway skytrain on 12.15.13 at 3:24 am
what a retarded thing to say, yet the followers ate it up like candy.

Same thing goes for your entire post.
————————————————-
fact remains it was a fradulent prediction, based on fradulent science which has now been proven to be utterly incorrect. simple.

ALARMIST SELF SERVING bunk. proven. by the ‘top’ scientists. ha. climate science is and always was for the C students who could not do ‘hard’ science, like the kinds with math!

keep paying those green taxes with all the other suckers and keep you commie silliness to yourself.

#246 45north on 12.15.13 at 5:15 pm

Ralph Cramdown: The “float” is the number of shares of a company held by its investors, not including those held by a controlling shareholder

thanks

from your link Procter & Gamble has the biggest option dilution 11.2% but Apple has the lowest 0.7%.

#247 broadway skytrain on 12.15.13 at 5:16 pm

oh right, i forgot, it not warming now, its more and worse storms.

of course after any big one the climatesheep run around screaming how cc is surely to blame.

whats to blame when ther are NO storms and co2 levels are still elevated..

“The 2013 Atlantic hurricane season was the first Atlantic hurricane season since 1994 to end with no major hurricanes, and the first since 1968 to feature no storms of at least category 2 intensity.”

gosh now that pesky climate change is killing hurricanes, better make some new taxes!!!

#248 broadway skytrain on 12.15.13 at 5:38 pm

#238 Old Man on 12.15.13 at 3:45 pm
The title is most appropriate……

————————–
you came back from your little hiatus substantially more lucid than you when left. you are slipping again.

keep it real gramps.

#249 broadway skytrain on 12.15.13 at 5:46 pm

considering how much waste exists in the govt, does one become morally obligated to do ones business in unreported cash (like hamilton apt blocks) and then use a greater portion of the profits to benefit society (without slices for the greaseball duffys/wallins and co) than would have been otherwise.

$1000 to ottawa or $400 directly to local hospitals/shelters etc – which does more good?

i’d say the 400.

#250 Old Man on 12.15.13 at 5:52 pm

#241 World – had a bug, so had to restore, now want you to get pumped up about Ottawa for sleepless nights, as there is no such thing as a pay freeze as if such is done it is just political con. There is about 5 general levels, and several levels within, so on any review the machine bumps you up to a higher level with more pay, so no pay increase for the public to ever know about this all as received an extra $10,000 a year with a pay freeze; see how the machine works. Now will one day disclose the so-called layoffs in Ottawa with independent contracts, but such might be too much for the taxpayers to ever know about.

#251 HD on 12.15.13 at 5:52 pm

@ #241 World According to Garth on 12.15.13 at 4:40 pm

“First of all. Govt Employees do NOT pay taxes. You can’t pay taxes on a salary that comes from taxes. The elimination of “taking taxes off of govt employees cheques would save millions alone I bet.”

——————————————-

That must be one of the most bizarre statement I have read here in a long time.

Best,

HD

#252 jess on 12.15.13 at 5:52 pm

Oil and gas drilling waste is being spread over New York roads as de-icer

..”The documents also contained results of lab tests conducted on the waste-turned-de-icer. From Riverkeeper’s blog:
A review of these brine testing results from both natural gas production brine and brine from natural gas storage facilities showed extremely high levels of chloride. Chloride can corrode infrastructure and negatively affect aquatic life and vegetation. In addition, results … revealed the presence of benzene and toluene. Benzene is a carcinogen and has been linked to blood disorders such as anemia, while toluene has been linked to nervous system, kidney, and liver problems.”…

http://www.riverkeeper.org/blog/fracking/new-york%E2%80%99s-fracking-waste-problem/

#253 jess on 12.15.13 at 5:57 pm

12 December 2013
Iceland jails former Kaupthing bank bosses
They are the former chief executive, the chairman of the board, one of the majority owners and the chief executive of the Luxembourg branch.
http://www.truthdig.com/eartotheground/item/iceland_sends_four_bank_bosses_to_the_slammer_20131212

#254 frustrated stock picker on 12.15.13 at 6:03 pm

I have a problem….I want to rebalance and buy bonds and etf’s as told by the gurus on BNN…but the stocks I own keep going up more than the general index. Should I accept a safe and mediocre return so that I more fit the profile of what financial advisors say my portfolio should look like.

My question is….when should I sell stocks that outperform the market on a consistent basis? Ex THI…bought at 18 and now 62….. GIB.a 15 to 37…..CP….73 to 159….AGU 48 to 95…..SAP 25 to 47…PGF 4 to 6.50…TD 45 to 95. My unbalanced portfolio is full of these issues and I can’t get balanced while stock picking has created this nightmare of outperformance. Does it make sense to sell winners and downgrade to a balanced portfolio for safety?

No, be normal. Wait for your stocks to rocket lower then sell them quickly and sit in cash for two years until they all rise again. Buy in at those levels and come here to ask advice. — Garth

#255 Canadian Watchdog on 12.15.13 at 6:11 pm

#232 Shawn

The condo exchange headline was intended to be sarcastic.

#234 Ralph Cramdown

I'm not sure how many investor who purchased a presale from late 2010 forward made a positive return. Chart At best, those fortunate enough may have sold at cost or rented to cover mortgage payments.

On the developers side, dollar volume has pretty much collapsed, leaving many short of cash due to deposit structure payments. The next best options would be to sell units abroad, rent out any unsold and completed units and a lot of damn cutbacks on building materials. If either of those options don't work out, then they'll go beg a bank (or "itchy finger" Luigi) for more credit, at which point they will kindly be asked to post more personal assets as collateral, of which 10-15% must be liquid.

If all of the above doesn't work out, then they go into DIP or BK.

#256 World According To Garth on 12.15.13 at 6:22 pm

No comment

http://armstrongeconomics.com/2013/12/15/more-global-warming/

#257 World According To Garth on 12.15.13 at 6:33 pm

An income tax is a government levy (tax) imposed on individuals or entities (taxpayers) that varies with the income or profits (taxable income) of the taxpayer. Details vary widely by jurisdiction. Many jurisdictions refer to income tax on business entities as companies tax or corporation tax. Partnerships generally are not taxed; rather, the partners are taxed on their share of partnership items. Tax may be imposed by both a country and subdivisions thereof. Most jurisdictions exempt locally organized charitable organizations from tax.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Govts do not earn income and derive their income from private citizens and private companies therefore by definition public employees only recieve taxes as salary but do not pay taxes.

Think about it. If everyone worked for the govt WHERE would the money come from to pay everyone? Bizarre indeed.

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

That must be one of the most bizarre statement I have read here in a long time.

Best,

HD

#258 Old Man on 12.15.13 at 7:20 pm

I am going to do this now, as the government in power will tell the public they are cutting back, as no more overtime. Now will target Stats Canada, as my babe worked there making big bucks. So all part-time help needed was contracted to an employment agency for a fee that was double, and she applied to work a night shift back at Stats Canada making the same money from 6:00 to 11:00 PM on her same position for more money. So she was happy, and I say what was this all about?

#259 JimmyAAA on 12.15.13 at 7:28 pm

#256 World According To Garth on 12.15.13 at 6:22 pm
No comment

http://armstrongeconomics.com/2013/12/15/more-global-warming/

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

If you are insisting on calling it global warming, not climate change – which is more accurate. Them we will not allow the term oil sands to be used anymore. tarsands it is.

#260 Knickerbockers Knosty on 12.15.13 at 7:34 pm

#195 Smoking Man on 12.14.13 at 11:13 pm — “This blog is going to get very interesting after Jan 30. Ha I’m pure evil.”
— and —
#240 Smoking Man on 12.15.13 at 4:19 pm — “Official book launch Feb 1”

Hmmm. I like the evil part, but other than the fact the universe is always in constant motion, moving to and fro and that all is in its rightful place at the right time for the right reason, I sense a new trend developing here, proving the reality that climate change always has and will continue to exist and change, therefore it is better to get on the commercialized gravy train while it’s still in motion and grab a major piece of the pie for oneself. Close?!

#261 Is it Neanderthal Night? on 12.15.13 at 7:44 pm

#252 jess on 12.15.13 at 5:52 pm

Oil and gas drilling waste is being spread over New York roads as de-icer

—-

There are usually multiple reasons for these operations. I’ve heard that many farmers and land owners are more than happy with the money they get from fracking on their land.
Ostensibly its about gas. But it the real reason is to destroy the water table.
The government ‘solution’ to the problems they created is to bring in water from elsewhere, fluoridated of course. The real goal of fracking is to make independent people dependent on the government.
Land owners with food and water independence are a formidable foe.
An apathetic populace (fluoridated)is the reason Harper got his beloved HST

#262 recharts on 12.15.13 at 7:56 pm

#255 Canadian Watchdog and all

re:Canadian condos being sold on foreign markets.
———————

I thinks that there is nothing to discuss here. We can see what the sales are, CaW.Dog ☺ showed that condos have almost zero appreciation.
If the move to sell condos abroad worked the sales for new homes should be higher. I have no idea if these condos were previously bought with cash but if they weren’t then selling these to foreign investors is going to have very bad consequences for Canadians. Moreover if CMHC was somehow involved in this then it is going to be even worse.

Anyway I think that the number of condos sold to these guys is relatively small compared to what they sold to canadians, that is confirmed by the increasing debt that we are seeing in so many charts.

#263 recharts on 12.15.13 at 8:06 pm

More bitcoin news

http://www.zerohedge.com/news/2013-12-15/bitcoin-transaction-volume-triples-october-europe-prepares-regulate-tax-digital-curr

Of course these guys are crazy, why waste your time to legalize a currency with no future. They should read this blog…

You are so gullible. Cute, but gullible. — Garth

#264 Cici on 12.15.13 at 8:06 pm

#103 T.O. Bubble Boy

I don’t know what is going to happen with the currency, but according to what I’ve read lately it could dip down as far as $0.88 to the US dollar, but will eventually stabilize at around $0.93. We are at about $0.94 right now…So, not a huge difference.

And yes, if you buy when Canadian currency is strong, especially at or near parity, and sell when it is weak after your stocks have gone up in value, you will make gains. But, if we are going into deflation mode while the US is in rebound mode, I’m not sure those US REITs will be all that attractive.

#265 Julia on 12.15.13 at 8:12 pm

I don’t know about you Garth, but I think that reading these comments day after day is starting to affect my mental health.

#266 Andrew Woburn on 12.15.13 at 8:13 pm

#222 Musty Basement Dweller on 12.15.13 at 12:27 pm

Much continues to be said about Asian money fueling the Vancouver real estate market. The extent of the phenomenon appears highly debatable. … But in terms of a debate on future price corrections in Vancouver does it really matter?
====================================

After living 25 years in Vancouver, these are my thoughts on the importance of HAM.

There is always an influx of buyers from Asian countries besides China such as Iran and Russia and its former satellites. They seek safe haven in Vancouver often in waves after disruptions in their homeland.

One early wave followed the Iranian revolution and a second during the Iraq-Iran war. In the nineties, many more came from Hong Kong ahead of the Mainland Chinese takeover. Most were genuine immigrants and they visibly changed Richmond and the North Shore. They raised real estate prices as would any buyer influx. Once the homeland crises ended, the immigrant flow reduced and house prices stagnated for this and presumably other unrelated reasons.

Many among the Hong Kong exodus, for example, were not particularly wealthy but the homes they had sold were valued far above contemporary Vancouver prices so they looked rich to us. They moved into middle class areas like Richmond driving up typical family home prices.

My impression is that today’s HAM buyers tend to be very wealthy investors rather than long term middle class immigrants and they are not competing with average Canadians for suburban bungalows. They seem to look for trophy properties they can sell to other global investors. Obviously all buyers affect the market to some extent but my guess is that today’s Vancouver HAM market is so detached from the rest that the presence or absence of HAM buyers has little detectable effect on the price of semis in Surrey (at least until the next homeland crisis).

You don’t need HAM to explain the urge to pay a million for a bug shack in East Vancouver or Leslieville. The first thing you learn in university is that real people don’t live in the suburbs. We have an ever increasing supply of university grads desperate to be where the action is even it means living in 300 square feet. For many, parenthood will eventually cure this affliction.

One thing that is interesting about HAM buyers is they rarely seem to come from stable places like Singapore. I find it disquieting then that Mainland Chinese buyers will pay crazy prices in West Van for something they could buy in Beverly Hills or New York for half as much. Clearly they are not barred from buying US property and they didn’t get rich by wasting cash. To really prosper in the PRC you need sensitive antennae. Are they anticipating the fraying of relations between the US and the PRC? If you had just watched your government kick sand in the face of two of its biggest customers, the US and Japan, wouldn’t you be worried?

#267 Bottoms_Up on 12.15.13 at 8:22 pm

#247 broadway skytrain on 12.15.13 at 5:16 pm
—————————————————–
Let’s put in it simple terms that you might understand: Worsening climate change (caused by human activity) can be seen as ‘volatility’, similar to the stock market. One year, no storms. The next year more storms (or more worse storms) than ever recorded. How is that so hard to understand?

#268 KommyKim on 12.15.13 at 8:33 pm

RE: #245 broadway skytrain on 12.15.13 at 5:11 pm
#242 KommyKim on 12.15.13 at 4:41 pm
RE: #205 broadway skytrain on 12.15.13 at 3:24 am
what a retarded thing to say, yet the followers ate it up like candy.
Same thing goes for your entire post.
————————————————-
fact remains it was a fradulent prediction, based on fradulent science which has now been proven to be utterly incorrect. simple.
ALARMIST SELF SERVING bunk. proven. by the ‘top’ scientists. ha. climate science is and always was for the C students who could not do ‘hard’ science, like the kinds with math!
keep paying those green taxes with all the other suckers and keep you commie silliness to yourself.

You miss-spelled “fradulent”. It’s “fraudulent”. The word is often used to describe the climate skeptics hired by big oil companies who brainwash people like you.
BTW, climate science does involve math. Here’s an easy one that you should be able to understand:

But, I do agree with one thing you’ve said. Those green taxes are dumb. In my province (BC), the government has used them to transfer funds from public institutions such as schools, hospitals, etc, to industry.

I will keep spreading my “commie silliness” on this blog as long as Garth is gracious enough to indulge me.

#269 broadway skytrain on 12.15.13 at 9:50 pm

#267 Bottoms_Up on 12.15.13 at 8:22 pm
#247 broadway skytrain on 12.15.13 at 5:16 pm
—————————————————–
Let’s put in it simple terms that you might understand: Worsening climate change (caused by human activity) can be seen as ‘volatility’, similar to the stock market. One year, no storms. The next year more storms
———————————-
grasp at straws much?

first – hotter temps – for certain
second – maybe not hotter but more, worse storms – assured
third – sometimes more sometimes less storms – hotter and colder at the same time – bank on it

guess what? the weather has been volatile as long as it has been changing, which is since the formation of the planet. galveston hurricane of 1900 anyone?

the only certainty of climate is that the fools from east anglia(WTF?) will certainly change their predictions again, after their next epic and assured fail .

everything i learned in thermodynamics1 and2, heat transfer 1 and 2, fluid mechanics, thermal system design and energy conversion says the ipcc science is bad , very bad. But thks for the stk mkt analogy anyway!

#270 Andrew Woburn on 12.15.13 at 10:39 pm

#252 jess on 12.15.13 at 5:52 pm
Oil and gas drilling waste is being spread over New York roads as de-icer

..”The documents also contained results of lab tests conducted on the waste-turned-de-icer. From Riverkeeper’s blog:
A review of these brine testing results from both natural gas production brine and brine from natural gas storage facilities showed extremely high levels of chloride. Chloride can corrode infrastructure and negatively affect aquatic life and vegetation.

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

Would that be sodium chloride, aka salt? Is it chloride, the chemical the human body needs for metabolism?

It is hard to assess how worried we should be. Maybe I have too much fluoride.